This chapter presents the development of the conceptual model used in this study based on the discussion in Chapter 2. The conceptual model of behavioural intentions depicts the integrated potential relationships that exist between service quality, customer satisfaction, perceived value, bank corporate image, switching costs and behavioural intentions. The 18 hypotheses tested in this study to satisfy this study’s objectives are discussed.
Model Development 3.1
In this study, a banking behavioural intentions conceptual model (see Figure 3.1) has been developed based on Clemes et al. (2014, 2011, 2010, 2007) model framework. The proposed model demonstrates firstly, the expected relationships that may exist among the six important marketing constructs in the context of the Malaysian retail banking industry. In particular, the conceptual model shows that it is expected that customers’ perceptions of service quality will influence customer satisfaction, perceived value, bank corporate image, switching costs and behavioural intentions. Secondly, customer satisfaction, perceived value, bank corporate image, and switching costs are expected to influence behavioural intentions. Thirdly, perceived value and corporate image are expected to influence customer satisfaction. It is important to note that this conceptual model depicts customer satisfaction, perceived value, corporate image, switching costs and behavioural intentions as higher order constructs. This approach offers a more complete theoretical framework for examining the links between service quality and the higher order constructs (Clemes et al., 2010). The model also conceptualises retail bank service quality as a multidimensional, hierarchical and reflective construct measured at three levels: an overall service quality level, a primary dimension level, and a subdimension level (Hossain et al., 2014).
The primary dimension level consists of three primary dimensions: (1) interaction quality; (2) physical environment quality; and (3) outcome quality. The subdimension level comprising interaction quality is represented by five subdimensions (i.e., attitude, behaviour, expertise, problem solving and information). The physical environment quality subdimension level is represented by four subdimensions (i.e., ambient conditions, equipment, physical appeal, and social factors). Finally, the outcome quality subdimension level is represented by six subdimensions (i.e., waiting time, convenience, valence, security and privacy, reliability,
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and speed of decisions and responses). The three primary dimensions together reflect customers’ overall service quality perceptions (Brady & Cronin, 2001; Dabholkar et al., 1996).
Hypotheses Development 3.2
Hypotheses Relating to Research Objective 1 3.2.1
Based on Brady and Cronin’s study (2001), there are three major dimension antecedents of overall service quality: interaction quality, physical environment quality and outcome quality, which are categorized as primary dimensions. These three primary dimensions are identified as coherent in the retail banking industry, as discussed in section 2.2.7. Each primary dimension consists of a number of subdimensions (Hossain et al., 2014; Lu et al., 2009; Brady & Cronin, 2001). Martínez Caro and Martínez García (2008) encourage researchers to build industry-specific models instead of replicating a universal conception of service quality models, because the critical factors of service quality are not uniform across all service industries. In addition, a different cultural background may result in different perceptions of service quality (Malhotra et al., 2005; Cui et al., 2003; Stauss & Mang, 1999; Donthu & Yoo, 1998; Winsted, 1997). Therefore, the subdimensions of interaction quality, physical environment quality and outcome quality in this study have been obtained from the literature, through focus group interviews and through exploratory factor analysis, specifically for customers of retail banking in Malaysia (see Section 4.1.1).
Interaction Quality 3.2.1.1
From the literature, researchers have identified the following set of subdimensions that customers evaluate as components of interaction quality that relate to banking services: (a) attitude (Martínez Caro & Martínez García, 2007; Al-Hawari & Ward, 2006; Yavas et al., 2004; Brady & Cronin, 2001; Bahia & Nantel, 2000; Grőnroos, 1990); (b) behaviour (Ehigie, 2006; Yavas et al., 2004; Bahia & Nantel, 2000; Grőnroos, 1990); (c) expertise (Martínez Caro & Martínez García 2008; 2007; Clemes et al., 2007; Arasli et al., 2005a; Brady & Cronin, 2001); (d) problem solving (Clemes et al., 2010; de Matos et al., 2009; Lu et al., 2009; Martínez Caro & Martínez García, 2008; 2007); and (e) information (Lu et al., 2009; Martínez Caro & Martínez García, 2007; Arasli, Mehtap-Smadi & Katircioglu, 2005b; Jabnoun & Al-Tamimi, 2003; Blanchard & Galloway, 1994). These subdimensions are expected to constitute the interaction quality primary dimension. Thus, the first hypothesis is formulated as:
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H1: There is a significant positive relationship between the subdimensions of interaction quality (i.e. H1a, H1b, H1c, H1d and H1e)8 and the interaction quality primary
dimension.
Physical Environment Quality 3.2.1.2
From the literature, researchers have identified the following set of subdimensions that customers evaluate as components of the physical environment quality, that relate to banking services: (a) ambient conditions (de Matos et al., 2009; Martínez Caro & Martínez García, 2008; Al-Hawari & Ward, 2006; Ko & Pastore, 2005; Brady & Cronin, 2001; Bahia & Nantel, 2000); (b) equipment (de Matos et al., 2009; Lu et al., 2009; Martínez Caro & Martínez García, 2008; Al-Hawari & Ward, 2006; Ko & Pastore, 2005); (c) physical appeal (Lu et al., 2009; Manrai & Manrai, 2007; Arasli et al., 2005b; Ko & Pastore, 2005; Yavas et al., 2004; Brady & Cronin, 2001; Oppewal & Vriens, 2000; Levesque & McDougall, 1996); and (d) social factors (Brady & Cronin, 2001). These subdimensions are expected to constitute the physical environment quality. Based on these four factors, the second hypothesis is formulated as:
H2: There is a significant positive relationship between the subdimensions of the physical environment quality (i.e. H2a, H2b, H2c, and H2d)9 and the physical environment quality primary dimension.
Outcome Quality 3.2.1.3
From the literature, researchers have identified the following set of subdimensions that customers evaluate as components of outcome quality that relate to banking services: (a) waiting time (Pollack, 2009; Martínez Caro & Martínez García, 2008; Beerli et al., 2004; Brady & Cronin, 2001); (b) convenience (Kumar et al., 2010; Kumar et al., 2009; Yavas et al., 2004); (c) valence10 (Lu et al., 2009; Martínez Caro & Martínez García, 2008, 2007; Ko &
Pastore, 2005; Brady & Cronin, 2001); (d) security and privacy (Al-Hawari et al., 2005; Joseph & Stone, 2003; Lassar et al., 2000; Ennew, Reed & Binks, 1993); (e) reliability (Rod et al., 2009; Shamdasani, Mukherjee & Malhotra, 2008; Arasli et al., 2005b; Bahia & Nantel,
8 Note: in Figure 3.1, the subdimensions a, b, c, d, e are labelled A, B, E, PS, I. 9 Note: in Figure 3.1, the subdimensions a, b, c, d are labelled AC, EQ, PA, SF.
10 Valence captures attributes that control whether customers believe that service outcome is good or bad,
regardless of their evaluation of any other aspect of the experience (Brady & Cronin, 2001; Martínez Caro & Martínez García, 2007; Ko & Pastore, 2005).
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2000); and (f) speed of decisions and responses (Shamdasani et al., 2008; Ennew et al., 1993). These subdimensions are expected to positively affect outcome quality. Based on these six factors, the third hypothesis is formulated as:
H3: There is a significant positive relationship between the subdimensions of outcome quality (i.e. H3a, H3b, H3c, H3d, H3e and H3f)11 and the outcome quality primary
dimension.
Overall Perceived Service Quality 3.2.1.4
Service quality is viewed as a reflection of the three primary dimensions identified as interaction quality, physical environment quality and outcome quality (Lu et al., 2009; Brady & Cronin, 2001), by retail bank customers. Therefore, the following three hypotheses are formulated as:
H4: There is a significant positive relationship between the interaction quality primary dimension and retail bank customers’ overall service quality perceptions.
H5: There is a significant positive relationship between the physical environment quality primary dimension and retail bank customers’ overall service quality perceptions. H6: There is a significant positive relationship between the outcome quality primary
dimension and retail bank customers’ overall service quality perceptions.
Hypotheses Relating to Research Objective 2 3.2.2
Although studies have been conducted to measure customers’ perceptions of service quality in the banking industry (Hossain et al., 2014; Bahia & Nantel, 2000; Jun, Peterson, Zsidisin, & Daily, 1999; Marshall & Smith, 1999; Athanassopoulos, 1997; Newman & Cowling, 1996; Blanchard & Galloway, 1994; McDougall & Levesque, 1994), the comparative importance of the service quality dimensions are still under researched. Mixed results have been reported in the marketing literature for the primary dimensions. From among the three dimensions, outcome quality is most reported as having the strongest influence on service quality in various service settings, e.g., sport spectators (Clemes et al., 2011), accommodation (Clemes et al., 2010; Clemes et al., 2009), hairdressers and local telephone service subscribers (Pollack, 2009), and urgent transport (Martínez Caro & Martínez García, 2007). Outcome quality is followed by interaction quality in importance, as
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reported by Hossain et al. (2014) for retail banks, Clemes et al. (2014) for Chinese mobile communications, and Clemes et al. (2007) for university student satisfaction. Only one study, by Chow, Lau, Lo, Sha, and Yun, (2007) on the restaurant industry, reports that the physical environment quality has the strongest influence on service quality. To extend retail banks’ perceptions of the level of importance of the primary dimensions and subdimensions, the following hypotheses are formulated as:
H7a: Customers will vary in their perceptions of the importance of each of the primary dimensions.
H7b: Customers will vary in their perceptions of the importance of each of the subdimensions.
Hypotheses Relating to Research Objective 3 3.2.3
Customers’ perceptions of service quality have been proposed as positively influencing customer satisfaction (Clemes et al., 2014, 2013; Karatepe, 2011; Ladhari et al., 2011b; Beerli et al., 2004; Jamal & Naser, 2002; Lassar et al., 2000; Yavas, Bilgin & Shemwell, 1997); perceived value (Clemes et al., 2014, 2013; Gera, 2011; Korda & Snoj, 2010; Chen & Chen, 2010; Lu et al., 2009; Cronin et al., 2000; Zeithaml, 1988); corporate image (Clemes et al., 2014, 2013; Ladhari et al., 2011b; Chahal & Kumari, 2010; Hu et al., 2009; Lu et al., 2009; Aydin et al., 2005; Wang et al., 2003; Bloemer et al., 1998; Nguyen & LeBlanc, 1998); switching costs (Clemes et al., 2014; Chou & Lu, 2009; Meng & Elliot, 2009; Aydin et al., 2005); and behavioural intentions (Mason & Nassivera, 2013; Li et al., 2011; Alexandris et al., 2002; Cronin et al., 2000; Zeithaml, 1988). Indirect relationships between service quality and behavioural intentions through customer satisfaction have also been reported (Mosahab et al., 2010; Bei & Chiao, 2006; Ehigie, 2006; Lam & Burton, 2006; Caruana, 2002).Therefore, the following hypotheses are formulated as:
H8: Higher perceptions of service quality positively affect customer satisfaction. H9: Higher perceptions of service quality positively affect customer perceived value. H10a: Higher perceptions of service quality positively affect favourable behavioural
intentions.
H10b: Higher perceptions of service quality positively indirectly affect favourable behavioural intentions through customer satisfaction.
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H11: Higher perceptions of service quality positively affect perceived switching costs. H12: Higher perceptions of service quality positively affect corporate image.
Customer perceived value is proposed as having a positive influence on both customer satisfaction (Roig et al., 2013; Gera, 2011; Korda & Snoj, 2010; Chen, 2008; Bontis et al., 2007; Gallarza & Gil Saura, 2006; Cronin et al., 2000; Oh, 1999) and behavioural intentions (Chen, 2008; Lewis & Soureli, 2006; Sirdeshmukh et al., 2002; Oh, 1999). Therefore, the following two hypotheses are formulated as:
H13: Higher customer perceived value will positively affect customer satisfaction. H14: Higher customer perceived value will positively affect behavioural intentions.
Perceived switching costs are claimed to have a positive influence on behavioural intentions (Burnham et al., 2003; Anderson et al., 1994; Dick & Basu, 1994; Fornell, 1992). As switching costs increase, the level of customer loyalty also increases (de Matos et al., 2009; Beerli et al., 2004; Lee & Cunningham, 2001; Jones et al., 2000; Andreassen & Lindestad1998; Dick & Basu, 1994).Therefore, the following hypothesis is formulated as:
H15: Higher perceived switching costs will positively affect behavioural intentions.
Many studies support a positive link between corporate image and behavioural intentions (Ladhari et al., 2011b; Fathollahzadeh et al., 2011; Lai et al., 2009; Aydin et al., 2005; Hart & Rosenberger, 2004; Hong & Goo, 2004; Johnson et al., 2001; Nguyen & Leblanc, 2001; Kandampully & Suhartanto, 2000; Andreassen & Lindestad, 1998) as well as customer satisfaction (Richard & Zhang, 2012; Lai et al., 2009; Palacio et al., 2002; Andreassen & Lindestad, 1998). However, limited studies have been done to justify these relationship links in a banking context, especially in Malaysia. Therefore, the following hypotheses are formulated as:
H16: Higher perceptions of corporate image will positively affect favourable behavioural intentions.
H17: Higher perceptions of corporate image will positively affect perceptions of customer satisfaction.
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Finally, a considerable number of studies have confirmed a positive link between customer satisfaction and behavioural intentions in various industries, including banking, (Amin et al., 2013; Amin et al., 2011; Baumann, Burton, & Elliott, 2005; Beerli et al., 2004; Cronin & Taylor, 1992). Therefore, the following hypothesis is formulated as:
H18: Higher perceptions of customer satisfaction will positively affect customers’ behavioural intentions.
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Conceptual Research Model 3.3
The hierarchical model of behavioural intentions in the banking industry summarizes the hypotheses formulated in order to test each path in the model (see Figure 3.1).
Figure 3.1: Behavioural Intentions in the Banking Industry: A Conceptual Research Model and Hypotheses
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