Determinants and outcomes of dual distribution: an international study

Abstract

Purpose – The purpose of this paper is to analyze the coexistence of independent and manufacturer-owned distributors within the same distribution system. In particular, the authors seek to identify those factors that determine the use of dual distribution and the effect of dual distribution systems on different economic outcomes. Design/methodology/approach – Using a case study-based approach, the authors compare different brands in different European markets of a German automobile manufacturer using 24 expert interviews in Germany, Sweden and Spain. Findings – Our results demonstrate the importance of limited resources, investment specificity, location, divergent interests and competitive strategies for the development of dual distribution structures. The results show that the overall distribution system performance is positively related to dual distribution. Research limitations/implications – The generalizability of the findings is limited due to the use of cases for different brands of one large corporation within a specific industry and the limited number of countries that were examined. This study is also limited to the subjective evaluation of firm performance and the qualitative evidence provided by the interviewees in our sample group. Our study contributes to the ongoing debate on the use of independent and manufacturer-owned distributors among distributive vertical chains. Based on the qualitative findings, propositions for future research and managerial implications are provided. Originality/value – While in previous research, the explanatory approach of make-or-buy has often been used for examining dual distribution, the authors combine insights from different theoretical streams (transaction cost theory, market-based view, resource-based view and principal-agent theory) to identify and empirically investigate the antecedents and outcomes of dual distribution. Furthermore, while prior research focused on single-country studies and franchise systems, the authors examine a multi-country sample in the automobile industry and expand the findings of the existing literature by covering different brands.