Driving forces of coordination costs in distributor–supplier relationships: toward a middle-range theory

Transaction cost analysis (TCA) has inspired many empirical studies in marketing channels and business-to-business marketing. However, the vast majority of these studies have been conducted within the context of a single nation, making it hard to determine whether the empirical relationships derived from the framework are universal. Highlighting the influence of the national context in which the economic exchange relationship is embedded, we elaborate on the manner by which one form of transaction costs, namely, coordination costs, can be both a direct and an indirect function of two key governance challenges: safeguarding and adaptation. Taking a middle-range approach, we propose that the process by which coordination costs are evoked is a combination of context-excluded and context-embedded links. The hypothesized relationships are tested with data collected in parallel national surveys of industrial distributors in two large national economies with different cultures: the United States and Japan. The results support our predictions of both context-excluded and context-embedded links with the exception of the effect of environmental volatility.