The Marketing - Human Resource Interface: Superior Performance for the Small Business

ABSTRACT The authors propose a model that integrates important constructs from both human resource management and marketing. The conceptual model suggests that small business managers possess both customer focus and employee focus. Importantly, the manager's customer focus is hypothesized to be a major determinant of reported human resource management practices as well as customer management practices. Both human resource management practices and customer management practices are hypothesized to have direct effects on customer satisfaction, which ultimately has a direct effect on firm performance. The authors find empirical support for the structural equations model using data collected from a sample of small businesses. INTRODUCTION Recently there has been growing interest in the role of human resource management (HRM) in achieving important marketing outcomes such as customer satisfaction (e.g., Hartline, Maxham, & McKee, 2000; Lengnick-Hall & Lengnick-Hall, 1999; Morrison, 1996). While this trend is important for all businesses (Meziou, 1991; Milite, 1999), it is likely to be of critical importance in the small business (Huck & McEwen 1991). In many small firms, responsibility for the design and implementation of both human resource policy and marketing policy may rest with the same decision-maker (Hall, 2001). Likewise, in small businesses a majority of the employees are likely to be in customer contact positions (O'Connell, 1994). Concurrent with the interest shown in HRM, marketing scholars and practitioners have been investigating the effect of customer orientation on customer satisfaction and firm performance (Deshpande, Farley, & Webster, 1993). Customer orientation is generally thought to be a focus on understanding and fulfilling the needs of customers. It is widely thought to be a critical element of the larger concept of market orientation (Narver & Slater, 1990). It seems apparent then that both human resource management and customer/marketing management are important elements of creating satisfied customers and achieving superior total firm performance. Thus, the small business manager that can develop strong customer focus and strong employee focus, and understand the linkages between these managerial perspectives, can likely gain a competitive advantage, improve customer satisfaction, and improve the firm's financial performance. The research reported in this study integrates important human resource management constructs with important customer focused constructs in an overall model of firm performance. Our conceptual model suggests that small business managers possess both customer focus and employee focus. Importantly, customer focus is hypothesized to be a major determinant of reported human resource management practices as well as reported customer management practices. Both human resource management practices and customer management practices are hypothesized to have a direct effect on customer satisfaction. Finally, customer satisfaction has a direct effect on firm performance. Data collected from a sample of small firms support our hypotheses and lend credence to our overall conceptualization of the marketing-human resource interface. BACKGROUND A firm's customer orientation is thought to be a major factor determining overall performance of the company. Customer focus is a key part of Kohli and Jaworski's (1990) market orientation construct (see also Narver & Slater, 1990). Market orientation has been defined as the firm-wide process of generating, disseminating, and responding to market intelligence regarding customer needs (Kohli & Jaworski, 1990; Narver & Slater, 1990). There are three components of market orientation: (1) customer orientation, (2) competitor orientation, and (3) interfunctional coordination (Narver & Slater, 1990). Customer orientation involves developing an understanding of customer needs and preferences and then acting on those needs to create superior value for the customer (Kohli & Jaworski, 1990). …