Channel Conflict Research Articles

Robert F. Lusch: Mentor, Collaborator, and Colleague

The author reviews his relationship with Professor Robert F. Lusch, including joint research with some of their doctoral students. Their work addressed questions pertaining to marketing channel power and dependence, channel conflict, and channel member satisfaction as well as contracting among channel member firms.

Supplier Encroachment in the Supply Chain in the E-Commerce Age: A Systematic Literature Review

The evolution of e-commerce drives suppliers to develop online direct selling channels to encroach on the retail market, in addition to the traditional distribution channels through the retailer. A systematic literature review (SLR) approach is adopted in this paper to review the existing studies using theoretical models to capture supplier encroachment behavior, as well as the related industry practice phenomena and strategic factors in the supply chain. We present the major research streams according to the selected encroachment literature from two aspects: channel conflict and coordination as well as information structures. We also generalize the significant practical strategies and strategic factors that have been investigated, combined with supplier encroachment, such as investment and spillover effects, the retailer’s store brand introduction, strategic inventory, and contract mechanism designs. More importantly, we summarize the classical theoretical models which include the basic models, the signaling game model, and the Hotelling model, and these have been widely used by scholars to capture the supplier’s encroachment behavior. Finally, we provide several suggestions which may be valuable for researchers to identify future potential research directions.

Vertical Channel Conflict Coordination Strategy of e-Commerce Supply Chain under Platform Brand Empowerment

We develop a game model for a supply chain consisting of one e-commerce platform, one supplier from other channels, and one retailer. The platform has a well-known brand that can influence consumers’ purchase decisions, and it provides good-quality products with high prices, while supplier from other channels provides cheaper products but possibly with low quality, and there may even be some serious quality problems, sometimes leading to serious problems such as “free-riding” behavior by the retailer and reducing the profits of the supply chain members. First, we study the decisions of platform and retailer under centralized decision (CD) scenario, decentralized decision (DD) scenario, cost sharing contract (CS) scenario, and minimum order quantity contract (QC) scenario. Second, we found that channel conflicts have a negative impact on supply chain members under DD scenario; however, CS and QC scenarios can make the optimal empowerment level of platform the same as CD scenario and encourage retailer to order more products from platform. Finally, the improvement effect in QC and CS scenarios is affected by the substitutability of the two products, the coefficient of empowerment cost, and the reaction coefficient of product price on goodwill. Furthermore, we found that under QC scenario, only within an appropriate range can the platform and the retailer achieve a win-win situation.

The reflection of competition and coordination on organic agribusiness supply chains

Given the social, environmental, and economic advantages of organic products compared to their conventional counterparts, there has been a growing interest in improving agribusiness sustainability through organic farming technology. However, less attention has been paid to developing analytical models to resolve challenges observed in organic supply chains. This study analytically explores competition- and coordination-based scenarios driving conventional and organic markets under contract farming mechanisms. Motivated by real-world practices, we investigate a three-party agricultural supply chain consisting of an agribusiness enterprise, an organic farmer, and a conventional farmer, where the farmers’ products are imperfect substitutes. First, we develop analytical models to derive closed-form optimal solutions under the traditional contract farming, where the agribusiness enterprise as the Stackelberg leader offers the guaranteed wholesale price and the farmers, as the followers, set their production quantity. We examine the problem by incorporating the specific features of organic farming, including organic price premium, crop yield gap, and organic cost factor into the model. We also conduct sensitivity analyses to explore the effects of competition and main characteristics of organic farming on the farmers’ and agribusiness enterprise’s optimal strategies. Meanwhile, we analytically compare and contrast the optimal traditional contract farming strategies with those under the centralized setting as a benchmark. Finally, we propose a coordinated version of contract farming named synergistic trilateral contract farming to convince the members to move towards centralization. The proposed contract not only benefits all the members by resolving both horizontal and vertical channel conflicts but also motivates the consumption of organic produce in the market. The societal measures in the investigated framework, including consumer surplus and social welfare, also improve when the supply chain members move towards coordination. Additionally, our results highlight the impact of organic farming parameters on quantity- and pricing-based decisions across the network.

Implications of Contract-Bargaining Mechanisms for Coordination and Profit Sharing in a Distribution Channel

The present work models a three-level distribution channel that has a manufacturer, multiple distributors, and multiple retailers under each distributor to analyze channel members’ cooperative, semicooperative, and noncooperative decisions for an arbitrary replenishment cycle other than the first in the infinite time horizon. It uses two sequential bargaining processes: forward contract-bargaining (FCB) and backward contract-bargaining (BCB) to eliminate channel conflict and allocate additional profit among channel members. We successfully implement a hybrid contract mechanism that combines wholesale price discount (WPD) and subsidy on holding cost for channel coordination. The concept of Nash bargaining is applied for additional profit sharing. The proposed hybrid contract can fully coordinate the tree-like supply chain and enrich the entire profit of the supply chain at its best. The manufacturer provides WPD to each distributor separately, and each distributor provides a subsidy to each of its retailers independently. Both the sequential bargaining processes are designed in such a way that an upstream channel member always has the opportunity to account for different reservations for its different downstream members. Although each bargaining process eliminates the channel conflict, finds win-win ranges, and distributes surplus profit, the distributors prefer BCB, whereas the manufacturer and the retailers prefer the FCB. Also, without receiving WPD, the distributors have the ability to coordinate the supply chain and find win-win profits by subsidizing the retailers’ holding costs. A numerical case is presented to explain the findings of the work.

Inventory model for sustainable operations of a closed-loop supply chain: Role of a third-party refurbisher

This paper investigates the joint decision on inventory and refurbishing strategies in a closed-loop supply chain, consisting of a manufacturer responsible for the production and first-market sales and a third-party refurbisher responsible for the refurbishment and second market. Based on a game-theoretic model, we investigate the effects of supply chain structures on the production operations, sales price of a refurbished product, profits and environmental performance. Through numerical analyses, we reveal that the integrated system yields higher first-market sales and a larger production lot size, while the decentralized one shows higher second-market sales and a larger refurbishing lot. Interestingly, the integrated system sets the higher price for the refurbished item due to channel conflict issues. Efforts to increase the second-market sales can harm the overall supply chain profit by leading to the decrease in the higher-margin first-market sales. We also show that the difference in pricing decisions and inventory holding cost components allows a better operational performance of the third-party refurbisher's process in the decentralized system. Then, it leads to the better environmental performance in the decentralized system, enhancing the refurbishing rate and sales of refurbished items while reducing scrap costs. By investigating the overall performance of integrated and decentralized supply chains, we offer important implications to practicing supply chain managers by revealing how the third-party refurbisher can help the sustainable operations of a closed-loop supply chain. We also contribute to the body of knowledge by incorporating pricing and lot sizing issues into the context of closed-loop supply chain management.

Unintended CSR Violation Caused by Online Recommendation

This paper investigates whether online recommendation of products that exhibit corporate social responsibility (CSR) penalizes the purchase intention of non-CSR products. When consumers browse online retail stores and consider buying a particular product, online recommendation is made (e.g., “Customers who viewed this item also viewed”). This recommendation is often made between products of which attributes have a trade-off relationship (e.g., CSR vs. price). (A trade-off is where one thing increases, and another must decrease. A trade-off relationship between CSR and price suggests a pair of competing products are available: a more expensive, CSR product and an economical, non-CSR product.) We borrowed from the psychological literature of evaluability to hypothesize that when a CSR product is recommended, consumers would decrease their purchase intention of the economical product. However, when an economical product is recommended, consumers would maintain their purchase intention of the CSR product. We further hypothesized that this asymmetric effect would disappear when reinforcement information regarding the CSR is provided. Two carefully designed experiments conducted in China supported these hypotheses. Our findings contribute to the growing literature on online retailers by elucidating the psychological impact of online recommendations, which may influence manufacturers’ sales in an unexpected manner. The findings also indicate that online recommendations could be a potential source of channel conflict. While this study newly verifies the unintended CSR violation effect of online recommendations, future studies are required to expand our understanding of the CSR violation effect by investigating the effect under the trade-off relationship with other attributes of the product.

A parallel joint optimized relay selection protocol for wake-up radio enabled WSNs

Conflicts in the data transmission lead to a serious waste of energy, so it is pivotal to design a parallel and less conflict communication protocol for sensing nodes with limited energy. In this paper, a Parallel joint Optimized Relay Selection (PORS) protocol is proposed to reduce collision, delay as well as energy consumption for wake-up radio enabled WSNs. First, the basic Consecutive Packet Transmissions (CPT) method is adopted by PORS protocol. In this method, once a node obtains the channel, its data packets are sent continuously at once, and other nodes go to sleep in this period to reduce channel conflicts and save energy. Then, two thresholds namely maximum waiting queue length and waiting time are set for each node. When the data packets of the node do not meet the threshold, it keeps silent to reduce channel conflicts, and accumulates more packets to increase the number of data packets sent at once, thereby improving energy efficiency. Furthermore, a relay node selection approach is proposed by comprehensively considering factors such as the number of data packets, waiting time, and remaining energy. Those nodes that have many packets, long waiting time, and a large amount of remaining energy are more likely to be selected as relay nodes, so that they can receive more data packets in a short time and meet the threshold requirements as soon as possible. While the other nodes try not to obtain data and keep silent on the channel, thus reducing the collision as well as delay. Finally, the threshold values of nodes in adjacent layers differ by a constant. Thus, the crossing nodes of adjacent layers can transmit data in parallel to reduce the collision and delay Comprehensive analysis and experimental results demonstrate that the average energy consumption is reduced by 11.9%, network lifetime is increased by 26.1%, and network delay is reduced by 35.6% compared with the strategy with the fixed relaying nodes.

Factors Affecting Channel Conflicts in the Value Chain of FMCG Sector

Marketing channels are a set of interdependent organizations involved in the process of making a product or service available to customers/consumers, for use or consumption. The channel members in a marketing channel include companies, distributors, wholesalers, retailers and customers. Channel conflict is when a member of the distribution channel perceives another member to be engaged in behaviour that negatively impacts the attainment of its goals. Marketing channel conflicts are of different types and there are vast variations in their intensity and scale. This study, therefore, aims to ascertain the factors that cause channel conflicts in the supply chain of the Fast-Moving Consumer Goods (FMCG) sector and their impact on the overall supply chain of their marketing. The study considers a wide variety of FMCG products such as processed foods, baked goods, fresh, frozen and dry goods, medicines, cleaning products, and office supplies. The geographical boundary of this study is the south Indian state of Kerala.A qualitative methodology is used in the study by conducting in-depth interviews of the different channel members in the supply chain of FMCG sector in Kerala. The Quota-sampling method was used to identify the sample to be interviewed. Further, a correlation and regression analysis are done to understand the most influential factors in marketing channel conflicts. The findings of the study revealed that the major factors causing channel conflicts, were damaged goods, late deliveries, miscommunication, poor packaging, very low margin etc. The study found that managing channel conflicts will ensure a more efficient value chain that will reduce the overall costs incurred by the channel members. The study aims to identify measures to tackle channel conflicts in the supply chain of FMCG sector and enhance its value.

Dual‐Channel Distribution: The Case for Cost Information Asymmetry

Dual channel distribution benefits upstream manufacturers but may irritate downstream retailers. The channel conflict only seems to aggravate when retailers are put at information disadvantage. We show this need not be the case. (i) We demonstrate upstream private information can improve channel efficiency and consumer surplus. The main mechanism is the offsetting interplay of signaling distortion and double marginalization: with private selling cost, the manufacturer may signal her cost by cutting the wholesale price; the price cut encourages the retailer to buy more, thereby reducing double marginalization and improving channel efficiency. (ii) We qualify the received wisdom. The general insight that cost information asymmetry reduces efficiency does not work in dual‐channel settings. We show incorporating cost information asymmetry can change dual‐channel equilibrium substantially—it can turn the retailer and channel from the victims of manufacturer encroachment to its beneficiaries. Also, we rationalize why the retailer can benefit from his information disadvantage, and when he can gain from the manufacturer’s selling cost improvement, despite retail competition. (iii) We demonstrate our results are robust for other prevailing arrangements, for example, two‐part tariffs, price competition, imperfect substitution, and simultaneous moves. Our results suggest a more nuanced view of manufacturer encroachment: as private cost information can ease channel conflict and improve consumer surplus, previous studies may have overestimated the harm of encroachment. By highlighting the critical role of cost information asymmetry, this study sharpens our understanding of dual‐channel theory and practice.

Challenge or opportunity? A case of tire rental servitization from financial and channel perspectives

Using a case study of a Korean tire manufacturing firm that became a tire rental servitization provider during 2015–2019, this study disentangles revenue and cost implications and highlights moderating factors (i.e., the internal and external channel conflicts) that hinder firm performance. The study mitigates the inherent time lags of the firm’s product and service portfolio variables and analyzes financial data. The servitization and non-servitization revenue streams are independent and non-cannibalizing. Initial profitability is small, given the operational costs increase with the service growth. Internal organizational change affects servitization performance, challenging manufacturing firms to maintain servitization profitability.

Coordination Mechanism of Dual-Channel Supply Chains Considering Retailer Innovation Inputs

In response to the online channels established by manufacturers, physical retailers are starting to offer innovative services, which will intensify conflicts between manufacturers and retailers. Considering that the conflict will affect the operation efficiency and sustainable development of the supply chain, the coordination mechanism of a dual-channel supply chain has been established. In this study, we construct the Stackelberg game model based on consumer utility theory to analyze the complex mechanism of retailers’ innovation input level affecting supply chain operation and design the double coordination mechanism. The results show that: (1) an optimal combination of wholesale prices, retail prices and innovation input levels can optimize the operational efficiency of the supply chain, (2) Noncooperation among channel members affects the retailer’s product pricing, decreases the market share of the physical channel and increases the market demand of manufacturers, (3) The dual coordination mechanism can alleviate channel conflicts, which can improve the operational efficiency of the supply chain. This study provides several insights on the theory of organizational coordination and sustainable development in conflicts of dual-channel supply chains.

Could the E-Commerce Platform’s Big Data Analytics Ease the Channel Conflict From Manufacturer Encroachment? An Analysis Based on Information Sharing and Risk Preference

Big data technology and analytics makes the e-commerce platform obtain more accurate demand information from large-scale customer data. In this paper, we consider a dual-channel supply chain including a manufacturer with risk preference, a traditional retailer, and an e-commerce platform in which the manufacturer adopts an encroachment strategy, adding a direct channel through the e-commerce platform beside the ex-traditional channel. The game model approach is used to analyze the intention of the e-commerce platform's information sharing with the manufacturer and the impact of demand-information sharing on the channel conflict brought by manufacturer encroachment. The results show the manufacturer's encroachment strategy always creates channel conflict. The e-commerce platform is always glad to share its demand information with the online manufacturer, for the information value must be realized through the online transaction. More important, whether the demand information could ease the channel conflicts brought by manufacturer encroachment depends on the degree of the manufacturer's risk aversion, fluctuation of market demand, and the accuracy of the demand information. When the fluctuation of market demand is fixed, the demand information will ease the channel conflicts if the manufacturer is risk-neutral but increase the conflicts if the manufacturer is risk-averse. At the same time, we also find that the manufacturer's risk-aversion level can ease the channel conflicts. The higher the manufacturer's risk aversion, the more he relies on the traditional channel. When the manufacturer's risk aversion level reaches a certain point, manufacturer encroachment may even produce a “win-win” situation for the manufacturer and retailer in some conditions.

Manufacturer’s channel selection in a capital-constrained supply chain under bargaining game

In the context of a capital-constrained supply chain, we examine how a direct channel added by a manufacturer influences the players’ optimal decisions and profits under bargaining game. The capital-constrained retailer adopts a type of hybrid financing scheme including bank credit and equity financing to alleviate its capital shortage. We characterize the equilibrium results under different sales channels, and examine the impacts of the bank loans ratio and bargaining power on the players’ optimal decisions. The conditions of the equilibrium channel choices are derived. We find that if the retailer’s bank loans ratio in the retail channel is beyond a certain threshold, a dual-channel structure can enhance the profits of the manufacturer and supply chain. The retailer, however, will benefit from the direct channel when its bank loans ratio in the retail channel is below a certain threshold. We further demonstrate that a dual-channel structure can reduce the degree of double marginalization of the overall supply chain. In addition, to solve the potential channel conflict, a bilateral payment mechanism is developed to achieve Pareto improvement for both players. Numerical examples are included to illustrate the major results of the paper.

Influence of marketing channel conflicts on channel innovation capability: the mediating role of channel cohesion and the moderating role of channel network structure

PurposeIn this paper, extending the research on the positive effects of marketing channel conflicts, this paper aims to examine how functional and dysfunctional conflicts influence channel innovation capability by triggering channel cohesion and investigate the moderating role of a distributor’s network structure.Design/methodology/approachBased on social network theory and Coser’s conflict theory, this paper develops a framework, tested using Chinese manufacturers’ data, which incorporated six key variables, namely, functional conflict, dysfunctional conflict, channel cohesion, channel innovation capability, network density and network centrality.FindingsThe empirical results revealed that functional conflict can arouse channel cohesion and that distributor network density and centrality positively moderates this relationship; dysfunctional conflict negatively affects channel cohesion, but distributor network density negatively moderates this relationship; channel cohesion had a mediating effect on the relationship between channel conflict and channel innovation capability.Originality/valueThis paper contributes to the research on channel conflict by incorporating the entire channel system’s innovation capability as a positive consequence of channel conflict and expands the channel conflict literature that adopts a network structure perspective.

Conflict and performance in channels: a meta-analysis.

Conflict between channel members is of great interest to marketers given its presumed negative impact on the channel’s business performance. In a comprehensive meta-analysis of the empirical literature spanning six decades between 1960 and 2020, we observe channel performance is indeed negatively linked to channel conflict. However, we find that this conflict–performance link has evolved significantly over time, roughly in keeping with the growth and maturing of e-commerce technologies. Further, the damage caused by conflict appears to be more pronounced for channels with international operations, and for channels with greater dependency between channel members. Additionally, businesses in North America seem to suffer the consequences of channel conflict more than others. Our results also show several study characteristics related to measurement and sampling significantly impact the empirical conflict–performance links reported in the literature. We base our conclusions on correlational analyses, two-stage meta-analytic structural equation modeling (TSSEM), and meta-analytic regression analyses (MARA).Supplementary InformationThe online version of this article (10.1007/s11747-020-00751-1) contains supplementary material, which is available to authorized users.

The effect of subscription-based direct-to-consumer channel additions on firm value

Technological advancements have made it easier for firms to bypass traditional distribution networks and establish subscription-based direct-to-consumer (SBDTC) channels. Despite their growing popularity, little is known about the effectiveness of these channels. However, pursuing these new channels may not be the best decision for firms even though technology allows it and, in some instances, consumers demand it. Results from an event study of SBDTC channel additions in the cable television industry show that they complicate channel relationships and can lead to conflict, which reduce firm value. Further analysis reveals that firm-specific characteristics and strategic execution factors operate to mitigate the loss in firm value. Specifically, the study results show that channel power diminishes the negative impact of channel conflict, suggesting that firms with greater channel power benefit from adding SBDTC channels. The study also finds that firms marketing high-quality, differentiated offerings are rewarded with more favorable firm valuations.

Dual Channel Distribution: The Case for Cost Information Asymmetry

Dual channel distribution benefits upstream manufacturers but may irritate downstream retailers. The channel conflict only seems to aggravate when retailers are put at information disadvantage. We show this need not be the case. (i) We demonstrate upstream private information can improve channel efficiency and consumer surplus. The main mechanism is the offsetting interplay of signaling distortion and double marginalization: with private selling cost, the manufacturer may signal her cost by cutting the wholesale price; the price cut encourages the retailer to buy more, thereby reducing double marginalization and improving channel efficiency. (ii) We qualify the received wisdom. The general insight that cost information asymmetry reduces efficiency does not work in dual-channel settings. We show incorporating cost information asymmetry can change dual-channel equilibrium substantially — it can turn the retailer and channel from the victims of manufacturer encroachment to its beneficiaries. Also, we rationalize why the retailer can benefit from his information disadvantage, and when he can gain from the manufacturer's selling cost improvement, despite retail competition. (iii) We demonstrate our results are robust for other prevailing arrangements, e.g., two-part tariffs, price competition, imperfect substitution, and simultaneous moves. Our results suggest a more nuanced view of manufacturer encroachment: as private cost information can ease channel conflict and improve consumer surplus, previous studies may have overestimated the harm of encroachment. By highlighting the critical role of cost information asymmetry, this study sharpens our understanding of dual-channel theory and practice.

Collection disruption management and channel coordination in a socially concerned closed-loop supply chain: A game theory approach

Uncertainty in real-world situations disrupts operations, including the collection process in closed-loop supply chains (CLSCs). A collection disruption is more critical in the pharmaceutical sector since pharmaceutical leftovers contain chemicals that threaten the environment and human health. This paper revolves around the challenges of a real pharmaceutical case that implements circular economy principles through a closed-loop system design, takes sustainability issues into account, and seeks for effective management of collection disruption. The case includes a manufacturer, who invests in green research and development (R&D), and two retailers competing on corporate social responsibility (CSR) efforts to boost the collection amount and market demand. This competitive environment raises conflict of interests and complicates the interactions between members, which need to be neutralized by an appropriate coordination plan. This paper proposes an analytical scenario-based coordination model that resolves channel conflicts and pays dividends to the involving members through augmenting their social, economic, and environmental performance. We show that the coordination plan could be a practical policy to increase the system’s adaptability to disruption. Under the coordinated model, by increasing a retailer’s collection disruption, the other one invests more in CSR efforts to compensate for its competitor’s lower collection, preventing loss for the whole channel. We also demonstrate that the proposed model maintains the chain’s balance and prevents loss in case of a highly competitive CSR-based collection and boosts the collection amount, market demand, and the whole chain’s profitability simultaneously.

Research on Agricultural Products Marketing Channel Conflict Governance based on Three Party Game Model

Through the analysis of the behavior between the parties in the agricultural products marketing channel conflict, this paper constructs three-party-game model of the Agricultural-product Market Association (AMA), the farmer and the leading enterprise using the evolutionary game method, and then the equilibrium point is obtained. Based on the equilibrium point, this paper finds that the possibility of reconciliation chosen by the farmer and the leading enterprise depends on the cost of the mediation, the possibility of successfully mediate through AMA and the loss of not choosing reconciliation which should be bored by the farmer and leading enterprise. In addition, in view of the limitation of the regional distribution of AMA in China, this paper introduces another party-Farmer Professional Cooperatives (FPC), and then forms the effective path of channel conflict management.