Closing the Marketing Strategy-Tactics Gap: An Institutional Theory Analysis of Pharmaceutical Value Chain - Innovation and Marketing in the Pharmaceutical Industry - page 693

1989 ; Lampel and Shamsie 2000 ). Prahalad and Bettis ( 1986 , p. 490) defi ne
dominant logic as “the way in which managers conceptualize the business and make
critical resource allocation decisions.” From an institutional lens, dominant logic
provides a mental model of a common set of assumptions and beliefs about organi-
zational purpose and goals that guide managerial decision making and strategic
choices. Thus, pharmaceutical marketing strategies are located at the intersection of
strategy and institutional theory literatures within the dominant logic framework of
shared cognitions that underpin strategic choices by pharmaceutical managers.
We develop the dominant logic at this intersection for pharmaceutical marketing
strategy next. Thereafter, we take this theorizing forward by conceptualizing the
dominant logic underlying physician-patient exchanges. In the fi nal section, we
join these developments to highlight the confl icted action implications of disparate
logics in the pharmaceutical value chain.

24.2.1 Pharmaceutical Marketing Strategy and Logics

of Consequences

The dominant logic of pharmaceutical marketing conforms to the institutional
theory conception of the logic of consequences (March 1996 ; March and Olsen
1998 ), which asserts that an orderly and stable system of market relationships arises
as a result of exchanges among market actors pursuing self-interested gains. The
logic of consequences is reminiscent of Adam Smith's merchant logic, manifested
through assumptions of market mechanisms and goal of maximizing ROI. Heide
and Wathne ( 2006 ) note that the logic of consequences is common to several theories
of inter-fi rm relationships including transaction cost, agency, and game theories.
For instance, in a supply chain, self-interested manufacturers and distributors may
coordinate their actions and trust each other because the long term payoffs from
coordination and restrained opportunism exceed short term benefi ts from unilateral
opportunism (Barney and Hansen 1994 ).
Past research provides evidence supporting the foundation of pharmaceutical
marketing on the bedrock of the logic of consequences. In their review, Manchanda
and Honka ( 2005 ) note that much pharmaceutical marketing effort is directed at
physicians and consumers with the goal of facilitating market exchanges that opti-
mize the company's return on marketing investments (Narayanan et al. 2004 ;
Ahearne et al. 1999 ). Consider, for example, physician detailing, a wide spread
practice of using sales representatives to reach physicians. Detailing efforts are
guided by a consequential logic to deploy selling skills to slant physicians' prefer-
ences and “utility functions” in favor of the company's products (Narayanan et al.
2005 ). Consistent with this, research examines whether the amount of detailing is
“optimal” from a ROI perspective (Narayanan et al. 2004 ). Manchanda and Honka
( 2005 , p. 785) note that it is an “important” goal of research to “establish that detail-
ing [has] signifi cant effect on physician prescription behavior” and to “improve the
effi ciency and effectiveness of detailing practices.”