Academic journal article Economics, Management and Financial Markets

Innovation Capability and Customer Relationship Management: A Review

Academic journal article Economics, Management and Financial Markets

Innovation Capability and Customer Relationship Management: A Review

Article excerpt

1. Introduction

In the current volatile market where things change rapidly and new technologies rise with fast speed, companies have to come with innovation capabilities, in order to satisfy customers. The current situation means developing new ways of gaining competitive advantages, ways that are more and more often offered by innovation. Companies must develop innovation capabilities to maintain and win market share and satisfied customers.

In this article the authors will explain some theoretical concepts that are necessary to obtain the above mentioned things. Concepts like Customer Relationship Management and innovation are explained in the next pages together with a proposed research method that will combine the defined theoretical concepts. Development of innovation capabilities to meet the demands of unpredictable competitive markets became an important problem for companies in manufacturing industry (Shane and Ulrich, 2004).

2. Literature Review

A good Customer Relationship Management (CRM) between manufacturing companies and industrial customers will retain customers and will encourage them to provide suggestions and feedback. These suggestions will improve the quality of provided services and products (Ramani and Kumar, 2008).

CRM offers companies a new way of approaching their customers' preferences. In 2008, Ramani and Kumar stated that CRM is becoming a mean for developing innovation capability and provides a lasting competitive advantage. Through this article, the authors try to verify the relationship between CRM and innovation capability.

2.1 Customer Relationship Management

Customer Relationship Management refers to two directions. The first, is the process of developing CRM, and second, is the content of CRM. The process can be divided into three parts: initiation, maintenance and termination (Reinartz et al. 2004). CRM consists in activities that manufacturers take to satisfy customers' needs, identify their preferences and resolve their complaints, offer them after sales services, in conclusion, establish a longterm relationship with their customers (Sin et al. 2005).

If we take an in-depth analysis, the CRM process can be split into internal and external programs. Internal programs refer on organization structure, culture and knowledge management, while external programs refer on the interaction with the customers.

The article will refer to the external parts of CRM programs in relation with five most popular CRM activities: information sharing, customer involvement, long-term partnerships, joint problem solving, and technology based CRM.

Information sharing. It refers to sharing and exchange essential and exclusive information through interactive activities between manufacturers and their customers (McEvily and Marcus, 2005; Mentzer et al. 2000).

Customer involvement. When a new product is developed, the customer can be involved in the process: development activities, technical meetings, supply chain conferences and market evaluation conferences. Many times, customers offer information related to market trends, fact that should lead to better understanding of future demands (Sin et al., 2005).

Long-term partnership. It refers to the business relationship between two firms. Each of the two partners must share similar goals and pursue mutual profits on a reliable basis (Mohr and Spekman, 1994).

Joint problem solving. It refers to collaboration between customers and manufacturers in solving the problems together and sharing responsibilities in unexpected situations (McEvily and Marcus, 2005).

Technology-based CRM. It refers to manufacturers using computer technologies in order to facilitate different CRM activities and offering support to customers. These activities also include data storage, data mining and CRM software systems (Sin et al, 2005).

2.2 Innovation Capability

Innovation capability refers to implementation or creation of technology as plied to systems, policies, products, devices, processes, etc. …

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