Sales management control strategies in banking strategic fit and performance impact

Florian Mueller Sales Management Control Strategies in Banking GABLER RESEARCH Florian Mueller Sales Management Control Strategies in Banking Strategic Fit and Performance Impact RESEARCH Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the Internet at http://dnb.d-nb.de Dissertation EBS Universität für Wirtschaft und Recht i Gr | EBS Business School | Wiesbaden, 2010 D 1540 1st Edition 2011 All rights reserved © Gabler Verlag | Springer Fachmedien Wiesbaden GmbH 2011 Editorial Office: Stefanie Brich | Anita Wilke Gabler Verlag is a brand of Springer Fachmedien Springer Fachmedien is part of Springer Science+Business Media www.gabler.de No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder Registered and/or industrial names, trade names, trade descriptions etc cited in this publication are part of the law for trade-mark protection and may not be used free in any form or by any means even if this is not specifically marked Cover design: KünkelLopka Medienentwicklung, Heidelberg Printed on acid-free paper Printed in Germany ISBN 978-3-8349-2653-1 Dedicated to my parents and Lisa Acknowledgements I would like to express my sincere gratitude to my doctoral supervisor Prof Dr Andreas Hackethal for his academic guidance and support throughout my three and a half years as a doctoral candidate at the European Business School (ebs), International University Schloss Reichartshausen He gave me the decisive, intellectual impulses and freedom for the successful completion of this work Without his profound advice, encouragement, and trust this dissertation would not have been possible I am deeply grateful to him Furthermore, I would like to sincerely thank Prof Dr Utz Schäffer for agreeing to provide the second opinion on my dissertation as well as his time and interest in my research His thought-provoking, scientific counsel significantly improved this thesis I am also profoundly thankful to the European Business School, a truly distinct academic institution, its excellent professorate, and the entire ebs community They have laid the foundation for my academic development and created a highly supportive and inspiring research environment Especially, I would like to thank all the members of the HCI Endowed Chair of Financial Services and its sponsors who have contributed to my work in many ways My further appreciation belongs to Dr Tobias Weigl and Henning Syllwasschy for countless hours of constructive discussions as well as their honest and thoughtful feedback Their intellectual sparring and advice was inestimable for the development and refinement of this work Moreover, I would like to thank my employer Bain & Company for the support during my leave of absence and especially the financial services partner group for their valuable input and experience sharing In particular, I am indebted to Dr Rasmus Wegener and Dr Thomas Gumsheimer for their outstanding support and mentorship VIII Acknowledgements Lastly, I would like to express my gratitude to my parents, sister, and friends Without the love and belief of my parents Undine and Jürgen none of this would have been possible They have been a constant source of strength and support on my path of life My special thanks belong to my wife Lisa She not only endured the ups and downs of my dissertation venture, her love, patience, and encouragement kept me going when my steps seemed to falter Florian Mueller Table of Contents List of Figures XIII List of Tables XVII List of Equations XIX List of Abbreviations and Symbols XXI Introduction 1.1 Problem Definition 1.2 Research Objectives and Contribution to Literature 1.3 Structure of Analysis Banking in Germany 11 2.1 Overview of the German Banking Market 11 2.2 The Three Pillars of the German Banking System 15 2.2.1 Private Commercial Banks 16 2.2.2 Savings Bank Group 17 2.2.3 2.3 Cooperative Banking Group 19 Segmentation of the Banking Industry 21 2.3.1 Retail Banking 21 2.3.2 Private Banking 23 2.3.3 Corporate Banking 25 2.4 Current Development 27 2.5 Summary 35 Terminological, Conceptual, and Theoretical Basics 3.1 Strategy and Strategic Management 3.1.1 3.1.2 39 39 Concept of Strategy 40 3.1.1.1 Evolution and Definition 40 3.1.1.2 Levels of Strategy 45 3.1.1.3 Banking Business Strategy 47 Strategic Management 50 3.1.2.1 50 Evolution and Definition 384 Index Environmental Uncertainty 83, 108, 123 Epistemic Relationships 178 Equifinality 65 Equity 19 Equity Arrangements 83 Equity Fund 21 Euclidean Distance 237 European Banking Federation 29 Evaluation 67 Exogenous Variable 202 External Parameters Externally Oriented Planning 51 Extra-Konto 34 F Factoring Company 18 Fannie Mae Fee-based Business 27 Feedback 95 Financial Planning 25, 50 Financial Services Action Plan 31 Fit as Covariation 60, 62 as Gestalts 60, 62 as Matching 60, 62 as Mediation 60, 61 as Moderation 60, 61 as Profile Deviation 60, 62, 115, 122, 149, 233 Fit Model 8, 9, 60, 115, 122, 149, 266 Fixed Deposit 21 Fixed Salary 69 Forecast-based Planning 51 Index 385 Foreign Bank 16, 33 Formal Control 4, 67, 116, 121, 126 Formal Management Control 8, 70 Fortis Founding Entity 17 Fragmentation 13 Freddie Mac Free Savings Bank 18 FSAP see Financial Services Action Plan Function Fitting 203 G Generic Strategies 126 German Savings Bank Association 18 Germany 272 Getting In Stage 80 Gewährträgerhaftung see Guarantor’s Liability Giro Business 12 Glass-Steagall Act 11 Global Financial Crisis 273 Globalization 52 Goal Incongruence 96 Goodness-of-fit 201 Gramm-Leach-Bliley Act 11 Group Behavior 104 Guarantee Business 12 Guarantor’s Liability 17 H Halo Effect 73 Hardware 106 Harvard School 110 386 Index Hausbank 35 Hierarchy 83 High High Net Worth Individual 23 Hinting 80, 116 Housing Enterprise 12 Humor 80, 116 HVB Group 16, 37 Hybrid Governance Structures 83 Hybrid Mechanisms Bilateral 86 Unilateral 86 I Ideal Profile 233 Identity Principle 19 Incentive-based Solution 90 Incest Taboo 96 Indentitätsprinzip see Identity Principle Indicator Reliability 181 Industrial Task Environment 108 IndyMac Inequities 72 Influence 95 Informal Control 4, 67, 116, 121, 126, 133, 273 Informal Management Control 8, 78 Information Sharing .83 Information Systems 50 Information Technology 2, 8, 34, 106, 141 Information-based Solution 91 Informational Requirements 97, 139 ING-DiBa 17, 33 Initiation 70, 78 Index 387 Inner Model see Structural Model Input Control 67 Insolvency Law 30 Institutional Liability 17 Insurance Company 20 Interest 11 Interest Margin 27 Intrinsic Motivation 78 Investment Banking 11, 25 Investment Company 12, 20 Investment Fund Business 12 Involvement 102, 103, 117, 122, 126, 136, 213, 215, 249 IT see Information Technology IT Sophistication 8, 106, 107, 117, 126, 141, 213, 215, 252, 267 J Jackknifing 202 Joint Action 86 K Key Informant 167 Kidding see Humor Knowledge of the Transformation Process 139 L Landesbank 18, 29 Landsbanki LBS 18 Learning School 56 Leasing Company 18, 20 Legal Environment 29 388 Index Lehman Brothers Lending Business 11 Line of Business 7, 11, 21 Linear Structural Relations 177 Liquidity .21 Liquidity Control 25 Liquidity Management 25 LISREL 201 Loans 11 Locus of Authority 105 Long-range Planning 51 Long-term Goals 72, 76 Long-term Relationships 94 M Maladaptation 85 Management 102, 105 Management Incompetence 72 Market Governance 137 Market Trading 110 Markets 97 Markets in Financial Instruments Directive 31 Martinsa-Fadesa Mathematical School 110 Measurement Model 178 Mediating Force 43 Merrill Lynch Message .104, 139 MiFID see Markets in Financial Instruments Directive Military .40 Minimum Capital Requirement .31 Monetary Transaction 21, 25 389 Index Money Market Fund 21 Monitoring .67 Moral Hazard 88 Mortgage Bank 20 Mortgage-backed Derivatives N Napoleonic Wars 17 Net Assets 22 Net Income 22 New Industrial Economics 110 New Institutional Economics 83 Nobel Memorial Prize in Economic Sciences 110 Normative Requirements 96, 139 O Object of Experience 7, 11 Obligation 12 Observation Language 178 Old Testament 40 Opportunity Costs 83 Organic Solidarity 99 Organization-specific Characteristics .101, 126, 131, 148, 158, 201, 213, 233 Organizational Centralization 8, 105, 117, 126, 143, 252, 267 Organizational Characteristics 3, 5, 9, 266, 271 Organizational Commitment 81 Organizational Control Theory6, 8, 82, 95, 124, 130, 132, 135, 139, 142–144, 146, 148, 158 Organizational Culture 8, 102, 122, 132, 139, 267 Organizational Failures Framework 96 Organizational Goal Formulation 52 Organizational Identification 81 390 Index Organizational Structure 22, 23, 105 Organizational Task Environment 108, 118, 144 Outcome Measurability 93 Outcome-based Control 66, 74 Outer Model see Measurement Model Output Control 67, 74 Outsourcing 2, 34 P Partial Least Squares 177, 201 Participation .105 Path Coefficient 202 Pattern 115 Perceived Competition 111 Perfect Competition 110 Performance .9, 111, 118, 121, 123, 126, 158 Performance Ambiguity 96 Performance Evaluation Problem 85, 139, 142 Period of Good Conduct 30 Personal Banking 22 Personal Insolvency 30 Perspective 115 Plan 115 Planning Framework 52 Planning School .55 Ploy 115 PLS see Partial Least Squares Portfolio Analysis 51 Position 115 Positioning School 55 Positivist Agency Theory 89, 124 Postbank 17 391 Index Power 95 Power School 56 Pre-test 167 Predictability 8, 109, 118, 126, 148, 225, 226, 230, 258, 268 Prices 97 Principal Broking Services 11 Principal-Agent Goal Conflict 93 Principal-Agent Model Simple 91 Principal-Agent Relationship 88 Principal-agent Theory 89, 124, 128, 130, 133, 135, 137, 140, 141, 143–145, 148, 158 Private Banker 16, 23 Private Banking 7, 21, 23, 34, 37 Private Banking Advisor 23, 38 Private Client 21 Process Control 67 Product Complexity 131 Professional Control 3, 79, 122, 126, 133, 138, 139, 205–207, 210, 211, 213, 215, 218–221, 225, 226, 229–231, 242, 244, 245, 248–251, 256–258 Profit Contributed 112 Profitability 112 Provisions 83 Public Bank 1, 12 Public Insurance Company 18 Q Quantum Change 65 Questionnaire 165 R Races 110 392 Index Raiffeisenbank 19 Rationalism 42 Receiver 104, 139 Refinancing 29 Regional Bank 16 Regional Principle 18, 37 Regression Analysis 201 Regression Models 51 Regular Insolvency 30 Regulatory Environment 29, 38 Regulatory Requirements 106 Relationship Banking 35 Relationship Establishment 80 Research Framework 122 Research Question Residual Debt 30 Residual Income 112 Resource Adequacy 131 Resource Allocation 51 Response Rate 168 Responsibility 70, 78 Responsiveness 104 Retail Banking 7, 21, 33, 34, 37 Return on Assets under Management 112 Risk Aversion 92 Risk Sharing 87 Rivalry 110, 118 Rules 97 Rules of Correspondence 178 S Safe Custody Business 11 Index 393 Safeguarding Problem 84, 139 Sal.Oppenheim .34 Sales and Market Share Effectiveness .112 Sales Management Control 3, 8, 39, 66, 116, 126, 131, 141, 267 Sales Management Control IT-system 106 Sales Management Control Strategy 158, 201, 206, 213, 225, 233 Sales Organization Effectiveness .112 Sales Organization Outcomes 8, 112, 123, 126, 149, 234, 238 Sales Orientation 39 Salesperson Behavioral Performance 8, 113, 119, 123, 126, 149, 235, 238 Salesperson Outcome Performance 113, 119, 126, 150, 235, 239 Salesperson Performance 113 Sample Average Total Assets 171 Commercial Banks 173 Credit Cooperatives 174 Customer Consultant Sales Support Ratio 172 Customer Consultants 172 Distribution Germany 175 Full Time Employees 171 Geographical Distribution 175 Sales Support 172 Savings Banks 175 Sectors 169 Segments 169 Sampling 167 Savings 21 Savings Bank 14, 17, 23, 29 Savings Bank Group Schools of Strategic Management 54 Scientific Object SEB 17 394 Index Securities Depository .12 Segmentation 22 Selbsthilfe see Self-Aid Selbstverantwortung see Self-Responsibility Selbstverwaltung see Self-Administration Self Control 3, 67, 78, 116, 122, 126, 140, 205–207, 210, 211, 213, 215, 218–221, 225, 226, 229–231, 242, 244, 245, 248–251, 256–258 Self-Administration .19, 36 Self-Aid 19, 36 Self-Interest 83 Self-Responsibility 19, 36 Seller’s Market 3, 35, 51 Selling Orientation - Customer Orientation 188 Sender 104, 139 Senior Citizen 35 Sense of Ownership 103 Service Mandate 18, 37 Service Provider 34 Settling In Stage 80 Signals 99 Significance 202 Small Group Control 79 SmartPLS 201 Social Control 67, 79 Social Exchange Theory 95 Social Power 95 Social System 104 Socialization 99 Socialization Process 79, 97 Sociology 102, 105 SOCO see Selling Orientation - Customer Orientation Software Applications 106 Index 395 Sparda-Banken 34 Special Bank 12, 33, 36 SPSS 201 Standard Operation Procedures 67 State Aid Complaint 29 State Guarantee 29 Stocks 21 Stone-Geisser-Criterion .203, 205 Strategic Control .52 Strategic Management 8, 39, 50, 52, 115 Strategic Planning 51 Strategy 8, 39, 40, 115, 126 Advice-oriented Strategy 49, 115, 122, 126, 243 Business Strategy 45, 46, 122, 126 Classical Definition .41 Collective Strategy 45 Corporate Strategy 45, 122 Deliberate Strategy 43 Emergent Strategy 43 Focus Strategy 48 Functional Strategy 122 Generic Strategy 48 Hybrid Strategy 49 Intended Strategy 43 Levels of Strategy 45 Operational Strategy 45, 46 Realized Strategy 43 Sales-oriented Strategy 49, 115, 122, 126, 129, 243 Strategy as Pattern 43 Strategy as Perspective 44 Strategy as Plan 43 Strategy as Ploy 43 396 Index Strategy as Position 43 Strategy Evaluation 52 Strategy Formulation 52 Strategy Implementation 52 Structural Equation Modeling 176 Structural Model 178, 201 Stuck-in-the-middle 49 Study Cross-Sectional 272 Longitudinal 272 Sub-prime Mortgage Market 1, 265 Subjectivity 73 Surrogate Loan 25 Switching Cost 2, 34 SWOT Model 54 Systematic Random Sample 168 T T-Test 201 Tanach see Old Testament Task Programmability .93, 128 TCA see Transaction Cost Theory Telephone Interview 169 Theoretical Framework 8, 122, 126 Theoretical Language 178 Three Pillars 15 Time Lag of Output Realization 128 Total Assets 33 Traditions 97 Training Programs 67 Transaction Cost Analysis see Transaction Cost Theory Transaction Cost Economics see Transaction Cost Theory 397 Index Transaction Cost Theory 6, 8, 82, 83, 124, 129, 132, 134, 137, 139, 142–145, 148, 158, 266 Transaction Costs 83 Transformation Process 75 Transparency 2, 34 Treasury 26 Trend Analysis 51 U Ultra High Net Worth Individual 23 Uncertainty 126 Underwriting Business 12 UniCredit Group 16 Unitary Culture 103 Unity 86 Universal Bank 2, 7, 11, 12, 35 V Variable Compensation 69 Versorgungsauftrag see Service Mandate Volksbank 19 W Wage Agreement 260, 274 Warranties 12 Wars of Attrition 110 Wealth Management 23 Wealthy Private Client 21 Welfare 110 WestLB WGZ Bank 20 398 Index Work Flow .106 Work-Life Balance 80 World Economy .273 ... Mueller Sales Management Control Strategies in Banking GABLER RESEARCH Florian Mueller Sales Management Control Strategies in Banking Strategic Fit and Performance Impact RESEARCH Bibliographic information... corporate banking institution’s sales management control strategy be designed in view of its internal and external parameters in order to increase the individual and organizational performance? ... National Margins (Net Non-Interest Income/Net Interest Income) in Banking 1990-2003 Figure 2.13: 28 28 Development of National Margins (Income before Tax/Total Assets) in Banking 1990-2003