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

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  • Kartik Kalaignanam

    () (Moore School of Business, University of South Carolina, Columbia, South Carolina 29208)

  • Tarun Kushwaha

    () (Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599)

  • Jan-Benedict E. M. Steenkamp

    () (Kenan-Flagler Business School, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599)

  • Kapil R. Tuli

    () (Lee Kong Chian School of Business, Singapore Management University, Singapore 178899)

Abstract

One central business activity that companies increasingly outsource is the information systems (IS) function. Previous research has shown that outsourcing of back-office IS generally has a positive effect on shareholder value of the outsourcing firm. Much less is known about the performance implications of outsourcing of another important IS function, namely, front-office customer relationship management (CRM) systems, where the vendor uses its own personnel and software to perform several CRM tasks. Previous, largely anecdotal evidence shows that the performance implications of outsourcing CRM range from very negative to very positive. To address this unsatisfactory state of knowledge, we provide and empirically test a contingency perspective on the performance implications of outsourcing CRM processes. We do so using the event-study methodology. The results are largely consistent with our contingency model. CRM outsourcing is more beneficial to firms that are high on information technology capabilities and low on marketing capabilities, and less beneficial when it concerns presales CRM. Similarly, although vendor economic distance has a positive influence on the outsourcing firm's shareholder value, vendor cultural distance has a negative influence. These effects are in turn significantly moderated by the type of CRM process outsourced. This paper was accepted by Sandra Slaughter, information systems.

Suggested Citation

  • Kartik Kalaignanam & Tarun Kushwaha & Jan-Benedict E. M. Steenkamp & Kapil R. Tuli, 2013. "The Effect of CRM Outsourcing on Shareholder Value: A Contingency Perspective," Management Science, INFORMS, vol. 59(3), pages 748-769, July.
  • Handle: RePEc:inm:ormnsc:v:59:y:2013:i:3:p:748-769
    DOI: 10.1287/mnsc.1120.1565
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    File URL: http://dx.doi.org/10.1287/mnsc.1120.1565
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Dahlgrün, Philipp W. & Bausch, Andreas, 2019. "How Opportunistic Culture Affects Financial Performance in Outsourcing Relationships: A Meta-Analysis," Journal of International Management, Elsevier, vol. 25(1), pages 81-100.
    2. Kalaignanam, Kartik & Kushwaha, Tarun & Rajavi, Koushyar, 2018. "How Does Web Personalization Create Value for Online Retailers? Lower Cash Flow Volatility or Enhanced Cash Flows," Journal of Retailing, Elsevier, vol. 94(3), pages 265-279.
    3. Kevin B. Hendricks & Manpreet Hora & Vinod R. Singhal, 2015. "An Empirical Investigation on the Appointments of Supply Chain and Operations Management Executives," Management Science, INFORMS, vol. 61(7), pages 1562-1583, July.
    4. Raassens, Néomie & Wuyts, Stefan & Geyskens, Inge, 2014. "The performance implications of outsourcing customer support to service providers in emerging versus established economies," International Journal of Research in Marketing, Elsevier, vol. 31(3), pages 280-292.
    5. Ding, Li & Lam, Hugo K.S. & Cheng, T.C.E. & Zhou, Honggeng, 2018. "A review of short-term event studies in operations and supply chain management," International Journal of Production Economics, Elsevier, vol. 200(C), pages 329-342.
    6. Adina Bărbulescu Robinson & Kapil R. Tuli & Ajay K. Kohli, 2015. "Does Brand Licensing Increase a Licensor's Shareholder Value?," Management Science, INFORMS, vol. 61(6), pages 1436-1455, June.
    7. Isaac M Dinner & Tarun Kushwaha & Jan-Benedict E M Steenkamp, 2019. "Psychic distance and performance of MNCs during marketing crises," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(3), pages 339-364, April.

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