Marketing Department Power and Board Interlocks

Peter Ebbes (), Frank Germann and Rajdeep Grewal
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Peter Ebbes: HEC Paris
Frank Germann: University of Notre Dame
Rajdeep Grewal: University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

No 1330, HEC Research Papers Series from HEC Paris

Abstract: Although the level of power held by the marketing department can determine key organizational outcomes, including firm performance, we show that this power has been decreasing since 2007. To address this apparent disconnect, we propose that the board of directors is a critical but overlooked antecedent of marketing department power. In particular, we demonstrate that directors’ exposure through board service at other firms (i.e., board-interlocked firms) affects the marketing department’s power in the firms on whose boards they also serve (i.e., focal firms). Using our sample, based on 6,008 firms and spanning the years 2007–2021, we show that marketing department power in board interlocked firms has a positive and significant effect on marketing department power in the focal firms. Even though extant research indicates board interlock effects have diminished or even disappeared over the last two decades, our findings suggest the board interlock effect is a potent antecedent of marketing department power – and that this effect has not decreased during our observation period. Adopting the 3-R (reach-richness-receptivity) framework, we also show that the board interlock effect increases as the reach and richness of a focal firm’s board interlock network as well as its executives’ receptivity to information furnished by the board interlock increases. The marketing department’s decreasing power is concerning for our discipline; our robust results suggest that firms need to get the board “on board” to stem this diminishing trend.

Keywords: board interlocks; endogeneity; marketing department power; social networks (search for similar items in EconPapers)
JEL-codes: C23 C26 L14 M14 M30 M31 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2019-02-01
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Persistent link: https://EconPapers.repec.org/RePEc:ebg:heccah:1330

DOI: 10.2139/ssrn.3322304

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