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Effect of Formal Control System on Ambidextrous Selling: A study of Pharmaceutical Salesforce
Abstract
Extant marketing literature manifests ambidextrous behaviour of salespersons as the ability to sell both new and existing products. Previous studies have shown how ambidextrous Salesforce outperform the single-oriented Salesforce in terms of customer satisfaction, increased sales and achieving higher profits with stability. On the other side is the Salesforce control system which is outcome and behaviour-based is aimed to direct and guide the salesperson’s actions and decisions. By collecting responses from 194 medical representatives we assessed the effect of the three control mechanism viz. outcome, behaviour and hybrid control on ambidextrous behaviour of the salesperson. Using structural equation modelling the findings depict that both outcome and behaviour control system are positively related to ambidextrous behaviour individually. Hybrid control which is the collective effect of the two control is negatively related to ambidextrous behaviour.
Keywords: Ambidextrous product selling, Salesforce control system, outcome control, behaviour control
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Managing employees and external partners effectively has been a primary concern for organizations and their managers. Many studies have investigated the effectiveness of organizational controls in a wide variety of contexts. Using organizational controls literature that discriminates among outcome, behavior, and clan control, this study synthesizes the research on the effectiveness of these controls. In particular, the study examines 23,839 organizational controls–performance relationships from 120 independent samples, and tests several new hypotheses using advanced meta‐analytic methods. The results indicate that outcome, behavior, and clan controls generally enhance performance, with each control having a distinct performance effect. Our analysis also demonstrates that controls function as complements to one another. This finding indicates that one form of control increases the effectiveness of other forms of control. We also examine the organizational controls–performance relationships across various contexts, and our results show that they vary according to the type of task. The paper concludes with a discussion on the theoretical and managerial implications of these findings. This article is protected by copyright. All rights reserved.
Sales management control systems (SMCSs) are designed to align salespeople's activities and actions with organizational objectives. This article reviews and synthesizes over 50 SMCS articles published in sales, marketing, and management journals over the past 30 years. We begin by building a comprehensive framework that enables us to classify prior research into digestible categories (e.g., SMCSs as antecedents, SMCSs as consequences). Next, we present an analysis of gaps in the literature. Among other findings, our analysis reveals that there is an overwhelming focus on the use of formal (specifically behavior- and outcome-based) controls as compared to their informal control counterparts. Finally, we suggest avenues for future research: (1) mapping and understanding the full spectrum of control mechanisms, (2) developing a fuller understanding of the often-overlooked forms of control (e.g., input and cultural controls), and (3) more thoroughly analyzing how controls operate (or do not operate) as an integrated system.
Sales organizations aim to grow their firms' business by acquiring new customers while retaining their existing ones. Although customer acquisition and retention are complementary processes, they involve different sales process capabilities that often compete for investments. However, firms that succeed in effectively combining these capabilities are “ambidextrous” and will enjoy superior growth and profits. Although developing ambidexterity is a fundamental sales management task, it has received little attention in research. Based on the Motivation-Opportunity-Ability framework we identify a set of organizational sales capabilities that can help sales organizations' joint management of acquisition and retention capabilities, and explain their influence drawing on Job Demands-Resources (JD-R) theory. Survey and time-lagged archival performance data from 174 firms provide an empirical test of the conceptual model and hypotheses developed. Results confirm that incentive management, cross functional cooperation, and the interaction of cross functional cooperation and sales training capabilities are positively correlated with sales organization ambidexterity. In addition, we find a positive correlation of customer prioritization on ambidextrous selling. Results confirm that firms with high levels and aligned acquisition and retention capabilities enjoy superior organic growth. However, contrary to expectation, increases in profit growth are only accomplished if acquisition capabilities are high.
This research examines how employees’ climate perceptions – or psychological climate – influence their performance of climate-related outcomes. We focus on two specific climates arguably most relevant to boundary-spanning organizations: service and sales climates. Building from the resource-allocation framework, the authors examine the way employees reconcile these multiple psychological climates. Polynomial regression and response surface modeling are used to test for the influence of these distinct climates on employee outcomes using a sample of 252 marketing employees and their 68 immediate supervisors. Specifically, the authors examine relationships between service and sales climates and the employee performance outcomes of customer satisfaction, helping behavior, effort, and sales performance. Results provide insight into the benefits and pitfalls of sales and service climates co-existing. Specifically we find that while sales effort is highest in climates that heavily favor sales, sales performance may exist in both sales-favored and service-favored climates (yet not in the presence of both). From a customer satisfaction perspective we find no significant impact of increasing sales climate in the presence of high service perceptions. These findings – both significant and non-significant – provide implications for future research in the realm of service-sales ambidexterity and interface as well as insight and direction for frontline managers.
This research investigates the effects of sales-service ambidexterity on salesperson role perceptions, behaviors, and customer satisfaction. Using a business-to-business, salesperson-customer sample, we build and test a model which highlights both the positive and negative consequences of this simultaneous goal pursuit. Specifically, while sales-service ambidexterity positively impacts adaptive selling behaviors, it also increases perceptions of role conflict among salespeople. Customer demandingness moderates these relationships. Taken together, the results provide insights for firms on how to manage their sales force to optimize both sales and service outcomes based on characteristics of their salespeople and customers.
Ambidextrous product selling strategies, in which companies have their salespeople concurrently pursue the sale of existing and new products, are hard to implement. Previous studies have studied this issue for relatively simple consumer settings with the manager in close proximity to the salespersons and focusing on different levels of control and autonomy to resolve this issue. However, little is known about how field salespeople can be influenced to proactively pursue such dual goals for more complex business-to-business products. In this study, the authors distinguish between salespeople’s proactive selling behaviour for new and existing products and study the impact of two alternative mechanisms: a situational mechanism (i.e., perceived manager product-selling ambidexterity) and a structural mechanism (i.e., salesperson organizational identification). Using a time-lagged, multisource data set from a large ambidextrous company, the authors demonstrate that both mechanisms contribute to salespeople’s proactive selling of new and existing products, but also act as each other’s substitutes. The results suggest two most likely strategies for salespeople to obtain overall sales targets: (1) focusing on existing product selling or (2) acting ambidextrously. The latter approach offers the benefits of better obtaining ambidextrous company sales goals and of greater performance stability and thus is preferred.
In business-to-business markets, hunting for new customers and farming existing customers are critical to achieve sales goals. Although practitioners suggest that salespeople have a preference for either hunting or farming, academic research has yet to examine when and why salespeople become oriented toward hunting or farming, and whether a simultaneous engagement in both (i.e., being ambidextrous) is efficient or damaging. In Study 1, the authors identify the link between regulatory focus and salesperson hunting and farming orientations. In Study 2, they demonstrate that (1) a promotion (prevention) focus is more strongly related to salesperson hunting (farming) orientation than is a prevention (promotion) focus, and (2) ambidextrous salespeople generate higher profits when they are customer oriented. In Study 3, the authors show that salesperson expectations about hunting success and the extent to which compensation plans are based on customer acquisition activities can change the direction of the relationship between regulatory focus and salesperson hunting and farming orientations. The authors discuss the implications of these findings for research and management of customer acquisition and retention at the salesperson level.
Frontline employees in traditional customer service units are under increasing pressure to pursue the twin goals of providing quality service while achieving productivity gains by meeting increased sales targets—that is, being service-sales ambidextrous. Drawing from literature on organizational ambidexterity, this study explores forces that facilitate the conversion from a service-only environment to one that emphasizes both sales and service behavior. With a sample of more than 2,306 frontline employees in 267 bank branches, this study examines the impact of contextual variables on service-sales ambidexterity from a multilevel perspective. It then explores the consequences by analyzing objective financial data at the retail branch level, which reveal a significant relationship between ambidexterity and financial performance. Empowerment and transformational leadership are positively associated with service-sales ambidexterity at individual and branch levels; team support is associated with ambidexterity only at the individual employee level. Managers thus should let service workers exercise their own judgment when deciding when or what to up- or cross-sell. The delegation of authority works best for branch office veterans whose service excellence and selling both are recognized and rewarded.
This is a pre-print (post-peer review & non-publisher's document).
When manufacturers introduce a new product to the market, downstream retail partners are faced with inherent trade-offs. Retail sales personnel has to support the new product’s introduction with substantial sales efforts, but also sell the existing products in stock, before storage and devaluation costs spin out of control. This study shows how retail sales managers can guide sales personnel’s performance of new and existing product selling, respectively. The authors argue that a manager may prioritize selling new products, existing products, or both (i.e., have an ambidextrous selling orientation). Based on data gathered from sales representatives and company databases of a large European consumer electronics retailer, the authors perform a time-lagged partial least squares analysis to empirically test their conceptual model. The authors find that ambidextrous sales managers outperform their singular-oriented counterparts if they properly align their orientation with a frontline management mechanism consisting of task autonomy, performance feedback, and employee age. More specifically, ambidextrous managers promote net profit obtainment if they grant their sales employees task autonomy and give little performance feedback. In addition, a remarkable finding is that more aged sales agents tend to outperform their younger counterparts when working under an ambidextrous manager. The authors discuss the implications of these findings.
The author summarizes 11 hypotheses from agency theory, transaction cost analysis, and Ouchi's theoretical approach about the impact of environmental, company, and salesperson characteristics on the design of sales force control systems (outcome- versus behavior-based) and tests them on a data set of 270 German sales organizations. Many of the hypotheses receive empirical support. Sales force size, the only construct for which the author derives two opposing hypotheses, is related negatively to the use of behavior-based control in sales forces. Thus, the hypothesis derived from Ouchi's approach is supported, whereas the contradictory hypothesis from transaction cost analysis is rejected.
The relationship between flexibility and efficiency is re-conceptualized. Much organization theory argues that efficiency requires bureaucracy, that bureaucracy impedes flexibility, and that organizations therefore confront a tradeoff between efficiency and flexibility. Others have pointed out numerous obstacles to successfully shifting the tradeoff. Seeking to advance understanding of these obstacles and how they might be overcome, an auto assembly plant that appears to be far above average industry performance in both efficiency and flexibility is analyzed. NUMMI, a Toyota subsidiary located in Fremont, California, relied on a highly bureaucratic organization to achieve its high efficiency. Analyzing 2 recent major model changes, it is fond that NUMMI used 4 mechanisms to support its exceptional flexibility/efficiency combination. These mechanisms are discussed.
Forms of control systems used in salesforce evaluation and based on the monitoring of outcomes or of behaviors are described, contrasted, and evaluated in terms of emerging theories in economics, organization theory, and cognitive psychology. Generally, the principles of behavior control as opposed to outcome control are found to be consistent with these theoretical perspectives with exceptions as noted, though studies of descriptive trends suggest that outcome control remains useful as a sales management philosophy. The authors conclude with a set of propositions intended to stimulate research on the managerial and behavioral consequences of the two control philosophies.
The authors extend the conceptual work of Anderson and Oliver (1987) and Jaworski (1988) on control in three ways. First, they account for the independent effects of the reinforcement dimension of control, in addition to the information dimension traditionally studied. Second, to reflect the varied behaviors that supervisors attempt to control, they disaggregate behavior control into activity control and capability control. Third, they delineate the direct and mediated effects of control on salespeople. Their proposed framework was tested with data collected from 270 salespeople in five industrial product divisions of two Fortune 500 companies. The findings suggest that managers must carefully match controls-in-use with desired results. Overall, the results show that information and reinforcement effects vary, which suggests the need to distinguish between the information provided and the actual reinforcements administered to salespeople. They also show that activity and capability control have different effects and draw a sharp distinction between two types of behavior control. Finally, the results suggest that supervisory controls primarily have indirect effects on salesperson performance, but both direct and indirect effects on satisfaction
This study investigates how to direct and assemble the sales force for new product selling. In a first step, the authors draw on self‐determination theory to explore and empirically test a threefold conceptualization of motivation. Results provide insights into why sales force steering works differently in the new product selling context. Specifically, results show that for new products’ financial performance, internalized new product selling motivation is more important than intrinsic and controlled motivation. In a second step, the authors show how firms can motivate different sales reps to achieve higher financial performance of new products. In doing so, they examine the interaction effects of sales reps’ predispositions and widespread firm steering instruments on new products’ financial performance. Results reveal that the new product sales orientation of the bonus strengthens the positive relationship between sales reps’ performance predisposition and new product financial performance but weakens the relationship between sales reps’ learning predisposition and financial new product performance. Moreover, results reveal that the new product sales orientation of the periodic review strengthens the positive relationship between sales reps’ learning predisposition and financial new product performance. A post hoc analysis shows that a differentiated steering approach that matches appropriate steering instruments with sales reps’ varying predispositions substantially enhances reps’ financial new product performance.
This article is protected by copyright. All rights reserved.
This study examines how employee customer and selling orientations, and their interaction, impact frontline employees’ (FLEs) pursuit of service and sales-related performance outcomes. Applying a job demands-resources lens, we advance a model that explores service-sales ambidexterity at the individual level. Polynomial regression and response surface analysis are used to assess how varying levels of customer and selling orientation relate to FLE outcomes. Our findings indicate that commitment to service quality and sales performance are highest when employees are singularly focused on one or the other. However, when required to be ambidextrous—that is, when employees must maintain a dual focus—these outcomes begin to suffer as employees are unclear of their role in the organization. While ambidextrous employees experience role conflict, they are also more likely to use creativity in their selling activities. These positive and negative consequences of ambidexterity underscore both the potential risks and rewards of a dual orientation on the front line.
Purpose
The purpose of this paper is to extend the previous regulatory focus and sales force control literature suggesting that organizational control system not only moderates but also mediates the interactive effect of the assessment × locomotion on salesperson ambidextrous behavior. Organizational control system, which has behavior and outcome dimensions, moderates the effects of employee regulatory focus on their ambidextrous behavior, sales performance, and satisfaction.
Design/methodology/approach
The authors conducted a survey with 163 bank frontline employees (FLEs) who sell financial products to final consumers. Each respondent was approached by a professional interviewer who presented the questionnaire and collected the answers. These respondents are FLEs, who are the ones that sell financial services and are responsible for post-sales services, such as answering customer questions and account problems. In the sample, FLEs are the primary source of revenue generation and services activities (ambidextrous features) in banking sector, similar to Bailey et al. (2016).
Findings
First, the moderating and mediation analysis showed that the interactive effect of both regulatory focus, locomotion and assessment, predicts FLE ambidextrous behavior. Second, this interaction effect suffers a three-way interaction under organizational control system. Third, organizational control system also moderates the impact of ambidextrous behavior on performance, such that outcome-based control system amplifies the relationship. Fourth, the authors found a conditional indirect effect, in such ambidextrous behavior, mediates the indirect effect of control system on sales performance, generating stronger (vs weaker) results under an outcome-based control system (vs behavior-based control system).
Research limitations/implications
Since this study adopts the cross-sectional research design, the authors could not empirically demonstrate the causality of the relationships among constructs. The authors also analyzed the organizational control system from the FLEs perspective and not from the supervisors/managers perspective, who daily control employees activities.
Originality/value
The authors propose a conditioning indirect mediating impact of control system on performance and consumer satisfaction through ambidextrous behavior and explore the regulatory focus-ambidexterity-performance moderating chain, theorizing that this sequence depends on the level of control system.
Purpose
The demand for efficient and flexible workers is growing in the service industry, with the promise of enhanced revenue generation and customer retention. The purpose of this paper is to investigate the antecedents (i.e. intrinsic motivation (IM)) and consequences (i.e. service performance (SP)) of front line employees’ ambidextrous behaviours, as well as the moderating roles of a proactive personality (PP), emotional intelligence (EI) and extrinsic reward (ER) in the IM-individual ambidexterity (IA) relationship.
Design/methodology/approach
A self-administered questionnaire was designed to collect empirical data from 205 flight attendants working at a Taiwanese airline company. Hierarchical regression analysis is used to test the proposed relationships and estimate factor affecting employees’ SP.
Findings
The results confirm that IM is positively related to ambidextrous behaviour, which in turn improves SP. EI positively moderates the relationship between IM and IA, while a PP and ER negatively moderate it.
Practical implications
This paper entails useful implications for service providers to better understand front line employees’ ambidextrous behaviours and determine effective recruitment and reward management strategies that reflect the differing employee characteristic.
Originality/value
This study addresses the important issue of ambidextrous behaviours in a service-oriented context by examining whether and how PP, EI and ER moderate the relationships among IM, IA and SP.
Historically, marketing control research has involved either the development of output-oriented financial controls or the analysis of how financial controls affect performance. This work on marketing control is limited in that it (1) has focused primarily on the control of marketing plans/activities, not on the control of marketing personnel, (2) fails to capture all controls operating within the marketing unit, (3) does not consider environmental conditions that both influence the use and moderate the effects of controls, and (4) ignores the behavioral and psychological impact of controls on individuals. To overcome these limitations, a theory integrating environmental context, controls, and the consequences of controls is proposed. Previous research is categorized within the framework, relevant propositions are advanced, and directions for future research are proposed.
A fourfold typology of supervisory feedback is developed by crossing the locus of feedback (output vs. behavior) with the valence of feedback (positive vs. negative) provided to salespeople. Findings from an empirical study suggest that positive feedback serves an informational and a motivational function and has a significant effect on salespeople's performance and satisfaction. In contrast, negative feedback serves an informational function, but not a motivational function, and improves performance to a relatively small extent. Further, whereas positive output feedback is found to have the strongest total effect on performance, positive behavioral feedback appears to have the strongest total effect on satisfaction. Interestingly, neither negative output feedback nor negative behavioral feedback seems to reduce salespeople's satisfaction with supervisors. Finally, contrary to expectations, salespeople's acceptance of supervisory feedback does not appear to moderate these relationships in general.
The author examines two different theories-traditional and contingency-of negative employee responses to marketing control systems. Traditional control theory draws on the humanistic perspective to suggest that controls have negative consequences because they limit employee autonomy and signal a lack of trust in employees. Contingency theory, on the other hand, posits that employee response depends on the degree to which the control used fits the job context. The author examines two types of job contexts, namely, task and supervision. Tasks are characterized along two dimensions, namely, performance documentation and procedural knowledge. Supervision is captured by three factors-the degree to which employees perceive that they are allowed to participate, that supervisors are knowledgeable about their performance, and that supervisors are considerate. Using dysfunctional behaviors as the focal negative response, the author finds stronger support for the traditional perspective compared with the contingency perspective.
In a previous volume of this journal, the authors presented a behavior versus outcome sales control continuum based on methods of monitoring, directing, evaluating, and compensating the salesperson's efforts and results. They empirically test their propositions about how control system perceptions influence salespeople on a diverse sample of sales representatives. They find that the predicted effects of control philosophy on affective and motivational states are generally supported whereas the effects on sales strategies or performance outcomes are not. Organizational culture differences are also observed.
Organizations evolve through periods of incremental or evolutionary change punctuated by discontinuous or revolutionary change. The challenge for managers is to adapt the culture and strategy of their organizations to its current environment, but to do so in a way that does not undermine its ability to adjust to radical changes in that environment. They must, in other words, create an ambidextrous organization—one capable of simultaneously pursuing both incremental and discontinuous innovation.
Operational efficiency is a central goal of service firms. The past decade witnessed the replacement of people with IT systems in service industries, yet the spotlight recently shifted to how frontline employees (FLEs) might perform a dual role by achieving sales and service goals simultaneously. This study examines the predictive ability of three well-established constructs (psychological climate perceptions, leader–member exchange, and employee self-efficacy) to model sales and service performance empirically across a range of service settings. The authors also examine the moderating impacts of environmental dynamism and employee experience, to identify the conditions in which climate, leader–manager exchange, and self-efficacy have greater or weaker impacts on FLEs' ability to meet both sales and service targets. The results indicate the significance of all three main effects in driving sales and service performance and support the moderating effects of environmental dynamism and experience.
Anderson and Oliver (1987) presented a behavior vs. outcome sales control taxonomy based on methods of monitoring salespersons' effort. Under an outcome system, sales revenue is thought to be a sufficient criterion for sales proficiency. Under a behavior system, the sales process itself is critical and “input” monitoring activities are maximized. Oliver and Anderson (1994) tested these differences on salesperson perceptions and found effects on affective and cognitive consequences. This paper extends these findings and shows that, while conventional behavior and outcome strategies appear to be operating in accord with theory, evidence is found for an integrated or “hybrid” philosophy exhibiting degrees of both. The incidence and nature of such strategies are discussed in terms of their consequences and implications.
We investigated contextual organizational ambidexterity, defined as the capacity to simultaneously achieve alignment and adaptability at a business-unit level. Building on the leadership and organization context literatures, we argue that a context char- acterized by a combination of stretch, discipline, support, and trust facilitates contex- tual ambidexterity. Further, ambidexterity mediates the relationship between these contextual features and performance. Data collected from 4,195 individuals in 41 business units supported our hypotheses. A recurring theme in a variety of organizational literatures is that successful organizations in a dy- namic environment are ambidextrous—aligned and efficient in their management of today's busi- ness demands, while also adaptive enough to changes in the environment that they will still be around tomorrow (Duncan, 1976; Tushman & O'Reilly, 1996). The simple idea behind the value of ambidexterity is that the demands on an organi- zation in its task environment are always to some degree in conflict (for instance, investment in cur- rent versus future projects, differentiation versus low-cost production), so there are always trade-offs to be made. Although these trade-offs can never entirely be eliminated, the most successful organi- zations reconcile them to a large degree, and in so doing enhance their long-term competitiveness. Authors have typically viewed ambidexterity in structural terms. According to Duncan (1976), who first used the term, organizations manage trade-offs between conflicting demands by putting in place "dual structures," so that certain business units—or groups within business units—focus on alignment, while others focus on adaptation (Duncan, 1976).
Examines the correlation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. Also discusses the difficulty in balancing resource management between gaining new information about alternatives to improve future returns (i.e., exploration) and using information currently available to improve present returns (i.e., exploitation). Two models which evaluate the formation and use of knowledge in organizations are developed. The first is a model of mutual learning in a closed system having fixed organizational membership and stability. The second is a model which considers the ways in which competitive advantage is affected by knowledge accumulation. The analysis indicates that the choice to rapidly develop exploitation over exploration might be effective in the short term, but is potentially detrimental to the firm in the long term. (SFL)
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