Article2007

The mediating effect of organizational reputation on customer loyalty and service recommendation in the banking industry

Nick Bontis · Lorne D. Booker · Alexander Serenko

363 citations0/0 files storedManagement Decision

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Customer Service Quality and Loyalty Consumer Behavior in Brand Consumption and Identification Corporate Identity and Reputation

Abstract

Purpose The overall purpose of this study was to develop an understanding of the mediating effect of organizational reputation on service recommendation and customer loyalty. Design/methodology/approach Four models were developed that were variations of the American Customer Satisfaction Model (ACSM). These models were then tested by using the Partial Least Squares (PLS) procedure on a data collected from a survey that yielded 8,098 respondents. Findings It was found that customer satisfaction enhances reputation in the service environment. It was also discovered that reputation partially mediates the relationship between satisfaction and loyalty, and that reputation partially mediates the relationship between satisfaction and recommendation. Research limitations/implications More research needs to be undertaken to explore the role of reputation within the ACSM. It is necessary to conduct research employing experimental design with longitudinal data captured from across industries using robust measures. Originality/value The findings suggest that the relationship between corporate reputation and profitability may reside in reputation's influence on customer loyalty, and that reputation plays an important role within the ACSM. This study is one of the first documented attempts to use PLS to test a mediation effect.

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References

1988Consumer Perceptions of Price, Quality, and Value: A Means-End Model and Synthesis of Evidence 1998The partial least squares approach for structural equation modeling.1996The Behavioral Consequences of Service Quality 1999Whence Consumer Loyalty?1994Customer Loyalty: Toward an Integrated Conceptual Framework 2000Structural Equation Modeling and Regression: Guidelines for Research Practice 1991Effects of Price, Brand, and Store Information on Buyers' Product Evaluations 1996The American Customer Satisfaction Index: Nature, Purpose, and Findings

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