Exploring the Impact of Marketing and Manufacturing Strategies, Conflict, and Morale on Business Performance

Exploring the Impact of Marketing and Manufacturing Strategies, Conflict, and Morale on Business Performance

By David Bruce Montgomery, Aleda V. Roth
2000Working Paper No. 1620

As firms are increasingly transforming their organizations in response to environmental pressures and hypercompetition, the traditional sequence of manufacturing and marketing (hereafter M/M) strategy formulation and implementation is undergoing scrutiny. Questions are being raised about how to gain interfunctional cooperation, how to manage interfunctional conflicts and whether or not the quality of the M/M interface contributes to business performance. In this exploratory investigation of the M/M interface, we propose a model for assessing the quality of this interface and construct a theoretical framework to test it using structural equation modeling (SEM) techniques. In our model, we introduce the notion of manufacturing orientation, which, like the well-documented market orientation, captures the subjective reality of the importance of manufacturing strategy in executing business strategy and managing the balance of manufacturing with marketing. Our model includes predisposing factors (antecedents) and performance outcomes (consequences), which are expected to influence or be influenced by the quality of the M/M interface. We find that M/M harmony and intergroup conflict are distinct but related theoretical constructs that define the quality of the M/M interface. Contrary to conventional wisdom, an increased emphasis on the importance of marketing and manufacturing strategy improves the functions' ability to work together, which in turn favorably influences the firm's competitive position and profit performance. In contrast, emphasis on manufacturing strategy is unrelated to intergroup conflict, while tentative results indicate that an increase in marketing strategy emphasis reduced interfunctional conflict. Higher levels of M/M strategic emphasis also contribute to improved morale. Furthermore, the overall quality of the management team is found to be the most important contributor to profit performance. This study provides empirical evidence that the behavioral or "soft" side of manufacturing strategy merits attention in future research, especially regarding influences on the quality of M/M interface.