The Performance Implications of Designing Multiple Channels to Fit with Strategy and Environment

Abstract

Applying a configuration-theoretic approach to study multiple channels, the authors hypothesize that multiple-channel systems make their greatest contributions to firm performance when their structures are properly aligned with their firms' business-level strategies and with environmental conditions. A conceptual model incorporating these variables is supported in an empirical study of responses from executives at 291 electronic component manufacturers. The results confirm the existence of two theoretically ideal configurations. As hypothesized, channels in these ideal configurations make greater contributions to their firms' performance than do channels in alternative configurations. Moreover, a profile deviation analysis shows that a channel system's contribution to its firm's performance is greatest when that channel system's structural profile is closest to the profiles of top-contributing channel systems operating under similar strategic and environmental conditions. The authors present specific guidelines to help managers design distribution systems for different combinations of environment (e.g., with high and low dynamism, munificence, and diversity) and strategy (cost leadership and differentiation).