"Process Variation as a Determinant of Service Quality and Bank Performance: Evidence from the Retail Banking Study?"
Abstract: Conventional wisdom in retail banking states that firm performance is dependent on higher average process performance. This paper refutes conventional wisdom and provides empirical evidence, which demonstrates that low process variation contributes significantly to firm performance. More specifically, this paper examines the effect of process variation, caused by process variability, on service quality and financial performance, as measured by customer satisfaction and price-to-earnings ratio.
This paper estimates process variation and reveals large variation in rocesses, reflecting large variation in firm strategy and process design. The data is from the Wharton Financial Institution Center Retail Banking study of fifty-seven of the largest bank holding companies (BHC) in the United States. Furthermore, this paper empirically tests under which conditions process variation impacts customer satisfaction and firm performance.
Download the paper.