Modeling the Impact of Corporate Reputation on Customer Satisfaction and Loyalty Using Partial Least Squares

  • Sabrina HelmEmail author
  • Andreas Eggert
  • Ina Garnefeld
Part of the Springer Handbooks of Computational Statistics book series (SHCS)


Reputation is one of the most important intangible assets of a firm. For the most part, recent articles have investigated its impact on firm profitability whereas its effects on individual customers have been neglected. Using data from consumers of an international consumer goods producer, this paper (1) focuses on measuring and discussing the relationships between corporate reputation, consumer satisfaction, and consumer loyalty and (2) examines possible moderating and mediating effects among the constructs. We find that reputation is an antecedent of satisfaction and loyalty that has hitherto been neglected by management. Furthermore, we find that more than half of the effect of reputation onto loyalty is mediated by satisfaction. This means that reputation can only partially be considered a substitute for a consumer’s own experiences with a firm. In order to achieve consumer loyalty, organizations need to create both, a good reputation and high satisfaction.


Partial Little Square Structural Equation Modeling Customer Satisfaction Consumer Research Customer Orientation 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Abdullah, M., Al-Nasser, A., & Husain, N. (2000). Evaluating functional relationship between image, customer satisfaction and customer loyalty using general maximum entropy. Total Quality Management, 11, 826–829.CrossRefGoogle Scholar
  2. Anderson, E., & Sullivan, M. (1993). The antecedents and consequences of customer satisfaction for firms. Marketing Science, 12, 125–143.CrossRefGoogle Scholar
  3. Anderson, E., & Weitz, B. (1989). Determinants of continuity in conventional industrial channel dyads. Marketing Science, 8(2), 310–323.CrossRefGoogle Scholar
  4. Anderson, E., & Weitz, B. (1992). The use of pledges to build and sustain commitment in distribution channels. Journal of Marketing Research, 24(1), 18–34.CrossRefGoogle Scholar
  5. Anderson, J., & Gerbing, D. (1991). Predicting the performance of measures in a confirmatory factor analysis with a pretest assessment of their substantive validities. Journal of Applied Psychology, 76(5), 732–740.CrossRefGoogle Scholar
  6. Andreassen, T. (1994). Satisfaction, loyalty and reputation as indicators of customer orientation in the public sector. Internatinal Journal of Public Sector Management, 7(2), 16–34.CrossRefGoogle Scholar
  7. Andreassen, T., & Lindestad, B. (1999). The effect of corporate image in the formation of customer loyalty. Journal of Service Research, 1, 82–92.CrossRefGoogle Scholar
  8. Bagozzi, R., Yi, Y., & Phillips, L. (1991). Assessing construct validity in organizational research. Administrative Science Quarterly, 36(3), 421–458.CrossRefGoogle Scholar
  9. Balmer, J., & Gray, E. (1999). Corporate identity and corporate coummunications: Creating a competitive advantage. Corporate Commincations, 4(4), 171–176.CrossRefGoogle Scholar
  10. Balmer, J., & Greyser, S. (2003). Revealing the Corporation. London/New York: Routledge.Google Scholar
  11. Baron, R., & Kenny, D. (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.CrossRefGoogle Scholar
  12. Baumgartner, H., & Homburg, C. (1996). Applications of structural equation modeling in marketing and consumer research: A review. International Journal of Research in Marketing, 13(2), 139–161.CrossRefGoogle Scholar
  13. Bem, D. (1967). Self-perception: An alternative interpretation of cognitive dissonance phenomena. Psychological Review, 74(3), 183–200.CrossRefGoogle Scholar
  14. Berens, G., & van Riel, C. (2004). Corporate associations in the academic literature: Three main streams of thought in the reputation measurement literature. Corporate Reputation Review, 7(2), 161–178.CrossRefGoogle Scholar
  15. Bettencourt, L. (1997). Customer voluntary performance. customers as partners in service delivery. Journal of Retailing, 3, 383–406.Google Scholar
  16. Bollen, K., & Lennox, R. (1991). Conventional wisdom on measurement: A structural equation perspective. Psychological Bulletin, 110(2), 305–314.CrossRefGoogle Scholar
  17. Bromley, D. (2002). Comparing corporate reputations: League tables, quotients, benchmarks, or case studies. Corporate Reputation Review, 5(1), 35–50.CrossRefGoogle Scholar
  18. Chin, W. (1998). The partial least squares approach to structural equation modeling. In G. Marcoulides (Ed.), Modern Methods for Business Research (pp. 295–336). Mahwah/London: Lawrence Erlbaum.Google Scholar
  19. Chin, W., Marcolin, B., & Newsted, P. (2003). A partial least squares latent variable modeling approach for measuring interaction effects: Results from a monte carlo simulation study and an electronic-mail emotion/adoption study. Information Systems Research, 14(2), 189–217.CrossRefGoogle Scholar
  20. Churchill, G., & Surprenant, C. (1982). An investigation into the determinants of customer satisfaction. Journal of Marketing Research, 19(10), 491–504.CrossRefGoogle Scholar
  21. Diamantopoulos, A., & Winklhofer, H. (2001). Index construction with formative indicators: An alternative to scale development. Journal of Marketing Research, 38, 269–277.CrossRefGoogle Scholar
  22. Dick, A., & Basu, K. (1994). Customer loyalty: Toward an integrated conceptual framework. Journal of the Academy of Marketing Science, 22(2), 99–113.CrossRefGoogle Scholar
  23. Festinger, L. (1957). A Theory of Cognitive Dissonance. Stanford CA: Stanford University Press.Google Scholar
  24. Fombrun, C. (1996). Reputation. Boston: Harvard Business School Press.Google Scholar
  25. Fombrun, C. (1998). Indices of corporate reputation: an analysis of media rankings and social monitors ratings. Corporate Reputation Review, 1, 327–340.CrossRefGoogle Scholar
  26. Fornell, C., & Bookstein, F. (1982). A comparison analysis of two structural equation models: Lisrel and pls applied to market data. In C. Fornell (Ed.), A Second Generation of Multivariate Analysis (pp. 290–312). New York: Greenwood.Google Scholar
  27. Gotsi, M., & Wilson, A. (2001). Corporate reputation: Seeking a definition. Corporate Communications, 6, 24–30.CrossRefGoogle Scholar
  28. Gray, J. (1986). Managing the Corporate Image. Westport/London: Greenwood Press.Google Scholar
  29. Hair, J., Anderson, R., Tatham, R., & Black, W. (1998). Multivariate Data Analysis (5th ed.). Englewood Cliffs: Prentice Hall.Google Scholar
  30. Herbig, P., & Milewicz, J. (1994). Marketing signals in service industries. Journal of Services Marketing, 8(2), 19–35.CrossRefGoogle Scholar
  31. Hoyle, R. H., & Kenny, D. A. (1999). Sample size, reliability, and tests of mediation. In R. H., Hoyle (Ed.), Statistical strategies for small sample research (pp. 195–222). Thousand Oaks: Sage.Google Scholar
  32. Iacobucci, D., & Duhachek, A. (2003). Mediation analysis – round table acr 2003. Presentation at the round table of the ACR Conference, Toronto.Google Scholar
  33. Jarvis, C., Mackenzie, S., & Podsakoff, P. (2003). A critical review of construct indicators and measurement model misspecification in marketing and consumer research. Journal of Consumer Research, 30, 199–218.CrossRefGoogle Scholar
  34. Kleinbaum, D., Kupper, L., Muller, K., & Nizam, A. (1998). Applied Regression Analysis and Other Multivariable Methods (3rd ed.). Pacific Grove: Duxbury.Google Scholar
  35. Lewis, S. (2001). Measuring corporate reputation. Corporate Communications, 6, 31–35.CrossRefGoogle Scholar
  36. MacCullum, R., & Browne, M. (1993). The use of causal indicators in covariance structure models: Some practical issues. Psychological Bulletin, 114(1), 533–541.CrossRefGoogle Scholar
  37. Mano, H., & Oliver, R. (1993). Assessing the dimensionality and structure of the consumption experience: Evaluation, feeling, and satisfaction. Journal of Consumer Research, 20, 451–466.CrossRefGoogle Scholar
  38. Markwick, N., & Fill, C. (1997). Towards a framework for managing corporate identity. European Journal of Marketing, 31(5/6), 396–409.CrossRefGoogle Scholar
  39. Middleton, S., & Hanson, D. (2002). Reputation, research, and the resource bases view: Determining a suitable methodolgy. In R. H. Hoyle (Ed.), Proceedings of the 6th International Conference on Corporate Reputation, Identity and Competitiveness. Boston.Google Scholar
  40. Morley, M. (2002). How to Manage Your Global Reputation (2nd ed.). New York: New York University Press.CrossRefGoogle Scholar
  41. Nguyen, N., & Leblanc, G. (2001a). Corporate image and corporate reputation in customers’ retention decision in services. Journal of Retailing and Consumer Services, 8, 227–236.CrossRefGoogle Scholar
  42. Nguyen, N., & Leblanc, G. (2001b). Image and reputation of higher education institutions in students’ retention decisions. The International Journal of Educational Management, 15(6), 303–311.CrossRefGoogle Scholar
  43. Oliver, R. (1997). Satisfaction. New York: McGraw-Hill.Google Scholar
  44. Oliver, R. (1999). Whence consumer loyalty? Journal of Marketing, 63, 33–44.CrossRefGoogle Scholar
  45. Rossiter, J. (2002). The c-oar-se procedure for scale development in marketing. International Journal of Research in Marketing, 19(4), 305–335.CrossRefGoogle Scholar
  46. Rust, R. T., & Zahorik, A. J. (2003). Customer satisfaction, customer retention,and market share. Journal of Retailing, 69, 193–215.CrossRefGoogle Scholar
  47. Sandberg, K. (2002). Kicking the tires of corporate reputation. Harvard Management Communication Letter, 5(1), 3–4.Google Scholar
  48. Seltin, N., & Keeves, J. (1994). Path analysis with latent variables. In T. Husn & T. Postlethwaite (Eds.), The International Encyclopedia of Education (2nd ed., pp. 4352–4359). Oxford: Pergamon.Google Scholar
  49. Shapiro, C. (1982). Consumer information, product quality, and seller reputation. Bell Journal of Economics, 13(1), 20–35.CrossRefGoogle Scholar
  50. Singh, J., & Sirdeshmukh, D. (2000). Agency and trust mechanisms in consumer statisfaction and loyalty judgments. Journal of the Academy of Marketing Science, 28(1), 150–167.CrossRefGoogle Scholar
  51. Sobel, M. (1982). Asymptotic confidence intervals for indirect effects on structural equation models. In S. Leinhardt (Ed.), Sociological Methodology (pp. 290–312). Jossy-Bass.Google Scholar
  52. Thibaut, J., & Kelley, H. (1959). The Social Psychology of Groups. New York: Wiley.Google Scholar
  53. Wartick, S. (2002). Measuring corporate reputation. Business & Society, 41(4), 371–392.CrossRefGoogle Scholar
  54. Westbrook, R., & Oliver, R. (1981). Developing better measures of consumer satisfaction. some preliminary results. Journal of Consumer Research, 18, 84–91.Google Scholar
  55. Yoon, E., Guffey, H., & Kijewski, V. (1993). The effects of information and company reputation on intentions to buy a business service. Journal of Business Research, 27, 215–228.CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.John and Doris Norton School of Family and Consumer SciencesUniversity of ArizonaTucsonUSA
  2. 2.University of PaderbornPaderbornGermany

Personalised recommendations