This chapter provides a review of the existing literature relevant to this study.
Trust
As the foundation of interpersonal interactions, trust requires smooth interpersonal relations. The earliest study of trust began from psychologists studying on the impact of trust on interpersonal relationship. Trust between people is like coagulant, and it's the foundation of social cooperation. The concept of trust in management indicates employee faith in an organization’s goal attainment and organizational leaders and the belief that organizational action will be beneficial for employees. Levin and Cross (2004) refer to trust in management to analyze its effects on performance and the ability to focus employees’ attention on the tasks that need to be done to add value to their firm. Kramer (1999) distinguish between trust in management and trust in peers in their studies on interpersonal trust at work affecting the way in which one behaves towards others. Trust leads to increased overall knowledge exchange, and trust also makes knowledge exchanges less costly. Besides, trust can increase the likelihood which knowledge acquired from a colleague is sufficiently understood that people can put it to practice (Abrams, Cross, Lesser, & Levin, 2003; Levin & Cross, 2004). Interpersonal trust in the workplace has a strong and robust influence on various organizational phenomena including job satisfaction, stress, organizational commitment, productivity and as well as knowledge sharing (Kramer, 1999; Levin & Cross, 2004). Many researchers state that interpersonal trust, a key aspect of relationship capital, is important because it can strengthen organizational network density and thus lead to higher levels of knowledge sharing (Hsu &
Chang, 2012).
12 another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.
Jensen and Connell (2006, p. 152)
Trust as emerging when long-lasting relations among principals combine with good reputations.
Grandison and Sloman (2003, p. 93)
Trust is the firm belief in the competence of an entity to act dependably, securely, and reliably within a specified context.
Fukuyama (1995, p.
127)
The expectation that arises within a community of regular, honest and cooperative behavior, based on commonly shared norms on the part of the members of the community.
Mayer, Davis, and Schoorman (1995, p.
713)
The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party.
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Knowledge Sharing
Knowledge sharing is essential in modern organizations since successful knowledge sharing can result in shared intellectual capital, an increasingly important resource. Cummings (2004) defined knowledge sharing as “the provision or receipt of task information, know-how and feedback regarding a product or procedure.” H. F. Lin (2007) defined knowledge sharing as a social interaction culture, involving the exchange of employee knowledge, experiences, and skills through the whole department or organization. Li (2010) defined knowledge sharing as the activity in which participants are involved in the joint process of contributing, negotiating and utilizing knowledge. Li states that knowledge sharing is a joint process in nature because participants need to be engaged in the process if they really want to share knowledge. As a result, only when individual and group knowledge are translated into organizational knowledge can the organization begin to manage this resource effectively (Liao et al., 2007).
With verbal communication about the task and the exchange of tangible artifacts, information about who knows what in the group, and the implicit coordination of expertise are included in knowledge sharing (Faraj & Sproull, 2000; Rulke & Galaskiewicz, 2000). In work groups, knowledge sharing means to provide task information to a client, or receive feedback on a project from their senior managers (Cummings, 2004).
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Definitions of Knowledge Sharing
Knowledge is a broad, complex and abstract concept, when we see from different aspects, we will have different definitions.
Table 2.2.
Definition of Knowledge Sharing
Source Definition
Y. Liu and Phillips (2011, p. 46)
A kind of human social interaction behavior, and it's also a process of knowledge provider and knowledge sharer conducting knowledge and technology transfer.
Becerra-Fernandez and Sabherwal (2010, p. 231)
Knowledge sharing is defined as the process through which tacit or explicit knowledge is communicated to other individuals.
Aulawi, Sudirman, Suryadi, and Govindaraju (2009, p. 2240)
Knowledge sharing is explained into tacit knowledge sharing behavior and explicit knowledge sharing behavior.
Staples and Webster (2008, p.
621)
Knowledge sharing is an exchange where one party gives some knowledge that she/ he has (explicit or tacit) to another party (a person or a repository).
(continued)
15 knowledge (in the form of text, a diagram or an electronic document) from an isolate sender to a separate receiver.
H.-F. Lin (2007, p.
319)
A social interaction culture, involving the exchange of employee knowledge, experiences, and skills through the whole department or organization
Siakas and
Georgiadou (2006, p. 4)
Knowledge sharing is the process where individuals mutually exchange both tacit and explicit knowledge, and jointly create new knowledge.
Customer Relationship Management
Nowadays, customer relationship management (CRM) has the potential for achieving success and firm’s growth in this environment of extensive competition and rapid technological development. Rababah, Mohd, and Ibrahim (2011) indicates that CRM not only enables organizations to know their customers better, but also build sustainable relationships with them.
Customer relationship management (CRM) is originated from relationship marketing (RM), besides, CRM is replacing the traditional ‘four Ps’ of marketing – product, price, place and promotion (Hung, Hung, Tsai, & Jiang, 2010; I. L. Wu & Wu, 2005). Relationship marketing is particularly used to establish a long-term association, characterized by purposeful cooperation and mutual dependence on social, and structural, bonds as well (Mowen & Minor, 1998). The concept of CRM was first emerged in the information technology (IT) vendor
16
community and practitioner community in the mid-1990s (Boulding, Staelin, Ehret, & Johnston, 2005; Payne & Frow, 2005). The terms RM and CRM are often used interchangeably in the academic community (Parvatiyar & Sheth, 2001). Yet, CRM is more commonly used in the context of technology solutions and has been described as “information-enabled relationship marketing” (Lynette Ryals & Payne, 2001).
The main components of CRM are people, technology, and processes. CRM can be understood as a business philosophy, a business strategy, a business process, or a technological tool. As a business philosophy, L. Ryals and Knox (2001) defines CRM as a relationship orientation, customer retention and superior customer value created through process management. As a business strategy, Croteau and Li (2003) defines CRM as a customer-focused business strategy which focuses on increasing customer satisfaction and customer loyalty by providing a more responsive and customized services to each customer. As a business process, Srivastava, Shervani, and Fahey (1999) defines CRM as a macro-level (i.e., highly aggregated) process which classifies numerous sub-processes, for example, prospect identification and customer knowledge creation. As a technology, Hsieh (2009) defines CRM as an enabling technology for firms to foster closer relationships with their customers. CRM coordinates marketing, selling, and service activities in both intra-organization and inter-organization (Swift, 2001).
17
Definition of Customer Relationship Management
Table 2.3.
Definition of Customer Relationship Management
Source Definition
L. Ryals and Knox (2001, p. 535)
CRM is a relationship orientation, customer retention and superior customer value created through process management.
Zablah, Bellenger, and Johnston (2004, p.
477)
CRM refers to the idea that the most effective way to achieve loyalty is by proactively seeking to build and maintain long term relationships with customers.
Kincaid (2003, p. 8) CRM is the strategic use of information, processes, technology, and people to manage the customer’s relationship with a company across the whole customer life cycle.
Croteau and Li (2003, p. 22)
CRM is a customer-focused business strategy that aims to increase customer satisfaction and customer loyalty by offering a more responsive and customized services to each customer.
Parvatiyar and Sheth (2001, p. 5)
CRM is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value.
(continued)
18 improved shareholder value through the development of appropriate relationships with key customers and customer segments. CRM unites the potential of relationship marketing strategies and IT to create profitable, long-term relationships with customers and other key stakeholders. CRM provides enhanced opportunities to use data and information to both understand customers and to create value with them. This requires a cross-functional integration of processes, people, operations, and marketing capabilities that is enabled through information, technology, and applications.
Huang and Wang (2009, p. 737)
CRM is a customer-centered enterprise management mode, which discovers the customers’ value and satisfies their requirements to realize the interaction between enterprise management and customers.
Urbanskiene, Žostautiene, and Chreptavičiene (2008, p. 52)
CRM is the complex of software and technologies, automating and performing business processes in the following areas: sales, marketing, service, and customer support
Hsieh (2009, p. 416) CRM is an enabling technology for organizations to foster closer relationships with their customers.
(continued)
19
Table 2.3. (continued)
Source Definition
Hobby (1999, p. 28) CRM is a management approach that enables organizations to identify, attract, and increase retention of profitable customers by managing relationships with them.
Glazer (1997, p. 67) CRM attempts to provide a strategic bridge between information technology and marketing strategies aimed at building long-term relationships and profitability. This requires “information-intensive strategies”.
Swift (2001, p. 34) CRM is an enterprise approach to understanding and influencing customer behavior through meaningful communication to improve customer acquisition, customer retention, customer loyalty, and customer profitability.
Bose (2002, p. 90) CRM is an enterprise-wide integration of technologies working together, such as data warehouse, web site, intranet/ extranet, phone support system accounting, sales, marketing, and production.
Tarokh and
Ghahremanloo (2007, p. 48)
CRM is a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them.
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Innovation Capabilities
Guan and Ma (2003) state that in today’s competitive and fast-changing business environment, a firm’s capability to innovate is likely to be a particularly crucial learning output because it is the key to gaining dynamic competitive advantage. Elmquist and Le Masson (2009) asserted that developing innovative products and services is a key challenge for many firms today and companies need to develop their innovation capabilities to stay competitive.
Innovation capabilities provide unique competitive advantages because they help the firm improve its products, processes, production, problem- solving techniques and therefore operate successfully in global markets (Yi, Wang, & Kafouros, 2013). Many researchers considered innovation capability as a key for competition (Kogut & Zander, 1992; Lawrence & Lorsch, 1967; Prahalad & Hamel, 1990). Innovation is often described in terms of changes in what a firm offers the world (product/service innovation) and the ways it creates and delivers those offerings (process innovation) (Sher & Yang, 2005). Innovation is a critical activity for companies and firms that do not innovate risk being eliminated from the market (Liao et al., 2007). Hurley and Hult (1998) suggested that firms with greater innovation capability will be more successful in responding to their environments and developing new knowledge about how to improve existing products and processes or create new ones. Besides, firms that have high innovative capability will be more successful to develop new capabilities that will cause response to environment, competitive advantage and high performance.
Based on Samson’s concept of innovation categories, Tasi et al. define a firm’s innovation capability as including product innovation, process innovation, and managerial innovation (Liao et al., 2007).Liao et al. (2007) also state that process innovation belongs to the area of technical innovation, besides, management innovation is a capability that improves a firm’s performance by implementing new managerial regulations, systems, and methods etc.
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Definition of Innovation Capabilities
Table 2.4.
Definition of Innovation Capabilities
Source Definition
Lall (1992, p. 172) Innovation capabilities as the capacity and knowledge needed to effectively absorb, master, and improve the existing technologies and to create new ones.
Koc and Ceylan (2007, p. 108)
Innovation capability is the ability of an organization to successfully adopt or implement new ideas, processes or products.
Zheng, Liu, and
Innovation capability is defined as: (1) the capacity of developing new products satisfying market needs; (2) the capacity of applying appropriate process technologies to produce these new products;
(3) the capacity of developing and adopting new product and processing technologies to satisfy the future needs; and (4) the capacity of responding to accidental technology activities and unexpected opportunities created by the competitors.
Kogut and Zander (1992, p. 385)
A firm’s innovation capability is defined as its ability to mobilize the knowledge included its employees and combine it to create new knowledge resulting in product or process innovation.
(continued)
22
Table 2.4. (continued)
Source Definition
Lall (1992, p. 170) Innovation capabilities can be defined as the skills and knowledge needed effectively to absorb, master and improve existing technologies, products and to create new one.
Akman and Yilmaz (2008, p. 74)
Innovation capability is defined as an important factor that facilitates an innovative organizational culture, characteristics of internal promoting activities and capabilities of understanding and responding appropriately to the external environment.
Tsai et al. (2001, p.
537)
A firm’s innovation capability is defined as including product innovation, process innovation, and managerial innovation.
Teece and Pisano (1998, p. 196)
Innovation capability is define here as an actor’s ability to sense the changes in the environment and exploit existing resources and competencies in order to create competitive advantage by innovation activities.
23