Exploring channel evolution with history

This paper discusses the evolution of the distribution channel of the Australian Information Communication Technology (ICT) industry over a 21 year period, introducing an effectiveness of the methods used to investigate this. The paper opens with a discussion of the value of historical analysis, arguing that ‘applying history helps us by identifying the reasons for important transitions’. A historical focus both allows us to interpret the past via the identification of key events that triggered change; and by considering the patterns that these form; we are able to surmise the impact of present and future events. The practical problems associated with extended longitudinal research have been well documented and include substantial resources required, drop out, poor choice of focus (as one cannot foresee if research subjects will evolve in ways of interest to the researchers), etc. This paper illustrates an effective way of overcoming at least some of these problems by using archival material in combination with narrative event analysis and any necessary clarification and augmentation provided via depth interviews with industry experts. Narrative event analysis enables consideration of the important explanations that can emerge from considering timing, order and interaction of events over simple correlation between variables. The analysis enables consideration of ‘moving pictures’ of networks as they evolve rather than only static pictures. The analysis of archival data avoids problems of imperfect recall and because the material used (articles in trade journals published during the review period) is from the perspective of many different observers, we also avoid dependence on the perspectives and interpretations of only a few observers. The paper focuses on a description of the classification and coding of the archival data for events using structural conditions topography. One of the key findings is that the following mechanisms/conditions are appropriate for classification and interrelating of the processes and the events of the channel’s evolution. Market conditions which relate to preferred structure of the optimum channel network, size of market, industry growth, competition relating to number of vendors and distribution partners in the channel, long term strategic trends and the frequency of mergers and acquisitions were important drivers. Product conditions are connected to market conditions and these play a particularly important role in the information technology market where there is a constant emergence of new products and technology with products superseding other products and with short product life-cycles. Influence conditions (i.e. social mechanisms) are concerned responses to product and market conditions, in particular with how vendor distributor relationships are managed by vendor distributor management. This involves fit in terms of organisation culture and expectations between vendor and distributor, fit of personality of account manager on vendor distributor side, inter personal skills of account manager, communication frequency, interpersonal skills and how conflicts are managed. Commercial agreement conditions (risk/return profile of distribution) are the final key mechanism. This relates to the vendor commercial distributor agreement, basic functions, channel strategy, nature of commercial relationship, performance targets and formal reporting. The paper presents a portion of the analysis of the archival data using this frame to show the interrelationships of these four categories. Structural conditions have a significant impact on the structural evolution of the channel and on the relationships within the channel of distribution. Structural evolution is driven in part by market conditions. Mergers and acquisitions have resulted in increased channel consolidation and the emergence of fewer channel partners and this has moved the relationship processes from high conflict and adversarial to highly collaborative forms – though these do often include considerable conflict. Product conditions relating to convergence of new product technology over time have also impacted on channel structure expanding the channel further into retail and online alternatives. However this greater complexity of tasks (in conjunction with adversarial history) has resulted in the need for increasing levels of channel coordination to manage and resolve the considerable conflicts that continue to emerge. Evolution of commercial conditions has resulted in more professionalism and a formalised partner planning process which in turn is impacting on the influence conditions. The paper concludes with a discussion of further development of this methodology and the further analysis that will be undertaken