Final Thesis John

SOCIAL IDENTITY AND CUSTOMER LOYALTY OF NEPALESE INSURANCE
COMPANIES
By
John Hang Rai
Exam Roll: 679/19
TU Reg No: 7-3-28-27-2018
A Graduate Research report submitted to in partial fulfillment of the requirements
for the degree of
Master’s in Business Administration (MBA)
at the
School of Management
Faculty of Management
Tribhuvan University
Kirtipur, Nepal
September, 2021
Recommendation
i
Certification
ii
DECLARATION OF AUTHENTICITY
I, John Hang Rai, declare that this GRP is my own original work and that it had fully and
specifically acknowledged wherever adapted from other sources. I also understand that if at
any time it is shown that I have significantly misinterpreted material presented to SOMTU,
any credits awarded to me on the basis of that material may be revoked.
Signature: ______________________________
Name: John Hang Rai
Date:
iii
ACKNOWLEDGMENTS
This Graduate Research Report, titled “Social Identity And Customer Loyalty of Nepalese
Insurance Companies" was written in partial fulfillment of the requirements of the Masters of
Business Administration (MBA) degree at Tribhuvan University's, School of Management. I
owe a debt of gratitude to a number of people without whom this work would not have been
nearly as this effective.
First, I would like to express my sincere gratitude to my supervisor, Dr. Gangaram

Biswakarma, Deputy Director of School of Management, Tribhuvan University for his
guidance, support and assistance throughout the research period.
I also like to express my, profound gratitude to Mr. Ashish Rai (Rastriya Beema Sansthan),
Sanjaya Dahal (Surya Life Insurance), Susan Rai (Nepal Life Insurance), and Neeraj Nepal
(Shikhar Insurance) for providing necessary information for my GRP report.
I'm also grateful to my friends and well-wishers who assisted me directly and indirectly
throughout the GRP. Likewise, I am deeply obliged to the entire respondent for providing
valuable response.
Finally. I also like to thank School of Management, Tribhuvan University and its faculty
members for providing me this opportunity.
John Hang Rai
September, 2021
iv
v
Table of Contents
Recommendation ....................................................................................................................... i
Certification .............................................................................................................................. ii
DECLARATION OF AUTHENTICITY ................................................................................ iii
ACKNOWLEDGMENTS ....................................................................................................... iv
List of Figures ........................................................................................................................... x
ABBERVIATION.................................................................................................................... xi
EXECUTIVE SUMMARY .................................................................................................... xii
Chapter I.................................................................................................................................... 1
Introduction ............................................................................................................................... 1
1.1 Background of the study ................................................................................................. 1
1.2 Statement of Problem ...................................................................................................... 2
1.3 Objective of the study ..................................................................................................... 3
1.4 Research Hypothesis ....................................................................................................... 3
1.5 Scope and Significance of the Study .............................................................................. 5
1.6 Limitations of the Study.................................................................................................. 5
1.7 Outline/ Structure of the Report ...................................................................................... 6
CHAPTER II............................................................................................................................. 8
LITERATURE REVIEW ......................................................................................................... 8
2.1 Theoretical Review ......................................................................................................... 8
2.1.1 Theoretical concept of social identity ...................................................................... 8
2.1.2 Corporate Social Identity in Marketing ................................................................... 9
2.1.3 Theoretical concept of Customer Loyalty.............................................................. 11
2.1.4 Theoretical concept of Customer Trust.................................................................. 13
2.2 Review of Related Literature ........................................................................................ 14
2.2.1 Social Identity and Loyalty .................................................................................... 14
vi
2.2.2 Social identity and Customer Trust........................................................................ 16
2.2.3 Customer Trust and Customer loyalty ................................................................... 17
2.2.4 Mediating role of customer trust in relationship between social identity and
customer loyalty .............................................................................................................. 19
3. Conceptual Framework ................................................................................................... 21
CHAPTER III ......................................................................................................................... 21
RESEARCH METHODOLOGY............................................................................................ 22
3.1 Research Design............................................................................................................ 22
3.2 Population and sample .................................................................................................. 22
3.3 Sources of Data and Data Collection Plan .................................................................... 23
3.4 Instrumentation ............................................................................................................. 23
3.5 Data Analysis Technique .............................................................................................. 24
3.6 Ethical Consideration .................................................................................................... 24
CHAPTER IV ......................................................................................................................... 26
ANALYSIS AND RESULTS ................................................................................................. 26
4.1 Demographic Profile of Respondents ........................................................................... 26
4.2 Descriptive Statistics ..................................................................................................... 27
4.3 Normality Test .............................................................................................................. 33
4.4 Measurement Model ......................................................Error! Bookmark not defined.
4.4.1 Construct Reliability and Validity ......................................................................... 23
4.4.2 Discriminant Validity..............................................Error! Bookmark not defined.
4.3.3 Collinearity Test..................................................................................................... 36
4.4 Correlation Matrix ........................................................................................................ 37
4.4.1 Correlation between Corporate Identity and Customer Loyalty ............................ 37
4.4.2 Correlation between Corporate Image and Customer Loyalty .............................. 37
vii
4.4.3 Correlation between Corporate Reputation and Customer loyalty ........................ 38
4.4.4 Correlation between Customer Trust and Customer loyalty.................................. 38
4.5 Regression Model ......................................................................................................... 38
4.6 Mediation Effect ........................................................................................................... 39
4.6.1 Mediation Effect of Customer Trust on relationship between corporate identity and
4.6.2 Mediation Effect of Customer Trust on relationship between corporate image and
4.6.3 Mediation Effect of Customer Trust on relationship between corporate reputation

and customer loyalty ....................................................................................................... 42
4.7 Hypothesis Testing Summary ................................................................................... 43
CHAPTER V .......................................................................................................................... 46
DISCUSSION, CONCLUSION AND IMPLICATIONS ...................................................... 46
5.1 Discussions ................................................................................................................... 46
5.2 Conclusion .................................................................................................................... 48
5.3 Implication .................................................................................................................... 49
5.3.1 Managerial Implication .......................................................................................... 49
5.3.2 Implication for Future Research ............................................................................ 50
REFERENCES ....................................................................................................................... 51
APPENDIX ............................................................................................................................. 56
viii
List of Tables
Table 1 Demographic Profile of Respondents ....................................................................... 26
Table 2 Descriptive Statistics of Corporate Identity ............................................................... 27
Table 3 Descriptive statistics of Corporate Image .................................................................. 28
Table 4 Descriptive statistics of Corporate Reputation .......................................................... 28
Table 5 Descriptive statistics of Customer Trust .................................................................... 29
Table 6 Descriptive statistics of Customer Loyalty ................................................................ 30
Table 7 Descriptive Statistics of Corporate Identity Items ..................................................... 30
Table 8 Descriptive Statistics of Corporate Image Items ....................................................... 31
Table 9 Descriptive Statistics of Corporate Reputation Items ................................................ 31
Table 10 Descriptive Statistics of Customer Trust Items ....................................................... 32
Table 11 Descriptive Statistics of Customer Loyalty Items ................................................... 32
Table 12 Shapiro-Wilk Test .................................................................................................... 33
Table 13 Construct Reliability and Validity ........................................................................... 23
Table 14 Fornell-Larcker Criterion ..........................................Error! Bookmark not defined.
Table 15 Collinearity Statistics ............................................................................................... 36
Table 16 Correlation Matrix ................................................................................................... 37
Table 17 Regression Model Test ............................................................................................. 38
Table 18 Coefficient Table ..................................................................................................... 39
Table 19 Direct Effect ............................................................................................................. 39
Table 20 Indirect Effect .......................................................................................................... 40
Table 25 Hypothesis Testing Summary .................................................................................. 43
ix
List of Figures
Figure 1 Conceptual Framework ............................................................................................ 21

Figure 2 Histogram of Corporate Identity .............................................................................. 34
Figure 3 Histogram of Corporate Image ................................................................................. 34
Figure 4 Histogram of Corporate Reputation ......................................................................... 35
Figure 5 Histogram of Customer Trust ................................................................................... 35
Figure 6 Histogram of Customer Loyalty ............................................................................... 36
x
ABBERVIATION
AVE: Average Variance Extracted
CI: Corporate Identity
CIM: Corporate Image
CL: Customer Loyalty
CR: Corporate Reputation
CT: Customer Trust
GRP: Graduate Research Project
LLCI: Lower Limit of Confidence Interval
MBA: Master of Business Administration
Rho_A: Reliability Indices for each construct
SD: Standard Deviation
SEM: Structural Equation Modeling
ULCI: Upper Limited of Confidence Interval
xi
EXECUTIVE SUMMARY
The main objective of this study is to examine the effect of the corporate identity, corporate
image and reputation on customer loyalty, and investigate the mediating role of customer trust
on relation between social identity forms (corporate identity, corporate image and corporate
reputation) and customer loyalty of Nepalese insurance companies. The population are the
insurance customers who are employed, students and businessperson. The samples are taken
from Kathmandu valley and 352 sample size are collected from both Nepalese life and non-
life customers.
The research is based on primary data collection. Study questionnaire was distributed primary
in printed forms and as well as through online. The measurement model analysis has been
conducted with the SMAR PLS V3 to validate the data and analyze the construct validity and
discriminant validity. Likewise, SPSS MACRO PROCESS was used and analytical techniques
like descriptive, correlation and multiple regression were used along with SPSS macro
processer to test the mediation effect.
The findings suggest that there is the significant and positive effect of social identity that are
corporate identity, corporate image and corporate reputation on customer loyalty. Likewise,
there is partial mediation effect of customer trust on relation between social identity forms and
customer loyalty. Since the three forms of social identity has significant positive impact on
customer loyalty, insurance companies must be able to manage all the three forms of social
identity to build the customer loyalty.
xii
Chapter I
Introduction
1.1 Background of the study

The world is surrounded with the risk and uncertainty. Especially, country like Nepal, safety
and security is one of the major concern among the general public (Khanal, 2020). Thus,
insurance is the best method to provide the financial compensation to those people who suffers
from the losses. It is the best means to transfer the risk of the losses and provide the financial
security towards the insurance policyholders. Insurance companies collect the premiums of the
customer, manage the premiums, and disperse the risk to ensure they can pay off any losses
(Damtew & Pagidimarri, 2013). The central idea of customer trust has received a lot of concern
from the research scholars in various businesses. The insurance business is no exemption
because it business revolves around the customers. Trust is more important for insurance
company than any other type of business because insurance company is selling a promise.
Several studies show the significant role of customer trust in building customer loyalty in the
insurance sector. For an example, research conducted by Damtew and Pagidimarri (2013)
states that customer trust has a positive and significant influence on customer loyalty in
insurance companies. The rise of the new type of insurances services like combined insurance
policy from both Life and Non-Life insurance company has created rivalry among the
insurance companies in the market (Khanal, 2020). In this competitive Nepalese market,
insurance companies should bound to connect with the customers and build customer loyalty
that lasts. Thus, insurance companies are facing a challenge in retaining their customers.
Customer cannot differentiate between the insurance company services. The result is,
competitive insurance premium charges among the insurance companies.
Customer loyalty revolves around the concept of firm social identity and customer trust. Many
studies indicate that corporate social identity plays a significant decisive role in developing
customer trust and loyalty. Customers tends to trust those companies with an established social
reputation and corporate image (Moorman, Zaltman & Deshpande, 1992). Similarly, research
1
by Sari and Yasa (2019) shows the importance of the corporate image of the firm on building
customer loyalty. In line, research conducted by García de Leaniz and Rodríguez Del Bosque
Rodríguez (2014) states that social identity has the positive and significant relationship on
customer loyalty. Customer loyalty is significantly influenced by various elements through
services quality, corporate branding, policy benefits, customer satisfaction, premium charges
and customer trust. Besides these elements, the role of customer trust remains a vital factor in
developing customer loyalty among the insurance customers.
Corporate identity refers to the way a firm or business portrays itself to the general public.
People's perceptions of a firm, its products, and services are reflected in its corporate identity
and image. The customer evaluation of a company's previous actions and potential to offer to
deliver improving outcomes towards its customers over time is referred to as corporate
reputation. Customer loyalty can be influenced by a variety of elements such as service quality,
customer satisfaction, and perceived price. The proposed study, aims to highlight the
importance of trust as the most important mediating factor between firm social identity and
customer loyalty. Within the study, we limit ourselves to three forms of firm social identity
developed by Nguyen, Leclerc and Leblanc in 2013. The study of Nguyen, Leclerc and Leblan
states that three major forms of firm’s social identity are corporate identity, corporate image,
and corporate reputation. Thus, this study will emphasize exclusively on the role of social
identity developed through corporate identity, corporate image, and corporate reputation.
1.2 Statement of Problem

Due to severe competition among insurance businesses and the advancement of technology
that enhances customer awareness, the Nepalese insurance sector is becoming extremely
competitive. Despite Nepal's favorable conditions for insurance development, customer
disloyalty with in insurance business are high. As a result, the primary focus should be on
establishing and maintaining consumer loyalty.
Several factors influence the insurance industry's ability to maintain customer’s loyalty, and
various research are conducted to discover the determinants of consumer loyalty. According
to Rasheed, Sajid, Shahid, and Ahmad (2015), customer loyalty is affected through trust,
customer satisfaction, and service quality. However, no relation was found between financial
institutions' social identities and consumer loyalty.
2
In today’s market, relying solely on the service dimension is insufficient to retain customers.
The importance of corporate reputation and image in both retaining and attracting new clients
cannot be understated. Insurance services alone do not create loyal consumers; the favorable
image of insurances in the eyes of customers is something to be concerned about because it
related to the insurance company's trustworthiness in guaranteeing customer trust (Karyose,
Astuti, & Ferdiansjah, 2017).
In this approach, a research on social identity in the form of corporate identity, corporate image,
and corporate reputation combines most of the general evaluation of firm social identity.
The customers uses to evaluate those firm social identity to determine the loyalty among
insurance companies. In this case, evaluating consumer trust as a mediator between social
identity and customer loyalty could be beneficial.
The study address the following research issues;
 Is there any significant effect of social identity on customer loyalty?

 Is there any significant mediation effects of customer trust on the relationship
between social identity and customer loyalty?
1.3 Objective of the study

The general objective of this research is to examine the relationship and impact between social
identities, customer trust and customer loyalty in Nepalese insurance companies. Moreover,
following are some of the specific objective;
 To examine the significant effect of social identity on customer loyalty in Nepalese

insurance companies.
 To examine the significant effect of corporate identity, corporate image and
corporate reputation on customer loyalty.
 To analyze the mediation effect of customer trust on the relationship between
corporate identity, corporate image and corporate reputation on customer loyalty.
1.4 Research Hypothesis

A number of studies found there is a positive, significant relationship between corporate
identity and customer loyalty. Dehdashtia, Kenaria, and Bakhshizadehb (2012) investigated
3
the relationship between corporate identity and customer loyalty development where the result
shows there is the positive relationship between those variables, demonstrating when there is
more positive corporate identity, there is more customer loyalty. Similarly, Nguyen, Leclerc
and Leblan (2013) and Shawky Nahas and Nahas (2013) discover that there is positive
relationship between corporate identity and customer loyalty. Thus, the following hypothesis
is drawn from the previous studies;
H1: Corporate identity has a positive and significant effect on customer loyalty
Likewise, a number of the studies found that there is the positive relationship between
corporate image and customer loyalty (Tang Weiwei, 2007; Adeniji, Osibanjo, Abiodun &
Oni-Ojo, 2015 and Nguyen & Phan; 2018). Thus, the following hypothesis are drawn from the
previous studies;
H2: Corporate image has a positive and significant effect on customer loyalty
There are number of studies which argues that there is the significant, positive relationship
between the corporate reputation and customer loyalty (Tang Weiwei, 2007; Salam, Shawky
& Nahas, 2013, Leaniz & Bosque, 2016). Unlike other studies, (Szwajca, 2016) found a
negative relationship between corporate reputation and customer loyalty. Thus, the following
hypothesis are drawn from the previous studies;
H3: Corporate reputation has a positive and significant effect on customer loyalty
There are number of studies which end result found that there is the significant mediation effect
of customer trust on relation between corporate identity and customer loyalty (Nguyen,
Leclerc, & Leblanc, 2013; Rather 2017; Shirazi, Lorestani and Mazidi, 2013). Thus, the
following hypothesis are drawn from the previous studies;
H4: There is significant mediation of customer trust on relation between corporate

identity and customer loyalty
Similarly, there are also number of studies which found that there is the significant mediation
effect of customer trust on relation between corporate image and customer loyalty (Shirazi,
Lorestani & Mazidi, 2013; Purwanto, Deviny & Muthar, 2020). Thus, the following hypothesis
are drawn from the previous studies;
4
image and customer loyalty
Likewise, there are also previous studies which found that there is the significant mediation
effect of customer trust on relation between corporate reputation and customer loyalty (Nugyen
et al.,2013; Chang, 2013; Kempa, 2020). Thus, the following hypothesis are drawn from the
previous studies;

reputation and customer loyalty
1.5 Scope and Significance of the Study

Customer loyalty has been the primary goal of insurance businesses in today's competitive
Nepalese market. As a result, every insurance company strives to come up with a new way to
keep its customers by providing the greatest insurance policies and services as far as possible.
The findings of this study will shed light on how an insurance firm decides the factors that
influence customer loyalty to the industry. This study will offer a thorough framework for the
social identity forms on consumer loyalty. It also offers new approaches to keep customers by
using various aspects of social identity.
Furthermore, all businesses, particularly the insurance industry, will gain from this outcome.
However, there is a general lack of trust in the insurance business. They will be able to identify
the factors that drive consumer loyalty, as well as the relationship between social identity, trust,
and customer loyalty, as a result of this research. As a result, they are in a better position to
improve and make better decisions. Furthermore, the outcomes of this study can provide some
beneficial feedback that can assist the insurance firm in recognizing the importance of social
identity in establishing trust and increasing customer loyalty. This study also serves as a
roadmap for future researchers by supplying baseline data for large-scale studies that will be
more dependable and generalizable.
1.6 Limitations of the Study

The research will always have limitations. Every research project has its own set of restrictions.
This study is based on data from a primary source. As a result, the following are the limitations
of this study paper:
5
 This research is limited to Nepal's insurance industry. Factors such as service quality,
price fairness, customer satisfaction etc. which affects customer loyalty are ignored in
this study.
 The data would be difficult to generalize due to the small sample size.
 Since a self-administered questionnaire was employed, social desirability issues may
occur, such as persons purposefully misinterpreting the questions or inadvertently
providing incorrect answers.
 This study is taken during the pandemic of COVID 19 in short period of time.
1.7 Outline/ Structure of the Report

According to Tribhuvan University guidelines, this research paper contains three main sections
with a total of five chapters.
 Preliminary Section
 Body of the Report
 Supplementary section
The preliminary section contains; the title page, certification, declaration of authenticity,
acknowledgments, table of contents, list of tables, list of figures, common report abbreviations,
and executive summary are all included in the introductory section. Furthermore, the body of
the report consists of; introduction, literature review, and conceptual framework, research
methods, analysis and results, discussions, conclusion and managerial implication. There are
distinct features to each chapter. The final section of the report consist of references and
appendix.
The first chapter is the study's introduction, which covers the theoretical background of social
identity and customer loyalty. Likewise, it also covers the current situation of Nepalese
Insurance Companies in the Nepalese market. It also comprises a statement of the research
problem, the study's purpose, research objectives, the research report's rationale, the study's
importance, the study's limits, and the thesis's format. Similarly, the literature review and
conceptual framework are compromised in the second chapter. A literature review includes a
review of empirical studies, research publications, and a thesis or dissertation, as well as a
summary of the study's general situation and how it connects to the study's objectives.
6
Similarly, the research methods chapter discusses the strategies that were used in the study.
The research design, sample size and population, data source, data collection methodologies,
and data analysis are all covered in this chapter. It also covers the study's ethical considerations
and the trustworthiness of research equipment and procedures. The study's analysis and results
are described in the fourth chapter. It denotes the statistical analysis of quantitative data that
defines the numerous tables and figures that are used to answer the research's objectives and
research questions.
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CHAPTER II
RELATED LITERATURE AND THEPRITICAL FRAMEWORK

2.1 Theoretical Review
2.1.1 Theoretical concept of Social Identity
Social identity is part of the self that is defined by one’s memberships. A person's social
identity is defined as their knowledge of belonging to specific social groups, as well as their
enthusiasm for and value for that group's membership. In the 1970s, social psychologists Henri
Tajfel and John Turner proposed the concept of social identity for the first time. People prefer
to project a positive image of the groups they are a part of. Individuals are more likely to seek
out highly regarded features, attitudes, and practices that are considered common in their social
circles as a result of social identification assessments. The theory of intergroup social identity
developed by Tajfel and Truner in 1970 distinct the relationships member of a group specified
by the individual perception and interpersonal relationships. They proposed that there are three
process involved in evaluating others as “Us and them” or “in-group and out-group” They
define the social identity as the three components or process of cognitive behavior human;
Social categorization: Individuals generally classify themselves as members of social

groupings to which they belong. This is the first stage of social identity theory. People are
classified in order for them to be recognized and identified. Assigning persons to different
categories allows people to learn more about them. Individuals also learn about themselves
and which group they belong to.
Social identification: The members' pre-existing qualities are then used to define the
categories. First, it locates or characterizes individuals in the social context and defines the
individual to be classed on the basis of group behavior. Groups provide us with a sense of
social identity, or belonging in the social environment. Individuals assume the identity of the
group they are a part of.
Social Comparison: The social identity is the final stage of social identity. Individuals compare
their existing group to other groups for prestige and high standing after categorizing and
identifying themselves. Here, there is conflict between groups for resources and their place in
society.
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2.1.2 Corporate Social Identity in Marketing
In few decades, the theory of social identity was adopted by researchers in marketing to explain
the formation and measurement of social identity. The concept of social identity has been
applied to the setting of an organization in recent years, and its applications at this level have
been studied. (Ashforth & Mael, 1989). Thus, an organization can expand its social
identification through emphasizing that it belongs to a specific industry, and highlighting its
components (Gionia, 1998). In line with social identity theory, customers also seeks identity
of an organization even when they are not formal member of the organization. The social
identity model applies both to individuals and to the firm itself (Rao, Davis & Ward, 2000).
A study conducted by Underwood, R., Bond, E., and Baer, R (2001) support the arguments
that social identity of an organization does exist towards customers. Their research entitled as
“Building service brands via social identity: lessons from the sports marketplace” illustrate the
impact of social identification towards customer identification in service sector. The study
unrevealed that there is significant effects of the service environment (history/tradition, group
experience, physical facility and rituals) towards brand identity. Furthermore, the research
result also argues that brand identity will evoke affective ties between consumer identification
and organization identity.
Companies communicate themselves as a significant social identities towards customers that

assist them to fulfill their needs (Bhattacharya & Sen, 2003). They further added that the firm
social identity can also be defines from the customer perspective through brands. Currently,
individuals as well as an organization have focused on a “social identity” built on vital, long-
term, and unique characteristics within the structure of social relationship (Negrin, 2008). In
the marketing literature, the concept of firm social identity can be found on different forms;
corporate image corporate identity, visual identity, corporate branding, brand reputation and
corporate reputation (Balmer & Greyser, 2002). In the service industry the association between
these forms are very difficult to pinpoint the forms because of its intangible service nature.
This argument further supported by the research conducted by Flavián, Torres & Guinalíu in
2004. Their study entitled “Corporate image measurement. A further problem for the
tangibilization of Internet banking services” focuses on examine the intangible social identity
of the service industry. The result provides a measuring tools to measuring the corporate
9
reputation of the organization. The reputation construct items were; promises, experiences,
competitors and fair to customers. Their study highlights the importance of measurement of
corporate reputation to measure the different dimensions of corporate identity in research.
Nguyen, Leclerc, and Leblanc (2013) conducted the research with a research objective to
analyze the impact of social identity on customer loyalty in financial service industry. The total
of 1296 questionnaire collected from the customers of credit unions. The exploratory study
was conducted by taking three different form of social identity (corporate identity, corporate
image and reputation). The outcomes of the study has empowered to affirm the significant
effect and validity of the construct among the social identity variables. The measurement items
of corporate identity were corporate logo and name, corporate distinctive character and
customer perceived differences. Likewise, the measurement items of corporate image were
impression, images and responsive. The average variance extracted for each factor loading
items in the construct was significant with each other. The end result of the study suggests that
there is a significant relationship among social identity and customer loyalty with the mediating
effect of customer trust.
Another research conducted by Weixian Xue and Pengfei Cheng (2014) entitle “Corporate
Image, Customer Participation and Service Quality: From Social Identity Theory Perspective”
focuses on whether three measuring variable of social identity; corporate image, customer
participation and service quality are interrelated or not. The research survey of 324 respondents
was conducted using a structural equation model. The results indicate that customer
participation partially mediated the relationship between corporate image and service quality.
The study conducted by Ana Cuic Tankovic (2015) proposed the two dimension model of
corporate marketing construct in her study titled as “Interrelationship of corporate identity,
corporate image and corporate reputation: a new stakeholders-time based model”. She
proposed that social identity of an organization starts from corporate identity to corporate
image and corporate reputation. As these terms, are used interchangeable, firm social identities
are communicated through corporate branding or band identity to the external stakeholders like
customers or general public.
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2.1.3 Theoretical concept of Customer Loyalty
Customer loyalty is described as a long-term commitment to repurchase or patronize a favorite
product or service. Oliver (1999) proposed four stages of loyalty, meaning that different
components of loyalty emerge progressively through time rather than simultaneously. At each
stage of consumer loyalty, several elements impacting loyalty can be identified.
Phase I: Cognitive Loyalty
It's the beginning of consumer loyalty. At this point, the customer is simply cognitively loyal,
displaying direct or indirect knowledge of the firm's services and benefits, and making a
purchase based on a belief in the offer's superiority. Only after several purchases does the buyer
establish a second level of loyalty.
Phase II: Affective Loyalty
This is a particularly positive attitude toward the brand that develops in the customer as a result
of the customer's expectations being confirmed repeatedly throughout the cognitive loyalty
stage.
Phase III: Conative Loyalty
Affective loyalty is strengthened through conative loyalty. It is sustained by a desire to buy

things from a single brand again and over again. It comes as a result of a series of successful
repeated purchase.
Phase IV: Action Loyalty
Customer loyalty is at its peak during this phase, according to Oliver. This suggests a
commitment that is sustained not only by strong motivations, but also by actions made in the
“want to survive” despite any obstacles that may arise in the decision to purchase the services
to which the person is committed. This stage is marked by a strong sense of social belonging.
The customer will also start spreading favorable word of mouth and recommending services
to others at this time.
The study conducted by Valariea Leonard & Parasuraman (1996) with the title “The
Behavioral Consequences of Service Quality” highlights the importance of the measurement
of customer loyalty with the behavioral intention. For the purpose of the study, 3069 customers
11
of four companies from service industry were distributed questionnaire. The single item rating
scale was used for the research. The items were positive things, recommend company, remain
loyal, spend more, pay premium prices, low switching intention and less complain.
On the view of Bose and Rao (2011) in the business setting, customer loyalty is defined as a
customer's commitment to conduct business with a specific company, as evidenced by
recurrent purchases of that company's goods and services. Customer loyalty allows a company
to maintain a business relationship over time and establish a pattern. It's a one-of-a-kind notion
that grows out of a partner's mutual commitment and trust. They also tell other potential buyers
about the company's products (Bahri Ammari, 2012). To establish a strong company image
that boosts the company reputation, the organization should always work to improve the
service delivery system and come up with new revolutionary products and services to build
customer loyalty.
Trif (2013) emphasizes the importance of customer loyalty as a source of long-term

competitive advantage that allows banks to maintain a stable position in the banking industry.
It is less expensive to keep existing consumers than to find new ones. Aside from that, loyal
customers generate positive word-of-mouth, higher financial transaction, and increased firm
social value. Many brand aspects have a role in the banking industry's ability to keep customers
loyal (Madjid, 2013). It is a deeply held commitment to purchase a favored product or service
in the future on a regular basis, resulting in repetitive same-brand purchases (Khan, 2013).
According to Ken Ferguson, more than half of bank customers consider their relationship with
their financial institution to be more important than the best financial value. According to
Bricci, Fragata, and Antunes (2016), trust allows for lower exchange costs and promotes long-
term customer relationships, as well as being a driver of strategic alliance formation. Contrary
to Haghighi, Dorosti, Rahnama, and Hoseinpour (2012) findings, customer loyalty is not
influenced by trust.
Nowotarska Romaniak (2020) has done more attempt in the field of customer loyalty. The
study entitled “Customer Loyalty on the Insurance Services Market in Poland” has been
conducted to find out the role of customer loyalty; from Oliver loyalty theory perspective. The
study highlights the importance of Oliver loyalty theory of measurement in customer loyalty.
The study was conducted using customer satisfaction index and net promoter score. The study
12
was conducted through structure questionnaire distributed among 187 respondents. The
research study conclusion was trust, image creation, and service features places a vital role for
affecting the customer loyalty in insurance sector. He further suggested that customer loyalty
in insurance companies can be measured into three basic categorize:
 Intention to make repeated purchases with the same insurance company,

 Possibility of a client recommending "his" insurance company to others,
 Examination continuation of insurance in the same insurance company, how long he or
she was a customer of the company or when was the last time he made the purchase.
2.1.4 Theoretical Concept of Customer Trust

Trust is a concept that has been explored in a variety of areas, and as a result, numerous
definitions of trust exist. Customer Trust is defined as the level of reliability from one party to
another through mutual relationship (J. B., 1967). In the insurance industry, trust is valued even
more highly than it is in most other corporate-customer relationships (Devlin, Ennew, &
Sekhon, 2015).
The study conducted by Sirdeshmukh, Singh and Sabol (2002) highlights the measurement of
customer trust in service industry. Their study suggests that customer trust can be measured
through trust-building and trust-depleting process. Likewise, it can be measure through
contingent asymmetric relationships between trustworthiness dimensions and consumer trust.
The end result of the study suggests that there are three forms of consumer trust measurement:
competence, benevolence and problem solving orientation. Likewise, trust can be describe into
two dimension i.e. emotional and rational. Empathy, feelings of secure, personal experience,
benevolence are the components of emotional dimensions. And knowledge, competence,
ability, integrity, reliability, creditability are the components of rational dimension of trust.
According to Utami (2015), an organization can achieve customer loyalty in a number of ways.
Trust is one of the most efficient ways to build customer loyalty. It will generate loyalty if you
build trust. This is consistent with Sari and Yasa's (2019) findings, which found that trust has
a strong and moderating relationship with customer loyalty. Customer Trust are based on the
perceived credibility and company honesty. Credibility indicates the insurance company’s
honest behavior towards its customers. It indicates the consumer perceptions that words and
13
promise of an insurance company can be trusted (Agyei, Sun, Abrokwah, Penney & Ofori-
Boafo, 2020).
RELATED THEORY
2.2 Review of Related Literature

2.2.1 Social Identity and Loyalty
Tang Weiwei (2007) of his studies entitled as “Impact of corporate image and corporate
reputation on customer loyalty” discovers that corporate image and corporate reputation plays
a significant role to build the customer loyalty in service industry. He suggested that both
variable of social identity assist customers to build the perception towards the firm. The study
results suggest that customer loyalty is the result of the corporate image, corporate reputation
and communication.
The study conducted by Dehdashtia, Kenaria, and Bakhshizadehb (2012) study the effect of
the firm social identification on loyalty development. Structural equation model and factor
analysis were used for the reliability of the model. Furthermore, the study consist the identity
perspective from the variables of social identity, perception value, trust, loyalty and customer
satisfaction. The study examine the role of those variable and verify its positive roles towards
influencing the perception of the product and service of an organization. Thus, the study plays
a remarkable role to highlight the importance of social identity variables relationship with the
loyalty. For the purpose of the study, questionnaire was design on likert based scale from
completely disagree to agree. The questionnaire data was collected and measured the validity
of the construct by examining the items through convergent, discriminate validity, standardized
factor loading and average variance validity.
A study conducted by Nguyen, Leclerc, and Leblanc (2013) discover that social identity has
significant relationship on customer loyalty. For the purpose of the study, researcher
determines the social identity variables as corporate identity, corporate reputation and
corporate images. For the purpose of the study, 1296 questionnaire respondents were collected
from the customers of credit unions. The average variance extracted for each factor loading
items in the construct was significant with each other. The outcomes of the study has
14
empowered to affirm the significant effect and validity of the construct among the social
identity variables.
Salam, Shawky, and Nahas (2013) of their studies discover the effect of company identity and
reputation in constructing consumer loyalty via a case evaluation in Egyptian companies. The
findings of the study imply that the elements of company social identity and reputation has
significant relationship towards consumer loyalty. A structured questionnaire was used to
collect the data. According to the findings, one of the factors determining customer loyalty is
corporate image and reputation. According to the study, corporate image and reputation is an
issue of attitudes, feelings, and beliefs toward the organization, and it can play a key role in
deciding which corporate brand to choose and maintaining loyalty.
Research conducted by Adeniji, Osibanjo, Abiodun and Oni-Ojo (2015) entitled as “Corporate
Image: A Strategy for Enhancing Customer Loyalty and Profitability” states that variables of
corporate image, service offering and environment has more significant than other variables in
the relationship towards customer loyalty. The study was conducted between variable;
corporate image and service offering towards customer loyalty and profitability. For the
purpose of the study, self-structure questionnaire was distributed among 400 banking
customers. All of the variable items were composed by twenty three items which measures the
customer loyalty, customer satisfaction, reputation, corporate identity, service offering and
environment. The reliability and validity of the construct was measured through Cronbach
alpha scores ranging from 0.8 to 0.9 among the items.
Leaniz and Bosque (2016) in their study investigated the influence of customer identification
on customer loyalty. The variable of customer identification on this study were composed from
corporate identity and corporate reputation. The research was based on data gathered from
Spanish clients in a service sector. To explore the impact of corporate image and reputation on
customer loyalty, the data was analyzed using the Structural Equation Model. The end result
gave perception into the significance of company image and reputation with in the service
sector. Similarly, the study additionally shows that managers be required to make use of their
available resources with the aid of using company image and reputation to enhance the
customer loyalty.
15
However, Szwajca (2016) conducted a study to discover the competitive position represented
by the level of corporate reputation in relation to the customer loyalty in banking sector. Unlike
other studies, this one found negative relationship between bank reputation and customer
loyalty. It shows that the banks with the greatest reputation ratings had the lowest levels of
loyalty.
Nguyen and Phan (2018) empirical studied on the determinations of customer satisfaction and
loyalty in Vietnamese Life-Insurance Setting. The research was conducted among the 1476
insurance customers through a questionnaire. The variables of determinants was corporate
image, service quality, prices, perceived value, customer satisfaction and customer loyalty. For
the purpose of the study, path analysis technique is applied to examine the proposed framework
on the relationship among the variables. The end result suggested that life-insurance companies
should focuses more on the improving their corporate image and service quality to gain more
customer loyalty.
2.2.2 Social identity and Customer Trust

In the Pakistan Banking Industry, Ali, Leifu, and Rehman (2014) investigated the impact of
trust and company reputation on customer loyalty. To collect the information, a systematic
questionnaire was created. The data was analyzed using correlation and regression. Customer
loyalty is favorably influenced by trust, corporate reputation, and service quality, according to
the findings. They also stated that in building customer loyalty strategies in Pakistan's banking
sector, reputation, service quality, and customer trust should be taken into account.
Based on credit cardholder perceptions, Upamannyu, Bhakar, and Gupta (2015) study the links
between corporate image, Brand Trust, and Brand Effect for Indian banks. The findings show
that corporate image has a direct effect on brand trust and brand effect. They went on to say
that banks must be cautious when building a corporate image since it will decide the level of
trust customers have in the brand and the brand effect.
Basaula (2017) conducted a study to investigate the repurchase behavior of insurance policy
in Nepalese insurance market. The findings shows that customer repurchase the insurance
policy because of their trust towards company and they look for social propensity.
16
Yasin and Bozbay (2017) conducted the study to see how company reputation affects customer
trust in the Turkish telecom business. A total of 600 people took part in this survey. The
questionnaire was used to collect data. To examine the data, researcher used multiple
regression analysis approaches. The study's findings show to the importance of corporate
reputation in establishing customer trust, particularly in the service business, where companies'
offers are more difficult to pinpoint because to the intangibility nature of their services. The
findings also suggest that organizations seeking a high corporate reputation should pay close
attention to their customers and their demands in order to achieve their goal. Furthermore, the
findings imply that the organization becomes dependable and financially solid, which is an
important aspect in establishing customer trust.
In 2020, Kempa et al. conducted a research entitled as “Insurance Policy Purchase Decision in
Surabaya, Indonesia”. The research objective was to determine the influencing factor of
purchasing decision on insurance services. For the purpose of the study, the one of the social
identity forms i.e. corporate reputation variables was measured in order to find it significant
with the customer trust. The survey was conducted among one hundred insurance customers
which then further carried out using Partial Least Square method. The results unrevealed that
corporate reputation has significant relationship with the customer trust and then purchase
decision in insurance industry.
2.2.3 Customer Trust and Customer loyalty

Chen & Mau (2009) conducted a research regarding the “The impacts of ethical sales behavior
on customer loyalty in the life insurance industry”. The research objectives of the study was to
analyses how sales person’s ethical and unethical behavior affects customer trust and then,
effects customer loyalty in life insurance companies. For the purpose of the study, the self-
administrative questionnaire was distributed to 11 different business region in Taiwan, China.
The confirmatory factor analysis was used to the validity of the items. Customer believes,
insurances trustworthiness and reliability has a positive significant impact on customer loyalty.
Similarly, Sirdeshmukh, Singh and Sabol (2002) entitled as “Consumer Trust, Value, and
Loyalty in Relational Exchanges” provides a deeper insight into the relationship between
customer trust and customer loyalty in service industry. The result of the study demonstrates
the presence of partial mediator’s “values” in between the relationship of customer trust and
17
loyalty. The study supports the tripartite views of trustworthiness which consist of operation
competence, operation benevolence and problem solving orientation dimensions.
Another research conducted by Damtew and Pagidimarri (2013) entitled as “The role of “trust”
in building customer loyalty in insurance sector- A study” focused to find out whether or not
the customer trust affects the customer loyalty. For the purpose of the study, two dimension of
trust was tested. The two dimension of trust were; customer trust towards employees and
customer trust towards company. The self-administer questionnaire was distributed and
collected from 360 insurance customers in Ethiopia. The Cronbach’s Alpha was carried out to
test the reliability of the items in the proposed model. The end result of the study suggest that
customer trust on employees and customer trust on insurance company play a vital role in
influencing customers towards loyalty in insurance sector.
Leaniz and Bosque (2015) used an integrated method to investigate the antecedents of hotel
customer loyalty from a social identity perspective. Structural equation modeling was used to
examine empirical data. Customer loyalty is favorably influenced by customer trust, consumer
dedication, and customer identification with the organization, according to the findings.
According to Ahmed and Othman, customer loyalty and trust are interconnected (2016). The
study suggested that the belief that customers develop after using a product or service is
referred to as customer trust. Customers develop trust in a services that meets their needs and
leaves them satisfied.
Likewise, Agyei, Sun et al. (2020) entitle as “Influence of Trust on Customer Engagement:
Empirical Evidence from the Insurance Industry in Ghana” study provides another insight
towards dimension of the trust. The dimension of the trust was categorize into service provider,
economy based trust, regulator trust and information based trust. A total of 452 responses were
taken among the insurance customers using a structural equation model. Though this research
holds various dimension of the trust, each items of the construct into a single construct. The
result uncovers that building customer trust in necessary in order to engage the customer
through communication and driving a high level of customer loyalty in insurance industry.
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2.2.4 Mediating role of customer trust in relationship between social identity and
customer loyalty
Research conducted by Chang (2013) explore the mediating role of perceived trust in between
corporate reputation and customer loyalty in restaurant sector in Taiwan. The study
investigates the significant relationship between the variables; perceived customer trust,
corporate reputation, customer loyalty, customer satisfaction and perceived values. For the
purpose of the study, a research model was develop to empirically investigate relationship.
Structural equation model was carried out to test the hypothesis among the variables. The
questionnaire was collected from 529 from two different restaurants. The research result
unrevealed that corporate reputation creates customer loyalty through customer perceived trust.
Likewise, another major findings of the research was perceived trust plays a significant role
towards customer satisfaction and then customer loyalty.
Research conducted by Damtew and Pagidimarri (2013) states that customer trust has a
positive and significant influence on customer loyalty in insurance companies. Trust is more
important for insurance company than any other type of business because insurance company
is selling a promise. It collect the premiums from customers and minimize the risk and the cost
if any loss occurred.
Nguyen, Leclerc, and Leblanc (2013) investigated the role of consumer trust in a financial
institution's customer loyalty. Customer trust acts as a mediator between social identity (in its
three forms: corporate identity, corporate image, and corporate reputation) and customer
loyalty, according to the findings of the study. The findings allowed researchers to confirm the
important impact of the identity-image-reputation towards customer trust, which in turn
generates customer loyalty. The end result suggests that the customer trust positively mediates
between the relationship between the social identity and customer loyalty.
Shirazi, Lorestani and Mazidi (2013) conducted a research entitled as “Investigating the Effects
of Brand Identity on Customer Loyalty from Social Identity Perspective”. The study results
revealed that both brand identity and customer identification indirectly effect the customer
loyalty through the customer trust and perceived values. The result further argued that
consumer-organization is obtained from organization identity. Therefore, manager need to
19
create positive corporate identity to customers to build genuine image towards customers to
generate customer loyalty through customer trust and perceived values.
Another research conducted by Melewar, Foroudi, Gupta, Kitchen and Foroudi (2017) entitled
as “Integrating identity, strategy and communications for trust, loyalty and commitment”
explore the relationship between corporate identity, stakeholder trust and loyalty through
commitment and trust theory. For the purpose of the research, explanatory research design was
used at initial stage and then structural equation model was examined to relationship among
the variables. The research result indicate that the key driver to generate trust, loyalty is through
corporate identity and communication.
Rather (2017) conducted the research to investigate the relationship between social identity
and social exchange construct. The social exchange construct include satisfaction, trust and
commitment in predicting customer loyalty in hospitality industry. For the purpose of the
study, response of 345 hotel customer are collected with the help of self-administered
questionnaire. The end result suggests that social identity has significant relationship on
customer loyalty, satisfaction and brand trust. The reliability, trustworthiness, customer
minded, showing respect to customer and promise are the items of the trust measurement in
the study. This study highlights that there is a partial role of trust on the relationship between
Brand identity and customer loyalty in hospitality sector.
Purwanto, Deviny and Muthar (2020) conducted the study to investigate the mediating role of
customer trust in relationship between corporate image and customer loyalty. The study uses
the structural equation modeling to test the mediating role of trust. The result of the study
shows that there is the significant mediation role of customer trust which positively effect on
relation between corporate image and customer loyalty.
Another study conducted by Kempa et al. (2020) has highlighted the mediating role of
customer trust in between the relationship of corporate reputation and purchased decision in
among insurance customers. The research objective was to determine the influencing factor of
purchasing decision on insurance services. The survey was conducted among one hundred
insurance customers which then further carried out using Partial Least Square method. The
results unrevealed customer trust plays significant mediating role towards purchase decision
making of insurance customers and then significantly positively effects customer loyalty.
20
3. Conceptual Framework
In this study, research intends to investigate the customer loyalty in Nepalese insurance
companies focusing primarily on firm social identity. A proposed model and measurement
value scale has been constructed based on the research of Valariea Leonard & Parasuraman
(1996), Sirdeshmukh, Singh & Sabol, (2002), and Nguyen, Leclerc, and Leblanc (2013). The
independent variable is social identity dimension with three construct that is corporate identity,
corporate image and corporate reputation. Likewise, the dependent variable is customer
loyalty. Furthermore, the mediating variable is customer trust.
Mediating Variable
Customer Trust
Social Identity
Corporate Identity (CI) Customer Loyalty
Corporate Image (CIM)

Dependent Variable
Corporate Reputation (CR)
Independent Variable
Figure 1
Conceptual Framework
Adapted from Nguyen et al. (2013)
21
CHAPTER III
RESEARCH METHODOLOGY
A master framework for the investigation is provided by research methodology. It refers to the
procedures or techniques utilized to find, collect, process, and evaluate data for my research
project, "Social identity and customer loyalty in Nepalese insurance companies" This chapter
depicts how the research is carried out.
3.1 Research Design

The main approach for the data collection for this GRP followed the deductive approach to test
the existing theory. The research design has been linked to the research questions, which aim
to investigate the relationship and impact of social identity and customer loyalty. This study
employed a quantitative exploratory research design, with the descriptive research is used to
define the factors of social identity and customer loyalty.
Furthermore, causal research is used the test the relationship between the construct of social
identity, customer loyalty and customer trust. It will aid in providing researchers on detailing
the precise relationship that exists between the variables, as well as an equation or model that
expresses the dependent variable as an additive combination of the independent variable.
3.2 Population and sample

The desired data was collected via non-probability sampling. The study used both convenient
sampling technique to track the insurance customer for the respondents. The population of the
study are all the insurance customers exist in the Nepalese insurance market who are in
Kathmandu valley of Nepal. Both life and non-life customers are taken as the sample for the
study. The Cochran equation is used to calculate the representative sample size (1963:75).
n= z2*p*q/e2
Where,
n= Sample size
p = Population proportion with given characteristic
q = 1-p
22
z = Z value (e.g. 1.96 for 95% confidence level)
e= Error margin
It is advised that the values of p and q be set to 50% for the unknown population. Using a 95%
confidence level, a z value of 1.96, and a sampling error of 5%.
n = 50∗50*(1.96)2 /0.052=384
As a result, the sample size calculated using this approach is 384, which is the sample size for
this study. However, only 352 replies were obtained, resulting in a response rate of 91.67
percent that is considered appropriate for this study.
3.3 Sources of Data and Data Collection Plan

The primary method of data collecting was chosen for this study. After the questions were
constructed with the help of Google Forms, 91 response were collected through the online
medium, and 261 responses were collected using printed survey questionnaires.
3.4 Instrumentation
The questionnaire contains three constructs of the social identity value scale developed by
Nguyen et al. (2013) which are corporate identity, corporate image and corporate reputation.
Three items of corporate identity, three of corporate image and four of corporate reputation
had been adopted for the study. Similarly, the items of customer trust was originally developed
by Valariea Leonard & Parasuraman (1996). Five items of customer trust had been adopted for
the study. Likewise, the items of customer loyalty were originally developed by Sirdeshmukh,
Singh and Sabol (2002). For the measurement of latent variables. Items have been chartered
in 6 Likert scale ranges from strongly disagree -1 to strongly agree -6.
3.4.1 Construct Reliability

Table
Construct Reliability
Latent Variable Code No. of Items Source Cronbach Alpha

Corporate Identity CI 3 Nguyen et al. (2013) 0.849
Corporate Image CIM 3 Nguyen et al. (2013) 0.875
Corporate Reputation CR 3 Nguyen et al. (2013) 0.866
23
Customer Trust CT 2 Leonard & Parasuraman (1996) 0.778
Customer Loyalty CL 2 Sirdeshmukh et al. (2002). 0.758
Table 13 exhibits the construct reliability. It represent Cronbach alpha of independent,

dependent and mediating variables which is reliability of corporate identity, corporate image,
corporate reputation, customer trust and customer loyalty. The analysis indicate that the all
latent variables of this study is acceptable which represents that collected data are consistent
and reliable for the study.
3.5 Data Analysis Technique

The normality of the data has been assessed in the data analysis process, that is, whether the
gathered data are normal or not, using the Shapiro-Wilk Test and Histogram. Since, the data
were not normal. After the test of normality, data descriptive analysis has been used to present
the data. Furthermore, SMART PLS V3 to analyses the reliability of the study data. Reliability
has been analyzed with the help of Cronbach's Alpha with a minimum threshold of 0.70.
Likewise, correlation, regression and mediation effect were analyzed using SPSS PROCESS
MACRO V40. The analysis were conducted the degree of the relationship effect of corporate
identity, corporate image, corporate reputation, customer trust and customer loyalty
respectively.
3.6 Ethical Consideration

In research, ethical condition are crucial. Honesty and fairness should be a non-negotiable
value in the research study. Both ethics and norms are maintained while conducting the survey
as well as during the writing of the report. The norms and regulations were observed, and no
unethical acts were carried out during the survey or report writing, as per the university's
standards.
Responses were involved with the acceptance of participants. The respondents were
completely made aware of the objectives of the research project for academic purposes and
only for the purposes of this particular research. They were also reassured that their responses
will be treated as confidential. The respondents made assured of their participation in the
24
research is voluntary and are free to withdraw anytime due to any causes. In spite of that, if
there was a denial of respondents to participate in the survey due to any reason, it was also
respected.
Participants were neither physically or psychologically injured nor abused during the research.
The researcher, on the other hand, tried to build and maintain a flexible, comfortable, and
cooperative atmosphere during the survey. Respondents were assured that their data would be
kept confidential and that no information would be shared with third parties. They were also
assured that the data provided by them will only be used for academic purposes. Similarly, the
researcher guarantees that suitable citation and references have been used and that plagiarism
will not occur. The sources have been properly stated in order to honor the original authors of
the ideas and concepts provided in this report.
25
CHAPTER IV
ANALYSIS AND RESULTS

4.1 Demographic Profile of Respondents
Table 1
Demographic Profile of Respondents
Demographics Frequency Percent

Gender Male 226 64.2
Female 126 35.8
Age Group 17 to 30 185 52.6

31 to 45 140 39.8
Above 45 27 7.7
Monthly Less than 15000 88 25.0

Income 15000 to 30,000 77 21.9
30,001 to 45000 97 27.6
Above 45000 90 25.6
Education Primary 3 .9
level SLC 7 2.0
Plus (+2) 26 7.4
Bachelor 141 40.1
Masters and above 175 49.7
Current
Occupation 107 30.4
Student
Job Holders 195 55.4
House maker 14 4.0
Businessperson 36 10.2
Total 352 100.0
Table 1 exhibits the demographic profile of the respondents who took part in the survey.
Respondents are divided into five main categories. They are Gender, Age Group, Monthly
Income, Education Level and Current Occupation. Out of 352 respondents, 64.2 percent are
male and 35.8 are female. Likewise, 52.6 percent of respondents are in the age group of 17 to
30 years, 39.8 percent of respondents are in the age group of 31 to 45 years. Similarly, 40.1
percent of respondents have qualification up to Bachelor level and 49.7 percent of respondents
26
have qualification up to Masters and above. Similarly, 30.4 percent are students, 55.4 percent
are Job Holders as their current occupation.
There is the ultimate domination of male gender in the study. Similarly, in the case of
respondents there is dominance respondents who are in the age group of 17 to 30 years.
Likewise, there is the dominance of respondents who have monthly income from NRS. 30,001
to 45000 as monthly income. And, in the case of current occupation, there is the ultimate
domination of Job Holders which is good for the study. Thus, the respondents matches the
sample characteristics which was planned for the study.
4.2 Descriptive Statistics
Table 2
Descriptive Statistics of Corporate Identity
Statistic Std. Error

Mean 4.1 0.0624
Median 4.334
Variance 1.37
Std. Deviation 1.18
Corporate Identity Minimum 1
Maximum 6
Range 5
Interquartile Range 1.67
Skewness -0.897 0.13
Kurtosis 0.072 0.259
Table 2 exhibits the descriptive statistics of the corporate identity under the study. Corporate
identity had a mean response of 4.1 with a standard deviation of 1.18 which indicate that overall
respondents slightly agree with the proxies that measured corporate identity of their associated
insurance company. It also indicate that respondents slightly agree that they loved their
insurance name and it is always there to help them.
27
Table 3
Descriptive statistics of Corporate Image

Mean 4.14 0.06362
Median 4.33
Variance 1.43
Std. Deviation 1.19
Corporate Image Minimum 1
Maximum 6
Range 5
Kurtosis -0.085 0.259
Table 3 exhibits the descriptive statistics of corporate image under the study. Corporate image
had a mean response of 4.14 with a standard deviation of 1.19 which indicates that overall
respondents slightly agree with the proxies that measured corporate image of their associated
insurance company. It also indicates that respondents slightly agree that their associated
insurance company’s name came first in their mind when asked about insurance services and
always had good impressions towards it.
Table 4
Descriptive statistics of Corporate Reputation

Mean 4.05 0.05984
Median 4.45
Variance 1.27
Std. Deviation 1.1223
Corporate Reputation Minimum 1
Maximum 6
Range 5
28
Kurtosis 0.034 0.259
Table 4 exhibits the descriptive statistics of corporate reputation under the study. Corporate
reputation had a mean response of 4.05 with a standard deviation of 1.1223 which indicates
that overall respondents slightly agree with the proxies that measured corporate reputation of
their associated insurance company. It also indicates that respondents slightly agree that they
had a good experience with their associated insurance and it is better than other existing
insurance companies in the Nepalese market.
Table 5
Descriptive statistics of Customer Trust

Mean 4.13 0.06301
Median 4.5
Variance 1.397
Std. Deviation 1.18
Customer Trust Minimum 1
Maximum 6
Range 5
Kurtosis -0.089 0.259
Table 5 exhibits the descriptive statistics of customer trust under the study. Customer trust has
a mean response of 4.13 with a standard deviation of 1.18 which indicates that overall
respondents slightly agree with the proxies that measured customer trust of their associated
insurance company. It also indicates that respondents had a moderate level of trust with their
associated insurance company. The result revealed that respondents slightly trust the expertise
of their associated insurance company and also slightly agree that their insurance company has
been honest with them.
29
Table 6
Descriptive statistics of Customer Loyalty

Mean 4.1 0.06563
Median 4.42
Variance 1.51
Std. Deviation 1.22
Customer Loyalty Minimum 1
Maximum 6
Range 5
Interquartile Range 2
Kurtosis -0.281 0.259
Table 5 exhibits the descriptive statistics of customer loyalty under the study. Customer loyalty
had a mean response of 4.1 with a standard deviation of 1.22 which indicates that overall
respondents slightly agree with the proxies that measured customer loyalty of their associated
insurance company. It also indicates that respondents are loyal towards their associated
insurance company. The result revealed that respondents does not have any intention to switch
over other insurance company and consider their associated insurance company as their first
choice.
Table 7
Descriptive Statistics of Corporate Identity Items
N Minimum Maximum Mean Std. Deviation

My insurance company is there to help me 352 1 6 4.17 1.25
My insurance company is different from
other insurance companies 352 1 6 3.82 1.38
I like the name of my insurance company 352 1 6 4.3 1.36
30
Table 7 exhibits that the overall average of the respondents responses regarding the corporate
identity of their insurance company. The mean for company’s presence to help respondents,
respondents’ insurance company being different from others and finding company’s name
attractive are 4.17, 3.82 and 4.3 respectively. This means that respondents majorly agree
towards finding their company’s name attractive followed by company’s presence to help and
company differentiation.
Table 8
Descriptive Statistics of Corporate Image Items
Std.
N Minimum Maximum Mean Deviation
I have always had a good impression of my
insurance company 352 1 6 4.08 1.30
My insurance company name always comes
first to my mind when I think of insurance 352 1 6 4.29 1.34
My insurance company always interacts
well with me 352 1 6 4.02 1.35
Table 8 exhibits that the overall average of the respondents responses regarding the corporate
image of their insurance company. The mean for recalling respondents associated insurance
name, good impression and well interaction are 4.29, 4.08 and 4.02 respectively. This means
that respondents agree towards the statement that their insurance company name comes first
when they think of insurance followed by having a good impression and good interaction with
their insurance company.
Table 9
Descriptive Statistics of Corporate Reputation Items
Std.
My insurance company always keep its
promises to me 352 1 6 3.93 1.26577
31
My insurance company reputation is better
than other insurance company 352 1 6 4.00 1.25858
I have a good experience with my insurance
company 352 1 6 4.21 1.26837
Table 9 exhibits that the overall average respondent’s responses regarding the corporate
reputation of their insurance company. The mean from the items that measured experience with
their insurance, company reputation and meeting promises are 4.21, 4.00 and 3.93 respectively.
This means that respondents have a good experience towards their associated insurance
company. Similarly, they also believe that reputation for their insurance company is better and
that they fulfil the promises made to the clients.
Table 10
Descriptive Statistics of Customer Trust Items
Std.
My insurance company is honest
with me 352 1 6 4.008 1.32581
I trust the expertise of my insurance
company 352 1 6 4.241 1.2882
Table 10 exhibits that the overall average of the respondent’s responses regarding the corporate
trust. The mean of items of company being honest and expert in their field are 4.008 and 4.241
respectively. This means that respondents believe that they require expertise from their
associated insurance company. They also show their agreeableness about their company being
honest with them.
Table 11
Descriptive Statistics of Customer Loyalty Items
Std.
32
I consider my insurance company as my
first choice 352 1 6 4.034 1.32432
I have no intention to switch over other
insurance company 352 1 6 4.09 1.41976
Table 11 exhibits that the overall average of the respondent’s responses regarding the customer
loyalty. The mean of item that measures respondent’s first choice and intention to switch is
4.034 and 4.09 respectively. This means that respondents are more inclined towards their
insurance company as their first choice and are less likely to switch to other insurance
companies.
4.3 Normality Test
Table 12
Shapiro-Wilk Test
Shapiro-Wilk
Statistic Df Sig.
Corporate Identity 0.913 352 0
Corporate Image 0.932 352 0
Corporate Reputation 0.919 352 0
Customer Trust 0.919 352 0
Customer Loyalty 0.938 352 0
Table 12 exhibits Shapiro-Wilk test conducted for analyzing the data normality. The results of
the analysis show that the test is significant having p-value lower than 0.05, data are not
normally distributed.
33
Figure 2 Histogram of Corporate Identity
From figure 2, it can be seen that data of the study for corporate identity are not normally
distributed. Furthermore, the histogram of corporate identity are negatively or left-skewed.
Figure 3 Histogram of Corporate Image
From figure 3, it can be observed that data of the study are for corporate image are negatively
or left skewed and thus, not normally distributed.
34
Figure 4 Histogram of Corporate Reputation
From figure 4, it can be observed that data of the study are for corporate reputation are
negatively or left skewed and thus, not normally distributed.
Figure 5 Histogram of Customer Trust
From figure 5, it can be observed that data of the study are for customer trust are negatively or
left skewed and thus, not normally distributed.
35
Figure 6 Histogram of Customer Loyalty
From figure 6, it can be observed that data of the study are for customer loyalty are negatively
or left skewed and thus, not normally distributed.
4.3.3 Collinearity Test

Table 13
Collinearity Statistics
VIF
CI1 2.062
CI2 2.008
CI4 2.131
CIM1 2.123
CIM3 2.82
CIM5 2.415
CL1 1.594
CL5 1.594
CR1 2.133
CR2 2.653
CR5 2.173
CT1 1.679
CT5 1.679
36
Table 15 exhibits the multi-collinearity. Since the Variance Inflation Factor (VIF) of each item
is below 3, it means that there is no issue of multi-collinearity.
4.4 Correlation Matrix

Table 14
Correlation Matrix
Corporate Corporate Corporate Customer Customer

Identity Image Reputation Trust Loyalty
Corporate Identity 1
Corporate Image .791** 1
Corporate Reputation .770** .833** 1
Customer Trust .740** .776** .818** 1
Customer Loyalty .742** .729** .752** .776** 1
N 352 352 352 352 352
** Correlation is significant at the 0.01 level (2-tailed).
Table 16 exhibits the degree of correlation and significance level of the corporate identity,
corporate image, corporate reputation, and customer trust and customer loyalty.
4.4.1 Correlation between Corporate Identity and Customer Loyalty

There exists a high degree of correlation (r=0.742) between corporate identity and customer
loyalty. The p-value of success is less than 0.05 level of significance which means that there
is also a significant relationship between corporate identity and customer loyalty. It means
when the degree or level of corporate identity increases, customer loyalty will also increase.
4.4.2 Correlation between Corporate Image and Customer Loyalty

There exists a high degree of correlation (r=0.729) between corporate image and customer
is also a significant relationship between corporate image and customer loyalty. It means when
the degree or level of corporate image increases, customer loyalty will also increase.
37
4.4.3 Correlation between Corporate Reputation and Customer loyalty
There exists a high degree of correlation (r=0.752) between corporate image and customer
is also a significant relationship between corporate image and customer loyalty. It means when
the degree or level of corporate image increases, customer loyalty will also increase.
4.4.4 Correlation between Customer Trust and Customer loyalty

There exists a high degree of correlation (r=0.776) between customer trust and customer
is also a significant relationship between customer trust and customer loyalty. It means when
the degree or level of customer trust increases, customer loyalty will also increase.
4.5 Regression Model
Table 15
Regression Model Test
R Mean Square
Model R Square Errors F df1 df2 P
Social
Identity:(Constant)
Corporate Identity 0.7404 0.5483 0.6331 424.7871 1 350 0
Corporate Image 0.7763 0.6027 0.5568 530.8763 1 350 0
Corporate Reputation 0.8185 0.6699 0.4626 710.222 1 350 0
Table 17 exhibits the model summary of regression analysis. From the table, it can be seen that
the value of r square is 0.549, 0.61, and 0.67 respectively which means that 54.9 percent, 61
percent and 67 percent of the variance in the dependent variable can be explained by the
independent variables. Out of which, 45.1 percent, 39 percent, 33 percent of variance can be
explained by the other variables which this study has not considered.
38
Table 16
Coefficient Table
Unstandardized Standardized
Coefficients Coefficients T Sig.
B Std. Error Beta
(Constant) 0.33 0.156 2.116 0.035
Corporate Identity 0.355 0.059 0.338 6.059 0.00
Corporate Image 0.175 0.066 0.17 2.638 0.009
Corporate Reputation 0.385 0.068 0.351 5.677 0.00
Table 18 exhibits the coefficients of the latent variables. It can be seen the p-value of corporate
identity, corporate image and corporate reputation is less than 0.05 which means that there is
a significant impact of social identity on customer loyalty towards insurance companies.
Furthermore, corporate reputation is the most dominant factor followed by corporate identity
and corporate image with the value of Beta 0.338, 0.17 and 0.351 respectively.
4.6 Mediation Effect

The mediation effect was analyzed using SPSS MACRO PROCESS V40 Model developed by
Hayes’ (2020) with the 5,000 bootstrapping resamples to access the direct and indirect effect
of customer trust in relationship between social identity and customer loyalty.
4.6.1 Mediation Effect of Customer Trust on relationship between corporate identity

and customer loyalty
Table 17
Direct Effect
Direct effect of Corporate

Model Identity on Customer Loyalty
Standard
Effect Error t P LLCI ULCI
Corporate
Identity
(constant) 0.3899 0.0485 8.036 0 0.2945 0.4854
39
Table 19 exhibits the direct effect of corporate identity on customer loyalty. The direct effect
of corporate identity on customer loyalty is 38.9 percent. Likewise, the results shows that there
is the significant relationship effect on the variables which is less than P-value is 0.05 at 95
percent confidence interval. And, the value of LLCI and ULCI do not lie between 0, thus it is
concluded that the corporate identity has positive significant effect on customer loyalty. Thus,
H1 hypothesis of the study is accepted.
Table 18
Indirect Effect
Indirect effects of Corporate

Model Identity on Customer Loyalty
Indirect Effect Boot SE LLCI ULCI
Customer Trust
(constant) 0.3907 0.0474 0.2987 0.4851
Table 20 exhibits the indirect effect of customer trust as a mediator between corporate identity
on customer loyalty. The table provides insight into the mediation effect of customer trust. The
indirect effect of customer trust is 39.07 percent. And, the value of LLCI and ULCI do not lie
between 0, thus it is concluded that the customer trust positively mediates and significantly
impact on relationship between corporate identity and customer loyalty. Thus, accepting the
H4 hypothesis of this study.
In conclusion, there is both direct and indirect significant effects of corporate identity on
customer loyalty with the presence of customer trust as a mediator. Thus, we can conclude that
there is the partial mediation effect of customer trust on the relationship between corporate
identity and customer loyalty.
40
4.6.2 Mediation Effect of Customer Trust on relationship between corporate image and
customer loyalty
Table 19
Direct Effect
Direct effects of Corporate

Model Image on Customer Loyalty
Effect SE T P LLCI ULCI
Corporate Image
(constant) 0.3284 0.524 6.2728 0 0.2255 0.4314
Table 21 exhibits the direct effect of corporate image on customer loyalty. The direct effect of
corporate image on customer loyalty is 32.8 percent. Likewise, the results shows that there is
the significant relationship effect on the variables which is less than P-value is 0.05 at 95
percent confidence interval. And, the value of LLCI and ULCI do not lie between 0, thus it is
concluded that the corporate image has positive significant effect on customer loyalty. Thus,
H2 hypothesis of the study is accepted.
Table 20
Indirect Effect

Model Image on Customer Loyalty
Effect Boot SE LLCI ULCI
Corporate Trust
(constant) 0.4236 0.54 0.3179 0.5323
Table 22 exhibits the indirect effect of customer trust as a mediator between corporate images
on customer loyalty. The table provides insight into the mediation effect of customer trust. The
indirect effect of customer trust is 42.3 percent. And, the value of LLCI and ULCI do not lie
between 0, thus it is concluded that the customer trust positively mediates and significantly
impact on relationship between corporate image and customer loyalty. Thus, accepting the H5
hypothesis of this study.
41
In conclusion, there is both direct and indirect significant effects of corporate image on
image and customer loyalty.
4.6.3 Mediation Effect of Customer Trust on relationship between corporate reputation

and customer loyalty
Table 21
Direct Effect
Direct effects of
Corporate Reputation
Model on Customer Loyalty
Effect SE T P LLCI ULCI
Corporate
Reputation
(constant) 0.3889 0.061 6.3792 0 0.269 0.5088
Table 23 exhibits the direct effect of corporate reputation on customer loyalty. The direct effect
of corporate identity on customer loyalty is 38.89 percent. Likewise, the results shows that
there is the significant relationship effect on the variables which is less than P-value is 0.05 at
95 percent confidence interval. And, the value of LLCI and ULCI do not lie between 0, thus it
is concluded that the corporate reputation has positive significant effect on customer loyalty.
Thus, H3 hypothesis of the study is accepted.
Table 22
Indirect Effect

Model Reputation on Customer Loyalty
Effect Boot SE LLCI ULCI
Corporate Trust
(constant) 0.4362 0.59 0.324 0.5519
Table 24 exhibits the indirect effect of customer trust as a mediator between corporate
reputations on customer loyalty. The table provides insight into the mediation effect of
customer trust. The indirect effect of customer trust is 43.62 percent. And, the value of LLCI
42
and ULCI do not lie between 0, thus it is concluded that the customer trust positively mediates
and significantly impact on relationship between corporate reputation and customer loyalty.
Thus, accepting the H6 hypothesis of this study.
In conclusion, there is both direct and indirect significant effects of corporate reputation on
reputation and customer loyalty.
4.7 Hypothesis Testing Summary

Table 23
Hypothesis Testing Summary
p-
Hypothesis Result
value
H1: Corporate identity has a positive and significant effect on
0 Accepted
customer loyalty
H2: Corporate image has a positive and significant effect on customer
0.009 Accepted
loyalty
H3: Corporate reputation has a positive and significant effect on
0 Accepted
customer loyalty
H4: There is significant mediation of customer trust on relation between
0 Accepted
corporate identity and customer loyalty
H5: There is significant mediation of customer trust on relation between
0 Accepted
corporate image and customer loyalty
H6: There is significant mediation of customer trust on relation
0 Accepted
between corporate reputation and customer loyalty
Table 25 exhibits the hypothesis testing results summary. It end results suggests that H1, H2,
H3 hypothesis are accepted. And, H4, H5, H6 results shows that there is the partial mediation
of customer trust on the relationship between corporate identity forms; corporate identity,
corporate image and corporate reputation.
The first hypothesis is accepted because the p-value is less than 0.05 level of significance which
states that there is significant impact of corporate identity on customer loyalty. Likewise, the
second hypothesis is accepted because the p-value is less than 0.05 level of significance which
43
states that there is significant impact of corporate image on customer loyalty. The third
hypothesis is also accepted because the p-value is less than 0.05 level of significance which
states that there is significant impact of corporate reputation on customer loyalty.
The fourth, fifth and sixth hypothesis are accepted because the value of LLCI and ULCI do not
lie between 0 which states that customer trust positively mediates and significantly impact
customer loyalty. Thus, accepting the H4, H5 and H6 hypothesis of the study.
4.9 Major Findings
Some of the major findings of the study are as follows:
 The mean scale of corporate identity is 4.0985 with the standard deviation 1.17067
which suggests that average respondents agree with the statement that measured
corporate identity and looking for their insurance name and admire those insurance
who helps them.
 The mean scale of corporate image is 4.1364 with the standard deviation 1.1937 which
suggests that average respondents agree with the statement that measured corporate
image. The result shows that insurance customers like those brand images which assist
them to recognize the company. Then, insurance customers like those insurance
company which frequently make a good communication with its customers.
 The mean scale of corporate reputation is 4.0464 with the standard deviation 1.1227
which suggests that average respondents agree with the statement that measured
corporate reputation. The result shows that insurance customers will be loyal when they
get better customer experience and perceive more reputed insurance company.
 The mean scale of customer trust is 4.125 with the standard deviation 1.18 which
trust. The result shows that insurance customers trust those insurance companies which
assist expertise service towards its customer and honest behavior.
 The mean scale of customer loyalty is 4. 060 with the standard deviation 1.24 which
44
loyalty. The result shows that insurance customers regards their insurance companies
as their first choice and has no any switch intention.
 There is significant and positive impact of corporate identity on customer loyalty of
Nepalese insurance companies. It means that statistically it portrays that if the corporate
identity of insurance companies increases, customer loyalty will also increase as well.
 There is significant and positive impact of corporate image on customer loyalty of
image increases, customer loyalty will also increase as well.
 There is significant and positive impact of corporate reputation on customer loyalty of
reputation increases, customer loyalty will also increase as well.
 There is the partial mediation of customer trust on the relationship between social
identity form (corporate identity, corporate image and corporate reputation) and
customer loyalty.
45
CHAPTER V
DISCUSSION, CONCLUSION AND IMPLICATIONS

This chapter is a concluding part of the study. It is divided into three sections on the basis of
the research outcomes. First of all, it discuss about the study results. Then, the conclusion is
carried out on the basis of discussions and the chapter is ended with the implication.
5.1 Discussions
The main purpose of the study was to examine the mediating role of customer trust on the
relationship between social identity forms and customer loyalty. The study investigated the
three forms of social identity (corporate identity, corporate image and corporate reputation)
that can influence the customer loyalty among insurance customers.
The results reaffirm the study of Nguyen et al. (2013) which showed that the social identity
forms (corporate identity, corporate image and corporate reputation) has a significant positive
impact of social identity on customer loyalty. The social identity forms significantly increases
the customer trust and then positively impacts the customer loyalty. One of the reasons behind
the study similar results with the current one is because of higher measurement likert scale of
social identity forms. The surveyed insurance customers indicated that physical forms elements
like company name can create lasting impression on customer minds. Likewise, elements of
corporate image plays a significant role to determine the customer loyalty. One of these
elements is contact personnel items where company need to keep good communication with
the customers to make lasting impression.
With regard to the impact of social identity forms (corporate identity, corporate image and
corporate reputation) on customer loyalty, the results showed that there is significant impact
of social identity forms. This is consistent with the results of previous studies from Tang
Weiwei (2007), Dehdashtia et al. (2012), Nguyen et al. (2013), Salam, Shawky & Nahas
(2013), Adeniji et al. (2015), Leaniz & Bosque (2016), and Nguyen & Phan (2018). Their
studies too showed that there is significant impact of social identity forms on customer loyalty.
This results is consistent with the social identity theory in marketing empirical studies which
emphasizes that firm social recognition leads to better competitive position to retain more
customers.
46
On the contrary, this findings is inconsistent with the study of Szwajca (2016) who concluded
that corporate reputation has negative relationship on customer loyalty. The study argues that
firms with the greatest reputation ratings had the lowest levels of loyalty. This insignificant
could be the result of fewer samples used in the study because it contradict both social identity
and customer loyalty theory.
However, this study contradicts the findings from the study conducted by Fachmi et al. (2020).
The study showed that customer trust has no direct significant effect on customer loyalty in
life insurance services. It is in the line with the Kishada & Wahab (2015) study result shows
that the customer trust has no significant effect on customer loyalty in banking industry. This
might be because the study has customer satisfaction as a intervene variables. Likewise, this
study result also contradict the study conducted by Basaula (2017) which claim that Nepalese
life insurance customers repurchase the insurance policy because they first trust the company
and look for social propensity. This might be because the researcher heavily rely on the
insurance agents who were picked by their own insurance companies. It contradict current
study. The current study result shows there is only partial mediation role of trust of Nepalese
insurance companies.
The study results more or less reaffirm the findings from the study, Chang (2013) which
showed that customer trust plays a significant mediating role on relationship between corporate
reputation and customer loyalty. This findings is also consistent with the study conducted by
Kempa et al. (2020). Chang (2013) study contradicts the study which showed that the overall
average service customer’s response regarding the importance of corporate reputation did not
consistently express the positive response in the survey and it has effect on customer loyalty.
This is one of the controversial results. On one hand, it shows positive relationship between
corporate reputations on customer loyalty with higher central tendencies, but on other hand
researcher interprets his own findings considering low customer response on corporate
reputation survey questions. In contrary, the current study findings result suggests that
corporate reputation plays more significant impact compared to other social identity forms.
This might be because of social dimension of Canada, most of the service sector invest most
of their resources in marketing activities, whereas Nepalese insurance companies invest most
of their resources in insurance agents.
47
Apart from these, the previous study shows that there is significant mediation effect of
customer trust on relation between social identity forms and customer loyalty (Chang, 2013;
Nguyen, Leclerc, & Leblanc, 2013; Shirazi, Lorestani & Mazidi, 2013; Rather 2017; Kempa,
2020). Therefore, the current result is also consistent with the customer loyalty theory which
states that customer retention occurs when customer recognizes the firm social existence build
upon the trust values.
5.2 Conclusion
The overall goal of this study was to examine the effect of social identity forms (corporate
identity, corporate image and corporate reputation) on customer loyalty. Likewise, the results
of this study also demonstrate the mediating role of customer trust on relation between social
identity forms and customer loyalty of Nepalese insurance companies.
The finding of the study revealed that there is significant positive impact of social identity
forms on customer loyalty. And the customer trust partially mediates between the social
identity forms and customer loyalty. The data were collected from the selected category who
belongs to certain level of jobs. Hence they look for something that build their social category
which can be the primary reasons on why the corporate reputation is found to be the most
dominant factor of this study.
Likewise, there is the partial mediating of customer trust on relation between social identity
forms and customer loyalty. And, there is no full mediation role of customer trust. It might be
because insurance customers are generally loyal to the insurance company who have better
social identity, better brand image and better reputation than other insurance companies.
Likewise, the results may also suggests that equal management of these three social identity
forms assist insurance companies to enforce customer loyalty. Excellent customer service
could be another reason. Those insurance companies who provide excellent service which meet
customer expectation. Therefore, Nepalese insurance customer might purchase insurance
policy who frequently creates good communication and has a better reputation in the market.
Likewise, the insurance premium charges on different policies might be the reason behind the
mediating role of customer trust. As Nepalese consumer are price sensitive, insurance premium
48
charges may lead customers to switch the insurance company. Similarly, active insurance
agent’s role in selling insurance policies in Nepalese market can be the reason behind the
mediating role of customer trust. Those insurance agents has personal contact with the
insurance customers. Most of the insurance policy are purchased from the respective insurance
agents. Thus, insurance customers tend to trust more on the insurance agent rather than the
company itself.
However, this result also suggested that building customer trust will somehow might strength
the relation between firm social identity and customer loyalty. Therefore, insurance company
should provide better training towards its contact personnel to build customer loyalty.
5.3 Implication
5.3.1 Managerial Implication
The findings of this study have been meaningful as there is the significant impact of social
identity forms on customer loyalty. Similarly to some previous studies findings. Likewise, the
findings also demonstrate that there is the partial mediating role of customer trust on relation
between social identity forms and customer loyalty.
The first implication could be that since all forms of social identity has positive significant
effect on customer loyalty. The insurance companies must be able to manage all three forms
of social identity to enhance the customer loyalty. When making a marketing campaigns,
insurance companies should try to sell the insurance policy in such a way that consumer should
feel that the companies is there to help them in any difficult situation. Likewise, insurance
companies should marketed themselves by creating advertisement by focusing on their name
to help customer to recall their brand name. Likewise, they can also compare their insurance
policy to stand out in the market to position themselves as a distinct insurance company. The
message should be clear state that why we are better than other insurance companies so that
they could trust.
Another implication of this study could be important is that insurance companies should
focuses their service delivery system. To enhance better corporate identity and reputation,
insurance companies should train the contact personnel. In context of Nepalese insurance
market, there are two contact personnel. They are insurance agents and organization frontline
49
or who have direct access with the customers. They should keep good communication with the
insurance customers and provide better customer experience. Likewise, insurance contact
personnel should assist expertise insurance service by performing in such a way that they could
understand the insurance customer and meet their expectation.
Lastly, to build customer loyalty and sustain it in long term, the relationship marketing plays
a significant role to influence the insurance customers. Thus, insurance companies should be
honest with the insurance policy towards its customers so that it became a first choice and does
not want to switch the company. It is important to note that corporate identity and reputation
is the dominant forms while building trust and then reinforcing customer loyalty in Nepalese
insurance customers. There is the gap between action and rhetoric therefore, insurance
company should avoid any action that can damage the corporate reputation. It should prevent
all measures to avoid such negative impact and engaged its contact personnel especially,
frontline employees and insurance agents.
5.3.2 Implication for Future Research

This research contains a sample size of 352 only where majority are engaged with their jobs.
Similarly, both judgmental and convenient sampling technique has been implemented for the
respondent purpose.
Likewise, majority of this respondents are insurance customers from Rastriya Beema Sansthan,
Rastriya Beema Company, Surya Life Insurance, Nepal Life insurance, Shikhar Insurance and
Sagarmatha Insurance. Thus, there is wider room for future researcher by increasing the sample
size in the study. Apart from this, this study uses only three forms of social identity as a
measurement. The future study may contains more items that can better measure the social
identity construct and incorporate more variables in study to improve the model.
50
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55
APPENDIX
Questionnaire
I am John Hang Rai student of School Of Management, Tribhuvan University. I am conducting

a survey for my thesis titled as “Social Identity and Customer Loyalty in Nepalese Insurance
Companies”. It will only take approximately 15 minutes to complete. Your response will be
strictly confidential and the results will be used for the stated purpose only. If you have any
questions at any time you can contact me by email address; raisampang.jhr@gmail.com.
Thank you very much for your time and support.
SECTION A
Q.1 Gender
A. Male -1
B. Female -2
Q.2 Age group
A. 17 to 30-1
B. 31 to 45 -2
C. Above 45-3
Q.3 Monthly Income
A. Less than 15000 -1
B. 15000 to 30,000 - 2
C. 30,001 to 45000 - 3
D. Above 45000 – 4
Q.4 Education Level
A. Primary-1
B. SLC-2
56
C. Plus (+2) -3
D. Bachelor-4
E. Masters and above-5
Q.5 Occupation
1. Student-1
2. Job Holders-2
3. Housemaker-3
4. Businessperson-4
Q.6 When did you subscribe the insurance policy?
1. Before 2010-1
2. 2011 to 2015 -2
3. 2016 to 2021-3
SECTION B
Q.1 What type of insurance services do you have?
A. Life Insurance -1
B. Non-Life Insurance -2
C. Both-3
Q. 2. What is the average term of the policies you have?
A. Up to 5 years-1
B. 6 to 10 years-2
C. 11 to 15 years-3
D. 16 to 20 years-4
E. Above 20 years-5
57
Q.3 Have you ever received any benefits from any of the policies you currently have?
A. Yes-1
B. No-0
SECTION C
Please read each question carefully and select your level of agreement for the following
statement. And tick (√) mark the appropriate number from 1 to 6. Each testimonial is measured
by 6- point Likert scale: 1= Strongly Disagree; 2=Disagree; 3=Slightly Disagree; 4= Slightly
Agree; 5= Agree; 6= Strongly Agree.
Social Identity Level of Agreement
Measurement of Corporate Identity 1 2 3 4 5 6
1. My insurance company is there to

help me
2. My insurance company is different
from other insurance companies
3. I like my insurance company logo
and slogan
4. I like the name of my insurance
company
5. My insurance company has a good
image on my mind
Measurement of Corporate Image
1. I have always had a good

impression of my insurance
company
2. My insurance company image is
better than other insurance
company
58
3. My insurance company name
always comes first to my mind
when I think of insurance
4. My insurance company is open and

responsive to me
5. My insurance company always
interacts well with me
Measurement of Corporate Reputation
1. My insurance company always

keep its promises to me
2. My insurance company reputation
is better than other insurance
company
3. My insurance company is fair in its
decision and actions towards me
4. I have a positive perception of my
insurance company
5. I have a good experience with my
insurance company
Customer Trust Level of Agreement
1 2 3 4 5 6
1. My insurance company is honest
with me
2. I trust my insurance company
because it fulfill its promises to me
3. My insurance company is always
concerned about me
59
4. My insurance company is very
reliable
5. I trust the expertise of my insurance
company
Customer Loyalty Level of Agreement
1 2 3 4 5 6
1. I consider my insurance company
as my first choice
2. I will continue to use this insurance
service
3. I speak positive things about my
insurance company
4. I would recommend my insurance
company to other people
5. I have no intention to switch over
other insurance company
60

Final Thesis John

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SOCIAL IDENTITY AND CUSTOMER LOYALTY OF NEPALESE INSURANCE

John Hang Rai

Exam Roll: 679/19

TU Reg No: 7-3-28-27-2018

A Graduate Research report submitted to in partial fulfillment of the requirements

for the degree of

Master’s in Business Administration (MBA)

Name: John Hang Rai

First, I would like to express my sincere gratitude to my supervisor, Dr. Gangaram

John Hang Rai

DECLARATION OF AUTHENTICITY ................................................................................ iii

List of Figures ........................................................................................................................... x

EXECUTIVE SUMMARY .................................................................................................... xii

1.1 Background of the study ................................................................................................. 1

1.2 Statement of Problem ...................................................................................................... 2

1.3 Objective of the study ..................................................................................................... 3

1.4 Research Hypothesis ....................................................................................................... 3

1.5 Scope and Significance of the Study .............................................................................. 5

1.6 Limitations of the Study.................................................................................................. 5

1.7 Outline/ Structure of the Report ...................................................................................... 6

LITERATURE REVIEW ......................................................................................................... 8

2.1 Theoretical Review ......................................................................................................... 8

2.1.1 Theoretical concept of social identity ...................................................................... 8

2.1.2 Corporate Social Identity in Marketing ................................................................... 9

2.1.3 Theoretical concept of Customer Loyalty.............................................................. 11

2.1.4 Theoretical concept of Customer Trust.................................................................. 13

2.2 Review of Related Literature ........................................................................................ 14

2.2.1 Social Identity and Loyalty .................................................................................... 14

2.2.3 Customer Trust and Customer loyalty ................................................................... 17

3. Conceptual Framework ................................................................................................... 21

CHAPTER III ......................................................................................................................... 21

3.1 Research Design............................................................................................................ 22

3.2 Population and sample .................................................................................................. 22

3.3 Sources of Data and Data Collection Plan .................................................................... 23

3.4 Instrumentation ............................................................................................................. 23

3.5 Data Analysis Technique .............................................................................................. 24

3.6 Ethical Consideration .................................................................................................... 24

ANALYSIS AND RESULTS ................................................................................................. 26

4.1 Demographic Profile of Respondents ........................................................................... 26

4.2 Descriptive Statistics ..................................................................................................... 27

4.3 Normality Test .............................................................................................................. 33

4.4 Measurement Model ......................................................Error! Bookmark not defined.

4.4.1 Construct Reliability and Validity ......................................................................... 23

4.4.2 Discriminant Validity..............................................Error! Bookmark not defined.

4.3.3 Collinearity Test..................................................................................................... 36

4.4 Correlation Matrix ........................................................................................................ 37

4.4.1 Correlation between Corporate Identity and Customer Loyalty ............................ 37

4.4.2 Correlation between Corporate Image and Customer Loyalty .............................. 37

4.4.4 Correlation between Customer Trust and Customer loyalty.................................. 38

4.5 Regression Model ......................................................................................................... 38

4.6 Mediation Effect ........................................................................................................... 39

4.6.3 Mediation Effect of Customer Trust on relationship between corporate reputation

4.7 Hypothesis Testing Summary ................................................................................... 43

DISCUSSION, CONCLUSION AND IMPLICATIONS ...................................................... 46

5.1 Discussions ................................................................................................................... 46

5.2 Conclusion .................................................................................................................... 48

5.3 Implication .................................................................................................................... 49

5.3.1 Managerial Implication .......................................................................................... 49

5.3.2 Implication for Future Research ............................................................................ 50

Figure 1 Conceptual Framework ............................................................................................ 21

CI: Corporate Identity

CIM: Corporate Image

CL: Customer Loyalty