The Impact of Retailer’s Economic and Social Satisfaction on Its Commitment, and the Moderating Effect of Manufacturer Brands’ Strength

Selvan Perumal,Nor Azila Mohd Noor,Majid Mapkhot Goaill

doi:10.5539/ass.v10n8p140

Abstract

Available literatures have confirmed that there are unstable and complex relationship between manufacturers and large retailers especially in the growing strength of retail organizations in the global context. This study thus examines the impacts of retailer’s satisfaction dimensions on its commitment, and the moderating effect of the manufacturer brands’ strength on the relationships between retailer’s satisfaction dimensions, and its commitment. This quantitative study presents the empirical findings from a survey of 140 large retailers using partial least squares (PLS). The results indicate that retailer’s economic and social satisfaction have strong positive influence on retailer’s commitment, and surprisingly, the retailer’s social satisfaction is more influential on its commitment than retailer’s economic satisfaction. The study also found that the strength of manufacturer’s brands enhances the relationship between retailer’s economic satisfaction and its commitment, but not the relationship between retailer’s social satisfaction and its commitment. Theoretical and managerial implications are extracted from these findings.

Highlights

There has been a notable shift in the role of retailers since 1970s from being just a distributor to being a partner in a business relationship (Pelau, 2008) because of the transformation of the production markets to customer demand markets
The results indicate that retailer’s economic and social satisfaction have strong positive influence on retailer’s commitment, and surprisingly, the retailer’s social satisfaction is more influential on its commitment than retailer’s economic satisfaction
Our study shows that retailers’ economic satisfaction and social satisfaction have a strong positive influence on their commitment to food suppliers

Summary

Introduction

There has been a notable shift in the role of retailers since 1970s from being just a distributor to being a partner in a business relationship (Pelau, 2008) because of the transformation of the production markets to customer demand markets. A notable shift in the behavior of manufacturer and retailer is noted (Pelau, 2008), urging the need to understand the retailer-manufacturer relationship and how this relationship shapes the retailer’s satisfaction and commitment toward the manufacturer. Securing and maintaining retailer’s commitment is a core strategy employed by manufacturers. This is because commitment is viewed as the fundamental characteristic to any successful relationship with the desire for long-term benefits (Morgan & Hunt, 1994), such as, ensuring retailer’s shelf space for the products of the manufacturer (Amrouche & Zaccour, 2007). Many recent studies examined commitment as a consequence of overall relationship satisfaction (e.g., Davis-Sramek, Mentzer, & Stank, 2008; Sharma & Paul, 2000), but very little research has addressed commitment as a consequence of economic and social satisfaction (Goaill, Selvan, & Nor Azila, 2013)

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Results

Discussion

Conclusion