Channel incentives as unilateral and bilateral governance processes

The authors investigate channel incentives as extra-contractual governance processes that maintain and extend marketing channel relationships. More specifically, instrumental incentives are monetary-based payments made by a manufacturer in a unilateral channel arrangement to motivate distributor compliance, while equity incentives are bilateral expectations of fair treatment that motivate both parties to continue to cooperate with one another. A model of the antecedents and performance consequences of channel incentives is conceptualized and tested on 314 marketing channel relationships using a structural equation modeling methodology. The findings support the conceptual model and suggest that unique facets of the channel relationship explain the type of incentive mechanism in use.