Incentivizing CEOs to Build Customer- and Employee-Firm Relations for Higher Customer Satisfaction and Firm Value

Journal of the Academy of Marketing Science, 40(6), 745-58, 2012

15 Pages Posted: 4 May 2013

See all articles by Xueming Luo

Xueming Luo

Temple University

Jan Wieseke

University of Marburg - Faculty of Psychology

Christian Homburg

University of Mannheim - Department of Marketing; University of Melbourne - Department of Management and Marketing

Date Written: 2012

Abstract

This research reveals customer- and employee-firm relations to be two routes by which firms can leverage executive incentive structures to create customer and firm value. Analyses of a unique dataset with multiple archival sources show that (1) increases in the proportion of CEOs’ long-term equity-based compensation positively influence actions that build customer- and employee-firm relations as measured by the Kinder, Lydenberg, Domini & Co. (KLD) data source, (2) such effects are stronger in unstable markets, and (3) customer and employee relationship-building actions affect firm value both directly and indirectly via the mediator of customer satisfaction as measured by the American Customer Satisfaction Index (ACSI) data source. The findings have implications for the improvement of customer satisfaction, the role of marketing in the organization, and the design of CEO incentive packages leading to higher customer satisfaction and firm value.

Keywords: CEO compensation, Customer-firm relations, Employee-firm relations, Customer satisfaction, Firm value

JEL Classification: M21, M31, G00, G12, L86, M00, M30, M14

Suggested Citation

Luo, Xueming and Wieseke, Jan and Homburg, Christian, Incentivizing CEOs to Build Customer- and Employee-Firm Relations for Higher Customer Satisfaction and Firm Value (2012). Journal of the Academy of Marketing Science, 40(6), 745-58, 2012, Available at SSRN: https://ssrn.com/abstract=2260291

Xueming Luo (Contact Author)

Temple University ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

HOME PAGE: http://www.fox.temple.edu/mcm_people/xueming-luo/

Jan Wieseke

University of Marburg - Faculty of Psychology ( email )

Gutenbergstr. 18
35032 Marburg
Germany
06421 28 26598 (Fax)

Christian Homburg

University of Mannheim - Department of Marketing ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

University of Melbourne - Department of Management and Marketing

5th Floor Babel Building
Melbourne, Victoria 3010
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
97
Abstract Views
1,201
Rank
567,279
PlumX Metrics