Báo cáo : Structural Equation Modeling on the Antecedents of Customer Loyalty Mohammad Muzahid Akbar1 and Md. Munir Hossain2 potx

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Structural Equation Modeling on the Antecedents of Customer Loyalty
Mohammad Muzahid Akbar1 and Md. Munir Hossain2

Three conceptual frameworks had been proposed and investigated to
assess the effects of perceived service quality, trust, switching cost,
customer satisfaction, and corporate image on customer loyalty.
Structural equation modelling was employed to analyse the data
collected
from
322
subscribers/customers
of
a
private
telecommunication company in Bangladesh. The results revealed that
perceived service quality, customer satisfaction, corporate image, and
trust are very powerful antecedents of customer loyalty. Customer
satisfaction and trust found to be important mediators between service
quality and customer loyalty; corporate image and customer loyalty
respectively. Such study might encourage the service providers to take
appropriate course of action in order to create a loyal customer base.

Keywords: Service quality, Trust, Switching cost, Customer satisfaction, Corporate image,
and Customers loyalty.

Introduction
In the past three decades, due to significant liberalization and privatization the entire
telecommunications industry has become a dynamic service industry subject to increasing
competition with huge growth potential. (Graack, 1996). In recent years, in some Asian

countries the number of mobile subscribers even passed the number of fixed-line
subscribers (Fink, Matto, & Rathindran, 2003). Hence, the strategic behavior of
telecommunications companies has attracted so much attention in recent years, both in
the academic literature and in the popular press. In Bangladesh the scenario is not much
different as its socioeconomic profile offers the industry a tremendous opportunity to grow.
In Bangladesh currently six telecommunications companies (five private and one stateowned) are operating; but the aggressive competition has forced the incumbent mobile
1

Mohammad Muzahid Akbar did his MBA from Lahore University of Management Science (LUMS)
and Master of Commerce (Accounting) from University of Dhaka, Dhaka. He is currently working as
a Senior Lecturer (Marketing and Management) in the School of Business in the Independent
University, Bangladesh.
2

Md. Munir Hossain is a Senior Lecturer at the Independent University, Bangladesh (IUB). He has
a Masters from the University of Central Arkansas (UCA), USA. His research interests are focused
on consumer behavior, cross cultural differences, advertising, green marketing and services
marketing.


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operators or telecommunications companies to reconfigure their strategy and business to
sustain or improve their competitive advantage. Interestingly, in Bangladesh mobile
subscribers are not that loyal to any particular mobile service provider as they have the
option of switching to another company for more convenient and suitable ser vice offerings.
Thus, the mobile service providers are pushed to undertake various strategic and tactical
measures to attract new customers while retaining the existing customers. Therefore, the

mobile service providers must realize the necessity of studying and understanding various
antecedents (viz. service quality, trust, switching cost, customer satisfaction, and corporate
image) of the customer loyalty which might help them to develop a loyal customer base.
As reported in the relevant literature high quality service helps to generate customer
satisfaction and customer loyalty and growth of market share by soliciting new customers,
and improved productivity and financial performance (Anderson, Fornell, & Lehmann,
1994; Lewis, 1993). Corbitt, Thanasankit, and Yi (2003) have investigated the effect of
trust on customer loyalty in telecommunication sector and found trust has a strong effect
on customer loyalty. Aydin and Ozer (2005) in a study on telecommunication industry
showed that the switching cost and corporate image have positive and direct affect on
customer loyalty. Hackl, Scharitzer, and Zuba (2000) had substantiated the point by adding
that customer satisfaction is a prerequisite of customer retention and loyalty. So the
understanding of these commonly cited antecedents of customer loyalty is important for
the survival and long term success of any mobile service provider. Because customer
loyalty ensures higher profit through enhanced revenues, reduced costs to acquire
customers (Sharp & Sharp, 1997).
The objective of this study is to analyze a conceptual framework empirically that considers
the interrelationships of service quality, trust, switching cost, and customer satisfaction in
relation to customer loyalty for a group of customers of a major private telecommunication
company in Bangladesh.

Literature Review
Service Quality
Service quality by early researchers has been described as a form of attitude that is
formed due to the difference between customer expectations regarding a service to be
received and perceptions of the service being received (Parasuraman, Zeithaml, & Berry,
1988). Other researchers associated service quality with the extent to which a service
meets customers' needs or expectations (Dotchin & Oakland, 1994; Lewis & Mitchell,
1990). It is also conceptualized as the consumer‟s overall impression of the relative
inferiority or superiority of the services (Zeithaml, Berry, & Parasuraman, 1990).

According to Grönroos (1983) service quality is comprised of two components – technical
quality (“what” is delivered) and functional quality (“how” is delivered). In SERVQUAL
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Parasuraman et al. (1988) identified five dimensions of service quality (viz. reliability,
responsiveness, assurance, empathy, and tangibles) that link specific service
characteristics to consumers‟ expectations. However, an alternative instrument called
SERVPERF relies on customer‟s perception of service provider‟s performance while
delivering service adequately and competently. Experts like Parasuraman, Zeithaml, and
Berry (1994) argued that the difference between SERVQUAL and SERVPERF is very little
while accepting the fact that the notion „performance‟ has more predictive power.
Continuously provided services like telephone services should be customer‟s evaluation of
performance. For such services, Bitner and Hubert (1994) conceptualized service quality
as customer‟s evaluation judgment regarding the degree of superiority of the service
performance. Asubonteng, McCleary, and Swan (1996) pointed out in their research that
the number of service quality dimensions varies from industry to industry. Aydin and Ozer
(2005) tried to conceptualize quality of mobile services (especially in GSM sector) by
incorporating the dimensions or base services typically found to be most pertinent or
relevant to the subscribers (namely, coverage of network or calling area, value-added
services, customer support services, the suppliers‟ services of the operator, and services
in campaigns). This paper has chosen the conceptualization of Aydin and Ozer (2005).

Trust
In business trust is viewed as one of the most relevant antecedents of stable and
collaborative relationships. Researchers had established that trust is essential for building
and maintaining long-term relationships (Rousseau, Sitkin, Burt, & Camerer, 1998; Singh &
Sirdeshmukh, 2000). Morgan and Hunt (1994) stated that trust exists only when one party
has confidence in an exchange partner's reliability and integrity. While defining trust

Moorman, Deshpande, and Zaltman (1993) referred to the willingness to rely on an
exchange partner in whom one has confidence. According to Lau and Lee (1999), if one
party trusts another party that eventually engenders positive behavioral intentions towards
the second party.
From Anderson and Narus (1990) it can be safely deduced that if one party believes that
the actions of the other party will bring positive outcomes to the first party, trust can be
developed. Doney and Cannon (1997) added that the concerned party also must have the
ability to continue to meet its obligations towards its customers within the cost-benefits
relationship; so, the customer should not only foresee the positive outcomes but also
believe that these positive outcomes will continue in the future. In this study trust has been
operationalized following Aydin and Ozer (2005) who used several contemporary
definitions.

Switching Cost
According to Porter (1998), switching cost is the cost involved in changing from one
service provider to another. In addition to measurable monetary costs, switching costs also
include time and psychological effort involved in facing the uncertainty of dealing with a
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new service provider (Dick & Basu, 1994; Guiltinan, 1989; Kim, Kliger, & Vale, 2003).
Jackson (1985) defined that, switching cost is the sum of economic, psychological, and
physical costs. Usually switching cost varies from customer to customer (Shy, 2002). Aydin
and Ozer (2005) tried to conceptualize perceived switching cost for mobile phone services
by assimilating notions like perceived monetary costs, uncertainty costs, evaluation costs,
learning costs, and set-up costs from researchers like Burnham, Frels, and Mahajan
(2003); Guiltinan (1989); and Jones, Beatty and Mothersbaugh (2002). This study has
adopted the definition from Aydin and Ozer (2005).

Customer Satisfaction
Customer satisfaction is a well known and established concept in several areas, such as
marketing, consumer research, economic psychology, welfare-economics, and economics.
The most common interpretations gathered from various authors reflect the notion that
satisfaction is a feeling which results from a process of evaluating what has been received
against what was expected, including the purchase decision itself and the needs and
wants associated with the purchase (Armstrong & Kotler, 1996). Bitner and Zeithaml
(2003) stated that satisfaction is the customers‟ evaluation of a product or service in terms
of whether that product or service has met their needs and expectations. According to
Boselie, Hesselink, and Wiele (2002) satisfaction is a positive, affective state resulting from
the appraisal of all aspects of a party‟s working relationship with another. Previous studies
have identified two aspects of customer satisfaction: transaction specific satisfaction and
overall or cumulative satisfaction (Andreassen, 2000). According to Wang, Lo and Yang
(2004) overall satisfaction has been used more than transaction specific satisfaction in
predicting customer behavior and firm performance. This paper has also focused on
overall satisfaction like most of studies on customer satisfaction.

Corporate Image
Barich and Kotler (1991) tried to define corporate image as the overall impression a firm
has left on the minds of the people. According to Keller (1993) corporate image is „the
perception of a firm reflected in the associations held in consumer memory‟. A firm‟s
various attributes eventually settle in the minds of people or customers resulting in certain
mental image(s) relatable to the firm intuitively (Nguyen & Leblanc, 2001). Corporate
image germinates as customers or people actively and/or passively receive and process
information about a firm from various sources. Kennedy (1997) said corporate image has
two dimensions; functional (tangible characteristics) and emotional (feelings and attitude
towards a firm). Nguyen and Leblanc (2001) said that as people or customers get exposed
to the realities created by a firm they tend to construct an image or form an attitude about
the firm regardless of how little or abundant information they have. Aydin and Ozer (2005)
borrowed several notions from Bayol, LaFoye, Tellier, and Tenenhaus (2001) in order to

conceptualize corporate image pertinent to mobile services. Hence, this study has
employed the aforesaid notions for corporate image.
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Customer Loyalty
Pearson (1996) has defined customer loyalty as the mind set of the customers who hold
favorable attitudes toward a company, commit to repurchase the company‟s
product/service, and recommend the product/service to others. As identified by experts
customer loyalty is comprised of both customers‟ attitudes and behaviors. Customers‟
attitudinal component represents notions like: repurchase intention or purchasing
additional products or services from the same company, willingness of recommending the
company to others, demonstration of such commitment to the company by exhibiting a
resistance to switching to another or superior competitor (Cronin & Taylor, 1992;
Narayandas, 1996; Prus & Brandt, 1995), and willingness to pay a price premium
(Zeithaml, Berry, & Parasuraman, 1996; Narayandas, 1996). On the other hand, the
behavioral aspect of customer loyalty represents- actual repeat purchase of products or
services that includes purchasing more and different products or services from the same
company, recommending the company to others, and reflecting a long-term choice
probability for the brand (Feick, Lee, & Lee, 2001). It can be concluded that customer
loyalty expresses an intended behavior related to the product or service or to the company.
The researchers have used the definition of Narayandas (1996) for this study.

Relationship between Service Quality And Customer Satisfaction
In the recent past, there has been a heightened emphasis on service quality and customer
satisfaction in business and academia alike. Cronin and Taylor (1992) proved service
quality is an important antecedent of customer satisfaction. Sureshchandar, Rajendran,
and Anantharaman, (2003) identified that strong relationships exist between service quality

and customer satisfaction while emphasizing that these two are conceptually distinct
constructs from the customers‟ perspective. Spreng and Mackoy (1996) showed that
higher service quality leads to higher customer satisfaction while working on the model
developed by Oliver (1997). Fornell (1992) said that higher customer satisfaction is an
indicator of high perceived quality. Consistent with these findings, the researchers have
hypothesized the following:
Hypothesis 1: Perceived service quality has a positive effect on customer
satisfaction.
Relationship between Service quality and Customer loyalty
In various studies the relationship between service quality and customer preference loyalty
had been examined (Boulding, Kalra, Staelin, & Zeithaml, 1993; Cronin & Taylor, 1992). In
their study Cronin and Taylor (1992) focused solely on repurchase intentions, whereas
Boulding et al. (1993) focused on the elements of repurchasing as well as the willingness
to recommend. In the study by Cronin and Taylor (1992) service quality did not appear to
have a significant (positive) effect on repurchase intentions (in contrast to the significant
positive impact of satisfaction on repurchase intention), whereas Boulding et al. (1993)
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found positive impact of service quality on both repurchase intentions and willingness to
recommend. Therefore, following hypothesis has been proposed:
Hypothesis 2: Perceived service quality has a positive effect on customer loyalty.
Relationship between Service quality and Trust
Many services marketing related studies have admitted the notion like relationship
between quality of services and trust is a formidable one in context of relationship
marketing. Garbarino & Johnson (1999) found that service quality related features or
attributes typically foster or enhance customers‟ trust or confidence on an organization that
provides the service. The causal link between two variables has also been supported by
Hsieh & Hiang (2004). Often better services lead the customer to believe that the provider

is trustworthy or dependable. In other circumstances, simply the perceived quality of
service may help the service providers to gain the confidence of the customers (Doney &
Cannon, 1997; Singh & Sirdeshmukh, 2000). Therefore, following hypothesis has been
proposed:
Hypothesis 3: Perceived service quality has a positive effect on Trust.
Relationship between Customer satisfaction and Corporate Image
Corporate image is the outcome of a process related to customer‟s experience or
encounter with company (MacInnis and Price, 1987). In this process, besides intangible
ideas, obscure thoughts or feelings customer‟s first-hand consumption experiences with a
company eventually germinates into mental images where memory plays an important role
(Yuille and Catchpole, 1977). In other words, corporate image pops out at the end of the
evaluation process which relies on consumption experiences that lead the customer to
realize whether s/he is satisfied before forming or articulating an impression about the
company. Hence, the researchers have hypothesized the following:
Hypothesis 4: Customer satisfaction has a positive effect on Corporate Image.
Relationship between Customer satisfaction and Customer loyalty
Several authors have found a positive link between customer satisfaction and customer
loyalty (Anderson & Sullivan, 1993; Bolton & Drew, 1991; Fornell, 1992). Numerous
studies in the service sector have also empirically validated the positive relationship
between satisfaction and behavioral intentions such as customer retention and word of
mouth (Anderson & Sullivan, 1993; Bansal & Taylor, 1999; Cronin & Taylor, 1992). Hart
and Johnson (1999) have added that one of the conditions of true customer loyalty is total
satisfaction. Hence, the researchers have hypothesized the following:
Hypothesis 5: Customer satisfaction has a positive effect on Customer loyalty.
Relationship between Trust and Customer Loyalty
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A number of researchers have advocated that trust is fundamental in developing customer

loyalty (Moorman et al., 1993; Morgan & Hunt, 1994). The importance of trust in explaining
loyalty is also supported by authors like Lim and Razzaque (1997), Garbarino and Johnson
(1999), Chaudhuri and Holbrook (2001), Singh and Sirdeshmukh (2000), and
Sirdeshmukh, Singh, and Sabol (2002). However, lack of trust in a market with suitable
alternatives might lead to negative loyalty. Corbitt et al. (2003) have pointed out that a
strong positive effect of trust on customer loyalty in case of telecommunications sector.
Therefore, following hypothesis has been formulated:
Hypothesis 6: Trust has a positive effect on customer loyalty.
Relationship between Switching cost and Customer loyalty
It has been suggested in numerous studies that the degree of switching costs may have an
influence on customer loyalty in a certain industry (Anderson & Fornell, 1994; Dick & Basu,
1994; Fornell, 1992; Gremler & Brown, 1996). Andreasen (1982; 1985) found empirical
support for the effect of high switching costs on customer loyalty in relation to medical
services. Therefore, following hypothesis has been formulated:
Hypothesis 7: Perceived switching cost has a positive effect on Customer loyalty.
Relationship between Corporate Image and Trust
In marketing literature typically reputation or image of a firm is often linked with its
credibility and trustworthiness as perceived by the customers (Herbig and Milewicz, 1993;
Hyde and Gosschalk, 2005). Casalo, Flavia‟n and Guinali‟u (2007) said that in the absence
of physical contact (which is particularly relevant to the service providers), a firm should
increase its reputation in order to diminish the perceived risk by the consumer. Numerous
researchers have tried to explain the connection between reputation or corporate image
with consumers‟ trust in the online context (Walczuch, Seelen, & Lundgren, 2001;
Jarvenpaa, Tractinsky & Vitale, 2000). The researchers have hypothesized the following:
Hypothesis 8: Corporate Image has a positive effect on Trust.
Relationship between Corporate Image and Customer Satisfaction
According to Grönroos (1990) “(corporate) image is a filter which influences the perception
of the operation of the company”. He also said that a favorable and well-known image of a
firm should be considered as asset and may influence the perception of quality and
customer satisfaction (Grönroos, 1990). Corporate image is formed in the consumers‟

mind through communication and experience, which is believed to have a halo effect on
customers‟ assessment of satisfaction. If the customers are s atisfied, their attitude toward
the company is improved and eventually this improved attitude will shape/improve the
consumers‟ satisfaction (Andreassen & Lindestad, 1998). Hence, the following hypothesis
is proposed:
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Hypothesis 9: Corporate Image has a positive effect on Customer satisfaction.
Relationship between Corporate Image and Customer Loyalty
Corporate image being an attitude is functionally related to customer‟s behavioral
intentions such as customer loyalty (Johnson, Gustafsson, Andreassen, Lervik & Cha,
2001). Furthermore, Nguyen and Leblanc (2001) have proved that corporate image relates
positively with customer loyalty in three sectors namely, telecommunication, retailing and
education. Kristensen, Gronholdt and Martensen (2000) have investigated and affirmed
the relationship between corporate image and customer loyalty in the context of Danish
postal services. Hence, the researchers have hypothesized the following:
Hypothesis 10: Corporate Image has a positive effect on Customer loyalty.
Conceptual Framework
Perceived service quality, trust, switching cost, customer satisfaction, corporate image and
customer loyalty are probably the most widely used variables in the domain of relationship
marketing. Three research models have been proposed based on literature review to
analyze the relationships among these variables in order to detect the discerning impact of
several antecedents on customer loyalty (Table I). Structural Equation Modeling has been
applied to investigate the causal links among the studied variables as the research
hypotheses suggested by testing the model for best data fit (Figure 1, Figure 2, and Figure
3). García and Caro (2008) tried to build a sound causal model to measure the relationship
between attitudes and customer loyalty by examining various causal models presented by
earlier researchers using various antecedents of customer loyalty. This study is similar to

the abovementioned study to a certain extent in its purpose; the only distinctive feature of
this study is that all three models have employed the same five antecedents of customer
loyalty in the context of mobile services.

Figure 1: Proposed research model 1 with results

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Figure 2: Proposed research model 2 with results

Figure 3: Proposed research model 3 with results
Table I: Summary of Measurement Models
Model
Model 1

Model 2

Model 3

Theoretical Models
a) Paths from perceived service quality to customer satisfaction,
corporate image, and customer loyalty; b) perceived service
quality to customer satisfaction, and customer loyalty; c) trust to
customer loyalty; and d) switching cost to customer loyalty.
a) Paths from perceived service quality to customer satisfaction,
corporate image, and customer loyalty; b) perceived service
quality to customer satisfaction, and customer loyalty; c)

perceived service quality to customer loyalty; d) perceived service
quality to trust, and customer loyalty; and e) switching cost to
customer loyalty.
a) Paths from perceived service quality to customer satisfaction, and
customer loyalty; b) perceived service quality to customer loyalty;
c) perceived service quality to trust, and customer loyalty; d)
switching cost to customer loyalty; e) corporate image to customer
loyalty; f) corporate image to trust, and customer loyalty.
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Methodology
Sample
The researchers used the quota sampling and total 800 questionnaires were distributed
among the customers/subscribers of a major private telecommunication company in
Bangladesh who had been receiving its services for last one year or more. T hese
participants live in Dhaka metropolitan area. The mode of participation was voluntary. The
number of usable questionnaires was 322. Thus, the response rate was 40.25%. The
average age of the respondents was 32 years. 67 % respondents were male and 33 %
were female.

Measures
A structured questionnaire was used to collect data which was comprised of six scales
borrowed from earlier researchers with properly assessed validity and acceptable level of
reliability. For all of these variables like the earlier researchers the authors have used 5
point Likert scale. Service quality was measured by using 21 items developed by Zeithaml,
Berry, and Parasuraman (1996).
Instead of SERVQUAL, perceived service quality is measured (six-item scale) by

employing a unidimensional scale covering all the base services pertinent to mobile
services for the sake of data collection efficiency (Bloemer, Ruyter, & Wetzels, 1998). As
Aydin and Ozer (2005) pointed out in the GSM sector, the base services are- coverage of
calling area, value-added services, customer support services, the suppliers‟ services of
the operator, and services in campaigns. This scale of service quality has reported
reliability is 0.827.
The trust (five-item scale) has been measured by using several complementary definitions
as used in the study of Aydin and Ozer (2005) that has a reported reliability of 0.856.
Customer satisfaction was measured by using 4 items adopted from Cronin, Brady and
Hult (2000) and Wang et al. (2004), and the reported reliability of this scale is above 0.886.
Perceived switching cost was measured by seven item scale borrowed from Burnham,
Frels, and Mahajan (2003); Guiltinan (1989); and Jones et al. (2002). Corporate image
was measured by using five items borrowed from Bayol et al. (2001) and it has reliability of
0.871. This scale‟s reported reliability is .674. To measure customer loyalty five item scale
developed by Narayandas (1996) was used, and the reported reliability of this scale is
0.824.

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Data Analysis
To assess direct and indirect (mediated) relationships among the studied variables the
researchers have performed confirmatory factor analysis and structural equation modeling
(Anderson & Gerbing, 1988). SPSS 14 and Amos 16.0 had been used to perform these
analyses. These analyses suppose to help us to understand which model fits the data best
while presenting a credible assessment on the antecedents of customer loyalty of mobile
subscribers.

Results
Descriptive Statistics and Correlations Matrix
The Descriptive statistics and the Reliability coefficients of the studied variables are
presented in Table II. The reliability coefficient or alphas for the different constructs were
computed using the reliability procedure in SPSS (version 14). The reliabilities of all the
constructs used in this study found to be above the standard set by Nunnally (1978), which
is 0.70. The range of Cronbach alphas of all the scales used for this group of respondents
was 0.71-0.84. Mean scores had been computed by equally weighting the mean scores of
all the items relevant to each construct.
The mean scores of all the variables found to have a range of 4.07 to 4.61 and the
corresponding standard deviations were ranging from 0.39 to 0.6. These mean scores
reflect that the subscribers‟ perceived service quality, trust towards the service provider,
and corporate image is pretty high. Their perceived switching cost involved in changing the
current service provider is also high but no as high as other variables. Moreover, they
seem pretty loyal to the company. However, in isolation these descriptive statistics could
be quite misleading. Hence, other statistics must be consulted.
Table II: Reliability Coefficient and Descriptive Statistics of Service Quality, Trust,
Switching Cost, Customer Satisfaction, Corporate Image, and Customer Loyalty
Scales

Number of items

Alpha

M

SD

Service quality
Trust

6
4

0.74
0.80

4.53
4.36

0.49
0.60

Switching cost
Corporate image

5
5

0.71
0.76

4.07
4.29

0.45
0.45

Customer satisfaction
Customer loyalty

4
5

0.84
0.79

4.61
4.11

0.43
0.39

Note: n = 322

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A bivariate correlation analysis had been done which was subject to two tailed tests of
statistical significance at two different levels- highly significant (p<.01) and significant
(p<.05). Correlations matrix is presented in Table III. Again, correlations scores support the
notion of hypothesized positive relationships among the studied variables with high
statistical significance (p<.01) except switching cost (p<.05).
Table III: Correlation Matrix for Service Quality, Trust, Switching Cost, Customer
Satisfaction, Corporate Image, and Customer Loyalty
ser_qua swi_cos
ser_qua
swi_cos

tru

cus_sat

cor_ima

cus_loy

-

0.17**
0.04

0.50**
0.03

0.10
0.07

0.40**
0.09*

-

0.21**
-

0.20**
0.11**
-

0.35**
0.43**
0.27**

0.02
-

tru
cus_sat
cor_ima
cus_loy

-

Note: *p < .05, **p < .01.

Confirmatory Factor Analyses
The Comparative Fit Index (CFI), and Goodness of Fit Index (GFI) (Hair, Anderson,
Tatham, & Black, 2003), Normed Fit Index (NFI), and Root Mean Square Error of
Approximation (RMSEA; Steiger, 1990) had been used in judging the model fit. The
Comparative Fit Index is a recommended index of overall fit (Gerbing & Anderson, 1993),
Goodness of Fit Index measures the fitness of a model compare to another model (Hair et
al., 2003), Normed Fit Index measures the proportion by which a model is improved in
terms of fit compared to the base model (Hair et al., 2003), and the latter (RMSEA)
provides information in terms of discrepancy per degree of freedom for a model (Steiger,
1990). As suggested in the literature (Bollen & Long, 1993; Joreskog & Sorbom, 1993;
Kline, 1998) model fit should be assessed by employing several indices. The accepted
thresholds for these indices are χ 2/df ratio should be less than 3; the values of GFI, RFI,
NFI, and CFI should be greater than 0.90; and RMSEA is recommended to be up to 0.05,

and acceptable up to 0.08 (Gefen, Straub, & Boudreau, 2000; Hair et al., 2003).

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Table IV: Summery of Results of Measurement Models
χ2
Model1
Model 2
Model 3

df

χ2/df

CFI

NFI

GFI

RMSEA

22.1
22.5
7.3

5
6

3

2.50
3.75
2.43

0.987
0.991
0.996

0.985
0.967
0.973

0.979
0.980
0.983

0.103
0.092
0.067

Note: RMSEA = root mean square error of approximation; GFI = Goodness-of-Fit Index;
NFI= Normed Fit Index; CFI = Comparative Fit Index.

Structural Equation Analysis
Table IV represents the results of measurement models to test the hypothes es with regard
to model paths. The first model examined the causal (several direct and few indirect or
mediated) links among perceived service quality, customer satisfaction, corporate image,
trust, switching cost , and customer loyalty, where customer satisfaction and corporate

image were mediating variables respectively between perceived service quality and
customer loyalty (χ2 = 22.1, df = 5). Afterwards, this model had been compared to the
second model which assessed both the direct and mediated (indirect) causal links among
the studied variables, where in addition to customer satisfaction and corporate image trust
has been introduced as a mediating variable between service quality and customer loyalty
(χ2 = 22.5, df = 6). Finally in the third model, customer satisfaction and trust had been
considered as mediating variables whereas corporate image had been treated as an
exogenous variable besides perceived service quality and switching cost (χ2 = 7.3, df = 3).
The results show that the third model fits the data reasonably well. The changes or
improvements in these three models - χ 2/ df (2.50 to 3.75 to 2.43); NFI, GFI, and CFI
(0.985, 0.979, and 0.987 to 0.967, 0.980, and 0.991 to 0.973, 0.983, and 0.996
respectively); and RMSEA (0.103 to 0.092 to 0.067) support this claim.

Path Analysis
The result of path analysis is presented in Table V. The path coefficients are also shown in
Figure 1, Figure 2 and Figure 3 for model 1, 2 and 3 respectively. The path coefficients
are the standardized regression weights that help us to estimate impact of each variable
on the following variable(s) as identified in the paths of the measurement models.

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Table V: Standardized Path Coefficients for the Models
Path

Model 1

Model 2

Model 3

ser_qua → cus_sat

0.50***

0.50***

0.494***

cus_sat → cor_ima
cus_sat → cus_loy
cor_ima → cus_loy

0.112
0.251***
0.166***

0.112
0.250***
0.166***

0.248***
0.164***

tru → cus_loy
swi_cos → cus_loy

0.232***
0.090

0.232***
0.090

0.229***
0.089

ser_qua → cus_loy
ser_qua → tru

0.231***
-

0.230***
0.167

0.228***
0.148

cor_ima → tru
cor_ima → cus_sat

-

-

0.194***
0.064

Note- *** p< .001

Considering the pattern of significance for the parameters estimated in Model 1,
hypothesis 1, hypothesis 2, hypothesis 5, hypothesis 6, and hypothesis 8 found to be true
in the hypothesized direction with high statistical (p< .001) significance. Similarly in Model
2, hypotheses 1, 2, 5, 6, and 8 found to be true in the hypothesized direction with high
statistical (p< .001) significance. However, Similarly in Model 3, in addition to hypotheses
1, 2, 5, 6 and 8 hypothesis 9 is also found to be true in the hypothesized direction with high
statistical (p< .001) significance.

Discussion
The present study is noteworthy for a special reason. As to the knowledge of the
researchers no such study has been done by other researcher(s) (on the subscribers of
any telecommunication company in Bangladesh) to examine several models empirically in
order to understand commonly cited antecedents of customer loyalty. Specially, the
researchers have attempted to investigate in which model the postulated causal
relationships among the studied variables fit the data best. It is an open secret that a
sound understanding of various antecedents of customer loyalty is of paramount interest to
the service providers.
Data supported the proposed research model 3 most reasonably. In general, the results
supported most of the hypothesized relationships. This study research provides an
empirical support for the notion that perceived service quality independently as well as
when mediated through customer satisfaction is an important antecedent of customer
loyalty. Likewise, corporate image alone as well as when mediated through trust was found
to be an important antecedent of customer loyalty. Hence, the management at the
telecommunication company should give proper emphasis on these abovementioned
variables to foster customer or subscriber loyalty. The management must figure out „how to
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win customer trust‟. According to Sharma and Patterson (1999) trust plays an important

role in motivating the customers or clients to remain loyal to the service provider due to
inherent credence properties and complex intangibles of service which make it difficult for
many customers to assess whether service objectives were maximized or optimized.
Corporate image has to be improved continuously in order to create a loyal customer base.
However, perceived switching cost is found to have little and statistically insignificant
impact on customer loyalty. This is not surprising, because the nature of GSM Mobile
sector has reduced the actual switching cost for the subscribers. That‟s why most of the
mobile phone subscribers have more than one mobile phone connection(s) from different
operators. Hence, this (reduced) switching cost is found not to be an important antecedent
of subscribers‟ loyalty in Bangladeshi context.
The findings of this study have to be interpreted after considering few limitations. First,
data were collected only from the subscribers of one private telecommunication company;
so the results might not be generalized without applying caution for other
telecommunication companies. Moreover, data collection was limited to the subscribers
who live in Dhaka metropolitan area; so the findings should not be generalized for all
subscribers that company has throughout the country. Second, the current study was a
cross-sectional study but to determine the causal paths of the studied variables a
longitudinal study would be more appropriate one (Poon, 2004). In addition, the current
study not being an experimental one it was not possible to eliminate or withhold the
influence of unidentified and undesired extraneous variables from the study. Hence, future
researchers might consider these recommendations to draw causal inferences more
assertively and safely. Finally, there may be many other variables like price perception,
customer value etc., which influence customer loyalty and inclusion of such variable(s)
might have made the research models more robust and interesting. In future research
additional variables may be incorporated.

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