How Successful Firms Manage the Power Between Sales and Marketing Functions: An Abstract

Abstract

Sales and marketing functions play critical roles in generating market knowledge and revenue. A firm’s success is contingent on its ability to collect market knowledge and respond to market changes. A key factor that prevents sales-marketing’s collective learning activities is power asymmetry because it directs the actors’ attentions to self-protection or self-enhancement rather than engaging in risky market learning activities and knowledge sharing. In this paper, sales-marketing collective learning is defined as the new market knowledge that sales and marketing departments create, retain, and share to achieve collective goals. To enhance sales-marketing collective market learning, this study investigates ways to reduce the negative impact of power asymmetry toward sales/marketing on firm performance. This paper proposes that power asymmetry toward sales or marketing is associated with greater firm performance when that firm has a power balancer. The moderating effects of power balancers (e.g., organizational time horizon, learning orientation, customer power, and institutional investor power) are examined using a sample of 8599 firm-year observations of 622 firms over 19 years (2001–2019). All hypotheses are supported except for the moderating role of organizational time horizon. The study thus offers several theoretical implications and actionable guidelines for senior managers. This study extends the sales-marketing interface literature by highlighting the role of sales-marketing power asymmetry in driving firm performance. This study also contributes to the upper echelons research in marketing by showing that the sales-marketing department power relationship in the top management team can influence the firm’s decisions and performance. Moreover, by introducing the notion of power balancers, this paper contributes to the organizational power and learning literature. While most prior studies adopt a dyadic power relationship (sales-marketing), this study examines a triadic power relationship: sales – power balancer – marketing.