The effect of exporter’s incentives on foreign distributor’s role performance

A foreign distributor’s motivation to perform local marketing tasks for an exporter is often poor due to agency conflicts and transaction cost constraints characterizing the export channel. While exporters may engage in actions such as offering incentives and overseeing partner activities to improve foreign marketing, such intrusions into partner operations often fail to enhance the distributor’s role performance. Drawing on motivation theory, the authors develop a model explaining the efficiency of different incentive types in enhancing the distributor’s motivational context to act on behalf of the exporter, thereby improving relationship quality, distributor relationship-specific investments, and, consequently, distributor role performance. The authors use a sample of 278 European exporters to test hypotheses regarding relationship factors that mediate and moderate the incentive–role performance relationship. The results indicate that the impact of low-powered incentives (LPIs) substitutes for the effect of high-powered incentives on relationship quality and specific investments, the key mediators driving distributor role performance. In addition, exporter oversight of distributor activities weakens the effectiveness of LPIs to increase distributor-specific investment. The authors derive implications for designing portfolios of incentives, with inferences based on efficiently matching incentive-induced motivational context with foreign distributor’s actions required to accomplish exporter goals.