Changing patterns of channel governance: An example from Japan

In Japan, the distribution system is undergoing revolutionary changes leading toward enhancing retailers' power in the channel. Theory in distribution has long taught that where retailers obtain greater power they are likely to exercise greater control and governance of the system will change. This study seeks to ascertain whether the observed structural changes taking place in Japan's distribution system will cause this pattern to emerge in this country as in western environments. To make this determination, we collected information from Japanese manufacturers and retailers about their expectations of the future locus of control in their channels. Analysis of the data found that both retailers and manufacturers expected control to shift toward the retailers. Across the ten different channel governance issues we studied, retailers forecast that they would gain greater control for all. Apparently reading reality largely in the same way, Japanese manufacturers also forecast that they would lose control, but for only six of the ten distribution activities studied. These findings indicate that despite the enormous differences historically found between western distribution systems and those in Japan channels from bath environments respond in much the same way to changes in structure and power. The tight grip that Japanese manufacturers have long held over the channel is now slowly loosening.