As the BMS entails a “system, structure or culture” (Santos-Vijande et al. 2013;
Lee et al. 2008) that allows for the implementation of brand-related activities, the question arises what kind of organizational structure would help to facilitate or hinder its development? Organizational structures have been established as an important contributor of organizational outcomes (John and Martin 1984; Moch and Morse 1977), as it represents a factor under the control and influence of the firm itself, i.e. how work is coordinated and executed (John and Martin 1984).
Therefore, it is highly relevant to evaluate the impact of different organizational structures on the development of the BMS. In the field of marketing strategy, the following organizational structures have been regarded as particularly important;
centralization, formalization and specialization (Vorhies and Morgan 2003, 103).
Specifically, formalization and centralization tend to be positively related, but they vary inversely with specialization (Ruekert, Walker, and Roering 1985, 20;
Hage 1965).
2.4.2.1 Centralization, and the BMS
Centralization refers to “the degree to which members participate in decision-making” (Aiken and Hage 1966, 497). Specifically, an important aspect of it is the degree of hierarchy of authority – this means the extent to which employees are assigned to tasks, and thereafter provided with the power to implement them without interruption of superiors (Aiken and Hage, 1966, 498). In highly centralized firms, only one or a few superiors hold most of the decision-making authority, while in the decentralized firms the decision authority is delegated to middle- and lower-level managers (Olson, Slater and Hult 2005, 51; Walker and Ruekert 1987, 27). Ruekert, Walker, and Roering (1985, 15) outline that
centralization has the advantage as it leads to greater effectiveness because of the decision maker’s ability to plan, coordinate, and control marketing activities. In addition, the route for final approval of any decision travels quickly, and after the decision is made the implementation of marketing actions can be considered as straightforward in centralized firms (Olson, Slater and Hult 2005, 51).
It can be argued, that consistency in a firm’s action may be more prominent in centralized firms than in the decentralized organizations, as the decision-making
authority is centered around only one or a few top managers that possess a broad overview over the firm, instead of a fragmented decision-making structure where the decisions are taken with a standpoint from a narrow area within the company, and not based on the company as a whole. For example, Rust, Moorman, and Bhalla (2010, 98) argue for the necessity of a customer-cultivating organization, where the chief customer officer should report to the chief executive officer, who has the ultimate responsibility for designing and implementing the firm’s
customer relationship strategy and overseeing all customer-facing functions. In addition, it is also reasonably to assume that in centralized firms the response to changes in the market can be better managed than in decentralized firms. This is due to its nature of fast implementation and decision-making process.
Due to the arguments above, centralization has the potential to protect and substantiate some of the central aspects of the BMS; 1- consistent delivery of the brand, 2- implementation and control of brand-related activities in a coordinated way, and 3- a dynamic capability, enabling adaptation to changing market requirements (Santos-Vijande et al. 2013, 149-150). As centralization has the ability to satisfy, and fit well with these aspects of BMS, we expect that
centralization will be a positive contributor to the BMS. Thus, we hypothesize as follows:
H5: Centralization has a positive effect on the BMS
2.4.2.2 Formalization, and the BMS
The organizational structure of formalization has been regarded from the angle of how decisions and working relationships are governed by formal rules and
standard policies and procedures (Walker and Ruekert 1987, 27). In other words, it can be viewed as a reflection of leadership style. A commonly used definition of the nature of formalization is the degree to which workers are provided with rules and procedures that deprive, versus encourages creative, autonomous work and learning (Nahm, Vonderembse, and Koufteros 2003, 285; Koufteros and
Vonderembse 1998; Damanpour 1991; Ettlie, Bridges, and O’Keefe 1984; Dewar and Werbel 1979; Pierce and Delbecq 1977; Aiken and Hage 1971; Evan and Black 1967; Thompson 1965). Even though formalization can be a prescriber of solutions through an increased amount of written rules, and procedures - it can
also be an important facilitator in how to deal with issues (Nahm, Vonderembse, and Koufteros 2003, 286).
John and Martin (1984) underpin the diversity of organizational structures that can be evident in one single organization - hence there is a necessity to specify the level of analysis to include those activities and workflows of relevance.
Consequently, when dealing with the challenge of how firms should structure the workflow, e.g. through formalization - it is important to focus on the relevant tasks that characterize the marketing department and its corresponding marketing activities - which is the focus of our study.
Marketing planning is an important component of brand-related activities. John and Martin (1984) regard planning as how organizations intend to handle the future, and the changing environment it operates in. This means that planning is the organizational tool that facilitates the investigation and discovery of the desired actions and outcomes, and where environmental changes have been taken into consideration (John and Martin 1984, 170). One of the major responsibilities of the marketing department is the implementation of marketing programs that undergo the process of marketing planning (Andrews and Smith 1996, 17). John and Martin (1984) showed that marketing planning procedures that are
formalized, have a positive effect on both credibility, and utilization. Due to the argumentation above, we expect that formalized marketing planning would positively impact the BMS, as the nature of it has the potential to encourage learning (Nahm, Vonderembse and Koufteros 2003, 282). The latter is a crucial component of the BMS, which is reflected through the dimension of internal branding - meaning that employees are sufficiently educated, trained and informed about the brand (Santos-Vijande et al. 2013). Also, we expect that formalized marketing planning would positively impact the dynamic capability of the BMS, as it brings important insight into how organizations should plan, and align themselves with a changing marketplace.
H6: Formalization has a positive effect on the BMS
2.4.2.3 Specialization, the BMS, and Performance
In highly specialized organizations, there are a higher proportion of “specialists”
with well-defined set of activities (Olson, Slater, and Hult 2005, 52; Ruekert, Walker, and Roering 1985). According to Vorhies and Morgan (2003, 103), the organizational structure characteristic of specialization refers to “the extent to which marketing activities are narrowly divided into unique elements that are performed by those with specialized knowledge”. Olson, Slater, and Hult (2005, 61) state that in contexts where a firm’s focus is on efficiency-related advantages, reliance on marketing generalists (i.e. the opposite of specialists) is beneficial as they are able to address multiple marketing tasks that in particular help to control costs. Ruekert, Walker, and Roering (1985), cited in Walker and Ruekert (1987, 27), point out that an unspecialized structure is likely to be associated with efficient performance within marketing departments. In contrast, as a specialized structure within a marketing department seems to entail a division of marketing activities, with specialists working independently with these tasks, crucial information may remain exclusively in possession of these specialists. In other words, it is reasonable to believe that the information flow and coordination evolving around the marketing activities are less apparent in specialized structured marketing departments than in unspecialized ones – where the latter entails that the marketing employees works with several and possible even overlapping activities, in which they possess common knowledge. As the BMS involves sharing relevant information, as well as implementing and controlling the brand-building activities in an integrated and coordinated way (Santos-Vijande et al.
2013, 149; Kim and Lee, 2007), we expect that specialization can have a destructive effect on the BMS because of its nature. Thus, we hypothesize that:
H7a: Specialization has a negative effect on the BMS
Moreover, with a transaction cost perspective, it is found that market failures are more likely to occur when tasks require highly specialized assets, as the
investments or the knowledge are so task specific that it cannot be transferred to other tasks (Ruekert, Walker, and Roering 1985, 17). In addition, creating specialized structures are not likely to be efficient ways to achieve marketing goals such as cost-based advantages (Vorhies and Morgan 2003, 104). Having the above, and the latter findings in mind, specialization seems to be negatively
related to such marketing performance outcomes, and therefore we expect that it specifically has a negative impact on the firm’s customer performance.
H7b: Specialization has a negative effect on the firm´s customer performance
2.4.2.4 Horizontal Integration, and the BMS
Another frequently researched aspect of the realm of organizational structure relates to the level of horizontal integration, which has been defined as “the degree to which departments and workers are functionally specialized (i.e. low level of horizontal integration) versus integrated in their work, skills, and training (i.e. high level of horizontal integration)” (Nahm, Vonderembse and Koufteros 2003, 287; Vonderembse, Ragunathan and Rao 1997; Davenport and Nohria 1994; Doll and Vonderembse 1991). Ghoshal and Gratton (2002) point to a change in management focus which entails moving towards horizontal integration and unity, and away from running an organization consisting of separate divisions with little incentives to knowledge-sharing when performance is measured on individual contributions, instead of benefits to the overall performance of a firm.
Hong, Doll, Revilla and Nahm (2011) find that horizontal integration through the provision of cross-functional teams with common knowledge are better equipped to think strategically, possess adaptive behavior, and get involved in new ideas that achieve satisfactory goals. The structure of horizontal integration has been highlighted as an effective mean in how to deal with a changing environment, and where cross-functional teams are brought together that align employees in how to respond to customers’ needs (Nahm, Vonderembse and Koufteros 2003, 287).
Organizations, characterized by horizontal integration, has been found to hold a high focus on organizational learning (Chen, Qiao, Lee 2014). Consequently, we expect a positive contribution from horizontal integration on the BMS - as the former functions as a supportive organizational structure that enables a firm to internalize, align and adopt the brand orientated culture across functions.
Additionally, we expect that horizontal integration by the use of cross-functional teams generate more knowledge-sharing among employees, which is a positive antecedent to the education of employees that intend to bring knowledge and understanding of the brand’s identity
2.4.2.5 Communication, and the BMS
Another structural dimension is the communicational aspect within firms. In line with Nahm, Vonderembse, and Koufteros (2003, 287), this study describes an optimal communication as a vertical and horizontal communication that is fast, easy, and abundant. These are the characteristics of an organic organization, whereas a non-communicative and inorganic organization can be described as a vertical and horizontal communication that is slow, difficult, and limited (Nahm, Vonderembse, and Koufteros 2003, 287). An optimal communication entails a cross-functional communication where learning and creativity particularly are present as knowledge and information are easily transmitted (Nahm,
Vonderembse, and Koufteros 2003, 289). This implies that people from different functional areas within the firm posses a fundamental common knowledge, which again is beneficial as it will be easier for the employees from different
departments to understand each other. The importance of communication across functions is emphasized by Webb, and Lambe (2007, 30), stating that in order to integrate multiple channels within a firm, one of the key behaviors to achieve this is effective internal communication. Moreover, faster and easier vertical
communication enhances the responsiveness to market changes (Nahm, Vonderembse, and Koufteros 2003, 287).
Sharma, and Kamalanabhan (2012) look specifically at the link between internal corporate communication, and internal branding outcomes. The authors find that these two aspects are closely related, where internal corporate communication can create a strong sense of brand identification, brand loyalty, and brand commitment among the employees in the company. The importance of communication with regards to internal education of the marketing concept is emphasized by Christian (1962). The author states that all employees should have some general idea of the basic elements of the marketing concept, and that this can only be achieved through proper communications and educational techniques which reach throughout the company (Christian 1962, 81). Interestingly, Hughes (2013) suggests that a salesperson’s perceived advertising quality influences the
salesperson’s brand identification, but that this relationship is much stronger when accompanied by internal communications. This means that internal
communication is a crucial factor in order to make the employees identify with a brand.
In sum, based on the existing literature, communication seems to promote
education and training of the employees, and help them identify with the brand, as well as understand the meaning of the brand across functions – which are central parts of the dimension internal branding within the BMS. In addition,
communication also facilitates the dynamic capability of the BMS, due to the enhanced responsiveness to market changes. Having this foundation is the reasoning of the following hypothesis:
H9: Communication has a positive effect on the BMS