Impact of Business Intelligence on Achievement of Competitive Advantage in Branches of Bank Melli Iran in Mazandaran Province

www.ijrls.pharmascope.org Impact of Business Intelligence on Achievement of Competitive Advantage in Branches of Bank Melli Iran in Mazandaran Province Naser Ali Yadolahzade Tabari 1*, Naghme Golbarar Nezhad Amiri 2 1 Economics Department, Babol Branch, Islamic Azad University, Babol, Iran 2 Management Department, Babol Branch, Islamic Azad University, Babol, Iran ISSN 2231-2935 Research Article ABSTRACT The main purpose of this research was to examine the relationship between business intelligence and competitive advantage in branches of Bank Melli of Mazandaran province. This is a descriptive correlation type study. The statistical population is consisted of all managers and master experts working in branches of Mazandaran province Bank Melli who were 168 individuals, among whom 118 were selected as the sample using stratified sampling method. To collect the data two researcher-made questionnaire were used aimed to assess business intelligence and competitive advantage. The results indicated that there is a positive and significant relation between business intelligence and competitive advantage. Also there is a positive and significant correlation between competitive advantage and the three dimensions of business intelligence, i.e. collection of information in data warehouses, data integration and analysis, and access to information for the purpose of decision making. Keywords Business Intelligence; Competitive Advantage; Bank Melli of Mazandaran Province. INTRODUCTION Today, people s need for banking services is increasing evermore, and people expect more and faster services from banks. Considering the growth of banking and competitive environment, different banks try to attract more customers and clients by improving and presenting better performance and services compared to their competitors. This issuecalls for the use of modern technology in order to obtain information about competitors, customers, and market; and this purpose is realized by the use of business intelligence systems. The issue of competition started with Adam Smith s famous book Wealth of Nations. However Michel Porter s books on the analysis of competition in the 1980s had more readers. His books were competitive strategy, competitive advantage, and nations competitive advantage, which were all published by Free Press publication company in the years 1980, 1985, and 1989 respectively [Farzin & Nadalipour, 2011]. Since then the concept of competitive advantage has attracted many companies, industries, and expert to research on. Although many definitions of competitive advantage are available, it is hard to present a clear-cut definition for it. However it can be said that competitive edge on one hand refers to extra ordinary output and one the other hand refers to performance of capital market * Corresponding Author Naser Ali Yadolahzade Tabari Email: nasertabari@yahoo.com and expectations. The most widely known definition of competitive edge concerning competitive strategy and creation of values is anything that increases income more than the expenses [Rasekhi et al, 2008]. Peteraf (1993) define competitive advantage as maintaining the income at higher level than normal. According to Bescano, Drano, and Shanelli, if a company achieves higher rate of economic profit compared to average rate of economic profit, it has achieved competitive advantage [Ankli, 1992]. Business intelligence is a wide concept which covers appropriate trends of the whole organization. This concept deals with acquisition, management, and analysis of large amount of data and information about partners, products, customers, suppliers, activities and interactions between them [Lu & Zhou, 2000]. In other words, business intelligence is a systematic process through which organizations obtain information about activities and decisions of its business from inside and outside source, analyze that information, and distribute it. Business intelligence is a comprehensive concept by which organization uses the existing information systems in the most effective manner to obtain timely and quality information for the purpose of decision making, in a way that yields competitive advantage. Such concept should be supported by higher organizational managers and spread all around the organization [Mirabi et al, 2010]. After studying the research history and examination of different models of business intelligence and competitive advantage, the researcher has adopted the follow- JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 984

ing model from Vardi (2013) M.A thesis to be used in the present research. Collection of information in data warehouses Competitive advantage Data integration and analysis Accessing and utilization of data for decision-making STATEMENT OF PROBLEM AND RESEARCH HISTORY Today, due to intensified competitive environment, for purpose of decision making and competitive strategies countries and institutions do not suffice to limited intra-organizational resources od random information obtained from external sources. In fact having correct, effective and updated information on environment is a power tool in national and organizational level. Therefor organizations try to access the best information sources about business environment and use it effectively in their strategic programming [Rothberg & Erickson, 2004]. Application of business intelligence in organization is one of the strategies to obtain and manage information. is an important issue which has been recently introduced into literature of management and strategic marketing. Various perspectives have been suggested concerning the determining and effective factors in competitive advantage. Industrial organization theorists believe environmental factors to be prominent and determining elements regarding competitive advantage, while others put their emphasis on intra-organizational factors [Mehri &Khodadad Hosseini, 2004]. In a research titles identification of factors contributing to realization of sustainable competitive advantage of banking services in Mellat Bank based on resource-oriented view Attaran et al (2012) extracted three categories of tangible, intangible, and potential assets and proposed and examined a concept model for sustainable competitive advantage. Their findings indicated that intangible, potential and tangible assets are prioritized in the same respective manner. In the aspect of tangible assets: service diversity, selfbanking, infrastructure, capital, and market; in the aspect of potential assets: executive potentials, human resources and management resources; and in the aspect of intangible assets: internal and external factors were identified as important elements that affect sustainable competitive assets in Mellat Bank. Research concept model (adopted from Vardi, 2013) In an article, Lajvardi & Hatami (2010) studied the role of tacit knowledge management as a source of competitive advantage in Jam Petro-chemical Company. They emphasized on the application of tacit knowledge in achievement of competitive advantage. For that purpose, basic levels of tacit knowledge management were identified and their impact on achievement of competitive advantage for that organization was studied. The statistical population of their study was consisted of official employees of Jam Petro-chemical Company. Their findings indicated that evolution, livelihood, and transfer were components of tacit knowledge management which has correlation with achievement of competitive advantage. Among these components, tacit knowledge evolution had the highest impact on competitive advantage. Alongside the study, identification and introduction of the most important factors in performance of business intelligence system, Haghighat Monfared & Rezaei (2011) proposed a model for evaluation of business intelligence (with the case study of a Software company). Considering the fact that the factors were dependent on each other, in order to develop an evaluation model they used fuzzy network analysis method to identify and measure the dependence and relations between the factors. Then they examined their results against fuzzy hierarchical analysis process and compared it to non-fuzzy network analysis processes. Their findings indicated that according to experts, among 14 indices of their model, indices of organizational efficiency, users participation, and response to users demands had the highest inter-relations. By presenting a model, Rezaei Dolatabadi et al (2011) studied the impact of competitive intelligence and its components on competitive advantage among companies of Isfahan science and research town. The required data was collected by questionnaire and analyzed by LISREL software. Their results indicated that using a competitive intelligence program give the company a competitive edge and ensures the survival of organization. In other words, programming, concentration, collection, analysis, distribution and evaluation of JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 985

information improve an organization s competitive advantage and give it a higher position in the market. In an article Haj Akbari & Ghiasi (2010) studied the role of business intelligence in achievement of competitive advantage and profit in insurance industry. They stated that modern technology is advancing with an unprecedented pace, and communities in general and markets in particular seek ways to adapt themselves to these conditions and ensure their own survival. Organizations must accept that their philosophy of life has changed, and no more does living mean achievement of constant profit-making; they have to seek competition and its appropriate tools because today few organizations do business in traditional manners. In order to keep up with competitors or even outmaneuver them, organizations need to be completely aware of new game rules, and perhaps someday they can write their own rules. On this basis, being competent in new technologies such as business intelligence is a necessity of business. In their article, the researchers briefly point out the importance of establishing a business intelligence system in insurance companies for the purpose of effective decision making, increase of profits, and achievement of competitive advantage. Eptimehin (2011) conducted a study to find out whether innovation and creativity in marketing affects competitive advantage. The findings indicated that innovation and creativity in marketing have considerable role Yadolahzade Tabari et al., Int. J. Rev. Life. Sci., 5(1), 2015, 984-991 in organizational success. Additionally, by application of innovation and creativity, insurance industry can improve its business and achieve competitive advantage. In his M.A thesis and by the use of questionnaires, Kruger (2010) studied the long-term strategic intelligence implemented in South African insurance industry. The results of his study indicated that strategic intelligence had not yet been fully implemented in South African insurance industry. However the managers believed that implementation of strategic intelligence can help their success in global and international competition and improve innovations. METHODOLOGY This is a survey study and the tool for data collection is questionnaire. As it is explained bellow, two researcher-made questionnaires were used in this study. The statistical population is consisted of all managers and master experts working in branches of Mazandaran province Bank Melli who were 168 individuals, among whom 118 from the cities of Sari, Babol, and Ghaemshahr were selected as the sample using stratified sampling method and Morgan & Krejcie table. DATA ANALYSIS Table 1: Kolmogorov-Smirnov test Result Error (α) P-Value Parameter Abnormal distribution 00.0 Collection of information in data warehouse Abnormal distribution 00.0 011.0 Data integration and analysis Abnormal distribution 00.0 Access and utilization of information for decision-making Abnormal distribution 00.0 As demonstrated in the table above, in all instances the obtained P-value is smaller than error level (0.05). In other words, the data distribution for all items is abnormal. There for since data distribution is abnormal and the data is collected in ordinal scale, to examine research hypotheses the Spearman s correlation test must be used. Main hypothesis: there is a correlation between business intelligence and competitive advantage in branches of Mazandaran province Bank Melli. In this hypothesis, business intelligence is independent variable and achievement of competitive advantage is dependent variable. The results of examination of the relation between the two variables are demonstrated in the table bellow. The condition for confirmation or rejection of the hypothesis is as bellow: JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 986

Table 2: the correlation between business intelligence and competitive advantage Dependent variable Level of significane 0 /000 026.0 Independent variabl Business intelligence Considering the table and level of significance (0.000) which is smaller than the critical value of 0.05, the null hypothesis is rejected and the alternative hypothesis is confirmed. Hence with 95 percent confidence it can be said that there is a positive and significant relation between the two variables. Therefor with the increase of business intelligence, the competitive advantage also increases; and the decrease in business intelligence reduces the competitive advantage in the bank. and competitive advantage in branches of Mazandaran province Bank Melli. In this hypothesis, collection of information in data warehouses is independent variable and achievement of competitive advantage is dependent variable. The results of examination of the relation between the two variables are demonstrated in the table 3. The condition for confirmation or rejection of the hypothesis is as bellow: The first sub-hypothesis: there is a correlation between collection of information in data warehouses Table 3: the correlation between collection of information in data warehouses and competitive advantage Dependent variable Level of significane 0 /000 0.500 Independent variabl Collection of information in data warehouses Considering the table and level of significance (0.000) which is smaller than the critical value of 0.05, the null hypothesis is rejected and the alternative hypothesis is confirmed. Hence with 95 percent confidence it can be said that there is a positive and significant relation between the two variables. Therefor with the increase of collection of information in data warehouses, the competitive advantage also increases; and the decrease in collection of information in data warehouses reduces the competitive advantage in the bank. The second sub-hypothesis: there is a correlation between data integration and analysis and competitive advantage in branches of Mazandaran province Bank Melli. In this hypothesis, data integration and analysis is independent variable and achievement of competitive advantage is dependent variable. The results of examination of the relation between the two variables are demonstrated in the table 4. The condition for confirmation or rejection of the hypothesis is as bellow: Table 4: the correlation between data integration and analysis and competitive advantage Dependent variable Level of significane 0 /000 0.490 Independent variabl Data integration and analysis Considering the table and level of significance (0.000) which is smaller than the critical value of 0.05, the null hypothesis is rejected and the alternative hypothesis is confirmed. Hence with 95 percent confidence it can be JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 987

said that there is a positive and significant relation between the two variables. Therefor with the increase of data integration and analysis, the competitive advantage also increases; and the decrease in data integration and analysis reduces the competitive advantage in the bank. The third sub-hypothesis: there is a correlation between information accessibility and analysis and competitive advantage in branches of Mazandaran province Bank Melli. Accessibility and analysis and competitive advantage Yadolahzade Tabari et al., Int. J. Rev. Life. Sci., 5(1), 2015, 984-991 In this hypothesis, information accessibility and analysis is independent variable and achievement of competitive advantage is dependent variable. The results of examination of the relation between the two variables are demonstrated in the table 5. The condition for confirmation or rejection of the hypothesis is as bellow: Table 5: the correlation between information Dependent variable Level of significane 0 /000 0.558 Independent variabl Information accessibility Considering the table and level of significance (0.000) which is smaller than the critical value of 0.05, the null hypothesis is rejected and the alternative hypothesis is confirmed. Hence with 95 percent confidence it can be said that there is a positive and significant relation between the two variables. Therefor with the increase of information accessibility and analysis, the competitive advantage also increases; and the decrease in information accessibility and analysis reduces the competitive advantage in the bank. For the purpose of data analysis, indices of descriptive statistics such as frequency, percentile, frequency distribution tables, mean, and standard deviation are used. Also in inferential statistics chapter, considering the ordinal scales, data distribution is examined using Kolmogorov-Smirnov test (KS); and after the data distribution was determined to be abnormal, using SPSS software the Spearman s correlation test was carried out; and to confirm the research model, by LISREL software the structural equation modeling was carried out. The conformity factor analysis chart for the research model To evaluate the model maximum likelihood method has been used. And to assess the model s fit the following indices have been used: chi square, ( x 2 ) chi 2 x ( ) df square divided by degrees of freedom, normal fit index (NFI), non-normal fit index (NNFI), root mean square error of approximation (RMSEA), root mean JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 988

square residual (RMR), goodness of fit index (GFI), and adjusted goodness of fit index (AGFI). As indicated, the level of significance for chi square is smaller than 0.00, which hints to model s high goodness of fit. On the other hand, if chi square divided by degrees of freedom is smaller than 3, then the goodness of fit is very desirable; this value for the above model is 2.89, hence high goodness of fit. If NFI and NNFI are larger than 0.90 and RMSEA is smaller than 0.1, then the fit is very suitable and desirable. In this case, NFI and NNFI are both 0.95, and RMSEA is 0.019, which indicate very desirable goodness of fit for the model. Tests of the model s fit yielded positive results which indicated that research s concept model has high goodness of fit. Values of GFI=0.95 and AGFI=0.89 are very suitable estimations for the model. NNFI NFI CFI AGFI GFI 2 RMSEA Index d f 90.0 90.0 96.0 89.0 90.0 19.2 090.0 Value 1 & 0 1. 0 & 0 Desired level Considering the indices of the model it can be concluded that the model is in good shape in terms of index. Table 6: the final results for all hypotheses The results concerning the calculation of final impacts are summarized in table 6. Test result Level of significance Hypothesis Rejection of null hypothesis 026.0 Main Rejection of null hypothesis First Rejection of null hypothesis 090.0 Second Rejection of null hypothesis 008.0 Third Examination of the main hypothesis indicated that there is a positive and significant relation between business intelligence and competitive advantage. This result is to some extent in alignment with that of Rezaei Dolatabadi (2011) who concluded that competitive intelligence and collection and analysis of information about customer and market have positive impact on achievement of competitive advantage. Also Vardinejad et al (2009) concluded that the use of new technologies in I.R.N.A has led to achievement of competitive advantage in that news press, and that there is a positive and significant relation between use of modern technology and competitive advantage. In addition to that, the study by Haj Akbari & Ghiasi (2010) indicated that implementation of business intelligence in the organization has a positive correlation with achievement of competitive advantage in that organization. Examination of the first sub-hypothesis indicated that there is a positive and significant relation between data collection in data warehouses and competitive advantage in branches of Mazandaran province Bank Melli.This result is in alignment with that of Rezaei Dolatabadi et al (2011). They concluded that collection of information about customers, competitors and the market by insurance companies can help them achieve competitive advantage, and that there is a positive and significant correlation between the two. JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 989

Examination of the second sub-hypothesis indicated that there is a positive and significant correlation between data integration and analysis and competitive advantage. And with the increase of data integration and analysis, the competitive advantage also increases; and the decrease in data integration and analysis reduces the competitive advantage in the bank. In their research, Rezaei Dolatabadi et al (2011) reached a similar conclusion. They found out that analysis and processing of information by computers have positive impact on competitive advantage and can help companies accomplish higher competitive advantage compared to their competitors. Also the examination of the third sub-hypothesis indicated that there is a positive and significant relation between information accessibility and utilization for decision-making and competitive advantage in branches of Mazandaran province Bank Melli. The results of the study by Rezaei Dolatabadi et al (2011) confirm this fact. They concluded that information accessibility and utilization in due time have positive and significant impact on achievement of competitive advantage. CONCLUSION AND SUGGESTIONS: In modern competitive market, especially in banking section, competitive advantage is of utmost importance. The results of the present study along with similar studies point out that use of information and communication technologies and implementation of business intelligence in organizations, especially in banks, can lead that organization to achievement of competitive advantage. Due to access to information about market, competitors, customers, products and services, companies which are equipped with business intelligence systems can easily make decisions regarding increasing quality and etc. hence gaining competitive advantage over their competitors. Therefor decision-makers and programmers of banking section should especially be concerned with investment in implementation of business intelligence systems in their respective banks in order to accomplish the main objective of any financial organization which is to attract customers and obtain higher profits and assets. Based on the obtained results and the issues the researcher encountered during this study, the following are suggested for suture studies: [1] Haj Akbari M, Ghiasi R, 2010, the role of business intelligence in achievement of competitive advantage in isurrance industry, 2 nd international conference of financial service marketing, 27 th and 28 th of November, Tehran [2] Haghighat Monfared J, Avaz Malayeri A, 2010, impact of business intelligence on commercial procedures and organizational performance, case study: IPCO Iran Khodro design and motor production, 1 st conference of organizational/business intelligence, 20 th and 21 st of December, Tehran [3] Rasekhi S, Zabihi E, 2008, competitive advantage in institutional level: concept and theory, economical science magazine, 8(28), 31-54 [4] Rezaei Dolatabadi H, Zeinali Z, Shekarchizadeh Z, 2011, impact of competitive intelligence on achievement of competitive advantage, Business Managemenr Perspective, 5(38), 9-25 [5] Attaran J, Divandari A, Adinoff H, 2012, identification of factors contributing to realization of sustainable competitive advantage of banking services in Mellat Bank based on resource-oriented view, Business Management, 4(12), 91-112 [6] Farzin M, Nadalipour Z, 2011, factors contributing to competitive advantage of tourist attractions in Iran (case study: Chabahar region), Turism Studies periodical, 14, 41-67 [7] Lajvardi S.J, Hatami S, 2010, the role of tacit knowledge management as a source of competitive advantage in Jam Petro-chemical Company, 1 st international conference of innovation management, 16 th and 17 th of February, Shiraz [8] Mehri A, Khodadad Hosseini H, 2004, designing a competitive advantage model for Iran s automotive industry, Teacher of Humanities periodical, 9(2), 189-212 [9] Mirabi V, Kordlui H, Hashemi A, 2010, application of business intelligence in banking section to achieve competitive advantage, 1 st conference of organizational/business intelligence, 20 th and 21 st of December, Tehran [10] Ankli, R. E. (1992). Michael Porter's Competitive Advantage and Business History. Business and Economic History, 21, 228-236. Conducting similar studies in other banks and private or governmental financial institutions. Conducting studies regarding the required infrastructures for implementation of business intelligence systems in banks. Conducting a study to identify indices and factors contributing to business intelligence in banks, using analytical hierarchy process method (AHP). REFERENCES: [11] Empetimehin, Festus M. (2011). Achieving Competitive Advantage in Insurance Industry: The Impact of Marketing Innovation and Creativity. European Journal of Social Sciences. 19(1), 123-127. [12] Kruger, Jean-Pierre (2010). A Study of Strategic Intelligence as a StrategicManagement Tool in the Long-Term Insurance Industry in South Africa, Master Project of Commerce, University of South Africa. JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 990

[13] Lu, H. & Zhou, A. (2000). Web- Age information management. Berlin: Springer Verlag. [14] Rothberg, H. & Erickson, S. G. (2004). From knowledge to intelligence: Creating competitive advantage in the next economy. London: Routledge JK Welfare & Pharmascope Foundation International Journal of Review in Life Sciences 991