GOING DIRECT TO MARKET - THE INFLUENCE OF EXCHANGE CONDITIONS

When faced with the strategic choice of going direct to market versus the option of using intermediaries, a firm is posited to evaluate the benefits to customers from going direct to market, and the transaction costs involved in using intermediaries. In this paper, we discuss how these evaluations might differ depending upon the microcharacteristics of the exchange domain. Based on these theoretical considerations, specific propositions are offered regarding the conditions under which firms might rely more heavily on direct channels. These propositions are tested by conducting a cross-sectional empirical analysis using a large sample of manufacturing firms operating in diverse exchange domains. We also control for the impact of macrolevel environmental characteristics, as well as firm-level characteristics that may influence the direct to market decision. Our empirical results confirm that customer benefits and transaction costs are important considerations in going direct to market.