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Power dynamics of the international marketing within firms and how they
shape international performance
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Itzhak Gnizy
Ono Academic College
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Itzhak Gnizy
Faculty of Business Administration, Ono Academic College, Kiryat Ono 55000, Israel,
Phone/Fax: +972-3-5311888, E-mail: itzikgn@gmail.com
Abstract
The status of marketing within the firm and its cross-functional interactions continue to draw
academics and practitioners' attention. Using power, rather than influence, and power
asymmetry concepts in an industrial international marketing (IM) context for the first time,
the study examines the interface between IM and non-IM functions and investigates whether
powerful IM functions benefit international performance. Findings show that IMs are
powerful and enhance performance, however to some extent. Power asymmetry between IM
and non-marketing functions is related negatively with performance while power asymmetry
between IM and non-international marketing function is not related to performance.
However, in the presence of international market orientation (IMO) the negative effect of
differences between IM and non-marketing functions powers on performance is weaker.
Thus, a strategic decision to adopt an IMO, perceived as a power mechanism, potentially has
a reviving effect on the IM function, and IMO and the power distribution activity should not
be isolated domains of managerial decision-making. The study accounts simultaneously for
IM as a distinct function and as an activity-based process and allows refined observation into
the marketing functions' interaction.
1. Introduction
The status and importance of marketing within the firm continue to draw attention.
Practitioners and academics address the role and contribution of the marketing area and
voice continued concerns regarding the marketing function's influence (Auh & Merlo, 2012;
Verhoef & Leeflang, 2009; Webster et al., 2005). Marketing has been declared as powerless
(Schultz, 2005) and some scholars state that strong marketing functions are disappearing
within the firm is pondered (O'Sullivan & Abela, 2007; Rust et al., 2004). Recently,
Homburg et al. (2015) found that the marketing department has lost significant influence
powerful, rather than influential, marketing functions and firm performance is limited and
performance (Auh & Merlo, 2012; Homburg et al., 2015; Moorman & Rust, 1999) while
others do not approve a direct link (Verhoef & Leeflang, 2009). These inconclusive findings
do not illuminate whether powerful marketing functions are needed especially where there is
&Merlo, 2012; Verhoef & Leeflang, 2009). Notably, influential marketing units still make
the greatest contribution to performance (Homburg et al., 2015). Furthermore, such extant
studies address the non-international marketing (NIM; i.e., local marketing) functions'
influence leaving the international marketing’s (IM) power and its impact on international
firm has not been researched. In light of the essentiality of internationalization to firms that
may increase the importance of IMs' relative functional power, scholars call on to study the
relationship between IM functions and performance (Cadogan et al., 2005; Gnizy &
Shoham, 2014). Power is a central aspect of organizational life that affects organizational
3
processes, strategies and outcomes (Fleming & Spicer, 2014). Notably, the power of
relationships (Dawes & Massey, 2006a). Hence, the first objective of this study is to
marketing context. In B2B firms, functional power frequently resides in functions other than
2013).
Even though there may be solid justifications why international firms should increase
the power of IM functions, two questions remain unanswered. The first is what happens
when IMs possess too much power. Excessive power of an organizational function may
result in dysfunctional outcomes (Atuahene-Gima et al., 2005, 2008). Thus, there may be an
optimal level of power, which implies the investigation of a non-linear relationship between
IMs' power and performance. Such a more complex relationship can provide perspectives
that managers can cope with but has not been addressed in prior research, and is therefore
The second unanswered question is what happens when IMs have very low or very
high relative power. Unequal intra-firm relationships and power differences may undermine
the quality of the cross-functional dialogue and affect firms' outcomes. This implies the
investigation of the consequences of power asymmetry between IMs and other functions.
While power asymmetry is an ongoing reality and exists in the vast majority of relationships
(Kumar, 1996), its effects on performance in international context has not received attention
Matters at the interface of marketing with other functions are among the essential
ones that managers are concerned with (Kotler et al., 2006). Such interface can be viewed
along two dimensions in which marketing can exercise power: marketing as a distinct
(Merlo & Auh, 2009). The interplay between these dimensions exposes a facet of
marketing's position. Although few studies include both dimensions and report conflicting
beyond that of a market orientation (Auh & Merlo, 2012; Verhoef & Leeflang, 2009), their
simultaneous impact is neglected (Merlo & Auh, 2009). Notably, strategy affects the
distribution of power among functions (Walker & Ruekert, 1987) and thus affects the power
asymmetry-performance link. Thus, international market orientation (IMO) can drive the
power of IM and play a role in the link amid power asymmetry between IM and other
functions. Prior literature on power has not addressed this phenomenon in IM context.
Hence, the fourth objective of this study is to examine whether IMO facilitates the effect of
This study draws on power theory to address its four objectives and contributes in
several ways. First, not only is the concept of power applied limitedly on marketing within
the firm (Auh & Merlo, 2012; Hingley et al., 2015a) but also restricted to studies on NIMs.
2015a). Our study extends the power domain into an international context. Although IM
may be perceived merely as “one of the business functions” it is a crucial one because of its
unique roles and skills. The IM function extends throughout internal (e.g., new products for
the international markets, adaptation/ standardization levels) and external (e.g., connecting
the organization to other entities in the supply chain) issues. The growth of international
economies and the increase in IM activities in many industrial firms bring to surface the
importance of IM issues. Second, this study highlights the need to study IM in a different
stream than NIM functions. While scholars send warning signals concerning the existence of
marketing "as a distinct capability within the firm" (Auh & Merlo, 2012, p. 861), research on
asymmetry may exist across firms’ international and domestic operations and functions
5
(Howard, 2003). Thus, our study is conducted on firms with a clear distinction between IMs
and NIMs. Furthermore, we examine the interactions between IM and non-marketing (NM)
functions. Prior research investigates the influence of the marketing function in isolation and
does not account for the distribution of power among functions (Homburg et al., 2015). To
the best of our knowledge, no prior research has focused simultaneously on the power of IM,
NIM and NM functions. Such setting assists in better understanding how IM functions are
nested within the firm. Third, the decline in marketing departments' influence, attributed to
decreased performance and is thus worrisome (Homburg et al., 2015). Hence, current
understanding of IMs' power dynamics and their consequences is important for international
managers' conducting. Furthermore, this study focuses on power rather than influence. The
distinction between the two constructs provides another perspective on marketing's position.
methodology, present the study's findings and discuss them. We conclude with implications,
Power and Influence. The relationship between power and influence is widely
recognized though in many cases the two terms are used interchangeably. This study focuses
on relative functional power and distinguishes power from influence. While power in
general is the ability to change others' behaviors, whether this ability is used or not,
influence is the use of power (Homburg et al., 1999). Therefore, power is a potential
influence and influence is a subtle manifestation of power. On one hand, the more an
organizational entity possesses power, the more potential influence it may have (Krush et al.,
2015). On the other hand, influential entities may have little power and powerful entities are
sometimes not influential. For instance, the IM function can advise the NIM function on the
6
conduct of a common communication strategy in both foreign and local markets. IM may
have influence if the NIM function follows this advice. However, in many firms, especially
those with independent IM from NIM functions, IM may have no power over the NIM
function. IM can persuade but not necessarily compel. The NIM function may have power
over its resources and can impose its will upon a separate communication strategy. Hence,
power and influence are not distributed equally and reflect different aspects of behavior.
Merlo (2011), for example, used power as a determinant of marketing's influence in the firm.
While prior research has uncovered the influence of the marketing functions (Gnizy &
Shoham, [2014] in IM context, Engelen, [2011] in NIM context), this study examines their
relative power and thus supplements views and findings from prior research, and provides a
more nuanced understanding of IMs' position and how they are nested in the firm.
on a wide variety of different phenomena with numerous perspectives (Fleming & Spicer,
2014). When one function is dependent on another, a power relationship emerges (Daft,
This view is consistent with a resource-based view of the firm (Dawes and Massey, 2006b).
However, concerns regarding the decline of the marketing functions in recent years induced
scholars to explore the relative power of marketing and focus on lateral power relationships.
Notably, managers simply understand the relative functional power concept and can easily
Functional power originates form different sources such as the function's centrality,
substitutability, uncertainty coping, expertise, and access to resources (Krush et al., 2015).
While the term power is widely used to designate the potential or ability to change others'
actions and beliefs, following the above discussion and this study's context, we
conceptualize power as the relative importance of a unit to the firm (Dawes & Massey,
2006b). This definition is consistent with other scholars' definition of marketing power (e.g.,
7
Atuahene-Gima & Evangelista, 2000; Homburg et al., 1999). Specifically, IM's power is a
reflection of its strength within the firm. Auh and Merlo's (2012) operationalization of
marketing power was based on the critical contingencies perspective but they called on to
Business performance is the extent of the business unit’s financial success (Krush et
al., 2015). Numerous studies underline financial performances such as profits and revenues
to measure firms' success (Carneiro et al., 2011). Hence, we conceptualize the international
functions and international performance. First, in NIM context, strong marketing functions
can accelerate organizational processes such as new product development (NPD), which
drive performance (Homburg et al., 2015). Moreover, powerful marketing functions enhance
directly performance (Auh & Merlo, 2012). By implication, powerful IM functions should
that strong IMs provide firms with competencies and can use their strength to foster
organizational orientations (e.g., IMO), which enhance performance (Gnizy & Shoham,
2014). Third, powerful exporting functions can acquire the collaboration and teamwork of
other functions to optimize the offerings to foreign markets and thus benefit performance
(Vyas & Souchon, 2003). Powerful IMs can exert cross-functional coordination, which also
enhance customer value and market orientation and again drive performance (Homburg et
al., 2015). Furthermore, the strength of IMs directly and positively affects performance
(Gnizy & Shoham, 2014). Finally, characteristics of the exporting unit such as the degree of
autonomy of its managers and activities, level of priority given to and attitude towards
export (Bijmolt & Zwart, 1994) and the existence of an export department and its
8
independency enhance export performance (Beamish et al., 1999; Carneiro et al., 2011; Das,
1994). Notably, these characteristics reflect the relative power of IMs and the structural
determinants (i.e., existence and independency) are consistent with our design to study
separate and distinct IM functions. Hence, the greater the IM's power, the more it is able to
influence its position and the actions of other functions and thus enhance performance.
The preceding discussion focused on the positive relationship between IM power and
performance. Though the tendency of managers is to build up their power base and there
may be solid arguments for empowering marketing, too much power may be harmful (Auh
& Merlo, 2012). Thus, there should be an optimal level of IM's power, which implies a non-
linear relationship between the IM power and performance. We discuss the negative effects
of IM power below.
function (e.g., IM) possesses too much power, risky conditions may evolve in which one
organization. This may lead to an organizational myopia. Worse, in such conditions, the
more powerful party may dictate its own ideas and in response, the less powerful parties may
become reluctant to communicate and become alienated (Atuahene-Gima & De Luca, 2008).
This may harm the interactions between business functions and their coordinated efforts to
benefit performance.
this function. For example, Kohli and Jaworski (1990) hypothesized a political problem
behind the transition to market orientation (Lamberti & Noci, 2009) with a possible
with customers, understand the market and competitors (Song et al., 2007), high power of
IMs may result in over-attention to current customers' needs leaving their new and emergent
needs under-attended, which may unwittingly lead the firm into a competency or familiarity
9
trap (Atuahene-Gima et al., 2005). In the same vein, in situations where IMs are very
powerful, they may be in a position to employ their preferred plans and activities through
over-dominance rather than through collaboration with other functions, which may
jeopardize a successful implementation of IM activities. IMs may acquire more and more
control over the firm processes at the expense of other functions. In the extreme, excessive
performance.
In sum, while at certain lower levels of IM's power, it may be advantageous and
disadvantageous and carry the risk of inhibiting performance. Considered in tandem with
IMs' power positive effects, these potential negative effects suggest there is an inverted U-
H1: There is an inverted U-shape relationship between the power of IM function and
IMs manage interactions with other functions that exert power as well. Homburg et
al. (2015) found that while the marketing function has lost power in recent years, other
functions gained it. Such dynamics reflect power differences, i.e., power asymmetry,
between functions. While the general notion is that power asymmetry is dysfunctional
understand how power differences between IMs and other functions affect performance.
above (H1). Following Auh and Merlo (2012), we define power asymmetry as the difference
and identities lead to numerous power asymmetry scenarios. For example, functions such as
marketing and manufacturing represent line (as opposed to staff) functions that contribute to
core value-added processes and have more power than other functions. Marketing is often
seen as more powerful because of its boundary-spanning role (Papke-Shields & Malhotra,
2008). In B2B firms, functional power structures keep marketing from exerting control over
innovation and NPD decisions (Griffin et al., 2013). In hi-tech firms, marketing-R&D
interdependence is asymmetrical with marketing having relatively lower power in the NPD
process (Atuahene-Gima & De Luca, 2008). Asymmetric power relations are less beneficial
than symmetric (Auh & Merlo, 2012) since under conditions of power imbalance,
frequencies of exchange and information flow among actors are reduced and hinder
successful relationships (Casciaro et al., 2005). Power imbalance among functions may have
Gima & Evangelista, 2000). The bilateral deterrence theory indicates that power asymmetry
negatively affects performance since it is associated with high levels of conflict. When
asymmetry is high, the parties are engaged in self-serving behaviors at the expense of the
firm's interests (Auh & Merlo, 2012). Additionally, according to the sociopolitical
perspective asymmetrical power relationships between units engender struggles for influence
and countervailing power behaviors (Atuahene-Gima & De Luca, 2008) at the expense of
which other functions jockey for power and in many cases, firms' export operations
Though this discussion holds for the IM-other functions power asymmetry, including
NIMs, we elaborate on the IM-NIM power asymmetry. IM and NIM functions are both
marketing that operate in similar domains, share objectives, have closely related tasks and
11
skills, and more frequently exchange resources, which increase their interdependence
(Dawes & Massey, 2006b). While all functions compete on organizational resources, IMs
and NIMs compete on the same marketing resources. Particularly, export firms have internal
environments that are often geared toward serving the domestic market. As a result, export
marketing and non-export functions compete for resources, which increase conflict between
them (Cadogan et al., 2005) and affect coordinated efforts to attain organizational objectives.
power asymmetry is low, all functions may believe that conflict could compromise their
relationships and effectiveness, and may choose to cooperate and avoid opportunism
behaviors, which should enhance performance as a whole (Auh & Merlo, 2012). Thus, we
hypothesize:
H2: The larger the difference between IMs' power and (a) NIMs' power, and (b) NM
However, a question rises whether there are circumstances, which attenuate this negative
activities and the power distribution among functions. Specifically, strategy affects the
performance-power asymmetry link (Auh & Merlo, 2012). Auh and Merlo (2012) studied
differentiation and cost leadership strategies, and called for future research to examine this
link under other strategies. Such examination of how the marketing-other functions
interactions can improve performance may provide managers with insight for effective
resource allocation decisions (Auh & Merlo, 2012). Since functional power reflects on how
the influence over market-related activities is allocated between units (Homburg et al., 1999)
and given the increasing need for cross-functional collaboration in today's business, we
12
propose IMO as such a strategy. IMO is central to the IM thought and practice as a predictor
of international performance (Gnizy & Shoham, 2014). Its employment assists in diffusing
marketing insights’ into strategic decision-making. We argue that the negative effect of IM-
other functions power asymmetry is decreased through its interaction with IMO.
IMO provides mechanisms for information and resource sharing and mutual
responsiveness to market needs (Kohli & Jaworski, 1990). Shared market knowledge is the
and diversity of perspectives among functions (Atuahene-Gima et al., 2005). Hence, through
its components, which are more likely to rely equally on the competencies and power of
multiple functions, IMO can enhance consensus with respect to IM activities. Such
consensus creates a common working framework (e.g., analysis of customer needs and
market trends) for employees and may hinder the negative outcomes of power asymmetry
such as conflicts and political behaviors, and thus decrease their negative effects on
performance. Alternatively, IMO involves the efforts of virtually all functions and can serve
decreased marketing power (Verhoef & Leeflang, 2009). Conversely, increased IM-other
functions power asymmetry decreases the frequency and effectiveness of exchanges between
functions (Casciaro et al., 2005), and increases coordination uncertainty and thus harm
mutual objectives in attaining the IM goals. Hence, IMO captures the degree to which IM
interacts with other functions with respect to different aspects of IM activities and therefore
encompasses the power asymmetry in their interactions. IMO's components serve as power
sources to the involved functions. We advance that IMO provides a backdrop for the use of
(positive) power sources (see Atuahene-Gima & De Luca, 2008). Thus, we hypothesize:
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H3: The negative effect of differences between IMs' power and the power of (a) NIM,
3. Research Methodology
Sampling and Data Collection. Data were collected by employing a self-
procedure on Dun & Bradstreet database, 800 Israeli international firms were selected.
Target respondents were one key senior executive per firm that had perspectives on the
operations and interactions of IM with other functions and insights on the functions'
performance (e.g., executives who oversaw IM or had ties with IM). Since target firms were
those with both international and domestic operations and have separate function/personnel
managing IM independently from NIM, we eliminated all surveys that did not indicate such
independence. We also eliminated surveys with less than two employees in either marketing
functions to ensure we were measuring power on functional rather than on personal basis.
After excluding respondents who indicated confidence or familiarity levels below 3.75 (out
of 5), non-respondents and incomplete surveys, a total of 137 respondents from different
firms provided useable questionnaires matching the study's setting, for an effective response
rate of 17.1%. The sample size exhibits sufficient statistical fit (Hair et al., 2010) and the
response rate is consistent with prior research that studied related topics (e.g., Auh and
Merlo, 2012; Homburg et al., 2015). To control for limitations of a self-administered survey
we sent a reminder a week after the initial contact. We also used a short questionnaire and
study's purpose and context. Finally, we validated the respondents' confidence and
five-item scale of departmental power (Kohli, 1989). Executives easily understand and apply
the concept of relative functional power (Harris & Ogbonna, 2003). We asked respondents
14
to relate independently to the power of IM, NIM and NM functions. In line with Auh and
Merlo (2012), power asymmetry was measured by squaring the difference between IM's and
NIM's power, and similarly between IM's and NM's power. The greater the difference, the
greater the power asymmetry between IM and certain functions regardless of which function
is more powerful. It is important to note that this measurement does not imply that IM has
less or more power in comparison to other function but that power imbalance occurs
between them. To measure IMO we used Pelham and Wilson's (1996) nine items adjusted to
performance through three subjective items measuring the volume of sales, growth, and
firms' profitability. Subjective performance measures are highly consistent with objective
All items were measured using 5-point Likert scales (Appendix) with minor
adaptations to the study's context. All measures developed in English were translated into
Hebrew for use with Israeli respondents and were back translated to achieve linguistic
equivalency. Some of the scales used were translated in previous research. For face validity,
one IM academic and two executives commented on the appropriateness of the scales and on
clarity and wording of the survey items. In addition, the questionnaire was pre-tested with 20
managers.
observed effects were included in the model (Auh & Merlo, 2012). Controls included firm
experience (years), IM intensity (ratio of IM sales of total sales), and industry type (a dummy
variable: hi-tech or not). Because more experienced respondents may overstate the power of
IM, we include respondents' personal international experience (years). IMs do not operate in
an organizational void, thus we control for the level of NIM and NM functions' power.
Finally, an item was included in the questionnaire asking respondents to indicate whether a
15
department. Another item asked to indicate the scope of international operation (i.e., to
Sample Profile. Firms (41.8% large [with >250 employees], 45.8% medium [<250
employees] and 12.4% small [<50 employees]) represented a variety of industries such as
These industries represent well Israeli industrial firms that are involved in international
operations (Israel Export and International Cooperation Institute in 2014). In addition, the
sample was evaluated on firms' international scope where 51 firms marketed mainly to North
geographical spread is consistent with statistics reported by Israel Export and International
representation of the studied population. Firms were also of diverse IM function size (number
intensity (averaged 63.6%). Such diversity and representativeness obtained a more complete
picture of marketing power, ensured data richness and strengthened the results generalizability.
Notably, in all firms there was a distinction between the IM and NIM functions. Respondents
(69.9% vice presidents, 15.9% general managers/directors, 8.8% CEOs, and 5.3% others)
were all well positioned to provide insights on IMs' and other functions' power. Notably, they
were from a uniform managerial level. Their international experience varied (3-41 years;
Data and Measure Validation. Comparing early with late respondents (Armstrong &
Overton, 1977) showed no differences on the study’s scales and comparing respondents and
potential key informant response bias, confidence and familiarity items were included in the
16
questionnaire asking respondents to assess the extent to which they believed their familiarity
with addressing the topic studied had allowed them to complete the survey confidently,
resulting in high means (confidence = 4.48/5, familiarity = 4.53/5). Notably, key informants
have been used in marketing research that has reinforced their responses validity on
Several steps were undertaken to ensure the scales' validity and reliability. First, we
used previously validated and reliable scales. Second, our scales' alphas exceeded .78
(>0.70). Third, exploratory factor analysis with principal component extraction and varimax
rotation was used to further examine the scales structure, which revealed that the measures
were unidimensional. All items were cleanly loaded onto their respective factors with high
item loadings (≥.57; Hair et al., 2010) except of one IMO item (Appendix), which was
excluded. Fourth, no evidence of common method bias was found and several ex-ante and
ex-post steps have been undertaken (Chang et al., 2010). Ex-ante procedures included using
senior informants with high levels of confidence and knowledge and assuring them of
formats in the questionnaire. In addition, the specified relationships in our model are not
overly simple (i.e., moderation). Ex-post procedures included marker variable and Harman
tests. An included item in the questionnaire ("I usually read business journals"), unrelated
theoretically to the model's latent variables, was not correlated with any of the model's
constructs. In addition, a Harman’s one-factor test where all the items were entered into a
single factor analysis produced five factors and accounted for 73% of the variance. No a
single factor emerged and no one factor accounted for more than 50% of the variance
validity of all constructs. Fifth, in support of convergent validity, all factor loadings were
statistically significant (Auh & Merlo, 2012) and values of average variances extracted
(AVE) for all constructs exceeded .50. Finally, in support of discriminant validity, we
17
contrasted the squared correlation of each construct pair with the AVE of each construct and
found in each case the AVE exceeded the squared correlation (Fornell & Larcker, 1981).
Construct Mean SD 1 2 3 4 5 6 7 8 9 10 11
tests typically employed in moderation analyses (Andersson et al., 2014), were used to test
the hypotheses. In all tests, an initial regression was run with the control variables only. The
inter-scale correlations were lower than recommended (.90) and variance inflation factors (≤
2) were below the acceptable threshold of 10 (Hair et al., 2010), thus multicollinearity was
not a concern. To further minimize and check for the presence of multicollinearity, mean-
centered variables were used in the interaction termsa. All models were significant (p≤.01)
with at least medium levels (>0.09) of explained variances (R2) (Pedhazur et al., 1991).
Notably, the adjusted R2 values revealed no significant loss in predictive power compared to
a
When examining (inverted) U-shaped relationships, mean-centering the independent variable is unfortunate,
unneeded, shifts the results and complicates the computation of the turning point (Haans et al., 2015)
18
Table 2 reports the unstandardized regression coefficients for the main effects of IM
Model 3 the non-linear relationship. IM intensity was the only control that was related
positively with performance, consistent with the view that the larger firms' international
operations, the stronger the international performance. Industry type had marginal effects.
Notably, the power of NIM or NM functions did not affect performance. The ΔR2 (.063)
from the model with only controls (Model 1) to the model with the independent variable
Independent Variables
IM power .364** 1. 414**
IM power squared -.167**
* p≤ .10, ** p≤ .05, *** p≤ .01, One-tailed test is used because the hypotheses are directional.
power and international performance. First, the significant addition of the quadratic term to
the linear model increased R2 by 7% (p≤.0), which indicates that the non-linear model fits
the data better than the linear. Second, the coefficient for the IM power quadratic term was
negative and significant (β=-.167, p≤.05; Model 3). To ensure the correct interpretation of
19
performance = -0.167*(IM power)2 + 1.414*(IM power) and followed Lind and Mehlum's
(2010) procedure. First, not only is the IM power quadratic term significant and of the
expected negative sign, but also the linear direct effect of IM power on performance is
significant (β=.364, p≤.05; Model 2). Second, the slopes at both low and high ends of the
data range (1.08 > 0 [p≤.0]; -0.256 < 0 [p≤.1], respectively) are steep (Haans et al., 2015).
Finally, taking the first derivative of the non-linear equation and setting it to zero yields the
turning point at (-1.414)/2*(-0.167) = 4.2 < 5. Hence, the turning point is located within the
data range. In other words, in the range of interest, this function reaches its maximum when
IM power = 4.2 suggesting that for values below the maximum there is a positive
relationship between IM power and international performance. However, beyond that, the
relationship turns negative. As a follow-up, we report that 68.2% of the firms have IM power
Table 3 reports the effects power asymmetry (Model 2) and moderation (Model 3) on
p>.10), however the IM-NM effect was negative and significant (β=-.31, p≤.05). Thus, H2b
is supported and H2a is not supported. Again, IM intensity was the only control that was
related positively with performance. H3 tested the interaction between power asymmetry and
IMO and predicted that the negative effect of differences between IMs' power and the power
of NIMs (H3a), and NM functions (H3b) on performance is weaker when IMO is stronger.
Table 3 Model 3 reports the results. The interaction of IM-NM power asymmetry and IMO
on performance was positive and significant (β=.161, p≤.01) in support of H3b. Notably,
IMO is positively related to performance in both models 2 and 3 however the IMO
coefficient is higher in the model where IMO interacts with IM-NM power asymmetry. This
indicates that international market-oriented behavior can reduce the negative effect of IM-
performance, its interaction with power asymmetry may lead to an organizational climate in
which performance can flourish due to convergence of the partners’ interests. The effect of
the interaction of the IM-NIM power asymmetry and IMO on performance (H3a) was not
supported (β=-.059, p>.10). This may indicate that the power relationship between IMs and
NIMs is not affected by IMO. Finally, results in Table 3 model 3 also show that the
significant addition of the interaction terms to the main effects model increases R2 by 4%
(p≤.05).
Main Effects
IM-NIM power asymmetry .037 .029
IM-NM power asymmetry -.31** -.031
IMO .316*** .370***
Moderation Effects
IM-NIM power asym. x IMO -.059
IM-NM power asym. x IMO .161***
* p≤ .10, ** p≤ .05, *** p≤ .01, One-tailed test is used because the hypotheses are directional.
gain further insights. First, we ran our main models without the controls to see if our basic
hypotheses are grounded statistically and we received similar results. The significance levels
of the included variables do not change substantially and the signs of the coefficients remain
Second, to elaborate on the finding that IM-NIM power asymmetry did not affect
performance we ran additional models. The organizational context can play a role in
determining the outcomes of power asymmetry thus whether a firm's operation is domestic
performance. Domestic driven firms may benefit from disproportionally powerful NIMs
whereas international driven firms may benefit from disproportionally powerful IMs. Thus,
we split the sample into 2 sub samples with less and more than 50% IM intensity. Although
the significance levels decrease because of the smaller sample sizes, the results were stable
has more or less power. To gain further understanding on situations in which IMs posses
very high power, we tested for additional models parallel those reported in Table 3. In the
imposing the powers of NIM and NM functions to equal zero. It might be argued that NIM
and NM powers may affect the tested relationships, thus we included them as controls. The
results were similar to the main models (Table 3) with two exceptions. First, IMO had a
positive and significant relationship with performance in the main and current models;
however, in the current model the magnitude of the IMO coefficient was lower. Second and
more essentially, power asymmetry related significantly and negatively with performance.
Notably, the inclusion of the interaction term (with IMO as a moderator) resulted in
significant and negative coefficient. Hence, where IM is very powerful, IMO deteriorated
5. Discussion
This research aims to study whether powerful IM functions benefit international
examination of various functions allows observation into the interactions of IM with other
subunits. Moreover, it allows refining the observation into the marketing functions, that is,
the interaction between IMs and NIMs. Our results indicate that IMs are powerful and IMs'
power has a non-linear relationship with performance. IM-NM power asymmetry is related
negatively with performance. However, in the presence of IMO this negative effect is
IM Functions' Power. The means of the power of IM, NIM and NM functions were
3.97, 3.32 and 2.81 respectively with moderate SDs (Table 1). The means were invariant
across firm size and industry. This is consistent with the view that strong marketing
functions are not necessarily associated with big departments (Webster et al., 2005). This
may also initially imply for an organizational shift in power from non-marketing functions in
industrial firms to marketing. A key contribution of our study is that IM functions enjoy a
relative "first-class" status. Obviously, IMs appear to be the most powerful functions. NM
functions have the lowest power mean and NIMs stay relatively in the middle. The most
critical function tends to be the most powerful and marketing is often seen as more powerful
because of its boundary-spanning role, which affects its relative power (Papke-Shields &
Malhotra, 2008). While in recent years commentators have been questioning whether the
NIM functions are undervalued or losing power, IMs appear to be powerful. Homburg et al.
(2015) demonstrate that the marketing departments have lost significant influence in the last
decades, however they do not account for marketing's power and power asymmetry, and not
Our results also reflect differences in power among functions, which relate to our
power asymmetry construct. Interestingly, though its operationalization does not determine
what function has less or more power in comparison to other, we observed that for 13.3% of
the firms in the sample the term (IM power - NIM Power) is negative. Namely, in 86.7% of
23
the firms, the IM function is perceived as more powerful than the NIM function. Similarly,
for 7.1% of the firms the term (IM power - NM Power) is negative, namely, in 92.9% of the
firms, the IM function is perceived as more powerful than NM functions. These reinforce the
finding that IMs are powerful and reflect again power asymmetry among functions.
IMs contribute to international performance and that IM power has the strongest effect on
performance (Table 2). These findings parallel Auh and Merlo's (2012) findings in NIM
context and supplement Gnizy and Shoham's (2014) findings in IM context who find that
influential, rather than powerful, IMs contribute directly to performance. Homburg et al.
(2015) find that the marketing's influence is the utmost among all functions and none of the
that firms should seek to empower their marketing departments. However, they do not
indicate to what extent. In addition, they do not account for international performance. Our
findings support an inverted U-shaped relationship between IMs' power and performance,
which has not been shown in prior research. This implies that while there are positive returns
to IMs' power, beyond a certain level it impairs performance. Hence, IMs should not have
full power. As the IMs' power rises from low to higher levels, its advantages come into play
because IMs can use their power to recruit others to execute IM actions, which creates
synergy in attaining IM objectives and thus enhances performance. However, beyond this
level of power, IMs might use their excessive power to impose their concepts on others,
which may result in other functions' antagonism and lead to less and ineffective
should also retain some level of power with relation to IMs' power.
IM-NIM Power Asymmetry. Our results indicate that power asymmetry between IMs
and NIMs is not related to performance. The post hoc tests supported this finding. These
24
results are interesting and can be explained by several arguments. First, we looked for firms
with independent IMs and NIMs. Thus, a priori these functions are less dependent on each
other and therefore less affects each other's power. In addition, IMs rather than NIMs are
held accountable for the direct outcomes of international operations. These imply that power
asymmetry between them does not affect international performance. Second, IM functions
in international firms appear to be so important that their power asymmetry with NIMs does
not affect international performance, which underscores IMs' position. In other words, IMs
do not need to rely on NIMs' power to enhance performance. IMs are less dependent on
inputs from NIMs, which is also supported by our finding on the role of IMO in its effect of
IM-NIM power asymmetry on performance (see below). This argument reinforces our
assumption that IMs are developing into a different functional business field, underlines the
need to distinguish between IMs and NIMs, and supports our decision to study them as two
distinct functional groups. Third, IMs and NIMs are both marketing, "sister" functions that
share similarities, i.e., the marketing concept, which should increase the effectiveness of
their exchanges. This closeness provokes mutual sympathy and appreciation of the other
group’s work. Though there may be some conflicting interests between these neighboring
functions, due to their similarities they are able to jointly negotiate and obtain required
internal resources or share them. If resource sharing takes place, their difference in power is
less likely to affect performance. Conversely, one can argue that since IMs and NIMs
compete on the same resources, one function's power is a hindrance to the other. However,
given their different markets, customers, etc., the power of one function needs not affect the
other. This raises the possibility of symmetrical power with relation to performance. Finally,
these findings must be interpreted in light of the finding discussed ahead regarding the
IM-NM Power Asymmetry. Our results indicate that power asymmetry between IM
contrasting views. Marketing may exercise influence “by concentration”, i.e., when the
marketing department is powerful, or “by diffusion”, i.e., when the firm is strongly market
oriented (Auh & Merlo, 2012). When the IM function is concentrated, it is less dispersed in
the firm and may be perceived as a silo, which may increase its perceived power and
therefore its power difference with other functions. In this situation, IM may become a
monologue and disconnected from the firm's people. IM-NM power asymmetry may lead to
conflicts and political behaviors and impede coordinated efforts to achieve IM goals, which
harm performance. On the other hand, when IM is diffused, it is more dispersed and may
lose power in comparison to other functions, which again may result in power asymmetry
between the functions. However, dispersion affects performance negatively (Engelen, 2011).
The Role of IMs. Studying the IM function and IMO domains simultaneously
provides insights on IMs' role in industrial firms. Interestingly, the interaction of IM-NIM
power asymmetry and IMO did not affect performance. This finding may indicate the un-
market orientation by the non-international marketing function. While IMO is a concept that
affects the whole organization, we speculate that NIMs are less related to IMO. It would
appear that IMs' high involvement in IMO due to their strong position enable them to
manipulate the IMO processes to enhance their impact on performance without or with little
involvement of NIMs. The lack of correlation between NIM power and IMO (r=-.17,
p>0.05) supports this view. Since the organizational context plays a role in determining the
did not include domestic market orientation in our model, a possible explanation may be that
firms may have different levels of market orientation across different business operations,
export and domestic, and these orientations differ (Cadogan et al., 2003).
With regard to the second interaction interplay in our model, IMO attenuated the
26
perspective whereby the effect of power asymmetry on performance is not universal, but
rather depends on the level of intervening IMO. IMO is beneficial in these conditions
because it reduces the uncertainty associated with the IM processes given their divergence
from firms' domestic markets and operations. Prior research suggests that differences in the
roles and power of the marketing functions result from differences in the implementation of
the marketing concept (Kohli & Jaworski, 1990). Thus, IMO may rely on a disproportionally
powerful IM function to establish meaningful points of difference. For IMs, such points
could be their unique knowledge on international markets. For NM, this could be their
ability and inclination to work out IMs' concepts and plans. In addition, goal alignment can
build trust and moderate asymmetry (Marcos-Cuevas et al., 2015) and asymmetry can be
viewed as a mean of effective coordination, integration, and goal attainment (Hingley et al.,
2015a). If IMO is used to align goals, share information and increase coordination, then trust
and consensus among units are increased which should decrease negative effects of power
asymmetry. Additionally, when several functions share the implementation of IMO through
responsiveness to market intelligence, they are more likely to be highly committed to the
activities and again decreases the negative effects of power differences between the involved
functions.
Our results indicate that IMO had a direct positive effect on international
performance (Table 3, Models 2 and 3). Verhoef and Leeflang (2009) did not find support
for a direct relationship between marketing influence and performance and attributed it to an
increase in market orientation at the expense of marketing's influence. This study shows that
powerful IMs are associated with enhanced performance beyond the contribution of a market
orientation. These findings parallel Auh and Merlo's (2012) findings for NIM functions and
Gnizy and Shoham's (2014) findings for influential IMs that contributed directly and
27
a reviving effect on the IM function, since IM is the boundary-spanning function that serves
as a fundamental interface with the external environments (Homburg et al., 1999; Merlo,
2011). IM provides the firm with necessary resources to compete internationally. This study
argued that the IM function's boundary-spanning capabilities might be even more critical in
an international setting. A domestic B2B firm may be dominated by the local culture since
the employees and targeted customers have the same cultural profile. The more international
a firm becomes, the more important marketing becomes and it is the IM function that brings
in key and unique knowledge on foreign markets (e.g., on cultural and legal environments)
and is responsible for coordinating external relationships (e.g., customers with different
cultures), which are critical in the success of international operations. The IM function has
also inputs on important issues (e.g., has a domestic product international potential or a new
product is required? What components of the marketing mix need to be adapted, if any) that
assists the firm to overcome obstacles in internationalization. These may place a powerful
power and power asymmetry affect performance and how to use them productively and
wisely. Power is a property of the social relation and not an entity's attribute and thus can be
managed. The achievement of desired outcomes is the basis of the power concept. Hence,
power must be seen as a tool managers can get something done with. While “power is to
organization as oxygen is to breathing” (Fleming & Spicer, 2014; p. 2), excessive power of
or power differences among functions can detriment performance. The management of IMs'
power may be of high importance for international companies because it ultimately affects
(positively and negatively) international performance. From a tactical point of view, the
28
IMO process and the power distribution activity should not be isolated domains of
How IM managers exercise power shapes their relationships with other functions and
affects IM outcomes. Establishing a link between IMs' power and performance is only part
of the challenge since too low or too high levels of IMs' power may hinder performance. IM
managers should keep from the temptation to use their full power to overemphasize attention
to IM operations but should gain sufficient levels of power. They hold on the power parity
that contributes optimally to performance though such parity is not trivial to determine.
Managers should initially rely on intuition to set the level of power to achieve best
outcomes. They can use soft power techniques that require collaborative, cooperative, and
maintaining IMs' power. They can take actions to be proactive in balancing their power with
other functions. A way to achieve this could be the promotion of IMO, which is beneficial in
many organizational conditions and certainly reduces negative effects of IM-NM power
organizational domestic operations, likely to enhance the outcomes of their operations. They
can promote carefully activities that infuse their concepts and processes by promoting
information exchanges (an IMO's element) on foreign markets among units. Information can
be used to shift power or reduce power imbalance (Brown, 1994) because it increases
partaking and longer-lasting persuasion, and decreases the likelihood of intra-firm conflicts.
Information sharing can be also used to shape other employees' view of IM's importance.
Through IMO's dissemination and responsiveness elements, other units can be invited to
participate in the IM processes. IMs can formulate a general IM strategic direction but
devolve power to other functions to implement IM activities. IM mangers can also rely on
informal mechanisms of trust and coordination designed to sanction a more balanced power
29
among functions that can enhance the power of the involved functions. Where no formal
power bases exist, IM managers can use their influence over other functions to gain a power
base. IMO, usually the responsibility of the IM function, can be used as an influence tactic.
functions, their relative power, and IMO are useful means. They should realize that although
fundamental part of organizational life, firms would be unable to function. Top management
is responsible for managing power structures and deploying power among functions.
situations (Hingley et al., 2015a). Top management should assess the current level of IMs'
power due to inertia or bounded rationality may lead to decline in performance. Though
reduce its power on behalf of improved performance. On the other hand, disempowering
other functions at the expense of IM can create insurgency that erodes the power of their
leadership (Gebhardt et al., 2006). Thus, top management should look for ways to
"symmetrize" power to be more equally distributed such that it leads to more stability and
little need to be dependent on one certain function to achieve enhanced performance. Thus,
top management can strive to position formally and properly IM within the firm,
communicate IMs' value to other functions, as well as their relevance and potential scope of
actions. Importantly, distribution of power among functions is contingent upon IMO. Top
management should place pressure on all functions to embrace the international marketing
concept, which ensures effective exchanges, reciprocal involvement in, and constructive
IM functions and IM processes can coexist within the firm, not one at the expense of
30
the other. IMs have important roles both as a function and as an orientation strengthening the
view that IM is not merely a set of organizational processes that every employee can
implement but also a distinct group of professional international marketers (Auh & Merlo,
2012). Thus, IM functions and IMO should be empowered simultaneously because they
benefit performance.
marketing research about the consequences of power and asymmetrical power. Power should
not be perceived as an end but be managed with appropriate levels and combined with
organizational processes. IM functions may continue to gain power in firms since nowadays
managers in all industries are under increasing pressure to internationalize their firms. While
this growth may be imperative, international firms need to realize what the best ways are for
This study is subject to several limitations and draws attention to potentially future
research areas. First, we studied IMs' power rather than IMs' influence. Future research can
provide a more comprehensive view of these two related constructs. Second, our study
focused on the power dynamics of the IM functions. Research that lies outside the scope of
this study may raise additional interesting insights and allows more generalization in the
context of the NIM functions (e.g., NIM-NM power asymmetry). Furthermore, a replication
of the study in firms that do not have separate IMs from NIMs would prove insightful. Third,
we examined industrial firms but did not focus on particular business sector (e.g., retailing
and food supply). Future research may provide more fine-grained insights in a certain
business sector. Fourth, we measured the functions' relative power and not one certain
function compared to another specific function (e.g., IM's power compared to NIM's power).
31
Future research can explore the effects of these refined dyadic measures. Fifth, this study
identified a negative relationship between power asymmetry and performance, however not
why and how such a relationship evolved. Such understanding can provide insights that are
function is more powerful. Such a distinction can allow addressing the directionality of
power and understanding better power inequality consequences. Moreover, key concepts
surrounding power asymmetry such as trust and commitment (Hingley et al., 2015a) can be
findings did not indicate a role for IMO in the IM-NIM power asymmetry. Further research
can elaborate on this issue. An interesting direction for future research would be the
inclusion of both IMO and domestic market orientations. Eight, though our respondents
provided a more complete picture of power distribution in firms, adding respondents from
different disciplines in the firm could provide additional perspectives. The viewpoint of
respondents on both power sides (i.e., the strong and weak parties) may suggest potential
new insights on power. Finally, recently the dispersion of the marketing function and
activities is subjected to increasing attention. Krush et al. (2015, p. 36, 46) point out that
phenomenon and power asymmetry may reflect such power dynamics. Thus, a dispersed
asymmetry offers another perspective of dispersion and may advance research on the
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