To Delegate Or Not To Delegate? That Is The Question Of Pricing Authority

Abstract

The burning issue of delegating pricing authority to the sales force is of interest to marketing academics as well as practitioners in a wide variety of consumer, industrial and institutional marketing situations. There are many studies which examine the decision to delegate ultimate pricing authority (PA) to the sales force. Additionally the marketing literature encompasses many theoretical rationales for giving sales personnel authority to set prices. Conversely there are also empirical research outcomes that debate the opposite scenario, asserting that giving salespeople the highest degree of pricing authority engendered the lowest sales and profit results. It is difficult to find any study which has investigated or explored this issue from the salesperson’s point of view. In this study, we examine the perception of the sales force on the price authority they have been given. Supported by the sales motivation theory, we, specifically, examine the sales force perception of the decentralized (delegated) price authority to them and perceived firm performance.