The Effect of CRM Outsourcing on Shareholder Value: A Contingency Perspective

Management Science, 2013 Forthcoming

39 Pages Posted: 28 Jun 2012 Last revised: 12 Dec 2012

See all articles by Kartik Kalaignanam

Kartik Kalaignanam

Moore School of Business (University of South Carolina)

Tarun Kushwaha

University of North Carolina Kenan-Flagler Business School

Jan‐Benedict EM Steenkamp

University of North Carolina (UNC) at Chapel Hill - Marketing Area

Kapil Tuli

Emory University - Goizueta Business School

Date Written: June 23, 2012

Abstract

CRM refers to processes that involve interaction with end-users or customers. The increased emphasis on CRM today stems from changes in the business environment, availability of large amounts of data and advances in information technology. Outsourcing of customer relationship management (CRM) processes is rapidly becoming a competitive imperative for firms. However, there is little evidence on why the performance implications of outsourcing CRM processes differ so much across firms. In this study, the authors examine the impact of CRM outsourcing on shareholder value. The authors draw on insights from agency theory and the resource-based view of the firm in an international context and test hypotheses on a sample of 158 CRM outsourcing announcements between 1996 and 2006. On average, CRM outsourcing erodes shareholder value of the outsourcing firm. More importantly, the authors find that the performance implications of CRM outsourcing are contingent on the type of process involved, firm capabilities, and economic and cultural distance to the vendor. CRM outsourcing is much more beneficial to firms that are high on IT capabilities than to firms that are low on IT capabilities. In contrast, CRM outsourcing is more beneficial to firms that are low on marketing capabilities than firms characterized by marketing excellence. As the economic distance between the firm and vendor increases, shareholder value of the outsourcing firm is increased. However, as the cultural distance between the firm and vendor increases, shareholder value of the outsourcing firm in reduced. In addition, the type of CRM process outsourced significantly moderates the effects of firm capabilities and vendor cultural distance on shareholder value.

Keywords: outsourcing, customer relationship management, shareholder value, resource based view

JEL Classification: M31

Suggested Citation

Kalaignanam, Kartik and Kushwaha, Tarun and Steenkamp, Jan-Benedict E. M. and Tuli, Kapil, The Effect of CRM Outsourcing on Shareholder Value: A Contingency Perspective (June 23, 2012). Management Science, 2013 Forthcoming. Available at SSRN: https://ssrn.com/abstract=2089664

Kartik Kalaignanam (Contact Author)

Moore School of Business (University of South Carolina) ( email )

1014 Greene Street
Columbia, SC 29208
United States

Tarun Kushwaha

University of North Carolina Kenan-Flagler Business School ( email )

Chapel Hill, NC 27599
United States

Jan-Benedict E. M. Steenkamp

University of North Carolina (UNC) at Chapel Hill - Marketing Area ( email )

CB 3490
Chapel Hill, NC 27599
United States
919-962-9579 (Phone)

HOME PAGE: http://www.kenan-flagler.unc.edu/Faculty/search/detail.cfm?person_id=860

Kapil Tuli

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

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