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Journal of the Academy of Marketing Science

, Volume 40, Issue 6, pp 745–758 | Cite as

Incentivizing CEOs to build customer- and employee-firm relations for higher customer satisfaction and firm value

  • Xueming LuoEmail author
  • Jan Wieseke
  • Christian Homburg
Original Empirical Research

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 

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Copyright information

© Academy of Marketing Science 2011

Authors and Affiliations

  1. 1.Eunice & James L. West Distinguished Professor of MarketingThe University of Texas at ArlingtonArlingtonUSA
  2. 2.Marketing DepartmentRuhr-University BochumBochumGermany
  3. 3.Marketing DepartmentUniversity of Mannheim, GermanyMannheimGermany

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