Abstract

     Drawing on brand equity literature and transaction cost economics, this study investigates the impact of member-retailers’ strategic behaviors on the retail buying group’s brand equity and how such behaviors are associated with their financial performance in the context of horizontal strategic alliances. The hypotheses were tested using survey data collected from 241 small- and medium-sized supermarket retailers joining retail buying groups in Japan. The study offers evidence that relationship-specific investment directly improves the buying group’s brand equity as well as strengthens the brand equity’s positive effect on financial performance. Additionally, while contract-based passive opportunism weakens the positive effect of the buying group’s brand equity, response-based passive opportunism directly depreciates such brand equity. Our results generate implications for headquarter managers to design and govern retail buying groups.

Introduction

     Brand equity, widely defined as added value for the brand, is a success factor for business-to-business (B2B) marketing (Aaker, 1991; Davis & Mentzer, 2008; Dwivedi et al., 2020; Lindgreen, Beverland, & Farrelly, 2010; Oh, Keller, Neslin, Reibstein, & Lehmann, 2020). Firms tend to stick to trading parties with high brand equity and recommend them to other firms (Davis & Mentzer, 2008; Oh et al., 2020); therefore, a strong brand equity is considered a key to their growth and profitability (Baldauf, Cravens, & Binder, 2003; Grashuis, 2018). However, managing brand equity in inter-firm relationships is demanding (Marquardt, 2013), which often embarrasses firm managers who wish to benefit from strong brand equity. Therefore, early investigators have paid considerable attention to investigating the antecedent factors influencing a firm’s brand equity in the various B2B marketing contexts: organizational capabilities (Zhang, Jiang, Shabbir, & Du, 2015), B2B marketing efforts (Kim & Hyun, 2011), relational engagement (Dwivedi et al., 2020), brand relationship quality (Nyadzayo, Matanda, & Ewing, 2016), and human capital (Biedenbach, Hult´en, & Tarnovskaya, 2019).

     However, insights into brand equity are scarce for horizontal strategic alliances by small- and medium-sized retailers (SMRs). These alliances are understood as cooperative network or organizations where small, independent retailers with divergent and distinct goals are loosely and horizontally connected to improve each firm’s competitive standing in the context of a firm’s long-term plan (Ghisi, da Silveira, Kristensen, Hingley, & Lindgreen, 2008): for example, cross-border alliances (Cho & Jin, 2015), retail network via shop-in-shop (Picot-Coupey, Viviani, & Amadieu, 2018), or retail buying groups (Kennedy, 2016).

Discussion and implications

     In today’s competitive and dynamic retail market situations, improving the buying group’s brand equity is a success factor for ensuring better performance of member retailers, but indicates a real challenge in retail buying groups. Headquarter managers intending to maximize the benefits of such brand equity need to find out how to better manage their member-retailers’ strategic behaviors. To address this knowledge gap, this study examines how relationship-specific investment and passive opportunism are linked to the buying group’s brand equity and financial performance. Our study’s findings generate important implications for headquarter managers to design and govern retail buying groups.