When does CEO endorsement of sales & marketing leaders help firms? The role of heavy marketing emphasis

Abstract

The purpose of this paper is to examine the impact of CEO endorsement (measured by the presence of a CEO quotation in a press release) of sales and marketing leaders on firm performance when the organization has a heavy marketing emphasis. Our study on over 800 appointment announcements shows that enhanced expectations raised by the CEO's endorsement of sales and marketing leaders suffer a mismatch with high customer relationship turbulence due to changes in the sales and marketing organization. We find that CEO endorsement of sales and marketing appointment announcements at firms with a heavy marketing emphasis hurts firm performance in the year-end. The findings also reveal that CEO endorsement hurts in both the immediate and year-end horizons, since CEO endorsement as a measure of internal, firm-level assessment has the perception of being uninformed and subjective. Extant research has studied the impact of appointment announcements on firm performance, while neglecting the role of CEO endorsement. Thus, this study has implications for the appointment of sales and marketing leaders who under certain conditions could enhance the expectations of the firm's continued existence in a market. Theoretically, we contribute by developing a field at the intersection of research related to sales and marketing managerial succession, endorsements and corporate announcements. We emphasize the role of a new construct - CEO endorsement - on firm performance given a heavy marketing emphasis context.