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IJQRM QUALITY PAPER

35,8
Service quality, customer
satisfaction, and loyalty in the
1546 banking sector
Received 17 January 2017 The moderating role of organizational culture
Revised 27 July 2017
2 September 2017
Accepted 3 October 2017
Samuel Famiyeh, Disraeli Asante-Darko and Amoako Kwarteng
Business School, Ghana Institute of Management and Public Administration,
Achimota, Ghana

Abstract
Purpose – The purpose of this paper is to understand the moderating role of organizational culture in the
relationship between service quality, customer satisfaction and loyalty in the banking sector using data from
the Ghanaian banking sector. The idea is to understand the relative importance of the various service
dimensions to customers patronizing banking services in Ghana and to ascertain what drives customer
satisfaction and whether this satisfaction has implication on their loyalty.
Design/methodology/approach – The study used a survey and relied on partial least squares structural
equation modeling to study the relationship between service quality and its impact on customer satisfaction
and customer loyalty.
Findings – The result indicates that the reliability, ambiance and social factors all have a significant positive
relationship with the satisfaction of customers doing business with these banks. However, assurance and
responsiveness of the employees seem to have no significant relationship with the satisfaction of customers.
It is also important to indicate that organizational culture seems to strengthen the positive relationship
between the service quality dimensions and customer satisfaction. The results further indicate that customer
satisfaction has a direct positive relationship with customer loyalty.
Research limitations/implications – Reliability, ambiance and social factors remain the three most
important drivers of customer satisfaction in the banking sector in Ghana. It is, therefore, important for
bankers to consistently undergo training and education in order to deliver more reliable services to customers.
Managers should also make efforts to groom employees, provide attractive promotion materials, provide
directions to the banks, make sure the banking halls are neat for customers while waiting and the provision of
enough parking spaces for customers. One limitation of this work is that the data focused on only the
Ghanaian banking environment.
Practical implications – The research shows the importance of the service quality constructs such as
reliability, ambiance and the social factors on customer satisfaction and loyalty in the banking sector.
The organizational culture seems to strengthen the positive relationship between empathy, reliability, tangibles
and customer satisfaction. It is therefore important for banks to continue to build cultures that will commit
employees to their work, so that they feel the sense of ownership of quality in order to contribute meaningfully.
Originality/value – The work illustrates and provides some insights and builds on the literature in the area of
service quality, customer satisfaction and loyalty from a developing country’s environment using the
stimulus-organism-response model. In addition, this work further highlights the importance of the moderating role
of organizational culture in the relationship between the service quality dimensions and customer satisfaction.
Keywords Quality, Satisfaction, Loyalty, Ghana, Empathy, Banking
Paper type Research paper

1. Introduction
Quality represents the degree to which an entity satisfies its user’s needs (Batagan et al.,
2009); as such, quality tends to play a pivotal role in the success of the service industry,
International Journal of Quality &
Reliability Management owing to the intangible nature of services (George and Kumar, 2014). Service quality has
Vol. 35 No. 8, 2018
pp. 1546-1567
been defined as customers’ overall assessment of service (Ganguli and Roy, 2011), or
© Emerald Publishing Limited
0265-671X
consumers’ overall impression of the relative inferiority or superiority of an organization
DOI 10.1108/IJQRM-01-2017-0008 and its services (Bitner and Hubbert, 1994). A customer emotional response such as
satisfaction or dissatisfaction is a major outcome of every marketing activity and serves as a Moderating
link with various stages of consumer buying behavior. For instance, if customers are role of
satisfied with a particular service offering after its use, then they are likely to engage in organizational
repeat purchase and try line extensions (East, 1997). Customer satisfaction is widely
recognized as a key influence in the formation of consumers’ future purchase intentions culture
(Taylor and Baker, 1994). Customer satisfaction is increasingly becoming a corporate goal
as more and more companies strive for quality in their products and services (Bitner and 1547
Hubbert, 1994).
The relationship between customer satisfaction and service quality has received a great
deal of attention in the literature (Lee et al., 2011; Olorunniwo et al., 2006; Izogo, 2015;
Parasuraman et al., 1988; Zeithaml et al., 1996) based on the SERVQUAL scale, using the
five service quality dimensions – reliability, tangibles, responsiveness, assurance and
empathy (Parasuraman et al., 1988). Though the SERQUAL model has been used
extensively in recent times in the banking sector, there seem to be inconsistencies in the
findings. In fact, the context of country or culture has brought to bear the differences in
relevance and importance of the dimensions of the service quality model (Sangeetha and
Mahalingam, 2011). While researchers like Shanka (2012), Ilyas et al. (2013) and Sulieman
(2013) found empathy to be the most significant dimension in achieving customer
satisfaction within the banking industry they also had divergent conclusions on the
immediate preceding dimension after empathy. On the other hand, researchers like Lau et al.
(2013), Corneliu (2012), Khodaparasti and Gharebagh (2015) and Kumar et al. (2009) found
tangibles rather to be the most important dimension in ensuring that customers within the
banking industry from various environments are satisfied.
With these inconsistencies, attention in recent times has been focused on the use of
stimulus-organism-response (SOR) as a model to investigate the relationship between
service quality and customer satisfaction. Several studies have therefore employed the use
of the SOR framework (e.g.) to understand customer satisfaction and service quality.
Nonetheless, the role of organizational culture in moderating the relationship between
customer satisfaction and service quality within the context of the SOR framework has not
been explored. A number of researchers have shown that a company’s culture has a close
link to its effectiveness (Denison, 1990; Heskett and Kotter, 1992; Ouchi, 1981) and giving
today’s competitive business environment, customer satisfaction is an increasingly
important component of an effective organization (Berry and Parasuraman, 1992; Fornell
et al., 2006). Notwithstanding, the question as to whether and how organizational culture
may act as a moderating variable in the relationship between service quality and customer
satisfaction using the SERVQUAL or SOR model has not been addressed. The current study
is therefore aimed at examining the moderating role of organizational culture as measured
by the Denison Organizational Culture Survey (Denison and Neale, 2000) in the relationship
between these service quality dimensions, customer satisfaction and loyalty in the banking
sector of Ghana using the SOR model (Mehrabian and Russell, 1974).
In the SOR model, the stimulus is referred to as factors that affect the internals states of
the customer and can be conceptualized as an influence that stimulates the customer (Eroglu
et al., 2001). Bagozzi (1986) indicates the stimuli in the SOR model as external to customers
and consist of both marketing mix variables and the other environmental inputs such as
social factors relating to the service provider and the ambient conditions pertaining to effect
of customer satisfaction, and loyalty has been studied disjointedly across various industries,
with little attention to measuring the relationship between the two concepts in the retail
banking sector. They also indicate that competition is much intensified in the Ghanaian
retail banking sector. Hence, understanding the antecedents of customer loyalty in the
Ghanaian banking sector is, therefore, critical for effective design and implementation of
loyalty programs to ensure customer loyalty and retention. Thus, the relevance of customer
IJQRM satisfaction and customer loyalty cannot be underestimated in today’s competitive business
35,8 environment in the financial terrain of Ghana.
The rest of the paper is structured into five main parts. First, we present the literature
review and the research hypothesis, together with the conceptual model. This is followed
by the research method and the mode of data collection procedures. We then present
the data analysis and the main findings from the work. This is followed by the discussions
1548 and conclusions.

2. Literature review and research hypothesis

2.1 The SOR model
The conceptual framework of the study is developed based on the SOR model (Mehrabian
and Russell, 1974). According to Mehrabian and Russell (1974), the shopping environment
contains stimuli (S) that affect organisms (consumers, O) and result in approach or
avoidance response (R) behaviors toward the store and in behaviors like store searching,
intention to purchase and repurchase intention. In the classical SOR model, the stimulus is
defined as those factors that affect internal states of the individual and can be
conceptualized as an influence that stimulates the individual (Eroglu et al., 2001).
According to Bagozzi (1986), when consumer behavior is depicted as an SOR system, the
stimuli are external to the person and consist of both marketing mix variables and other
environmental inputs.
In this study, we conceptualized the stimuli as the banking environmental characteristics
such as social factors, reliability, assurance, responsiveness and ambiance that affect the
emotional responses of the customers. Organism refers to “internal processes and structures
intervening between stimuli external to the person and the final actions, reactions, or
responses emitted. The intervening processes and structures consist of perceptual,
physiological, feeling, and thinking activities” (Bagozzi, 1986, p. 46). In this study, the
organism is conceptualized as customer satisfaction toward the banking environmental
characteristics. The response in the SOR model represents the final outcomes and the final
decisions of consumers, which can be approach or avoidance behaviors (Donovan and
Rossiter, 1982; Sherman et al., 1997). The approach behaviors of the study are
conceptualized to represent customer loyalty to a particular bank. The SOR theoretical
framework has been applied by various authors to explain consumer behaviors toward
vendors (e.g. Eroglu et al., 2001; McKinney, 2004; Koo and Ju, 2010; Chang et al., 2011; Pen
and Kim, 2014). This framework is, therefore, being used in this study to explain customer
satisfaction and subsequent loyalty to banking services in Ghana.
2.1.1 Relationship between service quality and customer satisfaction. Customer
satisfaction is generally defined as a feeling or judgment of customers toward products
or services after they have used them ( Jamal and Naser, 2003; Quan, 2010; Gupta and
Bansal, 2012), whereas service quality is an overall assessment of the services and
satisfaction derived from the overall evaluation of the experience with those services
(Tian-Cole and Cromption, 2003; George and Kumar, 2014). Parasuraman et al. (1985, 1988)
initially described five dimensions of service quality: reliability, tangibles, responsiveness,
assurance and empathy. These dimensions indicate that, first, the service quality must
be tangible, which means there must be physical facilities provided by firms; second, it must
be reliable, which means that services are provided accurately; third, it must be responsive,
that is, servicing firms have a willingness to response the customers; fourth, services must
have the quality of assurance, that is, they must be confident and trustworthy; and, finally, it
must have empathy, that is, caring and customized services are provided (Ryu et al., 2011).
In the service literature, strong emphasis is placed on the importance of service
quality perceptions and the relationship between customer satisfaction and service quality
(Bitner and Hubbert, 1994; Cronin and Taylor, 1992; Taylor and Baker, 1994; Rust and Moderating
Oliver, 1994). It is generally accepted that customer satisfaction often depends on the quality role of
of product or service offering (Anderson and Sullivan, 1993; Levesque and McDougall, organizational
1996). For this reason, research on customer satisfaction is often closely associated with the
measurement of quality (East, 1997). culture
Zaim et al. (2010) found out that tangibility, ambiance or the physical facilities, reliability
and empathy or the social factors of the service are three important factors that affect 1549
customer satisfaction, whereas responsiveness and assurance are important factors, found
by Mengi (2009). Kumar et al. (2010) and Lai (2004) found that assurance, social factors and
the ambience or physical facilities or tangibles are the important factors, and, on the other
hand, Baumann et al. (2007) found that tangibles or ambience are not related to customer
satisfaction with Ahmed et al. (2010) finding out that empathy or the social factors are
negatively related to customer satisfaction.
Amin et al. (2011), in their work involving Islamic banks in Malaysia, indicating that a
bank’s ability to deliver the benefits of fast and efficient service, friendliness of bank
personnel, confidentiality and transaction speed on an on-going basis probably influence the
level of customer satisfaction. Roy et al. (2011) analyzed service quality perspectives and
customer satisfaction in commercial banks in Jordan. The authors applied multiple
regressions on the five parameters of service quality and found a positive relationship
between them and customer satisfaction. In a study carried out in Egypt by Saghier and
Demyana (2013), it was found that factors influencing users’ evaluation of service quality of
banking services were reliability, responsiveness, empathy or the social factors and
assurance. Zameer et al. (2015) found that there is a positive relationship between service
quality, customer satisfaction and corporate image. A study conducted by Paul et al. (2016)
related to private banks in India identified that knowledge of products, response to need,
solving questions, fast service, quick connection to the right perso, and efforts to reduce
queuing time were found to be the factors that are positively associated with overall
satisfaction. Ahmad and Kamal (2003) and Zameer et al. (2015), all in a study in Pakistan,
found similar relationships. One of the main purposes of the present study is to understand
the impact of the service quality on the satisfaction of customers patronizing the services of
banks in Ghana. Hence, based on the above arguments, our prior hypotheses are:
H1a. The social factors: the provision of care and individual attention to customers by
the bank has a direct positive impact on the satisfaction of the customers.
H1b. Reliability: the ability of the bank to perform the promised services both
dependably and accurately has a direct positive impact on the satisfaction
of the customers.
H1c. Assurance: the knowledge and courtesy of the bank, as well as the ability to
convey trust and confidence, has a direct positive impact on the satisfaction of
the customers.
H1d. Responsiveness: the willingness of the bank to help and provide prompt services
has a direct positive impact on the satisfaction of the customers.
H1e. Ambience: the facilities and the banking environment have a direct positive impact
on the satisfaction of the customers.
2.1.2 Relationship between customer satisfaction and customer loyalty. Loyalty or positive
behavioral responses are developed over a period of time from a consistent record of the
meeting, and sometimes even exceeding customer expectations (Teich, 1997). Gremler and
Brown (1996) define loyalty as the degree to which a customer exhibits repeat purchasing
behavior from a service provider, possesses a positive attitudinal disposition toward the
IJQRM provider and considers using only this provider when a need for this service exists. Afsar
35,8 et al. (2010) are of the view that the concept that is very closely related with satisfaction.
Satisfaction is yet another important trait which must be taken into account when shaping
the overall loyalty of the customers toward their service providers. In banks, the customers
ask themselves about the level of the services and decide about the lack of importance given
to them and decide on repurchase behavior after using these services. Long-term success
1550 and reputation of an organization depend primarily on customer loyalty. The mantra, “the
customer is always right,” is to be taken extremely seriously and, thus, the attainment of
customer loyalty is a golden principle for businesses (Sabir et al., 2014). Both service
management and marketing literature suggest that there is a strong theoretical foundation
for an empirical exploration of the linkages between customer satisfaction and customer
loyalty. Khan and Rizwan (2014) point out that if the purpose of any bank is to build
customer loyalty through customer satisfaction, then it will be important to ensure that all
points of contact are meeting customer satisfaction, whether they are personal or remote in
nature. The ability to provide high service quality will strengthen the organization’s image,
and enhance retention of customers, attracting new potential customers through customer
satisfaction and loyalty (Rahman, 2013).
Customer loyalty is, therefore, the result of an organization’s creating a benefit for
customers so that they will maintain and increase repeat business with the organization
(Anderson and Jacobsen, 2000). The service management literature proposes that customer
satisfaction influences customer loyalty, which, in turn, affects profitability. Proponents of
this theory include researchers such as Anderson and Fornell (1994), Gummesson (1993),
Heskett et al. (1990), Heskett et al. (1994), Reicheld and Sasser (1990), Rust et al. (1995),
Schneider and Bowen (1995), Storbacka et al. (1994) and Zeithaml et al. (1990).
These researchers discuss the links between satisfaction, loyalty and profitability.
Statistically-driven examination of these links has been initiated by Nelson et al. (1992), who
demonstrated the relationship of customer satisfaction to profitability among hospitals, and
Zahorik and Rust (1992), who examine the relationship of customer satisfaction to customer
retention in retail banking. Customers satisfied with the products/services are more likely to
be loyal to the provider (Anderson and Sullivan, 1993; Bolton and Drew, 1991). Customers’
satisfaction promotes loyalty in terms of patronage and repeats purchase (Mittal and
Kamakura, 2001). Our second objective of the present study is to understand the
relationship between customer satisfaction and customer loyalty within the Ghanaian
banking industry. Hence, based on the above arguments, our next hypothesis is:
H2. The satisfaction of customers with services provided by banks has a direct positive
relationship with the loyalty of customers.
2.1.3 The moderating role of organizational culture and the relationship between service
quality and customer satisfaction. Historically, examination of an organizations’ culture has
entailed in-depth qualitative methodologies with sociological or anthropological origins to
identify the unique values and beliefs that characterize a group or organization (e.g. Deal and
Kennedy, 1982; Ouchi, 1981; Pettigrew, 1979; Wilkins and Ouchi, 1983). A common theme of
these efforts has been a focus on the “shared basic assumptions that the group learned as it
solved its problems of external adaptation and internal integration” (Schein, 1993, p. 12). In
general, questionnaires purported to measure organizational culture tend to focus on a
broader set of characteristics (e.g. Cameron and Quinn, 1999; Denison and Neale, 2000; Heskett
and Kotter, 1992; O’Reilly et al., 1991). The current study builds on the organizational culture
framework of Denison et al. (Denison, 1990; Denison and Mishra, 1995; Fey and Denison, 2003),
which was developed using a combination of qualitative and quantitative investigations of
organizational culture. We conceptualize organizational culture along four dimensions that
have shown to relate to organizational effectiveness: involvement, consistency, adaptability Moderating
and mission. The learned responses to the problems of internal integration are observed by role of
the traits of involvement and consistency. Survival in the external environment is organizational
characterized by the adaptability and mission traits. These respective traits describe the
extent to which a company is customer focused and strategically oriented. culture
Taken together, the four traits measures “the underlying values, beliefs, and principles
that serve as a foundation for an organization’s management system as well as the set of 1551
management practices and behaviors that both exemplify and reinforce those basic
principles” (Denison, 1990, p. 2). This organizational culture model provides a systems
approach to impacting organizational effectiveness (Denison, 2000). By focusing on
the system as a whole, companies may be better able to satisfy their customers but, in the
process, also identify areas in need of improvement with respect to their mission, the
interaction among employees, and the systems and structures that encourage efficient
operations. We hypothesize that each of the four organizational culture traits will relate to
customer satisfaction; however, the trait of adaptability is related the most to customer
satisfaction, as it involves the capacity to respond to changing market demands and even
includes “customer focus” as one of its indexes. Together, adaptability and mission
represent an external focus, which is the organization’s mission including goals and
strategies to meet customer demands. Hence, the mission should also relate to customer
satisfaction. In theory, the traits of consistency and involvement are more internally focused
and, at first glance, may not seem to relate clearly to customer satisfaction. However,
through the focus on building shared values, systems and an infrastructure and
maintaining employee functioning and ownership, the organization is equipped to serve the
needs of customers better in the long run. Therefore, we also expect that organizations
higher on the cultural traits of adaptability will have greater customer satisfaction (Gillespie
et al., 2008). The following hypothesis is therefore proposed:
H3. Organizational culture moderates the positive relationships between banking sector
service quality characteristics and customer satisfaction.
Figure 1 summarizes the hypotheses of this study in conceptual model based on the SOR
model. The hypothesized relationships between the constructs are all hypothesized as
positive (+).

THE MODERATOR
H3: Organizational
Culture

STIMULUS ORGANISM RESPONSE

Banking Sector Service Consumers’ Emotional Consumers’ behavioral
Quality Characteristics Responses Responses
Social Factors (Empathy)
Reliability
Assurance Customer Satisfaction Customer Loyalty
Responsiveness
Ambiance (Tangibles) Figure 1.
The conceptual model:
the stimulus-
organism-response
(SOR) model
H1a–H1e H2
IJQRM 3. Research methods and measures
35,8 3.1 Methods
A questionnaire was developed and sent to customers of various banks in Ghana. This was
achieved through the assistance of both graduate and undergraduate students pursuing
business studies in one of the most recognized business schools in Ghana. Each student was
given the responsibility to identify five random individuals who were customers of
1552 the various banks. A set of questionnaire was then handed over to each of them. These
customers were given one to two weeks to complete the questionnaires. After which the
students went back to collect them. The instrument used in this research consisted of eight
distinct sections. The first five sections dealt with specific questions related to the five
dimensions of service quality based on the SERVQUAL scale developed by Parasuraman
et al. (1988) and were contextualized to suit the services rendered by the banking industry.
The sixth and seventh sections were structured based on customer satisfaction and
customer loyalty dimensions respectively. The satisfaction items were related to that of
Oliver (1997), Spreng and Mackoy (1996), Westbrook (1987) and Westbrook and Oliver
(1991), and the loyalty constructs were developed according to Lam et al. (2004), Morgan and
Hunt (1994), Zeithaml et al. (1996) and Shanka (2012).
The last section of the questionnaire addressed the biographical details, the name of the bank
the customer operates with and the number of years the customer has been with the bank. The
instrument was pretested with experts in marketing and operations management as well as
practitioners and the feedback received were used to improve the final piece before administering.
In all, 300 questionnaires were sent out. In total, 248 questionnaires were received, representing a
response rate of 82.6 percent; however, only 180 were usable due to incomplete, cancellations, etc.
All items were measured on Likert-type scales ranging from 1 ¼ “strongly disagree” to
5 ¼ “strongly agree.” These together form the structural and the measurement models.

3.2 Measures
The service quality items used in the survey questionnaire were adapted and expanded
from the previously validated SERVQUAL scale developed by Parasuraman et al. (1988).
This was then contextualized to suit the banking industry. Service quality was measured
using the five main constructs: reliability, (tangibles) ambiance, responsiveness, assurance
and social factors (empathy) (Parasuraman et al., 1988; Chang et al., 2011). The customer
satisfaction construct was operationalized using a differential scale similar to other effective
interpretations of customer satisfaction (Oliver, 1997; Spreng and Mackoy, 1996; Westbrook,
1987; Westbrook and Oliver, 1991). The customer loyalty scale draws on the attitudinal and
behavioral patronage logic of commitment described by others (e.g. Lam et al., 2004; Morgan
and Hunt, 1994; Zeithaml et al., 1996).
The questionnaire was developed by largely adopting constructs suggested in relevant
research as it is described below:
(1) Service quality: the dimensions’ choice was influenced by the works of Parasuraman
et al. (1988), Chang et al. (2011) and Izogo (2015), who summarized and categorized
the quality factors identified and contextualize it to capture sector-specific and
cultural issues within the context of the study:
• Social factors (empathy) was measured based on the ability of the bank to give
personal attention to customers, been friendly, sharing of information, willingness to
help customers and asking whether clients are satisfied with the banking services.
• Reliability was measured based on the ability of the employees to deal with
complaints directly, his/her competencies, showing of reliable behavior, giving
good advice and the provision of error-free services.
 • Assurance was measured on the ability of the employees to exhibit courteous Moderating
behavior, consideration of the customer’s interest, and informing customers role of
exactly what services can be expected. organizational
• Responsiveness was measured based on the ability of the employees to keep culture
appointments, performance of only important services, and answering of
customer’s call quickly.
• Ambience (tangibles) was measured based on the availability of well-groomed
1553
employees, how neat the banking hall is, how relaxing the banking hall is for
transactions, how pleasant the interior design of the bank, provision of coffee/
cocoa/drink whiles waiting, calling on customers by their names, provision of a
seat at a waiting room whiles providing services and the provision of enough
parking spaces for customers.
• Organizational culture – Denison Organizational Culture Survey (Denison and
Neale, 2000) is comprised of four traits (involvement, consistency, adaptability
and mission. However, out of the four traits, we selected the adaptability to
represent organizational culture in this study. According to Gillespie et al. (2008),
the trait of adaptability is more related to customer satisfaction, as it involves the
capacity to respond to changing market demands. Adaptability was measured
by how the organization understands and reacts to the customer, and anticipates
their future needs. Organizational culture was therefore measured by the
organization’s understanding and reaction to customers’ anticipation.
(2) Customer satisfaction – the customer satisfaction construct was operationalized
using a differential scale similar to other effective interpretations of customer
satisfaction (Oliver, 1997; Spreng and Mackoy, 1996; Westbrook, 1987; Westbrook
and Oliver, 1991). Satisfaction was measured with items such as the overall feeling
toward the bank and the level of satisfaction with the service provided.
(3) Customer loyalty – the customer loyalty scale draws on the attitudinal and
behavioral patronage logic of commitment described by others (e.g. Lam et al., 2004;
Morgan and Hunt, 1994; Zeithaml et al., 1996). Customer loyalty was measured with
items such as the possibility of the customer returning to the bank for service,
committed relationship, recommending to others and always saying positive things
about the bank.

4. Data analysis and results

4.1 Data analysis
In this study, we used partial least squares structural equation modeling (PLS-SEM) to
study the relationship between service quality and its impact on customer satisfaction and
customer loyalty due to its ability to simultaneously test and estimate complex causal
relationships (Williams et al., 2009).

4.2 Reliability and validity analyses

To proceed with our analysis, we examined the validity and reliabilities of our items and
constructs. To establish convergent validity, we considered the outer loadings of the items
as well as the average variance extracted (AVE) constructs. Figure 2 shows factor
loadings of items all were above the acceptable convergent validity thresholds, as all items
had significant loadings above 0.5 on their associated constructs (Fornell and Larcker,
1981). Table I displays AVE values all above the recommended threshold value of 0.5
(Fornell and Larcker, 1981). Discriminant validity displays the extent to which a construct
IJQRM ACS1 ASC2 ASC3 ASC5 TAN1 TAN3 TAN5 TAN7

35,8 0.795 0.807 0.770 0.730 0.761 0.743 0.763 0.756

0.000 0.000

EMP4
0.789
ASSURA... TANGIBLES
EMP5
0.817
0.000
0.751 0.088 0.290
EMP6 0.743

1554 EMP7
0.733
EMPATHY 0.258

0.864
SAT2 0.807
LOY2

EMP8 LOY3
0.663 0.853 0.831
0.838 SAT3 0.702 0.917
0.858
0.906 LOY4
REL3 0.299 SAT4
0.871
0.802 CUST SAT
CUST LO... LOY5
REL4 0.789 0.000 SAT5 0.821
0.818 0.033 0.077
0.830 LOY6
REL8
RELIABILITY
REL9 RESPONSI. CULTURE

Figure 2. 0.000 0.000

Results of the
measurements and the 0.751 0.735 0.764 0.785 0.650 0.725 0.623 0.903

structural model
RES2 RES4 RES5 RES8 CULT1 CULT2 CULT3 CULT4

Constructs AVE Composite reliability R2 Cronbach’s α

Assurance 0.6028 0.8584 0.7804

Culture 0.5377 0.8198 0.7389
Cust loyalty 0.7353 0.9327 0.7017 0.9091
Cust sat 0.7427 0.9203 0.6631 0.8845
Table I. Empathy 0.5885 0.8771 0.8268
AVE, composite Reliability 0.656 0.8841 0.8259
reliability, Cronbach’s Responsiveness 0.5765 0.8447 0.7582
α and R2 measures Tangibles 0.5677 0.8401 0.7467

in a model is truly distinct from other constructs by empirical standards. We established

this using the Fornell–Larcker criterion (Hair et al., 2011). The Fornell–Larcker criterion
compares the square root of the AVE values with latent variable correlations (Fornell and
Larcker, 1981). Specifically, the square root of each constructs AVE should exceed the
squared correlations with other constructs. We establish that the square root of all AVEs
was greater than the correlations with other constructs (Chin, 1998; Fornell and Larcker,
1981), as shown in Table II, exhibiting discriminant validity. We also ensured that the
constructs had high internal consistency by calculating their composite reliabilities (CRs)

Cust Cust
Constructs Assurance Culture loyalty sat Empathy Reliability Responsiveness Tangibles

Assurance 0.776
Culture 0.158 0.733
Cust loyalty 0.311 0.271 0.857
Cust sat 0.345 0.238 0.510 0.862
Empathy 0.383 0.187 0.416 0.483 0.767
Table II. Reliability 0.428 0.178 0.458 0.520 0.400 0.810
Discriminant validity Responsiveness 0.386 0.150 0.412 0.41 0.320 0.415 0.759
– Fornell–Larcker Tangibles 0.446 0.140 0.516 0.512 0.395 0.482 0.472 0.753
criterion Note: The italic numbers on the diagonal are the square root of the AVEs
and Cronbach’s α (CA) values. The CA values, as well as the CR values, were all above the Moderating
recommended threshold of 0.7 (Hair et al., 2014; Nunnally and Bernstein, 1994), as role of
displayed in Table I. organizational
The interpretation of Tables I and II indicates the satisfaction of all the quality criteria
since the psychometric properties of the data set seem appropriate; hence, the data are culture
deemed adequate for further analysis.
1555
4.3 Model predictive relevance Q2 and effect size f 2
In addition to the evaluation of the R2 values of the endogenous constructs, we also
evaluated the f 2 and Q2 values. The f 2, the effect size, is the change in R2 values when a
specified exogenous construct is omitted from the model (Cohen, 1988). This is used to
evaluate whether the omitted construct has a substantive impact on the endogenous
constructs or not. The effect size can be calculated as:

R2included R2excluded
f2 ¼ ;
1R2included

where R2included and R2included are the R2 values of the endogenous latent variable when a
selected exogenous latent variable is included or excluded from the model. Guidelines for
assessing f 2 are that values of 0.02, 0.15 and 0.35, respectively, represent small, medium and
large effects (Cohen, 1988) of the exogenous latent variable. Hence, from Table III, all the
exogenous latent variables seem to have some effect on the endogenous latent variables in
the model. Surprisingly, responsiveness seems to have some small negative effect on
customer satisfaction. To further examine the accuracy of our model, we examined
Stone–Geisser’s Q2 value (Geisser, 1974; Stone, 1974). This measure is an indicator of the
model’s predictive relevance. In the structural model, Q2 values larger than zero for a certain
reflective endogenous latent variable indicate the path models’ predictive relevance for that
particular construct (Chin, 1998; Henseler et al., 2009; Tenenhaus and Esposito Vinzi, 2005).
The Q2 values in Table III were obtained using the blindfolding procedure in PLS 2.0.
The same guideline recommended by Cohen (1988), is used to assess the values of Q2. The
results in Table III, therefore, indicate Q2 values of 0.442 and 0.501 for customer satisfaction
and customer loyalty, respectively, indicating the very large predictive relevance of these
endogenous constructs in the model.

4.4 Results
In Figure 2, we present the results of both the measurement and the structural models.
The bootstrapping procedure using re-samples of 5,000 (Hair et al., 2011) was used to

Constructs Q2 Customer satisfaction ( f 2)

Endogenous latent variables

Customer satisfaction 0.442 –
Customer loyalty 0.501 –
Exogenous latent variables
Empathy – 0.118
Reliability – 0.083
Assurance – 0.035 Table III.
Responsiveness – −0.003 Predictive relevance
Tangibles – 0.157 2
(Q ) and effect size
Culture – 0.003 ( f 2) the default model
IJQRM determine the significance of the path coefficients in the model. The bootstrap results are
35,8 shown in Table IV.
We begin the analysis of the structural model by evaluating Pearson’s coefficients (R2).
This R2 is a very important indicator of the portion of the variance of the endogenous
variables, customer satisfaction and loyalty which is explained by the structural model. It
also indicates the quality of the adjusted model. According to the Cohen (1988), an R2 ¼ 2
1556 percent is classified as having a small effect, R2 ¼ 13 percent is classified as having a
medium effect and R2 ¼ 26 percent can be classified as having a large effect. Thus, the
results in Figure 2 indicate that the research model explained 66.3 and 70.2 percent of the
variance in customer satisfaction and loyalty, respectively, indicating a very large effect in
the two endogenous constructs in the structural model.
As far as the hypothesized relationships are concerned, the results indicate that the
empathy, reliability, tangibles dimensions of quality and organizational culture of the bank all
have a significant positive relationship with the satisfaction of customers patronizing banking
services with empathy ( β ¼ 0.2578, p ¼ 0.000), reliability ( β ¼ 0.2994, p ¼ 0.000), tangibles
( β ¼ 0.2895, p ¼ 0.000) and organizational culture ( β ¼ 0.0775, p ¼ 0.025). However, the
assurance and responsiveness of the employees of the bank seem to have no significant
positive relationship between the satisfaction of customers of patronizing banking services
with assurance ( β ¼ 0.0878, pW0.05) and responsiveness ( β ¼ 0.0325, pW0.05) accepting
H1a, H1b, H1e, but rejecting H1c and H1d. The results also indicate that customer satisfaction
has a direct positive relationship with customer loyalty ( β ¼ 0.8377, p ¼ 0.000), satisfying H2.
A summary of the hypothesis tested and the results are presented in Table V.

4.5 Moderating effects of organizational culture on service quality and customer

satisfaction
In respect of H3, following the procedures suggested by Frazier et al. (2004), reliability,
tangibles, responsiveness, assurance, empathy and organizational culture were
standardized first. Next, product terms of organizational culture and these service quality
indicators were created by multiplying the values of the two variables to represent the

Paths Original sample Sample mean SD SE t-statistics p-values

Assurance → cust sat 0.0878 0.0881 0.0598 0.0598 1.4694 0.143

Culture → cust sat 0.0775 0.0834 0.0342 0.0342 2.2648 0.025
Table IV. Cust sat → cust loyalty 0.8377 0.8384 0.0218 0.0218 38.3867 0.000
Hypothesis tested, Empathy → cust sat 0.2578 0.2605 0.0601 0.0601 4.2863 0.000
path coefficients and Reliability → cust sat 0.2994 0.2939 0.0606 0.0606 4.9427 0.000
significance levels Responsiveness → cust sat 0.0325 0.0324 0.0669 0.0669 0.4867 0.627
from bootstrapping Tangibles → cust sat 0.2895 0.2915 0.044 0.044 6.583 0.000

Hypothesis Exogenous variable Path Endogenous variable Path estimate p-value Supported?

H1a Empathy → Customer satisfaction 0.626*** 0.000 Yes

H1b Reliability → Customer satisfaction 0.294*** 0.000 Yes
H1c Assurance → Customer satisfaction 0.088 0.143 No
Table V.
Summary of H1d Responsiveness → Customer satisfaction 0.032 0.627 No
hypothesis tested, H1e Tangibles → Customer satisfaction 0.292*** 0.000 Yes
path coefficients and H2 Customer satisfaction → Customer loyalty 0.838*** 0.000 Yes
significance levels Notes: *p 0.10; **p 0.05; ***p 0.01
interaction between the predictor and moderator. This resulted in five regression models Moderating
presented in Table VI. The results indicates that the first three regression models were role of
significant ( p o0.001), indicating that organizational culture moderates the relationship in organizational
respect of those constructs. However, models 4 and 5 involving Assurance and
Responsiveness were not significant ( p W0.05). culture
Specifically, the interaction term of empathy, reliability, tangibles and organizational
culture were significant ( β ¼ 0.736, t ¼ 3.822, p o0.001), ( β ¼ 0.567, t ¼ 2.774, p o0.001) and 1557
( β ¼ 0.048, t ¼ 2.625, p ¼ 0.001), respectively, indicating the moderating role of
organizational culture on empathy, reliability and tangibles on customer satisfaction. We
relied on Gaskin’s (2016) Stats Tools Package for the plots of the interaction effects of the
moderating variable The plots of these moderating effects of organizational culture on
the relationship between empathy, reliability and tangibles on customer satisfaction are
presented in Figures 3, 4 and 5, respectively.

5. Discussion and conclusions

5.1 Discussions
One of the main aims of this research was to understand the quality dimensions influencing
customer satisfaction as well as their loyalty in the banking sector in Ghana. In this work,
the items used in the survey questionnaire were adapted and expanded from the previously
validated SERVQUAL scale developed by Parasuraman et al. (1988) and Chang et al. (2011)
based on the SOR model. These items were then contextualized to suit the banking sector.
The PLS-SEM which was used in the analysis enabled us to understand the critical service
quality requirements that are important to customers patronizing banking services based
on their satisfaction and loyalty.
The results indicate that quality criteria such as reliability, ambiance (tangibles)
and social factors (empathy) are very important to customers in Ghana patronizing

Variable Standardized coefficients t

Model 1
Empathy 0.859 5.426***
Organizational culture 0.384 4.139***
Empathy × organizational culture 0.736 3.822***
Model 2
Reliability 0.717 4.711***
Organizational culture 0.379 3.171***
Reliability × organizational culture 0.567 2.774***
Model 3
Tangibles 0.601 4.650***
Organizational culture 0.382 3.084***
Tangibles × organizational culture 0.048 2.625***
Model 4
Assurance 0.176 0.958
Organizational culture −0.196 0.94
Assurance × organizational culture −0.45 1.369
Model 5
Responsiveness −0.034 0.251
Organizational culture 0.026 0.266 Table VI.
Responsiveness × organizational culture −0.096 0.607 Summary of
Notes: *p 0.10; **p 0.05; ***p 0.01 moderation results
IJQRM 5
35,8 4.5

3.5 Moderator

Cust Sat
3 Low Culture
1558 High Culture
2.5

2
Figure 3. 1.5
The moderating effect
of organizational 1
culture on empathy Low Empathy High Empathy
and customer
satisfaction Culture strengthens the positive relationship between
Empathy and Cust Sat.

5
4.5
4
3.5 Moderator
Cust Sat

3 Low Culture

2.5 High Culture

2
Figure 4. 1.5
The moderating effect
of organizational 1
culture on reliability Low Reliability High Reliability
and customer
satisfaction Culture strengthens the positive relationship between
Reliability and Cust Sat.

5
4.5
4
Moderator
3.5
Cust Sat

Low Culture
3
High Culture
2.5
2
Figure 5. 1.5
The moderating effect
of organizational 1
culture on tangibles Low Tangibles High Tangibles
and customer
satisfaction Culture strengthens the positive relationship between
Tangibles and Cust Sat.
banking services. Reliability of the employees which is a measure of the ability of the Moderating
employees to deal with complaints directly, their competencies, showing of reliable role of
behavior, giving good advice and provision of error-free services were also identified as organizational
the single most important factor influencing customer satisfaction. In addition, the ambience
(tangibles), which is a measure of the availability of well-groomed employees, the neatness culture
of the banking, the pleasant nature of the design of the interior, provision of a seat at a
waiting room while providing services and the provision of enough parking spaces for 1559
customers were also important to customers. Also, the social factors (empathy), a measure of
the ability of the employees of the bank to give personal attention to customers, being
friendly, sharing of information and asking whether clients are satisfied after the banking
services were the third most important quality dimension important to bank customers in
Ghana. The above findings are very consistent with Zaim et al. (2010), who found out that
tangibility, reliability and empathy are important factors for customer satisfaction in
Turkey. This is also consistent with Roy et al. (2011), who analyzed service quality
perspectives and customer satisfaction in commercial banks in Jordan using multiple
regressions on the five parameters of service quality and found a positive relationship
between them and customer satisfaction. Kumar et al. (2010) and Lai (2004) found empathy
and tangibles are the important factors of customer satisfaction.
Surprisingly, we found no relationship between assurance, responsiveness and customer
satisfaction. The findings of this work seems to contradict the findings of Amin et al. (2011),
based on their work involving Islamic banks in Malaysia, which indicated that a bank’s
ability to deliver the benefits of fast and efficient service, confidentiality and transaction
speed on an on-going basis probably influence the level of customer satisfaction. Paul et al.
(2016), related to private banks in India, identified that knowledge of products, response to
need, solving questions, fast service, quick connection to the right person and efforts to
reduce queuing time were found to be the factors that are positively associated with
overall satisfaction.
The second hypothesis which was testing the relationship between customer satisfaction
and customer loyalty was also fully supported, indicating that when indeed customers are
satisfied with the products and services of a bank, they are likely to remain loyal and
will continue to do business with this particular bank. This finding is consistent with
Anderson and Fornell (1994), Gummesson (1993), Heskett et al. (1990), Heskett et al. (1994),
Reicheld and Sasser (1990), Rust et al. (1995), Schneider and Bowen (1995), Storbacka et al.
(1994) and Zeithaml et al. (1990). These researchers discuss the links between satisfaction,
loyalty and profitability. Customers satisfied with the products/services are more likely to
be loyal to the provider (Anderson and Sullivan, 1993; Bolton and Drew, 1991). In fact, Mittal
and Kamakura (2001) found a similar relationship indicating that customers’ satisfaction
promotes loyalty in terms of patronage and repeat purchase. The organizational culture
seems to strengthen the positive relationship between empathy, reliability, tangibles and
customer satisfaction. It is therefore important for banks to continue to build cultures that
will commit employees to their work, so that they feel a sense of ownership of quality in
order to contribute meaningfully.
The findings have some implication for practice and theory. It is important therefore for
banks and their employees to pay more attention to reliability, tangibles and empathy in
order to be competitive. Reliability, tangibles and empathy remain the three most important
drivers of customer loyalty in the banking sector of Ghana. It is therefore important for
bankers to consistently undergo training and education in order to deliver more reliable
services to customers. It is also important for management of these banks to groom
employees, provide attractive promotion materials, provide directions to the banks, makes
sure the banking halls are neat, provision of seats for customers while waiting and the
provision of enough parking spaces for customers. Finally, it is important for management
IJQRM to educate employees to do their best to give personal attention to customers, to be friendly,
35,8 ask whether clients are satisfied with the banking services before their final exit from the
banking hall. For theory, this work presents an extension of the SOR model in the banking
industry based on data from a developing country.
One limitation of this work is that the data focused on only Ghana. Future research can
therefore investigate additional cities, in order to compare the results. Again, this research
1560 can also be investigated at the regional level where we have communities with a different
cultural background in order to check as to whether culture can affect the results in any
way. It is important for other researchers to collaborate and collect data from a wider
geographical area, say all the ten regional capitals or in the entire West Africa, to investigate
as to whether the results could be confirmed. With regards to the organizational culture
dimensions, this research actually adapted the only one out of the four, which was
adaptability. It is important for future research to include more than one to assess as to
whether the effects will change.

5.2 Conclusions
The present study contributes to the literature by investigating the relationship between the
five dimensions of service quality, customer satisfaction and loyalty. This work contributes
to the existing debate concerning the drivers of customer satisfaction and loyalty using data
from bank customers from a different environment based on the SOR model. The results
indicate the need for employees to be reliable by dealing effectively with complaints directly,
show reliable behavior, advise customers well and provide error-free services as this was
identified as the single most important factor influencing customer satisfaction. In addition,
the ambience (tangibles), which is a measure of the availability of well-groomed employees,
the neatness of the banking, the pleasant nature of the design of the interior, provision of a
seat at a waiting room while providing services and the provision of enough parking spaces
for customers were also important to customers. Also, the social factors (empathy),
a measure of the ability of the employees of the bank to give personal attention to customers,
being friendly, sharing of information and asking whether clients are satisfied after the
banking services were the third most important quality dimension important to bank
customers in Ghana.
Our work found no relationship between assurance, responsiveness and customer
satisfaction. We also found support for the relationship between customer satisfaction and
customer loyalty, indicating that when indeed customers are satisfied with the products and
services of a bank, they are likely to remain loyal and will continue to do business with this
particular bank. The organizational culture strengthens the positive relationship between
empathy, reliability, tangibles and customer satisfaction.

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Corresponding author
Samuel Famiyeh can be contacted at: sfamiyeh@gimpa.edu.gh

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