Channel Contract Behavior: The Role of Risk Attitudes, Risk Perceptions, and Channel Members' Market Structures

51 Pages Posted: 9 Jun 2003 Last revised: 30 Apr 2017

See all articles by Joost M. E. Pennings

Joost M. E. Pennings

Maastricht University; Wageningen UR

Brian Wansink

Cornell University

Abstract

By integrating elements of both marketing and finance, we show how risk influences channel contract behavior. We model risk behavior as the interaction between risk attitude and risk perception (IRAP). An analysis of the joint channel decisions of 208 producers, wholesalers, and processors provides three clear results. First, risk attitudes significantly vary across different levels of channel members. Second, IRAP - in combination with the channel member's market structure on the buying and selling side - is a strong predictor of contract behavior. Third, increases in channel power strengthen the impact of IRAP on channel contract behavior.

Keywords: Marketing Channel, contracts, risk attitude, risk perception

JEL Classification: D0, G0, L1, M1, M2

Suggested Citation

Pennings, Joost M. E. and Wansink, Brian, Channel Contract Behavior: The Role of Risk Attitudes, Risk Perceptions, and Channel Members' Market Structures. Pennings, Joost M.E. and Brian Wansink (2004), “Channel Contract Behavior: The Role of Risk Attitudes, Risk Perceptions, and Channel Member Market Structures,” Journal of Business, 77:4 (October), 697-723. . Available at SSRN: https://ssrn.com/abstract=393963 or http://dx.doi.org/10.2139/ssrn.393963

Joost M. E. Pennings (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Wageningen UR ( email )

Hollandseweg 1
Wageningen, 6706KN
Netherlands

Brian Wansink

Cornell University ( email )

Ithaca, NY 14853
United States

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