The impacts of corporate social responsibility, service quality, and transparency on relationship quality and customer loyalty in the hotel industry

CSR and service quality

Brown and Dacin (1997) claim that all the information a consumer holds about a company consists of CSR and service quality. Perceived CSR refers to a company’s commitment to its societal obligations. Detailed CSR information about a company can lead to higher awareness of its activities in this area (Bhattacharya and Sen 2004) and that this type of information is typically beneficial to a company’s image (Diehl et al. 2016). Service quality refers to a company’s ability to produce or organize. Consumers use the company’s service quality and CSR as evaluative criteria for their purchasing decisions (Kolkailah et al. 2012). Auger et al. (2003) clarify the dispute by noting deficiencies in current studies that attempt to rank the significance of CSR issues while avoiding the use of trade-off measures between service quality and CSR product features. Perceived service quality has been found to have a stronger impact on the perceptions of stakeholders than CSR initiatives, while existing studies have shown the opposite effect.

Corporate reputation

Wang et al. (2003, p. 76) refer to “reputation plays an especially important strategic role in service markets because the pre-purchase evaluation of service quality is necessarily vague and incomplete.” In other words, a strong, positive CR is a vital competitive advantage in markets that product differentiation is challenging because it provides leverage for managing consumers (Shamsie 2003). Corporate status can be regarded as a company-centric construct that influences how employees of the organization behave on behalf of it (Ettenson and Knowles 2008). Reputation is defined as the features that differentiate one company from another (Barnett et al. 2006). Corporate reputation can be measured as a necessary strategic resource that contributes to a firm’s sustainable competitive advantage.

Transparency

Transparency has become a buzzword that involves precision, truth, and the full disclosure of pertinent information (Murphy et al. 2007). Transparency is defined as the degree of accessibility of relevant information for consumers, which makes perceived access to information a critical component of alleged transparency (Cicala et al. 2014). As part of an effective CSR communication strategy, each company leader must determine the level of transparency he or she will reveal in these communications (Fernandez-Feijoo et al. 2014). Transparency plays a role in decreasing informational asymmetry and helps to create fair markets and reduce inequalities (Sud and VanSandt 2012).

Relationship quality (satisfaction and trust as mediating variables)

Relationship quality refers to a customer's assessment of the strength of their relationships with the service providers (Crosby et al. 1990). The goal of relationship marketers is to build long-term relationships with valued customers. Consumer trust is defined as a belief that the product or service provider can be relied on so that the long-term interests of the consumers will be served (Crosby et al. 1990). Trust is one of factors commonly employed to measure company-consumer relationships. Satisfaction has been found to be a strong predictor of intention to revisit a service provider in the future and provide positive recommendations and referrals (Can 2014).

Customer loyalty

Loyalty refers to customers purchase the products they have grown to prefer from a company they trust and will continue to do so in the future, despite diverse situational impacts and marketing efforts to encourage switching behavior (Oliver 1999). As customer loyalty is considered essential to a firm’s growth, building a loyal customer base has not only become a major marketing goal (Kotler and Armstrong 2008), it is also an important basis for developing a sustainable competitive advantage (Dick and Basu 1994). Understanding customer loyalty and retention is key to delivering long-term corporate profitability (Reichheld 1996), as profits can be increased over the lifetime of a customer through his or her continued business (Lemon et al. 2002). Marketing scholars and specialists recognize maintaining customer loyalty as an objective in all service industries.

The influence of CSR on customer trust, satisfaction, and loyalty

The influence of service quality on customer satisfaction, trust, and loyalty

The influence of CR on customer satisfaction, trust, and customer loyalty

The influence of transparency on customer trust, satisfaction, and loyalty

The relationship between customer trust and satisfaction and its effect on customer loyalty

Figure 1 presents a causal and integrated model that summarizes the predicted relationships between the variables. Links between CSR, service quality, corporate reputation, and CSR-related transparency and the effects of trust and satisfaction on customer loyalty within the hotel context are all incorporated into the model.

Measures and development of the questionnaire

A preliminary list of measurement items for the current study was adapted from the existing literature. We measured all items using a five-point Likert-type scale, ranging from strongly disagree (1) to strongly agree (5). Corporate social responsibility was measured via five items adapted from the existing research (Brown and Dacin 1997; Walsh and Bartikowski 2013b) including, “This hotel seems to make an effort to create new jobs.” Three service quality items were adapted from Fombrun et al. (2000) and Brown and Dacin (1997) such as “This hotel offers high quality products and services.” Perceived CR was measured using three items originally created by Weiss et al. (1999), including items such as, “This hotel is very successful.” Five transparency items were measured with a scale to assess consumer perceptions on transparency, as outlined in previous studies (Hustvedt and Kang 2013; Liu et al. 2015). It included questions such as, “It is easy to obtain sufficient information about this hotel’s CSR activities.”

We measured consumer trust via five items from a scale developed by previous studies (Morgan and Hunt 1994), which included questions such as, “I trust the quality of this hotel.” We measured consumer satisfaction via three items developed by Maxham and Netemeyer (2002) including, “As a whole, I am satisfied with this hotel.” In order to measure customer loyalty, we utilized a four-item scale, which we borrowed from other relevant studies (Sirdeshmukh et al. 2002). An example question was “This hotel company is my first choice compared to other hotel brands.” The questionnaire concluded with a series of demographic questions for identifying the gender, ethnic background, age, level of education, and annual income of our respondents.

Two faculty members and six graduate students of Hospitality Management at Mid-West University, in the U. S. reviewed a preliminary questionnaire containing these items. Based on their responses, we adapted it and removed any redundant or vague questions. After designing the questionnaire, we evaluated the internal consistency of each construct through a pilot test with participants (n = 30) recruited from Amazon Mechanical Turk to assess the clarity, accuracy, and readability of the survey items.

Data collection

A hypothetical hotel was mentioned in the questionnaire description to reduce participant biases, such as pre-existing attitudes about or loyalty to a certain brand or company, which may occur when a real company or brand is used. The hypothetical description was developed from previous relevant studies (e.g., Zhang and Mattila 2015). We clearly stated in the introduction of the survey that participants’ responses would be treated anonymously, kept confidential, and would be used for academic purposes only. We also explained that there were no right or wrong answers and that we were merely interested in participants’ honest impressions. In order to test our conceptual model, we conducted an online survey among U.S. citizens. Qualified participants were instructed to evaluate their previous experiences at hotels. Participants were required to be at least18 years old and live in the United States at the time of the survey. We collected 500 questionnaires in total from Amazon Mechanical Turk, thirteen of which were thrown out because of inert, simulated answer patterns, or incompletion. Thus, the 487 remaining questionnaires were sufficient for data analysis.

Sample profile

Data analysis

Following Anderson and Gerbing (1988), we adopted a two-step approach, which consisted of utilizing measurement models and then conducting structural equation modeling. To check the reliability and validity of the measurement model, we performed confirmatory factor analysis (CFA) using AMOS. Then, we assessed the simultaneity of all the hypothesized associations among the multiple constructs via structural equation modeling.

The measurement model and validity testing

Structural equation modeling and testing of the hypotheses

A SEM with a maximum likelihood estimation method was run. Findings from this model indicated a suitable fitness of the projected theoretical model to the data (χ ²  = 1376.434, df = 303, p < .001), RMSEA = .08, CFI = .900, NFI = .901, TLI = .902. The squared multiple correlation (SMC; R²) statistics of the structural equations for trust and customer loyalty were .869 (86.9%), and .693 (69.3%), respectively. We tested the hypothesized associations based on the structural model results. When we assessed hypotheses 1, 2, and 3, we found that CSR had a positive effect on satisfaction (β = .257, t = 2.345, p < .05) and trust (β = .337, t = 3.869, p < .001). However, hypothesis 3 was not supported (β = .057, t = .411). Our results also did not support hypotheses 4 and 5 (β = .199, t = 1.936; β = .109, t = 1.393, respectively). Interestingly, we found service quality to be a positive predictor of customer loyalty, which supported hypothesis 6 (β = .383, t = 3.212, p < .001). Thus, while hypotheses 7 and 8 were supported (β = .353, t = 4.401, p < .001; β = .155, t = 2.498, p < .05 respectively), hypothesis 9 was not supported (β = −.168, t = −1.758).

Transparency, tested in hypothesis 11, was found to have a positive effect on overall customer trust (β = .239, t = 3.842, p = .001); however, hypotheses 10 and 12 were not supported (β = .100, t = .080; β = .179, t = 1.855, respectively). When hypotheses 13, 14, and 15 were tested, results indicated that customer trust exerted a positive impact on customer loyalty (β = .297, t = 6.827, p < .001; β = .279, t = 3.669, p < .001; β = .358, t = 2.335, p < .05). Our research supports these hypotheses. Table 4 and Fig. 2 show whether or not each hypothesis was supported. It indicates a possible partial mediating role for customer trust between customer satisfaction and customer loyalty. A bootstrap analysis further confirmed the mediating role of customer trust, shown in Table 5. Based on statistically significant results, the paths of CSR and transparency to customer trust and, in turn, to customer loyalty were very clear.

Paths	Standardized estimate	SE	t-value	Hypothesis
H1 CSR → customer satisfaction	.257	.110	2.345*	Supported
H2 CSR → customer trust	.337	.087	3.869***	Supported
H3 CSR customer loyalty	.057	.138	.411	Not supported
H4 SQ → customer satisfaction	.199	.103	1.936	Not supported
H5 SQ → customer trust	.109	.078	1.393	Not supported
H6 SQ → customer loyalty	.383	.119	3.212***	Supported
H7 CR → customer satisfaction	.353	.080	4.401***	Supported
H8 CR → customer trust	.155	.062	2.498*	Supported
H9 CR → customer loyalty	-.168	.095	−1.758	Not supported
H10 Transparency → customer satisfaction	.100	.080	1.251	Not supported
H11 Transparency → customer trust	.239	.062	3.842***	Supported
H12 Transparency → customer loyalty	.179	.097	1.855	Not supported
H13 Customer satisfaction → customer trust	.297	.043	6.827***	Supported
H14 Customer satisfaction → customer loyalty	.279	.076	3.669***	Supported
H15 Customer trust → customer loyalty	.358	.153	2.335*	Supported

Goodness-of-fit statistics for the structural model: χ ² = 1376.434, df = 303, p < .001, RMSEA = .08, CFI = .900, NFI = .901, TLI = .902

Note: CSR corporate social responsibility, SQ service quality, CR Corporate reputation

*p < .05; ***p < .001

Mediator	Relationship	Partial mediation	Direct effect size	Indirect effect size
Customer trust	Customer satisfaction → customer loyalty	√	.244	.093

Note: With regard to the Customer satisfaction → customer trust → customer loyalty relationship, the total effect (.337) is decomposed into direct effect (.244) and indirect effect (.093)

Theoretical implications

Our findings have considerable theoretical and practical implications for this field. From a theoretical perspective, while CSR has been investigated extensively, our research presents valuable implications by extending the existing model (Brown and Dacin 1997) to include transparency and corporate reputation. Our investigation contributes to the literature by examining the variables (i.e., trust and satisfaction) that mediate the link between CSR and customer loyalty.

Although CSR is believed to enhance the trustworthiness and likability of a business (Klein and Dawar 2004), these findings are not directly relevant to evaluating customer responses to service offerings. The literature on the relationship between CSR and customer satisfaction does not always support a significantly positive relationship. Previous studies have examined the relationships between the perception of service quality, customer satisfaction, and behavioral intentions (Su et al. 2016). Although current studies indicate that customer satisfaction has a partial mediating role (e.g., Dagger and Sweeney 2006; Walsh and Bartikowski 2013b), we found that customer satisfaction had a fully mediating effect on both service quality and customer loyalty. The relevant studies regarding the impact of transparency on individuals’ trust have shown mixed findings. The causal relationship between CR and trust or customer satisfaction remains unclear within the hotel context (Park et al. 2014). Bontis et al. (2007) point out that more research is needed to understand the relationship between customer satisfaction and corporate reputation. A conceptual model of antecedents and outcomes of CR, which has yet to be tested against empirical data (Walsh and Wiedmann 2004). Su et al. (2015a) also claims that modest attention has been paid to the status of CR in a hospitality context. Especially, we determined that CR as a predictor was positively correlated with customer trust and satisfaction. This study provided a model that will add to our understanding of how CR contributes to relationship building. Thus, the proposed model not only includes antecedents of customer loyalty but also demonstrates a framework of relationships among these constructs that allows for a better understanding of how customers develop a sense of loyalty toward a company.

In this study, we introduced and applied the concept of transparency to customer-company relationships and provided thought-provoking insights for theory building within the hotel industry. Although transparency is not generally considered a variable, as Gutierrez-Nieto and Serrano-Cinca (2010) suggest, such extension is meaningful because previous studies were limited to the exploration of the impact of service quality on CSR, CSR by itself (de Leaniz and del Bosque Rodríguez 2015), and the impact of CSR (Su et al. 2015a) on customer loyalty within the hospitality context.

Practical implications

From a practical perspective, regarding hypotheses 1, 2, and 3, we found that an unremitting effort to be a good citizen via strategic CSR initiatives will augment long-term relationship quality, which may in turn encourage long-term success (Swimberghe and Wooldridge 2014). Our study confirmed that CSR initiatives are no longer optional and that engagement in CSR activities should be a part of the hotel industry’s long-term strategic mission. CSR activities are more likely to lead to positive effects when they are considered trustworthy by consumers. Based on the findings of hypotheses 4, 5, and 6, increasingly aggressive competition requires hotel company executives to enhance quality (Gray et al. 2000), which is a crucial factor in finding a viable lead and market difference because customer perceptions of service quality directly increases loyalty toward the hotel. Thus, hospitality managers still need to heavily invest in improving and maintaining service quality to achieve sustainable competitive advantages. For example, in service businesses well-trained staff with good manners and a high level of expertise play an significant role in boosting consumer loyalty to a particular service or brand.

According to hypotheses 7, 8, and 9, company leaders should closely watch their reputations, as this aspect plays a serious role in the general appraisal of the company. Service companies can profit from the effects of good CR due to the halo effect that encourages customers to have more positive assessments of the company. Good reputation, which has a long-term effect on a firm, is difficult to establish and easy to lose (Fatma et al. 2015). Thus, based on our findings hospitality industry managers should implement CR as an intangible resource to help provide competitive advantage in the marketplace.

According to hypotheses 10, 11, and 12, an effort to be transparent and honest plays an important role in helping a hotel appear more trustworthy and favorably perceived by customers. Mohr et al. (2001) claims that some consumers recognize that although a company may act in a socially responsible manner, this does not necessarily mean that it will be viewed as socially responsible. Consumers are thus not fully informed of companies’ behavior (Carrigan and Attalla 2001). Consumer cynicism about the corporate world is increasing, and consumers believe that firms often disperse false and/or misleading environmental information to deceive potential customers and better their image (Parguel et al. 2011). High levels of transparency can be associated with increased confidence in the company’s commitment to sustainability (Dando and Swift 2003), resulting in decreasing public doubt about its CSR involvement (Kim and Ferguson, in press). Hospitality managers should reflect on how they are communicating their CSR efforts to potential clients by stressing credibility, transparency, and honesty, and in turn, asking the companies to support their interactive efforts more directly to consumers to increase their trust.

Finally, although existing studies have reported a positive consumer response towards companies engaged in CSR activities, others have discovered that customers are not interested in socially-responsible practices (Vaaland et al. 2008). In fact, they often retain a strong preference for non-socially responsible products in many domains. This failure of CSR to influence patron loyalty has lately been ascribed to consumer uncertainty about CSR efforts like skepticism (Skarmeas and Leonidou 2013). In conclusion, corporate social responsibility is not the most dominant criterion that affects consumer behavior (Boulstridge and Carrigan 2000); service quality, corporate reputation, and CSR-related-transparency remain important standards. This research can help the industry identify the various paths available to establish, improve, or reinforce consumer trust, satisfaction, and loyalty via the constructs discussed above.

Limitations and suggestions for future research

This study is subject to certain limitations, which are possible areas for future research. First is the probability of social desirability bias in our reported measures. The cross-sectional nature of the data limits our ability to draw strong inferences about the sequence of effects. The data used in this research are cross-sectional in nature, which raises concerns about the causal relationships between constructs in the tested model. They could employ a longitudinal design to measure the variables after participants discussed their experiences with CSR programs. They could also utilize qualitative research methods, experimental designs, or quasi-experimental designs. Our sample did not represent the entire population in the U.S. It would be helpful if future studies would investigate other types of hospitality establishments, different industries, and other cultures or subcultures in order to increase the generalizability of the findings. Future studies are encouraged to utilize the findings of the present research by extending the model to include other outcomes, antecedents, mediators, and moderators.