Effects of channel members’ customer-centric structures on supplier performance
The authors examine the upstream impact of a firm’s customer-centric organizational structure on its supplier, including both positive effects of greater revenue and negative effects of demanding services that raise the supplier’s costs. These countervailing effects on supplier profit are moderated by characteristics of the firm’s buying center and the firm–supplier relationship, in accordance with the value capture literature. Study 1 examines the proposed firm-level financial effects of the dual processes, using surveys of industrial firms matched with secondary data from their supplier. Study 2 assesses the supplier-level net impact of the dual processes, using publicly available data to shed light on the upstream financial impact of firms’ customer-centric structures across a broad sample of Fortune 500 suppliers. Findings highlight the need for a supplier to proactively assess the structure of each buyer-firm, as a supplier can take steps to mitigate cost effects and enhance revenue effects.
KeywordsMarketing channels Customer-centric structure Value capture Supplier performance Financial performance
- Davie, C., Stephenson, T., & De Uster, M. V. (2010). Three trends in business-to-business sales. Retrieved February 1, 2018 from https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/three-trends-in-business-to-business-sales.
- Day, G. S. (2006). Aligning the organization with the market. MIT Sloan Management Review, 48, 41–49.Google Scholar
- Financial Accounting Standards Board. (1997). Disclosures about segments of an enterprise and related information, in Statement of Financial Accounting Standards No. 131. Norwalk, CT: FASB.Google Scholar
- Grewal, R., & Lilien, G. L. (2012). Business-to-business marketing: Looking back, looking forward. In G. L. Lilien & R. Grewal (Eds.), Handbook of business-to-business marketing (pp. 3–12). Northampton: Edward Elgar Publishing.Google Scholar
- Grewal, R., Lilien, G. L., Bharadwaj, S., Jindal, P., Kayande, U., Lusch, R. F., Mantrala, M., Palmatier, R. W., Rindfleisch, A., Scheer, L. K., Spekman, R., & Sridhar, S. (2015). Business-to-business buying: challenges and opportunities. Customer Needs and Solutions, 2, 193–208.CrossRefGoogle Scholar
- Gulati, R. (2007). Silo busting. Harvard Business Review, 85, 98–108.Google Scholar
- Hatcher, L. (1994). A step-by-step approach to using the SAS system for factor analysis and structural equation modeling. Cary: SAS Institute.Google Scholar
- Hughes, C., Wheatley, S., Dalton, D., Smith, S., & Southern, R. (2014). Customer-centricity: Embedding it into your organisation’s DNA. Retrieved February 1, 2018 from https://www2.deloitte.com/content/dam/Deloitte/ie/Documents/Strategy/2014_customer_centricity_deloitte_ireland.pdf.
- Joerss, M., Neuhaus, F., & Schröder, J. (2016). How customer demands are reshaping last-mile delivery. Retrieved February 1, 2018 from https://www.mckinsey.com/industries/travel-transport-and-logistics/our-insights/how-customer-demands-are-reshaping-last-mile-delivery.
- Porras, J. I., & Robertson, P. J. (1983). Organization development: Theory, practice, and research. In M. D. Dunnette & L. M. Hough (Eds.), The handbook of industrial and organizational psychology (Vol. 3, pp. 719–822). Palo Alto: Consulting Psychologists Press.Google Scholar
- Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.Google Scholar
- Precision Castparts Corp. (2008). 10-K report, (accessed May 24, 2011), [available at https://www.sec.gov/Archives/edgar/data/79958/000119312509120337/d10k.htm].
- Qwest Communications International Inc. (2008). 10-K report, (accessed March 1, 2013), [available at http://www.sec.gov/Archives/edgar/data/1037949/000104746909001126/ a2190288z10-k.htm].
- Roodman, D. (2006). How to do xtabond2: an introduction to “Difference” and “System” GMM in Stata. Center for Global Development. (No. 103).Google Scholar
- Rust, R. T., Moorman, C., & Bhalla, G. (2010). Rethinking marketing. Harvard Business Review, 88, 94–101.Google Scholar
- Schmidt, K., Adamson, B., & Bird, A. (2015). Making the consensus sale. Harvard Business Review, 3, 107–113.Google Scholar
- Schreiber, U., Forer, G., Lutz, K., de Yonge, J., Jaggi, G., Potter, A., & Whistler, M. (2017). The upside of disruption. Ernst & Young Megatrends. Retrieved August 18, 2017 from http://www.ey.com/Publication/vwLUAssets/EY-the-upside-of-disruption/$FILE/EY-the-upside-of-disruption.pdf.
- Smith, D. C., & Owens, J. P. (1995). Knowledge of customers’ customers as a basis of sales force differentiation. Journal of Personal Selling & Sales Management, 15, 1–15.Google Scholar
- Stock, J. H, & Yogo, M. (2005). Testing for weak instruments in linear IV regression. In Identification and Inference for Econometric Models: Essays in Honor of Thomas Rothenberg: Cambridge University Press.Google Scholar