European Journal of Marketing

Emerald Article: An empirical investigation into the impact of relationship selling and LMX on salespeople's behaviours and sales effectiveness Nicholas G. Paparoidamis, Paolo Guenzi

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To cite this document: Nicholas G. Paparoidamis, Paolo Guenzi, (2009),"An empirical investigation into the impact of relationship selling and LMX on salespeople's behaviours and sales effectiveness", European Journal of Marketing, Vol. 43 Iss: 7 pp. 1053 1075 Permanent link to this document: http://dx.doi.org/10.1108/03090560910961515 Downloaded on: 24-03-2012 References: This document contains references to 119 other documents To copy this document: permissions@emeraldinsight.com This document has been downloaded 1957 times.

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An empirical investigation into the impact of relationship selling and LMX on salespeoples behaviours and sales effectiveness
Nicholas G. Paparoidamis
IESEG School of Management, Universite Catholique de Lille, France, and

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Received June 2007 Revised January 2008, May 2008 Accepted July 2008

Paolo Guenzi
` SDA Bocconi School of Management, Universita Bocconi, Milan, Italy
Abstract
Purpose This study aims to develop and test a model of relationship selling management. It seeks to examine the impact of leadership quality and relationship selling, as antecedents of salespeoples relational behaviours, on sales effectiveness. Design/methodology/approach Starting from a review of literature, the model incorporates two classes of salespeoples relational behaviours, namely customer-oriented selling (COS) and adaptive selling (AS), two classes of managerial antecedents (i.e. relationship selling strategy and LMX) and one consequence (sales effectiveness). The authors collected data from 164 sales manager-salesperson dyads in a sample of French rms. A structural equation modelling approach was employed to test the hypotheses. Findings The ndings show that relationship selling and LMX stimulate salespeoples relational behaviours, which in turn positively affect sales effectiveness. Moreover, the results reveal a positive impact of relationship selling on sales manager-salesperson exchanges. Research limitations/implications The study is cross-sectional, and many other relevant constructs should be investigated in future research on the topic. Objective measures of performance may also be incorporated. Practical implications The study demonstrates that companies can stimulate desirable behaviours of salespeople, which drive to better performance, by leveraging on controllable organisational factors, i.e. selling strategy and leadership. Originality/value The research lls three important gaps in the extant literature. First of all, the study clearly sheds some light on the role played by specic organisational variables (e.g. leader-member exchange quality) and behaviours of salespeople in implementing relational strategies. Second, the study shows that the quality of the relationship between supervisors and salespeople can affect specic behaviours of subordinates. Third, the paper contributes to a better understanding of organisational drivers of customer-oriented selling and adaptive selling, and nds evidence of a positive impact of such behaviours on sales effectiveness. Keywords Relationship marketing, Customer orientation, Sales performance, Behaviour, Sales force Paper type Research paper
European Journal of Marketing Vol. 43 No. 7/8, 2009 pp. 1053-1075 q Emerald Group Publishing Limited 0309-0566 DOI 10.1108/03090560910961515

The review process for this paper was managed entirely by Professors Gilmore and Carson and not by the Guest Editors of this special issue.

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1. Introduction In todays highly competitive marketplace, personal selling is a critical element in the effort of modern rms to achieve organisational success based on customer satisfaction, loyalty and protable sales volume (Anderson and Sullivan, 1993; Fierman, 1994; Reichheld and Sasser, 1990; Anderson, 1996; Baldauf and Cravens, 1999; Reynolds and Arnold, 2000). Enhancing sales effectiveness is considered as one of the most urgent tasks that sales managers face (Boles et al., 2000). The rms marketing success is largely dependent upon salespeople, who have the most immediate inuence on customers (Williams and Attaway, 1996). The role of salespeople has expanded beyond sales generation and more towards relationship selling as a means of creating customer satisfaction and loyalty (Ingram, 1996; Weitz and Bradford, 1999; Wilson, 2000; Ingram et al., 2001). This is consistent with the general evolution of the discipline of marketing, which is increasingly interpreted from a relational perspective. For example, the American Marketing Association recently modied the ofcial denition of marketing, stating that marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benet the organisation and its stakeholders. We argue that salespeople play a key role in customer relationship management and in understanding, creating, communicating and delivering value to customers. In fact, relational strategies are to a great extent implemented by sales managers and salespeople: the boundary-spanning role of the salesperson is critical in relationship marketing (Sharma and Patterson, 1999). Langerak (2001) demonstrated that the manufacturer is fully dependent upon the attitude and behaviours of salespeople to successfully build and maintain relationships with customers (p. 232). Unfortunately, however, there are often discrepancies between marketing strategies and their functional implementation at the sales level (Strahle et al., 1996). The implementation of relational strategies requires the adoption of relational behaviours (customer-oriented selling and adaptive selling) from salespeople and adequate leadership support from sales managers. The main goal of our study is to ll three important gaps in the literature. First, in the extant literature, little attention has been paid to the role of the sales force and sales management in the implementation of relationship marketing strategies (Slater and Olson, 2000). Viswanathan and Olson (1992, p. 45) pointed out that studies linking specic sales management activities with marketing strategies have been largely non-existent. More specically, researchers to date have not sufciently examined the extent to which relationship marketing affects salespeoples behaviours and ultimately sales effectiveness. Second, we investigate the impact on specic behaviours of salespeople of the quality of the relationship between supervisors and subordinates. In fact, strategic organisational guidelines (e.g. relationship selling strategy) and supervisors may have different inuences on salespeoples behaviours and, hence, on sales effectiveness. Importantly, Jones et al. (2003, p. 334) demonstrated empirically that salespeople perceive the actions of the rm separately from the actions of the sales manager. Based on leader-member exchange theory, we posit that the quality of the relationship between sales managers and salespeople within the sales department plays an important role in the implementation of relational strategies. Sales managers must

become strategy-driven leaders capable of inuencing subordinates in their efforts to achieve sales objectives (Ingram et al., 2002). Unfortunately, to date, there is a scarcity of research investigating the role of leadership in stimulating relational selling behaviours, such as customer orientation and adaptive selling, and its impact on sales effectiveness (Lagace, 1991; Flaherty and Pappas, 2000; Stock and Hoyer, 2002). Third, we want to contribute to a better understanding of organisational drivers of COS and AS, as well as to examine further their impact on sales effectiveness. To address the above-cited gaps, we develop and test a model of relationship selling management (see Figure 1), starting from literature on relationship selling, salespeoples behaviours and leader-member exchange (LMX). Our model incorporates two classes of salespeoples relational behaviours, namely customer-oriented selling (COS) and adaptive selling (AS), two classes of managerial antecedents (i.e. relationship selling strategy and LMX) and one consequence (sales effectiveness). Our study examines the impact of leadership quality and relationship selling, as antecedents of salespeoples relational behaviours, on sales effectiveness. Our framework is consistent with the most widely accepted models of sales management, since it focuses on two organisational variables inuencing sales force behaviours and performance (Walker et al., 1977, 1979; Churchill et al., 1990). The study begins with an examination of the key constructs used in our study. Then the conceptual framework and research hypotheses are presented and the method used in this research is explained. The results are then presented and discussed. Finally, conclusions and managerial implications of the study are provided. The limitations of the study and a set of future research directions are also discussed.

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Figure 1. The conceptual model

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2. Literature review 2.1. Relationship selling strategy As market relationships expand from discrete transactions to relational exchanges, relationship marketing and selling are at the forefront of academic research (Day, 2000; Fontenot and Wilson, 1997; Garbarino and Johnson, 1999; Jolson, 1997). Many researchers in the sales literature have argued that salespeople adopting a relational approach provide the grounds for gaining competitive advantage by adding value for customers and inuencing future purchase intentions (Luthy, 2000; Boles et al., 2000). We dene relationship selling strategy as a strategic approach developed by a supplier willing to establish long-term and mutually protable relationships with its customers (Jolson, 1997). From the sellers point-of-view, the relationship selling strategic approach impacts on organisational decisions as well as individual attitudes and behaviours of sales managers and salespeople. In fact, Day (2000, p. 28) states that relationship orientation [. . .] is immediately evident in the mind-set of those who deal directly with the customer. Salespeople typically contribute to improving relationship quality by performing value-adding activities such as customer problem solving and customisation (Crosby et al., 1990). Compared with traditional, short-sighted selling strategies, a relationship-oriented approach requires management and salespeople to change or adopt some specic behaviours. When adopting a relational strategy, for example, salespeople should abandon transactional (hard) selling approaches and behaviours, which are short-sighted and aimed at maximising immediate sales volume, often at the expense of long-term results. In fact, it has been empirically demonstrated that using closing techniques (Hawes et al., 1996) or some ingratiatory behaviours (Strutton et al., 1996) leads to lower levels of customer satisfaction, trust and loyalty. To sum up, leadership capabilities as well as specic behaviours of salespeople need to be developed and adopted when a relationship selling strategy is pursued. Consequently, we will focus on customer-oriented selling, adaptive selling and leader-member exchange quality. 2.2 Relational behaviours of salespeople Companies pursuing relational selling strategies need to direct their salespeople to adopt relational selling behaviours (Wotruba, 1996). In this research, we focus on two constructs that have attracted a lot of attention from researchers in the current, relational era: customer-oriented selling (Saxe and Weitz, 1982) and adaptive selling (Spiro and Weitz, 1990). 2.2.1 Customer-oriented selling. Customer-oriented selling is dened as the implementation of the market orientation construct at the level of individual salespeople. As companies move toward relational exchanges, a win-win philosophy should be adopted, with salespeople becoming customer partners (Weitz and Bradford, 1999) and increasing their customer orientation, as opposed to their selling orientation (Saxe and Weitz, 1982). Williams (1998) argues that customer-oriented selling is of fundamental importance in customer relationship development. Customer-oriented selling is consistent with the building of long-lasting positive relationships between the buyer and the seller and is widely recognised as an important aspect of relational selling behaviours (Flaherty et al., 1999; Keillor et al., 2000; Martin and Bush, 2003; Siguaw et al., 1994; Weitz and Bradford, 1999). Saxe and Weitz (1982) clearly stated that highly customer-oriented salespeople engage in behaviours aimed at increasing

long-term customer satisfaction (p. 344) and found that the SOCO scale correlated with a measure of long-term versus short-term time orientation (p. 347). Customer-oriented individuals would defer short-term returns for long-term dividends: salespeople, therefore, will engage in customer-oriented selling when they expect future transactions with the buyer. Research specically devoted to examining the link between COS and relationship selling strategy, on the one side, and the quality of the supervisor-salesperson relationship, on the other, is almost completely lacking (Flaherty et al., 1999; Schwepker, 2003). However, it is important to investigate these links because, based on extant literature, both the rms strategy and the sales managers actions can inuence salespeoples customer orientation (e.g. Siguaw et al., 1994; Jones et al., 2003). 2.2.2 Adaptive selling. Adaptive selling is dened as the altering of sales behaviours during a customer interaction or across customer interactions based on perceived information about the nature of the selling situation (Weitz et al., 1986, p. 175). A high level of adaptive selling is achieved by using different sales presentations and communication styles across encounters (Spiro and Weitz, 1990). Adaptive selling should be more applicable to selling situations characterised by varying needs across customers, complex buying centres, complex buying tasks, complex products, high information needs and high perceived risks, i.e. typical situations in which relationship-specic approaches are required (Porter et al., 2003). At the company level, high adaptation to customer needs and customisation of the offer are usually considered important dimensions of a relational strategy (e.g. Cannon and Perreault, 1999). Similarly, at the individual salesperson level, the practice of adaptive selling is consistent with a relationship selling strategy as [its] benets will likely exceed opportunity costs with potentially large orders or with a high probability of using currently collected information to secure future sales (Porter et al., 2003, p. 277). To sum up, adaptive selling is a relevant aspect of relational behaviours, because of its links with customer satisfaction, customer trust and the achievement of long-lasting buyer-seller relationships (Spiro and Weitz, 1990; Vink and Verbeke, 1993). 2.3 LMX Role theory, social exchange theory and equity theory developed the theoretical basis of the leader-member exchange (LMX) model, providing a thriving approach to the study of leadership (Dansereau et al., 1973; Graen et al., 1982; Graen and Scandura, 1987). Leader-member exchange theory posits that leaders and members engage in a number of exchanges and interactions over time, which affects the development of the interpersonal relationship between the two parties involved. Drawing on social exchange theory, different types of interpersonal relationships may exist between supervisors and subordinates: low-quality leader-member relationships form pure economic exchanges following contractual agreements, with supervisors obtaining routine subordinate performance and subordinates receiving standard organisational benets (Graen and Cashman, 1975). On the contrary, high-quality leader-member relationships form working exchanges characterised by mutual trust and support (Liden and Graen, 1980), with subordinates showing increased levels of commitment and competence (Dansereau et al., 1973) and supervisors offering favourable performance rewards and promotions (Graen et al., 1990; Yukl, 1994).

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Although many studies focused on leader-member exchanges, a number of issues remain unresolved, mainly due to the lack of tests in various relationship formats and environments (Miner, 1988; Dienesch and Liden, 1986). More specically, further investigation is needed into the association between performance and LMX quality in a sales department context (Dunegan et al., 1992; Bauer and Green, 1996). Research reported in the sales literature suggests an association between LMX quality and job satisfaction and conict (Lagace, 1991), salespersons willingness to accept future job changes (McNeilly and Lawson, 1999), subordinates loyalty and reliability (Wakabayashi et al., 1990; Delvecchio, 1998; Flaherty and Pappas, 2000). Based on these foundations, we argue that sales management is a relevant context for studying LMX. Unfortunately, however, research relating LMX quality to selling behaviours and performance is lacking. 3. Research hypotheses 3.1 Salespeoples relational behaviours and sales effectiveness From a theoretical standpoint, COS summarises the ability and willingness of salespeople to show concern for customers, to analyse their problems and nd appropriate solutions, and to act in the customers interest. As a consequence, it is posited that COS should drive to higher customer satisfaction which, in turn, should increase sales effectiveness (Saxe and Weitz, 1982). Empirical studies generally suggest that COS has a positive impact on performance (e.g. Boles et al., 2000, 2001; Brown et al., 2002). However, we believe that this topic deserves further investigation. In fact, the recent meta-analysis by Franke and Park (2006) found that COS increases only self-rated performance. In addition to this, in the extant research, performance was often measured by soft measures like customer satisfaction and trust (e.g. Goff et al., 1997; Williams, 1998; Bejou et al., 1998), while fewer studies analysed the impact of COS on bottom line performance (e.g. Keillor et al., 2000). We address these gaps in the literature by investigating the impact of COS on manager-rated hard measures of performance. Based on the above-cited arguments and evidence, we hypothesise that: H1. COS is positively related to sales effectiveness. From a conceptual standpoint, the main rationale behind the hypothesis of a positive impact of AS on a salespersons effectiveness lies in the contingency model of salespeoples effectiveness (Weitz, 1981). Adaptations in sales interactions help salespeople customise the content and format of their messages, which in turn increase communication effectiveness by improving rapport and reducing objections. Starting from the seminal study by Spiro and Weitz (1990), research largely concludes that AS improves salesperson performance (e.g. Boorom et al., 1998; Giacobbe et al., 2006; Keillor et al., 2000; Piercy et al., 1999; Rich and Smith, 2000; Spiro and Weitz, 1990). This conclusion is also strongly supported by the meta-analysis by Franke and Park (2006). Hence, we hypothesise: H2. AS is positively related to sales effectiveness. 3.2 Relationship selling strategy and salespeoples relational behaviours From a conceptual standpoint, relationship marketing theory clearly underlines the importance of customer satisfaction, trust and commitment in stimulating continuity of exchanges over time (Palmatier et al., 2006). These customer-focused relational

mediators are strongly affected by the absence of opportunistic behaviour and provision of relational benets by sellers (e.g. Morgan and Hunt, 1994), which, at the level of individual salespeople, are mainly represented by their level of customer orientation. Similar considerations can be found in the market orientation literature, in which customer orientation is a key behavioural component of the market orientation construct (Narver and Slater, 1990), which in turn is a key precondition for increasing customer satisfaction and developing a long-lasting relationship with customers (e.g. Kohli and Jaworski, 1990). From an empirical standpoint, Williams and Weiner (1990) found an association between relationship selling strategy and COS. Williams (1998) pointed out that customer-oriented selling is of fundamental importance in customer relationship development. Beatty and Lee (1996) also found an association between successful long-term relationships with clients and customer-oriented selling. Langerak (2001) empirically demonstrated that market orientation of the selling company fosters salespeoples COS, which in turn positively affects customer trust, i.e. a key relational outcome. Based on this evidence, we hypothesise: H3. Relationship selling strategy is positively related to salespeoples COS. From a theoretical standpoint, relationships are a dynamic phenomenon. As a consequence, in the relationship lifecycle, different phases can be identied (e.g. Ford, 1980; Dwyer et al., 1987). Each phase is characterised by different priorities and key success factors (e.g. Wilson, 1995), so the sellers ability to adapt to changing customer requirements over time and in different situational contexts is a critical component of successful relationships. Conceptually, adaptation is a vital interaction process in dyadic relationships between a buyer and a seller (Moller and Wilson, 1995). In fact, when a supplier engages in a relational selling strategy, one of the biggest challenges for salespeople is to deliver messages consistently to customers in a manner that specically targets the needs, wants and concerns of each individual buyer (Rich and Smith, 2000; Sengupta et al., 2000). Customers are constantly increasing their demands that the selling organisation, as well as their salespeople, adopt customised approaches to their specic desires (Jolson, 1997). Hence: H4. Relationship selling strategy is positively related to salespeoples AS. 3.3. Leader-member exchange quality and salespeoples relational behaviours Social learning theory suggests that, in a personal selling context, the sales manager is the person most likely to be responsible for shaping a salespersons behaviours. However, the extent to which salesperson-manager exchange relationships affect salespersons behaviour is still unclear. For example, Lagace (1990), measuring salesperson effectiveness, found no signicant relationship with salesperson-manager exchange quality. Most of the research on LMX focused on its impact on subordinates job performance, job satisfaction, job commitment, role conict, role clarity and turnover intentions (Gerstner and Day, 1997). In contrast, the inuence of LMX on specic behaviours has been relatively overlooked. Studies in leadership suggest that exchanges that occur between salespeople and their managers can have an impact on subordinates selling behaviours (e.g. Butler and Reese, 1991; Graen and Uhl-Bien, 1995). So far, only a few studies have examined the antecedent role of supervisor-subordinate relationships on COS (e.g. Stock and Hoyer, 2002). OHara

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et al. (1991) stressed the importance of salesperson-manager relationship quality, demonstrating that relationships based on trust, support and fairness are positively related to COS. Martin and Bush (2003) suggested that salespeople will engage in COS when they perceive a positive psychological climate through sales managers leadership style. This contention was later supported empirically (Martin and Bush, 2006). Boles et al. (2001) pointed out that supportive supervisors can create cohesive working environments in which salespeople are more likely to collaborate towards satisfying customer needs. Conversely, in a non-supportive working environment, salespeople may behave in a rather egoistic manner, in order to maximise sales gures and avoid negative sanctions from sales managers (Eisenberger et al., 1986; Teas, 1983). Moreover, Schwepker (2003, pp. 164-165) suggested that sales managers who want to foster customer-oriented selling may want to develop supportive relationships with salespeople [. . .] that are based on trust, interaction, support. Hence: H5. The quality of the LMX is positively related to salespeoples COS. High quality leader-member relationships generate a psychological climate which fosters salespersons empowerment by increasing subordinates perceptions of autonomy and support (Martin and Bush, 2006). Similarly, the level of trust between a sales manager and a direct subordinate salesperson positively affects the salespersons perceptions of autonomy and innovativeness (Strutton et al., 1993). Moreover, subordinates perceiving high value congruence between themselves and their leaders are more productive in generating ideas (Jung and Avolio, 1999). In keeping with job enrichment theory, empowerment and autonomy emphasise individual contribution and employee initiative, exibility, creativity and self-determination (Spreitzer, 1996; Anderson and Huang, 2006), which are all preconditions for adaptive selling. The application of adaptive selling requires strong managerial support in terms of the supervisors investment in limited resources such as time and attention (Knowles et al., 1994). This support can be an outcome of the relationship between supervisors and subordinates aimed at developing proper internal communication and role formation (Dubinsky et al., 1986). In the absence of good relationships, subordinates may avoid adaptive selling behaviours (Spiro and Weitz, 1990). Delvecchio (1998) pointed out that the salesperson-manager relationship quality, by playing the role of support to salespeople, may foster increased levels of AS behaviours. Hence: H6. The quality of the LMX is positively related to salespeoples AS. 3.4 Relationship selling strategy and leader-member exchange quality Day (2000) states that, to develop strong relationships with customers, a relationship orientation must pervade the mind-sets, values and norms of the organisation (p. 24). This implies the existence of a strong esprit de corps in the selling rm (Homburg et al., 2002), which, at the personal level, can be examined through the existence of leader-member exchange quality. In a broader perspective, based on relationship marketing theory, we argue that building enduring relationships with customers implies adopting a relational approach internally, i.e. in terms of both inter-functional and interpersonal relationships inside the selling rm (e.g. Gronroos, 1991; Gummesson, 1999). The same argument is widely used in CRM literature (see for example Meyer and Kolbe, 2005; Tuominen et al., 2000). To our goals, the main rationale behind this argument is that high quality LMX

reduces subordinates turnover (Graen et al., 1982; Ferris, 1985) and turnover intentions (Vecchio and Gobdel, 1984), thus increasing employee retention, which is an important prerequisite for customer retention. This is especially true for front-line personnel, like salespeople. In other words, a rm pursuing a relationship selling strategy is strongly dependent on the ability of its salespeople to create long-lasting relationships with customers; to do this, the selling rm should reduce salespeoples turnover, and this goal can be accomplished by increasing their job satisfaction. Due to the bond between satisfaction with the supervisor and job satisfaction (Lagace, 1991), relationship selling strategy should be associated with high levels of LMX quality (Jones et al., 2003). Therefore, we propose: H7. Relationship selling strategy is positively related to the quality of the LMX. 4. Method, data analysis and results 4.1 Data collection To test our hypotheses, a cross-sectional survey was conducted in a sample of rms located in France. Following similar methodologies in the sales and organisational behaviour literature, chief and eld sales managers and their sales personnel were selected as respondents (Lagace, 1991; Dyne et al., 2002; Moideenkutty et al., 2006). A preliminary test of the questionnaire was run by means of 15 personal interviews with eld sales representatives. All items were checked in terms of readability, clarity and face validity. Then, we randomly selected 480 chief and eld sales managers from a list of 3,000 French companies. They were contacted by telephone and 350 managers agreed to participate in the study and ll in a questionnaire measuring relationship selling and sales effectiveness. They were also asked to provide the names and contact information of individual salespeople they directly supervised, and permission to send them questionnaires measuring customer-oriented selling, adaptive selling and LMX. Hence, 723 salespeople were contacted. Information related to the type of industry respondents represent is summarised in the appendix. This process generated 278 usable questionnaires from sales managers and 211 from salespeople. By combining the two samples, we obtained 164 dyads. Importantly, the separation of respondents for dependent and independent variables for the relationships tested in our model provides a guard against common method variance (Podsakoff et al., 2003). In order to assess non-response bias, a comparison of early respondents and late respondents was made on all variables of interest (Armstrong and Overton, 1977). No signicant difference was found. Boxs M-test for homogeneity of variances between the two groups, the multivariate Wilks lambda test and the test of between-subjects effects for all constructs were nonsignicant. In addition, Levenes test of equality or error variances for all variables was also nonsignicant. 4.2 Measures Sales effectiveness was measured using a four-item seven-point Likert scale (much better/worse than competitors/objectives) describing the companys change in sales volume and market share in the last two years, compared with the major competitor and the units objectives (Cravens et al., 1993; Babakus et al., 1996; Piercy et al., 1997; Grant and Cravens, 1999). LMX was measured using an eight-item scale (Liden and Maslyn, 1998); for relationship selling we used the four-item scale adopted by Slater

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and Olson (2000); for customer orientation we used the ve-item scale proposed by Thomas et al. (2001); for adaptive selling we used the ve-item scale suggested by Robinson et al. (2002). 4.3 Measurement model We performed exploratory factor analysis (with Varimax rotation), which led to a ve-factor solution (see Table I). The ve factors explain 67.16 per cent of the total variance and, as expected, are: relationship selling (12.24 per cent), LMX (13.47 per cent), customer-oriented selling (13.82 per cent), adaptive selling (12.91 per cent) and sales effectiveness (14.72 per cent). At this exploratory phase of the study, three items measuring LMX failed to load in any factor, thus the initial Liden and Maslyn (1998) scale was reduced to eight items. The reliability of each scale was estimated through Cronbachs coefcient (Cronbach, 1970), which for all multi-items scales ranged from 0.73 to 0.83, thus exceeding the threshold level of 0.70 suggested by Nunnally (1978). To assess the measurement model, we then conducted a conrmatory factor analysis using LISREL 8.52. The overall t of the model was adequate: with an x 2 of 352.26 (df 216, p 0:00), a goodness-of-t index of 0.99, an adjusted goodness-of-t index of 0.99 and a comparative t index (Bentler, 1990) of 0.96. As for convergent validity, the measurement factor loadings were all signicant, and the average variance extracted (Fornell and Larker, 1981) indicated that, in each case, the variance captured by the construct was greater than the variance due to measurement error (see Table II). Finally, to test for discriminant validity, the procedure described by Fornell and Larker (1981) was used. As an indication of discriminant validity, the average variance extracted (AVE) for each construct should be higher than the squared correlation between that construct and any other construct. In the present study, in no case was there a squared correlation between any two constructs that was higher than either of the constructs AVE (see Table III). 4.4 Structural model The structural relationships between the latent variables have been examined using LISREL 8.52. The overall model t indices, the standardised parameters and the t-values of this model are shown in Figure 2. The empirical results indicate that: . relationship selling and LMX positively affect both customer-oriented selling (0.38, t 4:53 and 0.32, t 5:47, respectively) and adaptive selling (0.26, t 3:97 and 0.32, t 4:68, respectively); . relationship selling positively affects LMX (0.22, t 2.76); and . both customer-oriented selling (0.40, t 8.03) and adaptive selling (0.31, t 5.38) positively affect sales effectiveness. Thus, all hypotheses are supported empirically. Although we did not formulate specic hypotheses concerning the direct impact of relationship selling strategy and LMX on sales effectiveness, to test for the potential existence of direct paths we compared the proposed model (which can be interpreted as a full mediation model) with two rival models. More specically, the two rival models were tested for partial (partial mediation model) or no mediation (no mediation model) of sales behaviours. It was found that the t statistics of both the partial mediation model (x 2 379:42, df 217, p 0:001, NFI 0:90, CFI 0:88, RMSEA 0:149) and

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Items 0.714 0.653 0.687 0.745 0.628 0.699 0.667 0.582 0.702 0.619 0.723 0.660

Relationship selling LMX COS AS

Sales effectiveness

0.683 0.695 0.654 0.678 0.697 0.706 0.687 0.637 0.655 0.736

The parties expect relationships to last a lifetime It is assumed that renewal of agreements will generally occur The parties make plans in terms of individual purchases but also in terms of relationship continuance The relationship with our customers is essentially evergreen I appreciate a lot my sales manager as a person My sales manager can depend on me when we are overloaded with work I respect my sales managers knowledge of and competence on the job I am impressed with my sales managers knowledge of his/her job I admire my sales managers professional skills My sales manager defends me to a superior, even without complete knowledge for the issue in question My sales manager would defend me to others in the organisation if I made an honest mistake I do work for my sales manager that goes beyond my job description My sales manager is the kind of person one would like to have as a frienda My sales manager is a lot of fun to work witha My supervisor would come to my defence if I were attacked by othersa I try to gure out a customers needs I have the customers best interests in mind I take a problem solving approach in selling products or services to customers I recommend products or services that are best suited to solving problems I try to nd out which kinds of products/services would be most helpful to customers If a sales approach is not working, I am able to change to another approach I like to experiment with different sales approaches I am very exible in the selling approach I use I am capable of using a wide variety of selling approaches I try to understand how one customer differs from another Sales volume compared to major competitor (past 24 months) Sales volume compared to sales unit objectives Market share compared to major competitor Market share compared to sales unit objectives Cronbach alpha Percentage of total variance explained (67.16 per cent) 0.737 12.24 0.747 0.794 0.777 13.47 13.82 12.91 0.801 0.784 0.758 0.812 0.830 14.72

Note: a Items dropped

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Table I. Exploratory factor analysis (VARIMAX rotation)

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Items 0.72 0.72 0.71 0.73 0.70 0.71 0.70 0.72 0.72 0.74 0.71 0.74 22.56 22.89 22.19 23.56 23.68 25.34 22.52 25.72 22.97 24.24 0.70 0.72 23.28 23.61 0.69 0.69

Relationship selling (Slater and Olson, 2000) The parties expect relationships to last a lifetime It is assumed that renewal of agreements will generally occur The parties make plans in terms of individual purchases but also in terms of relationship continuance The relationship with our customers is essentially evergreen 0.67 0.69 0.67 0.70 0.70 0.70 0.68 0.71

LMX (Liden and Maslyn, 1998) I appreciate a lot my sales manager as a person My sales manager can depend on me when we are overloaded with work I respect my sales managers knowledge of and competence on the job I am impressed with my sales managers knowledge of his/her job I admire my sales managers professional skills My sales manager defends my work actions to a superior, even without complete knowledge for the issue in question My sales manager would defend me to others in the organisation if I made an honest mistake I do work for my sales manager that goes beyond my job description My sales manager is the kind of person one would like to have as a frienda My sales manager is a lot of fun to work witha My supervisor would come to my defence if I were attacked by othersa 0.75 0.75 0.71 0.79 0.72 26.46 27.82 22.26 30.13 24.26

COS (Thomas et al., 2001) I try to gure out a customers needs I have the customers best interests in mind I take a problem solving approach in selling products or services to customers I recommend products or services that are best suited to solving problems I try to nd out which kinds of products/services would be most helpful to customers

Table II. Measurement model and convergent validity Factor loading l t-value 0.87 Rho Joreskog rY Construct reliability rh AVE rvch 0.77 0.82 0.75 0.85 0.70 0.71 0.70 0.78 0.71 (continued) 0.78

Items 0.73 0.72 0.71 0.81 0.81 0.82 0.83 0.80 0.79 352.26 216 0.00 0.99 0.99 0.064 0.96 0.95 34.56 35.18 32.47 30.28 0.78 0.79 0.75 0.78 0.89 24.62 23.42 22.19 31.91 31.25 0.71 0.70 0.68 0.76 0.77 0.86

Factor loading l t-value

Rho Joreskog rY

Construct reliability rh 0.79

AVE rvch

AS (Robinson et al., 2002) If a sales approach is not working, I am able to change to another approach I like to experiment with different sales approaches I am very exible in the selling approach I use I am capable of using a wide variety of selling approaches I try to understand how one customer differs from another

Sales effectiveness (past 24 months) (Cravens et al., 1993) Sales volume compared to major competitor Sales volume compared to sales unit objectives Market share compared to major competitor Market share compared to sales unit objectives

0.81

Goodness of t statistics: Chi-squared df p-value GFI AGFI RMSEA CFI NFI

Note: a Items dropped

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Table II.

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Constructs Relationship selling LMX Adaptive selling Customer oriented selling Sales effectiveness

Relationship selling 0.745 * 0.478 * * 0.528 * * 0.455 * * 0.080 * *

LMX 0.732 * 0.364 * * 0.391 * * 0.067 * *

Adaptive selling

Customer oriented selling

Sales effectiveness

1066
Table III. Discriminant validity

0.789 * 0.219 * * 0.502 * *

0.801 * 0.486 * *

0.814 *

Notes: *The diagonal entries represent the average variance extracted by the construct; * *The off-diagonal entries represent the variance shared (squared correlation) between constructs

Figure 2. The structural model

the no mediation model (x 2 375:87, df 216, p 0:001, NFI 0:92, CFI 0:90, RMSEA 0:135) were inferior to those of the proposed model. The chi-square difference test can be used to assess whether the proposed model ts the data signicantly better than the rival models (partial and no mediation models). The critical value (Dx 2 Ddf 1 . 3:84) was exceeded in both cases. Therefore, we can conclude that the proposed model is a signicantly better representation of the data. 5. Discussion and implications Our study suggests that a relational environment (i.e. the adoption of a relationship selling strategy and a high quality of leader-member exchange) enhances sales personnels adoption of relational behaviours, which in turn positively affects sales effectiveness. The ndings also conrm that sales managers can strongly affect the

behaviours and performance of salespeople. In fact, they are critical boundary spanners because they are often the only link between the salesperson and the organisation (Swift and Campbell, 1998). More specically, the results suggest that the quality of the interpersonal relationship between the supervisor and salespeople has a positive inuence on two important classes of relational behaviours of salespeople. Our ndings show that the adoption of a relationship selling strategy per se does not necessarily increase performance. Rather, it improves performance by stimulating salespeoples relational behaviours both directly and indirectly (i.e. via an increase in LMX quality). Moreover, the present study provides clear evidence of the role of LMX in fostering COS and AS. This suggests that effective leadership is an important precondition for implementing relationship selling strategies. The contribution of this research effort to current knowledge can be summarised as follows. In general terms, the study deepens our understanding of how relational strategies can be implemented at the sales department level. In fact the adoption of a relationship selling strategy stimulates salespeoples relational behaviours both directly and indirectly, that is, by increasing the quality of LMX. Furthermore, our research highlights the contribution of salespeoples behaviours in implementing relationship selling strategies toward customers. Finally, we nd further support of a positive impact of COS and AS on sales effectiveness. More specically, our study lls many important gaps in the extant literature. First of all, in the huge amount of literature on relationship marketing, the topic of strategy implementation at the sales department level is largely overlooked. Our study clearly suggests that future research on the topic should investigate the role played by specic organisational variables (e.g. leader-member exchange quality) and behaviours of salespeople in implementing relational strategies. In fact, mixed evidence and controversial ndings on the impact of relational strategy on performance are often the result of poor consideration of how such a strategy is actually implemented in the eld. Second, we demonstrate that the quality of the relationship between supervisors and salespeople can affect specic behaviours of subordinates. Especially in the context of sales literature, investigating the impact of LMX on specic behaviours is important because salespeople, due to their boundary-spanning role, directly inuence organisational performance exactly through their behavioural performance (Churchill et al., 1990). Again, we argue that controversial ndings on the impact of LMX on bottom line performance, especially in sales settings, are largely a consequence of overlooking its impact on specic behaviours of subordinates. Third, we contribute to a better understanding of organisational drivers of COS and AS. As underlined by many authors, most studies focused on individual-level antecedents of these important behaviours (e.g. Schwepker, 2003). Even the recent meta-analysis on COS and AS performed by Franke and Park (2006) only investigated salespeoples individual drivers (gender and experience). This is clearly a limitation in the extant literature, since both researchers and managers need to understand how corporate strategies and leader-subordinate relationships can affect such behaviours. Finally, we nd evidence of a positive impact of AS and COS on sales effectiveness. Importantly, unlike most of the research on the topic, we focused on hard measures of performance (as opposed to soft measures like customer satisfaction and trust) and strongly limited the risk of common method bias by using dyads instead of single respondents. This contribution should not be underestimated, especially in the light of

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1068

the ndings of the analysis by Franke and Park (2006). In fact, their study shows that the impact of COS on performance is signicant only when self-reported measures of performance are used, whereas its effects on manager-rated and objective performance are nonsignicant, therefore raising questions about the effectiveness of COS. Similarly, the authors found that the impact of AS on performance depends on the performance measures used because, again, AS is more related to self-rated performance than to manager-rated and objective performance. The authors state that this may result from common method bias. Hence, our use of dyads should be particularly appreciated. In terms of managerial implications, our study demonstrates that companies can stimulate desirable behaviours of salespeople that drive to better performance by leveraging on controllable organisational factors, i.e. selling strategy and leadership. Adopting a relational selling strategy often implies changing corporate culture, sales force organisation, control systems and incentives. Similarly, building high-quality leader-subordinates relationships implies investing in psychological contracts, as opposed to contractual agreements. The present study, in line with recent studies in the sales management area (Ingram et al., 2005), points out the need for the development of sales managers leadership skills. The results of the study conrm the necessity for management practices that stimulate sales behaviours on the basis of successful leadership styles. Moreover, it is apparent that sales behaviours buffer the impact of the quality of leadership on sales effectiveness. 6. Limitations of the study and directions for future research The present study has several limitations. First of all, since our study is cross-sectional, causal linkages should be interpreted with caution. Future research on the topic may use experimental and longitudinal designs helping the clarication of the causality and direction of underlined relationships between relationship selling, LMX, customer orientation, adaptive selling and effectiveness. Second, in the present study, a number of variables were not included (e.g. sales force control systems, group cohesion etc.), which could reveal how the relationships between certain variables are mediated or moderated. Comparing the effects of different sales force control systems on the adoption of customer orientation and adaptive selling behaviours and sales effectiveness could have valuable implications for sales force training and management. Third, in our study we used self-reported measures of COS and AS, as well as managerial ratings of sales effectiveness. Ideally, future research may use customer perceptions of salespeoples behaviours and objective measures of performance. However, the use of dyads of respondents in our study strongly reduces the risk of common method bias. Finally, further research efforts are needed in the sales leadership domain, especially to identify the critical leadership capabilities.
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Industry Technology and electronics Raw materials Consumer services Consumer goods Insurance Health care and pharmaceuticals Real estate Financial services Transportation Business services Total Frequency 34 27 22 17 16 12 11 9 8 8 164 % 20.73 16.46 13.41 10.36 9.75 7.31 6.70 5.48 4.87 4.87 100

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Table AI. Industry type distribution of respondents by industry

Corresponding author Nicholas G. Paparoidamis can be contacted at: n.paparoidamis@ieseg.fr

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