Industrial Marketing Management 35 (2006) 974 – 988 Developing marketing capabilities for customer value creation through Marketing–Sales integration Paolo Guenzi a,⁎, Gabriele Troilo a,b a Università L. Bocconi and SDA Bocconi School of Management, Italy b Universidad Autònoma de Barcelona, Spain Received 26 January 2006; received in revised form 26 May 2006; accepted 10 June 2006 Available online 28 July 2006 Abstract The capacity to create superior customer value stems from the marketing capabilities a company possesses. A considerable body of research has indicated that market oriented companies have distinctive marketing capabilities which lead to superior organizational performance. Although it has been widely recognized that the development of marketing capabilities requires the joint effort of Marketing and Sales departments, almost no attention has been devoted to investigating the integration of these two functions. This study reports on an exploratory effort to use the means– end theory in explaining Marketing–Sales integration. Findings show that Marketing–Sales integration is a multi-faceted construct made up of different components that impact different marketing capabilities and highlight its antecedents and consequences. © 2006 Elsevier Inc. All rights reserved. Keywords: Marketing–Sales relationships; Interdepartmental integration; Marketing capabilities; Means–end theory; Laddering 1. Introduction One of the cornerstones of modern marketing thought is that market oriented companies are better equipped to meet the generation of superior customer value and, as a consequence, to attain sustainable competitive advantage. Several studies show that market orientation is positively related to organizational performance (Jaworski & Kohli, 1993; Narver & Slater, 1990; Ruekert, 1992; Slater & Narver, 1994). The ability to generate superior customer value is dependent on the availability of distinctive marketing capabilities (Day, 1994a; Hult & Ketchen, 2001; Slater & Narver, 1995, 2000). Inter-functional relationships are at the basis of the market orientation construct. Narver and Slater (1990) consider interfunctional coordination as a component of the construct, whereas Kohli and Jaworski (1990) suggest that interdepartmental dynamics are an antecedent of market orientation. In short, ⁎ Corresponding author. Università L. Bocconi, Italy. E-mail address: paolo.guenzi@sdabocconi.it (P. Guenzi). 0019-8501/$ - see front matter © 2006 Elsevier Inc. All rights reserved. doi:10.1016/j.indmarman.2006.06.006 market oriented companies are characterized by a high level of integration of market-related knowledge and skills. Prior research shows that knowledge and skills regarding market-related activities are spread throughout the organization, the highest concentration, as one would expect, in the two departments traditionally responsible for managing market relationships: Marketing and Sales (Homburg, Workman, & Jensen, 2000; Homburg, Workman, & Krohmer, 1999; Krohmer, Homburg, & Workman, 2002; Rouziès et al., 2005; Zoltners, 2004). Despite the fact that Marketing and Sales often share responsibility for many common activities, their rapport is not without problems (Anderson, 1996; Carpenter, 1992; Shocker, Srivastava, & Ruekert, 1994; Strahle, Spiro, & Acito, 1996). As a result, opportunities for a company to create superior customer value risk being seriously challenged. Even though the existing literature (Dewsnap & Jobber, 2000, 2002; Rouziès et al., 2005) has contributed to enhancing our knowledge on Marketing– Sales integration, research in this area is still scarce. The purpose of this study is to explore the contribution of Marketing–Sales integration to the development of marketing capabilities, and, as a consequence, to the creation of superior value for the customer. In particular, our objectives are to better P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 clarify and detail the integration construct; to investigate how Marketing–Sales integration can impact different marketing capabilities; and, finally, to identify potential antecedents which may foster Marketing–Sales integration. The article, therefore, is structured as follows. Firstly, a literature review on marketing capabilities and Marketing– Sales integration highlights the limitations of prior research regarding the contribution of the two departments (and their integration) to the creation of superior customer value. Secondly, our methodological approach is described and findings of the exploratory research on Marketing–Sales integration are presented and discussed. Lastly, a discussion of theoretical and managerial implications and possibilities for future research on the topic conclude the paper. 2. Literature review 2.1. Marketing capabilities and the contribution of Marketing and Sales departments Over the last decade, a growing number of studies have highlighted the role of marketing capabilities in the attainment of a firm's competitive advantage. Leveraging on the resourcebased view of the firm (Barney, 1991; Grant, 1991; Peteraf, 1993; Wernerfelt, 1984) and on the capability-based view of the firm (Grant, 1996; Prahalad & Hamel, 1990; Teece, Pisano, & Shuen, 1997), marketing researchers demonstrated that marketing resources and capabilities can contribute to the creation of a competitive advantage because they may be rare, difficult to achieve, difficult to duplicate and their value can be appropriated by the organization (Dutta, Narasimhan, & Rajiv, 1999; Hooley, Greenley, Cadogan, & Fahy, 2005; Hunt & Morgan, 1995; Vorhies, Harker, & Rao, 1999; Weerawardena, 2003a). Marketing capabilities have been defined as “the integrative processes designed to apply collective knowledge, skills and resources of the firm to market-related needs of the business, enabling the business to add value to its goods and services, adapt to market conditions, take advantage of market opportunities and meet competitive threats” (Vorhies, 1998: 4). However, the literature also suggests the existence of different classifications of marketing capabilities. All of them share the assumption that these capabilities are exercised through specific marketing processes. The most popular one has been proposed by Day (1994a) who distinguishes between market sensing and customer-linking capabilities: the first referring to the ability of a company to identify customers' needs, the second referring to the ability to build relationship with them. Still other authors claim that market oriented companies share a distinctive capability, that is, the ability to learn from the market (Li & Calantone, 1998; Slater & Narver, 1995; Weerawardena, 2003a,b). In fact, the capacity to collect, disseminate and use market-based information is key to the growth of organizational performance (Jaworski & Kohli, 1993; Narver & Slater, 1990). Several studies point out that an effective development of marketing capabilities calls for both Marketing and Sales departments to modify their role and practices in order to increase the coordination of their activities and give life to integrated 975 processes (e.g. Cespedes, 1993; Day, 1994a; Slater & Narver, 1995). However, scholars have devoted very limited attention to which mechanisms a firm may use to foster the coordination of the two units, since both are involved in the design and implementation of marketing processes. Almost all studies on this topic implicitly assume that marketing activities are under the complete responsibility and control of a single organizational unit, namely, the Marketing department. However, this assumption does not hold true if one takes into account that in many modern corporations, it is the Sales department that actually has more influence than Marketing on many of the so-called “marketing” decisions (Homburg et al., 1999; Krohmer et al., 2002). Based on the above, the development of marketing capabilities requires a joint effort of the two departments and their integration comes to the fore as a relevant theoretical and managerial issue. 2.2. Marketing–Sales integration Marketing–Sales integration is “the extent to which the activities carried out by the two functions are supportive of each other” (Rouziès et al., 2005: 115). In modern companies, Marketing and Sales are kept separate due to the specialized tasks each is called upon to deal with in the external environment (Cespedes, 1993; Dewsnap & Jobber, 2000): the Marketing department is usually focused on customer marketing, brand management, advertising management, marketing research; while the Sales department is focused on trade marketing, trade negotiations, channel management. However, as stated by Lawrence and Lorsch (1967), organizational functioning requires differentiation and integration, where the former meets the need for specialization, and the latter ensures the direction of efforts and resources toward a common goal. Literature on Marketing–Sales integration is quite scarce and mostly devoted to exploring the barriers to integration. Drawing on new product development literature (e.g. Fisher, Maltz, & Jaworski, 1997; Griffin & Hauser, 1996; Gupta, Raj, & Wilemon, 1986; Maltz, 1997), Dewsnap and Jobber (2002) highlight the role of socio-psychological differences between the two groups. Similarly, Rouziès et al. (2005) confirm that a major impediment to Marketing–Sales integration is created by the different mindsets of employees of the two units. Unfortunately, however, both Dewsnap and Jobber (2002) and Rouziès et al. (2005) only develop conceptual frameworks. They do not empirically test the relationship between the existence of such impediments and Marketing–Sales integration, nor do they test the impact of potentially beneficial antecedents on integration. Surprisingly, a widely accepted definition and a measure of the integration construct are still eluding the literature (Rouziès et al., 2005). Previous research on Marketing integration with departments other than Sales might provide some help. Kahn and his colleagues (Kahn, 1996, 2001; Kahn & McDonough, 1997; Kahn & Mentzer, 1998) suggest that interdepartmental integration is a combination of interaction and collaboration. Interaction regards communication flows between the two organization units. Effective interaction takes place when functions regularly exchange information in a formalized way through meetings, 976 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 memoranda, documents, etc. Collaboration, on the other hand, requires that the two functions be willing to work together and share the same vision, goal and resources. However, other scholars (Dewsnap & Jobber, 2000; Fisher et al., 1997; Maltz & Kohli, 1996; Rouziès et al., 2005) claim that some of the components of the integration construct highlighted by Kahn and colleagues – like information exchange, communication, teamwork, shared goals – just play the role of antecedents to Marketing–Sales integration. Moreover, Kahn and colleagues (Kahn, 1996, 2001; Kahn & McDonough, 1997; Kahn & Mentzer, 1998) posit that successful integration relationships with Marketing depend on which functional unit or department is to be integrated. They suggest that different interdepartmental relationships warrant specific investigation. 2.2.1. Summary and objectives Our literature review reveals four limitations to existing studies. Firstly, despite the fact that marketing capabilities are defined as “integrative processes” (Day, 1994a; Vorhies, 1998), a clear explanation of how these processes function is still, in our view, missing. Much of the research emphasizes the need for integration (Ruekert & Walker, 1987) but there is no theoretical explanation nor empirical evidence to support that different marketing capabilities may require various levels of integration. Similarly, it remains unclear as to whether those capabilities would be affected differently by the various components of integration. Secondly, marketing organization studies emphasize the ‘shared’ responsibilities and activities between Sales and Marketing departments in today's modern firms (Homburg et al., 1999; Krohmer et al., 2002). Similarly, marketing strategy research posits that the capacity to offer superior customer value and to achieve a competitive advantage requires a joint effort of Marketing and Sales departments (e.g. Cross, Hartley, Rudelius, & Vassey, 2001; Slater & Olson, 2000). However, prior research on marketing capabilities does not seem to recognize the joint contribution of Marketing and Sales departments in the development of those capabilities, assuming that marketing activities fall under the responsibility of a single department and that the relationships between Marketing and Sales are non-problematic. On the contrary, literature on Marketing–Sales interface demonstrates that it is not the case (Anderson, 1996; Carpenter, 1992; Shocker et al., 1994; Strahle et al., 1996). We therefore maintain that the contribution of integration between Marketing and Sales to the development of marketing capabilities remains mostly unexamined. Thirdly, there is no widespread agreement on the nature of the Marketing–Sales integration construct. The scarce literature that does exist on the topic is purely theoretical (Dewsnap & Jobber, 2000, 2002; Rouziès et al., 2005). Clear and detailed specification of the construct is still lacking. What is present in the literature leverages on Marketing integration with other nonSales departments and hence ignores the rather peculiar relationship that exists between Sales and Marketing. In fact, the two departments are resource interdependent, their activities and responsibilities overlap and the change in the organizational design of many modern corporations makes the two functions increasingly intertwined (Workman, Homburg, & Jensen, 2003). Fourthly, there has been little field research to date regarding the antecedents and consequences of Marketing–Sales integration. Literature on Marketing relationships with other departments (excluding Sales) has analyzed a number of integrating mechanisms (Leenders & Wierenga, 2002; Maltz & Kohli, 2000), demonstrating that they are not equally effective in terms of the different expected integration outcomes. Furthermore, prior research on the consequences of Marketing relationships with other functions (Kahn, 1996, 2001; Kahn & Mentzer, 1998) shows that the outcomes of these relationships are indeed different for each cross-functional relationship type. As a result, an analysis of the specific drivers and consequences of Marketing–Sales integration is still missing. Considering these limitations in extant research, we designed a field research project with several objectives. The first objective was to depict a more comprehensive and detailed view of the construct in terms of its components and the relationships among them. The second objective was to disentangle the relationships between Marketing–Sales integration and specific marketing capabilities. In particular, we wanted to explore the role played by the different components of integration in the development of the marketing capabilities described in extant literature. Finally, we aimed at depicting a clearer picture of antecedents and consequences of Marketing–Sales integration by exploring the different nature of antecedents and describing the consequences of integration in terms of valuable outcomes for the customer. 3. The study Due to the lack of robust conceptual and empirical foundations for our topic, we adopted an exploratory approach with a qualitative research design. We are interested in exploring the relationship between Marketing–Sales integration with its antecedents and consequences, hence the method we selected was the laddering technique based on means–end theory. As pointed out by Foote and Lamb (2002), laddering provides for an opportunity to clarify meanings, explanations, goals and values beyond that achievable with the more widely used techniques of questionnaires and semi-structured interviews. In fact, the resultant data potentially allows for the use of qualitative and quantitative analysis meaningfully without the necessity for large respondent samples. Compared to other interviewing techniques, laddering has several important advantages. Firstly, it reduces the risk that some important attributes/benefits are overlooked in the in-depth interviews (Botschen, Thelen, & Pieters, 1999). Secondly, it allows for the conversion of the qualitative data (i.e. the raw verbatim responses) into nominal codes that can be quantified (Gengler & Reynolds, 1995). This in turn permits a shift from the ladders produced by many individuals to the aggregate cognitive structure of a group of people. These can be interpreted as “dominant ways of thinking” (Reynolds & Gutman, 1988). Finally, laddering facilitates the construction of Hierarchical Value Maps, which graphically display a well-organized P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 summary of the information derived from the interviews (Claeys, Swinnen, & Vanden Abeele, 1995). According to means–end theory, three categories of meaning are typically associated with a concept (Thompson & Chen, 1998): a) attributes (the means) i.e. relatively concrete meanings that represent the observable, perceived characteristics of the object of analysis; b) consequences, i.e. more abstract meanings reflecting the perceived functional or psycho-social benefits or costs associated with specific attributes; c) personal values, i.e. highly abstract meanings referring to enduring end-states of existence that respondents seek to achieve through their behavior. Originally developed for analyzing and interpreting consumer behavior (Gutman, 1982), means–end has more recently been applied for eliciting information from managers about organizational culture (Rugg, Mahmood, Rehman, Andrews, & Davies, 2002), personal values (Bourne & Jenkins, 2005; Foote & Lamb, 2002) and success factors for specific job positions, such as the sales managers (Deeter-Schmelz, Kennedy, & Goebel, 2002). Laddering (Reynolds & Gutman, 1988) employs a one-to-one interviewing technique in which a series of directed probes are used to reveal how respondents link the attributes of the object of analysis (the integration of Marketing and Sales departments in our case) to their own underlying values. This allows researchers to determine the ladder of linkages between attributes, consequences and values. Since using laddering implies the risk of incurring in wrong or biased interpretations when content-analyzing verbal data collected through the laddering interview technique (Langerak, Peelen, & Nijssen, 1999; White & Kokotsaki, 2004), we decided to run some preliminary interviews to gain some insights on the topic under investigation. In fact coding “chunks” of meaning to which each verbatim should be assigned is a complicated process that gives a lot of latitude to the researcher. Hence, coding should preferably not be based on the researcher's idiosyncratic cognitive categories (Grunert & Grunert, 1995). Thus, we conducted 12 in-depth interviews with marketing managers, sales managers and CEOs of companies operating in different environments (i.e. both business to business and business to consumer goods and services). We are, after all, probing into the nature of Marketing–Sales integration and how it contributes to developing marketing capabilities and superior customer value. Moreover, in the case this contribution were to be further developed, we would be interested in understanding the managerial tools respondents perceived as useful to foster integration. Therefore, interviews covered three main issues: what is Marketing–Sales integration and how is it interpreted by managers? Why is such integration relevant? How can such integration be improved? Each interview lasted between 45 and 90 min. Table 1 provides some descriptive information on respondents. Subsequently, we used means–end chain theory and the laddering technique. Consistent with Reynolds, Dethloff, and Westberg's (2001) argument that a minimum of 20 respondents should be interviewed, we interviewed 33 executives attending different Marketing and/or Sales courses at a major business school. Worthy of note is that none of these courses dealt with the topic of the relationship between these two functions in any way. 977 Table 1 Descriptive information on respondents interviewed in the first step of the research process Respondent Gender Market Job position 1 2 3 4 5 Female Male Male Male Male Marketing manager Marketing manager Sales Manager Sales Manager Sales Manager 6 7 8 9 10 11 12 Male Female Male Male Male Male Male Beverage (non-alcoholic drinks) Electrical equipment Automotive spare parts Professional coffee machines Cement, aggregates, concrete and constructionrelated services Professional hand-tools Luxury goods Stainless steel flat products Construction materials Medical equipment Beverage (alcoholic drinks) Coffee Sales Manager Marketing manager CEO Marketing manager CEO Marketing manager Marketing manager All interviews were audio recorded and transcribed verbatim. The number of interviews is consistent with previous exploratory analysis based on the same research technique (see Bourne & Jenkins, 2005; Foote & Lamb, 2002; Rugg et al., 2002; Thompson & Chen, 1998), while the variety of profiles in the sample ensures the general applicability of results, avoiding the mere description of policy and behavior of a specific firm or organization. The final respondents are executives of companies operating in B2B markets (54.5%) and consumer markets (45.5%) in many different industries (e.g. FMCG, banking, telecommunications, medical equipment, etc.) As for the job position of our respondents, 51.5% work in the Marketing department, 36.4% in the Sales function, and 12.1% have different roles (e.g. CEO, business unit director, etc.). In keeping with Reynolds and Gutman's (1988) recommendations, respondent introspection was facilitated by presenting the interviewer as a facilitator and the respondent as the expert. Before starting each interview, the fact that there were no right or wrong answers was made clear and that the purpose was simply to understand the respondent's opinion. The interview started asking each respondent to indicate 5 to 8 mechanisms he or she considered important for fostering effective integration of Marketing and Sales departments. This free elicitation of relevant attributes is a common practice in means–end research (Botschen et al., 1999). This list of attributes served as a basis for asking the question “why is that important to you?”. This procedure was repeated varying the actual wording of the probe (e.g. “why is that?”, “what happens if this is absent?”) or by evoking specific situational contexts. This gradually led respondents to higherlevel distinctions and helped them move forward. 4. Findings 4.1. Preliminary interviews Regarding the meaning of Marketing–Sales integration, many different interpretations emerged. Integration was described by executives in terms of coordination, collaboration, communication, working relationships, level of conflict, distribution of 978 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 power. Many respondents provided different definitions of the integration concept during the interview, pointing out that integration can refer to different levels: integration of goals, resources or activities carried out by the two departments in question. As one marketing manager pointed out: We [the Sales department and us] may share our goals. But sharing plans and resources is a completely different story. This evidence suggests that integration is a complex and multi-faceted construct. For example, some managers claimed that sharing decisions does not imply accepting them. Similarly, it was noted that knowing one's counterparts does not always equate to understanding them or to being able to put themselves in the ‘other department's shoes’ per se. This complexity is clear in the following statement made by a sales manager: They [colleagues from the Marketing department] know what we do. We share a lot of information and regularly meet them every week. However, I am not sure that they really understand what our job is about. Product managers seldom call on customers with our salespeople. As a consequence, I don't think we truly trust each other. I don't know… I am not sure we can properly say that we have a high level of integration. The complex network of subjective mental associations is apparent if one considers that in some cases the same concept was interpreted in opposite ways by different respondents, depending on the connections they made between that concept and positive or negative consequences. For example, in most cases power imbalance between the two departments was considered detrimental to interfunctional integration. However, as one marketing manager pointed out: To some degree, I think that power imbalance is good. We need to get things done rapidly. Clarity is more important than equity. When we have a meeting, we need to come out with decisions, even though they are perceived as “unfair” by some. Table 2 Definitions of variables used for the Hierarchical Value Map Code Label Definition A2 A6 Spatial proximity of Marketing and Sales offices People from Marketing and Sales departments interact by exchanging standard written documents A7 A8 A9 A10 Physical location Exchange of documentation (e.g. report, fax, memoranda, etc.) Training ICT (e.g. mail, database, phone, etc.) Job rotation Planned meetings A11 A12 A15 Unplanned meetings Organizational structure Reward systems A16 A18 C2 C3 C4 C5 C6 C8 C9 Corporate strategy and culture Joint customer calls Better decisions Better implementation Consistency and synergies Collaboration Commitment Sharing goals and resources Less conflict C10 C11 C12 C13 C14 C15 C17 C18 C19 C22 C24 V1 V3 V4 V6 V8 V9 Confrontation Communication Better market knowledge Helping the counterpart Understanding the counterpart Broader perspective Motivation Positive work climate Solving customer problems Shared strategies and plans Trust in the counterpart Achieving corporate success Achieving corporate goals Improving corporate image Innovation Employee satisfaction Customer satisfaction People from Marketing and Sales departments jointly participate to cross-functional training programs People from Marketing and Sales departments interact by exchanging information through ICT tools The company stimulates job rotation between Marketing and Sales departments People from Marketing and Sales departments regularly interact by participating to fixed contact points (e.g. monthly meetings) People from Marketing and Sales departments interact by organizing informal meetings The company's organizational structure facilitates interaction between Marketing and Sales departments The company adopts some form of cross-functional incentive schemes based on the attainment of interdepartmental goals The company's strategy and culture support interdepartmental interaction and collaboration People from Marketing accompany salespeople calling on customers Improving speed and quality of decision-making processes Improving the actual implementation of decisions, strategies and plans Reducing waste of organizational resources, optimizing resource allocation Interdepartmental relations are characterized by goodwill, mutual respect and teamwork Increasing job commitment of employees Each department knows the other department's goals and resources Reducing the parties' negative emotional reactions to perceived disagreements and interference with the attainment of own goals Openness and willingness to listen to the counterpart's arguments Exchanging information Broadening and deepening the understanding of market phenomena Willingness to solve the counterpart's problems Developing a better knowledge of the working conditions and problems of the counterpart Taking into account the counterpart's point of view Increasing job motivation of employees Developing esprit de corps and improving the working conditions in terms of quality of social relations Improving the ability to solve customer problems Each department knows the other department's strategies and plans Thinking that the counterpart is reliable, dependable and acts in the other department's interest Ability to outperform competitors Ability to accomplish the goals set by the company Ability to increase the company reputation Ability to create new products and services Ability to satisfy employees' job requirements Overall ability to satisfy customer needs P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 Similar considerations hold true for conflict. One marketing manager emphasized that: Our CEO believes that conflict is positive, because it helps motivating people and getting the most from each department […] moreover, by stimulating interfunctional conflicts, the CEO aims at dividing functional managers: this way, he avoids being the minority when decisions must be made. Among the most cited reasons for poor integration (and in many cases even for conflict) between Marketing and Sales is the existence of different perspectives and time frames used in the processes of goal setting, resource allocation and performance evaluation (e.g. Rouziès et al., 2005; Strahle et al., 1996). Such differences obviously lead to conflicting priorities and inconsistent activities, because Marketing mainly adopts a strategic, longterm perspective, while Sales primarily focuses on tactical, shortterm objectives and activities. This radical difference is apparent in the following quote by one sales manager: To me, marketing is a dream, while sales are real life. Addressing the importance of achieving integration, in keeping with Cespedes (1993), managers pointed out that Marketing and Sales perform interrelated tasks, which often lead to overlapping situations that spark confusion and uncertainty about who is required to do what. Hence, interfunctional integration is needed to improve the performance of joint and/or complementary activities, since effective implementation requires the existence of positive cross-functional relationships (e.g. Dewsnap & Jobber, 2000; Ellinger, 2000). However, respondents had differing interpretations on performance indicators that were affected by achieving strong integration between Marketing and Sales: for example, all managers mentioned process improvements (e.g. “more datadriven decision making” or “faster implementation of strategies and plans”), while only eight managers explicitly indicated the impact on bottom-line performance and seven respondents pointed out the positive impact on socio-psychological aspects related to organizational climate. Finally, respondents suggested a number of different ways to improve Marketing–Sales integration. In keeping with Rouziès et al. (2005), these integrating mechanisms belong to company culture (e.g. market orientation), structure (e.g. use of a direct sales force), processes (e.g. cross-functional incentive systems) and personal characteristics (e.g. collaborative attitude). All respondents mentioned processes, while company culture, structure and personal characteristics were cited by five, eight and six managers, respectively. These results helped us in two ways. They suggested our paying much more attention to different components of the integration construct. As stated earlier, the literature review suggested that interaction and collaboration should have been the components to focus on, whereas our respondents gave us a much broader view of the concept. We also collected a list of codes, related to components of the Marketing–Sales integration construct, to be used during data interpretation in the next step of this study. The availability of the list helped us reduce the bias derived by our idiosyncratic cognitive structures. 979 4.2. Laddering The research team started out by content analyzing the interview transcripts: ladders of each response were classified Table 3 Macro-categories used for the Hierarchical Value Map Code A1 A2 A3 A4 A5 A6 A7 A8 A9 A10 A11 A12 A13 A14 A15 A16 A17 A18 C1 C2 C3 C4 C5 C6 C7 C8 C9 C10 C11 C12 C13 C14 C15 C16 C17 C18 C19 C20 C21 C22 C23 C24 V1 V2 V3 V4 V5 V6 V7 V8 V9 Label Common budget Physical location Common plans Common research Recruitment criteria and policies Exchange of documentation (e.g. report, fax, memoranda, etc.) Training ICT (e.g. mail, database, phone, etc.) Job rotation Planned meetings Unplanned meetings Organizational structure Personal characteristics Total quality management Reward systems Corporate strategy and culture Teams Joint customer calls Accepting decisions Better decisions Better implementation Consistency and synergies Collaboration Commitment Common decisions Sharing goals and resources Less conflict Confrontation Communication Better market knowledge Helping the counterpart Understanding the counterpart Broader perspective More responsibilities Motivation Positive work climate Solving customer problems Time and resources saving Shared goals Shared strategies and plans Self-improvement Trust in the counterpart Achieving corporate success Increasing creativity Achieving corporate goals Improving corporate image Organizational flexibility Innovation Crisis resolution Employee satisfaction Customer satisfaction Sum of direct (XX) and indirect (YY) relationships XX. YY Out In 4.24 6.59 3.19 1.6 1.3 13.91 – – – – – – 11.64 15.143 8.50 26.217 8.53 24.168 7.39 5.28 12.76 15.124 4.34 11.108. 5.11 20.14 13.6 16.9 25.51 15.20 3.6 10.8 11.22 19.56 72.179 42.61 9.6 29.57 22.12 6.4 9.12 16.14 18.12 1.6 2.1 25.29 1.4 11.11 – – – – – – – – – – – – – – – – – – – – – 6.30 28.115 23.112 28.97 22.40 10.46 7.21 14.37 14.47 19.20 112.19 29.137 10.42 35.42 13.63 4.16 8.36 19.69 21.94 7.61 3.5 24.84 2.12 10.46 37.172 4.6 18.85 6.44 2.16 14.84 1.9 12.66 16.62 Dropped items are in italics; bold characters show the highest frequencies. 980 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 Fig. 1. Hierarchical Value Map. into attributes, consequences and values. These summary codes were then aggregated into a smaller number of broad categories. Much consideration was given to how fine-grained the coding should be. In line with Van Rekom, Van Riel, and Wierenga (2006), we chose a conservative approach to avoid excessively broad categories. Nevertheless, this still led to some 51 codes, which are consistent with the threshold suggested by Gengler and Reynolds (1995, p.24). Thus through the coding process we identified 18 attributes, 24 consequences and 9 values (Table 2 presents a short definition of variables). Next, connections between attributes, consequences and values were summarized in an implication matrix representing the number of both direct and indirect connections between each attribute, consequence and value (Klenosky, Gengler, & Mulvey, 1993). The implication matrix, a square matrix whose size reflects the set of elements identified through the coding process, shows attributes, benefits and values that act as the row and column elements. The cells contain the frequency in which a particular column element is mentioned after a particular row element, aggregated across subjects and laddering. Both direct and indirect linkages between meanings are entered and the diagonal remains empty since a particular row element cannot be mentioned after itself. Overall, 588 direct connections and 1918 indirect connections were identified. Table 3 summarizes the number of direct and indirect relationships between an element and other elements leading into them (“in”) and higher order elements connected to them (“out”) (Reynolds & Gutman, 1988). Then, a Hierarchical Value Map (HVM) was built (Fig. 1) by connecting the chains extracted from the implications matrix. In doing this, consistent with previous research using a similar number of respondents (Thompson & Chen, 1998), a cut-off level of three relationships was established: all connections below this level were ignored. Of note is that “there are no theoretical or statistical criteria to guide the selection of the cutoff level” (Grunert & Grunert, 1995, p.221). Since there P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 Fig. 2. a: First dominant chain. b: Second dominant chain. c: Third dominant chain. d: Fourth dominant chain. 981 982 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 Fig. 2 (continued). P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 is a tradeoff between comprehensiveness and parsimony (Bagozzi & Dabholkar, 2000), a compromise is needed between retaining information and creating a manageable map. This process requires a lot of ingenuity, heuristics or a patient trial-and-error approach (Reynolds & Gutman, 1988). The only guidelines suggested when constructing an HVM are the following: “one should try at all costs to avoid cross lines” (Gutman, 1982, p.65) on the maps for the benefit of interpretability. Secondly, all concepts should be mentioned by at least 5% of the respondents (i.e. two managers, in our case) (Gengler, Klenosky, & Mulvey, 1995; Klenosky et al., 1993). Thirdly, the most relevant criteria in establishing how effective the map is in representing the data is to assess the percentage of all relationships among elements accounted for by the mapped elements (Reynolds & Gutman, 1988). The typical threshold value here is 70% (Gengler & Reynolds, 1995). Our final choice met all these requirements, since the final HVM has very few cross-lines. The map includes only those concepts cited by at least 7 of the 33 respondents: the final attributes, consequences and values account respectively for 86.2%, 92.5% and 89.8% of total attributes, consequences and values cited by respondents. Finally, the HVM incorporates 69.7% of total connections. The map in Fig. 1 depicts attributes, consequences and values in different ways. The “n” inside the circles indicates the number of respondents who cited that concept. The relative strength of association between concepts is represented by the width of the connecting lines. In line with relevant literature (Dewsnap & Jobber, 2000; Leenders & Wierenga, 2002; Maltz & Kohli, 2000; Rouziès et al., 2005), the 11 attributes finally used refer to different organizational elements: culture/strategy, structure, processes and managerial systems. The 18 consequences retained include both psycho-social benefits (e.g. trust, commitment, motivation, perception of positive climate) (e.g. Dewsnap & Jobber, 2002) and functional benefits (e.g. better decisions, better implementation) (e.g. Cespedes, 1993; Rouziès et al., 2005), thus confirming the findings of the preliminary study. These consequences provide a detailed picture of different components of the “integration” construct to be discussed later. The final six values refer to distinct although related entities: customers (customer satisfaction), the company (success, corporate image) and its employees (employee satisfaction). Consistent with other studies (e.g. Thompson & Chen, 1998; Van Rekom et al., 2006), we decided to present both the complete HVM and the dominant chains separately. The complete HVM is drawn for purposes of analysis. It is highly informative but is also complex. The dominant chains are drawn for purposes of presentation, since they help clarify and better understand the connections among the key variables. The complete HVM incorporates 52 different attribute– consequence–value chains. By analyzing both their length and the sum of links (direct and indirect) they incorporate, it is possible to identify the dominant chains (Aurifeille & ValetteFlorence, 1995; Gengler et al., 1995). Noteworthy is the fact that all dominant chains (Fig. 2a,b,c,d) incorporate the concept 983 of communication. The first dominant chain is: communication–confrontation–better market knowledge–broader perspective–better decisions–company success. Similarly, the second dominant chain follows this path: communication–sharing of strategies and plan–consistency and synergies–better decisions–company success. A third chain includes: communication–understanding the counterpart–helping the counterpart– solving problems–increased customer satisfaction. Lastly, a fourth dominant chain follows the sequence: communication– collaboration–commitment–motivation–positive climate–employee satisfaction. 5. Discussion 5.1. The nature of Marketing–Sales integration Previous research suggests that integration is a combination of interaction and collaboration (Kahn, 1996, 2001). In keeping with Dewsnap and Jobber (2000) and Rouziès et al. (2005) our findings highlight a more articulated nature of the integration construct. Communication and collaboration emerge as two components of the construct, whereas trust, motivation, commitment, mutual help, reduced inter-group conflict and positive organizational climate play a role as well. Communication appears as the central node in the network of concepts representing integration. Our findings reinforce the fact that effective communication between Marketing and Sales yields many positive outcomes including: stimulating confrontation, mutual understanding, collaboration and sharing. These, in turn, foster increased effectiveness and efficiency of market knowledge development and decision making, while supporting an organizational climate based on trust and cooperation, confirming prior research on Marketing interfaces with other functional units (Fisher et al., 1997; Kahn, 2001; Maltz & Kohli, 1996). However, earlier research has yet to fully analyze the relationship between interaction and collaboration considering them as independent components of integration. Conversely, our results indicate that interaction – obtained through meetings, exchange of documents, use of ICT, etc. – brings about collaboration, so that its role as antecedent of collaboration might be advanced. Other findings suggest that the definition of integration referred only to marketing and sales activities (Rouziès et al. 2005) is too limited. Respondents, in fact, also mention sharing of goals and resources and sharing of strategies and plans, giving emphasis to the fact that integration can be achieved at different organizational levels: from bottom-line activities to strategic decision-making and long-term investments decisions. 5.2. Marketing–Sales integration and marketing capabilities An analysis of the dominant chains of the HVM provides some insight into the contribution integrating the two departments has on the development of marketing capabilities. The first dominant chain (Fig. 2a) suggests that market sensing and market based generative learning are enriched. As Day (1994b) suggests, continuous learning about markets 984 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 requires widespread information distribution and mutually informed mental models. Increased communication between Marketing and Sales helps ensure the confrontation of different thought worlds so that mental models of both parties are challenged and functional oversimplification of market representations can be avoided. Moreover, by dismantling the systematic or structural constraints on information flows between the two departments, shared interpretation of information can emerge bringing about generative learning. Generative learning is different from adaptive learning (Senge, 1990; Sinkula, 1994; Slater & Narver, 1995) in so far as the latter occurs within the actual knowledge base of the organization, whereas the former challenges long-held beliefs allowing the organization to have a broader perspective about its markets. As a consequence, generative learning improves the effectiveness of marketing decisions contributing to company success via the ability to sense and anticipate future market trends ahead of its competitors (Day, 1994a; Weerawardena, 2003b). The second dominant chain (Fig. 2b) suggests that Marketing–Sales integration contributes to market-based adaptive learning and customer linking. In fact, increased communication allows both parties to create a common vision of the market and strategies as well as plans are therefore shared accordingly (Kahn, 2001; Slater & Narver, 1995). Improved alignment between the two functions fosters efficient decisionmaking processes by means of heightened consistency and synergy. This evidence is strengthened by prior research on customer relationship management, where the positive effect of integrated interfunctional efforts for strategic account management (Workman et al., 2003) and relationship selling (Weitz & Bradford, 1999) is emphasized. The customer linking capability, as discussed in Day (1994a), suggests that improvements can be developed by means of cross-functional Marketing– Sales coordination and information sharing that focuses on a common vision as to which customers to serve and which quality standards to provide. The ability to create long-lasting relationships with customers depends on the consistency of marketing and sales strategies as well as objectives along the product life cycle (Strahle et al., 1996) and the coordination of communication and promotional investments/strategies (Cespedes, 1993). The third dominant chain (Fig. 2c) displays another contribution of Marketing–Sales integration to marketing capabilities. As suggested by Kahn and colleagues (Kahn, 1996, 2001; Kahn & Mentzer, 1998), communication and mutual understanding are two main components of interdepartmental integration. Our findings suggest that Marketing– Sales integration generates customer value by means of increased organizational citizenship (see Podsakoff, MacKenzie, Paine, & Bachrach, 2000, for a review). In fact, helping behavior is a type of citizenship behavior, defined as “voluntarily helping others with, or preventing the occurrence of, work-related problems” (Podsakoff et al., 2000: 516). As posited in prior research on the topic, organizational citizenship behavior enhances customer satisfaction by stimulating constructive suggestions about how to improve a company's value proposition (Waltz & Niehoff, 1996). Again, this is yet another example of the contribution of Marketing–Sales integration to the development of market sensing capabilities. Several studies demonstrate that the integration of salespeople in marketing decision-making contributes to an increased organizational effectiveness in solving customer problems and enhancing customer satisfaction. Good examples of this are provided by Lambert, Marmorstein, and Sharma (1990), who focus on the fundamental role played by the sales force in getting information from the market, von Hippel (1989), who emphasizes the insights that salespeople get by interacting with lead users, and Weitz and Bradford (1999), who claim the need to involve the Sales department in decisions regarding customer service since part of this service is actually provided by the sales force. The fourth dominant chain (Fig. 2d) shows that integration between Marketing and Sales departments fosters the creation of an organizational climate typical of learning organizations, hence giving more emphasis to the market-based learning capability contribution. In fact, as suggested by Slater and Narver (1995), learning organizations are characterized by organic structures (cf. Burns & Stalker, 1961), whose main features are: recognition of interdependence, information sharing, cooperation and commitment. Studies on market orientation (Jaworski & Kohli, 1993; Kohli & Jaworski, 1990) posit that the typical processes of market oriented companies – e.g. effective marketing intelligence dissemination and organizational responsiveness – have a positive impact on employee satisfaction. Our findings confirm this theory. Similarly, research on procedural justice in organizations (see Konowsky, 2000 for a review) also provides support for our findings. In fact, communication and collaboration are perceived to be opportunities to increase informational justice (Greenberg, 1993) – that is, provide adequate explanations related to decisions made – a component of procedural justice. Prior research (Konowsky, 2000) suggests that perceptions of procedural justice strongly impact commitment and trust, and, as a consequence, employee satisfaction. Therefore, again, Marketing–Sales integration contributes to the creation of an organizational context supporting market-based organizational learning. 5.3. Antecedents and consequences of Marketing–Sales integration The literature highlights the importance of integration mechanisms to reduce intra-organizational conflicts and achieve interdepartmental integration (e.g. Maltz, 1997; Maltz & Kohli, 2000; Rouziès et al., 2005), but an empirical examination of how these mechanisms function in Marketing–Sales relationships is almost non-existent. Our study begins to shed some light on this topic, hopefully contributing to “a better understanding of the social psychological determinants and effects of relations between Marketing and Sales [which] will lead managers to design and institute organizational designs and human resources policies so as to minimise any negative intergroup effects” (Dewsnap & Jobber, 2002: 875). Findings show P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 985 6. Implications long-held mental models and support generative market learning. Moreover, sharing strategies and plans allows the organization to develop adaptive market learning, gaining efficiency and consistency in marketing decision-making. This, in turn, brings about an improved ability to design a value proposition able to better satisfy customer expectations. On a more general level, other components of Marketing–Sales integration, like commitment, motivation and trust, help generate an organizational climate typical of a learning organization (Li & Calantone, 1998; Senge, 1990; Slater & Narver, 1995). Another important theoretical implication of our study regards the relationship between Marketing–Sales integration and certain organizational variables like citizenship behavior and procedural justice. To our knowledge, ours is the first study to consider these relationships and hopefully will inspire further debate on the topic. Information sharing, confrontation and mutual understanding foster citizenship behavior – e.g. helping behavior – as well as the perception of procedural justice. Prior literature on citizenship behavior (Podsakoff et al., 2000) and procedural justice (Konowsky, 2000) posit a significant positive impact of these variables on organizational effectiveness and performance. Therefore, the relationship between Marketing– Sales integration and the creation of superior customer value creation is also mediated by some characteristics of the organizational context. 6.1. Theoretical implications 6.2. Managerial implications The present study is one of the very few empirical investigations on Marketing–Sales integration. As such it makes a number of theoretical contributions. The first contribution is to better specify the nature of the Marketing– Sales integration construct. Our findings may be used in future research on how to better implement and measure the integration construct, or on how to improve model causal paths between different facets of integration. In fact, the result that emerges from our data is that the construct is multi-faceted and encompasses many more interrelated components than those traditionally considered in the literature on crossfunctional relationships (Kahn, 1996, 2001). An additional implication regarding the nature of the construct is that a better understanding may encompass not only the integration of marketing and sales activities, but also the integration of strategies, resources and investments. One important theoretical implication of our study is a clearer understanding of the relationship between marketing capabilities and Marketing and Sales integration. Notwithstanding the emphasis made by prior research on marketing capabilities to the integrative role of those capabilities (Day, 1994a; Vorhies, 1998), a validated work on how integration functions is missing. The results of our study suggest that Marketing–Sales integration contributes to the development of several marketing capabilities: market-based organizational learning, market sensing and customer linking. In fact, interdepartmental communication, collaboration and confrontation allow members of the two departments to challenge their In terms of managerial implications, an important contribution of this study regards integrating mechanisms. Prior research on interdepartmental integration (Dewsnap & Jobber, 2000; Leenders & Wierenga, 2002; Maltz & Kohli, 2000; Rouziès et al., 2005) argues that systems supporting information flows and collaboration between the two functions positively affect their integration. Our findings suggest that integration components exceed interaction and collaboration in a way that may also affect elements like organizational climate, mutual trust, motivation and commitment. This suggests that some mechanisms are able to affect the various components of integration in different ways. As a result, the adoption of different integrating mechanisms calls for a clear understanding of their effects. Such effects can be interpreted in terms of cognitive, affective and behavioral responses of marketing and sales personnel, which should be regularly monitored. Secondly, starting from this indepth understanding, companies should identify likely intraorganizational differences in such responses, try to reduce (if not eliminate) these differences, reinforce positive associations and work against negative associations. An additional managerial implication regards the organizational effects of integration between Marketing and Sales departments. Contemporary managerial literature emphasizes the importance of cross-functional teams for the effectiveness of many organizational processes – e.g. customer order fulfillment, new product/service development, customer service delivery. Our findings suggest that managers can utilize interdepartmental integration to also improve citizenship that different integrating mechanisms have differential effects on specific integration components. For example, job rotation impacts mutual understanding (a component of collaboration), whereas training and organizational structure impact mutual understanding and communication albeit differently. As for the consequences of Marketing–Sales integration our findings begin making progress on the managerial perceptions of customer value creation to some extent. Customer value creation is interpreted by respondents as the ability to solve customer problems by means of better knowledge and a broader perspective of the market, which allow companies to make better decisions and innovate. Marketing–Sales integration emerges as a company key capability contributing to the generation of customer value. These findings broaden general definitions of customer value such as the customer's perceptions of the benefits enjoyed versus costs incurred in buying products or, more simply, what you get for what you pay (e.g. Ulaga, 2001; Ulaga & Chacour, 2001; Walter, Ritter, & Gemünden, 2001). In fact, they suggest that customers value the seller firm's flexibility and responsiveness (e.g. Lapierre, 2000) and anticipate expectations about future performance of the relationship (Ravald & Grönroos, 1996), hence the perceived supplier's ability to innovate also plays a very relevant role. 986 P. Guenzi, G. Troilo / Industrial Marketing Management 35 (2006) 974–988 behavior and the perception of procedural justice with the consequent beneficial effect in terms of employee satisfaction and customer value creation. The last managerial implication involves organizational market orientation. Literature on market orientation has posited the beneficial effect of it in terms of customer satisfaction and employee satisfaction (Jaworski & Kohli, 1993; Slater & Narver, 1994). Our research provides some guidance to managers who wish to improve or redirect their organization's orientation toward their markets. In keeping with Rouziès et al. (2005: 113), we argue that “Marketing and sales integration is one of the components of market-driven organizations”. In fact, the results of our study suggest that effective integration between Marketing and Sales departments positively contributes to the generation and dissemination of marketing intelligence (Kohli & Jaworski, 1990) and to the creation of an organizational climate supportive of a learning orientation (Li & Calantone, 1998; Slater & Narver, 1995). In conclusion, the integration of Marketing and Sales departments is a capability in itself, whose development requires the ability to use appropriate mechanisms at different levels: organizational culture, organizational design, managerial systems and communication technology and infrastructure. 6.3. Limitations and future research directions The study presented here is clearly exploratory. As any qualitative design, it has limitations in terms of whether it is considered replicable and hence legitimized in making generalizations of its findings. To achieve these objectives a crosssectional survey should be designed and run. This survey would help confirm the multi-dimensionality of the integration construct and analyze the relationship between its different components. Furthermore, a quantitative design would also help measure the differential impact of various integrating mechanisms on the different components. Such factors may be investigated at different levels: company culture, organization structure, processes/systems and personal characteristics of the managers of the two functions (Dewsnap & Jobber, 2000; Langerak, 2001; Rouziès et al., 2005). The consideration of factors affecting the optimal level of integration should also be welcome. In a sense, our study implicitly suggests that when considering integration mechanisms, the relationship between them and the integration achieved is positive and linear. As prior research suggests with respect to some mechanisms, this does not always hold true. For example, Maltz and Kohli (1996) found evidence of an inverted U-shape relationship between communication and integration. Further research should investigate if a non-linear relationship may also hold true for other integrating mechanisms. Finally, in our study we have focused our attention on organizational factors and we have not analyzed the differential need of Marketing–Sales integration resulting from the existence of specific external variables. As argued by Ruekert and Walker (1987) different environmental and industry configurations may require different levels of integration. Thus, we suggest investigating the role played by the following categories of variables: i) environmental variables (e.g. market dynamism, environmental uncertainty, technology turbulence), ii) customers (e.g. concentration vs. fragmentation, demand uncertainty), iii) competitors (e.g. competition intensity, industry concentration, competitors' innovation strategies) and iv) company (e.g. size, strategic positioning, distinctive capabilities, reliance on product or process innovation). Some of these variables may also act as moderators between the use of integration mechanisms and the resulting Marketing–Sales integration. This aspect would, in our view, also warrant special attention. Acknowledgement This study was partially supported by the Department of Marketing and the Research Division of SDA Bocconi School of Management. The authors thank the anonymous IMM reviewers for their help in greatly improving the article. 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(2003). Intraorganizational determinants of key account management effectiveness. Journal of the Academy of Marketing Science, 31, 3−21. Zoltners, A. (2004). Sales and Marketing Interface. Paper presented at the Sales Force Summit, University of Houston, May. Paolo Guenzi is an Associate Professor of Marketing at Università L. Bocconi and SDA Bocconi School of Management, Milan, Italy. His main research interests include sales management, relationship marketing and services management. His research has been published in the International Journal of Service Industry Management, European Journal of Marketing, Journal of Marketing Management and International Journal of Sports Marketing and Sponsorship. Gabriele Troilo is an Associate Professor of Marketing at Università L. Bocconi and SDA Bocconi School of Management, Milan, Italy. His main research interests include marketing knowledge management, marketing capabilities and cross-functional integration. He is Vice President of the European Marketing Academy.