Previous research has found that process control in marketing channels sometimes leads to undesirable (i.e. crowding-out) effects such as increased opportunism, instead of desirable (i.e. disciplining) outcomes. The purpose of this study is to determine if fairness in the channel explains why this occurs and to explore some conditions as to when it happens (specifically, perceptions of the legitimacy of process control and the extent of output control).
Based on the literature, the authors developed a conceptual model to explain the effects of process control in marketing channels. The authors then conducted an online survey of 121 marketing agents’ perceptions of their relationships with their channel principals. The conceptual model was tested using a Bayesian moderation/mediation analysis of these perceptions.
The authors found that channel agents’ perceptions of the legitimacy of their principal’s process control weaken the indirect crowding-out effects and strengthen the indirect disciplining effects of process control on agent opportunism. This study also shows that the principal’s output control weakens both the direct crowding-out effects and the indirect disciplining impact of their process control on agent opportunistic behavior.
The authors find that fairness in marketing channels mediates the effects of process control on opportunism and that process control’s effects are contingent upon perceptions of its legitimacy and the extent to which output control is also used.
This research shows that marketing channel managers can mitigate the crowding-out effects of process control by emphasizing the fairness of their procedures and distribution of rewards. Building perceptions of the legitimacy of their process control efforts and constraining output control activities to moderate levels can also help managers limit the crowding-out effects of process control.
This study represents an initial attempt to understand why process control does not always work as desired in marketing channels. This study is the first, to the best of the authors’ knowledge, to investigate the perceptions of the legitimacy of process control as a condition underlying these undesired effects. Research into other possible explanations and likely conditions for these effects is needed.
