The Buyer's Perspective on Transaction Costs and Relational Norms in the Distribution Channel: Prepositions for Research

Abstract

Some understanding and form of inter‐organisation management is necessary and desirable if a channel is to maintain or achieve satisfactory performance as a competitive entity (Stern and El‐Ansary 1992). Although this view is not novel (of. Alderson 1954,1957), it has not been the subject of extensive research (Frazier 1983), and interorganisational coordination in distribution channels has perhaps received less focus as a survival requirement (Dwyer and Oh 1988) than it deserves. Stern and El‐Ansary (1992) seem to reflect traditional points of view when stating that power is the major means available to achieve coordination and co‐operation among channel members. Power, however, gives rise to channel dependence and interdependence issues, (of. Pfeffer and Salancik 1978; Gaski 1984; Brown, Lusch and Muehling 1983), and issues of interorganisational governance mechanisms which for some years have also interested institutional economists, (of. Williamson 1993, 1991, 1986, 1981, 1975, Ouchi 1980) and economic sociologists, (of. Granovetter, 1985, Granovetter and Swedberg 1992). The marketing literature (of. Heide and John 1992; 1990; 1988) has questioned Williamson's somewhat simplistic treatment of opportunism as an underlying behavioural norm, central as this is to his transaction cost paradigm. Since Heide and John's [1992] work on the role of norms in marketing relationships, there is a distinct possibility that insufficient further research has been done in order to allow comparisons of their findings with those of other studies that differ with regard to cultures, settings, and time periods. Maintaining focus on the transaction between dyadic exchange partners as a fundamental activity in marketing channels (of. Achrol, Stern, and Reve 1983), the objectives of this article are to examine the existence or otherwise of relational norms between dyadic exchange partners serving as a governance mechanism safeguarding against opportunistic behaviour in the presence of transaction‐specific assets. The work of Heide and John [1992] shed much light on this, but examined the dyad from the perspective of a strong buyer facing a large number of small suppliers. We will focus on a strong supplier, facing a large number of small buyers, currently, but not indefinitely, bound to it by legislation and contract. The perspective adopted will be that of many small buyers (phar‐macies) from a monopolistic ethical drug wholesaler, at the time of dismantling of a statutory wholesale drug monopoly in Norway.

Citation

Bakkeland, G. and Berthon, P.R. (1997), "The Buyer's Perspective on Transaction Costs and Relational Norms in the Distribution Channel: Prepositions for Research", Management Research News, Vol. 20 No. 5, pp. 1-14. https://doi.org/10.1108/eb028560