| This study explores the determinants of disintermediation on the part of manufacturers given their virtual presence. In particular, the study examines the factors that are hypothesized to relate to a manufacturer's extent of disintermediation. The Transaction Cost Analysis framework (Anderson, 1985; Heide & John, 1990, and Williamson 1975, 1979, 1985) is used in tandem with Transactional Value Analysis (Zajac & Olsen, 1993) to examine factors influencing a manufacturer's use of the direct channel vis-a-vis the indirect intermediary channel, given its virtual presence. The proposed conceptual model was tested empirically with manufacturers in the United States. Key informants were high level executives responsible for making distribution channel decisions.; Two operationalizations of the dependent variable, the extent of disintermediation, are used to test the conceptual framework. One focuses largely on transactional disintermediation; the other incorporates both transactional and functional disintermediation. Both operationalizations give very similar results. The results indicate that transaction specific human assets invested in intermediaries, offsetting investments by intermediaries, and innovative value creation are negatively related to the extent of disintermediation whereas intermediary functional value replaceability is positively related to the extent of disintermediation.; Based on the examination of the descriptive statistics of the extent of disintermediation, it is evident that the threat of disintermediation due to manufacturer's virtual presence is an exaggeration. There is a stronger trend to increase intermediary reliance than to decrease intermediary reliance (disintermediate). More manufacturers have increased and will increase their intermediary reliance, despite their capability to use their web facilitated direct channel to replace the indirect intermediary channel.; The results reflect upon steps that intermediaries can take to prevent disintermediation. Simultaneously, the findings help manufacturers understand the factors that are associated with the decision to use the indirect intermediary channel vis-a-vis the direct Internet channel. It also informs manufacturers of the extent to which disintermediation has been undertaken and will progress in the coming years. |
