For some reason, inexplicable to me, my two favourite research papers, are also my two least successful in terms of citations. Perhaps they were published in the wrong journals. This week I would like to report on one of them. While the empirical analysis was done in a distribution channels context, it has fascinating implications for the conditions under which war breaks out. My hope is to provide readers a provocation that makes them think, rather than provide definitive answers.
Basically, the paper was inspired by two theories – bilateral deterrence and conflict spiral – that made diametrically opposite predictions on the likelihood of hostilities (use of punitive tactics) between two parties as a consequence of the relative power positions of parties.
The Bilateral Deterrence Theory argues as the total power increases, punitive actions decline as both parties have greater exposure to loss and strong motivations to avoid that loss. With increasing power, each party’s fear of retaliation increases and their expectation of attack from the other party decreases (as the other party also fears retaliation). Increasing symmetric power leads to stable relationships according to the bilateral deterrence theory.
Bilateral deterrence theory makes the opposite prediction if the power of the two parties is unbalanced (one party has a lot more power than the other). In the face of unbalanced power, the powerful party focuses on the little it has to lose, and it therefore has little fear of retaliation and few restraints on its punitive actions. The less powerful party’s knowledge that the other is likely to use punitive actions renders its fear of retaliation a moot point. Although the less powerful party has more to lose than the other, it also expects to be attacked, regardless of its actions, and therefore has strong incentive to use punitive tactics pre-emptively to signal that it will not passively submit, despite its relative weakness. Asymmetrical relationships lead to greater use of punitive tactics by both parties.
The Conflict Spiral Theory argues as total power increases, punitive actions increase as both parties are tempted to use their power in order to accomplish their goals. As total power increases, each firm knows that its partner is similarly tempted and motivated to use punitive actions. Increasing symmetric power leads to unstable relationships according to the conflict spiral theory.
Conflict spiral theory argues that increasing asymmetry of power stabilizes a relationship, because one party clearly is more dominant. As the weaker party faces an increasing power deficit, it avoids punitive acts because it realizes that the expected gain from such tactics is low. Because punitive tactics are unlikely to advance its goals, the party with lower power will seek other means to gain the more powerful party’s cooperation. Conflict spiral theory also argues that the dominant partner becomes less likely to use its power because it has a lower expectation of being attacked by the less powerful party and is able to get that party to comply without resorting to punitive tactics.
Faced with the opposing predictions of the two theories with respect to greater power and asymmetry of power, our paper (with my co-authors Lisa Scheer and J-B. Steenkamp published in Journal of Marketing Research May 1998) reconciled them by demonstrating that both theories are valid, but for different forms of power. Fundamentally, the predictions of the bilateral deterrence theory hold true for power based on dependence, while the predictions of the conflict spiral theory are valid for power based on punitive capability. Let me now describe the two types of power.
Dependence based power rests on the extent to which party B is dependent on party A for valued resources. When party A possesses valued resources, such as capital, expertise, information, services, assets, affiliation, or status that generate for party B rewards and benefits that are not easily replaced, then party B is dependent on party A. When both parties are highly dependent on each other (think trade flows between two countries), there is less likelihood of war. But if the dependence is asymmetrical, then it is more likely that hostilities will break out.
Punitive capability based power arises from the possession of damaging resources by party A that generates no value for party B but can be used to wound party B. The arms build-up by countries is the best example of punitive capability. In our research context of distribution channels, various tracking systems and legal infrastructure by one party creates no value for the partner, except to demonstrate the former’s ability to punish the partner.
Research and Business Schools
Of course, this study raises many unresolved questions for future research. Compared to the previous postings, I realize that this one is theoretical. But, as I return to the academic world, I wanted to give readers a flavour of how distinct the academic research world in business schools is from the management practice world. My academic career had two distinct decade-long phases.
The first, between 1992-2002 was focussed on academic research such as the one presented in this blog post. The goal here was to generate citations by other academics. It is this type of research that leading business schools conduct and results in tenure and promotions for faculty.
The second phase between 2003-2013 was focussed on management practice research, which is published in books and management practice journals such as Harvard Business Review. These are typically not counted for raises and promotions at leading business schools. It is a luxury that only faculty who have achieved tenure can afford to pursue. But, it is this type of research that gets faculty members “guru” status.
Unfortunately, most business schools outside the top 50 pursue neither type of research, and instead, become teaching shops. But if all we have are student factories, then the question it raises is who will create the knowledge that these faculty will impart. Research, both academic and management practice, is the engine for this new knowledge.