Self-efficacy in the sales context: A consistent message

Research on sales self-efficacy began in 1983 when Barling and Beattie established a positive correlation between self-efficacy and salesperson performance. Since the Barling and Beattie study, over 70 articles have been published on the effects of self-efficacy in the sales domain, with almost half of self-efficacy studies examining the relationship between self-efficacy and salesperson performance. Many studies consider different moderators and mediators of the relationship (e.g. Ballantine & Nunns, 1998; Krishnan et al., 2002). As a brief summary, all studies demonstrate a positive relationship between self-efficacy and salesperson

performance, with the exception of Donassolo and De Matos (2014) and Fu et al. (2009). However, all sales self-efficacy research examines only between-person self-efficacy, with no sales research taking more than one measurement of self-efficacy. Table 2.2 outlines the self- efficacy/sales performance research reported in the sales literature.

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Table 2.2 Overview of the key self-efficacy/sales performance research

Author(s) Date Key Findings

Barling & Beattie 1983 Positive correlation between self-efficacy and sales performance Lee & Gillen 1989 Self-efficacy positively related to performance quality

Ballantine & Nunns 1998 Supervisory support moderated the relationship between self-efficacy and supervisor-rated performance

Brown et al 1998 Self-efficacy demonstrates a strong direct and indirect (via organizational climate) on salesperson performance

Renn & Fedor 2001 Self-efficacy related to work performance through feedback-based goals Krishnan et al. 2002 Self-efficacy demonstrates a strong direct and indirect (via effort) on

salesperson performance

Wang & Netemeyer 2002 Positive correlation between self-efficacy and sales performance Purwanto 2002 Positive correlation between self-efficacy and sales performance Ahearne et al. 2005 Positive correlation between self-efficacy and sales performance Ryerson 2008 Positive correlation between self-efficacy and sales performance

Fu et al. 2009 Relationship between self-efficacy and new product sales is non-significant Fu et al. 2010 Self-efficacy demonstrates a positive effect on new product sales growth rates Saragih 2011 Positive correlation between self-efficacy and sales performance

Fauzilah & Razak 2011 Positive correlation between self-efficacy and sales performance Walumbwa &

Hartnell

2011 Positive correlation between self-efficacy and sales performance

Yang et al. 2011 Self-efficacy significantly influences objective sales performance Lai & Chen 2012 Positive correlation between self-efficacy and sales performance Goebel et al. 2013 Positive correlation between self-efficacy and sales performance

Gupta et al. 2013 Sales self-efficacy predicted objective and subjective measures of performance Pettijohn et al. 2014 Positive correlation between self-efficacy and sales performance

Donassolo & De Matos

2014 Negative influence of self-efficacy on performance, but a positive indirect effect through effort

Rapp et al. 2015 Positive correlation between self-efficacy and sales performance Panagopoulos &

Ogilvie

2015 Positive correlation between self-efficacy and sales performance

Monteiro & Vieira 2016 Positive correlation between self-efficacy and subjective sales performance Carter et al. 2016 Self-efficacy significantly correlated with job performance after controlling for

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Singh et al. 2017 SE positively related to sales performance directly, and indirectly through adaptive selling behaviors and selling skills

The positive relationship between self-efficacy and sales performance is exhibited across a plethora of between-person sales studies in many different industries (Goebel et al., 2013). These sales studies include retail (Rapp, Agnihotri, & Baker, 2015), real estate (Pettijohh, Schaefer, & Burnett, 2014; Wang & Netemeyer, 2002), telecommunications (Krishnan et al, 2002), manufacturing (Lee & Gillen, 1989), life insurance (Frayne & Geringer, 2000), pharmaceutical (Ahearne, Mathieu, & Rapp, 2005; Brown, Cron, & Slochum Jr, 1998), call centers (Renn & Fedor, 2001), automobile (Walumbwa & Hartnell, 2011), and office supplies (Brown et al., 2005). The relationship is also demonstrated in countries, including Taiwan (Lai & Chen, 2012), Brazil (Monteiro & Vieira, 2016), Indonesia (Purwanto, 2002), South Korea (Yang, Kim, & Macfarland, 2011), and South Africa (Ballantine & Nunns, 1998), and in the European Union (Panagopoulos & Ogilvie, 2015).) Accordingly, the positive self- efficacy/sales performance relationship is demonstrated across many countries and contexts, leading sales researchers to conclude that enhancing self-efficacy will result in performance benefits (e.g. Carter et al., 2016).

Only two between-person studies find contradicting results, namely Donassolo and De Matos (2014) and Fu et al. (2009). Donassolo and De Matos’ (2014) finding can be explained by their measurement of self-efficacy, as they do not use a traditional measure of self-efficacy. Donassolo and De Matos instead measure self-efficacy as an amalgamation of skills, knowledge, orientation towards customer, and orientation towards learning, a measurement not consistent with the conceptual definition of self-efficacy. Self-efficacy is defined as salesperson’s belief in their capabilities of undertaking a task successfully (Carter et al., 2016), and not perceptions or attitudes of multiple different constructs. In relation to Fu et al. (2009), the self-efficacy measure is taken at the beginning of a longitudinal study, relating it to sales performance three and six months later. Self-efficacy is known to change over time (Bandura, 2012), and thus, a person’s level of self-efficacy at the beginning of a longitudinal study may not reflect their self-efficacy levels six months later. Thus, self-efficacy at the outset of a study may not be an accurate predictor of salesperson performance at the end of a study.

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A positive indirect effect of self-efficacy on salesperson performance is also demonstrated in the literature. The first, and primary mechanism, is via effort allocation; self-efficacy is unanimously demonstrated to be related to effort allocation, although only four sales studies examine the self-efficacy/effort allocation relationship. Findings from Krishnan et al. (2002), Srivastava, Strutton, and Pelton (2001), and Jaramillo and Mulki (2008) all demonstrate higher self-efficacy to be related to higher levels of effort; these findings are consistent with SCT. Effort is driven by attempts to reduce the discrepancy between an individual’s current goal state and their desired state (i.e. closing the gap between the current level performance and the achievement of performance targets) (Bandura, 2012).

Of interest to the present study, Bonney et al. (2014) examine the influence of competitive intensity on the self-efficacy/effort allocation relationship in salespeople. The results reveal that competitive intensity positively moderates the self-efficacy/resource allocation

relationship. Specifically, as competition for a sale increases, individuals with a higher level of self-efficacy increase the time allocated to this specific sale more than salespeople with lower self-efficacy. Additionally, salespeople with higher between-person self-efficacy decrease their effort allocation more than salespeople with lower self-efficacy when competition decreases. It seems that when salespeople are challenged, individuals with greater between-person self-efficacy will increase their effort to a greater extent, but decrease their effort to a greater extent as they perceive a task to be attained easily. Accordingly, several studies find an indirect relationship between self-efficacy and sales performance via goal-level (Brown et al., 2005; Brown et al., 1998; Renn & Fedor, 2001).

Developing the relationship further, two studies in the sales context observe a time-lagged relationship in the sales context. The aforementioned Fu et al. (2009) study only demonstrates that self-efficacy exhibits a positive indirect effect on performance via effort allocation. However, self-efficacy influences effort allocation three months later, which in turn influenced new product sales performance at six months. Fu et al. (2010) then conduct a follow-up study finding self-efficacy to have a positive direct effect on growth rates for new product performance.

Encompassing all self-efficacy literature, only four studies5 exhibit a negative effect of self- efficacy at the between-person level of analysis (i.e. Bandura & Jourden, 1991; Stone, 1994; Hmieleski & Baron, 2008; Vancouver et al., 2014), with all of the above research undertaken

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outside of the sales arena. These negative effects all seem to be due to unrealistic perceptions of what it takes to successfully perform a task. Bandura & Jourden, (1991) find individuals perceiving an easy goal condition to demonstrate lower effort allocation, resulting in worse performance. Similarly, Stone (1994) finds that if an individual overestimates their self- efficacy, then self-efficacy can be negatively related to performance, as well as indirectly via a reduction in effort allocation. Here, individuals who have no previous experience on a task and therefore no accurate information on which to base their self-efficacy judgements, could overestimate their task progress, resulting eventually in individuals exhibiting less effort and then reduced performance. A positively biased goal progress effect is also found in

Vancouver, Gullekson, Morse, and Warren (2014). Lastly, highly efficacious entrepreneurs in highly dynamic markets, who are highly optimistic, performed worse than their moderately optimistic counterparts. This optimism resulted in a negative relationship between self- efficacy and performance (Hmieleski & Baron, 2008). Perhaps these entrepreneurs are too optimistic in their belief that they can perform without realistically appraising the situation, again representing a situation of positively biased goal progress. The negative influence of self-efficacy on performance is yet to be found in extant sales literature.

2.4.3 Conclusion

There is a widespread assumption that self-efficacy drives salesperson performance in both academic (Fornier et al., 2010; Carter et al., 2016) and practical (Monty, 2014; Kalb, 2002) literature. However, the assumption that self-efficacy is beneficial in regard to salesperson performance is purely based on between-persons research. Self-efficacy is posited to indirectly influence performance by driving higher goals (Tolli & Schmidt, 2008), resulting in increased effort (Krishnan et al., 2002). Encompassing all between-person self-efficacy literature, it seems that self-efficacy may be damaging to performance in one situation - when individuals overestimate their goal progress. Here, salespeople may reduce their effort, or direct their efforts elsewhere. There seems at least some evidence that salespeople may re- allocate their effort elsewhere (e.g. Hmieleski & Baron, 2008). Nevertheless, sales research only compares highly efficacious salespeople with their lower efficacious counterparts. While the opinion that salespeople with higher self-efficacy perform better than salespeople with lower self-efficacy seems undeniable due to the great deal of evidence, recent evidence

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suggests some caution must be taken (Beck & Schmidt. 2012). Wider literature examining within-person self-efficacy relationship dynamics demonstrates that self-efficacy’s positive influence on effort and performance may not be universal (Schmidt & Deshon, 2010; Sitzmann & Yeo, 2013). Self-efficacy can be further understood by examining the within- person processes, specifically regarding how intra-individual change in self-efficacy impact subsequent change in salesperson performance. Understanding the within-person processes will provide greater knowledge on the self-efficacy/sales performance relationship, resulting in a better understanding of the process occurring within salespeople.

From a practical standpoint, self-efficacy is something that sales coaches look for develop within salespeople (Monty, 2014), at least in part based on evidence finding higher levels of self-efficacy to be positively related with higher performance (Carter et al., 2016).

Accordingly, sales coaches are aiming to produce within-person developments of

salespeople’s self-efficacy based on assumptions made from incompatible research designs. Since Molenaar (2004) outlines that within-person relationships are more than likely

dissimilar from the between-person counterparts, caution must be aired. Consequently, the subsequent section discusses the within-person self-efficacy/performance research conducted in the broader psychological literature. The following section is designed to highlight the importance of the within-person dynamics of self-efficacy.