Effectiveness of Relational and Transactional cultures in commercial banking: putting client‐value into the competing values model

This paper has four purposes. First, it points out and explains why the Market‐type culture, is not the culture type most conducive to business performance. This Market‐type culture reflects mainly a Transactional approach to the market rather than a longer term Relational approach to clients. Second, a modification of the CVM is presented which forces the respondents to weigh the value their firm places on the client or customer compared with the other competing values in the model. This modified version can be used to describe organizational cultures which are more Relational or Transactional in nature. Third, an empirical study of commercial banking relationships in France indicated that business effectiveness was greater when both parties in the exchange (account manager and business client) perceived their respective organizations to be Relational‐type cultures. Conversely, the worst business performance was found when both organizations had Transactional‐type cultures. Fourth, the managerial implications of the paper are discussed in the context of commercial banking.