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Process Variation as a Determinant of Service Quality and Bank Performance: Evidence from the Retail Banking Study

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  • Frances X. Frei
  • Ravi Kalakota
  • Leslie M. Marx

Abstract

Conventional wisdom in retail banking states that firm performance is dependent on higher average process performance. This paper refutes conventional wisdom and provides empirical evidence, which demonstrates that low process variation contributes significantly to firm performance. More specifically, this paper examines the effect of process variation, caused by process variability, on service quality and financial performance, as measured by customer satisfaction and price-to-earnings ratio. This paper estimates process variation and reveals large variation in rocesses, reflecting large variation in firm strategy and process design. The data is from the

Suggested Citation

  • Frances X. Frei & Ravi Kalakota & Leslie M. Marx, 1997. "Process Variation as a Determinant of Service Quality and Bank Performance: Evidence from the Retail Banking Study," Center for Financial Institutions Working Papers 97-36, Wharton School Center for Financial Institutions, University of Pennsylvania.
    • Handle: RePEc:wop:pennin:97-36
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    File URL: http://fic.wharton.upenn.edu/fic/papers/97/9736.pdf
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    References listed on IDEAS

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    1. Morroni,Mario, 1992. "Production Process and Technical Change," Cambridge Books, Cambridge University Press, number 9780521410014, September.
    2. Roger E. Bohn, 1995. "Noise and Learning in Semiconductor Manufacturing," Management Science, INFORMS, vol. 41(1), pages 31-42, January.
    3. Frei, F.X. & Harker, P.T., 1996. "Measuring the Efficiency of Service Delivery Processes: With Application to Retail Banking," Papers 96-04, Rochester, Business - Operations Management.
    4. George P. Huber & Danial J. Power, 1985. "Retrospective reports of strategic‐level managers: Guidelines for increasing their accuracy," Strategic Management Journal, Wiley Blackwell, vol. 6(2), pages 171-180, April.
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    Cited by:

    1. Andreas Soteriou & Stavros A. Zenios, 1999. "Operations, Quality, and Profitability in the Provision of Banking Services," Management Science, INFORMS, vol. 45(9), pages 1221-1238, September.
    2. Frances X. Frei & Patrick Harker, 1996. "Measuring the Efficiency of Service Delivery Processes: With Application to Retail Banking Journal of Service Research," Center for Financial Institutions Working Papers 96-31, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. M. S. Krishnan & Venkatram Ramaswamy & Mary C. Meyer & Paul Damien, 1999. "Customer Satisfaction for Financial Services: The Role of Products, Services, and Information Technology," Management Science, INFORMS, vol. 45(9), pages 1194-1209, September.

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