Effect of Bilateral Controls on Opportunism: The Mediating Role of Commitment

Abstract

ABSTRACT Purpose Scholars have conducted extensive research on channel control, which includesboth unilateral and bilateral controls. Researchers have mainly focused on the impact of unilateral controls, whereas bilateral controls have been given little attention. As an important classification of channel control, bilateral controls can save the cost of enterprise channel control and are conducive to the long-term development of channel relationships. This paper aims to investigate how bilateral controls impact opportunism. We attempt to answer the following: (1) How do bilateral controls (bilateral incentives, bilateral monitoring, and bilateral enforcement) affect distributors’ opportunism? (2) What is the mechanism by which bilateral controls affect distributors’ opportunism? Methodology/Approach The study proposed a research model usingbilateral incentives, bilateral monitoring, bilateral enforcement, and commitment as the antecedents, and distributor’s opportunism as the consequence. To test the model, we collected data from manufacturers in multiple industries, and analyzed the data from 200 valid responses using a multiple regression approach. Findings Both bilateral incentives and bilateral enforcement would respectively decrease distributor’s opportunism, and bilateral monitoring would increase distributor’s opportunism. Commitment has a mediating role on the relationship between bilateral incentives, bilateral monitoring, bilateral enforcement, and distributor’s opportunism. Research implications Based on expectations of fairness and equitable treatment over the long run, manufacturers need to improve their commitment, and distributors need to curb their opportunism. Whereas a firm’s self-monitoring of investments can meet partners’ expectations, this study suggests that bilateral monitoring decreases commitment and facilitates distributor’s opportunism. Managers should therefore carefully use bilateral monitoring strategies for channel management. Practical implications The study found that both bilateral incentives and enforcement can facilitate commitment and mitigate opportunism. Bilateral enforcement (versus bilateral incentives) has a larger negative impact on opportunism. Bilateral monitoring can mitigate commitments and facilitate opportunism. Additionally, our findings reveal that commitment strengthens the negative effect of both bilateral incentives and bilateral enforcement on opportunism and mitigates the positive effect of bilateral monitoring on opportunism. The findings serve as a base for marketing practitioners managing inter-firm relationships. Originality/Value This study makes two contributions to existing literature. First, it empirically tested the impact of bilateral incentives, bilateral monitoring, and bilateral enforcement on opportunism, thereby enriching the literature on bilateral controls in the marketing channel. Second, it aims to further clarify the mechanism of bilateral controls affecting opportunism. Our study laid a foundation for a follow-up study on commitment.