The roles of conflict in an organization and the theoriesunderpinning conflict in organizations have been studiedprimarily by researchers in the organization psychologydiscipline. At the center of the debate is what role conflictplays in organizational performance. Some havecontended that some elements of conflict are functional toperformance while others hold that conflict in general isdysfunctional to organizational performance. Pearson(1973) refers to the two groups as the anti-conflict and thepro-conflict camps. Adapting the model developed byAmason (1996), the study investigates the two types ofconflict in manufacturing managers’ decision making thatinvolves their marketing counterparts. The study wasconducted under two decision scenarios namely,physically efficient supply chain (functional decision) andmarket responsive supply chain (innovative decision). Asample of 391 firms was used to test the hypothesizedrelationships. Results indicate that while cognitiveconflict had positive effect on company performance,affective conflict adversely affect organizationalperformance in interfunctional conflict betweenmanufacturing and marketing. Furthermore, cognitiveconflict was found to lead to a higher level of companyperformance in market responsive supply chain thatentails innovative decisions.