Bert Rosenbloom

The boom of internet and network technology has fostered the emergence of a new type of advertising model: affiliate marketing. Affiliate marketing spend has reached to four billion dollar in the USA in 2015. Surprisingly, however, affiliate marketing is still considered as one of the least understood components of the online marketing mix. Also in academic research, affiliate marketing has received little attention. Affiliate marketing has been described as performance-based marketing, and the primary compensation models employed in affiliate marketing industry are performance-based and outcome-driven (e.g., pay-per-sale, pay-per-click, and pay-per-action). Those performance-based compensation methods compensate only on results rather than input, focus solely on direct performance (e.g., revenue) and ignore indirect performance (e.g., quality of customers), and fail to take affiliate’s risk attitude into account, and thus they have been proved to be insufficient and ineffective under certain circumstances. It calls for a better compensation system, which will go beyond the purely performance-based mechanism. In salesforce literature, control system is a broader concept than compensation method, which will also consider other control activities such as monitoring and evaluation, besides compensation. The design of salesforce control system could be either outcome-based or behavior-based. In this paper, we define Affiliate Control System (ACS) as: merchant’s set of procedures of monitoring, motivating, directing, and evaluating its affiliate partners. The outcome-based affiliate control system means merchant’s control procedures mainly focus on the outcomes and performance of affiliate (e.g., sales and traffic generated); the behavior-based affiliate control system emphasizes the importance of affiliate’s behaviors (e.g., tactics applied and resources devoted). Based on agency theory and transaction cost analysis, we studied the antecedents for choosing between outcome-based and behavior-based affiliate control system from three levels: environment, merchant characteristics and affiliate characteristics. Specifically, we propose that high environment uncertainty will encourage merchant to choose behavior-based over outcome-based affiliate control system; larger affiliate team size will increase merchant’s willingness to adopt behavioral-based control system due to improved efficiency, but this willingness is moderated by merchant’s risk attitude and its ability to measure affiliate’s behaviors; different types of affiliates will also have their own preferences: content provider prefers behavior-based control system, shopping incentivizer prefers outcome-based control system, while there is no preference for shopping assistant. The effect of affiliate’s own preferences on merchant’s decision of control system is moderated by affiliate power.

Retailers are the last and, thus, a crucial link in the marketing channel because they make goods available to millions of consumers where and when they want them on a daily basis. As consumer tastes and preferences are ever evolving, retailers devise new store formats and expand their operations in order to respond to changing consumer behavior trends. As a result, in many countries around the world, the retail industry has become saturated and retailers have sought to explore untapped market potential in foreign markets in a desire to grow. This has led to a heightened level of retail internationalization (RI), which refers to a retailer’s store presence in foreign markets (Reinartz et al. 2011; Vida et al. 2000). And despite the recent growth of online shopping, which enables international retailers to use e-commerce as a foreign entry mode, these retailers still face similar foreign market expansion impediments as retailers expanding internationally through brick-and-mortar stores. Because retailers directly interact with final consumers as well as suppliers, the RI process is a complex and particularly challenging task (Dawson 2007; Jackson and Sparks 2005; Jonsson and Foss 2011; Samiee 1993; Wrigley and Currah 2003). In order to be successful on the international scene, retailers need to gain an understanding of local culture and business practices, the regulatory environment and its impact on retail operations as well as the nature of retail competition in the host market because retail institutions are embedded in the environment within which retailing activities take place (Douglas and Craig 2011; Griffith 1998; Griffith et al. 2005; Samiee 1993, 1995). In fact, there are numerous examples of international retailer powers such as Wal-Mart and Dutch retailer Royal Ahold that have underestimated some of the aforementioned environmental factors when expanding abroad and have, as a result, suffered significant losses (Bianchi 2011; Christopherson 2007; Samiee 1995). Not surprisingly, in an effort to better understand the intricacies of RI and the road to a retailer’s successful internationalization efforts, marketing scholars have sought to tackle various RI issues. Specifically, we identify three key RI areas that have attracted scholarly interest: (1) RI process, (2) Small to Medium-sized retail internationalization (SME RI), and (3) RI and retail structure. However, RI research to date has left many unanswered questions and, thus, multiple research gaps to be filled. Moreover, to the best of our knowledge, no attempts have been made to synthesize RI research in an effort to further advance the field. Consequently, the purpose of this study is to, by providing a comprehensive review of RI research, identify the existing gaps in RI research as well as make suggestions for potential research venues going forward.

This article discusses some of the fundamental channel management issues that should be considered in new product planning to promote channel member support for new products. These are: 1) obtaining channel member input into new product planning, 2) enhancing the product’s acceptability to channel members in terms of margin requirements, 3) fitting the product into channel member assortments, 4) providing education and training and 5) detecting “problem products” before they reach the channel members.

As global competition has increased, there has been a renewed Interest in the effect of culture on marketing strategy (Aggarwal 1995; Black and Porter 1991; Bigoness and Blakely 1996; Dyer and Song 1997). The basic question, which has been argued for decades (see for instance, Buzzell 1968; Levitt 1983), is whether (or to what extent) management theories and practices are transferable across cultures (Douglas and Wind 1987). Some assert that globalization and changes in technology have lead to standardization, increasingly similar cultures, and universal management practices (Levitt 1983; Misawa 1987; Harpaz 1990; Ralston et al 1992). Others argue that despite the standardization of products and services, cultures are resistant to change, cultural differences are fairly stable over time, and different cultures require different management practices (Newman and Holten 1996; Hofstede 1980; 1991; Barkema and Vermeulen 1997; Erez 1986). Research findings have been mixed, but recently academicians have tended toward the view that culture does still matter. However, it has appeared that many organizations operate under the belief that cultures are converging and therefore, the transferability of management practices is a viable strategy (Callahan 1989; Marketing News June 1998). Thus, the impact of culture on marketing management strategies is still an important issue.

Marketing channels around the globe exist in an increasingly competitive environment. Consequently, many alternative channel structures and methods of distribution have emerged. Specifically, many firms have re-engineered their international marketing channel systems by forging cross-cultural alliances to respond quickly to new opportunities and threats. These international partnerships place increased emphasis on the fostering of cooperation among channel partners to achieve individual and systemic goals on a global scale. In a marketing channels context, the existence of a channel leader and the channel leader=s ability to effectively manage channel participants have grown increasingly important. In this environment, the question of the transferability of management theories and practices across cultures takes on greater importance. Despite the importance of channel leadership and channel partner cooperation, research on this construct has been limited in scope.

Introduction Wholesalers have been key participants in marketing channels for a very long time. Indeed, historical research shows that references were made to wholesalers in the Far East as long ago as 5,000 years (Beckman, Engle, and Buzzell 1959). By the time of ancient Greece wholesaling and wholesalers were recognized as a distinct branch of commerce and a specific word, 'emporos', was used to describe them. The emporos was the merchant who imported foreign goods and sold them 'by wholesale'. He usually owned ships and sold his goods to other wholesalers, broker-like agents, or retailers. During the times of the Roman Empire, the Middle Ages, the mercantilist period in Europe, right into the modern era ushered in by the Industrial Revolution, wholesaling continued to flourish. In the nineteenth century wholesalers played a vital role in the rapid economic development of the United States (Alderson 1949) and most other industrialized countries, and they continue to do so right up to the present time (Danenburg, Moncriet, and Taylor 1978; Rosenbloom 1983).