Distribution Channel Dynamics: Sharing or not Sharing Information between Members?

Abstract

Every distribution channel involves the efficient organization of product exchanges between manufacturers, large retailers, and wholesalers, typically supported by logistics service providers. Managing the physical flow of goods from factories to stores, pick-up points, or consumers’ homes necessitates the parallel exchange of information related to order tracking, stock levels, and order preparation, among other things. However, for strategic reasons, it is not uncommon for members of the distribution channel to be reluctant to share certain information deemed “sensitive” with their business partners. The question of whether to share information among distribution channel members has garnered significant interest from management researchers. Debates center around the appropriate level of informational transparency needed for a distribution channel to achieve optimal performance. This paper highlights the existence of two opposing views: one that focuses on the benefits of information sharing and another that emphasizes the associated risks. Building on this observation, whose major limitation is the binary nature of the information transparency/opacity dichotomy, the authors propose a “waves model.” The model identifies a succession of phases of information sharing and retention, which are influenced by the presence of critical incidents during a business relationship.