Academic journal article Contemporary Management Research

Strategic Alliance, Information and Communication Technology, and Customer-Related Performance: The Role of Industry Characteristics

Academic journal article Contemporary Management Research

Strategic Alliance, Information and Communication Technology, and Customer-Related Performance: The Role of Industry Characteristics

Article excerpt

INTRODUCTION

In today's globally competitive e-commerce market, customers have more choices. In such a challenging environment, companies are subject to threats from both local and overseas competitors. The extant literature suggests that, to overcome such threats, a firm must keep its customers satisfied. On the one hand, a competitive e-commerce offers customers various opportunities to compare and buy products online; on the other hand, it provides organisations with new ways to conduct business and exchange/communicate information. Consequently, the market becomes increasingly competitive as customers can get easy access to more product information and are able to buy products and services online from anywhere. Companies usually spend big money to market their products, both to get new customers and retain existing customers. However, in the current global e-commerce market, companies using only traditional product-promotion activities may not survive (O'Connell, 2002). The relevant literature suggests that, to survive in the market, companies have to improve their customer-related performance to get new customers and retain the existing ones.

Customer-related performance, which is usually driven by customer satisfaction, has been regarded as a critical determinant of long-term customer behaviour. The more satisfied customers are, the more loyal they are to the products (Ranaweera & Prabhu, 2003), which in turn leads to increased sales and market shares. Kim (2010), for instance, reported that satisfied customers show loyalty to a company through repeat as well as increased purchases of its products and services as well as recommendation of the products/services to others; they are also less sensitive to price. Compared to getting new customers, satisfied customers are also less expensive to retain, thereby generating financial benefits at relatively lower marketing costs (see Ranaweera & Prabhu, 2003). Following the literature, we consider that a company's customer-related performance contributes to its success.

The relevant literature suggests that, as the market becomes more and more competitive, companies find it harder to maintain or improve their customer satisfaction by increasing their product range, improving the quality of products and services, offering better value for money, and penetrating into new and/or overseas markets (Kaplan & Norton, 1996; Whipple, 2000). One way to achieve such an objective is to engage in strategic alliance(s) with other firms. Gulati (1998, p. 293) defined a strategic alliance as "voluntary arrangements between firms involving exchange of technologies, sharing of services, and/or co-development of products." They can occur as a result of a wide range of motives and goals, take a variety of forms, and occur across vertical and horizontal boundaries. Engaging in a strategic alliance allows the alliance member firms to jointly undertake research and development; share knowledge, costs, and risks in developing new products; and share processes and services (Connell & Voola, 2007; Hill, 2010). It is also a way of bringing together complementary skills and resources that a firm could not easily develop alone.

We view that the managerial use of information and communication technology (ICT) can facilitate the positive effect of a firm's strategic alliance on its performance. ICT comprises the Intranet and Internet, including net-meeting, netphone, and videoconference. Andersen and Segars (2001) suggested that the managerial use of ICT can help a firm maximise the benefits of its engagement in a strategic alliance, particularly when a manufacturing firm operates in a highly competitive market, offering a broad range of products, maintaining a number of divisions in different regions or countries, and employing a large number of personnel.

THEORY AND HYPOTHESIS DEVELOPMENT

In this section we explain the relationship between engagement in a strategic alliance (SA) and the managerial use of ICT, followed by discussion of the relationship between ICT and customer-related performance (CRP). …

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