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The Influence of e-Commitment and e-Trust towards e-Loyalty

among Internet Banking Users: A PLS Modelling Approach

The objective of this study is to foresee the influence of e-commitment and


e-trust towards e-loyalty among the internet banking users in Malaysia.
The collection procedure used in this study was probability sampling. The
data were distributed using questionnaires whereby the internet banking
users were randomly chosen by intercepting the banking customers. The
analysis applied was Partial Least Square (PLS) using SmartPLS software
version 3. The reasons of using PLS are it is generally used in marketing
and social science research and it is helpful in reducing problems such as
multicollinearity. There are a total of 100 completed and usable
questionnaires. The study concluded that both e-commitment and e-trust
have significant influence towards e-loyalty.

Keywords: e- commitment, e-trust, e-loyalty, internet banking


1. Introduction

Loyalty has been remarked to have a positive yet significant impact on organization’s
turnover. Also, firms have gained benefits such as active customer support and purchase
as well as gaining and retaining customer loyalty (Lee, Chu, & Chao 2011). In addition,
the rising of competition and technology have triggered most organization to change their
strategy. Most firms are focusing on strengthening their business-to-customer relational
strategy (Ndubisi 2007b). Furthermore, technology in addition to personalized service
offered have ease the development of relationship because technology helps to minimize
time and cost (Berry 2011).

Also, Sheth, Sisodia, and Sharma (2000) assert that IT mainly internet has assisted
interaction and communication thus act as a tool to handle relationship. In addition,
Gordan (1998) claims that the internet-technology can be used to deliver value to the
customers. Furthermore, organizations with this technology can get nearer to their buyers
as well as gain competitive benefit. Thus, bigger organizations are moving towards online
service to further improve their relationship marketing (Colgate, Buchanan-Oliver, & Elmsy
2005). Conferring to Srirojanant and Thirkell (1998), internet is important in building
customer relationship. Even though online technology has been proven to improve the
quality of most businesses however proper planning is needed before riding on this
technology (Reichheld, Markey, & Hopton 2000). Companies should also consider other
matters such as privacy, security and quality.

The development of technology has enable banks along with other businesses to ride on
online technology. Due to the internet technology, banks are offering online service to
complement their traditional face-to-face service. Researchers have claimed that majority
of the banks are implementing online banking because the service has positive influence
on customer relationship (Durkin & Howcroft 2003). According to KPMG (2012), banks
must consider factors influencing customer loyalty due to it can boost up the banking’s
growth. This study further elaborates that investing in loyalty activities will result in
customer’s positive word-of-mouth. Furthermore, it is also supported that the internet has
an impact on banking industry as well as on relationship marketing (Zineldin 2000).

2. Literature Review
2.1 e-Commitment and e-Loyalty

Commitment has been known to have an influence on relationship and loyalty. Conferring
to Gustafsson, Johnson, and Roos (2005), firms that are focusing on commitment are able
to form existing and create new customer relationship. They further extended that
commitment is an essential influence on relationship because there is an attachment of
emotional on the company. In addition, several studies have confirmed the commitment
effect on loyalty (Anvari & Amin 2010; Ndubis 2007a; Wu 2011). Moreover, there are also
other researchers that claim the commitment influence on loyalty (Evanschitzky &
Wunderlich 2006; Fullerton 2003; Garbarino & Johnson 1999; Morgan & Hunt 1994).

Looking at the online aspect, it is remarked that online commitment will result in customer
repurchase behavior and positive attitude towards the companies (Luarn & Lin, 2003).
Likewise, in other studies, customers that are committed toward the companies are
inclined to repeat their online visit and purchase (Mohd Kassim & Ahmed Abdulla, 2006).
Furthermore, committed customers are willing to build up their relational activities with the
online companies (Casaló, Flavián, & Guinalíu 2007; Chang, Wang, Chih, & Tsai 2012;
Eastlick, Lotz, & Warrington 2006).

In addition, Mukherjee and Nath (2007) have recommended that online commitment build
higher relationship and sense of belonging towards the firms. Thus, it is concluded that
online commitment has been established to have an impact on online loyalty based on
several studies (Eastlick et al. 2006; Luarn & Lin 2003; Mukherjee & Nath 2007; Nusair,
Nan Hua, & Li 2010; Park & Kim 2003).

Thus, the following hypothesis is theorized:


H1: e-Commitment is positively related with e-Loyalty.

2.2 eTrust and e-Loyalty

Trust has been emphasized as a vital factor on loyalty. Grönroos (2004) mentions that
trust as well as security are associated with building up long-term relationship. Moreover,
customer interaction can be enhanced if customers trust the company (Hess & Story,
2005). Looking at the perspective of relational marketing, trust and relationship are both
important for companies’ growth (Kantsperger & Kunz 2010). In several articles, trust
variable has been established to influence loyalty (Graf & Perrien 2005; Moorman 2013;
Ndubisi 2007a). Besides that, trust too has been associated with relationship marketing
(Morgan & Hunt 1994; Priluck 2003). Moreover, further studies have concluded that trust
does influence loyalty (Alrubaiee & Al-Nazer, 2010; Chaudhuri & Holbrook, 2001;
Eisingerich & Bell, 2007; Sirdeshmukh, Singh, & Sabol, 2002).
Furthermore, it is also established that in an online context, there is an impact of online
trust on online loyalty (Rolph E. Anderson & Srinivasan 2011; Chiou, 2004; Cyr,
Hassanein, & Ivanov 2007; Mukherjee & Nath 2007). In addition, in the online banking
setting, trust has been claimed as a significant factor in keeping customer (Foon & Chan
2011) and generating loyalty (R. E. Anderson & Srinivasan 2003). And, the significant
influence of online trust towards online among banking and financial industries has been
established by some studies (Al-Agaga & Md Nor 2012; Corbitt, Thanasankit, & Yi 2003;
Flavián & Guinalíu 2006).

Therefore, this hypothesis is developed:


H2: e-Trust is positively related with e-Loyalty.
3. The Research Model

Based on the above literature reviews, the study has proposed the following framework.
The model indicates that both e-Commitment and e-Trust have an impact on e-Loyalty.

Figure 1: Proposed Research Framework

e-
Commitment

e-Loyalty

e-Trust

4. The Methodology

The profile of respondents was entered in SPPS 19.0 and descriptive analysis was
executed for profiling purpose. Next, the Partial Least Square (PLS) structural modelling
approach was conducted to estimate the factor loading, reliability and validity.
Subsequently, both hypotheses are tested in this modelling approach. PLS was applied in
the study for several reasons. PLS has been applied in several social sciences studies
including marketing (Hennig-thurau, Henning, & Sattler 2007). Next, PLS is applied due to
it does not make any distributional assumption (J. F. J. Hair, Black, Babin, & Anderson
2010). Furthermore, PLS is also good for a smaller sample size and robust towards
multicollinearity issue (Cassel, Hackl, & Westlund 2000). In this study, 100 usable survey
questionnaires were obtained for further data analyzing.

5. The Results and Findings

5.1 Demographic Profile


After analyzing respondents’ profile in SPPS, the following demographic profiling was
obtained and summarized in Table 1 below.

Table 1. Demographic Profile of Respondents


Demographics Frequency Percentage Mean Std. Dev
Gender 1.630 .485
Male 37 37%
Female 63 63%
Age 2.670 .975
Less than 20 3 3%
20-29 53 53%
30-39 25 25%
40-49 12 12%
50.00 and above 7 7%
Marital Status 1.560 .556
Single 47 47%
Married 50 50%
Divorced 3 3%
Academic Qualification 3.210 .935
PMR / LCE 1 1%
SPM / MCE 24 24%
Certificate / Diploma 36 36%
Degree / Professional 31 31%
Certificate
Postgraduate 8 8%
Employment Status 4.250 3.066
Student 33 33%
Self-Employed 3 3%
Professional 15 15%
Manager 8 8%
Management level 8 8%
Academician 2 2%
Clerical support employee 28 28%
Skilled employee 1 1%
Operator and Assembler 1 1%
Others 1 1%

5.2 Composite Reliability and Construct Validity

In PLS, both assessment on measurement model and structural model were conducted. In
the measurement model, reliability and validity test are performed. Composite reliability is
used in the measurement because it prioritized all indicators compared to analyzing the
cronbach alpha which is likely to underestimate the value of reliability (J. F. Hair, Hult,
Ringle, & Sarstedt 2014). Conferring to them, composite values of 0.70 and above are
considered satisfactory. In this study, composite reliabilities for all constructs are above
0.70.

Next, the construct validity will be assessed by observing at the convergent validity and
discriminant validity. Convergent validity will be examined by looking at all factor loadings.
It is suggested that the outer loading should be 0.70 or higher and average variance
extracted (AVE) of 0.50 and higher will be accepted (J. F. Hair et al. 2014). Table 2
indicates the summary of convergent validity analysis. From all items, eight items such as
ETR4, EL6, ETR2, ETR1, EL11, EL12, EC2 and EL8 were deleted. After these deletions,
all loadings are above 0.70 and all AVE are above 0.50.

Table 2. Convergent Validity Analysis


Construct Item Loading CR AVE
e-Commitment (eComt) eComt1 0.755
eComt2 0.960
eComt3 0.923 0.914 0.781
e-Trust (eTr) eTr3 0.903
eTr5 0.871
eTr6 0.829
eTr7 0.925 0.934 0.779
e-Loyalty (eL) eL1 0.934
eL2 0.927
eL3 0.831
eL4 0.872
eL5 0.905
eL7 0.923
eL9 0.840
eL10 0.861
eL13 0.831 0.969 0.777

Next, discriminant validity test will be performed to ensure the validity of a construct is
differ to another construct (J. F. Hair et al. 2014). In this validity test, the cross loading
indicators will be examined. It is suggested that the indicator’s outer loadings on certain
construct should be higher than all its cross loadings. The Fornell and Larcker's (1981)
criterion also remarked that the assessment of discriminant validity is that the square root
of each construct’s AVE should be larger than the highest latent variable correlations. If
the criteria’s requirement is not meet, it is suggested to eliminate the indicator due to it
may increase the discriminant validity (J. F. Hair et al. 2014). It is presented in Table 3 that
the diagonal figures show the square root of the AVE of the construct. In this study, there
is adequate discriminant validity due to the diagonal figures are higher than the off-
diagonal figure both corresponding rows and columns.

Table 3. Discriminant Validity Analysis


Construct eComt eTr eL
e-Commitment (eComt) 0.884
e-Trust (eTr) 0.862 0.881
e-Loyalty (eL) 0.538 0.804 0.883
Note: Value in the diagonal (bold) are square root of the AVE while the off diagonals are the inter construct correlations

5.3 Hypotheses Testing

Subsequently, the structural model (outer model) analysis was conducted. In this analysis,
the path coefficients (β) or hypothesized relationships are determined (J. F. Hair et al.
2014). The value of relationship can between -1 to +1 and value that is closer to +1 shows
a strong positive relationship and the value of -1 indicates the opposite direction.
Bootstrapping procedure is also conducted to foresee whether the t-value reveals a
significant coefficient (J. F. Hair et al. 2014). Figure 2 indicates the result of path analysis
for this study. The result of the R² is 0.906 which shows that 90.6% of the variance is
explained by e-commitment and e-trust. In addition, looking at the result of the path
coefficient in Table 4, both hypotheses (H1 and H2) are supported. It can be concluded
that both e-commitment and e-trust have a positive influence on e-loyalty among the
internet banking users in Malaysia. The significant level for this these two relationships
are at p<0.01. The result of the path analysis can be referred in Figure 2 and Table 4.

Figure 2. Path Analysis

Table 4. Path Coefficient and Hypotheses Testing


Hypothesi Relationship Std. Beta Std. Error t-value Decision
s
H1 eComt -> eL 0.603 0.101 5.960** Supported
H2 eTr-> eL 0.480 0.100 4.896** Supported
** Note: t-value is greater than 2.33, thus it is significant at p<0.01

6. Summary and Conclusions

Based on the study analysis, it is concluded that there is a positive and significant
relationship between e-commitment and e-trust toward e-loyalty. Also, the findings of the
study have reinforced previous researches’ outcomes on online loyalty in which both
constructs do contribute positively towards online loyalty. The study also contributes
practically especially to the Malaysian online banking providers on which factors to focus
on. Thus, online banking providers must strategize on both commitment and trust because
they may lead to customer’s intention, retention, positive word-of-mouth, preference and
continual purchase. As a conclusion, the study has led to additional empirical evidences
on e-commitment and eTrust influence on online loyalty. It is also suggested that other
factors even moderator and mediator should be considered in the future studies.

7. Acknowledgements

The authors wish to thank the Ministry of Education Malaysia (MOE) and Universiti
Teknologi MARA for the financial support under scholarship. The author also thanks the
support from the OYA Graduate School of Business, Universiti Utara Malaysia as well as
the respondents who participated in the survey.

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