Abstract
Having a strong reputation is a desirable resource for banks which must face today’s competitive business environment. This chapter aims to (1) investigate the contribution of service quality and relationship investment to building a good reputation and (2) show that the efforts made by banks in maintaining customer relationships ultimately translate into positive outcomes, such as relationship loyalty. Data collected from banking services consumers from two countries were analysed using partial least squares (PLS). Based on 510 responses from Romanian consumers and 525 responses from UK consumers, the proposed framework is tested separately and causal relationships are then compared to examine whether path estimates are invariant across the two countries. Finally, the data is pooled to increase the generalizability of results. Perceptions of both service quality and relationship investment have a significant contribution to building sympathy towards banks and in developing favourable perceptions about their competence. Furthermore, perceived relationship investment acts as a mediator in the relationship between overall service quality and corporate reputation. Finally, this study reinforces the importance of perceived relationship investment and corporate reputation in developing long-lasting relationships by demonstrating the willingness of customers to reciprocate. The findings extend previous knowledge in the field by emphasising the importance of perceived relationship investment in building customers’ sympathy towards service companies as well as favourable perceptions regarding their competence. In addition, the framework herein proposed acknowledges the mediating role of perceived relationship investment between service quality perceptions and corporate reputation. Furthermore, the study builds on signalling and social exchange theories to show that banks’ endeavour to increase their customers’ quality perceptions enhance the benefits of banking institutions. Altogether, results reported in this study are of high relevance from both a theoretical and managerial perspective. Future studies may test the proposed framework in other cultures and explore the mediating role of perceived relationship investment between other factors and corporate reputation. Despite the interest in the two concepts of corporate reputation and perceived relationship investment in either the relationship marketing literature or the corporate reputation literature, the relationship between the two constructs has been only theoretically suggested. Against this background, this chapter is the first to investigate empirically the impact of perceived relationship investment on corporate reputation. It is also the first to assess the potential role of perceived relationship investment in mediating the effect of service quality on corporate reputation.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Alniacik, E., Alniacik, U., & Erdogmus, N. (2012). How do the dimensions of corporate reputation affect employment intentions? Corporate Reputation Review, 15(1), 3–19.
Barisitz, S. (2004). The transformation of the Romanian financial and banking sector (Financial STab17lity Report No. 7). Vienna: Oesterreichische Nationalbank, 88–100.
Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.
Bartikowski, B., & Walsh, G. (2011). Investigating mediators between corporate reputation and customer citizenship behaviors. Journal of Business Research, 64(1), 39–44.
Bartikowski, B., Walsh, G., & Beatty, S. E. (2011). Culture and age as moderators in the corporate reputation and loyalty relationship. Journal of Business Research, 64(9), 966–972.
Bendapudi, N., & Berry, L. L. (1997). Customers’ motivations for maintaining relationships with service providers. Journal of Retailing, 73(1), 15–37.
Blau, P. M. (1964). Exchange & power in social life. New York: Wiley.
Bontis, N., Booker, L. D., & Serenko, A. (2007). The mediating effect of organizational reputation on customer loyalty and service recommendation in the banking industry. Management Decision, 45(9), 1426–1445.
Boulding, W., & Kirmani, A. (1993). A consumer–side experimental examination of signaling theory: Do consumers perceive warranties as signals of quality? Journal of Consumer Research, 20(1), 111–123.
Braggion, F., & Ongena, S. (2013). A century of firm—bank relationships: Did banking sector deregulation spur firms to add banks and borrow more?. CEPR Discussion Paper No. DP9695. Retrieved October 25, 2016, from https://ssrn.com/abstract=2343705.
Carmeli, A., & Tishler, A. (2005). Perceived organizational reputation and organizational performance: An empirical investigation of industrial enterprises. Corporate Reputation Review, 8(1), 13–30.
Cepeda-Carrión, G., Henseler, J., Ringle, C. M., & Roldán, J. L. (2016). Prediction-oriented modeling in business research by means of PLS path modeling: Introduction to a JBR special section. Journal of Business Research, 69(10), 4545–4551.
Chibucos, T. R., Leites, R. W., & Weis, D. L. (2005). Readings in family theory. Thousand Oaks: Sage.
Chin, W. W. (2010). How to write up and report PLS analyses. In V. E. Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares (pp. 655–690). Heidelberg: Springer.
Chun, R. (2005). Corporate reputation: Meaning and measurement. International Journal of Management Reviews, 7(2), 91–109.
Colgate, M., & Smith, B. (2005). Relationships and the internet: The mediating role of a relationship banker. Journal of Financial Services Marketing, 10(2), 140–151.
Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management, 37(1), 39–67.
Cropanzano, R., & Mitchell, M. S. (2005). Social exchange theory: An interdisciplinary review. Journal of Management, 31(6), 874–900.
Davies, R., Richardson, P., Katinaite, V., & Manning, M. (2010). Evolution of the UK banking system. Bank of England Quarterly Bulletin, Q4, 321–332.
Dawar, N., & Parker, P. (1994). Marketing universals: Consumers’ use of brand name, price, physical appearance, and retailer reputation as signals of product quality. Journal of Marketing, 58(2), 81–95.
De Wulf, K., Odekerken-Schröder, G., & Iacobucci, D. (2001). Investments in consumer relationships: A cross-country and cross-industry exploration. Journal of Marketing, 65(4), 33–50.
De Wulf, K., Odekerken-Schröder, G., & Van Kenhove, P. (2003). Investments in consumer relationships: A critical reassessment and model extension. International Review of Retail, Distribution and Consumer Research, 13(3), 245–261.
Diamantopoulos, A., & Winklhofer, H. M. (2001). Index construction with formative indicators: An alternative to scale development. Journal of Marketing Research, 38(2), 269–277.
Dijkstra, T. K., & Henseler, J. (2015). Consistent partial least squares path modeling. MIS Quarterly, 39(2), 297–316.
Dimitriadis, S. (2010). Testing perceived relational benefits as satisfaction and behavioral outcomes drivers. International Journal of Bank Marketing, 28(4), 297–313.
Doltu, C. (2000). The evolution of the banking system in Romania. Romanian Center for Economic Policies no. 8, 1–13.
Dunham, B. (2011). The role for signaling theory and receiver psychology in marketing. In G. Saad (Ed.), Evolutionary psychology in the business science (pp. 225–256). Heidelberg: Springer.
Eberl, M. (2010). An application of PLS in multi-group analysis: The need for differentiated corporate-level marketing in the mobile communications industry. In V. E. Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares (pp. 487–514). Heidelberg: Springer.
Edelman. (n.d.). Level of trust in banks in the United Kingdom between 2007 and 2015. In Statista—The Statistics Portal. Retrieved March 20, 2017, from https://www.statista.com/statistics/514244/bank-trust-levels-in-uk.
Eurostat. (n.d.). Online banking penetration in Romania from 2006 to 2016. In Statista—the statistics portal. Retrieved March 15, 2017, from https://www.statista.com/statistics/380874/online-banking-penetration-in-romania/.
EZB. (n.d.). Total number of payment cards issued in Romania from 2009 to 2016 (in 1,000s). In Statista—The statistics portal. Retrieved March 15, 2017, from https://www.statista.com/statistics/444436/number-of-payment-cards-in-romania/.
Falkenreck, C., & Wagner, R. (2010). Impact of direct marketing activities on company reputation transfer success: Empirical evidence from five different cultures. Corporate Reputation Review, 13(1), 20–37.
Feldman, P. M., Bahamonde, R. A., & Velasquez Bellido, I. (2014). A new approach for measuring corporate reputation. Revista de Administração de Empresas, 54(1), 53–66.
Franke, G. R., & Richey, R. G., Jr. (2010). Improving generalizations from multi-country comparisons in international business research. Journal of International Business Studies, 41(8), 1275–1293.
Freedom House. (2015a). Freedom in the World. Retrieved March 15, 2017, from https://freedomhouse.org/report/freedom-world/2015/united-kingdom and https://freedomhouse.org/report/freedom-world/2015/romania.
Freedom House. (2015b). Freedom of the press. Retrieved March 15, 2017, from https://freedomhouse.org/report/freedom-press/2015/united-kingdom and https://freedomhouse.org/report/freedom-press/2015/romania.
Gardberg, N. A. (2006). Reputatie, reputation, réputation, Reputazione, Ruf: A cross-cultural qualitative analysis of construct and instrument equivalence. Corporate Reputation Review, 9(1), 39–61.
Hair, J. F., Ringle, C. M., & Sarstedt, M. (2011). PLS-SEM: Indeed a silver bullet. Journal of Marketing Theory and Practice, 19(2), 139–151.
Hair, J. F., Sarstedt, M., Ringle, C. M., & Mena, J. A. (2012). An assessment of the use of partial least squares structural equation modeling in marketing research. Journal of the Academy of Marketing Science, 40(3), 414–433.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2014). A primer on partial least squares structural equation modeling (1st ed.). Thousand Oaks: Sage.
Hair, J. F., Sarstedt, M., Matthews, L. M., & Ringle, C. M. (2016). Identifying and treating unobserved heterogeneity with FIMIX-PLS: Part I—method. European Business Review, 28(1), 63–76.
Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2017). A primer on partial least squares structural equation modeling (2nd ed.). Thousand Oaks: Sage.
Hayes, A. F. (2013). Introduction to mediation, moderation, and conditional process analysis: A regression-based approach. New York: Guilford.
Henseler, J. (2007). A new and simple approach to multi-group analysis in partial least squares path modeling. In H. Martens, T. Næs, & M. Martens (Eds.), Causalities explored by indirect observation proceedings of the 5th International Symposium on PLS and related methods (PLS’07) (pp. 104–107). Norway: Matforsk, As.
Henseler, J. (2012). PLS-MGA: A non-parametric approach to partial least squares-based multi-group analysis. In W. A. Gaul, A. Geyer-Schulz, L. Schmidt-Thieme, & J. Kunze (Eds.), Challenges at the interface of data analysis, computer science, and optimization (studies in classification, data analysis, and knowledge organization) (pp. 495–501). Heidelberg: Springer.
Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2009). The use of partial least squares path modeling in international marketing. In R. R. Sinkovics & P. N. Ghauri (Eds.), New challenges to international marketing: advances in international marketing (pp. 277–319). Bingley: Emerald Group.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modelling. Journal of the Academy of Marketing Science, 43(1), 1–21.
Henseler, J., Hubona, G., & Ray, P. (2016a). Using PLS path modeling in new technology research: Updated guidelines. Industrial Management & Data Systems, 116(1), 2–20.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2016b). Testing measurement invariance of composites using partial least squares. International Marketing Review, 33(3), 405–431.
Hofstede, G., Hofstede, G. J., & Minkov, M. (2010). Cultures and organizations—software in the mind (3rd ed.). New York: McGraw Hill.
International Monetary Fund. (2013). Financial access survey. Retrieved March 15, 2017, from http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C.
Jarvenpaa, S. L., Tractinsky, N., & Saarinen, L. (1999). Consumer trust in an internet store: A cross-cultural validation. Journal of Computer-Mediated Communication, 5(2), 45–71.
Jeng, S. P. (2008). Effects of corporate reputations, relationships and competing suppliers’ marketing programmes on customers’ cross-buying intentions. The Service Industries Journal, 28(1), 15–26.
Jeng, S. P. (2011). The effect of corporate reputations on customer perceptions and cross-buying intentions. The Service Industries Journal, 31(6), 851–862.
Jin, B., Yong Park, J., & Kim, J. (2008). Cross-cultural examination of the relationships among firm reputation, e-satisfaction, e-trust, and e-loyalty. International Marketing Review, 25(3), 324–337.
Jing, L., & Lei, W. (2007). A study on the signaling mechanism of corporate reputation. In Proceedings of the wireless communications, networking and mobile computing, international conference (pp. 3277–3280). Shanghai: IEEE.
Keh, H. T., & Xie, Y. (2009). Corporate reputation and customer behavioral intentions: The roles of trust, identification and commitment. Industrial Marketing Management, 38(7), 732–742.
Kenny, D.A. (2016). Moderation. Retrieved July 28, 2016, from http://davidakenny.net/cm/moderation.htm#WWF.
Kirmani, A., & Rao, A. R. (2000). No pain, no gain: a critical review of the literature on signaling unobservable product quality. Journal of Marketing, 64(2), 66–79.
Knoppen, D., Ateş, M. A., Brandon-Jones, A., Luzzini, D., Van Raaij, E., & Wynstra, F. (2015). A comprehensive assessment of measurement equivalence in operations management. International Journal of Production Research, 53(1), 166–182.
Liang, C. J., & Wang, W. H. (2006). The behavioural sequence of the financial services industry in Taiwan: Service quality, relationship quality and behavioural loyalty. The Service Industries Journal, 26(2), 119–145.
Liao, L. F. (2008). Knowledge-sharing in R&D departments: A social power and social exchange theory perspective. The International Journal of Human Resource Management, 19(10), 1881–1895.
Loureiro, S. M. C., & Kastenholz, E. (2011). Corporate reputation, satisfaction, delight, and loyalty towards rural lodging units in Portugal. International Journal of Hospitality Management, 30(3), 575–583.
MacKenzie, S. B. (2003). The dangers of poor construct conceptualization. Journal of the Academy of Marketing Science, 31(3), 323–326.
Nelson, P. (1970). Information and consumer behavior. Journal of Political Economy, 78(20), 311–329.
Nitzl, C., Roldán, J. L., & Cepeda Carrión, G. (2016). Mediation analysis in partial least squares path modeling: Helping researchers discuss more sophisticated models. Industrial Management & Data Systems, 116(9), 1849–1864.
Office for National Statistics (UK). (n.d.). Online banking penetration in Great Britain from 2007 to 2017. In Statista—the statistics Portal. Retrieved March 15, 2017, from https://www.statista.com/statistics/286273/internet-banking-penetration-in-great-britain/.
Palmatier, R. W. (2008). Relationship marketing. Cambridge: Marketing Science Institute.
Palmatier, R. W., Dant, R. P., Grewal, D., & Evans, K. R. (2006). Factors influencing the effectiveness of relationship marketing: A meta-analysis. Journal of Marketing, 70(4), 136–153.
Podolny, J. M., & Phillips, D. J. (1996). The dynamics of organizational status. Industrial and Corporate Change, 5(2), 453–471.
Rindova, V. P., Williamson, I. O., Petkova, A. P., & Sever, J. M. (2005). Being good or being known: An empirical examination of the dimensions, antecedents, and consequences of organizational reputation. Academy of Management Journal, 48(6), 1033–1049.
Ringle, C. M., Wende, S., & Will, A. (2010). Finite mixture partial least squares analysis: Methodology and numerical examples. In V. E. Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares (pp. 195–218). Heidelberg: Springer.
Ringle, C. M., Wende, S., & Becker, J.-M. (2015). SmartPLS 3. Boenningstedt: SmartPLS GmbH. http://www.smartpls.com.
Romanian Banking Association. (2016). The banking sector of Romania. Retrieved March 20, 2017, from http://www.arb.ro/en/romanian-banking-system/romanian-banking-system-2/.
Rosenzweig, P. M. (1994). When can management science research be generalized internationally? Management Science, 40(1), 28–39.
Ruiz, B., García, J. A., & Revilla, A. J. (2016). Antecedents and consequences of bank reputation: A comparison of the United Kingdom and Spain. International Marketing Review, 33(6), 781–805.
Sarstedt, M. (2008). A review of recent approaches for capturing heterogeneity in partial least squares path modelling. Journal of Modelling in Management, 3(2), 140–161.
Sarstedt, M., & Ringle, C. M. (2010). Treating unobserved heterogeneity in PLS path modeling: A comparison of FIMIX-PLS with different data analysis strategies. Journal of Applied Statistics, 37(8), 1299–1318.
Sarstedt, M., & Schloderer, M. P. (2010). Developing a measurement approach for reputation of non-profit organizations. International Journal of Nonprofit and Voluntary Sector Marketing, 15(3), 276–299.
Sarstedt, M., Schwaiger, M., & Ringle, C. M. (2009). Determining the number of segments in FIMIX-PLS. In L. Robinson (Ed.), Developments in marketing science: Proceedings of the academy of marketing science. Baltimore: Springer.
Sarstedt, M., Becker, J.-M., Ringle, C. M., & Schwaiger, M. (2011). Uncovering and treating unobserved heterogeneity with FIMIXPLS: Which model selection criterion provides an appropriate number of segments? Schmalenbach Business Review, 63(1), 34–62.
Sarstedt, M., Ringle, C. M., Henseler, J., & Hair, J. F. (2014). On the emancipation of PLS-SEM: A commentary on Rigdon (2012). Long Range Planning, 47(3), 154–160.
Schlägel, C., & Sarstedt, M. (2016). Assessing the measurement invariance of the four-dimensional cultural intelligence scale across countries: A composite model approach. European Management Journal, 34(6), 633–649.
Schwaiger, M. (2004). Components and parameters of corporate reputation-an empirical study. Schmalenbach Business Review, 56(1), 46–71.
Shamma, H. M. (2012). Toward a comprehensive understanding of corporate reputation: Concept, measurement and implications. International Journal of Business and Management, 7(16), 151–169.
Shamma, H. M., & Hassan, S. S. (2009). Customer and non-customer perspectives for examining corporate reputation. Journal of Product & Brand Management, 18(5), 326–337.
Shiau, W. L., & Luo, M. M. (2012). Factors affecting online group buying intention and satisfaction: A social exchange theory perspective. Computers in Human Behavior, 28(6), 2431–2444.
Shore, L. M., Tetrick, L. E., Lynch, P., & Barksdale, K. (2006). Social and economic exchange: Construct development and validation. Journal of Applied Social Psychology, 36(4), 837–867.
Smith, J. B., & Barclay, D. W. (1997). The effects of organizational differences and trust on the effectiveness of selling partner relationships. Journal of Marketing, 61(1), 3–21.
Steenkamp, J. B. E., & Baumgartner, H. (1998). Assessing measurement invariance in cross-national consumer research. Journal of Consumer Research, 25(1), 78–90.
Stiglitz, J. E. (2002). Information and the change in the paradigm in economics. American Economic Review, 92(3), 460–501.
Terblanche, N. S. (2014). Validation of the customer-based corporate reputation scale in a retail context. International Journal of Market Research, 56(5), 655–671.
The Economist Intelligence Unit. (2015). Democracy Index 2015: Democracy in an age of anxiety. Retrieved March 15, 2017, from https://www.yabiladi.com/img/content/EIU-Democracy-Index-2015.pdf.
The UK Cards Association. (2015). UK card payments. Retrieved March 15, 2017, from http://www.theukcardsassociation.org.uk/wm_documents/UK%20Card%20Payments%202015%20taster%20for%20website.pdf.
The World Bank. (2013). World development indicators. Retrieved March 15, 2017, from http://databank.worldbank.org/data/.
The World Bank. (2015). The worldwide governance indicators (WGI). Retrieved March 15, 2017, from http://info.worldbank.org/governance/wgi/index.aspx#reports.
Transparency International. (2015). Corruption perceptions index 2015. Retrieved March 15, 2017, from https://www.transparency.org/cpi2015/#results-table.
Vidaver-Cohen, D. (2007). Reputation beyond the rankings: A conceptual framework for business school research. Corporate Reputation Review, 10(4), 278–304.
Vinzi, V. E., Trinchera, L., & Amato, S. (2010). PLS path modeling: From foundations to recent developments and open issues for model assessment and improvement. In V. E. Vinzi, W. W. Chin, J. Henseler, & H. Wang (Eds.), Handbook of partial least squares (pp. 47–82). Heidelberg: Springer.
Walker, K. (2010). A systematic review of the corporate reputation literature: Definition, measurement, and theory. Corporate Reputation Review, 12(4), 357–387.
Walker, K., & Dyck, B. (2014). The primary importance of corporate social responsibility and ethicality in corporate reputation: An empirical study. Business and Society Review, 119(1), 147–174.
Walsh, G., & Beatty, S. E. (2007). Customer-based corporate reputation of a service firm: Scale development and validation. Journal of the Academy of Marketing Science, 35(1), 127–143.
Walsh, G., & Wiedmann, K. P. (2004). A conceptualization of corporate reputation in Germany: An evaluation and extension of the RQ. Corporate Reputation Review, 6(4), 304–312.
Walsh, G., Mitchell, V. W., Jackson, P. R., & Beatty, S. E. (2009a). Examining the antecedents and consequences of corporate reputation: A customer perspective. British Journal of Management, 20(2), 187–203.
Walsh, G., Beatty, S. E., & Shiu, E. M. (2009b). The customer-based corporate reputation scale: Replication and short form. Journal of Business Research, 62(10), 924–930.
Walsh, G., Bartikowski, B., & Beatty, S. E. (2014). Impact of customer-based corporate reputation on non-monetary and monetary outcomes: The roles of commitment and service context risk. British Journal of Management, 25(2), 166–185.
Wang, Y., Lo, H. P., & Hui, Y. V. (2003). The antecedents of service quality and product quality and their influences on bank reputation: Evidence from the banking industry in China. Managing Service Quality: An International Journal, 13(1), 72–83.
Wang, Y., Kandampully, J. A., Lo, H. P., & Shi, G. (2006). The roles of brand equity and corporate reputation in CRM: A Chinese study. Corporate Reputation Review, 9(3), 179–197.
Weigelt, K., & Camerer, C. (1988). Reputation and corporate strategy: A review of recent theory and applications. Strategic Management Journal, 9(5), 443–454.
Woodside, A. G. (2016). The good practices manifesto: Overcoming bad practices pervasive in current research in business. Journal of Business Research, 69(2), 365–381.
World Justice Project. (2015). Rule of law index 2015. Retrieved March 15, 2017, from https://worldjusticeproject.org/sites/default/files/roli_2015_0.pdf.
Zhang, Y. (2009). A study of corporate reputation’s influence on customer loyalty based on PLS-SEM model. International Business Research, 2(3), 28–35.
Zhao, X., Lynch, J. G., & Chen, Q. (2010). Reconsidering Baron and Kenny: Myths and truths about mediation analysis. Journal of Consumer Research, 37(2), 197–206.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendices
Appendix 4.1
Appendix 4.2
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG
About this chapter
Cite this chapter
Radomir, L., Wilson, A. (2018). Corporate Reputation: The Importance of Service Quality and Relationship Investment. In: Avkiran, N., Ringle, C. (eds) Partial Least Squares Structural Equation Modeling. International Series in Operations Research & Management Science, vol 267. Springer, Cham. https://doi.org/10.1007/978-3-319-71691-6_4
Download citation
DOI: https://doi.org/10.1007/978-3-319-71691-6_4
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-71690-9
Online ISBN: 978-3-319-71691-6
eBook Packages: Economics and FinanceEconomics and Finance (R0)