The impact of sales controls on manufacturers’ agents’ tactical decisions: the importance of inter-organizational climate

Abstract

Purpose Organizational climate is an essential dynamic to leverage in salesforce performance. This study aims to develop a model that explores the determinants of independent manufacturers’ representatives’ (i.e. IMRs’) intentions to comply with their principals’ requests for additional tasking. Using agency theory, the authors explore the application of behavior and outcome-based controls upon dyadic manufacturer-IMR relationships for these additional performance/task requests. Design/methodology/approach Data from over 1,000 US-based IMRs were used to test two constructs; inter-organizational climate and perceptions of mutual satisfaction within the agency-principal dyad. Compliance behaviors tested were IMRs’ intentions to engage in non-selling-related tasks and intentions to allocate additional selling time to principals’ products. The following four exogenous controls were tested: perceived goal congruence between IMRs and principals; IMRs’ perceptions of principals’ expertise; mutual communications between IMRs and principals in the supply chain dyad; resources and sales support programs provided by principals to IMRs; and IMRs’ perceptions of the adequacy and fairness of the principals’ compensation plans. Findings Two constructs – inter-organizational climate and perceptions of mutual satisfaction with the agency-principal dyad – mediated the effects of exogenous sales controls on two compliance behaviors. The model’s data were analyzed using Partial least squares structural equation modeling (PLS-SEM). A marker variable was deployed to check for common method variance also supported using the Partial least squares (PLS) factor solution. Most variables demonstrated significant direct and mediated effects on each compliance behavior. Variables that emphasized behavioral-based controls dominated intentions for IMRs to engage in non-selling tasks. The principal commission structure, the only sales outcome-based control in the study, most influenced IMRs’ intentions to commit additional sales time to their principals’ products. Research limitations/implications This study only examined the intentions of IMRs to engage in additional selling activities and their intention to engage in non-selling tasks. Principals may desire longer-term commitments from IMRs. The model developed here can be modified to capture additional behavioral and attitudinal outcomes including, for example, the exit intentions of IMRs. Practical implications Principals are well-advised to foster a positive inter-organizational climate that fuels perceptions of mutually satisfying working relationships with their IMRs. These mutually satisfying working relationships can, by themselves, positively influence IMRs to acquiesce to reasonable requests made by principals. This advice appears to be particularly crucial when asking IMRs to engage in additional non-selling tasks. The total pattern of path estimates points to the conclusion that capable sales control plays an important role in fostering positive inter-organizational climates. The inter-organizational climate – mutual satisfaction link proved crucial as a mediator of the impact of sales controls on IMRs’ behavioral compliance intentions. Originality/value Knowing the impact of sales controls on IMR’s affords businesses the ability to use these controls for behavioral compliance intentions on non-selling tasks.