Florian Mueller. Sales Management Control Strategies in Banking

Transcription

1 Florian Mueller Sales Management Control Strategies in Banking

2 GABLER RESEARCH

3 Florian Mueller Sales Management Control Strategies in Banking Strategic Fit and Performance Impact RESEARCH

4 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 Dissertation EBS Universität für Wirtschaft und Recht i. Gr. EBS Business School Wiesbaden, 2010 D st 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. 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

5 Dedicated to my parents and Lisa

6 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.

7 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

8 Table of Contents List of Figures List of Tables List of Equations List of Abbreviations and Symbols XIII XVII XIX XXI 1 Introduction Problem Definition Research Objectives and Contribution to Literature Structure of Analysis Banking in Germany Overview of the German Banking Market The Three Pillars of the German Banking System Private Commercial Banks Savings Bank Group Cooperative Banking Group Segmentation of the Banking Industry Retail Banking Private Banking Corporate Banking Current Development Summary Terminological, Conceptual, and Theoretical Basics Strategy and Strategic Management Concept of Strategy Evolution and Definition Levels of Strategy Banking Business Strategy Strategic Management Evolution and Definition

9 X Table of Contents Configurational School Fit Concept Development of Configurations Sales Management Control Evolution and Definition Formal Management Controls Behavior Control Compensation Control Informal Management Controls Self Control Professional Control Cultural Control Underlying Theories Applicability of Theories Transaction Cost Analysis Agency Theory Evolution and Definition Positivist Agency Theory Principal-Agent Theory Organizational Control Theory Internal and External Influencing Variables Organizational Structure and Characteristics Organizational Culture Organizational Centralization Information Technology Environmental Parameters Dynamism Predictability Competition Performance Sales Organization Outcomes Salesperson Behavioral Performance

10 Table of Contents XI Salesperson Outcome Performance Summary Theoretical Framework and Hypotheses Theoretical Framework Theoretical Hypotheses Strategy Control Fit Organization Control Fit Influence of the Environment on Configurations Performance of Configurations Model Summary Empirical Data Data Gathering Sample Description Operationalization of the Constructs Overview of the Operationalization Approach Sales Management Control Strategy Bank Strategy Organization-Specific Characteristics Environmental Parameters Performance Empirical Analysis of the Theoretical Model Analysis of the Relationships in the Theoretical Model Criteria for the Evaluation of PLS Models General Evaluation of the Theoretical Model Strategy Control Fit Assessment of Predictability Testing of Research Hypotheses Organization Control Fit Assessment of Predictability Testing of Research Hypotheses

11 XII Table of Contents Environmental Influence on Configurations Assessment of Predictability Testing of Research Hypotheses Analysis of the Performance of Configurations Identification of Ideal Empirical Profiles Performance Impact of Adherence to Ideal Empirical Profiles Congruence of Ideal Empirical Profiles with Theoretical Relationships Strategy Control Fit Organization Control Fit Environmental Influence on Configurations Discussion of the Results Conclusion Final Comments and Recommendations Implications for Future Research Bibliography 275 Appendices 337

12 List of Figures Figure 1.1: Structure of the Study Figure 2.1: German Banking Market - Specialized Banking Institutions 13 Figure 2.2: German Banking Market - Universal Banking Institutions. 13 Figure 2.3: German Banking Market - Universal Bank Branches Figure 2.4: The Three Pillars of the German Banking System Figure 2.5: Development of the German Cooperative Banks since Figure 2.6: Sample Structure of a Retail Banking Branch Figure 2.7: Sample Structure of a Private Banking Division Figure 2.8: Retail and Private Banking Customers Requirements Figure 2.9: Corporate Banking Service Offering Figure 2.10: Sample Structure of a Corporate Banking Division Figure 2.11: Development of National Margins (Net Interest Income/Total Assets ) in Banking Figure 2.12: Development of National Margins (Net Non-Interest Income/Net Interest Income) in Banking Figure 2.13: Development of National Margins (Income before Tax/Total Assets) in Banking Figure 2.14: Trends in the German Banking Market Figure 2.15: German Banks - Decreasing Number of Institutions, Branches, and Employees Figure 2.16: German Banks - Increasing Total Assets Figure 2.17: Branches of Foreign Banks Gaining Market Share Figure 3.1: Deliberate and Emergent Strategies Figure 3.2: Three Levels of Strategy Figure 3.3: Evolution Phases of Strategic Management Figure 3.4: Classificatory Framework of Fit Methodologies Figure 3.5: Consequences of the Perceived Control System Figure 3.6: Linking Environment, Control, and Consequences Figure 3.7: Comparison of Behavior and Compensation Control Figure 3.8: Output Behavior Measurement Matrix

13 XIV List of Figures Figure 3.9: Overview of the Performance Dimensions Figure 4.1: Theoretical Framework Figure 4.2: PLS Model of the Theoretical Research Framework Figure 5.1: Distribution of the Sample and the German Banking Market along Sectors Figure 5.2: Distribution of the Sample along Segments Figure 5.3: Distribution of the Sample along Average Total Assets Figure 5.4: Distribution of the Sample along Full Time Equivalents Figure 5.5: Average Customer Consultants, Sales Support, and Ratio of the Total Sample Figure 5.6: Average Customer Consultants, Sales Support, and Ratio of Commercial Banks in the Sample Figure 5.7: Average Customer Consultants, Sales Support, and Ratio of Credit Cooperatives in the Sample Figure 5.8: Average Customer Consultants, Sales Support, and Ratio of Savings Banks in the Sample Figure 5.9: Distribution of the Sample in Germany Figure 6.1: Test of the Strategy Control Fit Hypotheses Figure 6.2: Test of the Organization Control Fit Hypotheses - Consistency, Adaptability, and Involvement Figure 6.3: Test of the Organization Control Fit Hypotheses - Communication, IT Sophistication, and Organizational Centralization 224 Figure 6.4: Test of the Environmental Influence on Configurations Hypotheses Figure 6.5: Empirically Derived Ideal Profiles Figure 6.6: Test of Congruence of Ideal Profiles with Strategy Control Fit Hypotheses Figure 6.7: Test of Congruence of Ideal Profiles with Organization Control Fit Hypotheses I/II

14 List of Figures XV Figure 6.8: Figure 6.9: Test of Congruence of Ideal Profiles with Organization Control Fit Hypotheses II/II Test of Congruence of Ideal Profiles with Environment Control Fit Hypotheses Figure 1: Number of Insolvencies in Germany ( ) Figure 2: Overview of Research on Sales Management Control Figure 3: Standardized Questionnaire

15 List of Tables Table 2.1: Top 10 German Banks Table 3.1: Classic Definitions of Strategy Table 3.2: Schools of Strategic Management Table 3.3: Comparison of Fit Models Table 3.4: Sources and Types of Transaction Costs Table 3.5: Agency Theory - Key Facts and Assumptions Table 3.6: Organizational Failures Framework Table 4.1: Table 4.2: Table 4.3: Table 4.4: Overview of the Hypotheses - Strategy Control Fit and Organization Control Fit Overview of the Hypotheses - Influence of Environment on Configurations Overview of the Hypotheses - Performance of Configurations I/II Overview of the Hypotheses - Performance of Configurations II/II Table 5.1: Comparison of PLS and LISREL Table 5.2: Operationalization of Sales Management Control Table 5.3: Operationalization of Bank Strategy Table 5.4: Operationalization of Organization-Specific Characteristics. 194 Table 5.5: Operationalization of Environmental Parameters Table 5.6: Operationalization of Performance Table 6.1: R 2 Values of the Theoretical Model Table 6.2: Q 2 Values of the Theoretical Model Table 6.3: f 2 Values of Strategy Control Fit Table 6.4: q 2 Values of Strategy Control Fit Table 6.5: Path Coefficients and T-Statistics of Strategy Control Fit Table 6.6: f 2 Values of Organization Control Fit Table 6.7: q 2 Values of Organization Control Fit Table 6.8: Path Coefficients and T-Statistics of Organization Control Fit 217

16 XVIII List of Tables Table 6.9: f 2 Values of Environmental Influence on Configurations Table 6.10: q 2 Values of Environmental Influence on Configurations Table 6.11: Path Coefficients and T-Statistics of the Environmental Influence on Configurations Table 6.12: Sales Organization Outcomes of Ideal Profiles Table 6.13: Salesperson Outcome Performance of Ideal Profiles Table 6.14: Salesperson Behavioral Performance of Ideal Profiles Table 6.15: Fit Impact on Sales Organization Outcomes Table 6.16: Fit Impact on Salesperson Behavioral Performance Table 6.17: Fit Impact on Salesperson Outcome Performance Table 6.18: Ideal Profile - Formal Controls Table 6.19: Ideal Profile - Informal Controls Table 6.20: Congruence of Ideal Profiles with Strategy Control Fit Table 6.21: Congruence of Ideal Profiles with Organization Control Fit I/II 247 Table 6.22: Congruence of Ideal Profiles with Organization Control Fit II/II Table 6.23: Congruence of Ideal Profiles with Environment Control Fit. 255 Table 1: Top 100 German Banks Table 2: Operationalization of Sales Management Control Strategy. 355 Table 3: Operationalization of Strategy Table 4: Operationalization of Organization-specific Characteristic Table 5: Operationalization of Environmental Parameters Table 6: Operationalization of Performance Table 7: AVE Correlation Matrix - All Segments Table 8: AVE Correlation Matrix - Retail Banking Table 9: AVE Correlation Matrix - Corporate Banking Table 10: AVE Correlation Matrix - Private Banking Table 11: Cross-Loadings - All Segments Table 12: Cross-Loadings - Retail Banking Table 13: Cross-Loadings - Corporate Banking Table 14: Cross-Loadings - Private Banking

17 List of Equations Equation 5.1: Reflective Measurement Model Equation 5.2: Formative Measurement Model Equation 5.3 : Composite Reliability Equation 5.4: Average Variance Extracted Equation 5.5 : Compensation Control Index Equation 5.6 : Organizational Centralization Index Equation 6.1 : f 2 - Effect Size Equation 6.2 : Q 2 - Stone-Geisser-Criterion Equation 6.3 : q 2 - Predictive Relevance Equation 6.4: Euclidean Distance

18 List of Abbreviations and Symbols Abbreviations AVE... avg.... Bn... bn... CAGR... cc... CRD... CRM... FSAP... FTE... IT... LISREL... LV... MiFID... NIE... PLS... R&D... SEM... SMC... SOCO... ss... TCA... UK... Average Variance Extracted average Billion billion Compound Annual Growth Rate customer consultant Capital Requirements Directive Customer Relationship Management Financial Services Action Plan Full Time Equivalent Information Technology Linear Structural Relations Latent Variable Markets in Financial Instruments Directive New Iinstitutional Economics Partial Least Squares Research and Development Structural Equation Modeling Sales Management Control Selling Orientation - Customer Orientation sales support Transaction Cost Analysis United Kingdom Symbols X ij... Mean for the Ideal Profile along the jth Dimension Δ... η... Vector of the Residuals δ 1,..., δ n Latent Variable with Formative Measurement Γ x... Weighting Vector y 1,..., y n

19 XXII List of Abbreviations and Symbols λ i... Component Loading to an Indicator ρ c... Composite Reliability ζ... Measurement Errors f 2... EffectSizeofanIndependent Variable on a Dependent Variable Q 2... Stone-Geisser-Criterion q 2... Predictive Relevance of an Independent Variable for a Dependent Variable R 2... Explained Variance of Total Variance Rexcl 2... Explained Variance excluding an Independent Variable Rincl 2... Explained Variance including an Independent Variable X... Vector of the Indicators x 1,..., x n X sj... Score for a Bank in the Study Sample on the jth Dimension ACHIEVEMENT. Average Degree of Target Achievement CENTR INDEX... Organizational Centralization Index COMP INDEX.... Compensation Control Index D... Omission Distance E... Sum of Squares of Prediction Error FUNCTION... Existence of Centralized Sales Management Control Functions FUNCTION EMPL Number of Employees in the FUNCTION j... Number of Profile Dimensions O... Sum of Squares Errors using the Mean for Prediction PERCENT Percentage of Variable Compensation SHARE... Share of Employees with Variable Compensation TARGET Target for the Payment of Maximum Variable Compensation TOTAL EMPL.... Total Number of Employees in the Bank