32_ahearne, lam, hayati, and kraus_intrafunctional competitive intellige

Michael Ahearne, Son K. Lam, Babak Hayati, & Florian Kraus

Intrafunctional CompetitiveInteliigence and Sales Perforniance:

A Sociai Network PerspectiveSalespeople represent a primary source of competitive intelligence (CI), but the contextual factors that influencethe performance impact of salesperson CI quality remain underresearched. The authors develop a framework toexamine the performance impact of CI quality at the individual salesperson and sales district levels, with salesdistrict CI quality diversity and sales managers' network centrality as contingencies thereof. The empirical resultsfrom multilevel data sets of two U.S.-based corporations reveal that district CI quality diversity weakens the positiveperformance effect of CI quality at both levels. Sales managers' centrality in within-district and peer advice networksbuffers the performance losses created by district CI quality diversity, but salespeople's centrality does not havethis buffering effect. The study uncovers conditions under which the positive performance impact of salespersonand district CI quality can disappear and even become negative, thus highlighting the role of managers as CI hubs.

Keywords: sales management, market intelligence, social network analysis, multilevel analysis

Competitive intelligence (CI) plays an important rolein strategic marketing decisions and market-orientedorganizations (Jaworski, Maclnnis, and Kohli 2002).

Although multiple sources for attaining CI exist, the richestsource of CI comes from salespeople, because they fre-quently interact with customers and CI is an integral part ofselling activities (Marshall, Moncrief, and Lassk 1999;Montgomery and Weinberg 1979; Moss 1979; Robertson1974; Thietart and Vivas 1981; Webster 1965). Despite itswidely recognized importance, prior research on CI has pri-marily been conceptual and anecdotal. Empirical researchon the topic has also waned over the years. Our review ofthis literature reveals several important limitations.

First, prior research has primarily focused on theantecedents to individual salesperson CI behavioral effort(Le Bon and Merunka 2006) and largely ignored the multi-level nature of CI. Furthermore, little is known about thegroup-level influence on the performance impact of sales-person CI quality, defined as the usefulness of informationabout a firm's competition. This is surprising, because priorresearch suggests that the group-level average of anattribute, such as district CI quality, and group-level diver-sity, such as district CI quality diversity, can exert important

Michael Ahearne is C.T Bauer Chair and Professor of Marketing, C.T.Bauer Coiiege of Business, University of Houston (e-maii: mahearne®uh.edu). Son K. Lam is Assistant Professor of Marketing, Terry Coiiege ofBusiness, University of Georgia (e-maii: [email protected]). Babak IHayatiis Assistant Professor of Marketing, Lee Business Schooi, University ofNevada-Las Vegas (e-maii: [email protected]). Fiorian Kraus is Dr.Werner Jackstädt Endowed Chair of Business Administration and Market-ing IV, University of Mannheim (e-mail: [email protected]).The authors thank the three anonymous JM reviewers for their construc-tive comments during the review process. Robert Paimatier served asarea editor for this articie.

effects on individuals (e.g., Blalock 1984; Fiol 1994; Fire-baugh 1980; Jehn, Northcraft, and Neale 1999; Schneider,Salvaggio, and Subirats 2002; Van Knippenberg, De Dreu,and Homan 2004). We define district CI quality as the aver-age CI quality across salespeople in a sales district and dis-trict CI quality diversity as the extent to which CI qualitydiffers among salespeople in a sales district. Understandingthe effects of these group-level constructs is importantbecause it helps us explain why salespeople who have thesame level of individual CI quality but work in districts withdifferent district CI quality and/or with different district CIquality diversity can achieve differential performance.

Second, CI may circulate in both formal and informalnetworks (Jaworski, Maclnnis, and Kohli 2002). However,as Van den Bulte and Wuyts (2007) point out, research onmarket information using social networks is still rare. Inthis vein, although prior research recognizes that managerscan rely on the formal organization to motivate salespeopleto collect CI (Le Bon and Merunka 2006), research on man-agers' informal role in managing CI quality through theirinformal networks, such as the advice network, is scarce.Unlike salespeople, managers are likely to play a criticalrole in managing CI quality because they are embedded invarious networks at different levels (Balkundi and Harrison2006). Therefore, it is important to investigate how salesmanagers use their unique position in the formal structureand informal networks to leverage or buffer the effects ofdistrict CI quality and CI quality diversity.

In light of this discussion, we develop a multilevelframework that (1) distinguishes the roles of individualsand groups (i.e., sales districts) in converting CI quality intoperformance and (2) incorporates two contingencies: dis-trict CI quality diversity and managers' in-degree centralityin their within-district advice network and in the peer

© 2013, American Marketing AssociationISSN: 0022-2429 (print), 1547-7185 (electronic) 37

Journal of MarketingVoi. 77 (September 2013), 37-56

advice network. In-degree centrality refers to the extent of aperson's incoming connectivity with other network mem-bers (Freeman 1979; Van den Bulte and Wuyts 2007). Thewithin-district advice network consists of a sales managerand all his or her subordinates in the unit, and the peeradvice network includes all the sales managers at the samelevel. For theoretical development, we draw from the socialnetwork literature, the nature of the interactions within thetwo types of informal networks, and the recent shift from asingle level to multiple levels in research on organizationallearning (Crossan, Lane, and White 1999) and social net-works (Brass et al. 2004).

We tested the framework using data from two large U.S.companies. The first data set includes 65 district managerswho supervise 433 salespeople in a media company. Thesecond includes 228 district managers and 1,437 salespeoplein a Fortune 500 firm. We found that although individual orgroup CI quality can boost salesperson performance, dis-trict CI quality diversity can destroy this performanceimpact. We also found that managers' position in within-district and peer social networks can buffer that destruction.

This study contributes not only to the scarce empiricalresearch on the role of CI quality and CI quality diversity insales management but also to research on team diversityand social networks. First, we divert from the single level ofanalysis in prior research on CI and conceptualize CI as amultilevel phenomenon. We demonstrate the contextualeffect of group-level CI quality on objective salespersonperformance that goes beyond the effect of individual-levelCI quality. This finding empirically demonstrates theimportance of group norms in multilevel organizationallearning frameworks (Crossan, Lane, and White 1999;Sinkula 1994). Second, we challenge the conventional wis-dom that CI quality always leads to higher performance. Weuncover situations in which the performance impact of CIquality at both salesperson and district levels can disappearor even become negative. In doing so, we extend previousresearch on team diversity by showing that CI quality diver-sity can be detrimental or beneficial, depending on two fac-tors: the mean level of work group or individual CI qualityand the manager's centrality in informal social networks.Third, we are among the first to empirically demonstrate therole of both formal and informal networks in CI. We shedadditional light on the effect of network centrality and con-tribute to the emerging multilevel perspective in social net-work research. Specifically, we demonstrate that districtsales managers who occupied central positions in within-district and peer advice networks were more successful atbuffering the detrimental effects of district CI quality diver-sity at the individual and group levels, respectively. We alsofound that although a salesperson's centrality among peersdirectly improved salesperson performance, this parameterdid not moderate the salesperson CI quality-salespersonperformance relationship. In other words, we provide amore nuanced understanding of the benefits of networkpositions: they can be specific to the type of network (e.g.,within-district vs. peer networks) and the position of thesocial actor in the formal structure (e.g., managers vs. sales-people). We summarize the research gaps and our contribu-tions in Table 1.

Broadly, our study informs managers that althoughsalespeople are suitably positioned to be CI agents—muchlike spokes—they rely on managers who can play a trans-formational role—much like hubs—in filtering, verifying,and integrating CI quality through their informal networks.Our study has at least four managerial implications. First,the effect of group-level CI quality represents a way formanagers to improve salesperson performance and under-stand why performance differences exist among equallygood salespeople who work in different districts. Second,managers should be aware that group-level CI qualitydiversity is not necessarily a bad thing. Indeed, such diver-sity can be useful to salesperson performance when the CIquality of a particular salesperson or the district is low.Third, to buffer the potential negative performance impactof CI quality diversity at the individual and group levels,managers must rely on their position in two different typesof informal social networks. Fourth, managers can controlgroup-level CI quality and its diversity by encouraginginformal interactions and adjusting group diversity in salesexperience and competitor orientation.

In the next section, we provide a brief literature reviewof prior research on salesperson CI and explain why socialnetwork analysis is appropriate for examining such aprocess. We then present the conceptual framework alongwith our hypotheses. This account is followed by twoempirical studies. We conclude with a discussion of theo-retical and managerial implications and directions for fur-ther research.

Background LiteratureResearch on Salesperson CIPrior research on salesperson CI has developed along threemajor streams. First, the inter- and intrafirm stream focuseson market orientation (laworski and Kohli 1993; Slater andNarver 1995) and market research use (Deshpandé 1982;Deshpandé and Zaltman 1984; Moorman 1995; Moorman,Zaltman, and Deshpandé 1992). In general, this infiuentialbody of research treats competitor orientation as an impor-tant form of organizational learning. The second researchstream examines the interfunctional level of market intelli-gence activities. Researchers in this stream draw from com-munication theories to examine market intelligence dissemi-nation across functional boundaries (Fisher, Maltz, andJaworski 1997; Maltz and Kohli 1996). Our study falls intothe third category, which is the intrafunctional level of mar-ket intelligence activities (e.g., Evans and Schlacter 1985;Le Bon and Merunka 2006). This stream of research origi-nates from early work on personal selling (e.g.. Moss 1979;Robertson 1974; Webster 1965). Empirical findings in theintrafunctional level of market intelligence activities sug-gest that the majority of salespeople who collect CI areoften left empty-handed, feeling as if their managers wastethe CI they provide (Robertson 1974). We contribute to thisconversation by examining three effects: (1) the maineffects of CI quality at two levels (individual and group) onsalesperson performance, (2) the negative moderatingeffects of district CI quality diversity, and (3) the buffering

38 / Journal of Marketing, September 2013

TABLE 1Research Gaps and Contributions

Prior Research Current Research

Salesperson CI ResearchApproach Primarily conceptual and/or anecdotal (e.g.,

Jaworski, Maclnnis, and Kohli 2002; Montgomeryand Weinberg 1979; Moss 1979; Webster 1965)

Level of Single level (e.g., LeBon and Merunka 2006;analysis Moss 1979; Robertson 1974)

Focus Cl behavior (e.g., Evans and Schlacter 1985;LeBon and Merunka 2006; Robertson 1974)

Organizational Primarily formal structure (e.g., LeBon andstructure Merunka 2006)

Performance Not examined (e.g., Evans and Schlacter 1985;outcome Thietart and Vivas 1981 )

Social Network ResearchPosition of Centrality in informal networks is important, but

social actors the position of the social actor and the type ofnetwork have not received much attention (e.g.,Balkundi and Harrison 2006; Burt 2000; Mehra etal. 2006)

Social Conceptually discussed, but not empiricallynetworks examiried (e.g., Jav\/orski, Maclnnis, and Kohliand CI 2002; Üstüner and Godes 2006; Van den Bulte

and Wuyts 2007)

Diversity ResearchEffect of Information diversity can be beneficial due to

diversity elaboration of different perspectives (e.g., Fiol1994; Jehn, Northcraft, and Neale 1999; VanKnippenberg, De Dreu, and Homan 2004)

Empirical, in two contexts

Multiple levels: individual salesperson, business unit(e.g., sales districts), and cross-level interactionsCI quality and CI quality diversity

Both formal (managers vs. employees) and informalstructures (advice social networks among peers andwithin district)Objective sales performance: the performance impactof CI quality can be nonsignificant, even negative.

Network centrality is important depending on•The formal position of the social actor (managers orsalespeople)

•Types of netv\/orks: managers' centrality in within unitand peer networks plays different roles at differentlevels of analysis

CI is embedded in two types of informal socialnetworks (within district and peer). Social networkparameters function as important contingencies inthe relationships among CI quality, district CI qualitydiversity, and salesperson performance.

Information quality diversity can be detrimental orbeneficial, depending on•The mean level of work group information quality•The manager's centrality in social networks

effect of sales managers' centrality in informal networks onthese negative effects.

Social Networks as a Useful Lens to ExamineSalesperson CI Behavior

Different types of function-level social networks. Ourfocus on informal social networks is in line with the viewthat managers thrive on informal, personal communications(Mintzberg 1973) and that "informal, personal media sim-ply are capable of providing richer information to managersabout certain problems" (Daft and Lengel 1984, p. 201).Although formal communication can provide useful infor-mation, information through formal channels of communi-cation may be limited, too general, or even obsolete(Mintzberg 1973, pp. 73-74). Johnson et al. (1994) suggestthat informal channels of communication can provide infor-mation that is specific to a situation and therefore canreduce information overload. Finally, Jaworski, Maclnnis,and Kohli (2002) theorize that both formal (e.g., formalpositions) and informal (e.g., interpersonal relationships)structures are important in studying CL

A typical sales department in a firm includes multiplesales districts, which in turn are independently managed bydistrict managers and comprise many salespeople. There-fore, although the sales function may only be a single entity

in a larger organization, multiple social networks existwithin its hierarchy. Within this organizational hierarchy,we focus on two types of informal networks: (1) a within-district network, which includes the district sales managerand his or her salespeople, and (2) a peer network, whichincludes the focal person and all his or her peers at the samelevel in the sales organization. Thus, the district managerpeer network includes all district managers, and the sales-person peer network includes all salespeople. Figure 1depicts the boundaries of these social networks.

Network centrality. Although there are many types ofcentrality (for a review, see Freeman 1979; Van den Bulteand Wuyts 2007), we focus on in-degree centrality in theadvice network of an organizational member. Our focus isbased on the social network literature, which suggests thatpeople with high in-degree centrality have two key advan-tages: (1) information access (e.g.. Freeman 1979) and (2)high visibility and prestige in the group (Freeman 1979;Knoke and Yang 2008). By providing advice to others,actors who are frequently sought after for advice (i.e.,actors with high in-degree centrality) send out signals abouttheir level of competence, creating a reputation of expertise(Burt 1992, 2000; Mehra et al. 2006). For the remainder ofthe article, to simplify the language, by "centrality," wemean "in-degree centrality." Although mounting evidence

Intrafunctional Competitive Intelligence and Sales Performance / 39

FIGURE 1Social Networks in a Multilevel Sales Organization

Formal Structure Social Networks

District Managers

J VSalespeople

District Manager Peer Network

Salesperson Peer Network

Notes: In this hypothetical sales organization, District Manager DM1001 manages three salespeople, SP1, SP2, and SP3. Similarly, DistrictManager DM1006 manages three salespeople, SP4, SP5, and SP6. In the formal structure, salespeople report to their managers only,and the managers are of equal rank. The line of reporting, represented by solid arrows, is confined within the district. In informal socialnetworks, such as the advice network, salespeople and managers can go to their peers for advice (represented by dotted, unidirectionalarrows). In this hypothetical example, in the within-district network, salesperson SP3 has a higher in-degree centrality than DistrictManager DM1001, who has the highest in-degree centrality in the district manager peer network. District Manager DM1006 has thehighest within-district in-degree centrality but has low in-degree centrality in the district manager peer network. The weighted in-degreecentrality scores use the frequency of interaction between advisers and advisees as the weight.

supports the benefits of centrality in advice networks, threeresearch questions remain unanswered: (1) Does centralityhelp leverage the translation of intrafunctional CI qualityinto performance? (2) If centrality matters and there aremultiple informal networks, in which network does central-ity matter? and (3) Does the effect of centrality depend onthe position of members in the formal organizational struc-ture (e.g., a district manager vs. a salesperson)? Ourresearch addresses these knowledge gaps.

Research HypothesesWe propose that the performance impact of CI quality at thesalesperson and district levels is contingent on two factors:(1) district CI quality diversity and (2) district managers' in-

degree centrality in within-district and peer networks. Wesummarize the hypotheses and the distinct theoreticalmechanisms for each of them in Figure 2.

Disentangling the individual- and Group-LeveiReiationships Between d Quaiity andSalesperson Performance

Individual level. CI quality helps salespeople achievehigher performance in at least two ways. First, comparedwith salespeople who lack accurate competitive information,salespeople equipped with a thorough understanding of thecompetitive landscape can conduct competitor-centeredassessments and thus have better knowledge of the firm'scompetitive superiority (Day and Wensley 1988). With abetter grasp of the strengths and weaknesses of the firm


FIGURE 2Intrafunctionai Ci and Salesperson Performance: A Social Network Perspective

Inter- and Intrafirm Marketing Intelligence Activities (e.g., Jaworski and Kohli 1993; Moorman 1995; Slater and Narver 1995)

Interfunctional Marketing Intelligence Activities (e.g.. Fisher, Maltz, and Jaworski 1997; Maltz and Kohii 1996)

Conceptual Framework: Intrafunctional Competitive Intelligence

District CI Quality Diversity• As noise at the individual level (HjJ: Reduce salesperson confidence in

using one's own information• As noise at the group level (Hji,): Create information of mixed quality in

district planning and implementation, reduce normative influence from peers.

: District Manager's : Hj,,: Within-District j: In-Degree Centrality |

• Validate information internally• Reduce noise by information synthesis• Resolve information issues in planning

and implementation

DistrictCI Quality

I District Manager's I ^I Peer-Network | 1J In-Degree Centrality j

• Validate information externally' Reduce noise by information contrast• Relay superior Cl quality from outside

* Managers' acting on CI in district-level planning and implementation

• Normative influence from peersalespeople

Controls(at both levels)

• DM Work Experience• SP Customer Orientation• SP Job Satisfaction• SP Sales Experience

V • SP Product Knowledge /

Level 2

Level I

SalespersonCI Quality

' More effective customers'objection handling

' Better individual-level salesplanning and tactics

SalespersonPerformance

(Objective data)

SalespersonSurvey

District ManagerSurvey

Notes: SP = salesperson, and DM = district sales manager.

relative to its cotnpeting alternatives, a salesperson can bemore effective in overcoming customers' competitor-relatedobjections (Weitz 1981). Second, prior research suggeststhat quality information is more likely to be used and actedon (e.g., Deshpandé and Zaltman 1984; Maltz and Kohli1996). Jaworski, Maclnnis, and Kohli (2002) suggest thatCI quality leads to superior business performance because itenhances business planning and actions. Furthermore, qual-ity information enables people to justify the basis of theirdecisions and actions (O'Reilly 1982). For salespeople, sucha justification can be useful to acquire additional resourcesto close a sale. Therefore, we hypothesize the following:

Hj : The relationship between salesperson CI quality andsalesperson performance is positive.

Contextual effect. From a multilevel perspective (Chan1998), CI quality can be conceptualized at various organi-zational levels. Prior work on work group climate suggeststhat the average level of work group characteristics (definedas the aggregation of individual work group members' char-acteristics) can exert a meaningful influence on a given

work group member's performance (e.g.. Grizzle et al.2009). The sociology and multilevel literature refers tothese effects as contextual effects (e.g., Blalock 1984; Fire-baugh 1980).

The contextual effect is consistent with multilevel orga-nization learning models that describe learning as a multi-level phenomenon that takes place at the individual, group,and organizational levels (Crossan, Lane, and White 1999;Sinkula 1994). Nonaka (1994, p. 15) posits that "althoughideas are formed in the minds of individuals, interactionbetween individuals typically plays a critical role in devel-oping these ideas. That is, 'communities of interaction' con-tribute to the amplification and development of new knowl-edge." In our context, such contextual effects represent theexpected difference in performance of two salespeople whohave the same level of individual CI quality but work in dis-tricts that differ in their average level of work group CIquality. More important, contextual effects may exist evenafter controlling for individual-level effects (e.g., Firebaugh1980). Therefore, we also consider district CI quality.

Intrafunctionai Competitive intelligence and Sales Performance / 41

which is the average of CI quality across salespeople in asales district.

We propose that district CI quality exerts unique influ-ences on salesperson performance for at least two reasons.First, consistent with the idea that quality information ismore likely to be used and acted on (e.g., Deshpandé andZaltman 1984; Maltz and Kohli 1996), managers are alsomore likely to use and incorporate high CI quality into strat-egy planning and implementation. Whereas use of CI qual-ity at the individual level is based on intuition and interpret-ing information that results from individual solutions,managers' use of CI quality occurs at the group level and isbased on the integration and institutionalization that lead tocollective rules, coordinated procedures, and integrativesolutions (e.g., Crossan, Lane, and White 1999). Therefore,a high level of work group CI quality should lead to effec-tive competitive business strategies that improve the perfor-mance of all salespeople in the work group. Second, thecontextual effect of district CI quality on individual sales-person performance can occur through normative influence,also known as peer pressure. Such a contextual effect iswell documented in organizational sociology and socialpsychology (Firebaugh 1980; Raudenbush and Bryk 2002).Specifically, in districts with high district CI quality, asalesperson is more likely to interact with salespeople withhigh CI quality. These peers are likely to perform well,which creates a normative influence on the salesperson toachieve a high level of performance. Thus, we hypothesizethe following:

Hii,: The relationship between district CI quality and sales-person performance is positive.

Moderating Effect of District Ci Quaiity DiversityAn underlying assumption of contextual effects is that workgroup members are largely homogeneous on the attributebeing evaluated (Blalock 1984). In this subsection, weexamine how district CI quality diversity can change thedirection of the performance impact at the individual anddistrict levels. The literature on work group diversity sug-gests that it plays an important role in how group membersprocess information in a group setting (Van Knippenberg,De Dreu, and Homan 2004). Equivocal information impairsinformation interpretation and strategic actions (Daft andLengel 1984; Sinkula 1994). Similarly, CI quality diversityhinders the formation of a uniform competitive knowledge.We apply this logic to the context of CI to propose that dis-trict CI quality diversity functions as "information qualitynoise" that moderates the positive performance impact ofCI quality at the salesperson and district levels.

Moderating effect on the relationship between sales-person CI quality and salesperson performance. Competi-tors are extemal stakeholders whose activities are not read-ily observable. Therefore, there is some level of uncertaintyabout the CI collected by a single person. In other words, asalesperson's CI quality represents only a single point ofobservation with some confidence intervals about what thecompetitors are actually doing. The salesperson can fine-tune these confidence intervals on the basis of social learn-ing from peers, which consists of a larger number of obser-

vations about the competition. Research on the influence ofgroups on individual behavior (e.g., Sniezek and Henry1989) and multilevel organization learning models bothunderscore the social aspect of learning (e.g., Crossan,Lane, and White 1999). In line with these models, we pro-pose that a salesperson in a district is likely to (1) comparehis or her own CI quality with district CI quality and (2)adjust confidence in his or her own CI quality, dependingon how peers' CI quality differ from his or her own.

Specifically, in a district with high CI quality diversity,salespeople are likely to be confused by the mixture of goodand bad CI. That is, the comparison of their own CI qualitywith other salespeople's CI quality leads to confusion ratherthan clarity. Even if sales managers decide to use their for-mal power to block CI of low quality from circulating, theymay not be able to prevent salespeople from exchanging CIof mixed quality in informal social interactions. As a result,these salespeople become less confident in their analysis ofcompetitors and use of their own CI in devising selling tac-tics, regardless of their actual CI quality. In contrast, sales-people who work in districts in which CI quality is morehomogeneous have a clear group-level anchor point withwhich to compare their own CI quality. Salespeople whoseCI quality falls below the group average will realize thattheir own CI quality is actually inferior and be less likely touse it. Conversely, salespeople whose CI quality rises abovethe group average will realize that their own CI quality issuperior and be more likely to use it. Such adjustments ofconfidence in one's own CI quality should lead to higherperformance for salespeople with high CI quality than forthose with low CI quality. Therefore, we hypothesize thefollowing cross-level interaction effect:

H2a: The positive relationship between salesperson CI qualityand salesperson performance is weaker when district CIquality diversity is high.

Moderating effect on the relationship between districtCI quality and salesperson performance. District CI qualitydiversity also impairs the positive contextual effect of dis-trict CI quality on salesperson performance because it leadsto less effective and efficient within-district planning andimplementation. First, when CI quality varies significantlyacross salespeople in a district, managers are exposed to CIof mixed quality. Although these managers can rely moreheavily on salespeople whom they think have high CI qual-ity than those who have low CI quality, they are likely to beless confident in using the within-district CI. This situationoccurs because such selective attention is focused on only afew salespeople in the district rather than many salespeople(e.g., Sniezek and Henry 1989), and the deviation from themean level of within-district CI quality is large. Priorresearch suggests that the more managers appraise a situa-tion as an opportunity, the greater is the magnitude andcommitment of their response (White, Varadarajan, andDacin 2003). However, when managers are faced with awide distribution of CI quality within their districts, theirlack of confidence in the CI collected by salespeople willmake them less likely to act on an opportunity than thosewho manage districts with more homogeneous CI quality,even with the same high mean level of district CI quality.

42 / Journal of iVIarketing, September 2013

Second, district CI quality diversity also infiuences theimplementation of managers' plans for their business units.When district CI quality diversity is high, it is difficult formanagers to secure commitment from all the salespeople tofollow a uniform competitive plan. Prior research suggeststhat having shared organized knowledge structures about afirm's external environment can facilitate team communica-tion and team strategy implementation (e.g., Marks, Math-ieu, and Zaccaro 2001). However, such shared knowledgeabout the competitive environment collapses in districtswith high CI quality diversity. Such a situation can lead toconfiicts in work groups, which in turn may impair individ-ual salesperson performance. Finally, the normative infiu-ence of a district's CI quality on a salesperson should bemuch weaker when there is high diversity of CI qualityamong salespeople. Together, these processes weaken thecontextual effect of district CI quality that we describedpreviously. Therefore, we hypothesize the followingbetween-group interaction effect:

H2b: The positive relationship between district CI quality andsalesperson performance is weaker when district CI qual-ity diversity is high.

Effect of Managers' Network CentralityIn the previous subsection, we predicted that district CIquality diversity destroys salesperson confidence in CIquality at the salesperson level and strategic planning andimplementation at the district level. In this subsection, wepropose that district managers can buffer these effects byrelying on their central position in the peer and within-districtnetworks, respectively.

Peer-network centrality. In the district manager peernetwork, a centrally located district manager can exchangeand learn from multiple informal ties with district managerswho manage different salespeople. This form of sociallearning is distal and creates novel insights because theinformation is extracted from interactions with people out-side the regular task now rather than within the district(Brass 1984; Sparrowe et al. 2001). Note that a centrallylocated district manager in the district manager peer net-work has access to unique information from district man-agers who are formal CI hubs themselves. Because theinformation from these peer district managers is more com-prehensive, synthesized, and integrated from a large num-ber of observations across multiple districts, its confidenceinterval about the truth will be narrower than observationsfrom salespeople in a single sales district. In short, man-agers who are central in the peer network will possess CIwhose quality is more objective (i.e., not extracted fromsalespeople within the district and contrasted with externalsources) and superior (i.e., based on a larger sample). WhenCI quality in a group is diverse, managers who are centralin the district manager peer network can buffer its negativeeffect in at least two ways. First, salespeople who are con-fused by district CI quality diversity will be in need of CIfrom people who have access to information from outsidethe district. Because managers who are central in the districtmanager peer network are able to contrast the CI in the groupwith the CI from outside the district, they are better at help-

ing salespeople overcome the infiuence of information noise.Second, they possess superior CI quality, which supplementssalespeople's CI quality and reinforces salespeople's confi-dence in using CI. Thus, we hypothesize the following:

H3a: District managers' peer-network centrality buffers thenegative cross-level moderating effect of district CI qual-ity diversity.

Within-district network centrality. Prior research sug-gests that "formal leaders can benefit from being informalleaders as well" (Balkundi and Harrison 2006, p. 53).Although district managers have positional power oversalespeople who report to them, they do not necessarilyoccupy a central position in informal district-level socialnetworks. For example, salespeople may prefer to go topeers for advice rather than the district manager. In otherwords, the formal and informal organizational structuresneed not coincide (Soda and Zaheer 2012). Prior researchalso suggests that by giving advice, centrally located peopleare able to accumulate knowledge about task-related prob-lems and form workable solutions (Baldwin, Bedell, andJohnson 1997). Note that centrality in the within-district net-work enhances managers' ability to synthesize local infor-mation, creating local knowledge that is useful for within-district planning and implementation of competitive tactics.

Specifically, when district CI quality diversity is high,managers who are central within the district possess district-specific knowledge that may help overcome an ambiguoussituation. In contrast, managers who are not central may beconfused by information of mixed quality. That is, man-agers' within-district network centrality helps them reduceequivocal information (Daft and Lengel 1984) created bydistrict CI quality diversity. Furthermore, district managerswho are more central among the salespeople within theirrespective sales districts will have not only formal powerbut also informal power (e.g., expert power, referent power,information power; French and Raven 1959) over sales-people in their districts. Compared with their less centralcounterparts, centrally located managers are more popularamong subordinates in the sense that they are known as"go-to" people for advice. Through these informal, albeitpersonal, interactions, central managers have greaterknowledge of their group members' preferences (e.g., task-related attitudes, concerns, needs) and the group's socialstructure (e.g., interpersonal ties among group members)(Greer, Galanter, and Nordlie 1954). Equipped with thisinterpersonal knowledge, these more centrally located man-agers are more effective at resolving mixed informationframes and confiicts that arise from having diverse CI qual-ity than are less central managers. These arguments lead tothe following hypothesis:

H31,: District managers' within-district network centralitybuffers the negative within-district moderating effect ofdistrict CI quality diversity.

Study 1In Study 1, we test Hj^, Hn,, H2a, and H2b. We collecteddata from a leading media company, which has a typicalhierarchical structure of sales organizations, in which sales-

Intrafunctional Competitive intelligence and Sales Performance / 43

people work under the supervision of district managers.Moreover, the competitive nature of the media industry inthe U.S. market makes it an ideal context in which to studyCI. Before launching the quantitative survey, we conductedin-depth interviews with several district managers andsalespeople in the company to gain an understanding of CImanagement inside the company and to ensure that ourmeasures matched the research context. From this qualita-tive research, we defined the sample ñ-ame as the membersof the sales organization who compete, in some form, forthe customer's business. As such, the study's questionnairewas not distributed to members of the sales organizationwhose jobs pertained solely to after-sales customer services.From the qualitative interviews, we deemed these employ-ees too far removed from the competitive aspect of the busi-ness, making CI secondary to their day-to-day activities andthought processes. Regardless of this exclusion, our sampleframes still covered more than 75% of the sales organiza-tion. To match responses from different levels of the organi-zation, we embedded individualized code numbers in eachquestionnaire. Our final data included 65 district managers(88% response rate) who supervised 433 salespeople (65%response rate). We tested for systematic differences in theresponses of early and late respondents on both demo-graphic variables and major constructs; unanimously, theresults yielded insignificant effects. Table 2 provides a briefdescription of the sample.

Measures

In addition to attaining self-reported data from the sales-people and district managers, we gained access to objectivedata from the company's records for a three-month timespan after the start date of data collection, providing ustime-lagged salesperson performance metrics. We adaptedall other measures from published scales in the literature

and assessed them on Likert scales anchored by 1("strongly disagree") and 7 ("strongly agree"). Next, webriefly summarize these measures; Appendix A provides acomplete list.

CI quality. For salesperson CI quality, we asked districtmanagers to evaluate the content of the CI each salespersoncollected in their sales districts. The measure we used for CIquality is a shortened version of Maltz and Kohli's (1996)multidimensional construct. In the original scale, CI qualityhas four subdimensions, including accuracy, relevance,clarity, and timeliness. Here, we selected one item fromeach subdimension that best suited our research context toform a four-item scale of CI quality. We calculated districtCI quality as the average CI quality of salespeople within asales district. For district CI quality diversity, we calculatedthe standard deviation of CI quality of salespeople within asales district. This operationalization of diversity is consis-tent with research on climate strength (e.g., Schneider, Sal-vaggio, and Subirats 2002).

Salesperson performance. We used sales as a percent-age of quota (i.e., sales quota achievement), which is calcu-lated as dollar sales in a given month divided by theperiod's sales quota, to measure each salesperson's perfor-mance. Because we expected CI quality to influence sales-person performance after a time lag, we obtained sales-person performance data for three consecutive months afterthe survey was launched and used the mean level duringthis period as our dependent variable.

Covariates. We controlled for salespeople's salesexperience (number of years working in the sales job) anddistrict managers' work experience (number of years in thecurrent position) using company objective data. In addition,to extract the effects of other possible determinants of sales-person performance, we controlled for salesperson cus-

Level

Study 1Level 2: District Managers(N=65; 15.38% female)

MSD

Level 1: Salespeople(N = 433; 30.02% female)

MSD

Study 2Level 2: District Managers(N = 228; 12.28% female)

MSD

Level 1: Salespeople(N = 1,437; 25.61% female)

MSD

TABLEDescription of

2Samples

Experience in theCurrent Position Work Experience

(Years) (Years)

10.602.93

8.502.78

7.113.73

5.513.83

18.307.13

12.206.77

15.907.55

13.317.87

Experience withCompany (Years)

11.856.19

10.374.30

12.138.03

8.496.21

Age(Years)

41.486.87

33.297.15

44.237.42

34.188.20


tomer orientation with an adapted six-item measure fromThomas, Soutar, and Ryan (2001). We also controlled forsalesperson product knowledge by adapting a four-itemmeasure from Behrman and Perreault (1982).

Anaiyticai StrategyBecause salespeople were nested within district managers,we applied hierarchical linear modeling (HLM; Rauden-bush and Bryk 2002) to account for the possible inter-dependence of observations in a sales district. To separateout within-level and between-level effects, we followedRaudenbush and Bryk's (2002) recommendation to addgroup-mean-centered predictors to Level 1 and the meansof these predictors to Level 2. In this regard, coefficients ofgroup-mean-centered variables at Level 1 determine within-group effects, and coefficients of the means of thesevariables at Level 2 determine between-group effects. Weprovide details of the model specification in Appendix B.

Measurement ModeiAlthough all the scales were either adapted from or devel-oped on the basis of previously tested measures in the litera-ture, we conducted an exploratory factor analysis to validatethe scales. The results showed that all items loaded on theircorresponding factors. An additional confirmatory factoranalysis on the focal constructs also resulted in acceptablefit indexes (^2 = 36.6, d.f. = 13; comparative fit index = .97;Tucker-Lewis index = .95). Table 3 reports the descriptivestatistics, average variance extracted (AVE), and correlationmatrix of the focal constructs included in the factor analy-sis. As Table 3 and Appendix A show, all constructs in thestudy have Cronbach's alphas greater than .70 and AVEsgreater than .50. These results indicate that our measuresare highly reliable. Moreover, because the AVE values forall constructs exceeded the squared correlations betweeneach respective pair, the constructs also exhibited discrimi-nant validity (Fomell and Larcker 1981).

Before aggregating the CI quality variable from thesalesperson level to the district level, we analyzed theappropriateness of data aggregation. Our analysis of theintraclass correlations justified aggregation to higher levels(ICCl - .23, ICC2 = .81, median Rwg = .74). More specifi-cally, the ICC(l) value, which represents between-groupvariance, is similar to that reported by previous researcherswho justified data aggregation on this basis (Bliese 2000;Grizzle et al. 2009; Schneider, Salvaggio, and Subirats2002). The ICC(2) value, which represents group mean reli-ability, is above .70, which exceeds the conventional thresh-old (Ehrhart, Bliese, and Thomas 2006). Finally, the medianRwg is also above that reported in the literature (James,Demaree, and Wolf 1984; Schneider, Salvaggio, and Subi-rats 2002).

Hypothesis TestingOur test of the intercept-only model showed that 65% of thevariance in sales performance resides between salespeopleand 35% of variance can be attributed to between-sales dis-trict differences. Both variances are significant at p < .05,justifying the addition of predictors at Level 2.

Main effects. We analyzed the model using two-levelHLM, with salesperson performance as the dependentvariable. The results of the analysis appear in Table 4,which reports the main-effects-only model on the left-handside for sales quota achievement as the dependent variableand the full model, including the interactions, on the right-hand side. We found that a salesperson's CI quality (Level1) has a significant effect on his or her performance (Hi^: Y =.17,;? < .05). District CI quality (Level 2) also has a posi-tive influence on the performance of a salesperson workingin the corresponding district (Hji,: Y= -19,^ < .05).

Moderating effects. As we predicted, the positive rela-tionship between salesperson CI quality and salespersonperformance is weaker when district CI quality diversity ishigh (H2a: Y = --^7, p < .05). Moreover, the positive rela-tionship between district CI quality and salesperson perfor-mance is weaker when district CI quality diversity is high(H2b: y--.12,p < .05). To probe the nature of the interactionsfurther, we followed Aiken and West's (1991) recommenda-tion and plot these interactions in Figure 3, Panels A and B.

Control variables. To rule out possible alternativeexplanations, we controlled for the effects of severalvariables on salesperson performance. First, we argue thatsalespeople who have greater sales experience or workunder the supervision of highly experienced district man-agers have, on average, better sales performance. Ourresults (Table 3) show that salesperson sales experience (Y =.13,p < .05) and district manager work experience (Y= .09,p < .10) are positively related to salesperson quota achieve-ment. Second, we controlled for salesperson customer ori-entation, product knowledge, and job satisfaction becausethese variables are important predictors of salesperson per-formance (e.g.. Brown et al. 2002). We found a significant,positive effect for salesperson customer orientation (Y= .10,p < .05), product knowledge {y=.l2,p< .05), and job sat-isfaction (Y= .15,P < .05).

Discussion

In Study 1, all hypotheses were supported. More specifi-cally, we found that salesperson CI quality is positivelyrelated to salesperson performance and that the contextualeffect of district CI quality exists. However, district CIquality diversity impairs these relationships. Nevertheless,the sample size in Study 1 was relatively small at Level 2(i.e., 65 district managers) and did not provide us withenough statistical power to simultaneously test the three-way interactions predicted in H3a and H3(,. Furthermore, itis important to examine whether the findings, especially theinteraction effects, are generalizable in a different context.

Study 2Our goals in Study 2 were to replicate Hi^, Hn,, H2a, andH2b and to test the three-way interactions predicted in H3aand H3b in a different industry and selling context. We col-lected data from a Fortune 500 firm that operates in theindustrial supplies sector. Again, the company has a typicalhierarchical structure. Furthermore, the contexts are partic-ularly suitable for a multilevel social network study insofar


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TABLE 4Study 1 : HLM Results of Two-Level Models: District Managers and Salespeople

Variables

intercept

ControlsSPCOSPEXPSPPKOSPSATDMEXP

Simple EffectsSPCIO (Hia)DCIO (Hib)DCIODIV

Interaction EffectsSPCIO X DCIODIV (H2a)DCIO X DCIODIV (H2b)

Pseudo R2-2 log-likelihoodChange in fit index

Dependent Variables

Main-Effects-Only Model

Y

.83**

.09**

.13"

.11"

.14**

.10*

.16"

.18"-.21

SE

.136

.028

.043

.035

.022

.051

.032

.075

.431

.1121,843.39

42.17"

= Quota Achievement

Full Model

Y

.85**

.10"

.13"

.12"

.15"

.09*

.17"

.19"-.027

- . 1 7 "- . 1 2 "

.1951,801.22

(d.f. = 2)

SE

.139

.030

.044

.039

.024

.054

.035

.081

.490

.021

.036

*p<.10.**p < .05.Notes; Two-tailed tests. SPCO = salesperson customer orientation, SPEXP = salesperson sales experience, SPPKO = salesperson procJuct-

knowledge, SPSAT = salesperson job satisfaction, DMEXP = district manager's work experience, SPCIQ = salesperson CI quality,DCIO = district CI quality, and DCIQDIV = diversity of CI quality in a sales district. N = 433 (salespeople), 65 (district managers).

as specific social networks exist between employees andmanagers at different levels of the sales organization. As inStudy 1, we conducted qualitative interviews with districtmanagers and salespeople before the launch of the survey.The final data set includes 228 district managers (95%response rate) who manage 1,437 salespeople (71%response rate). Again, we found no systematic differencesbetween the responses of early and late respondents oneither the demographic variables or the major constructs.Table 2 briefly describes this second sample.

Measures and Anaiyticai Strategy

In addition to the measures we describe in Study 1, we col-lected social network data using the nomination method.We asked salespeople and district sales managers to identifyan exhaustive list of individuals in the company who wererepresentative of the coworkers they go to for advice aboutwork-related matters. The nomination method has longbeen known as a reliable means of measuring social net-works (Marsden 1990) and has been used extensively bynetwork scholars (e.g., Burt 1992; Ibarra 1993) to captureadvice networks. We also measured the strength of theadvice-seeking ties by asking respondents to indicate howoften they interact with the nominated colleagues aboutwork-related matters (1 = "seldom," and 7 = "very often").

District manager peer-network centrality. Districtmanager peer-network centrality refers to a manager's cen-trality among peer district managers in the sales organiza-tion. Following Freeman (1979) and recent developments inthe social network literature (e.g., Hanneman and Riddle

2005; Opsahl, Agneessens, and Skvoretz 2010), weweighted each manager's incoming ties by their strength,operationalized as the frequency of the interaction betweenthe advice-giver and the advice-seekers. We adopt thisapproach because it adds explanatory power to the measure-ment of social networks (Granovetter 1973). Specifically,we calculated the weighted in-degree centrality of a givendistrict manager among all district managers by summingthe strength of incoming ties a district manager receivesfrom peer district sales managers.

District manager within-district centrality. To measurethe within-district centrality of a district manager in eachwithin-district social network, we asked salespeople in eachsales district to nominate their district manager if he or shewas a source of help or advice with regard to work-relatedmatters. We then asked those who nominated their districtmanager to indicate how often they interacted with themanager about work-related matters (1 = "seldom," and 7 ="very often") to capture the strength of network tie betweenthese individuals. Using Freeman's (1979) approach, wecalculated the weighted in-degree centrality of a districtmanager in the within-district social network. Therefore, wesummed the strength of incoming ties a district managerreceives from his or her salespeople and divided the resultby the number of salespeople working for the districtmanager (i.e., the maximum possible number of incomingties to the manager) to normalize the within-district central-ity measure according to the size of each sales district(Wasserman and Faust 1994, p. 179).

Intrafunctionai Competitive intelligence and Sales Performance / 47

FIGURE 3Moderating Effects of District CI Quality Diversity (Two-Way Interactions)

Study 1

A: Between District CI Quality Diversity andSalesperson CI Quality

1.4 1

1.2-

0)u

I 1.0-

IIá! .8-1Q.(A

.6-

.4

— Low DCIQDIV^- High DCIQDIV

Low SPCIQ High SPCIQ

B: Between District CI Quality Diversity andDistrict CI Quality

1.4

1.2 -

1.0-

CL . 8 -0.V)

. 6 -

.4

- Low DCIQDIV- High DCIQDIV

Low DCIQ High DCIQ

Study 2

C: Between District CI Quality Diversity andSalesperson CI Quality

D: Between District CI Quality Diversity andDistrict CI Quality

1.4

1.2-

«>u

I 1.0

S. .8]0.(A

.6-


1.4

1.2

1.0-

IS. .8

.6-

Low SPCIQ High SPCIQ.4


Low DCIQ High DCIQ

Notes: SP Performance = salesperson performance as quota achievement (1 = 100%), SP = salesperson, DCIQDIV = district CI quality diver-sity, SPCIQ = salesperson CI quality, and DCIQ = district CI quality.

Covariates. In addition to the covariates we describe inStudy 1, we included salesperson peer-network centralityand its interaction terms with salesperson CI quality anddistrict CI quality diversity. Using the social network data,we calculated the weighted in-degree centrality of a givensalesperson among salespeople in the sales organization(i.e., centrality in the salesperson peer network) using Free-man's (1979) approach by summing the strength of incom-ing ties a salesperson receives from peer salespeople.

Analytical strategy. Because the data also have a nestedstructure, we again used HLM (Raudenbush and Bryk

2002) and centered the variables in a way similar to Study1. The model specification in Study 2 differs from Study 1in that we added the centrality variables and the interactionterms (see Appendix B). We also wrote a MATLAB code tocalculate the social network measures.

Measurement Model

Our exploratory factor analysis showed that all the itemsloaded on their corresponding factors. An additional confir-matory factor analysis also resulted in acceptable fit indexes(%2 = 30.5, d.f. = 13; comparative fit index = .95;


Tucker-Lewis index = .93). We report the descriptive statis-tics, AVEs, and correlation matrix of the focal constructs inTable 3. Again, all the constructs had Cronbach's alphasgreater than .70 (Appendix A), all AVEs exceeded .50, andthe constructs exhibited discriminant validity. We also con-ducted a few tests to justify aggregating the CI qualityvariable to higher levels. All our tests justified aggregationto Level 2 (ICCl = .16, ICC2 = .72, median Rwg = .81).

Hypothesis TestingThe intercept-only model showed that 68% of the variancein sales performance resides between salespeople and 32%of the variance exists between sales districts. Both vari-ances are significant at /? < .05, justifying the addition ofpredictors at Level 2.

Main effects. We analyzed the data using two-levelHLM, with salesperson performance as the dependentvariable. The results appear in Table 5, which reports the

main-effects-only model and models with two-way andthree-way interactions. As in Study 1, we found that a sales-person's CI quality (Level 1) has a significant effect on hisor her performance (}i;^:y-.l5,p< .05). District CI qual-ity (Level 2) also has a positive influence on the perfor-mance of a salesperson working in the corresponding dis-trict (Hn,: y =-20,/? < .05).

Moderating effects. However, we found that the positiverelationship between salesperson CI quality and salespersonperformance is weaker when district CI quality diversity ishigh (H2a: y = -.13,/j < .05). In addition, the positive rela-tionship between district CI quality and salesperson perfor-mance is weaker when district CI quality diversity is high(H2b: y=-16,p < .05). We plot these two-way interactionsin Figure 3, Panels C and D. We also found support for theproposed three-way interactions. Our results show that adistrict manager's peer-network centrality buffers the nega-tive cross-level moderating effect of district CI quality

TABLE 5Study 2: HLM Results of Two-Level Models: District Managers and Salespeople

Variables

Intercept

ControlsSPCOSPEXPSPPKQSPSATDMEXP

Simple EffectsSPCIQ (Hia)DCIQ (Hib)SPPNCENDMPNCENDMWDCENDCIQDIV

Two-Way Interaction EffectsSPCIQ X DCIQDIV (Hsa)DCIQ X DCIQDIV (^¿b)SPCIQ X SPPNCENSPCIQ X DMPNCENDCIQ X DMWDCENSPPNCEN X DCIQDIVDMPNCEN X DCIQDIVDMWDCEN X DISCIDIV

Three-Way Interaction EffectsSPCIQ X DCIQDIV X SPPNCENSPCIQ X DCIQDIV X DMPNCEN i

Dependent Variables = Quota Achievement

Main-Effects-Only Model

Y

,88**

.10**

.09**

.15**

.12**

.013

.16**

.18**

.10**

.09

.08-.022

(Ha.)DCIQ X DCIQDIV x DMWDCEN (H3b)

Pseudo R2-2 log-likelihoodChange in fit index

.1593,623.11

SE

.154

.053

.050

.055

.031

.50

.058

.012

.030

.077

.079

.189

Two-Way Interaction Model

Y

.88**

.10**

.10**

.16**

.12**

.17

.15**

.19**

.12**

.10*

.10*-.030

-.12**-.15**

.05

.10*

.11**

.049-.07

.06

.1863,585.87

37.24** (d.f. =

SE

.155

.056,052.56.033.45

.058

.010

.040

.064

.061

.162

.047

.052

.523

.064

.044

.074

.167

.858

= 8)

Full Model

Y

,89**

.11**

.10**

.17**

.12**

.05

.15**

.20**

.12**

.11*

.10*-.034

-.13**-.16**

.04

.11**

.11**

.052-.07

.07

.089

.14**

.10**

SE

.158

.055

.054

.057

.033

.046

.060

.009

.040

.065

.063

.141

.044

.052

.485

.051

.048

.071

.154

.755

.670

.046

.051

.2193,561.17

24.70**(d.f. = 3)

*p<.10.**p < .05.Notes: Two-tailed tests. SPCO = salesperson customer orientation, SPEXP = salesperson sales experience, SPPKO = salesperson product

knowledge, SPPKO = salesperson job satisfaction, DMEXP = district manager's work experience, SPCIO = salesperson CI quality, DCIO =district CI quality, SPPNCEN = salesperson peer-network centrality, DMPNCEN = district manager peer-network centraiity, DMWDCEN =district manager withln-district centrality, DCIODIV = district CI quality diversity. N = 1,437 (salespeople), 228 (district managers).


diversity (H3a: Y = -14, p < .05). In addition, a districtmanager's within-district network centrality moderates thewithin-level moderating effect of district CI quality diversity(H3b: Y= .10,p < .05). To illustrate these three-way interac-tions, we plot them in Figure 4. Panels A and C of Figure 4show that when managers are central in the two networks, thepositive performance impact of salesperson CI quality anddistrict CI quality does not seem to change drastically, evenwhen district CI quality diversity exists. In contrast, as Pan-els B and D of Figure 4 show, when salespeople in the dis-trict differ in CI quality but sales managers are not central ineither network, the performance impact of CI quality at bothsalesperson and district levels can actually become negative.

Control variables. Our results show that salespersonsales experience has a positive effect on salesperson quota

achievement (Y = 10, p < .05). However, district managerwork experience does not significantly influence sales-person quota achievement (Y = .05, ;? > .10). Furthermore,our results indicate that customer orientation (Y = . 11, i" <.05), job satisfaction (Y= .12, p < .05), and product knowl-edge (Y = .17, p < .05) significantly infiuence salespersonquota achievement. Note that salesperson centrality amongpeer salespeople does not positively moderate the relation-ship between salesperson CI quality and salesperson perfor-mance (Y= .04, P > .10).

Discussion

Consistent with the findings in Study 1, we replicated theresults related to the main effects of salesperson and districtCI quality on salesperson performance and the within- and

FIGURE 4Three-Way Interactions

Three-Way Interaction Among SPCIQ, DCIQDIV, and DMPNCEN

A: When DM Peer-Network Centraiity Is High

1.4-

1.2-

B: When DM Peer-Network Centrality Is Low

(0

0)Q.Q.CO

1.0-

.8-

.6

.4

High DCIODIVLow DCIQDiV

1.4 .

1 . 2 •

1.0 •

.8-

.6 •

Low SPCIQ High SPCIQ.4

High DCIQDIVLow DCIQDIV

Low SPCIQ High SPCIQ

Three-Way Interaction Among DCIQ, DCIQDIV, and DMWDCEN

C: When DM Within-District Centrality Is High D: When DM Within-District Centrality Is Low

1 .4 •

« 1.2 •uc(0

i 1.0 -I

0)

(O

.6 •

High DCIQDIVLow DCIQDIV

1.4-

1.2-

8c 1.0-1

0)Q. .8 -

a.<n

.6-

.4

-*- High DCIQDIV- • - Low DCIQDiV

Low DCIQ High DCIQ Low DCIQ High DCIQ

Notes: SP Performance = salesperson performance as quota achievement (1 = 100%), SP = salesperson, DM = district manager, DCIQDiV =district CI quality diversity, SPCIQ = salesperson CI quality, DCIQ = district CI quality, DMPNCEN = district managers' peer-networkcentrality, and DMWDCEN = district managers' within-district centrality.


cross-level moderating effects of district CI quality diver-sity. Note that the patterns emerging from the two-wayinteraction plots are almost identical (Figure 3). The three-way interactions suggest that the two-way interactioneffects arise when district managers' within-district central-ity and peer-network centrality are at the average. As arobustness test, we also assessed whether district managers'centrality in the within-district network has a cross-levelinteraction effect and whether district managers' centralityin the peer network has a within-level interaction effect.These additional interactions were not significant, suggest-ing that district managers' within-district network centralitybuffers the negative effect of district CI quality diversity atthe group level whereas district managers' peer-networkcentrality buffers the negative effect of district CI qualitydiversity at the individual level.

Additional Analyses

Prior research suggests that several factors can be predictiveof CI quality diversity. First, the level of competitor orienta-tion can determine how closely salespeople track competi-tors' behavior. Thus, in districts in which salespeople varyin terms of their competitor orientation, district CI qualitywill also be higher. Second, because experienced sales-people can use prior knowledge to collect useful informa-tion selectively, the more diverse the district salespeople'sexperience, the more diverse the CI quality is in the district.Finally, network density, which refers to the proportion ofactual to possible ties in a network (Blau 1977), can reduceCI quality diversity. This negative effect occurs because in anetwork with high network density, group members have ahigh level of interactions and are more cohesive, which inturn makes it easier to transfer knowledge among membersand inhibit critical thinking (Blau 1977; Nahapiet andGhoshal 1998; Rentsch 1990; Sniezek and Henry 1989).

Across both studies, we calculated sales district networkdensity in accordance with Hanneman and Riddle's (2005)method by summing all the existing ties among salespeoplein a focal sales district, with the frequency of interaction ofeach tie as the weight, and dividing the result by the maxi-mum possible number of ties in that sales district (n x [n -1], where n is the number of salespeople in a given sales dis-trict). We found that competitor orientation diversity (Study1: ß = .34,/? < .05; Study 2: ß = .40, p < .05), salespeople'ssales experience diversity (Study 1: ß = .12 ,p < .10; Study2: ß = .16, p < .05), and network density are predictive ofdistrict CI quality diversity (Study 2: ß = - .18,p < .05).These standardized coefficients also suggest that competitororientation diversity among salespeople is the strongest pre-dictor of district CI quality diversity. The varianceexplained was .68 in Study 1 and .57 in Study 2.

General DiscussionDiscussion of Findings and TheoreticalImplicationsOverall, the empirical findings indicate that although collect-ing CI from the field is part of salespeople's in-role behav-ior (Marshall, Moncrief, and Lassk 1999), the performance

impact of CI quality is contingent on many group-level fac-tors. Our findings underscore the role of information qualitydiversity as noise and confirm the role of managers as CIhubs. Our research also contributes to existing theories onsocial networks and knowledge management.

Contextual effect. By conceptualizing the performanceimpact of CI quality as a multilevel phenomenon ratherthan as an individual process, we are among the first toempirically show that although salespeople's CI qualityimproves their performance, CI quality as a group-levelvariable also significantly enhances the performance ofgroup members beyond the individual-level effect. Thiscontextual effect contributes to the current understanding ofCI functionalities: individual-level CI is an isolated type ofknowledge that must be shared, filtered, and organizedthrough group processes to be transformed into a useful ini-tiative that enhances sales performance. This finding res-onates with prior theories about the importance of groupnorms and higher-order learning at the organizational level(Crossan, Lane, and White 1999; Sinkula 1994).

The role of group-level CI quality diversity. The nega-tive moderating effect of district CI quality diversityextends prior research on team diversity and confirms that"knowledge generated by the individual does not come tobear on the organization independently. Ideas are shared,actions taken, and common meaning developed" (Crossan,Lane, and White 1999, p. 524). Prior research suggests thatinformational diversity can enhance performance because itprovides multiple perspectives to a problem (e.g., Fiol1994; Jehn, Northcraft, and Neale 1999), and this effect ismediated by elaboration of task-relevant information (VanKnippenberg, De Dreu, and Homan 2004). However, thefindings across two studies consistently suggest that group-level information quality diversity can create informationalnoise that shakes salespeople's and managers' confidence ininformation utilization, thus nullifying the positive perfor-mance impact of CI quality at both the individual and thedistrict level. This effect seems to indicate that elaborationof information of diverse quality may hurt rather than help.That is, the potential benefits of individual CI quality maybe lost if its quality is in doubt (Sniezek and Henry 1989).

Social networks and formal structure. Little researchhas examined the interplay between social actors' positionin the organizational hierarchy and their position in socialnetworks (Soda and Zaheer 2012). Jaworski, Maclnnis, andKohli (2002, p. 303) conjecture that "the status of the net-work or individuals within it might bias the sense-makingprocess" such that "greater weight might be given to thehigh status individual/network." Our empirical findingssupport and enrich this understanding in two respects. Onthe one hand, the findings suggest that managers who aremore central among their subordinates are more effectivethan their less central counterparts at resolving district-levelissues that district CI quality diversity creates. This findingcontributes to the emerging theoretical discourse on thebenefits of combining formal and informal power over sub-ordinates when managers try to enhance the performance oftheir groups (e.g., Balkundi and Harrison 2006; Soda and


Zaheer 2012). On the other hand, we found that sales-people's peer-network centrality does not have the buffer-ing effect that district managers' peer-network centralitydoes. It seems that networking with peers at the manageriallevel generates more status gains and a stronger impact onothers than networking with peers at the salesperson level.It might be argued that salespeople with access to high CIquality are reluctant to share with peers because they treatCI as a tool to secure an individual competitive advantageand, as a result, gain personal prestige among peers.Employees may also perceive the cost of sharing knowl-edge with others as greater than what they might gainthrough reciprocal actions (Huber 2001). In contrast, man-agers might better understand the strategic and long-termbenefits of exchanging CI with peers and thus activelyshare novel information about the competition with subor-dinates and defuse the negative effect of diverse informa-tion quality.

Manageriai impiicationsThe findings provide managers with a more nuanced

understanding of the relationship between CI quality andsalesperson performance. By shedding light on the group-level effect and contingencies of the relationship between CIquality and salesperson performance, we demonstrate thatthe performance impact of CI quality is far from simple.

Managing CI quality: individual and group levels. First,our findings underscore the contextual effect such thatgroup-level CI quality contributes to salesperson perfor-mance beyond individual salesperson CI quality. In terms ofeffect size, the results show that the main effect of group-level CI quality is as strong as that at the individual level.Such a contextual effect creates a significant difference inperformance between two salespeople who have the samelevel of individual CI quality but work in districts that differin their average level of CI quality. If sales compensation isbased purely on performance, the two salespeople will havea significant pay difference. Therefore, this finding informsmanagers of the performance benefit of group-level CIquality but, more important, also informs them of situationsin which inequity in compensation and reward systems canoccur regardless of salesperson effort or ability.

Second, conventional wisdom suggests that CI qualitycreates better sales performance and that CI quality diver-sity is always detrimental. We show that both assumptionscan be wrong. Specifically, as Figure 3 illustrates, when dis-trict CI quality diversity is high, there is no significant dif-ference in salesperson performance between salespeople ordistricts with high and low CI quality. This result is impor-tant, because collecting CI takes time and effort that sales-people can otherwise spend on other selling activities.However, when the average CI quality in the district is low,having some CI quality diversity can actually benefit sales-person performance. Therefore, in managing CI quality,managers should pay attention not only to individual sales-person CI quality but also to the average level of CI qualityacross salespeople (i.e., district CI quality) and its diversityin their sales districts. Specifically, if managers believe thattheir district CI quality is high, they should attempt to

reduce district CI quality diversity because a collective con-currence of high-quality CI enhances the confidence inusing superior information at both the individual and grouplevels, thereby boosting salesperson performance in theentire district. However, if managers believe that their dis-trict CI quality is low, they should encourage and create dis-trict CI quality diversity, because a collective concurrenceof low-quality CI in the district creates collective confi-dence in using inferior information, thereby worseningsalesperson performance in the entire district.

Our additional analyses show that competitor orienta-tion diversity, sales experience diversity, and network den-sity of the district are the key drivers of district CI qualitydiversity. Therefore, managers can manage CI qualitydiversity by influencing these variables through formal(e.g., restructuring the district to achieve higher or lowerlevels of sales experience diversity, training programs onCI, formal newsletter on CI, periodical updates) and infor-mal (e.g., encouraging more social interactions within andoutside the workplace) mechanisms.

Managers' centrality in informal networks. Our resultssuggest that managers who are popular among their peersand subordinates help protect their teams from the potentialnegative effects of CI quality diversity. Two descriptive sta-tistics of Study 2 are particularly informative to managers.First, approximately 20% of managers were not the mostcentral members of their sales districts, and even whenmanagers were named as the advisor on task-related issues,there were large variations in the frequency of informalinteractions with managers. Thus, managers cannot assumethat because they hold a formal position, they will be the defacto central person in the within-district advice network.Instead, they will need to invest time and resources in build-ing that informal position. Second, the correlation betweenmanagers' centrality in the within-district network and theircentrality in the peer network was significant but weak.This weak correlation informs managers that centrality inthe witbin-unit network is not indicative of centrality in thepeer network, and vice versa. That is, the two types of cen-trality require separate investments of time and resources.

Unique values of managers' centrality. We found thatwhereas a manager's within-district centrality buffers thenegative effect of district CI quality diversity at the districtlevel, a manager's peer-network centrality buffers it at theindividual salesperson level. This finding is more importantwhen we consider that salesperson centrality in the sales-person peer network does not have this buffering effect. Thisfinding informs managers that they have two unique waysto buffer the potential negative effect of CI quality diversity.Managers who desire to buffer the negative effect of districtCI quality diversity on the performance impact of group-level CI quality must invest resources to become central inthe within-district informal network. In contrast, managerswho aim to buffer the negative effect of district CI qualitydiversity on the performance impact of individual-level CIquality must devote resources to become central in the peernetwork. The building of each type of centrality requiresdifferent social tactics, and pursuing both can be prohibi-tively costly for managers. Finally, from an organizational


learning perspective, these two routes of managers' infor-mal infiuence provide indirect evidence that local learningwithin the group enhances group efficiency through sharedunderstanding and aligned collective actions, whereas distallearning with external individuals enhances innovativenessthrough access to novel information (Wong 2004).

Limitations and Further Research

The empirical findings in this study should be interpretedwith their limitations in mind. First, our study focuses onsalesperson CI quality. Further research could examineother types of salesperson market intelligence activities,such as customer-focused assessments of existing andpotential customers rather than a competitor-centeredapproach (e.g.. Day and Wensley 1988; Üstüner and Godes2006). Because of the sensitivity of customer information,we expect it to be easier for salespeople to share and dis-seminate CI than customer information. In addition, firmssuch as those in our research generally compensate sales-people on the basis of outcomes (e.g., sales quota achieve-ment) or activities (e.g., number of sales calls) that are notdirectly related to CI. Thus, future studies could examinethe effect of incentive mechanisms on collecting and shar-ing CI inside a sales unit. Second, we examined only theadvice network. Although our qualitative interviews withmultiple salespeople and managers suggest that CI consti-tutes a significant percentage of the work-related adviceexchanged, it would be useful to further investigate theroles of other types of informal social networks, such asfriendship networks in CI processes. Research that delvesdeeper into networks beyond organizational borders, suchas competitors' networks and types of resource flow (Bor-gatti 2005), would be useful.

Third, firms may vary in terms of their formalization ofCI collection and dissemination, thus infiuencing sources ofsalesperson CI and CI quality diversity. At one end of thespectrum are firms that do not have formal programs to col-lect CI (e.g., a formal delineation of staff and resources forCI activities, a dedicated CI unit; Jaworski, Maclnnis, andKohli 2002), such as those in our empirical contexts. Here,although CI is discussed during reporting processes andmeetings, salespeople collect and disseminate CI primarilythrough informal networks and are not remunerated forsuch activities. Perhaps it is because of this organizationalstructure that we observed high variation in salesperson CIquality. At the other end of the spectrum are firms that insti-tutionalize CI behavior through more formal CI units withfull-time directors and associated staff, such as IBM(Behnke and Slayton 1998) and 3M (Lackman, Saban, andLanasa 2000).' In these firms, salespeople have a commonsource of CI in addition to their own CI. Further research isnecessary to examine how the relationships we uncoveredmay change in these firms. We conjecture that because of

'Most firms have formal reporting processes, especially from dis-trict managers to regional managers. Reporting processes can alsobe conducted through informal but mostly company-sanctionedconversations. Information flowing through informal social net-works is a more voluntary process. We thank an anonymousreviewer for this point.

the institutionalized information, redundancy of informa-tion may be reduced, but novel information may be moredifficult to attain. Thus, although managers will probablystill need to rely on social networks to leverage the perfor-mance impact of CI, their ability to bridge structural holesbetween networks to access unique information (e.g., tieswith peers in other districts) rather than within-district cen-trality will play a more critical role.

Fourth, studies that measure the underlying process ofCI collection and dissemination would provide usefulinsights. For example, salesperson motivation to share CI,information-sharing norms, and actual use of CI all mighthelp further explain the process (e.g.. Fisher, Maltz, andJaworski 1997; Reinholt, Pedersen, and Foss 2011). Further-more, prior research suggests that knowledge at the individ-ual, group, and organization levels can be either tacit orarticulated (Polanyi 1962). Tacit knowledge is non verbal-ized, or even nonverbalizable, and intuitive, whereas articu-lated knowledge is specified either verbally or in writing(Hedlund 1994). Competitive intelligence can reside withinexperienced salespeople as tacit knowledge (Crossan, Lane,and White 1999) or can be documented and shared as artic-ulated knowledge. Thus, further research that explicitlyconsiders the distinction between tacit and articulated CIwould be useful. Finally, further research could investigatehow individual information evolves into organizationalknowledge (Crossan, Lane, and White 1999; Jaworski,Maclnnis, and Kohli 2002; Sinkula 1994).

Appendix A: Measurement Scales^CI Quality

Rated by district managers. Cronbach's alpha = .76 (Studyl)/.86 (Study 2). Developed from Maltz and Kohli (1996).

For each salesperson, the district manager provides ratingon the following statements:

l.This salesperson collects competitive information that isusually accurate.

2. This salesperson collects details about competitors thathave strategic value.

3. This salesperson gathers competitive information in atimely manner.

4. This salesperson has clear ideas about the competition.

Product Knowledge

Rated by salespeople. Cronbach's alpha = .77 (Study l)/.78(Study 2). Adapted from Behrman and Perreault (1982).

1.1 know the design and specifications of company productsvery well.

2.1 know the applications and functions of company productsvery well.

3.1 am able to detect causes of operating failure of companyproducts.

4.1 keep abreast of our company's production and technologi-cal developments.

2A11 scales are measured on a seven-point Likert scale (1 ="strongly disagree," and 7 = "strongly agree").


Customer OrientationRated by salespeople. Cronbach's alpha = .67 (Study l)/.77(Study 2). Adapted from Thomas, Soutar, and Ryan (2001).

1.1 try to figure out what a customer's needs are.2.1 have the customer's best interests in mind.3.1 try to help customers achieve their goals.4.1 take a problem-solving approach in selling products or

services to customers.5.1 offer the product of mine that is best suited to the cus-

tomer's problem.6.1 try to find out which kinds of products or services would

be most helpful to customers.

Job SatisfactionRated by salespeople. Cronbach's alpha = .74 (Study 1)/.81(Study 2). Adapted from Hackman and Oldham (1975).

1. Generally speaking, I am very satisfied with my job.2.1 am generally satisfied with the kind of work I do in this

job.3.1 never think of quitting this job.

Appendix B: Model SpecificationBecause of the nesting nature of the data, we specify a two-level model for both empirical studies. For Study 2, weadded the social network variables (in bold) to the model.

Level 1 (Salespeople)

(1) PERFij = 7loj + 7tij(SPCIQy)

+ JC6j(SPPNCENy)

+ 7t7j(SPCIQij X SPPNCENjj) + ey.

Level 2 (District Sales Managers)

(2) Tioj = ßoo + ßoi(DA_SPCIQj) + ßo2(DA_SPCOj)

+ ßo3(DA_SPEXPj) + ßo4(DA_SPPKOj)

(3)

(4)

(5)

and

(6)

where

+ ßo7(DMPNCENj)

+ ßo8(DCIQDIVj) + ßo9(DCIQj x DMWDCENj)

+ ßio(DCIQj X DCIQDIVj) + ßiKDMWDCENj

X DCIQDIVj) -h ßi2(DCIQj x DMWDCENj

X DCIQDIVj) + ßi3(DMPNCENj x DCIQDIVj) + roj.

i i j = ßio + ßuCDMPNCENj) + ß,2(DCIQDIVj)

+ ßi3(DMPNCENj X DCIQDIVj),

6j = ßso + ßsiCDCIQDIVj),

SPCIQ = salesperson CI quality,SPCO = salesperson customer orientation,SPEXP = salesperson sales experience,SPPKO - salesperson product knowledge,SPSAT= salesperson job satisfaction,SPPNCEN = salesperson peer-network centrality,DCIQ = district CI quality,

DA_SPCO - average customer orientation of sales-people in a sales district,

DA_SPEXP = average work experience of salespeoplein a sales district,

DA_SPPKO - average product knowledge of sales-people in a sales district,

DMEXP = district manager's work experience,DMWDCEN = district manager within-district centrality,DMPNCEN = district manager peer-network centrality,

andDCIQDIV - district CI quality diversity.

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