How Does the Brand’s Perceived Ethicality Influence Customer Loyalty and Positive Word-Of-Mouth in Service Brands of Pakistan? A Comparative Analysis of Bank, Restaurants, and Telecom Sectors in a Moderated Mediatory Framework.

Abstract

In the past few decades, growth in ethical consumerism has led brands to increasingly develop conscientiousness and depict ethical image at a corporate level. But does having a corporate brand that is perceived to be ethical have any influence on outcome variables of interest for its product brands? Accordingly, this article aims to empirically examine the effects of customer perceived ethicality in the context of corporate services brands. Specifically, we analyzed the outcome in terms of brand loyalty and Positive Word-of-Mouth. Drawing on the outcomes of Perceived Ethicality, as proposed in Markovic et.al. (2018) Singh et. al. (2012), and Iglesias et. al. (2019), we proposed a theoretical framework, modifying and combining these models into a unified path analysis. Based on data collected for three service categories namely Banks, Restaurants, and Telecom, the hypothesized structural model is tested using Confirmatory factor analysis and structured equation modeling. We hypothesized that a Brand’s Perceived Ethicality increase the brand trust, affect, and Perceived Quality, creates a better Brand Image, and raises the Affective Commitment with the brand these factors would, in turn, increase brand loyalty and ultimately affecting positive word of mouth. We also assumed a complementarity of empathy in the impact of Affective Commitment and Perceived Quality on brand loyalty. Similarly, we proposed a positive moderation of brand heritage in brand image and loyalty nexus. Empirical validity was established by conducting a survey using a close-ended questionnaire conducted on 254 respondents. The result suggested that perceived ethicality has a significant and positive impact on Brand effect, image, trust, Affective commitment, and perceived quality in all three sectors. Restaurants seem to have a more pronounced effect as compared to the other two. However, only Affective Commitment seems to positively affect loyalty in all three sectors. The brand effect has a positive impact in the case of restaurants, whereas, Perceived Quality has a significant and positive effect in the case of telecom and Banks. Customer Loyalty further leads to Positive Word-of-Mouth in all three cases. Concerning the moderating effect, Empathy seems to have a negative complementarity in ethicality and perceived quality nexus. However, empathy seems to have a positive effect on both Affective commitment and perceived quality. Lastly, brand heritage also seems to positively impact brand image. Hence, only effective commitment seems to meditate ethicality loyalty relationships in all cases, whereas perceived quality and brand effect also mediate in few cases. The managerial and academic implications of the results are discussed.