The effect of internal branding on organisational financial performance and brand loyalty: mediating role of psychological empowerment

Leo Paul Dana,Maryam Soleimani,Pejman Ebrahimi,Parisa Bouzari,Aidin Salamzadeh

doi:10.1108/jabes-08-2021-0122

Abstract

PurposeThis study explores the effect of internal branding on organisational financial performance and brand loyalty with the mediating role of psychological empowerment.Design/methodology/approachThe data gathered from 200 Pasargad insurance employees in Iran were analysed. Structural equation modelling and R were used to evaluate the model. Financial performance was measured by four concepts (ROI, ROE, Sales growth, ROA) based on available data from March 2010 to March 2020.FindingsThe results revealed that internal branding and psychological empowerment have no significant effect on financial performance, but both have a significant positive effect on brand loyalty. Likewise, the mediating role of psychological empowerment on the subject of the impact of internal branding on brand loyalty was confirmed. Furthermore, psychological empowerment did not play a mediating role in the impact of internal branding on financial performance.Research limitations/implicationsThe findings of this study could be important for managers of organisations active in the insurance industry to highlight internal branding and enhance psychological empowerment and employee brand loyalty. Moreover, managers' perception of the effective role of psychological empowerment to enhance employee brand loyalty is another practical aspect of this research.Originality/valueConsidering the mediating role of psychological empowerment to the effect of internal branding on financial performance and brand loyalty is an innovative aspect of the present study. Meanwhile, the use of R software for VB-SEM was another point to surge the value of this paper.

Highlights

Establishing a strong brand and boosting performance are crucial components in maintaining long-term organisational survival (Lee et al, 2008)
Internal branding and psychological empowerment do not affect financial performance. This means that the activities performed by employees in the organisation to deeply understand the meaning of the brand and strengthen the employees’ sense of empowerment cannot significantly improve the financial performance of Pasargad Insurance Company
Managers of insurance companies in Iran cannot improve the financial performance of their collection through the use of human resource management strategies

Summary

Introduction

Establishing a strong brand and boosting performance are crucial components in maintaining long-term organisational survival (Lee et al, 2008). Branding can be considered a major topic for improving brand positioning and organisational performance. Branding is a multi-dimensional concept, and when used among employees of an organisation, it is referred to as internal branding (Hasni et al, 2018). Internal branding aims to ensure that brand messages are conveyed to employees by the brand, for customers and other stakeholders (Punjaisri and Wilson, 2017). According to internal branding literature, employees have the role of “brand ambassadors” who need to display the brand meaning through their actions and interactions, thereby helping to foster a consistent brand image among all the stakeholders. Service organisations have found that the brand message conveyed to employees is as important as the message sent to customers. Employees of an organisation are internal customers, and the lack of their support of brand message can undermine brand reputation

Objectives

Findings

Discussion

Conclusion