Design and Governance of Multichannel Sales Systems: Financial Performance Consequences in Business-to-Business Markets

Abstract

Multichannel sales systems in business-to-business markets vary substantially in their designs and thereby either attenuate or aggravate agency conflicts between manufacturers and sales partners. Drawing on multiple agency theory, the authors introduce direct and indirect channel usage as focal design dimensions of multichannel sales systems and investigate each channel’s performance effects using a matched manufacturer–sales partner data set. Whereas direct channel usage predominantly lowers agency conflicts in terms of information asymmetry and sales partner moral hazard, indirect channel usage amplifies moral hazard concerns. How those sales partner effects translate into manufacturer performance outcomes critically depends on governance mechanisms, confirming predictions from governance value analysis: formalization enhances performance outcomes for manufacturers in the case of indirect channel usage but diminishes performance in the case of direct channel usage. The authors observe converse effects for centralization and information exchange: centralization and information exchange enhance outcomes of direct channel usage but diminish outcomes of indirect channel usage. The focal managerial implication is that managers must align the design of their multichannel sales systems with effective governance mechanisms.