Customer relationship management and innovation as performance drivers

Good customer relationship management (CRM) between service firms and customers not only retains customers but also encourages them to provide important suggestions for improving products and service. Service firms have been described as facing a dilemma between serving customers for short term financial profits or for enhancing long term position by creating customers through the development of unique and differentiated products. The effectiveness and efficiency of CRM are increasingly recognized as means for developing innovation and providing a lasting competitive advantage. This study first examines the direct effects of CRM on service firm's innovation. The effects of CRM and innovation on both organizational financial and non-financial performances are further investigated. This study integrates the CRM association with innovation and organizational performance. The conceptual model and hypothesized relationships were tested using data collected from restaurants in Taiwan involving 203 valid responses. A structural equation analysis was used to test the hypothesized model. Current results demonstrate customer relationship management is positively related to product innovation, managerial innovation, and marketing innovation. Service firm's managerial innovation has significant impacts on organizational performance. Customer relationship management does have significant influence on organizational performance.