Board Interlocks and Marketing Department Power

Abstract

Although the level of power held by the marketing department can determine key organizational outcomes, including firm performance, this power often is modest and, in some firms, diminishing. To address this apparent disconnect, the authors propose that the board of directors is a critical but overlooked driver of marketing department power. In particular, directors’ marketing exposure through board service at other firms (i.e., board-interlocked firms) may affect the marketing department’s power in the firms on whose boards they also serve. With a sample of 4,264 firms, spanning 2007–2013, this study reveals that marketing department power in board-interlocked firms significantly and positively drives marketing department power in the focal firms. Consistent with an information sharing mechanism, the magnitude of this effect varies with the number and nature of ties of the focal firm’s board-interlocked network, such that it strengthens as the focal firm’s effective degree, community- and industry-overlap increase, and its number of maximal cliques decrease. These robust results suggest that board members and their social networks significantly influence marketing department power; if marketing wants to increase its power, it should get the board “on board.”

Keywords: board interlocks, endogeneity, marketing department power, social networks

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