Articles / Recommended Reading / Relationship

Customer Relationship Management and Firm Performance

Customer Relationship Management and Firm Performance
Tim R. Coltman, Timothy M. Devinney and David F. Midgley

Tim R. Coltman
University of Wollongong, Wollongong, NSW, Australia

Timothy M. Devinney
Faculty of Business, University of Technology–Sydney, Sydney, NSW, Australia

David F. Midgley
INSEAD, Fontainebleau, France

Published by University of Wollongong, Wollongong, NSW, Australia

Abstract

In this paper, we examine the impact of customer relationship management (CRM) on firm performance using a hierarchical construct model. Following the resource-based view of the firm, strategic CRM is conceptualized as an endogenously determined function of the organization’s ability to harness and orchestrate lower order capabilities that comprise physical assets, such as IT infrastructure, and organizational capabilities, such as human analytics and business architecture. Our results reveal a positive and significant path between a superior CRM capability and firm performance. In turn, superior CRM capability is positively associated with human analytics and business architecture. However, our results suggest the impact of IT infrastructure on superior CRM capability is indirect and fully mediated by human analytics and business architecture. We also find that CRM initiatives jointly emphasizing customer intimacy and cost reduction outperform those taking a less balanced approach. Overall, this paper helps explain why some CRM programs are more successful than others and what capabilities are required to support success.

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