Internal marketing: a review and future research agenda

Internal marketing is a method of cultivating high-level employee perfor- mance. However, the concept is marred with confusion due to the wide range of definitions and consequent implementation challenges. We reviewed the literature on internal marketing published between 1980 and 2020, using a theory, context and method framework. We found that scholars have not paid attention to the utilization of an established frame- work for construct operationalization. We advocate for the application of self-determination theory as a framework for operationalizing internal marketing. In addition, based on the identified research gaps, we propose several ideas for future research directions

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Internal marketing: a review and future research agenda

Fatima Saman Qaisar & Nazlida Muhamad

To cite this article: Fatima Saman Qaisar & Nazlida Muhamad (2021): Internal marketing: a reviewand future research agenda, Asia Pacific Business Review, DOI: 10.1080/13602381.2021.1858590

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Internal marketing: a review and future research agenda

Fatima Saman Qaisar and Nazlida Muhamad

School of Business and Economics, University Brunei Darussalam, Gadong, Brunei Darussalam

ABSTRACT

Internal marketing is a method of cultivating high-level employee

perfor-mance However, the concept is marred with confusion due to the wide

range of definitions and consequent implementation challenges We

reviewed the literature on internal marketing published between 1980

and 2020, using a theory, context and method framework We found that

scholars have not paid attention to the utilization of an established

frame-work for construct operationalization We advocate for the application of

self-determination theory as a framework for operationalizing internal

marketing In addition, based on the identified research gaps, we propose

several ideas for future research directions.

ARTICLE HISTORY Received 1 April 2020 Accepted 25 November 2020 KEYWORDS

Internal market; internal marketing; relationship marketing; market orientation

1 Introduction

Organizations today face intense competition due to the volatile and dynamic nature of the business environment, which is driven by a technology revolution, globalization, market deregulation, the changing needs of customers and investors, changing career dynamics, and new employee expectations (Becker and Gerhart 1996; Muthuveloo, Shanmugam, and Teoh

2017) Achieving and maintaining competitive positioning and sustainability has become

a challenge for managers, forcing them to seek strategies that emphasize performance for survival Much of the literature on organizational performance and competitive advantage has adopted an external focus on customers and competitors (increasing customer base, market share, and sales and profitability) Though this external focus is essential, internal attention is equally required to meet the challenges of competition Ignoring the contributions of internal human resources to organizational outcomes cannot drive competitive advantage in the modern market Employees are responsible for the production and delivery of goods and services; therefore, organizations must incorporate both internally and externally focused marketing to ensure an effective response to their competition The term that describes this internal focus is ‘internal marketing’

The notion of internal marketing, though introduced in the late 1970s, gained prominence in the 1990s (Berry 1995; George 1990; Grönroos 1995; Gummesson 1987; Varey 1995) It is a blend

of marketing philosophy and human resource management practices, intended to enhance external marketplace performance (Paul and Sahadev 2018) It parallels an organization’s external marketing programme, which targets the external marketplace of customers and competitors (Rodrigues and Pinho 2012) Piercy and Morgan (1990, 1991) suggest that market-ing mix elements of product, price, communication, and distribution should be used to develop

CONTACT Fatima Saman Qaisar 18h8702@ubd.edu.bn

https://doi.org/10.1080/13602381.2021.1858590

appropriate internal marketing programmes, directed to segments of the internal marketplace with their varying needs and characteristics This targeted internal marketing, in turn, affects employee outcomes, leaving employees better prepared to respond to and deliver on the external marketing programmes (Ferdous, Herington, and Merrilees 2013) Ballantyne (2000,

2003) provides another perspective for adopting internal marketing principles: an inward approach to relationship marketing methods This reflects the relationship development process based on value exchanges between internal suppliers and internal customers The internal network of relationships improves the cross-functional flow of information that creates learning, thereby generating knowledge that is critical for improving external market perfor-mance Internal marketing adopts methods and principles of marketing to develop a customer- orientation among employees, which is an important condition for ensuring the success of external marketing approaches (Bell, Mengüç, and Stefani 2004; Ferdous, Herington, and Merrilees 2013; Piercy and Morgan 1991)

An organization’s dedication to satisfying its employees’ needs provides value to the firm-employee relationship (Papasolomou 2006) This is characterized by conditions of interdependency, support, and reciprocity between the organization and its employees The creation of harmonious exchanges between the two parties motivates the employees

to reciprocate with positive attitudes and behaviours These rewards support the zation’s marketing objectives and strengthen its competitive position in the external market (Ahmed, Rafiq, and Saad 2003; Lings and Greenley 2009) For instance, internal marketing practices have been found to enhance job satisfaction and performance (Huang and Rundle-Thiele 2014), positively influence employees’ happiness at work (Tang et al 2020), and ensure a more effective approach to handling customers, which,

organi-in turn, organi-induces positive word of mouth, repeat purchase behaviour, and long-term relationships with customers (Park and Tran 2018) Thus, internal marketing practices can yield significant benefits for the organization by enhancing employees’ organizational commitment (Awwad and Agti 2011; Bailey, Albassami, and Al-Meshal 2016; Narteh and Odoom 2015), customer-orientated behaviour (Nart et al 2019), and job performance (Ieong and Lam 2015), which together ultimately improve organizational performance (Kanyurhi and Akonkwa 2016; Shiu and Yu 2010)

Despite more than four decades of discussion of internal marketing, its application in organizations remains limited This is perhaps due to its diverse conceptualizations, which has resulted in operationalization issues, due to a lack of clarity on its functionality (Gounaris 2006) These varied interpretations have meant a diverse range of activities being grouped together as internal marketing practices (Rafiq and Ahmed 2000), creating confusion and leading to measurement issues (Lings 2004) Another challenge is that while internal marketing may seem to be a simple concept, it is unusually slippery when it comes to implementation It is socially constructed, meaning the socio-cultural context in which employees and management are operating is important Successful implementation of internal marketing is contingent upon its participants and their understanding, interpretations, and orientations Internal marketing, as

a holistic concept, calls for integration and coordination of functions, which requires unified organizational effort, guided by understanding and appreciation of the objectives of internal marketing These challenges call for a review of the existing literature on internal marketing.The aim of this review article is two-fold First, it re-visits the concept of internal marketing to analyse and synthesize the literature on the relevant conceptual developments and application

It examines the theoretical frameworks that have been previously applied to this topic, the

methodologies used, and the variables of interest, with a focus on research from the Asian region Second, this article identifies the limitations of the previous studies and proposes directions for future research.

This study is structured as follows The following section discusses the methodology chosen for the paper Section three presents the synthesis of the conceptual development

of internal marketing and its underlying theories and frameworks Section four describes the outcomes of internal marketing Section five discusses the research gaps identified from the findings of the review, section six outlines future research directions, and section seven presents theoretical and practical implications Finally, section eight presents the concluding remarks

2 Method

There are several types of systematic review paper There is the structured review, which focuses on widely used methods, theories, and constructs (Canabal and White 2008; Kahiya 2018; Rosado-Serrano, Paul, and Dikova 2018); framework-based reviews (Paul and Benito 2018); the hybrid-narrative form, with a framework for setting a future research agenda (Kumar, Paul, and Unnithan 2019; Paul, Parthasarathy, and Gupta

2017); theory-based reviews (Gilal et al 2020a, 2019b; Paul and Rosado-Serrano 2019); meta-analyses (Knoll and Matthes 2017); bibliometric reviews (Randhawa, Wilden, and Hohberger 2016); and reviews for model or framework development (Paul 2019; Paul and Mas 2019)

Following a brief consideration of the various styles of systematic review paper,

a structured review style was chosen for this paper to highlight issues in the lization of internal marketing and to synthesize its theoretical, contextual, and methodo-logical utilization A structured literature review aligns with the objectives and aims of this study A structured literature review maintains a tight focus on the subject area and supports more rigorous thought processes It offers a strategy for dealing with fragmen-ted ontological and epistemological diversity (Armitage and Keeble-Ramsay 2009; Hart

conceptua-1998) A well-crafted structured review synthesizes and conveys the collective wisdom from the existing body of research It enhances scholars’ understanding of the topic; helps

to illuminate gaps in the knowledge of methods, theories, and constructs; and signals future research avenues (Paul and Criado 2020)

The authors conducted a thorough systematic search for theoretical and empirical research papers, using numerous electronic databases, including Science Direct, Emerald Insight, Jstor, Wiley-Blackwell, Springer, and Taylor & Francis, as well as an article reference list to identify relevant publications This strategy of using multiple sources ensured that all important and relevant studies were included in the review The keywords used were internal marketing, internal market, internal market orientation, and internal relationship marketing The studies that mention any of these keywords in their titles, abstracts, or author-specified keywords were reviewed The search was restricted to academic articles from journals registered in the business and management discipline Book chapters and research reports were not considered.The review focused on articles published in well-recognized journals between 1980 and 2020 This timeframe was chosen because internal marketing was introduced in 1976 and research on the topic – especially theoretical research – saw rapid growth from the beginning of the 1980s The search yielded more than 200 relevant articles Articles

ASIA PACIFIC BUSINESS REVIEW 3

published in languages other than English were removed from this initial list The tion criteria were then refined to limit the review to journals with a B, A, or A* ranking from the Australian Business Deans Council (ABDC) Studies that mentioned internal marketing

selec-as a tool but did not claim to have used it in the study were also removed from the final list We retained highly cited publications conducted from the theoretical perspective of internal marketing Ultimately, our search yielded a total of 85 articles from 39 journals (see Table 1)

The sample consists of two types of research paper: non-empirical (25 studies) and empirical (60 studies) Figure 1 shows the historical trend among articles published from

1981 to 2020 In the 1980s, the studies primarily adopted a theoretical approach, and empirical research saw rapid growth only during the latter half of the 1990s A stronger emphasis on empirical research was seen in the last two decades (2000–2020), with a focus on the Asian region (see Figure 2) The empirical research conducted in the last two decades provides an overview of the most recent applications of internal marketing, including the contexts and methods Our literature search was primarily intended to locate studies on the

Table 1 List of journals included in the sample

International Journal of Bank Marketing 10

International Journal of Hospitality Management 5

Anatolia: An International Journal of Tourism and Hospitality Research 2

Journal of Hospitality, Marketing & Management 2

International Journal of Retail and Distribution Management 1

International Journal of Contemporary Hospitality Management 1

Journal of Business and Industrial Marketing 1

Journal of Marketing Practice: Applied Marketing Science 1

Journal of Retailing and Consumer Services 1

Journal of Academy of Marketing Science 1

Journal of Financial Services Marketing 1

Journal of Non-Profit & Public Sector Marketing 1

Journal of Global Scholars of Marketing Science: Bridging Asia and the world 1

Journal of human resources in hospitality and tourism 1

conceptual development of internal marketing and to identify possible areas for future research that have either not been addressed or received only limited attention from scholars.

3 Conceptualization and theoretical models

3.1 Conceptual definitions and synthesis

Numerous definitions of internal marketing have been proposed since the inception of this concept 30 years ago (Berry, Hensel, and Burke 1976) The concept is typically defined in terms

of organizational outcomes It has evolved from a purely managerial perspective on satisfying the needs of customer-contact employees for external customer satisfaction (Berry 1987; Berry, Hensel, and Burke 1976), to incorporate the management of the service value chain and the motivation of customer consciousness and sales mindedness (George 1990; Grönroos 1990; Gummesson 1987), ultimately becoming a complex and holistic concept of developing customer priority throughout the organization to manage change (Ahmed & Rafiq, 2003; Varey 2000) (see Table 2)

No of Articles - Non-empirical No of Article - Empirical

Figure 1 Distribution of sample studies from 1981–2020

Coverage of Research Region (1987 -2020)

Figure 2 Coverage of research region for empirical studies from 1987–2020

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Table 2 Theoretical research on internal marketing.

1 Berry ( 1981 1987 ) Service firms should use marketing research to understand internal customers’ needs better, modify and improve job-products, segment

employee markets, using advertising and personal selling to attract employment candidates.

2 (George 2015 ) – (original work

published in 1984)

Internal marketing focuses on the exchange process between the organization and its employee publics – employment opportunities as products and employees as customers.

3 MacStravic ( 1985 ) Internal marketing is a systematic approach to achieve a positive relationship with employees that will contribute to the external marketing

objectives as well as quality, productivity and efficiency.

4 Berg ( 1986 ) Internal marketing is a shift in management focus from the management of human resource to the management of symbolic resources

Internal marketing could help management to create and manage unifying symbols that give meaning to the organization members and impel them to take action according to the overall strategy of the company.

5 Jones ( 1986 ) Internal marketing facilitates interaction and collaboration between different functions for total service delivery system Internal marketing

exists at the strategic as well as tactical level.

6 Flipo ( 1986 ) Internal marketing is for customer-contact personal The marketing function has to deal at the same time with internal and external markets,

and success in the latter is highly dependent on success in the former.

7 Tansuhaj, Randall, and Mccullough

( 1988 )

Internal marketing is oriented to employee development through recruitment, training, communication, motivation and retention to inculcate positive employee attitudes and behaviours such as job satisfaction, commitment, involvement and work motivation.

8 George ( 1990 ) Internal marketing is a mechanism for developing and maintaining service-minded and customer-conscious employees

Internal marketing programmes alone are not sufficient in developing service culture and need a continued partnership with organizational behaviour such as organizations personality, structure, leadership etc.

9 Piercy and Morgan ( 1990 ) Internal marketplace should be segmented into different groups with different needs and characteristics, and the internal marketing

programme developed around these segments.

10 Grönroos ( 1990 ) Internal Marketing a pre-requisite for successful external marketing Its purpose is to motivate and retain customer-conscious employees

Internal marketing is a means to develop and maintain service culture.

11 Rafiq and Ahmed ( 1993 ) Internal Marketing is implemented through the application of marketing techniques, along with human resource management practices to

facilitate the implementation of the company’s market objectives.

12 Greene, Walls, and Schrest ( 1994 ) Internal marketing must originate at the top and communicate down to the very bottom of the firm

Internal marketing results in satisfaction and motivation of employees to improve service performance.

13 Hales ( 1994 ) The conceptual basis of Internal marketing is riven with contradictions and problems Its individualistic approach to managing human

resources clashes with its emphasis on teamwork and commitment.

14 Piercy ( 1995 ) Internal Marketing helps to remove internal barriers such as politics, corporate culture, credibility, cost barrier for customer satisfaction.

15 Cahill ( 1995 ) Internal marketing is a good human resource management to satisfy external customers

Learning organization is a necessary step in the correct performance of internal marketing.

16 Grönroos ( 1995 ) Internal marketing is a thorough and ongoing internal marketing process that requires cooperation between marketing, operations and

human resource functions.

17 Varey ( 1995 ) Internal Marketing is a process of ‘selling’ the concept of customer service to employees

Internal Marketing is for customer orientation and quality culture.

Table 2 (Continued).

18 Mitchell and Taylor ( 1997 ) Internal marketing can be used for a successful volunteer programme within the non-profit sector through allowing self-expression,

developing skills and abilities through training, providing challenge and recognition, role clarity and autonomy and two-way feedback system.

19 Varey and Lewis ( 1999 ) Internal marketing must apply marketing principles within the total corporation as a social system which operates as a free market’

Internal marketing focus on social values provides for a richer range of exchanges, both economic and non-economic values.

20 Rafiq and Ahmed ( 2000 ) Internal marketing is a planned effort to achieve customer satisfaction through motivated and customer-oriented employees using marketing

like approach.

21 Ahmed & Rafiq ( 2003 ) Internal marketing creates an environment in which quality enhancing behaviours become a reflexive part of employee action

Internal marketing is used to manage internal relationships and generates commitment and involvement in organizational performance.

22 Ballantyne ( 2003 ) Internal marketing requires a process of learning activity for knowledge renewal to achieve market orientation and market-based

performance.

23 Lings ( 2004 ) Internal market orientation has a direct positive impact on the internal aspects of organizational performance – employee satisfaction,

retention and commitment and these internal aspects, in turn, affect external market orientation and external performance that is customer satisfaction, retention and profit.

24 Ferdous, Herington, and Merrilees

( 2013 )

Firms having higher levels of Internal market orientation are likely to develop internal marketing programs that are relationship-oriented.

25 Boukis ( 2019 ) Internal market orientation (IMO) is a value creation mechanism for the firm’s internal market

Organizations develop superior reciprocal value propositions for employees through internal market orientation.

The most popular definition of internal marketing originates in the managerial point originally presented by Berry (1981) Adopting the behavioural approach, Berry (1981) defines internal marketing as the idea of jobs as internal products offered to internal customers (employees), who deliver product and service value and external customer satisfaction However, Grönroos (1981) postulates that internal marketing aims to obtain and retain motivated customer-conscious staff at all organizational levels

view-by improving communication and coordinating tasks between customer service staff and support staff (Grönroos 1981)

In line with Grönroos (1981), George (1990) suggests that internal marketing is a philosophy that considers employees to be a group of internal stakeholders, whose needs must be met so that they can meet the needs of the external customers Piercy and Morgan (1991) recommend that internal marketing strategies use external marketing techniques (4Ps) to handle problems and opportunities within the organization Gummesson (1987) introduced the term ‘internal customer’ He defines internal marketing as a process for integrating all employees and functions into a customer-supplier relationship as part of the service value chain This internal network of customers and suppliers creates interdependence between individuals, serving external customers and improving service quality and customer satisfaction Based on the mechanistic approach of Gummesson (1987), Ballantyne (2003) defines internal marketing as

a method of channelling staff commitment and teamwork to enhance external marketplace performance In a similar vein, albeit in the context of the service value chain, Roberts-Lombard (2010) argues that the purpose of internal marketing is to motivate, retain, and attract employ-ees to serve business objectives This is achieved by understanding employees’ emotional and intellectual needs, providing customized products and services, and focusing on the building of long-term relationships (Roberts-Lombard 2010)

The essence of the above definitions is that internal marketing recognizes employees as the first market of the organization, and managers must first identify and tend to their needs Since employees are the crucial part of the equation of organizational success, firms should work hard to provide a work environment that motivates, satisfies, and retains the best people (Ahmed & Rafiq,

2003; Vasconcelos 2008) It emphasizes the importance of treating employees as customers and their jobs as products As they do with external customers, organizations should determine the needs of their internal customers and design jobs that meet those needs Internal marketing practices signal that the company values its employees, thereby encouraging the growth of trust and commitment to the organization (Abzari, Ghorbani, and Madani 2014; Ahmed & Rafiq, 2003) and a motivated and satisfied workforce (Ahmed, Rafiq, and Saad 2003; Gordillo-Benavente, Domínguez-Valdez, and Vega-Sosa 2015; Gummesson 1987; Romani, Grappi, and Bagozzi 2013; Tansuhaj, Randall, and Mccullough 1988)

Rafiq and Ahmed (2000) take a holistic view of internal marketing, proposing inter- departmental integration that improves a company’s coordination, overcomes resistance to organizational change, and motivates employees to engage in the organizationally desired behaviour They define five essential components of internal marketing: (1) achieving customer satisfaction through (2) effective implementation of customer-orientated strategies by virtue of (3) managing and coordinating cross-functional efforts within a process of (4) motivating and (5) satisfying employees (Ahmed & Rafiq, 2003; Ahmed, Rafiq, and Saad 2003) Varey and Lewis (1999) and Varey (1995) also seem to be aligned with this approach Internal marketing represents the convergence of discrete management technologies, such as human resource development, quality management, strategic management, employee relations, corporate

communications, and macro-marketing into a complete system (Varey and Lewis 1999) Gilmore and Carson (1995) state that, ‘internal marketing management could be considered and redefined as a more holistic, systematic, and organisation-wide concept’ (Gilmore and Carson 1995, p 308).

Departing from the traditional, firm-driven, internal marketing perspective, Lings (2004) and Gounaris (2006, 2008) propose a value-driven perspective that they term an

‘internal market orientation’ The firm-driven view advocates for marketing approaches in the internal market that motivate employees to align their efforts with the firm’s objec-tives (Boukis 2019) In contrast, an internal marketing orientation enhances and sustains the value created for internal stakeholders It consists of managerial behaviours by which the firm identifies employees’ needs, generates value for them, and ensures that employ-ees’ competences and performance remain aligned with the company’s marketing objec-tives (Boukis and Gounaris 2014; Boukis et al 2015)

3.2 Theories and models of internal marketing

Theories utilized in the field of internal marketing include the marketing mix model, relationship marketing, social exchange theory, transaction cost theory, service profit chain, and the resource-based view

3.2.1 Internal marketing mix model

The traditional marketing mix (4Ps) is the most commonly used approach that emerged from early discussions of the concept of internal marketing (Grönroos 1981) It often appeals to managers due their familiarity with the marketing mix concepts of product, price, place, and promotion The 4Ps promotes the notion of ‘selling the job’ to employees via internally directed elements of external marketing programmes to elicit the desired behaviour Using this approach, internal marketers regard their employment opportu-nities as their principal products and their employees as their most important customers Managers analyse the wants and needs of their internal customers and tailor a marketing mix to suit their employees’ skills, expertise, and experience

A primary concern when adopting the internal marketing mix model is that employees cannot be treated as a customer in the same way that an external customer can The power dynamics between an organization and its employees differ from those that arise between an organization and its customers Organizations have coercive power over their employees that they do not have over their customers, and so employees may derive negative utility from unwanted work Second, treating employees as customers may dilute the organization’s focus

on its external markets Ahmed and Rafiq (2003) suggest that internal marketing should be secondary to a commitment to the external market – namely, customers and competitors (Ahmed & Rafiq, 2003; Bell 1998; Roy et al 1995; Varey and Lewis 1999) However, we suggest that organizations must determine a balance between their commitments to the external marketplace and the internal market, as the development of meaningful relationships with external customers will prove difficult without committing to the development of similar relationships within the organization

There are four components of the internal marketing mix Internal product refers to the job itself or its characteristics that are provided to the internal customers (employees) to satisfy their needs The job plays a vital role in the exchange process between the

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employee and the organization Organizations must design jobs that offer valuable experiences to employees and increase their satisfaction Satisfied employees are more motivated and reciprocate with organizationally desired behaviours The indexes of internal products may be practices such as training and development, job autonomy, career development, and growth opportunity Internal price is the cost and resources that the employer expends to turn inputs into outputs when developing and delivering jobs to internal customers This includes a reward system, incentives, and benefits Internal promotion refers to the use of means to communicate positive messages that instil productive attitudes, openness, and interest in the workplace The purpose of internal promotion is to create knowledge and skills so that employees understand what is expected of them and can perform their jobs well Internal place, or ‘internal distribution’, refers to the strategic and operational activities that take place during the delivery of products (jobs) to employees This includes practices related to internal market research and the work environment (Jones 1986; Piercy and Morgan 1990, 1991; George 2015).

3.2.2 Transaction cost theory

Transaction cost theory is built on the principles of maximizing the efficiency of economic exchange It assumes that employee-employer interactions occur in the same way as customer-company transactions The attributes of the transactions give rise to the cost, therefore organizations must attempt to identify the governance mechanism that will maximize the efficiency of exchange between the organization and the employee This takes a tactical view of internal marketing, as the emphasis is on the transactional nature

of the relationship, rather than creating value for the employee-organization relationship (Gounaris 2008) This may be interesting from an economic perspective, but it ignores the social, psychological, and emotional dimensions of the relationship

Pitt and Foreman (1999) applied the transaction cost perspective to internal marketing in their theoretical research to define the context in which internal marketing would be applicable The goal incongruence and performance ambiguity were considered the sources

of cost They propose that the extent to which internal marketing is practised in tions is a function of goal incongruence and performance ambiguity in the employment situation An organization with goal congruence but a high level of performance ambiguity will consider internal marketing to be mandatory (Pitt and Foreman 1999)

organiza-3.2.3 Theory of relationship marketing

While Berry introduced relationship marketing in 1983 (Berry 1983), exploration of the concept only began to develop substantially in the latter half of the 1990s Initially, the literature on relationship marketing focused on customer relationships and ignored the importance of building long-term relationships with other stakeholders Sheth (1996) argues that the domain of relationship marketing should be limited to satisfying the needs of customers (Sheth 1996) However, scholars such as Ballantyne (2000); Ballantyne, Christopher, and Payne (1995); George (1990); and Gummesson (1987) argue that the boundaries of relationship marketing should be opened to other stakeholders, including suppliers, influencers, referral sources, and internal markets (Ballantyne 2000; Ballantyne, Christopher, and Payne 1995; George 1990; Gummesson 1987) Since the turn of the millennium, this broader perspective has gained momentum, and considerable advances have been seen (Payne and Frow 2017)

The relational view of internal marketing involves ongoing relationship management It emphasizes value-focused internal marketing that extends beyond economic exchange (transactions) to include social processes and relationships within the organization

A relational approach to internal marketing stresses that profitability and competitive tage comes through building and managing successful relationships, rather than just trans-actions (Chaston and Mangles 2003) The discrete transaction is short-term and manipulative Relationships, on the other hand, are much more than just exchange A relationship is a long- term notion, implying an ongoing association between two parties, based on trust, commit-ment, and mutual understanding (Grönroos 1995; Morgan and Hunt 1994)

advan-3.2.4 Social exchange theory

The relational approach to internal marketing views the employee-organization ship from a social exchange perspective Social exchange theory emerged in sociology and social psychology, provides a theoretical explanation for the exchange relationship between employees and their organization (Bell 1998) It suggests that the actions of individuals are motivated by the organization’s treatment of them, with the expectation that such treatment should bring returns The nature and extent of these returns are

relation-a function of personrelation-al obligrelation-ation, grrelation-atitude, relation-and trust in the orgrelation-anizrelation-ation (Emerson 1976; Gould-Williams 2007) Employees working in organizations in which a high level of social exchange occurs will reciprocate through discretionary effort and display positive work- related attitudes and behaviours

Internal marketing practices work to satisfy employee needs and communicate the organization’s care and concern for its employees, as well as its belief in their significance

An employee’s perception that their organization values them and cares about their wellbeing is vital for creating reciprocal obligations Employees that perceive a high level of social exchange will use behaviours valued by the organization as a currency to reciprocate the organization’s benevolent treatment (Gould-Williams 2007; Hoffman and Ingram 1992; Tang and Tang 2012; Tortosa, Moliner, and Sánchez 2009) In this way, internal marketing practices create high-quality exchange relationships that lead to

a productive work environment and mindset

3.2.5 Service-profit chain (SPC) model

The service-profit chain is a causal chain that links employee satisfaction to the firm’s financial performance, through mediating variables such as customer satisfaction and customer loyalty It is presented as follows: employee satisfaction → customer-orientation

→ customer satisfaction → customer loyalty → profits At one end of the chain is employees, followed by customers in the middle, and the organization is at the other end This is an important model that guides service firms’ operations for employee satisfaction and customer satisfaction, which are the consequences of internal and external service quality (Herington and Johnson 2010; Homburg, Wieseke, and Hoyer

2009) Organizational activities such as job design, training, reward, and recognition, and

so on, have a direct effect on internal service quality

The service-profit chain model (SPC) recognizes the impact of organizational practices

on employee perceptions and attitudes, and it calls for caring about and valuing employees and customers through relationship-building Herington and Johnson (2010) propose the application of internal marketing – grounded in relationship theory – to the SPC, for internal

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service quality that ultimately benefits external service quality and organizational mance Paul and Sahadev (2018) applied internal marketing to the SPC model to improve the performance of caregivers at a nursing home and to increase customer satisfaction.

perfor-3.2.6 Resource-based view

The resource-based view posits that an organization improves performance by building superior internal capabilities These core capabilities are related to organizing work for the learning and coordination of employee skills across different business units and hierarch-ical levels, deep commitment, communication, and involvement, as well as delivering value to the customer According to Prahalad and Hamel (1990), core capabilities operate like the root system of a tree, providing nourishment, sustenance, and stability to the organization Unlike tangible or physical assets, core competencies do not diminish with use; instead, they enhance when applied and shared (Prahalad and Hamel 1990)

In the resource-based theory, internal marketing is a critical competence implemented

to build and enhance core capabilities for sustained competitive advantage (Ahmed, Rafiq, and Saad 2003) These competencies and capabilities are embodied in the form

of attitudes and behaviours, such as employee satisfaction and engagement, motivation and company loyalty, citizenship behaviour, market orientation, and knowledge renewal, which ultimately bestow the firm with economic rents (Becker and Gerhart 1996) Álvarez- González et al (2017) adopted this theoretical framework as a critical competence for non-profit organizations to enhance their HRM capabilities to positively affect non-profit performance (Álvarez-González et al 2017)

4 Internal marketing research

4.1 Outcomes

4.1.1 Internal marketing and employee-related benefits

Organizations implement internal marketing practices to improve their employees’ hension of their roles and their contribution to organizational performance (see Figure 3) Through internal marketing, the organizations’ beliefs, values, and objectives are passed to their employees via internal communications, ensuring that everybody is working in the same direction and exhibiting attitudes and behaviours consistent with the values of the organiza-tion The organization also generates intelligence about the internal market, collecting informa-tion on the needs of internal customers, their expectations, and their level of satisfaction When the employees’ needs are attended to, this makes them feel valued and supported, which, in turn, increases their level of satisfaction and identification with the organization The employees then desire to be loyal to the organization and to remain with it for the long-term (Domínguez- Falcón, Martín-Santana, and De Saá-Pérez 2017) Domínguez-Falcón, Martín-Santana, and De Saá-Pérez (2017) conducted empirical research in four- and five-star hotels in Gran Canaria, Spain, and found that internal marketing leads to job satisfaction and affective commitment among managers and market-oriented behaviour among managers and supervisors

compre-Internal marketing practices such as internal communication, reward, empowerment, and internal market research create positive work environments, characterized by trust, enthusiasm, and happiness These positive perceptions of the work environment are reflected in employee behaviour in terms of improved coordination and communication

and quality of tasks performed Employees feel motivated to develop capabilities and skills that enhance their performance and their organization’s performance (Domínguez- Falcón, Martín-Santana, and De Saá-Pérez 2017) Martin and To (2017) found a positive link between internal marketing and organizational performance, job satisfaction, per-ceived customer satisfaction, and competitive positioning of the organization They found that internal marketing is an essential tool for aligning employees to a service vision and mission and inducing positive work attitudes (Martin and To 2017).

Ieong and Lam (2015) found a significant relationship between internal marketing and employee satisfaction and perceived job performance They explain that internal marketing practices – solicit employee loyalty and commitment and identification with the organization’s vision, leading to satisfaction and improved service for customers Implementing proper communication channels increases perceptions of internal service quality and enhances employee self-efficacy, which increases self-esteem and job satisfaction (Bailey, Albassami, and Al-Meshal 2016; Gounaris 2008; Ieong and Lam 2015) Training and development improve employee skills and knowledge and create a common perception of the vision of the organiza-tion, which leads to improved customer service (Ottenbacher 2007) Well-defined reward and compensation structures enhance employee morale and increase employee retention in the organization, thereby reducing turnover (Ieong and Lam 2015; Kim, Song, and Lee 2016)

4.1.2 Internal marketing and customer-related benefits

Internal marketing originated in the service context as a means of improving service quality for customers Service is a human factor, thus it must be nurtured through internal systems of the organization that satisfy, motivate, and train employees to become customer-conscious and to increase the level of service quality Positive employee out-comes translate into positive customer outcomes Berry signifies internal marketing as

Figure 3 Summary of outcomes in internal marketing research

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a means to an end; that is, effective internal marketing is essential for effective external marketing (Berry 1981) Therefore, to establish a long-term relationship with its custo-mers, the organization must focus on constructive relationships with its internal employ-ees, as high turnover transforms into high churn rates Conceptual and empirical research has strongly emphasized the relevance of internal marketing for customer satisfaction, customer service quality (Boukis et al 2015; Richardson and Robinson 1986), and market orientation (Domínguez-Falcón, Martín-Santana, and De Saá-Pérez 2017).

4.1.3 Internal marketing and organization-related benefits

Ballantyne (2000, 2003) states that internal marketing practices are the means by which knowledge can be shared, challenged, and renewed The theory of internal marketing draws strong connec-tions between learning activity and knowledge management Internal marketing creates a series of motivating activities to derive knowledge from individual tacit levels to the group-wide explicit level (Hume and Hume 2015) Internal communication and training have emerged as capable vehicles for knowledge acquisition and retention (Yang 2015) Training provides employees with the opportunity to learn; and as individuals learn, they create knowledge that transforms them from touch labour to knowledge workers These knowledge workers form the foundation for organization-level learning and knowledge accumulation (Youndt and Snell 2004) Under the umbrella of internal marketing, cross-functional coordination and collaboration create the oppor-tunity for the flow of information, tapping into experience-based individual knowledge from varied resources (Ballantyne 2003) This access to job-related knowledge helps employees to meritoriously perform their jobs and ensures that organizational strategies are effectively imple-mented in the organization Lee and Chen (2005) found that internal marketing significantly affects knowledge management in high-tech industry in Taiwan (Lee and Chen 2005) Yang (2015), in an empirical study, found that the promotion component of internal marketing leads to knowledge- sharing that significantly influences organizational effectiveness (Yang 2015)

4.2 Research studies from Asia

Research studies on internal marketing in the Asian context are limited, coming primarily from

a small number of countries in East and South-East Asia such as China, Taiwan, and Vietnam Most of these studies have been conducted in the last decade (17 studies) Table 3 presents

a summary of the types of research adopted and the industries investigated in the Asian and non-Asian studies in our sample The majority are quantitative studies (e.g Ahmed, Rafiq, and Saad 2003; Chow, Lai, and Loi 2015; Kim, Song, and Lee 2016) There are two exploratory studies; one qualitative case study used interviews (Ng, Fang, and Lien 2016) and the other used triangulation (Budhwar et al 2009) The use of quantitative methods implies that, among the Asian studies, the primary emphasis is testing the strength and persistence of relationships

Table 3 Comparison of research type and industry across asia and rest of the world

Asia Quantitative Qualitative Mix Service Manufacturing Multi-sectoral

Non-Asia

between internal marketing and other constructs, hence providing a broader and macro-level understanding of the concept However, qualitative approach has received more attention in the non-Asian context (12 studies), capturing the richness and depth of contextual meaning and providing a more informed basis for theory building Therefore, more qualitative research is needed for the Asian context to obtain a more micro-level and detailed picture of experiences, practices, and motives involved in the internal marketing phenomenon.

The majority of the data acquired by both Asian and non-Asian studies come from the service sector In Asia, the most frequently investigated industries in the service sector are finance (6 studies) and hospitality (5 studies), and there is a similar pattern in the non- Asian studies Two studies from Asia used cross-sectoral data (see Table 3) to investigate the influence of internal marketing on business performance (Ahmed, Rafiq, and Saad

2003), knowledge-sharing (Tang, Chang, & Cheng, 2017), and organizational ness (Jahanshahi and Bhattacharjee 2019) However, these studies used aggregated samples for their investigations and did not draw any comparison between service and manufacturing firms in terms of the role and impact of internal marketing

competitive-Ahmed, Rafiq, and Saad (2003) researched manufacturing (80% of the sample) and services (20% of the sample) organizations in Malaysia They adopted resource-based theory and propose that the result of the internal marketing programme is organizational competencies that include market-oriented behaviour, employee satisfaction and individual competencies The study found that organizational competencies mediate the relationship between internal marketing programmes and organizational performance, without drawing conclusions on cross-sector context Tang, Chang, and Chen (2017) applied social exchange theory in their investigation of the relationship between internal marketing practices and the knowledge- sharing behaviour of expatriates working at various enterprises in Ho Chi Minh City, Vietnam In their study sample, 35% of the participants were from the manufacturing sector, and the remainder were from the services sector The findings indicate that internal marketing activities positively influence knowledge-sharing behaviour

There are two cross-sectoral studies in a non-Asian context One used cross-sectoral data for the development of an internal marketing instrument (Foreman and Money 1995); and the second (Podnar and Golob 2010) sampled an equal number of manufacturing and service organizations to investigate the implementation and role of internal marketing (as flexible work practices) The findings show that service organizations are more aware of internal marketing in relation to friendly flexible work practices, and it is more widely used to create a supportive environment Manufacturing companies, on the other hand, predominantly use higher propor-tions of unfriendly forms in their work arrangements This comparative analysis is missing among cross-sectoral Asian studies and provides opportunities for future research

Table 4 presents the key findings from studies conducted in Asia These studies show that internal marketing positively influences employee job satisfaction (Chiu, Cho, and Won 2014; Ieong and Lam 2015; Shiu and Yu 2010; Turkoz and Akyol 2008), which leads to positive customer outcomes (Park and Tran 2018; Tansuhaj, Wong, and McCullough 2007; Turkoz and Akyol 2008) Ng, Fang, and Lien (2016) explored the role of trust and commitment in internal marketing effectiveness They found that both trust and commit-ment moderate the relationship between internal marketing practices (training, motiva-tion, company vision and goals, co-optation, and communication) and internal marketing effectiveness Kim, Song, and Lee (2016) studied employees at a casino company in Seoul, South Korea, and report that internal marketing practices improve desirable employee

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Table 4 Empirical research on internal marketing in Asia.

1 Ahmed, Rafiq, and Saad ( 2003 ) Internal marketing mix strongly related to business

performance

Organizational competencies mediate the relationship between the internal marketing mix and business performance.

3 Karasa et al ( 2008 ) Internal marketing improves the quality of service Turkey

4 Turkoz and Akyol ( 2008 ) Internal marketing improves employee satisfaction, that

consequently increases customer satisfaction.

Turkey

5 Budhwar et al ( 2009 ) Well-structured and rationalized internal marketing

approach can significantly improve employee relations with management and overall organizational competitiveness and performance.

India

6 Shiu and Yu ( 2010 ) Organizations with high levels of customer-oriented culture

have a high implementation of internal marketing

Internal marketing positively influences job satisfaction and organizational performance.

Jordan

8 Fu ( 2013 ) Surface acting and deep acting reveals a partially mediating

effect on the relationship between internal marketing and customer-oriented behaviour.

Taiwan

9 Ferdous and Polonsky ( 2014 ) Front line employees’ organizational identification and job

satisfaction mediate the relationship between their perceived internal market orientation and customer- oriented behaviour.

Bangladesh

10 Chiu, Cho, and Won ( 2014 ) Internal marketing positively influences employee job

satisfaction, that leads to employee organizational commitment.

Taiwan

11 Chow, Lai, and Loi ( 2015 ) The internal marketing orientation is positively associated

with travel agents’ customer service behaviour only when the leader-member exchange is low.

Hong Kong – China

12 To, Martin, and Yu ( 2015 ) Management commitment to internal marketing positively

affects employee work attitudes

Internal marketing practices partially mediates the relationship between Management commitment to internal marketing and employee work attitudes.

Macao SAR, China

13 Ieong and Lam ( 2015 ) Internal marketing has a positive effect on employee job

satisfaction that in turn, will positively influence job performance.

Macao SAR, China

14 Kim, Song, and Lee ( 2016 ) Employees’ perceptions of internal marketing are positively

related to their organizational commitment and negatively to their turnover.

16 Ng, Fang, and Lien ( 2016 ) Commitment and trust among management and employees

will moderate the relationship between internal marketing practices and internal marketing effectiveness that would lead to improved customer quality and satisfaction.

Taiwan & Singapore

17 Tang Chang and Cheng ( 2017 ) Internal marketing positively influences knowledge sharing

Work-role adjustment partially mediates the relationship between internal marketing and knowledge sharing.

Vietnam

18 Park and Tran ( 2018 ) Internal marketing positively influences employee

performance that partially mediates the relationship between internal marketing and customer outcomes.

Vietnam

(Continued)