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This is to certify that the

dissertation entitled

INFORMATION UTILIZATION IN THE MARKETING CHANNEL DYAD:
ASSESSING THE EFFECTS OF RELATIONAL CHARACTERISTICS

presented by

Joseph I. Scuily

has been accepted towards fulfillment
of the requirements for

Ph.D. degree in Marketing

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INFORMATION UTILIZATION IN THE MARKETING CHANNEL DYAD:

ASSESSING THE EFFECTS OF RELATIONAL CHARACTERISTICS

By

Joseph I. Scully

A DISSERTATION

Submitted to
Michigan State University
in partial fulﬁllment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of Marketing

1995

ABSTRACT
INFORMATION UTILIZATION IN THE MARKETING CHANNEL DYAD:
ASSESSING THE EFFECTS OF RELATIONAL CHARACTERISTICS
BY

Joseph I. Scully

In a business environment characterized by continued globalization and rapid
advances in information technology. sustainable advantage is becoming less a
matter of obtaining timely, credible information and more a matter of effectively
utilizing information. Despite the quantities of information that ﬁrms receive from
partners in the marketing channel, and that information’s critical importance in
inﬂuencing strategies and decisions, little attention has been paid to how ﬁrms utilize
information provided by their channel partners.

This dissertation synthesizes the literature on information utilization in the
areas of market research utilization, the marketing-R80 interface, and marketing
plan utilization. Subsequently, it develops a microeconomic and transaction costs
model to study research questions concerning how a ﬁrm’s utilization of information
received from a channel partner is inﬂuenced by relational characteristics such as
satisfaction with prior general and informational outcomes, operational and boundary

spanning cooperation, trust in credibility, trust in benevolence, and expectations of

continuity.

Joseph I. Scully
The unit of analysis is a “critical incident“ report provided by the supplier on
how shelving management can be improved through the use of Direct Product
Proﬁtability (DPP), planogramming, or other shelving set up methods. Using EQS,
the model was tested on a sample of 301 grocery supplier-grocery chain dyads.
Results of the study indicate that trust in credibility and boundary spanning
cooperation directly affected information utilization, whereas operational cooperation,
satisfaction with prior general outcomes, and satisfaction with prior informational
outcomes had indirect effects. These research ﬁndings are compared and
contrasted with those from previous research. Managerial implications concerning
how to enhance a channel partner’s use of information are discussed, as are

directions for future research.

Copyright by
JOSEPH l. SCULLY

1995

ACKNOWLEDGMENTS

This study could not have been completed without the help and support of a
number of individuals. I owe the greatest debt to Dr. M. Bixby Cooper, who
encouraged and guided me at every stage of the dissertation. His contribution to my
personal and professional development and his strong personal interest in my well-
being went far beyond the normal call of duty. As a researcher. dissertation advisor,
and person he will always be a role model.

I am also greatly indebted to the other three members of my dissertation
committee. I express my sincere appreciation to Dr. David J. Closs. This study
beneﬁted greatly from his valuable suggestions concerning the measurement scales
and other elements of the research methodology. I worked as Dr. Stanley E.
Fawcett’s research assistant for three years. It was one of the most positive
experiences of my life. The articles we collaborated on honed my skills and assisted
my career. He also made a strong contribution to ensuring the managerial relevance
of the dissertation study. However, his greatest lessons were ones of integrity,
courage, perseverance, family, and collegiality. Finally, Dr. William Haines made
two major contributions to this research. First, he provided valuable insights in
ensuring that the study was relevant to managers. His contribution was particularly

valuable during the pretest stage. Second, he served as Director of the Food

iv

Industry Institute at Michigan State University, which provided total ﬁnancial support
forthe research study. This support is gratefully acknowledged. All of the members
of my dissertation committee generously gave of their time when I approached them
for help.

In addition, lwish to thank Dr. Robert W. Nason and Dr. Cornelia Droge for
their encouragement, support, and assistance during various stages of my doctoral
education. A special thanks to my colleague Steve Clinton for his encouragement
and friendship. I give my gratitude to my mother Pat and my brothers Bob and
Howard for their love and support. Finally, I wish to thank my dear friends Sheryl
Schumacher and Linda Hutcheson. They have always been there for me. I am

deeply grateful for their love, encouragement, and prayer.

TABLE OF CONTENTS

Page
LIST OF TABLES ............................................... viii
LIST OF FIGURES ............................................... ix
Chapter
I. INTRODUCTION ...................................... 1
Deﬁnition of the Problem. ............................... 1
Importance of Information Utilization ....................... 2
Deﬁnitions of Information and Information Utilization .......... 4
Motivation for the Research ............................. 8
Purpose of the Research .............................. 10
Scope and Research Domain ........................... 11
Expected Contributions of the Research ................... 14
Limitations .......................................... 16
Outline of the Dissertation .............................. 16
ll. LITERATURE REVIEW ................................ 18
Information Utilization in the Marketing-R80 Interface ........ 18
Use of Marketing Research Information by Marketing
Personnel ......................................... 22
Other Marketing Articles Concerning Information
Utilization ......................................... 27
III. A CONCEPTUAL MODEL OF INFORMATION UTILI-
ZATION IN THE CHANNEL DYAD ....................... 37
A Microeconomic and Transaction Costs Model of
Information Utilization ................................ 37
Model Development .................................. 38
Speciﬁcation of Hypotheses ............................ 40

vi

Satisfaction With Prior Outcomes ....................... 40

Cooperation ....................................... 46

Trust ............................................. 49
Expectation of Continuity ............................. 50
Conclusion ......................................... 51

IV. METHODOLOGY .................................... 52
Measure Development ................................ 52

Unit of Analysis ...................................... 54
Sampling Frame ..................................... 57

Key Informant ....................................... 58

Mailing and Follow Up ................................. 59

V. RESEARCH FINDINGS ............................... 60
Final Sample ........................................ 60

Survey Response .................................... 61
Evaluation of Nonrespondents .......................... 62
Measure Puriﬁcation and Reliability ...................... 64
Evaluation of Multivariate Normality ...................... 68

Test of the Overall Model .............................. 70
Assessment of Measurement Model and Construct Reliability . . 70
Assessment of Hypotheses ............................. 74

Assessment of Hypotheses Linking Relational Constructs . . . 74
Assessment of Hypotheses Concerning Information

Utilization ........................................ 78

Summary and Conclusions ............................. 79

VI. CONCLUSIONS AND IMPLICATIONS .................... 81
Theoretical Signiﬁcance of the Research Findings ........... 81

Managerial Implications ............................... 83

Limitations .......................................... 87

Future Research Directions ............................ 89
REFERENCES ................................................. 93

vii

Table

1-1

2-4

3-1

4-1

5-I

5-4

5-5

5-6

LIST OF TABLES

Page
Menon and Wilcox’s Types of Information Utilization ................ 6
Strategic, Operational, and Tactical Types of
Information ............................................... 12
Information Utilization Articles Concerning the Marketing-
R&D Interface ............................................ 20
Articles Concerning Use of Marketing Research Information
by Marketing Personnel ..................................... 24
Other Marketing Articles Concerning Information Utilization ......... 29
Types of Variables Affecting Information Utilization ................ 34
Deﬁnition of Variables ...................................... 41
Scale Items Included in the Questionnaire ...................... 55
Response Rate Summary ................................... 61
Goodness-of-Fit Test on Distributions of the Sample and
the Sample Frame ........................................ 63
Measurement Model and Conﬁrmatory Factor Analysis by EQS ...... 65
Descriptive Statistics of Retained Scale Items .................... 69
Assessment of Structural Model by EQS ........................ 72
Ranking of Total Effects ..................................... 80

viii

LIST OF FIGURES

Figure Page
3-1 Proposed Structural Model ................................... 42
5-1 Model Results .............................................. 71

CHAPTER ONE
INTRODUCTION
“We are drowning in Information and stewed for knowledge” (Naisbett, 1984).

The motivation, objectives, purpose and scope of the research are described
in this chapter. The study was undertaken to investigate the utilization of information
in a distribution channel. First, the research problem is deﬁned. Next, information
utilization is deﬁned, and its importance is discussed. The motivation and purpose
of this research and speciﬁc research questions are identiﬁed, and the scope and
research domain for this research are set forth. The expected contributions and
limitations of the study are discussed next. An overview of the remainder of the

dissertation concludes this chapter.

1.1 Deﬂuuicnmheﬂmblem
Utilization of information received by a ﬁrm from a channel partner can
improve channel coordination and enhance the efﬁciency, proﬁtability, strategic
capability, and comparative advantage of ﬁrms in the channel. However, there are
many obstacles to effective information utilization in a marketing channel’s
environment, including difﬁculties in the channel relationship, characteristics of the

information sender and receiver, and attributes of the message and the medium.

1

2

Characteristics of the channel relationship are an important determinant of
information utilization in the marketing channel dyad. Thus, the research problem
in this study was to determine which relational characteristics signiﬁcantly affect the
utilization of information received by a ﬁrm from a channel partner. Using the results
of this research, ﬁrms can devise strategies to improve their information utilization,

and ultimately their performance.

12' I [IE I' ”IT I'

Utilization of information for decision making and knowledge base
enhancement is a critical component of a ﬁrm’s sustainable competitive advantage
and performance (Glazer 1991; Porter and Miller 1985). It can serve as a substitute
for inventory (Dudley and Lasserre 1989), a means of inﬂuencing buyers or
augmenting product value in the marketing process (Moriarty and Spekman 1984),
and a way of controlling processes and activities within the organization (Bruns and
McFarIan 1987). Information can enable a ﬁrm to produce products at lower cost,
differentiate itself from competitors, target markets, raise entry barriers, and even
change the nature of the market itself through product innovation or positioning of
the ﬁrm (Bergeron, Buteau, and Raymond 1991; McFarIan 1984; Porter 1985).

Generally speaking, information can be obtained from any source in the ﬁrrn's
environment: its own internal environment, other ﬁrms in the marketing channels
within which it operates, customers, or the macroenvironment (Achrol, Reve, and
Stern 1983). In turn, that information can be used strategically to accomplish the

goals and purposes of the ﬁrm. These purposes may include transforming the ﬁrm

3

itself, its products, or its relationships with customers or suppﬁers in order to meet
its objectives of survival, growth, efﬁciency. and control over its environment (Kumar
1991)

Continuing, rapid advances in information technology have made more and
more information readily available to ﬁrms, while at the same time requiring them to
compete in a knowledge intensive environment (Achrol 1991; Menon and
Varadarajan 1992). Competitive advantage in the marketplace is becoming less a
matter of obtaining timely, credible information and more a matter of who can
effectively utilize the information they have at hand (Moorman, Deshpande, and
Zaltman 1992; Porter and MiIIar 1985). Effective utilization involves more than
merely generating and/or gathering information. Firms must make “informational
and interpersonal investments" to evaluate the content, context, meaning, and
quality of information, and make it actionable to the immediate or long-term
decisions of the ﬁrm (Arrow 1973; Moorrnan, Zaltman, and Deshpande 1992, p.
316)

In some instances, information should not be utilized at all due to poor quality,
information overload, or other circumstance causing the gain from utilization to be
less than the cost of processing the information. In these instances, the task of the
decision maker is to make the correct decision about whether to invest in utilizing the

information (Glazer, Steckel, and Winer 1992).

4
1.3 W

Glazer (1991) deﬁned information as "data that have been organized or given
structure—that is, placed in context-and thus endowed with meaning” (p. 2). The
fundamental information problem facing a ﬁrm is to maximize its performance and
success in the face of the task uncertainty it faces. Thus. information that is
organized and meaningful to the ﬁrm will be relevant to the ﬁrm’s operations, either
by affecting decision making in the ﬁrm, or by developing management's knowledge
base for future activity. Meaningful information is also comprehensible, novel (which
Includes conﬁrmatory information where uncertainty remains in the task
environment), and credible (Gottlieb 1985; Moenaert and Souder 1990b).

All assessments of information content depend to some degree onthe context
or environment in which the assessment takes place. The value or meaning of
information comes from what one seeks to accomplish, as well as the payoff matrix
from decisions made under different information states. In this study, the general
information context comprised the channel environment and the decision makers in
the ﬁrm who determine whether and how information supplied by a channel partner
is to be used.

As Menon and Varadarajan (1992) noted, information utilization has been
described in a variety of ways. John and Martin (1984) deﬁned information utilization
as the degree to which information directly guides decisions and behavior, such as
the decision to introduce a new pricing strategy or to pursue a strategic relationship

with a vendor. Patton (1978) discussed information utilization in terms of the

5

reduCtion of uncertainty among decision makers. Thus, utilized information can be
viewed as affecting perceptibns of the decision makers’ costs and payoff matrix.
From Anderson, Ciarlo, and Brodie’s (1981) broader perspective, information may
be considered as utilized if exposure to that information results in any behavioral,
cognitive, and/or affective changes in the individual, even in the absence of an
explicit decision context.

Most empirical studies of information utilization have focused on instrumental
usage—that is, the direct applications of information to solve a problem and make a
decision (Caplan, Morrison, and Stambaugh 1975). However, instrumental
utilization is only one way a ﬁrm can use information. Information can be used for
general enlightenment and building the corporate knowledge base (Beyer and Trice
1982). It can also be used for symbolic purposes, such as for the sake of
appearances. This can include such activities as making the supplier feel involved
in the decision making (Menon and Wilcox 1994). Indeed, some information
utilization scales that purport to measure instrumental usage nonetheless contain
questions that would appear to measure utilization of other types.

Menon and Wilcox (1994) developed a measure of information utilization of
market research ﬁndings based on six types of information utilization identiﬁed in the
literature (see Table 1-1). First, congruous use is action oriented, for instrumental
or decision making purposes, and used in a manner consistent with the intentions
and implications of the study ﬁndings. This is equivalent to the instrumental

utilization discussed by many authors (cf. Deshpande and Zaltman 1982, 1984,

 

Table 1-1

Menon and Wilcox’s Types of Information Utilization

 

Type

Deﬁnition

Examples

 

Congruous Use
(Instrumental/Decision
Making)

Action oriented, for instrumental
or decision making purposes,
used in a manner consistent
with the purposes of the
provided report.

Make or change a decision
regarding: Price/product mix
changes, entering a new market,
product purchase

 

Incongruous Use

Action oriented, for instrumental
or decision making purposes,
used in a manner inconsistent
with the purposes of the
provided report.

Seek to make or change a ﬁrm’s
decision or price, product mix,
etc., for reasons of internal politics
or private agenda.

 

Positive Use

Action oriented, for symbolic or
ritualistic purposes, used in a
manner consistent with the
purposes of the provided report.

Symbolic incorporation of report
contents into decision process to
show individuals inside or outside
the ﬁrm that certain behavior is
valued (i.e. benchmarking, quality,
or competitiveness studies).

 

Cynical Use

Action oriented, for symbolic
purposes, used in a manner
inconsistent with the purposes
of the provided report.

Symbolic incorporation of report
contents into decision process for
political, internal agenda, or
appearance’s sake before
supervisors/ﬁrm management.

 

Product Based Use
(Knowledge
Enhancing)

Knowledge enhancing use of
the provided report.

Information applied to
organization learning, to start
discussion, provide fresh
perspective.

 

 

Process Based Use

 

Knowledge enhancing use of
information obtained from
seeking/obtaining the report.

 

Learning through the process of
developing a relationship with the
information provider, and seeking/
obtaining the report.

 

 

7

1987; Moorman, Zaltman and Deshpande 1992). Second, incongruous use is action
oriented, instrumental, and used in a manner inconsistent with the research
intention; for example, information that is distorted or taken out of context to justify
a decision.

Third, cynical use is action oriented, used for symbolic purposes, and used
ritualistically even though the users see no value In it. Usually the users perceive
that their superiors or some other audience does perceive value in the process.
Examples would include incorporation of research ﬁndings into a recommendation
purely for appearance’s sake or political purposes, as well as the use of information
as a scapegoat to explain poor performance. Fourth, positive use is action oriented,
symbolic, and used not so much for the value in the information but for the message
that utilization (for example, of benchmarking, quality, or competitiveness studies)
sends to other individuals inside or outside of the ﬁrm.

Product based use, the ﬁfth type of information usage, is the employment of
the product of the research study itself to enhance the knowledge base of the ﬁrm.
This sort of organizational learning is quite common in ﬁrms, and can occur either
through deliberate efforts at learning or through low-involvement learning
(Greenwald and Leavitt1984; Petty, Cacioppo and Schumann 1983; Weiss 1980).
Firms can learn from reports from suppliers and customers, as well as through direct
contact with them. Sixth, process based use is the utilization of knowledge obtained
from the process of engaging in the research study. In this instance, Menon and

VVIICOX suggested that the very process of setting up the research task, developing

8

a relationship with a supplier or customer, or implementing study recommendations
can result in additions to the knowledge base of the ﬁrm, independent of the
resulting exchange of information between the parties themselves.

Two of Menon and Wilcox’s six dimensions and corresponding scales-
congruous use and product based use--were adapted for use in this study. These
two, representing instrumental and knowledge enhancing use of the information
product, are the aspects of information utilization that have been identiﬁed most
consistently in the literature. In addition, Menon and Wilcox’s (1994) empirical
results showed that congruous and product based use are the two most common
forms of information utilization among managers in the context of a market research
report. Although there are no deﬁnitions of information utilization that relate to
utilization in a channels environment, the activities are analogous, and Menon and

Wilcox’s deﬁnitions and scales can be adapted for examining channels phenomena.

1.4 Wish
There has been a small but steady amount of research activity in marketing
directed at understanding (1) how ﬁrms utilize information obtained from market
research sources (cf. Moorman, Deshpande and Zaltman 1992), (2) how individuals
in the marketing function and research and development function of an organization
utilize information obtained from each other (cf. Gupta and Wilemon 1988a, 1988b;
Moenaert and Souder 1990a, 1990b), and (3) how ﬁrms attribute credibility to and

utilize information from marketing planning processes (Piercy and Morgan 1994).

9
There has also been a great deal of research concerning the issue of communication
strategy in marketing (Mohr and Nevin 1990).

One of many key roles information plays is in the management of
organizational interdependence (Rockart and Short 1989). Channel partners are a
major source of information for ﬁrms, and information systems that facilitate the
generation and utilization of information across organizational boundaries "allow
major improvements in organizational effectiveness and constitute one of the most
important competitive weapons available to the organization" (Bergeron, Buteau, and
Raymond 1991, p. 89). This is particularly true when ﬁrms enter into strategic
alliances (Bowersox 1990) or information partnerships (Konsynski and McFarlin
1990)

However, despite the signiﬁcant quantities of information that ﬁrms receive
from partners in the marketing channel, and the critical importance of that
information in inﬂuencing the strategies and decisions the focal ﬁrm undertakes, little
attention has been given to how ﬁrms utilize information provided by their channel
partners. There has been a lack of discussion regarding (1) how ﬁrms sharing
information with their channel partners can seekto ensure that their communications
are received by the target party with an “open ear" and used for their intended
purpose, (2) what conditions within the relationship and the channel environment
inﬂuence how and why ﬁrms utilize information obtained from channel partners, and
(3) how more effective information utilization and channel partner strategies directed

toward that goal affect ﬁrms' performance.

10
1.5 BMW

In recognizing the limited nature of research on information utilization in the
marketing channel relationship, the researcher believed that a further understanding
of how and why organizations utilize information received from channel partners is
necessary if marketing scholars and practitioners are to understand fully the
importance and performance implications of information utilization. Greater
understanding of the information utilization process would allow for the development
of more effective communication strategies and increased qualitative and
quantitative outcomes (Mohr and Nevin 1990).

The principal research questions addressed in this research concern the
effect of relational characteristics in the channel dyad on information utilization.
They are:

1. What is the impact of trust, cooperation, and expectations of continuity on
a ﬁrm’s instrumental (decision making) and knowledge enhancing utilization of
information provided by a channel partner?

2. What is the impact of prior general outcomes and prior informational
outcomes in a relationship on a channel member's trust, cooperation, expectation
of continuity, and instrumental and knowledge enhancing utilization of information
provided by a channel partner?

In these instances, "impact" on instrumental use refers to the independent
variable affecting the actual decisions in the ﬁrm; i.e., decisions are altered,

changed, or made/not made instead of the reverse. "Impact" on knowledge

11
enhancing use refers to the independent variable affecting the use of information to
provide new insights or knowledge, gain fresh perspective, or start discussion
regarding an issue.
The purposes of this research are therefore (1) to develop and validate
adequate measures of these constructs and (2) to develop and test a model of

information utilization in the channel dyad that addresses these questions.

1.6 MW

There are inordinate numbers of types and classiﬁcations of information that
can be exchanged in 3 channels context. Information can be routine or nonroutine
in nature; strategic, operational, ortactical; product or nonproduct related, and so on.
For purposes of illustration, a partial list of types of strategic, operational, and tactical
information is shown in Table 1-2.

Clearly, information relating to prices or speciﬁc product quotations is handled
differently from information that can affect strategic choices of the ﬁrm. The
processing of large quantities of transaction related data (through EDI techniques,
for example) is an important marketing concern, as is the processing of strategically
oriented market analyses. This research focused on utilization of information that
is both complex and operational in nature; speciﬁcally, information shared by the
channel partner that may assist the channel member in product stocking activities

that improve performance of the product category.

12

 

Table 1-2
Strategic, Operational, and Tactical Types of Information

 

Strategic Customer Segmentation Analysis

SWOT (Strength, Weakness, Opportunity, Threat) Analysis
Strategic orientation

Analyses of Market Share

Experience Curve Analysis

Product/Market Life Cycle Analyses

Portfolio Analyses

Studies of Competitors

 

Operational Payment Terms

Types of Goods and Services Sold
Balance Sheets

Credit Ratings

Supplier capabilities

Performance Ratings

Customer Lists

Direct Product Proﬁtability (DPP) Reports
Sales Forecasts

 

Tactical Delivery Schedules
Production Schedules
Price Lists

Contract Terms

Daily Sales Figures
Marketing Tactics
Shipping Records

 

 

 

 

One industry in which information about stocking management systems is
exchanged regularly is the food and grocery products industry. Stocking
management systems in the food and grocery products industry include Direct
Product Proﬁtability (DPP) methods and planograms. Direct Product Proﬁtability is
a method of accounting whereby Indirect product costs such as handling, Inventory,

and shelving costs are more accurately calculated and assigned to products. This

 

rl

C'e

13

enhances the ability of retailers to manage their stocking activities to improve proﬁts.
Planograms are an analytical tool for creating a schematic depicting how products
are to be displayed in a retail store, based on the nature of the display space as well
as cost and proﬁtability considerations.

When each program (and improvements to each program) is used, it helps
buyers manage store shelving to improve proﬁts and performance. Channel
partners sharing such information may also beneﬁt by (1) having their products
viewed in a more favorable light, thus potentially increasing their own sales and
performance, and (2) improving the quality of their relationship with the channel
members. Thus, this information can be extremely valuable to users as a means of
making better marketing decisions, enhancing their own knowledge base, and
improving their performance. In this research, shelving management information
was the scope of information explored, and a report on how shelving management
can be improved was the unit of information.

This type of report was selected as the information focal point because (1) it
is information that grocery product suppliers are likely to have, and thus would be a
reasonable and available candidate for transmission to grocery chain buyers; (2)
both parties are aware that the information might be relevant, comprehensible, and
helpful to distributors; (3) the transmittal of this report is a relatively discrete event;
and (4) unlike product speciﬁcation data or transaction related information such as

delivery dates, its use is likely to be inﬂuenced by relational as well as operational

14
concerns. The supplier-distributor relationship was selected in order to maximize the

expected relevance of the information transmitted.

1.7 BMW

The research is expected to contribute to the theory of information utilization
in marketing channels in three ways. First, building on a review of the information
utilization literature in other ﬁelds, a theoretical framework for information utilization
in marketing channels is developed, based on microeconomic and transaction cost
considerations. Second, a measure of information utilization in marketing channels
is developed, incorporating both instrumental and knowledge enhancing utilization.
Also, new measures for prior informational outcomes and boundary spanning
cooperation are developed. Third, the developed model rectiﬁes a lack of research
in this area and suggests that utilization of information by a ﬁrm is a function of the
distributor’s perceptions of prior information and performance outcomes, operational
and boundary spanning cooperation, trust in the partner's credibility and
benevolence, and relational continuity. The possibility that different forms of trust
and cooperation. may have different effects on information utilization is an important
consideration for both marketing scholars and marketing practitioners.

This study also has several implications for managers and ﬁrms. First,
information utilization is a fundamental task of the ﬁrm. A better understanding of
how the marketing channel relationship affects utilization can improve the ﬁrm’s

decision making and organizational learning activities, and thus performance.

15

Second, the model provides a managerially relevant basis for channel
members to use in developing strategies for promoting the effective utilization of
information they receive from channel partners, which could be expected to improve
the organizations’ task related planning, implementation, and/or performance. This
study will have particular relevance forthe implementation of shelving management
systems by grocery chains.

Third, channel partners will gain a greater understanding of how their
relationship with the channel member affects the buyer's and the ﬁrm’s response to
the information they communicate. This could spur suppliers to improve the channel
relationship, and will also enable them to commit additional resources and devise
additional strategies to increase the utilization of their reports. Further, the buyer's
and ﬁnn's utilization of the channel partner’s information may reduce the buyer’s
utilization of information provided by a competitor, further enhancing the competitive
beneﬁt to the supplier. Again, this study is particularly relevant for grocery product
suppliers seeking to persuade the grocery chains they deal with to improve their
shelving management systems.

Fourth, ﬁrms in a channel relationship often commit a large amount of
resources to improving communication in the channel, when in reality poor quality
of communications is only one reason why transmitted information may not be
utilized. This study will enable ﬁrms to design communication systems more

effectively, with fewer wasted resources.

16
1.8 Limitations

This dissertation has several limitations. First, only characteristics of the
supplier-distributor relationship are studied fortheir effect on information utilization.
Second, the unit of analysis of the shelving management report within the context
of interaction between the supplier and the grocery store chain may be sufﬁciently
idiosyncratic that the external validity of the ﬁndings may be limited. Third, several
new measures are used. Although appropriate scale development paradigms were
followed, the constructs may still have one or more validity difﬁculties. Fourth, the
analysis of shelving management reports that the key informant selected may not
give an accurate picture of information utilization in the ﬁrm’s day-to-day activities.
Fifth, the lack of a second informant to conﬁrm the relationships in the model limits
the credibility of the results. All of these issues may be addressed through future

research.

1.9 Walton
This dissertation consists of six chapters, including this introductory chapter.
Chapter Two contains a review of the literature on information utilization and its
antecedents in marketing related areas. The literature review is classiﬁed into three
areas: (1) utilization of information in the marketing-R80 interface, (2) utilization of
market research information, and (3) other marketing articles concerning information
utilization, including utilization of marketing plan information. This literature is then

discussed and summarized.

17
Chapter Three contains a synthesis of the literature; a model of information
utilization from a microeconomic and transaction cost perspective is described. The
research methodology is described in Chapter Four. Included is a discussion of
measure development, the item pool for constructs, the sampling frame, the key
informant, mailing and follow-up, evaluation of nonrespondents, measure puriﬁcation
and reliability, and the hypothesis testing approach. The ﬁndings of the study are

described in Chapter Five. Finally, the contributions of the study are discussed in

Chapter Six.

CHAPTER TWO

LITERATURE REVIEW

This chapter is divided into four parts. In the ﬁrst three sections, the literature
on (1) information utilization in the marketing-R80 interface, (2) use of market
research information by marketing personnel, and (3) information utilization in other
areas of the marketing ﬁeld is discussed. Because very limited research has been
conducted on information utilization in 3 channels context, these articles are the
basis for the development of theory in the channels area. In the fourth section, this
literature is discussed and summarized, and a theoretical framework is advanced to
serve as a foundation for developing and testing hypotheses concerning the

utilization of information provided by a channel partner.

2.1 W
Product innovation is an activity that requires the combined efforts of many
functions in the ﬁrm. For product innovation to be commercially successful, it is
essential that marketing and R&D departments in aﬁrm (1) interact successfully with
each other, resulting in the consistent, quality exchange of information between
functions, and (2) utilize the information received from the other department in the

innovation process (Gupta, Raj, and Wilemon 1985a, 1985b; Souder 1987; Young

18

19

1979). Most studies of the marketing-R&D interface have focused on the link
between integration and/or interaction and project success (cf. Gupta, Raj, and
Wilemon 1986; Hise et al. 1989; Parry and Song 1993; Song and Parry 1992). Many
researchers who have examined information utilization have looked at information
transfer between different types of individuals within a functional area, such'as
gatekeepers, scientists, and engineers (Allen 1985; Gerstenﬁeld and Berger 1980;
Pelz and Andrews 1966; Rosenbloom and Wolek 1970; Tushman 1977).

Despite being "rare exceptions" (Moenaert and Souder 1990b), some
investigations of information utilization in the marketing-R&D interface have been
performed, as discussed below (see also Table 2-1). These built on the above-
mentioned literature, and because this study examined the utilization of marketing
information received from an outside ﬁrm, the primary focus was on those articles
examining marketing personnel’s use of information provided by R&D personnel.
The purpose of these articles is to (1) determine the informational needs of the user
and (2) examine the antecedents of and inﬂuences on information transfer between
functional areas of the ﬁrm (Allen 1985). Technological innovation is considered a
process of reducing uncertainty (Allen 1985; Johnston and Gibbons 1975); this
perspective is broad enough to include both decision making and knowledge
enhancing components of information utilization.

Gupta and Wilemon (1988a) examined why research and development
personnel resist using information provided by marketers within the ﬁrm. The

principal reasons that were given related to poor information quality; information was

20

too often inaccurate, incomplete, too narrowly focused, not timely, or unrealistic.
Also, respondents reported difﬁculties with the working style or technical
competence of marketing personnel. Finally, some R&D managers stated that their
own organization was responsible in some instances. Problems here included time

constraints, hubris, past history of failures, or internal biases.

 

Table 2-1
Information Utilization Articles Concerning the Marketing-R&D Interface

 

 

Study Summary
Gupta and Examined why R&D personnel resist using information provided by
Wilemon marketing personnel. Empirical survey found that favorable perceptions
(19883) of information related to information quality, accuracy, completeness,

timeliness, realism, perceived technical competence and working style of
marketing managers, user time constraints, and user biases.

 

Gupta and Studied characteristics of credible information and credible managers.
Wilemon Empirical survey with factor analysis showed that information credibility
(1988b) was related to realism, perceived validity, analyzability, objectivity,

completeness, consistency, and quality of presentation.

 

Moenaert and Presented a source-message-medium-receiver characteristics model of
Souder (1990b) information utilization. Suggested that information utility is composed of
part-worths of credibility, comprehensibility, relevance, and novelty.

 

Moenaert et al. Studied communication characteristics of successful product innovating
(1994) ﬁrms in technical industries. Survey showed that communication ﬂows
between marketing and R&D personnel were increased by project
formalization, organizational formalization, decision making
decentralization, positive interfunctional climate, and role ﬂexibility.

 

 

 

 

Gupta and Wilemon (1988b) examined how R&D managers viewed the
credibility of both marketing information and marketing managers. The

characteristics of credible information and credible managers were explicated by

21

means of factor analysis. Credible information was found to be realistic and valid,
well analyzed and presented, objective, consistent and complete, and useful and
appealing. Credible marketing managers were those who were cooperative and
trustworthy, competent and helpful, friendly and social, easy to work with, fair,
knowledgeable about R&D, rational, and respected. Both source and information
credibility were viewed as necessary antecedents to information use.

Moenaert and Souder (1990b) reviewed the use of information within both the
marketing and R&D functions and presented a model for extrafunctional information
utilization based on a utilitarian perspective. Following Rogers and Agarwala-
Rogers (1976), use was analogous to a change in the receiver’s knowledge,
attitudes, or overt behavior. Based on a set of exploratory interviews, Moenaert and
Souder suggested that the utilization of R&D information by marketing personnel
(and vice versa) was determined by (1) media characteristics (personal vs.
impersonal, written vs. oral); (2) message attributes (recency, validity, timeliness,
actionability, accuracy); (3) source and receiver characteristics (interaction,
education, experience, trust); and (4) contingency or structural elements
(formalization, centralization, innovation stage, interfunctional climate). These
attributes affected the perceived relevance, novelty, credibility, and comprehensibility
of the information, which determined the degree to which that information was used.
The underlying premise was microeconomic and transaction cost based, with

utilization decisions based on the utility of the information received.

22

Moenaert etal. (1994) collected data from both marketing and R&D personnel
in research projects and found that cross-functional communication ﬂows increased
under conditions of formalization of projects, decentralization of decision making,
and positive interfunctional climate. Role ﬂexibility (the willingness to assume
extrafunctional tasks) in R&D personnel signiﬁcantly increased R&D to marketing
communications, but marketing role ﬂexibility did not signiﬁcantly affect marketing
to R&D communications. Formalization and interorganizational climate also were
positively correlated with commercial success of the innovation project. Information
utilization itself was not studied. Utilization was implied to some degree in the scale
for information received, but as both marketing and R&D often perceive the
information provided by the other party to be incomplete or inaccurate (Gupta and
Wilemon 1985a, 1988b), the applicability of these conclusions to utilization is

uncertain.

2.2 ‘0 no. .‘II! 1‘ ‘o. I louq'u! uni-Io. " 011‘

As sophisticated information technology systems become increasingly
available to the average ﬁrm, competitive advantage has become less a matter of
who has information and more a matter of who is effectively using information
(Moorman, Zaltman, and Deshpande 1992; Porter and Millar1985). The Marketing
Science Institute (1990) considered "improving the utilization of market information”
to be its top research priority for the 19903.

A steady stream of articles over the last 15 years has provided many insights

into the factors that facilitate or impede a ﬁrm’s utilization of information provided by

23

a marketing researcher (see Table 2-2). Deshpande and Zaltman (1982) examined
the use of market research by marketing managers in consumer goods industries.
In all of Deshpande and Zaltman’s studies, utilization was deﬁned instrumentally;
that is, information used was information that affected decisions of the ﬁrm. Their
data showed that high quality of the research content, interaction between the
market researcher and marketing manager, political acceptability and actionability
of the report, and a conﬁrmatory research purpose all increased the use of research.
The effect of interaction between market researcher and marketing manager was
primarily indirect-~by increasing the perceived quality and political acceptability ofthe
report and by reducing its surprise content. Organizational formalization had a very
strong negative effect on use; centralization, surprise content, and an exploratory
research purpose also had negative effects.

In their 1984 article, Deshpande and Zaltman examined the same issue,
manager’s use, but they measured it based on researchers’ perceptions of that use.
Several interesting differences were found. Content quality, interaction, political
acceptability, and actionability remained as positive inﬂuences, but interaction
replaced content quality as the most signiﬁcant positive inﬂuence, and political
acceptability was considered far more important in the eyes of researchers than in
the eyes of managers. A conﬁrmatory research purpose was now seen as a
negative inﬂuence on perceived use, and surprise content and an exploratory

research purpose were now considered as positive inﬂuences by this sample of

24

 

Table 2-2

Articles Concerning Use of Marketing Research Information by Marketing Personnel

 

Study

Summary

 

Deshpande and
Zaltman (1982)

Studied factors affecting instrumental use of market research information
by consumer good marketing managers. Survey showed that high
quality of research content, researcher-manager interaction, political
acceptability of the results, and conﬁrmatory research purpose increased
utilization. Organizational formalization, centralization, surprise content,
and exploratory purpose decreased utilization.

 

Deshpande and
Zaltman (1984)

Studied factors affecting researchers’ perceptions of instrumental
information utilization by consumer goods marketing managers. Survey
showed that high quality of the research content, researcher-manager
interaction, political acceptability of the results, surprise content, and
exploratory research purpose increased perceived manager’s utilization.
Confirmatory purpose decreased utilization.

 

Deshpande and
Zaltman (1987)

Investigated the factors influencing instrumental use of marketing
information by industrial marketing managers. Survey found that
formalization and an exploratory research purpose were associated with
increased information utilization. Surprise content of the information
reduced information utilization.

 

Lee, Acito, and

Used a laboratory experiment to explore how decision makers evaluate

 

 

 

 

Day (1987) and use market research information. Perceived information quality and
use were affected by prior beliefs, and qualitative vs. quantitative nature
of market research information.

Moorman, Empirical survey investigated behavioral factors inﬂuencing instrumental

Deshpande, and utilization of market research information. Dyad type, trust, perceived

Zaltman (1992) quality of interaction, and user’s desire for researcher’s involvement
increased utilization.

Menon and Presented a model of instrumental and knowledge enhancing information

Varadarajan utilization based on environmental and information task characteristics,

(1992) information and innovation culture, communication ﬂows, and information
characteristics.

Menon and Presented and tested a six-faceted measure of information utilization

WIin (1994) (see Table 1-1).

 

 

 

25

researchers. Because researchers could have only a limited understanding of the
organizational structure of the focal ﬁrm, those variables were not studied.

Deshpande and Zaltman (1987) also investigated factors affecting industrial
marketing managers’ utilization of marketing information. Because industrial
marketing managers tend to use customer contact as an alternative to formal
marketing research, the use of marketing information rather than market research
was the subject of study. Thus, the information could have come from a multitude
of sources. In this context, formalization increased information utilization, as did
exploratory research purpose. A conﬁrmatory purpose and centralization both had
a nonsigniﬁcant negative effect. Surprise content once again had a negative effect
on utilization.

Lee, Acito, and Day (1987) used a laboratory experiment to investigate the
effect of decision makers’ prior beliefs on information utilization. The results suggest
that research conﬁrming prior beliefs is much more likely to be judged as high in
quality and utilized than is research refuting prior beliefs.

Moorman, Deshpande, and Zaltman (1992) examined the effects of several
behavioral factors on the use of marketing research. In addition, they looked at
these effects for different types of dyads. including researcher-researcher vs.
researcher-manager, marketer-marketer vs. marketer-nonmarketer, and
interorganizational vs. intraorganizational (within-ﬁrm vs. between-ﬁrm) dyads. For
the "basic" researcher-manager dyad in the main effects model, perceived quality

of interaction was the only variable studied that had a direct effect (positive) on

26

for researcher involvement positively affected use indirectly, through perceived
quality of interaction. All three variables directly or indirectly increased the user’s
commitment to the research relationship, but the hypothesized linkage between
commitment and use was nonsigniﬁcant.

Mixed support was found for the propositions that these relationships were
stronger for researcher-researcher dyads and weaker for marketer-nonmarketer
dyads. Of particular interest to this study is the effect of interorganizational as
compared to intraorganizational dyads. For interorganizational dyads, trust
continued to have a positive effect on interaction and commitment, but now it had a
negative effect on the user’s desire for researcher involvement. Interaction had a
dramatically higher effect on utilization. Commitment by the user to the relationship
now had a signiﬁcant negative effect on utilization.

Menon and Varadarajan (1992) reviewed the literature on "marketing
knowledge use." They suggested that studies measuring only utilization for decision
making were not only inconsistent (often measuring conceptual and symbolic as well
as instrumental usage) but, by measuring a relatively rare form of utilization, limited
as well. They suggested three types of research use: action oriented
(encompassing instrumental and symbolic use), knowledge enhancing (based on
both the research process and the research project), and affective use. Finally, they
proposed a model of knowledge utilization in ﬁrms based on (1) environmental
factors; (2) task characteristics, such as complexity; (3) organizational

characteristics, such as structure, information and innovation culture, and internal

27

and external communication ﬂows; and (4) information factors, such as information
cost, information credibility, and information usefulness.

As discussed in Chapter One, Menon and Wilcox (1994) developed a series
of scales to measure six types of research information utilization. They
conceptualized information utilization as a second-order construct made up of two
ﬁrst-order factors: appropriate usage and inappropriate usage. Congruous or
instrumental usage, knowledge enhancing usage of the research project and
research process, and positive symbolic usage loaded on the appropriate usage
ﬁrst-order factor, whereas incongruous and cynical usage loaded on the
inappropriate usage ﬁrst-order factor. Despite allowing three sets of error terms to
correlate, model ﬁt was only moderate; the Goodness of Fit Index (GF I) was .84,

and the Non-Normed Fit Index (NNFI) was .925.

2.3 OjbeLMaLketingAdicleLQonceLnjnanfQLmaﬂonmuzaﬁon

One of the earliest articles on information utilization was Caplan, Morrison,
and Stambaugh’s (1975) classic development of the ”two-communities theory” of
knowledge utilization. In evaluating the use of social science research information
by US. government ofﬁcials, the authors found that the principal reason for low
utilization was that the researchers and the users belonged to two separate
communities. Each community had its own separate norms, values, socialization
methods, and truth tests that bore on evaluative judgments of usable research, and
these differences were exacerbated by different languages and mutual distrust. This

contention is conﬁrmed in the differences Deshpande and Zaltman (1984) found

28
between researchers’ and managers’ perceptions of what inﬂuenced the managers’
information utilization.

Severalotherarticlesinthemarketing literature contained insights concerning
the utilization of information (see Table 2-3). John and Martin (1984) and Piercy and
Morgan (1994) discussed the utilization of marketing plans by marketing
departments. John and Martin found that organizational formalization and
centralization increased both perceived credibility and utilization of information for
decision-making purposes. Specialization and spatial dispersion (physical distance
between the parties) within the marketing area were not signiﬁcantly related to
utilization; however, spatial dispersion was negatively related to perceived credibility.

Through factor analysis, Piercy and Morgan also identiﬁed ﬁve behavioral
problems that can develop in the planning process: (1) planning recalcitrance,
whereby planning activities are actively resisted and subverted; (2) politics and
myopia, which reﬂected shortsightedness and a focus on internal political
considerations; (3) alienation and uncertainty, reﬂecting confusion, fear of making
mistakes, and a lack of management support; (4) planning avoidance; and (5) a
"squirm factor" related to being able to avoid planning responsibility. All ﬁve
problems were negatively related to a measure combining elements of both plan
credibility and plan utilization. Separately, perceptions of thoroughness in the

marketing planning process were positively related to credibility and utilization of the

marketing plan.

29

 

 

 

Table 2-3
Other Marketing Articles Concerning Information Utilization
Study Summary
John and Examined the effects of the structure of marketing-plan-related activities on

Martin (1984)

the perceived credibility and instrumental utilization of marketing plan output.
Survey results showed that organizational formalization and centralization
increased perceived credibility and utilization. Physical distance between
the parties decreased credibility.

 

 

Piercy and Empirical survey studied the effect of behavioral problems on credibility and

Morgan usage of marketing plans. Planning thoroughness increased credibility and

(1994) utilization. Five behavioral problems decreased utilization: (1) planning
recalcitrance, (2) politics and myopia, (3) alienation and uncertainty, (4)
planning avoidance, and (5) avoidance of planning responsibility. Effective
plan utilization requires dealing with these issues.

Wilton and Proposed and tested a model for the formation of information utility

Myers (1986)

expectation and information utility. Lab experiment results supported the
hypotheses that increases in information credibility, relevance, and novelty
increased perceived information utility. Conceptual tasks were associated
with greater information utility and use. Disconﬁrmation of expectations for
information was shown to be a contributor to information utility.

 

Moriarty and
Spekman
(1984)

Examined factors affecting utilization of four types of information
(commercial vs. noncommercial, personal vs. impersonal) during an
industrial buying process. Salient factors included conflict in the decision
process, buyer’s conﬁdence, and buyer and departmental risk factors.

 

Monczka,
Giunipero,
and Reck
(1981)

Used survey data and factor analysis to identify six types of supplier
information of use to purchasing agents in the purchase process: (1)
sourcing capability, (2) supplier performance, (3) labor union data, (4)
supplier’s other customers, (5) contract terms and conditions, and (6) pricing
data.

 

Spekman
(1988)

Used survey data and factor analysis to identify ﬁve categories of supplier
information important to purchasing professionals: (1) product data, (2)
service data, (3) price data, (4) experience with supplier, and (5) availability
of supplier. Further, ﬁrms perceiving themselves to be strategically
vulnerable placed more importance on information concerning product
reliability, maintenance support, and supplier availability.

 

 

Monczka,
Nichols, and
Callahan

‘ (1992)

 

Used survey data and factor analysis to identify 12 categories of supplier
information important to purchasing agents in the purchasing department.
Supplier capabilities and ﬁnancial position/threats were the most important.
The value of different types of information varied according to the type of
purchase.

 

 

30

Wilton and Myers (1986) examined the effect of prior expectations on both
instrumental and conceptual information utilization. Their methodology was a
laboratory experiment in which individual subjects learned about and evaluated a
new technology. Findings supported the hypotheses that (1) increases in
information credibility, relevance, and novelty are associated with increased
perceived information utility; (2) individuals using information for conceptual
purposes perceive greater utility and use information more than those using
information for instrumental purposes; and (3) the higher (lower) information
expectations are, the more likely it is that expectations will be negatively (positively)
disconﬁrmed, lowering (raising) perceived utility and use. Wilson and Myers’s work
strongly supported Menon and Varadarajan’s (1992) contention that information
utilization studies that do not include conceptual utilization are narrow and ﬂawed to
some degree. Also, disconﬁrmation of expectations may be an important
determinant of information utilization. Speciﬁcally, the history of the relationship,
including prior outcomes, may strongly inﬂuence decisions on whether or not to
utilize information coming from a particular source. especially if expectations
previously have been disconﬁrmed.

Several researchers have sought to identify characteristics of information that
would be of particular value to buyers. Moriarty and Spekman (1984) investigated
factors that affected certain types of information utilized during the purchasing
process for industrial products. Characteristics of the buying situation such as the

existence of conﬂict in the decision process, the buyer’s personal conﬁdence, and

31.

personal and departmental risk from a poor decision all led to increased use of
personal information sources. Another signiﬁcant ﬁnding was that the use of
impersonal, noncommercial sources (such astrade associations and rating services)
remained strong up to the vendor selection stage of the purchasing process.

Monczka, Giunipero, and Reck (1981) used factor analysis to identify six
supplier information factors, or types of information that are useful to purchasing
departments in the purchase decision: sourcing capability, supplier performance,
labor union data, suppliers' other customers, contract terms and conditions, and
pricing data. Spekman’s (1988) analysis yielded ﬁve informational factors: product,
service, price, experience with supplier, and supplier availability. Findings of this
study showed that the more purchasing professionals perceived their ﬁrms to be
strategically vulnerable in the marketplace, the greater the importance they placed
on receiving information from suppliers about product reliability, maintenance
support, and supplier availability.

Monczka, Nichols, and Callahan (1992) conducted a more comprehensive
study that identiﬁed 12 information factors; a supplier’s capabilities and ﬁnancial
position/potential threats were the two most signiﬁcant factors. However, the value
of different types of information varied according to the type of purchase (raw
materials, unique and standardized engineered components, and so on). As
expected, cost information became more important and supplier capabilities became
less important as products became more standardized and available from alternative

sources. Also, purchasers of maintenance, repair, and operations (MRO) suppliers

32

tended to be less concerned about information regarding the supplier’s ﬁnancial
position and more concerned about their socioeconomic status (disadvantaged!
minority supplier) than were purchasers of other types of products.

These studies on organizational buying contain several important
considerations for building a model of information utilization in the marketing
channel. First, to ensure theoretical soundness, proper survey response, and
managerial relevance of the results, the type of information studied should have
value to the focal ﬁrm. Second, source characteristics and message type apparently

interact in determining information utilization.

2.4 Discussionendﬁummam

In specifying an information utilization measure, it is clear that it must include
both instrumental and conceptual components (Menon and Varadarajan 1992;
Menon and Wilcox 1994; Wilton and Myers 1986). The predominant theoretical
framework used to model information utilization seemed to be utilitarian in nature
(Moenaert and Souder 1990b), although the underlying theory was rarely speciﬁed.
Indeed, much of the literature discussed above was atheoretical, with variables of
a particular category (organizational structure, message characteristics, and so on)
being examined in sets.

Thus, the most proﬁtable means of building on the existing literature would
be to work within a utilitarian schema, with microeconomic and transaction cost
rationales for each hypothesis being clearly delineated. In addition, these

frameworks could be used to provide additional insight into the utilization process.

33

It should be noted that several other perspectives on information utilization
could be employed. If conceptual and instrumental utilization is viewed as the result
of a decision by the ﬁrm, then other frameworks that seek to explain decisions in 3
channels environment could be employed. For example, the behavioral paradigm
(Sterm 1969) could provide the effect of channel conﬂict and power on utilization.
Resource dependency theory would suggest that information utilization is a strategic
response by a ﬁrm to conditions of uncertainty and dependence (Pfeffer and
Salancik 1978). Employing the relational contracting paradigm would lead to
examining the effect of interﬁrm normative obligations, especially those related to
information sharing and usage, on utilization. These are all promising avenues for
future research, but in the absence of an existing theory for 3 channels environment,
starting from the same base employed in the existing literature is appropriate.

As Moenaert and Souder (1990b) noted, the constructs employed in many of
these studies tend to be complementary, regardless ofthe speciﬁc research domain.
By expanding their sourcechannel-message-receiver slightly, the ﬁndings presented
above can be arranged and summarized in order to present the basis of a model
explaining the utilization of information provided by a channel partner. Each of the
variables described below and in Table 2-4 affects utilization through the information
utility part-worths of relevance, novelty, credibility, and comprehensibility (Moenaert
and Souder 1990b). The actual synthesis of these ﬁndings and development of the

model is presented in Chapter Three.

34
Table 2-4
Types of Variables Affecting Information Utilization

 

 

 

Category Typical Variables
Environmental Environmental dynamism, environmental diversity, environmental
Attributes capacity, competitive intensity
Source Expertise, geniality, credibility, fairness, characteristics of liaison

Characteristics personnel, education

 

Media Message form (written, oral, electronic), message formality, richness of
Characteristics the information channel

 

Message Validity, timeliness, actionability, political acceptability, completeness,
Characteristics relevance, recency, familiarity, clarity, accuracy, surprise

 

Relational Interaction, integration, trust, commitment, cooperation, formalization,
Characteristics interorganizational climate, prior outcomes, domain similarity

 

Receiver Information task environment, time constraints, cost to process
Characteristics information, propensity to use outside information, organizational
formalization, organizational centralization

 

 

 

 

Source: Adapted from Moenaert and Souder (1990b).

The list of variables affecting information utilization in a channels environment
can be classiﬁed as follows (see Table 24): First are characteristics of the
environment (Menon and Varadarajan 1992), which have not been examined in any
detail to date. These could include conditions such as environmental dynamism,
diversity, capacity, and competitive intensity (Achrol and Stern 1988; Jaworski and
Kohli 1993). The second category of variables concerns characteristics of the
relationship, such as the degree of interaction between and integration ofthe parties,

trust, commitment,formalization, centralization, interorganizational climate, and prior

35

outcomes and other history ofthe relationship (Deshpande and Zaltman 1982, 1984,
1987; Moenaert and Souder 1990a, 1990b; Moenaert et al. 1994; Moorman,
Deshpande, and Zaltman 1992; Wilton and Myers 1986). These variables are of
particular interest in the present research because (1) variables that have been
signiﬁcant in one research domain usually have been signiﬁcant in other domains
(although some effects, such as formalization and centralization, have been
inconsistent in sign); (2) integration and trust in particular have been cited as drivers
of other effects (Deshpande and Zaltman 1982, 1984, 1987; Moorman, Zaltman, and
Deshpande 1992); (3) relational variables can be expected to have a signiﬁcant
effect on utilization in a channels context; and (4) channel partners should be able
to develop strategies to manage the relationship in order to improve utilization.

Third, characteristics of the source ﬁrm can be expected to inﬂuence
information utilization by the focal ﬁrm. Such traits include the expertise, geniality,
credibility, and fairness of the source ﬁrm as a whole, as well as properties of the
liaison personnel (Gupta and Wilemon 1988a, 1988b; Moenaert and Souder 1990b).

Fourth, attributes of the ﬁrm receiving the information, such as characteristics
of the information task, time constraints, propensity to use outside information, prior
beliefs and expectations, and other behavioral attributes, can promote or impede
information utilization (Gupta and Wilmon 1988b; Lee, Acito, and Day 1987; Menon
and Varadarajan 1991; Moriarty and Spekman 1984; Piercy and Morgan 1994;

Wilton and Myers 1986).

36

Fifth, characteristics of the information channel, such as media type (written,
oral, electronic), whether the message content is formally or informally
communicated, and the breadth or richness of the channel, can affect utilization
(Moenaert and Souder 1990b). Finally, characteristics of the message itself, such
as its timeliness, consistency, comprehensibility, actionability, and political
acceptability, can have a material effect on the utilization of the information
contained in that message (Deshpande and Zaltman 1982, 1984, 1987; Gupta and

Wilemon 1988a, 1988b).

CHAPTER THREE

A CONCEPTUAL MODEL OF INFORMATION UTILIZATION

IN THE CHANNEL DYAD

The discussion from the preceding chapter is synthesized in this chapter, and
a theoretical model of a channel member’s utilization of information provided by a
channel partner is presented. First, a microeconomic and transaction cost model
of information utilization is introduced. Second, the process of developing the model
is discussed. Third, the constructs are deﬁned. Subsequently, formal hypotheses

and their underlying theoretical rationale are presented, linking seven constructs to

information utilization.

3.1 W
[It I' ”H. t.

As shown in Chapter Two, there are several ways to conceptualize the
process of utilizing information received from a channel partner. However, the
prevailing tendency in the information utilization literature is to view the utilization
decision as utilitarian in nature (Moenaert and Souder 1990b). From this

perspective, ﬁrms maximize proﬁt by allocating resources to various tasks (such as

37

. 38
information utilization) so that the marginal gain from each of the allocation centers
equals the marginal cost (Anderson, Lodish, and Weitz 1987).

Transaction cost theory is also based on the principle of maximizing the
economic efficiency of the ﬁrm, but it relaxes certain assumptions of classical
microeconomics. Speciﬁcally, the assumptions of perfect knowledge about
outcomes and frictionless markets (zero transaction costs) are removed. This
means that ﬁrms incur costs (1) to gather information on whether information
provided by the channel partner should be used, (2) to decide to use or not to use
the information, and (3) to monitor utilization outcomes to assess retrospectively
whether use of the channel partner’s information was the correct decision.

These transaction costs in the information utilization decision are added to
other decision costs when a ﬁrm decides whether utilization is appropriate. There
are several implications of this. For example, some information may require the
expenditure of signiﬁcant transaction costs to determine whether it should be used.
If this information is also relationship speciﬁc (i.e., of value only in the context of an
ongoing relationship with that ﬁrm) and the ﬁrm’s expectation of continuity of the
relationship is low, then the ﬁrm may decide that there is insufﬁcient time to gain

beneﬁts from the information before a new channel relationship must be established.

3.2 ModeLQevelonment

In developing a model of information utilization for this research, it was
desirable to select variables that could explain a signiﬁcant proportion of the

information utilization that would occur in the study, and that were reasonably well

39

grounded in the literature on both information utilization and marketing channels.
Also, it was deemed important that the research variables be managerially relevant
and that the results could serve as a basis for channel partners developing
strategies to manage information utilization in the channel. Finally, confounding
effects from omitted variables needed to be avoided.

Based on these criteria, the decision was made to examine the effect of
relational characteristics in the channel on the utilization of information transmitted
between channel partners. This decision formed the basis ofthe research questions
for this study:

1. What is the impact of trust, cooperation, and expectation of continuity
on a ﬁrm’s instrumental (decision making) and knowledge enhancing utilization of
information provided by a channel partner?

2. What is the impact of satisfaction with prior outcomes in a relationship
on trust, cooperation, expectation of continuity, and a ﬁrm’s instrumental and
knowledge enhancing utilization of information provided by a channel partner?

Two types each of satisfaction with prior outcomes, cooperation, and trust
were selected as model variables, as well as expected continuity of the relationship.
Cooperation between ﬁrms rather than integration between ﬁrms was selected for
two reasons. First, measures of cooperation are better grounded and developed in
the channels literature than are measures of integration. Second, the use of
cooperation enabled modeling of the effects of both operational cooperation, i.e.,

cooperation directed at performance outcomes, and boundary spanning cooperation,

40
i.e., cooperation by the two ﬁrms in activities aimed at integrating the two

organizations. Deﬁnitions of these constructs are shown in Table 3-1.

3.3 Speciﬁcatiemttmheses

Figure 3-1 shows the hypothesized relationships between the speciﬁc
variables in the model. The constructs in this model represent a subset of the
variables that could have been selected forthe research (see Table 2-4). However,
as mentioned above, examination of relational variables was considered to be the
appropriate focus for this dissertation.

The fundamental reason for selecting variables concerning satisfaction with
prior outcomes, cooperation, trust, and expectation of continuity is that these
attitudes and behaviors are considered to increase the perceived beneﬁt of
information utilization (either for instrumental or knowledge enhancing purposes),
decrease the costs of utilization, and/or decrease the risk of utilizing the information
studied in the research. These seven factors are discussed in the following

paragraphs, and the hypotheses concerning constructs in the model are set forth.

3.3.1 SatisfactionJMthﬂicLQuthmes

The impact of satisfaction with two types of prior outcomes on information
utilization was explored in this study. First, satisfaction with general outcomes is
examined. Then the effects satisfaction of prior informational outcomes on

information utilization are considered.

41

 

Table 3-1
Deﬁnition of Variables.

 

Variable

Deﬁnition

 

Satisfaction with
Prior General
Outcomes

A channel member’s positive affective attitudes and feelings concerning
the full domain of the channel partner's channel related activities
(Ganesan 1994; Schul, Little, and Pride 1985).

 

Satisfaction with
Prior
Informational
Outcomes

A channel member’s positive affective attitudes and feelings concerning
the channel partner’s activities related to information sharing and
exchange in the channel (Ganesan 1994; Schul, Little, and Pride 1985).

 

Operational
Cooperation

Similar or complementary coordinated actions taken by ﬁrms to achieve
mutual general performance outcomes or singular performance
outcomes with expected reciprocation over time (Anderson and Narus
1990).

 

Boundary
Spanning
Cooperation

Similar or complementary coordinated actions taken by ﬁrms to achieve
integration of the ﬁrms, where integration is the strategic linking of
functionally specialized groups from separate ﬁrms while preserving their
individual orientations (Anderson and Narus 1990; Moenaert and Souder
1990b).

 

Trust in
Credibility

A channel member’s belief that the channel partner is honest or credible,
stands by its word, has the required expertise to fulﬁll role obligations

faithfully and sincerely, and is sincere (Ganesan 1994; Kumar, Scheer,
and Steenkamp 1995).

 

Trust in
Benevolence

A channel member’s belief that the channel partner has intentions and
interests beneﬁcial to the channel members that extend beyond
contractual commitments, is interested in the channel member’s welfare,
is willing to accept short-term dislocations, and will not take unexpected
actions that have a negative impact on the channel member (Anderson,
Lodish, and Weitz 1987; Ganesan 1994; Kumar, Scheer, and
Steenkamp 1995).

 

Expectation of
Continuity

A channel member’s belief that the relationship with the supplier will
continue (Anderson and Weitz 1989).

 

 

Information
Utilization

 

A channel member’s employment of information received from a channel
partner for purposes of decision making or knowledge enhancement
(Menon and Varadarajan 1992; Menon and Wilcox 1994).

 

 

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43

Aﬁrrn’s satisfaction with prior general outcomes (i.e., proﬁtability, competitive
pesition, working relationship) resulting from a channel relationship reﬂects a positive
affective state concerning the whole domain of the channel partner’s channel related
activities, and thus the overall relationship (Ganesan 1994). This results in an
expectation of positive subsequent outcomes (Wilton and Myers 1986). It is
suggested that this positive expectation raises the perceived potential beneﬁt for
both the channel member and the channel partner from cooperation in operational
matters, as well as from cooperation in boundary spanning activities (see Table 3-1).
In addition, cooperation involves a commitment of assets and a certain risk.
Outcomes that result in ﬁrm satisfaction should also lower the perceived risk of

future cooperation.

H1: Satisfaction with prior general outcomes is positively related to
operational cooperation.

H2: Satisfaction with prior general outcomes is positively related to boundary
spanning cooperation.

Satisfaction with prior general outcomes can be expected to increase the
perceived continuity of the relationship based on increasing incentives and lowering
risks to stay in the relationship. Satisfaction from these greater outcomes should
increase expectations of relevance and credibility of the information provided by the
channel partner (Wilton and Myers 1986), as well asthe actual perceived relevance
and credibility. Expected economic gains from information utilization will therefore

be higher, and risks lower.

H3: Satisfaction with prior general outcomes is positively related to
expectation of continuity of the relationship.

44

H4: Satisfaction with prior general outcomes is positively related to
information utilization.

Satisfaction with prior informational outcomes in the channel relationship
reﬂects positive attitudes and feelings concerning the channel partner’s activities
speciﬁcally related to information sharing and exchange in the channel. This can
include attitudes and feelings regarding the message characteristics of the
information communicated by the channel partner, such as information quantity,
quality, timeliness, validity, relevance, credibility, clarity, and political acceptability.
Satisfaction or dissatisfaction can also reﬂect media content (e.g., insufﬁcient
personalization or oral explanation of written documents) or source characteristics
(i.e., unhappiness with liaison personnel). These can bear directly on the expected
value of future information received from that channel partner, as well as the value
of certain activities in the relationship. First, because informational outcomes are
also a component of generaI outcomes, a linkage between the two is posited:

H5: Satisfaction with prior informational outcomes is positively related to
satisfaction with prior general outcomes.

Also, satisfaction with ‘ prior informational outcomes results from the
information provided to the ﬁrm being valuable and usable. The dimensionality of
information utility has been discussed by many writers (cf. Bailey and Pearson 1983;
Larcker and Lessig 1980; Wilton and Myers 1986). Moenaert and Souder’s (1990b)
synthesis and extension of this research suggests that information utility comprises
the part-worths of relevance, novelty, credibility, and comprehensibility. Thus, it is

suggested that satisfaction with prior outcomes increases the focal ﬁrm’s trust in the

4,5

credibility of the channel partner. Further, it is posited that such satisfaction would
also increase boundary spanning cooperation. The rationale is that boundary
spanning cooperation is a joint activity to integrate the two ﬁrms so that the
exchange of information can be facilitated. In other words, boundary spanning
activity is an investment of resources designed to reduce the transaction costs of
handling information in the channel. Satisfaction with prior informational outcomes
would increasetheperceived beneﬁtsfrom furtherboundaryspanning activities,thus
making investment of resources to cooperate more attractive.

H6: Satisfaction with prior informational outcomes is positively related to the
channel member’s trust in the channel partner’s credibility.

H7: Satisfaction with prior informational outcomes is positively related to the
channel member’s perceptions of boundary spanning cooperation.

Satisfaction with prior informational outcomes can be expected to increase
the channel member’s perception of the relevance of the present information
supplied by the channel partner. Also, perceived expected beneﬁts from utilization
increase, and perceived risks from utilization decrease. Thus, satisfaction with prior
informational outcomes directly inﬂuences one ﬁrm’s perception of the utility of
present information provided by another ﬁrm. Wilton and Myers (1986) suggested
that disconﬁrmation of expectations for information is a powerful determinant of
information utilization, lending further credence to this proposition.

H8: Satisfaction with prior informational outcomes is positively related to
information utilization.

46
3.3.2 Qmpemtim

In the marketing literature, cooperation is deﬁned as ”similar or
complementary coordinated actions taken by ﬁrms in interdependent relationships
to achieve mutual outcomes or singular outcomes with expected reciprocation over
time” (Anderson and Narus 1990, p. 45). In this study, it is suggested that two
different types of cooperation may have distinct effects on other variables in the
model (see Table 3-1). Rather, the types of cooperation are similar, but the domains
of the coordinated actions differ.

Operational cooperation may be considered to be cooperation that is focused
on general performance outcomes for the two ﬂrrns. Boundary spanning
cooperation can be deﬁned as similar or complementary actions focused on
achieving outcomes in both ﬁrms related to integrating the two ﬁrms. Moenaert and
Souder (1990a) described integration as the ”strategic linking of functionally
specialized groups while preserving their individual orientations" (p. 95). They
described three mechanisms for integration: task speciﬁcation (such as task
planning and scheduling), organization structure design (such as formalization or
centralization), and methods of promoting an organizational climate of integration
(for example, establishing a common corporate culture).

Anderson and Narus (1990) demonstrated that cooperation between ﬁrms
leads to trust. Although they did not distinguish between trust in a partner’s
credibility and trust in a partner’s benevolence, it is suggested that operational

cooperation does, in fact, positively affect both. This was partially supported by

47

Gupta and Wilemon (1988), who found that cooperation between marketing and
R&D increased a channel member’s perceptions of the partner’s credibility.
Because operational cooperation is an investment in joint outcomes, it should also
increase beliefs in a partner’s benevolence. Thus:

H9: Operational cooperation is positively related to a channel member’s trust
in the channel partner’s credibility.

H10: Operational cooperation is positively related to a channel member’s
trust in the channel partner’s benevolence.

Operational cooperation can also be expected to result in greater interaction
between the channel partners. This would include greater sharing of informational
needs and the context of information usage, which would improve the quality of
information shared by a channel partner and reduce the cost of providing it. Also,
the channel member’s information needs are expected to become more focused on
information that can be provided only by this partner. This means that the channel
member is relatively more likely to use information from this channel partner rather
than other sources. Finally, this focus on information provided by the channel
partner means that transaction costs to process information from the channel partner
will be reduced. Therefore:

H11: Operational cooperation is positively related to information utilization.

Because boundary spanning cooperation isfocused on integration outcomes,
its effects are posited to be different from those of operational cooperation. First, in
order for ﬁrms to cooperate in an operational manner, they need to be able to have

mechanisms for exchanging information about their respective needs, goals,

48
operations, and so on. Boundary spanning cooperation can therefore contribute to

operational cooperation:

H12: Boundary spanning cooperation is positively related to operational
cooperation.

Boundary spanning cooperation is a mutual investment toward improved
integration and increased interaction, which should improve the quality of information
shared by a channel partner, as well as the perceived credibility of the information.
Thus, a ﬁrm’s trust in a partner’s credibility should be positively affected. This belief
is supported by Moorman, Deshpande, and Zaltman’s (1992) ﬁnding that interaction
did increase trust. However, there is no reason to posit a link between boundary
spanning cooperation and trust in a partner’s benevolence.

H13: Boundary spanning cooperation is positively related to a channel
member’s trust in a channel partner’s credibility.

Mechanisms for increasing integration, such as task speciﬁcation,
organizational structure design, and organizational climate improving activities all are
means of improving the interaction between the two ﬁrms, and should therefore
increase information utilization (Moorman, Deshpande, and Zaltman 1992). In
addition, a signiﬁcant purpose of boundary spanning activities is to lower the cost of
processing Information passed between the boundaries of the ﬁrm.

H14: Boundary spanning cooperation is positively related to information
utilization.

 

 

49
3.3.3 ILIISI

Kumar, Scheer, and Steenkamp (1995) noted that a consensus seems to be
developing that Interpersonal trust has two components. The ﬁrst is trust in the
partner’s honesty or credibility, which encompasses a belief that a channel member
stands by its word (Anderson and Narus 1990), has the required expertise to render
role obligations faithfully and reliably (Ganesan 1994), and is sincere (Scheer and
Stern 1992). The second is trust in the partner’s benevolence, which is the belief
that a channel member has an interest in the welfare of the focal firm (Ganesan
1994), is willing to accept short-tenn disparities in outcomes (Anderson, Lodish, and
Weitz 1987), and will avoid taking unexpected actions that will have a negative effect
on the focal ﬁrm (Anderson and Narus 1990).

Using a unidimensional trust construct, Anderson and Weitz (1989) showed
that trust in a channel partner was positively linked to a ﬁrm’s expectation of
continuity for the relationship. Ganesan (1994) tested for links between two trust
constructs and long-term orientation. For both retailer and vendor, only trust in a
channel partner’s credibility was signiﬁcant. These results suggest that trust in a
partner’s benevolence is likely to increase the focal ﬁrm’s expectations of relational
continuity, because both parties are likely to gain from continuing the relationship.

Trust in the partner’s credibility implies that the information the channel
partner provides to the ﬁrm is credible and reliable; thus, the focal ﬁrm is more likely
to use that information (Gupta and Wilemon 1988a, 1988b; Moenaert and Souder

1990b). Thus:

50

H15: A channel member’s trust in the channel partner’s credibility is
positively related to the channel member’s expectation of continuity for the
» relationship.

H16: A channel member’s trust in the channel partner’s credibility is
positively related to the channel member’s information utilization.

H17: A channel member’s trust in the channel partner’s benevolence is
positively related to the channel member’s expectation of continuity for the
relationship.

Following Ganesan (1994), residuals between the two trust constructs are assumed

to covary because of correlated errors.

3.3.4 Expeﬂmmmnﬂnuﬂx

Expectation of continuity for the relationship is deﬁned as the channel
member's expectation that the relationship with the channel partner will continue
(Anderson and Weitz 1989). As such, it includes the channel member’s perceptions
of both parties’ intentions to continue the relationship (Kumar, Scheer, and
Steenkamp 1995). A ﬁrm that perceives the relationship will continue will expect to
have a greater amount of time to recover transaction costs that need to be invested
in order to effectively utilize information provided by the supplier. Also, a longer
relationship means that there is more time to realize beneﬁts from relationship-
speciﬁc information provided by the partner. Finally, a continuing relationship
implies less risk from utilizing relationship-speciﬁc information that could be costly
should the relationship be terminated. Thus:

H18: A distributor’s expectation of continuity for the relationship is positively
related to the distributor’s information utilization.

51
3.4 Conclusion
A theoretical model that can be used to assess the inﬂuence of relational
factors on information utilization was described in the preceding section. In the next

chapter, indicators and measures for the constructs in the model are provided.

CHAPTER FOUR

METHODOLOGY

The research methodology used to empirically test the soundness of the
proposed model and hypotheses is presented in this chapter. First, the development
of operational measures for the model constructs is discussed. Second, the unit of
analysis is described. Third, the sampling frame and nature of the key informant are

examined. Finally, survey mailing and follow-up procedures are described.

4.1 Measutouevelooment

To test the theory proposed in Chapter Three, valid scales had to be
developed to measure the constructs of interest. Validation methods are composed
of criterion-related, content-related, and construct-related procedures (Cronbach and
Meehl 1955). Scale development paradigms such as those described by Churchill
(1979) and Gerbing and Anderson (1988) are designed to guide the researcher in
developing valid scales, and are followed in this instance.

Because using single-item measures of constructs can cause signiﬁcant
research difﬁculties due to overspeciﬁcity and random error (Churchill 1979; Jacoby
1978; Nunnally 1978), multiple-item measures were developed. Based on the

deﬁned constructs, a parsimonious set of scale items was generated to fully capture

52

 

 

53

the construct domain (Churchill 1979; Gerbing and Anderson 1988; Saxe and Weitz
1982). Using the existing literature, literature on related concepts with questions that
could be reworded, and the theoretical framework underlying the construct
deﬁnitions, many items were generated for each construct. Following Churchill
(1979), care was taken in generating these items to ensure that the set of items
included those with slightly different shades of meaning, in order to fully capture the
construct.

The next step in scale development was to conduct a pretest to reﬁne the
items. A two-stage pretest methodology was employed. First, ﬁve academicians
and ﬁve practitioners who were willing to participate in the pretest were contacted.
These individuals were (1) researchers who had published in ﬁelds related to the
subject of the dissertation, and/or (2) practitioners who were experienced in supplier-
distributor relationships and in dealing with supplier-provided information. Five ofthe
ten individuals had direct experience in food and grocery operations.

Pretesters were given a list of construct deﬁnitions and a list of scale items.
They were asked to (1) assign each item to the construct they thought appropriate;
(2) note when they thought the item could represent more than one construct in the
model; (3) comment on and suggest changes for items that appeared vague,
ambiguous, and/or difﬁcult to understand; and (4) describe additional scale items
that they thought might capture additional facets of the constructs (Churchill 1979).

Items that were found to be ambiguous orthat appeared to load on more than

one construct were modiﬁed or deleted. In the second stage of the pretest

54.
procedure, a mock survey instrument was developed that contained the modiﬁed
scale items. This survey instrument was the subject of in-person interviews with two
grocery chain buyers. Based on their recommendations, additional changes in the
survey format, instructions, and scale items were made to ensure clarity and

readability. The ﬁnal scale items in the survey instrument are shown in Table 4-1.

4.2 UniioLAnaiyoio

As mentioned in Chapter One, numerous types of information can be
exchanged in a marketing channel. The unit of analysis selected for this research
was a distributor’s response to a report developed by a supplier on how shelving
‘ management can be facilitated. Grocery suppliers often give grocery buyers formal
or informal reports on how certain new or improved shelving set up methods can
increase sales and proﬁts for the buyer’s product categories.

Grocery buyers were asked to identify two such reports they had received in
the previous six months, one each from their leading supplier and their second
leading supplier. Further, respondents were asked to categorize each report as
pertaining to (1) direct product proﬁtability (DPP) set up methods, (2) planogramming
set up methods, or (3) other shelving set up methods. They were also asked to

brieﬂy describe each report.

55

 

Table 4-1
Scale Items Included in the Questionnaire

 

SATISFACTION WITH PRIOR GENERAL OUTCOMES

Please describe your feelings with respect to this supplier’s general performance during
the past year:

V1. Displeased-—Pleased

V2. Sad-Happy

V3. Dissatisﬁed-Satisﬁed

V4. Negative Past Experience-Positive Past Experience

 

SATISFACTION WITH PRIOR INFORMATIONAL OUTCOMES

Please describe your feelings with respect to your information outcomes (quantity and
quality of information, openness to information exchange, access to needed information,
etc.) from this supplier during the past year:

V5. Displeased--Pleased

V6. Sad--Happy

V7. Dissatisﬁed—Satisﬁed

V8. Negative Past Experience-Positive Past Experience

 

OPERATIONAL COOPERATION
Scale Anchors: 1=Minimal Cooperation 7=Extensive Cooperation
V9. Improving product sales.

V10. Improving the competitive position of both ﬁrms.
V11. Improving product proﬁtability.

 

 

BOUNDARY SPANNING COOPERATION
Scale Anchors: 1=Minimal Cooperation 7=Extensive Cooperation

V12. Establishing an atmosphere of teamwork and trust.

V13. Resolving disputes between the two ﬁrms.

V14. Setting up information sharing mechanisms.

V15. Developing competent liaison personnel.

V16. Developing teams/task forces for solving problems.

V17. Developing feedback mechanisms.

V18. Determining responsibilities and commitments in the relationship.

 

 

56

 

Table 4-1
Scale Items Included in the Questionnaire

 

TRUST IN CREDIBILITY
Scale Anchors: 1= Strongly Disagree 7=Strongly Agree

V19. When this supplier gives us a rather unlikely explanation, we're still conﬁdent that
they’re telling the truth.

V20. When this supplier gives us suggestions about our business operations, we know
that they're sharing their best judgment.

V21. This supplier has often provided us with inaccurate information (R).

V22. This supplier usually keeps their promises to us.

V23. Our ﬁrm can count on this supplier to be sincere.

 

TRUST IN BENEVOLENCE
Scale Anchors: 1= Strongly Disagree 7=Strongly Agree

V24. Though situations change, we believe this supplier will be ready and willing to offer
us assistance and support.

V25. When making important decisions, this supplier is concerned about our well-being.
V26. When we share our problems with this supplier, they respond with understanding.
V27. We can count on this supplier to consider how its decisions and actions will affect us.
V28. When it comes to important matters, we can depend on this supplier’s support. I
I——————__—_——-————_—_————-_—-———_—_———————T
EXPECTATION 0F CONTINUITY

Scale Anchors: 1= Strongly Disagree 7=Strongly Agree
V29. We expect our relationship with this supplier to last a long time.

V30. Renewal of our relationship with this supplier is virtually automatic.
V31. It is unlikely that our ﬁrm will still be doing business with this supplier in two years (R).

 

 

 

57

 

Table 4-1
Scale Items Included in the Questionnaire

 

 

V32.
V33.
V34.
V35.

V36.

V37.
V38.
V39.
V40.
V41.

INFORMATION UTILIZATION
Scale Anchors: 1= Strongly Disagree 7=Strongly Agree

Decision Making (Instrumental) Utilization

A decision was made that ﬁt with at least some of the suggestions in this report.
One or more ﬁndings in this report signiﬁcantly impacted on a decision.

It’s possible that without this report different decisions would have been made.

It was worth reading this report because some of the points had a sizable effect on a
decision we made.

This report was used to decide an issue of signiﬁcance.

Knowledge Enhancing Utilization

The ﬁndings in this report were used to provide new insights.

The ﬁndings in this report gave a fresh perspective about something.

The ﬁndings in this report provided new knowledge about something.

The ﬁndings in this report were used to start discussion about an issue.

The ﬁndings in this report were used to learn something new about our business.

 

maximize the expected relevance of the information transmitted as well as the

managerial relevance of the research. To minimize unexplained variance, it was

4.3 Samplingjrame

The relationship between the supplier and distributor was selected to

decided to sample supplier-distributor relationships In only one industry.

ensure a representative sample, no more than one buyer per grocery chain was

selected. To capture a wide array of relationships, key informants were asked to

The sampling frame selected was a sample of grocery chain buyers. To

provide information regarding both their ﬁrst and second leading suppliers.

 

58

The model examined in this research contains nine variables. In addition, the
measure development procedure allowed for the creation of additional variables from
an item pool if a construct should need to be measured by more than one indicator.
To ensure that there would be at least ten complete survey responses for each

variable, a minimum sample size of 150 was sought.

4.4 Kevinformant

This study relied on data from a single key informant on the distributor’s side
of the marketing channel dyad. Because the study concerned the effect of
perceptions of distributors about their information utilization, this was an appropriate
methodology. Although some interesting avenues of research could have been
explored in a dyadic manner, this research was so exploratory that it was judged
more important to thoroughly explore the distributors’ perceptions at this time. Also,
the discrete unit of analysis (e.g., reports selected by the purchasing agent) made
the development of a second key informant problematic.

Campbell (1955) suggested that key informants should have roles that make
them knowledgeable about the issues being researched, and be able and willing to
participate in the research. The key informants for this study were the buyers for the
distributors. The buyer is the primary contact person for most suppliers and is
knowledgeable about the relationship and the reports on shelving management
facilitation provided by the supplier. The buyer also has a signiﬁcant amount of

responsibility and authority for shelving management decisions.

 

 

59
4.5 Maﬂlnganiﬁallmuiln

To ensure that a minimum sample size of 150 was attained, a list of 913
grocery chains was randomly selected from the W
W. Grocery chains with less than $10 million in listed
annual sales were excluded. For each selected chain, a buyer listed in the directory
was randomly selected for contact. Because meat and produce sections of the store
normally are not arranged using conventional shelving sets, buyers listed as
purchasing for those product categories were excluded from consideration.

These 913 grocery chain buyers were telephoned to solicit their willingness
to participate in the survey. The buyers were offered a free summary of the research
results in exchange for their participation. Participating buyers were mailed a
questionnaire packet containing the survey instrument, a cover letter, a brightly
colored "bullet" page reiterating the points in the cover letter, an "instruction stuffer"
brieﬂy restating how to select shelving set up reports for evaluation, a postage-paid
return envelope, a handwritten "please/thank you" note, and a sharpened pencil. All
envelopes were hand stamped.

A follow-up letter was mailed to buyers 12 to 14 days following the initial
mailing. Twelve to 14 days later, a second questionnaire packet with a new cover

letter was mailed to buyers who had not yet responded.

 

CHAPTER FIVE

RESEARCH FINDINGS

The empirical results of the research are presented in this chapter. The ﬁnal
sample is described, and survey responses are proﬁled. Next, results of tests for
nonresponse bias are reported. Procedures for measure puriﬁcation are described,
and the reliability and validity of the ﬁnal measures are evaluated. Finally, test
results forthe proposed model are reported, including tests of individual parameters,

overall model signiﬁcance, and goodness of ﬁt.

5.1 ElnaLSamnle

As summarized in Table 5-1, telephone contact was attempted with one buyer
from each of 91 3 grocery chains in order to ask fortheir participation in the research
survey. Of the 913 buyers, 11 belonged to chains that were found to be out of
business or unlocatable. Seven hundred sixty-two buyers were successfully
reached via telephone. Despite at least three and sometimes ﬁve attempts at
contact, 140 buyers could not be reached and were excluded from the survey.

Of the 762 buyers who were contacted, 63 stated that the survey instrument
did not apply to them and their company. Principal reasons included (1) the chain

being primarily meat markets, gourmet supermarkets, or warehouses (and thus

60

61
lacking conventional set ups); and (2) the chain not receiving any reports or
suggestions from its suppliers of the nature described in this research. Of the

remaining 699 buyers, 49 buyers declined and 650 agreed to participate in the

 

 

survey.
Table 5-1
Response Rate Summary
Total Number Called 913
Out of business/unlocatable 11
Unable to reach 140
Survey did not apply/excluded 63
Declined to participate 49
Willing to participate 650
Final Sample (Willing + Declined) 699
Survey did not apply/excluded 44
Survey responses 217
Response Rate: 217/(699-44) 33.1 %

 

 

5.2 W

Usable survey responses were received from 217 of the 650 buyers who were
mailed surveys. Of the remaining, 44 buyers responded by mail or by telephone with
notiﬁcations that the survey instrument did not apply to either their grocery chain or
their speciﬁc responsibilities as a buyer. Reasons for such notiﬁcations were similar
to those described above. The resulting response rate was 217/(699-44) or 33.1%.

Of these 217 respondents. 175 were able to provide information about reports

they had received from their suppliers. The other 42 (many of whom called to

 

62
discuss their ability to complete the survey) did not receive shelving management
reports as discussed in the survey. However, these buyers did complete other parts
of the survey. Listwise deletion caused these surveys to be omitted from the present
analysis.

From the 175 ﬁrms came information about 175 leading suppliers and 126
second leading suppliers, including evaluations of shelving set up reports received
from those suppliers. Thus, the response sample for analysis consisted of 301
channel relationships.

Respondents selected and evaluated a wide variety of suggested set up
reports that they had received from suppliers. The most common reports evaluated
Included (1) movement or velocity reports, (2) planograms. (3) direct product
proﬁtability reports, and (4) miscellaneous reset suggestions based on sales data,

trafﬁc ﬂow, seasonal tie ins, and so on.

5.3 W15

It was important to determine whether those informants who completed and
returned the questionnaire were representative of the population of buyers surveyed.
To evaluate the possibility of nonresponse bias, the group of ﬁrms with buyers
responding to the survey was compared to the overall sample of 699 ﬁrms. The
sampling distributions of (1) the number of stores in the chain and (2) annual sales
were compared, using data contained in the Wang
W. Chi-square goodness-of—ﬁt tests were conducted to

compare the distributions in the respondents’ group and the sample frame.

63
The low chi-squares and high probabilities (signiﬁcance all'above .05)
reported in Table 52 indicate a lack of signiﬁcant difference between the

respondents’ group and the sample frame. This suggests that nonresponse bias

was negligible.

 

Table 5-2
Goodness-of-Fit Test on Distributions of
the Sample and the Sample Frame

 

 

 

 

 

 

 

 

 

a. Number of Stores in Chain
. . No. of Firms in the
Number of Stores No. Of Firms m the Sample Frame Chi-Square Test
Sample (N - 217) (N = 699)

nla 1 2
2 47 160 x2 = 0.27
3-4 65 208 df = 4
5-9 53 171 p = .99
10-49 36 ‘ 113
50+ 15 45

b. Annual Sales for Chain

. . No. of Firms in the
Annual Sales No. Of Firms— m the Sample Frame Chi-Square Test

Sample (N - 217) (N = 699)

nla 18 40
under $15mm 43 150 x2 = 1.58
$15mm - $24mm 43 138 df = 4
$25mm - $49mm 49 145 p = .84
$50mm - $99mm 29 92
$100mm + 35 134

 

 

 

 

 

 

 

64
5.4 Meamﬂuﬂﬂcaﬂonandﬁeliabﬂity

Following Gerbing and Anderson (1988), the proposed measures were
puriﬁed by assessing their reliability and unidimensionality. First, each of the items
in the proposed scales was assessed using item-to-total correlations. Each scale
item showed a correlation above .40; thus, no items were deleted at this point.
Second, a conﬁrmatory factor analysis was performed using EQS (Bentler 1989) to
ensure that (1) the scale items were unidimensional; (2) convergent validity was
established, with each indicator loading on the relevant construct; and (3) the ﬁt of
the overall measurement model was adequate. Several measures were dropped
due to their lack of unidimensionality. Third, Cronbach’s alpha was calculated to
assess the reliability of each summated scale.

Table 53 contains (1) a list of the retained and dropped measures, (2)
Cronbach’s alpha for each scale, and (3) the results of the EQS conﬁrmatory factor
analysis. Examining the alpha coefﬁcients reveals that six of nine alpha coefﬁcients
were greater than .80, and four were greater than .90. This indicates good reliability
of these constructs (Nunnally 1978). The alpha coefﬁcients for expectation of
continuity, information utilization for decision making, and information utilization for
knowledge enhancement were less than .80. but all exceeded .70, making them
satisfactory for exploratory research.

Forthe conﬁrmatory factor analysis, all of the remaining scale items exhibited

item-construct correlations signiﬁcant at p < .001. For the overall conﬁrmatory

model, the Bentler—Bonett Non-Normed Fit Index and the Comparative Fit Index

 

65

 

Table 5—3

Measurement Model and Conﬁrmatory Factor Analysis by EQS

 

 

 

 

 

EQS Item-
Constructs/ltems Construct Cronbach
Correlation Alpha
Stand. t-value
SATISFACTION WITH PRIOR GENERAL OUTCOMES .9218
V1. Displeased--Pleased .901
V2. SaduHappy .893 23.55
V3. Dissatisﬁed-Satisﬁed .885 23.05
V4. Negative Past Experience-Positive Past Experience .759 17.05
SATISFACTION WITH PRIOR INFORMATIONAL .9409
OUTCOMES
.926
V5. Displeased--Pleased .927 28.94
V6. Sad--Happy .905 26.99
V7. Dissatisﬁed—Satisﬁed .810 20.45
. V8. Negative Past Experience-Positive Past Experience
OPERATIONAL COOPERATION .8684
V9. Improving product sales. .857
V10. Improving the competitive position of both ﬁrms. .871 18.87
V11. Improving product proﬁtability. .765 15.65
BOUNDARY SPANNING COOPERATION .9103
V12. Establishing an atmosphere of teamwork and trust. dropped
V13. Resolving disputes between the two ﬁrms. dropped
V14. Setting up information sharing mechanisms. .810
V15. Developing competent liaison personnel. .835 17.23
V16. Developing teams/task forces for solving problems. .822 16.84
V17. Developing feedback mechanisms. .860 18.00
V18. Determining responsibilities and commitments in the
relationship. .909 19.56

 

 

66

 

Table 5-3
Measurement Model and Conﬁrmatory Factor Analysis by EQS

ll

 

 

 

 

EQS Item-
Constructs/ltems Construct Cronbach
Correlation Alpha
Stand. t-value

TRUST IN CREDIBILITY .8109
V19. When this supplier gives us a rather unlikely

explanation, we’re still conﬁdent that they’re telling the

truth. dropped
V20. When this supplier gives us suggestions about our

business operations, we know that they’re sharing their

best judgement. .760
V21. This supplier has often provided us with inaccurate

information (R). dropped
V22. This supplier usually keeps their promises to us. .733 13.36
V23. Our ﬁrm can count on this supplier to be sincere. .819 15.21
TRUST IN BENEVOLENCE .9195
V24. Though situations change, we believe this supplier will

be ready and willing to offer us assistance and support. dropped
V25. When making important decisions, this supplier is

concerned about our well-being. .859
V26. When we share our problems with this supplier, they

respond with understanding. .892 21.35
V27. We can count on this supplier to consider how its

decisions and actions will affect us. .813 18.07
V28. When it comes to important matters, we can depend on

this supplier’s support. .881 20.87
EXPECTATION OF CONTINUITY .7920

V29. We expect our relationship with this supplier to last a

long time. .906
V30. Renewal of our relationship with this supplier is virtually
automatic. .824 18.58

V31. It is unlikely that our ﬁrm will still be doing business with
this supplier in two years (R). .817 18.31

 

 

 

 

67

 

Table 5-3

Measurement Model and Conﬁrmatory Factor Analysis by EQS

 

 

 

new about our business.

 

 

EQS Item-
Constructs/Items Construct Cronbach
Correlation Alpha
Stand. t-value

INFORMATION UTILIZATION
Decision Making (Instrumental) Utilization .7790
V32. A decision was made that ﬁt with at least some of the

suggestions in this report. dropped
V33. One or more ﬁndings in this report signiﬁcantly

impacted on a decision. , .752
V34. It’s possible that without this report different decisions

would have been made. dropped
V35. It was worth reading this report because some of the

points had a sizable effect on a decision we made. .817 11.87
V36. This report was used to decide an issue of signiﬁcance. .649 10.26
Knowledge Enhancing Utilization .7014
V37. The ﬁndings in this report were used to provide new dropped

insights.
V38. The ﬁndings in this report gave afresh perspective dropped

about something.
V39. The ﬁndings in this report provided new knowledge .798

about something.
V40. The ﬁndings in this report were used to start discussion .462 7.06

about an issue.
V41. The ﬁndings in this report were used to learn something .735 9.95

 

x2 = 977.70, df = 428, p < .001
Norrned Fit Index = 0.886

Non-Normed Fit Index = 0.921
Comparative Fit Index = 0.932

 

68
were above 0.90, indicating a satisfactory ﬁt of the conﬁrmatory measurement model
(Bentler and Bonett 1980). The Bentler-Bonett Norrned Fit Index was slightly below
0.90, but Bentler (1989) noted that this index is not always a robust estimator when

sample sizes are large.

5.5 EvaluationoLMultivaﬂateuormaﬂtx

An important concern in structural equation modeling is the multivariate
normality of the sample data. If the data are not close to being multivariate normal,
standard estimation methods (such as maximum likelihood estimation) may not be
suitable for use.

Table 5-4 shows the means, standard deviations, kurtosis, skewness, and
Bera-Jarque statistic and signiﬁcance level (Greene 1993) of each retained scale
item. The Bera-Jarque test for normality combines skewness, kurtosis, and variance
information for each scale item, and is chi-square distributed with 2 degrees of
freedom.

For 32 of 33 variables, kurtosis was below 1.00, and in the remaining instance
it was well below 2.00. Similarly, for 30 of 33 variables, absolute skewness was
below 1.00. In the remaining instances, absolute skewness was below 1.40. Given
a signiﬁcance level of a = .05, the Bera—Jarque statistic showed no signiﬁcant
deviation from normality for 27 of 33 variables. In the remaining six instances, the
departure from normality was not extreme. Thus, it is reasonable to conclude that

the data were near multivariate normality and suitable for maximum likelihood

estimation.

69

 

 

 

 

Table 5-4
Descriptive Statistics of Retained Scale Items

Variable . .
(Retained Scale Mean Standard Kurtosis Skewness 8?] Statistic

Devratlon (signiﬁcance)
Item)
V1 5.14 1.28 0.41 -0.77 7.06 (p < .05)
V2 5.06 1.22 0.09 -0.52 4.13 (n.s.)
V3 5.03 1.34 0.51 -0.76 5.32 (n.s.)
V4 4.95 1.37 -0.02 -0.68 3.51 (n.s.)
V5 5.11 1.26 0.33 -0.58 4.43 (n.s.)
V6 4.98 1.21 0.12 -0.36 2.11 (n.s.)
V7 4.95 1.29 -0.14 -0.38 1.60 (n.s.)
V8 4.85 1.27 -0.12 032 1.25 (n.s.)
vs 5.32 1.21 0.40 -0.69 8.05 (p < .05)
V10 5.19 1.30 0.39 -0.77 6.40 (p < .05)
V11 5.01 1.35 0.06 -0.55 2.51 (n.s.)
V14 4.94 1.32 -0.04 -0.52 2.57 (n.s.)
V15 4.95 1.45 -0.04 -0.63 2.14 (n.s.)
V16 4.52 1.52 -0.20 -0.35 0.52 (n.s.)
V17 4.51 1.48 -0.22 -0.35 0.61 (n.s.)
V18 4.68 1.40 -0.10 -0.43 1.24 (n.s.)
V20 4.97 1.30 0.33 -O.62 4.16 (n.s.)
V22 5.43 1.36 0.84 -1.03 9.17 (p < .05)
V23 5.32 1.31 0.60 -0.93 9.11 (p < .05)
V25 5.08 1.43 9 0.04 -0.69 2.79 (n.s.)
V26 5.11 1.38 0.21 -0.80 4.69 (n.s.)
V27 4.73 1.47 -0.20 -0.57 1.64 (n.s.)
V28 5.21 1.38 0.13 -0.76 4.21 (n.s.)
V29 5.70 1.37 1.56 . -1.28 14.89 (p < .05)
V30 5.29 1.69 -0.16 -0.84 1.52 (n.s.)
V31 5.77 1.67 0.71 -1.33 4.20 (n.s.)
V33 5.20 1.54 0.38 -0.88 2.97 (n.s.)
V35 5.07 1.58 -0.30 -0.62 1.27 (n.s.)
V36 4.57 1.66 -0.55 -0.41 0.47 (n.s.)
V39 5.32 1.46 0.70 -O.95 4.97 (n.s.)
V40 4.18 1.74 -0.70 -0.34 0.28 (n.s.)
V41 4.87 1.61 -0.24 -0.64 1.20 (n.s.)

 

 

 

 

 

 

 

70
5.6 W

The hypothesized measurement and structural relationships in the proposed
model were simultaneously evaluated using maximum likelihood estimation and the
EQS structural modeling program. The model converged in 17 iterations and had
no difﬁculty in estimating the model parameters.

As shown in Figure 5-1 and Table 5-5, the ﬁt indices showed a moderately
good ﬁt of the overall model. The Bentler-Bonett Norrned Fit Index (N F I) was 0.920.
the Non-Normed Fit Index (NNFI) was 0.826, and the Comparative Fit Index (CPI)
was 0.928. Thus, two of the three were above the minimum acceptable level of 0.90
(Bentler 1990). The chi-square statistic was 125.73 with 15 degrees of freedom and
p < .001. Although the chi-square test results were unsatisfactory, they were likely
inﬂated by the sample size of 301 (Hayduk 1989). In addition, model ﬁt should be
assessed by examining multiple-ﬁt indices (Bagozzi and Yi 1988; Bentler 1990;
Hayduk 1989). Based on these results, it is reasonable to conclude that the model
ﬁts moderately well, but could be improved following additional modiﬁcation and/or

research.

5.7 A ‘ II‘I 0 u:- ,‘n‘| un- -_n u .01 i:
Information utilization was represented by two indicators, each representing
a different type of use: information utilization for decision making purposes and
information utilization for knowledge enhancing purposes. It was the only construct
with more than one indicator. The standardized loadings for the two indicators were

0.803 for decision making use and 0.554 for knowledge enhancing use.

71

 

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E— I m
Table 5-5
Assessment of Structural Model by EQS
Stand.
Independent Construct Hypoth- Path . t-value Conclusion
Dependent Construct eSIs (signiﬁcance)
Coeff.
Satisfaction with Prior
General Outcomes is
positively related to .....
Operation Cooperation H1 .266 5.37 (p < .001) Strongly Supported
Boundary Spanning H2 .257 4.08 (p < .001) Strongly Supported
Cooperation
Expectation of Continuity H3 .169 3.07 (p < .01) Strongly Supported
Information Utilization H4 -.106 ~1.02 (n.s.) Not Supported
Satisfaction with Prior ll
Informational Outcomes is
positively related to....
Satisfaction with Prior
Informational Outcomes H5 .747 19.46 (p < .001) Strongly Supported
Trust in Credibility H6 .212 4.84 (p < .001) Strongly Supported
Boundary Spanning H7 .477 7.60 (p < .001) Strongly Supported
COOperation H8 .035 0.32 (n.s.) Not Supported
Information Utilization
Operational Co0peration is
positively related to.... "
Trust in Credibility H9 .507 9.62 (p < .001) Strongly Supported
Trust in Benevolence H10 .609 13.28 (p < .001) Strongly Supported
Information Utilization H11 .112 1.06 (n.s.) Not Supported
Boundary Spanning
Cooperation is positively
related to....
Operational Cooperation H12 .543 10.98 (p < .001) Strongly Supported ..
Trust in Credibility H13 .065 1.26 (n.s.) Not Supported
Information Utilization H14 .215 2.09 (p < .05) Supported
Trust in Credibility is
positively related to....
Expectation of Continuity H15 .177 2.23 (p < .05) Supported
Information Utilization H16 .254 2.65 (p < .01) Strongly Supported ll

 

 

73

 

 

Table 55
Assessment of Structural Model by EQS
t d.
Independent Construct Hypoth- 8 an t-value ,
, Path , , Conclusion
Dependent Construct esis Coeff (Signiﬁcance)

 

Trust in Benevolence is
positively related to....

Expectation of Continuity H17 .325 4.42 (p < .001) Strongly Supported

 

Expectation of Continuity is
positively related to....
Information Utilization H18 -.029 -0.37 (n.s.) Not Supported

 

 

 

 

 

 

 

Overall Model Fit:
x2 = 125.73, df= 15, p < .001
Norrned Fit Index = 0.920

Non-Normed Fit Index = 0.826
Comparative Fit Index = 0.928

The unstandardized loading from the information utilization construct to the
decision-making-use indicator was ﬁxed in the model at 1.00, in order to identify the
model and ﬁx the scale of the construct. Thus, the signiﬁcance of the loading for
decision-making use could not be assessed. However, the coefﬁcient for knowledge
enhancing use was signiﬁcant at p < .001.

The composite reliability of a construct is calculated using the standardized
loadings and measurement errors for each indicator, and should exceed 0.50
(Fornell and Larcker 1981). The construct reliability for the information utilization
construct was 0.6610, suggesting that the two indicators constituted a strong and

reliable estimate of the underlying construct.

 

74
5.8 W
The results of tests for the signiﬁcance of the hypothesized coefﬁcients are
shown in Figure 5-1 and Table 5-5. The 18 hypotheses in the model were of two
types: (1) those hypotheses linking the relational constructs and (2) those
hypotheses linking relational constructs with information utilization. Because the
strengths of the results for these two types of hypotheses were signiﬁcantly different,

the two types of hypotheses will be examined separately.

5.8.1 WNW
Balationalﬁonstructs

Twelve hypotheses linked the relational constructs. These hypotheses were
modeled to (1) properly capture the effects of each construct on the other and (2)
demonstrate the importance of distinguishing between different forms of satisfaction,
cooperation, and trust. Signiﬁcant coefﬁcients were found for 11 of the 12
hypotheses (see Figure 5-1 and Table 5-5).

Hypothesis H1 posited a positive signiﬁcant relationship between satisfaction
with prior general outcomes and operational cooperation. In other words, it was
suggested that a ﬁrm’s satisfaction with the working relationship with its channel
partner, including resulting proﬁts, competitive position, and other performance
outcomes, leads to greater cooperation between the parties toward mutual proﬁt,

sales, and other competitive goals. Hypothesis H1 was conﬁrmed, with the

coefﬁcient signiﬁcant at p < .001.

 

75

Hypothesis H2 suggeSted that satisfaction with prior general outcomes
increases the perceived beneﬁts and lowers the perceived risks for the channel
partners engaging in boundary activities linking the two firms. These activities can
include setting up information sharing mechanisms, establishing feedback
mechanisms to alert managers in the channel of potential problems or opportunities,
and determining which of the ﬁrms is responsible for and/or committed to various
activities and behaviors in the relationship. Thus, satisfaction with prior general
outcomes was posited to lead to increased cooperation between the channel
partners in boundary spanning activities. This hypothesis was also conﬁrmed at p <
.001.

Hypothesis H3 suggested that satisfaction with prior general outcomes
increases the perceived beneﬁts for ﬁrms remaining in the channel relationship, and
thus has a positive effect on expectation of relational continuity. This hypothesis
was conﬁrmed, with the coefﬁcient signiﬁcant at p < .01.

Satisfaction with prior informational outcomes concerns the distributor’s
beliefs pertaining to the supplier’s quantity and quality of information supplied,
openness to information exchange, willingness to provide needed information, and
so on. Because satisfaction with the information ﬂow in a channel relationship is a
component of a healthy and satisfactory relationship as a whole, satisfaction with
prior informational outcomes was hypothesized to have a signiﬁcant and positive

effect on satisfaction with prior general outcomes (H5).

76

In addition, it was expected that a distributor’s satisfaction with prior
informational outcomes would result In (1) placing additional conﬁdence in the
reliability ofsupplier-provided information and (2) increased expectations of beneﬁts
to be gained from boundary spanning activities, which facilitate information
transmittal. Thus, satisfaction with prior informational outcomes was hypothesized
to increase the distributor’s trust in the supplier’s credibility (H6), as well as boundary
spanning cooperation (H7). H5, H6, and H7 were all conﬁrmed, with each coefﬁcient
signiﬁcant at p < .001.

These results support the view that satisfaction is a signiﬁcant direct and
indirect driver of channel cooperation, trust, and relational continuity. In particular,
satisfaction with prior informational outcomes is a critical precursor (standardized b =
0.477) to boundary spanning cooperation.

Operational cooperation was deﬁned earlier as cooperation that is focused
on general performance outcomes for the two ﬁrms. In the survey, it was measured
by cooperation to improve sales, proﬁts, and competitiveness in the channel, and it
was hypothesized to positively affect both trust in credibility (H9) and trust in
benevolence (H10). Both coefﬁcients were highly signiﬁcant (b = .507 and b = .609,
respectively; both p < .001). This conﬁrms the material role of operational
cooperation in developing the distributor’s trust in both the credibility and the
benevolence of the supplier.

Boundary spanning cooperation was deﬁned as similar or complementary

actions focused on achieving outcomes in both ﬁrms related to integrating the two

 

77

ﬁrms. Boundary spanning cooperation was hypothesized to be positively related to
both operational cooperation (H12) and trust in credibility (H13). The link between
boundary spanning cooperation and operational cooperation was strongly conﬁrmed
(p <-.001), which is consistent with the belief that boundary spanning cooperation
removes obstacles that stand in the way of operational cooperation. However,
boundary spanning cooperation was not found to signiﬁcantly affect trust in
credibility. Combined with the results for H12, this ﬁnding suggests that the effect
of boundary spanning cooperation on trust is indirect in nature; by improving
operational cooperation, boundary spanning cooperation provides for improved trust
in credibility.

The last two hypotheses connecting relational constructs concerned the
effects of trust in credibility and trust in benevolence on expectation of continuity
(H15, H17). Signiﬁcant coefﬁcients were found for both hypotheses, conﬁrming
previous ﬁndings in the literature that trust is a signiﬁcant contributor to the continuity
of channel relationships.

Firms can contribute to their perceived credibility by fulﬁlling their
commitments and role obligations faithfully and reliably, being sincere in their
statements and actions, and ensuring that the information they provide to channel
partners is believable. Firms can establish a benevolent intention in the eyes of a
channel partner by showing an interest In the welfare of the channel partner, being
willing to accept short-term disparities in outcomes, and avoiding unexpected actions

that will negatively affect the channel partner.

 

78
In turn, a channel partner’s trust in the supplying ﬁrm’s credibility and
benevolent intention enables the partner to make strategic and tactical decisions
based on the long-term continuity of the channel relationship. This can include
investments that are tailored speciﬁcally to the relationship, such as materials

handling systems and joint marketing activities.

5.8.2AssessmenmLtImcheseLQQmeming.
If 1' ”IT I'

Six hypotheses linked the seven relational constructs with the information
utilization construct. Information utilization was a latent construct consisting of two
indicators: (1) information utilization for decision-making purposes and (2)
information utilization for knowledge enhancing purposes. Signiﬁcant coefﬁcients
were found for two of the six hypotheses.

Boundary spanning cooperation and trust in credibility were hypothesized to
have a positive effect on information utilization (H 1 4, H16). These hypotheses were
conﬁrmed. For the relationship between boundary spanning cooperation and
information utilization, the coefﬁcient of .215 was signiﬁcant at p < .05. For trust in
credibility, the coefﬁcient of .254 was signiﬁcant at p < .01.

These ﬁndings provide signiﬁcant evidence that building (1) cooperation
focused on boundary spanning activities and (2) trust in the supplier’s credibility are
important tools for improving a distributor’s utilization of information provided by the

supplier.

79

Several hypotheses were not conﬁrmed. Satisfaction with prior general
outcomes (H4), prior informational outcomes (H8), operational cooperation (H11),
and expectation of continuity (H18) were not found to signiﬁcantly affect information
utilization. Thus, there is no signiﬁcant evidence that developing these relational
factors is an effective means of promoting the use of channel-transmitted

Information.

5.9 Summancandﬁoncluslons

A breakdown of direct, indirect, and total effects of the seven relational
constructs on information utilization is given in Table 5-6. Several points are of
interest. First, boundary spanning cooperation had the largest effect on information
utilization by virtue of having both direct and indirect effects on the information
utilization construct.

Second, satisfaction with prior informational outcomes had three indirect links
to information utilization. Its total effect on information utilization was nearly as large
as the effects of boundary spanning cooperation and trust in credibility.

Overall, the ﬁve variables in the model with non-zero effects accounted for
nearly 21% of the variance in the information utilization construct. This is an
impressive ﬁgure for an exploratory design. Based on this ﬁgure, boundary
spanning cooperation accounted for approximately 6% of the variance in the model.
Trust in credibility and satisfaction with prior informational outcomes each accounted

for approximately 5% of the variation in the model.

80

 

 

 

 

Table 5-6
Ranking of Total Effects
Information Utilization Direct Indirect Total
Boundary Spanning Cooperation 0.215 0.070 0.285
Trust in Credibility 0.254 n.s. 0.254
Satisfaction with Prior Informational Outcomes n.s. 0.232 0.232
Operational Cooperation n.s. 0.129 0.129
Satisfaction with Prior General Outcomes n.s. 0.107 0.107

 

 

 

 

 

CHAPTER SIX

CONCLUSION AND IMPLICATIONS

The ﬁndings from this research offer insights into issues that are of signiﬁcant
theoretical and managerial interest. In this ﬁnal chapter, the theoretical signiﬁcance
of the research ﬁndings is considered ﬁrst. The managerial implications of the
research are discussed next, followed by the limitations of the research. Finally,

future research directions are described.

6.11! rl' IS. 'f] [II 8 IE. I.

As discussed in Chapter One, information utilization for decision making and
knowledge enhancing purposes is a critical component of developing and sustaining
a ﬁrm’s sustainable advantage and performance. This research advanced the
theory of how ﬁrms use information they receive from a channel partner in four
important ways.

First, this research provided positive evidence that microeconomic and
transaction costs theory can be used as a theoretical framework for research on
information utilization in marketing channels. Previous research on information
utilization has been fragmented and to a large extent atheoretical. Thus, the

relationship between independent variables (in this instance, satisfaction,

81

82

cooperation, trust, and expectation of relational continuity) and information utilization
can be at least partially accounted for by perceived beneﬁts to the ﬁrm from
utilization, costs from utilization, and risks in utilization. This framework is a
promising vehicle for further theory building and application.

Second, this research provided the ﬁrst empirical evidence that a distributor’s
relationship with its supplier is an important determinant of the distributor’s utilization
of information provided by that supplier. In fact, previous research on information
utilization has not focused on channel-transmitted information. Five of the seven
relational factors in the model were shown to inﬂuence the distributor’s use of
channel-transmitted information. These ﬁndings provide channel partners with a
major additional incentive for building a strong relationshiputhat is, enhanced
information utilization.

Third, the results of this research provided a plain distinction between the
effects of different forms of trust, cooperation, and satisfaction on information use.
Speciﬁcally, trust in credibility, boundary spanning cooperation, and satisfaction with
prior informational outcomes had a much greater effect on information utilization
than did trust in benevolence, operational cooperation, and satisfaction with prior
general outcomes. This is an important improvement over the use in previous
research of undifferentiated, general constructs.

Fourth, this study employed a broader measure of information utilization that
more accurately and fully measured the extent of information utilization in a ﬁrm.

Information utilization was modeled as a latent construct with two manifest

 

83

indicators: (1) information utilization for decision making purposes and (2)
information utilization for knowledge enhancing purposes. Previous researchers
either have not distinguished between these two uses of information, or else have
examined only decision making use. Results of the assessment ofthe measurement
model and construct reliability conﬁrmed that buyers perceived these two uses as
two dimensions ofone underlying information utilization construct. Both types of use
enable a ﬁrm to develop competitive advantage; thus, both types of information
utilization were measured and evaluated.

In addition to developing new insight into a ﬂrrn’s use of channel-transmitted
information, this study furnished one signiﬁcant insight into the channel relationship
itself. A distributor’s trust in the benevolence of its supplier was found to have a
much greater effect on the distributor’s expectation of relational continuity than did
its trust in the credibility of that supplier. In addition to being of practical assistance
to managers, this ﬁnding provides further evidence of the usefulness of examining
these forms of trust separately.

The preceding insights demonstrate the contribution this research has made
to the theories underlying information use and channel relationships. Next, the

managerial implications of the research are examined.

6.2 ManageriaLImuli'satigns

The ﬁndings of this research offer several practical insights into how
managers in a channel relationship can (1) improve the use of information they

provide to and/or receive from a channel partner and (2) improve the overall quality

84

of the channel relationship. Both of these outcomes can be expected to enhance
ﬁrms’ performance by enabling them to improve operational efﬁciency, coordination
in the distribution channel, the quality of marketing decisions, and value provided to
the customer.

First, ﬁrms need to recognize the importance of developing strategies. to
promote the use of information they provide to channel partners. Firms often invest
a great deal of resources in upgrading inter-ﬁrm communication capabilities.
However, information that is communicated is not necessarily used. Further, the
ﬁndings of this research showed that ﬁrms do have the ability to inﬂuence the use
of information they provide. Thus, those ﬁrms that can recognize and exploit
opportunities to enhance the use of information they provide to channel partners can
gain an advantage in the marketplace.

To accomplish this, ﬁrms must make enhancing the use of information they
provide to channel partners part of their marketing plan. It cannot be assumed that
information that is provided will be used. Therefore, the process of developing
information sharing strategies must include an analysis of the ﬁrm’s strengths and
weaknesses in promoting information utilization, information utilization opportunities
(a supplier’s informational needs, an existing network for sharing information, and
so on), and threats to information utilization (a poor-quality relationship, untrained
liaison personnel, inadequate information sharing mechanisms, and so on).

A second managerial implication is the need for ﬁrms to develop strategies

to coordinate their information management and relationship management activities.

85

Because the quality of the relationship between two channel partners affects the use
of information sent from one channel partner to the other, ﬁrms should ensure that
information sharing activities contribute to the quality of the relationship, and vice
versa.

In practice, such coordination is rarely accomplished. Firms often view
information exchange as a method of solving speciﬁc problems or needs for a
channel partner. Even when information partnerships are developed with a global
view toward strategic competitive advantage, the interaction within a ﬁrm between
relational marketing activities and information sharing and use has been limited.

Managers can take several practical steps to coordinate information
management and relationship management. These include (1) developing
executives who understand the strategic beneﬁts and tactical intricacies of a
coordinated approach to information and relationship management, (2) establishing
an organizational structure that promotes the sharing of information and marketing
goals between marketing and information support functions, (3) training both
marketing representatives and information support personnel to recognize the
relationship between information quality and information use, (4) coordinating the
design of information reports to enhance both information use and relationship
quality, and (5) using long-term, account-dedicated liaison personnel in the channel
relationship.

Developing competent, account-dedicated liaison personnel to interact with

a channel partner is a particularly promising strategy for coordinating information

86

management and relationship management. These individuals would have greater
knowledge and expertise for assessing and meeting the informational needs of
particular customers, assisting channel partners in using information, enhancing
channel cooperation, and gaining the partner’s trust. All of these outcomes
contribute to improved relationship quality and information use.

Third, managers should enact control mechanisms to evaluate the use of
information they supply to channel partners. This can be readily accomplished by
asking their partners about the usability, actual usage, and individual users of the
provided information for decision making and knowledge enhancing purposes. This
control process can be accomplished orally or in writing, and can also be used to
gain the channel partner’s feedback on how to improve the quality and usability of
provided information.

A fourth implication for managers is the need to promote boundary spanning
activities. Boundary spanning activities enable two ﬁrms to integrate their operations
by reconciling their respective needs, goals, and actions. This reconciliation, in turn,
leads to greater cooperation toward proﬁt and sales goals, greater trust in the
sUpplier’s credibility, and improved use of channel-transmitted information.

Speciﬁc boundary spanning or reconciling options include (1) investing time
and effort in improving the relationship; (2) establishing an atmosphere of teamwork
and trust; (3) setting up mechanisms for resolving disputes between the two ﬁrms;
(4) communicating regularly; (5) establishing a mutual understanding of each ﬁrm’s

roles, responsibilities, and commitments in the distribution and marketing process;

87

(6) setting up information sharing mechanisms, including information systems linking
the two ﬁrms; (7) using long-term, competent liaison personnel to work regularly with
the other ﬁrm (as discussed above); and (8) developing teams and/or task forces to
solve mutual problems. I

The ﬁnal managerial implication concerns the need to improve the
distributor’s trust in the credibility of the supplier, which in turn improves the use of
information provided to that distributor by the supplier. The ﬁndings of this research
showed that cooperation toward mutual sales, proﬁtability, and competitive goals
signiﬁcantly increases the credibility of the supplier in the eyes of the distributor.
Firms must also build credibility by developing a reputation for credibility, providing
accurate information, dealing honestly with their channel partners, demonstrating the .
skill needed to fulﬁll their obligations in the relationship, and promoting their own
value as a credible channel partner.

In summary, the research ﬁndings suggest that managers can employ a
variety of means to enhance both the quality of their relationships with channel

partners and the use of information provided to those channel partners.

6.3 Limitations
There were several limitations in this research. F irst, self-selected information
reports may not give an accurate picture of day-to—day information utilization in the
ﬁrm. Self-selected reports, or “critical incidents," were used in this study, based on
previous use in other research reported in the literature. Also, an a priori judgment

was made that a buyer’s evaluation of a speciﬁc report was a more reliable

88

assessment of information use than his/her evaluation of a heterogeneoUs stream
of information over a period of time. However, the reports that were evaluated
constituted only a fraction of the information received by each respondent.

A second limitation is the lack of a second informant to further validate the
responses of the key informant. Multiple informants clearly would have been
preferred. However, the use of the "critical incident“ unit of analysis made selection
of a second informant to assess utilization of that same report problematic.

Finally, studying the utilization of a speciﬁc type of report (e.g., a shelving
management report) within a speciﬁc industry raises concerns about the external
generalizability of the research. However, the unit of analysis was chosen in order
to make external generalizations possible. First, the shelving management report
involved a use intended to improve sales and performance of the channel partner,
which is a pervasive need in channel relationships. Second, shelving management
reports are not overly technical in nature and usually can be interpreted by grocery
buyers. Thus, they are not idiosyncratic technically.

This research can be expected to be externally generalizable to the utilization
of similar types of reports in other industries. This model of information utilization
may or may not be appropriate for analyzing reports that are highly strategic in
nature, highly tactical (delivery dates, invoices, and so on), or idiosyncratic

technically (e.g., blueprints).

89
6.4 W

There are several promising areas forfuture research. First, the conﬁrmatory
factor analysis revealed that the scale items measuring the expectation of continuity
construct were signiﬁcantly cross-loaded with most of the other relational constructs.
In other words, these scale items were sufﬁciently ill—deﬁned to measure not only
expectation of continuity, but many of the other relational constructs as well. This
may have contributed to a signiﬁcant understatement of the strength of the
relationships between these constructs and expectation of continuity. Removing
expectation of continuity from the model could lead to modiﬁcation of the results.

Second, these results suggest that both ﬁrm managers and academic
researchers in the marketing ﬁeld must examine several areas in evaluating the
extent to which channel partners use information that is transmitted by the distributor
for decision making and knowledge enhancing purposes. In addition to new
relational factors, it would be prudent to examine other variables that have been
discussed in research on information utilization (see Chapter Two). In particular,
characteristics of the ﬁrm sending the message, properties of the message itself,
and traits of the receiving ﬁrm may be appropriate areas for research.

Thus, other potentially important determinants of the extent of information
utilization would include (1) expertise and working style of the ﬁrm transmitting the
information, (2) power and dependency in the relationship, (3) perceived quality of
the information received, (4) characteristics of the receiving ﬁrm (organizational

formalization and centralization, organizational support for implementation,

90
marketing orientation, and so on), and (5) buyer characteristics (time constraints,
role stress, learning and/or performance orientation, and so on).

The existence of intervening variables between the relational constructs and
information utilization is a signiﬁcant possibility. Other characteristics discussed
above (perceived information quality, organizational supportforimplementation, and
so on) were not part of this model. These factors, addressed in the literature on
information utilization in other marketing related areas, may be signiﬁcant
intermediaries in the model.

Should constructs such as these be added to the model, hypothesized direct
relationships currently found to be insigniﬁcant might become indirectly signiﬁcant
through one or more paths. This would result in improved model ﬁt and improved
determination of the effects on information utilization.

Athird research avenue to explore would be suppliers’ perceptions of how the
information they supply is used by the manufacturer. As Deshpande and Zaltman
(1982, 1984) discussed, suppliers’ perceptions of how "their" information is used
often do not match the distributor’s own perceptions of how the provided information
is used. Thus, ﬁrms supplying information may devise strategies to promote the
distributor’s use ofinformation, based on the supplier’s distorted perceptions of what
increases the distributor’s extent of information use.

Comparing the supplier’s and distributor’s respective perceptions would (1)
enable information suppliers to develop strategies promoting information utilization

that ﬁt with the operating environment of the supplier, (2) enable information users

91

to work with information suppliers to create conditions conducive to-information use,
and (3) improve performance of both channel partners by enhancing their ability to
provide and use information to meet the objectives of both ﬁrms.

Finally, the speciﬁc effects of information utilization on ﬁrm performance can
be explored. A distributor’s increased use of information for decision making
purposes can be expected to improve the quality of decisions, and thus overall
performance. Similarly, greater use of information for knowledge enhancing
purposes adds to the knowledge base of the organization, providing new insights
and fresh perspectives. This should also lead to improved performance.

There are several intriguing directions for research in this area. First, decision
making use and knowledge enhancing use could have different direct and indirect
effects on performance improvements from that use. Indeed, there may be different
intervening constructs in each instance.

Second, the role of relationship characteristics (satisfaction, cooperation,
trust, dependency, and so on), information quality, organizational support for
information use, and buyer characteristics (i.e., role conﬂict, role ambiguity, role
overload, learning orientation, and performance orientation) in performance
improvements from information utilization can be explored. It is possible that these
factors will affect performance improvements from use independently of and
differently from their effect on the extent of information utilization.

In summary, this research was the ﬁrst step on an extended journey to

understanding utilization of channel-transmitted information. While some questions

92

have been answered as a result of this research, even more questions have been

raised. These results provide the basis for future research in this area.

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