The relationship between manufacturer and distributors: knowledge transfer and performance.
| Autor | Redaelli, Emir Jose |
| Cargo | Report |
Introduction
New markets for manufactured products are potential opportunities to expand revenues. In the last few years, traditional manufacturers and new competitors have sought to expand their sales geographically. To compete in these new markets (and also in previously exploited markets), companies need to strengthen their distribution networks, especially for intensive technology products.
Jouni, Huiskonen and Pirttila (2011) showed that an integrated management system from manufacturer allows the improvement of service and stocks performance at distribution level. More specifically, past studies like Frazier (2009) claimed that manufacturing companies that depend on other companies to distribute and sell their products need to transfer knowledge about their products to the distributors. Therefore, it is possible to state that knowledge transfer from manufacturer positively influences supply chain performance (Blome, Schoenherr, & Eckstein, 2014). At the same time, it is a continuous challenge for distributors to acquire and assimilate new knowledge to improve their services, and consequently, the sales of manufactured products. Conversely, a manufacturer may gather valuable new information about the market from these distributors. In this case, the shared knowledge will allow distributors to precisely guide customers in the purchasing process. Therefore, knowledge sharing may create a continuous learning process extending from the manufacturer to the customer and vice versa. Distributors and manufacturers that do not share knowledge have more difficulty in meeting customers' expectations, what increases switching behaviors (Eggert, Henseler, & Hollmann, 2012; Wagner & Buko, 2005).
This study explores the relation between manufacturers and their distribution network based on knowledge transfer in order to improve their performance. It is also possible to advance in the understanding related to knowledge transfer from a downstream approach in the supply chain. Pioneer studies in marketing showed that the relationship between buyer and seller should not be a discrete event. Actually, companies need to see this relationship as an ongoing process (Cannon & Perreault, 1999; Dwyer, Schurr, & Oh, 1987; Ganesan, 1994).
Prior studies on supply chain management have analyzed the knowledge transfer from the distributor to the manufacturer (Liu, Li, & Xue, 2010; Y. Li, Liu, & Liu, 2011). Nevertheless, for distributors, it is also important to acquire knowledge from the manufacturers in order to better understand their products, policies, and services, as pointed out by Frazier (2009). For a better understanding of all those issues above, the distributors can properly perform tasks, offer qualified services, and, consequently, be more likely to achieve superior performance.
This is especially important in the context of intensive technology products, like cars, lorries, heavy equipment, cellphones, computers, and domestic appliances, among others. It is known that decreasing of short life cycles of products require a fast pace of knowledge transfer throughout the supply chain, including distributors. This intricate relationship between knowledge transfer and distributor performance leading us to our research question: Does knowledge transfer from the manufacturer to distributor improve the performance of the second?
The paper is organized as follows: Firstly, some concepts and findings encountered in the literature review are presented. The second section discusses the theoretical model. Thirdly, the methodological procedures followed in our study and the results found are presented. Finally, the last section shows the conclusions, limitations, and suggestions for future studies.
Theoretical Background
The literature about knowledge transfer explores how acquisition of knowledge may improve performance in the supply chain, including manufacturer and other actors in the supply chain. Conceptual and empirical arguments may expand the notion of performance monitoring in the supply chain. Prior studies consider that an activity designed to control potential opportunistic behavior can also be a form of knowledge transfer (Calantone & Gassenheimer, 1991; Weitz & Jap, 1995). It challenges the assumption that monitoring others can degrade a relationship and it can be negatively viewed from the perspective of those being monitored.
The knowledge theory of the firm has attempted to understand the existence and organization of firms as resulting from the creation, acquisition, appropriation, and management of knowledge by individuals and organizations (Grant, 1996; Nonaka, 1994). Organizational knowledge can be viewed as information that is systematically verified and produces other information that can be used to understand more complex systems (Kogut & Zander, 1992).
The processes of knowledge creation and acquisition are related to the context. Thus, there is a need for a physical place where firms can create knowledge and transfer part of it to their partners (Nonaka, Toyama, & Nagata, 2000). The mechanisms of creation, appropriation and knowledge transfer allow the firms to store specialized knowledge that are integrated and transformed within their boundaries (Grant, 1996). Prior studies like X. Li and Chandra (2007) explored the existing challenges for knowledge integration in complex network management especially in geographically dispersed supply chains. Nevertheless, Nonaka, Toyama and Nagata (2000) identified different types of knowledge creation that are related to tacit or explicit knowledge. Socialization occurs when there is only tacit knowledge exchange. Nonaka et al. (2000) also mentioned that the process of acquiring knowledge in this case is based on internal interactions and other forms of interaction with suppliers or customers, and this is often related to the physical proximity. On the other hand, knowledge creation, identified as internalization, is present when the existing explicit (or formalized) knowledge creates new tacit knowledge. In this case, internalization is present in activities like learning-by-doing, training and exercises. Externalization is identified when tacit knowledge is transformed into formalized knowledge, such as training material, documents, and norms, among other forms (Nonaka & Konno, 1998).
The processes through which firms organize and transfer knowledge are the most valuable in understanding the nature of the relationship between the manufacturer and other partners, like distributors (J. H. Dyer & Nobeoka, 2000). Routine visits are used by firms to create and transfer tacit knowledge among them, because these allow organizational members and other external partners to share experiences, express their problems, and learn better ways to perform tasks (J. H. Dyer & Nobeoka, 2000; Nonaka & Takeuchi, 1996). At the same time, there are also other forms of knowledge creation and transfer, such as formal meetings, negotiation processes, formal training sessions, and informal interactions, among many others. As a result of these interactions, Modi and Mabert (2007) showed that knowledge transfer throughout the supply chain may improve performance. In a manufacturer-distributor relationship, some of these forms of interaction happen in a long-term relationship, allowing the distributors to access valuable knowledge created by the manufacturer (Xuan, Xia, & Du, 2011). Y. Li, Liu and Liu (2011) found that co-operative activities improve knowledge acquisition by the manufacturer from the distributor. Thus, Frazier (2009) stressed that, as distributors play a central role in generating sales for manufacturers, the latter should transfer an amount of tacit, explicit knowledge on products and their benefits, and "encourage intermediate persons to process and integrate such knowledge to enhance their capabilities" (Frazier, 2009, p. 33).
Model Development and Hypothesis
The proposed theoretical model is based on the organizational knowledge approach. It considers that the manufacturer relies on the distributor to sell its products. The presence of asymmetric information between seller and buyer (or manufacturer and distributor) may influence the second to behave opportunistically, diverging from the manufacturer's goals and increasing the need for monitoring by the manufacturer. However, by monitoring the performance of the distributor, the manufacturer becomes involved and interacts with the distributor in order to ensure the proper development of tasks by the distributor (Y. Li et al., 2011). Zhou, Zhang, Zhuang and Zhou (2015) showed that relational governance combines relational norms and collaborative activities. This interactive process, in turn, helps the knowledge transfer processes from the manufacturer to the distributor, which may increase the knowledge base of the distributor and improve its performance.
Knowledge-sharing activities between manufacturer and its distributors can be an important factor affecting overall supply chain performance, as found by Hult, Ketchen and Slater (2004) in their study about how information-sharing and face-to-face discussions can improve supply chain performance. Figure 1 illustrates our proposed model.
[FIGURE 1 OMITTED]
Performance monitoring
The proposed model considers the relationship between the manufacturer and distributors according to the agency theory perspective (Jensen & Meckling, 1976), in which the principal actor relies on the agent. Nevertheless, this perspective suggests the distributor may sometimes behave in its own self-interest rather than that of the manufacturer (see for example Zeng, Chen, Dong, & Zheng, 2015). The reasons are explained by certain activities that demand investments and efforts, and are not perceived as useful or worthwhile by the distributor. At the same time, the manufacturer can invest in activities, such as monitoring the distributor's performance or training its team (Y. Li et al...
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