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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40

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

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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

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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

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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

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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

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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.

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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

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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

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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

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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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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”.

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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

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(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.

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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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