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A Cross National Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Services Across Eight Countries

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  A Cross-national Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Services across Eight Countries Lerzan Aksoy  a, ⁎ & Alexander Buoye  b & Pelin Aksoy  c &Bart Larivière  d, e & Timothy L. Keiningham  b a   Fordham University, School of Business, 1790 Broadway Avenue, 11th Floor, Office #1129, New York, NY 10023, USA  b  IPSOS Loyalty, Morris Corporate Center 2, 1 Upper Pond Rd, Bldg D., Parsippany, NJ 07054, USA c George Mason University, Department of Applied Information Technology, 3255 Nguyen Engineering Building, Ffx, MSN: 1G8, Fairfax, VA 22030, USA d  Department of Management, Innovation and Entrepreneurship, Ghent University, Tweekerkenstraat 2, 9000 Ghent, Belgium e  Erasmus School of Economics, Erasmus University Rotterdam, Burgemeester Oudlaan 50, 3062 Rotterdam, The Netherlands Abstract Improving customer satisfaction has become a strategic imperative for managers and researchers given the bene 󿬁 ts of developing customer loyalty for long-term  󿬁 nancial success. Creating these linkages becomes even more important in the context of mobile telecommunications due tothe ubiquitous nature of mobile phones and the potential this creates to engage in interactive marketing for   󿬁 rms. Further, with increased global penetration of mobile telecommunications, examining cross-national differences in consumer attitudes and behaviors has become critical. Most studies that examine customer satisfaction and loyalty linkages however have traditionally focused on single countries and/or single industries.This study extends the literature by testing the moderating impact of cultural variables on the impact of satisfaction on loyalty intentions using datafrom 3,393 mobile telecommunications customers in Australia, Brazil, Canada, China, France, Spain, UK, and USA. Our   󿬁 ndings reveal that theimpact of satisfaction on loyalty in the mobile telecommunications context depends on cultural differences. The results demonstrate non-linear threshold effects where managers operating in countries characterized by self-expressionist values will have an easier time creating satisfaction andloyalty with mobile customers compared to those operating in cultures dominated by high survivalist values.© 2012 Direct Marketing Educational Foundation, Inc. Published by Elsevier Inc. All rights reserved.  Keywords:  Customer satisfaction; Loyalty; Repurchase intention; Recommend intention; Mobile telecommunications; Cross-cultural Managers and researchers have long recognized the impor-tance of customer loyalty to companies' financial performanceand long-term success. Loyal customers create value throughrepeat purchases, positive word of mouth, and referrals, whichultimately contributes to increased cash flow. As a result, in aneffort to increase customers' loyalty, managers have focused onimproving customers' level of satisfaction. While there is a great deal of research examining the linkages between satisfaction andloyalty (Blattberg, Malthouse, and Neslin 2009; Kumar et al.2009), studies investigating this linkage in the context of mobiletelecommunications is limited. The notable exception is a studyof telecommunications services by Gustafsson, Johnson, andRoos (2005) where the authors examine the effects of customer satisfaction and commitment on retention and find that overallsatisfactionisasignificantpredictorofloyalty(operationalizedinthis paper as reduced churn).The context of mobile telecommunications is an important oneas mobile devices have become ubiquitous in everyday life. Thereis an explosion globally in the use of handheld electroniccommunication devices, such as mobile phones, digital music players, and other handheld Internet accessible devices. The largenumberofadoptersofthesedevicesandrelatedservicesindicatesahugepotentialformobileelectroniccommunicationandpromotionandthedeliveryofmobileelectronicservices(Shankaretal.2010).Mobile marketing has therefore increased in popularity in recent  ⁎  Corresponding author.  E-mail addresses:  aksoy@fordham.edu (L. Aksoy),alexander.buoye@ipsos.com (A. Buoye), paksoy@gmu.edu (P. Aksoy),  bart.lariviere@UGent.be (B. Larivière), tim.keiningham@ipsos.com(T.L. Keiningham).www.elsevier.com/locate/intmar 1094-9968/$ -see front matter © 2012 Direct Marketing Educational Foundation, Inc. Published by Elsevier Inc. All rights reserved.http://dx.doi.org/10.1016/j.intmar.2012.09.003Please cite this article as: Lerzan Aksoy, et al., A Cross-national Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Servicesacross Eight Countries, Journal of Interactive Marketing (2012), http://dx.doi.org/10.1016/j.intmar.2012.09.003  Available online at www.sciencedirect.com Journal of Interactive Marketing xx (2012) xxx – xxx INTMAR-00120; No. of pages: 9; 4C:  years where consumers are involved in two- or multi-waycommunication and promotion of an offer between a firm and itscustomers through a mobile medium, device, channel, or technology.As consumer demand for mobile services increases globallyand firms (some of which include Vodafone and T-Mobile)respond to such opportunities by becoming more global,examining cross-national differences in consumer attitudesand behaviors becomes a topic of considerable relevance.Researchers, managers and corporations have become closelyinterested in determining the sources and consequences of cross-national differences in consumer satisfaction and loyalty.Despite this increased interest however, the majority of studiesin marketing have focused on examining these links withinsingle industries and single countries, or at best compareddifferences between two countries. Therefore, studies examin-ing cross national differences is limited. Those cross culturalstudies that do exist tend to draw upon Hofstede's cross culturaldimensions (Hofstede 1983; Hofstede 1994) to examine theimpact of culture on the relationships (Donthu and Yoo 1998;Furrer, Liu, and Sudharshan 2000), with comparisons acrosslimited number of countries (Patterson and Mattila 2008;Winstead 1999). This research extends the satisfaction andloyalty literature in the mobile telecommunications industry byinvestigating the moderating effects of cultural dimensions increating customer loyalty by employing an extensive data set from a diverse sample of eight countries.In summary, this research contributes to the literature byextending the variables previously used in satisfaction studies byexamining the moderating role of cultural dimensions (usingdimensions from Inglehart and Baker (2000), i.e., traditional vs.secular-rational values, and survival vs. self-expression values)onloyaltyintentionsinthecontextofmobiletelecommunicationsservices. This research provides important insight regarding theability to generalize this chain of effects across countries withsignificant differences in cultural conditions. Furthermore, it hasimportant implications for managers of multinational companiesor managers of companies that have plans to expand their  business internationally. The potential growth in Asian econo-mies (e.g., China, Hong Kong, Japan, Korea, Singapore, andTaiwan) as well as in emerging and developing economies hasnot gone unnoticed by many US and European managerstargeting a greater piece of the pie. These countries however,differ substantially in terms of cultural dimensions from the USand other Western countries such as those located in Europe. In particular, managers must recognize that the cultural landscapewithin a nation will condition the satisfaction of consumerswithin that market, and therefore impact their prospects for creating customer satisfaction and loyalty. Theoretical Background Global Mobile Telecommunications Industry The mobile telecommunications industry has experiencedexpansive growth since its infancy in 1946 when the first mobiletelephone system (MTS) was offered to consumers in only 25cities in the US (Papadimitriou et al. 2003). The rate of growthincreased remarkably, starting in the 1990s when the first generation (1G) voice-only analog systems were replaced withtheir subsequent counterparts of second generation (2G) digitalsystems offering additional features such as text messaging tosubscribers. With the rate of convergence 1 that has occurred,especially over the pastdecade, and increased consumer demand,the telecommunications infrastructure (including hardware andsoftware) has undergone several changes and upgrades as 1Gsystems have evolved into 4G and beyond. A recent study by theThe World Bank (2012) states that   “ around three-quarters of theworld's inhabitants now have access to a mobile phone, ”  anindicator of the extremely prolific nature of these devices.The information technology industry in general, including themobile telecommunications sector, possesses a unique andunder-investigated set of factors that impacts consumers andshapestheirbehaviorscomparedtoothertraditionalservicessuchas banking and retail. One research finding related to the area of mobile telecommunications suggests that retaining customers ismore crucial than attaining new ones due to increased market saturation (Lee 2010), making the contribution of this particular research even more relevant. Furthermore, there are crossnational differences in access to, growth of and consumption of information technology. Two of the largest consumers of mobileservices today are China and India. Globally, the number of mobile devices connected to the Internet is projected to increaseto ten billion by the year 2016 as specified in a press release byCISCO (2012). Also, a recent study related to the Informationtechnology sector focusing on Internet search engines found that cultural, behavioral, and economic factors cause differences inthe way that Chinese and Western Europeans perform search for informationbeforecompletingapurchase(Vuylstekeetal.2010).Furthermore, other studies have found cross cultural differencesin E-service quality perceptions, online advertising effectiveness,online review usage and purchase influence and interactivereview feature implementation (Brettel and Spilker-Attig 2010;Kim and Kim 2010; Park and Lee 2009; Yun, Park, and Ha2008). Focusing on youth consumers, one study empirically testsa mobile technology adoption model using data collected in bothan established (U.S.A.) and an emerging market (Pakistan) andfinds similarities and differences across these two markets(Sultan, Rohm, and Gao 2009). The prevailing results fromthesestudiespointtothefactthatusersofinformationtechnologyin general have some unique patterns of behavior compared toconsumers of traditional services that need to be taken intoaccount when managing for loyalty cross-culturally, especiallygiven the projected expansion of the mobile telecommunicationssector.Furthermore, mobile technology is changing the way compa-nies think of and implement marketing (Shankar et al. 2010)making the context of the current study relevant and important.Due to the time-sensitive and location-sensitive nature of themobilemediumanddevices,mobilemarketinghasthepotentialto 1 Convergence is a term that describes the uni 󿬁 cation of technologies to offer different information services through a single device or system (Aksoy andDeNardis 2007).2  L. Aksoy et al. / Journal of Interactive Marketing xx (2012) xxx  –   xxx Please cite this article as: Lerzan Aksoy, et al., A Cross-national Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Servicesacross Eight Countries, Journal of Interactive Marketing (2012), http://dx.doi.org/10.1016/j.intmar.2012.09.003  change the paradigm of how marketing is able to reach and touchthe customer. Since the mobile device stays with the consumer,reach can be anywhere, anytime. Furthermore, mobile marketingis a form of two- or multi-way communication (Shankar andBalasubramanian2010) in which mobilityand the personalnatureof the mobile device distinguish it from other electronic devicessuch as the television (TV) and the personal computer (PC) andother channels, with important implications for marketers.  Impact of Customer Satisfaction on Loyalty Intentions There is a large body of research that demonstrates thefavorable responses that customer satisfaction is likely to elicit.Customer satisfaction has been found to have an overall positiveeffect on a company's relationship with its customers (Bolton,Lemon, and Verhoef 2004). More specifically, research hasfound that customer satisfaction has a measurable impact on purchase intentions (Bolton and Drew 1991; Larivière 2008),customer retention (Mittal and Kamakura 2001; Oliver 1980; Yi1990), reduced customer defections (Anderson 1996), share-of  ‐ wallet (Cooil et al. 2007; Keiningham, Perkins-Munn, and Evans2003), increased receptiveness to cross selling efforts (Fornell1992), reduced complaints (Bolton 1998; Fornell 1992) and spreading of word-of-mouth (Anderson 1998).Furthermore, there is substantial evidence to suggest that thestrength of a firm's customer relationships is an important indicator of firm performance (Amber et al. 2002; Bell et al.2002; Berger et al. 2002; Blattberg and Deighton 1996; Hogan,Lemon, and Rust 2002; Rust, Lemon, and Zeithaml 2004).Longitudinal examinations of customer satisfaction on other  performance measures have also similarly found a positiverelationship with customer retention (Bolton 1998), firmrevenues (Gruca and Rego 2005; Ittner and Larcker 1998),and shareholder value (Anderson, Fornell, and Mazvancheryl2004; Fornell 2003; Fornell et al. 2006; Gruca and Rego 2005).Given that the current study operationalizes loyalty in termsof loyalty intentions, i.e., recommend intention and repurchaseintention, and based on the overwhelming evidence from prior studies indicating the positive impact that satisfaction has oncustomer purchase behaviors, we would expect the followingeffect on customer loyalty intentions (see Fig. 1). H1 . Overall satisfaction will be positively related to loyaltyintentions.  Moderating Impact of Culture Variables on the Customer Satisfaction and Loyalty Intentions Linkage For many of the decisions we make, our cultural backgroundand learning inevitably play an important role. We interpret information and formulate our responses based on the web of cultural networks that shape our thinking. Hofstede (1994, p 4)defines culture as  “ the collective programming of the mindwhich distinguishes the members of one group or category of  people from those of another  ”  which has the potential to effect consumption behavior as well.A large body of research has confirmed the importance of culture to effective marketing across national boundaries,discovering a link between it and a range of relevant consumer intentions and behaviors. Prior research for instance finds a link  between culture and customer satisfaction (Khan et al. 2009),consumer tipping behavior (Lynn, Zinkhan, and Harris 1993), perceptions ofservice quality (Furrer, Liu, and Sudharshan 2000;Mattila 1999), the relationship between price and perceivedquality (Jo and Sarigollu 2007), between perceived servicequality and satisfaction (Reimann, Lunemann, and Chase 2008),complaint behavior (Liu and McClure 2001), consumer expec-tations (Donthu and Yoo 1998; Tsikriktsis 2002), sensitivity to prices (Ackerman and Tellis 2001), brand loyalty intention (Lam 2007), and loyalty to domestic (versus foreign) retailers(Straughan and Albers-Miller 2001) among others. Given that culture impacts many consumer related behaviors, we wouldexpectthatnationalculturewouldalsohelpexplaincross-culturaldifferences in how satisfaction impacts loyalty.Most cross-cultural studies in the marketing discipline haverelied upon Hofstede's (1983) dimensions of culture to test itsimportance. Although these dimensions were uncovered follow-ing a very extensive data gathering effort, it is not without limitations. Specifically, the first of which is the age of the datafor Hofstede's study. Furthermore, there are more recent paperslinking other cultural classifications (Inglehart and Baker di-mensions) to the current variable of interest, i.e., customer satisfactionusingverylargedatasets(Morgesonetal.2011).Asaresult, we adopt a different set of cultural classification variablesto conduct our analyses, i.e., Inglehart and Baker's dichotomousmeasures of national – cultural: traditional vs. secular-rationalvalues, and survival vs. self-expression values (Inglehart 1997;Inglehart and Baker 2000). To make sure we were not overlooking cultural effects stemming from the two different cultural classification approaches, we conducted a test for theoverlap between Hofstede and Inglehart  – Baker's dimensions.The results revealed a high degree of inter-relatedness betweenthem, similar to the findings of  Morgeson et al. (2011). 2 These OverallSatisfactionLoyalty Intentions ãRepurchase IntentionãRecommend Intention CULTURE ãTraditional –Secular RationalãSurvival –Self Expression H2 & H3H1 Fig. 1. Theoretical model. 2 Regressing the traditional vs. secular-rational values dimension on the four Hofstede predictors produces a multiple correlation of r=0.51, with Power Distance Index having the strongest in 󿬂 uence. Likewise, regressing the survivalvs. self-expression values dimension on the same four predictors produces amultiple correlation of r=0.97, with Individualism/Collectivism Index havingthe strongest in 󿬂 uence.3  L. Aksoy et al. / Journal of Interactive Marketing xx (2012) xxx  –   xxx Please cite this article as: Lerzan Aksoy, et al., A Cross-national Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Servicesacross Eight Countries, Journal of Interactive Marketing (2012), http://dx.doi.org/10.1016/j.intmar.2012.09.003  Inglehart (1997) dimensions would be classified on two different continua that tap into different dimensions of culture. The first dimension is the extent to which a culture embraces traditionalversus secular-rational values. Inglehart and Baker (2000)describe the traditional vs. secular-rational cultural valuesdichotomy (Morgeson et al. 2011, p 201) in the following way: “  Although the people of traditional societies have highlevels of national pride, favor more respect for authority,take protectionist attitudes toward foreign trade, and feel that environmental problems can be solved without inter-national agreements, they accept national authority pas- sively …  They emphasize social conformity rather thanindividualistic striving, favor consensus rather than open political conflict, support deference to authority, and havehigh levels of national pride and a nationalistic outlook.Societies with secular-rational values have the opposite preferences on all of these topics . ” Based on Inglehart and Baker's (2000) conceptualization,individuals in traditional societies aim for collective consensusand look to minimize conflict. They value conformity over individuality. Inviting conflict or open disagreement is generallyfrowned upon and individuals are expected to be passive anddefer toauthority.Thisoutlookisexpectedtobepervasive acrossdifferent life domains including consumption patterns. Con-sumers in traditional cultures would therefore be expected toaccepteffortstoimprovesatisfactionlevelsfromfirmswithmuchless resistance and hence be influenced by them to a greater extent. This would then translate to improved consumer loyalty.On the other hand, secular-rational societies tend to valueindividuality and create members of society who are not constrained by traditional structures and are open to sharingopinions. Therefore, as societies move away from traditional andtoward secular-rational values, individual consumers should bemore willing to reject conformity, question institutions, be moreskeptical of marketing practices in general and be more able andwilling to form independent critical judgments. As a result,consumers dominated by secular-rational cultural values areexpected to be influenced to a lesser extent by firm efforts toimprovesatisfactionlevels.Thisshouldinturnlowertheeffectof the satisfaction experience on their loyalty intentions. Based onthese arguments, the following hypothesis is set forth regardingthe impact that traditional – secular-rationalvalues are expected tohave on the satisfaction – loyalty linkage: H2 . Satisfaction will have a weaker effect on loyalty intentionsin countries with secular-rational values.The second dichotomy of cultural values that  Inglehart andBaker (2000) propose is survival vs. self-expression values.This can be described (Morgeson et al. 2011, p 201) in thefollowing way: “ Societies that emphasize survival values show relativelylow levels of subjective well-being, report relatively poor health, are low on interpersonal trust and relativelyintolerant of outgroups, are low on support for gender equality, emphasize materialist values, have relatively highlevels of faith in science and technology, are relatively low onenvironmental activism, and relatively favorable to authori-tarian government. Societies high on self-expression valuestend to have the opposite preferences on these topics . ” Furthermore, in survival dominated cultures, financial well being is much more uncertain causing individuals to cling totraditional gender roles, and emphasize more conservativenorms in an attempt to increase predictability in an uncertainworld. This leads individuals to be much less trusting towardsout-groups including large corporations. In self-expressivesocieties however, contrary to survival dominated societies,individuals have high degrees of physical and economicsecurity and therefore greater levels of interpersonal trust. Asa result, societies high on self expressiveness are also known to be more accepting of diversity and out-groups and much moreliberal in their outlook. They also hold stronger perceptions of general reported well-being which is linked to more happinessand satisfaction with different aspects of their lives. In self expression dominated cultures, such higher levels of trust andgeneral openness would be expected to extend beyond personalrelationships and apply to consumption related behaviors aswell. For these reasons, as societies move away from survivaland toward self-expressive values, consumers would be morereceptive to firm efforts aimed at improving satisfaction whichwould in turn have a stronger effect on increasing loyaltyintentions. Based on these arguments, the following hypothesisis set forth regarding the impact that survival – self-expressionist values is expected to have on the satisfaction – loyalty linkage: H3 . Satisfaction will have a stronger effect on loyalty intentionsin countries with self expressionist values. Methodology  Data Data for the analysis were collected by a large marketingresearch firm in its annual global norms survey and includes3,393 responses from mobile telecommunications customers ineight countries: Australia (n=401), Brazil (n=409), Canada(n=462), China (n=406), France (n=426), Spain (n=423),UK (n=406), and USA (n=460). The countries were selected for inclusioninthestudywiththepurposeofcreatingadiversesetthat corresponds to varying levels of the Inglehart  – Baker culturaldimensions. Within each country, survey respondents weremembers of nationally representative online panels, balancedon official census demographics. The data were collected as part of a third party online source panel actively managed,continuously refreshed and compliant with EFAMRO AccessPanel rules and ESOMAR regulations. These are doubleopt-in panels in which respondents are required to completean online recruitment survey (and agree to the terms andconditions of membership in the panel) and then respond toan opt in email. Panel members are incentivized for their  participation in surveys. 4  L. Aksoy et al. / Journal of Interactive Marketing xx (2012) xxx  –   xxx Please cite this article as: Lerzan Aksoy, et al., A Cross-national Investigation of the Satisfaction and Loyalty Linkage for Mobile Telecommunications Servicesacross Eight Countries, Journal of Interactive Marketing (2012), http://dx.doi.org/10.1016/j.intmar.2012.09.003
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