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Abstract
Purpose– The purpose of this paper is twofold: to empirically analyse how customer corporate social responsibility (CSR) perceptions impact on the perceived service quality (PSQ)-loyalty relationship in the banking industry of Pakistan; and to evaluate the mediating role of customer trust in that model.Design/methodology/approach– Based on a field survey of 408 customers of five different banks of Pakistan, the hypothesized model is tested through partial least squares based structural equation modelling.Findings– The findings demonstrate that banking customers in Pakistan recognise CSR as a multidimensional construct that serves as a direct determinant of PSQ, trust, repurchase and word of mouth (WOM) intentions. PSQ also influences customer trust directly and positively and trust has a direct and positive impact on repurchase and WOM intentions. On the contrary, PSQ does not influence repurchase and WOM intentions directly. Its effect is mediated by customer trust.Practical implications– Contrary to the previous mixed findings reported in the literature, this research confirms the explicit contribution of CSR towards customer perceptions and intentions in the context of the banking industry. The findings suggest that banking companies should take great care over preparing their CSR initiatives and include them in their marketing plans in order to improve customer loyalty intentions. In this way, CSR can enhance PSQ and customer trust, which are two key constructs in the loyalty model proposed in this paper.Originality/value– The originality of the paper lies in the context in which the research was developed. The banking industry of Pakistan had not previously been extensively researched. The proposal for a comprehensive model that evaluates the role of customer trust is another key contribution of the paper. Previous research has not extensively studied the role of trust in loyalty models that evaluate CSR perceptions along with PSQ.
Highlights
Nowadays, due to the numerous benefits that are associated with corporate social responsibility, firms are encouraged to spend millions on CSR activities (Becker-Olsen et al, 2006; Pirsch et al, 2007)
The outcomes of this research expand the corpus by identifying the effect of CSR perceptions on the PSQloyalty relationships as well as evaluating the mediating role of trust in the banking industry of a developing economy
In response to the first objective of this research, the role of CSR perceptions on customer attitudes namely PSQ, trust, repurchase and WOM intentions has been evaluated by extending the García de los Salmones et al.’s (2005) model of CSR-PSQ-loyalty in two directions
Summary
Due to the numerous benefits that are associated with corporate social responsibility (hereafter CSR), firms are encouraged to spend millions on CSR activities (Becker-Olsen et al, 2006; Pirsch et al, 2007). There has been only limited research into the effect of CSR on customer perceptions and intentions (Pérez et al, 2013a). In this regard, it is important to state that firms consider customers as being among of their most important stakeholders and, that the academic study of customer intentions should be a priority in business research (Sen and Bhattacharya, 2001)
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