UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------- Hoang Thi Bich Chi AFFECTIVE AND INSTRUMENTAL COMMITMENT: A SPECIAL REFERENCE TO SELF-SERVICE TECHNOLOGIES IN DOMESTIC AND FOREIGN BANKS MASTER OF BUSINESS (Honours) Ho Chi Minh City- Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------- Hoang Thi Bich Chi AFFECTIVE AND INSTRUMENTAL COMMITMENT: A SPECIAL REFERENCE TO SELF-SERVICE TECHNOLOGIES IN DOMESTIC AND FOREIGN BANKS ID: 22120043 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. LE NHAT HANH Ho Chi Minh City- Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Firstly, I would like to express my gratefulness to my supervisor Dr. Le Nhat Hanh for her professional guidance, intensive support, valuable suggestions, instructions and continuous encouragement during the time of research and writing this thesis. I would like to express my deepest appreciation to ISB Research Committee for their valuable time as their insightful comments and meaningful suggestions were contributed significantly for my completion of this research.
My sincere thanks also go to all of all of my lecturers at International Business School- University of Economics Ho Chi City for their teaching and guidance during my Master course. Last but not least, I would like to thanks my family, whom were always supporting me and encouraging me with their best wishes. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The purpose of this research is to investigate the factors that influence customer satisfaction and their commitment with self-service banking technologies. In particular, this field study conducted in Vietnam focuses on making a comparison on customer satisfaction and commitment of foreign banks and domestic banks with self-service banking technologies.
The research indicated perceived usefulness, perceived convenience, privacy and security positive effect customer satisfaction. As result, such positive effects lead to a significantly affective and instrumental commitment of customer with banks in Vietnam. However, there are some differences between domestic banks and foreign banks. Based on the findings presented, this study will provide bankers and policy makers with a greater understanding of customer assessment to compose the appropriate future strategies.
Key words: Self-service banking technologies, customer satisfaction, affective commitment, instrumental commitment LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS CHAPTER 1: INTRODUCTION .4 Research methodology and research scope. 6 CHAPTER 2: LITERATURE REVIEW.1 Expectation-confirmation model in the context of IT (ECM-IT).2 Self-service banking technologies .3 Security and privacy .4 Overview on customer satisfaction and commitment.7 The conceptual model and hypotheses of the research. 16 CHAPTER 3: RESEARCH METHODOLOGY. 17 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.5 Data analysis method.
22 CHAPTER 4: DATA ANALYSIS .3 Exploratory Factor Analysis (EFA).1 EFA for independent variables .2 EFA for Dependent variables .1 Simple Regression analysis .2 Multiple Regression Analysis. 38 CHAPTER 5: CONCLUSION, IMPLICATIONS, AND LIMITATIONS .3 Limitations and future research. 64 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 2. 17 Figure D1: Histogram of Customer Satisfaction (Domestic/Foreign/Overall).
76 Figure D2: Normal Plot of Customer satisfaction (Domestic/Foreign/Overall). 77 Figure D3: Scatter Plot of Customer satisfaction (Domestic/Foreign/Overall). 78 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3.1 Source of measurement scale .2 Reliability test result .3 KMO and Bartlett’s Test of Independent Variables.4 Rotated Component Matrix of Independent Variables .5 KMO and Bartlett’s Test of Independent Variables.6 Rotated component Matrix of Dependent variables .7 Model summary of simple regression analysis .8 ANOVA of simple regression analysis .9 Coefficients of simple regression analysis .10 Model summary of simple regression analysis .11 ANOVA of simple regression analysis .12 Coefficients of simple regression analysis .14 Model summary of multiple regression analysis .15 ANOVA of multiple regression analysis .16 Coefficients of multiple regression analysis .17 Summary of hypothesis testing result. 45 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 1 CHAPTER 1: INTRODUCTION This chapter presents the introduction to the study.
It contains the research background, research gap, research objective, research methodology, research scope, contribution of research and research structure.1 Research background “Today fast-paced world is becoming increasingly characterized by technology- facilitated transactions” (Meuter et al. Customers tend to interact with technology to complete given task instead of interacting with a customer service employee. According to Meuter et al., (2000) self-service technologies (SSTs) are technological interfaces that allow customers to offer their own service independent of interaction with a firm’s service personnel through the use of technology. SSTs represent a variety of different services, ranging from the common automated teller machines (ATMs), online book tickets, automated hotel checkout, banking by telephone.
To illustrate, most recently, a 24-hour ATM sells cupcakes on street in New York City, America and Egold services which you can by gold via internet has just been launching by TP Bank in Vietnam at the beginning of this year. The rapid development of SSTs in recent years means that customers have changed the way in which they deal with many services, including banking services (Bobbitt & Dabholkar, 2001). Since the mid-1990s, there has been a fundamental change in banking service channels toward using SSTs such as ATMs. These days, with the adoption of technologically enhanced service delivery methods, an increasing number of financial institutions are using technology in order to facilitate their services.
A large and growing number of consumers interact with these Self-service banking technologies (SSBTs) that include online banking, ATMs, electronic funds transfer at the point of sale, mobile banking, telephone banking, SMS banking, which are so prolific. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 2 Affected by global economy crisis since 2008, economy of Vietnam has been facing various challenges and the banking industry is not an exception. According to General Statistics Office, a lot of companies have had to shut down in this year. Therefore, the demand of loans and capital of those companies is shrunk resulting in the reduction in the revenue of banking industry.
To solve this problem, banks have to develop their non-credit services in order to balance and diversify their sources of revenue. In addition, integration into WTO has also boosted Vietnamese economy to develop remarkably. A significant amount of inflows of investment has been poured into the market by foreign investors. Many foreign companies have taken part in different industries including banking.
The globalization of banking industry has encouraged many developing countries including Vietnam into opening their markets to foreign banks and built up the industry infrastructure to international standards. Those foreign banks own various advantages in terms of not only capital and effective management system but also high technology. The foreign banks perform better than domestic banks because of their ownership advantages (Claessens, 2001; Harylchyk & Jurzyk, 2011). On the other hand, due to the benefit of local market knowledge and longevity, domestic banks, especially the state owned commercial banks dominate the market (Nahm, 2008).
However, this situation will change when the market opens freely. Therefore, to become more competitive, domestic banks have to focus on improving their own service quality such as professionalism of services provided and modernization in equipment and tools. In today’s business environment, customers have become the center of all business decisions right from the conception of product to the delivery of product. In the highly competitive banking industry, service becomes one of the most important elements for gaining a sustainable competitive advantage in the market place.
Understanding the potential impacts these SSBTs facilities may have on consumers’ satisfaction and their ongoing commitment is the challenge for service managers and researchers. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 3 Hence, it seems more and more important to determine the customer ongoing commitment to the bank in this study. In general, commitment is considered as the customers' retention, advocacy after experiencing the quality, after self-service, shared value and trust of the vendor (Morgan &Hunt, 1994). This implies that customer commitment to the service supplier would be of vital importance to their loyalty in service industries, particularly in banking service.
Noticeably, commitment is a multidimensional construction which includes not only the two afore mentioned components but also a wide range of others; and the effect of various type of commitment on customer loyalty may not be equivalent in both magnitude and direction (Fullerton, 2003). In marketing field, commitment is complicated and consists of at least two following components: affective commitment and instrumental commitment (Gundlach et al., 1995), which will be discussed in detail in current study. More specifically, affective commitment is an attitudinal component which signalizes the durable intention to thrive and maintain a permanent relationship in the long term; instrumental commitment expresses an affirmative action taken by the vendor to make customer interested in staying with them (Gundlach et al., 1995 as cited in Beatson, Coote & Rudd, 2006). Nevertheless, in this study extent, affective commitment and instrumental commitment are the two components discussed in more detail.2 Research gap The number of customers that are using SSBTs is increasing day by day.
Vietnam Banks Association (2014) stated that 40 banks have announced deployment of internet banking system at different level. Especially, about using card services, as of 31th December 2013, the total number of cards issued by 50 issuers of more than 66.2 million cards- up more than 20% compared with 2012; total sales of more than 1,206,704 card payment billion, up 23. On infrastructure for payment card transaction has installed approximately 15.Vietnam is expected to share common characteristics such as huge LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Moreover, according to eMarketer’s latest report as cited in Finance Journal (2014), Vietnam has about 5.3 million internet subscribers, penetration rate reached 35.7 million mobile subscribers, of which 30% are smart phones.
These notable figures are not only a good sign for the technology application industry, but also a great opportunity for the development of SSBTs which is one of the key business segments of banks today. In the literature, there were a lot of researches about SSBTs (Pikkarainen et al., 2004; Cheng et al., 2006; Guriting & Ndubisi, 2006; Farzianpour et al. From the point of view, most of these study focus on determining the factors that directly affect customer satisfaction, customer intention to use some basic kind of SSBTs and some studies also briefly mentioned about their continued behavioral intention in generally. Most of these studies on SSBTs in Vietnam have investigated popular SSBTs such as ATMs, internet banking, mobile banking of a particular bank.
Meanwhile, this research will focus on finding about general SSBTs of banking system in Vietnam. To the best of our knowledge, there were only few studies that have been conducted for examining the effect of customer satisfaction on two specific dimensions of commitment (i., affective and instrumental). In this study, by categorizing commitment into two components, the investigation on the linkage between customer satisfaction and commitment becomes clearer and more specific. SSBTs have been widely applied in developed countries, however it is considered as an ongoing innovation in Vietnamese banks, and there are still limited studies about SSBTs, customer satisfaction, and commitment in Vietnam.
More specifically, the research of Wang (2012) indicated that perceived convenience and perceived usefulness of SSBTs have positive impact on customer satisfaction and their commitment to the bank. Moreover, the research’s finding of Pikkarainen et al. (2004) had showed that security and privacy impact significantly on customer satisfaction of using SSBTs. Therefore, this research tries to test the effect of perceived convenience, perceived usefulness and security and privacy of SSBTs on customer satisfaction and their commitment to the banks.
LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com 5 In addition, the performance of foreign bank in Vietnam has been known a little until now because of the lack of data and information, thus this study aims to examine how domestic banks differ from foreign banks in the same market about customer satisfaction and commitment with banks after using SSBTs.