The sponsorship performance cycle: longitudinal evidence of sponsors’ contribution to Formula One team achievement

Abstract

Purpose A sponsorship performance cycle of business-to-business (B2B) exchange is conceptualized, where distinct types of resources are invested by sponsoring firms into sponsored properties and the competitive success of those properties enhances returns to sponsors. While the latter return channel in this cycle is well-documented, the former investment channel has remained opaque. Recognizing this empirical missing link, this paper aims to illuminate the investment channel through a longitudinal analysis. Design/methodology/approach Based on 50 years of Formula One (F1) team and sponsor alliances, this study models the effects of three different sponsorship categories on team performance in the annual F1 constructors’ championship. Findings The results demonstrate that each incremental sponsor offering performance-based resources is associated with four additional team points in the championship, controlling for factors such as past success and team experience. Conversely, sponsors offering access to financial or operational resources have no competitive impact. This performance-based sponsor effect is illustrated in models of the current and following seasons. Research limitations/implications In combination with related literature, this study substantiates a complete sponsorship performance cycle in the motorsports context. Practical implications The findings contribute an empirically-based strategy for sustainable sponsorship support that emphasizes acquisition of performance resources in the business-to-business exchange over operational or strictly financial alternatives. Originality/value While scholars have discerned that sponsors invest heterogeneous resources into sponsored properties, and the competitive success of those properties can enhance returns to sponsors, this study demonstrates that particular resources invested by sponsors are related to the property’s competitive success.