effects of dependence and trust

7282019 Effects of Dependence and Trust

httpslidepdfcomreaderfulleffects-of-dependence-and-trust 127

Effects of Dependence and Truston Channel Satisfaction

Commitment and Cooperation

Mohammed Abdur Razzaque

Tan Gay Boon

ABSTRACT Although researchers in the area of channel behavior

have examined issues of dependence and trust on satisfaction commit-

ment andcooperation independently the joint effects of dependence and

trust on the listed dependent variates have received little attention in the

literature This study seeks to fill that void via an experiment conducted

in Singapore Extending on the work of Andaleeb (1996) an experimen-

tal design to create treatment groups with differing levels of dependence

and trust was used to establish the relationships between the dependent

and independent constructs Research results highlight the important

mediating effect of trust on dependence in determining attitudinal and

behavioral outcomes Specifically all three dependent constructs were

rated highly under conditions of high trust regardless of the level of de-pendencepointing to the overbearing influence of trust in shaping chan-

nel dynamics [Article copies available for a fee from The Haworth Document Delivery Service 1-800-HAWORTH E-mail address ltdocdeliveryhaworthpresscomgtWebsite lthttpwwwHaworthPresscomgt copy 2003 by The Haworth Press

Inc All rights reserved]

Mohammed Abdur Razzaque is affiliated with the School of Marketing The Uni-versity of New South Wales

Tan Gay Boon is a Logistics Executive with a Singapore CompanyAddress correspondence to Mohammed Abdur Razzaque School of Marketing

The University of New South Wales Sydney NSW 2052 Australia (E-mail marazzaqueunsweduau)

Journal of Business-to-Business Marketing Vol 10(4) 2003httpwwwhaworthpresscomstoreproductaspsku=J033 2003 by The Haworth Press Inc All rights reserved

101300J033v10n04_02 23



KEYWORDS Distribution Channels dependence trust satisfaction

commitment cooperation Singapore

INTRODUCTION

This research investigation seeks to empirically test some of the existing

propositions about channel behaviors mainly derived from the US experiences

in the context of an Asian market and thereby provide an opportunity to validate

them from a broader perspective Essentially a replication and extension of an

earlier work by Andaleeb (1996) it examines the effects of different levels of

dependence and trust on channel satisfaction commitment and cooperation in

the context of Singapore More specifically it seeks to reveal interaction effectsbetween dependence and trust

Globalization of business and an ever-increasing level of competition have

been forcing business firms all around the world to change their mode of opera-

tions Traditional exchanges involving discrete inter-firm interactions and im-

personal buyer-seller transactions (Macneil 1980) are being replaced by

relational type of exchanges characterized by high level of personal involve-

ment joint actions and long-term commitment This marks the rise to promi-

nence of relationship marketing a paradigm shift that advocates inter-firm

partnership and collaboration as the way to compete in a global marketplaceThe transition described above is perhaps most vividly manifested in the

conventional distribution channels where the participants specializing in dif-

ferent functionshave to dependon each other for thechannel to function effec-tively In response to the constantly changing business environment of today

participants in many channel arrangements have changed their bases of com-

petition Adoption of supply chain management which calls for even higher

levels of coordination and commitment (Dertouzos et al 1989 Houston and

Gassenheimer 1987) has yielded higher channel performance and satisfac-

tion and resulted in stronger dependence amongst channel members Usually

channel relations are of long duration (Frazier and Summers 1984) during

which each member expects numerous interactions with another (Young and

Wilkinson 1989) and behave cooperatively Trust which underpins the col-

laborative relationships associated with relational exchanges and allows firms

in the relationship to look beyond short-term returns (Ganesan 1994) has a

mediating effect on the behavioral outcomes in dependence relationships

(Andaleeb 1995) Dependence with its different aspects such as types of influence strategies

symmetry of dependence etc plays a central role in determining behavioral

24 JOURNAL OF BUSINESS-TO-BUSINESS MARKETING



outcomes and thus affects channel dynamics For example the use of coercive

influence strategies results in greater dissatisfaction and conflict among chan-

nel members (Brown et al 1983) Similarly presence of trust or lack of it dis-

tinguishes relational partnerships from functional relationships (Levy and

Weitz 1995 Weitz et al 1995) the high degree of cooperation and commit-

ment in relationship marketing requires the presence of trust (Achrol 1991)Literature presents a somewhat divergent stand on the relationships be-

tween some of the constructs referred to above The effect of dependence on

satisfaction for instance has been a long-standing moot point while some

(El-Ansary and Stern 1972 Pfeffer and Salancik 1978 Kotter 1979) see de-

pendence as detrimental to satisfaction others (Lewis and Lambert 1985

Andaleeb 1996) suggest a positive relationship between the two It is how-

ever important to note that there could be different types of relationships sat-

isfaction of one partner with the other and evaluation of one partnerrsquos

performance by the other vary across these various types (Cannon and

Perrault Jr 1999)

OBJECTIVE OF THE STUDY

The trends discussed above have warranted a reexamination of concepts

such as cooperation commitment trust satisfaction and dependence in the

context of channels since the ever-changing business environment of today

may have altered the relationship between them substantially Although much

has been written about these concepts (Dwyer et al 1987 Spekman 1988Anderson andWeitz 1989 1992 Anderson and Narus 1990 Heide and John

1990 Lorange and Roos 1991) (i) most researchers have conducted their

studies in the West and (ii) none has incorporated all of them in a single study

Channel behaviors do vary between different cultural settings and culture af-

fects behavioral cooperation through mechanism selection or modification

(Chao et al 1998) Objective of this investigation which integrates all the fo-

cal points is to study these constructs in thecontext of an Asian market (Singa-

pore) unravel new relationships if any and thereby provide an opportunity to

test the validity of the theory in a non-US context

DEVELOPMENT OF HYPOTHESES

To facilitate the development of the hypotheses to be tested in this study a

clear understanding of dependence trust and their individual and joint effects

Mohammed Abdur Razzaque and Tan Gay Boon 25



on satisfaction commitment and cooperation constitutes a logical starting

point

Dependence In this study the term dependence refers to a firmrsquos need to

maintain an exchange relationship with other firms to achieve desired goals

This conforms to the definitions proposed by Emerson (1962) Pfeffer and

Salancik (1978) Frazier (1983) Buchanan (1992) and Andaleeb (1996) An

organization must develop and maintain relationships with another organiza-

tion that controls thescarce resources necessary to achieve itsgoals (Buchanan

1992) Dependence and its inverse power are often viewed as key concepts

in explainingorganizational and interpersonal behaviors (Thorelli1986Mor-

gan and Hunt 1994) Resource dependence theory describes channel relation-

ships as a set of power relations arising from the acquisition and exchange of

economic resources channel member X controlling resources required bymember Y acquires power to influence Y (Emerson 1962 Pfeffer 1981)

Trade partners providing critical resources are difficult to substitute while

those providing less important resources are easily replaceable (Buchanan

1992) Therefore the significance of the relationship and the firmrsquos ability to

replace its partner are deemed to be closely related (Frazier 1983)

The symmetry of the relationshipndashanother important aspect of depend-

encendashis determined by the extent to which partners value one anotherrsquos re-

sources A symmetric relationship values the resources of the two parties

equally and exhibits high-to-low dependence levels In an asymmetric rela-

tionship the resources are valued unequally and a less dependent party domi-

nates the relationship A symmetric high-dependence relationship engenders

valuable resources as well as cooperation between partners In an asymmetricrelationship dependence represents a tradeoff the dominant partner provides

valuable resources but may refuse to do so if supplying resources undermines

itsownprograms and efforts (Buchanan 1992)These differences betweenthe

two states may imply attitudinal differences with regard to satisfaction com-

mitment and cooperation

Trust The term trust has been defined variously as onersquos beliefs about the

motives and intent of another party (Pruitt 1981 Butler and Cantrell 1984

Rempel and Holmes 1986) onersquos confidence in exchange partnerrsquos reliabil-

ity integrity (Morgan and Hunt 1994) and goodwill (Ring and Van De Ven

1992) This investigation however concurs with Andaleebrsquos (1996) interpre-

tation of trust and views it as the willingness of a party to rely on the behaviors

of others especially when these behaviors have outcome implications for the

party bestowing trust Presence of trust between parties makes one confidentand contented about the relationshipby reducing theuncertainty about the out-

comes in therelationship absence of trust does just theoppositeRelationships




lacking trust are typically unfulfilling and likely to be severed Hence trust is

crucial in determining dependence relationships

Interactions between Dependence and Trust The vulnerability resulting

from high degrees of interdependence between channel members (Gundlach

andCadotte 1994 Kumaret al 1995) hasmotivatedresearchers to study trust

in the context of distribution channels (Anderson and Weitz 1989 Anderson

andNarus1990 Morgan andHunt 1994)However notmany of them studied

the effects of dependence and trust separately (Kale 1986 Keith et al 1990)

perhaps because of theimplicitbuterroneous assumption that dependence re-

lations are characterized by trusting relations Despite lack of trust parties in-

volved in a dependence relationship may continue the relationship because of

the benefits it provides to both the parties (Arrow 1974) As an illustration

consider an exchange relationship involving buyer B who depends on seller Sfor a critical resource When B depends on but does not trust S exchange can

continue But if S exploits B which is possible in the absence of trust the rela-

tionship is likely to worsen However the risks associated with and the uncer-

tainties inherent in the dependence relationship become more acceptable in a

trusting relationship because of an assurancendashimplicit or evenexplicitndashthatex-

pected outcomes will be achieved On the contrary when B does not depend

on S due to the availability of alternative sources of supply (weak depend-

ence) continuedinteraction is suspect In this situation trust maybe thedecid-

ing factor in determining the outcome although current marketing literature

has yet to provide sufficient indication to support it It is therefore proposed

thathigh-low dependence perceptions will interact withhigh-low trustpercep-

tions to definequalitatively different types of relationships that exhibit varying

degrees of satisfaction commitment (Andaleeb 1996) and cooperation

Main and Interaction Effects of Dependence and Trust on Satisfaction

Satisfaction which affects channel membersrsquo morale encourages partici-

pation in collective activities (Schulet al 1985)prevents members from leav-

ing the channel and seeking protective legislation (Hunt and Nevin 1974) is

crucial in understanding channel relationships Although it hasbeen defined in

many different ways (Gaski and Nevin1985 Ruekert and Churchill 1984)

this investigation views satisfaction as a positive affective state resulting from

the appraisal of all aspects of a firmrsquos working relationship with another

(Frazier et al 1989 Gaski and Nevin 1985)

Literature supports a positive relationship between trust and satisfaction

(Dwyer et al 1987 Anderson and Narus 1990) suggesting that presence of trust raises levels of performance and causes greater satisfaction (Kumar

1996) One may question these on the grounds that for trust to be present trust-




ing parties must be vulnerable to some extent decision outcomes must be un-

certain but important to the trusting party (Deutsch1962 Moorman et al

1992 Schlenker et al 1973) and it must be possible for the partner to abuse

the trust (Luhmann 1979) However it is the ability of the parties to make a

ldquoleap of faithrdquo (Kumar 1996) that helps overcome these problems implying

that each party is concerned about the otherrsquos welfare and that neither will do

something that can hurt the other Schul et al (1985) have suggested that the

composite of trust mutual respect and support is associated with higher satis-

faction These views tend to suggest that the presence of trust will engender a

sense of security arising from the expectation that the bestowal of trust will re-

sult in positive outcomes or not result in negative outcomes and should lead to

greater satisfaction Hence it is posited that

H 1 The greater the level of buyerrsquos trust in a supplier the greater will be

the buyerrsquos satisfaction in the relationship

Researchersrsquo attempts to establish some linksndashdirect or indirectndashbetween

dependence and satisfaction (Dwyer 1980 Frazier et al 1989 Anderson and

Narus 1990 Keith et al 1990) have failed to yield any conclusive result

However there is no denying that trade partners controlling resources impor-

tant to the focal firm can influence latterrsquos strategic decisions (El-Ansary and

Stern 1972 Pfeffer and Salancik 1978) adversely affecting its performance

(Porter 1980) Hence such relationships are characterized by high degrees of

conflict and dissatisfaction (Reve and Stern 1979 Gaski 1984)Literature tends to suggest that direct effect of dependence on channel

membersrsquo satisfaction is nebulous (Andaleeb 1996) perhaps some other con-

struct acts as moderating variable between them Andaleeb (1996) notes that

introduction of trust in dependence relationships better explains satisfaction

through observation of the interaction effects If in a situation involving lim-

ited alternative sources of a critical resource a buyer has to depend on a partic-

ular supplier the buyerrsquos satisfaction in the relationship is likely to be affected

by the extent of trust present in the relationship High level of trust in the sup-

plier is likely to exhibit lowuncertainty associated with theexpected outcomes

and vice versa Consequently satisfaction is expected to be greater in the high

dependence-high trust condition than that in the high dependence-low trust

condition If on the contrary the buyer is not dependent on the supplier as

there are alternative sources of supply the level of trust in the supplier will be

less important in determining the buyerrsquos satisfaction As a result satisfactionwill not be influenced by different levels of trust Therefore the following is

hypothesized




H 2a When a buyer is dependent on a supplier satisfaction of the buyer willbe influenced by the level of buyerrsquos trust in the supplier

H 2b When a buyer is not dependent on a supplier satisfaction of the buyer will not be influenced by the level of buyerrsquos trust in the supplier

Main and Interaction Effects of Dependence and Trust on Commitment

Commitment is especially relevant in conventional distribution channels

Like other constructs discussed earlier it has also been conceptualized in dif-ferent ways While Morgan and Hunt (1994) viewed it is the maximum effect

toward maintaining a relationship Iverson and Roy (1994) focused on turn-over or attachment as the key factor Gundlach et al (1995) on the other hand

explained the construct as an aggregate of some form of investment a psycho-logical attachment and a temporal phenomenon indicating that the relation-ship exists over time This research synthesizes all these diverse views and

defines commitment as an enduring desire to maintain a valued relationshipwith expectation of continuity and intention to strengthen the relationship

If trust and commitment were viewed as mediators (Morgan and Hunt1994) the former would be a precursor of the latter it is unlikely to establish

commitment if trust is deficient as commitment usually involves potential vul-nerability and sacrifice Since short-term inequities are inherent in any rela-tionship (Williamson 1985) mutual trust is needed to develop confidence

which will correct these inequities over time and yield long-term benefits(Dwyer et al 1987)

Trust also represents value (Arrow 1974) that provides enhanced benefitsto both parties in a relationship (Barber 1983) by allowing them to take risks

because onersquos partner is unlikely to act opportunistically (Morgan andHunt1994) Furthermore the trusting party need not monitor its partnerrsquos be-

haviors to safeguard self-interests (Andaleeb 1996) which should foster mu-

tual attachment and contribute to the continuity of the relationship It istherefore posited that

H 3 The greater the level of a buyerrsquos trust in a supplier the greater will be

the buyerrsquos commitment to the supplier

A buyerrsquos commitment to a supplier may also be influenced by the extent towhich the latter fulfills itsneeds as well as theavailability of neededresources

from alternative sources (Andaleeb 1996) The dependent party in an ex-

change should therefore value the relationship and want to maintain it It isgenerally believed that trade partners will realize benefits by establishinglong-term relationships (Anderson and Weitz 1989) and the relational norms




needed to govern these relationships (Dwyer et al 1987 Macneil 1980) To

establish these long term relationship and norms trade partners may signal

their intention by making credible commitments such as investment of their

own resources From this perspective dependence should reinforce a partyrsquoscommitment to the relationship suggesting that

H 4 The greater the buyerrsquos dependence on a supplier the greater will be

the buyerrsquos commitment to the relationship

By positing an interaction effect of trust and dependence on commitment

Andaleeb (1996) observed that the level of trust in low-dependence condi-

tion affected commitment while that in high-dependence condition did notHe argues that in a high dependence situation where the buyer has trust in the

supplier commitment should be high leading to identification with the part-

ner Even when the buyer has no trust in the supplier anticipation of greater

outcome uncertainties need not necessarily weaken commitment because es-

sential resources are available from the relationship However in a low-de-

pendence relationship lacking trust between the partners commitment to the

relationship is weak and the alliance is likely to be discontinued under the

slightest prompting Presence of trust in a low-dependence condition on the

contrary influences commitment positively Hence the following hypotheses

are postulated

H 5a

When the buyer is dependent on the supplier commitment of the buyer will be high and unaffected by different levels of trust in the supplier

H 5b

When the buyer is not dependent on the supplier commitment of thebuyer will be affected by different levels of trust in the supplier

Effects on Cooperation

The fact that no businesses can be competitive and efficient without devel-

oping relationships with other members of the industry and distribution chan-nel (Young and Wilkinson 1989) underlies the importance of cooperation

Henceit is notsurprising that almost four decades ago Alderson(1965)voiced

the need for the development of a corresponding cooperative theory like the

competitive theory

Anderson and Narus (1990) define cooperation as similar or complemen-tary coordinated actions taken by firms in interdependent relationships to

achieve beneficial outcomes with expected reciprocation over time Someearly researchers (eg Pearson and Monoky 1976 Gattorna 1978 Ross et al

1982) tended to perceive cooperation as the inverse of conflict However




since their differences have been demonstrated empirically (Lusch and Ross

1981) a few others viewed them as two separate concepts (Pearson 1972

Robicheaux and El-Ansary 1976)Social scientists emphasized the importance of trust in different coopera-

tive social situations For example Twomey (1974) demonstrated a positive

association between trust and conflict resolution whileReve (1981) has shown

the importance of norms of exchangendashtheextent to which channel transactions

are based on mutual trust in which the parties share a unit bondingndashin fostering

channel cooperation Similarly Anderson and Narus (1990) observed that

with the establishment of trust firms learn that cooperation leads to outcomes

exceeding what the firm would achieve acting for its own interestIn social psychology trust has often been viewed as a precondition of coop-

eration an individual must trust another to act in good faith before the formerdecides to cooperate with the latter (Deutsch 1962) or to undertake high risk

(Pruitt 1981) However Anderson and Narus (1990) have re-specified coop-

eration as being causallyantecedent rather than consequent to trust since trust

in a partner develops as a result of past cooperation with the partner Matthews

and Shimoff (1979) Frazier (1983) and Dwyer and LaGace (1986) have en-

dorsed this view Notwithstanding whether cooperation is antecedent or con-

sequent of trust the positive association between the two remains consistent

Hence the following hypothesis is posited

H 6 The greater the level of the buyerrsquos trust in a supplier the higher will be

the buyerrsquos tendency to cooperate with the supplier

Dependence and power relations have long been linked to cooperation Theexercise of power is instrumental in fostering cooperation within a marketing

channel (Stern and El-Ansary 1992) while the importance of dependency re-

sults from resource scarcity or performance distress in producing inter-organi-

zational cooperation (Schermerhorn 1975) Frazier and Summers (1984

1986) Frazier and Rody (1991) and Skinner et al (1992) have advocated the

positive role of dependence in promoting effective coordination in exchange

relationships Bonoma (1976) suggests that levels of cooperation tend to be

high in a unilateral power system whereby one strong party exercises influ-

ence over a considerably weaker one However the notion of cooperativeness

in this unilateral context often forces the weaker party to satisfy undue de-

mands of its stronger counterpart

In marketing channels where each participant performs specific tasks

specialization creates significant functional interdependence compellingparticipants to cooperate (Robicheaux and El-Ansary 1976) For example

manufacturers who generally specialize in production national promotion




and physical distribution and retailers who specialize in local merchandising

assortment building and local promotion depend on each other to reach the fi-

nalconsumers This dependency promotes joint actions from both parties in at-

taining goals such as reducing lead times increasing responsiveness and

lowering costsOn theother hand large power retailersor category killers may

not be as cooperative with the manufacturers since they may not be dependent

on them These arguments lead to the following hypothesis

H 7 The greater the buyerrsquos dependence on a supplier the higher will be


Desirability of cooperation often comes in conflict with organizationsrsquo

preference for high levels of independence and autonomy (Stern and Brown1969) andis constrained by time and effort theorganizationcandevote to joint

action with other organizations This implies that firms will cooperateonly un-

der circumstances of necessity particularly when dependency in the relation-

ship is pronounced levels of trust in the supplier has no affect on the buyerrsquos

propensity to cooperate Hence no interaction effect is posited and following

hypotheses are put forward

H 8a

When the buyer is dependent on the supplier the propensity of thebuyer to cooperate will be high and unaffected by different levels of trust in the supplier

H 8b

When the buyer is not dependent on the supplier the propensity of the

buyer to cooperate will be low and unaffected by different levels of trust in the supplier

RESEARCH DESIGN AND PROCESS

To test the hypotheses presented above this research uses an experimental

designin line with similar studies conducted in thepast (SullivanandPeterson

1982 Schurr and Ozanne 1985 Andaleeb 1996) This approach affords con-

trolover the researchsituationby facilitatingevaluation of causal relationships

among the variables and ensuring internal validity (Zikmund 1997) A 2 times 2

between group factorial design that combines two levels of dependence (high-

low) with two levelsof trust (high-low) to produce four experimental groups is

chosen to allow the observation of both main and interaction effects Follow-ing Andaleeb (1996) dependence and trust are manipulated using a set of four

of short-case like scenarios describing situations reflecting the four treatment




effectsndashhigh dependence-high trust high dependence-low trust low depend-

ence-high trust and low dependence-low trust

Experimental Manipulations

Each scenario describes a contrived relationship involving a manufacturer

(supplier) and a distributor (buyer) which has been in place for about a year A

one-year duration is considered ideal for the investigation because too long a pe-

riod may not be conducive for the low trust manipulation while a shorter dura-

tion is deemed inappropriate for the high trust manipulation (Andaleeb 1996)

The high dependence scenarios presented the supplier as a monopolist pro-

ducing crucial components for the industry and the buyer as a small and insig-

nificant customer who is dependent on the supplier for the components whichare critical to the buyerrsquos production Subjectsrsquo perception of the buyerrsquos

heavy dependence on the supplier is further accentuated by stressing that there

are no ready substitutes for the components in question and it is too expensive

and thus infeasible for the buyer to switch to a new supplier Low dependence

is manipulated by reversing the above information The supplier is portrayed

as one of many producers in the industry while the buyer is a big-time cus-

tomer that all the suppliers in the industry want to do business with The com-

ponents are described as undifferentiated generic products that vary little from

one supplier to the other Hence it is easy for the buyer to switch suppliers

creating a condition of low dependence on the supplier

In the high trust scenarios the supplier is portrayed as very honest and reli-

able in its dealings with the buyer It is highlighted that a close working rela-

tionship based on trust and communication has been built with the supplierUnderscoring communication is important because it is viewed as an anteced-

ent of trust (Anderson et al 1987) To reinforce perceptions of strong trust

subjects are told that the supplier has been conferred an award recognizing its

integrity and trustworthiness by a contrived publication Subjects are how-

ever not informed that the publication is fictitious to enhance the realism of

the depictions The opposite is projected in the low trust manipulation where

thesupplier is describedas dishonest lacking integrityandunethical in itscon-

duct with the buyer Before responding to the questions following the scenar-

ios subjects are informed that there are no right or wrong answers

Sampling Procedure

The subjects comprised 120 Singaporean managers and executives withcorporate buying and selling experience representing a broad spectrum of in-

dustries Using a judgmental sampling they were selected from a class of 189




participants attending a professional program in sales and marketing manage-

ment Questionnaires along with prepaid self-addressed envelopes were dis-

tributed to the subjects requesting them to return the completed questionnaires

within a stipulated date All the questionnaires were received in two weeks

time Subjects were randomly assigned to one of the four experimental groups

to exclude any bias or undesired extraneous variables

Measurement Scales

Five items are used to measure each of the five constructs namely depend-

ence trust satisfaction commitment and cooperation All the 25 items each

numbered for easy reference are shown in Exhibit 1 One of the items in each

of the scales has been reversed to test for subjectsrsquo internal consistency Mostitems used in the survey have been adopted or adapted from past studiesThe five items measuring dependence reflect the criticality of the compo-

nents needed and theavailability of alternative supply sources Thenotion that

firmrsquos dependence in a channel is inversely related to the number of alterna-

tives available to the channel (Robicheaux and El-Ansary 1975) underlies

items 1 5 and 9 reflecting the buyerrsquos ability to switch between alternative

suppliers and thus its resultant dependence on a particular supplier The argu-

ment that dependence is a function of the resources held by one party (Pfeffer

and Salancik 1978) and that criticality of the resources is a manifestation of

the focal companyrsquos dependence on its supplier has also been operationalized

[item 19] Following this the perceived importance of the supplier to the focal

company has been viewed as a measure of the latterrsquos dependence in the ex-

change [item 16] This is a new measure developed specifically for this studyHowever its correlations with the other dependence measures have been

deemed acceptableLiterature on trust (Larzelere and Huston 1980 Dwyer and LaGace 1986)

suggests that the trusting partyrsquos confidence results from the belief that the

trustworthy party is reliable [item 21] and helpful [item 11] The expectation

that one partner will not exploit the other [items 2 24] demonstrates an act of

trustndashthe belief that a partner will only do things that result in positive out-

comes for the company and refrain from taking any action that may result in

negative outcomes (Anderson and Narus 1990) The argument that willing-

ness to act is implicit in the conceptualization of trust (Morgan and Hunt

1994) is reflected by item 8 measuring the focal firmrsquos willingness to make

crucial purchasing decisions based on its supplierrsquos suggestions

Satisfaction with the supplier has been measured by performance and theachievement of goals [item 6] (Robicheaux and El-Ansary 1975 Skinner et

al 1992) and the propensity to make positive recommendations after satisfy-




ingencounters [item 13] Theremaining three items [10 1822]measure satis-

faction connected with various aspects of relationship To measure overall

commitment as indicatedby a desire to continue the relationship this study uses

a four-item scale [items 3 12 14 and 20] consistent with Morgan and Hunt

(1994)andan additional newmeasure [item 25] whichshowed acceptable cor-

relation with the other established measuresOrganizational interdependencyndasha basic concept representing cooperation

(Schermerhorn1975)ndashis capturedby item 4 which emphasizes the importance


EXHIBIT 1 Statements Used to Operationalize the Variables (lsquoMrsquo Refers to the

Supplier)

VARIABLES No Statements operationalizing the variable

DEPENDENCE 1 My alternate sources of filter component supply are limited

TRUST 2 There is a need for me to monitor every aspect of transactions withM because he cannot be trusted

COMMITMENT 3 It is a good idea for me to commit to a long-term contract with M formy supply of filter components

COOPERATION 4 My success is dependent on maintaining a good working relationshipwith M

DEPENDENCE 5 It is easy for me to switch to another filter components supplier

SATISFACTION 6 I am satisfied with Ms performance

COOPERATION 7 My future goals are best reached by working with rather than against

MTRUST 8 I can be confident of making crucial purchasing decisions based on

Ms suggestions

DEPENDENCE 9 It is very difficult for me to switch to other suppliers even if I want to

SATISFACTION 10 I like the way M conducts his business relationship with me

TRUST 11 I believe M will render help when needed even when he has nothingto gain from helping me

COMMITMENT 12 It is not necessary for me to switch to a new supplier yet

SATISFACTION 13 I would not recommend M to my fellow manufacturers

COMMITMENT 14 I think it is good to further strengthen my ties with M

COOPERATION 15 I will try my best to resolve any conflict with M

DEPENDENCE 16 M is important to my business

COOPERATION 17 There is no need for me to cooperate with M

SATISFACTION 18 I am satisfied with my relationship with M

DEPENDENCE 19 The components supplied by M are critical to my operations

COMMITMENT 20 I would be better off if I terminate my relationship with M

TRUST 21 I can rely on M to keep his promises

SATISFACTION 22 I consider M a good company with which to do business

COOPERATION 23 I will tend to go along with Ms wishes

TRUST 24 I do not expect M to take advantage of me

COMMITMENT 25 I believe that my relationship with M is worth maintaining indefinitely



of a good relationship with the partner The scale also operationalizes the no-

tion that resolution of conflict is a prerequisite for cooperation among channel

members and efficient channel operations [item 15] (Frazier 1983 Robicheaux

andEl-Ansary 1975)Thedesire for havingrelationship between autonomous

organizations [items 7 17] is also a manifestation of inter-organizational

cooperation (Schermerhorn 1975) Item 23ndasha new measure specifically

developed for this study reveals satisfactory correlation with the other four

itemsSince some new measures were used in developing the scales a small scale

pretest of theinstrument wasconductedusing 24 BBAfinal year students from

theNational University of Singapore Based on thefeedback of thepretest mi-

normodifications were made to theresearch instrument to facilitate clarity and

ease of understandingFor each of the 25 (5 times 5) items referred to above subjects are required to

respond to five-point Likert scales anchored at ldquoStrongly Agreerdquo (5) and

ldquoStrongly Disagreerdquo (1)

Reliability and Validity Analyses

Reliability of the measures used in the study has been first confirmed by ac-

ceptable inter-item-correlation which for each scale exceeded the 030 sug-

gested by Robinson et al (1991) In addition Cronbach alpha (α) values for

each of the scales were computed These values ranged between 076 and 093

indicating high internal consistency (Nunnally 1978) and thus reliability of

the scales

Items in the instrument were also assessed for content and construct va-lidity The fact that 20 out of 25 items adapted to the current context from

other works with proven content validity and that the pre-test yielded satis-

factory results for all the 25 items (including the five specially developed

for this study) confirms content validity of the measures To measure the

construct validity of the scales item-total correlation [ITC] analysis and

factor analysis [FA] using principal component analysis with varimax rota-

tion were conducted In each of the scales item-to-total correlation values

for all items exceeded 071 indicating that all the items contributed mean-

ingfully to the respective scales they defined Also factor analysis confirmed

unidimensionality of each scale with loadings greater than 072

Manipulation Checks

Manipulation checks were conducted to assess the effectiveness of the ex-

perimental design andto ensure that subjects have correctlyperceived the high




and low conditions of dependence and trust so that valid conclusions can be

drawn from the study The items measuring dependence and trust were first

subjected to a univariate analysis of variance (ANOVA) to uncover thesignifi-

cance of group differences Results of the test indicated significant differences

between the four treatment groups for both trust and dependence Scheffersquos

test revealed that subjects in the high-dependence condition rated the depend-

ence scales significantly higher than those in the low-dependence condition

Similarly subjects in the high-trust condition rate the trust scales significantly

higher than those in the low-trust condition These imply thesuccess of experi-

mental manipulations attempted in this research At the overall alpha value

(using 05 as acceptable) means within the same group are not significantly

different with each other while means in different subgroups are

Hypotheses Testing Efficacy

Multivariate analysis of variance (MANOVA) is employed to test the main

and interaction effects of dependence and trust on satisfaction commitment

and cooperation due to its efficacy in detecting the overall differences brought

about by interactions amongst the dependent variables In addition to control-

ling experiment-wide error rate (Hair et al 1992)MANOVA can also provide

dimensions of differences that can distinguish among the composite of vari-

ables better than individual variables

Research data satisfied the assumptions of linearity normality homogeneity

of variance-covariance matrices for all treatment groups and multi-collinearity

between thedependentvariables which areprerequisites for using MANOVA

The experiment has been conducted such that subjectsrsquo responses were inde-

pendent of one another and no time-ordered effects were present It is reason-

able to assume that observations were independent of one anotherSummary results of MANOVA and ANOVA are shown in Table 1

RESULTS AND DISCUSSIONS

Assessment of Overall Multivariate Differences

Results of MANOVAreveal significant multivariate maineffect of depend-

ence (F = 26456 p lt 05) trust (F = 163699 p lt 05) and their interaction ef-

fect (F = 4539 p lt 05) in terms of Pillairsquos trace and Wilkrsquos lambda which are

widely regarded as the measures most immune to violation of the assumptionswhile still preserving the greatest power It is important to note that these re-

sults merely indicate the existence of differences of group means on a set of de-






Results also reveal a significant interaction effect of dependence and trust

on satisfaction (F = 4415 p lt 05) The cell means show that satisfaction is

much more sensitive to (ie influenced by) different levels of trust under

low-dependence conditions supporting H2b [When a buyer is not dependent

on a supplier satisfactionof thebuyer will be influenced by thelevel of buyerrsquos

trust in the supplier] However there is no support for H2a [When a buyer is

dependent on a supplier satisfaction of the buyer will not be influenced by the

level of buyerrsquos trust in the supplier] ie satisfaction has been found to be

lower under high-dependence conditions and is in fact influenced by differentlevels of trust under the high-dependence condition This may be an indication

that the importance of trust as a determinant of satisfaction has been underesti-


TABLE 2 Descriptive Statistics Cell Means of Dependent Variables

Dependence Trust Mean Std Deviation N

Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120



mated in the formulation of thehypotheses In fact trust exercises a greater in-

fluence over satisfaction than dependence satisfaction is consistently rated

higher under conditions of high trust regardless of the level of dependence

Main and Interaction Effects on Cooperation

Figures in Table 1 show significant main effect of dependence on coopera-

tion (F = 7772 p lt 05) supporting H7 [The greater the buyerrsquos dependence

on a supplier the higher will be the buyerrsquos tendency to cooperate with the

supplier] Controlling for high-trust a significant difference in means is found

between subjects in the high- and low-dependence conditions Hence the

results conform to the literaturendashhigher levels of commitment are associated

with high-dependence relationships Results also reveal significant main ef-fect of trust on cooperation (F = 26575 p lt 05) Controlling for high-depend-

ence a significant difference in means is found between subjects in the high-

and low-trust conditions implying that H6 [The greater the level of trust a

buyer has in a supplier the higher will be the buyerrsquos tendency to cooperate

with the supplier] is supported More specifically cooperation is higher under

conditions of high trust

Finally significant interaction effects of dependence and trust on coopera-

tion have been noted (F = 9846 p lt 05) Controlling for high-dependence a

significant difference in means has been found between subjects in the high-

and low-trust conditions Hence H8a [When thebuyer is dependent on the sup-

plier the propensity of the buyer to cooperate will be high and unaffected by

different levels of trust in the supplier ] is rejected Although the propensity to

cooperate is high under high-dependence conditions it is still affected by thelevel of trust reinforcing the argument that trust plays a deciding role in deter-

mining behavioral outcomes The rejection of H8b [When the buyer is not de-

pendent on the supplier propensity of the buyer to cooperate will be low and

unaffected by different levels of trust in the supplier ] provides further support

for this Since cooperation is not criticalin a low-dependence relationship it is

highly plausible for firms in such a relationship to refrain from cooperating

and thus save resources and additional effort However presence of trust

seems to reverse this inclination by presumably instilling a sense of together-

ness which in turn spurs the desire for joint actions

Main and Interaction Effects on Commitment

Results also demonstrate significant main effect of dependence on commit-ment (F = 35801 p lt 05) Controlling for high-trust a significant difference

in means is found between subjects in the high- and low-dependence condi-




tions supporting H4 [The greater the buyerrsquos dependence on a supplier the

greater will be the buyerrsquos commitment to the relationship] This is consistent

with the notion that commitment is greater in exchange relationships that ex-

clusively provide critical resources The result also shows significant main

effect of trust on commitment (F = 179633 p lt 05) Controlling for high-de-

pendence a significant difference in means has been found between subjects

in the high- and low-trust conditions providingsupport forH3 [The greater the

level of the buyerrsquos trust in a supplier the greater will be the buyerrsquos commit-

ment to the supplier ] More specifically commitment is higher under condi-

tions of high-trustFinally the results also show significant interaction effects of dependence

and trust on commitment (F = 4302 p lt 05) Controlling for low-dependence

a significant difference in means is found between subjects in the high- andlow-trustconditions lending support forH5b [When thebuyer is notdependent

on the supplier commitment of the buyer will be affected by different levels of

trust in the supplier ] However H5a [When the buyer is dependent on the sup-

plier the buyerrsquos commitment will be high and unaffected by different levels

of trust in the supplier ] is rejected This implies that trust again plays a crucial

role in fostering commitment This can be observed from the fact that commit-

ment is higher in the low-dependence-high-trust condition than in thehigh de-

pendence-low trust condition The results have therefore demonstrated that

the presence or lack of trust overrides the effect of dependence in determining

the level of commitment in a relationship

Implications of the Study

Seven of the 11 hypotheses tested in the study have been supported De-

pendence and power relationsndashlong been regarded in the West as important

constructs in explaining inter-organizational interactions and their influ-

encendashhas been found to be important in an Asian context as well The fact that

dependence brings about high levels of commitment and cooperation amongst

channel partnersndashwhich appears to be a cross-cultural phenomenonndashimplies

that increasing the importance and exclusivity of onersquos resources can have

positive effects on a partnersrsquo exhibited level of cooperation and commitment

to the relationship Indeed dependence-balancing strategies (Emerson 1962)

that seek to accentuate trade partnersrsquo dependence by increasing the impor-

tance of the resources held by the focal firm (Heide and John 1988) or by re-

ducing the alternatives available to the partners have been documented

The principle objective of the dependence-balancing strategies is to gainpower often through coercive or pre-emptive means so as to create depend-

ence on the part of onersquos partners Although these strategies have long been




used to control or dominate business partners and promote self-interest their

efficacy has been questioned as empirical evidence of dissatisfaction toward

such strategies gains prominence Moreover the power inequalities caused by

increasing the level of dependence tend to create an undesirable destabilizing

effect within the channel (Anderson and Weitz 1989) Hence managers

should recognize that relying solely on power is unlikely to guarantee

long-term success greater importance needs to be attached to the fostering of

trust in inter-organizational relationships The results of this investigation

clearly support the view that the presence of trust is instrumental in bringing

about positive attitudes and behaviorsGiven the value of trust in a relationship the challenge facing managers is

naturally the identification of ways to nurture trusting relationships with busi-

ness partners This is especially important in relationships characterized bypower imbalances For trust to take root in the relationship the powerful party

has to instill both distributive and procedural justice in its dealing with its

weaker partner (Kumar 1996) Since absence of trust may lead to the termina-

tion of the relationship (Pelton et al 1997) companies must possess the re-

solve to make trust an integral part of the organizational culture

However such emphasis on the importance of trust does in no way mean

that managers should build trust-intensive relationships with all business part-

ners as it reflects a distinct lack of understanding of the varying relational ten-

dencies exhibited by different business partners (Fournier et al 1998) This is

particularly true in the Asian context A firm may need to practice both rela-

tional and transactional marketing strategies to address the different attitudes

toward trust amongst its trade partners (Anderson and Narus 1991 Berry

1995 Jackson 1985)The relationships between constructs uncovered in this study contributes to

the literature in three important ways First empirical support is gained for the

robustness and generality of relationships predicted from past research Sec-

ond the relationships revealed in this study have provided an avenue for fur-

ther investigation leading to theoretical development And third the study

servesas a useful basis for future channel studies in the context of Asia an area

hitherto neglected by researchers

Limitations of Study and Recommendations for Future Research

Like all experimental studies the possible lack of external validity of the

measures used in the study may negate generalization of the findings to other

subjects in the population under study (Zikmund 1997) Internal validity mayhave been attained at the expense of external validity as a result of the deliber-

ate manipulations within a carefully controlled experimental environment




Despite the care exercised in making the contrived scenarios used in this re-

search as realistic as possible the experimental conditions may not have been

truly representative of the realityThe highly parsimonious approach adopted in the study by keeping the num-

ber ofquestions in the instrument may havemade the subjectsmore receptive to-

ward theinstrument at theexpense of scale robustness Also theassumption that

subjects arecompetent to understand and interpret thedepicted scenariosby vir-

tue of their past experience in inter-firm transactions could have been wrongThe study has left out several important attitudinal behavioral and other

constructs such as conflict level of communication and age of the dyad which

may have obscured certain aspects of channel dynamics Inclusion of these

could have better reflected the complexities of the real world channel dynam-

ics and enriched the studyIn view of the recognition afforded to trust in recent years future research-

ers will find it interesting to find ways and means to resolve issues such as the

possible tradeoffs between dependence and trust For instance can a company

build trust while maintaining or even increasing its power over a partner or

does the fostering of trust necessarily involve a sacrifice of power Given the

rising importance of relationship marketing more attention should be devoted

to the strategies for developing trust within and between organizations Spe-

cifically future studies can investigate the efficacy of various trust-building

strategies in different cultural and business settings

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Alderson E (1965) Dynamic Marketing Behavior Homewood IllinoisArrow Kenneth J (1974) The Limits of Organization New York WW NortonAndaleeb Syed Saad (1995) ldquoDependence Relations and the Moderating Role of

Trust Implications for Behavioral Intentions in Marketing Channelsrdquo Interna-tional Journal of Research in Marketing 12 (2) 157-72

______ (1996) ldquoAn Experimental Investigation of Satisfaction and Commitment inMarketing Channels The Role of Trust and Dependencerdquo Journal of Retailing 72(1) 77-93

Anderson Erin and Barton Weitz (1989) ldquoDeterminants of Continuity in Conven-tional Industrial Channel Dyadsrdquo Marketing Science 8 (Fall) 310-23

______ and _____ (1992) ldquoThe Use of Pledges to Build and Sustain Commitment in

Distribution Channelsrdquo Journal of Marketing Research 24 (February) 85-97______ Leonard M Lodish and Barton A Weitz (1987) ldquoResource Allocation Be-havior in Conventional Channelsrdquo Journal of Marketing Research 24 (February)254-62




______ and James A Narus (1990) ldquoA Model of Distributor Firm and Manufacturer

Firm Working Partnershipsrdquo Journal of Marketing 54 (January) 42-58______ and _____ (1991) ldquoPartnering as a Focused Marketing Strategyrdquo California

Management Review 33 (Spring) 95-113Barber Bernard (1983) The Logic and Limits of Trust New Brunswick NJ Rutgers

University PressBerry Leonard L (1995) ldquoRelationship Marketing of ServicesndashGrowing Interest

Emerging Perspectivesrdquo Journal of the Academy of Marketing Science 23 (Fall)

236-45Bonoma Thomas V (1976) ldquoConflict Cooperation and Trust in Three Power Sys-

temsrdquo Behavioral Science 21 499-514Brown James R and Robert F Lusch and Darrel D Muehling (1983) ldquoConflict and

Power-DependenceRelations in Retailer-Supplier Channelsrdquo Journal of Retailing

59 (4) 53-80Buchanan Lauranne (1992) ldquoVertical Trade Relationships The Role of Dependence

and Symmetry in Attaining Organizational Goalsrdquo Journal of Marketing Research

29 (February) 65-75Butler John K Jr and R Stephen Cantrell (1984) ldquoA Behavioral Decision Theory

Approach toModeling DyadicTrust in Superiorsand Subordinatesrdquo Psychological

Reports 55 19-28Cannon Joseph P and William D Perrault Jr (1999) ldquoBuyer-Seller Relationships in

Business Marketsrdquo Journal of Marketing Research 36 (November) 439-460Chao C Chen Xiao-Ping Chen and James R Meindl (1998) ldquoHow Can Cooperation

Be Fostered The Cultural Effects of Individualism-Collectivismrdquo The Academy of

Management Review 23 (2) 285-304Dertouzos Michael L Richard K Lester and Robert M Solow (1989) ldquoMade in

America Regaining the Productive Edgerdquo in Cambridge MA The MIT PressDeutsch M (1962) ldquoCooperation and Trust Some Theoretical Notesrdquo Nebraska

Symposium on Motivation University of Nebraska Press 275-319Dwyer F Robert (1980) ldquoChannel Member Satisfaction Laboratory Insightsrdquo Jour-

nal of Retailing 56 (Summer) 45-65______ and Rosemary R LaGace (1986) ldquoOn the Nature and Role of Buyer-Seller

Trustrdquo in AMA Summer Educatorsrsquo Conference Proceedings Series 52 Terence

Shimp et al eds Chicago American Marketing Association 40-45______ Paul H Schurr and Sejo Oh (1987) ldquoDeveloping Buyer-Seller Relation-

shipsrdquo Journal of Marketing 51 (April) 11-27El-Ansary Adel and Louis W Stern (1972) ldquoPower Measurement in the Distribution

Channelrdquo Journal of Marketing Research 9 (February) 47-52Emerson Richard M (1962) ldquoPower-Dependence Relationsrdquo American Sociological

Review 27 31-41Fournier Susan Susan Dobscha andDavid Glen Mick (1998) ldquoPreventing thePrema-

ture Death of Relationship Marketingrdquo Harvard Business Review 76 (Janu-

aryFebruary) 42-50Frazier Gary L (1983) ldquoInter-organizational Exchange Behavior A Broadened Per-

spectiverdquo Journal of Marketing 47 (Fall) 68-78




______ and John O Summers (1984) ldquoInter-firm Influence Strategies and Their Ap-

plication within Distribution Channelsrdquo Journal of Marketing 48 (Summer)

43-55______ and ______ (1986) ldquoInter-firm Power and itsUse Within a FranchiseChannel

of Distributionrdquo Journal of Marketing Research 23 (May) 169-76______ and Raymond C Rody (1991) ldquoThe Use of Influence Strategies in Inter-firm

Relationships in Industrial Product Channelsrdquo Journal of Marketing 55 (January)

52-69______ James D Gill and Sudhir H Kale (1989) ldquoDealer Dependence Levels and Re-

ciprocal Actions in a Channel of Distribution in a Developing Countryrdquo Journal of

Marketing 53 (January) 50-69Ganesan Shankar (1994) ldquoDeterminants of Long-term Orientation in Buyer-Seller

Relationshipsrdquo Journal of Marketing 58 (April) 1-19Gaski John F (1984) ldquoThe Theory of Power and Conflict in Channels of Distribu-

tionrdquo Journal of Marketing 48 (Summer) 9-29______ and John R Nevin (1985) ldquoThe Differential Effects of Exercised and Unexer-

cised Power Sources in a Marketing Channelrdquo Journal of Marketing Research 22

(May) 130-42Gattorna John (1978) ldquoChannels of Distribution Conceptualizations A

State-of-the-Art Reviewrdquo European Journal of Marketing 12 (7) 471-512Gundlach Gregory T Ernest R Cadotte (1994) ldquoExchange Interdependence and

Interfirm Interaction Research in a Simulated Channel Settingrdquo Journal of Mar-

keting Research 31 (November) 516-32______ Ravi S Achrol and Jon T Mentzer (1995) ldquoThe Structure of Commitment in

Exchangerdquo Journal of Marketing 59 (January) 78-92Hair Joseph F Jr Rolph E Anderson Ronald L Tatham and William C Black

(1992) Multivariate Data Analysis 3rd ed New York MacmillanHeide Jan B and George John (1990) ldquoAlliances in Industrial Purchasing Determi-

nants of Joint Action in Buyer-Supplier Relationshipsrdquo Journal of Marketing Re-

search 27 (February) 24-36Houston Franklin S and Jule B Gassenheimer (1987) ldquoMarketing and Exchangerdquo

Journal of Marketing 51 (October) 3-18Hunt Shelby D and John R Nevin (1974) ldquoPower in a Channel of Distribution

Sources and Consequencesrdquo Journal of Marketing Research 11 (May) 186-93Iverson Roderick D and Parimal Roy (1994) ldquoA Causal Model of Behavioral Com-

mitment Evidence from a Study of Australian Blue-collar Employeesrdquo Journal of

Management 20 (1) 15-41Jackson Barbara B (1985) Winning and Keeping Industrial Customers The Dynam-

ics of Customer Relationships Lexington MA DC Heath and CompanyKale Sudhir H (1986) ldquoDealer Perceptions of Manufacturer Power and Influence

Strategies in a Developing Countryrdquo Journal of Marketing Research 23 (Novem-

ber) 387-93Keith Janet EDonald W Jackson Jr andLawrence A Crosby (1990) ldquoEffects of Al-

ternate Types of Influence Strategies under Different Channel Dependence Struc-

turesrdquo Journal of Marketing (July) 30-41




Kotter John (1979) ldquoManaging External Dependencerdquo Academy of Management Re-

view 4 (1) 87-92Kumar Nirmalya (1996) ldquoThe Power of Trust in Manufacturer-Retailer Relation-

shipsrdquo Harvard Business Review November-December______ Lisa K Scheer and Jan-Benedict E M Steenkamp (1995) ldquoThe Effects of

Perceived Interdependence on Dealer Attitudesrdquo Journal of Marketing Research

32 (August) 348-56Larzelere Robert E and Ted L Huston (1980) ldquoThe Dyadic Trust Scale Toward Un-

derstanding Interpersonal Trust in Close Relationshipsrdquo Journal of Marriage and

the Family 42 (August) 595-604Levy Michael and Barton A Weitz (1995) Retailing Management Chicago Richard

D IrwinLewis Christine M and Douglas M Lambert (1985) ldquoA Model of Channel Member

Performance Dependence and Satisfactionrdquo Journal of Retailing 67 (2) 205-25

Lorange Peter and Johan Roos (1991) ldquoWhy Some Strategic Alliances Succeed andOthers Failrdquo The Journal of Business Strategy (January-February) 25-30

Luhmann Niklas (1979) Trust and Power New York John WileyLusch R F and R H Ross (1981) ldquoPerceptual Incongruity and Domain Dispenses as

Sources of Channel ConflictCooperationrdquo unpublished working paper Macneil IanR (1980) The NewSocialContractAn Inquiry Into Modern Contractual

Relations New Haven CT Yale University PressMatthews Byron A and Eliot Shimoff (1979) ldquoExpansion of Exchange Monitoring

Trust Levels in Ongoing Exchange Relationsrdquo Journal of Conflict Resolution 23

(September) 538-60Moorman Christine Gerald Zaltman and RohitDeshpande (1992) ldquoRelationshipsBe-

tween ProvidersandUsers of MarketRresearchTheDynamics of Trust Withinand

Between Organizationsrdquo Journal of Marketing Research 29 (August) 314-28Morgan Robert M and Shelby D Hunt (1994) ldquoThe Commitment-Trust Theory of

Relationship Marketingrdquo Journal of Marketing 58 (July) 20-38Nunnally Jum C (1978) Psychometric Theory 2nd ed New York McGraw HillPearson MM (1972) An Empirical Study of the Operational Results Associated with

Conflict and Cooperation in Channels of Distribution Southern MarketingAssoci-

ation Washington DC______ and John F Monoky (1976) ldquoThe Role of Conflict and Cooperation in Chan-

nel Performancerdquo in Kenneth L Bernhardt (ed) Proceedings of the 1976 Summer

Educatorsrsquo Conference Marketing 1776-1976 and Beyond 240-47Pelton Lou E Strutton David and James R Lumpkin (1997) Marketing Channels A

Relationship Management Approach Chicago IrwinPfeffer Jeffrey (1981) Power in Organizations Cambridge MA Ballinger______ and Gerald R Salancik (1978) The External Control of Organizations New

York Harper RowPorter Michael (1980) Competitive Strategy Techniques for Analyzing Industries

and Competitors New York The Free PressPruitt Dean G (1981) Negotiation Behavior New York Academic PressRempel John K and John G Holmes (1986) ldquoHow do I Trust Theerdquo Psychology To-

day (February) 28-34




ReveToger (1981) ldquoInter-organizational Relations in Distribution Channelsrdquounpub-

lished working paper Norwegian School of Economics and Business Administra-

tion Bergen______ andLouis W Stern (1979) ldquoInterorganizational Relations in MarketingChan-

nelsrdquo Academy of Management Review 4 (July) 405-16Ring Peter S and Andrew H Van De Ven (1992) ldquoStructuring Cooperative Rela-

tionships Between Organizationsrdquo Strategic Management Journal 13 483-498Robicheaux Robert A and Adel I El-Ansary (1976) ldquoA General Model for Under-

standing Channel Member Behaviorrdquo Journal of Retailing 52 (Winter) 13-30Robinson J P P R Shaver and L S Wrightsman (1991) ldquoCriteria for Scale Selec-

tion and Evaluationrdquo in Measures of Personality and Social Psychological Atti-

tudes in J PRobinson PR Shaver and L S Wrightsman(eds)San Diego Calif

Academic PressRoss Robert H Robert F Lusch and James R Brown (1982) ldquoPower Dependency in

the Marketing Channel A Methodological Noterdquo in Bruce J Walker et al (eds)

An Assessment of Marketing Thought and Practice 1982 Educatorsrsquo Conference

Proceeds 48 Chicago IL American Marketing Association 194-98Ruekert RobertW andGilbert A Churchill (1984) ldquoReliability andValidity of Alter-

nate Measures of Channel Member Satisfactionrdquo Journal of Marketing Research

21 (May) 226-33Schermerhorn John R (1975) ldquoDeterminants of Inter-organizational Cooperationrdquo

Academy of Management Journal 18 (4) 846-56Schlenker Barry R Robert Helm and James T Tedeschi (1973) ldquoThe Effects of Per-

sonality and Situational Variables of Behavioral Trustrdquo Journal of Personality and

Social Psychology 25 419-27Schul Patrick L Taylor E Little Jr and William M Pride (1985) ldquoChannel Climate

Its Impact on Channel Membersrsquo Satisfactionrdquo Journal of Retailing 61 (2) 9-38Schurr Paul H and Julie L Ozanne (1985) ldquoInfluences on Exchange Processes

Buyersrsquo Preconceptions of a Sellerrsquos Trustworthiness and Bargaining Toughnessrdquo

Journal of Consumer Research 11 939-53Skinner Steven J Jule B Gassenheimer and Scott W Kelley (1992) ldquoCooperation in

Supplier-Dealer Relationsrdquo Journal of Retailing 68 (Summer) 174-93Spekman Robert E (1988) ldquoStrategic Supplier Selection Understanding Long Term

Buyer Relationshipsrdquo Business Horizons (July-August) 75-87SternLouis W and Adel I El-Ansary(1992) Marketing Channels 4thed Englewood

Cliffs NJ Prentice-Hall Inc______ and Jay Brown (1969) ldquoDistribution Channels A Social Systems Approachrdquo

in Distribution Channels Behavioral Dimensions Louis Stern ed New York

Houghton-Mifflin Company 6-20Sullivan Jeremiah and Richard B Peterson (1982) ldquoFactors Associated with Trust in

Japanese-American JointVenturesrdquo Management International Review 22 30-40Thorelli Hans B (1986) ldquoNetworks Between Markets and Hierarchiesrdquo Strategic

Management Journal 7 37-51Twomey D (1974) ldquoPower Trust and Inter-organizational Conflict Resolutionrdquo un-

published doctoral dissertation Kent State University Graduate School




Weitz BartonAStephen B Castleberry andJohnF Tanner (1995) Selling BuildingPartnerships Chicago Richard D Irwin

Williamson Oliver E (1985) The Economic Institutions of Capitalism New YorkThe Free Press

Young Louise C and Ian F Wilkinson (1989) ldquoThe Role of Trust and Cooperation inMarketing Channels A Preliminary Studyrdquo European Journal of Marketing 23(2) 109-22

Zikmund William G (1997) Business Research Methods 5th ed The Dryden PressHarcourt Brace College Publishers


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KEYWORDS Distribution Channels dependence trust satisfaction

commitment cooperation Singapore

INTRODUCTION

This research investigation seeks to empirically test some of the existing

propositions about channel behaviors mainly derived from the US experiences

in the context of an Asian market and thereby provide an opportunity to validate

them from a broader perspective Essentially a replication and extension of an

earlier work by Andaleeb (1996) it examines the effects of different levels of

dependence and trust on channel satisfaction commitment and cooperation in

the context of Singapore More specifically it seeks to reveal interaction effectsbetween dependence and trust

Globalization of business and an ever-increasing level of competition have

been forcing business firms all around the world to change their mode of opera-

tions Traditional exchanges involving discrete inter-firm interactions and im-

personal buyer-seller transactions (Macneil 1980) are being replaced by

relational type of exchanges characterized by high level of personal involve-

ment joint actions and long-term commitment This marks the rise to promi-

nence of relationship marketing a paradigm shift that advocates inter-firm

partnership and collaboration as the way to compete in a global marketplaceThe transition described above is perhaps most vividly manifested in the

conventional distribution channels where the participants specializing in dif-

ferent functionshave to dependon each other for thechannel to function effec-tively In response to the constantly changing business environment of today

participants in many channel arrangements have changed their bases of com-

petition Adoption of supply chain management which calls for even higher

levels of coordination and commitment (Dertouzos et al 1989 Houston and

Gassenheimer 1987) has yielded higher channel performance and satisfac-

tion and resulted in stronger dependence amongst channel members Usually

channel relations are of long duration (Frazier and Summers 1984) during

which each member expects numerous interactions with another (Young and

Wilkinson 1989) and behave cooperatively Trust which underpins the col-

laborative relationships associated with relational exchanges and allows firms

in the relationship to look beyond short-term returns (Ganesan 1994) has a

mediating effect on the behavioral outcomes in dependence relationships

(Andaleeb 1995) Dependence with its different aspects such as types of influence strategies

symmetry of dependence etc plays a central role in determining behavioral


















Perrault Jr 1999)






















point


















































































































hypothesized












































are postulated

H 5a


H 5b







competitive theory




























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________



















Perrault Jr 1999)






















point


















































































































hypothesized












































are postulated

H 5a


H 5b







competitive theory




























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________






point


















































































































hypothesized












































are postulated

H 5a


H 5b







competitive theory




























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________
















































































hypothesized












































are postulated

H 5a


H 5b







competitive theory




























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________













































are postulated

H 5a


H 5b







competitive theory




























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________


























































H 8a


H 8b















































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________




































Sampling Procedure












Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________











Measurement Scales








































Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________














Supplier)










Ms suggestions








































the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________

























the scales











Manipulation Checks

























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________
























































Satisfaction

high

high 38200 4046 30

low 21067 6617 30

Total 29633 10208 60

low

high 39000 3353 30

low 18200 4468 30

Total 28600 11195 60

Total

high 38600 3706 60

low 19633 5781 60

Total 29117 10680 120

Cooperation

high

high 37600 5443 30

low 35800 5047 30

Total 36700 5283 60

low

high 32533 3748 30

low 25133 5138 30

Total 28833 5814 60

Total

high 35067 5291 60

low 30467 7377 60

Total 32767 6797 120

Commitment

high

high 38467 3884 30

low 29000 5298 30

Total 33733 6633 60

low

high 35200 3881 30

low 22267 5058 30

Total 28733 7906 60

Total

high 36833 4187 60

low 25633 6156 60

Total 31233 7688 120








































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________










































































































































REFERENCES



















































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________













































































































































Name _____________________________________________________________

Institution __________________________________________________________

Address ___________________________________________________________



State __________ Zip ____________________



effects of dependence and trust

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