Critical success factors of the financial performance of commercial private banks: A study in a developing nation
-
Author(s)K. M. Anwarul IslamLink to ORCID Index: https://orcid.org/0000-0002-5305-6724
,
Mohammad Bin AminLink to ORCID Index: https://orcid.org/0000-0002-9184-4828
,
Sk Alamgir HossainLink to ORCID Index: https://orcid.org/0000-0002-2756-0329
,
Roushanara IslamLink to ORCID Index: https://orcid.org/0000-0003-4055-7885
,
Jozsef PoppLink to ORCID Index: https://orcid.org/0000-0003-0848-4591
-
DOIhttp://dx.doi.org/10.21511/bbs.18(4).2023.12
-
Article InfoVolume 18 2023, Issue #4, pp. 129-139
- 362 Views
-
122 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study’s objective is to examine the impact of employee innovativeness, readiness to change, employee creativity, and learning capability on the financial performance of private banks in Bangladesh. The study involved 334 bank employees from three prominent private banks in Bangladesh. Those banks were selected with better ratings by the central bank and have several branches across the country. First, branch managers were contacted about this study and collected employee emails from each branch information desk. Then, email invitations were sent to each employee of the selected bank branches. This study involved branch managers, senior officers, officers, and junior bank executives. Past studies also considered senior and junior bank officers as they directly contribute to a bank’s performance. The study utilized a methodical questionnaire to assess the three independent variables: employee innovativeness, readiness to change, and learning capability. The dependent variable in this study was financial performance, which was assessed through key financial indicators such as profitability and sales growth over three years. SPSS was utilized to conduct hypothesis testing by considering 95% confidence interval. Correlation results show that all three independent variables were significantly correlated with the bank’s financial performance. The study’s regression results suggest that bank employees’ readiness to change (β value = 0.393) significantly impacts the bank’s financial performance, followed by employee innovativeness (β value = 0.338). On the other hand, employees’ learning capability (β value = 0.202) has the least significant impact on financial performance. Moreover, three independent variables explain 42.9% variance in bank financial performance.
- Keywords
-
JEL Classification (Paper profile tab)G21, L25, M12
-
References50
-
Tables6
-
Figures0
-
- Table 1. Sources for developing the survey questionnaire
- Table 2. Reliability and validity analysis
- Table 3. Demographic information
- Table 4. Correlation matrix
- Table 5. Model summary of regression analysis
- Table 6. Regression coefficient
-
- Abbas, W., & Wu, W. (2019). Employee innovativeness, fairness and organizational support: An empirical assessment. Human Systems Management, 38(2), 169-177.
- Akgün, A. E., Ince, H., Imamoglu, S. Z., Keskin, H., & Kocoglu, İ. (2014). The mediator role of learning capability and business innovativeness between total quality management and financial performance. International Journal of Production Research, 52(3), 888-901.
- Akgün, A. E., Keskin, H., Byrne, J. C., & Aren, S. (2007). Emotional and learning capability and their impact on product innovativeness and firm performance. Technovation, 27(9), 501-513.
- Akram, K., & Hilman, H. (2018). Effect of knowledge management activities and dynamic capabilities on employee performance in the banking sector: empirical evidence from Pakistan. Studies in Business and Economics, 13(2), 41-60.
- Albertini, E. (2013). Does environmental management improve financial performance? A meta-analytical review. Organization & Environment, 26(4), 431-457.
- Alqudah, I. H., Carballo-Penela, A., & Ruzo-Sanmartín, E. (2022). High-performance human resource management practices and readiness for change: An integrative model including affective commitment, employees’ performance, and the moderating role of hierarchy culture. European Research on Management and Business Economics, 28(1), 100177.
- Ambrosini, V., Bowman, C., & Collier, N. (2009). Dynamic capabilities: An exploration of how firms renew their resource base. British Journal of Management, 20, S9-S24.
- Asheq, A. A., Tanchi, K. R., Kamruzzaman, M., & Karim, M. M. (2021). The impact of e-marketing orientation, technological orientation and learning capacity on online SME performance. Innovative Marketing, 17(3), 168-179.
- Ashiru, J. A., Erdil, G. E., & Oluwajana, D. (2022). The linkage between high performance work systems on organizational performance, employee voice and employee innovation. Journal of Organizational Change Management, 35(1), 1-17.
- Calantone, R. J., Cavusgil, S. T., & Zhao, Y. (2002). Learning orientation, firm innovation capability, and firm performance. Industrial Marketing Management, 31(6), 515-524.
- Chiva, R., Alegre, J., & Lapiedra, R. (2007). Measuring organizational learning capability among the workforce. International Journal of Manpower, 28(3/4), 224-242.
- Cho, Y. H., & Lee, J. H. (2020). A study on the effects of entrepreneurial orientation and learning orientation on financial performance: Focusing on mediating effects of market orientation. Sustainability, 12(11), 4594.
- Craig, J. B., Dibrell, C., & Garrett, R. (2014). Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance. Journal of Family Business Strategy, 5(3), 229-238.
- Dai, W. D., Mao, Z. E., Zhao, X. R., & Mattila, A. S. (2015). How does social capital influence the hospitality firm’s financial performance? The moderating role of entrepreneurial activities. International Journal of Hospitality Management, 51, 42-55.
- Ebben, J. J., & Johnson, A. C. (2005). Efficiency, flexibility, or both? Evidence linking strategy to performance in small firms. Strategic Management Journal, 26(13), 1249-1259.
- Gaubatz, J. A., & Ensminger, D. C. (2017). Department chairs as change agents: Leading change in resistant environments. Educational Management Administration & Leadership, 45(1), 141-163.
- Gazi, M. A. I., Nahiduzzaman, M., Harymawan, I., Masud, A. A., & Dhar, B. K. (2022). Impact of COVID-19 on financial performance and profitability of banking sector in special reference to private commercial banks: empirical evidence from Bangladesh. Sustainability, 14(10), 6260.
- Gibb, J., & Haar, J. M. (2010). Risk taking, innovativeness and competitive rivalry: A three-way interaction towards firm performance. International Journal of Innovation Management, 14(05), 871-891.
- Goh, S. C., Elliott, C., & Quon, T. K. (2012). The relationship between learning capability and organizational performance: A meta-analytic examination. The Learning Organization, 19(2), 92-108.
- Haffar, M., Al-Karaghouli, W., Djebarni, R., & Gbadamosi, G. (2019). Organizational culture and TQM implementation: investigating the mediating influences of multidimensional employee readiness for change. Total Quality Management & Business Excellence, 30(11-12), 1367-1388.
- Haque, M. D., TitiAmayah, A., & Liu, L. (2016). The role of vision in organizational readiness for change and growth. Leadership & Organization Development Journal, 37(7), 983-999.
- Hatak, I., Kautonen, T., Fink, M., & Kansikas, J. (2016). Innovativeness and family-firm performance: The moderating effect of family commitment. Technological Forecasting and Social Change, 102, 120-131.
- Heffernan, S. A., & Fu, X. (2010). Determinants of financial performance in Chinese banking. Applied Financial Economics, 20(20), 1585-1600.
- Holt, D. T., Armenakis, A. A., Feild, H. S., & Harris, S. G. (2007). Readiness for organizational change: The systematic development of a scale. The Journal of Applied Behavioral Science, 43(2), 232-255.
- Huhtala, H., & Parzefall, M. R. (2007). A review of employee well-being and innovativeness: An opportunity for a mutual benefit. Creativity and Innovation Management, 16(3), 299-306.
- Husain, Z., Dayan, M., & Di Benedetto, C. A. (2016). The impact of networking on competitiveness via organizational learning, employee innovativeness, and innovation process: A mediation model. Journal of Engineering and Technology Management, 40, 15-28.
- Jehangir, M., Dominic, P. D. D., Langove, N., & Khan, A. (2012). Managerial expertise, top management support and learning capacity impact on e-commerce capability and business performance. International Journal of Business Innovation and Research, 6(4), 379-390.
- Jones, R. A., Jimmieson, N. L., & Griffiths, A. (2005). The impact of organizational culture and reshaping capabilities on change implementation success: The mediating role of readiness for change. Journal of Management Studies, 42(2), 361-386.
- Kabir, M. A., & Chowdhury, S. S. (2023). Empirical analysis of the corporate social responsibility and financial performance causal nexus: Evidence from the banking sector of Bangladesh. Asia Pacific Management Review, 28(1), 1-12.
- Kafetzopoulos, D. (2023). Talent development: a driver for strategic flexibility, innovativeness and financial performance. EuroMed Journal of Business, 18(2), 296-312.
- Katsaros, K. K., Tsirikas, A. N., & Kosta, G. C. (2020). The impact of leadership on firm financial performance: the mediating role of employees’ readiness to change. Leadership & Organization Development Journal, 41(3), 333-347.
- Kyrgidou, L. P., & Spyropoulou, S. (2013). Drivers and performance outcomes of innovativeness: An empirical study. British Journal of Management, 24(3), 281-298.
- Lee, J. Y., & Lee, Y. (2018). Job crafting and performance: Literature review and implications for human resource development. Human Resource Development Review, 17(3), 277-313.
- Mallén, F., Chiva, R., Alegre, J., & Guinot, J. (2016). Organicity and performance in excellent HRM organizations: the importance of organizational learning capability. Review of Managerial Science, 10(3), 463-485.
- Matthysen, M., & Harris, C. (2018). The relationship between readiness to change and work engagement: A case study in an accounting firm undergoing change. SA Journal of Human Resource Management, 16(1), 1-11.
- Metwally, D., Ruiz-Palomino, P., Metwally, M., & Gartzia, L. (2019). How ethical leadership shapes employees’ readiness to change: The mediating role of an organizational culture of effectiveness. Frontiers in Psychology, 10, 2493.
- Nybakk, E. (2012). Learning orientation, innovativeness and financial performance in traditional manufacturing firms: a higher-order structural equation model. International Journal of Innovation Management, 16(5), 1250029.
- O’Reilly, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior, 28, 185-206.
- Parzefall, M. R., Seeck, H., & Leppänen, A. (2008). Employee innovativeness in organizations: a review of the antecedents. Finnish Journal of Business Economics, 2(8), 165-182.
- Rahman, A. A. A., Meero, A., Zayed, N. M., Islam, K. M. A., Rabban, M. R., & Bunagan, V. D. R. (2021). Impact of Leverage Ratios on Indicators of Financial Performance: Evidence from Bahrain. Academy of Strategic Management Journal, 20(3) 1-12.
- Salisu, Y., & Bakar, L. J. A. (2019). Technological capability, relational capability and firms’ performance: The role of learning capability. Revista de Gestão, 27(1), 79-99.
- Schweisfurth, T. G., & Raasch, C. (2018). Absorptive capacity for need knowledge: Antecedents and effects for employee innovativeness. Research Policy, 47(4), 687-699.
- Siahaan, D. T., & Tan, C. S. L. (2020). Antecedents of Innovation Capability and Firm Performance of Indonesian ICT SMEs. Asian Journal of Business Research, 10(2), 45-71.
- Tsai, K. H., & Yang, S. Y. (2013). Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition. Industrial Marketing Management, 42(8), 1279-1294.
- Vakola, M. (2014). What’s in there for me? Individual readiness to change and the perceived impact of organizational change. Leadership & Organization Development Journal, 35(3), 195-209.
- Wang, L., Zhao, J. Z., & Zhou, K. Z. (2018). How do incentives motivate absorptive capacity development? The mediating role of employee learning and relational contingencies. Journal of Business Research, 85, 226-237.
- Weeks, W. A., Roberts, J., Chonko, L. B., & Jones, E. (2004). Organizational readiness for change, individual fear of change, and sales manager performance: An empirical investigation. Journal of Personal Selling & Sales Management, 24(1), 7-17.
- Zayed, N. M., Mohamed, I. S., Islam, K. M. A., Perevozova, I., Nitsenko, V., & Morozova, O. (2022). Factors Influencing the Financial Situation and Management of Small and Medium Enterprises. Journal of Risk and Financial Management, 15(12), 554.
- Zhang, X., Wang, Z., Zhong, X., Yang, S., & Siddik, A. B. (2022). Do green banking activities improve the banks’ environmental performance? The mediating effect of green financing. Sustainability, 14(2), 989.
- Zollo, M., & Winter, S. G. (2002). Deliberate learning and the evolution of dynamic capabilities. Organization Science, 13(3), 339-351.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 3006 Downloads: 1022 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2817 Downloads: 1132 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2770 Downloads: 540 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
