Internal market orientation and customer oriented behavior a study of banking industry in ho chi minh city

TRAN VO ANH TUYEN INTERNAL MARKET ORIENTATION AND CUSTOMER-ORIENTED BEHAVIOR A Study of the Banking Industry in Ho Chi Minh City MASTER OF BUSINESS MBUS HO CHI MINH CITY_2014... TRAN

TRAN VO ANH TUYEN

INTERNAL MARKET ORIENTATION AND CUSTOMER-ORIENTED BEHAVIOR

A Study of the Banking Industry in Ho Chi Minh City

MASTER OF BUSINESS (MBUS)

HO CHI MINH CITY_2014

TRAN VO ANH TUYEN

INTERNAL MARKET ORIENTATION AND CUSTOMER-ORIENTED BEHAVIOR

A Study of the Banking Industry in Ho Chi Minh City

on teaching, communicating the precious knowledge about my major during the two years of study, as well as necessary specialized skills; so that I have full capital for performing this research

Next, I would specially like to send deeply gratitude to supervisor Le Nguyen Hau, who has dedicated instructions, creates necessary and convenient conditions, is always willing to help, gives suggestions, and advises me, in order to choosing topic, determining the correct direction for the study and completed thesis in the best way

Finally, to complete the perfect and full study, I would genuinely like to thank for getting the attention and support of selected banks in survey They kindly cooperate to quickly finish for collecting the accurate data, and the model is used in study achieved high reliability Especially, I truly thank all tellers and individual customer relationship officers working at SeAbank-Ho Chi Minh branch, who offer useful advices for research having practical information

Again, faithfully thank all those who contribute to help me complete the study

Yours sincerely, Tran Vo Anh Tuyen

employees are a primary contact point in banking settings and the way their behaviors are perceived by customers is a critical antecedent of customer satisfaction For this reason, purpose of the present study is to recognize how internal marketing orientation affects customer-oriented behavior of service personnel in banking industry In the paper, we have used a questionnaire with twenty-five main questions in order to survey two hundred and fifty tellers and individual customer relationship officers at joint stock commercial banks in Ho Chi Minh city Besides, a model has been designed to show the effect of components belonging to internal marketing orientation on customer-oriented behavior through employee commitment factor based on previous literature review As well as, a theoretical framework has been developed to prove empirically with an application of regression analysis Implications of the findings for customers' overall satisfaction level replying on customer-oriented behavior are discussed From creating the motivation, capacity building, and opportunity environment for employees show their performance, in order to bring organizational competitiveness, lead to customer satisfaction Finally, the expected contribution of this study is that will be able to gain extend knowledge about customer-employee interactions in banking industry in Vietnam

Keywords: Internal marketing orientation, Customer-oriented behavior,

Employee commitment, Banking industry, Frontline service employees

1.2 Research Problem 2

1.3 Research Objective 6

1.4 Scope of the Research 6

1.5 Structure of the Thesis 7

CHAPTER 2 LITERATURE REVIEW AND RESEARCH MODEL 2.1 Literature Review 9

2.1.1 Customer-Oriented Behavior (COB) 9

2.1.2 Internal Market Orientation (IMO) 11

2.1.2.1 Internal Information Generation (IIG) 13

2.1.2.2 Internal Communication (IC) 14

2.1.2.3 Internal Responsiveness (IR) 15

2.1.3 Employee commitment (EC) 16

2.2 Hypotheses and Research Model 17

2.2.1 Hypotheses 17

2.2.2 Conceptual Model 20

CHAPTER 3 RESEARCH METHODOLOGY 3.1 Research Design 22

3.1.1 Research Context and Method 22

3.1.2 Sample selection and data collection 24

3.2 Measurement of Constructs 25

CHAPTER 4 RESULTS 4.1 Descriptive Statistic 27

4.1.1 Description of the survey data 27

4.1.2 Descriptive data in the questionnaire 28

4.1.2.1 Descriptive statistic for demographic variables 28

4.2.2 Hypotheses tests 36

4.2.3 Analysis of the causal relationships among the variables of the model 37

CHAPTER 5 CONCLUSION 5.1 Discussions and implications 40

5.2 Study Limitations and Future Research 43

5.2.1 Limitations 43

5.2.2 Recommendations for the future research 44

5.3 Conclusion 45

References 47

Appendix 69

Questionnaire 71

Table 4.2 Meaning of Mean 32

Table 4.3 Rating the Acceptance for Constructs of Banks 32

Table 4.4 Reliability and Convergent validity 34

Table 4.5 The Correlation Matrix for Variables 35

Table 4.6 Summary of results 37

Figure 2.1 The proposed model of critical factors to customer-oriented behavior 21

Figure 4.1 Gender Ratio of the Banks Participating in the Survey 28

Figure 4.2 Education Level Ratio of the Banks Participating in the Survey 29

Figure 4.3 Working Time Ratio of the Banks Participating in the Survey

30

Figure 4.4 Results of causal relations of the model 39

Appendix 1: Total Variance Explained 68

Appendix 2a: Model Summaryb 68

Appendix 2b: Model Summaryb 69

Appendix 3a: Coefficientsa 69

Appendix 3b: Coefficientsa 69

CHAPTER 1 INTRODUCTION

1.1 Research Background

In service organizations, many researchers have demonstrated that customer preferences are influenced by interactions between employees and customers (Bowen, 1986; Kohli & Jaworski, 1990; Gremler, Gwinner & Brown, 2001) and have argued that an adequate focus on service personnel (Berry, 1995) is also considered to be the important element of the firm’s marketing mix (Nicoulaud, 1989) in an almost parallel research stream (Gronroos, 2006) The origin of this research stream can be found as the internal marketing (IM) concept introduced by Berry, Hensel and Burke (1976) They have suggested that the regulations that apply to the company’s external market are relevant for its internal market in similar way The center of internal marketing efforts is the management of relationship between internal customers and internal suppliers (George, 1990; Lings, & Brooks, 1998) for service-mindedness and customer-oriented behavior (Berry, 1981; Gronroos, 1989), and importantly for successful exchanges with external markets (Flipo, 1986) Based on this concept, not many companies succeed in implementing

IM, largely because of the inadequacy of unanimously-agreed upon definitions and lack of clarity with respect to the operation of the IM concept (Gronroos, 1991; Greene, Walls, & Schrest, 1994) Towards this end, Lings and Greenley (2005) have developed an instrument to measure internal market orientation (IMO) in a retail industry and suggested that the IMO has positive consequences in different service contexts and be examined in different cultural settings

Following the tendency of western counterparts, service organizations in fast developing countries, such as: India, China, are implementing marketing concepts and strategies towards increasing customer satisfaction and loyalty through improved service quality (Choudhury, 2008; Dutta & Dutta, 2009) Based on effects found empirically in developed countries (Wright, Filatotchev, Hoskisson & Peng, 2005), the adoption of internal market orientation of developing countries comes into question because of their various contexts: different cultural, social, economic and regulatory conditions (Lachman, Nedd & Hinings, 1994; Kirkman & Shapiro, 1997; Venkatesh, Bala

& Sykes, 2010) In this regard, rightly pointed out by Zinkhan and Hircheim (1992), Sheth and Sisodia (1999) and more recently Sheth (2011), marketing is

a contextual discipline, where context matters due to unique characteristics and existing practices and perspectives of emerging markets

1.2 Research Problem

The banking sector plays a very important role to the fortunes of the country's economy (Alfaro, Chanda, Kalemli-Ozcan & Sayek, 2004), where coordinates currency supply and demand, is bridge, which supports activities for the development of other industries (Herring & Santomero, 1995; Levine, 1997; Tyler & Stanley, 2007) As we knew, banking industry has a lot of business operations, but raising capital and credit are traditional operations that decide the existence of a bank (Grinblatt & Titman, 2002) Besides, banks in Vietnam are operating on the field: retail banking, because only with this operation, they can raise capital (Vietnamplus, 2013) Therefore, employees who interact with customers are a key part of the bank (Jamal & Naser, 2002; Jayakody & Sanjeewani, 2006) when bank wants to sustainably develop and increase competitive advantage

The survival of banks bases on capital raised by customers (Razzaque, 2009) If they can't attract capital inflows from market (Mishkin, 2006), banks will, of course be eliminated Meanwhile, as noted, the risk of bank is replaced

in Vietnam, because of customers, is quite high With low switching costs, customers almost no loss what if they want to transfer their funds out of the bank and invest in another place (Finance Newspaper, 2013)

On the other hand, at present, there are too many banks in Vietnam, but really there are not strong banks with international stature Banks are scrambling to scale the network to raise capital (width development) This has led to a situation that credit institutions compete fiercely with each other in activities and forget credit products and services utilities attach with them (Viet Capital Securities, 2008)

Moreover, the bank expands scale but lack of quality human resources; thus, management activities haven't kept up the development scale Economic crisis has lasted from 2008 to now, also bringing many difficulties for the banking industry Some banks have been not able to maintain growth in the past year (Vietnam News Agency, 2013) This is the basis for many merger experts stating the comment that the merger trend in the banking industry is approaching Currently, the intrinsic difficulties in Vietnam’s banking system,

is a major challenge for the economy Restructuring the banking system is a critical requirement, but also is an arduous route that banks have to undergo (Vietnamplus, 2013)

In the nutshell, banks want to maintain the growth, survive and firmly develop They must change internal policies, robustly implement human resource reform, so that making increase competitive advantage from their own

differences (Gummesson, 1987; Lings & Brooks, 1998; Lings, 2004) Considering agents or entities other than customers or competitors becomes crucial elements in running of the organization (Yoon, Seo & Yoon, 2004) The workforce has a greatest influence on the business results of any enterprise, which is an unprecedented strategic importance for system (Post, Preston & Sachs, 2002) This reality explains the current trend of marketing research into the sphere of internal organization Indeed, based on the basis of the theoretical reference constituted by the stakeholder orientation, the orientation towards employees and considering them as internal customers of the bank has become the subject of study that named internal marketing (Collins & Payne, 1991; Rafiq & Ahmed, 1993; Gounaris, Vassilikopoulou, & Chatzipanagiotou, 2010)

In addition, different papers have centered on the services sector defend the adoption of internal marketing, favoring the satisfaction of the contact personnel and their commitment to constructing good relationships with external customers (Schneider & Bowen, 1985; Rogers, Clow & Kash, 1994) Rely on the definition by Rafiq and Ahmed (2000), and from scale of measurement of Lings and Greenley (2005), known as internal market orientation (IMO) Nevertheless, it is not clear if marketing constructs such as market orientation (MO) and internal market orientation (IMO) developed and validated primarily using data from the western world can be employed in developing countries (Sin, Alan, Yau, Lee & Chow, 2002) Concepts of MO and IMO are quite novel and pertinent for developing countries, and specifically, the banking industry has been slow to adopt marketing as a management discipline (Calantone & Mazanec, 1991; Gounaris, Vassilikopoulou, & Chatzipanagiotou, 2010) Therefore, it is believed that a study of internal market orientation in the banking industry can enhance the

overall understanding of the concept of market orientation in banking in particular and the service industry context in general

On the other hand, previous theories have proved that banks which focus their activities on the needs of their customers, meaning behave in a customer-oriented way, their performance has been better than those banks that do not (Donavan, Brown & Mowen, 2004) The economic potential of customer-oriented behavior has empirically been substantiated by studies of Narver and Slater (1990), and Jaworski and Kohli (1993) Besides, customers often rely on the behavior of service employees who directly contact with customers for judging the quality of a service in each bank (Dwyer, 1987; Choudhury, 2007) Consequently, the level of customer orientation of bankers is considered as a crucial leverage for service banks’ success about economic aspect (Bowen & Schneider, 1985; Bitner, Booms & Tetreault, 1990; Bove & Johnson, 2000; Sergeant & Frenkel, 2000)

Notice to improve business performance, providing services to clients better, as well as increase the competitive advantage (Gwinner, Gremler & Bitner, 1998) of banks in Ho Chi Minh city Besides, banks aim to find solutions to improve their face, explore out the main factors affecting their business activities; in order to offer the appropriate remedial measures (Lings

& Greenley, 2005), so that banks can create higher labor productivity, and keep talents in the organization; finally, leading to long term profit for organization (Siguaw & Brown, 1994) However, based on the actual study situation, so far the number of specific research projects have given the impact factors as well

as the ability of the factors affecting the operation of such banks in Ho Chi Minh city, is very limited, mainly in qualitative researches Therefore, in this context, employees’ customer-oriented behavior (COB) will certainly make a

difference and betterment in terms of improving customers’ overall satisfaction

in the banks Given this situation, the paper explores the influence of IMO on front-line service employees’ customer-oriented behavior in the banking industry in Vietnam, particularly in Ho Chi Minh city

1.3 Research Objective

Particularly, this current research is aimed to achieve the following objectives:

 To identify and examine quantitatively the influence of components of internal market orientation (IMO) on front-line employee commitment (EC)

to a bank

 To investigate the impact of employee commitment (EC) on oriented behavior (COB)

customer-1.4 Scope of the Research

We have considered in terms of space aspect The object of this project

is to study the joint-stock commercial banks in Ho Chi Minh city, namely large branches, which belong to type one of the central districts like as district 1, and district 3; for instance: SeABank (Southeast Asia Commercial Joint Stock Bank), Kien Long Bank, Eximbank (Export Import Commercial Joint Stock Bank), SCB Bank (Sai Gon Joint Stock Commercial Bank), and VCB (Bank for Foreign Trade of Vietnam) Customer-oriented behavior has been examined

in organic relation with internal marketing orientation through the mediating impact of employee commitment factor In which we emphasizes the role of the leading banks for retail banking operations to search customer and mining customers thoroughly, aiming to eventually profit maximization, finally bringing great benefits to the bank However, due to the number of joint-stock

commercial banks in Ho Chi Minh City is relatively large, with a variety of activities, services, as well as various parts; thus we should only research frontline staff, who directly take care of individual customers at banks, such as tellers and individual customer relationship officers (CROs)

The next, considering in terms of time Time study is more than 6 months, including time of data collection and data process is about 2 months

1.5 Structure of the Thesis

The main contents of the thesis consist of five chapters, with summary parts as following:

Chapter 1: Introduction

This sector points out that background of the overall situation, the role and the platform of the banking sector and the current situation of the banking industry in Vietnam, the urgency of research topic, as well as issues that need

to be clarified in the essay text Chapter 1 shows out an overview of the research topic, the scope and object of research

Chapter 2: Literature Review and Research Model

We have based on previous research by researchers in different countries They have studied the same issue, in order that giving the concepts and definitions about components, about various aspects of the factors in the research In addition, this part learns out the effects of the independent variables on the dependent variable, with the direction and extent of the impact

of them Thence, we draw hypotheses to present the relationship between

variables Finally, given a research model rely on previous studies, and the hypotheses for better overall

Chapter 3: Research Methodology

This chapter focuses on the items that belong to each component to compose screening questionnaire, and then, selecting the appropriate number of samples and conducted surveys at selected banks After collecting enough needed data, we conduct data processing, namely selecting tools, appropriate methods to process and present data

Chapter 4: Results

Presentation of results through data processing has been done in Chapter

3 Data must assure the reliability and validity, including: convergence validity, and discriminant validity forward the results to determine the influence of the independent variables on the dependent variable, as well as their impact direction, and testing of hypotheses have been drawn out in Chapter 2 Finally,

we come to the conclusion about the relationship between the variables and the extent of effect

Chapter 5: Conclusion

Besides making suggestions, proposals and solutions to improve and promote the development of customer-oriented behavior of personnel department at the bank, we also offer a limited sector, which most study experiments have, when have studied in real environment, thereby giving the direction to perform better for future researches

CHAPTER 2 LITERATURE REVIEW AND RESEARCH MODEL

2.1 Literature Review

In this section, we have summarized relevant literature on the components

of internal market orientation affecting to customer-oriented behavior of banks through mediating variable, which is employee commitment with its antecedents, as well as learning about customer-oriented behavior clearly, and concretely that has placed in relationship to other factors based on previous studies, and the research framework has used in this study (Chih & Li, 2006;

Lanjananda & Patterson, 2009; Johari & Hee, 2013)

2.1.1 Customer-Oriented Behavior (COB)

Customer orientation is one of the behavioral components of market orientation (Narver & Slater, 1995); it is widely used in the marketing literature (Saura, Contri, Berenguer, Taulet & Velazquez, 2005) According to Hartline, Maxham and Mckee (2000) customer orientation is defined as the set of beliefs that puts the customer's interest first at the firm level Saxe and Weitz (1982); Daniel and Darby (1997) define customer orientation as the willingness of service providers to adjust their service delivery oriented to a customer's situation, for example, needs, problems, special circumstances at an individual level

Customer-oriented behavior refers to specific behaviors, that personnel satisfy their customers through serve the service (Farrell, Souchon & Furden, 2001; Winsted, 2000a, b) Customers often rely on the behavior of employees, who contact customers directly when judging the quality of a service that belongs to firm (Levesque, & McDougall, 1996; Johnson, Sivadas, &

Garbarino, 2008) Our conceptualization of customer-oriented behavior is consistent with three works (Chih, & Li, 2006) Firstly, customer-orientation is the degree to which an organization or its employees focus their efforts on understanding and satisfying customers, that is suggested by Saxe, and Weitz (1982) The second is customer-oriented behavior as the extent to which service employees use their marketing concepts for helping customers to make purchase decisions as well as satisfying their needs (Stock, & Hoyer, 2002) Thirdly, customer-oriented behavior in terms of a tendency of employees to meet needs of customer in job-related environment (Brwon, Mowen, Donavan,

& Licata, 2002) Consistent with these views, we define customer-oriented behavior as the extent to which customer-contact employees use their marketing concepts for satisfying customers’ needs As a result, the customer orientation level of service employees is considered a crucial leverage for the service firms’ economic success (Bowen & Schneider, 1985; Bitner, Booms & Tetreault, 1990; Bove & Johnson, 2000; Sergeant & Frenkel, 2000) Therefore, customer-oriented behavior is necessary in fulfilling customers’ needs and interests Others researchers have mentioned that COB provides information and assistance to reach customers satisfaction (Stock & Hoyer, 2005); in addition to researchers who have analyzed the role of employees in customer-oriented behavior as a dimension of service quality (Parasuraman, Zeithaml & Berry, 1988; Dabholkar, Sheperd & Thorpe, 2000) In service industry, the behavior of customer-contact employees plays key role during customers’ decision making process (Chih & Li, 2006) Consequently, customer-oriented behavior could be as predisposition or tendency in the workplace (Donavan, Brown & Mowen, 2004) It is a main determinant of customer overall satisfaction in order to create a long-term profitable service organization (Johari & Hee, 2013)

In the banking context, it is explained that the term customer-oriented behavior refers to the service behavior and ability of the service providers to adjust their service in order to reflect reality of customers' demand (Daniel & Darby, 1997) On the same note, Darby and Daniel (1999) have stated that existing the interaction between employees and customers in the process of co-producing a service; therefore, customer-oriented behavior is an essential interface element for customer-contact employees to meet the incremental customers' expectation As a result, customer's evaluation will be highly depended on employee’s behavior that they frequently encounter (Lengnick-Hall, 1996; Ndubisi & Wah, 2005) It is widely accepted that a customer-oriented organization is more likely to generate satisfied customers and create more favorable behavioral outcomes than organization that lack of customer orientation (Brady & Cronin, 2001) In the nutshell, customer-oriented behavior is believed to facilitate achievement of a bank's goal and increase its performance (Dell, 1991; Johnson, Sivadas & Garbarino, 2008) Banks with customer oriented employees have the competitive advantage over those do not perceive customer-oriented behavior as an important factor for long-term business development (Bruce, Bowman & Brown, 1998)

2.1.2 Internal Market Orientation (IMO)

Internal market orientation arises from the view that customer contact personnel is of primary importance to service industries, and that satisfied, committed and motivated front-line employees are essential if customers are to perceive that they have received good service (Sasser & Arbeit, 1976; Berry, 1984; Berry & Parasuraman, 1991) This means that internal market orientation focuses on customer contact personnel and treat the employees as customers of the organization’s jobs is the foundation on which internal market orientation is

based (Lings, 2004) The role of IMO in facilitating the relationship between the company and its employees, as a prerequisite to effective relationships between employees and their customers; so wants marketing be developed, must to be examined in order that a more comprehensive approach (Chaston, 1994; Heskett, Jones, Loveman, Sasser & Schlesinger, 1994; Tannenbaum, Beard & Gueutal, 1994; Lings, 2000; Conduit & Mavondo, 2000)

Internal market orientation, in another way, could consider as internal marketing Within a service business organization, internal marketing is more important factor than conventional external marketing (Kotler, 2000) Furthermore, internal marketing is the key to excellent service and to successful external marketing, this viewpoint is indicated by Greene, Walls, and Schrest (1994) In summary, IMO is about identifying and satisfying the wants and needs of employees as the initial condition to satisfy wants and needs of customers (Gronroos, 1982)

For internal aspects of organizational performance, such as employee retention (Tansuhaj, Wong & McCullough, 1987; Comm, 1989; Berry & Parasuraman, 1991), employee motivation and morale (Piercy, 1995; Van & Bekkers, 1995), employee satisfaction (Piercy, 1995; Bowen, 1996) and organizational commitment (Stauss & Schulze, 1990; Piercy & Morgan, 1990; Berry & Parasuraman, 1991) Internal marketing orientation (IMO) has implications, as well as for external aspects of performance; for example service quality (Gronroos, 1981), customer satisfaction (Piercy, 1995) and finally, financial performance (Tansuhaj, Randall & McCullough, 1988; Crawford & Getty, 1991)

The managerial behaviors have categorized in a manner consistent with current marketing thinking; in particularly external market orientation (Kohli & Jaworski, 1990) allows IMO to be viewed as the internal equivalent to market orientation (Stauss & Schulze, 1990; Wasmer & Brunner, 1991; Piercy, 1995)

in the external context As such, IMO involves the generation and dissemination information (Tansuhaj, Randall & McCullough, 1988; Piercy, 1995; Reynoso & Moores, 1996), internal communications to the wants and needs of employees, and the design and implementation of appropriate responsiveness (Sasser & Arbeit, 1976; Berry & Parasuraman, 1991; Lukas & Maignan, 1996) to meet these desires The behavioral dimensions of IMO are discussed in more detail below:

2.1.2.1 Internal Information Generation (IIG)

Informal information generation is about the needs and wants of staff in day to day, face-to-face interactions between managers and employees Information generation relates to employees’ perceptions of the inputs to their jobs, the outputs (what they receive) and the equity of this exchange (Lings & Greenley, 2005) Lings and Greenley (2005) have also identified three modes

of information generation They are formal written media, such as: questionnaires and job satisfaction surveys, formal face-to-face interactions, as interviews, and performance appraisals and meetings (Cobb, Samuels & Sexton, 1998)

The necessity to collect information about the internal environment has been identifiied by several researchers, for instance: Briscoe (1980); Gomez-Mejia (1988); Huseman, and Hatfield (1990); Stauss, and Schulze (1990); Cobb, Samuels, and Sexton (1998); Johlke, and Duhan (2000) They acquiesce

generating information about exchanges of value in the internal market (Ewing

& Caruana, 1999), in particular what employees seek from their job, what they are prepared to give up to get them and what competitors are offering in terms

of rotational employment Segmenting the internal market based on differences

in the characteristics of employees in order to better identify the different needs

of these employees (Wasmer & Brunner, 1991; Piercy, 1995) The appropriate internal market information includes: information about important attributes of jobs, satisfaction of employees with their working conditions, the internal factors that influence employee satisfaction

2.1.2.2 Internal Communication (IC)

Communication means transferring information among people inside the organizations (Johlke & Duhan, 2000) Gronroos (1990), Boswell and Boudreau (2001) and Guest and Conway (2002) have mentioned that internal communications are central to the alignment of employees’ attitudes with organizational goals The more communication, the more wants and needs could be shared (Lings & Greenley, 2005) Communication between managers and employees is a part of the internal marketing mix (Tansuhaj, Wong & McCullough, 1987; Piercy, 1995) Besides, they stress the use of reports, presentations and formal meetings as effective tools support for communication In addition, Hurley (1998) also point out that good communication and response from mangers to employees, especially high levels of IMO, rapidly facilitate acceptance of organizational directives and behavior change in organization Therefore, within people in organizations, flow of information is very important On the other hand, relationship between employers and employees in communication has been shown to improve employee outcomes and performance, especially front-line service staff (Johlke

& Duhan, 2001) Consequently, in the internal market orientation context, information dissemination is particularly important; so that adapting to needs of the internal market, pertinent information has related to the internal market must be communicated for an organization (Kohli & Jaworski, 1990)

2.1.2.3 Internal Responsiveness (IR)

Another category of IMO is involves the response to the information among employees together about the wants and needs of individual employees (Carter & Gray, 2007) Huseman and Hatfield (1990) have stated that internal response could make some tangible social benefits such as status, recognition for good work and sense of accomplishment Therefore, managers need to consider both the financial and social wants and needs of their employees (Tansuhaj, Wong & McCullough, 1987)

Briscoe (1980) has also suggested some ways for internal response like improving individual reward standard, changing working hour, provide flexible physical settings and providing training These activities belong to job design

In addition, according to Huseman and Hatfield (1990), equity theory brings a highly relevant insight to responsiveness in that the consideration must be given to the way employees evaluate their jobs in terms of inputs and outputs One of the most common applications for IMO information is to create job’s products, meeting the needs of employees and thus satisfying and motivating them, which is suggested by several authors: Sasser, and Arbeit (1976); Stauss, and Schulze (1990); Berry, and Parasuraman (1991) Consequently, internal market research can identify how employees satisfied with their jobs, as well as managers can respond by redesigning jobs to improve these outputs or change perceptions about them (Sasser, & Arbeit, 1976; Lings, & Greenley, 2005)

2.1.3 Employee commitment (EC)

Dordevic (2004) has pointed out that the commitment of employees is an important issue because it may be used to predict employee’s performance, absenteeism and other behaviors It reflects the extent employees identify with organization Thus, high levels of commitment have led to several favorable organizational outcomes (Dixit & Bhati, 2012) There are some studies showed that it is important to understand employees’ behavior for measuring employee commitment In the nutshell, employee commitment encourages team and individual to get goals, which in turn binds each member to the organization (Jaworski & Kohli, 1993) In addition, Muthurveloo and Rose (2005) have stated that the organizational commitment is the collective of employee commitment that includes: work commitment, career commitment and organizational commitment, which could support higher productivity Besides, the influence of organizational commitment on turnover intentions and on job performance (Chughtai & Zafar, 2006) Organizational commitment leads to positive organizational outcomes, which is examined by Muthuveloo and Rose (2005) Nawab and Bhatti (2011) have pointed out that job satisfaction has the highest impact on high employees’ commitment and productivity of organization

On the other hand, a positive correlation between organizational commitment and job performance (Meyer, Paunonen, Gellatly, Goffin & Jackson, 1989), or highly committed employee should have a weak intention to leave organization, in comparision with low commitment has also been associated with low levels of morale (DeCottis & Summers, 1987) non committed employees, or negative relationship between turnover intentions and organizational commitment (Mowday, Porter & Steers, 1982) As a result,

employees who are committed to their respective organization, are not only more likely to remain with the organization, are but also likely to exert more efforts on behalf of the organization and work towards organization's success;

so they also exhibit better performance that the uncommitted employees

Finally, employee commitment can bring benefits to organization; for instance, it can improve performance and motivation (Mowday, Steers & Porter, 1979); reduces absenteeism (Steers & Rhodes, 1978; Mathieu & Zajac, 1990), and less turnover absenteeism (Cotton & Tuttle, 1986) in order that resulting in sustained productivity; thus increasing organization productivity (Schuler & Jackson, 1996) Mowday, Steers and Porter (1979) have pointed out that employees with high level of organizational commitment provide a secure and stable workforce; thence providing competitive advantage to the organization (Meyer & Allen, 1997; Colquitt, Lepine & Wesson, 2009)

2.2 Hypotheses and Research Model

2.2.1 Hypotheses

Internal information generation and its effect on employee commitment

Belonging to one of the researches of Lings and Greenley (2005), which focus on the need to corroborate the possible causal order of the dimensions of IMO Deshpande and Zaltman (1982); Kohli and Jaworski (1990); Diamantopoulos and Hart (1993); and Slater and Narver (1995) have implemented several studies about marketing orientation (MO) with three components of MO: generation, dissemination and response to the information that have related to each other following a causal order, have derived from internal information generation (IIG), which subsequently influences

information dissemination, and finally the response made to the information generated In the same paper series, internal information generation has affected the response or action, taken by managers towards their contact personnel, regardless having first been distributed or communicated (Deshpande & Zaltman, 1982; Lings & Greenley, 2005) We therefore establish as hypothesis to be tested:

H1: Generation of internal information positively and considerably influences on employee commitment

Internal communication and its effect on employee commitment

Communication can be understood into the implicit communications that impact service delivery; as well as the explicit communications that employees receive The role of implicit communications on employee behavior

is not straightforward Often the message communicated to employees by their organizational context is not directly related to explicit messages

Gudergan, 2008) The internal communications have represented by IMO are reported to enhance the association that employees feel for the firm and its services (Bell, Menguc & Stefani, 2004) Communication has been particularly important in influencing employee behavior such as service orientation (George, 1990) and loyalty to the banks (Ozment & Keller, 1999) Both attitudinal and behavioral elements are comprised in loyalty, as well as have manifested in affective commitment (attitudinal loyalty) and staff retention (behavioral loyalty) Affective commitment is particular interest, because it creates changes in employee behavior towards customers Once employees like their jobs and feel a sense of affection towards their employers; consequently,

more likely to display positive behaviors towards customers In addition, affective commitment is understood as liking for the employer and expected to foster employee identification with the organization, reduced dysfunctional behaviors, and increased behaviors compliant with organizational strategies (Piercy & Morgan, 1990; Ramaswami, 1996) In contrast, behavioral loyalty may arise from perceived lack of opportunities to leave or simple inertia, and

manifest only as staff retention The loyalty level may decrease as employees feel trapped in a job that they do not enjoy, working for employers whom they are unsympathetic As a result, we hypothesis the following:

H2: Internal communication (represented by IMO) has an appreciable positive impact on employee commitment

Internal Responsiveness and its effect on employee commitment

Information responsiveness of internal market may take several forms Appropriate feedbacks have been suggested as the design of careers (Sasser, & Arbeit, 1976; Berry, & Parasuraman, 1991), financial rewards (Sasser, & Arbeit, 1976) and the administration of non financial rewards and desirable outcomes (Varey, 1995), including management consideration (Johnston, Parasuraman, Futrell, & Black, 1990), training (Van, & Bekkers, 1995), recruitment (Tansuhaj, Randall, & McCullough, 1988) and targeted internal communications (Stauss, & Schulze, 1990; Piercy, 1995) The internal marketing literature has showed that internal responsiveness impacts several aspects of employee commitment This is suggested to improve employee motivation and retention (Gronroos, 1981; Berry, & Parasuraman, 1991), increase employee satisfaction (Piercy, 1995) and foster employee commitment

to the organization (Stauss, & Schulze, 1990; Berry, & Parasuraman, 1991) In this way, we justify the following hypothesis:

H3: Internal responsiveness has a positive impact on employee commitment

Employee commitment and its effect on customer-oriented behavior

According to previous surveys, there are antecedents of commitment, such as demographics, met expectations, relationships with managers, relationships with colleagues, pay and reward, job satisfaction, promotion (Hayday, 2009) Job satisfaction is an important component of commitment, but should not be perceived as equivalent to it, so commitment has more positive outcomes to employee performance for the organization In addition, customer-contact employees have higher job involvement, have the compatibility about interests and values of employees and the organization, have sense of mutual obligation between the employees and the organization, and feel satisfaction about job which they work, as well as the belief that the employee is engaged in a fair economic exchange, and tend to focus on job-related activities such as thinking of ways to service customers better rather than wasting time on non job-related activities (Cohen, 1995; Rosin, & Korabik, 1995) Thus we believe that higher employee commitment would lead

to higher customer-oriented behavior Consequently, we proposed:

H4: Employee commitment would positively affect customer-oriented behavior

2.2.2 Conceptual Model

To answer the research question, the research model is conceptualized in order to understand the proposed relationship between enabling factors to the

customer-oriented behavior as shown Figure 2.1 (Lings, & Greenley, 2005;

Hwang, & Chi, 2005)

Figure 2.1 The proposed model of critical factors to customer-oriented behavior

Customer-Employee commitment

IMO

H1

H2

H3

CHAPTER 3 RESEARCH METHODOLOGY

3.1 Research Design

3.1.1 Research Context and Method

The banking service sector in Ho Chi Minh city and in particular the COB displayed by contact customer employees, was the focus of this study (Lanjananda, & Patterson, 2009) While the main study involved a structured questionnaire with a final sample of 250 front-line staff, including: tellers, and individual customer relationship officers (CROs), the data were selected, sifted through qualitative study prior to conducting main study by quantitative survey (Bolton, & Bronkhorst, 1991; Bolton, 1993)

of the entity being studied, and thus to be able to adapt more precisely the scale

of measurement of IMO's components affecting EC, and EC’s antecedents impact COB Again, the purpose was to examine the conceptual model for face validity and to gauge whether there were other key constructs that should be included in the model Moreover, personal interviews were conducted in selected bank, namely SeABank – Ho Chi Minh branch; especifically,

preparatory interviews were carried out with two of its branch managers, and 5 tellers; furthermore, we also directly interviewed some tellers and individual customer relationship officers (CROs), working in other banks located in Ho Chi Minh city As a result of this study, we opted to differentiate the obtaining

of information into two dimensions, formal and informal generation, as proposed by the literature (Mohr, & Nevin, 1990; Johlke, & Duhan, 2000) All interviews were conducted in Ho Chi Minh branches, and were recorded and later transcribed (Hui & Triandis, 1985) This phase resulted in modification to several questions that supported the validity of the model specification (Lanjananda, & Patterson, 2009)

Pretest of instrument

The questionnaire was also pre-test using concurrent and retrospective with interviews (Bolton, & Bronkhorst, 1991; Bolton, 1993), as well as pre-test methods prior to the administration of surveys The purpose of the pre-test study was to assess question meaning, and the applicability of scale items (Lanjananda, & Patterson, 2009) Interviews were conducted with tellers and individual customer relationship officers (CROs), who were working at SeABank- Ho Chi Minh branch There were modifications to the scales, including items respective with questions for fitting constructs and data collecting purpose

Main study

The final questionnaire survey was tuned fully and administered following qualitative testing The questionnaire was first translated from the initial language (English) into Vietnamese The results from Vietnamese

questionnaires that were collected, then translated back into English (Hambleton, 1993), so that supporting data process and reporting results through running SPSS A non-probability convenience sampling procedure was used where all tellers and individual customer relationship officers (CROs), working at selected banks were approached The average agreement rate across all five banks was 250 tellers and individual customer relationship officers (CROs) with 100 percent rate of amount of sample The 250 respondents were contacted and yielded 250 usable questionnaires for the final analysis

3.1.2 Sample selection and data collection

This study employed scales from previous studies to ensure their validity and reliability (Lei, & Chen, 2011) Based on the literature review addressed in the previous chapter, the questionnaire was developed The questionnaire consisted of five sections in order to covering objectives of the research Considering the purpose of the exploratory study, the convenience sampling method was used to collect data The questionnaire was sent to banks located in Ho Chi Minh Estimated sample size was 250 questionnaires The people responded questionnaires of the survey, were front-line employees who directly contacted with customers, including tellers, individual customer relationship officers (CROs)

Finally, to be able to investigate the relationship between internal marketing orientation and employee commitment; as well as influence from employee commitment to customer oriented behavior; thence exploring impacts of IMO's antecedents on COB; therefore a survey was developed and conducted; namely, 250 samples were directly sent to 5 banks at HCM, such as: SeABank, Kien Long Bank, SCB Bank, EximBank, and Vietcombank All

branches were contacted to gather requisite information pertaining to IMO, EC, and COB After almost 1 month, questionnaires were completely filled out by the employees, constituting 100 percents, 95 percents, 90 percents, 91 percents and 94 percents; respectively responsed rates in seABank, Kien Long Bank, Eximbank, SCB bank, Vietcombank, with an overall responsed rate of 95 percent meaning 237 samples

3.2 Measurement of Constructs

All measures were 7-point Likert-type scales, ranging from “strongly disagree” value as “1” to “strongly agree” value as “7” (Lings & Greenley, 2005) Each of the variables used to access was based on the measurement as follows: Customer-oriented behavior had 5 items (Husna & Ong, 2013) These items which used to access customer-oriented behavior of the extent to which customer-contact employees satisfied customers’ needs were developed based

on Brown, Mowen, Donavan and Licata (2002) IMO was represented by 3 components: Internal Information Generation, Internal Communication, and Internal Responsiveness; in which, Internal Information Generation included 5 items, Internal Communication had 5 items, and Internal Responsiveness also consisted 5 items (Sahi, Lonial, Gupta & Seli, 2013) Employee commitment included 5 items (Hayday, 2009) Each item corresponded with one question, and 25 items of five constructs were obtained from literature as in Table 3.1 below:

Table 3.1 Measures underlying the constructs

Constructs and measurement items

Internal Information Generation (IIG)

IIG1: Bank conducts survey with employees at least once a year to assess the

quality of employment

IIG2: Management frames questionnaires to identify your wants and needs

IIG3: Managers frequently talk with the staff about their work

IIG4: Staff welfare is looked after satisfactorily by human resource

development department

IIG5: Ample opportunities are available for informal talks among different

depts

Internal Communication (IC)

IC1: You are friendly with other employees in Bank

IC2: Managers make sure that employees are happy with their jobs

IC3: Keeping employees satisfied is as important as keeping customers

satisfied

IC4: Organization treats all employees in a way they are valued

IC5: Organization tries to accommodate different personal needs of

employees

Internal Responsiveness (IR)

IR1: Your salary commensurate with work

IR2: Managers develop mutual trust and respect with employee

IR3: Managers develop a work climate of helpfulness

IR4: Employees are regularly sponsored for various need-based training

courses

IR5: Employees have enough opportunities for advancement

Employee Commitment (EC)

EC1: I understand how my work contributes to the organization's goals and

objectives

EC2: I think this is a good place to work

EC3: Changing my career would be difficult for me to do now

EC4: I feel I have the necessary skills to provide good customer service

EC5: I find that my values and the organization’s values are very similar

Customer-Oriented Behavior (COB)

COB1: Achieve transaction goals by satisfying customers

COB2: Counseling and offer products best suited to the customer’s needs

COB3: Answer customer's question about banking service correctly

COB4: Frequently calls to remind customers, get customers to discuss their

needs

COB5: Figure out the right way to solve non related problem with our

specialization when customers require

CHAPTER 4 RESULTS

4.1 Descriptive Statistic

Trochim and Donnelly (2005) stated that descriptive statistics were used

to describe the basic features of collected data in the study They provided simple summaries about the sample and the measures Together with simple graphics analysis, descriptive statistics formed the basis of virtually every quantitative analysis of data (Wigginton & Abecasis, 2005) Trochim (2006) also pointed out that descriptive statistics were used to present quantitative descriptions in a manageable form In a research study we might have lots of measures, or we might measure a large number of people on any measure, descriptive statistics helped us to simply large amounts of data in a sensible way (Trochim & Donnelly, 2005) Each descriptive statistic reduced lots of data into a simpler summary

4.1.1 Description of the survey data

We applied the frequency distribution and average values to describe the sample data, and to describe the agreed extent of the banks that attend to survey for the variables given in the questionnaire

In process of the investigation, 250 questionnaires were given to five banks, which in the survey were the joint-stock commercial banks 250 questionnaires were on paper, and were investigated by directly distributed form to the survey participants, for example: tellers and CROs Percentage coordinated investigation under way in person rather was quite high, accounting for 95% of the 250 questionnaires given out It was equivalent 237 completed questionnaires, only 13 questionnaires were not full filled, because

the work of some survey participants were very busy, as well as some survey participants were unwilling to cooperate, so some questionnaires collected but did not answer, or incompletely answer, even just reply to complete the task

4.1.2 Descriptive data in the questionnaire

4.1.2.1 Descriptive statistic for demographic variables

Figure 4 1 Gender Ratio of the Banks Participating in the Survey

Female was always outnumber the majority of personnel in the banking industry, in particularly, for customer service department such as teller department Therefore, not exception, in selected banks for survey, the teller department almost were women, percentage of male was surveyed, primarily working in CRO department For this reason, the gender ratio as shown in above Figure 4.1, 173 participated female, and 64 participated male, accounted for 73% of female and 27% of male in the survey of 237 people, respectively

Female 73%

Male 27%

Gender

Figure 4.2 Education Level Ratio of the Banks Participating in the

Survey

Figure 4.2 reflected the current reality and specific of the banking sector

in particularly, and job recruitment in other industries in generally in Vietnam Education level of the survey participants was mostly college-university, accounted for 85% of participants, compared with 14% of postgraduate and 1%

of under college Degree and diploma were mandatory condition for the banking industry Otherwise, except the university bachelor's degree, individual customer relationship officers had to gain law diploma, or the securities practice certificates depending on each field in the bank, when they wanted to draft loan contracts, or consulted and provided services to their customers

Under College 1%

College - University 85%

Postgraduate 14%

Education Level

Figure 4.3 Working Time Ratio of the Banks Participating in the

Survey

For working time factor, surveyed banks tended to select young people following market to create the first impression to customers, who would face to face, contacted and worked with their customers in front-line service department as teller and CRO These were shown out in Figure 4.3; respectively, with 48% working time at 1-3 years, next 31% working time at more than 3 years and finally 21% working time at less than 1 year

Through analysis descriptive statistics of the indicators on gender, level

of education and working time, we saw that the surveyed banks include all necessary characteristics for the study These characteristics suggested that the survey sample might be representative of the population of the banks operating

in Ho Chi Minh City

Less than 1 year 21%

1 - 3 years 48%

More than 3

years

31%

Working Time

4.1.2.2 Descriptive Statistics of the Constructs

Table 4.1 showed an overview of the collected data from banks Clearly, each scale consists of 5 items, each items corresponded to one question in the questionnaire In addition, three measure of the center of a distribution were commonly used: mean, median, and mode (Leech, Barrett & Morgan, 2005) Moreover, the table drawn also out the most common answer was chosen under Likert scale, as well as frequency of this answer, and which percentage of this answer accounted in correlation with the total at 100%, corresponding to 237 samples

Table 4.1 Descriptive Statistics of the Constructs

Construct Item N Mean Mode Frequency

(Mode)

Percent (Mode)

Std Deviation

Range value = (Maximum - Minimum) / n = (7-1) / 7 = 0.86

Table 4.2 Meaning of Mean

Table 4.3 Rating the Acceptance for Constructs of Banks

Communication

IC1

237

5.6667 Agree IC2 4.9283 slightly agree

(IC) IC4 4.7722 slightly agree

IC5 4.7300 slightly agree Internal

Basing on results from Table 4.3, level of agreement to items of impact

on construct was highly uniform The majority of rating fell into range

"partially agree" and "agree" with the statements that presented in questionnaire Only one item was assessed as "undecided"; this is item: "Bank conducted survey with employees at least once a year to assess the quality of employment" Due to the overall review of the 5 banks, included some banks have regularly conducted surveys once a year, but banks did not regularly conduct surveys, thereby affecting the overall results that "undecided" From high acceptance on items, which showed that most of respondents endorsed the influence of items on the scale and these items belonged to this scale

4.2 Results

4.2.1 Reliability and Validity