Application of customer relationship management in vietnamese trading SMEs

Thus, this study aimed to identify barriers in implementing customer relationship management in Vietnam SMEs by answering the following questions: 1.. Research Objectives To review exis

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

TẠI VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2018

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH

TẠI VIỆT NAM

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: TS NGÔ VI DŨNG

Hà Nội - 2018

STATEMENT

The author confirms that the research outcome in the thesis is the result of author‘s independent work during study and research period and it is not yet published in other‘s research and article

The other‘s research result and documentation (extraction, table, figure, formula,and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business, and the laws for above-mentioned declaration

Phan Tung

ACKNOWLEDGEMENT

First and foremost, I would like to express my sincere gratitude to my supervisor, PhDDr NGO VI DUNG, at the Hanoi School of Business and Management (HSB), Vietnam National University (VNU) for his detailed guidances and valued advices Without his guidance and persistent help this thesis would not have been completed

I would like to express my great thank to all my colleagues and friends for their warmly support during my thesis My special thanks come to DNS management and staffs for all encourages and supports during the whole my MBA course

Last but not least, I would like to express my deeply thank to my wife, my children, family members and friends They were the one that are always beside me and supporting me during all the process

Phan Tung

TABLE OF CONTENTS

ABBREVIATION iii

LIST OF TABLE iiiiii

LIST OF FIGURES iiiiiiiii

CHAPTER 1: INTRODUCTION 114

1.1 Rationale 114

1.2 Research Objectives 336

1.3 Subject and Scope of Research 336

1.4 Structure of the thesis 336

CHAPTER 2: THEORETICAL BACKGROUND 558

2.1 Definition of CRM and its conceptualization problems 558

2.2 Benefits or objectives of business when implementing CRM 8811

2.3 Key factors for success and barriers of CRM application 101012

2.4 Key antecedents of CRM application 111114

2.5 Hypotheses development and research model 202023

2.5.1 Background of Vietnam SMEs 202023

2.5.2 Barriers of CRM implementation in Vietnam SMEs 212124

2.5.3 Research Model 262629

2.6 Chapter Brief 282831

CHAPTER 3: METHODOLOGY 292932

3.1 Research design 292932

3.2 Data sources and data collection 313134

3.3 Qualitative research 313134

3.4 Research measurements 363639

3.5 Quantitative research 383841

3.6 Validity and reliability 393942

3.7 Ethical consideration 404043

3.8 Chapter brief 404043

CHAPTER 4: RESULTS AND DISCUSSIONS 414144

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4.1 Sample description 414144

4.2 Results of focus group discussion 414144

4.3 Results of survey 424245

4.4 Discussion on the results 454548

4.5 Chapter brief 525255

CHAPTER 5: CONCLUSIONS, LIMITATIONS AND IMPLICATIONS 535356

5.1 Conclusions 535356

5.2 Implications and suggestions for Vietnam SMEs 545457

5.3 Limitations 606063

5.4 Recommendation for future research 616164

REFERENCES 626265

APPENDIX I: QUESTIONNAIRE 787074

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ABBREVIATION

1 CRM: Customer Relationship Management

2 SMEs: Small and Medium Enterprises

3 AI: artificial intelligence

4 SFA: Sale force automation

5 KMS: Knowledge Management System

6 RM: Relationship Marketing

7 ERP: Enterprise resource planning

8 NPD: New product development

9 BPS: Business process standardization

10 BPR: Business process reengineering

bullets or numbering

LIST OF TABLE

Table 2.1: Benefit of successfully CRM implementation 9

Table 2.2: Success factors for CRM implementation 10

Table 2.3: Barriers factors identified by previous studies 11

Table 2.4: Transactional marketing vs CRM approach (Piccoli et al., 2003) 131312

Table 3.1 Key barrier factors and sub-dimensions to CRM implementation in Vietnam SMEs 323231

Table 3.2: Operationalized variables 363635

Table 4.1: Respondent‘s background 414140

Table 4.2 Results on the key factors of barrier 424241

Table 4.3 Results on the sub-dimension of each factor 434342

Table 4.4 6 sub-dimensions as most commonly barriers 454544

Table 4.5: Detail sub-dimensions of Barrier 1-Changing Business Culture and Cross-functional interaction 464645

Table 4.6: Detail sub-dimensions of Barrier 2- Lacks of customer management knowledge 474746

Table 4.7: Detail sub-dimensions of Barrier 3-Lacks of new processes and standards 494948

Table 4.8: Detail sub-dimensions of Barrier 4-Lacks of skillful Human Resources 505049

Table 4.9: Detail sub-dimensions of Barrier 5-Information Security Threats 515150

Table 5.1 CRM implementation key antecedents 535352

Table 5.2 Key barriers in CRM implementation for Vietnam SMEs 545453

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LIST OF FIGURES

Figure 2.1: Evolution of CRM (Haran, 2005) 8

Figure 2.2 Knowledge Management System (Fteimi and Lehner, 2014) 141413

Figure 2.3: Factors of Change (Pries & Stone, 2004) 181817

Figure 2.4: Transition Curve (Carnall, 1990) 191918

Figure 2.5: CRM Knowledge Management process 232322

Figure 2.6 Research model 272726

Figure 3.1 Research process 303029

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CHAPTER 1: INTRODUCTION 1.1 Rationale

CRM (customer relationship management) has been increasingly recognized

as a business strategy to effectively understand, manage, and sustain customer

relationship with advanced information and communication technologies

The term of "relationship marketing", coined by Berry(1983) emphasized on

continuing relationships rather than simply individual transaction It is a new-old

concept The idea of a business earning the customers' favor and loyalty by

satisfying their wants and needs was not unknown to the earliest merchants

Gronroos (1994) cites this Middle Eastern proverb from ancient trade: "As a

merchant, you'd better have a friend in every town."

Before the mid of twentieth century, most of the retails activities take place

in small stores, the purchasing process was very simple, allowed the shopkeeper and

customer to spend quality time getting to know each other The shopkeeper deeply

understand about his/her customers' habits and behaviours After that, at the mid of

last century, the mass production techniques and mass marketing fundamentally

changed the competitive landscape by increasing product availability for

consumers Many huge shopping malls and super markets with rich merchandise

portfolio in a convenient way gradually replace the small stores in trading activities

Customer lost their uniqueness, as they became an ―account number‖ and

shopkeepers lost track of their customers‘ individual needs as the market became

full of product and service options (Chen & Popovich, 2003)

In the 21st century, the explosive growth of the Internet and information

technology(IT) has also brought new ways for businesses to communicate with their

customers in various cost effective ways, such as: website, email, cloud-based CRM

applications, and now even the omni-channel retailing fullfilment system with

artificial intelligence(AI) and cognitive technologies supported are not fiction

(IBM-Watson,2017) Attracting customer has become very difficult these days,

when people are harder to please They are smarter, price conscious and sensitive,

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more demanding, less forgiving, and they are approached by many more competitors with equally good or better offers (Kotler,2003)

Increasing competition and decreasing customer loyalty have led to the emergence of concepts that focus on the nurturing of relationships to customers(Fazlzadeh,2011) The combination of "the old" relationship marketing mindset and "the new" CRM and other business support technologies might be the answer for a sustainable way to nurture relationship with customers Many companies today are racing to re-establish their connections to new as well as existing customers to boost long-term customer loyalty Some companies are competing effectively and winning this race through the implementation of relationship marketing principles using strategic and technology-based customer relationship management (CRM) applications.(Chen & Popovich, 2003)

SMEs are featured with limitation of capital and resources,but recently as the cost for CRM application significant reduced and Nielsel approximated the explosive growth of Vietnam e-commerce market at a rate of 22%last year, many Vietnam SMEs start deploying CRM as solutions to improve its relationship with customer) Report from a SME CRM solution provider in Vietnam indicated that during last year their customer growth was more than 200% But during the process

of CRM implementation, representative also noted that Vietnam SMEs faced a lot

of obstacle in the process of achieving the properly benefits.According to our best knowledge, there is currently no studies on barriers on CRM management in the context of Vietnam In addition, because more than 90% of Vietnamese firms are SMEs (GSO, 20161) Thus, this study aimed to identify barriers in implementing customer relationship management in Vietnam SMEs by answering the following questions:

1 What are the benefits or objectives of business when implementing CRM?

2 What areis the key antecedents that affects the result of CRM implementation?

3 What areis the major barriers that VNSMEs faced when implementing

1 https://www.gso.gov.vn/

CRM?

1.2 Research Objectives

To review existing knowledge on barriers of customer relationship

management provided by previous studies;

To identify key antecedents of CRM application that affects the result of

CRM implementation;

To identify barriers in implementing customer relationship management of

Vietnamese SMEs;

To provide some suggestions in CRM implementation practices to

improveVNSMEs performance and benefit in developing long-term relationship

with their customers

1.3 Subject and Scope of Research

Research Subject

The research subject of this thesis areis the key antecedents of CRM

application andbarrier factors of CRM implementation of Vietnamese SMEs

Research Scope

This study examine Vietnamese SMEs which implementing CRM for their

businesses activities in Vietnam The timespan for data collection is cros-sectional

and implemented in 2017

1.4 Structure of the thesis

Part 1 presents the introduction, Part 2 presents the literature and theoretical

framework relate to practice in CRM implementation and benefit in developing

relationship with customer, Part 3 presents about methodology where the research

design and research methods are explained Part 4 explains results and discussions

while Part 5 gives conclusions, limitations and implications

Detailed structure of this thesis is:

Statement

Abstract

Abbreviations

List of tables

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List of figures

Part 1: Introduction

Part 2: Theoretical background

Part 3: Methodology

Part 4: Results and discussions

Part 5: Conclusions, limitations and implications References

Appendices

CHAPTER 2: THEORETICAL BACKGROUND

The second part presents academic literatures on the subjects of CRM definition, key antecedents and barrier factors of implementing CRM It provides relevant theories, researches and studies, as well as to provide the conceptional framework The chapter also provides definitions and elaborations on the main concept of practice in CRM implementation and barriers that impact CRM implementation;

The chapter will end with identification of variables and formulation of hypotheses

2.1 CRM and key antecedents of implementing Definition of CRM and its conceptualization problems

Definitions of CRM and its conceptualization problems

Customer relationship management (CRM) was the buzz word of the 1990‘s Until now, CRM is one of the hottest topic in the fields of business strategy, marketing management and information technology Many researchers such as Peppers and Rogers (1999),Chen and Popovich (2003), Day and Van Den Bulte (2002), Gulati and Garino (2000), even some organizations: Gartner Group (1999), Hewson Group (2001), have tried to describe it, but CRM still experienced problems with reference to its conceptualization: CRM means different things to different people (Kale, 2004) This multi-dimensional characteristic of CRM has created ambiguities in how it is defined; there is no universally accepted definition

of CRM (Ngai, 2005) The following section will try to describe what customer relationship management is through the evolution of CRM combined with definitions of CRM based on different level points of view: CRM as a toolset, CRM

as a process or cross-functional process and CRM as a business strategy or dimensional concept

multi-CRM as a tool or a set of tools

Customer relationship management itself is an outgrowth of sales force automation (SFA) tools, CRM is often referred to in the literature as one-to-one

marketing (Peppers and Rogers, 1999) SFA software automates routine tasks such

as tracking customer contacts and forecasting Fickel(1999) define CRM as the technology application link front office (e.g sales, marketing and customer service) and back office (e.g financial, operations, logistics and human resources) functions with the company‘s customer ―touch points‖ With more details, in 2003 Agrawal described CRM is typically designed as a toolset for guiding sales teams and supporting engineers and other specialists in developing sales prospects, creating appropriate business proposals, dealing with customer objections, and providing post-sales customer support CRM integrates touch points around a common view

of the customer (Eckerson & Watson, 2000)

CRM as a process or cross-functional process

―Customer relationship management (CRM) as the process of achieving and maintaining an ongoing relationship with customers across multiple customer touch points through differential and tailored treatment of individual customers based on their likely responses to alternative marketing programs, such that the contribution

of each customer to the overall profitability of the firm is maximized‖ Kumar and Ramani(2004) ―A cross-functional process for achieving a continuing dialogue with customers, across all their contact and access points, with personalized treatment of the most valuable customers, to increase customer retention and the effectiveness of marketing initiatives.‖(Day and Van Den Bulte, 2002) ―An interactive process achieving the optimum balance between corporate investments and the satisfaction of customer needs to generate the maximum profit‖(Gebert et al., 2002)

CRM as a business strategy or multi-dimensional definition

―A CRM business strategy leverages marketing, operations, sales, customer service, human resources, R&D and finance, as well as information technology and the Internet to maximize profit ability of customer interactions For customers, CRM offers customization, simplicity, and convenience for completing transactions, regardless of the channel used for interaction‖ (Gulati and Garino, 2000)

―Customer relationship management (CRM) is a combination of people, processes

and technology that seeks to understand a company‘s customers It is an integrated approach to managing relationships by focusing on customer retention and relationship development‖ (Chen & Popovic,2003)

―Activities a business performs to identify, qualify, acquire, develop and retain increasingly loyal and profitable customers by delivering the right product or service, to the right customer, through the right channel, at the right time and the right cost CRM integrates sales, marketing, service, enterprise resource planning and supply chain functions through business process automation, technology solutions and information resources to maximise each customer contact CRM facilitates relationships among enterprises, their customers, business partners, suppliers and employees.‖ (Galbreath and Rogers, 1999) ―A business strategy that maximises shareholder value through winning, growing and keeping the right customers‖ (Hewson Group, 2001) Construed the scope of CRM as encompassing strategy,management of the dual creation of value, intelligent use of data and technology, acquisition and dissemination of customer knowledge to appropriate stakeholders, development of appropriate (long-term) relationships with specific customers and/or customer groups, and the integration of processes across the many areas of the firm and across the network of firms that collaborate to generate customer value (Boulding et al., 2005)

When developing a framework to assist the implementation of CRM, Haran (2005) has provide a table to demonstrate how CRM has evolved over the last couple of years through different researchers:

Figure 2.1: Evolution of CRM (Haran, 2005)

As the technology keep growing in a fast pace, according to the author, CRM

still can be defined as a customer-focusbusiness stragtegy, even methodology that

combine of people, processes and technology to manage the loop of developing

capability to:

 Understand most profitable target customer‘s wants and needs

 Deploy a clear, properly and attractive value proposition and company

images

 Continuously verify the effectiveness through market feedback on

conversion rates

 Build strong customer relationship and utilization profit based on

improvement of customer acquisition and customer retention

 Revise, re-emphasize or develop new value proposition based on new

and verified customer knowledge

2.2 Benefits or objectives of business when implementing CRM

Positive impact of successfully implementation of Customer Relationship

Management is widely recognized in most of the literature These have been many

studies focusing on the benefit of business when successfully implementation of

CRM as well as practice factors for success in CRM application CRM is one of the

hottest topic in the fields of business strategy, marketing management, and

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information technology (Fazlzadeh et al, 2011) CRM is also a cross functional philosophy that calls for substantial business intergration Thus, to implement CRM successfully, a very different mindset is needed (Piccoli et al, 2003)

Successfully implementing CRM application have resulted in increased competitiveness for many companies as witnessed by higher revenues and lower operational costs Managing customer relationships effectively and efficiently not only boosts customer satisfaction but also improves retention rates (Reichheld, 1996; Jackson, 1994; Levine, 1993) CRM applications help organizations gain customer loyalty and increase profitability by improving life-time value of each customers

CRM application offers the benefit of sharing customer data throughout the organization and implementing innovative technology that resulting in remarkable competitive advantages as below:

Table 2.1: Benefit of successfully CRM implementation

Customer data sharing throughout the

organization resulting in:

CRM innovative technology:

Superior levels of customer service

Opportunities for cross-selling and

up-selling

Vast information about customers‘

habits and references

Integrated and complete view of the

customer

Improved targeting to segments and

individual customers

Efficient call centers/service centers

Extends capability to the customer for self-service and Internet applicationsAttracts existing and new customers through personalized communications and improved targeting

Integrates customer and supplier relationships

Constructs metrics to analyze common and unique customer patterns

Source: (Chen & Popovich, 2003)

2.3 Key factors for success and barriers of CRM application

Key factors for success and barriers of CRM application

Case studies and data sets examined in the academic literature, to date, are

largely comprised of successes (Bohling, 2006) For instance, Leverick et al (1998)

provide a wide ranging review of success factor research with particular reference

to the marketing domain By way of more specific areas, Ryals et al (2000) provide

a comprehensive review of the CRM literature; Wilson and McDonald (1996)

review success factors for marketing decision support; and in a wide-ranging study,

Dutta (2000) examines emerging success factors in e-commerce – one area where a

comprehensive literature review could not be found Wilson et al (2002) examines

the factors that influence the successful deployment of CRM applications, with

particular emphasis on those factors which are distinct from other areas of

application derived from five in-depth case studies Below table are summarise

previous research on success factors for CRM implementation:

Table 2.2: Success factors for CRM implementation

Comment [HSB1]: What factors? Put them

into a table

Comment [HSB2]: Table

Source: Wilson et al., 2002

On the other hand, there are limited study about the barriers or obstacles when

implementing CRM Bohling (2006) express an opinion that to help identify factors

that distinguish successes from failures, future data sets must also include failures

Barriers factors of implementing CRM are often described as an inessential or

additional discussion about CRM implementation For instance, Fazlzadeh et al (2011)

determined that the most important barriers to small and medium-sized enterprises

(SMEs) in science and technology parks are poor communication, inadequate

supporting budgets and inefficiencies in business process In other research, Bohling et

al (2006) determinded the three most commonly cited roadblocks from the survey of

101 US-based firms were lack of necessary resources, insufficient focus on change

management, and insufficient involvement of employees

Table 2.3: Barriers factors identified by previous studies

al.(2006)

Fazlzadeh et

al (2011)

Insufficient focus on change

(Source: The author)

2.4 Key antecedents of CRM applicationimplementation

Relationship marketing

Relationship marketing(RM) has been introduced in the service marketing by

Leonard Berry in 1983 The focus of relationship marketing is to facilitate and

support the customers‘ consumption and usage processes throughout the

Comment [HSB3]: What factors? Put them

relationship, in which value for customers is created by the customers and in interactions with the supplier or service provider (Seth & Parvatiyar, 1995) Relationship marketing is a tactical implications in a firm (Gronnroos, 1997) Armstrong and Kotler (2000) point out that relationship marketing is a relationship process for creating, retaining, and enhancing mutual value between enterprises and customers or other stakeholder groups

Table 2.4: Transactional marketing vs CRM approach (Piccoli et al., 2003)

CRM differs from traditional marketing initiatives (Table 1), CRM also has its roots in relationship marketing which is aimed at improving long run profitability by shifting from transaction-based marketing, with its emphasis on winning new customers, to customer retention through effective management of customer relationships(Christopher et al., 1991).Landry (1998) defines relationship marketing as a long-term database system application by an enterprise to understand

a customer‘s profile and further develop relationship through various communication channels to deliver value and service Additionally, RM involvesbuilding long term interactive relationships, especially with customers, which is the most important benefit for the organizations which have adopted this concept (Webster, 1992) This is underlined by Gronroos (1991) who states that the purpose of relationship marketing is to establish, maintain and enhance relationships with customers and other partners Communication with customer partners is necessary process of relationship marketing Having strong relationship marketing helps in relationship development, fosters trust, and provides the information and knowledge needed to undertake the cooperative and collaborative activities (Hajar

et al.,2014)

Knowledge management

In an organization knowledge management includes learning aboutcustomer needs and wants, dissemination of this knowledge within theorganization (Sin et al., 2005) CRM practice uses customer knowledge asa means for enhancing customer relationships CRM process can providean opportunity for companies to profiably communicate with relevantcustomers(Plakoyiannaki & Saren, 2006) On the first

hand, knowledgeis viewed as one of the important and high valued organization assetsfor an enterprise Knowledge management capability has four factorssuch as acquirement, transformation, application and protection Onthe other hand knowledge management has signifiant impaction tothe customer loyalty and satisfaction (Wang et al., 2010) Figure 2.2 below shows the proposed framework structure for KMS from Fteimi and Lehner(2014)

Figure 2.2 Knowledge Management System (Fteimi and Lehner, 2014)

Furthermore, knowledge management also followed the trend, with systems commonly being defined as technologies that support four knowledge management activities: knowledge creation, codifiation, transfer and application (Nevo & Chan, 2007) Although information and data management are important pillars of

knowledge management, knowledge management encompasses broader issues – in

particular, the creation of processes and behaviors that allow people to transform

information within the organization to create and share knowledge

Technological CRM resources

In achieving successful CRM, organizations should go beyond theconception

of CRM as a set of technological solutions A review ofdifferent studies, see

example (Chen & Popovich, 2003; Xu & Walton,2005; Zablah et al., 2004) reveals

three aspects of CRM technology- external operation with customers and facilitate a

two waycommunication, internal operations and to analyze data, informationand

disseminate the resulting knowledge throughout the organization.This definition,

which is based on META group segmentation, dividesCRM technologies into

collaborative, operational, and analyticalcategories.Technological resources has

reach across customer touch points such ase-mail, phone calls, fax and website

pages as channels by firms interactwith their customers (Payne & Frow, 2006)

Furthermore, operationalCRM technologies involve the Intranet and Extranet to link

variousapplications and systems together in order to make the information

andknowledge available at all touch points within the firm and betweenthe firm and

its business partners (Xu & Walton, 2005) Hence, it‘s muchimportance to enhance

the customer experience, moreover various available channels to improve the

strength of business customerrelationships (Hamid & Kassim, 2004).Peppard

(2000) suggests that technological advances in global networks,convergence and

improved interactivity, are key to explaining thegrowth of e-business and CRM

Technology has been acknowledged asan element towards the success of CRM

(Kubi & Doku, 2010) to achievethe customer profitability

Motivation of Innovation

Forces of change and critical role of top management team

From 1999, McGrath et al cited that companies are experiencing significant

pressures from increased levels of competition, rapidly changing market

requirements, higher rates of technical obsolescence, shorter product life-cycles and

the heightened importance of meeting the needs of increasingly sophisticated

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customers Added to this are visibly increasing product development lead times,

more frequent development of new technologies and increasing product

development costs and complexity The ways in which companies meet these

challenges depends largely on the nature of the business they are in, the dynamic

forces of the market in which they operate, and the resources and skills that can be

applied to ensure their business objectives are met (Shepherd et al., 2000)

New products and services are fundamental to organizational performance

and survival (Damanpour, 1991; Smith et al., 2005) Finding new way to serve the

customers increase the ability of firms to meet new market demands and helps them

establish position in a fast pace technological generation

A key logic in the innovation literature is that the pace of new product

introductions is a function of the search and identification of new knowledge and

information (Katila & Ahuja, 2002; Maggitti, Smith, & Katila, 2013; March, 1991).And

top management team serve a critical role in the search process (Qiang Li et al., 2013)

Top management commitment for innovation

Implimentation of enterprise technology, such as CRM and ERP, requires

changes to organizational culture (Al-Mashari and Zairi, 2000)

―Top management commitment is an essential element for bringing an

innovation online and ensuring delivery of promised benefits Top management

commitment, however, is much more than a CEO giving his or her blessing to the

CRM project Customer-centric management requires top management support and

commitment to CRM throughout the entire CRM implementation Without it,

momentum quickly dies out.‖ (Chen & Popovich, 2003)

During the research ―From production to solutions innovation: a new

paradigm for competitive advantage", Shepherd et al devised New product

development (NPD) frameworksto deploy innovative ideals that generallycomprise

four key elements that emphasized the critical role of Top management team in

every steps:

(1) A senior, cross-functional managementteam responsible for

reviewingprogrammes and making associated GO/NO-GO decisions

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(2) Empowered cross-functional executionteams who are responsible for an effectiveexecution and management of productdevelopment programmes

(3) Aligned cross-functional processesproviding an execution roadmap for allemployees and ensuring activities areeffectively co-ordinated and aligned (4) Specific ―decision points'' or milestones,which demand the delivery of specificdeliverables These are employed to allowthe senior cross-functional managementteam to review programme progress andattractiveness

Human Resource Development

While both technology and business processes are both critical to successful CRM initiatives, it is the individual employees who are the building blocks of customer relationships(Chen & Popovich, 2003).And even in SME, effective training can play a vital role in supporting small firm expansion and growth (Jenning et al., 1996) Bolton report (1971) highlighted the dichotomy between the

―need‖ for and the ―demand‖ for training and development in small firms and noted the inadequacy of the provision of supporting these activities Small business owner and manager do not recognized the need for training and development or that there are obstacles to converting a recognized need into effective demand

It must be recognized that some small business owner managers prefer independence and autonomy to growth and profit (Beaver, 1984; Bolton, 1971; Stanworth and Curran, 1973; Stanworth and Gray, 1991) and work within limited geographical horizons with little desire to expand (Binks and Jennings, 1986; Storey, 1986; Flamholtz, 1990) Although it does not follow with logical necessity that the pursuit of growth and expansion are a prerequisite of undertaking training and development, the reality is that virtually all training and development schemes and programmes assume this to be the case Some owner managers therefore feel that an inevitable consequence of training will be growth and consequently, choose not to participate in training and development programmes (Jenning et al.,1996)

Change management

―Change Management is the process of continuous planning and realization

of profound changes‖, according to Kostka and Monch (2002) At the centre of this

are always human beings Strategy and goals always have to be built around the market (e.g Customers, Competitors) and client (e.g shareholder), please refer figure below for the Factors of Change that affect wide range stakeholders when implementing CRM initiatives or other major projects (Pries & Stone, 2004):

Figure 2.3: Factors of Change (Pries & Stone, 2004)

Change is introduced through a learning process According to Carnall (1990), ―Effective organisations are those which introduce change quickly and in which people—employees and managers—learn about the business or organization

as this process proceeds ( ) Only if people and organizations change, by learning from the experience of change, can effectiveness be achieved and sustained‖ The learning process and reaction of those involved in a significant organizational change can be described by the transition-curve It is clear that one of the most important factors in a change situation is time (see Figure 2.4: Transition Curve, Carnall,1990)

Figure 2.4: Transition Curve (Carnall, 1990)

If learning does not form part of change, powerful groups may oppose it, and negative attitudes towards change may arise for the future Another very important element

of Change Management is not to forget about the organization‘s culture: ―A culture is a set

of values, behaviors and norms which tell people what to do, how to do it and what is acceptable.‖ (Atkinson, 1990) Burnes (1992) explains the problem as follows:

―It is argued that socio-structure (organizational structures, practices and procedures) is supported and legitimised by organizational culture It follows from this that any change in the former must be accompanied by a change in the latter, otherwise it risks being rejected.‖

Carnall summarises the goal of Change Management as to ―create the environment in which creativity, risk-taking, learning and the rebuilding of self-esteem and performance can be achieved‖

When perform survey of the CRM Implementation related experiences of

101 U.S.-based firms, Bohling (2006) also identified Change Management is one of the five major CRM implementation approach steps The results showed process

change, which was cited by more than 50% of respondents as being very difficult or difficult to implement

2.5 Hypotheses development and research model

2.5.1 Background of Vietnam SMEs

Economic growth and development in Vietnam has followed a positive trajectory in the last three decades, following the introduction of ―doi moi‖ (reform

or renovation) in 1986, while the majority of OECD members have experienced sluggish growth (Nguyen et al., 2015) Vietnam, with a population now approaching

100 million, has risen substantially from the status of a poor income country to enter the low-medium income level, with World Trade Organization membership and growing integration into the world economy Researchers (Carree and Thurik 2005; Minniti 2007; Braunerhjelm 2008; Acs, Desai, and Hessels 2008; Acs and Virgill 2010; Wennekers and Thurik 1999) have identified the pivotal role of entrepreneurship in facilitating economic growth

Recent data indicates Vietnam‘s economy remain on a solid growth with 6.68% in 2015 (BSI report, 2015) Retail sales also rose at a double-digit rate as a surge in private sector credit encourage greater private consumption (FE consumption report, 2016) In the first 6-months period of 2017, Vietnam GDP is estimated to increase 5.73% The contribution of some sectors accounted for a large proportion of the general growth as follows: Wholesale and retail trade increased 7.10% over the same period last year, which is the highest contribution to general increase (0.65 percentage point); accommodation and catering services increased 8.90%, contributing 0.35 percentage point

The development of SMEs in Vietnam, however, is limited especially by market constraints and the SMEs' internal limitations such as limited capital, old and poorly maintained equipments, outdated technology, lack of management skills and management experience Because of this, Vietnamese SMEs cannot reach their full potential (Webster and Taussing, 1999)

During the research of motivation and entrepreneurship in Vietnam SMEs, Swierczeks & Thai (2003) found some interesting characteristics of Vietnam ownerthat

they are more motivated by challenge and achievement than the necessity for a career and economic security The motivation of Vietnamese entrepreneurs is positively correlated to the Entrepreneurial Orientation And Vietnamese SME owners emphasize

a short-term approach based on Net Profit rather than Business Growth

Vietnamese entrepreneurs are more willing to accept challenges and to emphasize working hard (Ronnas and Rammaurthy, 2000) They also depicted the Vietnamese entrepreneurs as "some one in the mid-age with ten more years of education and previous employment in a position of responsibility, most probably in state sector, and willing to take challenges" The changing economic conditions in Vietnam are producing a positive entrepreneurial culture based on necessity These findings are contrasted with the expected values of Vietnamese culture and challenging business environment that SME owners would be more motivated by Security than other dimensions

These findings about characteristic of Entrepreuneuship in Vietnam raised questions about how it will affect the perspective of Vietnam SME on the barriers

of CRM implementation and that will be discussed in the next section

2.5.2 Barriers of CRM implementation in Vietnam SMEs

Lacks of skillful Human Resources

Top management, marketing and sales management are generally the initiators of a firm CRM project (Cap Gemini, 1999) CRM initiatives require vision and each and every employee must understand the purpose and changes that CRM will bring (Chen & Popovich, 2003)

According to VietnamWorks.com's survey of human resources in 2015, the human resource for marketing and sale continues to be in the top six areas of demand The supply index also increased by about 20%, sometimes up to 40% compared with the previous year but still not meet the demand Marketing, especially digital marketing is a fierce competition area and change constantly, so the marketing staff must constantly learn to catch up with practical requirements Discussion about the CRM implementation hurdles related to human resource ability, Bohling cited that CRM strategy and programs can be hampered

due to a resistance to change at various levels of the organization For instance, marketing managers may not easily make the transition from being responsible for all aspects of the marketing of a single product or brand to handling functions spanning multiple brands and products that are simultaneously relevant to a firm‘s customers (Kumar, Ramani, and Bohling, 2004) Similarly, sales personnel would need to be actively involved in the process of understanding data-driven campaign output files that prioritize customer selection and overcome reluctance to accept recommendations that do not suggest traditional customer touch patterns (Kumar, Ramani, and Bohling 2004)

Implementing CRM, as in most major changes efforts, objections and disagreement among various functional departments that arise in the process of business reengineering and CRM implementation can only be solved through personal intervention by top management In addition, project teams require not only sponsorship by top management but also a project champion that can persuade top management for continuous change efforts (Al-Mashari and Zairi, 1999)

As the quality of human resource plays a vital role as one of the key antecedents and the discussion above about how lack of it might hinder the success

of CRM implementation, thus the author have the following hypothesis

H1 Lacks of skillful human resource is a barrier to Vietnam SMEs in successfully CRM implementation

Lacks of Customer Knowledge Management Ability

The statement ―retaining customers is more profitable than building new relationships‖ is especially true in the changing Internet market The Boston Consulting Group estimates that it costs $6.80 to market to existing customers via the Web, versus $34 to acquire a new Web customer (Hildebrand, 1999) To illustrate how CRM practice can help firms to better understanding and properly interact with their most profitable customers and improve customer retention and loyalty through knowledge management process, please refer Figure 2.5: CRM Knowledge Management process below

Figure 2.5: CRM Knowledge Management process

(Alavi & Leidner, 2001)

As Fig 2.5 suggests, the knowledge management process can be further subdivided into three distinct micro-processes: (1) data collection, (2) intelligence generation, and (3) intelligence dissemination (Alavi & Leidner, 2001; Fahey et al., 2001) As its name implies, the data collection process refers to a firm‘s activities that focus on capturing information about customers and markets It can involve recording details about a particular interaction (e.g., customer response to a direct mail campaign), obtaining data from secondary sources (e.g., U.S Census data), or querying customers about their satisfaction with the firm (Park & Kim, 2003; Stefanou & Sarmaniotis, 2003) CRM applications merely help firm to record the data of customers, the ability to transforming it into customer knowledge, customer complaint handling and build on-site customer related decision making policyis consider to be the difficulty for most of Vietnam SMEs

H2 Lacks of Customer Knowledge Management ability is a barrier to Vietnam SMEs in successfully CRM implementation

Changing Business Culture and Cross-functional interaction

Implementation of enterprise technology, such as CRM and ERP, requires changes to organizational culture (Al-Mashari and Zairi, 2000) Customer relationship marketing techniques focus on single customers and require the firm to

be organized around the customer, rather than the product Customer-centric organizations seamlessly integrate marketing and other business processes to serve customers and respond to market pressures.(Chen & Popovich, 2003)

Start implementing CRM to systematically listening and understand about the firm‘s customers is the first step to value creation, one of the means of gaining a competitive advantage With rapidly evolving technology in an uncertain environment, enterprises must rethink and continue to try to create new business models (Voelpel et al., 2004)

Despite this, inertia exists in most organizations Hannan and Freeman‘s (1977) structural inertia theory indicates the characteristics of inertia in a business structure They stated that inertia will hinder organizations facing external environmental changes because businesses cannot respond efficiently and engage in organizational change When organizations try to change, various organizational structures and inertia behavior for strategies and systems emerge due to the experience that past models created, or because organizations were bound by fixed operating procedures Studies have shown that it is not conducive for organizations engaged in innovative activities to have organizational inertia (Amabile et al., 1996; Blumentritt and Danis, 2006; Francis and Smith, 1995; Matthyssens et al., 2006; Nijssen et al., 2006)

When perform survey of the CRM Implementation related experiences of

101 U.S.-based firms, Bohling (2006) also identified Change Management is one of the five major CRM implementation approach steps The results showed process change, which was cited by more than 50% of respondents as being very difficult or difficult to implement Two other verified roadblocks to CRM implementation are also: insufficient focus on change management (11%), and insufficient involvement

of employees (9%)

Thus in this study, as the Change Management considered as one of key antecedents, Changing Business Culture and Cross-functional interaction are consider to be the barrier for most of Vietnam SMEs in CRM implementation H3 Changing Business Culture and Cross-functional interaction is a barrier

to Vietnam SMEs in successfully CRM implementation

Lacks of new processes and standards

Customer relationship management is an enterprise-wide customer-centric business model that must be built around the customer It is a continuous effort that requires redesigning core business processes starting from the customer perspective and involving customer feedback

Further more, Zablah (2004) emphasized the importance of defining both CRM process and the processes that relevant to CRM This includes providing a detailed mapping and description of the relevant processes (knowledge and interaction management) and sub-processes, as well as an allocation of responsibilities for process activities among individuals and groups (i.e., process roles; Buckley &Carter, 1996)

Oncethe CRM processes have been defined and roles assigned, managers must assess the state of their CRM capabilities to ensure that they have the requisite resources to effectively execute the activities related to each of the CRM processes In general, CRM capabilities refer to the mix of human, physical (including technological), and organizational (e.g., capital) resources that enable firms to execute the knowledge and interaction management processes.Dutta (2000) emphasises the need to experiment in the marketplace with a ―rapid strategy/action loop‖ in order to

―compete in Internet time‖ This goes beyond the need to conduct pilot tests (Leverick

et al.1998) and project management needs to be flexible in order to respond to unexpected events during implementation and still deliver the desired outcome As the experiment processes become part of CRM implementation, lacks of standardization and description of the new processes also a barrier (Fazlzadeh et al, 2011)

Thus in this study, lacks of new processes and standards is considered as a barrier for Vietnam SMEs in CRM implementation

H4 Lacks of new processes and standards is a barrier to Vietnam SMEs in successfully CRM implementation

Information Security Threats

One of the most important strategies in CRM (Customer Relationship Management) is to capture enough information from customers and using this information carefully And security of this information is very important in CRM data management Data management is a method for scheduling and controlling data saving, recovering and processing This activity has been done continually or periodically Security level of this information depends on the security policy of the organization (Seify, 2006).CRM security policy is the directives and practices for managing, protecting and distributing assets which are included sensitive information, within an organization and its CRM systems

Recently Vietnam adopted the Law on Cyber Information Security, effective

as of July 1 2016 This is the first specific law issued in Vietnam on the security of

‗cyber information‘, which has been defined as information exchanged in a telecoms or computer network environment The laws provide mechanisms to prevent, detect, stop and address spam, computer viruses and cyber attacks and protect information exchanged in cyberspace (ie, an environment where information

is provided, transmitted, collected, processed, stored and exchanged over telecoms networks and computer networks)

As CRM application centralized customer data and encourage sharing customer information through cross-functional department, without properly security policy and process descriptions, the threat of leaking critical information, for example business opportunities, customer contacts is considerable

H5 Information security is a barrier to Vietnam SMEs in successfully CRM implementation

2.5.3 Research Model

From literature review 2.1.3 (CRM's implementation key antecedents), 2.2 (Vietnam SMEs) and 2.3 (Barriers of CRM implementation in Vietnam SMEs), we propose the below model to study the key barrier factors

impacting on Vietnam SME‘s CRM implementation

The hypotheses are graphically presented in the Figure 1 below In the next section, we describe our methodology, research design and data collection

Figure 2.6 Research model (Source: the author)

We have five independent variables (Lacks of skillful Human Resource, Lacks of customer management knowledge, Changes in business culture and cross-functional interaction, Lacks of new processes & standardization and Security Threats) in the research model

Hypotheses

As from the above research model, we have 5 hypotheses as following:

*H1: Lacks of skillful Human Resource influences negatively (-) to CRM implementation

*H2: Lacks of customer management knowledge influences negatively (-) to CRM implementation

*H3: Changes in business culture and cross-functional interaction influences

CHAPTER 3: METHODOLOGY

3.1 Research design

This chapter explains how the research is conducted in term of

methodological approaches It also identifies research design and choice as well as

reasons for the choices Chapter begins with research design then follows by

research strategy before presentation of research technique, paradigm, questionnaire

preparation and data collection The chapter ends with method of analysis and

ethical consideration

A research design is the plan of a research study and it can be described as

a plan for executing the research and answering the research objectives It provides

the structure to resolve the identified problem and avoid situations where the

evidence does not address the initial research problems (Yin, 2009) This research

uses deductive approach because it tends to apply of existing theories on the CRM

and key antecendents of implementation to propose the hypotheses of barrier factors

for CRM implementation and follow all steps of deductive approach such as:

hypothesis development, data collection and testing, hypothesis confirm/reject,

discussion and theory revision The research questions for this research derived

from theories and previous researches as presented in chapter 2 of theoretical

background Previous researches had pointed out that many researches have been

done within the CRM area, but case studies and data sets examined in the academic

literature, to date, are largely comprised of successes To help identify factors that

distinguish successes from failures, future data sets must also include failures

(Bohling, 2006) The intention is not to establish new theories; it is rather to apply

existing key antecedent theories, adapt it into barrier factors and apply in new

contexts of Vietnam SMEs

This research uses both qualitative and quantitative method (mixed

methods research) It uses form of survey as the main research strategy to collect

data and using statistical tools for data analysis Before doing the survey, this

research also uses in-depth discussion with SME owners to understand dimensions

Comment [HSB6]: ok

of CRM and the key antecedents of implementing as well as discussion and collect attributes from SME owners‘ point of view about the barriers that prevent Vietnam SMEs in successfully implementing CRM

Research process

The research starts with qualitative research by focusing on group discussion to define the barriers that prevent Vietnam SMEs in successfully implementing CRM, as well as to define the measurements for those barriers This step aims to have a set of measurements of common barriers that Vietnam SMEs faced when implementing CRM

Then, following by quantitative research, includes collecting respondents of SME owners through a survey with questionnaire, checking credibility of measurements, doing analysis for statistical data and reports All steps as below figure 3.1

Figure 3.1 Research process (Source: the author)