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Process Variation as a Determinant of Bank Performance Evidence from the Retail Banking Study

Author

Listed:
  • Frei, F.X.
  • Kalakota, R.
  • Marx, L.M.

Abstract

Conventioanl wisdom in retail banking industry states that firm performance is dependent on higher average process performance. This paper provides empirical evidence that low process variation also contributes significantly to firm financial performance, perhaps even more than process performance itself. This paper estimates process variation and reveals large variation in processes, reflecting large variation in firm strategy and process design.

Suggested Citation

  • Frei, F.X. & Kalakota, R. & Marx, L.M., 1998. "Process Variation as a Determinant of Bank Performance Evidence from the Retail Banking Study," Papers 98-01, Rochester, Business - Operations Management.
    • Handle: RePEc:fth:robuom:98-01
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    References listed on IDEAS

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    Cited by:

    1. Zeynep Ton, 2008. "The Effect of Labor on Profitability: The Role of Quality," Harvard Business School Working Papers 09-040, Harvard Business School, revised Jul 2009.
    2. Daniel Beverungen, 2014. "Exploring the Interplay of the Design and Emergence of Business Processes as Organizational Routines," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 6(4), pages 191-202, August.
    3. Frances X. Frei & Patrick T. Harker, 1999. "Value Creation and Process Management: Evidence from Retail Banking Diversity of Opinion and Financing of New Technologies," Center for Financial Institutions Working Papers 99-16, Wharton School Center for Financial Institutions, University of Pennsylvania.
    4. Ilya Okhmatovskiy, 2010. "Performance Implications of Ties to the Government and SOEs: A Political Embeddedness Perspective," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 1020-1047, September.
    5. Mair, Johanna & Rata, Cristina, 2004. "Corporate entrepreneurship: Linking strategic roles to multiple dimensions of performance," IESE Research Papers D/551, IESE Business School.
    6. Arnold, Vicky & Benford, Tanya & Canada, Joseph & Sutton, Steve G., 2015. "Leveraging integrated information systems to enhance strategic flexibility and performance: The enabling role of enterprise risk management," International Journal of Accounting Information Systems, Elsevier, vol. 19(C), pages 1-16.
    7. Yee, Rachel W.Y. & Yeung, Andy C.L. & Edwin Cheng, T.C., 2010. "An empirical study of employee loyalty, service quality and firm performance in the service industry," International Journal of Production Economics, Elsevier, vol. 124(1), pages 109-120, March.
    8. Peter Nderitu Githaiga & Josephat Cheboi Yegon & Joyce Kimosop Komen, 2019. "Does the ‘Process’ of Process Capital Matter to Performance? Evidence from Kenyan Commercial Banks," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 10(2), pages 37-46, May.
    9. Nan Liu & Stacey R. Finkelstein & Margaret E. Kruk & David Rosenthal, 2018. "When Waiting to See a Doctor Is Less Irritating: Understanding Patient Preferences and Choice Behavior in Appointment Scheduling," Management Science, INFORMS, vol. 64(5), pages 1975-1996, May.
    10. Amit Das, 2003. "Knowledge and Productivity in Technical Support Work," Management Science, INFORMS, vol. 49(4), pages 416-431, April.
    11. Ioannou, George & Mavri, Maria, 2007. "Performance-Net: A Decision Support System for Reconfiguring a Bank's Branch Network," Omega, Elsevier, vol. 35(2), pages 190-201, April.
    12. Lynn Wu & Lorin Hitt & Bowen Lou, 2020. "Data Analytics, Innovation, and Firm Productivity," Management Science, INFORMS, vol. 66(5), pages 2017-2039, May.
    13. Peng, Jianping & Quan, Jing & Zhang, Guoying & Dubinsky, Alan J., 2016. "Mediation effect of business process and supply chain management capabilities on the impact of IT on firm performance: Evidence from Chinese firms," International Journal of Information Management, Elsevier, vol. 36(1), pages 89-96.
    14. Venky Nagar & Madhav V. Rajan, 2005. "Measuring Customer Relationships: The Case of the Retail Banking Industry," Management Science, INFORMS, vol. 51(6), pages 904-919, June.
    15. Detlef Seese & Christof Weinhardt & Frank Schlottmann (ed.), 2008. "Handbook on Information Technology in Finance," International Handbooks on Information Systems, Springer, number 978-3-540-49487-4, November.
    16. Heidi Romero & Remco Dijkman & Paul Grefen & Arjan Weele, 2015. "Factors that Determine the Extent of Business Process Standardization and the Subsequent Effect on Business Performance," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 57(4), pages 261-270, August.
    17. I. G. Fedorov, 2015. "Improving The Efficiency And Quality Of Business Processes Using Bpms," Russian Journal of Industrial Economics, MISIS, issue 1.
    18. Fawz Manyaga & Umit Hacioglu, 2021. "Investigating the impact of mobile telecom service characteristics on consumer satisfaction in urban Uganda," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(6), pages 19-33, September.
    19. Sundar Bharadwaj & Anandhi Bharadwaj & Elliot Bendoly, 2007. "The Performance Effects of Complementarities Between Information Systems, Marketing, Manufacturing, and Supply Chain Processes," Information Systems Research, INFORMS, vol. 18(4), pages 437-453, December.
    20. Verena Wolf & Christian Bartelheimer & Daniel Beverungen, 2020. "Workarounds as Generative Mechanisms for Restructuring and Redesigning Organizations - Insights from a Multiple Case Study," Working Papers Dissertations 68, Paderborn University, Faculty of Business Administration and Economics.

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    More about this item

    Keywords

    BANKING ; FINANCIAL MARKET;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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