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Journal of the Academy of Marketing Science

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11-01-2020 | Original Empirical Research

Chief marketing officer presence and firm performance: assessing conditions under which the presence of other C-level functional executives matters

Authors: Pravin Nath, Neeraj Bharadwaj

Published in: Journal of the Academy of Marketing Science | Issue 4/2020

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Abstract

This research extends understanding of the relationship between chief marketing officer (CMO) presence and firm performance by investigating how it is affected by the presence of three other functional heads (or CXOs) under various environmental and strategic contingencies. Results based on a panel of 401 U.S. manufacturers reaffirm the positive CMO presence–firm performance relationship and establish that the linkage is (a) strengthened by chief sales officer presence when industry sales volatility is high, (b) strengthened (weakened) by chief technology officer presence when industry innovation and firm differentiation (cost leadership) are high, and (c) strengthened (weakened) by chief supply chain officer presence when firm diversification (differentiation) is high. The study: expands top management team research by investigating executive dyads formed by the pairing of heads of functions advocated in the organizationally embedded view of marketing; delineates CXOs’ roles and orientations to clarify mechanisms that aid or hamper the CMO; and, identifies industry and firm-level contexts that affect the CMO–CXO interfaces. Additionally, the findings underscore the importance of appointing CMOs and, of CMOs spanning organizational silos.

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We use the terms structural or dyadic to emphasize that the interfaces we study result from the simultaneous or dyadic presence of the CMO and each of the other CXOs in the TMT’s structural configuration. In comparison, the focus in the functional-level marketing interfaces literature (subsequently cited in this paper) is on process measures such as inter-functional cooperation where the interfacing functions are always present.

Notably, this literature precedes the rising importance of big data, which would make the CMO–CIO interface also worthy of study (Sleep and Hulland 2019; Whitler et al. 2017). Conversely, the marketing–finance interface explored in this literature cannot be studied at the structural level using data from recent history because almost all public firms have a CFO, making the issue of presence of CFOs and CMO–CFO dyads moot. As such, we acknowledge the importance of these and other possible CMO–CXO interfaces, but limit our scope to the three that we have studied given that our research represents one of the early efforts to investigate structural dyads in TMTs.

The moderation of the CMO presence–firm performance relationship by any CMO–CXO interface is essentially the interaction between the CMO’s and this CXO’s presence. The addition of environmental and strategic contingencies discussed in the body of this paper as well as the resulting hypothesized relationships shown in Figure 1 are, therefore, three-way interactions between CMO presence, CXO presence, and each of these contingencies.

We thank an anonymous reviewer for suggesting this Table.

We preclude delineating CXO orientations along the temporal dimension even though it has been used at the functional level—e.g., Homburg and Jensen (2007) find that marketing is relatively more long-term oriented than sales—since TMTs, and by extension CXOs, are generally long-term oriented in strategic decision making.

Because the main effects of CSO, CTO, and CSCO presence are not central to our conceptual model, we do not hypothesize them; however, we report and comment on them in subsequent sections of this paper.

Since we study structural CMO–CXO interfaces that are captured by the simultaneous presence of the CMO and a CXO, we do not consider process measures such as cooperation and conflict. Such facets of an interface can have opposing effects as discussed in the body of this paper. Consequently, the net effect on performance, if any, is not clear, leading to our preclusion of directional two-way hypotheses for these interfaces.

We test H7 with total, related, and unrelated diversification but expect the latter to be more relevant for the rationales proposed here because business units are more disconnected in unrelated (vs. related) diversifiers, making it harder for CMOs to effectively perform their roles. Because total diversification is the sum of these two measures, we similarly expect the arguments to be less relevant to it compared to unrelated diversification.

We sampled from the following two-digit SICs: 20 (Food & Kindred Products), 25 (Furniture & Fixtures), 26 (Paper & Allied Products), 28 (Chemicals & Allied Products), 35 (Industrial & Commercial Machinery & Computer Equipment), 36 (Electronic & Other Electrical Equipment & Components), and 37 (Transportation Equipment).

TMT operationalizations have varied in extant research. Given the increasing importance of research on TMT functional heads within and outside marketing, we clarify this issue of operationalizing the TMT separately, in an Appendix, to serve as a primer for future research in the area; we also justify our TMT operationalization in it. We thank an anonymous reviewer, the associate editor, and the editor for their inputs that led to creating this Appendix.

We also observed executives with marketing and sales titles (or responsibilities in the case of the customer and commercial titles discussed subsequently in the paper). Our focal analyses classified such executives as CMOs, but we subsequently conducted robustness checks of our results classifying them as only CSOs and as CMOs and CSOs.

Our focal results are substantively similar whether we used the raw measure of SGA or excluded R&D from it (cf. Ptok et al. 2018). We used the latter operationalization to report findings in this paper.

We consider a moderation hypothesis as being supported if its related three-way interaction is strongly significant (p < .05) in at least one of the two models that includes it, i.e., the model in which it is entered separately or the full model, and at least weakly significant (p < .10) in the other model. We claim partial support when the interaction is significant in only one of these models, and weak support if this interaction is weakly significant (p < .10). Cases with both models showing weak interactions would also be weakly supported, but our focal results preclude such cases.

As mentioned in Footnote 8, we tested H7 with total, related, and unrelated diversification. While results for H7a and H7b were similarly non-significant across all these measures and Models M7a, M7b, and M8, with H7c, Model M7c’s results reported in the body of this paper hold only with unrelated diversification and not with total or related diversification (these latter measures are identical when dichotomized). Similarly, the strong support for H7c in the full Model M8 was observed only with the former measure; we found only weak support (p > .10) with the latter. Furthermore, when we used continuous measures, H7c was again supported, albeit weakly, with only unrelated diversification. Thus, the arguments we proposed for this hypothesis are more relevant to this latter measure, in line with the expectation mentioned in Footnote 8. We, therefore, only report results with unrelated diversification.

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Title: Chief marketing officer presence and firm performance: assessing conditions under which the presence of other C-level functional executives matters
Authors: Pravin Nath
Neeraj Bharadwaj
Publication date: 11-01-2020
Publisher: Springer US
Published in: Journal of the Academy of Marketing Science / Issue 4/2020
Print ISSN: 0092-0703
Electronic ISSN: 1552-7824
DOI: https://doi.org/10.1007/s11747-019-00714-1

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