REWARD MANAGEMENT Article:

Channel Management through Selective Announcement of Reward and Punishment Decisions.

Summary: This article was publish in Journal of Management Journal of Business-to-Business Marketing, 19:129146, 2012. The article was written by RUI WANG , XIAOLING LI and MINXUE HUANG. In this article the writer said that a firm uses the reward and punishment strategies which are also called the channel strategies. Some members of the organization make other member aware of the policy of the channel by doing so the firm attempts to enlarge the strategies of rewarding and punishing. The strategies of reward and punishment are useful for firm to manage some channel partners. In this paper the social effect of theses strategies of reward and punishment are not examined. Firms selectively announce their reward and punishment decisions, hoping that these announcements can help encourage or prevent the channel behaviors of other channel members. This article provides a theoretical understanding of this business practice in channel management. The methodology used by the author was he conducts interview and a scenario experiment with the sale manager. . The experiment is a 2 (degree of institutionalization: high vs. low) 2 (power of distributors: powerful vs. less powerful) 2 (influence strategy: punishment vs. reward) design. The results develop through the interviews was that the firms announce the reward decision more than the punishment decision. Also, when institutionalization of marketing channel is low, firms tend to announce all their reward decisions, but they are reluctant to announce their punishment decisions regarding powerful channel members. When institutionalization of marketing channel is high.

We find that firms are more likely to announce rewards and punishments regarding less powerful channel members.Contribution: An important contribution of this research is that we are among the first to explore the social effects of power exercise in channel management. We extend the

channel power literature by arguing that selective announcements of power exercise (reward and punishment) can influence more channel members. Institutional theory and channel power theory to explain the underlying mechanisms. That is, the degree of institutionalization in marketing channel influences how firms make selective public announcements of their channel decisions.

BY: TAHREEM JAMIL SHAH