THE MEDIATING EFFECT OF OPERATIONAL RISK MANAGEMENT BETWEEN BUSINESS ATTRIBUTES AND COMPETITIVE ADVANTAGE IN THE IRAQI BANKING SECTOR

Abstract

The rapid changes in the business environment have made organisations consider the implementation of various strategies to face the fierce competition in the worldwide market. Such a competitive situation has become increasingly challenging for many organisations and banks in particular.

This paper aims to examine the mediating effect of the operational risk management between business attributes and the competitive advantage in the Iraqi banking sector.

To meet this objective, thirteen hypotheses tailored by the theoretical lenses of the Resource-Based View (RBV) were proposed to test the theorised relationship of business attributes (Strategy, Technology, Human Resources, Organisational Structure), the operational risk management and the competitive advantage. A quantitative approach is used to obtain data from a survey (questionnaire) consisting of 60 items with a five-point Likert scale. A total of 114 managers (80.2% response rate) in the Iraqi banking sector participated in the study. The data analysis was conducted using Smart PLS 3.2.9. The findings of the path analysis of partial least squares (PLS) support variables in their hypothesised direct relationships with a competitive advantage.

The analysis results suggest that operational risk management partially mediates the relationship between business attributes (Strategy, Technology, Human Resources, Organisational Structure) and the competitive advantage.

The paper advances several recommendations that can be beneficial for researchers to conduct further research in this area as well as to policymakers and managers in their efforts to enhance the competitive advantage of organisations in the future. Lastly, this research presents the theoretical, empirical and practical implications as well as limitations and recommendations for future investigations