MKT 404 - Methods in Business Research

Research on relationship between banking

sector internal factors and customer satisfaction

Authors:

Sinan Khan Durrani

Shahmeer Hussain
Mandra Luhana

Supervised by:

Sir Fahad Mushtaq

Abstract
This research was carried out to analyze and evaluate the influence of internal
factors in the banking sector on customer satisfaction. These mentioned factors are
also the 5 independent variables of the study with customer satisfaction being the
dependent variable. The study further highlights the significance of customer
satisfaction in today’s banking sector and the consequences it has on organizations
and general basis. The methodology used to conduct the research was a
questionnaire consisting of related questions, the responses of which were
analyzed using regression analysis under which it has been concluded that 4 of the
5 hypotheses of the study were supported.

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Abstract
Introduction
Background of Study
Significance of Study
Literature Gap
Problem Statement
Research Objectives
Literature Review
Theoretical Background
Definitions & Dimensions
Workplace Culture
Workplace Ethics
Customer Experience
Leadership Style
Environment
Hypothesis
Conceptual Framework
Methodology
Research Design
Sample Size and Data Collection
Research Instruments and Measurements
Results
Descriptive Statistics
Correlation
Regression analysis
Discussions
Discussions of hypothesis
Managerial Implications
Limitation of Study
Appendix
Questionnaire
References

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Introduction
The relationship between customer satisfaction and internal factors in the banking industry

is very important but has not been researched much often in organizations. It is also

important to understand the relationship since it is becoming more essential for increasing

performance in organizations as trends are changing along with technological

improvements in the financial sector.

The contents of this research is based on the topic that emphasizes how organization

culture can influence behavior of employees and customer satisfaction as well. Alvarez

and Barney (2007) highlight how corporate culture affects service quality and propose that

better customer experiences are correlated with robust organizational cultures. Moreover,

as suggested by the research of Narver and Slater (1990) it places importance on how

customer centric cultures can build long term client relationships and trust in the banking

industry.

Organizational culture is very important because there has not been much research on this

topic. This study lacks crucial aspects that makes it difficult for the banking industry to

understand crucial factors like customer satisfaction. It also makes it more difficult for

organizations to use their work cultures as a tool to improve customer retention by

providing quality service.

Noting these aspects and analyzing them, this research paper aims to explore the relations

that exist between banking sector and customers, work culture and the industry and other

important elements. This research helps to understand how internal organizational factors

affect customer experiences and outcomes within the specified industry by combining

previous research and theoretical frameworks.

Background of Study
Being an important part of the economy the banking sector has various effects on both

consumers and businesses. It is important to understand the relationship between

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workplace culture in the Banking sector and how it affects the consumer satisfaction levels.

All articles that mention this aspects also emphasize the relationship between workplace

internal factors and the quality of service being provided and the influence this has on

customer satisfaction and retention. Despite the fact that study has been done on the

subject, not much has been done to specifically examine how organizational culture affects

customer satisfaction in the banking industry. For banks looking to boost organizational

performance, improve service delivery, and strengthen client relationships, closing this gap

is essential.

Significance of Study
There are important theoretical and practical ramifications for comprehending the

relationship between customer satisfaction and work culture in the banking industry. First

off, explaining this relationship advances knowledge of organizational dynamics in a crucial

industry, which is a valuable contribution to scholarly discourse. This study contributes to

the theoretical frameworks of customer relationship management and organizational

behavior by illuminating the ways in which organizational culture affects customer

satisfaction.

Furthermore, the study's conclusions provide banking organizations with useful

information to improve organizational performance and optimize client experiences.

Through the identification of the primary factors that influence customer satisfaction in the

context of work culture, banks can customize their approaches to establish a favorable

organizational setting that promotes favorable customer encounters. Better client

retention, loyalty, and eventually sustained competitiveness can result from this.

Moreover, the study's limits go beyond specific companies because of the banking

industry's widespread influence on the economy and society. This research advances a

customer-centric culture in banking organizations, which helps to further the overarching

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objective of building confidence and trust in financial services, which in turn supports

stability and economic progress.

Essentially, the study's importance stems from its capacity to contribute to academic

discussions as well as real-world initiatives in the banking sector, which will ultimately lead

to increases in consumer satisfaction and organizational efficacy.

Literature Gap
Even though corporate culture in banking is acknowledged to be important, little is known

about how specifically it affects customer satisfaction. The literature that currently exists

frequently ignores the complex dynamics that exist within the banking industry in favor of

broad organizational behavior or customer relationship management. The relationship

between work culture, customer satisfaction, and other pertinent factors particular to

banking workplaces is rarely explored in research. The lack of relevant literature makes it

difficult to create focused strategies that will improve organizational performance and

consumer experiences in the banking sector. To effectively utilize their work cultures and

achieve excellent client results, banks must close this gap.

Problem Statement

Customer satisfaction and internal factors such as ethics in organization, employee

engagement, leadership style and customer experience within the banking sector, is are
fundamental elements that defines how well an organization is managing itself and how its
consumers experience it. It is more than just acknowledging the relation between these
two but using this knowledge to gather intelligence on what can be done to enhance
customer service, which in turn helps the performance of the entire organization.

Research Objectives

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RO1: To identify the impact of workplace culture on customer satisfaction.

RO2: To identify the impact of ethics in organization and customer satisfaction.

RO3: To identify the impact of employee engagement on customer satisfaction.

RO4: To identify the impact of leadership style on customer satisfaction.

RO5: To identify the impact of the customer experience on customer satisfaction.

Literature Review

Theoretical Background

Internal factors within an organization have been a major focus in academic literature and
real business environments because they are seen to impact different outcomes of the
organization, which includes employee satisfaction and performance. In this study, we also
explored the relationship between organizational work culture and customer satisfaction is
a mean to gaining an understanding on how an organization’s work culture can influence
customer perceptions and behaviours, this study was specifically focused on the banking
sector in Pakistan.

Definitions & Dimensions

Workplace Culture

Workplace culture refers to the shared values, beliefs, attitudes, and behaviors that set an
organization apart from others and shape its work environment. It influences employee
perceptions, motivations, and interactions, ultimately impacting organizational
performance and customer satisfaction. A strong workplace culture fosters a sense of
belonging, purpose, and alignment with organizational goals, motivating employees to
deliver exceptional service and enhance customer experiences. Conversely, a dismissive or
unhealthy work culture can lead to employees' active withdrawal, dissatisfied attitudes, and
unsatisfied customer service provided by the employees. It is crucial for the banking sector
to understand the importance of fostering an encouraging and positive environment of
employee well-being, customer retention and long term success. Hofstede in 1980
established a handful of essential insights about cultural dynamics, assisting in the
comprehension of cross-cultural differences in behavior and practices within organisation.

Workplace Ethics

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The customer’s brand perception and response is highly influenced by the ethical conduct

of banks. In 2007, Alvarez and Barney called attention towards the role of workplace

culture in determining service quality and suggested that firms with a positive work

environment are better able to deliver excellence to their customers. Additionally, Narver

and Slater (1990) further discussed the importance of client-centric workplace approaches

in fostering long lasting customer relationships and customer retention. Furthermore,

Schein in 1990 illustrated a comprehensive and in depth notion of organizational culture

impact on performance and productivity of employees.

Customer Experience

The organizational culture and employees' performance builds the customer experience
with the brand. In 2019, Gallup’s research emphasized the role of employee engagement
and how it reflects the customer experience. Schneider and Bowen (1993) indicated that
customer-centric values reflect a positive employee engagement which smithen the
customer interaction with the brand. Furthermore, Locke and Latham (2002) discussed the
goal setting and task motivation which further help us analyze the dynamics of employee
engagement impact on customer satisfaction.

Leadership Style

Impactful leadership impacts the effectiveness of an organization, its culture and customer
satisfaction. Heskett et al. (1994) pointed out the unified integration of organizational
performance, employee productivity, and customer satisfaction, highlighting the role of
leadership in creating a productive healthy work culture. Bass (1990) delves deeper in the
transformational leadership style, offering insights into its effectiveness in facilitating
organizational change and improving customer experiences.

Employee Engagement

Numerous studies have emphasized the strong relation between employee engagement
and satisfaction. This review of literature aims to examine existing research about the link
between employee engagement and customer satisfaction. According to Gallup's (2019)
study, organizations with highly engaged employees tend to earn significantly higher levels

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of customer satisfaction. This is attributable to positive customer experiences, including
attentiveness, empathy, and problem-solving, which are fostered by employee behaviours
and ultimately enhancing overall satisfaction levels

Hypothesis

On the basis of above discussion, now we are able to propose the following hypothesis:

H1: There is an impact of workplace culture on customer satisfaction.

H2: There is a relationship between workplace ethics and customer satisfaction.

H3: There is an impact of employee engagement on customer satisfaction.

H4: There is an impact of leadership style on customer satisfaction.

H5: There is an impact of the customer experience on customer satisfaction.

Conceptual Framework

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Methodology

Research Design

Our research employs a mixed method of data collection to assess the "Impact of Internal
Factors on Customer Satisfaction in the Banking Sector," primarily utilizing a deductive
approach. Both quantitative and qualitative data was crucial to identify levels of customer
satisfaction and understanding reasonings behind consumer perceptions. The analysis is
based on primary data gathered through a questionnaire, which will be distributed to a
diverse sample, across students of IoBM, acquainted social circles and family members of
the researchers. The questionnaire utilizes a 5-point Likert Scale to gauge the strength or
intensity of workplace culture and customer satisfaction, assuming a linear relationship,
ranging from strongly agree to strongly disagree.

Sample Size and Data Collection

The sample for this research comprises students of IoBM, workers in the banking sector,
individuals within acquainted social circles, and family members of the researchers. A
sample of 106 individuals has been selected for the study. The sampling technique
employed is a form of non-probability sampling known as convenience sampling. This
method was chosen for its convenience in reaching out to individuals within the
researchers' affiliated social, educational and workplace circles rather than seeking out
individuals from exceptionally diverse backgrounds. The primary criterion for sample
selection was the possession of a bank account in Pakistan.

To gather data, a survey was conducted using a questionnaire designed to collect

information on consumer perceptions of the best banks in Pakistan compared to their own
affiliated banks. Additionally, the questionnaire aimed to assess customer satisfaction
levels based on workplace culture perceptions within their respective banks.

Research Instruments and Measurements

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In this study, a custom-designed questionnaire was developed to measure various
constructs related to customer satisfaction, organizational culture, and banking services
within the context of the banking sector in Pakistan. The questionnaire was structured to
gather both qualitative and quantitative data from the participants.

The questionnaire included a series of closed-ended questions designed to assess

customer perceptions, experiences, and satisfaction levels with their respective banks.
These questions covered a range of topics, including customer perceived value,
communication effectiveness of bank staff, perceptions of ethical conduct, diversity and
inclusion within the bank, trust levels between customers and bank management, and
empowerment to address issues or concerns independently.
Additionally, the questionnaire incorporated a numeric rating scale to measure overall
customer satisfaction with the banking organization's customer service. Participants were
asked to rate their satisfaction level on a scale of 1 to 5, with 1 indicating "very dissatisfied"
and 5 indicating "very satisfied."

The development of the questionnaire involved a thorough review of existing literature and
consultation with banking sector employees. Furthermore, the questionnaire was designed
to be administered digitally, allowing for efficient data collection and analysis.

Results
The scope and study of this paper was extensively discussed in the above chapters. The

result is summarized in the tables below.

Descriptive Statistics

Variable Mean Standard Deviation

Leadership Style 3.68 1.02

Customer Experience 3.63 0.74

Workplace Culture 3.64 0.86

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 Employee Engagement 3.61 1.02

Workplace Ethics 3.51 1.07

This table summarizes the normality of the data. The construct, leadership style has the

highest mean and on the contrary, the ethics in organization have the lowest mean. The

standard deviation of construct ethics is the highest while the standard deviation of

construct experience is the lowest.

In conclusion, the data above supports the normality of data hence it can be used further

to interpret the below results.

Correlation
The correlation between two constructs shows the extent to which they are linearly
related. In other words, it shows how two constructs change together at a constant
rate. The acceptable range for correlation between is ≤0.9 to ≥0.3 where 1
represents 100 percent correlated. If correlation is ≥0.3 or ≤0.9, the constructs are
mutli-colinear which will weaken the statistical power, making it less reliable

Variable Ethics Engagement Culture Leadership Experience

Workplace Ethics 1.00 0.48 0.37 0.42 0.59

Employee Engagement 0.48 1.00 0.63 0.57 0.61

Workplace Culture 0.37 0.63 1.00 0.49 0.51

Leadership Style 0.42 0.57 0.49 1.00 0.57

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 Customer Experience 0.59 0.61 0.51 0.57 1.00

Regression analysis
The table below summarizes the regression analysis. It includes Beta (β), T-value and P-

value.

Variable Coefficient p-value Supported

Workplace Ethics 0.25 0.032 Supported

Employee Engagement 0.34 0.001 Supported

Workplace Culture 0.18 0.071 Not Supported

Leadership Style 0.29 0.008 Supported

Customer Experience 0.39 0.017 Supported

Discussions

Discussions of hypothesis

After the discussion and results of the above data, we can now conclude if the hypothesis

raised in the previous chapter was supported or unsupported.

1- There is a positive relationship between workplace ethics and customer

satisfaction.

Based on the above discussion and results, we can conclude that there is no/weak

relationship between constructs and therefore hypothesis is not supported.

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2- There is a negative relationship between workplace culture and customer

satisfaction.

Based on the above discussion and results, we can conclude that there is weak or no

relationship between constructs and therefore hypothesis is not supported.

3- There is a positive relationship between employee engagement and customer

satisfaction.

Based on the above discussion and results, we can conclude that there is strong

relationship between constructs and therefore hypothesis is supported.

4- There is a positive relationship between leadership style and customer

satisfaction.

Based on the above discussion and results, we can conclude that there is strong

relationship between constructs and therefore hypothesis is supported.

5- There is a positive relationship between customer experience and customer

satisfaction.

Based on the above discussion and results, we can conclude that there is strong

relationship between constructs and therefore hypothesis is supported.

Managerial Implications

The study has proven that it is critical for a majority of the organizational bodies to possess

an engaged workforce culture. One of the most crucial aspects that lead to customer

happiness is an active . To guarantee customer satisfaction, organizations need to “expect”

the public leadership philosophies that prioritize employee engagement, such as the user-

centric philosophy. To satisfy customers, organizations need to become more transparent

and ensure pleasant and honest . Organizations must also value the customer experience

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and, to that end, only provide products and services that are able to meet the customers’

needs.

Limitation of Study

The study on the opposite hand had an intent to be relevant in the research of the impacts
on culture on the work among many facilitators which has led to the improvement in
customer satisfaction within the Pakistani banking sector, a couple of issues prevail to
debate and significant are still a problem have to be able to make this decision, after having
considered the breakthroughs of data.

1. Sampling Bias: The adaptation of the convenience sampling method is admissible

and expedient to approach more students within school peer context and
convenient setting to them, singular researchers and teams could also shifted by
subjective biases.

2. Small Sample Size: The given samples 50 individuals are adequate, but on the other
hand the idea of such a sample gives you the possibility to get concerned about
your biggest problems.

3. Self-Report Bias: This questionnaire can however also be said to have a limitation as
it relies on the participants answering the questionnaire without bias. totally stem
from it to a certain extent, as there are huge potentials of affecting with response
bias, as long as they remember that the kind of feedback which will be passed to
them is the one which is most likely to be socially desirable.

4. Limited Scope of Questions: It turns out that very often a study, whether it explores
or merely finds out whether the problem exists, a questionnaire is sent to the
participant. leading to them to prioritise some necessary and workplace friendly
factors, the factors that are equally essential and promote work culture might be
unnoticed effectively customers’ satisfaction that is a top value for a banking
market. As a customized questionnaire, in addition to that, the class worked in the
arrangement together as a collective which will be the subject of another
questionnaire and I would put much emphasis on these specific features with tears
of traditional ways or a customer had a hope of something less than excellent, now
the visitor will experience perfect service. It could be a completely different set of

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 factors that might be the cause of them but the main ones being ignored while the
way out is contemplated.

5. Subjectivity of Measurements: And it is hard to apprise how those measurements

will affect the results as this specific impact will be subjective. Values, degree of a
product or service attractiveness, and product's or service's good or bad reputation
are some of the things that are shaped by these factors, in addition to the debates
about whether the traditional methods of brand management are still able to keep
pace with people's expectations or not in the digital age.

6. Cross-Sectional Design: The study adopted a cross-sectional design, capturing data

at a single point in time. This design limits the ability to establish causal
relationships between work culture and customer satisfaction, as changes in these
variables over time cannot be assessed. Longitudinal studies would provide more
solid evidence of the impact between workplace culture and customer satisfaction
in the Pakistani banking sector.

Despite these limitations, this study contributes valuable insights into the complex
interplay between work culture and customer satisfaction in the banking sector. Future
research employing larger, more diverse samples and longitudinal designs could help
explain these relationships more and enhance our understanding of organizational
dynamics in service industries.

Appendix

Questionnaire
1. Which Bank do you use for your financial services?

2. Which Bank/Organisation would you vote for to have the best environment and

customer service?

3. To what extent do you feel valued as a customer by your bank?

4. How would you rate the communication skills of the staff members at your bank?

5. Do you believe that ethical conduct is prioritized by your bank?

6. How would you rate the level of diversity and inclusion within your bank?

7. Which feature do you think is most important for a bank to have?

8. Do you believe that the size of an organization affects the work culture?

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 9. How would you rate the level of trust between customers and the management of

your bank?

10. Do you feel that your bank empowers you to address any issues or concerns

independently?

11. How often do you interact with staff members at your bank?

12. How would you describe the overall management leadership style of your bank?

13. To what extent do you think the bank's work culture influences its employees'

behavior?

14. On a scale of 1 to 5, how satisfied are you with the customer service provided by

your banking organization?

15. How do you perceive the overall reputation of your bank in the industry? Please

describe.

References
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Satisfaction in Banking Sector of Pakistan. Global Journal of Management and Business
Research, 15(2), 57-64.

Ali, G., & Ayyub, S. (2015). The Impact of Work Settings on Job Performance in the
Banking Sector of AJ&K. Pakistan Journal of Human Rights, 6(2), 47-61.

Alvarez, R. D., & Barney, J. B. (2007). Discovery and creation: Alternative theories of
entrepreneurial action. Strategic Entrepreneurship Journal, 1(1‐2), 11-26.

Bass, B. M. (1990). From transactional to transformational leadership: Learning to share

the vision. Organizational Dynamics, 18(3), 19-31.

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 Gallup. (2019). State of the American Workplace. Retrieved from
https://www.gallup.com/workplace/238085/state-american-workplace-report-2017.aspx

Heskett, J. L., Sasser, W. E., & Schlesinger, L. A. (1994). The service profit chain. New
York: The Free Press.

Hofstede, G. (1980). Culture's consequences: International differences in work-related

values. Sage Publications.

Locke, E. A., & Latham, G. P. (2002). Building a practically useful theory of goal setting
and task motivation: A 35-year odyssey. American Psychologist, 57(9), 705-717.

Narver, J. C., & Slater, S. F. (1990). The effect of a market orientation on business
profitability. Journal of Marketing, 54(4), 20-35.

Schneider, B., & Bowen, D. E. (1993). The service organization: Human resources
management is crucial. Organizational Dynamics, 21(4), 39-52.

Schein, E. H. (1990). Organizational culture. American Psychologist, 45(2), 109-119.

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