Similarities between Conflict and Cooperation in the Marketing Channel

Robert H. Ross, Wichita State University Robert F. Lusch, Oklahoma University

This article examines the relationship between two causes of conflict: domain dissensus andperceptual incongruity, and the levels of conflict and cooperation within a marketing channel dyad. Utilizing a national sample of food broker-food wholesaler dyads, four hypotheses were tested-two relating domain dissensus and two relating perceptual incongruity to conflictlcooperation. Results indicated no significant relationship between either perceptual incongruities or domain dissensus and the level of conflict found in the dyad, while a significant negative relationship was found between both perceptual incongruities and domain dissensus and the level of cooperation in the dyad.

Most recent studies of the interactions between members of a marketing channel have taken Aldersons [l] perspective of the channel as an interorganizational system. These studies assume that channels are superorganizations . . [which] have the characteristics of complex social organizations, even though comprised of collectivities rather than individuals [19, p. 4061. Thus within a channel there are activities aimed at attaining both collective and self-interest goals; a division of functions and tasks resulting in interdependent processes; and integrated actions that result in channels developing a unique identity separate from their members [ 19, p. 4061.

The interdependent relations between channel members are important to the development of research regarding channel conflict in that interdependency has been identified as a precondition for the existence of conflict [4]. To date, most research on channel conflict has focused on vertical channel conflicts causes [5, 8, 9, 12, 20, 26, 27, 321, consequences [ 11, 13, 16, 231, mechanisms of conflict resolution [2, 13,26,27,30].

Channel interdependence also creates the need for cooperation to assure effective channel management. Cooperation has received less attention in intrachannel studies, with Pearsons [ 151 the only reported empirical example. There are divergent views of the relationship

Address correspondence to Robert H. Ross, Department of Administration, Wichita State University, College of Business Administration, Wichita, KS 6 7208.

JOURNAL OFBUSINESSRESEARCH 10, 237-250 (1982) 0 Elsevier Science Publishing Co., Inc. 1982 237 52 Vanderbilt Ave., New York, NY 10017 0148-2963/82/020237-14$2.75

238 Robert H. Ross and Robert F. Lusch

between conflict and cooperation in channels. Pearson [ 151 indicates that conflict and cooperation are at opposite ends of a single scale, whereas Mallen [ 131, Stem and Heskett [27], and Robicheaux and El-Ansary [20] view conflict and cooperation as separate constructs. Stem and Reve [28] suggest that the degree of conflict or cooperation in a given channel is the result of the degree of power balance present, as well as the aggregate amount of power in the channel [28, p. 581.

There has been no reported research investigating the effect of the presence of causes of conflict with the levels of conflict and of cooperation in a channel, even though these concepts appear to share similar antecedents. An empirical investigation of these relationships is the objective of this research.

Channel Conflict

Conflict has been defined as a state when incompatable activities occur. . . an action that is incompatible with another action, prevents, obstructs, interferes, injures, or in some way makes the latter less likely or less effective [7, p. lo]. Within the channel, conflict may be defined as an action by one channel member which is inconsistent with the goals of some other member or members at a different channel level [30, p. 61. This definition is adopted for this research, since it implies the presence of a vertical linkage in the channel and also implies that actions need not be planned as conflictual to be perceived as such.

The effect of various levels of conflict on the functioning of a channel can be either productive or destructive. Managerially, it is important to develop strategies to manage conflict and identify what sort of conflict behavior is most likely to lead to constructive outcomes and which behaviors tend to be either nonproductive or destructive [29, p. 8921. After isolating these behaviors it is necessary to identify the variable which influence the occurrence of these behaviors. . . [to] develop productive intervention strategies and tactics [29, p. 8921.

To assist in understanding the conflict process, several models have been developed. Pondy [ 171 in his model indicates the presence of four (not necessarily sequential) stages: a latent stage (causes of conflict present); a perceived stage (awareness of conflict); a felt stage (conflictual parties experience tension or stress); and a manifest stage (actual conflictual behavior takes place). The outcome of one conflictual episode sets the stage for the next. Similar models have been developed by Thomas [29] and in a channel setting by Rosenberg and Stem [21,

Rosenberg and Stem [21] suggested in their empirically tested model that interdependence, perceptual incongruity, domain dissensus, and

Marketing Channel 239

goal incompatibility were the causes of conflict in a channel. These causes react with structural and attitudinal factors to create a measurable level of conflict. The behavior occurring at this point determines the eventual outcome of the conflict episode.

It appears that interdependency provides the foundation for the other causes [26, p. 1561, in that each channel member will have its own goals and preferred method of their achievement. However, none can pursue the goals without concern for how this pursuit will affect other members goal attainment [26, p. 1601. Domain dissensus is also related to interdependency in that it involves disagreement regarding the range of products, population to be served and the services rendered and/or functions performed [27, p. 2941 between the member of a channel. Lastly perceptual incongruities become particularly significant when interdependent channel members must work together to reach chan- nelwide goals.

Cooperation

Cooperation may be defined as a situation where the individuals composing a group are pursuing promotably interdependent goals [6, p. 1501. In the channel, cooperation may be defined as a state or condition characterized by members willingness to coordinate their activities in an effort to help all channel members achieve superordinate goals [20, p. 221. This definition is utilized in the research at hand.

Conflict versus Cooperation

Interdependence is an antecendent of both cooperation and conflict. Therefore knowledge of ways to manage conflict and cooperation in interdependent channel settings has significant managerial impact since it affects the channels ability to function effectively. In addition, empirically based knowledge of the relationship between conflict and cooperation in a channel has theoretical value, since analyses of this relationship have been somewhat ambiguous to date. As examples, Schermerhom [24] is representative of authors suggesting that conflict and cooperation share common roots in organizational interdependence, domains, and goals-with the outcome situationally determined. Bonama [3], on the other hand, indicates that the relation between conflict and cooperation varies with the relative power of the involved parties. The former opinion indicates that conflict and cooperation are antithetical, while the latter indicates that they should be considered as separate constructs.

240 Rohert H. Ross and Robert F. Lusch

If conflict and cooperation are considered as separate constructs, channel member behavior could be classified along one continuum from cooperative to noncooperative, and along a second continuum from functional to dysfunctional conflict [20, pp. 22-231. Stem [25] indicates that the cooperative orientation in channels is obtained in a setting within which the potential for conflict is present.

Given the common root ot interdependency, if perceptual incon- gruities and domain dissensus result in higher levels of channel conflict, do congruent perceptions and domain consensus lead to higher levels of cooperation? If conflict and cooperation have similar roots, it would seem logical that these elements in the conflict process would also bear on cooperation.

Hypotheses

Based on this background an empirical study was conducted that allowed testing of the relationship between two of the primary causes of conflict in the channel: domain dissensus and perceptual incongruity, and the level of both conflict and cooperation in a channel dyad.

HI : the greater the domain dissensus between channel members A & B, the higher the level of conflict in the A-B dyad.

HI: the greater the perceptual incongruity between channel members A & B, the higher the level of conflict in the A-B dyad.

H,: the greater the domain dissensus between channel members A & B, the lower the level of cooperation in the A-B dyad.

H,: the greater the perceptual incongruity between channel members A & B, the lower the level of cooperation in the A-B dyad.

Research Design

Data and Sampling Data utilized to test the research hypotheses were collected as part of a nationwide study of the relationships between food brokers and food wholesalers.

A sample of 100 broker-wholesaler pairs (matches) was randomly chosen from a nationwide list of broker and wholesaler participants in the grocery channel. Two criteria were used: the broker-wholesalers must be involved in the general grocery trade and they must do business with each other. The 100 matched pairs of brokers and wholesalers were first contacted by telephone and asked to take part in a study of operating policies in their marketing channel. Although no mention was made of the behavioral focus of the study, responsents were informed that they

Marketing Channel 241

would be rating only their business relationship with the oposite member of their dyad. They were then mailed a questionnaire. As an incentive, all participants were promised a copy of a managerial summary. After one followup there were 54 usable responses. The data are unique in terms of channels research since 1) both sides of a specific dyad are surveyed, and 2) the 54 percent response rate indicates a high interest level among participating subject in the results of the research. Measurement Channel Conflict and Cooperation. Rosenberg and Stem [21] used as a measure of conflict the absolute difference between channel members evaluation of the performance of the dyad on conflict- related issues. This approach fails to distinguish between a cause of conflict and conflict itself, as no measure of actual conflict was performed. Lusch [lo] operationalized the measure of conflict in the marketing channel as the frequency of intramember disagreements. Although frequency of disagreement was measured, the intensity of the disagreements was not measured.

Pearson [ 151 measured the conflictual and cooperative orientation in the channel by generating a list of 30 adjectives, 15 having content validity in the measurement of conflict and 15 having content validity in the measurement of cooperation. Each adjective was accompanied by a Stapel scale ranging from + 5 to + 1 and from - 1 to -5. Respondents assigned a positive number to those adjectives that were good descriptors of the situation in their channel, and a negative number to those that were poor descriptors, with the magnitude of goodness or poorness reflected in the absolute size of the assigned number. The extent to which the conflictually based adjectives were deemed to be good descriptors indicated the level of conflict in the channel, while the extent to which the cooperatively based adjectives were deemed good descriptors indicated the level of cooperation in the channel. This measure corresponds to Pondys felt conflict stage. It is in this stage that conflict affects the way in which the parties involved in a conflict episode feel about each other, and therefore might be expected to color their working relationship.

Pearson tested this procedure on two channel segments, one known to be conflictual, the other cooperative. Through discriminant analysis 10 of the 30 adjectives were found to be statistically significant in their predictive power regarding membership in cooperative or conflictual dyads. This set of ten adjectives had criterion validity. This list of adjectives consisted of five that were cooperative (coordination, co- alition of interests, respectfulness, mutual confidence, companionship) and five that were conflictual (unreasonable demands, crossness, inconsistency, emotional outbursts, dissension).

242 Robert H. Ross and Robert F Lusch

In the study at hand, these ten adjectives, with a lo-point Stapel scale, were used to measure the level of felt channel conflict and cooperation. A major concern with this methodology is that channel members might resist making responses that would indicate the presence of conflict out of fear of damaging their business relationships with the opposite member of the dyad. To overcome this concern, respondents were assured both during the original telephone contact and in writing on the questionnaire as to the confidentiality of their response. Domain Dissensus. Domain dissensus in a channel dyad refers to the absence of agreement between members of the dyad regarding their respective performance of functions, activities, or decision making- specifically, whose domain these functions, activities, or decision fall within. After consulting with food brokers and food wholesalers and reviewing the trade literature, a list of ten activities or functions involving wholesalers marketing policies was developed. These policy areas related to wholesalers of product line, pricing policies, inventory levels, sales promotion policies, product mix, addition of new products, in-bound transportation decisions, product deletion, order size, and overall operation. For each of these areas, the food broker and food wholesaler may not reach a consensus regarding who should have primary influence, both feeling that their position or expertise should allow them to influence the policy.

To assess whether dissensus was present in these areas, dyad members responded to a 5-point rating scale regarding their relative influence in each area. A Wilcoxon Matched Pairs Test allowed an evaluation of differences between the broker and wholesalers position, and indicated in which of the ten policy areas significant differences existed between brokers and wholesalers. At the .05 significance level, dissensus was found in the following areas: pricing policies, product mix, order size, product deletion, and overall operations. In each case brokers felt they should have more influence than wholesalers were willing to grant.

Domain dissensus scale scores were constructed by summing together the absolute values of the differences in these five areas for each dyad. Thus in a particular wholesaler-broker dyad, a higher domain dissensus score would result if there is considerable disagreement as to who has the major influence on each of the five domain dissensus areas.

The domain dissensus scale has content validity since the domain areas were obtained through field discussions with wholesalers and brokers and from the trade literature. Additionally, the scale was limited to areas in which there was consensus between the members of the dyad. Criterion validity was assessed by testing hypotheses one and three in which the domain dissensus scale was correlated with the conflict and the cooperation scales. Although no relationship was found between domain

Marketing Channel 243

dissensus and conflict, a significant negative relationship was found with cooperation. Control validity, or the degree to which a concept is manipulatable and capable of influencing other variables [31, p. 441, also is present. This is the case because the areas (pricing, product mix, order size, and the like) that we refer to in the domain dissensus scale have direct empirical referents that management can understand and effect, and therefore control. Finally, reliability was assessed by computing coeficient alpha for the Sitem domain dissensus scale. The alpha level was .67, which is generally considered adequate for basic research. Perceptual Incongruity. Perceptual incongruity in a channel exists when each party to the dyad views a particular event, phenomenon, or aspect of the channels internal or external environment differently. In the broker-wholesaler dyad one critical aspect of the relationship is the extent to which brokers provide wholesalers with assistance. In deciding which assistances to provide and emphasize, brokers must know how important the various assistances are to wholesalers. In so doing brokers will develop perceptions of which assistances are most important. At the same time, food wholesalers also have perceptions of the importance of these assistances. To the extent that these entities differ in their evaluation of the importance of these assistances, perceptual incon- gruities will be present.

In developing the list of assistances a variety of sources were consulted, including Daniel Padbergs [14] book on the role of food brokers in the distribution cycle, as well as a study by Progressive Grocer [ 181 on the tasks performed by salespeople in the grocery industry. An initial list of over 40 assistances were reduced to 24 after

Table 1: Correlations between Perceptual Incongruities and Domain Dissensus and Channel Conflict and Cooperation

Dependent Variables

Independent Variables Conflict Scale Cooperation Scale

Domain dissensus scale 76 = 0.05 TV = -0.26 Q! = 0.30 01 = 0.007

Perceptual incongruity scale 76 = 0.01 7* = -0.25 01 = 0.45 01 = 0.007

Nofe: ~b refers to Kendalls tau measure of correlation and o refers to the significance

level.

244 Robert H. Ross and Robert F. Lusch

discussions with food brokers and food wholesalers. The final set of 24 assistances is provided in the Appendix.

Both wholesalers and brokers rated the importance of these as- sistances to the wholesalers on a 9-point scale. A nonapplicable category was provided to allow respondents to indicate assistances that were not provided. Each party was told to evaluate only the other member of his or her dyad. A Wilcoxon Matched Pairs Test was performed on wholesalers and brokers responses to each of the 24 assistances. The results, at the .05 level, showed significant differences in importance ratings on five of the asistances: 1) describing requirements necessary for payments of advertising, display, or trade allowance; 2) describing advertising ideas successfully used elsewhere; 3) arranging for dis- position of damaged merchandise; 4) resetting sections within retail outlets; and 5) providing coordination with transportation or ware- housing intermediaries.

To construct the perceptual incongruities scale, the absolute values of the difference scores for each of these five assistances were summed for each dyad. As an example, in a specific dyad, if the wholesaler rates an assistance of low importance but the broker rates it high, this dyad would be characterized by a high score on the perceptual incongruities scale.

The perceptual incongruities scale has content validity since it was drawn from discussions with industry representatives and a trade journal study. The final scale included only the five assistances on which brokers and wholesalers had incongruent perceptions. The criterion validity of the scale was assessed through testing hypotheses two and four, thus revealing that the perceptual incongruities scale correlates with the cooperation but not the conflict scale. As was true of the domain dissensus scale, the perceptual incongruities scale has control validity. There exists a direct empirical referent for the scale in terms of the broker assistances. If there are perceptual incongruities regarding the im- portance of these assistances, the broker and wholesaler can in principle rectify the situation and thus control the degree of perceptual in- congruity. Finally, the perceptual incongruity scale is reliable as evidenced by the computed coefficient alpha of .78.

Results

Table I provides a summary of the results of testing hypotheses 1 through 4.

To test hypothesis one, that the greater the domain dissensus, the greater the level of felt conflict, r, was computed between the domain dissensus and conflict scales. The obtained r6 of .05 was not statistically significant at the .05 level. Although no relationship can be dem-

Marketing Channel 245

onstrated, the sign of the correlation coefficient was in the expected positive direction.

The second hypothesis, that the greater the perceptual incongruity, the greater the level of felt conflict, was tested by measuring the correlation between the perceptual incongruity scale and the conflict scale. The positive rb of .Ol was again in the direction hypothesized but was not statistically significant at the .05 level.

The third hypothesis, that the greater the dyads domain dissensus, the lower the level of cooperation, was empirically investigated by cor- relating the domain dissensus scale with the cooperation scale. A negative correlation was expected, indicating low levels of domain dissensus should be related to high levels of cooperation. The TV was - .26 and significant statistically at the ,007 level.

The final hypothesis, that the greater the dyads perceptual in- congruities, the lower the level of cooperation, was addressed by correlating the perceptual incongruity scale with the cooperation scale. The expectation was a negative correlation that would suggest low levels of perceptual incongruity being tied to high levels of cooperation. The results supported this expectation. A rb of - .25 was obtained that was statistically significant at the .OO7 level.

In summary, the statistical analysis provided evidence that perceptual incongruities and domain dissensus among members in a channel dyad are inversely related to cooperation in the dyad. On the other hand, perceptual incongruities and domain dissensus were not found to be related to conflict in the channel dyad.

Discussion

Although the results are probably not generalizable to all channel types and/or systems, they do suggest that at least certain premises and propositions in the channel theory literature be questioned and carefully scrutinized.

At least four possible conclusions can be drawn from the finding that domain dissensus and perceptual incongruity are not related to felt channel conflict. The first is that there existed a problem in the research design and/or measurements. Although this is a possibility, the authors believe all proper precautions were taken in the survey research design and in the construction of the measurement instruments.

Second, perhaps the domain dissensus and perceptual incongruity that existed in the channel was not as yet perceived. Conflict might still be in a latent stage, not affecting the feelings one number had about the other. This is not very probable since the average wholesaler-broker dyad inthe

246 Robert H. Ross and Robert F. Lusch

study had been dealing with each other for 20 years and domain dissensus and perceptual incongruity should have already surfaced.

Third, response bias may have been operative, in that only the more cooperative dyads may have completed their questionnaires. Although the response rate is high enough to minimize this concern, if more conflicting dyads had been included as respondents, it might have been possible to demonstrate a more significant relationship between conflict and perceptual incongruities and/or domain dissensus.

Fourth, domain dissensus and perceptual incongruity may have been perceived but had not resulted in any feelings of stress, tension, or hostility (i.e., felt conflict). We believe this fourth possible explanation to be the most likely one. Significant dissensus was found in only five of the ten domain areas investigated. Similarly, 24 areas were investigated for perceptual incongruity and in only 5 were perceptions significantly different between broker and wholesaler. A rather cooperative set of brokers and wholesalers was selected, which is somewhat surprising since exploratory interviews with brokers and wholesalers in Kansas and Oklahoma indicated that the potential for considerable domain dissensus and perceptual incongruity existed.

Surprisingly, although not found to be related to conflict, domain dissensus and perceptual incongruity were related to cooperation. Domain dissensus and perceptual incongruity could have been expected to be related to conflict and nor cooperation, since the conflict literature identifies them as causes of conflict, while the cooperation literature does not directly identify them as causes of cooperation.

A possile explanation of this finding is that by reducing domain dissensus and perceptual incongruity, cooperation in the channel can be fostered because members of the channel become more able to coordinate their activities when they agree on domains and the importance of assistances. But the opposite does not necessarily hold. When they do not agree on domains or the importance of assistances, they may not feel conflict or behave in a conflictual way because they may not get frustrated. They may view some (probably low) level of domain dissensus and perceptual incongruity as healthy since their diversity of opinion may help the dyad make better channel decisions. This could be especially true in this research setting since relatively little domain dissensus and perceptual incongruity was present in the broker and wholesaler dyad.

Conclusions

The results of this study seem to provide support for Schermerhoms [24] observation that conflict and cooperation have common roots, with the

Marketing Channel 247

outcome in a particular episode determined by the situation. This conclusion is based on our results, which show that clearly specified domains and congruent perceptions of reality are associated with higher levels of cooperation. Managerially, this suggests the need for con- centrated attention to establishing mutually agreedto domains as well as congruent perceptions of reality. As Stem and Haskett [27] suggest, these functions can be successfully accomplished through a bargaining process enhanced by the presence of an agreed upon power structure to govern the channel. Therefore it appears important for channel managers to focus on strategies to develop such a structure.

An important question remaining to be answered regards the direction of the relationship between domain consensus, perceptual congruity, and cooperation. For example, in this dyad, was the presence of a cooperative orientation the cause of congruent perception and domain consensus, or did these phenomena create the cooperative orientation noted? There appears to be intuitive support for each position, particularly when one considers that food brokers success is enhanced by their ability to maintain cooperative relations with a diverse group of wholesalers.

Because of the small number of empirical studies of cooperation in channels, it is difficult to draw conclusions based on this research for channels in which specialized intermediaries (such as food brokers) are not present. Future research needs to deal with the relationship between causes of conflict and the levels of cooperation and conflict in other types of channel dyads, as well as with potential contributors to the climate of cooperation in a channel. Additionally, further techniqaues should be developed to measure empirically the consequences of various levels of cooperation on the effectiveness and efficiency of a channel.

Appendix: Assistances and Services the Food Broker Provides the Food Wholesaler

1. Communicate with wholesaler as to the content as well as the timing of upcoming promotional plans.

2. Inform wholesaler of the existence of new products. 3. Provide descriptions of unique qualities or selling features of new

products. 4. Suggest retail pricing. 5. Schedule the arrival of in-bound shipments. 6. Provide information concerning changes in the competitive

environment for products handled.

248 Robert H. Ross and Robert F. I,usch

7.

8.

5. 10.

11. 12. 13. 14.

1.5. 16.

17. 18.

15.

20. 21. 22.

Advise as to events causing potential fluctuations in the expected order cycle time for the product (including order processing time, order handling time, and transit time). Provide information regarding sales variations that may be expected owing to seasonality or changes in the competitive environment. Advise when manufacturer is out or nearly out of stock. Describe requirements necessary for payment of advertising, display, or other forms of trade allowance. Report competitive retail pricing. Arrange for disposition of damaged merchandise. Provide adequate retail store coverage. Provide logistical coordination for the introduction of new products, as to start-ship dates, handling characteristics, and so forth. Recommend order quantities on new products. Present manufacturer or broker research on new products as to specific needs/requirements of local customers. Reset sections within retail outlets. Offer economies of time by presenting offerings of multiple manufacturers on one call. Provide coordination with various transportation or warehousing intermediaries. Communicate manufacturers sales policies. Describe merchandising ideas successfully used elsewhere. Provide logistical coordination for upcoming promotional events, assuring that adequate product is on hand to support projected sales levels.

23.

24.

Offer suggestions to facilitate ease in storage and handling and minimize damage in the sale of products. Describe advertising ideas successfully used elsewhere.

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