THE IMPACT OF CUSTOMER RELATIONSHIP MANAGEMENT CAPABILITY DIMENSION ON ORGANIZATIONAL PERFORMANCE IN THE MICRO, SMALL AND MEDIUM SCALE ENTERPRISES; THE MODERATING EFFECT OF COMPETITIVE INTENSITY

ABSTRACT
The study observes the role of competitive intensity in moderating the relationship between Customer Relationship Management (CRM) capability and firm performance. The research was necessitated because of the problem of several firms not being able to harness the full benefit of the CRM concept mainly because there is no backing capability to ensure competitive advantage. In order to achieve this, some specific objectives were set including to determine the CRM capability practices among Micro, Small and Medium scale Enterprises (MSME‟s), to measure the effect of CRM capability on organizational performance, to investigate competitive intensity and its effect on organizational performance in the MSME sector and to ascertain extent to which competitive intensity affects the role played by CRM capabilities in determining organizational performance. In order to achieve this, 400 structured questionnaires were conveniently distributed to owners, managers and executives of MSMEs in Ashanti region. 400 responses were retrieved and analyzed quantitatively using Stata and SPSS. Mean analysis, correlation analysis and Hierarchical Linear Modeling (HLM) regression were the main analysis used in deriving the findings from the research. Findings from the research indicate that firms in the sector have the capabilities of managing customer information knowledge and winning them back. However, upgrading customer relationship is on the average in the sector. It was also found from the correlation and HLM regression that CRM capabilities do have a positive impact on firm performance whiles controlling for period of working in the business and the type of business. The work also indicated that the introduction of competitive intensity as a moderating variable saw a change in performance in the effect of CRM capabilities and performance. It was recommended that owners, managers and executives should build a stronger CRM capabilities whiles working hard to stay above the competition in the sector.


CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The concept of Customer Relationship Management (CRM) has brought to the attention of organizations, the need to bring stronger relationship with customers. Several literatures on the concept of Resource-Based View (RBV) has indicated that having varied resources including customer relationship and rational assets like data on the preference of customers gives a business or an organization a good source of competitive advantage (Srivastava et al., 1998; Barney, 1991). Scanty study has however concentrated on how the resources are used or positioned to equal the situations of the market and as such add up to the performance of businesses including Micro, Small and Medium Scale Enterprises (SME‟s) (Slotegraff et al., 2003; Morgan et al., 2009).

The practice of CRM has presented to marketers including owners of Micro, Small and Medium scale enterprises the need to keep customers and the benefits derived in building long term relationships with customers in today‟s competitive business environment (Ismail et. al., 2007, p.16; Jayachandran et. al., 2005). The Concept of Customer Relationship Management (CRM) is concerned with business interacting with their customers with the purpose of getting and analyzing the data of customers and using the outcome or results to improve service delivery and attain marketing objectives (Seybold, 2001, Strau╬▓and Schoder, 2002). The concept identifies the long-term value of potential and actual clients whiles seeking a growth in revenue, profits and shareholder worth through the activities of marketing which are channeled to the development, conserving and augmenting successful organizational-customer relations (Berry, 1983; Morgan and Hunt, 1994; Gronroos, 1990). The activities involved in managing customer relationship include a thorough understanding and appreciation of the fundamental sources of value derived by the firm from customers and what the customers on the other hand gives to the organization. Organizations over the years are beginning to realize that customers have various economic value and importance to the company, and as such are subsequently adapting their customer offerings and communications strategy accordingly. Because of this, organizations are gradually shifting from a product or brand centric marketing to a customer – centric approach.

In the SME sector, a well-managed CRM program can assist in targeting customers who really need attention and are as well profitable. This way customized package can be designed and marketed to them to ensure customer satisfaction and an increase in profitability of the enterprise.

CRM has the ability to perform analysis on customers with respect to their routine processes over time. These include purchase orders, regular visit times, and credit pattern. A proper monitoring and analysis of these can increase customer satisfaction by ensuring proper measures and enhanced delivery. The research amongst other things seeks to conceptualize and operationalize the extent to which CRM processes have been implemented amongst the SME‟s in Kumasi. This will give a clear indication on the CRM processes among businesses and can also ensure the determination of whether higher levels of CRM can impact on the performance of the enterprises.

The capability aspect of CRM is a multifaceted package containing skills and learning abilities that is practiced through the processes in the organization (Day, 1994). The work of (Morgan et al, 2004) defined CRM capabilities as organizational activities or processes that reveal the skills or abilities of a firm with the purpose of constantly creating, sustaining and advancing purposeful relationships with clients. Based on existing literature, the work adopted 4 dimensions of CRM capability. These were, Customer Knowledge Management Capability (CKMC), Customer Interaction Management Capability (CIMC), Customer Relationship Upgrading Capability (CRUC), and Customer Win-back Capability (CWC) (Parvitiyar and Sheth, 2001; Reinartz. et al, 2004). A major key in building a firm‟s competitive advantage is its capability. The various categories of marketing capabilities are considered as a highly significant driver of the performance of businesses (Day, 1994; Srivastava, Shervani and Fahey, 1998). Exceptional CRM capabilities have the ability to provide firms with competitive advantage that is very difficult to imitate and also very sustainable (Day, 2000). If a firm is able to adequately use its capabilities derived from the relationship with its customers through the various activities of CRM, it can generate and convey greater worth for customers and thus increase its performance.

A very element of the hostility of the environment is the intensity of the competition (Barth, 2003; Kumar and Subramanian, 2000 and Dess and Beard, 1984; Dibrell 2007, Child and Tsai, 2005). Competitive intensity is the condition where there exist fierce competition as a result of the numerous competitors operating within the market or industry and absence of growth opportunities (Auh and Menguc,2005). It is suggested by Auh and Menguc (2005) that, the outcome of the behavior of a business will change from being the results of a firm‟s from being deterministic to stochastic. This happens because the outcome of the firm‟s activities is affected or influenced by the activities undertaken by the competitors. Due to this, in a market where there is high competition, predicting outcomes reduces. Competitive intensity was introduced as a moderating variable between the capability of CRM and the performance of organizations. The purpose and reason for the introduction was to test whether the prediction organizational performance from CRM capabilities differs by the introduction of the third variable, in this case competitive intensity. Some items that were used in measuring the level of competition were, the number of firms offering products/services that are similar in nature, aggressive marketing strategies by other firms, market share and attraction of new entrants into the industry. Competitive intensity was introduced as a moderating variable because, it has been established in some works (Kemper et. al., 2013, Lumpkin and Dess, 2001) that, in industries or markets that have higher competition, the individual firms are customer focused. The motivation to focus mainly on the customer was driven by the intense competition that exists in highly competitive markets. According to (Kemper et al 2013), the intense competition can make organizations embark on Corporate Social Responsibility (CSR) since the CSR activity has a positive effect on the relationship on the firms performance. On the other hand, if the intensity of the competition is low, firms are not much concerned in the desires of the customers as such are not customer focused. Building long-term relationship with customers does not exist in such markets or it‟s very low.

1.2 Problem Statement
For some years now, customer relationship management in the field of business has risen in various literatures as a significant academic study and management practice. Several businesses now accept the fact building a stronger relationship with customers can improve the business in several ways (Neil 2001). Literature gathered from customer relationship management studies has alluded to the fact that many firms are not able to successfully use the CRM programs or activities available to them (Reinartz et al., 2004, Parvitiyar and Sheth, 2001, Plakoyiannaki and Tzokas, 2002). It has been ascertained that firms and businesses around the world are spending lots of money on CRM, but on the average about 70% of CRM programs do not achieve results in boosting business performance (Reinartz et al., 2004; Neil, 2001). It was indicated in some of the studies that, the businesses or firms got it wrong or faltered because the CRM capabilities they possess was not adequately deployed to ensure building of superior capabilities in managing customer relationships in order to achieve competitive advantage (Day and Van den Bulte, 2002; Morgan et al., 2004; Plakoyiannaki and Tzokas, 2002). The resource based view of a firm also shows that, poor capability of the relationship built between the firm and the clients may be one very critical cause of the failure of CRM. It has therefore become urgent that there should be a need for businesses to learn the ways of developing and strengthening CRM capabilities. It is however unfortunate that very scanty knowledge exists on what constitutes the capabilities of CRM and ways of measuring and strengthening the capabilities to ensure enhanced outcomes or performance of business.

Some sections of businesses and business owners see CRM to be only technologically driven (Reinartz et al., 2004). Customer Relationship Management however does not only work with technology. It is a combination of activities of human, processes and technology working together at the same time to ensure efficiency. Organizations that believe that CRM is only about technology do not understand the concept and thus fails immensely in its adaptation and usage. Thus this work does not look at the technological side but the capabilities derived from the activities of the business owners, managers and executives.

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Item Type: Ghanaian Project Material  |  Attribute: 85 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH50  |  Delivery: Within 30Mins.
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