Abstract
Drawing on social comparison and equity theory, this study examines the influence of reward strategies a manufacturer in a focal dyad employs on the cooperative behaviors of other observing firms in a dealer network. We test the hypotheses using a survey of 234 auto manufacturer–dealership relationships. The results reveal that (1) reward observation frequency has a negative effect on the cooperation of observers, (2) observer network centrality amplifies the negative effect of reward observation frequency on the cooperation of observers, and (3) network density dampens the negative effect of reward observation frequency on the cooperation of observers. The findings suggest that managers must be aware of the nuanced consequences of this “spillover” effect of rewards in shaping their influence strategies within the context of the larger business network.
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