Marketing Department Power and Board Interlocks

50 Pages Posted: 1 Feb 2019 Last revised: 22 Jun 2023

See all articles by Peter Ebbes

Peter Ebbes

HEC Paris - Marketing

Frank Germann

University of Notre Dame

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Date Written: June 15, 2023

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

JEL Classification: M30, M31, M14, C23, C26, L14

Suggested Citation

Ebbes, Peter and Germann, Frank and Grewal, Rajdeep, Marketing Department Power and Board Interlocks (June 15, 2023). Wharton Customer Analytics Research Paper, Kenan Institute of Private Enterprise Research Paper No. 19-6, HEC Paris Research Paper No. MKG-2019-1330, Available at SSRN: https://ssrn.com/abstract=3322304 or http://dx.doi.org/10.2139/ssrn.3322304

Peter Ebbes (Contact Author)

HEC Paris - Marketing ( email )

Paris
France

Frank Germann

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN 46556-5646
United States

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

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