Investigating the effect of environmental conditions on customer orientation and entrepreneurial orientation of private banks in Isfahan province

end­ Letter for Master's degree (M.A)

Financial Oriented Business Management

Autumn 2013

Abstract

This research is a group of items obtained from exploration in the basics of research evaluation regarding the effect of environmental conditions on customer orientation and entrepreneurial tendency of private banks in Isfahan province.

In this research, the effect of environmental conditions on the bank The private companies of Isfahan province have been investigated based on the models of entrepreneurial tendencies, which include 3 main hypotheses and 16 sub-hypotheses. .

The statistical population of this research is all employees of the bank­ private schools in Isfahan province in 2013.

The data collection tool is a questionnaire, which was distributed among 30 bank employees on a trial basis for the validity and reliability of the questionnaire, and based on Cronbach's alpha coefficient, the internal consistency of the questionnaires was reviewed.

  According to the results of the research, only the third main hypothesis of the research is not accepted and the first to thirteenth sub-hypotheses of the research It is confirmed and the 14th to the 16th are rejected. Therefore, environmental conditions have a significant effect on customer orientation and entrepreneurial orientation of private banks in Isfahan province, and customer orientation does not have a significant effect on the level of entrepreneurial orientation of private banks in Isfahan province.

Key words: environmental conditions, customer orientation, entrepreneurial orientation. organization­ They operate in a dynamic, ambiguous and complex environment. Basically, the continuous and dramatic changes in the way of thinking, social values, ways of doing work and many other phenomena of life is one of the most obvious features of the present era, and these changes in the current competitive world crush any kind of resistance from organizations and take everyone forward with them. The scope and variety of changes that are imposed on organizations are so great that there is no other way for them to adapt and respond to these changes. In such a situation, which is referred to as “environmental uncertainty” [1], if the organization does not respond to the environmental changes using new procedures and does not respond to the needs of its customers through customer-oriented strategies and instead assumes a passive state, it will lag behind the competition and development. Therefore, companies and organizations are trying to be at the forefront of the process of innovation[2] and entrepreneurship[3] and in this way they can maintain their flexibility to the changes and developments of the competitive market and gain the opportunities available in the market. In fact, today's organizations have moved in the direction of providing new products, new processes and new organizational systems and have created a new revolution towards facilitating, accelerating and expanding the organizational process in order to be at the forefront of the field through entrepreneurship (Kordnaij et al., 2016). Including Tejarat Bank, Saderat and Mellat, the competition in this industry has increased significantly. And the need for organizational entrepreneurship in the banking service system is felt more than ever. Looking at the activities of the banking industry, the emergence and introduction of services such as fuel card projects (fuel payment through POS), cash purchase plan for farmers' wheat, service packages for guilds, doctors and engineers, etc. Examples of entrepreneurship in this industry are some of these services arising from innovation. And some others are derived from the risk-taking capabilities and pioneering activity of banks.

The review of entrepreneurship literature shows that researchers have moved in two main streams to equip organizations and companies with entrepreneurial tools, which include organizational entrepreneurship approaches[4] (Gath and Ginsberg[5], 1990; Zahra[6], 1993, 1991) and entrepreneurial orientation [7] (Miller, 1983; Quinn and Sloane, 1988; Lumpkin and Des[8], 1996). Organizational entrepreneurship refers to strategic restructuring, in the sense of redefining the company's strategy and organization, while the entrepreneurial tendency originates from researches that consider the determination of strategy in terms of action patterns or decision-making styles.Of course, research shows that various factors such as the external environment, organization strategy, and management activities are influential factors in organizational entrepreneurship (Gath and Ginsberg, 1990; Miller, 1983; Karatko et al.[9], 1990; Hinonen[10], 1999). In a number of studies, it has been tried to classify the influential factors in the development of organizational entrepreneurship and the mechanism of its effects on organizational performance by expanding theoretical models. For example, Lumpkin and Dess (1996) in their conceptual model for organizational entrepreneurship, consider the factors of entrepreneurial orientation, organizational factors, and environmental factors on the performance of the organization. In Antonsik's model [11] (2000), the characteristics of organizational entrepreneurship (new business, new risky business, innovation in services and products, innovation in the process, modernization, risk-taking, and finally ultra-active and competitive aggression) as well as the factors affecting it (characteristics of the organization, characteristics of units and departments, and characteristics of the environment) are considered in the examination of organizational entrepreneurship. Also, Moghimi (2005) classifies the factors affecting organizational entrepreneurship based on the three-branch model (Mirzaei, 1378) into three structural groups (variables related to the structure and systems within the organization except for human factors), behavioral (managers and employees and their attitudes in the organization), and contextual (organizational environment). Using exploratory factor analysis, Jarna and Kaiso [12] (2006) reported that three major groups of factors, including management activities and organizational culture, organization structure, and finally the skills and attitudes of employees, are potential and prerequisite factors in the creation and development of the organizational entrepreneurship process. Despite the different approaches to analyze entrepreneurship at the organizational level, today most researches search for the factor of entrepreneurship development at the organizational level in the concept of entrepreneurial orientation. Therefore, in this research, the effect of environmental conditions on the private banks of Isfahan province has been investigated based on the models of entrepreneurial orientation.

1-2- Statement of the problem

The external environment of each organization is unique and fluid, and creating uncertainty may limit the organization's opportunities (Penros [13], 1995). Robbins [14] (1991) introduces environmental uncertainty as one of the factors of the organization's external environment that affects the organization's performance. In his opinion, environmental uncertainty refers to managers' awareness of changes in the organization's external environment and their ability to predict changes in environmental components. Sources of environmental uncertainty in business environments include government and policies, economy, resources and services required by industry, products, markets and demand, competition and technology (Miller [15], 1993). Research shows that dynamic environments increase entrepreneurial orientation in small firms (Miles, Quinn and Healy [16], 2000). Also, risk-taking and innovation increase in dynamic environments because slow decision-making in dynamic environments destroys opportunities (Hogg and White [17], 2003). Currently, the political conditions of Iran are such that the important parameters involved in the decision-making of organizations have become highly variable and unpredictable, and this factor may affect the factors involved in organizational performance.

On the other hand, the regulatory, structural and technological factors in the banking industry around the world are changing drastically in the last decade (Angar et al.[18], 1999). In the environmental conditions facing the banking industry, conditions have become highly competitive and bank managers have realized that attracting and maintaining loyal customers is the key to their survival and success (Yavas et al. [19], 1997). Therefore, banks and financial institutions have designed multiple strategies to provide quality services to customers and in this way they try to gain the satisfaction and loyalty of their customers. In the meantime, according to the key role of employees in establishing relationships with customers, their views and behaviors towards customers will determine the quality of services perceived by customers, the customer's sense of satisfaction, and ultimately the customer's emotional commitment to banks (Henning-Tarao[20], 2004; Yoon et al.[21], 2001).