Board Interlocks and Marketing Department Power

63 Pages Posted: 1 Feb 2019 Last revised: 11 May 2022

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: March 1, 2022

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

Suggested Citation

Ebbes, Peter and Germann, Frank and Grewal, Rajdeep, Board Interlocks and Marketing Department Power (March 1, 2022). 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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