BRAND IMAGE AND COMPANY REPUTATION
HOW DO THEY INFLUENCE B2R RELATIONSHIPS?
Malou Inger Nijboer
BRAND IMAGE AND COMPANY REPUTATION
HOW DO THEY INFLUENCE B2R RELATIONSHIPS?
AUTHOR
Malou Inger Nijboer Student number: 1536982 Gedempte Poortezijlen 9 8601 BW Sneek E-mail: m.i.nijboer@student.rug.nl Telephone: 06-52463260 UNIVERSITY OF GRONINGEN Faculty of Economics and Business
Master Thesis MScBA Marketing Management Date: August 2011
1st supervisor: Drs. J. Berger
MANAGEMENT SUMMARY
Relationships are important, both in private life as in business markets where suppliers and resellers engage in different types of relationships. Relationship marketing constitutes all marketing activities directed towards establishing, developing, and maintaining successful relationships. Relationships can be defined as being a multidimensional construct, consisting of four elements: commitment, trust, relationship satisfaction, and relationship quality.
The motivation for this study is the need for research that leads to a better understanding of the influences of brand image and company reputation on relationships between suppliers and resellers. With the growth of e-commerce and global competition, marketers in business
markets are asking if branding can help improve their competitive position in the new economy.
Brand image is a multidimensional construct, consisting of perceived service/product quality, perceived price fairness and perceived brand personality congruence. Higher perceived service/product quality, higher perceived price fairness and a higher perceived congruence between a reseller’s own brand personality and the supplier’s brand personality will lead to higher commitment, trust, relationship satisfaction and relationship quality. In the same vain, a more favorable company reputation will lead to higher commitment, trust, relationship satisfaction and relationship quality.
Besides testing the direct influence of brand image and company reputation on the relationship construct dimensions, the influence of three different relationship types is also tested. This moderator variable of relationship types leads to a final hypothesis in which it is proposed that in relationship types I and II the influence of brand image and company reputation on the relationship construct dimensions is higher than in relationship type III.
The brand image and company reputation hypotheses are empirically tested in the white goods supplier to reseller market in the Netherlands. Online questionnaires are send out to 872 resellers, of which a response rate of 6,9% (60 respondents) remained. There are three different links which lead to three online questionnaires. The three questionnaires are exactly the same, but the three links are necessary to divide the resellers into the three different relationship types. The hypotheses are tested by using multivariate regression analyses. The first regression analyses are executed without the moderator variable and tested only the direct influence of brand image and company reputation on the relationship construct dimensions. The second round of regression analyses required a different approach, because SPSS is not able to include a categorical moderator variable in the regression analysis right away. The independent variables were centralized, the moderator variable was turned into two dummy variables, with
relationship type III as the baseline and product variables are created by multiplying the dummy variables with the independent variables. After that, all independent variables (the two dummy variables, the centralized independent variables and the product variables) are entered into the regression analyses with four different dependent variables (commitment, trust, relationship satisfaction and relationship quality).
Perceived price fairness has a significant, positive effect on all four relationship construct dimensions. Perceived brand personality congruence has no significant effect on the
relationship construct dimensions. Company reputation has a significant, positive effect on all four relationship construct dimensions. Besides that, company reputation was the only independent variable to make a difference between the three relationship types. In type I relationships, company reputation has a lower, positive effect on commitment than in type III relationships. In type II relationships, company reputation has a lower, positive effect on commitment, relationship satisfaction and relationship quality than in type III relationships. This was the opposite of what was hypothesized. There was no significant difference between relationship types I and II compared to relationship type III when it comes to the influence of company reputation on trust.
Managers in supplying companies who are in relationships with resellers should be aware of the influence of brand image and company reputation on these relationships. Especially managers in type III relationships should remind themselves of the larger influence of their company’s reputation on the relationship construct dimensions of commitment, relationship satisfaction and relationship quality.
Future research should focus more on the importance of brand image and company reputation in influencing the relationship construct in supplier-reseller markets. This research should be replicated with a larger dataset, because the small sample of 60 is a limitation of this study. Finally, this research could be replicated with another categorization of the relationship types, so as to come to a more generalizable and complete representation of the real world.
PREFACE
I started my life as a student at the University of Groningen in 2005. During the final phase of my Bachelor study, I decided to continue studying and started with my Master study in Marketing Management. And here I am, writing the final words of my Master’s Thesis and thereby closing a valuable chapter in my life. Even though this is the time to look back and be proud of the things I’ve done, it is also the time to look at the future and start a new chapter, where I can use the theories from my studies and make them work in "real life".
Since I started studying in Groningen, the element of business administration and marketing that I was always very interested in was the relationships that people build with each other. When we look at successful companies, the most important thing that they share is the "simple" notion that people are dedicated to what they do and feel a certain relationship with the company and with other people who are involved with the company. These relationships between people are not necessarily bounded within the company, many times they occur between two or more companies.
When I had the freedom to choose a subject for my Master’s Thesis, I knew that I would go for a research that was somehow related to the concept of "relationships". At the same time I was looking back at my life as a student and realized that I missed one important element in my life: some practical experience in the form of an internship. Therefore, I decided to combine doing an internship with writing my Master’s Thesis. For six months I was able to work at the
marketing department of Whirlpool Nederland B.V. in Breda. I had a great time over there and learned a great deal about marketing in practice. Together with my coach we came up with a subject that related to my personal interests (relationships) and something that was valuable to know for Whirlpool Nederland B.V. (brand image and company reputation). The result of this cooperation is the document you are reading right now.
First of all, I would like to thank my supervisor Drs. J. Berger for his great support during the process of writing my Master’s Thesis. His feedback and expertise of business relationships helped me to succeed my research. I would also like to thank Prof. Dr. J.C. Hoekstra for her valuable feedback in order to complete my thesis.
Secondly, I would like to thank Arnoud van Huffelen for his help with interpreting the SPSS output when I had to execute a multivariate regression analysis with a categorical moderator variable.
Finally, I would like to thank my friend Erez Lasker and my sister Inger Nijboer, for helping me and supporting me during the process of writing my Master Thesis.
A special thanks goes out to my parents, Jan Nijboer and Anny Dolstra, for giving me the opportunity to study at the University of Groningen, to study in Italy for five months, to do my internship in Breda and for their help and support during the process of writing this thesis.
INDEX
MANAGEMENT SUMMARY 3
PREFACE 5
1. INTRODUCTION 9
1.1 Background 9
1.2 Short Introduction Company 10
1.3 Problem Statement 11
1.4 Research Questions 12
1.5 Theoretical and Social Relevance 13
1.6 Thesis Structure 14
2. THEORETICAL FRAMEWORK 15
2.1 Relationships 15
2.1.1 What are relationships? 15
2.1.2 Why are relationships important? 16 2.1.3 What is a supplier-reseller relationship? 16 2.1.4 What are the different types of supplier-reseller relationships? 16
2.2 Relationship Construct 17 2.2.1 Commitment 17 2.2.2 Trust 18 2.2.3 Relationship Satisfaction 18 2.2.4 Relationship Quality 19 2.3 Brand Image 19
2.3.1 Perceived Service/Product Quality 20 2.3.1.1 Perceived Service/Product Quality and Commitment 21 2.3.1.2 Perceived Service/Product Quality and Trust 21 2.3.1.3 Perceived Service/Product Quality and Relationship Satisfaction 22 2.3.1.4 Perceived Service/Product Quality and Relationship Quality 22 2.3.2 Perceived Price Fairness 23 2.3.2.1 Perceived Price Fairness and Commitment 23 2.3.2.2 Perceived Price Fairness and Trust 23 2.3.2.3 Perceived Price Fairness and Relationship Satisfaction 24 2.3.2.4 Perceived Price Fairness and Relationship Quality 24 2.3.3 Perceived Brand Personality 24 2.3.3.1 Perceived Brand Personality Congruence and Commitment 26 2.3.3.2 Perceived Brand Personality Congruence and Trust 26 2.3.3.3 Perceived Brand Personality Congruence and Relationship Satisfaction 27 2.3.3.4 Perceived Brand Personality Congruence and Relationship Quality 27
2.4 Company (Supplier) Reputation 28
2.4.1 Perceived Supplier Reputation and Commitment 29 2.4.2 Perceived Supplier Reputation and Trust 30 2.4.3 Perceived Supplier Reputation and Relationship Satisfaction 30 2.4.4 Perceived Supplier Reputation and Relationship Quality 30 2.5 Moderator: Supplier-Reseller Relationship Types 31
2.6 Hypotheses Overview 36
3. RESEARCH DESIGN 38
3.1 Research Method 38
3.2 Data Collection Method 39
3.2.1 Respondents and Design 39
3.2.2 Materials and Procedure 41
3.2.3 Measures and Scales 41
3.3 Plan of Analysis 43
4. RESULTS 47
4.1 Cronbach’s Alpha, Reliability, Generalizability and Representativeness 47 4.1.1 Reliability (Cronbach’s Alpha – Combining the Multi-Item Scales) 47 4.1.2 Generalizability and Representativeness 49 4.2 Analysis and Discussion of the Empirical Data – Without Moderator 49 4.2.1 Brand Image and Company Reputation on Commitment 49 4.2.2 Brand Image and Company Reputation on Trust 51 4.2.3 Brand Image and Company Reputation on Relationship Satisfaction 52 4.2.4 Brand Image and Company Reputation on Relationship Quality 54 4.3 Analysis and Discussion of the Empirical Data – With Moderator 56 4.3.1 Relationship Types and Commitment 56 4.3.2 Relationship Types and Trust 57 4.3.3 Relationship Types and Relationship Satisfaction 59 4.3.4 Relationship Types and Relationship Quality 61
5. GENERAL DISCUSSION AND CONCLUSION 64
5.1 Introduction 64
5.2 Summary Results – Without Moderator 64 5.3 Summary Results – With Moderator 65
5.4 Conclusion 65
5.5 Recommendations 70
6. LIMITATIONS AND FUTURE RESEARCH DIRECTIONS 72
REFERENCES 74
APPENDIX I. QUESTIONNAIRE 80
APPENDIX II. PERCEIVED BRAND PERSONALITY CONGRUENCE INDEX 84
APPENDIX III. CORRELATION MATRIX INDEPENDENT VARIABLES 86
1. INTRODUCTION 1.1 Background
Relationships are important. Many books are written about relationships, many studies have been executed with relationships as their main focus, and every human being has some
experience with a relationship in their life. Relationships come in many forms, like relationships between people, animals, products, and companies. There are many famous quotes about relationships and one of them says: 'no road is long with good company.' When we feel that relationships with friends and family are one of the most important things in our lives, isn’t it also true then that relationships with resellers are one of the most important things to achieve for business companies? It all goes back to one simple statement: without friends, no company will survive.
In 2007 Deli XL announced their partnership with catering company Sodexho. The agreement included a five-years contract in which Deli XL will be the main food supplier of Sodexho. Both firms invested in this relationship with money, trust and time. Deli XL improved their logistics, infrastructure and their warehouses to be able to meet the extra demand. Sodexho invested a lot of their independence by making Deli XL their main supplier (www.missethoreca.nl).
In 2010 SAP Australia introduced its global Extended Business Program into the local market in an attempt to aid partners and broaden its reach. The program allows a reseller or integrator partner to become a Master Value Added Reseller and build a network of peers to provide additional niche capabilities, as well as broaden its geographic or vertical reach. The Extended Business Program network means that resellers can provide better assistance to their customers (www.sap.com).
During the 1990s the role of relationships has been accepted as a marketing strategy in many lines of business, as can be seen from the stories mentioned above. Simultaneously, researchers from many different disciplines have started to pay increasing attention to relationships. In the past decade, relationship marketing (RM), both in business practice and as a focus of academic search, has experienced an explosive growth (Anderson and Narus 1990, Boles et al. 1997, Cannon and Perreault Jr. 1999, Dwyer et al. 1987, Grönroos 1994, Hennig-Thurau et al. 2002, Holmlund and Törnroos 1997, Hunt et al. 2006, Kasabov 2007, Morgan and Hunt 1994, Palmatier et al. 2006, Palmatier et al. 2008, and Wilson 1995).
In a business-to-reseller (B2R) environment, suppliers need to understand the nature and circumstances of their resellers, because of the unique characteristics of having "customers acting as organizations" (Rauyruen and Miller 2007). In these markets, the benefits of close relationships can be enormous (Narayandas 2005).
Relationship marketing can be defined as all marketing activities directed towards establishing, developing, and maintaining successful relationships. Relationships can be defined as being a multidimensional construct, consisting of four elements: commitment, trust, relationship satisfaction, and relationship quality (Morgan and Hunt 1994, Palmatier et al. 2006, Rauyruen and Miller 2007, and Wilson 1995).
When we take another look at the stories of Deli XL and SAP, it is interesting to wonder how these relationships are influenced by the opinions that the resellers have of Deli XL and SAP. With other words, how do they perceive the image and reputation of Deli XL and SAP and how does this influence their relationships? Both companies have branded their products and in this way they’ve built a brand image around their products. Both companies have also developed a reputation in the market. Do these concepts of brand image and company reputation influence the relationships between suppliers and their resellers?
How do brand image and company reputation influence a relationship between a supplier and its reseller? Do brand image and company reputation have a different influence on the relationship when we make a distinction between different types of relationships? This is an interesting area to be researched. Especially, because branding research in general has largely focused on consumer goods markets. Only recently, attention has been given to business (supplier to reseller) markets.
Several studies provide a good starting point for this research, for example by providing a relationship framework or by distinguishing between the influences of brand image and company reputation in business markets (Cretu and Brodie 2007, Mudambi 2002, Palmatier et al. 2006). However, further refinement is needed and this can come from focusing on the influences of brand image and company reputation on the relationship construct and the influence of different types of supplier-reseller relationships in business markets.
1.2 Short Introduction Company
The empirical research, which will test the hypotheses from the conceptual model, will be executed in the white goods business-to-reseller market in the Netherlands. This market is characterized by having a couple of large suppliers (e.g. Miele, Bosch-Siemens, AEG-Electrolux and Whirlpool Nederland B.V.) and all of them sell their products to the final end-consumer through different types of resellers (interal information Whirlpool Nederland B.V.).
The fact that Whirlpool Nederland B.V. is part of one of the largest companies in the white goods market worldwide and that they have relationships with several different types of
resellers makes Whirlpool Nederland B.V. a good empirical research setting to test the influence of their brand’s image and company’s reputation on the relationship construct within different types of supplier-reseller relationships.
1.3 Problem Statement
The motivation for this study is the need for research that leads to a better understanding of the influences of brand image and company reputation on relationships between suppliers and resellers. With the growth of e-commerce and global competition, marketers in business markets are asking if branding can help improve their competitive position in the new economy (Mudambi 2002).
Two important branding constructs are brand image and company reputation and these two dimensions are becoming more and more important in business markets and in academic articles (Bailey 2005, Cretu and Brodie 2007, Eccles et al. 2007, Mudambi 2002, Nguyen and Leblanc 2001, Purohit and Srivastava 2001, Roper and Davies 2010, Webster Jr. 2000, and Zablah et al. 2010). However, when we look at the current status of branding research we have to conclude that branding research has largely focused on consumer goods markets. Only recently attention has been given to branding in business markets.
The research of branding in business markets that has been executed has largely been exploratory and there has been little systematic development and testing of comprehensive models (Cretu and Brodie 2007). Besides that, most research about branding in business markets has been lacking and only a limited amount of research has focused on the influence of brand image and company reputation on relationships within business markets. Research about the specific effects of brand image and company reputation on business-to-reseller relationships has been limited and needs further investigation.
Relationship marketing in general has already been studied widely, however, there is always a need for more research with different variables and constructs, to improve the dimensions of relationship marketing and to make the area of relationship marketing a consistent one. For example, in their paper, Palmatier et al. (2006) represent a relationship marketing framework with different antecedents. At the end of their paper, they propose that future research should focus on other antecedents that could influence the relationship construct.
One of the antecedents that Palmatier et al. (2006) put forward for further research is the concept of "liking". When a reseller does, or does not like a supplier’s reputation, or when a reseller does, or does not like the supplier’s brand, this would probably have some influence on the relationship between the supplier and the reseller.
From prior research it can be seen that brand image has a strong influence on resellers’ perceptions of product and service quality and that company reputation has a strong influence on behavior and buying decisions. Besides that, Bailey (2005) found that the degree of
Besides that, in channel relationships, a supplier’s reputation enhances trust and loyalty. It is interesting to wonder what influence brand image and company reputation would have on relationships between suppliers and their resellers. And does this influence differ when different types of supplier-reseller relationships are considered? The different types of relationships between suppliers and their resellers can be considered as a moderating variable. The
distinction between different types of relationships can be based on several factors, but in this paper we will use the framework of Roemer (2006).
After all that has been stated above, the problem statement of this paper is:
"What is the influence of the reseller’s perception of the supplier’s brand image and company reputation on the four dimensions of the relationship construct, which are commitment, trust, relationship satisfaction and relationship quality, and how do different types of supplier-reseller relationships moderate this influence?"
Figure 1 shows a preliminary research model of this paper. This model is based on the
conceptual model of Palmatier et al (2006) and takes a closer look at his customer-focused part of the model. In this paper the antecedents are reseller-focused and the conceptual model shows the hypothetical relationships between the different variables, moderated by different types of supplier-reseller relationships.
Figure 1. Preliminary Research Model.
1.4 Research Questions
To guide the research in this paper, the following research questions, derived from the problem statement, are important and relevant:
1. What are brand image and company reputation in business markets?
3. What is the influence of company reputation on the relationship construct (commitment, trust, relationship satisfaction, and relationship quality)? 4. What are the different types of supplier-reseller relationships?
5. What is the influence of brand image and company reputation on the relationship construct under different types of supplier-reseller relationships?
These questions will all be answered in the literature part of the theoretical framework (section 2). Based on these research questions and literature part, hypotheses will be formed.
1.5 Theoretical and Social Relevance
This thesis contributes to several future research indications from former, academic research in the area of marketing. Palmatier et al. (2006) ask for more customer-focused antecedents to research the relationship marketing construct. They suggest the concept of "liking", which can be interpreted in the largest sense of word. In this paper the concept of liking is applied to the construct of brand and company liking (brand image and company reputation). Zablah et al. (2010) ask for future research, directed to the influence of brands in straight re-buy situations, which can be considered as a certain type of relationship. Cretu and Brodie (2007) indicate that there has only recently been an attempt to understand the influence of brand image and company reputation in business markets. This paper responds to these future research indications.
By executing this research, the concept of branding in business markets and its influence on the relationship construct under different types of supplier-reseller relationships will become more clear and consistent. Current research has only focused on branding in business markets in a limited sense, while branding is being used more and more in business markets. Relationship marketing has been researched a lot in the academic world, but still lacks some important dimensions, like the influence of brand image and company reputation on relationships.
Suppliers and resellers in business markets who are already in some kind of relationship with each other can benefit from this research by improving their relationship. Suppliers can benefit by changing the sales representative’s current point of view on their relationships with resellers, depending on the special type of relationship between them. The supplier’s sales personnel have a daily battle for shelf space in the reseller’s store and promotional features and trade discounts are the principal weapons they use in this fight. They spent much less effort in explaining their brand’s superior positioning, features, image, and performance versus competitive brands (Webster Jr. 2000). Managers in supplying companies and their sales representatives should become aware of this missed opportunity in relationship building with their resellers and this paper can help in achieving a higher awareness.
Several studies have shown that a favorable brand image and a favorable company reputation have positive effects on business market companies (Cretu and Brodie 2007, Eccles et al. 2007, Nguyen and Leblanc 2001, Roper and Davies 2008, Webster Jr. 2000). Managers in supplying companies who understand the power of their brand’s image and company’s reputation can use this advantage in the relationships with their resellers.
This paper contributes to the large amount of research that has already been executed in the field of relationship marketing. Business relationships are extremely complex and
heterogeneous and former research has been based on a wide set of diagnostic variables and research methods (Mitręga and Katrichis 2010). This paper will try to add a new view to the concept of relationship marketing by including two dimensions (brand image and company reputation), which have gained an increasing interest in business market research the last couple of years. In this way, this paper tries to develop a more comprehensive relationship marketing model.
Given that there are substantial marketing investments in building brand image and building company reputation, its influences on relationships between suppliers and resellers requires investigation.
1.6 Thesis Structure
This paper will start with a theoretical framework (part 2), in which the different research questions will be addressed, the hypotheses will be presented and a conceptual model will be given. In part 3 the research method, data collection method, and plan of analysis will be discussed. Working from part 3, the results from the empirical research are described in part 4. The issues of reliability, generalizability and representativeness will be treated and the empirical results will be discussed. The conclusion will be given in part 5, after which the
2. THEORETICAL FRAMEWORK
This part of the paper will explain some of the most important concepts of the preliminary research model in figure 1, like the dimensions of the relationship construct: commitment, trust, relationship satisfaction, and relationship quality, brand image, company reputation, and the different types of supplier-reseller relationships. From these descriptions, hypotheses will be formed. The theoretical part concludes with a representation of all the hypotheses and the conceptual model.
2.1 Relationships
We are all familiar with relationships in our lives. You can have a relationship with many types of entities, like persons, companies, pets, and brands. In this paper, the main focus lies on
relationships between suppliers and their resellers in business markets, which can come in many forms.
Building relationships between suppliers and their resellers is becoming one of the most discussed topics in the marketing literature. But what are relationships is general? And why are relationships so important? What exactly is a relationship between suppliers and resellers? And what are the different types of relationships between suppliers and resellers? This will all be discussed next.
2.1.1 What are relationships?
Relationships are complex constructs and cannot be described within one word or one dimension. This means that the relationship construct is multidimensional and consists of several dimensions. Many authors have discussed their view of relationships and explained the different dimensions that make up the construct of a relationship. In this paper the definition of Palmatier et al. (2006) will be used. They describe relationships as a multidimensional construct, consisting of four dimensions: commitment, trust, relationship satisfaction, and relationship quality. Their framework was developed by using numerous academic articles about
relationships and therefore seems to give a good impression of what is currently known about the contents of the relationship construct. The four relationship construct dimensions will be described in section 2.2.
Relationships are interdependent processes of continuous interaction and exchange between at least two actors (Holmlund and Törnroos 1997). Relationships have a long-term orientation and are the opposite of short-term discrete transactions. Relationships differ from discrete
The degree to which a long-term relationship has been established between two actors is reflected in both of their perceptions of the likelihood that the relationship will continue
(Anderson and Weitz 1989). This expectation of continuity is also called "commitment" and both actors can achieve a higher level of performance by working together than by operating
independently (Anderson and Weitz 1992). Collaborative relationships also rely on relational forms of exchange characterized by high levels of a dimension called "trust" (Doney and Cannon 1997). These high levels of trust enable the suppliers and resellers to focus on the long-term benefits of the relationship. The dimensions of commitment and trust are important elements of the relationship construct and will be explained in sections 2.2.1 and 2.2.2. The dimensions of relationship satisfaction and relationship quality will be explained in sections 2.2.3 and 2.2.4.
2.1.2 Why are relationships important?
For decades, relationships between suppliers and their resellers have been highly touted as a business strategy that can expand the pie of benefits for both parties (Anderson and Jap 2005). According to Anderson and Weitz (1989), long-term relationships combine the advantages of vertically integrated distribution systems (e.g. control and coordination), with the advantages of systems utilizing independent channel members (e.g. flexibility, scale economies, efficiency, and low overhead). Given that both actors posses some sort of mutual commitment within the relationship, they work together to serve the end-consumer better than they could have been doing alone. This, of course, also increases mutual profitability. Both actors experience reduced uncertainty, an increase in exchange efficiency, greater access to information, the creation of mutual loyalty, and reduced costs (Dwyer et al. 1987). Relationships create loyal resellers, and this is very important when one considers that it is much more costly to get new resellers than to keep existing ones (Boles et al. 1997). In addition, existing resellers often purchase more than new resellers. Thus, there is a clear confirmation that stronger relationships are associated with higher performance (Hibbard et al. 2001, Palmatier et al. 2008, Rauyruen and Miller 2007).
2.1.3 What is a supplier-reseller relationship?
There are many types of relationships, like supplier partnerships (e.g. between goods/services suppliers and the focal firm), lateral partnerships (e.g. between competitors or government and the focal firm), internal partnerships (e.g. between employees or business units and the focal firm), and buyer partnerships (Morgan and Hunt 1994). The relationship between suppliers and resellers is a buyer partnership, where the supplier is the focal firm who sells their products and services to the reseller.
Supplier-reseller relationships are important for both actors. Resellers have a major advantage in the marketplace, which suppliers most often do not have: the possibility to build enduring relationships with the end-consumer (De Wulf et al. 2001). By establishing close relationships, end-consumer information can flow from resellers to suppliers. Another advantage of close relationships between suppliers and resellers has to do with the competitive environment in many business markets. In meeting this competition in a creative and flexible way, suppliers have responded by building collaborative relationships with their resellers (Doney and Cannon 1997).
2.1.4 What are the different types of supplier-reseller relationships?
Some may be related or connected with formal contracts and others simply by trusting agreements; some may be connected with open communications, and others may treat every piece of information as a secret; some may be connected by a shared sense of cooperation, and others may act as if they were totally independent. Relationship performance may vary across relationship types and this performance may be quite different (O’Toole and Donaldson 2000).
In this paper, the classification of Roemer (2006) will be used. He uses the concept of
"dependence" and its distribution across the supplier and the reseller in the relationship, as the basis for a supplier-reseller relationship typology. In part 2.5 this will be explained further on.
2.2 Relationship Construct
Now that the relationships between suppliers and resellers in business markets have been explained, it’s time to give some more insight into the relationship construct elements of commitment, trust, relationship satisfaction, and relationship quality (Palmatier et al. 2006). The higher the score on these dimensions, the better the relationship between the supplier and reseller "performs".
2.2.1 Commitment
A key element in the relationship construct is commitment (Tellefsen and Thomas 2005). When suppliers and resellers are committed to each other, they create a stable environment in which they can build on each other’s strengths, engage in joint decision making, and increase the net benefits to both.
In many academic articles, commitment is named as one of the most important elements of the relationship construct and as being essential for the successfulness of relationships (Hennig-Thurau et al. 2002, Lages et al. 2008, Morgan and Hunt 1994, Newman et al. 2005, Palmatier et al. 2006, Rauyruen and Miller 2007, Wilson 1995).
"Commitment can be described as an enduring desire to maintain a valued relationship."
Commitment in this context goes beyond a simple, positive evaluation of the other party based on the current benefits and costs associated with the relationship (Anderson and Weitz 1992). It implies the adoption of a long-term orientation towards the relationship – a willingness to make short-term sacrifices to realize long-term benefits from the relationship.
2.2.2 Trust
Where commitment is one side of the medal, trust is the other key element in the relationship construct (Mitrega and Katrichis 2010, Morgan and Hunt 1994, Newman et al. 2005, Palmatier et al. 2006, Rauyruen and Miller 2007, Wilson 1995).
Trust plays a critical role in the development of long-term relationships because short-term inequities are inevitable in any relationship (Anderson and Weitz 1989): at the most basic level, one party must undertake actions before the other party and thus must rely on (or have trust in) the other party to honor its commitments. Through trust, parties in a relationship develop confidence that, over the long-term, short-term inequities will be corrected to yield a long-term benefit.
"Trust is one party’s belief that its needs will be fulfilled in the future by actions undertaken by the other party."
Trust is the perceived credibility and benevolence of a target of trust (Doney and Cannon 1997). The first dimension of trust focuses on the objective credibility of an exchange partner, an expectancy that the partner’s word or written statement can be relied on. The second dimension of trust, benevolence, is the extent to which one partner is genuinely interested in the other party’s welfare and motivated to seek joint gain. Trust is one firm’s belief that the other firm will perform actions that will result in positive outcomes for the firm, as well as not take unexpected actions that would result in negative outcomes for the firm (Anderson and Narus 1990). Trust has therefore a historical focus and a future-oriented focus and is influenced by both internal and external factors (Newman et al. 2005). Trust enhances relationships is that high levels of trust reduce reliance on formal control mechanisms, which thereby reduces transaction costs (Selnes and Sallis 2003). High levels of trust also increase information sharing, and decrease the chance that parties forsake short-term gains at the expense of the other party.
2.2.3 Relationship Satisfaction
Another dimension of the relationship construct is relationship satisfaction. According to Anderson and Narus (1990), DeWulf et al. (2001), Jap and Ganesan (2000), and Palmatier et al. (2006) this can be described as follows:
"Relationship satisfaction is a person’s affective or emotional state towards a relationship, typically evaluated cumulatively over the history of the exchange."
Relationship satisfaction is thus an affective state, and can be contrasted with an objective and rational summary assessment of relationships (Anderson and Narus 1990). Satisfaction, by its nature, is not only a proxy for concepts such as ‘perceived effectiveness’, but also may be more predictive of future actions by partner firms in the relationship. Further, satisfaction has been found to lead to long-term continuation of relationships. Relationship satisfaction summarizes the reseller’s previous interactions with the supplier, which in turn influence expectations of future relationship development (Lages et al. 2008). Positive interactions lead to long-term continuation of the relationship, thus emphasizing that relationship satisfaction is essential to the improvement of relationships.
2.2.4 Relationship Quality
The fourth, and last, dimension of the relationship construct is relationship quality. According to DeWulf et al. (2001), and Palmatier et al. (2006) this can be described as follows:
"Relationship quality is the overall assessment of the strength of the relationship, conceptualized as a composite or multidimensional construct capturing different but related facets of a
relationship."
When a reseller perceives the relationship as being of high quality, this means that he/she is able to rely on the supplier’s integrity and has confidence in the supplier’s future performance because the level of past performance has been consistently satisfactory (Crosby et al. 1990). Building high-quality relationships offers advantages to both the supplier and reseller (Boles et al. 1997). Higher levels of relationship quality will lead to greater reseller intentions to stay with the current supplier and higher intentions to provide referrals and recommendations to the end-consumer.
2.3 Brand Image
As markets grow more competitive, companies need to improve their understanding of their resellers’ needs, attitudes, and buying behavior (Barich and Kotler 1991). They must design their offers and images to be competitively attractive. The resellers carry images in their heads about each supplier’s product quality, service quality, prices, and so on. These images might be true or false, real or imagined, right or wrong, but no matter in what form they come, images guide and shape behavior.
The term "image" represents the sum of beliefs, attitudes, and impressions that a person or a group has of an object (Barich and Kotler 1991). In this paper, the object is a brand and the person or group is the reseller. According to Cretu and Brodie (2007):
"Brand image can be defined as a mental picture of the product/service which is offered, and it includes symbolic meanings which are associated with the specific attributes of the
product/service."
In business markets, brand image can be expected to play an important role, especially where it is difficult to differentiate products or services based on tangible quality features (Cretu and Brodie 2007, Mudambi 2002, Roper and Davies 2010, Zablah et al. 2010). Powerful brands create meaningful images in the minds of resellers and enhance differentiation and buying behavior. Suppliers in business markets invest in branding because a favorable brand image can enhance differentiation and can positively influence buying behavior, as resellers choose among competitive offerings.
The supplier’s brand offers many obvious benefits for the reseller, including an established end-consumer demand, favorable end-end-consumer attitudes towards the brands found in their stores, a commitment from the supplier to promote the brand, and the credibility and image of the brand itself as enhancements of the reseller’s credibility and image. Besides that, brand image is a value-added antecedent determining satisfaction, and loyalty.
When brand image has such a strong influence on buying behavior in business markets, it is also possible that it will have a strong influence on the relationship construct, as this can also be considered as a particular type of buying behavior. The brand is a commitment to the reseller on the part of the supplier, but it is not “idiosyncratic” to a relationship. However, one of the possible meanings of a relationship could be to reinforce the brand of the supplier, so that both the reseller and the supplier benefit from end-consumer demand for the brand (Webster Jr. 2000).
Brand image in this paper is the way in which resellers perceive the supplier’s brand. Brand image is a multidimensional construct and consists of several dimensions. Is this paper, three of these dimensions will be used to measure brand image: perceived service/product quality, perceived price fairness, and perceived brand personality. According to several papers, these dimensions represent one of the most important elements of brand image (Aaker 1997, Barich and Kotler 1991, Bian and Moutinho 2009, Keller 2008 p. 56-59 and p. 370) and can therefore be used to measure brand image in an academic and complete sense.
Perceived quality and perceived price fairness are performance-related brand associations, which make up the brand image, whereas brand personality is an image-related association (Keller 2008 p. 56-59). The dimensions which make up brand image are all “perceived”
dimensions of the brand by the reseller. We consider the “brand” in this paper as the brand of the supplier, because resellers buy the brand from the supplier and not the other way around. The three brand image dimensions will be discussed next.
2.3.1 Perceived Service/Product Quality
The first dimension of brand image is the perceived quality, which is the image that resellers hold about the quality of the supplier’s products and services. Quality can be described as a performance-related brand association (Keller 2008 p. 56-59). Higher perceived service/product quality leads to a more favorable brand image.
Perceived quality has been defined as the evaluation or judgment about the overall excellence or superiority of a service/product (Garcia and Caro 2010, Snoj et al. 2004, Tsiotsou 2006). Perceived quality is a value judgment about the service/product and is created in relationships between resellers and suppliers. Perceived quality differs from objective quality. Perceived quality is a global assessment characterized by a high abstraction level and refers to a specific consumption setting. Objective quality refers to the actual technical excellence of the
service/product that can be verified and measured. Perceived quality is a type of attitude and can be viewed as a form of overall evaluation of a product, suggesting that quality is relatively a global value judgment (Kwak and Kang 2009). Perceived quality is stronger in forming
2.3.1.1 Perceived Service/Product Quality and Commitment
When resellers perceive the quality of the services and products of the supplier, with whom they have a relationship, as high, we presume that these resellers are more committed to the relationship as well. Commitment is the desire to maintain a valued relationship (Palmatier et al. 2006). The relationship is more valued by the reseller when they perceive the quality of the services/products they buy as high compared to competitors. Former research has shown that a higher perception of service/product quality can lead to higher levels of loyalty (Kwak and Kang 2009): commitment is a type of loyalty.
When resellers perceive the quality of the services and products that they buy from the suppliers with whom they have a relationship as high, they will be more committed to the relationship and have a long-term orientation towards the relationship. This commitment means that resellers are willing to sacrifice short-term benefits (like buying from a cheaper supplier) to realize long-term benefits with the supplier. This decision to commitment and long-term orientation becomes much easier when the resellers perceive the quality of the services and products to be high.
H1. Higher perceived service/product quality leads to higher commitment to the relationship.
2.3.1.2 Perceived Service/Product Quality and Trust
When resellers perceive the quality of the services and products of the supplier, with whom they have a relationship, as high, we presume that these resellers also have a higher level of trust in the relationship. When the reseller perceives the quality to be high, they believe that the service/product won’t let them down and that the supplier can also be trusted in other areas of the relationship. Resellers can believe that when they receive high quality services and products, the supplier takes them seriously and is not planning on betraying them in the relationship.
Trust is the confidence that resellers have in the supplier’s reliability and integrity (Palmatier et al. 2006) and the resellers’ belief that their needs will be fulfilled by the supplier (Anderson and Weitz 1989). One of the main needs in the relationship is the delivery of services/products of good quality. When resellers perceive this quality as high, they are convinced of the supplier’s reliability to deliver services/products of good quality and therefore have more trust in the relationship.
Trust in a working relationship and its implications for a firm’s actions have been defined as “the reseller’s belief that the supplier will perform actions that will result in positive outcomes for the reseller, as well as not take unexpected actions that would result in negative outcomes for the reseller” (Anderson and Narus 1990). When resellers perceive the quality of the delivered service/product by the supplier as high, this is an indication that the supplier performs actions (e.g. delivers services and products) that will result in positive outcomes for the reseller (e.g. receives and perceives high quality services and products). This again will lead to higher trust in the supplier and their relationship.
2.3.1.3 Perceived Service/Product Quality and Relationship Satisfaction
When resellers perceive the quality of the services and products of the supplier, with whom they have a relationship, as high, we presume that these resellers will also feel more satisfied about the relationship in general. Former research has shown that higher perceptions of service and product quality lead to higher satisfaction (Kwak and Kang 2009).
Relationship satisfaction is a reseller’s affective or emotional state towards a relationship, typically evaluated cumulatively over the history of the exchange (Palmatier et al 2006). When resellers perceive the services/products they receive from the supplier, with whom they have a relationship, as high, their affective (e.g. emotional) feelings towards the supplier and their relationship is likely to increase as well. Just as the opposite would be true when the reseller perceives the services/products as low in quality.
Relationship satisfaction summarizes the reseller’s previous interactions (e.g. delivery of services/products of perceived high quality) with the supplier, which in turn influence
expectations of future relationship development (Lages et al. 2008). Positive interactions (e.g. perceived high quality of the services and products) will lead to higher satisfaction with the relationship.
H3. Higher perceived service/product quality leads to higher relationship satisfaction.
2.3.1.4 Perceived Service/Product Quality and Relationship Quality
When resellers perceive the quality of the services and products of the supplier, with whom they have a relationship, as high, we presume that these resellers also perceive the quality of the relationship as higher. A main part of relationships is the exchange of services and products (it is often the main reason for the relationship to exist). When this part of the relationship runs smoothly, resellers feel that the relationship is high in quality.
Relationship quality is the overall assessment of the strength of a relationship, conceptualized as a composite or multidimensional construct, capturing the different, but related, facets of a relationship (Palmatier et al. 2006).
When resellers perceive the relationship as being of high in quality, this means that they are able to rely on the supplier’s integrity and have confidence in the supplier’s future performance because the level of past performance has been consistently satisfactory (Crosby et al. 1990). This means that perceived service/product quality is closely related to relationship quality. This is so, because an important part of the relationship is the delivery of services and products. When this is perceived as high in quality, then the relationship will automatically also be perceived as higher in quality than when the services and products were perceived as low in quality.
The relationship will be perceived as stronger (e.g. higher quality) when the reseller’s perception of the quality of the delivered services and products increases.
2.3.2 Perceived Price Fairness
The second dimension of brand image is perceived price fairness, which is the image that resellers hold about the fairness of the price of the supplier’s services/products. Price can be described as a performance-related brand association (Keller 2008 p. 56-59). Prices should not be perceived as too high, neither as too low. Higher perceived price fairness leads to a more favorable brand image.
Price perceptions can have a significant effect on brand preference, brand image, and purchase intentions (Darian et al. 2005). Perceived price fairness has an influence on patronage intentions (e.g. relationships) and is acknowledged as one of the reasons why individuals undertake certain actions (Daskalopoulou and Petrou 2005).
Perceived price fairness might be the dominant determinant of satisfaction (Herrmann et al. 2007). The principle of distributive fairness, or fairness of outcomes, maintains that individuals judge the fairness of a relationship based upon the allocation of rewards resulting from their contributions to the relationship. Procedural fairness concerns judgments whether processes are based on prevailing norms and behaviors. Price fairness perceptions are influenced by both procedural and distributive considerations. Another foundation of price fairness perceptions, the principle of dual entitlement, suggests that one party should not benefit by causing a loss to another party (Herrmann et al. 2007). Price fairness perceptions influence resellers’ overall satisfaction judgments. Price is an important element in resellers’ purchases; therefore it has a large influence on satisfaction judgments.
2.3.2.1 Perceived Price Fairness and Commitment
When resellers perceive the prices they pay to the supplier, with whom they have a relationship, as fair, they will be more committed to the relationship than when they consider the prices to be unfair. Resellers are more willing to maintain a relationship when they value this relationship. A substantial part of the value equation comes from perceived price fairness, together with perceived quality (Darian et al. 2005, Daskalopoulou and Petrou 2005, Herrmann et al. 2007, Nejad et al. 2009). This means that prices can be perceived as fair, even when other suppliers offer a lower price, when the other elements of the relationship make up for this difference. Here again we see the willingness to sacrifice short-term benefits (e.g. lower price at the competitor) to realize long-term benefits (e.g. a good relationship with fair prices).
H5. Higher perceived price fairness leads to higher commitment to the relationship.
2.3.2.2 Perceived Price Fairness and Trust
When resellers perceive the prices they pay to the supplier, with whom they have a relationship, as fair, they will have more trust in the relationship than when they consider the prices to be unfair. Price fairness is an important signal that an exchange partner is trustworthy and
therefore, resellers will trust their supplier when they feel that the prices are fair (Newman et al. 2005).
When the reseller perceives the supplier’s prices are fair, the reseller will have higher confidence in the supplier’s reliability and integrity, and therefore will have more trust in the supplier and their relationship. Besides that, when resellers perceive the prices as fair, their trust in the relationship and the supplier will rise and they will infer that the supplier will also not betray them on other elements of the relationship.
When prices are perceived as fair, the reseller will know that the supplier performs actions that will result in positive outcomes for the reseller, as well as not take unexpected actions that would result in negative outcomes for the reseller.
H6. Higher perceived price fairness leads to higher trust in the relationship.
2.3.2.3 Perceived Price Fairness and Relationship Satisfaction
Perceptions of prices as “fair” or “unfair” have a direct influence on satisfaction (Nejad et al. 2009). When resellers perceive the prices they pay to the supplier, with whom they have a relationship, as fair, they will feel more satisfied about the relationship than when they consider the prices to be unfair.
Relationship satisfaction is an emotional or affective state, typically evaluated cumulatively over the history of the exchange (Palmatier et al. 2006). When resellers have always perceived the prices as fair, this increases their satisfaction with the relationship and the supplier. Fairness is also an emotional state and is therefore closely related to satisfaction.
H7. Higher perceived price fairness leads to higher relationship satisfaction.
2.3.2.4 Perceived Price Fairness and Relationship Quality
When resellers perceive the prices they pay to the supplier, with whom they have a relationship, as fair, these resellers will perceive the quality of the relationship as high. Relationship quality is the overall assessment of the strength of the relationship, conceptualized as a composite or multidimensional construct, capturing the different but related facets of a relationship (Palmatier et al. 2006). One important facet of a relational exchange is the prices which are charged. When resellers perceive these prices to be fair, they will evaluate the relationship as being of higher quality. When uncertainty is reduced for the reseller, the relationship will be of higher quality (Crosby et al. 1990). When resellers perceive the prices to be fair, their
uncertainty will be reduced and their perception of the quality of the relationship will increase.
H8. Higher perceived price fairness leads to higher relationship quality.
2.3.3 Perceived Brand Personality
The brand personality factor is the third dimension of brand image and projects the brand´s values and creates an image of the brand´s typical buyer and user (Bian and Moutinho 2009). The idea of brand personality developed out of the notion of brand image in the early 1950s (Dowling 1986, Kuenzel and Halliday 2010). Hence, generally, brand personality is viewed as a dimension of brand image (Kuenzel and Halliday 2010).
Brand personality can be used by the reseller to express an ideal self or specific dimensions of oneself. Besides that, brand personality can be used by the reseller to create an image of the brand and its end-consumers.
The supplier can use its brand personality in different ways: to differentiate himself from competitive brands, as a central driver of end-user preference and usage, or as a common denominator that can be used to market a brand across cultures. In contrast to the product-related attributes of brand image, which tend to serve a utilitarian function for the reseller, brand personality tends to serve a symbolic or self-expressive function of brand image. Previous research suggests that favorable brand personalities are a central driver of brand preference, brand loyalty and brand usage (Aaker 1997, Kuenzel and Halliday 2010).
There are different ways to measure brand personality. One of the most well-known papers about measuring brand personality is the paper by Aaker (1997). However, the scales that are used in that paper are very extensive (42 traits) and are therefore not suitable for the
questionnaire in this paper, where brand personality is part of a larger concept (brand image). Besides that, it was also discovered that Aaker’s brand personality scale is sensitive to the cultural context in which it is used and did not hold in countries outside the United States (Kuenzel and Halliday 2010).
Another way of measuring brand personality is the concept of "brand personality congruence". Brand personality congruence occurs when the reseller’s own brand personality matches their perception of the brand personality of the supplier. In this case, the reseller’s brand is their store where they sell the brand of the supplier. One outcome of brand personality congruence is brand loyalty and thus loyalty to the relationship in this research (Kuenzel and Halliday 2010). The greater the match between how resellers perceive the supplier’s brand personality and the reseller’s own brand personality, the more likely that the reseller has a favorable image towards the brand, and probably also towards the supplier and their relationship. In this study the "ideal self-congruity" measurement is used, because it has been found that this is the most
appropriate measurement for brand preference and loyalty, and thus for relationship measurements (Kuenzel and Halliday 2010).
Officially, the ideal self-congruity concept has only been used in consumer markets. In this paper, the consumer will be replaced by the reseller, because it is assumed that a reseller also has a certain self image about his own brand personality. Therefore, it should be no problem to use the same concept in a business to reseller market. In this case, the brand personality congruence scale will be used to quantitatively relate the reseller’s perception about the supplier’s brand personality to the reseller’s own brand personality. In this case, the ideal self-congruity relates to the fit between how resellers see their own brand personality in relation to their perception of the supplier’s brand personality. Higher ideal self-congruity leads to a more favorable supplier’s brand image perception by the reseller.
2.3.3.1 Perceived Brand Personality Congruence and Commitment
When there is a higher level of congruence between the reseller’s perception of the supplier’s brand personality and its own brand personality, the higher the commitment of the reseller to the relationship will be. This seems and feels logical in the sense that people feel more committed to something they understand and feel related to, than to something they don’t understand and can’t relate to (Campbell 2010). Resellers will experience less internal conflict and are more willing to make an effort for a brand they relate to and of which they are proud to sell in their stores. Reseller will feel more committed to stay in a long-term relationship with this particular supplier, because they value the relationship and the brand more when the brand’s personality relates to their own brand personality. This long-term orientation is based on the assumption that the relationship is stable and will last long enough for the parties to realize long-term benefits. Commitment means the willingness of the reseller to maintain the
relationship with a particular supplier, and the unwillingness to consider other suppliers. When resellers feel related to the supplier’s brand personality, they will be less likely to consider other suppliers with other brands to which they might feel less related and thus will be more
committed to the relationship. This stems from the fact that people are unlikely to feel committed to something they do not value or do not find important (Moorman et al. 1992, Morgan and Hunt 1994, Wilson 1995). The congruity between the reseller’s perception of the supplier’s brand personality and their own brand personality also creates an emotional bond in the form of emotional commitment to the brand and the relationship (Hennig-Thurau et al. 2002, Tellefsen and Thomas 2005).
H9. Higher congruence between the reseller’s perception of the supplier’s brand personality and their own brand personality leads to higher commitment to the relationship.
2.3.3.2 Perceived Brand Personality Congruence and Trust
When there is a higher level of congruence between the reseller’s perception of the supplier’s brand personality and its own brand personality, the reseller will have more trust in the
relationship. For the same reason that people are more committed to brands and suppliers they understand and feel related to, so too will they have more trust in brands and suppliers they feel related to.
When there is congruity between the reseller’s perception of the supplier’s brand personality and their own brand personality, resellers will have more confidence in the supplier’s reliability and therefore have more trust in the supplier and their relationship. People tend to have more trust in brands they understand and feel related to. Besides that, the reseller will trust the supplier more in the sense that they belief that their needs will be fulfilled in the future by actions undertaken by the supplier (Anderson and Weitz 1989). This comes from the fact that they will feel so related and connected to the supplier’s brand personality, that their needs will automatically be more fulfilled than when they would not feel related or connected to the brand’s personality at all.
Trust in a working relationship and its implications for the supplier’s and reseller’s actions can be defined as "the reseller’s belief that the supplier will perform actions that will result in positive outcomes for the reseller, as well as not take unexpected actions that would result in negative outcomes for the reseller".
The fact that the brand personality of the services/products the supplier delivers to the reseller is so closely connected to the reseller’s own brand personality already feels like a positive outcome for the reseller. The reseller will therefore believe that the supplier can be trusted to deliver other positive outcomes in the relationship as well. Therefore, the reseller trusts the supplier and their relationship and is willing to rely on this.
H10. Higher congruence between the reseller’s perception of the supplier’s brand personality and their own brand personality leads to higher trust in the relationship.
2.3.3.3 Perceived Brand Personality Congruence and Relationship Satisfaction
When there is a higher level of congruence between the reseller’s perception of the supplier’s brand personality and its own brand personality, the reseller will feel more satisfied about the relationship. Relationship satisfaction is the emotional or affective state towards the
relationship, typically evaluated cumulatively over the history of the exchange (Palmatier et al. 2006).
When resellers feel congruity between their own brand personality and the supplier’s brand personality, their emotional state towards the brand and the relationship will increase, and so will their satisfaction towards the relationship. Resellers will appreciate the relationship more when they feel connected to the brand of the supplier. Satisfaction with the relationship seems more reasonable when there is a connection between the reseller’s perception of the supplier’s brand personality and its own brand personality.
H11. Higher congruence between the reseller’s perception of the supplier’s brand personality and their own brand personality leads to higher relationship satisfaction.
2.3.3.4 Perceived Brand Personality Congruence and Relationship Quality
When there is a higher level of congruence between the resellers perception of the supplier’s brand personality and their own brand personality, the reseller will perceive the relationship of being of higher in quality. Relationship quality is the overall assessment of the strength of the relationship, conceptualized as a composite or multidimensional construct, capturing the different, but related, facets of a relationship (Palmatier et al. 2006).
When resellers feel that the supplier’s past performance has been satisfactory, they will rate the quality of the relationship as higher. When resellers perceive a higher level of congruity
between the supplier’s brand personality and their own brand personality, they will feel more connected to the brand and the supplier and will automatically be more satisfied with the past performance of the supplier in their relationship. Therefore, they are more likely to rate the relationship as being of high in quality.
H12. Higher congruence between the reseller’s perception of the supplier’s brand personality and their own brand personality leads to higher relationship quality.
2.4 Company (Supplier) Reputation
In the present competitive environment, company reputation is acknowledged as having the potential to impact on a reseller’s loyalty towards a supplier (Nguyen and LeBlanc 2001). In this paper, company refers to the supplier and how resellers perceive their supplier’s reputation. The degree of reseller’s loyalty towards a supplier and their relationship has a tendency to be higher when their perceptions of the supplier’s reputation are strongly favorable.
Company reputation is the result of past actions of the firm and is an external perception of the firm. Company reputation is the extent to which firms and people believe a company is honest and concerned about its customers, end-consumers, employees, environment, society, and other stakeholders (Barich and Kotler 1991, Doney and Cannon 1997).
Company reputation has been broadly described as the long-term combination of the
stakeholders’ assessment about "what the firm is", "how well the firm meets its commitments and conforms to stakeholders’ expectations", and "how well the firm’s overall performance fits with its socio-political environment" (Cretu and Brodie 2007, Eccles et al. 2007, Nguyen and LeBlanc 2001).
Company reputation can also be described as a particular type of feedback received by an organization from its stakeholders, concerning the credibility of the organization’s identity claims (Cretu and Brodie 2007).
Suppliers develop a reputation among resellers concerning whether they "play fairly" (Anderson and Weitz 1989). Suppliers provide signals of their future actions through their presentations. Resellers are especially attuned to behaviors which allow them to infer cooperative rather than competitive tendencies. As such, a reseller is more willing to commit to a supplier who holds a reputation for cooperative behavior. One way of signaling their intentions is by the frequency with which suppliers terminate relationships.
Suppliers can build a good reputation by making sacrifices and demonstrating concern in long-term relationships (Anderson and Weitz 1992). Such a reputation reduces the motivation of the supplier to act opportunistically, because such actions would damage their reputation.
Opportunistic behavior is defined as "self-interest seeking with guile" (Morgan and Hunt 1994). As such, the essence of opportunistic behavior is deceit-oriented violation of implicit or explicit promises about one’s appropriate or required role of behavior. Therefore, opportunistic behavior damages the basis of trust, which is about keeping promises. When the reseller believes that the supplier engages in opportunistic behavior, this perception will lead to decreased trust. Such behavior will also lead to decreased relationship commitment by the reseller, because the reseller thinks that the supplier cannot be trusted and will keep acting opportunistically in the future. Acting opportunistically can give the supplier a bad reputation in the marketplace. On the other hand, when suppliers have a good reputation, reseller’s believe them not to act opportunistically in relationships.
Disclosing refers to the extent to which a supplier is perceived to provide sensitive information about itself (Leuthesser and Kohli 1995). Sensitive information is information that may cast the supplier in a negative light, or information that provides glimpses into the internal workings of the supplier’s organization not normally revealed to others. Disclosure by suppliers is
instrumental in maintaining a reseller’s trust in the relationship.
Favorable supplier reputation enhances the reseller’s trust in and loyalty towards the
relationship (Anderson and Weitz 1989). Reputation can be used by resellers as a cue to assess suppliers in the absence of other cues. In this case, supplier reputation is a "high-scope cue", because it takes time for a reputation to develop and therefore cannot be changed
instantaneously. Supplier reputation is a very important cue in assessing quality (Purohit and Srivastava 2001).
2.4.1 Perceived Supplier Reputation and Commitment
When resellers perceive the reputation of the supplier as favorable, they will be more
committed to the relationship. They will infer from the reputation that the supplier is capable of handling long-term relationships. Resellers are especially attuned to behaviors which allow them to infer cooperative rather than competitive tendencies (Anderson and Weitz 1989). As such, a reseller is more committed to the relationship with a supplier who holds a reputation for cooperative behavior.
Resellers’ commitment to the relationship increases, when their perceptions of the supplier’s reputation for fairness in relationships increase (Morgan and Hunt 1994). Commitment to reputably trustworthy suppliers reduces the reseller’s perceived risk of being mistreated or being acted upon opportunistically. When the reseller believes that the supplier engages in opportunistic behavior, this perception will lead to decreased relationship commitment by the reseller, because the reseller thinks that the supplier cannot be trusted and will keep acting opportunistically in the future.
A favorable supplier reputation enhances a reseller’s loyalty towards and expectations of continuity of the relationship (Anderson and Weitz 1989, Kumar et al. 1995).
