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IJBM 24,2

Further probing of higher order in satisfaction construct

The case of banking institutions in Malaysia
Ding Hooi Ting
School of Business and Economics, Monash University Malaysia, Selangor, Malaysia
Abstract
Purpose This paper aims to bring a new insight by examining the satisfaction model in a more complex manner to capture the variations of the satisfaction construct better. Design/methodology/approach The paper presents a subsequent expansion from a previous research. The methodology used is similar, as the researcher believes that it is the best way to measure and to capture the curvilinear relationship of the variables under study. Regression of a higher form has been discussed and established and three variables were tested, i.e. word-of-mouth referrals (dependent variable), satisfaction (independent variable), and ownership (moderating variable). In order to test for the moderating effect, the hierarchical moderated regression analysis has been employed. Findings This study contributes to the body of knowledge in two ways. First, a literature review and exploratory study suggest that marketers should consider a higher-order model in the models of satisfaction. Second, further considerations should be made to determine the curvature of the relationship where the researcher suggested that there might be a U-shaped relationship between satisfaction perception and word-of-mouth referrals when there is a change in ownership. Research limitations/implications Customer satisfaction should be seen as a non-linear construct. In fact, in most industries there are tendencies to build marketing strategies around their core services. However, this research suggests that customers in Malaysia view beyond satisfaction in choosing their banks. Malaysian bank customers prefer patronizing banks from the same ethnic group as theirs, where banks owned by the same ethnic group as the customers are able to moderate the satisfaction level. Originality/value The paper shows and suggests how satisfaction construct should be measured in a non-linear form with interaction in a different cultural context as in the banking sector in Malaysia. Keywords Customer satisfaction, Banking, Malaysia Paper type Research paper

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International Journal of Bank Marketing Vol. 24 No. 2, 2006 pp. 98-111 q Emerald Group Publishing Limited 0265-2323 DOI 10.1108/02652320610649914

Introduction There have been extensive studies in the West to test the satisfaction construct and how it affects word-of-mouth referrals. New models have been developed and tested in order to gain better insights into the customer satisfaction construct. However, there are few studies conducted in Asian countries, especially Malaysia on the satisfaction model. Most of the models developed consider the use of a linear model to test the satisfaction construct. A recent development in the satisfaction literature suggests that the satisfaction construct should be in a non-linear form (Anderson and Sullivan, 1993; Basadur and Head, 2001; Oliva et al., 1992; Taylor, 1997). The purpose of this paper is to assess this argument in a different cultural context as in the banking sector in Malaysia.

The objective of this study is to have a better grasp of the relationship pattern between the word-of-mouth referrals and satisfaction with ownership as the moderating variable as opposed to the widely used linear model. The researcher will further probe into the higher order and the curvature of the relationship. Hence, the rst objective of this study is to further probe the curvature of the higher order model[1] of the relationship under study. The second objective is to test the simple slope and the nature of the relationship under study where ownership by certain ethnic groups will be used as the moderator between satisfaction and word-of-mouth referrals. Literature review Word-of-mouth marketing tends to work very slowly and it is limited geographically but it is a very effective method of marketing. The value of word-of-mouth marketing is immense because of its impartiality and credibility from the customers point of view (File et al., 1992). Word-of-mouth referrals are important in determining the success of a bank and are the cheapest method for a bank to market itself. It needs no additional costs for advertising in local newspapers or in any media. In many situations, customers seek the opinions of others before selecting a service rm. When customers depend on someone else for information (other customers experiences) as opposed to the companys advertisements, the beliefs they hold about what the product will do (expectations) may be important in forming satisfaction (Goode et al., 1996). Customers referrals act as a better guide compared to advertisements since the screening process has taken place in the recommenders mind. In the study by Tan and Chua (1986) in Singapore, they found that friends, neighbors and family members have great inuence on prospective customers when it comes to making decisions as to which nancial institution to patronize. These ndings are consistent with the Eastern culture that puts emphasis on social and family ties (Haron et al., 1994). Many marketing researches on service quality and customer satisfaction found that they have a unique and strong relationship (Cronin and Taylor, 1992; Zeithaml et al., 1993) whereas Boulding et al. (1993) and Zeithaml et al. (1996) did not differentiate between service quality and customer satisfaction, but treated them as the same entity. Satisfaction is the outcome of ones experiences and the ability of the supplier to meet the norms and expectations (Dwyer et al., 1987; Fornell, 1992; Oliva et al., 1992). The studies done by Fornell (1992) and Cronin and Taylor (1992) show that satised customers would have effect on subsequent behavior after purchase. In other words, satisfaction would lead to positive word-of-mouth referrals and vice versa. Bank ownership In Malaysia, there are three major types of bank ownership owned by the three major ethnic groups, that is the Malays, Chinese and Indians. The government has tried to integrate the multiracial and ethnic groups in Malaysia into one identity through various means and approaches ever since her independence in 1957. The study carried out by Edris (1997) on the quality that is regarded as important for business customers and the determinants on bank selection among the Kuwaitis found that local ownership is one of the determinants for bank selection; whereas a study by Athanassopoulos (1997) showed that there is no global difference between the private and the government-owned banks; this has been further conrmed by Kristensen et al. (2001). These researchers researched on customer satisfaction and loyalty in retailing, to investigate possible effects of ownership and type in Danish retailing. They found out that there are differences in image between privately-owned

Further probing in satisfaction construct 99

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stores and stores owned by a co-operative where privately-owned stores lead to higher customer loyalty and customer compared to stores owned by a co-operative. nez-Tur et al. (2001) shows that as the number of While a study carried out by Mart distinct services an organization offers (structural complexity) increase, public organizations are less able to maintain customer satisfaction than private organizations. In other words, ownership appeared to have impact on the relationship between service structural complexity and customer satisfaction. From the reviews above, it is hypothesized that ownership would be able to moderated the relationship between satisfaction and word-of-mouth referrals. Curvilinear and higher order According to Kano et al. (1984) and Taylor (1997), there are many literatures that suggest that evaluation of satisfaction should involve a curvilinear and higher order form. However Taylor and Baker (1994) included the interaction effect as well. This has been conrmed by Conklin et al. (2004), Danaher (1997), Oliva et al. (1992) and Ting (2004) who stated that the satisfaction model should not be in a linear form. Customer satisfaction has also been seen as a non-linear model leading to subsequent behaviors (Anderson and Sullivan, 1993; Coyne, 1989; Oliva et al., 1992; Rust et al., 1994, 1995, 1996). In other words, the relationship between satisfaction and its outcome should also be non-linear. However, Jaccard et al. (1990) showed that the relationship between the two different variables should be represented by a cubic function (X 3). According to Aiken and West (1991), failure to express the function in a curvilinear form and interaction effect will lead to an error in the interpretation which may sometimes be very serious. While in a study by White and Yu (2005), it was found that there is no curvilinear effect between the emotions and behavioral intention scales (positive word of mouth, complaining behavior, switching behavior and willingness to pay). According to Busacca and Padula (2005), failure to account properly for the non-linear and asymmetric relationship between attribute performance and overall satisfaction would lead to incorrect prioritization of resource allocation to enhance customer satisfaction. The above reviews denote some arguments to the literature on the curvilinear nature of satisfaction construct. As there has been support from previous research plus the dynamism of customer behavior, it is therefore hypothesized that there exists a curvilinear nature for the satisfaction construct. Methodology The sample for this study was gathered via a snowballing method where the initial samples chosen were randomly selected. The snowballing method was adapted as there was no ready-made frame that could capture the entire population. Respondents are between 21 and 60 years of age because this category had the most working in the age group. A total of 2,100 questionnaires were distributed and 51 percent of the questionnaires were returned. Questionnaires used in this study focus on the word-of-mouth referrals, satisfaction of bank customers and bank ownership of the same ethnic group as the customers. The following method will be used to test the relationship between word-of-mouth referrals and satisfaction with the ownership as the moderator. There are four items used for the word-of-mouth referrals: possibility of telling positive aspects of a bank to acquaintances; possibility of referring a bank to acquaintances who asked about it; possibility of telling acquaintances about a bank in general; and possibility of

describing in detail about a bank to acquaintances using a Likert scale of 1 to 7 where 1 refers to very unlikely and 7 refers to very likely. As for satisfaction, only one item was used according to Cronin and Taylor (1992) The item used was My feelings towards XYZs services can best be described as . . . in a seven-point Likert scale ranging from 1 (very unsatised) to 7 (very satised). As for ownership, one item was used, this is Ownership of banks by Malays. Both the satisfaction and bank ownership questions used a 1 to 7 scale where 1 is strongly disagree and 7 is strongly agree. Equation (1) is the basic equation used to study the relationship between two independent variables and a dependent variable (Aiken and West, 1991): Y a1 a2 X a3 Z e Y a1 a2 X a3 Z a4 XZ e Y a1 a2 X a3 X 2 e Y a1 a2 X a3 X 2 a4 Z e Y a1 a2 X a3 X 2 a4 Z a5 Z Z e Y a1 a2 X a3 X 2 a4 Z a5 XZ a6 X 2 Z e 1 2 3 4 5 6

Further probing in satisfaction construct 101

Y a1 a2 X a3 X 2 a4 Z a5 Z 2 a6 XZ a7 X 2 Z a8 XZ 2 a9 X 2 Z 2 e: 7 The equations above are similar to those used by Ting (2004) because the researcher thinks that it is the best approach to measure the interaction and curvilinear effect (Aiken and West, 1991). Equation (1) suggests that the subsequent behavior after a purchase, i.e. word-of-mouth referrals (Y) is a function of a constant (a1), plus the regression coefcient for satisfaction (X) with the moderating effect, ownership (Z) and the error term (e). Equation (1) is the most basic model. The coefcient X shows the slope of the regression line that can best predict the independent variable (Taylor, 1997) whereas equation (2) is an extension of equation (1) that includes the interaction term. Aiken and West (1991) have found a few models that have the potential to capture a more complex relationship using a higher order form which has proved to be more consistent. The change in the regression form to a higher-order form is termed as curvilinear model. The most basic curvilinear model is shown in equation (3). Here, the predictor X has a curvilinear relationship with Y i.e. X and X 2 represent the linear and quadratic components of the total effect. Equation (4) suggests that the regression Y on X is curvilinear whereas the regression Y on Z is linear. Equation (5) shows a model that has a linear interacting effect on top of the curvilinear relationship of X and Z. The difference between equations (4) and (5) is that the relationship between Y on X and Y on Z is no longer parallel. Equation (6) is expanded to show the curvilinear and interaction effects for X and Z whereas equation (7) shows the example of a higher-order model or an interaction effect that has a curvilinear effect. In order to show the two-way interaction, four additional components have been added into the equation. They are XZ, X 2Z, XZ 2 and X 2Z 2.

IJBM 24,2

Here, they show the curvilinear relationship of X, curvilinear relationship of Z, and all possible interactions. This model suggests that the curvilinear relationship exists in both the independent variables and its interaction. In order to test the hypotheses that a curvilinear satisfaction model explains more variations than the linear model, hierarchical moderator regression will be utilized. Here the moderating effect is also included. Identifying the curvilinear nature of independent variable In order to identify the curvilinear nature of the independent variable, the following equation will be employed: Y a1 a2 X a3 X 2 a 4 X 3 : 3a

102

To determine the existence of interaction and quadratic effects in the models tested, Table I will be used. In each model, there will be two similar dependent variables but the independent variable will be different. This is to test whether any interaction and quadratic effects exist between the two different variables. For the second level, if F changes, then the test is signicant. It means that there are quadratic effects and the test on quadratic effects on the interaction effects is carried out using the equations (7), (2) and (1) as suggested by Taylor (1997). If only one equation has a quadratic effect, models 6, 5 and 1 will be used (Taylor, 1997). If both equations are not signicant, then there are no quadratic effects and the model is linear. The ndings from Table I show that there exist quadratic effects (that is X 2) and interaction effects on the dependent variable, that is satisfaction. The term, X 3 is insignicant statistically, and does not add to the prediction ability as seen by the change in R 2. According to Aiken and West (1991), the relationship between the independent and the dependent variables with cubic forms is very rare. The ndings support the fact that there might exist a non-linear form for satisfaction. Equation (6) represents the step-down procedures since it includes the quadratic function (X 2) and the linear function (XZ) as well as the linear-quadratic effect (X 2Z). While the step-down procedures in the hierarchical moderated regression as in equations (5) and (6) may show the potential existence of multicollinearity, the removal of the scale-dependent[2] term demonstrates that issues related to multicollinearity to the nal results are no longer present (Taylor, 1997). Furthermore, multicollinearity is an issue for linearly dependent models.

Model Y Y Y Y Y Y 3:246** 0:344X 1 2 0:0509X 1 0:006485X 3 1 3:787** 2 0:05467X 1 0:0398* X 2 1 2:984** 0:317** X 1 3:454ast; ast; 0:503Z 2 0:105Z 2 2 0:00896Z 3 3:924* * 0:0677Z 0:009624Z 2 3:761ast; * 0:153** Z

R2 0.103 0.103 0.099 0.043 0.042 0.041

DF 0.646 0.046 * 0.000 * * 0.251 0.487 0.000 * *

Table I. Examining the curvilinear nature of model

Notes: * Signicant at 0.05 level; * * Signicant at 0.01 level; Y refers to word-of-mouth referrals; X1 refers to satisfaction; Z refers to ownership

Post hoc probing of a more complex regression equation In order to assess further the relationship of the underlying variables, the procedure of probing using a simple curvilinear equation (second order) involving only X and X 2 as in equation 3 were carried out: Y a1 a 2 X a3 X 2 e : This equation can be re-written to show the regression of Y on X: Y a2 a3 X X a1 e: 8 3

Further probing in satisfaction construct 103

From equation (8), the regression of Y on X depends on the specic value of X; that is at any particular value of X, the value of Y might be decreasing, not changing at all or increasing. The regression slope of Y on X as in equation (3) is no longer a2 a3 X but a2 2a3 . The approach of re-arranging the regression equation to identify simple slopes does not generalize to equations containing curvilinear components. Simple slope derivation from the regression equation The mathematical operation involving derivations (in order to obtain the tangent slope of a curve on a particular point) will give the regression measurement of Y on X at a particular value of X along the curve. The slope for regression of Y on X is the rst derivative of the regression equation of Y on X on at least one variable or other variables such as Z, the variable X itself or the combination of variables. Hence: DY =DX a2 2a3 X : 9

When a particular value of Xi is substituted into equation (9), then the value obtained is the simple slope of Y on X at that particular value of Xi. From Table II we can see that satisfaction and ownership explain a signicant amount of relationship in word-of-mouth referrals (R 2 0:103, r , 0:01) whereas in the partial quadratic interaction effect at level three, the ownership variable explains a signicant amount of effect in word-of-mouth referrals (DR 2 0:007, r , 0:05). Simple slope and the nature of the curve Since it is difcult to interpret the relationship of Y on X as in equation (6) above, the equation is rewritten as follows: Y a2 a5 Z X a3 a6 Z X 2 a4 Z a1 : 6a

As in equation (6), the coefcient of a2 a5 Z provides the same information as the coefcient a2 in the overall equation. On the other hand, the coefcient a3 a6 Z represents the linear term of X on Y on the value of Z that is equal to a3. It represents the curvilinear nature of a simple regression line. If the value of a2 a5 Z is positive, then the curve will slope upwards and if it is negative, then it will slope downwards. By re-writing equation (6) in full, the following will be obtained: Y 5:715 2 0:939X 2 0:533X 2 0:135Z 0:229XZ 2 0:034X 2 Z e: By using the parameter values in equation (6a), the equation below is written: Y 20:939 0:229Z X 20:533 0:034Z X 2 0:135Z 5:715:

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Dependent variable Y

Equation 1 5

Parameter Constant X1 Z Constant X1 Z X1 *Z X2 1 Constant X1 Z X1 *Z X2 1 * X2 1 Z

b
2.992 * * 0.331 * * 2 0.0155 * * 3.817 * * 0.0026 2 0.0724 0.0278 0.0139 5.715 * * 2 0.939 * 2 0.533 * 0.135 * 0.229 * 2 0.034 *

Std error 0.146 0.040 0.030 0.434 0.209 0.115 0.028 0.024 1.007 0.497 0.249 0.059 0.106 0.011

R2 0.100 0.103

DR 2 0.100 0.003

DF 56.438 2.068

D sig. F 0.000 * * 0.127

104

0.107

0.004

4.357

0.037 *

Table II. Partial quadratic for the dependent, independent and moderator

Notes: * Signicant at 0.05 level; * * Signicant at 0.01 level; Model number refers to the equation from the manuscript that is empirically accessed in the analysis

In order to obtain the slope of Equation 6a, substitute the values of 2 2.200, 0 and 2.200 with ZL (Zbelow), ZM (Zmean) and ZH (Zabove)[3]. The values of Z will then be substituted into equation (6a). The value of a2 a5 Z is negative but the negativity becomes lesser as Z increases; Z: 2 1.4428 for ZL, 2 0.939 for ZM and 2 0.4352 for ZL. Hence, equation (6) has a negative slope. However, the values for a3 a6 Z are as follows: 2 0.6078 for ZL, 2 0.533 for ZM and 2 0.4582. The negativity reduces as the values of Z increase. To test the coefcient signicance of a2 a5 Z and a3 a6 Z , the standard deviation will be calculated (Tables III-IX). The standard regression for computation
Table III. Mean and standard deviation (for centered data) Mean Satisfaction Ownership 0 0 Std deviation 1.2701 1.6924

Mean Word-of-mouth referrals Satisfaction Satisfaction2 Ownership Satisfaction *Ownership Satisfaction2 *Ownership 4.465 0.033 23.648 2 0.033 23.302 123.279

Std deviation 1.286 1.272 12.034 1.694 12.488 90.007

Table IV. Computation of simple slope analysis by computer

Note: The above is computed for the X 2Z interaction in the regression equation Y a1 a2X a3X 2 a4Z a5XZ a6X 2Z e: overall analysis with centered X and centered Z means and standard deviation

B Constant Satisfaction Ownership Satisfaction *Ownership Satisfaction2 Satisfaction2 *Ownership 5.715 * * 2 0.939 * 2 0.533 * 0.135 * 0.229 * 2 0.034 *

Std error 1.007 0.497 0.249 0.059 0.106 0.011

Further probing in satisfaction construct 105

Table V. Computation of simple slope analysis by computer

Notes: * Signicant at 0.05 level; * * Signicant at 0.01 level; Dependent variable: word-of-mouth referrals; for the X 2Z interaction in the regression equation Y a1 a2X a3X 2 a4Z a5XZ a6X 2Z e: overall analysis with centered X and centered Z regression analysis

Mean Word-of-mouth referrals Zabove X2 A Zbelow XAZB X2 AZB 4.4714 2.9645 13.3102 1.6924 23.1382 93.9146

Std deviation 1.2786 1.6939 8.8403 1.6924 12.5039 75.6825 Table VI. Regression analysis with Xabove and Zbelow

Note: The above is computed to derive the simple slope at XH and ZL (regression of Y on I at one standard deviation above the mean of X and one standard deviation below the mean Z) mean and standard deviation

B Constant Xabove X2 A Zbelow XAZB X 2ZB 5.215 * * 2 0.881 0.175 * 2 0.243 * 0.229 * 2 0.023 *

Std error 0.701 0.469 0.076 0.124 0.106 0.011

Notes: * Signicant at 0.05 level; * * Signicant at 0.01 level; Dependent variable: word-of-mouth referrals

Table VII. Regression analysis with Xabove and Zbelow to derive the simple slope at XH and ZL (regression of Y on X at one standard deviation above the mean of X and one standard deviation below the mean Z) regression analysis

procedure will be used to test the simple slope (Darlington, 1990). Regression analysis with Xabove and Zbelow in order to derive the simple slope analysis on XH and ZL (regression of Y on X at one standard deviation above the mean value of X, and one standard deviation below the mean value of Z). Tables III-IX comprise of different component output from the analyses. From Tables III-IX, for the value of a3 a6 Z , at ZL, the t value 0:022; at ZM, the t value 0:031 whereas at ZH, the t value 0:027. This further supports the theory that the curvature of regression Y on Z at ZL has a downward sloping trend as Z increases. The readers should note that the linear coefcient of a2 a5 Z and the curvilinear coefcient of a3 a6 Z in equation (6a) is not a simple slope. But the coefcient

IJBM 24,2
Word-of-mouth referrals Satisfaction Satisfaction2 Zabove XZA X 2ZA

Mean 4.4714 4.6901 23.6109 2 1.6924 15.3273 83.0144

Std deviation 1.2786 1.2709 12.0132 1.6924 10.6361 71.1914

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Table VIII. Regression analysis with X and Zabove

Note: The above is computed to derive the simple slope at X mean and ZH (regression of Y on X at one standard deviation above the mean of X and one standard deviation below the mean Z) mean and standard error descriptive statistics

B Constant Satisfaction Satisfaction2 Zabove XZA X 2ZA Table IX. Regression analysis with X and Zabove 4.813 * * 2 0.552 0.0959 * 2 0.533 * 0.229 * 2 0.023 *

Std error 0.700 0.358 0.043 0.249 0.106 0.011

Notes: * Signicant at 0.05 level; * * Signicant at 0.01 level; Dependent variable: word-of-mouth referrals; the above is computed to derive the simple slope at X mean and ZH (regression of Y on X at one standard deviation above the mean of X and one standard deviation below the mean Z) regression analysis

shows the overall relationship of Y on X at a particular value of Z. Hence, in getting the simple slope of Y on X for equation (6), the rst derivation should be done on X: DY =DX a2 2a3 X a5 Z 2a6 XZ : 6b

The simple slope of Y on X depends on the values of both X and Y. The simple slope relates to both the possible combinations for XL, XM and XH as well as ZL, ZM and ZH calculated by substituting the values of X and Z in equation (6b). An example of the calculation is as follows. For the simple slope of Z H 1:6924 and X L 21:2701, substitute back into equation (6b), thus the simple slope is 20:939 2 2 (2 0.533) 21:2701 0:229 1:6924 2 (2 0.034) (2 1.2701) 1:6924 21:6407. However, to obtain the standard error, it can be calculated using the variance of the simple slope that is: s11 4X 2 s22 Z 2 s44 4X 2 Z 2 s55 4Xs12 2Zs14 4XZs24 4XZs15 8X 2 Zs25 4XZ 2 s45 : To obtain the standard error, it is the square root of variance. The matrix that includes the nine simple slopes and standard error is as shown in Tables X and XI. Based on the above readings, for example, for combinations of XL and ZM (Table X, row 1, column 2), the reading for the simple slope is 2 2.2929. On the other hand, for

(1) ZL 21:6924 (1) X L 21:2701 (2) XM 0 (3) X H 1:2701 Simple slope Std error t Simple slope Std error t Simple slope Std error t 2 2.8267 0.8437 2 3.3504 * * 2 1.3265 0.6708 2 1.977 * 0.1735 0.4671 0.3714

(2) ZM 0 2 2.2929 0.6422 2 3.5704 * * 2 0.939 0.5169 2 1.8166 * 0.4149 0.3491 1.1885

(3) ZH 1:6924 2 1.6407 0.464 2 3.536 * * 2 0.5514 0.3853 2 1.4311 0.6563 0.2478 2.649 * *

Further probing in satisfaction construct 107

Table X. Simple slope4 for equation Y 5.715 2 0.939X 2 0.533X 2 0.135Z 0.229XZ 2 0.034X 2Z e

Note: A simple slope is obtained by using the equation a2 2a3 X a5 Z 2a6 XZ

a1 a1 a2 a3 a4 a5
0.247 2 0.02859 0.08968 2 0.04455 0.005050

a2
2 0.02859 0.003465 2 0.009079 0.004815 2 0.0005774

a3
0.08968 2 0.009079 0.06196 2 0.02541 0.002470

a4
2 0.04455 0.004815 2 0.02541 0.01118 2 0.001152

a5
0.005050 2 0.0005774 0.00247 2 0.001152 0.0001253

Notes: t-test is based on n 2 k 2 1 df where k 5; * Signicant at 0.05 level; * * Signicant at 0.01 level

Table XI. Sa: covariance matrix for coefcient a

combinations of XM and ZM at the mean values of both X and Z (row 2, column 2), the simple slope is equivalent to 2 0.939 (the value is the same for the coefcient value of a2 on X in the overall equation). The standard error obtained and the t-test for all the nine combinations of X and Z will be used to determine the slope of the curve. For XL, it can be seen that the simple slope for the regression curve becomes atter as ZL increases. The same applies to XM. As for XH, the slope becomes even atter as Z increases. Graph To portray the interactions between the moderating variable and the ownership more clearly, a graph is drawn. To draw the graph, the bases of satisfaction and moderator variables are initially re-coded into three categories namely low, moderate and high by dividing the respondents into three approximately equal groups using the following percentile (0 2 33 percent Low, 33.1 66 percent Medium and 66.1 percent High). As can be observed from Figure 1, for low ownership level, as the level of satisfaction moves from low to high, the level of inuence of word-of-mouth referrals will increase. Nevertheless, the reading remains the same as the level of satisfaction moves from moderate to high. When the level of ownership is high, as the level of satisfaction increases from low to moderate, the level of inuence in the word-of-mouth referrals will decline. However, as the ownership level increases from moderate to high, the level of inuence of word-of-mouth referrals begins to increase too. For moderate ownership level, the level of satisfaction does not have much impact on the level of inuence of word-of-mouth referrals. The ndings suggest that when the ownership

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Figure 1. Moderating effect of ownership on the relationship between satisfaction and word-of-mouth referrals

level is high, the satisfaction level will only have impact on the level of inuence on the word-of-mouth referrals when it ranges from moderate to high below which the satisfaction level will not be able to inuence the word-of-mouth referrals. Discussion and managerial implications This study stems from arguments from recent development of the nature of the relationship of satisfaction constructs. Through this study, it has expanded our knowledge on the nature of the relationship and the curvature of the relationship in the context of Malaysian banking institution. The ndings from this study may be able to generalize other settings as Malaysia is moving towards globalization where the inow and outow of information is very easy, therefore, the perception of Malaysians towards the satisfaction construct could be seen as one of universal perception. But more researches is required to conrm this. This study contributes to the body of knowledge in two ways. First, a literature review and exploratory study suggest that marketers should consider a higher-order model in the models of satisfaction. Second, further considerations should be made to determine the curvature of the relationship where the researcher suggested that there might be a U-shaped relationship between satisfaction perception and word-of-mouth referrals when there is a change in ownership. The downward sloping curve of word-of-mouth referrals, satisfaction and ownership shows that the respondents captured at this initial stage of research might fall into the second category. This implies that the samples obtained from this study are experiencing bank ownership that they favored. Further research is required to further conrm this pattern. From the study, it is clear that customer satisfaction is essential for the banks to remain competitive in the long run. In fact, in most industries there are tendencies to build marketing strategies around their core services. However, this research suggests that customers in Malaysia view beyond satisfaction in choosing their banks. The customers not only view satisfaction as important, but they also look at the ownership of the banks where the ownership of the banks tend to moderate the relationship.

Anecdotal evidence as well as that from this research suggests that customers may remain in a relationship even if they perceive the satisfaction level as less than superior especially if they are patronizing a bank owned by the same ethnic group. This is because there are three major ethnic groups in Malaysia. They are Malays, Chinese and Indians. The customers accept the styles and culture of banks from the same ethnic groups. This leads to customers overlooking minor problems experienced by them. Furthermore, there is a sense of belonging social bonds between the banks owned by the same ethnic group as the customers and the customers themselves. This further suggests that the bonds among customers of the same ethnic group are still strong though there have been efforts carried out by the government to integrate the three major ethnic groups in Malaysia since Malaysia achieved her independence in 1957. Ownership is found to moderate the relationship between satisfaction and word-of-mouth referrals in a higher order manner. This means that Malaysian bank customers prefer patronizing banks from the same ethnic group as theirs where banks owned by the same ethnic group as the customers are able to moderate the satisfaction level. In other words, when customers patronize banks owned by their ethnic group, the chances of them remaining with the bank would be higher although their satisfaction level is not as high. This is because if customers patronize banks owned by the same ethnic group, they are better able to tolerate the way they are served. In another words, these customers more or less understand the employees of the bank who are usually from the same ethnic group as they are, and who would behave more or less like themselves. Since their mindset has been pre-adjusted earlier about the behavior of bankers, hence, the toleration level would be higher. Thus, the tendency to ignore minor discomfort they experience while dealing with the bank would be higher. Ownership of banks by different ethnic groups would also use different designs and colors, hence, the ambience of banks. The Islamic Bank will go for green while those banks owned by the Chinese will use bright or red designs. This is because different ethnic groups fancy different styles and ambience such as the decorations. Furthermore, these two aspects are the rst to be noticed by customers when they enter a bank. As the ndings suggested, due to the higher emphasis on ethnic group ownership, banks should be able to provide a more welcoming environment and create social ties that are able to bind the customers to the banks. As this is a normal phenomenon in the Malaysian context (which might be due to colonialism where the three major ethnic groups were treated differently and also because of their places of residence), it is suggested that banks that intend to branch out should investigate the area where they plan to set up the branch (to determine the ethnic groups residing in that area) in order to attract more customers. If a bank is owned by an ethnic group which is different from the ethnic group of the residence where a branch is being set up, what can be done is to hire employees from the same ethnic group as the residents in that area in order to be able to fulll the same ethnicity requirement and to promote better understanding between bankers and customers. Conclusion This paper outlined a newer approach to explore the consequences of the satisfaction construct of bank customers. The approach used in this study is more practical in terms of customer satisfaction and dynamism compared to the traditional way of measuring satisfaction as it leads to a higher variation explained earlier. From this study, it is found that there exists a higher order relationship between satisfaction and word-of-mouth referrals with interaction effects. The ndings provide a better understanding towards the behavior of customers compared to the linear models.

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It is hoped that the ndings from this study can be used as a stepping-stone towards a more vigorous research and study in service quality and customer satisfaction.
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Jaccard, J., Turrisi, R. and dan Wan, C.K. (1990), Interaction Effects in Multiple Regression, Sage Publications, Newbury Park, CA. Kano, N., Seraku, N., Takahashi, F. and Tsuji, S. (1984), Attractive quality and must be quality, Quality, Vol. 14 No. 2, pp. 39-48. Kristensen, K., Juhl, H.J. and stegaard, P. (2001), Customer satisfaction: some results for European retailing, Total Quality Management, Vol. 12 Nos 7/8, pp. 890-7. nez-Tur, V., Peiro , J.M. and Ramos, J. (2001), Linking service structural complexity to Mart customer satisfaction the moderating role of type of ownership, International Journal of Service Industry Management, Vol. 12 No. 3, pp. 296-306. Oliva, T.A., Oliver, R.L. and MacMillan, I.C. (1992), A catastrophe model for developing service satisfaction strategies, Journal of Marketing, Vol. 56 No. 3, pp. 83-95. Rust, R.T., Zahorik, A.J. and Keinsingham, T.L. (1994), Return of Quality: Measuring the Financial Impact of Your Companys Quest for Quality, Probus Publishing, Chicago, IL. Rust, R.T., Zahorik, A.J. and Keinsingham, T.L. (1995), Return on quality (ROQ): making service quality nancially accountable, Journal of Marketing, Vol. 59 No. 2, pp. 58-70. Rust, R.T., Zahorik, A.J. and Keinsingham, T.L. (1996), Service Marketing, Harper Collins College Publishers, New York, NY. Tan, C.T. and Chua, C. (1986), Intention, attitude and social inuence in bank selection: a study in an oriental culture, International Journal of Bank Marketing, Vol. 4 No. 3, pp. 43-53. Taylor, S.A. (1997), Assessing regression-based importance weights for quality perceptions and satisfaction judgements in the presence of higher order and/or interaction effects, Journal of Retailing, Vol. 73 No. 1, pp. 135-59. Taylor, S.A. and Baker, T.L. (1994), An assessment of the relationship between service quality and customer satisfaction in the formation of consumers purchase intentions, Journal of Retailing, Vol. 70 No. 2, pp. 163-78. Ting, D.H. (2004), Service quality and satisfaction perceptions: curvilinear and interaction effect, International Journal of Bank Marketing, Vol. 22 No. 6, pp. 407-20. White, C. and Yu, Y.T. (2005), Satisfaction emotions and consumer behavioral intentions, Journal of Services Marketing, Vol. 19 No. 6, pp. 411-20. Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1993), The nature and determinants of customer expectations of service, Journal of the Academy of Marketing Science, Vol. 21 No. 1, pp. 1-12. Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), The behavioral consequences of service quality, Journal of Marketing, Vol. 60, April, pp. 31-46. Further reading Coyne, K. (1989), Beyond service fads meaningful strategies for the real world, Sloan Management Review, Vol. 30, Summer, pp. 69-76. Holmlund, M. and Kock, S. (1996), Relationship marketing: the importance of customer-perceived service quality in retail banking, The Service Industries Journal, Vol. 16 No. 3, pp. 287-304. Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality, Journal of Retailing, Vol. 64 No. 1, pp. 12-40. Corresponding author Ding Hooi Ting can be contacted at: dinghooi9@yahoo.com To purchase reprints of this article please e-mail: reprints@emeraldinsight.com Or visit our web site for further details: www.emeraldinsight.com/reprints

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