Supply Chain Contagion

Author(s): Richard G. McFarland, James M. Bloodgood and Janice M. Payan

Source: Journal of Marketing, Vol. 72, No. 2 (Mar., 2008), pp. 63-79
Published by: Sage Publications, Inc.
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 Richard G. McFarland, James M. Bloodgood, & Janice M. Payan

Supply Chain Contagion

Drawing on research from the interfirm relationship, marketing channels, operations management, and network
theory literature and on the basis of qualitative depth interviews, the authors identify a new phenomenon they call
"supply chain contagion." Supply chain contagion is the propagation of interfirm behaviors from one dyadic
relationship to an adjacent dyadic relationship within the supply chain. Contagion can occur inadvertently and with
or without the knowledge of the affected parties. Using institutional theory, the authors develop a conceptual model
that predicts the conditions under which contagion is likely to occur. Although contagion may take the form of any
number of interfirm behaviors, operationally, the authors focus on whether the downstream influence strategies that
manufacturers use with their dealers are imitated by these same dealers with end customers. They conduct
conclusive research using a sample of 151 vertically linked manufacturer-dealer-customer supply chain triads and
explain a large variance (R2 .30) in the use of downstream influence strategies in terms of supply chain contagion.
Given extensive prior empirical support for alternative antecedents to influence strategy usage, the explanatory
power of supply chain contagion is impressive and suggests that how intermediaries treat end customers is
explained, to a large degree, as the intermediaries simply imitating how their suppliers treated them. In addition to
the identification of a new theoretical concept, the study provides empirical support for the effects of both macro-
and microinstitutional factors on interfirm behavior. Specific factors that are positively related to the level of manifest
contagion are environmental uncertainty and the perceived similarity and frequency of contact between boundary
personnel; dependence asymmetry has a negative effect on manifest contagion. Managers and boundary-spanning
personnel who are aware of supply chain contagion effects should be better able to influence strategically the
behavior of channel partners and may be better inoculated against their own unintended imitation of other
organizations within their supply chain.

Keywords: supply chain, institutional theory, network theory, operations management, influence strategies

Research on interfirm governance and supply chain relationships (Anderson, Hdkansson, and Johanson 1994
management highlights the importance of interper- Moran 2005).
sonal relationships and factors such as trust, cooper- As Grewal and Dharwadkar (2002, p. 82) note, how-
ation, and relational norms (Granovetter 1985; Heide and ever, "researchers have largely overlooked the ubiquitous
John 1992; Lee, So, and Tang 2000). Network theorists sug- influence of the institutional environment and how inter-
organizational relationships such as marketing channels are
gest that the entire network of organizations within which
firms and individuals are embedded is a social network embedded in [the] larger social context." Wathne and Heide
(e.g., Grewal, Lilien, and Mallapragada 2006; Ibarra, Kil-note that prior research has focused predominantly
(2004)
duff, and Tsai 2005). Firms in these networks of relation-
on individual dyads when developing theory for business-
ships provide examples of behavior that is often imitated by
to-business relationships, with a ceteris paribus assumption
other network members (Henisz and Delios 2001). Institu-
for all other relationships. In expanding our view of the sup-
tional theory proposes that extensive noneconomic motiva-
ply chain beyond dyadic interactions and explicitly incorpo-
tions exist that strongly shape the form and behavior rating
of social contextual motivations for firm behavior, we
firms (Dacin, Oliver, and Roy 2007). Together, this implies
identify a phenomenon we call "supply chain contagion."
that a strong motivating force behind firm behavior is chain contagion is the propagation of interfirm
Supply
socially based and that it is embedded within personal behaviors rela- from one dyadic relationship to an adjacent
tionships, institutions, and interconnected organizational dyadic relationship within the supply chain.
Supply chain contagion can occur without the knowl-
edge of affected firms. This may be particularly problematic
Richard G. McFarland is Associate Professor and L.L. McAninch Chair of
when firms imitate behaviors that are inappropriate or even
Business Administration, Department of Marketing (e-mail: mcfarlan @
detrimental to their relationships with other firms. In the
[Link]), and James M. Bloodgood is an associate professor, Depart-
exploratory
ment of Management (e-mail: jblood @ [Link]), Kansas State University. stage of this study, we found that contagion is
common.
Janice M. Payan is Associate Professor of Marketing, Monfort College of However, it appears that supply chain members
are acting on the assumption that the effects of their actions
Business, University of Northern Colorado (e-mail: [Link]@unco.
edu). The authors thank Michael Ahearne, Ravi Dharwadkar, Ashwin with each other are confined to the dyad and do not spill
Joshi, Eric Higgins, James Higgins, Mark Pagell, James Reardon, Ray-
over into other relationships. Thus, for example, manufac-
mond Rody, and Yun-Oh Whang for their help. They are also grateful to the
turers and suppliers may unwittingly be influencing the
anonymous JM reviewers for their helpful guidance and insights. This arti-
downstream behaviors of organizations that handle and
cle was published while the first author was on sabbatical leave and a vis-
iting professor at Yonsei University in Seoul, Korea. market their products in ways that are detrimental to achiev-
ing their goals.

(c) 2008, American Marketing Association Journal of Marketing

ISSN: 0022-2429 (print), 1547-7185 (electronic) 63 Vol. 72 (March 2008), 63-79

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 Our theoretical framework, which predicts the condi- FIGURE 1
tions under which supply chain contagion is likely to occur, Triadic/Dual Dyadic Supply Chain Configuration
is guided by institutional theory. Grewal and Dharwadkar
(2002) develop a rich theoretical model that highlights the
important role of institutions in both the structure and the
behavior of organizations. They demonstrate the linkage
Manufacturer (A)
between institutional theory and the political economy in
explaining firm-level behavior within dyadic channel rela-
tionships. Specifically, their model develops propositions
that examine how institutional pressures "facilitate or hin- Dyad 1
der transactions that occur within [channel] dyads" (p. 89).
Although institutional theory originates primarily from a
macroenvironmental perspective (e.g., national culture,
regulatory institutions), we argue that it is important to Dealer (B)
consider both macro- and microinstitutional pressures in
explaining convergence in interfirm behaviors within the
supply chain.
Because contagion effects can have both positive and Dyad 2
negative outcomes in the supply chain, firms that are aware
of these effects should be better able to control the down-
stream interactions between their intermediaries and end
customers. Thus, the primary purpose of this article is to Customer (C)
identify and confirm the existence of supply chain conta-
gion and to examine its theoretical basis through the lens of
institutional theory. Operationally, we focus on whether the
downstream influence strategies that manufacturers use
Notes: Arrows indicate the direction of influence strategy behaviors
with their dealers are imitated by these dealers with end examined in this study.
customers. In the following sections, we discuss the back-
ground for this study and the in-depth field interviews that
we initially conducted to identify the contagion phenome- the first dyad and, in turn, a customer of that same dealer
non. Next, we review the literature and formulate our con- reports on the dealer's downstream actions in the second
ceptual framework and hypotheses. This is followed by the dyad (i.e., non-self-reported measures).
presentation of the empirical study, including a discussion
of the triadic sample and data collection, a test for measure-
Field Interviews
ment invariance across groups, and the results of hypothe-
ses testing. Finally, we discuss the theoretical and manage- Because the supply chain contagion phenomenon has not
rial implications of the study and offer directions for further been identified previously, we initially conducted 23 in-
research. depth field interviews with dealers and wholesalers from 14
industries in different regions of the United States to find
out more about this phenomenon (see Table 1). We focused
Background primarily on product-based wholesalers and, to a lesser
Figure 1 depicts a vertical supply chain that involves dyadic extent, on retailers; however, in addition, we included sev-
relationships at two levels. The first-level dyad involves the eral service providers to have a broadly diversified sample.
relationship between the manufacturer and the dealer (A -> We found that intermediaries frequently imitate the down-
B), and the second-level dyad involves the relationship stream behaviors of manufacturers/suppliers (e.g., Dyad 1
between the dealer and the end customer (B -> C). We in Figure 1) in their interactions with end customers (e.g.,
examine whether specific actions the manufacturer takes Dyad 2 in Figure 1). This occurs even when there appears to
with dealers are imitated by the dealers with their end cus- be little economic rationale for these actions, which raises
tomers. In our empirical study, operationally, we focus on the question, "Why do firms engage in these behaviors, par-
whether the downstream influence strategies that manufac-ticularly if there is no economic benefit for doing so?"
turers use with specific dealers result in imitative influence As an example of this phenomenon, a liquor manufac-
strategy usage by the same dealers with their downstream turer used a noncoercive influence strategy approach when
customers. Thus, contagion is present when the influence dealing with a downstream distributor, highlighting the
strategies used by B with C can be partially explained as value of its product as having an exclusive image (which
mirroring the influence strategies used by A with B. Our would presumably provide the distributor with a positive
study uses data from the agricultural farm equipment indus- way to distinguish itself from competitors). In turn, the dis-
try, in which dealers sell both products and services to com- tributor used this same "exclusive image" argument when
panies and consumers. The data are matched on a one-to- dealing with its customers, even when some customers did
one-to-one basis, in which, for example, a specific dealer not view this exclusivity as particularly valuable and, in
reports on the downstream actions of the manufacturer in some cases, even when customers considered it detrimental

64 / Journal of Marketing, March 2008

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 TABLE 1 they have done or are doing under similar circumstances.
Characteristics of In-Depth Field Interviews This process leads to convergence within organizational
fields and to the establishment of institutions. However, it is
Number of
also important to note that these processes often do not
Respondents occur consciously (March and Olsen 1984; Oliver 1991).
Industry in Category
After they are formed, institutions both empower and con-
Agricultural equipment dealers 2 strain the activities of organizations (Grewal and Dharwad-
College furniture dealer 1 kar 2002). To study these processes more deeply, it is
Construction supply wholesaler 2 important to distinguish between the pressures that compel
Copier machine dealer 1 convergence and the homogeneous forms or institutions that
Farm supply wholesaler 3
arise from these pressures (Frumkin and Kaplan 2006). In
Fastener, nuts, and bolts suppliers 4
Financial services broker 1 this study, the focus is on institutional pressures that lead to
Industrial equipment rentals 1 convergence in interfirm behaviors. Institutional pressures
Industrial equipment dealer 1 can arise from the presence of the regulatory environment,
Liquor and wine dealers 2 shared forms of cognitions, established relational norms,
Prison supply company 1 and so forth.
Retail boat dealer 1
Retail furniture dealer 1
Institutional theory was first developed in the fields of
Tool supply company 2 sociology and political science with contributions from
noted authors, including Peter Berger, Thomas Luckmann,
Emile Durkheim, Karl Marx, and Max Weber (Scott 1995).
Given its theoretical origins, institutional theory is often
(e.g., consumers who want to fit in rather than be different).
discussed and viewed from a macrosocietal level, and the
One owner/manager in the financial services industry even
management literature has primarily focused on the struc-
coined a term for supply chain contagion: "the matching
ture and form of firms. However, it is important to note that
principle." She noted that financial planners often use the
many authors have explicitly applied institutional theory to
same strategies and messages with their clients that their
explain individual firm-level behaviors, firm-to-firm behav-
broker dealers (in this case, analogous to their suppliers)
iors, and behaviors of individuals within firms (e.g.,
used with them. In some cases, this occurred even when it
DiMaggio and Powell 1983; Jepperson 1991; Scott 1983).
appeared that the messages relevant to the financial planner
Grewal and Dharwadkar (2002) demonstrate the applicabil-
were not relevant for the financial planner's customers. She
ity of institutional theory in explaining firm-level behavior
could only guess why this imitation occurred. One guess
within dyadic channel relationships. Chatterjee, Grewal,
was that the broker was considered credible, and the plan-
and Sambamurthy (2002, p. 68) state that institutions affect
ner may have thought that he or she could obtain credibility
technology assimilations within firms and note that institu-
with his or her own clients by imitating the broker's strate-
tions shape "the behaviors and cognitions of individuals
gies and messages.
within" firms. Nevertheless, much of this research, even
that which uses institutional theory to explain firm-level and
Theory interfirm-level behaviors, views institutions and institu-
tional pressures only at the macro level (e.g., national cul-
Institutional Theory ture, regulations and laws).
Despite this, many prominent institutional theorists hold
We examine the antecedents of supply chain contagion
that institutions originate and function at a variety of levels
using an institutional theoretical framework. Researchers
(e.g., DiMaggio and Powell 1991; Jepperson 1991; Scott
have increasingly acknowledged the importance of institu-
1983). Thus, for example, the source of institutionalization
tional theory in explaining firm behavior (e.g., Grewal,
can be an organizational field or a dyadic relationship. The
Comer, and Mehta 2001; Handelman and Arnold 1999;
Academy of Management Journal (in 2002, Vol. 45, Iss. 1)
Homburg, Workman, and Krohmer 1999; Srinivasan, Lilien,
and American Behaviorist Scientist (in 2006, Vol. 49, Iss. 7)
and Rangaswamy 2002), whereas others have called for
published special issues highlighting microinstitutional
empirical research examining key aspects of institutional analysis. Henisz and Delios (2001) state that firms tend to
theory in marketing channels (Grewal and Dharwadkar imitate organizations with which they have social ties.
2002). Because firm behaviors and interactions occur
Galaskiewicz and Wasserman (1989) find that though firms
within a social arena, a theoretical perspective that accounts may mimic those they perceive as successful, it is more
for the impact of the social environment, rather than one likely that firms will imitate organizations with which they
that applies an economically rational perspective alone, is have ties through boundary-spanning personnel. Zucker
critical for a more complete understanding of the causes (1977) notes that macrolevel and macrolevel institutions are
and effects of organizational behaviors within supply chain "inextricably intertwined" and that the process of institu-
systems (Scott 1995). tionalization occurs even at the interpersonal level. For this
People rarely start from scratch when undertaking a new reason, in this study, we focus on both macroinstitutional
course of action; rather, they are influenced by the presence pressures (e.g., environmental uncertainty) and microinsti-
of symbols and habits that exist within the environment tutional pressures that can develop through the interper-
(March and Simon 1958). People look to others to see what sonal interactions of boundary-spanning personnel (e.g.,

Supply Chain Contagion / 65

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frequency of contact) and the effects of these pressures on imitation, and normative imitation motivations. We describe
interfirm behaviors. each of these in turn.

Theoretical Framework Reflexive Imitation

Environmental
We refer to the three forms of imitation pressures or uncertainty makes it difficult for firms to
motives identified by DiMaggio and Powell (1991)select
as appropriate actions because the potential risks and
reflexive imitation, compliant imitation, and normativerewards
imi- of any actions are amplified by the uncertainty
(Greve 1998; March and Simon 1958; North 1990) and
tation motives.1 Each of these three motivations suggests
"previous
testable hypotheses relevant to predicting the occurrence of patterns of behavior are less informative" (John-
son, Sohi,
supply chain contagion. Reflexive imitation is a firm's stan- and Grewal 2004, p. 24). In situations in which a
dard response to environmental uncertainty. As DiMaggiofirm's best course of action is unclear, imitating the behav-
and Powell (1983) note, when faced with environmental ior of other firms within their network provides a low-cost
solution
uncertainty, firms may model their behavior on that of other to that uncertainty (Henisz and Delios 2001). Firms
are
firms. Organizations and individuals may also mimic simi- more likely to imitate other firms with which they have
direct
lar organizations or similar individuals to enhance their own network ties and interpersonal contact through
boundary-spanning
legitimacy. Thus, environmental uncertainty and similarity personnel (Galaskiewicz and Wasser-
man
are two primary foci of reflexive imitation. Compliant imi- 1989). In general, marketing tactics can be an impor-
tant
tation is a firm's response to interorganizational depen- ingredient for obtaining higher customer-based perfor-
dence. We focus primarily on the degree of cohesiveness mance (Zahay and Griffin 2004). Thus, imitating others'
stemming from dependencies between firms as the may be tactics considered a safe strategy in the presence of
antecedent to this type of imitation. Although firmsenvironmental
also uncertainty. Therefore, when environmental
comply with cultural and regulatory institutions, these uncertainty
insti- is present, dealers are more likely to imitate a
manufacturer's
tutions fall outside the domain of this study. Normative imi- use of influence strategies with other
tation stems from the high degree of socialization and parties.
inter-
action that often occurs between members of the same Reflexive imitation can also occur under conditions of
similarity. Perceived similarity among boundary-spanning
organizational environment; when these members interact,
personnel increases the likelihood that organizational prac-
they reinforce and spread norms of behavior among them-
selves (Scott 1983). tices are diffused among those individuals (Galaskiewicz
and Wasserman 1989; Strang and Meyer 1994). Individuals
Our theory holds that contagious behaviors can take
many forms; thus, although several other variables couldwho are similar are more likely to identify with one another
potentially have been used, we concentrate on influence and to form shared conceptions of social reality (Friedland
and Alford 1991). Identity has increasingly been acknowl-
strategies as the focal behaviors that may be imitated. Influ-
ence strategies are defined as the content of what is commu-edged as a salient attribute of organizations and organiza-
nicated between one channel member and another in an tional forms (Romanelli and Khessina 2005). Through
attempt to influence that firm's behaviors to achieve busi- interpretations of situations and events, individuals affect
ness objectives (Boyle et al. 1992; Payan and McFarland behavior of their organizations (Lant and Baum 1995;
the
2005). They are the communications through which channelPfeffer and Salancik 1978). As a result, greater imitation is
coordination takes place (Frazier and Rody 1991). As such, likely to occur with greater similarity between the firms'
influence strategies are ubiquitous and readily identifiableindividual boundary spanners (Suchman 1995).
by supply chain members (Frazier and Summers 1984). Hi: Environmental uncertainty is positively associated with
When actions are observed, imitation may occur, even when supply chain contagion in the form of dealers' imitation
of the manufacturer's use of downstream influence
organizations may not intend for this to happen (Greve
1998; Henisz and Delios 2001). Consequently, influence strategies.

strategies provide a readily identifiable and rich source of H2: Similarity between manufacturer and dealer boundary-
behaviors that can be examined in an institutional context to spanning personnel is positively associated with supply
chain contagion in the form of dealers' imitation of the
determine the extent to which contagion occurs. manufacturer's use of downstream influence strategies.

Compliant Imitation
Hypotheses
DiMaggio and Powell (1983) suggest that interorganiza-
In this section, we develop hypotheses that predict condi-
tional dependence can increase the likelihood of imitation
tions under which supply chain contagion is more or less
between organizations. Their primary view, as well as those
likely to occur on the basis of reflexive imitation, compliant
of other researchers (e.g., Pfeffer and Salancik 1978), is that
organizations imitate those they are dependent on to
increase their perceived validity by those organizations. We
1We use more straightforward terminology for what sociologists
suggest that in the case of interorganizational relationships,
have referred to as "isomorphism." Specifically, we refer to
cohesiveness between the organizations is paramount in
"mimetic isomorphic" as "reflexive imitation," to "coercive iso-
morphic" as "compliant imitation," and to "normative isomorphic"
determining the degree of compliant imitation (Galask-
as "normative imitation." We thank a knowledgeable reviewer foriewicz and Burt 1991). The marketing literature suggests
suggesting this terminology. that dependence is a bilateral construct that should be stud-

66 / Journal of Marketing, March 2008

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ied in terms of interdependence and dependence asymmetry legitimacy standards tend to develop as interaction levels
(Heide and John 1988; Kumar, Scheer, and Steenkamp increase (Aldrich and Fiol 1994; Leblebici et al. 1991).
1998).2 Interdependence (sometimes referred to as "depen- Such standards are used to make judgments about "whether
dence magnitude"; see Gundlach and Cadotte 1994) is the [a behavior] is 'the right thing to do'" (Suchman 1995, p.
sum of both organizations' dependence on each other, and 579). As a result, individuals who interact in the same orga-
dependence asymmetry refers to the difference between the nizational environment come to accept a narrower range of
organization's dependence on its partner and the partner's behaviors as the norm to attain or maintain legitimacy. As
dependence on the organization (Geyskens and Steenkamp this range of legitimate behaviors narrows, firms whose per-
1995). sonnel interact more frequently are increasingly likely to
The more dependent two organizations are on each display matching behaviors (Romanelli and Khessina
other (i.e., greater interdependence or magnitude), the more 2005).
cohesive the relationship is (Emerson 1962). As a relation- In addition to legitimacy motivations that can arise from
ship becomes more cohesive, the partners make more these straightforward interactions, the length of tenure of
investments with each other (Anderson and Weitz 1992) individuals in the same organizational environment will
and form deeper common interests (Kumar, Scheer, and also prescribe behaviors for firms (Larson 1977). As indus-
Steenkamp 1995), which leads to more cooperative inter- trial tenure increases, the promulgation of normative rules
actions (Dwyer, Schurr, and Oh 1987; Gundlach and about organizational behavior that emerges from formal
Cadotte 1994). As organizations increasingly cooperate education and other organizational networks (e.g., profes-
with each other, they tend to conform to each other in an sional and trade associations) increases. Key boundary-
attempt to maximize the usefulness of that cooperation spanning personnel across a range of organizations that
(Ostrom 2000). Consequently, the greater the inter- operate in the same environment often interact. These key
dependence, the more likely imitation is to occur. employees tend to have more similar professional beliefs
In contrast to the cohesion associated with greater inter- and are predisposed to accept the same organizational
dependence, higher levels of dependence asymmetry may behaviors (Perrow 1974). Thus, the longer an employee's
cause relationships to become unstable and dysfunctional tenure in an industrial field, the greater is the likelihood that
(Geyskens and Steenkamp 1995; Narayandas and Rangan the employee will follow prescriptive norms. In turn, these
2004). According to Emerson (1962), the instability sur- key employees influence the norms established in their own
faces because the less dependent organization may exercise firms regarding organizational behavior (Levitt and Nass
its power advantage in the relationship. Even without evi- 1989). As the range of possible behaviors narrows, supply
dence of the exercise of power, in an unbalanced relation- chain contagion is likely to occur to a greater extent.
ship, the more dependent organization may attempt to bal-
H5: Frequency of contact between manufacturer personnel and
ance the relationship by becoming less dependent (Mindlin dealer personnel is positively associated with supply chain
and Aldrich 1975). For example, the more dependent orga- contagion in the form of dealers' imitation of the manu-
nization may seek out relationships with alternative organi- facturer's use of downstream influence strategies.
zations or attempt autonomous acts to reduce its depen- H6: Industry tenure is positively associated with supply chain
dency on the less dependent organization (Ulrich and contagion in the form of dealers' imitation of the manu-
Barney 1984). With increased potential for the disintegra- facturer's use of downstream influence strategies.
tion of the relationship, the more dependent organization
feels less need to be compliant; cohesiveness is lower, and
imitation will be less likely to occur. Sample Design
The unit of analysis in this study is the vertical supply chain
H3: Interdependence is positively associated with supply chain
consisting of three members-that is, manufacturer-dealer-
contagion in the form of dealers' imitation of the
facturer's use of downstream influence strategies. customer triads (see Figure 1). We gained the cooperation
of a Fortune 500 agricultural equipment manufacturer that
H4: Dependence asymmetry is negatively associated with sup-
ply chain contagion in the form of dealers' imitation of the sells its products through a dealer network. In this setting,
manufacturer's use of downstream influence strategies. the dealer principal is the primary contact who interacts
with the manufacturer's territory manager (TM; each deal-
Normative Imitation
ership deals with only one TM) and, at the same time, is
characteristically the primary person who interacts with the
Because normative prescriptions of behavior develop
between firms over time, imitation of behavior between customer (we only include data in the study in which this
was the case). Business customers are typically represented
organizations in a given environment increases as the level
by an individual buyer who is responsible for making all
of their interactions and the interactions of their boundary-
spanning personnel increases (DiMaggio and Powell 1983; purchase decisions. Therefore, the key boundary spanner at
each level of the supply chain could be identified and
Scott 2001; Strang and Meyer 1994). Firms and their per-
matched on a one-to-one-to-one individual basis.
sonnel are motivated to achieve not only economic success
but also social legitimacy (Carroll and Delacroix 1982).We obtained contact information from the manufacturer
Specifically, collective beliefs and a common acceptancefor of 400 dealers that were randomly selected within each of
the manufacturer's 100 territories (4 per territory) as well as
the names and addresses of approximately three customers
2We modified and improved this section with the helpful guid-
ance of a knowledgeable reviewer. for each dealer, who were chosen at random from each

Supply Chain Contagion / 67

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dealer's customer database (we had accurate contact infor- dealer principal, and customer responses resulted in 151
mation for 1188 customers). Each customer made at least unique triads. Of these triads, we had two or more customer
one purchase over the previous year. In addition, the manu- responses within 60 triads. As we discuss subsequently,
facturer reported on the territory sales accounted for by when two or more responses were received for a single
each dealership so that interdependence and dependence dealer principal, we took the average of these multiple
asymmetry could later be calculated. Dealer principals and responses within each triad. We tested nonresponse bias
customers were simultaneously mailed packets that con- using a median split between early and late responders for
tained a questionnaire, a postage-paid return envelope, and each sample. There were no significant differences between
a signed cover letter that addressed the recipient by name. early and late responders in any sample.
Figure 2 summarizes the data collection process. Our methodology and sample design are consistent with
After three waves of mailings, we received 307 dealer the recommendations of Podsakoff and colleagues (2003)
principal responses; we eliminated 4 because of missing for reducing common methods biases. They recommend (1)
data, which left 303 usable responses. We obtained 436 obtaining measures of the predictor and criterion variables
usable customer responses with complete data. In total, we from different sources; (2) offering anonymity/confidential-
received one or more customer response that named 199 of ity to reduce the chances of responses that are socially
the 400 dealer principals. Matching of the manufacturer, desirable, lenient, acquiescent, and consistent with how

FIGURE 2
Triadic Data Collection Procedure

Collect data for 400 triads

(1 dealer per triad and
approximately 3 customers per triad)

Customer
responses
Manufacturer Dealer principal 436/1188
records responses (One or more
400/400 303/400 response for
199/400
dealer principals)

Merge

Complete triadic data for 151/400

possible triads with multiple customer
responses for 60 triads.

68 / Journal of Marketing, March 2008

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respondents believe researchers want them to respond; and appropriate and common in areas such as satisfactio
(3) informing the respondents that there are no correct or research (e.g., Bohlman et al. 2006), measuring psychic d
incorrect answers and that they should respond as honestly tance and cultural distance in cross-cultural settings (e.g
as possible to reduce evaluation apprehension. We followed Dow and Karunaratna 2006), and measuring an individual
these recommendations. In addition, our key variables are propensity to use coercive influence (e.g., Su, Fern, and
not self-reported. There are many benefits of non-self- 2003). Before calculating these scores, we ensured that th
reported measures, including the reduction of self-serving influence strategy measures were invariant across group
biases (McFarland, Challagalla, and Shervani 2006). we followed the procedure that Steenkamp and Baumgar
ner (1998) recommend (we discuss this procedure in greate
detail subsequently).
Measures
Table 2 lists the summary statistics and the correlation
matrix for all variables. The items, item reliabilities, and
factor reliabilities for all multi-item measures appear in the
(1) yi=5ISM[ISDijh],
Appendix. where

Dependent Variable i = influence strategy identifier, 1-6;

j = triad identifier, 1-151; and
We examine supply chain contagion in the form of down-
n = number of consumer responses for each triad, 1-3
stream influence strategy similarity between manufacturer
and dealer (A ---> B) and between dealer and customer (BIn--->
the majority of cases, we had single informants fo
C). We model manifest influence strategy contagion each (or,
of the three members of the triad; however, as we d
more simply, manifest contagion) as a second-ordercussed
com- previously, for 60 of the 151 triads, we had more
posite latent variable composed of the first-order influence
than one customer response.3 The customers report on on
strategy similarity measures (Jarvis, Mackenzie, and thePod-
dealers' behaviors; thus, they can be viewed as ke
sakoff 2003) (see Equation 1). We used the influenceinformants.
strat- As Equation 1 shows, in these cases, we f
egy measures that McFarland, Challagalla, and Shervani
lowed convention and aggregated these responses using t
(2006) developed. These six measures are applicable
meanto(e.g., Bell, Menguc, and Stefani 2004; Homburg and
both channel coordination and sales settings. "Information
Furst 2005; Kumar, Scheer, and Steenkamp 1995, 1998
exchange" is a communication process in which informa-
To ensure that aggregation is appropriate, the within-gro
tion about general business issues is exchanged but variation
no spe- should be smaller than the between-group vari
cific requests are made. "Recommendations" are tion; logical
in other words, we expect that the data will exhibi
arguments that explain the benefits the target will achieve if
high degree of interrater reliability (James 1982). T
the target complies with the request of the source of influ- this issue, we conducted several analytic tes
explore
ence. With "promises," the source of influence offers a spe-1976; Bliese 2000; James 1982). As Table 3
(Bartko
cific reward or inducement that is contingent on thedepicts,
target'sthe analyses of variance are significant for each of
compliance with the source's request. "Threats" are the
implied
variables the customers reported, and each eta-square
or stated negative sanctions or consequences that will occur
(12) exceeds the threshold of .20, indicating that within-
if the target does not comply with the source's group
[Link] is smaller than the between-group variation
"Ingratiation" involves the use of behaviors that areMenguc, and Stefani 2004; Bliese 2000). The inter-
(Bell,
designed to enhance interpersonal attractiveness to gain
class the
correlations (ICC) also support aggregation. The
approbation of others and includes actions such as praising,
ICC(1) coefficient can be viewed as the consistency of the
acting humble, and so forth. "Inspirational appeals" attempt
responses and, in general, should exceed .20. The ICC(2)
to elicit an emotional response, such as enthusiasm, can beand
viewed as the reliability of the within-group means
strive to excite the target about the source's request.(Bell, Menguc, and Stefani 2004; Bliese 2000). Together,
We scored all influence strategy items on a five-point
this indicates strong support for the legitimacy of aggregat-
scale anchored by never uses and always uses. To eliminate
ing these responses.5
the problems associated with self-reported measures and to
Manifest contagion is modeled as a composite latent
reduce common methods biases, we asked the dealers tospecified as what Jarvis, Mackenzie, and Podsakoff
variable
rate the frequency with which the manufacturer used influ-
(2003) describe as a Type II, reflective first-order, formative
ence strategies with them (labeled ISM in Equation 1), and
second-order model. The six first-order factors are mea-
we asked the customers to rate the frequency with which
the dealers used influence strategies with them (labeled ISD
in Equation 1). We determined the similarity of use for each
3We 1.
of the six influence strategies as illustrated in Equation thank a knowledgeable reviewer for suggesting this.
4As one reviewer noted, alternatives to data aggregation might
Higher scores indicate greater imitative use of influence
include repeated measures methodologies. However, the reviewer
strategies. Peter, Churchill, and Brown (1993) note that
noted that these techniques are unlikely to yield substantially dif-
similarity scores should be used with caution because of
ferent results than were achieved by data aggregation in our case.
problems such as the possibility of inflated reliability
5We conducted these tests with the helpful guidance of a knowl-
scores. However, for many research scenarios, their use isreviewer.
edgeable

Supply Chain Contagion / 69

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 TABLE2

DescriptvSa,ColnMxdfgFL

[Link] 6.Industrye13-08 [Link]-14208 [Link]-261407 [Link]-01237

[Link] 3.Interdpc09 [Link]-02 [Link]-0231

[Link]-85367 1.Promise074-593 [Link]-05486 [Link]-0287594 14.Inspiratole02-763985

IndeptVaribls ContrlVaibes InfluecStragyimVbs Manifestcog.209-531647 M3.864109527 SD.807632519 alnfuecstrgyodimz,bhpq. Notes:p-.05fral>+16,2nd

Varibles1234567890

70 / Journal of Marketing, March 2008

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 TABLE 3
Tests for the Appropriateness of Aggregating Multi-Informant Customer Data

Dealers Influence Strategy F(59, 70) for Analyses

Usage Reported by Customer of Variance 12 ICC(1) ICC(2)

Information exchange 3.870** .77 .59 .74

Recommendations 2.390** .67 .41 .58
Promises 1.664* .58 .25 .40
Threats 2.931"" .71 .49 .66
Ingratiation 1.728" .59 .27 .42
Inspirational appeals 2.688** .69 .46 .63
*p< .05.
""p< .01.

sured as in Equation 1. The

length of time manifest
they have been workingcontagion
in their current
meets the standard definition of a formative construct profession.
because it represents a combination of factors that are addi-
Control variables. We measured commitment and
tive rather than reflective or caused by the latent factor (For-
expectations of continuing the relationship from the deal-
nell and Bookstein 1982). Thus, the model does not assume
ers' perspective with regard to the manufacturer. We
that similarity in the use of any one influence strategy is
included these relationship variables because of their poten-
caused by a single underlying construct but rather that
tial impact on behaviors and perceptions in the supply
manifest influence strategy contagion is a linear combina-
chain. We based these multi-item scales on the work of
tion of each influence strategy similarity factor (Diaman-
Kumar, Scheer, and Steenkamp (1995). These measures use
topoulos and Winklhofer 2001).
five-point Likert-type scales with scale anchors of "strongly
Independent and Control Variables disagree" and "strongly agree."

Environmental uncertainty. This multi-item scale mea-

Measurement Analysis
sures the difficulty that firms have in making predictions
We analyzed one confirmatory factor analysis (CFA) model
about future business conditions in their industry. We
for all multi-item measures reported by dealers and one
adapted our measures from Celly and Frazier's (1996)
CFA for the customer respondents using maximum likeli-
study, using a five-point semantic differential scale. This
hood estimation in LISREL 8.54 (Joreskog and Sorbom
measure was based on the dealers' responses.
1996). The models demonstrated good fit. For the first
Manufacturer-dealer similarity. This variable measures
model, x2 = 748, with 610 degrees of freedom; root mean
the perceived similarity of the dealer with the TM fromsquare
the error of approximation (RMSEA) = .039; non-
dealer's perception. We adapted this multi-item scale from
normed fit index (NNFI) = .96; comparative fit index
the work of Doney and Cannon (1997) and modified it = .96; and incremental fit index (IFI) = .96. For the
(CFI)
slightly for context; we used a five-point Likert-type scale
second model, x2 = 367, with 184 degrees of freedom;
with scale anchors "strongly disagree" and "strongly agree."
RMSEA = .067; NNFI = .95; CFI = .96; and IFI = .96.
We also conducted a CFA on the second-order formative
Interdependence and dependence asymmetry. We asked
the manufacturer to report the percentage of territory measure,
sales manifest contagion; we discuss these results
subsequently.
accounted for by each dealership in the sample. Similarly,
we asked each dealer principal to report the percentage ofFor all multi-item measures, composite trait reliabilities
exceeded the recommended cutoff criterion of .70, and the
total purchases made from the focal manufacturer. Follow-
ing precedent (e.g., Gundlach and Cadotte 1994; Jap variance
and extracted for each factor exceeded the .50 cutoff

Ganesan 2000; Lusch and Brown 1996) and in line with criterion
the that Fornell and Larcker (1981) suggest (except for
ingratiation,
condition that dependence should be judged from both sides which had a variance extracted of .49), indicat-
of a dyad, we determined total dependence by summing ing that the measures are internally consistent. All item
loadings
these two values, and we determined asymmetry by taking were significant for each factor, demonstrating
convergent validity (Anderson and Gerbing 1988). We
the absolute difference between them (Geyskens and
Steenkamp 1995; Kumar, Scheer, and Steenkamp 1995). demonstrated discriminant validity following the proce-
dures of Fornell and Larcker (1981), and we demonstrated
Frequency of contact. This variable measures the per-
unidimensionality following the guidelines of Gerbing and
ceived frequency of contact between the dealer and the TM
Anderson (1988).
from the dealer's perspective. We adapted this multi-item
Grewal, Cote, and Baumgartner (2004) highlight the
measure from the work of Doney and Cannon (1997); we
problems that the presence of multicollinearity can create
used a five-point Likert-type scale anchored by "strongly
when structural equation modeling procedures are used.
disagree" and "strongly agree."
They recommend checking for multicollinearity by examin-
Industry tenure. This is a single-item measure that asks
ing the strength of correlations between constructs and con-
the dealer principals to indicate in years and months the
ducting Fornell and Larcker's (1981) test for discriminant

Supply Chain Contagion / 71

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validity. It does not appear that multicollinearity is a threat Results
to the validity of the current results.
Test of Hypotheses
Test of Measurement Invariance Across
We tested the hypotheses using partial least squares (PLS)
Response Groups structural equation modeling with PLS-Graph 3.0 (Chin
2001).
When difference scores between groups are calculated, thePartial least squares is a non-covariance-based struc-
tural equation modeling procedure (Fornell and Bookstein
results are meaningful only if the measures are invariant
across groups (Steenkamp and Baumgartner 1998).1982)
Thus,commonly used in the marketing literature (e.g.,
we tested for measurement invariance for the influence Hennig-Thurau et al. 2006; Johnson, Herrmann, and Huber
strategies across groups. Steenkamp and Baumgartner rec-2006; Smith and Barclay 1997). A strength of PLS is its
ommend testing for both configural invariance and metricability to incorporate formative scales, as does our model
invariance when similarity scores are calculated. Configural(see Dellande, Gilly, and Grahm 2004; Ulaga and Eggert
invariance exists when the measures have the same factor 2006; White, Varadarajan, and Dacin 2003). Because PLS is
structure across groups. Testing this involves an examina- a nonparametric procedure (Wold 1985), the structural
tion of the degree to which the observed variables fit the model is assessed using the R-square for dependent con-
latent constructs in each group, allowing factor loadings to structs and the size, t-statistics, and significance level of the
vary freely within each group. Metric invariance exists structural path coefficients. Standard errors and t-statistics
when both the factor structure and the scale of each are estimated using the bootstrap resampling procedure
observed variable are equivalent. Testing metric invariancewith a resample size of 200, as Chin (1998) recommends.
involves an examination of the equality of a construct's Initially, we conducted a CFA for the higher-order for-
mative construct manifest contagion, using the six influence
metrics across groups through the use of hierarchical nested
multigroup CFA models, in which the fit statistics of thestrategy similarities factors as first-order constructs with
PLS. We used the hierarchical component procedure that
baseline unconstrained configural invariance model are
examined and then compared with the fit statistics of the Wold (1985) recommends for estimating the second-order
constrained metric invariance model. For the baseline con- factor (Chin 1998). The composite reliability is .73. All
first-order factors load significantly on the higher-order
figural invariance model, x2 = 703, with 388 degrees of
freedom; CFI = .9562; and gamma hat = .9080, which indi-construct (p < .001), indicating convergent validity (see
Table 2). We indicate discriminant validity following the
cates that the model has acceptable fit and meets the test for
configural invariance. For the constrained metric invarianceprocedures of Fornell and Larcker (1981).
model, x2 = 728, with 404 degrees of freedom; CFI = Next, we estimated the structural model. Table 4 lists
the path loadings and their t-statistics. Because the promises
.9510; and gamma hat = .9067. The differences in the fit
influence strategy did not load significantly on manifest
indexes for the hierarchical nested models are Axe = 25,
contagion in the full structural model, we dropped this fac-
with 16 degrees of freedom (nonsignificant at p = .05);
\CFI = -.0052; and \gamma hat = -.0069. This indicatestor from the model. For each multi-item factor, the compos-
that the null hypothesis of metric invariance should not beite reliability is _-.86, and the average variance extracted
rejected (Steenkamp and Baumgartner 1998). Thus, theis -.61. The R-square for the model is .30. Four of the six
influence strategy measures demonstrate both configuralhypotheses are supported. H1 predicted a positive relation-
invariance and metric invariance across the dealer and the ship between environmental uncertainty and manifest con-
customer samples, and difference scores are meaningful. tagion; the standardized path coefficient (SPC) was .202

TABLE 4
Results of PLS Analysis on the Dependent Variable Manifest Contagion
Imitation Predicted Standardized Hypothesis
Hypothesis Motivation Direction Path Loading Supported?

Independent Variable
Environmental uncertainty H1 Reflexive + .202* Yes
Manufacturer-dealer similarity H2 Reflexive + .286** Yes
Interdependence H3 Compliant + -.001 No
Dependence asymmetry H4 Compliant - -.233* Yes
Frequency of contact H5 Normative + .270** Yes
Industry tenure H6 Normative + -.097 No
Control Variable
Commitment Control -.021 N.A.
Continuance Control -.061 N.A.
"cp < .05.
**p< .01.
Notes: N.A. = not applicable.

72 / Journal of Marketing, March 2008

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(p < .05), indicating support for the hypothesis. H2 pre- research has predominantly focused on individual d
dicted a positive relationship between manufacturer-dealer when developing theory for supply chain relations
similarity and manifest contagion; this hypothesis is also (Wathne and Heide 2004). Although a dyadic focus
supported (SPC = .286, p < .01). Interdependence (H3) was important in the process of theory development, the lim
not significantly related to manifest contagion; however, tion of taking a purely dyadic focus is that critical fac
dependence asymmetry (H4) was negatively related to within the system or network in which organizations o
manifest contagion, as we hypothesized (SPC = -.233, p < ate are not in a researcher's consideration set. A strengt
.05). H5 predicted a positive relationship between the fre- this study is the use of data from all three levels of the
quency of contact between manufacturer-dealer and mani- ply chain. Our research approach enables us to identify
fest contagion; this hypothesis is also supported (SPC = unique phenomenon that would not be possible without
.270, p < .01). Industry tenure (H6) was not significantly triadic study design. Focusing on the supply chain, ins
related to manifest contagion. of the status quo of dyadic, reciprocal interactions betw
firms, enables us to identify and support empirically
Summary of Findings existence of supply chain contagion (i.e., the spread
The results of the conclusive study support the conclusions interfirm behaviors from one dyad to an adjacent dya
we drew from our in-depth field interviews. That is, the supply chain). Our model suggests that how interm
although the literature has not discussed the idea of supply aries treat end customers is explained to a great extent
chain contagion, we show that intermediaries often imitate the intermediaries simply imitating how they were tre
the behaviors of their suppliers. One interviewee even themselves by their suppliers.
referred to this as the "matching principal." A large variance Our theoretical framework, which predicts the
(R2 = .30) in the use of downstream influence strategies is antecedents that make supply chain contagion more or less
explained as supply chain contagion. An implicit assump- likely to occur, has an institutional theoretical foundation.
tion that firms are likely to make is that the effects of influ- Institutional theory explicitly acknowledges that the effects
ence strategy behaviors are confined to the dyadic relation- of firm behavior are not confined to dyadic relationships
ship. Given the extensive and sustained attention in the and that the behaviors of organizations are influenced by
literature on marketing influence strategies (e.g., Boyle and their larger social context. Recognizing the importance of
the institutional environment as a determinant of channel
Dwyer 1995; Boyle et al. 1992; Frazier and Rody 1991;
Frazier and Summers 1984; McFarland, Challagalla, and behaviors, processes, and structures, Grewel and Dharwad-
Shervani 2006; Payan and McFarland 2005), the explana- kar (2002) call for empirical research on key aspects of the
institutional environment in channels of distribution. Our
tory power of supply chain contagion is impressive and sug-
research is consistent with and builds on Grewel and Dhar-
gests that this newly identified phenomenon is important.
This phenomenon may also occur with other firm behaviors wadkar's theoretical article. Institutional theory has been
in addition to influence strategies. increasingly acknowledged as important in explaining firm
In addition to supporting the existence of supply chain behavior (e.g., Grewal, Comer, and Mehta 2001; Handel-
contagion, there is solid support for our conceptual frame- man and Arnold 1999; Homburg, Workman, and Krohmer
work. The two reflexive imitation hypotheses were sup- 1999; Srinivasan, Lilien, and Rangaswamy 2002), and it has
ported, and one of two hypotheses were supported for both particular relevance in the context of this study; it suggests
compliant and normative imitation pressures. To reiterate, that organizations operate within a social network and that
Hi (environmental uncertainty) and H2 (similarity) were imitation between organizations occurs under (1) reflexive
tests of reflexive imitation, H3 (interdependence) and H4 conditions of environmental uncertainty and similarity and
(dependence asymmetry) were tests of compliant imitation, (2) normative conditions of contact frequency but is less
and H5 (frequency of contact) and H6 (industry tenure) were likely to occur under (3) compliant (or noncompliant) con-
tests of normative imitation. Each of these factors might ditions of dependence asymmetry.
influence contagion. However, the influence of these factors This study makes several contributions. First, this study
may vary depending on situational conditions. As we pre- develops the supply chain contagion concept, which, to the
dicted, in our sample, environmental uncertainty and simi- best of our knowledge, is a novel concept. As a result, this
larity characteristics (reflexive imitation) as well as fre- study contributes to the understanding of how firm behav-
quency of contact (normative imitation) had a positive iors become imitated in the supply chain. Second, through
influence on dealers imitating manufacturers, whereas the use of institutional theory, we described these effects as
dependence asymmetry (compliant imitation) had a nega- stemming from direct interactions between firms. Notably,
tive influence. these interactions can stimulate the participants to imitate
one dyadic partner when dealing with other partners in
future interactions. Our field interviews suggest that this
Discussion imitation is typically not part of the planned response by
Management of the supply chain continues todyadic receive
partners; nonetheless, it may have both positive and
increasing attention as organizations look fornegative
ways to implications. Thus, contagion may occur inadver-
improve the creation, production, distribution, and market-
tently, and it may occur both with or without the knowledge
ing of products (e.g., Lambert and Cooper 2000; ofLee, So,
the involved party. Our field interviews also suggest that
and Tang 2000; Schroeder, Bates, and Junttila 2002). Sup-
supply chain contagion can occur with wholesalers, retail-
ply chains may contain many organizational levels,
ers, andbut
service providers. Third, we highlight the impor-

Supply Chain Contagion / 73

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tance of institutional theory in providing a more complete pointed to problems associated with similarity/difference
understanding of the behavior of firms in the supply chain. scores; thus, examining the phenomena of supply chain
From our sample, we found that supply chain members' contagion without the use of difference scores is important
behavior was influenced by institutional pressures. Specifi- to provide additional empirical support for our findings.
cally, in some cases, the manufacturer's interactions with We reiterate that we chose the six factors investigated in
dealers induced dealers to imitate its behaviors. Institutional
this study as predictors of supply chain contagion on the
theory provides a convincing explanation for the social basis of institutional theory. We must also acknowledge that
environmental effects on firm behavior. Because firm other, noneconomic factors might influence the extent of
contagion within the supply chain. For example, a potential
behavior occurs in a social environment, institutional theory
environmental characteristic could be the percentage of
can advance the understanding of firm behavior in the sup-
other firms that already engage in imitated behaviors (Greve
ply chain beyond simple dyadic-based explanations. Fourth,
1996; Henisz and Delios 2001). Firm characteristics, such
we focus on the importance of considering both macroenvi-
as age, size, and strategy, may influence relationships, as
ronmental and microenvironmental institutions in explain-
institutional theory posits (Guillen 2002). Older firms might
ing behaviors within the supply chain. The results of our
be able to rely more on experience and might be more prone
empirical study lend support to this approach. Finally, we
used influence strategies as a proxy for determining theto habitual behavior than newer firms. Larger firms might
be less likely to imitate smaller firms. In addition, there
level of contagion within a supply chain, so our results have
important implications for influence strategy researchers. may be an array of interactions among these factors that
Until now, influence strategy research has focused largely could shed light on supply chain contagion.
on bilateral or unilateral antecedents of influence [Link] of supply chain contagion are also of interest.
Supply chain contagion may occur for various reasons and
Our model suggests that effects beyond the dyad are critical
without the recognition of organizations or the resultant
determinants of the use of influence strategies within chan-
nels of distribution. In summary, these contributions performance implications. To assess the nature of the rela-
demonstrate the importance of looking outside the focaltionship between supply chain contagion and organizational
dyad when examining certain phenomena. performance, researchers could examine multiple industries
with a variety of different characteristics. In addition, atten-
Limitations and Further Implications for Research tion could be given to the specific types of organizations
being imitated. For example, competitors, suppliers, and
Several limitations of this study may affect the generaliz-
government organizations could all be sources of behavior
ability of its results. The characteristics of the market in
subject to imitation. Just how far contagion carries is also of
which our study participants operate may not be equivalent
importance to researchers. Potentially, both multilevel con-
in other industries. The particular mix of influence strate-
tagion and contagion in lateral and network relationships
gies used likely varies across industries; therefore, our find-
may exist. Researchers may find a reduction in supply chain
ings may not generalize to other industries. Continued
contagion at each additional level of the supply chain in
research in a variety of industries might help determine
some industries and a stable or increased rate in other
industry-specific effects. Although influence strategies are
industries. In addition, although this study examined supply
perhaps the strongest and most logical choice for examining
chain contagion down the supply chain, a similar process
supply chain contagion, other dependent variables might
may occur moving upstream. A notable implication of the
prove useful in the assessment of these effects in the supply
chain. study is the importance of placing dyadic encounters within
a larger context. Dyadic interactions are still worthy of
We used a general measure of environmental uncer-
study because factors within the dyadic interaction still
tainty in this study (e.g., Celly and Frazier 1996). However,
directly influence the outcomes of the interaction. However,
although we found support for the effect of environmental
examination of the effects beyond the dyad has shown the
uncertainty on contagion, environmental uncertainty has
also been identified as a multidimensional construct in the existence of more complex phenomena than is frequently
assumed.
literature. Some examples include demand or volume
uncertainty, technological uncertainty, goal ambiguity, and
Managerial Implications
performance ambiguity (see, e.g., Grewal and Tansuhaj
2001; Heidi and John 1990). To provide additional clarity, Our findings should be of some assistance to managers as
further research should examine the effects of these different well. In general, managers should attend more to the long-
forms of uncertainty on contagion. In addition, a more direct term outcomes of their organizations' actions, which can
measure of professionalism than industry tenure might be have ongoing effects by influencing other organizations to
more appropriate. Although we found frequency of contact act similarly. Whether or not managers desire their organi-
to be a significant normative imitation pressure, its compan- zations' actions to be imitated and passed on, these actions
ion measure, industry tenure, was not. DiMaggio and Pow- may occur nonetheless. By acknowledging that supply
ell (1983) discuss professionalism in the context of mem- chain contagion might occur, managers should be better
bership in associations, participation in industry-sponsored able to structure their behaviors to provide the best chance
training programs, and so forth. Future studies should for imitation when it is desired and the least chance for imi-
examine whether alternative variables for professionalism tation when it is not. For example, by increasing exposure
are antecedents to contagion. Some scholars have also of their organizations' behaviors to other organizations,

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managers can assist other organizations in copying the supply chain. Competitors may also be able to capitalize on
behaviors. Alternatively, hiding the behaviors can help pre- an increased awareness and understanding of this process.
vent them from being imitated. Manufacturers and suppliers
may be more hesitant to use coercive influence strategies if Conclusions
they will propagate down the channel because their use may
This study answers Grewal and Dharwadkar's (2002)
be detrimental to downstream relationships (Payan and
for research that examines firm behavior in the supply ch
McFarland 2005).
due to institutional environmental effects. In doing so, t
Our in-depth field interviews lead us to the conclusion
study breaks new ground in several areas and sheds light
that when contagion occurs, it may lead to suboptimal
some important topics. We found that there are indeed c
actions. Institutional theory suggests that contagion can
tagion effects from the manufacturer-dealer dyad to th
occur without firms' knowledge, and our field interviews
dealer-customer dyad. Manufacturers and dealers sho
appeared to confirm this. There are several notable issues
make themselves aware of these effects and more carefu
that arise when the behaviors firms engage in within a
monitor the influence strategies (and other behaviors) th
dyadic interaction are passed on by their dyadic partner. An
use. For example, manufacturers may believe that it
obvious issue is that firms may need to evaluate the likeli-
appropriate to use coercive influence strategies, such
hood that they themselves are engaging in inappropriate
threats, with their dealers, but it is unlikely that manufact
imitation of channel partner behaviors. Because firms may
ers will desire their dealers to use these same strategies w
lose control of the spread of behaviors, they should consider
the final customer (Gundlach and Cadotte 1994). Acknow
in advance whether it is in their best interests for the behav-
edging that supply chain contagion occurs in a manner th
ior to spread in this manner. Managers and boundary-
is consistent with the principles of institutional theory p
spanning personnel who are aware of supply chain conta-
vides important implications for further supply ch
gion effects may be better inoculated against their own
research and practice.
unintended imitation of other organizations within their

APPENDIX
Multi-Item Scales

Standardized Item Composite Reliability

Factor Loading (Variance Extracted)

Dealer Customer Dealer Customer

Influence Strategies Scale Itemsa (Manufacturers' TMs' Use of Influence

Strategies with Dealers Reported by Dealers/Dealers' Use of Influence
Strategies with Customers Reported by Customers)
Information Exchange .86 .84
The TM/dealer ... (.62) (.57)
1. Asked about your long-term purchasing goals. .64 .71
2. Presented information related to your various purchase options. .87 .67
3. Asked if there were any problems or needs he or she could help
address. .79 .71
4. Talked about the
services. .82 .90

Recommendations .89 .89

The TM/dealer ... (.67) (.67)
1. Made it clear that by following h
business would benefit. .75 .85
2. Outlined the evidence for expecting succe
suggestions. .73 .88
3. Provided a clear picture of
recommended course of action would have. .88 .80
4. Made a logical argument supporting his or her specific suggestions. .91 .73
Promises .88 .85
The TM/dealer ... (.65) (.59)
1. Made promises to give something b
request (e.g., discounts, quicker delivery). .69 .76
2. Offered additional benefits for your business after you had been
initially reluctant to agree to his or her terms. .90 .88
3. Offered to provide incentives to your business for agreeing to his or
her purchase requests. .90 .90
4. Offered a specific deal for your business to ch
certain issues. .72 .45

Supply Ch

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 APPENDIX
Continued

Standardized Item Composite Reliability

Factor Loading (Variance Extracted)

Dealer Customer Dealer Customer

Threats .93 .89

The TM/dealer ... (.76) (.67)
1. Stated that you would stop receiv
her proposals were ignored. .66 .98
2. Advised that he or she would stop doing business with y
company if his or her requests were not followed. .92 .92
3. Threatened to become uncooperative if you failed to agree to his or
her demands. .96 .75
4. Indicated he or she could "
his or her requests were not met. .92 .56

Ingratiation .74 .75

The TM/dealer ... (.49) (.50)
1. Complimented and praised your achievements. .73 .72
2. Discussed shared interests and/or hobbies prior to discussing sales
issues. .64 .75
3. Made you feel go
pitch. .72 .64

Inspirational Appeals .82 .76

The TM/dealer ... (.61) (.51)
1. Described the use of his or he
and conviction. .86 .78
2. Tried to get you excited about what he or she was selling. .88 .75
3. Appealed to your values and ideals when asking for your business. .56 .61

Standardized Item Composite Reliability

Factor Loading (Variance Extracted)
Independent and Control Variable Scale Items
Environmental Uncertainty .80
(Five-Point Semantic Differential Scale. Dealer Responses.) (.50)
How would you describe the market environment in which your business
operates?
1. "Predictable/unpredictable" .71
2. "Easy to monitor trends/difficult to monitor trends" .58
3. "Sales volume is stable/sales volume is volatile" 80.
4. "Sales forecasts are quite accurate/sales forecasts are quite
inaccurate" .71

Manufacturer-Dealer Similarityb .88

(Five-Point Likert-Type Scale. Dealer Responses.) (.70)
1. Shares similar interests with me. .86
The TM ...

2. Is very similar to me. .84

3. Has similar values to mine. .81

Frequency of Contact with Manufacture .86

(Five-Point Likert-Type Scale. Dealer Responses.) (.67)
The TM ...
1. Often visits my place of business. .71
2. Makes more calls than other suppliers. .74
3. Frequently makes sales calls. .98

Commitment to the Manufacture .92

(Five-Point Likert-Type Scale. Dealer Responses.) (.78)
1. Even if we could, we would not drop this supplier because we like
being associated with them. .82
2. We want to continue as a customer of this firm, because w
genuinely enjoy our relationship with them. .94
3. Our positive feelings toward this company are a major reason we
continue to work with them. .89

76 / Journal of Marketing, March 2008

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 APPENDIX
Continued

Standardized Item Composite Reliability

Factor Loading (Variance Extracted)

Expectations of Continuing the Relationship with the Manufacturetb .79

(Five-Point Likert-Type Scale. Dealer Responses.) (.56)
1. We expect the relationship with this company to continue for a long
time. .85
2. Renewing the relationship with this company is virtually automatic. .79
3. In the next two years, we are likely to terminate this relationship.
(reverse coded) .59
altems were measured on a five-point
bScale anchors are 1 = "strongly disagr

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