Forms of Competition and Outcomes in Dual Distribution Channels: The Distributor’s Perspective

The focus of this paper is dual distribution channels in business-to-business markets. We take the perspective of the distributor, and examine how different forms of competition with a manufacturer-owned channel impact distributor opportunism. Next, we consider how the same forms of competition impact the distributor’s end customers. Based on a multi-industry field study of industrial distributors, we highlight the complex processes that characterize dual distribution systems. We show that while competition with a manufacturer-owned channel increases distributor opportunism, it also has the potential to benefit the distributor’s end customers. In addition, although actions taken by a manufacturer to create vertical separation between channels limit competition, such actions also reduce end customer satisfaction.