Influence of functional conflicts on marketing capability in channel

relationships
Thuong Phat Tang, Xiaorong Fu, Qinghong Xie

Main Conceptual Model:

The study examines the influence of functional conflicts on the innovation and responsive
capabilities in channel relationships by triggering inter-organizational knowledge sharing.
Further, it explores the moderating effects of conflict frequency and relationship quality on the
relationships between functional conflict, knowledge sharing and the organizational
capabilities. Thus, an input-process-output model of the inter-organizational learning
relationship has been developed.

Hypothesis:
The following hypotheses were logically deducted from the theoretical discussions presented in
the article:
1. Functional conflict has a positive influence on inter-organizational knowledge sharing.
According to organization theory, a conflict encourages the organization to search for
additional information to solve the problem. Both the parties involved in the conflict
focus on achieving a common goal and enhanced mutual trust. This is only possible
through mutual exchange of information and knowledge between both the parties
involved
2. Conflict frequency negatively moderates the relationship between functional conflict and
inter-organizational knowledge sharing.
Earlier literature on conflicts indicate that as the frequency of conflicts increases,
members perception about interaction negatively affects the satisfaction levels of
 members. In such cases, even though the functional conflict encourages knowledge
sharing, the dissatisfaction caused due to higher conflict frequency creates a huge
barrier for sharing knowledge.
3. a. Knowledge sharing is positively related to channel members responsive capability.
Sharing of knowledge allows greater flexibility for both the parties to respond to the
challenges caused due to the rapid changes in market and environment.
b. Knowledge sharing is positively related to channel members innovation capability
The process of knowledge sharing encourages the channel members to actively explore
new methods, evaluate alternatives and provide different perspectives to solve the
problem. Thus, it creates new knowledge and has a positive influence on the innovation
capability of the channel members.
4. Relationship quality positively moderates the relationship between functional conflict and
knowledge sharing.
During conflicts, a higher level of relationship quality helps members to overcome
communication barriers and enhances mutual adaption and understanding. A strong
relationship creates mutual trust which makes the channel members to forgo short-
term benefits. Thus, it acts as a strong stimulus to share more knowledge.
5. a. Relationship quality negatively moderates the relationship between knowledge sharing
and innovation capability
b. Relationship quality negatively moderates the relationship between knowledge sharing
and responsive capability.
Channel members in high-quality relationship are bound by the existing relationship
rules and are unwilling to break them. In such cases, channel members form closed
networks. This encourages knowledge sharing but, there is no creation of new
knowledge. A high-quality relationship results in sharing of homogenous market
information and makes the firms less flexible to change. Thus, it negatively affects both
the innovation capability and the responsive capability of organizations.

Data collection methodology:

An empirical study has been conducted which applies the principle of simple random sampling
for selection. Medium and small sized enterprises involved in distribution channels were
selected as survey participants. A questionnaire was prepared to collect data regarding the
participants recollections of disagreements during their previous conflicts. Previous literature
on conflicts indicate that previous conflicts are the basis for current and future conflicts.
The first sixty responses included feedback and suggestions which were used to refine and
optimize the questionnaire items. During the field survey stage, a total of 300 questionnaires
were sent through post which resulted in 152 valid responses from the survey participants. The
respondents belonged to two provinces of Southwestern China and the survey period was from
May to July 2015.
This empirical study adapts literary suggestions for design, process, and statistical control. For
design control, the questionnaire was designed such that the respondents do not find any
ambiguous or unfamiliar terms. The order of the items appears random to avoid the cognitive
maps of respondents. For process control, the samples are carefully selected to include
respondents with different roles in channel marketing. To reduce bias, the questionnaire
includes reverse scoring items. For statistical control, a single factor analysis has been
conducted.

Findings:
The data analysis of the above-mentioned empirical study provides the following conclusions:
1. The functional conflict has a positive influence on knowledge sharing behaviour of
channel members.
2. Frequency of functional conflicts weakens the positive influence of functional conflict on
knowledge sharing.
3. Knowledge sharing has a positive influence on the marketing capability of the firm,
which is positively related to the innovation capability of the organization. Thus,
knowledge sharing fully mediates the relationship between the innovation capability
and conflict. The relationship between the organizations responsive capability and
conflict is only partially mediated by knowledge sharing.
4. Relationship quality is found to negatively moderate the relationship between
knowledge sharing and innovation capability. However, its effect on the relationship
between knowledge sharing and responsive capability is not significant.

Implications for management:

The channel managers of firms can use the findings of this study to take advantage of functional
conflicts. This study indicates that channel managers should focus their attention to both the
level and frequency of conflict to yield the positive effects of functional conflicts. Channel
managers are posed with a new challenge of maintaining quality relationships to ensure
effective management of functional conflicts between partners. The study highlights that
mutual trust plays an important role in fostering quality relationships.
The findings of the empirical study also indicate that the effectiveness of the yielding positive
effects of a functional conflict depends on the ability of the channel partner to leverage their
mutual knowledge. This study can be used as guide for all the front-line managers in channel
relationships for developing understanding and communication skills to exploit knowledge
sharing and conflict management. The study encourages firms to take full advantage of the
positive influence of relationship quality and to avoid its negative influence on organizational
capability.