Information technology and customer relationships

This dissertation aims to further enquiry into the business value of information technology (IT) by identifying customer satisfaction and relationship oriented measures of IT effectiveness and firm performance. In contrast with previous research on the business value of IT, which focuses on tangible measures of firm performance, this dissertation examines intangible and more comprehensive measures of firm performance. I draw on IT value, transaction cost and customer satisfaction streams of literature to test several hypotheses relating the effect of IT on firm performance. I propose causal mechanisms that underlie the value creation from IT investments. In doing so, I consider the effect of contextual variables such as market orientation and supply chain integration in deriving value from customer facing IT investments. Using a combination of archival and primary data, this study advances our understanding of the effect of IT investments (both in dollar terms and at the individual technology application level) on customer knowledge, customer satisfaction, and aggregate firm performance.; This dissertation research is comprised of three related studies that explore questions about the effect of IT on customer relationships and business performance. In the first study, I study the importance of customer relationships for suppliers in business-to-business transactions where buyers have the choice of using reverse auctions. Results of the first study point to the critical importance of investing in intangible assets for better customer satisfaction and retention. The second study of the dissertation addresses whether greater investments in IT, particularly those in customer relationship management systems (CRM), help firms improve their customer satisfaction in a business-to-consumer context. Finally, the third study extends the effect of CRM on customer relationships in the business-to-business context. By highlighting the role of specific causal mechanisms and by testing the mechanisms rigorously in the business-to-business and business-to-consumer contexts using archival and primary data, this research triangulates the effect of IT on customer based measures of firm performance and contributes to empirically valid theory.