Business BRQ Research Quarterly
www.elsevier.es/brq
ARTICLE
Determinants of reputation of leading Spanish financial institutions among their customers in a context of
economic crisis
Belén Ruiz
∗, Águeda Esteban, Santiago Gutiérrez
UniversityofCastilla-LaMancha,DepartmentofBusinessAdministration,Avda.RealFábricadeSedass/n, 45600TalaveradelaReina(TOLEDO),Spain
Received13October2013;accepted14April2014 Availableonline6June2014
JEL
CLASSIFICATION M31
KEYWORDS
Corporatereputation;
Loyaltyandwordof mouth;
Financialinstitutions;
Economiccrisis;
Partialleastsquares
Abstract Thispaperdevelopsabankreputationmodel,inanenvironmentofeconomiccrisis specificallymarkedbythenationalizationofBankiaandtheofferoffinancialrescuefromthe EurogrouptoSpain.Fromastudyamongfourhundredbankcustomers,anindexisdeveloped reflectingthenewconfigurationofreputationoftheleadingSpanishfinancialinstitutionsand itseffectonthebehavioroftheconsumer.Theconclusionsofthisresearchshowthat,inan environmentwherethefinancialsystemhasbeenidentifiedasthemaincauseofthenewsocioe- conomiclandscape,banksshouldfocustheirreputationstrategiestoconveyreliabilityandto reinforcetheleadershipoftheirmanagers,payingspecialattentiontoconsumersatisfaction andtrustinordertoachievethemaximumoptimizationoftheirreputationresources.
©2013ACEDE.PublishedbyElsevierEspaña,S.L.U.Allrightsreserved.
Introduction
Manyeconomictheorieshavehelpedtoconfirmtheimpor- tance of reputation in the strategic processes of the organization,buttheresources based-view(Barney,1991) shows the ability of this intangible resource to generate
∗Correspondingauthor.Tel.:+34902204100;
fax:+34902204130.
E-mailaddresses:[email protected](B.Ruiz), [email protected](Á.Esteban),
[email protected](S.Gutiérrez).
superior profits, and a key sustainable competitive advantageforcorporatesuccess.Followingthistheory,rep- utations,asindicators of qualityofthe set ofmanagerial actions,areavaluableresourcehardtoimitate,whichplays acrucialroleintimes ofcrisis(Coombs,2007).Goodcor- porate reputations provide a reservoir of goodwill which bufferscompaniesfrommarketdeclinein timesofuncer- taintyandeconomicturmoil(Jonesetal.,2000),anditis quantifiable onthe base of its restraining action on neg- ative effects that could potentially spread in case of its absence (e.g. expected sales drop or time necessary to gain back the financial markets’ esteem) (Cuomo et al., 2011).
http://dx.doi.org/10.1016/j.brq.2014.04.002
2340-9436/©2013ACEDE.PublishedbyElsevierEspaña,S.L.U.Allrightsreserved.
Inthispaper,theelectionoftheanalysisofbankreputa- tionisconditionedbythreeissuesthatwillbeconsidered.
Ontheonehand,inthebankingsector,theserviceintangi- bilitymakesitsassessmentdifficult,givingmorerelevance toreputation(WalshandBeatty,2007)whoselossmaycause moreharmthan in anyother kind of companies(Kimand Choi, 2003). On other hand, banks are facing the major challenge of resisting the negative effect that the eco- nomiccrisis (alsoknownasfinancial crisis)has hadinthe perceptionsthat consumers have of banks. The subprime mortgage scandal revealed that the excessive deregula- tionhadcreatedaparallelmarket,basedonthefactthat derivedproductsandfinancialvehiclescreatedfictitiousand uncontrolled money, leading toa huge bubble that burst afterthehousingbubble,withdevastatingresultsforboth theSpanish andworld economy.And,finally, theelection of this sector makes it possible to verify if the expec- tations and perceptions of the banks that have assumed morerisksarespreadingtoothercompaniesinthesector, as it is shown in the results of the study of bank repu- tation carried out in the United Kingdom by Burke etal.
(2011).
Thisstudyalsofacesoneoftheissuesthathasbeenmore controversial in measuring corporatereputation, which is its conceptualization as a reflective construct, involving theuseof measurementscales thatusefactorial loadings to define the final structure of data without a previous theoreticalbasis (Dowling, 2004;Helm,2005).Inthispro- cess, essential variables containing a great part of the corporate reputation theoretical meaning can be elim- inated. It is therefore necessary to analyze reputation fromamultidimensionalandformativeapproachwherethe dimension indicators, obtained from an extensive review of the literature, enables to extract the very essence of theconcept.Consideringthatmostreputationmodelsuse general dimensions (Schwaiger, 2004; Helm, 2005; Ponzi etal.,2011)or arefocusedonfew specificdimensions of the study (Walsh and Beatty, 2007; Nguyen, 2010), it is advisable to consider both contributions so that the key reputationelementsoftheorganizations analyzedarenot excluded.
Inthisway,thispaperfirstexplorestheantecedentsof corporatereputationestablishingaformativemodeloften dimensions.Thesedimensionsareextractedfromadetailed analysisofthemostrelevantgeneralandspecificreputation modelsavailable in academicliterature, usedtomeasure andanalyzethereputationofbanksfromtheircustomers’
perspective.Then,therelationshipbetweencorporaterep- utation, customer loyalty and word of mouth is studied.
Following this, themodel is validated andapplied tothe four banks that lead the retail banking in Spain, in par- ticular: BBVA, Santander,La Caixa and Bankia.Later, the implications of this current study in the fieldof business managementarediscussed.Itisshownherethatthemea- surementindexextractedfromthisresearchisconsiderably different from the measurement proposals found in aca- demicandprofessionalliterature.Beforethiscircumstance, itis suggestedthat,in changingenvironments, companies should reconsider the reputation criteria that were key factorsunderequilibriumsituations.Thepaperfinishesby presentingthelimitationsofthestudyandsuggestingfuture researchlinesrelatedtothistopic.
Theoretical foundation
Definitionofcorporatereputation
Intheliteratureregardingcorporatereputation,theprob- lems derived from the complex and intangible nature of reputation are perfectly known, making it very hard to perform a conceptual delimitation, characterization and measurement (Shenkar and Yuchtman-Yaar, 1997;
Deephouse,2000;Martínetal.,2006).
Table1showsthedefinitionsmostcitedintheacademic literature,beingtheonebyFombrun(1996)themosthigh- lighted because it has been used as reference definition repeatedly(Wartick,2002;SmaizieneandJucevicius,2009;
Walker,2010;Langeetal.,2011).Nevertheless, according toRuizetal.(2012a),givingcontinuitytotheinterpreta- tionthatFombrun (1996)givesof corporatereputationas
‘‘perceptions...oftheoverallappealofthecompanyforall itsconstituents’’,impliesmeasuringreputationwithmodels thatwouldoffertoooverallresultstobeusefulinbusiness management. Companies are more interested in learning howtheyareperceived by certainstakeholders andwhat thecriteriaarethatconditiontheseperceptions,insteadof learningmarket‘‘overall’’perceptionofthem.Therefore, thisstudyusesthereferenceofthedefinitionproposedby Ruiz et al. (2012a), whounderstand reputation asa per- ceptualrepresentationofpastactionsandfutureprospects of a firm that describes its appealin specific contextual circumstances, with respect tothe different criteriaand a specific stakeholder,compared against somestandard.1 Althoughthisisacombinationofprecedingdefinitions,itis indeedanadaptationofFombrun’s(1996)definitiontothe reputationdefinitionbytheAmericanHeritageDictionary, whichwasalsoFombrun’s(1996)referencesource,although itnowpresentsanewconceptualizationmoreadvancedand betteradaptedtothetrueessenceoftheconcept.
Withthisdefinition,companiesmayhaveasmanyrepu- tationsasgroups ofstakeholdersanddifferentreputations forthedifferentcriteria.Fromthisconceptualization,rep- utation is measured asa multidimensional construct that provides‘‘specificinformation’’wherereputationprograms willbedeveloped,focusingononeorseveralaspectsthat thefirmisinterestedinenhancingamongitsdifferentinter- estgroups.
Fromthis conceptualizationof corporatereputation, it islikewisepossibletodistinguishreputationfromthecon- ceptsofidentityandimage,whichfarfrombeingsynonyms forreputationwouldberelatedconcepts.Thus,‘‘theorga- nization(past)actions,influencedbythecompanyidentity (conveyed through communications, employers and other companyevents)wouldbecometheirexternalimages(cor- porate image), that generates expectations (future) for company’s performance, behavior and ethics, which are contrastedbyindividuals overtimewiththeirexperiences andother actionsofthecompany,givingrisetoareputa- tion’’ (Ruiz et al., 2012a: 14). According to this concept
1Thisstandardmaybecompetence,theaveragereputationfor thesector or thereputation levelsof thecompanyin thepast, amongothers.
Table1 Definitionsofcorporatereputation.
Author(s),year:page Definition
WeigeltandCamerer(1988:443) ‘‘Asetofattributesascribedtoafirm,inferredfromthefirm’spastactions’’.
FombrunandShanley(1990:234) ‘‘Theoutputofacompetitiveprocessinwhichitemssignaltheirkey characteristicstoconstituentstomaximizetheirsocialstatus’’.
Fombrun(1996:72) ‘‘Aperceptualrepresentationofacompany’spastactionsandfutureprospects thatdescribesthefirm’soverallappealtoallofitskeyconstituentswhen comparedwithotherleadingrivals’’.
FombrunandVanRiel(1997:10) ‘‘Acorporatereputationisacollectiverepresentationofafirm’spastactions andresultsthatdescribesthefirm’sabilitytodelivervalueoutcomestomultiple stakeholders.Itgaugesafirm’srelativestandingbothinternallywithemployees andexternallywithitsstakeholders.Inbothitscompetitiveandinstitutional environment’’.
CableandGraham(2000:929) ‘‘Apublic’saffectiveevaluationofafirm’snamerelativetootherfirms’’.
Deephouse(2000:1093) ‘‘Theevaluationofafirmbyitsstakeholdersintermsoftheiraffect,esteem, andknowledge’’.
Bromley(2001:316) ‘‘...adistributionofopinions(theovertexpressionsofacollectiveimage)about apersonorotherentity,inastakeholderorinterestgroup’’..
Mahon(2002:417) ‘‘Areckoning,anestimation,fromtheLatinreputatus-toreckon,tocountover.
Theestimationinwhichaperson,thingoractionisheldbyothers...whether favorableorunfavorable’’.
WhettenandMackey(2002:401) ‘‘Organizationreputationisaparticulartypeoffeedback,receivedbyan organizationformitsstakeholders,concerningthecredibilityofthe organization’sidentityclaims’’.
Rindovaetal.(2005:1033) ‘‘Stakeholder’sperceptionsaboutanorganizationalabilitytocreatevalue relativetocompetitors’’.
RheeandHaunschild,2006:102) ‘‘Theconsumer’ssubjectiveevaluationofaperceptualqualityoftheproducer’’.
Carter(2006:1145) ‘‘Asetofkeycharacteristicsattributedtoafirmbyvariousstakeholders’’.
Barnettetal.(2006:34) ‘‘Observer’scollectivejudgmentsofacorporatebaseonassessmentsofthe financial,socialandenvironmentalimpactsattributedtothecorporateover time’’.
SmaizieneandJucevicius(2009:96) ‘‘Sociallytransmissiblecompany’s(itscharacteristic’,practice’s,behavior’sand results’,etc.)evaluationsettledoveraperiodoftimeamongstakeholders,that representsexpectationsforthecompany’sactions,andleveloftrustworthiness, favorabilityandacknowledgmentcomparingtorivals’’.
Walker(2010:370) ‘‘Arelativelystable,issuespecificaggregateperceptualrepresentationofa company’spastactionsandfutureprospectscomparedagainstsomestandard’’.
ReputationInstitute(2010) Setofperceptionsaboutthecompanyofthedifferenttargetgroupsrelated (stakeholders),bothinternalandexternal.Itistheresultofthecompany behaviordevelopedovertimeanditdescribesitsabilitytodistributevalueto thementionedgroups.
Source:AdaptedfromWalker(2010).
ofreputation, afirm cancreateitsimageimmediatelyby mediacampaigns,whereasitsreputationtakesshapeover timeasstakeholdersacquiredirectorindirectexperiences withtheorganization(Rindova,1997),sothatthegoodrep- utationisthefinalresultoftheimageconstructionprocess (Balmer,2009)anditdependsontheconsonancebetween thecompany’sapparentbehaviorandtheexperiencesofthe stakeholders(HansenandSand,2008).
Multidimensionalconceptofcorporatereputation:
dimensionsandconsequences
Fromtheanalysisofthecorporatereputationmodelswith greaterdissemination,itis concludedthatthereisnotan agreement on the concept dimensions (Gotsi and Wilson,
2001) and that most of them follow general approaches, withoutdistinguishingamongsectorsorstakeholders.They usethesamecriteriawiththesamerelativeimportanceto measure the reputation of a bank or of a dairy products company;aswell astomeasure reputationamongexpert publics(managersoranalysts)andamongconsumerswhodo nothavetechnicaldatarelatedtotheorganization.Before thissituation,itis necessary toinclude inthe theoretical reviewofthoselesspopularmodelsbutwhicharecloserto thiswork.
In this way, the dimensions of reputation used in this studyareextractedfromthefusionofthedimensionscol- lected from the general reputation models and specific reputationmodelsdesigned tomeasure the reputationof servicecompaniesamongtheirconsumers(Table2).Among thegeneralmodelsused,thosemorewidespreadstandout,
Table2 Generalandspecificmodelsofcorporatereputation,literature.
Dimension Generalmodels Specificmodels
Offer Fortune’sMostAdmiredCompaniesa;RepTrak Pulsea;ReputationQuotienta;Merco
Companiesa;TrackingMerco;Schwaiger(2004);
WalshandWiedmann(2004);Helm(2005)
MercoFinancialBrandsa;LeBlancandNguyen (1996);Flaviánetal.(2004);Flaviánetal.
(2005);WalshandBeatty(2007);Boshoff (2009);Bravoetal.(2009b);Garcíadelos Salmonesetal.(2009);Walshetal.(2009a,b), AkdagandZineldin(2011)
Customercare Hung(2002);WalshandWiedmann(2004);
Helm(2005)
LeBlancandNguyen(1996);Flaviánetal.
(2004);Flaviánetal.(2005);WalshandBeatty (2007);Boshoff(2009);ChenandChen(2009);
GarcíadelosSalmonesetal.(2009);Walsh etal.(2009a,b);Bravoetal.(2010a) Innovation Fortune’sMostAdmiredCompaniesa;RepTrak
Pulsea;ReputationQuotienta;Merco Companiesa;Hung(2002);HenardandDacin (2010)
ChenandChen(2009)
Employerbranding Fortune’sMostAdmiredCompaniesa;RepTrak Pulsea;ReputationQuotienta;Walshand Wiedmann(2004)
WalshandBeatty(2007);Boshoff(2009);Walsh etal.(2009a,b)
Integrity RepTrakPulsea;NewellandGoldsmith(2001);
Gurhan-CanliandBatra(2004)
MercoFinancialBrandsa
Leadership Fortune’sMostAdmiredCompaniesa;RepTrak Pulsea,ReputationQuotienta;Walshand Wiedmann(2004);Helm(2005)
LeBlancandNguyen(1996)
Reliabilityand financialstrength
Fortune’sMostAdmiredCompaniesa;RepTrak Pulsea;ReputationQuotienta;Merco
CompaniesaTrackingMercoa;Hung
(2002);Schwaiger(2004);WalshandWiedmann (2004);Helm(2005)
MercoFinancialBrandsa;Flaviánetal.(2004);
Flaviánetal.(2005);WalshandBeatty(2007);
Boshoff(2009);ChenandChen(2009);Walsh etal.(2009a,b)
Socialaction Fortune’sMostAdmiredCompaniesa;RepTrak Pulsea;ReputationQuotienta;Merco
Companies;TrackingMercoa;Hung(2002);
WalshandWiedmann(2004);Schwaiger (2004);Helm(2005)
MercoFinancialBrandsa;WalshandBeatty (2007);Boshoff(2009);Bravoetal.(2009b);
ChenandChen(2009);GarcíadelosSalmones etal.(2009);Walshetal.(2009a,b);Bravo etal.(2010a)
Satisfaction Helmetal.(2010) Walshetal.(2009b)
Trust NewellandGoldsmith(2001);Roseand Thomsen(2004);Wilczynskietal.(2009);
Ponzietal.(2011)
Walshetal.(2009b)
aReputationmonitorsofprestigiousinstitutions:Fortune’sMostAdmiredCompaniesbyFortunemagazine.MercoCompanies,Merco FinancialBrandsandMercoTrackingbyVillafa˜ne&Asociadosconsulting.RepTrakPulsebyReputationInstituteconsulting.Reputation QuotientbyHarrisInteractiveconsulting.
such as the Rep Trak Pulse by the Reputation Institute, Most Admired Companies by Fortune 1000 magazine and theReputation Quotient by HarrisInteractive consulting.
The main contributionof the specific modelsis extracted from the scales of Walsh and Beatty (2007) and Walsh etal.(2009a,b),whofollowmethodologicalapproachessim- ilar to this study’s. Special attention is also paid to the modelsdesignedtomeasuretheperceptionsthatbankcus- tomershave of their banks (Chen and Chen,2009; Akdag andZineldin,2011),amongwhichtheonesproposedbythe workscarriedout amongbankcustomers in certainSpan- ishregions areincluded (Flaviánetal.,2004,2005; Bravo
et al.,2009b; Garcíade losSalmones et al.,2009; Bravo etal.,2010a).Itisnotedthatallstudiesusesamplesthat precedethebeginningofthecrisisor thedeteriorationof theeffectsoftheSpanishrecessionfromthefourthquarter of2008.2
Afterthismergerprocessofgeneralandspecificmodels, tendimensionsofbankreputationareobtained:eightcog- nitivedimensionsandtwoemotionaldimensions.Theyare
2Spaingoesintorecessioninthefourthquarterof2008whenGDP fellby1.1%quarteronquarter(INE.es,May17th,2012).
Table3 Dimensionsofbankingreputation,literature.
Offer
Bloemeretal.(1998);FombrunandShanley(1990);Brown andDacin(1997);Fombrunetal.(2000);Cravensetal.
(2003);Schwaiger(2004);Martínetal.(2006);Walshand Beatty(2007);Bravoetal.(2009b);Highhouseetal.
(2009);Walshetal.(2009b);AkdagandZineldin(2011) Customercare
NguyenandLeBlanc(2001);Hung(2002);Newman(2001);
Cravensetal.(2003));WalshandWiedmann(2004);Walsh andBeatty(2007);ChenandChen(2009);Nguyen(2010) Innovation
Cravensetal.(2003);Gurhan-CanliandBatra(2004);
Martínetal.(2006);WalshandBeatty(2007);Bravoetal.
(2009b);CourtrightandSmude,2009;Garcíadelos Salmonesetal.(2009)
Employerbranding
Fombrunetal.(2000);Martínetal.(2006);Sánchezand Barriuso(2007);WalshandBeatty(2007);Highhouseetal.
(2009);MartinandGroen-in’tWoud(2011) Integrity
Hung(2002);Gurhan-CanliandBatra(2004);Walshand Wiedmann(2004);BouchikhiandKimberley(2008);Bravo etal.(2009b);Highhouseetal.(2009);Matuteetal.
(2010);Vitezic(2011) Leadership
LeBlancandNguyen(1996);Fombrunetal.(2000);
Gaines-Ross(2003);WalshandWiedmann(2004);Martín etal.(2006);Sohn(2009);Sotillo(2010);JinandYeo (2011)
Reliabilityandfinancialstrength
Fombrunetal.(2000);Hung(2002);Cravensetal.(2003);
DeQuevedo(2003);DelaFuenteandDeQuevedo(2003);
Schwaiger(2004);Helm(2005);Martínetal.(2006);Walsh andBeatty(2007);GarcíadelosSalmonesetal.(2009);
Langeetal.(2011) Socialaction
Fombrunetal.(2000);Hung(2002);SenandBhattacharya (2001);Schwaiger(2004);Martínetal.(2006);Walshand Beatty(2007);DeQuevedoetal.(2007);Bravoetal.
(2009b);Highhouseetal.(2009) Satisfaction
LevesqueandMcDougall(1996);JamalandNaser(2002);
Wangetal.(2003);HansenandSand(2008);Walshetal.
(2009b);Helmetal.(2010);Ladharietal.(2011) Trust
Dowling(2001);NewellandGoldsmith(2001);Robertsand Dowling(2002);RoseandThomsen(2004);Walshetal.
(2009b);ReputationInstitute(2012)
contrastedbymeansoftheindividualizedanddetailedstudy oftheliteraturerelatedtoeachoneofthem(Table3),which makesitpossibletoverifythemtheoreticallyandformulat- ingthehypothesesofthisresearch.
Among the cognitive antecedents of reputation, the appeal of the offer of products and services appears in
most studies (Newman, 2001; Nguyen and LeBlanc, 2001;
Roberts and Dowling, 2002; Vitezic, 2011) as the most importantattributeofcorporatereputation,especiallyfrom customers’perspective.AccordingtoShapiro(1983),afirm hasgoodreputationifconsumersthinkthatitsproductsare ofgoodquality.Aqualityofferisakeyfactorforreputation sinceitallowsthecompaniestoshowcredibilityandtogain thetrustoftheirstakeholders(Fombrun,1996).EvenLewis andSoureli (2006)suggest that in the bankingsector the assessmentofthisdimension,explainedbyissuesrelatedto qualityandthevarietyofproducts/servicesandthecondi- tionsofsale,issoimportantthatitmighteventuallycasta
‘‘halo’’effectontheotherdimensionsofcorporatereputa- tion.
Thedimensionthatpresentsaspectsrelatedtocustomer careandtheinteractionswiththeemployeesappearsasthe heaviestantecedentintheanalysisofreputationofservices companiesamong their customers (Walshand Wiedmann, 2004;Flaviánetal.,2005;WalshandBeatty,2007;García delosSalmonesetal.,2009;Walshetal.,2009a,b).Most generalmodelsdonotintegratethisdimensionsincetheir studies includes public that never had a direct relation- ship with the organization, and that could not make a personal assessment of the aspects related to customer care,suchasfriendlinessandemployees’skills.According toHardaker and Fill (2005) and Nguyen(2010),customer care becomes a key component for the development of identity andreputation of services organizations,since it is here where care is really taken and the relationship is born.
Thedegreeofinnovationofafirmisadimensionofgrow- ingimportanceinthemeasurementsbyRepTrakPulsefrom itsfirststudyin 2006.Itsanalysisis includedin mostspe- cificmodels(WalshandBeatty,2007;Bravoetal.,2009b;
Walshet al., 2009a,b; Akdag and Zineldin, 2011), not as an independentdimensionbut asone moreaspect of the assessmentof the offeror services provided.The innova- tivespiritisassociatedwiththeorganizationidentityand, therefore,itispresentfromthebeginningoftheformation processofreputation.Thepreeminenceornotorietyofthe company,that have been considered as an antecedentof itsreputation(Rindovaetal.,2005),willbeincreasedifit introducesnewproductsinaconsistentandsuccessfulway, whatwill boostits relevance amongconsumers and their favorablepredispositiontoward thecompany(Henardand Dacin,2010).
AsitisshowninTable2,theemployerbrandingdimen- sionispresentinthegeneralandspecificmodels.Itmakes referencetotheperceptionsthatcustomers have onhow thefirmandmanagers dealwiththeemployeesandsafe- guardtheir interests,aswell ason theexpectations that customershaveabouttheemployees’competence.Several authorsidentifythestrategicroleofthisdimensionaspro- tectorofcorporatereputations(SánchezandBarriuso,2007;
Burkeetal.,2011),whereasDelaFuenteandDeQuevedo (2003)confirmthatthewaythecompanytreatstheemploy- eesaffectstheperceptionsoftherestofstakeholders.From theTheoryofSigns,highperformancetrainingbasedontal- entappealandworkers’commitmentwouldbesignalssent tothe outside bythe organization in ordertocreate the impression of reputable employer (Martin and Groen-in’t Woud,2011).
The integrity dimension is understood as the degree of responsibility, transparency, ethics and honesty prac- ticedbyorganizations,whichconstitutethemainprinciples toincrease reputationamong their stakeholders (Vitezic, 2011).Thisdimensionextractedfromthegeneralandspe- cificmodelsshowninTable2,isalsoanalyzedasindicator ofother dimensions inthe specificmodels ofBravoetal.
(2009b)andGarcíadelosSalmonesetal.(2009).According toHillandKnowlton(2004),managershighlighttheattitude ofcorporategovernmentsasoneofthemostinfluentialfac- torsinbusinessreputation. Consideringthat,furthermore, misconductand lack oftransparency have beenidentified asthemain causesoftheworldeconomic/financialcrisis, it can be stated that, nowmore than ever, the integrity practicedbythegovernmentsoffinancialinstitutionsform acriticaldimensionoftheperceptionsthatcustomershave ofbanks(Delgadoetal.,2008).
Leadership, referring totheactions carriedout bythe leadersofthecompany,isadimensioncollectedbythemain generalmodels.Althoughit isless presentamongspecific models,conceptsrelatedtoleadershipareanalyzedasone moreaspectoftheotherdimensionsinthescalesofWalsh andBeatty (2007),Bravoetal. (2009b)andGarcíade los Salmones etal. (2009). According toKhurana (2002), the expectedskillsofagoodleaderhavebeentransformedand theynolongerdependonprofessionalexcellenceandhon- estybutoncharismaandleadershipskills.Themainappeal ofafirmleader,beingconsideredasanintangibleasset,is thatitcanbemorepowerfulbyimplementingaprocessof leadershipmanagement thatgetstoboostthe topexecu- tive’sreputationandtransferittotheorganization(Sotillo, 2010),settingupaprocessof‘‘reputation transfer’’from theleadertothecompany(Gaines-Ross,2003).
Thereliabilityandfinancialstrengthdimensionispresent in most general and specific models, and it makes refe- rencetothe abilitiesthatfirmshave togeneratebenefits inordertoguaranteethesurvivalandgrowthofthebusi- ness,aswellastoguaranteecustomers’depositsinthecase ofbanks.Positiveeconomicindicatorspredisposethepublic toamorepositiveassessmentofthecompany(DeQuevedo, 2003;Rose and Thomsen,2004) sincetheydetermine the sector dominance and prestige (Lease et al.,2000). High profitabilityofthefirminthepastwillleadeconomicagents toanticipateahighcreationofvalueinthefuturethatwill favor their expectations of satisfaction of their demands and, furthermore,the corporate reputationconsolidation (Delgadoetal.,2008).However,for thepublicwhoisnot informed,suchasconsumers,financialdatadonotacquire suchanimportantroleanddifferentindicatorsareusedin ordertointuittheeconomichealthofthefirm,suchas:the companypositioninrelationtoitscompetitors(Walshand Beatty,2007),itssolidityorsolvency(GarcíadelosSalmones etal.,2009),itsrecognitionworldwide(Schwaiger,2004)or itsfutureperspectives(BartikowskiandWalsh,2011).This kind ofinformation, morethan indicators of thefinancial profitabilityoftheorganization,reflectitsreliabilityamong thepublicthatisnotinformedwho,toagreatextent,intu- its this information from the advertising received by the organizationsandthewordofmouth.
Thedimensionrelatedtocompanies’socialaction,which includestheirsocial,philanthropicandenvironmentalactiv- ities,ispresentinallreputationgeneralmodelsandinmost
specificones.Itisaconceptofgrowingimportanceinthe mind or emotions of consumers who wantto see compa- nies acting asactive andresponsible citizens (McWilliams etal.,2006).Thus,agoodongoingsocialactionadaptedto the different institutional contexts would consolidate the legitimizationandcorporatereputation(DeQuevedoetal., 2007).ThestudyofMattilaetal.(2010)demonstratesthat messagesofsocialactionmaymitigatethenegativeeffects ofthefinancialcrisisinconsumers’perceptions,inthesame waythatinthepastlowreputation,suchasoilandtobacco companies, had managed toreestablish their image from advertisingtheirsocialactionprojects.
Although most business reputation models use exclu- sivelycognitivecriteria,thereisatheoreticalsupportlarge enough (Levesque and McDougall, 1996; Dowling, 2001;
RobertsandDowling,2002;RoseandThomsen,2004;Hansen andSand, 2008;Ladharietal.,2011) thatconsidersemo- tional dimensions: satisfaction and trust, as antecedents of reputation, especiallywhen thecustomeris the analy- sisgroup.Customershavehaddirectexperienceswiththe organizationthatenablethemtocomparetheimage that theyhadofitandtoconfigurebusinessreputations(Giogia etal.,2000).Inthisway,thehigherorlowerlevelofsat- isfaction of direct and indirect experiences of customers withthecompany,andthedegreeoftrustacquiredthrough them,areantecedentsofcorporatereputation(Walshetal., 2009b).The empiricalconfirmation ofthese tworelation- shipstogether can befound in themodel of Walshet al.
(2009b),whereas inthe model ofHelm et al.(2010) it is demonstratedforthecaseofsatisfaction,andinthemodels ofNewellandGoldsmith(2001)andPonzietal.(2011)for thecaseoftrust.Thislastone,basedexclusivelyonstake- holderstrust,waslatervalidatedbyWilczynskietal.(2009).
Fromareviewoftheliterature,thefollowinghypotheses areformulatedabouttheformationofbankreputation:
Hypothesis1. Favorablecharacteristicsoftheofferhave a direct effecton the reputationof financial institutions amongtheircustomers.
Hypothesis2. Favorablecustomercarehasadirecteffect onthereputationoffinancialinstitutionsamongtheircus- tomers.
Hypothesis3. Financialinstitutionsinnovationhasadirect impact on the reputation of financial institutions among theircustomers.
Hypothesis4. Financialinstitutionsemployerbrandinghas adirecteffectontheirreputationamongtheircustomers.
Hypothesis5. Financialinstitutionsintegrityhasadirect effectontheirreputationamongtheircustomers.
Hypothesis6. Financialinstitutionsleadershiphasadirect effectontheirreputationamongtheircustomers.
Hypothesis7. Financialinstitutionsreliabilityhasadirect effectontheirreputationamongtheircustomers.
Hypothesis 8. Financial institutions social action has a directeffectontheirreputationamongtheircustomers.
Hypothesis 9. The satisfactionthatcustomers feelfrom their relationship with financial institutions has a direct effectontheirreputationamongtheircustomers.
Hypothesis10. Thetrustthatcustomershaveintheirrela- tionships withfinancial institutions hasa direct effecton theirreputationamongtheircustomers.
Regarding the consequences of corporate reputation, althoughlittleresearchhasfocusedonitsanalysis,thestud- iescarriedoutbyWalshetal.(2009b)andBartikowskiand Walsh(2011) demonstrate empirically the directrelation- ship between corporate reputation and customer loyalty.
Accordingtotheoriesofcognitiveconsistency,peoplemain- tainapsychologicalharmonyamongtheirbeliefs,attitudes and behaviors; therefore, when customers give a good reputationtoaservicescompany,theywillbeprobablycom- mittedtoitandtheywillintendtocontinueinteractingwith it,orcarryingoutotheractionsinitsfavor(Zeithamletal., 1996;Bettencourt, 1997).Therehas beenevidence show- ingthattheincreaseinprofitresultingfromafivepercent increaseincustomerretentionvariesbetween25%and85%
(Ladharietal.,2011)andthattoretainacustomercanbe uptotentimescheaperthanachievinganewone(Heskett etal.,1990).Alongwithloyalty,wordofmouthisthemost commonconsequenceassociatedwithreputation(Walshand Beatty,2007;Walshetal.,2009b).Someauthorshavecon- sideredword ofmouth asa muchmore powerfulstrength thantraditionalmarketingtools(Silverman,2001)byinflu- encingfuturepurchasingdecisionsandbyhelpingtoattract newcustomers,especiallywhentheserviceprovidedposes ahigh riskfor them(Molina etal., 2007).On thebasisof the findings reported in the previous studies, the follow- inghypothesesareraised abouttheconsequencesofbank reputation:
Hypothesis 11. Financial institutions reputation among theircustomers hasadirecteffectontheloyaltyof their customers.
Hypothesis 12. Financial institutions reputation among theircustomers hasadirecteffectoncustomers’ positive wordofmouth.
Methodology
Measurementmodelofbankreputation
A multidimensional construct consists of heterogeneous aspectsandeachonemakesauniquecontribution.There- fore, it is more appropriate to cope with this type of constructs fromthe formativeperspective (Gómezet al., 2013),wheredimensionsarecausingtheconcept.Accord- ingtoHelm(2005),ifreputationwastobeconceptualized asareflectiveconstruct,itwouldimplysupposingthatits dimensions(e.g.productqualityoremployeescare)would beeffectsoftheconstruct. Inother words,companyrep- utationwoulddeterminethequalityofitsproductsorhow employeesaretakencareof,andnottheotherwayasithap- pensactually.Furthermore,ifreputationwastobemodeled asareflectiveconstruct,thedifferentdimensionswouldbe
stronglycorrelatedamongthem,thatistosay,animprove- ment in the product quality would be accompanied by a bettercareof theemployeesor a greatercontribution to environmentalpreservation. However,itis notfeasible to assumethatthisislikethis,sinceaninstitution,bymeans ofitsemployees,canactuallyprovideanexcellentcareand service,regardless ofnotbeingsoworried aboutenviron- mentalissues.
Inthisstudy,thereputationof banksis conceivedasa secondordermultidimensionalconstructthatisintegrated bycognitivedimensions(modeledasformativeconstructs) andemotionaldimensions (measured ina reflectiveway).
FollowingthecriterionofDowling(2004),Schwaiger(2004) and Helm (2005), cognitive dimensions (offer, customer care,innovation,employerbranding,integrity,leadership, reliability/financialstrengthandsocial action)areformed by their indicators that, at the same time, also con- tribute to reputationformation. The formative-formative approachdiffersfromtheoneusedinmostmodelsofrep- utationmeasurement because,although theseuse second orderformativeapproaches,theprocessfollowedtoiden- tifytheindicators of each dimensionis thetypical ofthe reflective models (Dowling, 2004; Helm, 2005). From an exploratory factorial analysis, the underlying structure is obtainedamongalargenumberofvariables,withoutapre- vioustheoreticalbasisbutusingfactorialloadingstodefine the data final structure (Hair et al., 2006). This process ofidentifying dimensions implies that essential indicators can be removed in the determination of that particular dimensionofcorporatereputation,fornothavinganoptimal factorialloadingsorforbringingtogetherinanonlyonefac- torvariablesthatdonothaveatheoreticalcorrespondence amongthem(Blázquez,2009).Inordertoavoidthisprob- lem,theindicatorsofthecognitivedimensionsinthisstudy, extractedfromawidereview ofthereputableliterature, aredeterminedinthebasisofaformativeapproach.
Emotionaldimensions(satisfactionandtrust)arerelated inareflectivewaytotheirindicatorsandinaformativeway toreputation,followingthemostcommonlyusedcriterion inthestudiesincludedintheanalysisoftheseconceptsin relationtoreputation.
Inthispaper,reputationglobalindicatorsarealsoused, sincetobeabletoestimatesecondorderconstructsitisnec- essaryforconstructstobedirectlymeasuredbyindicators toachieveanoptimalidentificationofthemodel.
Furthermore, and following the practice found in the existing literature, outcome variables (loyalty and word ofmouth) arealsomeasured asfirstorderreflectivecon- structs,in sucha waythat every itemreflects the latent construct.
Companiesinthestudy
Consideringthevolumeofassetsasanindicatorofthesize oftheinstitutionsandtakingintoaccountthatthesizeof theorganizationsisoneofthevariablesthathasastronger effectontheirreputation,thisresearchisaddressedtothe studyof thereputationofthe fourleadingfinancialinsti- tutionsinthenationalscene(Graphic1):BBVA,Santander, LaCaixaandBankia.Inthisway,thepossiblebiasderived from size differences or market power of the analyzed
La Caixa + Banca...
BBVA + Unim Santander Bankia Sabadell + CAM Popular + Pastor Unicaja + Caja...
Ibercaja + Caja 3 Bankinter Liberbank Barclays Banco de Valencia
Deutsche Bank 16.400 24.000
29.000 52.000
62.000 63.000 68.000
76.000 76.000 77.000
80.000
161.000 166.000
325.000 337.000 338.000
354.000
Catalunya Banc NCG Banco Kutxabank Mare Nostrum
Graphic1 LargestfinancialinstitutionsinSpainbyassets.TotalJune,2012.Million euros.DataextractedfromInvertia.com.
Availableathttp://www.invertia.com/noticias/articulo-final.asp?idNoticia=2657129(28.02.14).
institutionsis minimized.Additionally, giventhattheyare twoofthemainbanksandtwoofthemainsavingsbanks,3 qualitativedifferencesthatcouldderivefromtheircondi- tion(bankorsavingsbank)arecompensated.
Studysample
Theelectionofthecustomersofthedifferentfirmsastarget groupisdeterminedbytheirhigherknowledgeoftheorga- nizations, acquired through their direct experiences with them, which enablethem to make more consistent judg- mentsaboutthedifferentcriteriausedfortheirassessment.
AccordingtoDowling (2001),animportantdeterminantof thereputationthatapersonhasofacompanyistherela- tionshipthatthispersonhaswithit,andcustomersaremore likelytohavearelationshipwithcompanies.Moreover,the judgmentsthatcustomersmakeaboutfirmscomeintobeing aspurchasingdecisions,financialinvestmentdecisions,the electionofacertaincompanywheretoworkorotherdeci- sions that are key factors to the survival and successful developmentofcompanies(WalshandBeatty,2007).
For this study, four hundred bank customers were selected, one hundred fromeach of the four institutions
3Capitalrequirementsimposedbythebankrestructuringstarted in 2011 imply that savings banks are turned into banks. Con- sequently, at the time of the study, Bankia and La Caixa are constituted as public limited companies with bank statutes, althoughduringthepresentationofthenewsocietiesthepresidents ofbothinstitutionsstatedtheirstatusassavingsbanks.
under analysis (sociodemographic characteristics of the samplearepresentedinAppendix1).Inordertoachievea representativesampleandtheutmostrigorwhenperform- ingthe fieldwork,itwasnecessary tohiretheservices of thecompanyNetquest,4whichisspecializedincarryingout studies of online market thatis the most commonly used systemfor gatheringinformationinordertostudyreputa- tion,bothinacademicandbusinessfields.Table4showsthe technicaldatasheetoftheresearch.
Followingthe criterion ofJamal andNaser(2002), the relationshipofthesamplecustomerswiththeirmainbank mustexceedthreeyears;furthermore,theymusthavemore thanthreecontractedproductsandtheycannotbeeither shareholdersorbankworkers.Thefirsttwoconditionsguar- anteethestrengthoftheexperienceofthecustomerwith theinstitutionandthethirdonelimitsthepossibilitiesthat therespondenthasprivilegedinformationthatdoesnotcon- cerncustomersingeneral.
Questionnaireandmeasurementscales
Thequestionnaireisdividedintothreemainparts.Thefirst sectionverifiesthesuitabilityoftherespondentaspartof thesample(timeasacustomeroftheinstitution,statusof shareholderorbankworkerandcontractedproducts).The secondpartincludesquestionsaddressedtoassesstherep- utationofthemainfinancialinstitutionandoftheoutcome variables.
4http://www.netquest.com/.
Table4 Technicalspecificationsofthesurvey.
Universe Financialinstitutions customersolderthan18:
Santander,BBVA,LaCaixaand Bankia
Geographicalarea Spain
Samplesize 400validquestionnaires Samplingerror ±4.9%,confidencelevelof
95%;p=q=0.5
Samplingmethod Stratifiedrandomsampling Sampledesign OnlinepanelbyNetquest
onlinePanel
Fieldwork From8thto27thofJune,2012
In ordertoguaranteethe contentvalidityof themea- surement index in this study, a detailed analysis of all the scales used in order to measure corporate reputa- tion along with each of their most commonly associated dimensions is carriedout.The conclusions ofthis analysis arecontrastedwiththeresultsextracted fromthereview of the scales specially developed to measure bank cus- tomers’ perceptions. Taking into account that reputation isdifferentamongthedifferentstakeholdersanddifferent criteria,andthat thesectorwherethecompanyinteracts alsoconditionstherelevanceofreputationattributesin a qualitative andquantitative way(Ruiz etal.,2012b), the purposeofthisstudyistodevelopahighlyaccurateindex that guarantees the identification of the dimensions that determine indeed the reputation of the institutions ana- lyzed.
For the identification of the cognitive variables, a methodology focused onthe review of the literature and subsequentrefinementbyexpertshasbeenfollowed.After theexploratoryanalysisofgeneralandspecificitemsofcor- poratereputation, a setof 74 variablesis extracted. The first refinement developed with 10 strategy and market- ingteachersmakesitpossibletoidentifyhighlyredundant items and,as a resultof it, the questionnaire is reduced to62variables. Then,7experts, 20bankprofessionals, a stockexpertand20bankcustomersareinterviewed.Atthis stage,thequestionnaireisreducedto51itemsgroupedin 8 cognitivedimensions (Appendix2a). The twoemotional dimensionsareassessedbyreflectivescalesextractedfrom themainreputationstudiesinthebankingsector(Appendix 2b).
In order to measure global reputation, which enables tochecktheexternalvalidityofthedimensionsthatform bankreputation,andbehavioralintentions(loyaltyandword ofmouth),reflectivescaleswereused,consistingofthree items selectedfrom other reputationstudies (Appendices 2cand2d).Alltheindicators weremeasuredonten-point Likert-typescale,from0(stronglydisagree)to10(strongly agree). The reason why the scale of 0 to 10 is selected isbecausenon-professionalstakeholdersaremorefamiliar withitfortheireverydayevaluations.
The third section ofthe questionnaire raises theques- tions related to the sociodemographic informationof the respondents,inparticular:sex,age,maritalstatus,educa- tion,workingstatusandincomelevel.
Data analysis and findings
EvaluationofmeasurementmodelThe measurement instrument (reliability, convergent and discriminantvalidity)hasbeenvalidatedbythepartialleast squares(PLS),techniqueespeciallyappropriatetoanalyze formativeconstructs(Chin, 1998a,b).The modelhasbeen estimatedby usingSmartPLS2.0(Ringle etal.,2005)and theparameterssignificancehasbeenobtainedbybootstrap- ping,randomlygenerating500sub-samples,withthesame sizeastheoriginal sample (400in total:BBVAcustomers:
100;Santander customers: 100; La Caixacustomers: 100;
Bankiacustomers:100).
Concerningpsychometricproperties,thecalculatedindi- cators of reflective constructs show excellent reliability levels(Table5).Alltheindicatorsshowvalueshigherthan 0.85, over 0.7 proposed both for Cronbach’s alpha (Hair etal., 2006) and composite reliabilityindex (Fornell and Larcker,1981).Theaveragevarianceextracted(AVE)values aresignificantly different fromzero andhigher than 0.6, guaranteeingtheconvergent validity ofthe measurement reflectivemodel(BagozziandYi,1988).
The discriminantvalidityisverifiedby testing thatthe AVEforeachconstructishigherthanthesquareofthecor- relationsamongeachpairofconstructs(FornellandLarcker, 1981).Moreover,SmartPLS2.0providesanindicator’scross- loadingswitheveryconstruct,showingthatnoindicatorhas higher loadings over another different construct in asso- ciation (Götz et al., 2010). Both criteria have indicated sufficientdiscriminantvalidity(Table6).
In formative constructs, multicollinearity (Cronbach’s alphaandcompositereliability)isan undesirableproperty asitcausesestimationdifficulties.Theseestimationprob- lemsarisebecauseamultipleregressionlinkstheformative indicators tothe construct. Highly intercorrelated indica- torsarealmostperfectlinearcombinationsand,therefore, they are quite likely to contain redundant information.
Diamantopoulos and Winklhofer (2001) suggest the indi- cator elimination based on the variance inflation factor indicator(VIF),whichassessesthedegreeofmulticollinear- ity. VIF analysis results show that only 31 items, out of 51 which composed the initial index, are below 3.3, the strictestheuristicvalueatthepointwheresomeproblemsof collinearitystarttoemergeforformativemeasures(Petter etal.,2007).Theresultssuggestnomulticollinearityinthe indicatorsthatcreatebankreputation.Thesignificanceand loadingsof indicators were testedby t-value. The results showthat 5 indicators should be removed and,after this refinementprocess,thefinal26indicatorsofthebankrep- utationindexwereextracted(Table7).
Thenomologicalvalidityofthemodelistestedbylinking corporate reputationto two of the most common conse- quences:loyaltyandwordofmouth(WalshandBeatty,2007;
Walshetal.,2009b).Giventhatsatisfactionandtrusthave alsobeen considered as antecedents of loyalty and word ofmouth(Walshetal.,2009b;Ladharietal.,2011),these relationshipsarealsostudiedintheanalysis,reinforcingthe nomologicaltestofthemodel,whichiscompletedbyadding theanalysisof loyaltyasan antecedentofword ofmouth (seeFig.1in‘‘Hypothesestesting’’section).
Table5 Measurementmodel:Assessingtheinstrument.
Dimension/construct Indicator Loading Weight t-value(Bootstrapping) ∞Cronbach CR AVE
Offer
OFF3 0.448*** 7.06 N/A N/A N/A
OFF4 0.132* 1.80
OFF5 0.282*** 4.87
OFF8 0.293*** 3.84
Customer care
CTC3 0.210** 2.48 N/A N/A N/A
CTC6 0.190** 2.01
CTC9 0.403*** 3.88
CTC11 0.141** 1.96
CTC12 0.268*** 4.05
Innovation
INN1 0.465*** 6.65 N/A N/A N/A
INN3 0.389*** 5.16
INN4 0.248*** 4.01
Employerbranding
EBR1 0.554*** 8.84 N/A N/A N/A
EBR2 0.239*** 3.86
EBR5 0.260*** 3.85
Integrity INT1 0.657*** 10.70 N/A N/A N/A
INT3 0.412*** 6.53
Leadership LEA2 0.543*** 10.29 N/A N/A N/A
LEA3 0.518*** 9.75
Reliabilityand financialstrength
REL2 0.365*** 5.97 N/A N/A N/A
REL6 0.179*** 3.76
REL7 0.418*** 8.98
REL10 0.195*** 3.06
Social action
SA1 0.241*** 2.91 N/A N/A N/A
SA2 0.294*** 2.97
SA3 0.566*** 6.57
Overallreputation
REP1 0.971*** 212.79 0.969 0.980 0.988
REP2 0.976*** 306.48
REP3 0.963*** 190.11
Satisfaction
SAT1 0.976*** 255.94 0.973 0.982 0.948
SAT2 0.974*** 150.12
SAT3 0.970*** 248.76
Trust
TRU1 0.950*** 160.63 0.926 0.953 0.871
TRU2 0.925*** 87.78
TRU3 0.923*** 117.34
Loyalty
LOY1 0.955*** 173.43 0.929 0.955 0.877
LOY2 0.956*** 141.43
LOY3 0.895*** 75.09
Wordof mouth
WOM1 0.983*** 433.94 0.982 0.988 0.966
WOM2 0.975*** 266.73
WOM3 0.988*** 545.24
CR,compositereliability;AVE,averagevarianceextracted;N/A,notapplicable.
* P<0.10(t(0.10;499)=1.648).
**P<0.05(t(0.05;499)=1.964).
*** P<0.01(t(0.01;499)=2.585).
Bank reputation is confirmed as an antecedent of loyalty(ˇ=0.185; p<0.01) butsatisfaction hasthe great- est effect on loyalty (ˇ=0.496; p<0.01), followed by trust (ˇ=0.274; p<0.01) and reputation. Word of mouth is a quasi-significant outcome of reputation (ˇ=0.052;
p<0.10). Satisfaction (ˇ=0.311; p<0.01) is the main
predictor of word of mouth, followed by trust(ˇ=0.104;
p<0.05) and reputation with lower influence. Loy- alty is also confirmed as the main predictor of word of mouth (ˇ=0.522; p<0.01). These relationships with reputation outcomes guarantee the nomological valid- ity.
Table6 Measurementmodel:Discriminantvalidity.
OFF CTC INN EBR INT LEA REL SA REP SAT TRU LOY WOM
OFF N/A
CTC 0.401 N/A
INN 0.261 0.561 N/A
EBR 0.433 0.486 0.433 N/A
INT 0.405 0.573 0.608 0.562 N/A
LEA 0.455 0.569 0.599 0.465 0.620 N/A
REL 0.590 0.500 0.424 0.535 0.591 0.615 N/A
SA 0.368 0.390 0.299 0.412 0.368 0.409 0.455 N/A
REP 0.139 0.301 0.427 0.238 0.441 0.323 0.214 0.138 0.942
SAT 0.332 0.429 0.382 0.449 0.482 0.421 0.446 0.286 0.380 0.948
TRU 0.319 0.373 0.362 0.469 0.500 0.406 0.421 0.332 0.353 0.623 0.871
LOY 0.345 0.373 0.481 0.501 0.564 0.468 0.455 0.315 0.381 0.614 0.540 0.877
WOM 0.342 0.430 0.422 0.488 0.534 0.462 0.460 0.315 0.377 0.665 0.560 0.729 0.966 OFF,Offer;CTC,Customercare;INN,Innovation;EBR,Employerbranding;INT,Integrity;LEA,Leadership;REA,Reliabilityandfinancial strength;SA,Socialaction;REP,Reputation;SAT,Satisfaction;TRU,Trust;LOY,Loyalty;WOM,Wordofmouth.
PrincipalDiagonal,Averagevarianceextracted;Belowthediagonal,squaredcorrelationsbetweenconstructs.
N/A,notapplicableforformativelatentvariables.
Offer
Customer care
Innovation
Employer branding
Integrity
Leadership
Reliability
Social action
H8 β=–0.091*(1.78)
H7 β=0.470***(4.64)
H6 β=0.357***(4.08)
H5 β=–0.141*(1.93)
H4 β=–0.002 n/s(0.03)
H3 β=0.084 n/s(1.37)
H2 β=–0.060 n/s(1.26)
H1 β=–0.254***(2.85)
H9 β=0.315***(4.25)
H11 β=0.185***(3.61)
H12 β=0.052*(1.75)
H10 β=0.187***(2.76)
β=0.311***(6.06)
β=0.522***(9.63)
β=0.274***(4.59) β=0.104**(2.10) β=0.496*** (8.36)
Trust
Word of mouth Reputation
Loyalty Satisfaction
Figure1 Resultsofthestructuralmodel.***p<0.01;**p<0.05;*p<0.10;n/s,notsignificant(tvaluebootstrap).
Table7 Indicatorsofthedimensions:collinearitytesting.
Dimension/indicator COD VIF
Offer
Offersawideandcompleterangeofproducts OFF3 2.266
Keepsitscustomerswellinformedoftheiraccountsandofnewproducts OFF4 2.357 Offersthemostattractiveconditionsforsavingsanddebtproducts OFF5 2.362
Solvesproblemsquickly OFF8 2.368
Customercare
Haspersonnelwhoanticipatesmyneeds CTC3 2.594
Itspersonalisexpert CTC6 2.576
Hispersonnelgivesaclearanddetailedviewofprosandconsregardingproductsand services
CTC9 3.253
Itstelephonebankingserviceisgood CTC11 1.926
Itsonlineserviceisgood CTC12 1.693
Innovation
Tendstoinnovateratherthanimitate INN2 2.797
Tendstobethefirsttointroducenewproductsandservices INN3 2.731
Itsequipmentandtechnologyareup-to-date INN4 2.163
Employerbranding
Isagoodinstitutiontoworkfor EBR1 2.306
Caresforthewell-beingofitsstaff EBR2 2.934
Attractsahighstandardofemployees EBR5 2.598
Integrity
Isopenandtransparentaboutitsproceduresandclientrelationships INT1 2.173
Itsdirectorsusetheirpowerresponsibly INT3 2.173
Leadership
Hasastrongandwell-respectedpresident/CEO LEA2 2.480
Iswellorganized LEA3 2.480
Reliabilityandfinancialstrength
Generatesbenefits REL2 2.570
Itsoperationsarecompletelysecure REL6 2.369
Itsmarketingisappealingandsincere REL7 2.318
Isrecognizedonaninternationallevel REL10 2.488
Socialaction
Hasenvironmentallysoundtargets SA1 2.114
Iscommittedsocially:givinggrantsandfoundingeducational,cultural,andoffering assistancetocatastrophes,povertyanddevelopmentalco-operation.
SA2 2.283
Itsroleinsocietyclearlyexceedsthesimpledesireofprofits. SA3 2.459
Once the quality of the measurement instrument has been checked, the structural model is assessed, on the basisoftheanalysisofthecoefficientofdetermination(R2) andtheStone-Geisser criterion(Q2)(Geisser,1974;Stone, 1974; Chin, 1995) (Table 8). The R2 for endogenous con- structsamplyexceedthethresholdof0.1(FalkandMiller,
Table8 Structuralmodel:testingnomologicalvalidityand predictiverelevance.
Construct R2 Q2
Overallreputation 0.763 0.710
Loyalty 0.820 0.707
Wordofmouth 0.891 0.846
R2,coefficientofdetermination;Q2,Stone---Geissertest.
1992),evenhigherthan0.75(Hairetal.,2011).InPLS,the Q2 test gives moreinformation about thepredictive rele- vanceofthemodelthanR2andAVE.TheQ2forendogenous constructswithareflectivemeasurementmodel,obtained throughblindfolding,ishigherthan0(Chin,1998a,b).These resultsguaranteethepredictiverelevanceofthestructural model.
Hypothesestesting
Onlyfouroutofthetenhypothesesrelatedtoantecedents ofreputationareconfirmed(Fig.1).Thecognitivedimen- sionsofreliabilityandfinancialstrength(ˇ=0.470,p<0.01) and leadership (ˇ=0.357, p<0.01) are the most impor- tantantecedentsofreputationofthefinancialinstitutions analyzed. Hence, hypotheses H6 and H7 are supported.
Table9 Hypothesestesting.
Hypotheses Relationship Support?
H1 Offer→Reputation NO
H2 Customercare→Reputation NO
H3 Innovation→Reputation NO
H4 Employerbranding→Reputation NO
H5 Integrity→Reputation NO
H6 Leadership→Reputation YES
H7 Reliability→Reputation YES
H8 SocialAction→Reputation NO
H9 Satisfaction→Reputation YES
H10 Trust→Reputation YES
H11 Reputation→Loyalty YES
H12 Reputation→Wordofmouth YES
Offer has a negative and significant effecton reputation (ˇ=−0.254,p<0.01),justasintegrity(ˇ=−0.141,p<0.1) andsocialaction(ˇ=−0.091,p<0.1),althoughthelasttwo ones have quasi-significant coefficients. Thus, hypotheses H1,H5andH8arenotsupportedsincethesignoftherela- tionshipiscontrarytowhatwasexpected.The constructs ofcustomercare(ˇ=−0.060;p>0.1),innovation(ˇ=0.084;
p>0.1)and employerbranding (ˇ=0.002; p>0.1) arenot confirmedasantecedentsofreputation,notsupportingH2, H3andH4.Inthecaseofemotionaldimensions,bothsatis- faction(ˇ=0.315,p<0.01)andtrust(ˇ=0.187;p<0.01)are confirmedasantecedentsofreputationduetotheirpositive andsignificantcontribution,supportingH9andH10.
The nomological analysis performed in the previous section enables to verify that hypotheses H11 and H12 are supported. These hypotheses proposed, respectively, customer loyalty (ˇ=0.185; p<0.01) and word of mouth behavior(ˇ=0.052;p<0.10)asconsequencesofbankrep- utation, although word of mouth is a quasi-significant outcomeofreputation.
Table9showsasummaryofhypothesestesting.
Consideringthattheespeciallyunfavorableconditionsof oneof thebanks analyzed (Bankia)inthe momentof the studycouldaffecttheresultsoftheresearch,theanalysis of the structural model is based on two different sam- ples:theanalysisincludingthetotalsample(globalmodel) and the analysis that excludes Bankia customers (model withoutBankia).Inthislastmodel,thehypothesestesting offersresults similartotheglobal model.The dimensions ofreliabilityandfinancialstrength(ˇ=0.294;p<0.05)and leadership (ˇ=0.357; p<0.01) are confirmed as the only cognitive dimensions that have a direct effect on repu- tation, although the relative importance of leadership is higherinthis case.The inverse relationshipbetween rep- utationandintegrity(ˇ=−0.365;p<0.01)andsocialaction (ˇ=−0.147;p<0.05)isalsoreproducedinthemodelwith- outBankia,althoughthelevelofeffectandsignificanceis higherthanintheglobal model.However,contrarytothis lastone,thenegativerelationshipbetweenofferandrepu- tationisnotsignificant(ˇ=−0.147;p>0.1).Theeffectthat non-significant dimensions hadonthe global model is not either significant in the model without Bankia: customer care (ˇ=0.038;p>0.1),innovation (ˇ=0.147;p>0.1) and
employerbranding(ˇ=−0.117;p>0.1).Emotional dimen- sions,satisfaction(ˇ=0.410;p<0.01)andtrust(ˇ=0.261;
p<0.01),are alsoconfirmed assignificant antecedents of reputation.
Asa conclusionofthiscomparativeanalysisofthe two models,itcanbesaidthattheantecedentsofreputationare thesameinbothcasesalthoughtherearedifferencesinthe relativeimportanceofeachoneofthem.Hence,itmaybe concludedthattheassessmentsofBankiacustomerswould notbeconditioninginarelevantwaytheresultsachieved inthe global model, whatmakes it possible toverifythe robustnessofthereputationmodeldevelopedinthisstudy.
Conclusions and managerial implications
EmpiricalandtheoreticalconclusionsThisstudycontributestoacademicresearchbypresentinga formativeindexofreputationthatintegratesthemostrel- evantdimensionsoftheexistingliterature,analyzingbank reputationamongcustomers,bothfromtheperspectiveof cognitiveandemotionalcomponents.
The resultsobtained inthis studysignificantly contrast withpreviousworks(Flaviánetal.,2004,2005;Walshand Beatty,2007; García de los Salmones et al., 2009; Bravo etal.,2009b; Chenand Chen,2009; Walshetal., 2009a;
Bravoetal.,2010a;AkdagandZineldin,2011)thatanalyze theperceptionsthatbankcustomershaveindifferentcon- textualcircumstances.Thisinvolvesanempiricalevidence thatreputationmeasurementmodelsmustbeadaptedvery accuratelytotheconditionsoftheenvironmentatthetime oftheanalysis,sothattheybecomeareallyeffectivetool in business practice. In this regard, reputation would be specific both tothe particular sector where the company interactsandtothetargetgroup(Ruizetal.,2012b),along withthe current socioeconomic context.The variationof theconditionsof theenvironmentmodifiesthestakehold- ers’mindsets, in sucha waythat keyaspectsin the past forthem canbelessinteresting orrelevant inadifferent context.
Amongthedifferentconclusions, itisobserved thatan unfavorablereputationofthefinancialinstitutionswouldbe negativelyrelatedtocustomerloyaltyandtheirunwilling- nesstomakecommentsorpositiverecommendationsofit.
Hence,itisconfirmedhowimportantitisforbankstoknow thedeterminantsoftheirreputationinordertogettodesign effectivestrategicpoliciesof marketingandorganization.
Theempiricalresultsofthisworkshowthat,inacondition ofeconomic crisiswhere financialinstitutionsarethought tohavetheprimaryresponsibilityforthecurrentsituation, thedimensionsthatpositivelyconditiontheirreputationare thereliabilityandfinancialstrengththattheinstitutioncon- veys,andtheleadershiproleoftheirmanagers;aswellas thesatisfactionandtrustthatcustomersfeelascustomers oftheinstitution.
Issuessuchastheappealoftheoffer,managers’integrity andsocial action, show an inverse relationship withbank reputation. These results must beinterpreted takinginto account that global indicators have been used in the methodology of this study to measure global reputation.
Theadvantagethatthismethodpresentsisthatitenables
todrawassessmentsofreputationindependentoftheones madeineach oneofthedimensions.Thus,farfrominter- pretingthat customerreject theseissues,in the casesof offerand socialaction,theseresults canbeobtaineddue tothefactthatthemaininstitutionsarenotknownneither forhavingthemostappealingoffernorforbeingthemost involvedinsocialissues.Inthisway,customersassumethat themostreputableentitiesarenotbeingdifferentiatedfor havingthelargestvarietyofproducts,thebestservices,or thebestmarketterms.Themostreputablefinancialinsti- tutionswouldbefocusingtheireffortsonofferingarange of products more austere but less risky, according tothe economic context prevailing at the time of the empirical research.They arenotdifferentiatedeither forbeingthe most committedto environmental protection or to social causes,orforhavinganaltruisticvision.
Otherpaperscanbefoundinliteraturewherebankover- pricing becomes an indicator of quality, since it assures thatthefuturevalueofincomeexceedsthepossibleben- efitsoffraud(KleinandLeffler,1981;Shapiro,1983).Fang (2005)proposesthatunderequilibriumthemostreputable banks should offer lower-risk products, set higher prices andreceivehigherremuneration.Thistheorywould apply ina marketsituation suchasthe current situationat the timeofthefieldwork,wherethesecurityofbankproducts andservicesispubliclydoubted.Inthisresearch,price(the attractionpowerofinterestrates)isoneoftheexplanatory variablesofoffer,butnotthemostinfluentialone.However, thecriterionofFang(2005)mayexplaintheinversedirec- tionoftherelationshipbetweenthedimensionofofferata globallevelandreputation.
Intheliteraturethe relationshipbetweensocial action and reputation has been found to be direct, neutral or inverse (Brown and Dacin, 1997; Sen and Bhattacharya, 2001), since according to Devinney et al. (2006), people are not as noble as surveys show and their commitment tosocietyfinisheswhenittouchestheirowninterests.The inverserelationshipconveyedinthisstudyisnotexpected tobecaused byalack ofcredibility(Matuteetal.,2010) ofbanking social action, sincethereis not anyreference at an academic or professionallevel suggesting that con- sumersaresuspiciousof theiraltruistnature.Infact,this result would be conditioned because customers consider thatmostreputableinstitutionsarenotmakingeverypossi- blesocialeffort.Inotherwords,customersgivemorevalue toinstitutionsthatstandoutbytheirabilitytotakecareof customers’economicinterests,withawell-knownboardof directors,despitetheirsocialactionsarepnotreachingthe samelevelofacknowledgment.
There is no earlier reference in the literature to an inverserelationshipbetweenintegrityandreputation,but theeconomiccrisishasbeenrelatedfromthebeginningto the lack of integrity of corporate governances (Bouchikhi andKimberley, 2008). Therefore, the inverse relationship mightaccordinglybejustifiedbythespecialcircumstances surroundingthebankingindustryat the timeofthe field- work, where the transparency and responsibility of the banking system in general are being called into question inallfields:professionalandnotprofessional.Respondents mayhavebeen isolatingtheirreputationviewsfromtheir perceptionsofintegritysincethiswouldbediscardedapri- ori for every organization in the financial system. Then,
coincidingwiththeresultsofthestudyofBurkeetal.(2011), therestofthefinancialindustrywouldbealsoaffectedby thebehaviorofthefinancialinstitutionsthathaveassumed morerisks.
Additionally,thedimensionofcustomercare,withpar- ticularrelevanceinpreviousworks(WalshandBeatty,2007;
Flaviánetal.,2005;GarcíadelosSalmonesetal.,2009), isnotconfirmedinthisstudyasantecedentofbankreputa- tion,coincidingwiththeconclusionsofNguyenandLeBlanc (2001).Thisresultcouldbeduetothefactthatcustomers donotseem toperceivedifferencesinthe customercare offered by the various financial institutions, as it is con- firmedinthestudyof Bravoetal.(2009a).Thisreasoning wouldalsojustifytheconclusionsextractedbyBravoetal.
(2010a), revealing how customer care does not have an effectonthevaluegiventotheserviceprovidedbyfinan- cial institutions. One possible explanation is provided by García de losSalmones and Rodríguez delBosque (2006), whohaveobservedthatissuesrelatedtocustomercareare onlysignificantinthecaseofcompaniesthatarenotfirmly establishedinthemarket,whichisnotthecaseofthefirms underconsiderationhere.
Innovationandemployerbrandingarenotconfirmedas bankreputationdimensionseither.Coincidingwiththestudy of Bravo et al. (2010b), the aspects relatedto bank ser- vicesinnovationdonotseemtohaveanimpactonthebank customers’perceptions.Thequickreactionofbankstothe innovationsthattheircompetitorscomeupwithmakescus- tomersnottoperceivesubstantialdifferencesamongthem.
Employerbrandingcouldalsobeperceivedinasimilarway among banks; or maybe in this new socio-economic con- text, where public concerns seem to have changed, this issuecouldhavebeenrelegatedintheassessmentsofbank customers.
Inshort,bankreputationwouldbemainlyconditionedby thosefactorsthatshowtheabilityofthefinancialinstitution tomanagemoreeffectivelytheinterestsofthecustomers, withaboardofdirectorsrecognizedfortheirsuccessfulpro- fessionalcareerswho,atthesametime,managetomaintain highlevelsofsatisfactionandtrustamongtheircustomers.
Managerialimplications
Most works that have analyzed the perceptions that cus- tomers have about their banks, have been carried out in situations of economic and social stability, existing little empiricalevidenceonwhatthetruevaluesofcustomersina situationofeconomiccrisisare,wherethemodusoperandi ofbanksinthepasthasgeneratedangeranddistrustamong thegeneralpopulation.Theresultsofthisstudy,startedthe samedaythattheMinisterofEconomyannouncedtheres- cuerequestoftheSpanishbankingsystemtoEurope,offer banks informationabout thevalues that theyshould pro- mote at a timewhen, for the first time,they are in the spotlightofpopulationingeneral.
Inthisstudy,itisobservedthatfavorablereputationof banksispositivelyrelatedtocustomerloyaltyandtheirwill- ingnesstohighlyrecommendit.Giventheimpactthatinthis sensethefavorablebehaviorofconsumershasontheorgani- zations’benefits(Heskettetal.,1990;Molinaetal.,2007), itisimportantforbankstogettoknowhowtheirreputations
