Converting from Independent to Employee Salesforces: The Role of Perceived Switching Costs

Abstract

A study was conducted to understand when and why manufacturers might convert from an independent salesforce to a direct salesforce. On the basis of hypotheses developed from channel distribution theory and ecological theory of organizational change, the authors estimate a model of a firm's intention to “go direct” with survey data from 243 manufacturers currently using manufacturers’ representatives. Results indicate considerable inertia in the manufacturer/agent relationship and suggest some reasons for the stability of those arrangements.