Abstract
This study investigates the influences of product quality, and prominent relational elements, namely trust, cooperation, and communication, on customer loyalty, and mediating effects of commitment in Malaysian electrical and electronics manufacturing industry. The study utilizes quantitative methodology, where survey questionnaires are sent to Malaysian electrical and electronics manufacturing firms, which are randomly selected from two directories. A total of 267 returned and useable survey questionnaires are accepted for data analysis, which consists of data screening, response rate, descriptive statistics, PLS-SEM, and mediation effects. PLS-SEM analysis findings determine that product quality and cooperation have significant influences on customer loyalty. In contrast, trust and communication do not have significant influences on customer loyalty. Mediation effect analysis findings establish that commitment significantly mediates the four relationships between product quality and customer loyalty, trust and customer loyalty, cooperation and customer loyalty, and communication and customer loyalty. Two relationships between product quality and customer loyalty, and cooperation and customer loyalty are partially mediated by commitment. The other two relationships between trust and customer loyalty, and communication and customer loyalty are fully mediated by commitment. This study has managerial implications for the Malaysian electrical and electronics manufacturing industry, where customer loyalty can be developed with influences of product quality and relational elements, in which not all of them develop customer loyalty in similar ways; only cooperation has direct influence on customer loyalty. Nevertheless, with the presence of mediating effects of commitment, all three relational elements (trust, communication, and cooperation) can develop customer loyalty indirectly.
Highlights
Malaysia is considered one of the global manufacturing hubs for electrical and electronics (E&E) products
Convergent validity was determined by the Average Variance Extracted (AVE), where the determined AVE ranged from 0.522 to 0.536, which were greater than the critical limit of 0.50 (Hair et al, 2014) indicating the convergent validity were sufficiently established in the reflective measurement model
The findings of this study have determined that the relationship between product quality and customer loyalty is significant in Malaysian E&E manufacturing industry
Summary
Malaysia is considered one of the global manufacturing hubs for electrical and electronics (E&E) products. Notwithstanding the important contributions of Malaysian manufacturing E&E industry, it is experiencing challenges that are adversely affecting export growth in recent decade (Bank Negara Malaysia [1]). It is subjected to many challenges, ranging from global competitions, rapid technological innovations, to cyclical demands. These challenges are further compounded by recent development, where E&E customers are consolidating their supplier bases by holding fewer suppliers (Li[2]). This shift of supply chain management has created profound impact on suppliers, who must compete and differentiate themselves by delivering values beyond merely selling products. Establishing customer loyalty and commitment have become more important than ever
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