Vendor‐owned Inventory Management Arrangements in Retail: An Agency Theory Perspective

This paper undertakes two related tasks to augment current understanding regarding vendor‐owned inventory management (VOIM) arrangements implemented in the retail industry. The first task formally juxtaposes three prevalent forms of VOIM arrangements (i.e., Consignment, Pay‐On‐Scan, and Scan‐Based Trading) to one another and identifies three dimensions (i.e., Relevant Data Visibility, Timeliness of Information Release, and Shrink Responsibility) that serve to discriminate among them. The second task applies an Agency Theory lens to uncover differing profiles of characteristics underlying the retailer‐vendor relationship across the Consignment, Pay‐On‐Scan, and Scan‐Based Trading arrangements. These conceptual results contribute to and have implications for the science and practice of VOIM arrangements in the retail industry.