Content area
Abstract
This study investigated how decision making uncertainty, as produced by environmental variability, affected channel decision structures, decision processes and transaction form. Until recently, researchers have neglected to study the impact of the environment on channel relations. This study was one of the first in channels research to test the relationship between the environment and uncertainty. In addition, this study examined the relationship of channel transaction form with decision processes and structures.
A theoretical model based on the political economy framework explicated hypothesized relationships. The channel's external political economy (variance in environmental dimensions such as capacity, dynamism, and complexity) was hypothesized to result in decision making uncertainty. This uncertainty was then expected to affect the channel's internal economy, specifically, to lead to more vertically integrated transaction forms. Uncertainty was also expected to result in flexible decision structures (informalized, decentralized, unstandardized, and nonspecialized) and more participative decision processes (consensus and both more and balanced communication).
Results from a mail survey of farm equipment dealers suggested that capacity is a major determinant of uncertainty. Uncertainty had little direct effect on decision structures and appeared to squelch rather than enhance channel communication. Uncertainty related positively to vertically integrated channel transaction form. Transaction form related to inflexible decision structures and nonparticipative decision processes.
