Internal Marketing: Theories, Perspectives, and Stakeholders [1 ed.] 0367532921, 9780367532925

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Internal Marketing

This book traces the development of internal marketing from initial conceptualisation through to the current issues. It identifies both significant underlying tensions between major theorists and areas in which new perspectives may enrich our understanding of this crucial subject. Internal marketing is the use of traditional strategies by organisations to market themselves to their employees. Presented in bite-sized sections, each of which dissects the most important themes and concepts underpinning the subject, this book explains how subsidiary areas of study have emerged and suggests how the introduction of concepts and perspectives from channel management literature can help analyse the dyadic encounters in which internal marketing takes place. Brown critically extends the scope of internal marketing theory yet further by presenting and analysing new interview transcripts to suggest that internal demarketing – an organisation making itself less attractive to its employees – may sometimes be undertaken intentionally. Internationally applicable and highly accessible, Internal Marketing is perfect for students, teachers, and researchers with an interest not only in internal marketing, but also in employer relations, internal branding, employer branding, and internal communications. It uses clear language and gradually introduces the reader to more sophisticated theoretical concepts step by step, with a uniquely focused, critical, and comprehensive thematic coverage of internal marketing and its extensive theoretical outputs. David M. Brown is Senior Lecturer in Marketing at Northumbria University, UK, where he leads the PhD programme for the Business School. His own PhD thesis examined different perspectives on internal marketing, and he has subsequently published research which expands the concept of internal demarketing. David is a professionally qualified teacher and marketer with 18 years of industrial experience, as well as a Senior Fellow of the Higher Education Academy.

Routledge Studies in Marketing

This series welcomes proposals for original research projects that are either single or multi-authored or an edited collection from both established and emerging scholars working on any aspect of marketing theory and practice and provides an outlet for studies dealing with elements of marketing theory, thought, pedagogy, and practice. It aims to ref lect the evolving role of marketing and bring together the most innovative work across all aspects of the marketing ‘mix’ – from product development, consumer behaviour, marketing analysis, branding, and customer relationships, to sustainability, ethics and the new opportunities and challenges presented by digital and online marketing.

Internal Marketing Theories, Perspectives, and Stakeholders

David M. Brown

First published 2021 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2021 David M. Brown The right of David M. Brown to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Brown, David Michael, 1950– author. Title: Internal marketing: theories, perspectives and stakeholders / David M. Brown. Description: New York: Routledge, 2021. | Series: Routledge studies in marketing | Includes bibliographical references and index. Subjects: LCSH: Marketing—Management. | Marketing channels. | Branding (Marketing) | Communication in organizations. Classification: LCC HF5415.13 .B746 2021 (print) | LCC HF5415.13 (ebook) | DDC 658.8/72—dc23 LC record available at https://lccn.loc.gov/2020023749 LC ebook record available at https://lccn.loc.gov/2020023750 ISBN: 978-0-367-53292-5 (hbk) ISBN: 978-1-003-08132-6 (ebk) Typeset in Bembo by codeMantra

I wrote this book during the spring of 2020 at home in England, surrounded by my family, during the Covid-19 lockdown. I would like to pay tribute to the key workers who toiled under stressful and dangerous conditions at this time, often at the expense of their lives. I am grateful to my students and colleagues, who worked independently and supported each other from afar. I am deeply appreciative of my wife, Tannya, for being the perfect companion during ‘house arrest’ and for her patient home schooling of our children during this time. Finally, I would like to dedicate this book to our daughter, Amelia, and our son, Dylan, who interspersed my writing sessions (and their own academic tribulations) with laughter, conversation, and kickabouts in the back garden. David Brown, Darlington, England, Spring 2020

Contents

1 Introduction to Internal Marketing 1.1 Recent theoretical debates within Internal Marketing literature 2 1.2 Aims and perspectives of this book 5

1

2

9

Internal Marketing: the theoretical background 2.1 Defining Internal Marketing and its underlying concepts and philosophies 10 2.2 The roles and purposes of Internal Marketing 16 2.3 Elements of Internal Marketing 19 2.4 The aims and potential of Internal Marketing 22 2.5 Organisational vision, commitment, and change 24 2.6 Internal Marketing as an integrative mechanism 26 2.7 Internal Marketing, organisational culture, and the relationship with Human Resource Management 28 2.8 Demands, resistance, limitations, and criticisms of Internal Marketing 31 2.9 Internal and external customers and markets: orientation and primacy 34 2.10 Transactions and service in Internal Marketing 38 2.11 Internal service encounters, internal exchanges, and service quality 41 2.12 Satisfaction, trust, and motivation in Internal Marketing 46 2.13 Relationships, communications, customer orientation, and boundary personnel 49 2.14 Measuring and operationalising Internal Marketing 52 2.15 Theoretical limitations of Internal Marketing 54 2.16 Chapter summary 56

viii Contents

3

Selected theoretical evolutions beyond Internal Marketing 69 3.1 The relationship between Internal Marketing and Internal Branding 69 3.2 Organisational and brand loyalty, Brand Orientation, and their relevance to Internal Marketing 71 3.3 Chapter summary 76

4

Dyadic perspectives: how Channel Management theories can inform our understanding of Internal Marketing 82 4.1 Dyadic partnerships 82 4.2 Relationships – from the interorganisational to the intraorganisational 84 4.3 Relationalism, influence, control, and power 86 4.4 Satisfaction, dependency, and interdependency 87 4.5 Commitment, stability, long-term relational orientation, and formalisation 90 4.6 Diplomacy, influence strategies, and incentivisation 92 4.7 Relational quality and norms, and their effects on cooperation and compliance 94 4.8 From interorganisational dyadic behaviour to the dyadic behaviour of individual boundary personnel 95 4.9 Channel conflict 97 4.10 Chapter summary 99

5

The dark side of Internal Marketing: Internal Demarketing 5.1 Identifying Internal Demarketing 107 5.2 A taxonomy of Internal Demarketing 111 5.2.1 Unintentional Internal Demarketing 113 5.2.2 Ostensible Internal Marketing 115 5.2.3 Selective Internal Marketing 117 5.2.4 Selective Internal Demarketing 120 5.3 Chapter summary 122

107



Glossary of terms Index

129 135

1

Introduction to Internal Marketing

Internal Marketing (IM) is considered a management philosophy, an organisational approach, and a collection of strategies and practices. The term is used to refer to the act of an organisation marketing itself to its staff. Its senior managers may wish to do this for numerous reasons – for example, to enhance internal communication, to increase employee retention, to make staff less focused on wage levels, to break down departmental silos, to encourage collaboration, to instil a market orientation and customer-centric behaviours, to embed organisational values, or to reduce the psychic distance between employee and employer. To do this, organisations use marketing approaches more traditionally associated with their interactions with customers and other external stakeholders. Ownership of IM within organisations is often problematic, with only a tiny minority employing a nominated ‘Internal Marketer’. Instead, it may be owned by, and shared between, senior managers, middle managers, Human Resources and Marketing departments, and by various other internal stakeholders – that is, interested parties within the organisation. Recent research suggests that much IM is informal, tacit, and often undetected. Perhaps even more significantly, it has shown that IM may be mismanaged, and that the outcomes of badly handled Internal Marketing may be very damaging to employees, the organisation, and perhaps customers. This book is intended to be used primarily by researchers, teachers, and students of marketing. It begins by identifying the main recent and current debates taking place within IM literature, before tracing the evolution and development of IM as a concept, and its subsequent ‘offspring’ concepts such as Internal Branding. We then suggest how IM theory may be broadened through the reapplication of many Channel Management theories – those previously used to examine relationships between firms and their retailers, dealers, or agents – from an external and interorganisational context into an internal and interpersonal one. The concept of Internal Demarketing is then discussed, before we introduce and analyse fresh data to suggest a re-reading and reconceptualisation of Internal Demarketing. Finally, we discuss what the future may hold for the development of IM, particularly from a theoretical perspective.

2  Introduction to Internal Marketing

1.1 Recent theoretical debates within Internal Marketing literature As we shall discover later in this book, IM has a long theoretical tradition stretching back half a century. A number of its core concepts have been hotly contested, such as whether to consider employees as ‘customers’ or jobs as ‘products’ and whether to prioritise the needs and perspectives of paying customers, the organisation, or members of staff. Likewise, the location of IM’s boundaries has attracted debate, and the very legitimacy of IM has been called into question. The number of publications about IM has grown significantly since the start of the 21st century, so it may appear that the subject is going from strength to strength. However, whether this is true depends greatly on the extent to which IM is being developed as a theoretical concept. To gauge the health of IM theory, and to identify its current concerns, we must analyse the recent literature, establishing whether IM itself has been expanded and updated or whether it has merely been applied into different contexts, providing a lens through which to analyse other foci. A good place to start is Huang’s (2019) comprehensive survey of the 249 IM studies found to have been published between 1990 and 2016 – although it must be noted that by limiting the search to the terms ‘Internal Marketing’, ‘Internal Market’, and ‘Internal Market Orientation’, the author is likely to have missed publications which addressed IM through different terminology, which is a deficiency which we explore later in this book. Perhaps more importantly, the author only focused on empirical papers – an approach which would have missed several of the most seminal IM publications had they been published within this time frame. Notwithstanding these limitations, it is extremely useful to extract the key findings. The survey begins by categorising the 1980s as a conceptual decade for IM, the 1990s as one defined by an ‘outside-in’ perspective considering how external marketing techniques could best be applied to an IM context, and the 21st century as having spawned a significant increase in the number of IM papers, although these have usually constituted the application of IM into new industries or countries rather than the development of IM itself. Almost half of papers in Huang’s (2019) analysis have used Asian populations and organisations. The hotel, hospitality, and tourism industries have accounted for around one third of all commercial contexts, with banking and finance, and medicine and pharmaceuticals, also much better represented than any other industry. The functional variables dominating recent IM theory (i.e. the organisational concerns at the heart of most studies) have been communication, internal market research, training, and knowledge, and the main dimensions underpinning IM frameworks have been employee satisfaction, motivation, attitude, efficiency, communication, recruitment, reward systems, and service. The five main perspectives adopted have been those of stakeholders, CEOs, managers, employees, and customers. Although the author identifies ‘employee’ as the dominant perspective (and believes the

Introduction to Internal Marketing  3

relative lack of customer-oriented studies a deficiency in the literature), this analysis is misleadingly simplistic because, whilst employees are the focus of many recent IM studies, it is not necessarily their needs or perspectives which have been prioritised – employees may well have been scrutinised, but in reality this is almost always from a different party’s perspective. This is not always apparent from article titles and abstracts, with ‘satisfaction’ the focal outcome of around half the papers but, upon closer inspection, usually with employee needs treated as a stepping stone to organisational ones, and the author clarifies this by providing a model of IM impacted by variables and inf luencing employees, who in turn provide outcomes classed as ‘organisation’ or ‘customer’. In short, most theorists have imagined IM as a route to employee need fulfilment only because they believe that this will lead to customer need fulfilment. Ozuem, Limb & Lancaster’s (2018) exploration of the “locus of Internal Marketing” (p. 356) is similarly enlightening in its analysis of the velocity and direction of the theoretical debate, identifying only two studies (Bhattacharya & Korschun, 2008; Smith, Drumwright & Gentile, 2010) in which they believe the customer may not have been granted primacy over the employee, two which questioned whether all stakeholders should have an equal claim over IM (Donaldson & Preston, 1995; Freeman, 2010) and one which applies a Social Identity Theory perspective to IM (Wieseke, Ahearne, Lam & Van Dick, 2009). Indeed, this analysis of the literature brings to the fore some of the limitations which were less apparent in that of Huang (2019). Rafiq & Ahmed (2000), already seminal thinkers in their field, attempted to set the tone for 21st-century IM theoretical developments by suggesting that they should focus on integration and coordination, empowerment, job satisfaction, employee motivation, service quality, employee development, vision, reward, and leadership. Whilst explicitly giving priority to customers, they had previously (Rafiq & Ahmed, 1998) proposed that employees could gain self-actualisation and development from their jobs. However, although subsequent studies have acknowledged employee needs, this has usually been on route to fulfilling commercial needs. For example, Turkoz & Akyol (2008, p. 149) believed that IM could be used “to motivate, educate and coordinate internal customers (employees)…”, which in itself sounds rather authoritarian, “…towards creating satisfaction for external customers”. Employee satisfaction has never been discarded as a concern by theorists, but has been more explicitly considered as a conduit for performance (e.g. Awwad & Agti, 2011; Dos Santos Cerqueira & Mainardes, 2018), organisational citizenship (e.g. Ma & Qu, 2011; Schulz, Martin & Meyer, 2017), loyalty (e.g. Mainardes, Rodrigues & Teixeira, 2019), the delivery of company objectives (e.g. Finney, 2011; Matanda & Ndubisi, 2013), and the foundation of organisational competitiveness (e.g. Birdi et al., 2008). Indeed, the two most recent of the handful of academic books written on IM (i.e. Winston & Cahill, 2016; Kimura, 2019) even state that IM is to be used ‘for growth’, and

4  Introduction to Internal Marketing

their subsequent analyses focus on the potential for commercial and organisational, rather than personal, growth. A decade and a half into the new century, IM models were ref lecting the aforementioned priorities. Perhaps, the most accurate way to identify the real concerns of IM theorists is to analyse how they would measure the success of an IM strategy. Arnett, Laverie & McLane (2002), again placing the concept within the context of the hospitality industry, not only saved organisational performance as their final criterion and sought an evaluation of management, but also included work environment, evaluation of rewards, and role clarity – all of which benefit staff. Narteh & Odoom’s (2015) six suggested dimensions of IM – communication, training, culture, rewards, commitment, and empowerment – were, when stripped back to the branches, proposed with external stakeholders in mind. Kim, Song & Lee’s (2016) five dimensions – welfare, training, compensation, communication, and support – struck a compassionate tone. However, most recent staff-centred publications, such as Chiang & Liu’s (2017) attempt to address employee burnout with IM, have been highly context-specific – often, as in this case, focused on specialised functions within the hospitality industry and in one socio-cultural context. So often, the devil is in the detail. Keller, Lynch, Ellinger, Ozment  & Calantone’s (2006) measure of IM was comprised of four constructs – internal job/product, internal price, internal places, and internal promotion. Notwithstanding the contrived feel of forcing ideas to correspond to Marketing Mix elements, which seem uneasy bedfellows within the Relationship Marketing paradigm guiding IM, the first of these categories does at least promote the idea that employees are marketised and should be marketed to by their employers. Moreover, the 19 statements which inform measurement of the aforementioned four dimensions of IM are all written from the perspective of the employee, which appears to represent a breakthrough to those advocating the primacy, or at least equality, of employees compared to customers and the firm. However, of the 19 statements, nine appertain to the employees’ views of the Human Resources department and its performance and eight to their opinions of their supervisor and colleagues. Whilst this bottom-up perspective and top-down accountability is encouraging, and congruent with the ethos of IM, it nevertheless neglects the ways in which employees’ self-concepts and identities are affected by it. IM theorists have long debated whether to afford the customer, employer, or employee primacy, whether to look down on the phenomenon as policy-makers see it or look up at it through the experiences of staff, and whether to import customers’ values into the internal environment or export employees’ values to the external environment. However, IM’s ‘perspective problem’ appears not limited to the tensions arising from ‘customer v employee’, ‘organisation v employee’, ‘top-down v bottom-up’ or ‘inside-out v outside-in’. Yang & Coates (2010) observed that whilst dyadic interpretations of IM had often promised to surface, they had never properly materialised, despite the often explicit descriptions in IM literature of ‘exchange’,

Introduction to Internal Marketing  5

‘encounters’, and ‘transfer’ taking place between managers, staff, and colleagues. However, ultimately their call for dyadic perspectives in future studies of IM went largely unheeded. It seems that the perspectival deficiencies within IM’s stakeholder orientations are as multidimensional as IM itself.

1.2 Aims and perspectives of this book IM is usually considered a form of relationship marketing concerned with an organisation’s employees. As such, it is longitudinal, transmitting information and values at multiple touch points to enhance the relationship between an organisation and a targeted group, and to engender cognitive, attitudinal, and behavioural changes amongst inf luential stakeholders. It encompasses organisational and managerial beliefs and actions which, by adopting a marketing orientation, are intended to enhance employee practices and achieve efficiencies. By retargeting traditional marketing strategies from the external environment to an internal one, it draws upon an organisation’s marketing capabilities (Rafiq & Ahmed, 1993) to win over the hearts and minds of its employees, whilst often incorporating techniques more closely associated with the Human Resources function (Sasser & Arbeit, 1976; Collins & Payne, 1991; Hales, 1994; Joseph, 1996; Harris & Ogbonna, 2001). The five stakeholder groups identified within IM theory are shareholders and owners, senior executives, managers, employees, and customers – the last of these being beneficiaries of IM outcomes rather than instigators or actors – but managerial and employee perspectives have dominated the extant literature (Huang, 2019). As we have seen, the employee perspectives presented almost always comprise their perceptions of the organisational benefits of IM, whilst their perceptions of employee benefits are either ignored or treated as a means to some commercial end. This perhaps ref lects a theoretical preoccupation in which IM satisfies employees in order to inspire and motivate them towards provision of enhanced customer-centric service (e.g. Berry, Hensel & Burke, 1976; Kohli & Jaworski, 1990; Narver & Slater, 1990; Bennett & Barkensjo, 2005). Such a reductive approach relegates employees to conduit status, deprioritising the internal market of the workforce comparative to the external market, and casting IM as an indirect form of ‘ inside-out’ marketing in which ‘happy workers make for happy customers’. For example, in examining the locus or loci of IM in an article considering the legitimacy of external customer primacy, Ozuem, Limb & Lancaster (2018) identify the principal employee foci as motivation, workforce engagement, feelings of importance, customer experience, customer loyalty (in the context of supermarket shoppers), and company ethos. Even when this problematic perspectival split within IM theory is finally challenged, the authors subsequently apportion primacy to external customers (Ozuem, Thomas & Lancaster, 2016). Therefore, this book will pursue a more balanced perspective which builds upon the sporadic and unfulfilled suggestion that employees might deserve equal legitimacy (Donaldson & Preston, 1995; Freeman, 2010)

6  Introduction to Internal Marketing

or even primacy (Bhattacharya & Korschun, 2008; Smith, Drumwright & Gentile, 2010) within IM. We will begin by presenting the main theoretical concepts underpinning IM, the evolution of the literature, and the key tensions within the academic debate, before tracing the migration of certain IM concepts into adjacent and subsidiary theoretical areas. We will then consider how IM might be reconceptualised by transferring interorganisational dyadic perspectives from Channel Management theory into intraorganisational, interpersonal contexts within the internal market. By transposing concepts from a different area of marketing theory, we will consider the applicability of demarketing categories into IM. In doing so, we re-evaluate Vasconcelos’ (2008) Internal Demarketing by challenging the assumption that it is always an accidental phenomenon, whilst acknowledging the problematic nature of establishing organisational intent and suggesting research approaches to gauge its likelihood. The book concludes with a discussion of the major perspectival challenges facing IM theorists and by suggesting opportunities for further research and theoretical expansion. The discussion and exploration of ID will draw upon rich primary data from interviews with four key informants, helping to demonstrate the potential for theoretical development and perspectival expansion.

References Arnett, D.B., Laverie, D.A., & McLane, C. (2002). Using job satisfaction and pride as internal marketing tools. The Cornell Hotel and Restaurant Administration Quarterly, 43 (2), 87–96. Awwad, M.S., & Agti, D.A.M. (2011). The impact of internal marketing on commercial banks’ market orientation. International Journal of Bank Marketing, 29 (4), 308–332. Bennett, R., & Barkensjo, A. (2005). Internal marketing, negative experiences, and volunteers’ commitment to providing high-quality services in a UK helping and caring charitable organization. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 16 (3), 251–274. Bhattacharya, C.B., & Korschun, D. (2008). Stakeholder marketing: Beyond the four Ps and the customer. Journal of Public Policy & Marketing, 27 (1), 113–116. Birdi, K., Clegg, C., Patterson, M., Robinson, A., Stride, C.B., Wall, T.D., & Wood, S.J. (2008). The impact of human resource and operational management practices on company productivity: A longitudinal study. Personnel Psychology, 61 (3), 467–501. Chiang, C.-F., & Liu, B.-Z. (2017). Examining job stress and burnout of hotel room attendants: Internal marketing and organizational commitment as moderators. Journal of Human Resources in Hospitality and Tourism, 16 (4), 367–383. Collins, B., & Payne, A. (1991). Internal marketing: A new perspective for HRM. European Management Journal, 9 (3), 261–270. Donaldson, T., & Preston, L.E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20 (1), 65–91.

Introduction to Internal Marketing  7 Dos Santos Cerqueira, A., & Mainardes, E.W. (2018). Internal-market orientation and job satisfaction in the public sector: A case study of fire inspectors in Brazil. International Review of Public Nonprofit Marketing, 15, 143–160. Finney, S. (2011). Stakeholder perspective on internal marketing communication: An ERP implementation case study. Business Process Management Journal, 17 (2), 311–331. Freeman, R.E. (2010). Strategic management: A stakeholder approach. Cambridge: Cambridge University Press. Hales, C. (1994). ‘Internal Marketing’ as an approach to human resource management: A new perspective or a metaphor too far? Human Resource Management Journal, 5 (1), 50–71. Harris, L.C., & Ogbonna, E. (2001). Strategic human resource management, market orientation, and organizational performance. Journal of Business Research, 51 (2), 157–166. Huang, Y.-T. (2019). Internal marketing and internal customer: A review, reconceptualization, and extension. Journal of Relationship Marketing, 1–17. Ind, N. (Ed.). (2017). Branding inside out: Internal branding in theory and practice. London: Kogan Page. Joseph, W.B. (1996). Internal marketing builds service quality. Journal of Health Care Marketing, 16 (1), 54–59. Keller, S.N., Lynch, D.F., Ellinger, A.E., Ozment, J., & Calantone, R. (2006). The impact of internal marketing efforts in distribution service operations. Journal of Business Logistics, 27 (1), 109–137. Kim, J., Song, H.J., & Lee, C.K. (2016). Effects of corporate social responsibility and internal marketing on organizational commitment and turnover intentions. International Journal of Hospitality Management, 55, 25–32. Kimura, T. (2019). Internal marketing: Another approach to marketing for growth. London: Routledge. Kohli, A.K., & Jaworski, B.J. (1990). Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing, 54 (2), 1–18. Ma, E., & Qu, H. (2011). Social exchanges as motivators of hotel employees’ organizational citizenship behavior: The proposition and application of a new threedimensional framework. International Journal of Hospitality Management, 30 (3), 680–688. Mainardes, E.W., Rodrigues, L.S., & Teixeira, A. (2019). Effects of internal marketing on job satisfaction in the banking sector. International Journal of Bank Marketing, 37 (5), 1313–1333. Matanda, M.J., & Ndubisi, N.O. (2013). Internal marketing, internal branding, and organisational outcomes: The moderating role of perceived goal congruence. Journal of Marketing Management, 29 (9/10), 1030–1055. Narteh, B., & Odoom, R. (2015). Does internal marketing inf luence employee loyalty? Evidence from the Ghanaian banking industry. Services Marketing Quarterly, 36 (2), 112–135. Narver, J.C., & Slater, S.F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 54 (4), 20–35. Ozuem, W., Limb, N., & Lancaster, G. (2018). Exploring the locus of internal marketing. Journal of Strategic Marketing, 26 (4), 356–372. Ozuem, W., Thomas, T., & Lancaster, G. (2016). The inf luence of customer loyalty on small island economies: An empirical and exploratory study. Journal of Strategic Marketing, 24 (6), 447–469.

8  Introduction to Internal Marketing Rafiq, M., & Ahmed, P.K. (1993). The scope of internal marketing: Defining the boundary between marketing and human resource management. Journal of Marketing Management, 9 (3), 219–232. Rafiq, M., & Ahmed, P.K. (1998). A customer-oriented framework for empowering service employees, Journal of Services Marketing, 12 (5), 379–396. Rafiq, M., & Ahmed, P.K. (2000). Advances in the internal marketing concept: Definition, synthesis and extension. Journal of Services Marketing, 14 (6), 449–462. Sasser, W.E., & Arbeit, S.P. (1976). Selling jobs in the service sector. Business Horizons, 19 (3), 61–65. Schulz, S.A., Martin, T., & Meyer, H.M. (2017). Factors inf luencing organizational commitment: Internal marketing orientation, external marketing orientation, and subjective well-being. Journal of Management Development, 36 (10), 1294–1303. Smith, S.N., Drumwright, M.E., & Gentile, M.C. (2010). The new marketing myopia. Journal of Public Policy & Marketing, 29 (1), 4–11. Turkoz, I., & Akyol, A. (2008). Internal marketing and hotel performance. Anatolia, 19 (1), 149–154. Vasconcelos, A.F. (2008). Broadening even more the internal marketing concept. European Journal of Marketing, 42 (11/12), 1246–1264. Wieseke, J., Ahearne, M., Lam, S.K., & Van Dick, R. (2009). The role of leaders in internal marketing. Journal of Marketing, 73 (2), 123–145. Winston, W., & Cahill, D.J. (2016). Internal marketing: Your company’s next stage for growth. London: Routledge. Yang, H., & Coates, N. (2010). Internal marketing: Service quality in leisure services. Marketing Intelligence & Planning, 28 (6), 754–769.

2

Internal Marketing The theoretical background

Internal Marketing (IM) is a branch of Relationship Marketing in which an organisation communicates and interacts with its employees for mutual benefit (Brown, 2017). It is implemented for a wide variety of reasons and is intended to fulfil many key roles, most of which are inherently interconnected and interdependent, but the key objectives discussed within the theoretical literature may be summarised as follows: (i) to capitalise upon the organisation’s existing marketing expertise by reapplying previously successful strategies and tactics from the external market into the organisation’s internal environment (e.g. Christopher, Payne & Ballantyne, 2013); (ii) to pursue improvements in staff performance (Berry & Parasuraman, 1991; Christopher, Payne & Ballantyne, 1991; Ballantyne, 1997, 2000; Sanchez-Hernandez & Miranda, 2011); (iii) to facilitate interactive, multidirectional relational networks in which knowledge can be nurtured, transferred, and co-created (Varey, 1995; Voima, 2001; Lings, 2004); (iv) to contribute towards the recruitment, satisfaction, and retention of high quality staff (Berry, 1984; Glassman & McAfee, 1992; Quester & Kelly, 1999; Gounaris, 2006); (v) to orient staff towards the external marketplace and their targeted customers and prospects (Grönroos, 1981; George, 1990; Christopher et al., 1991; Ballantyne, 1997; Awwad & Agti, 2011); (vi) to provide a conduit for, or constituent of, a Human Resource Management strategy (Collins & Payne, 1991; Hales, 1994); (vii) to encourage colleagues to treat each other as internal customers when delivering service to them, and/or to instil the perception of jobs as internal products (Berry, 1984; Berry & Parasuraman, 1991; Greene, Walls & Schrest, 1994; Ballantyne, 1997; Caruana & Calleya, 1998; Lings, 2004); (viii) to motivate staff towards the achievement of organisational objectives (Grönroos, 1981; Berry & Parasuraman, 1991; Rafiq & Ahmed, 1993; Conduit & Mavondo, 2001); (ix) to encourage internal market exchange and research, facilitating the growth of organisational competencies and the transmission of organisational knowledge (Ballantyne, 1997, 2000; Ahmed & Rafiq, 2003; Gounaris, 2006; Lindner & Wald, 2011); (x) to stimulate and enable efficacious internal communications (Varey, 1995; Hogg, Carter & Dunne, 1998; Rafiq & Ahmed, 2000; Kale, 2012); (xi) to instigate organisational change and encourage employees to embrace and drive change (Reardon & Enis, 1990;

10  Theoretical background

Christopher et al., 1991; Rafiq & Ahmed, 1993; Varey, 1995; Varey & Lewis, 1999; Winston & Cahill, 2012); (xii) to streamline internal processes, acting as an integrative mechanism to dismantle organisational silos and propagate interdepartmental collaboration (Reardon & Enis, 1990; Christopher et al., 1991; Rafiq & Ahmed, 1993; Varey, 1995; Ballantyne, 1997, 2000; Varey & Lewis, 1999; Kelemen, 2000; Hume & Hume, 2015); and (xiii) to manage the underlying culture of the organisation (Gummesson, 1987; George, 1990; Piercy & Morgan, 1991; Keleman & Papasolomou-Doukakis, 2004). In this chapter, we explore the concepts and expectations underpinning IM, tracing the evolution of IM theory and analysing the key tensions within the literature. We begin by defining IM, its roles, and the elements of which it consists. By examining the aims and potential of IM and the importance of organisational vision, commitment, and change, we focus on IM’s potential as an integrative mechanism, its contribution to organisational culture, and its relationship to Human Resources Management. Although theorists have often taken a somewhat utopian view of IM, we seek out the demands upon, resistance towards, and limitations of IM which occasionally surface within critical appraisals, before analysing the roles of internal and external customers and markets, and the levels of orientation and primacy afforded to each within the academic debate. In the second half of this chapter, we analyse the nature of transactions and service, and the internal service encounters and other internal exchanges within which service quality may be delivered, transferred, or co-created, before establishing how satisfaction and motivation may contribute towards, and result from, IM. The roles of relationships and communication, boundary personnel, and customer orientation are outlined, giving a solid foundation on which to discuss how IM might be operationalised and measured. The chapter concludes by identifying the main limitations of IM literature and opportunities for future research which can enhance the theoretical debate and bring value to practitioners.

2.1 Defining Internal Marketing and its underlying concepts and philosophies I propose the following as a definition of Internal Marketing: Internal Marketing is a social norm enabling employees and their organisations to co-create sustained, incremental, mutual value through reciprocal service and respect. Having proposed this definition, let us explore the previous conceptualisations of IM which inform it. IM is a theoretical area bristling with heated debate. Most of its core principles are strenuously contested, and one theorist (Hales, 1994) even questioned its legitimacy as a concept. Prolonged disagreements have arisen over which stakeholders should be responsible for IM, how it should relate to other organisational functions, who should be the major beneficiaries, whether

Theoretical background  11

organisations should ‘market’ their jobs to employees already doing those jobs, if employees should be considered as ‘customers’, and a host of other theoretical dilemmas. Whilst these scholarly deliberations have possibly hindered the ability of practitioners to design and implement coherent strategies, they are intellectually rewarding and worthy of exploration and development. Furthermore, the field of IM requires fresh theoretical contributions if it is to retain its relevance to a generation which enjoys high degrees of technologically mediated interconnectivity and challenges the traditional boundaries of interaction. Despite comprising both a theoretical field and an area of organisational activity (Sasser & Arbeit, 1976), the criticism remains true today that “there does not exist a single unified notion of what is meant by IM” (Rafiq & Ahmed, 1993, p. 219). IM was first proposed as a way of maximising the benefits of organisations’ expertise by replicating within the internal environment certain marketing strategies which had previously only been targeted at external stakeholders, and in particular customers (e.g. Varey & Lewis, 1999). As the IM concept rapidly developed, it outgrew its initial, basic remit, which later attracted criticism for the narrowness of its scope, the lack of multi-sector application, and the neglect of socio-organisational considerations in its early, rather neoclassical interpretations. Seeking to realise IM’s greater potential in the field of services marketing, Woodruffe (1995, p. 86) challenged its functional boundedness and preoccupation with commercial objectives by proposing the following definition: Treating with equal importance the needs of the internal market – the employees – and the external market through proactive programmes and planning to bring about desired organisational objectives by delivering both employee and customer satisfactions. A less claustrophobic role would be scarcely possible, but this directly contrasts with IM’s early focus on increasing sales volumes simply by inf luencing the behaviours of those ‘boundary-spanners’ or customer-facing staff members most likely to contribute to a purchase transaction located in the external environment (Berry, Hensel & Burke, 1976). The philosophical conditions for broadening the scope of IM were nourished by Porter’s (1980) highly seminal identification of value creation, and therefore the sources of competitive advantage, within numerous organisational functions and roles. This encouraged even those theorists most focused on economic outputs to expand their search for marketing contributions away from the product and the customer sales encounter. By following the lead of Grönroos (1981) and Rafiq & Ahmed (1993) in pursuing the potential of IM to attract, develop, motivate, satisfy, and retain high quality staff who can indirectly impact on an organisation’s commercial performance, many theorists nonetheless baulked at the concept of ‘employees as customers’ (Berry, 1981) and ‘jobs as products’ (Berry & Parasuraman, 1991), considering it misdirected, subversive, and immoderate.

12  Theoretical background

IM is a process in which organisational knowledge and relationships can be nurtured and managed (Ballantyne, 2003; Christopher et al., 2013), the two drivers of which are the organisation (or its management) and its staff. All actors are therefore situated in an internal marketplace which is sometimes presented as the venue for ‘supplier’ and ‘customer’ roles (Collins & Payne, 1991), although such terms are far from universally accepted and, in any case, simplistic in appearing to allocate each role to one entity rather than articulating that each actor should adopt both roles simultaneously and reciprocally. Nonetheless, by proposing employees as ‘internal customers’, early proponents of IM such as Berry (1981) encouraged a marketised approach in which internally focused marketing strategies could draw upon and enhance the organisation’s prowess and experience gained from externally focused marketing (Barnes, 1989). By suggesting the adoption of “marketing-like approaches” internal to the organisation (Ahmed & Rafiq, 1995, p. 34) – the inclusion of ‘-like’ perhaps inferring an element of pretence or at least adaptation – numerous theorists saw for IM a specific and clearly managed remit which stopped well short of granting employees ‘customer’ status. Even those who believed a lack of coercion or leveraging on contractual obligations to be the distinguishing factor between IM and Human Resource Management, and who celebrated the more consensual nature of IM (e.g. Rafiq & Ahmed, 1993), often suggested that the concept of ‘employees as customers’ was an unnecessarily indulgent and misguided prioritisation. Some criticised the term ‘internal customers’ and the notion that jobs were ‘internal products’ to be promoted by organisations to their staff by arguing that these ideas presupposed a universally and uniformly pliant, committed, and motivated workforce whilst neglecting the presence of discontented or rebellious staff who might exploit their ‘customer’ status abusively (Mudie, 2003). Lings (2000) also rejected the concept of ‘employee as customer’, suggesting that Berry’s (1981) conceptualisation of IM had failed to observe heterogeneity, and more specifically the differing expectations of service, amongst employees comparative to external customers. He asserted that IM should accommodate the interdependence of external and internal markets, and the differences between employee roles across organisational functions, to establish more accurately the potential contribution of IM to efficiency. Moreover, he questioned the applicability and relevance of most traditional marketing approaches to internal stakeholders, in this respect challenging the central tenets of IM more robustly than almost all of his contemporaries. As the theoretical focus of IM moved towards ‘boundary-spanners’ (e.g. Hennig-Thurau, 2005) – staff members who are in direct contact with external customers, thereby ‘spanning’ the dyad between supplier and customer – a perspectival shift towards dyadic interpretations looked likely but, despite a f lurry of research into IM interactivity as a driver of organisational efficiency (e.g. Berry & Parasuraman, 1991; Ballantyne, 1997, 2000), this never properly materialised. As noted by Yang & Coates (2010), such perspectives could have

Theoretical background  13

generated useful insights into how IM might manage interactive activities internal to the organisation, rather than analysing its benefits in terms of its ability to instil in staff a customer orientation (e.g. Grönroos, 1981; Ballantyne, 1997; Christopher et al., 2013), but this theoretical area has lain fallow and represents a lacuna which this book addresses. The most commonly adopted interpretation of IM was provided by Rafiq & Ahmed (2000), who described a holistic approach incorporating cross-functional and inter-departmental integration, employee motivation, the dismantling of organisational silos, the propagation of customer orientation to increase external customer satisfaction, the implementation of strategies geared specifically to the achievement of organisational goals, and the retargeting of marketing practices commonly used in external contexts. In doing so, they developed their previous definition of IM as a force for removing “organisational resistance to change” (Rafiq & Ahmed, 1993, p. 222), by highlighting its efficacy in assisting the implementation of organisational strategies, the alignment of diverse internal stakeholders, the integration of staff, and the motivation of a workforce. In both of their explanations of IM, they present a multi-dimensional, f luid, and accommodating interpretation which shares the conceptual clarity of Money & Foreman’s (1996) itemisation of IM’s remit, though not the categorisation – in this case, as vision, reward, and development – which could have helped to translate their ideas more readily into practitioner actions. In his inf luential analysis of IM, Grönroos (1985) called for it to engage in marketing practices not only boundary personnel but also all employees. Whilst he envisioned a highly interactive role for IM, he provided little detail on how employees should be moved between the strategic and tactical engagements which he proposed, and on methods for measuring its effectiveness. His definition of IM is particularly significant, not simply extending the role of employees through interaction and traditional marketing techniques but also promoting sales-mindedness and improving internal transactions and relationships. George (1990) considered such techniques to have great potential to motivate internal stakeholders, and therefore to instil customer orientation and sales-mindedness. In spite of this, he and his contemporaries failed to draw a meaningful distinction between ‘sales-mindedness’ and ‘service-mindedness’, which may have led to the dubious implication that they share common antecedents and drivers. Ballantyne (2000) saw for IM a more dominant, overarching role in which the treatment of employees as customers would increase staff satisfaction, creativity, and independence, thereby increasing service quality to external customers. Berry’s (1981) seminal paper conceptualised IM as an internal exchange logic which should be less concerned with interpersonal employee-toemployee transactions and more with the reciprocal value exchanges between employees and the organisation and how these could be facilitated. In relocating the focus towards interdepartmental transactions, Rafiq & Ahmed (1993, 2000) emphasised the potential efficacy of IM in engendering interfunctional

14  Theoretical background

alignment and integration, and therefore the dismantling of departmental silos to produce a matrix organisation. This reinforced the prevalent belief that the use of marketing techniques to ameliorate employee satisfaction would, through the subsequent provision of improved service levels, lead to improved customer satisfaction. Despite acknowledging that IM encapsulated the management of organisational relationships (Voima, 2000), external commercial concerns were, as so often, not far from the surface. An agreed definition of IM and an accepted scope remain elusive (Rafiq & Ahmed, 2000), particularly concerning its uneasy relationship with HRM. Hales (1994), himself an HRM academic, criticised IM vociferously, accusing it of being at best an unsophisticated rebadging of longstanding Human Resource Management (HRM) strategies, at worst an encroachment by marketers into HRM territory lacking credibility or legitimacy. Such hostility was possibly stoked by the classic delineation of IM’s boundary with HRM, which supposed that whilst HRM could, and would, seek to inf luence staff through coercion and leveraging upon contractual obligations and its legitimate power (French & Raven, 1959), IM would take the ethical high ground, eschewing force in favour of a battle for hearts and minds – a notion which would later be reinforced by Ahmed & Rafiq (2002). The implication of artless bullying appears not have gone unnoticed by HRM theorists. Contrastingly, alternative descriptions of an IM/HRM intersection are plentiful, with a minority of authors (e.g. Joseph, 1996) even suggesting the incorporation of IM into HRM, its principles, theories, and operational technologies – a rare and self less example of interdisciplinary thinking within the IM debate. The ambiguous nature of IM calls for clarification (Ahmed & Rafiq, 2002). Whilst the lack of a unifying definition was the motivation behind Lings’ (2004) design of an IM construct, serious disagreements over IM’s scope and characteristics have lingered to its detriment, and an updated definition is surely overdue. Yang & Coates (2010) devised a conceptual framework for IM which was founded upon four diverse concepts: (i) the implicit nature of an ‘internal market’ (Ahmed & Rafiq, 2002); (ii) the informing of internal service encounters by service literature appertaining to the external environment (Czepiel, Solomon, Surprenant & Gutman, 1985); (iii) the partial defining of IM by and through situational factors (Mintzberg & McHugh, 1985); and (iv) the partial defining of IM based upon a more accurate understanding of the roles of its various contributing actors. In this respect, they drew upon Ahmed & Rafiq’s (2003) description of IM as an organisational philosophy designed to meet the needs of organisations and their employees through emotionally literate undertakings. The concept of IM expanded greatly in the late 1980s and 1990s (Bansal, Mendelson & Sharma, 2001), with Ishikawa (1985) and others extrapolating its logic back to the Total Quality Management (TQM) literature of the 1950s, whilst a separate strand of theorists (e.g. Varey & Lewis, 1999) considered IM totally independent of TQM logic and with origins no more distant

Theoretical background  15

than the 1970s. Most commentators agree that IM is a management philosophy (e.g. Grönroos, 1981, 1985; Ahmed & Rafiq, 2003) which has as its key objectives the maximisation of organisational benefits from previous marketing expertise (Ahmed & Rafiq, 1995), the recruitment and retention of highly qualified staff (George, 1990; Berry & Parasuraman, 1991; Collins & Payne, 1991), and the collaboration, and sometimes unification, of IM with the HRM function to promote organisational behaviours likely to bring sustainable business benefits (Glassman & McAfee, 1992). George (1990), in contrast to Hales (1994), envisaged IM as a managerial philosophy underpinned by a marketing perspective, which could manage human resources (although not usurp HRM), whilst Berry & Parasuraman (1991, p. 151) developed this concept by praising its potential in attracting, nurturing, motivating and retaining highly suitable employees “through job products that satisfy their needs”. In classifying IM as a management philosophy, Grönroos (1981, 1985) reiterated the crucial role played by interaction, whilst Varey (1995) extended the framework beyond the traditional scope of the marketing function, advocating its role as a socio-cultural activity chain, spreading amongst different social groupings, and bonding together individuals with values not directly concerned with economic outputs or benefits, thereby engendering an organisational reorientation. Ahmed & Rafiq (2003, p. 1180) acknowledged this potential of IM as a management philosophy to coordinate multiple diverse activities holistically, and particularly its suitability to bring together those business elements “including internal and external relationships, networks, interaction and collaborations”. It should do this, they asserted, through the management of those individual factors and activities most likely to increase satisfaction amongst partners in the ‘internal supply chain’. In this respect, even theorists concerned mostly with organisational and commercial outcomes were becoming increasingly mindful of the importance of individuals’ social and psychological factors. Rafiq & Ahmed (1995) attributed three stages to the evolution of IM theory: (i) conceptualisation literature primarily concerned with employee satisfaction; (ii) customer orientation literature taking a more externalised and commercial perspective; and (iii) strategy implementation and change management literature. An additional four stages were identified by Hwang & Chi (2005): (iv) conceptualising employees as internal customers; (v) inculcating within employees customer-oriented behaviours; (vi) orienting IM towards HRM principles; and (vii) internal exchange. Therefore, rather than extending Rafiq & Ahmed’s (1995) conceptual discussion, they turn instead to a proposed strategisation of those concepts, contributing to the translation of theory into practitioner approaches. Elsewhere it is also possible to observe a schism within the evolution of the literature and the varying levels of conceptualisation by authors, simply by comparing definitions. For instance, Webster (1992) assigned to IM nothing more than a strategic perspective displaying little commonality with the societal or ethical traditions of

16  Theoretical background

Relationship Marketing, whilst Ahmed & Rafiq (2003, p. 184) declared it an “emotionally intelligent philosophy” – although it must be noted that the latter authors also analysed more operational factors driving the philosophy from beneath, such as the emotional needs of individual actors, organisational goals, the desire to install interfunctional and integrative mechanisms, and the commitment and affective involvement which employees invest towards the fulfilment of organisational objectives. Similarly, when they identified theoretical consensus in the debate over IM’s role in the nurturing of closer organisation–employee relationships, it was adopted as the basis for theorising a range of managerial activities – for instance, by Papasolomou-Doukakis & Kitchen (2004), who anticipated significant potential in changing organisational cultures to embrace the same exchange logics within the internal environment as those already prevalent within external stakeholder relationships.

2.2 The roles and purposes of Internal Marketing The important role played by IM in the attraction, retention, and motivation of committed, capable staff has been recognised by numerous commentators (e.g. Thompson, Berry & Davidson, 1978; Rafiq & Ahmed, 1993). Others have acknowledged its contribution to the management and training of staff to produce consistently high levels of service (e.g. McDonald, De Chernatony & Harris, 2001). However, the incorporation by IM of active promotion of an organisation to its employees has received far less attention (e.g. Greene et al., 1994). Schultz (2004, 2006) considered IM more critical to organisational success than its externally focused marketing, believing staff satisfaction to be a necessary antecedent of customer satisfaction (Fisk, Brown  & Bitner, 1993), largely due to the phenomenon of employees internalising their daily experiences and ref lecting them in their customer-facing interactions – another instance of the notion of ‘happy employees equal happy customers’. Pitt & Foreman (1999, p. 31) also stated that organisations “gain the rewards of [employee] commitment”, and this ref lected assertions that although employees and jobs should be considered internal customers and internal products, respectively (Berry, 1981; Keller, Lynch, Ellinger, Ozment & Calantone, 2006), satisfying the needs of employees should dovetail into, and facilitate, the delivery of organisational objectives. Elsewhere, other theorists are sympathetic in their understanding of IM to the fulfilment of employee needs. For example, Winter (1985) considered its dominant objective to be the alignment, management, and education of employees towards a cross-functional fulfilment of organisational aims, whilst Varey & Lewis (1999) recognised the contribution of IM to these objectives but wished to grant a higher level of primacy to employee needs, criticising the structure and role of IM for enabling manipulation of staff. Since 2000, the boundaries between IM, employee branding, and Internal Branding (and other similarly titled theoretical areas) have become increasingly indistinct, with some commentators deeming them of equal importance

Theoretical background  17

in nurturing an external brand, which ref lects the concerns and demands of customers (Witt & Rode, 2005; O’Callaghan, 2009). Despite earlier theorists having linked organisational reputation, corporate image, and the organisation–employee relationship (e.g. Garvin, 1987), the suggestion became more widespread that IM should maximise its role in the improvement of customer satisfaction and external service quality (Ewing & Caruana, 1999; Bansal et al., 2001). Nevertheless, the key benefits of IM were elsewhere linked to organisational functionality and internal structure by those envisioning a role for IM which was centred on the implementation of organisational strategy (e.g. Tansuhaj, Wong & McCullough, 1987; Piercy, 2002). In analysing the contribution deliverable by IM in the implementation of organisational initiatives, Ahmed & Rafiq (1993) noted its potential to help organisations conquer resistance to change from internal stakeholders, although they later contextualised this stance by advocating a more robust role for IM in the promotion of organisational interfunctionality, in the coordination and integration of colleagues, and in their subsequent alignment towards the implementation of strategies (Ahmed & Rafiq, 2000). These suggestions were driven by a preoccupation with customer satisfaction, and the belief that it could be improved by highly committed, customer-oriented employees. In extending and developing their ideas yet further, they suggested approaches which might deliver a healthy balance between the needs of individuals and organisational goals by leveraging upon the unique skill sets and capabilities represented within the workforce to advance competences which could transcend traditional silos (Ahmed & Rafiq, 2003). In suggesting a more mechanised role for IM, Darling & Taylor (1989) predated the integrative marketing practices which would be enabled by future developments in digital interactivity, but targeted the role towards well-established themes such as the reduction of conf lict between departments, the discouragement of resistance to organisational change, the dismantling of silos, and the prevention of functional isolationism. Most major studies of IM have addressed issues which go beyond sector-specific concerns, although since 2015 much of the published research applies IM concepts into specific industries and countries, testing their transferability rather than extending the scope of IM theory. Harrell & Fors (1992) analysed how IM might need to be handled if it were to be adopted by a manufacturing organisation rather than a service one. Furthermore, by recognising the inherent threat to an organisation’s competitive advantage represented by the commoditisation of products and services, Knox (2004) suggested that relationships between the organisation or brand and its customers would be nurtured more effectively by employees who had been subject to ongoing IM approaches. Taking a more radical stance, Bell, Mangüç & Stefani (2004) suggested that an IM framework should supersede the traditional focus by organisations on their external stakeholders. Even those few theorists who may be in agreement with allocating primacy to employees might find this an extreme position, preferring the middle ground offered by

18  Theoretical background

Peltier, Schibrowsky & Schultz (2003) when they proposed that IM should prioritise the needs of employees but endeavour to encourage, monitor, and reassert customer-consciousness amongst the workforce. Despite their recognition of marketing’s highly effective role in the delivery of customer promises externally, Wilson, Zeithaml, Bitner & Gremler (2012) nonetheless did not consider this an appropriate role to be transferred to the internal environment, even when factoring in the transferability into the internal market of customer-oriented benefits such as perceived brand value (Del Rio, Vazquez & Iglesias, 2001). Instead, most theorists since 2000 have adopted a more cautious stance, identifying IM as an enabling force (Ahmed & Rafiq, 2003) which can establish organisational competencies by nurturing creativity amongst employees. IM has occasionally been yoked to the theme of employee empowerment (e.g. Gounaris, 2006, 2008), but this has generally been underrepresented conceptually, or at least cast as a secondary concern to the commercial considerations to which it was expected to defer. Whilst the remit of IM may encompass the implementation of tactics intended to facilitate the delivery of strategised programmes and employee support for them (Schultz, 2004), it may go further by moderating organisations’ self-interested and opportunistic behaviours towards external stakeholders, effectively saving them from their own excesses (Gummesson, 1987; Ahmed & Rafiq, 2003). These might be considered implicit criticisms of unfettered capitalistic practices. Moreover, they represent a significant ambition for the potential of IM to instil ethical norms and promote societal beneficence. Notwithstanding the aforementioned areas of contention amongst theorists, there is a broad consensus within IM literature regarding its role in managing relationships both internally and, indirectly, externally (Grönroos, 1981; Gummesson, 1987; Rafiq & Ahmed, 1993; Voima, 2000). However, while its occupancy of that role is seldom challenged, the manner in which it should discharge it has been the subject of widely divergent interpretations (Hales, 1994). The most comprehensive discussion of those factors demanding an IM solution was offered not in an academic journal article, but in a consultancy paper (Samms, 1999), which identified the following: (i) changes to the organisational structure at a macro level which necessitate sustained communication between the organisation and employees, including takeovers and mergers or downsizing; (ii) the rebranding of an organisation, which requires all stakeholders to understand, support, and convey the brand values; (iii) a desire to increase the staff focus on external customer relationships, and the training required to achieve this; (iv) the prevalence in outsourcing, which demands that staff employed by third-party organisations and often for a short fixed term perceive themselves and act like in-house staff; (v) the desire to leverage on the internal brand to inculcate a spirit of greater reciprocity between the organisation and its employees; and (vi) the establishment of new strategic alliances or working practices. Though often unvoiced, these may be considered a common thread running the length of the IM theoretical tradition.

Theoretical background  19

2.3 Elements of Internal Marketing As the characteristics, rather than the elements, of IM had dominated much of the literature, Dunmore (2005) sought to rectify this deficiency by proposing seven defining elements: (i) IM is defined by its role in communicating and instilling the values and culture, vision, and missions of an organisation, at both an interpersonal and interdepartmental level; (ii) it should draw together disparate strategies and tactics into a coherent and cohesive corporate approach; (iii) it should be inherently instructive, communicating how services and processes should be undertaken and prescribing metrics and standards by which strategic success may accurately be gauged; (iv) it should be the principal conduit to, and managerial mechanism of, organisational knowledge; (v) it should be the main driver of internal communication; (vi) it should inform the direction of Human Resources strategy, rather than being reactive to it; and (vii) it should be a unifying force between an organisation’s internal and external marketing activities. The final element in particular bestows upon IM an authority which extends beyond its commonly accepted boundaries, and in that respect was more ambitious and holistic than Rafiq & Ahmed’s (2000) response to perceived conceptual shortcomings, in which they identified the following five elements of IM: (i) the motivation and satisfaction of employees; (ii) the orientation of staff towards external customers, and the development of staff behaviours designed to satisfy customers; (iii) the co-ordination and integration of organisational functions, and the nurturing of an interdepartmental mindset; (iv) the application of successful external marketing strategies within the internal environment; and (v) the implementation of a range of strategies united by common objectives. Rafiq & Ahmed’s (2000) list of stipulations, whilst slightly less expansive than Dunmore’s (2005), nonetheless provides an ambitious scope, and both sets of ideas appear readily applicable to practitioners, either combined or separately. Moreover, Ahmed & Rafiq (2003) used it as a springboard into a less conceptual and more practical exploration of IM, when they reapplied the seven elements of the Marketing Mix (Borden, 1964). ‘Price’ became the cost of IM, not in terms of the organisation’s financial investment, but the employees’ emotional labour (Hochschild, 2003) under the weight of IM, representing an admirably ‘bottom-up’ perspective so often absent from IM studies. ‘Promotion’ became the internal communications through which organisations and employees interact, not confined to verbal and written communications, but incorporating symbolism and other routes through which meaning is conveyed. ‘Product’ was the employees’ job, perhaps indicating a softening of the authors’ stance towards heavily marketised interpretations of the internal environment. ‘Place’ encapsulated the various tactics for engaging staff members which, although not corresponding exactly to the external market concept of ‘place’, do recognise the inf luence of intermediaries and channel partners in an “internal supply chain” (Ahmed & Rafiq, 2003, p. 1180), representing an unrealised opportunity for subsequent research to

20  Theoretical background

assess the transferability of dyadic perspectives from Channel Management literature into IM contexts. ‘Place’ may also encapsulate the workplace or the location of dyadic interactions. This use of the term differed from Dibb’s (1997, 2001) application of it to the internal departments hosting IM, and Piercy & Morgan’s (1991) very structured consideration of ‘place’ as venues created by technical and social inf luences for the delivery of products and communication. ‘Physical evidence’ became the materials reinforcing the precepts and aims of IM, such as memoranda or guidelines, and this ref lected the esteemed role which Bansal et al. (2001) gave to it, based on their belief that customer satisfaction would increase commensurate to their perceptions of higher service quality resulting from physical evidence of service delivery. ‘Process’ was the manner in which organisations and employees were expected to transmit value and deliver service via ‘internal service encounters’. ‘People’ became not specifically staff members or managers, but a mixture of both placed in the interactive, dehierarchised roles as ‘internal service providers’. Several other theorists have suggested adapting and adopting the Marketing Mix for the internal environment. Fisk, Grove & John (2007) introduced ‘performance’ to emphasise the f low of IM between employers and their staff – although the dialogical, reciprocal nature of this performance was perhaps understated – and the conveyance of service between employees. These theoretical developments prompted the practitioner, Beckwith (2009), to add ‘packaging’, although the explanation of this largely equated to ‘the marketing of IM’, ref lecting the lack of tangibles within the service domain. Fryar (1991) had previously proposed the inclusion of ‘positioning’ through IM, believing that this would enable organisations to differentiate their job ‘products’ on offer to staff, whilst English (2000) introduced ‘personal relationship’ to promote the role of empathy and ‘chemistry’ in interpersonal relationships within service delivery contexts, which he deemed as inf luential to success as organisation-level actions. In this respect, he shared both the postmodernist appreciation of tacit inf luences and the observation of inf luential interpersonal factors which would gain traction in dyadic studies of Channel Management (e.g. Lai, 2007). Whilst many of the theoretical developments linked to the Marketing Mix have been engaging, few have stimulated further debate, and the rather forced use of category terms beginning in ‘p’ risks giving the impression that more appropriate terms may have been discarded spuriously in favour of self-consciously eye-catching titles (O’Malley & Patterson, 1998; Harker & Egan, 2006). Keller et al. (2006) proposed that the elements of IM include ‘interdepartmental customer orientation’, ‘internal promotion’, ‘internal customer job satisfaction’, and ‘internal customer performance’ although, with the exception of ‘internal promotion’, it is debatable whether these are true elements of IM or should be considered at least partially as consequences. Likewise, in calling for IM to comprise proactive respect, feedback, speed, accuracy, and smart use of information, Finn, Baker, Marshall & Anderson (1996) focused

Theoretical background  21

at a more operational than conceptual level, although this is of undoubted value to practitioners. A further contribution to practice was provided by Tansuhaj, Randall & McCullough (1988, 1991), who suggested that IM should be defined by the designed-in presence of several conditions, namely an organisational mindset which demands positivity towards employees; the inclusion of employees within the recruitment of prospective colleagues, democratising a vital stage of team formation and helping to legitimise the successful candidate; the provision of continued mentoring and formal training; the communication of targeted actions oriented towards achievable objectives; the provision of an environment conducive to staff communication and contribution; an explanation to employees of organisational strategies which are placed in their wider environmental contexts; adoption of a twoway feedback process; and a more coherent relationship between performance and reward, although this final point appears slightly incongruous with the underlying philosophy of IM, as it constitutes a form of positive reinforcement and therefore a very hierarchical form of behaviour management. Likewise, when Schultz (2004, 2006) considered that IM was comprised of organisation-level decisions, instructions, and activities intended to persuade employees to embrace organisational programmes, strategies, and tactics, the explanation appeared insufficiently dialogical or democratised to fit the IM ethos. When Dunmore (2005) declared Employer Branding the dominant component of IM in the attraction, retention, and development of valuable staff, this was consistent with a broader theoretical development. Several researchers had noted the propensity of positive Brand Image to contribute towards commercial success, especially in the case of brands constructed not around salient products but upon stakeholder perceptions derived from its internally and externally directed organisational actions (Kasper, van Helsingden & Gabbott, 2006). Keller (2009) asserted that those organisations enjoying the greatest brand equity invariably shape their external marketing strategies around internal market considerations – a suggestion seemingly approving of internal stakeholder primacy. As Brand Image is derived from symbolism and perceptions (Low & Lamb, 2000), and it represents organisational attributes, customer attitudes, and stakeholder benefits (Aaker, 1996; Keller, 2009), IM professionals should adopt those dimensions of Brand Identity which are likely to be most resonant with internal customers, in the same way that marketers have external customers (Aaker, 1996). The twelve proposed dimensions were clustered within four perspectives ref lecting whether staff perceived the brand as a product, organisation, person, or symbol. Other researchers who have focused less on brand have instead analysed the interconnected nature of IM, relationship building, and internal communication (e.g. Oliver, 1997; Kitchen, 2005), seeing IM as a way to communicate information appertaining to organisational affairs (Grunig, 1992) or to facilitate interpersonal employee communication (Argenti, 1998). Ballantyne (2000) considered IM as a vehicle capable of establishing internal relationships

22  Theoretical background

and refreshing organisational knowledge but, like almost all researchers in this field, found IM to be a rich blend of strategies and concepts which could be approached from a variety of theoretical perspectives (Kelemen & Papasolomou-Doukakis, 2004).

2.4 The aims and potential of Internal Marketing As we have seen, the potential remits intended for IM vary greatly in scope from one theorist to another, but all anticipate an ambitious role which delivers a range of benefits to the organisation, its employees, and customers. The greatest tension within the literature surrounds theorists’ prioritisation of those three entities, and this consideration has inf luenced how authors have perceived the aims of IM. Berry & Parasuraman (1991) described IM as a three-stage process in which employees are enlivened and motivated by treating them as customers and then both employees and ‘the organisation’ (i.e. also at the level of strategic direction and management) are reoriented towards external customers, and finally strategies are implemented to manage change and bring about improvements to performance. Whilst this took a more holistic view to IM than most research, which tended to isolate one single phase of IM for examination, its eventual scrutiny of commercial and external customer benefits ref lects the dominant form of stakeholder prioritisation in the academic debate. Amongst theorists who afforded primacy to internal stakeholders within their IM conceptualisations, Sasser & Arbeit (1976) prioritised the employee ‘market’ and, a generation later, this standpoint was supported by Brooks, Lings & Botschen (1999), who believed that IM constituted a process which should condition the internal market with the primary aim of satisfying the needs of internal customers. Elsewhere in the literature, IM and its role in motivating and satisfying employees has not been envisaged as an altruistically driven managerial choice (e.g. Barnes, 1989), but one which is yoked to the ongoing management and measurement of employees’ task performance and ultimately designed to deliver improvements to productivity (Tansuhaj et al., 1987; Ahmed & Rafiq, 2003). Despite the widespread belief that IM should place internal stakeholders at the heart of any strategy aimed at producing organisational gains (Ahmed & Rafiq, 2003), very few commentators have pursued the delivery of staff satisfaction without placing greater emphasis on its impact on external, commercial benefits. By motivating staff to adopt more customer-centric attitudes and practices, Grönroos (1981) anticipated IM contributing to the integration of departments and individuals, at least in part, by its effectiveness in embedding sales-mindedness amongst those employees who are not engaged in what is traditionally understood as the sales process (i.e. non-boundary personnel), but also those who are. However, this anticipated sales-mindedness translated not only to the organisation treating staff as internal customers, but also to employees being familiarised, through carefully developed programmes,

Theoretical background  23

with the expectations and requirements of external customers. As such an approach was intended to capitalise upon interactions between employees and customers, as opportunities to undertake commercially motivated marketing and sales activities, the delivery of value, and the benefits of improved service are largely targeted externally, with employees cast as net benefactors. This stance is also adopted by Zerbe, Dobni & Harel (1998), who expected that IM would engender a wholesale focus on customers and service within organisational culture, and in places even supported by relatively employee-focused theorists (e.g. Varey & Lewis, 2000), who considered the corporate strategies and ensuing relationships of IM a breeding ground for customer-oriented and service-minded initiatives. By adopting sales and marketing approaches such as negotiation as internal market stimulants, the form of IM considered most effective by Grönroos (1994) would seek to persuade staff into such initiatives and behaviours, thereby building on his earlier discussion around IM roles which had placed the instilling of a customer focus as the main priority (Grönroos, 1985). Hogg & Carter (2000) concurred by calling for IM to engender a service culture and customer-consciousness. However, this theoretical preoccupation developed in a nuanced manner. Ahmed & Rafiq (2003) sought the creation of work system efficiencies through dedicated management of IM mix elements which were intended to increase business performance by establishing higher competencies at both an individual and organisational level, whereas Greene et al. (1994) harboured a more simplistic, unidimensional aim – to promote the organisation, the brand, and its products to employees, thereby embedding product knowledge and stimulating the conditions which may give rise to improved customer service skills. Meanwhile, despite many theorists intending for IM a remit focused heavily on the delivery of either internal or external market benefits, a small number pursued the middle ground linking both groups. For instance, Gummesson (1987) argued that the interdependence between internal and external markets should facilitate implementation of organisation-wide strategies capable of addressing the needs of each. Many authors demonstrated the necessity of balancing the needs of the organisation (and, by default, those of external stakeholders) against those of individuals in the internal environment, in order to improve organisational performance (e.g. De Bussy, Ewing & Pitt, 2003). Rafiq & Ahmed (2000) identified the positive contribution which IM should make in reducing employee role ambiguity. This is the damaging phenomenon in which individual staff members wastefully duplicate each other’s efforts, neglect tasks by mistakenly believing that others are responsible for them, or descend into conf lictual behaviours, due to uncertainty over their job remits. It relates extremely closely to the idea of ‘domain dissensus’ which has been conceptualised as a dyadic, interorganisational phenomenon between partners (e.g. a manufacturer and a dealer) in Channel Management theory (e.g. Rosenberg & Stern, 1971). Whilst it has been pivotal to an understanding of relationships between producer and buyer organisations (Foreman & Money, 1995), it has

24  Theoretical background

been curiously, perhaps detrimentally, absent from the development of IM theory for much of its course. By increasing employee commitment through job satisfaction (e.g. Tansuhaj et al., 1987, 1988, 1991), and by engendering behavioural and attitudinal change (Varey, 1995), IM may boost commercial productivity, stimulate innovative practices, reduce absenteeism, lead to an improvement in relationships between an organisation and its external stakeholders, improve service quality, and, by generating efficiencies, enable the organisation to reduce its financial outlay (Paul, Niehoff & Turnley, 2000), thereby bringing sustainability and stability. As researchers have sought to establish the potential benefits of IM approaches in divergent market and industry contexts, they have often gauged its ability to deliver against specific purposes with socio-political aims – for example, when the management of relationships has been studied between internal and external stakeholders in the context of healthcare provision (Lee, Gombeski & Doremus, 1991). Where IM is implemented with the intention of stimulating organisational innovation, the relationships which it fosters to achieve this may remain informal (Hayton, 2005). However, when IM and internal communications are designed with the principal aim of instilling employee knowledge of policies, strategies, and practices, or increasing staff ‘buy-in’ and foster community spirit (Elving, 2005), these internally located objectives are invariably driven by a desire to improve performance in the external environment (Gabbott & Higg, 2001). In this respect, the internal priorities of organisations – even amongst those theorists most concerned with relational, employee outcomes rather than commercial, organisational ones – are invariably considered alongside or within their external priorities (Berry & Parasuraman, 1991).

2.5 Organisational vision, commitment, and change Whilst IM encompasses a wide variety of interpretations and stances, all theorists agree on its requirement to engender change by inf luencing the attitudes and behaviours of some or all of its actors. In doing this, it instils a service-focused organisational mindset which is communicated to employees and tasked with bridging departments and fine-tuning the dyadic interface between management and staff. IM can increase employees’ emotional commitment to their organisation (Meyer, Allen & Smith, 1993) and is most commonly tasked with doing so in a processual manner (Ahmed & Rafiq, 1995), exerting a positive inf luence on attitudes to work and fostering organisational commitment (Tansuhaj et al., 1991; Gabbott & Hogg, 1996), thereby increasing the probability that the organisation’s marketing plan will enjoy success (Piercy & Morgan, 1994). This “circle of reciprocity” (Ahmed & Rafiq, 2003, p. 1182) within which the overt demonstration of organisational commitment to employees stimulates requited commitment in return contributes to the fulfilment of broad strategic objectives. Adopting a stance which owed much more to social psychology theories than ideas from

Theoretical background  25

the field of economics, Thomson (1998) noted that as the inf luences upon employees’ affective domains are transmitted via interpersonal transactions or encounters, the manner in which an organisation treats its staff becomes increasingly inf luential on their levels of organisational commitment and attachment. This may suggest that by promoting the progressive, fair-minded treatment of staff and the fostering of close working relationships through the diminution of interpersonal psychic distance, IM may be more likely to encourage internal stakeholder adoption of organisational visions and values. Whilst there has been a superficial consensus that IM can foster organisational commitment, the very nature of organisational commitment itself is contested within IM literature, thereby casting doubt upon the robustness of that consensus. O’Reilly & Chatman (1986) believed organisational commitment to be driven by a psychological attachment which was comprised of two dimensions, namely the propensity of the individual employee (rather than the collective workforce) to identify with the organisation and the extent to which organisational norms and values had become internalised by targeted stakeholders. However, this differed substantially from Meyer & Allen’s (1991) proposed structure, which emphasised the importance of three rather different dimensions: the importance of the emotional ties and identification between an employee and their organisation encouraging them to continue working there and to contribute to the culture; the staff perception of exit barriers from which a commitment to stay is necessitated; and a staff sense of obligation in which they become convinced, perhaps at an unconscious level, that remaining with the organisation is the morally correct line of action. The authors labelled these respectively as affective, continuance, and normative dimensions. Notwithstanding the probable utility of this research for organisations wishing to implement IM specifically to increase staff retention, it pays little attention to other potential benefits and relegates employeefocused considerations to a secondary status. There is a lengthy tradition of theory which considers the level of employee identification and involvement with an organisation to be dominant factors in inf luencing the strength of organisational commitment (Porter, Steers, Mowday & Boulian, 1974; Mowday, Steers & Porter, 1979, Baron, Greenberg, DeNisi & Goddard, 1990). Similarly, numerous theorists have analysed the inf luence exerted upon organisational commitment by factors such as the intensity of employee attachment to the organisation (Guimaraes, 1996), and their levels of satisfaction and loyalty. As organisational commitment is widely acknowledged to propagate increased and better quality interaction between employees and external customers, and those theorists linking IM to organisational commitment have concluded that they provide mutually positive contributions (e.g. Caruana & Calleya, 1998), there is strong evidence to show that IM stimulates customer-mindedness amongst employees, both directly and as an indirect outcome of nurturing organisational commitment. Varey & Lewis (1999) conceptualised IM as a process which, being goal-focused and social, could respond to emerging macro-environmental

26  Theoretical background

opportunities and threats by helping to deliver organisational change. In this respect, their expectations of IM differed little from those of Ahmed & Rafiq (1995), who advocated that IM should encapsulate a suite of techniques with which change could be implemented and managed within a multitude of contexts, or from Piercy’s (2002) understanding of IM as a mechanism by which strategic change could be implemented. As Ahmed & Rafiq (1993) wished IM to act as a holistic strategy to dismantle resistance to organisational change, they perhaps intended a realignment of employees interfunctionally to implement organisational strategies, rather than in function-specific silos in which the ‘big picture’ can become lost. This restructuring was later developed by Hogg et al. (1998), who believed change to be best facilitated through a process of ‘enculturation’, but contrasted with the expectations of other theorists, such as Dunmore (2005), who sought speedier routes to the implementation of strategic change and declared more prescriptive and externally focused models of strategic planning obsolete due to their relative neglect of internal market considerations. However, the notion common to all of these interpretations of IM and its relationship to organisational commitment is that IM helps employees to become enabled (i.e. to work more efficiently and autonomously, to make independent commercial decisions, and to find their own ways of delivering customer satisfaction), that it improves service quality, and that it is ultimately responsible – however partially or indirectly – for an increase in external market performance (Greene et al., 1994).

2.6 Internal Marketing as an integrative mechanism Numerous articles have proposed that IM acts as a conduit through which integrated exchanges of value can be channelled within the organisation, thereby capitalising effectively upon market-oriented opportunities which are presented by the capabilities of increasingly customer-focused staff (Ahmed & Rafiq, 1995; Varey & Lewis, 1999). In the majority of cases, this function has been conceptualised as a method of harnessing IM as the machinery of internal alignment (Rafiq & Ahmed, 1993; Ahmed & Rafiq, 2003), aiming employees’ actions uniformly towards the implementation of organisational strategies at an interdepartmental level by nurturing a collaborative appreciation of, and support for, programmes before they are launched (Grönroos, 1981). In doing so, it may be instrumental in dismantling organisational silos (Ahmed & Rafiq, 2003) and representing a managerial philosophy founded upon a spirit of coordination (Berry, 1981; George, 1990; Collins & Payne, 1991; Rafiq & Ahmed, 2000). The integration inherent in this interpretation of IM is intended to develop and sustain organisational frameworks which enable the transfer of value and quality to external stakeholders, and in particular, customers, thereby fulfilling their demands and needs (Ahmed & Rafiq, 2003). In this respect, IM transfers traditional marketing approaches from external, commercial environments into internal, relational ones to fulfil internal and external stakeholder needs (Gummesson, 1987).

Theoretical background  27

The idea of integration in IM has been explored not only at a predominantly interfunctional level (e.g. Grönroos, 1981, 1985), but also from the perspective of streamlining organisational processes, such as production, and of promoting the conditions in which social integration can f lourish (e.g. Grönroos, 1981; Thomson, 1998; Kelemen, 2000). In an echo of earlier studies (e.g. Bak, Vogt, George & Greentree, 1994), Davis (2001) maintained the necessity of integration as an antecedent to customer-mindedness and market orientation, whilst Glassman & McAfee (1992) suggested that those individual actions being subjected to integration might be drawn from a combination of marketing and non-marketing functions, giving staff a more holistic view of the organisation and the interconnectedness of every employee’s job, rather than an isolated knowledge of their own role. Integration cannot be achieved simply by merging functions, but requires collaboration between colleagues and the merging of relationships from both the internal and external environments by “examining all activities involved in satisfying customers throughout the internal supply chain” (Ahmed & Rafiq, 2002, p. 1180). A number of researchers (e.g. Ivancevich & Gilbert, 2000) have chosen to focus on integration within IM at a managerial level, rather than more generally at different hierarchical levels, claiming that by encouraging managers to clarify the remits and objectives of their strategies, they could devolve a greater proportion of the implementation of IM by identifying internal entrepreneurs who would lead their colleagues through times of organisational change. Others (e.g. George, 1990; Varey, 1995; Schultz, 2004) recognised the potential of integrated approaches as a managerial process less prescriptively and more specifically to incorporate considerations such as ethics. Davis (2001) considered that the adoption of an IM perspective would automatically guarantee interaction between employees and those functions charged with delivering added value both inside and outside the organisation, although Ahmed & Rafiq (2003, p. 1180) envisioned a broader role for IM in the defactionalisation of staff functions through the removal of inter-employee barriers and the delivery of ‘strategic coherence’. As an integrative, interfunctional, organisational philosophy (George, 1990), IM was expected to address and neutralise interdepartmental politics (Caruana, Ewing & Ramaseshan, 2000), deescalate and detonate conf lict (Rafiq & Ahmed, 1993), reduce departmental isolation, or promote interdepartmental cooperation (Christopher et al., 2013). Therefore, the framework with which IM aims to integrate is holistic and expansive across all parts of the organisation (George, 1990), rather than just those stakeholders with an immediate inf luence over commercial performance. As discussed, IM is not only a deeply integrative concept (Gummesson, 1987), but may also be conceptualised as an umbrella organisational framework which can both complement and incorporate other internal processes (Rafiq & Ahmed, 1993). In this way, employees become aligned not to a single function but to a unified cluster of processual approaches (Rafiq & Ahmed, 2003), and this unity helps to orient each constituent component

28  Theoretical background

more directly towards external stakeholders and the target market (Grönroos, 1981). As a highly integrative form of management philosophy, IM has been labelled as ‘total’ (Ahmed & Rafiq, 2003), ref lecting its all-embracing ethos. Numerous theorists have stipulated that IM must be consistent with the other functional parts of the organisation (e.g. Grönroos, 1985; Varey, 1995; Schultz, 2004), and particularly in relation to its processes, people, machinery, and materials, in the ways in which it drives interfunctional efficiencies. Furthermore, Ahmed & Rafiq (2003) called for each member of staff to be allocated dedicated roles in the delivery of quality between supplier and customer. In doing so, they expected IM to achieve unity through operational means, whereas other commentators believed that IM should pursue this coordination managerially (e.g. Grönroos, 1981). Whilst a large proportion of IM theory has concerned itself with IM’s relationship and junctions with other organisational functions, including the dialogical process of communication between managers and employees (Hogg et al., 1998), this focus falls short of establishing dyadic perspectives through which IM may be conceptualised. Furthermore, the relationship between IM theory and research into adjoining fields such as Internal Branding has become increasingly indistinct since around 2000, examples of this being LePla  & Davis’ (2003) and LePla’s (2013) studies into the consequences of Internal Branding on the delivery of service to customers and on stakeholder perceptions of brand. Despite the prominence of IM in many studies appertaining to market orientation (e.g. Ahmed & Rafiq, 2003), the integration of staff is sometimes considered the direct antecedent to market orientation, and elsewhere as an indirect precursor which is channelled through IM (Ahmed & Rafiq, 1993) or dependent upon it. Such theoretical pluralism provides significant potential for future research into the nature of IM’s integrative role.

2.7 Internal Marketing, organisational culture, and the relationship with Human Resource Management IM and organisational culture share close ties within theory (Ahmed & Rafiq, 2003). Organisational culture is best understood as the cognitive systems which direct employee values, beliefs, and behaviours (Pettigrew, 1990), and the abstract entity which dictates levels of managerial effectiveness, the role to be undertaken by IM, and the values conveyed (Parasuraman  & Deshpande, 1984). The behaviours inherent within organisational culture are widely considered to be inf luential in improving organisational efficiency (Ahmed & Rafiq, 2003). Schein (2010) declared that the tacitly held cultural elements within social groupings constituted values, artefacts, and assumptions – respectively, employees’ preferred approaches to pursue chosen outcomes through preferred actions, the representations of culture such as traditions and rituals, and the beliefs and opinions adopted universally in a group without challenge. As IM renders organisational and individual behaviour more manageable, it has a valuable role in building competencies,

Theoretical background  29

and establishing practices and routines to nurture Organisational Identity (Papasolomou-Doukakis & Kitchen, 2004) – nourishing shared organisational values which do not simply instil desirable behaviours such as loyalty, but contribute to a broader collective culture within the organisation (Wallace, Hunt & Richards, 1999). By presenting the benefits of IM programmes to employees in a readily accessible manner, staff can be aligned and oriented towards institutional values and organisational objectives (Winter, 1985). Through the adoption and transmission of these values, employees represent, carry, and distribute this culture within the organisation, adjust their professional aspirations, and amend their social norms. IM is instrumental in laying the foundations for such norms (Hogg et al., 1998), which benefit the organisation, as employees are able to internalise the preferred values and behave accordingly in their encounters with external customers (Kelemen, 2000). Ahmed & Rafiq (2003, p. 1178) referred to a ‘collective mind’ which contributes to the formation of Corporate Identity, whilst Davis (2001) explained that interactions between management and staff tend to be centred on the performativity of expected behaviours. In both cases, the authors explored how the f low of culture within organisations adopting IM is often horizontal, rather than a hierarchical trickling down which is provoked by directorial diktat. The behaviours of individuals emanate from a broader culture (or, more properly, a broader range of cultures) and ref lect the levels of customer orientation inherent within the firm (Deshpandé, Farley & Webster, 1993), and in this way IM is responsible for shaping customer contact encounters (Flipo, 1986). Grönroos (1985) posited that IM is responsible for the single most powerful impact upon external relationships, as the organisation has far greater control over its internal market than the external one and can exert the greatest inf luence upon its external environment indirectly through management of workforce orientation. However, he did not make explicit whether the relative ease of inf luencing internal stakeholders was due to the longitudinality of the individual relationships inherent, the proximity and frequency of the contact between the dyadic partners, or from the presence of employees’ contractual obligations. Leveraging on the final one of these factors would represent an invasion of the Human Resource Management remit by IM, especially if we are to define IM’s boundary with HRM as per the explanation of Ahmed & Rafiq (1993). The HRM academic, Hales (1994), strongly believed that IM was seeking to colonise aggressively the territory of HRM, and whilst this was an extreme stance within the literature, there were several supporters of IM who believed that encroachment into HRM had taken place, at least theoretically (e.g. Foreman & Money, 1995; Pitt & Foreman, 1999). Glassman & McAfee (1992) distinguished between IM and HRM, considering the differentiating factor to be IM’s integrative role within marketing, in comparison with his suggestion that the contribution of HRM to IM should simply be one of resourcing it with suitable personnel. This position is almost as extreme as

30  Theoretical background

that of Hales (1994), though opposingly so, by casting HRM in a subservient, supporting role to IM. Bak et al. (1994) also advised that human resources (though, significantly, not the HRM function) should be managed by IM from a marketing paradigm, whilst Joseph (1996) asserted that HRM could be made more effective if HRM theories, practices, and principles were to become embraced within an IM super-construct. In partial contrast to this, Collins & Payne (1991) advocated that IM be a mindset or approach applied to the conduct of HRM. This drew upon Grönroos (1985), Tansuhaj et al. (1988), and Ahmed & Rafiq (2003) by proposing the adoption of a marketing perspective by HRM practitioners. Elsewhere, IM was considered an antecedent to the implementation of successful HRM strategies, especially within the Public Sector (Ewing & Caruana, 1999), where employees often have greater employment rights but less job mobility. Certain commentators saw IM as a powerful resource in HRM’s development of market-aware, customer-oriented staff (Ahmed & Rafiq, 2002; Kotler, Bowen & Maken, 2013) and satisfied employees and customers (Hwang, 2005), due to its potential to generate a new service-focused culture in which desirable organisational values could be spread. Whilst considering IM and HRM as wholly separate entities, Glassman & McAfee (1992) proposed their alignment and integration to improve the effectiveness of both. Kotler & Levy’s (1969) definition of the boundary between marketing and HRM stated that marketing’s lack of coercion was the differentiating factor, and Ahmed & Rafiq (2002) advised IM practitioners to avoid carefully the formalised mechanisms favoured by HRM, although the contractual nature of these mechanisms was not detailed. In contrast to IM, HRM enjoys formal authority within its task-oriented management, and therefore wields more legitimate power than IM in the attraction, recruitment, development, and reward of employees, and being able to terminate employment (Willman, 1989). Collins & Payne (1991) believed HRM and IM to be equally concerned with the management of staff as a resource, whilst George’s (1990) definition of IM, as a holistic, integrative management of human resources, envisaged a similarly broad remit. Whilst Joseph (1996) believed that a combination of IM and HRM could reap increased benefits by improving service quality for internal and external stakeholders, and that IM should pursue such an approach, Hales (1994) rejected the notion that IM should have any inf luence or authority over HRM, considering it a superficial rebrand of established HRM procedures. In pursuit of a broad conceptualisation which could address and encapsulate the interactions between IM and HRM, Gummesson (1987) and Ahmed & Rafiq (2003) considered literature from both theoretical traditions. Nonetheless, whilst acknowledging, albeit implicitly, the dyadic nature of IM encounters, they chose not to draw from theory related to dyadic interactions and conf lict, from Channel Management literature, or from works on social or occupational psychology. The result is that even those IM theorists who are most concerned with relational rather than commercial outcomes take a relatively neoclassical approach to IM, inasmuch

Theoretical background  31

as they tend to conceptualise the actions of stakeholders collectively by considering how they might be dictated by macro-level, economic, and market factors, rather than individually by considering how their behaviours might be inf luenced by localised socio-psychological sidewinds.

2.8 Demands, resistance, limitations, and criticisms of Internal Marketing If organisations wish for their staff to convey positive behaviours towards external customers, it seems intuitive that they are better placed to achieve this by behaving in a positive manner towards their employees (Kotler et al., 2013), modelling norms which they would like their staff to adopt, and ensuring that staff do not feel deprioritised, which would risk instilling resentment that leaks out into the external environment. A common theme within IM is of the necessity to address and satisfy employee needs before those of external customers by reapplying traditional marketing practices from the external to the internal environment, even if this does not entail giving primacy to employees over customers. To implement such an approach, it is vital that IM is congruent with the culture and vision of the organisation, that it enables and encourages employees to identify closely with it, that staff should be included within (at least some) democratised decision-making processes, and that the communications channels within the organisation should constantly be open and transparent (Naudé, Desai & Murphy, 2003). The adoption of these practices should bring about a relational market in which the transaction costs endured by employees within interpersonal encounters are reduced (Pitt & Foreman, 1999), leading to efficiency gains and increased job satisfaction. The development of cross-functional teams is central to the ethos and success of IM (Rafiq & Ahmed, 1995), but may prevent operational issues if specific staff members are so heavily relied upon in their current roles that they have little time or opportunity to become invested in new interdepartmental initiatives. Particularly at the point of programme outset, employees may be subjected to heavy demands, and this is especially true within organisations which expect the same levels of service to be delivered to internal stakeholders as delivered to external customers (Cahill, 1995). However, as each member of staff begins to reap the reciprocated role of beneficiary, the demand becomes compensated. IM usually leverages upon comprehensive training programmes to address demands which are specific to the organisational objectives and are able to orient staff towards them whilst simultaneously empowering employees (Liu, Petruzzi & Sudharshan, 2007), who must be sufficiently motivated to push themselves towards appropriate levels of customer service (Bradley, 2003). Within IM, the staff benefits of their emotional capital must outweigh the demands of emotional labour placed upon them by participating in the IM initiative (Waldron, 1994). In other words, the positive and collaborative

32  Theoretical background

feelings generated by IM, which enable and encourage staff to embrace its ethos and work in a way which is beneficial to themselves and the organisation, should be achieved through a proportionally smaller outlay in terms of the time, money, and effort spent on the initiative and the level of self-sacrifice demanded of staff to align themselves to a new relational orientation. Emotional capital results from the interpersonal interactions within IM programmes and, over a prolonged period, affects their receptiveness to IM, whereas emotional labour – though representing a challenging commitment from staff – may utilise certain extant behaviours and emotions to help them adopt and display desirable attitudes (e.g. Ashforth & Humphrey, 1993; Küpers, 1998). Emotional capital may be accumulated and stored internal or external to the organisation through perceptions held by diverse stakeholders and, whilst incorporating positive emotions such as pride, trust, and commitment, may also be partially comprised of negative ones like apathy, envy, or anger (Thomson, 1998). In addition to the production of emotional capital, the undertaking of emotional labour may require (knowingly or otherwise) employee responses which are forced and unnatural, and the conveyance of emotions which are not representative of their own personality or feelings. This is likely to be stressful to the employee, who must suppress and subsume their personality traits or values beneath the expectations of the organisation. Moreover, it is likely to engender resentment which can damage interactions with internal and external stakeholders and can hinder the ability of staff to share individual experiences, to trust, and to establish any form of intimacy with colleagues (Küpers, 1998). As such, these outcomes are in direct contravention of intended IM objectives. When employees invest in, or commit to, the emotional capital held by the organisation, those doing so under duress or reluctantly whilst suppressing their true values are likely to produce false personification or, at the very least, to present a version of their true emotions which have first been commercialised and inauthentically sanitised (Hochschild, 2003). Such employees may feel scripted, coerced, alienated, and forced to abandon their self-concepts, consequently preventing them from distinguishing between organisational benevolence and coercion (Ashworth & Humphrey, 1994). Therefore, whilst it is desirable to demand at least some level of uniformity in terms of the approach taken and service levels delivered by employees, strict regimentation and prescriptive practices are to be avoided. Failure to do so is likely to produce cognitive dissonance (Festinger, 1957), as employees struggle unsuccessfully to reconcile their true self-concepts to those personal mindsets which they feel are being imposed upon them, resulting in a lack of credibility and resonance, both within interpersonal exchanges (Mudie, 2000) and in terms of external customers’ perceptions of the brand. Stakeholder support and awareness are critical to the success of IM, which must develop constantly to fit the needs of the organisation and to ensure that all stakeholders within an evolving internal market are cognisant with, and accepting of, the rationale for its implementation (Rafiq & Ahmed, 1993).

Theoretical background  33

The operationalisation of IM may be seriously hindered if it encounters internal resistance, either to the programme itself or to the manner in which internal stakeholders are expected to integrate (Schultz, 2004). Likewise, it may be difficult or impossible to fulfil customer expectations and to safeguard brand value if employees are ambivalent to IM (Gounaris, 2008) or where the emotions which they display are forced and false and simply adopted as a personal coping mechanism or to avoid censure (Küpers, 1998). Ahmed & Rafiq (2003) were particularly mindful to the potentially deleterious impact of this phenomenon and described 11 elements within the organisation which they considered controllable by firms seeking to overcome resistance, motivate employees, and instil customer-orientation in their staff. This categorisation drew heavily upon the earlier model of Galpin (1997), who also identified inf luence structures within organisations, albeit using the context of new businesses. In attempting to delineate IM, Lings (2004) expanded upon this framework, concluding that employee resistance to IM, whilst invariably damaging, may not always be wilful or even conscious. Harris & De Chernatony (2001) found that many instances of unconscious employee non-adherence to practices desired by the organisation resulted from a lack of investment in staff training, or from communicating insufficiently the intended outcomes of the IM programme, whilst Harris & Ogbonna (1999) observed that employees vary in their levels of risk-averseness, fear of change, and inclination towards a market-oriented concept, which may originate from a fear of losing political power or personal status (Harris, 2002). Whilst Schultz (1996) perceived a decline in the acceptance and perceived importance of IM amongst managers since the 1990s internet bubble, he did not explain if he considered this a result of changing priorities, budgetary restrictions, or an evolution in management philosophy. A decade later, Gounaris (2006, 2008) contradicted many articles which considered IM to be in the ascendancy (e.g. Rafiq & Ahmed, 2003; Papasolomou-Doukakis & Kitchen, 2004) by lamenting a lack of widespread organisational acceptance afforded to IM, citing the underdevelopment or absence of an IM perspective amongst many managers. Indeed, his conceptualisation of IM pivoted on a description of its adoption by organisations. Both Thomson (1998) and Mudie (2003) believed many organisations suspicious of IM, fearing that their employees would need to adopt phony personae or act disingenuously, and that this would undermine staff goodwill and be self-defeating. To guard against IM being perceived or implemented in a manner which is incongruous with its ethos, Rafiq & Ahmed (2000) proposed that theorists (and perhaps managers) should develop exact, prescriptive lists outlining their desired constituents of IM. The most ardent critic of IM, Hales (1994), attacked it from an HRM perspective, proposing that its open-ended, conceptual nature and lack of rules and boundaries left it vulnerable to abuse and misinterpretation. Voima (2001), most unusually amongst theorists, was very critical of the simple transfer of marketing strategies and techniques from the external to the internal

34  Theoretical background

market, believing this extremely neglectful of the crucial differences in dynamics between the two social entities. For example, as an employee, who is committed to an organisation by the terms of their employment contract, has relatively high barriers to exit and limited mobility, an internal stakeholder is far less able to reject a ‘product’ or ‘service’ offering from the organisation, or even to challenge its ethos, than an external customer, who is likely to be able to take their business elsewhere. In making this criticism, Voima (2001) reinforced the earlier concerns of Narver & Slater (1990), who warned against deriving IM intelligence solely from experiences of external marketing and from commercial market data. Moreover, he also ref lected the concerns of Deshpandé et al. (1993), who believed that such an approach would, by effectively relegating employees to a secondary status moulded around external customer characteristics, fail to address the needs of internal stakeholders. Rafiq & Ahmed (1993) stipulated that distributors and suppliers, or at least the most important ones to an organisation, should be considered within the remit of IM. Although this suggestion is of great theoretical and commercial potential, it has not been seized upon, and provides an opportunity to study key theories from Channel Management literature in the context of IM (and vice versa), which is one of the objectives of this book. By ref lecting those concerns, even only brief ly, Lings’ (2004) later critique, that previous IM literature had paid insufficient consideration to market orientation, seems overstated. Whilst there is little unusual or controversial about Voima’s (2000) description of IM creating and nurturing internal relationships, he also stated that it could be instrumental in terminating such relationships. Once more, this potentially rich (and rather controversial) theoretical opportunity was not capitalised upon by subsequent researchers, although Anosike (2008) criticised it as a distortion. Indeed, even when Vasconcelos (2008) introduced the concept of Internal Demarketing (ID), he failed to consider that IM could play a designated, intended role in this, preferring to see ID as an accidentally botched form of IM. We explore ID in much greater depth later in this book.

2.9 Internal and external customers and markets: orientation and primacy IM enhances customer satisfaction (Berry, 1981, 1984) in part by encouraging employees to be oriented towards external customers (Ahmed & Rafiq, 1995). Piercy (1995, 1996) asserted that an organisation’s IM strategy should not be static, but should be adjusted regularly to ensure an equilibrium between the needs and satisfaction of external and internal stakeholders, warning that if external customer satisfaction outstrips employee satisfaction, this risks resentment which could ultimately lead to poorer commercial relationships. Smith (1997) defined a customer as an individual who pays for a product or service, although it was recognised that these individuals may function within larger groups, and that the payment may not be with money. De Bussy et al. (2003) advocated that IM should inf luence the needs of all

Theoretical background  35

stakeholders to bring about a fulfilment of the requirements of internal exchange relationships – their rationale seemingly based upon a perception of the similarities between external and internal market exchanges (Sasser & Arbeit, 1976). The quality of buyer–seller market exchanges may certainly be improved through IM (Grönroos, 1981, 1985), and as customer tolerance of service quality is only sustainable down to a certain level and this acceptance threshold is inf luenced by environmental factors such as exit barriers (Zeithaml, Bitner & Gremler, 2006), IM enjoys a critical role within many organisations’ strategies for the reduction of customer and employee churn. Kotler et al. (2013) believed that the key contribution of IM is in the recruitment and development of employees who may subsequently deliver excellent service to external customers, although Piercy (1995, 1996) called for a more balanced approach when debating the issue of primacy between internal and external stakeholders. Whilst Foreman & Money (1995) used the term ‘customer’ metaphorically to identify specific employees and their units when reconceptualising how internal service could best be discharged, most theorists adopting the term have done so more literally, contextualising it within the scope of the internal customer value delivery process (e.g. Tansuhaj et al., 1987; Berry, Conant & Parasuraman, 1991; Hartline, Maxham & McKee, 2000; Kennedy, Lassk & Goolsby, 2002). Gummesson (1987) expected individual employees to identify themselves as customers of services delivered by their colleagues, as they receive or provide products, services, and materials. They also contended that employees could not consider their job function to have been properly completed until external customer satisfaction becomes evident. Berry (1981, 1984) was committed to the stance that organisations should treat their employees as internal customers, their job roles as internal products, and their internal environment as an internal marketplace, and this concept was adopted enthusiastically by Gummesson (1987). Ahmed & Rafiq (1993, 2002) found the notion more problematic, citing the lack of choice enjoyed by employees in their ability to adopt or reject a ‘product’. They preferred to conceptualise the ‘employee as customer’ or, more specifically, ‘internal customer’ (Rafiq & Ahmed, 2000), considering IM’s primary purpose to be to inf luence staff towards external organisational outcomes rather than to divert the main f low of power from external customers to employees. Mudie (2003) meanwhile considered that any notion of ‘employees as customers’ was undermining of employee identity, and potentially damaging and disrespectful of the reciprocal exchanges already occurring between organisations and employees. In envisaging an internal marketplace of internal suppliers and customers bounded by the relationships which are nurtured by IM, Brooks et al. (1999) shared a similar opinion to Barnes, Fox & Morris (2004), who considered IM as the necessary underpinning structure for the internal customer supply chain, which would host both horizontal and vertical f lows of value and quality (Rafiq & Ahmed, 2003). As noted by Lings (1999), internal customers may receive service from a variety of suppliers, and may themselves

36  Theoretical background

be suppliers to multiple customers, and this multiplicity of interactive episodes calls for an IM mindset (Hwang, 2005). Those theorists who have argued for internal customer needs to be fulfilled before consideration of external customer satisfaction (e.g. Gwinner, Gremler & Bitner, 1998) have stated the importance of organisations being thoroughly aware of, and willing to act upon, internal issues such as empowerment, communication, job domains, pay, working conditions, and training. Grönroos (1981) believed that primacy should be given to the external customer, not necessarily due to any philosophical concerns, but because he believed this a necessary condition to be in place before employees can be guided towards a customer orientation. Nonetheless, he opined that the design of any strategy should uphold the rights of all stakeholders, regardless of economic status. Whilst Ahmed & Rafiq’s (2003) reworking of Galpin’s (1997) model applied broad brush strokes rather than being prescriptive when explaining how an organisation should create customer value, Frost & Kumar’s (2000) adaptation of SERVQUAL (Zeithaml, Parasuraman & Berry, 1990), which applied it to interactions occurring between boundary personnel and their internal stakeholders, provided more detail. The concept of Internal Market Exchange has been considered by numerous theorists (e.g. Sasser & Arbeit, 1976) as fundamental to IM. Berry (1981) understood the relationship between employees and organisations as broadly similar to those between commercial customers and their suppliers, inasmuch as both arenas are markets in which customer satisfaction is vital. Despite the widespread assumption that employees could be reoriented towards meeting the needs of external customers, addressing the market through a sales-minded marketing mindset (e.g. Grönroos, 1985), the notion of employees having internal customer and supplier relationships (e.g. Wilson et al. 2012) has inf luenced how IM is expected to drive reciprocal value exchange between the organisation and staff (George, 1990) and between colleagues (Rafiq & Ahmed, 2003). Grönroos (1985) considered the internal and external markets to be joined within a pyramidic structure, the external market exerting an inf luence upon the practices and behaviours of boundary personnel and upon the external marketing strategy adopted by the organisation. Moreover, it should inf luence the actions and behaviours of external customers, and of the IM strategy adopted, although the manner in which this approach inf luences interpersonal exchange requires clarification. Money & Foreman (1996) suggested that organisations should initially market their products (that is, the traditional definition of products, rather than ‘job products’) to employees before introducing them to the external market, as this would enable the product to be tested critically by knowledgeable and impassioned users, encourage staff to ‘buy into’ the products’ success, demonstrate empowerment of the workforce, and instil an element of democratisation. Furthermore, Grönroos (1985) intended the marketing competencies of an organisation to be sustained by the competencies of individual employees – although this particular idea still appears to afford

Theoretical background  37

primacy to external stakeholders. Both Lings (2004) and Gounaris (2006) envisaged Internal Market Orientation as a construct which could be utilised for the measurement of the effectiveness of relationships between the organisation and its employees, although the qualitative nature of IM and employee relationships may present challenges to such a quantitative approach. In expanding Narver & Slater’s (1990) construct which underpinned the concept of Internal Market Orientation, Lings (2004) broke it down into specific categories labelled ‘internal market research’, ‘communications’, and ‘response’. ‘Internal market research’ was intended to inform strategies for the exchange of value whilst identifying conditions within the employee market, segmenting the internal market, and proposing strategies for each of those segments. This segmented approach to the internal market, which enables the organisation to tailor approaches to specific staff members rather than adopting a generic strategy, had been almost totally neglected since Woodruffe’s (1995) brief discussion of internal segmentation within her book on services marketing, but plays a major theoretical role in our interpretations of Internal Demarketing (Brown, Dey, Wäppling & Woodruffe-Burton, 2019) which are examined later in this book. ‘Communications’ were intended as an integrative link between employees and managers which would enable the latter entity to verbalise employee needs, whilst ‘response’ encapsulated the managerial design of job specifications, training, and remuneration packages which would build upon the internal market research and communications to address employees’ needs. Lings’ (2004) definition of Internal Market Orientation is rather narrower, focusing on and reinterpreting ideas introduced by Berry (1984) and Grönroos (1985), and is therefore concentrated upon IM’s inf luence upon boundary personnel. Several other academics (e.g. Ahmed & Rafiq, 2003; Gounaris, 2008) criticised this approach. Gounaris (2008) considered IM to have direct relevance to multiple stakeholders, including employees, and that this was not diminished or moderated by a staff member’s hierarchical position or the functional structure of the organisation. Furthermore, Barnes et al. (2004) judged Ishikawa’s (1985) Total Quality Management (TQM) construct, which inf luenced Lings’ concepts, to be equally applicable to relationships solely between employees as to those between staff and external customers. Gounaris’ (2006) IMO concept also used three categories, labelled ‘Internal Market Intelligence Creation’, ‘Internal Intelligence Dissemination’, and ‘Internal Intelligence Response’. Each of these could be considered nuanced expansions of Lings’ (2004) categories rather than entirely new ones, and Kohli, Jakorski & Kumar’s (1993) model focused predominantly on which behaviours they believed necessary for the creation of customer value. By adopting an IMO, Berry (1981) had hoped for organisations to recognise, understand, and address employee demands and expectations, and this has encouraged subsequent theorists to place interactivity at the heart of their IMO concepts. Indeed, Grönroos (1985) saw interactivity as the channel

38  Theoretical background

through which free communication, engagement, and cross-selling could occur, although the most commonly adopted understanding of IMO is that of Gounaris (2006, 2008), who visualised a conduit within the internal environment for the construction of a robust relationship between organisation and employees which would inf luence the process of external value delivery and create external customer value, thereby presenting the organisation with a competitive advantage over those rivals which are focused more rigidly on the external market. As discussed previously, IM theory contains many debates, and one of these concerns the levels of primacy which should be allocated to internal and external stakeholders and their markets. Berry (1981, p. 34) disagreed with previously accepted standpoints, introducing not only the concept of ‘employee as customer’, but also the concept of ‘employee as internal customer’, in this respect helping to assert the marketised nature of the internal environment. The concept of ‘employee as customer’ gained popularity, perhaps not as a self-conscious shift in political paradigm or for reasons of altruism, but as more theorists (e.g. Day & Wensley, 1983; Quester & Kelly, 1999) embraced the notion that satisfied staff were more likely to generate satisfaction amongst external customers and to deliver improvements to organisational performance. Bell et al. (2004) questioned the appropriateness of adopting external market activities and transferring them into the internal environment, particularly as they were concerned with the resource implications and the difference in termination costs to relationships internally and externally to the organisation. Gummesson (1987) and Rafiq & Ahmed (2000) wished to refine the concept of internal customers by absorbing considerations of organisational and employee performance and the role of contractual obligations (and perhaps HRM’s legitimate power achieved by leveraging on employment contracts) inherent in those relationships. Hales (1994, p. 52), the arch-critic of IM, was far more scathing, referring to the concept of internal customers as “an exploitation of the customers’ relationship with the organisation”, and even Rafiq & Ahmed (1993) rejected calls for internal customer primacy, stating that external customers represented the raison d’ȇtre of the organisation, funding it through their payments for products and services.

2.10 Transactions and service in Internal Marketing By placing employees in the roles of supplier and customer, albeit sometimes only implicitly, IM transactions may be considered as organisational encounters between internal customers and their internal suppliers (Rafiq & Ahmed, 1993). Within each internal market exchange relationship, transaction costs are inherent. Each transaction demands effort, time, and emotions (Ouchi, 1980), and this commitment helps to provide reassurance to each partner that the value which is expected to be given and that expected to be received are equivalent to each other (Pitt & Foreman, 1999). This in turn helps to prevent cognitive dissonance (Festinger, 1957). Hewitt (1991) identified a

Theoretical background  39

symbolic interactionist perspective, based on role theory, within service marketing literature, and this tradition is based on the expectation that managers comprehend the nature of their roles and remits due to their perceptions of other people’s expectations of their behaviour, therefore compelling them to act accordingly. This theoretical lens originated when Blumer (1969) proposed three core philosophical premises: first, he posited that people treat other people and objects according to the meaning which that person or object holds for them, thereby imbuing a situational inf luence into every role or service. Taken within the context of IM, this suggests that if there is a change in the situation, this will be matched by a corresponding change in the roles that the actors take. This potentially demands that the IM approach of any organisation should be f lexible enough to accommodate such changes, and especially during times of organisational f lux. However, IM theory has somewhat overlooked this issue, and this may be due to a lack of postmodern perspectives within the field. Second, he explained that all roles adopted by the actors would be given meaning by the social interactions hosting them. Therefore, staff members must play out their roles performatively, defining the manner in which they interpret and act out those roles based upon what they perceive to be other internal partners’ expectations of them. Once more, the inf luence of this role expectation is neglected in IM theory. Third, these perceptions give rise to meanings which are interpreted, modified, and handled by the actor. This perspective, and its applicability into internal service encounters and their roles, gives cause to believe that IM has relied too much on microeconomic theories rather than drawing from occupational and social psychology. Definitions of service have focused on actions (Kasper et al., 2006; Wilson et al., 2012), performances (Kotler & Keller, 2006), and interaction outcomes (Silvestro & Johnson, 1990). In Grönroos’ (2007) conceptualisation of service as a process, he emphasised the critical nature of resources, which included people, in the provision of solutions to customer requirements through interactions (otherwise termed service encounters). The performativity underpinning Kotler & Keller’s (2006) understanding of service, meanwhile, drew heavily upon ideas within Service Dominant Logic (S-D Logic) (e.g. Vargo & Lusch, 2004), and in particular the call for marketers to free themselves of the ageing paradigm in which the selling of physical products dominated (Shostack, 1977), concentrating instead on intangible factors and exchanges. Many commentators (e.g. Bebko, 2000; Kotler & Keller, 2006) have commented on the defining characteristics of services when compared to products – that they are inseparable from the service context, perishable, variable in quality from one exchange to another, and intangible. Silvestro & Johnson’s (1990) discussion on the value exchanged through interactions between organisations and customers, or indeed between boundary personnel and supporting functions and resources (Silvestro, Johnston, Fitzgerald & Voss, 1990), seems to anticipate key ideas from co-creation literature (e.g. Prahalad & Ramaswamy, 2004), despite predating it by well over a decade.

40  Theoretical background

Whilst service was perceived to consist of processes and deeds by Zeithaml, Bitner & Gremler (2003) and Kasper et al. (2006), the first of these sources placed a heavy emphasis on processual performativity, whereas the second scrutinised the outcomes of this performativity and the experiential nature of adopting the role of customers in that process. Like many commentators before them, Doyle & Stern (2006) believed all industries and organisations to be actively and constantly engaged in the delivery of service, even if this service was in the form of a product or a knowledge. Levitt (1972) had previously stipulated that only by individualising and targeting service at individuals could their specific needs and wants be met. The characteristics of service or services have received widespread debate. Svensson (2006) observed that whilst the inseparability of a service is inf luential to both provider and customer, its perishability dictates that its production, consumption, and value transmission must occur simultaneously within the interaction between service provider and customer. This was supported by Grönroos (2007) whilst building on his earlier statement that a service is not simply an intangible as per some suggestions (e.g. Bebko, 2000; Olorunniwo, Hsu & Udo, 2006), but rather an interaction designed to deal with that intangible (Grönroos, 2000). In mapping the relative intangibility of differing goods and services on a bipolar tangibility–intangibility continuum, Shostack’s (1977) explanation was not specific to IM, or even to Relationship Marketing. However, if Bebko’s (2000) subsequent statement, that intangibility denies a customer ownership, is considered correct, this perhaps shifts the conceptualisation of all services closer towards a Relationship Marketing paradigm. In delineating the definitions of service, several studies (e.g. Cook & Thompson, 2000; Jiang, Klein & Crampton, 2000) have noted that as evolution occurs within the service context, the service dimension may also evolve to keep pace with it, and this is especially true in terms of its supply and demand characteristics. In addressing the issue of these evolving contexts, Grönroos (2007) proposed the Servicescape model as an attempt to analyse the inf luence of the environment hosting the service. Lovelock & Wirtz (2002) recommended that organisations could gain competitive advantage if they were prepared to innovate in their design and delivery of new services, and this seems more appropriate in a changing environment, whilst Greene et al. (1994) volunteered IM as the perfect enabler of such a nimble approach to service. Hewitt (1991), whilst appreciating the situational nature of service, chose to focus his explanation on the interplay of multiple actors, whilst Stryker (2002) provided an exploration of the positionality and interdependence of actors – for example, declaring that the role of ‘teacher’, or an informed understanding of the ‘teacher’ role or roles, would be impossible without ‘student’. Svensson (2006) proposed that both service production and consumption construct roles which are expanded by interactions between the service provider and receiver. Therefore, any successful service encounter should be defined through implementation of an IM strategy which identifies

Theoretical background  41

the expected actions, characteristics, and roles expected of them. This provides researchers with an opportunity to re-examine theories from Channel Management literature and generate fresh understanding of the dyadic nature of internal service encounters. Within service encounters, both customers and service providers act out roles which are shaped by the specific context encapsulating the encounter, and if the service is to be successful, the roles are well defined and understood by both parties (Czepiel et al., 1985; Guirguis & Chewning, 2005), thereby reducing domain dissensus. Managers within these encounters adapt the service offerings of their organisations to fit the customer requirements with a greater level of specificity than would be achievable by a bespoke measure, and for this reason service is likely to differ considerably from one department or boundary personnel to another within the same organisation, especially if one takes into account the inf luence of individuals’ personalities and ‘chemistry’. Therefore, this does not necessarily indicate non-adherence to the organisation’s prescribed IM approach (Marshall, Baker & Finn, 1998). George & Grönroos (1989) believed the success of service encounters to hinge upon the service-mindedness of the service provider. Within every service encounter, there should be a mutually beneficial exchange (Doyle & Stern, 2006), in which something of value is transferred from the provider to the receiver in return for something of similar reciprocal value. Miles, Hatfield & Huseman (1991) contended that the benefits which had been prioritised within internal exchange by Sasser & Arbeit (1976), such as employment conditions and remuneration levels, should be considered equally pivotal to the success of internal exchange, as the quality of the service delivered within the encounter is dependent upon levels of satisfaction and motivation amongst boundary personnel. The concept of Internal Service Logic was introduced by Berry (1984) to summarise the exchange of resources such as labour, skills, and time with the financial benefits and security exchanged between organisations and employees, explaining that the inherent reciprocity within the structure is equivalent to the exchange of services and goods for money occurring between organisations and external customers.

2.11 Internal service encounters, internal exchanges, and service quality IM is built around internal service, which itself has been conceptualised in a variety of ways. Yang & Coates (2010), who encouraged a dyadic perspective of IM, sought to establish what constitutes quality within internal service encounters and how it is constructed, customer expectations of service, and the strategies used by managers to address those expectations. Despite approaching questions concerning quality and managerial responses from the standpoint of both ‘service provider’ and ‘customer’, their study of customer expectations made only brief references to the expectations of the service provider, and a gap analysis might be worthwhile in complementing their

42  Theoretical background

enlightening research. Perhaps, the key to deconstructing expectations of service is to unpack the contexts in which the service is hosted – in effect, by exploring its situation, we can understand its situational nature (Hewitt, 1991). Zeithaml, Bitner & Gremler (2006) promoted this line of interrogation by offering the following categorisation of service encounters: (i) ‘recovery’ service encounters in which a staff member responds to a failure within the service delivery process or system; (ii) ‘adaptability’ service encounters in which the member of staff addresses a customer demand or need; (iii) ‘spontaneity’ service encounters in which the employee provides a service which is unexpected and not requested by the customer and perhaps unplanned by the firm; and (iv) ‘coping’ service encounters which occur when one or more employees respond to a problem which has been generated by the customer (e.g. through the misuse of a product). Though potentially useful to practitioners and as the basis for further theoretical development into the needs, expectations, and outcomes of different service types, the application of these ideas in IM literature has not been situated entirely within the internal environment, but across the dyad between the organisation and external customers, and it cannot be assumed that internal and external customers would behave similarly. Albrecht (1998) rejected the classification of services and service encounters, asserting that each one should be crafted to its specific application (and situation). Contrastingly, other theorists (e.g. Sayles, 1964; Strauss, 1996; Davis, 2001) have contended that the differentiability of services, which is engendered by considerations around supply and demand, justifies a categorisation. Sayles (1964) divided service into two thematic areas – ‘workf low relationships’ motivated by a need for task completion and ‘service relationships’ intended to build intergroup alliances internal to an organisation. In his Service Marketing Triangle model, Grönroos (2007) declared that the same organisational objectives should be shared by external marketing (i.e. company-tocustomer service encounters), interactive marketing (i.e. employee-to-customer service encounters), and internal marketing (i.e. company-to-employee service encounters). Although the distinction between ‘external’ and ‘interactive’ has subsequently become blurred in practice by the recent proliferation of interactive, digital media available to organisations for non-personal communication with customers, his distinction between internal and the two forms of external marketing appears less obsolescent. Kang, James & Alexandris (2002) split internal service encounters into three categories: between managers and boundary personnel; between support staff and boundary personnel; and between managers and support staff. In drawing these distinctions, they maintained that each relationship would have different needs and expectations. Likewise, in their research specifically into internal service encounters, Reynoso & Moores (1995) advised managers to tailor the characteristics of each encounter to the inf luence exerted upon it by its host situation. Davis (2001) was another of several theorists who sought to categorise internal service encounters, and found that they would represent a routinised

Theoretical background  43

workf low, a support service to that workf low, or an audit or evaluative service, with the final of these three categories being unique in targeting the needs of individual customers. In turn, this interpretation relied upon Sayles’ (1964) four-part taxonomy of service patterns, in which (i) auditing relationships help to monitor or evaluate a separate relationship, (ii) advisory relationships provide specialist knowledge and expertise, (iii) stabilisation relationships prevent a sense of stability during times of organisational f lux, and (iv) innovation relationships generate fresh insights and knowledge to help the firm capitalise upon emergent opportunities. As failing to consider the situation encapsulating service encounters can impede service interaction and prevent a meaningful appreciation of actors’ behaviour and roles and potential outcomes (McHugh, 1968), practitioners have been urged to consider the differences between encounters which happen remotely (e.g. by phone or mediated by more modern technology) and face to face (Shostack, 1985). This would bring a greater understanding of the role of non-verbal cues in IM. Wilson et al. (2012) stated that this issue had increased in intensity and frequency due to the use of telephony and digital communications, although they said little about how the choice of service encounter type could impact upon the efficacy of IM. Notwithstanding the importance of these articles, service encounters have been invariably understood in terms of face-to-face (Svensson, 2006) interactions between the service provider and the customer, with the exception of Shostack (1985), who preferred to focus on the process of interaction between the customer and the service rather than between customer and service provider. As we have seen, IM has attracted criticism for potentially trapping employees into a regime in which their true feelings, beliefs, and emotions are suppressed (e.g. Hochschild, 2003), with Küpers (1998) expecting this phenomenon to undermine interpersonal exchange by distorting the relational patterns of genuine exchanges and leading to them being misperceived and mistrusted. Ahmed & Rafiq (2003) considered that a central tenet of IM is the management of interactions taking place within the organisation, but did not fully clarify the extent to which managers should allow employees the freedom of individual belief whilst attempting to get them all (to use industry vernacular) ‘singing from the same hymn sheet’. They understood the dependency of IM upon the information and meanings which are transmitted within interactions, whether these are interpersonal or between the organisation and individuals, and recognised that social processes could be enhanced by the organisation identifying and harnessing within its marketing behaviours the activities and values common to all service interactions. Meanwhile, Mudie (2003) adopted a more critical and postmodern stance towards the notion of internal exchange(s), deeming them implausible due to the inf luence of evolving procedures and structures upon the working lives of employees, whereas De Bussy et al. (2003) believed internal exchanges to be readily controllable by any organisation seeking to capitalise upon the needs of stakeholders. Surprenant & Solomon (1987, p. 86) placed the management

44  Theoretical background

of service encounters at the heart of managing service, considering it a “dyadic interaction between a customer and a service provider” but, as with Yang & Coates (2010), not advocating the potentially fruitful examination of dyadic theories specifically from Channel Management literature with a view to their reapplication into internal market contexts. IM can stimulate knowledge renewal within an organisation by constructing and nurturing an internal network of exchange relationships (Ballantyne, 1997, 2000), and the exchange logic informing the interpretation of product and service purchases appears readily transferable into the internal marketplace. Indeed, it has inf luenced several studies of how staff seek fulfilment within their employment (e.g. Berry, 1981; Collins & Payne, 1991). To acknowledge the transition within marketing from sales of goods to customers in a transactional manner to offering a ‘servitisation’ of exchange to embed product-service systems (Vandermerwe & Rada, 1989), it may be worthwhile to identify which dimensions of service quality are applicable to this new paradigm within an IM context when analysed through the lens of SERVQUAL (Zeithaml et al., 1990) or the Nordic Model (Grönroos, 1985). In doing so, Yang & Coates (2010) proposed the categories of responsiveness, empathy, assurance, reliability, consideration, recognition, fairness, communication, and f lexibility. Although the delivery within the internal environment of a consistently high service quality may be facilitated by IM, and it may address the expectations of internal stakeholders whilst satisfying organisational aims (Berry, 1981), service quality is a subjective concept which has proved tricky to define. This is perhaps because it is formed not just from the service, but also from customer perceptions of, and attitudes towards, that service (Parasuraman, 1998; Pakdil & Aydin, 2007). This suggests that more bottom-up research to uncover internal customer experiences is required to complement managerial perspectives. The internal service encounter may be considered a co-creation of the organisation and internal customer, and Svensson (2006) posited that it is determined by the qualities and characteristics of the service provider. Jayawardhena, Souchon, Farrell & Glanville (2007) were keen to reiterate the inf luence of service variability, which they thought had been largely overlooked as a factor in IM studies. Within IM literature, the measurement of service quality is a recurring concern. This is perhaps driven by the ability of outstanding service quality to differentiate an organisation from its competitors and decommoditise its brand (Strydom, 2005). The most widely adopted model in discussions of service quality has been Parasurman et al.’s (1998) SERVQUAL (e.g. Brooks et al., 1999; Frost & Kumar, 2000; Lings, 2000), which has provided a lens through which commentators have focused on reliability, responsiveness, assurance, empathy, and tangibility. Reliability is the ability of a service to deliver promised levels of service consistently, responsiveness is its ability to provide prompt customer assistance commensurate to their requirements, assurance is its propensity to build confidence and trust through the qualities

Theoretical background  45

of employees, empathy is the capacity of service to be attentive and sympathetic to individual customers, and tangibility is the presence of the materials and machinery which can facilitate the service delivery. Using these five dimensions, SERVQUAL provides a gap analysis of the differences between the perceptions, expectations, and realities of service delivery from the perspectives of several stakeholders, and although it has been amended numerous times and attracted continued criticism from others, it remains a useful foundation for research within several contexts (Bogomolova, Romaniuk & Sharp, 2009), including IM. In suggesting that a consideration of the characteristics and needs of specific environments, industries, and customer groups could drive a more critical understanding of certain service dimensions, Grönroos (2007) considered SERVQUAL neglectful of the determinants of high service quality. Both Jiang et al. (2000) and Cook & Thompson (2000) questioned the stability of SERVQUAL’s five dimensions, their representativeness, and their dependence on differing service contexts. Carman (1990) believed the dimensions should be sector-specific, and Buttle (1996) and Gilmore & McMullan (2009) dismissed the dimensions as inappropriate and too simplistic. The most widely used alternative to SERVQUAL has been the Nordic Model of Service Quality (Grönroos, 2007), which identifies seven criteria by which perceived service quality may be judged: (i) the attributes, skills, and professionalism of the service providers; (ii) the attitudes and behaviours underpinning the delivery and prevalent in the organisation; (iii) the accessibility to customers of the service and its f lexibility to their needs; (iv) the trustworthiness and reliability of the service, its creators, and the service providers; (v) the ease with which service recovery is enacted; (vi) the ‘servicescape’, or environment in which the service occurs (Bitner, 1992); and (vii) the credibility and reputation which the service enjoys amongst customers. Grönroos (2007) expanded upon each of these dimensions. The criterium of professionalism would relate directly to the service outcome, as customers’ recognition of the skills, resources, and attitudes being mobilised for their benefit inf luences their levels of satisfaction. Service may be individualised by the behaviours and attitudes of contact personnel, building interactivity across the organisation–customer dyad (or, if we are to relate this to the internal market, perhaps interfunctionally or interpersonally inside the organisation), and as this indirectly delivers customer satisfaction, it may be considered a process-linked criterion. For a customer to perceive a service as accessible, they must feel that it is tailored to their specific needs – this corresponds closely to the concept of ‘idiosyncratic investments’ from Channel Management literature (Anderson & Weitz, 1992), the applicability of which to IM we shall consider later in this book. The service trustworthiness and reliability reassure customers that boundary personnel have agreed actions with them and with their organisation, so that promises will be met and the service provider will act with integrity, and customers find service recovery satisfactory when appropriate remedial action is undertaken in a timely manner. The ‘servicescape’ relates to Hewitt’s

46  Theoretical background

(1991) notion of contextual inf luences upon service, but Grönroos’ (2007) explanation also ref lects the idea of ‘physical evidence’, which Bitner (1990) used to explain how the service environmental may inf luence interpersonal interaction through the reinforcement of service quality expectations and promises. The credibility and reputation of services, which can inspire trust and transmit shared values between the organisation and customer, are perhaps more important now than when the Nordic Model was introduced due to the speed and reach of electronic Word of Mouth enabled by new media, and its effect upon customer purchase decisions. Both SERVQUAL and the Nordic Model assess service quality from the service receiver’s perspective. This complements the insights from previous organisation-focused research, but slightly neglects the collaborative nature of service, which may increasingly be co-constructed between provider and customer (e.g. Prahalad & Ramaswamy, 2004) as the enablement of interactive media grows. It also largely overlooks the dyadic nature of service encounters (Yang & Coates, 2010), and whilst SERVQUAL has been applied to the internal market numerous times (e.g. Frost & Kumar, 2000; Lings, 2000), the Nordic Model was underutilised in this context until Yang & Coates (2010). Outside SERVQUAL and the Nordic Model, service quality has been conceptualised as comprising dimensions as diverse as corporate image (Lehtinen & Lehtinen, 1982) and, in the context of customer-perceived service quality, customer perceptions and expectations (Parasuraman, Zeithaml & Berry, 1988). Yang & Coates (2010) emerged from this complicated theoretical melting pot having selected the elements most appropriate to an internal market context, expanded them, and presented them as 20 specific dimensions which offer great potential in guiding practitioners and perhaps even greater potential, although so far overlooked, for theoretical development. Their dimensions, all of which require little explanation, are assistance, caring, competence, consideration, communication, credibility, defending, encouragement, explanation, empathy, fairness, f lexibility, listening, professionalism, responsiveness, recognition, reliability, security, sympathy, and understanding.

2.12 Satisfaction, trust, and motivation in Internal Marketing IM plays a crucial role in the delivery of customer and employee satisfaction (George, 1990; Grönroos, 1985; Kotler et al., 2013). Numerous studies have posited that customer satisfaction is dependent upon satisfied customercontact employees (e.g. Berry, 1981; Hales, 1994; Barnes & Morris, 2000; Hogg & Carter, 2000; Liu & Chen, 2006). Employee satisfaction more generally and the empathy displayed by employees towards their staff are linked to customer satisfaction (Zeithaml et al., 1988; Bitner et al., 1990). Berry & Parasuraman (1991) argued that employees must be sure of the customer service quality provided by their organisation if they are to be content in their roles

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and provide a service which raises customer satisfaction. As IM is intrinsically linked with the management of job satisfaction (Gounaris, 2008), and with satisfied employees more capable of delivering strong service to customers, IM can indirectly exert a robust inf luence on the satisfaction of external stakeholders (Greene et al., 1994; Bruhn, 2003; Keller et al., 2006; Papasolomou & Vrontis, 2006). Berry & Parasuraman (1991) defined and analysed customer satisfaction by proposing four elements: (i) a customer’s expectations before service delivery and consumption; (ii) their perception later of how the product or service has been delivered; (iii) the reinforcement or contradiction of those expectations and perceptions during the post-purchase evaluation stage, in which cognitive dissonance (Festinger, 1957) can occur; and (iv) the complaining behaviours of dissatisfied customers. Whilst this classification helps to pinpoint where customer satisfaction occurs, and the benefits to workforce effectiveness of satisfying employees, it would be worthwhile for future research to define the dimensions of employee satisfaction specifically. Ahmed  & Rafiq (2003) believed internal customer satisfaction helps organisations to deliver higher quality service and thus satisfy their external customers, whilst Gummesson (1987) argued that the transfer of traditional external marketing activities to the internal environment can inf luence this significantly. Furthermore, several major studies have recommended that by measuring job satisfaction, organisations have an early indicator of overall company performance (e.g. Sasser & Arbeit, 1976; Brown & McIntosh, 2003; Varey, 1995; Lings & Greenley, 2005; Gounaris, 2006). Positive, satisfying internal encounters engender feelings of partnership and trust (Morgan & Hunt, 1994), which inform the central tenets of IM (Ahmed & Rafiq, 2003). Indeed, satisfaction and trust are widely considered to be both antecedents and consequences of IM. Academic literature has produced much more diverse interpretations of employee and job satisfaction than of satisfaction amongst external customers or unstipulated stakeholders, and their dimensions are usually analysed on a piecemeal basis. A concept of considerable antiquity, it has been understood as an emotional reaction to employment (Smith, Kendall & Hulin, 1969) or from one’s sense of workplace achievement (Hackman & Oldham, 1975). Locke (1976) considered job satisfaction a positive psychological state fuelled by an employee’s healthy appraisal of their work experiences, whilst Spector (1985) believed it to be the extent to which an employee was able to derive satisfaction from their work. By treating employees as customers (Bak et al., 1994) and jobs as internal products (Berry, 1984), IM is able to produce job satisfaction (Berry et al., 1976) by focusing on strategies which are central to the delivery of organisational objectives (Maignan, Ferrell & Hult, 1999). Similarly, although by transmitting value between the organisation and employees by communication and internal exchanges, the organisation can generate commitment (George, 1990) and direct it towards organisational programmes (Ahmed & Rafiq, 2003), little synthesis between theories

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in organisational commitment and the role of employee commitment has occurred within IM literature. In his seminal description of those ‘hygiene maintenance factors’ vital for workforce motivation, Herzberg (1964) identified pleasant working conditions, friendly colleagues, good remuneration, and job security. In a further model seemingly based upon Maslow’s (1954) Hierarchy of Needs, Allen (2001) placed pyramidically above those factors hierarchically arranged levels of increasingly sophisticated staff needs which organisations should fulfil sequentially. These were titled ‘motivational factors’ which could drive staff towards self-actualisation, and included work which is challenging and interesting, the opportunity to fulfil one’s capabilities, the sense that one is making a contribution to something worthwhile and meaningful, recognition and reward for one’s achievements, a sense of one’s importance within the organisation and towards its performance, an involvement in decision-making processes, and liberal access to managerial information. Nalbantian & Szostak (2004) proposed that providing factors such as these through careful recruitment, training, motivation, and management would result in outstanding organisational performance, whilst Gounaris (2006) demonstrated that recognition and reward for outstanding service delivery are amongst the most powerful motivators of staff performance. There has been long-held recognition of the capacity of IM to motivate employees into adopting a customer orientation and a service-minded mindset through marketing approaches applied internally (e.g. Grönroos, 1985; George & Grönroos, 1989; Quester & Kelly, 1999). Thompson et al. (1978) attributed organisational success primarily to the attraction, motivation, and retention of effective staff, especially for firms wishing to gain a competitive advantage through service quality, and Kotler & Armstrong (2013) suggested that employee motivation could be achieved by building a customer orientation through training initiatives which result in good customer service, and could also contribute to it. Flipo (1986) and Rafiq & Ahmed (2000) considered the motivation of staff through IM to be especially beneficial in terms of their alignment to organisational objectives, whilst Varey (1995) stated that IM as a philosophy is built around staff support and motivation. Bell et al. (2004) noted an extensive relationship between managerial and supervisor support of staff and the motivation of those staff to perform their jobs to the best of their abilities. In the recruitment of quality employees to achieve competitive advantage, IM is key (Guest, 1987), and through the coordination and integration of HRM and marketing functions, several IM studies have suggested that HRM can act as a resource tool for managing relationships between organisations and employees (e.g. Berry, 1984; George, 1990; Berry & Parasuraman, 1991; Collins & Payne, 1991; Glassman & McAfee, 1992) – although naturally this was fiercely contested by Hales (1994). Collins & Payne (1991) believed organisations could only retain their best talent by making job roles more fulfilling, empowering staff, the provision of training, by boosting pay and conditions, through motivation packages and IM initiatives, and by offering a

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transparent and achievable career progression. However, their study paid less attention to the effects of external environmental factors, such as the strength of the economy and job market, than upon the commitment of organisations to these initiatives. To develop job roles that fulfil employee needs requires an organisational response which meets staff ’s social and financial needs (Lings & Greenley, 2005). Gounaris (2008) commented that employees who feel empowered are more likely to be satisfied and promote the organisation’s services and image positively, but did not deconstruct the empowerment construct, thereby leaving his definition of internal market orientation slightly patchy, as ‘empowerment’ could be either motivational or relational in nature (Conger & Kanungo, 1988). Furthermore, to link IM solely with motivation would be dangerous, as it appears equally and intrinsically joined to reward, support, empowerment, and other factors. Indeed, empowerment is a particular apposite construct which impacts indirectly upon customer satisfaction and profitability by enabling staff responsiveness and improving their speed of service (Tansuhaj et al., 1987; Lings, 2004; Papasolomou & Vrontis, 2006; Gounaris, 2008). Hales (1994) was highly critical of what many IM theorists consider the basis for empowerment – the encouragement and enablement of staff to feed back useful intelligence to their superiors – as he believed that for an employee to do this without incorporating the communication of their aspirations would be demotivational for them. Pitt & Foreman (1999) also acknowledged IM’s potential to inf lict an incremental cost upon employees in the shape of the increased level of affinity to the organisation being demanded of them, but argued that increased job satisfaction, better remuneration, and greater benefits would more than compensate for this. O’Toole & Donaldson (2002) believed the motivation inherent within IM sufficiently worthwhile to merit the costs incurred, principally due to its ability to improve service quality and customer satisfaction. Despite the widespread acknowledgement of IM’s role in speaking to all internal stakeholders rather than isolated staff members and groups, and in engendering interfunctionality (e.g. Berry, 1984; Grönroos, 1985; Rafiq & Ahmed, 2000; Schultz, 2004), many commentators consider the main benefit derived from IM to be the dismantling of silos and facilitation of innovation and knowledge transfer. The psychological benefits of individuals being able to understand their roles within a broader context, and interacting less bureaucratically with cross-functional colleagues, are usually considered secondary, perhaps because IM has traditionally been theorised from a more microeconomic, positivist standpoint, rather than a sociological and interpretivist position.

2.13 Relationships, communications, customer orientation, and boundary personnel The outcomes of relationships between organisations and customers, and of those entirely between internal stakeholders, are dependent upon a variety of actions, so it is important for IM to prioritise each task according to its

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potential inf luence and put into place a commensurate level of action. This is one of many reasons why IM is usually implemented through relational approaches (Bell et al., 2004), and the quality of relational networks are vital to the development of strong relationships in the internal environment (Grönroos, 1985; Rafiq & Ahmed, 1993; Pitt & Foreman, 1999; Voima, 2000; Ballantyne, 2003; Lings, 2004; Gounaris, 2006). As IM seeks to establish and manage internal relationships (Gummesson, 1987; Piercy & Morgan, 1991; Voima, 2000), several key articles have conceptualised it as a relationship process (Ballantyne, 1997) which coordinates and encourages internal relationships capable of improving external relationships (Grönroos, 1985; Varey & Lewis, 1999). Strong internal relationships may be exploited for external commercial gain through sustained competitive advantage (Varey, 1995). This can be achieved by nurturing an acknowledgement of internal stakeholders’ needs and wants (Ahmed & Rafiq, 2003) and fostering high quality networks to link employees and create value (Bell et al., 2004). De Bussy et al. (2003) and Bell et al. (2004) proposed that IM plays a constructive role in relationship management. However, the undeveloped concept of Internal Demarketing (Vasconcelos, 2008), which we expand later in this book, seems to contradict this. Relationship building encourages collaboration and assists in the communication of knowledge (Ballantyne, 2003), which in turn is transferred by internal exchanges (Berry, 1981; Collins & Payne, 1991) where IM manages the relationship hosting the exchange (Ahmed & Rafiq, 2003). Exchanges are often hierarchical, establishing themselves through organisational or legitimate power and authority structures, and being justified by the role of such exchanges in fulfilling external customer needs. However, network exchanges may occur spontaneously amongst informal networks and arising from informal, social interests, being legitimised or justified later through the adoption of their content against the framework of the organisational hierarchy (Ballantyne, 2003). Rafiq & Ahmed (2003) noted that if one is to understand the nature of exchanges within relationships, one must ascertain the power balances, or imbalances, and levels of coercion which produce them. Day & Wensley (1983) posited that exchange itself was determined by the logic of internal exchange, which itself had, they believed, been theorised only at an abstract level. Notwithstanding these warnings, studies which were specifically focused on marketing exchanges (e.g. Sasser & Arbeit, 1976) established a consensus that value transfer is the predominant motivator in any exchange. Internal communications foster closer relationships between employers and employees, and the strength of these affects the potency of interpersonal interaction in the workforce, establishing customer-consciousness (Hogg et al., 1998) and environments conducive to employee commitment. Indeed, some studies have found that staff commitment grows when formal channels are used by senior managers to present employees with information appertaining to the execution of their job roles, as this builds trust and decreases the psychic distance between managers and employees (e.g. Postmes, Tanis & DeWit, 2000).

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As we have seen, IM can instil customer consciousness in employees (Grönroos, 1981), embedding a customer perspective (Deshpandé et al., 1993). Customer orientation is commonly conceptualised as being interchangeable with market orientation (Hartline et al., 2000; Brady & Cronin, 2001), and the ‘customer first’ ideal (Shapiro, 1988; Webster, 1992). Nonetheless, some academics have proposed similarly allocated levels of primacy between external and internal customers (e.g. Piercy, 1996). Grönroos (1985) believed customer orientation to be interchangeable with the term ‘customer consciousness’, as it ultimately entails increasing profitability (Deshpandé et al., 1993) by considering the needs of customers without alienating other stakeholder groups, and may be transmitted behaviourally via the underlying culture of the organisation (Narver & Slater, 1990). Liu & Chen (2006) believed that to improve levels of customer consciousness, customer contact employees (or ‘boundary spanners’) should be the core focus of the organisation’s IM charm offensive, whilst other theorists have suggested that more attention be diverted to salespeople, to help them undertake satisfactory customer interactions which address customer needs and to help in their decision-making processes so they are more likely to conclude sales without undue pressure (Saxe & Weitz, 1982). This would require organisations to place more emphasis on relational goals and less on the achievement of monthly sales objectives (Dunlap, Dotson & Chambers, 1988), and is therefore relatively neglected within industry. By orienting employees towards customers ( Johnson & Seymour, 1985), IM can harvest market intelligence (Kohli & Jaworski, 1990) which may otherwise have been left at a tacit level in the workforce or wasted completely, and has the potential to deliver a more market-oriented management framework (Varey, 1995) to inf luence organisational and customer decision-making (Shapiro, 1988) and convince staff of the benefits of high quality customer service (Varey, 1995). Whilst Ahmed & Rafiq (2003) stipulated that market and customer orientations, as separate dimensions, could help improve organisational performance if linked with employee satisfaction, they did not explain fully the linkages between them, despite the interconnectedness of the dimensions. By distinguishing between a customer and market orientation, they contradict Narver & Slater (1990) and Kohli, Jaworski & Kumar (1993), who both conceptualised customer orientation as a subsidiary or component of market orientation. Berry (1981) and De Bussy et al. (2003) believed that organisations could indirectly address customer needs by satisfying employee needs, although others have contested this. Kotler & Armstrong (2013) recommended that support staff and boundary personnel be trained and motivated to achieve a strong customer orientation, whilst Cahill (1995) believed that staff who serve their colleagues by considering them customers are more likely to provide high quality external customer service and be customer oriented. Liao & Subramony (2004) proposed that by establishing a customer orientation by managing interactive internal activities, a more efficient internal environment could be created in which customer consciousness is

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normalised – and this could be channelled via the personnel function (Caruana & Calleya, 1998). The advantages to employees and customers alike of a long-term customer orientation have been almost uniformly recognised, especially in the reduction of stress and conf lict (e.g. Kelley, 1992). Sasser & Arbeit (1976) and numerous subsequent theorists have advised organisations to market ‘job products’ to staff as a way of indirectly selling goods and services to external customers, and many have singled out boundary personnel for particular investment, as any misunderstanding over the scope or remit of their role is likely to introduce uncertainty during the implementation of processes (Grönroos, 1981) such as sales meetings, thereby undermining their credibility and ability to achieve commercial objectives. Levels of satisfaction among boundary personnel are often inf luenced by the quality of internal service encounters (Gremler, Bitner & Evans, 1995; Gounaris, 2006), whereas the quality of encounters between boundary personnel and external customers may determine organisational success (Lovelock & Lovelock, 1996), as interactions between buyers and salespeople are vital to the fulfilment of commercial opportunities (Grönroos, 1985). Likewise, interactions between service staff and customers are critical for successful service delivery (Kasper et al., 2006). By refining the interface between employees and customers, customer satisfaction may be improved (Quester & Kelly, 1999), most notably within ‘moments of truth’ when satisfactory interactions are the result of abilities bestowed upon boundary personnel through the interdepartmental alignment inherent in IM (Carlzon, 1987, p. 3). Boundary personnel behaviours inf luence external service delivery (Hartline & Ferrell, 1996). Therefore, it is logical that the behaviours of colleagues within internal exchange encounters may inf luence internal service delivery, and that organisations might benefit from investing in them (Day & Wensley, 1983; Grönroos, 1985; Collins & Payne, 1991). Furthermore, as customers’ perceptions of brand values are inf luenced by their relationships with employees (Papasolomou & Vrontis, 2006), this appears wholly applicable to internal customers, encounters, and exchanges too, presenting a significant opportunity for theoretical development. IM applies marketing approaches to boundary personnel (Greene et al., 1994). Ideally, managers should ascribe as much importance to the care of jobs as to other products, services, and goods (Sasser & Arbeit, 1976). IM is most successful when organisations inform their staff before customers of strategies and policies, ensuring their support and understanding, and implementing them for the benefit of customers and of employees (Grönroos, 1981).

2.14 Measuring and operationalising Internal Marketing Organisations depend upon the improvements to staff performance brought about by IM (Berry, 1984), especially where these entail improvements in market performance (Bekkers & Van Haastrecht, 1993). Whilst economic improvements may be attributable to many other measures besides IM,

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a number of studies have sought to introduce instruments for measuring the efficacy of IM in enhancing organisational performance (e.g. Piercy & Morgan, 1991; Lings, 2004). Gounaris (2008) attempted this by synthesising desirable behaviours and beliefs which arise from marketing campaigns, and Mudie (2003) stated that it could be achieved by gauging the levels of legitimacy which stakeholders perceive an IM approach to have, although this was not undertaken comprehensively, as the nature of legitimacy was not fully clarified and only a narrow range of stakeholders were studied. IM exerts an inf luence upon staff motivation (Berry et al., 1976), whilst these outcomes are delivered by many relationships and stakeholders (Gummesson, 1987; Bell et  al., 2004), suggesting that the metrics for measuring IM effectiveness should cover a broad range of organisational activities and contributors. Mindful of this, Gounaris (2008) demanded that IM be measured holistically, and Varey (1995) proposed that surveys should use data harvested from multiple employee segments to aid managerial strategising, contending that to depend solely on managers and decision-makers for IM intelligence would be to base strategies upon an unrepresentative perspective. The qualitative nature of IM renders it difficult to quantify, even by observing the outputs which it affects, and in their attempts to say how IM should be operationalised, several researchers have abandoned the concept of an internal market populated by internal customers (e.g. Ahmed & Rafiq, 2003; Gounaris, 2008), although it is unclear exactly what drove this change. There appears to be a theory–practitioner gap in academic studies of IM, which are usually highly conceptual and of limited immediate applicability when deciding how to design key performance indicators. Furthermore, there is little advice for practitioners on the implementation of IM (Ahmed & Rafiq, 2003), with the notable exceptions of Foreman & Money (1995) and the accessible but less scholarly book by Drake, Gulman & Roberts (2005). This has been exacerbated as theorists have moved away from attempts to measure processual elements as the Marketing Mix is adapted to the internal market, in favour of identifying steps in the adoption of an internal market orientation (Kohli & Jaworski, 1990; Narver & Slater, 1990). Whilst Ahmed & Rafiq (2003) wished to gauge the competencies linking IM, its operationalisation, and organisational performance, the factors considered are relatively conceptual and unquantifiable. Grönroos (1985) believed that IM could be implemented by managers and staff across the organisational hierarchy, thereby producing a mix of strategic and tactical approaches, whereas Tansuhaj et al. (1991) commented that nominated marketing experts within organisations were usually allocated responsibility for IM, which suggests a practical deficiency. Lings (2004) observed that the implementation of IM is often chaotic and lacking unifying measures of success, with Rafiq & Ahmed (1993) suggesting that the refinement of implementational measures may have been neglected due to IM often being conceptualised as an implementational ‘means to an end’ (i.e. a subservient

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process for the implementation of more highly regarded organisational strategies). Ahmed & Rafiq (2003) were critical of the scope of previous studies, noting that they had neglected to ascertain what mix of programmes should be assembled to implement IM successfully. To address issues appertaining to IM implementation, they posited that effective theoretical models were required. This gap in IM theory is a potentially serious f law, especially when applied to service organisations, as each IM element provides cues to customers which inf luence their perceptions of the organisation’s quality and image (Mudie & Pirrie, 2012). The four key studies of Ahmed & Rafiq (2003), Lings (2004), and Gounaris (2006, 2008) focused heavily on the operationalization of IM (Anosike, 2008).& Rafiq Lings (2004) sought to adapt Narver & Slater’s (1990) marketing orientation construct to explain how IM should be implemented, whereas Ahmed & Rafiq (2003) pursued a more tentative and less prescriptive exploration than had been offered elsewhere (e.g. Pitt & Foreman, 1999; Mudie, 2003). Gounaris (2006, 2008), however, suggested that organisations should operationalise IM by collecting and analysing internal market intelligence than redistributing the insights amongst managers and employees, who in turn would enhance organisational stability, which would improve the internal market product and the service design and delivery (Collins & Payne, 1991; Rafiq & Ahmed, 1993; Varey, 1995).

2.15 Theoretical limitations of Internal Marketing In highlighting a paucity of research into the domains of IM, Ahmed & Rafiq (2003) expressed concern that the debate was unresolved around what IM entails, how it should be operationalised as a managerial strategy, and how it might be developed as a field of academic research. In particular, they criticised the lack of case-based empirical investigation into the efficacy of IM, pointing out that most studies had focused on organisational adoption of IM, rather than how it should complement their wider strategic landscape to contribute towards transformational or commercial objectives. They believed that these deficiencies may have arisen from the inherent difficulties in researching IM due to the need for a theoretical knowledge of HRM, leadership, and organisational studies in addition to marketing. In attempting to bond IM more closely to the concept of internal exchange and internal market research, Lings (2004) and Gounaris (2008) suggested that such research would help address the competitive issues located within the external environment which had been neglected by studies that focused solely on internal integrative functions and thereby understated the potential of IM. Ahmed & Rafiq (2003), Schultz (2004), and Anosike & Ahmed (2009) each recommended more holistic research into the organisational potential of IM, calling for the inclusion of more practitioner perspectives through phenomenological research to produce new insights which would help in the implementation of IM within industry (Anosike, Ehrich & Ahmed, 2012).

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Despite Anosike & Ahmed (2009) partially addressing this requirement by exploring managerial viewpoints, subsequent studies have continued to overlook the experiences of those who may be considered ‘receivers’ of IM or ‘junior partners’. For this reason, bottom-up, multi-perspectival research is needed. This is especially the case when considering the call by Yang & Coates (2010) for dyadic interpretations of IM. Their own adoption of dyadic perspectives was predominantly vertical (i.e. between managers and staff ), with less consideration of how IM is transmitted within single hierarchical levels. Furthermore, they did not draw upon the rich tradition of dyadic theory in other areas of marketing literature such as Channel Management, or the co-creation literature (e.g. Prahalad & Ramaswamy, 2004) so prevalent as they wrote. This book seeks to capitalise upon those traditions to produce a more thorough understanding of IM. Schultz (2006) complained of an increasing lack of relevance to practitioners within IM literature, whilst others noted a paucity of qualitative inquiry and phenomenological approaches (e.g. Ahmed & Rafiq, 2003; Lings, 2004; Gounaris, 2006). The experiences of practitioners should be incorporated into academic interpretations of IM for them to be holistic, structured, and inclusive (Schultz, 2006). Yang & Coates (2010) suggested that research be included into how value is introduced and embedded within internal service encounters between managers and support staff, and into the inf luence of factors such as the work environment and interpersonal relationships upon internal service. Ahmed & Rafiq (2003) identified a lack of commentary on how IM works in practice, which Schultz (2004, p. 119) suggested being addressed by ‘end user research’. The methodology most commonly suggested to address these deficiencies is phenomenological inquiry (e.g. Küpers, 1998; Ahmed & Rafiq, 2003; Gibson & Hanes, 2003; Schultz, 2004; Anosike & Ahmed, 2009), partially due to its ability to explore how context-specific interpersonal interactions and their meanings contribute to organisational actions and activities (Küpers, 1998). To summarise, the main gaps in IM literature are as follows: IM has been insufficiently broken down into its constituent parts, its operationalisation as a managerial strategy and as a field of academic research has been underexplored, and its effectiveness in transforming businesses to achieve commercial objectives has been neglected (Ahmed & Rafiq, 2003). Partially due to a lack of phenomenological approaches (Küpers, 1998), more research is required which bridges the theory-practice divide and incorporates practitioner perspectives (Ahmed & Rafiq, 2003; Schultz, 2004; Gounaris, 2006; Anosike & Ahmed, 2009). By analysing the role of dyads, it should be possible for the first time to understand fully how value is added within internal service encounters between managers and staff, and the inf luences impacting upon such encounters (Yang & Coates, 2010). It would be beneficial to explore those issues which either facilitate or hinder the efficiency of IM as an integrative strategy (Lings, 2004; Gounaris, 2008). In addition to the aforementioned suggestions from other authors, a focus on the perspectives and experiences of ‘junior

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partners’ or ‘recipients’ within IM is likely to democratise the field and provide a more complete understanding of IM’s implementation and inf luence.

2.16 Chapter summary By exploring the major concepts and expectations upon which IM is built, we have traced its evolution from Berry et al.’s (1976) seminal article and Berry’s (1981) conceptualisation of the employee as customer. There have been several hotly contested debates, most notably between theorists who believe that employees should enjoy equal primacy with external customers, or more, and those who strongly disagree in such a marketised interpretation of organisations’ internal environments. We have also noted the difficulties which theorists have experienced when locating the boundary between IM and Human Resource Management, and even the outright repudiation of IM by Hales (1994), but by comparing key definitions of IM, we have been able to establish its intended remit and inf luence, even if the conceptual nature of much of the key literature hinders a translation of theory into practitioner guidelines. The core aims of IM become particularly apparent when analysing the contributions which researchers have advocated for it in areas such as organisational vision and change, the integration of functions, and the propagation of organisational culture. Naturally, there is also plenty of debate and uncertainty, for instance, surrounding the roles and characteristics of internal service encounters, the desired level of customer orientation, and the interplay between motivation and satisfaction. Furthermore, the management of communication and relationships within IM is under-theorised, presenting an opportunity for future development – including later in this book. However, there are key similarities between the visions of IM presented by most theorists, and in the next brief chapter we ascertain how these have informed other important fields such as Internal Branding and been applied within diverse industrial contexts.

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68  Theoretical background Waldron, V.R. (1994). Once more, with feeling: Reconsidering the role of emotion in work. In S.A. Deetz (Ed.) Communication Yearbook (Vol. 17, pp. 388–416). Thousand Oaks, CA: Sage. Wallace, J., Hunt, J., & Richards, C. (1999). The relationship between organisational culture, organisational climate and managerial values. International Journal of Public Sector Management, 12 (7), 548–564. Webster, Jr., F.E. (1992). The changing role of marketing in the corporation. Journal of Marketing, 56 (4), 1–17. Willman, P. (1989). The logic of ‘market-share’ trade unionism: Is membership decline inevitable? Industrial Relations Journal, 20 (4), 260–270. Wilson, A., Zeithaml, V.A., Bitner, M.J., & Gremler, D.D. (2012). Services marketing: Integrating customer focus across the firm (5th ed.). Boston, MA: McGraw Hill. Winston, W., & Cahill, D.J. (2012). Internal marketing: Your company’s next stage of growth. London: Routledge. Winter, J.P. (1985). Getting your house in order with internal marketing: A marketing prerequisite. Health Marketing Quarterly, 3 (1), 69–77. Witt, P., & Rode, V. (2005). Corporate brand building in start-ups. Journal of Enterprising Culture, 13 (03), 273–294. Woodruffe, H. (1995). Services marketing. Pennsylvanie, PA: Trans-Atlantic Publications. Yang, H., & Coates, N. (2010). Internal marketing: Service quality in leisure services. Marketing Intelligence and Planning, 28 (6), 754–769. Zeithaml, V.A., Bitner, M.J., & Gremler, D.D. (2006). Services marketing: Integrating customer focus across the firm (4th ed.). Boston, MA: McGraw-Hill. Zeithaml, V.A., Parasuraman, A., & Berry, L.L. (1990). Delivering quality service: Balancing customer perceptions and expectations. New York: Simon and Schuster. Zerbe, W.J., Dobni, D., & Harel, G.H. (1998). Promoting employee service behaviour: The role of perceptions of human resource management practices and service culture. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l’Administration, 15 (2), 165–179.

3

Selected theoretical evolutions beyond Internal Marketing

As Internal Marketing (IM) is multidisciplinary in its concerns and scope, it often incorporates ideas from different theoretical traditions, and has benefitted from contributions in fields as diverse as leadership, organisation studies, social psychology, occupational psychology, behavioural psychology, economics, industrial relations, Human Resource Management, Channel Management, and numerous others. Likewise, it has made its own contributions to those areas. The sheer interconnectedness between IM theory and its adjoining fields prevents any brief study from capturing all these theoretical relationships, but by selecting those closest to IM in terms of the phenomena, populations, contexts, and concerns, we are able to ascertain how IM has sometimes been developed under different guises. In this chapter, we trace the evolution of IM into those adjacent (or perhaps subsidiary) theoretical areas which owe the most to the central tenets underpinning IM. In particular, we examine the relationship between IM and Internal Branding, paying attention to the debate between proponents of ‘outside-in’ and ‘inside-out’ approaches to Internal Branding. We briefly consider some of the ways in which elements of IM have been ‘rebadged’ by certain theorists, before analysing its relationship with theoretical concepts such as organisational loyalty and citizenship (which are specific to the internal market) and brand loyalty and orientation (which are not). Whilst recognising the theoretical and practical contribution made by employer branding (e.g. Ambler & Barrow, 1996; Barrow & Mosley, 2010), a consideration of that theory is outside the scope of this book, as its principal objective is to increase the brand perceptions of an organisation held by its prospective employees, whilst ‘delivering on the employer brand promise’ is a secondary consideration. In that respect, it is only properly concerned with one of the rationale for undertaking IM which is outlined at the start of this book – the recruitment of high quality staff – and is not sufficiently congruent with IM as a concept to merit analysis in this chapter.

3.1 The relationship between Internal Marketing and Internal Branding IM theory has contributed greatly to debates in Internal Branding since the turn of the millennium. Whilst IM is a particularly multidisciplinary area of

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marketing, overlapping with numerous neighbouring fields, Internal Branding is often considered to be strategic at a more holistic level, and enjoys a greater perceived legitimacy amongst a broader range of more recent theorists (e.g. Vallaster & De Chernatony, 2006). However, it would be an understatement to consider Internal Branding simply as a continuation of IM, and a misrepresentation to consider Internal Branding and IM’s successor. The two areas reciprocally drive each other forwards, despite the frequent contradictions regarding the definition of Internal Branding. Foster, Punjaisri & Cheng (2010) and Punjaisri & Wilson (2017) each explained Internal Branding as strategic, integrated, and integrative, with a role intended to enrich corporate brands through internally focused actions, such as the communication of core values to employees, and the explanation and instillation of brand values within the workforce. This perhaps suggests the ‘top-down’ imposition by managers upon employees of a mindset or organisational philosophy which may contain little staff input or enjoy scant commonality with their concerns. If so, this would represent a reversal of the notion in IM that by designing strategies to satisfy and enable internal stakeholders, their enthusiasm and engagement looks after the external stakeholders, and would contradict the assertions of Chong (2007) and Ind & Bjerke (2007) that Internal Branding should be dialogical and participatory at every stage of its practical development. Foster et al. (2010) believed that IB’s largest contribution could be in the alignment of recently recruited employees to an organisation’s brand, and Cushen (2011) saw increased staff turnover, outsourcing, and other externally inf luenced factors as the main hindrances when acculturating ­ staff to a brand. Gapp & Merrilees (2006) considered Internal Branding more sophisticated than IM – a more mature and better developed continuation of IM theory which seeks improved interdepartmental collaboration to extend its remit beyond the improvement of service quality – although the justification of this standpoint appears to demonstrate an underappreciation of IM. Indeed, whilst this comment criticised IM’s supposedly narrow focus, Vallaster & De Chernatony (2006) posited that the dominant concern of Internal Branding is Employee Brand Orientation, which is itself thought by many theorists to be just one of many constituent parts of IM. Other commentators have claimed that Internal Branding is more observant of the importance of corporate values than IM in the communication of brand (e.g. Gotsi & Wilson, 2001), demanding a comparatively greater strategic input if it is to be implemented successfully (e.g. Punjaisri & Wilson, 2017), although these statements are not fully substantiated by evidence from theory or practice. Whilst several studies have recognised the contribution which marketing departments provide to the management of Internal Branding ­ (e.g. De Chernatony & Cottem, 2006; Kimpakorn & Tocquer, 2007; Yen-Tsung & Ya-Ting, 2013), almost all have advocated coordinating managerial approaches in tandem with HR colleagues to streamline implementation and help mitigate negative employee perceptions of Internal Branding. Internal Branding is comprised of leadership, internal communications, and Human Resource Management which are operationalised in a brand-centred

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manner (Burmann & Zeplin, 2005). It may therefore be considered interfunctional and collaborative. The internal communications are intended to underpin (Gotsi & Wilson, 2001), develop and disseminate (Vallaster & De Chernatony, 2006) brand values, and ensure consistency between formalised messages and those spread through more tacit, informal, internal channels (Quinn & Hargie, 2004; Sharma & Kamalanabhan, 2012). However, it is also essential for internal communications to be representative of employees’ everyday lived realities if they are to be persuasive and relevant and reinforce the organisation’s competitive differentiatedness (Mitchell, 2002). Furthermore, where key organisational brand values may be perceived by employees as distant from their experiences and priorities, and/or overbearing and manipulative, Internal Branding risks being ineffective if it relies solely upon internal communications (Murphy & Davey, 2002; Cushen, 2011). Internal Branding depends upon leadership from senior executives, but all levels of management play a crucial role in modelling brand-centred behaviours which can be adopted and replicated by their subordinates (Purcell & Hutchinson, 2007; Morhart, Herzog & Tomczak, 2009). However, Cushen (2009) considered the leadership of senior management as a conduit to ­Internal Branding, especially in nurturing employee brand orientation, rather than a subsidiary element of it. To transmit and convey the behaviours which unite and define a brand, Lencioni (2002) believed that the core values should transcend organisational departments, and Mosely (2007) emphasised that they should be consistently relevant to staff across all functions. For this reason, if Internal Branding is to be successful in orienting employees’ behaviours and attitudes to strengthen Brand Identity (Harris & De Chernatony, 2001), it must be led by managers who enjoy interdepartmental authority and who are able to view the organisation and its diverse workforce holistically. Participatory management is critical to Internal Branding effectiveness (Ind & Bjerke, 2007), and the senior managers required to drive such a holistic approach are perhaps less well positioned to interact on a personal level with individual employees in a large workforce. This reinforces other theorists’ calls for Internal Branding to be the responsibility of multiple stakeholders at differing levels of seniority (e.g. Purcell & Hutchinson, 2007; Morhart et al., 2009).

3.2 Organisational and brand loyalty, Brand Orientation, and their relevance to Internal Marketing Within the literature on IM, many theorists have discussed the inf luence which it may exert on employees and their actions and attitudes, its encouragement of internal stakeholders to adopt and transmit the values of the organisation, and its role in orienting staff towards organisational goals (e.g. Kiriakidou & Millward, 2000). One debate which has become increasingly detached from the broader IM literature is the discussion on how Organisational or Brand Identity can help to instil market-orientedness amongst employees. This theme, although closely related to IM, has been expanded by a number of theorists who are critical of IM.

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Organisational Identity has attracted an array of often contrasting definitions. Whilst some theorists conceptualise it as an organisation-specific vision, mission, and mindset which encapsulate that organisation’s culture (e.g. Ravasi & Van Renkom, 2003), the longer held and more accepted definition considers other intangible factors (Schmidt, 1997), visually apparent aspects (Alessandri & Alessandri, 2004), aesthetic elements (Balmer, 1998), and the perceptions which external stakeholders harbour of the organisation (Cornelissen, Haslam & Balmer, 2007). The ‘institutional’ interpretation of Organisational Identity is of a building up and drawing together of powerful subcultures inside an organisation (Balmer, 2001, 2012) which, in their relationships to the organisation’s characteristics (Albert & Whetten, 1985; Whetten & Mackey, 2002; Ravasi & Schultz, 2006) and their independence from employees’ characteristics (Vella & Melewar, 2008), gain a uniqueness. The opposing, ‘constructionist’ interpretation of Organisational Identity expresses the importance of employee perceptions of the organisation (Ravasi & Schultz, 2006), which represent their daily lived realities in the workplace (Kiriakidou & Millward, 2000; Brickson, 2005) and demand an emotional consensus between internal stakeholders (Alvesson & Empson, 2008; Gioia, Price, Hamilton & Thomas, 2010). By interpreting the impact which employees have on Organisational Identity (Corley, 2004; Dhalla, 2007), these constructionist conceptualisations of Organisational Identity have contrasted with notions of organisations developing Corporate Identity, whilst acknowledging the tendency of Organisational Identity to evolve and be evasive (Alvesson & Empson, 2008). More established, ‘traditional’ interpretations of Corporate Identity emphasise its derivation from aesthetic and tangible elements (e.g. Blombäck & Ramirez-Pasillas, 2012), whereas more of the recent commentary either focuses on internal factors such as organisational strategies and operational policies (Abratt & Kleyn, 2012) or seeks a balance between the two more entrenched perspectives (Melewar & Karaosmanoglu, 2006). Brand Identity (BI) may be understood as a way of delivering promises to customers (Keller, 2009), which simplifies and reduces risk from decisionmaking (Ghodeswar, 2008), and which constitutes elements such as relationships, personality, and culture (e.g. Harris & De Chernatony, 2001; Kapferer, 2012). Nonetheless, as a concept, it has proven ambiguous, is difficult to measure or define, and is heavily contested by leading theorists (Sicard, 2013). Aaker (2012) suggested that Brand Identity is transmissible through people, products, semiotics, or the organisation itself. Others, considering Brand Identity to be the sum of an organisation’s employee behaviours or values (e.g. Urde, 2013) and therefore driven from within, believed that it influences Organisational Identity (Burmann  & Zeplin, 2005). The link between these ideas is explored sporadically (Burmann, Jost-Benz & Riley, 2009; Yoganathan & McLeay, 2014), but their impact upon IM is not. Whilst much research has suggested that employees shape Brand Identity from the inside out (e.g. Van Rekom, Van Riel & Wierenga, 2006; Crain, 2009; King & Grace, 2010), it also draws the counterintuitive conclusion that Brand Identity also requires strategic organisational efforts to encourage employees to adopt it consistently, orient it to the firm’s brand, and reflect and reinforce

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the normative experiences and roles of staff (De Chernatony, 1999; Kiriakidou & Millward, 2000). Despite some researchers proposing that an ‘inside-out’ approach to Brand Identity is neglectful of external stakeholder requirements and may plant undesired perceptions (Scott & Lane, 2000), it may nevertheless help to establish a deeply ingrained Brand Identity rather than a superficial Brand Image (Joachimsthaler & Aaker, 1996; Whelan & Wohlfeil, 2006; Burmann et al., 2009). This may discourage employees from feeling alienated, as their Brand Identity is not predominantly tailored to meet the demands of external stakeholders, whose association with the brand may be fleeting and uncommitted (Aaker, 2012). Furthermore, as Brand Identity which is achieved by building from the inside out should be more readily adoptable by employees and easier to reinforce through brand-consistent behaviours, staff are more inclined to ‘live the brand’ (Mitchell, 2002; Ind, 2007, 2017) and be more psychologically attached to it (King, 2010) if this approach has been taken. The comparative benefits of ‘inside-out’ versus ‘outside-in’ approaches deserve greater exploration from an IM perspective, and this might be considered a limitation so far of the mainstream IM literature. Employees understand the firm’s expectations of how they should behave (Dobni, Ritchie & Zerbe, 2000; Williams, 2002) and perform their roles, based upon the organisational values communicated to them (Urde, 2013). Therefore, by being built upon organisational culture, a firm’s Brand Identity may be instilled with uniqueness (Wheeler, Richey, Tokkman & Sablynski, 2006). This should result in the creation and sustenance of a competitive advantage which is almost unassailable by rival organisations (Aaker, 2012). Corporate Identity and Brand Identity differ slightly, the former being less permanent and easier to amend through strategic interventions (Balmer, 2012). However, Brand Identity derives from Corporate Identity, and the two are relatively inseparable and largely indistinguished from each other (Blombäck & Brunninge, 2009; Blombäck & Ramirez-Pasillas, 2012). For this reason, a theoretical debate has developed in which ‘Corporate Brand Identity’ denotes the values which represent a firm within its brand (Harris & De Chernatony, 2001; Kapferer, 2012). Brand Image is derived from the feelings (Roy & Banerjee, 2008) or associations (Davies, 2008) which customers sense when they encounter a brand. Although Brand Identity is concerned partially with the brand’s meaning to internal stakeholders, it explores in greater depth the brand meanings held by external stakeholders or other external recipients of brand communications (Joachimsthaler & Aaker, 1996; Nandan, 2005). Brand Image is founded upon Brand Identity (Kapferer, 2012), but this relationship may be obfuscated where a complex brand architecture, such as a ‘house of brands’ structure, is in place (Aaker, 2012). Considering that Brand Image originates from Brand Identity, Brand Identity originates from the brand culture of an organisation (Wheeler et al., 2006), and IM helps to embed a consistent and coherent brand culture, then perhaps the indirect impact of IM on Brand Image is neglected within IM, Brand Identity, and Organisational Identity research. This may be due to the many intermediary factors playing a moderating role. Brand Personality – the

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personification of brand through human traits (Aaker, 1996)  – may be assessed in the measurement of the Brand Image (Davies, 2008) inherent both inside and outside the organisation. Therefore, some commentators consider Brand Personality to be one of numerous dimensions of Brand Identity, and as such unsuitable for the purposes of measuring (e.g. Azoulay & Kapferer, 2003; Geuens, Weijters & De Wulf, 2009; Kapferer, 2012). Brand Orientation (BO) is usually considered an integrated yet holistic approach to creating a meaningful Brand Identity across an entire organisation. Its role in doing this also entails guiding all interactions, communications, and processes (Wong & Merrilees, 2007; Gromark & Melin, 2011), and using the corporate brand to differentiate the organisation in the marketplace, gaining competitive advantage (Hankinson, 2002). As the core brand values must be clearly conveyed to internal stakeholders in order to encourage BO and brand-consistent behaviours (Morhart et al., 2009), this suggests that IM, which has a broader scope than Internal Communications in which to persuade staff, can encapsulate, or at least facilitate, BO. BO introduces values into work activities and decision-making (Aurand, Gorchals & Bishop, 2005), thereby mirroring the aims of IM. Furthermore, by fostering a strong appreciation of these values amongst employees (Urde, 2013), it conveys a powerful Brand Image to external stakeholders which also brings financial (Yen-Tsung & Ya-Ting, 2013) and competitive (Wentzel, 2009; Baumgarth, 2010) advantages. Employee Brand Orientation is an expansion of Brand Orientation which arises from employees’ embodiment of brand values (Mitchell, 2002; Ind, 2007) through the internalisation and ref lection of them in their jobs and their interactions with internal and external stakeholders (Ind & Bjerke, 2007; Baumgarth, 2010). Despite often being considered merely one type of evidence of BO, Employee Brand Orientation is sufficiently intangible and subjective to be difficult to measure, although several studies have attempted this (e.g. Baumgarth, 2009). Antecedents to BO include the unification of an organisational culture (Gyrd-Jones, Merrilees & Miller, 2013), and its consequences include the adoption of shared values by employees and customers (Mulyanegara, Tsarenko & Anderson, 2009). Both of these phenomena suggest commonality with IM. Furthermore, the increased fragmentation of employment due to staff turnover and casualisation (Crain, 2009) hinders the success of BO. In conveying the brand (Gromark & Melin, 2011) internally and externally of work roles, staff are required to comprehend and transmit brand meaning (Punjaisri & Wilson, 2007). BO is shaped by values which are the accepted protocols guiding employee behaviour (De Chernatony & Segal-Horn, 2003) and organisational actions (Murphy & Davey, 2002). They represent and clarify the organisation’s heritage whilst ref lecting the everyday work realities of staff (Ind, 2007; Urde, 2013), underpinning the organisational culture (McDermott & O’Dell, 2001; Lencioni, 2002), and providing brand differentiation (Williams, 2002; Ind, 2007; Urde, 2013). An organisation’s core values are likely to be more

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inf luential than its peripheral ones (Pant & Lachman, 1998; Van Rekom et al., 2006) and are associated more closely with the corporate brand (Burmann et al., 2009). However, the alignment between core brand values and staff behaviour is critical (Berthon, Ewing & Hah, 2005), and this reinforces the potential usefulness of researching IM and BO in conjunction with each other. Articles dealing specifically with Brand Identity and Brand Orientation are better developed than IM studies (e.g. Sasser & Arbeit, 1976; Brooks, Lings & Botschen, 1999) in debating whether internal or external stakeholders should be given primacy. Many commentators favour the ‘outside-in’ approach to corporate branding in which external stakeholder value and expectations dictate the nature of the values and culture to be adopted by the organisation and its employees (Burmann et al., 2009), and this constitutes a customer-centric perspective (Urde, 2013) better suited to the satisfaction of market demands (Blombäck & Ramirez-Pasillas, 2012). Although this is the predominant perspective (Ind & Bjerke, 2007; Kimpakorn & Tocquer, 2007), some organisations reject it (De Chernatony, 1999), and this is especially the case in charities, not-for-profit and public sector organisations (Gromark & Melin, 2011). The principal rationale for the adoption of an ‘outside-in’ approach is to achieve superior customer value (Jaworski & Kohli, 1993; Miles & Mangold, 2004) in market-oriented firms (Urde, 2013), and this is embraced by several IM theorists too (e.g. Narver & Slater, 1990). However, it is often rather problematic, as it may alienate employees if they feel that they have had external, inappropriate values imposed upon them and been deprioritised by their managers compared to less committed stakeholders, who may have invested much less loyalty in the brand than themselves and made fewer sacrifices for it. Such feelings may lead to resistance amongst staff, or even brand sabotage (Wallace & de Chernatony, 2009). Cushen (2009) believed that the arbitrary imposition of customer values upon employees is often symptomatic of weak organisational direction, whilst others attributed such short-termist and faddish decisions to an excessive market orientation (Ind & Bjerke, 2007; Alsem & Kostelijk, 2008) which risks alienating and confusing staff, and even disorientating customers. Furthermore, in the absence of interfunctional communication, firms may misinterpret market conditions and, as a result, implement unnecessary and needlessly reactive strategies (Conduit & Mavondo, 2001). The opposing approach to brand development is the ‘inside-out’ approach, in which appropriate values are identified through employee engagement (Ind, 2007). These values provide a simple definition for the brand (Urde, 2013), translating it into customer benefits and value (Urde, 2013) by communicating it externally (Ind & Bjerke, 2007), usually through interaction between boundary personnel and customers (Ind, 2007). In common with the ‘outside-in’ approach, ‘inside-out’ aims to align employee behaviours, build competitive advantage, and differentiate the brand from others, but by giving precedence to the opinions of internal stakeholders (Burmann et al., 2009). This neutralises, or at least drastically reduces, the risk of employee alienation and disengagement (Alsem & Kostelijk, 2008). Research into Brand

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Orientation and Brand Identity has adopted a more ‘inside-out’ perspective (e.g. Harris & De Chernatony, 2001; Burmann et al., 2009) and focused more on identity than image, but IM literature has failed to track this evolution, maintaining a more ‘outside-in’ stance. Identity may be considered internal, employee-driven (Burmann & Zeplin, 2005), and participatory rather than an imposition of the marketing function (De Chernotony & Segal Horn, 2003). Nevertheless, ‘inside-out’ still takes into account the expectations and needs of customers, but by prioritising the relational above the commercial, it is usually less short-termist than ‘outside-in’ (Urde, 2013) and is adoptable by, and authentic to, a broader range of internal stakeholders (Ind, 2007). A number of theorists have warned against organisational introspection, believing that it can blind policy-makers to critical changes in the external environment by lulling them into strategic drift (Ind & Bjerke, 2007), but few have rejected an ‘inside-out’ perspective entirely. The traditional branding approach centred predominantly around the desires of the target market (Ind & Bjerke, 2007) is increasingly considered deleterious if not operationalised alongside strategies taking into account employee perspectives, as the latter are seen to provide more future-proof brand foundations (Aaker, 2012) and a stronger basis for constructing competitive advantage (Wheeler et al., 2006). Indeed, the majority of theorists now believe that a balanced combination of internal and external stakeholder considerations should be accommodated to build a strong brand (Urde, 2013), preferably through the collaboration of employees and customers within major brand decisions (Ewing & Caruana, 1999). Certain theorists have even recommended that internal stakeholders be given absolute primacy, arguing that employee loyalty and satisfaction constitute strong foundations for customer loyalty and satisfaction (Bansal, Mendelson & Sharma, 2001), but most articles from the 21st century (e.g. Burmann et al., 2009; Urde, 2013) cautiously urge a compromise between the two opposing stances.

3.3 Chapter summary Inthis chapter, we have followed the course of IM concepts into adjacent and related theoretical areas and fields of research. We have examined the commonality between IM and Internal Branding, and considered how the Internal Branding debate between proponents of the ‘outside-in’ and ‘inside-out’ stances towards stakeholder primacy is extremely pertinent within IM, though perhaps not clearly articulated in the years since the argument between advocates of ‘employees-as-customers’ or ‘jobs-as-products’ and those IM theorists more concerned with external customers and the organisation’s authority. In places, it appears that IM has been at least partially ‘rebadged’, and elsewhere many of its ideas have been transposed – for example, within many studies of internally located phenomena such as organisational loyalty and citizenship, and even to externally located ones such as customer brand loyalty

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and BO. Taking into consideration these recent uses of IM theory, and the steadily growing number of articles which use IM in the contexts of different industries like banking, tourism, and hospitality management, it may appear that IM theory is f lourishing. However, it is important to note that much of the recent IM-related published output has been a recontextualisation of extant ideas rather than constituting theoretical development.

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78  Selected theoretical evolutions Blombäck, A., & Brunninge, O. (2009). Corporate identity manifested through historical references. Corporate Communications: An International Journal, 14 (4), 404–419. Blombäck, A., & Ramírez-Pasillas, M. (2012). Exploring the logics of corporate brand identity formation. Corporate Communications: An International Journal, 17 (1), 7–28. Brickson, S.L. (2005). Organizational identity orientation: Forging a link between organizational identity and organizations’ relations with stakeholders. Administrative Science Quarterly, 50 (4), 576–609. Brooks, R.F., Lings, I.N., & Botschen, M.A. (1999). Internal marketing and customer driven wavefronts. Service Industries Journal, 19 (4), 49–67. Burmann, C., Jost-Benz, M., & Riley, N. (2009). Towards an identity-based brand equity model. Journal of Business Research, 62 (3), 390–397. Burmann, C., & Zeplin, S. (2005). Brand building commitment: A behavioural approach to internal brand management. Journal of Brand Management, 12 (4), 279–300. Chong, M. (2007). The role of internal communication and training in infusing corporate values and delivering brand promise: Singapore airlines’ experience. Corporate Reputation Review, 10 (3), 201–212. Conduit, J., & Mavondo, F.T. (2001). How critical is internal customer orientation to market orientation? Journal of Business Research, 51 (1), 11–24. Corley, K.G. (2004). Defined by our strategy or our culture? Hierarchical differences in perceptions of organizational identity and change. Human Relations, 57 (9), 1145–1177. Cornelissen, J.P., Haslam, S.A., & Balmer, J.M. (2007). Social identity, organizational identity and corporate identity: Towards an integrated understanding of processes, patternings and products. British Journal of Management, 18 (s1), 1–16. Crain, M. (2009). Managing identity: Buying into the brand at work. Iowa Law Review, 95, 1179. Cushen, J. (2009). Branding employees. Qualitative Research in Accounting and Management, 6 (1/2), 102–114. Cushen, J. (2011). The trouble with employer branding: Resistance and dissillusionment at Avatar. In M.J. Brannan, E. Parson, & V. Priola (Eds.), Branded lives: The production and consumption of meaning at work (pp. 75–89). Cheltenham: Edward Elgar Publishing. Davies, G. (2008). Employer branding and its inf luence on managers. European Journal of Marketing, 42 (5/6), 667–681. De Chernatony, L. (1999). Brand management through narrowing the gap between brand identity and brand reputation. Journal of Marketing Management, 15 (1–3), 157–179. De Chernatony, L., & Cottem, S. (2006). Internal brand factors driving successful financial services brands. European Journal of Marketing, 40 (5/6), 611–633. De Chernatony, L., & Segal-Horn, S. (2003). The criteria for successful services brands. European Journal of Marketing, 37 (7/8), 1095–1118. Dhalla, R. (2007). The construction of organizational identity: Key contributing external and intra-organizational factors. Corporate Reputation Review, 10 (4), 245–260. Dobni, D., Ritchie, J.R., & Zerbe, W. (2000). Organizational values: The inside view of service productivity. Journal of Business Research, 47 (2), 91–107.

Selected theoretical evolutions  79 Ewing, M.T., & Caruana, A. (1999). An Internal Marketing approach to public sector management: The marketing and human resources interface. International Journal of Public Sector Management, 12 (1), 17–29. Foster, C., Punjaisri, K., & Cheng, R. (2010). Exploring the relationship between corporate, internal and employer branding. Journal of Product and Brand Management, 19 (6), 401–409. Gapp, R., & Merrilees, B. (2006). Important factors to consider when using internal branding as a management strategy: A healthcare case study. Journal of Brand Management, 14 (1/2), 162–176. Geuens, M., Weijters, B., & De Wulf, K. (2009). A new measure of brand personality. International Journal of Research in Marketing, 26 (2), 97–107. Ghodeswar, B.M. (2008). Building brand identity in competitive markets: A conceptual model. Journal of Product & Brand Management, 17 (1), 4–12. Gioia, D.A., Price, K.N., Hamilton, A.L., & Thomas, J.B. (2010). Forging an identity: An insider-outsider study of processes involved in the formation of organizational identity. Administrative Science Quarterly, 55 (1), 1–46. Gotsi, M., & Wilson, A. (2001). Corporate reputation management: Living the brand. Management Decision, 39 (2), 99–104. Gromark, J., & Melin, F. (2011). The underlying dimensions of brand orientation and its impact on financial performance. Journal of Brand Management, 18 (6), 394–410. Gyrd-Jones, R., Merrilees, B., & Miller, D. (2013). Revisiting the complexities of corporate branding: Issues, paradoxes, solutions. Journal of Brand Management, 20 (7), 571–589. Hankinson, P. (2002). The impact of brand orientation on managerial practice: A quantitative study of the UK’s top 500 fundraising managers. International Journal of Nonprofit and Voluntary Sector Marketing, 7 (1), 30–44. Harris, F., & De Chernatony, L. (2001). Corporate branding and corporate brand performance. European Journal of Marketing, 35 (3/4), 441–456. Ind, N. (2007). Living the brand (3rd ed.). London: Kogan Page. Ind, N. (Ed.). (2017). Branding inside out: Internal branding in theory and practice. London: Kogan Page Publishers. Ind, N., & Bjerke, R. (2007). Branding governance: A participatory approach to the brand building process. Chichester: John Wiley & Sons. Jaworski, B.J., & Kohli, A.K. (1993). Market orientation: Antecedents and consequences. Journal of Marketing, 57 (3), 53–70. Joachimsthaler, E., & Aaker, D.A. (1996). Building brands without mass media. Harvard Business Review, 75 (1), 39–41. Kapferer, J.N. (2012). The new strategic brand management: Advanced insights and strategic thinking. London: Kogan Page. Keller, K.L. (2009). Building strong brands in a modern marketing communications environment. Journal of Marketing Communications, 15 (2–3), 139–155. Kimpakorn, N., & Tocquer, G. (2007). Employees’ commitment to brands in the service sector: Luxury hotel chains in Thailand. Journal of Brand Management, 16 (8), 532–544. King, C. (2010). “One size doesn’t fit all”: Tourism and hospitality employees’ response to internal brand management. International Journal of Contemporary Hospitality Management, 22 (4), 517–534. King, C., & Grace, D. (2010). Building and measuring employee-based brand equity. European Journal of Marketing, 44 (7/8), 938–971.

80  Selected theoretical evolutions Kiriakidou, O., & Millward, L.J. (2000). Corporate identity: External reality or internal fit? Corporate Communications: An International Journal, 5 (1), 49–58. Lencioni, P.M. (2002). Make your values mean something. Harvard Business Review, 80 (7), 113–117. McDermott, R., & O’Dell, C. (2001). Overcoming cultural barriers to sharing knowledge. Journal of Knowledge Management, 5 (1), 76–85. Melewar, T.C., & Karaosmanoglu, E. (2006). Seven dimensions of corporate identity: A categorisation from the practitioners’ perspectives. European Journal of Marketing, 40 (7/8), 846–869. Miles, S.J., & Mangold, G. (2004). A conceptualization of the employee branding process. Journal of Relationship Marketing, 3 (2–3), 65–87. Mitchell, C. (2002). Selling the brand inside. Harvard Business Review, 80 (1), 99–105. Morhart, F.M., Herzog, W., & Tomczak, T. (2009). Brand-specific leadership: Turning employees into brand champions. Journal of Marketing, 73 (5), 122–142. Mosely, R. (2007). Customer experience, organisational culture and the employer brand. Brand Management, 15 (2), 123–134. Mulyanegara, R.C., Tsarenko, Y., & Anderson, A. (2009). The big five and brand personality: Investigating the impact of consumer personality on preferences towards particular brand personality. Journal of Brand Management, 16 (4), 234–247. Murphy, M.G., & Davey, K.M. (2002). Ambiguity, ambivalence and indifference in organizational values. Human Resource Management Journal, 12 (1), 17–32. Nandan, S. (2005). An exploration of the brand identity–brand image linkage: A communications perspective. Journal of Brand Management, 12 (4), 264–278. Narver, J.C., & Slater, S.F. (1990). The effect of a market orientation on business profitability. Journal of Marketing, 20–35. Pant, P.N., & Lachman, R. (1998). Value incongruity and strategic choice. Journal of Management Studies, 35 (2), 195–212. Punjaisri, K., & Wilson, A. (2007). The role of internal branding in the deliver of employee brand promise. Journal of Brand Management, 15 (1), 57–70. Punjaisri, K., & Wilson, A. (2017). The role of internal branding in the delivery of employee brand promise. In K. Punjaisri, & A. Wilson (Eds.), Advances in corporate branding (pp. 91–108). London: Journal of Brand Management: Advanced Collections. Purcell, J., & Hutchinson, S. (2007). Front-line managers in agents in the HRMperformance causal chain: Theory, analysis and evidence. Human Resource Management Journal, 17 (1), 3–20. Quinn, D., & Hargie, O. (2004). Internal communication audits: A case study. Corporate Communications: An International Journal, 9 (2), 146–158. Ravasi, D., & Schultz, M. (2006). Responding to organizational identity threats: Exploring the role of organizational culture. Academy of Management Journal, 49 (3), 433–458. Ravasi, D., & Van Rekom, J. (2003). Key issues in organizational identity and identification theory. Corporate Reputation Review, 6 (2), 118–132. Roy, D., & Banerjee, S. (2008). CARE-ing strategy for integration of brand identity with brand image. International Journal of Commerce and Management, 17 (1/2), 140–148. Sasser, W.E., & Arbeit, S.P. (1976). Selling jobs in the service sector. Business Horizons, 19 (3), 61–65.

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4

Dyadic perspectives How Channel Management theories can inform our understanding of Internal Marketing

Whilst most theorists have approached Internal Marketing (IM) in a conceptual manner, even research into the internal service encounter has said little about how IM is transmitted, communicated, co-created, or exchanged between two or more actors. In this chapter, we address this by considering the applicability of dyadic perspectives from Channel Management literature into the context of the internal market. In doing so, we compare the characteristics of relationships between a “service provider and [external] customer” (Solomon, Surprenant, Czepiel & Gutman, 1985, p. 99) with those wholly within the organisation. In discussing the transferability of these interorganisational concepts to intraorganisational, interpersonal situations, we unify two related areas of Relationship Marketing whose reciprocal relevance is underacknowledged, answering the call from Yang & Coates (2010) for the introduction of dyadic perspectives as a lens through which to scrutinise internal service encounters and IM. We begin by suggesting how Channel Management theory can help to reconceptualise IM, before introducing the requirements and characteristics of dyadic partnerships and suggesting how interorganisational and intraorganisational relationships might differ. We then analyse the myriad of variables that determine the success of relationships – relationalism, inf luence, control, power, satisfaction, dependency and interdependency, trust, commitment, stability, long-term relational orientation, and relationship formalisation. This leads into an examination of how business relationships are managed and nurtured through diplomacy, inf luence strategies, and incentivisation, and a discussion of relational quality and norms and their effects on cooperation and compliance. The dyadic behaviours of organisations are compared with those of the individual boundary personnel who represent those organisations, before exploring the phenomenon of channel conf lict and the ways in which it is managed. Finally, we summarise the likely transferability of dyadic perspectives from Channel Management to IM.

4.1 Dyadic partnerships Solomon et al.’s (1985) seminal article on relationships between service providers and external customers appeared to inform the subsequent concept of

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Service-Dominant Logic (e.g. Vargo & Lusch, 2004), but the interpretation of service encounters as dyadic interactions long remained limited to studies of boundary personnel, excepting some theoretical expansion by Surprenant & Solomon (1987). Internal service patterns and themes had often been understood in terms of the characteristics of the relationships and situations hosting the service (e.g. Sayles, 1964; Strauss, 1996; Albrecht, 1998; Davis, 2001), but not until the conceptualisation of ‘internal service encounters’ (Gremler, Bitner & Evans, 1995) occurred were ideas from Solomon et al.’s (1985) seminal article imported from Channel Management into IM. Moreover, Gremler et al.’s (1995, p. 28) definition of internal service encounters as “the dyadic interaction between an internal customer and an internal service provider” has remained largely unchanged since. In categorising the encounters according to their partners – as ‘customer-contact employee and manager’, ‘customer-contact employee and back-office employee’, and ‘back-office employee and manager’ encounters – Kang et al. (2002) ignored their dyadic characteristics. Several studies (e.g. Czepiel, Solomon, Surprenant & Gutman, 1985; Solomon et al., 1985; Hewitt, 1991; Guirguis & Chewning, 2005) have analysed service encounters through the theoretical lens of Symbolic Interactionism (McHugh, 1968; Blumer, 1969) to suggest that the behaviours of constituent actors should evolve to match the surrounding organisational situation, but there has been scant comment on how this occurs or the effect of organisational f lux upon IM and internal service – perhaps due to a relative scarcity of postmodern perspectives in IM literature and the lack of response to Yang & Coates’ (2010) call for dyadic perspectives to inform IM studies. Dyadic partnerships in the internal market may exist for different reasons and have different characteristics than those occurring between staff and external customers, as internal customers have less freedom to reject a marketing approach or ‘shop around’ for alternatives, given their status as employees, and this factor is likely to be intensified where the internal customer is hierarchically below the marketer or dyadic partner (Rafiq & Ahmed, 1993, 2000). Nonetheless, internal customers have tolerance levels towards services, which are dictated by exit barriers, the availability of alternatives, transaction benefits and costs, and other factors, and intolerable service will motivate them to seek a change of supplier (Zeithaml, Bitner & Gremler, 2006) – in this case, employer. Furthermore, the dependence resulting from logistical, market, relational, and legal exit barriers to relationship dissolution within marketing channels (e.g. Doherty & Alexander, 2006; Palmatier, Dant & Grewal, 2007) appears to mirror more closely the potency and characteristics of dependence within the internal market than between organisations and external customers, thereby inviting an analysis of Channel Management literature for this purpose. Dyadic parties within sales channels assess the potential of a relationship by gauging the characteristics of the prospective channel partner (Ghosh, Joseph, Gardner & Thach, 2004) – which in Channel Management literature usually equates to manufacturers and dealers or retailers. Whilst the stronger

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party gains more benefits from a dyadic partnership, the weaker partner may increase the benefits to them by raising the exit barriers or switching costs experienced by their counterpart (Crook & Combs, 2007), perhaps suggesting that an employee who is crucial to an organisation may gain more from IM relationships than more expendable colleagues. The stronger partner in a channel relationship is principally motivated by potential economic and financial gains to form the partnership (Gassenheimer, Baucus & Baucus, 1996; Gassenheimer, Houston & Davis, 1998), whereas the weaker partner is usually motivated by an expectation of financial benefits and competitive differentiation (Ghosh et al., 2004). However, by exerting control over the relationship, the stronger party enjoys higher satisfaction without diminishing that of their weaker partner (Gassenheimer et al., 1996). The granting of greater differential benefits (i.e. in terms of a partner’s resulting prestige in the marketplace) can encourage channel partners’ acceptance of fewer financial benefits arising from the partnership (Ghosh et al., 2004), suggesting that employees might commit to IM approaches if they believe that they gain prestige. The benefits achievable are not purely economic or relational, but also psychological at both an organisational level (Sweeney  & Webb, 2007), and by a junior party being publicly identified with a prestigious partner, they can gain ‘Trade Equity’ (Davis & Mentzer (2008), which is a variation of the ‘Halo Effect’ (Coombs & Holladay, 2006) in which their perceived worth increases through association. Whilst this may encourage employees to embrace IM initiatives, seeing them as indicative of organisational prestige which will rub off on their personal brand, it should be noted that brand equity increases the effect of trade equity on junior channel partners’ dependence on senior partners, but weakens the effect of trade equity on their commitment (Davis & Mentzer, 2008). Therefore, it is possible that the most prestigious employers may inadvertently raise the dependence but reduce the commitment of their staff through a dyadic relationship.

4.2 Relationships – from the interorganisational to the intraorganisational Between their organisations, sellers and buyers instigate exchange and become “mutually dependent” (Harker & Egan, 2006, p. 222). The personality and characteristics of individuals inf luence these exchanges and relationship success (Sweeney & Webb, 2007), with the individual representative almost certain to differ from their organisation in terms of their behaviours, aspirations, and perceptions of the benefits derivable from the relationship. This divergence from organisational behaviours by individual behaviours largely stems from the benefits which individuals, but not organisations, seek within partnerships, and implanting this Channel Management concept into an IM context is likely to produce a less idealised conceptualisation of how the dyadic relationship may proceed ‘at ground level’ through its interpersonal interactions rather than how it was planned to proceed by strategists. This analysis of

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internal dyadic relationships is informed by the theory of “opponent-centred behaviour” (Stern, Schulz & Grabner, 1973, p. 169), in which the actions of all parties, not solely of boundary personnel, are dictated by how those individuals are positioned against those with whom they are interacting. Various previous studies have failed to account for the difference between organisational intentions and individual behaviours, and their potential effect – for example, Mayo, Richardson & Simpson’s (1998) comparison of ‘operational communication’ and ‘inf luence communication’ was conducted almost entirely at an organisational level. This appears to be a deficiency in Channel Management and IM literature. Gassenheimer et al. (1996) believed effective communication through boundary personnel to affect dyadic relationships, and were especially interested in how the supplier’s (i.e. junior partner’s) perception of the manufacturer’s (i.e. senior partner’s) representative performance would shape the interorganisational relationship, with ‘performance’ being defined as the ability to help both entities to achieve their mutual objectives. In a manufacturer–supplier dyad, this may be through the provision of helpful market intelligence or by finding profitable and marketable stock, but within an IM dyad, it is more likely to be through other enabling actions. Frazier & Summers (1984) believed that most managers would be able to increase the effectiveness of their ‘request strategies’ (i.e. their ability to motivate dyadic partners to respond positively to their requests) by ‘priming’ their partners through the provision of low-cost but highly perceived favours, thereby boosting the reputations as experts and enabling themselves to garner further inf luence through other inf luence strategies, such as information exchange and the making of recommendations. For this reason, they posited that dyadic managers should be targeted to deliver long-term objectives which provide enough time to build inf luence in an uncoercive manner. However, their suggestion that each action merits a cost-benefit analysis would only be workable at an informal and immediate level, due to the time constraints and spontaneity inherent within interpersonal IM interactions. Boyle & Dwyer (1995) observed that the making of promises and recommendations, and the exchange of information, increased relationalism and are precursors to dyadic success, whereas the issuing of threats, requests, and legalistic pleas (i.e. those requests referring to the other party’s contractual obligations) are deleterious to relationalism. Frazier & Summers (1984) had considered dyadic requests to be the hard-won privilege of more skilled managers and made no judgment on their potential to damage. Other studies linked the effects of relationalism to governance (Boyle, Dwyer, Robicheaux & Simpson, 1992) and of cultural issues to relationship success. Where relationship dissolution is discouraged by ‘exit barriers’, relationship satisfaction heavily inf luences relationship commitment and maintenance, and more so if numerous attractive alternatives are present (Sharma & Patterson, 2000). Indeed, organisations are more likely to form and maintain relationships with each other if they are aware of viable alternative partners (Harris,

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O’Malley & Patterson, 2003). Whilst Cann (1998) described Business-toBusiness (B2B) marketing as comparatively transactional, he advised firms to pursue strategies which fit their culture, adjust their partners’ culture, nurture social bonds with the customer, and add value to the relationship. This indicates that even a very microeconomic interpretation of Channel Management is inf luenced by Relationship Marketing tenets (Hopkinson & Blois, 2014), further suggesting commonality with IM. Whilst relationalism has been understood as a facilitator of new market entry (Ghosh et al., 2004) or of long-term stability (e.g. Zineldin, 1998; Ghosh et al., 2004; Kale, 2012), it has elsewhere been identified as an inf luence upon dyadic decision-making through the incentive of differentiating a partner within the marketplace (Gassenheimer et al., 1996). Applying this logic to IM, it is possible that some employees might perceive that their experiences of IM enable them to differentiate themselves competitively within the internal market of their organisation’s workplace, or even within their profession or the employment market more broadly. Whilst B2B relationships between individuals are “explicitly recognised by both parties” (Egan, 2001, p. 280), and their benefits recognised, there is likely to be a much greater variety of relationships, in terms of formality, strength, and intent, between colleagues, and this potentially complicates the use of Channel Management dyadic theories within an IM context.

4.3 Relationalism, inf luence, control, and power When Doherty & Alexander (2006) explored how franchisors and franchisees in downstream marketing channels use a mixture of coercive and uncoercive power, they studied a dichotomy which is potentially relevant to IM, which is usually distinguished from HRM by its avoidance of coercion (Rafiq & Ahmed, 1993). Additional to the identified control mechanisms specific to the marketing channel – franchise partner selection, designated sales and aftersales territories, franchise contracts, and support operations – they considered power as originating either from the organisation or from the relationship. However, some contemporary commentators (e.g. Gelderman, Semeijn & De Zoete, 2008) rejected the adoption of a Relationship Marketing paradigm, considering dominant dyadic partners to be unconcerned by the negative side-effects of their coercion, whilst others believed that junior partners may surrender control to senior ones who are attentive and responsive and perform well – in the case of Gassenheimer et al. (1996), suppliers to manufacturers. In concluding that powerful suppliers use non-mediated approaches (e.g. information exchange and recommendations) more often than mediated ones (e.g. legalistic pleas and threats), Boyle & Dwyer (1995) portrayed coercion as a potentially compensatory strategy, with Gassenheimer et al. (1996) also suggesting that the stronger partner’s comparatively greater power would undermine the weaker partner’s satisfaction, encouraging relationalism further. Moreover, the conspicuous display of unwielded power – the ‘power of power’ – has been seen to deliver many of the benefits, but few of the

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negative side-effects, of exercised power (Kumar, 2005). This potentially has implications for the definition of IM, depending on whether the phenomenon is transferable from Channel Management into the internal market and on whether the display of unwielded power may be considered a passive threat and therefore an implicit form of coercion. Much of the Channel Management literature of the 1990s was concerned with inf luence strategies but tended to neglect power sources (Mayo et al., 1998). Many later sources have focused on the antecedents, sources, and consequences of power within supply chains, but have assumed that power, whether used directly or indirectly to enhance the partnership, benefits all parties. Whilst the belief persisted that ‘a rising tide lifts all boats’, Crook & Combs (2007) disagreed, noting wryly that those partners with important resources were invariably lifted the highest. Heavily inf luenced by French & Raven’s (1959) seminal social psychology study which classified power as ‘referent’, ‘expert’, and ‘legitimate’, Kumar (2005) observed the power structure between channel partners as one of several determinants of how power would be used within a collaborate partnership and what effect it would have. The potential relevance of this finding to the internal market is significant if we assume IM to be a strategy for encouraging collaboration between partners who have asymmetrical power (e.g. between an employee and a manager), but perhaps less so if we understand IM simply as a mechanism for getting staff ‘on-message’. Therefore, it is likely to be more relevant where the organisation has a holistic and well-balanced approach to IM which is intended to serve multiple outcomes and benefit multiple stakeholders. In extending Lusch’s (1976) work on types and sources of channel power, Dant & Schul (1992) analysed asymmetrical exchange relationships. Although their scope was interorganisational, not intraorganisational or interpersonal, most IM relationships are also asymmetrical due to differences between partners in terms of power, authority, rank, or knowledge, so an understanding of them may be informed by this research. Gaski (1986) had been close to addressing this theoretical gap unintentionally by studying the interrelations of power sources instead of each power source separately. His findings demonstrated that, by using coercion and reward strategies, dyadic partners could inf luence the strength of referent, expert, and legitimate power sources. Furthermore, this would inf luence satisfaction levels and, in doing so, trigger a circle of events which would compound power. Ref lecting on this from the perspective of IM, it becomes apparent that the infrequency and superficiality with which power sources and their effects have been researched leaves a gap in the theory and in practitioners’ knowledge when trying to implement their strategies.

4.4 Satisfaction, dependency, and interdependency Organisations focused on IM commit numerous resources to the creation, measurement, and maintenance of employee satisfaction (Podsakoff, MacKenzie & Bommer, 1996; Harter, Schmidt & Hayes, 2002), and may display

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as much expertise and skill in engaging their internal stakeholders as in managing their channel partners (Narver & Slater, 1990; Slater & Narver, 1995; Lings, 1999, 2004). Although it is seldom discussed within IM literature, many employees also wish to satisfy their employers and deliver against their expectations (Levine, 1995) – perhaps through a sense of duty, personal pride, or the need to pursue their career ambitions or safeguard their jobs. However, it is doubtful that they formalise, strategise, and measure their efforts to satisfy their partners in the same way that employers do (Robinson & Rousseau, 1994). Within interorganisational dyads, satisfaction is determined by its relationships with power (e.g. Lewicki, McAllister & Bies, 1998; Geyskens, Steenkamp & Kumar, 1999; Sharma & Patterson, 2000; Jonsson & Zineldin, 2003; Benton & Maloni, 2005; Lai, 2007) and with trust (e.g. Anderson & Weitz, 1989, 1992; Andaleeb, 1995; Geyskens et al., 1999; Sharma & Patterson, 2000; Jonsson & Zineldin, 2003). Satisfaction may be categorised as ‘social’ (‘noneconomic’) or ‘economic’ (Geyskens et al., 1999; Geyskens & Steenkamp, 2000; Lai, 2007). Somewhat counterintuitively, the coercive use of power by one party does not impact significantly upon the satisfaction of their partner (Zineldin, 1998), but trust levels play a major role in engendering relationship satisfaction. In a B2B study based within the motor industry, Benton & Maloni (2005) found that buyer–seller relationships which were affected by power would impact greatly on the satisfaction and performance of partners, suggesting that the power-satisfaction variable is paramount within supply chain relationships. Indeed, Lai (2007) found this to be equally true within more collectivistic societies in East and Southeast Asia. Satisfaction has been found inseparable from both commitment and trust, but more inclined to increase as a response to trust than to economic outcomes (Geyskens et al., 1999). Lewicki et al. (1998) found trust and distrust not to be bipolar opposites, and relationships not to be unidimensional constructs, and this seems to raise the possibility that channel partners or IM partners might mistrust one aspect of an organisation’s communications, actions, or intentions, but trust other elements of its relationship with them. However, this is cast into doubt by Sharma & Patterson’s (2000) assertion that satisfaction inf luences trust more than trust inf luences relationship commitment. Despite satisfaction increasing as a result of the reputational gains derived from the formation of a partnership and other relational benefits, a lack of trust and/or commitment does not necessarily undermine satisfaction ( Jonsson & Zineldin, 2003). Whilst communication is widely recognised to build trust, Anderson & Weitz (1989) stressed that this inf luence was reciprocal, and Andaleeb (1995) found that high levels of trust in an organisation could discourage its channel partner from exerting controls over it. Furthermore, social satisfaction is considered more important than economic satisfaction in inf luencing the performance of partners (Geyskens et al., 1999; Geyskens & Steenkamp, 2000; Lai, 2007) – a significant reason for organisations to use IM to boost social satisfaction.

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Dependence is the key driver of performance in relationships between organisations (Palmatier et al., 2007), but its impact does not produce a straightline increase in performance, as dependence also indirectly increases the long-term orientation of both parties towards each other and is therefore an antecedent of reciprocated trust, increasing dependence in a self-perpetuating manner. Dependence levels and the role performance of the supplier inf luence the channel relationship (Chung, Sternquist & Chen, 2008). Payan & McFarland (2005) found that coercive inf luence strategies such as promises and threats, which are aimed at producing compliance, are usually preceded by high dependence levels, although Lai (2009) found dependence symmetry critical, observing that, as interdependence increases, suppliers resort less frequently to coercive strategies (apart from promises) and more frequently to non-coercive ones. Therefore, it seems intuitive that, for an organisation to ascertain which employees are likely to negotiate with them as a result of IM, they must ascertain not only how dependent employees are upon the relationship, but also how dependent the organisation is upon specific employees, gauging the levels of asymmetry. Certain Channel Management strategies for reducing dependence are unavailable to IM practitioners. As an example, a car dealership may ‘hedge its bets’ by holding the sales and service franchises for multiple motor manufacturer brands to reduce its dependence on each, and this might undermine its individual relationships (Gassenheimer et al., 1996). However, just as trust does, dependence brings cooperation and a reciprocal willingness to collaborate commercially. When dependence is high, perceptions of trust should moderate channel members’ behavioural intentions (Andaleeb, 1995). Anderson & Weitz (1992, p. 19) introduced the concept of ‘idiosyncratic investments’, in which both parties would provide resources such as personnel, training, facilities, or joint operations, which are specific to that particular partnership rather than generic to all partnerships, thereby engendering a greater level of commitment in return. Building upon this finding, Jap (1999) contended that such investments in the relationship should be driven by coordination efforts, a mutual desire for competitive advantage and enhanced performance, environmental dynamism and demand, if partner commitment is to be encouraged, and that they would need to be facilitated by complementary capabilities. If we are to transfer these considerations to IM, it appears that internal service encounters should be at least partially individualised (in both directions) to increase their efficacy. Bantham et al. (2003) introduced the concept of interdependence to Channel Management literature from theories about marriage in social psychology literature, studying the ability of interdependence to build relationships which could bestow on the partners a competitive advantage. Marriage theory from social psychology also provided the basis for studies into factors mitigating partnership dissolution between firms (e.g. De Hildebrand e Grisi & Puga Ribiero, 2004). In his analysis of Relationship Marketing, Egan (2000) suggested that as a firm’s competitive advantage becomes more

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easily replicated over time, organisations try to renew strategies frequently to defend their position – a phenomenon potentially applicable to organisations which perceive IM as a way to gain a competitive advantage over rival employers. Lai (2009) found that the negative nature of the relationship between interdependence and coercion increases in line with shared values and norms. Frazier, Gill & Kale (1989) discovered that, amongst channel intermediaries in India, transparent behaviour and the provision of good service resulted in partners feeling obligated, thereby linking dependence and reciprocity, whereas McFarland, Bloodgood & Payan (2008, p. 63) found that dependence asymmetry between channel partners produced a negative effect on manifest (or behavioural) ‘Supply Chain Contagion’ – the tendency of a channel partner who is treated with certain behaviours to then treat their partners from different relationships in the same manner. If this logic is to be applied to IM, and an employer and employee are enjoying equal levels of dependence, those behaviours displayed by the employer in their interactions with that employee are less likely to be replicated in that employee’s interactions with colleagues. Lai (2009) discovered that as retail organisations become more dependent upon their suppliers, those suppliers become more coercive in their strategies and gradually discontinue the use of non-coercive ones. However, Gassenheimer & Ramsey (1994) found that whilst power-dependence imbalances and mutual dependence levels affect retailer satisfaction levels in channels, this impact is progressively reduced if the supplier is only the second or third largest in terms of the annual business volume traded to the retailer. As most staff are only employed by one organisation, this is not likely to be transferable into the majority of individual IM relationships at an interpersonal level. However, organisations employing staff who also work elsewhere might consider their importance to those staff (or the dependence of those staff upon the organisation) relative to the relationship between those staff and their other employers. This better enables the organisation to ascertain the levels of staff satisfaction which might be achievable and may be of particular relevance to organisations that use outsourced or temporary staff, or those employed precariously on zero hours contracts within the ‘gig economy’ (Moore, 2017).

4.5 Commitment, stability, long-term relational orientation, and formalisation Commitment, stability, relationalism, and the formalisation of relationships are all critical factors in the success of Channel Management, and as with concepts such as trust and dependence, these ideas have their roots in social psychology theories and the literature on personal relationships and marriage. So often, when thinking about how people interact within business relationships, at either an individual or an organisational level, it is worthwhile stopping to consider how people interact in their personal, romantic, and matrimonial relationships. In a romantic relationship, commitment may

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take the form of opening joint bank accounts or buying a house together, and formalisation might constitute getting engaged or married, or even just introducing a partner to one’s parents for the first time. All of these steps are highly significant and symbolic, ref lecting the status of the relationship (or at least its status as perceived by one or both partners) and the intentions which one or both partners have for the future of the relationship. If ‘Partner A’ proposes marriage to ‘Partner B’ and presents them with an engagement ring, this does not simply entail a few words, a question, and some expensive jewellery, but rather a symbol of commitment, and a declaration that ‘Partner A’ intends for the relationship to become permanent. To ‘Partner B’, this might trigger feelings of acceptance, pride in a perceived improvement in their social prestige, legitimacy, happiness at the fulfilment of a secret ambition, relief that they have avoided the unwanted dissolution of the relationship and gained extra security by way of an exit barrier, relief at eliminating some risk and uncertainty, and many more emotions besides. In short, the decisions made and actions taken by each partner in a relationship have multiple meanings to the other partner, which may be powerfully symbolic and critical to the strength, success, and longevity of that relationship. In dyadic business partnerships, this is every bit as true as in personal relationships. This transferability between the context of social psychology and personal relationships to interorganisational dyadic business relationships suggests the possibility of their further transferability to interpersonal and intraorganisational dyadic relationships within IM. Within dyadic business relationships, each partner’s commitment may be inf luenced by their perception of the other partner’s commitment levels, the perceived and self-reported pledges made by each partner, the amount and quality of communication taking place, the reputation of the partner, and the history of the relationship (Anderson & Weitz, 1992). The first two of these factors ref lect an expectation of reciprocity between partners, and the absence of reciprocity can partially explain why dyadic relationships may fail. The inf luence of relationship history is potentially problematic within nascent relationships, which have little history, and it is unclear whether partners simply take a leap of faith, cast around for parallel experiences from other contexts, or simply proceed with more caution. Anderson & Weitz (1989) suggested that when selecting new partners, formalised mechanisms such as franchise agreements are not essential to achieve stability if each partner is aware of the other’s reputation for fair treatment and of the importance in which they place the relationship. Moreover, they demonstrated that relationships become more stable and require less communication as they mature, as communication can accrue between partners. Ghosh et al. (2004) discovered that commitment is determined by the perceived relationship benefits and rewards when compared by a partner to the perceived risks. They stated that interpersonal commitment was accrued directly and organisational commitment indirectly, implying that – in line with a postmodern interpretation – organisational knowledge is often informal,

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tacit, fragmented, and mainly held in lower parts of the firm’s hierarchy. Commitment is not a static phenomenon or one-dimensional but evolves with changes to organisational benefits and characteristics. Indeed, it continuously f luctuates as functional benefits drive commitment at company level (Sweeney & Webb, 2007). Morgan & Hunt (1994) found that commitment and trust are the major mediating variables in Relationship Marketing, with commitment impacted by trust and shared values, relationship benefits and termination costs, and commitment itself impacting upon cooperation, acquiescence, and a reduced desire to exit the relationship. By juxtaposing commitment, trust, and their causes and effects, the study found trust to be fuelled by communication, shared values, and less opportunistic behaviour, whilst trust itself fuelled cooperation, relationship commitment, increased certainty, and a reduction in conf lict. Within industrial partnerships, long-term orientation and commitment (with trust, satisfaction, and communication) may be engendered through the standardisation of production, with standardised firms seeking longterm, standardised relationships (Polo-Redondo & Cambra-Fierro, 2008). Within IM, there is no parallel research to gauge the impact of standardisation upon commitment between organisations and internal stakeholders. Boyle & Dwyer (1995) suggested that the formalisation of relationships may encourage the deployment of non-mediated inf luence tactics such as recommendations and information exchange, which seems logical given their finding that legalistic pleas in formalised relationships usually increase in number due to the introduction of contractual mechanisms which facilitate and encourage those legalistic pleas, rather than specific changes to relationship status. If this consideration is transferred into the internal market, practitioners should consider the potential effects of relationship formalisation through quasi-legalistic mechanisms, as they may inadvertently foster a normalisation of pleas and coercion.

4.6 Diplomacy, inf luence strategies, and incentivisation Dyadic relationship dysfunctionality is problematic in industry and has been the focus of Channel Management studies. Kumar, Scheer & Steenkamp (1995) sought to ascertain whether an increase in relationship interdependence, or interdependence asymmetry, within automotive manufacturer– dealer dyads led to an increase in dysfunctionality. They found not only that, as interdependence became more asymmetrical, trust and commitment decreased, but also that, as the combined interdependence grew, conf lict would decline and both trust and commitment would increase. Additionally, in Kumar, Scheer & Steenkamp’s (1998) research, which was underpinned by previous theories appertaining to conf lict spiral, relative power, and bilateral deterrence, they found that an increase in punitive capabilities brought about an increased deployment of those capabilities against partners, but that increases in relationship interdependence lessened the likelihood of punitive

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actions. Whilst the bilateral ‘exchange-of-persons’ constitutes a recognised mediation technique between channel partner organisations in response to channel conf lict (Stern, Sterntahl & Craig, 1973, p. 169), its applicability to IM seems limited to the appointment by directors of employee representatives to corporate boards. However, the mitigation of individual employees’ “opponent-centred behaviour” (ibid, p. 169) appears to have greater applicability to the resolution of workplace grievances both inside and outside an IM context, to facilitating cross-functional collaboration, and to the dismantling of resistance to organisational change. In spite of Rosenberg’s (1974) seminal theory on channel conf lict, which differentiated between ‘anticipatory’ and ‘reactive’ strategies aimed at its mitigation and resolution, Dant & Schul (1992) conceptualised strategies for the resolution of conf lict as a combination of choices made in response to perceived risk levels. Jap (1999) saw trust, like cooperation and goal congruence, as a facilitator of mutually beneficial outcomes between organisations, rather than simply an antecedent to satisfaction, and considered the resultant bargaining strategies as ‘integrative’ rather than ‘distributive’. Roering (1977) produced a seminal study into the effects of specific actions upon negotiations between partners, such as the effect upon negotiations of using ‘we’ and other personal pronouns. This research contextualised interorganisational negotiations within the environment of business relationships, finding that the expectations of future transactions and experiences of past transactions heavily inf luenced the success of current negotiations. Rosenbloom (1978) studied the effects of reciprocity within channel negotiations by drawing upon non-business theories, further demonstrating the interdisciplinary nature of the subject matter and its application. Dyadic inf luence strategies vary in the existence and intensity of coercion exerted by either partner, their antecedents within and effects upon the relationship, and in their grounding in commitment, trust, and (inter) dependence. Information exchange, promises, and recommendations help to generate relationalism (Boyle et al., 1992), whilst information exchange boosts the performance of the exchange relationship. Requests (especially those without any reciprocal element of offer), legalistic pleas, and threats are all considered negative and damaging (Boyle & Dwyer, 1995). Payan & McFarland’s (2005) article introduced ‘rationality’ as a non-coercive strategy which was nonetheless built around a full argument structure. The idea of offering a rationale for one’s actions as a way to increase goodwill and inf luence, for the first time located within the context of industrial dyads, was derived from social psychology works, such as those by Cialdini (1993). Lai (2007) disagreed with many of the previous categorisations of inf luence strategies, considering promises to be separate from coercive strategies and requests to be separate from non-coercive strategies, as both are hybridisations with effects heavily inf luenced by their host conditions. The debate later developed towards a scrutiny of overt incentivisation and other explicit inf luence strategies, such as the use of power as an incentive displayed explicitly

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and its effects on commitment from the other party. It is likely that, within an organisation, the incentivisation of individuals through IM can give rise to improvements in performance if the IM process has been designed to enhance relationalism, although the qualitative and subjective nature of relationalism may pose problems for those charged with targeting and measuring it.

4.7 Relational quality and norms, and their effects on cooperation and compliance Interpersonal relationships between buyers and sellers host the same principles which underpin Relationship Marketing, and if we consider the highest quality relationships to be the most productive and least conf lictual ones, they are usually characterised by more ‘friendly’ interactions which adopt a personable style, tone, and language (Van Bruggen, Antia, Jap, Reinartz & Pallas, 2010), and focus less on compliance behaviours, disagreements, and questioning. It is possible that, within nascent relationships in which ‘friendship’ has not had enough time to develop, more questioning is necessary for familiarisation, in which case these findings require more qualification. Furthermore, they defined ‘relational quality’ by levels of conf lict, trust, engagement or disengagement, buyer-seller interaction, question-asking, friendliness, compliance, expectations of relationship continuity, and the length of time spent talking. Although their data suggested that, as relationship quality improves, buyers may grant sellers more time for conversation, several of the characteristics by which they defined ‘relational quality’ required to be grounded more demonstrably in extant theory. Nevertheless, in focusing on qualitative concepts and processes, their study adhered more closely to a Relationship Marketing paradigm than previous ones and tells us much about the potential nature of the interactions and relationships inherent within IM. The location, quality, and number of connections between two organisations inf luence the characteristics of focal business relationships. In researching this phenomenon at a time when digital communications were stimulating a new wave of social psychology studies into interpersonal interconnectedness, Hadjikhani & Thilenius (2005) explored the effects of vertical and horizontal relationships on trust and commitment. Palmatier et al. (2007) considered the performance of interorganisational relationships to be driven by relational norms, whilst experience-based norms had earlier been discovered to increase the potency of service satisfaction and trust upon relationship commitment (Sharma & Patterson, 2000), and shared values and norms had been found to moderate the relationship between inf luence strategies and interdependence (Lai, 2009). All of these findings appear congruent with the key considerations underpinning IM literature, although Boyle & Dwyer’s (1995) suggestion, that relationship quality is unaffected by bureaucracy, seems less consistent with IM principles. Elsewhere, De Hildebrand e Grisi & Puga Ribiero (2004) designed their study to explore the antecedents of relationship decay and dissolution, finding that cooperation could help

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prevent either, whilst most other research focused on relationship longevity and success – for instance, Jap’s (1999) paper linking goal congruence and trust with cooperation. Payan & McFarland (2005) found that whilst inf luence strategies could encourage channel intermediaries to comply with each other, they do not impact positively upon relational outcomes, and that non-coercive strategies bring greater compliance (excepting the making of recommendations, which reduces it). In developing this avenue of research, Gelderman et al. (2008) noted that the stronger partner in a channel dyad recognised compliance and non-compliance in partners in a very unnuanced, simplistic, and binary manner, and that the weaker partners recognised delayed or partial compliance. These phenomena, when applied within an IM context, could suggest that the stronger partner in an IM dyad (i.e. the manager or ‘organisation’) may be incapable of accurately gauging levels of compliance (e.g. to the principles of the IM campaign, or company/brand values), although it is debatable whether the concept of ‘compliance’ should be deemed acceptable within IM, as it implies one partner bowing under duress to the will of another in a manner inappropriate to the central tenets of non-coercion (Rafiq & Ahmed, 1993).

4.8 From interorganisational dyadic behaviour to the dyadic behaviour of individual boundary personnel Within interorganisational dyads, relationship characteristics may be impacted by market liberalisation and other macroenvironmental factors (Brenkers & Verboven, 2006; Van Riel, Liljander, Semeijn & Polsa, 2011) and by the behaviour of the organisations, whilst the success of transactions between boundary personnel are inf luenced by the personal perceptions of the participating actors (Sweeney & Webb, 2007). Grayson & Ambler (1999) found trust to straddle the dyad and made little distinction between organisations and individuals in their identification of trust’s role in increasing commitment, interaction, involvement, and expectations in brief relationships, and in discouraging subjectivity and opportunism. By adopting the individuals’ perspectives of dyadic transactions, Hunter, Gassenheimer & Siguaw (2011) observed situational inf luences to impact primarily upon behaviour, and this finding was a significant development within the predominantly ‘top-down’ tradition of Channel Management literature. Kumar (2005) scrutinised the role of boundary personnel whilst noting the over-simplistic treatment of relationships by previous theorists as automatically indicative of high levels of trust, and their support for what he believed the false dichotomy of ‘power versus trust’. Hunter et al.’s (2011) study of suspicion between organisations challenged theoretical convention by recognising the role of suspicion in sustaining relationships rather than simply casting it as a cause of relationship decay. In doing so, they asserted that high or low suspicion levels are deleterious to a relationship, whilst a moderate amount is helpful in eliminating or preventing

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hostility and complacency. In this bell curve effect, low suspicion may discourage rationality and the motivation for continuity of the relationship, decrease performance, and blur judgment, whilst an intermediate level of suspicion can reduce the propensity for a partner to be deceived and their susceptibility to Fundamental Attribution Error (i.e. when one party forgivingly considers that their own shortcomings are due to unfortunate external factors but intolerantly believes that their partner’s deficiencies are the result of intrinsic factors) ( Jones & Harris, 1967; Ross, 1977). They also found that intermediate suspicion levels could increase performance and the appreciation and awareness of the value of a relationship, and this is of great relevance to IM, which is a more effective strategy when the employee ‘buys into’ the approach and perceives that value is being added. Furthermore, these findings challenge the assumption implicit within IM theory that a reduction in suspicion and increase in trust are necessarily desirable. Trust has been a pivotal construct in research into both interpersonal and interorganisational marketing dyad relationships. Jap (1999) considered it both an antecedent and outcome of goal congruence and cooperation, with Palmatier et al. (2007) acknowledging the relationship between commitment and trust as a driver of relationship performance between organisations. In their analysis of the effects of trust upon selected inf luence strategies, Payan & McFarland (2005) found that low levels of trust render recommendation strategies counterproductive but that compliance is significantly impacted by the interaction between recommendations and trust. Lado, Dant & Tekleab (2008), meanwhile, found that a reduction in both trust and opportunism produce first a decrease and then an increase in subjective performance and interorganisational relationalism, presenting another bell curve effect. Research into punitive actions between organisations have diverged from an earlier debate surrounding the attributes linked to trust and have drawn increasingly from a broader range of theoretical areas. Kumar (2005), in attempting to isolate and identify individual sources of punitive capability, concluded that they differed significantly from power based on dependence. He developed Kumar et al.’s (1995) study, which emphasised the strong negative effects of total interdependence and of interdependence asymmetry upon interfirm trust, commitment, and conf lict, and Kumar et al.’s (1998) research, which demonstrated how the punitive actions of dealers could be driven by dealers’ perceptions of their own actions, punitive capabilities, and independence, and those of their partner manufacturer. Whilst punitive capability asymmetry inf luenced the use of punitive actions, the asymmetry of interdependence did not, and this was labelled ‘bilateral deterrence’ – a phenomenon which is of potential importance to IM practitioners and theorists who accept Rafiq & Ahmed’s (1993) definition of the IM–HRM boundary as the border between approaches which are always, or only sometimes, non-coercive. Sweeney & Webb (2007) adopted Social Exchange Theory in their analysis of how individuals affect channel relationships, ascertaining the psychological relational benefits which might accrue both to individuals and to groups.

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McFarland et al. (2008, p. 62) seized upon the emergence of theory linking social connectivity with evolving interpretations of online social networks which were underpinned by ideas from medical studies into epidemiology, and proposed ‘Supply Chain Contagion’, in which (usually negative) interorganisational actions and behaviours experienced by one dyadic partner are replicated in that partner’s other supply chain relationships with different partners. Even within the organisation transmitting this contagion, the phenomenon is usually unconscious, undetected, and inadvertent. The antecedents of this contagion identified by the authors were environmental uncertainty, and the perception within the transmitting intermediary that the partnership characteristics in the second relationship (in which it passes on the contagion) closely resemble those of the first relationship (in which they caught the contagion), with frequent contact occurring between the intermediary and both of their channel partners. The notion of contagion had been implied, albeit tangentially, in earlier IM literature, by the infrequently surfacing assumption that the organisation’s attitude and behaviours towards its employees, and in particular of boundary personnel, would be likely to be replicated at least partially in those employees’ interactions with their external stakeholders.

4.9 Channel conf lict The phenomenon of channel conf lict and its antecedents and consequences are perhaps the dominant concern within Channel Management literature, with numerous seminal articles over more than half a century inf luencing the debate. In conceptualising supply chains as ‘interfirm behavioural systems’, Rosenberg & Stern (1971, p. 437) effectively placed behaviour centre-stage, and believed conf lict to be entirely normative organisational behaviour. Rosenberg (1974) subsequently traced the evolution of conf lict in interorganisational dyads from its ‘covert’ and ‘overt’ stages. Assael’s (1969) introduction of distribution channel conf lict did not analyse interpersonal or intergroup dynamics, and those considerations only gradually entered the debate, reaching the height of their prominence with Kale’s (1989) assertion that the personality variables of individual dyadic actors, and their impact upon the dependence of each partner organisation, were paramount. For example, he extrapolated from personality traits through acts of alienation and reciprocity and analysed how they inf luenced conf lict. Gaski & Ray (2004), in contrast, believed ‘alienation’ to be a supra-construct which included ‘estrangement’ and ‘social malintegration’, and saw it as significant only at an organisational level, saying that the analysis of individual characters’ inf luence was a transient academic phase. Lusch (1976) developed Rosenberg & Stern’s (1970) organisation-level research into the causes, management, measurement, and consequences of conf lict by analysing the inf luence of power upon conf lict. Whilst Rosenberg & Stern (1971) delineated channel roles by commenting on accepted dyadic

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domains, Ross & Lusch (1982) brushed off Etgar’s (1978) earlier criticism of their work by pinpointing limitations in Rosenberg & Stern’s (1971) research, which they felt failed to differentiate sufficiently between antecedents of conf lict and conf lict itself. Ross & Lusch (1982) therefore analysed domain dissensus and perceptual incongruity (whereby both parties differently perceive the remits of their relationship or the realities of their common situation), their inf luence upon conf lict (of which none was present), and their effects upon cooperation (for which a strong positive correlation was found). This work was noteworthy for demonstrating that, despite cooperation and conf lict sharing certain roots, they do not represent opposing extremities of a bipolar construct, as had previously been inferred. The inf luence exerted by partners’ perceptions of each other’s role was examined by Rosenberg & Stern (1971), but only at an organisational level, whilst Gaski’s (1986) study of supplier–dealer affinity accounted for the personal relationship between the boundary personnel (i.e. the supplier’s area manager and the dealer’s staff ) and analysed performance measures which derived predominantly from common operational factors which have the potential to ignite conf lict, such as the supplier failing to expedite the delivery of urgently required stock. To this point, all studies had treated conf lict as affective and attitudinal – that is, a covert set of feelings and emotions which partners try to hide for the good of the relationship – and had considered conf lict to be wholly damaging, an unwanted by-product maligning the relationship. However, Rosenberg (1974) ascertained that conf lict, especially latent conf lict, can bring commercial and relational gains, for example, by stimulating ref lexivity and self-evaluation within the organisation and galvanising efforts. In parallel to this conversation, a debate evolved surrounding manifest conf lict, in which malicious conf lictual behaviours become noticeable to the party which is stimulating the negative attitudes. Rosenberg & Stern (1970) believed the cause of such conf lict to be structural rather than relational, exerting a negative inf luence upon external variables such as customer demand. Etgar (1979) undertook a detailed analysis of the sources and categories of conf lict, and proposed a dichotomous interpretation in which cognitive, affective, and attitudinal sources were separate from manifest, behavioural ones. He identified nine major causes of conf lict (e.g. the drive for autonomy, and a divergence of partners’ goals) which were split into 46 very specific causes. Several of these, along with Dant & Schul’s (1992) classification of conf lict resolution strategies, appear worthy of consideration within an IM context. The elements of partnership cessation and relationship decay have underpinned several prominent studies into channel conf lict. Gaski & Ray (2004, p. 158) considered alienation as ‘social malintegration’ or a ‘feeling of separation or estrangement’ and adopted the organisation-level focus of many earlier studies (e.g. Harvey, Harvey, Warner & Smith, 1980). Grayson & Ambler (1999) explored the potential of relationship longevity to undermine

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service use and therefore the effect of trust. Macneil (1980) went further than both, considering ‘relationalism’ and ‘alienation’ as bipolar opposites, and Gassenheimer et al. (1996) focused on reasons for partnership cessation, finding that the most common causes were the imposing of unrealistic targets or the withdrawal of margin opportunities by one partner from another. De Hildebrand e Grisi & Puga Ribiero (2004) offered five detailed reasons why channel relationships dissolve – inappropriate pricing, difficult payment conditions, substandard product quality, unacceptably patchy fulfilment of deliveries, and underinvestment in technology. Whilst employees are not able to dissolve relationships with their employers whilst still working there, it is possible that they could become estranged (i.e. work for the organisation but with a reduced level of emotional attachment or goodwill) or seek alternative employment – both of which would represent a serious malfunction of the IM relationship, and merit attention within future IM research. In adopting these five final reasons for relationship cessation to the internal environment, ‘inappropriate pricing’ may correspond to ‘inappropriate relationship costs’, ‘difficult payment conditions’ to ‘poor remuneration or working conditions’, ‘substandard product quality’ to ‘substandard job role specification’, ‘patchy fulfilment of deliveries’ to ‘inconsistent fulfilment of organisational pledges’, and ‘underinvestment in technology’ could be recontextualised in its present form.

4.10 Chapter summary In this chapter, we have sought to address the lack of research into the transmission, communication, co-creation, and exchange of value in an IM context by exploring how it is conceptualised in a related field of marketing theory, namely that of Channel Management. In doing so, we have considered the applicability of theories from interorganisation contexts (e.g. between a manufacturer and a retailer) to intraorganisational and interpersonal contexts (i.e. in IM). This has enabled us to use dyadic perspectives as an analytical lens, as per the suggestion of Yang & Coates (2010). Beginning with an identification of the requirements and characteristics inherent within dyadic partnerships, we suggested ways in which these might differ between organisations and individuals, and considered how IM relationship success might be determined by factors such as relationship formalisation, inter/dependency, trust, commitment, control, long-term relational orientation, power, satisfaction, inf luence, relationalism, and stability. We considered that most factors are likely to transfer well into an internal market context, but that many of the strategies used to manage and nurture relationships – compliance and cooperation, incentivisation, inf luence, diplomacy, and relational norms – are likely to differ significantly inside an organisation, if only in their method of deployment. However, our comparison of the dyadic behaviours of organisations with those of individual boundary personnel, and our analysis of the management of channel conf lict,

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suggested a high likelihood of theoretical transferability into IM. Whilst it is outside the remit of this book to undertake research to prove the applicability of Channel Management concepts to IM, the following dyadic perspectives from Channel Management literature are potentially applicable to IM, and are proposed here as suggestions for future research, based upon the rationales presented within this chapter. IM satisfaction may be inf luenced by trust (e.g. Sharma & Patterson, 2000; Jonsson & Zineldin, 2003) and power (e.g. Benton & Maloni, 2005; Lai, 2007). The characteristics and antecedents of IM satisfaction should be explored. It may also be beneficial to ascertain whether the inf luence of satisfaction varies according to the seniority of the partner. The role of the individual IM dyadic partner may adapt to fit evolving intraorganisation interactions, inf luencing satisfaction levels (Lai, 2007; Van Riel et al., 2011) within internal service delivery, just as it does for channel dyad partners (Etgar, 1979). Likewise, roles within internal service encounters may evolve to fit external conditions and the organisational circumstances, just as in external service encounters (e.g. Hewitt, 1991; Guirguis & Chewning, 2005). Dyadic IM relationships may be inf luenced by informal, haphazard, and tacit aspects of interpersonal communication, in the same way as relationships between organisations (Lado et al., 2008). Although the consensual nature of IM may not accommodate an interpretation of the employer and employee as ‘strong’ and ‘weak’ partners, they nevertheless have different expectations of each other’s actions within IM relationships, and derive different motivations from them, just as intermediaries do in marketing channels (Gassenheimer et al., 1996; Ghosh et al., 2004). Likewise, although Gassenheimer et al.’s (1996) concept of control– satisfaction relationships within supply chains does not translate neatly into an IM context due to the dissonance between ‘control’ (in a relational situation) and the consensual nature of IM (Ahmed & Rafiq, 2002), different levels of implied or covert coercion may exist in IM, especially if a broader interpretation is applied to ‘control’. Just as in Channel Management, psychological and relational benefits may be enjoyed by dyadic partners (Sweeney & Webb, 2007) within IM, albeit perhaps mediated by authority and status. Furthermore, IM relationships may benefit from mistrust and suspicion between partners, as is the case in supply chains (Hunter et al., 2011). IM partners’ mutual perceptions (Gassenheimer et al., 1996) and ‘idiosyncratic investments’ (Anderson & Weitz, 1992, p. 19) may inf luence relationship success not only in channels but also in IM. The credible implementation of IM may demand a level of divergence between the personal characteristics of the dyadic individuals and those of the organisation, to accommodate members’ desire to differentiate themselves from their firms (Sweeney & Webb, 2007) – perhaps motivated by a wish to lessen the ‘emotional labour’ (Hochschild, 2003) within IM.

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Different IM inf luence strategies may produce different perceptions and reactions amongst staff, with some damaging the relationship or indicating poor relationship health (Frazier & Summers, 1984), as they do in Channel Management. Expert, legitimate, and referent power (French & Raven, 1959) may vary in effectiveness within IM settings, as they do between channel intermediaries (e.g. Lusch, 1976; Dant & Schul, 1992), producing similar organisational outcomes. Similarly, just as downstream channel intermediaries may be willing to surrender some control as a result of channel partners’ favourable behaviours (Gassenheimer et al., 1996), so too may IM partners. The inf luence of interdependence, dependence, and dependence asymmetry upon engagement and relationalism between channel partners (Payan & McFarland, 2005; Chung et al., 2008; Lai, 2009) appears applicable to IM. Whilst supply chains benefit significantly from relationship-building incentives (Sheu & Hu, 2009), this has not yet been explored outside that context. Likewise, the link between goal congruence and trust ( Jap, 2009), and between cooperation and relationship longevity (De Hildebrand e Grisi & Puga Ribiero, 2004) may be applicable to IM. As ‘compliance’ facilitates channel relationships (Payan & McFarland, 2005), so it may lubricate IM relationships, although once more, the accommodation of such a coercive phenomenon within a specifically non-coercive theory would be problematic. In the next chapter, we consider the relocation of more theories appertaining to organisations’ interactions with their external environments – specifically, about demarketing – to their internal markets, and by doing so challenge the underlying assumption that Internal Demarketing is always unintentional.

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5

The dark side of Internal Marketing Internal Demarketing

As Internal Marketing (IM) theory assumes the existence of an internal market with similar market forces and characteristics to external ‘customer’ markets, it also assumes that a major objective of all IM is to increase demand amongst internal customers (employees) for the organisation’s internal products (jobs). When Vasconcelos (2008, 2011) first raised the possibility of Internal Demarketing (ID) – marketing actions which reduce employee demand for an organisation’s jobs – he suggested that this would occur without organisational intent, as the result of managerial incompetence, neglect, or poor planning. By casting ID as well-intentioned but botched IM, the utopian, idealistic view of IM ref lected in much of the literature went unchallenged. However, in this chapter, we question that assumption and demonstrate the likelihood that at least some ID may be undertaken with organisational intent. We do this by introducing fresh qualitative data from several stakeholders in a different industries and locations where publicly available data on the organisations has previously portrayed contexts which may suggest on the balance of probability (though not beyond all reasonable doubt) that ID may have been utilised with organisational intent. We begin the chapter by identifying and defining ID, before analysing fresh data through the lens of extant demarketing theory, which appertains to external stakeholders and predates Vasconcelos’ (2008) concept by nearly four decades. By adopting the various categories of demarketing and applying them to the internal market, we propose a taxonomy of ID and explain their likely characteristics. The four main categories are unintentional ID, ostensible internal marketing, selective internal marketing, and selective ID. The chapter concludes with a discussion of the effects of these different forms of ID, and the ethical concerns arising from them.

5.1 Identifying Internal Demarketing Internal Demarketing is a form of IM which reduces the attractiveness of an employer and its job products to its staff. Since its conceptualisation by Vasconcelos (2008), ID has been neglected as a phenomenon, and the antecedents and conditions proposed by Vasconcelos (2008, 2011) have remained

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unchallenged. To analyse the concept better, we first compare definitions of IM, ID, and demarketing to see how the concept of ID has relied on that of IM but overlooked the broader characteristics of demarketing. We then analyse fresh data from key informants to ascertain the sufficiency and representativeness, or otherwise, of Vasconcelos’ (2008, 2011) explanation of ID and to broaden it as a theoretical concept. The definition of IM which is perhaps most commonly accepted and used by theorists is as follows: Internal Marketing is a planned effort using a marketing-like approach… to align, motivate and inter-functionally co-ordinate and integrate employees…to deliver customer satisfaction through a process of creating motivated and customer orientated employees. (Ahmed & Rafiq, 2002, p. 454) By deconstructing this definition and analysing some of its constituent parts, we get a clearer idea of what IM represents and what it rejects. “Planned” activities entail organisational and/or managerial intent, and “effort” is active rather than passive. “Using a marketing-like approach”, given the context of the authors’ subsequent explanation, refers to the lack of coercion or willingness to leverage on the terms and conditions of employment contracts. “Align”, “inter-functionally co-ordinate”, and “integrate” ref lect the desire for a unified outcome which unites staff, whilst “motivate” and “creating motivated employees” implies an intent to energise and enthuse employees through something which instils hope or optimism. Therefore, we can consider IM to be (i) intentional, (ii) active, (iii) non-coercive, (iv) unifying and (v) enthusing. In short, a wholly positive phenomenon. The definition of ID offered by Vasconcelos (2011, p. 35) is as follows: Internal Demarketing is regarded as a sort of corporate illness that is closely associated with high and middle managers’ actions, decisions, and behaviors that are capable of triggering negative perceptions at work settings that can potentially lead to the decrease of productivity and/or poor organizational performance. Again, we can deconstruct and analyse this definition for a clearer idea of the author’s meaning. “Corporate” refers to private sector, not-for-profit, and third-sector organisations, although there is no explanation within the article of why ID might not also occur in public sector organisations. “Illness” alludes to something which is unpleasant, uninvited, and damaging inf licted upon the host, which is the organisation, regardless of its sector. “Associated with high and middle managers’ actions…” places the blame squarely with executives and managers – those who design and implement IM strategies – rather than the workforce. “Actions, decisions and behaviors” covers a multitude of managerial sins and does not limit them to the context of IM.

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Although elements of decision-making are unconscious and may rely on incomplete or misleading information or false heuristics, the word “decisions” nonetheless implies that the actors have gone through a deliberate cognitive process which has resulted in ID, whereas “behaviors”, and perhaps even “actions”, leaves more scope for a lack of cognisance of their mismanagement. The uncertain nature of the words, “capable of triggering negative perceptions at work settings that can potentially lead to…”, and especially “capable of ” and “potentially”, infers that these “actions, decisions, and behaviors” have variable outcomes which may or may not lead to “the decrease of productivity and/or poor organizational performance”, which itself would be an entirely negative outcome for the organisation, its owners, shareholders, and external stakeholders, rather than directly to its employees. The phrase “negative perceptions at work settings” is the only allusion, however tangential, to employees, and is included not to enable consideration of their needs, but to point out their negative impact upon commercial and organisational outcomes if ID encourages them to develop “negative perceptions” (of something which is not unstipulated). To summarise, Vasconcelos (2011) proposes that ID is (i) a private sector phenomenon, (ii) inf licting damage on an organisation without invitation, (iii) as a result of incompetences and deficiencies (iv) which are underlying (v) and mobilised with varying degrees of knowingness, (vi) potentially triggering amongst staff negative perceptions (vii) which might damage the organisation’s profits and performance. So far, this comparative exercise has highlighted the following: Ahmed & Rafiq’s (2002) IM is intentional, Vasconcelos’ (2011) ID is unintentional. IM is active; ID is borne of passivity, ignorance, incompetence, and/or neglect. IM is non-coercive, but we are not told whether or not ID is coercive, although it cannot be consensual, as managers inf licting ID unknowingly or unwillingly would not be in a position to give or seek consent. IM unifies staff, but we are not told if ID unites, divides, or neither. IM enthuses staff, but ID may produce negative staff perceptions. IM is a wholly positive phenomenon, ID potentially damaging specifically to performance. Having analysed these two definitions, we must not overlook Vasconcelos’ (2008, 2011) choice of new terminology for his concept: the name, “Internal Demarketing”. “Internal” seems incontestable, as the phenomenon is located within the organisation’s internal market, where its initial impact (if indeed, it produces one) is upon the internal stakeholders. However, to appreciate the applicability and appropriateness, or otherwise, of the term “demarketing” to his definition, we must first ascertain the true meaning of that word. As editors of an excellent compendium on demarketing, Bradley & Blythe (2014, p. 1) offered a concise definition which was distilled from the one core meaning underpinning nearly 50 years of infrequent studies into this niche subject area: Demarketing can be defined as the deliberate attempt by marketers to reduce demand for a product by using the same tools and techniques as are normally used to increase demand.

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As the term “marketers” can be and has been used in academic literature to indicate not only designated staff from within the marketing departments of organisations but also those who may dictate marketing strategies – and especially senior managers whose roles are not marketing-specific – a holistic understanding of that word is not only permissible, but appropriate. This is especially the case, as their compendium focused entirely on externally focused demarketing approaches which are almost certain to be designed by marketing specialists, whereas IM appears to be more often instigated and designed by non-specialists who assume the remit according to their rank and authority, even if they rely on underlings for its implementation and intermediation. By anchoring their definition of demarketing to the generally accepted academic meaning of ‘marketing’ the authors do not need to go into detail about what it entails, as we already understand those “tools and techniques” utilised. However, this differs significantly from Vasconcelos’ (2011) insistence that ID emanates from “actions, decisions, and behaviors” which seem to be a powder keg of underlying propensities and deficiencies ignited inadvertently by the spark of a stray decision. Most crucially of all, Bradley & Blythe (2014) declare demarketing to be a “deliberate attempt”, which directly contradicts Vasconcelos’ (2011) treatment of ID as an unhappy accident brought about by suboptimal managerial capabilities and botched IM. Although his initial conceptualisation of ID predated Bradley  & Blythe’s (2014) definition of demarketing by six years, this would not have been detrimental to his understanding of the term ‘demarketing’, which had been treated as an intentional strategic approach in all previous literature, with the exception of those studies referring explicitly to “unintentional demarketing” (e.g. Kotler & Levy, 1971), including one in Bradley & Blythe’s (2014) compendium. Although the use of “deliberate” in their definition sits rather awkwardly on page 1 of a compendium which contains a chapter on “unintentional demarketing”, we should not be distracted by this untidiness, as it represents a red herring. To be clear and tidy, unless explicitly stated otherwise by the term “unintentional demarketing”, all demarketing is intentional. Therefore, we must ask, why did Vasconcelos (2008, 2011) give a title unambiguously conveying organisational intent to a phenomenon which he portrayed as unintentional? Perhaps, implicitly understanding the highly problematic nature of establishing proof of organisational intent for something so controversial, negative, damaging, and potentially unethical, he considered the issue of intent to be irrelevant, unimportant, impossible to pursue, or unlikely to attract academic debate. However, the presence or absence of intent has far-reaching implications in terms of the strategies available to organisations, levels of vigilance required by staff, employee perceptions and likely tolerance levels towards ID, and ethical debates over how it might be prevented, monitored, and tackled. For these reasons, we will turn next to a closer inspection of the existing categories of demarketing and their potential application to the internal environment.

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5.2 A taxonomy of Internal Demarketing Kotler & Levy’s (1971) pioneering article conceptualisation of demarketing gave rise to a niche area of marketing theory which has been developed in the intervening years, but has perhaps been the focus of fewer studies than may be expected given the need for organisations – especially governments and public sector bodies – to discourage consumption of certain goods and services. Bradley & Blythe (2014) expanded upon this seminal article to propose six categories of demarketing: (i) synchromarketing is the collection of strategies and actions which seek to synchronise the f luctuations of market demand more closely with the availability of supply, smoothing out the peaks and troughs of seasonality; (ii) counter-marketing is used to counteract the inherent desire of publics to consume certain products or services, such as alcohol, tobacco, or private transport; (iii) general demarketing aims to reduce the overall demand for a product or service, perhaps because it has become economically unviable for the manufacturer to produce and sell; (iv) selective demarketing aims to discourage demand only from a selected customer segment whilst protecting demand from more preferred segments – for example, a producer of sportswear for serious athletes may wish to discourage ‘casual, urban’ consumers from adopting their brand in case they undermine its credibility amongst the core audience; (v) ostensible demarketing occurs when organisations deliberately give the outward appearance of trying to reduce demand (i.e. demarketing) whilst actually attempting to increase it – essentially, trying to build the aspirational aspect of the brand or to ‘treat them mean, keep then keen’; and (vi) unintentional demarketing, which is when the organisation’s genuine attempts to increase or maintain customer demand are unsuccessful and result in a decrease. The first five of the above six categories are undertaken with organisational intent, but the final one is, as the title suggests, unintentional and may be the result of managerial incompetence, poorly designed IM strategies, a lack of IM, or a range of other internal and external factors. Vasconcelos (2011, p. 37) suggested that ID could be “either consciously or unconsciously implemented”. At first glance, “consciously or unconsciously” infers that ID may be intentional or unintentional, varying from one manager to another. However, in his subsequent description, it appears that the possible consciousness with which some managers might implement ID was not a consciousness of the likely deleterious effects of their “managerial actions, decisions, and behaviors”, or even that these constituted ID, but more a vague recognition of their managerial inadequacies without any intent to produce a damaging organisational outcome. In effect, he was not imagining a brand saboteur (Wallace & De Chernatony, 2009) working stealthily from the inside to grudgingly undermine his employer, but someone genuinely intending to undertake successful IM – or at least to get the task finished without unnecessary effort, commitment, forethought or negative consequences – but failing to do so successfully due to personal shortcomings. Vasconcelos (2011)

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offered seven antecedents to ID which could be considered applicable either to managers or to ‘the organisation’ at a cultural level, and these are the violation by managers of employees’ psychological contracts, ‘people devaluing’, ‘quality of working life unconcern’, inadequate leadership, indistinct vision, a growth of distrust, and a lack of communication. Arguably some of these may constitute consequences as well as antecedents, and it may be difficult when undertaking organisational research to anticipate which came first – the chicken or the egg, the poor relationships or the poor relationship management. During the course of some recent research into the nature of IM (Brown, 2017; Brown, Dey, Wäppling & Woodruffe-Burton, 2019), insights unexpectedly emerged suggesting the presence of ID, despite the fact that the researcher was neither seeking indications of ID nor, at least initially, even aware of the ID concept. Furthermore, although the research participants were unable to supply proof that the perceived ID had been undertaken with either organisational or managerial intent, the contextual circumstances and the methods of communication often rendered this possibility extremely likely. Undoubtedly, there was a great deal of unintentional demarketing (Kotler & Levy, 1971; Bradley & Blythe, 2014) occurring in the internal environments explored. However, in places the data suggested that different segments of the internal market were being subjected to approaches which varied in the extent to which they constituted IM or ID, suggesting a form of selective demarketing (Kotler & Levy, 1971; Bradley & Blythe, 2014; Farquhar, 2014; Tan, 2014) inside the organisations. Elsewhere, some managers were communicating messages which, whilst superficially appropriate, were such thinly veiled double-speak that only the most undiscerning employees would have taken them at face value. If this was the result of managers underestimating employees’ intelligence, then it was a form of unintentional demarketing (Bradley & Blythe, 2014; Kirchner, 2014; Madichie, 2014), thereby corresponding to Vasconcelos’ (2011) broad conceptualisation of ID. However, if the supposedly positive messages were deliberately designed to be transparent and disingenuous in a passive aggressive manner so that employees would deliberately see the true message behind the veneer, then this constituted a form of ostensible marketing (Bradley & Blythe, 2014; Croft, 2014; McKechnie, 2014) applied to IM. Taking into account the apparent applicability of different categories of demarketing into the field of IM/ID, and the previous lack of recognition or exploration of these categories in an IM/ID context due to Vasconcelos’ (2011) less nuanced interpretation of the phenomenon, the following sections analyse fresh, qualitative data collected specifically for this book, to consider the potential categorisations of ID. Specifically, we consider the categories of (i) Unintentional Internal Demarketing, (ii) Ostensible Internal Marketing, (iii) Selective Internal Marketing, and (iv) Selective Internal Demarketing (Brown et al., 2019), before discussing their characteristics and potential consequences.

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5.2.1  Unintentional Internal Demarketing Unintentional Internal Demarketing corresponds to what Vasconcelos (2008, 2011) described in his conceptualisation of ID. Whilst the organisation intends to undertake IM to make itself more attractive to its staff by spreading positive communications, conveying desirable values, and treating its employees with respect, it inadvertently fails in this strategy by miscommunication or poor strategic design, resulting in employees becoming less appreciative of the organisation than they were before the initiative. As in any market where the target audience becomes alienated from the brand and perceives decreasing amounts of value in their products and services, the perceived cost of the brand, products, and services increases and/or the perceived benefits decrease, bringing about a decline in demand for them. In an external market, this would potentially result in customers becoming more price-sensitive and less loyal to the organisation; they are more likely to seek alternative suppliers or, at least, to reduce their commitment to, and investment in, the firm by purchasing less frequently, in smaller volume, and with less inclination to upgrade, accessorise, or make positive recommendations of the brand to peers. The following is a passage from an interview with Danny about IM in which he described Unintentional Internal Demarketing without any prior recognition of the concept, prompting or encouragement. A 54-year-old manager with 30 years’ continuous service in a regional plant of a steel manufacturer, he had recently experienced a protracted initiative from his organisation which he perceived to constitute an attempt at IM, but one which he felt had been counterproductive as a result of mismanagement. The big bosses came in and gave us a talk. They meant well, I’m sure, but they just weren’t cut from the same cloth as us [i.e. did not have much in common with their audience] and when they tried to talk to us on our level, it just sounded false and a bit patronising. I don’t mean dropping their aitches for the riff-raff or anything like that, it’s just that you could tell they had unrealistic ideas about what our work is like, a more deskbound view of it – clean and clinical. They were nice people, and it was interesting to get their slant on things. It helped us to see what contribution our work makes to the company and how it affects colleagues in other countries. But they were trying to talk to us in too chummy [i.e. friendly, informal] a manner, when I think it would have rung a bit more true [i.e. - seemed more authentic] if they’d just got on with it as our bosses. It’s like when politicians visit soldiers, they always take off their suit jacket, get rid of their tie and roll their sleeves up, like it magically makes them a squaddie [i.e. soldier]. The other thing is all the posters and corporate messages from HQ which get stuck up on the canteen walls. They all have messages about developing yourself for a bright future and going outside your comfort zone, but that’s not where most of us are. Most of us are a bit longer in the tooth [i.e. – older] and have put in all

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those hard yards [i.e. made sacrifices, expended great effort] over many years when we were younger – night classes, exams and so on – and we’re looking to reap the dividends of that effort and experience now, not have to jump through a load of new hoops [i.e. fulfil new developmental requirements], so those posters just make us feel that, well, y’know, the company doesn’t get [i.e. understand] us, and that’s pretty demotivational to be honest. In this telling quotation, Danny appears sympathetic towards the directors, judging them as well-intentioned ‘nice people’ who simply undermined their own credibility by attempting to gain acceptance from employees through the unconvincing and unnecessary downplaying of their seniority. Their lack of commonality with the workforce would have been more readily accepted if they had not attempted to hide it. Danny welcomed the IM approach, or at least part of it, enjoying ‘seeing the big picture’ and learning about the interconnectedness of his work with those in other functions. In this respect, the IM has worked in encouraging staff to have a more holistic view of their organisation which transcends departmental and geographical boundaries, to understand the broader value of their work, and to appreciate how they provide a service to colleagues. However, by comparing the directors to politicians, with their connotations of unpopularity, cynicism, and Machiavellianism, Danny speaks volumes about their inability to instil trust. When describing the posters carrying messages which are inappropriate to the values and aspirations of Danny and many of his colleagues, he makes no suggestion of organisational intent, but seems to imply a perception that the messages are ill conceived within the context in which they are applied – they may have been appropriate to a younger audience, but have a demotivational effect on Danny and his colleagues, who feel misunderstood. The root of these problems seems to be a lack of experience amongst the IM ‘designers’ and ‘enactors’ of their audience, and sharing many traits with Vasconcelos’ (2008) conceptualisation of ID, it constitutes Unintentional Internal Demarketing. Translated into an internal environment context, Unintentional Demarketing is likely to make the organisation and its job roles less attractive to its staff as a result of its values, or the ways in which they have been communicated, being out of sync with employees’ expectations and desires. They will often therefore become less enthusiastic about working for their organisation and place more emphasis on the importance of a higher salary, showing less loyalty to the firm and seeking alternative employment. In terms of investment and commitment, they become less likely to place the organisation at the centre of their long-term plans (e.g. when choosing their home location or children’s school), to undertake professional qualification courses for the purposes of achieving promotion there (though perhaps to enable them to move elsewhere more easily), and to recommend the firm to others as an attractive employer. The organisation will almost certainly suffer by having

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increasingly disengaged employees who show less commitment to the firm, by having to pay higher wages to attract the required quality of staff, and through an increased staff churn rate with its accompanying uncertainty and recruitment costs. As employees are less committed to the organisation’s values, they are less likely to convey them to external audiences, and in particular customers, and to retain a healthy market orientation. Unintentional Internal Demarketing is (i) caused by a lack of knowledge, awareness, skill, or care at managerial or board room level; (ii) unintentional, and in direct contract to the wishes of the organisation; and (iii) likely to impact negatively on all internal stakeholders, before its effects may be felt indirectly by external stakeholders (Brown et al., 2019). 5.2.2 Ostensible Internal Marketing Ostensible Internal Marketing is ID undertaken intentionally under the pretence and outward appearance of IM. It is a form of ostensible marketing (Bradley & Blythe, 2014; Croft, 2014; McKechnie, 2014) which differs significantly from Vasconcelos’ (2008, 2011) conceptualisation of ID, as it entails organisational intent. Whilst the organisation deliberately gives the impression that it is trying to make itself more attractive to its employees through positive values, messages, and treatment, these may be a superficial, diversionary smokescreen enabling a more negative approach to go unnoticed, or they may be a disingenuously presented misinterpretation of reality or of the organisation’s true values and behaviours. Naturally, establishing organisational intent is extremely difficult and perhaps only possible for organisations which make internal declarations directly contradicting the course of action which they have said that they would take in publicly available documents, or the course of action which seems overwhelmingly likely from publicly available information. For example, if employees complained that an element of their organisation’s seemingly well-intended communications was instilling anxiety, resentment, or disbelief in them, and that organisation had publicly declared that it needed to reduce its workforce drastically, there would be reason to consider the possibility of covert organisational intent. The following is a selection of comments made by Charlene during an interview about IM, in which she described what might be thought to constitute Ostensible Internal Marketing without any prior recognition of the concept, prompting or encouragement. A 36-year-old manager with 14 years’ service in a regional government authority, she had recently experienced a year-long IM campaign which she found, in many respects, deceitful and unsettling. Ugh, it made my skin crawl at times, it was so slimy and deceitful. They couldn’t lie straight in bed! It was all spin, spin, spin. They issued all these self-serving statements about how they were making the workplace fairer

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by having a greater proportion of women and mothers and careers and disabled people there, but all the time they were making it much harder for those people to build a career. Sure, they managed to get a bigger proportion of those people employed with us and then boast about what a wonderful thing they’d done for society, but it was all done by getting rid of more senior males on big pay-outs then f looding the lowest paying roles with women. Women who then couldn’t get promoted because, to get promoted, you needed to work long hours, sacrifice your spare time and move locations – all things that mothers, careers and the cared-for can’t usually do. Oh, and another thing: all this about how many more women they were going to employ? Well, that turned out not to be FTEs [Full Time Equivalent posts]. They simply split a load of basic clerical roles in two and had two people on 18 hour contracts instead of one on 36. That’s just fudging the numbers. Anyway, as you can tell, it didn’t really wash with me. But the thing is, no one took them at face value. We all knew what was going off, reducing the headcount, getting rid of the old guard, getting the wage bill down. And they knew that we knew, because it used to come up all the time in union meetings and town hall meetings. But they didn’t care. They didn’t try to change the messages or adopt a different tone. They just carried on as before, using their announcements and statements as some kind of whitewash, as if to say, “well, we all know what’s happening, but as long as we keep smiling at the cameras and trotting out these words, we’re free to do whatever we want”. It should first be noted that Charlene described herself as ‘active in the union’ and ‘not a big fan of management’, but even accounting for the interpretative nature of her comments, the perceptions expressed are clear and damning – of ‘slimy’, ‘deceitful’ ‘spin’ delivered by people whom she considers to be liars. The publicly available information about her employer shows that it needed to reduce its wage bill and headcount at the time of the interview and in the preceding few years, but this alone does not necessarily constitute a ‘smoking gun’ which is indicative of organisational intent to undertake disingenuous IM or to alienate staff. However, intent may perhaps be inferred by the absolute certainty with which Charlene – and a unanimous sample of her colleagues – judged the IM campaign to be a smokescreen constructed by the organisation, the existence of which appears to have been mutually acknowledged. Employer and employees shared a recognition of the deceit in which hollow representations of IM covered and enabled the organisation’s actions aimed at reducing, rather than increasing, its attractiveness as an employer. In short, it seems that he organisation was pretending to do IM, whilst its poor execution of this was an intentional deployment of ID – therefore, Ostensible Internal Marketing. Transposed into the internal environment, Ostensible Marketing is likely to instil in employees varying degrees of Cognitive Dissonance (Festinger,

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1957), as the communicated promises and values of the organisation seem discordant with their everyday lived experiences of work there or are presented in a manner which betrays the lack of managerial or organisational commitment to them. Some staff members may suffer the gradual onset of unease or anxiety related to their job roles and employment, but it may be unconscious and they may not recognise it or link it to the IM campaign. Others – perhaps the more cynical or confident members of staff – may recognise the source of this anxiety, becoming more disdainful towards, and untrusting of, the organisation and its management. They may be more likely to engage in ‘brand sabotage’ (Wallace & De Chernatony, 2009) as a form of casual revenge and to become uncommitted towards their employer. This in turn is likely to discourage them from offering the highest levels of customer service or from embracing a market orientation and may indirectly lead to a decline in the firm’s performance. Ostensible Internal Marketing is a form of ID which (i) is covert but deliberate, (ii) is negative and against the spirit of IM, (iii) requires significant managerial or organisational knowledge of the workforce and the ability to design and implement a ‘false strategy’, and (iv) is likely to affect some or all internal stakeholders, before possibly affecting external stakeholders too. 5.2.3 Selective Internal Marketing Selective Internal Marketing is a form of IM which goes against the ethos of IM inasmuch as it is targeted by the organisation only at a preferred segment of the internal marketing, to the neglect of less preferred or valued employee segments. The IM aimed at the target audience resembles the IM envisioned by the major theorists, as it uses the same strategies and techniques and is intended to fulfil the same objectives. However, rather than treating all employees with an equal amount of respect and trying to make the organisation and its job products more attractive to everyone, Selective Internal Marketing prioritises some staff above others and allocates its resources accordingly. Preferred staff receive more favourable and attractive messages, which may be transmitted more often or with more enthusiasm than to the remainder of the workforce. Whilst the approach is not intended to internally demarket to the less valued employees, they – like the favoured employees – are likely to perceive an inconsistency of approach and feel either slightly alienated and overlooked or slightly legitimised and recognised, according to which group they inhabit. Whilst it may coax the favoured staff to be more committed and loyal to the firm, decreasing their sensitivity to wage levels and increasing their willingness to give excellent customer service, it is likely to have the opposite effect upon the overlooked staff, albeit slightly and only if they perceive the segmented approach to IM. The following is a collection of comments made by Valerie during the course of an interview about IM, in which she described Selective Internal Marketing, albeit with no previous notion of the concept, with no

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prompting or encouragement. A 28-year-old clerical officer with nine years’ service within a well-known multinational organisation, she had recently observed an organisational ‘charm offensive’ being directed at certain other staff members, who all shared certain characteristics, but not her segment. I find it incredibly upsetting. I joined this company when I was 19 when I could have gone to other places for more money because I was attracted by the prestige of this place, but also because I thought that I would have the chance to progress. I was sold that at the interview and that’s what my line manager has always said. And, you know, during my time here, I’ve done everything possible. I’ve worked late when we’ve had a crisis on, I’ve hardly ever been off ill or late, I’ve never had a complaint and I get along well with everyone. I’ve never made any serious mistakes. And I’ve taken all the training that I could get my hands on, taken all the company’s initiatives seriously and tried to do my best for them. But it’s become very obvious that there is no real opportunity for me to progress at all, apart from maybe moving up one clerical grade if I’m lucky. Because it’s all about the ‘Graduate Trainees’ [exact terminology redacted to preserve anonymity]. They come in from university – some of them are really good, but a lot of them are definitely not as good or as committed as me – and they start at the bottom and get trained up and thrown in a lot of different roles to get a good understanding of the firm. But it doesn’t seem to matter how much they screw up or how incapable some of them prove themselves in some roles. If they’ve been chosen for the ‘Graduate Trainee’ scheme at 21 or 22, that’s it. They’re like a ‘made man’ in the mafia – they’ve been chosen for greatness and every time you think you’re in with a chance of promotion, one of these kids who you’ve trained up will be legged up into the empty spot above you. And this is what really annoys me about all the internal marketing in this place – all the posters, the training site, the intranet messages and the town hall meetings. All the language used is their language. It’s all business school language about ‘synergies’ and ‘rationalising’ and all that kind of nonsense and blag. When the Training Director and the HR people are in training sessions and courses, they head straight to the ‘Graduate Trainees’ and start buttering them up, talking to them like they’re kids from the Royal Family or something. I remember doing an online training programme last year which actually said something like “think back to your time at university” or “think about how you have developed since university”. Well, of course, I haven’t been to university. I was here at 19. Are they actually saying that working for this business and being trained by this business’s managers and training department makes you less suitable to become a manager in this company than someone who went to university instead? How does that work? I mean, do I have to wear a big hat with an arrow pointing down at me?

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And all the Internal Marketing stuff is about being ambitious, young, sharp-suited, mobile, ruthless – it’s just blatantly aimed at them and not the likes of me. This is a disappointing story but certainly not an uncommon one. Many organisations have a succession planning strategy which can leave those not included feeling resentful, alienated, and overlooked, as is the case here, and that may largely be considered a Human Resources Management strategy which does not on its own constitute IM or ID. Furthermore, organisations may promote staff, or choose not to, based upon erroneous assumptions and/ or prejudices. However, in this example, Valerie explicitly states that, in her opinion, IM enables these practices. Naturally, her judgements of her own merits compared to those of career rivals are unlikely to be objective, and her subsequent judgments of the accompanying IM are likely to be tainted by this, but she provides much detail to substantiate her analysis, even though none of it is in the form of direct quotations or examples. She portrays the organisation and graduate trainees as imbued in the same corporate culture, which is represented by jargon and management speak – again, this is not the doing of IM. However, the seemingly obsequious favouritism displayed towards graduate trainees by senior colleagues within training sessions, especially when contrasted with the implied relative neglect of others, does constitute a form of ID – the question is, which kind? If individual managers are not undertaking IM as equitably as the organisation wishes – perhaps because they tend to socialise with those of a similar background, or nurture alliances with the power-brokers of the future – then this would appear to be Unintentional Internal Demarketing borne of neglect or unconcern. However, as the language used in corporate materials such as intranet training programmes – which have been designed at length and signed off rather than seeping out in the heat of the moment – is also written specifically with the graduate trainees in mind but not others such as Valerie, then it appears that the organisation is intentionally directing its IM approaches at one particular segment of its workforce. In other words, it is Selective Internal Marketing. Selective Internal Marketing is likely to be well-intentioned towards a selected staff segment but thoughtless and inconsiderate towards an unselected one. Whilst it may reap rewards from the former in terms of increased productivity, collaboration, Organisational Identity, and so forth, its neglect of the latter may inadvertently instil the exact opposite emotions and behaviours in that population. Likewise, whilst favoured employees may become more market-oriented and customer-conscious, the opposite is true of other employees. Selective Internal Marketing is a form of IM which (i) requires a significant knowledge at board and managerial level of the organisation’s desired segment of the internal market, but perhaps a lower awareness or level of concern for the less desired segment; (ii) may be wholly intentional (to favour one segment and care little for the effects upon others), wholly unintentional,

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or the marketing may be intentional but the side-effects upon others unintentional, unanticipated, and unwanted; (iii) should produce positive effects on the target audience, but may unintentionally have a negative effect on the untargeted audience. 5.2.4 Selective Internal Demarketing Selective Internal Demarketing is the most deleterious type of IM or ID and shares many characteristics with Selective Internal Marketing – including a segmentation of the employee audience. However, rather than selecting a preferred staff segment for a positive IM approach and either consciously ignoring or unintentionally overlooking other segments, as is the case with Selective Internal Marketing, it must entail intentional segmentation of the internal market and the intentional transmission of messages, behaviours, and values which are designed to make the organisation less attractive to an unfavoured staff segment. It may be operationalised by not marketing to the preferred segment at all whilst marketing deleteriously to the unfavoured one, or it might rely on conveying a divisive set of values and messages which are simultaneously repellent to the unfavoured staff segment, decreasing the attractiveness of the organisation to them, and positive to the favoured segment. In an external market context, such an approach is relatively mainstream and uncontroversial. For example, the Swedish high quality adventure clothing brand, Fjällräven, has stated that, when expanding within the United States market, it does not wish to be adopted by urban youths as ‘streetwear’ as it would undermine their credibility with their core audience, and it appears that they would take active steps to discourage such adoption. Likewise, even within the open and consensual field of Relationship Marketing theory (of which IM is a part), it is accepted not only to identify and prioritise the most profitable and worthwhile customers, but also to ‘sack’ the least sustainable ones. Therefore, it seems unlikely that this approach would not be applied to the internal market. The following is a selection of comments made by Arthur during the course of an interview about IM, in which he described actions, behaviours, and emotions which seemed congruent with Selective Internal Demarketing, although he had not prior knowledge of the concept and was not encouraged to talk about it. A 53-year-old senior officer with 25 years’ experience in a regional branch of a central government organisation, he had recently felt angry, anxious, and alienated as a result of his organisation’s IM initiatives. I’m in ‘special measures’, did you know that? Actually, it’s called ‘needing development’. I’m ‘needing development’ because I’ve finished in the bottom 25% of staff where I work in my annual appraisal. I’ve performed perfectly well for over two decades, no one’s ever had the slightest problem with my work or me, and yet, since austerity and the government

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wanting to shrink the state, all of a sudden, I’m apparently a big problem. You know, this place used to fit me like a glove. It was homely, there was camaraderie, people looked out for each other and you’d even all go for a pint after work on a Friday. Of course, you used to have the odd renegade, but it was a good place. But just lately, completely different. It’s all market-driven and about competing, outmuscling other people. And we’re told, in our handbook of values or whatever they call it, that we’re supposed to commit to each other’s success – fair enough – but in the same breath, that if we finish in the bottom 25%, we’re hanging by a thread. Well, you’re always gonna have a quarter of your workforce in the bottom 25%, even if everybody’s a world-beater. It’s just ridiculous. How can you commit to your colleagues’ success if that might mean them finishing 75th and you 76th? It’s just a complete contradiction, and you can’t tell me that people of their intellect haven’t realised this when writing it. The other day I got told ‘off the record’ – you know, ‘off the record’, like, nudge, nudge – that there was going to be a round of Voluntary Severance coming up which I could apply for, but that if I didn’t go, the next round of Voluntary Severance in a year or two is likely to be much less generous. And all the time while they’re building up to this round of VS, I’m going through ‘special measures’, having monthly meetings to check my performance against last month’s targets – and of course, I’m not targeted on anything objective which can be measured, just things like ‘personal integrity’. And you know, it always tends to be the older staff members like me who are on this list. We’re older, we’ve reached the top of the pay grade, we’ve probably achieved a grade higher than we would if we joined today, and we’re just steady. We know the job inside-out, and we’re not aspiring to be [redacted: the head of each government department] in six months or work in every office in [redacted: national HQ]. But, of course, we’re a pension liability, aren’t we? Anyway, whilst this is going on, we’re getting hammered with these messages coming out of HQ: “work smarter, invest in each other, aspire to be better, get out of your comfort zone, be mobile, move around” – and this is a favourite of theirs, because if you’re not prepared to move cities twice a year, they make you out to be some rudderless idler, but if you’re middle-aged and have a mortgage, family and roots in one town, you just can’t do it. It’s almost like they’re battering us with those messages more than those who actually want to be mobile. This damning account is one of several gathered from national and local government employees during the second decade of the 21st century, in which the government imposed austerity and shrank the state as a reaction to a high national debt resulting from the Great Financial Crisis of 2007–2009. Whilst there is a wealth of publicly available information from this time, such as ministerial statements, outlining the need to reduce public sector headcount and reshape the demographic of the average national government employee,

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we shall restrict ourselves here to an analysis of the primary interview data. Arthur provides very clear examples of disingenuously conf licting IM messages being targeted at staff – being asked to commit to others’ success whilst being ranked against them for disciplinary measures. This could be Ostensible Internal Marketing, giving the impression of a genuine attempt at IM, whilst simultaneously discouraging employees from adopting the behaviours advocated. It seems a form of organisational gaslighting, in which employees are tormented by a deleterious practice, only to be told that the reality is the exact opposite of their perception. Naturally, Arthur is not a neutral commentator, and we must bear this in mind, but the contrast between his 20 years of unblemished service and his sudden unacceptability (despite his apparent lack of change) suggests that his employer has turned against him. Perhaps most worrying is his suggestion that, rather than just being the neglected bystander watching his organisation’s Selective Internal Marketing from a distance, he feels that he and similar colleagues have been deliberately targeted with messages which the organisation knows must alienate, disconcert, or disorient them – his thinly veiled implication being that it is a way of pushing unwanted, expensive staff out of the organisation either without a pay-out or panicked into the first severance package which is offered. If this assessment is correct – and it matches those of numerous others whilst fitting the publicly stated organisational objectives – then it is Selective Internal Demarketing, perhaps the worst possible abuse of IM. Whilst relatively normalised in external markets, selectively demarketing to specific segments of an internal market seems unethical and is certainly in direct contravention of the principles and ethos of IM. Rather than passively neglecting less preferred employees by not targeting them positively, it actively attacks them with targeted, negative strategies and tactics. As a result, the ‘recipients’ – (and we may consider them thi as there is not the dialogical, interactive co-creation of value which underpins IM – are likely to feel alienated, bullied, and undermined. For them to stay employed by the organisation is likely to be more damaging to both parties than for them to leave, although it is possible that it could be deployed by an organisation as a pre-emptive strategy to encourage certain staff to leave without the need to pay them a severance package. Selective Internal Demarketing (i) requires a great deal of board level and managerial knowledge of the internal market, and an ability to design and operationalise a suitable strategy; (ii) is intended by the organisation; (iii) actively targets less favoured employee segments negatively; and (iv) is likely to affect some internal stakeholders very negatively whilst either not affecting or perhaps even positively affecting other segments.

5.3 Chapter summary In this chapter, we have used fresh qualitative data to analyse the perceptions which many stakeholders hold of their experiences of IM, and in particular

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those instances where they feel that the experience has been sufficiently negative to warrant the term Internal Demarketing. By placing those experiences within broader organisational contexts using publicly available information, we have challenged Vasconcelos’ (2008) conceptualisation of IM as the unfortunate by-product of well-intended IM undermined by managerial unconcern and incompetence, and instead suggested that at least some instances of ID may occur with organisational intent. Naturally, as senior managers and strategists are unlikely to admit such an approach, establishing organisational intent beyond all reasonable doubt is all but impossible. However, through data triangulation, it is sometimes possible to establish the possibility of intentional ID on the balance of probability. By re-examining ID through the lens of extant demarketing theory which locates the phenomenon external to organisations, we are able to redefine and taxonomise it, resulting in four separate classifications: (i) Unintentional Internal Demarketing arises accidentally from managerial incompetence or unconcern, (ii) Ostensible Internal Marketing gives the appearance of marketing the organisation (positively) to employees whilst covertly demarketing it (negatively) to them, (iii) Selective Internal Marketing is positive only for a favoured segment of the workforce, whilst (iv) Selective Internal Demarketing is negative and aimed at only an unfavoured segment of the workforce. Having concluded this chapter by analysing the effects which these categories of ID could have upon stakeholders, and the ethical concerns inherent, this book concludes with a summary of the theoretical concept of IM, its limitations, and suggested areas for its future development.

References Ahmed, P.K., & Rafiq, M. (2002). Internal marketing: Tools and concepts for customerfocused management. Oxford: Oxford University Press. Bradley, N., & Blythe, J. (Eds.). (2014). Demarketing. London: Routledge. Brown, D.M. (2017). Reconceptualising internal marketing: A multistakeholder perspective (PhD thesis, Newcastle: Northumbria University). Brown, D.M., Dey, B.L., Wäppling, A., & Woodruffe-Burton, H. (2019). Internal demarketing in the UK Civil Service since the 2007–2009 financial crisis. Strategic Change, 28 (5), 355–368. Croft, R. (2014). Ostensible demarketing: The power of prohibition. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge. Farquhar, J.D. (2014). Selective demarketing: A value destruction approach. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge. Festinger, L. (1957). A theory of cognitive dissonance. Evanston, IL: Row, Peterson. Kirchner, T.A. (2014). Unintentional demarketing. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge. Kotler, P., & Levy, S.J. (1971). De-marketing, yes, de-marketing. Harvard Business Review, 74–80. Madichie, N.O. (2014). “Unintentional demarketing” in higher education. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge.

124  The dark side of Internal Marketing McKechnie, S. (2014). Ostensible demarketing case study. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge. Tan, J. (2014). Selective demarketing: Case study – Frizzell insurance. In N. Bradley & J. Blythe (Eds.), Demarketing. London: Routledge. Vasconcelos, A.F. (2008). Broadening even more the internal marketing concept, European Journal of Marketing, 42 (11/12), 1246–1264. Vasconcelos, A.F. (2011). Internal demarketing: Construct, research propositions and managerial implications. Management & Marketing, 6 (1), 35–58. Wallace, E., & De Chernatony, L. (2009). Exploring brand sabotage in retail banking. Journal of Product & Brand Management, 18 (3), 198–211.

Conclusion The future of Internal Marketing

In this book, we have considered Internal Marketing (IM), and the relevance to it of Internal Branding, dyadic perspectives within Channel Management theory, and categories of Internal Demarketing (ID). By adopting the perspectives of multiple stakeholders, we have explored the commonality between the different theoretical areas and discussed how their interconnectedness might facilitate a more realistic conceptualisation of IM which accounts more thoroughly for the inf luence both of individual actors and of the marketised, ‘outside-in’ orientation of many organisations. By looking to the future and suggesting ways in which theoretical, organisational, and multi-stakeholder perspectives might be accommodated, we have contributed to the ongoing development of the IM concept to stimulate further academic debate. IM should be a force for good, able to generate significant benefits for employers, employees and customers, and other key stakeholders who come into contact with them. There has been widespread disagreement over which stakeholders should be prioritised and whether internal or external customers should be given primacy within the design and implementation of IM strategies. Despite IM being predominantly targeted at staff, the vast majority of theorists consider the resulting employee benefits not as the key objective, but as intermediary steps on route to enhanced organisational performance and customer service. Moreover, even when IM research has attempted a more ‘bottom-up’ approach by exploring employee perspectives, these have almost always been their perspectives of the organisation, their managers, and commercial or organisational performance, rather than ref lections on their own lived experiences. The perspectival limitations of extant IM outputs have not only related to their relative lack of concern for the employee experience, but also the paucity of dyadic theory, which is perhaps surprising when one considers the similarity between interactions involving channel partners and their boundary personnel (which are invariably conceptualised as dyadic) and those involving a firm’s managers and staff (which are not). This apparent deficiency deprives IM of a comprehensive understanding of the inf luences and interrelationships of satisfaction, dependency, interdependency, commitment, diplomacy, inf luence strategies, control, and power, which all appear similarly

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applicable to internal, interpersonal, and intraorganisational contexts as to external and interorganisational ones. As we have seen, a number of debates originating within IM have developed a separate identity – for example, as Internal Branding – and this has dispersed the research foci. Some new research areas, such as Employer Branding, appear to have cherry-picked the intended benefits of IM which practitioners may wish to see (in this case, the ability to attract better quality employees) and underemphasised the aspects of IM which they might find less desirable, such as the empowerment of staff. Likewise, there have been many studies undertaken within the field of Human Resources Management (HRM) which deal with the key concerns of IM academics, albeit often from a different perspective and using different terminology. Indeed, as the world of work evolves, it may be necessary to redefine the boundary between IM and HRM – or, more properly, to understand the extent of its overlap. Finally, the phenomenon of ID appears to be less innocent and even less benign than first thought, at least in a proportion of its instances, as there is often cause to suspect organisational intent. This is a difficult area to research for a number of reasons. Key informants amongst the workforce are likely to provide highly subjective accounts and, in some instances, could even resent their organisation for reasons not of its making. Designers and implementors of ID initiatives are extremely unlikely to admit their intentions, and organisational informed consent for research on the phenomenon would almost certainly not be forthcoming. Senior managers who had left an organisation and who may, as a result, feel more willing to talk may also have an axe to grind and would, nevertheless, be shackled by compromise agreements and the risk of litigation. However, where publicly available information about the organisation suggests that they intended to lose staff members (and especially, as inexpensively as possible), this may help to identify a ‘smoking gun’ of organisational intent to undertake IM – not proving it beyond all reasonable doubt but suggesting it on the balance of probabilities. Likewise, if a large organisation has shed all of its staff on a particular pay grade through performance management procedures without paying voluntary severance (as has been the case with at least one major UK insurance company), the statistical unlikelihood of so many employees becoming so unacceptably bad at their jobs within such a short space of time can perhaps be taken as permissible evidence. In any case, much of marketing is about perceptions and incorporates multiple realities. Even where ID has not been the result of organisational intent, if much of the workforce believes that it has, or at least some of the workforce believe this strenuously and substantiate their opinion properly, then the incorrect perception of Intentional Internal Demarketing is perhaps as worthy of exploration (though not judgment) as a correct perception of Unintentional Internal Demarketing. After all, the effects are likely to be strikingly similar.

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To further develop the theoretical concept of IM, research should incorporate dyadic perspectives, explore the experiences of employees, and embrace relational and psychological concerns rather than simply commercial ones. By redefining the boundaries of IM, marketing and HRM academics may find much common ground and benefit from complementary perspectives. Likewise, by the reapplication of theories from Channel Management, the nature of IM interactions and ‘the doing of IM’ at ground level may be better understood. By raising awareness of the needs of employees and the ethical obligations inherent within IM, we may be better placed to guard against its abuse and pursue theoretical developments which have genuine multistakeholder perspectives.

Glossary of terms

Affective domain A person’s feelings, emotions, and attitudes. Alienation ‘Estrangement’ and ‘social malintegration’, discussed by Gaski & Ray (2004) but only at an organisational, rather than personal, level. Behavioural domain A person’s behaviours and social interactions. Bilateral deterrence A term used by Kumar, Scheer, and Steenkamp (1998) to describe the mutual discouragement by two dyadic partners of punitive actions by the other. ‘Bottom-up’ perspective An approach to research which prioritises the focus on less powerful actors (such as individual employees) rather than more powerful ones (such as organisations or senior management). Boundary personnel/‘boundary spanners’ Those staff members whose jobs place them in direct contact with external customers. Customerfacing personnel. Brand saboteurs Wallace & De Chernatony’s (2009) term for disgruntled staff who actively undermine their organisation’s brand and ambitions. Channel management The management of marketing and sales activities through channel intermediaries, such as retailers, dealers, and wholesalers. Co-creation/customer co-creation of value The collaboration between an organisation and its customer base to create better ideas, products, services, and processes. Coercive power The ability to inf luence another’s actions by force or threats rather than persuasion (French & Raven, 1959). Cognitive dissonance Festinger’s (1957) seminal term for the uncomfortable psychological state experienced when one’s behaviours do not ref lect fully one’s beliefs, ideas, or values. Cognitive domain A person’s knowledge, thoughts, comprehension, and understanding. Counter-marketing A form of marketing which aims to reduce the social pressures to buy or consume a product such as alcohol or tobacco, thereby reducing demand for it or demarketing.

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Demarketing A form of marketing which reduces demand for a product, service, or brand, rather than increasing it. Domain dissensus A type of role ambiguity in which two parties perceive differently their relationship, and especially the boundaries of each other’s responsibilities. Downstream channel intermediary An organisation such as a dealer, broker, agent, wholesaler, or retailer situated between the originating organisation (e.g. manufacturer) and its customers, providing a route to market. Dyad Something consisting of two parts or elements – in channel management, usually two channel partners such as a manufacturer and a dealer. Economic satisfaction The satisfaction which one or both parties in a relationship derive from the financial benefits of that relationship. Electronic Word of Mouth /eWOM Word of Mouth communication (see separate glossary entry) transmitted by social media, email, or other electronic media rather than face to face. Emotional capital The psychological assets of an organisation, such as its employees’ goodwill towards it and each other. Emotional labour The management of one’s emotions and self-expression which employees are expected to make at work (e.g. being polite to rude customers). Employee brand orientation The pursuit, adoption, and embodiment of an organisation’s brand values by its employees (Mitchell, 2002; Ind, 2007). Employer branding The application of brand management techniques to Human Resource Management (Ambler & Barrow, 1996), with the aim of building an organisation’s reputation as a good employer. Exchange-of-persons When two-partner organisations agree to second staff to each other, usually as an attempt to foster mutuality and resolve conf lict (Stern, Sterntahl & Craig, 1973). Exit barriers Real or psychological barriers preventing or discouraging a person or organisation from dissolving a partnership (e.g. the hassle of rearranging direct debits is an exit barrier to customers switching banks). Expert power The ability of a person or entity to inf luence another based upon their expertise or knowledge and the trust that this engenders (French & Raven, 1959). General demarketing The overall reduction of demand for a product or service. Halo effect Customer favouritism towards a specific organisation’s product or service due to the favourable reputation of their other products or services. Hierarchy of needs Maslow’s (1954) seminal model, which states that humans’ basic needs (e.g. physiological needs such as shelter and food) must be satisfied before they can contemplate more advanced needs (e.g. self-actualisation needs such as self-fulfilment and achievement of ambitions).

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Hygiene maintenance factors Factors – such as good working conditions, job security, and employee status – which do not satisfy or motivate employees by their presence but would dissatisfy and demotivate them by their absence (Herzberg, 1964). Idiosyncratic investment Anderson & Weitz’s (1992) term for an investment which a partner makes in a situation which is specific to that one partnership. For example, a motor manufacturer supplying financial marketing support to one dealer to address a local market opportunity. Information exchange A strategy in which one organisation in a channel partnership attempts to strengthen its position by supplying valuable information or knowledge to its partner organisation. Informational power The ability of someone to use their ownership of valuable information to inf luence how another person or entity behaves (French & Raven, 1959). Inside-out approach The approach to Internal Branding which prioritises internal stakeholders’ brand expectations, and especially those of employees, then seeks to incorporate them into the organisation’s values, which would then need to be conveyed to its customers (e.g. Crain, 2009; King & Grace, 2010). Integrative bargaining A negotiation in which both parties strive for a mutually beneficial, ‘win-win’ solution. Internal Branding An organisational strategy enabling and encouraging employees to adopt and convey the organisation’s brand values in all they do. Internal communications Communications whose intended audiences are all within the organisation. Internal customer Some IM theorists consider employees to be internal customers who should receive similar levels of service as external customers from colleagues and their organisations. A small number of theorists believe that organisations should treat jobs as internal products to be marketed to their employees, although this idea is hotly contested by other commentators. Internal Demarketing The reduction of an organisation’s attractiveness to its staff as an employer resulting from its internal marketing activities (Vasconcelos, 2008). Internal environment The resources within an organisation. These may be tangible resources such as staff, money, machinery, materials, or intangible resources such as goodwill or expertise. Internal market(place) In the context of IM, the environment within the organisation, and specifically a marketised understanding of its workforce. (NB: ‘internal market’ has different meanings outside IM, for example, in the fields of economics and health management.) Internal market orientation An organisational mindset which acknowledges that the needs of its employees are similarly legitimate to the needs of its customers.

132  Glossary of terms

Internal Marketing Promotion by an organisation of its vision, philosophy, values, objectives, expectations, brand, products, and services, by marketing techniques, to its employees and other stakeholders who may be considered internal to the organisation. Internal products The belief of a small number of theorists that jobs are internal products which organisations should market to their employees. It is hotly disputed by other theorists who instead believe in the primacy of external stakeholders, and especially paying customers. Interfunctionality Collaboration and cooperation between different functions or departments within an organisation (e.g. between Marketing and Finance departments). Internal service encounter An interaction within an organisation during which one or more people provide a service to a colleague or colleagues. Legalistic pleas A strategy in which one organisation in a channel partnership attempts to strengthen its position by referring to the contractual obligations of its partner organisation. Legitimate power The ability of someone to use their rank, invested authority, or hierarchical seniority to make another person or entity act in a certain way (French & Raven, 1959). Market orientation Sometimes used interchangeably with ‘customer orientation’, the marketised organisational approach which focuses on the needs and demands of those stakeholders who provide revenue (especially customers) and the competitive environments in which suppliers and customers must interact. Nordic model The customer’s perceived quality of the service experience derived not just from the service outcomes but also from the process of the service delivery. Organisational identity/organisational identification A set of statements or truths which define employees’ understanding of what is distinctive to an organisation and fundamental to its personality and ethos. Organisational knowledge All the knowledge-based resources within an organisation which may be drawn upon to achieve organisational objectives. Ostensible demarketing Giving the outward appearance of demarketing (i.e. of attempting to reduce demand) whilst actually marketing (i.e. attempting to increase demand). Ostensible Internal Marketing An organisation giving the impression of undertaking internal marketing (i.e. of attempting to increase its attractiveness as an employer) whilst actually undertaking internal demarketing (i.e. attempting to decrease its attractiveness) (Brown, Dey, Wäppling & Woodruffe-Burton, 2019). Outside-in perspective The approach to Internal Branding which prioritises external stakeholders’ brand expectations, and especially those of customers, then seeks to incorporate them into the organisation’s values, which would then need to be embraced by its staff (e.g. Jaworski & Kohli, 1993; Miles & Mangold, 2004).

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Performativity In Social Sciences, the idea that people conform to the expected norms of their roles through their actions. Postmodernist perspective of organisations The perspective that organisations are in a constant state of f lux, that many of their functions are undertaken informally and their knowledge held tacitly, that they tend to be cyclical in their strategising, and that they do not necessarily represent the best interests of society. Referent power The ability of someone to inf luence another person or entity’s behaviour as a result of their personality, presence, or earned respect (French & Raven, 1959). Relationalism The inf luence of relational norms upon business interactions. Relationship Marketing A branch of marketing which prioritises longterm customer retention and satisfaction over short-term customer acquisition and single sale profit maximisation. Reward power The ability to inf luence a person or organisation to do something by offering a reciprocal incentive (French & Raven, 1959). Selective demarketing Reducing demand for a product, service, brand, or commodity amongst a targeted segment rather than the entire population. Selective Internal Demarketing An organisation’s use of demarketing approaches targeted at a segment of its employees to reduce its attractiveness as their employer (Brown, Dey, Wäppling & Woodruffe-Burton, 2019). Selective Internal Marketing An organisation’s use of marketing approaches targeted at a segment of its employees to increase its attractiveness as their employer (Brown, Dey, Wäppling & Woodruffe-Burton, 2019). Service-Dominant Logic/S-D Logic A view of marketing which understands all organisations as the providers of service. In this paradigm, they market with, rather than to, customers and other stakeholders. Instead of selling a product, they provide a solution, and a product may be the means of its provision. S-D Logic is collaborative and co-creative, suggesting that all stakeholders (e.g. manufacturers, retailers, customers) should seek to use their resources for each other’s benefit. Service encounter An interaction during which one person or organisation provides a service to another. Service quality The customer perspective of an organisation’s delivered service minus the customer’s previously anticipated level of service. Service recovery The organisation’s resolution of a service breakdown or problem, which re-establishes customer satisfaction. Services marketing The marketing of (intangible) services rather than (tangible) products and goods. Servicescape The physical environment in which a service may occur. Servitisation The paradigmatic shift within organisations from focusing on the provision of products to the provision of services and solutions. Silo/organisational silo Isolated employees or departments lacking the ability or desire to communicate and collaborate with each other.

134  Glossary of terms

Social satisfaction/noneconomic satisfaction The satisfaction which one or both parties in a relationship derive from non-financial benefits of that relationship, such as friendly social interactions, trust, or fruitful collaboration. Stakeholder Any person or entity impacted by, or with an interest in, a process such as internal marketing. Strategic alliances Two or more organisations working together for mutual benefit. Supply Chain Contagion Term used by McFarland, Bloodgood & Payan (2008) to describe how the characteristics of one interorganisational relationship (usually negative) become replicated in adjacent relationships. Synchromarketing A form of demarketing in which the organisation attempts to address problematic f luctuations in customer demand. Total Quality Management (TQM) A holistic management philosophy which incorporates continuous improvement, communication, factbased decision-making, systematic and strategic approaches, integration, robust processes, employee involvement, and a focus on customers. Trade equity Davis & Mentzer’s (2008) term for the value which accrues to one partner in a channel dyad (e.g. a car dealership) by being publicly recognised as the trading partner of another (e.g. a motor manufacturer). Transaction cost Expenses incurred in the purchase or sale of a product or service. Triangulation The use of several different methods, data, approaches, observers, materials, theories, or perspectives to ensure that research produces a rich, balanced picture of a phenomenon or population. ‘Top-down’ perspective An approach to research which focuses on the needs, experiences, and concerns of more powerful actors (e.g. organisations or senior managers) rather than those of less powerful ones (e.g. individual employees). Unintentional demarketing The accidental reduction of demand which occurs when an organisation intends to increase demand through its marketing but mismanages the process, achieving the opposite result to that desired. Unintentional Internal Demarketing The form of internal demarketing (see separate glossary entry) which occurs without organisational intent, as a result of poor administration or management (Brown, Dey, Wäppling & Woodruffe-Burton, 2019). This form accords with Vasconcelos’ (2008) concept of internal demarketing. Value In marketing, the value in a product or service is a customer’s perception of its benefits minus its costs when compared to competing products or services. Vision/organisational vision An overarching philosophy, stance, or theme which guides and articulates an organisation’s current and intended way of operating. Word of Mouth/WOM A form of communication which is transmitted from one person to one or more others by informal conversation, usually allowing information to penetrate a large population.

Index

absenteeism 24 adaptability service encounters 42 advisory relationships 43 alignment of staff 13–17, 26, 48, 75 asymmetrical exchange relationships 87 attitudinal change 5, 24 auditing relationships 43

cooperation & coordination, interdepartmental 27 counter-marketing 111 cross-functional teams 13, 16, 31, 49 customer-consciousness 18, 24, 50 customer-contact employees see boundary personnel/spanners

bargaining 93 behavioural change 5, 24 benefits to stakeholders of IM 5, 21, 31, 125 bilateral deterrence 92–93, 96 ‘bottom-up’ perspectives 4, 19, 44, 55, 125 boundary personnel/spanners 10, 13, 28, 37, 39, 41–42, 45, 49, 51–52, 75, 82–83, 85, 95, 97–99, 125 brand identity 21, 71–73, 75–76 brand image 21, 73–74 brand orientation 70–71, 74 brand personality 73–74 brand sabotage/saboteurs 75, 111, 117

dependence asymmetry 90, 92, 96, 101 dialogical process 20–21, 28, 70, 122 differential benefits 84 diplomacy 82, 92, 99, 125 distrust 88, 112 domain dissensus 23, 41, 98

change, organisational/management 9, 15, 17, 26–27 co-creation of value 39, 44, 55, 99, 122 coercion 12, 14, 30, 32, 50, 86–87, 90, 93, 95, 100, 108 cognitive dissonance 32, 38, 47, 116 collective mind 29 commitment 4, 10, 16, 24–26, 32, 38, 47–50, 82, 84–85, 88–96, 99, 111, 113–115, 117, 125 competencies, organisational 9, 18 competitive advantage 11, 17, 38, 40, 48, 50, 73–76, 89–90 compliance 82, 89, 94–96, 99, 101 conflict spiral 92 control 84, 86, 88, 99–101, 125

electronic word of mouth (EWOM) see word of mouth (WOM) emotional capital 31–32 emotional labour 19, 32, 100 employee brand orientation 71, 74–75 employer branding 21, 69, 126 empowerment 3–4, 18, 36, 49, 126 enculturation 26 exchange-of-persons 93 exit barriers (within relationships) 25, 35, 83–85 franchises/franchisors/franchisees 86, 90–91 Fundamental Attribution Error 96 general demarketing 111 Halo Effect 84 Hierarchy of Needs model, Maslow’s 48 hygiene maintenance factors 48 idiosyncratic investments 45, 89, 100 incentivisation 82, 93–94, 100

136 Index influence communication 85 information exchange 85–86, 92–93 innovation 24, 43, 50 ‘inside-out’ perspective 4–5, 70, 73, 75–76, 122 interdependence 12–13, 40, 89–90, 92, 94, 96, 101 interfunctionality 13, 16–17, 26–28, 45, 49–50, 71, 76 internal branding (IB) 1, 17, 28, 69–71, 76, 125–126 internal communications 9, 19, 24, 50, 70–71, 75 internal customer supply chain 35 internal entrepreneurs 27 internal environment 9, 11, 16, 18–20, 23, 31, 35, 38, 42, 44, 47, 50–51, 76, 99, 110, 112, 114, 116 internal exchange 10, 13, 15, 35, 41, 43, 47, 50, 52, 54 internal intelligence 37 internal marketplace 12, 25, 44 internal market intelligence 37, 54 internal market orientation 2, 37, 49, 53 internal market research 2, 37, 54 internal products, jobs as 9, 12, 16, 35, 47, 107 internal promotion 4, 20 Internal Service Logic 41 internal stakeholders 1, 12–13, 17, 21–22, 25, 29, 31, 33–34, 36, 44, 49–50, 70–76, 88, 92, 109, 115, 117, 122 internal suppliers/supply chain 15, 20, 27, 35, 38 knowledge, organisational 12, 19, 22, 91, 117 legalistic pleas (to dyadic partners) 85–86, 92–93 management philosophy, IM as 1, 14–15, 27–28, 33, 70 marketing mix 4, 19–20, 53 marketing orientation 5 matrix organisation 14 mission, organisational 19, 72, 99 moments of truth 52 Nordic Model of Service Quality 44–46 operational communication 85 operationalisation of IM 33, 53, 55

opponent-centred behaviour 85, 93 organisational commitment 24–26, 48, 91, 117 organisational identity/identification 29, 72, 119 organisational knowledge 12, 19, 22, 91, 117 organisational philosophy, IM as see management philosophy, IM as organisational values/norms 1, 25, 29–30, 65 ostensible demarketing 111 Ostensible Internal Marketing 107, 112, 115–117, 122–123 packaging 20 people devaluing 112 perceptual incongruity 98 performance, organisational 4, 23, 38, 48, 51, 53, 125 performativity 29, 39, 40 physical evidence 20, 46 postmodernist perspective of organisations 20, 39, 43, 83, 91 primacy of stakeholders 3–6, 10, 16–17, 21–22, 31, 34–38, 51, 56, 75–76, 125 priming (of dyadic partners) 85 productivity 22, 24, 108–109, 119 psychological contract 112 reciprocity 18, 24, 41 recommendations (to dyadic partners) 85–86, 92–93, 95–96, 113 relational networks 9, 50 relationalism 82, 85–86, 90, 93–94, 96, 99, 101 relationship marketing 4–5, 9, 16, 40, 82, 86, 89, 92, 94, 120 role ambiguity 23 role expectation 39 sales-mindedness 13, 22, 36 selective demarketing 111–112 Selective Internal Demarketing 112, 120, 122–123 Selective Internal Marketing 107, 112, 117, 119–120, 122–123 Service-Dominant Logic (S-D Logic) 39, 83 service-mindedness 13, 23, 41, 48 service marketing triangle 42 service recovery 45 SERVQUAL 36, 44–46

Index  137 silos, organisational 1, 10, 13–14, 17, 26, 49 Social Exchange Theory 96 ‘spontaneity’ service encounters 42 stabilisation relationships 43 strategic alliances 18 Supply Chain Contagion 90, 97 symbolic interactionist perspective 39, 83 synchromarketing 111

trade equity 84 transaction costs 31, 38

‘top-down’ perspectives 4, 70, 95 Total Quality Management (TQM) 14, 37

Word of Mouth (WOM)/electronic word of mouth (EWOM) 46 workflow relationships 42

unintentional demarketing 110–112, 114 Unintentional Internal Demarketing 112–113, 115, 119, 123, 126 vision, organisational 3, 13, 19, 24–25, 27, 31, 56, 72, 112, 117