Linking Service Innovation to Organisational Performance: Mediating Role of Employee Productivity and Job Satisfaction

Introduction

The service sector is currently witnessing an impressive expansion while contributing positively to the Gross Domestic Product (GDP) of several countries (Ishola & Olusoji, 2020). The dynamism of the service sector, particularly information technology (IT) and IT enabled services has resulted in an unprecedented and rapid growth. Banks are therefore leveraging on technology like ICT and its related services to address the major concerns of their employees including improvements in service delivery methods, enhancing operational efficiency, and reducing the time to perform transactions.

Employees tend to be effective when the needed skills, equipment, knowledge and right technology is provided in the performance of their duties. It is important therefore that organizations give employees the needed tools and skills to motivate them to increase their productivity and achieve better performance for the organization. Employee performance and productivity is linked to employee job satisfaction (Bakotić, 2016; Latif et al., 2015; Mafini & Pooe, 2013). Job satisfaction refers to the compatible and incompatible feelings that employees have about their jobs. Job satisfaction can be defined as pleasant and positive state of job evaluation or job experience (Amoopour, Hemmatpour & Mirtaslimi, 2014). It reflects the extent to which the work environment (i.e. job, colleagues, and supervision) meet the individual needs. Job satisfaction is therefore one of the important variables in the search for understanding the attitudes and behaviors of employees towards their organizations. According to some recent studies, employees who have experienced job satisfaction are likely to be productive and remain in their jobs (Amoopour et al., 2014). Job satisfaction thus experienced by employees will effect on the quality of the services they provide which in turn will affect their job performance (Eisenberg et al., 2012).

Recent literature links employee performance or productivity to innovation. Osman, Sharif and Lajni (2016) mentioned that one of the methods organizations could use to increase or enhance productivity of employees is innovation. Innovation is essential for achieving a competitive advantage in startups and established companies (Lichtenthaler, 2020). Through innovation, employees are able to generate new product ideas to enhance the competitiveness of their firm (Sadikuglo & Zehir, 2010). Innovative activities thus improve administrative processes, increase efficiencies and make work management more effective (Walker, Damanpour & Devece, 2010). In order to become innovative, organizations must manage and foster an inner environment that supports the innovative behavioral traits among employees (Bysted, 2013).

Favre-Bonte, Elodie and Thevenard-Puthod, (2013) defined innovation as occurring when the bank takes deliberate actions to increase its profits. Innovation has also been explained as creating values that play a significant role in making organizations sustainable in the business market (Belal, Shirahada, & Kosaka, 2014). Organisational performance is linked to employee productivity through innovation. The empirical investigation further shows that the banking sector can develop process innovations, which give the bank a longer-term competitive advantage (Favre-Bonte et al., 2013).

The introduction of innovation in the banking service means that customers need not to be physically present in the banking halls for banking transactions (Yusheng & Ibrahim, 2019). Banking services can thus be performed via innovative platforms such as internet banking, mobile banking, automated teller machines and mobile banking apps.

A careful look at the service literature shows a paucity of research on the effect of innovation on employee productivity in the banking sector especially in Ghana. This study therefore seeks to close the gap identified in the literature in the Ghanaian context. This therefore calls for a research to find out how service innovation could enhance the productivity of bank employees as well as improve organizational performance. The major objective of the study therefore is to explore the impact of service innovation on organizational performance among banks in Ghana.

From the foregoing, this study seeks to achieve the following objectives: