Exploring CRM effectiveness: an institutional theory perspective

This study identifies the potential contribution that institutional theory can make to understanding the success of marketing practices. Based on institutional theory, we argue that the effectiveness of marketing practices decreases when firms are motivated to adopt such practices under the influence of institutional pressures originating in firms’ environments. However, alignment between a practice and a firm’s marketing strategy may buffer against these negative effects. We apply these insights to the case of customer relationship management (CRM). CRM is considered an important way to enhance customer loyalty and firm performance, but it has also been criticized for being expensive and for not living up to expectations. Empirical data from 107 organizations confirm that, in general, adopting CRM for mimetic motives is likely to result in fewer customer insights as a result of using this practice. Our study suggests that institutional theory has much to offer to the investigation of the effectiveness of marketing practices.     

Toward a “theoretical toolbox” for sustainability research in marketing

This paper provides a foundation for future marketing research on sustainability through the application of nine prominent organizational theories. Specifically, we consider the implications for sustainability offered by transaction cost economics, agency theory, institutional theory, population ecology, resource dependence theory, the resource-based view of the firm, upper echelons theory, social network theory, and signaling theory. We consider how each theory can help researchers to better understand the ways that firms engage in sustainable marketing and business practices, and we develop insights that emerge from simultaneous examination of complementary or competing theoretical perspectives.     

Effect of analysts’ earnings pressure on marketing spending and stock market performance

Despite the clearly visible effects of analysts’ pressures on C-level executives in the popular press, there is limited evidence on their effects on marketing spending decisions. This study asks two questions. First, how do analysts’ pressures affect firms’ short-term marketing spending decisions? Based on a sample of 2706 firms during 1987–2009 compiled from Institutional Brokers Earning System, COMPUSTAT, and CRSP databases we find that firms cut marketing spending. Second, more importantly, we ask if firms which remained more committed in the past to marketing spending under analysts’ pressures have higher longer-term stock market performance. We find that the stock market performance of firms more committed to marketing spending under past periods of analysts’ pressures is higher. The findings are replicated for R&D spending and are robust across measures, controls, and methodologies. Consideration of two industry-based moderators, R&D spending and revenue growth, and one firm-based moderator, whether the firm is among the industry’s top four market share or other lower share firms, reveals that the findings are stronger for high R&D and growth industries and lower market share firms. One key implication is that top executives respond to analysts’ pressures by cutting marketing spending in the short term; however, if they can resist these pressures, longer-term stock market performance is higher.     

Where is the opportunity without the customer? An integration of marketing activities, the entrepreneurship process, and institutional theory

Marketing and entrepreneurship have long been recognized as two key responsibilities of the firm. Despite their tight integration in practice, marketing and entrepreneurship as domains of scholarly inquiry have largely progressed within their respective disciplinary boundaries with minimal cross-disciplinary fertilization. Furthermore, although firms increasingly undertake their marketing and entrepreneurial activities across diverse settings, academe has provided little insight into how changes in the institutional environment may substantially alter the processes and outcomes of these undertakings. Herein, we integrate research on marketing activities, the entrepreneurship process, and institutional theory in an effort to address this gap. We first discuss market orientation as enhancing a firm??s opportunity recognition and innovation, whereas marketing mix decisions enhance opportunity exploitation. We then examine how entrepreneurship leads to innovation directed toward market orientation and marketing mix activities. Based on this foundation, we examine differences in marketing and entrepreneurship activities across institutional contexts.     

Corporate identity and the societal constituent

Increasingly, the management of corporations’ identities is being conducted in the context of empowered, socially engaged, culturally adept social actors who present organizations with a range of conflicting societal and economic expectations. These social actors, referred to as societal constituents, claim moral legitimacy to influence the decisions and actions of corporations they feel have affected their personal and community space. Firms’ environments come to be regarded as complex webs of social groups whereby the cultural meanings embedded in their corporate brands come to be morphed across the range of social groups. As such, the management of corporate brands becomes a task of symbolic facilitation and managing contradictions. Jay M. Handelman (jhandelman@business.queensu.ca) is an associate professor of marketing in the Queen’s University School of Business, Kingston, Ontario, Canada. His articles have appeared in theJournal of Marketing, theJournal of Consumer Research, and theJournal of Retailing. His current research interests include the application of institutional theory to help understand how product and corporate brands come to be managed in the context of a turbulent social environment. His teaching interests include brand management, marketing ethics, marketing theory and history, and interpretive research methods.     

Leveraging customers’ multiple identities: identity synergy as a driver of organizational identification

Marketers want to encourage constituents to strongly identify with their organizations, because organizational identification contributes to positive firm outcomes. However, the extant research on organizational identity largely has overlooked the fact that an individual??s ??self?? actually is a collection of multiple social identities. This study is the first to propose and empirically demonstrate that marketers can leverage customers?? multiple societal roles (e.g., parent, environmentalist, professor) to build and reinforce their relationships with the firm. Specifically, the research introduces the concept of ??identity synergy.?? Identity synergy occurs when individuals?? involvement with an organization facilitates their pursuit of other important social identities. Our study shows that customer perception of identity synergy is positively related to identification with an organization. Moreover, the study helps explain the process by which antecedents of organizational identity (identity affirmation, identity support, and value congruence) positively affect customer-firm relationships by proposing and testing identity synergy as a mediator between these antecedents and organizational identification. The study also contributes to our understanding of organizational identity theory by introducing the new concept of peer identification, or identification with other members of the organization, such as other customers or volunteers. The empirical evidence demonstrates identity synergy??s role in building peer identification, as well as peer identification??s role in building organizational identification.     

Fundamental changes in marketing organization: The movement toward a customer-focused organizational structure

There has been growing interest in the future of marketing and changes in marketing’s organization and role within the firm. However, there has not been research that holistically explores key changes in marketing organization. The authors draw on qualitative interviews with 50 managers in the United States and Germany and argue that changes in marketing organization that have been discussed in isolation are part of a more general shift toward customer-focused organizational structures. They initially discuss two specific changes related to the overall shift: changes concerning primary marketing coordinators and increasing dispersion of marketing activities. They then introduce the concept of a customer-focused organizational structure that uses groups of customers as the primary basis for structuring the organization. They identify typical organizational transitions as firms move toward a customer-focused organizational structure and discuss the challenges firms face in making this transition. They conclude with implications for academic research, managerial practice, and business school curriculum. Christian Homburg is a professor of business administration and marketing and Chair of the Marketing Department at the University of Mannheim in Germany. He received his Ph.D. and master’s degrees from the University of Karlsruhe and earned his habilitation at the University of Mainz. His research interests include organizational issues in marketing, customer orientation, industrial marketing, and relationship marketing. Dr. Homburg has consulted and delivered executive education programs for more than one hundred companies, including Daimler-Benz, Siemens, Deutsche Bank, Hoechst, RWE, Thyssen, Krupp-Hoesch and Sodexho. John P. Workman, Jr. is an associate professor of marketing at Creighton University in Omaha, Nebraska. Dr. Workman conducts research on the organization and role of marketing within the firm, on new product development in high-tech firms, and more recently on organizational issues for e-commerce initiatives. His research uses concepts from organization theory, strategy, and sociology to examine the interactions between marketing and other groups in the firm. Dr. Workman has a B.S. from N.C. State University, an M.B.A. from the University of Virginia, and a Ph.D. from M.I.T. He has consulted for a number of organizations on the topics of e-commerce and marketing organization. Ove Jensen is a Ph.D. student studying under Professor Homburg at the University of Mannheim. He received his master’s degree from the WHU Koblenz. He conducts research on sales management, organizational issues in marketing, and incentive systems. He has extensive consulting experience in the areas of market-focused management and sales management.     

The evolving role of managerial ties and firm capabilities in an emerging economy: evidence from China

As emerging economies experience unprecedented market and institutional changes, where should firms focus their attention to address new marketing challenges: network-based resources (e.g., managerial ties) or market-based capabilities? Building on institutional theory, this study examines the evolving roles of managerial ties and firm capabilities, as well as their interplay, in China. A longitudinal survey of 166 Chinese firms reveals that over time, the positive role of ties with the government (i.e., political ties) declines, whereas the positive effect of ties with the business partners (i.e., business ties) persists; marketing capability has a persistent effect, and technology capability exerts a stronger impact on performance. Moreover, as market development progresses, marketing capability positively interacts with business ties, whereas technology capability positively interacts with political ties, in fostering performance.     

Perceived environmental turbulence and its effect on selected entrepreneurship,marketing, and organizational characteristics in industrial firms

Entrepreneurship and marketing are approached as proactive corporate responses to an increasingly dynamic, threatening, and complex external environment. Both represent organizational orientations built around creativity, innovativeness, flexibility, and risk-taking. A conceptual model is proposed relating the levels of entrepreneurship, marketing activity, and marketing-related structure of a firm to the degree of perceived environmental turbulence confronting the firm. Results of a survey involving personal interviews with managers in 93 firms representing six industries are reported. Turbulence is found to have a significant causal impact on both the levels of entrepreneurship and the marketing orientation of the firm, but not on structural variables.     

Antecedents to customer expectations for service recovery

Selected antecedents of customers’ service recovery expectations are considered in this study. A conceptual model is proposed in which customer perceptions of service quality, customer satisfaction, and customer organizational commitment function as antecedents to service recovery expectations. The proposed model was tested with covariance structure analysis. The results support the hypothesized relationships, suggesting that service quality and customer organizational commitment have direct effects on customer service recovery expectations and that customer satisfaction has an indirect effect on service recovery expectations. He received his doctorate in marketing from the University of Kentucky. His research interests include services marketing and ethics. His research has been published in theJournal of the Academy of Marketing Science, Journal of Retailing, and theJournal of Business Research. He received his doctorate in industrial and organizational psychology from Virginia Tech University. His research interests include service quality with a focus on health care settings. His research has been published in theJournal of Management, Organizational Behavior and Human Decision Processes, andMedical Care Review.     

Improving customer-focused marketing capabilities and firm financial performance via marketing exploration and exploitation

Evidence within the marketing literature has shown that marketing capabilities are important drivers of firm performance. However, very little is known about how firms improve their marketing capabilities via the embedding of new market knowledge. Organizational learning theory provides us with a theoretical lens through which we can examine how existing customer-focused marketing capabilities may be improved and new customer-focused marketing capabilities may be created via marketing exploitation and exploration capabilities. In addition, this study investigates whether ambidexterity in marketing exploration and exploitation exists and finds that firms cannot do both at high levels without risking a negative impact on customer-focused marketing capabilities. This study also presents findings demonstrating how improving the two customer-focused marketing capabilities in our study, brand management and customer relationship management, impacts objective financial performance.     

Innovating for sustainability: a framework for sustainable innovations and a model of sustainable innovations orientation

In an environment characterized by growing awareness of environmental sustainability among various stakeholders in organizations, innovating for sustainability can be expected to grow in importance from the standpoints of organizational legitimacy, reputation, and performance. Relatedly, a firm’s sustainable innovations capabilities as a source of competitive advantage and the sustainability related attributes of a firm’s product offerings as bases for market segmentation, target marketing, positioning, and differentiation can also be expected to grow in importance. The emergence of sustainability as a major driver of innovation highlights a number of important issues that merit investigation, such as potential avenues for sustainable innovation and sustainable product innovation and factors underlying differences between firms in their commitment to a sustainable innovations orientation. In an attempt to gain insights into these issues, this paper presents (1) a conceptual framework delineating potential avenues for sustainable innovations and (2) a conceptual model delineating a number of firm-related and industry-related antecedents of sustainable innovations orientation, along with performance outcomes of sustainable innovations orientation. Implications for theory, research, and practice are discussed.     

Do institutional investors pay attention to customer satisfaction and why?

Extant marketing, accounting, and finance research has neglected to examine the relevance of customer satisfaction information for institutional investors, despite their potential importance. This study develops and supports a framework suggesting that firms with positive changes in customer satisfaction are more attractive to transient institutional investors than to non-transient institutional investors. We also find that the impact of customer satisfaction on transient institutional investor holdings is contingent upon firm intangible asset intensity, product-market demand uncertainty, and financial market volatility. In addition, transient institutional investor holdings at least partially mediate the effects of changes in customer satisfaction on firm abnormal return and idiosyncratic risk. Thus, transient institutional investor investments represent a mechanism through which customer satisfaction affects firm value.     

中小企业集聚组织形式:交易费用视角分析

企业集聚是中小企业生存、发展的组织形式选择,从规模经济理论和交易费用理论都可以找到其存在的合理根据。中小企业通过企业间组织关系建立的“准一体化”集聚规制结构,可以拥有比纯市场交易和单一企业更强的优势。中小企业集聚组织形式兼得了中小企业的灵活性优势和大型企业的规模优势,未来中小企业所面临的竞争将从单一企业间的竞争转向集聚网络间的竞争。     

Bribery as an organizational response to conflicting environmental expectations

This article develops a conceptualization of bribery activity in organizational relationships at the international level. Utilizing a coalitional viewpoint of organizational interaction across markets, this paper proposes that international exchange environments are dimensioned by two critical factors: environmental constraints formed by cultural expectations and management capability to resolve incongruent exchange demands on the international marketing organization. These factors are proposed as determinants of a model of bribery behavior comprising four international exchange environments. Bribery activity in each environment is examined as a form of “side payment substitution” for unresolvable demands, representing a rational response to conflicting payment requirements and expectations.     

Firm capabilities and growth: the moderating role of market conditions

Using a contingency theory lens, this study explores the impact of multiple firm-level capabilities and their interactions on firm growth under different market conditions, using panel data from 612 U.S. public firms across 16 years in 60 industries. Specifically, this study empirically examines how three key firm capabilities (marketing, R&D, operations) interact to impact firms’ revenue growth and profit growth over time, and how external boundary conditions (market munificence and competitive dynamism) influence the interactive growth effects of these capabilities. The results indicate that firms’ R&D (operations) capabilities positively (negatively) influence the effects of marketing capabilities on firm growth and that such effects vary across different market conditions. This study provides insights to researchers and managers regarding how to manage and deploy resources across multiple capabilities simultaneously under different market conditions to drive firm growth.     

Selecting research firms from which to get proposals

Many marketing research firms are incompetent or transient. It is difficult for the inexperienced buyer of marketing research to know how to make a choice. One factor that should be considered is the nature of the problem; understanding your own needs helps to spell out some of the characteristics to look for in a research firm. Locating names of research firms can be done from reviewing available lists, and from informed sources. Evaluation of the firms is difficult. The potential buyer should attempt to estimate the competency of the firm (in questionnaire development, statistical design, field work, coding and editing, and data processing). The buyer should also try to evaluate the research imagination of the firm, for creativity may add value to the study. Integrity is another important aspect, since this affects whether your marketing secrets are kept, and whether or not a good study is done. Practicality is a highly important standard; this is reflected in location, meeting of deadlines, flexibility, speed, personal relations, and pricing policies. Sources of information for obtaining the necessary information include material from the research firm being considered, a planned visit to the firm’s headquarters, customers of the research firm, and general reputation (among both users and nonusers of the firm).     

Do managers know what their customers think and why?

The ability of a firm’s managers to understand how its customers view the firm’s offerings and the drivers of those customer perceptions is fundamental in determining the success of marketing efforts. We investigate the extent to which managers’ perceptions of the levels and drivers of their customers’ satisfaction and loyalty align with that of their actual customers (along with customers’ expectations, quality, value, and complaints). From 70,000 American Customer Satisfaction Index (ACSI) customer surveys and 1068 firm (manager) responses from the ACSI-measured companies, our analyses suggest that managers generally fail to understand their firms’ customers in two important ways. First, managers systematically overestimate the levels of customer satisfaction and attitudinal loyalty, as well as the levels of key antecedent constructs such as expectations and perceived value. Second, managers’ understanding of the drivers of their customers’ satisfaction and loyalty are disconnected from those of their actual customers. Among the most significant “disconnects,” managers underestimate the importance of customer perceptions of quality in driving their satisfaction and of satisfaction in driving customers’ loyalty and complaint behavior. Our results indicate that firms must do more to ensure that managers understand how their customers perceive the firm’s products and services and why.     

The perceived importance of ethics and social responsibility on organizational effectiveness: A survey of marketers

A necessary but insufficient condition for marketers to act ethically and be socially responsible is that they must perceive ethics and social responsibility to be important. However, little is known about marketers’ perceptions regarding the importance of ethics and social responsibility components of business decisions. The objectives of this study are (1)to assess the marketing practitioners’ perceptions regarding the importance of ethics and social responsibility in achieving organizational effectiveness, and (2) to analyze the relative influences of selected personal characteristics and organizational factors underlying a marketer’s perceived importance of ethics and social responsibility. The results from a mail survey of American Marketing Association members indicate that the marketers generally believe that ethics and social responsibility are important components of organizational effectiveness. The results partly indicate that there is a positive relationship between a marketer’s corporate ethical values and his or her perceptions regarding the importance of ethics and social responsibility. The results also indicate that the marketers’ perceptions regarding ethics and social responsibility can be explained by idealism and relativism. He has also served on the marketing faculty at Thammasat University, Thailand. He received his Ph.D. from the University of Mississippi. His research focusing on marketing ethics and social responsibility has been published inJournal of the Academy of Marketing Science, Journal of Business Ethics, Journal of Macromarketing, Journal of Personal Selling & Sales Management, Journal of Public Policy & Marketing, and elsewhere. He received his D.B.A. in management from the University of Maryland. His work on business ethics, organizational design, and strategic planning has been published inAcademy of Management Review, American Business Review, andJournal of Business Ethics. His current research interest centers on the measurement of moral intensity. He received his Ph.D. from Texas Tech University. His work has appeared inJournal of the Academy of Marketing Science, Journal of Business Ethics, Journal of Business Research, Journal of Macromarketing, Journal of Personal Selling & Sales Management, Research in Marketing, and elsewhere. He received his Ph.D. in marketing from the University of Mississippi. His research has been published inJournal of the Academy of Marketing Science, Journal of Business Ethics, Journal of Pharmaceutical Marketing and Management, Journal of Social and Administrative Pharmacy, and elsewhere. His research interests include marketing ethics, health care marketing, international marketing, and direct marketing.     

Marketing strategy: An assessment of the state of the field and outlook

This article provides an assessment of the state of the field of marketing strategy research and the outlook. Using institutional theory, the authors develop an organizing framework to serve as a road map for assessing research in marketing strategy. Their assessment of the state of the field based on a review of extant literature suggests that significant strides in conceptual development and empirical research have been achieved in a number of areas. Several recent developments in the business world, including deconglomeration and increased organizational focus on managing and leveraging market-based assets such as brand equity and customer equity, suggest that marketing is likely to play a more important role in charting the strategic direction of the firm. However, the theoretical contributions of the field to the academic dialogue on strategy leave much to be desired. P. Rajan Varadarajan (Ph.D. University of Massachusetts, Amherst) is a professor of marketing and the Jenna and Calvin R. Guest Professor of Business Administration at Texas A&M University. His research interests are in the areas of corporate, business, and marketing strategy; marketing management; and global competitive strategy. His research has been published in theJournal of Marketing, theJournal of the Academy of Marketing Science, theAcademy of Management Journal, theStrategic Management Journal, Sloan Management Review, California Management Review, Business Horizons, and other journals. He is coauthor of a textbook entitled,Contemporary Perspectives on Strategic Market Planning. He served as editor of theJournal of Marketing from 1993 to 1996. He currently serves on the Board of Governors of the Academy of Marketing Science, as Chairperson of the Marketing Strategy Special Interest Group of the American Marketing Association, on the Editorial Review Boards of theJournal of Marketing, Journal of the Academy of Marketing Science, and theJournal of International Marketing, and as an ad hoc reviewer for a number of journals in themarketing and management disciplines. In recognition of his research and publications, in May 1994, he was awarded the Texas A&M University Distinguished Achievement Award for Research, the highest honor the University bestows. Satish Jayachandran is a doctoral candidate in marketing at Texas A&M University. His research interests include competitive behavior of firms and the impact of organizational performance on subsequent managerial and firm behavior. His research is forthcoming in theJournal of Marketing and has been presented at American Marketing Association and Academy of International Business conferences. His professional experience spans sales and channels management in the computer industry and account management in advertising.