Factors affecting the termination propensity of inter‐firm relationships

Abstract

Purpose

The decline of inter‐firm relationships remains an important, although little studied, topic within the channel management literature. Existing research on the topic tends to be fragmentary and largely occupied with the cataloguing of switching incentives and deterrents. This aim of this paper is to articulate a more comprehensive explanation of the process of decline.

Design/methodology/approach

With special emphasis on those channels spanning international borders, this paper outlines a mediational model of termination propensity which exploits the tension between the switching and opportunity costs of maintaining the status quo. Specifically, the study examines how switching motivators and deterrents interact to tip the balance towards, or away from, the inclination to terminate.

Findings

Two significant outcomes are achieved. First, it is proposed that the switching motivators identified in the literature are mediated through clients' satisfaction with their intermediary's current and anticipated performance. Significantly, it is shown that changes in the market, organisational and relational contexts can alter clients' perceptions independently of any changes in actual intermediary performance. Second, and in contrast with the direct links espoused in previous studies, switching costs are predicted to moderate the link between client satisfaction and termination propensity.

Originality/value

In contrast with past approaches examining a single cause of decline, this study develops propositions outlining a comprehensive, mediational explanation of termination propensity.

Citation

Ellis, P.D. (2006), "Factors affecting the termination propensity of inter‐firm relationships", European Journal of Marketing, Vol. 40 No. 11/12, pp. 1169-1177. https://doi.org/10.1108/03090560610702759