Advertisement

Journal of the Academy of Marketing Science

, Volume 47, Issue 1, pp 56–75 | Cite as

Effects of channel members’ customer-centric structures on supplier performance

  • Andrew T. CreceliusEmail author
  • Justin M. Lawrence
  • Ju-Yeon Lee
  • Son K. Lam
  • Lisa K. Scheer
Original Empirical Research

Abstract

The authors examine the upstream impact of a firm’s customer-centric organizational structure on its supplier, including both positive effects of greater revenue and negative effects of demanding services that raise the supplier’s costs. These countervailing effects on supplier profit are moderated by characteristics of the firm’s buying center and the firm–supplier relationship, in accordance with the value capture literature. Study 1 examines the proposed firm-level financial effects of the dual processes, using surveys of industrial firms matched with secondary data from their supplier. Study 2 assesses the supplier-level net impact of the dual processes, using publicly available data to shed light on the upstream financial impact of firms’ customer-centric structures across a broad sample of Fortune 500 suppliers. Findings highlight the need for a supplier to proactively assess the structure of each buyer-firm, as a supplier can take steps to mitigate cost effects and enhance revenue effects.

Keywords

Marketing channels Customer-centric structure Value capture Supplier performance Financial performance 

Supplementary material

11747_2018_606_MOESM1_ESM.docx (72 kb)
ESM 1 (DOCX 71 kb)

References

  1. Adner, R., & Zemsky, P. (2006). A demand-based perspective on sustainable competitive advantage. Strategic Management Journal, 27, 215–239.Google Scholar
  2. Ahearne, M., Lam, S. K., Hayati, B., & Kraus, F. (2013). Intrafunctional competitive intelligence and sales performance: a social network perspective. Journal of Marketing, 77, 37–56.Google Scholar
  3. Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58, 277–297.Google Scholar
  4. Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-components models. Journal of Econometrics, 68, 29–51.Google Scholar
  5. Bagozzi, R. P., & Yi, Y. (2012). Specification, evaluation, and interpretation of structural equation models. Journal of the Academy of Marketing Science, 40, 8–34.Google Scholar
  6. Barney, J. B. (1986). Strategic factor markets: expectations, luck, and business strategy. Management Science, 32, 1231–1242.Google Scholar
  7. Bishop, W. S., Graham, J. L., & Jones, M. H. (1984). Volatility of derived demand in industrial-markets and its management implications. Journal of Marketing, 48, 95–103.Google Scholar
  8. Blocker, C. P., Cannon, J. P., Panagopoulos, N. G., & Sager, J. K. (2012). The role of the sales force in value creation and appropriation: new directions for research. Journal of Personal Selling & Sales Management, 32, 15–27.Google Scholar
  9. Blut, M., Evanschitzky, H., Backhaus, C., Rudd, J., & Marck, M. (2016). Securing business-to-business relationships: the impact of switching costs. Industrial Marketing Management, 52, 82–90.Google Scholar
  10. Bowman, C., & Ambrosini, V. (2000). Value creation versus value capture : towards a coherent definition of value in strategy. British Journal of Management, 11, 1–15.Google Scholar
  11. Brandenburger, A. M., & Stuart, H. W. J. (1996). Value based business strategy. Journal of Economics & Management Strategy, 5, 5–24.Google Scholar
  12. Buckles, T. A., & Ronchetto, J. R. (1996). Examining an industrial buyer’s purchasing linkages: a network model and analysis of organizational buying workflow. Journal of Business & Industrial Marketing, 11, 74–92.Google Scholar
  13. Chatain, O. (2011). Value creation, competition, and performance in buyer-seller relationships. Strategic Management Journal, 32, 76–102.Google Scholar
  14. Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, 95–120.Google Scholar
  15. Cragg, J. G., & Donald, S. G. (1993). Testing identifiability and specification in instrumental variable models. Econometric Theory, 9, 222–240.Google Scholar
  16. Cui, A. S., & O’Connor, G. (2012). Alliance portfolio resource diversity and firm innovation. Journal of Marketing, 76, 24–43.Google Scholar
  17. Dahlquist, S. H., & Griffith, D. A. (2014). Multidyadic industrial channels: understanding component supplier profits and original equipment manufacturer behavior. Journal of Marketing, 78, 59–79.Google Scholar
  18. Davie, C., Stephenson, T., & De Uster, M. V. (2010). Three trends in business-to-business sales. Retrieved February 1, 2018 from https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/three-trends-in-business-to-business-sales.
  19. Dawes, P. L., Lee, D. Y., & Dowling, G. R. (1998). Information control and influence in emergent buying centers. Journal of Marketing, 62, 55–68.Google Scholar
  20. Day, G. S. (2006). Aligning the organization with the market. MIT Sloan Management Review, 48, 41–49.Google Scholar
  21. Dent, E. B., & Goldberg, S. G. (1999). Challenging “resistance to change”. The Journal of Applied Behavioral Science, 35, 25–41.Google Scholar
  22. Dyer, J. H., & Nobeoka, K. (2000). Creating and managing a high-performance knowledge-sharing network: The Toyota case. Strategic Management Journal, 21, 345–367.Google Scholar
  23. Esper, T. L., Ellinger, A. E., Stank, T. P., Flint, D. J., & Moon, M. (2010). Demand and supply integration: a conceptual framework of value creation through knowledge management. Journal of the Academy of Marketing Science, 38, 5–18.Google Scholar
  24. Fang, E., Palmatier, R. W., & Steenkamp, J. B. (2008). Effect of service transition strategies on firm value. Journal of Marketing, 72, 1–14.Google Scholar
  25. Financial Accounting Standards Board. (1997). Disclosures about segments of an enterprise and related information, in Statement of Financial Accounting Standards No. 131. Norwalk, CT: FASB.Google Scholar
  26. Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18, 39–50.Google Scholar
  27. Gans, J., & Ryall, M. D. (2017). Value capture theory: a strategic management review. Strategic Management Journal, 38, 17–41.Google Scholar
  28. Gebauer, H., Gustafsson, A., & Witell, L. (2011). Competitive advantage through service differentiation by manufacturing companies. Journal of Business Research, 64, 1270–1280.Google Scholar
  29. Gensler, S., Leeflang, P., & Skiera, B. (2012). Impact of online channel use on customer revenues and costs to serve: considering product portfolios and self-selection. International Journal of Research in Marketing, 29, 192–201.Google Scholar
  30. Germann, F., Ebbes, P., & Grewal, R. (2015). The chief marketing officer matters! Journal of Marketing, 79, 1–22.Google Scholar
  31. Grewal, R., & Lilien, G. L. (2012). Business-to-business marketing: Looking back, looking forward. In G. L. Lilien & R. Grewal (Eds.), Handbook of business-to-business marketing (pp. 3–12). Northampton: Edward Elgar Publishing.Google Scholar
  32. Grewal, R., Chakravarty, A., & Saini, A. (2010). Governance mechanisms in business-to-business electronic markets. Journal of Marketing, 74, 45–62.Google Scholar
  33. Grewal, R., Lilien, G. L., Bharadwaj, S., Jindal, P., Kayande, U., Lusch, R. F., Mantrala, M., Palmatier, R. W., Rindfleisch, A., Scheer, L. K., Spekman, R., & Sridhar, S. (2015). Business-to-business buying: challenges and opportunities. Customer Needs and Solutions, 2, 193–208.Google Scholar
  34. Guerreiro, R., Bio, S. R., & Merschmann, E. V. V. (2008). Cost-to-serve measurement and customer profitability analysis. International Journal of Logistics Management, 19, 389–407.Google Scholar
  35. Gulati, R. (2007). Silo busting. Harvard Business Review, 85, 98–108.Google Scholar
  36. Gummesson, E. (2008). Extending the service-dominant logic: from customer centricity to balanced centricity. Journal of the Academy of Marketing Science, 36, 15–17.Google Scholar
  37. Hanssens, D. M., & Pauwels, K. H. (2016). Demonstrating the value of marketing. Journal of Marketing, 80, 173–190.Google Scholar
  38. Hatcher, L. (1994). A step-by-step approach to using the SAS system for factor analysis and structural equation modeling. Cary: SAS Institute.Google Scholar
  39. Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–161.Google Scholar
  40. Homburg, C., Workman, J. P., & Jensen, O. (2000). Fundamental changes in marketing organization: the movement toward a customer-focused organizational structure. Journal of the Academy of Marketing Science, 28, 459–478.Google Scholar
  41. Homburg, C., Wilczek, H., & Hahn, A. (2014). Looking beyond the horizon: how to approach the customers’ customers in business-to-business markets. Journal of Marketing, 78, 58–77.Google Scholar
  42. Hughes, C., Wheatley, S., Dalton, D., Smith, S., & Southern, R. (2014). Customer-centricity: Embedding it into your organisation’s DNA. Retrieved February 1, 2018 from https://www2.deloitte.com/content/dam/Deloitte/ie/Documents/Strategy/2014_customer_centricity_deloitte_ireland.pdf.
  43. Joerss, M., Neuhaus, F., & Schröder, J. (2016). How customer demands are reshaping last-mile delivery. Retrieved February 1, 2018 from https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/how-customer-demands-are-reshaping-last-mile-delivery.
  44. Johnston, W. J., & Bonoma, T. V. (1981). The buying center: structure and interaction patterns. Journal of Marketing, 45, 143.Google Scholar
  45. Joshi, A. W. (2009). Continuous supplier performance improvement: effects of collaborative communication and control. Journal of Marketing, 73, 133–150.Google Scholar
  46. Kale, J. R., Reis, E., & Venkateswaran, A. (2009). Rank-order tournaments and incentive alignment: the effect on firm performance. Journal of Finance, 64, 1479–1512.Google Scholar
  47. Kalwani, M. U., & Narayandas, N. (1995). Long-term manufacturer-supplier relationships: do they pay off for supplier firms? Journal of Marketing, 59, 1–16.Google Scholar
  48. Kim, S. H., Cohen, M. A., & Netessine, S. (2007). Performance contracting in after-sales service supply chains. Management Science, 53, 1843–1858.Google Scholar
  49. Kim, S. K., McFarland, R. G., Kwon, S., Son, S., & Griffith, D. A. (2011). Understanding governance decisions in a partially integrated channel: a contingent alignment framework. Journal of Marketing Research, 48, 603–616.Google Scholar
  50. Kirca, A. H., Jayachandran, S., & Bearden, W. O. (2005). Market orientation: a meta-analytic review and assessment of its antecedents and impact on performance. Journal of Marketing, 69, 24–41.Google Scholar
  51. Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: the construct, research propositions, and managerial implications. Journal of Marketing, 54, 1–18.Google Scholar
  52. Kumar, V., & Petersen, J. A. (2005). Using a customer-level marketing strategy to enhance firm performance: a review of theoretical and empirical evidence. Journal of the Academy of Marketing Science, 33, 504–519.Google Scholar
  53. Kumar, N., Scheer, L. K., & Steenkamp, J. B. E. (1995). The effects of perceived interdependence on dealer attitudes. Journal of Marketing Research, 32, 348–356.Google Scholar
  54. Kumar, V., Venkatesan, R., & Reinartz, W. (2008). Performance implications of adopting a customer-focused sales campaign. Journal of Marketing, 72, 50–68.Google Scholar
  55. Kumar, A., Heide, J. B., & Wathne, K. H. (2011). Performance implications of mismatched governance regimes across external and internal relationships. Journal of Marketing, 75, 1–17.Google Scholar
  56. Lamberti, L. (2013). Customer centricity: the construct and the operational antecedents. Journal of Strategic Marketing, 21, 588–612.Google Scholar
  57. Lee, J.-Y., Sridhar, S., Henderson, C. M., & Palmatier, R. W. (2015). Effect of customer-centric structure on long-term financial performance. Marketing Science, 34, 250–268.Google Scholar
  58. Lewin, J. E., & Donthu, N. (2005). The influence of purchase situation on buying center structure and involvement: a select meta-analysis of organizational buying behavior research. Journal of Business Research, 58, 1381–1390.Google Scholar
  59. Li, T., & Calantone, R. J. (1998). The impact of market knowledge competence on new product advantage: Conceptualization and empirical examination. Journal of Marketing, 62, 13–29.Google Scholar
  60. Lindell, M. K., & Whitney, D. J. (2001). Accounting for common method variance in cross-sectional research designs. Journal of Applied Psychology, 86, 114–121.Google Scholar
  61. Maltz, E., & Kohli, A. K. (1996). Market intelligence dissemination across functional boundaries. Journal of Marketing Research, 33, 47–61.Google Scholar
  62. McCabe, D. L. (1987). Buying group structure: Constriction at the top. Journal of Marketing, 51, 89–98.Google Scholar
  63. Mizik, N., & Jacobson, R. (2003). Trading off between value creation and value appropriation: the financial implications of shifts in strategic emphasis. Journal of Marketing, 67, 63–76.Google Scholar
  64. Narayandas, D., Caravella, M., & Deighton, J. (2002). The impact of internet exchanges on business-to-business distribution. Journal of the Academy of Marketing Science, 30, 500–505.Google Scholar
  65. Noordhoff, C. S., Kyriakopoulos, K., Moorman, C., Pauwels, P., & Dellaert, B. G. (2011). The bright side and dark side of embedded ties in business-to-business innovation. Journal of Marketing, 75, 34–52.Google Scholar
  66. O’Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality and Quantity: International Journal of Methodology, 41, 673–690.Google Scholar
  67. Panico, C. (2017). Strategic interaction in alliances. Strategic Management Journal, 38, 1646–1667.Google Scholar
  68. Porras, J. I., & Robertson, P. J. (1983). Organization development: Theory, practice, and research. In M. D. Dunnette & L. M. Hough (Eds.), The handbook of industrial and organizational psychology (Vol. 3, pp. 719–822). Palo Alto: Consulting Psychologists Press.Google Scholar
  69. Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.Google Scholar
  70. Precision Castparts Corp. (2008). 10-K report, (accessed May 24, 2011), [available at https://www.sec.gov/Archives/edgar/data/79958/000119312509120337/d10k.htm].
  71. Qwest Communications International Inc. (2008). 10-K report, (accessed March 1, 2013), [available at http://www.sec.gov/Archives/edgar/data/1037949/000104746909001126/ a2190288z10-k.htm].
  72. Ramon-Jeronimo, J. M., Florez-Lopez, R., & Ramon-Jeronimo, M. A. (2017). Understanding the generation of value along supply chains: Balancing control information and relational governance mechanisms in downstream and upstream relationships. Sustainability, 9, 1487–1518.Google Scholar
  73. Reagans, R., & Mcevily, B. (2003). Network structure and knowledge transfer: the effects of cohesion and range. Administrative Science Quarterly, 48, 240–267.Google Scholar
  74. Rindfleisch, A., & Moorman, C. (2001). Utilization of and acquisition in new alliances: a strength-of-ties perspective. Journal of Marketing, 65, 1–18.Google Scholar
  75. Roodman, D. (2006). How to do xtabond2: an introduction to “Difference” and “System” GMM in Stata. Center for Global Development. (No. 103).Google Scholar
  76. Roy, R., & Cohen, S. K. (2017). Stock of downstream complementary assets as a catalyst for product innovation during technological change in the U.S. machine tool industry. Strategic Management Journal, 38, 1253–1267.Google Scholar
  77. Rust, R. T., Moorman, C., & Bhalla, G. (2010). Rethinking marketing. Harvard Business Review, 88, 94–101.Google Scholar
  78. Saboo, A. R., Kumar, V., & Anand, A. (2017). Assessing the impact of customer concentration on IPO and balance-sheet based outcomes. Journal of Marketing, 81, 42–61.Google Scholar
  79. Scheer, L. K., & Stern, L. W. (1992). The effect of influence type and performance outcomes on attitude toward the influencer. Journal of Marketing Research, 29, 128–142.Google Scholar
  80. Scheer, L. K., Miao, C. F., & Garrett, J. (2010). The effects of supplier capabilities on industrial customers’ loyalty: the role of dependence. Journal of the Academy of Marketing Science, 38, 90–104.Google Scholar
  81. Schmidt, J., & Keil, T. (2013). What makes a resource valuable? Identifying the drivers of firm-idiosyncratic resource value. Academy of Management Review, 38, 206–228.Google Scholar
  82. Schmidt, K., Adamson, B., & Bird, A. (2015). Making the consensus sale. Harvard Business Review, 3, 107–113.Google Scholar
  83. Schreiber, U., Forer, G., Lutz, K., de Yonge, J., Jaggi, G., Potter, A., & Whistler, M. (2017). The upside of disruption. Ernst & Young Megatrends. Retrieved August 18, 2017 from http://www.ey.com/Publication/vwLUAssets/EY-the-upside-of-disruption/$FILE/EY-the-upside-of-disruption.pdf.
  84. Shah, D., Rust, R. T., Parasuraman, A., Staelin, R., & Day, G. S. (2006). The path to customer centricity. Journal of Service Research, 9, 113–124.Google Scholar
  85. Sheth, J. N., Sharma, A., & Iyer, G. R. (2009). Why integrating purchasing with marketing is both inevitable and beneficial. Industrial Marketing Management, 38, 865–871.Google Scholar
  86. Siguaw, J. A., Simpson, P. M., & Baker, T. L. (1998). Effects of supplier market orientation on distributor market orientation and the channel relationship: the distributor perspective. Journal of Marketing, 62, 99–111.Google Scholar
  87. Slater, S. F., & Narver, J. C. (1995). Market orientation and the learning organization. Journal of Marketing, 59, 63–74.Google Scholar
  88. Smith, D. C., & Owens, J. P. (1995). Knowledge of customers’ customers as a basis of sales force differentiation. Journal of Personal Selling & Sales Management, 15, 1–15.Google Scholar
  89. Stock, J. H, & Yogo, M. (2005). Testing for weak instruments in linear IV regression. In Identification and Inference for Econometric Models: Essays in Honor of Thomas Rothenberg: Cambridge University Press.Google Scholar
  90. Teece, D. J. (1998). Capturing value from knowledge assets: The new economy, markets for know-how, and intangible assets. California Management Review, 40, 55–80.Google Scholar
  91. Töytäri, P. (2015). Assessing value co-creation and value capture potential in services: a management framework. Benchmarking: An International Journal, 22, 254–274.Google Scholar
  92. Töytäri, P., & Rajala, R. (2015). Value-based selling: an organizational capability perspective. Industrial Marketing Management, 45, 101–112.Google Scholar
  93. Tuli, K. R., Bharadwaj, S. G., & Kohli, A. K. (2010). Ties that bind: the impact of multiple types of ties with a customer on sales growth and sales volatility. Journal of Marketing Research, 47, 36–50.Google Scholar
  94. Verhoef, P. C., & Leeflang, P. S. H. (2009). Understanding the marketing department’s influence within the firm. Journal of Marketing, 73, 14–37.Google Scholar
  95. Wagner, S. M., & Eggert, A. (2016). Co-management of purchasing and marketing: why, when and how? Industrial Marketing Management, 52, 27–36.Google Scholar
  96. Wang, G., & Netemeyer, R. G. (2002). The effects of job autonomy, customer demandingness, and trait competitiveness on salesperson learning, self-efficacy, and performance. Journal of the Academy of Marketing Science, 30, 217–228.Google Scholar
  97. Wilhelm, M. M., Blome, C., Bhakoo, V., & Paulraj, A. (2016). Sustainability in multi-tier supply chains: understanding the double agency role of the first-tier supplier. Journal of Operations Management, 41, 42–60.Google Scholar
  98. Winer, R. S. (1983). Attrition bias in econometric models estimated with panel data. Journal of Marketing Research, 20, 177–186.Google Scholar
  99. Wuyts, S., Rindfleisch, A., & Citrin, A. (2015). Outsourcing customer support: the role of provider customer focus. Journal of Operations Management, 35, 40–55.Google Scholar

Copyright information

© Academy of Marketing Science 2018

Authors and Affiliations

  1. 1.Collat School of BusinessUniversity of Alabama at BirminghamBirminghamUSA
  2. 2.Eli Broad College of BusinessMichigan State UniversityEast LansingUSA
  3. 3.Debbie and Jerry Ivy College of BusinessIowa State UniversityAmesUSA
  4. 4.Terry College of BusinessUniversity of GeorgiaAthensUSA
  5. 5.Robert J. Trulaske, Sr. College of BusinessUniversity of MissouriColumbiaUSA

Personalised recommendations