Conflict, leadership, and market orientation

Abstract

While conflict is generally viewed as something to avoid, some conflicts benefit organizations. Against this backdrop, this article explores how a particular type of leadership (i.e., transformational) affects (a) the two dimensions of interfunctional conflict (i.e., task and relational), (b) market orientation and performance, and (c) the task/relational conflict–market orientation and performance relationships that allow for nonlinear effects. Data collected from CEOs and marketing managers show that the relationship among task/relational conflict, transformational leadership, market orientation, and performance is more complex than previously thought. The authors discuss the relevance of nonlinear effects in the context of how firms might improve their market orientation and performance.

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.