This paper has three objectives: (1) to construct a theoretical model that aids in evaluating marketing expertise, (2) to use that theoretical model to identify factors influencing the value of marketing expertise, and (3) to empirically test the model by observing how different market conditions influence whether companies emphasize marketing expertise. The authors accomplish these objectives as follows. First, they use decision theory to find an expression for the expected value of marketing expertise. The authors do not use decision-analysis in the normative tradition. Nor do they assume that firms actually use formal decision-analysis. Rather the authors assume that the firms are rational and that decision theory describes their actions. Given that assumption, they predict how firms should evaluate marketing. Here, marketing expertise helps a firm make better marketing decisions (at least on average). Hence, the value of marketing expertise increases as marketing decisions become more important. Second, consistent with decision theory, the authors predict that marketing decisions become more important with increases in the instability of the marketing environment (i.e., predictability), the profit impact of marketing decisions (i.e., opportunity profit), and the loss from marketing mistakes (i.e., potential loss). Third, they construct empirical measures of our theoretical constructs with data from 592 firms. Our empirical results are consistent with our predictions and reveal factors influencing the value of marketing expertise. For example, greater market instability and market presence increase the value of marketing expertise, while larger organization size, organization instability, and competition decrease its value.
