The role of CRM implementation in internal capital markets
Journal of Business & Industrial Marketing
ISSN: 0885-8624
Article publication date: 5 September 2023
Issue publication date: 13 February 2024
Abstract
Purpose
The purpose of this paper is to investigate how customer relationship management (CRM) implementation affects internal capital allocation efficiency, the efficiency with which a firm allocates its capital across its business segments.
Design/methodology/approach
The authors use a statistical regression method to analyze a sample of 801 unique firms in the USA from COMPUSTAT and the Computer Intelligence database. This analysis examines the relation between CRM implementation and internal capital allocation efficiency and identifies the conditions under which firms benefit more from CRM implementation. They also use instrumental variables (IVs) to address endogenous concerns with a two-stage least squares (2SLS) model.
Findings
The authors find that CRM implementation is positively related to internal capital allocation efficiency. The results are robust to the 2SLS analysis with IVs. This positive relation is more pronounced for firms with effective internal control and for those operating in highly competitive markets.
Practical implications
The research implies that that CRM can have a significant cross-functional effect on corporate financing and budgeting. This also suggests that when chief marketing officers plan marketing initiatives and implement CRM, they should communicate to chief financial officers not only the direct effect but also the indirect strategic benefits of such initiatives to a firm.
Originality/value
The authors reveal a previously overlooked aspect of marketing accountability by suggesting marketing’s impact on internal capital markets. They also enrich the body of literature on CRM benefits by showing a cross-functional benefit from marketing to finance (or capital allocation).
Keywords
Acknowledgements
The authors are grateful to suggestions and feedback from participants at the Journal of Marketing-Tsinghua Research Development Workshop in 2019, and the 23rd Pacific Asia Conference on Information Systems (PACIS) 2019. We thank Yu Li for her excellent research assistance. Zhuo (June) Cheng acknowledges financial support from the Research Grants Council of the Hong Kong Special Administrative Region, China (#15503817). Feng Tian acknowledges financial support from the Hong Kong Polytechnic University (#P0046074).
Citation
Cheng, Z.J., Min, Y., Tian, F. and Xu, S.X. (2024), "The role of CRM implementation in internal capital markets", Journal of Business & Industrial Marketing, Vol. 39 No. 2, pp. 407-422. https://doi.org/10.1108/JBIM-01-2023-0042
Publisher
:Emerald Publishing Limited
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