Marketing’s role in multi-stakeholder engagement

In 2019 the CEOs of more than 180 of the largest U.S. firms signed a statement of corporate purpose indicating that corporations are responsible for providing economic benefits to all stakeholders, not just shareholders. Although stakeholder theory states that there are several stakeholders (internal and external) whose continuing participation affects a firm’s sustainability and long-term profitability, the marketing literature has focused primarily on customer engagement. This research argues for a broadened focus by marketing scholars and introduces a stakeholder engagement framework based on a triangulation approach including a systematic review of marketing research from a stakeholder perspective, the results of a survey of 254 editorial review board members from top marketing journals, and business case examples. The framework identifies three dimensions of firms’ stakeholder engagement strategies (stakeholder recognition, support, and dialogue) linked to stakeholder responses (stakeholder contribution to the firm or retaliation) that ultimately influence firm performance (financial, reputation, and risk). Two core propositions of multi-stakeholder engagement provide a foundation for a detailed future research agenda for marketing.     

Mapping the Relationship Among Political Ideology,CSR Mindset,and CSR Strategy: A Contingency Perspective Applied to Chinese Managers

The literature on antecedents of corporate social responsibility (CSR) strategies of firms has been predominately content driven. Informed by the managerial sense-making process perspective, we develop a contingency theoretical framework explaining how political ideology of managers affects the choice of CSR strategy for their firms through their CSR mindset. We also explain to what extent the outcome of this process is shaped by the firm’s internal institutional arrangements and external factors impacting on the firm. We develop and test several hypotheses using data collected from 129 Chinese managers. The results show that managers with a stronger socialist ideology are likely to develop a mindset favouring CSR, which induces the adoption of a proactive CSR strategy. The CSR mindset mediates the link between socialist ideology and CSR strategy. The strength of the relationship between the CSR mindset and the choice of CSR strategy is moderated by customer response to CSR, industry competition, the role of government, and CSR-related managerial incentives.     

An Investigation on Incentive Strategies in Community Building in Business-to-Business Electronic Markets

ABSTRACT

Purpose: Community building is recognized as an important governance mechanism in business-to-business (B-to-B) electronic markets by enhancing firms’ participation in these platform markets. However, little research has been done regarding the role of incentive strategies in community building. The main purpose of this paper is to understand how to motivate merchants to participate in a merchant community with incentive strategies.

Methodology: Data were collected in a community of a large B-to-B electronic platform market in China. We randomly chose a sample of 605 participants from among all merchant firms registered in this community, and track their behaviors for 2 weeks. Their behaviors are recorded based on our research design.

Findings: With the empirical analysis from a community of a large B-to-B electronic platform market in China, our results show that (1) both platform and peer incentive strategies can significantly enhance community participation, while platform incentives is more effective in general; (2) platform incentive strategy is a more effective strategy as seller firm uncertainty increases; (3) peer incentive strategy is a more effective strategy as buyer firm uncertainty increases.

Originality: This paper is among the first to investigate two types of incentive strategies in community building, platform level and peer level. We also investigate the moderating role of market uncertainties due to market participants from seller and buyer when examining the effectiveness of these two incentive strategies.     

A systems perspective on offshoring strategy and motivational drivers amongst onshore and offshore employees

Extant research tends to view firm level offshoring strategies and micro level motivational drivers as self-contained units of analysis. By contrast, this paper draws on an inductive study of two global service firms to demonstrate how the implementation and success of an advanced task offshoring strategy depends on certain systemic interdependencies between (a) the strategy, (b) onshore employees’ motivation to transfer advanced tasks and (c) offshore employees’ motivation to spend effort on their tasks and stay with the firm. We analyse how these three elements interact and produce feedback loops to create an ‘offshoring system’. Extrapolating from our findings, we propose how the offshoring system is likely to develop within the external constraints set by the attainable expertise of offshore employees and by client demands.     

Discussion of “A Theoretical Framework of Professional Accountants’ Identity Formation and Directions for Future Research”

Many researchers believe the tremendous industrial development over the past two centuries is unsustainable because it has led to unintended ecological deterioration. Despite the ever-growing attention sustainable supply-chain management (SSCM) has received, most SSCM research and models look at the consequences, rather than the antecedents or motives of such responsible practices. The few studies that explore corporate motives have remained largely qualitative, and large-scale empirical analyses are scarce. Drawing on multiple theories and combining supply-chain and business ethics literature, we purport that instrumental, relational, and moral motives are behind a firm’s engagement in SSCM practices. Specifically, we examine the links between corporate motives, SSCM practices, and firm performance. Using a sample of 259 supply-chain firms in Germany, we empirically test five hypothesized relationships. Our results reveal that relational and moral motives are key drivers, and that firms exhibiting high levels of moral obligations tend to outperform those primarily driven by amoral considerations. Findings of this study contribute to multiple literatures espousing sustainability management and can help policy makers, stakeholder groups, and scholars develop more robust strategies for encouraging firms to practice SSCM.     

Antecedents to differentiation strategy in the exporting SME

Small- and medium-sized enterprises (SMEs) face various constraints related to size and resource base. Such firms face additional liabilities when they venture into foreign markets. Given such conditions, exporting SMEs should develop and leverage appropriate orientations and strategies, with a view to maximizing firm performance. In this paper, we examine the antecedents to differentiation strategy in the exporting SME. We focus on differentiation strategy because, among the generic strategies, it provides especially important competitive advantages to SMEs. Using survey data from several hundred SMEs, we examine key factors that support the use of differentiation strategy in exporting smaller firms. Findings support our model and hypotheses, and reveal strong roles for Entrepreneurial Orientation, International Growth Orientation, and International Learning Orientation, in the development of Differentiation Strategy. Findings hold implications for SMEs and resource-constrained firms generally.     

Doing Good Business by Hiring Directors with Foreign Experience

Using a manually collected dataset on the overseas experiences of directors of Chinese listed firms, we examine the effects of returnee directors on firms’ corporate social responsibility (CSR) engagement. Our results show that returnee directors significantly improve their firms’ CSR engagement. The positive relationship between the percentage of returnee directors and CSR engagement is more significant when a firm is in a competitive industry, when a firm has no government ownership, when a firm’s CEO is not politically connected, and when a firm’s CEO is older. Furthermore, we find that only long-term foreign professional or academic experience matters, whereas short-term visiting experience does not. Finally, our results are robust after controlling for endogeneity. Therefore, this paper offers clear policy implications by suggesting that hiring more returnees as corporate directors is an efficient way to enhance firms’ CSR, which may be of particular interest to regulators in emerging markets.     

CEOs’ regulatory focus and firm internationalization: The moderating effects of CEO overconfidence,narcissism and career horizon

While the international business literature has mainly focused on the firm- or industry-level antecedents of internationalization strategies, scholars have recently advocated a greater focus on the microfoundations of firms’ strategic decisions. Building on the regulatory focus theory, this study focuses on how CEO promotion and prevention foci impact firm internationalization. Looking into dispositional and situational attributions, this study also theorizes how these factors moderate the relationship between a CEO’s psychological motivations and firm internationalization. Using data from publicly traded US firms listed in the Fortune 500, the findings of this study show that a CEO’s promotion focus is positively associated with the extent of a firm’s internationalization, whereas a CEO’s strong prevention focus limits the extent of a firm’s internationalization. The findings also reveal that the relationship between a CEO’s regulatory focus and the extent of a firm’s internationalization is moderated by a CEO’s overconfidence, narcissism, and career horizon. These findings have important research and managerial implications for firms engaged in international business.     

Exploring the innovation strategies of young firms: Corporate venture capital and venture capital impact on alliance innovation strategy

We investigate how governance structure and power influence alliance exploration strategy. Adopting a real options perspective and the agency view, we suggest that innovation strategies differ based on the firm's governance authority. We find that the motivations of corporate venture capitalist firms, venture capitalists, and firm founders may have an impact on the formation of exploratory alliances among adolescent firms. Using a sample of 122 adolescent firms, we examine the influence that governance structure has on the firm's alliance portfolio and innovation potential. While the influence of corporate venture capitalist firms alone do affect alliance formation strategy, corporate venture-backed firms with founders having high influence (knowledge or ownership in the firm) are more likely to form innovation-focused alliances. In contrast, venture capitalist-backed firms tend to avoid innovation-focused alliances, preferring more exploitive ones, even when founders have high influence within the firm.     

The omnichannel continuum: Integrating online and offline channels along the customer journey

This paper provides a framework for conceptualizing omnichannel integration as a continuum, identifies phenomena that determine how firms should position along that continuum, and summarizes empirical research regarding these phenomena. The framework combines the customer journey (search to purchase to aftersales) and channel choice (online vs. offline). This generates a range of omnichannel strategies, anchored by “Unconnected” on one extreme and “Complete” on the other. In between, “Vertical” strategies integrate channels over the customer journey, while “Horizontal” strategies integrate across channels at a given stage in the customer journey. We draw on more than 200 articles to identify 10 consumer and marketing phenomena (“determinants”) that influence where a firm should position along the continuum. This however raises challenges. For example, empirical research surprisingly finds many customers belong to an offline-focused segment. This suggests a Vertical strategy linking offline channels. However, today's turbulent retail environment questions whether the offline-focused segment will endure. Should the retailer cater to offline-focused customers or facilitate their progression to “multichannelism”? Another finding is that consumers strongly prefer consistency across channels. This suggests a Horizontal strategy. However, consistency might create channel cannibalization. How can the retailer avoid this? We discuss these and several other findings regarding the impact of the 10 determinants on omnichannel continuum strategy. We identify issues researchers need to research and managers need to consider when developing omnichannel continuum strategy.     

Defensive Strategy’s Effect on Firm Value: Evidence from Public-Listed Companies in Malaysia

This study examines the relationship between defensive strategy and firm value for a sample of 596 listed firms in Malaysia over the period 2008 to 2015. For the sake of robustness, the institutional setting is considered in this research by gauging the ownership structure. More specifically, this study seeks to determine whether a firm’s ownership structure might have a significant contribution to the value of its defensive strategy. Additionally, the value creation of defensive strategy is compared among family firms, government-linked firms, and foreign firms. This study concludes that defensive strategy, especially retrenchment strategy, has a positive significance on a firm’s excess value. This implies that defensive strategy will improve the firm performance. The reduction of the costs and assets, the efficiency of monitoring structure, the threat of dismissal, and the promotion of stewardship can enhance a firm’s benefits. Low profitability is found to be better for the firm performance. However, the ownership structures of government-linked and foreign firms tend to have a discount value on the excess value when these firms adopt retrenchment actions. The implication of this study lies in two main points. Firstly, it enriches the body of knowledge by showing how an effective defensive strategy creates value, and the role corporate governance plays in that relationship. Secondly, it helps to inform regulator and policymakers about how defensive strategy might have a good corporate governance to create value.     

Carbon Risk,Carbon Risk Awareness and the Cost of Debt Financing

We seek insights into potential benefits for firms adopting strategies to improve business sustainability in a carbon-constrained future. We investigate whether lenders incorporate a firm’s exposure to carbon-related risk into lending decisions through the cost of financing, and if so, importantly whether firms can mitigate the penalty by demonstrating an awareness of their carbon risks. We use a sample of 255 firm-year observations from eight industries over the period 2009–2013. We measure carbon-related risk exposure as the firm’s historical carbon emissions and our primary measure of carbon risk awareness is based on the firm’s willingness to respond to the Carbon Disclosure Project (CDP) survey. We document a positive association between cost of debt and carbon risk for firms failing to respond to the CDP. Further, this association is economically meaningful, with a one standard deviation increase in carbon risk mapping into between a 38 and 62 basis point increase in the cost of debt. Equally, we find that this penalty is effectively negated for firms exhibiting carbon risk awareness. Our results are robust when we consider alternate measures of carbon awareness—disclosure through alternative medium to the CDP and firms’ annual cash investment in new capital assets using “cleaner” technology. Our results highlight not only the importance of carbon awareness as a business strategy for polluting firms, but also its importance to lenders exposed to their clients’ default and reputational risk. The debt market appears to incorporate historical carbon emissions and forward-looking indicators of carbon performance.     

Staking Cosmopolitan Claims: How Firms and NGOs Talk About Supply Chain Responsibility

Non-governmental organizations (NGOs) increasingly hold firms responsible for harm caused in their supply chains. In this paper, we explore how firms and NGOs talk about cosmopolitan claims regarding supply chain responsibility (SCR). We investigate the language used by Apple and a group of Chinese NGOs as well as Adidas and the international NGO Greenpeace about the firms’ environmental responsibilities in their supply chains. We apply electronic text analytic methods to firm and NGO reports totaling over 155,000 words. We identify different conceptualizations of cosmopolitanism in this discourse: a legalistic approach to cosmopolitanism for Apple and a group of Chinese NGOs and a moralistic approach for Adidas and Greenpeace. We argue that these differences connect to the roles that the firms are expected and perhaps willing to take in SCR: legalistic discourse connects to a governmental function of rule development and enforcement; in contrast, moralistic discourse connects to a citizenship function that focuses on doing good to the global community. We discuss implications for companies’ non-market strategies and future research.     

Perspectives on strategic internationalization: Developing capabilities for renewal

While strategic renewal has increasingly received interest from strategy scholars (Agarwal and Helfat, 2009, Baden-Fuller and Volberda, 1997, Capron and Mitchell, 2009, Crossan and Berdrow, 2003, Gulati and Puranam, 2009, Huff et al., 1992), its gains from internationalization are less understood. We draw on both internationalization and strategy literature to investigate what is known about ‘if’ and ‘how’ firms renew their capabilities through internationalization. We anticipate that the scope of internationalization has an inverted U-shape effect on the firm's ability to create alternatives for renewal, thus allowing for the development of renewal capabilities. Yet we also draw attention to the factors that may represent limitations of the role of internationalization for strategic renewal. Internationalization strategies related to location, timing and venture mode decisions are antecedents to capability renewal strategies, uncovered as linear vs. non-linear renewal paths.     

Foreign ownership and bribery: Agency and institutional perspectives

In this study we examine the effectiveness of formal institutions (as the macro-level mechanism) and external auditing (as the micro-level mechanism) in controlling multinational firms’ engagement in bribery. We adopt World Bank’s data and investigate 38,673 firms in 113 countries. Our results suggest that a firm’s engagement in bribery is positively related to its foreign ownership. Furthermore, we demonstrate the substitute effects of formal institutions and external auditing in controlling this unethical activity. We argue that in a situation whereby formal institutions are weak, a firm’s internal governance mechanism plays a vital role in controlling bribery.     

The complex firm financial effects of customer satisfaction improvements

It has been widely assumed that increases in customer satisfaction have continuous financial benefits for firms. However, recent meta-analysis results and anecdotal evidence suggest substantial variability in satisfaction-performance effects. We propose and investigate three explanations for this variability: (1) changing trade-offs of financial benefits vis-à-vis costs along the satisfaction continuum, (2) varying stickiness of benefits and costs over time, and (3) contextual effects related to a firm’s marketing strategic situation. For our empirical investigation, we used customer satisfaction scores and financial data for around 100 U.S. firms over a 15-year period. The results show that revenues and savings in marketing and acquisition costs can accelerate at high satisfaction levels. However, for many firms, operating costs and capital investments also accelerate, and shareholder returns for satisfaction improvements can become negative. Tests over different assessment horizons show that operating cost increases are sticky while top line benefits fade. Finally, firm strategy, offering customization, potential of customer word of mouth, and competitive innovation pressure determine the satisfaction payoffs. Our study will help managers to predict more accurately than before the financial effects of their customer-directed investment decisions.     

Servitization of Global Manufacturing Business

This study examines important but understudied issues in the servitization of global manufacturing firms. We begin with a review of the literature that suggests that global manufacturing firms can grow by integrating services into traditional products in a rapidly changing business environment. We fill a gap in the literature by considering exogenous (i.e., country-level and industry-level) and endogenous (i.e., firm-level) antecedents of servitization. We posit that home-country institutional development has a positive effect on global manufacturing firms’ servitization. We also posit that a high level of industry competition is favorably associated with servitization and that a firm’s technological capability and geographic diversification are related to servitization. To test these arguments, we made a comprehensive data set by using the Thomson Reuters database, which provides the financial information of 301 global manufacturing firms in the 2015 Forbes Global 1,000, and by using annual reports published on the websites of the firms.

     

Performance differentials within geographic clusters

Increasing evidence indicates that firms benefit from a location in a geographic cluster of similar firms. The literature is nearly silent, however, on whether agglomeration economies accrue symmetrically across clustered firms. Drawing from the knowledge-based view, we investigate which firms benefit most from agglomeration and discuss how the implications for entrepreneurs are significant if some firms benefit more from geographic agglomeration than others. We investigate three particular firm attributes that may accentuate or mitigate benefits tied to participation in a cluster. We test our hypotheses on a sample of biotechnology firms and find strong evidence that firms benefit asymmetrically. Younger firms and firms with higher knowledge stocks benefit more from agglomeration.     

Digital marketing and social media: Why bother?

Changes in consumer behavior require firms to rethink their marketing strategies in the digital domain. Currently, a significant portion of the associated research is focused more on the customer than on the firm. To redress this shortcoming, this study adopts the perspective of the firm to facilitate an understanding of digital marketing and social media usage as well as its benefits and inhibitors. The second generation of Internet-based applications enhances marketing efforts by allowing firms to implement innovative forms of communication and co-create content with their customers. Based on a survey of marketing managers, this article shows that firms face internal and external pressures to adopt a digital presence in social media platforms. Firms’ digital marketing engagement can be categorized according to perceived benefits and digital marketing usage. To improve digital marketing engagement, marketers must focus on relationship-based interactions with their customers. This article demonstrates how some firms are already accomplishing just that.     

The timing of version releases: A dynamic duopoly model

In many R&D-intensive consumer product categories, firms deliver value to consumers through the quality enhancements provided by new and improved versions of existing products. Therefore, important marketing decisions relate to a firm’s strategy for developing quality enhancements and releasing new versions. This paper explores this type of product development using a dynamic duopoly model that endogenizes each firm’s decisions over how much to invest in R&D and when to release new versions. Specifically, I explore how two key industry fundamentals—the degree of horizontal differentiation and the cost of releasing a new version—affect firms’ product development strategies and, accordingly, the evolution of industry structure. I find that varying the degree of horizontal differentiation gives rise to three distinctly different types of competitive dynamics: preemption races when the degree of horizontal differentiation is low; phases of accommodation when it is moderate; and asymmetric R&D wars when it is high. Furthermore, I find that an increase in the cost of releasing a new version can induce firms to compete more aggressively for the lead and, in doing so, release new versions more frequently despite the higher cost.