Effects of Government-to-Contractor Revolving Door Appointments on Customer Relationship Performance: An Abstract

Abstract

Marketing scholars have increased their focus on examining the role of political connections (e.g., a donation to political parties) in enhancing performance. However, most studies have overlooked a unique approach in which business-to-government (B2G) firms proactively forge their relationship with the government—government-to-contractor revolving door appointments (revolving door appointments hereafter). Revolving door appointments refer to a firm’s hiring of former public employees from government agencies as corporate executives and directors. Though revolving door appointment is a prevalent approach to build relational ties with government customers, the implication of revolving door appointments in managing customer relationship remains highly underdeveloped.

Prior studies predominantly examine a firm’s financial performance (e.g., abnormal stock returns) as outcome variables, neglecting the role of relational value that revolving door appointments bring in a buyer-seller relationship. We thus evaluate its effect on customer relationship performance, which refers to the firm’s success in building (customer acquisition performance) and enhancing customer relationships (cross-selling performance). Therefore, we propose our research question: what is the effect of revolving door appointments on customer relationship performance?

Analyzing multisource secondary panel data of 102 publicly-traded U.S. firms in the B2G market over 14 years (2004–2017), we demonstrate that revolving door appointment has a positive effect on customer relationship performance. It implies that a firm can leverage revolving door executive’s and director’s ties with customers (i.e., government agencies) and gain first-hand information about potential customers and identify the new needs of customers. We also identified two crucial contingent factors critical to the leverage of knowledge from revolving door appointments: market knowledge (a firm’s experiences and knowledge in serving government customers) and product scope (the narrowness of the firm’s product knowledge). Market knowledge strengthens the effects of revolving door appointments on customer relationship performance because market knowledge enables the firm to better leverage the connections with and knowledge of customers from revolving door appointments. Product scope weakens the positive effects of revolving door appointments because revolving door executives and directors have limited opportunities to apply their connections and knowledge when providing offerings. These results offer unique contributions to marketing theories and policymakers.