Predicting cooperative behavior during a retailer’s bankruptcy

Retailer bankruptcy provides an opportunity for studying the relationships among members of a channel of distribution because bankruptcy disturbs the ongoing pattern of such relationships. This study employs qualitative research to model the criteria that suppliers use in selecting their response to a bankrupt retailer. Results show that suppliers who continue cooperative behavior with a retailer employ a model that assesses whether the risks in continuing to supply that retailer are in balance with the outcomes generated from the relationship. However, behavioral variables appear relevant as well: retailers appear to benefit from adopting a collaborative communication strategy and building supplier confidence so that a turnaround will in fact occur.