DOCTORA L T H E S I S
Department of Business administration, Technology and Social sciencesDivision of Business Administration and Industrial Engineering
Determinants in the Adoption of a Customer Relationship Management System:
A Study among Bank Managers
Joseph Vella
ISSN: 1402-1544 ISBN 978-91-7439-327-9
Luleå University of Technology 2011
Joseph Vella Determ
inants in the Adoption of a C
ustomer R
elationship Managem
ent System: A
Study among B
ank Managers
ISSN: 1402-1544 ISBN 978-91-7439-XXX-X Se i listan och fyll i siffror där kryssen är
DOCTORAL THESIS
Determinants in the Adoption of a Customer RelationshipManagement System: A Study among Bank Managers.
Joseph Vella
2011
Industrial Marketing and e Commerce Research GroupDepartment of Business administration, Technology and Social sciences
Luleå University of Technology
Printed by Universitetstryckeriet, Luleå 2011
ISSN: 1402-1544 ISBN 978-91-7439-327-9
Luleå 2011
www.ltu.se
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Determinants in the Adoption of a Customer Relationship ManagementSystem: A Study among Bank Managers.
Joseph Vella
PhD Candidate in e CommerceDepartment of Business Administration, Technology and Social sciences
Luleå University of Technology
Abstract
Customer relationship management, better known as CRM, has become synonymous with
business practices nowadays. Technology advancement has made it both possible and
feasible for organizations to develop individual and intimate business relationships with
their customers, irrespective of the size of their customer base or geographic dispersion.
Unfortunately research has uncovered a significant number of cases in which CRM
implementations simply failed to meet organizational expectations. Moreover, user
resistance has been found to be a significant cause for this anomaly.
This study aims to fill an existing gap in the literature by identifying a number of salient
cognitive and behavioural constructs that, when grounded in a theoretical framework made
up of the Technology Acceptance Model together with Equity Theory, can help us to gain a
better understanding of the mechanics behind user resistance and identify ways to
overcome it.
A sequence of five separate yet interdependent studies has been conducted among the
managers of a large bank. The studies focus on behavioural activation and inhibition, equity
sensitivity, emotional labour as well as users’ perception of CRM systems’ usefulness, ease
of use and firm performance. Findings suggest that a lot can be gained by recruiting the
right employees and investing in them, in terms of training and empowerment, thereby
creating teams of satisfied, highly competent service providers who would be willing to
adopt and use their organization’s CRM system to enhance customer loyalty.
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Acknowledgements
Doreen, my wife and my daughters Sarah, Maria and Rebecca for theirencouragement and support.
Prof. Albert Caruana, my mentor, co author, supervisor and good friend, whomI can never thank enough for introducing me to this program and for guidingme through the fascinating world of academic research.
Prof. Leyland Pitt, who apart from being a valuable co author has always beena great inspiration, particularly by sharing his distinguished academicexperience with us and demonstrating what a unique experience learning atthis level can be.
Prof. Esmail Salehi Sangari for being so patient and understanding, particularlyduring the more difficult times during this program.
Prof. Costas Katsikeas for his thoughtful and very insightful commentsregarding this research.
Noel Scerri, Tony Sammut and Claudette Pace, who made it possible for us togather all the necessary data that enabled us to conduct the five separatestudies within this thesis.
A special thanks to all the professors and fellow students who made thisprogram such a memorable event, as well as to my co workers, without whoseco operation I could have never made it this far.
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Determinants in the Adoption of a Customer Relationship Management System: A Studyamong Bank Managers:
Contents
CHAPTER 1: Introduction 9
1.1 From relationship marketing to CRM and eCRM 101.2 Defining CRM 141.3 What CRM entails 151.4 CRM and eCRM 171.5 The three underlying pillars of CRM systems 201.6 The critical role of people in enabling success with CRM systems 211.7 The pivotal role of People in service firms 221.8 Research question 231.9 The generic model of this study and related hypotheses 241.10 Theoretical underpinning for the research model 271.11 References 30
CHAPTER 2: The effect of behavioural approach and inhibition systems onCRM adoption 40
CHAPTER 3: The effect of equity sensitivity, emotional labour andorganizational commitment on corporate performance:A study among Bank Managers 72
CHAPTER 4: Encouraging CRM systems usage: A study among bank managers 108
CHAPTER 5: Perceived performance, equity sensitivity and organizationalcommitment among bank managers 130
CHAPTER 6: Organizational commitment and users’ perception of ease of use:A study among Bank Managers 155
CHAPTER 7: Conclusions, implications, limitations and future research 174
7.1 Overview 1747.2 Summary of results 1757.3 Theoretical implications 1777.4 Managerial implications 1797.5 Limitations 1807.6 Directions for future research 1817.7 References 184
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Chapter 1: Introduction
You can lead a horse to water but you cannot make it drink1
This popular English proverb which can be traced back to the twelfth century, aptly
describes a contemporary situation faced by many organizations nowadays. Despite
investing heavily in technological systems that are meant to attract new customers and
retain existing ones, more often than not the end results are both disappointing and
considerably different to the initial expectations. A major pitfall in many such cases can be
attributed to a reluctance shown by employees to adopt and use such systems. This is
particularly true for customer relationship management (CRM) and its web enabled version
(eCRM), applications. Since the advent of CRM in the early 1990’s CRM and eCRM have
become popular acronyms that are synonymous with modern business practises. The
literature abounds with articles which show that even in situations where no effort had
been spared to design the best systems in terms of their technological prowess, these very
systems simply failed, sometimes quite miserably, to deliver the expected benefits
attributed to them (e.g. Bass, 2003; Bligh and Turk 2004; Greenberg, 2001; Lavender, 2004;
Ragowsky and Somers 2002) .
This chapter starts with an overview of CRM that recognises the rise of relationship
marketing as an important facilitator of CRM; defines CRM; explores the distinction
1Hwa is thet mei thet hors wettrien the him self nule drinken [who can give water to the horse that will notdrink of its own accord]?[c 1175 Old English Homilies (EETS) 1st Ser. 9]
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between CRM and eCRM; and recognises the constituent components of CRM in terms of
people, processes and technology. The chapter then proceeds to highlight the importance of
the human aspect as the underpinning force that guarantees the successful implementation
and usage of CRM systems and the particular relevance of people within the context of
service firms. It concludes by providing the overall research question of this study, which is
followed by the general research model including the related hypotheses together with a
discussion about the theory that underpins the research model being proposed. This model
encompasses the five areas that are the focus of just as many papers which together test a
total of thirteen hypotheses applied to a service provider, namely a large community bank in
Malta.
1.1 From relationship marketing to CRM and eCRM
A growing interest in CRM both within academia and industry, started to become evident
around the early 1990’s (Ling and Yen, 2001; Xu et al., 2002). This followed the prevalent
thinking during the same period that held that retaining existing customers was less
expensive for firms than acquiring new ones. For example, Reichheld and Sasser (1990)
claimed that a five percent improvement in customer retention could result in a 25 to 85
percent increase in profitability. Moreover, the same authors also argued that properly
served customers could generate more profits as well as become good advocates for the
organizations they patronized. Light (2001), asserted that CRM evolved from relationship
marketing, a concept which had started to gain popularity almost a decade before (see:
Berry, 1983, Christopher et al., 1991; Dholakia et al., 1987; Grönroos, 1994; Jackson, 1985).
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Relationship marketing on the other hand was considered to be an offshoot of service
marketing research (Grönroos, 1995).
CRM systems seek to improve customer satisfaction that can in turn foster demand which
can increase overall sales and revenue. Companies that focus on their customers’ needs and
wants are in a better position to achieve long term success than those that do not (Kotler,
2000). Researchers began to realize that organizations that treated their customers simply
as end users of their products or services were deemed to be less competitive than those
that tried to entice them into some form of mutual relationship (Schneider and Bowen,
1995). This led to a significant transformation in marketing practices from a transaction
oriented / product focused era to a relationship oriented / customer focused era, which
became a priority for organizations, in their ongoing quest to acquire and retain customers
(Smith and Chang, 2010). Thus, relationship marketing sought to create a permanent bond
between the customer and the product or service supplier. While it could still be used as a
means to facilitate product repositioning and to attract potential customers away from
competitors, its ultimate use was to increase customer loyalty on a long term basis and to
convert indifferent customers into loyal ones (Andersson et al., 1994; Berry and
Parasuraman, 1991).
The continuous development of technology was seen as an opportunity to take the concept
of relationship marketing one step forward, particularly since it was realized that technology
could be employed as a means by which all the customer touch points could be seamlessly
integrated with various existing database systems. This allowed the firm to have a single
holistic picture of individual customers, during the course of the firm’s relationship with its
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customers (Peppers and Rogers, 1997; Ryals and Knox, 2001). This development gave rise to
a new buzzword customer relationship management (Ling and Yen, 2001) or its better
known ubiquitous acronym CRM. It is recognized that CRM in essence is an extension of
relationship marketing that focuses on customer retention and relationship development
(Deighton, 1998; Galbreath, 1998; Lockard, 1998).
Nowadays, technology provides businesses with affordable systems that can help
companies track customers’ interactions whilst simultaneously permitting the quick retrieval
of any information pertaining to them, which in essence implies that if properly used, CRM
systems, should enhance organizations’ abilities to achieve the ultimate goal of retaining
their customers, consequently gaining a strategic advantage over their competitors (Nguyen
et al., 2007). Moreover, CRM not only allows organizations to devote particular attention to
their most valuable customers, but it goes one step further by enabling them to target the
less loyal ones, since these could well represent future sources of revenue to these same
organizations (Ling and Yen, 2001). These authors further argue that although CRM is a
revolutionary concept, it can also be conceptualized as the end result of how marketing and
sales have evolved over the years, from traditional direct interactions between seller and
buyer, to mass marketing during the 1960’s, target marketing during the 1980’s and
relationship marketing during the early 1990’s (see Table 1.1). Perhaps even more
interestingly, the authors further note that these activities seem to be coming back in a full
circle to the original one to one relationships. The concepts of customer service and
relationship management are not new and can be traced back to the origins of business
itself. Kotorov (2002) argues that customers have been the patrons of both producers and
merchants since the emergence of competitive markets, and their goodwill rests on the
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quality, timeliness and convenience of the service that they receive. Thus CRM is
reminiscent of the good old days when customers bought many of their needs from corner
stores and they were accustomed to being personally greeted by the person behind the
counter. The more successful shopkeepers were the ones who made it their business to
understand their customers’ individual needs and wants whilst simultaneously knowing
which suppliers offered the best products to suit their customers’ requirements. This
created an intimate relationship between suppliers and customers which was mediated by a
service provider, the shopkeeper in this example. Such a relationship usually resulted in a
number of satisfied persons who kept returning, in other words loyal customers, the same
who usually tend to build and strengthen relationships with the firm and who also behave
differently from non loyal customers (Zeithaml et al., 1996).
Source: Ling and Yen (2001)
Table 1.1: A Comparison of Marketing Strategies.
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1.2. Defining CRM
The immediate uptake of CRM both within academic circles and among
practitioners, resulted in several different definitions to the extent that even to this day,
there is no single universally accepted definition of the concept. For example, Ling and Yen
(2001), suggest that CRM does not have a unique clear definition although it has been an
extensively researched topic by academics, while Sin et al., (2005) argue that there is still
much debate over exactly what constitutes CRM, going so far as to assert that many
scholars have claimed that the precise meaning of CRM is not always clear in the literature.
The various attempts to define CRM, made by different scholars, show that while many of
them share many similarities, studies within the IS literature tend to be more focused on the
technological attributes of CRM whereas those within the marketing literature are more
customer focused. Moreover even within the industry, some companies tend to view CRM
primarily as an investment in technology and software, whereas others strive to develop
sound and productive relationships with their customers (Reinartz et al., 2004). Kincaid,
(2003 p41) defines CRM as “the strategic use of information, processes, technology and
people to manage the customer’s relationship with your company (marketing, sales, services
and support) across the whole customer life cycle”. Similarly, according to Chen and
Popovich (2003), “CRM is a combination of people, processes and technology that seeks to
understand a company’s customers”. Thus CRM entails the integration of people, processes
and technology in order to ascertain total customer satisfaction before, during and after a
particular sale or service” and this is the prevalent definition that will be adopted in this
study.
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1.3. What CRM entails
The entire CRM concept is built around three major functional areas, namely
Marketing, Sales and Services, and Support (Chen and Popovich, 2003; Greenberg, 2010;
Kincaid, 2003; Ling and Yen, 2001; Xu et al., 2002). These three functions play a key role in
customer attraction, relationship management and consequently customer retention.
Typically a CRM system is often integrated with other decision support systems across the
various functions to obtain a holistic information management system which enables
organizations to interact with their customers along the various touch points (Nguyen et al.,
2007). An overview of a typical CRM system is shown in Fig. 1.1. Such a system not only
leads to improved quality but will also augment the prompt response to customers’ needs
(Anderson, 2006). Therefore it is imperative that CRM is conceptualized as an important tool
that can be used to give organizations a competitive advantage, by breaking down
traditional bureaucratic barriers between the manufacturer or service provider and the
customer or end user. CRM is not another technology; rather it should be viewed as a
strategic process that helps organizations to understand their customers’ needs whilst
simultaneously providing them with an infrastructure to enable a rapid response to those
needs (Nguyen, 2007). Therefore technology should be viewed as an enabler of CRM and
not CRM itself (Reinartz et al., 2004).
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Source: Chen and Popovich (2003)
Fig. 1.1.: A Typical CRM Application
A comprehensive CRM system can, at least in theory, automate every aspect of an
organization’s interaction with its customers, in a cycle of events that incorporates all those
activities needed to target new customers through sales, support and finally retention
(Rigby and Ledingham, 2004). Such a typical CRM cycle is shown in Fig. 1.2.
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Source: Rigby and Ledingham (2004).
Figure 1.2: The CRM cycle.
1.4. CRM and eCRM
The popularity of the internet during the recent past has brought about the use of
yet another popular buzzword among academics and practitioners alike, namely eCRM.
Several authors use both CRM and eCRM interchangeably and according to Greenberg
(2001: 59 ) “eCRM is CRM and CRM must become eCRM”, which is another way of saying
that basically eCRM involves a web enabled CRM.
The advent of the internet resulted in the movement of business applications on
line, allowing organizations to enhance their competences by using CRM to provide access,
both to their suppliers and customers. As a result CRM became known as eCRM however
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this shift to the world wide web brought about a number of changes, mainly concerning the
underlying technology and the user or systems interfaces (Chandra and Strickland Jr., 2004).
Both CRM and eCRM are considered to be sophisticated front end operations which are
synchronized with back end operations by means of enterprise resource planning (ERP)
systems. A high level technology map outlining the salient differences between CRM and
eCRM is shown in Fig. 1.3.
Source: Chandra and Strickland Jr., 2004
Figure 1.3.: High Level Technology Maps of CRM and eCRM Systems
There are some subtle differences between CRM and eCRM which will be
highlighted. In the case of eCRM applications, the user is free to use a browser based
window to interact with the organization, thus a typical eCRM system provides customers
with a self service medium that enables them to interact with an organization at their own
leisure, rather than being restricted to normal business hours. Customer touch points in an
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eCRM system thus include the internet and other wireless devices. In the case of traditional
CRM applications, the customer touch points are the retail stores and other customer
service functions pertaining to the organization. This means that whereas CRM systems are
primarily designed on a corporate level such that the service providers are the main system
users, eCRM applications are designed in a user friendly web interactive manner, which
allows customers to access any appropriate information just like accessing different web
pages, giving the customer a “total control” experience of the web. As a rule, eCRM systems
are designed to cover the entire organization, including all customers, suppliers and
partners and therefore offer more in terms of flexibility than web enabled CRM systems do.
The salient differences between CRM and eCRM are summarized in Table 1.2.
Source: Chandra and Strickland Jr., (2004).
Table 1.2. Technological differences between CRM and eCRM.
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1.5. The three underlying pillars of CRM systems
CRM is a rather complex and sophisticated application that provides a
comprehensive view of every individual customer based on data which is gathered along the
various touch points during the cycle of interaction between the same customers and the
organization itself (Chen and Popovich, 2003). In order to explore those factors that lead to
the successful adoption and implementation of CRM systems we need to refer to the three
underpinning pillars of the definition of CRM, namely people, processes and technology
(Chen and Popovich, 2003: Kincaid, 2003). A model of a typical CRM implementation is
depicted in Fig. 1.4.
Source: Chen and Popovich, (2003).
Figure 1.4.: A typical CRM implementation model
Several authors acknowledge the importance of technology as a critical enabler to
redesign business processes (e.g. Becker et al., 2009; Greve and Albers, 2006; Jayachandran
et al., 2005; Rigby et al., 2002; Winer; 2001; Xu et al., 2002). Reinartz et al., (2004) reported
a positive, moderating effect of CRM technology on organizational performance, which
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further demonstrates the important function that technology, has in ensuring a successful
implementation. Both technology and processes form an integral part of the CRM concept
(Chen and Popovich, 2003; Kincaid, 2003; Sin et al., 2005) and also serve to demonstrate its
cross functional attributes, however detailed analysis of them is beyond the scope of this
study.
1.6. Critical role of people in enabling success with CRM systems.
Over the past two decades several organizations, particularly those operating within
the financial services sector, have realized the significance of customer relationship
management (CRM) and with the advent of internet eCRM, as a means of enabling them to
attract, retain and maximize the lifetime value of their customers. This is quite evident from
the considerable investments made by many of them in such systems (Greenberg, 2010;
Reinartz and Kumar, 2002; Winer, 2001). Research has brought to light a number of success
stories (e.g. Bohling et al., 2006; Greenberg, 2001), that demonstrate how the correct
implementation and operation of such applications can enhance overall firm performance.
However, despite the enormous growth in the acquisition rate of CRM systems, critics point
to the high failure rate of CRM implementations (Kale, 2004; Raman et al., 2006). Greenberg
(2001) also confirms this, arguing that there have been dozens of reports, surveys and
studies highlighting different reasons for CRM failure. For example a much cited survey
conducted by the Gartner Group (2001), states that 55 percent of a sample of implemented
CRM projects, simply failed to meet expectations. According to Lavender (2004),
notwithstanding all the intended benefits associated with CRM applications, an astonishing
80 percent of them fail, predominantly because management tends to focus on the
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technological attributes, rather than the Human Resources aspects. Krauss (2002) makes the
important point that technology is not the hardest characteristic of CRM adoption but
rather, the most difficult part of the process has to do with the users themselves. Thus, the
significance of the human element in such an environment cannot be over stated, since
irrespective of how much is spent on acquiring even the most sophisticated of CRM
technologies, unless the users adopt and make proper use of the system, the entire project
would most likely be doomed to failure.
1.7. Pivotal role of people in service firms.
Today marketing is no longer considered to be just a function, but rather it is the way
of conducting business itself (Zineldin, 2005). Moreover, it has long been known that
services marketing employees, particularly front line service providers, play a pivotal role in
attracting, building and maintaining relationships with customers (Berry, 1995; George,
1990; Tansuhaj et al., 1988). Gummesson (1981, 1987) employs the notion of a "part time
marketer" to highlight the vital marketing role performed by customer contact employees
within service organizations. CRM is a rather complex construct, to the extent that Sin et al.,
(2005) argue that there is still much debate over the exact meaning of the term and proceed
to define it as a multi dimensional construct consisting of four broad behavioural
components: key customer focus, CRM organization, knowledge management, and
technology based CRM, rather than just a system. Moreover its successful implementation
highly depends on its users’ attitudes and the way they intend to use it. It therefore follows
that adoption and usage may well vary among individuals, depending on certain behavioural
and cognitive traits.
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1.8. Research question
The cumulative global expenditure on CRM had almost hit the $100 billion mark by
2004 (Kale, 2004). According to research firm Gartner, as CRM practices evolve, the market
is expected to continue growing with global CRM annual spending expected to reach $12
billion by 2013 (http://www.teletech.com/news/customer management/study evolution
of crm leads to mobile social 800498145). Moreover, CRM has also been shown to be an
effective tool in acquiring, satisfying and retaining customers, who at the end are arguably
the most important asset of any organization. One would expect every organization to
endeavor to adopt and make use of such systems. We highlight the critical role of People in
CRM systems who are often the major cause of CRM failure among firms. The role of people
is particularly relevant among service firms, because unless these ultimate service providers
are both ready and willing to adopt and make full use of their organization’s CRM system, it
is highly unlikely that their organization can ever fully benefit from the significant
advantages that a successfully implemented CRM system is able to offer. Thus
understanding these potential users’ intentions is of paramount importance.
This leads us to the all embracing research question of this study, namely:
What are the main factors that can positively influence service marketing providers’ intention to
adopt and make full use of their organization’s CRM system during their interactions with
customers?
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1.9. The generic model of this study and related hypotheses
In an attempt to determine which factors are the more salient predictors of adoption
and usage of CRM and eCRM, a total of seven constructs have been employed and the
interactions among them have been mapped in Figure 1.5. The model is employed to
highlight the relationships among identified constructs, aimed at ultimately providing a
better understanding and further insight into what managers can do to foster CRM systems’
adoption and use. Our decision to opt for cross sectional rather than longitudinal analysis in
each of the subsequent papers was taken in an attempt to grasp a better understanding of
users’ intentions towards CRM adoption during a particular moment in time. It is precisely
for the same reason that we employed such constructs as perceived firm performance,
rather than actual performance itself, since we wanted to test whether users’ intentions
would be affected by their own, individual perceptions of organizational performance.
Although perceived performance happens to be a subjective measure, this should not give
rise to any major concern since these ratings are needed for relative, rather than absolute
analysis. Moreover, measures of perceived firm performance are multidimensional, since
subjects are better suited to consider all the various dimensions of performance. On the
other hand, measures of actual performance are, in most cases, unable to capture the
trade offs between the different dimensions of the business, at any particular point in time
(Triantafylli and Ballas, 2010). A diagrammatical representation of the entire study,
showing the various links between the different variables adopted in this study, as well as
their role as antecedents, consequences or mediators is shown in Figure 1.5.
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Figure 1.5. Overall research Model
The model identifies a number of constructs that act as antecedents to adoption and
usage of CRM and eCRM, together with thirteen related hypotheses grounded in equity
theory (Adams, 1963; 1965) and the Technology Acceptance Model (Davis, 1989; Davis et
al., 1989, Venkatesh and Davis, 2000) and its related Theory of Reasoned Action (Fishbein
and Ajzen, 1975). The model provides the basis of five distinct papers, each eliciting its own
conclusions, which have been submitted to peer reviewed academic journals. A look at
Figure 1.5 shows that each of the five papers has been bounded by a broken line to make
them easier to identify. A summary consisting of the titles, constructs, together with details
of the hypotheses that were tested and the findings is shown in Table 1.3.
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TITLE CONSTRUCTSEMPLOYED
HYPOTHESES TESTED RESULTS
The Effect of BehaviouralActivation and Inhibition onCRM Adoption.
BehaviouralInhibition System(BIS); BehaviouralApproach System
(BAS)
H1: Individuals having high BIS and high BASlevels will have a moderate to high tendency toadopt CRM..H2: Individuals having low BIS and high BASlevels will have the strongest tendency to adoptCRM.H3: Individuals having high BIS and low BASlevels will have a low to moderate tendency toadopt CRM.H4: Individuals having low BIS and low BAS levelswill have the lowest tendency to adopt CRM.
Individuals with differentcombinations of BIS BAS levelsdemonstrate varying degreesof willingness in adopting andcontributing towards the CRMsystem.
The Effect of EquitySensitivity, EmotionalLabour and OrganizationalCommitment on CorporatePerformance: A StudyAmong Bank Managers
Equity sensitivity(ES); Emotionallabour, (EL);Organizationalcommitment (OC)and Performance.
H1: Managers with lower levels of equitysensitivity will display higher levels oforganizational commitmentH2: Managers with lower levels of equitysensitivity display higher levels of emotionallabour.H3: Managers that display higher levels ofemotional labour will exhibit higher levels oforganizational commitment.H4: An increase in organizational commitmentamong managers has a direct positive effect onthe level of corporate performance.
Results support an effect oforganizational commitment oncorporate performance whileemotional labour and equitysensitivity are found to act asimportant antecedents toorganizational commitment.
Encouraging CRM Systemsusage: A study among BankManagers.
Perceivedusefulness (PU);Perceived ease ofuse (PEOU);Intention to use.
H1: The higher the perceived ease of use, thegreater the intention to use CRM.H2: The higher the perceived ease of use, thegreater the perceived usefulness.H3: The effect of perceived ease of use onintention to use CRM is mediated by perceivedusefulness.
Results indicate that the higherthe perceived ease of use, thegreater the perceivedusefulness and the higher theintention to use CRM.Moreover perceivedusefulness is also found to actas a partial mediator betweenperceived ease of use andintention to use CRM.
Perceived Performance,Equity Sensitivity andOrganizationalCommitment among BankManagers.
Equity sensitivity(ES); Organizationalcommitment (OC)and Perceivedperformance
H1: As the level of equity sensitivity decreasesthe level of organizational commitmentincreases.
Results support an effect ofequity sensitivity onorganizational commitmentwhile high or low perceivedcorporate performance seemto have an adverse effect onthe relationship between thetwo constructs.
Organizationalcommitment and users’perception of ease of use:A study among bankmanagers.
Organizationalcommitment (OC)and Perceived easeof use (PEOU).
H1: A positive organizational commitmentamong service providers leads to higherperceived ease of use of technology.
Results have been mixed andpartially conditioned by serviceproviders’ willingness toleverage the possibilities thatthe technology can provide.
Table 1.3.: A Summary of the Constructs and Hypotheses
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The tiles of the five submitted papers together with their respective authors’ names are shown in
Table 1.4.
Title Authors Journal and status
The Effect of Behaviour Activation and InhibitionSystems on Intention to Use CRM: A Study amongBank Managers.
Joe VellaAlbert CaruanaLeyland F. Pitt
International Journal ofBank Marketing.Forthcoming 2011
The Effect of Equity Sensitivity, Emotional Labourand Organizational Commitment on CorporatePerformance: A Study Among Bank Managers.
Joe Vella International Journal ofServices, Economics andManagement – Underreview
Encouraging eCRM systems usage: A study amongbank managers.
Joe VellaAlbert Caruana
Management ResearchReview – Forthcoming2011
Perceived Performance, Equity Sensitivity andOrganizational Commitment among BankManagers.
Joe VellaAlbert CaruanaLeyland F. Pitt
Journal of FinancialServices Marketing –Currently under secondreview.
The Effect of Organizational Commitment onPerceived Ease of Use: A Study among BankManagers.
Joe VellaAlbert CaruanaLeyland F. Pitt
Journal of ManagementDevelopment. –Forthcoming 2011
Table 1.4. The five submitted papers.
1.10. Theoretical underpinning for the research model
Among the theories that were considered to be suitable for this study, Adams’
(1963; 1965) Equity Theory, the Technology Acceptance Model (Davis, 1989; Davis et al.,
1989; Venkatesh and Davis, 2000) and the Theory of Reasoned Action (Fishbein and Ajzen,
1975); were judged to be the most appropriate, since the entire study revolves around
users’ behavioural and cognitive attributes.
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Equity theory Adams (1963: p425) posits that "the presence of inequity will motivate persons
to achieve equity or reduce inequity, and the strength of motivation to do so will vary
directly with the amount of inequity." The focus is on individuals’ perception of fairness with
respect to a relationship. Thus, individuals assess the ratio of what is output from the
relationship to what is input into the relationship, and also the ratio of what the other
persons’ output from that relationship in relation to their input into it. In summary, if these
individuals perceive some form of inequity, where either their output/input ratio is less than
or greater than what they perceive the output/input ratio of the other persons within the
same relationship to be, then these persons are likely to be distressed. Equity theory has
been successfully applied to a number of studies ranging from information systems (Joshi,
1989; 1990); turnover intentions (Griffeth and Gaertner, 2001) as well as library systems
(Small et al., 2004).
The Theory of Reasoned Action (TRA) postulates that the core to predicting behaviour lies
with intentions, which in turn are formed by attitudes toward the behaviour and social
norms; and beliefs are the ultimate source of those attitudes and norms. Its overall
predictive ability, even when it is utilized to investigate situations and activities that lie
outside the boundary conditions originally specified for the model, has been successfully
applied to account for behaviour in several diverse areas (Randall, 1989). These include
weight reduction (Sejwacz et al, 1980), brand choice (Glassman and Fitzhenry, 1976), voting
in American presidential elections (Ajzen et al., 1982), use of public transportation (Thomas,
1976; Thomas et al., 1978), reenlistment in military organizations (Horn et al., 1979), and
blood donation (Pomazal and Jaccard, 1976).
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The Technology Acceptance Model – TAM (Davis, 1989; Davis et al., 1989; Venkatesh and
Davis, 2000) has also been used extensively in a wide range technology acceptance
contexts, some of which include electronic mail, file editing and drawing applications
(Davis,1989); computing resources (Taylor and Todd, 1995); telemedicine (Hu et al., 1999);
on line gaming (Hsu and Lu, 2004); military combat ISs (Levy and Green, 2009) and public
transportation (Chen et al., 2011). It is arguably the most important augmentation of
Fishbein and Ajzen’s (1975) theory of reasoned action (TRA) that can be found in the
literature. Perceived usefulness (PU) and perceived ease of use (PEOU) have been
successfully employed as substitutes of TRA’s attitude measures. Both TRA and TAM,
possess strong behavioural attributes to the extent that, when individuals intend to perform
an action, they are presumably free to act without any form of constraint.
This study employs the three above mentioned well researched theories. However it must
be stated that while TAM may be conceptualized to be a subset of TRA and is conceptually
related to it, one can also envisage a common thread between all three theories in terms of
their employment leading to a behavioural action as an outcome. Thus in the case of equity
theory, subject may take action to restore equity while in the case of TRA the outcome is
also some form of action, whereas in TAM, the outcome is acceptance of some form of
technology, which is also an action.
30
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Chapter 2: The Effect of Behavioural Activation and InhibitionSystems on Intention to Use CRM: A Study among Bank Managers
Abstract
Purpose:
This paper seeks to examine the effect of behavioural inhibition and behavioural activation
systems on users’ intention to adopt CRM applications.
Design/methodology/approach:
Data for this study were collected from among managers of a major player in the
community banking sector within the E.U. A total of 274 valid responses were obtained from
398 managers.
Findings:
Results indicate that individuals with different combinations of BIS BAS levels demonstrate
varying degrees of willingness in adopting and contributing towards the CRM system.
Practical implications:
These results can be useful for HR managers, who can screen individuals for positions
requiring customer interface and effective use of CRM systems. The need to align
employees’ characteristics with CRM goals and strategies is critical to the successful
application of CRM systems but has often not been given sufficient attention.
Originality/value:
This paper demonstrates that individual behaviour can be attributed to different personality
traits which in turn can be traced back to physiological as well as psychological origins.
41
Keywords:
Behavioural Activation System BAS, Behavioural Inhibition System BIS, CRM, equity,
motivation, financial services
Paper type:
Research paper
42
The Effect of Behavioural Activation and Inhibition Systems on Intention to Use
CRM: A Study among Bank Managers
Introduction
The operation of a Customer Relationship Management (CRM) system as an effective
tool in improving the management of relations with customers goes beyond the
procurement and installation of an expensive bundle of the most recent CRM system
software. Many firms are incorporating technology into their marketing and operations
(Meuter et al., 2005), however organizations are often misled by an over reliance on
technology, lack of strategic perspective, use of faulty metrics, inadequate segmentation,
neglect of brand considerations, blind faith in data, and confusion regarding leadership roles
(Crosby, 2002; Fandos Roig et al., 2006). Over the past decade several organizations,
particularly those operating within the financial services sector, have realized the
significance of CRM in enabling them to retain and maximize the value of their customers
(Dibb and Meadows, 2004; Peppard, 2000; Riivari, 2005). However, successful
implementation of CRM initiatives depends on an effective cross functional integration of
processes, people, operations, and marketing competences, which in turn is enabled
through information, technology, and applications (Bohling et al., 2006; Payne and Frow,
2005). Notwithstanding all the intended benefits associated with such applications, the
literature shows that even in situations where no effort had been spared to design the best
systems in terms of their technological prowess, these very systems simply failed,
sometimes quite miserably, to deliver the expected benefits attributed to them (e.g. Bass,
43
2003; Bligh and Turk 2004; Greenberg, 2001; Lavender, 2004; Ragowsky and Somers 2002).
This is predominantly because management tends to focus on the technological attributes,
rather than the Human Resources aspects (Lavender, 2004). Despite this seemingly
negative aspect attributed to CRM systems, research has brought to light a number of
success stories within the banking sector that demonstrate how the correct implementation
and operation of such applications can enhance overall firm performance (Greenyer, 2008).
This paper seeks to examine the effect of behavioural inhibition systems (BIS) and
behavioural activation systems (BAS), as put forward by Gray (1987, 1990); on users’
intention to adopt CRM applications. Carver and White (1994) posit that BAS is believed to
control desirable motives in which the goal is to move towards something considered
necessary. Conversely, BIS is thought to regulate aversive motives, in which the objective is
to move away from some undesireable situation. Heubeck et al., (1998), argue that the BIS
is responsive to secondary aversive stimuli, typically associated with perceptions of
punishment, novelty and non reward. Anxiety is the typical emotion associated with BIS.
The authors further argue that BAS is perceived to be a response to incentives or some
other form of reward. A sense of happiness or similar positive emotions are usually
associated with BAS. Low BIS and high BAS are believed to be associated with impulsivity
(Avila, 2001). Thus if one were to use a motor vehicle as an analogy, BAS would be its
accelerating system whereas BIS would be its braking system. This study employs a well
established and validated self report instrument, developed by Carver and White (1994), to
measure individual differences of the BAS and BIS sensitivities. Although the term CRM will
be used throughout this paper, it is recognised that eCRM (electronic Customer Relationship
Management) does not fundamentally differ from CRM (Friedlein, 2000). eCRM systems
44
focus on using the web site as the main interaction channel for businesses to simulate an
old fashioned one to one direct relationship with customers (Chen et al., 2007).
Development in information and communication technology has facilitated the scale and
scope of CRM, leading to the growing use of eCRM. By integrating and simplifying the
customer related processes through the internet, eCRM helps improve customer
acquisition, customer development and customer retention (Chang et al., 2005).
There are several CRM definitions in the literature (Sin, et al. 2005). However the
concept of CRM adopted in this study, involves “the integration of people, processes and
technology in order to ascertain total customer satisfaction before, during and after a
particular sale or service” (Kincaid, 2003). More specifically, CRM adoption should foster
customer loyalty and customer lifetime value (Licata and Chakraborty, 2009). One of the
most important pillars underpinning a sound CRM system involves the frontline employees,
yet it is not uncommon to come across employees and managers who avoid employing CRM
because they find it too confusing and often lack confidence in the direction that it can
provide (Crosby, 2002).
A global survey carried out among 370 executives by IBM Business Consulting
Services, back in 2004, reports that employee concerns were actually the most important
factor in CRM success, with one of their spokespersons going so far as to claim that
“…aligning employees’ needs with CRM goals and strategies is more important than adding
value to customers” (IBM 2004).
45
The importance of front line employees in any services oriented environment
cannot be overstated (Yavas and Babakus, 2009). Thus the role of employee motivation is
critical to the success of a CRM system. According to Kreitner, (1995) motivation is the
psychological process that gives behaviour both purpose and direction. Motivation happens
to be quite a complex variable since, whatever it takes to motivate employees, tends to
change constantly (Bowen and Radhakrishna, 1991). For example, when employees’ income
becomes relatively high, money becomes less of a motivator (Kovach, 1987). Some
employees seem to be able to develop a strong passion for their work. They devote a good
part of their working time in pursuit of their quest to improve whatever they may be doing.
Their motivation can be linked to emotional bonding, a challenging environment or an
incentive system. Moreover, regardless of its origin, this motivation can become quite
contagious and may ultimately motivate the entire organization (Shaw and Ivens, 2002).
Such employees are a huge asset to any organization since they also tend to adapt well to
their organization’s customers’ needs and wants. Other employees however, may lack such
a strong passion for their work, furthermore they also tend to operate on a more functional
basis, doing whatever they are obliged to do, seldom considering putting in any little extra
effort that may be required to retain or win a valuable customer.
Employment engagement programs have been observed to attract, motivate and
develop the right kind of people (Mosely, 2007) whilst engaging employees emotionally.
This is of paramount importance in developing their positive experience (Schembri, 2006).
Support – whether from their seniors or peers – facilitates employees’ engagement in their
work. This support may encourage them to become more creative in what they do and also
assist them in problem solving (Baer and Oldham, 2006; Madjar et al., 2002). As opposed to
46
their more complacent peers, highly motivated employees seem to be able to generate
memorable interactions with their customers (Millard, 2006). A key question that may be of
major concern to management focuses on how they could possibly turn the majority of their
employees into highly motivated individuals with a strong passion for their respective work.
In their book called Managing the Equity Factor...or “After All I’ve Done for You...”
Huseman and Hatfield, (1989) describe an internal system of checks and balances that seem
to influence the way that people behave as they do. They conclude that it all boils down to a
sense of fairness which the authors attribute to an important notion that they term the
equity factor. This in turn underpins the successful management of all kinds of interpersonal
relationships. We look at equity theory as the underpinning framework explaining the
motivation that drives employees to contribute towards their organization’s goals.
Specifically we employ two systems that account for motivation (Gray, 1987). The first
system, known as the behavioural inhibition system or BIS, deals with a sense of avoidance,
in that, individuals do not pursue any goals or achievements but rather do their best to
avoid them. The second system, known as the behavioural activation system or BAS, is a
desirable situation system which describes how individuals strive to pursue their goals
(Gray, 1987; Carver and White, 1994). We set out to consider the effect of BIS BAS
combinations on the intention to use CRM systems. Hypotheses linking these variables are
developed and data are collected from a sample of bank managers at a commercial bank,
where a CRM system is in operation. Results are reported and implications for managers
and theory development are considered, while limitations are noted and directions for
future research are indicated.
47
Equity theory, motivation and outcomes
One way of explaining why certain employees are more passionate about their work
than others is by trying to understand those personal factors that affect every person’s
perception of their own relationship with their peers and other stakeholders (Guerrero et
al., 2007). John Adam’s (1963; 1965) Equity Theory underpins this concept. According to this
theory a balance is sought between an employee’s inputs (such as: hard work, skill level,
tolerance and enthusiasm) and an employee’s outputs (like: salary, benefits and intangibles
such as recognition). Thus individuals would perceive themselves to be treated fairly if the
ratio of their inputs to their outcomes are equivalent to those of their peers, even going so
far as to accept the fact that their seniors would be entitled to a higher compensation owing
to the latter’s higher level of input and experience. Equity violations, benefitting either
employees or their employers (or managers) will give rise to a tension whereby employees
feel compelled to restore equity, or in other words they get even, via both cognitive and
behavioural strategies (Kanfer and Kantrowitz, 2002).
In extreme cases where individuals are unable to attain this equitable state, it is not
uncommon for them to go so far as to quit their jobs. The concept of justice is important to
people because it enables their personal gain, it shows how important they are to their
superiors or peers, and it is aligned with a basic respect for human worth (Ambrose, 2002;
Cropanzano et al., 2001). Employees are not passive, they are constantly observing and even
more importantly, evaluating what is taking place around them. Thus for example, if an
employee feels that his or her work is not being appreciated, or that it is inferior when
48
compared to that of another employee’s, an inequity may result and the employee will
become de motivated. Moreover, in an instance where many employees feel that there is a
lack of appreciation for their inputs, inequity may also exist. Adams, (1965) stated that
employees will attempt to restore equity through various means, which in extreme cases
may be counter productive to organizational goals and objectives (Walster et al., 1978). For
instance, employees who sense a lack of appreciation for their work will tend to take longer
breaks, be less productive, often go out on sick leave, or even develop dissident attitudes
and actions.
Industrial psychologists use Equity Theory to describe the relationship between
employees’ motivation and their perception of equitable or inequitable treatment in the
relationship between themselves and their employer. Managing employees’ perceptions of
their outcomes is not as straightforward as it may seem since, for example, socialization
processes may impact on equity evaluations (Adams, 1965). In fact as many as eleven
different strategies, namely: positive expectations, goal setting, positive feedback,
availability, trust communication, negative feedback, information, participation, novel ways
of rewarding, two way communication and criticism have been attributed to be employed
by the more successful managers to provide their subordinates with viable outcomes
(Huseman and Hatfield, 1990).
Once we have established why companies need motivated employees and what
motivates or de motivates them, we need to try to find out what actually drives individuals
to attain their outcomes. Gray, (1987) put forward two systems that account for behaviour
49
and personality. The first system, the behavioural inhibition system or BIS, deals with
avoidance in the sense that individuals do not pursue any goals or achievements but rather
do their best to avoid them. On the other hand the second system, the behavioural
activation system or BAS, describes how individuals strive to pursue their goals (Gray, 1987;
Carver and White, 1994). Both BIS and BAS do not only exist at a conceptual level but can
also be accounted for in neurobiological terms (Smits and Boeck, 2006) and a more
comprehensive neurobiological approach can be found in Gray, (1987; 1990) as well as in
Sutton and Davidson, (1997). This study examines BIS BAS from a psychological rather than
a physiological perspective. In this respect, the focus is on the motivational aspect of BIS
BAS and whether these systems can be shown to either enable or else inhibit individuals
from adopting CRM strategies.
According to Gray, (1987, 1990) the BIS is sensitive to signals of punishment, non
reward and novelty. It inhibits behaviour that may lead to negative or painful outcomes.
Therefore BIS activation causes inhibition of movement towards goals (Carver and White,
1994). A highly sensitive BIS would likely result in marked inhibition, vigilance and anxiety in
response to signals of punishment (Quilty and Oakman, 2004). A less sensitive or insensitive
BIS would more likely result in a lack of reactivity to signals of punishment, increasing the
likelihood of antisocial or psychopathic symptoms (Nichols and Newman, 1986). BAS on the
other hand is said to be sensitive to signals of reward, non punishment and escape from
punishment. Activity in this system causes the person to begin (or to increase) movement
towards goals (Carver and White, 1994). A highly sensitive BAS has been associated with
lack of forethought or restraint, increasing risk of manic symptoms or an impulse control
disorder, such as problem gambling. An insensitive BAS on the other hand would result in
50
very few stimuli being perceived as rewarding, thereby increasing vulnerability to depressive
symptoms (Quilty and Oakman, 2004).
Every one of the aforementioned motivational systems is presumed to be related to
one broad affective quality, the BAS to a positive effect whereas the BIS is related to a
negative effect. Moreover both are assumed to be unrelated to their alternative effect
(Carver and White, 1994). An important corollary to this notion is that according to Gray,
(1987), given that BIS and BAS represent distinct structures in the nervous system (being
separable both pharmacologically and by brain lesions), their sensitivities are presumed to
be orthogonal. This further implies that within any given population, one should be able to
find individuals with every possible combination of BIS and BAS sensitivity (Carver and
White, 1994). The BIS BAS concept provides us with a behaviourally and physiologically
based explanation for personality and it is therefore of little wonder that these systems
have been related to several personality theories, such as Eysenck’s dimensional theory. In
fact links between BIS and neuroticism and those between BAS and extroversion have been
reported (Smits and Boeck, 2006). However, aspects of BIS BAS are not adequately captured
by Eysenck’s constructs (Eysenck et al., 1985; Eysenck and Eysenck, 1975) or by measures
assessing such emotional experiences as anxiety (Leone et al., 2001).
This leads us to believe that individuals, who exhibit different combinations of BIS
BAS levels, as shown in Figure 1 below, may show varying degrees of willingness towards
adopting CRM. More specifically, our first hypothesis proposes that:
51
H1: Individuals having high BIS and high BAS levels will have a moderate to high
tendency to adopt CRM.
While it is true that individuals with a high level of BAS are likely to be highly driven towards
goal achievement (Carver and White, 1994), the high level of BIS also present within their
personality would most likely increase their level of anxiety, (Gray, 1987; Quilty and
Oakman, 2004) thus driving them away from goal achievement and subsequent CRM
adoption. However, this same high level of BIS would also make these individuals
susceptible to fear of being reprimanded by their superiors, to such an extent as to drive
them towards adopting CRM.
Our second hypothesis focuses on the more adventurous type of personality,
namely:
H2: Individuals having low BIS and high BAS levels will have the strongest
tendency to adopt CRM.
In this instance the high level of BAS within these individuals increases their eagerness
towards goal achievement (Carver and White, 1994). Moreover, because of their low BIS
level, they would not experience any form of fear towards being punished (Nichols and
Newman, 1986) and would therefore pursue whatever objectives they may have, which in
this particular study is that of adopting CRM.
This leads us to our third hypothesis:
52
H3: Individuals having high BIS and low BAS levels will have a low to moderate
tendency to adopt CRM.
The low level of BAS within these individuals’ personality would tend to reduce their drive
towards goal achievement (Quilty and Oakman, 2004). On the other hand, their high level
of BIS would instill a certain amount of fear in them (Carver and White, 1994; Quilty and
Oakman, 2004), enough to enable them to make an effort to comply with their superiors’
request to adopt CRM.
Finally our fourth and last hypothesis concerns those individuals who would most
likely avoid adopting CRM, thus:
H4: Individuals having low BIS and low BAS levels will have the lowest tendency
to adopt CRM.
The low level of BAS within these individuals’ personality would once again tend to reduce
their drive towards goal achievement (Quilty and Oakman, 2004). This time however, the
low level of BIS within their personality would make their reluctance to participate even
more pronounced (Nichols and Newman, 1986), owing to the fact that they would not
experience any significant degree of anxiety towards being punished. In other words, these
individuals could not care less. It is worth pointing out that it is likely that individuals with
low BIS and low BAS will have a tendency to refuse to adopt most changes and not just
those relating to CRM.
53
This study proceeds to investigate the relation between the effect of the four combinations
of high / Low, BIS / BAS, and their effect on intention to use CRM.
Methodology
The Carver and White, (1994) BIS BAS questionnaire was used to measure the
different levels of BIS BAS activity among a sample of bank managers at a commercial bank.
This particular questionnaire enables the measurement of the dispositional sensitivities to
BIS and BAS at a cognitive level by focusing on the consequences of activities rather than the
activities per se (Carver and White, 1994; Smits and Boeck, 2006). The BIS BAS
questionnaire consists of seven BIS and thirteen BAS items. The BIS items attempt to
measure concerns regarding the possibility of the occurrence of negative events and the
sensitivity towards such events should they occur. The thirteen items that make up the BAS
54
scale consist of three dimensions namely: drive, fun seeking and reward responsiveness. As
its name implies, the drive sub scale (BASD) consists of four items that “pertain to the
persistent pursuit of the desired goals”; the fun seeking sub scale (BASF) is made up of four
items that “reflect both a desire for new rewards and a willingness to approach a potentially
rewarding event on the spur of the moment”; whereas the reward responsiveness sub scale
(BASR), comprises five items that “focus on positive responses to the occurrence or
anticipation of reward” (Carver and White, 1994: 322; Smits and Boeck, 2006: 257). On a
closer examination of the above mentioned BIS/ BAS scales, one can notice that the BASD
and BASF sub scales refer to actions taken by individuals either while pursuing their goals or
while looking for ways to have fun, whereas the BASR sub scale and BIS scale contain items
that express sensitivity towards events that have already occurred or are expected to occur
(Smits and Boeck, 2006). In addition to the BAS/BIS scales the final questionnaire
incorporated a three item scale, adapted from the 1985 Oliver and Bearden study, whose
purpose was to capture the intention to use the Bank’s CRM system. Furthermore data
pertaining to seven classificatory variables, namely: gender, age, marital status, academic
qualifications, whether both subject and his/her partner worked, tenure with the bank and
finally, current position at the bank, were also collected.
The format for the BIS BAS items consisted of a seven point scale, similar to the
2001 study by Leone et al., who cited Olsson’s (1979) work which in turn had shown that at
least five point scales are needed under maximum likelihood factor analysis procedures to
achieve satisfactory psychometric properties. Seven point scales were also used to capture
intention to use CRM. The items that make up the questionnaire are shown in Table 1.
55
Initially, a number of industries were considered as possible entities for testing the
relationships outlined in the hypotheses. These included: insurance, retailing and
community banking. In the end a major player in the community banking sector was chosen,
mainly on the grounds that: the human service element at the bank is a critical aspect to
effective marketing (Yavas and Babakus, 2009); senior management was willing to provide
support with the data collection; the bank possessed a national network of offices as well as
an established brand name; moreover the bank held a respectable market share of
traditional deposits.
In order to ascertain that all the questions were fully coherent and understood, a
pilot session was undertaken before dispatching the questionnaires to potential
participants. To achieve this, a sample of ten managers was randomly selected from
different offices of the bank and these were asked to complete the final questionnaire
during a face to face meeting at their respective workplaces. We found no major problems
associated with the questionnaire and only minor amendments were necessary. All
managers at the bank were sent a covering letter explaining the nature of this research
together with the self completion questionnaire. The covering letter sought to assure
respondents that complete anonymity would be respected. A total of 398 questionnaires
were sent to all managers at the bank and 274 were collected after the cut off date, four
weeks later, representing an effective response rate of 68.8%.
56
Results
48.9% of respondents were male, with a mean age of 37.9 (sd. 9.2); 74.3% were
married and 73.2% indicated that both partners worked. 53.1% of respondents had a
graduate or a post graduate degree and their average tenure with the bank was 17.2 years
(sd. 9.6). These demographics are in line with the overall demographics for all the senior and
middle managers at the cooperating bank, providing some support to the generalization of
findings to the entire management of this particular bank. Table 1 gives details of the items
together with means and standard deviations for each of the items collected in the
questionnaire.
57
Table 1: Descriptive statistics for items and constructs
Min. Max Mean Std. Dev
If I think something unpleasant is going to happen I usually get pretty"worked up."
1 7 4.5 1.5
I worry about making mistakes. 1 7 5.3 1.6Criticism or scolding hurts me quite a bit. 1 7 4.8 1.6I feel pretty worried or upset when I think or know somebody is angry atme.
1 7 5.4 1.3
Even if something bad is about to happen to me, I rarely experience fearor nervousness.
1 7 4.7 1.7
I feel worried when I think I have done poorly at something. 1 7 5.8 1.5I have very few fears compared to my friends. 1 7 3.9 1.4BIS 10 49 34.3 6.4When I get something I want, I feel excited and energized. 1 7 6.0 1.2When I'm doing well at something, I love to keep at it. 1 7 6.2 1.1When good things happen to me, it affects me strongly. 1 7 6.2 1.1It would excite me to win a contest. 1 7 5.5 1.4When I see an opportunity for something I like, I get excited right away. 2 7 5.6 1.0BAS Reward Responsiveness 9 35 29.5 4.6When I want something, I usually go all out to get it. 2 7 5.6 1.1I go out of my way to get things I want. 2 7 5.4 1.2If I see a chance to get something I want, I move on it right away. 1 7 5.5 1.1When I go after something I use a "no holds barred" approach. 1 7 4.8 1.4BAS Drive 10 28 21.2 4.0I will often do things for no other reason than that they might be fun. 1 7 4.2 1.6I crave excitement and new sensations. 1 7 4.9 1.4I'm always willing to try something new if I think it will be fun. 1 7 5.1 1.3I often act on the spur of the moment. 1 7 4.2 1.5BAS Fun Seeking 4 28 18.4 4.6BAS 39 91 69.1 10.2your intention to use the CRM system on a regular basis:Extremely Unlikely/ Extremely likely
1 7 5.3 1.9
your intention to use the CRM system on a regular basis: Improbable/Probable
1 7 5.8 1.4
your intention to use the CRM system on a regular basis: Uncertain/Certain
1 7 6.0 1.2
Intention to use CRM 3 21 17.1 3.7
58
The mean (and standard deviations) for the three constructs used were BIS 34.3 (sd.
6.4); BAS 69.1 (sd. 10.2); and Intention to use CRM 17.1 (sd. 3.7). The results of a principal
components factor analysis followed by a varimax rotation are shown in Table 2. A varimax
rotation was employed because BIS BAS are conceptualized as being orthogonal. Results
indicate that items loaded on six separate factors corresponding to the five constructs of the
study, as intended. The extra factor resulted from the negative items in the BIS measure
that loaded separately but are an integral part of the BIS construct. These results provided
support for both convergent and discriminant validity. In addition, Cronbach alphas for the
items making up the three constructs of BIS, BAS (three dimensions) and Intention to use
CRM were: 0.74; 0.84; 0.87; 0.75 and 0.75 respectively. These all exceeded the 0.7 level and
are therefore acceptable (Nunnally 1967), providing support for the reliability of the
instruments employed.
59
Table 2: Results of principal components factor analysis with a varimax rotation
Component
1 2 3 4 5 6
If I think something unpleasant is going to happen I usually get pretty"worked up."
.654
I worry about making mistakes. .784
Criticism or scolding hurts me quite a bit. .764
I feel pretty worried or upset when I think or know somebody is angryat me.
.789
I feel pretty worried or upset when I think or know somebody is angryat me.
.746
I feel worried when I think I have done poorly at something. .522
I have very few fears compared to my friends. .847
When I get something I want, I feel excited and energized. .800
When I'm doing well at something, I love to keep at it. .827
When good things happen to me, it affects me strongly. .870
It would excite me to win a contest. .638
When I see an opportunity for something I like, I get excited rightaway.
.615
When I want something, I usually go all out to get it. .777
I go out of my way to get things I want. .843
If I see a chance to get something I want, I move on it right away. .801
When I go after something I use a "no holds barred" approach. .737
I will often do things for no other reason than that they might be fun. .777
I crave excitement and new sensations. .809
I'm always willing to try something new if I think it will be fun. .797
I often act on the spur of the moment. .656
your intention to use the CRM system on a regular basis: Extremelyunlikely/ Extremely likely
.742
your intention to use the CRM system on a regular basis: Improbable/Probable
.882
your intention to use the CRM system on a regular basis: Uncertain/Certain
.862
60
Both the BIS and BAS values exhibited a normal distribution of scores. To categorize
each of these into low and high it was decided to eliminate respondents around the mean.
Therefore in the case of BIS, respondents with scores up to 31 on the BIS scale were treated
as low whereas those over 38 were treated as high. Similarly for BAS those with a score of
less than 65 were treated as low and those with a score over 74 were treated as high. Those
respondents who scored in intermediate categories on the BIS BAS measures were not
used. This procedure provided four combinations as follows: 33 respondents with Low BAS
Low BIS; 43 respondents with High BAS High BIS; 21 respondents with Low BAS High BIS;
and 20 respondents with High BAS Low BIS.
These groupings were coded and used as the factors in a one way Anova test with
intention to use CRM as the dependent variable. Results in Table 3 show that there was a
statistically significant difference among the four groups being investigated. Furthermore,
the results indicated that respondents with Low BAS Low BIS had the lowest intention to
use CRM and those with High BAS Low BIS had the highest intention to use CRM thereby
offering support for the results indicated from the theory and formulated in the hypotheses.
Table 3: Results of Anova with Intention to use CRM and the four BIS/ BAS categories
N Mean Std. Deviation F Sig.
Low BAS Low BIS 33 16.27 2.65 2.74 .047.
High BAS High BIS 43 18.03 3.07
Low BAS High BIS 21 16.78 4.05
High BAS Low BIS 20 18.23 3.00
Total 117 17.35 3.22
61
Cross tabulation of the four BIS BAS combinations and intention to use CRM with the
demographic variables collected showed no differences by position occupied, marital status,
academic qualifications, age and years employed with the bank. However, an interesting
observation was that gender did have a statistically significant effect ( 2=13.16; p<.01) on
the BAS BIS combination with males indicating stronger High BAS High BIS as evidenced by
the standardized residual analysis (Agresti, 1984) – see Table 4.
Table 4: Cross Tabulation of BIS/ BAS combinations with Gender
Gender
Total Male Female
Low Bas-Low BIS Count
Std. Residual
16
1.0
15
-0.8
31
High BAS-High BIS Count
Std. Residual
8
-2.2
35
1.8
43
Low BAS-High BIS Count
Std. Residual
11
0.9
10
-0.7
21
High BAS - Low BIS Count
Std. Residual
11
1.1
9
-0.9
20
Count 46 69 115
Statistically significant 2 =13.16; p<.01.
Findings, implications, limitations and indications for future research
In this study we expected the results to concur with Gray’s (1987) as well as with
Carver and White’s (1994) studies, where individuals with a high level of BAS and a low level
of BIS would tend to be more willing to adopt CRM strategies. On the other hand, we
expected to find that those managers with a high level of BIS and a low level of BAS would
62
be more reluctant to adopt CRM strategies while other BIS/BAS combinations would
represent a moderate level of willingness to adopt CRM. The results obtained support this
position.
Zineldin, (2005) argues that banks do not sell products; they sell their reputation
with every customer relationship. CRM systems have today become an indespensible tool
for effective customer relationships. However, if one were to conduct a quick search within
the annals of business literature, it will become immediately evident that there are several
cases of organizations where management tried to implement a CRM strategy that never
really took off (e.g. Foss et al., 2008; Woodcock and Starkey 2001).
A closer examination may often reveal that whereas management would have
spared nothing when it came to adopt the best technology or hire experts to design
whatever system they may have wished to adopt at the time, little if any thought may have
been given to the employees’ individual social and psychological issues in its use (Lavender,
2004). Another way of looking at this would be to suggest that while the formulation of the
strategy is often optimal, it frequently falls down in its implementation (Bonoma, 1984;
Bonoma and Crittenden, 1988). Furthermore this lack of forethought would usually and
inevitably result in people behaving quite differently from what was originally expected. An
all too common mistake is to look at an organization through the eyes of management or,
even worse, through those of the CEO rather than seeking to understand more deeply, and
finding ways, of aligning individuals’ wants, needs and skills with the overall company
objectives.
63
In this study, the results indicate that there may be some observable distinct traits
exhibited by persons with different combinations of BIS BAS levels. This may prove to be
quite useful for HR managers, particularly when it comes to selecting the “right” persons
while interviewing potential candidates for particular jobs or positions. Managers should
seek ways of identifying individuals with a strong potential to adopt and use CRM. Moreover
they should also consider others who may be hesitant at first yet whom, given a fair amount
of training and the right motivation, could potentially also perform well. On the other hand,
individuals who, given their BIS BAS combination, are most unlikely to adopt or use CRM
should be weeded out as they may also stall or disrupt the whole process. Further research
should be aimed at identifying the effectiveness with which the Carver and White, (1994)
BIS BAS instrument could be adopted to enable senior management to screen individuals
before they are assigned to CRM, or other important strategic, activities.
An effective CRM system is critical to sustain a customer orientation as it allows for
efficient customer understanding and effective relationship marketing. It is practically
impossible for a firm to be customer oriented without having adequate information about
its customers, since relationships are only possible with people whom we know something
about. However information needs to be supported by ensuring the selection of the right
people for front line service provision roles, particularly within the financial sector. While it
is necessary for contact personnel to adhere to their organization’s protocol to ensure that
the overall embracing strategy is being followed, it is also very important that they act under
their own initiative and take the right decisions independently, especially during one to one
interactions with customers. Such actions can enable service organizations to become more
customer oriented.
64
More often than not organizational behaviour is not given sufficient importance and
many business related studies tend to focus more on the functional aspects of an
organization rather than the complex inter relationships between the individuals within it.
An organization is a complex entity within which any particular event is usually a sum total
of several distinct and sometimes disjointed factors. Therefore rather than focusing on an
individual level, future studies should seek to understand what goes on at higher levels of
abstraction. Different hypotheses may be formulated thus paving the way for researchers to
adopt other theories to try to explain and understand organizational behaviour.
The limitations of this study include the fact that we were only observing the effects
of BIS BAS combinations at one bank and not on the industry in general, or indeed on
organizations outside the banking industry. This raises questions as to whether these
findings apply to banks more generally. Given the strength of the underpinning equity
theory, the findings are likely to be extendable to other banks and possibly also to other
service firms. Like many studies this paper is also prone to specification error in that it is
possible that other variables may also be influencing CRM adoption. However, the adoption
of a theory based model should significantly mitigate this error. Another point worth
considering is that participants may have felt under some pressure from the HR department
to complete their questionnaire and consequently they may have been inclined to answer in
a manner that they felt that their bosses would have liked.
65
One promising direction for future research is to look at other antecedent variables
that could include personality traits or characteristics, such as culture, which could possibly
affect individuals’ intention to use CRM. Furthermore such a study could ideally also be
conducted across banks and other financial services organizations, possibly even across
different cultures, thereby providing a stronger basis for generalization. Another area for
future research would be to investigate possible mediating effects acting on the BIS-BAS effect on on
users’ intention to use CRM.
Several organizations have pursued the adoption of technically sophisticated CRM
systems that can capture data effectively and allow for detailed analysis. Often internal data
can provide useful information about a firm’s operations as well as rich details of customers’
transactions. The latter can be particularly useful in helping the firm build meaningful
relationships with individual customers. The role of people in financial services marketing
has long been recognized and ultimately it is of course people, not systems, who build
relationships. This paper flags the effect of just one psychological aspect relating to staff
members that has been found to be an important enabler in the successful implementation
of a CRM system. The critical importance of people needs to be reemphasised as it is they
who ultimately decide whether or not they will use and leverage existing tools and
technology effectively. Identifying the right people, not just to maintain relationships with
customers, but also in operating sophisticated internal CRM systems is a must. Before the
provision of any technical or capabilities training on a CRM system, the chances of a
successful CRM system implementation can be considerably enhanced through the proper
screening of staff for their respective BIS BAS levels.
66
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Chapter 3: The Effect of Equity Sensitivity, Emotional Labour andOrganizational Commitment on Corporate Performance: A StudyAmong Bank Managers
Abstract
Purpose:
This study considers equity sensitivity, emotional labour and organizational commitment as
three important variables that play a critical role among service providers and the effect
these ultimately have on corporate performance.
Design / Methodology / Approach:
Using an equity theory perspective the constructs of equity sensitivity, emotional labour,
organizational commitment and corporate performance are considered and research
hypotheses linking their interaction are formulated. Data are collected from managers of a
community bank and partial aggregation followed by structural equation modelling is used
to test the hypotheses.
Findings:
Results support an effect of organizational commitment on corporate performance while
emotional labour and equity sensitivity are found to act as important antecedents to
organizational commitment.
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Research limitations / Implications:
The study was limited to a single organization and consequently the results should be
generalized with caution. Replication studies with improved measures, in other countries
and contexts are desirable.
Practical Implications:
The effect of organizational commitment on corporate performance is supported,
highlighting the need for management to devote resources to develop the elements that
foster this construct among service providers. The study is also helpful because it indicates
that two other constructs, namely emotional labour and equity sensitivity are antecedents
to organizational commitment, thus implying the need to also strengthen these aspects in
order to improve organizational commitment and ultimately corporate performance.
Originality / Value:
This paper investigates the interaction among three key human resources concepts and
their effect on corporate performance, highlighting also the role of equity sensitivity.
Key Words:
Equity Sensitivity (ES), Emotional Labour (EL), Organizational Commitment (OC), Corporate
Performance, Community Banking.
74
The Effect of Equity Sensitivity, Emotional Labour and Organizational
Commitment on Corporate Performance: A Study Among Bank Managers
Introduction
Business has become increasingly dynamic and competition more intense. In order to
remain competitive organizations need to embrace progressive talent strategies. These
should enable the HR and marketing functions to operate more efficiently and effectively
thus improving overall responsiveness to customers’ needs. The growing significance of
service firms in modern economies necessitates the need for effective employee talent
strategies. The perception of the quality of the service being offered depends in part on the
customer's approval of the emotions being displayed by service providers (Abraham, 1999).
While technology and systems 'hardware' are known to facilitate the provision of
positive service experiences, these can only be as efficient as the people employing them.
Recognizing the importance of service employees within any service infrastructure is
therefore critical. Service organizations need to commit themselves to effective HR talent
strategies. Understanding customers is challenging enough; understanding and motivating
employees is by no means any less perplexing.
This study considers three principal HR 'software' components believed to be critical in
any talent strategy development, namely: emotional labour (EL), equity sensitivity (ES), and
organizational commitment (OC). It also considers the effect that these three components
ultimately have on corporate performance. These constructs are individually considered and
together they are used to build a research model that investigates a number of
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hypothesized relationships. Research instruments are identified and data are collected from
among senior managers of a commercial bank. Results are reported, implications are drawn,
limitations are noted and directions for future research are indicated.
Equity sensitivity
Equity sensitivity (Huseman et al., 1985; 1987) which is grounded in Adams’ (1963;
1965) seminal work on equity theory, posits that a balance (or equity) is sought between an
employee’s inputs (such as hard work or skill level) and an employee’s tangible (like salary
and benefits) and intangible outputs (such as recognition). Equity exists when a situation
matches an individual’s own internal standard of equity and is congruent with that of
referent others (Taylor et al., 2009). Thus individuals would perceive themselves to be
treated fairly if the ratios of their inputs to their outcomes are equivalent to those of their
peers. Equity violations, benefitting either employees or their managers will give rise to a
tense situation whereby employees feel compelled to restore equity. In other words they
attempt to get even, via both cognitive and behavioural strategies (Kanfer and Kantrowitz,
2002). However, individual conceptualization of equity tends to be rather subjective. Thus,
when describing the ES construct, Huseman et al., (1987: 223) suggest that: “individuals
react in consistent but individually different ways to both perceived equity and inequity
because they have different preferences for (i.e., are differentially sensitive to) equity.” ES is
a personality variable. Huseman et al., (1987) propose a continuum of possible reactions
that employees can elicit and identify three categories that vary in terms of their equity
preferences, namely: equity sensitives, benevolents and entitleds. Sensitives are those who
endeavour to balance the outcomes with their respective inputs, which is in line with the
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original equity theory. When the ratio of outcomes to inputs runs out of balance, they
would act to restore balance. Benevolents appear to be more tolerant to situations in which
they perceive to be insufficiently rewarded. While they do not actively pursue situations
where they are under rewarded, they are less likely to react in such situations. Entitleds will
hardly react to situations of over rewarding; yet, would be ready to express their
dissatisfaction, even overtly, in situations of under rewarding.
The conceptualization described by Huseman et al., (1985; 1987) has evolved and King
et al., (1993: 302) hold that ES is related to a “person’s perception of what is and what is not
equity, and then use that information to predict reactions to inequity”. Sauley and Bedeian,
(2000) have put forward a measure of ES termed the Equity Preference Questionnaire
(EPQ). This is not bound by the trichotomization resulting from grouping the respondents
into three categories suggested by Huseman et al., (1987). Moreover this instrument
improves on the original ES Instrument (ESI) (Huseman et al., 1985) in that it follows robust
instrument development procedures and provides support for its psychometric properties.
Persons scoring high in ES would expect more than others for any given input, whereas
those scoring low would be more concerned with their inputs and would typically show less
sensitivity to inequities (Sauley and Bedeian, 2000). People with high ES tend to be more
materialistic, giving more importance to extrinsic outcomes such as pay, status and fringe
benefits whereas those with low ES are more inclined towards intrinsic outcomes, such as a
sense of accomplishment and doing one’s best (Miles et al, 1994). In addition, ES is
positively correlated with external locus of control and negatively associated with
Machiavellianism (Sauley and Bedeian, 2000).
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Emotional labour
Emotional labour was introduced by Arlie Hochschild in her 1983 pioneering work
entitled The Managed Heart: Commercialization of Human Feeling. Hochschild (1983:7)
defines EL as “The management of feeling to create a publicly observable facial and bodily
display”. She distinguishes between “surface acting”, when an employee portrays a
particular feeling, by looking gravely concerned over a complaint or by producing a sincere
looking smile when necessary; and “deep acting” when employees express a real feeling
that has been self induced. Rather than emphasize the effort made by workers in an
attempt to manage their feelings, Ashforth and Humphrey (1993) focus on the display of
appropriate emotions. These need to be congruent with an organizationally defined set of
rules (Opengart, 2005). EL also includes spontaneous and genuine emotions that can be
displayed with little prompting. Morris and Feldman (1996: 987) highlight the role of
interaction in a social environment and define EL as “the effort, planning and control
needed to express organizationally desired emotions during interpersonal transactions”.
These authors suggest four dimensions, namely: frequency of interaction, attentiveness
consisting of intensity of emotions and duration of interaction, variety of emotions required
and emotional dissonance. Drawing on the work by Morris and Feldman (1996) and
Hochschild, (1983), Brotheridge and Lee (2003) operationalized a measure of EL that
consists of six facets, namely: frequency of interaction, intensity of emotions, duration of
interaction, variety of emotions required (excluding emotional dissonance) together with
the two dimensions of deep and surface acting. The authors provide support for the
psychometric properties of their scale. The role of emotional dissonance remains unclear.
While Ashforth and Humphrey, (1993) view it as a consequence, Grandey (2000) includes it
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as an integral part of the conceptualization of EL whereas Brotheridge and Lee (2003)
exclude it.
Hochschild’s work spurred a considerable amount of research among several different
service providers ranging from fast food chains to nurses (Steinberg and Figart, 1999).
Researchers have taken EL one step further by studying manager subordinate relationships.
They found that in many cases, although not a formal prerequisite, subordinates were
expected to “get along with the boss” (Pierce, 1995; 1999). Such relationships tend to
facilitate working relations and reduce the likelihood of workplace tensions (Steinberg and
Figart, 1999). Although many studies conclude that subordinates bear the brunt of
exhibiting EL (Pierce, 1995; 1999; Steinberg and Figart, 1999), others believe that managers
actually perform a more intense form of EL than their subordinates, in an attempt to
demonstrate their total commitment to their respective functions (Kunda and Van Maanen,
1999).
Studies of EL usually focus on service employees since the service sector has become
more important as a result of the transformation of many developed economies. (Wharton,
2009). Service jobs necessitate contact with other people, both externally and internally to
the organization, as well as face to face or voice to voice contact (Steinberg and Figart,
1999). There is considerable literature pertaining to the services industry that emphasizes
the contact between service employees and customers. A public employee demonstrating
an indifferent “cold” attitude when confronted with a concerned or irritated customer may
cause the subject to criticize the service being rendered, irrespective of whether the job in
question is done in a technically correct manner. Thus, emotion is part of the job that must
be performed well (Mastracci et al., 2006).
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Service providers are often required to either be really nice, such as in the case of
flight attendants, or else displaying a rather nasty demeanor, as in the case of debt
collectors (Hochschild, 1983). However, acting in an impartial manner may also burden
workers to a considerable extent since they are expected to suppress their true emotions.
This should also be recognized as one form of EL (Tracy and Tracy, 1998). Sometimes
workers may be forced to smile even when confronting a particularly difficult customer.
Such cases give rise to a conflict between emotions that are genuinely felt and those that
are in fact displayed, a situation known as emotional dissonance (Yang and Chang, 2008).
Service employees who practice EL may demonstrate different degrees of emotion at work
depending on either contextual rules, such as those imposed by their organization, or else
individual factors which depend on their respective abilities and skills (Hsieh and Guy, 2009).
Different gestures accompanying speech, pertaining to different cultures, have been
observed to modify the meanings being communicated, to the extent that gestures have
even been described as “a language having its own semiotics” (Kendon, 1995). Although
largely overlooked in the past (Arvey et al., 1998; Putnam and Mumby, 1993), scholars have
recently given this aspect its due importance and many are also acknowledging the value of
such emotions in everyday work (Ashkanasy et al., 2000; Bono and Vey, 2005; Hartel et al.,
2002).
Studies show that EL may have both negative and positive outcomes. Positive
outcomes include job satisfaction, increased security, increased self esteem (Tolich, 1993;
Wharton, 1993), increased task effectiveness (Ashforth and Humphrey, 1993) and ultimately
profitability (Grandey, 2000). However EL has also been shown to have negative outcomes
that include self alienation and stress (Grandey, 2000; Ashforth and Humphrey, 1993), poor
self esteem (Ashforth and Humphrey, 1993; Fineman, 1993) and burnout (Brotheridge and
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Grandey; Montgomery et al, 2006). It may also serve to augment customer expectations to
such an extent that these cannot be met and can therefore result in emotive dissonance and
self alienation (Ashforth and Humphrey, 1993). In addition, managing one’s emotions for
pay may actually be detrimental to the employee concerned (Grandey, 2000).
Surface acting is positively related to the different attributes that lead to burnout but
it does seem to have a negative effect in situations where customers are able to “see
through” employees’ acting (Groth et al., 2009). Deep acting is associated with positive
aspects such as a sense of self efficacy and well being (Johnson and Spector, 2007; Kim,
2008). Moreover, deep acting has been found to benefit customers in terms of perceived
customer orientation and service quality.
Organizational commitment
Organizational commitment is an important aspect of HR management since it is
considered to be the bond linking individuals to their respective organizations (Mathieu and
Zajac, 1990). OC can be described as the degree of responsibility that employees feel with
respect to their organization’s aims and objectives, that is the intensity of the psychological
attachment between employees and their jobs. (Allen and Meyer, 1996:252) define OC as a
“psychological link between the employee and his or her organization that makes it less
likely that the employee will voluntarily leave the organization”. The work undertaken by
Meyer and Allen (Allen and Meyer 1990; 1996; Meyer and Allen, 1984; 1991; 1997) has
resulted in the development of a multi component model of OC consisting of three
"different frames of mind" which can characterize employees’ commitment towards their
81
respective organization. The three components are termed Affective, Continuance and
Normative commitment.
Affective Commitment concerns employees with a positive emotional attachment
towards their organization. Typically, they would strongly concur with the goals of their
organization and feel a strong sense of belonging to it. In such situations employees’
commitment to their organization is purely voluntary.
Continuance Commitment relates to individuals who commit to the organization
mainly out of fear of the perceived high costs associated with forgoing their organizational
membership (Allen and Meyer, 2000). These costs include both economic costs (such as
retirement schemes) and social costs (such as peer relationships). Here, commitment is not
voluntary; rather individuals feel compelled to commit themselves to avoid any perceived
unpleasant consequences.
Normative Commitment occurs when individuals not only commit to their
organization because of deep feelings of obligation (Meyer and Allen, 1991; 1997) but
because they also feel that they must stay. These feelings usually result from a sense of
obligation towards the organization following some form of interest or investment, such as
training, that the individual has received from the organization. Employees feel that they
must stay with their organization because they "ought to".
These three dimensions of the OC construct are captured by the instrument
developed by Allen and Meyer, which is known to exhibit very acceptable psychometric
properties (Allen and Meyer, 1996; Meyer et al., 1993). In addition the OC construct has
been linked to various antecedents and consequences (see meta analysis by Mathieu and
Zajac, 1990).
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Corporate performance
There is no authoritative definition for corporate or organizational performance.
Usually corporate performance is understood as the concentrated reflection of
achievements of each organizational function and reflects the realization of organizational
objectives (Shieh, 2008). Yet the importance of corporate performance as an outcome
variable for researchers cannot be overstated. Market competition for customers, inputs
and capital make corporate performance essential to the survival and success of modern
business (Richard et al, 2009). The effectiveness of every major business function is
ultimately appraised by its contribution towards corporate performance.
When it comes to measuring their firm’s performance, many executives find this to be
quite a daunting exercise. Sometimes, their efforts result in a mass of numbers and
comparisons that offer very little in terms of insight into actual performance (Liekerman,
2009).
Performance is usually measured in terms of financial ratios, such as ROI (Duchesneau
and Gartner, 1990) or ROE (Barney, 1997; Richard, 2000). Although relatively easy to
understand, financial measures may be untimely or even inaccessible (Chong, 2008). Using
non financial measures offers an alternative possibility (Kunkel and Hoffer, 1993). These
include market share (Bouchikhi, 1993), employee turnover (Huselid, 1995) and productivity
considerations (Ahmad and Schroeder, 2003).
Regardless of the framework used, corporate performance is a complex and
multidimensional phenomenon (Dess and Robinson, 1984). As a dependent variable, it
consists of three specific areas of firm outcomes, namely financial performance, product
market performance and shareholder return (Richard, et al, 2009). A hybrid system
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consisting of both financial and non financial measures would enable senior executives to
gain a wider perspective of their firm’s performance (Chong, 2008).
Dess and Robinson (1984) recommend the use of subjective perceptual measures of
corporate performance. Pearce et al., (1987) argue that corporate respondents exhibited
strong correlations between their subjective assessments and objective results for the
dimensions considered.
Equity sensitivity, organizational commitment, emotional labour, and corporate
performance
ES can be subjectively conceptualized as a form of organizational justice. Similarly,
perceived organizational justice is based on perceived fairness and is also grounded in
equity theory. A meta analysis for organizational justice undertaken by Cohen Charash and
Spector (2001) supports correlation links to work performance, various types of satisfaction,
trust, turnover intentions, negative emotions, organizational citizenship behaviour and OC.
Kim (2009) reports that employees who perceived fair treatment by their company were
more likely to exhibit trust, satisfaction and commitment. In the case of ES, benevolents
who have lower levels of ES, exhibit the highest degree of organizational citizenship
behaviour (Bing et al, 2009). On this basis we hypothesize that:
H1: Managers with lower levels of equity sensitivity will display higher levels of
organizational commitment
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ES can possibly explain complex interactions in interpersonal relationships at work.
Employees with lower levels of ES are more willing to provide care to others at a cost of
declining personal well being and self denial. In doing so they are capable to manage their
feelings, exhibiting higher levels of EL. On the other hand those with higher equity sensitivity
are less likely to manage their feelings when dealing with customers. This leads us to
postulate a negative causal relationship between ES and EL, hence:
H2: Managers with lower levels of equity sensitivity display higher levels of
emotional labour.
Throughout the literature search no empirical evidence was found of any direct
relationship between EL and OC. The demands of the service profession require that
employees draw on their personal emotional resources to fulfill organizational
responsibilities (Bal et al., 2010).
Service professionals who are able to manage their observable feelings exhibit higher
levels of EL that improves interaction with customers and enhances OC. On this basis it is
hypothesized that:
H3: Managers who display higher levels of emotional labour will exhibit higher levels
of organizational commitment.
EL has also been shown to have positive outcomes that ultimately lead to higher levels
of profitability (Grandey, 2000) but this effect is indirect via other variables. Various studies
cite different benefits, such as corporate performance, (Pitt et al., 1995). Assuming a
85
minimum ability level is met, high levels of OC should result in higher levels of corporate
performance (Angle and Lawson, 1994). Studies conducted on the retail banking industry
(Pugh, 2001) and nursing home workers (Shuler and Sypher, 2000) confirm these findings.
Hence it is hypothesized that:
H4: An increase in organizational commitment among managers has a direct positive effect on the
level of corporate performance.
The hypotheses discussed above are depicted in the conceptual and research model
shown in Figure 1.
Figure 1: Conceptual and Research Model
H2H3
H4
H1
CorporatePerformance
Emotional Labour
Equity sensitivity
Intensity
Variety
Deep Acting
Surface Acting
AffectiveCommitment
NormativeCommitment
EPQ
PERFOrganizationalCommitment
86
Methodology
Study Design: Figure 1 indicates that perceived corporate performance is driven by OC
which is in turn influenced by both EL and ES. To test the interactions highlighted by the
hypotheses in the model, we sought the collaboration of a large organization. A number of
industries were considered and a major player in the community banking sector was
ultimately chosen, mainly on the grounds that this bank had a national network of offices; a
respectable market share of traditional deposits as well as an established brand name.
Participants: The HR manager and his team made it possible to reach the entire
middle and senior managers located at all the main offices and branches of the bank. They
accepted to send all bank managers a covering letter explaining the nature of the research
as well as assuring them of complete anonymity. A total of 398 questionnaires were sent to
all senior and middle managers and 274 were collected after the four week cut off date,
representing an effective response rate of 68.8%.
Research Instrument: The research instrument employed consisted of four
instruments that could capture each of the constructs of interest. Therefore, in capturing ES
the conceptualization by King et al., (1993) as well as the unidimensional Equity Preference
Questionnaire (EPQ) developed by Sauley and Bedeian, (2000) that is not bound by
trichotomization were employed. EL was conceptualized on the basis of the work by Morris
and Feldman (1996) and Hochschild, (1983) and operationalized using the six facet structure
of Brotheridge and Lee (2003) that sought to capture: frequency of interaction, intensity of
emotions, duration of interaction, variety of emotions required (with the exclusion of
87
emotional dissonance) together with the two dimensions of deep acting and surface acting.
OC (Allen and Meyer, 1990; 1996) was captured by their instrument that encompassed the
three dimensions of affective, continuance and normative commitment. Finally a
unidimensional indirect measure of corporate performance suggested by Dess and
Robinson, (1984) and supported by Pearce et al., (1987) was also employed. All four
measures had been previously used and shown to have acceptable psychometric properties.
As a result, the final instrument consisted of a total of 57 items made up of the 16 Items of
the EPQ used to capture ES (Sauley and Bedeian, 2000), 14 items to capture EL (Brotheridge
and Lee, 2003), 24 items to capture OC (Allen and Meyer, 1990; 1996), and 3 items to
capture perceived corporate performance (Dess and Robinson, 1994). All items were
measured using Likert type, scales ranging from 1 = Strongly disagree to 7 = Strongly agree
for the OC items and from 1 = Strongly disagree to 5 = Strongly agree for all other items of
the constructs. In addition to these 57 items, seven classificatory variables dealing with age,
gender, marital status, whether partner worked, educational level, tenure with the bank and
position, were also collected.
Analysis
48.9% of respondents were male, with a mean age of 37.9 (sd. 9.2); 74.3 % were
married and 73.2 % indicated that both partners worked. 53.1% of respondents had a
graduate or a post graduate degree and their average tenure with the bank was 17.2 years
(sd. 9.6). Comparison of the demographic percentages of the sample to the overall details of
employees held by the bank indicated very similar percentages providing support for the
generalizability of the findings to all managers at the bank.
88
Since measures for the causal constructs were captured from the same respondents
and seven and five point, scales were used throughout, it was necessary to test for
common method variance using Harman’s single factor test (Podsakoff et al, 2003). To do
so, all the 57 items that made up the four constructs were entered into an EFA, first using
unrotated principal components factor analysis and then using principal component analysis
with a varimax rotation. This was done to determine the number of factors that were
necessary to account for the variance in the items. Common method bias is indicated by
such a test if either a single factor emerges from the factor analysis, or in the case of
multiple factors, one general factor that accounts for most covariance among the items
emerges. Results of these tests showed four clear factors with no evidence of a single
dominant or general factor. These findings provide some assurance that any presences of
common method biases are within acceptable levels and are not likely to significantly affect
the relationships among the constructs being investigated.
Structural equation modelling lends itself best to tackle the two stage nature of the
research model being investigated and to allow for the proper testing of the hypotheses. To
do this it is necessary to test both the measurement model that assesses how well the
constructs have been captured during measurement, as well as to use the structural model
to investigate the relationships among the constructs indicated by the hypotheses in the
study.
This study employs a relatively large number of items to capture the constructs within
the research model being proposed. An initial summary for the dimensions and their
correlation matrix is provided in Table 1. However, since the focus of this research was to
look at causal links among the constructs considered, a partial aggregation approach was
adopted to allow for efficient handling of the data. We opted for partial aggregation for two
89
reasons. First the factor structure of the instruments used is well established in the
literature. Secondly, this procedure is an accepted method for reducing some of the
computational challenges that arise from dealing concurrently with the 57 items that make
up the constructs in the study. Partial aggregation has been used to assess complex models
(e.g. Morgan and Hunt, 1994) and involves the aggregation of items for each dimension of
each construct so that each separate underlying factor is retained (Bagozzi and
Heatherington, 1994). The procedure allows for the creation of a composite variable from
the items that make up each of the dimensions of a construct which therefore become
single indicators for each dimension. Baumgartner and Homberg (1996) recommend that
these aggregate variables should be created from scales for which uni dimensionality and
reliability are established. This approach to model assessment provides greater substantive
content for each variable within a smaller matrix, less distraction from accumulated errors
and, thereby, greater reliability (Bentler and Wu, 1995). To this effect, the items and
dimensions for each construct that are treated as reflective variables were initially analyzed
separately using CFA in Lisrel 8.72.
Table 1: Means, standard deviations and correlation matrix of dimensions of constructs (n = 274)
Min Max Mean SD 1 2 3 4 5 6 71. AffectiveCommitment
5 28 20.64 4.61
2. NormativeCommitment
4 28 16.11 5.25 .39**
3. Intensity 2 10 6.28 1.65 .17** .20**
4. Variety 2 10 6.66 1.75 .14* .10 .50**
5. Surface Acting 3 15 8.37 2.64 .09 .01 .12* .21**
6. Deep Acting 2 10 6.34 1.81 .17** .12 .40** .36** .18**
7. Equity Sensitivity 5 20 16.46 2.87 .24* .07 .12* .11 .01 .088. CorporatePerformance
4 15 11.91 1.95 .47** .14* .17** .14* .04 .24** .21**
Note: Low equity sensitivity is indicated by high scores on the equity sensitivity scale; *= p<.05; ** = p<.01.
90
In the case of the OC construct it was necessary to eliminate the continuance
commitment dimension. The original items that make up this dimension are negatively
worded, but despite their reversal during the analysis, the inconsistencies could not be
corrected during the partial aggregation process and this dimension had to be dropped. As
indicated earlier, other authors (e.g. Hackett et al., 1994; Meyer et al., 1993) have noted
that few studies consider all three dimensions of OC concurrently.
Problems were also encountered with two of the six dimensions of the EL construct.
The single item dimension for Duration and the three item Frequency dimension did not
provide clear loadings and needed to be eliminated. ES and corporate performance were
conceptualized as uni dimensional constructs.
During the initial CFA of each of the dimensions and constructs, items that accounted
for low levels of variance as indicated by low R2 values often needed to be eliminated.
Indeed the presence of negatively worded questions in the instrument often necessitated
the elimination of these items because of the low variance that they accounted for.
Although such negatively worded items are often meant to guard against aye saying, some
authors have argued against the use of negatively worded questions as there may be an
overall tendency for respondents to misinterpret the meaning of such items (e.g.
Roszkowski and Soven 2010; Rubin and Babbie 2010).
The items that exhibited acceptable R2 and that together indicated a good fit of the
items for each construct were retained. Items were then summed up to form separate
dimensions for each of the constructs in the study. In the case of the uni dimensional ES and
corporate performance constructs, the total scale scores act as single indicators to each of
the constructs. In assessing the fit of these two constructs the composite single indicator
91
error variance was initially set to zero but subsequently a correction for attenuation was
made by fixing the error variance at non zero values, using reliability information involving
the subtraction of the value of the reliability of each of the constructs from one and
multiplying this by the indicator's variance. CFA was then performed to test the overall
measurement model for all the constructs and resulting dimensions. Indicator reliabilities
and variance extracted were computed and results indicated that all reliability alphas
exceeded the threshold levels while variance extracted were above or only marginally below
the 0.5 threshold normally employed (Hair, et al 1987, p. 450). Descriptive statistics and fit
results that provide support for the measurement model are shown in Table 2a.
Once the measurement model fit provided acceptable results it was possible to
investigate the structural model fit and to test the hypotheses presented earlier in this
study. To achieve this, the links indicated by these hypotheses were added to the model.
The results that appear in Table 2b indicate good model fit and provide support for the
hypotheses of this study. None of the possible other links among the constructs exhibit
significant t values.
92
Table 2a; Indicators, descriptive statistics and confirmatory factor analysis results (n = 274)
Indicators Mean Standardized FactorLoading
Equity Sensitivity 4.12 .84Organizational CommitmentAffective Commitment 5.16 .90Normative commitment 4.03 .42Emotional LabourIntensity 3.14 .72Variety 3.33 .69Surface Acting 2.79 .23Deep Acting 3.17 .56Corporate Performance 3.97 .86
Notes: Mean scores range from 1 to 7 in the case of the indicators for organizational commitment and from 1to 5 for the rest; All factor loadings are significant t values > 2; 2 (df=17) = 26.09; p=0.073; RMSEA=0.044;GFI=.98; NFI=.93; NNFI=.95; CFI=0.97.
Table 2b; Structural model fit with results for tests of hypotheses (n = 274)Indicators Standardized Factor
Loadingt value
Equity Sensitivity Organiza onalCommitment
0.28 3.54
Equity SensitivityEmotional Labour
0.19 2.17
Emotional Labour Organiza onalCommitment
0.23 2.83
Organizational CommitmentCorporate Performance
0.61 8.74
Notes: All indicator loadings remain significant with t values > 2; 2 (df=19) = 30.41; p=0.047; RMSEA=0.047;GFI=.97; NFI=.92; NNFI=.95; CFI=0.96.
Managerial implications, limitations, and directions for future research
ES is a key variable that has been found to have an effect on both EL and OC. Equity
exists when a situation is congruent with the individual’s preferences vis a` vis the
comparison with that of others (Taylor et al, 2009). While levels of sensitivity vary by
individual it is imperative that management seeks to ensure a ‘sense of fair play’ throughout
93
the organization. This has implications on the various HR policies particularly among service
firms that are so people dependent. Such policies include those relating to remuneration,
promotion and postings. A widespread and prevalent sense of objective or perceived
inequity resulting from any of these sources can give rise to a sense of grievance. This in
turn may lead to a ‘cycle of failure’ that service firms would find it difficult to break out of
(Schlesinger and Heskett, 1991). HR managers therefore need to monitor competitor pay;
undertake individual career planning; support the necessary training and undertake ongoing
internal assessments to determine the presence of any perceived inequity, with respect to
such aspects as bonus schemes, pay scales and other sources.
EL which refers to the management of feeling to create a publicly observable facial
and bodily display (Hochschild, 1983) has been found to have a direct effect on OC. It is
typically required in service contact situations and is therefore an important part of the job
(Anderson, 2006). It has been shown that the personal interaction between those providing
a service and their respective customers is an integral part of the whole service experience
(Bowen, 1990). EL encompasses a number of dimensions that include surface and deep
acting. Deep acting, in particular, is known to be a key driver of service delivery outcomes
such as perceived service quality (Groth et al., 2009). In this respect, the theatre has been
suggested as a useful metaphor for understanding service provision (e.g. Grove and Fisk
2001). These service “actors” perform different routines that are critical to effective service
delivery and to the overall customer experience. The ability of an employee to master and
feel at ease with the service role assigned eventually influences that employee’s OC. This
highlights the importance of initiating new recruits into the core values of the company.
Such a policy forms an integral part of any talent strategy for a service firm as it seeks to
staff key contact points. It highlights the importance of recruiting the right employees over
94
as wide an area as possible, to ensure that the firm is able to identify the right people who
can have the desired levels of EL for their eventual roles. It can also help ensure that recruits
are inclined to stay on and make their job a long term career choice.
Previous research has identified a link between the extent of employees’ positive
emotions and customer satisfaction (Tan et al., 2004). Managers who require their
employees to express particular emotions during the course of their work should clearly
specify the desired displays. Failing to do so could easily result in several different forms of
emotional display, all of which may be judged by those displaying them as being
appropriate. (Diefendorff and Gosserand, 2003). In addition, managers need to be on the
look out for signs of anxiety or stress and possible burnout among their employees, all of
which are known to be consequences of EL (Hochschild, 1983). This effect may perhaps arise
from the deep acting required in service contexts, particularly prevalent in situations where
employees have to demonstrate emotions that they do not actually feel (Pines and Aronson,
1989). While our findings show that both EL and ES have a significant direct effect on OC,
this has been shown to have a strong direct effect on corporate performance. If this result is
confirmed in replication studies this would represent a significantly important finding.
Managers need to take actions that foster both ES and EL since, any improvements in these
constructs are relayed to OC and ultimately to better corporate performance.
Limitations
The findings need to be considered in the light of certain limitations. First, we were
only observing the effects of the various constructs on one bank and not on the industry in
general. Therefore any generalizations made, need to be done with caution. A second point
95
worth highlighting is that questionnaires were distributed via the bank’s HR office and
respondents were asked to return them to the same office. It is possible that participants
may have felt subjected to some pressure by their superiors and consequently may have
been inclined to answer in a manner that they felt that the HR office would approve. Thirdly,
like similar studies, this paper may also be prone to specification error in that it looks at only
four constructs when there are other variables to consider and more interactions to be
modeled. The use of a theory based model has sought to reduce this error as much as
possible, however it cannot be completely excluded. Furthermore it is to be noted that
some dimensions within some constructs may have conflicting outcome effects. Therefore
Bono and Vey (2005) have indicated that surface acting and deep acting have different
relationships to outcome variables while Meyer et al., (1993) similarly point out that the
different dimensions of organizational outcomes have different outcome effects. However
affective and normative commitments tend to have similar outcomes, unlike continuance
commitment (Meyer, et al. 2002) which was not used in this study. Fourth, this paper
focuses only on corporate performance as a main outcome and does not consider other
possible outcomes of ES and EL. Finally, corporate performance which is the ultimate
dependent variable in this study is somewhat difficult to quantify since it is usually
conceptualized in terms pertaining to social and economic outcomes. We have used a self
reported, indirect measure of business performance. The self report approach has been
shown to be superior to using corporate performance data from documentary sources (e.g.
Dess and Robinson, 1984) while an indirect approach to corporate performance
measurement has been shown to be a reliable means of measuring corporate performance
(e.g. Pearce et al., 1987). Nevertheless it may be argued that such an indirect measure could
include other aspects of corporate performance.
96
Directions for future research
One of the foremost directions for future research would be to investigate further the
strong link between OC and corporate performance that has resulted in this study. Proper
replication involving a study across service firms is therefore a priority. Secondly, the
interrelationships among the constructs of this study and other constructs could provide
various extensions. Thus for example, it is possible to include and investigate the role of
behaviour activation and inhibition systems and behavioural intentions on the constructs
already considered. Thirdly, it is also possible to look at other personal traits that could
influence the extent to which individuals would be ready to show a higher degree of EL or
OC. For example, King and Miles, (1994) suggest that benevolents demonstrate a greater
degree of OC than do the entitleds. Such a study may also warrant a more thorough
investigation of how the ES categories described earlier, interact with these other variables.
Finally, the present study can be conducted across a much wider area, possibly even across
different countries and industries which would ultimately serve to strengthen its
generalizability.
Conclusion
The study explores and clarifies the nomological net among the three related HR
constructs, namely ES, EL and OC, as well as their ultimate effect on corporate performance
among service firms. The findings provide support for the notion of ‘cycle of success’ and
‘cycle of failure’ that are often put forward in services marketing discussions. Proper
97
management support to leverage ES, EL, OC and ultimately business performance requires a
clear talent strategy. Such a strategy can be used to leverage the important effect that ES
and EL have been shown to have on OC and ultimately business performance. Whereas
there has been a lengthy debate as to whether the best performance in organizations
results from a focus on customers or innovations and technology (cf. Berthon et al., 1999),
the findings of this research point towards the need to focus on employees. This resonates
with the well known “service profit chain” approach to achieving performance in services
firms (Heskett et al., 2008). This logic argues that corporate performance is driven by
customer loyalty, and that loyalty is a direct result of customer satisfaction. Customer
satisfaction is in turn strongly affected by the value of services provided to customers, and
that this value is delivered by satisfied, loyal, and productive employees.
98
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108
Chapter 4: Encouraging CRM Systems Usage: A Study among Bank
Managers
Abstract
Purpose:
This study identifies perceived usefulness and perceived ease of use as key elements that
are critical in encouraging service providers’ intention to use Customer Relationship
Management (CRM) systems.
Design / Methodology / Approach:
The research is grounded in the Theory of Reasoned Action and the Technology Acceptance
Model. These are used as a basis for developing hypotheses of the relationships between
the variables pertaining to the intention to use CRM systems, among a sample of service
providers. Data are collected from a sample of managers in a community bank.
Findings:
Results indicate that the higher the perceived ease of use, the greater the perceived
usefulness and the higher the intention to use CRM. Moreover perceived usefulness is also
found to act as a partial mediator between perceived ease of use and intention to use CRM.
Research limitations / Implications:
The study was limited to a single entity and consequently the results should be generalized
with caution. Replication studies, that could possibly include additional variables, across
other countries and contexts are desirable.
109
Practical Implications:
The effect of Perceived Ease of Use on employees’ intention to use CRM is supported,
highlighting the need for management to devote adequate resources toward developing
this aspect. The study is also helpful because it highlights the need for senior management
to create the right environment to enhance systems adoption.
Originality / Value:
This paper investigates the interaction among these key elements and their effect on CRM
systems adoption within a banking context thereby contributing to better understanding of
the underlying links.
Key Words:
Perceived Usefulness, Perceived Ease of Use, Customer Relationship Management (CRM),
Community Banking.
110
Encouraging CRM Systems Usage: A Study among Bank Managers
Introduction
Following the turmoil in worldwide economic activity resulting from the recent global
financial crisis, businesses are seeking to head back on track. Many are acknowledging that
their activities must be focused on their customers, rather than on cost cutting strategies
since competition is a real, omnipresent threat to them (Biederman, 2010). Ideally lead
times need to be shorter and availability higher, possibly with the barest minimum increase
on the price tag (Bowersox et al., 2002). Managers need to find ways of improving the
operations of their various functions so that ultimately their customers will experience a
better service. This can be achieved with the support of an efficient Customer Relationship
Management (CRM) system. Although CRM will be used throughout this paper, it is
recognised that eCRM (electronic Customer Relationship Management) does not
fundamentally differ from CRM (Friedlein, 2001). eCRM systems focus on using the web site
as the main interaction channel for businesses to simulate an old fashioned one to one
direct relationship with customers (Chen et al., 2007). Development in information and
communication technology has facilitated the scale and scope of CRM, leading to the
growing use of eCRM. By integrating and simplifying the customer related processes
through the internet, eCRM helps improve customer acquisition, customer development
and customer retention (Chang et al., 2005).
There are several CRM definitions in the literature (Sin, et al. 2005). However the concept of
CRM adopted in this study, involves “the integration of people, processes and technology in
order to ascertain total customer satisfaction before, during and after a particular sale or
service” (Kincaid, 2003). Kale (2004) refers to the seven deadly sins of why CRM failure can
occur. These are: viewing CRM primarily from a technology perspective; a lack of customer
centric vision, not understanding the concept of a customer’s lifetime value, insufficient top
management support, not re engineering business processes, underestimating the
challenges in integration of various sources of data and underestimating the challenge in
111
effecting change. Therefore, while technology and systems 'hardware' have been put
forward as critical enablers that can facilitate the provision of positive service experiences
(Sin, et al. 2005), these can only be as efficient as the people employing them. The major
problem faced by many service firms is not primarily related to such 'hardware'; rather the
challenge is to get the interpersonal communication aspect (or 'software') right, to ensure
that those providing a service interact effectively at a human level to deliver superior
experiences to customers. Indeed it it is the people aspect that is often one of the main
challenges and causes of CRM failure. This is especially so in the case of service firms where
service persons are the backbone supporting an existing service infrastructure. To do so,
these persons need to make appropriate use of the technology and systems 'hardware',
simultaneously. In such circumstances technology acts primarily as an enabler rather than a
driver, therefore understanding the intentions of service providers towards the firm’s
technology is critical. The bottom line is that CRM is not merely a bundle of software that
automatically propels an organization into stardom, thus it is equally important to study
people as attentively as we tend to study technology (Huwe, 2010). Service organizations
need to commit themselves to effective human resources talent strategies. Of course this is
much easier said than done. Understanding customers is challenging enough; understanding
and motivating employees is by no means any less challenging.
It is for this reason that this paper seeks to understand service providers and their intentions
towards the use of their organization’s CRM technology. It starts by looking at the role of
CRM and its evolution with the coming of age of the internet to eCRM and identifies
Perceived Usefulness (PU) and Perceived Ease of Use (PEOU) as two key antecedents
highlighted by the Technology Acceptance Model (Davis, 1989; Davis, et al. 1989) that are
critical to encouraging service providers’ intention of using CRM technologies. Data are
collected from among managers at a community bank; results are reported, implications are
drawn and limitations are also noted.
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CRM among service firms
The advent of internet technology has drastically changed the underpinning platform for
most businesses. In manufacturing firms, it has brought about a shift from the original focus
on Supply Chain Management to e Supply Chain Management which emphasizes the need
to manage relationships with the various stakeholders of the firm. eCRM is a multifaceted
approach that supports the sustainability and progress of firms (Palaniammal, 2008). Apart
from focusing on the importance of the end user, eCRM ensures complete visibility and
control of the various fuctional processes needed to address customers’ needs efficiently
and effectively. This emphasis on customer relationship management is central to effective
marketing by service firms and many seek to utilise technology to provide more meaningful
and effective relationship experiences. Whilst offering immediate advantages in obtaining
and disseminating information, both in terms of speed and accuracy, the associated pitfalls
of CRM are also serious.
Driven by demanding customers, intense competition and rapid technological development,
many firms have sought to deliver superior customer value (Woodruff, 1997). Customer
value is a strong attribute of any product or service and can be understood in terms of
product value, service value, employee value and company image value (Kotler, 1997).
Moreover customer value is perceived by the customer rather than the supplier (Wang, et
al. 2004). A prerequsite for the improvement of CRM performance is that firms should
focus their operations towards the creation and delivery of superior customer value (Jensen,
2001).
Proper adoption of IT innovations can improve a firm’s performance and eventually leads to
competitive advantage (Sophonthummapharn, 2009). The internet undoubtedly offers a
unique low cost opportunity for companies to reach out to several (broadly defined)
customers in relatively short periods of time. IT systems and e business solutions have a
113
huge influence on the way that customer relationships are managed. However, in today’s
economic situation, organizations cannot be expected to spend too lavishly when it comes
to selecting the best available solutions for their IT infrastructures. Moreover merely
investing in e business technologies, while essential, is not in itself sufficient to provide a
competitive advantage. Instead it is the organizations’ capabilities to effectively implement
and leverage e business technologies within the context of their various relationship
partners that are more important (Johnson, et al. 2007).
Customer satisfaction can foster demand which in turn can increase overall sales and
revenue. Companies that focus on their customers’ needs and wants are in a better position
to achieve long term success than those who do not (Kotler, 2000). CRM enhances a service
firm’s ability to keep, improve and extend its relationships with customers (Tsikriktsis, et al.
2004). Web driven applications have re defined the rules of traditional selling. Nowadays
salespersons and contact staff in service firms have an advocating role; they provide a
medium by which critical company resources under the form of marketing information,
training, logistics opportunities, customer and collaborative planning initiatives are made
available to each customer (Poirier and Bauer, 2000).
eCRM can be conceptualized as being reminiscent of the good old days when customers
bought many of their needs from corner stores and they were accustomed to being
personally greeted by the person behind the counter. The more successful shopkeepers
were the ones who made it their business to undertsand their customers’ individual needs
and wants whilst simultaneously knowing which suppliers offered the best products to suit
their customers’ requirements. This created an intimate relationship between suppliers and
customers which was mediated by a service provider, the shopkeeper in this example. Such
a relationship usually resulted in a number of satisfied persons who kept returning, in other
words loyal customers, the same who usually tend to build and strengthen relatioships with
the firm and who also behave differently from non loyal customers (Ziethaml, et al. 1996).
Nowadays, technology has taken this process to a higher level, however the basic concept
has remained unchanged. Data are collected from any point where the customers interact
with organizations, as well as from other sources such as demographic or social databases.
These data are then combined together and processed to provide information which in turn
114
enables the same organizations to improve their respective services. Consequently, the
importance of e transactions and CRM is not only limited to academics but is also critical to
managers (Tsikriktsis, et al. 2004). Managers must conceptualize their service processes in a
holistic manner. They must try to create “win win” relationships that utilize the strengths of
other channel members, between the partners (Katzorke and Lee, 2002). Successful
companies are customer oriented; they adopt a universal CRM culture throughout. They
must start by ensuring that there is a common understanding of the company culture all
around. Indeed corporate culture is similar to a firm’s personality in that it provides an
organizational memory that minimizes the need to start over whenever personnel changes
occur (Walsh and Ungson, 1991).
Despite the apparent benefits associated with CRM usage, a thorough literature search
immediately brings to light a significantly worrying number of instances where any attempt
to implement even the most recent of CRM systems have failed. Several authors have cited
cases where CRM implementation failed to deliver what was expected (e.g. Bird 2001;
Howarth 2002; McNulty, et al. 2003). Stories of CRM failures are abundant. According to
Hertz and Vilgon (2002) up to 60 per cent of CRM implementation projects fail to deliver
what had been initially promised. Moreover, Forrester Research reported that more than
50% of CRM projects simply fail to meet expectations, (Band, 2008). Unfortunately
managers still tend to focus on the technological aspect of CRM without giving processes
and people their due importance. Studies have shown that certain strategies have been
unseccessful owing to their implementation, rather than the fault being with the strategies
themselves (Bonoma, 1985; Piercy, 1998). Moreover IT projects are usually known to fail not
because of some technological flaw but because of resistance to change as well as
uncertainty, both of which are inherent to human nature. Usually such projects require a
fair amount of change, which in turn appears threatening to many employees. This makes it
somewhat difficult to gain their support and commitment towards implementing any
necessary changes (Mauer, 1997).
Given the critical role that employees play in CRM implementation, this study focuses on the
cognitive and behavioural aspects underpinning the implementation of a successful CRM
system. It looks at the intention to use CRM as a key outcome variable of interest, and
115
moves on to identify perceived usefulness (PU) and perceived ease of use (PEOU) as critical
antecedent variables. PU essentially measures how useful the users perceive a particular
technology to be to them, whereas PEOU considers the users’ perception of the degree of
difficulty they would expect to encounter, if they were to use that same technology. These
constructs are adopted from the Technology Acceptance Model (TAM), proposed by Davis
(1989). The underpinning theory for the TAM is from the domain of social psychology,
particularly the TRA Theory of Reasoned Action (Fishbein and Ajzen, 1975). The TAM model
has been tested across a wide range of technology settings and has proven to be a reliable
forecaster of computer use (Taylor and Todd, 1995; Venkatesh and Davis, 2000).
The technology acceptance model is robust and can be applied to a wide range of
technologies (Venkatesh and Davis, 2000). It is specific and only requires a small number of
constructs to predict intention (Agarwal and Prasad, 1999); it is parsimonious and displays a
high level of predictive power when applied to the use of technology (Chen and Chao,
2011). In addition, Taylor and Todd (1995), claim that a combination of the TAM and the
TRA can adequately define individuals’ behaviour towards using a new technology.
Table 1 provides a selection of studies, covering a varied range of technologies, in which the
TAM was successfully employed to investigate the factors affecting usage intentions.
116
Author/s Year Technology Investigated Findings
Davis 1989 PRQFS electronic mail, XEDIT fileeditor, Chartmaster and Pendraw.
TAM scales exhibited high convergent,discriminant and factorial validity. Both PU andPEOU were significantly correlated with usageand perceived future use. PU had asignificantly larger correlation than PEOU.
Taylor andTodd
1995 Computing Resource Centre TAM scales exhibited a good fit to the data.PEOU was significantly correlated to PU andattitude while PU was correlated to attitudeand to behavioural intention.
Hu et al. 1999 Telemedicine PU significantly affected attitude and intentionhowever PEOU did not have any significanteffect.
Lederer etal.
2000 WWW Both PU and PEOU were significantdeterminants of usage.
Chen et al. 2002 Virtual Store PEOU had a positive effect on PU and attitudewhile PU had a significant effect on attitude.
Hsu and Lu 2004 On line Games Both PU and PEOU had significant positiveeffects on attitude.
Levy andGreen
2009 Military Combat ISs PU and PEOU had significant positive effects onintention.
Chen et al. 2011 Public Transportation Both PU and PEOU had significant positiveeffects on attitude.
Table 1: Various studies utilizing the Technology Acceptance Model (TAM) and Theory of Reasoned Action (TRA).
Technology based systems are fundamental to CRM. TAM with its grounding in the TRA is
the most influential of the technology driven diffusion theories and has been shown to
predict user acceptance of a significantly wide range of technology related applications (see
Table 1). We argue that the relevance of TAM in predicting CRM usage is potentially an
important incremental elaboration of the theory. Although the two antecedent constructs
of PU and PEOU in the model might seem simplified, they have been found to be critical in
users’ intention to accept or reject technologies (see Table 1). Therefore, this study sets out
to investigate whether PU and PEOU can be used to understand and predict the use of CRM
systems and technologies, so that service organizations can take the necessary measures to
ensure greater CRM technology acceptance and usage.
The TAM model (Davis, 1989; Davis, et al. 1989; Venkatesh and Davis, 2000) and associated
TRA (Fishbein and Ajzen, 1975) envisage a direct link of both PEOU and PU to intention to
use a technology, while PEOU is also envisaged as having a mediating effect on intention to
117
use a technology, via PU. We extend the application of this model by testing it in the case of
intention to use CRM systems and technologies and therefore hypothesise that:
H1: The higher the perceived ease of use, the greater the intention to use CRM.
H2: The higher the perceived ease of use, the greater the perceived usefulness.
In addition the mediating role of PU will also be investigated, hence:
H3: The effect of perceived ease of use on intention to use CRM is mediated by perceived
usefulness.
These relationships are depicted in the research model shown in Figure 1.
Figure 1: Research model
Perceived Easeof Use
PerceivedUsefulness
Intention touse CRM
H1
H2 H3
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Methodology
The study uses existing scales to measure PU and PEOU (Davis, 1989; Davis, et al. 1989), and
intention to use CRM (Qingxiong and Liping, 2004). The final questionnaire consisted of a
total of 22 items made up of PU (6 items), PEOU (6 items) and Intention to Use CRM, (3
items) together with seven classificatory variables. In order to ascertain that all the
questions were fully coherent and understood, a pilot session was undertaken before the
dispatch of the questionnaire to all potential participants. To achieve this, a sample of ten
managers was randomly selected and every one of them was in turn asked to fill in their
respective questionnaires during a face to face meeting in their respective workplaces.
Since all of the participants were presumed to have quite a high level of education, we did
not anticipate, neither did we find any major problems associated with the syntax and / or
semantics of the questionnaire.
A total of 400 questionnaires were sent to all senior and middle managers at a
community bank, via the bank’s internal mail. The bank chosen is a major player in the
community banking sector that has a national network of offices; a respectable market
share of traditional deposits as well as an established brand name. The human resources
manager and his team at the selected community bank made it possible to reach the entire
middle and senior managers located at all the main offices and branches of the bank. Each
questionnaire was accompanied by a covering letter from the bank’s senior human
resources manager, urging participants to co operate by filling in the questionnaires and
returning them on time, whilst at the same time assuring them of complete anonymity.
Managers were allowed a total of four weeks during which they were expected to fill in and
return the questionnaires. A total of 274 were collected by the cut off date, representing an
effective response rate of 68.5%.
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Results
48.9% of respondents were male, with a mean age of 37.9 (sd. 9.2); 74.3% were married and
73.2% indicated that both partners worked. 53.1% of respondents had a graduate or a post
graduate degree and their average tenure with the bank was 17.2 years (sd. 9.6). These
demographics are in line with the overall demographics for all the senior and middle
managers at the cooperating bank, providing some support for the generalization of findings
to the entire management of this particular bank. Table 1 gives details of the items together
with means and standard deviations for each of the items collected in the questionnaire.
Table 1: Descriptive Statistics for PEOU, PU and Intention to use CRM
Min. Max. Mean Std. Deviation
The Bank’s CRM system helps me work more quickly 1 7 5.55 1.34
The Bank’s CRM system helps my job performance 1 7 5.49 1.32
The Bank’s CRM system helps me increase productivity 1 7 5.44 1.27
The Bank’s CRM system helps my Effectiveness 1 7 5.54 1.25
The Bank’s CRM system helps make my job easier 1 7 5.53 1.34
The Bank’s CRM system is useful 2 7 5.81 1.11
Perceived Ease of Use (PEOU) 11 42 33.35 6.92
The Bank’s CRM system has been easy to learn 1 7 5.92 1.16
The Bank’s CRM system is clear and understandable 1 7 5.79 1.27
The Bank’s CRM system makes it easy for me to become skillful 1 7 5.20 1.38
The Bank’s CRM system is easy to use 1 7 5.82 1.25
The Bank’s CRM system helps is very controllable 1 7 5.27 1.36
The Bank’s CRM system is very flexible 1 7 4.88 1.52
Perceived Usefulness (PU) 7 42 32.89 6.45
your intention to use the CRM system on a regular basis: Extremely
likely/ Extremely unlikely
1 7 5.32 1.94
your intention to use the CRM system on a regular basis: Improbable/
Probable
1 7 5.83 1.35
your intention to use the CRM system on a regular basis: Uncertain/
Certain
1 7 5.97 1.19
Intention to use CRM (Int CRM) 3 21 17.12 3.74
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The mean (and standard deviations) for the constructs used namely, PU, PEOU and
Intention to Use CRM are 33.35 (sd. 6.92); 32.89 (sd. 6.45) and 17.12 (sd. 3.74) respectively.
Exploratory factor analysis involving the imposition of three factors on the data meant to
capture the constructs indicates that items load on the three factors separately as intended,
thereby providing support for both convergent and discriminant validity – Table 2. Cronbach
alphas for the items making up the three constructs of PU, PEOU and Intention to use CRM
where: 0.96; 0.89 and 0.75 respectively. These all exceeded the 0.7 level and therefore are
acceptable (Nunnally, 1967) providing support for the reliability of the instruments
employed.
Table 2: Results of principal component factor analysis followed by a Varimax rotation forall items in the questionnaire Component
PEU PU
IntCRM
The Bank’s CRM system helps me work more quickly .84
The Bank’s CRM system helps my job performance .86
The Bank’s CRM system helps me increase productivity .89
The Bank’s CRM system helps my Effectiveness .89
The Bank’s CRM system helps make my job easier .79
The Bank’s CRM system is useful .75
The Bank’s CRM system has been easy to learn .82
The Bank’s CRM system is clear and understandable .84
The Bank’s CRM system makes it easy for me to become
skillful
.62 .51
The Bank’s CRM system is easy to use .89
The Bank’s CRM system helps is very controllable .71
The Bank’s CRM system is very Flexible .50
your intention to use the CRM system on a regular basis:
Extremely likely/ Extremely unlikely
.76
your intention to use the CRM system on a regular basis:
Improbable/ Probable
.85
your intention to use the CRM system on a regular basis:
Uncertain/ Certain
.82
121
Having established support for the validity and reliability of the constructs used it is possible
to investigate the research model in Figure 1. This shows a situation of mediation with the
effect of PEOU on intention being both direct as well as indirect via PU. To test such a
mediated model, the procedure in Baron and Kenny (1986) has been followed. This involves
a set of three regressions. The first regression treats the mediator PU as the dependent
variable and PEOU as the independent variable. The second regression treats intention to
use CRM as the dependent variable and PEOU as the independent variable and finally a third
regression that treats intention to use CRM as the dependent and PEOU and PU as
independent variables. The results of these regressions are shown in Table 3.
Table 3: Results of Mediated Regression Tests
Dependent Variable PU Int CRM Int CRM
R2 .49 .40 .20
F 258.5*** 50.9*** 33.6***
Independent variable
PEOU unstandardized beta .65*** .22*** .11**
PU unstandardized beta .16***
***= p<.001; ***=p<.01
The results indicate that the requirements for full mediation are not met; first an increasing
R2 does not result; second the beta of PU does not become significant in the third regression
to the exclusion of the beta of PEOU. The finding is confirmed by the Sobel test which is also
found not to be significant (Sobel test statistic =.77; p>.05). These results provide support
for hypotheses 1 and 2, namely that:
H1. The higher the perceived ease of use, the greater the intention to use CRM.
H2. The higher the perceived ease of use, the greater the perceived usefulness.
But not for hypothesis 3 that states that:
H3. The effect of perceived ease of use on intention to use CRM is mediated by
perceived usefulness.
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The results therefore indicate a situation of partial mediation rather than full mediation.
PEOU has a direct effect on intention to use CRM represented by a beta of 0.22 but PEOU
also has a partial indirect effect on intention to use CRM via PU which is represented by the
product of the betas of the link of PEOU to PU and that of PU to intention to used CRM (0.65
x 0.16).
Conclusions, recommendations, limitations and future research
The results indicate that both PEOU and PU influence intention to use CRM and that in
addition the effect of PEOU on intention to use CRM is also partially mediated by PU. The
implications of the research findings are of some significance both to management practice
and to academia. PEOU and PU are recognized as important variables in understanding
technology acceptance (Venkatesh and Davis, 1996; Venkatesh, et al. 2004). Results
obtained in this study show that these are also important variables in understanding the
intention of using CRM systems by employees. In particular, the results highlight the
importance for management to enhance the PEOU of CRM systems, if they wish to improve
the increased adoption and usage of such systems by staff. PEOU is associated with the
belief of individuals about their computer prowess and personal skills ( Davis and Venkatesh,
2004; Davis, et al. 1989). These beliefs tend to be strong to such an extent that even in the
case of adverse advice from reliable sources, these individuals would be unlikely to change
their perceptions of ease of use based on their own beliefs (Davis and Venkatesh, 2004).
Individuals usually form these early perceptions of perceived ease of use of a system based
on both intrinsic (such as self efficacy, computer playfulness or computer anxiety) and
extrinsic (such as availability of organizational resources or senior management support)
factors (Venkatesh and Bala, 2008). It is therefore imperative that management identifies
and facilitates the determinants of PEOU. This can also be strengthened with appropriate
organizational support, that can be formal via training and education, as well as informal,
via peer assistance. Employees who lack information and / or training may be subject to
anxiety (Olson, 2004). Given that CRM involves a complex system that seeks to integrate
people, processes and technology within an organization, it is critical that users are
appropriately trained and educated before any CRM system is implemented. To enhance
123
their PEOU, CRM users need to be supported in order to become familiar with IT / IS issues.
In addition, users need to be kept updated about any developments pertaining to the new
system, consulted where necessary and assured of senior management’s support.
Results obtained from this study also show that PEOU has a direct effect on PU which
confirms earlier studies that posited that PEOU is one of the determinants of PU (Venkatesh
and Davis, 2000; Venkatesh and Bala, 2008). It is known that the PEOU construct captures
the influence of cognitive instrumental processes on PU. Individuals form perceptions of
usefulness based on cognitive instrumental processes which essentially means that “they
form PU judgments in part by comparing what a system is capable of doing with what they
need to get done in their job” (Venkatesh and Davis, 2000). In this context management
needs to ascertain that users fully understand the benefits of CRM adoption and usage.
Management needs to be seen to be competent, ethical, understanding, accessible and
exemplary. Group or individual ideas and suggestions pertaining to system enhancement
need to be encouraged, supported, investigated and where applicable rewarded and
implemented. The adopted system itself should be designed in such a way to be as user
friendly as possible and every effort should be made to improve the system where
necessary.
CRM needs to be viewed as an integral element of corporate strategy that has full senior
management commitment, without which CRM projects are unlikely to succeed (Kotorov,
2003). Successful CRM introduction requires an understanding of both the external
environment that includes customers’ requirements, suppliers’ attributes and competitive
reality, as well as internal effort directed at the staff to ensure required levels of PEOU and
PU are reached. Without such consideration, the investment of valuable resources in a CRM
system will be wasted because despite all the positive aspects attributed to the system,
employees will either under utilize its capabilities or simply not use it at all.
The research also highlights a point of theoretical interest in that results indicate a partial
mediation whereby PEOU not only has a direct effect on intention to use CRM but also has
124
an indirect effect that comes about by strengthening the importance of PU and its effect on
the intention to use CRM. It has been shown that the mediation effect is partial in the
context of the bank under investigation but whether this effect is always so requires
broader investigation. A better understanding of the circumstances when such an
interaction is more pronounced has potentially interesting implications for theory
development.
The limitations of this study are mainly concerned with specification error whereby it is only
the effect of PEOU and PU on intention to use CRM that has been considered. Other equally
significant issues that involve the use of technology could also be specified in the research
model. Moreover only one bank was used in the study raising questions as to whether this
finding applies to banks more generally. Given the strength of the underlying TAM theory,
the findings are likely to be extendable to other banks and service firms. Another limitation
worth considering is that participants may have felt some pressure from their superiors and
consequently may have answered in a way that they felt that senior management would
have liked. In terms of future research these results can be strengthened by considering a
wider sample and consideration of other variables that are known to have an effect on CRM
and ultimately corporate success. In addition it may also pave the way for other researchers
to pursue different paths, possibly making use of other theories which in turn could be used
to provide alternative explanations to service provider’s intention to use CRM. Other areas
for future research could include other possible determinants and their moderating effects,
particularly those pertaining to technology, socio cultural issues, gender and age. The
people aspect of CRM system implementation remains a strong area of research focus as
our advances in this area tend to be unable to keep up with concurrent advances being
made in technology and process capabilities that these systems are able to provide.
125
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Chapter 5: Perceived Performance, Equity Sensitivity and OrganizationalCommitment among Bank Managers.
Abstract
This study looks at equity sensitivity and organizational commitment and considers the
possible moderation role that managers’ perception of organizational performance may
have. Using an equity theory perspective, the constructs of equity sensitivity and
organizational commitment, as well as the effect of perceived firm performance, are
considered. A research model linking their interaction is proposed. Data are collected from
managers of a community bank and moderated regression is used to test the hypotheses.
Results support a positive effect of equity sensitivity on organizational commitment while
high or low perceived firm performance is found to have a determining effect on this
relationship.
Key Words
Equity Sensitivity, Organizational Commitment, Perceived Corporate Performance,
Community Banking.
131
Perceived Performance, Equity Sensitivity and Organizational Commitment
among Bank Managers
Introduction
Customer loyalty, employee retention, revenue, sales, and profit are essential to the success
of any business. The longer an organization is able to retain its customers, the greater the
revenue and the lower the operating costs pertaining to those same customers.1 These
outcomes are correlated with employee attitudes and perceptions of work conditions.2,3,4
Human resources (HR) are considered by both academics and practitioners to be an
organization’s most valuable and competitive asset, particularly among service firms.
Employees with high levels of commitment will tend to perform better, be more productive,
exhibit lower levels of absenteeism and are usually punctual.5,6 Consequently one would
expect senior management to actively pursue activities that seek to ensure that their
employees are committed to their organization. Yet, a study on a number of organizations
conducted by Schlesinger and Heskett back in 1991,4 revealed that in many of the cases they
analysed, rather than adopting measures to foster organizational commitment, managers
were doing quite the opposite. This was often the result of cost cutting efforts on their part.
The outcomes were inevitable: lower pay schemes, lack of training and greater work loads,
resulted in a large number of de motivated employees who were ready to defect to another
company at the first available opportunity. Moreover, managers seemed to accept this
situation as standard protocol, even going so far as to claim that “….high turnover is simply
an inevitable part of our business. You’ve got to learn to live with it” even though this
eventually resulted in a high customer turnover, owing to the latter’s perceived
dissatisfaction with these organizations’ products or services.4
Employees who are emotionally committed to their job or organization have been found to
perform better.7 Intuitively there should be a strong link between satisfied customers and
committed employees. It would seem that if employees feel good about their jobs, they
would be more committed to their organization and, in turn, their sense of well being would
132
be reflected in the quality of their work as well as in the positive feedback received from
their customers. For example Schneider and Bowen (1985) reported a direct relationship
between bank customers’ satisfaction and the satisfaction levels of the tellers.8 Job
satisfaction is known to be an important correlate of organizational commitment and this, in
turn, has been shown to have various beneficial consequences in terms of trust, better job
performance, perceived job alternatives and lower search turnover intentions. 12,15,21,25,26
Not surprisingly, organizational commitment has therefore received considerable attention
among service firms. Among banks, key and important customers identified using some
Pareto distribution, are increasingly being handled by middle and senior managers rather
than junior staff who tend to be more focused on providing service to ordinary customers.
The role of organizational commitment among managers who handle some of the more
high worth customers has received little attention.
In this respect, this study looks at the role of equity sensitivity and perceived organizational
performance as two antecedent variables to organizational commitment among bank
managers. It is known that equity sensitivity, which is grounded in equity theory, is a key
variable impacting organizational commitment.9,10 In addition, Wright and Gardner (2003)11
hold that there is substantial literature establishing a HR – performance relationship;
however there seems to be a lack of empirical research examining the mechanisms through
which this relationship functions and in turn what role a positive or poor performance of a
firm has. Banks are increasingly challenged to show improving year on year performance
and there is considerable pressure on bank managers in this respect, evidenced by ever
increasing performance targets. It is therefore interesting to investigate whether equity
sensitivity among managers in banks impacts their organizational commitment. In addition,
does bank managers’ perception of their bank’s performance mediate the effect of equity
sensitivity on the organizational commitment? Any such mediation effect can potentially
have implications for various HR polices directed at managers.
This study therefore looks at organizational commitment and equity sensitivity among bank
managers as two relevant HR and marketing elements and considers the possible role that
managers’ perception of their bank’s performance may have on this relationship.
Specifically it investigates the possibility that perceived bank performance acts to moderate
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the effect of equity sensitivity on organizational commitment. A better understanding of
how the equity sensitivity and organizational commitment constructs operate can provide
HR and marketing managers with a meaningful direction for undertaking activities in
support of organizational commitment. To investigate these relationships, data are collected
from managers working at a community bank and moderated regression is used to analyse
the role of perceived bank performance. Results are reported, implications are drawn,
limitations are noted and directions for future research are indicated.
Organizational Commitment
Organizational commitment is held to be an important aspect of HR management since it is
considered to be the bond linking individuals to their respective organizations.12 The
importance of this construct is evident from the significant number of studies that abound
in the literature, because it is believed that organizational commitment affects
organizational performance.13 Other studies have found relationships between commitment
and workplace attitudes and behaviour.14,15 Organizational commitment can be described as
the degree of responsibility that employees feel with respect to their organization’s aims
and objectives, or in other words, the intensity of the psychological attachment between
employees and their jobs.16 Bateman and Strasser (1984:95) define organizational
commitment as a “multi dimensional construct, involving an employee’s loyalty to the
organization, willingness to exert effort on behalf of the organization, the degree of goal and
value congruency with the organization and a desire to maintain membership”.5
Among the best known conceptualizations of the organizational commitment construct is
the three component model consisting of three "different frames of mind" which can
characterize employees’ commitment towards their respective organizations.17,18,19,20,21 The
first is affective commitment which takes place when employees have a positive emotional
attachment towards their organization. Typically, these employees would strongly concur
with the goals of their organization and feel a strong sense of belonging to it. Here,
commitment by employees to their organization is purely voluntary. The second dimension
is described as continuance commitment. This describes the situation whereby individuals
commit to their organization mainly out of fear of the perceived high costs associated with
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forgoing their organizational membership.22 These costs would include both economic costs
(such as retirement schemes) as well as social costs (such as peer relationships).
Continuance commitment is not voluntary; rather individuals feel compelled to commit
themselves to avoid any perceived unpleasant consequences. The final dimension is that of
normative commitment, which occurs when individuals not only commit to their
organization because of deep feelings of obligation but because they also feel that they
must stay.20,21 These feelings may result from a sense of obligation towards the
organization as a form of acknowledgement towards some form of interest or investment
that the individual may have received from the organization. For example, following intense
training periods; employees may feel that they must stay with their organization because
they "ought to".
Studies have linked organizational commitment to important antecedents and
consequences. Employees who are treated with consideration and encouraged to
participate in corporate decision making have been shown to display higher levels of
organizational commitment.23,24 There are also beneficial consequences such as more trust,
better job performance, perceived job alternatives and lower turnover intentions.12,15,21,25,26
Employees who exhibit high levels of commitment towards their organization are also more
effective.21 The pivotal role that organizational commitment has, helps explain why many
organizations adopt Human Resources practices intended to maximize such employee
commitment.27,28 It is suggested that what has been described here for general employees
applies also to employed managers.
While Meyer and Allen (1991)20 have used affective, continuance, and normative
commitment to capture the multidimensional nature of organizational commitment,
affective commitment is considered a more salient measurement of organizational
commitment. Employees with strong affective commitment were found to be motivated to
higher levels of performance and therefore were able to make more meaningful
contributions than their peers who expressed continuance or normative commitment.16,29
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Equity Sensitivity
Throughout the years, employers have embarked on an on going quest to maximize their
employees’ outputs, to the extent that a quick literature search reveals a wealth of material
related to motivation theory and research.30 The equity sensitivity construct is defined as a
personality variable suggesting that an individual reacts in a consistent way to perceived
equity or inequity.31 Equity sensitivity is an important construct that has been put forward
by Huseman et al (1985; 1987).31,32 It is grounded in Adams’ (1963, 1965)33,34 seminal work
on equity theory. This extension of equity theory posits that individuals can be divided into
three different groups: equity sensitives, benevolents and entitleds.31,32,35,36 Since its
inception, Equity sensitivity has generated a lot of interest within the research community
such that one finds many interesting papers pertaining to this topic.37,38,38,40,41,42,43
According to equity theory, balance (or equity) is sought between an employee’s inputs
(such as hard work, skill level, tolerance and enthusiasm) and an employee’s tangible (for
example, salary and benefits) and intangible (such as recognition) returns. Equity results
when a situation matches an individual’s own internal standard of equity and when it is
congruent with that individual’s preferences vis à vis the comparison with that of referent
others.44 Thus individuals would perceive themselves to be treated fairly if the ratios of their
inputs to their returns are equivalent to those of their peers. Equity violations, benefitting
either employees or their employers will give rise to a tense situation whereby employees
feel compelled to restore equity, or in other words to get even, via the pursuit of both
cognitive and behavioural strategies.45 There is no reason to assume that managers will
react any differently to how lower level employees act.
Individual assessment of equity is subjective such that inputs and returns are not necessarily
one or the other in any absolute way.30 Furthermore, inputs and returns can sometimes be
quite ambiguous, to such an extent that an individual’s input may be another individual’s
outcome. The equity sensitivity construct proposes that individuals have different
preferences for equity and thus react differently to perceived equity and inequity.31
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The level of equity sensitivity has been employed to group employees into three
categories.31,32 First, there are those that have been described as equity sensitives. These
will endeavour to balance their returns with their respective inputs. Such individuals are in
line with the original equity theory idea such that when the ratio of returns to inputs runs
out of balance, these individuals act to restore balance. A second group is described as
benevolents. These are more tolerant to situations in which they perceive themselves to be
insufficiently rewarded. Such individuals do not actively seek to redress or react to
situations where they are under rewarded. The third group has been described as entitleds.
These individuals will hardly react to situations of over rewarding yet, would be ready to
express their dissatisfaction, even overtly, in situations of under rewarding. Entitleds tend to
expect more than others for any given input.46 They are also inclined to be more
materialistic and give greater importance to extrinsic outcomes such as pay, status and
fringe benefits. On the other hand benevolents are more concerned with their inputs and
would typically show less sensitivity to inequities.31,46 Benevolents are more prone towards
intrinsic outcomes, such as a sense of accomplishment and in doing one’s best.47 These
groupings into three categories are useful but essentially equity sensitivity can best be
thought of as a continuum. Indeed, Sauley and Bedeian, (2000) who sought to
operationalize the equity sensitivity measure, do so in this manner.46
Perceived Firm Performance
Organizational performance is a multi faceted construct that has received considerable
research attention, yet remains difficult to fully comprehend and measure.48,49,50 Although
various high performance HR management practices are known to affect objective and
perceptual organizational performance measures, there are no universally accepted high
performance HR management constructs.51 Operationalizing a construct of this complexity
is inherently difficult.52 Information in the form of revenue, assets and other data that can
provide researchers with the information required to measure performance objectively is
either almost impossible to retrieve, because it is jealously guarded by its proprietors; or
else when such information does become available, it still cannot be used for inter
organizational comparative studies, since different firms may have used different
accounting procedures to obtain their respective results.52
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The way that employees perceive their own firm’s performance is considered to be very
important in business studies, because perceived views tend to be congruent with a true
image of the state of affairs within an organization.8,53,54 In fact researchers have been able
to identify positive correlations between perceived organizational performance and
objective measures of firm performance.55 Moreover employees base their own perceptions
of organizational performance on important issues such as product quality, customer
satisfaction and new product development.51 Studies have also shown that employees who
perceive their organization as ‘having a formidable service orientation’, experience a greater
number of customers who report more positive service experiences .56,57 While strongly
advocating the use of accurate objective measures of organizational performance, if and
where these are available, Dess and Robinson (1984) report a strong correlation between
objective measures of the absolute changes in ROA and revenue over a five year period and
subjective measures of perceived firm performance, during that same period.52 Studies have
shown that although employees do care about the objective measures of organizational
performance, such as revenue, ROA and EPS, they are more likely to base their perceptions
on subjective performance criteria and social responsibility issues, particularly those relating
to organization employee relationships.58 We would assume that managers exhibit an even
more knowledgeable assessment of the performance of their organization than lower level
employees.
The relationship between the three variables
The importance of organizational commitment to the success of the firm is well established.
Much research has been undertaken on the antecedents and outcomes of organizational
commitment.12,19,21,59,60 These have established that employees demonstrate higher levels
of affective commitment when their employment relationships were based on mutual
obligations between their organization and themselves.61 When a process leading to a
certain outcome is perceived to be unfair, the employee’s reactions are predicted to be
directed at the whole organization, rather than at the task or the specific outcome in
question.62 Employees may perceive their organization to be unfair because of the manner
by which resources are allocated. Negative attitudes and perceptions lead to employees not
138
being incited to work in favour of the organization. Moreover, they might entice employees
into acting against the organization.63,64 There is no reason to suppose that these same
sentiments are not also experienced by managers. Equity sensitivity is known to be directly
correlated to organizational commitment.9,36,43 Employees who put considerable
importance to achieving balance between their inputs and their returns and who therefore
have high equity sensitivity will exhibit higher levels of organizational commitment. Again,
such a trade off is not restricted to lower level employees and managers can be expected to
act in a similar manner. Hence:
H1: As the level of equity sensitivity increases the level of organizational
commitment increases.
The major focus of this study goes beyond looking at this direct link between equity
sensitivity and organizational commitment. In addition it seeks to consider whether
managers’ perception of their firm’s performance has any effect on this link between equity
sensitivity and organizational commitment. Specifically, we argue that perceived firm
performance does not have a direct influence on the link between equity sensitivity and
organizational commitment but moderates the link by influencing perceptions as to what is
equitable and what is not. This relationship is represented in the model shown in Figure 1.
Figure 1: Research Model
EquitySensitivity
Perceived FirmPerformance
OrganizationalCommitment
H1
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Construct Measures and Data Collection
The research instrument used to test this model consists of 43 items that capture the three
constructs. The final questionnaire consisted of 16 items for equity; 24 items for
organizational commitment and 3 items for perceived firm performance. The 16 items
measuring equity sensitivity are those of the instrument developed by Sauley and Bedeian
(2000); 46 the 24 items measuring organizational commitment are from the instrument
developed by Allen and Meyer (1990);17 while the 3 item instrument for perceived firm
performance is from Dess and Robinson (1984).52 The three instruments used to capture
each of the constructs used in this study have been previously employed and exhibit strong
psychometric properties. Details of the items appear in Table 1. In addition seven
classificatory variables were also collected. With the support of the human resources
function at a community bank, a total of 400 questionnaires were sent to all senior and
middle managers at the bank across all its offices and branches. 274 completed
questionnaires were collected by the cut off date, four weeks later, representing an
effective response rate of 68.5%.
Analysis
48.9% of respondents were male, with a mean age of 37.9 (sd. 9.2); 74.3% were married and
73.2% indicated that both partners worked. 53.1% of respondents had a graduate or a post
graduate degree and the average number of years they had been with the bank was 17.2
years (sd. 9.6). These demographics are in line with the overall demographics for all the
senior and middle managers at the cooperating bank, providing some support to the
generalization of findings to the entire management of this particular bank. Table 1 gives
details of the items retained together with means and standard deviations for each of the
items collected in the questionnaire. A total of six and four items were deleted from the
questionnaires for organizational commitment and equity sensitivity respectively. Items
were deleted either because of low item to total correlations or poor loadings during factor
analysis. The resultant means (and standard deviations) for the three constructs were
140
Organizational Commitment: 82.53 (sd. 13.05); Equity Sensitivity: 51.51 (sd. 6.25); and
Perceived Firm Performance 11.91 (sd. 1.95).
Table 1: Details of instruments used with mean and sd Organizational Commitment
Mean
Std.
Dev.
I enjoy discussing my organization with people outside it. 5.22 1.42
I really feel as if this organization's problems are my own. 4.95 1.51
I feel that I am separated from the “rest of the family” at my organization.(R) 4.83 1.59
I feel "emotionally distant" to this organization.(R) 5.24 1.52
This organization has a great deal of personal meaning for me. 5.03 1.44
Affective Commitment 25.28 5.16
I feel very much at ease about what might happen if I quit my job without having another one
lined up. (R)
5.01 2.03
It would be very hard for me to leave my organization right now, even if I wanted to. 4.92 1.92
Too much in my life would be disrupted if I decided I wanted to leave my organization now. 4.99 1.80
I can afford to leave my organization now. 4.96 1.91
Right now, staying with my organization is a matter of necessity as much as desire. 4.64 1.73
I feel that I have too few options to consider leaving this organization. 4.09 1.83
One of the few serious consequences of leaving this organization would be the scarcity of
available alternatives.
4.24 1.86
One of the major reasons I continue to work for this organization is that leaving would require
considerable personal sacrifice — another organization may not match the overall benefits I have
here.
4.57 1.73
Continuance Commitment 37.43 8.78
According to me it is perfectly ethical to jump from organization to organization.(R) 4.37 1.72
One of the major reasons I continue to work for this organization is that I believe that loyalty is
important and therefore feel a sense of moral obligation to remain.
4.26 1.65
If l got another offer for a better job elsewhere I would feel it was wrong to leave my organization. 3.50 1.69
I was taught to believe in the value of remaining loyal to one organization. 3.99 1.74
Things were better in the days when people stayed with one organization for most of their
careers.
3.71 1.57
Normative Commitment 19.82 6.25
82.53 13.05
141
Table 1: Details of instruments used with mean and sd (continued) Equity Sensitivity Mean Std.
Dev.
I prefer to do as little work as possible while getting as much as I can from my employer.(R) 4.69 .72
I am most satisfied at work when I have to do as little as possible.(R) 4.58 .88
When I am at my job, I think of ways to get out of work.(R) 4.73 .66
If I could get away with it, I would try to work just a little bit slower than the boss expects.(R) 4.63 .83
It is really satisfying to me when I can get something for nothing at work.(R) 4.58 .79
If I had to work hard all day at my job, I would probably quit.(R) 4.26 .91
I feel obligated to do more than I am paid to do at work. 3.36 1.10
At work, my greatest concern is whether or not I am doing the best job I can. 3.86 1.02
A job which requires me to be busy during the day is better than a job which allows me a lot of
loafing.
4.22 .95
At work, I feel uneasy when there is little work for me to do. 4.02 1.02
I would become very dissatisfied with my job if I had little or no work to do. 4.30 1.05
All other things being equal, it is better to have a job with a lot of duties and responsibilities than
one with few duties and responsibilities.
4.28 .85
Perceived Performance 51.51 6.25
The overall performance of XXX bank in the last five years has been very good 4.19 .77
The Return On Capital Employed of XXX bank in the last five years has been much more than
other banks in the country
3.82 .84
The deposit growth of this bank in the last 5 years has been much more than other banks in the
country
3.91 .79
11.91 1.95
Note: 1. (R) = Negatively worded question - 2. The mean and standard deviation shown for negatively worded questions are those that result afterthe particular item has been reverse scored
The results of a principal components factor analysis followed by an oblique rotation for all
items that seek to capture the constructs in this study are shown in Table 2. An oblique
rotation was employed because the constructs are conceptualized as correlated. Results
indicate that items loaded on six separate factors corresponding to the three constructs and
dimensions of the study, as intended. Organizational commitment loads clearly into its three
142
conceptualized dimensions of affective, continuance and normative commitment. Although
equity sensitivity is conceptualized as a unidimensional construct, the results of the factor
analysis show the items for this construct splitting into two dimensions, with the negative
items loading separately from the positively worded items. However, this additional
dimension is simply resulting from the negatively worded items, which are an integral part
of the equity sensitivity construct. Therefore, these two dimensions in effect represent one
factor in line with the unidimensional conceptualization of this construct. Finally, the three
items that make up perceived firm performance load together on a separate dimension.
Taken together these results provided support for both convergent and discriminant
validity. Reliability was tested using Cronbach alphas. Test results obtained for
organizational commitment were: 0.72 for affective commitment; 0.74 for continuance
commitment; 0.80 for normative commitment; 0.81 for equity sensitivity; and 0.74 for
perceived firm performance. All exceeded the 0.7 threshold and are therefore acceptable65,
providing support for the reliability of the instruments employed.
Table 2: Results from factor analysis with an oblique rotation Component
1* 2* 3* 4* 5* 6*
I enjoy discussing my organization with people outside it. .60 . .53
I really feel as if this organization's problems are my own. .42
I feel that I am separated from the “rest of the family” at my organization. .67
I feel "emotionally distant" to this organization. .82
This organization has a great deal of personal meaning for me. .46 .52
I feel very much at ease about what might happen if I quit my job without
having another one lined up.
.33
It would be very hard for me to leave my organization right now, even if I
wanted to.
.63
Too much in my life would be disrupted if I decided I wanted to leave my
organization now.
.65
I can afford to leave my organization now. .43
Right now, staying with my organization is a matter of necessity as much as
desire.
.60
I feel that I have too few options to consider leaving this organization. .76
One of the few serious consequences of leaving this organization would be
the scarcity of available alternatives.
.64
143
One of the major reasons I continue to work for this organization is that
leaving would require considerable personal sacrifice — another organization
may not match the overall benefits I have here.
.69
According to me it is perfectly ethical to jump from organization to
organization.
.58
One of the major reasons I continue to work for this organization is that I
believe that loyalty is important and therefore feel a sense of moral obligation
to remain.
.74
If l got another offer for a better job elsewhere I would feel it was wrong to
leave my organization.
.79
I was taught to believe in the value of remaining loyal to one organization. .82
Things were better in the days when people stayed with one organization for
most of their careers.
.68
I prefer to do as little work as possible while getting as much as I can from
my employer.
.78
I am most satisfied at work when I have to do as little as possible. .68
When I am at my job, I think of ways to get out of work. .84
If I could get away with it, I would try to work just a little bit slower than the
boss expects.
.88
It is really satisfying to me when I can get something for nothing at work. .75
If I had to work hard all day at my job, I would probably quit. .56
I feel obligated to do more than I am paid to do at work. .43 .51
At work, my greatest concern is whether or not I am doing the best job I can. .54
A job which requires me to be busy during the day is better than a job which
allows me a lot of loafing.
.52 .
At work, I feel uneasy when there is little work for me to do. .79
I would become very dissatisfied with my job if I had little or no work to do. .77
All other things being equal, it is better to have a job with a lot of duties and
responsibilities than one with few duties and responsibilities.
. .62
The overall performance of XXX bank in the last five years has been very
good
.73
The Return On Capital Employed of XXX bank in the last five years has been
much more than other banks in the country)
.79
The deposit growth of this bank in the last 5 years has been much more than
other banks in the country
.78
Note: 1 = Affective commitment 2 = Continuance commitment 3 = Normative commitment 4 and 5 = Equity sensitivity with negatively worded questions loading separately from positively worded items 6 = Perceived firm performance
144
The research model envisages perceived firm performance acting as a moderator on the link
between the independent variable of equity sensitivity and the dependent variable of
organizational commitment. Pearson correlations among the three constructs were first
computed for perceived firm performance and equity sensitivity; perceived firm
performance and organizational commitment; and equity sensitivity with organizational
commitment; providing an r of .29 (p <.001); .25 (p <.001) and .20 (p<.01) respectively. It can
be seen that the correlation between independent and moderator constructs at .29 is not
large and should not impede the analysis. Before proceeding with testing using moderated
regression it was necessary to center the independent and moderator constructs by
subtracting the value of the mean from each observation. This procedure removes the
multicolinearity between the two variables. The moderated regression required a two step
approach, first involving the entry of the independent (equity sensitivity) and moderator
(perceived firm performance) variable in a regression with the dependent (organizational
commitment) variable. Subsequently the regression is rerun with the addition of an
interaction effect variable consisting of the product of the independent and the moderator
variable. Results, shown in Table 3, support the moderating effect of perceived firm
performance where the change in F between the two regression equations and the
interaction effect are found to be significant (p <.003), providing support for a moderated
effect. However, the unstandardized betas that result are not accurate and it is necessary to
run a standardized solution to obtain true values for the unstandardized betas. The
regressions are rerun using the z standardized values for the independent, moderator and
dependent variables and it is the unstandardized betas from this output that provide correct
values Table 3.66 The resultant unstandardized regression coefficients were used in a two
way standardized plot which is shown in Figure 2.
145
Table 3: Results of the moderated regressions
Y
Organizational
Commitment
Organizational
Commitment
Sig F change
R2 .08 .11 -
F 11.91 8.87 .003
Constant 82.53*** 83.07***
Beta Equity Sensitivity 2.98* 0.22 (.11)
Beta Perceived Firm Performance 1.40** 1.23**(.18**)
Beta Equity Sensitivity x
Performance Firm Performance- -.155**(-.15**)
* = p < .05; ** = p < .01; *** = p < .001.Values shown in brackets in column 3 represent unstandardized betas from standardized solution
Figure 2: Standardized plot for Organizational Commitment and Equity sensitivity
Employees with low equity sensitivity scores show a greater desire for an equity sensitivity
balance and consider it to be very important for them to strike equilibrium between their
inputs and their returns. As the equity sensitivity scores of respondents increases, they
exhibit increasing levels of organizational commitment (R2 = .04; F = 11.66, p<.01; b = .20,
p<.01). This result provides support for H1.
146
However, Figure 2 provides an interesting perspective. While the relationship indicated by
H1 appears to hold in situations of high perceived firm performance, this effect is no longer
evident in low performance situations. In fact in situations of perceived low firm
performance, managers with higher levels of equity sensitivity exhibit considerably lower
levels of organizational commitment than those who are less sensitive to equity
considerations. This is clearly indicated by the slope of the lower line in Figure 2.
Discussion
Equity sensitivity is known to impact organizational commitment. 9, 36, 43 Our findings suggest
that managers with higher levels of equity sensitivity exhibit higher levels of organizational
commitment. However, in addition, this research set out to establish whether perceived
firm performance has any moderating effect on the relationship between equity sensitivity
and organizational commitment. Indeed the positive relationship between equity sensitivity
and organizational commitment only holds for situations of perceived high firm
performance. In situations of low perceived firm performance those with higher equity
sensitivity tend to exhibit lower levels of organizational commitment. The role played by
perceived firm performance in the link between equity sensitivity and organizational
commitment provides an interesting addition to the theory and to our understanding of
how external circumstances that effect perceived firm performance work their way to
impact links between such HR variables as equity sensitivity and organizational
commitment.
The results obtained from this study should be useful to practitioners. In this day and age
where the global economy appears to have become increasingly fragile, while
simultaneously, competition is increasing at breathtaking speed, human resources have
indeed become every organization’s major asset. Moreover, for those firms whose offering
includes a high service component, aspects of human resources have become increasingly
important considerations to effective marketing. Our findings suggest that when a service
firm faces difficult market conditions that impact the perceived performance of the firm
among managers, the level of organization commitment declines. One possibility is that
147
when this happens, managers may reason that any extra effort is unlikely to be rewarded
via the pay packet as their firm is less likely to be in a position to give generous rewards and
bonuses. In such circumstances it is necessary for HR and marketing managers of the firm to
develop alternative HR management strategies that foster an equitable working
environment which in turn can sustain managers’ commitment to their organization. The
firm will need to look at alternative variables that are known to impact organizational
commitment positively. Rather than focus on the pay packet one alternative may be to seek
to establish stronger workload equity. Another is to seek to undertake team building and
other activities that foster job satisfaction. Failure to follow such a course of action may
draw the firm into a downward spiral of events that can result in a progressive deterioration
of service quality, a situation that Schlesinger and Heskett (1991) so aptly describe as the
“cycle of failure in services”.4 Such a scenario may lead to high management, employee and
customer turnover, resulting in a devastating effect on firm performance. Ironically there
are several instances where, rather than investing in organizational commitment building
strategies that are known to enhance organizational performance, managers opt for cost
cutting activities such as replacing defecting experienced managers with lower paid less
able recruits. This can only intensify the problem, as it leads to increasing customer
dissatisfaction.4 During an economic downturn that is likely to hurt the performance of a
firm, HR and marketing managers should endeavour to avoid the cycle of failure at all costs.
They need to seek to create a cycle of success by attempting to sustain organizational
commitment through the pursuit of HR policies that can offer non monetary, but
nonetheless appreciated, rewards, thereby ensuring that both existing managers as well as
new entrants perceive their organization to be their preferred employer.3, 4
If the necessary conditions that augment organizational commitment are implemented,
managers serving high worth customers will be in a better position to interact directly with
customers.67 Such interaction and resultant relationships are known to be beneficial to
service companies in general and to financial service firms in particular, as these seek to
retain the loyalty of their customers and to develop profitable, long term relationships with
their customers thereby ensuring their survival in an increasingly competitive retail banking
environment.1
148
A main limitation of this study is the fact that data were collected from a single bank raising
questions as to whether the findings apply to banks more generally. Given the strength of
the research model and the underlying theory, the findings are likely to be extendable to
other banks and service firms. Another limitation worth considering is that since the
questionnaire was sent out via the human resources department, participants may have felt
some undue pressure from their institution and consequently may have answered in a way
that they felt that their top management would have liked. In terms of future research these
results can be strengthened by considering a wider sample and a broader range of variables
that are known to have an effect on organizational commitment and ultimately effective
employee performance and relationship building with customers. In addition it may also
pave the way for other researchers to pursue different paths, possibly making use of other
theories and variables which in turn could be used to provide alternative cues to
understanding and achieving higher organizational commitment.
This paper uncovered an interesting moderating effect of perceived firm performance
among managers in the relationship of equity sensitivity to organizational commitment
which warrants further study, particularly in the context of the current challenging financial
performance of many banks. Further areas for future research should include other possible
determinants and their moderating effects, particularly those pertaining to technology,
socio cultural issues, gender and age. The human aspect of any organization remains a
strong area of research focus as our advances in this area struggle to keep up with the
continuously changing business practices resulting from intense competition and the
volatility of the global economy.
149
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155
Chapter 6: Organizational commitment and users’ perception ofease of use: A study among bank managers.
Abstract
Purpose:
This paper looks at the issue of perceived ease of use of a web based customer relationship
management system and considers the role of organizational commitment as a possible
antecedent.
Design/methodology/approach:
Data for this study were collected from among managers of a major player in the
community banking sector within the E.U. A total of 274 valid responses were obtained from
398 managers.
Findings:
Results have been mixed and partially conditioned by service providers’ willingness to
leverage the possibilities that the technology can provide.
Research limitations / Implications
The study was limited to a single organization and consequently the results should be
generalized with caution. Replication studies with improved measures, in other countries
and contexts are desirable.
156
Practical implications:
The results can be useful for management, since Web based customer relationship
management systems have been adopted by many service providers in their quest to offer
better one to one marketing possibilities to their customers.
Originality/value:
This paper demonstrates the importance of fostering a sense of organizational commitment
amongst key service providers as this in turn seems to enable them to overcome many
impediments pertaining to technology use.
Keywords:
Normative commitment, affective commitment, continuance commitment, perceived ease
of use, technology acceptance, technology use.
Paper type:
Research paper
157
Organizational commitment and users’ perception of ease of use: A studyamong bank managers.
Introduction
There is little doubt that over the past two decades the internet along with other computer
technologies has changed the way that business is conducted. While these technological
advances have given manufacturers and service providers the possibility to reach out to
many potential customers, it has also provided them with a fast and feasible way to target
these customers individually (Chen and Popovich, 2003). Because organizations are finding it
increasingly difficult to maintain product and cost advantages resulting solely from
technology development, many have sought differentiation by leveraging the one to one
marketing possibilities that technology is increasingly making available (Kimiloglu and Zarali,
2009). Organizations that treat their customers simply as end users of their products or
services are deemed to be less competitive than those that try to entice them into some
form of mutual relationship (Schneider and Bowen, 1995). Thus a significant transformation
in marketing practices from a transaction oriented / product focused era to a relationship
oriented / customer focused era has become a priority for organizations, in their ongoing
drive to acquire and retain customers (Smith and Chang, 2010). The pioneering work on
Relationship Marketing conducted by various researchers (e.g. Berry, 1983, Christopher et
al., 1991; Grönroos, 1994; Jackson, 1985) has driven the development of Customer
Relationship Management (CRM) processes that include web based applications (eCRM).
These have sought to augment one to one marketing possibilities.
Over the past two decades the electronic era has redefined competitiveness. Contrary to
many assumptions, technology advancement although necessary is not in itself sufficient to
create a sustained competitive advantage (Carr, 2003). Rather it is the manner by which this
technology is implemented and adopted that matters. This is because despite the potential
benefits attributed to IT investments, the unwillingness of users to adopt technology can
jeopardize the returns on these investments (Magni and Pennarola, 2005). Research has
158
shown that perceived usefulness and perceived ease of use affect intended adoption of IT
(Davis, 1989; Venkatesh, 2000; Venkatesh et al., 2003) Perceived ease of use (PEOU) has
been shown to be a particularly important antecedent to systems adoption since
“individuals are more likely to interact with a new technology if they perceive that relatively
little effort is needed to interact with it” (Agarwal, 2000). Moreover, understanding the
antecedents of perceived ease of use from a theoretical standpoint is equally important
because of its key role in determining users’ acceptance and use (Liao and Tsou, 2009;
Venkatesh and Davis, 1996). This paper builds on this argument by first looking at
organizational commitment as a possible antecedent and proceeds to investigate whether
this impacts employees’ perceived ease of use of technology. Although the presence of
other antecedent variables, such as complexity of system, prior training and perceived
usefulness is acknowledged, the intention of this study is to emphasize the importance of
Organizational Commitment as a potentially powerful antecedent that ultimately positively
influences employees' behaviour towards technology adoption. In this instance, managers’
adoption of a bank’s CRM system will be investigated to highlight such a relationship. Data
are collected from managers at a community bank that operates a sophisticated web based
CRM system. Analysis is undertaken, conclusions are drawn, limitations are noted and other
possible avenues for research are considered.
Organizational Commitment
Organizational commitment is the bond linking individuals to their respective organizations
and therefore held to be an important aspect of human resource management (Alper, 2008;
Mathieu and Zajac, 1990). Organizational commitment can be described as the degree of
responsibility that employees feel with respect to their organization’s aims and objectives. It
indicates the intensity of the psychological attachment between employees and their jobs.
Allen and Meyer, (1996:252) define organizational commitment as a “psychological link
between the employee and his or her organization that makes it less likely that the employee
will voluntarily leave the organization”. The work undertaken by Meyer and Allen (Allen and
Meyer 1990; 1996; Meyer and Allen, 1984; 1991; 1997) has resulted in the development of
159
a multi component model of organizational commitment consisting of three "different
frames of mind" which can characterize employees’ commitment towards their respective
organization. The three components are termed Affective, Continuance and Normative
commitment. Affective Commitment takes place when employees’ have a positive
emotional attachment towards their organization. Typically, these employees would
strongly concur with the goals of their organization and feel a strong sense of belonging to
it. In such situations employees’ commitment to their organization is purely voluntary.
Continuance Commitment on the other hand describes the situation whereby individuals
commit to the organization mainly out of fear of the perceived high costs associated with
forgoing their organizational membership (Allen and Meyer, 2000; Meyer et al., 2002).
These costs would include both economic costs (such as retirement schemes) as well as
social costs (such as peer relationships). Here, commitment is not voluntary; rather
individuals feel compelled to commit themselves to avoid any potentially unpleasant
consequences. Normative Commitment occurs when individuals not only commit to their
organization because of deep feelings of obligation (Meyer and Allen, 1991; 1997) but
because they also feel that they must stay. These feelings may result from a sense of
obligation towards the organization as a form of acknowledgement towards some form of
interest or investment that the individual has received from the organization. For example,
following intense training sessions; employees may feel that they must stay with their
organization because they "ought to".
The three dimensions of the organization commitment construct are captured by the
instrument developed by Allen and Meyer that has been shown to exhibit positive
psychometric properties (Allen and Meyer, 1996; Meyer et al., 1993). In addition the
organizational commitment construct has been linked to various antecedents and
consequences as highlighted in the meta analysis by Mathieu and Zajac, (1990).
Perceived Ease of Use
The technology acceptance model (TAM) (Davis, 1989; Davis et al., 1989) has been widely
used to predict users’ acceptance of information technology. In this model Perceived
Usefulness (PU) and Perceived Ease of Use (PEOU) are inherent users’ beliefs that are crucial
160
in determining their intention to adopt a particular technology (Moore and Benbasat, 1991;
Venkatesh and Davis, 1996; Yousafzai et al., 2007). Although the significance of perceived
ease of use on intention to use seems to vary according to context, for example from quite
insignificant, as in the case of the medical profession (Chau and Hu, 2002) to very significant,
as in the case of the accounting profession (Bedard et al., 2003; Pennington et al., 2006); the
literature abounds with evidence of the significant effect of perceived ease of use on usage
intention, either directly or else indirectly via its effect on perceived usefulness (e.g. Agarwal
and Prasad, 1999; Davis et al., 1989; Hu et al., 1999; Jackson et al., 1997; Venkatesh, 1999,
2000; Venkatesh and Davis, 1996, 2000; Venkatesh and Morris, 2000).
Davis (1989:320) defines perceived ease of use as “the degree to which a person believes
that using a particular system would be free of effort”, thus it follows that in order to foster
the acceptance and usage of technological systems, these must be perceived to be easy to
learn and use. Information technologies that are easy to use are normally perceived to be
less threatening to the individual (Moon and Kim, 2001). Furthermore, Agarwal (2002)
argues that individuals are more likely to interact with a new technology if they perceive
that relatively little effort is required to interact with it.
Businesses have squandered millions of dollars on unsuccessful system implementations
(USA Today; May 20, 2002). Often users fail to adopt such systems because of their negative
perception of ease of use (Gefen and Straub, 2000). Therefore it is important to attempt to
identify antecedents that may positively influence users’ perceptions of ease of use. Yet
surprisingly little research appears to have actually been done on understanding the
antecedents and determinants of this important predictor of the intention to use construct
(Torkzadeh and Lee, 2003; Venkatesh and Davis, 1996). Some notable exceptions include:
Anandarajan et al., (2002) who argued that in less developed countries, perceived ease of
use depends on subjective norms; Ghorab, (1997) found that the sophistication level of the
applied technology affects perceived ease of use ; Davis et al., (1989) established that self
efficacy and procedural knowledge affect PEOU; while Karahanna and Straub, (1999) found
that physical accessibility directly affected perceived ease of use; Nov and Ye, (2008)
161
established that resistance to change is a significant determinant of perceived ease of use
and Venkatesh, (2000) identified computer self efficacy, computer anxiety, computer
playfulness and facilitating conditions as being key determinants of PEOU.
Organizational commitment and perceived ease of use.
Organizational behaviour theory recognizes that relationships within the organization and
among users of technology in an organization have a significant effect on the actions of
individuals within organizations (Brief and Weiss, 2002). Several studies have attempted to
investigate the behavioural consequences of organizational commitment beyond the
traditional consequence of retention (Magni and Pennarola, 2008). Research has shown that
affective and normative commitment, are key elements that promote championship as well
as a sense of co operation between peers (Choi, 2006). Moreover, affective and normative
commitment, have also been shown to underpin employees’ support for change initiatives
(Armenakis and Bedeian, 1999). Magni and Pennarola (2008), argue that individuals with a
high level of affective commitment tend to be willing to exert extra effort towards accepting
change. They proceed to suggest that these individuals would go even further to endeavor
to understand the aim of the technology that they are expected to adopt and would also be
ready to exert even more effort to understand how to use it. Their findings provide support
for a positive link between affective commitment and both perceived ease of use and
perceived usefulness. However, the authors do not consider the effect of normative,
continuance or overall organizational commitment.
Organizational commitment is all about employees’ attachment to their organization and
employees who are committed to their organization are more likely to be willing to “go the
extra mile”.
162
This leads us to hypothesize that individuals who are highly committed to their organization
would be positively disposed to the use of new technology and willing to strive to overcome
any perceived difficulties associated with the usability of that technology, hence:
H1: A positive organizational commitment among service providers leads to higher perceived ease
of use of technology.
Methodology
This paper sets out to test the relationship between organizational commitment and
perceived ease of use of technology, among service managers at a community bank, where
a sophisticated web based customer relationship management system has been installed.
To accomplish this, a questionnaire consisting of two instruments to capture each of the
constructs in the study, is employed. The first construct of organizational commitment, as
conceptualized by Allen and Meyer (1990; 1996), was captured using the 24 item three
dimensional instrument made up of sub measures for each of: affective, continuance and
normative commitment. The second construct of PEOU was measured using the 6 item
unidimensional instrument employed by Davis, (1989) and Davis et al., (1989). In addition
the final questionnaire also captured seven classificatory variables dealing with: gender,
age, marital status, academic qualifications, whether both subject and his/her partner
worked, tenure with the bank and finally, current position at the bank. All items making up
the two constructs were measured using Likert type, scales ranging from 1 = Strongly
disagree to 7 = Strongly agree.
Initially, a number of industries were considered as possible entities for testing the
relationship outlined in the hypothesis. These included: insurance, retailing and community
banking. In the end a major player in the community banking sector was chosen, mainly on
the grounds that the majority of the respondents holding managerial positions within the
bank could be accessed and generally acknowledged the usefulness of CRM systems.
163
Moreover their bank had provided them with extensive training and they were therefore
very familiar with the bank’s CRM system. In addition the bank recognized that the human
service element is a critical aspect to effective marketing and senior management was
willing to provide support with the data collection. Finally, the bank possessed a national
network of offices, an established brand name, and could boast of a respectable market
share of traditional deposits.
In order to ascertain that all the questions were fully coherent and understood, a pilot
session was undertaken before dispatching the questionnaires to potential participants. To
achieve this, a sample of ten managers was randomly selected from different offices of the
bank and these were asked to complete the final questionnaire during a face to face
meeting at their respective workplaces. We found no major problems associated with the
questionnaire and only minor amendments were necessary. All managers at the bank were
sent a covering letter explaining the nature of this research together with the self
completion questionnaire. The covering letter sought to assure respondents that complete
anonymity would be respected. A total of 398 questionnaires were sent to all managers at
the bank and 274 were collected after the cut off date, four weeks later, representing an
effective response rate of 68.8%.
Analysis
51.1% of respondents were female, with a mean age of 37.9 (sd. 9.2); 74.3 % were married
and 73.2 % indicated that both partners worked. 53.1% of respondents had a graduate or a
post graduate degree and their average tenure with the bank was 17.2 years (sd. 9.6).
Descriptive statistics in terms of means and standard deviations for items used in the
analysis appear in Table 1. The factor structure of all the items that make up the two
constructs was subject to a principal components factor analysis. Given the expected
correlations among the dimensions and constructs this was followed by an oblimin rotation.
During this phase and the subsequent testing for reliability using Cronbach alphas it was
necessary to delete five items, two from the eight items that make up the affective
commitment dimension and three from the eight items that make up the normative
commitment dimension. This deletion was required to eliminate items that loaded strongly
164
on more than one factor or had item to total correlations with the other items making up
the dimension that were rather low. The resultant loadings that appear in Table 1, provide
strong support for the factor structure of the two constructs and dimensions. They also
provide support for the convergent and discriminant validity of the measures. The reliability
for each of the constructs and dimensions are shown on the diagonal in Table 2. All items
exceed the 0.7 level and are therefore acceptable (Nunnally, 1967).
Table 1: Mean and standard deviation for items and principal component factor analysiswith oblimin rotation
Mean Standard
Deviation
Component
1 2 3 4
I enjoy discussing my organization with people outside it. 5.22 1.42 .74
I really feel as if this organization's problems are my own. 4.95 1.51 .57
I feel that I am separated from the “rest of the family” at my
organization.
4.83 1.59 .59
I feel "emotionally distant" to this organization. 5.24 1.52 .78
This organization has a great deal of personal meaning for me. 5.03 1.44 .67
I feel strongly detached from my organization. 5.30 1.81 .74
Affective Commitment 30.57 6.06
I feel very much at ease about what might happen if I quit my job
without having another one lined up.
5.01 2.03 .31
It would be very hard for me to leave my organization right now, even
if I wanted to.
4.92 1.92 .64
Too much in my life would be disrupted if I decided I wanted to leave
my organization now.
4.99 1.80 .67
I can afford to leave my organization now. 4.96 1.91 .42
Right now, staying with my organization is a matter of necessity as
much as desire.
4.64 1.73 .61
I feel that I have too few options to consider leaving this organization. 4.09 1.83 .75
One of the few serious consequences of leaving this organization would
be the scarcity of available alternatives.
4.24 1.86 .63
One of the major reasons I continue to work for this organization is that
leaving would require considerable personal sacrifice — another
organization may not match the overall benefits I have here.
4.57 1.73 .70
Continuous Commitment 37.43 8.78
According to me it is perfectly ethical to jump from organization to
organization.
4.37 1.72 .57
One of the major reasons I continue to work for this organization is that
I believe that loyalty is important and therefore feel a sense of moral
obligation to remain.
4.26 1.65 .74
165
If l got another offer for a better job elsewhere I would feel it was
wrong to leave my organization.
3.50 1.69 .79
I was taught to believe in the value of remaining loyal to one
organization.
3.99 1.74 .84
Things were better in the days when people stayed with one
organization for most of their careers.
3.71 1.57 .72
Normative Commitment 19.82 6.25
Organizational Commitment 87.82 13.26
The Bank’s CRM system has been easy to learn 5.92 1.16 .82
The Bank’s CRM system is clear and understandable 5.79 1.27 .89
The Bank’s CRM system makes it easy for me to become skilful 5.20 1.38 .77
The Bank’s CRM system is easy to use 5.82 1.25 .92
The Bank’s CRM system helps is very controllable 5.27 1.36 .81
The Bank’s CRM system is very Flexible 4.88 1.52 .68
Perceived Ease of Use 32.89 6.45
Items were summed up for each dimension and constructs and their values are shown in
Table 1. Following this an initial correlation among the composite variables was undertaken
and results are shown in Table 2. Not surprisingly each dimension of organizational
commitment is correlated with the construct, but affective and continuance commitments
have not been found to be correlated.
Table 2: Correlation among dimensions and constructs with reliability alpha on diagonal
AC CC NC OC PEOU Affective Commitment (AC) .73
Continuance Commitment (CC) -.07 .74
Normative Commitment (NC) .20** .14* .80
Organizational Commitment (OC) .51** .70** .65** .72
Perceived Ease of Use (PEOU) .27** .05 .25** .27** .90
**. = p< 0.01; *= p<0.05.
Each dimension of organizational commitment is correlated with the construct, with the
exception of continuance commitment which is not significantly correlated with affective
commitment. Continuance commitment is also not correlated with perceived ease of use.
In order to test the hypothesis of this paper, two regressions were undertaken. The first
involved using organizational commitment as the independent variable and PEOU as the
166
dependent variable. Results provide support for this direct effect (with an R2 = .08; F =
22.10, p <.001 and a standardised beta for organizational commitment of .27; p <.01). A
second regression was performed to investigate the effect of each of the dimensions on
PEOU. To do this regression scores were obtained from the factor analysis for the three
dimensions so that the intercorrelations among dimensions as evidenced in Table 2 could be
removed. These regression scores where then used as independent variables in a regression
with PEOU as the independent variable. Results indicate that a significant relationship
(Adjusted R2 = .08; F = 8.71, p < .001) with only two of the betas, for normative (b=.21; p <
.001) and affective commitment (b=.18; p < .01), being significant, while continuance
commitment was not found to have an effect. The significant beta values reported above
indicate that normative commitment has a stronger effect than affective commitment on
PEOU.
Discussion, Limitations and Future Research
Many firms are incorporating technology into their marketing and operations (Meuter et al.,
2005) and few people doubt the efficiency and effectiveness of such systems. Yet unless the
people employing these systems feel comfortable enough to adopt and use them, they are
ultimately of little use to organizations. A search within the IT systems implementation
literature over the past decade would quickly reveal an astonishing number of would be
successful implementation stories turning into overnight failures. One of the major reasons
behind this paradox is that while technical issues usually receive management’s full
attention, the people aspect is often neglected, to the extent that these ultimate service
providers are regarded as dispensable. Consequently management discover, sometimes too
late in the day, that users tend to avoid using these systems, preferring to do things their
own way (Bird, 1995). Therefore the importance of identifying the conditions that foster the
adoption and usage of such systems cannot be overstressed.
This paper has identified organizational commitment, specifically normative and affective
commitment as having a positive effect on perceived ease of use, whereas continuance
commitment was not found to have any significant effect. Employees with high affective
commitment develop a strong positive emotional bond towards their organization (Allen
167
and Meyer, 2000) and would therefore be more willing to put in an extra effort to overcome
any perceptions of complexity related to the adoption and usage of technology within their
organization. Normative commitment was found to have an even more pronounced effect
on perceived ease of use. A possible explanation could be that not only do individuals with
high normative commitment develop a strong emotional attachment with their organization
but they also foster a sense of obligation towards it (Allen and Meyer, 2000) which serves to
augment their willingness to adopt and use technology. On the other hand, employees with
continuance commitment have no emotional attachment or any sense of obligation to the
organization, rather these individuals’ bond with their organization is one of convenience,
until they come across a better opportunity, which helps to explain why in their case, no
significant effect was found between continuance commitment and perceived ease of use.
The implications of these results are twofold. Given that perceived ease of use is a key
determinant of technology adoption (Davis, 1989; Venkatesh and Davis, 1996),
understanding its antecedents and determinants is of paramount importance to
researchers. This study has contributed to the existing literature by identifying
organizational commitment, specifically the normative and affective commitment
dimensions, as being important antecedents to PEOU. It also highlights the significance of
the human aspect in determining whether technology implementation within organizations
is a success story or an expensive failure. From a professional point of view, senior
management should identify ways of fostering a sense of commitment towards the
organization among employees, since those individuals who are affectively or normatively
committed to their organization have been shown to exhibit a stronger will to try to
overcome any barriers impeding their adoption and eventual use of technology.
The limitations of this paper include that only one bank was used in the study, raising
questions as to whether the results apply to banks more generally. Given the intuitive and
underlying theoretical link between the constructs, the findings are likely to be extendable
to other banks and service firms. Like many studies this paper is also prone to specification
error in that it is possible that other variables may also be influencing CRM adoption. It is
therefore necessary to caution against oversimplification. It needs to be recognized that
organizational commitment is a complex construct that interacts with various other
168
constructs besides the outcome variable considered in this study. However, the adoption of
a theory based model should help to significantly mitigate this error. Another limitation
worth considering is that since the questionnaire was sent out via the human resources
department, participants may have felt some undue pressure from their institution and
consequently may have answered in a way that they felt that their top management would
have liked.
In terms of future research these results can be strengthened by considering a wider sample
and the consideration of other variables. The latter could include confounding and
antecedent variables such as complexity of an adopted CRM system, prior training provision,
actual system utility and perceived benefits, perceptions of fairness or equity and inclination
toward adoption of new technology. In addition there are various work related variables,
including proficiency, tenure, position and burnout, that are known to have an effect on
organizational commitment (see Mathieu and Zajac, 1990). . The study can also pave the
way for other researchers to better investigate the role of organizational commitment in the
Technology Adoption Model which to date appears to have received scant attention.
169
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Chapter 7: Conclusions, Implications, Limitations and Future
Research.
7.1 Overview
CRM is arguably one of the most frequently used (and misused!) contemporary buzzwords,
both within academic circles and in the business world. Yet despite its increasing popularity
one finds several documented case failures, (see: Bohling et al., 2006; Bull, 2003; Greenberg,
2010; Kim and Pan, 2006; Wehmeyer, 2005); One of the major stumbling blocks
encountered by managers during its implementation has been identified to be the lack of
enthusiasm displayed by the system’s potential users, to adopt and make full use of such
systems (Chalmeta, 2006; Kale, 2005; Speier and Venkatesh, 2002). Consequently this
situation warranted further research into identifying a number of cognitive and behavioural
constructs that could help better understand users’ intentions towards CRM adoption and
usage.
Each of the five separate papers included in this study examines a number of antecedents
leading to users’ intention to adopt CRM which, when grouped together, highlight a number
of salient consequences that provide further insight into understanding what needs to be
done to promote the adoption and usage of such systems. Furthermore these studies also
identify a number of pitfalls that should be avoided. The constructs employed were either
cognitive or behavioural, the underlying premise being that by inducing a change in critical
variables, managers should be able to positively influence the systems users’ perceptions
and eventual behaviour, a process known as cognitive behavioural modification. Kazdin
175
(1978 p. 337) argues that cognitive behavioural modification encompasses treatments that
attempt to change overt behaviour by altering thoughts, interpretations, assumptions and
strategies of responding.
7.2 Summary of results
A summary of the findings of each of the five papers is given in the following section.
The first study examined the effect of two constructs, behavioural inhibition and
behavioural activation systems (Gray,1987; 1990 ; Carver and White, 1994), which have
been conceptualized as two neural motivational systems that regulate sensitivity to
punishment (BIS) and reward (BAS), on users’ intention to adopt CRM applications. Findings
indicated that individuals with different combinations of BIS BAS levels demonstrated
varying degrees of willingness in their respective intentions towards adopting and
eventually facilitating the implementation of a CRM system.
The second study investigated the effect of equity sensitivity (Huseman et al., 1985; 1987),
emotional labour (Hochschild, 1983) and organizational commitment (Allen and Meyer,
1996 ) as three important variables that play a critical role among service providers’
intentions and the effect these have on CRM adoption and usage and ultimately on
corporate performance. Results supported a positive effect of organizational commitment
on corporate performance while emotional labour and equity sensitivity were found to act
as important antecedents to organizational commitment.
176
The third paper looked at perceived usefulness and perceived ease of use (Davis, 1989;
Davis et al., 1989) as key elements that are critical in encouraging service providers’
intention to use Customer Relationship Management (CRM) systems. In this case, results
indicated that the higher the perceived ease of use, the greater the perceived usefulness
and the higher the intention to use CRM. Moreover perceived usefulness was also found to
act as a partial mediator between perceived ease of use and intention to use CRM.
The fourth study explored the effect of equity sensitivity (Huseman et al., 1985; 1987), on
organizational commitment (Allen and Meyer, 1996 ), whilst it simultaneously considered
the possible moderating role that employees’ perception of organizational performance
may have had. Results supported an effect of equity sensitivity on organizational
commitment while high or low perceived corporate performance seemed to demonstrate
an adverse effect on the relationship between the two constructs.
Technology advancement has provided various opportunities for companies to improve
their competitiveness. CRM systems have been adopted by many service providers in their
quest to offer better one to one marketing possibilities to their customers. The fifth and
final paper examined the issue of perceived ease of use (Davis, 1989; Davis et al., 1989) of
such a technology by looking at the role played by organizational commitment (Allen and
Meyer, 1996) as a possible antecedent. Results were mixed and partially conditioned by
service providers’ willingness to leverage the possibilities that the technology can provide.
177
7.3 Theoretical implications
The technology acceptance model has been extensively used to explain technology adoption
and usage, across a wide variety of applications, mainly as a result of the significant effect of
perceived ease of use on usage intention, either directly or else indirectly via its effect on
perceived usefulness (e.g. Agarwal and Prasad, 1999; Davis et al., 1989; Hu et al., 1999;
Jackson et al., 1997; Venkatesh, 1999, 2000; Venkatesh and Davis, 1996, 2000; Venkatesh
and Morris, 2003).
Despite its versatility, scholars have identified a few limitations pertaining to its use. For
example, Dishaw and Strong (1999) argue that a weakness of TAM is its lack of task focus,
which refers to matching the capabilities of the technology to the demands of the task
involved, while Venkatesh and Morris (2003) expressed their concern regarding the TAM’s
assumption that acceptance of the technology in question should be assumed as voluntary,
which is not usually common in applications that are imposed by senior management, as in
the case of CRM. Perhaps even more importantly, the TAM does not seem to capture social
considerations effectively, resulting in calls for further research on a social conceptualization
of technology (Lamb and Kling, 2003).
This study took into consideration the multi faceted nature of CRM and focused mainly on
the humane aspect of its adoption and usage. Most of the research papers pertaining to
technology adoption, that have been cited in this study, employ the TAM as the underlying
theory to explain technology adoption and usage across a wide variety of applications.
However, in each of the circumstances where this theory was applied, adoption of the
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technology in question was assumed to be on a voluntary basis and the only constraints
were the potential users’ perceptions of ease of use and usefulness of the system itself.
This study opened with a quote of an old English proverb: “You can take a horse to water
but you cannot make it drink”. This is precisely the situation that limits the use of TAM as
the sole theory to explain or predict technology adoption in all situations and this is where
the concept of resistance should be brought in. It is important to establish that resistance is
not the opposite of acceptance (Lauer and Rajagopalan, 2003). As an example, one can
consider a situation of a disgruntled employee who, no matter how easy he/she perceives
the system’s usage to be, or even the fact that the system itself might be very useful, in
itself may not be sufficient to entice him/her to adopt that technology. This is precisely why
a better understanding of users’ intentions is necessary. Thus in such cases, employment of
the TAM as the sole underlying theory, based on the user’s perceptions of ease of use and
usefulness would predict system adoption, which would certainly not be the case.
Hirschheim and Newman (1988, p. 398) define user resistance as “an adverse reaction to a
proposed change which may manifest itself in a visible, overt fashion or may be less obvious
and covert”. User resistance cannot be accounted for by the TAM, however Joshi (1991)
argues that resistance can be explained in terms of equity theory. He further posits that
users evaluate changes in their equity before and after implementation. Following that, they
would then compare their own change in equity with that of their peers and if they perceive
an inequity, they are likely to manifest their disapproval by working around, or even
resisting any mandatory obligations imposed by their superiors. This notion, which is in line
with Adams’ (1963; 1965) original equity theory, is also re affirmed by Hess et al., (2010)
who propose that users make equity evaluations of new technology through three levels of
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social comparison, namely: (1) their individual net outcomes in using the technology as
opposed to not using it; (2) their net outcomes as compared to those of some authority or
organization; and (3) their net outcomes as compared to those of other users. These social
comparisons of equity determine eventual acceptance or resistance behaviour.
In order to provide a holistic view of the sequence of events leading to either acceptance or
rejection of CRM, a conceptual framework involving key social cognitive and behavioural
constructs was developed and tested, using equity theory in tandem with the TAM. The
results obtained should contribute towards a better understanding of the versatility of the
employed theoretical framework in explaining and predicting users’ intentions towards
technology adoption and usage.
7.4 Managerial implications
The specific implications pertaining to each paper have already been discussed separately in
each study. The following are the most salient points, drawn from the five papers, in an
attempt to list the key implications of the overall study.
Screening potential users for different combinations of BIS BAS levels may prove to be quite
useful for managers, particularly when it comes to identifying individuals with a strong
intention to adopt and use CRM. Moreover such screening could also enable managers to
detect other candidates, who may be hesitant at first yet whom, given a fair amount of
training and the right motivation, could potentially also perform well. Furthermore,
individuals who, given their BIS BAS combination, are most unlikely to adopt or use CRM
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may be isolated, as a precaution against the disruption of the entire implementation
process. On similar grounds, managers should also identify and develop those elements that
foster emotional labour and reduce equity sensitivity, since these two constructs have been
identified as two important antecedents to organizational commitment. This is particularly
essential to firms offering a high service component, since aspects of human resources have
become important considerations to effective marketing. Consequently management needs
to focus on developing HR management strategies that foster an equitable working
environment which in turn can sustain employees’ commitment to their organization. The
emphasis on organizational commitment in this study is not coincidental. The final paper
presented in this thesis identifies organizational commitment, specifically the normative and
affective commitment dimensions, as being important antecedents to perceived ease of use
(PEOU). Given that perceived ease of use is a key determinant of intentions leading to
technology adoption (Davis, 1989; Venkatesh and Davis, 1996), understanding its
antecedents and determinants is of paramount importance to researchers and managers
alike, in their perpetual quest of finding ways to overcome any barriers impeding the
adoption and eventual use of technology.
7.5 Limitations
This study was conducted in Malta, the smallest EU country with very limited sources of
useful data. Consequently only one of the largest local organizations, a commercial bank
with several branches spread all over the island was used, raising questions as to whether
the results apply to banks more generally. Given the intuitive and underlying theoretical
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links between the various constructs that were employed throughout this study, the
findings are likely to be extendable to other banks and service firms. This has been the
underlying scope of this study which, rather than just being another replication, its objective
was to test the theoretical framework in an attempt to provide a better understanding of
the interactions between the variables themselves and to pave the way for further research
in this regard. The nature of this study would have warranted an experiment during which a
number of cognitive and behavioural variables could have been manipulated among groups
of participants, in an attempt to determine which of these variables could best explain
users’ intention to adopt and use their organization’s CRM system. Unfortunately such an
experiment proved to be impossible to set up. Another limitation worth considering is that
since the questionnaire was sent out via the human resources department, participants may
have felt some undue pressure from their institution and consequently may have answered
in a way that they felt that their top management would have liked. While every precaution
was taken to ensure the reliability and validity of the instruments used to capture the data,
replication studies with improved measures, as well as across different cultures in other
countries are desirable.
7.6 Directions for future research
Given the time and resources constraints to complete this thesis, we were only able to test
the underpinning theory within a single large organization in a small country. The next step
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forward should be an attempt to consolidate this theory by replicating this study among
other organizations, including banks, in different countries.
Another possible corollary to this study would be an attempt to determine the link between
users’ intentions to adopt CRM and actual usage. This could be achieved by taking a new
sample of participants and record their intentions to use CRM, grouping them into
individuals with high intentions to adopt and individuals with low intentions to adopt CRM,
then proceed find out which ones actually exhibited heavy usage of the CRM system, a year
after the original study was conducted. Results are likely to interest researchers and
practitioners alike.
Global business is becoming increasingly dynamic and competition more intense. According
to Greenberg (2010) the way that customers communicate has changed irrevocably. The
internet, as well as other mobile communication devices, has been the major driving force
underpinning this change. Gillin (2011) argues that the introduction of the Web 2.0 platform
has revolutionized the way that business is conducted. Customers are now able to express
themselves in a way that they were hitherto unable to do. They are also able to share their
views about organizations as well as their products or services. Consequently, many
customers nowadays trust their peers even more than they trust salespersons or marketing
experts for product or service recommendations, as one can easily witness on the
ubiquitous number of blogs on various social network sites. Their demands have also
become greater than ever before. This scenario should provoke academics and practitioners
alike into promoting CRM to a new level, using social networks as a platform. Technological
advances have provided marketers with an unprecedented wealth of resources which can
proactively be utilized to meet or even exceed customers’ expectations.
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Further areas for future research could include other possible determinants and their
moderating effects, particularly those pertaining to technology, socio cultural issues, gender
and age. The people aspect of CRM system implementation remains a strong area of
research focus since advances in this area tend to be unable to keep up with concurrent
advances being made in technology and process capabilities that these systems are able to
provide. The results obtained in this study can be further strengthened by considering a
wider sample as well as other variables that are known to have an effect on organizational
commitment and ultimately perceived ease of use and eventual technology adoption. In
addition it may also pave the way for other researchers to investigate even deeper, the role
of organizational commitment in the Technology Adoption Model, which to date appears to
have received scant attention.
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