The Role of the Institutional Environment in Marketing Channels

Abstract

Set within the political economy framework, marketing channels literature predominantly has used an efficiency-based task environment perspective and largely overlooked a legitimacy-based institutional environment approach in studying channel attitudes, behaviors, processes, and structures. The purpose of this article is to highlight the importance of the institutional environment and develop a comprehensive conceptual framework that incorporates the institutional environment into current marketing channels research. The institutional environment perspective relies on the primacy of (1) regulatory institutions (e.g., laws), (2) normative institutions (e.g., professions), and (3) cognitive institutions (e.g., habitual actions) in influencing the legitimacy of channel members. Using institutional theory, the authors augment the current task environment approach by developing three institutional processes and their underlying mechanisms and elaborating on how these institutions might influence channel relationships. The article ends by laying out a research agenda and highlighting managerial implications.