Competitive Paper

The Irish hotel industry is facing major challenges, with a rapidly increased bed capacity in the sector accompanied by an international economic slump. In addition, hotel guests have increasingly high levels of expectation about the quality of their hotel experience, and are sharing these views through travel sites such as Tripadvisor.com. This reinforces the need articulated in national strategy to enhance the business capability of Irish tourism firms (Fáilte Ireland 2004; Tourism Policy Review, 2003) and in particular, there is an imperative for Irish hotels to establish and maintain more effective relationships with their guests. Customer Relationship Management (CRM) represents the organisation‘s ability to create and maintain profit maximising relationships with its customers (Zablah et al., 2004). However, CRM programmes frequently fail (Sigala, 2005). The objective of this paper is to examine how a Resource-Based View of the Firm (RBV) perspective (Wernefelt, 1984), which links company actions directly to performance (Harmsen and Jensen, 2004) can assist Irish hotels in implementing more effective CRM programmes. The rapid evolution of CRM technologies grants organisations the motivation and the instruments to create strong relationships and enhance customer value (Day and Van den Bulte, 2002). However, this is not the case for all organisations: many companies have failed to forge customer relationships through utilising CRM (Sigala, 2005), which may be due to an over-reliance on the technology aspect (Campbell, 2003; Reinartz et al., 2004). The RBV is proposed as a theoretical perspective to address the failures of CRM. The RBV is a strategic management framework that aims to elucidate the link between idiosyncratic firm resources and differentials in firm performance (Gibbert, 2006; Hatch and Dyer, 2004). It focuses on how specific resource and capability pools are employed to create and sustain competitive advantage. Firms possessing sustained competitive advantage (SCA) will enjoy profit earnings exceeding that of their competition. However, while the RBV shows potential as a theory for examining strategic issues, firms must understand it before implementation efforts are considered (Fahy and Smithee, 1999). Significant work by Day and Van den Bulte (2002) and Day (2003) on CRM within the RBV framework has identified that the Customer Relating Capability (CRC) provides a more satisfactory model of CRM, they argue that the acknowledgement of the cultural context to developing more effective customer relationships in this capability explains its positive relationship with performance. However, this capability has had limited empirical exploration. Therefore, a research agenda is presented in this paper which proposes examination of the nature of customer-relating capability within the Irish hotel industry. Research should encompass both senior managers and front-line staff, important for gaining the optimum view of an organisational capability (see Ulrich and Smallwood, 2004). This will make a significant contribution to the academic literature in further understanding of this key capability, and address a pressing need for insight into more effective customer relationship management in the Irish hotel sector.