Service,People and Customer Orientation: A Capability View to CRM and Sustainable Competitive Advantage

Abstract

In today’s highly competitive business environment enterprises are continuously striving to achieve a sustainable advantage. This sustainable advantage can be accomplished only when the enterprise is realizes a value-creating strategy, simultaneously not being implemented by any current or potential competitor(s) and when other firms are unable to replicate the benefits of this strategy. A very little literature is available that investigates the relationship among customer relationship management (CRM) capability variables and sustainable competitive advantage (SCA). In this backdrop, the article tries to analyse the role of CRM capability towards the goal of SCA. It identifies three CRM capability factors, that is, service capability, personnel capability and customer orientation and examines their effect on SCA. Structural equation modelling (SEM) has been used on a sample of 204 respondents who were selected randomly from the population of bank employees. The data have been collected from the bank employees through a structured questionnaire. The findings of the study reveal that CRM capability (having three domains—service capability, personnel capability and customer orientation) has a significantly positive impact on the SCA. This article contributes to the theory by examining CRM capability variables and tries to determine their impact on SCA in the banking sector, as CRM is now becoming strategically crucial in the banking industry.

Keywords

Customer Orientation Service Capability Personnel Capability CRM Capability Sustainable Competitive Advantage

Introduction

Customer relationship management (CRM) is considered as one of the holistic marketing strategies that prompt organizations to become competitive in the current business scenario through value creation and customer orientation (Borsaly, 2014). Today, business environments are characterized by increasingly saturated markets, resulted due to changes in the nature of competition and ever-growing importance to attain a comprehensive appreciation of customer needs. Matching the growing complexity of the business environment has led to more diversified and demanding customer base (Barnes, Fox & Morris, 2004). Due to information bloom, the customer has become dynamic, knowledgeable, vibrant and competitive in making a selective choice among the various offerings available in the marketplace. The customer can easily detect competitors who promise better offerings at lower prices (Bhardwaj, 2007). Thus, CRM is nested within an intricate organizational system of interrelated and interdependent resources that are used to generate and sustain competitive advantage. Such an approach aligns with two schools of thought underpinning resource-based theory, namely the resource-based view (RBV) and the knowledge-based view (KBV), that emphasizes firm specific competitive advantages (Kumar & Reinartz, 2006). Therefore, it has become imperative for the organizations to have unique capabilities in terms of products, services and personnel, to manage such a dynamic customer portfolio thereby assisting in building and sustaining long-term competitive advantage.

The marketing theorists (Hunt, 2000) and RBV proponents (Barney, 1991; Dierickx & Cool, 1989; Mahoney & Pandian, 1992; Wernerfelt, 1984) have examined that resources and capabilities of firms enable them to generate normal rates of return and a sustainable competitive advantage (SCA). They have emphasized leveraging the scarce resources to create and sustain value for the organization’s customers. The competitive advantage according to RBV can be derived from the resources in the form of assets acquired by the firm, which are used as basic inputs in these processes (Kaleka, 2002). However, capabilities in the form of accumulated skills and expertise are utilized in creating value and competitive advantage (Day, 1994). Capability is the ability of a bank to manage the existing resources in a way to accomplish specific goals. Capabilities have a basis in skill, knowledge and expertise of employees in the banks. Human resource has a vital role in developing and using capabilities to create core competencies. The core competency is the combination of resources and capabilities that becomes a source of competitive advantage to the bank (Hitt, Ireland & Hoskisson, 2013). Kay (1993) has argued that in order to achieve competitive advantage through relationship management, the banking organizations need to own three distinctive capabilities: architecture (structure of relationship with customers, suppliers and employees); reputational (including customer experience, signal quality, assurance, word of mouth, warranty, connotation with other brands, and building and maintaining a reputation); and innovation (strong capability repeated to create innovation). Chahal and Bakshi (2015) have opined that the linkage between intellectual capital of a bank (human, relational and structural capital) and marketing concepts, such as marketing capabilities (service and product capabilities), service dominant logic and internal marketing, can provide interesting research agenda for the researchers to determine their relationship with competitive advantage. Wang and Feng (2012) have argued that service firm’s resources such as customer orientation, customer-centric organizational system and CRM technology can be organized in such a way which will foster superior CRM capabilities and achieve competitive advantage. Meanwhile, organizational capabilities are intangible in nature and involve skills and managerial expertise of the firm to deploy resources advantageously through product market strategy (Hunt, 2000). Therefore, an instant need has been felt for a banking organization to develop and strengthen their CRM capabilities as very little is known about their relationship with SCA. The study tries to address these research gaps and contributes to the literature by taking a capability view of CRM, identifying resources that are crucial for achieving superior CRM capability and empirically determining the impact of CRM capability on the SCA in the emerging economies.

Objectives

The study has been undertaken with the following objectives:

To identify the key attributes of CRM capability.

To analyse the impact of CRM capability on SCA.

Theoretical Framework and Hypotheses Development

The literature on RBV has depicted that heterogeneous group of resource (e.g., customer relationship and customer preference information) give a source of competitive advantage (Barney, 1991; Srivastava, Shervani & Fahey, 1998). This view has further been expanded by the researchers to include ‘all assets, capabilities, organizational processes, firm attributes, information, knowledge etc. controlled by a firm which helps in proper implementation of strategies thereby improving efficiency and effectiveness’ (Barney, 1991, p. 101). Capability is the capacity for a team of resources to perform some task or activity, and distinctive capability allows service firms to review their competitors over time and sustain competitive advantage (Day, 1994; Hayes, Pisano & Upton, 1996; Morgan, Vorhies & Mason, 2009). They are usually embedded in organizational processes and enable firms to coordinate their activities more effectively (Day, 1994).

The RBV reveals that SCA can be achieved through valuable, rare, inimitable and non-substitutable resources (Barney, 1991; Wernerfelt, 1984). It depends on the right combination of resources possessed by the firm for accomplishing a particular SCA. Barney (1991) has explored the linkage between firm’s resources and SCA. It has been deciphered by him that all the resources possessed by the firm cannot deliver SCA to it. Rather, the resources that have rareness, value and inability to be replaceable. But, in real business world, Barney’s ideal conditions for SCA are hardly met by all the service firms. Again, the right combination of these resources is a challenge for the firm which although owns these unique resources. In contrast, KBV suggests that knowledge is the key for SCA. It emphasizes that tacit knowledge of the people in the organization act as a source for SCA (Leonard-Barton & Sensiper, 1998; Yu, 2002). But, capturing the tacit knowledge is again a challenge for a firm. Another stream of research has emphasized that firms with superior marketing capabilities have superior performance (Day, 1994; Krasnikov & Jayachandran, 2008; Srivastava et al., 1998; Wang and Feng, 2012). Day (2000) has argued that CRM capabilities are most important marketing capabilities that enable firms to utilize relational resources efficiently to build SCA. In this backdrop, the current study takes a capability-based view into consideration and identifies the variables (services capability, customer orientation and personnel capability) as determinants of CRM capability and a source of SCA.

CRM Capability

The CRM capabilities are rooted in organizational processes and reflect the organizations’ skills and gathered knowledge for attracting new and prospect customers to build SCAs (Day, 1994; Morgan et al., 2009). Elkordy (2014) has conceptualized CRM as a distinct capability, which anchors CRM technology, CRM process, customer orientation and CRM organization as determinants of CRM capability. While the four dimensions are given by the researcher to address CRM capability of a bank but for extrapolation and enhancement of the CRM concept, more such variables are to be added (Elkordy, 2014). According to Day (1994), capabilities are derived from employee’s knowledge and skills; technical systems including information systems and formal procedures; management systems and unifying values and norms. The banks need to integrate these systems for exploiting the resources to increase their responsiveness to the continuously changing need of customers (Peppers, Rogers & Dorf, 1999). The RBV perspective describes employees as a valuable resource rather than effective administrators from strategic point-of-view and contributes significantly to the organizational sustainability and effectiveness, thus viewed as a source of competitive advantage for the organizations (Beaumont, 1993; Mohrman & Lawler, 1999; Rao, 1994; Schuler & Jackson, 1987; Wright & McMahan, 1992; Wright, MacMahan & McWilliams, 1994). Thus, CRM capability has been defined as ‘an organizational capability that enables a firm to manage long term profitable relationships with its customers and to enhance its competitive position’ (Elkordy, 2014, p. 130). A comprehensive literature review about CRM capability provides us with adequate gaps that need to be addressed with new variables so as to improve and further augment the understanding and application of CRM capability in a bank.

Service Capability

In the present volatile business environment, service capabilities have occupied a prominent position in marketing research and play an important role in sustaining competitive advantage (Felin, Foss, Heimeriks & Madsen, 2012). The service industry has been continuously dominating the overall economy of the world and has a major share in the global economy (Chesbrough, 2011; Fitzsimmons & Fitzsimmons, 2004; Normann, 2001; Spohrer, Maglio, Bailey & Gruhl, 2007). A service can be defined as ‘a means of delivering value to customers by facilitating outcomes and customer wants to be achieved without the ownership of specific costs and risks’ (Orand, 2010, p. 39). Service capabilities have a prominent role in meeting the customer needs by personalizing and maintaining a higher quality of products/services (Sin, Tse & Yim, 2005; Yang, 2012). The benefits of service capability include increased customer satisfaction, better customer retention, positive word of mouth, reduced staff turnover, decreased operating costs, increased market share, increased profitability and improved financial performance (Duncan & Elliott, 2002; Gounaris, Stathakopoulos & Athanassopoulos, 2003; Janda, Trocchia & Gwinner, 2002; Kang & James, 2004; Sureshchandar, Rajendran & Anantharaman, 2002). Lai (2004) has argued that the enhancement of service capability can provide a potential source of competitive advantages. From the of above discussion, following hypothesis has been formulated:

H1a: Service capability is a significant dimension of CRM capability.

Customer Orientation

Customer orientation is a culture-based concept that determines the firm’s affiliation towards its customers, reflected in its behaviour norms, values and beliefs (Day & Van den Bulte, 2002; Wang & Feng, 2012). Jayachandran, Sharma, Kaufman and Raman (2005) have emphasized on the customer-centric behaviour for successful implementation of CRM. It has been defined as the ‘cultural propensity of the organization to undertake customer relationship management’ (Jayachandran et al., 2005, p. 182). Therefore, customer orientation will escort the organization’s attitude towards the successful implementation of CRM activities (Day, 2000), leading to the development of long-lasting customer relationships. Researchers have found that customer orientation has a positive impact on the performance and loyalty of a bank and is considered one of the dominating factors of CRM capability (Bhat & Darzi, 2016; Day & Van den Bulte, 2002; Minami & Dawson, 2008). Elkordy (2014) and Sin et al. (2005) have studied customer orientation as a key dimension of CRM capability and influence both the marketing and financial performance, thus giving distinct competitiveness to a bank. In accordance with the above discussion, it could be concluded that customer orientation is an essential dimension of the CRM capability and is thus expected to contribute to the firm’s SCA.

H1b: Customer orientation is a significant dimension of CRM capability.

Personnel Capability

Personnel capability has been regarded as the bundle of accumulated knowledge and specialized skills, which influence the CRM performance of a bank (Shum, Bove & Auh, 2008). Yang (2012) has opined that human resource capability develops from skills and competencies of the personnel and has an ability to create value for both the customers and the bank. Researchers have observed that the successful CRM implementation in the current dynamic banking sector is dependent on the staff commitment to change (Fedor, Caldwell & Herold, 2006; Jones, Jimmieson & Griffiths, 2005). Human resources have an important role in developing and using capabilities to create core competencies, which ultimately becomes a source of competitive advantage (Hitt et al., 2013). Khandekar and Sharma (2005) have observed that firms, which make greater use of personnel capabilities are more likely to gain a SCA and better performance. Mendoza, Marius, Perez and Griman (2007) have identified 13 critical success factors which broadly cover human, process and technological aspects of the CRM capability. The authors have emphasized on the human component as they are crucial to enable firms to overcome the technical and business risks associated with the investment in CRM programmes (Bharadwaj, 2000). The KBV of CRM emphasizes that humans be bestowed with unique abilities that can convert data into wisdom, thereby creating competitive advantages and enhancing the performance of the firm (Grant, 1996). In light of above discussions, following hypothesis has been formulated:

H1c: Personnel capability is a significant dimension of CRM capability.

Sustainable Competitive Advantage

The SCA is different from the competitive advantage. A sustained competitive advantage exists only when other firms are incapable of replicating the benefits of competitive advantage (Lippman & Rumelt, 1982). To achieve SCA, organizations need to continuously focus on the identification of differential product strategies, building core competencies regarding service delivery, hiring skilled workforce and accumulation of intellectual property (Martin, Clark, Peck & Payne, 1995). All of these capabilities can be properly harnessed to achieve better performance in the highly competitive marketplace (Bagram, 2010). Identifying what constitutes a core competence has been a subject of debate in the literature for over 20 years (Aaker, 1989; Prahalad & Hamel, 1990). Bhat and Darzi (2016) have observed that CRM has both direct and indirect impact (through loyalty) on the competitive advantage of a bank. Keshvari (2012) has argued that in Iranian banking sector, SCA can be gained through the efficient implementation of E-CRM practices.

Combining the RBV and dynamic capabilities perspective, it has been argued that possession of resources influences the effectiveness of organizational capabilities to deploy these resources, which in turn can influence organizational performance (Jiang, 2002). Specifically, the study examines how firm resources such as service capability, customer orientation and personnel capability can be deployed to foster superior CRM capabilities and achieve SCAs (Figure 1). Therefore, the following hypothesis has been put forward:

H2: CRM capability has a positive impact on sustainable competitive advantage.

Figure 1.

Source: Authors’ compilation.

Methodology

Figure 1 shows the conceptual model of the study, which includes three CRM capability dimensions (service capability, customer orientation and personnel capability) and SCA. To test the hypothesis, a survey has been conducted among a sample of bank employees of a private sector bank operation in the state of Jammu and Kashmir.

Sample and Data Collection

A simple random sampling technique was adopted to collect the data from the employees of the bank working in the state of Jammu & Kashmir. The data have been collected in August/September 2015 from the employees of a private banks. Before the collection of final data pretesting of the research instrument was performed on 20 bank employees to ensure face validity and content validity on the questionnaire. Following this, some items, which the respondents could not understand easily, were modified or dropped. The final questionnaire has been distributed among 225 bank employees consisting of 17 items. A total of 204 filled questionnaires were received back from the respondents with the overall response rate was 91 per cent. The sample size was determined by the following formula (Yamane, 1967):

Table 1.

Demographic Description of Employees

Demographic Variables	Category	Frequency	Percentage
Designation	Branch Manager	29	14.3
	Back-up Manager	26	12.7
	Personal Banker	48	23.5
	Relationship Manager	27	13.2
	Assistant Manager	38	18.6
	Branch Sales Officer	36	17.7
Age (years)	15–25	11	5.4
	26–35	144	70.6
	36–45	47	23
	46–55	2	1
Gender	Male	109	53.4
	Female	95	46.6
Region	Kashmir	108	52.9
	Jammu	96	47.1
Experience (years)	Below 1	10	4.9
	1–3	58	28.4
	3–5	78	38.2
	5–7	35	17.2
	7–9	18	8.8
	9 above	5	2.5

Source: SPSS output.

S S = \frac{N}{1 + N {(e)}^{2}}

Here,

SS = sample size

N = population

e = acceptable sampling error

Figure 2.

Source: AMOS output.

Table 2.

Factor Loadings of CFA

Latent Variables	Scale Items	Path Estimate*	Average Variance Extracted	Construct Reliability
Service capability	SC1	0.812	0.704	0.905
	SC2	0.858
	SC3	0.840
	SC11	0.845
Customer orientation	CO31	0.767	0.673	0.891
	CO32	0.901
	CO33	0.839
	CO34	0.768
Personnel capability	PeC12	0.907	0.796	0.921
	PeC13	0.922
	PeC14	0.845
Sustainable competitive advantage	SCA42	0.743	0.741	0.895
	SCA43	0.959
	SCA44	0.867

Source: AMOS output.

Note: ^*All the paths are significant at p < 0.05.

Table 3.

Discriminant Validity Results

	SC	CO	PeC	SCA
SC	0.704 ^a
CO	0.202	0.673 ^a
PeC	0.305	0.265	0.796 ^a
SCA	—	—	—	0.741 ^a

Source: Author’s compilation from primary data.

Note: ^aVariance extracted.

Table 4.

Results of Structural Model

Paths			Std. Estimates	Critical Ratio	P-value	Decision	R²
SC	←	CRM capability	0.63	6.17	0.001	Supported
CO	←	CRM capability	0.74	6.71	0.001	Supported
PeC	←	CRM capability	0.76	6.78	0.001	Supported
SCA	←	CRM capability	0.68	6.22	0.001	Supported	0.47

Source: AMOS output.

Figure 3.

Source: AMOS output.

Sample Description

The description of the employee sample is given in the Table 1. The table reveals that employee sample has a high percentage of ‘Personal Banker’ (23.5%) followed by ‘Assistant Managers’ (18.6%) and ‘Branch Sales Officers’ (17.7%). The ‘Personal Banker’ is a key person in the bank as maximum responsibility towards the banking functions are performed by him/her. In the sample, maximum respondents were from the age group of ‘26–35 years’ (70.6%). The sample consists of highest male respondents as compared to female, and slightly more respondents were observed from the ‘Kashmir region’ than ‘Jammu region’. Also, the highest percentage of respondents was observed from the experience group of ‘3–5 years’, and lowest number was found in the ‘above 9 years’ group.

Questionnaire Design and Development

The questionnaire has been divided into two sections. The first section contains a demographic description of the employees such as age, gender, geographical region, income and experience. And the second section contains items/statements related to the various variables identified in this study. The respondents were asked to give their level of agreement on the five-point Likert scale (1–5) for the second section of the questionnaire. The scale items were developed from the existing established scale only modifications in terms of wording and content were made to fit the context of five-point scale for uniform appearance (Annexure I).

Reliability and Validity

The reliability and validity of the questionnaire was confirmed through confirmatory factor analysis (CFA). Second order factor analysis was performed for CRM capability, which consists of service capability, customer orientation and personnel capability as its latent variables as shown in Figure 2. The model summary of the measurement model provides a good level of model fit with χ²/df = 1.55 (<2 is good and 2–5 acceptable); goodness-of-fit index = 0.946 (GFI > 0.90 is good and >0.80 acceptable); comparative fit index = 0.985 (CFI > 0.90 acceptable); root mean residual = 0.058 (RMR < 0.10 acceptable) and root mean square error of approximation = 0.052 (RMSEA < 0.10 acceptable) (Chau, 1997). Factor loadings are standardized regression weights of variables with its items; loadings above 0.70 are considered good and a loading above 0.60 has also been acceptable by authors (Hair, Anderson, Tatham & Black, 1998).

The significantly good loading of the items provides evidence for convergent validity, so average variance extracted (AVE), construct reliability (CR) and discriminant validity (DV) were calculated as shown in the Table 2. Standardized loading estimates should be 0.5 or higher, and ideally 0.7 or higher; AVE should be ≥0.5 to suggest adequate convergent validity; CR should be ≥0.7 to indicate adequate convergence or internal consistency and for DV the square of the correlation between factors should not exceed the variance extracted (Fornell & Larcker, 1981), which indicates the degree to which measures of conceptually distinct construct differ.

Table 2 depicts that all the four constructs have AVE and CR above the threshold. However, some items have been dropped from the constructs because their item loading was below the threshold. Items SC4 and SC5 have poor loading and were dropped from service capability. Table 3 shows DV results, the diagonal variance of constructs is given and is above the square correlation between the variables in the table.

Results and Discussions

For testing the hypotheses in the conceptual model, structural equation modelling (SEM) has been employed. Maximum likelihood approach with 5000 subsamples bootstrapping procedure using AMOS 20 software has been used for testing the proposed hypotheses. In the structural model, CRM capability is depicted as the independent variable and SCA as the dependent variable (Figure 3). The evaluation of model summary reveals that the model fit indices are good and above the acceptable limit, which envisages that the data fits the model and is in accordance with the proposed conceptual model.

The hypotheses test was performed through the evaluation of regression estimates, critical ratio, the level of significance (5% is set for the present study) and coefficient of determination (R²). The results as shown in Table 4 depict that the path from CRM capability to SCA has regression weight of 0.68, critical ratio of 6.22 and p-value of 0.001 are above the threshold and provide support to the hypothesis H2 that CRM capability has a positive impact on SCA. The coefficient of determination (R² = 0.47) in the model signifies that SCA is 47 per cent determined by the CRM capability, and rest is explained by some other variables not undertaken by this study. Personnel capability has the highest contribution towards CRM capability, with regression weight of 0.76, critical ratio of 6.78 and significant at 0.001. Thus, it provides support to H1c that personnel capability is the significant dimension of CRM capability. The findings are in accordance to the fact that employees of the bank are in direct contact with the customers and are more influential in developing and maintaining a relationship with the new and existing customers (Khandekar & Sharma, 2005).

The study analysed the conceptualization and dimensionality of CRM capabilities and identifies three dimensions (service capability, customer orientation and personnel capability) which have been empirically validated in the measurement model. The SEM results support the hypothesis H1a that service capability is the significant dimension of CRM capability (regression weight of 0.63, critical ratio of 6.17 and p-value < 0.001). Service capabilities reflect the services which the bank has personalized to its cus-tomers. The bank has a diverse set of services which distinguish it from other banks and also has very efficient grievance redressal policy through which customer complaints are addressed in the shortest possible time. The findings are in accordance with the earlier findings of Yang (2012) and Felin et al. (2012) that services play prominent role in sustaining competitive advantage.

Customer orientation of the bank includes information access to customers via. Internet and mobile and mechanism for evaluation of customer-centric performance at all customers touch points. The results support the hypothesis H1b that customer orientation is a significant dimension of CRM capability (regression weight of 0.74, critical ratio of 6.71 and p-value < 0.001). The findings of the study are in line with the earlier findings that customer orientation is a discriminating factor of CRM capability (Bhat & Darzi, 2016; Wang & Feng, 2012). Customer-oriented culture helps the bank to gain deeper insights and understanding into the customer behaviour and developing long-lasting relations with customers, which in a longer run will boost competitive position and superior performance.

Personnel capability has the highest loading in the measurement model and contributes maximum towards the CRM capability. The findings add to the earlier literature which suggested that personnel capability is a key determinant of CRM capability and acts as a source of SCA (Arthur, 1994; Becker & Huselid, 1998; Jackson & Schuler, 1995). Employees contribute to the bank’s competitive advantage based on the knowledge and relationship skills they have acquired over a period of time on the job they perform. The bank must understand and enrich the knowledge base of their employees and provide a common platform, whereby these employees can apply and share the knowledge (Lepak & Snell, 2004).

One of the major findings of the study has been the possession and deployment of superior CRM resources in terms of services, customer-orientedness and personnel which can assist the bank in sustaining competitive advantage. It has been evident from the banks’ previous year (December 2015) performance that the bank was able to achieve 212.01 per cent of its lending target in priority sector (agriculture) as compared to other banks (J&K Bank—58.09%; ICICI Bank—80.94%; SBI—25.32%; PNB—39.41%). Although the J&K Bank has a major market share in the state of Jammu & Kashmir, still the performance of the case bank is more commendable. The bank has launched a strong marketing campaign for the promotion of its diversified products and services. The bank continuously strives to create a strong customer base across different business segments to become a preferred service provider and believes in independence, accountability, responsibility, transparency and timely disclosure. It was the first bank in the state of Jammu & Kashmir which has implemented the CRM strategy, which is one of the key components of its marketing campaign. Moreover, the achievement of the bank in the overall priority sector (including agriculture, micro-small enterprises, education, housing and others) was 90.69 per cent as compared to other banks: J&K Bank—52.39 per cent, ICICI Bank—15.79 per cent, SBI—49.06 per cent and PNB—47.02 per cent. In non-priority sector (heavy industries, medium industries, education, housing and others), the bank was able to achieve 74.14 per cent of its lending targets as compared to other banks: J&K Bank—51.49 per cent, ICICI Bank—6.71 per cent, SBI—57.65 per cent and PNB—42.76 per cent (JKSLBC, 2015). The performance of the bank can be attributed to the CRM capability among other marketing factors. Thus, it adds to the extent literature on RBV by analyzing the impact of CRM resources on the competitive advantage.

Conclusion

The study has demonstrated a significant relationship between CRM capability and SCA that are consistent with the RBV of the firm. Banks that rely on CRM capability are more likely to gain a SCA with superior performance. Personnel capability has been a crucial determinant of the CRM capability and plays an essential role in sustaining competitive advantage of the bank. The bank’s resource capabilities include service delivery mechanism and channels, diversified and personalized banking products, customer-centric culture and skilful & talented staff. These resources should be properly synchronized and configured to produce positive synergies for the bank and can hold the potential of SCA. This study has identified and explored CRM capabilities embedded in organizational processes, people and technology which the bank has to develop for achieving a superior competitive advantage. The measurement model has recognized service capability, customer orientation and personnel capability as the latent variables of CRM capability, and empirically, it has been supported that CRM capability has a significantly positive impact on the SCA.

Achieving the goal of SCA through CRM competencies requires continuous evaluation and monitoring by the bank as competency patterns change with time. The employees need to develop customized relationships with the customer in order to understand their behavioural patterns and redraft their CRM strategy. The bank needs to bring innovation in all the CRM dimensions (service capability, customer orientation and personnel capability) so that other firms are unable to replicate such an advantage.

Managerial Implications

Managers who are concerned with CRM must take an early lead in the process of building CRM capabilities. The SCA can only be achieved when competitors are unable to replicate such competitive strategy. The parties involved in designing such competitive strategies should be cautiously approached. As the process of developing these capabilities required implicit and tacit knowledge, which are highlycontextualized in the human brains of the knowledge workers.

The findings of the study reveal that personnel capability has a major influence on the CRM capability. The managers need to make a sound investment in HR capabilities of the bank for the development of a unique knowledge base, desired skills and aptitudes, which can handle and manage relationships with the customers. In the banking sector, the staff has a crucial role to play, as there are more customer touch points than other sectors. Therefore, development of capabilities requires the active participation of the managers at all level of the firm.

The study bridges the two bodies of literature (RBV and KBV) by proposing a multidimensional approach of CRM capability. The study contributed to the literature by taking a capability view of CRM and empirically validated the three dimensions such as service capability, customer orientation and personnel capability. In addition, the present study developed a scale for CRM capability dimensions and SCA. These dimensions, as well as the scale, can be considered for further validation by the research works in different economies and service sectors other than banking.

Limitations and Future Research

The findings of this study are based on one of the private sector banks operating in the state of Jammu and Kashmir, other banks are not covered under the study. Therefore, the findings of this research should be generalized cautiously to other banks and other sectors. The future research can adopt the methodology of this study and generalize it to other sectors. The model developed is based on a cross-sectional approach, for further validation longitudinal study should be taken. The study has linked service capability, customer orientation and personnel capability as the determinants of the CRM capability. These determinants can be directly linked to the SCA, and their influence can be explored and analysed empirically by some future research. The CRM capability determines only 47 per cent of the SCA other variable need to be incorporated into the model which explain more of SCA. The future research can consider variables such as competitive orientation of service firm, low-cost advantage, financial performance, satisfaction level of customer, etc. Future researchers might consider the moderating and mediating effects of various variables like sociodemographic, retention, loyalty, convenience, cost-benefit issues, etc., in the proposed framework of the study. The analysis carried out in the study can be extended to the individual branch of the bank to investigate the role of the region in which the branch is located and the characteristics of the branch in relation to competitors.

Footnotes

Appendix

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