Antecedents and consequences of Sales Force Control Systems: a relational perspective

Transcription

1 Antecedents and consequences of Sales Force Control Systems: a relational perspective Artur Baldauf, University of Bern Bern, Switzerland [email protected] Paolo Guenzi, Scuola di Direzione Aziendale Università Commerciale Luigi Bocconi Milano, Italy [email protected] Vini Onyemah Boston University School of Management Boston, MA, USA [email protected] 2

2 Antecedents and consequences of Sales Force Control Systems: a relational perspective Abstract This study develops and tests a comprehensive model analyzing the links between relationship selling strategy, management controls, salesperson behaviors and performance in the light of the relational perspective. Findings show that the adoption of a relationship selling strategy exerts different impacts on different control types and behaviors of salespeople. Relationship selling strategy fosters sales unit effectiveness both directly and indirectly, that is through the relationship selling strategy-sales force cultural control-customer oriented selling-sales unit effectiveness path. Cultural control positively affects both customer oriented selling and adaptive selling, while process control stimulates only adaptive selling and directly increases sales unit effectiveness. 3

3 1. Introduction Investigating relational aspects of exchanges is an important research issue (Dyer & Singh, 1998; Grönroos, 1994; Sheth & Parvatyiar, 1995; Vargo & Lusch 2004). Adopting a relationship oriented approach is a major strategic commitment for firms and effective relationship performance may be a central resource for gaining sustainable competitive advantages (Dyer & Singh, 1998). For instance, effective relationship marketing should enhance customer satisfaction and customer retention as well as organizational outcomes (Morgan & Hunt, 1994). The sales unit plays a critical role in performing relationship specific activities because boundary-spanners such as sales managers and salespeople have important relationship management responsibilities (Strahle, Spiro, & Acito, 1996; Weitz & Bradford, 1999). Langerak (2001, p. 232) argues that the manufacturer is fully dependent upon the attitude and behaviors of salespersons to successfully [ ] build and maintain relationships with customers. Moreover, Homburg, Workman, and Jensen (2000, p. 475) found that primary marketing coordinators increasingly reside in the sales rather than the marketing organization. A relationship orientation, therefore, must pervade the mind-sets, values, and norms of an organization and, in particular, salespeople must be committed to manage longterm, mutually profitable partnerships with customers (Day, 2000; Anderson, 1996). Hence, sales management skills and sales force behaviors are central resources for gaining competitive advantage and enhancing customer and firm values (Doney & Cannon, 1997). In the relational era almost radical changes occur in sales management practices and sales force activities and hence, certain sales management issues, such as the sales force reward and control systems, need to be reconsidered. Indeed, special attention should be devoted to the antecedent role of relational strategies on sales activities and organizational effectiveness (Weitz & Bradford, 1999). Importantly, researchers to date have not sufficiently examined how relational strategies impact the sales unit. Viswanathan and Olson (1992, p. 45), for 4

4 instance, argue that studies linking specific sales management activities with marketing strategies have been largely non-existent. Though studies of buyer-seller relationships have been conducted (e.g., Doney & Cannon, 1997), the specific role of sales management practices and of sales force behaviors under a relational selling strategy perspective warrants further investigations. Empirical evidence concerning the links between marketing strategies, sales management policies and sales force activities is almost lacking. An exception is the work of Slater and Olson (2000). These authors find empirical support for the assumption that firms pursuing different strategic approaches adopt specific selling strategies, sales force control and compensation systems. The main purpose of this article is to develop a conceptual model with relational-specific sales management issues and sales force behaviors as key constructs and empirically examine a set of hypotheses. In the following we will present our conceptual logic and based on reviewing the literature we will formulate a set of hypotheses. We will then describe the research methodology and report the findings. Finally, we will discuss our results and limitations of the study, and provide directions for future research. 2. Conceptual logic and research hypotheses The conceptual model underlying this research is shown in Figure 1. The constructs refer to relationship selling strategy, sales force control types, relational behaviors of salespeople and sales organization effectiveness. The logic underlying this model is that managerial aspects are critical in determining the activities of salespeople, whose behaviors impact sales unit performance. Before drawing our attention to each specific construct, some general contributions of this research need to be mentioned. [Insert Figure 1 about here] First, we consider in our model managerial aspects of relationships, such as selling strategy and sales management controls, and relate them to individual-level behaviors and 5

5 sales unit effectiveness.. The inclusion of relationship selling strategy, which we view as a sales unit s long-term collaborative efforts directed to major stakeholders, seems to be particularly relevant if one considers the literature referring to the difficulties in aligning sales processes to strategies (Strahle, Spiro, & Acito, 1996; Slater & Olson, 2000). The extant research reveals the relevance of control mechanisms because of their effects on sales force behaviors and salesperson and sales unit performance (Jaworski 1988; Jaworski, Stathakopoulos, & Krishnan, 1993; Oliver & Anderson, 1994; Slater & Olson 2000). Control mechanisms are procedures for goal achievement. Importantly, we incorporate into our model both formal and informal aspects of control (Jaworski & MacInnis, 1989). We draw our attention to process control (i.e. behavioral control) as scholars argue that in the relational era companies should shift from outcome-based to behavior-based sales force control systems (Cravens et al., 1993; Oliver & Anderson, 1994; Weitz & Bradford, 1999). Since a relationship selling approach might influence work group relations we include cultural control into our model. In fact, expressing esprit de corps or a sense of belonging in the sales department may imply the existence of positive internal relationships, which are frequently seen as a prerequisite for generating and maintaining positive external relationships, especially with customers (Day, 2000; Grönroos, 1994). Second, while most of the literature on sales force control systems focused on aggregate measures of behavioral performance, we consider two specific relational behaviors of salespeople: customer oriented selling, an approach consistent with efforts to build longlasting positive buyer-seller relationships (Saxe & Weitz, 1982) and adaptive selling, which was found to be linked with customer satisfaction, thus fostering effective buyer-seller relationships (Spiro & Weitz, 1990). As a matter of fact, these two behaviors have been largely recognized to be of critical importance in the current, relational era. 6

6 Third, we relate relationship-specific constructs to sales unit effectiveness. So far, most of the studies have investigated effects of single constructs on specific outcomes. As we believe that relational aspects are referring to complex constructs with far reaching effects on both individuals and organizations, we decided to examine these influences on a more general construct Relationship selling strategy Relationship selling... focuses on the building of mutual trust within the buyer-seller dyad with a delivery of anticipated, long term, value added benefits to buyers [...to] create long term relationships, alliances, and collaborative arrangements with selected customers whenever possible (Jolson, 1997, p. 76). A relationship selling strategy can be defined as buyer-seller interdependence, information sharing, and trust building activities to achieve long-term financial rewards for participating parties from coordinated strategic investments (Ganesan, 1994; Morgan and Hunt 1994). Relationship selling strategy is concerned with the implementation of a firm s overall relational strategy at the sales department level. A major characteristic of a relationship selling approach is that buyer and seller are normally committed to strategic investments which are to a great extent based on trust and coordination. Such investments would not be undertaken if the parties did not believe in an ever-lasting relationship (Ganesan, 1994; Heide & Miner, 1992; Morgan & Hunt, 1994; Slater & Olson, 2000). A relationship selling approach impacts organizational as well as individual attitudes and behaviors. Day (2000, p. 28) states that [A] relationship orientation [ ] is immediately evident in the mind-set of those who deal directly with the customer. Salespeople contribute to achieving higher relationship quality through performing valueadding activities such as customer problem solving and customization (Crosby, Evans, & Cowles 1990). A relationship oriented approach requires management and subordinates (e.g., 7

7 salespeople) to change or adopt some specific behaviors. Indeed, leadership capabilities as well as specific skills of salespeople need to be developed. Subsequently, we will draw our attention on management control as a major leadership dimension Sales management controls Management controls are the set of activities designed to increase the probability that specific plans are implemented properly and desired outcomes are achieved (Jaworski, 1988). In an attempt to develop a theory of marketing control, Jaworski (1988) conceptually differentiates between formal and informal controls. Formal controls, which include process (i.e., behavior) and outcome control types, are typically written and management-initiated, while informal controls, such as professional and cultural control types, are unwritten and worker-initiated mechanisms. In the sales and marketing literature the main research interest has been centered around examining antecedents and consequences of formal controls (Cravens et al., 1993; Krafft, 1999; Oliver & Anderson, 1994; Ramaswami, 1996). Less attention has been devoted to the study of informal controls. However, it is important to note that companies practicing relational approaches might also consider control mechanisms based on socialization or clan (Ouchi, 1979). In clan type systems, the existence of an organizational climate, characterized by strong esprit de corps and shared values among the members of the company, drives social and self control processes (Stathakopoulos, 1996). Challagalla and Shervani (1996, 1997) argue that the adoption of distinct conceptualizations, measures and research methodologies led to several unexpected and ambiguous empirical findings. Hence, in the light of the increasing importance of the relational perspective, it seems to be particularly relevant to examine the effects of a relationship selling strategy on relationship specific aspects of a sales force control system. 8

8 Process control. It has been stated that following a behavior oriented control philosophy, which requires managers to monitor and direct the activities of their subordinates, should be the preferred option in companies adopting a relational strategy (Cravens et al. 2004; Weitz & Bradford, 1999). The rationale behind this assumption is that under a process control system subordinates are evaluated and rewarded based on their achievements on their ability to perform specific activities aimed at nurturing relationships with customers, rather than on their achievement of end-results. Conversely, in an outcome-based system, there is a strong pressure on short-term results, which may stimulate salespeople s adoption of hard selling techniques aimed at maximizing immediate revenues, sometimes at the expense of the creation of a long-lasting relationship with customers. Starting from these considerations, a process control perspective should be employed if a long-term orientation of the organization is articulated in the strategic plan. Hence we propose: H1: Relationship selling strategy is positively related to process control. Cultural control. Cultural control is defined as the pattern of shared values and beliefs that guide norms of behavior within the organization (Jaworski, Stathakopoulos, & Krishnan, 1993, p. 58). Cultural control is associated with dominant attributes such as esprit de corps and sense of belonging. From a sales department perspective this implies that salespeople feel as part of a group and are proud in their work. These attitudes are relevant for companies adopting relational strategies, because they indicate positive internal relationships. Day (2000, p. 29) argues that, it is necessary to keep key people on the team long enough for them to have real impact. Solid relationships require continuity, both inside and outside. In fact, establishing long-lasting interpersonal relationships between the buyer and the seller implies on-going interactions between buyers and the same individual salesperson over a long time period (Witkowski & Thibodeau, 1999). Based on these arguments we state: H2: Relationship selling strategy is positively related to cultural control. 9

9 2.3. Relational behaviors of salespeople Companies pursuing relational selling strategies need to direct their salespeople to adopt relational selling behaviors. Relational selling behaviors are characterized by interaction intensity, mutual disclosure and co-operative intentions (Crosby, Evans, & Cowles, 1990), and are represented through constructs such as customer oriented selling (Saxe & Weitz, 1982) and adaptive selling (Spiro & Weitz, 1990). In contrast, traditional transactional (hard) selling approaches and behaviors are short-sighted and aimed at maximizing immediate sales volume, sometimes at the expense of long-term results. For example, it has been empirically demonstrated that using closing techniques (Hawes, Strong, & Winick, 1996) or some ingratiatory behaviors (Strutton, Pelton, & Tanner, 1996) leads to lower levels of customer satisfaction and trust. Therefore, opportunistic behaviors should not be considered as relational (Geyskens, Steenkamp, & Kumar, 1998; Morgan & Hunt, 1994). Unfortunately, a commonly accepted set of relational behaviors does not exist. Hence, in this research we draw our attention on customer oriented selling and adaptive selling. Customer oriented selling. As we move toward relational exchanges, a win-win philosophy should be adopted, with salespeople becoming customer partners (Weitz & Bradford, 1999) and increasing their customer orientation, as opposed to their selling orientation (Saxe & Weitz, 1982). Williams (1998) argues that customer oriented selling is of fundamental importance in customer relationship development. Customer oriented selling is an approach consistent with the building of long-lasting positive relationships between the buyer and the seller. Hence, customer oriented selling is recognized as an important aspect of relational selling behaviors (Flaherty, Dahlstrom, & Skinner 1999; Martin & Bush 2003; Siguaw, Brown, & Widing 1994; Weitz & Bradford 1999). Saxe and Weitz (1982) clearly state that highly customer-oriented salespeople engage in behaviors aimed at increasing 10

10 long-term customer satisfaction (p. 344) and found that the SOCO scale correlated with a measure of long-term versus short-term time orientation (p. 347). Hence, customer oriented individuals would defer short-term returns for long-term dividends. Salespeople, therefore, will engage in customer oriented selling when they expect future transactions with the buyer. Beatty et al. (1996) also found an association between successful long-term relationships with clients and customer-oriented selling. Indeed, a firm pursuing a relationship selling strategy is strongly dependent on the ability of its salespeople to create long lasting relationships with customers. O'Hara, Boles, and Johnson (1991) emphasize the need to examine the antecedents of customer-oriented selling, such as the organizational environment. Referring to the Walker, Churchill, and Ford paradigm (1979) a firm s strategy and control system belong to the organizational environment. Hence, including organizational dimensions in our research model seems to be important because managers can influence the orientation of their sales force (Siguaw, Brown, & Widing, 1994). Only a limited amount of empirical research exists regarding the effects of relationship selling strategy on specific relational selling behaviors. Williams and Weiner (1990) report a positive association between relationship selling strategy and customer oriented selling. Siguaw, Brown, and Widing (1994), Menguc (1996) and Langerak (2001) found that a selling firm s market orientation positively affects the customer orientation of salespeople. On the other hand, Jones, Bush, and Dacin (2003) found no support for this assumption and these authors notice (p. 334) that salespeople perceive the actions of the firm separately from the actions of the sales manager. Hence, strategic organizational guidelines and sales management policies may exert different influences on salespeople s behaviors, and we can conclude that customer oriented selling may increase the selling company s relational outcomes by fostering the customer s interpersonal relationship quality with the sales force (Langerak 2001). A relational selling strategy should positively 11

11 affect customer oriented selling as this construct reflects non-opportunistic behavior that stresses customer-focused solutions and mutual benefits (Schwepker, 2003). Therefore: H3: Relationship selling strategy is positively related to salespeople s customer oriented selling. An important aspect in the sales management literature is the impact of a specific formal sales force control system on salespeople s relational behaviors. Adopting a process control philosophy is expected to lead to supportive behaviors as well as higher effectiveness. Extant research (e.g., Cravens et al., 1993; Cravens et al. 2004) shows that behavior-based control systems increase the behavioral performance of salespeople, though only a few researchers examined the impact of controls on specific salespeople behaviors such as customer oriented selling or adaptive selling. We are interested in exploring the effects of process control systems on salesperson s relational behaviors as such behaviors are to a great extent influenced by the applied sales force control system. Anderson and Oliver (1987) postulated that a behavior-based sales control system should foster customer oriented selling, because salespeople will be allowed to develop specific skills without being forced to sacrifice long-term for immediate results. O Hara, Boles, and Johnson (1991) found that salespeople are more likely to use customer oriented selling when salesperson-manager relationships are based on trust, interaction, support and formal/informal rewards. In another study, behavior-based control system was found to be related with customer orientation of salespeople (Cravens et al., 1993). Hence: H4: Process control is positively related to salespeople s customer oriented selling. There is empirical evidence concerning the influence of the working environment on salesperson attitudes and behaviors (Babin & Boles, 1996; Jaworski & Kohli, 1993; Teas, 1983). A working environment can positively affect the salesperson s motivation, job satisfaction or organizational commitment, thus increasing the work quality and decreasing salespeople s intention to leave (Cravens et al., 2004). High quality internal relationships are a 12

12 prerequisite for building and maintaining positive external relationship with customers (Grönroos, 1994). Boles et al. (2001), argue that in cohesive working environments salespeople are more likely to collaborate toward satisfying customer needs. Conversely, in a non-supportive working environment, salespeople may behave in a rather egoistic manner, to maximize sales and thus avoiding negative assessments and sanctions from sales managers (Eisenberger et al., 1986; Teas, 1983). It has been suggested that a clan control system is expected to be associated with improved salesperson-customer relationships because salespeople are likely to recognize and appreciate the importance of such relationships for themselves and their organization (Stathakopoulos, 1996, p. 10). Unfortunately, empirical support for this statement is lacking. Some evidence exists that the more salespeople are committed to the organization (which is consistent with the high esprit de corps characterizing cultural control), the more likely they are to practice customer-oriented selling (Joshi & Randall, 2001). Moreover, Schwepker (2003, p. 153) posits that companies creating an environment where workers support one another should help foster a more customeroriented sales force, also because the direction provided by the organization via its cultural control is likely to reduce salesperson ambiguity. Consequently, customer-focused values will likely drive salespeople s use of customer-oriented selling behaviors (Schwepker, 2003, p. 163). Based on these arguments we hypothesize: H5: Cultural control is positively related to salespeople s customer oriented selling. Adaptive selling. Adaptive selling is defined as the altering of sales behaviors during a customer interaction or across customer interactions based on perceived information about the nature of the selling situation (Weitz, Sujan, & Sujan, 1986, p. 175). Salespeople exhibit a low level of adaptive selling when they use the same sales presentation in and during all customer encounters. In contrast, a high level of adaptive selling is achieved by using different sales presentations and communication styles across encounters (Spiro & Weitz, 13

13 1990). Adaptive selling should be more applicable to selling situations characterized by varying needs across customers, complex buying centers, complex buying tasks, complex products, high information needs and high perceived risks, i.e., typical situations where relationship specific approaches are required (Porter, Wiener, & Frankwick, 2003). Adaptive selling is a relevant aspect of relational behaviors, because of its links with customer satisfaction, customer trust and the achievement of long-lasting buyer-seller relationships (Spiro & Weitz, 1990; Vink & Verbeke, 1993). At the company level, high adaptation to customer needs and customization of the offer are usually considered important dimensions of a relational strategy (e.g., Cannon & Perreault, 1999). Similarly, at the individual salesperson level, the practice of adaptive selling is consistent with a relationship selling strategy as [its] benefits will likely exceed opportunity costs with potentially large orders or with a high probability of using currently collected information to secure future sales. Adaptive selling may cause a salesperson to sacrifice short-term sales to maintain customer satisfaction and increase the probability of future sales (Porter, Wiener, & Frankwick, 2003, p. 277). Finally, in the specific context of key account relationships, Sengupta, Krapfel and Pusateri (1997) found that seller adaptation increases the customer s switching costs, thus stimulating longlasting relationships. Based on these considerations we posit that: H6: Relationship selling strategy is positively related to salespeople s adaptive selling. The success of salespeople in adaptive selling is related to strong managerial support in terms of supervisor s investment on limited resources. This support can be an outcome of the relationship between supervisors and subordinates aimed at developing proper internal communication and role formation (Dubinsky et al., 1986; Graen et al., 1977). In the absence of good functioning relationships subordinates may avoid adaptive selling behaviors (Spiro and Weitz, 1990). Moreover, adaptive selling was found to be associated with behavior-based control (see e.g., Babakus et al., 1996). Delvecchio (1998) stressed that the quality of internal 14

14 relationships (which can be interpreted as a proxy of cultural control) in the sales department may foster increased levels of adaptive selling behavior. Only a few studies have specifically examined the impact of the adoption of behavior-based sales control systems on adaptive selling. Baldauf, Cravens, and Piercy (2001-b) and Piercy, Cravens, and Morgan (1999) found a positive relationship between behavior-based sales control and adaptive selling. Therefore: H7: Process control is positively related to salespeople s adaptive selling. H8: Cultural control is positively related to salespeople s adaptive selling Sales unit effectiveness Sales unit effectiveness is a summary representation of organizational outcomes (Churchill et al. 2000). In the extant literature (e.g., Babakus et al. 1996; Cravens et al. 1993) the construct has been examined using different dimensions and/or indicators (e.g., total sales volume, market share, costs, customer satisfaction, profit contribution, return on assets, and residual income) as well as referring to different units of analyses (e.g., regions, districts, territories, sales units, and customers). In our research, we refer to the effectiveness of the entire sales unit, which conceptually is influenced through the attitudes and behaviors of salespeople, organizational attitudes and decisions as well as environmental dimensions (Churchill et al. 2000; Walker, Churchill, & Ford 1979). In the sales management literature three multi-item dimensions (i.e., sales volume and market share, profitability, and customer satisfaction) of sales unit effectiveness have been used. Empirical research findings on sales force control systems indicate a positive association between salesperson outcome performance and sales unit effectiveness (Babakus et al., 1996; Baldauf, Cravens, & Piercy, 2001-a,b; Cravens et al., 1993; Piercy, Cravens, & Morgan, 1999). The link between relationship selling strategy and sales unit effectiveness may vary depending on the performance measures considered (e.g., short-term or long-term results, tangible or intangible outcomes). In fact, building long-term relationships with customers may imply the sacrifice of 15

15 immediate sales results (Saxe & Weitz, 1982) or the increase of related costs (e.g., in order to offer higher levels of customer service), which may reduce profits. However, results of empirical studies (e.g., Reichheld & Sasser, 1990; Kalwani & Narayandas, 1995) generally demonstrate that the adoption of a relational strategy is associated with higher levels of organizational effectiveness. Hence we hypothesize: H9: Relationship selling strategy is positively related to sales unit effectiveness. Considering the impact of sales force control on sales unit effectiveness, some inconsistent findings among extant studies exist, which may be due to different construct measures and informant bases (e.g., chief sales managers versus field sales managers). Baldauf, Cravens, and Piercy (2001-b) found that the adoption of behavior based sales force control increases sales organization effectiveness. Although some empirical evidence actually confirms the existence of a direct positive effect of behavior-based sales control system on performance, the majority of studies suggests a more complex network of relations, where this link acts indirectly, through the positive affective impacts on the sales force attitudes (i.e., increase of organizational commitment and reduction of role ambiguity) and through the improvement of salespeople s behavioral performance (Challagalla & Shervani, 1996; Grant et al., 2001; Joshi & Randall, 2001). Building on the extant literature our hypothesis is that: H10: Process control is positively related to sales unit effectiveness. The importance of customer oriented selling lies upon its positive association with crucial organizational outcomes such as salesperson performance (Dunlap, Dotson, & Chambers 1988) and customer satisfaction (Goff et al., 1997). Although it is generally recognized that customer oriented selling increases salesperson performance (Boles et al. 2001; Brown et al. 2002; Saxe & Weitz 1982) and organizational effectiveness, some controversial findings suggest further investigating this relationship. Langerak (2001) found no direct impact of customer oriented selling on financial performance and argued that (p. 16

16 231) salespersons often exercise a higher customer orientation than the manufacturer desires. This might cause salespersons to sacrifice the immediate sale, at the expense of the manufacturer s financial performance, in the interest of the relationship with customer. Hence, the analysis of the impact of salespersons relational behavior on performance deserves special attention. Goff et al. (1997) demonstrated that customer oriented selling leads to higher levels of customer satisfaction with the salesperson, thus increasing his/her role performance. Similarly, Williams (1998) pointed out that customer oriented selling is of fundamental importance in customer relationship development, which incorporates customer satisfaction, trust and commitment toward the salesperson. Jones, Bush, and Dacin (2003) showed that customer oriented selling reduces customer s propensity to switch to other suppliers. As for the relationship between adaptive selling and performance, Babakus et al. (1996), Piercy, Cravens, & Morgan (1999), Baldauf et al. (2001-a) empirically found a positive relationship between an aggregate measure of salespeople behavioral performance (which also included one item referring to adaptive selling) and salesperson outcome performance. Piercy, Cravens, and Morgan (1999) report a positive association between adaptive selling and the overall salesperson outcome performance. Moreover, Sujan, Weitz, and Kumar (1994) and Porter, Wiener, and Frankwick (2003) found that adaptive selling drives to higher selling effectiveness outcomes across different selling environments. Hence: H11: Customer oriented selling is positively related to sales unit effectiveness. H12: Adaptive selling is positively related to sales unit effectiveness. 3. Research method 3.1. Sampling procedure and data collection To test our hypotheses, we conducted a cross-sectional survey using a judgmental sampling method to collect data from firms located in Italy. An English version of the questionnaire was originally designed, as all the constructs used in this study have been 17

17 developed in English-speaking research settings. The English version of the questionnaire was translated into Italian by one expert translator and then retranslated into English by a second (Douglas & Craig 2000). Before the questionnaire was distributed, pre-tests with a sample of 20 field sales managers attending a training program at a major business school in Italy were performed. The respondents were asked to critically review the questionnaire and identify ambiguous and misleading scale items. Hence, the main purpose of these pre-tests was to check for wording and understanding of the single questions. Based on these pre-tests, the questionnaire was modified slightly. Chief and field sales managers responsible for direct supervision of salespeople were the respondents. The choice of sales managers as key informants seems to be reasonable, since they occupy a position within organizations which allows them to provide the information requested in this study. The main goal of the sampling frame of this study was to include sales organizations from various selling environments such as consumer and industrial products and services. In sum, 530 chief and field sales managers were contacted. They were pre-informed about receiving a questionnaire. Participants were assured confidentiality of their information. In answering the questionnaire they were asked to refer to the sales unit they manage. Hence, the respondents provided average assessments of behaviors of the salespeople reporting to them. Three weeks after the initial contact, a telephone follow-up with non-respondents was conducted and again we asked for study participation. Finally, we received a total of 201 usable questionnaires, achieving a response rate of 38%. We assessed the potential for nonresponse bias by comparing early and late responses (Armstrong & Overton 1977). Analysis of the focal constructs and several variables (e.g., annual sales, number of customers served) indicated no significant differences between the two groups, suggesting that nonresponse bias does not appear to be a significant (at the 0.05 level) issue, but a stronger test would have been to contact nonrespondents. The final sample consists of companies representing industrial goods (50%), consumer/durable goods 18

18 (19%), pharmaceuticals (16%), services (12%), and others (3 %). Small, medium-sized, and large companies constitute the sample. The median number of total customers of the selling firm is 1.000; the median number of customers managed per salesperson is 50. The majority of respondents (51%) are chief sales managers, 27% are field sales managers and 22% indicated other job positions (e.g., marketing manager or business unit manager). Importantly, no matter their job positions, all respondents are in charge of directly managing a sales force. The respondents allocate about 48% of their time to selling to customers and 52% of their time to managing the sales force. The median age of the respondent is 36 years. The respondents median experience in the current position is three years, in the current organization it is six years and they report to have about 11 years of overall working experience Measurement All the constructs in this study were measured by well-established scales. Table 1 provides descriptive statistics, intercorrelations, and reliabilities of study constructs. The scale items of each measure are provided in the appendix. [Insert Table 1 about here] To measure relationship selling strategy we used the four item scale from Slater and Olson (2000), which comprises items referring to respondents perceptions of their company s relationship selling strategy (e.g., the development of long-term relationships with buyers). The respondents assessed each indicator using a 7-point Likert scale ranging from 1 (completely inaccurate) to 7 (completely accurate). Process and cultural control were measured using the Jaworski and MacInnis (1989) and Jaworski, Stathakopoulos, and Krishnan (1993) scales. The process control scale consists of four items expressing the extent to which the manager monitors, evaluates, modifies, and provides feedback on procedures 19

19 applied to achieve performance goals. Cultural control comprises two items indicating cultural identification, i.e., sense of belonging and pride associated to the work environment. Both constructs were gauged by items utilizing a 7-point Likert-type scale. To measure the customer oriented selling of salespeople we adopted a short form of the Saxe and Weitz (1982) SOCO scale, proposed by Thomas, Soutar, and Ryan (2001). The scale includes questions referring to the desire to help customers, to offer products that will satisfy customers needs, to avoid descriptive or manipulative tactics, and to avoid the use of high pressure selling. Importantly, however, in this research we consider only items belonging to the customer oriented selling factor. The scale consists of five items which the respondents assessed using a 9-point Likert scale ranging from 1 (never) to 9 (always). The adaptive selling scale is based on Robinson et al. (2002), who developed a short version of the original Spiro and Weitz (1990) scale. Sample scale items refer to the ability to change to another sales approach or to the capability of using a wide variety of sales approaches. The respondents assessed five items using a 7-point Likert scale. Sales unit effectiveness was measured adopting and extending (by means of the inclusion of an item on costs) the scale utilized by Babakus et al. (1996), which incorporates sales volume, market share, profitability and customer satisfaction compared against both competitors and the sales organizational goals. All these items were gauged on a 7-point scale ranging from 1 (much worse) to 7 (much better) Reliability and validity of measures Referring to Churchill (1979) and Gerbing and Anderson (1988) we assessed the psychometric scale properties. First, every construct/dimension was factor analyzed, to investigate the factor structure (i.e., to check if scale items load significantly on at least one factor (.40). On this basis no item was excluded from further analysis. The scale reliabilities 20

20 were estimated by coefficient alphas. All coefficient alphas exceeded the.70 threshold level suggested by Nunnally (1978) with the exception of relationship selling strategy, which is nonetheless very close to this level and hence was kept in our analysis (see Table 1). Second, drawing on Gerbing and Anderson (1988), we also employed confirmatory factor analysis. We examined each scale separately and then estimated an overall model including all constructs, except the sales unit effectiveness construct. In fact, based on insights gained from Jarvis, MacKenzie, and Podsakoff (2003) we consider sales unit effectiveness as a formative indicator and therefore we do not examine this construct together with the other constructs, which were assumed to be reflective factors. The fit indices of our measurement models, Chisquare/degrees of freedom, adjusted goodness of fit (AGFI), and comparative fit index (CFI) are acceptable. The lowest average variance extracted (AVE) is All items significantly load on their corresponding construct (lowest t-value is 4.63), demonstrating adequate convergent validity. Following Bagozzi, Yi, and Phillips (1991) we conducted pairwise comparisons of the constructs within our overall model. All latent-trait correlations are significantly different at one because each phi-value plus or minus twice the standard error does not include one, thus indicating discriminant validity. In sum, we assume that the psychometric properties of our measures exhibit acceptable results. Subsequently, we combined the individual items of each measure by calculating the arithmetic means for each construct. 4. Research findings We used regression analyses to investigate our hypotheses, estimating five regression models to test H 1 through H 12. In models 1 and 2, relationship selling strategy was regressed on process and cultural control. In model 3, relationship selling strategy, process control and cultural control were regressed on the customer oriented selling construct. In model 4, 21

21 relationship selling strategy, process control and cultural control were regressed on the adaptive selling construct. Finally, in model 5, relationship selling strategy, process control, customer oriented selling, and adaptive selling orientation were regressed on sales unit effectiveness. The results of these model estimations are reported in Table 2. To examine for the potential presence of multicollinearity we estimated, for all five models, variance inflation factors and condition indices. The variance inflation factors range from 1.00 to 1.46 well below the recommended cut-off of 10, and the condition indices range from 8.87 to well below the recommended cut-off of 30. These findings suggest that multicollinearity seems not to be a threat to the substantive conclusions drawn from the parameter estimates. [Insert Tables 2 about here] In addition to the five regression models, a path analysis was performed to assess the direct, indirect, and total effects of relationship selling strategy, controls and salespeople behaviors on sales unit effectiveness. The results of path analysis are also shown in Table 3. [Insert Tables 3 about here] 4.1. Overall model fits The overall model fit statistics reveal that the proposed (linear) models fit the data reasonably well. Except for the first model the adjusted R 2 s are significant at the p<.05 level or better and explain an acceptable amount of the variances of the dependent variables, ranging from 3 percent for process control to 16 percent for sales unit effectiveness. Hence, the estimated coefficients can be validly examined to reveal interrelationships among the modeled constructs Coefficients and hypotheses tests 22

22 Examining the estimated (structural) coefficients, we find that eight of our twelve hypotheses are supported. Consistent with H 2, relationship selling strategy has a significant positive influence on cultural control ( =.15, t-value = 2.20, p <.05) but not on process control ( = n.s.). Hence, while H 1 is not supported we can support H 2. Relationship selling strategy does not impact customer oriented selling, but positively affects adaptive selling ( =.25, t-value = 3.79, p <.001). Therefore our findings support H 6 but we have to reject H 3. Relationship selling strategy positively impacts sales unit effectiveness ( =.17, t-value = 2.53, p <.05) which supports our H 9. Process control does not affect customer oriented selling (H 4 is not supported) but there are positive effects between process control and adaptive selling ( =.20, t-value = 2.88, p <.05) which supports our H 7, and process control and sales unit effectiveness ( =.24, t-value = 3.57, p <.001), thus supporting H 10. Cultural control has an impact on both customer oriented selling ( =.41, t-value = 5.85, p <.001) and adaptive selling ( =.13, t-value = 1.82, p <.10). These findings provide support for our hypotheses H 5 and H 8. Finally, sales unit effectiveness is positively influenced by customer oriented selling ( =.13, t-value = 1.84, p <.10), while no impact is found through adaptive selling. Hence, our findings support H 11 while H 12 needs to be rejected. 5. Contribution of the study and research implications Recognizing the importance of relationship selling in today s business landscape, we explored how relationship selling strategy and certain relational aspects of a sales force control system affect salespersons behaviors and overall sales unit performance. In general, it is assumed that the sales force plays a pivotal role in increasing bottom-line performance, creating and reinforcing long-lasting relationships with customers, gaining insights on market trends, thus contributing to obtaining competitive advantage. Hence, salespeople can be a strategic resource for many companies, and creating and managing an effective and efficient 23

23 sales force may be considered as one of the most valuable capabilities of firms in current times. This is especially true for those companies willing to adopt a relational strategy, because salespeople have to perform important tasks to transfer such an approach towards customers. In short, the contribution of our research can be synthesized as follows. Firstly, we developed and tested a comprehensive model incorporating strategy, management controls, individual behaviors and performance in the light of the relational perspective and in the context of the sales department, thus contributing to adding empirical findings to the often overlooked topic of the implementation of a relational strategy at the sales department level. To date, most of the studies on sales force management controls did not examine simultaneously both antecedents and consequences of control systems. Moreover, while extant research on the topic typically analyzed aggregate measures of behavioral consequences, we explored the impact on specific classes of behaviors. Secondly, we examined both formal and informal types of managerial control: our research clearly shows the relevance of informal controls, which insofar have not been deeply investigated in academic nor managerial research in marketing. This study is one of the few empirical investigations taking into account the role of both formal and informal types of control on salespeople s behaviors and performance. Thirdly, we shed some light on important managerial antecedents of two classes of relational behaviors of salespeople (i.e. customer oriented selling and adaptive selling): to date, most of the research on these constructs mainly focused only on the consequences of such behaviors, or explored their individual-level drivers. Finally, our research is one of the few empirical studies on the topic run in not- English speaking countries. More specifically, in our study we empirically examined links between constructs which to date had only been developed theoretically. Results of our research seem to confirm that the adoption of a relational approach from the part of a firm positively affects the sales unit s effectiveness, both directly and indirectly, i.e., through its 24

24 impact on some behaviors of salespeople (that is by the relationship selling strategy cultural control customer oriented selling effectiveness path). Interestingly, it is apparent that the adoption of a relationship selling strategy does not necessarily determine per se the adoption of sales force relational behaviors. In fact, although this strategy stimulates adaptive selling, it does not exert any direct impact on customer oriented selling. However, there seems to be an indirect link between a relationship selling strategy and customer oriented selling, by means of the mediating effect of cultural control. This evidence underlines the importance of sales force control systems in implementing a relational strategy at the sales department level. It is also noteworthy that our results show a direct and positive association of relationship selling strategy with cultural control, but not with process control. This finding suggests that informal controls, which are important components of a company s culture, should deserve more attention than formal controls when strategic issues are considered. Our findings show that process control fosters adaptive selling, but not customer-oriented selling: again, this unexpected finding suggests interpreting with caution the assumption that process (behaviorbased) control leads in general terms to higher behavioral performance. It may be, in fact, that process control exerts different impacts on different behavioral aspects. Moreover, it is interesting to underline that process control increases adaptive selling but not customer oriented selling, thus mirroring the impacts found between relationship selling strategy and sales force behaviors. A possible explanation for our findings is that companies in our sample recognize that adapting to customers needs is an essential prerequisite for building deep relationships with few selected customers (Wilson, 2000), while being customer oriented may be considered as a kind of precondition to stay in the market. If adaptive selling were considered to be discretionary (while customer oriented selling is necessary) to gain positive outcomes for the selling firm, the former behavior would be explicitly recognized, stimulated and rewarded (while the latter is not) in both the selling firm s strategy and sales force 25

25 controls. This topic deserves special interest in future research in this field. One way to get to a deeper understanding of these aspects may be the adoption of a more comprehensive construct of relationship selling strategy, explicitly incorporating such components as reciprocity, trust, etc. Consistently with previous research in the field, our findings support the well recognized evidence that process control increases the selling unit s effectiveness. Interestingly, our findings provide only weak support (if not at all) for the link between relational behaviors and effectiveness. However, this result may be explained by the way we operationalized the effectiveness construct. In fact, relational behaviors may not affect bottom line performance in the short run, but they may increase intangible and long-term based performance indicators, such as intentional loyalty and, more in general, affective and attitudinal responses of customers. Hence, we suggest that future research on this field include more relational measures of effectiveness (e.g., customer trust, intention to repurchase, willingness to recommend, etc.). Moreover, a dyadic approach could be applied, because of the limitations of self-reported, single informant evaluations of such indicators from the part of sales managers. 6. Limitations and future research directions The research results presented in this paper are subject to several limitations. First, although the research is based on an extensive review of the literature, other significant variables (e.g., other relevant relational behaviors, such as team selling) have not been considered. Second, the study is exploratory. Since the sample of selling firms is not statistically representative of the total population of Italian companies, it would be hard to generalize the findings. Third, we can only draw conclusions about association between variables, not causation, because we conducted a cross-sectional study. Fourth, we relied on a single informant within each organization, who expressed their subjective perception 26

26 regarding the behaviors of salespeople and the sales unit effectiveness. Nevertheless, it is important to underline that respondents were asked to express their evaluation with regards to salespeople they directly supervise: hence they are likely to provide a reliable assessment. Similarly, although sales unit effectiveness should ideally be measured through objective data, previous research has shown that self-report measures are acceptable (Churchill et al., 1985) because even if they are biased there is no reason to suspect that the amount of bias varies systematically across respondents. Finally, the stages of the buyer-seller relationship life cycle, which could require different sales force behaviors in different phases of a relationship, have not been considered. This may explain why we do not find very strong associations between the sales force relational behaviors and the selling firm s effectiveness. In future research, this issue could be examined through conducting a longitudinal study (Frankwick, Porter, & Crosby, 2001). In conducting empirical research concerning the topic examined in this paper, we recommend to start by giving a clear specification of the meaning of relational strategy: in this study we used a narrow and restricted, but workable definition (i.e., the extendedness of relationship scale used by Heide & Miner, 1992). In future studies broader conceptualizations of the construct relationship selling could be utilized to better capture the domain of this strategic approach. The same is true for problems related to measurement of the effectiveness construct. Moreover, it could be interesting to compare the perceptions of chief sales managers, field sales managers, and salespeople, in order to assess potential discrepancies between informants at different levels involved in the process of creating and managing the customer relationship. Finally, another aspect deserving investigation is to carry out intercultural research aimed at identifying possible dissimilarities concerning the above aspects in different geographical contexts: for example, the importance of informal control systems may vary across different cultures. 27

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32 Construct/Items Factor Source Loading Relationship Selling Strategy (7-point, completely inaccurate- Alpha:.67 Slater, Olson 2000 completely accurate) c2/df = 4.76 a 1. The parties expect relationships to last a lifetime. 0,71 AGFI:.86 b, CFI:.99 c 2. It is assumed that renewal of agreements in relationships will generally occur. 0,73 Lowest t-value: The parties make plans not only for the terms of individual purchases but also for 0,66 AVE: 50.8 d the continuance of relationships. 4. The relationship with our customers is essentially 'evergreen'. 0,75 Sales Force Process Control (7-point, never-always) Alpha:.80 Jaworski, MacInnis I monitor the extent to which salespeople follow established procedures. 0,78 c2/df = 2.21 a 2. I evaluate the procedures salespeople use to accomplish a given task. 0,87 AGFI:.98 b, CFI:.93 c 3. I modify salespeople's procedures when desired results are not obtained. 0,72 Lowest t-value: I provide salespeople with feedback on how they accomplished our performance goals. 0,81 AVE: 63.5 d Sales Force Cultural Control (7-point, strongly disagree-agree) 1. The work environment encourages salespeople to feel part of the division. r=.82 Jaworski et al The work environment encourages salespeople to feel sense of pride in their work. Customer Oriented Selling (9-point, never-always) Alpha:.86 Thomas, Soutar, Ryan Our salespeople try to figure out a customer's needs. 0,75 c2/df = 4.01 a 2. Our salespeople have the customer's best interests in mind. 0,71 AGFI:.89 b, CFI:.98 c 3. Our salespeople take a problem solving approach in selling products or services to customers. 0,83 Lowest t-value: Our salespeople recommend products or services that are best suited to solving problems. 0,86 AVE: 65.3 d 5. Our salespeople try to find out which kinds of products or services would be most helpful to customers. 0,88 Adaptive Selling (7-point, never-always) Alpha:.90 Robinson et al If a sales approach is not working, our salespeople are able to change to another 0,80 c2/df = 2.52 a approach. AGFI:.93 b, CFI:.96 c 2. Our salespeople like to experiment with different sales approaches. 0,87 Lowest t-value: Our salespeople are very flexible in the selling approach they use. 0,91 AVE: 71.6 d 4. Our salespeople are capable of using a wide variety of selling approaches. 0,90 5. Our salespeople try to understand how one customer differs from another. 0,73 Sales Unit Effectiveness (7-point, much worse -much better) 0.83** Cravens et al Sales and Market Share 1. Sales volume compared to major competitor (past 24 months) 0,84 c2/df = 1.69 a 2. Sales volume compared to sales unit objectives. 0,82 AGFI:.96 b, CFI:.99 c 3. Market share compared to major competitor. 0,76 Lowest t-value: Market share compared to sales unit objectives. 0,85 AVE: 67.1 d Profitability 1. Profitability compared to major competitor. r= Profitability compared to sales unit objectives. Customer Satisfaction 1. Customer satisfaction compared to major competitor. r= Customer satisfaction compared to sales unit objectives. Sales Unit Costs APPENDIX: Scale Items 1. Sales unit costs compared to major competitor. r= Sales unit costs compared to sales unit objectives. **... Reliability estimate for linear combinations of variables. a= chi-square/degrees of freedom; b=adjusted goodness of fit; c=comparative fit index; AVE=average variance extracted 33

33 Table 1: Descriptive Statistics, Construct Correlations and Reliability Estimates (n=201) Constructs (number of items) Means SD Coefficient Alphas 1. Relationship Selling Strategy (4) 4,19 1,11 0,67 2. Sales Force Process Control (4) 4,89 1,15 0,80 * 3. Sales Force Cultural Control (2) 5,66 1,38 r=.82 0,15 0,36 4. Customer Oriented Selling (5) 6,67 1,26 0,86 * * 0,38 5. Adaptive Selling (5) 4,40 1,17 0,90 0,29 0,27 0,24 0,43 6. Sales Unit Effectiveness (10) 4,95 0,80 n.m. 0,23 0,30 0,29 0,20 0,30 * Not significant at.05; n.m.: not meaningful 34

34 Table 2: Results of Regression Analysis: Standardized Coefficients (n=201) Dependent Variables Independent Variables Ho (Hypothesized Sign) Standardized -coefficient (t-value) F-value adj. R2 Sales Force Process Control Relationship Selling Strategy H 1 (+) - n.s. n.s. Sales Force Cultural Control Relationship Selling Strategy H 2 (+) 0.15 (2.20) c 4.82 c 0,02 Customer Oriented Selling Relationship Selling Strategy H 3 (+) n.s a 0,14 Sales Force Process Control H 4 (+) n.s. Sales Force Cultural Control H 5 (+) 0.41 (5.85) a Adaptive Selling Relationship Selling Strategy H 6 (+) 0.25 (3.79) a a 0,15 Sales Force Process Control H 7 (+) 0.20 (2.88) b Sales Force Cultural Control H 8 (+) 0.13 (1.82) d Sales Unit Effectiveness Relationship Selling Strategy H 9 (+) 0.17 (2.53) c a 0,16 Sales Force Process Control H 10 (+) 0.24 (3.57) a Customer Oriented Selling H 11 (+) 0.13 (1.84) d Adaptive Selling H 12 (+) n.s. n.s.=not significant; a=significant at p<0.001; b=significant at p<0.01; c=significant at p<0.05; d=significant at p<

35 Table 3: Direct, Indirect and Total Effects Dependent Variables Indipendent Variables Direct Effects Indirect Effects Total Effects Customer Oriented Selling Relationship Selling Strategy n.s. 0,06 0,06-0,07 0,07 Adaptive Selling Relationship Selling Strategy 0,25 0,02 0,27 0,56-0,56 Sales Unit Effectiveness Relationship Selling Strategy 0,17 0,01 0,18 Sales Force Process Control 0,24-0,24 36

36 Figure 1: Conceptual model Management Sales Force Behavior Outcomes Sales Force Cultural Control Customer Oriented Selling Relationship Selling Strategy Sales Unit Effectiveness Adaptive Selling Sales Force Process Control 37