A Study On Manufacturer's Use Of Power In China Marketing Channels

Nowadays, channel relationship management has become a key problem in marketing research. Many companies begin to view channel members as their partnership and focus on establishing and maintaining lasting, stable exchange relationship with them. It is very difficult for them to establish lasting and stable relationship, because channel members' attitudes and objectives are not compatible. Effective approach to solve the question is that manufactures use appropriate governance mechanisms. Among these mechanisms, power use is an important mechanism which can maintain and coordinate successful exchange relationships. A few across-culture power studies show culture is a significant factor influencing power use of channel members. Considering Chinese culture is very different from western culture, channel power theory and its relevant results cannot be put into China's practice. The only method to solve this problem is adjusting western theory based on China's practice.In China channel, Power between manufacturers and downstream members has changed. Dependence of manufacturers on downstream members increases, moreover dependence of downstream members on manufacturers weakens. Both sides tend to use coercive power for the sake of changing or maintaining established interest distribution. How domestic manufacturers use their power to maintain relationship and accomplish their value or performance is an emphasis of this paper. The dissertation is organized in the following three questions:(1)How does it categorize these strategies which the domestic manufacturer often use?(2)Which antecedent is the most important factor to influence manufacturers' selection on power strategies? What is the relationship between these antecedents and power strategies' exercise? (3)Which can ensue from manufacturers' power use?The first question is solved in the dissertation's third chapter. After the interview with some manufactures and dealers in many industries, this paper has identified four strategies which are used frequently by manufactures in China, including threat, promise, information exchange, suggestion. Based on academic analysis and the interview, this paper distinguishes two kinds of power strategies: coercive and non-coercive. The former includes threat and promise, the latter is composed of information exchange and suggestion. CFA have proved bilateral-dimension structure of power strategies.The second question is solved in the dissertation's fourth chapter. Recently, marketing scholars have highlighted the importance of power structure on manufacturers' using power. They also have examined the effect of power structure on dealer's attitudes and behavior. But so far the issues have not been examined in countries with different cultural values. The cultural difference between China and western countries can lead to the diverse impact of power usage on the other relationship constructs, and make enterprise use distinct power strategies in the same conditions. In China, people pay more attention to interpersonal relationship, because it has the most important impact on economic activities. Personal guanxi between manufacturer's and dealer's boundary personnel may influence the choice of manufacturer power strategies and the other relationship constructs. So the chapter views power structure and personal guanxi as the important antecedents that can influence the choice of power strategies, presents hypothesis between these antecedents and power usage.The third question is solved in the dissertation's fifth and sixth chapter. The majority of extant channel literature investigates the relationship between power usage and some behavioral variables such as conflict, satisfaction, trust, commitment and so on, but, in certain extent, overlooks channel performance about which practitioners are concerned. Author uses compliance and emotional commitment as qualitative channel outcomes of power use, uses channel performance as quantitative channel outcomes of power use. Given the measure deficiency, this paper uses relationship value as predictor of channel performance measure, fully reflecting the impact and role of power exercise on channel relationship. Then author adopts attitude change theory and organismic integration theory to develop hypothesis associating power usage with compliance and emotional commitment, uses cognitive evaluation theory to develop hypothesis associating power usage with relationship value. In the meantime, author also investigates the relationship between antecedents and power outcomes, which can help compare the effect of power structure and power use on outcome variables.The seventh chapter is an empirical research part. Author uses multiple linear regression analysis and SEM model to test hypothesis among antecedents, power use and power outcomes.As for research methodology, this dissertation use qualitative analysis and quantitative analysis. For the sake of getting a rational result, besides retrieving former research document and systematic analysis, author also uses software (SPSS 13.0, LISREL8.50), interview and questionnaire investigation for empirical study.Based on empirical research, the main conclusions are as follows:First, the different antecedents have the diverse impact on the choice of power strategies. With the increasing total power, manufacturers will increase the use of non-coercive and coercive strategies; with the increasing power asymmetry, manufacturers will have a decreasing tendency to use non-coercive strategies; well personal guanxi will restrain manufacturers from using coercive strategies towards their dealers.Second, the type of power strategies applied by manufacturer has different influence on power outcomes. Non-coercive strategies used by manufacturers can increase dealer compliance and value gained from the relationship, but has no direct and only small indirect influence on emotional commitment. Coercive strategies used by manufacturers decrease value gained by dealers from the relationship, but has insignificant influence on relational behaviors. So channel member should regard non-coercive strategies as the main way to control marketing channel.Third, power is an important mechanism to coordinate channel relationship. Power has more influence on power outcomes than power usage. Some scholars in relationship marketing have criticized power as having negative effects on channel relationships. Empirical research demonstrates the viewpoint is not correct, and power is still an important coordination mechanism. Because of negative effect between power asymmetry and power outcomes, channel member should avoid the formation of high power asymmetry. In order to balance power gap between the members, channel member should take steps to increase its own and partner's power.Fourth, Personal guanxi is an important variable which can influence power use and outcomes in marketing channel. Well personal guanxi can increase dealer compliance, lead to high emotional commitment, hinder from using coercive strategies, promote relationship value that dealers gain by intervening variables such as coercive strategies, compliance. So channel member should encourage its boundary personnel to establish well personal guanxi with other member's related personnel.Fifth, final objective of channel relationship management should maximize the relationship value, not seeking for high quality relationship. Although many researchers holds that high commitment can bring about high performance for both parties, this research suggests emotional commitment has insignificant effect on relationship value, even leads to certain negative effect.The innovation of this paper's work and its conclusions includes four aspects: (1)this paper puts forward and test bilateral-dimension structure of power strategies in China marketing channel. (2)this paper explicitly focuses on relationship constructs at both the firm level and the interpersonal level, as well as categorizes personal guanxi, identifies two types of guanxi, and tests the impact of power structure, personal guanxi on the choice of power strategies, power outcomes. At the same time, brings forward and tests the mediated effect between personal guanxi and total power or power asymmetry on the choice of power strategies. (3)this paper integrates channel performance into analysis framework of power use, brings forward a new view of channel performance--values, and designates relationship value as the predictor of performance measure. This paper tests the influence of relationship value from these aspects, including compliance, emotional commitment, power use and so on.(4)this paper establishes a systemic framework for exercises of power of manufacturer, including identification and taxonomy of power strategies used by manufacturers, the choice of power strategies and power outcomes. This paper puts forward and tests the view that power use has a direct and indirect influence on channel performance, and compares the effect of power structure on power outcomes with the impact of power use on power outcomes.