Managing Change for Radical Business Process Improvement: Effects on Islamic Banks Performance

Abstract

Managing change is difficult as the change is constant. Organizational resources have to be wisely utilized
in optimizing the outcome of a change management project. The rapid rate of change has imposed many companies
to radically change to improve their current business processes. The banking industry is one of the main economic
drivers of any nation, and banks have been experiencing drastic changes in their operations. This paper examines the
effect of change management initiatives on the Islamic banks performance. The performance of Islamic banks differs
than any conventional banks due to three main aspects, namely, (1) educating individual, (2) public interest, and (3)
establishing justice. In this study, the organizational performance is measured by the cost spent by the banks to fulfill
those three aspects. The causal relationship was analyzed using the Partial Least Square (PLS) structural equation
modeling. Collectively, the results show the significant positive effect of change management on the performance of the
Islamic banks. The findings of the study contribute to the knowledge of change management to both managers as well as
researchers in relation to the banks performance.