The Economic Relevance of Chief Marketing Officers in Firms' Top Management Teams Page: 555
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The Economic Relevance Of Chief
Marketing Officers In Firms' Top
John Abernathy, Kennesaw State University, USA
Tom Kubick, University of Kansas, USA
Adi Masli, University of Kansas, USA
Management theory suggests that the presence of the Chief Marketing Officer in the Top
Management Team reflects a corporate emphasis on marketing and customer relations. Finance
theory suggests that this emphasis should translate into additional shareholder wealth. However,
prior research has failed to document such a relationship. Using performance attribution
analysis, the authors construct a long-short portfolio that buys (sells) stocks of firms with
(without) a Chief Marketing Officer in the Top Management Team and find this investment
strategy would have earned risk-adjusted excess returns of approximately 3%. Additional analyses
suggest the value of having a Chief Marketing Officer in the Top Management Team manifests
primarily among firms with high operating margin, low asset turnover, high profitability, high
R&D intensity and high advertising expenses. The authors conclude that having a Chief
Marketing Officer in the Top Management Team has a positive impact on shareholder wealth.
Keywords: Chief Marketing Officer; Top Management Team; Shareholder Wealth; Performance Attribution
he Chief Marketing Officer's (CMO's) roles include understanding and delivering value to customers,
developing and pricing products, and measuring marketing's contribution to the business in relevant
and quantifiable terms (Nath and Mahajan, 2008; 2011; Boyd, Chandy, and Cunha, 2010; IBM,
2011). Moreover, the CMO plays a crucial role in advising the CEO and board members about the latest customer
preferences and aligning corporate objectives to meet those evolving customer needs (Roll, 2011). Nevertheless,
debates continue to exist as to whether the CMO position provides sustainable business value to its organization.
For example, a recent Forbes article proclaims "the Chief Marketing Officer is dead", suggesting that
CMOs are increasingly powerless and peripheral (Turpin, 2012). In a recent survey by Fournaise Marketing Group
(2011), 73% of CEOs believe that marketers lack business credibility, are not effective enough in generating
incremental customer demand, and are not business growth generators. In this sense, a majority of CEOs doubt
whether CMOs are able to demonstrate how the marketing strategies and campaigns they deploy grow their
organizations' top line in terms of customer demand, sales, prospects, conversions or market share. As a result,
CMOs are under increasing pressure to prove their value and relevance on a daily basis (Magnone, 2011).
Accordingly, Spencer Stuart (2004) finds that, among the top 100 branded firms, CMO tenure has fallen to just
under 23 months. Further, marketers are losing stature and influence within organizations. A recent Ernst & Young
study of Fortune 1,000 company financial filings notes the lack of head marketers listed among the highest
compensated executives (Zmuda, 2009).
On the other side of the debate, proponents of the CMO position claim that the position is crucial to
business growth and firm performance. For example, Andrew Hayes, an executive of CMO and CEO recruitment
firm Russell Reynolds Associates claims that:
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Abernathy, John L.; Kubick, Tom & Masli, Adi. The Economic Relevance of Chief Marketing Officers in Firms' Top Management Teams, article, December 2013; Littleton, Colorado. (digital.library.unt.edu/ark:/67531/metadc1020952/m1/1/: accessed January 17, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT College of Business.