"That's my job" Exploring the effect of brand empowerment towards employee brand equity: The mediating role of employee critical psychological states.
| Autor | Altaf, Mohsin |
1 Introduction
In 2015, China and Pakistan signed a US$46 billion trade route agreement called the China-Pakistan Economic Corridor (CPEC), which is an important part of the "One Belt, One Road" projects that connect Pakistan and the western parts of China to the Arabian Sea (Houreld, 2015). It was reported that the CPEC will generate approximately US$70 billion in revenue per year from Chinese cargo transportation (Aamir, 2016). This will create a new set of challenges and opportunities for Pakistani banks. Most Pakistani banks are willing to start operations in China but they will face fierce competition from Chinese ones, which are among the most powerful in the world, with nine Chinese banks ranking among the top twenty-five in the world (Cara, 2016). To overcome these challenges, some significant changes are required to meet the changing dynamics of the new competitive environment. Several top Pakistani banks claim that they are prepared to exploit new business challenges by reorienting their internal banking systems for this purpose (Aazim, 2016). As a strategic posture, banks are urged to adopt a strong brand orientation (Schmitt, 2012). Brand orientation could help in the development of a successful brand through re-orientating the entire organization around brand identity and core brand values (Hankinson, 2012). Consequently, the development of powerful brands and brand equity has become an important top management issue in this current competitive environment (Hirvonen, Laukkanen, & Reijonen, 2013).
The banking industry provides a large array of services to attract customers and to meet their demands and this, in turn, creates support for the economy (Driga & Dura, 2014). As with other services, banks face unique challenges in branding due to the intangible offerings and lack of product and service differentiation between competing banking brands (Bravo, Montaner, & Pina, 2010). It should be noted that even though private and public sector banks operate in the same environment, the performance of private banks is well above that of public sector banks (State Bank of Pakistan [SBP], 2016), and private banks have shown higher profitability (Waleed, Shah, & Mughal, 2015). Public banks have shown the worst performance, and they have to endure a highly bureaucratic culture instead of a brand-oriented culture, as highlighted by the former governor of the State Bank of Pakistan:
In the government banks the staff worked like typical government employees, coming to office at 9:00 a.m., checking files; having nothing important to do and leaving at 5.00 p.m. without doing much work. These banks suffered from a high bureaucratic approach, unprofitable branches and poor customer service (Husain, 2005, p. 1).
Hence, public sector banks need a brand-oriented culture to compete with local and international banks. To this end, employee behavior should represent and communicate the brand values of public sector banks. This is because employees interact closely with clients and are responsible for service delivery and issues related to service delivery (Chelladurai, 2006).
Employees' role in branding has been largely overlooked in branding literature (King, Grace, & Funk, 2012)2012, as such literature has previously focused on the company's image in the minds of customers. In recent years, companies and academics have started to understand the powerful implication of employees' perceptions of an organization. Most well known marketing scholars believe that customer contentment and loyalty towards a brand spark from the contentment and loyalty among its employees (Boone & Kurtz, 2012; Dijulius, 2011; Hennig-Thurau & Hansen, 2013). Thus, in services, the behaviors of employees is the primary determinant of value creation (Ind, 2007), and so scholars of this area tend to focus on investigating brand management from inside an organization specifically through the employees. This approach is termed as internal branding. The shift from external branding to internal branding started in the last decade. Employee behavior is required to represent and communicate the brand values of public sector banks. This is because employees interact closely with clients and are responsible for service delivery and issues related to service delivery (Chelladurai, 2006).
Aligning employee behavior with the brand promise is often the focus of internal branding. Considerable efforts have been seen in the branding literature to maintain employee behavior according to the communicated brand value. The literature on internal branding has often focused around the brand related attitudes of employees, i.e. brand commitment and its impact on employees' brand behavior (Burmann, Jost-Benz, & Riley, 2009; Burmann & Zeplin, 2005; Burmann, Zeplin, & Riley, 2009). On the other hand, there are limited research efforts on employees' critical psychological states or their mental processes, i.e. employee brand understanding (Piehler, King, Burmann, & Xiong, 2016; Xiong, King, & Piehler, 2013) and brand psychological ownership (Chang, Chiang, & Han, 2012; Chiang, 2009; Chiang, Chang, Han, & McConville, 2013), which could be used to manage employees' brand behavior. Moreover, there is little discussion on the antecedents of employee critical psychological states in the branding literature (Altaf, Mokhtar, & Ghani, 2017; Piehler et ah, 2016) 2016b. Hence, based on the need to uncover the dynamics of employee critical psychological states (Altaf et ah, 2017; Piehler et al., 2016; Xiong et ah, 2013), this study examines the effect of brand empowerment on the development of employee critical psychological states, i.e. brand psychological ownership and employee brand understanding, and its effects on employee brand equity.
2 Literature Review
2.1 Employee brand equity
Employee brand equity is the third perspective of brand equity. Previously, the literature on brand equity only focused on the consumer and financial sides (Houreld, 2015; King & Grace, 2009). In the first decade of this new century, King & Grace (2009) shifted the paradigm by presenting a new model of employee-based brand equity. This model focused on the employee side of brand equity. King & Grace (2009) defined employee-based brand equity (King & Grace) as "The differential effect that brand knowledge has on an employee's response to their work environment" (p. 130). The purpose of employee brand equity is to translate brand identity in a way that is important and meaningful for employees in terms of their roles and responsibilities. In the model, the behavior of the employee was denoted as employee-based brand equity benefits, which were measured through brand citizenship behavior, brand endorsement, brand loyalty, and employee satisfaction. Later, King et al. (2012) modified the measurement of employee-based brand equity benefits and termed them as "employee brand equity". More specifically, they stated that "employee brand equity is the result when an employee possesses brand knowledge that engenders positive, productive employee brand-related behavior that is congruent with the communicated brand identity" (King et al. 2012, p. 271).
2.2 Employee brand understanding
Employee brand understanding is defined as an increase in employees' perceptions regarding their roles and responsibilities in brand success as well as their skill in delivering brand promise (Xiong et al., 2013)2013. In other words, employee brand understanding is the "cognitive representation of the brand in the mind of employees" (Piehler et al., 2016). In the same vein, Thomson, Chernatony, Arganbright, and Khan (1999) claimed that a good understanding of organizational strategy better prepares employees to identify how their roles can add value to the brand. Organizations may vary in terms of their size and branding practices, but employee brand understanding and employee roles in the delivery of services are fundamental to the service experience (Xiong et al., 2013)2013. Up until now, few attempts have been made to establish employee understanding and employee capability with respect to their role as brand ambassadors. Miles and Mangold (2004) conceptualized the employee branding process and highlighted that it is a process based on the information an employee receives from internal and external sources and from interpreting the information. In addition, King and Grace (2008) revealed that employees need to perceive that the brand values they learn are meaningful, relevant, and important to them in order to achieve extra-role behavior. Otherwise, employees remain neutral and only work according to their job descriptions.
According to Hackman and Oldham (1975), an employee develops different levels of psychological states when he or she is exposed to different job designs that lead the employee towards personal and job outcomes. Different levels of psychological states are job knowledge, job meaningfulness, and job responsibilities, whereas different levels of job designs include skill varieties and task identities. When employees perceive that they are skillful and have sufficient knowledge regarding their work, they are more likely to deliver high quality services (Oldham & Hackman, 2010). Therefore, according to JCT, as well as previous literature, how employees internalize the brand relates to three factors that constitute employee brand understanding. These factors are: (1) employee perceived brand knowledge, (2) employee perceived brand importance, and (3) employee perceived brand role relevance. Regarding these critical psychological states of employees, Xiong et al. (2013) conceptualized employee brand understanding according to the critical psychological states under JCT. The following section will briefly describe the conceptualization of employee brand understanding under JCT.
2.3 Brand psychological ownership
According to Pierce, Kostova, and Dirks (2003), psychological ownership is "the state in...
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