The Effects of IT-enabled Collaboration

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measured by CRM processes. Reinartz et al. (2004) investigate organizational performance by implementing CRM processes through relationship initiation, maintenance, and termination.

To summarize the literature, measurements of organization performance fall into three categories: financial, operational and relational. We will measure SME performance accordingly, and the details of our research framework are described below.

3.1. The Effects of IT-enabled Collaboration

3.1.1. Effects of Collaboration with SME Partners

Marketing theorists stress the importance of continually learning about the market environment. This learning process involves a series of information processing activities (Day, 1994). Through IT-enabled collaboration with business partners, information on consumers, competitors and other channel members can be acquired and interpreted in light of past experiences and knowledge on the same platform, then used to assist in decision-making. Through the above processes, intangible information and knowledge are transformed into a visible marketing response (José-Juan et al., 2006; Ma, 2009). Appropriate use of information is fundamental to the ability to sense market requirements (Rogers et al., 1991). If an organization does not have adequate and accessible resources and information, it stands at a distinct competitive disadvantage (Herbig & Shao, 1993). Haeckel and Nolan (1993) further stress that information technology is critical to managing conditions that are too turbulent to make sense of. IT-enabled collaboration thus allows resource-limited SMEs to acquire and share information efficiently and effectively, which strengthens their ability the read the market. Therefore, we hypothesize the following:

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Hypothesis 1-a: IT-enabled collaboration with SME partners has a positive impact on market-sensing capability.

Although customer relationships are viewed as an intangible resource that may be relatively rare and difficult for others to replicate (Srivastava et al., 1998; Hooley et al., 2005), the capability of SMEs to acquire and manage customer information is limited due to their smaller scale. By coordinating information and activities with strategic partners, a SME can develop more ways to attract customers, and become more responsive to customer requests and build greater customer loyalty and better customer relations (Stock, 1990; Rapp et al., 2010). Therefore, we predict that customer-linking capability can be improved by collaboration through information technology:

Hypothesis 1-b: IT-enabled collaboration with SME partners has a positive impact on customer-linking capability.

SMEs usually lack promptness because of their lack of resources. To enhance promptness, it is important to increase communication and collaboration and improve decision-making processes (Lee et al., 2006). SMEs can acquire necessary resources and capabilities by forming alliances (Fernández & Nieto, 2005). Smith et al. (2007) argue that organizations involved in alliances are better able to utilize resources, improving their speed to the market and their speed in serving customers. Information technology makes such coordination more feasible (Kumar & Dissel, 1996). Paulraj and Chen (2007) state that IT-enabled collaboration increases information processing speed by providing an intermediary platform for partners to share knowledge, provide

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timely information, and transcend each firm’s boundaries. We hypothesize the following:

Hypothesis 1-c: IT-enabled collaboration with SME partners has a positive impact on promptness.

3.1.2. Effects of Collaboration with Customers

Unlike large organizations, SMEs do not have the resources to engage in formal market research (Keh et al., 2007). For SMEs to sense the market precisely and adapt to it, they must collaborate with their customers to collect a significant amount of data and analyze it. This analysis will provide them with better insight into customer requirements and expectations, ultimately resulting in a service that is more suited to the market (Kausch, 2007). With the help of information technology, SMEs are able to gather, store, access, and analyze customer data to effectively make strategic business decisions (Swafford et al., 2006). Therefore, we hypothesize that IT-enabled collaboration with SME customers provides an environment for organizations to collect and analyze market data from customers and thus enhances the capability of organizations to sense the market.

Hypothesis 2-a: IT-enabled collaboration with SME customers has a positive impact on market-sensing capability.

One crucial reason for conducting customer-linking activities is low customer satisfaction with services and products provided by organizations (Atuahene-Gima, 1995; Goldenberg et al., 2001). It is especially important for SMEs to listen to

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customers’ opinions and complaints directly to raise their level of service and product satisfaction. However, linking to customers is a time-consuming and resource-demanding process for SMEs. It is therefore essential for SMEs to enhance their customer-linking capability by collaborating with customers through a friendly, accessible, and directly interactive channel so that customers feel comfortable giving feedback (Kausch, 2007). Füller et al. (2009) observe that, with the help of IT, organizations are able to form new channels to collaborate with customers, effectively sharing knowledge and managing relationships. As a result, IT-enabled collaboration with customers may reduce the distance between resource-limited SMEs and customers. Thus, we develop the following hypothesis:

Hypothesis 2-b: IT-enabled collaboration with SME customers has a positive impact on customer-linking capability.

Whereas large organizations can simply employ a number of people to take care of their customers immediately, resource-limited SMEs may struggle to respond quickly to the demands of their customers. For SMEs, a fast and efficient communication tool to learn about customers is vital if they are to achieve business success. Through collaboration with customers, SMEs are able to learn about their customers in multiple ways, shortening development time. Moreover, IT enables organizations to reduce the time required to share information and reduce response time to unforeseen events, thereby enhancing promptness (Katayama & Bennett, 1999;

Mondragon et al., 2004). Therefore, we hypothesize that SMEs gain promptness through IT-enabled collaboration with customers.

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Hypothesis 2-c: IT-enabled collaboration with SME customers has a positive impact on promptness.