When do incentives work in channels of distribution?

David I. Gilliland, Stephen K. Kim

Research output: Contribution to journalArticle

Abstract

The incentive dilemma refers to a situation in which incentives are offered but do not work as intended. The authors suggest that, in an interorganizational context, whether a principal-provided incentive works is a function of how it is evaluated by an agent: for its contribution to the agent's bottom line (instrumental evaluation) and for the extent it is strategically aligned with the agent's direction (congruence evaluation). To further understand when incentives work, the influence of two key contextual variables-industry volatility and dependence-are examined. A field study featuring 57 semi-structured depth interviews and 386 responses from twin surveys in the information technology and brewing industries provide data for hypothesis testing. When and whether incentives work is demonstrated by certain conditions under which the agent's evaluation of an incentive has positive or negative effects on its compliance and active representation. Further, some outcomes are reversed in the high volatility condition.
Original languageEnglish
Pages (from-to)361-379
Number of pages19
JournalJournal of the Academy of Marketing Science
Volume42
Issue number4
Early online date7 Dec 2013
DOIs
Publication statusPublished - 31 Jul 2014

Keywords

  • channels of distribution
  • incentives
  • agency theory
  • compliance

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