Customer Relationship Management and Firm Performance: The Mediating Role of Business Strategy

Abstract

As managers and academics increasingly raise issues about the real value of CRM, the authors question its direct and unconditional performance effect. The study advances research on CRM by investigating the role of critical mechanisms underlying the CRM-performance link. Drawing from the sources → positions → performance framework, the authors build a research model in which two strategic postures of firms – differentiation and cost leadership – mediate the effect of CRM on firm performance. This investigation also contributes to the literature by drawing attention to the differential impact of CRM in diverse industry environments. The study analyzes data from in-depth field interviews and a large-scale, cross-industry survey, and results reveal that CRM does not affect firm performance directly. Rather, the CRM-performance link is fully mediated by differentiation and cost leadership. In addition, CRM’s impact on differentiation is greater when industry commoditization is high.

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Keywords: CRM, Customer Relationship Management, Business Strategy, Structural Equation Modeling, Mediation, Industry Commoditization