Reputation management as a motivation for sales structure decisions

The authors examine whether reputation concerns affect how manufacturers st ructure their sales organization. Using reputation theory, they examine whe ther reputation-related perceptions and beliefs affect whether a manufactur er that currently uses an outside selling organization (i.e., a "rep") inte nds to vertically integrate the selling function or switch to a new rep. In particular, they propose that a manufacturer's intentions to replace its c urrent manufacturers' rep with a company sales force or a different rep is a function of its perceptions of the reputation of itself and the rep and i ts beliefs about how high-reputation manufacturers in the industry typicall y organize their selling function. Survey data support the plausibility of these reputation-based arguments as factors that influence sales organizati on structure decisions. These results provide some important extensions to reputation theory. The authors discuss the study's implications for both ma nagerial behavior and the literature on channels and organizational governa nce.