Dealer’s Legitimate Power and Relationship Quality in Gaunxi Distribution Channel: A Social Rule System Theory Perspective

Relative to the volume of research into B2B channel power effects on relationship outcomes and relationship quality in gaunxi distribution channel, individual channel power effects have received much less attention than plodded channel powers. To tackle this imbalance, this study examines the direct effects of dealer’s legitimate power on four dimensions of relationship quality (cooperation, relationship commitment, relationship satisfaction and trust) from the perspective of small and medium enterprise (SME) manufacturers. In order to understand how gaunxi distribution channels operate, social rule system theory is utilized. Four hypothesized relationships are tested with a sample of 400 manufacturing SMEs in Taiwan. The results suggest that dealer’s legitimate power positively influences SME manufacturers’ cooperation, relationship satisfaction, relationship commitment and trust in a significant way. Managerial implications of the findings are discussed and limitations and future research directions are indicated.