Multidyadic Industrial Channels: Understanding Component Supplier Profits and Original Equipment Manufacturer Behavior
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Industrial component suppliers (CSs) work to enhance profitability by building brand differentiation with original equipment manufacturers (OEMs) and indirect industrial buyers (IIBs) through their marketing investments to each member. However, as a CS increases its marketing investments to its IIB, the OEM's profit position is threatened, motivating the OEM to respond with aligning or opposing behavior. The results from a three-study, multimethod design indicate that a CS's strategy of allocating its marketing investments between its OEM and IIB increases its brand differentiation, which allows it to capture increased profits subject to conditions of uncertainty. However, the results also demonstrate that the OEM does not sit idly by as its CS invests in building brand differentiation with the IIB; rather, it reacts with both aligning and opposing behaviors to benefit from the CS's investments as well as offset the CS's gains.
