Bonding Costs and Inside–Outside Dyadic Selling in Business-to-Business Markets

Abstract

In business-to-business markets, dyadic selling efforts by inside and outside sales reps involve an outside sales (OS) representative (rep) who interfaces with customers face-to-face and an inside sales (IS) rep who does so through remote selling efforts. Firms that seek to extract value from such IS–OS dyadic selling must mitigate agency problems–manifested as free riding and shirking–that arise due to the potential for misaligned interests of the reps (agents, as both reps are employed by the firm) and the firm (principal). The concept of dyadic bonding costs suggests a means to conceptualize the costs borne by sales reps (agents) to mitigate free riding, as a combination of hold-up costs (commitment to prior success) and alignment costs (efforts to refine dyad-specific interaction). To test a framework of the interplay of these two forms of bonding costs and their effects on selling task performance, the authors gather field data that reveal performance-enhancing effects of IS–OS shared selling success (indicator of hold-up costs), which weaken with dependence asymmetry within a dyad and strengthen with selling task uncertainty (indicators of alignment costs). Thus, firms might attain improved performance by relying on reps’ shared success and balanced mutual dependence, as well as by assigning dyads that have substantial shared success to selling tasks (customers) marked by uncertainty.

Keywords: agency theory, alignment costs, bonding costs, business-to-business sales, dependence asymmetry, dyadic teams, hold-up costs, governance, inside–outside sales reps, shared selling experience

JEL Classification: M3