The effect of firms' structural designs on advertising and personal selling returns

Firms make substantial investments in advertising and personal selling to improve their performance, but it is unclear how returns on the promotional mix vary across different corporate-level organizational structures. This article identifies and integrates two structural designs that foster customer alignment, namely, structural type (i.e., organizing corporate-level business units around customer instead of product groups) and structural granularity (i.e., dividing a firm into smaller business units), then investigates how these customer-aligned structural designs moderate the effects of the promotional mix on firm performance. An analysis of 14 years of longitudinal, multisource, secondary data reveals that the performance effect of investments in advertising and personal selling are enhanced by customer-aligned structural designs. However, the synergistic effects of joint investments in advertising and personal selling get suppressed in customer-aligned structures because functional fragmentation results from internal inefficiencies and complexities. To specify the tensions involved across the different structures, the authors conduct a post hoc analysis and thereby derive organizational structure-specific guidelines.