International Journal of Knowledge Engineering and Research Vol 1 Issue 3 December 2012

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A Theoretical Framework for Technology Oriented Customer

Relationship and Knowledge Based Learning in SMEs
Entrepreneurship

Arpita Mehta

Abstract

Entrepreneur derives from the French words entre, meaning between, and prendre, meaning
to take. Entrepreneurship is a process by which individuals pursue opportunities without
regard to resources they currently control. Entrepreneurship has become a major force in the
global economy. Policy makers across the world are discovering that economic growth and
prosperity lie in the hands of entrepreneursthose dynamic, driven men and women who are
committed to achieving success by creating and marketing innovative, customer-focused new
products and services. Inventors and entrepreneurs differ from one another: Inventor creates
something new; Entrepreneur assembles and then integrates all resources needed to transform the
invention into a viable business. Engagement marketing is a new approach to brand development
that builds on the time-honored notion of listening to customers and keeping them for life. The
difference is that engagement uses interactive technology to reach and communicate continually
with all stakeholders customers, other trading partners, shareholders and anyone else who
determines the brands success. It builds relationships by being immediately attentive and
responsive to stakeholder needs and opinions, 365/24/7.

Keywords: CRM, Knowledge Management, Technology Management, SMEs,

Entrepreneurship, Customer Engagement, Relationship Marketing, Learning, Strategy

Introduction

According to Lovelock and Wright (2002:102-103), customers define a valued relationship as

one in which the benefits received from service delivery significantly exceed the associated costs
of obtaining them. Relationship marketing is defined as the process of establishing and
maintaining mutually beneficial long-term relationships among organizations and their
customers, employees and stakeholders. This shift to building relationships is offered as a
solution to organizations in promoting sustainable relationships in this era of ever-increasing
competition (Rensburg & Cant, 2003:119). Technology, in the business context, can best be
considered as an important type of resource, and hence there are considerable linkages with other
resource-based views of the firm (e.g. Wernerfelt , 1984, Dierickx and Cool ,1989, Penrose,
1995, Grant, 1996), such as competence (Hamel & Prahalad, 1994) and capability approaches
(Teece et al., 1997), and the general knowledge management literature. A key objective of
technology management is to ensure that technological resources are effectively linked to
business requirements, which is the focus of the technology management framework proposed in
this paper, and a key benefit of the technology road mapping approach. According to Rouse and

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Rouse (2002), effective communication means that the information is received accurately in
terms of content and meaning as intended by the sender. According to Duncan (2002:8),
marketing communication is a process for managing the customer relationships that drive brand
value. Technology management addresses the effective identification, selection, acquisition,
development, exploitation and protection of technologies needed to maintain a stream of
products and services to the market (Gregory, 1995). There are many published definitions of
'technology' (e.g. Floyd 1997, Whipp 1991, Steele 1989). Examination of these definitions
highlights a number of factors that characterize technology, which can be considered as a
specific type of knowledge (although this knowledge may be embodied within a physical artefact
- i.e. a machine, component, system or product). The key characteristic of technology that
distinguishes it from more general knowledge types is that it is applied, focusing on the 'know-
how' of the organization. While technology is often associated with science and engineering
('hard' technology), the processes which enable its effective application are also important - for
example new product and innovation processes, together with organisational structures and
supporting communication / knowledge networks ('soft' aspects of technology). Treating
technology as a type of knowledge is helpful, as knowledge management concepts can be
brought to bear (e.g. Stata, 1989, Nonaka, 1991, Leonard-Barton, 1995, Fleck, 1997, Pelc, 1997,
Madhaven and Grover, 1998, Bowonder and Miyake, 2000). For instance, technological
knowledge generally comprises both explicit and tacit knowledge. Explicit technological
knowledge is that which has been (or can be) articulated (e.g. a report procedure or user guide),
together with the physical manifestations of technology (e.g. equipment). Tacit technological
knowledge is that which cannot be easily articulated, and which relies on training and experience
(e.g. welding, or design skills).

Literature Review

According to Kotler (2001:7), relationship marketing aims at building long-term mutually

satisfying relations with key parties such as customers, suppliers, distributors in order to earn
and retain their long term preference and business. However, the most comprehensive definition
of relationship marketing was proposed by Gronroos (2000: 42-3) who submits that the
objectives of relationship marketing are to identify and establish, maintain and enhance, and,
when necessary, terminate relationships with customers and other stakeholders, at a profit so that
the objectives of all parties involved are met. This is done by mutual exchange and fulfillment of
promises.

Van Staden et al., (2002) cite the following advantages of communicating effectively with
customers:

Better customer relationships

Saving time and money
More effective decision-making
Successful problem-solving

Van Staden et al., (2002) define communication as a two-way process whereby information (the
message) is sent from one person (the sender) through a channel to another person (the receiver)
who in turn reacts by providing feedback. The literature study also yielded the same results:

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emphasizing Kotlers (2001:21) definition of satisfaction as a persons feelings of pleasure or

disappointment resulting from comparing a products perceived performance (or outcome) in
relation t o his or her expectations. Thus, satisfaction as a function of perceived performance and
expectations will result in customer dissatisfaction if performance falls short of the expectations
and in customer satisfaction if it exceeds expectations.

According to Peppers and Rogers (2004:235), if a service provider wants to establish a long-term
long
relationship with a customer based on individual information, it should recognize that customer
data is its most valuable asset, should secure and protect that data, and also share the policy for
that protection in writing with its customers, partners and vendors, in the form of a privacy
pledge. Marketing entails much more than developing a good product, pricing it attractively and
making it readily available to the target customers. Organizations need to communicate with
their current and potential customers. They have to fulfill the role of communicator and promoter
(Kotler, 2000:550).

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Schultz et al. (1995:85) are of the opinion that it is impossible for a marketer to establish
effective communication with the target customers using only mass techniques like advertising,
sponsorship, and publicity. It is the rapport, the empathy, the dialogue, the relationship and the
communication that the marketer establishes with the prospect that makes the difference that
separates him/her from the rest

According to Peppers and Rogers (2004:45), commitment is the belief that the importance of a
relationship with another is so significant as to warrant maximum effort at maintaining it. Like
trust, commitment is viewed as extremely important in the formation of customer relationships.
Morgan and Hunt (1994) submitted that, the presence of relationship commitment and

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relationship trust is central to successful relationship marketing Commitment and trust lead
directly to cooperative behaviors that are conducive to relationship marketing success.

Hedberg (1981), states, although organizational learning occurs through individuals, it would be
a mistake to conclude that organizational learning is nothing but the cumulative result of their
members learning. Organizations do not have brains, but they have cognitive systems and
memories. ...Members come and go, and leadership changes, but organizations memories
preserve certain behaviors, mental maps, norms and values over time (p. 6). In a similar vein,
Nonaka (1991), describes a company as a living organism with a collective sense of identity and
a fundamental purpose, which in turn influences each members commitment to learning and
sharing knowledge. Here, it is recognized that as members learn and codify their leanings in
organizational features, such as norms and systems, those features in turn influence future
member learning.

Another primary debate in the OL literature has been around the question of whether
organizations can learn. While some academics maintain that organizational learning is simply
the sum of what individuals in organizations learn (Kim, 1993; Simon 1991), others contend that
organizational learning is a reflection of the collective ideas, activities, processes, systems, and
structures of the organization (Levitt & March, 1988; March 1991). Organizational knowledge
(OK) theorists have also noted the behavioral--cognitive distinction, but from the point of view
of the product of learning; either the development of know what or know how. Nonaka (1994),
drawing on the work of Polanyi (1966), distinguishes between explicit, easily codified
knowledge, and tacit knowledge, which is rooted in both cognitive capability (know what) and
action (know how). While the exchange of explicit knowledge can be shared and integrated
amongst members via reports, memos, data bases, and lectures, the sharing and development of
tacit knowledge, whereby we know more than we can tell (Polanyi, 1966 in Nonaka, 1994),
occurs through dialogue and practice as members surface and absorb know what and know how.
Similarly, Zander and Kogurt (1995) create a distinction between information and know how,
whereby information refers to knowing what something means and knowing how refers to a
firms ability to put that knowledge into action. According to the authors, know how becomes a
capability of the firm and is built from the firms ability to share, leverage, and exploit member
competence. Organizational knowledge theorists have added to the conversation by defining the
product of learning as both know what (cognitive learning) and know how (behavioral learning).
Increasingly, academics have adopted broader definitions of OL that embrace the cognitive and
behavioral nature of learning, perhaps in recognition that learning cannot be separated from how
one experiences the world (Esterby--Smith, Crossan, & Nicolini, 2000).

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Representing the former perspective, Simon (1991) points out that organizations do not learn,
people do, and we must be careful about reifying the organization and talking about it as
knowing something or learning something (p. 126). As Simon contends, All learning takes
place inside individual human heads; an organization learns in only two ways: (a) by the learning
of its members, or (b) by ingesting new members who have knowledge the organization didnt
previously have (p. 125). Accordingly, Simon (1991), reasons that learners, those who have the
knowledge stored in their heads,, should be the focal point of inquiry with the questions being: 1)
do we know who knows what? and 2) can their knowledge be accessed by others as the need
arises? As Simon suggests, What aan n individual learns in an organization is very much
dependent on what is already known to (or believed by) other members of the organization and
what kinds of information are present in the organizational environment. As we shall see, an
important componentt of organizational learning is internal learning learning transmission of
information from one organizational member or group of members to another. Individual
learning in organizations is very much a social, not a solitary, phenomenon (p. 125).

Independent of the benefits to individual learning, social interaction, and common experiences
also play an important role in the development and transfer of group knowledge (Becerra--
(Becerra
Fernandez & Sabherwal, 2008; Fiol 1994). Those exploring group level learning have hav identified
how social processes enable the exchange, synthesis, and broadening of individual member
knowledge into the synergistic knowing that resides amongst the group. Here, academics have
studied the many processes and conditions associated with prod productive
uctive learning interactions via
conversation and interaction principles (Isaacs, 1999; Kahane, 2004), and common working--
working
in-- learning experiences (Kofman & Senge, 1993; Lave & Wenger, 1991, Wenger, 2006).
To this end practical theorists have develop
developed
ed social technologies like caf conversations (Hurley
& Brown, 2010), whole systems change processes (Danemiller & Jacobs, 1992), and theory U
(Scharmer, 2005) to offer philosophical, procedural, and logistical tenants for the facilitation,
focus, pacing, and flow of productive learning experiences amongst and between groups and
communities (Hurley & Brown, 2010; Weber & Manning, 1998). Together, these protocols
create a rich environment for conversing and learning.

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Similarly to 'technology', there are m

many
any definitions of 'technology management' in the literature
(e.g. Roussel et al., 1991, Gaynor, 1996). For the purposes of this paper the following definition
is adopted, proposed by the European Institute of Technology Management (EITM):

"Technology management
agement addresses the effective identification, selection, acquisition,
development, exploitation and protection of technologies (product, process and infrastructural)
needed to maintain a market position and business performance in accordance with the
company's objectives".

This definition highlights two important technology management themes:

Establishing and maintaining the linkages between technological resources and company
objectives is of vital importance, and represents a continuing challenge for many firms. This
requires effective communication and knowledge management, supported by appropriate tools
and processes. Of particular importance is the dialogue and understanding that needs to be
established between the commercial and technological functions in the business.

Effective technology management requires a number of management processes, and the EITM
definition includes the five processes proposed by Gregory (1995): identification, selection,
acquisition, exploitation and protection of technology. These processes are not always very
visible in firms, and are typically distributed within other business processes, such as strategy,
innovation and operations.

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According to Peppers and Rogers (2004:46), the overall role that customer satisfaction plays in
the formation of relationships is intuitive since a dissatisfied customer will generally seek to
replace the service provider. This threat has increased since the advent of cell phone number
portability.

According to Peppers and Rogers (2004:235), if a service provider wants to establish a long-term
long
relationship with a customer, based on individual information, it will recognize that customer
data is its most valuable asset, hence it will secure and protect that data, and will share
sha the policy
for that protection in writing with its customers, partners and vendors, in the form of a privacy
pledge as indicated above. Peppers and Rogers (2004:56), approach customer loyalty from two
different directions: attitudinal and behavioral. Thee attitudinal definition of loyalty implies that
loyalty is a state of mind. Customers are loyal to a brand or company if they have a positive,
preferential attitude toward it. They like the company, its products, or its brands, and they prefer
to buy from it, rather than from the companys competitors. It is assumed that the majority of
customers are loyal to their chosen service provider and they have a positive ongoing
relationship that is satisfying and enduring. Any company wanting to increase loyalty in
attitudinal terms will concentrate on improving its product, its image or other elements of the
customer experience. In the behavioral definition, loyalty is not the cause, but the result of brand
preference. A company wanting to increase customer loyalty ty will focus on whatever tactics will
increase the amount of repurchase behavior.

Hart (2003:144), outlines a number of organizational attributes of service providers that may
help foster sustainable customer relationships:
An organizational culture that
hat focuses on customer service.

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Employees that have good interpersonal communication skills since these influences how
service providers interact with customers.
Employee motivation and training which is very important especially in services that involve
high employee/customer contact, where social benefits are valued and where technology plays a
significant role in building and maintaining relationships, for e.g. service providers contacting
customers via sms.
Developing an ability to calculate relationship performance and to assess the impact of
marketing strategies on customer satisfaction, trust, commitment and loyalty.

Proposed Theoretical Framework

Conclusion

Evans, OMalley and Patterson (2004:213), consider trust to be the basis of relationships and the
glue that holds it together. Unless there is a minimum level of trust between the parties, it is
unlikely that a relationship will be initiated at all. If trust breaks down, the relationship is likely
to be dissolved. In order for customers to trust in their service provider, they must have
confidence in their service providers ability and willingness to keep their promises. Trust is
particularly important for services, which by their nature are highly intangible. The trust that a
customer places with the service provider is mainly based upon their own experience with that

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provider or with similar organizations. Trust in a relationship brings harmony and stability.
Service providers need to make greater efforts to understand the specific needs of customers.
They can achieve this through intensive marketing research. This will enable them to adapt their
offerings to suit the individual needs of their customers.

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