Employee Perceived Value in Retail Banking: Development and Validation of a Multidimensional Measure of the Employee-Side Foundations of Service Innovation

Abstract

Purpose: Employees are widely treated as the bridge between a bank’s innovation intent and the customer’s experience of it, yet employee-side value perceptions are rarely measured with a validated, context-specific instrument. This study conceptualises Employee Perceived Value (EPV) in retail banking and develops and validates a multidimensional measure of it.

Design/methodology/approach: A 21-item pool, derived from the literature and refined through expert review and a pilot study, was administered to 384 employees of five public and five private sector banks across ten districts of Jharkhand, India. The sample was randomly split into calibration (n = 192) and validation (n = 192) halves. Parallel analysis and maximum-likelihood exploratory factor analysis were applied to the calibration half; confirmatory factor analysis with robust maximum likelihood (MLR) and diagonally weighted least squares (WLSMV) estimation was applied to the validation half and the full sample.

Findings: A 10-item, three-dimensional structure emerged: Relational and Innovative Work Climate, Digital Channel Enablement and Branch Automation Technology. The model fitted the validation data well (MLR: CFI = .975, TLI = .964, RMSEA = .076, SRMR = .040; WLSMV: CFI = .998, RMSEA = .051), outperformed one- and two-factor rivals, and was invariant across the two random halves up to the scalar level. Composite reliabilities ranged from .83 to .94, average variance extracted from .60 to .83, and all heterotrait–monotrait ratios were below .75. The relational dimension was only moderately related to the two technology dimensions (φ = .34–.42), which were closely related to each other (φ = .73).

Originality/value: The study offers a validated EPV measure for bank employees in an emerging-market, semi-urban and rural setting. It shows that employees’ relational value and technological value are distinct, so a single EPV score would obscure the human side of service innovation. Propositions linking each dimension to service innovation are advanced for future multi-source testing.