Investigation of customer loyalty and customer satisfaction with respect to corporate social responsibility: a model for the Indian banking industry

This paper aims to study the roles of corporate social responsibility (a non-service related concept) and perceived service quality (a service-related concept) in determining the attitudinal and behavioral loyalty and satisfaction of customers in the retail banking sector in India.
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Investigation of customer loyalty and customer satisfaction with respect to corporate social responsibility: a model for the Indian banking industryInternational Journal of Management (IJM)Volume 6, Issue 9, Sep 2015, pp. 93-101, Article ID: IJM_06_09_010Available online athttp://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=6&IType=9ISSN Print: 0976-6502 and ISSN Online: 0976-6510© IAEME Publication___________________________________________________________________________ INVESTIGATION OF CUSTOMER LOYALTY AND CUSTOMER SATISFACTION WITH RESPECT TOCORPORATE SOCIAL RESPONSIBILITY: A MODEL FOR THE INDIAN BANKING INDUSTRY Victor Saha and Abhilas ha Sharma BITS Pilani ABSTRACT This paper aims to study the roles of corporate social responsibility (a non-service related concept) and perceived service quality (a service-related concept) in determining the attitudinal and behavioral loyalty and satisfaction of customers in the retail banking sector in India. The study is quantitative in nature and uses the responses of 1067 respondents who answered a survey questionnaire. Data analysis was performed using partial least squares (PLS), a variance based structural equation modeling method. The results of the study demonstrate that corporate social responsibility (CSR) has a significant strong and positive association with attitudinal loyalty and satisfaction. While the results are clear and have strong salience for the retail banking industry, future research should take into account the specific industry context within the national culture. The study provides a set of findings relating to CSR initiatives and perception of service quality that could be readily incorporated into banks’ corporate strategic plans. The paper demonstrates an empirical operationalization of CSR initiatives measured from the customers’ point of view, and from which banks could learn for corporate strategy development. Key words: Corporate Social Responsibility, Customer loyalty, Customer Satisfaction and India. Cite this Article: Saha, V. and Sharma, A. Investigation of Customer Loyalty and Customer Satisfaction with respect to Corporate Social Responsibility: A model for the Indian Banking Industry. International Journal of Management (IJM), 6(9), 2015, pp. 93-101. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=6&IType=9http://www.iaeme.com/IJM/index.asp 93 editor@iaeme.com Victor Saha and Abhilasha Sharma1. INTRODUCTIONCorporate Social Responsibility also called social conscience or businessresponsibility is a form of corporate self-regulation integrated into a business model.In the late 1960s and early 1970s, the term “corporate social responsibility or CSR”came into common use. Holmes and Watts (1999) defined CSR as the continuingcommitment by business to behave ethically and contribute to economic developmentwhile improving the quality of life of the workforce and their families as well as ofthe local community and society at large. Some researchers argue that corporationsmake more long term profits by operating with a CSR perspective, while others arguethat CSR distracts from the economic role of businesses. However, Matten & Crane(2005) [12] emphasized that the firms will experience divergent degrees of internal,external and lateral pressures to engage in CSR, as firms are embedded in differentnational business systems. Robbins and Coulter (2007) explained that themanagement’s social responsibility goes beyond making profit to include protectingand improving social’s welfare of its stakeholders and the environment in which thefirm carries out its operations. One of the main reasons for the growing interest inCSR is because of the idea that CSR influence consumer loyalty at a time whenhospitality companies are facing an extremely business competitive environment andever growing customer expectations (Hanet al., 2011). Many hospitality firms arehaving difficulty increasing their market share because of rising internationalcompetition, slower growth rates, decreased population growth, and over supplied andmature markets (So et al., 2013). Thus, firms within this sector have become moreinterested in looking after and retaining their customers because the advantages seemobvious. When customers become loyal, they buy more, are willing to pay more andrecommend more (Harris and Goode, 2004). However, creation of loyalty amongcustomers represents a challenge for hospitality business since switching hospitalitysupplier can represent a risk because it is difficult to estimate the quality of the servicebefore it is consumed (Nemec, 2010). Customer satisfaction is a part of customer loyalty or we can say that customerloyalty is influenced by ...