Multidyadic Industrial Channels: Understanding Component Supplier Profits and OEM Behavior

Seminars - Department Seminar Series
12:45 - 14:00
Via Roentgen, 4th floor, Room 4-E4-SR03

Industrial component suppliers (CSs) work to enhance profitability by building brand differentiation with original equipment manufacturers (OEMs) and indirect industrial buyers (IIBs) through their marketing investments to each member. However, as a CS increases its marketing investments to its IIB, the OEM’s profit position is threatened. This article investigates implications of this issue using a three-study, multimethod design. The results indicate that as a CS’s allocation of marketing investments to the IIB increases, brand differentiation is enhanced, which increases the CS’s profits. The leveraging of brand differentiation into CS profits increases as market uncertainty increases but decreases as performance ambiguity increases. The authors find that an OEM increases opposing and aligning efforts in response to a CS’s increased brand differentiation and that aligning efforts decrease as market uncertainty and performance ambiguity rise. Finally, they find that CS profit increases are driven primarily by IIB specification of the CS to the OEM, rather than by general demand increases, thus demonstrating the importance of brand differentiation development in the multidyadic industrial channel.
 

David A. Griffith, Lehigh University