Abstract
This article proposes a comprehensive model for analyzing the environmental forces that affect channel length. The marketing literature regards channel length as a succinct, key measure of channel structure. Transactional cost analysis offers an integrative explanation of the seemingly contradictory phenomena and varied interpretations found in the channels literature. The central thesis of this article is that the developmental process alters the balance between performing channel tasks externally and internally and thereby channel structure. The article also interprets from a transactional cost perspective how selected cultural, political, and urban market concentration factors account for enduring differences in channel structure among nations at similar levels of development.
Similar content being viewed by others
References
Adelman, I. and C. T. Morris. 1968. “An Econometric Model of Socio-Economic Political Change in Underdeveloped Countries.”The American Economic Review 58 (December): 1184–1218.
Adelman, I. and C. T. Morris. 1973.Economic Growth and Social Equity in Developing Countries. Stanford, CA: Stanford University Press.
Agarwala, R. 1983.Price Distortions and Growth in Developing Economies. New York: Oxford University Press.
Anderson, Erin. 1985. “The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis.”Marketing Science 4 (Summer): 234–254.
Anderson, Erin and Ann T. Coughlan. 1987. “International Market Entry and Expansion Via Indpendent or Integrated Channels of Distribution.”Journal of Marketing 51 (January): 71–82.
Anderson, Erin and Hubert Gatignon. 1986. “Modes of Foreign Entry: A Transaction Cost Analysis and Propostitions.”Journal of International Business Studies 17 (Fall): 1–26.
Aharoni, Yair. 1977.Markets, Planning and Development. Cambridge, MA: Ballinger.
Arndt, Johan 1972. “Temporal Lags in Comparative Retailing.”Journal of Marketing 36 (October): 40–45.
—. 1979. “Toward a Concept of Domesticated Markets.”Journal of Marketing 43 (Fall): 69–75.
—. 1981. “The Political Economy of Marketing Systems: Reviving the Institutional Approach.”Journal of Macromarketing 1 (Fall): 36–47.
Balassa, Bela. 1980. “The Process of Industrial Development and Alternative Development Strategies.”Essays in International Finance. No. 141. Princeton, NJ: Princeton University Press.
Barnes, W. N. 1980. “International Marketing Indicators.”European Journal of Marketing 14 (2): 90–136.
Bello, Daniel C. and Nicholas C. Williamson. 1985. “Contractual, Arrangements and Marketing Practices in the Indirect Export Market.”Journal of International Business Studies 16 (Summer): 65–82.
Bhasin, Ajay and Louis W. Stern. 1982. “Vertical Integration: Considerations of Efficiency, Risk and Strategy.” InMarketing Channels: Domestic and International Perspectives, Eds. Michael G. Harvey and Robert F. Lusch. Norman: University of Oklahoma, 1–4.
Boddewyn, Jean J. 1981. “Comparative Marketing: The First Twenty-Five Years.”Journal of International Business Studies 17 (Springer–Summer): 61–79.
Bowen, David E. and Gareth R. Jones. 1986. “Transaction Cost, Analysis of Service Organization Customer Exchange.”Academy of Management Review 11 (April): 428–441.
Bromley, R. J. 1971. “Markets in Developing Countries: A Review.”Geography 56 (April): 124–132.
Bucklin, Louis P. 1970a. “National Income Accounting and Distributive Trade Cost.”Journal of Marketing 34 (April): 14–22.
— 1970b. “Macro Models of Vertical Marketing Systems.” InVertical Marketing Systems, Ed. Louis P. Bucklin. Glenview, IL: Scott, Foresman and Company, 116–134.
Business Week. 1988a. “Now, Japan is Feeling the Heat from the Gray Market. March 14: 50–51.
Business Week. 1988b. “Campbell’s Taste of the Japanese Market is mm-mm Good.” March 28: 42.
Business Week. 1990a. “How CPC is Getting Fat on Muffins and Mayonnaise.” April 16: 46–47.
Business Week. 1990b. “Can Colgate Import its Success Overseas?” May 7: 11.
Buzzell, Robert D. 1983. “Is Vertical Integration Proffitable?”Harvard Business Review 61 (January/February): 92–103.
Byerlee, Derek. 1974. “Rural-Urban Migration in Africa: Theory, Policy and Research Implications.”International Migration Review 8 (Winter): 543–566.
Carson, David. 1967. “International Marketing: A Comparative Systems Approach. New York: John Wiley and Sons.
Cateora, Philip R. 1985.Strategic International Marketing. Homewood, IL: Dow Jones-Irwin.
Chandler, Alfred D. 1977.The Visible Hand. Cambridge, MA: Belknap.
Corstjens, Marcel and Peter J. Doyle. 1979. “Channel Organization in Complex Marketing Systems.”Management Science 25 (October): 1014–1025.
Coughlan, Anne T. 1985. “Competition and Cooperation in Marketing Channel Choice: Theory and Application.”Marketing Science 4 (Spring): 110–129.
Cox, Reavis, Charles S. Goodman, and Thomas C. Fichandler. 1965.Distribution in a High Level Economy. Englewood Cliffs, NJ: Prentice Hall.
Cundiff, Edward W. 1965. “Concepts in Comparative Retailing.”Journal of Marketing 29 (January): 59–63.
Czinkota, Michael R. 1985. “Distribution in Japan: Problems and Prospects.”Columbia Journal of World Business 10 (Fall): 65–71.
Dahringer, Lee. 1983. “Public Policy Implications of Reverse Channel Mapping for Lesotho.”Journal of Macromaketing 3 (Spring): 69–75.
Dannhauser, Norbert. 1981. “Evolution and Devolution of Downward Channel Integration, in the Philippines.”Economic Development and Cultural Change 29 (April): 577–578.
Davidson, William. 1970. “Changes in Distributive Institutions.”Journal of Marketing 34 (January): 7–10.
Day, George S. and Saul Klein. 1987. “Cooperative Behavior in Vertical Markets: The Influenc of Transaction Costs and Competitive Strategies.” InReview of Marketing. Ed. Michael J. Houston. Chicago: American Marketing Association, 39–66.
Deshpande, Rohit and Frederick E. Webster. 1989. “Organizational Culture and Marketing: Defining the Research Agenda.”Journal of Marketing 53 (January): 3–15.
Dholakia, Nikhilesh and Rakesh Kurana. 1983. “Public Policy Toward Essential Consumption Items: Generalizations from the Indian Experience.”Journal of Public Policy and Marketing 2: 171–182.
Dominguez, Luis V. and Cristina Vanmarcke. 1987. “Market Structure and Marketing Behavior in LDCs: The Case of Venezuela.”Journal of Macromaketing 7 (Spring): 4–16.
Douglas, Susan P. 1971. “Patterns and Parallels of Marketing Structures in Several Countries.”MSU Business Topics 19 (Spring): 38–48.
Dowd, Lawrence P. 1959. “Wholesale Marketing in Japan.”Journal of Marketing 23 (January): 257–262.
Dwyer, Robert F. and Sejo Oh. 1988. “A Transaction Cost Perspective on Vertical Constractual Structure and Interchannel Competitive Strategies.”Journal of Marketing 52 (April): 21–34.
Dwyer, Robert F. and M. Ann Welsh. 1985. “Environmental Relationships of the Internal Political Economy of Marketing Channels.”Journal of Marketing Research 22 (November): 397–414.
El-Ansary, Adel. 1984. “Strategies for Reforming Food Marketing Systems in Developing Countries.” Paper presented at the Ninth Macromarketing Conference, Arlie, Virginia.
El-Ansary, Adel and Marilyn L. Liebrenz. 1982. “A, Multistage Approach to Comparative Marketing Analysis.”Journal of Macromarketing 2 (Fall): 59–65.
Etgar, Michael. 1974. “An Empirical Analysis of the Motivations for the Development of Centrally Coordinated Vertical Marketing Systems: The Case of Property and Casualty Insurance Industry.” Dissertation. School of Business Administration. University of California. Berkeley.
—. 1978. “The Effect of Forward Vertical Integration on Service Performance of a Distributive Industry.”Journal of Industrial Economics 26 (March): 249–253.
—. 1983. “A Failure in Marketing Technology Transfer: The Case of Rice Distribution in the Ivory Cost.”Journal of Macromarketing 3 (Spring): 59–68.
Etgar, Michael and Pinhas Zusman. 1982. “The Marketing Intermediary as an Information Seller: A New Approach.”Journal of Business 55 (4): 505–515.
FAO (Food and Agricultural Organization). 1982.The Private Marketing Entrepreneur and Rural Development. Rome: FAO.
Forman, Shepard and Joyce F. Riegelhaupt. 1970. “Market Place and Marketing System: Toward a Theory of Peasant Economic Intergation.”Comparative Studies in Society and History 12 (January): 188–212.
Frazier, Gary L., J. Gill, and Sudhir H. Kale. 1989. “Dealer Dependence Levels and Reciprocal Actions in a Channel of Distribution in a Developing Country.”Journal of Marketing 53 (January): 50–69.
Frazier, Gary L. and Sudhir H. Kale. 1988 “Manufacturer-Distributor Relationships: A Sellers’ versus Buyers’ Market Perspective”.International Marketing Review 6 (6): 7–25.
Goldman, Arieh. 1982. “Adoption of Supermarket Shopping in a Developing Country: The Selective Adoption Process”.European Journal of Marketing 16 (1): 17–26.
Guiltinan, Joseph P. 1974. “Planned and Evolutionary Changes in Distribution Channels”.Journal of Retailing 2 (Summer): 79–91.
Harrison, Kelly et al. 1974.Improving Food Marketing Systems in Developing Countries: Experience from Latin America. East Lansing, MI: Latin American Studies Center, Michigan State University.
Heide, Jan B. and George John. 1988. “The Role of Dependence Balancing in Safeguarding Transaction-Specific Assets in Conventional Channels”.Journal of Marketing 52 (January): 20–35.
Hill, Polly. 1963. “Markets in Africa”.The Journal of Modern African Studies 1 (4): 441–453.
Hofstede, Geert. 1980.Culture’s Consequences: International Difference in Work Related Values. Beverly Hills: Sage.
Hutt, Michael D., Michael P. Mokwa, and Stanley J. Shapiro. 1986. “The Politics of Marketing: Analyzing the Parallel Political Marketplace”.Journal of Marketing 50 (January): 40–51.
Izraeli, Dov, Dafna N., Izraeli, and Jehiel Zif. 1977. “Integrative Processes in Agricultural Marketing Channels”.Journal of the Academy of Marketing Science 5 (Summer): 203–220.
Jain, Subhash C. 1990.International Marketing Management. Boston: Kent-PWS Publishing.
Jeuland, Abel P. and Steven M. Shugan. 1983. “Managing Channel Profits”.Marketing Science 2 (Summer): 239–272.
John, George. 1984. “An Empirical Investigation of Some Antecedents of Opportunism in a Marketing Channel”.Journal of Marketing Research 21 (August): 278–289.
John, George and Torger Reve. 1982. “Reliability and Validity of Key Informant Data from Dyadic Relationships in Marketing Channels”.Journal of Marketing Research 19 (November): 517–524.
John, George and Barton Weitz. 1988. “Forward Integration into Distribution: Empirical Test of Transactional Cost Analysis”.Journal of Law: Economics, and Organization 4 (Fall): 121–139.
Kacker, Madhav. 1988, “International Flow of Retailing Know-How: Bridging the Technology Gap in Distribution”.Journal of Retailing 64 (Spring): 41–67.
Kale, Sudhir. 1986. “Manufacturers’ and Distributors’ Power Within a Distribution Channel in a Developing Country”.Journal of Marketing Research 23 (November): 387–393.
Kaasarjian, Harold H. 1977. “Content Analysis in Consumer Research”.Journal of Consumer Research 4 (June): 8–18.
Katzin, Margaret Fisher. 1959. “The Jamaican Country Higgler”.Social and Economic Studies 1 (December): 421–440.
Kaynak, Erdener. 1978. “Changes in the Food Retailing Institutions of Urban, Turkey”,Studies in Development 18 (Winter): 63.
—. 1982.Marketing in the Third World. New York: Praeger Scientific.
—. 1986.Marketing and Economic Development. New York: Praeger Scientific.
Kaynak, Erdener and Ben Issa Hudanah. 1987. “Operationalizing the Relationship Between Marketing and Economic Development: Some Insights from Less Developed Countries”,European Journal of Marketing 21 (1): 48–65.
Keegan, Warren J. 1974.Multinational Marketing Management. Second Edition. Englewood Cliffs, NJ: Prentice Hall.
Kelly, Lane, Arthur Whatley, and Reginald Worthley. 1987. “Assessing the Effects of Culture on Management Attitudes: A Three-Culture Test”.Journal of International Business Studies 19 (Summer): 17–32.
Klein, Saul. 1986. “Fostering Development through Backward Integration of Channels”.Journal of Macromarketing 6 (Spring): 17–27.
—. 1989. “A Transaction Cost Explanation of Vertical Integration in International Markets”,Journal of the Academy of Marketing Science 17 (Summer): 253–260.
Klein, Saul, Gary Frazier, and Victor J. Roth. 1990. “A Transactional Cost Model of Channel Integration in International Markets”,Journal of Marketing Research 17 (May): 196–208.
Kogut, Bruce and Harbir Singh. 1988. “The Effect of National Culture on the Choice of Entry Mode”,Journal of International Business Studies 20 (Fall): 411–432.
Krippendorf, Klaus. 1980.Content Analysis. Beverly Hills, CA: Sage.
Kumcu, Erdogan and M. Ercan Kumcu. 1987. “Determinants of Food Retailing in Developing Countries: The Case of Turkey”,Journal of Macromarketing 7 (Fall): 26–40.
Layton, Roger A. 1981. “Trade Flows in Macromarketing Systems”,Journal of Macromarketing 1 (Spring): 35–48.
— 1989. “Measures of Structural Change in Macromarketing Systems”,Journal of Macromarketing 9 (Spring): 5–15.
Lazer, William, Shoji Murata, and Hiroshi Kosaka. 1985. “Japanese Marketing: Towards a Better Understanding”.European Journal of Marketing 49 (2): 69–81.
Liander, Bertil et al. 1967.Comparative Analysis for International Marketing. Marketing Science Institute. Boston: Allyn and Bacon.
Livesay, Harold C. 1979.American Made: Men Who Shaped the American Economy. Boston: Little and Brown.
Livesay, Harold C. and Patrick G. Porter. 1969. “Vertical Integration in American Manufacturing, 1899–1948”,Journal of Economic History 29 (September): 494–500.
Mallen, Bruce, 1975. “Marketing Channels and Economic Development: A Literature Overview”,International Journal of Physical Distribution and Materials Management 5 (5): 230–237.
—. 1977.Principles of Channel Management. Lexington, MA: Lexington Books.
McGuire, Timothy W. and Richard Staelin. 1983a. “An Industry Equilibrium Analysis of Downstream Vertical Integration”,Marketing Science 2 (Spring): 161–191.
McGuire, Timothy W. and Richard Staelin. 1983b. “The Effects of Channel Member Efficiency on Channel Structure”, InProductivity and Efficiency in Distribution Systems. Ed. David A. Gauschi. New York: Elsevier Science Publishing, 3–15.
Meier, Gerald M. 1984.Leading Issues in Economic Development. New York: Oxford University Press.
Meissner, Frank. 1987. “Agricultural Marketing Policies and Activities of the Inter-American Development Bank”,Food Policy 12 (August): 255–263.
Mentzer, John T. and A. Coskun Samli. 1981. “A Model for Marketing in Economic Development”,Columbia Journal of World Business 16 (Fall): 91–101.
Mittendorf, Hans J. 1978. “The Challenge of Organizing Food Marketing Systems in Developing Countries”, Zeitschrift für Austlandische Landwirtschaft 17 (October–December): 323–341.
Moore, J. R. 1972. “Structural Dynamics of Marketing Channels”. Dissertation. University of Illinois.
Moorthy, K. Sridhar. 1988. “Strategic Decentralization in Channels”,Marketing Science 7 (Fall): 335–355.
Norton, Seth W. 1987. “The Coase Theorem and Suboptimization in Marketing Channels”.Marketing Science 6 (Summer): 268–285.
Pascale, R. T. and A. Athos. 1981.The Art of Japanese Management. New York: Simon and Schuster.
Porter, Michael E. 1990a. “The Competitive Advantage of Nations”,Harvard Business Review 2 (March–April): 73–93.
— 1990b.The Competitive Advantage of Nations. New York: Free Press.
Porter, Patrick G. and Harold Livesay. 1971.Merchants and Manufacturers. Baltimore, MD: Johns Hopkins University Press.
Preston, Lee E. 1970. “Marketing Organization and Economic Development: Structure, Products and Management”, InVertical Marketing Systems. Ed. Louis P. Bucklin. Glenview, IL: Scott, Foresman and Company, 116–134.
Rangan, V. Kasturi. 1987. “The Channel Design Decision: A Model and Application”,Management Science 2 (Spring): 156–181.
Richartz, Leon E. 1970. “A Game Theoretic Formulation of Vertical Market Structures”, InVertical Marketing Systems. Ed. Louis P. Bucklin. Glenview, IL: Scott Foresman and Company, 180–204.
Riley, Harold and John Statz. 1981. “Food System Organization Problems in Developing Countries”. Reprot No. 23. New York: Agricultural Development Council.
Rosenbloom, Bert. 1987.Marketing Channels. Third Edition. Chicago: Dryden.
Ross, Rolph E. 1983. “Understading the Japanese Distribution System: An Explanatory Framework”,European Journal of Marketing 17 (1): 5–13.
Rummel, R. J. 1972.The Dimension of Nations. Beverly Hills, CA: Sage Publications.
Sabot, Richard H. 1982.Migration and the Labor Markets in Developing Countries. Boulder, CO: Westview Press.
Savitt, Ronald. 1988. “The State of the Art in Marketing and Economic Development”, InResearch in Marketing, Supplement 4. Ed. Erdogan Kumcu, Ercan Kumcu, and Mehmet Karafakioglu. Greenwich, CT: JAI Press, 11–37.
Scholing, Eberhard and Vincent Timmermann. 1988, “Why LDC Growth Rates Differ: Measuring Unmeasurable Differences”,World Development 16 (11): 1271–1294.
Shimagushi, Mitsuaki and William Lazer. 1979. “Japanese Distribution Channels: Invisible Barriers to Entry”,MSU Business Topics 27 (Winter): 49–62.
Slater, Charles C. 1970. “Market Channel Coordination and Economic Development”, InVertical Marketing Systems. Ed. Louis P. Bucklin. Glenview, IL: Scott Foresman and Company, 135–157.
Slater, Charles C. et al. 1969. “Market Processes in the Recife Area of State University.
Slocum, John W. 1971. “A Comparative Study of the Satisfaction of American and Mexican Operatives”,Journal of the Academy of Management 14 (March): 89–98.
Sorensen, Olav Jull. 1978. “A Conceptual Framework for an Analysis of Government Intervention in Distributive Trade in Ghana”. Working Paper, University of Ghana School of Administration.
Stern, Louis and Adel El-Ansary. 1988.Marketing Channels. Third Edition. Englewood Cliffs, NJ: Prentice Hall.
Stern Louis W. and Torger Reve. 1980. “Distribution Channels as Political Economies”,Journal of Marketing 44 (Summer): 52–64.
Stigler, George J. 1951. “The Division of Labor is Limited by the Extent of the Market”.Journal of Political Economy 59 (June): 185–193.
Terpstra, Vern. 1987. “The Evolution of International Marketing”,International Marketing Review 4 (Summer): 47–59.
Tse, David K. et al. 1988. “Does Culture Matter?”,Journal of Marketing 52 (October): 81–95.
United Nations. 1989.Prospects of World Urbanization. New York.
Varadarajan, Rajan. 1984. “Marketing in Developing Countries: The New Frontier”,Long Range Planning 17 (December): 118–126.
Venkatesh, Alladi and Nikhilesh Dholakia. 1986. “Methodological Issues in Macromarketing”,Journal of Macromarketing 5 (Fall): 36–52.
Wadinambiaratchi, George H. 1965. “Channels of Distribution in Developing Economies”,The Business Quarterly 30 (Winter): 74–82.
Williamson, Oliver E. 1975.Markets and Hierarchies. New York: Free Press.
— 1981. “The Economics of Organizations: The Transaction Cost Approach.”American Journal of Sociology 87 (3): 548–577.
—. 1983. “Organizational Innovation: The Transactional Cost Approach.” InEntrepreneurship. Ed. Joshua Ronen. Lexington, MA: Lexington Books.
World Bank. 1988.World Bank Report. New York: Oxford University Press.
—. 1990.World Development Report. New York: Oxford University Press.
Yau, Oliver H. M. 1988. “Chinese Cultural Values: Their Dimensions and Marketing Implications.”European Journal of Marketing 22 (5): 44–57.
Yavas, Ugur, Erdener Kaynak, and E. Borak. 1982. “Food Shopping Orientations in Turkey.”Food Policy (May): 133–140.
Zald, Mayer N. 1970. “Political Economy: A Framework for Comparative Analysis.” InPower in Organizations. Ed. Mayer N. Zald. Nashville, TN: Vanderbilt University Press, 221–261.
Zusman, P. and Michael Etgar. 1981. “Marketing Channel as an Equilibrium of Contracts.”Management Science 27 (March): 284–302.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Sharma, A., Dominguez, L.V. Channel evolution: A framework for analysis. JAMS 20, 1–15 (1992). https://doi.org/10.1007/BF02723471
Issue Date:
DOI: https://doi.org/10.1007/BF02723471