Governance Mechanisms in Internet-Based Affiliate Marketing Programs in Spain

Paul B. Fox and Jonathan D. Wareham
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Paul B. Fox: ESADE - Ramon Llull University, Spain
Jonathan D. Wareham: ESADE - Ramon Llull University, Spain

International Journal of E-Business Research (IJEBR), 2010, vol. 6, issue 1, 1-18

Abstract: Internet-based affiliate marketing programs have emerged as one of the fastest-growing methods for online retailers to acquire customers and increase sales by tapping into the power of independent web sites to reach a large, diverse audience of potential customers. However, while these programs have proven effective in increasing website traffic and sales, illegal or inappropriate activities on the part of affiliates could negatively impact a retailer’s brand in the eyes of customers. This study is an exploratory analysis of governance mechanisms (formal contracts, partner selection, incentives and monitoring) in one-to-many affiliate programs in Spain. Agency theory and transaction cost analysis provide the theoretical background. The conclusion is that there is a significant lack of transparency in the guidance and restrictions communicated to affiliates, and a lack of systematic monitoring of affiliate behavior, which increases the risk of opportunism or misconduct. General recommendations for managers of affiliate programs are considered.

Date: 2010
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