Abstract

This paper investigates the relationship among Customer Relationship Management (CRM) technology, organizational market orientation, perceived customer retention improvement, and perceived performance improvement from using CRM technology. Based on theories of business value of information technology and resource-based view of organization, three research questions are examined: first, is CRM technology related to customer retention improvement and performance improvement? Second, is market orientation a facilitator of CRM technology adoption? Finally, is market orientation related to customer retention improvement and performance improvement? The data collected by mail survey from eighty Canadian organizations was analyzed to understand how organizations achieve benefits from investment in CRM technology. The findings suggest that first, the CRM technology, used to enhance organizational capability of serving customer, is positively linked to perceived customer retention improvement and perceived performance improvement; second, companies with higher level of market orientation are more likely to adopt CRM technology; third, there is a positive link between organizational market orientation and perceived customer retention improvement and perceived performance improvement. This study contributes to the MIS discipline by demonstrating the enabling role and business value of information technology in customer relationship management, as well as by underscoring market orientation, the organizational resource that can possibly increase the effect of CRM technology on customer retention and overall performance. The managerial implications are significant. When CRM technology is used to enhance organizational capability of serving customers, it can achieve substantial business value. Directions of increasing market orientation are provided for organizations to attain payoffs from CRM technology investment.