Introduction The research described in this abstract discusses “multilevel marketing,” including a review of academic literatures and studies that have used the direct sales business method as a research context. The multilevel marketing business structure represents an alternative to the business-employee-consumer relationships of those offered by traditional bureaucratic organizations. As such, they have, on one hand, collectively prospered and, on the other hand, attracted negative attention from regulatory and government entities, scholars, and competitors. Studies related to MLM organizations have examined these businesses on every populated continent, and have considered the viewpoints of consumers, MLM participants, and sales managers. Research has included a variety of empirical approaches, from quantitative survey methods to qualitative ethnographic studies. Consumer dispositions toward MLM have been measured intermittently over several years, and include consumer responses from many different countries. One consistent finding is that people who have purchased products from MLMs expressed more favorable opinions of them than do those who have not bought from MLM. Further, studies also provide evidence that consumers perceive that buying from direct selling is perceived to be less risky than some other non-store shopping modes (Gillett, 1976; Peterson, Albaum & Ridgway 1989; Alturas, Santos & Pereira 2005). Nonetheless, the practice is controversial and faces intense scrutiny in many countries while being banned in others. However, the research literature suggests careful consideration of the benefits of MLM organizations, in that the nontraditional organizational structure and methods of promotion may provide economic development in poor economies and also allow consumer-participants to develop important skills. One common method of retailing is direct sales. Direct selling companies emphasize promotion and distribution of their products through person-to-person contact, usually away from a physical retail location and usually through some network of independent sellers. The sales presentations are often held in homes, in the form of door-to-door solicitation, one-to-one meetings, through sales “parties,” or through some type of online social media platform (e.g., Facebook). Direct selling provides a channel of distribution for companies as an alternative to traditional retail outlets; it is attractive to companies that may be unable to compete with the vast advertising and promotion expenses that other manufacturers employ to gain shelf space in traditional retail stores. The variety of products and services that are sold through direct sales matches that of major traditional retailers, including cosmetics, home décor, wellness, jewelry, kitchen products, clothing, organic gardening, and scrapbooking supplies. Promotion of the products often relies on product demonstrations. One type of direct sales is multilevel marketing. A multilevel marketing organization (MLM) is a type of compensation structure (Coughlan & Grayson 1998) through which distributors earn income from their own sales as well as through commissions from the sales made by individuals they have recruited into their organization. As depicted in Figure 1, there are three basic components to compensation: 1. Distributors purchase the products or services at wholesale cost from the MLM organization; these products are sold at a profit (markup) to end consumers 2. Distributors are paid a commission by the MLM for what they sell directly 3. Distributors earn a bonus (percentage) of the sales made by individuals they recruit into the MLM. Recruits are referred to as the distributor’s “downline,” while the recruiter is referred to as the recruited person’s “upline.” MLM and traditional organizations MLM participants include people with diverse backgrounds, levels of education and experience, and personal qualities. Direct selling organizations rely on social connections and relationships to broaden their potential customer base; MLM organizations rely on these social connections as integral to their recruiting as well. MLM organizations do not have formal sales management structures. MLM participants are not “employees,” but rather act as independent franchisees that must adhere to organizational, ethical, and legal parameters. MLM participants are usually not co-located – they do not work at a central office – and often begin work part-time. Participants usually pay start-up or membership fees and pay for training and other selling-related materials. Because MLMs operate without bureaucratic organizational structure or traditional workplace, the company’s culture and ideologies are circulated through social relationships of each individual participant. Several researchers have asserted that cultural characteristics have a significant impact on the success of MLMs in any economy. Biggart (1989) observed that MLMs are successful in Asian countries because those societies tend to be very structured and hierarchical, and individuals in those countries carry a Confucian work ethic similar to Protestant ethic characteristic of the United States. Additionally, Asian extended family networks make selling and recruiting easier. By contrast, Herbig and Yelkurm (1997) observed that MLMs have not succeeded in parts of Europe, because the cultural and ideological climate is comparatively unreceptive to free enterprise and market entry. Laws restrict sellers to contact people at home. Southern European countries, however, tend to have larger informal sectors, fewer worker protections and restrictions, and stronger family and extended-family relationships. Statistics Worldwide, direct retail sales were $182.8 billion in 2014, an increase of over 6% from the previous year; these sales were generated by over 99 million direct-sellingretailers, including cosmetics, home décor, wellness, jewelry, kitchen products, clothing, organic gardening, and scrapbooking supplies. Promotion of the products often relies on product demonstrations. One type of direct sales is multilevel marketing. A multilevel marketing organization (MLM) is a type of compensation structure (Coughlan & Grayson 1998) through which distributors earn income from their own sales as well as through commissions from the sales made by individuals they have recruited into their organization. As depicted in Figure 1, there are three basic components to compensation: 1. Distributors purchase the products or services at wholesale cost from the MLM organization; these products are sold at a profit (markup) to end consumers 2. Distributors are paid a commission by the MLM for what they sell directly 3. Distributors earn a bonus (percentage) of the sales made by individuals they recruit into the MLM. Recruits are referred to as the distributor’s “downline,” while the recruiter is referred to as the recruited person’s “upline.” MLM and traditional organizations MLM participants include people with diverse backgrounds, levels of education and experience, and personal qualities. Direct selling organizations rely on social connections and relationships to broaden their potential customer base; MLM organizations rely on these social connections as integral to their recruiting as well. MLM organizations do not have formal sales management structures. MLM participants are not “employees,” but rather act as independent franchisees that must adhere to organizational, ethical, and legal parameters. MLM participants are usually not co-located – they do not work at a central office – and often begin work part-time. Participants usually pay start-up or membership fees and pay for training and other selling-related materials. Because MLMs operate without bureaucratic organizational structure or traditional workplace, the company’s culture and ideologies are circulated through social relationships of each individual participant. Several researchers have asserted that cultural characteristics have a significant impact on the success of MLMs in any economy. Biggart (1989) observed that MLMs are successful in Asian countries because those societies tend to be very structured and hierarchical, and individuals in those countries carry a Confucian work ethic similar to Protestant ethic characteristic of the United States. Additionally, Asian extended family networks make selling and recruiting easier. By contrast, Herbig and Yelkurm (1997) observed that MLMs have not succeeded in parts of Europe, because the cultural and ideological climate is comparatively unreceptive to free enterprise and market entry. Laws restrict sellers to contact people at home. Southern European countries, however, tend to have larger informal sectors, fewer worker protections and restrictions, and stronger family and extended-family relationships. Statistics Worldwide, direct retail sales were $182.8 billion in 2014, an increase of over 6% from the previous year; these sales were generated by over 99 million direct-selling distributors (World Federation of Direct Selling Associations, 2015). The primary product categories included cosmetics/personal care, wellness, household products, and clothing/accessories. The largest markets for direct selling include the United States, Europe, and Japan. The European Direct Selling Association (Seldia) reported that 2014 sales of direct selling firms in European Union countries were €24 billion (about $26.7 billion), with over 5 million direct sellers (Seldia, 2015). In Japan, 2012 direct selling revenues were ¥177 trillion ($16 billion), with 3.3 million participants (WFDSA, 2015). In the United States, there were over 18 million direct-selling distributors in 2014 who generated $34.5 billion, a 5.5% increase from 2013. The Direct Sales Association reported that over 95% of U.S. direct sales in 2011 were through MLMs (Direct Sales Association, 2015). In terms of participation, the vast majority of direct distributors are women in both of two largest aggregate direct-selling markets. In the European Union, 79% of all direct sellers were women in 2014 (Seldia, 2015); seventy-six percent of direct sellers were considered to be part-time. In the U.S., the percentage of female direct sellers in the U.S. in 2014 was 74% (DSA, 2015). Criticism and Legal/Regulatory Issues Legitimate MLMs are often characterized as or confused with illegal “pyramid” or “Ponzi” schemes, and seem to have always attracted regulatory scrutiny (Arun, 2015; Alpert, 2012; Croft, Cutts & Mould, 2000; Hyman, 2008; Herbig & Yelkurm, 1997; O’Regan, 2015). In response to illegitimate operations, consumer protection groups and federal and local governments have provided information and enacted laws which distinguish MLMs from their fraudulent counterparts. MLMs and pyramid schemes Much of the academic and legal literatures have ventured to provide formal delineation between legal MLMs and the illegal and unethical practices related to pyramid schemes (Stockstill, 1985; Coughlan & Grayson, 1998; Epstein, 2010; Vander Nat & Keep, 2002). There is nearly universal concurrence that whether a program is a legitimate multilevel marketing plan or an illegal pyramid depends on: (1) the method by which the products or services are sold; and (2) the manner in which participants are compensated. Basically, if an organization pays participants for sales by their “enrollees,” “recruits,” and/or their downline enrollees and recruits, that plan is multilevel. If a program compensates participants, directly or indirectly, merely for the introduction or enrollment of other participants into the program, unrelated to the sales of any product, it is considered to be a pyramid. In the United States, federal and state anti-pyramid statutes comprise a comprehensive consumer protection umbrella. These laws are designed to protect individuals from being defrauded through illegitimate programs which lure participants with the promise of easy money by compensating them from the investments of additional participants rather than from legitimate product sales. Federal and state regulatory agencies have sought to prohibit such illegal activity using laws that control pyramids, mail fraud, business opportunity, franchise, lottery, and securities. Internationally, many countries ban some forms of pyramid schemes. Pyramid selling and multilevel marketing both take the form of complex organizations, and because of different interpretations of business activities and underlying regulatory philosophies across countries, regulation takes different forms (Micklitz, Monazzahian & Rößler, 1999; Dobson, 2011; Chan, 1999; China Daily, 2013; Epstein, 2010). Economic Development and MLM Organizations Several studies have observed that one of the key reasons for the establishment and growth of MLM organizations has been that they are often introduced into a larger socioeconomic context, using pre-existing social relationships to become engrained in the overall complex of an economy. Indeed, in communities where families and social networks are relatively large and geographically concentrated, MLM organizations have tended to thrive. MLMs are particularly attractive employment options for groups of people who may experience high unemployment and discrimination in the primary labor market (Brodie, Stanworth & Wotruba, 1998), for example women (Biggart, 1989; Casanova, 2011a, 2011b; Vincent, 2003; Dolan & Scott, 2009; Cahn, 2011; Singh & Aggarwal, 2012) and ethnic minorities (Dai, Wang & Teo, 2011; de Vidas, 2008). Further, as many countries attempt to follow a neo-liberalized, free-market approach to economic development, employment has become more feminized (Standing, 1999) and selling for a transnational direct sales organization is often an appealing option for women in developing countries, providing paid employment that takes place not only outside the home, but outside the archetypical, standardized workplace of the export-product manufacturing factory (Casanova, 2011a, 2011b; Wilson, 1998). Other evidence has suggested several macro-environmental developments that continue to have an impact on direct sales organizations (Ingram, 1993; Ragland, 2012). First, the splintering of market segments into subsegments has compelled companies with fewer resources to focus to avoid the “mass market,” and focus instead on smaller segments, tailoring their efforts to gain customer satisfaction (Kotler & Armstrong, 2014). MLMs are particularly suited to this consumer environment – distributors talking directly to consumers to find out what it is that they want, like, and prefer. One further outcome of this fragmentation has been that people have been forced to seek new groups to satisfy their need to belong, and “hybrid” economic social networks such as MLMs satisfy these nonmaterial needs of distributor participants (Green & D’aiuto, 1977). This appears to be a reasonable explanation of why many of the largest MLM organizations have several million distributors, the majority of whom gain only very minimal financial rewards despite devoting a substantial portion of their time to company activities. A second macro trend is that of globalization. Over the past thirty years, a strong demand has developed for Western products in then-newly-opened European and Asian markets. This continues to be the case in central Asia (India, Russia) and Latin America. In addition to consumer demand, a high level of salesperson motivation in those countries cited as a key to success. Thus consumer demand for MLM-supplied products has grown, while the entrepreneurial spirit that multilevel marketing encourages is appealing to many who seek self-managed work and independence from the traditional employer-employee relationship. Third, manufacturers often pursue multiple channels of distribution to make products available, and MLMs offer a realistic (and often creative) alternative component. This makes it easy for shoppers to find what they want, and a “direct” channel can coexist with traditional channels, allowing entry into extremely local markets and extremely poor consumers (Ireland, 2008; Dolan & Scott, 2009). For example, Ireland (2008) provided several examples of the implementation of MLM in poor communities in South America. This strategy was executed by well-known brands, some of which were recognizable MLMs (e.g. Avon) and some of which were traditional consumer products manufacturers (e.g. Coca Cola). The MLM organization in each of these cases emphasized physical distribution – in some situations going so far as to provide refrigerators in the homes of poor consumers, who would then sell beer or soft drinks directly from their homes. Improving access to products involved elaborate multilevel marketing channels that used the social skills and energy of “bottom of pyramid” (very poor) residents who participated as distributors. A fourth macro-level trend has been that toward trust-based relationship marketing, defined as building, developing and maintaining strong relationships with customers and other stakeholders in order to obtain a high profitability through customer satisfaction (Berry, 1983). The success of the MLM business model as a strategic alternative may thus be linked to the macro-level processes in national and global economies. Discussion and Conclusions Modern versions of direct selling hold the potential to improve lives across the world’s developing economies as the range of products begins to include those that have high social value, such as medicines, hygienic items and communications. Multilevel marketing is an innovation that has become increasingly successful as it has evolved in Western economies to include well-known consumer products (Amway, Tupperware, Mary Kay) but also high-end fashion (J. Hilburn, Etcetera) and even sex toys (Passion Parties). In developing countries, the MLM represents a potentially lucrative channel for traditional companies seeking growth – the flexibility of the channel of distribution, the fact that it relies on existing relationships among potential consumers and distributors, and its ability to reach consumers directly make it a potential tool for economic development. Even still, multilevel marketing carries negative connotations in many marketplaces worldwide. Because MLM participants are technically not employees of their company, “control” over participants is difficult, and continued participation is difficult to maintain. The high degree of commitment and strong organizational culture seem to foster accusations of “cult” behaviors. While there is no question that false product or business opportunity claims may be made – as with any consumer product – academic research tends to suggest that prohibition or strict regulation needs to be carefully weighed against the potential benefits of MLM organizational structures and operations. Multilevel marketing and other direct sales channels of distribution may facilitate economic development, first by employing people who may have little business experience, and second by making products available to consumers in markets where few other retailers may be able to reach. Research also suggests that the MLM business method provides a legitimate alternative strategy to traditional retailing: marketers can get information to consumers in ways that are not feasible using traditional advertising or retail distribution, and person-to-person selling increases the likelihood of customer satisfaction.

Since the arrival of omni-channel retailing, which promotes seamless experience for consumers and zero effort commerce, channel integration has been a big issue in both the domestic and the international retail industry. Some researchers have identified problems that can occur in the process of channel integration, such as cannibalization and channel conflict (Coelho & Easingwood, 2003). However, many studies on channel integration report its positive impact on a firm’s revenue growth through improved trust (Schramm-Klein & Morschett, 2006), higher consumer conversion rates (Neslin et al., 2006), and greater cross-selling opportunities (Berry et al., 2010). Regarding the issue of effectively establishing channel integration in order to bring positive synergy to a company, the present study intends to identify a solution within a company’s internal factors. This study aims to provide a strategic perspective on channel integration formation of domestic fashion retailers by identifying some of the key organizational components that drive a firm’s channel integration in this omni-channel era, when the boundaries between online and offline markets are disappearing. This study predicts that organizational structure and strategic orientation are the key components of a fashion retailer’s channel integration implementation in an omni-channel environment. As shown in previous studies, channel integration has a positive impact on a firm’s performance through active and innovative transformation of the organization’s hardware and software (Cao & Li, 2015; Yan, Wang, & Zhou, 2010). In particular, this study introduces channel (extension) strategies (number of different types of channels in both online and offline markets) into channel integration as one of the crucial variables, in addition to the two existing variables. The data were collected through a survey targeting mid-level executives or above, within a business unit of Korea’s fashion companies with over $10 million revenue. Through this selection, a total of 120 samples were used in the final analysis. Hierarchical regression modeling was used to prove the study’s hypothesis. The revenue size of a parent company and SBU was used as a control variable in the level 1 model; channel strategies in the level 2 model; organizational structure in the level 3 model, and organization strategic orientation in the level 4 model, which was used as an independent variable. Integrated back-end system and integrated human resource management, which are the highest levels of channel integration (Cao & Li, 2015; Oh, Teo, & Sambamurthy, 2012), have been used as dependent variables. The main findings of this study are as follows: In a back-end system integration model, organization strategic orientation was identified as the highest level when the organizational structure becomes more centralized, whereas the system integration level is the highest when the model is competitor-oriented and innovation-oriented. In the human resource management integration model, the human resource management integration level is at its highest when the organizational structure becomes formalized and specialized, and organization strategic behavior becomes more competitor-oriented and innovation-oriented.

Market orientation has been extensively studied in the last 30 years. Previous studies have mainly focused on manufacturing and in the retail industry market orientation remains rather unexplored. There are only a few studies on market orientation in retailing (e.g. Elg, 2003; Kajalo & Lindblom, 2015; Liu & Davies, 1997). According to Elg (2003) market orientation in retailing differs from manufacturing in several aspects. Most importantly, in retailing individual stores have important roles to implement market orientation. They interact with customers and satisfy customer’s needs in the service encounter. Even if retailer can generate and share market knowledge in organization, the effect of market orientation on performance is weak when store organization does not adopt market oriented behaviour (Liu & Davies, 1997). Therefore, it is important for retailer to control market orientation of a retail store. Most retailers operate as retail chains to increase the scale of business. Retail chain is a multi-unit firm that manages many stores as profit units (Chang & Harrington, 2002). Retail chain includes buying and selling divisions, which specialize in different tasks. Buying division has specialized role and responsibility to search and negotiate with the suppliers, make the merchandising plan, monitor the process of merchandising, and revise the merchandising plan. In a similar manner, selling division has specialized role and responsibility to implement merchandising plan, promote retail services to customers, and manage the stores to differentiate from competitors. Buying division makes standardized merchandising plan for stores to increase scale advantage in buying, inventory management, store delivery, and advertising. Retail chains centralize the decisions of merchandising to buying divisions and formalize the process of merchandising in chain organization. On the other hand, retail chains become market - oriented organization to increase the scale advantage because this advantage depends on the effectiveness of merchandising plan. From the perspective of market orientation, the three behavioral aspects of market orientation – generation, dissemination, and response are performed by buying division and selling division of the retail chain. Buying division needs the market information generated by retail stores as selling division. Buying division makes the merchandising plan under environmental uncertainty. Buying division decreases this uncertainty to analyze the market information from stores. Market information includes not only existing market needs but also potential market needs. Buying division finds potential market needs into the market information and makes an innovative merchandising plan.In the merchandising process, selling division implements market orientation in stores. After the buying division makes merchandising plans to differentiate from competitors, the selling division implements these plans on stores. For example, store manager monitors the process of implementation and revises the action according to merchandising plans. When store managers find problems, they report these problems to the buying division and request to refine merchandising plans. In this way, the buying division takes the planning part of market orientation and the selling division takes the implementation part of market orientation. To control market orientation in chain organization, retail chain coordinate buying division and selling division by organizational structure - centralization and formalization (Lechner & Kreutzer, 2010). Organizational structure has effect on market orientation. First, formalization has opposite effect on market orientation (Jaworski & Kohli, 1993). According to Ouchi (1978) formalization reduces the ambiguity of goals and makes clear the criteria of performance evaluation in organization among organizational members. When formalization motivates organizational member to be market oriented, formalization facilitates market intelligence generation and sharing of market intelligence with organizational members. On the other hand, formalization limits the behavior of organizational members (von Krog, 1998). López et al. (2006) suggest that the rules and procedures set by formalization give the pattern to organizational communication. As results, formalization reduces the chances for organization members to communicate market intelligence and interact with each other because organizational member put priority on formalized communication channel. Second, centralization has negative effect on market orientation. According to Pelham and Wilson (1996) decentralization increases organizational commitment to satisfy customer needs and motivates market orientation. Souitaris (2001) and Ouchi (2006) assert that centralization reduces the degree of information sharing among organizational members. Therefore, centralization has negative effect on market orientation. Organizational structure has indirect effect on innovation orientation of store thought market orientation. There are two streams about the relationship between market orientation and innovation orientation (Grinstein 2008). One stream suggests that market orientation is negatively related to innovation. Another stream suggests that market orientation is positive related to innovation. In this study, we argue according to recent research that market orientation is likely to enhance. To test the conceptual model that incorporates these concepts (Figure 1), a survey was conducted among Japanese retailers. The sample (N=191) consists of store managers (71), vice-store managers (22), and floor managers (98) of a Japanese retail chain. The scales used in the study were adapted from previous research (Table 1). Concerning common method bias, we conducted Harman’s one-factor test and applied confirmatory factor analysis (CFA) testing of a model with all of the items loading on a common method factor. Comparing this model with a measurement model containing seven latent variables revealed a significant deterioration in chi-square (χ2 = 378.446; p < .01). This finding suggests that common method bias is not a serious threat in the study. This data was analyzed by following a two-step structural equation modeling approach. First, a CFA was carried out to assess the reliability and validity of theconstruct measures included in the study. In order to evaluate the reliability of the latent variables, composite reliability for all latent variables was calculated. We assess scale reliability using average variance extracted (AVE) and composite reliability (CR). The CR of each scale exceeds 0.80. The AVE of each scale exceeds 0.50. Discriminant validity was evaluated by Fornell and Larcker (1981). We found that the square root of the average variance extracted is greater than all of the corresponding correlations. These findings indicate that reliability and validity of the construct measures was adequate. Second, a structural equation model analysis was done to test the hypothesis. As seen in Figure 2 the SEM model exhibits good overall fit of the model. The results of the model provide several interesting contributions. First, the study shows that centralization has a statistically significant negative impact on formalization in retail chain. Second, the study demonstrates how centralization and formalization are linked to innovation orientation through three dimensions of market orientation. Third, the study demonstrates to retail managers the importance of organizational design and how good market orientation can benefit retailers in their increasingly innovation orientation. For retail chain, centralization and formalization of decision making about merchandising are important for gaining scale advantage. But centralization has negative effect on market orientation. Retail chain has trade – off between scale advantage and market orientation in practice. Overall, our framework demonstrates the effects of organizational structure on market orientation and innovation orientation in retail chain. Thus, our framework shows the direct and indirect impacts that organizational structure has on innovation orientation.

기업의 소유와 경영에 관한 논의는 기업의 사회적 역할과 윤리의식이 결부되면서, 기업과 사회 환경이 소유와 경영에 어떠한 영향을 미치는지에 대한 관계를 모색하고자 하는 논의가 활발하게 진행되고 있다. 이러한 논의가 진행되는 이유는 기업의 사회적 책임이 강조되면서 기업의 경영체제가 장기적으로는 기업의 경영성과를 결정하는 중요한 이슈 중의 하나로 인식되고 있기 때문이다. 기업경영에는 여러 가지의 유형이 있지만, 그 중 하나가 가족경영(family busine

This study aims to investigate the direct relationship between ownership structure, earnings manipulation, and organizational performance, and then examine the mediating effect of earnings manipulation in the relationship between ownership structure and organizational performance. This study collected and analyzed secondary data published in financial reports related to all insurance organizations listed in the Jordanian market during the study period (from 2009 until 2018). A panel data analysis was conducted, giving a total of 200 observations. The findings of this study concluded that ownership concentration, foreign ownership, and organization size affect organizational performance proxied by ROA, ROE, and EPS, more specifically, ownership concentration and organization size have a positive effect, whereas foreign ownership has a negative effect. At the same time, board of director ownership, organizational ownership, and CEO compensation did not affect organizational performance. Next, the board of director ownership, ownership concentration, foreign ownership, and CEO compensation affect earnings manipulation separately. In addition, earnings manipulation positively affects organizational performance proxied by ROA, ROE and EPS. This means that the higher the earnings manipulation is, the higher the organizational performance is. Finally, earnings manipulation mediates the relationship between ownership concentration and foreign ownership of ownership structure, and organizational performance.