Reward strategy spillover effects on observer cooperation in business networks
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Reward strategy spillover effects on observer cooperation in business networks Hannah S. Lee 1
& David
A. Griffith 2
Accepted: 29 September 2020/ # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Drawing on social comparison and equity theory, this study examines the influence of reward strategies a manufacturer in a focal dyad employs on the cooperative behaviors of other observing firms in a dealer network. We test the hypotheses using a survey of 234 auto manufacturer–dealership relationships. The results reveal that (1) reward observation frequency has a negative effect on the cooperation of observers, (2) observer network centrality amplifies the negative effect of reward observation frequency on the cooperation of observers, and (3) network density dampens the negative effect of reward observation frequency on the cooperation of observers. The findings suggest that managers must be aware of the nuanced consequences of this “spillover” effect of rewards in shaping their influence strategies within the context of the larger business network. Keywords Reward strategies . Observer cooperation . Business networks . Social
comparison theory . Equity theory
1 Introduction Connectivity within a firm’s business network, resulting from increased interactions between downstream or upstream partners (e.g., Lilien et al. 2010; Sa Vinhas and Gibbs 2012; Wang et al. 2013), necessitates that the firms carefully manage not only within but also across relationships (Lee and Griffith 2019; Sa Vinhas et al. 2012). For Electronic supplementary material The online version of this article (https://doi.org/10.1007/s11002-02009543-7) contains supplementary material, which is available to authorized users.
* Hannah S. Lee [email protected]
1
Department of Marketing, Farmer School of Business, Miami University, 800 E. High Street FSB3057, Oxford, OH 45056–3600, USA
2
Department of Marketing, Mays Business School, Texas A&M University, 4122 TAMU, 220C, College Station, TX 77843–4112, USA
Marketing Letters
example, in its downstream operations, General Motors (GM) has built several private web-based portals, such as GM GlobalConnect and GM Women’s Retail Network, to link its dealers (Kisiek 2008; Sawyers 2016). While these portals have helped increase information sharing, resulting in reduced dealer operating costs and increased dealer effectiveness, they have also triggered more social comparison among connected dealers. Because dealers likely form judgments not only on how GM treats them (i.e., internal comparison) but also on how GM treats other dealers (i.e., external comparison), GM must understand how the actions it takes toward one dealer may have a “spillover” effect on other observing dealers. A major premise in managing channel relationships is encouraging cooperation (i.e., exchange members working together to achieve mutual goals [Hausman and Johnston 2010]) between relational partners. This often requires a balancing act between utilization of influence with the firm’s partners to mo
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