Partner Relationship Management (PRM) Index: An Innovative
Approach For Enhancing Channel Partner Relationships

ANUJA AGARWAL; DEEPALI SINGH

Partner Relationship Management (PRM) Index: An Innovative Approach For Enhancing Channel Partner Relationships

ANUJA AGARWAL¹, DEEPALI SINGH²

ANUJA AGARWAL PhD Scholar, ABV-Indian Institute of Information Technology & Management, Gwalior (M.P.), India Postal Address: Room No.103, e-Business Lab, Block-A, ABV-Indian Institute of Information Technology & Management, Morena Link Road, Gwalior (M.P.)-474015, India Author's Personal/Organizational Website: www.iiitm.ac.in Email: anuja.iiitm@gmail.com, nuja@iiitm.ac.in
Anuja Agarwal is currently pursuing Ph.D in the area of partner relationship management at ABV-IIITM, Gwalior. She has 1 year of teaching and 3 years of research experience.
Professor, ABV-Indian Institute of Information Technology & Management, Gwalior (M.P.), India Postal Address: Room No.113, Block-A, ABV-Indian Institute of Information Technology & Management, Morena Link Road, Gwalior (M.P.)-474015, India Author's Personal/Organizational Website: http://www.iiitm.ac.in/index.php/prof-deepalisingh Email: deepalipsingh@gmail.com
Dr. Deepali Singh is a professor of management at ABV-IIITM, Gwalior. She has been a university topper in MBA (1994) and completed Ph.D in the area of management in 1999. She has been teaching nearly 19 years at PG level (Post Ph.D 15 years and Pre- Ph.D 4 years’ experience). She is Gold-medalist UGC-NET qualified, Accredited Management Teacher and merit holder throughout her academic career. She has been very active in research in the area of Marketing for over 16 years. She has guided many Ph.D students and PG students (MBA, M.Tech) in new and innovative areas of emarketing,
e-CRM, Ethical Brand Positioning, IT-enabled Distribution Systems, Neuro- Marketing, Customer Centric New Product Development, SRM etc.

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Abstract

The purpose of this research article is to develop a valid partner relationship management (PRM) index for enhancing the effectiveness and overall efficiency of channel partner relationships by taking Indian automobile sector as a unit of study. The result of the exhaustive literature review done by authors clearly indicates paucity of such type of standard and valid measure for evaluating PRM effectiveness, which leads this research work with an aim of filling aforementioned gap. A standard and valid methodology for scale development was adopted which resulted in five factor model namely trust, satisfaction, relational communication, collaboration and environmental factors contributing towards PRM. Confirmatory factor analysis was used for validation of proposed structure followed by case-based methodology for development of PRM index. Strategic implication indicates how the effective implementation of PRM practices can create win-win situation for all the parties involved and how PRM index can help in successful implementation of PRM practices. Academically this research is an attempt to propose a PRM index and side by side serve as a tool for enhancing the overall profitability and productivity of Indian automobile sector in most effective and efficient format.

Keywords

Partner relationship management (PRM) index, Business to Business (B2B), Exploratory factor analysis, Confirmatory factor analysis, Indian automobile sector

INTRODUCTION

Distribution channel is one of the most important aspects under marketing concept. It is a network not only for distributing goods but also for services, people and information. In broad perspective, this system is popularly known as a service network. As its basic objective is to make the product available on the right place and at the right time which is like providing services. Due to its service nature, channel partners need to build relationship among them so as to enhance the efficiency and effectiveness of the distribution channel. Each member of the distribution channel has an impact on the smooth functioning of the distribution channel. A manufacturer needs to have sound relationship with distributors and retailers, as they will provide information regarding changing customer attitudes, buying behavior, consumption pattern etc. Producers may have the choice of utilizing a direct channel to approach the ultimate customers but indirect channel of distribution has its own importance.

Various challenges exists for organizations in current competitive business scenario namely, globalization, technological advancement, diversity in market trends, change in customers’ behavior pattern, demand uncertainty etc. (Vlachopoulou et al., 2005). These challenges have made the companies to focus on their core competencies and core processes and on the other hand outsourcing the sub-processes. Due to this, partner relationship management (PRM) as a relationship building and maintaining concept between manufacturer and its channel partners has emerged.

The importance for building long-term sustainable relationships between manufacturer and its channel partners has increased over the years (Morgan and Hunt, 1994; Sheth and Parvatiyar, 1995; Payen et al., 2010). PRM works as a business process integrator while supporting seamless real-time information flow to all the business partners, scheduling business processes, ease collaboration among partners etc.

LITERATURE REVIEW

The relationship between a manufacturer and its channel partners is popularly known as channel relationships that are based on interactions and connections among the parties involved. The basic aim of building and maintaining such relationships is to create value and enhance the level of benefits for all the parties involved (Agariya and Singh, 2011). There are many ways to create value in relationship between manufacturer and channel partners like cost reduction, lead time improvements etc. (Cannon and Homburg, 2001; Ulaga and Eggert, 2006; Wagner and Lindemann, 2008). Efficient and appropriate utilization of distribution channels can result in reduction in cost of maintaining inventories and improvement in lead-time. But to utilize distribution channels efficiently one must keep and maintain a sound system of information exchange and proper coordination of all the business processes.

There are few things that explain the importance of building and maintaining channel relationships. Firstly, it is important that each of the channel partners of the distribution channel must play their role in the most appropriate manner because it has got some benefits for the channel partner itself and for others as well. But to make the channel partners to perform their roles, there is a strong need for building sound channel relationships. Wang and Kess (2006) have explored the role of the distributor which is not just limited to selling the product but also to provide services against the product to customers, to provide information about the current customer needs and market trends, etc.(Lin and Chen, 2008; Mudambi and Aggarwal, 2003; Paun, 1997).

On the other hand the manufacturer must seriously and accurately incorporate all the information provided by the distributors. Secondly, the channel partners must focus on removing asymmetry existing in the distribution channel that creates irregularity in distribution process. As explained by Anderson and Weitz (1989), asymmetry brings instability and low profitability atleast for one channel member in the relationship. This can only happen if strong channel relationship exists. Thirdly, due to the change in market trends and customer expectations, a manufacturer needs to offer a broad range of products, specialized products etc. But to make this broad range of products available to customers, a manufacturer needs to have strong channel relationship with increased number of distributors which can regulate the sales process (Vlachopoulou et al., 2005).

Literature revealed a strong need for building sound channel relationships in Indian context. Dabas (2012) has explained about a comparison study showing data of ten countries, where India stood in last position. This comparison study has evaluated ten countries in three measures i.e. product quality, design and on-time delivery. Some significant reasons behind are transportation difficulties, delayed deliveries, uncontrollable factors and these reasons can be resolved by business processes focused strategies and strong channel relationships.

Various academicians and practitioners have considered a shift towards establishing, building and maintaining successful relationship among the channel members. This is basically a shift from vertical marketing system (VMS) and authoritative control to evaluation of relationship among the channel members that involve contractual and normative controls (Kalafatis, 2000; Weitz and Jap, 1995).

A contractual and normative control refers to the set of shared implicit values; principles or norms that helps channel members in coordinating activities and governing their relationship.

Channel relationships are based on smooth information exchange and high level of commitment between the manufacturer and the channel partner.

Channel relationship building process

Such relationship building process generally carries three stages namely, select & explore, expand & maintain and evaluate as indicated in figure-2 (Pelton et al., 2002).

Select and Explore

Before initiating a relationship, the manufacturer must have internal commitment and support with team building orientation. This stage is the pre-relationship stage, where the manufacturer looks for potential channel partner who can perform successfully and profitably. But to select a prospective channel partner there has to be some specified criteria.

Therefore in this concern various researchers have considered logistic capabilities, marketing capabilities, relationship intensity and firm infrastructure as major dimensions for channel partner selection (Cavusgil et al., 1995; Fram, 1992; Lin and Chen, 2008; Mummalaneni et al., 1996).

Expand and Maintain

After proper selection and exploration of channel partners next is to build and maintain the relationship. For proper relationship development, involved parties need to get into partnership where the idea is to work for each other’s benefits. This also includes provision for encouraging each other for team building and collaborating for better outcomes.

Evaluate

Next is to evaluate the relationship status from time to time, which is popularly known as performance measurement (Hu, 2011). This includes outcomes of relationship i.e. profitability, reputation, timely delivery, quality product, complete coverage of markets etc.

Some others researchers have talked about a slightly different process of developing partner relationship. Like, Wilson (1995) has proposed a five-stage partner relationship development process that includes partner selection, defining purpose, setting relationship boundaries, creating relationship value and relationship maintenance.

In general, PRM can be understood in three contexts i.e. business to business (B2B), business to customer (B2C) and strategic alliance. This paper focuses on PRM in B2B context specific to Indian automobile sector.

An overview of Partner Relationship Management (PRM) in B2B Context

Rackham, Friedman and Richard (1995) has defined PRM as the partner relationship between two or more firms which takes place, when the firms agree to integrate, to jointly control their respective parts of operations, and to share mutual benefits. Various researchers have talked about the basic aim of PRM i.e. to build and manage longlasting harmonious and productive relationship between the manufacturer and the distributor/retailer with the ultimate goal of enhancing the level of customer satisfaction (Marchetti, 1999; Mirani et al., 2001; Shoemaker, 2001). Hayes and Ref (2003) have indicated that PRM improves the efficiency of business processes which results in high valued customer service and seamless partnering experience to all the channel partners. PRM has revolutionized and improvised inefficient communication tools and other ineffective techniques used in early days.

According to a research report, uninterrupted use of PRM practices for a little longer duration can reduce the distributor cost by 32% and enhance the sales level by 17% based on the survey of 50 executives from large manufacturing organizations (Hayes and Ref, 2003).

Zablah et al., (2005) have considered PRM as a combination of channel relationships and information technology as its proper implementation depends on reseller commitment towards technological advancement.

PRM has been considered important for the organizations producing such goods which require considerable level of consulting activities and service to facilitate sales. The major aims behind implementation of PRM includes sound communication mechanism, profit maximization, channel partner related data obtained from partner touch-points (Murtaza & Shah, 2004), reduce order cycle time, tracking actual product performance, partner retention, cost reduction (Lemmink et al., 1996), adequate growth of all the companies involved in the relationship (Mirani et al., 2001; Murtaza and Shah, 2004; Rabin, 2002; Vlachopoulou et al., 2005), etc.

Various organizations have reviewed upon implementing CRM successfully and explained the need for integration of partner organizations in value chain which will positively help in delivering high quality products and services to customers (Chakravorti, 2009; Day et al., 2008; Myers & Cheung, 2008). PRM has been considered important for the supply side of the value chain, just as like CRM is important for the demand side.

There are two channels of distribution for delivering products to the end customer i.e. direct channel and indirect channel. Direct channel exists when the manufacturer directly contacts the customer then CRM exists between the manufacturer and the customer. Indirect channel exists when distributors and retailers exists in between the process of making products available to end customer. Figure-3 above shows the existence of PRM between the manufacturer and the retailer and CRM between the retailer and customer in indirect channel of distribution. Basically PRM addresses this indirect channel i.e. the extended organization.

Agarwal and Singh (2013) have mentioned an indicative list of definitions of PRM given by renowned researchers. On this basis a summarized definition of PRM is as follows, PRM is being considered as a business strategy, as a technology, as a value-creating strategy and as a system, with the main focus on building and maintaining value-laden relationships between the manufacturer and its channel partners and its ultimate goal is to enhance customer satisfaction level and increase profitability (Galbreath, 2002; Geyskens et al., 1998; Murtaza and Shah, 2004; Suh et al., 2005; Tribunella and Baroody, 2008).

Following is the indicative list (Table-1) of PRM studies in B2B context.

Some of the business strategies that a company need to follow for receiving maximum benefit of PRM practices includes streamlining of channel functions which drives out extra cost, advantageous utilization of growth opportunities and market share extension (Mirani et al., 2001). Recruitment management, contract management, campaign management, lead management, referral management, partner order management, service management, inquiry and complaint management are some the major components of PRM (Mirani et al., 2001; Shoemaker, 2001; Vlachopoulou et al., 2005)

An overview of Indian Automobile sector

In Indian automobile sector, vehicle manufacturers or popularly known as automakers are the key elements of the value chain and majorly responsible for the products’ quality and its innovativeness. Dealers, parts and accessory sellers, service providers are the major intermediaries existing in between the automakers and the customers. In majority of the cases an Indian automaker follows indirect channel of distribution and therefore there is an urgent need to build strong channel relationships in such cases.

Proper implementation of PRM practices with a measuring tool to assess the effectiveness of PRM will enhance the success level of the companies involved.

This sector is growing both in production and sales levels at a higher rate year after year in India contributing almost 7% to the GDP of the country. This industry has become a major regulator of the economic growth of the country. Some major players in Indian automobile market include Maruti Suzuki India, Tata Motors, Hyundai Motors India, Ford India, Skoda Auto India, Toyota Kirloskar Motor, Bajaj Auto etc. These all companies are involved in manufacturing commercial vehicles, passenger vehicles, three-wheelers and two-wheelers.

OBJECTIVE OF THE STUDY

The objective of the study is to develop PRM index specific to Indian automobile sector. It is being observed through literature review that PRM has been able to successfully create value-laden channel relationships at various ends but there is non-availability of a measuring tool for evaluating the effectiveness of PRM. Also this tool will help in determining the correct set of factors contributing towards PRM. Then formulation of appropriate strategies by manufacturers and channel partners can be done to receive best outcome out of PRM practices. PRM implementation and its effectiveness evaluation in Indian automobile sector will have various benefits for the sector as well as for the country. Therefore to cater this research scope, this study aims at developing a PRM index in B2B context specific to Indian automobile sector.

METHODOLOGY

Exhaustive literature review in PRM context has resulted into identification of 47 items (a list containing these items has been attached at the end of this paper in Table-A.1). These items were further reduced to 38 items on the basis of applicability and relevance to manufacturing sector. Then a rough questionnaire has been prepared using these 38 items for carrying out depth interviews with a total of 13 manufacturers and channel partners of different automobile organizations in northern and north-central region (NCR) of India. The duration of depth interview varied anywhere between 30 to 45 minutes. The purpose behind carrying out depth interviews is to identify major issues that exist while maintaining relational aspects by manufacturers with their partner organizations and vice-versa. The result of this exercise resulted in refinement of the items which were further reduced to 33 based on the responses from depth interview. Further to this, a pilot survey was carried out using these 33 items in the form of a questionnaire. Final questionnaire was made using 30 items as 3 items were further eliminated as the result of pilot survey.

Data Collection

The final questionnaire comprised of two sections:

Section-1: Demographic information of the respondents

Section-2: Items measuring partners’ perceptions on specific relational characteristics of their respective partnering organization.

The respondents were requested to select that response which best indicates their experiences or perceptions on each statement, using a five point Likert-type scale (From 1= strongly disagree to 5= strongly agree). Both online and offline modes were used for data collection from the respondents belonging to NCR and northern region of India. The respondents of this study were the partners of different Indian automobile organizations. A potential list of respondents was made containing 813 participants of automobile industry belonging to NCR and northern region. Out of this, a total of 346 complete and usable responses were received indicating response rate of 42.56% (which is quite appropriate in Indian scenario). These responses are subjected to statistical analysis for identifying major factors by applying reliability analysis, sampling adequacy analysis and exploratory factor analysis (with the first half of the data with sample size 173). SPSS-15 software was used for carrying out statistical analysis mentioned above. In subsequent phase, confirmatory factor analysis was carried out (with the second half of the data with sample size 173) to confirm the factor structure and to provide evidence of scale reliability, dimensionality and validity. AMOS-7 software was used for carrying out statistical analysis mentioned above. Next, case based method was used for the development of index.

MAJOR FINDINGS

Cronbach-α value is calculated for evaluating the reliability of the data, which is 0.817. The quite acceptable range is (> 0.7) as indicated by Nunnally (1978). Next, sampling adequacy is checked by calculating Kaiser Mayer Oklin statistics (acceptable range is >0.5) (Agariya and Singh, 2013) and the calculated value is 0.593. Both the values were considered suitable for carrying out exploratory factor analysis. The demographic information of the respondents is given in Table-2.

After carrying out exploratory factor analysis, a total of 5 factors were extracted with 27 indicators contributing towards 65.7% of variance. Based on these five factors a conceptual framework for PRM in B2B context was being proposed. The extracted factors along with their indicators are shown in Table-3.

TRU: Trust, SAT: Satisfaction, REC: Relational Communication, COL: Collaboration, ENF: Environmental Factors

The findings from exploratory factor analysis show PRM as a multi-dimensional construct explained by the five factors as mentioned above. The proposed framework was validated through confirmatory factor analysis by using the rest half of the data (Sample size: 173). Confirmatory factor analysis leads to elimination of 8 indicators namely TRU2, TRU5, SAT4, REC1, COL2, COL3, ENF2 and ENF4 in the model (Figure-5) because of poor loadings (<0.5).

By following the specifications given by Anderson & Gerbing (1988), the measurement model has indicated an acceptable model fit of the data. In addition to this all the indicators loaded significantly on the corresponding latent constructs. A reasonable fit of the measurement model with the sample data was indicated through the values of the fit indices (Byrne, 2001). The calculated statistics of all measures are shown in Table-4.

Reliability and Validity of PRM Scale

The fairly acceptable range of composite reliability is more than 0.6; therefore the calculated values of composite reliability for the identified constructs were acceptable as indicated above in Table-5 (Carmines and Zeller, 1988). Construct validity was identified in this study through content validity, convergent validity and discriminant validity. Exhaustive literature review and interaction with experts in the area of PRM has verified content validity. Through examination of average variance extracted (AVE) and factor loadings, convergent validity was evaluated (Fornell and Larcker, 1981). All the indicators in the model have shown the loadings on their respective latent construct with values varying between 0.50-0.83 and the AVE for each construct was greater than or equal to 0.50, which supports convergent validity of the constructs. According to Fornell and Larcker (1981), a comparison of AVE with corresponding inter-construct squared correlation estimates can evaluate discriminant validity.

The result of the comparison indicated that the AVE values were more than the square of the inter-construct correlations for all the constructs of measurement model. Therefore, good construct validity and suitable psychometric properties were reflected in the measurement model (Agariya and Singh, 2013).

In the second model (Figure-6) the structural PRM model is validated. The calculated statistics of absolute measures, incremental fit measures and parsimonious fit measures are shown in Table-4. The structural model indicated an acceptable model fit of the data (Anderson and Gerbing, 1988). In addition to this all the indicators loaded significantly on the corresponding latent constructs. The values of the fit indices indicate a reasonable fit of the structural model with the sample data (Byrne, 2001). In short, the structural model confirms the five-factor structure of PRM.

PRM INDEX DEVELOPMENT (USING CASE BASED METHOD)

The validation of PRM scale in B2B context specific to Indian automobile sector was carried out through case based method and development of PRM Index along with the manufacturers and channel partners weights with the help of survey method using questionnaire.

PRM Index derivation

Steps

• Identification of factors leading to PRM in B2B context (empirically validated factors along with their indicators)

• 19 indicators

• Development of questionnaire

• Data collection

• Respondents score

• Calculation of weights (Manufacturers as well as Channel partners perspective)

• Development of PRM Index (Manufacturers as well as Channel partners perspective)

• Gap analysis

The initial two steps of index derivation have already being completed as indicated in the previous section of this study.

Development of questionnaire

The questionnaire structure comprises of:

Section-1: Demographic information of the respondents

Section-2: 19 items measuring the respondents’ perceptions on specific characteristics of PRM in B2B context

The respondents were requested to select the response that best indicates their experiences or perceptions on each statement, using a five point Likert-type scale (From 1= strongly disagree to 5= strongly agree).

Collection of sample

For generation of weights for PRM Index in B2B context, judgment sampling was used under non-probability sampling method. Sample was selected on the basis of the judgment of the researcher (Deming, 1960). Final number of responses received was 35 and 23 from the production, marketing, purchasing, store managers and top management officials of manufacturing and channel partner organizations respectively. Table-6 shows the demographic profile of the respondents.

Mathematical model used for ranking

PRM Index was evaluated with the help of the following mathematical model:

PRM Index Score = (WA1* SA1+ ......................................+WA6* SA6)

Where:

WA1-WA5: were the calculated weights for the PRM constructs.

S A1-S A5: were the scores corresponding to the PRM constructs.

ANALYSIS OF THE DATA

A sample size of 35 and 23 responses with 19 questions in the questionnaire led to a total of 665 and 437 data points which were actually the preferences of the organizations under investigation.

Some gaps between the preferences of manufacturers’ and channel partners are indicated in comparison matrix in terms of weights given to the factors by manufacturers and channel partners (Table-8) and the same has been depicted in figure 7 and 8. According to the manufacturer’s point of view, collaboration is the most important factor but not of that much of importance from the viewpoint of channel partners. Manufacturers consider relational communication highly important by channel partners and moderately important. Trust and satisfaction is equally important for both the parties involved. Environmental factor is considered moderately important by both.

Both the parties involved must formulate adequate and appropriate PRM strategies in order to do justice with the gap of preferences and receive maximum benefit out of PRM implementation in B2B context. Manufacturers must duly take care of the channel partners’ preferences and vice-versa. The proposed index can be used by manufactures to get the feedback of channel partners and vice-versa, to evaluate the level of effectiveness of the formulated and implemented PRM strategies in B2B context.

STRATEGIC IMPLICATIONS

Five factors were extracted contributing towards PRM in B2B context specific to Indian Automobile sector after carrying out exploratory factor analysis and confirmatory factor analysis. These five factors include satisfaction, trust, relational communication, collaboration and environmental factors. Each extracted factor is a combination of important dimensions contributing towards PRM in B2B context.

Trust

In simple words, trust is the extent to which channel partners believes and have confidence that its partner is reliable and honest. Trust has three main moves in context of channel relationships: Expression of confidence, belief on partner acts and willingness to rely. Trust is being defined and considered important by many a researcher in channel relationship context. Presence of trust among the channel partners makes them to become responsible and accountable towards their practices of distribution, which is somehow very important for the smooth functioning of the distribution channel.

This study has extracted trust as an important factor mainly comprising of reliability, benevolence, credibility and integrity contributing towards PRM. Reliability is about the ability of the channel partner to rely on other partners’ acts and decisions and vice-versa. Benevolence is another important dimension of trust where the channel partner is considered as genuinely interested in the welfare of other partners’. Credibility refers to the ability and quality of the channel partner to be believed as trustworthy by his partners. Integrity refers to the wholeness or totality in terms of building and sustaining the relationship between the channel partners. All these dimensions in combination, results in strong relationship building with optimum level of trust among the distribution channel partners.

Satisfaction

Many-a-researchers have considered satisfaction as an important factor as it plays a vital role in long-term relationship maintenance between the manufacturer and its channel partners who all are responsible for making manufacturer’s product available to customers. This factor is the resulting positive state due to appraisal of all aspects of a firm’s working relationship with another firm. Two major type of satisfaction in context of channel relationships are economic satisfaction and social satisfaction. Economic satisfaction refers to the economic benefits derived out of the relationship with the channel partner. Social satisfaction refers to psychological aspects resulted from interactive experiences such as shared values.

This study has extracted this factor with four major sub-factors namely, no opportunism, customer orientation, channel productivity and social responsibility. Opportunism refers to taking advantage of opportunities without keeping in mind that it may cause some problems to others. It mainly includes disclosing incomplete or distorted information especially for the purpose of misleading. Therefore no opportunism practices must be followed by all parties involved which lead to higher satisfaction. Customer orientation is important for every organization to succeed. Each channel partners’ orientation towards customer satisfaction, results in sound level of profitability. Channel productivity is about the performance of the whole chain of distribution channel which depends on the performance of each channel partner. Involvement of manufacturers and channel partners in social responsibility results in better satisfaction level and socially acceptable services to all involved in the relationship.

Relational Communication

Communication is known to be a medium through which a partner transfers a message to its channel partners and make sure that the message is clear and understandable. In general, optimum level of communication results in proper flow of information, elimination of conflicts, no scope for misunderstandings etc. Relational communication refers to the communication which is directed at building and sustaining relationships between the manufacturer and its channel partners.

This study has revealed relational communication as an important factor with sub-factors like, information exchange, grievance handling, negotiation and social exchange. Information exchange is the centralized information sharing system which helps in creating cooperative network and reduces the possibilities of conflict. It also aims at timely collection and circulation of information to concerned people. A grievance can commonly be understood in B2B context as a dispute between the parties involved and also as a complaint made by any of the partner due to the differences in goals, perceived poor efficiency and perceived unfairness. Companies must have formal as well as informal mechanisms to handle grievances. Negotiation is the situation when the distribution channel partners seek to do better through joint actions with some level of conflict then it is known as negotiation. Social exchange is an informal act of relationship maintenance where the manufacturer and its channel partners share an intensive and familiar contact.

Collaboration

Manufacturers and channel partners must consider collaboration as an important factor as it focuses on creating joint values and processes, which requires high level of cooperation, determination and substantial investments in co-specialized assets. Working jointly in a cooperative environment makes the manufacturer and channel partners to achieve success in satisfying customer needs effectively, in successfully handling demand uncertainties and in reduction of costs, which is not easily possible while working alone in isolated environment.

This study has considered it as an important factor with sub-factors namely, flexibility, co-opetition, inter-firm adaptation and goal congruence. Flexibility is important for manufacturers and channel partners, as it must exist in practices and roles played by the parties involved. Co-opetition is a business strategy, which is a combination of cooperation and competition, derived from an understanding that business competitors can benefit when they work together. Inter-firm adaptation is about the policies and practices followed by the parties involved and these must be adaptable by all through proper collaboration. Goal congruence is the perception that the goals of both the parties in an exchange relationship can be achieved simultaneously. It also promotes investment in coordination efforts.

Environmental factors

Such factors can affect channel partner’s expectations about the certainty of task environment and this creates a doubt about the favorable market conditions. It ultimately affects the predictability of future customer demand and creates uncertainty in decisionmaking. The existence of sound relationships among the channel partners has become helpful in effectively adapting such environmental conditions.

In this study, influencing environmental factors is considered as an important factor with sub-factors namely, market dynamism, wastage disposal and market diversity. Market dynamism is about the rapid changes and uncertainty in market and customer demand. This affects the smooth functioning of the manufacturer and its channel partners. Wastage disposal is an important aspect as the organizations must need to dispose the wastage adequately and without harming the environment. Apart from wastage disposal, organizations must take care that the distribution process must not harm the natural environment. Market diversity refers to the diversity in population having diversified set of needs and wants, due to different demographic profile, taste and preferences, attitudes, culture, psychological factors etc.

CONCLUSION

Distribution channel is as important as the other processes of an organization because if a product is not reaching to the end customer then there is no use of other business processes. Various researchers and practitioners have highlighted the important role played by the distributor (Lin and Chen, 2008; Mudambi and Aggarwal, 2003; Paun, 1997). Relational participation has its own benefits like a retailer can assist manufacturer in planning activities and a manufacturer can suggest some effective ways of offering the products (Wang and Kess, 2006). Therefore, building and maintaining strong relationships with channel partners is necessary for the smooth flow of a product from manufacturer to the final customer and also to effectively achieve firm’s goals and objectives (Morgan and Hunt, 1994; Payen et al., 2010; Sheth and Parvatiyar, 1995).

With the effective implementation of PRM practices one can build and maintain strong relationships with their channel partners and ease the process of making the products available to customers for manufacturers as well as for the distributors. It works in the direction of improving satisfaction level of ultimate customers and also the growth of all companies involved (Mirani et al., 2001; Murtaza and Shah, 2004; Rabin, 2002; Vlachopoulou et al., 2005).

The objective of this study includes enhancement and empowerment of channel partner relationships by providing a set of factors in terms of an index for efficient and effective use of PRM practices. This research work revealed PRM as a multi-dimensional construct comprising factors namely trust, satisfaction, relational communication, collaboration and environmental factors. The proposed measurement tool known as PRM index can be used by the manufacturers as well as the channel partners for evaluating the effectiveness of PRM implementation from time to time. After evaluation one can understand where the lacking element is and formulate strategies accordingly to enhance the level of benefits out of PRM practices.

LIMITATIONS AND FUTURE SCOPE

The limitation of this research work includes small sample size. If large and diversified sample size is used then one can expect a different set of results. The generalizability and robustness of the proposed PRM index can be tested by applying it in different industry and national context. Also this study can be replicated in different business segments across different countries for identifying the generalizability of the index.

ANNEXURE

Tables at a glance


Table 1	Table 2	Table 3	Table 4


Table 5	Table 6	Table 7	Table 8

Figures at a glance


Figure 1	Figure 2	Figure 3	Figure 4


Figure 5	Figure 6	Figure 7	Figure 8

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