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European Journal of MarketingEmerald Article: Internet channel and perceived cannibalization: Scaledevelopment and validation in a personal selling context

Dheeraj Sharma, Jule B. Gassenheimer

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To cite this document: Dheeraj Sharma, Jule B. Gassenheimer, (2009),"Internet channel and perceived cannibalization: Scale

evelopment and validation in a personal selling context", European Journal of Marketing, Vol. 43 Iss: 7 pp. 1076 - 1091

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Internet channel and perceivedcannibalization

Scale development and validation in a personalselling context

Dheeraj SharmaCentre for Innovative Management, Athabasca University,

St Albert, Canada, and

Jule B. GassenheimerCrummer Graduate School of Business, Rollins College, Winter Park,

Florida, USA

Abstract

Purpose The purpose of this paper is multifold. First, this study aims to proffer a psychometricscale to measure sales agents perception of sales cannibalization due to the addition of an internetchannel. Second, the study seeks to estimate the downstream impact of sales agents perceivedcannibalization (SPC) on two outcomes, namely, commitment and alienation from work. Third, it aimsto examine the moderating role of environmental munificence in the relationship between SPC and thetwo outcomes.

Design/methodology/approach The data for this study were collected from a contact pool of2,108 insurance sales agents. A total of 511 valid responses were attained. Structural equationmodeling was employed to examine the relationships posited in this study.

Findings First, a multi-item scale was conceptualized and developed for measuring SPC. Second, theproperties of the scale were assessed following procedures recommended by Churchill, Anderson,

Gerbing, Bagozzi, and Yi. The scale demonstrated satisfactory reliability and validity. Third, SPC wasshown to be not universally damaging to commitment. Rather, only under a low munificent environmentdoes perceived cannibalization significantly reduce salespersons commitment. Additionally, the severityof the influence of SPC on alienation from work increases in low munificent environment.

Research limitations/implications The data for this study were collected using a single surveyof insurance agents. Future researchers should attempt to examine the relationships posited in thisstudy using a sample from a different industry.

Practical implications While recognizing that the internet is here to stay and that strategicchannel decisions will unlikely be made based on the views or psychological reactions of sales agentsalone, incorporating the sales agent perspective does allow organizations to take a holistic view of theirdistribution system. This may be particularly important in view of multi-channel marketing, when anew marketing channel is employed to co-exist with the traditional sales force.

Originality/value Previous conceptualizations of inter-channel cannibalization were all based oneconomic terms and, hence, were considered myopic by Porter. This study examines the psychologicalinfluence of the addition of an internet channel on sale agents work related outcomes.

Keywords Sales, Job satisfaction, Marketing strategy, Sales force, Innovation

Paper type Research paper

The oldest and strongest emotion of mankind is fear (H.P. Lovecraft).

The dawn of the internet era has led several companies to explore new and radicalmarketing channels. In fact, multi-channel use has become the norm rather than the

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0309-0566.htm

EJM43,7/8

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Received June 2007Revised January 2008,July 2008Accepted September 2008

European Journal of Marketing

Vol. 43 No. 7/8, 2009

pp. 1076-1091

q Emerald Group Publishing Limited

0309-0566

DOI 10.1108/03090560910961524


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exception (Frazier, 1999). By adding internet channels, companies hope to increaseoverall performance, consolidate existing markets and expand into new markets(Geyskens et al., 2002). Unfortunately, internet channels are not without potentialproblems: internet channels are likely to increase uncertainty about market allegiance,

generating real risks for long-term business performance (Geyskens et al., 2002), aswell as destroying the value of past investments (Chandy and Tellis, 1998). As Porter(2001, p. 73) promulgates, it is widely assumed that the internet is cannibalistic [and]will replace [or supplement] all conventional ways of doing business.

Furthermore, Trembly (2001) suggests that the ubiquity of the internet will result inlower commissions for sales agents and gradual attrition of sales agents. Inconcurrence, Stucker (1999) found that 60 percent of the carriers surveyed view theweb as at least a moderate threat to the agent distribution system (p. 8). This findingis corroborated by Hagerty (2005), who suggests that web-based brokerage firms havecompletely shaken up the real estate industry, thus, creating paranoia for thetraditional real-estate agents. Hagerty (2005) describes the traditional real estateagents perceptions of the internet channel as exasperating, demotivating, andcannibalistic in nature. In their study of the insurance industry, Eastman et al. (2002)found that insurance agents experiencing the addition of an internet channel feltinsecure about their job. While the internet provides easier communication andincreases interactions with customers, the internet also provides multiple options forinsurance purchasers, thus increasing the chances of sales cannibalization. This trendhas been confirmed by extant research, which suggests that the internet will continueto attract consumers, breed uncertainty, and undoubtedly change sales agentsperceptions of job security as well as their job performance (Frazier, 1999; Greenhalghand Rosenblatt, 1984).

Primarily working with economic and financial terms, marketing researchers haveconceptualized cannibalization and assert that, in fact, the addition of internet channels

may not generate significant cannibalization (Biyalogorsky and Naik, 2003; Chandyand Tellis, 1998; Deleersnyder et al., 2002; Ward and Morganosky, 2000). Others,however, contend that even if the financial impact is inconsequential, the psychologicalimpact of cannibalization can influence marketers performance outcomes (Geyskenset al., 2002). In this regard, Porter (2001) posits that salespeople fear internet channeladditions in anticipation that the Internet will cannibalize their sales. In addition,salespeople worry that internet channels will make them outmoded and eventuallyreplace them. Elsewhere, Frazier (1999) contends that, regardless of the extent of actualcannibalization, sales agents fears concerning cannibalization and the security of their

jobs can subdue their efforts, breakdown long-standing relationships, reduce theircommitment, and make them fearful of an uncertain future (see also Ashford et al.,1989; Gerstner and Hess, 1995; Greenhalgh and Rosenblatt, 1984; Jeuland and Shugan,

1983; Lal et al., 1996; McGuire and Staelin, 1983).This negative influence of perceived cannibalization on sales agents job outcomes

and relationships often offset the potential gains (e.g., increased market penetrationand decreased distribution cost) from adding internet channels (Porter, 2001).Although past researchers have emphasized the importance of perceivedcannibalization as a determinant of the benefits and risks of adding an internetchannel and the consequences of job insecurity, empirical research on cannibalizationin the marketing literature remains scant, apart from the study by Gulati et al. (2002),

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which was focusing on the fear of disintermediation felt by sales agents. Gulati et al.(2002) position fear of disintermediation as an endogenous variable. In contrast, thecurrent study positions the SPC as an exogenous variable that influences the salesagents psychological outcomes.

The organizational behavior literature has found similar outcome variables to besignificantly related to job insecurity the perceived powerlessness to maintaindesired continuity in a threatening job situation (Greenhalgh and Rosenblatt, 1984,p. 438). According to Greenhalgh and Rosenblatt (1984), one of the key reasons for jobinsecurity is the potential shrinkage of jobs due to external changes. Within the contextof our study, individual perception of shrinkage (cannibalization) is attributed to anexternal change brought about by the internet. Gulati et al. (2002) conceptualized thefear of disintermediation as a perception of complete loss of business. Ourconceptualization of perceived cannibalization captures the subjective threat, which isthe consequent of an objective threat. The individuals perceptual processes capture thesubjective threat from the addition of an internet channel.

This study aims to develop a scale that can be used to measure sales agentsperceived cannibalization of their earnings due to the addition of an internet channel.We establish the conceptual foundation for the scale and the scales ability todemonstrate acceptable psychometric properties. The scale is then applied in thecontext of sales agents perception of the addition of internet channels. By doing so, thedownstream outcomes of SPC on commitment and alienation from work can bemodeled. While a job insecurity scale may have been used to capture the perceivedpowerlessness of the situation, existing job insecurity scales assess multiple features of

job insecurity that are not relevant to our study. Job insecurity scales also do not tapinto perceived threats from competing channels (cf. Ashford et al., 1989; Mauno et al.,2001). Lastly, this research study also argues that the influence of perceivedcannibalization on sales agent job outcomes may also be contingent upon the state of

environmental munificence, which refers to the extent of growth opportunitiesavailable in the market.

Uncertainty reduction theory (Berger, 1979, 1986; Planalp and Honeycutt, 1985;Shannon and Weaver, 1949), the expectancy theory of motivation (Vroom, 1964), andcongruity theory (Osgood and Tannenbaum, 1955) are used to ground the research.Uncertainty reduction theory explicates how the addition of alternatives in a givensituation results in increased uncertainty and how these additions may be perceived ascannibalistic (cf. Berger and Calabrese, 1975; Heider, 1958). The expectancy theory ofmotivation argues that a high level of perceived cannibalization is likely to decrease asales agents belief that expending a given amount of effort will result in correspondingreward, thus, resulting in alienation from work (Vroom, 1964). Congruity theorysuggests that the lack of expectation that effort will result in appropriate rewards could

result in reduced commitment and increased alienation from work (Osgood andTannenbaum, 1955).

Specifically, this research offers a deeper understanding of the influence of theaddition of the internet channel on sales agents motivation. While recognizing that theinternet is here to stay and that strategic channel decisions will unlikely be made basedon the views or psychological reactions of sales agents alone, incorporating the salesagent perspective does allow organizations to take a holistic view of their distributionsystem and make market-focused improvements that coordinate all customer touch

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points (Vargo and Lusch, 2004). In other words, understanding a sales agents perceivedcannibalization can aid managers in developing strategies to keep the sales agentsmotivated when employing multiple competing marketing channels to reach customers.

Conceptual frameworkAlthough there is surprisingly little empirical work on channel cannibalization, severalresearchers have expressed their concerns for the hazards of internet disintermediation(e.g. Garven, 2002; Gulati et al., 2002; Narayandas et al., 2002); a situation in whichinternet channels are added to entrenched channels (e.g. Alba et al., 1997; Brynjolfssonand Smith, 2000; Coughlan et al., 2001). Internet disintermediation results in thereplacement of traditional channel partners with the Internet (Narayandas et al., 2002).This phenomenon fortifies the common belief that internet channels potentiallycannibalize the sales of entrenched channels (Porter, 2001).

First, sales may shift from entrenched channels to new internet channels when thelatter provides features that are more appealing to a target audience, such as a

substantial amount of information on the products characteristics, their possiblecustomization and consistent time savings (Alba et al., 1997). Second, the Internet islikely to increase competition since the consumers have better and quicker access toefficient shopping comparison websites. The resulting increase in price competition mayexplain why online prices for homogenous products are often found to be lower thanthose of conventional outlets (Brynjolfsson and Smith, 2000). Consequently, sales mayshift from conventional to internet channels. Third, total sales may also decrease shouldimpulse purchases be reduced (Machlis, 1998). Indeed, not only are sales of existingchannels cannibalized, but aggregate sales over all channels may also suffer because ofthe internet channel. Fourth, existing channels may view new internet channels asunwelcome competition. Consequently, the former may lose motivation and reducesupport for the firms products. This may, in turn, also result in brand switching towards

the firms competitors and, hence, decreased total sales (Coughlan et al., 2001).In spite of the above observations and much current debate about disintermediation

and insecurity generated by internet channels (Mattila, 2002; Useem, 1999), only ahandful of empirical studies have tangentially focused on the potentially cannibalizingconsequences of adding the internet to the distribution chain. As shown in Table I,previous empirical studies have viewed cannibalization in terms of its effect on thetotal sales or overall financial value of the firm. What has yet to be investigated is theimpact that perceptions of internet cannibalization have on the commitment and workalienation.

This research study proffers the construct of sales agents perceivedcannibalization, which refers to salespeoples perceptions of the extent to whichsales opportunities are lost to an internet channel. SPC reflects an attitudinal reaction

of a sales agent to challenges that may occur due to the addition of the internet channel.If sales agents view the addition of an internet channel by the firm as a high threat totheir current and future sales outcomes, perceived cannibalization should be high.Contrarily, if agents do not consider the addition of an internet channel by their firm asa menace to their current and future sales, perceived cannibalization should be low.Scholars have contended that when a firm begins selling through the Internet, salesagents selling through existing channels are likely to perceive losing market share andcustomers to online sales (Frazier, 1999; Narayandas et al., 2002; Porter, 2001).


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Relationship commitment and its relationship with sales agents perceivedcannibalizationCommitment is an important component of marketing relationships (Morgan andHunt, 1994). Relationship commitment is defined in the literature as an enduringdesire to maintain a valued relationship (Morgan and Hunt, 1994, p. 23). In other

words, relationship commitment captures sales agents willingness to maintain arelationship with their company. Plausibly, it can be argued that a channel member

who is satisfied with the economical dimension of the relationship is also committed tothe relationship (Morgan and Hunt, 1994).

Concurrent with the expectancy theory of motivation argument, this research

contends a negative influence of SPC on sales agents relationship commitment.According to expectancy theory, individuals will be motivated if they believe that

expending a given amount of effort on a task will lead to an improved level ofperformance on some dimensions (Futrell, 2001, p. 278). In contrast, if individualsbelieve their efforts will not produce expected results, motivation will suffer (Vroom,

1964) along with these relationships. Thus, perceptions of high level of uncertainty inthe outcome of the sales agents effort result in a lack of interest in maintaining along-term relationship. Thus, the following is hypothesized:

H1. SPC negatively influences sales agents relationship commitment.

Author Publication Results

Ward and Morganosky(2000)

eCommerce ResearchForum, MIT

It is a multiple-industry study assessing internetcannibalization by consumers channel usage

pattern. Authors assessed consumers buyingand information search behaviors regarding agiven product within the past six months. Theresearchers assumed that if the primary source ofinformation was the internet, offline sales couldpossibly increase. However, online sales wouldnot necessarily increase if the primary source ofinformation was an offline medium (retail storeor catalog)

Deleersnyder et al.(2002)

International Journal ofResearch in Marketing

Authors studied the effect of cannibalization inthe newspaper industry. The results suggest thatthe addition of Internet channels affects thecirculation of only a few newspapers. However,

the authors conclude that the new channel isperceived to be a substitute for the traditionalchannel especially when there are few differencesbetween online and offline consumers

Geyskens et al. (2002) Journal of Marketing Authors examined the total value implications ofthe addition of internet channels (as measured bystock market returns); the impact ofcannibalization on any specific distribution agentwas not assessed

Table I.Extant research incannibalization

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Alienation from work and its relationship with sales agents perceived cannibalizationAlienation from work refers to an attitude in which an employee expresses lack ofconcern about work and works with low enthusiasm (Moch, 1980). Particularly,alienation from work is a psychological separation from work due to a perceived

mismatch between effort and outcome. In concurrence with past research, this studycontends that agents perception of sales cannibalization may lead to psychologicalseverance from work. This psychological severance results from the perception thatwork will bring sub-optimal outcomes (Moch, 1980).

Furthermore, past research indicates that sales agents perceived cannibalization,due to the addition of an internet channel, increases uncertainty (Berger, 1979, 1986;Planalp and Honeycutt, 1985; Shannon and Weaver, 1949). The increased uncertaintyrelated to work or role in the organization may result in psychological detachment fromwork (Allen and LaFollette, 1977).

Additionally, past research indicates that job insecurity influences work attitudes(Hellgren et al., 1999). In other words, individuals will not work optimally when their

job is in jeopardy. The introduction of an internet channels should breed insecurity forsales agents who perceive the internet channel reduces their earning potential (Porter,2001). This view is supported by extant literature, suggesting that employees workingin an environment that engenders high job insecurity will experience a high level ofwork alienation (Blauner, 1964; Shepard, 1971). Consequently, sales agents perceptionof cannibalization may be positively linked to alienation from work:

H2. SPC positively influences sales agents alienation from work.

Environmental munificence and its moderating influenceEnvironmental munificence is foreseen to play a contingency role in relation toperceived cannibalizations influence on salesperson commitment (Celly and Frazier,1996). Our contention is rooted in past research on environmental munificence.Veliyath (1996) contends that it is easier for channel members to achieve their salesgoals in a high munificence environment rather than in a low munificenceenvironment. This is because business risk decreases and industry performanceincreases with an increase in environmental munificence. Munificence increases theopportunities for performance by providing many growth opportunities. Theseopportunities can reduce the perceived challenges associated with multiple channelsserving the same market. Consequently, salespeople working in an environment withhigh munificence may anticipate higher sales growth, which would make up for theloss of sales due to the introduction of an internet channel. However, in a lowmunificence environment, growth opportunities in the environment are limited; hence,the addition of an internet channel can further exacerbate the duress of salespersons.

Consequently, the effect of perceived cannibalization on commitment and alienationwill be limited in a highly munificent environment, while in a minimally munificentenvironment, SPCs impact on commitment and alienation from the work relationshipwill be strong. This view concurs with Chisholm and Cummings (1979) who suggestthat environmental conditions may moderate the relationship between workcharacteristics and outcomes. Therefore:

H3a. The relationship between SPC and commitment will be moderated byenvironmental munificence such that when environmental munificence is low


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the relationship between perceived cannibalization and commitment will bestronger.

H3b. The relationship between SPC and alienation from work will be moderated by

environmental munificence such that when environmental munificence is lowthe relationship between perceived cannibalization and alienation from workwill be stronger.

MethodScale developmentTo operationalize SPC, initially a pool of eight items was generated as the potentialmeasure (Churchill, 1979; DeVellis, 1991). These items were reviewed in an interviewformat by 20 insurance agents, who verified anxiety towards the introduction of anonline sales channel that would increase the competition and decrease their earnings. Apanel of three research survey experts who engage in research in this domain alsoreviewed the items. Considering the transcribed interviews of the insurance agents and

comments of the research experts, the number of items was reduced to five.These items reflect the impact that the introduction of online channels might have

on the insurance agents perception of their current and future sales performance.Specifically, the items relate to how the addition of an internet channel will beperceived by insurance agents as a likely driver of reduction in clientele and profits. Inother words, the measures are intended to describe insurance agents psychologicallyperception that their profits and growth opportunities are cannibalized by the additionof internet channels.

After discussing the sample, the psychometric properties of the newly developedscale, perceived cannibalization are described. The scales used for measuringcommitment and environmental munificence are well-established in the literature.Specifically, a three-item relationship commitment scale developed by Kumar et al.

(1995) is used in this study. The scale measures affective commitment of sales agentswith their insurance company. A four-item scale was used to measure alienation fromwork (Miller, 1967; Agarwal, 1993). We used Dwyer and Ohs (1987) five-item scale tomeasure environmental munificence. The scale measures an insurance salespersonsperception of market opportunities for growth and profit. The respondents werepresented with a factual scenario pertaining to the future of the insurance industry.After considering the scenario, respondents were asked to rate there perception ofgrowth opportunities.

SampleA list of insurance agents in North Texas, which had been obtained through a privatevendor, was compared with the insurance agent listings in the yellow page section of

greater Dallas-Fort Worth area and other major towns in North Texas. After thiscomparison, a contact pool of 2,108 insurance sales agents was developed. All 2,108sales agents were contacted to request their participation to the survey.

The questionnaires and a letter elucidating the nature and purpose of the studywere mailed to the contact pool of insurance agents by the primary researcher of thisstudy. Of 578 filled questionnaires, 67 were incomplete, resulting in 511 usablequestionnaires (response rate 24.2 percent). There were 370 males and 141 femalerespondents, with an average work experience in the insurance industry of 7 years.

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The resulting valid responses indicate that the respondents have the experience ininsurance industry to provide a basis to respond to the survey. Participation wascompletely voluntary. Valid respondent characteristics are reported in Table II.

Measurement assessment proceduresFor the purpose of cross validation, data were randomly divided into two sub-samples,training and validation. Thirty percent of randomly drawn cases formed the trainingsample (n 150) and the remaining 70 percent constituted the validation sample(n 361). Initially, scale properties were assessed with the training sample and thencross-validated with the validation sample. In addition to the scale of SPC, three otherscales of theoretically related constructs, relationship commitment, alienation fromwork, and munificence, were included in the analyses. The analysis was initiated byconducting exploratory factor analysis on the training sample. Thereafter,confirmatory factor analysis was performed on the validation sample.

Exploratory factor analysis. Using the principle component method and varimaxrotation, all 17 items belonging to 4 constructs were factor analyzed with the training

sample (n 150). As expected, four factors emerged with eigenvalues of 4.652, 3.640,3.552, and 2.884 together accounting for 81.14 percent of the variance. All five items ofperceived cannibalization, three items of commitment, four items of alienation fromwork, and five items of environmental munificence loaded clearly with their respectiveconstructs. Factor loadings ranged from 0.612 to 0.966.

Confirmatory factor analysis. Next confirmatory factor analysis (CFA) with thevalidation sample (n 361) was conducted. The CFA model had 17 items 5 forperceived cannibalization, 3 for commitment, 4 for alienation from work, and 5 forenvironmental munificence. The initial model fit was not optimal. Based on low factorloading (lower than 0.40), high residual (normalized residual .2.58) and modificationindices, one item from the SPC scale and one item from environmental munificence

Frequency %

GenderMale 370 54.3Female 141 45.7Total 511 100

Income ($)Less than 25,000 14 2.7Between 25,00 and 50,000 77 15.1Between 50,001 and 75,000 196 38.4Between 75,001 and 100,000 179 35.0Above 100,000 45 8.80

Total 511 100

Age18-25 33 6.4626-35 99 19.3736-45 237 46.3846-55 120 23.48,56 22 4.31Total 511 100

Table II.Sample descriptive

statistics


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were deleted. The essence of the deleted items was retained by other items of theirrespective scale, that is, the content validity was not significantly reduced. Theresulting fit indices demonstrated a good fit: x2 109:409 (p 0:028; 62.4 percent ofthe variance explained), df 83, GFI 0:962, AGFI 0:944, CFI 0:99,

RMSEA 0:

029, PCLOSE 0:

993, and HOELTERs 0.05 and 0.01 were 347 and382, respectively. The GFI and AGFI values of.0.90 and 0:90 were indicative of agood fit. Also, a RMSEA , 0.05 shows a good fit. The PCLOSE . 0.50 suggestsRMSEA is good. Lastly, Hoelters 0.05 and 0.01 indexes were,200 indicating that thevalidation sample size was adequate.

Convergent and discriminant validity, AVE, and composite reliability . Results for thevalidation sample showed that all the critical ratios of all the indicators weresignificant (critical ratios .1.96, p , 0.05) and ranged from 6.764 to 96.716. Theseresults were taken as evidence of acceptable convergent validity (Gerbing andAnderson, 1988). The composite reliabilities were 0.905, 0.834, 0.930, and 0.864,respectively, while the average variance extracted (AVE) for the constructs of SPC,commitment, alienation from work, and environmental munificence were 0.706, 0.627,0.772, and 0.615, respectively (Bagozzi and Yi, 1988) (see Table III). The AVE for eachfactor exceeded the squared correlations between that factor and all other factorsindicating acceptable discriminant validity. Additionally, none of the confidenceintervals ( two standards errors) for the estimated correlations for the constructsincluded 1.0, providing further support for adequate discriminant validity (Andersonand Gerbing, 1988).

Common method bias. Since the data for this study were obtained from a singlesurvey, common method variance was possible. Following Podsakoff and Organ(1986), the Harmans one-factor test in which all variables were hypothesized to load ona single factor representing the common method was employed. The principalcomponent factor analysis revealed four factors each with an eigenvalue greater than

1.0. All factors together accounted for over 81 percents of the total variance in thetraining and validation samples respectively. The first factor accounted for 28 percentof the variance. Additionally, high correlation (r . 0.90) was not found between anyconstruct. Bagozzi et al. (1991) indicate that the presence of common method biasusually results in extremely high correlations between variables. Hence, commonmethod bias may not be a serious concern in this study.

Non-response bias. To examine the non-response bias, mean responses from earlyrespondents and late respondents were compared (Armstrong and Overton, 1977).Independent t-tests of the mean responses on all the four constructs showed nostatistical differences (at 0.05 level), thus, non-response bias should not be a problem.

Hypotheses test

In order to test the hypotheses, a structural model with four constructs wasestimated: SPC, the interaction term of SPC and environmental munificence(SPC *EM), alienation from work, and commitment. We followed the procedurerecommended by Aiken and West (1991) and Ping (1995) for creating and using theinteraction term. The items of SPC and environmental munificence were meancentered and cross-multiplied to create the interaction term. In the proposed model,commitment and alienation are endogenous, whereas the remaining two constructsare exogenous. The structural model was analyzed with the combined sample of 511

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cases. The fit indices demonstrated a reasonable fit: x2 288:556 (p , 0.001; 60.2percent of the variance explained), df 86, GFI 0:931, AGFI 0:903, CFI 0:96,NFI 0:944, RMSEA 0:058. Even though the direction of the path was negativeas per H1, SPC! commitment link was not significant (estimate 20:031,

t 20:

877, p-value 0:

381). That is, H1 was not supported. Thus, no main effectof SPC on commitment was found. The SPC ! alienation from work link wassignificant (estimate 0:068, t 1:981, p-value 0:045). Thus, H2 was supported.Further, the SPC *EM ! commitment link (estimate 0:067, t 2:475,p-value 0:013) and SPC *EM! alienation from work link (estimate 20:064,t 22:767, p-value 0:006) were both significant, thus, supporting H3a and H3b.Consequently, the influence of SPC on commitment and alienation from work ismoderated by environmental munificence. The results are summarized in Table IV.

ItemStandardized

loadings Alpha CR AVE

Sales agents perceived cannibalization 0.897 0.905 0.707

The internet attracts a large number of insurance buyers aI am losing market share to internet insurance sales 0.715Large number of my present and future customer may insteadchoose to shop for insurance online 0.798I think I am losing a large number of customers to competinginternet channel 0.917I think I could sell more insurance if my company did not sellinsurance online 0.956

Environmental munificence 0.949 0.834 0.627My own opportunity for sales volume will be 0.776My own opportunity for sales growth will be 0.792My own opportunity for profit growth will be 0.832My own opportunity to recruit other agents will likely be a

The number of individuals who choose a career as an agent inthe insurance industry will be 0.882

Relationship commitment 0.897 0.929 0.773I have little, if any, emotional attachment to my insurancecompany 0.793It is a pleasure to deal with my insurance company 0.792I really enjoy working with my insurance company 0.820

Alienation from work 0.845Selling insurance for my company provides me anopportunity to excel 0.990I really do not feel a sense of pride or accomplishment as aresult of selling insurance for my company 0.956I am proud to have done well in selling insurance for mycompany 0.599Selling insurance for my company is a rewarding experience 0.894 0.864 0.615

Notes: Chi-square 109.409; df 83; p 0.028; GFI 0.962; AGFI 0.944; NFI 0.962;CFI 0.990; RMSEA 0.03; a deleted item

Table III.Reliability and validity

statistics


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Discussion and conclusionIn this study, the concept of perceived cannibalization is tested in a sales context. Manypast studies suggested the possibility of the rise of sales agent perceivedcannibalization due to the addition of internet channels (Hagerty, 2005; Porter, 2001).Some warnings are evident with respect to the potential negative outcomes of salesagents perceived cannibalization on various job aspects. Anecdotal evidence hassurfaced showing that salespersons are perceiving internet channels as cannibalistic totheir current and future sales. Yet no attempt had been made to either conceptualize oroperationalize the construct of sales agents perceived cannibalization.

Previous conceptualizations of inter-channel cannibalization were all based on

economic terms (Geyskens et al., 2002; Ward and Morganosky, 2000; Deleersnyder et al.,2002) and, hence, were considered myopic by Porter (2001). Indeed, Porter (2001)argued that the psychological impact of the addition of new channels on existingchannels had to be taken into account to understand fully the impact of salescannibalization. Our contention follows Porters proposition and extends hisconceptualizations of cannibalization by examining the impact of the addition of aninternet channel in the sales domain.

After conceptualizing the construct, a multi-item scale was developed for measuringsales agents perceived cannibalization. The properties of the scale were assessedfollowing procedures recommended by Churchill (1979), Anderson and Gerbing (1988),Gerbing and Anderson (1988), and Bagozzi and Yi (1988). This study, utilizes bothexploratory and confirmatory factor analysis to assess the reliability and validity of

the SPC scale. Our scale opens a window of opportunity for empirical research onchannel cannibalization in general and sales channels in particular.

In addition to advancing the scale, four hypotheses are developed, centering on theprincipal construct: sales agents perceive cannibalization. By demonstrating thatenvironmental munificence moderates the effect of perceived cannibalization oncommitment, this research study demonstrates that perceived cannibalization is notuniversally damaging to relationship commitment. Rather, only under a lowmunificent environment perceived cannibalization will significantly reduce

Fit indices Coefficient t-value p-value

Chi square 288.558df 86

GFI 0.931AGFI 0.903CFI 0.960IFI 0.960NFI 0.944RMSEA 0.058SPC! COM (H1) 20.031 20.877 0.381SPC! AFW (H2) 0.068 1.981 0.045SPC *EM! COM (H3a) 0.067 2.475 0.013SPC *EM! AFW (H3b) 20.064 22.767 0.006

Notes: SPC: Sales agents perceived cannibalization; SPC *EM: Interaction term for estimatingmoderating effect of environmental munificence (EM); COM: Relationship commitment

Table IV.Structural model results

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salespersons relationship commitment. Furthermore, perceived cannibalizationincreases alienation from work but its effect is more severe in low munificentenvironment.

Implications for sales agentsThis research study demonstrated that the perception of cannibalization can reducesales agents commitment to relationships with their company in a low munificenceenvironment. In addition, it can enhance alienation from work, which may result in lowperformance outcomes in the long run. Consequently, the view that the internet channelwill not cannibalize sales (Deleersnyder et al., 2002) is myopic.

It may be possible for salespersons to transform their negative perceptions ofcannibalization into motivators. Specifically, while internet channels providecustomers easy access to the core business processes such as quotations, policyissuance, and claims, salespersons may be able to develop high levels of competenciesin areas that internet channels cannot easily learn. For example, a sales agent may be

able to respond to requests (e.g. from brokers for a quote) and make requests (e.g. toreinsurers for a confirmation of coverage) using electronic channels as tools to carryout decision-making and communication tasks that are unique to the agents skill set.Thereby, even under a low munificence environment, salespersons may overcome thestress of perceived cannibalization of internet channels.

Leonard-Barton (1995) contends that sales agents who are committed to an existingbusiness structure may show a more anxious reaction towards the introduction of anew channel such as the internet. Consequently, these sales agents who have highcommitment to the existing format could have a stronger perception of cannibalizationthan that of those who have less commitment to the existing business format. Thus,future researchers may explore the moderating effect of commitment to the existingbusiness format in the relationship between SPC and the indicators of salespersons

performance.

Implications for firmsOne of the objectives of this study is to offer prescriptive and descriptive insights tofirms regarding perceived cannibalization and its possible consequences on salesagents motivation. Specifically, when firms operate in environments thatcharacteristically offer few sales opportunities, appropriate measures should betaken to counteract salespersons perceptions of cannibalization. For example, a firmcould design effective incentive systems to reduce the negative feelings towardscompeting internet channels. One way of doing so is to provide incentives to salesagents who provide service to clients who have purchased insurance online. Anotheroption is to train salespersons on how to make the internet beneficial to their own sales

operations. Since changes often necessitate acquisition of new skills, alteration insalespersons repertoire and adaptability to cope (Ingram et al., 2006; Schuler andHuber, 1993) will become key determinants of whether the new channel helps orhinders the goals of sales agents. Therefore, training salespersons to adapt to changemay be critical to the overall success of both new and entrenched channels. Furtherresearch may investigate the role of salesperson training and salesperson collaborationin the development of internet channels as they relate to sales agents perceivedcannibalization and its impact.


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In view of multi-channel business models followed by the large number ofcompanies today, the jury is still out regarding the efficiency of the integration ofoff-line and on-line selling activities. In this backdrop, the role of sales agentsperceived cannibalization in the integration of off-line and on-line channels needs

further exploration. The SPC scale proffered in this study should facilitate empiricalresearch on this important phenomenon. The findings of this study should provideencouragement for further investigation of the antecedents and consequences of theSPC construct.

Limitations and future researchOne major limitation of this study is that the data used in this study to develop andvalidate the scale was from a single sample of insurance agents. Typically, separatesamples are required for examining the psychometric properties of a new scale. Bollen(1989) contends that a new data set can be obtained by randomly dividing the initialdata pool into two. However, future research may validate the scale using a newsample. Additionally, the results of this study may lack external validity because thesample used in this study is industry specific. Future research may also examine therelationship posited in this study by using data from a different industry.

Our failure to find a direct influence of SPC on commitment presents anotherresearch opportunity; that being the possibility of other intervening variables. Pastresearch indicates that salespersons skills and competencies are critical determinantsof salespersons performance outcomes (Churchill et al., 1985). Consequently, futureresearch may explore the intervening role of salespersons skills and competenciesbetween SPC and performance outcomes. Additionally, there also may be differencesacross sex, age, and experience for the relationships posited in this study.

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Corresponding authorDheeraj Sharma can be contacted at: [email protected]


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