Antecedents of performance of multi‐level channels in transitional economies

Purpose – The purpose of this study is to examine the antecedents of channel performance in a multi‐level marketing (MLM) channel. Design/methodology/approach – Personal interviews with 105 distributors from network marketing companies operating in Lithuania, provided data for this study. Hypotheses were tested using structural equation model (LISREL). Findings – The findings suggest that trust, locus of control and shared values are moderated by channel commitment of the downstream channel members. Research limitations/implications – This study is limited to one country under investigation, therefore further research needs to be extended to other economies. Researchers might also identify additional variables affecting channel performance as well as undertake a longitudinal approach of the focal areas of commitment and channel performance. Practical implications – This study is of managerial interest, as the framework suggested in this study may be applied by MLM firms to monitor their networks and evaluate multi‐level channel performance. Originality/value – MLM channels offer a unique alternative and underutilized distribution channel for many companies, yet limited theoretical research has been accomplished in this arena. MLM channels are very interpersonal by their very nature and thus we extend the relationship marketing paradigm to MLM. In addition, transitional economies tend to have less developed marketing channels, and therefore are prime targets for MLM. Thus, this research specifically examines MLM in a transitioning economy.