J BUSN RES 1988:11:321-341 321 Partnership Advantage and Its Determinants in Distributor and Manufacturer Working Relationships Rajagopalan Sethuraman James C. Anderson Northwestern University James A. Narus Wake Forest University This paper draws upon a social exchange theory perspective and the marketing channels literature to provide a conceptualization of partnership advantage. Part- nership advantage directs consideration to the interdependent nature of manufac- turer and distributor working relationships, and to the resultant need of each firm to be cognizant of the advantage that it provides to its partner firm, relative to alternate potential partners. The contribution of partnership advantage to com- petitive advantage in the final customer marketplace is also discussed. A key in- formant methodology and a structural equation modeling approach were employed to investigate the determinants of partnership advantage. Both the manufacturer firm perspective and the distributor firm perspective were studied, with sample sizes of 162 manufacturer firms and 199 distributor firms. Nine distributor firm characteristics were found to account for 66% of the total variation in partnership advantage from the manufacturer firm perspective. Market penetration ability, with a path coefficient of 0.57, made the greatest unique contribution. Thirteen man- ufacturer capabilities explained 58% of the total variation in partnership advantage from the distributor firm perspective. Product offering, with a path coefficient of 0.69, made the most unique contribution. Introduction Developing and sustaining strong working relationships between firms in business markets are increasingly being viewed as a means for firms to reduce real costs and/or add value to the exchange system (e.g., Purchasing Worfd, 1985; Bohn, 1983). Arndt (1979) has referred to this changing nature of relationships between Address correspondence to James C. Anderson, Department of Marketing, J. L. Kellogg Graduate School of Management, Northwestern University, Evanston, IL 60208. Journal of Business Research 17, 327-347 (1988) 0 1988 Elsevier Science Publishing Co.. Inc. 014X-2963/88/$3.50 655 Avenue of the Americas, New York, NY 10010