“THE GRAY AREA”

Marketing Professor’s Research
Wins National Attention

Jan Heide, Irwin Maier Chair of Marketing, is one of the most highly regarded —and prolific —researchers in his field. Last year, an American Marketing Association study rated him the third most influential individual in the nation in terms of citations for marketing research. Heide is the latest in a long line of outstanding researchers at the School of Business. He spoke to UPDATE recently about his research interests, why he believes academic research matters and how he integrates the demands of researching and teaching.

Your recent research has explored relationship governance in supply chain networks, investments in marketing relationships and opportunism in interfirm relationships. Is there a common theme?

I’m interested in relationship management—how companies and manufacturers manage relationships upstream with their suppliers and downstream with their distributors and customers. My main notion is that relationship management is actually a big part—or should be a big part—of a company’s strategy. It’s not just something that happens by chance, like going to play golf with your buddies. It’s relationship management as a strategic tool.

How did this interest develop?

I wrote my dissertation here at Madison. (I returned to the scene of the crime, so to speak.) And I did my dissertation on relationships between manufacturers and component suppliers. This was in 1986. At that time, there was a great deal of buzz surrounding Michael Porter and the notion of competitive strategy. That whole model, coming out of industrial organizational economics, had the assumption that you should try to draw strict boundaries around the firm. That you should either do things internally and make your own components and sell your products through your own sales force or you should keep your exchange partners (suppliers and distributors) at arm’s length and view them not
as allies, but as competitors.

When I did my dissertation, that was the prevailing wisdom. But at the same time, there was quite a bit of anecdotal evidence of other philosophies having quite a bit of success. For instance, the U.S. automobile industry, which historically had looked at suppliers and distributors as adversaries, was getting beaten up very badly by their Japanese counterparts, who had actually been able to structure cooperative relationships with their suppliers and distributors. So that’s where my dissertation began. I was interested in: “When does it make sense to look at your suppliers as partners, and how can you structure cooperative relationships?” From a theoretical standpoint, I’m interested in the gray area between complete vertical integration on the one hand, and arm’s-length relationships on the other. I’m interested in what happens in the middle and how to locate the maximum benefits.

How do you research that topic?

When you study these day-to-day working relationships, you really need to get down to the grassroots and talk to people about what they do. There really are no secondary data sources.

I conduct surveys and do interviews to collect primary data on how companies work with their suppliers and distributors.

When “marketing relationships” is “Googled,” a paper you co-authored is the first of more than 220,000 items listed. Why is your research so often cited?

There really was no grand plan to this, but I think that relationship management has an appeal at a practical level because it’s something that companies struggle with, but also is theoretically interesting. This gray zone of how you structure relationships—that look a lot like employment relationships but aren’t exactly—has caught on.

The hurdle is high to be published in top journals. The top journals in marketing only publish 9 percent of all submitted manuscripts; the review process itself is fairly brutal. It’s nice to be cited. Sometimes you work on these articles and you never know if anyone other than your mother (or the people in your class who have to) will ever read them.

Does research done in business schools matter to real-world businesses?

I think it is really important, but I think maybe we can do a better job of disseminating it. We, as academicians, can do a good job of trying to document best practices and link practices with outcomes. Textbooks are often a couple of years behind the field. So, if we can document best practices and bring them into the classroom and share them in executive education seminars, business schools can really be where things are happening.

With your real-world focus, do you do much consulting?

I do very little. Between my teaching and my research I just stay too busy. I teach in our Executive MBA program, though, and that is a great opportunity for me to “take the pulse” of what goes on. These are highly experienced people and it’s a great way for me to test my theories, so to speak. I find them very receptive to conceptual frameworks. If they don’t like the theory, they will tell me so, in a very constructive way! In fact, students in all our programs are incredibly thoughtful. They come here because they want to learn something new, not just hear war stories.

What role do PhD students play in faculty research?

They keep you honest. They go to seminars and come back with new ideas and challenge you. When the process works right, the advisor learns more than the student. Our PhD students are a phenomenal source of energy for creativity.

Do you see top research and outstanding teaching as opposing goals?

The research helps the teaching, and the other way as well. If you are doing research, you can bring it into the classroom. Students ask questions that give me research ideas. It’s very synergistic. I don’t think there is a dichotomy between teaching and research.

Why do you think Wisconsin has such a strong research tradition, especially in marketing?

It is remarkable how we have been able to do this for a long time. People leave and people come and we keep doing it. I think there’s something about our values, our standards. Being part of a great university with a tremendous research tradition keeps us on our toes.