Too Much of a Good Thing? The Dual Effect of Public Sponsorship on Organizational Performance

Julien Jourdan and Ilze Kivleniece
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Julien Jourdan: DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Ilze Kivleniece: INSEAD - Institut Européen d'administration des Affaires

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Abstract: Existing research provides contradictory insights on the effect of public sponsorship on the market performance of organizations. We develop the nascent theory on sponsorship by highlighting the dual and contingent nature of the relationship between public sponsorship and market performance. By arguing that sponsorship differentially affects resource accumulation and allocation mechanisms, we suggest two opposing firm-level effects, leading to an inverted U-shaped relationship between the amount of public sponsorship received and the market performance of sponsored organizations. This non-linear relationship, we argue, is moderated by the breadth, depth and focus of the focal organization's resource accumulation and allocation patterns. While horizontal scope (i.e. increased breadth) and externally oriented resource profile (i.e. reduced depth) strengthen the relationship, market orientation (i.e. increased focus) attenuates it. We test and find strong support for our hypotheses using population data on French film production firms from 1998 to 2008. Our work highlights the performance trade-offs associated with public sponsorship, and carries important managerial and policy implications.

Keywords: public sponsorship; market performance; resource orchestration; strategy; film industry; Organizational performance; Public-private sector cooperation; Allocation (Accounting); Resource management; Market orientation (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (34)

Published in Academy of Management Journal, 2017, 60 (1), ⟨10.5465/amj.2014.1007⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01488178

DOI: 10.5465/amj.2014.1007

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