Abstract: This paper explores the adoption of a relationship marketing paradigm by the National Basketball Association. A contextualist framework was used to explore the context, content and processes of this change that evolved over a 17-year time period. Personal interviews were conducted with leaders of this league and over 80 documents were reviewed and content analyzed. The results of this study provide insights into relationship marketing and organizational change for sport managers.
Keywords: Relationship marketing, Organizational change, National Basketball Association
A transformation in the business landscape of professional sport in North America has resulted in the widespread adoption of relationship marketing practices. The relationship marketing paradigm in sport is based upon the principle of attracting and maintaining long-term relationships with commercial and industrial buyers, corporate sponsors and fans. In order to identify factors that have affected the adoption of relationship marketing as the dominant paradigm in professional sport organizations, Pettigrew's (1987) contextualist framework was used. This perspective advocates that, when seeking to understand organizational transformations, an examination of the firm's environment (both the inner and outer context), the aspects of firms that are being changed (content), and the actions, reactions and interactions of interested parties (processes) are important.
Using the National Basketball Association (NBA) as a case study of a sport organization that has adopted relationship marketing as a dominant business level strategy, we examine the role played by these factors in the change process. The results of this investigation indicated that external contextual shifts such as the rise of pay TV, technological change, the globalization of world markets, and the growing entertainment economy all contributed to the paradigm shift. In addition, contextual changes within the organization that were influential included the specialization of staff, the restructuring of the organization, the identification of partners, and the adoption of a partnership philosophy by the league. Factors related to the content of the NBA's change from one marketing paradigm to another included the firm's commitment to quality, the emergence of marketing as a dominant function within the organization, and the evolving criteria employed to measure customer satisfaction. Finally, processual factors facilitating the adoption of relationship marketing within the NBA were the recruitment of a new visionary leader and the articulation of a partnership driven vision of the firm. In making a shift to a relationship marketing approach, managers must be aware of the organizational implications of partnering, of employee competencies, of partner readiness, and of a clearly articulated vision of the firm, and how these play a role in achieving a successful transition.
North American professional sport organizations changed dramatically over the last two decades. The nature of this change has been influenced by factors such as the globalization of world markets, the proliferation of television coverage of sporting events, shifts in technology (e.g. increasingly rapid communication, diffusion of sports information via the Internet and satellite television), and finally, the emergence of the entertainment economy marked by increased employment in the leisure and recreation industries and the introduction of new technology driven by entertainment products (Mandel, et al., 1994). These shifts have created opportunities for and necessitated the formation of proximal relations among sport organizations and between sport organizations and corporate partners. A consequence of these linkages has been the adoption of relationship marketing practices by professional sport leagues and individual franchises. Relationship marketing is the term employed to encapsulate a shift in marketing toward practices that emphasize flexibility, specialization and relationship management instead of market transactions (Webster, 1992). This type of marketing is underpinned by ongoing relationships that depend on negotiation as a principal basis for conducting business (Webster, 1992).
There exists an abundance of examples of relationship marketing practices in professional sport organizations. For instance, the San Diego Padres baseball team experienced unprecedented success with its initiative to reward valued customers. A program, comparable to a frequent flyer program, enabled fans to accumulate points by purchasing the franchise's products; these points were subsequently redeemed for rewards. The National Football League (NFL) also employed relationship marketing practices to strengthen its links with corporate sponsors, such as McDonald's. The fast food chain's "Kick Off" promotion used the league's footage for advertising and promoting its relationship with the NFL. At the retail level, customers can win NFL Game Day trading cards, enter contests for trips to the Super Bowl and Pro Bowl, win season tickets to any NFL team, or a player's salary for a day. McDonald's and the Miller beer company have similar agreements with the National Basketball Association (NBA), and Anheuser-Busch i s focusing on its relationship with Major League Baseball (MLB).
In 1997, a special issue of Sport Marketing Quarterly was dedicated to relationship marketing and corporate sponsorship within the sport context. The articles in this issue highlighted the use of relationship marketing practices by sport organizations and the changes in the ways practitioners in the field of sport attracted commercial and industrial buyers and maintained long-term relationships with them. This shift within professional sport from the traditional marketing paradigm has occurred for several strategic reasons. Specifically, these organizations have realized the importance of customer retention and developing strong ties with sponsors and partners. The relationship marketing approach serves as a vehicle to foster such ties (Gronroos, 1994). Furthermore, it provides previously untapped benefits for sport organizations and their partners such as securing a loyal customer base, fostering legitimacy, and improving quality and interdependency between the partners (Shani, 1997).
The National Basketball Association (NBA) has been a leader in the adoption of relationship marketing practices and is representative of the phenomena as they are occurring throughout professional sport. It appears that the shift in the dominant ideology, culture and practices of this league occurred between 1980 and 1997. Recent evidence from industry articles (cf Bittman, 1985; Grimm and Lefton, 1993; Kapp, 1991; Rifkin, 1997) suggests that this is the period over which the NBA has embraced the tenets of the relationship marketing paradigm. A network of long-term relationships with more than 150 companies including industry giants such as Coca Cola, McDonald's and Nike, has resulted in a 30fold revenue increase (i.e. $107 million in 1987 to over $3 billion in 1997) over the last ten years (Rifkin, 1997). In order to identify the environmental and organizational dimensions that affect the adoption of relationship marketing as a dominant paradigm by sport organizations the context, content and process of chan ge must be considered. The contextualist approach posited by (Pettigrew, 1987) advocated an examination of such factors when seeking to understand organizational change. Therefore, the purpose of this paper is to explore the context, content and process of change in one sport organization that has adopted relationship marketing as a dominant perspective. Given the apparent shifts in the marketing strategies it has employed since 1980, the professional sport league selected to investigate this phenomenon was the NBA. This organization was selected given the complete transformation of [this] once floundering league into the most powerful global sports brand in the world" (Hill and Rifkin, 1999, p.123).
In the first section of the paper we provide an overview of the relationship marketing paradigm and highlight the differences between this perspective and traditional marketing approaches. Next, the conceptual framework posited by Pettigrew (1987) for understanding organizational transformations such as the shift from traditional marketing to relationship marketing is presented. The research method employed in this investigation is then discussed. This is followed by an overview of the factors that facilitated changes in the NBA's marketing strategies over the last two decades. Specifically, the context, content and process of change that transpired in the NBA are discussed. A summary of the contributions of this research concludes the paper.
Overview: Relationship Marketing
Relationship marketing has emerged as an important discussion point among academics and practitioners interested in the field of marketing. Initial interest in this area was stimulated by Gronroos' (1994) seminal article, "From Marketing Mix to Relationship Marketing: Towards a Paradigm Shift in Marketing". This article highlighted a transformation In marketing that was underpinned by changing events, standards and expectations in this field. Furthermore, the recognition of the importance of customer retention underpinned the emergence of relationship marketing practices among organizations (Groonroos, 1994). The prominence of new forms of business organizations on the economic landscape, such as strategic alliances, partnerships and networks, which necessitate new ways to manage market transactions among economic actors has also been cited as a factor contributing to the appearance of new marketing practices (Webster, 1992).
Groonroos differentiated between the traditional marketing mix of short-term transaction type exchanges and the relationship marketing approach which focuses on building long term relationships with both organizational partners and consumers. He outlined several distinctions including: (i) the time perspective; (ii) the dominant marketing function; (iii) the dominant quality dimension (output or relationship); (iv) the measurement of customer satisfaction; and, (v) the customer information systems (surveys vs. real time feedback), This distinction between the traditional marketing mix and relationship marketing is significant in that the latter acknowledges not only the context of changes in the marketing environment, but also the greater organizational environment. Relationship marketing can be considered from several different perspectives (Cravens, 1995). It can be viewed as a means to enhance business to business relationships, to establish and build customer relationships, or to develop channel of distri bution relationships. The focus of this paper will be primarily on business to business (or strategic partnering) relationship marketing practices.
Academic writers studying sport marketing have sought to enhance our understanding of relationship marketing by exploring its emergence within the sport context, and the success of new relationship-building practices employed by sport organizations. Table 1 highlights the differences between the traditional and relationship marketing approaches using sport sponsorship as an example.
Shani (1997) suggested that the traditional marketing paradigm that centres on the four Ps has become less effective for sport organizations embedded in the new market structure characterized by large homogeneous global segments, and a plethora of products with little differentiation between them. As a result, sport organizations should embrace relationship marketing as a means to compete in the 1990s and beyond. This shift from traditional to relationship marketing is facilitated, according to McDonald and Milne (1997), by the availability of information technology that has enabled sport marketing executives to use databases to store information regarding consumers and assess their value to the organization. These writers have highlighted the need for sport organizations to embrace relationship marketing as a means to compete within the professional sport industry and suggested frameworks to assist managers as they attempt to do this. Yet there exists a fundamental concern with their contributions. They have overlooked the inner and outer context that enables organizations to successfully embrace this new marketing paradigm. Ignoring the impact of the inner and outer context of sport organizations seeking to adopt a relationship marketing approach goes against mainstream change and management literature (Hinings and Greenwood, 1988; Pfeffer and Salancik, 1978; Tushman, Newman and Romanelli, 1986). A paradigm shift, such as the one hypothesized by Gronroos (1994) represents a quantum change in the ideas and beliefs, structures and systems of sport organizations. Given this, to more fully understand the adoption of relationship marketing practices, a more holistic framework that facilitates an exploration of the environment of sport organizations together with the nature and process of the change is needed and, accordingly, it is to this framework that we now turn our attention.
Our starting point for the analysis of change in sport organizations adopting a relationship marketing paradigm is Pettigrew's (1987) notion that the content of organizational change entails managing its context and process. Importantly, for us, it is the emphasis of the contextualist approach on shifts in the beliefs of actors that give it the explanatory power to enhance our understanding of the nature of the change that unfolds as a firm embraces the relationship marketing paradigm. According to Normann (1977, p.161) "the only way to bring about lasting change and to foster an ability to deal with new situations is by influencing the conditions that determine the interpretations of situations and the regulation of ideas". Given that relationship marketing is viewed as "a major shift in the perception of the fundamentals of marketing ... so dramatic that it, no doubt, can be described as a paradigm shift" (Gronroos, 1994, p.10), a perspective that facilitates an investigation of the evolving beliefs of acto rs is paramount. Furthermore, the contextualist approach encompasses the environment of the organization, its structure, politics, and the processes of this change.
The contextualist approach emphasizes the importance of investigating the phenomenon of change at vertical and horizontal levels of analysis and the interconnections between these levels over time. Pettigrew (1987) suggested that the vertical level represents the interdependencies between higher and lower levels of analysis such as the firm and its environment, while the horizontal level refers to the sequential relationships among past, current and future events. The interconnected nature of this approach facilitates an exploration of the dynamic relationship between the context and structures that shape and constrain organizational actions as well as the abilities of individuals and groups to mobilize their context and structure to achieve desired outcomes (Pettigrew, 1987). Accordingly, this investigation of the adoption of the relationship marketing paradigm by the NBA will consider the outer and inner context of change as well as the content of this transformation and the process in which it unfolded ove r time. A brief overview of the broad analytical categories of the contextualist approach are presented below.
The outer context of change refers to elements within and beyond the boundaries of the organization, for example the social, economic, technological, political and competitive environments which must be considered in any transformation (Pettigrew, 1987). Organizational environments have long been viewed as fundamental to understanding firm structures and actions (Burns and Stalker, 1961: Duncan, 1972; Lawrence and Lorsch, 1967). Fundamental to organizational survival is the ability to acquire and maintain access to valued resources (Pfeffer and Salancik, 1978). As a result, a firm establishes dependencies upon organizations in its environment as transactions are initiated and managed over a period of time. It is the emphasis on a firm's relationships with bargaining partners in its environment that underpins the relationship marketing paradigm. According to Gronroos (1994) a focus of the relationship marketing paradigm is the long-lasting linkages between service providers and their customers that develop ove r time. Furthermore, given the importance of these relationships to the strategic goals of the organization, their management cannot be separated from the overall strategic management of the firm (Gronroos, 1994). Thus, the environment in which sport organizations are embedded represents a crucial dimension when contemplating organizational change such as the adoption of the relationship marketing paradigm. Notwithstanding the importance of the environment in which the sport organization is embedded, the inner context of the change is also a fundamental element of organizational transformations (Pettigrew, 1987).
Inner context concerns the structure, corporate culture and political context of the firm through which ideas for change proceed (Pettigrew, 1987). The contextualist approach views the cultural and political dimensions of organizations as sources of both stability and change and, as such, represents a central element of this perspective. An organization's culture and the dominating beliefs and ideologies of the firm are viewed as a source of coherence and consistency in organizational life. Politics is seen as the management of meaning where seeking legitimacy for one's ideas and actions is a contest between individuals and groups struggling to assert particular ideas and rationalities (Pettigrew, 1987). Thus, it is the notion of legitimacy that links both continuity and change in studies of organizational transformations.
The content of change refers to the areas of firm-level transformation under examination. This element of change may, according to Pettigrew (1987), involve shifts in the particular system of knowledge employed by the organization, the human and material resources used, the products, markets or geographical positioning of the firm, or its dominant ideas and beliefs. In the case of sport organizations seeking to adopt the relationship marketing paradigm, we suggest that a multi-faceted transformation of various value, cognitive and structural elements of the firm is necessary. The ideas and beliefs of organizational members (Hellgren and Melin, 1992), and the values and structures of a firm have been highlighted as important elements of organizational change (Hinings and Greenwood, 1988; Kilulis, Slack and Hinings, 1995). As such, a transformation from the traditional marketing perspective to relationship marketing involves a quantum change in the ideas and beliefs, structures and systems of an organization. A change of this magnitude is, according to Prahalad and Bettis (1986), a shift in the way top managers view their world and their basis for action. However, the content of change is ultimately a product of the legitimization process that was shaped by the political and cultural contest among organizational members (Pettigrew, 1987). Thus the transformation from the traditional marketing approach to the relationship marketing model may be the result of a challenge to the dominant ideology, culture, and system of meaning in the firm (Pettigrew, 1987).
The process of change is the third and final element of the contextualist approach that warrants consideration. This refers to the actions, reactions and interactions of the various interested actors within the organization as they endeavor to transform the organization from its present to its future state (Pettigrew, 1987). Organizations are highly politicized entities that consist of power coalitions of actors seeking to enhance or maintain their own positions of influence. Shifts in a firm's dominating beliefs, culture and strategy, such as a shift from the traditional to the relationship marketing paradigm, may upset the balance among organizational actors at different levels of the firm. Investigations of change at the organizational level of analysis need to consider the actions of various actors within the firm, together with the reactions of other individuals or coalitions and the interactions of various parties throughout the change process.
Therefore, in order to enhance our understanding of the adoption of the relationship marketing paradigm by sport organizations, a holistic approach, one that encompasses the context, content and processes of change as it unfolds over time, is warranted. Such an approach requires an appropriate method; details of the approach used in this study follow.
As part of a larger study, primary and secondary data were gathered for this analysis of the shifts in the dominant marketing paradigm employed by the NBA between 1980 and 1997. The NBA was selected for this study given that our preliminary investigations in this area demonstrated that the enacted strategies of this sport organization shifted during this time period as did the leaders' beliefs regarding the importance of relationship marketing for their organization. In order to gain insight into the shifts in the marketing perspective and enacted strategies, the NBA was contacted directly and a request was made for documents related to the historical and current marketing approaches used by this firm over a 17-year period. A search of business and sport publications was also completed to retrieve articles from the popular press related to the NBA's marketing initiatives. Finally, a review of Sports Illustrated and Financial World magazines was completed to gather articles pertaining to the environment and ma rketing strategies of the NBA. In total, over 80 documents, primarily articles from newspaper and trade magazines related to the outer and inner context of this organization and its marketing initiatives, were gathered from these sources. These articles were content analyzed and marketing-related information (for example, quotes from interviews, examples of traditional and relationship marketing initiatives and practices) from these sources was then entered into a database and placed in chronological order.
Additionally, interviews were conducted with two senior marketing executives from the head office of the NBA, one of whom was employed by the NBA for nearly all of the duration of the change period under study, and one senior executive of an NBA franchise whose involvement with the team extended over 12 years. Information was gathered by asking open-ended questions to uncover information about the context, content and process of change as the NBA's marketing strategies evolved over the 17year period of this investigation. Specifically, the questions asked in the interviews were first about changes that had occurred in the NBA over the period under study. Specifically we asked about how such issues as changes in the regulatory environment had influenced the organization, how the league and its various franchises were making use of new technological developments, and what type of strategic initiatives had emerged as a result of these changes. We also asked questions about the way in which new actors such as the commissioner had influenced the league, what new structural arrangements had been put into place over the years (as with many other areas of questioning prompts were given to ask about particular developments that we knew, from our documentary analysis, had taken place) and how relationship-building practices had been put into place to achieve the long-term goals of this organization. We also asked questions which related to how change was managed, what people felt about the implementation of new marketing initiatives, and how the league's relationships with buyers and suppliers had changed over the years, and indeed how buyers and suppliers had changed.
The taped interviews, which lasted from 60 to 75 minutes, were then transcribed and coded using the same coding framework as the documentary sources. The actual method of coding the data and identifying changes in the league's dominant marketing perspective and strategies was based upon the approach taken by Marshall and Rossman (1999). They suggested that analytic procedures should encompass the generation of categories, themes, and patterns, coding the data, testing the emergent understandings and searching for alternative explanations. Specifically, in this study, general themes were initially identified by the researchers as a starting point. These themes broadly encompassed the context, content and processes of change outlined in Pettigrew's framework. Context of change themes included statements / documentation pertaining to the external social, economic, political and competitive environment, the inner organizational structure, corporate culture and political context of the firm. Themes for the content of change integrated factors such as the systems of knowledge employed by the organization, the human and material resources used, the products, markets or geographical positioning of the firm and the dominant ideas and beliefs guiding its operations. Finally themes for the process of change were developed which included the actions, reactions and interactions of the actors within the organization. Once these themes were established, documents were then rereviewed and the researchers were able to manually code sub-themes related to the relationship marketing practices of the NBA in both the primary and secondary sources of data. This process of analysis ensured that each interview and document was analyzed in a comprehensive, systematic, and consistent manner. In analyzing the data gathered from the primary and secondary sources, the leaders' beliefs about marketing consistent with each of the established marketing perspectives were extracted from the text, as was the information about the enacted marketing strategies of this professional sport league.
Results and Discussion
Firm transformations have been conceptualized in relation to linkages between the content of change within the organization and its context and process (Pettigrew, 1987). The analysis of strategic change entails understanding the content of the shift as well as the circumstances within the firm's inner and outer context (environment) that facilitated the transformation. Furthermore, insight into the process of change (i.e. the actions, reactions and interactions of interested parties that facilitated the firm's movement from a past to a future state) must be gleaned. In this study, evidence was found that indicated that the turbulent environment in which the NBA was embedded coupled with leadership and cultural issues internal to the organization facilitated shifts in the dominant marketing perspective of this organization. Yet how did these contextual factors affect the firm's marketing strategies? What factors affected the content of this change? How did this change process unfold as the firm evolved over t ime? The following is a presentation of the factors in the outer and inner context of this organization that contributed to the adoption of the relationship marketing approach. Additionally, an overview of the content and process of this transformation is provided. It should be noted that numerous changes in the context, content and process of this firm transpired during the time period under investigation. However, given that the purpose of this study is to explore these factors as they relate to the adoption of the relationship marketing paradigm, only those shifts relevant to this change will be discussed.
When considering the outer context of change it is generally the accepted view that an organization's environment is crucial to understanding a firm's actions and structures (Burns and Stalker, 1961; Pfeffer and Salancik, 1978; Porter, 1980). In the early 1980s the NBA was embedded within a turbulent context characterized by a changing regulatory environment, by a shifting global economy, and by technological advancements. For example, the deregulation of cable broadcasting in the mid-1970s facilitated the emergence of a plethora of cable broadcasting companies into the North American marketplace (Klatell and Marcus, 1988). The number of cable systems in the United States expanded from 28 in 1980 to 162 by 1997 (NCTA, 1997). This event influenced the outer context of the league and its franchises by creating opportunities for them to forge stronger relationships with broadcasting buyers. This regulative change also affected the nature of the NBA's dependence upon the traditional buyers of its products. The le ague's reliance on revenue generated at the gate and from the three network broadcasters, ABC, NBC and CBS, diminished as other sources of revenue from cable broadcasters became available to the NBA and its member franchises. According to Johnson (1981a, p.35), in the early 1980s sport organizations moved "into an era when television rather than the box office generated the largest source of revenue for most major sports". Gruneau and Whitson (1993) concur, suggesting that North American professional sport became dependent upon revenues from sources beyond the live gate. These authors attributed this change to the escalating
pressures to increase money spent on team and league promotions, to sustain multi-million-dollar salaries, and to pay for expensive playing facilities. Consequently, the aforementioned pressures have contributed to an aggressive pursuit of subsidiary revenues by professional sport leagues.
The globalization of world markets also contributed to changes in the NBA's environment as new buyers became encompassed within the league's expanded network of bargaining partners. Gruneau and Whitson (1993) suggested that globalization was facilitated by mass communications and pressures to liberalize international trade which, in turn, created new opportunities for professional sport leagues to pursue subsidiary revenues and audiences around the world. The result of this changing global marketplace was that North American professional sports began to position themselves in an increasingly global sports entertainment domain (Gruneau and Whitson, 1993). To achieve this, these firms began to establish new and strengthen current relations with global partners (Cousens and Slack, 1997; Grimm and Lefton, 1993). Globalization also facilitated the emergence of new types of relationships among entertainment companies as firms jockeyed for lucrative competitive positions amid the fast-changing entertainment industry . According to Grimm and Lefton (1993), firms began to explore new types of partnerships, strategic alliances and joint venture relationships to leverage their investments and capitalize on emerging opportunities. Within professional sport, stronger relationships were viewed as a means to overcoming risks and reducing barriers presented by the evolving global marketplace. David Stern, the NBA's commissioner, cited fading political barriers worldwide, increasing TV channel capacity, and more direct media opportunities as fundamental reasons the NBA was able to position basketball as a global marketing brand and strengthen relationships with global corporations (Schlossberg, 1992). One senior NBA executive interviewed for this study highlighted contextual factors as a catalyst for change within this league stating:
"I think that all the technology improvements and all of the things going on outside the NBA were leading to something that said sports are going to become more valuable to advertisers and therefore more valuable to the network, and more money to the leagues."
These shifts in the outer context of the NBA created incongruities between this organization and its environment, Miller and Friesen (1980) suggested that in situations such as this, when an event or decision causes an imbalance, the firm is required to initiate changes in their organization and\or their strategies and, as a result, a transition within the organization occurs. In the case of the NBA in the early 1980s, a lack of congruence was experienced between the outer context of this firm and the marketing strategies it employed to sell its products to broadcasters and multinational corporations. Changes in the structure of the industry in which the NBA was embedded therefore served as a trigger for the adoption of the relationship marketing paradigm. Globalization and the deregulation of cable broadcasting also had a considerable impact upon the structure of the professional sport industry as these factors facilitated the emergence of buyers into the league's marketplace. A change such as this, where a firm's managers are compelled to cope with increasing strategic variety, necessitates a revision of the ideas and beliefs employed to manage the business (Prahalad and Bettis, 1986). One NBA executive discussed how, in order to capitalize on the environmental shifts related to television and develop competitive strategies to compete within this environment, a relationship approach was employed when dealing with the league's network broadcasters when he stated:
"All of this only works if it works for all of our business partners over the long term. We are very much focused on the long term. The best example is what we do with our network partners. We were the first -- now it is very standard -- but we were the first to sell media time hand-in-hand with our network partners. So if we sold a sponsorship to IBM it would almost be to the exclusion of rights fees at this point. I mean a rights fee, a couple hundred thousand dollars or whatever, is not nearly as relevant as them stepping up and buying a significant media package on Turner [Broadcasting] and on NBC. Because we are very aware that that money goes through them but obviously comes back to us and our numbers [revenues] continue to go up if they [the networks] are successful."
Managers need to both identify the evolving structural characteristics and adapt or revise the firm's logic to compete within its new competitive circumstances (Prahalad and Bettis, 1986). Thus, the shift from a traditional marketing perspective to relationship marketing within the NBA involved adapting the firm's strategies in the face of an increasingly diverse set of global corporate buyers and broadcasters.
Technological changes, particularly in the areas of satellite television, also affected the outer context of the NBA. Innovations and advancements in this area facilitated the emergence of broadcasting stations, such as Ted Turner's TBS SuperStation, able to present over 600 sporting events each year (Johnson, 1981a). The enormous marketplace potential, and the financial opportunities generated through television for sport organizations, grew at an overwhelming rate (Johnson, 1981a). These technological advances contributed to the emergence of stronger linkages between sport and broadcasting firms. Strategies involving partnerships, strategic alliances and joint ventures emerged as the leaders of these firms recognized proximal relationships as a means to achieve a competitive advantage (Cousens & Slack, 1997). Enduring ties such as these affected the marketing perspective of the NBA, as strong ties have the potential to change the dominant ideas and beliefs of organizational actors. Kanter (1989) suggested t hat following the initiation of partnerships, top managers increase their sensitivity to the needs of their partners and to the escalating informational cues to which the executives must contend. Furthermore, tight linkages among firms are associated with the homogeneity of beliefs of actors embedded in the same competitive circumstances. In the case of the NBA, it appears that the shifts in the environment of this firm affected the ideas and beliefs of organizational leaders as these actors were compelled to respond to new demands from a broader and more diverse network of domestic entertainment and broadcasting firms.
The results of this investigation also uncovered upheavals in the NBA's inner context, that is, its organizational structure, culture and politics. In the early 1980s, the league was challenged by poor financial performance of the majority of its franchises (Swift, 1991), by a crisis of leadership (Newman, 1982), and by political upheaval within the organization resulting from a culture of animosity among the franchise owners and club executives (Swift, 1991). The deteriorating financial performance of the league was evidenced in the 1981 season when the NBA's 23 teams suffered losses totaling $15 to $20 million with only seven of the franchises showing a profit (Newman, 1982). As a result, the league's commissioner, Larry O'Brien, began to lose the support of franchise owners (Johnson, 1981b). Furthermore, the data provided evidence of political turmoil within the league's Board of Governors. This disorder was underpinned by a culture of competitiveness between the business operations divisions of the league 's franchises, that also contributed to the NBA's poor financial performance (Swift, 1991). According to Paula Hanson of the league's Team Services department: "I was shocked, when I went to my first league meeting, at how competitive and uncommunicative the teams were. There was a real us against them attitude" (Swift, 1991, p.81).
Under the leadership of commissioner David Stern, who succeeded Larry O'Brien in 1984 (Bittman, 1985), the league experienced shifts in its culture, structure and politics that facilitated and reflected the adoption of the relationship marketing paradigm. The NBA's culture shifted from one shaped by the "us-against-them attitude" among the team proprietors to one of co-operation and collaboration between club owners and management alike (Swift, 1991, p.81). Rather than animosity between the franchises, an atmosphere that facilitated idea sharing and unanimity among member teams permeated the league (Swift, 1991). According to one senior league executive, the league's Team Services department was instrumental in creating a collaborative culture:
"To really foster communication not only between the teams and the league but also among the teams. The teams also did not talk to each other. They did not share information. They thought they were competing with each other instead of working together. So one of the main things we do is really facilitate that communication but also it is our job to help the teams do as much as possible to enhance their revenue sources. And that is sharing information about what is working for Boston [Celtics] if they come up with something new or there is a new sponsor - sharing that [information] with all the clubs to ensure it works for everybody."
The new culture of the organization, one underpinned by the notion of partnerships, appeared to have pervaded other aspects of the NBA's business operations with relationship-building emerging as a crucial element of the firm's business strategy. The continuity created by the strong relationships with team owners and sponsors gave the league tremendous leverage for its brand as the trust underpinning these partnerships offered flexibility for the league's marketing initiatives (Hill and Rifkin, 1999).
This shift in the culture of the organization was also manifest in the new forms of interorganizational relationships such as partnerships, strategic alliances, and joint ventures that the league initiated with their key buyers (Grimm and Lefton, 1993). In its relationships with corporate buyers and broadcasting companies, the NBA began to emphasize strategic issues such as goal compatibility, length of commitments, and quality interfaces with partners when launching and managing corporate relationships (Kapp, 1991). To strengthen relationships with corporate buyers and build the NBA brand, the league embarked on a marketing strategy that, according to commissioner Stern, enabled the league to "spend quality time with the customer . . . find out what they want to accomplish in the marketplace . . . and work with any company on things such as business-to-business entertaining, trade promotions or employee incentives" (Kapp, 1991, p.30). Practices such as these that involve contact with customers, that facilita te various types of dialogue and real-time feedback from customers, and that emphasize long-term relationship building as a goal represent fundamental aspects of relationship marketing (Gronroos, 1994).
This approach to dealing with customers represented a shift in marketing strategy of the NBA, one that emerged over time as the league sought to enhance its legitimacy and strengthen relationships with corporate partners, licensees and broadcasting companies. For example, one league executive described how in the early 1980s the NBA struggled to achieve legitimacy with partners:
"We were the weak link in the sports league departments. There is no question about it. Football [NFL] and baseball [MLB] were ranked one and two depending upon whom you talk to. So if somebody partnered with us, and they partnered with the other leagues, we didn't get nearly the respect that we felt we needed or deserved."
To address this situation, the league focused attention on its relationships with established buyers. Stated one executive: "If the other leagues had ten licensees; we had one. So to that one licensee we were going to be important. Instead of spreading our business over ten licensees, we wanted to be important to one." Over time, the licensees' relationship with the NBA became disproportionately essential to the partner because of the quality and the strategic emphasis held paramount by this league. The executive said that by the mid 80s, the staff in the NBA were "aware that you have to stand for quality over the long term. And in order to stand for quality you have to have control. Because everybody has a short-term perspective."
Having worked to establish quality relationships with existing and new partners, the NBA then sought to leverage these relationships to promote the NBA as a brand. This league's relationships with the shoe companies in the 1980s exemplified this strategy. One NBA senior executive stated:
"The shoe companies, starting with Nike in the mid-'80s, have put our players front and centre in order to sell their products. We couldn't have put the media - and that third party credibility - behind our athletes and our game in this way. So all of a sudden Grant Hill is a recognized college star who comes into the NBA and signs a deal with Fila and he is going to get $X million worth of promotion behind him beyond what we do. All of a sudden on MTV there is Grant Hill in Fila commercials that are less about selling the shoes than selling their relationship with our athletes. So literally they are paying us and paying him in order to promote our product."
A strategy such as this, where the NBA brand, its athletes and its game are promoted by third-parties, was crucial to this league in the 1980s, according to Hill and Rifkin (1999, p.124): "Because he inherited few of the resources now available, Stern could not rely on heavy advertising or traditional marketing methods." Thus, implementing this strategy involved building relationships with selected sponsors and broadcasters. Through these symbiotic relationships with firms such as Nike, Reebok, Coca-Cola and McDonald's, the NBA "has reaped hundreds of millions of dollars worth of marketing and goodwill without spending a nickel of its own money" (Hill and Rifkin, 1999, p.127).
The structure of the organization also shifted to accommodate the partnership-driven marketing initiatives and philosophy of the league. For example, the NBA hired a complement of marketing executives who were energetic, professional, and committed to working in specialized areas of the organization's operations (Bittman, 1985; Swift, 1991). The league also restructured its operations to encompass divisions in the areas of Team Services, Entertainment and Properties. Furthermore, the league and franchises approach to sponsorship evolved as they began to bundle media properties, such as radio and television ads, together with sport properties such as signage in the arena, names on tickets, and ads in game-day programs (Bittman, 1985). This shift provided opportunities for the league to design products to meet the specific needs of their corporate partners. Working with corporate partners to design sponsorship packages not only added value to the products offered to the NBA, it enhanced the interaction process between organizations, which is a primary element of relationship marketing (Gronroos, 1994).
Change such as these, where major elements of the firm's organizational design were transformed, represents a revolutionary shift within the firm (Tushman, Newman and Romanelli, 1986; Hinings and Greenwood, 1988). Yet, it appears that even though shifts in key areas of the firm transpired, coherence in the firm's design was maintained given that the complementary and simultaneous changes in its culture and structure were each underpinned by the notion of partnerships. For example, the culture of the firm evolved from one characterized by conflict and competition to one favoring collaborative and communicative relationships (Swift, 1991). The structure of the league evolved to reflect an increased emphasis on shared decision-making and the specialization of marketing functions within the Properties division of the firm (Bittman, 1985). The political environment also shifted as the commissioner's influence within the league and his vision of collaboration for the NBA and its member franchises permeated the orga nization (Swift, 1991). Such coherence between an organization's structure, culture and strategies facilitates successful revolutionary change (Hinings and Greenwood, 1988).
Furthermore, a change in the structures and systems of organizations, such as the ones initiated by the NBA, has been associated with concomitant shifts in the ideas and beliefs of actors (Hinings and Greenwood, 1998; Prahalad and Bettis, 1986; Kikulis, Slack and Hinings, 1995). Structures and systems in organizations are not neutral instruments but, according to Hinings and Greenwood (1988), embody the intentions, aspirations and purposes of the ideas and beliefs of organizational actors. The relationship between structural designs and members' ideas, values and beliefs has been identified as the basis for understanding qualitative differences between structural forms (Hinings and Greenwood, 1988). It is not surprising, then, that a shift in the dominant marketing paradigm of the NBA was accompanied by a simultaneous change in the structure of this organization.
The content of change under examination was the shift in the dominant marketing paradigm guiding decision-making pertaining to marketing in the NBA. The results of this study indicate that the executives' ideas and beliefs pertaining to marketing changed dramatically under the leadership of commissioner David Stern. For example, the beliefs concerning the domain of marketing within the firm, the organization of marketing functions, as well as the criteria employed to evaluate marketing each shifted as the firm began to embrace the relationship marketing paradigm. The domain of marketing shifted from tasks relegated to a staff of three employees to a company-wide perspective that reached broad areas of the league. During an interview shortly after he became commissioner, Stern stated that: "our consistent theme, is that after putting your best team on the court, marketing has to take a priority over everything else" (Bittman, 1985, p.26). According to one senior vice president of the NBA, this philosophy trans cended every element of the league and, as such, NBA Properties was reorganized to include divisions in retail licensing, marketing and entertainment. A complement of 30 employees was hired including a new "marketing expert" to lead the league's marketing arm (Bittman, 1985). According to Swift (1991), Stern encouraged the NBA's employees to use their initiative, to challenge each other, and to actively participate as the business of sport redefined itself from one focused on arenas to one focused on the business of television. Furthermore, Stern encouraged the symbiosis between his league and its commercial sponsors (Halberstam, 1996) and positioned the relationship marketing approach as an essential component of the NBA's strategy to promote its brand, its game and its athletes.
The unfolding process of change within organizations represents a crucial element in the successful transformation of the firm (Pettigrew, 1987). Given this, investigations of the adoption of the relationship marketing paradigm by sport organizations necessitate a holistic approach that explores not only the context in which the change is taking place and the actual content of the change, but the actual dynamics of how the change is initiated within the organization and how it unfolds. The role of powerful actors, such as transformational leaders or change agents, represents a fundamental aspect when seeking to uncover the dynamics of a firm's transformation (Pettigrew, 1987). In the NBA, the process of the change was initiated by two critical events: the succession of a new leader and the articulation of a new vision for the league.
The succession of David Stern to the position of commissioner of the NBA represented a catalyst for change within this organization. When asked about Stern's role in the process of change in the NBA, a senior NBA executive stated that: "He gave it the start that made it happen. So in a sense he did do it on his own because it comes down to the drive, the determination and the vision of saying 'We have an incredible, underutilized resource.' Under his leadership, the NBA was transformed from 'a collection of flagging franchises' into a global leader in sport marketing with over $1.2 billion in sales in 1996" (Rifkin, 1997, p.74). Interestingly, however, is the notion that Stern had no "grand plan" to turn things around. Rather, according to Hill and Rifkin (1999, p.135, 126): "he initiated a series of emerging principles focused on creating and building a brand" by "using a few key alliances with both sponsors and television networks, believing that long-term partnerships strengthen and extend the brands of al l parties".
Stern initiated a number of shifts in the NBA, many of which have been discussed elsewhere in this paper. However, it seems that it was his vision, his ability to articulate his marketing-focused view of the league and embrace a model to emulate, the Disney Company, that facilitated the process of change within this organization. When asked about the NBA's vision and business strategy, one senior vice president stated that: "in David's [Stern] mind, it was a very crystal clear goal of always being the best and doing everything we do to the maximum, and the attention to detail. So that cuts across everything we are going to do for now and in the future." Another executive discussed Stern's vision stating that it was: "to really start marketing the league and the players as 'stars' like they do in the entertainment industry ... he is just a very marketing-oriented person. I think he realized the value of doing some things and not trying to be a traditional sports league." According to Mobram, Ledford and Mobram (1989) the ability of leaders to provide a vision, to energize the organization, and to enable change to occur is fundamental to the successful transformation of a firm. Similarly, Nadler and Tushman (1990) recognized the importance of a leader's ability to provide a vision for the firm as a means to facilitate large-scale organizational change.
The selection of a model to emulate also facilitated the process of change within the NBA. Commissioner Stern chose arguably the world's most successful entertainment company, the Walt Disney Company, when seeking a marketing-oriented view to emulate (Swift, 1991). For example, he began to view the NBA's arenas as "theme parks" and its athletes as "characters" (Swift, 1991, p.84). Encompassed within this view of the NBA as an entertainment company rather than a basketball league was a range of strategies that enabled the league to diversity into new product areas and expand its target audience to segments such as pre-teenagers (Swift, 1991). According to Huff (1982) organizations look to others to make sense of their environment and their opportunities to compete within it. It appears that amid the shifting global climate, Stern looked beyond sport to the entertainment industry when seeking solutions to the strategic problems of the NBA. Thus, Stern borrowed a constructed view of the world from a source beyon d the boundaries of the network in which the NBA was embedded.
The reactions of the owners, players and management personnel of the league to Stern's vision and leadership appear to have been uniformly supportive. Stern's "artistry" (Halberstam, 1996, p.34) in negotiations with both players and owners have contributed to his successful implementation of novel agreements with both of these key partners. For example, the NBA negotiated the first revenue-sharing salary cap agreement in professional sports in 1983, one that underpinned the stability of the league for over a decade (Swift, 1991).
The franchise owners speak highly of Stern given the successes they have experienced under his leadership. Aside from the enhanced financial performance experienced by the teams, the owner of the Denver Nuggets, Robert Wussler, stated that Stern "makes time for people, whether it's over a corned beef sandwich in his office or a phone call late at night. He is warm, intelligent, street-smart, and has a terrific relationship with every member of the league. A best-friend relationship." (Swift, 1991, p.79).
Perhaps it was Stern's role as a charismatic leader, one who, according to Yukl (1989), is "able to influence major change in the attitudes and assumptions of organization members and build commitment for the organization's mission" that enabled him to transform the dominant marketing ideas of this organization. It is this shift in attitudes toward marketing, and assumptions regarding the importance of building relationships among actors within the firm and those beyond its boundaries, that Stern initiated and piloted over almost two decades.
Over the last 17 years, the NBA has experienced a transformation from a struggling collection of sport franchises to a powerful global brand with a media presence in over 196 countries (Hill and Rifkin, 1999). This change is underpinned by the strategic relationships between the NBA and its owners, sponsors, licensees, broadcasters and fans. In the early 1980s, the league's relationships with its teams were fragmented, few sponsors purchased league products, and the league's championship series was shown only on tape-delay (Hill and Rifkin, 1999). Since this time the NBA has used long-term relationships to build and manage its brand, to expand its global reach, and to promote its athletes as stars to millions of viewers around the world. The league's relationships were treated as strategic assets and infused with the trust and loyalty one would expect from valued long-term partners. While these relationships may execute "buying and selling" functions according to the traditional marketing perspective, they ar e about the people, the organizations and the social processes that bind actors together in ongoing relationships (Webster, 1992). Thus, the transformation was not restricted to the marketing department per se, but encompassed the entire firm as ideas and beliefs of organizational members evolved to encompass a new vision of the firm and its value in the international marketplace.
Applications for Sport Managers
Specific earnings from this case of interest to sport managers are related to organizational change, employee competencies, organizational culture, environmental considerations, and leveraging existing partnerships. A shift to relationship marketing extends beyond maintaining a database of clients and loyalty marketing initiatives. Rather, this paper demonstrates that inter-organizational partnering necessitates organizational changes that extend beyond software management to touch aspects of the firm's culture, strategy and structure. For example, sport managers need to foster a culture of collaboration and co-operation to facilitate effective partnership management. The next area of concern for sport managers to consider when adopting a relationship marketing approach is to ensure that staff with relationship management competencies are given the latitude to thrive in the organization. These competencies include the ability to develop and manage interpersonal relationships, strong communication skills, deci sion making abilities, and the wherewithal to engage in joint planning and development with partners. Sport managers also need to consider the environment in which they are embedded. Specifically, managers need to evaluate their potential partners' readiness, capacity and strategic compatibility when contemplating new relationships, while simultaneously leveraging existing relationships with long-term partners. Furthermore, managers need to be aware of strategic issues, such as goal compatibility, length of commitments with partners, and the quality and number of interfaces with partners, when considering initiating new relationships. Table 2 presents details of aspects of the context, content, and process of change that sport managers need to consider in any shift to the relationship marketing paradigm.
In conclusion, exploring the context, content and process of change surrounding the NBA's adoption of the relationship marketing paradigm provides insight into the magnitude of this organizational transformation. The results of this study provide support for the notion that the contextualist approach to investigating change identified by Pettigrew (1987) represents a meaningful way to understand a transformation such as the one experienced by the NBA. The importance of providing both academics and practicing managers with an explanatory tool to comprehend the adoption of the relationship marketing paradigm cannot be understated given the demands of today's competitive marketplace and the pressures placed upon sport organizations to generate revenue and market their athletes and their sports through relationships with valued partners.
Building and managing relationships with key buyers and suppliers represents, for a sport organization such as the NBA, a strategic advantage that has fueled unprecedented success within the field of sport. Marketing the products and services of this league by interacting with customers, focusing on the quality of customer interfaces, and monitoring the effectiveness of relationships enabled the NBA to position its brand as the preeminent global marketing vehicle of the 1990s. While practicing the tenets of relationship marketing facilitated the firm's success in penetrating new markets and exploiting its brand, the ideas and beliefs of organizational members regarding building relationships that underpinned these practices were fundamental to the transformation of this firm.
Table 1 A Comparison of Paradigms in Sport Marketing Traditional Marketing Relationship Marketing Orientation Orientation "Sport Sponsorships" "Sport Partnerships" Marketing is a function Marketing is an of the marketing department. organizational function. Teams sell individual sport Teams bundle sport properties properties to sponsors. into packages. Effectiveness is measured Effectiveness is measured by by market share. the quality of relationship with buyers. Relationships are based on Relationships are enacted exchange with no expectation of through partnerships, strategic continuation. alliances, joint ventures. Relationships have a short-term Relationships have a long-term focus. focus. Limited number of ties between Several ties link the firms. firms. Minimal investment in the A substantial investment relationship. Not linked to the (financial, human, equipment) strategic objectives of the is made in the organizations. relationship. No leveraging of the relationship. The team sells a variety of The team sells the benefits of sponsorship properties. corporate involvement with the team, the sport's visibility and the sport organization's role in its broader network of firms. A dollar value is attributed Value attributed to the level of to each sponsorship property. partnership and leveraged opportunities available to the sport organization. Marketing is based around Marketing is based upon a holistic promoting the sporting event. approach to promoting multi-faceted extensions of the sport organization. Table 2 Summary of Applications for Sport Managers Element of Change Applications for Sport Managers Context of Change * Continually review the structural characteristics of your industry and consider partnerships as a means to compete within a changing context. * Evaluate partners' readiness, capacity and strategic compatibility when contemplating new relationships. * Also consider the length of commitment with partners, and the quality and number of interfaces with them. * Leverage existing relationships with partners rather than always considering new relationships. Content of Change * Foster a culture of collaboration and cooperation to facilitate effective partnership management. * Employ staff with the ability to develop and manage interpersonal relationships, strong communication skills, and decision making abilities. * Ensure staff with relationship management competencies are given the latitude to thrive in the organization. * Adopt practices that involve continued contact with customers, those that facilitate real-time feedback, and emphasize long-term relationships. * Leverage relationships by using partners as vehicles to promote your firm's products and/or services. * Concomitant shifts in the structure, culture and strategy of the organization facilitate revolutionary change to the relationship marketing perspective. Process of Change * Establish a partnerships-driven vision and articulate this vision to energize employees at every level of the organization. * Select and appropriate model for change to emulate (e.g. Disney).
Final draft received: 10th October 2000
[C]Winthrop Publications 2000
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Laura Cousens is a graduate of the University of Waterloo, the University of Ottawa and the University of Alberta. She is currently consulting for public and private sport organizations in Vancouver, British Columbia. Her previous academic positions include lectureships at the University of British Columbia in Canada and Central Queensland University in Australia.
Laura's main research area is inter-organizational partnering and industrial change with a particular emphasis on professional sport organizations. She has published several academic papers on various aspects of professional sport including sponsorship, inter-organizational networks, and strategic change.
Dr Cousens regularly presents papers at both academic and industry conferences in Canada and abroad.
Kathy Babiak is currently completing her Ph.D. in sport management at the University of British Columbia in Canada. She holds an undergraduate degree in physical education from Queen's University, and a master of Arts - Sport Administration, from the University of Ottawa. Kathy is presently a lecturer in the Leisure and Sport Management program at UBC, and is involved as a consultant for the amateur sport system in British Columbia. Her main area of research is investigating the creation and management of interorganizational relationships in the elite amateur sport delivery system in Canada. Kathy regularly presents papers at both academic and industry conferences.
Trevor Slack is Professor and Head of the School of Physical Education, Sport & Leisure at De Montfort University. He was previously at the University of Alberta in Canada and has been a Visiting Professor at Warwick Business School. His primary research interests are in the areas of organizational strategy and change.
Professor Slack has worked as a consultant for a large number of sport organizations and has published his work in such journals as Organization Studies, Journal of Sport Management Journal of Management Studies, Leisure Studies, international Review for the Sociology of Sport, and Human Relations. Professor Slack is editor of the Journal of Sport Management.
Laura Cousens, Vancouver, British Columbia, Canada * e-mail: email@example.com
Kathy Babiak, School of Human Kinetics, University of British Columbia, 210 War Memorial Gym, 6081 University Blvd, Vancouver, BC V6T 1Z1 * Tel: +1 (604) 822-4864 * Fax: +1 (604) 822-5884 * e-mail: firstname.lastname@example.org
Trevor Slack, School of Physical Education, Sport and Leisure, De Montfort University, 37 Lansdowne Road, Bedford, UK * Tel: +44 (0) 1234 793268 * Fax: +44 (0) 1234 793440 * e-mail: email@example.com…