TY - JOUR
T1 - Performance implications of the direct and moderating effects of centralization and formalization on customer orientation
AU - Auh, Seigyoung
AU - Menguc, Bulent
N1 - Funding Information:
The work described in this paper was fully supported by a grant from the Research Grants Committee of the Faculty of Economics and Commerce, The University of Melbourne.
Copyright:
Copyright 2007 Elsevier B.V., All rights reserved.
PY - 2007/11
Y1 - 2007/11
N2 - Drawing on the control literature in marketing and management, this paper addresses the direct and moderating effects of control mechanisms on the formation and implementation of customer orientation. The key focus of this paper is to examine how two of the most widely studied control mechanisms - centralization and formalization - affect customer orientation formation and implementation differently. We hypothesize that centralization will reduce the effect of the formation and implementation of customer orientation. In contrast, we expect formalization to negatively influence the formation of customer orientation but bolster the impact of customer orientation on firm performance. Furthermore, we hypothesize a three-way interaction among customer orientation, centralization, and formalization on firm performance. Using top management team (e.g. CEO) data from leading firms in the industrial production sector, our results support the universal negative role of centralization on customer orientation formation and implementation. For formalization, our results did not support a negative effect on the development of customer orientation, but supported a positive effect on the implementation of customer orientation. Finally, customer orientation was found to have a positive effect on firm performance when a decentralized organization was coupled with formalization.
AB - Drawing on the control literature in marketing and management, this paper addresses the direct and moderating effects of control mechanisms on the formation and implementation of customer orientation. The key focus of this paper is to examine how two of the most widely studied control mechanisms - centralization and formalization - affect customer orientation formation and implementation differently. We hypothesize that centralization will reduce the effect of the formation and implementation of customer orientation. In contrast, we expect formalization to negatively influence the formation of customer orientation but bolster the impact of customer orientation on firm performance. Furthermore, we hypothesize a three-way interaction among customer orientation, centralization, and formalization on firm performance. Using top management team (e.g. CEO) data from leading firms in the industrial production sector, our results support the universal negative role of centralization on customer orientation formation and implementation. For formalization, our results did not support a negative effect on the development of customer orientation, but supported a positive effect on the implementation of customer orientation. Finally, customer orientation was found to have a positive effect on firm performance when a decentralized organization was coupled with formalization.
KW - Centralization
KW - Control theory
KW - Customer orientation
KW - Formalization
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U2 - 10.1016/j.indmarman.2006.02.010
DO - 10.1016/j.indmarman.2006.02.010
M3 - Article
AN - SCOPUS:34548849094
SN - 0019-8501
VL - 36
SP - 1022
EP - 1034
JO - Industrial Marketing Management
JF - Industrial Marketing Management
IS - 8
ER -