Post on 17-May-2023
Revisiting internal market orientation: a noteGurjeet Kaur Sahi
Post-Graduate Department of Commerce, University of Jammu, Jammu, India
Subhash Lonial and Mahesh Gupta
College of Business, University of Louisville, Louisville, Kentucky, USA, and
Nitasha Seli
Post-Graduate Department of Commerce, University of Jammu, Jammu, India
AbstractPurpose – This paper seeks to further the understanding of the domain of the IMO construct in a developing country, as suggested by Lings andGreenley. It seeks to build on their proposed construct and provide empirical evidence of its impact in the context of the Indian banking industry.Design/methodology/approach – The behavioral dimensions of the construct are confirmed in a manner consistent with established marketorientation (external) construct. The paper validates scale pertaining to the wants and needs of bank employees for effective intelligence generationand dissemination as well as for effective response implementation.Findings – The authors find a positive significant relationship between internal market orientation and staff attitude and perceived customersatisfaction. Further, the impact of staff attitude on employee job satisfaction is also significant.Research limitations/implications – Internal market orientation, with the passage of time, may not be as prevalent and exhaustive as it is nowbecause the nature of the marketing environment is extremely dynamic. So, there is a need to make changes as time evolves so that this scale remainsfocused with a high level of reliability and validity.Practical implications – To generate internal market intelligence, bank management should not only rely on internal customer surveys, but also theintelligence obtained through a variety of formal and informal means, such as meetings and discussion with internal customers; analysis of sales reportsand worldwide customer databases; and formal market research, such as employees’ attitude surveys and sales response in a test market.Originality/value – The present research would be of value to managers across the world for identifying key requirements of internal customers,which need to be evaluated consistently from time to time, for different strategic actions.
Keywords Internal market orientation, Indian banking, Scale development, Market orientation, Banking, India
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
Since 1990, considerable conceptual and empirical research
efforts have been directed to understand what market
orientation (MO) is, what it consists of, and what its
relationship is with organizational performance across
national as well as multinational industries. One widely
acknowledged conceptualization refers to MO as a set of
management behaviors that enable a firm to collect market
intelligence, to disseminate it across functional areas, and
initiate a response to this intelligence to create a value for
customers. This process creates a sustainable business
performance (Jaworski and Kohli, 1996; Kohli and Jaworski,
1990). Researchers have argued that a MO conceptualization
primarily focuses on the external environment of the firm
(e.g. needs of customers and shareholders, nature of
competition) and sidelines, if not totally ignores, internal
factors such as employees, processes and the nature of
employer-employee relationships (Carter and Gray, 2007).
In an almost parallel research stream, especially pertaining
to the service organizations, many researchers have
investigated the impact of encounters between employees
and customers on improved customer satisfaction and have
argued that an adequate focus on service personnel is a
significant element of the firm’s marketing mix (Gronroos,
2006). This research stream can be traced back to the internal
marketing (IM) concept introduced by Berry et al. (1976).
They suggested that the regulations that apply to the
company’s external market are, by similarity, relevant for its
internal market as well. The focus of internal marketing
efforts is the management of relationship between internal
customers and internal suppliers (George, 1990; Lings and
Brooks, 1998) for service-mindedness and customer-oriented
behavior (Berry, 1981; Gronroos, 1989), and importantly for
successful exchanges with external markets (Flipo, 1986).
The number of companies successfully implementing IM
remains small, largely due to lack of unanimously-agreed-
upon definitions and lack of clarity with respect to the
operationalization of the IM concept. Towards this end, Lings
and Greenley (2005) developed an instrument to measure
internal market orientation (IMO) in a retail industry and
suggested that the IMO construct should be further validated
in different service contexts and be tested in different cultural
settings.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0887-6045.htm
Journal of Services Marketing
27/5 (2013) 385–403
q Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/JSM-09-2011-0131]
385
Service organizations in fast developing countries (e.g. India
and China), following the trends of their western
counterparts, are implementing marketing concepts and
strategies towards increasing customer satisfaction and
loyalty through improved service quality (Choudhury, 2008;
Dutta and Dutta, 2009). Many scholars have questioned
whether the empirical findings of research performed in
developed countries can be generalized to developing
countries because of their unique cultural, social, economic
and regulatory conditions (Kirkman and Shapiro, 1997;
Lachman et al., 1994; Venkatesh et al., 2010). In this regard,
rightly pointed out by Zinkhan and Hircheim (1992), Sheth
and Sisodia (1999) and more recently Sheth (2011),
marketing is a contextual discipline, where context matters
due to unique characteristics and existing practices and
perspectives of emerging markets. Thus, it is not clear if
marketing constructs such as MO and IMO developed and
validated primarily using data from the western world can be
employed in developing countries.
While all types of service industries are important, the
Indian banking industry has gone through turbulent financial
reforms (including deregulation) over the past two decades.
Consequently, the Indian banking industry has witnessed
significant growth in private as well as foreign banks, which
has spurred a market-oriented competitive environment
(Nicholls and Roslow, 1989; Sin et al., 2005; Zhao et al.,
2009). Concepts of MO and IMO are quite novel and
pertinent for fast-developing countries, and specifically, the
banking industry has been slow to adopt marketing as a
management discipline (Calantone and Mazanec, 1991).
Therefore, it is believed that an investigation of internal
market orientation in the banking industry can enhance the
overall understanding of the concept of market orientation in
banking in particular and the service industry context in
general. To the best of our knowledge, we could not trace any
study conducted to examine the concomitant impact of the
three major dimensions of IMO (along with their sub-
dimensions) on the success of internal and external markets in
terms of staff attitude, employee job satisfaction, and
perceived customer satisfaction in context of fast-emerging
economies, particularly India.
Thus, the purpose of this paper is to further our
understanding of the domain of the IMO construct and to
examine the relationships between IMO and staff attitude,
employee job satisfaction, and perceived customer satisfaction
in the context of the Indian banking industry as theorized in
Lings and Greenley’s (2005) study. Based on the data
collected from the employees of both public- and private-
sector banks in India, we present a validated scale pertaining
to the needs and wants of the bank employees for effective
intelligence generation and dissemination, as well as for
effective response design and implementation in the Indian
banking industry.
More specifically, this paper consists of four sections. First,
we briefly discuss the dimensionality of the IMO construct in
delineating managerial behaviors associated with employee-
employer relationships. We direct readers’ attention to Lings
(2004) for elaborate discussion and literature review. Second,
we discuss the development and validation of IMO
measurement scale following Lings and Greenley’s (2005)
study. Third, we discuss our findings in terms of the
relationship between IMO and staff attitude and employee job
satisfaction as well as perceived customer satisfaction. Finally,
we highlight the implications for bank managers, especially in
the context of a developing country like India and present
directions for future research.
The changing Indian service economy
During the last two decades, the Indian market has undergone
a sea change. From 1951 to 1985, India was an economy that
discouraged consumption in preference to saving and
investment. A large discontented middle class with many
hang-ups and a conservative mindset ruled the consumer
market (Chen et al., 2005; Das, 2007). India’s development
strategy emphasized import substitution and large-scale
industrialization through government investment in public
sector enterprises. These policies created recurrent shortages
of foreign exchange and made the balance of payments
vulnerable to sudden changes in international markets (World
Bank, 1999a). By early 1991, India, faced with double-digit
inflation (almost 14 percent), was on the verge of defaulting
on its external debt obligations (Agarwal et al., 1995; World
Bank, 1999a). July 1991 was the beginning of a new era when
the new government dismantled most of the economic
policies adopted and implemented the new economic policy, a
set of radical market-friendly reforms.
Recommendations for India included the devaluation of the
rupee, an increase in interest rates, and an increase in imports
and foreign investment in capital-intensive and high-tech
activities. Additionally, they promoted massive privatization of
major national industries including power generation,
telecommunications, and toll roads and bridges and a
decline in the economic role of the public sector (World
Bank, 1999b; India Weekly, 1991; WEDO, 1998). The neo-
liberal economic reforms exposed the country to a new open-
market economy, marked by industrialism and consumerism,
including the opening up of many Indian bank branches
abroad, the introduction of many foreign banks to the Indian
market, and the start of debit cards and credit cards. It
ushered in myriad players both from the domestic front as
well as from abroad. The opening up of the consumer goods
segment to foreign investors, the approval of technology
transfers, and the collaboration and reduction of import
duties on several categories of goods have brought about
substantial changes in the demand-supply situation in the
domestic market (Subramanian and Gopalakrishna, 2001).
A hallmark of the new economic policy of India has been
the gradual liberalization of its financial sector. The
immediate effect of reforms in this sector has been a
perceptible rise in the level of activity in various financial
markets (Gouri, 1997; Chossudovsky, 1997; Arora, 1999;
Guha-Khasnobis and Bhaduri, 2000). The steady growth of
consumer finance options and curtailment of inflation at
reasonable levels over the past decade and a half has resulted
in a general increase of income levels of the middle and rich
classes in India (Agnihotri, 2004; Kumar and Sarkar, 2008;
Mishra and Dash, 2008). The changing demographic profiles,
increasing income levels, urbanization, technology, and
globalization have brought about a dramatic shift in
consumer taste and preferences (Sharma, 2011). Consumer
segments in India are maturing faster than ever.
The most striking feature of the structural change in the
Indian economy in recent decades has been the pre-eminence
of the services sector as the major contributor to growth,
raising its share rather sharply in the national output (Verma,
Revisiting internal market orientation: a note
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Volume 27 · Number 5 · 2013 · 385–403
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2008). Now the service sector constitutes about 60 percent of
GDP with the growth rate of 7 percent and increased
specialization in all fields (Singh and Pachori, 2007). The
service sector is the fastest growing sector in India where
competition, changing market conditions, new technologies,
economic uncertainties, more demanding customers, and the
changing climate are becoming fiercer day-by-day and have
presented an unprecedented set of challenges (Sureshchandar
et al., 2002; Jham and Khan, 2008). India is currently in the
second phase of the retail evolution cycle, with consumers
becoming more demanding with their rising standard of living
and changing lifestyles. Major factors fuelling this growth spur
are the increase in people’s disposable income, improved
lifestyles, increased international exposure and increased
consumer awareness. Indian consumers have used the retail
boon to their advantage, and they have more options than
ever before and they exert their power of knowledge very well
(Choudhari and Rumilla, 2009). Although the recent global
economic recession has had some impact on the information
technology, real estate and manufacturing sectors, still
economists are of the opinion that India will not suffer a
great impact. A.T. Kearney’s Global Retail Development
Index (2008) suggested that India is still the best investment
destination for the retail sector, followed by Vietnam. The
Consumer Confidence Index (2008) further revealed that
Indian consumer intentions to spend on personal comfort
such as new clothes, home improvements/decorating, and
technology products are stronger than the global average.
The rapid change in the Indian consumers’ attitudes and
profiles made it difficult for organizations to cater to their
needs. Indian companies, more used to licensing policies and
under-production during the pre-liberalization period, faced
the uphill task of catering to the changing consumer taste and
preferences (Kumar and Sarkar, 2008). Thus, it can be
concluded that India is undergoing unique changes in its
marketing context. These changes are so unique and
profound that brand strategies practiced in developing
markets require a significant adaptation to the Indian
context. For marketers, investment in brands today is
necessary to secure brand loyalty for better times ahead
(Sharma, 2011). In this regard, Sheth (2011) has aptly
pointed out that the failure of well-established (in well-
developed nations) products in emerging markets can be
attributed to a lack of sensitivity to local cultures (Ghemawat,
2001; Hofstede, 2001) as part of the brand’s strategy to
connect consumers with the brand’s proposition is critical.
The combination of cultural value with functional utility is a
powerful strategy adopted by a few successful brands in the
recent times. In this context, State Bank of India (SBI),
known as “Banker to every Indian” with its five associates and
22 subsidiaries has succeeded in offering an attractive salary
package, in empowering its work force with a strong service
culture, introducing effective HR policies for exploring and
exploiting employees’ potential, ensuring regular internal
communication programs, in reversing feedback and ideas
from bottom up, in taking decisions through consensus and
unilaterally, and in organizing family gatherings, etc. (Lal and
Tahilyani, 2011). This is one bank where both functional
benefits in terms of bringing efficiency in banking operations
and cultural cues through family gatherings have been
extensively used. Besides, cultural nuances of the country
require a proper balance of emerging western values and
strongly entrenched Indian values (Kumar et al., 2007).
Western cultural values are well established in the existing
consumer theory as regards luxury consumption (Wong and
Ahuvia, 1998). The extensive research of Hofstede (1991,
2001) and Hofstede and Bond (1988) on culture has found
that the East Asian culture of interdependent values differs
from Western independent values. They identified five
cultural dimensions of interdependent versus dependent
cultural values: power distance, individualism and
collectivism, masculinity and femininity, uncertainty
avoidance, and short and long-term orientation. Thus,
Indian culture is quite different from western culture, and
requires special and distinct attention of marketers, policy
makers and practitioners. In this context, the present study
intends to validate the Internal Market Orientation construct
in the Indian setting.
Dimensionality of IMO and hypothesesformulation
Drawing from “external” market orientation
conceptualization (Kohli and Jaworski, 1990), Lings and
Greenley (2001), IMO involves generating and disseminating
intelligence, satisfying the wants and needs of employees
(i.e. internal customers), and designing and implementing
appropriate responses to meet those wants and needs. Based
on the extensive literature review, they presented five
behavioral dimensions of IMO, viz., the formal generation
of internal information; the informal generation of internal
written information; the formal face-to-face generation of
internal information; the dissemination of information
generated from employees; and the design and
implementation of the managers’ response. Additionally, in
order to establish nomological validity of the dimensions,
Lings and Greenley (2005) identified various consequences of
IMO behaviors, such as customer satisfaction, staff attitude,
compliance, retention etc. Each of these variables was
measured using a survey administered to UK retail
managers from a wide range of retail outlets.
From this pretext, our study intends to confirm the
significant role played by information generation, information
dissemination and responsiveness, towards predicting the
IMO level in the Indian banking industry:
H1. Internal market orientation in the Indian banking
industry is significantly influenced by information
generation, information dissemination and
responsiveness.
While examining the impact of IMO on the internal success of
an organization, Lings and Greenley (2005) identified a
significant relationship between IMO and important internal
organizational factors, viz., staff attitude and employee job
satisfaction. In addition, the Gounaris (2006) model
explained a significant amount of the variance accounted for
by the IMO construct for job satisfaction. Further, Carter and
Gray (2007) argued that internal market orientation can be
achieved through reward systems designed to meet their
needs so they in turn are more motivated towards customer
orientation. Thereafter, Gounaris (2008) observed that job
satisfaction is positively correlated with the practice of internal
marketing. Thus, empowering employees has a positive effect
on their job satisfaction both directly and indirectly (through
role conflict and ambiguity reduction). Finally, Lings and
Greenley (2009) concluded that IMO has a direct positive
Revisiting internal market orientation: a note
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Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
387
impact on employee motivation. Hence, we may infer that
IMO impacts employees’ attitude:
H2. Internal market orientation significantly influences
employee attitude.
In order to study the impact of IMO on customer satisfaction,
the Lings and Greenley (2005) study revealed that IMO plays
a significant role in enhancing relationship quality between
employees and customers, thereby ensuring service quality,
customers’ satisfaction and financial performance. Snipes et al.
(2005) pointed out that employee job satisfaction is one of the
major factors influencing customer satisfaction. This
perspective views employees as the organization’s internal
customers, linking to the concept of external customers. Lings
and Greenley (2009) examined the significant relationship
between internal market orientation, employee motivation,
and external marketing success (market orientation, financial
performance, and customer satisfaction). Further, Tortosa
et al. (2009) revealed that internal market orientation,
through the informal generation of information, influences
the satisfaction of contact personnel, and ultimately, the
perception of quality and satisfaction of customers receiving
the service. Hence, we posit that IMO will have a significant
impact on external market success in terms of perceived
customer satisfaction:
H3. Internal market orientation significantly influences
external aspects of performance in terms of perceived
customer satisfaction.
Employees form attitude towards their jobs by taking into
account their feelings, beliefs and behaviors (Robbins, 2005;
Akehurst et al., 2009). Actually, managers do not spend
enough time learning about human behavior, communication
and how their attitude and behavior impact employees’
performance. Moreover, management requires a keen
understanding of human nature, the basic needs, wants and
abilities in order to improve staff attitude, which has a
significant impact on employees’ job satisfaction (Babin and
Boles, 1996; Lings and Greenley, 2005). Managers at all
levels cannot cause an employee to become motivated; they
can create an environment for individuals to motivate
themselves. Since job satisfaction has a strong correlation
with job performance, it is very important to reinforce this by
applying the right human resource policies (Gelade and Ivery,
2003). If employees are highly satisfied with their work,
supervision, co-workers, pay and derive a high level of overall
job satisfaction, they are more likely to be committed to their
organization (Karia and Asaari, 2006). Positive organizational
climate exerts and enhances employees’ attitude and job
satisfaction; hence, they are less likely to look for jobs
somewhere else. Thus, keeping good employees is critical to
business success, and organizations should make employee
retention a part of corporate culture. Further, recognition and
respect are highly important, especially for those employees
who are in direct contact with the customers. Recognition
from managers for good performance is vital in increasing job
satisfaction and is central to boosting morale. A supportive
management style, demonstrated through open
communication, respect and recognition, greatly enhances
and improves employees’ attitudes and in turn leads to
employee job satisfaction (Rad and Moraes, 2009). In this
context, it can be assumed that IMO helps achieve employee
job satisfaction by creating their positive attitude towards the
organization and their role in it. Thus we hypothesize:
H4. Staff attitude significantly influences employees’ job
satisfaction.
Research methods
This study adopted the IMO scale developed by Lings and
Greenley (2005) to measure its three dimensions (intelligence
generation, intelligence dissemination and responsiveness) as
well as other constructs, namely: staff attitude, employee job
satisfaction, and perceived customer satisfaction. Because the
original instrument was developed within a retail setting, the
wording of the original scale items was modified to make the
items more suitable for use in a banking context. The final
draft of the IMO instrument consisted of 78 items distributed
among its three major dimensions (i.e. intelligence
generation-20, intelligence dissemination-21 and
responsiveness-37), five staff attitude items, nine items
addressing employee job satisfaction and four items
pertaining to perceived customer satisfaction. Response
options employed a five point Likert-type scale, anchoring
from “highly satisfied” (5) to “highly dissatisfied” (1).
“Intelligence generation” encompassed formal written and
face-to-face information generation, informal information
generation and segmentation of the internal market.
“Intelligence dissemination” included the relationship
between employee and employee, the attitude of managers,
and the organizational climate. Finally, “responsiveness”
covered job design to meet wants and needs of employees;
incentives in the form of bonus, salary, loan and other
allowances; management considerations; and training
(Figure 1).
Pre-testing was done in three discernible stages
(i.e. qualitative assessment of instrument items by the
consultative panel, vetting of the instrument, and self-
administered instrument to randomly selected employees of
different bank branches). As the instrument was intended to
be administered in a different cultural and service setting (at
least different from western culture), its qualitative validity
was confirmed through item-to-item discussion with a panel
of marketing researchers and bank employees.
Intuitively, one could accept that the firm’s customers (the
direct customer as well as the end user) are in a good position
to judge the degree of market orientation of an organization
(Gabel, 1995; Webb et al., 2000). Thus, for the final survey,
responses were generated from the internal customers of three
major banks (labeled Bank1, Bank2, and Bank3 for purposes
of confidentiality) in the retail Indian banking industry.
According to an unpublished report composed by the Reserve
Bank of India (2008), these banks rank among the largest and
most strongly profitable public and private banks. Each enjoys
a strong retail presence in a metropolitan city with a large and
diverse population in the northern region of India. In all,
there were 37 branches of Bank1, 14 of Bank2 and 16 of
Bank3 in the metro area. All branches were contacted to
gather requisite information pertaining to IMO. All 194
employees of Bank1, 129 of Bank2 and 125 of Bank3 were
approached. After three visits, 143, 69 and 80 instruments
respectively were completely filled out by the employees,
constituting a 74, 64 and 53 percent response rate
respectively, with an overall response rate of 65 percent.
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
388
Analysis and discussion
We used confirmatory factor analysis (CFA) to evaluate the
dimensionality of the IMO scale (Anderson and Gerbing,
1988). We analyzed the covariance matrix of dimension-wise
items by capturing the three components of IMO and data
from bank employees using AMOS 16.0. As suggested by
Hair et al. (1998, p. 605), we employed maximum likelihood
estimation. We first tested the measurement model to assess
how well the items corresponded to their respective latent
variables and to establish the relationship between latent
constructs in this study. We examined the CFA measurement
model by allowing each of the ten latent constructs of three
dimensions (see Figure 1 conceptual model) to correlate with
each other, while constraining the measurement items and
their error terms to be uncorrelated. The CFA fit statistics
(x2 ¼ 1265.637; df ¼ 585; GFI ¼ 0.899; IFI ¼ 0.876;
CFI ¼ 0.874; RMSEA ¼ 0.063) indicate acceptable levels of
convergence, discriminant validity, and unidimensionality,
leading us to fit the structural equation model. Table I
summarizes the measurement models for intelligence
generation, intelligence dissemination, and responsiveness,
respectively. Table I shows the standardized regression
weights for variables that entered the model at both the
individual factor level as well as the aggregate level. The factor
level analysis includes only the indicators for each factor
(i.e. variables loading on that factor). The aggregate
measurement model then combines the specific factors that
form a latent variable (such as intelligence generation,
intelligence dissemination, and responsiveness) in order to
examine the relationships between the factors. The
standardized regression weights for all variables in Table I
are highly significant for both levels of analyses. Goodness-of-
fit indexes for this analysis are shown in Table II and all
support the model fit.
Examining the individual standardized loadings of each
item (Table I) affirms that employees’ regular interaction with
their management has a significant impact on their job
satisfaction, which is indicative of an interdependent
organizational culture. Further, management’s attempt to
inquire about employee satisfaction has an even greater
impact on the staff attitude, as it has a long-term impact on
the organizational as well as individual’s performance. This
finding is also supported by Lings and Greenley (2010), as
they concluded that informal methods of collecting
information from employees, hall talk and casual
conversations have the most significant impact on
information dissemination and response. Thus, informal
and friendly relations among employees as well as the
organization’s serious attempt to ensure employee job
satisfaction have significant implications for disseminating
the intelligence so generated, which predicts collectivism in
vogue. Finally, a helping and empathetic attitude of managers,
the opportunity for professional development of employees,
and the existence of organizational policies to update
employees’ job-related information for better performance
are the most influential aspects of organizational
responsiveness and a long-term orientation towards
employees.
After conducting a confirmatory factor analysis on the
measurement model to validate the internal and external
consistencies among factors, we constructed a second-order
measurement model (Figure 1) for the three latent constructs
(intelligence generation, intelligence dissemination, and
responsiveness). These models examine the relationships of
these factors with latent variables to determine if sufficient
justification exists to combine the factors into one latent
variable. To conserve the degrees of freedom for the analysis
(as the sample size is small), the factors for each construct
were represented by the summated scores of the variables, as
opposed to using all individual variables in the analysis. To
conserve space, the detailed results are not reproduced here.
The goodness-of-fit indices were quite high, providing
additional validation for the factor structure of intelligence
generation, intelligence dissemination, responsiveness and for
overall model of IMO (x2/df ¼ 2.364; RMSEA ¼ 0.068,
Figure 1 Conceptual model for internal market orientation
Revisiting internal market orientation: a note
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Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
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Table I Results of CFA: standardized factor loadings and t-values
Individual Aggregate
Sub-scale
Regression
weights t-value
Regression
weights t-value
Intelligence generation
1. Formal intelligence generation
– Management conducts survey to identify major influence on employee’s behavior 0.830 * 0.771 11.180
– Management frames questionnaires to identify your wants and needs 0.568 7.869 0.566 8.737
– Bank conducts survey with employees at least once a year to assess the quality of employment 0.738 8.523 0.790 *
– Management meets employees at least once a year to find out what expectations they have for
future jobs 0.940 6.806 0.582 8.914
– Management interacts directly with employees to find out how to make them satisfied 0.647 8.121 0.574 8.781
2. Informal intelligence generation
– Managers frequently talk with the staff about their work 0.775 * 0.729 *
– Managers try to solve the problems causing change in behavior of employees 0.670 3.609 0.712 2.799
3. Segmentation of internal market
– Staff welfare is looked after satisfactorily by human resource development dept. 0.323 * 0.329 4.678
– Ample opportunities are available for informal talks among different depts. 0.825 4.857 0.750 6.711
– Employees are accessible to those in other departments 0.818 4.879 0.899 *
Intelligence dissemination
1. Between Employee and Employee
– You are friendly with other employees in Bank 0.430 * 0.612 *
– You get respect from them 0.703 6.795 0.654 9.534
– Employees develop friendly relationship with each other 0.918 6.861 0.969 12.554
2. Attitudes of managers
– Managers make sure that employees are happy with their jobs 0.881 * 0.831 *
– Bank considers employees as important resource for service delivery 0.755 12.785 0.787 14.434
– Keeping employees satisfied is as important as keeping customers satisfied 0.634 10.446 0.690 12.291
– Managers understand all factors that affect employees’ satisfied 0.636 10.891 0.658 11.605
– Managers help employees in official problems 0.603 10.252 0.616 10.726
3. Organization climate
– Organization is genuinely concerned with the welfare of all its employees 0.810 * 0.764 *
– Organization tries to accommodate different personal needs of employees 0.360 5.256 0.391 6.111
– Organization does not recognize the importance of its employees 0.302 7.248 0.280 4.368
– Organization treats all employees in a way they are valued 0.795 4.466 0.836 11.854
Responsiveness
1. Incentives
– Your salary commensurate with work 0.502 * 0.782 *
– You get housing loans at nominal interest rate 0.976 9.273 0.622 5.793
2. Management consideration
– Manager develops a work climate of psychological support 0.681 * 0.608 *
– Supervisors recognize employees as an individual and treat them with respect and dignity 0.628 9.353 0.537 11.636
– Manger develops a work climate of helpfulness 0.828 11.560 0.954 9.065
– Management respects your individuality 0.719 10.500 0.645 9.242
– Manger develops mutual trust and respect with employee 0.696 10.218 0.572 8.401
3. Training
– Bank arranges regular training both on and off the job 0.761 * 0.742 *
– Bank arranges adequate training facilities for its employees 0.845 15.721 0.834 14.486
– Employees are regularly sponsored for various need-based training courses 0.953 18.246 0.957 16.758
– Employees are constantly acquainted with the changing procedure and regulation through
refresher courses 0.957 18.342 0.959 16.793
– Development of employees is given due recognition in this bank 0.730 13.182 0.727 12.788
4. Job design
– Employees have enough opportunities for advancement 0.903 * 0.896 *
– Bank regularly plans for career development of its employees 0.916 21.000 0.920 21.198
– Growth opportunities are open to every employee, which motivates them for higher responsibility 0.794 17.319 0.797 17.397
Revisiting internal market orientation: a note
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Journal of Services Marketing
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GFI ¼ 0.952; AGFI ¼ 0.917; CFI ¼ 0.921; TLI ¼ 0.899)
(Table II). Therefore, the revised second-order scale for
IMO was deemed adequate for the purpose of this study. For
subsequent analysis and hypothesis testing, we use summated
scales for the first order constructs.
The data indicate that IMO, although conceptually similar
to external market orientation, has a three-factor structure,
representing information generation, information
dissemination and responsiveness.
The study tested the psychometric properties of three IMO
sub-scales through Cronbach’s alpha. Convergent validity was
established, since the standardized factor loadings of the
majority of the items under the three dimensions of IMO were
above 0.50, exceeding the recommended minima suggested
by Hair et al. (1998). Further, discriminant validity was
established by a low to moderate correlation among measures
designed to evaluate conceptually different but related
constructs. The inter-factor correlations for the three sub-
scales of IMO suggest that all three discriminate between
themselves. Additional evidence of discriminant validity is
provided when the average variance explained by a construct
is greater than the construct’s shared variance with other
constructs – the square of the inter factor correlations
between any two constructs (w2). Average variance explained
(AVE) are reported in Table III.
In order to test the hypotheses, we run a structural equation
model (SEM) with internal market orientation (IMO), staff
attitude (SA), employee job satisfaction (EJS) and perceived
customer satisfaction (PCS) as the latent constructs
(Figure 2). The standardized loadings for most of the items
are above the recommended level of 0.50. Further, all t-values
are significant at the 0.01 level (Table IV). The AVE from the
four constructs and their respective construct reliability is
above 0.50, supporting convergent validity. The overall
second order model in Figure 2, using CFA, provides
evidence for discriminant validity. Table V summarizes these
results. The proportion of AVE to the squared correlation
between the two constructs is well above unity, thus providing
evidence of discriminant validity (Table V).
SEM results pertaining to the relationships among latent
constructs indicate that IMO is significantly explained by all
the three dimensions, though it is best explained by
responsiveness (b ¼ 0.97), followed by Intelligence
Generation (b ¼ 0.86) and lastly, intelligence dissemination
(b ¼ 0.84). Hence, we accept H1 that IMO is significantly
predicted by intelligence generation, intelligence
dissemination and responsiveness. Information generation
relates to employees’ perceptions of the inputs to their jobs,
the outputs (what they receive) and the equity of this
exchange (Lings and Greenley, 2005). Generating and
understanding adequate information about the internal
exchange will allow suppliers to formulate appropriate
responses to their internal markets and make internal
products more attractive to the potential and existing
employees (Lings, 2004).
Further, when analyzing the relationship between IMO and
staff attitude, it becomes clear that SA is strongly and
significantly predicted by IMO (b ¼ 0.80). This result
confirms our second hypothesis (H2). More specifically, the
analysis reveals a significant effect of IMO on staff attitude,
which corroborates the findings of previous studies conducted
by Ahmed et al. (2003); Gounaris (2008); Lings and Greenley
(2005); Naude et al. (2003) etc. In this regard, Lings and
Greenley (2005) revealed that IMO significantly predicts staff
attitude.
The relationship between IMO and PCS also is significant
(b ¼ 0.66). Thus, IMO also directly influences perceived
customer satisfaction, offering support to H3. The majority of
related studies shows the positive influence of job satisfaction
on the performance of the contact personnel and therefore on
the quality of services received as perceived by external
customers (Hartline and Ferrell, 1996; Malhotra and
Mukherjee, 2004; Snipes et al., 2005; Yoon et al., 2004).
Thus, internal market orientation is grounded in the belief
that external marketing success is in part dependent on the
firm having satisfied and motivated internal customers (Berry
and Parasuraman, 1991; Greene et al., 1994). Further, Lings
Table II Second order CFA results confirming goodness of fit statistics
Description X2 X2/df RMSEA GFI AGFI CFI TLI
Intelligence generation
Formal information generation 6.324 1.58 0.045 0.991 0.967 0.995 0.987
Segmentation of internal market 2.202 2.202 0.064 0.996 0.962 0.995 0.972
Informal information generation * * * * * * *
Aggregate model 57.438 1.853 0.054 0.962 0.932 0.967 0.952
Intelligence dissemination
Between employee and employee 1.150 1.150 0.023 0.997 0.984 0.999 0.998
Attitude of managers 8.240 2.060 0.060 0.989 0.958 0.992 0.981
Organization climate 6.060 6.060 0.032 0.990 0.898 0.978 0.871
Aggregate model 131.274 2.524 0.072 0.932 0.898 0.937 0.920
Responsiveness
Incentives 5.076 2.538 0.073 0.991 0.957 0.995 0.985
Training 9.384 3.128 0.086 0.987 0.936 0.995 0.984
Job design 1.564 1.564 0.044 0.997 0.973 0.999 0.995
Management consideration 7.277 2.426 0.070 0.990 0.951 0.993 0.978
Aggregate model 123.356 1.486 0.041 0.944 0.919 0.985 0.982
Path model (IMO) 75.633 2.364 0.068 0.952 0.917 0.921 0.889
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Table III Results of confirmatory factor analysis for internal market orientation constructs – correlations, average variance extracted, and compositereliabilities
iig seg fig orglim attmgr bemem trn mcon jobdes incen
iig 0.69 * * *
seg 0.190 * * 0.69
fig 0.112 0.173 * * 0.79
orglim 0.134 * 0.194 * * 0.297 * * 0.75
attmgr 0.243 * * 0.230 * * 0.375 * * 0.615 * * 0.835
bemem 0.155 * * 0.126 * 0.166 * * 0.246 * * 0.255 * * 0.80
trn 0.168 * * 0.150 * 0.191 * * 0.199 * * 0.333 * * 0.106 0.92
mcon 0.124 * 0.166 * * 0.506 * * 0.430 * * 0.489 * * 0.204 * * 0.137 * 0.884
jobdes 0.076 0.217 * * 0.206 * * 0.247 * * 0.310 * * 0.074 0.333 * * 0.198 * * 0.787
incen 0.046 0.046 0.366 * * 0.221 * * 0.397 * * 0.125 * 0.385 * * 0.222 * * 0.272 * * 0.83
AVE 0.525 0.410 0.455 0.450 0.510 0.590 0.710 0.618 0.697 0.570
Notes: *Correlation is significant at the 0.05 level (two-tailed); * *correlation is significant at the 0.01 level (two-tailed); * * *composite reliability is on thediagonal; abbreviations used: iig ¼ intelligence generation; seg ¼ segmentation of internal market; fig ¼ formal information generation;orglim ¼ organization climate; attmgr ¼ attitudes of managers; bemem ¼ between employee and employee; trn ¼ training; mcon ¼ managementconsideration; jobdes ¼ job design; incen ¼ incentives
Figure 2 Structural model for internal market orientation
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and Greenley (2005) also revealed that IMO has significant
impact on customer satisfaction.
Finally, the impact of employees’ positive attitude on their
job satisfaction is also found to be significant (b ¼ 0.516),
which lends to the acceptance of our last hypothesis (H4).
Lings and Greenley (2005) also found positive impact of IMO
on employee satisfaction. Further, Gounaris (2008) also
observed that IMO is a significant variable in explaining
employee’s job-satisfaction.
On the whole, it can be concluded that IMO is significantly
predicted by the identified three dimensions. Further, IMO
has significant direct impact on SA and PCS and indirect
impact on EJS through SA. The relationship between IMO
and staff attitude/employee job satisfaction has been proved to
be robust and significant; thus it provides support to the
pertinent assertions placed by Lings and Greenley (2005).
Moreover, the study’s finding, as it pertains to the significant
impact of IMO on customer satisfaction, further affirms and
substantiates the validity of the research findings obtained by
Gronroos (1990); Lings and Greenley (2005), and Reynoso
and Moores (1995).
On analyzing the goodness-of-fit statistics, it becomes
evident that measurement models of intelligence generation,
intelligence dissemination and responsiveness have reached
the minimum acceptable threshold values of various fit
indices. The structural model of IMO has also qualified
various goodness-of-fit indices, viz., x2/df (1.760), GFI
(0.921), AGFI (0.881), CFI (0.948), TLI (0.929), and
RMSEA (0.051). Thus, it provides support that all indicators
are consistent in assessing an acceptable fit of the
hypothesized model to the data. Overall, the structural
model exhibits good fit with all fit indices approaching the
minimum acceptable values.
Since the data were collected from three bank branches, an
important extension of the above analysis would be to explore
if there are any significant differences among the three
Table V Squares of the parameters estimate between dimensions andaverage variance extracted for pairs of dimensions
Sub-scale IMO SA EJS PCS
IMO 0.88 0.74 0.78 0.67
SA 0.44 (0.66) 0.92 0.64 0.53
EJS 0.30 (0.55) 0.21 (0.46) 0.87 0.57
PCS 0.29 (0.54) 0.19 (0.44) 0.16 (0.40) 0.85
Notes: Inter-factor correlations (in parenthesis) and square of inter-factorcorrelations appear below the diagonal; average variance extracted appearsabove the diagonal and construct reliability on the diagonal
Table IV Results of SEM analysis: standardized factor loadings and t-values
Sub-scale IG ID R SA EJS PCS
Intelligence generation
1. Formal intelligence generation 0.271 (3.377)
2. Informal intelligence generation 0.704 (5.253)
3. Segmentation of internal market 0.386 *
Intelligence dissemination
1. Between employee and employee 0.325 (4.929)
2. Attitudes of managers 0.881 (10.576)
3. Organization climate 0.665 *
Responsiveness
1. Incentives 0.574 (6.297)
2. Management consideration 0.580 (6.328)
3. Training 0.552 *
4. Job design 0.486 (5.761)
Staff attitude
1. Staff members are generally happy working here 0.743 *
2. Staff members are happy to put extra efforts when needed 0.850 (15.090)
3. Employees are well motivated 0.811 (14.366)
4. Employees have positive thoughts towards management 0.691 (11.945)
Employee job satisfaction
1. You are satisfied with your job 0.894 *
2. Your work is both interesting and challenging 0.832 (15.938)
3. You are satisfied with rules and conditions of the job 0.722 (13.647)
Customer satisfaction
1. Customers are satisfied with bank services 0.647 *
2. Bank prides on friendliness attitude of staff 0.435 (6.455)
3. Customer service is the key factor to differentiate from
competitors 0.884 (9.050)
Note: t-value in parentheses
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
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dimensions of IMO from each of the three banks’ perspective.
Do these banks differ on their internal market orientation?
Consequently, we performed bank-wise analysis so as to
validate IMO scale for three banks under study. ANOVA
results confirm that significant difference between three banks
exist; and thus, supports our assertion of testing the structural
model separately for each bank. An L-S-D post hoc test reveals
no significant difference between the two public sector banks
but finds significant difference between the responses of
public and private banks. Hence, the study further validates
the IMO scale for public and private banks.
We found that the measurement model was a good fit for
private (x2/df ¼ 1.603, GFI ¼ 0.945, AGFI ¼ 0.892,
CFI ¼ 0.953, TLI ¼ 0.924, and RMSEA ¼ 0.065) as well
as public banks (x2/df ¼ 1.808, GFI ¼ 0.931, AGFI ¼ 0.878,
CFI ¼ 0.942, TLI ¼ 0.921, and RMSEA ¼ 0.074). Further,
the structural models of IMO both for public and private
banks have qualified various goodness-of-fit indices, viz., x2/df
(public ¼ 1.196; private ¼ 1.232), GFI (public ¼ 0.897;
private ¼ 0.896), AGFI (public ¼ 0.884; private ¼ 0.879),
CFI (public ¼ 0.963; private ¼ 0.973), IFI (public ¼ 0.952;
private ¼ 0.964), and RMSEA (public ¼ 0.036;
private ¼ 0.040). The detailed results of public and private
banks can be obtained from the corresponding author on a
special request (the Appendix is included for reviewers).
Thus, our analysis shows that IMO is significantly predicted
by information generation, information dissemination and
responsiveness for both categories of banks. IMO also has a
significant effect on both staff attitude and perceived
customer satisfaction. Staff attitude significantly determines
employees’ job satisfaction for both the sectors. Hence, all
hypotheses stand accepted for both categories of banks. After
further analysis of the descriptive statistics of both public and
private sector banks, it becomes clear that these banks have
not succeeded in generating formal face-to-face and written
information pertaining to bank employees’ job requirements.
Moreover, management does not meet employees regularly so
as to extract their job-related needs and wants. Thus,
managers do not understand various factors that affect
employees’ job satisfaction. Specifically in the case of the
private bank, management does not understand the personal
needs of its employees. The public sector bank employees feel
that their pay package is not commensurate with their work.
Moreover, regular on- and off-the-job training programs are
not being organized for employees of public banks.
To conclude, we comprehend that the most significant
indicators of IMO are satisfying employees’ job requirements,
management consideration and employees’ career
development. Thus, in addition to the monetary incentives,
whether employees stay in the organization is best predicted
by the treatment and respect they receive at their work.
Hence, management must place equal emphasis on the
generation and dissemination of the internal market
intelligence as well as being quite effective in responding to
the intelligence so generated.
Managerial implications
The efforts of Indian banks to generate internal market
intelligence are scarce. Hence, bank management should not
only rely on internal customer surveys; rather, a variety of
formal and informal means like meetings and discussion with
internal customers, worldwide customer databases, and
formal market research such as employees’ attitude surveys,
staff appraisal meetings and sales responses in test markets
can also be explored. The survey associated with internal
customer orientation needs to place more emphasize on
creating awareness about internal service quality, on
identifying internal customers’ expectations in terms of
financial and non-financial incentives, and on generating
and understanding the information for formulating an
appropriate response to internal marketing in terms of job
products, etc. An online employee suggestion system can also
be introduced (Lal and Tahilyani, 2011).
Bank management can utilize informal methods of
communication, such as setting a suggestion box or a
discussion board on the intranet to let staff express their
problems through a disclosed method or anonymously.
Managers’ responses for all the problems will benefit the
outcome of internal communication between management
and staff. Further, coordinating activities of different business
units for breaking existing silos (Lal and Tahilyani, 2011) can
also ensure effective dissemination of information pertaining
to internal markets.
Bank management should focus more on formal and on-
the-job training practices, as it plays a crucial role not only in
imparting relevant skills but also in infusing the right kind of
professional approach in solving the diverse banking
problems. Management needs to focus on organizing more
training programs, viz., lectures, group discussions,
conferences, case studies, program instructions so as to raise
employees’ knowledge towards banking service. Tie-ups with
top Indian business schools to regularly train the employees
can boost the morale of the employees (Lal and Tahilyani,
2011).
Development programs can be designed to include:. special assignments, supervisory coaching, planned job
rotation and job enrichment to develop the potential of
employees;. an effective appraisal system to provide an objective
assessment of current performance and future potential of
employees; and. employees should be encouraged to set personal
development goals and develop action plans for
achieving them.
Efforts should be made through continuous self-monitoring
to integrate the goals of individuals with organizational goals,
so that the values of being a long-term collectivist society can
be maintained.
Literature pertinent to Indian banking reveals that private
banks are more successful than public sector banks in terms of
implementing TQM initiatives, particularly in context to HR,
customer focus, and top management commitment
(e.g. Sathye, 2005; Selvaraj, 2009). Hence, public sector
banks need to redefine the customer service parameters in
order to compete with the private sector banks, which are
widely perceived as being more customer-oriented (Mallya,
2003). They must concentrate their efforts on instilling an
organizational culture that views employees as internal
customers and should focus more on TQM practices, as
they have significant influence on employees’ work-related
attitudes such as job involvement, job satisfaction, career
satisfaction and organizational commitment. These banks
must place due emphasis on the change management, internal
marketing and employees empowerment, so as to ensure
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
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394
requisite service quality. Moreover, pay and job satisfaction
are the primary factors for the bank employees, which need
considerable attention so as to achieve the long term goals of
the bank (Sowmya and Panchanatham, 2011). Determinants
such as the work itself, relationships with co-workers,
supervision and opportunities for promotions have been
found to contribute to job satisfaction (Opkara, 2004).
Therefore, public sector banks need to increase employees’
pay satisfaction by introducing a differential pay system based
on one’s merit and efforts. In addition, human resource
practices must be effectively and fairly used to enrich one’s
job, as these practices assist in formulating employees’ career
paths by ensuring proper implementation of growth and
training programs.
Future research agenda
The present study involved a single-informant method of data
collection. As such, common method variance may be a
problem since information on the dependent and independent
variables was collected from the same respondents. Following
Podsakoff and Organ (1986), we conducted the Harman’s
one-factor test. A factor analysis of the dependent and
independent variables did not yield a single-factor structure
that would account for a majority of the variances. This
suggests that the common method variance is not a concern in
the sample.
However, there are several methodological issues that limit
the generalizability of our findings and thus direct attention at
future research. Although internal market orientation is both
valid and reliable in the context of the present study relating
to the Indian banking scenario, rigorous testing in different
service settings is necessary to establish IMO as generalizable
to wider organizational context. Further, IMO in context to
non-profit organizations can also be explored in the near
future and a comparative evaluation of IMO level can be
undertaken between profit and non-profit making
organizations.
The present research could be of immense use to the
managers’ world over for identifying key requirements that
need to be evaluated consistently from time to time for
different strategic actions. IMO, with the passage of time, may
not be as prevalent and exhaustive as it is now because the
nature of marketing environment is extremely dynamic.
Hence, there is a need to make changes as time evolves so that
this scale remains focused with high level of reliability and
validity.
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Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
396
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Revisiting internal market orientation: a note
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Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
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Appendix
Table AI Results of CFA for private bank: mean scores, standardized factor loadings and t-values
Individual Aggregate
Sub-scale
Mean
value
Regression
weights t-value
Regression
weights t-value
Intelligence generation
1. Formal intelligence generation
– Management conducts survey to identify major influence on employee’s behavior 2.83 0.977 – 0.923 –
– Management frames questionnaires to identify your wants and needs 2.18 0.757 – 0.738 –
– Several departments plan work periodically 2.78 0.942 – 0.981 20.653
2. Informal intelligence generation
– Managers frequently talk with the staff about their work 4.05 0.841 – 0.606 4.057
– Managers try to solve the problems causing change in behavior of employees 3.80 0.631 – 0.877 –
3. Segmentation of internal market
– Departments look after different segments 4.14 0.519 4.949 0.546 5.389
– Staff welfare is looked after satisfactorily by Human resource development dept. 3.89 0.620 – 0.678 –
– Goals of respective department are in harmony 3.92 0.498 4.788 0.531 5.256
– Ample opportunities are available for informal talks among different depts. 3.65 0.694 6.085 0.656 6.236
– Employees are accessible to those in other departments 3.77 0.784 6.366 0.734 6.684
Intelligence dissemination
1. Between employee and employee
– You are friendly with other employees in Bank 2.43 0.642 6.452 0.650 6.501
– You get respect from them 2.22 0.985 5.530 0.972 5.813
– Employees develop friendly relationship with each other 1.84 0.589 – 0.597 –
2. Attitudes of managers
– Managers make sure that employees are happy with their jobs 4.02 0.882 5.288 0.861 6.907
– Bank considers employees as important resource for service delivery 4.06 0.816 5.706 0.783 6.605
– Keeping employees satisfied is as important as keeping customers satisfied 3.98 0.680 6.244 0.695 6.163
– Managers understand all factors that affect employees’ satisfied 3.08 0.598 6.385 0.646 5.879
– Managers help employees in official problems 4.14 0.527 – 0.562 –
3. Organization climate
– Organization is genuinely concerned with the welfare of all its employees 3.99 0.881 4.253 0.840 8.326
– Organization tries to accommodate different personal needs of employees 3.01 0.507 4.270 0.504 4.400
– Organization treats all employees in a way they are valued 3.70 0.705 – 0.743 –
Responsiveness
1. Incentives
– Your bank is giving best salary 4.22 0.924 8.865 0.914 8.937
– Your salary commensurate with work 3.87 0.822 8.902 0.836 8.882
– Salary is revised from time to time 4.15 0.699 – 0.693 –
2. Management consideration
– Manger develops a work climate of helpfulness 4.07 0.743 11.056 0.745 11.296
– Management respects your individuality 4.05 0.865 14.103 0.867 14.643
– Manger develops mutual trust and respect with employee 4.03 0.972 – 0.969 –
3. Training
– Bank arranges regular training both on and off the job 3.92 0.796 – 0.741 –
– Training meets the needs of both employees and bank. 4.13 0.637 6.845 0.580 6.895
– Training methods are tailored through your development 3.97 0.625 7.310 0.618 7.367
– Bank arranges adequate training facilities for its employees 3.89 0.847 10.350 0.847 10.417
– Employees are regularly sponsored for various need-based training courses 3.90 0.905 11.185 0.904 11.193
– Employees are constantly acquainted with the changing procedure and regulation through
refresher courses 3.94 0.926 11.456 0.922 11.438
4. Job design 0.753 8.996 0.747 9.049
– Employees have enough opportunities for advancement 3.81 0.908 12.329 0.898 12.290
– Bank regularly plans for career development of its employees 3.86 0.922 12.378 0.905 12.384
– Employees are provided with adequate job security 4.43 0.601 7.425 0.613 7.516
– Bank provides sound working conditions to its employees 4.31 0.553 6.751 0.567 6.836
– Growth opportunities are open to every employee, which motivates them for higher responsibility 4.17 0.799 – 0.802 –
Revisiting internal market orientation: a note
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Journal of Services Marketing
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Table AII Results of CFA for public banks: mean scores, standardized factor loadings and t-values
Individual Aggregate
Sub-scale
Mean
value
Regression
weights t-value
Regression
weights t-value
Intelligence generation
1. Formal intelligence generation
– Management conducts survey to identify major influence on employee’s behavior 2.89 0.993 10.742 0.967 11.369
– Management frames questionnaires to identify your wants and needs 2.20 0.514 6.407 0.490 6.397
– Several departments plan work periodically 3.02 0.882 – 0.904 –
2. Informal intelligence generation
– Managers frequently talk with the staff about their work 3.85 0.894 – 0.800 2.041
– Managers try to solve the problems causing change in behavior of employees 3.21 0.637 – 0.605 –
3. Segmentation of internal market
– Ample opportunities are available for informal talks among different depts. 3.77 0.851 – 0.892 3.136
– Employees are accessible to those in other departments 3.83 0.844 – 0.794 –
Intelligence dissemination
1. Between employee and employee
– You get respect from them 2.47 0.549 3.785 0.524 3.806
– Employees develop friendly relationship with each other 1.82 0.761 3.822 0.756 3.976
– You help your colleagues in improving themselves 3.39 0.531 – 0.512 –
2. Attitudes of managers
– Managers make sure that employees are happy with their jobs 3.30 0.726 6.325 0.722 6.069
– Bank considers employees as important resource for service delivery 3.46 0.768 6.455 0.775 6.235
– Keeping employees satisfied is as important as keeping customers satisfied 3.09 0.654 5.953 0.630 5.611
– Managers understand all factors that affect employees’ satisfied 2.50 0.613 – 0.586 –
3. Organization climate
– Organization is genuinely concerned with the welfare of all its employees 3.53 0.888 – 0.814 –
– Organization treats all employees in a way they are valued 3.20 0.692 – 0.728 –
Responsiveness
1. Incentives
– Your bank is giving best salary 3.22 0.714 5.378 0.733 5.527
– Your salary commensurate with work 2.58 0.758 5.267 0.731 5.528
– Salary is revised from time to time 3.24 0.579 – 0.589 –
2. Management consideration
– Manager develops a work climate of psychological support 3.34 0.916 5.628 0.916 5.623
– Supervisors recognize employees as an individual and treat them with respect and dignity 3.46 0.810 5.562 0.810 5.557
– Manger develops a work climate of helpfulness 3.67 0.676 5.188 0.676 5.183
– Manger develops mutual trust and respect with employee 3.91 0.463 – 0.463 –
3. Training
– Bank arranges regular training both on and off the job 3.08 0.745 8.911 0.743 8.837
– Training methods are tailored through your development 3.55 0.572 6.847 0.569 6.788
– Bank arranges adequate training facilities for its employees 3.15 0.840 10.041 0.838 9.952
– Employees are regularly sponsored for various need-based training courses 3.22 0.961 11.458 0.961 11.355
– Employees are constantly acquainted with the changing procedure and regulation through
refresher courses 3.24 0.963 11.477 0.962 11.364
– Development of employees is given due recognition in this bank 3.45 0.708 – 0.704 –
4. Job design
– Employees have enough opportunities for advancement 3.23 0.865 11.540 0.868 11.746
– Bank regularly plans for career development of its employees 3.35 0.916 11.855 0.911 12.085
– Growth opportunities are open to every employee, which motivates them for higher
responsibility 3.58 0.791 – 0.799 –
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
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Table AIII Second order CFA and SEM results confirming goodness of fit statistics
Description X2 X2/df RMSEA GFI AGFI CFI TLI
Intelligence generationPrivate bank 34.099 1.176 0.035 0.954 0.913 0.992 0.987
Public banks 14.264 1.189 0.036 0.974 0.939 0.994 0.990
Intelligence disseminationPrivate bank 50.233 1.288 0.045 0.940 0.899 0.981 0.973
Public banks 66.779 1.805 0.074 0.925 0.867 0.926 0.890
ResponsivenessPrivate bank 154.408 1.309 0.047 0.899 0.886 0.978 0.972
Public banks 91.856 1.021 0.012 0.932 0.898 0.999 0.998
Measurement modelPrivate bank 44.884 1.603 0.065 0.945 0.892 0.953 0.924
Public banks 56.047 1.808 0.074 0.931 0.878 0.942 0.921
Structural modelPrivate bank 213.136 1.232 0.040 0.896 0.879 0.973 0.964
Public banks 207.654 1.196 0.036 0.897 0.884 0.963 0.952
Table AIV Results of confirmatory factor analysis for internal market orientation constructs – correlations, average variance extracted, and compositereliabilities in case of private bank
iig seg fig orglim attmgr bemem trn mcon jobdes incen
Iig 0.68 * * *
seg 0.353 * * 0.76
fig 0.337 * * 0.220 * * 0.85
orglim 0.339 * * 0.409 * * 0.186 * 0.69
attmgr 0.355 * * 0.451 * * 0.266 * * 0.660 * * 0.82
bemem 0.212 * 0.214 * 0.402 * * 0.204 * 0.192 * 0.77
trn 0.143 0.290 * * 0.234 * * 0.289 * * 0.249 * * 0.109 0.91
mcon 0.434 * * 0.404 * * 0.090 0.476 * * 0.505 * * 0.015 0.206 * 0.89
jobdes 0.211 * 0.357 * * 0.195 * 0.362 * * 0.432 * * 0.022 0.288 * * 0.341 * * 0.87
incen 0.505 * * 0.417 * * 0.200 * 0.337 * * 0.325 * * 0.237 * * 0.312 * * 0.302 * * 0.259 * * 0.84
AVE 0.553 0.410 0.805 0.510 0.508 0.576 0.637 0.748 0.596 0.673
Notes: *Correlation is significant at the 0.05 level (two-tailed); * *correlation is significant at the 0.01 level (two-tailed); * * *composite reliability is on thediagonal; abbreviations used: iig=intelligence generation; seg ¼ segmentation of internal market; fig ¼ formal information generation; orglim ¼ organizationclimate; attmgr ¼ attitudes of managers; bemem ¼ between employee and employee; trn ¼ training; mcon ¼ management consideration; jobdes ¼ jobdesign; incen ¼ incentives
Table AV Results of confirmatory factor analysis for internal market orientation constructs – correlations, average variance extracted, and compositereliabilities in case of public banks
iig seg fig orglim attmgr bemem trn mcon jobdes incen
iig 0.60 * * *
seg 0.064 0.84
fig 0.068 0.184 * 0.82
orglim 0.200 * 0.130 0.040 0.75
attmgr 0.236 * * 0.071 0.057 0.462 * * 0.78
bemem 0.200 * 0.082 0.285 * * 0.116 0.195 * 0.59
trn 0.084 0.127 0.130 0.070 0.227 * * 0.163 * 0.92
mcon 0.447 * * 0.008 0.074 0.359 * * 0.332 * * 0.069 0.005 0.81
jobdes 0.152 0.008 0.152 0.017 0.024 0.121 0.259 * * 0.000 0.89
incen 0.175 * 0.085 0.113 0.102 0.241 * * 0.142 0.318 * * 0.038 0.102 0.72
AVE 0.603 0.718 0.676 0.634 0.481 0.387 0.657 0.542 0.738 0.473
Notes: *Correlation is significant at the 0.05 level (two-tailed); * *correlation is significant at the 0.01 level (two-tailed); * * *composite reliability is on thediagonal; abbreviations used: iig ¼ intelligence generation; seg ¼ segmentation of internal market; fig ¼ formal information generation;orglim ¼ organization climate; attmgr ¼ attitudes of managers; bemem ¼ between employee and employee; trn ¼ training; mcon ¼ managementconsideration; jobdes ¼ job design; incen ¼ incentives
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
400
Table AVI Results of SEM analysis: standardized factor loadings and t-values for private banks
Sub-scale IG ID R SA EJS PCS
Intelligence generation
1. Formal intelligence generation 0.553 *
2. Informal intelligence generation 0.755 (7.539)
3. Segmentation of internal market 0.642 (6.829)
Intelligence dissemination
1. Between employee and employee 0.333 (4.079)
2. Attitudes of managers 0.916 (8.434)
3. Organization climate 0.733 *
Responsiveness
1. Incentives 0.547 (5.632)
2. Management consideration 0.651 (6.780)
3. Training 0.629 *
4. Job design 0.649 (6.547)
Staff attitude
5. Staff members are generally happy working here 0.766 *
6. Staff members are happy to put extra efforts when needed 0.778 (10.571)
7. Employees are well motivated 0.934 (13.388)
8. Employees have positive thoughts towards management 0.814 (11.267)
Employee job satisfaction
1. You are satisfied with your job 0.737 *
2. Your work is both interesting and challenging 0.743 (5.962)
3. You are satisfied with rules and conditions of the job 0.628 (5.824)
Customer satisfaction
4. Customers are satisfied with bank services 0.537 *
5. Bank prides on friendliness attitude of staff 0.903 (10.609)
6. Customer service is the key factor to differentiate from
competitors 0.887 *
Note: t-value in parentheses
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
401
Table AVII Results of SEM analysis: standardized factor loadings and t-values for public banks
Sub-scale IG ID R SA EJS PCS
Intelligence generation
1. Formal intelligence generation 0.573 *
2. Informal intelligence generation 0.406 (3.406)
3. Segmentation of internal market 0.678 (3.648)
Intelligence dissemination
1. Between employee and employee 0.223 (2.291)
2. Attitudes of managers 0.925 (6.403)
3. Organization climate 0.505 *
Responsiveness
1. Incentives 0.613 (4.172)
2. Management consideration 0.389 (3.297)
3. Training 0.474 *
4. Job design 0.282 (2.372)
Staff attitude
9. Staff members are generally happy working here 0.911 *
10. Staff members are happy to put extra efforts when needed 0.897 (11.847)
11. Employees are well motivated 0.647 (8.172)
12. Employees have positive thoughts towards management 0.846 (5.552)
Employee job satisfaction
1. You are satisfied with your job 0.893 *
2. Your work is both interesting and challenging 0.910 (8.026)
3. You are satisfied with rules and conditions of the job 0.641 (7.496)
Customer satisfaction
7. Customers are satisfied with bank services 0.571 (4.326)
8. Bank prides on friendliness attitude of staff 0.434 (4.309)
9. Customer service is the key factor to differentiate from
competitors 0.976 *
Note: t-value in parentheses
Table AVIII Squares of the parameters estimate between dimensions and average variance extracted for pairs of dimensions in case of private bank
Sub-scale IMO SA EJS PCS
IMO 0.98 0.715 0.657 0.69
SA 0.402 (0.634) 0.93 0.758 0.792
EJS 0.012 (0.108) 0.015 (0.123) 0.80 0.734
PCS 0.167 (0.409) 0.16 (0.400) 0.003 (0.051) 0.92
Notes: Inter-factor correlations (in parenthesis) and square of inter-factor correlations appear below the diagonal; average variance extracted appears above thediagonal and construct reliability on the diagonal
Table AIX Squares of the parameters estimate between dimensions and average variance extracted for pairs of dimensions in case of public banks
Sub-scale IMO SA EJS PCS
IMO 0.96 0.574 0.596 0.572
SA 0.165 (0.406) 0.91 0.745 0.721
EJS 0.003 (0.058) 0.008 (0.091) 0.86 0.743
PCS 0.0001 (0.002) 0.001 (0.033) 0.013 (0.114) 0.86
Notes: Inter-factor correlations (in parenthesis) and square of inter-factor correlations appear below the diagonal; average variance extracted appears above thediagonal and construct reliability on the diagonal
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
402
Corresponding author
Gurjeet Kaur Sahi can be contacted at: gurjeetkaur18
@gmail.com
Executive summary and implications formanagers and executives
This summary has been provided to allow managers and executives
a rapid appreciation of the content of this article. Those with a
particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
research undertaken and its results to get the full benefits of the
material present.
Although there are big differences in running a business in a
developing country and doing it in a developed Western
country, some aspects remain the same. If, for instance, a
study into banking concluded that the most significant
indicators of internal market orientation are satisfying
employees’ job requirements, management consideration
and employees’ career development, are we talking
developed or developing country?
Need another clue? The researchers go on to say: “In
addition to the monetary incentives, whether employees stay
in the organization is best predicted by the treatment and
respect they receive at their work. Hence, management must
place equal emphasis on the generation and dissemination of
the internal market intelligence as well as being quite effective
in responding to the intelligence so generated.”
What’s being talked about here is the Indian banking
industry which has gone through turbulent financial reforms
– including deregulation – over the past two decades, and has
witnessed significant growth in private as well as foreign
banks, which has spurred a market-oriented competitive
environment. But references to internal market intelligence,
response to the intelligence generated, and treatment of and
respect for employees is surely applicable globally.
Concepts of Market Orientation (MO) and Internal Market
Orientation (IMO) are quite novel and pertinent for fast-
developing countries although the banking sector has been
rather slow to adopt marketing as a management discipline. In
their paper “Revisiting internal market orientation: a note”
Gurjeet Kaur Sahi et al. examine the relationships between
IMO and staff attitude, employee job satisfaction and
perceived customer satisfaction in the context of the Indian
banking industry. Economic reforms have resulted in the
opening up of many Indian bank branches abroad, the
introduction of many foreign banks to the Indian market, and
the start of debit cards and credit cards usage, a hallmark of
India’s new economic policy being the gradual liberalization
of its financial sector.
The efforts of Indian banks to generate internal market
intelligence are scarce. Consequently the authors recommend
bank managements not to rely only on internal customer
surveys, but rather a variety of formal and informal means like
meetings and discussion with internal customers, worldwide
customer databases, and formal market research such as
employees’ attitude surveys. Staff appraisal meetings and sales
responses in test markets can also be explored.
A survey associated with internal customer orientation
needs to place more emphasis on creating awareness about
internal service quality, on identifying internal customers’
expectations in terms of financial and non-financial
incentives, and on generating and understanding the
information for formulating an appropriate response to
internal marketing.
Bank management can utilize informal methods of
communication, such as setting a suggestion box or a
discussion board on the intranet to let staff express their
problems through a disclosed method or anonymously.
Managers’ responses for all the problems will benefit the
outcome of internal communication between management
and staff. Bank management should focus more on formal
and on-the-job training practices, as this plays a crucial role
not only in imparting relevant skills but also in infusing the
right kind of professional approach in solving diverse banking
problems. Management needs to focus on organizing more
training programs, such as lectures, group discussions,
conferences, case studies, program instructions so as to raise
employees’ knowledge towards banking service.
Tie-ups with top Indian business schools to regularly train
the employees can boost the morale of the employees.
Development programs can be designed to include: special
assignments, supervisory coaching, planned job rotation and
job enrichment to develop employees’ potential; an effective
appraisal system to provide an objective assessment of current
performance and future potential of employees, or employees
should be encouraged to set personal development goals and
develop action plans for achieving them. Efforts should be
made through continuous self-monitoring to integrate the
goals of individuals with organizational goals, so that the
values of being a long-term collectivist society can be
maintained.
Indian private banks appear to be more successful than
public sector banks in terms of implementing total quality
management TQM initiatives, particularly in context to HR,
customer focus, and top management commitment. Hence,
public sector banks need to redefine the customer service
parameters in order to compete with the private sector banks,
which are widely perceived as being more customer-oriented.
They must concentrate their efforts on instilling an
organizational culture that views employees as internal
customers and should focus more on TQM practices, as
they have significant influence on employees’ work-related
attitudes such as job involvement, job satisfaction, career
satisfaction and organizational commitment.
Public-sector banks need to increase employees’ pay
satisfaction by introducing a differential system based on
merit and effort. In addition, human resource practices must
be effectively and fairly used to enrich the job – for example
appropriate implementation of growth and training programs.
(A precis of the article “Revisiting internal market orientation: a
note”. Supplied by Marketing Consultants for Emerald.)
Revisiting internal market orientation: a note
Gurjeet Kaur Sahi, Subhash Lonial, Mahesh Gupta and Nitasha Seli
Journal of Services Marketing
Volume 27 · Number 5 · 2013 · 385–403
403
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