Can Social Media Marketing Improve Customer Relationship Capabilities and Firm Performance? Dynamic Capability Perspective

Social media usage has become ubiquitous, and organizations need to manage this tool to meet their strategic goals. Companies are finding it necessary to modify their approach to customer relationship management (CRM) and develop new marketing capabilities that facilitate customer satisfaction. The purpose of this study is to examine how social media usage can help firms build new CRM capabilities and thus improve marketing adoption strategies and business performance. We suggest that social CRM capability is critical when companies merge social media into their marketing strategies to improve customer engagement and firm performance. We empirically analyze data from 232 companies using Facebook, COMPUSTAT North America, and Global Fundamentals annual databases for the period 2004–2014. This study contributes to extant literature by confirming a new form of CRM capabilities – social CRM – using the resource-based view and dynamic capabilities theory frameworks, and by demonstrating that social media usage plays a moderating role by amplifying the positive impact of social CRM capabilities on firm performance.