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Governing relationships: the direct and interactive role of perceived fairness in distribution channels

Sandip Trada (Institute of Management, Nirma University, Ahmedabad, India)
Baljeet Singh (Indian Institute of Management Jammu, Jammu, India)

International Journal of Retail & Distribution Management

ISSN: 0959-0552

Article publication date: 26 December 2024

39

Abstract

Purpose

This research aims to analyse the potential role of perceived fairness as a complete governance mechanism in distribution channels. In doing so, this study examines the direct impact of perceived fairness on governance costs and its interactive effect on the driver (i.e. relationship-specific investments (RSIs) and deterrent (i.e. communication) of suppliers’ governance costs.

Design/methodology/approach

This research used a structural modelling approach to analyse the matched data collected from 241 pharmaceutical suppliers and distributors and test the proposed model.

Findings

The findings reveal that perceived fairness directly reduces governance costs in distribution channels. Further, they suggest that perceived fairness weakens the positive impact of suppliers’ RSIs and strengthens the negative effects of communication on suppliers’ governance costs.

Research limitations/implications

This study suggests that perceived fairness is a novel and effective way to govern distribution channels. These findings provide a holistic understanding of how perceived fairness reduces governance costs, directly and indirectly.

Practical implications

The findings suggest managers should design fair channel policies and train sales personnel to emphasise fairness during channel interactions. This would foster an equitable channel climate that safeguards investments and reduces governance efforts.

Originality/value

Prior literature has mostly overlooked the potential role of perceived fairness in distribution channels; however, this study addresses this gap and highlights the dual role of perceived fairness in channel governance.

Keywords

Citation

Trada, S. and Singh, B. (2024), "Governing relationships: the direct and interactive role of perceived fairness in distribution channels", International Journal of Retail & Distribution Management, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJRDM-12-2023-0695

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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