Magazine article Journal of Services Research

Technology Based Management of Customer Relational Capital: Human-Touch Still a Necessity

Magazine article Journal of Services Research

Technology Based Management of Customer Relational Capital: Human-Touch Still a Necessity

Article excerpt

This paper examines the role of information communication technology (ICT) in customer relation management(CRM). It explores organizational intellectual capital (IC) based on CRM by analyzing the efficiency and the effectiveness of ICT for social interaction and relationships between organizations and their customers. In doing so it seeks to understand the impact of ICT on the exploration or exploitation of knowledge or a combination of both. It asserts that ICT enables organizational efficiencies but compromises effectiveness and customer relational capital. It concludes that, although strong ties are costly; they foster stronger customer relationships-hence enabling competitive advantage. An organization's customers are more likely to be satisfied with interactive communication and direct contacts than by passive interaction using ICT-oriented processes such as process management, websites for online commerce and automated calling centres. The study concludes that organizations that emphasise efficiencies merely for cost-cutting may find their customers less satisfied, build weak relationships with their customers, and ultimately face diminishing organizational learning and innovation capabilities.

INTRODUCTION

The intellectual capital (IC) of an organization represents the stock of knowledge in the organization at a particular point in time (Choo and Bontis, 2002). It is a snapshot view of what an organization has learned in a cognitive sense. Underlying this view is the assumption that organizational IC is the sum of its constituents, which are considered to be human, structural and relational capital (Edvinsson and Sullivan, 1996; Saint-Onge, 1999). Conceptual frameworks about organizational knowledge, IC and learning are consistent with these three elements (Nahapiet and Ghoshal, 1998; Stewart, 1997). Some theorists have further extended relational capital to 'customer capital' and 'social capital' (De Carolis, 2002).

To be a strategic resource, the IC in an organization needs to be valuable, scarce and sustainable ( Rumelt, 1986;; Peteraf, 1993; Barney, 1996; Nambisan and Nambisan, 2008). Nonak (1994) argues that to remain sustainable in a continuously dynamic uncertain environment, the synergistic view of IC tends to be larger than the total sum of its parts. The view that the whole is equal to the total sum of its parts has been contested by those who contend that it is too static in nature and lacks the dynamic thrust to be a strategic resource in hyper-competitive environment (Grant, 1996; Teece, Pisano and Shuen, 1997). The synergistic value of IC stems from the linkage between different organizational resources in a context that collectively enables customer relations (Grant, 2002; Argyis and Schon, 1978 ).

Literature Review

In the ongoing debate in the literature, the perspectives may differ and paradigms may shift, but there is consensus among researchers and practitioners that IC is critical for organizational success from a customer relational point of view. Business organizations are often advised to improve and enhance their internal competencies with a sharing by caring perspective and at the same time being agile and flexible to meet external competition ( Prahalad, 1993; Leonard and Sensiper, 1998; Snowden, 1998; Wenger, 1998; Nahapiet and Ghoshal, 1998; Teece, 2000b). Theoretical models argue that IC and organizational learning not only enable thriving hyper-competition but also contribute to organizational growth (Klein, 1998; Romer, 1998; Zack, 1999; Johar et al, 2010). A similar argument is put forward by proponents of resource-based view of the firm (Penrose, 1995; Schumpeter, 1934). Exploitation of ICTs and exploration of new knowledge along with incremental innovation are predicated on existing customers and markets (Von Hippel, 1988; Benner and Tushman, 2003). Thus organizational IC tend to be bounded by customer relations and contribute to organizational learning and innovation. …

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