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MSQ
22,1 Customer loyalty and the role of
relationship length
Chung-Yu Wang
58 Department of Business Administration,
National Kaohsiung University of Applied Sciences, Kaohsiung, Taiwan, and
Received February 2011 Li-Wei Wu
Revised May 2011
August 2011
Department of International Business, Tunghai University, Taichung, Taiwan
September 2011
Accepted October 2011
Abstract
Purpose – The objective of this study is to examine the effect of corporate image, perceived value,
and switching costs on customer loyalty in customer/provider relationships of different length.
Design/methodology/approach – Five key constructs, namely: corporate image, perceived value,
switching costs, customer loyalty, and length of relationship, were employed. Using a systematic
sampling technique, student interviewers randomly approached customers exiting hair salons. The
final survey sample consisted of 279 respondents.
Findings – This paper supports a contingency model with regard to customer loyalty and its
antecedents. The results suggest that corporate image impacts customer loyalty in both newer and
older relationships. Whereas in newer relationships, corporate image has a cardinal influence on
switching costs, in more-established relationships switching costs are influenced primarily by
perceived value. In both cases, switching costs influence customer loyalty.
Research limitations/implications – As extant research claims that relationship quality, and not
length, moderates the relationship between loyalty/repurchase behavior and their antecedents, future
research could adopt relationship quality as a moderator to test the model of the present study.
Practical implications – The results support the importance of enhancing corporate image to
retain newer customers. In longer-established relationships, corporate image remains a determinant of
repurchase decisions. However, customer value also has a significant influence on switching costs and
loyalty.
Originality/value – The current study moves beyond customer-perceived value, switching costs,
and corporate image to demonstrate that relationship length has a significant influence on customer
loyalty.
Keywords Customer loyalty, Length of relationship, Switching cost, Corporate image, Perceived value
Paper type Research paper

Managing Service Quality
Vol. 22 No. 1, 2012
pp. 58-74
q Emerald Group Publishing Limited
0960-4529
DOI 10.1108/09604521211198119
Introduction
Service providers generally consider customer loyalty as an important source of
competitive advantage (Woodruff, 1997). Enhanced customer loyalty in service firms
has been demonstrated to increase profitability by numerous extant studies examining
the connection between customer loyalty and its antecedents (e.g. Aydin and Ozer,
2005; Cronin et al., 2000; Ibanez et al., 2006; Liu et al., 2005; Sirdeshmukh et al., 2002;
Woodruff, 1997). However, past research throws minimal light on how this connection
may evolve over time as the customer-provider relationship matures (e.g. Chiao et al.,
This work’s authors sincerely appreciate the precious comments from the two anonymous
reviewers and the financial aid from the National Science Council, Taiwan (NSC 97-2410-H-366 -005).
2008; Liu et al., 2005; Sabiote and Sergio, 2009). Potential customer loyalty antecedents Customer loyalty
include: corporate image, perceived value, and switching costs. Switching costs are
often strategically advocated as a means of encouraging customer loyalty, because the
costs associated with switching to an alternative store often deter customers from
doing so (Jones et al., 2000). Customers may also remain loyal to a company that they
perceive offers superior value (Lam et al., 2004) or a more positive corporate image
(Nguyen and Leblanc, 2001) than its competitors. Although researchers have 59
attempted to elucidate the connection between customer loyalty, corporate image,
perceived value, and switching costs, the complex interrelationships between these
constructs are still not fully understood. To the best of the authors’ knowledge, no
previous study has empirically investigated these constructs within a single
framework. Thus, this paper proposes, and empirically analyzes, a conceptual
framework that considers customer-perceived value, corporate image, and switching
costs as antecedents of customer loyalty. Specifically, this paper examines the
mediating role played by switching costs on perceived value and corporate image and,
by extension, on customer loyalty, as well as the direct effect that perceived value and
corporate image exerts on customer loyalty. Therefore, the present study compares the
relationships of the proposed model in the context of short vs. long customer/provider
relationship length.
Corporate image is a salient element in the proposed model. To reduce the
uncertainty associated with early service encounters, consumers will look for signs, or
evidence, of service quality (e.g. corporate image) from which to draw conclusions
(Gronroos, 1984). Patterson (2000, p.143) indicates that:
[. . .] new or first-time clients without concrete experiences are forced to rely on
word-of-mouth, marketer communications, or assessment of various tangible cues (such as
the consultant’s brochures, office decor and layout, and the professionalism of the written
proposal) to form weaker, less-stable expectations.
Patterson (2000) concludes that experience moderates the relationship between
performance, disconfirmation (the tendency to refute evidence challenging one’s
beliefs), and satisfaction. Therefore, this paper proposes that a positive corporate image
will facilitate the drawing of more positive inferences in a new customer/provider
relationship. However, as customers make more purchases over time, they start
perceiving value as overridingly important. Flint et al. (2002) ascertain that the
phenomenon of customer desired value change typically occurs in an emotional context.
Matos et al. (2009) demonstrate that the mediating effect of switching cost is stronger in
the relationship between satisfaction and attitudinal loyalty. This raises the question:
Does the impact of perceived value, switching costs, and corporate image on customer
loyalty evolve over the course of a customer/provider relationship? Specifically, this
paper theorizes whether consumers enter into a new exchange relationship by virtue of
their favorable perception of a provider’s corporate image. With regard to
longer-established relationships, this paper surmises whether perceived value will
have a pivotal effect on customer loyalty as a result of switching costs.
To answer this question, the authors propose and empirically analyze a conceptual
framework that considers perceived value, switching costs, and corporate image as
antecedents of customer loyalty. In particular, the authors examine the relationship
between customer loyalty and its antecedents in customer/provider relationships of
varying length. A better understanding of loyalty and the boundary conditions of
MSQ customer relationships could support managerial efforts to galvanize customer loyalty
22,1 through initiatives that leverage customer retention antecedents. For example, a useful
clarification for providers would be whether perceived value and switching costs have
a stronger effect on loyalty in long-standing customer relationships versus newer ones.
If this theory is proven correct, managers will be more likely to appreciate the
importance of perceived value and switching costs to longer-term customers and pay
60 more attention to both growing their firm’s perceived value and creating switching
costs. However, it should be noted that creating switching costs, in lieu of increasing
customer-perceived value and corporate image, would prove to be an unwise, long-term
strategy and may cause customers to be spurious loyalty (Dick and Basu, 1994).

Conceptual framework and hypothesis development

Customer loyalty can be defined as a buyer’s overall attachment or deep commitment
to a product, service, brand, or organization (Oliver, 1999). The concept of loyalty is
similar in definition to relationship commitment, which is described as an enduring
desire to be in a valued relationship (Morgan and Hunt, 1994). Customer loyalty
manifests itself in a variety of behaviors. The more common behaviors constitute the
repeated patronizing of the service provider and word-of-mouth referral to other
customers (e.g. Lam et al., 2004; Zeithaml et al., 1996).

Customer value
Customer value is a comparison of weighted “get” attributes with “give” attributes
(Heskett et al., 1994). Customer-perceived value is operationalized as a ratio between
total benefits received to total sacrifices made (Buzzell and Gale, 1987). These sacrifices
may be based on price, but can also include non-financial aspects, such as time, search
costs, and physical or mental effort expended by the customer consuming the service
(Dodds et al., 1991). Moreover, initial conceptualizations of value have shown a
tendency to measure value as a single, overall value construct, e.g. fair price,” “good
value” (Baker et al., 2002), and “value for money” (Grewal et al., 1998). Another
tendency is to use a multi-item scale to measure perceived value as a unidimensional
construct that has traditionally emphasized price perceptions (e.g. Grewal et al., 1998).
Despite these tendencies, Sigala (2006) suggests that a need has been recognized to
conceptualize customer value as a multidimensional construct in terms of both its
“give” and “get” attributes. Extant service management literature argues that customer
satisfaction results from customer’s perception of value received, where value equals
perceived service quality relative to price (Hallowell, 1996, p. 29). Naturally, a
customer’s perception of value received from a service provider could motivate the
customer to patronize the provider again. Therefore, customer-perceived value is
positively related to customer loyalty (Bolton and Drew, 1991; Bove and Johnson, 2000;
Cronin et al., 2000; Lai et al., 2009; Sirdeshmukh et al., 2002; Woodruff, 1997; Yang and
Peterson, 2004).
Providing customers with superior value is one approach to building exit barriers
(Wathne et al., 2001). Flint et al. (2002) suggest that value judgments are reassessed
periodically and become richer, more elaborate, and more accurate over time. Bove and
Johnson (2000) propose that the longer a relationship between a customer and an
individual service representative endures, the stronger it will be: such relationships
induce customer loyalty. Therefore, as the service relationship progresses, so does the
impact of “offer-related” service representative characteristics (e.g. competence, Customer loyalty
customization, and reliability) on trust (Coulter and Coulter, 2002). This, in turn,
engenders loyalty (Gundlach and Murphy, 1993). Hence, this study hypothesizes that:
H1a. Customer value positively influences customer loyalty.
H1b. Customer value has a stronger positive effect on customer loyalty in
longer-term relationships than in shorter-term relationships. 61
Corporate image
Corporate image can be described as the overall impression made on the public psyche
about a firm (Barich and Kotler, 1991). Corporate image can be a multifaceted
phenomenon: specific groups may hold various, divergent images of a single firm, as a
result of their distinct experiences and contacts with the company (Dowling, 1988).
Corporate image is related to the physical and behavioral attributes of a firm, such as
business name, architecture, variety of products/services offered, and interactions
(Nguyen and Leblanc, 2001). Corporate image is derived from a process (MacInnis and
Price, 1987) stemming from ideas, feelings, and consumption experiences related to a
company that are retrieved from memory and transformed into mental images (Yuille
and Catchpole, 1997). Corporate image may be considered as, “a function of the
accumulation of purchasing/consumption experience over time” (Andreassen and
Lindestad, 1998, p. 84). Therefore, corporate image essentially results from an
evaluation process (Aydin and Ozer, 2005). Previous studies have found that the effects
of corporate image on customer loyalty can be both direct (Nguyen and Leblanc, 2001;
Souiden et al., 2006) and indirect (Ball et al., 2006; Bloemer and de Ruyter, 1998). Extant
research has demonstrated that service relationships evolve both during specific
service encounters (Crosby et al., 1990), as well as during the gradual process of
“getting to know” a service provider. “Getting to know” a service provider implies the
acquisition of information. Early in the customer/provider relationship, consumers are
often confronted with not knowing what to expect from the service. With insufficient
knowledge about a company, a customer may be forced to obtain information from
different sources (e.g. via advertisements and word-of-mouth), which will affect the
corporate image formation process (Aydin and Ozer, 2005). Due to the intangibility
factor, customers often perceive services as risky and consequently need to gain initial
confidence in a service provider before starting a relationship. To reduce the
uncertainty associated with early service encounters, consumers will search in advance
for signs, or evidence, of service quality. Examples of these signs are perceived
corporate image (Gronroos, 1984), place, people, equipment, communication materials,
symbols, and price (Kotler, 1997, p. 469). It is from these tangible, corporate features
that customers draw inferences about service quality. In the early phases of a
relationship, customers rely primarily on the provider’s perceived trustworthiness,
placing faith in the reliability and quality of the services they deliver (Garbarino and
Johnson, 1999). Companies strive to build customer-perceived trustworthiness by using
advertising, brand names, and other signals that may also help boost corporate image.
In the early stages of a service relationship, a service representative’s similarity to a
customer (e.g. education level, social class, etc.), level of politeness, and empathetic
attitude will all facilitate the drawing of more positive customer inferences and help
build trust (Coulter and Coulter, 2002). Consequently, these inferences will influence
MSQ customer loyalty (Gundlach and Murphy, 1993). As a service representative’s personal
22,1 characteristics may also help to form a corporate image, this paper proposes that
corporate image constitutes a sign that will facilitate the drawing of more positive
inferences in a new relationship, which in turn, will positively influence customer
loyalty. Hence:
H2a. Corporate image positively influences customer loyalty.
62
H2b. Corporate image has a stronger positive effect on customer loyalty in
shorter-term relationships than in longer-term relationships.

Switching costs
Switching costs can be defined as the costs involved in changing from one supplier to
another (Heide and Weiss, 1995). The domain of switching costs includes both
monetary and non-monetary costs (e.g. time and psychological effort expended) (Dick
and Basu, 1994). Furthermore, this domain includes the loss of loyalty benefits incurred
by a firm when a customer takes their business elsewhere (Heide and Weiss, 1995). For
example, customer familiarity with a provider’s service procedures constitutes a type
of switching cost, because these costs will become worthless to the provider should the
customer terminate the relationship. Previous studies have conceptualized customer
value in two dimensions: “give” and “get” (Heskett et al., 1994). The “give” dimensions
include costs such as: time, search costs, and the physical or mental effort employed in
consuming a service. By contrast, switching costs are the, “one-time costs facing the
buyer switching from one supplier’s product to another” (Porter, 1980, p. 10). Based on
these, Liu (2006) concludes that economic value and the value obtained from relational
and support aspects of a service both exert a strong positive influence on switching
costs, and thus serve as barriers to exit. As the customer-perceived switching costs of
an activity increase, the likelihood of consumers engaging in such behavior will
decrease. Urbany (1986) demonstrates that, as the cost of information gathering
increases, the extent of information search diminishes. Therefore, perceived switching
costs have a positive effect on customer loyalty (Burnham et al., 2003; Lam et al., 2004).
Because customers make a series of purchases over time, they face increasingly
high costs when switching to a new supplier and will therefore come to view their
commitment level to a particular supplier as relatively stable (Jackson, 1985). Weiss
and Kurland (1997) demonstrate that the relationship between switching costs and
relationship continuation is strengthened by relationship age. Thus, as switching costs
increase over time, they will become an increasingly important factor in customer
repurchase decisions (Liu et al., 2005). Hence:
H3a. Switching costs positively influence customer loyalty.
H3b. Switching costs have a stronger positive effect on customer loyalty in
longer-term relationships than in shorter-term relationships.

Interrelationships of customer value, corporate image, and switching costs

Customer evaluation of service provider interactions becomes more significant in
longer-term relationships. Coulter and Coulter (2002) indicate that, as the length of
service relationship increases, so does the impact on customer trust levels of
offer-related characteristics, such as: competence, customization, reliability, and
promptness. This, in turn, will generate higher switching costs (Aydin and Ozer, 2005). Customer loyalty
High-value services may result from customer exposure to the above-mentioned
offer-related characteristics. Over the course of a relationship, customers become more
accustomed to interacting with a service provider and more familiar with their
procedures. Grayson and Ambler (1999) conclude that the higher the
customer-perceived quality of these provider interactions is, the more assured their
patronage of the service would be. Heskett et al. (1997) describe how companies can 63
deliver high-value services (i.e. quality services at a reasonable price) to their
customers in order to satisfy their needs. Providing customers with provider
heterogeneity, product complexity, and superior value is one way of developing
switching costs and building exit barriers (Burnham et al., 2003; Liu et al., 2005;
Wathne et al., 2001). This is because switching costs may reflect a buyer’s dependence
on a vendor (i.e. a buyer’s need to maintain a relationship with a supplier to achieve
desired goals (Frazier, 1983)). For example, service offers delivered in a reliable and
dependable manner by a long-term service provider will fortify customer-provider
relationships and may even create higher switching costs. By contrast, in a new
exchange relationship, a customer may have insufficient knowledge about a firm, and
so garner information from various sources (e.g. via advertisements and
word-of-mouth), which will influence the corporate image formation process. More
specifically, as it is difficult for new customers to base their behavior on their limited
experience of a provider, they may instead allow the latter’s perceived corporate image
to determine the level of confidence they place in the service’s reliability and quality.
Jackson (1985) indicates that psychological cost – which constitutes a type of
switching cost – is perceived by customers as the cost resulting from the
uncertainty/risk of trying a brand for the first time. This risk exists inherently within
the service industry, because service quality cannot be evaluated in the pre-purchase
phase (Sharma et al., 1997). Therefore, in the early stages of a provider relationship,
customers may perceive switching costs based on a positive corporate image. Thus:
H4a. Customer-perceived value positively influences switching costs.
H4b. Customer-perceived value has a stronger positive effect on switching costs in
longer-term relationships than in shorter-term relationships.
H5a. Corporate image positively influences switching costs.
H5b. Corporate image has a stronger positive effect on switching costs in
shorter-term relationships than in longer-term relationships.
Based on the preceding considerations, this paper proposes the following conceptual
model (see Figure 1).

Methods
Measurement
The authors designed a questionnaire with measures of the relevant constructs
(corporate image, perceived value, switching costs, customer loyalty, and length of
relationship), based primarily on scales from previous research. All measures use
seven-point Likert scales except length of relationship (1 ¼ ”strongly disagree,” and
7 ¼ ” strongly agree”). Length of relationship was measured by a single item question,
MSQ
22,1

64

Figure 1.
Conceptual research model
used in the present study

which asked respondents to indicate the amount of time they had been associated with
their hairstylist/barber’s firm. A five-item scale regarding the patronage dimension of
customer loyalty was drawn from Lam et al. (2004). Based on the measures of Jones
et al. (2000), three items were used to measure switching costs. In addition, a two-item
scale regarding perceived service value was drawn from Cronin et al. (2000). Cronin
et al. investigated six service industries and demonstrated the reliability and validity of
all five above-mentioned constructs. Consistent with the measures of Liu et al. (2005),
Sharma and Patterson (2000), and Davis and Mentzer (2008), one item was used to
measure relationship length. The work of Jones and Suh (2000) indicates that
approximately 75 percent of respondents have used the services of their current
hairstylist/barber for at least one year. One year is considered a suitable reference
period for short- and long-term relationships because hairstylists/barbers represent
service firms with higher than average levels of customer contact (Jones et al., 2000)
and frequency of use. In an attempt to compare the two groups in question,
respondents in relationships of less than 1 year were classified in one group ðn ¼ 62Þ;
while those in relationships of 1 year or more ðn ¼ 217Þ were classified in a second
group. Finally, five items were adopted as measures for corporate image (Souiden et al.,
2006). As the process view has been applied in numerous, previous research projects on
service firm image, this view was also adopted for the present study (e.g. Aydin and
Ozer, 2005; MacInnis and Price, 1987; Souiden et al., 2006; Yuille and Catchpole, 1997).
Each respondent was categorized according to which hairstylist/barber they
patronized and surveyed on the above items.

Sample
To test the hypotheses, in line with Yim et al. (2007) and Bove and Johnson (2001), the
present study selected the hairstyling industry for empirical analysis, due to its
easily-identifiable switching costs. Hair salons and barber shops are representative of
customized, high-contact service firms (Bove and Johnson, 2001). A single service
category focus offered improved internal validity, reduced error variance, and more Customer loyalty
effective hypothesis testing (Voss and Voss, 2000). In line with Yim et al. (2007),
Souiden et al. (2006), and Patterson and Smith (2003), the present study sought the
assistance of undergraduate night school college students to survey non-students over
the age of 18. Ten hairstyling businesses studied were located in residential
neighborhoods in Kaohsiung City, Taiwan. Using a systematic sampling technique,
the authors adhered to a skip interval of two when selecting respondents from those 65
exiting the hair salons (Omar and Ali, 2000). The questionnaire was originally written
in English and later translated into Mandarin Chinese. The questionnaire was then
translated back into English, in the interests of accuracy (Douglas and Craig, 1983).
Respondents were surveyed according to which hairstylist/barber they patronized.
Thus, a self-report survey was utilized to collect the required data. The present study
collected a total of 287 responses. Eight questionnaires were excluded due to
respondent failure to rate every item. Thus, analysis was performed on data from the
279 subjects who provided complete, model-related information. The demographics of
this sample are as follows: approximately 51 percent were female, 76 percent were over
35 years old, and 60 percent were college graduates.

Reliability and validity

In order to distill the data into a smaller and more meaningful set, several purification
steps (confirmatory factor analyses and item-to-total) were taken. Table I lists
composite reliabilities, AVE (Average Variance Extracted), items, and loadings for the
final multi-item measures. Amos 5.0 software was employed and confirmatory factor
analysis performed to assess the measurement model, consisting of all items designed

Constructs and items (composite reliability, AVE) Loading

Customer-perceived value (0.88, 0.78)

Overall, the value of the hairstylist/barber firm’s services to me is high 0.90
Compared to what I had to give up, the overall ability of the hairstylist/barber’s firm to
satisfy my wants and needs is high 0.86
Switching costs (0.83, 0.66)
In general it would be an inconvenience to switch to another hairstylist/barber’s firm
service 0.81
It would take a lot of time and effort to switch to another hairstylist/barber’s firm service 0.94
For me, the cost in time, money, and effort to switch hairstylist/barber’s firm is high 0.66
Customer loyalty (0.91, 0.68)
I consider the hairstylist/barber’s firm as my first choice of hairstyling/barber service 0.76
I will continue to patronize this hairstylist/barber’s firm over the next few years 0.82
I have said positive things about the hairstylist/barber’s firm to colleagues 0.87
I have recommended the hairstylist/barber’s firm to colleagues who seek my advice 0.86
I have encouraged others to patronize the hairstylist/barber’s firm 0.82
Corporate image (0.92, 0.69)
The hairstylist/barber’s firm is innovative and pioneering 0.75
The hairstylist/barber’s firm is successful 0.83
The hairstylist/barber’s firm is persuasive and shrewd 0.90 Table I.
The hairstylist/barber’s firm does business in an ethical way 0.82 Overview of the
The hairstylist/barber’s firm is open and responsive to consumers 0.86 multi-item measures
MSQ to measure four of the constructs: perceived value, switching costs, customer loyalty,
22,1 and length of relationship (x2 ¼ 377.07, df ¼ 84, RMR ¼ 0.05, GFI ¼ 0.91,
AGFI ¼ 0.87). With regard to reliability, the alpha values were higher than 0.7
(Nunnally, 1967) for all constructs. The AVE for all constructs ranged from 0.65 to 0.78,
which is greater than 0.5, and thus demonstrates convergent validity (Fornell and
Larcker, 1981). The correlation of a construct with its indicators (i.e. the square root of
66 AVE) should exceed the correlation between that construct and any other construct.
The square root of AVE for four constructs ranged from 0.81 to 0.88, which exceeds the
correlation between that construct and any other ranging from 0.43 to 0.79, meaning
that four constructs have adequate discriminant validity (Fornell and Larcker, 1981). In
summary, the overall measurement properties are considered acceptable. Table II. lists
scale means, standard deviations, and correlations among latent constructs.

Results
A two-group model was employed, with group membership assigned based on
relationship length (i.e. less than 1 year ðn ¼ 62Þ and 1 year or more ðn ¼ 217ÞÞ: Because
the number of items in the scales and the sample size of the new relationship group were
similar to those examined by Liu et al. (2005), the sample size may be considered sufficient
to run a two-group model. For structural comparisons across groups to be meaningful, the
model was specified to be invariant across groups. This model fits the data well
(x2 ¼ 872.22, df ¼ 179, RMR ¼ 0.07, GFI ¼ 0.89, AGFI ¼ 0.83, RMSEA (Root Mean
Square Error of Approximation) ¼ 0.09. Compared with other two-group model analyses,
the GFI (Goodness-of-Fit Index) value was better than that produced by Liu et al. (2005)
ðGFI ¼ 0:84Þ: The AGFI (Adjusted Goodness-of-Fit Index) value exceeded 0.80 and was
considered acceptable, based on the work of Taylor and Todd (1995). The RMSEA was
0.09, which is less than 0.1 (Browne and Cudeck, 1993; Hair et al., 2006). Statistical tests of
hypothesized, non-zero parameters were conducted by examining the associated
parameter scores (see Table III). In the shorter-term relationship group, all but two
parameters were found to be significant. Corporate image positively influenced switching
costs ðg ¼ 0:92; p , 0.05) and customer loyalty ðg ¼ 0:76; p , 0.05). Based on the data
mentioned above, corporate image and switching costs have adequate discriminant
validity and multicollinearity is not considered an issue. In the longer-term relationship
group, corporate image was found to be positively related to customer loyalty ðg ¼ 0:36;
p , 0.05). Customer value was identified as positively related to switching costs
(g ¼ 0.48, p , 0.05) and customer loyalty ðg ¼ 0:33; p , 0.10). Finally, switching costs
were found to be positively related to customer loyalty ðg ¼ 0:15; p , 0.05).
Although the findings suggest that antecedents of customer loyalty differ across
shorter- and longer-term relationship groups, further analysis was conducted to test

Mean SD 1 2 3

Customer-perceived value 5.85 0.96

Table II. Switching costs 5.38 1.26 0.43 *
Scale means, standard Corporate image 5.60 0.98 0.79 * 0.43 *
deviations, and Customer loyalty 5.64 0.97 0.65 * 0.47 * 0.71 *
correlations among latent
constructs Note: *p , 0.05
group differences by systematically constraining structural parameters to be equal Customer loyalty
across groups (see Table III). Findings indicate that the relationship between customer
value and switching costs is stronger for those in a longer-term relationship with their
hairstylist ðDx2 ¼ 5:12; Ddf ¼ 1; p , 0.05, H4b). By contrast, the relationship between
corporate image and switching costs is stronger for those in shorter-term relationships
ðDx2 ¼ 9:18; Ddf ¼ 1; p , 0.05, H5b). Finally, the relationship between corporate
image and customer loyalty is stronger for those in shorter-term relationships 67
(Dx2 ¼ 2.73, Ddf ¼ 1, p , 0.10, H2b) (See Figure 2). The results of hypotheses testing
are summarized in Table IV.

Group I Group II
(Short relationship) (Long relationship) Dx2

Perceived value ! Switching costs 20.20 0.48 * * 5.12 * *

Corporate image ! Switching costs 0.92 * * 0.00 9.18 * *
Perceived value ! Customer loyalty 0.03 0.33 * 1.56
Corporate image ! Customer loyalty 0.76 * * 0.36 * * 2.73 * Table III.
Switching costs ! Customer loyalty 0.11 0.15 * * 0.07 Path coefficients of a
two-group model
Note: *p , 0.10; * *p , 0.05 (standardized estimate)

Figure 2.
Summary of findings
MSQ
Hypothesis Results
22,1
H1a: Customer value positively influences customer loyalty Not supported
H1b: Customer value has a stronger positive effect on customer loyalty in Not supported
longer-term relationships than shorter-term relationships
H2a: Corporate image positively influences customer loyalty Supported
68 H2b: Corporate image has a stronger positive effect on customer loyalty in Supported
shorter-term relationships than longer-term relationships
H3a: Switching costs positively influence customer loyalty Not supported
H3b: Switching costs have a stronger positive effect on customer loyalty in Not supported
longer-term relationships than shorter-term relationships
H4a: Customer-perceived value positively influences switching costs Not supported
H4b: Customer-perceived value has a stronger positive effect on switching costs Supported
in longer-term relationships than shorter-term relationships
Table IV. H5a: Corporate image positively influences switching costs Not supported
Results of hypotheses H5b: Corporate image has a stronger positive effect on switching costs in Supported
testing shorter-term relationships than longer-term relationships

Discussion
The results of the present study highlight the effect that relationship length has on
customer loyalty. Whereas customer-perceived value, corporate image, and switching
costs are important determinants of loyalty, length of relationship was found to be
critical. The impact of corporate image on customer loyalty is heightened when
customers have used a service provider for only a short period (i.e. one year or less).
Although several studies (e.g. Hsieh et al., 2004; De Ruyter and Wetzels, 2000; Souiden
et al., 2006) have concluded that corporate image affects consumer behavior and
perceptions of a company’s product quality and credibility, previous research has not
clearly identified whether corporate image has a direct influence on switching costs. The
present study establishes that corporate image can directly affect switching costs in
shorter-term relationships. By contrast, the impact of customer value and corporate
image on customer loyalty is greater for customers in longer-term provider relationships.
The results demonstrate the need to incorporate constructs beyond
customer-perceived value and corporate image in models of customer loyalty and
also suggest the need to extend existing theories of behavioral intentions by
incorporating contingency relationships (e.g. Ball et al., 2006; Nguyen and Leblanc,
2001; Sirdeshmukh et al., 2002; Woodruff, 1997). Failure to incorporate contingency
relationships is likely to result in the underestimation of the role played by length of
relationship in the customer retention process. Moreover, failure to incorporate
switching costs is likely to result in the undervaluation of the mediating role played by
switching costs in the customer retention process.

Managerial implications
The authors’ contingency perspective and results suggest a number of important,
practical implications for service firms. Specifically, the findings have important
implications in terms of which service provider characteristics should be emphasized
at particular points in a customer/provider relationship. The results support the
importance of building a positive corporate image in order to retain recently-acquired Customer loyalty
customers. During the early stages of a service relationship, while the customer is still
unfamiliar with the provider, corporate image becomes an important cue upon which
customer repurchase decisions are made. Corporate image is more strongly linked to
switching costs in relatively new customer/provider relationships. This suggests that
new customers assess the costs of shifting business away from a service provider
based, at least partially, on the relative image that the service provider projects in the 69
marketplace. However, neither customer value, nor switching costs, were found to be
related to customer loyalty. Therefore, when customer/provider relationships are
relatively new, perceived value seems to be of only minimal significance to customers
making repurchase decisions. Likewise, switching costs may be relatively nonexistent,
and thus inconsequential, in those repurchase decisions.
As noted earlier, this study views corporate image from a process perspective; that
is: corporate image is considered to be formed gradually, with judgments accumulating
over time. Customers consider corporate image as a global impression of the firm
regarding its ability to meet their needs (Barich and Kotler, 1991). Managers of service
organizations should consider intrinsic attributes, such as innovative, responsive in
their communication strategy. These intrinsic attributes are generally translated into
customer satisfaction (e.g. Lai et al., 2009) or service quality (e.g. Lai et al., 2009; Fornell,
1992), which are considered the predominant antecedents of customer loyalty (Nguyen
and Leblanc, 2001).
In the case of customer/provider relationships that have matured and become more
established, the findings of the present study suggest that a gradual increase in
dependence may occur. In longer-term relationships, corporate image remains a
determining factor in repurchase decisions; however, customer value plays another
important role in directly determining and indirectly influencing loyalty via switching
costs. In addition, customer value is more strongly linked to switching costs in
longer-term relationships. Thus, as consumers and service providers continue to bond,
the customer’s perceived value of the provider becomes diagnostic in relation to
repurchase decisions. Furthermore, this perception will duly become a barrier to
switching providers. To improve customer-perceived value, a service provider should
identify its strengths and weaknesses on the value components relative to its
competitors (Liu et al., 2005). By focusing on attributes with a customer rating of high
importance, a service provider can address the critical weaknesses that severely
hamper its efforts to enhance customer-perceived value.
The findings of the present study stress the importance of viewing exchange
relationships as contingent and ones that therefore must be effectively managed. The
relative impact of corporate image on customer loyalty suggests that, for service
providers striving to increase the odds of customer repurchase in newer relationships,
the cultivation of a favorable corporate image is critical. However, the relative impact
of perceived value on customer loyalty – as a result of switching costs – suggests that,
for service providers striving to increase the likelihood of customer repurchase in
longer-term relationships, the tracking and measurement of customer value
perceptions and the building of switching costs are of paramount importance.
Examples of how providers can enhance customer switching costs include: helping
customers learn how to more effectively use a product/service, emphasizing any
unique features on offer, providing valuable bonus points, and engaging customers in a
MSQ more meaningful relationship. Because customer value in an exchange relationship
22,1 may change over time (Flint et al., 2002), service providers should continuously assess
and refine the value they provide to their customers.

Limitations and suggestions for future research

Naturally, the present study has certain limitations. These are discussed below,
70 together with recommendations for future research directions. First, consistent with
Patterson and Smith (2003), the present study collected data on only one type of
service. Generalizability would be greatly enhanced by replications of the present
study’s model across a range of service types. Future research could assess whether
differences/similarities exist across various service types. Second, with regard to
antecedents of customer loyalty, the present study focused on customer value and
corporate image, while future works could supplement with the inclusion of service
quality. This assumption is based on the conclusions of Coulter and Coulter (2002),
who imply that the length of relationship moderates the association between service
quality factors, such as reliability, competence, and trust. Third, this study employed
the dichotomous measurement of relationship length to demonstrate the effect of
corporate image, perceived value, and switching costs on customer loyalty in
relationships of different length. The dichotomous measurement is a significant
limitation of this study. Future research may consider utilizing a continuous
measurement of relationship length to better demonstrate the above-mentioned effect.
Fourth, in this study, the sample structure was consistent with Jones and Suh (2000).
As mentioned above, one year is deemed a suitable reference period for shorter- and
longer-term relationships, as hairstylists and barbers represent service providers with
above average levels of customer contact (Jones et al., 2000) and frequency of use.
Therefore, in an attempt to compare the two groups, relationships of less than one
year were classified as one group ðn ¼ 62Þ; and relationships of one year or more
ðn ¼ 217Þ were classified as a second group. Although the sample size of the newer
relationship group was similar to Liu et al. (2005), future research may consider
increasing the sample size for better comparison between groups. Finally, a
cross-sectional research design does not offer the same insight into the dynamics of
customer relationships within a firm, compared with that of a longitudinal design.
Seiders et al. (2005) conclude that customer, relational, and marketplace
characteristics moderate the relationship between customer satisfaction and
repurchase behavior. They further demonstrate that these moderating effects
emerge if repurchase is measured as an objective behavior and not as a repurchase
intention. Therefore, should future studies adopt repurchase behavior as a dependent
variable, this variable should be measured as an objective behavior. To better assess
causality, future research could test the present study’s model by using a longitudinal
design. Bell et al. (2005) indicate that, as a customer-provider relationship deepens,
consumers increase their expertise in the firm’s product line and industry. Bell et al.
(2005) conclude that, as this level of customer expertise increases, technical service
quality becomes a more important determinant of customer loyalty than functional
service quality. Palmatier (2008) demonstrates that the positive association between
contact authority and customer value increases proportionally with relationship
quality. Therefore, further research could also adopt relationship quality as a
moderator to test the present study’s model.
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Further reading
Jap, S.D. (1999), “Pie-expansion efforts: collaboration processes in buyer-supplier relationships”,
Journal of Marketing Research, Vol. 35 No. 4, pp. 461-75.

Corresponding author
Chung-Yu Wang can be contacted at: wcuwcu@kuas.edu.tw

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