Manufacturer–retailer bridge governance in retail supply chains

Abstract

To address information asymmetry in supply chains, the literature suggests that manufacturers should shift from market governance to hierarchical governance or a combination of both. However, as many manufacturers must continue to rely on market governance, this research introduces a governance strategy, manufacturer–retailer bridge governance (MRBG), for these manufacturers. The research examines the governance effects of MRBG on distributor behavior and the contingent effects of manufacturer status and MRBG strategic orientation. Hypotheses are developed based on in-depth interviews with sales and purchasing managers and tested in two experiments with sales managers. The results show that MRBG has a double-edged effect on distributor behavior, and this effect is moderated by manufacturer status. Moreover, the alignment between manufacturer status (high versus low) and MRBG strategic orientation (collaboration versus arbitrage) influences the effectiveness of MRBG.