Communication strategy development in supplier-based environmental uncertainty: the mediating effects of transaction form and interpersonal exchange norms

Abstract

This research examined the development of bureaucratic and social norms in a franchised channel of distribution in conditions of both decision uncertainty and nontransferable asset investments. A theoretical model was developed based on Transaction Cost Analysis (Williamson 1976, 1985, 1986) and Social Exchange Theory (Kelley and Thibaut 1978).

Additionally, several forms of interpersonal communication were modeled as behavioral outcomes of these norms. This research explored both the norms of the economic exchange between two firms and the interpersonal exchange between the individuals in these firms who interact on a regular basis.

The model was tested with a national sample using survey methodology in the farm equipment industry. Merchant wholesalers from 469 dealerships responded to the survey (response rate 47.8%). The model was tested using covariance structures analysis. The specific test was a stacked, two-group model with transaction-specific assets treated as a moderator variable.

The pattern of results indicated that dealers who have more transaction-specific assets are likely to use bureaucratic measures to tighten control of the transaction when decision uncertainty is high (expected). However, social norms were not used as a secondary asset safeguard; instead, parties withdrew socially in conditions of uncertainty, regardless of asset condition (not expected).

The overall pattern of results suggests that dealers use short-term efficiency measures in periods of stress but that those measures may be less effective in the long-term because of their inhibiting effects on trust, commitment, and shared values. Social norms were the strongest predictors of interpersonal communication (expected). Transaction-specific assets also affected communication between the dealer and the sales rep. Dealers with lower assets (i.e., lower exit barriers) relied more heavily on the sales rep as a conduit of information than did dealers with higher assets.