Channel Governance Mechanisms: When are Outcome Based Channel Incentives Most Effective in the High-Tech Industry?

As more companies in the high-tech industry rely on independent resellers for the distribution, the influence of channel incentive program increases. This thesis will look at the effect of outcome based channel incentive contracts on firm performance. Furthermore, it will look at the interaction effects of the organizational culture of the supplier. The research question answered is: “How do outcome based contracts affect the effectiveness of a motivational mechanism (a channel incentives program)?” The sub-question of this thesis is: “How do different types of organizational culture of the supplier company affect the relationship between outcome based contracts and the firm performance?” The research has found no significant effects regarding these hypotheses. The academic relevance of this paper lies in the perspective of this research. Where prior literature has focused mainly on the reseller side of the relationship, this thesis looks at the suppliers’ end. This paper is valuable to managers since it provides a new methodology for examining competitor’s organizational culture, and its results have revealed potential opportunities in the industry.