An Investigation of Path-Goal Leadership Theory
and Its Impact on Intrachannel Conflict and
Satisfaction
Patrick L. Schul
Memphis State University
This path-analytic study examined the relationships
among channel members' perceptions of dimensions
representing channel leader behavior, channel conflict and
satisfaction. In doing so, the path-goal theory of leadership
is tested in a franchise channel of distribution. The results
indicate that both the consideration and the initiating
structure dimensions of leader behavior significantly
influence franchisees" satisfaction with the franchise
arrangement. As defined in the theory, these relationships
were found to be mediated by the existing level of conflict
being experienced by franchisees. Causal linkages are also
found between intrachannel conflict and satisfaction.
Specific recommendations are provided to franchisors and
other channel leaders.
INTRODUCTION
In recent years market researchers have begun to
analyze relationships between distribution channel conflict,
behavioral antecedents of conflict such as leadership,
power, goal incongruity, differential role perceptions, and
dependent measures of performance and satisfaction (for a
review of this literature, see Hunt, et al. 1985). Despite the
paramount importance ascribed to viewing intrachannel
conflict as a dynamic process (Brown and Day 1981;
Rosenberg and Stern 1970; Rosenbloom 1973; Robicheaux
and E1-Ansary 1975-76; Firat, et al. 1975; Stern and E1-
Ansary 1982), the majority of empirical efforts have
focused on analyzing subprocess relationships in the
conflict process with little consideration for simultaneously
9 1987,Academyof MarketingScience
Journalof the Academyof Marketing Science
Winter, 1987,Vol. 15, No. 4, 042-052
0092-0703/ 87/ 1504-0042
JAMS
analyzing the dynamic relationships between causes, level,
and consequences of intrachannel conflict. Therefore, there
is considerable confusion about the nature of the dynamic
relationships among the constructs in the conflict process
(Brown and Day 1981; Brown 1979; Etgar 1979). For
example, significant relationships have been found
between various conflict antecedents (e.g., leadership,
autonomy, and power) and conflict (Gaski 1984; Schul, et
al. 1983; Etgar 1979; Lusch 1976a; Stern, et al. 1973) and
between these conflict antecedents and satisfaction (Brown
and Frazier 1978; Lusch 1978; Michie 1978; Hunt and
Nevin 1974; Schul, et al. 1985). In the sense that satisfaction
is considered to be a major consequence of intrachannel
conflict (Rosenberg and Stern 1970; Frazier 1983;
Robicheaux and EI-Ansary 1975-76), it is not empirically
clear whether the true relationship between intrachannel
conflict and satisfaction is being adequately described by
the results of these studies. These methodological
weaknesses may explain inconsistent findings reported in
many studies (Brown 1980; Gaski 1984; Hunt, et al. 1985;
Ruekert and Churchill 1984).
The objective of this research effort was to provide a
more extensive assessment of the relationships between a
set of potential causes, level, and consequences of
intrachannel conflict than has been provided in previous
studies. In executing the study, a conflict behavior process
model was developed and tested which includes dimensions
representing channel leader behavior as potential conflict
antecedents, and channel satisfaction as a defined
consequence of intrachannel conflict.
This article examines conflict behavior in a channel of
distribution that has a high degree of functional
interdependence--the franchise channel. Given the high
degree of functional interdependence between the
franchisee and franchisor, the possibility of channel
conflict is high in this type of channel. In addition, due to
the nature of the contractual arrangement between the two
parties, economic and social power is usually imbalanced
in favor of the franchisor (Lusch 1976a). As such, the
42 WINTER, 1987
AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON
INTRACHANNEL CONFLICT AND SATISFACTION
franchisor holds a strong potential for channel leadership.
VARIABLES A N D HYPOTHESES
A factor that is likely to influence both the attitudes and
resulting desires of channel members to comply with
channel-wide policies and procedures is the channel
leader's style of leadership behavior (Schul, et al. 1983). It
has been shown in numerous organizational studies that an
effective leader uses a particular leadership style to achieve
certain goals, resulting in high productivity and morale
(House and Mitchell 1974; House, et al. 1971; Filley, et al.
1976; Fulk and Wendler 1982; House 1971). One approach
to the study of leadership, labeled path-goal theory, has
prompted considerable conceptual and empirical research
on job perceptions such as satisfaction and conflict.
Two independent factors are central to path-goal theory
and pertain to our study of channel leadership behavior: (1)
consideration and (2) initiating structure. Consideration is
defined as behavior that involves trust, mutual respect,
friendship, support, and a concern for the welfare of
subordinates (Vroom 1976). Initiating structure, the second
major dimension of leadership style, concerns the degree to
which the leader organizes and clarifies the task
environment, assigns the necessary functions to be
performed, establishes communication networks, and
evaluates work group performance (Ivancevich, et al.
1977).
The two leadership variables examined in this study are
consistent with these two factors. However, they were
redefined to reflect the unique characteristics of the
franchise channel analyzed in the present study.
Intrachannel Conflict as a Function of Channel
Leader Behavior
Leader consideration. The evidence strongly indicates
that considerate leader behavior facilitates coordination
and thus serves to minimize conflict (Fry, et at. 1986; Schul,
et al. 1983; Strauss and Rosenstein 1970; Tannebaum and
Cooke 1974; House and Rizzo 1972; Seashore and Bowers
1970).
Channel members are likely to be more highly motivated
to cooperate with channel management and thus
experience less conflict if the channel leader exhibits
leadership style with consideration for the needs of channel
members. This includes displaying a concern for their
welfare, and creating a friendly, participative channel
environment. The hypothesized relationship between the
perceived level of consideration exhibited by the channel
leader and perceived intrachannel conflict was:
H 1: The higher the level of consideration exhibited by the
channel leader, the lower the level of intrachannel
conflict.
Initiating structure. A considerable body of organizational
research suggests that organizational conflict varies within
JAMS 43
SCHUL
and across organizational subunits as a function of the
subordinates' perceptual evaluations of the extent of
initiating structure exhibited by the leader (for a review, see
Kerr and Schreisheim 1974). In general, it has been found
that instrumental leadership (e.g., emphasis on rules,
standardization, and close supervision) tends to create
tension and stress (conflict antecedents) when subordinates
are engaged in highly structured tasks, and tends to reduce
the level of conflict when subordinates are engaged in
ambiguous or unstructured tasks (Fry, et al. 1986; Schul,
et al. 1983; Corwin 1969; Burke 1966; Pondy 1967).
It has been shown that franchisees generally possess a
higher level of autonomy than is observed among
participants in other types of channel organizations (Skylar
1977; Ruekert and Churchill 1984). Consequently,
franchise channel members are likely to desire relatively
close instrumental direction in performing channel-related
activities in order to understand properly and effectively
carry out channel policies and procedures.
Given the foregoing expectations, the following
hypothesis is proposed:
H2: The higher the perceived level of initiating structure
exhibited by the channel leader, the lower the level of
intrachannel conflict.
Channel Satisfaction as a Function of Channel
Leader Behavior
Leader consideration. The findings concerning leader
consideration generally show that it is associated with
higher subordinate satisfaction (Schul, et al. 1985; Fry, et
al. 1986; Schreisheim, House, and Kerr 1976; House and
Rizzo 1972; House, Filley, and Kerr 1971; Valenzi and
Dessler 1978). With respect to this hypothesis, Valenzi and
Dessler contend that "it may be that leader consideration
reduces role ambiguity (or its consequences), thus
increasing subordinate satisfaction" (Valenzi and Dessler
1978, p. 672).
It seems reasonable that channel members are likely to
be more highly motivated and express higher satisfaction
with the channel arrangement if the channel leader exhibits
behavior emphasizing consideration for the needs of
channel members. This includes displaying concern for
their well-being and welfare; and, creating a friendly and
participative channel environment that allows channel
members to influence decisions that affect their status in the
channel organization. Thus, the hypothesized relationship
between consideration and members' satisfaction was:
H3: The higher the level of consideration exhibited by the
channel leader, the higher the level of channel member
satisfaction.
Initiating structure. In general it has been found that
initiating structure has a positive impact on satisfaction
when subordinates are engaged in highly structured tasks
(Schul, et al. 1985; Fulk and Wendler 1982; Fry, et al. 1986;
Dunteman and Bass 1963; House and Dessler 1974;
WINTER, 1987
AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON
INTRACHANNEL CONFLICT AND SATISFACTION
Szilagyi and Sims 1974; Churchill, et al. 1976; House,
Filley, and Kerr 1971). Findings reported in these research
efforts suggest that channel members who perceive their
leader to be high on initiating structure are likely to
understand better the channel-wide policies and suggested
operational procedures. Consequently, they are likely to be
more satisfied with various aspects of the channel
arrangement. The hypothesized relationship between
initiating structure and channel member satisfaction was
stated as:
H4: The higher the perceived level of the initiating
structure exhibited by the channel leader, the higher
the level of channel member satisfaction.
Channel Satisfaction as a Function of Intrachannel
Conflict
From a channel's perspective, conflict has been found to
have a significant impact on channel members' satisfaction.
In a study by Walker (1970), the impact of conflict on
channel members' satisfaction was highly negative when
power was balanced among channel members. Rosenberg
and Stern (1970) found a significant association between
dealers' dissatisfaction with distributors and manufacturers
and conflict levels in their respective dyads (e.g.,
manufacturer-distributor, dealer-manufacturer, distributor-
dealer).
The channel member may hold the channel leader
responsible for creating the conflicts in which he finds
himself, regardless of the sources of his frustration.
Consequently, channel members who experience consider-
able amounts of tension in their channel operations are
likely to be dissatisfied with various channel-related
policies and procedures and with the channel leader. In
view of these arguments, the following hypothesis was
tested:
H5: The higher the perceived level of intrachannel conflict,
the lower the level of channel member satisfaction.
Intervening Effects of Intrachannel Conflict
The channel leader may be able to influence directly the
level of conflict and the resulting satisfaction derived by the
channel members through modification of leadership
behavior (i.e., the level of consideration and/or initiating
structure). Those channel members who are experiencing
high levels of intrachannel conflict are likely to be less
satisfied with the various aspects of their channel
arrangement. Consequently, attempts by the channel
leader to modify leadership behavior to influence channel
members' satisfaction not only may directly affect the level
of channel satisfaction but also indirectly affect the
satisfaction by influencing the level of intrachannel
conflict. Given the foregoing expectations, the following
hypotheses were proposed:
JAMS 44
SCHUL
H6: The relationship between the level of leader
consideration and channel member satisfaction will be
negatively influenced by the perceived level of
intrachannel conflict.
H7: The relationship between the level of initiating
structure and channel member satisfaction will be
negatively influenced by the perceived level of
intrachannel conflict.
RESEARCH METHODOLOGY
Sample and Survey Procedure
The data used to test the research hypotheses were
collected as part of a general study on franchisee-franchisor
relations in the real estate brokerage industry. Franchised
real estate brokers representing the six major franchise
organizations doing business in three south central states
served as the general population for this study.
To initiate the study, an eight-page questionnaire was
mailed to 1,052 franchised real estate brokers who
participated in the research project. Enclosed with each
questionnaire was a postage-paid envelope and a cover
letter requesting the owner/broker of the franchised
brokerage agency to cooperate in the study. Of the initial
questionnaires mailed in the first wave, 265 were returned.
Three weeks later, a follow-up questionnaire was sent and
126 additional questionnaires were received resulting in a
37 percent response rate.
To assess non-response bias, thirty-six randomly selected
non-respondents were contacted by telephone and queried
on several of the more important descriptive questions. No
significant differences were found between respondents
and non-respondents on any of the measures analyzed.
Measurement of Variables
Channel leader behavior. Franchisees' evaluations of the
extent of leader consideration and the initiating structure
exhibited by their franchisor were obtained using a series
of 12 descriptive scale items developed in an earlier study
(Schul 1980). These measures are consistent with existing
scales utilized to assess the two leadership constructs, as
defined in the organizational literature (See Fulk and
Wendler (1982) for a review of this literature). The items
were modified in order to better represent the climate of the
channel of distribution under investigation. These items are
shown in Table 1. Franchisees were asked to indicate their
agreement (or disagreement) on each item using a 5-point
Likert-type scale ranging from "strongly agree" to
"strongly disagree." Separate measures of the franchisee's
evaluations of the respective levels of leader consideration
and initiating structure were constructed by summing
across the items representing each dimension.
The construct validity of the leadership scales was
assessed using factor analysis. A varimax rotation of the
factor matrix yielded two significant factors with
eigenvalues greater than one (Table 1). Taken together,
these factors accounted for over 67 percent of the variance
in the leadership scale items. A cutoff of .50 was used for
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AN INVESTIGATIONOF PATH-GOALLEADERSHIPTHEORYAND ITS IMPACTON SCHUL
INTRACHANNELCONFLICTAND SATISFACTION

TABLE 1
Factor Analysis of Channel Leadership Items a
Derived Factors b
(1) (2)
Initiating
Leadership Statement Consideration Structure

. I am provided sufficient guidelines and careful instructions on how .4049 (.6683)

to manage my franchise operations.
. Good ideas from franchisees often do not get passed along to the (.8236) .2067
management of this franchise organization.
. Franchisees are not allowed to provide input into the determination (.7961) .1556
of standards and promotional allocations, or in establishing other
key franchise-related criteria (fees, services to be added, etc.)
. Franchisees have no influence in the determination of policies and (.7777) .1397
standards of this franchise organization.
. I am encouraged to use uniform procedures; they require franchisees .0003 (.7234)
to follow standard operational rules as outlined in the franchise rules
and regulations.
. The rights and obligations of all parties concerned are clearly spelled .3761 (.7648)
out in the franchise contract.
. I often find myself frustrated and exasperated due to the ambiguity (.7351) .2444
I experience in dealing with various representatives of my franchise
organization.
. There is a definite lack of support, coaching, feedback, and (.8305) .2509
confidence.
. Once they've sold you the franchise, they forget all about you... (.8026) .2496
except when your fees are due again.
10. This franchise organization is highly interested in the welfare of its (.7425) .3370
franchisees.
11. I am uncertain about how my agency's performance is actually (.5895) .1320
evaluated by my franchise organization.
12. Communication from various franchise offices (regional, national, (.7451) .1866
etc.) is often ambiguous, inconsistent, and/or duplicative in nature.

Eigenvalues 4.37 1.26

Percentage of total variation 52.3 15.1

aVarimax rotationwas performedon the factor matrix.

bLoadingsabove .50 are in parentheses.

item-scale selection. An analysis of Table 1, which presents
the coefficient matrix derived in the factor analysis, shows
that the construct validity of the scales was adequate since
none of the items intended to measure either of the two
dimensions of channel leadership behavior loaded on the
same factor. In other words, the factor structure was
consistent with the original two-dimensional representation
of channel leadership behavior.
The leadership scales were also tested for reliability, or
the extent to which the measures are repeatable (Nunnally
1967), using Cronbach's (1960) coefficient alpha. The
coefficients were .81 and .72 for the leader consideration
and the initiating structure scales, respectively. Thus, the
two measures exhibited well over the .50 reliability levels
suggested by Nunnally (1967, p. 226) as a minimum score
for acceptable reliability in basic research.

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AN INVESTIGATIONOF PATH-GOALLEADERSHIPTHEORYAND ITS IMPACTON SCHUL
INTRACHANNELCONFLICTAND SATISFACTION

TABLE 2
Factor Analysis of Intrachannel Leadership Items a
Derived Factors b
(1) (2)
Administrative Product / Service
Conflict Issue Conflict Conflict

. Bureaucratic red tape (.601) b .228

2. Quality of sales training programs .272 (.641)
3. General responsiveness of franchisor to franchisee needs .470 (.560)
4. Quality of meetings and conventions .176 (.673)
5. Quality of inter-city referral program .319 (.575)
6. Local advertising assistances .498 .377
7. Service and/or advertising fees (.715) .313
8. Contract terms or arrangements (.658) .388
9. Accounting information requirements (.622) .332
10. Initial franchise fees (or fees on additional new offices) (.540) .278
11. Sales promotion assistance .336 (.810)
12. Quality of national advertising program .333 (.620)
13. Quality of management training program .324 (.650)
14. Exclusive territory arrangements (.693) .118

Eigenvalues 5.79 1.15

Percent of total variation 44.6 8.9

Warimax rotationwas performedon the factormatrix.

bLoadingsabove .50 are in parentheses.
CDenotesitems whichfailedto load significantlyon eitherfactor.

Intrachannel conflict. Following the results of a series of
indepth personal interviews with franchisees and others
familiar with the franchised real estate brokerage industry,
fourteen key conflict-specific issues were isolated for
consideration in this study (see Table 2). Respondents were
asked to indicate how intense or serious the overall level of
disagreement had been in the past year with their
franchisor over each issue on a 4-point scale ranging from
"high" to "none."
Factor analysis was used to detect any strong underlying
dimensions along which the conflict issues would group
cohesively. Two principal factors evolved with eigenvalues
greater than one (Table 2). Together these two factors
accounted for over 53 percent of the overall variation in the
14 conflict items. A cutoff of .50 was used for item-scale
selection. Following a close inspection of the items loading
on each factor, the two factors were summarily labeled
"administrative conflict"and "product-service conflict,"
thus describing two inherent dimensions of intrachannel
conflict. Separate measures of the franchisee's evaluation
of the respective levels of administrative and product-
service conflict were derived by summing across the items
representing each dimension. This two-dimensional
representation of intrachannel conflict was consistent with
that derived in an earlier study in the same channel (Schul,
et al. 1983). The reliability of the two conflict dimensions
was assessed using coefficient alpha. The coefficients were
.78 and .83 for the administrative conflict and product-
service conflict scales, respectively. Thus, the reliability of
the conflict scales was deemed adequate.
Channel satisfaction. A measure consisting of twenty-
two descriptive scale items was used to represent the
franchisees' perceived satisfaction with the franchise
arrangement (Schul, et al. 1985). The specific items used for
the satisfaction construct are listed in the Appendix.
Franchisees were asked to rate their satisfaction (or
dissatisfaction) with the franchise arrangement on each of
the items using a 5-point Likert-type scale ranging from

JAMS 46 WINTER, 1987

AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON SCHUL
INTRACHANNEL CONFLICT AND SATISFACTION

TABLE 3
Path Analysis Results
Regression Path Regression Path
coefficients coefficients R 2 for coefficients coefficients R 2 for
Dependent Independent for a priori for a priori a priori for trimmed for trimmed Trimmed
Variable variables a models models b models models b models b Models

Administrative x~ -.2641 -.5312 .2889 -.2672 -.5373 .2887

Conflict x2 -.2342 -.0147 c -- -- --
constant 3.7922 20.3733

Product/ Xl -. 1790 -.4218 .2220 -.1790 -.4218 .2220

Service x2 -. 1329 -.0984 -.1329 -.0984
Conflict constant 17.1089 17.1089

Overall x~ 1.0769 .4708 .5766 1.0769 .4708 .5766

Satisfaction x2 1.0372 .1424 1.0372 .1424
x3 -.5830 -.1267 -.5830 -.1267
x4 -1.1412 -.2117 -1.1412 -.2117
constant 13.4998 13.4998

~Definition of Variables:
x~ = consideration
xa = initiating structure
x3 = administrative conflict
x4 = product/service conflict
b 9 - 9
Path coefficients represent standard regresmon coefficients.
Cp> .05 in a two-tailed test.

"strongly agree" to "strongly disagree." This approach to
the measurement of channel satisfaction was consistent
with that suggested by Ruekert and Churchill (1984). A
measure of the franchisees' overall satisfaction with the
franchise arrangement was constructed by summing across
the twenty-two items.
The convergent validity of the channel satisfaction
measure was assessed by testing the significance of the
correlation between the computed satisfaction measure and
the franchisees' response to a global satisfaction measure
(developed by Hunt and Nevin (1974) which was included
in the test instrument). The resulting significant correlation
of .68 (p < .001) ensured the convergent validity of the
satisfaction measure.
The internal consistency of the derived satisfaction
measure was assessed using a split-half reliability
procedure. Initially, the sample was split into two groups.
Then, a Spearman-Brown split-half reliability coefficient
was calculated. The resulting .71 correlation was significant
(p < .05), thus supporting the reliability of the channel
satisfaction measure.
application of path analysis in the present study was the
ability to decompose the zero-order correlations between
model components into direct, indirect, and noncausal
components, and then to appraise the direct and indirect
effects in terms of the proposed research hypotheses.
Hypotheses H 1 through H5, concerning the direct effects
of the dimensions of leadership behavior and intrachannel
conflict, were tested on the basis of an assessment of the
statistical significance of the standard regression
coefficients derived in the trimmed model. The testing of
hypotheses H6 and H7, regarding the indirect effects of the
dimensions of leadership behavior on channel satisfaction
through intrachannel conflict, was carried out via a
nonstatistical, subjective assessment of the magnitude of
the proportion of the total effect (direct and indirect effects)
of the independent variable (consideration or initiating
structure) on the dependent variable (channel satisfaction)
as mediated by intrachannel conflict (indirect effect only)
(Alwin and Hauser 1975).
FINDINGS

Data Analysis
The path-goal leadership model tested in this study is
depicted in Figure I. Path analysis was used to evaluate the
research hypotheses. The key benefits derived from the
Table 3 provides results of the path analysis of both a
priori and trimmed models. A summary of the direct
effects, indirect effects, and noncausal components of total
association is presented in Table 4.

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AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON
INTRACHANNEL CONFLICT AND SATISFACTION
Impact of Channel Leader Behavior on Intrachannel
Conflict
Administrative conflict. Table 3 indicates that the leader
consideration has a significant effect on the level of
administrative conflict between the franchisee and
franchisor (P31 = -.5373). In the trimmed model analysis,
leader consideration accounts for over 28.8 percent of the
variation in administrative conflict. These results provide
support for HI, showing leader consideration to be
inversely related to the level of intrachannel conflict.
Contrary to the rationale for H2, initiating structure does
not have a significant direct effect on administrative
conflict. Examination of Table 4 indicates that the zero-
order correlation between initiating structure and
administrative conflict (r23 = -.2346) is due primarily to a
high correlation between leader consideration and
administrative conflict (r13 = -.5373), rather than to a
significant direct or indirect effect of the initiating structure
on the level of conflict.
Product-service conflict. As the results shown in Table
3 indicate, both the leader consideration and the initiating
structure have direct effects on the franchisec's perceptions
FIGURE 1
Path-goal Leadership Model Tested in This Study
ANTECEDENTS
///f x~ Leader
Consideration
r12 a
X2 Initiating
Structure
Structural Equations:
xl = Ul
X2 = U2
X3 = b31xl + b32x2 + u3
X4 ---- b4Xl + b42x2 = u4
X5 = b s x I + bs2x2 + b53x3 + b54 + u s
aZero-order correlations between Xl and x2 and x3 and x4 are unanalyzed with respect to causation.
JAMS
SCHUL
of the level of product-service conflict (P41 = -.4218; P42
= -.0984). In the trimmed model, those variables explain
22.2 percent of the variance in franchisees' perceptions of
the level of product-service conflict. These results provide
support for hypotheses H 1 and H2, showing that the leader
consideration and the initiating structure do have
significant, inverse effects on the level of intrachannel
conflict.
Impact of Channel Leader Behavior and Intra-
channel Conflict on Channel Satisfaction
The path analysis results shown in Table 3 indicate that,
as hypothesized in H3, H4, and H5, channel satisfaction is
positively affected by the leader consideration (P51 -- .4708)
and the initiating structure (P52 = .1424) and negatively
affected by the two dimensions of intrachannel conflict
(P53 = -. 1267; P54 = -.2117). In the trimmed model, these
predictor variables account for over 57 percent of the
variation in overall channel satisfaction. Examination of
the component parts of total association between the
predictor variables and channel satisfaction (Table 4)
indicates that all four variables have significant effects on
channel satisfaction. The total effect of the leader
PROCESS OUTCOME
Channel
Satisfaction
Where:
b's = standardized regression coefficients
u's = disturbance terms
x's = model constructs
48 WINTER, 1987
AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON SCHUL
INTRACHANNEL CONFLICT AND SATISFACTION

TABLE 4
Decomposition of Total Association between Model Components a

(2)
(I) Indirect Effect (3) (4) (1+2) (1+2+3+4)
Predictor Observed Direct Through Through Spurious Unanalyzed Implied Implied
Model Variable Correlation Effect X3 X4 Total Correlation Correlation Correlation Correlation

Administrative XI r~3 = -.5373 -.5373 . . . . -.5373 -.5373

Conflict X~ r23 = -.2346 . . . . . . .2242 -- -.2242

Product/ XI rl4 = -.4625 -.4218 -- -- -.0410 -.4218 -.4628

Service X2 r24 = -.2729 -.0984 -- -- -.1760 -.0984 -.2744
Conflict

Overfll Xi r15 = .6959 .4708 .0680 .0892 .1572 -- .0680 .6280 .6960
Satisfaction X2 r25 = .4248 .1424 -- .0208 .0208 -- -.2620 .1632 .4252
X3 r35 = -.5584 -.1267 . . . . .2848 -.1451 -.1267 -.5568
X4 r45 = -.5554 -.2117 -- -- -.2569 -.0868 -.2117 -.5554

aDefinition o f v a r i a b l e s :
X~ = L e a d e r c o n s i d e r a t i o n
X2 = L e a d e r i n i t i a t i n g s t r u c t u r e
X3 -- A d m i n i s t r a t i v e conflict
X4 = P r o d u c t / s e r v i c e conflict

consideration on channel satisfaction is due to a direct
effect as well as to an indirect effect, mediated by both
administrative and product-service conflict. Consistent
with the rationale for H6, it appears that the leader
consideration has an indirect effect on channel satisfaction
through intrachannel conflict (Indirect Effect = .1572),
accounting for over 25 percent of the total effect of the
leader consideration on satisfaction. While path analysis
does not allow for a significance test of indirect effects, the
indirect component does represent a sizable portion of the
total effect.
The total effect of the initiating structure on channel
satisfaction appears to be due to both direct and indirect
effects, mediated by the level of product-service conflict.
Contrary to the rationale for H7, however, the indirect
effect (Indirect Effect = .0208), was not overly large,
accounting for less than 12 percent of the total effect. The
total effects of the two components of the intrachannel
conflict on channel satisfaction are due to their significant
direct effects on satisfaction.
DISCUSSION AND IMPLICATIONS
The implications of this study must be approached with
some caution due to several inherent limitations. It must be
recognized that factors other than the channel leadership
behavior may serve as causes of potential conflict and
factors affecting the various relationships posited in the
conflict behavior process model tested in this study. A
complete understanding of the linkages between all causes
and consequences of the intrachannel conflict was,
however, beyond the scope of this research.
Concern exists in the operationalization of the channel
satisfaction construct. Although a previous study (Schul, et
al. 1985) showed the channel satisfaction construct to be
multidimensional, a summary measure of satisfaction was
used in this study to represent the construct. Ideally, one
would wish to include all the salient dimensions of channel
satisfaction in the conflict process model as separate
outcomes. This elaborate degree of operationalization was,
however, not considered necessary given the objectives of
the present study. To the extent that the authors were
primarily interested in understanding the dynamic
processes occurring in the conflict behavior process, an
aggregate measure of channel satisfaction was quite
adequate. Future studies could, however, address this
issue.
The findings of the study generally indicate that the
franchisees' perceptions of leadership behavior exhibited
by the franchisor significantly influence the level of conflict
between the franchisee and the franchisor. To the extent
that the effects of administrative and/or product-service
conflict are disruptive, the franchisor can work to reduce
perceived intrachannel conflict with franchisees in two
ways. First, franchisees with high needs for consideration
may be given more overt support and latitude in making
decisions that affect their status in the franchise
arrangement. In so doing, a climate must be created in
which the franchisor is seen as considerate, supportive, and
fair in dealing with franchisees. Second, the franchisor
should attempt to maintain a franchise arrangement in
which all members understand fully their roles in franchise
operations as well as their relationships with others in the
channel system. By developing and communicating

JAMS 49 WINTER, 1987

AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY A N D ITS IMPACT ON
I N T R A C H A N N E L CONFLICT A N D SATISFACTION
common goals and operating policies and procedures, the
franchisor could expect a reduced level of intrachannel
conflict.
The finding suggest that if the franchisor wants to
enhance franchisee satisfaction, steps should be taken to
reduce intrachannel conflict. This reduction could be
accomplished in one of two ways. First, the franchisor
could attempt to structure the franchise arrangement to
reduce the opportunity for intrachannel conflicts to occur.
This approach might mean adjusting the franchisor-
franchisee relationship, streamlining franchise rules and
operational procedures, better coordinating franchise
programs with franchisee's needs, and so on. Second,
through a judicial screening and selection process, the
franchisor can attempt to choose franchisees to enter the
franchise arrangement who will be better able to cope with
tension and strain.
Finally, the path-analytic results suggest that the leader
consideration not only directly affects the franchisee's
perceived satisfaction, but also indirectly affects
satisfaction by decreasing the perceived level of intrachannel
conflict. These results indicate that intrachannel conflict
intervenes in the relationship between the leader
consideration and the overall franchisee satisfaction.
These findings suggest that franchisors (or other channel
leaders) seeking to increase channel members' satisfaction
should initiate policies and operational procedures in a way
intended to stimulate the perceived level of leader
consideration. In so doing, the franchisor could expect
leader consideration to have a simultaneous, multiple
impact on frachisee satisfaction.
In contrast to the findings concerning the effects of
consideration, the frachisee's perceptions of his frachisor's
initiating structure were found to have a direct effect only
on channel satisfaction. The magnitude of the indirect
effects of the initiating structure on satisfaction through
intrachannel conflict were not overly significant. Thus, for
the franchisor attempting to influence positively the
frachisee's satisfaction with the franchise channel
arrangement by modifying the level of initiating structure,
it is important for him to consider how structural changes
will directly affect channel satisfaction.
The findings of this study suggest several directions for
future research. Future research efforts might focus on the
dynamic role of other attitudinal and structural factors
reflecting perceptual differences, environmental factors,
and organizational conditions in the conflict behavior
process. The empirical evidence reported in this study
provide support of an intergrated model of intrachannel
conflict that includes consideration for both behavioral and
organizational constructs (e.g., leadership, satisfaction) as
potential causes and consequences of intrachannel conflict.
Specifically, attempts should be made to integrate further
additional concepts from organizational behavior theory to
the problems in the channel of distribution.
Additional research also needs to focus on variables that
may moderate relationships posited in the conflict behavior
process model, such as channel experience, organization
size, and channel structure.
JAMS 50
SCHUL.
ENDNOTE
~The twenty-two item satisfaction scale was subjected to a factor analysis which
yielded four independent dimensions with eigenvalues greater than one
(Schul, et al. 1985). Based on the objectives of the present study, however,
a summary measure of satisfaction was considered necessary due to
limitations in the application of path analysis and the overall objectives of
this paper.
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Conflict." Journal of Marketing Research 13 (November): 382-90. CHANNEL SATISFACTION SCALE ITEMS
1976b. "Channel Conflict: Its Impact on Retailer Operating
Perfomance." Journal of Retailing 52 (Summer): 382-90 My regional director makes every effort to make me
9 1978. "Franchisee Satisfaction: Causes and Consequences." feel like I am a valuable member of this franchise
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Michie, Donald A. 1979. "Specific Satisfaction: A Channel Study in the Tire
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Franz, R. M9 Hopkins, and A. G. Toma (eds.), 372-376. . My regional director provides me with substantial
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Company, Inc. programs.
Pondy, Louis. 1967. "Organizational Conflict: Concepts and Models9
Administrative Science Quarterly 12 (September): 296-320
. This franchise organization does not provide me with
Robicheaux, Robert A. and A. I. E1-Ansary. 1975-76. "A General Model for
Understanding Channe! Member Behavior." Journal of Retailing 52 adequate marketing, financial, and/or management
(Winter): 13-31. support.
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Journal of Marketing Research 8 (November): 437-42.
4. The various training programs provided by my
Rosenberg, L. J. and L. W. Stern. 19709 "Toward the Analysis of Conflict in
Distribution Channels: A Descriptive Model9 Journal of Marketing 34 franchise organization are timely, up-to-date, and
(October): 40-46. informative.
19719 "Conflict Measurement in the Distribution Channel."
Journal of Marketing Research 8 (November): 437-442.
5. Franchise management ignores my suggestions and
Rosenbloom, Bert. 19739"Conflict and Channel Efficiency: Some Conceptual
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Ruekert, Robert and Gilbert Churchill, Jr. 1984. "Reliability and Validity of
of Alternative Measures of Channel Member Satisfaction." Journal of . In my opinion, the monthly service and/or advertising
Marketing Research 22 (May): 226-33.
fees charged by my franchise organization are more
Schreisheim, C. A., R. J. House, and S. Kerr. 1976. "Leader Initiating
Structure: A Reconciliation of Discrepant Research Results and Some than reasonable in comparison to those fees charged
Empirical Tests." Organizational Behavior and Human Performance 15: by other franchise organizations.
297-3219
Schul, P. L. 1980. "An Empirical Investigation of the Conflict Behavior
Process in Franchise Channels of Distribution." Unpublished doctoral
. The initial franchise fee assessed by my franchise
dissertation, Texas A&M University. organization for obtaining a new franchise is to high
. W. M. Pride, and T. E. Little, Jr. 19839The Impact of Channel in comparison to those fees charged by other franchise
Leadership Behavior on Intrachannel Conflict." Journal of Marketing 47 organizations.
(Summer): 21-34.
, W. M. Pride, and T. E. Little, Jr, 1985. "Channel Climate: Its
Impact on Channel Members' Satisfaction." Journal of Retailing 61 8. My regional director has always been fair and honest
(Summer): 9-38. in dealings with me.
Seashore, S. and D, Bowers. 1970, "Durability of Organizational Change."
American Psychologist 25 (March): 227-233.
. My status in the real estate community has increased
Skylar, Fred. 1977. "Franchises and Indeper:dences." Urban Life 6 (Apri/): 33-
52. considerably since becoming a member of this
Stern, Louis W., Brian Sternehal, and C. S. Craig. 1973. "Managing Conflict franchise organization.
in Distribution Channels: A Laboratory Study." Journal of Marketing
Research 10 (May): 169-179.
10. I am proud to be a member of this frachise
and Adel I. EI-Ansary. 1982. Marketing Channels (2nd ed.).
Englewood, N. J.: Prentice-Hall, Inc. organization.
Strauss, S. and E9 Rosenstein 19709"Worker's Participation: A Critical View9
Industrial Relations 4 (February): 197-2149 I I. My regional director asks for my opinions and

JAMS 51 WINTER, 1987

AN INVESTIGATION OF PATH-GOAL LEADERSHIP THEORY AND ITS IMPACT ON
INTRACHANNEL CONFLICT AND SATISFACTION
suggestions and tries to use them.
12. The recognition/award programs in this franchise
organization do not give the franchise much incentive
to increase his/her agency's sales performance.
13. The benefits I derive directly from being a member of
this franchise organization are more than adequate to
justify the costs of franchise membership.
14. I have confidence in the fairness and honesty of the
management of this franchise organization.
15. My regional director demonstrates a genuine interest
in my agency's brokerage operations.
16. The financial benefits I receive from a member of this
franchise organzation are substantial in comparison to
those received by franchisees affliated with other
franchise organizations.
17. My franchise organization has assumed a leadership
role in the industry with regards to developing the
most competitive array of brokerage services.
JAMS
SCHUL
18. The overall franchise fee structure within my franchise
arrangement is more than fair when compared with
that of other franchise organizations.
19. My franchise organization is an excellent source for
new, creative marketing ideas that I am able to use in
my brokerage operations.
20. My regional director does a good job of helping me
develop my agency's sales potential.
21. My regional director communicates with me often by
telephone, mail, or in face-to-face meetings.
22. Franchise management keeps the frachisee in the dark
about things he/she ought to know.
ABOUTTHEAUTHOR
PATRICK L. SCHUL is Associate Professor of Marketing
at Memphis State University. He received his Ph.D. in
Marketing from Texas A&M University. Dr. Schul has
published articles in the Journal of the Academy of
Marketing Science, Journal of Marketing, Journal of
Retailing, and other business journals.
52 WINTER, 1987