UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Pham Thi Khanh Ngoc IMPACT FACTORS OF SALES EMPLOYEES’ CREATIVITY AND INNOVATIVE WORK BEHAVIOR IN BANKING INDUSTRY: EVIDENCE FROM VIETNAM ID: 22140030 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. Pham Ngoc Thuy Ho Chi Minh City – Year 2016 TIEU LUAN MOI download : skknchat@gmail.com Acknowledgement I would like to express my sincere acknowledge to my supervisor, Dr. Pham Ngoc Thuy for her insightful guidelines, valuable recommendations, and feedbacks during my research time. This research could not be possible without her evaluation in each stage which I spent.
My next appreciation also sends to participants of the survey. They are colleagues, friends in many banks in HCM city. They shared their time to assist me to answer the questionnaire. All their contributions have helped me to have the successful study.
1 TIEU LUAN MOI download : skknchat@gmail.com Abstract This study focuses on the impact of empowering leadership and challenge work environment on both sale employee’s creativity and innovative work behavior in Vietnamese banking industry. An empirical test with a sample of 370 sale employees in 15 banks in Ho Chi Minh City by means of structural equation modeling indicates a strong relationship between sale employees’ creativity and innovative work behavior. Moreover, the findings indicate that both empowering leadership and a challenge work environment are able to trigger sale employees’ creativity. Among this, sale employees’ creativity plays as a mediating variable in the relationship between empowering leadership, a challenge work behavior, and the employees’ innovative work behavior.
In general, this study contributes some suggestions for bank managers in finding out the appropriate methods to stimulate employees’ creativity and innovative work behavior in order to aim at a strong and sustainable business performance. Key words Empowering leadership, challenge work environment, creativity, innovative work behavior, banking industry, Vietnam. 2 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES 1. LITERATURE REVIEW AND HYPOTHESIS .1 Sale employee’s creativity and innovative work behavior .2 Empowering leadership and employee’s creativity .3 Challenge work environment and creativity .1 Procedure and Sample.
DATA ANALYSIS AND RESULT .2 Confirmatory Factory Analysis (CFA). 27 3 TIEU LUAN MOI download : skknchat@gmail. Implications for managers. Limitations and directions for future research.
Findings of preliminary research. Questionnaire in English. Questionnaire in Vietnamese. 47 REFERENCES 4 TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1: Borrowed research model.
11 Figure 2: Proposed research model. 11 Figure 3: CFA result. 28 Figure 4: SEM result. 32 LIST OF TABLES Table 1: Descriptive Statistics of Sample.
21 Table 2: Measurement scale. 23 Table 3: Means, standard deviations, and standardized CFA loadings of items. 30 Table 4: Structural paths in the model. 33 Table 5: Findings of preliminary research.
41 Table 6: Number of banks, and number of participated sale employees. 43 5 TIEU LUAN MOI download : skknchat@gmail. Introduction According to Drucker (1989), any organization pretemits to innovate that will become the ultimate reason for the decline and demise of existing organizations. Innovation is critical for all organizational long-term prosperity, particularly in dynamic business environment (Patterson, Kerrin & Gatto-Roissard, 2009).
Lin and Liu (2012) concluded that innovation is a crucial factor that brings the sustainable competitive advantages which organizations can use to deal with such a rapid-change business environment. So, what does the business start to innovate from? All innovations both arise from creative ideas of employees – a vital component of organization creativity that is the confirmation from many scholars (Woodman, Sawyer & Griffin, 1993). Therefore, stimulating the creative ability of employees is one of the decisive factors bring the succeed to an organization (Walton, 2003). Wong and Ladkin (2008) suggested that managers in service organizations should encourage their employees to be more creative.
Once organization can enhance their employees’ creativity, it can contribute to innovation and assist to the strong organizational survival and competitive advantage. West (2002) stated that creativity can be regarded as an important component of innovative work behavior. Although innovative work behavior is conducted by many scholars all over the world, research for this topic is also limited in Vietnam. Innovative work behavior in service jobs is the most important component to positively contribute to service organizations’ performance; bank industry is regarded as an example.
It is accepted that procedural innovation contributes to economic development 6 TIEU LUAN MOI download : skknchat@gmail. To reach to innovative work behavior in an organization, it is necessary for organizations to encourage creativity among employees. As the matter of fact, due to the specific characteristics of banking job, employees often comply with available regulated procedures, principles of government and internal banking without promoting their active ability and creativity in their job. Moreover, the policy that stimulates the innovation among banks has not applied popularly and strictly yet.
Apparently, a majority employee also passive in working, just only do the delegated tasks and make a change if any requests from supervisors. Consequently, employees have not made breakthroughs in their daily job and this influence seriously to banks’ performances. Therefore, finding the factors that improve the innovative work behavior of each employee to improve the quality of human resources is considered as a key solution for the banking sector to meet the requirements of new development in recent years. Subsequently, Edvardsson, Gustafsson, Johnson and Sanden (2000) recommended that the managers should make an environment and practices that are able to trigger creativity and innovation at the individual level.
Among this, sales employees are considered as a key labor force of banks in creating revenue. The main decisive human resource of the banking industry is the sales person or credit employees who deal with directly customers to bring the revenue to bank. However, workforce meets the development of the banking sector in recent years, but objectively recognized, quality of human resources is still low. The vast majority of bank employees still have "gaps" in terms of skills (attitude to work, team work skills, proficiency in 7 TIEU LUAN MOI download : skknchat@gmail.com English, ability to communicate) and knowledge (the knowledge of the financial sector, banks in general), as well as the flexibility in daily activities.
Therefore, this paper aims to indicate that the sale employee’s creativity is as the vital precondition for innovative work behavior in banking service organizations. In order to understand which factors can lead to sales employee’s creativity and innovative work behavior in banking environment. This study will be conducted to examine two factors: empowering leadership and challenge work environment. This study concentrates on examining creativity and innovation from banking sales employees’ perspective.
This study is limited to and examines the impact of two factors that are able to trigger sales employees’ creativity and innovation at the individual level, namely: (1) The impact of empowering leadership; and (2) The impact of a challenge work environment. In order to solve the research problem mentioned previously, this research has the following objectives: examine whether empowering leadership and challenge work environment are linked to sale employee’s creativity, which is turn is linked to sale employees’ innovative work behavior in Vietnamese banking industry. The objective is therefore to describe and explain the relationships between: empowering leadership and challenge work environment; and sale employees’ creativity and innovative work behavior in Vietnamese banking industry. 8 TIEU LUAN MOI download : skknchat@gmail.com This paper was conducted in some banks in Ho Chi Minh City.
The result of the research will be able to use for Viet Nam in general and for further references since Ho Chi Minh City is one of the biggest economic centers of Viet Nam. The interviewees will be sales employees who work in credit department and contact directly with customers. In general, this paper will assist human resource managers who are working in banks in decision making, as well as in finding out the appropriate and effective activities or strategies to maximize employee’s innovation. This paper has contributed to evaluation system of innovative work behavior level in banking industry in Vietnam, especially in dynamic city like Ho Chi Minh City.
Moreover, the result of this research would be reference source for researchers in banking human resource management. Literature review and hypotheses Although the literature on innovation in banking service is sparse, there seems to some agreement among researchers that using and implementing theories of innovation developed only on the basis of industry observations are inadequate for studying innovations in service organizations in general and in banking industry in specifically (Gadrey et al. Dejer (2004) employed the same concepts and tools that are used for innovation in manufacturing organizations for service innovation. Coombs and Miles (2000) suggest three ways of studying service innovation: “an assimilation approach”; “a demarcation approach”; and “a synthesis approach”.
The first way treats services as being similar to manufacturing; the second one states that service innovation is clearly various from innovation in manufacturing; and the third one 9 TIEU LUAN MOI download : skknchat@gmail.com suggests that service innovation brings to the forefront hitherto neglected elements that are relevant for both manufacturing and service industries. The demarcation and assimilation approaches are dominant in empirically based analyses of Dejer (2004). This study has followed the demarcation approach in order to study the drivers of innovation. Since the first reason for this choice is that banking industry is defined as a service sector, which has a totally different foundation from manufacturing (Parasuraman et al., 1985); the second reason relates to my focus on innovation at the individual level.
Specifically, I am interested in the drivers to service employees’ innovative behavior within a specific work role, which refers to sale employees’ having a frontline job. Consequently, it is reasonable to assume that the demarcation approach has the best potential for contributing to our understanding of innovative behavior in sale employee in banking service job. Following this line of reasoning, it is now to turn to the characteristic of sale employee and the definition of the concept of innovative behavior. According to Slatten, Svensson and Sværi (2011), the empowering leadership and humorous work climate had the effect on service employees’ creativity and innovative behavior in frontline service jobs, specifically in hospitality (see figure 1).
It is quite suitable for the study to examine the factor affecting to sale employee’s creativity and innovative work behavior in the banking industry due to the similar characteristic of two service industries. Thus, the study was carried out by borrowing the model of previous study of Slatten, Svensson and Sværi (2011). The figure 1 shows the relationship among research variables of the borrowed study. 10 TIEU LUAN MOI download : skknchat@gmail.
Borrowed research model In order to examine this model in the banking industry, challenge work environment was selected to replace the humorous work climate due to the target pressure of banking industry. With the new variables, the proposed research model of this study is showed as below (figure 2): Figure 2. Proposed research model 11 TIEU LUAN MOI download : skknchat@gmail. Sale employee’s creativity and innovative work behavior Sales employee is a person who sells a company's products and services.
For bank, they sell the bank services such as savings, loan, and other products. As well as approaching potential customers with the aim of winning new business; sales employees work to maintain good relationships with existing clients, gaining repeat business wherever possible. It is accepted there are several examples for sale employee’s daily working: Search customers (individuals, households and economic organizations .