Exclusive dealing without territory exclusivity in multichannel systems: managing channel conflict and driving commitment

TLDR: In this article, the authors investigate how manufacturers can enhance ED channel outcomes, such as the ED's level of commitment to the relationship, by strategically managing its downstream communication efforts with ED and non-ED channels.

Abstract: The exclusive dealing literature suggests that manufacturers should protect exclusive dealers (ED) from intrabrand competition by assigning exclusive territories (ET). We consider ED systems without ET and investigate how manufacturers can enhance ED channel outcomes, such as the ED’s level of commitment to the relationship, by strategically managing its downstream communication efforts with ED and non-ED channels. We show that these cross-channel communication efforts (i.e., the quality of communication between the manufacturer and non-ED resellers in the ED reseller’s territory) are important drivers of relationship conflict and commitment for ED resellers, while playing a limited role for non-ED resellers. These results underscore the need for manufacturers to understand the perspectives and behaviors of each individual channel within a multichannel system and manage their different distribution channel types as an integrated system. We find support for our hypotheses in a sample of 672 observations corresponding to different ED and non-ED resellers selling a manufacturer’s product-line across several European countries.