How Fair Is It? The Distributor’s View in Channel Collaborations

How to better motivate the distributor’s participation in channel collaborations is an ongoing concern for manufacturers. Previous research suggests that distributor participation is influenced by two types of variables: economic incentives and dependence dynamics. This study extends past research by investigating the role of fairness in affecting participation and long-term relationships. The contingent effect of fairness is observed along varying levels of distributor dependence. On the basis of a naturally occurred program, the authors collected data from a focal manufacturer’s distribution channel. The results indicate that (1) the distributor’s fairness perception has significant impacts on both compliance and relational outcomes; (2) the efficacy of fairness reduces as the distributor’s dependence on the manufacturer increases; and (3) the effect of economic incentives is strengthened as the distributor’s dependence increases. The authors discuss the theoretical and managerial implications of the study findings.