Corporate reputation: The importance of service quality and relationship investment

Abstract

Having a strong reputation is a desirable resource for banks which must face today’s competitive business environment. This chapter aims to (1) investigate the contribution of service quality and relationship investment to building a good reputation and (2) show that the efforts made by banks in maintaining customer relationships ultimately translate into positive outcomes, such as relationship loyalty. Data collected from banking services consumers from two countries were analysed using partial least squares (PLS). Based on 510 responses from Romanian consumers and 525 responses from UK consumers, the proposed framework is tested separately and causal relationships are then compared to examine whether path estimates are invariant across the two countries. Finally, the data is pooled to increase the generalizability of results. Perceptions of both service quality and relationship investment have a significant contribution to building sympathy towards banks and in developing favourable perceptions about their competence. Furthermore, perceived relationship investment acts as a mediator in the relationship between overall service quality and corporate reputation. Finally, this study reinforces the importance of perceived relationship investment and corporate reputation in developing long-lasting relationships by demonstrating the willingness of customers to reciprocate. The findings extend previous knowledge in the field by emphasising the importance of perceived relationship investment in building customers’ sympathy towards service companies as well as favourable perceptions regarding their competence. In addition, the framework herein proposed acknowledges the mediating role of perceived relationship investment between service quality perceptions and corporate reputation. Furthermore, the study builds on signalling and social exchange theories to show that banks’ endeavour to increase their customers’ quality perceptions enhance the benefits of banking institutions. Altogether, results reported in this study are of high relevance from both a theoretical and managerial perspective. Future studies may test the proposed framework in other cultures and explore the mediating role of perceived relationship investment between other factors and corporate reputation. Despite the interest in the two concepts of corporate reputation and perceived relationship investment in either the relationship marketing literature or the corporate reputation literature, the relationship between the two constructs has been only theoretically suggested. Against this background, this chapter is the first to investigate empirically the impact of perceived relationship investment on corporate reputation. It is also the first to assess the potential role of perceived relationship investment in mediating the effect of service quality on corporate reputation.