Business strategy, marketing organization culture,and performance

Stanley F. Slater & Eric M. Olson & Carol Finnegan

Published online: 4 August 2010# Springer Science+Business Media, LLC 2010

Abstract Drawing on configuration theory, we develop and test a model whichposits that overall firm performance will be influenced by how well the marketingorganizations cultural orientation (i.e., market, adhocracy, hierarchy, or clan)complements alternative business strategies (i.e., Prospector, Analyzer, Low-CostDefender, Differentiated Defender) after controlling for other, key firm-levelvariables. Responses from a sample of senior marketing managers provide partialsupport for the model and demonstrate that high-performing businesses of onestrategy type have a different cultural orientation than high-performing businesses ofthe other strategy types. And, contrary to previous research, the results of this studyshow that each of the cultural orientations may play a role in creating superiorperformance. We conclude with a discussion of the implications for scholars and formanagers.

Keywords Business strategy . Organizational culture . Performance . Configurationtheory . Strategy implementation . Miles and snow .Marketing organization

Mark Lett (2011) 22:227242DOI 10.1007/s11002-010-9122-1

S. F. Slater (*)Business Administration, College of Business, Colorado State University, Fort Collins,CO 80523-1278, USAe-mail: stan.slater@business.colostate.edu

E. M. OlsonCollege of Business Administration, University of ColoradoColorado Springs,Colorado Springs, CO 80933-7150, USAe-mail: eolson@uccs.edu

C. FinneganCollege of Business Administration, University of ColoradoColorado Springs,Colorado Springs, CO 80933-7150, USAe-mail: cfinnega@uccs.edu

1 Introduction

Marketings contribution to business strategy success has been a central theme inmarketing scholarship since, at least, the publication of Walker and Ruekerts (1987)Maynard Award winning article, Marketings Role in the Implementation ofBusiness Strategies: A Critical Review and Conceptual Framework. The basicquestion they asked (p. 15) was, Given a specific type of strategy, what marketingstructures, policies, procedures and programs are likely to distinguish highperforming business units from those that are relatively less effective, efficient,and adaptable? The proposition that the firms organizational architecture mustmatch its business strategy is the essence of configuration theory (e.g., Drazin andVan de Ven 1985; Miller and Mintzberg 1988). Configuration theory posits that foreach business strategy there is a configuration of organizational characteristics thatbest complements the strategy to yield superior performance (e.g., Doty et al. 1993).Walker and Ruekert's (1987) seminal article has spawned a rich set of studies thathave addressed the contribution of marketing strategy and marketing organizationcharacteristics to the success of the different strategy types. For example, in thecontext of different business strategy types, Matsuno and Mentzer (2000) studied therelationship between market orientation and performance McKee et al. (1989) andSlater and Olson (2001) studied the relationship between marketing strategy andperformance, while Olson et al. (2005) and Vorhies and Morgan (2003) studied therelationship between the structure of the marketing organization and performance.All found that different business strategy types were more effective when supportedby appropriate marketing organization characteristics.

An area that has yet to be studied is the match between business strategy andorganizational culture. As Barney (1986, p. 656) noted, Firms that have cultureswith the required attributes can obtain sustained superior financial performanceJust as different business strategies benefit from different marketing strategies andfrom different marketing organization structures, we expect to find that differentmarketing organization cultures are required for the success of different businessstrategies.

2 Overview of the major constructs

2.1 Business strategy

Business strategy is concerned with the organization-wide decisions that focus onachieving competitive advantage. The two dominant frameworks of businessstrategy are the Miles and Snow, and Porter typologies. Miles and Snows (1978)framework addresses alternative ways in which organizations approach theirproductmarket domains (the entrepreneurial problem) and construct structures andprocesses (the administrative and technical problems) to successfully implementtheir strategy. They identified four archetypes of how firms address the entrepre-neurial problem. Prospectors continuously seek to locate and exploit new productand market opportunities while Defenders attempt to seal off a portion of the totalmarket to create a stable set of products and customers. Analyzers occupy an

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intermediate position by cautiously following Prospectors into new productmarketdomains while also protecting a stable set of products and customers. A fourth type,the Reactor, does not have a consistent response to the entrepreneurial problem.Porter (1980) proposed that business strategy should be viewed as a product of howthe firm creates competitive advantage (i.e., differentiation or low cost) and how itdefines scope of market coverage (i.e., focused or market wide). Walker and Ruekert(1987) synthesized these strategy typologies by discriminating between Low-CostDefenders and Differentiated Defenders.

Consistent with the concept of equifinality (e.g., Hrebiniak and Joyce 1985), wefound no significant differences among the average performance levels of the fourproactive strategy types. As within-group performance variation is greater thanbetween-group performance variation, we assert that, along with matching strategyto environmental conditions (e.g., market turbulence and competitive intensity) andpossessing appropriate resources, a major reason for the achievement of superiorperformance for a particular strategy is an appropriate organizational configuration.

2.2 Organizational culture

Larry Bossidy, former CEO of AlliedSignal and Honeywell, argued (Bossidy andCharan 2002, p. 15) that Strategies most often fail because they aren't executedwell. Things that are supposed to happen don't happen. This begs the question ofwhat does it take to make sure that the right things happen? We posit that this islargely a matter of ensuring that behaviora product of cultureis aligned withstrategy. Deshpande and Webster (1989, p. 4) describe culture as the pattern ofshared values and beliefs that help individuals understand organizational functioningand thus provide them norms for behavior (our emphasis) in the organization.Barney (1986, p. 657) elaborates, further explaining that a firm's culture not onlydefines who its relevant employees, customers, suppliers, and competitors are, but italso defines how a firm will interact with these key actors. Thus, a strong culturefacilitates understanding of the business's strategy by employees and motivatessupportive behaviors by socializing members through mentoring, storytelling, andexample. Consequently, if the success of business strategy is dependent onappropriate behavior, then it is essential for the organization to have a supportiveculture.

Furthermore, culture is a source of competitive advantage when it enables thebusiness to execute its strategy more effectively or efficiently. An organizationsculture should have characteristics that are not common to the cultures of itscompetitors, and, as an invisible asset, should be difficult for competitors to imitate(Barney 1986, 1991). Culture, when matched to business strategy as we describebelow, is a valuable resource as it promotes both effectiveness and efficiency. Thecompeting values framework is an established model for representing culture (Quinnand Rohrbaugh 1983). This framework recognizes that managers must make choicesthat reflect two kinds of the tensions that exist in organizationsinternal vs. externalorientation and the need for control vs. the need for flexibility. This two-dimensionalrepresentation produces four culture types. The Adhocracy type is characterized byflexibility and an external orientation that produces entrepreneurial and creativebehaviors. The Market type is distinguished by control and an external orientation

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that produces highly competitive behaviors. The Clan type is exemplified byflexibility and an internal orientation that produces relationship-building behaviors.The final type is the Hierarchy, characterized by control and an internal orientationthat produces behaviors focused on predictability and smooth operations. While allorganizations exhibit attributes of each of the culture types, one culture type tends todominate.

Deshpande et al. (1993), in their study of the impact of culture, customerorientation, and innovativeness on performance in Japanese firms, found a Market >Adhocracy > Clan > Hierarchy ordering in impact on performance. Deshpande andFarley (2004) summarized the results of the original study along with those from fiveother studies that replicated the earlier study in a variety of national contexts. Theyfound positive relationships between both the Market and Adhocracy cultures andperformance and negative relationships between the Clan and Hierarchy cultures andperformance in all six studies although the relationships were not always significant.They concluded that As a general matter, relatively open, externally orientedorganizational cultures related to better performance, while relatively closed, internallyoriented organizational cultures related to poorer performance (p. 18).

While these findings suggest an orderly cultureperformance path (M > A >C > H), configuration theory suggests that, just as other organizationalarchitecture elements (e.g., structure, strategy formation process, capabilities)should be matched to context, so too should organizational culture. Rather thanconclude that one culture is inherently superior to others, we believe it is thedevelopment of a reinforcing set of strategy, structure, systems, capabilities, andculture that produces a high-performance organization (e.g., Galbraith andKazanjian 1986). Thus, culture and strategy are codependent. It is only whenappropriate matches are made that the chances for superior firm performance areoptimized. In this study, we focus on these issues within the marketingorganization because of marketings central role in strategy formation andimplementation (e.g., market scanning, target market selection, customer needidentification that influences product feature assortments, pricing, customerrelationship management approaches, and sales force management).

We now turn to the development of hypotheses that describe the most appropriatematches between culture and strategy. Each strategy type, with the exception of theAnalyzer which has a dual focus, has a primary focus (Miles and Snow 1978;Walker and Ruekert 1987), and as such our first hypothesis is our primaryhypothesis. However, the descriptions of the strategy types suggest the presence ofbehaviors that are the product of different cultural orientations. Thus, we also offer asecond, complementary hypothesis based on a shared focus on external orientation,internal orientation, flexibility, or control.

3 Hypotheses

3.1 Prospectors

Prospectors are the most entrepreneurial of the strategy types (Miles and Snow1978). Because of the uncertainty surrounding the development of new products that

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either cause a low-end disruption by providing a reduced feature set product at alower price or a high-end disruption by providing an innovative product(Christensen and Bower 1996), the Prospector must maintain flexibility instrategy-making process so that it can adapt quickly to new information (Conant etal. 1990; McKee et al. 1989). Prospector performance is enhanced when decision-making authority is extended down to lower-level managers within the marketingorganization and rigid rules and policies are supplanted by discretion and informalcoordination mechanisms (Vorhies and Morgan 2003). To find opportunities, themost effective Prospectors are oriented externally to understand customers latentneeds and on the technological environment that may be the source for solutions tothose needs (Slater et al. 2007). At the same time, Prospectors are results-oriented(Miles and Snow 1978, p. 63) and utilize structured product development programs(e.g., Cooper 2008). These are characteristics of the Market culture. Thus, we predictthe following:

HP1: There is a positive relationship between emphasis on the values in anAdhocracy culture and performance for Prospector businesses.HP2: There is a positive relationship between emphasis on the values in aMarket culture and performance for Prospector businesses.

3.2 Analyzers

If Prospectors are the most entrepreneurial of the strategy types, Analyzers may bethe most competitive. They have the dual challenge of competing with Prospectorsfor early adopters by introducing more innovative, higher-quality, or lower-pricedversions of the Prospectors products and of competing with other Analyzers andwith Defenders in the mass market to protect the core products and markets thatgenerate the necessary resources for their entrepreneurial activities (Slater et al.2007). Analyzers require an external focus on both competitors, to develop an in-depth understanding of their customer value propositions, and on customers, tounderstand their perceptions of the strengths and weaknesses of competitiveofferings to develop and bring their new and improved products to market (Olsonet al. 2005). They must have rigorous processes for market scanning so that they canmove quickly once a Prospector demonstrates the viability of a new product or anew market. And, because they will identify more opportunities than they canpursue, they must have a rigorous process for evaluating those alternatives (Conantet al. 1990). Thus, we predict the following:

HA1: There is a positive relationship between emphasis on the values in aMarket culture and performance for Analyzer businesses.HA2: There is a positive relationship between emphasis on the values in aHierarchy culture and performance for Analyzer businesses.

3.3 Low-Cost Defenders

To develop, distribute, and promote quality products or services at the lowestoverall cost, which enables them to compete on price, Low-Cost Defenders

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focus on efficiency through standardized practices in both operations andmarketing rather than on effectiveness that stems from creativity (Walker andRuekert 1987). Strategy making is a formal process that proceeds through asequential set of steps that are both efficient and effective (Conant et al. 1990).The most effective Low-Cost Defenders tend to be mechanistic with coordinationachieved through formal rules, procedures, and integration devices (Milesand Snow 1978; Vorhies and Morgan 2003) which are characteristic of theHierarchy.

Another aspect of this strategy is price competition (Slater and Olson 2001). Pricecompetition is a particularly aggressive strategy in that it may provoke price wars(Porter 1980). Low-Cost Defenders benchmark both prices and cost structurethrough their outward focus on competitors. This aggressiveness and outward focusare characteristics of a Market culture. Thus, we predict the following:

HLC1: There is a positive relationship between emphasis on the values in aHierarchy culture and performance for Low-Cost Defender businesses.HLC2: There is a positive relationship between emphasis on the values in aMarket culture and performance for Low-Cost Defender businesses.

3.4 Differentiated Defenders

Successful Differentiated Defenders provide consistently superior service and/orproduct quality at a premium price. Consistency is the product of the operationallyexcellent firm (e.g., Zeithaml et al. 1988). The Differentiated Defenders valueproposition is based on a nuanced understanding of its customers. Meehan et al.(2007) found that customer-oriented behaviors were more prevalent in Clans andAdhocracies than in Markets or Hierarchies. On the one hand, the finding that Clansare highly customer-oriented is counterintuitive since their focus is internal, oncreating teamwork and a sense of family. However, employees of Clan organizationsmay see customers as part of their extended family and treat them as they wouldfellow employees. Furthermore, delivering consistently superior service requiresintense communication among team members (Zeithaml et al. 1988), anothercharacteristic of the Clan.

Differentiated Defenders also have an entrepreneurial quality. As Walker andRuekert (1987, p. 21) argue, Differentiated Defenders can maintain theirprofitability only if they continue to differentiate themselves from competitors byoffering superior products, services, or other advantages. And, because customercontact personnel are the ones who ultimately deliver service, it is imperative thatthese employees are able to make decisions regarding customer relations withouthaving to check with higher-level managers on every decision. These are character-istics of the Adhocracy. Thus, we predict the following:

HDD1: There is a positive relationship between emphasis on the values in aClan culture and performance for Differentiated Defender businesses.HDD2: There is a positive relationship between emphasis on the valuesin an Adhocracy culture and performance for Differentiated Defenderbusinesses.

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4 Research design

4.1 Sample and data collection

We focused this study on manufacturing and service firms operating in 20different two-digit SIC code industries (classification categories 20, 30, 40) toprovide a reasonably similar context for respondents but also to be broad enoughfor the results to be generalizable. We purchased a commercial mailing list of2,400 senior marketing managers in businesses with 500 or more employeesoperating in these industries. In collecting the data, we followed the guidelinesby Huber and Power (1985) on how to obtain high-quality data from keyinformants. We selected senior marketing managers because they should beknowledgeable about marketing organization culture, business strategy, and firmperformance.

A personal letter, a description of our project, and a questionnaire were sent tothe 2,400 senior marketing managers with a postage-paid return envelope. Thequestionnaire defined the meaning of strategic business unit (SBU) and askedeach respondent to refer to either the largest SBU in the organization or the onewith which they were most familiar. Each letter contained a separate self-addressed postcard with instructions to distribute to another senior managerfamiliar with the focal SBU. Serving as a source of validation in a single-informant study, the cards contained performance measure questions andrequested the participants title. Four weeks after the initial mailing, a follow-up mailing was sent out with a duplicate copy of the questionnaire and a returnenvelope. We received 217 completed questionnaires (Prospectors, 67; Ana-lyzers, 48; Low-Cost Defenders, 42; Differentiated Defenders, 54; Reactors, 6)that, after accounting for undeliverables, constituted a 9.2% response rate. Wealso received matching postcards from 127 (62%) of the businesses that returnedquestionnaires. Seventy-five percent of the participants who returned perfor-mance postcards indicated they held positions of director or vice president ofmarketing within their respective firms.

A relatively low response rate might raise concerns about whether the sampleis representative of the population of interest. However, we are studyingrelationships among variablesnot attempting to estimate population parameters.As Blair and Zinkhan (2006, p. 5) noted, if a relationship is observed across thefull range of the related variables, the measurement of the extent to which the twovariables co-vary is likely to be relatively accurate even if sampling isdisproportionate at different levels of the variables. Calder et al. (1981) arguedthat respondent quality is a more important issue than response rate. Respondentsaveraged 17 years of experience in their business unit and 22 years in the industry.All respondents, except one, which we deleted, described themselves as at leastknowledgeable about strategic issues in their SBU and industry, while 96% of therespondents characterized themselves as very or extremely knowledgeable. Whenwe compared our analyses using the entire sample with the group of very orextremely knowledgeable respondents, we found no difference in regressioncoefficients. We concluded that all of these respondents were sufficientlyknowledgeable to participate in the study.

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4.2 Description of the measures

All constructs with the exception of business strategy were measured with five-pointLikert scales and inserted randomly in the questionnaire to prevent order bias. Quinnand Spreitzer (1991) tested the psychometric properties of the Likert scale measuresof cultural orientation and concluded that it may be used where the data will besubmitted to more complex analyses such as inferential statistics requiring intervalscales (p. 25). We assessed strategy type with the commonly used self-typingparagraph approach. Several studies (e.g., Conant et al. 1990; Shortell and Zajac1990) have shown that this is a valid measurement approach. We used Slater andOlson's (2001) performance measure.

Business unit effects have much greater influence on profitability than do industryeffects (Rumelt 1991). Thus, we focused on and developed measures of thefollowing covariates because of their influence on performance for specific strategytypes. For example, product innovativeness, customer relationship building, andprice advantage should be related to performance for Prospectors; product quality,price advantage, and product innovativeness for Analyzers; relationship marketing,operational excellence, and product innovativeness for Differentiated Defenders; andproduct quality, price advantage, and operational excellence for Low-Cost Defendersas described in Section 3. By controlling for these key variables, we ensure arelatively strong test of the impact of culture on performance.

We found that the questionnaire and postcard assessments of performance werestrongly correlated (r=0.88, p0.95, p

Table 1 Measures

Product quality (CR=0.78)

1. The quality of our current products/services compares well with past offerings

2. The quality of our products/services compares well with competitor products

3. Our products/services are of higher quality than competing products/services

Relationship marketing (CR=0.84)

1. We develop and maintain long-term relationships with key customers

2. Our key customers view us as partners

3. A substantial portion of our business is based on repeat purchases from existing customers

Price advantage (CR=0.66)

1. We charge lower prices than our competitors.

2. Our customers define value primarily based on low pricesa

3. Premium pricing is an important element of our strategy (R)

Marketing operational excellence (CR=0.59)

1. The timeliness of after-sale service in this business unit is excellent

2. We are able to substitute product or service offerings in the event of a delay or stockouta

3. We have a consistent approach to performing key marketing tasks

Product innovativeness (CR=0.80)

1. Customers believe that our products/services offer significant advantages relative to earliergeneration products/services

2. Customers perceive our products/services to be leading edge

3. Customers purchase our products/services because they are innovative

Adhocracy (CR=0.86)

1. The leadership in the marketing organization is generally considered to exemplify entrepreneurship,innovating, or risk taking

2. The marketing organization emphasizes acquiring new resources and creating new challenges.Trying new things and prospecting for opportunities are valued

3. The glue that holds the marketing organization together is commitment to innovation anddevelopment. There is an emphasis on being on the cutting edge

4. The marketing organization is a very entrepreneurial place. People are risk takers

5. The marketing organization defines success on the basis of having the most unique or newestproducts. It is a product leader and innovatora

6. The management style in the marketing organization is characterized by individual risk taking,innovation, freedom, and uniquenessa

Market (CR=0.88)

1. The management style in the marketing organization is characterized by hard-driving competitiveness,high demands, and achievement

2. The marketing organization is very results-oriented. A major concern is with getting the job done.People are very competitive and achievement-oriented

3. The marketing organization defines success on the basis of winning in the marketplace and outpacingthe competition. Competitive market leadership is key

4. The glue that holds the marketing organization together is the emphasis on achievement and goalaccomplishment. Aggressiveness and winning are common themes

5. The leadership in the marketing organization is generally considered to exemplify a no-nonsense,aggressive, results-oriented focus

6. The marketing organization emphasizes competitive actions and achievement. Hitting stretch targetsand winning in the marketplace are dominant

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Hierarchy (CR=0.77)

1. The glue that holds the marketing organization together is formal rules and policies

2. The marketing organization defines success on the basis of efficiencya

3. The leadership in the marketing organization is generally considered to exemplify coordinating,organizing, or smooth-running efficiencya

4. The management style in the marketing organization is characterized by security of employment,conformity, predictability, and stability in relationships

5. The marketing organization emphasizes permanence and stability. Efficiency, control, and smoothoperations are important

6. The marketing organization is a very formal and structured place

Clan (CR=0.87)

1. The marketing organization is a very personal place. It is like an extended family

2. The management style in the marketing organization is characterized by teamwork, consensus, andparticipation

3. The marketing organization defines success on the basis of the development of human resources,teamwork, employee commitment, and concern for people

4. The glue that holds the marketing organization together is loyalty, trust, and organizationalcommitmenta

5. The leadership in the marketing organization is generally considered to exemplify mentoring,facilitating, or nurturing

6. The marketing organization emphasizes trust, openness, and participation

Overall performance (CR=0.86)

1. The overall performance of the business was below expectations last year (R)

2. The overall performance of the business last year exceeded that of our major competitors

3. Top management was satisfied with the overall performance of the business last year

Strategy Type

Please indicate which ONE of the following profiles best describes your business units overall strategy

1. ____: These businesses are frequently the first-to-market with new products or services. They do nothesitate to enter new market segments where there appears to be an opportunity. Thesebusinesses concentrate on offering products that push performance boundaries. Their propositionis an offer of the most innovative product, whether based on substantial performanceimprovement or cost reduction

2. ____: These businesses are seldom first-in with new products or services or to enter emerging marketsegments. However, by monitoring market activity, they can be early followers with a bettertargeting strategy, increased customer benefits, or lower total costs

3. ____: These businesses attempt to maintain a relatively stable domain by aggressively protecting theirproductmarket position. They rarely are at the forefront of product or service development.Instead, they focus on producing goods or services as efficiently as possible. These businessesgenerally focus on increasing share in existing markets by providing products or services at thebest prices

4. ____: These businesses attempt to maintain a relatively stable domain by aggressively protecting theirproductmarket position. They rarely are at the forefront of product or service development.Instead, they focus on providing superior service and/or product quality. Their prices are typicallyhigher than the industry average

5. ____: These businesses do not seem to have a consistent productmarket strategy. They primarily act inresponse to competitive or other market pressures in the short-term

a This item was deleted in the measurement purification process.

Table 1 (continued)

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businesses. We replicated their analysis and, based on the standardized canonicaldiscriminant function coefficients, found an Adhocracy (0.797) > Market (0.527) >Hierarchy (0.426) > Clan (0.067) ordering (p

5.3 Analysis of the Low-Cost Defender model

In the analysis of the Low-Cost Defender model, we found positive effects foroperational excellence (=0.61, p0.001), product quality (=0.28, p0.05), andprice advantage (=0.27, p0.05), but no results for any dimension of culturalorientation. Thus, we reject both HLC1 and HLC2.

5.4 Analysis of the Differentiated Defender model

In the analysis of the Differentiated Defender model, we found positive effects ofrelationship marketing (=0.39, p0.001), operational excellence (=0.19, p0.05), and emphasis on values in the Clan culture (=0.51, p0.001) on

Table 2 Regression analysis standardized regression coefficients (n=201)

Predictor variables Productmarket strategies

Prospectors(n=65)

Analyzers(n=46)

Low-CostDefenders (n=40)

DifferentiatedDefenders (n=50)

Step 1

Product quality NA 0.53*** 0.32* NA

Relationship marketing 0.06 NA NA 0.41***

Price advantage 0.05 0.23* 0.10 NA

Operational excellence NA NA 0.32* 0.21*

Product innovativeness 0.58*** 0.03 NA 0.28**

R2 0.41 0.48 0.35 0.43

Adjusted R2 0.38 0.45 0.30 0.39

F value 14.11*** 13.1*** 6.53*** 11.34***

Step 2

Product quality NA 0.53*** 0.28* NA

Relationship marketing 0.02 NA NA 0.39***

Price advantage 0.07 0.17 0.27* NA

Operational excellence NA NA 0.61*** 0.19*

Product innovativeness 0.35** 0.13 NA 0.26**Adhocracy 0.32** 0.05 0.35 0.16Market 0.04 0.26* 0.25 0.15Hierarchy 0.10 0.23* 0.17 0.01Clan 0.14 0.03 0.01 0.51***R2 0.55 0.60 0.61 0.66

Adjusted R2 0.50 0.52 0.52 0.60

Adjusted R2 (steps 1 to 2) 0.14 0.07 0.22 0.21

F change 4.38** 2.66** 4.80*** 5.09***

The six Reactors are not included in this analysis. One-tailed tests

NA excluded variable

* p0.05; **p0.01; ***p0.001

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performance. We found no relationship between values in the Adhocracy culture andperformance. Thus, we find support for HDD1 but not for HDD2. Inclusion of theculture variables substantially and significantly ( adjusted R2=0.21; p0.001)increased the explanatory power of the model.

5.5 Limitations

The study utilized a cross-sectional design; thus, inferences about causality shouldbe made cautiously. For the performance analysis, we use a single respondent fromeach organization although we validated that respondent's assessment against that ofan independent assessor. We utilized a one-tailed test instead of the moreconservative two-tailed test. Also, the Analyzer and Low-Cost Defender samplesare relatively small. This increases the probability of a type II error. Finally, havingcollected data only from companies with at least 500 or more employees, the abilityto generalize the reported results to smaller companies is restricted.

6 Discussion

We must try to understand why we rejected four hypotheses. As we noted before,Walker and Ruekert (1987) argued that Prospectors, Low-Cost Defenders, andDifferentiated Defenders have an overriding focus. Thus, it seems that a strong,focused culture is most appropriate for these strategy types. However, this does notexplain why no marketing organization culture type influences performance for theLow-Cost Defender. While Slater and Olson (2001) found that Low-Cost Defenderswere most effective when they had a specific marketing strategy, that strategy wasrelatively unsophisticated (i.e., little marketing research, mass market orientation,low price, intensive distribution, and little promotion). Also, both Miles and Snow(1978) and Walker and Ruekert (1987) argued that marketing was not part of thedominant coalition for Low-Cost Defenders. In support of this, Homburg et al.(1999) found that marketing has little influence in firms pursuing a low-cost strategy.Thus, the culture of the marketing organization is subservient to that of operationsand of finance.

Given that only four of our eight hypotheses were supported, our results may becharacterized as exploratory or preliminary and, thus, worthy of further study.However, we believe that even these preliminary results provide useful insights forboth scholars and managers. Specifically, our results contradict those from theDeshpande and Farley studies which consistently show that firms whose dominantculture types are either the Adhocracy or Market consistently outperform firmswhose dominant cultures are either the Clan or Hierarchy. Our results, consistentwith configuration theory, suggest that different culture types provide the norms forbehavior that are essential to the successful execution of different strategy types.Specifically, the values implicit in the Adhocracy culture encourage the externalfocus, flexibility, and risk-taking behavior that are necessary for Prospectors. TheAnalyzer, with its dual emphasis on change and stability, requires a more complexculture reflected by maintaining an equilibrium between the external focus of theMarket culture and the internal focus of the Hierarchy culture. The emphasis on

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control shared by both of these culture types is necessary to accommodate bothstable and dynamic areas of operation (Miles and Snow 1978, p. 79). TheDifferentiated Defender's most valuable assets are its customer relationships that arecreated through its competences in customer service and product/service innovation(Slater and Olson 2001). The Clan culture, with its emphases on relationships andflexibility, encourages the behaviors required by Differentiated Defender. Thus,depending on the business's strategy, each of the cultural orientations is associatedwith performance.

From a practical perspective, the results of this study beg the question of what shouldexecutives in a business that has a misalignment between strategy and culture do?Recognizing that changing either will prove challenging, managers must understand thatthey may have to tackle both simultaneously in order to cope with evolving markets. In2006, Fords executive team saw that it must develop a new strategy to remaincompetitive. But they also realized that the firms entrenched culture posed a barrier tothis. To bring home the point that strategic changes cannot succeed without the properorganizational culture, the executive team hung a banner saying that Culture eatsstrategy for breakfast (McCracken 2006, B1). Fords new strategy was developed in arational, analytical fashion as was the change process for the culture.

Beer et al. (1990) identified the following characteristics of successful changeprograms: (1) set demanding performance goals; (2) mobilize commitment to changethrough joint diagnosis of problems that stand in the way of achieving those goals;(3) develop a shared vision for how to achieve those goals; (4) foster commitment tothe new vision by providing adequate resources; (5) institutionalize change throughformal policies, systems, and structures; and (6) monitor and adjust as problems arisein the change process. By utilizing such a process, the executive team can effectivelyassess where change needs to take place and take the necessary steps to effect thechange.

7 Concluding thoughts

While previous research has shown that businesses with an externally orientedculture outperform those with an internally oriented culture, the results of this studyshow that a match between the culture of the marketing organization and the firmsbusiness strategy is associated with superior performance. Our results also show that,depending on the businesss strategy, the values associated with any of the fourculture types may be associated with superior performance. This is because eachstrategy type requires different types of organizational and individual behavior for itssuccessful execution, and culture provides the norms for those behaviors. The resultsfrom our study should provide valuable guidance to executives as they assessreasons for underperformance and help to pinpoint areas for a change program.

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c.11002_2010_Article_9122.pdfBusiness strategy, marketing organization culture, and performanceAbstractIntroductionOverview of the major constructsBusiness strategyOrganizational culture

HypothesesProspectorsAnalyzersLow-Cost DefendersDifferentiated Defenders

Research designSample and data collectionDescription of the measures

Analysis and resultsAnalysis of the Prospector modelAnalysis of the Analyzer modelAnalysis of the Low-Cost Defender modelAnalysis of the Differentiated Defender modelLimitations

DiscussionConcluding thoughtsReferences