Ambidexterity as a Key Factor in Banks’ Performance: A Marketing Approach

TL;DR: Based on an ambidexterity approach and using data from 384 Spanish bank branch managers, the results of as mentioned in this paper confirm that market orientation facilitates the development of dynamic exploratory...

Abstract: Based on an ambidexterity approach and using data from 384 Spanish bank branch managers, the results of this study confirm that market orientation facilitates the development of dynamic exploratory...

Summary

Introduction

• Based on an ambidexterity approach and using data from 384 Spanish bank branch managers, the results of this study confirm that market orientation facilitates the development of dynamic exploratory capabilities in bank branches and these, in turn, influence their capacity to exploit knowledge through marketing capabilities, leading to higher performance.
• Ambidexterity, Market orientation, Marketing capabilities, Dynamic capabilities, Performance, also known as Keywords.
• Within this idea, ambidexterity starts from the premise that organisations capable of reconciling the exploration/exploitation paradox – or put another way, capable of exploiting their knowledge and, at the same time, exploring new domains – will be able to generate organisational results sustainably (Judge and Blocker 2008; Kouropalatis et al. 2012).

Approach

• Market orientation is now firmly established as a central construct in the marketing literature (Theodosiou et al. 2012).
• Many authors advocate an eclectic consideration of the two perspectives, which they consider to be perfectly complementary (Kolar 2006; Zhou et al. 2008).
• Kohli and Jaworski’s (1990) original model was extended by Jaworski et al. (2000), who suggested that there are two complementary approaches in the notion of market orientation: the “market-driven” approach and the “market-driving” approach.
• This context therefore offers an ideal framework in which to respond to the abovementioned recent calls.
• In this case exploration capabilities serve this function.

Capabilities

• Having recognised the antecedent influence of market orientation on the adaptation of exploration and exploitation capabilities, the authors must now consider the question of what specific capabilities will enable this dual function to be carried out in bank branches.
• Undoubtedly, through certain product/service, pricing, channel management and communication actions, marketing capabilities enable the direct operationalisation of the strategic approach linked to market knowledge management and satisfying customer needs on which the market orientation is grounded (Vorhies and Morgan 2005).
• These arguments lead us to propose the following hypotheses: H1.
• Market orientation relates directly (and positively) to explorative dynamic capabilities at bank branch level.

Ambidextrous Capabilities and their Influence on Branch Performance

• Capabilities represent a set of knowledge, experiences and skills needed to develop a task or activity, and involve complex patterns of coordination and cooperation among individuals and resources (Grant 1996).
• As noted above, not all the bank branch’s organisational capabilities will generate superior performance (Day 1994).
• Exploitative and operational marketing capabilities are associated with efficiency, alignment, execution and implementation, and help to maintain the branch’s technical aptitude for serving and satisfying customers in their day-to-day business, thus improving organisational performance in the short term.
• In turn, explorative and strategic dynamic capabilities are associated with search, analysis, adaptation and flexibility, and help to maintain the firm’s aptitude to evolve by facilitating the creation, extension and modification of its substantive resources and capabilities (Lidija and Robert 2014; Jiang et al.

Sample Selection and Data Collection

• The research team signed a collaboration agreement with a major Spanish bank (one of the top six firms based on total assets according to Moody’s international rating agency), through which the authors were able to interview branch managers for this study.
• All the scales used to measure the constructs correspond to their theoretical definitions.
• In contexts of analysis such as this one, most researchers use subjective measures to evaluate business performance (Naman and Slevin 1993; Jarvis et al.
• On the basis of this scale, bank branch managers were asked to indicate their degree of satisfaction with the results for the following aspects of their activity: turnover, market share, profitability and global satisfaction.

Validity and Scale Reliability

• Confirmatory factor analysis was run using structural equation modelling to refine the scales with version 6.1 of the EQS multivariate software package.
• Thus, based on latent variable structures assumed for the different constructs, the initial models were refined by suppressing the least appropriate indicators.
• A summary of the results after the factor, reliability and validity tests is shown in Further tests were also carried out.
• Third, various ANOVA were run to confirm that sample characteristics do not affect the model constructs.
• The authors can therefore verify that the market orientation bank branches adopt generates an optimal strategic context for simultaneously fostering key capabilities in the development and implementation of an ambidextrous approach in the branch: exploratory dynamic capabilities (H1: λ = 0.674; t = 8.162) and exploitative marketing capabilities (H2: λ = 0.303; t = 4.664).

Theoretical implications

• Ambidexterity theory was the integrating theoretical frame for the proposed model.
• Managerial Implications Several recommendations for management can be drawn from the study’s findings, which provide theoretical and empirical support for the concern expressed by service sector managers, particularly in the banking sector, to identify key factors with which to successfully tackle the process of change resulting from an increasingly dynamic environment.

Figures

Table 2.

Table 3 shows the discriminant validity of the constructs considered, evaluated through AVE (Fornell and Larcker 1981). For discriminant validity, a construct must share more variance with its indicators than with other constructs of the model. When the square root of the AVE between each pair of factors is higher than the estimated correlation between those factors, as in our case, discriminant validity is ratified.

Figure 2 shows the model to be analysed. - - - - - - - - - - - - - - - - - - - - - - - - Place Figure 2 about here