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


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. The following section explores this relationship in more detail.

Customer Relations and IC

Theorists and scholars propose that organizational relational capital is embedded in the integration of bi-directional flow of value chains of suppliers and of customers. Bontis' and Crossan (1999) argue that customer capital is a subset of relational capital because customers contribute to learning only when organisations lay massive importance to customer relationship. This indicates that organizational knowledge is embedded in customers and generated through marketing and sales intelligence activities. Some other scholars assert that customer capital can be explored for knowledge creation and innovation (Nonaka, 1994; Teece, 2000a; Von Krogh, Nonaka and Nishiguchi, 1999). This is similar to Schumpeter's (1934) and Penrose's (1995) resource-based view. On the other hand, the exploitative approach focuses on measuring, improving and rationalizing or generalizing the organizational processes (Benner and Tushman, 2003). Yet another view argues that the approach of exploration is necessary for organizational growth while exploitation is used for survival in the shortterm (Bontis et al, 2002). This ambidextrous view of bi-modal organizational strategy, however, may not apply to all organizations (Tushman and Anderson, 1996; Bierly and Daly, 2002). …

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