Ethical Sales Behavior, Relationship Quality, and Customer Loyalty

This study is exploratory, quantitative in nature, aiming to develop a better understanding of the relationships among the ethical sales behavior, relationship quality and customer loyalty to the bank. More specifically, the study intends to empirically investigate the direct and indirect effect of ethical sales behavior as perceived by customer on his loyalty to the bank through customer trust and customer commitment as mediators.

Selection of Sample and Respondents Demographics

The proposed research model is tested in the context of bank industry because financial services are highly abstract services characterized by credence attributes and consequently difficult for consumers to fully understand. Therefore, the customer must rely on the bank salesperson for correct information and proper guidance. Consequently, bank industry can adequately reflect the actual characteristics of ethical sales behavior relationships. Accordingly, the study is empirical based on the primary data collected from a sample of bank customers in Amman – Jordan.

The study was carried out in 2010 on a convenience sample from four main Jordanian commercial banks: Arab Bank, Jordan-Kuwait Bank, Housing Bank for Trade and Finance and Ahli National Bank. Questionnaires were administered to a total of 320 bank customers within the area of Amman. A total of 226 respondents returned surveys, of which nine questionnaires were rejected due to the lack of some information. Thus, 217 valid questionnaires were finally obtained, giving response rate of 67.8 per cent, a rate that is regarded as good. Since the questionnaire was administered in Arabic, the questionnaire was drafted in English and translated into Arabic thereafter.

The participants in this study were predominantly males (54.4 percent), majority (53.4 percent) of the respondents were ages up to 40 years old. In terms of education, most of them (65.4 percent) were university graduates (possessed a bachelor degree) and the majority of the respondents work in the private sector (49.3 percent). Finally (55.1 percent) of the respondents were married.

Data Analysis

The statistical package SPSS (version 19.0) was used for data analysis. A two-step detailed statistical analysis of data was involved. First, factor analysis was performed to extract the underlying factor of study variables. Second; a structural equation modeling was conducted using AMOS 7 to test the hypotheses in order to understand the direct and indirect effect of ethical sales behavior on - customer loyalty, customer trust and customer commitment.

 

Measures

All constructs in this study (i.e. ethical sales behavior, commitment, and trust and customer loyalty) were measured using multi-item Likert scale adapted from prior research previously validated in other contexts to ensure content validity. All items were measured using seven-point Likert-type scales. The respondents were asked to indicate their agreement or disagreement with the statements provided, with anchors of 1 to indicate 'strongly disagree' and 7 to indicate 'strongly agree'. The five items used to measure ethical sales behavior were adapted from those originally developed by Román to assess ethical sales behavior from the customer perspective in the Spanish financial sector.

This scale was also adapted next by Román and Ruiz; Chen and Mau; Hansen & Riggle. All items were negatively worded and subsequently reverse coded. The measure for trust were adapted from Morgan and Hunt; Karande et al.; Sanzo et al, 2003; Hansen and Riggle; Kennedy et al.; Chen and Mau; Sirdeshmukh et al.; Eisingerich and Bell.The eight items measure of customer trust designed to capture the major dimensions of trust: confidence, reliability, and integrity. These items were utilized as well, focusing specifically on those that capture respondents' perceptions as to the integrity and reliability of the bank/salesperson.

Measure Reliability

Different procedures were carried out using SPSS 19 to examine the psychometric properties of the proposed measurements. As the first step in analysis of the scale, internal reliability for the adapted scale was compared to that reported in the developmental literature. Reliability analysis, understood as internal consistency, was carried out by calculating Cronbach's α coefficient .However, all the individual scales exceeded the recommended standards level of .70 proposed by Nunnally and Hair et al. As depicted in Table 1, the Cronbach alphas coefficients demonstrating the reliability of the scale used for measuring the constructs are at acceptable levels and fall between 0.865 for ethical sales behavior and 0.942 for customer loyalty, which suggests a high internal consistency among the items in each construct.

Table 1. Cronbach's alpha coefficient of study variables

No.	Dimension	Items Number	Coefficient
1	Ethical sales behavior	5	0.865
2	Customer trust in the sales person	8	0.931
3	Customer Commitment	7	0.898
4	Customer loyalty	6	0.942
	All Dimensions	26	0.960

As can be seen in Table 1 these Cronbach alphas indicate that the scales used in the questionnaire satisfactorily measured the constructs, what means that the ability of the set of items employed to represent each of the latent constructs is satisfactory. However, unidimensionality of each construct must be checked. Therefore, items in each multi-item scale were factor analyzed separately using principal component factor analysis with Varimax rotation. The criteria for choosing variables are based on Kaiser's suggestions: an eigenvalue greater than 1 after Varimax rotation, absolute values of factor loadings greater than .50. As shown in Table 2, results indicate that in all case a single factor emerged, i.e. there is one factor derived from each variable. Ethical sales behavior (eigenvalue = 3.264); customer loyalty (eigenvalue = 4.664); customer trust (eigenvalue = 5.393); and customer commitment (eigenvalue = 4.355). Furthermore, all of the items in the research model had factor loadings greater than 0.70 (0.73 – 0.91).

Table 2. Construct measurement summary

Statements	Factor loading	Variance Explained %
Ethical sales behavior ( Cronbach Alpha: 0.865 )		65.284
1. The Bank salesperson lies about availability in order to make a sale (R).	.784
2. The Bank salesperson lies about competition in order to make the sale (R).	.788
3. The Bank salesperson gives answers when he/she does not really know the answers (R).	.841
4. The Bank salesperson applies sales pressure even though he/she knows the product is not right for me (R).	.861
5. The Bank salesperson paints rosy pictures of the products to make them sound as good as possible (R).	.762
Customer trust ( Cronbach Alpha:0.931 )		67.408
6. I believe that the Bank has my interest in mind.	.806
7. I feel that the Bank is trustworthy.	.819
8. I have confidence of the products and services of this Bank.	.819
9. Generally speaking, you do not have to worry at all in dealing with this Bank.	.778
10. The Bank can be relied on to keep their promises.	.857
11. T11. I believe the information that the Bank provides.	.839
12. This Bank is honest and truthful.	.873
13. This Bank can be counted on to do what is right.	.772
Customer Commitment ( Cronbach Alpha: 0.898 )		62.216
14. I want to remain a customer of this Bank because I genuinely enjoy my relationship with.	.730
15. I have a strong sense of loyalty towards this Bank.	.807
16. My relationship with this Bank is one that I really care about.	.801
17. I feel a strong sense of belonging to this Bank.	.780
18. I am very committed to the relationship with this Bank.	.788
19. My relationship with this Bank is very important to me.	.807
20. My relationship with this Bank is something I intend to maintain Indefinitely.	.806
Customer loyalty( Cronbach Alpha: 0.942 )		77.734
21. I am willing to place my future business with this Bank.	.882
22. This Bank is my first choice when I want to re buy or re patronize a preferred product or service in the future.	.820
23. I will recommend the Bank to my friends and relatives.	.915
24. I will introduce the Bank with positive evaluation.	.916
25. I feel satisfied with placing a contract with this Bank.	.885
26. I am willing to encourage others to do business with this Bank.	.867

Note: R denotes items requiring reverse scoring

However, both tests of principal component analysis and Cronbach's alpha support unidimensionality and therefore were accepted as being reliable for the path analysis. In addition, a correlation matrix of the variables in the model was constituted and fall between 0.44 and 0.89, as shown in Table 3, suggesting several highly significant correlations between the variables included in the conceptual model. Descriptive statistics and correlations among variables are presented in Table 3.

Table 3. Correlation matrix and descriptive statistics of study variables (n= 217)

	Ethical sales behavior	Trust	Commitment	Loyalty
Ethical sales behavior	1
Trust	.663(**)	1
Commitment	659(**)	.891(**)	1
Loyalty	.440(**)	.748(**)	.716(**)	1
Mean	5.2009	4.8992	5.000	4.472
Std. deviation	1.051	1.034	0.949	1.337

Note: ** Correlation is significant at the 0.01 level (2-tailed).

Thereafter, Following Anderson and Gerbing, to assess construct validity of the multi-item scales confirmatory factor analysis (CFA) was conducted in order to determine if the extracted dimensions in step 1 offered a good fit to the data (Table 4).

Table 4. Confirmatory factor analysis: measurement property

			Estimate	S.E.	C.R.	P	Label
E5	<---	Ethical Behavior	.707
E4	<---	Ethical Behavior	.833	.114	11.158	***	par_1
E3	<---	Ethical Behavior	.811	.115	10.906	***	par_2
E2	<---	Ethical Behavior	.711	.119	9.658	***	par_3
E1	<---	Ethical Behavior	.699	.124	9.504	***	par_4
T1	<---	Trust	.778
T2	<---	Trust	.771	.076	12.324	***	par_5
T3	<---	Trust	.776	.077	12.416	***	par_6
T4	<---	Trust	.725	.078	11.427	***	par_7
T5	<---	Trust	.842	.079	13.768	***	par_8
T6	<---	Trust	.828	.076	13.475	***	par_9
T7	<---	Trust	.866	.083	14.299	***	par_10
T8	<---	Trust	.748	.078	11.872	***	par_11
C7	<---	commitment	.779
C6	<---	commitment	.788	.084	12.444	***	par_12
C5	<---	commitment	.712	.088	11.006	***	par_13
C4	<---	commitment	.691	.084	10.623	***	par_14
C3	<---	commitment	.760	.082	11.912	***	par_15
C2	<---	commitment	.793	.082	12.553	***	par_16
C1	<---	commitment	.692	.094	10.645	***	par_17
L6	<---	Loyalty	.844
L5	<---	Loyalty	.861	.063	16.391	***	par_18
L4	<---	Loyalty	.906	.059	17.944	***	par_19
L3	<---	Loyalty	.899	.058	17.721	***	par_20
L2	<---	Loyalty	.770	.061	13.647	***	par_21
L1	<---	Loyalty	.856	.054	16.218	***	par_22

Note: Standardized Regression Weights: (Group number 1 - Default model)

According to Bagozzi and Yi, and Bearden et al.,  the CFA result provide overall fit indices: Chi-square was highly significant ( p < 0.001), the goodness of fit index (GFI) was 0.760 and adjusted goodness of fit index (AGFI) was 0.713; incremental fit index (IFI) = 0.882; the normed-fit index (NFI) = 0.829 and the root mean square residual (RMR) = 0.097. All indices indicating that the measurement models provide good support for the factor structure determined through the exploratory factor analysis, which suggests the unidimensionality of the measures. According to Anderson and Gerbing, the validity of the structural model is assessed using three key validity dimensions: nomological, discriminant and convergent.

The nomological validity is the validity of the entire model and indicates whether the model fits the data; the discriminant validity refers to the extent of separation between the constructs; and the convergent validity verifies the homogeneity of the indicators and their constructs. However, convergent validity can be stated as all its variables are associated to significant and high loadings at least at be significant at 95%. Therefore, it can be stated that scales have convergent validity.Thus, evidence of convergent validity was provided by the fact that all measurement items loaded on the appropriate constructs. Discriminant validity means that each factor represents a separate dimension.

According to Anderson and Gerbing, discriminant validity is the degree of correlation among the constructs, and the correlation between different constructs. It refers to the principle that the indicators for different constructs should not be so highly correlated as to indicate they are measuring the same thing. As mentioned above, correlations were run between the items of several constructs used in this study (Table 3).

However, in all instances the item correlations satisfied the R= 0:85 cut-off often used by researchers for this assessment, thus suggesting the model demonstrated good discriminant validity. Furthermore, nomological validity refer to the ability of a scale to behave as expected with respect to some other constructs to which it is related. As mentioned above, ethical sales behavior can improve customer trust, customer commitment and customer loyalty. Therefore nomological validity would be demonstrated if the scale were positively and significantly correlated with customer trust, customer commitment and customer loyalty.

As stated in Table 3, all correlation coefficients between the dimensions of ethical sales behavior, customer trust, customer commitment and customer loyalty are positive and significant (at p < 0.01). Thus nomological validity of the scale is demonstrated. Considering the reliability, nomological, convergent, and discriminant validity tests collectively, it's conclude that the measurement model satisfies all the psychometric property requirements. Table 3 shows the means, standard deviations, and intercorrelations for the constructs operationalized in this study.