Study On The Capabilities Of Chinese Commercial Bank Branches

Core competence is a source of sustainable competitive advantage for organizations. It's especially important for commercial banks in China to develop their own core competencies as they are at a critical period of development. The capabilities at branch level are important and integral part of commercial bank's overall core competencies. Theoretically and practically, it's important for researchers to study commercial bank's branches and their capabilities and capability's development mechanisms.This study is designed to explore, based on extensive reviews of literatures in organizational capability theories and their applications in banking industry, the relationships between branch's capability and performance, as well as managerial and organizational mechanisms in developing branch's capability, in the context of commercial banking industry in China.A conceptual research model is proposed to explore the relationship between branch's capability and key contributing factors to the development of capability. Measurement instrument is developed and validated to test the research model. A total of six types of key contributing factors are identified and validated. Three groups of hypotheses are proposed and verified. It is hypothesized that branch performance is positively related to branch capability; key contributing factors and branch capability affect each other.Data were collected through questionnaires completed by senior and middle level managers of a number of commercial banks in China. In addition, in-depth case studies were conducted. Branch F of Commercial Bank A was selected for in-depth case study, along with two branches, Zhengzhou Branch of Pudong Development Bank, and Hangzhou Branch of Guangdong Development Bank.The main findings of the study are as follows. Branch performance is positively affected by branch capability; branch capability and key contributing factors affect each other; branch capability is affected by operating strategy, human resources management and development, institutional and cultural factors, and leadership; the development of branch capability is not only affected by key contributing factors but also the interactions among the key contributing factors.