The unintended effect of monetary incentives on shirking in supplier–reseller relationships

Robson, Matthew ORCID: https://orcid.org/0000-0001-8642-9980, Obadia, Claude and Katsikeas, Constantine S. 2026. The unintended effect of monetary incentives on shirking in supplier–reseller relationships. International Journal of Operations & Production Management 10.1108/IJOPM-02-2026-0309

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Abstract

Purpose: This study investigates how temporal changes in manufacturer monetary incentives influence reseller behavior within manufacturer–reseller relationships. We theorize, using agency theory, and examine empirically how the manufacturer's incentive changes have complex and unintended effects on the reseller's shirking, ultimately shaping the manufacturer's economic performance. Design/methodology/approach: We test our hypotheses on the effect of incentives using data from two successive surveys of exporting manufacturers in partnerships with foreign resellers, together with archival sources. Findings: We observe a U-shaped relationship of monetary-incentive changes with shirking. The results reveal that when monetary incentives are decreasing (left-side of the U), their effect on reseller shirking is negative, but when they are increasing (right-side of the U), they can have a positive effect on shirking. The U-shaped relationship steepens when import market GDP growth is high. Practical implications: Manufacturer managers should scrutinize and even resist reseller requests to increase monetary incentives because in most cases, the intended positive act of boosting incentives leads to an unintended increase in reseller shirking and a reduction in manufacturer performance. Originality/value: We adopt a novel approach that examines intertemporal changes in monetary incentives within manufacturer–reseller relationships. Our findings add to modern thinking on agency theory, which views the level of convergence between the principal's and the agent's economic interests as a dynamic process shaped by wider considerations pertaining to relationship status.

Item Type:	Article
Date Type:	Published Online
Status:	In Press
Schools:	Schools > Business (Including Economics)
Subjects:	H Social Sciences > HF Commerce
Additional Information:	RRS policy applied
Publisher:	Emerald
ISSN:	0144-3577
Date of First Compliant Deposit:	11 September 2026
Date of Acceptance:	28 August 2026
Last Modified:	13 Oct 2026 12:15
URI:	https://orca.cardiff.ac.uk/id/eprint/189528

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