Essays on Strategic Marketing and Sales

The success of any organization depends on maintaining profitable customer relationships. However, boardroom discussions often do not adequately focus on customers. This is problematic as taking strategic decisions, at the highest level of the organization, without considering customer perceptions could jeopardize the financial health of the organizations. In this dissertation, I first examine the pivotal role of customer perceptions in the success (failure) of certain boardroom decisions and then demonstrate how shareholders can make the boards more customer-centric. In essay 1, I examine how a boardroom decision to merge with a poorer image organization affects salespeople. Drawing from literature on social identity theory, I hypothesize that merging with a poorer image organization decreases salespeople’s organizational identification (OI), leading to a lower performance. In addition, I hypothesize that (1) salespeople experience a higher decrease in OI if they have longer-tenure or they work for a manager that places greater emphasis on organizational culture or distinctiveness (2) salespeople experience a lower decrease in OI if they have greater social inclusion or they work for manager that places greater emphasis on organizational strategic direction. To test these relationships, I use longitudinal data embedded in an interesting natural experiment: a merger between a national retailer (focal firm) and the regional retailer. As the regional retailer has a poorer image, the national retailer’s image was at stake, but only in the overlapping region (where both the retail stores were operating). Therefore, I consider the overlapping region as the treatment group and the non-overlapping region as the control group. I study more than 350 salespeople across the treatment and control groups over a period of 13 months: six months before and seven months after the merger announcement. I found support for the hypotheses under different econometric methods. Specifically, I use fixed-effects difference-in-differences, multi-level model, and moderated-mediation regression methods. In addition to the above methods, I also find evidence for the hypotheses under an instrumental variable approach. In the second essay, I investigate whether having a customer in the boardroom matters. In particular, in the context of business-business firms, I explore whether having an executive from one of the firm’s customers as a board member enhances firm performance. Building on resource dependency theory, I hypothesize that having a customer in the boardroom improves firm performance. Moreover, I hypothesize that a number of factors moderates this effect. Specifically, I hypothesize that (a) presence of marketing executive in the top management (b) firm diversification (c) industry demand uncertainty (d) CEO tenure moderate this relationship. Using an objective measure of customer presence in the boardroom and a sample of 329 business-to-business firms over a nine-year period (2007–2015), I find that customer presence in the boardroom enhances firms’ performance (Tobin’s q). Furthermore, I find that a customer on the board is less valuable when the firm’s top management team contains marketing personnel or when the firm is highly diversified. In contrast, a customer on the board is more valuable when the chief executive officer has a long tenure or demand uncertainty is high.