The effects of authoritative mechanisms of coordination on market orientation in asymmetrical channel partnerships

Abstract

An important outcome of a firm's interorganisational relationships is the attainment of resources and capabilities required to attain a competitive advantage. Although market orientation has been considered one of those critical resources, there is little understanding regarding how it is created and nurtured in business relationships. In the context of asymmetrical channel partnerships dominated by a downstream leader, in this paper we present a model where the upstream follower's market orientation is promoted as a consequence of the leader's use of authoritative mechanisms of coordination. Some hypotheses are presented and empirically tested in a sample of agricultural cooperatives that maintain channel partnerships with second-order marketing cooperatives. The results indicate that formalization, participation, input control, and behaviour control are coordination mechanisms that lead to improvements in market orientation. Implications for interorganisational theory and managerial activities are discussed at the end of the paper.