Creating value in business relationships: The role of sales

Understanding the creation of value in business relationships has been a long-standing goal of researchers and managers alike. By adopting a relational perspective, recent research on business relationships has made much progress in understanding value-creating processes. As the sales function is thought to be a pivotal part of the value-creating processes in business relationships, the evolving view on creating relationship value clearly has implications for our understanding of the role of sales in these processes. In contrast to its importance, the question of how the sales function contributes to creating value in business relationships has been largely neglected in extant literature. The objective of our paper is to answer this question by systematically linking the relational value creating process to the sales function's content. Interpreting value creation as interaction process, we identify four features of value-creating processes in business relationships suggested in recent research (i.e., jointness, balanced initiative, interacted value, and socio-cognitive construction) and, based on these, outline a framework that is used to define a set of tasks that are key to creating value in business relationships and hence become critical for sales in its hitherto neglected role as co-creator of relationship value. We illustrate the various tasks of this new role of sales with data from 43 interviews with sales managers and salespeople. Along with related normative recommendations in extant literature, the interviews provide support for the validity and relevance of our framework for understanding the role of sales in creating relationship value. This framework puts forward a much-needed first effort towards a theory of sales' role in creating relationship value and offers several opportunities for future research.     

The Importance of Social Capital to the Management of Multinational Enterprises: Relational Networks Among Asian and Western Firms

Social capital is an important concept for multinational firms. Firms operating in global markets rarely have adequate resources to compete effectively in global markets; they access the needed resources through formal and informal relationships with other firms. The cultures in Asian countries have emphasized relationships much more strongly than Western firms. Thus, relational capital, based on guanxi (China), kankei (Japan) and inmak (Korea), provides the framework for business dealings in many Asian countries. As a result, the social capital of many Asian firms gives them a potential competitive advantage in global markets. Western firms must develop social capital and learn to manage relational networks to gain and sustain a competitive advantage in global markets. Western firms can learn how to develop and manage social capital from Asian firms. Alternatively, social capital has some disadvantages. Firms are limited by their networks and thus experience opportunity costs and path dependence. Additionally, while Asian firms often have strong network ties in their domestic markets, they have to develop many more ties globally to operate effectively in global markets. As a result, the development and management of social capital has become of critical importance for competitive advantage in global markets.     

Organizational perceptions of sales managers

The field sales manager is an important member of any organization that has a field sales force. Field sales managers are critical from an operations and human relations point of view [14]. It is at this position that marketing plans meet field implementation. In addition, field sales managers embody management to the salesmen and in turn represent the salesmen to top management. Because of the boundary nature of this position, it is essential to have field sales managers who work harmoniously with both organizational levels. The man-in-the-middle nature of the position makes the field sales manager susceptible to the performance expectations of two diverse groups—sales and managerial personnel.     

Understanding sales manager effectiveness: Linking attributes to sales force values

Although sales managers influence a variety of sales force outcomes critically important in the dynamic business environment of the 21st Century, research examining sales manager effectiveness is limited. As such, an investigation of the attributes of effective sales managers, as well as the impact of these attributes on the sales force, is warranted. To explore these issues, the authors employed value laddering, an in-depth interview technique that facilitates the identification of key attributes and the subsequent linkages of those attributes to consequences and underlying values or goals held by respondents. Data collected from sales professionals resulted in 308 ladders that were subsequently aggregated across subjects and used to generate a hierarchical value map (HVM) reflecting the associations among constructs. The HVM highlights the attributes of effective sales managers, as identified by respondents, and reflects three major sales management roles: communicator, motivator and coach. Each of these roles is explored and managerial and research implications are discussed.     

Beyond the Boundary

Much has been written about information gatekeepers, mostly describing how gatekeepers function within organizations. There has been less consideration of the gatekeeper's activities beyond the organization's boundary, though the gathering of external information is fundamental to gatekeeping. Stuart Macdonald and Christine Williams examine gatekeeping from an information perspective, starting with external information and following it into the organization. With only primitive networking and a range of occasional contacts in the outside world, the gatekeeper is something of a scavenger of external information. The gatekeeper certainly transfers information from the external environment to colleagues within the organization, but primary interest is in personal use of the information gathered. Seniority within the organization may allow the gatekeeper the latitude to function in ways that would not be tolerated in more junior employees. The article is wholly concerned with informal gatekeeping and concludes that organizations may condone or even inhibit such activity, but are constrained by the nature of information, and of organization itself, from encouraging it.     

Paradoxes and guanxi dilemmas in emerging Chinese-Western intercultural relationships

Three paradoxes have been revealed in the study of business networks by Industrial Marketing and Purchasing (IMP) researchers. These are: seeking opportunities and then facing limitations, influencing others and yet being influenced in turn, and controlling and yet being out of control in network situations. These paradoxes have previously received little critical evaluation. This article investigates these paradoxes through in depth interviews with twenty-two business managers in Chinese-Western intercultural relationships. Three specific dilemmas relating to the fundamental Chinese cultural principle of guanxi are revealed. These dilemmas are: dilemmas between strong personal ties (guanxi) and weak personal ties, dilemmas between previous understandings and new learning of guanxi ties, and conflicting obligations between inner and outer circles of guanxi networks. These guanxi dilemmas occur in emerging Chinese-Western intercultural networks, irrespective of the specific cultural variations, contractual constraints, or corporate policies applying. This paper identifies a need for more acute study of guanxi cultural norms and their behavioral consequences in emerging Chinese-Western intercultural relationships, given the rise of China in the global economy.     

Guanxi and organizational dynamics: organizational networking in Chinese firms

This paper focuses on the utilization of guanxi, which is an important cultural and social element in China, and the impact of guanxi on firm performance. Although guanxi is embedded in every aspect of Chinese social life, companies demonstrate different needs and capacity for guanxi cultivation. Chinese firms develop guanxi as a strategic mechanism to overcome competitive and resource disadvantages by cooperating and exchanging favors with competitive forces and government authorities. We develop an integrative framework theorizing guanxi utilization according to institutional, strategic, and organizational factors, and we explore the impact of guanxi on firm performance, primarily sales growth and net profit growth. Our findings, based on a survey of 128 firms in central China, provide strong support that institutional, strategic, and organizational factors are critical determinants of guanxi with competitive forces. However, only institutional and strategic factors are significant for guanxi utilization with government authorities. In general, guanxi leads to higher firm performance, but is limited to increased sales growth, and has little impact on profit growth. Guanxi benefits market expansion and competitive positioning of firms, but does not enhance internal operations. Copyright © 2001 John Wiley & Sons, Ltd.     

Marketing channel management and the sales manager

For years, the channel manager remained an organizational position found mainly in textbooks and the literature and seldom on company organization charts. Recently, however, persuasive evidence has revealed that marketing channel management comes chiefly under the purview of the sales manager. Accepting this new reality, sales management training will need to be dramatically expanded to include these new channel management responsibilities. But, are all levels of sales managers involved or equally involved in channel management? If not, channel manager training must be tailored for specific levels of sales management in order to achieve desired channel effectiveness and efficiency. To date, no published research has explored whether channel management involvement varies at different levels in the sales manager hierarchy. In this age of channel dynamism, successful companies must determine the specific involvement of each sales management level in channel management so that appropriate training and support can be provided to optimize performance in this critical area of market competition. To address the foregoing issues, data were drawn from a random national sample of sales managers. Results indicate that sales managers at all hierarchical levels participate in administering various aspects of marketing channel management. The degree of involvement, however, varies significantly by sales manager level. Sales management implications are discussed, and areas for future research are suggested.     

Effects of relational ties paradox on financial and non-financial consequences of servitization: Roles of organizational flexibility and improvisation

Drawing from relational governance and dynamic capabilities literature streams, we develop a conceptual model in which business and political ties are antecedents of organizational flexibility, which in turn are related to organizational improvisation and, ultimately, financial and non-financial firm performance. We test our model using a data collected from 302 Turkish senior managers. We find positive direct and indirect impacts of business ties on organizational improvisation, and negative direct and indirect impacts of political ties on organizational improvisation. We find organizational improvisation significantly related to several indicators of firm performance. Our results provide clarity on relational governance and firm performance. The intermediate variables of organizational flexibility and improvisation shed light on equivocal findings regarding the effects of business and political ties on firm performance.     

Reputational Effectiveness in Cross-Functional Working Relationships

The work of innovation management involves cross‐functional coordination among specialists and managers with different work orientations, time horizons, professional backgrounds, and values ( Ford and Randolph, 1992 ). While strong connections across functions are critical for new product development success ( Green et al., 2000 ), some managers may be more adept at fostering effective cross‐functional relationships than others. In this article, the authors empirically examine the factors that distinguish reputationally effective innovation workers from their less effective peers. Drawing on the work of Tsui (1984, 1994) , reputational effectiveness is defined as the degree to which a manager has been responsive to the needs and expectations of constituents. This research examines the relational skills and interaction patterns of more (versus less) reputationally effective managers. A large business unit of a Fortune 500 telecommunications firm provided the context for our study. Using a two‐phase approach, the authors first captured the social network patterns of 268 managers from marketing, research and development (R&D), manufacturing, and other business functions that were involved in the new product development process. In addition, the reputational effectiveness of each person who was identified as a member of the network was measured. In the second phase, the authors examined the relational competencies (e.g., role‐taking ability, interpersonal control, openness) of the managers who participated in Phase I of the research. As predicted, the results indicate that role‐taking ability is related positively to a manager's reputational effectiveness. No support, however, was found for the relationship between interpersonal control and reputational effectiveness. Interestingly, the authors found evidence of an inverse relationship between openness and effectiveness. By sharing too much information—or alternatively information that does not relate to the task at hand—the reputational effectiveness of a manager is damaged. Importantly, the results reveal that the social network characteristics of a reputationally effective manager differ from those of less effective managers. Closeness centrality, a measure of the degree of access one has to other organizational members, was associated strongly with reputational effectiveness. The results demonstrate that managers who are successful in working across functions appreciate the cognitive and emotional perspectives of diverse constituents and develop relationship ties that provide them with ready access to others across the organization.     

Sales force social exchange in problem resolution situations

While sales managers spend much of their time resolving sales force-related problems, existing theory offers little insight into the social exchange processes which occur in problem resolution situations. Using a qualitative inquiry method rooted in grounded theory, we uncover three key social exchange contributions used by sales managers when dealing with problem situations in the sales force: sales manager responsiveness, caring, and aggressiveness. We then show that the extent to which managers use these exchange contributions in problem situations is a function of manager characteristics, problem-specific characteristics, and the situational context. We also show that the extent to which managers invest in these three social exchange contributions has implications for the quality for the interpersonal relationships between salespeople and their managers, and for the effectiveness of problem resolution activity.     

Organizational innovativeness and firm performance: Does sales management matter?

Salespeople interact with individual customers to drive revenues by identifying and finding solutions for customer needs. The external knowledge salespeople acquire in conjunction with the network position they hold in their firm suggests that the sales force has great value in facilitating organizational innovativeness. Sales managers set the tone for sales operations, and an intellectually stimulating sales manager can create ripple effects of innovative thinking across the sales force and organization. In this paper, we propose that sales manager intellectual stimulation helps drive organizational innovativeness and, in turn, sales growth. Survey data collected from a cross-industry sample of business-to-business sales leaders are linked to an objective measure of firm sales growth. The results indicate that sales manager intellectual stimulation leads to organizational innovativeness. They also suggest that the degree to which the sales department is integrated within the firm strengthens this positive relationship. Finally, the relationship between organizational innovativeness and sales growth follows a non-linear U shape.     

How do the combinations of sales control systems influence sales performance? The mediating roles of distinct customer-oriented behaviors

By distinguishing customer-oriented behaviors into functional and relational ones, this study reveals how different combinations of sales control systems (namely activity control, outcome control, and capability control) affect a salesperson's distinct customer-oriented behaviors, which subsequently influence sales performance. By collecting data from business-to-business salespeople and their managers and using hierarchical linear modeling, we find that the outcome-capability control combination increases functional and relational customer-oriented behaviors. The outcome-activity control combination decreases functional customer-oriented behaviors. The activity-capability control combination increases functional customer-oriented behaviors but reduces relational customer-oriented behaviors. In addition, we find that both customer-oriented behaviors not only boost sales performance individually, but also complement each other to positively affect sales performance. These findings provide important theoretical and practical implications by demonstrating that combinations of control systems have a significant impact on a salesperson's functional and relational customer-oriented behaviors.     

Relationship marketing in Guanxi networks: A social network analysis study of Chinese construction small and medium-sized enterprises

Despite the significance of Guanxi networking as the integrated approach to relationship marketing in the Chinese business environment, there remains, however, a limited understanding of the structural and relational characteristics of these stakeholder networks, within which value is jointly created and shared. In this study, the value-adding ego-networks of the business owners in four Chinese construction small- and medium-sized enterprises (SMEs) are examined. The relationship between the business owner and six main stakeholder groups was identified, quantified, analyzed, and visualized using SNA. Relationships were measured according to the frequency of communication, the value of favour exchanges, and the amount of emotional investment in the relationship. Comparative SNA studies were conducted, focusing on ego-network density, tie strength, and prominence of key stakeholders. The findings highlighted the high degree of the structural and relational embeddedness in Chinese SMEs with Guanxi ties (both strong and weak) dominating the construction business-owners' network. They also underlined the prominence of the internal markets of multiskilled employees and business-development managers. Transactional ties, albeit a minority, also exist in the business-owners' network, which confirms that both relational and transactional marketing coexist in the Chinese construction industry. The study draws managerial implications for entrepreneurial business owners and managers, and proposes directions for future research.     

Flexibility in marketing & sales interfacing processes

Preliminary insights in the marketing literature indicate that flexibility is important in marketing and sales processes and interaction. However, to date, marketing and sales management literature lacks an understanding of what flexibility in marketing-sales interfaces looks like, its potential organizational consequences, and potential boundary conditions. Using data from interviews with marketing and sales managers, this study explores the nature, outcomes and facilitators of flexibility at the marketing-sales interface. This study conceptualizes marketing-sales interface flexibility (MSIF) as a process of flexible cross-functional resource exchange and finds that MSIF has positive organizational outcomes (both in terms of performance and relationship quality), that MSIF is essential for firms when dealing with exigencies in turbulent environments, and that the utility of MSIF is conditioned by the speed with which MSIF is implemented. The research contribution is twofold. At a theoretical level, the study defines the construct for the first time, revealing MSIF's conceptual composition for examination, and develops theory regarding MSIF's direct relationships with key business outcomes, as well as likely contingencies that shape its importance. At a practical level, the study's framework offers a tool that managers can use to help build organizational success through enhanced flexibility in their marketing-sales interfaces.     

The effect of social capital on local suppliers’ exploitative and exploratory learning in global buyer–supplier relationships: the moderating role of contract specificity

Drawing on the theories of social capital (SC) and organizational learning, a contingency theoretical framework that examines the impact of structural, relational, and cognitive SC on local suppliers’ exploitative and exploratory learning in the context of global buyer–supplier (GBS) relationships in China was developed. The extent to which the impact is moderated by the contract specificity between the buyer and supplier is also examined. The empirical results show significant positive impacts of structural and relational SC on local suppliers’ exploitative learning but significant negative impacts on local suppliers’ exploratory learning. More specifically, contract specificity strengthens the positive effects of all three dimensions of SC on exploitative and the negative effects of structural SC and relational SC on exploratory learning. They put forward several potential implications for practicing managers and policymakers.     

An approach for allocating sales call effort

This article describes a conceptual framework for developing a sales call effort allocation plan that considers, on an account-by-account basis, a variety of influences on the productivity of sales effort. The inputs needed for using the framework are jointly provided by sales managers and sales-people. A practical illustration of the framework is provided, and the benefits and limitations of the framework are discussed.     

Complexity of sales situation and sales lead performance: An empirical study in business-to-business company

Close collaboration in business-to-business relationships has been an interest of both researchers and managers; however, companies are often struggling to obtain the benefits of close collaboration with their customers. Our study examines the complexity of the sales situation from three perspectives 1) relational complexity, 2) complexity of internal sales tasks, and 3) vendor's cross-business unit collaboration, and its effect on the sales lead performance in a business-to-business context. We adopted a mixed methods approach; our data consists of interviews with sales personnel and a Customer Relationship Management (CRM) system data of 4000 sales leads from a large IT company that sells integrated solutions. Sales leads are classified into three categories: win, lost, and canceled. Based on multinomial logistic regression analysis, the results show that close collaboration with customers increases the probability of sales leads to be canceled. Our findings suggest that the selling approach focusing on close collaboration with the customers may not be a method to increase hit rates, due to possible high amount of canceled sales leads. This should be considered when salespeople's performance is measured in highly collaborative business-to-business environment. We conclude our paper with managerial and theoretical implications, and avenues for the further research.     

Market orientation, guanxi, and business performance

The purpose of this research is to investigate the role of guanxi in the relation between market orientation (MO) and business performance (financial and strategic). In this study, based on prior findings, we have proposed that an interaction between MO and business guanxi is likely to be positively related to both financial and strategic performance. The interaction between MO and political guanxi is proposed to be negatively associated with financial and strategic performance. In this study we focus on the competitor orientation and interfunctional coordination of the MO components. Our findings advance the existing guanxi and MO-performance literature by revealing that; (a) business guanxi has both positive and negative effects on business performance (financial and strategic), (b) political guanxi has both positive and negative moderation effect on financial performance and a negative influence on strategic performance, (c) the alignment of guanxi and MO can be extended to the MO competitor and interfunctional coordination components, and (d) a proper match between guanxi and the MO elements is important. The outcomes of this study have implications for marketing managers and research concerning MO, guanxi, and business performance.