Tags:Business-to-government, Customer acquisition, Customer expansion and Government-to-contractor revolving door
Abstract:
Federal government has been regarded as an important customer by many companies, and many contractors engage in the practice of government-to-contractor revolving door appointments—hiring former public employees from government agencies as corporate executives of government contractors, to gain political connections and enhance the relationship with government customers. Prior studies on revolving door practices predominantly examine firm’s shareholder value (e.g., stock abnormal returns) or financial performance (e.g., sales) as outcome variables, neglecting the importance of political connections in the buyer-seller relationships. We thus focus on customer-based performance (customer acquisition and customer expansion), which refers to the firm’s success in building and enhancing customer relationships, to assess the implications of revolving door appointments. Based on the empirical analysis of secondary longitudinal data of 110 defense contractors from 2008 to 2017, we reveal that revolving door appointments have positive effects on customer acquisition and customer expansion performance. These results indicate that revolving door appointments allow firms to gain valuable customer knowledge, and translate connections with government customers into superior performance while they try to build and expand the relationship with government customers.
Effects of Government-to-Contractor Revolving Door Appointments on Customer Relationship Performance