h

ttp
s:/
/do
i.o
rg/
10.
53056/
njms
r-2016001 I
SSN(Pr
int
):2467-
9356
I
SSN(
Ele
ctr
oni
c):2795-
1545
ht
tps
://
www.
nepj
ol.
inf
o/i
nde
x.php/
njms
r/i
nde
x

Ne
pal
es
NJMSR
eJour
nalofMa
nage
mentSc
ienc
eandRe
sea
rch

Ape
err
evi
ewe
dandNEPJOLi
nde
xedj
our
nal

Vo
lume-V II
ssu
e-I IMa
rch2022

F
ocu
sIs
sue

AnOf
fici
alPubl
ic
ati
onof
Gl
oba
lCol
legeI
nte
rna
tiona
l
https://www.nepjol.info/index.php/njmsr/index ISSN (Print) : 2467-9356
https://doi.org/10.53056/njmsr-2016001 ISSN (Electronic) : 2795-1545

Nepalese Journal of Management Science and Research

(NJMSR)
Volume - V I Issue - I I March 2022

A peer reviewed and NEPJOL indexed journal

Focus Issue

Mid-Baneshwor, Kathmandu, Nepal

Tel: 977–01–4465186 | 4488410 | Fax: 977–01–4465186
Email: [email protected] | URL: www.gci.edu.np
NJMSR Editorial Board

Managing Editor © Copyright:

Dr. Karan Singh Thagunna All rights reserved. No part of this publication in
general may be reproduced or transmitted, in any
Chief Editor
form or by any means, electronic, mechanical,
Dr. Dev Raj Paneru
photocopying and recording or any information
Editors storage system without the prior permission of
Dr. Subash Shrestha the Nepalese Journal of Management Science
Dr. Akshay Arora
and Research. Nepalese Journal of Management
Er. Navin Duwadi
Mr. Manoj Bhatta Science and Research is published bi-annually
Mr. Rajendra Ojha and distributed by Global College International.
The statements or opinions expressed in the
journal are personal views of authors and do not
Advisory Board
Prof. Dr. Prem Raj Pant represent the official views of NJMSR editorial
Prof. Dr. Pushkar Bajracharya board or Global College International.
Prof. Dr. Radheshyam Pradhan
Dr. Khagendra P. Ojha
Dr. Drona Lal Puri Publisher
Global College International
International Advisors Mid-Baneshwor, Kathmandu, Nepal
Prof. Dr. Himachalam Dasaraju Tel: 0977-01-4465186 / 4488410
Commonwealth Visiting Fellow UK www.gci.edu.np, E-mail: [email protected]
Sri Venkateswara University, Tirupati, India.
Prof. Dr. Sanjay Satapathy, Vice Chancellor,
Kalahandi University, Odisha, india Principal Contact
Dr. Karan Singh Thagunna
Nepalese Journal of Management Science and
Publishers Team Research
Mr. Ram Prasad Nyaupane Global College International
Mr. Sushant Marasini Mid-Baneshwor, Kathmandu, Nepal
Mr. Anurag Gaire Tel: 0977-01-4465186 / 4488410
Mr. Surendra Joshi www.gci.edu.np, E-mail: [email protected]
Mr. Rishav Khanal

Subscription
Layout & Cover See the preliminary page for detail information
Mr. Raju Bhattarai

Print
Print Communication Pvt Ltd.
 Editorial
Global College International (GCI) is a higher education institution established to preparing
communities of youth as skilled entrepreneurs, professionals and researchers having national
and international profile. GCI is managed in the lead of eminent academicians, professional
researchers and competent learner groups as its human assets. The college brings knowledge
communities and competent minds together and in interaction with the external educational
agencies and environments on an interface of multi-faceted academic system through research
activities, programs and publications as the key avenues of learning together. The enrichment of
advance educational systems allows GCI to pose itself as being a distinctive academic platform
that incorporates research as its primary tool to educate the 21st century young minds.
Nepalese Journal of Management Science and Research (NJMSR) is a scientific publication of
Global College International positioned as a key source to enhance research endeavors that are
lent space for public dissemination. It offers the academic communities an active avenue wherein
to publish their research knowledge as instrumental to developing new capabilities of learning
conceptualized to take a shape at the nexus of theory and practice. NJMSR includes research
papers for publication selected scientifically in consideration to their quality in procedural
and analytical rigor that results in the design of objectivity maintained in the communication
of research findings validated for an academic piece of work. As a research publication, NJMSR
has been a key medium to connecting partner institutions, international academia, faculty and
students together in research dissemination on achieving academic excellence.

Publication of NJMSR combines with the international conference participated by the researchers,
scholarly practitioners, professors, business leaders, and intellectual persons of national and
international repute making dissemination of research knowledge relating to the diverse key areas
of business or corporate management. It allows the research minds to come together on developing
research practice as a medium of innovation. It gives the mature and amateur researchers a
common platform to involve in the scientific process of learning and generate knowledge which in
turn adds value to the management discourses. It is at this point, NJMSR contributes positively to
expand intellectual thought process that will be instrumental for learning to happen at the nexus
of theory and practice.
This edition of NJMSR has been brought to the publication as a focus issue as all the research
papers selected in this edition center their arguments on the theme of business management with
special reference to finance, marketing, human resource management in the banks and a few
multinational based companies used in each work as the main units of analysis.

In his research paper titled; ‘Impact of COVID and Challenges in Academia with Reference to
Teachers’ Job Satisfaction,’ Binod Ghimire clarifies the relationship between flexible working
arrangement factors and employees’ job satisfaction. Considering job satisfaction as a crucial
part of human resource management aspect, it studies flexible work arrangement factors and job
satisfaction among 470 teachers engaged in their work according to the flexible work arrangement
practices during COVID 19. In findings, the paper provides empirical insights about how change
is observed by the adaptation of flexible work arrangement upon satisfaction. With the evidences
as indicated, the paper contributes and implies academic institutions to consider their experience
of FWA practices during COVID 19 and accordingly should revisit and observe the best flexible
working pattern.

In the article with title, ‘Financial Planning and Behavior of Students in Nepalese Higher Education,’
the author Joginder Goet looks at the impact of several factors on higher-level students’ financial
planning. The research findings based on correlational results in this work demonstrate family
background (FB), family support (FS), and financial socialization (FSO) having their substantial
impact on financial planning for students in higher education. Furthermore, family history has the
greatest influence on financial planning, whereas financial socialization has the least impact. The
practical consequences are clear for students in higher education, and they aid in good financial
planning. In short, the relating financial planning with the students behaviors, the author brings to
the inspiration of the stakeholders that education institutions should take students demographic
background features as some determinants on how they will behave that in turn has an impact on
their institutional performance and of course life of it.

In the third paper titled, ‘Talent Management Practices on Organizational Performance in

Nepalese Commercial Bank,’ the author Kishor Kumar Gautam examines the impact of talent
management on the organizational performance in banking sector in Nepal. Based on quantitative
survey supported by regression modeling technique, the researcher analyzes the data in order to
determine what level of impact; talent management practices make on organizational commitment.
The results show significant relations between talent management practices and organizational
performance. Further, the regression analysis reveals significant impact of management practices
on the banks’ performance with respect to their managing clients, customer complaints, company
reputation, the productivity of employees, and commitment issue.

The authors Dev Raj Paneru and Mahesh Kumar Bhandari in their research titled, ‘Impact of
non-financial rewards on employees’, motivation and their turnover intention in the context
of Nepalese Development Banks,’ investigate the effect of non-financial incentive scheme on
employees’ motivation and their turnover intention. Their study examines perception of the
employees of the Nepalese development banks regarding the nonfinancial rewards as regards their
motivation. Based on descriptive and explanatory analysis of the primary data from 100 sample
banks, the study reports Job Security, Challenging Work, Performance Recognition, Flexibility of
the work, and Leave Provisions related as significant predictors of employees’ motivation. More
specially, it presents job security, leave provisions, challenging work, flexibility of work condition,
and performance recognition as being the strongly significant predictors of employee motivation
which the study communicates to have been considerably unsatisfactory in practice in the Nepalese
development banks.

Using PMO model built on basic of branding theory and the consumer behavior theory, in their
study, ‘The Impact of Covid-19 Pandemic on Brand Preference in Purchasing Decisions of Hand
Sanitizers in Kathmandu, Nepal’, Abhisekh Man Shrestha and Akshay Arora investigate how a
pandemic affects brand preference in purchase decision of hand sanitizer in Kathmandu, Nepal.
The findings of qualitative analyses indicate aspects of price, quality, risk and loyalty associated to
the pandemic effects within the context of the health aspect of the COVID-19 virus. While there
appeared large shifts in the preferred sanitizer brands due to unavailable of stock, also there were
large changes in health consciousness and qualitative demands on sanitizer brands due to the
pandemic affecting brand preference. In this way, the study suggests impact of situation as key
predictor of quality demands for the consumers that in turn makes a difference in the sale of the
commodity.

The authors, Birendra Bista and Subash Shrestha in their paper titled, ‘Effect of Total Quality
Management Practices on Organizational Performance: A Case of BBA Program of Tribhuvan
University in Kathmandu Valley’, analyze the effects of TQM practices on organizational
performance. The results of the empirical data from the sample sizes of 172 respondents, reveal
top management commitment, employee involvement, customer focus and employee training
significantly positively associated with organizational performance of the universities and colleges
of BBA program. The study also recommends future studies to test the effects of the other elements
of TQM practices on organizational performance.

In the other paper titled, ‘Impact of Credit Risk Management on Financial Performance of
Nepalese Commercial Banks’, Dinesh Kumar Gole and Karan S. Thagunna investigate the credit
risk management indicators and their associations with the financial performance of Nepalese
commercial banks. Their research sheds light on Credit risk management as being a major
impactor on the financial performance of Nepalese commercial banks. The capital adequacy ratio,
non-performing loan ratio, and liquidity ratio all have a detrimental impact on bank performance,
according to the findings. Whereas it too informs LLP not as significant factor to determine
the bank’s performance. As a result, the authors advise to enhance financial performance and
minimize the risk of non-performing loans in the future. They argue that the banks must watch
very carefully the loans’ performance and analyze thoroughly the clients’ credit history and ability
to pay back their debts prior to any approval of loan applications.

Relating to the how question of startups in Nepal, Deepak Koirala, and Navin Duwadi in their
study titled, ‘Nepalese Networking Business Startups and International Expansion,’ investigate
business networking practices used by Nepalese startups on international expansion. The study
also explores those factors that stop the Nepalese startup to become global. The research provides
the answer to specific business strategies adopted by the Nepalese startups to expand themselves
in the international market. It shows specific business strategies applied by Nepalese startups and
results. It specifically brings these elements into light; use of local knowledge, skills, IP, innovation
among others as major factors that are responsible for expanding international business Network.
Based on its argument, the study suggests that the Nepalese Startups should focus on collaboration
strategy as well as joint venturing strategy while expanding their business in international business
Network. The additional factors like funding, vision, language, culture, and tradition, international
trade policy, etc. are also related as being responsible components for international business
network.
In their joint research paper titled, ‘Celebrity Endorsement and Consumer Buying Behavior
in Kathmandu, Nepal,’ Subani Panta and Ram Prasad Nyaupane investigate what celebrity
endorsements have been put into the practice for representation of services rather than performing
and delivering their genuine job as performer like in any stream such as showbiz, athletics.
Regardless of the expenditure and the threats drawn by the means of this method of promotion
and marketing, it has been in use somehow comprehensively in this age. The study illuminates
that implementation of celebrity endorsement has now become an omnipresent component of
advertising and communication in an organization. Nepalese people are now more conscious about
the things they purchase and tend to look after the products endorsed by a celebrity and consider it
to be a reliable brand. The marketers and the advertising company see this as an opportunity and
invest upon celebrities so as to build and establish their image as one of the strongest and most
leading brands in the market, increase revenue and market share.

In the paper titled, ‘Effect of Workplace Environment on Employee Performance in Nepalese

Commercial Banks,’ the researchers Pratistha Sharma Poudel and Manoj K Bhatta investigate
the effect of workplace environment on the employee performance in the Nepalese commercial
banks. It estimates the relationship between physical environment, supervisor support, job aid and
work life conflict and employees’ performance and commitment. It has brought positive finding
regarding the relationship between the workplace environment and employee performance
in case of the Nepalese Commercial Banks, though certain practices are yet to be improved as
indicated from poor performance of the banks in solving the work life conflict and their employee
performance.

Raising the problem of ethical behavior of senior staff and leadership, the authors Nisha Rana
Magar and Dev Raj Paneru, in their paper titled, Impact of Ethical Behavior on Employee
Performance in Nepalese Commercial Banks examine the impact of ethical behavior on employee
performance in Nepalese commercial banks. Based on primary data from 150 sample respondents,
the study examined relations of ethical behavior with employee performance in the sample banks.
The regression model was used to test the significance and effect of ethical behavior on employee
performance in Nepalese commercial banks. The correlation and regression results of the study
show teamwork and leadership style, reward and punishment, and discipline having positive
impacts on employee performance. Whereas the regression results showed racial discrimination
related negatively to trigger low employee performance in the sample banks. Similarly, corruption
has a negative impact on employee performance. In this way, the study argues significant relations
and impact of ethical behaviors on employee performance in conclusion.

Based on the above outlined summaries of the articles, it is surfaced that this focus issue of
NJMSR-2022 incorporates the research works all that focus to analyzing the financial sectors on
empirical designs that specifically relate to the problems of managing human resources, financial
and marketing management together with other interconnected areas. This edition of the journal
has been entitled to be a focus issue and it is particularly due to the research papers that deal with
the problems all relating to human resource, finance and marketing problems. The other special
feature that would demand close reading and critical review from the scholarly readers is research
in this issue. Each paper selected in this scientific edition approaches and analyses the selected
business phenomena and their interconnected issues centering on the issue of management on
empirical research design. As such, it is anticipated that the readers will be benefitted considerably
from the findings that each article in this focus issue has communicated and it is due to the results
that the papers have derived from the primary sources of data. Scholarly circles of any discipline
can benefit from reading NJMSR-2022 in general whereas as it is aimed to feed the questing
minds whose concern it has been to examine existing practices and explore perceptions of the
employees and employers in the corporate sectors that make a difference as concerns effectiveness
of component management, the scholarly circles from management discipline and corporate
sectors are the real target readers of this issue in particular. This issue offers research information
also that shall benefit to the top level managers along with the researchers who would like to gain
insights on how the human resource, marketing and finance management has been progressing
in the banks and corporates operating in Nepal at present and also in the coming times. Lastly,
nevertheless, journal formatting aspects have been managed with uniformity and article selection
has been based on scientific evaluation of research design and analyses that are drawn to yielding
the research results which have been adopted at the virtue of validity and reliability, the individual
authors should be taken accountable for deviation or flaws if any marked in the content of a
respective paper.

Dev Raj Paneru, PhD

Chief Editor
NJMSR-2022 (Focus Issue)
 CONTENTS

IMPACT OF COVID AND CHALLENGES IN ACADEMIA WITH THE REFERENCE TO TEACHERS’

JOB SATISFACTION
Binod Ghimire, PhD 1

FINANCIAL PLANNING AND BEHAVIOR OF STUDENTS IN NEPALESE HIGHER EDUCATION

Joginder Goet, PhD Scholar 15

IMPACT OF TALENT MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE IN

NEPALESE COMMERCIAL BANK
Kishor Kumar Gautam, MPhil 27

IMPACT OF NON-FINANCIAL REWARDS ON EMPLOYEES’ MOTIVATION AND THEIR

TURNOVER INTENTION IN THE CONTEXT OF NEPALESE DEVELOPMENT BANK
Dev Raj Paneru, PhD, Mahesh Kumar Bhandari 44

THE IMPACT OF COVID-19 PANDEMIC ON BRAND PREFERENCE IN PURCHASING DECISIONS
OF HAND SANITIZERS IN KATHMANDU, NEPAL
Akshay Arora, PhD, Abhisekh Man Shrestha 67

EFFECT OF TOTAL QUALITY MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE:

A CASE OF BBA PROGRAMOF TRIBHUVAN UNIVERSITY IN KATHMANDU VALLEY
Subash Shrestha, PhD, Birendra Bista 89

IMPACT OF CREDIT RISK MANAGEMENT ON FINANCIAL PERFORMANCE OF NEPALESE

COMMERCIAL BANKS
Dinesh Kumar Gole, Karan S. Thagunna, PhD 116

NEPALESE NETWORKING BUSINESS STARTUPS AND INTERNATIONAL EXPANSION

Deepak Koirala, Navin Duwadi, Er. 139

CELEBRTITY ENDORSEMENT AND CONSUMER BUYING BEHAVIOR IN KATHMANDU, NEPAL

Subani Panta, Ram Prasad Nyaupane 163

EFFECT OF WORKPLACE ENVIRONMENT ON EMPLOYEE PERFORMANCE IN NEPALESE

COMMERCIAL BANKS
Pratistha Sharma Poudel, Manoj K Bhatta 182

IMPACT OF ETHICAL BEHAVOIUR ON EMPLOYEE PERFORMANCE IN NEPALESES

COMMERCICAL BANKS
Nisha Rana Magar, Dev Raj Paneru, PhD 204
 Notes
Articles are subject to editorial by referees from the community of management
and economics. Comments or notes regarding articles are welcome and will
be considered for publication to the extent possible. The opinions and the
interpretations expressed in the articles are the personal opinions of the authors
and reviewers and do not necessarily reflect the views of the publisher and
editors, or of any institution with the information with which the author may be
associated. The editorial board does not guarantee the accuracy of the data and
the information included in the articles and accepts no responsibility, whatsoever,
for any consequences of their use.
 Request Form
Nepalese Journal of Management Science and Research
Global College International
Mid-Baneshwor, Kathmandu, Nepal
Tel: 977–01–4465186, 4488410
Subject: NJMSR Subscription
Dear Sir/Madam,
I would like to subscribe Nepalese Journal of Management Science and Research
(NJMSR) bi-annual publication of Global College International, Mid-Baneshwor,
Kathmandu,
Nepal.

Kindly supply to following address:

Full Name: …………………………………………………………...........................
Designation: ………………………………………………………............................
Institution: …………………………………………………………...........................
.............................................................................................................................................
Mailing Address: ..............................................................................................................
.................................................................................................................................
Telephone: ............................................................................................................
Email: ……………………….............................................................................
Fax: ........................................................................................................................
Sincerely, …………………………....................................................................
Name: …………………............ Date: ………………/……/……
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

IMPACT OF COVID AND CHALLENGES IN ACADEMIA WITH THE REFERENCE TO

TEACHERS’ JOB SATISFACTION

Binod Ghimire, PhD∗

Abstract
The paper aims to clarify the relationship between flexible working arrangement factors
and employees’ job satisfaction. It aims to expand the domain of FWA practices among
academia incorporating teachers considering job satisfaction as a crucial part of human
resource management aspect.

This research was based on the impact of flexible work arrangement factors and job
satisfaction among 470 teachers who were engaged in their work according to the flexible
work arrangement practices during COVID 19. Such engagement might be in job either
electronically or physically changing the shift or time as per necessity.

It provides empirical insights about how change is observed by the adaptation of flexible
work arrangement upon satisfaction. Furthermore, it is found helpful to maintain satisfaction
with the balance between work life and personal life.

With the evidences, this paper finally contributes and implies academic institutions to
consider their experience of FWA practices during COVID 19 and accordingly should
revisit and observe the best flexible working pattern. However, such FWA should not mean
deregulation, and the issue of flexibility must be treated as work- procedure, where the
satisfaction and well-being of the employees are placed at the center.

Keywords: COVID-19, Social distancing, Flexible work arrangements, Job satisfaction,

Human resource management

∗ Binod Ghimire, PhD, faculty at Global College International

1 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION
With the demand for more exposure and need for work result, there seems pressure in
work resulting into greater employee stress, less satisfied employees, loss of productivity,
and higher turnover. All these results are costly for companies. In this connection, greater
flexibility in the workplace would have some positive effects as workers would have choice
and control to achieve a better fit of their hours worked to their preferences (Cooper, &
Burke, 2008).

The globalization of the world economy and the growth of e-commerce have driven the work
schedule in a new perspective. Information technology has become an integral part of the
office environment, and the physical location of a working place has been gradually losing
its importance (Perezet al., 2003). It has made the notion of a 40 to 48 hour workweek
obsolete. Initially, the concept of FWA was used to refer into different forms such as flexible
work hours and tele working (Hill et al., 2008). Now, FWA is used as a term to encompass
‘work options that permit flexibility in terms of “where” work is completed (often referred
to as telecommuting or flex place) and/or “when” work is completed (often referred to as
flextime or scheduling flexibility)’ (Allen et al., 2013, p. 345).

Flexibility at work now takes various forms and includes job sharing, variable working time
and telecommuting alongside conventional part time schedules. Now- a-days, organizations
are adopting flexible work arrangement and includes flexibility in the scheduling of hours
worked, such as alternative work schedules (e.g., flex time and compressed workweeks),
and arrangements regarding shift and break schedules; flexibility in the amount of hours
worked, such as part time work and job shares; and flexibility in the place of work, such as
working at home or at different locations. Cole (2006) argued that these arrangements vary
across different countries and reflect the amount of control overworking time that employer
or employee enjoys in relation to when the work is done and the number of hours worked
during a specific period.

The corona virus outbreak was a global issue and brought significant effects on the
working model and system in the world. At that time, good fit between work demands and
matching responsibilities with work flexibility could improve the quality of both work and
safe home life for employees. Having newer experience with the newer things, we could
understand the importance of introducing and learning a newer dimension of flexible
work arrangement concept from employers’ as well as employees’ viewpoint. Basically, this
research is concerned with the understanding of flexible work arrangement and employees’
individual satisfaction level. With the exposure of safety issues due to COVID, here in Nepal,
few organizations had adopted flexible working models in their organization in the form of
tele work, flextime, and part-time schedules. With this consideration, this research is aimed
to examine the impact of flexible working arrangement on employees’ job satisfaction.

NJMSR Volume V I Focus Issue I 2

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2. LITERATURE REVIEW
Previous studies have revealed a number of multifaceted implications and advantages of
flexible working arrangements for individuals, organizations, and society. Flexible working
arrangements are useful for achieving more efficient use of human resources (HR) because
they provide an opportunity to allocate employees and their time depending on the nature
of work that has to be done (Berker, Morley, Tiernan, Purtill, & Parry, 2017). It is used to
recruit talented employees and retain them with higher satisfaction and productivity.
Some organizations are adopting flexible working arrangements with Results-Only Work
Environment (ROWE) so that employees get job done being fully responsible to achieve the
desired results.

The rationale of this arrangement is to let employees focus on productivity, rather than
whether they are physically present or not in the office. In general, employee job outcomes
are the results of the certain inputs. Employee outcomes are manifested in the form of
employee’s performance and productivity. It can be expressed as human efforts to produce
more and more with the less and less inputs of resources to ensure that there are distribution
of benefits among the maximum number of people concerned. European Productivity Council
states that “Productivity is an attitude of mind. It is a mentality of progress of the constant
improvement of that which exists. It is the constant adoption of economic and social life to
changing conditions. It is a continual effort to apply new techniques and methods. It is faith
in human progress”. The concept of productivity recognizes the interplay between various
factors in the workplace. The output or results achieved may be related to many different
inputs or resources in the form of various productivity ratios. Each of separate productivity
ratios is influenced by a combination of many relevant factors (Bain, 1982). One of the
factors is innermost happiness and willingness to work which is only possible when one is
in satisfactory level from doing his or her job in a flexible way.

McNall, Masuda, and Nicklin (2009) found that the availability of flexible work arrangements
such as flextime and compressed workweek seems to help employees experience greater
enrichment from work to home, which, in turn, is associated with higher job satisfaction
and lower turnover intentions. Similarly, De Menezes & Kelliher, (2011) highlighted that
HRM practices that increase workforce flexibility may boost productivity and innovation,
and ultimately could lead to increase financial performance, which can manifest itself as
increased profitability. Impact of Job satisfaction can be seen in lower turnover intention
and increase in financial performance of the organization.

Moreover, Beauregard and Henry (2009) found organizational commitment, reduced

turnover intentions, and increased job satisfaction apply only if employees perceive that
the usability of flexibility is to increase their control over time. With this, employees are not
3 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

interested to be in bound with control. As world moves on, innovations in technology have
made work easier as it allows work to be done anytime, and anywhere. Cloud technology
makes it possible for people to work in any location, log into their organization’s server,
access shared documents, or respond to emails. (Spreitzer et al., 2017). All this gadget and
technological development is supporting for newer dimension of working practices where
individuals can handle work anytime, and anywhere.

COVID 19 resulted in economic shock, livelihood problems, unemployment, hunger,

inequality and crimes. During pandemic, here in Nepal, some established employers tend to
practice flexible work arrangement practice. However, the attitude of employers/managers
towards workers during lock-down is basically focused on the intention of dismissal; avoid
paying salary and wage during the lockdown period. Very few employers have provided one-
time assistance to their workers in credit and cash. (Upadhyaya & Academy, 2020). Mostly,
flexible arrangement practices were made from employer view point; lessening manpower
and reducing the cost. During COVID, there was hardship for the business to survive; people
were forced to do work in flexible way not for satisfaction but for not getting any other
option without it. In this context, some organizations found FWA as a way forward for the
efficient work practices with the minimum pay rather than job satisfaction of an individual.
With the review towards flexible working hours and systems, flexibility in working
arrangement practices could be observed as a good practice if it is oriented towards employees
and for the sustainability of the organization. It is being emerged as a need in most of the
nature of work which can be functioned autonomously with flexible arrangements rather
than traditional 9 to 5 job timing. Since the concept of flexible working arrangement is taking
consideration in modern organizations with the objective to retain most talented employees
by balancing their work-life commitments through job satisfaction, these kinds of study is
necessary for future reference for other organizations too. Thus, this researcher tried to fill
the gap and undertake the survey to find out whether flexible working arrangements had
influence upon job satisfaction of employees or not.

3. METHODOLOGY
The research was conducted to get an insight into the level of job satisfaction with the use
of flexible job arrangement schedules practices. This research, further tries to identify and
pinpoint the respondents who had worked with flexible arrangement practices designed
by organization to face lock down caused by COVID 19 pandemic. So, this paper is based
on purposive sampling of teachers from academic institutions so as to understand their
perceived job satisfaction with the flexible work arrangement practices. The review of early
research signifies that there are several factors playing an important role in job satisfaction
of employees while providing flexible work schedules. Based on this research, issue and

NJMSR Volume V I Focus Issue I 4

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

literature review, following conceptual framework and hypothesis had been developed.
Independent Variable Dependent Variable

Flexible Work
Arrangements

Psychological balance
(Perceived barriers in
flexibility)
Job Satisfaction

Work/family balance

Figure 1: Conceptual framework of flexible work arrangements and job satisfaction.

With the literature review, flexible work arrangements were helping employees achieve
better work life balances and such changes were accepted by management as well as
employees. However, in organizations, where FWA has been introduced, there are a number
of barriers that prevent them from receiving advantageous parts of this practice. The major
barrier incorporates life commitment, work commitment and financial issues. Hence, basic
issues had been identified; work/ life balance and psychological balance for perceived
understanding about flexible work arrangement practices. Relations of these issues were
hypothesized as:
H1: Demographic factors have influence on teachers’ job satisfaction.
H2 : Flexible work arrangements have a positive impact on teachers’ job satisfaction.

3.1 Participants and Design

This survey is based on the employees who enjoyed flexible work arrangements during
COVID 19. Population of the study incorporated all levels of employees who were engaged
in their work according to the flexible work arrangement practices. Such engagement might
be in job either electronically or physically changing the shift or time as per necessity.
Their practical exposure to the reality about FWA and their psychological status in terms of
satisfaction is the key issue of the research. Before initiation of the survey, a close interview
was made among 10 teachers as a pilot study in the work setting. They were asked about
their job experience regarding flexible work arrangement practices by the organization
during COVID 19. With the consideration of their viewpoint, context, and understanding,
questionnaire had been improved in some context.

Research design of this study is descriptive and causal comparative. Primary data is used to
collect information about the perception of FWA and job satisfaction. All full time regular
employees of different organizations who practices flexible work pattern were considered
as the population of the study. Out of 600 questionnaires distributed to teachers working
in different institutions, 470 were returned. So, this study is based on 470 teachers who
directly observed flexible work arrangement practices during COVID pandemic from
different organizations.

5 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Purposive sampling technique was used to identify the respondents and collect the responses.
The respondents include school level to college level teachers. Structured questionnaire was
used as the tool for examining the level of flexible practices and satisfaction prevailing in the
work practices under the study.

3.2 Measures and Instrumentation

Surveys were accompanied by a cover letter assuring confidentiality. The first section
asked respondents about their demographic-related information including age, gender,
marital status, educational level, job position, tenure or experience. Second sections
contained questions tapping perceptions about the respondents' opinion about flexible
work arrangement factors and job satisfaction. It is measured on a five-point Likert scale.
Responses to all items were made on a 5-point Likert scale ranging from (1) “Strongly
Disagree” to (5) “Strongly Agree”. A five-point-rating scale was used to measure responses
(1 = strongly disagree to 5 = strongly agree).

For the statistical instrument, the variable of flexible work arrangements was measured by
using items scale developed by Majella J Albion (2004). With slight modification, 8 items
scale was in use. Similarly, Job Satisfaction was measured by nine facet scales, developed by
Spector, P. E. (1997). The nine facets include Pay, Promotion, Supervision, Fringe Benefits,
Contingent Rewards (performance based rewards), Operating Procedures (required rules
and procedures), Coworkers, Nature of Work, and Communication. Furthermore, with the
review of literature, social-demographic characteristics, such as gender, age, and number
of children, marital status, and organizational tenure had been found as important factors
related to the above-mentioned outcomes and we therefore, included them in our analysis.

4. RESULTS AND DISCUSSION

Demographic characteristics of the sample
This paper is based on the survey among 470 teachers who experienced flexible work
arrangement practice during lockdown caused by COVID pandemic. Here, personal and
positional factors such as age, marital status, nature of organization, the position of the job,
work experience of the respondents were presented as follows.

Table 1
Demographic characteristics of the sample
Attribute Characteristics N %

Gender Male 267 56.8

Female 203 43.2

NJMSR Volume V I Focus Issue I 6

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Age Below 25 71 15.1

25-35 275 58.5
35-45 109 23.2

45 to above 15 3.2
Marital Status Not married 182 38.8

Married 288 61.2

Duration of service Below 1 year 76 16.2
1-5 year 244 51.9
5-10 year 73 15.5
Above 10 years 77 16.4
Education Undergraduate 11 2.3

Graduate 221 47

Post Graduate 238 50.6

Job level College level 196 41.70

School level 274 58.30

In this study, majority respondents were male 56.8% (n=267) and female were 43.2%
(n=203), the age range below 25 of age was 15.1% (n=71), the age between 25 to 35 years
was 58.5% (n=275), the age between 35 to 45 years was 23.5% (n=109), and 45 and above
years was 3.2 % (n=15).

It was interesting to note that a large portion of the respondents were in the age between 25
to 35 years of age, and less portion of the respondents were in 45 and above years of age. As
for organizational tenure, 51.9% (n=244) of employees had 1 to 5 years working experience,
16.4% (n=77) of employees had more than 10 years of working experience, 16.2 % (n=76)
of employees had less than 1 years working experience, and 15.5 % (n=73) of employees
had 5 to 10 years working experience in their current profession. Table 1 show that more
than half of the employees have been occupying a position for 1 to 5 years. This could be
the result of a large number of respondents from higher degrees who are somehow fit with
the organization's norms and values. . In terms of job level, data shows that 58.30 percent
(n=274 respondents) were in school level, and 41.70 percent (n= 196 respondents) were in
college level.

7 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.1 Opinion about Job satisfaction

In the support of the FWA, some gave their opinion in the open-ended questionnaires
incorporated in the research survey. Regarding the question of how do you feel about flexible
work arrangement practices in terms of easiness and satisfaction? Majority of respondents
reported that it could be best working practices as it helps to balance personal and working
life. One of the graduate students and holding a primary level teaching job in private school
stated as:
………….FWA helps me to maintain balance between my work life and my personal life. I feel less stressed due to

flexible work arrangement. No need for commuting, which saves much time and money...............

With the viewpoint of creativity and innovation aspects with the FWA, some of the college
level teachers opined as:
……..FWA practices make people more creative. It gives me pleasure being able to work on my own and add extra

effort in your flexible time…….

…. Flexible work arrangement practices force me for innovation. I get enough time for innovative and creative

thinking…….
…. Flexible work hours should be allowed even for full time staff which will help them to fulfill family and social
responsibility…..
With the viewpoint about satisfaction and work life balance, with the work performance,
one of the respondents representing women teacher expressed as:
……Flexible work hours keep employees committed towards the work they do. Employees can spend some time
with their family. I think it is good for mostly women and housewives because they don't have time to manage all
the stuff. They will have a sense of satisfaction and do the work properly……
Regarding suggestion to improve the effectiveness of flexibility work arrangement, some of
the teachers had suggestions as:
….It tends to be more productive with flexible work arrangement; however, the monotony of the work kills
the excitement and decreases productivity. Team work with responsibility can be practiced for easiness and
satisfaction…….

Informed by the subjective opinion, we can observe individuals’ autonomy with the job itself
is deriving satisfaction in their personal life. With this context, self-determination theory,
the need for autonomy—control over the course of one’s life—is an underlying motivation
for individuals seeking freedom, a larger choice set, and optional functioning (Deci & Ryan,
2000). However, too many options or autonomy may lead to the monotony of the work as
they are to be performed in private informal setting. In the part of employees, we can notice
for adopting flexible work arrangement as a valuable way to enhance creativity, relieve the
pressures, conflicts and most importantly, some are finding it as a best means of trying to
balance work and non-work activities.

4.2 Demographic characteristics and Job satisfaction

There are different demographic characteristics such as gender, age, marital status, job
tenure etc. are involved in the determination of its effect on job satisfaction. To understand
NJMSR Volume V I Focus Issue I 8
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

its effect on job satisfaction, such demographic characteristics were tested through ANOVA.
Table 2 shows the relationship among gender, age, marital status, job tenure of teachers with
the job satisfaction. Their impact on job satisfaction was tested through ANOVA.

Table 2
ANOVA test of demographic profile with organizational commitment

Sum of Mean
Demography Category Squares df Square F Sig.
Gender Between Groups 25.332 32 0.792 3.844 0.000
Within Groups 89.989 437 0.206
  Total 115.321 469      
Age Between Groups 57.176 32 1.787 4.514 0.000
Within Groups 172.986 437 0.396
  Total 230.162 469      
Tenure Between Groups 136.399 32 4.262 6.846 0.000
Within Groups 272.088 437 0.623
  Total 408.487 469      
Education Between Groups 32.818 32 1.026 4.206 0.000
Within Groups 106.546 437 0.244
  Total 139.364 469      
Marital status Between Groups 12.296 32 0.384 1.829 0.004
Within Groups 91.831 437 0.210
  Total 104.128 469      

In table 2, the p-value of job satisfaction based on all demographic characteristics is 0.00. It
means that there is a significant difference in the perceptions of employees based on these
characteristics. The results of the ANOVA table depicts that job satisfaction has significant
associations with all demographic characteristics that have been analyzed. This means
there are different demographic effects on the perception of satisfaction..

4.3 Validity and Reliability Analyses for Measurement Scales

Table 3 shows that results of validity and reliability analyses for measurement scales.
The factor analysis with direct oblimin rotation was first analyzed for four variables with
18 items. After that, Kaiser-Meyer- Olkin Test (KMO) was done to measure the sampling
adequacy. It was conducted for each variable and the results were found acceptable. Relying
on Hair, Anderson, Tatham, and Black’s (1998) guideline, these statistical analyses showed
that the value of factor analysis for all items that represent each research variable was 0.4
and more. This indicated that the items met the acceptable standard of validity analysis.

9 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Table 3
The Result of Validity and Reliability Analysis of Measurement Scales

Measure Items Factor Loadings KMO Bartlett’s Test of Eigen Variance Cronbach

Sphericity Value Explained Alpha

FW Arrangements 8 0.597 to 0.845 0.880 1635.602,P=0.000 2.404 65.983 0.873

Job Satisfaction 11 0.408 to 0.857 0.910 3376.557,P=0.000 2.318 67.144 0.925

While testing the validity of measurement scales, there is acceptable standard of Kaiser-
Meyer-Olkin’s value which is 0.6. All variables were significant in Bartlett’s test of sphericity.
All research variables had eigen values larger than 1. The items for each research variable
exceeded factor loadings of 0.40. Besides that, all research variables exceeded the acceptable
standard of reliability analysis of 0.70 (Nunally and Bernstein, 1994). These statistical results
confirmed that the measurement scales used in this study met the acceptable standard of
validity and reliability analysis.

Table 4
Pearson Correlation Analysis and Descriptive Statistics
Variable Mean Standard Deviation Pearson Correlation Analysis

1 2

Flexible Work Arrangements 3.166 .973 1

Job Satisfaction 3.101 1.003 .846** 1

Table 4 shows the results of Pearson correlation analysis and descriptive statistics.
Means for all variables are between 3.101 and 3.166, signifying the level of flexible work
arrangement and job satisfaction. The correlation coefficients for the relationship between
the independent variable (i.e., flexible work arrangements) and dependent variable (i.e.,
job satisfaction) were less than 0.90, indicating the data were not affected by any serious
collinearity problem (Hair et al., 1998).

4.4 Regression Analysis

Regression analysis was performed to find the role of flexible work arrangements upon
job satisfaction. There are basically two components identified for the perception about
flexible work arrangement. They are work family balance and psychological balance.
Simple regression analysis was undertaken to test the effect of flexible arrangement factors
on employees’ job satisfaction. This method can assess the magnitude and direction of
independent variables on job satisfaction. By the use of SPSS, linear regressions were run
and results were presented in Table 5.

NJMSR Volume V I Focus Issue I 10

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Table 5
Model summary Regression

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .846a 0.715462473 0.714854487 4.498453893

Predictors: (Constant), TFW

From the results obtained in regression analysis as shown in Table 5, the value of R is
0.846, value of R square equals 0.7148, which means 71% of variation in job satisfaction
was due to variation in flexible job arrangements.

Table 6

Analysis of flexible work arrangements on job satisfaction

Model   Un-standardized Coefficients t Sig.

    B Std. Error    

1 (Constant) 2.331 0.949 2.455 0.014

  FWA 1.255 0.037 34.304 0

Dependent Variable: Job satisfaction

The p-value, in table 6, was low (less than 5% significance level), therefore accepted null
hypothesis, whereby the independent variable (flexible work arrangement) did significantly
explain the variance in organizational commitment. Hence, the model adequately explained
the relationship between the flexible work arrangement and job satisfaction (there was a
goodness of fit). From the result output, the value of the t-test statistic for ‘flexible work
arrangement’ is 34.304 and p-value is low (less than 5% significance level), hence ‘flexible
work arrangement’ contributes significantly to the model.

5. CONCLUSION AND DISCUSSION

In today’s modern society, intense competition and rapid growth of economy changed the
employees’ attitude and perception affecting organizational behavior at the workplace
(Ghimire, 2020). Professional employees need to work long hours and work demands their
long term commitment that overrun into their personal lives. E-mail, messenger, and cell
phones are providing too much information and accordingly, there are more work demands.
Nowadays, people are busy even in their travel, on vacation, on planes, and even in private
hours, employees can be interrupted by work demands. Considering this development, many
organizations are initiating steps to offer more flexible work schedules. They are concerned
to protect employees’ free time, and to more productively use employees’ work time. Both
intrinsic and extrinsic work characteristics, workplace relationships, work-life balance,
and scheduling flexibility conditions strongly impact worker job satisfaction (Andrade et
al., 2019). This paper also shows consistency of findings here in Nepal showing positive
relationship with FWA and satisfaction.
11 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

In the part of employees, it is a valuable way to relieve the pressures and conflicts of trying
to balance work and non-work activities. Workers are attracted to flexible arrangements
because they believe freedom leads them to get more done. There is an implicit but clear
argument, too: Employees often feel they would enjoy working at home more than having to
drive through rush hour traffic to get to the office (Darley, 2017). Satisfaction is the crucial
issue in the part of employees’ relation with the management as well as working model of
the organization.

Overall, the previous studies on factors related to productivity, satisfaction with flexible work
arrangements have been random, inconsistent and incongruous. Job characteristics theory
(Hackman & Oldham, 1980) somewhat explains the impact of the nature of the job on how
individuals experiences FWA. Autonomous and individual centered nature of the job can be
handled properly through this job arrangement practices. Similarly, this paper contributes
to flexible working arrangement research by answering the call for theory-building efforts
(Bailey & Kurland, 2002) and understanding its practical issues by investigating relationships
between flexible working arrangement factors and individual satisfaction with the job itself.
In conclusion, Administrators must adapt with flexible work arrangement practices so as
to ensure level of job satisfaction among employees. However, such flexibility should be
compatible according to the nature of the curriculum and its objective. Further research
about FWA, trust, and satisfaction is needed to get insight about employer and employees’
relation as well as perspectives. Administrators should develop FWA and develop a
trusting environment. Trustworthy relationships with the employees contribute for further
satisfaction. Greater trust in management may lead to higher job satisfaction (Ghimire,
2020). With the evidence of this research, it can be summed up that organizations should
consider their experience of FWA practices during COVID 19 and accordingly should revisit
and observe the best flexible working pattern so that it ensures positive impact in the
organization through happy and satisfied employees. Flexible work arrangement should not
mean deregulation, and the issue of flexibility must be treated as work procedure, where the
satisfaction and well-being of the employee is placed at the centre.

NJMSR Volume V I Focus Issue I 12

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Albion, M. J. (2004). A measure of attitudes towards flexible work options. Australian Journal
of Management, 29(2), 275–294. https://doi.org/10.1177/031289620402900207
Allen, T. D., Johnson, R. C., Kiburz, K. M., & Shockley, K. M. (2013). Work–family conflict and
flexible work arrangements: Deconstructing flexibility. Personnel Psychology, 66(2),
345-376. DOI:doi.org/10.1111/peps.12012
Almer , E. D., & Kaplan , S. E. (2002). The effects of flexible work arrangements on stressors,
burnout, and behavioral job outcomes in public accounting. Behavioral Research in
Accounting, 14, 1-34.
Andrade, M. S., Westover, J. H., & Kupka, B. A. (2019). The role of work-life balance and
worker scheduling flexibility in predicting global comparative job satisfaction.
International Journal of Human Resource Studies, 9(2), 80. https://doi.org/10.5296/
ijhrs.v9i2.14375
Bailyn, L., Rayman , P., Bengtsen, D., Carre, F., & Tierney, M. (2001). Fleet financial and radcliffe
explore paths of work/life integration. Journal of Organizational Excellence.
Bain, D. (1982). The productivity prescription: The manager's guide to improving productivity
and profits.
Beauregard, T. A., & Henry, L. C. (2009). Making the link between work-life balance practices
and organizational performance. Human Resource Management Review, 9-22.
Berkery, E., Morley, M.J., Tiernan,S., Purtill,H., & Parry, E.(2017). On the uptake of flexible
working arrangements and the association with human resource and organizational
performance outcomes. European Management Review, 14(2), 165 183.https://doi.
org/10.1111/ emre.12103
Cole, G. (2006). Flexibility and the workplace: The battle to control working time. Managerial
Law, 48(6), 536-540.
Cooper, C., & Burke, R. (2008, December). The long work hours culture. (A. craven,
interviewer) Emerald Group Publishing Limited.
Darley, L. (2017, September). The future of work: Flexible work arrangements. Retrieved
from forbes:https://www.forbes.com/sites/forbescoachescouncil/2017/09/21/
the-future-of-work-flexible-work-arrangements/#61990ce0ff3f
Deci, E., & Ryan, R. (2000). The “what” and “why” of goal pursuits: Human needs and the self-
determination of behavior. Psychological Inquiry, 11, 227–268.
De Menezes, L. M., & Kelliher, C. (2011). Flexible working and performance: A systematic
review of the evidence for a business case. International Journal of Management
Reviews (Vol. 13, Issue 4). https://doi.org/10.1111/j.1468-2370.2011.00301.x
Flexible Work Arrangements. (2017, January 16). Retrieved from Inc: https://www.
inc.com/sonia-thompson/the-essential-martin-luther-king-jr-leadership-lesson-
all-good-leaders-should-ma.html

13 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Ghimire, B. (2017). Demographic Analysis of Nurses’ Organizational commitment with

demographic analysis of nurses’ organizational commitment with reference to
Nepal. 2(january), 772–777.
Ghimire, B. (2020). The mediating role of trust in management on job satisfaction and
organizational commitment. Pravaha Journal; A Journal of Management, 25(1), 43–
52. https://doi.org/10.3126/pravaha.v25i1.31932
Hackman, R., & Oldham, G. (1980). Work Redesign. Reading, MA: Addison-Wesley.
Hill, E. J., Grzywacz J. G., Allen S., Blanchard V. L., Matz-Costa C., Shulkin S., Pitt- Catsouphes
M. (2008). Defining and conceptualizing workplace flexibility. Community, Work &
Family, 11(2), 149–163.
Majella J. Albion, (2004). A measure of attitudes towards flexible work options, Australian
Journal of Management, 29(2), 275-294.
Nepali, D. P. (2018). Balancing work life and family life: Problems and remedies. Pravaha
Journal; A Journal of Management, 217-232.
Upadhyaya, U., & Academy, N. L. (2020). National Labour Academy , Nepal Impact of Covid-19
on Workers & Employment in Nepal (based on desk review & key informant survey).
August.
Sirgy, M. J., & Lee, D. J. (2016). Work-Life Balance: A Quality-of-Life model. Applied Research
in Quality of Life 11(4), 1059–1082 https://doi.org/10.1007/s11482-015-9419-6
Spreitzer, G. M., Cameron, L., & Garrett, L. (2017). Alternative work arrangements: Two \
images of the new world of work. Annual Review of Organizational Psychology
and Organizational Behavior, 4, 473–499. https://doi.org/10.1146/annurev-
orgpsych-032516-113332
Thevanes, N., & Mangaleswaran, T. (2018). Relationship between work-life balance and job
performance of employees. IOSR Journal of Business and Management, 20(5), 11-16.
doi:10.9790/487X-2005011116

NJMSR Volume V I Focus Issue I 14

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

FINANCIAL PLANNING AND BEHAVIOR OF STUDENTS IN

NEPALESE HIGHER EDUCATION

Joginder Goet

Abstract
The goal of this research is to examine the impact of personal and related factors on higher
education students’ financial planning and behavior. The convenience sample approach
was used to obtain data from 382 respondents using a well-structured questionnaire.
To diagnose the data acquired, correlation and regression analysis were performed. The
findings demonstrated that family background (FB), family support (FS), and financial
socialization (FSO) all had a substantial impact on financial planning for students in higher
education. Furthermore, family history has the greatest influence on financial planning,
whereas financial socialization has the least impact. The practical consequences are clear for
students in higher education, and they aid in good financial planning. The article’s novelty
comes in its assertion that, in order to attain successful financial planning tactics, better
influencing variables must be implemented.

Keywords: Family background, Family support, Financial behavior, Financial socialization,

Financial planning.

∗ Joginder Goet, PhD Scholar faculty at Shankar Dev Campus, TU

15 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Background
Education has long been considered the most significant aspect in human progress as well
as the most liberating force. A large number of fresh students are knocking on the doors of
higher education institutions around the country. Education and skill development are still
important resources for economic development and poverty reduction in Nepal. Education
is one of the most crucial infrastructures for growth. A government must provide education
to its citizens as a right. Any country, whether developing or developed, understands
the importance of education. Knowledge is desperately needed on this globe. In order
to improve future growth chances, it is critical to recognize and invest in education. The
educational system in Nepal places a greater emphasis on theoretical principles than on
practical applications (Dilas, Cui & Trines, 2018). When it comes to financial security, college
students are frequently seen as a high-risk category. Many people take out loans to pay for
their schooling. Financial literacy is low among many college students. Ineffective financial
practices, such as low savings and poor record keeping, are linked to poor financial literacy
among college students. College students enjoy a period of independence during which they
can make their own decisions. College students are allowed to make their own financial
decisions during this period. College students, in general, encounter financial issues as
a result of a lack of financial knowledge and experience. College students’ financial well-
being is negatively impacted by poor income and a lack of financial understanding (Cude,
Lawrence, & Lyons, 2006). The majority of today’s young adults face significant financial and
economic difficulties. The consumer economy allows people to spend money, offers them
with a quick way to purchase on the Internet, and provides them with readily available and
simple financing resources through the credit card system. As kids progress from primary to
secondary school, they are frequently exposed to a variety of financial issues. Some of these
issues include their own issues, which can put their finances in jeopardy. However, the most
pressing issue among students nowadays is that they do not have enough money to survive
their college years due to a variety of factors that can affect their academic lives. There is a
financial issue that students confront, and that is a shortage of funds (Shim, Serido, & Tang,
2013).

Financial challenges affect college students, and there is a link between financial difficulties
and academic success. Students must be able to handle their finances well in order to
prevent financial difficulties caused by a lack of financial resources. Because of their
impoverished family backgrounds and lack of family support, many students experience
significant financial issues, which has a severe impact on their academic progress (Daud,
Norwani, & Yusof, 2018). The socialization process teaches college students how to manage
their money. What an adolescent sees and learns as a youngster has an impact on how he
or she will act as an adult. The higher the level of parental addictive behavior, the higher the
level of compulsive behavior in the subjects. Furthermore, students that engage in financial
behaviors such as impulsive purchasing, lack of budgeting, and lack of savings will encounter
greater financial difficulties in higher education. Parents have an important impact in their
children’s financial attitudes and skills development.

NJMSR Volume V I Focus Issue I 16

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1.2 Objective
The primary and main of this study is to examine out effects of family background, family
support, financial behavior and financial socialization on financial planning of students in
higher education in Nepal.

1.3 Research Hypothesis

To analyze the collected available data, correlation coefficients and regression coefficients
have been used to test the relationship and impact of independent variables on dependent
variable under following hypothesis:

H1: There is significant relationship between family background, family support, financial
socialization and financial behavior with financial planning of students in higher education.

H2: There is significant impact of family background, family support, financial socialization
and financial behavior on financial planning of students in higher education.

2. REVIEW OF LITERATURE
2.1 Financial Planning
Because finance is such an important part of our lives, most people are obliged to learn
financial planning at some time in their life. Personal financial planning is the process
of deciding how to spend, save, and invest money so that you can live comfortably, have
financial stability, and achieve your objectives. Many difficulties could be alleviated if people
were more informed about financial matters. Because of their lack of financial expertise,
college students tend to overestimate their prospective earnings and are more tolerant
of debt (Graves & Savage, 2015). Students’ earnings and expenses are out of balance. The
majority of students face financial challenges as a result of their low financial resources
and poor planning. As the cost of higher education in both public and private educational
institutions continue to rise, students in higher education require more money to cover the
costs of study and living in colleges. Due to limited financial resources and rising school
expenditures, students may confront financial issues in their daily lives (Daud, Norwani, &
Yusof, 2018). Positive financial behavior, such as financial planning and budgeting, is a key
component of financial happiness, while frequent money troubles are a sign of economic
insecurity. Other personal and family pressures might be exacerbated by financial problems
in addition to economic stressors. Financial issues are frequently the cause of divorce, mental
disease such as loneliness, emotional tension, melancholy, and low self-esteem, as well as a
variety of other unpleasant situations. The value of financial competence and abilities in
minimizing the danger of financial troubles was established by researchers (Falahati et al.,
2011). Many young individuals struggle to manage their personal money because they are
unfamiliar with the subject. They express a lot of financial anxiety and dissatisfaction. For a
multitude of reasons, including quality of life, marital happiness, physical and mental health,
and work productivity, both financial issues and impatience can have severe implications
(Saidi et al., 2016).

17 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.2 Family Background

College students’ socializing experiences and financial resources will be influenced by their
family background. The quantity of money received by pupils is influenced by the parents’
income. Both the mother and the father contribute to the financial well-being of students
from dual-career families (Masud, 2004). Long-term characteristics such as academic
performance and parental education are highly connected with higher education attendance.
Short-term financial restrictions, on the other hand, are connected with higher education
access to a lower extent. Furthermore, China’s higher education development in recent years
has made higher education more accessible to students from lower-income households.
Elite universities’ tuition costs and “net prices” are cheaper than those of medium-quality
universities, while medium-quality universities’ tuition fees and “net prices” are lower than
those of comparatively low-quality universities and colleges. As a result, the link between
family income and attendance expenses has flipped, with lower-income families bearing a
far greater price for their children’s university education than higher-income ones (Li, 2007).
In this context, personal and family background refers to socioeconomic and demographic
criteria such as age, ethnicity, gender, marital status, education, and income. These elements
are linked to financial well-being in a favorable way (Sabri, Cook, & Gudmunson, 2012). The
financial position of college students, specifically their parents’ financial situation, is their
context. Regardless of present financial dependence on parents, family income is a beginning
point for any student, and this experience has an impact on college student financial troubles.
The socializing and financial chances of college students might be influenced by their family
history (Graves & Savage, 2015).

2.3 Family Support

The family’s financial prosperity and other qualities are highly connected to financial
assistance from parents for their children. Involvement of parents in their children’s
education has a continuous and favorable effect on academic performance and self-esteem
(Chohan, & Khan, 2010). It assessed five areas in which the family might be able to help
financially (tuition, books, housing, daily costs, and recreation), and categorized the parents’
support into four groups based on the patterns of financial assistance supplied. The first
category comprised of parents who contributed a significant amount of money to tuition,
books, and lodging. On all variables, the second group of parents reported relatively low
levels of financial help. Parents who reported relatively high support for everyday expenses
and recreation, including personal expenses unrelated to education, made up the third
group. Finally, there is a group of parents who help their children financially in all five areas.
Students who receive greater financial assistance from their families are less likely to suffer
financial difficulties (Padilla-Walker, Nelson, & Carroll, 2012).

Young adults who receive financial aid from their parents are less financially burdened than
those who do not receive such assistance. Parents must also understand that providing
financial aid will help their children acquire confidence in their own financial abilities (Kim
& Torquati, 2016). Parents’ financial support has a huge influence on pupils’ willingness to
learn. As a result, parents must promote and support their children’s academic participation

NJMSR Volume V I Focus Issue I 18

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

(Dojillo et al., 2017). Financial support from parents for their children is strongly linked to
the family’s financial resources and other features. Because they are unable to supply it on
their own, students require parental assistance. The majority of kids work hard on their
own due to a lack of financial support from their parents. Students are put in a financial bind
as a result of this. Parents support their children when it comes to school-related financial
requirements. It is their responsibility to ensure that their children have all they require at
school, particularly when it comes to project work. Parents’ financial support and students’
motivation are linked in a major way. Having a high level of financial support from their
parents has an impact on students’ financial load (Moneva, Pestano, & Vertulfo, 2020).

2.4 Financial Socialization

Financial socialization is defined as the unconscious or conscious acquisition of financial
knowledge, skills, attitudes, and behaviors while growing up at home by important
socialization agents such as parents, school, and job. The consumer socialization hypothesis
provides a framework for identifying the financial socialization agents that influence young
people. Through interactions with socialization agents, this approach also stresses the
impact of anticipatory financial socialization on learning outcomes and, as a result, learners’
attitudinal and behavioral indicators during adolescence. Anticipatory socialization is
the development of skills, behaviors, or values that are related to adult roles. These skills,
behaviors, or values may be of little benefit to children, but they may be valuable later in life
(Hess & Torney 1967). The process of learning and promoting beliefs, information, norms,
standards, attitudes, and behaviors that enhance financial viability and individual well-being
is known as financial socialization (Danes, 1994). Parents have been identified as the key
agents of financial socialization during childhood; however, the influence of other agents,
such as peers and the media, appears to have grown in importance. Financial socialization
trends do not originate in a vacuum, but rather in the setting of a social milieu that includes
family, peers, the media, and marketing institutions. Parents are the major and direct source
of financial practices, followed by peers, who are a secondary source of financial socialization
effect, and finally, the mass media and advertising supply knowledge about consumption
and the worth of material commodities (John, 1999). Financial socialization is the process
by which young individuals acquire skills, knowledge, and attitudes that are critical to their
success as consumers in the marketplace. According to financial socialization studies, family
tactics in the socialization process have an impact on gender issues. Families employ a range
of financial socialization techniques for boys and girls, including keeping their daughters
financially dependent and unaware. Boys and girls get distinct financial messages from their
parents because daughters are shielded from their parents’ financial issues or do not see
or evaluate them in the same manner that sons do (Newcomb & Rabow, 1999). Financial
socialization encompasses the formation of standards, beliefs, norms, and attitudes that
will either impede or assist the development of financial aptitude in individuals as well
as increase financial well-being. The economic process through which young people’s
knowledge, abilities, and attitudes relevant to the effective operation of financial benefit are
formed is known as socialization. The good and negative financial habits that arise during
the transition to maturity are likely to persist throughout adulthood. Furthermore, young

19 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

people’ financial knowledge, attitudes, and behaviors, as well as their financial independence,
may have a significant influence on their life, not only in terms of financial and economic
well-being, but also in terms of continuous relationships with family, friends, and colleagues
(Arnett, 2004). Male students are more inclined than female students to interact with their
classmates about consumption concerns, according to a study of financial socialization
among Malaysian students. Female students, on the other hand, are more inclined to talk to
their parents about money (Kamaruddin, & Mokhlis, 2003).

2.5 Financial Behavior

A person’s financial conduct is influenced by his or her financial beliefs and behavior. As a
result, people’s financial attitudes shape their spending, saving, and hoarding tendencies.
The division of money into savings and expenditures, on the other hand, is linked to
financial behavior. One of the most basic financial management concepts is to save on a
regular basis, usually by setting aside a particular amount of money before paying for costs
(Hogarth, Beverly, & Hilgert, 2003). Through the lens of psychological aspects, financial
conduct includes reasons, risk tolerance, patient decision, financial decision, and saving
decision (Huat, Geetha, & Mohidin, 2010). Financial management behaviors are those
that help people and families improve their financial security and net worth (by reducing
financial responsibilities and/or developing financial assets). Despite the fact that we do not
consider these activities as good or bad, they do help people and families stay within their
built-in assets and income restrictions (Dew & Xiao, 2013). Personal financial concerns are
routinely cited as a key source of stress among adults. Young adults, particularly college
students, are emerging as the generation experiencing the most financial strain. Financial
problems for many college students include typical living expenses, tuition and academic
fees, overspending or credit card debt, student loan debt, work–school–life balance,
financial demands from family, and uncertain employment after graduation (Heckman,
Lim, & Montalto, 2014). Financial worries are becoming a major source of stress for young
adults at a time when anxiety and stress levels among college students are at an all-time
high. Financial stress has been linked to health and adjustment problems, with mental
health disorders including anxiety and depression being among the most likely contributing
factors. Financial stress has been linked to a reduction in course load, dropout, and poor
academic performance. In summary, financial stress has repercussions for college students’
mental health and adjustment, and general anxiety may be one of the most proximal health
correlates of financial stress (Dwyer, Hodson, & McLoud, 2013). The way people manage
their money is referred to as their financial behavior. The process of determining, obtaining,
dispensing, and utilizing financial resources was defined as financial management behavior.
In addition, a sequence of behaviors involving planning, implementing, and assessing are
carried out in the areas of cash, credit, savings, insurance, retirement, and estate planning.
The financial management activity is then described as part of financial decision-making,
aligning individual aim and corporate goal (Mien & Thao, 2015). Financial conduct also refers
to how well a family or individual handles financial resources such as savings, budgeting,
insurance, and investing. How well a guy manages cash, debt, savings, and other expenses
reveals his financial behavior. Personal financial conduct refers to how a person treats,
manages, and uses his or her own money. Individuals who practice responsible financial
NJMSR Volume V I Focus Issue I 20
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

behavior are more effective at making money, managing and regulating their spending,
saving, and paying their bills on time (Hasibuan, Lubis, & Altsani, 2018).

3. RESEARCH METHODOLOGY
The goal of the study is to answer “Does family background, family support, financial
socialization and financial behavior have a relation, and that impact on financial planning for
the students in their higher studies?" It also explores the impact of determinants of financial
planning on financial planning. For this purpose, family background, family support,
financial socialization and financial behavior have been considered as most reliable and
efficient factors to test the association with and impact on financial planning.

3.1 Research Design

The study has used correlational and causal research design to test the objective of the study.

Educationalists validated the questionnaire initially, followed by pilot testing that further
validated it. A total of 382 people were included in this study’s sample. Because the sample
of respondents met the minimum requirements, they were asked to participate in the study
through email. The research tool used a five-point Likert scale, with the extremes being
strongly disagree (1) and strongly agree (5). Data and sample characteristics such as gender,
age, degree of education, occupation, and residential status were collected using a non-
probability sampling technique (convenience sampling). Units are taken from the population
based on simple availability in convenience sampling. Each unit from the sampling frame
has an equal probability of being included in the survey in random sampling. As a result,
400 respondents were initially contacted via social networking sites and emails, but after
missing responses were eliminated, the data was reduced to 382 respondents.

4. RESULTS
The use of correlation analysis between variables was investigated in order to discover
relationships between them. Variables were analyzed using Pearson’s correlations. Another
section of the study attempts to assess the impact of family background, family support, and
financial behavior and financial socialization on financial planning for the students in their
higher studies.

Table 1 Correlation Analysis

  Mean Std. Dev. FB FS FBE FSO FP

FB 3.900 0.826 0.860

FS 4.100 1.004 0.312** 0.812
FBE 3.860 1.010 0.212** 0.420** 0.790
FSO 3.822 1.210 0.321** 0.234** 0.420** 0.852

21 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

FP 3.800 1.200 0.575** 0.682** 0.515** 0.572** 0.912

N=382, **p < 0.01 (2-Tailed), Diagonal elements (Bold) represents Cronbach’s alpha

Table 1 shows that the correlation between the independent variables i.e., family
background (FB), family support (FS), financial behavior (FBE), and financial socialization
with dependent variables i.e., financial planning (FP). Among independent variables, the
correlation coefficients (r=0.575, 0.682, 0.515 and 0.572) of family background, family
support, financial behavior and financial socialization with dependent variable are moderate.
The results show that there exist positive and significant correlation between independent
variables and dependent variable at 1 percent level of significance. The results also show
that the reliability test for all the component of questionnaire regarding the impact of
various factors of financial planning on financial planning for the students in their higher
level of education which were computed by using SPSS. Cronbach’s Alpha greater than 0.7 is
considered as reliable data.

Table 2
Model Summary of Factors Influencing Financial Planning
Model R R2 Adjusted R2 Error of the Estimate
1 .725 a
.526 .486 .78192
a. Predictors: Constant, FB, FS, FBE, FSO

Table 2 provides the overall model summary of factors influencing financial planning. R-
square (R2) is a statistical measure that represents the proportion of the variance for a
dependent variable that’s explained by an independent variable or variables in a regression
model. The R-square is the percentage of response variable variance described by a linear
regression model. R-square is always between 0 percent and 100 percent. In general, higher
the R-square better the model fits data. It also shows the R-square is 0.526 which indicates
that 52.6 percent variation on financial planning is explained by family background, family
support, financial behavior and financial socialization. The remaining 47.4 percent of
financial planning is accounted for by other factors not present in the model. The adjusted
R-square of 0.486 indicates that after adjusting degree of freedom, 48.6 percent of the
variance in financial planning explained by family background, family support, financial
behavior and financial socialization. Higher R value indicates that there is a strong positive
relationship between independent variables i.e., family background, family support, financial
behavior and financial socialization and dependent variable i.e., financial planning. Further,
the standard error of estimate shows that the estimated regression equation deviates by
0.78192.
Table 3
ANOVA Analysis
Model Sum of Squares df Mean Square F Sig.
1 Regression 75.825 4 19.154 32.612 .000b
Residual 120.120 377 .621
Total 195.945 381
a. Dependent Variable: FP
NJMSR Volume V I Focus Issue I 22
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

b. Predictors: Constant, FB, FS, FBE, FSO

Table 3 indicates the description of ANOVA analysis. ANOVA analysis is used to analyze
whether the overall model is significant and the model can be applied to the research. The
result of analysis shows that p-value is less than α i.e., 0.000 < 0.05 so, the model is significant
at 5 percent level of significance. So multi linear model can be used to analyze the data.

Table 4
Regression Analysis
Model Unstandardized Standardized Collinearity
Coefficients Coefficients Statistics

B Std. Beta t Sig. Toler- VIF

Error ance
(Constant) 6.520 .625 14.479 .000

FB .582 .112 .349 6.275 .000 .665 1.416

FS .495 .080 .679 9.250 .000 .632 1.324

FBE .250 .122 .120 1.380 .131 .667 1.545

FSO .484 .092 .325 5.428 .000 .625 1.689
a. Dependent Variable: Financial Planning

Table 4 shows that family background, family support and financial socialization have been
significantly contributed to financial planning at (β = 0.582, t = 6.275, p = 0.000; β = 0.0.495,
t = 6.9.250, p = 0.000 and β = 0.0.484, t = 6.5.428, p = 0.000). But financial behavior has not
been significantly contributed to financial planning at (β = 0.o.250, t = 1.380, p = 0.0.131).
As a result, it may be concluded that family background, family support, and financial
socialization have a substantial impact on financial planning. However, financial conduct has
had no meaningful impact on the dependent variable. As a result of these findings, the second
research hypothesis is partially accepted and proven. In compared to other independent
variables on attainment of financial planning, family background has a higher coefficient (FB
= 0.582) among the four independent variables. As a result, students at higher levels of study
should pay more attention to their family background in order to establish efficient financial
plans for their future studies. The independent variables’ VIF value is less than 3. It implies
that there is no multi-collinearity, implying that the regression line has no harmful effect.

5. DISCUSSION
The primary goal of this research was to identify and analyze the elements that have a major
influence on personal financial planning among Nepalese students in higher education. To
come up with a few crucial and relevant factors, a comprehensive and in-depth review of the
literature, as well as the self-conceptualization and knowledge of the concerned researchers,
was employed. The influence of independent factors such as family background, family
support, financial behavior, and financial socialization on financial planning of students in
higher education in Nepal was investigated.

According to Moneva, Pestano, and Vertulfo (2020), having a high level of financial support
23 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

from their parents affects the financial load of students. According to Li (2007), family
background characteristics are quantitatively more relevant than financial barriers; financial
help may somewhat counteract the negative impact of a short-term financial barrier.

The findings reveal that the dependent variable financial planning has a substantial
association with the independent variables’ family history, family support, and financial
socialization. Three variables have a major influence on financial planning, according to
Pearson correlation.

With a correlation value of 0.575, family background has the strongest link to financial
planning. As a result, it may be stated that family background has a higher influence on
financial planning. The lowest 0.515 connection exists between financial behavior and
financial planning. This factor has the smallest influence on financial planning.

According to Li (2007)’s research, there is a strong link between family background and
financial assistance and financial planning. There is no evidence of a link between financial
conduct and financial planning in this study. Financial attitudes and behavior, on the other
hand, according to Hogarth, Beverly, and Hilgert (2003), have a substantial effect in a
person’s financial conduct, which has an impact on student financial planning.

6. CONCLUSION
It has been found that a student’s family background has a significant impact and role to play
in their financial planning for higher education. Other factors, such as family support and
financial socialization, have a significant impact on students’ financial planning in higher
education, according to the study. Despite the lack of a link between financial behavior and
financial planning, financial behavior cannot be overlooked.

According to the findings, students’ lack of efficient financial planning and behavior resulted
in insufficient revenue for their expenses, inability to pay bills on time, and concerns regarding
college tuition payment. The financial planning and conduct of university students were
examined, and it was discovered that the students borrow money from their peers to cover
their bills. Students attempted to control their financial situation by lowering their living
expenses. Furthermore, a lack of good financial planning raised students’ psychological
stress, which had an impact on their academic performance.

According to the findings, family history had an impact on college students’ socializing
experiences and financial resources. Those who did not live with their parents had higher
financial difficulties than students who did. The quantity of money received by students
was also decided by working parents, and the number of siblings had a direct impact on the
amount of money received by students.

Finally, the outcomes of the study suggest that family history, family support, and financial
socialization have an impact on students’ financial planning in higher education. Though
there isn’t a direct link between financial conduct and financial planning, it can’t be
overlooked. The information gathered from the study will assist students in understanding
the factors that influence financial planning among college students in higher education and
taking the required steps to enhance financial planning and behavior.

NJMSR Volume V I Focus Issue I 24

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Arnett, J. J. (2004). Emerging adulthood: The winding road from late teens through the
twenties. Oxford: Oxford University Press, 2(1), 40-45.
Chohan, B. I., & Khan, R. M. (2010). Impact of parental support on the academic performance
and self-concept of the student. Journal of Research and Reflection in Education, 4(1),
14-26.
Cude, B., Lawrence, F., & Lyons, A. C. (2006). College students and financial literacy: What
they know and what we need to learn. Eastern Family Economics and Resource
Management Association, 2(1), 101-104.
Danes, S. M. (1994). Parental perceptions of children’s financial socialization.  Journal of
Financial Counseling and Planning, 5, 127-149.
Daud, N., Norwani, N. M. & Yusof, R. (2018). Students financial problems in higher education
institutions. International Journal of Academic Research in Business and Social
Sciences, 8(10), 1558–1565.
Dew, J. P., & Xiao, J. J. (2013). Financial declines, financial behaviors, and relationship
satisfaction during the recession. Journal of Financial Therapy, 4(1), 1-12.
Dilas, D. B., Cui, J., & Trines, S. (2018). Education in Nepal. World Education News & Reviews.
Retrieved from https://wenr.wes.org/2018/04/education-in-nepal
Dojillo, J. L., Balandra, J., Lebuna, M. R., & Lopez, N. E. (2017). The relationship of moral and
financial support of parents to the academic performance of the BSHRM students.
International Conference on Studies in Arts, Social Sciences and Humanities Journal,
8(2), 16-19.
Dwyer, R. E., Hodson, R., & McLoud, L. (2013). Gender, debt, and dropping out of college.
Gender & Society, 27(1), 30–55.
Falahati, L., Paim, L., Ismail, M., & Haron, S. A. (2011). Factors predict financial problem
among college students: A gendered view. International Conference on Sociality and
Economics Development, 10(1), 183-185.
Graves, E., & Savage, S. (2015). Financial pasts, presents, and futures of community college
students of a personal finance course. Journal of Business & Finance Librarianship,
20(1-2), 116–132.
Hasibuan, B., Lubis, Y. M., & Altsani. W. (2018). Financial literacy and financial behavior as a
measure of financial satisfaction. Advances in Economics, Business and Management
Research, 4 (1), 503-506.
Heckman, S., Lim, H., & Montalto, C. (2014). Factors related to financial stress among college
students. Journal of Financial Therapy, 5(1), 19–39.
Hess, R. D., & Torney, J. V. (1967). The development of political attitudes in children. Chicago:
Aldine. Canadian Journal of Political Science, 1(4), 288-291.

25 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Hogarth, J. M., Beverly, S. G., & Hilgert, M. (2003). Patterns of financial behaviors: Implications
for community educators and policy makers. Federal Reserve System Community
Affairs Research Conference, 4(1),1-28.
Huat, S. Y., Geetha, C., & Mohidin, R. A. (2010). Financial behavior amongst undergraduate
students with and without financial education: A case among University Malaysia
sabah undergrades. Prosiding Perkem V, 1, 210-224.
John, D.R. (1999). Consumer Socialization of Children: A Retrospective Look at Twenty-Five
Years of Research. Journal of Consumer Research, 26(3), 183-213.
Kamaruddin, A.R., & Mokhlis, S. (2003). Consumer socialization, social structural factors
and decision-making styles: a case study of adolescents in Malaysia. International
Journal of Consumer Studies, 27(2): 145156.
Kim, J., H. & Torquati, J. (2016). Does parental financial assistance assist young adults to
be financially healthy? Effects of parent-child relationship qualities on financial
outcomes and happiness. International Journal of Home Economics, 9(2), 40-55.
Li, W. (2007). Family background, financial constraints, and higher education attendance in
China. Economics of Education Review, 26(6), 725-735.
Masud, J. (2004). Financial behavior and problems among university students: Need for
financial education. Journal of Personal Finance, 3(1), 83-95.
Mien, NT, & Thao, T P. (2015). Factors affecting personal financial management behaviors:
evidence from Vietnam. Proceedings of the second Asia-pacific conference on global
business, Economics, Finance and Social Sciences, 15(3), 1-16.
Moneva, J. C., Pestano, R. L., & Vertulfo, R. M. (2020). Parental Financial Support and Students
Motivation in Learning. Issues in Social Science, 8(1), 10-17.
Newcomb, M.D., & Rabow, J. (1999). Gender, Socialization, and Money. Journal of Applied
Social Psychology, 29(4), 28-37.
Padilla-Walker, L. M., Nelson, L. J., & Carroll, J. S. (2012). Affording emerging adulthood:
Parental financial assistance of their college-aged children. Journal of Adult
Development, 19(1), 50-58.
Sabri, M.F, Cook, C. C., & Gudmunson, C. G. (2012). Financial well-being of Malaysian college
students. Asian Education and Development Studies, 1(2), 153-170.
Saidi, N. A., Khairuddin, N. A., Samat, N. A., & Jalil, N. F. (2016). Determinants of financial
problems among adults. International journal of accounting, Finance and Business,
1(1), 18-22.
Shim, S., Serido, J., & Tang, C. (2013). After the global financial crash: individual factors
differentiating young adult consumers’ trust in banks and financial institutions.
Journal of Retailing and Consumer Services, 20(1), 26-33.

NJMSR Volume V I Focus Issue I 26

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

TALENT MANAGEMENT PRACTICES AND ORGANIZATIONAL PERFORMANCE IN

NEPALESE COMMERCIAL BANKS

Kishor Kumar Gautam, MPhil∗

Abstract
The purpose of this study is to determine the level of talent management practices
and impact of talent management practices on organizational performance. To test the
research hypotheses, cross-sectional data were used. In addition, ordinary least square
method was used to analyze 252 sample responses from commercial banks operating in
Kathmandu valley using a convenience sampling technique. The findings suggested that
talent management practices affect a bank’s performance concerning their managing client,
customer complaints, company reputation, the productivity of employee, and commitment
issues.

Keywords: Talent attraction, talent development, talent retention, organizational

performance

∗ Kishor Kumar Gautam, MPhil, faculty at Global College International

27 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION
Globally, the shape of the national and international business environment has changed
due to technological, socio-economic, and demographic changes which lead to changing
role of talent identification, attraction, recruitment, development, and retention to meet
complex challenges of organizational change (Claus, 2019; Reiche, Lee & Allen, 2019).
Thus, Organization objectives have shifted from focusing on their product and service
differentiation strategy or improving productivity level to focusing on their human resource
outcomes (Kehinde, 2012). Past studies show that organizations that manage talented
people efficiently be more likely to have outstanding employees as well as organizational
performance which leads to increased competitive advantage. Hence talent management
practice is a key factor to improve employee and organizational performance. Over the
decade significant steps forwarded to link the relationships between talent management
and organizational performance. However; there is still a lack of empirical support of the
link between talent management and organizational performance (Colling, 2015).

In the last two decades, the financial sector especially the banking sector is the fast-growing
sector of the Nepali economy. After the financial liberalization and technological revolution,
financial institutions faced intense competition in the banking industry. Although the banking
industry is suffering from a talent crunch, most of the banks registered huge amounts of
profit in their financial report. Despite the shortage of talented people, the banking industry
has lifted to rank among the billion net profit group. In Nepalese Commercial banks, most
of the resources are similar but one resource that is different than their competitor is its
talented people. Talent turnover is the most critical issue in this competitive and complex
business environment. These days banks manager are facing challenges related to attraction,
development, and retention-related issues of talented people to improve the overall
performance of the organization. Faced with these talent constraints, talent management
strategy leads to improved organizational performance aligned with organizational
objectives (Ingram, 2016).

Commercial banks often spent a huge amount to develop their human resources but in
retention-related issues they paid less attention, as a result, it has become an emerging
priority to the manager (Ashton & Morton, 2005). Organizations can improve their financial
and non-financial performance through well design talent management systems (Luna-
Arora, 2020). Therefore, the organization seeks to further implement talent management
practices to improve organizational overall performance. Thus, this study covers an
important gap when analyzing the association between talent management practices and
the non-financial performance of the banks. Studying the effects of talent management
practices on organization performance is taking a considerable part of research these days.
1
Mr. Gautam graduated M. Phil. in Management from T.U. in 2021 and faculty at Global College International.

NJMSR Volume V I Focus Issue I 28

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

However, there is a lack of empirical studies that investigate the impact of talent management
practices on organizational performance in commercial banks in underdeveloped countries
like Nepal. Thus, the objectives of this study are to assess the levels of talent management
practices in Nepalese commercial banks and to examine the impact of talent management
practices on organizational performance.

2. LITERATURE REVIEW AND HYPOTHESIS

2.1 Talent Management practices

Talent management practice refers to a wide range of human resource strategies, policies, and
practices focusing on the management of talented people (Sonnenberg et al. 2014). Talent
management practices are the set of practices used by the organization in the direction that
fits the need of organizations, and as a result, individual and organizational performance
increases through happy, committed, and motivated employees (Thunnisses, 2016).
This view appears to be supported by Collings and Mellahi (2009). A model categorizes
talent management practices into talent attraction, talent selection, talent development,
talent retention, and talent engagement (Phillip & Ropper, 2014). In accordance, talent
management practices have been proposed as talent attraction, talent development, and
talent retention (Thunnisses et al., 2013). Therefore, the following talent management
practices are examined: talent attraction, talent development, and talent retention.

2.2 Organizational performance

In human resource management literature, organizational performance is identified as an
important construct to examine the outcomes of the organization. Human resource outcomes
(turnover, absenteeism, and job satisfaction), organizational outcomes (productivity, quality,
and service), financial accounting outcomes (ROA, and profitability), and market outcomes
(stock price, growth, returns) are all aspects of organizational performance (Dryer & Reeves,
1995). Financial and non-financial dimensions of organizational performance variables were
taken to study in the human resource management literature. the non-financial performance
of the firm was measured in this study, and operationalized as managing clients, customer
complaints, company reputation, the productivity of employees, and commitment issue.
The non-financial performance was composed of 10 items based on the findings of a study
conducted by Hernaus et al., (2012).

29 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.3 Talent Attraction and Organizational Performance

Talent attraction is the process of attracting qualified people adopting different tactics and
talent attraction are mostly depends on some factors like the reputation of the organization
(Motos et. al., 2012). One of the most essential practices in talent management is talent
attraction, which has a significant impact on organizational performance (Kehinde, 2012;
Payambarpour & Hooi, 2015; Auranzeb & Bhutto, 2016; Arif & Uddin, 2016; Sareen &
Mishra; 2016; Najm & Manasrah, 2017; Rawashdeh, 2018; Cheraisi & Busolo, 2020). The
following hypothesis is proposed based on preceding findings:

H1: Organizational performance is influenced by talent attraction.

2.4 Talent Development and Organizational Performance

Talent development practices are concerned with the planning and implementation of
development plans for enhancing the skills and knowledge of talented employees. Talent
development practices include training and development programs, coaching, mentoring,
and job shadowing (Aljbour, French & Ali, 2021). Talent development is considered one of
the significant stages of the talent management process (Mathimaran & Kumar, 2017). The
relationship between talent development and organizational performance is not new in
the talent management literature. The idea that talent development leads to organizational
performance is supported by (Auranzeb & Bhutto, 2016; Najm & Manasrah, 2017; Saloni,
2017; Rawashdeh, 2018). In Nepalese commercial banks, effective talent development
practice can increase organizational performance (Mahato, 2018). The empirical results,
according to these authors, established the relationship between talent development and
organizational performance. The following hypothesis has been developed based on the
findings of previous studies:

H2: Organizational performance is influenced by talent development.

2.5 Talent Retention and Organizational Performance

Organization can maintain and manage the most talented people to ensure their survival
and growth in the banking industry (Ibidunni, Osibanjo, & Adeniji, 2016). Previous empirical
studies found that the talent retention practice of an organization can increase organizational
performance (Arif & Uddin, 2016; Sareen & Mishra, 2016; Auranzeb & Bhutto, 2016; Najm &
Manasrah, 2017; Saloni, 2017; Rawashdeh, 2018). Similarly retention of talent in the context
of Nepal has a significant impact on performance of Commercial banks (Mahato, 2018).
Based on the empirical evidence, it can be conclude that employee retention is related to
organizational performance. Thus, it can be hypothesized as:

H3: Organizational performance is influenced by talent retention.

NJMSR Volume V I Focus Issue I 30

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.6 Conceptual Framework

Based on the literature review, this study adapted the conceptual model proposed by Colling
& Menalli (2009). Figure 1 depicts the relationship between talent management practices
and organizational performance, which is based on both resource-based theory and human
capital theory.

Figure 1: Conceptual Framework

3.RESEARCH METHODOLOGY
This research belongs to the survey research design which had adopted descriptive and
correlational research design. The correlation research design determines the nature, degree,
and direction of the association between talent management practices and organizational
performance of Nepalese commercial banks, providing insight in to both the variables and
their relationships. The population of the study is all officers, and manager-level employees
working in Nepalese commercial banks. The rationale for choosing officers and managers
level employees was because they are responsible for the organization's performance of
their various banks. The population is drawn from the websites of the bank. Samples were
taken from three public banks, seven private banks, and five joint-venture banks under the
convenience sampling method. Out of the 400 distributed questionnaires, 252 respondents
were selected. The researcher calculated the sample size using the formula given by (Daniel,
1995). Data collection followed a quantitative approach consisting of a cross-sectional
survey. Before the distribution of surveys, the researcher contacted the branch manager
or bank’s equivalent to discuss the survey project and an appropriate data collection
procedures. Officer and manager-level employees were also told that the main purpose of
the study was to gather at least the opinions, perceptions, beliefs, and experiences of officer-
level employees. It was agreed that researcher would access the banks to distribute surveys,
keep information confidential and not share personal results with banks management. In
this study, to measure talent management practices related to constructs 18 items were
used developed by Mohammed, (2018). Similarly, the organizational performance variable
was measured in ten items developed by Hernaus et al., (2012). The statement was scaled
on a six- point Likert scale (1= strongly disagree, 6= strongly agree). Descriptive statistics,
Variance inflation factor (VIF), Cronbatch alpha, Correlation analysis, and Multiple regression
analysis were analyzed using SPSS version 26.
31 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4. RESULTS
This study is based on a questionnaire survey that was used to collect responses from 252
employees working in the banking industry in Kathmandu valley. A total of 400 respondents
working in Nepalese commercial banks were invited to participate in the research and 252
surveys were returned. Table 1 shows the demographic characteristics of the respondents.
Table 1 Demographic profile

Source: Field Survey 2020

4.1 Status of Talent attraction

Employees were asked to indicate the talent management practices employed in the
Nepalese commercial banks where they work. Table 2 shows the level of talent attraction
practices measured with six questions on a six-point Likert scale.
Table 2: Descriptive statistics of the talent attraction (N = 252)
Talent attraction related item Mean S.D. R.I.
My bank attracts more talented employees by providing 4.67 1.03 1
them with social support in difficult times (e.g. maternity,
paternity, death, and financial difficulties).
The Employment Brand is strong and compelling among 4.59 1.04 2
prospective employees.
My bank attracts more talented staff through having a high- 4.54 1.11 6
quality working environment.
Work-life balance, and social networking activities, are 4.57 1.17 3
attractive factors for our talented employees.
My bank attracts more talented employees through high 4.56 1.02 4
salaries or remuneration.
NJMSR Volume V I Focus Issue I 32
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

My bank has effective recruitment strategies for attracting 4.55 1.11 5

professional staff
Overall rate 4.58 1.08 3
Source: Field Survey 2020
The analysis found that the respondents have given the highest priority to my bank attracts
more talented employees by providing social support during difficult time. Employment
brands are strong and attractive to potential employees. Work life balance and social
networking activities are attractive factors for talented employees. High pay or remuneration
effective recruitment strategies, and high quality work environment for attracting talented
employees’ strategies undertaken by banks were less prioritized by the respondents.
Table 2 shows that the general mean of this construct is 4.58, with standard deviation of
1.08 indicating strong consistency in the responses to this construct. The talent attraction
practices were found relatively good in the context of Nepal. This construct ranked third in
term of relative importance among the talent management constructs. It is obvious that the
Nepalese commercial banks use effective and explicit acquisition as well as effective talent
attraction strategies, to derive employee to make significant contribution to their own and
organization’s improvement.

4.2 Status of Talent Development

To further ascertain the level of talent development practices in Nepalese commercial banks
based on employees' ratings in-depth analysis was conducted. Table 3 shows the status level
of talent development measred with five questions.
Table 3: Descriptive statistics of the talent development (N = 252)
Talent development-related item Mean S.D. Rank
My bank has effective talent development strategies 4.42 1.02 5
which focuses on its organizational strategies.
My bank identifies the fields needed to personal develop- 4.66 1.01 4
ment of employees (e.g. skills gap analysis.
Internal job rotation is available to help talented individu- 4.69 0.95 3
als' broaden their expertise and development by rotating
them among other departments, and divisions.
My bank helps promising employees become leaders and 4.74 1.09 2
build a robust talent pool.
My bank develops successor development plan and iden- 4.78 0.93 1
tifies alternative for managers.
Overall rate 4.66 1 1
Source: Field Survey 2020
The analysis found that the respondents have given the highest priority to my bank
developing succession planning and identifying alternative talented employees for
leadership positions. The second priority was given to banks supporting high potential
employees to become leaders, to build a strong talent pool. Respondents were given third,

33 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

fourth, and fifth priority to questions three, two, and one respectively. The analysis indicates
that personal development (e.g. skills gap analysis) has less priority for the employees in the
bank. Furthermore, the result shows that the organizational strategy is not aligned with the
talent development strategy in the Nepalese bank.
Table 3 shows that the total mean score for the skill development constructs was 4.66, with
a standard deviation of 1.00 indicating strong consistency in the response to this construct.
In the context of Nepal, talent development techniques were determined to be outstanding.
This constructs’ relative importance is the first among the talent management constructs.
4.3 Status of Talent Retention
Table 4 shows the talent retention status measured with seven questions. The analysis
found that respondents prioritized retaining banks and qualified employees by providing
opportunities to improve their careers. Banks keep employees motivated and motivated to
keep talented employees. In addition, banks have a competitive compensation system and
supportive learning environment to retain competent employees.

Table 4: Descriptive statistics of the talent retention (N = 252)

Talent retention related item Mean S.D. R.I.
My bank has a competitive compensation system that mo- 4.62 1.12 3
tivates us to retain competent employees.
My bank promotes equal opportunity to retain qualified 4.55 1.07 7
employees.
My bank takes personal factors and life events (such as 4.6 1.23 4
family promises) into account in order to develop talented
employees.
My bank encourages innovative thinking and creative ideas 4.56 1.07 6
from talented employees.
There is a supportive learning environment that promotes 4.56 1.18 5
employee job satisfaction in order to retain qualified em-
ployees.
My bank keeps employees motivated and keeps talented 4.64 1.15 2
employees motivated.
My bank retains qualified employees by providing opportu- 4.65 1.19 1
nities for professional development.
Overall rate 4.6 1.14 2
Source: Field Survey 2020
Encouragement of innovative thinking, promoting creative ideas, and equal opportunity to
retain qualified employees were less prioritized by the respondents. The summated mean
score was found 4.60. It indicates that talent retention practices are excellent in Nepal. This
construct is the second most important among the talent management constructs in term of
relative importance. It is apparent that the Nepalese commercial bank employs effective and
explicit training as well as successful management methods at a high level to urge employees
to stay on for the improvement of themselves and the firm.

NJMSR Volume V I Focus Issue I 34

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.4 Status of Organizational Performance

Table 5 shows the organizational performance status measured with ten questions. The
analysis found that the respondents have given the highest priority to excellent relationships
with suppliers to maintain genuine partnerships with them. Respondents agreed high on
the reputation of the bank in eyes of the customers has improved. Although the number of
customer complaints has increased strongly; the productivity of employees is much higher
than the industry average.

Table 5
Descriptive statistics of the organizational performance (N =252)
Organizational performance related items Mean S.D. Rank
We manage to keep existing clients while also attracting 4.93 0.95 5
new ones.
The number of client complaints has risen dramatically in 4.98 0.91 3
the last few months.
In the perspective of our customers, our bank's reputation 4.98 1.02 2
has improved.
We consider our relations with suppliers to be excellent 4.99 1 1
because we maintain genuine partnerships with them.
Our bank and our suppliers have a mutually beneficial 4.86 1.09 7
relationship.
Within our bank, the net fluctuation of employees is very 4.68 1.12 10
high.
Our products are of superior quality to those in the indus- 4.83 0.94 8
try.
Employee productivity is significantly higher than the 4.95 1.01 4
industry average.
Employees have a strong commitment to the bank. 4.91 0.93 6
Absenteeism in our bank is relatively low (in comparison 4.68 1.13 9
to the competition).
Overall 4.88 1.01
Source: Field Survey 2020
The quality of our products is well above the industry average, the absenteeism rate of
banks is very low (compared to competitors), and the net turnover of employees in a bank
is high, were less prioritized by the respondents. The findings show that the employees
of commercial banks in Nepal have a high level of performance with an overall average
score 4.88 for the organization performance composition. It’s obvious that the Nepalese
commercial banks apply effective and explicit training as well as successful management
methods, at a high level to improve employee performance for their and the organization’s
betterment.

35 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.5 Descriptive Statistics, Correlation Analysis, and Reliability

Table 6 shows the results of descriptive statistics, reliability and correlation analysis.
According to Pearson correlation results, each of the constructs is positively and significantly
correlated.

Table 6
Descriptive, Reliability and Correlation analysis for the constructs
Mean S.D. TA TD TR OP
Talent 4.58 0.95 .943
Attraction
(TA)
Talent De- 4.66 0.88 .716** .928
velopment
(TD)
Talent 4.60 1.00 .688** .737** .947
retention
(TR)
Organiza- 4.90 0.83 .721** .758** .731** .945
tional per-
formance
(OP)
** Correlation is significant at the 0.01 level (2-tailed).
Diagonal value refers to Cronbach’s Alpha

Source: Field survey 2020

Cronbach's alpha test was used to investigate construct item correlations and measure the
reliability of the quantitative data collected for this investigation. The reliability test findings
show that the instruments employed in this study were reliable, with values more than 0.70.
Multi-Collinearity Analysis
Before testing the study hypotheses, the researchers must establish the associations
between the study variables and validate that the collinearity between them is low, with a
value of no more than (0.9). These need to be checked to avoid the probability of resulting
in a total correlation.

Table 7:
VIF and Tolerance Values for the independent variables
Variables Tolerance VIF
Talent attraction 0.431 2.32
Talent development 0.373 2.68
Talent retention 0.404 2.48

Table 7 shows the VIF values for the independent variables in this study, which ranged from
2.32-2.68, as well as the tolerance values, which were between 0.373 and 0.431. Given that

NJMSR Volume V I Focus Issue I 36

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

all VIF values are less than 10 and all tolerance values are greater than 0.10, these results
indicate that there is no multicollinearity issue among the dimensions of the independent
variable.
4.6 Specification of Model
Multiple linear regression was performed to analyze the main hypotheses in this study.
To determine the association between talent management practices and organizational
performance, the study presented a linear model. The model is as follows:
OP = α + β1 TA + β2 TD + β3 TR + ε
Table 8: Model summary
Model R R Square Adjusted R Square Standard error of the Estimate
1 .815a 0.663 0.659 0.4826

It can be noticed from the result from table 8 that the multiple correlation coefficients are
equal to (R = 0.815), which indicates that there is a strong positive correlation between the
study variable: talent management and organizational performance. Also, table 8 provides
the value of (R2=0.663), which means that talent management can account for (0.815) of the
variation of organizational performance. Based on the adjusted R2 value only, the researcher
can’t show the significance of the prediction of independent variables. Therefore, table 9
shows the ANOVA table to present the significance of the model.
Table 9: ANOVA
Model Sum of D. F. Mean Square F Sig.
Squares
Regression 113.885 3 37.962 169.971 .000b
Residual 57.768 248 0.233
Total 171.653 251

Table 9 shows the values (F =169.971, the p-value for F= 0.000) show that the model is
significant as the p-value is less than 1 percent level of significance hence the model is good
in predicting how the three independent variables (talent attraction, talent development,
and talent retention) influence organizational performance of banks. Furthermore, the
calculated value of F (169.971) is higher than the critical value of F (2.68) which shows
that the model is fit in predicting the influence of independent variables on the dependent
variable.

Table 10: Summary statistics of the estimated model

Model Unstandardized coefficient Standardized
Coefficient
B S.E. Beta t Sig.
(Constant) 1.196 0.17 7.013 0.000
Talent At- 0.239 0.048 0.275 4.909 0.000
traction

37 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Talent Devel- 0.335 0.056 0.357 5.924 0.000

opment
Talent reten- 0.225 0.049 0.271 4.678 0.000
tion
a Dependent Variable: Perceived Organizational Performance

Table 10 shows that when the three variables remain constant, the intercept (α) value 1.196
reflects the value of the organizational performance. The predictor talent development
has the highest beta value (β = 0.357), which means that when there is a rise of 1 unit in
talent development, organizational performance is increased by 0.357 units. The impact of
talent development on organizational performance is significant at level 0.001. In addition,
holding other independent variables constant, a unit increase in talent attraction would
lead to a 0.275 increase in the organizational performance of Nepalese commercial banks.
The relationship is significant as shown by a p-value of 0.001. Finally, the results show that
talent retention has a beta value (β=0.271), which means that when there is a rise of 1 unit
in talent retention, organizational performance is increased by 0.271 units. The impact of
talent retention on organizational performance is significant as shown by a p-value of 0.001.
From the findings, we can conclude that organizational performance is influenced by all
independent variables. Among the three variables, talent development is found strongest
predictor, and talent retention is found weakest predictor having the highest and lowest
beta value respectively.

5. DISCUSSION
This study found that talent management practices are potential tools for enhancing
organizational performance. The major focus should be on talent development, talent
retention, and talent attraction. This research paper contributed to the clarifying of the
relationship between talent management practices and organizational performance in
Nepalese commercial banks. The finding is consistent with the western context. The results
are similar because the prerequisite of talent management practices would be similar to
either the western context or non-western context.

Results confirmed H1 by showing that talent attraction has a significant impact on

organizational performance. These findings are consistent with previous research which
has been identified in different contexts (Kehinde, 2012; Payambarpour & Hooi, 2015;
Auranzeb & Bhutto, 2016; Arif & Uddin, 2016; Sareen & Mishra; 2016; Najm & Manasrah,
2017; Rawashdeh, 2018; Cheraisi & Busolo, 2020). For the banking industry, finding the
right people who will improve the performance of the organization is critical. To achieve
this talent attraction practice plays an important role in banks. Thus, as long as banks
attract talented people, they will contribute to improving the performance of banks. Results
of H2 suggest that Talent development make a significant influence on organizational
performance in Nepalese commercial banks, the finding which is consistent with other
studies (Sareen & Mishra, 2016; Auranzeb & Bhutto, 2016; Najm & Manasrah, 2017; Saloni,

NJMSR Volume V I Focus Issue I 38

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2017; Mahato, 2018; Rawashdeh, 2018). The results of H3 confirm a significant influence of
talent retention on organizational performance. These results parallel the findings of several
studies which found that talent retention is positively related to organizational performance
(Arif & Uddin, 2016; Sareen & Mishra, 2016; Auranzeb & Bhutto, 2016; Najm & Manasrah,
2017; Saloni, 2017; Mahato, 2018; Rawashdeh, 2018). These findings support human
capital theory and resource-based views theory to the extent that when organizations invest
in talent management practices, talented employees will compensate for the performance
of the organization. While the study’s context differs from previous research, the findings
are similar because the Nepalese banking sector is adopting international human resource
management practices to stay competitive, and the banking culture is thus more dynamic
and aligned with international standards than Nepal’s general business culture.

6. CONCLUSION AND IMPLICATION

The general objectives of the study were to establish the impact of talent management
on the organizational performance of banks. This study empirically confirmed that there
is a linear relationship between talent management strategies (attracting, developing,
retaining) and bank performance in Nepalese commercial banks. Thus the success of bank
performance depends on talent management. Therefore, the banking industry in Nepal
should initiate proper initiatives toward creating proper talent management practices to
increase organizational performance, so that the ultimate goal of the organization can be
achieved.

This study can be applied by the Nepalese banking industry in its strategy and HR policy
formulation. They can focus on talent attraction, talent development, and talent retention
while formulating strategy and policy. Similarly, this study focused on the banking sector
only so the further study can be undertaken in other sectors of the country.

7. ACKNOWLEDGEMENTS
I would like to thank University Grant Commission for the funding support in the completion
of my MPhil studies in Management from Tribhuvan University

39 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Agbaeze, K. E., Monyei, E. F., & Agu, O. A. (2017). Impact of talent management strategies
on organizational performance in selected deposit money banks in lagos state,
Nigeria. International Research Journal of Management, IT and Social Science,
4(2), 135-151.
Aguinis, H., Gottfredson, R. K., & Joo, H. (2012). Using performance management to win
the talent war. Business Horizons, 55(6), 609–616. https://doi.org/10.1016/j.
bushor.2012.05.007

Ahmad Arif, A., & Uddin, M. R. (2016). Talent management and organizational performance:
An empirical study in retail sector in Sylhet City, Bangladesh. Journal of Business and
Management. 11–18. https://doi.org/10.9790/487x-1810041118
Alibour, A., French, E., & Ali, M. 2021. An evidence based multilevel framework of talent
management: A systematic review. International Journal of Productivity and
Performance Management. https://doi.org/10.1108/IJPPM-02-2020-0065
Ashton, C., & Morton, L. (2005). Managing talent for competitive advantage: Taking a
systemic approach to talent management. Strategic HR Review, 4(5), 28–31. https://
doi.org/10.1108/14754390580000819

Bolander, P., Werr, A., & Asplund, K. (2017). The practice of talent management: A framework
and typology. Personnel Review, 46(8), 1523–1551. https://doi.org/10.1108/PR-02-
2016-0037

Boxall, P., & Purcell, J. (2003). Strategy and human resource management. (1st ed.).
Basingstoke, UK: Palgrave Macmillan.

Brijesh, S., & Rajasshrie, P. (2019). Technology and talent analytics for talent management
– a game-changer for organizational performance. International Journal of
Organizational Analysis, 28(2), 457–473. https://doi.org/10.1108/IJOA-01-2019-
1634

Cheraisi, E., Busolo, H. (2020). Effect of talent attraction on organizational performance:

A Case of Hotels in South Rift Region, Kenya. European Journal of Business and
Management, 12(6). https://doi.org/10.7176/EJBM/12-6-02
Collings, D. G., & Mellahi, K. (2009). Strategic talent management: A review and research
agenda. Human Resource Management Review, 19(4), 304–313. https://doi.
org/10.1016/j.hrmr.2009.04.001

Collings, D. G., Scullion, H., & Vaiman, V. (2015). Talent management: Progress and prospects.
Human Resource Management Review, 25(3), 233–235. https://doi.org/10.1016/j.
hrmr.2015.04.005
Coulson-Thomas, C. (2012). Talent management and building high-performance
organizations. Industrial and Commercial Training, 44(7), 429–436. https://doi.
org/10.1108/00197851211268027
NJMSR Volume V I Focus Issue I 40
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Devine, M.; Powell, M. (2008). Talent management in the public sector. The Ashridge
Journal.
Eva Gallardo-Gallardo, & Thunnissen, M. (2015). Standing on the shoulders of giants? A
Critical review of empirical talent. Employee Relations, 38(1), 31–56. https://doi.
org/10.1108/IJEBR-02-2016-0064

Gallardo-Gallardo, E., Thunnissen, M., & Scullion, H. (2020). Talent management: context
matters. International Journal of Human Resource Management, 31(4), 457–473.
https://doi.org/10.1080/09585192.2019.1642645

Ibidunni, S., Osibanjo, O., & Adeniji, A. (2016). Talent retention and organizational
performance : a competitive positioning in Nigerian banking sector. (January).
https://doi.org/10.3311/PPso.7958.

Ingram, T. (2016). Relationships between talent management and organizational

performance: The role of climate for creativity. Entrepreneurial Business and
Economics Review, 4(3), 195–205. https://doi.org/10.15678/EBER.2016.040315
Kakuri, M. (2015). Effect of talent management on employee outcomes: a case study of
central bank of Kenya. Strategic Journal of Business & Change Management, 2(1).

Kehinde, J. (2012). Talent management: effect on organization performances. Journal of

Management Research, 4(2), 178–186. https://doi.org/10.5296/jmr.v4i2.937
King, S. L., Schick, R. S., Donovan, C., Booth, C. G., Burgman, M., Thomas, L., & Harwood,
J. (2015). An interim framework for assessing the population consequences of
disturbance. Methods in Ecology and Evolution, 6(10), 1150–1158. https://doi.
org/10.1111/2041-210X.12411

Kontoghiorghes, C. (2016). Linking high-performance organizational culture and talent

management: satisfaction/motivation and organizational commitment as mediators.
International Journal of Human Resource Management, 27(16), 1833–1853.
https://doi.org/10.1080/09585192.2015.1075572

Lewis, R. E., & Heckman, R. J. (2006). Talent management: A critical review. Human. Resource
Management Review, 16(2), 139–154. https://doi.org/10.1016/j.hrmr.2006.03.001
Mahato, S. (2018). Impact of talent management on organizational performance in Nepalese
commercial banks. International Journal of Management and Applied Science,
4(7), 92–97.

McDonnell, A., Collings, D. G., Mellahi, K., & Schuler, R. (2017). Talent management: A
systematic review and future prospects. European Journal of International
Management, 11(1), 86–128. https://doi.org/10.1504/EJIM.2017.081253
Mohammed, A. (2018). An investigation into the relationship between talent
management processes and knowledge management processes : a case of the
higher education sector in Queensland, Australia A Thesis submitted by Atheer
41 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Abdullah Mohammed For the Award of Doctor of Philo. (December). https://doi.

org/10.13140/RG.2.2.35389.92647

Mohammed, A. A., Baig, A. H., & Gururajan, R. (2020). An examination of talent management
processes in Australian higher education. International Journal of Productivity and
Performance Management, (March). https://doi.org/10.1108/IJPPM-10-2018-0352
Mohan, M.D., Muthaly, S., & Annakis, J. (2015). Talent culture’s role in talent development
among academics: Insights from Malaysian government-linked universities. Journal
of Contemporary Issues in Business and Government, 21(1), 46-71.
Mugenda, O. M., & Mugenda, A. (2003). Research methods: Quantitative and qualitative
approaches, African Centre for Technology Studies, Nairobi, Kenya.

Najm, A., & Manasrah, A. K. (2017). The effect of talent management on organizational
performance: applied study in Jordanian banks. Review of Applied Socio-Economic
Research, 13(1), 36-51, 13(1), 36–51.
Nzewi, H. N. C., Obianuju M., Ogbeta, M. E. (2015). Talent management and employee
performance in selected commercial banks in Asaba, Delta State, NIGERIA. European
Journal of Business and Social Sciences, 4(9), 56–71.
Painter-Morland, M., Kirk, S., Deslandes, G., & Tansley, C. (2019). Talent management: The
good, the bad, and the possible. European Management Review, 16(1), 135–146.
https://doi.org/10.1111/emre.12171

Payambarpour, S. A., & Hooi, L. W. (2015). The impact of talent management and employee
engagement on organizational performance. International Journal of Management
Practice, 8(4), 311–336. https://doi.org/10.1504/IJMP.2015.073483
Peter, C., Robert, J., Thomas, E., Craig, K. P. (2009). The talent-powered organization:
strategies for globalization, talent management, and high performance. Human
Resource Management International Digest, 17(1). https://doi.org/https://doi.
org/10.1108/hrmid.2009.04417aae.001

Phillips, D.R., & Roper, K. O. (2009). A framework for talent management in real estate.
Journal of Corporate Real Estate, 11(1), 7–16.

Racol, N. D., Babe, P., & Studies, E. (2019). The talent management struggle in the banking
sector - efforts and achievements. The case of a commercial bank from Romania.
Contemporary Research on Organization Management and Administration, 7(1),
58-73. https://doi.org/10.33605/croma-012019-005

Rawashdeh, A. M. (2018). The impact of talent management strategies on bank performance

in jordanian commercial banks. Modern Applied Science, 12(12), 49. https://doi.
org/10.5539/mas.v12n12p49

Rothwell, W. (2005). Effective succession planning: Ensuring leadership continuity and

building talent from within, (3rd ed.). New York.: American Management Association.
NJMSR Volume V I Focus Issue I 42
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Sadri, A., Pirouz, H., Sharific, S., & Farhadi, M. (2015). Studying the impact of talent management
on performance of staffs. International Academic Journal of Economics, 2(11), 50–
59.

Saloni, D. (2017). Impact of talent management on organizational performance : Role of

employee engagement. International Journal of Management Studies, 4(1), 17–27.
https://doi.org/10.12816/0038079

Sareen, P., & Mishra, S. (2016). A study of talent management and its impact on performance
of organizations. IOSR Journal of Business and Management (IOSR-JBM), 18(12),
66–73. https://doi.org/10.9790/487X-1812036673

Sonnenberg, M., Van-Zijderveld, V., & Brinks, M. (2014). The role of talent-perception
incongruence in effective talent management, Journal of World Business, 49(2), 272-
280.

Tansley, C. (2011). What do we mean by the term “talent” in talent management?

Industrial and Commercial Training, 43(5), 266–274. https://doi.
org/10.1108/00197851111145853

Thunnissen, M. (2016). Talent management: for what, how, and how well? an empirical
exploration of talent management in practice. Employee Relations, 38(1), 57–72.
https://doi.org/10.1108/ER-08-2015-0159

Thunnissen, M., & Gallardo-Gallardo, E. (2019). Rigor and relevance in empirical TM

research: Key issues and challenges. Business Research Quarterly, 22(3), 171–180.
https://doi.org/10.1016/j.brq.2019.04.003

Vaiman, V., Scullion, H., & Collings, D. (2012). Talent management decision-
making. Management Decision, 50(5), 925–941. https://doi.
org/10.1108/00251741211227663

Wageeh A. N. (2016). The impact of talent management on organizational performance:

Evidence from the industrial companies in Egypt. International Journal of Case
Studies, 5(2016–08), 41–54. Retrieved from http://www.casestudiesjournal.com
Yassin H., Obeidat, B. Y. (2020). The impact of talent management on organizational
effectiveness in the health sector. Journal of Science, 9(2), 535- 572 https://doi.
org/10.25255/jss.2020.9.2.535.572

43 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

IMPACT OF NON-FINANCIAL REWARDS ON EMPLOYEES’ MOTIVATION

AND THEIR TURNOVER INTENTION IN THE CONTEXT OF
NEPALESE DEVELOPMENT BANK

Dev Raj Paneru, PhD∗ Mahesh Kumar Bhandari

ψ

Abstract

The purpose of this study was to investigate the effect of non-financial incentive scheme
on employees’ motivation and their turnover intention. It aimed to examine perception of
the employees of the Nepalese development banks regarding the nonfinancial rewards as
regards employee motivation in the sample banks. On descriptive as well as explanatory
research design which used 100 samples of bank employees selected by using the stratified
random sampling method as the primary source of data, the study examined the effect of
Job Security, Challenging Work, Performance Recognition, Flexibility of the work, and Leave
Provisions on employees’ motivation. Among the major findings, current non-financial
incentives practiced in the sampled Nepalese banks were not very satisfactory. However,
the results of regression analysis showed job security, leave provisions, challenging work,
flexibility of work condition, and performance recognition as being the significant predictors
of employee motivation. As such, the study has suggested reviewing the development bank’s
nonfinancial reward practices which can play instrumental role to raise current motivation
level of their employees.

Keywords: Employ turnover intention, Job security, Leave provisions, Challenging work,
Flexibility of work condition, Performance recognition.

∗ Dev Raj Paneru, PhD, faculty of Graduate Studies and director of IQAC for Global College, Kathmandu. He is the
reviewer for international journals published in European Universities, is a free-lance researcher in pedagogy, teacher
education and management.
ψ
Mahesh Bhandari, MBA graduate from Global College International affiliated to Mid-West University, Nepal.

NJMSR Volume V I Focus Issue I 44

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Background of the Study

To overcome the competition by getting competitive advantages human resource plays
the central role. So, they should be motivated, influenced and persuaded towards task
fulfillment for increasing performance, and achieve the goal of organization for prosperity.
For this purpose, an organization should build rewarding organizational system as a leading
tool to raise the employees’ level of motivation (Shafiq, & Naseem, 2011). Rewards can be
either financial or non-financial (Gkorezis, & Kastritsi, 2017; Pinto, & dos Santos, 2018).

Non-financial rewards are non-material gain or financial benefits that have the most
significant impact on employee behavior. These include achievement, praise or recognition,
advancement, autonomy or freedom, responsibility, the work itself, the working condition,
involvement in decision making, ability utilization, growth or development of skills, job
security, etc. (Hughes, 2012). Though financial rewards play a significant role in employee
motivation non-financial rewards cannot be ignored since their role is decisive and longer-
lasting effect than financial rewards (Yousaf, Latif, Aslam, & Saddiqui, 2014). Satisfied
employees show their strong positive cooperation and trust with employers and customers
(Gautam, 2011). Andrew, and Kent (2007) report employees possessing high level of
consciousness towards reward system for their job satisfaction and work motivation leading
to adequate performance recognition creates employee job satisfaction and enhances the
favorable working conditions which serve as key motivator. Schaufeli et al. (2002) suggested
significance of reward system for preventing employee burnout that reduces employee
job satisfaction and adversely affects motivation and productivity. The previous studies
reveal connection among reward, recognition and motivation of employee as strategically
significant to the success of an organization.

1.2 Statement of the Problem

Today business environment is changing rapidly with various changes occurred in personal,
professional and business lives that change people’s expectations from their job that demand
increasing motivation for better engagement as key to organizational performance. Some
are not willing to quit the job because they are enjoying the benefits as expected whereas
others leave their organizations because they are not motivated enough. The problem is
that organizations in general such as the banks of Nepal allocate financial rewards which
may fulfill needs but not want. Wants are recognition in the society, respect, good working
environment, flexibility, and many more. Many researchers have done research in this topic
(Prantika, 2020), who have claimed positive correlation between financial over non-financial

45 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

rewards and employee motivation. This means though agreed in general, impact of non-
financial rewards for job satisfaction or to remove frustration and fears on work (Dhanonjoy,
2015), has yet not been well studied as regards which components play determinant role on
employee motivation to stop turnover (Prakash, 2011).

1.3 Objectives of the Study

The major objectives of this study are:
i. To identify the non-financial reward components or reward factors that can be
responsible for employee motivation for retention in the Nepalese development
banks.
ii. To have an in-depth understanding of non-financial rewards defined in terms
of job security, leave provisions, performance recognition, challenging work,
flexibility of work conditions and their association with employee motivation as
instrumental for employee retention in the Nepalese development banks
1.4 Research Questions
This study will address the general questions as outlined below:

i. What is the practice of non-financial rewards and employees’ perception as

regards their job motivation and retention intention in the development banks
of Nepal?

ii. Which factors and components of non-financial rewards are perceived to be

significant as regards employees’ motivation and their turnover intention?

1.5 Research Hypothesis

Hypothesis for this research is given below:

H01: There is no significant relationship between job security and employee motivation

H02: There is no significant relationship between leave provisions and employee

motivation.
H03: There is no significant relationship between performance recognition and
employee motivation.
H04: There is no significant relationship between challenging work and employee
motivation.
H05: There is no significant relationship between flexibility of work conditions and
employee motivation.
H06: There is no significant relation between employee’s motivation and their turnover
intention.

NJMSR Volume V I Focus Issue I 46

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2. THEORETICAL PERSPECTIVES
Several researchers have studied different aspects of financial and non-financial rewards
and communicated these as key tool to improving employee motivation for performance
(Franco, et al, 2004) and also linking these as key components allowing the employees to
decide retention. Math Auer and Imhoff (2006) have defined non-financial incentives as
any means of incentives that do not involve money and monetary values or equivalents.
Employees as important human capital, perform their duties diligently and actively if
motivated.

De-motivated employees are likely to put in little or no effort in their jobs, produce low
quality work, mostly avoid their workplace and even exit the organization when they have
available opportunities. On the other hand, employees who are motivated to work are likely
to be determinant, innovative and competent. These aspects contribute significantly to the
growth and development of the overall organization. There is a positive correlation between
non-financial rewards and employee motivation.

While businesses need to get more from their employees, their employees are looking for
more out of them. Employee reward and recognition programs are one method of motivating
employees to change work habits and key behaviors to benefit a business organization.
Small businesses have also begun employing them as a tool to lure top employees in a
competitive job market as well as to increase employee performance. Newman and Gerhart
(2011) specified that rewards can play a significant role in influencing employees‟ attitudes
and perceptions of work.

Owing to the fact that rewards represent anything that is valuable and meaningful to the
recipient, skilled and talented employees are less likely to be motivated by rewards that are
not aligned with their preferences and values (Armstrong M., 2010). Motivation is the force
that convinces employees to behave and perform in a way that leads to reward (Dessler,
2009). As a result, they expect that they are rewarded with all those reimbursements that
they anticipate for themselves and their families in return of their services and efforts.
Motivation is defined as” the state that compels an individual to proceed in a way planned to
accomplish some goals” (Walker, 2016).

The essence of human resource management practices is to enhance the motivation of

employee. The employee motivation enhances job involvement and job satisfaction of an
employee (Nickson, 2013). According to research there are certain cross disciplinary
indicators like commitment, contentment, loyalty and intention to quit which measures
motivation of employee (Lauby, 2009). Golembiewski (2010) proposed that motivation
is the extent of enthusiasm, direction and persistence of efforts with which the employee
tries to accomplish goals. It is the readiness to exert efforts with passion conditioned by
their need satisfaction. Over others, intrinsic motivation provided by the work itself and
the quality of working life provided by the organization triggers readiness to work perform

47 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

better due to job satisfaction (Armstrong, 2010). It is the force that convinces employees to
behave and perform in a way that leads to reward (Dessler, 2009).

Some of the Non-financial rewards that a business organization offer might include-an
attractive pension scheme, access to private medical care, help with long-term sickness,
crèche facilities, counseling services, staff restaurant etc. Nonfinancial rewards can have
an even more substantial impact on employee satisfaction and motivation than traditional
financial rewards (Armstrong M, 2013).

Financial reward otherwise known as extrinsic rewards are the non-job-related rewards
such as pay, salary and work conditions. Gupta and Shaw (1998) concluded financial
incentives are also indeed effective but partially. All the jobs are interesting and challenging
in nature, if we would live in an ideal world everyone would be intrinsically motivated
and rewarded, but in many work places this is not the reality. They concluded that money
matters to most of us and it motivates us because of the symbolic and instrumental value
it bears. Financial rewards are those that will enhance the employee’s financial well-being
directly e.g., bonus, increase in wages and profit-sharing schemes i.e., are pay bonuses, fringe
benefits, transportation facility, medical facility, health and life insurance and benefits like
vacation with pay meal facilities (Chelladurai, 2009). In short, the debates are persistent on
which works better financial or nonfinancial rewards, however, non-financial rewards are
intrinsic and so more effective than financial. This suggests more to explore what, how and
why of non-financial rewards.

2.1 Nonfinancial Reward

Compensation is the total cash and non-cash payments that employees receive in exchange
for the work they have done. Modern organizations are constantly searching for new
methods to improve the performance of their employees in order to achieve better financial
results (Saraswat, & Arora, 2016). The use of different incentives is one of the ways to
increase the commitment of individuals and teams. The contemporary theories such as
the Motivation-Hygiene theory by Herzberg suggest non-monetary reward to be effective
(Herzberg, 2017). This is highly relevant for start-ups that are usually limited in terms of
available resources (Burton, 2017). Non-monetary rewards may include a positive working
environment, training and development opportunities, empowerment and autonomy,
recognition of individual achievements, flexible working arrangements and team rewards
(Saraswat, & Arora, 2016).

The relevance of non-monetary reward for increasing motivation and job performance was
recognized in the work by Fredrick Herzberg who developed the Motivation-Hygiene theory
(Herzberg, 2017). This concept suggests that monetary compensation and other tangible
motivators have a limited impact as ‘hygiene’ factors or the incentives across similar job
positions. Whereas non-monetary rewards exceed ‘hygiene’ factors in many cases (Nakhate,
2016). 
NJMSR Volume V I Focus Issue I 48
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

According to Pettersen et al. (2015), start-up members are highly motivated by social and
identity-based factors during the growth stage, while calculative and monetary incentives
become more relevant during the subsequent stages. The analysis of entrepreneurial start-
ups by Staniewski and Awruk (2015) revealed that pull-based motivations associated with
personal satisfaction and the sense of achievement was highly significant for the overall
motivation and performance of the studied organizations.

A critical perspective is also there as Gabriel and Nwaeke (2015) discovered no positive
correlation between job autonomy, job enrichment and employee satisfaction. Common
findings suggest that some members may be specifically motivated by self-development
programs that allow them to increase their professional competences (Emerole, 2015). On
the one hand, incentives such as empowerment, job recognition may be highly valuable for
employees and increase their job satisfaction (Haider et al., 2015; Waqas, 2014). Though
salary and remuneration are considered most important factor in the banks (Gautam, 2016;
Kosovska, & Pugh, 1994; Vans cotter, 2000). Richardson (2008) argued various substantial
services and welfare for effective reward system enabling the employee motivation.

(Morrell, 2011). Morrell (2011) added that significance of both financial and non-financial
rewards is imperative as there are diverse jobs in the industry where one kind of reward does
not accomplish the purpose. The early findings of Drucker (1954) about the significance of
rewards are consistent with Ryan and Deci (2000). Drucker (1954) suggested that workers
or managers, in business or outside needs reward for pride and prestige. This too holds
importance of non-financial rewards.

Armstrong (2010) recently briefed that it is not a matter of announcing ‘quick-fix’ initiatives.
In reality it appears to be a challenge for organizations to develop effective methodologies to
measure the cost of non-financial rewards (Deloitte Consulting, 2008). Gandossy and Kao
(2004) regard career opportunities as one of the factors of employee retention. Similarly,
Day, Sammons, Stobart, and Kington (2007) confirm that for an employee the chance to
develop and grow as part of his/her job is a factor that can satisfy and retain them for longer
period of time. Scott et al. (2007) confirmed employees’ preference of career development
opportunities as the focal purpose behind their decision to stay in the same organization for
longer period of time.

The presence of effective developmental plan shows greater value an organization gives to
its employees, absence of which could lead to frustrated work force searching for alternative
job opportunities (Mercer, & Reilly, 2006; Yeo, & Li, 2011). Researchers agree on the notion
that employees give prominence to learning new skills to make them more competitive and
to exploit future opportunities whether within the organization or outside (Armstrong,
2010; Zingheim, & Schuster, 2008). Blades and Fondas (2010) study affirmed that 66%
of the respondent organizations offer flexible programs which helped them increase
employee’s engagement. Whereas, 64% acknowledged employee’s retention, and about

49 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

49% experienced enhanced employee’s recruitment. Researchers maintained that Work-

Life balance includes programs which make it easier for employees to get their job done
while balancing personal and family needs (Giancola, 2009; Heneman III, & Milanowski,
2007).

2.2 Motivation
Motivation is such an important element in improving work productivity, every manager
or employer need to have a firm understanding of how it relates to job satisfaction and
reward systems. Atkinson (1964) defined modern-day stimuli on the path, energy as well as
persistence of accomplishment as meaning of motivation. Jones (1955) affirms motivation as
a way where action develops, is strengthened, is continued, is focused, is motionless, and the
form of personal or independent response which is inhibited within organizations despite
the fact all these are ongoing. Higgins (1994) asserts, motivation is inbuilt stimulus to fulfill
discontented or unsatisfied need. A motive is what prompts a person to act in a certain way or
at least develop an inclination for specific behavior (Kast, & Rosenzweig,1985),”Motivation”
is defined from the viewpoint of York (1976) as those forces within an individual that push
him to satisfy basic needs or wants.. Psychologists believe that all motivation is ultimately
derived from a tension that results when one or more of our important needs are unsatisfied
(Dessler 1986, 332).

Motivation of workers or employees is the central theme for the reason that, it may well be
a form to reducing and manipulating the space or gap that exists among employee’s tangible
and preferred level or degree of being committed to the institution or organization in
addition to encouraging individuals to perform a singular task or in teams. The problem that
organizations have in motivating employee is how to discover what the employees needs
and wants are and where it intersects with the organization’s core values and objectives.
Whereas some people may be motivated by to seek value and encouragement in more
creative work over high-salaried work, other individual might be interested in working more
to acquire much money in their work. These are demonstration that different inhibitions in
employees have an effect on their work patterns. Managers also in organizations can have a
significant effect in the motivational practices. They have an important part in putting work
structure accomplishments and the capability and independence of employees to undertake
self-determination objectives on the work performance. Superiors have the ability of
providing effective feedback on workers’ output as well as empowering them to take part
in decision making. The interactions that exist amongst managers and their subordinates,
good communication between them similarly impacts the motivational development.
According to Atkinson (1964), modern-day stimuli on the path, energy as well as persistence
of accomplishment are the results of motivation. In short, motivation is part of our daily lives
and it is frequently been in the work environment as being intrinsic or extrinsic in nature
seen (Sansone et al. 2000).

NJMSR Volume V I Focus Issue I 50

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.3 Job Security

The state of knowing ones’ job is secured. According to Borland (1999), job security is
defined as a freedom from fear of losing a job. According to Simon Stapleton (2009), job
security is defined as an employee’s assurance or confidence that they will keep their
current job. As stated by the theorist Pearce (1998) perceived job security is a mind state in
which employee sees his job stability with the firm in near future. Davy, Kinicki and Scheck
(1991); Geary (1992); Roskies and Louis-Guerin (1990); Tsui, Pearce, Porter and Tripoli
(1997) added that it is the result of the firm’s own practices and policies with the employees
which make them feel secure or insecure towards a job. Rousseau and Tijoriwala (1998)
assert workers don’t expect categorical job security since the competition in the volatile
market is maximum.

Ashford, Lee, and Bobko (1989); Steers (1977); Forbes (1985); Oldham et al (1986) have
found a negative inverse relationship between perceived job insecurity and both employee
satisfaction and commitment. Levine 1995 suggests that prescribed security assurances are
important to minimize the employee uncertainties that their involvement in the programs
will lead to their own layoffs. Beard and Edwards (1995), Davis-Blake and Uzzi (1993),
Hulin and Glomb (1999), Pearce (1993) maintain that attitudes and behaviors differ between
the Employees that means the permanent workers and the Temporary workers (Bishop, &
Goldsby, 2000; Broschak, & Davis-Blake, 1999; Van Dyne, & Ang,1998). On the same line, the
work of Ellingson, Gruys and Sackett, (1998); Feldman, Doerpinghaus and Turnley (1995)
explain the predictors of both the behaviors and attitudes of these contingent or temporary
workers. Osterman (2000), EATON (1990) discussed the same.

2.4 Leave Provision

It is a type of non-financial reward which is provided to its employees which shows the
organization as a supportive character (Kurtessis et al., 2017; Businesses actually report
no major problems in complying with the federal Family and Medical Leave Act, and some
studies suggest that leave policies can benefit companies through increased employee
retention and job satisfaction.34 Providing paid leave has many benefits for employers
including but not limited to a healthy and productive workforce which leads to improved
productivity, reduced employee turnover, improved morale, and employee loyalty (Gouldner,
1960). Nationwide, research is also taking a closer look at the impact that paid leave or the
lack there-of has specifically on caregivers in the United States.

2.5 Performance Recognition

Employees expect appreciation and recognition of their performance from their supervisors
and the organization. Performance recognition helps realizing the job and organization are
valued, and it increases employee satisfaction and motivation (Rizwan, & Tariq, 2014).
Recognition consistently correlates with higher retention, higher employee motivation
(Elton, & Gostick, 2002; Daniel, & Metcalf, 2005). A strong positive correlation between

51 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

recognition and performance is reported by Stajkovic, and Luthans (2003); Nasibov (2015).
The incentive awards like medals would be less important than the process of continuous self-
improvement (Saric, 2016).

Employee recognition is a highly effective motivational instrument (Zani, Rahim, Junos,

Samonol, Ahmad, & Merican, 2011; Rahim, & Duad, 2013; Freeman, 1978; Danish, &
Usman, 2010; Imran, Ahmad, Nisar, & Ahmad, 2014; Erbasi, & Arat, 2012; Ngatia, 2015;
Tausif, 2012). According to Imran, Ahmad, Nisar, and Ahmad (2014) assert that satisfied
employees have positive attitude towards organization and their jobs thereby increasing the
quality and quantity of employee performance (Herzberg, 1996 as cited in Luthans, 2000;
Silverman, 2004). Maritz Institute (2011), Whitaker (2010), Schechter, Thompson and
Bussin (2015), Silverman (2004) have pointed out that though money is highly valued and
employees will go all length to get, its impact on intrinsic motivation is limited at best (Zobal,
1999). Thumb ran (2010) has argued that by offering nonfinancial rewards to potential and
existing employees would be both relevant and beneficial to business and this would enable
businesses to better strategize in terms of the value offered to employees.

2.6 Challenging Work

It is a type of non-financial reward which is given to the employees for their capacity
testing. Challenging work can be a great motivator, as it can keep employees engaged and
interested in their role. Some studies maintain, that the task must still be possible otherwise
it could actually damage morale rather than inspire people. Set employees learning and
development goals. Making employees responsible for their own career development can
motivate them to push themselves that little bit further. However, if you want staff to grow
in their roles, you’ll need to provide them with opportunities to let them put their new skills
into action with promotions or the creation of new roles. By setting employees attainable
challenges, hopefully you’ll have a workforce that’s enthusiastic and who feel rewarded for
the hard work. Challenging employees is now an essential condition to keep them engaged,
motivated, and interested in your company. Feel free to perfect your motivation strategy with
these tips, and your followers will respond with a greater performance and a dedication to
future success. 

2.7 Flexibility of Working Condition

It is a type of non-financial compensation. In an organization every employee wants to work
freely and without disturbance. It is the state of working environment in which the employee
adapts to change. Workplace flexibility emphasizes  the willingness and ability to adapt
to change, particularly regarding how and when work gets done (Kandolin, 1996; Pryce
2006;  Smith 1998;  Viitasalo 2008; Dooley 2000;  Rodriguez 2002; Kandolin 1996). Two
other studies reporting on the effects of worker‐orientated flexibility found no significant
improvements in primary health outcomes but tellingly no negative health outcomes were
observed (Dunham 1987; Pryce 2006) and positive effects on secondary outcomes, including

NJMSR Volume V I Focus Issue I 52

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

quality of life, were seen in the study by  Pryce 2006.  Similarly, in the studies of gradual
retirement, having control over the retirement decision was associated with improvements
in the measured health outcomes (Calvo 2009;  de Vaus 2007; De Raeve 2007;  Rodriguez
2002). Given the limitations associated with the size and quality of the evidence base these
conclusions are made with caution (Pryce, 2006; Bambra 2009a; Bambra 2008b).

Clearly more research is needed to explore this possibility further. In a flexible workplace,
the needs of both employee and employer are met. It is used as a tool for motivating and
retaining employees.

3. RESEARCH METHODOLOGY

3.1 Design
This study follows quantitative approach. Based on the descriptive and correlational
research designs, this study used descriptive and inferential statistics. Primary data was
collected using closed-end questionnaire based on 5-point Likert Scale. Reliability of the
data was examined with Cronbach’s Alpha with cutoff value 0.7 as per Nunally (1978) and
the responses on each variable were found good in reliability test.

3.2 Population of the Study

Convenience sampling technique was used to select respondents from different position
holders in their respective Development banks. Approximately 80 percent response rate was
achieved with 200 respondents from Top Ten Nepali Development banks based on financial
performance of 2019-20. Among the respondents, there were 53.5 percent male and 46.5
percent female (gender wise classification), and 51 percent assistant level employees, 38
percent officer level employees and 11 percent manager level employees (position wise
classification)

3.3 Sampling Techniques

For analysis, descriptive statistics i.e., percentage analysis and mean, inferential statistics
i.e., Pearson’s correlations, independent sample t-test and regression analysis were used.
Descriptive statistics were used to draw conclusions regarding the perception of respondents
regarding the variables of interest on conceptual framework. In order to test the hypothesis,
inferential statistics were used. Inferences were made on 0.01 per cent and 0.05 per cent
level of significance. To conclude the most significant factors of motivation and to judge the
role of motivation on employee turnover intention, OLS is used.

3.4 Units of Analysis

The subjects of inquiry in this study included selected professionals and employees engaged
in development banking industry. For the purpose of data presentation and analyses, the
research method used gender, age-groups, professional lines of engagement and bank
53 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

employees as the key demographic variables for data presentation and analyses to compute
the difference between perceived and expected motivation level making these variables as
the bases of data presentation and analyses.

3.5 Analysis
This study follows quantitative approach. Based on the descriptive and correlational
research designs, this study used descriptive and inferential statistics. Primary data was
collected using closed-end questionnaire based on 5-point Likert Scale. Convenience
sampling technique was used to select respondents from different position holders in their
respective development banks. Approximately 80 percent response rate was achieved with
200 respondents from Top Ten Nepali Development banks based on financial performance
of 2019-20. Among the respondents, there were 53.5 percent male and 46.5 percent female
(gender wise classification), and 51 percent assistant level employees, 38 percent officer
level employees and 11 percent manager level employees (position wise classification).
Reliability of the data was examined with Cronbach’s Alpha with cutoff value 0.7 as per
Nunally (1978) and the responses on each variable were found good in reliability test.
For analysis, descriptive statistics i.e., percentage analysis and mean, inferential statistics
i.e., Pearson’s correlations, independent sample t-test and regression analysis were used.
Descriptive statistics were used to draw conclusions regarding the perception of respondents
regarding the variables of interest on conceptual framework. In order to test the hypothesis,
inferential statistics were used. Inferences were made on 0.01 per cent and 0.05 per cent
level of significance.

4. DATA PRESENTATION AND ANALYSIS

4.1 Data Analysis and Results

Results of the study reveal that majority of the respondents with weighted average 4.25,
agree upon the role of nonfinancial compensation for employee motivation. Likewise,
respondents have shown their agreements on the variables of nonfinancial compensation
or rewards on employee motivation with average response of 3.73. The organization is
reported to give much less preference to flexibility of working conditions (FWC), as the
average response is reported as 3.62 on the statements. Respondents have shown above the
average satisfaction level i.e., 3.75 on the statement for examining performance recognition.
Likewise, respondents have shown their satisfaction on the leave provision (LP) with
average response level of 3.82. Employees are motivated for better performance at their job
with the weightage average satisfaction i.e., 4.15. Regarding the turnover intention of the
employees, the average satisfaction level observed is 2.9 indicating the low willingness to
turnover. Pearson’s correlation is used to analyze the relationship between reward practice
and employee motivation.

NJMSR Volume V I Focus Issue I 54

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Table 1: Correlation coefficient between variables

This table reveals Pearson’s correlation coefficient between Turnover intention (TOI),
Employee motivation (EM) with components of non-financial reward system i.e., Job
Security (JS), Leave Provisions (LP), Performance Recognition (PR), Challenging Work (CW),
Flexibility of Working Conditions (FWC).

TOI EM JS CW LP PR FWC

TOI 1 -0.36** -0.35** -0.29** -0.45** -0.32** -0.46**

EM 1 0.62** 0.57** 0.61** 0.51** 0.54**

**correlation is significant at the 0.01 level (2-tailed).

Correlation table provides evidence that the turnover intention has negative relationship
with employee motivation and components of the nonfinancial reward system. Components
of the nonfinancial rewards system have the positive association with employee motivation.
Based on the result, Leave Provisions has maximum negative relationship with turnover
intention stating that the employees seek balance between professional life and the
personal life. Similarly, Flexibility of Working conditions is the strongest factor causing
turnover intention. Likewise, Challenging work cause comparatively low turnover intention.
Regarding the employee motivation, Job security and Leave Provisions have greater influence
on employee motivation.

Table 2: Regression of reward system factors on employee motivation

This table shows stepwise regression analysis results run as the Employee motivation (EM)
dependent variable and Job Security (JS), Challenging works (CW), Leave Provisions (LP),
performance recognition (PR), and Flexibility of Working conditions (FWC) as independent
variables.

The model assumed was EM= α+β1JS+β2CW+β3LP+β4PR+β5FWC+e where, dependent

variable is EM (Employee motivation) and independent variables are JS (Job Security), CW
(Challenging works), LP (Leave Provisions), PR (Performance recognition), FWC (Flexibility
of Working Conditions). The reported results also include the values of F-statistics (F) and
coefficient of determinants (R2).

Result reveals that job security, challenging work, leave provision, performance recognition,
flexibility of working conditions individually have positive and significant impact on
employee motivation at 1 percent level of significance. It reveals that higher the factors of
nonfinancial reward system higher would be the employee motivation. R2 value i.e., 0.65

55 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

indicates that 65 percent variation in response is explained by the model. The model becomes
EM= 1.426 + 0.185JS + 0.131CW + 0.318LP + 0.102PR + 0.201FWC+ e. This indicates that the
factors of nonfinancial reward system have positive significant relationship to the employee
motivation.

Model Intercept JS CW LP PR FWC R2 SEE F-VALUE

1 1.766 0.769 0.4 0.66 120.8

(6.57)** (10.99)**

2 2.149 0.641 0.3 0.68 88.54

(7.87)** (9.40)**

3 1.879 0.722 0.3 0.68 92.96

(9.64)**

4 1.876 0.717 0.3 0.68 89.9

(6.27)** (9.48)**
5 2.17 0.624 0.3 0.71 70.07
(7.14)** (8.37)**

6 2.348 0.342 0.325 0.4 0.62 50.16

(8.96)** (2.39)* (2.47)*

7 1.895 0.191 0.009 0.674 0.4 0.58 48.09

(7.33)** (0.72)** (0.32)** (5.38)**

8 1.739 0.058 0.442 0.5 0.56 56.82

(6.86)** (0.4)** (3.06)**

9 1.588 0.328 0.270 0.5 0.55 61.91

(6.38)** 92.850** (2.40)**

10 1.426 0.185 0.131 0.318 0.102 0.201 0.65 0.45 71.89

(5.13)** (0.74)** (0.32)** (2.85)** (0.42)** (2.40)**

1. Figures in parentheses are t-values.

2. The asterisk (**) and (*) signs indicate that the results are significant at 0.01 and 0.05
level of significance respectively.

3. Dependent variable is employee motivation

Table 3
Model summary for predicting turnover intention by employee motivation

Model R R2 AdjustedR² Std. Errors of the Estimates

1 0.36 0.130* 0.125 0.603

Predictors: (Constant), motivation

NJMSR Volume V I Focus Issue I 56

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Table 3 represents the variations in employee turnover. As the adjusted R2 is 0.126, only
12.6 per cent variation in the employee turnover is predicted by the model. The value of
F-statistic is statistically significant at 1 percent level of significance.9

Table 4
Coefficients of regression model
Model Unstandardized Standardized T Sig
Coefficients Coefficients
B Std. Error
1 Constant 0.63 0.882 8.441 0.000
Motivation -0.913 0.219 -0.346 -3.024 0.000

From table 4, it is conclude that the motivation has negative relation with employee turnover
intention at 1 percent level of significance. The regression model becomes: TOI = 0.63 – 0.913
Motivation + e. The result reveals that the motivation has significant negative influence on
employee turnover (sig. 0.000). Regression value -0.913 suggests that an increase of one
unit in motivation would reduce the employee turnover intention by 0.913 units. The result
has the implication that to decrease the turnover there need to increase the motivation level.
From the statistics, the hypotheses testing is as:

Table 5
Hypothesis Testing

H01: There is no significant relationship between job security Rejected

and employee motivation
H02: There is no significant relationship between leave provi- Rejected
sions and employee motivation.
H03: There is no significant relationship between performance Rejected
recognition and employee motivation.
H04: There is no significant relationship between challenging Rejected
work and employee motivation.
H05: There is no significant relationship between flexibility of Rejected
work conditions and employee motivation.
H06: There is no significant relation between employee’s moti- Rejected
vation and their turnover intention.

5. DISCUSSION
Results of this study reveal that majority of the respondents with weighted average 4.25,
agree upon the role of nonfinancial compensation for employee motivation. Likewise,
respondents have shown their agreements on the variables of nonfinancial compensation
or rewards on employee motivation with average response of 3.73. The organization is
reported to give much less preference to flexibility of working conditions (FWC), as the

57 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

average response is reported as 3.62 on the statements. Respondents have shown above the
average satisfaction level i.e., 3.75 on the statement for examining performance recognition.
Likewise, respondents have shown their satisfaction on the leave provision (LP) with average
response level of 3.82. Employees are motivated for better performance at their job with the
weightage average satisfaction i.e., 4.15. Regarding the turnover intention of the employees,
the average satisfaction level observed is 2.9 indicating the low willingness to turnover.

Correlation table provides evidence that the turnover intention has negative relationship
with employee motivation and components of the nonfinancial reward system. Components
of the nonfinancial rewards system have the positive association with employee motivation.
Based on the result, Leave Provisions has maximum negative relationship with turnover
intention stating that the employees seek balance between professional life and the
personal life. Similarly, Flexibility of Working conditions is the strongest factor causing
turnover intention. Likewise, Challenging work cause comparatively low turnover intention.
Regarding the employee motivation, Job security and Leave Provisions have greater influence
on employee motivation.

Result reveals that job security, challenging work, leave provision, performance recognition,
flexibility of working conditions individually have positive and significant impact on
employee motivation at 1 percent level of significance. It reveals that higher the factors of
nonfinancial reward system higher would be the employee motivation. The result reveals
that the motivation has significant negative influence on employee turnover. Regression
value -0.913 suggests that an increase of one unit in motivation would reduce the employee
turnover intention by 0.913 units. The result has the implication that to decrease the
turnover there need to increase the motivation level.

A few past studies such as Andreea Paul-2020, Fazıl ŞENOL-2011, Samuel Mansaray-
Pearce—2019, Pooja Dangol-2020, Lucie Depoo-2013 claimed the impact of nonfinancial
rewards articulated in terms of employee motivation. This study also supports the previous
research claims but with the findings as given above that stipulate leave provision, working
flexibility conditions, job recognition, job security as the major predictors of employee
motivation that is key to preventing them from their turnover intention.

6. CONCLUSION
The study concludes that the nonfinancial reward practice variables play a prominent role
in determination of employee motivation and turnover intention. Job Security, Challenging
work, Performance Recognition, Flexibility of the work conditions, and Leave Provisions are
the most influencing factors for determining employee motivation in chronological order
of correlation. Though Financial Compensation can immediately benefit the employees to
maintain their living expenses and economic progress. In growing inflation rate, it could be
natural to have the first priority to have better nonfinancial compensation package. In Nepali
NJMSR Volume V I Focus Issue I 58
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

practice, pay level of the banking industry is comparatively higher than other industries. As
many employees report that the work pressure at their bank is tremendously high, so Leave
Provisions is reported to be the second strongest factor influencing employee motivation.
Poor leave provisions could cause high job stress, poor family relations and social values,
which cause to have low satisfaction and low employee motivation. Research reports suggest
that the priority of millennial people is shifting significantly. Thus, management should work
for improving the work-life balance of the employees by maintaining leave provisions. If it
could do so, nonfinancial reward practices could be the source of organizational productivity
and competitive advantage.

Positive association between dimensions of nonfinancial reward system and motivation

indicates that higher the factors of nonfinancial reward system i.e., Job Security, Challenging
works, Leave Provisions, performance recognition, and Flexibility of Working Conditions
increases the employee motivation. Findings reveal employee motivation has negative
significant association with turnover intention which indicates that higher positive
motivation leads to decrease in employee turnover intention. Such results give significant
insights to the managers on how to reduce the turnover ratio, they should work for improving
the components and intensity of nonfinancial reward system.

The reason behind the positive association between components of nonfinancial reward
system and employee motivation could be the reason of stress management of employees
through fulfillment of personal needs of each employee. Li, et al. (2017) reported the
reciprocal relationship between stress and performance. Findings of this research are
supported by the study as the nonfinancial reward system helps to settle the stress of
the employees. At least, the nonfinancial reward system causes low stress on employees,
which increases the performance. Similarly, conclusion of the study has congruency with
the conclusion of Kiruja, & Mukura (2013) that increasing motivation of the employee also
increases the employee performance. Study revealed that the Leave Provisions and Job
Security contributes more to employee motivation as suggested by Herzberg. Similarly,
the findings agree with the arguments of the Herzberg that to increase the job enrichment,
the component of nonfinancial reward system to motivate employees and to increase
their performance level must increase. Relationship between training opportunity and
organizational citizenship behavior could be moderated by intrinsic motivation (Dysvik, &
Kuvaas, 2008) which indirectly agrees with the findings of the study. Intrinsic motivation
helps to reduce the turnover intention so that the managers can focus on increasing the
intrinsic motivation of the employees though several other components of comprehensive
reward system that have positive relationships with employee motivation.

59 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

7. SUGGESTION
Practical Implications - This research can be helpful for human resource managers in
Banking Sector in Nepal. They can design effective non-financial rewards factor to retain
their competent employees. Management can improve the use of effective rewards and
recognition system in the feedback process of their performance management system to
motivate their employees. The bank should periodically examine its nonfinancial rewards
practices to make it more interesting, fair and acceptable by its employees. Even if there was
a partial employee’s satisfaction on nonfinancial practices but there is a gap that would be
improved by the bank to fully satisfy its employees’. So, improvement on those variables will
lead to high employees’ motivation.

NJMSR Volume V I Focus Issue I 60

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Aguinis, H., & Kraiger, K. (2009). Benefits of training and development for individuals and
teams, organizations, and society. Annual Review of Psychology, 60, 451.

Andrew, D. P., & Kent, A. (2007). The impact of perceived leadership behaviors on satisfaction,
commitment, and motivation. International Journal of Coaching Science, 1(1), 37-58.

Armstrong, M. (2009) handbook of human resource management practice, 11thed, London

and Philadelphia, Kogan page Ltd.

Baron, R., & Greenberg, J. (2008). Behavior in organizations (9th ed.). New York: Pearson
Prentice Hall. Brooks, I (2009). Organizational behavior: individuals, groups and
organization. Harlow: Financial Times/Prentice Hall.

Baird, K., & Wang, H. (2010). Employee empowerment: extent of adoption and influential
factors. Personnel Review, 39(5), 574-599.

Buelens, Marc, Sinding, Knud, & Waldstrøm, Christian (2010). Organizational Behavior,
special edition for Aarhus School of Business and Social Sciences. Glasgow: Bell &
Bain Ltd.

Booz, M. (2018). These 3 industries have highest turnover rate. Linkedin Talent Blog.
Retrieved from https://business.linkedin.com/talent-solutions/blog/trends-and-
research/2018/the-3-industries-with-the-highest-turnover-rates.

Bowen, R. B. (2000). Recognizing and rewarding employees. International Journal of

Coaching Science, 1(1), 35-56.

Biruk, A. (2017) thesis of The Effect of Reward Practices on Employee Motivation, master’s
thesis, AAU, school of commerce.

Brickley, J. Smith, C. Zimmerman, J., & Willett, J. (2002) Designing organizations to create
value. New York, McGraw-Hill Companies.

Bozeman, B., & Gaughan, M. (2011). Job satisfaction among university faculty: Individual,
work, and institutional determinants. The Journal of Higher Education, 82(2), 154-
186.

Cameron, J., & Pierce, W. D. (2006). Rewards and intrinsic motivation: Resolving the
controversy. United States: Bergin & Garvey.

Cheema, F. E. A., Shujatt, S., & Alam, R. (2013). Impact of non-monetary rewards on employees’
motivation: A study of commercial banks in Karachi, Journal of Management and
Social Sciences, 9(2), 23-30.

61 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Dalton, M., Hoyle, D. G., & Watts, M. W. (2003). Human relations. Australia: South–Western
Educational Publishing.

Danish, R. Q., & Usman, A. (2010). Impact of reward and recognition on job satisfaction and
motivation: An empirical study from Pakistan. International Journal of Business and
Management, 5(2), 159-167.

Daniel, T. A., & Metcalf, G. S. (2005). The fundamentals of employee recognition. Society Of
Human Resource Management. 26(2), 62-74.

Danish, R. Q., & Usman, A. (2010). Impact of reward and recognition on job satisfaction and
motivation: An empirical study from Pakistan. International Journal of Business and
Management, 5(2), 159-166.

Dobre, O. (2013) Employee motivation and organizational performance, Review of Applied

Socio- Economic Research, 5(1), PP. 53-60.

Dixit, A. (2000). Incentives and Organizations in the Public Sector: An Interpretive Review.
Princeton University: Princeton NJ USA.

Dysvik, A., & Kuvaas, B. (2008). The relationship between perceived training opportunities,
work motivation and employee outcomes. International Journal of Training and
Development, 12(3).138- 157. doi.org/10.1111/j.1468-2419.2008.00301.

Franco, L.M., Bennett, S., Kanfer, R., & Stubblebine, P. (2004). Detrminanats and consequences
of health worker motivation in hospital in Jordan and Georgia. Soc.Sci.Med., 58(2),
345-355.

Herzberg, F., Mausner, B., & Snyderman, B. 1959. The motivation to work. (2nd ed.). New
York: John Wiley & Sons.

Herzberg, F. 1966. Work and the nature of man. Cleveland, OH: The World Publishing
Company.

Gautam, D. K. (2011). Changing perspectives of managing human resources in Nepal.

Proceedings of Nepalese Academy of Management, 1(1), 65-78.

Gautam, P. K. (2016). Determinants of Job Satisfaction and their Effect on Organizational

Performance: An Evidence from Nepalese Banking Sector. THE BATUK: Journal of
Interdisciplinary Studies, 2(2), 43-54. www.researchgate.net.

Harter, J. K., Schmidt, F. L., & Hayes, T. L. (2002). Business-unit-level relationship between
employee satisfaction, employee engagement, and business outcomes: A meta-

NJMSR Volume V I Focus Issue I 62

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

analysis. Journal of Applied Psychology, 87(2), 268-279.

Harunavamwe, M., & Kanengoni, H. (2013). The impact of monetary and non-monetary
rewards on motivation among lower-level employees in selected retail shops, African
Journal of Business Management, 7(38), 3929-3935.

Hassan, M. (2015). Issues and challenges of non-bank financial institutions in Bangladesh.

Asian Business Review, 2(1), 61-64.

Henderson, R. J. (1994). Compensation management: Rewarding performance, Englewood

Cliffs; Nj; Prentice – Hall. Irwin.

Honold, L. (1997). A review of the literature on employee empowerment. Empowerment in

Organizations, 5(4), 202-212.

Jackson., & Vincent, N. (1986). Motivation and the gift relationship in Kshirsagar, M., &
Waghale, V.Y. (2014). Impact of Financial and Non-financial Rewards on Employee
Motivation. International Research Journal of Management and Commerce, 1(6), 61-
74.

Kiruja, E., & Mukura, E. (2013). Effect of motivation on employee performance in public
middle level technical training Institutions in Kenya. International Journal of
Advances in Management and Economics, 2(4), 73-82.

Konovsky, M. A., & Pugh, S. D. (1994). Citizenship behavior and social exchange. Academy of
Management Journal, 37(3), 656-669.

LaBelle, J. E. (2005). The Paradox of Safety Hopes & Rewards: Are you rewarding the right
behavior? Professional Safety, 50(12), 37-39.

Lawller, E. (1986). High-Involvement arrangement: Participative strategies for improving

organizational performance. International Journal of Bank Marketing, 24(1), 37- 52.

Li, L., Ai, H., Gao, L., Zhou, H., Liu, X., Zhang, Z., . . . Fan, L. (2017). Moderating effects of coping
on work stress and job performance for nurses in tertiary hospitals: a cross-sectional
survey in China. Health Service Research, 17(401), 2-8.

Maidani, E. A. (1991). Comparative study of Herzberg’s two-factor theory of job satisfaction

among public and private sectors. Public Personnel Management, 20(4), 441-448.

Maslow, A. H. (1951). Motivation and Personality, New York: Harper and row publishers, Inc.
Milkovich, G. T., & Newman, J. M. (1993). Compensation, Homewood, IL; Richard D.

63 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Nawaz, T. (2015). Motivation behind Bicycling Habit in Sylhet City of Bangladesh.

Asian Business Review, 5(1), 38-42.

Mendis, M. D. V. S., & Weerakkody, W. A. S. (2017). The Impact of Work Life Balance on
Employee Performance with Reference to Telecommunication Industry in Sri Lanka:
A Mediation Model. Kelaniya Journal of Human Resource Management. 12(1). http://
doi.org/10A038/kjhrm.v12i1A2.

Meyerson, G., & Dewettinck, B. (2012). Effect of empowerment on employees’ performance.

Journal of Economic and Management Sciences, 2(1), 40-46.

Misra, P., Rana, N., & Dixit, V. (2012). Compensation: impact of rewards, organizational justice
on job satisfaction and turnover intentions in retail store operations–a study of Delhi
and NCR. In Proceedings of International Conference on Business Management & IS,
1(1), 406-415.

Njoroge, L. (2015). The financial trilemma and macroeconomic instability: Empirical

evidence from Kenya. American Journal of Trade and Policy, 2(1), 59-70.

Norman, H. Nie. (1975). Statistical package for the social sciences. New York: McGraw-Hill
International.

Nunnally, J. C. (1978). Psychometric theory. New York: McGraw-Hill.

Nyandema, C. O., & Were, S. (2014). Role of reward systems in employee motivation in Kenyan
deposit taking micro finance institutions, A case study of Faulu Kenya. International
Journal of Social Sciences Management and Entrepreneurship, 1(2),203-220.

Nacinovic, I., Galetic, L., & Cavlek, N. (2009). Corporate culture and Innovation: Implications
for Reward Systems. International Journal of Economics and Management Engineering,
53, 397- 402.

Ochenge, N., & Susan, W. (2014). Role of reward systems in employee motivation. International
Journal of Social Sciences Management and Entrepreneurship, 1(2), 203- 220.

Oktosatrio, S. (2018). Investigating the relationship between work-life-balance and

motivation of the employees: Evidences from the local government of Jakarta.
International Journal of Academic Research in Business and Social Sciences,8(2), 205-
221.

Omollo, P. A., & Oloko, M. A. (2015). Effect of motivation on employee performance of

commercial banks in Kenya: A case study of Kenya Commercial Bank in Migori
County. International journal of human resource studies, 5(2), 87-103.

NJMSR Volume V I Focus Issue I 64

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Pavithra, J. (2013). Role of motivation for improving organizational development.

International Journal of Innovative Research in Science, Engineering and Technology,
2(7), 2831-2834.

Rahman, M., & Islam, M. (2012). An analytical study on determining effective factors for
recruiting right person. ABC Journal of Advanced Research, 1(2), 50-56.

Rizwan, Q. D., & Ali, U. (2010). Impact of reward and recognition on job satisfaction and
motivation. An empirical study from Pakistan. International Journal of Business and
Management. Available online at www.ccsenet.org/ijbm Retrieved on 20th October,
2012.

Richardson, S. A. (2008). Undergraduate tourism and hospitality students’ attitudes towards

a career in the industry: A preliminary investigation. Journal of Teaching in Travel
and Tourism, 8(1), 23-46.

Rizwan, M., &Tariq,M (2014). A comparative analysis of the factors affecting the employee
motivation and employee performance in Pakistan, International Journal of Human
Resource Studies, 4(3), 35-49.

Schaufeli, W.B., Salanova, M., González-Romá, V., & Bakker, A.B., (2002). The measurement
of engagement and burnout: A two sample confirmatory factor analytic approach.
Journal of Happiness studies, 3(1), 71-92.

Ssesanga, K., & Garrett, R. M. (2005). Job satisfaction of university academics: Perspectives
from Uganda. Higher education, 50(1), 33-56.

Stajkovic, A. D., & Luthans, F. (1998). Self-efficacy and work-related performance: A meta-
analysis. Psychological Bulletin, 124(2), 240.

Stajkovic, A. D., &Luthans, F. (2003). Behavioral management and task performance in

organizations: conceptual background, meta-analysis, and test of alternative models.
Personnel Psychology, 56(1), 155-194.

Sekaran, U. (2003). Research methods for business a skill building approach. New York: John
Wiley, 292-297.

Siddique, M. (2014). CSR practices and competitive advantages: A descriptive study.

American Journal of Trade and Policy, 1(3), 109-116.

Tausif, M. (2012). Influence of non-financial rewards on job satisfaction: A case study of

educational sector of Pakistan, Asian Journal of Management Research, 2(2) 688-696.

65 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Vanscotter, J. R. (2000). Relationships of task performance and contextual performance with

turnover, job satisfaction, and affective commitment. Human Resource Management
Review, 10(1), 79- 95.

Varma, & Agarwal. (1994). Personal management; A human resource systems approach, New
Delhi: Forward Book Dept Educational Publications.

Yousaf, S., Latif, M., Aslam, S., & Siddiqui, A. (2014). Impact of financial and non-financial
rewards on employee motivation. Middle-East Journal of Scientific Research, 21 (10),
1776-1786.

Yamada, A. M., Lee, K. K., Dinh, T. Q., Barrio, C., & Brekke, J. S. (2010). Intrinsic motivation as
a mediator of relationships between symptoms and functioning among individuals
with schizophrenia spectrum disorders in a diverse urban community. The Journal
of nervous and mental disease, 198(1), 28.

NJMSR Volume V I Focus Issue I 66

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

THE IMPACT OF COVID-19 PANDEMIC ON BRAND PREFERENCE IN PURCHASING

DECISIONS OF HAND SANITIZERS IN KATHMANDU, NEPAL

Akshay Arora, PhD∗ Abhisekh Man Shrestha

ψ

Abstract
The COVID-19 pandemic has spread to nearly every nation around the world. As governments
struggle with lockdown measures to control the virus spread, national economies and
businesses are affected by loss. Nepal also suffered from corona virus and has surpassed all
the expectations. As sanitizer demand increased many sanitizer manufacturing companies
were facing difficulty in supplying adequate sanitizers in market which create panic
hoarding. Also newly emerged sanitizer companies were taking undue advantages of the
spiked market demands by selling low quality hand sanitizers and exposing consumers
to buying such products. The main purpose of this study was to find out how a pandemic
affected brand preference in purchase decision of hand sanitizer in Kathmandu, Nepal. For
collecting empirical data, PMO Model was built on basic of branding theory and the consumer
behavior theory. Qualitative approaches were used for research and analysis where sixteen
semi-structured interviews were conducted with Nepalese customers. The findings indicate
aspects of price, quality, risk and loyalty were tied to the pandemic within the context of
the health aspect of the COVID-19 virus. While large shifts have been preferred in sanitizer
brands due to unavailable of stocks, there are also large changes in health consciousness and
qualitative demands on sanitizer brands due to the pandemic affecting brand preference.

Keywords: Brand preferences, Consumer behavior, Buying behavior, COVID-19 pandemic,

Price, Quality, Risk, Loyalty, Sanitizer.

∗Akschya Arora, PhD, faculty at Global College International

ψ
Abhisekh Man Shrestha, MBA student at Global College International
67 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION
1.1 Background of the Study
World Health Organization (WHO) declare corona virus disease (COVID-19) as pandemic
on March 11th, 2020 because of speed and scale of the transmission of the disease (World
Health Organization, 2020). The virus was first identified in mainland China reported in the
city of Wuhan, Hubei province on February 26th (Na Zhu, 2020). There were 126,214 cases
worldwide, on the 1st of June 2020, the worldwide cases have reached 6,315,824 with over
374 thousand people died as a result of the disease (Na Zhu, 2020). The majority of people
were getting infected in a short period of time which is in overwhelming countries and as a
result, the government might not be able to provide the needed health care for the masses
or keeping the economic wheel functioning and maintaining it and the society (Nicomedes
& Avilab, 2020).

Due to rapid spread of COVID-19 virus in global, people have various reactions depending
on cultural orientations. For public awareness about corona virus, media communication
became the major source of information. It can also misinform which can lead to unnecessary
public panic and result in panic buying (Jones, Waters, Holland, Bevins, & Iverson, 2010).
Moral panic which is caused by fast transmission of COVID-19 virus in global can lead to
powerful psychological effect and is accompanied by a true sense of stigma (Gilman, 2010).
As a result, countries are having restrictions about gathering and are implementing social
distancing rules such as in Nepal. The COVID-19 pandemic and all of these restrictions
have an effect on the worldwide economy, the environment, and most importantly for this
research, each person ‘s life and how they are behaving. This has caused “disruption of the
world economy, decline of stock markets, scarcity of supplies, worsening political instability,
and governments losing hundreds of billions of revenues” (Nicomedes & Avilab, 2020, p. 13).

When an infected individual cough or sneezes, the COVID-19 virus spreads through saliva
droplets or nasal discharge. (World Health Organization, 2020). As the number of COVID-19
cases rises, there was a record-breaking sales of safety-health products such as sanitizers
and masks, also a ripple effect was created that triggered wider customer purchasing
behavior (Nielsen IQ, 2020). Another important factor is a moral panic, which describes as
“Real infectious diseases have a vigorous psychological effect that becomes ‘moral panic’
that spreads globally and is accompanied by a true sense of stigma” (Nicomedes & Avilab,
2020, p. 11). Moral panic can be identified as the appearing of fear in an inappropriate
situation or time (Nicomedes & Avilab, 2020). This panic leads to egoism such as xenophobia,
panic buying, believing all the news on social media, and capitalist behavior (Nicomedes &
Avilab, 2020). This phenomenon of panic buying is also called panic hoarding or consumer
hoarding and can be described as consumers buying an excessive number of products to
avoid shortage in the future (Biying, Huachu, & Zuojun, 2011). Customers’ panic buying can
lead to large-scale stock out, long waiting lines and anxiety. As a result, it has a negative
impact on society and the market. This makes it crucial to understand customers’ panic

NJMSR Volume V I Focus Issue I 68

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

buying behavior and how to reduce it (Biying, Huachu, & Zuojun, 2011).
People are advised to avoid crowds, seriously adopt safety measures and remain indoors
(Republica, 2020). Due to the higher risk and need for hand sanitizer, this thesis will focus
on purchase behavior of consumers in a pandemic. Given the importance of hand sanitizer
and brand preferences, this thesis will focus on brand preference in purchase decision of
hand sanitizer for COVID-19 preventions in Kathmandu, Nepal.
1.2 Statement of Problem
COVID-19 has affected the world and many countries have restriction measures like lockdown,
social distance rules. Looking specifically at the economic impact there has been an effect on
demand where retail consumption habits have changed in the wake of the pandemic. There
has been an increase in purchases of crisis goods such as hand sanitizers (Nielsen IQ, 2020).
To reduce the spread of Covid-19 virus hand washing and sanitizing have been identified
among the best measures (Hope Magazine, 2020). Following the pandemic, the DDA has
imposed standards of alcohol-based instant hand sanitizer, which requires sanitizers
containing at least 70 percent ethyl alcohol (Khanal, 2020). However, using poisonous
alcohol in the disinfectant and taking undue advantage of the spiked market demand has
been found by many companies (Khanal, 2020). Apart from this, the selling of low-quality
hand sanitizers is also increased in poorly regulated domestic market where Metropolitan
Police Crime Division seized large number of counterfeit sanitizers from Kathmandu-16,
in which an Indian citizen was accused of producing the fake product (Khanal, 2020).
Consumers’ vulnerability to buy low-quality hand sanitizer has been revealed by incidents
of selling low-quality hand sanitizer (Khanal, 2020). According to Nepal Academy of Science
and Technology (NAST) around 45 percent of the hand sanitizers being sold in Kathmandu
are unfit for use (Khanal, 2020). Hand sanitizer manufacture by four companies one each
from China and India and two domestic manufacturers which were sold in Kathmandu have
been banned by the Department of Drugs (DDA) (Khanal, 2020).

Many supermarkets and pharmacies have to resort hand sanitizer stock rationing due to
high demand and depleting rapidly. This leads consumer to switch to new available brands
and trust issue arises. Consequently, consumer purchasing behavior and brand preferences
of hand sanitizer become an important and relevant area to focus on to better understand
consumer behavior in a COVID-19 pandemic.

The study lack peer-reviewed scientific articles about brand preferences of sanitizer in a
pandemic context (Sohani & Fahmy, 2020). This led researcher to use PMO Model which
provides the basis for collecting empirical data needed for this dissertation based on the
previous literature regarding brand preferences in an economic context. However, the
findings indicated the PMO Model is considered limited in a pandemic context. The price was
only relevant factor for consumers experiencing a financial crisis and was not an important
factor in a pandemic environment on the customers’ brand preferences.

69 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The main objective of the study is to know customer brand preferences in purchase decision
of hand sanitizer during COVID-19 in Kathmandu, Nepal.
a. To identify the impact of COVID-19 pandemic on brand preference in purchase
decision on hand sanitizer from customer perspective. Thus, the study will examine
the association like price, quality, risk and loyalty on pandemic and impact on
purchase decision.
b. Whether brand preference still persist during crisis situation like current pandemic
COVID-19.

The research question for this research are:

i. What kind of sanitizer brand are available in Kathmandu, Nepal?
ii. How does customer decide on purchasing hand sanitizer during COVID-19 Pandemic
in Kathmandu, Nepal?
iii. Is there any association of price, quality, risk and loyalty with customer perception
toward buying hand sanitizer in Kathmandu, Nepal?

The study will explain the importance of price that customers expect, quality that consumers
prefer, risk and loyalty that people take which becomes tied to the pandemic in the sense
of the health aspect of the COVID-19 virus. This helps store managers to know the brand
preferences of consumers and helps to keep preferred sanitizer brands in stock. Also, this
will help sanitizer company to know customer preferences and choices for future gain.
2. REVIEW OF THEORETICAL PERSPECTIVES
The behavior shown by the consumer at the time of searching, purchasing, using, and
disposing of product and services which satisfy his needs and wants is called consumer
behavior (Radhika, 2019). It is concerned with the purchasing and use of product and
services by individuals (Radhika, 2019). Consumer behavior is important for this study
because researcher can understand what influences consumers’ buying decisions toward
hand sanitizers in Bhatbhateni Supermarket. By understanding how consumers decide on a
product they can fill in the gap in the study and identify the sanitizer brands that are needed
and the sanitizer brands that are obsolete.

A consumer behavior analysis should reveal consumer perception and feeling about various
alternatives (Valentin , 2019). Personal factors are unique to a particular person. Some of
them can be family situation, work, marital status, age, demographic, sex or experiences
in life and all of them can influence the decision of the purchase. It is also important to
know, who in the family is responsible for the decision making because sometimes only
one member in the family makes the decisions but other times the decisions can be made
by consensus. young people demand and purchase things for different reasons than older
people (Paul W. Miniard, 2002).

NJMSR Volume V I Focus Issue I 70

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

When looking at branding in the context of consumer behavior, one has to look at brand
preference, Brand preference is the “bias a customer holds toward a particular brand” (Liu,
2009 Pg.78). Brand preference indicates the degree to which a consumer is inclined to use
a particular brand’s product instead of a competitor’s and contributes significantly to brand
equity (Chipeta, 2020). Brand preference is crucial for this study because it helps to know
repeat customers who buy same sanitizer brand from supermarket.

Value of having a renowned brand, based on the idea that firmly established and reputable
brands are more successful is called brand equity (Aaker D. , 2021). Brand equity can be
linked to a brand name and symbol as it is a set of brand assets and liabilities, which add to
or subtract from the value provided by a product or service (Aker, 2020). Consumer brand
preference can be affected by brand equity. Brand equity has a direct positive effect on brand
preference (Liu, 2009). The importance of establishing brand equity, since “the brand with
the higher equity in the category generated significantly greater preference” (Myers, 2003,
p. 47). Furthermore, Keller,(1993), states “brand equity is defined in terms of the marketing
effects uniquely attributable to the brand” (p.1). On the other hand, Aaker D. A.(1996),
divides brand equity into five main dimensions the first four are related to consumer
perception which are: Brand associations, perceived quality of the brand, brand loyalty and
brand awareness. While the fifth one is related to information generated from the market
and is called ‘Market behavior measures’ (Aaker D. A., 1996).

Sohani & Fahmy (2020), explain brand preferences in purchasing decisions for hygiene
and food products during COVID-19 pandemic. PMO Model was built on basic of branding
theory and consumer behavior theory. As a result, there were less shifts in preferred brands
and large changes in health consciousness and qualitative demands on brands because of
COVID-19 pandemic affecting brand preference.
NKWOOD RESEARCH (2020), conducted research on surging demand for hand sanitizers
during COVID-19 outbreak. The study deals with hand sanitizer industry of India. PEST
analysis, value chain analysis, COVID-19 impact in India and the government regulations
has been studied.
Alberto, Romano, A, & Lorina (2020), review on basic of scientific evidence of hand
sanitation approaches and products available on the market. This study provides many
companies interested in production and marketing of hand sanitizers also with standardized
ingredients and formulations.

Stanciu, Radu, Sapira, & Bratoveanu (2020), conducted article that study the behavior of
the Romanian consumer within the context of COVID-19 emergence. The emergence of
sanitary crisis at the local economy level has been highlighted. The study shown that due
to lockdown and emergency state, has significantly reduced the social activities of the
Romanian consumer. The health of the consumers, procuring food or financial activities at

71 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

the banking units are the main motivations for leaving the residence. Trade methods based
on online shopping has been popular that provide the maintenance of the trade behavior.
Government support measures are necessary for the Romanian producers and also local
products can represent an opportunity for the Romanian companies.
Study conducted by Oana (2020), explains the perception and attitude of the individual
towards risk causes major changes in its purchasing behavior and in the economic and
social context generated by the COVID-19 pandemic. Although the fear and concern
generated by the present economic and social crisis are visibly affecting both social behavior
in generally, and buying behavior especially, finding effective ways to tell and communicate
with consumers to facilitate their access to up-to-date and highly accurate information is
important in conditions of risk and uncertainty.
Study conducted by Garbe, Rau, & Toppe (2020), investigated stockpiling of toilet paper
across 22 countries. As results came out that people who felt more threatened by COVID-19
virus stockpiled more toilet paper and individuals higher in conscientiousness tended to
stockpile more toilet paper. These results show the importance of clear communication by
public authorities to reduce anxiety and, at the same time, transmitting a sense of control.
Yoshizaki, Junior, Hino, & Pinheiro (2020), studied real toilet paper transactions that was
obtained from groceries around the city of São Paulo (Brazil). This study compares sales
levels during COVID-19 crisis time. The results show that panic buying happens in every
income class and contribute to enhancing the understanding of demand behavior during
periods of crisis.
In the study Ghose & Lowengart (2013), explore market where national, international and
private brands are present and how it affects the entrance of new international brands. In
backdrop of such a market the study focus on understanding the phenomena of consumer
choice and preference. By using multinomial discrete choice model Ghose & Lowengart
(2013), studied the model consumer choice in the context of these different categories of
brands. The estimated model explains different categories of brands that are international,
national and private which provides several diagnostic findings of managerial interest
especially with respect to what kinds of product attributes differentially affect choice
probabilities.
This study aims to research how the COVID-19 pandemic affects the brand preference
of consumers in their purchasing decisions of hand sanitizer in Kathmandu, Nepal. A
theoretical framework has been constructed based on the foundation of two theories
i.e. consumer behavior theory and branding theory. The framework is constructed by
describing the present condition of consumer behavior which is a phenomenon, moderators
and outcome (P-M-O). Theoretical framework is structured in a three-step process starting
with the phenomenon, which in the context of this thesis becomes the COVID-19 pandemic.
Moderators, which are directly linked to the outcome, and based on the purpose of the study
the outcome is brand preference. The moderators will be focused on four parts i.e. price,
risk, quality and loyalty.

NJMSR Volume V I Focus Issue I 72

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 3: Theoretical framework

Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered
coronavirus which was found in 2019 (World Health Organization, 2020). The situation
of contagion, self-isolation, lockdown and economic uncertainty have changed the way
consumers behave in market (Fabius, Kohli, Timelin, & Veranen, 2020). This leads researcher
to adopt PMO Model which explains the current situation of consumer behavior and brand
preference of sanitizer to prevent from COVID-19 virus.

Due to volatility in the market and emotional affects in self-perception, brand loyalty and
risk are connected on both a cognitive and emotional level regarding both cognitive affects
in price sensitivity, while loyalty is a mix of cognitive and emotional aspects such familiarity,
quality, price and self-perception (Gázquez-Abad, Martínez-López, & Esteban-Millat, 2017).
From another perspective inherit interconnectedness as aspects moderating consumer
brand preference both in a general context, the choices becomes clear (Méndez, Oubiña, &
Rubio, 2011) as well as a crisis context (Kaswengi & Diallo, 2015). The last part of the PMO
Model is the outcome which is the subject which is being studied. Given the purpose of the
study brand preference is outcome.
3. RESEARCH METHODOLOGY
The PMO Model will be applied by using qualitative methodology with semi-structure
interview. This research has adopted qualitative methodology since it aims to explore the
human behavior under a certain context ‘effects of the COVID-19 pandemic on the customer‘s
choice of brands’ and by utilizing semi-structured interviews which helps to get in depth
information will aid the finding of the phenomenon.

The population of the research incorporates the customer of both the genders male and
females aging from 21-40 year who buy hand sanitizer from Naxal Bhatbhateni supermarket
because the people aged group between 21 to 40 is among the worst-hit by the COVID-19
pandemic in the Valley (Republica, 2020). This research was conducted in Naxal Bhatbhateni
supermarket because Kathmandu has highest number of corona virus positive case and
public health workers and experts have warned that the densely populated capital city that
has high chances of infection spread (Peoplesreview, 2020).

For this research researcher adopted convenience sampling method. Convenience sampling
is a method adopted by researcher where market data can be collected conveniently from
the available pool of respondents (Dudovskiy, 2012). A snowball sampling technique is also

73 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

adopted in this research where it is considered as a type of convenience sampling (Bryman

& Bell, 2011).

The researcher has chosen this location for the interview because Kathmandu city has highest
number of corona virus positive case. It helps in getting accurate result from respondents
who lives in Kathmandu city and buy hand sanitizer from Naxal Bhatbhateni supermarket.

This dissertation has adopted qualitative methodology since it aims to explore the human
behavior under a certain context ‘effects of theCOVID-19 pandemic on the customer’s choice
of sanitizer brands’ and by utilizing semi-structured interviews in depth information will
be gathered which will aid the exploration of the phenomenon. Due to inherent flexibility
in semi structured interview which allows for greater validity in the data and it makes easy
for research to get finding from respondents, so this method were chosen (Gioia, Corley,
& Hamilton, 2012). Interviews are structured in four parts, opening questions, general
questions, target questions and ending questions.
The data were gathered from 16 semi-structure interview (10 male and 6 female) for their
commitment while collecting the data for this study. The study discusses this from the
Nepalese perspective of real customers living in the Kathmandu who buy hand sanitizers
from Bhatbhateni Supermarkets Naxal branch. Age group between 21 to 40 has been focused
for interview.
4. MAJOR FINDINGS
4.1 Response on Price
Starting with the role of price and how it affects brand preference during the crisis was
the available of different brands of sanitizers. Many brands were introduced as demand
increased and consumer found different sanitizers selling at different prices with different
features. The connection between product involvement and consumer confusion shows
that higher confusion occurs for low involvement products and some for high involvement
products which leads to consumer confusion (FOXMAN, MUEHLING, & BERGE, 1990).

Out of 16 interviews 11 voted price of hand sanitizer as not important during the pandemic.
Financial uncertainty was a situation where many Nepalese consumers faced it and brought
up regarding the role of price in brand preferences during the pandemic. Aspects such as
work, expenses, job security and savings were frequently mentioned and their impact on
the price sensitivity of the respondents. Out of 16 interviewees 5 responded discussed
that pandemics effect on their price sensitivity regarding price during the pandemic. Also
responded who was on rent and were student felt uncertain about their future financial
situation, the common sentiment was the pandemic affect their price sensitivity which also
effect on brand preferences for buying sanitizer.
The result of price sensitivity for Interviewee 5 and 10 can be related with environmental

NJMSR Volume V I Focus Issue I 74

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

factors. Price sensitivity is when individuals perceive and respond to changes or differences
in prices for products or services (Monroe, 1971). Rao (1984), reviewed the ‘state of the
art’ of pricing typically focused on grocery in general and on consumer packaged goods in
particular (Rao, 1984). However, they were a result of changes in demand and preferences
regarding the quality hygiene products like sanitizer.
4.2 Response on Quality
Looking specifically at the role of quality in brand preference during the pandemic
the interviewees had a wide range of preferences and subjective indicators for quality
regarding sanitizer brands. Aspects such as smell, packaging and labeling, certification were
commonly touched upon. However, a relevant finding regarding the brand preference was
the interviewees ‘consensus of a standard mentioned by DDA which had to be met quality
threshold.

Consumer-based brand equity becomes a vital aspect of brand equity. Customer-based

brand equity occurs when “consumer is familiar with the brand and holds some favorable,
strong, and unique brand associations in memory” (Keller, 1993, p.134). Customer based
brand equity is divided into brand awareness and brand image and is identified by Kotler as
(1991) as “a name, term, sign, symbol, or design, or combination of them which is intended
to identify the goods and services of one seller or group of sellers and to differentiate them
from those of competitors” (Kotler 1991, p.442). Brand awareness is the ability to recall and
recognize the brand performance as Interviewee 12 did.

This was a sentiment which most respondents agreed with. Conversely, consumer who used
sanitizer before had to changed their preferences and demands due to the pandemic. These
people had to shift to other new brands due to shortage of preferred sanitizer and were
focusing on buying new brands of sanitizer for their own well-being.

This was a sentiment agreed upon by all interviewees, where they discussed the importance
of quality in sanitizer during the COVID-19 pandemic for their physical well-being and
health. However, brand preference were affected and differ as the interviewees sharing this
sentiment had different ways. Most of these interviewees drifted towards better brands,
others remained with their previously preferred brands if available opting for products of
higher quality within the known brands catalogue. Quality of hand sanitizers was a factor
that was judged on different factors amongst the different interviewees as they have different
response in terms of quality. The different interpretations and expectations of quality such
as smell, packaging and labeling, brand value, certification was mentioned by interviewee.
The pandemic had created a shift in functional demand from the interviewees where
there had been an increased demand for quality from a health perspective. So, brand
association became increasingly important amongst the interviewees experiencing effect
of COVID-19 virus and changes in their product quality demand. Thus, brands became a
tool communicating quality to the consumers (Anselmsson, Johansson, & Bondesson, 2007).
75 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Consumer wants, values or beliefs are influenced by the opinion of role model, person’s
family, reference groups, social class and culture. Reference groups and opinion leaders have
a large influence in the consumers’ behavior. The types, quality, and quantity of products
that a person buys or uses can be determine by social class to some extent.
These findings show experience and consumer buying behavior. Specifically, how brand
or product knowledge acts as a foundation which allow consumers to make decisions and
create brand preference (Méndez, Oubiña, & Rubio, 2011). Moreover, this highlights the
role of traditional marketing channels such as advertisement as well as word of mouth in
creating brand knowledge and brand awareness in the decision making process for sanitizer
(Keller, 1993).

One of the findings in this section was amongst the interviewees with lacking experience
with sanitizer usage, and as a result their judgments on quality regarding sanitizer were
packaging and pricing. And as a result, due to their lack of personal experience with the
products their brand preferences of sanitizer were derivative of general marketing aspects.
Perceived quality was a concern which worked as the opposite side of the same coin. While
tangible aspects such as previous experience affected how the interviewees perceived
quality, intangible aspects such as country of origin for the products, quality of sanitizer
and ingredients were highlighted as aspects which the interviewees were averse of due
to the self-perceived implications of buying lower quality sanitizers during the pandemic.
Also, there was the role of perceived brand quality amongst the interviewees. Given the
importance of product knowledge, there were specific aspects mentioned as indicators
of quality regarding sanitizer during the pandemic. Knowledge about origin of sanitizer
products, smell of sanitizer, certification for corona virus and packaging and labeling which
become increasingly important as it affected their choice of brands.

Psychological factors can also effect on their decision making for sanitizers where they
concern for origin of brand to insure quality. Perception can be relational with different
concepts like taste, smell or touch (Kotler, Armstrong, Saunders, & Wong, 2001). People have
a sensation when they try a contain product. This perception depends on of experiences
that people had with the products and also of the knowledge (Kotler, Armstrong, Saunders,
& Wong, 2001). The knowledge or opinion of international brand or country of origin that
people have about a product can influenced in decision making. Also attitudes and feelings,
people having positive or negative feeling about a product lead by country technology for
quality assurance can effect on perception of consumer. For example; if you want to buy bike
that is reliable and gives good mileages you will probably think for Honda Company. Honda
is a Japanese company who manufacture quality automotive and people assume Japanese
made are high quality and reliable (Kotler, Armstrong, Saunders, & Wong, 2001). Thus
perceived quality became a combination of experience and marketing
Table 4

NJMSR Volume V I Focus Issue I 76

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Response on Quality
Interviewee Define quality in Sanitizers
1 Certified, Brand Value, Smell, Packaging and Labeling.
2 Smell, Brand Value, Packaging and Labeling, Certified.
3 Price, Packaging and Labeling, Certified, Smell.
4 Brand Value, Smell, Certified.
5 Price, Smell, Certified.
6 Brand Value, Certified, Smell, Packaging and Labeling.
7 Price, Smell, Certified, Packaging and Labeling.
8 Price, Smell, Certified.
9 Certified, Smell, Brand Value.
10 Price, Smell, Brand Value, Certified.
11 Certified, Brand Value, Smell.
12 Brand Value, Smell, Packaging, Certified.
13 Smell, Packaging, Certified, Brand Value.
14 Brand Value, Smell, Certified.
15 Smell, Certified, Packaging and labeling.
16 Brand Value, Smell, Packaging and Labeling, Certified.
Therefore, perceived brand quality, smell, certification and packaging became an important
factor moderating the brand preference and purchasing decision of the interviewees. But
majority of the interviewees were forced to buy new certified brands due to shortage of
preferred sanitizer which leads to high demand and lack of production.
4.3 Response on Risk and Loyalty
The final theme risk and loyalty has three main categories the availability of the brands,
health consciousness and habits, routines and brand value. Starting with the availability of
brands in supermarket, the interviewees indicated consumers only changed their preferred
sanitizer brands with other brands, when it was out of stock. As a result, in the case of
stock out, the interviewees substituted their preferred brands with another one. It should
be noted the lack of stock and available of emerging brands were caused by sudden high
demand of sanitizer to prevent from pandemic covid-19 virus. Many consumers started
buying sanitizer which they never bought before, which led to supply shortages (Biying,
Huachu, & Zuojun, 2011).

Brand preference is the bias a customer holds toward a particular brand” (Liu, 2009 Pg.78).
Brand preference indicates the degree to which a consumer is inclined to use a particular
brand’s product instead of a competitor’s and contributes significantly to brand equity
(Chipeta, 2020). But in this case people were forced to switch to other brands of sanitizers
due to stock out. Supply shortages were reported by all of the interviewees where they could
not found preferred brands. Looking at the increased health consciousness in the context of
the COVID-19 pandemic, the interviewees ‘health consciousness increased as result of the
77 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

COVID-19 pandemic, as the interviewees understood the importance of sanitizer in fighting

the virus. There were three consequences of the increased health consciousness of the
interviewees. Firstly, was the sub-theme of avoiding new emerging sanitizers brands, most
of the interviewees stated they would not try uncertified sanitizer during the COVID-19
pandemic, as they argued that it will be meaningless to use it if it does not work and don’t
want to take risk.

Customer-based brand equity occurs when “consumer is familiar with the brand and holds
some favorable, strong, and unique brand associations in memory” (Keller, 1993, p. 3). But
in this case lacking brand awareness for new emerge brands has lead customer to avoid the
new emerge brands in market. However, it should be noted that few interviewees argued
it is a good chance for the consumers to try new sanitizer, but his argument was mainly
based on saving money during the pandemic due to the uncertainties regarding the financial
situation and the ending of the pandemic.

Secondly was the lower time store visits, the interviewees started going less often and less
frequently to stores, in order to decrease the amount of time spent in the stores aiming
to minimize the risk of getting infected. Panic hoarding was the third consequence of the
increased health conscious. The interviewees indicated that they started panic hoarding due
to several reasons, but mainly due to the increased health conscious as they were afraid that
they won ‘t find sanitizers to buy, which subsequently would affect their health since they
need to use it when they are outside of home. And the final reason for panic hoarding was
due to the behavior of panic hoarding of consumers in general. High unusual demand can
lead to stock-out and can decrease the supply of some products, which subsequently causes
further problems which is result of panic holding subsequently leads to further panic buying
(Biying, Huachu, & Zuojun, 2011).

These measures might affect the choice of brands during the pandemic because less time in
the stores might lead to choosing the available brands without searching for them further
as explained by interviewee 2. It should be noted that most of the interviewees did not
change their preferred brands during the pandemic and bought the preferred brands if it
was available. If not, they have no choice to go for similar brand with good brand value. All
the interviewee had experience with trying new brands of sanitizer because of unavailable
preferred sanitizer stock. All interviewee preferred Dettol sanitizer at first which also was
leading brand for antiseptic and if not available then similar substituted brands of sanitizers
were preferred.
5. DISCUSSION
Looking at the different aspects affecting brand preference of sanitizer, the main take away
was that the pandemic that effect on brand preferences of consumer. While there were a
few aspects which facilitated change in brand preferences such as the changed demand for
quality, brand preferences due to the pandemics mild nature in affecting how the different

NJMSR Volume V I Focus Issue I 78

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

moderators in price, quality, risk and quality were perceived. Looking specifically at the
moderating role of risk and loyalty on brand preferences during the pandemic, the majority
of the interviewees did change their preferred brands. One of the main reason for this was
due to unavailability of preferred brands.

To begin with, the findings indicated that the interviewees, who changed their preferred
brands, changed it because they could not find their favorite brands at store, due to stock-
out of these brands and panic hoarding by other customers. Panic hoarding can decrease the
supply of products, which subsequently causes further problems as high unusual demand
might lead to stock-out which subsequently leads to further panic buying (Biying, Huachu,
& Zuojun, 2011). Consequently, illustrating the importance of managing the available supply
chain in crisis periods and keeping enough supply of demanded products or by enforcing
a purchasing quota to the customers (Biying, Huachu, & Zuojun, 2011). Moreover, it was
reported by the interviewees they did not found any consistent stock in market and have
to shift to different brands of sanitizers. However, after the loosen restrictions enforced by
the Nepalese government and regular flow of sanitizer, interviewees did not want to change
their preferred brands with new ones.

There were factors which led to changes in brand choice, and they all emerged as a result of
the increased health conscious of the interviewees, which resulted into five main changes in
their behavior:
First, they tried to avoid the risk of trying in emerged brands, fearing that these new brands
might not have went through all the inspections and testing, and due to the uncertainty of
the performance of these brands. Risk-averse consumers tend to not try or buy new product;
they feel threatened by the fact that they are uncertain about the performance of these
products (Matzler, Grabner‐Kräuter, & Bidmon, 2008).
Second, the interviewees had issue with bad smell of hand sanitizers. Majority of interviewee
has problem with bad smell of sanitizer and they prefer brands which have pleasant smell.
Since they have to use it frequently which effect on brand choice of sanitizers.

Third, some of the interviewees started to panic buy sanitizer fearing stock out of their
preferred brands. Panic buying (i.e. hoarding) occurring due to disruptions in the product
supply after a disaster (Biying, Huachu, & Zuojun, 2011). The panic hoarding behavior was
a result of the media and peer pressure, however the most significant motivator for this
behavior was due to the behavior of panic buying of other consumers in general. Panic
hoarding can decrease the availability of some products, which subsequently causes further
problems as high unusual demand might cause stock-out which subsequently result in
further panic buying (Biying, Huachu, & Zuojun, 2011). This affect the interviewees brand
selection since there will be less available of option to choose.

Fourth, price sensitivity was also factor affecting brand preference where 5 out of 16 voted
that price leads to buy sanitizer but all responded had same answer that it should be
79 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

certified. Regarding financial uncertainty and those who were on rent and specially student
had difficult time on expenses and as a result was forced to change his brand preferences
due to the financial impact of the pandemic. The rest of the interviewees differed from this
experience as their financial situation was not worst as student and was less affected by the
pandemic, and as a result there were no changes in how price regulated brand preference
during pandemic for them. They were more focused on quality concern and ready to pay for
good brands of sanitizers.

Fifth, quality was a moderator which changed during the pandemic affecting changes in
brand preference. While it is common amongst consumers to consider less quality during
financial crises but due to their financial uncertainties and go for cheaper brands and
products (Degeratu, Rangaswamy, & Wu, 2000), this was not the case during the COVID-19
pandemic. The changes in quality preferences were changed in preference in search of
quality and changed their brand preference towards brands which they perceived having a
higher quality.
Furthermore, this change in criteria also reduced the price sensitivity which displayed
in different types of behaviors such as buying more imported sanitizer brands within
the consumers already preferred brands. Due to the lack of experience amongst most of
consumers led them to search for information through traditional marketing channels,
which affected their brand preference.

Moving beyond the PMO Model and looking at the overarching effect of the pandemic on
brand preference the aspects of price, quality, risk and loyalty becomes tied to the pandemic
within the context of the health aspect of the COVID-19 virus. While there were indicating
large changes in brand preference due to unavailability of preferred brands and there were
large changes in health consciousness and qualitative demands on sanitizer due to the
pandemic. Furthermore, specialize on health permeated the aspects the moderating roles of
quality, risk and loyalty and intertwined them together.

The COVID-19 pandemic illustrated personal health as important. As a result, price did not
play a large role in affecting consumer brand preference, although certain consumers stated
they were ready to buy even on high price, price was now directly tied brand preference.
However, quality, risk and loyalty were through the changed demands. The consumers
demanded sanitizer brands which could meet their criteria either directly through high
quality brands or indirectly through availability and risk averseness. Consumers shied
away from trying new emerged and low quality brands and were increasingly aware of the
different factors which could affect the health factors.
Consequently, aspects such as brand knowledge, brand origin, smell, retail availability and
brand loyalty became important and the underlying factor of consumers which is proactively
reduce their chance of contracting the COVID-19 virus and simultaneously increase their
personal and family health safety which they deemed important during the pandemic.

NJMSR Volume V I Focus Issue I 80

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Therefore, this change in demand played the largest role in affecting brand preference
among consumers through them either continuing with their previously preferred brands
as they felt the brand still met their new demands, or go for new brands which could meet
the new demands.
6. CONCLUSION
Due to the global impact of COVID-19 pandemic and given the lack of empirical data and
studies on the phenomena of purchasing behavior during a pandemic, this thesis explored
how does the COVID-19 pandemic affect brand preference in purchasing decision of hand
sanitizer in Kathmandu, Nepal. The Theoretical framework was built on the foundation of
consumer behavior theory and branding theory, which provided the bases for collecting
empirical data needed for this dissertation. The framework had three different aspects
to it, the phenomenon (The COVID-19 pandemic) Moderators (Price, quality, loyalty and
risk) and Outcome (Brand preferences). Subsequently this dissertation adopted qualitative
methodology since it aimed at exploring the human behavior under a certain context, and
to do so semi-structured interviews were conducted with sixteen customers of Bhatbhateni
Naxal branch.
The finding shows the aspects of price, quality, risk and loyalty became tied to the COVID-19
pandemic within the context of the health aspect of the COVID-19 virus. While there were
large changes in purchased brands because of unavailable of preferred brands of sanitizers
which changed consumer demand from brands and as a result their brand preferences.
Furthermore, specialized on health permeated the aspects of the moderating roles of quality,
risk and loyalty and intertwined them together. This concludes that sanitizer price did not
play a big role in affecting consumer brand preference. The importance of health conscious
had reduced the sanitizer price sensitivity of consumers. However, quality, risk and loyalty
were through the changed demands.
The consumers demanded sanitizers which could meet their criteria either directly through
high quality brands or indirectly through availability and risk averseness. Consumers shied
away from trying low quality brands and were increasingly aware of the new emerge brands
which could affect the health factors. As described in literature review customer based brand
equity play a vital role in selection of sanitizer where aspects such as brand knowledge,
brand origin, retail availability, certification, smell and brand loyalty were considered. This
lead to underlying factor of consumers to proactively reduce their chance of contracting the
COVID-19 virus and simultaneously increase their personal and family health which they
deemed important during the pandemic.
7. IMPLICATIONS
The main theoretical implications were the connection of different roles of price, quality,
risk and loyalty. Also, price was not important for the consumers as long as the products
meet their new needs regarding health which is safety from COVID-19 virus. Due to the lack
of research on the effect of non-financial crises on brand preference, the main theoretical
implication from this study contribute to the field of empirical data by showing how the
COVID-19 pandemic affected the sanitizer brand preference of consumers. Additionally, the

81 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

respondent prioritizing on quality shows the importance of understanding the impact of a

COVID-19 crisis and how they align or clash with consumer demands before a crisis.
At last by adjusting the PMO Model by combining risk and loyalty, and including consumer
behavior as a moderator creating an adjusted theoretical framework. The adjusted PMO
Model could be utilized in similar studies on how a pandemic has affected brand preference,
or perhaps studying how other nonfinancial crises have affected brand preference.
Furthermore, due to the increased brand loyalty and risk aversion supermarket should try
to minimize the amount of new brands they buy and include in their product portfolio as a
result of the crisis. Finally, due to the volatile availability of products, supermarket could try
procuring sanitizers of strong and known brands to better meet the need of the consumers
and continues supply during a pandemic.

NJMSR Volume V I Focus Issue I 82

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Aaker, D. (2021). Prophet. Retrieved from www.prophet.com: https://www.prophet.
com/2013/09/156-what-is-brand-equity-and-why-is-it-valuable/
Aaker, D. A. (1996). Measuring Brand Equity Across Products and Markets. California
Management Review, 38, 102-120.
Aker, D. (2020). www.prophet.com. Retrieved from www.prophet.com: https://www.
prophet.com/2013/09/156-what-is-brand-equity-and-why-is-it-valuable/
Alberto, B., Romano, P. D., A, M. H., & Lorina, B. (2020). Hand sanitisers amid CoViD-19: A
critical review of alcohol-based products on the market and formulation approaches
to respond to increasing demand. International Journal of Pharmaceutics, 584, 54-
65. Retrieved 12 09, 2020
Ang, S. H., Cheng, P. S., Lim, E. A., & Tambyah, S. K. (2001). Spot the difference: consumer
responses towards counterfeits. Journal of Consumer Marketing, 18 (3), 219-235.
Anselmsson, J., Johansson, U., & Bondesson, N. (2007). Understanding price premium for
grocery products: A conceptual model of customer-based brand equity. Journal of
Product and Brand Management, 16 (6), 401-414.
Bailey, R., & Ball, S. (2006). An exploration of the meanings of hotel brand equity. The Service
Industry Journals, 26(1), 15-38.
BBSM. (2020). https://www.bbsm.com.np/stores/. Retrieved from www.bbsm.com.np:
https://www.bbsm.com.np/stores/
Bearden, W. O., & Etzel, M. J. (1982). Reference group influence on product and brand
purchase decisions. Journal of Consumer Research, 9, 47-57.
Biying, S., Huachu, X., & Zuojun, S. M. (2011). Consumer panic buying and fixed quota policy.
Management Science. Retrieved 11 18, 2020
Bryman, A., & Bell, E. (2011). Business research methods (3eds). Oxford University Press.
Chang, H. J., Eckman, M., & Yan, R.-N. (2011). Application of the stimulus-organism response
model to the retail environement. The International Review of Retail, Distribution
and Consumer, 21(3), 233-249.
Chipeta, C. (2020, 9 21). conjointly.com. Retrieved from conjointly.com: https://conjointly.
com/blog/market-research-brand-importance/.
Daraz. (2020, 12 26). www.daraz.com. Retrieved from www.daraz.com: https://www.daraz.
com.np/hand-sanitizers/.
DDA. (2021, 01 01). www.dda.gov.np. Retrieved from www.dda.gov.np: https://www.dda.
gov.np/.

83 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Degeratu, A. M., Rangaswamy, A., & Wu, J. (2000). Consumer choice behavior in Online
and traditional supermarkets: The effects of brand name, price, and other search
attributes. International Journal of Research in Marketing, 17(1), 55-78.
Dudovskiy, J. (2012, March 23). Business reseach methodology. Retrieved from business
reseach methodology: https://research-methodology.net/sampling-in-primary-
data-collection/convenience-sampling/.
Edward, S. W. (2013). The influence of visual packaging design on perceived food product
quality, value, and brand preference. International Journal of Retail & Distribution
Management, 41(10), 805-816.
Fabius, V., Kohli, S., Timelin, B., & Veranen, S. M. (2020, June 30). www.mckinsey.com.
Retrieved from www.mckinsey.com: https://www.mckinsey.com/industries/retail/
our-insights/how-covid-19-is-changing-consumer-behavior-now-and-forever#
Flatters, P., & Willmott, M. (2009). HBR. Retrieved from HBR: https://hbr.org/2009/07/
understanding-the-postrecession-consumer.
Foxman, E. R., Muehling, D. D., & Berge, P. W. (1990). An investigation of factors contributing
to consumer brand confusion. The Journal of Consumer Affari, 24(1), 170-189.
Garbe, L., Rau, R., & Toppe, T. (2020). Influence of perceived threat of Covid-19 and HEXACO
personality traits on toilet paper stockpiling. Plos One Journals, 15(6), 1-10.
Gázquez-Abad, J. C., Martínez-López, F. J., & Esteban-Millat, I. (2017). The role of consumers’
attitude towards economic climate in their reaction to ‘PL-only’ assortments:
Evidence from the United States and Spain. Journal of Retailing and Consumer
Services, 34, 340-348.
Ghose, S., & Lowengart, O. (2013, March 18). link.springer.com. Retrieved from link.springer.
com: https://link.springer.com/article/10.1057/jma.2012.1.
Gilman, S. L. (2010). Moral panic and pandemics. The Lancet, 375(9729), 10-20. Retrieved
11 11, 2020.
Gioia, D. A., Corley, K. G., & Hamilton, A. L. (2012). Seeking qualitative rigor in inductive
research: Notes on the Gioia methodology. SAGE Journal, 16(1), 15-31.
Grundey, D. (2009). www.researchgate.com. Retrieved from www.researchgate.com:
https://www.researchgate.net/publication/270527428_Consumer_behaviour_
and_ecological_agri-business_Some_evidence_from_Europe.
Hawkins, D. I., & Mothersbaugh, D. L. (2010). Consumer behavior building marketing strategy.
New York: Mc Graw-Hill Irwin.
Hieu, V. M., & Minh, V. A. (2020, July). Factors_affecting_the_purchasing_decision_to_buy_the_
fresh_food_-_empirical_study_in_vissan_stores_ho_chi_minh_city_vietnam. www.
researchgate.com. Retrieved from research gate: https://www.researchgate.net/
publication/342735395.

NJMSR Volume V I Focus Issue I 84

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Hofstede, G., & Bond, M. H. (1984). Hofstede’s Culture Dimensions: An Independent Validation
Using Rokeach’s Value Survey. Journal of Cross-Cultural Psychology, 15(4), 194.
Hope Magazine. (2020, October 20). ww.issuu.com. Retrieved from issuu.com: https://issuu.
com/hopemagazineltd/docs/hopemag_20issue_20111.
Hsieh, H. F., & Shannon, S. E. (2005). Three Approaches to Qualitative Content Analysis. SAGE
Journal, 15(9), 1277-1288.
Jacoby, J. (2008). Stimulus‐Organism‐Response Reconsidered: An Evolutionary Step in
Modeling (Consumer) Behavior. Journal of Consumer Psychology, 12(1), 51-57.
Jones, S. C., Waters, L., Holland, O., Bevins, J., & Iverson, D. (2010). Developing pandemic
communication strategies: Preparation without panic. Journal of Business Science,
63(2), 126-132.
Kaswengi, J., & Diallo, M. F. (2015). Consumer choice of store brands across store formats: A
panel data analysis under crisis periods. Journal of Retailing and Consumer Services,
23, 70-76.
Keller, K. L. (1993). Conceptualizing, measuring and managing customer-based brand equity.
Journal of Marketing, 57(1), 1-22.
Khanal, R. (2020, September 17). https://myrepublica.nagariknetwork.com/. Retrieved
November 19, 2020, from myrepublica.nagariknetwork.com/: https://myrepublica.
nagariknetwork.com/news/substandard-hand-sanitizers-in-the-market-threaten-
public-health/.
Kotler, P. (2006, 01). Marketing management. (12, Ed.) Uk: Pearson. Retrieved from www.
Researchgate.com: https://www.researchgate.net/publication/225084026_
Marketing_Management.
Kotler, P., Armstrong, G., Saunders, J., & Wong, V. (2001). Principles of marketing, 2nd edition.
Corporate Communications: An International Journal, 6(3), 164-165.
Kuper, A., Reeves, S., & Levinson, W. (2008, Feburary 11). Kuper_A_Reeves_S_Levinson_
WAn_introduction_to_reading_and_appraising_qualitative_research_BMJ_337_
a288. Researchgate. Retrieved from researchgate: https://www.researchgate.net/
publication/23156528.
Liu, H. H. (2009). The impact of brand equity on brand preference and purchase intentions
in the service industries. The Service Industries Journal, 29(12), 1687-1706.
Lumen. (2019, 11 19). Lumen. Retrieved from Lumen: https://courses.lumenlearning.
com/boundless-marketing/chapter/influences-of-personality-on-the-consumer-
decision-process/.
Maslow, A. H. (1970). Consumer Buying Behavior. In Motivation and Personality (p. 80).
Harper & Row, Publishers, Inc.

85 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Maslow, A. H. (1970). Motivation and personality. New York, Harper & Row.
Mathur, A., Moschis, G. P., & Lee, E. (2001). www.acrwebsite.org. Retrieved from The
association for consumer research: https://www.acrwebsite.org/volumes/11337/
volumes/ap04/AP-04.
Matzler, K., Grabner‐Kräuter, S., & Bidmon, S. (2008). Risk aversion and brand loyalty:
the mediating role of brand trust and brand affect. Journal of Product & Brand
Management.
Méndez, J. L., Oubiña, J., & Rubio, N. (2011). taste in affecting brand preferences. British Food
Journal, 113(10), 1229-1251.
Milesonmedia.com. (2016, September 24). Milesonmedia. Retrieved from milesonmedia.
com: https://milesonmedia.com/cultural-environmental-influences-on-consumer/
Monroe, K. B. (1971). Measuring price thresholds by psychophysics and latitudes of
acceptance. Journal of marketing research, 8(4), 460-64. Retrieved from https://
journals.sagepub.com/doi/abs/10.1177/002224377100800409.
Myers, C. A. (2003). Managing brand equity: A look at the impact of attributes. Journal of
Product & Brand Management, 12(1), 39-51.
Na Zhu, P. D. (2020). A novel coronavirus from patients with pneumonia in china, 2019. The
new England Journal of Medicine, 1-5. Retrieved 11 11, 2020.
Nicomedes , C. J., & Avilab, R. M. (2020, July 15). www.ncbi.com. Retrieved 11 11, 2020, from
NCBI: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7362858/.
Nielsen IQ. (2020). Nielsen IQ. Retrieved from Nielsen IQ: https://nielseniq.com/global/en/
insights/analysis/2021/unlocking-consumption-four-consumer-groups-driving-
spend/.
Nkwood Research. (2020).On-hand-sanitizer-market-in-india/#report-summary. Nkwood
Research. Retrieved from Nkwood Research: https://www.inkwoodresearch.com/
reports/impact-of-covid-19.
Noman, M. H., & Aziz, A. A. (2011). Decision making framework supported by knowledge
management activities. Journal of Knowledge Management Practice, 18(1), 5-22.
Oana, D. (2020, October 11). Sciendo. Retrieved from Sciendo: https://content.sciendo.
com/configurable/contentpage/journals$002fsbe$002f15$002f2$002farticle-p85.
xml?tab_body=abstract.
Peoplesreview. (2020, July 29). Kathmandu-at-a-high-risk. Peoplesreview. Retrieved 11
22, 2020, from peoplesreview: https://www.peoplesreview.com.np/2020/07/29/
covid-19.
Ploeg, J. (1999). ebn.bmj.com. Retrieved from ebn.bmj.com: https://ebn.bmj.com/
content/2/2/36.

NJMSR Volume V I Focus Issue I 86

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Prasain, K. (2020, March 04). Hand-sanitisers-in-short-supply-due-to-buying-rush-sparked-

by-outbreak-fears.The Kathmandu Post. Retrieved from https://kathmandupost.
com/money/2020/03/04/.
Puelles, M., Diaz-Bustamante, M., & Carcelén, S. (2016). Are consumers more rational and
informed purchasers during recession periods? The role of Private Labels and
retailing strategies. The International Review of Retail, Distribution and Consumer
Research, 26(4), 329-417.
Radhika. (2019). Consumer-behavior/consumer-behaviour-meaning-process-types-
buying-motives-and-factors-marketing/17980. Business Management Idea.
Retrieved from https://www.businessmanagementideas.com/.
Rao, V. (1984). ideas.repec.org. Retrieved from ideas.repec.org: https://ideas.repec.org/a/
ucp/jnlbus/v57y1984i1ps39-60.html.
Republica. (2020, October 17). Youths-at-a-higher-risk-of-covid-19-in-kathmandu-
valley. Myrepublica. Retrieved November 22, 2020, from https://myrepublica.
nagariknetwork.com/news/.
Sandra, C., & Jonesa, L. W. (2010). Developing pandemic communication strategies:
Preparation without panic. Journal of Business Research, 63(2), 126-132. Retrieved
11 11, 2020.
Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students.
London: Pearson Education Limited.
Scarabis, A. F. (2006). How advertising claims affect brand preferences and category–brand
associations: The role of regulatory fit. Psychology and Marketing, 23(9), 741-755.
Shultz, D. (2020). When-was-hand-sanitizer-invented. docshultz.com. Retrieved from
https://docshultz.com/blogs/news/.
Sohani, A., & Fahmy, T. (2020, June 22). DIVA. Retrieved from http://www.diva-portal.org/
smash/record.jsf?pid=diva2%3A1444267&dswid=-9802.
Stanciu, S., Radu, R. I., Sapira, V., & Bratoveanu, B. D. (2020, May 1). Consumer_Behavior_in_Crisis_
Situations_Research_on_the_Effects_of_COVID-19_in_Romania. Research Gate. Retrieved
from https://www.researchgate.net/publication/341266228.
Tamang, A. (2020, March 11). Best-hand-sanitizer-in-nepal. utsav360.com. Retrieved from
https://utsav360.com/5.
U.S. Food and Drug Administration. (2020, 09 17). Hand-sanitizers-and-covid-19. fda.gov.
Retrieved from https://www.fda.gov/drugs/information-drug-class/qa-consumers.
Urban-pathway. (2019). urban-pathway. Retrieved on 11 22, 2020 from urban-pathway:
https://www.urban-pathways.org/kathmandu.html.

87 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Valášková, K., Kramárová, K., & Bartosova, V. (2015). Multi_criteria_models_used_in_Slovak_

consumer_market_for_business_decision_making. Research Gate. Retrieved from
https://www.researchgate.net/publication/283955220.
Valentin , R. (2019, November 26). Consumer-behavior-in-marketing-patterns-types-
segmentation. Omniconvert. Retrieved from https://www.omniconvert.com/blog/.
Vieira, V. A. (2013). Stimuli-organism-response framework: A meta-analytic review. Journal
of Business Research, 66(9), 1420-1426.
World Health Organization. (2020, 03 12). Speeches/detail/who-director-general-s-
opening-remarks-at-the-mission-briefing-on-covid-19. www.who.com. Retrieved on
11, 2020 from https://www.who.int/dg/.
Yoshizaki, H. T., Junior, I. d., Hino, C. M., & Pinheiro, L. L. (2020). Relationship between Panic
Buying and Per Capital. Sustinability, 12(23), 1.

NJMSR Volume V I Focus Issue I 88

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

EFFECT OF TOTAL QUALITY MANAGEMENT PRACTICES ON ORGANIZATIONAL

PERFORMANCE: A CASE OF BBA PROGRAM OF TRIBHUVAN UNIVERSITY IN
KATHMANDU VALLEY

Subash Shrestha, PhD∗ Birendra Bista

ψ

Abstract
This study analyses the effects of TQM practices on organizational performance relating the
practices of BBA programs in Tribhuvan University, Kathmandu. The specific objectives of
the study were to determine the effect of top management commitment on organizational
performance, to examine the effect of employee training on organizational performance, to
assess the effect of employee involvement on organizational performance, to examine the
effect of customer focus on organizational performance. The quantitative research design
with structure questionnaire was used. The sample sizes of 172 respondents were drawn
with random sampling method from total of 18 BBA colleges in Kathmandu valley. The result
of the study reveal that top management commitment, employee involvement, customer
focus and employee training are positively associated with organizational performance and
supports the hypothesis that TQM practices significantly affect organizational performance
consequently, evoked that there is a need to focus on TQM for improving university
performance. The study recommends that future studies should test the effects of the other
elements of TQM practices on organizational performance.

Keywords: Total quality management practices, Organizational performance, Employee

training, Employee participation, Customer focus.

∗ Subash Shrestha, PhD, faculty at Global College International

ψ
Birendra Bista, MBA student at Global College International

89 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION
1.1 Background of the Study
During the last few decades, the business environment has been rapidly changing and
organizations over the world are trying to cope with changing environment in order to
survive in the market. For sustaining in the competitive market and to make business more
effective, all over the business organization are trying to use new philosophies of quality
such as Concurrent Engineering, Lean Production, JIT strategies, TQM, BRP, and many more
(Ngambi, Nkemkiafu, 2015). Out of all those philosophies TQM is consider as one of the most
important philosophies for gaining competitive advantage and for increasing organizational
effectiveness.

Nepalese universities and colleges have been offering different course of study out of which
Bachelor in Business Administration (BBA) program is taken as most important program
in the management field. The four year BBA program (under semester system) is tailored
made to serve the needs of the bright young person. In order to make effective competencies
on students, faculty should have to be committed to core values that promotes freedom of
thought, respect for their idea, excellence, diversity and support (Palikhe & Adhakari, 2013).
Quality is now so called the backbone of education. Quality not only influences the employees
but also influences what students learns, how well they learn and what benefits they
draw from their education (Zabadi, 2013). The study investigate the effectiveness of ISO
9001:2008 certification in quality of educational service industry of Nepal. They found out
that 91.4 percent are positive in these matters and the improvements is seen in employee
morale, reduction in defective levels, reduction in cost of quality and training and motivation
factors are not sufficiently improved (Kothari & Pradhan, 2011).
TQM can help a school or college providing better services to its primary customers;
students and employers. The continuous improvement focus on TQM is a fundamental
way of fulfilling the accountability requirements common to educational reform. TQM
system with a focus on continuous growth and improvements offers more excitement and
challenges to students and teachers than a good-enough learning environment can provide
(Farooq, Akhtar & Ullah).

Grayson (1992) in his survey stated that almost 60% of healthcare organization are
responding and implementing a TQM program. The study conducted by Sommer and Merritt
(1994) evaluates the impact of a TQM intervention on perception of workplace attitudes and
behavior for a healthcare organization. This study indicates an improvement on important
measures of organization climate after only one year of intervention.
Balasubramanian (2016) mention that service quality model and its application can help
the healthcare facility in achieving end employee’s satisfaction and customer satisfaction.
He also stated that healthcare organization, the traditional Indian culture, Leadership style
and the mentality of the medical professionals are somehow the barriers to the adoption of
NJMSR Volume V I Focus Issue I 90
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

the TQM and he suggested that integrated framework model of the TQM can be of great help
to the healthcare organizations to move out of the barriers and successfully implementing
TQM concepts and practices.

Due to the lack of knowledge and perception towards the TQM and its benefit, a barrier
exists towards the implementation of TQM and the Nepalese manufacturing organizations
are depriving to get the benefit of TQM (Pradhan, 2015).
F.Talib and Z.Rahman in their study suggested that the level of TQM practices in the
manufacturing and service industries are not significantly different except for QIPM, PM,
and QS practices in which the manufacturing industries show a significantly higher score
while for the service industries, continuous improvement and innovation, benchmarking,
and quality culture/work culture shows higher score or frequency of occurrences.
The tested model shows that the top management commitment, education and training and
employee empowerment has positive impact on employee satisfaction and employee satisfaction
greatly affects the customer satisfaction and business performance (Pradhan, 2015).
1.2 Statement of Problem
Universities play an important role in maintain the quality of education sector. The
knowledge produced and skills imparted by the sector contribute to faster growth in quality
of education. With expansion of the knowledge economy, the knowledge produced by the
system and the skills possessed by its graduates are becoming deciding factors in promoting
economic progress and social welfare. Improving organizational performance of education
sector is thus imperative to national growth and development. The quality of performance
of educational institution can be improved by implementing quality management models
such as Total Quality Management (Varghese, 2013).

As Nepal is a developing country and the practices of TQM is not being properly implemented
on the educational (Pradhan B. l., 2015). Those that organization implemented have been
lately adopted of quality management systems and there have not been study that examines
the adoption of TQM practices and its effects on organizational performance. Kathmandu
valley is diverse from the rest of the district in location, population and mainly the education.
Many global, regional and local studies have underscored the role of TQM practices in
enhancing customer and employee satisfaction in an organization (Crosby, 2000; Oakland,
2003; Denning, 2006; and Feigenbaum, 2006).

There is hard to get the research on TQM which are based on the developing countries
(Mellat et. Al. (2007). As looking toward the Nepalese context lack of leadership, lack of
qualified human resources, political instability and periodic strike, negative imbalance in
trade are the huddles of TQM implementation. There is few research conducted on effect of
TQM Practices in educational institutions and as far as resource availability is concern. Most

91 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

of the studies have, however, concentrated on the impact of TQM practices on performance
of profit making organizations but not on academic institutions (Chepkech, 2014).

This confirms that there is very limited literature on effect of TQM practices on educational
institutions in Nepal. So in order to know if there is the actual existence of the total quality
management practices on educational institution or not, this research was conducted. The
motives of the researcher to investigate the effect of total quality management practices on
organization performance of BBA colleges of TU because the BBA program is consider as
most popular professional degree that will teach you about the fundamental of management
and business.
1.3 Objectives of the Study
The objective of the study is to examine the effects of TQM practices on organization
performance with focus on BBA program of TU.
Moreover, the specific objectives of the study are:
i. To determine the effect of top management commitment on organizational
performance.
ii. To examine the effect of employee training on organizational performance.
iii. To assess the effect of employee involvement on organizational performance.
iv. To examine the effect of customer focus on organizational performance.
1.4 Research Questions
The basic research issue raised in the study, therefore is “What are the effects of TQM
practices on organizational performance in BBA program of TU?”
i. In what way does the top management commitment effects the organizational
performance of BBA program of TU.
ii. To what extent does the employee training effects the organizational performance
of BBA program of TU?
iii. What are the effect of employee involvement on organizational performance of BBA
program of TU?
iv. What are the effect of Customer Focus on organizational performance of BBA
program of TU?
1.5 Significance of the Study
Although the research primary focused was on the effect of TQM practices on BBA program,
the finding may be valuable for other researcher to carry out an identical research in other
educational program. This study is relevant to those educational institutions who are
running BBA Programs on the state of effect of TQM practices on organizational performance
This study is going to increase knowledge in the area of research in effect of Total Quality
Management practices on organizational performance. Academically potential and future
researcher on the issue of total quality management in organization would benefit from

NJMSR Volume V I Focus Issue I 92

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

this research. The findings of this research would help the other educational institution to
improve the quality of their services.
1.6 Limitation and Delimitation of the Study
This study made assumption that respondents cooperate and respond honestly and that
findings from the sample can be generalized to other educational institutions in the entire
country.
i. This study is only focus on the BBA program of TU only.
ii. The effects of TQM on organizational performance deserve further research since the
data will be collected from only one program i.e. BBA colleges of TU in Kathmandu
valley, which doesn’t represent other BBA programs of TU outside the Kathmandu
valley.
iii. Sample size is minimum and large sample may result to something else.
iv. It may not represent other universities BBA programs.
v. Within the context of TQM model, this study especially focus on three core practices
mainly top management commitment, employee involvement and employee
training.

2. REVIEW OF LITERATURE
The extended form of quality has been taken since 1980 after the term Total Quality
Management (TQM) has coined. The different types of organizations, manufacturing as
well as service organization nowadays implemented TQM. The advocates of TQM has
stated that while implementing TQM by organization, each employment from Top to down
has to be indulge in the TQM program for managing the improvement of the organization
through the technique of problem solving (Pradhan B. l., 2015). To make the detail concept
of TQM implementation and Impact, the detail concept of TQM has to be developed. The
development process of quality from Inspection to Quality control and then through quality
assurance to TQM has to be studied. The concepts of quality Guru, the concept given by the
popular quality award along with award in the Nepalese context were also explored. Finally,
the chapter concludes with the study of some chronological empirical research.
2.1 Definition of Quality
The term quality gets in popularity after the Second World War. Even though its popularity
is being increasing day by day there is no any accurate or universal meaning of the term
quality. Quality is an abstract term because it gives different meaning to the different people
and also in the different context. Although everyone seems to be talking about quality, the
concept is slippery and the meaning elusive (Pfeffer & Coote, 1991). Quality is an important
issue in the modern competitive business world. Like the ‘theory of relativity’ quality is
sometimes expressed as a relative concept and can be different things to different people
in different context (Dahlgaard, Kristensen, & Kanji, 1998). For example, Garvin (1984,
1988) has suggested following five co-existing definitions to prove why quality should have
93 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

different meanings in different context.

1. Transcendent (excellence)
2. Product-based (amount of desirable attributes)
3. User-based (fitness for use)
4. Manufacturing-based(conformation to specification)
5. Value-based (satisfaction relative to price)
“Conformance to requirements; it is precisely measurable; error is not required to fulfill the
laws of nature; and people work just as hard now as they ever did” (Crossby, 1979).
From the all above definition we can found out that most of them included the terms product,
process, services, customer and satisfaction. But mostly focused on the requirement of
the customer. So the concept can be coined as “Quality is a degree in which it fulfills the
requirement of the customer”.
2.2 Concept of TQM
Total quality management (TQM) is a systematic quality improvement approach for firm-
wide management for the purpose of improving performance in terms of quality, productivity,
customer satisfaction, and profitability. Since TQM practices have been embraced by many
firms around the world for decades, they have earned the attention of many researchers from
diverse areas (Nnaekee Ogocukwu T, 2016). Oakland and Porter (1994) state that, “TQM
is a comprehensive approach to improving competitiveness, effectiveness, and flexibility
through planning in each individual and in every level of the organization”.
TQM is defined as both a philosophy and a set of guiding principles that represent the
foundation of a continuously improving organization (et.al besterfield, 3rd edition).
Total quality management is seen as a holistic approach to managing project, it includes
of continuous improvement, training and re-training of staff, customer satisfaction, top
management support, elimination of rework etc. (Ndubuisi, 2012).
There are five basic principle of Total quality management that are necessary for improving
the organizational performance (Dahigaard, Kristensen, & Kanji, 2002). That are mention
below:
1. Management Commitment (leadership)
2. Everybody’s Participation
3. Continuous improvement (KAIZEN)
4. Focus on the customer and the employee
5. Focus on facts
2.3 Principle of TQM
According to Dean, and Bowen; (1994) TQM as a philosophy or an approach to management
can be characterized by its principles. Also, Barner (2008) describes TQM as a philosophy for
quality improvement based on principle of the elimination of waste, continuous improvement
and the involvement of all employees. The former however, indicates that TQM implementation
can only be accomplished through a set of principles that supports the TQM philosophy.

NJMSR Volume V I Focus Issue I 94

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Thus, the following key principles underpin the TQM concept, (Choppins 1995; Dale 2003;
Oschman 2009; Oakland 1989) namely;
2.3.1 Top management commitment and support
Top management should demonstrate understanding, commitment and be involved in
the total quality improvement process from day one. It is the major responsibility of the
top management to crease the organizational environment, values and behavior in which
TQM can achieve its potential Top management must have to act as leader so that tom
management , lead the process, provide direction, exercise forceful leadership, including
dealing with those employees who block improvement and maintain impetus.
2.3.2 Employee involvement
This principle contrasts TQM from previous quality management initiatives. Involving
employees means sharing knowledge, encouraging and recognizing their contribution. TQM
is essentially a way of organizing and involving the whole organization, every department,
every activity, every single person at every level. Involvement aware all the employees in the
organization, that may result as the importance of meeting customer requirements.
2.3.3 Continuous improvement
The best way to improve organization output and the quality is to continuously improve
performance. Quality improvement is not a task that has an end, as it is not static. The
emphasis is on seeking improvement opportunities, not just holding the status quo. In order
to maintain a wave of interest in quality, it is necessary to develop generation of managers
who are dedicated to the pursuit of never ending improvement in meeting external and
internal customer’s needs.
2.3.4 Continuous training
Training is the single most significant component in trying to improve quality. Training
should begin with educating top managers in TQM and its principles in the need for quality
improvement and in the tools of improvement. Continuous training contributes to the
establishment of a common language throughout the business.
2.3.5 Team work
Within the content of TQM, team work is an important outcome and a condition for
continuous improvement. Teams are generally viewed as more powerful and effective work
entities than individuals. Team are needed for all organizations in order to make them work
more flexibly and to develop mutual first among members.
2.3.6 Empowering the employees
Empowerment is an environment in which people have the ability, the confidence, and the
commitment to take the responsibility and ownership to improve the process and initiate

95 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

the necessary steps to satisfy customer requirement within well-defined boundaries in

order to achieve organizational values and goals. TQM offers ways in which empowerment
of employees can support an organization’s efforts not only in quality improvement, but
in empowerment as well. TQM may empower employees by delegating functions that
were previously the preserve of more senior organizational members and as a result,
institutionalize participation on a permanent basis.
2.3.7 Customer satisfaction
In a total quality context customer (internal and external) satisfaction is the driving force
for an organization to improve its performance. Quality of Organizations is depends on
their customers and therefore should understand current and future customer needs, meet
customer requirements and strive to exceed customer expectations.
2.3.8 Culture change
Quality culture binds together all of aforementioned TQM principles. Hul (1991) points
out that culture nurtures high - trust social relationships, and it develops a shared sense
of membership as well as a belief that continuous improvement is for the good of everyone
within the organization.
2.4 Concept of Organizational Performance
TQM is often used as a multidimensional approach to measuring organizational performance,
where both financial and non-financial measures assume equal importance (Sila, 2007)
whereas Ittner and larcker (1995) suggests that TQM practices are more important and
place great emphasis on non-financial performance. A Literature on TQM suggests various
measures of performance, for instance, Performance was also conceptualized differently
across studies. In recent years, many organizations have attempted to manage organizational
performance using the balanced scorecard methodology where performance is tracked and
measured in multiple dimensions such as financial performance (such as profit, return on
assets and return on investment), customer service, social responsibility (such as corporate
citizenship and community outreach) and employee stewardship (Richard et al ,2009).
Based on research different scholars have taken different criteria for organizational
performance and in short, organizational performance is the most important criterion in
evaluating organizations, their actions, and environment. (Chepkech, 2014).Organizations
that adopt a quality management strategy focus on achieving and sustaining high quality
outputs using management practices as the inputs and quality performance as the outputs
(Flynn et al., 1994).

The business results’ category in all quality award (Deming Prize, The Malcom Baldrize
national award, European quality award, NS quality award and FNCCI national Excellence
Award) models mostly looks at key measures of organizational performance as multiple
dimensions, including product and service outcomes, financial and market outcomes,

NJMSR Volume V I Focus Issue I 96

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

customer-focused outcomes, process effectiveness outcomes, workforce-focused outcomes,

and leadership outcomes. The results dimension in these models used sub-criteria and
identifies many possible measures, including some of popular measures like user satisfaction
and service quality and from a stakeholder perspective.

For measurement performance, many scholars used financial as well as non-financial

performance (Powell, 1995; Choi& Eboch, 1998; Flynn et al., 1995; Shafiq, Lasrado, & Hafeez,
2019). And whereas some of the scholars like Hackman and Wageman (1995), Psomas & Jaca
(2017), Zhang (2001) and Pradhan (2015) have consider employee satisfaction, customer
satisfaction, product quality and business performance measures to capture performance
benefits accrued from TQM practices.

2.5 Theories of TQM

The most famous quality guru W. Edward Deming devotes his time to construct the theory,
principle and method of quality improvement because of which he is considered as a
founding father of the TQM. In 1950 the association of japans scientists and Engineer invited
him to conduct a course on quality control. The revolution on the quality management in
Japan has taken place under the Deming’s encouragement. For the proper implementation
of Quality Management in the organization, Deming (Out of the Crisis: Quality, Productivity
and Competitive position, 1986) in his theory identifies the 14 management principle. In
order to help managers improve the quality of their organization, Deming has offered the
14 Management principles. In addition, “Quality Control Handbook” is a thoughtful book
which established stoutly Joseph M. Juran in the field of Quality. Juran had started his carrier
as an engineer in 1924 (Beckford, 2002). Juran also worked with Japanese after the Second
World War in the revolution of quality management. Juran has developed the “quality
trilogy‟ consisting quality planning, quality control and quality improvement (Juran,
1992).Juran in his theory has argued that eighty percent of the quality problem is arises
by the management aspect and has focus on the management of the quality. Furthermore,
Crosby has focused on the cost of quality elaborating the cost of doing wrong things. One
of the philosophy of Crosby is “it is always cheaper to do right thing first time”. Cosby has
developed a popular concept of “Zero Defect”. Crosby provides four Absolutes and 14 steps
for the quality improvement process. From the four absolute quality improvement process,
he further elaborated fourteen steps for continuous increase in quality.
As all mention theories are related to TQM and its effect on organizational performance but
researcher has choose Deming theory in order to support this study.

2.6 Quality Management Practices in Nepal

In education sector, University Grand Commission of Nepal is providing guidelines and
looking after the quality prospective of higher education in Nepal. UGC has published the

97 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

brief guidelines report on “Quality Assurance and Accreditation for Higher Education in
Nepal”. Accordingly, a Quality Assurance and Accreditation Committee (QAAC) has been
formed for the development and implementation of QAA activities in higher education in
Nepal in 2007. The QAA Division in UGC has been established to facilitate QAAC and to
perform regular activities related to QAA (University Grands Commission, 2013). Currently
UGC is undertaking only institution assessment and accreditation based on different criteria
and benchmarks:

2.7 Conceptual Framework

After reviewing various literatures related to TQM practices and organizational performance,
more than three TQM elements are found similar to measure the organizational performance
in educational sector. As the researcher found three elements closely related to education
sector to measure the performance of educational sector. Therefore, the researcher decided
to construct the conceptual framework as follows:

Figure 1: Conceptual framework for TQM implementation and Impact

This framework is designed to identify the TQM elements that contribute to better
organizational performance based on the review of related literatures. Above figure
conceptualizes the relationship between independent and dependent variables. Independent
variables is conceptualizes as TQM practices and was measured by constructs as top
management commitment, employee participation, employee training. The dependent
variables on the other hand was operationalized as the organizational performance which
constructs are employee satisfaction and customer satisfaction. The relationship of the
independent variable is reviewed to establish if there is any relationship between the four
factors and business performance.

3. RESEARCH METHODOLOGY
This chapter presents an overview of the methodological perspective of the research. The
discussion on the research design has done on the basis of the research question adopted

NJMSR Volume V I Focus Issue I 98

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

in the chapter 1. It also describes in detail about the development and execution about the
questionnaire survey. The sampling method, validity and reliability of the data, data analysis
techniques and methods of validating the models were discussed in this chapter.
3.1 Research Design
Research design is a mapping strategy which essentially includes objectives, sampling
method, research strategy, tools and techniques for collecting the evidences, analyzing the
data and reporting the findings (Pradhan, Khatiwadi, & Poudel, 2014).
The fundamental objective of this study is to examine effect of Total Quality Management
(TQM) practices on performance of organization. To achieve this objective, a questionnaire
survey research design was used to determine the relationship between studied variable.
The study also adopted a descriptive research design.
3.2 Population of the Study
The study population is the aggregation or the totality of all members or units from which
information could be obtained (Rubin and Babbie, 2001). The population of the study
comprised of faculty of BBA colleges of Tribhuvan University (constituent and affiliated)
within Kathmandu valley.
3.3 Study Area
The study area of this research includes Kathmandu valley, Nepal. The researcher has chosen
the BBA Colleges of Tribhuvan University within Kathmandu valley. The researcher has
chosen this study location for the survey because of high number of educational institutions
that runs BBA program. It helps in getting high number of respondents for more accurate
result.
3.4 Sample Size and Sampling Procedure
The researcher employed random sampling method to select respondents to avoid any
biasness. A sample was however large enough to represent the target population. The total
population of the study is 300 as per the discussion with key faculties, Campus Chiefs and
Head of Departments of Tribhuvan University. The sample size was determined at 172. The
sample size was calculated using Taro Yamani Formula as mention below:
N=N/ {1+N(e)2}
Where,
n=Sample size
N=Population Size=300
E=Margin of errors=5%=0.05
Hence,
n=300/ {1+300(0.05)2}
n=300/ {1+0.75}
n=171.428

99 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3.5 Data Collection

Primary Data: Primary data were collected from the field using a structure questionnaire
as the primary data gathering instruments. A questionnaire is a pro-forma containing a
sequence of questions to elicit information from the interviewee (Kenneth, 2012). According
to Kotler and Keller (2006) the questionnaire can be defined as a set of questions presented
to respondents. Primary data was collected using a questionnaire in a form of a Likert scale
ranging from 1 – Strongly disagree, 2 - Disagree, 3 - Neutral, 4 - Agree and 5 - Strongly Agree.
The respondents were required to respond the statements that most closely represent their
observations about the way management practices are in their organization.
Secondary data: Secondary data were collected using textbook, journals, lecturer material,
seminar paper and related article in academic journals and form the internet.
3.6 Data Collection Instruments
The researcher had developed a questionnaire based on the theoretical constructs,
operationalization of these constructs and some already tested questionnaire of the past
researches. While developing the questionnaire the understandability, coverage, systematic,
explanatory and scope were kept in the mind. The twenty questions were associated with
four constructs of TQM implementation. The developed questionnaire was distributed to
respondents through the use of mail because of the current pandemic situation, COVID-19.
And as well as telephone is also used in order to inform respondents about the research
questionnaire and help them if they don’t understand the questionnaire. The questionnaire
included two sections:
Section A: the first section addressed the demographic information of BBA program of
Tribhuvan University in Kathmandu valley. It related to the age, Gender, position, duration
of involvement in the company and the duration of in the current post of the respondents.
Section B: This section evaluated extends of TQM practices (the independent variable)
within the BBA colleges as follows:
Top management commitment measured by answering items (1-5)
Employees Participation measured by answering items (6-10)
Employee training measured by answering items (11-14)
Customer focus measured by answering items (15-19)
3.7 Validity and Reliability
Measurement is the process of observing and recording the observations that are collected
as a part of a research effort. The observed data should verify the reliability of measurement
and verify the true score theory which is done through the measurement of Reliability,
Item analysis and validity of the observed data. (Pradhan, Khatiwadi, & Poudel, 2014). Both
the confirmation of validity and test of reliability were used to confirm the accuracy and
consistency that the newly developed data collection tool intended to measure.

NJMSR Volume V I Focus Issue I 100

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3.7.1 Validity of research instruments

If the measurement is an accurate predictor, it is said to have good validity (Pradhan B. l.,
2015). Validity is the extent to which differences found with a measuring instrument reflects
true differences among those being tested (Kothari, 2004).Researchers has recognize three
main types of validity, they are: i) Content validity ii) Construct validity iii) Criterion-related
validity (Panta, 2009). So in order to test the validity, the researcher used content validity
and construct validity.
3.8 Content Validity
The content validity of the instrument was conducted by a wide review of the literature and
by using the feedback of supervisor from Global College International. His suggestions and
advice was used to adjust the instruments.
3.9 Reliability of Research Instruments
The measurement scale which is used for measurement of constructs must produce results
that are repeatable and therefore trustworthy, if the same measurement instrument is
applied on the same individual on a number of occasions, the result would closely agree. C.R.
Kothari (1990) has defined reliability as the condition where measurement scale provides
consistent result. Reliability of a survey item is the degree to which repeated measures will
yield similar responses (Subedi, 2010).The internal consistency is measured by calculating
a statistics known as Cronbach‟s alpha. The coefficient alpha measures internal consistency
reliability among a group of items combined to form a single scale. Generally, reliability
coefficients of 0.70 or more are considered good. Cronbach’s Alpha test was calculated to
examine the level of reliability which indicated a highly acceptable level of reliability of the
data collection instruments for its administration. The Cronbach Alpha coefficient obtained
was 0.912 which indicated that the instruments were reliable.
Table 2
Reliability Statistics of TQM Implementation
Cronbach’s Alpha N of Items
.912 20

3.10 Data Analysis Procedures

Data was screened to ensure that responses are legible and understandable and responses
are within an acceptable range. Collected data was coded and entered into the Statistical
Package for Social Sciences program for analysis. The analysis was done in following stages;
3.11 Descriptive Analysis
Descriptive statistics measures the characteristics of the individual variables. Mean, standard
deviation, variation are the three different characteristics of the descriptive statistics. Mean
and standard deviation has been used for descriptive analysis. Different charts are used like
Histogram, pie chart

101 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3.12 Inferential Analysis

Correlation and regression are used for inferential analysis. To identify the relationship
between organizational performance and TQM practices variable, correlation analysis
has been used. Correlation indicates to the existence of the relationship between the
variables. This study was to establish to know causal relationship between TQM practices
and organization performance. To achieve this, regression models was used to assess the
contributions of independent variables in predicting organizational performance. As the
research is based on showing the effect of independent variable on the dependent variable,
regression analysis is better for analysis.
3.13 Model Specification of the Study
The regression models that were used for this study was:
Y= α + β1x1 + β2x2 + β3x3 +β4x4+e
The model was then modified to reflect the variables of this study:
Y= α + β1x1 + β2x2 + β3x3 +β4x4+e
Where,
Y - Organizational Performance (Dependent variable)
α - Constant of Proportionality
x1 – Top Management Commitment (Independent variable)
x2 - Customer Focus (Independent variable)
x3 - Employee Participation (Independent variable)
x4- Employee Training (Independent variable)
e - Error Term
β- Constant
3.14 Socio-Ethical Compliances
To make the study socio-ethically sound, researcher was always concerned on a number
of aspects such as treatment of the respondents, revealing the purpose, use of research
information and application of university recommended style guidelines in drafting the
report.

Volunteer participation was explained clearly to the participants before they sign their
consent forms. Participants had the freedom to withdraw from the study at any stage. The
study had guarantee confidentiality and anonymity to the participants. The names of all
informants was coded to conceal their identity and to maintain confidentiality.
To avoid any chance of mal-communication, wrong recording of responses and cheating
by the field research staff, the present researcher personally identified, contracted and
administered the respondents were not at all compelled to participate. Rather, they were

NJMSR Volume V I Focus Issue I 102

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

humbly requested and the people having personal reservation against participation were
just left out from further consideration in sampling.
The present researcher has attempted to comply with the academic writing guidelines as
prescribed in APA format.
The information collected through the process of this research has been used only for the
purpose of this report writing and the same document has not been submitted elsewhere
for any purpose.

4. DATA PRESENTATION AND ANALYSIS

4.1 Analysis of Demographic Data

This section describes the demographic characteristics of the respondents by Age, Gender,
position and the duration of service. These attributes were relevant to the study since have a
bearing on the respondent’s ability to provide information that is valid, reliable and relevant
to the study. The analysis of respondents characteristics are done below:
Age
In this research, age refers to the time span of the human being from his or her birth. It is also
various stages of life where perception and thinking of any discipline changes. (Merriam-
Webster, 2018).
Table 4
Age of the Respondents
Frequency Percent. Valid Per- Cumulative
cent Percent
Below 30 6 3.5 3.5 3.5
30-40 39 22.7 22.7 26.2
Valid 40-50 77 44.8 44.8 70.9
Above 50 50 29.1 29.1 100.0
Total 172 100.0 100.0
Source: Sample Survey 2021
The above analysis portrayed that 3.5% representing 6 respondents were below 30 years,
22.7% representing 39 respondents were within 30-40 years age group, 44.8% representing
77 respondents were within 40-50 years age group and the remaining 29.1% representing
50 respondents were above 50 year of age. There is less number of age group below 30 to
response the research questionnaire. Above data been further describe through pie-chart
below.

103 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 2: Age of the Respondents

The above figure shows the total number of respondents taken for the study. The total
response from 172 respondents were collected and evaluated, out of which the major
involvement age group was 40-50 (45%), followed by age group above 50 (29%), age group
30-40 (23%) and age group below 30 (3%).
Gender
In this study, gender refers to biological sex of the human being. Gender is the range of
characteristics pertaining to, and differentiating between, masculinity and femininity. The
researcher has divided the gender into three groups male, female and others.
Table 5
Gender of the Respondents
Fre- Percent Valid Percent Cumulative
quen- Percent
cy
Female 69 40.1 40.1 40.1
Valid Male 103 59.9 59.9 100.0
Total 172 100.0 100.0
Source: Sample survey 2021
The above table reveals that out of 172 respondents in the study, about 40.1 percent of the
respondents were male, while 59.9 percent of them were female. It shows that majority of
respondents i.e. teachers were male. Above data been further describe through pie-chart
below.

NJMSR Volume V I Focus Issue I 104

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 3: Gender of the Respondents

The figure 4.2 shows that 60% respondents were male and 40% respondents were female.
No gender that lies in others categories have participated in this study.
4.2 Descriptive Analysis
There are four elements that are taken to measure the effect of TQM on organizational
performance. Each elements were constructed using different items i.e. 5-point Likert scale.
Organizational performance is taken as a dependent variable and is constructed as rating
scale i.e. 1 for low and 5 for high organizational performance in term of TQM elements
mention below. Descriptive statistics (Mean and SD) analysis is done as statements wise of
related variable and on overall variable analysis.
4.3 Descriptive Analysis of Overall Variables
Top Management Commitment, Employee Participation, Employee Training and Customer
Focus are taken as independent variables and organizational performance is taken as
dependent variables Descriptive statistics of dependent variables and independent
variables were and described and presented below. The table presented below describes
the descriptive statistics of dependent and independent variables. The data in the table
below shows the mean and standard deviation of variables along with minimum (1) and
maximum (5) scores of each variables. Mean score of all the variables are range from 3.023
and 3.564 with standard deviation from 0.6014 to 1.0541. With the highest mean score of
3.564 shows that the respondents agreed that organizational performance are effected by
top management commitment. Similarly employee participation, employee training and
customer focus has mean score of 3.488, 3.090 and 3.023 respectively, which shows that
respondents are slightly agreed that those variables effects organizational performance of
employees. The variables ‘TMC, EP and ET’ are not highly deviate but there is high deviation
among the respondents view on variable ‘customer focus’.

105 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The Dependent variable is constructed on rating scale so that respondents can rate their
organizational performance i.e. 1 for low and 5 for high in term of TQM (Four independent
variables mentioned). The respondent’s rate minimum of 1 and maximum of 5 of their
performance in term of given independent variables. Organizational performance score a
mean of 3.32 which shows that respondent’s performance in term of TQM is slightly high.
And there is low deviation among the respondent’s ratings. So with this it can be concluded
that organizational performance are highly affected by the practices of TQM variables
mentioned in the table given below.
Table 12
Descriptive Statistics of dependent and independent variables
N Min Max Mean Std. Dev.
TMCAVE 172 1.0 4.8 3.564 .7061
EPAVE 172 1.8 4.2 3.488 .6014
ETAVE 172 1.25 4.25 3.0930 .70301
CFAVE 172 1.0 5.0 3.023 1.0541
Organizational Performance 172 1 5 3.32 .822
Valid N (list wise) 172
Source: Sample Survey 2021
4.4 Analysis of Data
This section presents the data analysis through various statistical tools like correlation
analysis and regression analysis to interrelate dependent and independent variable.
4.5 Correlation Analysis Between Study Variables
Correlation analysis is the statistical tools that we can use to describe the degree to which
one variable is linearly related to other variable. The table below present bivariate Pearson
correlation coefficient between TQM variables and organizational performance of BBA
program colleges of Tribhuvan University in Kathmandu. Independent variables from TQM
are TMC as top management commitment, EP as employee participation, ET as employee
training, and CF as Customer focus. Dependent variable as organizational performance.
Correlation analysis between top management commitment and organizational performance
Table 4.10 shows the correlation between the dependent (organizational performance)
and independent variable (Top Management Commitment). There was a strong positive
relationship between organizational performance and top management commitment
(r=0.730, p= 0.000), indicating a positive correlation between top management commitment
and organizational performance. The result indicate that top management commitment
support total quality management practices in their organizations to improve their
performance.

NJMSR Volume V I Focus Issue I 106

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.5.1 Correlation analysis between employee participation and organizational

performance
The study carried out correlation analysis to investigate the relationship between employee
participation and organizational performance. The result shown in table 4.10 indicates
a strong positive relationship (r=0.534, p=0.000) between employee participation and
organizational performance. From the result it can be concluded employee participation
leads to better organizational performance.
4.5.2 Correlation analysis between employee training and organizational
performance
Table 4.10 is also shows the correlation between employee training and organizational
performance. As the table shows correlation is at 0.743 and p-value is 0.000 which is
less than 0.01, which clearly indicates that there is strong positive relationship between
employee training and organizational performance. So the result state that the training given
to employee on Total Quality Management practices affect organizational performance.
4.5.3 Correlation between Customer Focus and organizational performance
This study also focus to establish the effect of customer focus and organizational performance.
To find out the effect, correlation analysis was performed as shown in table 4.10. Correlation
analysis indicates a positive correlation (r= 0.587, p=0.000). The results shows that Total Quality
Management practices which are customer oriented affect organizational performance.
Table 13
Correlation Analysis between Dependent and Independent Variables
Organi- TMCAVE ETAVE CFAVE
zational EPAVE
Perfor-
mance
Pearson Cor- 1 .730** .534** .743** .587**
Organizational relation
Performance
Sig. (2-tailed) .000 .000 .000 .000
Pearson Cor- .730 **
1 .517 **
.721 **
.346**
TMCAVE relation
Sig. (2-tailed) .000 .000 .000 .000
Pearson Cor- .534 **
.517 **
1 .524 **
.122
EPAVE relation
Sig. (2-tailed) .000 .000 .000 .110
Pearson Cor- .743** .721** .524** 1 .557**
ETAVE relation
Sig. (2-tailed) .000 .000 .000 .000
Pearson Cor- .587** .346** .122 .557** 1
relation
CFAVE
Sig. (2-tailed) .000 .000 .110 .000
N 172 172 172 172 172
**. Correlation is significant at the 0.01 level (2-tailed).
107 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

In summery correlation results indicates that the three practices under consideration were
statistically significant, Employee Training had the highest positive correlation of 0.743,
p=0.000, followed by TMC, 0.730, p=0.000, Customer focus, 0.587, p=0.000 and Employee
participation, 0.534, p=0.000 as shown in the table 4.10.
4.6 Regression Analysis
Regression is a statistical tool to establish relationships between two or more variables
so that it is possible to predict one or more variables in term of others. In this study,
researcher used regression to identify the influence of four independent variables; Top
Management Commitment, Employee participation, employee Training and Customer Focus
and access to the dependent variables. This section also deals with regression result from
various specifications of the model to examine the effect of total quality management on
organizational performance. All data are calculated by the help of SPSS software version 21.
5. MODEL SUMMARY
5.1 Interpretation of R
The correlation coefficient R measures the strength and direction of a linear relationship
between variables. The R value is always between +1 and -1. +1 represent perfect positive
relationship and -1 represent perfect negative relationship.
5.2 Interpretation of R-square
R-square or coefficient of determination is a goodness of fit measure for linear regression
models In general, the higher the R-square, the better the model fits our data. It indicates
how much of variation is explained by the independent variable(s) in a regression model.
5.3 Interpretation of p value
The p value is the evidence against a null hypothesis. The smaller the p-value, the stronger
the evidence that you should reject the null hypothesis. The usual levels of significance used
are 0.10, 0.05 and 0.01 and so on. In case of this research work, 0.05 level of significance is
considered for analysis.
Therefore,
If, p>.05 Null hypothesis will be accepted, and
If, p<0.04 Null hypothesis will be rejected
Table 14 Model Summary
Model R R Square Adjusted R Std. Error of the
Square Estimate
1 .845a .713 .707 .445
Predictors: (Constant), CFAVE, EPAVE, TCMAVE, ETAVE
From the table of model summary, the correlation coefficient (R) results of 0.845 which
implies that the relation is positive. But this predication may vary by 0.445 % as shown
by the table as standard error of estimate. Similarly R square is 0.713, which shows that

NJMSR Volume V I Focus Issue I 108

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

all predicator accounts for 71.3% variation of organizational performance. This means that
28.7% of the variation in the organizational performance cannot be explained by these four
TQM variables.so there must be other variables too that have an influence. The value of
adjusted r2 is 0.707, showing that the prediction of Total Quality Management practices on
organizational performance account for approximately 70.7 % less variance.
5.4 Analysis of Variance
The analysis of variance was used to test whether the model could significantly fit in
predicting the outcome than using the means. The F-ratio represents the ratio of the
improvements in prediction that results from fitting the model, relatively to the accuracy
still exists in the model.
Table 15 ANOVA Test
Model Sum of Df Mean Square F Sig.
Squares
Regression 82.336 4 20.584 103.926 .000b
Residual 33.077 168 .198
Total 115.413 172

a. Dependent Variable: Organizational Performance

b. Predictors: (Constant), CFAVE, EPAVE, TCMAVE, ETAVE
The above table shows that the significance p value is 0.000 which defines that the model
used by the researcher is valid and match with the requirement of the study. And the F-ratio is
103.928 which is significant at p value (p<0.05). Therefore, the model significantly improved
the ability to predict the effects of Total Quality Management practices on organizational
performance.
5.5 Coefficient of the Total Quality Management Practices
Table 4.13 shows the estimation of beta (β) values and gives an individual contribution of each
predictor to the model. The value explains about the relationship between organizational
performance with each predictor (top management commitment, employee participation,
employee training and customer focus). That means the positive beta value gives the positive
relationship that exists between the outcomes and predictor and the negative beta value
gives the negative relationship between the outcomes and the predictor. Like for positive
relationship as top management commitment increase, organizational performance
increases; as employee participation increases, organizational performance increases;
as employee training increases; organizational performance increases and likewise as
customer focus increases; organizational performance increases. Similarly for negative
relationship as top management commitment decreases, organizational performance
increases; as employee participation decreases, organizational performance increases; as
employee training increases, organizational performance increases and likewise customer
focus decreases; organizational performance also increases and vice versa.
109 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The beta value not only shows the relationship but also tells us to what degree each
independent variable affects the dependent variables if the effect of all other independent
variables are held constant. In the table 4.13 the all predictor have a positive beta value,
which clearly states the positive relationship between the predictor and organizational
performance. Higher beta values signifies stronger correlation with the dependent
variable. The table mention below top management have the highest beta (.383), followed
by customer focus (.332), employee participation (.204) and employee training (.175).
This represent as if the top management commitment increases by 1 standard deviation,
organizational performance standard deviation increases by .383, if the customer focus
increases by 1 standard deviation, organizational performance increases by .332 and so
on (this interpretation is true only if the other variable are held constant while measuring
the relationship dependent variable and one of the independent variable). Thus, it can
be concluded that the TQM practices (total quality management, employee participation,
employee training and customer focus) has a positive effect on organizational performance
as summarized in the model below.
The General regression model is stated below
Y= α + β1x1 + β2x2 + β3x3 +β4x4+e
The model was modified to reflect the variables of this study:
Y= α + β1x1 + β2x2 + β3x3 +β4x4+e
Y=-.655+.446x1+.278x2+.205x3+.259x4+e
Where,
Y - Organizational Performance (Dependent variable)
α - Constant of Proportionality
x1 - Top Management Commitment (Independent variable)
x2 - Customer Focus (Independent variable)
x3 - Employee Participation (Independent variable)
x4- Employee Training (Independent variable)
e - Error Term
β- Constant

Model Unstandardized Coefficients Standardized t Sig.

Coefficients
B Std. Error Beta -2.937 .004
(Constant) -.655 .223 -2.937 .004
TCMAVE .446 .072 .383 6.227 .000
1. EPAVE .278 .070 .204 3.967 .000
ETAVE .205 .084 .175 2.438 .016
CFAVE .259 .040 .332 6.449 .000
6.449 .000

NJMSR Volume V I Focus Issue I 110

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

In the table given above shows that the p-value for all hypothesis is less than the level of
significance i.e. 0.05 under two-tail test, which shows that all null hypothesis mention are
rejected. Thus it can be described as below
1. The model is statically significant.
2. H01 is rejected, which states that there is significant relationship between top
management commitment and organizational performance.
3. H02 is rejected, which states that there is significant relationship between employee
participation and organizational performance.
4. H03 is rejected, which states that there is significant relationship between employee
training and organizational performance.
5. H04 is rejected, which states that there is significant relationship between customer
focus and organizational performance.
In this chapter all the collected data which were analyzed in SPSS were presented.
Demographic analysis, descriptive analysis, correlation analysis, regression analysis and
hypothesis testing were performed.
6. DISCUSSION AND FINDING
The study examined the relationships between top management commitment, employee
participation, employee training, customer focus and organizational performance. From the
study finding, this study conclude that top management commitment support total quality
management practices in their organizations to improve their performance. the study also
finds out that , top management are actively involved in establishing and communicating
the organization’s vision, goals, plans and value for quality program, top management insist
on accuracy and reliability of all information and communication within the organization,
top management is evaluated on quality performance, top management allocates adequate
resources towards efforts to improve quality and top management strongly encourages
employee involvement in quality management and improvement activities.

Concerning employee participation, this study concludes that, employees were actively
involved in quality related activities, employees were open to express their ideas, employee
were taken as valuable resources and were involved in important activities by top
management and they were encourages to make suggestions and in many cased allowed to
take action and the institution recognizes quality improvement suggestions from employees
extensively and implement them after evaluation.

The study conclude that employee training were crucial for organizational performance.
Employees were trained for total quality concept related to job and continuous learning
were provided through training. But results finds out that quality awareness education were
not given to employees and resources were not adequately available for employee training.

111 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

This study also concludes that customer focus was critical for organizational performance.
The result indicated that organization always try to attempted to meet its customer needs
and address customer complaints as a priority for the organization. The organization also
maintains the close relationship with customers and customer oriented strategies were
built and reviewed for further improvement. But the organization doesn’t performs market
research to find customer needs.
Finally, the result of the study revealed that top management commitment, employee
involvement, customer focus and employee training are positively associated with
organizational performance and supports the hypothesis that TQM practices significantly
affect organizational performance consequently, meaning that there is a need to focus on
TQM for improving university performance.
6.1 Finding
i. The study revealed that, there is strong positive relationship between top management
commitment and organizational performance, which implies that top management
commitment support total quality management practices in their organizations to
improve their performance.
ii. The study finds out that there is positive relationship between employee participation
and organizational participation, which conclude that employee participation leads to
better organizational performance.
iii. The study shows that there is strong positive relationship between employee training
and organizational performance, which indicates that the training given to employee
on total quality management practices affect organizational performance.
iv. The study also discovered that, customer focus are positively associated with
organizational performance, which shows that total quality management practices
which are customer oriented affect organizational performance.
v. The close examination of the results prepared above indicates that the R-square
value 0.713 of indicated that about 17.3% of the total systematic variations in
the organizational performance were due to the variation in top management
commitment, employee involvement, customer focus and employee training
vi. The significance t-values and significant F-values are less than 5% level of significance
for TMC, EP, ET and CF. So coefficient mention above are statistically significance for
TMC, EP, ET and CF.
vi. Out of 4 hypothesis, all the hypothesis were strongly satisfied, which implies that
there is a significant relationship between Dependent variable (organizational
performance) and independent variable (TMC, EP, ET and CF).

NJMSR Volume V I Focus Issue I 112

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

7. CONCLUSION
This study endeavors to analyze the effects of TQM practices on organizational performance:
a case of BBA program in Tribhuvan University in Kathmandu valley. The specific objectives
of the study were to determine the effect of top management commitment on organizational
performance, to examine the effect of employee training on organizational performance, to
assess the effect of employee involvement on organizational performance, to examine the
effect of customer focus on organizational performance. The quantitative research design
with structure questionnaire was used. The target population comprised the employees
who are concern on conducting and managing BBA program in TU constituent and affiliated
colleges in Kathmandu valley. The sample sizes of 300 respondents were drawn with
random sampling method from total TU BBA colleges in Kathmandu valley Based on the
analysis carried out.

113 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Abusa, F. (2011). TQM implementation and its impact on organizational performance in
developing countries: A case study on Libya. University of Wollongong, faculty of
enginerring. University of Wollongong research online.
Akhtar, S., Zameer, H., & Saeed, R. (2014). Impact of total quality management on the
performance of service organization in Pakistan. International journal of academic
research in economics and management science, 3(6).
Balasubramanian, M. (2016). Total quality management in the healthcare industry-
challenges, barriers and implementation developing a framework for TQM
implementation in a healthcare setup. Science Journal of Public Health, 4(4), 271-
278. (2015).
Chepkech, W. K. (2014). Effect of total quality management practics on organizational
perfornance: A case of tertiary institution in uasin gishu country.
Dahlgaard, J. J., Kristensen, K., & Kanji, G. K. (1998). Fundamentals of total quality management.
London and New York: Taylor and Francis.
Farooq, M. S., & Akhtar, M. S. (2007). Application of total quality management in education.
Journal of Quality and Technology Management, 3(2), 87-97.
Flynn, B. B., Schroeder, R. G., & Sakakibara. (1995). The impact of quality management
practices on performance and competitive. Decision Science, 659-691. doi:https://
doi.org/10.1111/j.1540-5915.1995.tb01445.x
Kenneth, A.-A. (2012). Assessment of Total Quality Management practices on organizational
Performance at Intravenous Infusions limited Koforidua.
Kothari, C. R. (2004). Research methodology. New delhi: New Age International p. Limited.
Kothari, P. H., & Pradhan, B. l. (2011). The effectiveness of ISO 9001:2008 certification in
educatioal institution of Nepal. Annals of Management Research, 1(2), 42-51.
Mashagba, D. I. (2014). The impact of Total Quality Management on the efficiency of academic
performance-empirical study-the higher education sector-the university of Jordan.
International Journal of Scientific & Technology Research, 3(4), 358-364.
Najafabadi, H. N., Sadeghi, S., & Habibzadeh, P. (2008). Total quality management in higher
education case study : Quality in practiceat university college of Boras. University
college of Boras.
Naumann, E., & Kathleen, G. (1995). Customer satisfaction measurement and management:
Using the voice of the customer. Cincinnati, Ohio : THomson Executive Press.
Nawelwa, C. S. (2015). An analysis of total quality management practices in Zambian
secondary schools : A survey of Lusaka district. The TQM Journal, 27(6).
Ndubuisi, N. H. (2012). Impact of total quality management in organizational productivity: A
case study of Ama Brewery.

NJMSR Volume V I Focus Issue I 114

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Nekoueizadeh, S., & Esmaeili, S. (2013). A study of the impact of TQM on organizational
performance of the telecommunication industry in Iran. European Online Journal of
Natural and Social Science, 2, 968-378.
Nepalimedia.(2020). Retrieved from Nepalimedia: https://nepalipedia.com
Ngambi, M. T., & Nkemkiafu, A. G. (2015). The impact of Total Quality Management on firm’s
organizational performance. Americal Journal of Management, 15(4), 79-85.
Ngware, M. W., Wamukuru, D. K., & Odebero, S. O. (2006). Total quality management in
secondary schools in Kenya: Extent of practice. Quality Assurance in Education,
14(4), 339-363.
Okrah, E. B., & Fening, F. A. (2012). TQM implementation : A case of a mining company in
Ghana. Benchmarking: An International Journal, 19(6), 743-759.
OS, O., & AG, I. (2014). The impact of total quality management on organizational’s sales and
performance. Journal of Science, 4(8), 529-533.
Palikhe, A., & Adhakari, N. B. (2013). A study on student’s attitude towards BBA program at
Janapriya Multiple Campus. Janapriya Journal of Interdisciplinary Studies, 2, 21-28.
Pambreni, Y., Khatibi, A., Ferdous, S., & Tham, J. (2019). The influence of total quality
management towards organizatin performance. Selangor.
Pandit, B. (2016). Student satisfaction in mathematics towards service quality of semester and
annual system.
Pokharel, T. (2010). Management education in Nepal: Status, spatial distribution and gender
diversity.
Pradhan, B. L. (2012). Quality assurance and accreditation in higher education of
Nepal. Retrieved from Network for quality, productivity anfd competitiveness:
http://nqpcn.org.np/wp-content/uploads/2012/07/QAA-Quality-Assurance-
Accreditation-in-Higher-Education-of-Nepal.pdf.
Psomas, E. L., & Jaca, C. (2017). The impact of total quality management on service company
performance: Evidence from Spain. International Journal of Quality & Reliability
Management, 33(3), 380-398.
Shafiq, M., Lasrado, F., & Hafeez, K. (2019). The effect of TQM on organizational performance:
Empirical evidence from the texttile sector of a developing country using SEM. 30,
31-52.
Talib, F., & Rahman, Z. (2010). Studying the impact of total quality management in service
industry. International Journal of Productivity and Quality Management, 6(2), 249-
263.
University Grands Commission. (2013). Quality assurance and accreditation fir higher
education in Nepal. Quality Assurance and Accreditation Devision.
Zabadi, A. M. (2013). Implementing total quality management on the higher education
institution- A conceptual model. Journal of Finance and Economics, 1(1), 42-60.

115 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

IMPACT OF CREDIT RISK MANAGEMENT ON FINANCIAL PERFORMANCE OF

NEPALESE COMMERCIAL BANKS

Dinesh Kumar Goleψ Karan S. Thagunna, PhD∗

Abstract

Credit risk management has become an engaging topic for the financial institutes in
Nepal. The turmoil in the financial industry emphasizes the importance of effective risk
management procedures. The objective of this research study was to identify the credit risk
management indicators and their associations with the financial performance of Nepalese
commercial banks.

According to the findings, the capital adequacy ratio, non-performing loan ratio, and
liquidity ratio all have a detrimental impact on bank performance, according to the findings.
On the other hand, LLP did not appear to be a significant factor in determining the bank’s
performance. As a result, it is advised that to enhance financial performance and minimize
the risk of non-performing loans in the future, banks must watch very carefully the loans’
performance and analyze thoroughly the clients’ credit history and ability to pay back their
debts prior to any approval of loan applications.

Keywords: Credit risk management, Financial performance, Return on equity, Return on

assets, Capital adequacy ratio.

ψ
Dinesh Kumar Gole, MBA student at Global College International
∗ Karan S. Thagunna, PhD, faculty at Global College International

NJMSR Volume V I Focus Issue I 116

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Background of the Study

Credit activity is always one of the core activities of banks. For banks and financial institutions,
corporate customers are always the main subjects that they aim to grant credit. The amount
of credit granted to corporate customers always accounts for the largest proportion and is
also the riskiest. This is not only an activity that generates a major source of revenue for
banks but also a potentially risky activity.

Credit risk is by far the most critical risk that banks face, and more than any other risk, the
success of their company is dependent on precise measurement and efficient management
of this risk (Bhattarai, 2016). If a borrower or counterparty fails to meet promises under an
agreement, there is a danger of financial loss, and any such failure has a negative impact on
the financial performance of the bank.

Credit risk management is understood as the process of identifying and analyzing risk factors,
measuring the level of risk, thereby selecting measures to manage credit activities to limit
and eliminate risks in the credit process. Fan and Zou (2014), Credit risk management is
an extremely important activity in the operation of banks because credit risk is one of
the problems that all commercial banks can encounter. If the activities of preventing and
limiting credit risks are well implemented, they will bring very practical benefits to banks
including raising income, reducing costs, preserving capital, creating trust for customers
and investors using the services of the bank, creating a premise to expand the market and
increasing the prestige, position, image and market share for the bank, etc.

In a financial institution, credit risk management begins with the adoption of solid lending
standards and an effective risk management framework. Under the supervision of the risk
management committee, policies, industry-specific norms and recommendations, as well
as risk concentration limitations, are developed. These rules, processes, and standards
also regulate how credit risk is assessed, monitored, reported and controlled. As market
conditions change rapidly, adequacy and effectiveness of internal controls should be
reviewed at least quarterly.

Serwadda (2018) asserts that credit creation is the main income generating activity for the
banks. But this activity involves huge risks to both the lender and the borrower. The risk of a
trading partner not fulfilling his or her obligation as per the contract on due date or anytime
thereafter can greatly jeopardize the smooth functioning of a bank‘s business. On the other
hand, a bank with high credit risk has high bankruptcy risk that puts the depositors in
jeopardy. Among the risk that face banks, credit risk is one of great concern to most bank
authorities and banking regulators. This is because credit risk is that risk that can easily and
most likely prompts bank failure.

117 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Bhattarai (2016) has maintained that Credit risk management is a structured approach to
managing uncertainties through risk assessment, developing strategies to manage it and
mitigation of risk using managerial resources. The strategies include transferring to another
party, avoiding the risk, and reducing the negative effects of the risk.

Credit risk management is a process of decision making which involves minimizing losses
from both bad debts and costs of debt operation while maximizing the value of credit
sales. Financial Performance is the operational strength of a firm in relation to its revenue
and expenditure as revealed by its financial statements. In any organization especially
commercial banks, financial performance is affected by credit risk. There is a significant
relationship between bank performance (in terms of return on asset) and credit risk
management (in terms of loan performance). Better credit risk management results in
better bank performance. Thus, it is of crucial importance that banks practice prudent
credit risk management and safeguarding the assets of the banks and protect the investors’
interests. Serwadda (2018) examined that NPL has negative relationship with financial
performance of and LLP has positive relationship to profitability of bank in Uganda. It means
that CRM appreciates the risk arising from lending business and hence tighten their credit
risk management capacity while incorporating high loan provision that could generate
provision. CRM has significant contribution in bank performance, so bank need to maintain
the optimum CAR level.

Commercial banks are exposed to high risk loans. The higher is the accumulation of unpaid
loans implying that these loan losses have produced lower returns to many commercial
banks. Basel Committee on Banking Supervision (1999) asserts that loans are the largest
and most obvious source of credit risk, while other are found on the various activities that
the bank involved itself with. The indicators to measure the credit risk management: capital
adequacy ratio (CAR) and non-performing loans ratio (NPLR), which are the main indicators
used to assess the soundness of the banking system (Fan, & Zou, 2014). Likely, Nyabicha
(2017) have pointed out the credit risk management (CRM) indicators such as: Loan Given
Ratio (LGDR), loan loss provision (LLPR), Non-performing loan ratio (NPLR) and capital
adequacy ratio (CAR) which influence banks’ profitability (AR). However, every bank needs
to identify measure, monitor and control credit risk and also determining how credit risks
could be lowered. This means that a bank should hold adequate capital, control the non-
performing loan and maintain the appropriate cost per loan assets. Credit risk is accessed
through analyzing the financial performance of commercial banks in an attempt to mitigate
impacts arising from credit defaults. The financial health of the commercial banks depends
on the possession of good credit risk management dynamics. Commercial banks may have a
keen awareness of the need to identify, measure, monitor and control credit risk as well as to
determine that they hold adequate capital against these risks and that they are adequately
compensated for risks incurred.

NJMSR Volume V I Focus Issue I 118

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1.2 Statement of the Problem

Nepalese commercial banks have faced difficulties over the years for a multitude of reasons.
However, the major cause of serious banking problems continues to be directly related to the
relaxed credit standards for borrowers and counterparties. Poor portfolio risk management,
whereby they fail to determine the best asset combination to invest in, which should have
a negative correlation, or lack of attention to changes in economic or other circumstances
that can lead to a deterioration in the credit standing of a bank’s counterparties. However,
in recent years, some policies have been reformed to improve banks’ performance and some
measures have been taken to minimize the negative effects of lending. They have focused
on mergers to increase capital requirements and reduce competition. Most of the Nepalese
commercial banks are found to approve loans that are not well examined. This may lead to
increased loan defaults and non-performing loans. Thus, the existing procedures for credit
risk management are not adequate to compete with the existing financial and economic
challenges in Nepal. There is a need to investigate whether this investment in credit risk
management is viable for banks. This study therefore seeks to investigate the impact of
credit risk indicators on a bank’s financial performance in Nepal (Tuladhar, 2017). This
study addresses how credit risk affects banks’ financial performance using a robust sample,
and the findings would serve as the basis for providing policy measures useful to the various
authorities on how to tackle the effect of credit risk in order to enhance the quality of banks’
risky assets. This study provides empirical evidence to confirm the validity of the theories
to assist the bank’s management in determining the best credit risk strategies that enhance
bank performance.
1.3 Research Objectives
The main objective of the study is to understand the credit risk management practices and
their impact on financial performance of Nepalese commercial banks.

General Objectives: - To identify the credit risk management indicators and their association
with financial performance of Nepalese commercial banks.

Specific Objective: In line with the general objective, the research paper will assess the
following specific objectives:
a) To examine the relationship between Capital Adequacies Ratio regarding the credit
risk management and financial performance on the Nepalese commercial banks.
b) To examine the relationship between NPL regarding the credit risk management and
financial performance on the Nepalese commercial banks.
c) To examine the relationship between Liquidity Ratio regarding the credit risk
management and financial performance on the Nepalese commercial banks
d) To examine the relationship between Loan loss Provision regarding the credit risk
management and financial performance on the Nepalese commercial banks
e) To examine the relationship between Cash Reserve Ratio regarding the credit risk
management and financial performance on the Nepalese commercial banks

119 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

f) To assess and determine the variables accountable to the financial performance of

Nepalese commercial banks.
1.4 Research Question
Among other risks faced by banks, credit risk plays an important role on banks’ financial
performance since a large chunk of banks’ revenue accrues from loans from which interest
margin is derived (Fan, & Zou, 2014). Based on the information we have studied in the
previous part, we have realized that it is of great interest to study the effect of credit risk
management on financial performance of commercial banks. And there is no recently
research that could clearly explain the relationship of credit risk management and financial
performance of commercial banks. Another factor leads us to the topic is that research in the
Nepal, as a complicated and unstable financial market, has not been developed until now. In
order to identify the impact of credit risk management on financial performance of Nepalese
commercial banks, we made the following research question:

1. What is the effect of the credit risk management on financial performance of commercial
bank?

2. Is there any relationship between credit risk management and financial performance of
Nepalese commercial banks?

2.1. How are the CAR and financial performance of Nepalese commercial banks
associated?

2.2. How are the NPL and financial performance of Nepalese commercial banks
associated?

2.3. How are the LLP and financial performance of Nepalese commercial banks
associated?

2.4. How are the Liquidity Ratio and financial performance of Nepalese commercial
banks associated?

2.5. How are the CRR and financial performance of Nepalese commercial banks
associated?

2.0 LITERATURE REVIEW

The primary purpose of conducting a review of literature was to get acquainted with the
required theoretical and conceptual knowledge of credit risk management and performance
of commercial banks. For this, the chapter as a whole has been developed into four distinctive
sections, where the first section presents the review of related theoretical and conceptual
perspectives followed by the review of important policy documents related to the present
study in the second section of the chapter. Similarly, the third section of the chapter contains

NJMSR Volume V I Focus Issue I 120

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

a review of other similar studies conducted in the Nepalese and international context.
Finally, on the basis of overall learning imports gained through review of various literatures,
the present researcher has made a conceptual framework for the study in the fourth section
of the chapter. This conceptual framework of the study serves as the basis for governing the
overall ongoing study.

2.1 Review of Theoretical Perspectives

The perspectives of risk differ and risk definition depends on and affected by the risk
observer. Serwadda (2018) explains that Credit risk is no sever as it has been stressed that
the greater the risk greater the return due to the bank’s capacity to increase their credit
portfolio though banks need to balance& mitigate the credit risk associated with a degree of
return. In case, bank should hold some amount of capital reserves to be able to contain credit
risk in the event of a financial crisis. Tuladhar (2017) states that bank need to maintain on
optimum level of CAR so that they will not have difficulty in meeting their financial obligation,
protect their depositor’s investment and thus promotes the stability of the financial system.
To Kannan, and Thangavel (2008), risk implies exposure to uncertainty or threat. Risk
sometimes entails some economic benefits as firms may derive considerable gains by taking
risk. Kaye and Lowe (2010) are of the view that risk is integral to opportunities and threats
which may adversely affect an action or expected outcome. Drucker (1977) submits that
business grows through greater risk taking. Hillson, and Murray-Webster (2011) see risk as
‘uncertainty that matter’ in business enterprise. In support of Drucker (1977), Hillson, and
Murray-Webster (2011), and Olajide (2013) explain that recent economic volatility gives
risk management a new focus and eminence. They are of the opinion that getting rid of risk
can undermine the source of value creation which truncates potential opportunities.

Credit risk management provides a clear and structured approach to identifying, measuring
and prioritizing risks in order to take appropriate actions to minimize losses. An effective
credit risk management (ECRM) practice does not eliminate risks, but minimize risks. The
implementation and maintenance of ECRM warrants firm commitment to improve the
efficiency of business processes. The efficiency can attracts some benefits like (i) saving
resources: Time, assets, income, property and personnel; (ii) Protection of an organization
reputation and public image; (iii) prevention or reduction of legal liabilities; (iv) increasing
the stability of operations and promoting continuous improvement; (v) protecting people and
environment from harm; (vi) avoiding fines for corporate non-compliance with regulations
and legislation; (vii) enhancing the ability to prepare for unforeseen and unexpected
circumstances; (viii) enhancing competitive advantage through improved decision support
and market intelligence based on more accurate risk-adjusted management information;
(ix) improved shareholder value and confidence, which is especially valuable in times of
crisis when shareholder trust is stressed to its maximum limits; and (x) assisting in clearly
defining suitable risk management techniques, including insurance needs (Meulbroek,
2002, Hillson, 2006, & Protiviti Inc., 2006).

121 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

In the case of banks, according to Abdullahi (2013), the issue of credit risk is even of
greater concern because of the higher level of perceived risks resulting from some of the
characteristics of clients and business conditions that they find themselves in, which needs
thorough empirical examinations. Sequel to this, Olalekan, and Adeyinka (2013) pointed out
that while banks are expected to absorb the losses from the normal earnings, there may be
some unanticipated losses which cannot be absorbed by normal earnings.

Fan, and Zou (2014) stated that the pervasive incidence of non-performing loan is one of the
prime causes of failure in the banking system. The very nature of the banking business is so
sensitive because more than 85% of their liability is deposits from depositors. While banks
engage in lending as main source of income, they are at the same time exposed to various
risks which if not properly analyzed and managed could threaten its continued existence.
Even though the survival of any bank depends largely on its effective risk management
strategies, some bank executives do neglect this aspect of bank job purely for selfish motives.
They emphasized that excessive and poorly managed risk can no doubt lead to losses and
thus endanger the safety of a bank’s depositors. Once risks have been identified, they should
be measured in order to determine their impact on the banking institution’s profitability
and capital. This can be done using various techniques ranging from simple to sophisticated
models. Accurate and timely measurement of risk is essential to effective risk management
systems.

According to Bikker (1999), and Kosmidou (2008) concept of bank performance can
be expressed in multidimensional ways which Nwude, and Okeke: Impact of Credit
Risk Management on the Performance of Selected Nigerian Banks include competition,
concentration, efficiency, productivity and profitability. These are the multidimensional
nature of the concept of bank performance which calls for wide range of its measures.
However the most frequently used measure of banking profitability are ROA, ROE ratio and
net interest margin (NIM). Despite the fact that ROE is still the primary performance measure
for the most investors and analyst, sometimes ROAs provides a better understanding of a
company performance as pointed out by Hagel et al. (2010). Besides some experts consider
that a single - ratio cannot be a good proxy for bank performance due to the complex
operational environment of banks (Yang, 2012).

2.2 The Commercial Loan Theory

The commercial loans theory or the so called real bills doctrine theory is the oldest theory
of the basic business activities of banks, which states that banks should only grant
self-liquidating short-term loans and commercial papers to clients (Al Zaidani, and Al
Zaidanin, 2021), the theory of commercial loans is designed to guide banks and influence
them logically and convincingly about the banking lending process and general economic
activities . The strong reliance of the principle of this theory and its follow-up is an engine
and directed to the display of liquidity to influence all economic activities, so some banks

NJMSR Volume V I Focus Issue I 122

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

whose liquidity is mainly coming from customer deposits considered that short-term loans
are the most appropriate because customer deposits are retractable at any time and that
their time nature is short-term. This shows that this theory does not serve banks that
maintain good reserves by moving towards supporting developing economies and financing
medium-and long-term loans such as industrial and real estate lending and thus creating a
gap in economic development that depends on long-term financing of development sectors.
Therefore, following this theory is a fundamental requirement to place bank credit in
its normal short-term context because this theory is not aware of the relative stability
of bank deposits, especially since in the case of withdrawal requests, whether normal or
unusual, they will not all be carried out at the same time, so the relative stability of
deposits in banks allows them to use them for reasonable periods of time without the
high risk of lack of liquidity. Despite the flaws of this theory, many banks around the world
apply their basic principle of short-term lending and banking screening and activity
evaluation procedures, so researchers and banking thinkers stress that understanding
current banking activities and activities depends on understanding and evaluating the
history of banks, which is mainly related to understanding the commercial loans theory.

2.3 Shiftability Theory

The shift ability theory is the procedure for transferring the bank’s assets to a bank that has
remarkably high liquidity when there is a scarcity of liquidity (Alshatti, 2014). It came to
assume the expansion of banks in the type of their assets by retaining transferable financial
assets in the open market such as government securities in addition to maintaining
the self-liquidation status of bonds available to those banks associated with assets
(Moti, Masinde, & Mugenda, 2012), so this theory did not come to eliminate or replace
the commercial loans theory, but came up with more comprehensive principles with
regard to banking through the introduction of new types of banking assets as an
addition to what came in the commercial loans theory, the Shiftability theory assumes
that the liquidity of banks depends on the ability of these banks to sell or transfer some
of their assets easily to others at predictable prices (Nwaezeaku, 2006). As per (Hosna,
& Manzura, 2009), the Shiftability theory came to guide banks to expand their assets by
owning convertible investments as a source of liquidity for those banks rather than focusing
on loans, and therefore the theory of transformation significantly affected the direction of
banks and their banking activities. Researchers and banking thinkers who are proponents of
the Shiftability theory have argued that the commercial loans theory has overly focused on
the liquidity of commercial loans (Kargi, 2011), yet the Shiftability theory is dominated by
the main drawback that a bank may be able to cope with its need for liquidity by transferring
its assets, but this principle is not true for all banks combined.

123 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.4 The Anticipated Income Theory

This theory was proposed by H.V. Prochanowin 1944 since the practice of extending term
loans by the USA commercial banks. In 1949, Prochanow conducted a comprehensive
study on loans and bank assets through which he developed a new theory on loans called
“Anticipated Income Theory”, According to Al Zaidanin, and Al Zaidanin (2021), International
Journal of Research in Business & Social Science 10(3) (2021), 2147-4478 business nature,
the Bank plans to repay borrowers their loans through their expected profits and not by
monetizing or selling their assets as in the commercial loans theory or by transferring or
selling existing loans to other lenders. However, anticipated Income theory assumes that
banks should lend to their applicants based on their expected income and not based on the
current values of their assets. What is striking about the anticipated Income theory is its view
of the future of loans and banking facilities that are being repaid or transferred to liquidity
through cash flows or expected profits of the borrower’s business and projects (Kolapo,
2012). The anticipated Income theory came in response to the principle of commercial loan
theory but did not compete with the Shiftability theory or the so-called capacity theory, and
the anticipated Income theory did not question the fact that the source of liquidity for any
bank is the optional or secondary reserves but came to focus the attention of banks and
banking thinkers on the types of loans best suited to the bank.

2.5 The Credit Risk Theory

The credit risk theory indicates the risk that the lender will be delayed or defaulting on the
installments or interests owed to him or both to the borrower (Dimitrios P. Louzis,et al.,
2012),where the risk is that the lender will be exposed to financial distress after which he
cannot return deposits to their owners or meet his other obligation due to the loss of capital
and interest and the lender’s exposure to significant losses resulting from borrowers not
paying their obligation to lenders, which is now called non-performing loans. Accordingly,
lenders would conduct a credit check and request appropriate loan insurance such as
mortgage insurance and request enhanced guarantees for mortgages on the borrower’s
assets such as personal guarantees or guarantees from third parties. Therefore, the level
of risk for borrowers directly affects the cost of loans such as interest, fees, etc.

2.6 The Liability Management Theory

This theory focuses on the fact that traditional trends in debt and liquidity management at
banks are not of any importance given that money can be obtained through short-term debt
instruments from the capital market whenever the need to fill the reserve deficit, and that
this does not mean that the bank manages only its liabilities and does not focus on
managing its assets, but the liability management theory emphasizes on the importance
of bank’s assets structure in providing it with (Al Zaidani, and Al Zaidanin, 2021),
however, this theory has taken another turn in terms of liquidity, suggesting that the bank
can use its liabilities for the purposes of providing appropriate liquidity to meet the demand

NJMSR Volume V I Focus Issue I 124

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

for withdrawals and meet loan applications. In addition, loans alone are not the source of
income, but the bank, which cannot provide proper liquidity to meet the demand for
loans and banking facilities by its depositors, will inevitably not be able to maintain these
depositors for a long time.

2.7 Enterprise Risk Management Theory

According to the theory an organization can either cope with risks by either tackling one
risk separately, by dividing them into various sections and dispersing them from one sphere;
or a summation of risks combined together within a synchronized and strategically set
framework. The initial approach is known as “enterprise risk management”. The approach
emphasizes that the most successful organizations are as such because of them having
effective ERM which earns them a sustainable competitive edge over those that single out
risks and tackle them singly. The main logic behind the approach is that, measurement
and management of risks procedurally and structurally, and provision of key decision
makers with the information and motivation to maximize return, reinforces the firm which
enables it meet long-term strategic objectives. Effective implementation of ERM can boost
organization’s competitive advantage and maximize shareholders value. The implementation
of ERM is however not upfront even though its conceptualization is quite direct. Banking
are mostly aware of the risks likely to face them hence their emphasis on proper controls
and straight forward business processes to minimize the risks imposed on them that are
likely to be transferred to their customers and other related parties. Banks are also keen
on reducing the risk of absorbing third party risks to shield themselves against losses. It
is advisable that they only deal with risks that are directly attributed to their 14 lines of
services while looking down upon other risks posed by the environment, government and
other external factors. All financial institutions including banks face legal risks, foreign
exchange risks. Credit risks, operational risks, and counterparty risks liquidity risks among
others to some extent. Banks operate in an economic environment which is volatile. Nduku
(2016) encourages most organizations to implement corporate risk management. Banks‟
ability to address all risks in their finer details including credit risks is a sure way of gaining
competitive advantage which will help them meet their goal of maximizing shareholders
and investors‟ returns

2.8 Development of Theoretical Framework of the Study

Bank manages credit risk for two main purposes: to enhance interest income (profitability)
and to reduce loan losses (bad debts) which results from credit default (Achou, & Tenguh,
2008). Therefore, it is expected that banks with better credit risk management strategies have
lower loan losses (non-performing loans). Bank financial performance was the dependent
variable and was measured in terms of the Return on Assets (ROA), Return on Equity (ROE)
and abnormal returns using market price per share of the banks under this study. Various
studies have been conducted to examine credit risk effect on the performance of banks.

125 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

ROA, ROE, NPLR, LLPR, Liquidity Ratio, CAR and CRR were applied as the variables of the
panel regression. The study identified a significant link between credit risk management
and profitability. MPS as an important indicator to measure the performance of banks
has been discussed extensively in the prior studies. The measurement of MPS connecting
shareholder‘s wealth which is implied in the market price of the ordinary shares is normally
used to define the performance in the banks. In this study risk performance was measured
by using Capitalization ratios, Asset Quality, Operating Efficiency and Liquidity ratios. In
this case, the required information will be available from sampled bank’s annual reports
and the central bank. The study used Capital Adequacy Ratio (CAR), Liquidity Ratio, Loan
Loss Provision (LLP), Cash Reserve Ratio (CRR) and Non-Performing Loans Ratio (NPLR) as
indicators of credit risk management.

There are ROE and ROA measurement tools to conduct the research.

Figure 1 Conceptual Framework

2.9 Dependent Variable

Return on Assets: - Return on Asset (ROA) is the ratio of net income to total assets which
measures net income earned per dollar of assets. It reflects how well the management is
utilizing the bank’s real investment resources to generate profit (Tuladhar, 2017).

Return on Equity: -Return on Equity (ROE) is the ratio of net income to total equity
capital which measures the return to shareholders on their equity. It measures how well the
management is utilizing the shareholder’s invested money to generate profit ( Fan, & Zou, 2014).

NJMSR Volume V I Focus Issue I 126

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.10 Independent Variables

Capital Adequacy Ratio: - The capital adequacy ratio is a measure of a bank’s capital level
stated as a percentage of its risk-weighted credit exposure. It is computed as the ratio of the
amount of capital to the risk-weighted sum of the bank’s assets.

Non- Performing Loan Ratio: -Among various indicators of credit risk and financial stability,
non-performing loan ratio (NPLR) holds critical importance as an increase in NPLR is
regarded as the failure of credit policy in banks, a reduction in bank’s earnings and a major
reason for the financial crisis. There is significant negative relationship between NPLR and
bank performance (Al Zaidanin, & Al Zaidanin, 201).

Liquidity Ratio: -These short-term obligations may include lending, deposit withdrawals,
investment commitments, and liability matures. It is measured by the ratio of credit facility
to total deposit.

Loan Loss Provision: -Loan loss provisions help banks manage their cash flows when a
loan turns bad – and they can be great indicators not only of a bank’s financial health, but
also that of the economy overall.

Cash Reserve Ratio: -The Cash Reserve Ratio refers to a certain percentage of total deposits
the commercial banks are required to maintain in the form of cash reserve with the central
bank. The objective of maintaining the cash reserve is to prevent the shortage of funds in
meeting the demand by the depositor.

3. RESEARCH METHODOLOGY
3.1 Introduction
The main focus is the design of research, methods of collecting data, data analysis techniques
as well as the mode of presentation of data.
3.2 Research Design
Research design is the plan and structure of investigation so conceived so as to obtain
answers to research questions. The study is used descriptive and casual comparative research
design. Quantitative research involves counting and measuring of events and performing the
statistical of a body of numerical data. Under the quantitative research design, descriptive
research design is used because it enabled the researcher to generalize the findings to a
larger population which was all the commercial banks in Nepal.
3.3 Scope of the Study
There are 27s commercial banks in Nepal, whereas only 26 commercial banks are listed
in Nepal Stock Exchange (NRB, mid- July, 2020). It means that only 26s commercial bank’s
shares have been trading in stock market. For this academic work, only those commercial
banks are taken and analyzed latest 6 year’s (2015-2020) financial data to conduct the work.
This work will be helpful those bank’s stakeholders. For example: investor, customer, board
127 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

member, scholar to investigate in this topic. Moreover, in selecting the 7 banks for the study,
due care is given to include banks such as: joint venture, domestic, best performer, average
performer and comparatively weak performer in the sample.
3.4 Population of the Study
This study examines the effect of credit risk on the performance of commercial banks in
Nepal over the period of 6 years (2015-2020). The reason behind choosing of the latest six
year period is to include the afresh data in the analysis and as the data are from pooling of
cross-sectional and time series, thus it seems sufficient to generate data for the analysis.
As per Mid-July, 2020, there are 27 commercial banks in Nepal (NRB,2020). Moreover, in
selecting the 7 banks for the study, due care is given to include banks such as: government,
joint venture, domestic, best performer, average performer and comparatively weak
performer in the sample. The banks selected for the study are: Everest Bank Ltd., Nabil Bank
Ltd., Himalayan Bank Ltd., Nepal Bank Limited, NMB, Sanima Bank Ltd., and Civil Bank Ltd.
The selected commercial banks appear fairly represent the study population. The population
of this study constitutes the “A” class commercial banks in Nepal which are listed in the
Nepalese Stock Exchange.

3.5 Sampling Technique

The purposive sampling method was used in choosing the banks for the study. Purposive
sampling targets a particular group of people or organization when the desired population
for the study is very difficult to locate and recruit for a study. Purposive sampling is chosen
by considering this pandemic, time concern, and cost of allocation for the research and
availability of data.

3.6 Units of Analysis

This study used descriptive and casual comparative research design. We examine the
quantitative variables carried out from audited financial statement of commercial bank in
Nepal. That data mainly related in money which is presented in Nepalese currency (NRS).
Some data are presented in ratio and percentage format.

3.7 Data Collection & Technique

Secondary data was extracted from audited statements of 7 banks in Nepal from 2015-2020.
In order to effectively perform the regression analysis, collection of the data for variables
used was conducted. The variables used were ROA, ROE, CAR, Liquidity Ratio, LLPR, CRR
and NPLR from data available in company annual reports of commercial banks. These are
obtained from the EBL, Nabil Bank, Himalayan Bank, NBL, NMB Bank, Sanima Bank, and
Civil Bank audited annual reports, which have listed in NEPSE.

NJMSR Volume V I Focus Issue I 128

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4. DATA PRESENTATION & ANALYSIS

4.1 Introduction
The section contains findings and data analysis. The data was extracted from 7 Nepalese
commercial banks annual reports for 6 years from 2015-2020 and regression model applied
in data analysis.

4.2 Descriptive Statistics

The section discusses the results of descriptive statistics for the data analyzed for the 6
year period. The table 2 below summarizes the descriptive statistics for both dependent and
independent variables;

Table 2 Descriptive Statistics

  N Minimum Maximum Mean Std. Deviation

ROE 42 -7.93 42.94 16.2574 8.49296
ROA 42 -5.0200 4.8900 1.800721 1.3832852
CAR 42 7.49 21.32 13.2952 2.24436
NPLR 42 0.010 4.050 1.47569 1.227817
LTD 42 65.38 106.87 82.6590 8.47937
LLP 42 10574238 4104731607 1415717762.55 933152714.073
CRR 42 4.06 31.39 15.9443 8.08489

Source: Research Findings

The descriptive statistics results above show that over the study period, the financial
performance as measured by return on equity (ROE) mean has 16.2574% and standard
deviation of 8.49296 while maximum performance has 42.94% and low performance of
-7.93%. Similarly, the financial performance measure by return on assets (ROA) mean has
800721% and standard deviation of 1.3832852 with 4.89% maximum performance while
minimum performance has -5.02%.

Credit risk management’s indicators which are called independent variables: capital
adequacy ratio (CAR) mean has 13.2952 % while its standard deviation has 2.24436 with
21.32% maximum while 7.49% level of CAR. Non- performing loan ratio (NPLR) mean has
1.47569% and standard deviation has 1.227817 with 4.05% NLR while its lower NPLR
has 0.010. Liquidity ratio (LDT) measure by credit to deposit ratio mean has 82.6590 %
and standard deviation has 8.47937 its maximum level of LDT has 106.87% and minimum
level is 65.38%. Loan Loss Provision (LLP) has a mean of Rs. 1415717762.55 and standard
deviation of Rs. 933152714.073, cash reserve ratio (CRR) mean has 15.9443% while
standard deviation has 8.08489% which maximum level of cash reserve ratio is 31.39% and
minimum level is 4.06%.
129 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.3 Correlation Analysis

In conducting the study, correlation analysis was applied as a test of degree of association
amongst variables.
Table 3 Correlations Analysis
ROE ROA CAR NPLR LTD LLP CRR

ROE 1

ROA 0.403** 1

CAR -0.411** -0.168 1

NPLR -0.437** -0.001 0.025 1

LTD -0.427** -0.104 0.559** -0.087 1

LLP -0.206 0.014 0.111 0.505** -0.169 1

CRR 0.260 -0.107 -0.083 -0.270 0.074 -0.558** 1

Source: Research Findings

Multi co- linearity arises where one or more variables in a study are highly linearly associated.
It can either be perfect or imperfect. Imperfect multi co linearity causes variations and
standard errors of the variables to rise sharply. The variables are highly correlated at the
level of 0.01.

The table shows that there is a negative relation between capital adequacy ratio and return
on equity which indicates that higher the capital adequacy ratio, lower would be the return
on equity. Similarly, there is negative relationship between non-performing loan ratio and
return on equity which revealed that higher the non-performing loan ratio, lower would
be the return on equity. Likewise, liquidity ratio has negative relationship with return on
equity. It indicates that higher the liquidity ratio, lower would be the return on equity.
Likewise, loan loss provision has negative relationship with return on equity showing that
larger the loan loss provision, lower would be return on equity. The study reveals that there
is a positive relation between cash reserve ratio and returns on equity which shows that
higher the cash reserve ratio, higher would be the return on equity.

4.4 Regression Analysis

A regression analysis was applied in establishing the link between the dependent and
independent variables.

NJMSR Volume V I Focus Issue I 130

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.5 Regression Analysis for ROE

The results are presented in the regression model summary in table 4 which outlines the
magnitude with which predictor variables affect dependent variable (ROE), analysis of
variance in table 5 which determines the accuracy of the model applied in illustrating the
relationship and the regression coefficients in table 6 which gives the coefficient defining
the degree of association between the two variables.
Table 4 Summary Regression Output for ROE
Model R R Square Adjusted R Std. Error of
Square the Estimate
1 0.681a 0.464 0.390 6.63380
Source: Research Findings
R is the correlation co-efficient which is an indicator of the nature of relationship between the
variables in the study. The above results reveal that there was a strong positive correlation
of 0.681. The adjusted R Square which is used as a measure of reliability of results is 0.39
hence the model is 39% in explaining the effect of the relation between dependent and
independent variables. Further the variability of banks financial performance is 39 %
attributed to CAR, non-performing loans, liquidity, LLP and CRR therefore the variability of
performance by other factors not included in the study is 61% which calls for the need to
study other factors affecting performance other than the ones factored by this study.
Table 5 Analysis of Variance for ROE

  Sum of Squares Dif Mean Square F Sig.

1373.08 5 274.616 6.24 .000b

Regression
1584.27 36 44.007    
Residual
Total 2957.34 41      
Source: Research Findings

The table above shows that the population parameters’ significance level is 0.00% which
is an indication that the data is perfect for deriving conclusion on the study variables since
p-value is below 5%.This illustrates that study model was significant and can be relied upon.
In conclusion, the relationship between the variables is statistically significant.

Table 6 Regression Coefficients for ROE

Model Unstandardized Coeffi- Standard- T Sig.

cients ized Coef-
ficients
1 (Constant) B Std. Error Beta

131 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

CAR 55.568 11.344 4.899 0.000

NPLR -0.736 0.576 -0.195 -1.279 0.209
LTD -3.170 0.979 -0.458 -3.239 0.003
LLP -0.357 0.154 -0.356 -2.325 0.026
CRR 9.071E-10 0.000 0.100 0.589 0.559
0.212 0.155 0.202 1.372 0.178

Source: Research Findings

From the table, the equation is derived as illustrated;

ROE=55.568-0.736CAR-3.170NPLR-0.357LTD+0.00LLP+0.212CRR + μ

From the above model it is clear that CAR have a negative relationship with ROE as indicated
by the co-efficient thus a unit increase in CAR result to 73.60% decline in ROE. NPLR has
negative relationship with ROE thus a unit increase in NPLR will result to 317.0 % decrease
in ROE. LTD which measures by credit to deposit ratio has negative relationship with ROE
thus a unit increase in will result to 35.70 % decrease in ROE while LTD as measured by
loan-to-deposit ratio has a negative relationship with ROE therefore a unit increase in LTD
will result to 3.91% decrease in ROE. CRR has positive relationship with ROE thus a unit
increase in CRR will result to 21.20% increase in ROE. In conclusion credit risk management
as measured by CAR, NPLR& LTD has a negative relationship with financial performance as
measured by ROE.

It is concluded that there is strong and significant negative relationship between

nonperforming loan ration and financial performance. Others CAR and LTD have weak
and significant negative relationship with bank performance while cash reserve ratio has
weak and significant positive relationship with bank performance. But there is weak and
significant positive relationship between loan loss provision (LLP) and bank performance
but statistically no relationship with bank performance.

4.6 Regression Analysis for ROA

The results are presented in the regression model summary in table 4.6 which outlines
the magnitude with which predictor variables affect dependent variable (ROA), analysis of
variance in table 7 which determines the accuracy of the model applied in illustrating the
relationship and the regression coefficients in table 4.8 which gives the coefficient defining

NJMSR Volume V I Focus Issue I 132

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

the degree of association between the two variables.

Table 7 Model Summary for ROA

Model R R Square Adjusted R Square Std. Error of the Estimate

1 0.212a 0.045 (0.087) 1.4425179

Source: Research Findings

R is the correlation co-efficient which is an indicator of the nature of relationship between

the variables in the study. The above results reveal that there was a weak positive correlation
of 0.212. The adjusted R Square which is used as a measure of reliability of results is -0.087
hence the model is -8.70% in explaining the effect of the relation between dependent and
independent variables. Further the variability of banks financial performance is -8.70 %
attributed to CAR, non-performing loans, liquidity, LLP and CRR therefore the variability of
performance by other factors not included in the study is 108.70% which calls for the fully
need to study other factors affecting performance other than the ones factored by this study.

Table 8 Analysis of Variance

Model Sum of Dif Mean F Sig.

Squares Square
1 Regression 3.542 5 0.708 0.340 0.885b
Residual 74.911 36 2.081
Total 78.453 41

Source: Research Findings

The table above shows that the population parameters’ significance level is 0.88% which
is an indication that the data is perfect for deriving conclusion on the study variables since
p-value is below 5%.This illustrates that study model was significant and can be relied
upon. In conclusion, the relationship between the dependent and independent variables are
statistically significant.

Table 9 Regression Coefficients for ROA

Model Unstandardized Coeffi-

cients
B Std. Error Beta T Sig.
1 (Constant) 3.808 2.467 1.544 0.131
CAR -0.107 0.125 -0.173 -0.852 0.400
NPLR -0.018 0.213 -0.016 -0.082 0.935
LTD -0.001 0.033 -0.005 -0.023 0.982

133 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

LLPR -6.473E- 0.000 -0.044 -0.193 0.848

11
CRR -0.026 0.034 -0.150 -0.764 0.450

Source: Research Findings

From the table the equation is derived as illustrated;

ROA=3.808-0.107CAR-0.018NPLR-0.001LTD-0.0LLP-0.026CRR + μ

From the above model it is clear that non-performing loans have a negative relationship
with ROA as indicated by the co-efficient thus a unit increase in CAR result to 10.70% decline
in ROA while NPLR has also a negative relationship with ROA thus a unit increase in NPLR
will result to 1.80 % decrease in ROA. LDT has a negative relationship with ROA thus a unit
increase in LTD will result to 0.10 % decrease in ROA while loan loss provision a negative
relationship with ROA therefore a unit increase in LLP will result to 0% decrease in ROA.
Similarly CRR has negative relationship with ROA thus a unit increase in CRR will result to
2.60% decrease in ROA. In conclusion credit risk management as measured by NPLR has a
negative relationship with financial performance as measured by ROA.

5. DISCUSSION AND FINDINGS

5.1 Discussion
In this section, the present researcher has established the comparative discussions by
comparing and contrasting the of research and key findings identified in the present study
and the past researches. For this, the works of Bhattarai (2016), and Tuladhar (2017), were
considered for developing comparative discussions for the purpose of this study.
Bhattarai (2016) has studied the effect of credit risk on performance of Nepalese commercial
banks. This Professor has examined by help of 77 observation regarding 16 sample Nepalese
commercial banks. This research helps to identify and measure the credit risk and its impact
on financial performance. For this, Professor has used 6 key determinants to measure. There
are a number of similarities between the present research and Bhattarai (2016) as the unit
of study is the same – return on assets (ROA), the present study has been conducted taking
into reference a set of three independent variables- cash adequacy ratio, non-performing
loan ratio and cash reserve ratio. The study has concluded that NPLR has negative and
statistically significant impact on bank performance.

Tuladhar (2017) has examined the impact of credit risk management on financial performance
of Nepalese commercial banks. It helps to measure the credit risk management of Nepalese
commercial banks. The scholar observed the 28 commercial banks for the period of 2011–
2015 and profound the result that credit risk management has significant contribution to
bank performance. She has used 9 independent variables like CAR, LR, BS, AQ, LER, NPLR,

NJMSR Volume V I Focus Issue I 134

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

CRR, CR, and FBM to measure the credit risk management and two dependent variables to
measure the bank performance (ROE & ROA). That study has concluded that banks need
to maintain an optimum level of CAR so that they will not have difficulty in meeting their
financial obligation, protect their depositor’s investment and thus promote the stability of
the financial system.

Comparing this study with Bhattarai (2016), and Tuladhar (2017), there are many similarities
on selecting the variables in developing the conceptual framework and conclude the result
as findings. NPLR has negative relationship with financial performance and liquidity ratio
have also negative effect on banks performance.

5.2 Findings
The objective of the study has to determine the effect of credit risk management on financial
performance of Nepalese commercial banks. A regression model has applied in conducting
data analysis. The maximum performance as measured by ROE has 42.94% while the lowest
performance was -7.93% which is an indication that banks performance have slightly varying
due to the issue of credit risk. There has a weak positive correlation of 0.681. The adjusted R
Square which is used as a measure of reliability of results is 0.39 hence the model is 39.00%
in explaining the effect of the relation between dependent and independent variables The
regression model illustrates that CAR have a negative relationship with ROE as indicated by
the co-efficient and NPLR has a positive relationship with ROE. LLP has a positive link with
ROE while liquidity has a negative relationship with ROE while CRR has positive relationship
with ROE. In conclusion credit risk management has a negative relationship with financial
performance as measured by ROE.

The maximum performance as measured by ROA has 4.89 while the lowest performance
has -5.02% which is an indication that banks performance have slightly varying due to the
issue of credit risk. There has a weak positive correlation of 0.212. The adjusted R Square
which is used as a measure of reliability of results is -0.087 hence the model is 8.70% in
explaining the effect of the relation between dependent and independent variables The
regression model illustrates that CAR have a negative relationship with ROA as indicated by
the co-efficient and NPLR has also a negative relationship with ROA. LLP has a negative link
with ROA while liquidity has a negative relationship with ROA while CRR has also negative
relationship with ROA. In conclusion credit risk management has a negative relationship
with financial performance as measured by ROA.

The findings coincide with those of Serwadda (2018) whose study showed a positive
relationship between LLP and financial performance measure by ROE. In other hand CRR has
positive relationship with financial performance measured by ROE and negative relationship
with financial performance measure by ROA. Further the study concluded that there was a
negative relationship between credit risk and financial performance and Tuladhar (2017)
whose output of the research showed NPLR and LTD had negative and significant effect on
135 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

ROE and ROA. Hence poor credit risk or high non-performing loan to total assets related to
poor financial performance. Thus commercial bank with high credit risk management and
low non- performing loans are profitable than others.

6. CONCLUSION
The current study investigated the impact of credit risk management on the financial
performance of seven commercial banks operating in the Nepal for the period of 2015-
2020 by applying the Correlation and regression Model. The Capital Adequacy Ratio, Non-
Performing Loans Ratio, Ratio, Liquidity Ratio, Loan loss provision, and cash reserve ratio
are used in the current study as financial credit risk measures and Return on Equity and
Return on Assets is used as a financial performance indicator. On the bases of overall data
presentation and analyses, the present researcher concludes that: Capital adequacy ratio
has been weak and negative relationship with financial performance measure by ROE and
ROE. Non -performing loan has negative and significant impact on financial performance
of Nepalese commercial banks. So banks should reduce the NPLR to increase the bank
performance. Liquidity ratio measure by credit to deposit ratio has also negatively affect
the bank performance as indicated by negative co- efficient. LLP has positive with less
percentage but statistically no relationship with bank performance measure by ROE, while
it has negative with less percentage but statistically no relationship with bank performance
measure by ROA. CRR has weak and positive impact on bank performance measure by ROE
and negative impact on bank performance measure by ROA.

Thus the study concluded that credit risk negatively affects performance of banks and
so is liquidity as indicated by the negative co-efficient. LLP and CRR have also a negative
relationship with ROA while CRR and LLP have positive relationship with ROE. Thus the
study concludes that LLP and CRR positively influence financial performance measure by
ROE of banks. Poor credit management and high NPLR related to poor financial performance
on Nepalese commercial banks. So, high credit risk management helped to decline the NPLR
to increase of bank’s profitability. .

NJMSR Volume V I Focus Issue I 136

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Abdullahi, S.R. (2013), Efficacy of credit risk management on the performance of banks in Ni-
geria a study of union bank PLC (2006-2010). Global Journal of Management and Business
Research Administration and Management, 13(4), 173-199.

Adeusi, S.O., Akeke, N.I., Adebisi, O.S. & Oladunjoye, O. (2013), Risk management and finan-
cial performance of banks in Nigeria. Journal of Business and Management, 14(6), 113-126.

Ahmad, N.H. and Ariff, M. (2007), Multi-country study of bank credit risks determinants. Inter-
national Journal of Banking and Finance, 5(1), 135-152.

Ahmed, A.S., Takeda, C., & Shawn, T. (1998), Bank loan loss provision: A re-examination of cap-
ital management and signaling effects. Working Paper, Department of Accounting. Federal
Ministry of Finance.

Al-Khouri, R. (2011), Assessing the risk and performance of the GCC banking sector. Interna-
tional Journal of Finance and Economics, 65, 72-78.

Al Zaidanin, J. S., & Al Zaidanin, O. Z. (2021). The impact of credit risk management on finan-
cial performance of UAE commercial banks. Business & Social Science IJRBS, 10(3) ISSN:
2147-4478.

Ariffin, N.M., and Kassim, S.H. (2009), Risk management practices and financial performance of
Islamic banks: Malaysian evidence. A Paper presented at the 8th International Conference on
Islamic Economics and Finance. Abuja, 15-20.

Bakpo, F.S., and Kabari, L.G. (2009), Credit risk evaluation system: An artificial neural bank-
ing sector. Far East Journal of Marketing and Management, 9, 145-166.

Ben-Naceur, S., and Omran, M. (2008), The effects of bank regulations, competition and financial
reforms on MENA banks’ profitability. Economic Research Forum Working Paper, 44, 88-93.

Bhattarai, Y. R.(2016), Effect of credit risk on performance of commercial bank of Nepal, NRB
Economic Review.

Bikker, J.A. (1999), Efficiency in the European banking industry: An exploratory analysis to rank
countries. Research Series Supervision, 18, 55-69.

Boahene, S.H., Dasah, J., and Agyei, S.K. (2012), credit risk and profitability of selected banks in
Ghana. Research Journal of Finance and Accounting, 16, 19-33.

Bobakovia, I. (2003). Raising the profitability of commercial banks. BIATEC, Národná Banka
Slovenska.

Broll, U., Pausch, T., Welzel, P. (2002), Credit risk and credit derivatives in banking. Volks
Wirtschaftliche Diskussionsreihe, Beitrag Nr. 228. 4.

Bruner, C.M. (2010). Corporate governance reform in a time of crisis. The Journal of Corporate
Law, 36 (2), 15-23.

Drucker, P.F. (1977), Management-an abridged and revised version of management: Tasks, re-
sponsibilities, practices. London: Pan Books.
137 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
E- Chuke, & Okeke C.(2018), Impact of credit risk management of selected Nigerian banks. In-
ternational Journal of Economics and Financial Issues, 2018, 8(2), 287-297.

Eitan, AI, & Kahlid, T. O. B. (2019), Credit risk and financial performance of the Jordanian com-
mercial banks: A panel data analysis. Academy of Accounting and Financial Studies Journal.

Epure, M., and Lafuente, I. (2012), Monitoring bank performance in the presence of risk. Barce-
lona GSE Working Paper Series, 61. 44-52.

Fredrick, O. (2010), The impact of credit risk management on financial performance of commer-
cial banks in UK. Applied Financial Economics, 13(8), 565-571.

Hanifa, Md A., Chowdhury,& Hasanul, B. (2015). The Effect of Credit Risk on the Banking
Profitability: A Case on Bangladesh, Global Journal of Management and Business Research:
C Finance.

Li, Fan, and Zou, Y. (2014), The impact of credit risk management on profitability of commercial
Banks: A study of Europe. Umea School of Business and Economics.

Mutava, P. M. (2016). Effects of credit risk management on financial performance of commercial

banks in Mombasa County. Research Journal of Finance and Accounting.

Serwadda, I.(2018), Impact of credit risk management systems on the financial performance of
commercial banks in Uganda. Acta Universitatis Agriculturae et Silviculturae Mendelianae
Brunensis, 66 (6): 1627–1635.

Tuladhar, R. (2017), Impact of credit risk management on profitability of Nepalese commercial

bank. Western Sydney University.

Uwuigbe (2015),Credit management and bank performance of listed banks in Nigeria. Journal of
Economics and Sustainable Development.

NJMSR Volume V I Focus Issue I 138

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

NEPALESE NETWORKING BUSINESS STARTUPS AND

INTERNATIONAL EXPANSION
Deepak Koirala Navin Duwadi, Er.∗
ψ,

Abstract

The research aims to identify the business networking practices used by Nepalese startups
on international expansion. It encompasses the factor that stop the Nepalese startup to
become global. The research provides the answer to specific business strategies adopted
by the Nepalese startups to expand themselves in the international market. The research
methodology used in this study is qualitative research. The findings of this research show
that people are optimistic towards business networking practices that Nepalese startup
used when expanding their business in the international market and challenge faced by
Nepalese startup during expansion. This study shows specific business strategies applied
by and current status of Nepalese startups. Similarly, use of local knowledge, skills, IP,
innovation as well as other things are major factors that are responsible for expanding
international business network. The Startups should focus on collaboration as well as joint
venturing strategy while expanding their business through international business network.
The additional factors like funding, vision, language, culture & tradition, international trade
policy, etc. are responsible for international business network.

Keywords: Status of Nepalese startups, Challenge, Scope of expansion, Business networking,

International expansion

ψ
Deepak Koirala, MBA student at Global College International
∗ Navin Duwadi, Er., faculty at Global College International

139 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION
1.1 Background of the Study
The term startups have been discussed all over the world over the past few years to describe
imperfect young venture. However, a startup is a company working to solve the burning
problem of the customer where the solution is not obvious and success is not guaranteed
(Konsek-Ciechońska, 2019).
According to (McDonald et al., 2013)natural growth expansion, waiting until after EU milk
quota abolition to expand, a full-scale expansion strategy without milk quotas and not
incurring super levy penalties, a full-scale expansion strategy with milk quotas and incurring
super levy penalties, and once-a-day milking until EU milk quota abolition, followed by
full-scale expansion. Each discrete whole farm investment strategy was evaluated over a
15-yr period (2013-2027, startup means “the act or an instance of settling in operation or
motion”. The main key attribute of startups is their ability is to grow fast and scale very
quickly. Similarly, startups mainly focus on growth, unconstrained by geography so that it is
slightly different from small businesses. A small tea shop in one town is not a startup, nor
is a franchise a startup. Thus, a startup is a temporary organization designed to search for a
repeatable and scalable business model.
Expansion is important for startups, as it would shift economic activity from a local or
national sphere to an international market. This is helping to shape the current economic
landscape. Nowadays, it is not enough to stay local and compete with local players. Startups
then need to adopt a new marketing strategy to expand themselves in the international
market so that it, directly and indirectly, supports all the new players and stakeholders on
a global scale.
A startup is made to grow fast, therefore, to accomplish this, a startup needs to aim for a big
market, and else staying local will slow down this process thus it needs to search for another
market to highly grow up and the international market should provide advantages to startups
by enlarging the market for their goods and shifting competitive dynamics. Getting to this big
market will allow the startup to grow faster and expand worldwide (Monterroso, 2015). If a
startup stays only in the local place, it might run the risk of getting eaten up by competition
and experience not for scale-up, surviving, or growing. However, startups may be able to
escape harsh competition in their local markets by capitalizing on opportunities in others.
International market sales are positively associated with startups’ survival (Salamzadeh, &
Kawamorita Kesim, 2015). In the context of Nepal, more than 1252 startups were registered
in Nepal and every year more than 30 new startups are being added with new concepts
that have such potential to create business networks in the international market. A young
Nepali startup has been making new and unique businesses, which involve a brilliant choice
of timing and products, though it is still incomplete due to the absence of making strategies
business. With most of the successful startups belonging to the IT sector, the future of the
Nepali startup industry looks promising.
The last decade has played a vital role in the development of technology in Nepal with the
growing technology, startups are increasing in numbers (Sodha, 2019). Startups are working
NJMSR Volume V I Focus Issue I 140
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

on different niches like recycling, fintech, food delivery, ride-sharing, futsal booking, etc. in
Nepal.
To expand globally, startups need a network or presence outside (Moen et al., 2010).
Getting covered by popular tech blogs, websites, international media, etc. could help create
awareness of Nepal-based companies.  Innovative ideas can help get some initial traction
through its wide network and reach (Kuemmerle, 2005)
Tech entrepreneurs are becoming more ambitious, focused on putting Nepal on the tech
map, despite the challenges in taking their product into the global market. Soon, it would
not be surprising to hear of big ideas from Nepal making a global impact (Gaudel, 2016)
those who want to start a startup to focus on doing branding well, having a unique offering,
scalable business model, global thinking, the flat hierarchy with a good working culture, and
getting inspired by what’s happening globally. 
Many businesses fail in their attempt at global expansion. The choice to expand business
operations into the foreign territory is one of the most serious and involved decisions that
the owner or manager of a company can make (Chivaka, 2017). Nataly Kelly of the Harvard
Business Review lists the most common mistakes made by businesses when going global as
not being specific enough in terms of expansion territory; a lack of in-depth market research;
not adapting sales and market channels; not adapting product offerings; micromanaging
local teams; and a lack of planning for global logistics (Gaudel, 2016). In addition to these
challenges, recent economic crises have “forced organizations to rethink their strategy and
many unresolved issues around the regional and global debate suggest that it is time to
broaden the perspectives with which these issues are examined by adding organizational
and social issues lenses to the dominant economic and strategy lenses” (Brede Ellefsen,
2016).With all of these issues present, it seems as though launching and expanding a
business to a global scale is nearly impossible.
Businesses that expand on an international scale have access to a greater customer base and
more global information, leave a wider brand footprint and build a better understanding of
diverse markets (Twarowska & Kąkol, 2013). International expansion has benefits for the
economy as a whole as well. These benefits include steering revenue growth, an improved
reinvestment rate and return on capital, greater financial security as a result of more
diversified portfolios and revenue streams, and quicker growth as is usually demonstrated
in international markets (Twarowska & Kąkol, 2013).
Startups can now reach international markets almost immediately at launch. Product/
market fit is a geographic, industry, and company-size agnostic — SaaS makes your product
adoption almost instantaneous. Although this early global traction can happen organically
at the beginning, the reality is that startups must be strategic about systematically scaling
from a local region to any number of international markets. The tricky thing about scaling
internationally is that the globalization process requires cross-functional cooperation and
alignment — engineering and product teams need to coordinate in a new way with go-to-
market operations like sales and marketing.

141 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Startups working in innovation concentrated conditions can extend the market for
their advances through deals internationalization. They may do as such in light of little,
experienced, or profoundly serious homegrown business sectors, or because they see
more prominent open doors in unfamiliar markets (Monterroso, 2015). By and large, the
globalization of new businesses is probably going to increment as the world turns out to
be more coordinated, as exchange obstructions decay, and as transportation. Furthermore,
the correspondence becomes more effective (Koch & Koch, 2017). This innovation asset
acts as a mediator in the connection between worldwide deals and startup endurance. To
demonstrate that the achievement of new companies, under the impacts of globalization,
relied upon the detailing and execution of procedures. A portion of these systems takes the
type of promoting, development, and the making of business organizations, which will be
clarified more in detail later on and underline
1.2. Statement of Problem
  Every year more than 30 unique startups are registered in Nepal (Startup Nepal, 2020).
They are giving better consumer services utilizing the latest technological Knowledge.
However, some of them are struggling for their existence in the market whereas a few have
lost their market share and are kicked out from their industry (Gaudel, 2016). The overall
sceneries of the emergence of startups are exciting but enhancement and scale up in the
market are very challenging.
Nepalese startups seem to be incapable of expanding and increasing their services in the
international market even though they effectively serve in their home country. They didn’t
succeed in partnership, Networking, and venturing with other National and International
startups. (Brede Ellefsen, 2016).  Also, they weren’t able to collaborate strategically with
renowned international companies. The popular product like juju is very much popular in
Kathmandu valley but even though it can’t expand in the Nepalese market also. What is the
region behind the Juju Dhau that can’t expand itself in the international market? 
Several similar startups have grown into big businesses and have been profitable and
popular at local and national levels. However, because of any unknown or known reasons,
their expansion in the international market has not come into sight. This is an indication
that nevertheless startups can convert into business and make a profit and have changed
into a sustainable business, just a few fingers count Nepalese startups have entered into
the international market. There are different types of problems such as Lack of strategies
networking and planning as well as problem of venturing, the problem of support from the
government level, etc. could be some of the special reasons which are yet not documented but
worth exploring subjects of study. This is because, theoretical study and some international
research reports seem to provide insights that good strategies network, long term
planning, support from the government, business expansion planning, and their effective
implementation tend to have a positive impact which hence plays a very instrumental role
to expand the startups in the international business market. Whereas the least number of
Nepalese startup businesses being able to participate in the international market is clearly
an indication of the above-listed problems that are i.e., networking strategies, the problem
NJMSR Volume V I Focus Issue I 142
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

of ventures, lack of capital, the problem of planning, and many more.   

In short, associated with the small number of startups in the Nepalese context, various types
of problems as listed above are indicated however since their causes are not known, it is
required that the study is made to explore what, why, and how of the business networking
strategies, practices and effectiveness of the startup businesses of Nepal are accountable to
suggest insights about this phenomenon for further research and directions. This is that this
research is felt needed to find out the existing situation and the problem faced by Nepalese
startups for international expansion.
1.3 Objectives of the Study
1. To identify special business strategies adopted by the Nepalese start-ups regarding
their aim to expand and/or participate in the international business market.
2. To investigate strategies of the Nepalese start-ups practiced in order to build up
International Business Networks.
3. To identify the challenges that could be preventing the expansion of Nepalese start-
ups in the international business market networks.
4. To identify the strategic practices that could be assessed as being effective strategies
for the expansion of Nepalese start-ups in the international markets.
1.4 Research Question 
It is intended for field observation and collecting data from related startup companies,
institutions, and stakeholders. This study will be focused on the following research question.
Research question 1: Startup Condition. What are the business strategies adopted by
Nepalese startups as regard their aim to expand in the international market?
Research question 2: Factor. What is the status of Nepalese’s startups as regard their
expansion in the international business market?
3. What are the challenge that could be preventing from building international network for
expansion in the international market?
Research question 3. Design of Expanding. What strategies practices could be accounted as
being effective strategies for the expansion Nepalese startups in the international market?

2. LITERATURE REVIEW
(Koch & Koch, 2017) defines the Global Startup as one that seeks to derive significant
competitive advantage from extensive co-ordination among multiple organizational
activities, the location of which is geographically vague. Such firms react to globalizing
economic situations, yet moreover proactively follow up on circumstances, to acquire
resource and sell yields at any put in the world they have the best worth. This means that
global startups are highly entrepreneurial firms where they seem to pursue opportunities

143 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

wherever they arise. These types of business startups are already born with an integrated
global connection and with a wide range of different actors. 
For much of the history of the modern business, startups were local during the early years.
Be that as it may, now most new business organization think that about for expanding
themselves as the international market. Several developments have facilitated the trend such
as technological progress, low-cost telecommunications connections, demand of products
in the international market and the advent of the Internet. New business and their chiefs
disparage the expenses of an extension move to foreign shores and do not have a reasonably
calculated structures for global development and its suggestion.
There are different motivations factor for startups to become expanding international market
such as demand for a new products or services. Also, how to produce them at lower cost or
through a new business model and selling these products or services into new geographical
market, which become a new opportunity for any startups.
Assets contain all that the business person may enroll to seek after a chance. These include
specific talent and human capital, specific information useful for pursuing a business
opportunity and risk-capital providers that can offer more than financial capital, such as
expertise and deal-structuring advice. Also crucial for startups are social and professional
networks. Regularly these organizations structure the reason for an endeavor’s prosperity
since they give one of a kind and convenient admittance to the more apparent assets, for
example, capital and the board ability for a new business (Monterroso, 2015).
Expanding the business to another country can altogether build an open door as it grows
the market for existing items and presents the chance of product offering augmentation.
Similarly, the setting up the subsidiary abroad can afford a company better access to resource
such as capital, well train manager, and specialized supplier services. Frequently, business
visionary can extend both to grow their chance and to access more assets (Marja, 2017).
In order for startups to become successful in a global scale it is necessary to enforce a
global mindset throughout the company, seek out individual with international experience,
ensure that the burning problem become small enough so to be solved by established
startups, sell a minimal viable product to foreign customer at an early stage, leverage the
assets of well- established companies and adopts a business model that is global and not
local anymore (Poole, 2012)”author”:[{“dropping-particle”:””,”family”:”Poole”,”given”:”Robe
rt”,”non-dropping-particle”:””,”parse-names”:false,”suffix”:””}],”container-title”:”Technology
Innovation Management Review”,”id”:”ITEM-1”,”issue”:”10”,”issued”:{“date-
parts”:[[“2012”]]},”page”:”27-31”,”title”:”Global Mindset: An Entrepreneur’s Perspective
on the Born-Global Approach”,”type”:”article-journal”,”volume”:”2”},”uris”:[“http://www.
mendeley.com/documents/?uuid=e7fca359-a820-40c7-9126-2697bd71b646”]}],”mendele
y”:{“formattedCitation”:”(Poole, 2012.

2.1 Business Networks and Startups

 In order for a startup to successfully develop it has to be involved in an interface between
the firm and its environment. There has been a presumption of a reasonable limit between

NJMSR Volume V I Focus Issue I 144

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

the two, in which climate has been characterized as “anything not part of the association
itself (Picken, 2017)transition, scaling, and exit. An association’s relationship with its
current circumstance is one of adjusting to requirements forced by a recalcitrant externality
and framing organizations. A network gives each startup a certain influence over the other,
which means that each startup is gaining control of at least one part of its environment while
giving away some of its internal control. Belonging to this network environment will also
be beneficial for the startup when there is change in the market, economy or government
regulations. Belonging to a business network can give a startup certain security against the
mentioned adversities. 
A business organization can likewise be characterized as a bunch of at least two associated
business connections, in which each trade connection is between business firms that
are conceptualized as aggregate entertainers (Emerson, 1981). Connected means the
extent to which exchange is one relation in contingent upon exchange (or non-exchange)
in the other relation”. Simultaneously, two associated connections of interest can be both
straightforwardly and in a roundabout way associated with different connections that make
them bear on them, as a feature of a bigger business organization.
An organization character is intended to catch the apparent appeal of a firm as a trade
accomplice because of its one-of-a-kind arrangement of associated relations with different
firms, connections to their exercises, and binds with their assets. It refers how the startups
see themselves in the network and how other network actors see them. When creating
networks, a startup needs to sell itself and the added value that it can provide to the future
partner. Both sides should possess something that the other part is attracted to and that
will beneficiate from it. An organization in new companies gives them heterogeneity in
the arrangement of partners and permits them to gain from a wide supply of information
(Marrone, 2013).
 The impact of organizations on startup endurance is essential. Larson’s, 1992 investigation
of how a startup firm developed and flourished by drawing on outside assets and backing
for key organizations capacities shows how connections are manufactured and supported
as a startup firm develops. While not explicitly looking at innovative output, there is an
importance of networks in obtaining resources necessary to fuel a startup firm´s success.
For example, it has been examined whether biotechnology startup firms’ cooperative
relationship with other firms had a positive effect on patenting (Suzuki & Okamuro, 2016).
By sharing resources and knowledge, both parts can help each other to achieve their own
goals. 

2.2 Management Classification in Networks 

The executives’ issues in an organization setting can be extremely convoluted because of the
implanted and proportional person of business connections framing the two organizations
and key organizations(Jones & Jones, 2019). It is recommended that the central points of
interest in overseeing key organizations fall inside three levels.

145 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.2.1 Industries as macro networks

Ventures are established of enmeshed organizations of entertainers, making them regularly
nontransparent and extremely unique. The leaders should have the choice to perceive and
appreciate the value structures and the performers through which the huge scope network
creates an impetus for the end customers. The more complex and volatile the value system
is, the more challenging the task are and the more a startup will have problems to create
presence abroad. It requires information on the entertainers affecting the organization
advancement, and capability in deciphering their perspectives and direction. Indeed,
even organizations with broad assets don’t ensure this capacity. Enormous enterprises
might attempt to shape the advancement of entire businesses or large-scale networks by
attempting to impact the convictions, objectives and conduct of other key entertainers
through “orchestration”. This is something that startups don’t have access to it and cannot
create a big influence as large companies can. This kind of orchestration gives a vision of the
network and a strong position and credibility in the certain field. Startups should be careful
and aware of the type of network they will join in this scenario as it can be at already stiff
environment where values and behaviors are already established. Therefore, the startup
won’t have enough room for creativity and innovation, as the standards are already set.
The level of strategic networks
Clusters (Barkema & Vermeulen, 1998) are comprised of a few covering key organizations.
Having the alternative to actuate and work with the value activities of other relevant
performers is principal in administering key associations. Significant inquiries are the
reality of how an organization can prepare value producing networks, and what sorts of
positions and jobs it should attempt to accomplish in various and covering networks across
various key circumstances. In this level, networks strategies can be divided into different
factors such as (i) improving the operational efficiency of a strategic network, (ii) working
on the influence of existing abilities through taking part in one or a few organizations and
(iii) growing new capacities through advancement organizations (Chivaka, 2017). These
strategic networks are something that a Startup could definitely beneficiate from as it can
create synergies and relationships with other parts that will have similar or same goals. A
few objectives can be sought after through one complex organization or a lot of covering
organizations.
A quite certain model straightforwardly connected to new companies is the point at which
these ones attempt to make new advancements, complex plans of action, or new business
ideas, administrators must have the option to organize entertainers from a few distinct
fields (Tsuji, 2001). This demands to create networking capabilities in activities, such as
actor evaluation, creating direction through agenda setting and motivation, coordination
and control. A critical viewpoint for the new businesses is to distinguish the jobs, abilities
and objectives of other significant entertainers, and to alter one’s technique to coordinate
with the organization circumstance and where the organization or startup needs to head.

NJMSR Volume V I Focus Issue I 146

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.3 Startups´ Globalization through Networks

Multiple reasons encourage startups to go global or international. Because of several
political, technological, social and competitive reasons, globalization has become essential.
Primary political factor among all the factors is the advancement through removing the strict
regulations, allowing firms to expand their businesses overseas with ease. Development of
advanced communication technology is another important factor in globalization of firms.
This hyped access to information is decreasing the physical distance between countries,
which was previously a hindrance in international expansion of business. (Marja, 2017). 
Essential factor that encourages the startups to go international is defined by Tread gold
as “push” and “pull” groupings motivating along the environmental and micro-firm-level or
startups dimensions. Factors that force or motivate a startup to increase its niche to abroad
looking for new opportunities are the push factors. Such push factors can be industry
competition, economy, legislation, and domestic saturation. While factors like economic
and political stability in international markets and the chances of making profit in foreign
market are the pull factors for a startup to expand business overseas (Nickols, 2010).
Other bunch of factors that firms benefit from in relation to going international are
technological progress that lowers the costs for transportation and communication to an
extremely affordable range as well as the unit cost to produce through local economies
and localizing the productive capabilities and resources in low-cost economies. Other than
manufacturing concentration, firms are able to source the materials or services from low-
cost countries either by setting their own operations or by purchasing locally (Lee & Kim,
2019). This provides startups with plenty of choices to buy their resources and production
from.

Additionally, startups nowadays are providing more technical and simpler products
making them more users friendly which are cheaper and easier for consumers to use. More
technical and the lesser the cultural the product is, the more likely it will be standardized
and appealing to mass. Startups just entering the market use this technique as pioneers.
Above two approaches of entering the market bring distinct outcomes on firms’ continuity
of globalization process. These are important factors in considering the firms degree of
internalization and markets degree of globalization. High degree of globalization of foreign
market means the startups in local market have many connections with outside markets.
Lower degree of market globalization shows that startups have business network within its
nation (Absanto, 2013)assets, net profits and a chance to take advantage of the experience
curve to reduce the per unit cost of products sold and thereby increasing profits. Business
growth can be realized through several different indicators. The indicators can be grouped
under four categories namely; business outcomes, business outputs, capacity and qualitative
indicators. In most recent years it has been argued that most of Tanzanian companies have
been experienced a slanted growth the situation which is reflected in few companies being
listed in the country’s stock exchange company, the Dar es Salaam stock exchange (DSE.

147 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2.4 Strategic Networks for Startup  

For a startup to obtain the targeted outcome, how can a network be constructed in best
way? Resource based theories suggest that the decision should be based on partners
capacity to provide additional resources for their mutual benefit (Chivaka, 2017). But for
the startups with limited resources and information sources, searching for and deciding
on who to collaborate with can be difficult (Salamzadeh, 2015) compared to larger firms
having sufficient resources to afford professional intelligence process to scan and monitor
their environment to find competitors, potential collaborators, and customers in the market
to use for their future strategies (Van Der Braak et al., 2018). Because of such difficulties,
startups are likely to make intense and lasting ties only after they have their networks
organized (Shapiro, 1989). A collaboration model is suggested to help startups sort out
their problem of finding right partners and plays intermediary role in supporting startups
to make collaboration network and eventually work together more effectively. Intermediary
helps startups to succeed in developing new products and services through maximizing
their chances of innovation. Acknowledging the importance of intermediary in to support
startup several policies and programs have been developed in various countries with public
authorities taking the role of intermediary.
Task of a negotiator is mainly three direct exercises. Firstly, motivation behind the information
base of the firm is to differentiate the fitting shared partners. A negotiator may build and keep
a relevant database which they can share with the startups to help in their search process.
Second, startup may require much support during network construction stage and then it
is that intermediary can support the technology transfer to improve strategic technology
management (Kurode et al., 2019), by studying each firm to later assist them in construction
of network of matching startups, and through proposing the effective network structure,
as well as by encouraging geographical clustering (Koch & Koch, 2017). The intermediary
may keep the information of each startup to asses them objectively and share with other
startups their own analysis rather than giving original technological information. Finally,
network management is another crucial task for negotiator to support the collaboration.
Apart from all these roles, intermediary plays two indirect activities, one of which is aimed
to develop the culture of collaboration and the other to support through that collaboration
(Rosenfeld, 1996). In the presence of intermediary, the conventional collaboration model
normally following the smaller, newer startups relying on larger firms or outsourcing to

NJMSR Volume V I Focus Issue I 148

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

other startups can be directed towards more open structure.

Figure of the conceptual framework of intermediary role is illustrated in the next page.

Figure 3: Conceptual framework of intermediary role (Source; lee, 2010)

2.5 Research Gap
There is a lot of literature and information about startups and business networks for
international expansion and how these two are linked together. However, there is yet not
much literature in regards to concerns for a Nepalese startup to create business networking
for international expansion purposes while keeping their business idea and innovation safe.
Also, if a startup thinks that a business network is useful for this matter has not been carried
out till today. Thus, the gap of such a study would be fulfilled by the proposed research.

149 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3. RESEARCH METHOLOGY

3.1 Research Design

Methodology is basically a plan on how data is gathered and analyzed in order to bring
solutions to research problems that come along from answering the main research question.
There are two types of research methodology. They are qualitative and quantitative research.
Quantitative research is the type of research that focuses on developing mathematical
models, theories and hypotheses pertaining to natural phenomena. In the case of this study
in view of its objectives, quantitative method is not adapted because the research is not
going to measure phenomena or create statistics (Creswell, 2007).  
Qualitative research is based on discussion and overall observation of the subject of the
study. It focuses on small sample size to conduct research. It is more descriptive in nature
than quantitative research methods. This research was attempted to Nepalese startups
and their business networking for international expansion. Both explanatory as well as
descriptive research designs were employed in this research to fulfill its objectives. To obtain
the findings from the systematic way of collecting the primary data and the secondary data
qualitative methodology were use since it aims to explore Nepalese networking business
startups and international expansion by utilizing structured interviews in depth information
will be gathered which will aid the exploration of the study.

3.2 Population of the Study and Sampling

This study area considers the Major cities of Nepal such as Kathmandu, Lalitpur, and
Bhaktapur (Kathmandu Valley) located as the central part of the country which falls under
the province no 3.  The total surface area of Kathmandu Valley is only 665 square kilometers.
According to 2076 data, there are 1252 registered startups in Nepal. Out of 1252 startups,
1240 startups are registered in Kathmandu valley only (sources; startup Nepal). Thus, we
choose the Kathmandu valley startups for this study.
The different sources of this study are primary as well as secondary data. Primary data is
the main source of data, and secondary is additional data for this study. Similarly, the time
of inception from the creation of the startup ranged from 6 months to 11 years to date.
3.3 Primary Data 
The interview sessions work as primary data in this study. The different startups founder
located in Kathmandu participated in this research. Some of them are- the Founder of
versusopedia Company, Co-founder & CEO of Pailaa technology, Managing Director of
Foodmandu, Co-Founder of tootle, etc. The questionnaire includes different response
questions, multiple questions, background questions, etc. Primary data gave the information
and genuine feelings and understanding of business personnel. 
3.4 Secondary Data 
Secondary data are the data extracted from the internet, articles, online papers, journals,

NJMSR Volume V I Focus Issue I 150

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

published articles, and unpublished articles related to business networking practices of

Nepalese startups on international expansion. These data come from the previously dictated
sources or extracted from research documents.    
3.5 Description of the Sample  
The target population for this study is startups of Nepal who build their networking business
and international. Interview sessions of a few of the business personnel are taken with
different open-end questionnaires to gain information on our research questions. 
There are many startups who plan to expand their business network in international
market. Moreover, five startups who try to build their business networking to expanding
their business in international market. Are participated in the research as a sample for the
study. A semi-structured interview was best suited for this research. They answered the
questions about their involvement in business networking practices so that they can expand
themselves in the international market. 

For this thesis researchers adopted the convenience sampling method. Convenience
sampling is a method adopted by researchers where they collect market research data from
a conveniently available pool of respondents (Dudovskiy, 2012). It is the most commonly
used sampling. Testing the entire community is practically impossible because they are
not easy to reach. Convenience sampling is used in situations where additional inputs are
not necessary for the principal research. Thus, it becomes incredibly simplified to include
elements in this sample. All components of the population are eligible and dependent on the
researcher’s proximity to get involved in the sample. Convenience sampling is characterized
by being less-time consuming (Saunders, Lewis, & Thornhill, 2009) and it is easy to operate
(Bryman & Bell, 2011). Convenience sampling is described as “A sample that is selected
because of its availability to the researcher” (Bryman & Bell, 2011, p. 713).
3.6 Data Collection procedure and Time Frame
Primary data is the main source of data for this research. It helps to collect views and
responses of founder or startup owner in business networking practices they apply
during international expansion. The source of primary data is approximately five research
participants of various startups in Kathmandu Valley. The interview consists of questionnaires
regarding to Nepalese networking business startups they applied when they are expanding
their business in international Market. Similarly, I can also survey and asked some question
to the 72 startups of Nepal who are plan to expand their startups in international market
in the coming day. Other additional data used in this research is secondary data. Internet
articles, journals, case studies, websites, etc. are the secondary data. 

151 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4. DATA PRESENTATION & ANALYSIS

Surveys as well as in 5 structured interviews were distributed to different startups with the
aim to gather relevant information for the study. Different startups executives participated
in this study. Furthermore, it is also aimed to find out business networking practices of
Nepalese startups while expanding themselves in the international market. With this, I want
to find out what challenges that could be preventing the expansion of Nepalese start-ups in
the international business market networks.
4.1 Business Networks Importance for Startups and Expansion Reasons
It is quite clear that startups believe that business networks are important for them to
become international. From the 72 startups that answered the survey to this question, 96%
of them answered that they believe business networks are important, only 4% showed
indifference and none of them believed business networks were not important. These same
results and percentages were shown when answering if they believe that having a good
structure of business networks will help them for their business international process.
This proves what Johanson and Mattsson (1988) argued when they stated that networking
seems to be a common trend in today’s international business and industry practice as they
have a significant effect on startup´s internationalization and globalization. 
 
Nowadays, startups realize the importance of using business networks as these open them
many doors for new opportunities. It is not the same being isolated and trying to do the job
just by themselves, then with a set of networks where they can interact, share and learn
from others. With the use of technology, it is even easier to create business networks not
only at a local scale but at a global scale as well. Technology plays an important role in
a startup´s business networks creation because it allows them to connect with different
players around the world in a fast, cheap and reliable way. This means that startups do not
need many resources in order to build business networks around the globe.
 
Now, knowing that most startups believe business networks are important for their
internationalization process, it was a need to find out what are the main reasons and drivers
that startups have for internationalization purposes. Six different options for this analysis
were given to the startup, which are: market opportunity, profit, expansion, motivation,
target new customers and others. The percentage of what the startups answered for each
category looks like this:

NJMSR Volume V I Focus Issue I 152

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 4: Startup Survey “What would your primary reasons for Internationalization be?” 

In the graph it can be seen that there are three main categories that startup´s chose as main
internationalization reasons/drivers. These main drivers are mainly for expansion purposes
followed by pursuing a better or different market opportunity and to target new customers.
Profit, motivation and others are still important but not as the previous mentioned before.
For the “other” answers, startups mentioned they do it to be the first ones in the local market,
have a greater impact in society on a global scale, export culture and history from their home
country and to create a global corporate image.  
 
Startups are aware that they need business networks to achieve their main internationalization
reasons. When they are looking for new market opportunities and target new customers,
startups need to interact with other players in the geographical location where they want to
join. Business networks will not only help them to build these interactions, locate their new
target customers and explore their market opportunity. Business networks in the target
location will also help them to understand how the market and customers behave differently
from their local ones, and what they need to do in order to adapt into the new environment.
Startups then can learn, adapt and execute an expansion plan in a more efficient and effective
way, as knowledge for the new market will be bigger. Therefore, internationalization
decisions will be more accurate. The more a startup knows about the new entry market, the
more they will also know their potential customers, how they behave and preferences. Then,
startups can adapt and tailor to customer´s specific needs and trends.  
 
It was observed in the survey that startups do consider business networks and building of
external relationships as tools to achieve in a faster way, the “internationalization drivers”
explained in the graph before. It was with no surprise that 90.4% of the 72 startups believe
that business networks will make their expansion and internationalization drivers to
achieve faster, including target new customers and new market opportunities, as seen in the
graph below.  
153 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 5: Startup Survey “Does the startup believe business networks will make their
internationalization driver(s) achieve faster?” 
This means that startups strongly believe that business networks are truly important to
achieve internationalization. Nonetheless, business networks appear to be significant for
internationalization when all is said in done as well as for other development drivers that
new companies have on their rundown, for example, expanded benefits, development,
inspiration, being first movers and presence creation among different reasons.
4.2 Startups and Business Alliances 
Part of the research also includes if startups would consider making business alliances with
other startups or firms. These alliances can be locally or internationally but with the aim
of creating a network, become stronger and eventually internationalize. When asked by
72 different startups if they will consider making business alliances with other companies
locally and/or internationally, 93% of them answer yes and only 7% were not interested in
making business alliances with other companies. It was seen that 7% of startups that were
not interested in making alliances, was because they had an innovation or Nobel idea that
they did not want to disclose before having a strong IP. This topic will be covered more in
detail later on the research. 
Knowing the reason for these alliances seems to also be important for the research. It
was found out that startups have different main purposes to create alliances. Surprisingly,
profitability and economic interests were not in the top spots. The following graph shows
the purposes of why startups can be motivated to make alliances. 

NJMSR Volume V I Focus Issue I 154

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 6: Startups Survey. “Startup’s main motivation for business alliances.” 

From the 72 Nepalese’s startups (93%) that answered to this question, two main motivation
drivers were identified and acknowledged as the ones with more relevance. “To complement
each other” and “to reach other markets” were the top two options selected by the startups
with 50% and 19% respectively, followed by “get knowledge & information” with 15% and
“boost sales” with only 11%. When selected “other” the respondents answered that they
want to grow their portfolio and that they believe all of the stated purposes were important
for them when getting into alliances.  
 
It is no surprise that startups selected these two factors as the top ones. Wanting to
complement each other goes in hand with the fact of getting knowledge & information.
These two reasons will provide the startups with ground information that eventually will
lead them to reach other markets. If there is something that startups do not possess in
abundance are resources. By making these alliances, they will gain access to these resources
and obtain information in a cheaper way. While analyzing the survey, it was interesting
to find that financial and economical drivers were not the startup’s main objective and
purpose. New companies understand that so as to get monetary and efficient advantages
and development, it is essential to initially have a strong base of associations, organizations,
connections, unions and generally speaking great business organizations to permit them
to develop locally and in this way globally. Then the financial and economical part will
eventually fall in place by itself. Information and knowledge are one of the best assets a
startup can have for growth and expansion. These are also expensive assets; which costs can
be minimized through business networks.   
4.3 Importance of Previous Skills for a Startup International Expansion 
It is relevant to take in account what are important skills that startups should have before
going international. Different skills that were considered important for a smoother and
better internationalization process were analyzed and asked to the 12 surveyed startups.
155 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The question was intended to see what weight each of these skills had in this matter. The
following are skills that startups consider important having prior to getting involved in their
internationalization process: 

Figure 7: Startup Survey. “Importance of different skills that startups believe will help them
before starting their international process.” 
 
From the graph above it can be observed that there are two main skills that startups consider
most important to have prior to their international expansion. Market knowledge and
Creativity & Innovation seems to be the predominant areas that startups consider important
to possess for their internationalization process. Various aptitudes that were viewed as
significant for a smoother and better internationalization measure were broke down
and asked to the 72 reviewed new companies. Startups by nature are more creative and
innovative as they are rising from scratch and they need to find new and non-conventional
methods to break into the market and be successful.  
 
Going to the second important factor, having “good market knowledge” of the area where
the startup wants to expand is critical. Getting knowledge of the desired market can be
sometimes very expensive for a startup. Having this type of knowledge is indeed critical
for a smoother transition as it will save the startup costs in the long run and it will provide
them with the possibility to tailor their product and service to the new desired market. Not
every market is the same and startups need to be willing to adapt and give what the new
international market is demanding in a fast and simple way. 
 
The third most important reason was the “ability to create business networks”. We know
now that business networks are important but having the ability to easily build the right
business networks is not easy and it can take time to develop. Having this ability dominated,
startups can easily achieve the previous skill (market knowledge) if they know with who
and where to build the networks. Related to this topic, to have a better understanding of
NJMSR Volume V I Focus Issue I 156
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

where startups would obtain information about the market they want to conquer, it was
asked to startups how they would gather information about the international target market
before entering such a market. The responses were as follow: 
  

Figure 8: Startup Survey. “How would startups gather information about the international
target market before entering such a market?” 
  
With the two top options it was identified first, having “Contacts in the desired market”
and as a second option “Extensive market research”. The first option (Contacts in the desire
market) is clearly identified as establishing relationships and creating business networks
in the desire expansion market. Therefore, once again we can see the importance of using
business networks and with what main purpose. This confirms once again that the use of
business networks is critical and important for a startup internationalization process. In
order to aim this, such business networks should not only be established locally but also
internationally. This way, startups can learn from the market they desire to penetrate and
get a good insight about it. These networks can be any source of contact that can provide the
startup with useful information. By using these foreign networks, startups can know how
the market behaves, how the customers behave, what are the most reliable suppliers and the
type of partners/alliances if so, they should join. In the above graph, “Previous experience”
was not considered as important as the other. “Other”, referred to the support of business
accelerators and government.

5. DISCUSSION AND FINDINGS

Some of the findings of this research are as follows;
Nepalese startups have such potential so that it can easily expand in the international
market. Every year there are number of startups register in the Nepal despite that some of
only get success and other can shut down within 2 to 3 years of operation. Startups possess

157 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

limited resources so that it is very hard them to expand in the international market.
Joint venture as well as collaboration are proven to be a great alternative for startups to put
themselves in a better position where they can benefit from their stakeholder, get a deep
insight about the target market, target new customer and eventually expand and create
more opportunities for themselves without having to spend too many resources.

The research showed that almost all the startups are willing to go international having
as top reason to aim for expansion, targeting new customer and search for a bigger and
better market opportunity. While expanding the startups in the international market local
knowledge play the vital roles. With the help of the local knowledge that they gain in their
home country really help them to compete with other startups in the international market.
Lack of resource, funding, advance technology, Knowledge gap are some of the main factors
that startups facing when they expanding their business in the international market.
Similarly, before expanding the business in the international market the market knowledge
plays the effective roles of understanding overall sceneries of that country. With the help of
the business networks, startups can get a deep insight of this market knowledge in order to
plan their international business development. Similarly, it is seeming to be correlated the
important of skills startups must have before going international and the use of business
network to achieve these skills. This means that they need business network to explore new
market and target new opportunities.
Business alliances are a great way to create synergies and expand their business networks
to a wider dimension. Similarly, motivation as an important factor for startups, as without
motivation there is no action. To be startups international, motivation factor plays a lot.

Intellectual property also giving startup confidence and eventually building up business
networks for internationalization process. If startups have a unique and original idea/
innovation then it can easily survive in the international market. Intellectual property will
also create added benefits to the startups such as positioning them to have a better and faster
financing and investment depending on the lifecycle and Intellectual property development
the startup has.

Collaboration, joint venturing, develop the network, develop an optimal strategic portfolio
are some Networking practices that Nepalese startups do when they expanding their
business in the international market.
A good, effective, efficient and cheap way for startups to break the barrier of this distance
and capitalize in global opportunity is through business networking. By using the business
network startups can optimize their resources and take advantage of other players to achieve
their personal and common goal. Collaboration, joint venturing and business network help
Nepalese startups to be international if they want.

NJMSR Volume V I Focus Issue I 158

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

6. CONCLUSION
Nepalese startups are highly popular nowadays. Most of the Nepalese startups have such
potential to expand in the international market. Due to some of the issues and challenge
they cannot reach into the international market. Only some of the Nepalese startups
reach themselves in the international market. Collaboration as well joint venturing
business networking practices mostly used by the Nepalese startups when they expand
in the international market. Also, business alliance plays the major role when they expand
themselves in the international business network.
Due to the lack of skills manpower, innovation, funding, advance technology, laws and policy,
language and culture are some major issues that stop Nepalese startup to become a global.
These research participants highly supported if they have intellectual property right then it
is very much easy them to expand the startups in international business market.
The outcome of this research is to have a clear picture that collaboration as well as joint
venturing business networking practices that Nepalese startups apply when they try to
expand themselves in the international market. There are few restrictions and issues while
expanding the business in the international market such as laws & policy, government
support, funding, etc. Despite all the problems, it results in an increment that Nepalese
startups are more global and doing better in the international market also- Pailaa technology
& Versusopedia founder said. Thus, if startups have unique ideas and innovation, it can easily
create business network for expanding themselves in the international market.

159 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Absanto, G. (2013). Analysis of business growth strategies and their contribution to business
growth. International Journal of Economics, Commerce and Management, I(1),
1–14.

Ahamat, A., Dirir, A., & Robani, A. (2017). International business expansion strategy: The
review of UAE family business. Proceedings of Mechanical Engineering Research
Day 2017 (Merd), May, 276–278.

Ali, J. (2008). Issues in supply chain management in Indian agriculture. Food for Policy, 83,
195–225. https://doi.org/10.1017/UPO9788175968462.008

Approach, T. C. (2013). International market entry mode. A Systematic Literature

Review. 1–26.
Barkema, H. G., & Vermeulen, F. (1998). International expansion through start-up or
acquisition: A learning perspective. Academy of Management Journal, 41(1), 7–26.
https://doi.org/10.2307/256894.

Brede Ellefsen, K. (2016). Developing a business strategy to support the international

expansion of a European business firm: Facts, trends and considerations.

Chivaka, R. (2017). Reason Chivaka : Business Internationalization Theories. June, 0–5.

Jones, G., & Jones, G. (2019). International business and emerging markets in historical
perspective. The Oxford Handbook of Management in Emerging Markets, 54–76.
https://doi.org/10.1093/oxfordhb/9780190683948.013.3.

Koch, M., & Koch, M. (2017). Tech Start-up Internationalisation Development of an

Internationalisation model.

Konsek-Ciechońska, J. (2019). Startup companies, challenges in Poland. Knowledge

International Journal, 30(6), 1621–1626. https://doi.org/10.35120/kij30061621k.
Kuckertz, A., Brändle, L., Gaudig, A., Hinderer, S., Morales Reyes, C. A., Prochotta, A., Steinbrink,
K. M., & Berger, E. S. C. (2020). Startups in times of crisis – A rapid response to the
COVID-19 pandemic. Journal of Business Venturing Insights, 13(April). https://doi.
org/10.1016/j.jbvi.2020.e00169.

Kuemmerle, W. (2005). The entrepreneur’s path to global expansion. MIT Sloan

Management Review, 46(2), 42–49.
Kurode, T., Kurode, A. V., & Moitra, K. (2019). A study of critical challenges in startup
management. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3348534.

NJMSR Volume V I Focus Issue I 160

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Lee, W., & Kim, B. (2019). Business sustainability of start-ups based on government support:
An empirical study of Korean start-ups. Sustainability (Switzerland), 11(18), 1–20.
https://doi.org/10.3390/su11184851.

Marja, H. (2017). Business Ecosystems and Startup Development. Oulu Business School,
April, 72.

Marrone, P. (2013). Chambers, RT. Etica e Politica, 15(1), 583–605. https://doi.org/10.1093/

acprof.

McDonald, R., Shalloo, L., Pierce, K. M., & Horan, B. (2013). Evaluating expansion strategies
for startup european union dairy farm businesses. Journal of Dairy Science, 96(6),
4059–4069. https://doi.org/10.3168/jds.2012-6365.

Moen, Ø., Bakås, O., Bolstad, A., & Pedersen, V. (2010). International market expansion
strategies for high-tech firms: Partnership selection criteria for forming strategic
alliances. International Journal of Business and Management, 5(1), 20–30.

Monterroso, S. (2015). Startups that conduct in international market 151(2013), 10–17.

https://doi.org/10.1145/3132847.3132886.

Nickols, F. (2010). Three forms of strategy. Strategy, 1, 1–7.

Picken, J. C. (2017). From startup to scalable enterprise: Laying the foundation. Business
Horizons, 60(5), 587–595. https://doi.org/10.1016/j.bushor.2017.05.002.
Pokharel, D. R. (2018). Entrepreneurial process: A case of Deep Jyoti family resort and
restaurant Pvt. Ltd. Pravaha, 24(1), 50–57. https://doi.org/10.3126/pravaha.
v24i1.20225.

Poole, R. (2012). Global Mindset: An entrepreneur’s perspective on the born-global

approach. Technology Innovation Management Review, 2(10), 27–31. https://doi.
org/10.22215/timreview617.

R.S.Kanchana, J.V.Divya, & Beegom, A. A. (2013). Challenges faced by new entrepreneurs.

International Journal of Current Research and Academic Review, 1(3), 71–78.

Salamzadeh, A. (2015). Startup companies- life cycle and challenges startup companies : Life
cycle and challenges. 4th International Conference on Employment, Education and
Entrepreneurship (EEE), August. https://doi.org/10.13140/RG.2.1.3624.8167

Shapiro, C. (1989). The theory of business strategy. The RAND Journal of Economics,
20(1), 125. https://doi.org/10.2307/2555656

Sodha, S. S. (2019). Challenges , issues and opportunities being faced by Indian

startups. Special Issue on Startup and Innovation February-2019. 2016, 255–263.

161 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Suzuki, S., & Okamuro, H. (2016). Determinants of academic startups’ orientation toward
international business expansion. Administrative Sciences, 7(1), 1. https://doi.
org/10.3390/admsci7010001.

Tsuji, O. (2001). Start-up companies and growth strategies. 1–3.

Twarowska, K., & Kąkol, M. (2013). International business strategy -reasons and forms of
expansion into foreign markets. Active Citizenship by Knowledge Management &
Innovation., 1005–1011. https://doi.org/10.1108/eb056701.
Van Der Braak, M., Jauregui Becker, J. M., & Pessoa, M. V. P. (2018). Supporting product
development at tech startups with lean product development: Challenges and
opportunities. Proceedings of International Design Conference, DESIGN, 2, 698–
702. https://doi.org/10.21278/idc.2018.0194.

NJMSR Volume V I Focus Issue I 162

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

CELEBRTITY ENDORSEMENT AND CONSUMER BUYING BEHAVIOR IN

KATHMANDU, NEPAL

Subani Panta Ram Prasad Nyaupane∗

ψ

Abstract
The celebrity endorsement has been put into the practice for representation of services
rather than performing and delivering their genuine job as performers like in any stream
such as showbiz, athletics. Regardless of the expenditure and the threats drawn by means
of this method of promotion and marketing, it has been in use somehow comprehensively
in this age.

Based on review of literature, this study brings insights provided by various similar research
projects which serve as a base for conducting this study further assisting in achieving the
goal and objectives. Quantitative research technique was used to conduct this study so as to
know whether or not does celebrity endorsement influence the consumer buying behavior as
per their age, gender, income, education, etc. This study also includes the findings extracted
from collecting the data which have been further summarized in the conclusion. Finally,
implementation of celebrity endorsement has now become an omnipresent component of
advertising and communication in an organization. Nepalese people are now more conscious
about the things they purchase and tend to look after the products endorsed by a celebrity
and consider it to be a reliable brand. The marketers and the advertising company see this
as an opportunity and invest upon celebrities so as to build and establish their image as one
of the strongest and most leading brands in the market, increase revenue and market share.

Keywords: Celebrity, Consumer, Buying behavior, Celebrity endorsement, Celebrity

influence, Marketers, Brand, Purchase intention

ψ
Subani Panta, MBA student at Global College International
∗ Ram Prasad Nyaupanem, faculty at Global College International

163 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Back ground of the Study

Today’s new market place is very striking and also is very competitive in terms of purchasing
power. Therefore, more ground breaking ideas needs to be developed by the marketers to
survive in the market which can bring about a long lasting impact on the consumers in long
run. People seldom ignore advertisements and commercials as they are being exposed to so
many of it are via TV, Newspapers and magazines but celebrities in the advertisements and
commercials hardly go unnoticed in today’s modern world of advertisement. Thus, celebrity
endorsement has a significant role in the promotion of brand as a whole. The celebrities
are appointed belonging to a particular field so as to feature them in the advertisement
campaigns. Moreover, since the celebrities are well recognized by the public they not only
serve to generate and sustain attention but it also helps in achieving a soaring recall rate.
Celebrities have also been effective for grabbing the attention of the consumer (Zafar &
Rafique, 2012). They also help in creating an ambition in the minds of the consumer to
get hold of what their favorite celebrity endorses and because of its favorable impact on
customer buying behavior, the field of advertising has become one of the most dominating
and leading aspects that is employed as a convenient marketing technique today (Qureshi
& Malik, 2017).
Every advertisement aims to generate consciousness and encourages the significance of their
brands or products in the minds of customers. So that advertisers make use of quite a lot
of marketing techniques to achieve the goal. Advertisers use celebrity endorsement, which
is one of these powerful methods, to capitalize on the celebrity’s image and recognition to
promote a product or a firm (Block, 1983).
A celebrity is a person who enjoys public attention and who uses this benefit for attracting
the consumers to make them want to buy the particular product that they have advertised
on the behalf of company. When celebrities are involved in certain kind of advertisement,
they tend to insert their very own personal as well as cultural essence as of what is required
for them to actually do in their promotional role as allocated by the company (Mccracken,
1989). Celebrities could be the people who are in the sphere of sports, cinema, theatre, and
social life politics or science anything but with some distinctive conclusion (Giridhar, 2012).
Celebrities are one of the most efficient ways to draw customers’ attention to approved
products and services. For the past 20 years, the practice of using a celebrity to advertise a
product has been fairly common. Everyone recognizes the power of celebrity endorsement,
and most marketing professionals agree that these superstars have a significant impact
on changing customer purchasing behavior. It aids in the creation of an impression on
consumers’ brains, attitudes, and recollection, and ultimately promotes increased sales
of their respective products and services. In today’s moden era celebrity endorsement is
considered to be one of the billion dollar industries worldwide (Kambitsis et al, 2002).
Consumer buying behavior indicates the judgmentprogression where individuals reconcile
for their buy and diverse choices keeping in view the practicalresources which are endevors,
NJMSR Volume V I Focus Issue I 164
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

time and money (Nawaz, 2012).Consumer behavior is a new field of study and encorporates
the concept of scientific discipline such as sociology and psychology as well (Kotler, 2011).
The consumer’s behavior while buying a certain product or making other marketing
decisions within the consumer’s knowledge or their ability to process a certain marketing
information influences the marketing out come. The study of consumer buying behavior
pattern promotes the understanding of the psychological aspects for example, how the
customer feels, reactor makes a choice between several provided alternatives (brands,
products) which further helps the companies and firms to bring improvisations to their
existing marketing strategies (Perner, 1997).
Mostly big companies sign deals with the celebrities so that the consumers would have a
positive impact about their particular product or service (Temperly & Tangen, 2006).
Celebrity endorsement is more impactful and relevant as compared to other type of
endorsements (Erdogan etal, 1999). Firstly, it draws attention of the public towards the
advertisement and the products or brands that they are endorsing (Sternthal, Dholakia, &
Leavitt, 1978). Secondly, celebrity endorsement also promotes the advertisements break
through the surrounding and otherwise busy clutter (Zafar& Stephen, 2001). Thirdly, the
companies also get a chance to enhance and improve their brand image with the help of
celebrity endorsement (Debevec & Iyer, 1986). Nepalese advertisement sector as well as
the Nepalese consumer market are escalating and have seen the turnover of Rs. 6 billion
in approximation. Therefore, Nepalese advertisement sectors and big companies have now
realized the importance of celebrity endorsement in the market and are considered to be
one of the most accepted practices and communication modem. Celebrities have been used
by large brands such as Hindustan Lever (Lux, Pepsi, Coke, etc.) to endorse their products
in the market, and celebrity trustworthiness is one of the primary elements that drives
customer buying behavior patterns (Shrestha, 2019).
1.2 Statement of the Problem
Celebrity endorsement has a noteworthy function in developing a brand’s image amongst
the consumers and marketers to a great coverage gives prominence to various strategies to
collect great amount of pecuniary benefit as well as the goodwill in the market. Celebrities
are used by advertising agencies and companies to make their advertisements more
appealing and effective. In recent years, Nepalese companies have changed their branding
and marketing ideologies and methods, with an obvious shift in the archetype where the
benefits of the product were highlighted during and in anticipation of celebrity endorsement,
but in today’s modern era of marketing, the benefits of the products are associated with
glamour in order to rise in the market (Adhikari, 2016).
While celebrity endorsement is excellent, it can have a pessimistic collision on a product
or service because of disparity between endorser and product. Furthermore, a celebrity’s
unfavorable image might be influenced or transferred to the product or service they
promote. And sometimes the product gets overshadowed due to much highlight being given
to the celebrity instead of the product.

165 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Therefore, marketers need to make sure that they choose a celebrity which can “fit” and
build the connection between celebrity’s image and the product. Based upon several
factors advertisers may opt for a particular celebrity, but the selection of right celebrity so
as to develop a right brand image amongst the consumers is always a difficult task for the
marketers (Khan, 2017). The study will be conducted to measure queries such as which
of the celebrity element has an enormous impact on reminiscing the brand that provides
direction to consumer’s buying behavior towards a certain product, how a customer
responds to a certain product endorsed by a celebrity and can the products endorsed by
celebrities are sold more in numbers than compared to the products which are not endorsed
by the celebrities?
Celebrity endorsement may possibly have an effect on consumer buying behavior but
with attributes like attractiveness, trustworthiness, expertise, multiple endorsement and
celebrity gender encompasses a greater impact on consumer buying behavior which is till
today not predominantly documented in spite of Nepalese advertisement being in a growth
phase (Kharel et al, 2016).
1.3 Objectives of the Study
The study’s main goal is to investigate the impact of celebrity endorsement on customer
purchasing behavior in Nepal. The study’s particular goals are as follows:
a) To identify the impact that celebrity endorsement has on consumer’s buying
intention in regards of credibility
b) To identify the effectiveness in terms of how marketers are using celebrities to
change consumers buying pattern and how are they creating a good image by
selecting strong publicly desirable celebrities.
c) To examine how the celebrities transfer meaning to the products endorsed by them
and to what extent does it molds the consumer’s buying intention.
d) To examine the perception of how consumers, perceive about the brands endorsed
by celebrity either in a positive, negative or neutral way.
1.4 Research Questions
Research Question1: Relationship between celebrity endorsement and consumer buying
behavior-How relevant and positive is the relationship between celebrity endorsement and
consumer buying behavior?
Research Question 2: Effects of celebrity elements such as attractiveness, credibility and
meaning transfer between the endorser and the brand in consumer buying behavior-How
does celebrity elements have an impact on consumer buying behavior?
Research Question 3: Perception of consumers towards celebrity endorsement- How do
consumers perceive about the brands endorsed by celebrity either in a positive, negative or
neutral way.

NJMSR Volume V I Focus Issue I 166

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2. REVIEW OF LITERATURE

2.1 Review of Theoretical Perspectives

Historical and current perspective over the years has made many arguments that have been
done with a reverence to the thoughts on what makes celebrity endorsement successful
communication tools. Several studies were done to identify the factors that actively
contribute to the buying behavior of the consumers (Hussain & Nazish, 2017).
As per Roll (2014), a celebrity endorser is supposed to have the qualities that are appealing
to the target audience for the particular endorsed brand. These qualities may perhaps be
associated with the lifestyle, physical appearance or intellectual capabilities of the celebrity
endorser. The phrase credibility, according to Roll, refers to the celebrity endorser’s
perceived reliability and expertise. He quotes “as celebrity endorsement acts as external
indication that enable customers to see through the tremendous brand clutter in the market,
the credibility factor of the celebrity greatly influences the acceptance with customer” (Roll,
2014, p.2).
And, in his opinion, there must be enough compatibility between the product and the
celebrity sponsor for meaning to be transferred (Roll, Martin Roll, 2018).
Source Attractiveness Model
It states that customers on seeing an endorser, who is physically attractive, form favorable
perception. The feature of attraction doesn’t generally comprise of physical gratifying
manifestation, but also includes the lifestyle and also personality element of the endorser.
Research findings have proven that endorsers who are professed as attractive can effortlessly
persuade the principles of the customers (Erdogan,1999). Hence the term attractiveness for
this research is the how the celebrity’s physical attraction, their personality element and
lifestyle is able to attract more consumers towards the products that they are endorsing
which in future would benefit the sales of a certain product.
Brand over Endorser (Vampire Effect)
While celebrity endorsement is considered to be one of the most effective communication
tools in the market, most of the times the image of a celebrity can be so extravagant that the
brand’s image and purpose gets overshadowed by it. The celebrities are the people that are
usually associated to different norms and are well renowned in the public. The reason why
the companies often appoint the celebrities to endorse their brand is that they can grab a lot
of attention of people within no time and people can also easily recall them (Rai & Sharma,
2013).
Kokil Theory (1987)
According to the theory, celebrity is an individual who has an expertise in his or her
department of career and consequently enjoys the recognition amongst masses. Marketers
tend to believe that celebrity endorsement has various rewards and advantages which
comprises of constructing the credibility, development of trust and drawing attention of the

167 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

consumers which will further result into sales of a particular brand. Celebrity endorsement
is considered to be one of the most successful strategies which helps in the escalation of
sales of that particular brand and incarcerate the market share, this technique is considered
to provide the product an alluring essence to it and glisten the prospect that a trendy or
glamorous touch will provide that product a supplementary appeal, appreciation and
acceptance in the market. Marketers excite their consumers through celebrity endorsement
by presenting them a very commendable and renowned face and hence mark their victory in
creating and generating a demand. Marketers are also raising the recall value of their brand
which optimistically generates the impact in the consumer’s buying behavior.
The use of celebrities in advertisement results in the facilitation of the brands, positioning
and or repositioning of the existing and the new products in the market which further has
a positive impact in the consumer buying behavior and their purchase decision (Kaikati,
1987).
Kamlile Theory
According to this theory, physical attractiveness can very easily change beliefs of the people
meaning that customers normally inclined and have positive attitude towards those who are
attractive (Chaiken, 1979).
Researchers have hence further proved that physical attractiveness can manipulate the
beliefs of individuals indisputably (Chaiken, 1979). Here, the similarity hence portrays
the resemblance which involves the receiver and source or foundation of the message.
Attractiveness of the source signifies that the celebrity is responsible for directing the
consumers towards a certain persuasion through which the consumer gets motivated and
is enthusiastic to attach themselves into a relationship with the celebrity by adopting the
same beliefs, attitude and behavior as reflected by the celerity (source) and if the celebrity
or source tend to change their situation or attitude, the consumers may tend to follow or
adapt to the changes that has been made by the particular celebrity.
Cognitive Perspective Theory
The cognitive perspective theory is grounded upon the cognitive models where the
processing of the information is based upon the cerebellum aspects such as attention,
memory, language, thinking, consciousness and perception (Mberia, 2014). The images
formed in the individual’s mind is highly determined by the personal interaction that he/
she with the other individual (celebrity) which in a way outlines the consumer’s perception,
behavior, response, and self-image. According to this theory, the person is more likely to
respond whenever he/she finds a match to a significant other who further determines their
ability to respond and accept to a celebrity endorsing a certain product. When the person
interaction finds a match to a significant other, he is more likely to respond. This theory
further explains that the Central Nervous System (CNS) first grasps the information that is
being delivered, processes it in different forms so as to culminate and deliver an output in the
form of behaviors, words, and codes. This theory is associated with celebrity endorsement
as the audiences are more likely to get influenced when they get more information about the
NJMSR Volume V I Focus Issue I 168
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

particular product and start considering the information to be true and sufficient for them
to make a decision (Bryant, 1995).
2.2 Review of Related Studies
Mwendwa & Mberia (2014), presented celebrities being a well-known figure in public either
because of their trustworthiness or charisma or could be because of both. It provided an
opportunity to the advertisers to use celebrities so as to promote the company or a brand
and to make sure that it turned out to be an effective commercial. The study focused on how
the consumers acknowledged, connected and recognized with the product and the societal
perception it created. The purpose of this study was to help the companies, marketing
and advertising firms as well as the celebrities to promote their brands in an effective and
efficient manner by incorporating various tools and techniques to reach the large number of
target audience. This also provided a wide picture to the marketers on how effective to what
extend can celebrity endorsement can contribute to the sales of the product and revenue
generation.
Shrestha & Shrestha (2019), conducted a study which showed celebrity endorsement being
one of the most important elements in the field of advertisement globally. Teenagers are
in large number in today’s 21st century marketing era where they spend huge amount of
money for products endorsed by celebrity. The study paid attention on investigating the
insight of Nepali teenagers in celebrity endorsement with their purchase intention. A study
implemented a quantitative approach & inferential. The results showed that celebrity
endorsements had positive outcome on the purchase intention of the teenagers that led to
their buying behavior.
Hammad, (2014), conducted a research where it concluded celebrity endorsement being
one of the most significant forms of marketing communication. The problem statement of
this study helped to understand the impact that celebrity endorsement can have on the
marketing strategies as well as customer psychographics such as; the brand image, brand
positioning and buying behavior of consumers.
Hussain M. A. (2017), conducted the study where celebrity endorsement consisted of 4
pillars: Credibility, attractiveness, product match up and meaning transfer. It analyzed
how celebrity endorsement had an impact upon the consumers buying behavior which
furthermore included the purchase intentions of female segment in the field of cosmetic. The
findings of this research report showed that the elements of credibility (which is composed
of expertise and trustworthiness) of the celebrity had a positive impact on consumers
intention to purchase cosmetics. This research also showed that people get more attracted
towards the products that were endorsed by celebrities.
Hania Safi, (2018), presented a research paper where the author studied about the
celebrity endorsement being relevant in the jewelry advertisement in Lebanese females. It
analyzed customer’s perception, decision making process, and demeanor as all influenced
by celebrity support, underlying explicative models, etc. Attractiveness of celebrity had an
indirect effect upon consumer’s intention to purchase jeweler in this study. The relationship

169 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

between the credibility of celebrity endorser and both consumer marked inclination and
mentality were examined and also studied the impact that it had on customer’s behavior
pertinent to advertisement generated an intention to buy. Mark inclination and mentality of
the consumer were found to be negatively influenced by celebrity endorsement in this study.
Supreet Kaur (2016), studied about the celebrity endorsement which gained immense
popularity over time and was perceived as one of the most effective formulas for the
promotion and growth of the brand and product in the market. In this study, the researchers
took the data from the college students through survey questionnaires and used convenience
sampling technique. It studied the impact of celebrity endorsement on the buying behavior
of college students.
Malik (2016), conducted a study where the data of total 100 respondents were taken with
the help of semi- structured questionnaire and SPSS software was used to analyze the
data. The study focused on analyzing the perceptions and buying intentions of Pakistani
customers with respect to celebrity endorsement. As per the study, it was found that few of
the aspects such as gender, attractiveness, credibility and multiple celebrity endorsement
were found to be effective in terms of buying intentions of the consumers.
Aradhana Pokharel (2017), conducted a study where it tried to focus on the how celebrity
attributes such as (celebrity attractiveness, trustworthiness, expertise and popularity)
affected the buying behavior of consumers in terms of Fast-Moving Consumer Goods (FMCG).
For the study, 150 respondents were included while providing a structured questionnaire
to them and descriptive analysis was done. According to the study, it showed that, the brand
was the top most priority for the consumers whereas the celebrity endorsement was the
4thfactor that influenced their buying behavior. A significant relationship existed between
celebrities’ attributes and purchase intension of FMCG as per the study.
2.3 Development of Conceptual framework of the Study
On the basis of overall preliminary review of literature related to the present area of
interest of the study, the conceptual framework was developed to govern the research
more systematically manner. Figure 2.1 presents with the detailed elements of conceptual
framework governing the present study.

Figure 2.2 Conceptual Framework

NJMSR Volume V I Focus Issue I 170

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3. RESEARCH METHODOLOGY
3.1 Methodology of the Research
This chapter reflects the interpretation and analyses of the responses that were collected for
the purpose of data analysis. An extensive array of sub-topics were touched upon and the
responses were collected through the provision of close ended survey question papers to
people from all over Nepal within the age group of 15-60 years through online social media
portal.
Both qualitative as well as quantitative study could be incorporated so as to conduct the
study but the quantitative paradigm was chosen as the most reliable and appropriate
method for this study.
Quantitative research concentrates upon the elementary association connecting pragmatic
surveillance and statistical expression of quantitative associations. An investigative
approach was incorporated to institute the problems for inquisition, classify the scope
of works and ascertain the hypotheses to congregate the objectives of the study through
quantitative methodology so as to see the sights of the problem of inquiry and ascertain
pertinent problem definition, research questions and working hypotheses systematically.
Also, the implementation of the cross- sectional descriptive study design helped to build the
relationship of the significance in between assortments of observation. Moreover, few results
were unfailing with the literature review but some of the results were quiet contradictory.
3.2 Population of the Study and Sampling
The population of the research incorporates the people of both the genders male and females
aging from 15-60 years belonging to different occupational and economic backgrounds from
only within Kathmandu valley. The reason behind choosing this particular age group is that
it is known as an active population (UNFPA, 2014) which would further more beneficial in
tracking down varying opinions regarding celebrity endorsement according to the selected
age groups. A convenience sampling technique under the non- probability sampling method
was used for this study. In convenience sampling, the researchers collect the data from the
pool of available respondents as per their convenience. Convenience sampling is defined
as a method adopted by researchers where they collect market research data from a
conveniently available pool
3.3 Development of Customer Survey Questionnaires
The models that were considered to build the survey questionnaire were The Source
Attractiveness Model and Meaning Transfer Model considering the demographic as well
as the socio-economic background of the respondents. Likert’s rating scale was used for
designing the survey questionnaires so as to know the impact of celebrity endorsement on
the consumer buying behavior.
In terms of precision and uniformity, the validity as well as the reliability of the test was

171 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

confirmed by the incorporation of newly developed data collection tools and techniques.
Reliability and validity are the methods to evaluate the quality of the research which
indicates about the authenticity of a method or a technique. Reliability mainly focuses on
the consistency of the research whereas; validity focuses on the accuracy of the measure
(Middleton, 2019).
The data collection tool was designed while considering the source attractiveness model
and meaning transfer model so as to test the validity for confirmation. In order to assure the
reliability of the test, 10% of the total sample size (400) i.e., 40 respondents from Sanepa,
Lalitpur Metropolitan City were included in the pre- testing and the data analysis was done
through IBM SPSS of 22 versions.
3.4 Mechanism for Research Administration
This study consisted of the survey design mainly through the social media portals by using
Google forms to collect the data from the respondents due to time constraints because of the
Global pandemic COVID-19. The data were collected only after taking their consent through
filling up the consent form. A completely close ended and self-administered questionnaire
was provided to the participants so as to keep their identity and responses anonymous.
The recording of each datum required at least 8-10 minutes of time. Most of the data were
collected through the online portal using Google form but rest of them were collected in the
physical presence of the participant in a convenient place while maintaining the safety WHO
standards i.e., maintaining of the social distance, using gloves and masks so that both the
respondents as well as the researcher are below the risk belt of getting COVID-19 (WHO,
2020).

4. DATA PRESENTATION & ANALYSES

4.1 Descriptive Analysis

There are three elements that are taken so as to measure the celebrity endorsement and
consumer buying behavior.
Each element was constructed using different item i.e., likert scale. Consumer buying
behavior is taken as a dependent variable and is constructed as rating scale i.e., 1 for low
and 5 for high buying behavior in term of independent variable mention below. Descriptive
analysis (mean and standard deviation) is done as statements wise of related variables and
on overall variable analysis.
Attractiveness
Mean, Standard Deviation and Variance of the total consumer’s perception towards the
celebrity endorsement in terms of attractiveness according to Gender
The consumer’s perception towards the celebrity attractiveness and their buying behavior,
the male responses varied significantly as compared to the female responses out of the
collected information from 400 responses all together. While comparing the variance, the
male responses were higher as compared to the female responses. Additionally, Chi-square

NJMSR Volume V I Focus Issue I 172

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

test was conducted so as to analyze the differences of responses across gender and the P
values were 0.00, 0.00,0.014, 0.05, 0.00, 0.00, 0.12 for purchasing of the product endorsed
by the celebrity, attraction to buy a product or a brand endorsed by the celebrity, celebrities
endorsed ads to be more attention grabbing than the other standard ads, products endorsed
by the celebrities to be more interesting, purchasing of the product just because the
celebrity is using it, celebrity endorsement is an important factor while making a purchase
decision, purchasing of the product because the favorite celebrity is using it respectively
are dependent with each other as the P value is less than or equals to 0.05 (if p < or =0.05,
reject null hypothesis). There after that means we reject the null hypothesis, which means
that there is a positive relationship between the gender and celebrity attractiveness which
helps in determining the consumer buying behavior.
Mean, Standard Deviation and Variance of the total consumer’s perception towards the
celebrity endorsement in terms of attractiveness according to the respondent’s age
The consumer’s perception towards the celebrity attractiveness and their buying behavior,
the variance of the respondents from age 41-50 were higher as of compared to other age
groups. Additionally, Chi-square test was conducted so as to analyze the differences of
responses across the various ages and the P values were 0.00, 0.00, 0.00, 0.003, 0.00, 0 for
purchasing of the product endorsed by the celebrity, attraction to buy a product or a brand
endorsed by the celebrity, celebrities endorsed ads to be more attention grabbing than the
other standard ads, products endorsed by the celebrities to be more interesting, purchasing
of the product just because the celebrity is using it, celebrity endorsement is an important
factor while making a purchase decision, purchasing of the product because the favorite
celebrity is using it respectively are dependent with each other as the P value is less than or
equals to 0.05 (if p < or =0.05, reject null hypothesis), which means that there is a positive
relationship between the age and celebrity attractiveness which helps in determining the
consumer buying behavior.
Trustworthiness/ Credibility
Mean, Standard Deviation and Variance of the total consumer’s perception towards the
celebrity endorsement in terms of Trustworthiness/ Credibility upon the celebrities
according to Gender.

The consumer’s perception towards the celebrity trustworthiness and credibility and
their buying behavior, the variance of the female responses highly varied from the male
respondents. Thus, the variance of the female responses was higher as compared to the
variance of the male respondents. Additionally, Chi-square test was conducted so as to
analyze the differences of responses across the various income levels and the P values
were, 0.00, 0.83, 0.004, 0.003, 0.003 for Stop buying the brand if the celebrity endorsing it is
involved in a scandal, the claims made in advertisements having celebrities to be believable,
celebrities using the products that they have endorsed, purchasing of the product just
because the celebrity is using it respectively are dependent with each other as the P value is

173 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

less than or equals to 0.05 (if p < or =0.05, reject null hypothesis), which means that there
is a positive relationship between the gender and celebrity credibility and trustworthiness
which helps in determining the consumer buying behavior.

Display of consumer’s perception towards the celebrity endorsement in terms of

trustworthiness and credibility by their educational level.

The consumer’s perception towards the celebrity trustworthiness and credibility and their
buying behavior. The variance of the under graduate respondents varied from rest of the
educational level of the respondents. Thus, the variance of the undergraduate was higher
as compared to the variance of the other educational levels. Additionally, Chi-square test
was conducted so as to analyze the differences of responses across the educational levels
and the P values were, 0.004, 0.00, 0.00, 0.002 for Stop buying the brand if the celebrity
endorsing it is involved in a scandal, the claims made in advertisements having celebrities
to be believable, celebrities using the products that they have endorsed, purchasing of the
product just because the celebrity is using it respectively are dependent with each other
as the P value is less than or equals to 0.05 (if p < or =0.05, reject null hypothesis), which
means that there is a positive relationship between the educational level and celebrity
credibility and trustworthiness which helps in determining the consumer buying behavior.
Mean, Standard Deviation and Variance of the total consumer’s perception towards the
celebrity endorsement in terms of Trustworthiness/ Credibility upon the celebrities
according to their Monthly income

The consumer’s perception towards the celebrity trustworthiness and credibility and their
buying behavior. The variance of the respondents having income level of more than 10000
per month varied from rest of the income levels of the respondents. Thus, the variance of
the monthly income more than 10000 was higher as compared to the variance of the other
income levels. Additionally, Chi-square test was conducted so as to analyze the differences
of responses across the educational levels and the P values were, 0.661, 0.004, 0.10, 0.10
for Stop buying the brand if the celebrity endorsing it is involved in a scandal, the claims
made in advertisements having celebrities to be believable, celebrities using the products
that they have endorsed, purchasing of the product just because the celebrity is using it
respectively are dependent with each other as the P value is less than or equals to 0.05 (if p
< or =0.05, reject null hypothesis), which means that there is a positive relationship between
the income level and celebrity credibility and trustworthiness which helps in determining
the consumer buying behavior.
Message flow
The consumer’s perception towards the message flows by the celebrity in an endorsement
and their buying behavior. The variance of the male respondents highly varied from the
variance of the female respondents. Thus, the variance of male respondents was higher
as compared to the variance of the female respondents. Additionally, Chi-square test was
conducted so as to analyze the differences of responses across the educational levels and the
NJMSR Volume V I Focus Issue I 174
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

P values were, 0.704, 0.00, 0.01, 0.05, 0.04, 0.00 for Ads having celebrities to be more effective
than the advertisement which don’t, presence of celebrity in remembering or recognizing
the brand, quick identification of the product endorsed by the celebrity, products endorsed
by the celebrities to be more informative, favorite celebrity gives positive image about the
brand, negative publicity about the endorser can influence the brand decision respectively
are dependent with each other as the P value is less than or equals to 0.05 (if p < or =0.05,
reject null hypothesis), which means that there is a positive relationship between the gender
and celebrity message flow which helps in determining the consumer buying behavior.

4.2 Analysis of Data

Table 4.16: Display of Correlation of coefficients (N=400)
A Gen M. Ed Inc Att Trust Ms
Ag P.C 1 -225** -6.75** 0.38 .485** .120 *
.061 .029

Sig 2T - .000 .000 .444 .000 .017 .225 .561

Ge P.C -.225** 1 .135** .184** .101** -.152** .144** .132**

Sig 2T .000 - .007 .000 .044 .002 .004 .008

Ms PC -.225** 1 .135** .184** .101** -.152** -.059 -.038
Sig 2T .000 .007 - .833 0.00 .002 .239 .448
Ed PC .038 .184** -.011 .173** .084 -.172 **
.127 *
.106*

Sig 2T .444 .000 .833 - .000 .001 .011 .034

In PC .485** .101* -.496** .173** 1 .005 .069 .034
Sig 2T .000 .044 .000 0.16 .252 .916 .168 .503
Att PC -491** .261** .319** .084 -.121* 1 .808** .312**
Sig 2T .000 .000 .000 .093 .016 .000 .000
T PC -292** .051 .113* -.117* -.061 .223** .212** .136**

Sig 2T .000 .309 .024 .019 .220 .000 .000 .007

Ms PC -203** .146** .120* .135** -.066 .420** .358** .248**

Sig 2T .000 .003 .017 .007 .186 .000 .000 .000

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Abbreviations: Ag*- Age, Ge*- Gender, Ed*- Education Level, In*- Income Status, M*-
Marital Status, Att*- Attraction, Ms*- Message flow, Trust*- Trustworthiness, PC*- Pearson

175 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

correlation, Sig2T*- Significant 2- tailed

Following inferences has been taken into account after analyzing Pearson’s Correlation
Coefficients and test of significance by conducting the comparison between several variables.
Correlation Analysis between Age Group and Rest of Variables

The results presented in table 4.16 statistically confirmed that there existed strong
relationship between the age group and purchasing of the product endorsed by the celebrity,
quick identification of the product endorsed by the celebrity, celebrities using the product
that they have endorsed, products endorsed by the celebrities to be more trustworthy and
informative, negative publicity of the celebrity endorser influencing the buying behavior of
the consumers, purchasing of the products just because the celebrity is endorsing it, celebrity
endorsement as an important factor. Whereas, there existed a weak relationship between
age and attraction to buy the product endorsed by the celebrity, ads having celebrities to be
more effective that general ads, presence of celebrity in recognizing the brand, claims made
by celebrity in ads are believable, purchasing of the product just because favorite celebrity
is using it.
4.2.1 Correlation analysis between gender and rest of variables
The results presented in table 4.16 statistically confirmed that there existed strong
relationship between the gender and purchasing of the product endorsed by the celebrity,
quick identification of the product endorsed by the celebrity, celebrities using the product
that they have endorsed, products endorsed by the celebrities to be more trustworthy and
informative, negative publicity of the celebrity endorser influencing the buying behavior
of the consumers, purchasing of the products just because the celebrity is endorsing it,
celebrity endorsement as an important factor. Whereas, there existed a weak relationship
between gender and attraction to buy the product endorsed by the celebrity, ads having
celebrities to be more effective that general ads, presence of celebrity in recognizing the
brand, claims made by celebrity in ads are believable, purchasing of the product just because
favorite celebrity is using it.
4.2.2 Correlation analysis between marital status and rest of variables
The results presented in table 4.16 statistically confirmed that there existed strong
relationship between the marital status group and purchasing of the product endorsed
by the celebrity, quick identification of the product endorsed by the celebrity, celebrities
using the product that they have endorsed, products endorsed by the celebrities to be more
trustworthy and informative, negative publicity of the celebrity endorser influencing the
buying behavior of the consumers, purchasing of the products just because the celebrity is
endorsing it, celebrity endorsement as an important factor. Whereas, there existed a weak
relationship between marital status and attraction to buy the product endorsed by the
celebrity, ads having celebrities to be more effective that general ads, presence of celebrity
in recognizing the brand, claims made by celebrity in ads are believable, purchasing of the

NJMSR Volume V I Focus Issue I 176

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

product just because favorite celebrity is using it.

4.2.3 Correlation between education level and rest of variables
The results presented in table 4.16 statistically confirmed that there existed strong
relationship between the education level and purchasing of the product endorsed by the
celebrity, quick identification of the product endorsed by the celebrity, celebrities using
the product that they have endorsed, products endorsed by the celebrities to be more
trustworthy and informative, negative publicity of the celebrity endorser influencing the
buying behavior of the consumers, purchasing of the products just because the celebrity is
endorsing it, celebrity endorsement as an important factor. Whereas, there existed a weak
relationship between education level and attraction to buy the product endorsed by the
celebrity, ads having celebrities to be more effective that general ads, presence of celebrity
in recognizing the brand, claims made by celebrity in ads are believable, purchasing of the
product just because favorite celebrity is using it.
4.2.4 Correlation between income level and rest of variables
The results presented in table 4.16 statistically confirmed that there existed strong
relationship between the income level and purchasing of the product endorsed by the
celebrity, quick identification of the product endorsed by the celebrity, celebrities using
the product that they have endorsed, products endorsed by the celebrities to be more
trustworthy and informative, negative publicity of the celebrity endorser influencing the
buying behavior of the consumers, purchasing of the products just because the celebrity
is endorsing it, celebrity endorsement as an important factor. Whereas, there existed a
weak relationship between income level and attraction to buy the product endorsed by the
celebrity, ads having celebrities to be more effective that general ads, presence of celebrity
in recognizing the brand, claims made by celebrity in ads are believable, purchasing of the
product just because favorite celebrity is using it.

5. DISCUSSION AND FINDINGS OF THE STUDY

The study concentrated upon the elementary association connecting pragmatic surveillance
and statistical expression of quantitative associations. An investigative approach was
incorporated to institute the problems for inquisition, classify the scope of works and
ascertain the hypotheses to congregate the objectives of the study through quantitative
methodology so as to see the sights of the problem of inquiry and ascertain pertinent
problem definition, research questions and working hypotheses systematically. Also, the
implementation of the cross- sectional descriptive study design was used which helped to
build the relationship of the significance in between assortments of observation.
Celebrity endorsement played a positive role on the buying behavior of the consumers and
uplifted the brand’s image and their promotion in the market (Rabia, Mubarak, Tallat, &
Nasir, 2017).
Celebrity endorsement is one of the most significant forms of marketing communication.

177 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The problem statement of this study helped to understand the impact that celebrity
endorsement can have on the marketing strategies as well as customer psychographics such
as; the brand image, brand positioning and buying behavior of consumers (Hammad, 2014).
The overall study shows that celebrity endorsement highly influences the consumer
buying behavior. As shown in the above finding, gender, age group, educational level and
monthly income of the candidate highly influenced the buying behaviors of the consumers.
It showed that there existed a positive relationship between the gender and celebrity
attractiveness which helps in determining the consumer buying behavior. Also, it showed a
positive relationship between the income level and celebrity message flow which helps in
determining the consumer buying behavior. Moreover, most of the respondents believed that
celebrity attractiveness, celebrity trustworthiness and the dissemination of the message by
the celebrity endorser through the product played a huge role in influencing the buying
behavior of the consumers.

6. CONCLUSION
On the bases of overall data presentation and analyses, the present researcher concluded that
the celebrity endorsed advertisements attracted more consumers than the advertisements
which were not endorsed by the celebrities and determined the effectiveness of a certain
product or a brand in the market. The products endorsed by celebrities were more consumed
by the customers in the market as compared to the products that were not endorsed by the
celebrities.
The advertisements containing celebrities were found to be more informative and attractive
and also the visibility of consumer’s favorite celebrity in the advertisement reflected positive
image about the brand. The negative publicity about the celebrity endorser developed trust
issues among the consumers and affected the purchase decision for a particular brand or
a product. The celebrity endorsement had a significant impact on the consumers as per
their attitude towards the advertisements endorsed by the celebrities and their purchase
intentions. The physical attractiveness, credibility and the recognition of the celebrities
with the reference to endorsed advertisements all have an impact on consumer’s perception
about the endorsed products.
Looking at the overall scenarios, the marketers are also being highly benefited by the usage
of celebrities in their brand endorsements. The study furthermore concluded that the
advertisements containing celebrities also helped in boosting up the sales and purchase of
a certain products or a brand such as beauty and styling products, clothing and apparel
brands, sports and luxury items such as jewelry, auto mobile as per the respondents which
showed that the consumers are aware and are influenced by the celebrities.

NJMSR Volume V I Focus Issue I 178

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
REFERENCES
Act, T. C. (2018). An act made to provide for amendment and consolidation of laws.
Adhikari, A. (2016). More than meets the eye. New Business Age.
Aradhana Pokharel, B. P. (2017). Influence of celebrity endorsement on consumers’ buying
behavior of fast moving consumer goods in Kathmandu. Journal of Business and
Social Sciences Research.
Associates, P.L. (2019). Retrieved from Pioneer Law Associates: http://www.pioneerlaw.com/
news/advertisement-regulation-act-2019.
Baker, M., & Churchhill, G. (1977). The impact of physically attractive models on advertising
evaluations. Journal of Marketing Research.
Bandura, A. (1977). Social learning theory. Department of Psychology.
Block, C. A. (1983). Effectiveness of celebrity endorsers. Journal of Advertising Research, 57-61.
Bryant, J. J. (1995). Introduction to media communication. Journal of Personality and Social
Psychology, 127-128.
Chaiken, S. (1979). Communicator physical attractiveness and persuasion. Journal of Personality
and Social Psychology.
Comission, F. T. (2009, October 5). Guides concerning the use of endorsements and testimonials
in advertising. America.
Cracken, G. M. (1989). Who is the celebrity endorser? Cultural foundations of the endorsement
process. Journal of Consumer Research, 21-310.
Erdogan, B. Z. (1999). Celebrity endorsement: A literatire review. Journal of Marketing Management.
Gauchan, Y. (2018, September 02). Director general of the department of commerce, supplies and
protection of consumers. (R. D. Sharma, Interviewer)
Giridhar, D. K. (2012). Effects of celebrity endorsement on consumer buying behavior and
branding of a brand. Zenith International Journal of Business Economics &
Management Research.
Golsmith, R. E., Lafferty, B. A., & Newell, S. J. (2000). The impact of corporate credibility and celebrity
on consumer reaction to advertisements and brands. Journal of Advertising, 43-54.
Gurung, D. S. (2019). Celebrity endorsements and purchase intention of the teenagers: Case of
Nepal. JK Business School, 1-13.
Hammad, A. (2014). The impact of celebrity advertisement and endorsement on the buying
behaviour of consumers. Brand Image and Brand Positioning of Coca Cola in London,
United Kingdom.
Hania Safi, M. A. (2018). The effect of celebrity endorsement on consumer behavior: Case of the
Lebanese jewelry industry. Arab Economic and Business Journal.
Hussain, & Nazish, M. A. (2017). Impact of celebrity endorsement on consumer buying behavior.
British Journal of Marketing Studies, 79-121.
Kaikati, J. G. (1987). Celebrity advertising; A review and synthesis. International Journal of
Advertising, 93-105.

179 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
Kambitsis, C., Harahousou, Y., & Nicholas D. Theodorakis, G. C. (2002). Sports advertising
in print media: The case of 2000 Olympic games. Corporate Communications An
International Journal.
Kamnis, M. A. (1990). An investigation into the “Match-up” hypothesis in celebrity advertising:
when beauty may be only skin deep. Journal of Advertising, 4-13.
Kharel, P., Khanal, C., Pokhrel, G. P., Shrestha, D. P., & Tripathi, T. D. (2016). Assesment of
media development in Nepal: Based on UNESCO’s media development indicator.
UNESCO Office Kathmandu.
Klaus, N., & Bailey, A. A. (2008). Celebrity endorsements: An examination of gender and
consumers’ attitudes. American Journal of Business, 53-62.
Kotler, P. (2011). Reinventing marketing to manage the environmental imperative. Journal of
Marketing.
Lavrakas, P. J. (2008). Convinience sampling. Encyclopedia of Survey Research Methods.
Malik, H. (2016). The impact of celebrity endorsement on consumer buying behavior. Journal of
Marketing and Consumer Research.
Mberia, M. M. (2014). The effects of celebrity endorsement in advertisements. International
Journal of Academic Research in Economics and Management Sciences.
McCracken, G. (1985). Culture and consumption: A theoretical account of the structure and
movement of the cultural meaning of consumer goods. The Journal of Consumer
Reseacrh , 1-14.
McGuire, W. (1985). Attitudes and Attitude Change. Handbook of social psychology, 223-346.
Middleton, F. (2019, July 3). Scribbr. Retrieved June 26, 2020, from Scribbr: https://www.scribbr.
com/methodology/reliability-vs-validity/.
Mukherjee, D. P. (2009). Impact of celebrity endorsement on brand image. Cognizant Technology
Solutions.
Mwendwa, M., & Mberia, H. K. (2014). The effects of celebrity endorsement in advertisements.
International Journal of Academic Research in Economics and Management Sciences.
Nawaz, N.-U.-A. (2012). What makes customers brand loyal: A study on telecommunication
sector of Pakistan. International Journal of Business and Social Science.
Perner, L. (1997). Consumer behavior: The Psychology of Marketing.
Plourde, C., & A, A.-M. O. (2019). Celebrity endorsement in the world of luxury fashion – when
controversy can be beneficial. Journal of Marketing Management, 1193-1293.
Pradhan, A. P. (2017). Influence of celebrity endorsement on consumers goods in Kathmandu.
Journal of Business and Social Sciences Research, 1-14.
Qureshi, M. M., & Malik, H. M. (2017). The impact of celebrity endorsement on consumer buying
behavior. Advances in Social Sciences Research Journal.
Rabia, M., Mubarak, N., Tallat, H., & Nasir, W. (2017). A study on study habits and academic
performance of students. International Journal of Asian Social Science.

NJMSR Volume V I Focus Issue I 180

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
Rai, D. S., & Sharma, A. K. (2013). Trends in celebrity brand endorsement on Indian television.
International Journal of Marketing.
Regmi, D. (2015, April 19). New Business Age. Retrieved April 19, 2015, from https://www.
newbusinessage.com/MagazineArticles/view/1150
Ri, D. S., & Sharma, A. K. (2013). Trends in celebrity brand endorsement on Indian television.
International Journal of Marketing.
Rodgers, E. (1962). Diffusion of innovations. New York: Free Press of Glencoe.
Roll, M. (2010, October 2nd). Celebrity endorsement guide. Retrieved on October 2nd, 2010,
frombrandstrategyinsider.com: https://www.brandingstrategyinsider.com/celebrity-
endorsement-guide/.
Roobina, O. (1991). The impact of celebrity spokespersons’ perceived image on consumers
intention to purchase. Journal of Advertising Research, 46-45.
Rumsey, D. J. (2011). Dummies. Retrieved on 2011, from A Willy Brand.
Shrestha, D. S. (2019, December). Celebrity_Endorsement_and_Purchase_Intentions_of_
Nepalese_Teenagers. Research Gate. Retrieved on December 2019, https://www.
researchgate.net/publication/337810881.
Sternthal, B., Dholakia, R., & Leavitt, C. (1978). The persuasive effect of source credibility: Tests
of cognitive response. Journal of consumer research.
Supreet Kaur, A. G. (2016). Celebrity endorsement and buying behaviour. A Study of Panjab
University Students.
Temperly, J., & Tangen, D. (2006). The Pinocchio factor in consumer attitudes towards celebrity
endorsement: Celebrity endorsement. Innovative Marketing.
Till, B. D., & Busler, M. (1998). Matching products with endorsers. Journal of Consumer
Marketing .
UNFPA. (2014). Population monograph of Nepal . Central Bureau of Statistics.
Westen, D. (1999). The scientific status of unconscious processes: Is Freud really dead?
W. H. (2020). Country & technical guidance - Coronavirus disease (COVID-19). World Health
Organization (WHO).
Zafar, E. B., J, B. M., & Stephen, T. (2001). Selecting celebrity endorsers: The practioner’s
perspective . Journal of Advertising Research.

181 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

EFFECT OF WORKPLACE ENVIRONMENT ON EMPLOYEE PERFORMANCE IN

NEPALESE COMMERCIAL BANKS

Pratistha Sharma Poudel Manoj K Bhatta∗

ψ

ABSTRACT
This study investigates the effect of workplace environment on the employees’ performance
in the Nepalese commercial banks. The study is based on descriptive and causal comparative
research design. It estimated the relationship between physical environment, supervisor
support, job aid and work life conflict and employees’ performance and employees’
commitment. Regarding workplace environment and employee performance 176 structured
questionnaires were administered to collect the data from respondents that consisted
of employees of the commercial banks within Kathmandu valley. The study has brought
positive finding regarding relationship between the workplace environment and employee
performance in case of the Nepalese Commercial Banks, though certain practices are yet to
be improved as indicated from poor performance of the bank in solving the work life conflict
and their employee performance in Nepalese Commercial Banks.

Keywords: Employee performance, Employee commitment, Physical environment,

Supervisor support, Job aid, Work life conflict

ψ
Pratistha Sharma Poudel, MBA student at Global College International
∗ Manoj K Bhatta, faculty at Global College International

NJMSR Volume V I Focus Issue I 182

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Background of the Study

In today’s competitive business environment, organizations can no longer afford to
waste the potential of their workforce. There are key factors in the employee’s workplace
environment that impact greatly on their level of motivation and performance. The workplace
environment is built in place that influence employee morale, productivity and engagement
both adversly and negatively (Chandrasekar, 2011). Job performance refers to behaviors
or activities that are performed towards achieving the organization’s goal. (Motowidlo et
al, 1999). Performance is the result of work of a person or group in an organization at a
particular time which reflects how well the person or group reach the qualification of a
job in a mission of organization’s goal achievement. Various factors could influence the
employee’s job performance including equipment, physical work environment, meaningful
work, standard operating process, and reward for good or bad systems, performance
expectancy and feedback on performance (Pisheh, 2011). The physical work environment
can hinder, intervene with, or set limits on the range of work behaviors that are displayed
which, in turn, potentially influence task performance.

Employee performance is the aggregate result of effort, ability, and perception of tasks (Platt,
2010). Employee performance is imperative for organizational outcomes and success. Many
factors influence employee performance and workplace environment factors stands out as
the key determinants of performance. It is the key multi character factor intended to attain
outcomes and has a major connection with planned objectives of the organization (Sabiret
et al, 2012). Suitable workplace environment guarantees the wellbeing of employees as well
as enables them to exert themselves to their roles with all energy that may results to higher
performance (Taiwo, 2010).

The physical aspects of a workplace environment can have a direct impact on the productivity,
health and safety, comfort, concentration, job satisfaction and morale of the people within
it. Important factors in the work environment that should be considered include building
design and age, workplace layout, workstation set-up, furniture and equipment design
and quality, space, temperature, ventilation, lighting, noise, vibration, radiation, air quality
(Sarode, Shirsath, 2012). Srivastava (2008) revealed that respondents who perceived
their work environment as to be adequate and favorable scored comparatively higher on
the measures of job satisfaction, performance, and perceived organizational effectiveness.
Similarly, Naharuddin and Sadegi (2013) showed that only supervisor support is not
significant towards the employee performance. However, job aid and physical workplace
environment also have significant relationship with the employee performance.

Malik et al. (2011) analyzed that performance of employees mostly depends on physical
working conditions, training and development and communication practices. The work
environment has an impact on an individual’s ability to work safely, competently and in
183 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

compliance with operational performance targets. It is necessary to train the employees to

efficiently and effectively handle the work overload. Similarly, Riyanto et al. (2017) showed
that there is a simultaneous effect on working motivation and working environment on
employee performance.

Arokiasamy (2013) found that the factors like compensation, rewards, job security and
working environment increase level of commitment and sense of belonging with the
organization. Likewise, Noah and Steve (2012) found that a work environment in an
organization increases level of satisfaction in job that ultimately leads to achievement of
organization goals. Similarly, Ali et al. (2013) found that the productivity of employees will
increase by keeping working conditions and working environment up to certain threshold
level and subsequently will decrease if work load will increase from above certain threshold
level. In addition, Haynes (2008) concluded that the behavior components of working
environment have significant impact than the physical components of working environment
where level of interaction is high, supports creativity and transfer of transactional knowledge.
Furthermore, Sehgal (1995) found that office layout play vital role in increasing employees’
productivity level. The study observed that the work place environment contributes to
24% in job satisfaction. It increases productivity level of an individual by 5% and team
performance can be increased to 11% through developing good working environment.

Wrzesniewski and Dutton (2001) defined importance of working environment as it is an

important determinant of employee performance and helps employees to concentrate
on their job properly. Salanova et al. (2005) found a positive relation exists between
HRD climate and employee performance and any change in working climate impacts on
performance. According to Bakotic and Babic (2013), employees like to work in working
environment that is less risky. Similarly, designs of the office also influence the performance
and motivation of the employees. Mokaya et al. (2013) found that factors like working
conditions, remuneration and promotions play vital role for employees’ level of job
satisfaction. Likewise, Ollukkaran and Gunaseelan (2003) found that how well employees
engage with their working environment determines the employees’ performance level.
Moreover, Egan et al. (2004) found that the development of good culture in the organization
affects employees’ level of motivation.

In context of Nepal, Pokhrel (2016) found that hiring and selection, training and development,
working environment, performance appraisal, compensation and promotion practices are
positively significant with employee commitment. Similarly, Paudel (2016) assessed the
impact of employee motivation on organizational performance of Nepalese commercial
banks. The results showed that there is a positive impact of employee motivation factors
(employee participation, performance appraisal system, rewards, training, compensation
and working environment) on organizational performance. Likewise, Nepal (2016) revealed
that training and development, working condition, performance appraisal conditions are the

NJMSR Volume V I Focus Issue I 184

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

major determining variables for job satisfaction in Nepalese commercial banks. According
to Gautam (2016), salary and remuneration, nature of work, training and development
opportunities, promotion opportunities, working condition, and performance appraisal
are found as the factors of satisfaction. Adhikari (2010) stated that in Nepalese workplaces
most prominent human resources issues and problems such as unproductive staff, lack of
corporate culture, lack of mechanism to implement labor legislation, low degree of integration
and coordination of different function, lack of performance based system, distorted flow
of communication and information, low level of pay, rising absenteeism and proliferating
union activities etc. directly affect the performance of employee. Similarly, Rijal (2006)
observed that the working environment in Nepalese commercial banks is congenial and
the informal communication system is also gradually increasing in some of the commercial
banks. The above discussion reveals that there is no consistency in the findings of various
studies concerning the impact of working environment on employee performance.The
major purpose of this study is to examine the impact of workign environment on employee
performance in Nepalese commercial banks. Specifically, it examines the impact of physical
environment, work life conflict, supervisor support and job aid on employee performance
and commitment in Neplaese commercial banks.

The remainder of this study is organized as follows: Section two describes the sample, data
and methodology. Section three presents the empirical results and the final section draw
conclusions and discuss the implications of the study findings.
1.2 Statement of the Problem
Creating a work environment which promotes wellbeing of employees and increase individual
performance is viewed as a strategy for enhancing company efficiency and productivity.
Employee’s normally have expectation and will demand a workplace environment that
facilitates them to perform their work optimally. When this is sufficiently provided, it
can boost organizational competitiveness (Heath, 2006). Employees’ performance and
productivity in any organization is essentially defined by working environment (El-Zeiny,
2013).

Allan et al. (2007), the inability of employees to achieve balance between work and home
domains can have negative consequences for both individual and organizations. Stallworth
and Kleiner (1996) argued that an organization’s physical layout is designed around
employees’ needs in order to have high productivity and satisfaction. Bank institutions
make significant investments in designing, building and ultimately recruiting knowledgeable
personnel. The banks immediate work environment in terms of actual physical layout
and design of an office is extremely important when it comes to maximizing individual
performance.

Poorly designed workstations, unsuitable furniture, lack of ventilation, inappropriate

lighting and excessive noise directly affect employee performance (Becker, 2002). Noble
185 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

(2009) stated that massive attention should be given in identifying and dealing with working
environment because when employee have negative perception to their environment they
suffer from high level of stress affecting their performance.

The job aid, supervisor support and physical workplace environment are the factors of
workplace environment in an organization that could affect the employees’ performance.
Furthermore, as part of the work itself, it consists of the relationship between work, tools
of work and workplace. The workplace environment also could leads to the unsafe and
unhealthy environment in an organization (Chandrasekar, 2011). Roelofsen (2002) indicated
that improving the working environment reduces complaints and absenteeism while
increasing productivity. The business environment is becoming very competitive, dynamic
and complex. Management should investigate to ensure that workplace environment is
conducive enough to enable employee performance in order to remain competitive.

In the context of Nepal, lots of conflict between job requirement and current level of
employees’ skills making it difficult in performing the given jobs. Employees’ participation
refers to the direct involvement of individuals in decision relating to their immediate work
organization and to indirect involvement in decision making, through representatives in an
organization (Agrawal, 2005).

1.3 Objectives of the Study

The main purpose of the study is to analyze the effect of workplace environment on the
employees’ performance of Nepalese commercial banks. Some precise objectives of this
study are as follows:

i. To assess the effect of physical environment on performance and commitment of

bank employees.

ii. To examine whether supervisor support contributes to increase bank employees’

performance and commitment

iii. To identify whether job aid contributes towards employees’ performance and
commitment

iv. To analyze the effect of work life conflict factor on performance and commitment
of bank employees’.

1.4 Research Questions

The dimensions of physical environment and job aid are still unclear in respect of how they
affect performance in the Nepalese banking sector. Commercial banks in least developed
country like Nepal play a very critical role in the economic development of the country.

NJMSR Volume V I Focus Issue I 186

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Though there are above mentioned empirical evidences in the context of other countries
and in Nepal, no such evidence using more recent date exists in the context of Nepal. This
study, therefore deals with following issues in context of Nepalese commercial banks:

1. What is the perception of employees on status of workplace environment (Job aid,

supervisor support, work life conflict and physical environment) in the Nepalese
commercial banks?

2. Is there any relation between job aid and supervisor support with employees
performance?

3. Whether work life conflict (personal and professional work life conflict) is related
to employees’ performance?

4. To what extant physical environment (Furniture, lighting, ventilation and noise)

has significant impact on employees’ performance?

5. Does job aid have fruitful impact on employees’ performance?

6. What is the impact of supervisor support on employees’ performance?

7. Does workplace environment affect the employees’ performance in Nepalese

commercial banks?

2. REVIEW OF LITERATURE

2.1 Review of Theoretical Perspective

Anderson et al. (2002) investigated the effect of work life conflict on employee performance.
The conflict can influences employees to consider leaving their institution which may have
a significant impact on the work life balance of an individual. If there is a lack of balance
work and life there will be a chance to increase level of work family conflict. Similarly, when
the employee is able to fulfill the demands of society than balance is achieved. Similarly this
study shows that the balance between works and family in the work place environment can
decreases conflicts and increase employees’ performance productivity. Likewise this study
investigated the impact of formal and informal work–family practices on both work-to-
family and family-to-work life conflict (WFC, FWC) and a broad set of job-related outcomes.
National Study of the Changing Workforce (NSCW) results showed that negative career
consequences and lack of managerial support were significantly related to work-to-family
conflict. These were significant predictors of conflict even when accounting for the effects of
work schedule flexibility.

Kohun (2002) analyzed that workplace environment and its effect on organizational

187 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

performance in the public sector organization. 285 employee’s surveys were done by using
stratified random sampling through the questionnaire. This study the ability of the physical
workplace environment to influence behaviors and to create an image is particularly apparent
for service business such as banks. These includes poorly designed workstations, unsuitable
furniture, lack of ventilation, inappropriate lighting, excessive noise, insufficient safety
measures in fire emergencies and lack of personal protective equipment are occupational
disease that turn negative impact on employees’ performance. This reduces the productivity
due to workplace environment. The study concluded that quality of workplace environment
impact on the level of employees’ motivation and their performance.

Boles et al. (2004) observed the relationship between health risks and productivity; including
health related absence and impaired performance on the job. A cross-sectional analysis
was implemented consisting of 2264 employees of a large national employee located in
Northeast. Participants responded to health risk assessment and work productivity scale.
Multivariate analyses, including logistic and linear regression were used to determine the
significance of health risks on productivity loss. Investigated that employees are physically
and emotionally having the desire to work and then their performance outcomes shall be
increased. However, the study also stated that by having a proper workplace environment
reduces the number of absenteeism and thus can increase the employees’ performance.
High level of performance leads to higher level of corporate productivity which in turn leads
to higher profits.

Gutnick (2007) analyzed that interior design technique that may reduce employee stress and
enhance productivity while using environmentally responsible materials and furnishings. The
design paradigm was qualitative, and the research method used was a case study. Specifically,
this was an action-research project consisting of a design proposal for an advertising firm
in Michigan. The design solution includes elements that increase collaboration and enable
teamwork among employees, combined with flexible and ergonomic furniture as a means
to enhance productivity. The facility is occupied by an advertising agency that specializes in
managing digital advertising campaigns for Fortune 500 companies.

Haynes (2008) analyzed that evaluate the effect that office comfort has on office occupiers’
productivity.   Study shows that linkage between the physical comfort of the office
environment and the effect on the productivity of the office occupiers. Office comfort
will initially be discussed as a generic concept and subsequently be broken down into
sub components.

Henry (2009) investigated that conflict management and its effects on employees’
performance using convenience one hundred and thirty mangers (130) selected from
government departments, parastatals and private companies in Gaborone. The analysis
of data is made quantitative approach. Data is analyzing descriptive methods. Only 85
questionnaires were by the respondents which accounts to 65.4%. The remaining was
NJMSR Volume V I Focus Issue I 188
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

not returned or misplaced by the respondent accounted 34.67%. On the basis of findings,
the study concluded there is no significant relationship between conflict management
and employee’s performance.

McGuire (2009) analyzed that the physical environment on employee commitment. It

explores how favorable working conditions can affect an employee’s sense of well-being
which in turn can generate higher levels of employee commitment. The host organization
for the study was a large call centre in Scotland employing 1,020 full time employed in 75
teams. The call centre is owned and managed by a prominent utility supplier as part of its
customer service operation and is located at the company headquarters. The call center has
an automatic call distributor (ACD) which assigns calls to operators within individual cells.
Employees must be logged on to the phone for 96% of their working day, which includes
agreed log outs for the following; lunch, two 15-minute breaks, daily team meetings and one
to one’s with their supervisor. The call centre was recently awarded the prestigious title of
being one of the ‘12 Best Call Centre Environments’ in the UK and Ireland.

2.2 Review of Related Studies

Bulut and Culha (2010) analyzed that organizational training on employee commitment
focusing on employees’ emotional and affective response towards their organization. This
study is based on primary data with survey of 298 responses of four and five star hotels
operating in Izmir, Turkey. The result shows that all dimensions of training positively
affected employees’ commitment. Implications have been presented for both researchers
and human resources practitioners as to utilize organizational training factors to raise
employee’s commitment.

Dost et al. (2011) investigated that Employee commitment always plays a very vital role
in improving the organizational performance and. The organizational performance can be
measured through a lot of ways e.g. company financial performance, employee turnover,
return on equity etc. On the bases of data which was collected from the three major cities
of Pakistan (Lahore, Rawalpindi, Islamabad), it was acknowledged that organizational
performance can be enhanced by involving employees in decision making that will ultimately
increase their commitment in the organization. The data is collected from public and private
sector employees from Lahore, Rawalpindi and Islamabad region. The total 525 respondents
were approached for data collection. Out of these 525 respondents, 515 were answered
correctly and 10 questionnaires were discarded. So, total sample size of our research was
515 employees in public and private organizations. Among 515 respondents 311 were male
and 204 were female employees related to Human Resources, Information Technology, Audit
& Accountancy, Finance, Marketing, Procurement, Budgeting and Technical Departments.

Ajala (2012) analyzed that adopted the descriptive survey research design of the ex-
post facto type. The random sampling technique was used to select 350 respondents. A
structured questionnaire with three sub-sections was used to collect data that were analyzed
with mean values and simple percentages. The results showed that workplace features
189 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

and good communication network at workplace have effect on worker’s welfare, health,
morale, efficiency, and productivity. It was recommended that industrial social workers
should advocate with management to create a conducive workplace environment and good
communication network that will attract, keep, and motivate its workforce for healthy living
and improved productivity and guarantee virile employees, enthusiastic employers and
sustenance of the organization.

Naharuddin (2013) analyzed those office environments that affect employee’s performance
in Miyazu Malaysia. Data was collected through the survey and the results shows that only
supervisor support is not significant towards the employees’ performance, meanwhile job
aid and physical workplace environment are having a significant relationship towards the
employees’ performance.

Ashfaq et al. (2013) analyzed that focuses on finding out the impact of work-life conflict
and work overload on employee performance in banking sector of Pakistan. The data was
gathered through questioners from 300 employees working in banks of Pakistan. The results
showed that employee performance is affected by work-life conflict and work overload
because in banking sector working hours are prolong, it becomes tough for the employees to
manage time for their families and personal life. Employee performance can be improved by
implementing strategies (like job sharing and dividing a task). By dividing a job employees
will feel relax will be able to perform better in the organization.

2.3 Review of Major Nepalese Studies

Shrestha (2007) examined the advantages of creating and maintaining a positive work
environment. Greater productivity is possible with happier people, employee’s stability,
better health and security also business advantages, higher profits are achievable. Improving
working environment results in decreases in the number of error rates, absenteeism and
hence increases performance. The results also highlighted that in twenty first century,
businesses are moving faster towards more strategic approach of environment management
to enhance their performance through improving and managing performance level of
employee’s.

Shrestha (2011) analyzed that effect of level of trust, communication and difference
in conflict management style on the perceived level of conflict between manager and
employees in commercial bank in Nepal. The survey primary data used data collection by
questionnaire tool used. There were 105 respondents from five commercial banks in Nepal.
The study used a questionnaire survey method to collect data and respondents are selected
probability sampling techniques for data analysis SPSS software tools used. The study found
that employees and managers working in commercial bank in Nepal reported remarkable
little conflict. They are satisfied with the level of trust and communication in the workplace.

NJMSR Volume V I Focus Issue I 190

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Adhikari et al. (2012) analyzed that although the country has been successful in decreasing
people’s number under the poverty line, there are challenges in meeting the decent work
goals. The study observed that in the case of quality of work life, since there is raising
dissatisfaction among employers and employees in the present economic and political
circumstances, they are interested in short-term benefits. The studied focused on decent
work and quality of work life for the first time in the Nepalese context. The study attempted
to familiarize readers with the situation of decent work and quality of work life in Nepalese
organization.

Joshi et al. (2013) analyzed impact of working conditions on manufacturing industries.

Lack of adequate physical infrastructures, poor working conditions with non-existent safety
procedures have posed risk to physical, mental and overall well-being of workers. The study
identified work related physical ailments and discomforts dominate brick industries of
Nepal. The study found that presence of inferior physical environment, working conditions
and practices has contributed to musculoskeletal injuries and problems exposing working
workers to risks and hazards

Gaire and K.C (2016) analyzed the effect of supervisor’s behavior on job performance,
satisfaction and commitment of employees towards their job. They also examined the
relationship of supervisor’s behavior with turnover intension and absenteeism of the
employees. The result showed that there is positive significance difference between the
participative supervisor’s behavior and attitudinal behavior (job satisfaction, performance
and commitment) and negative significance with work related behavior (turnover
intention). The relationship between the participative supervisor’s behaviors was found
insignificant with absenteeism. Similarly, there is negative significance difference between
the autocratic supervisor’s behavior and attitudinal behavior (job satisfaction, performance
and commitment) and positive significance difference with work related behavior (turnover
intention and absenteeism). The study concluded that performance of employees can be
improved by bringing a positive change in the behavior of supervisor.

2.4 Theoretical Framework of the Study

Theoretical framework is a system of concepts, assumptions, expectations, beliefs, and
theories that support and informs about the study and is a key part of a research design.
Bushiri (2014) analyzed that working environment plays vital role in motivating employees
to perform their assigned job. Based on the literature review relationships between
dependent variable and independent variables are constructed to form the study framework
for the study, is shown in figure 2.1.

191 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Figure 2.1: Schematic Diagram Showing the Relationship between Variables

3. RESEARCH METHODOLOGY

3.1 Research Approach and Design

The study has employ descriptive research design and causal comparative research design to
deal with the fundamental issues associated with various factors of workplace environment
on employee performance in Nepalese commercial banks. This study has adopted
descriptive research design for facts finding and to identify adequate information about the
status of workplace environment in Nepalese commercial banks. It has been undertaken
in order to ascertain and be able to describe the characteristics of the variable used. The
descriptive research design provides an accurate portrayal or account of the characteristics,
for example behavior, opinions, abilities, beliefs and knowledge of employees, so descriptive
research design is selected. Similarly, the study involves interpretation of opinions of the
respondents regarding their workplace environment. The descriptive survey design method
is useful in exploring how workplace environment affect performance in the study area. It
is an efficient approach of collecting data regarding characteristic of sample of a population,
current practices, conditions or needs (Chandran, 2004). This study also has used the causal
comparative research design in order to observe the direction, magnitudes and relationship
between workplace environment factors and employee performance. It helps in analyzing
the cause and effect relationship among the different variables used in the study. The basic
purpose of employing causal comparative research design in the study is to understand and
examine the effect of workplace environment factors on performance of employees.

NJMSR Volume V I Focus Issue I 192

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

3.2 Scope of Works

The study is based on primary and secondary sources of data and designed to examine the
effect of workplace environment on employee performance in Nepalese commercial banks.
The total population for this study is the employees of Nepalese commercial banks. Well-
constructed questionnaires were distributed to different age group people to collect their
responses through online or survey.

3.3 Population of the Study

This study includes 11 commercial banks within Kathmandu valley. The level of employees
taken as respondents in the study falls under assistant level, officer level, manager level
executive levels and senior manager level. For the analysis of factors of workplace
environment affecting employee performance in Nepalese commercial banks, questionnaires
were distributed to the respondents and 176 were collected. For data collection, one of the
non-probabilistic techniques i.e. convenience has been used. No restriction has been placed
on the type of survey. This method was most useful method because it is the way to reach
the respondents. A set of questionnaires shown in appendix was prepared and distributed
to the employees of 11 commercial banks within Kathmandu valley.
3.4 Sampling Techniques

This study was designed to measure the effect of workplace environment on employee
performance and employee commitment in Nepalese commercial banks. The study used
convenience sampling to track the respondents for the study. The sampling technique
generally assumes a homogeneous population that means the member of population poses
similar characteristics. The target population for this study is the entire employee working
in Nepalese commercial banks. The primary data were used to extract the information from
the employees regarding the effect of workplace environment on employees’ performance
in Nepalese commercial banks.

3.5 Data Modeling Techniques

This study is based on the primary data. This section elaborates on how data were collected
for this study purpose and also time frame for the study. Structured questionnaire has been
used to collect the required information from the employee of commercial banks. Structured
question was distributed to the employee of commercial banks. The questionnaire was
divided into 2 sections where the first section includes the general information’s about
respondents and 5-scale Likert scale questionnaire section includes statement question
physical environment, work life conflict, supervisor support, job aid employee performance
and employees’ commitment.

193 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4. DATA PRESENTATION AND ANALYSIS

This section presents the primary data that are taken to evaluate the effect of workplace
environment on employee performance and commitment. This section also presents
the results of the questionnaire survey conducted among different employee working in
Nepalese commercial banks. Questionnaire survey was designed to understand the view of
the respondents in relation to effect of workplace environment on employee performance in
Nepalese commercial banks. A set of questionnaires including, multiple choices and Likert
scales type of questions were provided. Altogether 176 respondents are surveyed and
analyzed in accordance with the objective of the study. The respondent profile along with
their personal characteristics and result of the survey are presented in below.

4.1 Respondent/ Participation Information

In this study, the respondents include employees of 11 selected commercial banks. Total
of 200 questionnaires were distributed to the employees of the banks including manager
level, officer level, assistant level. However, only 176 questionnaires were collected. The
respondents’ profile reveals the personal characteristics of respondents combined on
the basis of gender, age, marital status, academic qualification, types of banks, years in
the organization, tenure of job and monthly income. Demographic characteristic plays a
significant role in understanding behavior of the employees. This section therefore describes
the demographic characteristics of employees working in the organization. This section
deals with the gender, age, marital status, academic qualification, years in the organization
and tenure of job and monthly income of the respondents working in the commercial banks.

4.2 Correlation Analysis

Having indicated the perception of employee’s performance, the correlation analysis has
been conducted and the results are presented in Table 4.2.15. More specifically, it shows the
results of Kendall’s Tau correlation coefficients analysis.

This table shows the Kendall’s correlation coefficients between dependent and independent
variables. EP (employee performance defined as an assessment whether an employee
performs a job well), and EC (employee commitment defined as commitment is a force that
binds an individual’s to a course of action of relevance to achieve one or more targets.) are
dependent variables and PE (physical environment defined as tangible workplace aspects
environment that comprises spatial layout and functionality of the surroundings), WLC (work
life conflict refers to the conflict can be defined as tensions, annoyances, disagreements and
personal incompatibilities over matters such as beliefs, values, habits, and personalities), SS
(Supervisors have the responsibilities of leading the subordinates in their group task and
the groups in the organizations. As a supervisor, they are the first line managers), and JA (A
job aid is something that people rely on. Job aid helps in term of providing procedure for the
employees towards their task) are independent variables.

NJMSR Volume V I Focus Issue I 194

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Table 4.3.7: Kendall’s Tau Correlation Coefficients Matrix for the Dependent and
Independent Variables

  Vari-
ables Mean S.D EP EC PE WLC SS JA
EP 3.540 0.277 1
EC 3.736 0.525 0.227** 1
PE 3.786 0.471 0.418** 0.102 1
WLC 2.671 0.535 0.244** -0.160** -0.010 1
SS 4.006 0.577 0.285 **
0.368 **
0.164 **
-0.270** 1
JA 3.611 0.505 0.219** 0.362** -0.019 -0.052** 0.185** 1
Notes: The asterisk signs (**) and (*) indicate that the results are significant at 1 percent and
5 percent level respectively

Table 4.3.7 shows that physical environment is positively related to employee performance. It
indicates that better the physical environment, higher would be the employee performance.
Likewise, supervisor support and work life conflict is also positively correlated to employee
performance. It indicates that better guidance and supervisory support leads to increase in
the level of employee performance.

Similarly, there is a positive correlation between job aid and employee performance. It
indicates that better coordination and job aid leads to increase in the level of employee
performance.

The result also shows that physical environment is positively related to employee
commitment. It indicates that better the physical environment, higher would be the employee
commitment. However, there is a negative relationship between employee commitment and
work life conflict indicating that decrease in work life conflict leads to increase in employee
commitment.

Likewise, supervisor support is also positively correlated to employee commitment. It

indicates that better guidance and supervisory supports leads to increase in the level of
employee commitment. Similarly, there is a positive correlation between job aid and
employee commitment. It indicates that better coordination and job aid leads to increase in
the level of employee commitment.

4.3 Regression Analysis

Regression analysis is a statistical process for estimating the relationships among variables.
It includes many techniques for modeling and analyzing several variables, when the focus is
on the relationship between a dependent variable and one or more independent variable. The

195 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

regression analysis has been conducted to examine factor effect of workplace environment
on the employee’s performance in Nepalese commercial banks.

Having indicated the Kendall’s Tau correlation coefficients, the regression analysis has been
carried out and the results are shown in the table below. To be more specific, it shows the
regression results of physical environment, work life conflict, supervisor support and job
aid.

4.4 Regression Analysis on Employee Performance

The results are based on 176 observations by using linear regression model. The model is
EPi= EPi= β0i + β1PEi + β2JAi + β3WCi + β4SSi + εi ,where EP (employee performance defined
as an assessment whether an employee performs a job well), are dependent variables
and PE (physical environment defined as tangible workplace aspects environment that
comprises spatial layout and functionality of the surroundings), WLC (Work life conflict
refers to the conflict can be defined as tensions, annoyances, disagreements and personal
incompatibilities over matters such as beliefs, values, habits, and personalities), SS
(Supervisors have the responsibilities of leading the subordinates in their group task and
the groups in the organizations. As a supervisor, they are the first line managers), and JA (A
job aid is something that people rely on. Job aid helps in term of providing procedure for the
employees towards their task) are independent variables.

Table 4.3.8: Estimated Regression Results of Physical Environment, Work Life Conflict,
Supervisor Support and Job Aid on Employee Performance
Model Intercept Regression coefficients of SEE F-value
Adj-R_bar2
PE WLC SS JA

1 2.157 0.327 0.310 0.228 79.746

(15.439)** (8.930)**
2 2.931 0.174 0.110 0.256 22.545
(29.431)** (4.748)**
3 2.495 0.225 0.219 0.242 49.998
(19.401)** (7.071)**
4 2.618 0.215 0.152 0.253 32.326
(18.981)** (5.686)**
5 1.574 0.343 0.195 0.453 0.203 73.366
(10.412)** (10.491)** (6.801)**
6 0.590 0.287 0.269 0.249 0.696 0.1513 134.69
(4.217)** (11.566)** (12.075)** (11.819)**
7 0.200 0.285 0.266 0.215 0.150 0.768 0.132 145.615
(1.499) (13.148)** (13.630)** (11.298)** (7.346)**

Notes:
i. Figures in parentheses are t- values.

NJMSR Volume V I Focus Issue I 196

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

ii. The asterisk signs (**) and (*) indicate that the results are significant at 1 percent and
5 percent level respectively.
iii. Dependent variable is employee performance.
Table 4.3.8 shows that the regression coefficients for physical environment are positive with
employee performance i.e beta = 0.327 It indicates that physical environment has a positive
impact on employee performance. This finding is similar to the findings of (Bitner 1992).
Similarly R2 i.e. Coefficient of determination is 0.310 which signifies physical enviroment is
explained by dependent variable by 31%.
Likewise, the regression or the beta coefficients of supervisor support is 0.225. It indicates
that supervisor support has a positive impact on employee performance. This finding is
consistent with the findings of (Neubauer, 2009).Moreover R2 i.e. Coefficient of determination
is 0.219 which signifies supervisor supprt is explained by dependent variable by 21.9%

Similarly, the beta coefficients for work life conflict are positive with employee performance,
the regression/beta coefficient of work life conflict is 0.174. It indicates that work life
conflict as a positive impact on employee performance. This finding contradicts with the
findings of (Adams et al. 1996). The beta coefficients for job aid are positive with employee
performance as the beta coefficient of the job aid is 0.215 This indicates that job aid has a
positive impact on employee performance. This finding is similar to findings of (Naharuddin
& Sadegi 2013).The beta coefficients for physical environment, work life conflict, supervisor
support and job aid are signigicant at 1 percent level of significance.

4.5 Regression Analysis on Employee Commitments

Table 4.3.9 presents estimated regression results of physical environment, work life conflict,
supervisor support and job aid on employee’s commitment in Nepalese commercial banks.

The results are based on 176 observations by using linear regression model. The model is
ECi= β0i + β1PEi + β2JAi + β3WCi + β4SSi + εi, where EC (employee commitment defined as a force
that binds an individual’s to a course of action of relevance to achieve one or more targets
an employee performs a job well), are dependent variables and PE (physical environment
defined as tangible workplace aspects environment that comprises spatial layout and
functionality of the surroundings), WLC (work life conflict refers to the conflict can be
defined as tensions, annoyances, disagreements and personal incompatibilities over matters
such as beliefs, values, habits, and personalities), SS (supervisors have the responsibilities
of leading the subordinates in their group task and the groups in the organizations. As a
supervisor, they are the first line managers), and JA (A job aid is something that people rely
on. Job aid helps in term of providing procedure for the employees towards their task) are
independent variables.

Table 4.3.9: Estimated Regression Results of Physical Environment, Work Life Conflict,
Supervisor Support and Job Aid on Employee’s Commitment

197 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Model Intercept Regression coefficients of SEE F-value

Adj-R_bar2
PE WLC SS JA
1 2.783 0.252 0.451 0.514 9.305
(8.835)** (3.050)**
2 4.375 -0.239 0.540 0.512 10.939
(22.233)** (3.307)**
3 1.882 (7.781)** 0.463 0.254 0.454 60.538
(7.813)**
4 2.207 (5.871)** 0.423 0.161 0.482 34.464
(8.394)**
5 3.451 0.233 -0.24 0.920 0.501 9.880
(9.252)** (2.891)** (2.891)**
6 1.823 0.141 -0.102 0.413 0.271 0.449 22.684
(4.387)** (1.908) (-1.536) (6.591)**
7 1.020 0.137 -0.109 0.342 0.310 0.351 0.424 24.684
(2.387)** (1.972)* (-1.74) (5.613)** (4.719)**

Notes:

i. Figures in parentheses are t- values.

ii. The asterisk signs (**) and (*) indicate that the results are significant at 1 percent and
5 percent level respectively.

iii. Dependent variable is employees’ commitment.

Table 4.3.9 shows that the beta coefficient for physical environment is 0.25. It indicates that
price has a positive impact on employee commitment. This finding is similar to the findings
of Bruce (2008). Similarly, R2 i.e. Coefficient of determination is 0.45 which signifies physical
enviroment is explained by dependent variable by 45%.

Likewise, the beta coefficient of supervisor support with employee commitment is 0.463.
It indicates that supervisor support has a positive impact on employee commitment.
This finding is consistent with the findings of (Babin and Boles 1996). ). Similarly, R2 i.e.
Coefficient of determination is 0.25 which signifies supervisor supprot is explained by
dependent variable by 25%.

However, the beta coefficients for work life conflict are negative with employee commitment.
The beta coefficient of work life conflict is -0.239. It indicates that work life conflict has a
negative impact on employee commitment. This finding is consistent with the findings of
(Aminah 2008).

Similarly, the beta coefficients for job aid are positive with employee commitment. This
indicates that job aid has a positive impact on employee commitment. This finding is

NJMSR Volume V I Focus Issue I 198

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

similar to findings of (Shanockm and Eisenberger 2006). The beta coefficients for physical
environment, work life conflict, supervisor support and job aid are signigicant at 1 percent
level of significance.

5. DISCUSSION
This study has mainly focused on the effect of workplace environment on employee
performance of Nepalese commercial banks. In this study, two models are used. In first model,
employee performance was taken as the dependent variable and physical environment,
work life conflict, supervisor support and job aid are taken as independent variable. In the
second model, employee’s commitment was taken as the dependent variable and physical
environment, work life conflict, supervisor support and job aid are taken as independent
variable.

In this study, among 176 respondents the majority of the respondents are female (51.70
percent) and rest are male (48.30 percent). The majority of respondent (63.07 percent)
were in age group of 20-229 years followed by age group of 30-39 years (31.25 percent),
and 40-49 years (5.68 percent). In relation to marital status, majority of the respondents
were married (52.84 percent) some are single (46.59 percent) and rest are divorced (0.57
percent). In relation to educational qualification, majority of respondents holds master’s
degree (69.32 percent).

The result of correlation analysis indicates that there is a positive and significant relationship
between independent variables (physical environment, work life balance, supervisor
support and job aid) and dependent variable (employee’s performance). Similarly, the
result of correlation analysis indicates that there is a positive and significant relationship
between independent variables (physical environment, supervisor support and job aid) and
dependent variable (employee’s commitment). However, the result of correlation analysis
indicates that there is a negative and significant relationship between independent variable
work life conflict and dependent variable employee’s commitment.

The result of regression analysis shows that, all the independent variables (physical
environment, work life conflict, supervisor support and job aid) are positive and significant
at 1 percent level of significant with dependent variable (employee’s performance).

The analysis concluded that the physical environment, work life conflict, supervisor
support and job aid have positive impact on employee’s performance. Similarly, the result
of regression analysis shows that all the independent variables (supervisor support and job
aid) are positive and significant at 1 percent level of significant with dependent variable
(employee’s commitment). However, the result of regression analysis shows that all the
199 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

independent variables (physical environment) are positive and significant at 5 percent level
of significant with dependent variable (employee’s commitment). Similarly, the result of
regression analysis shows that all the independent variables (work life conflict) are negative
and significant at 1 percent level of significant with dependent variable (employee’s
commitment).

6. CONCLUSION
Workplace environment is the sum of the interrelationships that exists within the
employees and the environment in which they work. This environment involves the physical
location as well as the immediate surroundings, behavioral procedures, policies, rules,
culture, resources, working relationships, work location, etc. The quality of the workplace
environment has impact on the employee performance and subsequently influences the
organization competiveness.

This study attempts to analyze the effect of workplace environment on the employee
performance in Nepalese commercial bank. The study is based on primary data which were
collected from 176 respondents from 11 Nepalese commercial banks.

This study investigates the effect of workplace environment on the employees’ performance
in the Nepalese commercial banks. The study is based on descriptive and causal comparative
research design. This study estimated the relationship between independent variables
physical environment, supervisor support, job aid and work life conflict and dependent
variable such as employees’ performance and employees’ commitment. Regarding workplace
environment and employee performance 176 structured questionnaires were administered
to collect the data from respondents that consisted of employees of the commercial banks
within Kathmandu valley. The study has brought positive finding regarding relationship
between the workplace environment and employee performance in case of the Nepalese
Commercial Banks, though certain practices are yet to be improved as indicated from poor
performance of the bank in solving the work life conflict and their employee performance in
Nepalese Commercial Banks.

The study shows that physical environment, supervisor support and job aid have positive
impact on the employee performance. Similarly, the study also reveals that physical
environment, work life conflict, supervisor support and job aid have positive impact on the
employee commitment in Nepalese commercial banks. The study concludes that workplace
environment play significant role in explaining the changes in the level of employee
performance. The study also concludes that physical environment followed by supervisor
support and job aid is the most dominant factors that influence the employee performance
in Nepalese commercial banks.

NJMSR Volume V I Focus Issue I 200

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Adams, G. A., L. A. King., & King, D.(1996).Relationships of job and family involvement, family
social support, and work–family conflict with job and life satisfaction.  Journal of
Applied Psychology, 81(4), 411-420.
Adhikari, D. R.(2010). Human resource development for performance management,
International Journal of Productivity and Performance Management, 49(4),306- 324.
Adhikari, D. R.,Hirasawa, K. Takakubo, Y., & Pandey, D. L.(2012). Decent work and work life
quality in Nepal: An observation. Employee Relations, 34(1), 61-79.
Agrawal, R. (2005). Organizational relation in Nepal. Kathmandu: M.K. Publisher and
Distributor.
Ajala, M. (2012). The influence of workplace environment on workers’ welfare, performance
and productivity. In The African Symposium, 12 (1), 141-149.
Allan, C., Loudom, R., & Peetz, D.(2007). Influences on work/non-work conflict. Journal of
Sociology, 43(3), 219-239.
Aminah, A. (2008). Direct and indirect effects of work-family conflict on job performance.
The Journal of International Management Studies, 3(2), 176-180.
Anderson,S.E., Coffey, B. S., & Byerly, R. T., (2002). Formal organizational initiatives and
informal workplace practices: Links to work-family conflict and job-related
outcomes. Journal of management, 28(6), 787-810.
Ashfaq, S., Mahmood, Z., & Ahmad, M (2013). Impact of work-life conflict and work over
load on employee performance in banking sector of Pakistan. Middle-East Journal of
Scientific Research, 14(5), 688-695.
Babin, B. J., & Boles, J. S (1996). The effects of perceived co-worker involvement and
supervisor support on service provider role stress, performance and job satisfaction.
Journal of retailing, 72(1), 57-75.
Bakotic, D., &Babic, T (2013). Relationship between working conditions and job satisfaction:
The case of Croatian Shipbuilding Company.  International Journal of Business and
Social Science, 4(2), 206-213.
Bruce, C. (2009). Critically analyzing workplace discourse to inform AAC device design. ACM
Sigaccess Accessibility and Computing, 93(1), 26-30.
Bulut, C., &Culha, O. (2010). The effects of organizational training on organizational
commitment. International Journal of Training and Development, 14(4), 309-322.
Chandrasekar, K. (2011). Workplace environment and its impact on organizational
performance in public sector organizations.  International Journal of Enterprise
Computing and Business Systems, 1(1), 1-19.
Chandran, E., (2004) Research methods: A quantitative approach with illustrations from
financial institutions. Nairobi, Kenya: Daystar University.

201 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Gaire, A. K., & C., F. B., (2016). Effect of supervisors’ behavior on job performance of faculty
members of educational institutions of Nepal. The International Journal of Business
& Management, 4 (2), 89-97.
Gautam, P. K. (2016). Gender differences on employee motivation and job involvement with
job rotation practices. Journal of Interdisciplinary Studies, 2(1), 46-59.
Gutnick, L. (2007). A workplace design that reduces employee stress and increases employee
productivity using environmentally responsible materials.  Masters Theses and
Doctoral Dissertations.
Haynes, B. P., (2008). An evaluation of the impact of the office environment on
productivity. Facilities, 26(5/6), 178-195.
Heath, B (2006). Effect of perceived work environment on employee’s job behaviour and
Organizational effectiveness, Journal of Applied Psychology. Varanasi: Banarashindu,
University.
Henry, O (2009). Organizational conflict and its effects on organizational performance. Research
Journal of Business Management, 2(1), 16-24.
Koima, N. E. J., (2015). A framework to achieve seamless data interchange of electronic air-
waybill in e-freight systems: Case of Kenya air freight sector. Doctoral Dissertation.
Strathmore University.
Malik, M. I., A. Ahmad, S. F. Gomez, & M. Ali, (2011). A study of work environment and
employees performance in Pakistan. African Journal of Business Management, 5(34),
13227-13232.
Makin, A. M.(2006). A new conceptual framework to improve the application of occupational
health and safety management systems. Safety Science, 46(6), 935-948.
Mike, A., (2010). Visual workplace: How you see performance in the planet and in the office.
International Journal of Financial Trade, 11(3), 250-260.
Mokaya, S. O., J. L. Musau, J. Wagoki, and Karanja K., (2013). Effects of organizational work
conditions on employee job satisfaction in the hotel industry in Kenya. International
Journal of Arts and Commerce, 2(2), 79-90.
Mubex, C.M., (2010).Closed offices versus open plan layout. http://www.mubex.com/
sms/closed-vs-open-plan-officers.htm
Nepal, P.(2016). Relationship between job satisfactionand performance of Nepalese
commercial banks. Nepalese Journal of Management, 3(2), 41-50.
Neubauer, T. (2009). An empirical study about the status of business process
management. Business Process Management Journal, 15(2), 166-183.
Noah, Y., and Steve M. (2012).Work environment and job attitude among employees in a
Nigerian work organization. Journal of Sustainable Society, 1(2), 36-43.
Paudel, U., (2016).Impact of employee motivation on organizational performance of
Nepalese commercial banks. Nepalese Journal of Business, 3(2), 93-106.

NJMSR Volume V I Focus Issue I 202

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Pant, P. R. (2009). Principles of management. Kathmandu: Buddha Academic Publisher and

Distributer.
Pisheh, M. H. M. (2011). A study of the relationship between locus of control and job
involvement in Iran public employees. African Journal of Business Management, 5(34),
13217-13226.
Pokhrel, R., (2016). Impact of human resource practices on employee satisfaction of
Nepalese commercial banks. Nepalese Journal of Finance, 3 (1), 14-27.
Rijal, S. (2006). Application of management control system in Nepalese commercial banks.
The journal of Nepalese Business Studies, 3(1), 92-99.
Roelofsen, P.(2002). The impact of office environments on employee performance: The
design of the workplace as a strategy for productivity enhancement. Journal of
Facilities Management, 1(3), 247-264.
Sekar, C. (2011). Workplace Environment and its impact on organizational performance
in public sector organizations. International Journal of Enterprise Computing and
Business System International Systems,1(1), 2-5.
Sehgal, S. (2012). Relationship between work environment and productivity. International
Journal of Engineering Research and Applications, 2(4), 1992-1995.
Shanock, L. R., & Eisenberge, R. (2006). When supervisors feel supported: Relationships
with subordinates’ perceived supervisor support, perceived organizational support,
and performance. Journal of Applied Psychology,  91(3), 689-695.
Shrestha, Y. K. (2011). Human resource management and organizational performance:
Evidence from Nepalese banking industry. Unpublished thesis, M.Phil. in Management.
Kathmandu : Tribhuvan University.
Shrestha & Shruti. (2007). Improving employee performance. Journal of banking and finance,
90(10), 1621-1629.
Srivastava, A. K.(2008). Effect of perceived work environment on employees’ job behaviour
and organizational effectiveness.  Journal of the Indian Academy of Applied
Psychology, 34(1), 47-55.
Stallworth, J. O., & Kleiner, B. H. (1996). Recent developments in offoce design. Journal of
Facilities, 14 (1/2), 34-42.
Taiwo, A. S.(2010). The influence of work environment on workers’ productivity: A
case of selected oil and gas industry in Lagos, Nigeria. African Journal of Business
Management, 4(3), 299-307.
Vance, R. J.(2006). Employee engagement and commitment: A guide to understanding,
measuring and increasing engagement in your organization. SHRM Foundation’s
Effective Practice Guidelines, SHRM Foundation.

203 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

IMPACT OF ETHICAL BEHAVOIUR ON EMPLOYEE PERFORMANCE IN NEPALESES

COMMERCICAL BANKS

Nisha Rana Magar Dev Raj Paneru, PhD∗

ψ

Abstract
This study examines the impact of ethical behavior on employee performance in Nepalese
commercial banks. Based on primary data, the study examined relations of ethical behavior
with employee performance in the sample banks. Structured questionnaires on quantitative
data were used to gather data from 150 respondents selected by using the random sampling
method. The regression model was used to test the significance and effect of ethical behavior
on employee performance in Nepalese commercial banks.

The correlation and regression results of the study have shown teamwork and leadership
style, reward and punishment, discipline having positive impacts on employee performance.
However, the results show racial discrimination related negatively to trigger low employee
performance in the commercial banks of Nepal. Similarly, corruption has a negative impact
on employee performance. In this way, the study argues significant relations and impact of
ethical behaviors on employee performance in conclusion.

Keywords: Respect, Teamwork, Reward and punishment, Discipline, Leadership style,

Racial discrimination.

ψ
Nisha Rana Magar, MBA student at Global College International
∗ Dev Raj Paneru, PhD, faculty at Global College International

NJMSR Volume V I Focus Issue I 204

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

1. INTRODUCTION

1.1 Background
Bank as a service sector has a great influence in the economy of the country. The role of
bank in economic development includes saving promotion, saving mobilization, promotion
of trade, and employment, allocation of funds, and transfer of money. Bank or financial
organizations are expected to execute their functions in a way that it increases confidence
and stability. Banks facilitate the internal and external trade and the movement of money
and capital (Saini, & Sindhu, 2014). Furthermore, as Levine (1997) indicated, countries
which possess an advanced banking system, grow faster than those whose banking system
was weak.

Performance is a multidimensional construct that determines organizational success or

failure. According to Pattanayak (2005), performance of an employee is his/her resultant
behavior on a task which can be observed and evaluated. It is the contribution made by an
individual in the accomplishment of organizational goals. It consists of directly observable
actions of an employee products which result in organizational outcomes in the form of
attained goals.

Ethics is an important aspect formalized through a code of conduct within companies,

which has the role to articulate the core values and also employees’ behavioral expectations.
However, this process has not been wholly possible. Not all the elements are essentials to
define a system of ethics. They can be formulated into ethical principles and integrated
into the culture of the organization (Loumbeva, 2008). Kim and Miller (2008) argued that
behaving in an ethical manner is seen as part of the social responsibility of individuals in any
organization so as to ensure its stability and survival.

Sarwani (2017) investigated the effect of work discipline and work environment on the
performance of employees. The study found work discipline and work environment have a
significant influence on employee performance. Sahakyan and Stieger (2014) investigated
the impact and favorableness of corruption on firm performance. Ethical leadership is
the demonstration of normatively appropriate conduct through personal actions and
interpersonal relationships, and the promotion of such conduct to followers through two-
way communication, reinforcement and decision-making (Trevino et al., 2003; Zhu et al.,
2004; Bello, 2012).

According to Walker (2014), success of organizations depends on the alignment of

values between employee and organization.The utilization of collaborative tools in doing
group’s task can improve through group’s performance by being the media of information,
communication, and knowledge exchange and sharing (Hidayanto, & Setyady, 2014).

Peterson and Thea (2006) described many ways of the gender biasness and discrimination
in the organizations due to unfair actions of the employer. Hameed and Waheed (2011)
evaluated gender discrimination and its effect on employee productivity. Such cases are
taken responsible behind female skills that are underutilized which lowers performance
and economic efficiency (Shastri, 2014).

Reward and punishment in work situations is to show their acceptance of the behavior
and actions. It is fundamental driving force behind every action that we human beings
take. According to Kanthet al. (2011), in order to maintain qualified employees and keep
205 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

them in order to continue to be motivated, punishment and reward is used as a major tool.
Punishment and reward as part of discipline assists the organization to accomplish specific
targeted goals (Gatchalian, & Lumiqued, 2005; Tumilaar, 2015).

In the context of Nepal, organizations adhering to ethical standards determine the well-
being of all the stakeholders, productivity and profitability (Uprety, 2016). Ethics is a
highly elusive, enigmatic, complex and sensitive concept (Singh 2001).

In a nutshell, as the arguments above indicate, ethical behavior is a very sensitive matter
having its impact on employee performance. As such, the studies dealing with the impact of
ethical behavior are of greater importance. Though there are these findings in the context
of different countries, no such findings using more recent data cover this issue in Nepal.
Hence, this study focuses on the impact of ethical behavior on employee performance in
Nepalese commercial banks.

Nevertheless, ethical behavior is assumed to have decisive roles on employee performance,

it is the neglected area. Nepalese organizations do not have clearly defined leadership
style, teamwork, reward and punishments is regarded as an ethical behaviors in Nepalese
Commercial Banks. Therefore, the relationship between employee performance and ethical
behaviors need to be better understood in the Nepalese context.

In addition, just a few studies have approached relating ethical behavior with employee
performance in Nepalese context. Thus, this study attempts to examine impacts of ethical
behavior on employee’s performance in the Nepalese Commercial banking sector. The
major objective of this study was to understand the status of leaderships’ ethical behaviors
on employee performance in Nepalese commercial banks.

1.2 Research questions

The study sought to answer these major questions:

RQ1: What types of ethical behaviors are practiced by the leadership ranks as regards to
their association with the employee performance in the Nepalese commercial banks?

RQ2: How is the status of leaders’ ethical behaviors and how are they associated with the
employee performance in the Nepalese commercial banks?

RQ3. What leadership factors will improve employee performance in the Nepalese
commercial banks?

2. REVIEW OF LITERATURE

Employee performance is how a member of staff fulfils the duties of their role,
completes required tasks and behaves in the workplace. Measurements of performance
include the quality, quantity and efficiency of work. When leaders monitor the performance
of employees, they can paint a picture of how the business is running.

In an organization, it is very important to learn how to motivate employees. Motivation

refers to the set of forces that influence people to choose various behaviors among several
alternatives available to them (Shanks, 2007).
NJMSR Volume V I Focus Issue I 206
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Behavior based motivation is built on the theory that employee behavior is directly
linked to the consequences of their actions. As noted by Satterlee (2009) the behavioral
based methods of motivation “involve responding to subordinate behavior with positive
reinforcement, negative reinforcement, punishment, or extinction.”

Need based motivation theory focuses to examine individual needs as the major components.
For example, an employee who is always walking around the office talking to people may
have a need for companionship and his behavior may be a way of satisfying this need. Three
theories may be placed under this category: Maslow’s hierarchy of needs, ERG theory and
McClelland’s acquired-needs theory.

Maslow’s Hierarchy of Needs: Abraham Maslow is among the most prominent psychologists
of the twentieth century. His hierarchy of needs is an image familiar to most business
students and managers.

Existence Resistance Growth Theory: ERG theory does not rank needs in any particular order
and explicitly recognizes that more than one need may operate at a given time. Moreover,
the theory has a “frustration-regression” hypothesis suggesting that individuals who are
frustrated in their attempts to satisfy one need may regress to another. 

Acquired-Needs Theory: Among the need-based approaches to motivation, David

McClelland’s acquired-needs theory is the one that has received the greatest amount of
support. According to this theory, individuals acquire three types of needs as a result of
their life experiences. These needs are the need for achievement, the need for affiliation, and
the need for power.

Regarding employee performance, equity theory is also relevant and it lends idea that the
reward potential of employees is compared with the effort they must put in work. Equity is
attained when the rewards offered are equal to the effort that is put in work. In this theory,
employees are not just concerned about their rewards.

Expectancy theory stands on row as regards motivating the employees unto higher or
increased performance. Expectancy is a proper tool for motivating as well as the benefits
for employees. On this same line, reinforcement theory suggests behavior as a function of its
outcomes of taking initiative if it is reinforced.

Within the theoretical lines as suggested a few studies have been carried out on the impact
of ethical behavior upon employee performance. Ghaffariet al. (2017) investigated the
relationship of participative leadership with employees’ job satisfaction. The results showed

207 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

that respect for employees is significantly and positively correlated with job satisfaction. It
too confirmed positive relationship between participative leadership and job satisfaction as
a result of respect for employees.

Brown et al. (2015) examined the relationship between employee respect and workplace
performance. This study matched workplace and employee data in order to ascertain
workplace influence upon workplace performance. The study found that restricting paid
overtime and access to training potentially erode employee trust.

Respect, Teamwork, Reward and Punishment, Racial Discrimination, Leadership Style and
Discipline were the major independent variables were attributed to an increase in awareness
from the intervention. This study demonstrated partial support of the hypothesized
relationships of the workplace training to increase their desire to work. It concludes strong
leadership and environment of trust among team members come across as significant
factors which help to increase the level of employee performance.

The study by Abdulle and Aydintan (2019) concluded teamwork measures that include
trust, cohesiveness, and knowledge sharing among members have a positive and significant
impact on employee performance.

Boakye (2015) argued teamwork and other measures of team performance positively
related with employee performance. Schreurs et al. (2014) showed positive relationship
between reward and punishment and overall employee performance. Hameed and Waheed
(2011) found gender discrimination in promotion and facilities having negative impact on
employee performance. Similarly, Surji (2014) found positive impact of leadership team on
workforce performance within the organization and its workplace environment.

2.1 Conceptual Framework

3. RESEARCH DESIGN
NJMSR Volume V I Focus Issue I 208
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

This study has employed descriptive and correlation research design to quantitatively
examine with the fundamental issues associated with the impact of ethical behavior on
employee performance in context of Nepalese banks. The design has been appropriated to
identify characteristics, frequencies, trends and categories of impact of ethical behavior on
employee performance. It ascertains to understand the directions, magnitude and forms of
observed relationship between ethical behavior and employee performance in the Nepalese
commercial banks.

Out of 27, 4 commercial banks (Siddhartha Bank Limited, NIC Asia Bank Limited, Nabil Bank
Limited and Kumari Bank Limited) were sampled for the study. Based on quota sampling
method, a sample of 150 employees of the mentioned banks was selected. This technique
allowed to select gender, level of employees etc. as some categories of research population.

A quantitative survey questionnaire was used as a tool to gather data for descriptive,
correlational analysis. The questionnaire included personal information about respondents
such as gender, age, education level, job position and years of employment. Correlation
analysis was administered followed by the stepwise regression analysis. Test of significance,
standard error of estimate and correlation were attempted to ensure validity of results. All
the observed relationship and findings were interpreted to derive the meaningful conclusion
regarding the impact of ethical behavior on employee performance in Nepalese commercial
banks.

In the analysis part, a coefficient greater than or equal to 0.7 was considered acceptable and
good indication of construct reliability. The table represents the coefficient of Cronbach’s
alpha for all the data.

Table 1 shows the validity and reliability of the study.

Table 1: Coefficient of Cranach’s Alpha

Variables Number of Cronbach’s

Items Alpha
Employee performance 4 0.885
Respect 4 0.822
Teamwork 4 0.741
Reward and punishment 4 0.797
Racial discrimination 4 0.823
Leadership style 4 0.886
Discipline 4 0.832
Overall 28 0.832

Table1 shows the reliability test for all the component of questionnaire regarding the impact
of ethical behavior on employee performance in Nepalese commercial banks which were
computed by using SPSS. Cronbach’s Alpha greater than 0.7 is considered as reliable data,
the Cronbach’s alpha of 28 quantitative data is 0.832, which means 83.2 percent of the data
taken for the study is reliable and 16.81 percent of data is error.

209 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4. RESULTS
First part of results present the demographic features of the sample populations of this
study followed by results linking ethical behavioral practice variables for their impacts on
sample bank employee performance.

4.1 Demographic Results

Table 2: Distribution of population by Age group

Age group (in years) Number of Respondent Percentage

20-35 years 75 50.0
36-50 60 40.0
50 years above 15 10.0
Total 150 100

Majority of the respondents, i.e. 75 out of 150 respondents lie in the age group 20-35years,
constituting 50.0 percent of total respondents. 60 respondents constituting 40.0 percent of
total respondents are under 36-50 years of age group and only 15 respondents lie in the age
group of 50 years above, constituting 10.0 percent of total respondents.
Table 3: Distribution by Gender
Gender Number of Respondent Percentage
Male 74 49.3
Female 76 50.7
Total 150 100
The table 3 shows that majority of the respondents (49.3 percent) are females. Similarly,
figure indicates that (50.7 percent) of the respondents are males and no respondents (0
percent) are others.
Table 4: Distribution by Academic Qualification
Academic Qualification Number of Respondent Percentage
Intermediate 10 6.7
Bachelor’s degree 50 33.3
Master’s degree and 90 60.0
above
Total 150 100

Table 4 shows that the majority of the respondents 90 respondents constitutes 60.0% of
total respondents hold Master’s degree and above, which is followed by bachelor’s degree
hold by 50 respondents constituting 33.3% of total respondents and intermediate hold by
10 respondents constituting 6.7% of total respondents.

Table 5: Distribution by Year of Work Experience

Year of Work Experience Number of Respondent Percentage
Below 1 year 76 50.7
NJMSR Volume V I Focus Issue I 210
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

2- 5 years 53 35.3
5- 10 years 14 9.3
10 years and above 7 4.7
Total 150 100

Table 5 shows that majority of the respondents i.e. 76 respondents have below 1 year of
experience which makes up 50.7 percent of total respondents. Similarly, 53 respondents
constituting 35.3 percent of total respondents have 2- 5 years of experience.
4.2 Results of Descriptive Analysis
This section provides the information for each of the variables used in the survey, descriptive
analysis were performed. The main of this analysis is to describe the importance of each
variable in order of importance given to it by the survey respondents. Descriptive statistics
summarizes the sample and observation that have been made. In this study, descriptive
analysis incorporates the calculations of statistics measures such as mean and standard
deviation. The data for research was collected with the help of a questionnaire based a 5
point rating scale ranging from 1-strongly disagree to 5-strongly agree. The rating scale
ranges from 1 to 5 as follows:
1-Strongly Disagree
2-Diagree
3-Neutral/Neither disagree nor Agree
4-Agree
5-Strongly Agree
4.2.1 Employees’ perception on respect
Respect is a feeling of deep admiration for someone or something elicited by their abilities,
qualities or achievements. Respect in our relationships builds feeling of trusts, safety and
wellbeing. This study therefore tries to link the perception of employees on respect in
commercial banks.
Table 6 Respondents’ opinions regarding respect
Statements 5 4 3 2 1 N Mean
Managers here deal F 35 73 32 8 2 150 3.87
with employees hon-
estly. % 23.33 48.67 21.33 5.33 1.33 100
A% 72 21.33 6.66
Associates in my F 42 76 23 7 2 150 3.99
company treat with
respect regardless of % 28 50.67 15.33 4.67 1.33 100
mine position. A% 78.67 15.33 6

211 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

My suggestions are F 45 68 29 7 1 150 3.99

given serious consid-
% 30 45.33 19.33 4.67 0.67 100
eration.
A% 75.33 19.33 5.34
I am tolerant and re- F 45 60 37 5 3 150 3.93
spectful to those who
are different from me. % 30 40 24.67 3.33 2 100
A% 70 24.7 5.33
Weighted average mean 3.96

Table 6 reveals that majority of the respondents (72 percent) agreed that managers deal with
employees honestly, whereas some respondents (6.66 percent) disagreed that managers
deal with employees honestly. However, the rest (21.33percent) of the respondents were
indifferent to the statement.

The table also shows that majority of the respondents (78.67 percent) opined that associates
in their company treat with respect regardless of their position. However, some respondents
(6 percent) disagreed that associates in their company treat with respect regardless of their
position and the rest (15.33 percent) of the respondents were indifferent to the statement.

Regarding the statement on “My suggestions are given serious consideration”, majority of
respondents (75.33 percent) agreed that their suggestions were given serious consideration.
However, some respondents (5.34 percent) disagreed that their suggestions were given
serious consideration and the rest of the respondents (19.33 percent) were neutral on the
statement.

Likewise, regarding the statement “I am tolerant and respectful to those who are different
from me”, majority of the respondents (70 percent) agreed that they are tolerant and
respectful to those who are different from them. However, some respondents (5.34 percent)
disagreed about the statement and the rest of the respondents (24.67 percent) were
indifferent about the statement.

Similarly, majority of the respondents agreed that they listen to others and try to understand
their points of view. However, some respondents disagreed that they listen to others and
try to understand their points of view and rest of the respondents was indifferent on the
statement.

The mean of the respect ranges from a minimum value of 3.87 to maximum value of 4.10.
Among them, the most significant observations of the respondents regarding respect are
“I need to listen to others and try to understand their points of view” with mean value of
4.10 whereas, the most insignificant observation are “Managers here deal with employees
honestly” and “I feel respected by management in this organization” with mean value of
3.87.

Weighted average mean value for respect is 3.96, which indicate that there is a respect and
courtesy for the employees in Nepalese commercial banks.

NJMSR Volume V I Focus Issue I 212

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.2.2 Employees perception on teamwork

Teamwork is the collaborative effort of a group to achieve a common goal or to complete
a task in the most effective and efficient way. It is a synergistic way of working with each
person committed and working towards a shared goal. This concept is seen within the greater
framework of a team, which is a group of interdependent individuals who work together
towards a common goal. This study therefore tries to link the perception of employees on
teamwork in commercial banks of Nepal.

Table 7 Respondents’ opinions regarding teamwork

Statements 5 4 3 2 1 N Mean
Teamwork encourages F 65 62 18 3 2 150 4.23
employees to broaden
their skills and knowl- % 43.33 41.33 12 2 1.33 100
edge. A% 84.63 12 3.33
Working with team F 59 57 29 5 0 150 4.13
increase efficiency of
an employee. % 39.33 38 19.33 3.33 0 100
A% 77.33 19.33 3.33
All members of the F 49 56 37 8 0 150 3.97
team have an equal
% 32.67 37.33 24.67 5.3 0 100
opportunity for par-
ticipation to develop A% 70 24.67 5.33
confidence and skills.
Part of a team perfor- F 48 65 30 6 1 150 4.02
mance depends on the
knowledge, skills and % 32 43.33 20 4 0.67 100
abilities of its individ- A% 75.33 20 4.67
ual members.
Weighted average mean 4.08

Table 7 reveals that majority of the respondents (84.63 percent) agreed that teamwork
encourages employees to broaden their skills and knowledge, whereas some respondents
(3.33 percent) disagreed that teamwork encourages employees to broaden their skills
and knowledge. However, the rest (12percent) of the respondents were indifferent to the
statement. The table also shows that majority of the respondents (77.33 percent) opined
that working with team increase efficiency of an employee. However, some respondents
(3.33 percent) disagreed that working with team increase efficiency of an employee and the
rest (19.33 percent) of the respondents were indifferent to the statement.

Regarding the statement on “All members of the team have an equal opportunity for
participation to develop confidence and skills”, majority of respondents (70 percent)
agreed that all members of the team have an equal opportunity for participation to develop
confidence and skills. However, some respondents (24.67 percent) were neutral. Likewise,
regarding the statement “Part of a team performance depends on the knowledge, skills and
213 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

abilities of its individual members”, majority of the respondents (75.33 percent) agreed that
part of a team performance depends on the knowledge, skills and abilities of its individual
members.

The mean of the teamwork ranges from a minimum value of 3.97 to maximum value of 4.23.
Among them, the most significant observations of the respondents regarding team work is
“Teamwork encourages employees to broaden their skills and knowledge “with mean value
of 4.23 whereas, the most insignificant observation is “All members of the team have an
equal opportunity for participation to develop confidence and skills “with mean value of
3.97.

Weighted average mean value for team work is 4.08, which indicate that there is a good
teamwork in Nepalese commercial banks.

4.2.3 Employees perception on reward and punishment

Reward systems have the ability to attract the right employee, keep them and constantly
motivate them to deliver desirable performance. A poorly structured reward system can
result in high labor turnover, low productivity and a general laissez faire attitude. This study
therefore tries to link the perception of employees on reward and punishment in commercial
banks of Nepal.
Table 8 Respondents’ opinions reward and punishment
Statements 5 4 3 2 1 N Mean
My company offers F 39 68 31 8 4 150 3.87
rewards based on
performance. % 26 45.33 20.67 5.33 2.67 100
A% 71.33 20.67 8
Good prospects of F 62 55 22 9 2 150 4.11
obtaining reward
motivate you strongly % 41.33 36.67 14.67 6 1.33 100
to do some things. A% 78 14.67 7.33
High salary and pay F 40 74 23 9 4 150 3.91
rise on good perfor-
% 26.67 49.33 15.33 6 2.67 100
mance.
A% 76 15.33 8.6
My supervisor F 31 69 43 5 2 150 3.81
believes that employ-
ees must be given % 20.67 46 28.67 3.33 1.33 100
rewards or punish- A% 66.67 28.67 4.66
ments in order to
motivate them to
achieve organization-
al objectives.
Weighted average mean 3.85
Table 8 reveals that majority of the respondents (71.33 percent) agreed that their company
offers rewards based on performance, whereas some respondents (8percent) disagreed

NJMSR Volume V I Focus Issue I 214

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

that their company offers rewards based on performance. However, the rest (20.67percent)
of the respondents were indifferent to the statement. The table also shows that majority
of the respondents (78 percent) opined that good prospects of obtaining reward motivate
them strongly to do some things. However, some respondents (7.33 percent) disagreed
that good prospects of obtaining reward motivate them strongly to do some things and rest
(14.67percent) of the respondents were indifferent to the statement.
Likewise, regarding the statement “High salary and pay rise on good performance”, majority
of the respondents (76 percent) agreed that there is high salary and pay rise on good
performance. However, some respondents (8.67 percent) disagreed about the statement
and the rest of the respondents (15.33percent) were indifferent about the statement.
Regarding the statement, “My supervisor believes that employees must be given rewards
or punishments in order to motivate them to achieve organizational objectives”, majority
of respondents (66.67 percent) agreed that their supervisor believes that employees must
be given rewards or punishments in order to motivate them to achieve organizational
objectives. Some respondents (4.66 percent) disagreed about the statement. However, the
rest of the respondents (28.67 percent) were neutral on the statement.

The mean of the reward and punishment ranges from a minimum value of 3.69 to maximum
value of 4.11. Among them, the most significant observations of the respondents regarding
reward and punishment is “Good prospects of obtaining reward motivate you strongly to do
some things.” with mean value of 4.11 whereas, the most insignificant observation is “You
are troubled by punishments and work pressure during your office hours.” with mean value
of 3.69. Weighted average mean value for reward and punishment is 3.85, which indicate
that there is good provision of reward and punishment in Nepalese commercial banks.

4.2.4 Employees perception on racial discrimination

Racial discrimination is when a person is treated less favorably than another person in a
similar situation because of their race, color, descent, national or ethnic origin or immigrant
status. Discrimination in the workplace can have devastating consequences on the offenders
and the victim.
Table 9 Respondents’ opinions regarding racial discrimination
Statements 5 4 3 2 1 N Mean
You do not respect F 6 12 23 77 32 150 2.22
the diversity within
your organization. % 4 8 15.33 51.33 21.33 100
A% 12 15.33 72.66
Nepotism and F 4 13 35 54 44 150 2.19
favoritism is im-
portant to hire new % 2.67 8.67 23.33 36 29.33 100
employees. A% 11.34 23.33 65.33
Harassment has F 6 12 27 60 45 150 2.16
positive effect on
your work environ- % 4 8 18 40 30 100
ment. A% 12 18 70 215 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Discrimination in F 2 12 11 66 59 150 1.88

your organization
does not increase % 1.33 8 7.33 44 39.33 100
stress. A% 9.33 7.33 83.33
Weighted average mean 2.1
Table 9 reveals that majority of the respondents (72.66 percent) disagreed that they do not
respect the diversity within organization, whereas (12 percent) of the respondents agreed
that they do not respect the diversity within organization. However, rests (15.33 percent) of
the respondents were indifferent to the statement. The table also shows that majority of the
respondents (65.33 percent) disagree that nepotism and favoritism is important to hire new
employees. However, some respondents (23.33percent) agreed that nepotism and favoritism
is important to hire new employees and the rest (11.34percent) of the respondents were
indifferent to the statement.
Regarding the statement, “Harassment has positive effect on your work environment”,
majority of respondents (70 percent) disagreed that harassment has positive effect on their
work environment. However, some respondents (12 percent) agreed about the statement and
the rest of the respondents (18 percent) were neutral on the statement. Likewise, regarding
the statement “Discrimination in your organization does not increase stress”, majority of the
respondents (83.33 percent) disagreed that discrimination in their organization does not
increase stress. However, some respondents (9.33 percent) agreed about the statement and
the rest of the respondents (9.33 percent) were indifferent about the statement.

4.2.5 Employees perception on leadership style

A leadership style refers to a leader’s characteristics behaviors when directing, motivating,

guiding and managing group. Great leaders can inspire political movements and social
change. They can also motivate others to perform, create and innovate.
Table 10 Respondents’ opinions regarding leadership style
Statements 5 4 3 2 1 N Mean
My supervisor gives F 43 81 12 10 4 150 3.99
orders and clarifies
procedures. % 28.67 54 8 6.67 2.67 100
A% 82.67 8 9.34
In complex situations F 44 64 29 12 1 150 3.92
my supervisor allows
me to work my prob- % 29.33 42.67 19.33 8 0.67 100
lems out on my own A% 72 19.33 8.67
way.
You do not need to F 38 61 33 13 5 150 3.76
follow order if they
appear unethical. % 25.33 40.67 22 8.67 3.33 100
A% 66 22 12

NJMSR Volume V I Focus Issue I 216

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

There is need of bal- F 42 79 21 7 1 150 4.03

ance between orga-
nizational work and % 28 52.67 14 4.67 0.67 100
personal needs. A% 80.67 14 5.34
Weighted average mean 4.04
Table 10 reveals that majority of the respondents (82.67 percent) agreed that their supervisor
gives orders and clarifies procedures, whereas (9.34 percent) of the respondents disagreed
that their supervisor gives orders and clarifies procedures. However, rests (8percent) of the
respondents were indifferent to the statement. The table also shows that majority of the
respondents (72 percent) agreed that in complex situations their supervisor allows them
to work their problems out on their own way. However, some respondents (8.67 percent)
disagreed that in complex situations their supervisor allows them to work their problems
out on their own way and the rest (19.33percent) of the respondents were indifferent to the
statement.
Regarding the statement, “You do not need to follow order if they appear unethical”, majority
of respondents (66 percent) agreed that they do not need to follow order if they appear
unethical. However, some respondent (12percent) disagreed about the statement and the
rest of the respondents (22 percent) were neutral on the statement. Likewise, regarding
the statement “There is need of balance between organizational work and personal needs”,
majority of the respondents (80.67 percent) agreed that there is need of balance between
organizational work and personal needs. However, some respondents (5.34 percent)
disagreed about the statement and the rest of the respondents (14 percent) were indifferent
about the statement.

The mean of the leadership style ranges from a minimum value of 3.76 to maximum value
of 4.16. Among them, the most significant observations of the respondents regarding
leadership style is “Leaders should act ethically” with mean value of 4.16 whereas, the most
insignificant observation is “You do not need to follow order if they appear unethical” with
mean value of 3.76. Weighted average mean value for leadership style is 4.04, which indicate
that there is higher existence of good leadership style in Nepalese commercial banks.

4.2.6 Employees perception on discipline

Discipline in an organization ensures productivity and efficiency. Further, discipline
encourages harmony, co-operation among employees and boosts morale among for the
employees. Discipline aims to create and maintain mutual respect and trust between
management and the employees.

Table 11 Respondents’ opinions regarding discipline

Statements 5 4 3 2 1 N Mean
Our disciplinary sys- F 34 74 22 15 5 150 3.78
tem has a lot of rules
specifying how to deal % 22.67 49.33 14.67 10 3.33 100
with problem. A% 72 14.67 13.33
217 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

Managers here must F 48 68 23 9 2 150 4.01

get approval before
they fire an employee. % 32 45.33 15.33 6 1.33 100
A% 77.33 15.33 7.33
When disciplinary F 38 80 23 6 3 150 3.96
procedures or actions
are applied fairly, they % 25.33 53.33 15.33 4 2 100
can improve employ- A% 78.66 15.33 6
ee punctuality and
performance.
There is need of F 52 63 23 9 3 150 4.01
earlier disciplinary
warnings. % 34.67 42 15.63 6 2 100
A% 76.67 15.33 8
Weighted average mean 3.98

Table 11 reveals that majority of the respondents (72 percent) agreed that their disciplinary
system has a lot of rules specifying how to deal with problem. However, (13.33 percent) of
the respondents disagreed that their disciplinary system has a lot of rules specifying how
to deal with problem and rests (14.67percent) of the respondents were indifferent to the
statement. The table also shows that majority of the respondents (77.33 percent) agreed
managers there must get approval before they fire an employee. Some respondents (7.33
percent) disagreed that managers there must get approval before they fire an employee and
the rest (15.33percent) of the respondents were indifferent to the statement.

Regarding the statement, “When disciplinary procedures or actions are applied fairly, they
can improve employee punctuality and performance”, majority of respondents (78.66
percent) agreed that when disciplinary procedures or actions are applied fairly, they can
improve employee punctuality and performance. However, some respondents (6percent)
disagreed about the statement and the rest of the respondents (15.33 percent) were neutral
on the statement. Likewise, regarding the statement “There is need of earlier disciplinary
warnings”, majority of the respondents (76.67 percent) agreed that there is need of
earlier disciplinary warnings. However, some respondents (8 percent) disagreed about
the statement and the rest of the respondents (15.33 percent) were indifferent about the
statement.

The mean of the discipline ranges from a minimum value of 3.78 to maximum value of 4.08.
Among them, the most significant observations of the respondents regarding discipline is
“There is need of investigation of violation of rules” with mean value of 4.08 whereas, the
most insignificant observation is “Our disciplinary system has a lot of rules specifying how
to deal with problem” with mean value of 3.78. Weighted average mean value for discipline
is 3.98, which indicate that there is higher existence of discipline in Nepalese commercial
banks.
NJMSR Volume V I Focus Issue I 218
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

4.2.7 Employees perception on performance

Employee performance is the combined result of effort, ability and perception of tasks.
This study therefore tries to link the perception of employees on employee performance in
commercial banks of Nepal.
Table 12 Respondents’ opinions regarding employee performance
Statements 5 4 3 2 1 N Mean
I believe respect to F 64 59 19 3 5 150 4.16
each other increases
the employees-cus- % 42.67 39.33 12.67 2 3.33 100
tomer relationship. A% 82 12.67 5.33
Working with team F 60 61 20 5 4 150 4.12
helps employees to
improve their perfor- % 40 40.67 13.33 3.33 2.67 100
mance. A% 80.67 13.33 6
I believe good leader- F 59 64 18 8 1 150 4.15
ship style increases
% 39.33 42.67 12 5.33 0.67 100
the employee’s loyalty
towards the organiza- A% 82 12 6
tion.
Providing reward and F 56 64 21 8 1 150 4.11
punishment to the
employees increase % 37.33 42.67 14 5.33 0.67 100
accountability of em- A% 80 14 6
ployees.
Weighted average mean 4.10
Table 12 reveals that majority of the respondents (82 percent) agreed that they believe
respect to each other increases the employees-customer relationship. However, (5.33
percent) of the respondents disagreed that they believe respect to each other increases
the employees-customer relationship and rests (12.67percent) of the respondents were
indifferent to the statement. The table also shows that majority of the respondents (80.67
percent) agreed that working with team helps employees to improve their performance.
Some respondents (6 percent) disagreed that working with team helps employees to
improve their performance and the rest (13.33percent) of the respondents were indifferent
to the statement.
Regarding the statement, “I believe good leadership style increases the employee’s loyalty
towards the organization”, majority of respondents (82 percent) agreed that they believe
good leadership style increases the employee’s loyalty towards the organization. However,
some respondents (6percent) disagreed about the statement and the rest of the respondents
(12 percent) were neutral on the statement. Likewise, regarding the statement “Providing
reward and punishment to the employees increase accountability of employees”, majority of
the respondents (80 percent) agreed providing reward and punishment to the employees
increase accountability of employees. However, some respondents (6 percent) disagreed
about the statement and the rest of the respondents (14 percent) were indifferent about the
statement. 219 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

The mean of the employee performance ranges from a minimum value of 4.01to maximum
value of 4.16. Among them, the most significant observations of the respondents regarding
employee performance is “I believe respect to each other increases the employees-customer
relationship.” with mean value of 4.16 whereas, the most insignificant observation is “I
believe that working with corrupt colleagues create disturbance in performing activities.”
with mean value of4.01. Weighted average mean value for employee performance is 4.10,
which indicate that there is high level of employee performance in Nepalese commercial
banks.

4.3 Correlation Analysis

Correlation helps to measure the strength of a linear relationship between quantitative
variables. A strong or high correlation means that two or more variables have strong
relationship with each other, while a weak or low correlation means that the variables are
hardly related.

Table 12: Correlation results

The above table shows that the correlation matrix between different variables constants
(X1, X2, X3, X4, X5) where other variables are (EP= Employee Performance, RES= Respect,
TW= Teamwork, RP= Reward and Punishment, RD= Racial Discrimination, LS= Leadership
Style, DI= Discipline).

a. The correlation between related variable is 0.146, which means that there is
positive correlation between leaders’ respect toward employees and employee
performance in Nepalese commercial banks.

b. The correlation between related variable and employee performance related

variable is 0.254, which means that there is positive correlation between leaders
practice of team work and employee performance in Nepalese commercial banks.
NJMSR Volume V I Focus Issue I 220
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

c. The correlation between related variable and employee performance related

variable is 0.135, which means that there is positive correlation between reward
and punishment with employee performance in Nepalese commercial banks.

d. The correlation between related variable and employee performance related

variable is 0.098, which means that there is positive correlation between racial
discrimination and employee performance in Nepalese commercial banks.

e. The correlation between related variable and employee performance related

variable is 0.190, which means that there is positive correlation leadership style
and employee performance in Nepalese commercial banks.

f. The correlation between related variable and employee performance related

variable is 0.324, which means that there is positive correlation between discipline
and employee performance in Nepalese commercial banks.

4.4 Regression Analysis

The regression results represent respect, teamwork, leadership style, reward and
punishment, racial discrimination and discipline used as independent variables and
employee performance dependent variable. Presented in table is regression results relating
ethical behaviors on employee performance in the Nepalese commercial banks.

Table 13 Multiple Regression Analysis

Ӯ= (1.243+0.598X1+0.356X2+0.634X3+0.351X4+(0.079)X5+0.499X6+0.523X7)

In the above of table, the coefficient analysis above table shows the relationship between
the dependent variable and each independent variable. The regression coefficient of respect
in the regression coefficient analysis is 0.598 which indicates that 1 percent which leads
221 NJMSR Volume V Issue I
https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

to 59.8 percent positive change in employee performance in Nepalese Commercial Banks.

Similarly the regression coefficient of teamwork in the regression coefficient analysis 0.634
which indicates that 1 percent change which leads to 63.4 percent, however the regression
coefficient of reward and punishment in the regression coefficient analysis 0.351 which
indicates that 1 percent change in work conditions is work leads to 35.1 percent positive and
leadership style in the regression coefficient analysis -0.079 which indicates that 1 percent
change which leads to 79 percent negative change and at last the regression coefficient
of discipline in the regression coefficient analysis 0.499 which indicates that 1 percent
change which leads to 50 percent positive change in employee performance in Nepalese
Commercial Banks. Therefore, the corresponding p-value is 0.147 which is more than the
level of significance (α) =0.05, which has no significant impact on employee performance in
Nepalese Commercial Banks.

5. SUMMARY AND DISCUSSIONS

The major objective of the study was to examine the impact of ethical behaviors articulated
in terms of respect, teamwork, reward and punishment, discipline, leadership style, racial
discrimination on employee performance and to identify the most influencing factors of
ethical behavior that affect employee performance in Nepalese commercial banks.

Ethical consideration in labor management relationship is a concomitant for organizational

development. For high productivity, it’s important that all stakeholders observe ethical
conducts in their dealings with one another (Sunanda, 2018). Pava and Krausz (1996)
established that companies which had been acknowledged as those with positive ethical
conduct and are socially responsible experienced improved performance in their finances.
Based on descriptive and correlational analysis results as summarized below, this study
argues significant impact of ethical behavior on performance among the employees of
Nepalese commercial banks.
1. The results on the first hypothesis show that majority of the respondents (78.67
percent) opined that associates in their company treat with respect regardless of
their position. However, some respondents (6 percent) disagreed that associates
in their company treat with respect regardless of their position and the rest (15.33
percent) of the respondents were indifferent to the statement.

2. The results on the second hypothesis show that majority of the respondents
(77.33 percent) opined that working with team increase efficiency of an employee.
However, some respondents (3.33 percent) disagreed that working with team
increase efficiency of an employee and the rest (19.33 percent) of the respondents
were indifferent to the statement.

3. The results on the third hypothesis show that majority of the respondents (78
percent) opined that good prospects of obtaining reward motivate them strongly
to do some things. However, some respondents (7.33 percent) disagreed that good
prospects of obtaining reward motivate them strongly to do some things and rest
(14.67percent) of the respondents were in different to the statement.

4. The results of the fourth hypothesis show that majority of the respondents (65.33
NJMSR Volume V I Focus Issue I 222
https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

percent) disagree that nepotism and favoritism is important to hire new employees.
However, some respondents (23.33percent) agreed that nepotism and favoritism is
important to hire new employees and the rest (11.34percent) of the respondents
were indifferent to the statement.

5. The results on the fifth hypothesis show that majority of the respondents (72
percent) agreed that in complex situations their supervisor allows them to work
their problems out on their own way. However, some respondents (8.67 percent)
disagreed that in complex situations their supervisor allows them to work their
problems out on their own way and the rest (19.33percent) of the respondents
were indifferent to the statement.

6. The results on the sixth hypothesis shows that majority of the respondents (77.33
percent) agreed managers there must get approval before they fire an employee.
Some respondents (7.33 percent) disagreed that managers there must get approval
before they fire an employee and the rest (15.33percent) of the respondents were
indifferent to the statement.

7. The results on the seventh hypothesis shows that majority of the respondents (77.33
percent) agreed managers there must get approval before they fire an employee.
Some respondents (7.33 percent) disagreed that managers there must get approval
before they fire an employee and the rest (15.33percent) of the respondents were
indifferent to the statement.

8. The correlation between related variable is 0.146, which means that there is
positive correlation between leaders’ respect toward employees and employee
performance in Nepalese commercial banks.

9. The correlation between related variable and employee performance related

variable is 0.254, which means that there is positive correlation between leaders
practice of team work and employee performance in Nepalese commercial banks.

10. The correlation between related variable and employee performance related
variable is 0.135, which means that there is positive correlation between reward
and punishment with employee performance in Nepalese commercial banks.

11. The correlation between related variable and employee performance related
variable is 0.098, which means that there is negative correlation between racial
discrimination and employee performance in Nepalese commercial banks.

12. The correlation between related variable and employee performance related
variable is 0.190, which means that there is positive correlation leadership style
and employee performance in Nepalese commercial banks.

13. The correlation between related variable and employee performance related
variable is 0.324, which means that there is positive correlation between discipline
and employee performance in Nepalese commercial banks.

14. The regression coefficient of respect in the regression coefficient analysis is 0.598
which indicates that 1 percent which leads to 59.8 percent positive change in
employee performance in Nepalese Commercial Banks.

223 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

15. Similarly the regression coefficient of teamwork in the regression coefficient

analysis 0.634 which indicates 1 percent change which leads to 63.4 percent.

16. However the regression coefficient of reward and punishment in the regression
coefficient analysis 0.351 which indicates that 1 percent change in work conditions
is work leads to 35.1 percent positive and leadership style in the regression
coefficient analysis -0.079 which indicates that 1 percent change which leads to 79
percent negative change

17. At last the regression coefficient of discipline in the regression coefficient analysis
0.499 which indicates that 1 percent change which leads to 50 percent positive
change in employee performance in Nepalese Commercial Banks.

18. Therefore, the corresponding p-value is 0.147 which is more than the level of
significance (α) =0.05, signifying job security has no significant impact on employee
performance in Nepalese Commercial Banks.

6. CONCLUSION
Ethical behavior is necessary for successful organizations and is considered as a key to great
performance and long prospers life for the organization. The study shows that respect has
positive relationship with employee performance in Nepalese commercial banks. It indicates
that increase in respect leads to increase in employee performance. Similarly, teamwork has
also positive relationship with employee performance. It indicates that increase in teamwork
leads to increase in the overall employee performance. However, racial discrimination is
negatively related to the employee performance indicating that increase in discrimination
in the organization leads to decrease in employee performance. The study also shows
that reward and punishment has positive relationship with employee performance in the
Nepalese commercial banks. It indicates that increase in reward and punishment leads to
increase employee performance. Leadership style has positive relationship with employee
performance. It indicates that better leadership leads to better employee performance.
However, discipline is positively related with employee performance indicating that increase
in discipline in the organization leads to increase in employee performance. The study
concluded that ethical behavior is very important to increase the level of performance in
the Nepalese commercial banks. The study also allows to conclude that discipline followed
by teamwork and leadership style is the most influencing factor that explains the changes in
employee performance in Nepalese commercial banks.

The major conclusion of the study is that respect, teamwork, reward and punishment,
leadership style and discipline have positive impact on performance of employees.
However, racial discrimination has negative impact on employee performance in Nepalese
commercial banks. The study also concludes that teamwork followed by discipline and
racial discrimination is the most influencing factor that explains employee performance in
Nepalese commercial banks.

NJMSR Volume V I Focus Issue I 224

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545

REFERENCES
Abudu, D. (2017). Corruption and firm performance in Africa. United Kingdom: School of
Economics, University of Nottingham.
Abushal, M., & Adenubi, J. (2000). The use of behavior management techniques by dentists in
Saudi Arabia: A survey. Saudi Dent J, 12(3), 129-134.
Armstrong,M., & Murlis, H. (2007). Reward management: A handbook of remuneration strategy
and practice. UK : Kogan Page Publishers.
Anyango, C. A. (2015). Effects of leadership styles on employee performance at Boa Kenya
limited. Tanzania: Open University of Tanzania.
Alzolo, M. (2012). The ethics of business in wartime. Journal of Business Ethics, 99(10), 61–71.
Basit, A., Sebastian, V., & Hassan, Z. (2017). Impact of leadership style on employee performance:
A case study on a private organization in Malaysia.  International Journal of Accounting
& Business Management, 5(2), 112-130.
Bello, S. M. (2012). Impact of ethical leadership on employee job performance. International
Journal of Business and Social Science, 23(2), 227-236.
Benrazavi, S.R., & Silong, A. D(2013). Employees’ job satisfaction and ts influence on
willingness to work in teams. Journal of Management Policy and Practice, 14(1), 127-
140.
Berrone, P., Surroca, J., &Tribo,J. A. (2007). Corporate ethical identity as a determinant of firm
performance: A test of the mediating role of stakeholder satisfaction. Journal of Business
Ethics, 76(1), 35-53.
Booth, P., &Schulz A. K. D. (2004). The impact of an ethical environment on managers’ project
evaluation judgments under agency problem conditions. Accounting, Organizations and
Society, 29(6), 473-488.
Butterfield, K. D.&Fallon, M. J. (2013). A review of the empirical ethical decision-making
literature: 1996–2003. The Journal of Business Ethics,52(2), 213-263.
Crane, A., &Matten, D. (2007). Business Ethics. Delhi: Oxford University Press.
Darden, W. R.,& Babin, B. J. (1994). Exploring the concept of affective quality: Expanding the
concept of retail personality. Journal of Business Research, 29(2), 101-109.
Gelfand, M. J., Erez, M., &Aycan, Z. (2007). Cross-cultural organizational behavior. Annual Rev.
Psychology, 58(2), 479-514.. Greer, C. R. &Labig, C. E. (1987). Employee reactions to
disciplinary action. Human Relations August, 40(8), 507-524.
Hameed, A. &Waheed, A. (2011).Gender discrimination & its effect on employee performance
productivity. International Journal of Humanities and Social Science,1(15), 170-176.

225 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
John, R., Fernandes, N. &Misra, R. K. (2018). The impact of business ethics in the banking sector.
International Journal of Humanities and Social Science Invention, 07(10),15-17.
Katzenbach, J. R., & Smith, D. K. (1993). The rules for managing cross‐functional reengineering
teams. Planning Review, 25(6), 25-36.
Lamar, R. A. (2010). Empowerment: Building trust and respect in the workplace. Muncie:Ball
State University.
Levine, R. (1997). Financial development and economic growth: Views and agenda. Journal of
Economic Literature, 35(2), 688-726.
Nikas, A., &Argyropoulou, M. (2014). Assessing the impact of collaborative tasks on individuals’
perceived performance in ICT enabled project teams.  Procedia-Social and Behavioral
Sciences, 119(0), 786-795.
Pattanayak, B. (2005). Human Resource Management. New Delhi: PHI Learning Private
Limited.
Rizwan, M., Raza, M. A., Mateen, M. A., Tehseen, F., Farooq, M. S., Javed, A., &Javed, S.
(2014). Investigating the causes of job stress: A study on banking sector of Bahawalpur,
Pakistan. International Journal of Learning and Development, 4(2), 227-240.
Saini, P., and Sindhu, J. (2014). Role of commercial bank in the economics development of India.
International Journal of Engineering and Management Research, 4(1), 27-31.
Sanyal, S., &Hisam, M. W. (2018). The impact of teamwork on work performance of employees:
A study of faculty members in Dhofar University.  IOSR Journal of Business and
Management, 20(3), 15-22.
Simatupang, A., &Saroyeni, P. (2018). The effect of discipline, motivation and commitment to employee
performance. IOSR Journal of Business and Management (IOSR-JBM), 20(6), 31-37.
Simon, B., & Sturmer, S. (2003). Respect for group members: Intra group determinants of
collective identification and group-serving behavior. Personality and Social Psychology
Bulletin, 29, 183–193.
Singh, S. P. (2001). Beliefs, values and ethics. Vikalpa, 26 (2), 14-26.
Smith, H. J., & Tyler, T. R. (1997). Choosing the right pond: The impact of group membership on
self-esteem and group-oriented behavior. Journal of Experimental and Social Psychology,
33(2), 146-170.
Triana, M. D. C., Jayasinghe, M., & Pieper, J. R. (2015). Perceived workplace racial discrimination and
its correlates: A meta‐analysis. Journal of Organizational Behavior, 36(4), 491-513.
Tyler, T. R., Degoey, P., & Smith, H. (1996). Understanding why the justice of group procedures
matters: A test of the psychological dynamics of the group-value model. Journal of
Personality and Social Psychology, 70(3), 913-930.

NJMSR Volume V I Focus Issue I 226

https://www.nepjol.info/index.php/njmsr/index
 ISSN(Print) :2467-9356, ISSN (Electronic) : 2795 - 1545
Vonai, C. (2013). Management of discipline for good performance: A theoretical perspective.
Online Journal of Social Sciences Research, 2(7), 214 – 219.
Verniers, C., &Vala, J. (2018). Justifying gender discrimination in the workplace: The mediating
role of motherhood myths. Plus one, 13(1), 11-23.
Vonai, C. (2013). Management of discipline for good performance: A theoretical perspective.
Online Journal of Social Sciences Research, 2(7), 214-219.
Wilson, J. and Morris,J.E. (2000). The size and growth of UK manufacturing and service firms.
The Service Industries Journal, 20(2), 25–38.
World Bank, (2003). Improving the investment climate in China. Washington DC.
Wreder, A. (2008). How leadership and new technology influence the work environment:
Experiences taken from Swedish organizations. Sweden : Lulea University of Technology.
Wageman , R. (1997). Critical success factors for creating superb self – managing teas at Xerox.
Compensation and Benefits Review, 29(5),31-41.
Walker, A. N. (2014). The examination of organizational respect in relation to organizational
culture. New Hamphire : Main Campus, University of New Hampshire.

227 NJMSR Volume V Issue I

https://doi.org/10.53056/njmsr-2016001
 Gl
oba
lCol
l
egeI
nte
rna
tiona
l
Mid-
Baneshwor,Ka
thmandu,Nepal
T
el:
977–01–4465186|4488410|Fax:977–01–4465186
Ema
il
:nj
ms r
@gci.edu.
np|URL:www.gci
.edu.
np