The Use of Manangement Control to Guide Marketing Department Power in Establishing Market Orientation: A Resource Dependence Perspective

Abstract

Market orientation, an important organizational concept, is fundamentally driven by the marketing department, as marketing exerts its power to spread a market-oriented mindset throughout the organization. While the determinants and success-related benefits of market orientation have been broadly studied, the conditions under which it is established have been largely neglected. Addressing this gap, this paper investigates the associated role of the marketing department’s power in the creation of market orientation and how it is moderated by means of managerial control. Based on a Resource Dependence Theory (RDT) perspective, it is argued that top management depends on marketing to exert its power in order to induce market-oriented behaviors and values firm-wide, and that to manage this dependence top management iniates control. To observe the moderating effect of managerial control, we differentiate between formal and informal controls as Organizational Control Theory (OCT) suggests that the feasibility and effectiveness of controls is affected by the respective task context. Previous literature noted that establishing market orientation reflects a process of cultural transformation (Gebhardt et al. 2006) and therefore describes a changing and uncertain environment. Following OCT, formal controls are impaired in uncertain context settings, whereas informal controls serve as a “fall-back” option that is effective in such contexts. Therefore, we advance current conceptualizations of management control in market orientation research by applying formalization, centralization and output control as forms of formal control, and being the first to include socialization and selection & training as informal controls. The study aims to show that informal controls are suitable mechanisms to foster marketing departmental power in the creation of market orientation.