An Empirical Investigation into the Role of Internal Service Quality in Fostering Organizational Performance

Abstract

The study seeks to evaluate the role of ISQ in improving organizational
performance.The sample included 80 bank branches, the data was collected from the
employees working in different bank branches located within the city of Peshawar.
Banks selected as part of the population required to have more than five branches.
Stratified random sampling technique was utilized to collect the data from different
banks operating in the city of Peshawar. A total of 564 questionnaires were distributed
in 80 different branches of medium and large sized banks. In the present study 404
questionnaires were returned, constituting the response rate of 71.63%. A total of 63
questionnaires were rejected. The total number of questionnaires usable for the study
was 341.The objective measures for bank performance used in the present study
included Return on Equity (ROE), Earnings per Share (EPS) and Return on Assets
(ROA). The study ascertains that ISQ has a significant influence in predicting both
subjective and objective organizational performance measures. The present research
strengthens the theoretical assertions that unless ISQ is not strengthened, the
organization will not be able to attain external service quality, growth and profit. The
effect of ISQ is important to top management, implying their responsibility for investing
to create an environment that nurtures trust, understanding, commitment, provision of
timely service, and positivity in attitude and behavior. Management which expects to
reap benefits of service quality must understand the need of better ISQ and should invest
in the intangible factors that have been proven to affect the tangible profits. The
research study affirms that it is not only external service quality that adds to the
profitability of the organizations. Therefore, it is found imperative for the banks to foster
ISQ in their workplace environment.