Conflict, leadership, and market orientation
Introduction
Both academics and practitioners support the importance of forming market orientation (MO) to achieve firm success (e.g., Lear, 1963). Several studies show that MO provides superior returns for firms (e.g., Narver & Slater, 1990). For example, Kirca, Jayachandran, and Bearden (2005) suggest that MO not only leads to superior firm performance, but also to more committed employees and satisfied customers. More recently, Cano, Carrillat, and Jaramillo (2004), in an extensive study that spanned 23 countries across five continents, confirmed that there is a strong positive effect of MO on business performance. Therefore, the formation of MO should represent a central priority for marketing managers and academics alike.
Kohli and Jaworski (1990), Jaworski and Kohli (1993), and Kirca et al. (2005), among others, argue that interfunctional conflict and senior management focus serve as important antecedents to MO. Because the development and formation of MO is an organizational issue, interdepartmental dynamics can determine its success. Furthermore, previous research underscores the significance of senior management in forming MO (Felton, 1959, July–August, Levitt, 1969, Webster, 1988, May–June).
Previous research in marketing and management suggests that not all conflicts are hazardous to organizations (Amason, 1996, Jehn, 1997, Menon et al., 1996); they posit that while relational or affective conflict has negative effects, task or functional conflict can be positive. Thus, to simply claim that conflict is detrimental to MO ignores the different effects of varying types of conflict.
Previous researchers such as Kohli and Jaworski (1990) and Jaworski and Kohli (1993) merely highlight the importance of senior management and consider senior management focus as a broad, general construct. To provide a more fine-grained picture of senior management focus, we extend their research to the more concrete context of leadership. Narver, Slater, and Tietje (1998, p. 244) assert that “Top management plays a critical leadership role in changing a culture in general, and in creating a market orientation in particular.” Transformational leadership (TL) in particular offers excellent grounds for demonstrating senior management focus. We investigate TL, as opposed to other types of leadership such as transactional, because it forms a strong bond with and rallying point for employees to support and nurture MO (Harris and Ogbanna, 2001, Narver et al., 1998). In doing so, we adopt the following definition of TL: leadership that exerts influence over its followers by changing their values, beliefs, and attitudes through internalization or identification, so they align their values and goals with the broader objective of the organization (Kelman, 1958).
Our goal is to shed light on two particular antecedents of MO: interfunctional conflict and TL. We depart from prior research on several points. Specifically, we posit a tripartite role for TL in (1) affecting interfunctional conflict (i.e., task and relational), (2) influencing MO, and (3) moderating the interfunctional conflict–MO relationship. In addition to exploring MO as the final dependent variable, we also investigate firm performance. To this end, we examine the relationship among interfunctional conflict, TL, and MO/performance, allowing for nonlinearities.
In the next section, we provide our proposed conceptual framework for the relationships among our key constructs, including interfunctional conflict and TL. Subsequently, we develop our hypotheses and report empirical results. We used a multiple respondent design, in which functional managers responded to questions about TL and interfunctional conflict and CEOs answered items relating to MO, to minimize common method bias. For firm performance, we used an objective measure of the firms' return on assets (i.e., net profit after tax, expressed as a percentage of total assets). We conclude by discussing some managerial and theoretical implications, limitations, and future research directions.
Section snippets
Conceptual framework
The extant literature suggests that interfunctional conflict and TL affect MO. Our integrated model also argues that TL influences interfunctional conflict and moderates the interfunctional conflict–MO relationship.
TL and interfunctional conflict
Transformational leaders, due mainly to their personality characteristics (e.g., openness, agreeableness, positive affectivity), follow an integrative conflict management style (cf. Judge & Bono, 2000). The conflict handling literature suggests two dimensions that capture five conflict handling styles (i.e., accommodating, avoiding, compromising, integrating/collaborating, and competing): activeness and agreeableness (Van de Vliert & Euwema, 1994). Van de Vliert and Euwema (1994) show that an
Sample and data collection
We collected the data as part of a larger project conducted in Australia. Our target respondents were CEOs and/or senior executives and marketing managers of large Australian manufacturing companies, who are the most knowledgeable about the context of this study. We purchased a list of the names and addresses of the CEOs/senior executives and marketing managers of the 1000 largest manufacturing companies from a private databank company. Because we conducted a pretest of the draft questionnaire
Measure assessment
Confirmatory factor analyses (CFA) of the multi-item scales produced an acceptable fit to the data (χ(1219)2 = 2364.9, p < .001, goodness-of-fit index [GFI] = .89; root mean square error of approximation [RMSEA] = .07). In addition, all factor loadings are statistically significant (Gerbing & Anderson, 1988) and the average variance extracted (AVE) values are greater than .50 (Bagozzi & Yi, 1988). To test for discriminant validity, we performed the more stringent test suggested by Fornell and Larcker
Implications
Our findings provide several important theoretical and managerial implications. From a theoretical perspective, we examined the tripartite role of TL in terms of (1) managing different types of interfunctional conflict, (2) increasing MO, and (3) moderating the TC/RC–MO relationship. That is, we investigated the relationship among TL, two different types of conflict, and MO, allowing for nonlinearities. Our study uses a cultural perspective of MO and TL and examined not only how different types
Acknowledgments
The work described in this paper was fully supported by a grant from the Research Grants Committee of the Faculty of Economics and Commerce, University of Melbourne. We thank three anonymous reviewers, the former editor, Hubert Gatignon, the area editor, and the current co-editor, Donald R. Lehmann for their supportive comments.
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