An Integrated Theory of Channel Integration: Theory and Empirical Evidence
Previous authors have proposed two competing models of channel integration: one uses the Transaction Cost Analysis (TCA) paradigm and the other the Strategic Orientation (SO) paradigm. This paper proposes a unified channel integration model that subsumes both these models as special cases. Using confirmatory factor analysis and alternating least squares optimal scaling, we test the new integrated model on a large data set from a survey instrument that was administered to key respondents in 2,000 manufacturing firms in nine SIC industry groups. The empirical results show that BOTH the SO and TCA theories of channel integration are supported empirically. Importantly, a new construct, Channel Uncertainty, has a more significant effect on the degree of channel integration than previous constructs in the literature.
Keywords: Channel Integration, Strategy, Transaction-Costs Analysis, Strategic Orientation
Dr. Pankaj Kohli
Principal, Management Consulting, IMS Health
Dr. Sharan Jagpal
Professor, Rutgers Business School, The State University of New Jersey