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This is to certify that the
dissertation entitled

The Efficacy of Consumer-Employee and Consumer-Retailer
Relationships in Predicting Store Loyalty
Among Korean Consumers

presented by
Ho Jung Choo

has been accepted towards fulfillment
of the requirements for the

Ph. D. degree in Human Environment & Design

Major Proﬁssor’s Signatur‘q
W 12, 2003

Date

MSU is an Affirmative Action/Equal Opportunity Institution

 

 

 

‘W
Michigan State
Univerle

 

PLACE IN RETURN BOX to remove this checkout from your record.
TO AVOID FINES return on or before date due.
MAY BE RECALLED with earlier due date if requested.

 

DATE DUE

DATE DUE

DATE DUE

 

SEP1 2 2005

 

SE? 1

M5

 

6 2005

 

 

 

FEB 0 2 2011

 

jCl28

1H

 

 

 

 

 

 

 

 

 

6/01 c:/CIRC/DateDue.p65-p.15

_ﬁ__..

THE EFFICACY OF CONSUMER-EMPLOYEE AND CONSUMER-
RETAILER RELATIONSHIPS IN PREDICTING STORE LOYALTY
AMONG KOREAN CONSUMERS

By

Ho Jung Choo

A DISSERTATION

Submitted to
Michigan State University
In partial fulﬁllment of the requirements
For the degree of

' DOCTOR OF PHILOSOPHY

Department of Human Environment and Design

2003

ABSTRACT

THE EFFICACY OF CONSUMER-EMPLOYEE AND CONSUMER-
RETAILER RELATIONSHIPS IN PREDICTING STORE LOYALTY
AMONG KOREAN CONSUMERS

By

Ho Jung Choo

Relationship marketing literature emphasizes that a stable relationship between
consumers and marketers is beneﬁcial to both parties. This perspective has been adopted
in the service literature, and many service marketing researchers have investigated the
effects of consumer-service provider relationships on business performance.

In the present study, the researcher proposed a conceptual framework and
associated model to explain Korean consumers’ relationships with and shopping
behaviors in department stores. Specifically, this study has the following objectives: 1)
to propose and test the multiple levels and dimensions of a consumer’s relationship with a
retailer, 2) to determine the effect of antecedent variables on the retail relationships, 3) to
determine the effect of the retail relationships on consumer store loyalty, 4) to determine
the effect of the length of the relationship on the dimensions of the retail relationships,
and 5) to determine the effect of the relationship on the mediating role of consumer
voluntary participation between the retail relationship and consumer store loyalty.

Empirical survey instruments were developed to measure Korean consumers’
perceptions of and attitudes toward department stores and their employees. All measures
used in the study were previously developed and tested. The sample consisted of Korean
female consumers who reside in greater Seoul, S. Korea. Data were collected during July

2003; four hundred and eight usable questionnaires were analyzed.

In the present study, structural equation modeling analyses were conducted to test
the hypotheses. The results of the second—order factor analysis supported the existence of
two levels of retail relationship (consumer-employee and consumer-retailer). As proposed,
a two-dimensional consumer—employee relationship (satisfaction with employees and
trust in employees) and a three-dimensional consumer-retailer relationship (satisfaction
with, trust in, and commitment to store) were supported.

This study found that employee service, retail operations, retail facilities, and
business ethics positively affect the consumer-employee relationship, while only
merchandise quality and retail operations positively affect the Consumer-Retailer
Relationship. The results indicate that it is the consumer-employee relationship that is
directly affected by various retail attributes, however, this consumer-employee
relationship ultimately affects the consumer-retailer relationship. A two-group
comparison SEM analysis found that trust in employees becomes more important in the
consumer-employee relationship for consumers with a longer relationship with the
department store, and store commitment was more important for long-term consumers in

the consumer-retailer relationship. Marketing implications for retailers are discussed.

Copyright by
HO JUN G CHOO
2003

To My Advisor, Dr. Dawn Pysarchik

ACKNOWLEDGEMENTS

It has been a long journey to complete my doctoral program and this dissertation
research. Through this time, I owed so much to great people around me. I should express
my deepest appreciation to my advisor, Dr. Dawn Pysarchik. She has been supportive,
patient, and encouraging. She will be always a role model for me. I was lucky to have
such a wonderful committee, Dr. Linda Good, Dr. Brenda Sternquist, and Dr. Cornelia
Droge. I am grateful for Dr. Roger Calantone’s help on the data analysis.

My father had a car accident in the ﬁrst year of my doctoral program. He never
gave up through his painful recovery process. I was inspired by his courage and his love
for my family, and I am so proud to be his daughter. I would like to thank my whole
family in Korea for their support and love. My six-year old boy, Jung Ho, has been with
me in Michigan for the last two years after his father needed to return to Korea. I would
like to acknowledge him for being such a great helper and a friend to me. Last, I would

like to thank my husband, Yoon Sang, for his support of my studies and love.

vi

TABLE OF CONTENTS

LIST OF TABLES ................................................................................... x
LIST OF FIGURES ................................................................................ xi
CHAPTER I
INTRODUCTION ...................................................................................... 1
Statement of the Problem and Signiﬁcance of the Study .............................. 4
Research Objectives ......................................................................... 7
CHAPTER II
LITERATURE REVIEW ............................................................................ 9
Relationship Studies in the Service Industry .......................................... 9
Relationship Quality ..................................................................... 18
Satisfaction ......................................................................... 20
Trust ............................................................................... 21
Commitment ..................................................................... 22
Relationship Development Stages ..................................................... 24
Antecedents to Relationship Quality ................................................... 28
Service Quality .................................................................... 28
Retail Service Quality .......................................................... 30
Employee Service Quality ....................................................... 32
Retail Operations Quality ....................................................... 34
Retail Facility Quality .......................................................... 34
Merchandise Quality .......................................................... 35
Business Ethics Quality ......................................................... 36
Outcomes of Relationships ............................................................. 37
Consumer Voluntary Behavior ................................................. 37
Store Loyalty ..................................................................... 39
CHAPTER III
CONCEPTUAL FRAMEWORK ................................................................ 4O
Multi-Level Multi-Dimension Retail Relationships ................................. 40
Antecedents of Retail Relationships ................................................. 44
Retail Operations ............................................................... 46
Retail Facility .................................................................... 46

vii

Merchandise Quality ............................................................ 46

Employee Service ................................................................. 47
Business Ethics .................................................................... 47
Developmental Stages and Outcomes of Retail Relationships ..................... 51
CHAPTER IV
RESEARCH METHODS ........................................................................... 59
Research Design ............................................................................. 59
Sample Selection and Data Collection ................................................. 60
Instrument ................................................................................... 64
CHAPTER V
RESULTS AND DISCUSSION .................................................................. 72
Demographic Characteristics of Sample ............................................... 72
Conﬁrmatory Factor Analysis .......................................................... 75
Hypothesis Testing ......................................................................... 80
Relationship Quality Model with Second-Order Factor Components.....80
Path Analysis for Retail Attributes and Retail Relationship ..... 85
Merchandise Quality .................................................... 88
Employee Service Quality .............................................. 88
Retail Operations Quality ............................................... 88
Retail Facility Quality .................................................. 89
Business Ethics Quality ................................................. 89
The Effect of Relationship Length on Retail Relationships and
the Outcomes ............................................................ 90
Discussion .................................................................................. 99
Two Levels of the Relationship ................................................. 99
Antecedents and Retail Relationship ....................................... 101
Relationship Length and Retail Relationship ............................... 103
Retail Relationship and Its Consequences .................................. 104
CHAPTER VI
SUMMARY AND CONCLUSIONS ........................................................... 105
Summary of Introduction and Research Objectives ................................ 105
Summary of Literature Review ....................................................... 108
Summary of Conceptual Framework ................................................. 109
Summary of Research Methods ........................................................ 110
Summary of Empirical Results ........................................................ 112
Managerial Implications ............................................................... 114
Limitations and Recommendations for Future Studies ............................ 116

viii

APPENDICES

Appendix A: Survey Instrument ........................................................ 120
Appendix B: Consent Form ............................................................. 127
Appendix C: EQS Program Input and Covariance Matrix ....................... 130
Appendix D: Items Excluded in the Confirmatory Factor Analysis

Due to Cross-Loadings .......................................................... 146
BIBLIOGRAPHY ................................................................................ 148

LIST OF TABLES

Table 1. Previous Studies on Relationship Quality in the Service Industry:

Customers’ Perspective ................................................................ 13
Table 2. Retail Relationship Development Model .......................................... 54
Table 3. Data Collection Sites ..................................................................... 62
Table 4. Department Store Selected for the Study ............................................. 63
Table 5. Measurement .............................................................................. 65
Table 6. Demographic Characteristics of Sample .............................................. 74
Table 7. Item Measurement Properties: Conﬁrmatory Factor Analysis Results ......... 77

Table 8. Results of Second-Order Factor Analysis with Path Analysis:
Two Levels of Relationship .......................................................... 82

Table 9. Model Fit Comparison Among Competing Models of
Consumer-Employee and Consumer-Retailer Relationships .................... 84

TablelO. Results of Path Model: Two Levels of Relationship Quality and

Retail Attribute Variables ............................................................. 86
Table 11.Chi-square Difference Tests .......................................................... 92
Table 12. Results of Two Group Comparison: Long-term Relationship Model ......... 93
Table 13. Results of Two Group Comparison: Short-term Relationship Model ......... 95
Table 14. Summary of Hypotheses Testing ................................................. 118

LIST OF FIGURES

Figure 1. Five Stage Framework of Relationship Development ............................... 26
Figure 2. Two Levels of Retail Relationship Model ............................................ 45
Figure 3. Responsibility of Quality Components ................................................ 49
Figure 4. Antecedents to Two-Levels of Relationship Quality ................................ 50
Figure 5. A Model of Long-Term Relationship Retail Consumers ........................ 56
Figure 6. A Model of Short-Term Relationship Retail Consumers ........................ 57

Figure 7. Results of Second-Order Factor Analysis with Path Analysis:
Two Levels of Relationship ......................................................... 83

Figure 8. The Summary of Path Analysis: Two Levels of Relationship Quality
and Antecedent Variables ............................................................. 87

Figure 9. Results Summary of Two-Group Comparison:
Long-Term Relationship Model ..................................................... 94

Figure 10. Results Summary of Two-Group Comparison:
Short-Term Relationship Model ...................................................... 96

xi

CHAPTER I

INTRODUCTION

Anecdotes about the value of established customers over new customers are
ubiquitous. It is believed that it costs companies ﬁve times more to obtain a new
customer than to keep an existing one, and selling costs to existing customers are much
lower than those to new ones (Reichheld and Sasser 1990). Also, the longer the customer
stays in the relationship, the more proﬁtable he/she becomes to a marketer. For example,
banking industry data indicate that a customer who has been in a relationship with a bank
for ﬁve years is far more proﬁtable than a customer of one year with a bank (Sheth and
Parvatiyar 1995).

Understanding the motivations of consumers to engage in relationships with
businesses, therefore, has become an important issue for both practitioners and marketing
scholars. The basic concept of relationship marketing is to transform a transaction-based
customer into a relationship-based customer (Crosby, Evans and Cowles, 1990). Rather
than conducting business as a series of discrete transactions, a customer is encouraged to
make a commitment to a company based on her/his overall satisfaction. Generally, a
customer is willing to do this only if the company makes a reciprocal investment in the
relationship.

Although relationship marketing has a strong theoretical base in industrial and
channel marketing (Doney and Cannon 1997), systematic research on relationship

marketing in both the consumer environment (Beatty, Mayer, Coleman, Reynolds, and

Lee 1996; Wulf, Odekerken-Schroder, and Iacobucci 2001) and service marketing (Berry
1983; Crosby and Stephens 1987; Crosby, Evans, and Cowles 1990) is lacking. Yet
several authors agree with Dwyer, Schurr and Oh (1987), who note that relationship
bonds create beneﬁts in business as well as in the consumer environment (Sheth and
Parvatiyar 1995).

Retailing, as one stream of service marketing, shares common characteristics with
all service marketing. Retailers require knowledge not only of consumer satisfaction with
the products they offer, but also with other facets of shopping, buying, and interacting
with the outlet itself, as do all service marketers. As Tauber (1972) suggested, some of
the non-product satisfaction offered by retail outlets may be as signiﬁcant as the product-
related satisfaction in determining customer patronage. Non-product retail offerings
include retailers’ service, facilities, and business ethics. In the present environment of
increased competition due to rapid market entry of new store concepts and formats (Chan
and Pollard 2003; Maronick and Stiff 1985), the managerial challenge of increasing store
loyalty also presents a research challenge. In particular, collecting information from the
consumer’s side of the retailer-consumer dyad is considered an important research
avenue (Gwinner, Gremler, and Bitner 1998; Sheth and Parvatiyar 1995; Wulf et a1.
2001). With this information, retailers are able to understand the role of various store and
service-related factors in affecting customers’ perceptions of the relationship, and further,
the effect of positive relationships on the retailers’ performance.

As the service literature suggests, relationship marketing is mutually beneﬁcial to
customers and to marketers (Berry 1995). Customers want ongoing close relationships

with service providers but have difﬁculty ﬁnding such relationships (Berry 1995).

Although some leading retailers are implementing relationship marketing programs from
which they hope to build positive relationships with customers (Hougaard and Bjerre
2002; Diller 2000; Heskett, Sasser, and Schlesinger 1997; deLisser 1994), there is little
information available to them about how to design proﬁtable relationship programs
(Beatty et al. 1996).

The retailing industry in South Korea‘, which was in its infancy stage until the
early 19903, also has shown a dramatic change since the mid-19908. Department store
retailing was the fastest growing sector during thel9805 and 19905, and its annual sales
grew 24.3% during 1991 (Korea Chamber of Commerce and Industry 1998). However,
in 1997, South Korean department stores experienced a negative growth rate in sales
(-4.0%, 1,221 billion won or $862.8 millionz) for the ﬁrst time (Korea Chamber of
Commerce and Industry 1998). Since 1997, department stores have shown a slow growth,
however, they reported annual sales of 1,796 billion won ($1.5 billion3) in 2002 (Korea
National Statistics Bureau 2003) and serve an important role in the retail industry in
Korea. It is interesting to note that department store sales are concentrated in the Seoul
area where approximately 20% of the country’s p0pulation resides (10 million among 48
million of Korea population in 2002). Seoul residents contributed 44% of the total
department store sales in Korea (789 billion won or $657.3 million 4), while discount
store sales in Seoul (1,244 billion won or $1 billions) took 34% of the total discount sales

in Korea (Korea National Statistics Bureau 2003).

 

‘ Here after, Korea means South Korea

2 On the basis of exchange rate $l=l415.2 won, 1997 average exchange rate

3 On the basis of exchange rate $1=1200.4 won, 2002 average exchange rate

4 On the basis of exchange rate $1:1200.3 won, 2003 June average exchange rate.

Because of the signiﬁcance of the growing retail industry in Korea, it is important
to investigate the effect of business-customer relationships on consumer behavior. This is
particularly important due to the cultural differences between Korea and western
countries. Hofstede (1983) reported that Korea is one of the most highly collective
societies; people with high collectivism tend to emphasize harmony and long-term
relationships in their interactions with others. Thus, it is expected that Korean consumers
develop sophisticated relationships with key retailers, and their perceptions of the quality

of the relationship with a retailer have a signiﬁcant effect on their buying behavior.

STATENIENT OF THE PROBLEM AND SIGNIFICANCE OF THE STUDY

In retail and other service industries, employees play a key role in the provision of
service (Albrecht and Zemke, 1985; Schneider and Bowen 1995; Johnson 1996).
Employees inﬂuence the quality of, and delivery of, products and services to customers
(Zeithaml et al. 1990; Schneider and Bowen 1995). Thus, the role of employees in
establishing a relationship with customers has been an interest of retail and service
industry researchers (Crosby and Stephen 1987; Parasuraman, Zeithmal, and Berry 1985;
Crosby, Evans, and Cowles 1990).

The emphasis on the role of sales personnel in relationship building, however, is a
potential problem from the long-term perspective of a retail organization. First, the retail
industry depends on large numbers of part-time employees for its sales force. Previous
studies found that part-time retail employees are more likely to be dissatisﬁed and

insecure with their work than full-time employees (Gray and Laidlaw 2002). It is more

difﬁcult, therefore, to train part-time employees and encourage them to develop a long-
term relationship with customers. Second, the retail industry has a high turnover rate of
employees. Third, for most retailers who sell commodities, groceries, and even fashion
items, customers are not likely to spend enough time interacting with a salesperson to
build a relationship. In these cases, the relationship between the retailer and the customer
instead of the employee and the customer is more appropriate as a goal of relationship
marketing.

Sheth and Parvatiyar (1995) asserted that marketers should search for ways to
institutionalize their relationship with consumers. Institutionalized relationship means a
corporate bonding (e. g., consumer-retailer relationship) instead of bonding between a
frontline salesperson and consumer (consumer-employee relationship). Corporate
bonding would extend beyond the single level of the relationship (consumer-employee)
to multiple levels of the relationships (consumer-retailer). On the basis of this argument,
it is the primary subject of the present study to investigate the different dimensions and
impacts of retailer-oriented relationships and employee-oriented relationships on
customers’ store loyalty and behavior.

In spite of the growth of the service relationship literature during the 19808 and
19905, there is still little consensus about how to measure the relationship between
service providers and customers. Some researchers employed a univariate approach to
measure the quality of a relationship using satisfaction either with sales personnel or the
organization (Anderson 1998; Hallowell 1996), others used trust in sales personnel or the
organization (Coulter and Coulter 2002; Moorman, Zaltman, and Deshpande 1992), and

others studied commitment to the organization (Patterson and Smith 2001; Wetzels et a1.

1998; Sharma and Patterson 1999; Pritchard, Havitz, and Howard 1999). Other
researchers used a multivariate approach with two dimensions, such as satisfaction with
and trust in sales personnel (Crosby et a1. 1990), satisfaction with and commitment to
ﬁrm (Hennig-Thurau et a1. 2002), or trust in and commitment to the ﬁrm (Morgan and
Hunt 1994; Hennig-Thurau et al. 2001). Also, there are studies employing three
dimensions of relationship quality using satisfaction with, trust in, and commitment to the
ﬁrm (Hennig-Thurau and Klee 1997). Therefore, it is necessary to understand the
conceptual domains of these related constructs-~satisfaction, trust, and commitment — and
to investigate the relationships among them.

The present study investigates ﬁve unique aspects of a proposed conceptual
framework to differentiate the present retail study from previous studies. First, in the
proposed model, the qualities of two types of relationships (consumer-employee and
consumer-retailer) are compared. Previous studies have emphasized the relationship
between customers and sales employees in retail relationships. Even though the role of
salespeople in the retail business is critical, relationships depending upon sales employees
could be unstable and weak due to the high rate of employee turnover. Thus, a customer’s
relationship (satisfaction, trust, and commitment) with a retailer could be a more
meaningful measure of the quality of the relationship.

Second, the model simultaneously examines the effect of a retailer’s service,
products, and facilities on customers’ perceptions of their relationships with the retailer.
There are a limited number of studies that have incorporated these three critical aspects of

retail quality in the same model (Baker et a1. 2002).

Third, the proposed model includes customers’ perceptions of retailers’ business
ethics. Causal marketing studies found that manufacturers who are perceived to practice
ethical marketing are viewed positively by consumers. The effect of retailer’s business
ethics on consumers’ perceptions is hypothesized to be mediated by both the quality of
the retailer-customer relationship and the quality of the employee-customer relationship.

Fourth, the study investigates the different roles of satisfaction, trust and
commitment according to the relationship’s stage of development. Speciﬁcally, by
comparing consumers with little relationship with a retailer to those in a more developed
relationship with a retailer, this study seek to identify the critical elements of the
relationship that lead to positive buying behavior.

Finally, this study investigates a recently emerged concept in retail literature, that
of the role of consumer voluntary participation in a long-term relationship between
customers and retailers. Speciﬁcally, the study examines whether a customer’s voluntary

participation mediates the quality of the relationship and customer store loyalty.

RESEARCH OBJECTIVES

The objectives of this study are to propose a conceptual framework and associated
model to explain Korean consumers’ relationships with and shopping behaviors in
department stores. Speciﬁcally, this study aims: 1) to propose and test the multiple levels
and dimensions of a consumer’s relationship with a retailer, 2) to determine the effect of
antecedent variables on the retail relationships, 3) to determine the effect of the retail

relationships on consumer store loyalty, 4) to determine the effect of the length of the

relationship on the dimensions of the retail relationships, and 5) to determine the effect of
the relationship on the mediating role of consumer voluntary participation between the
retail relationship and consumer store loyalty.

In Chapter I, the background of the study, the research problem, the signiﬁcance
of the study, and the research objectives are discussed. The remainder of the dissertation
is organized as follows. The ﬁrst part of Chapter 11 provides a comprehensive literature
review of the focal constructs of the study including relationship quality, retailers’
offerings, and consumer voluntary participation. Then, in Chapter III a conceptual
framework incorporating various aspects of shopping-related perceptions, attitudes, and
behaviors is proposed. In Chapter IV, research design, data collection, and instrument
deve10pment are discussed. In the following chapter, V, a sample description, the results
of data analysis and discussion of the ﬁndings are provided. Chapter V1 is devoted to the

summary of each chapter, limitations of the study, implications, and conclusions.

CHAPTER II

LITERATURE REVIEW

In this chapter, the literature relevant to the present study is reviewed. First,
studies of buyer-seller relationships in the service literature are reviewed. The conceptual
meanings of relationship quality and its major dimensions including satisfaction, trust,
and commitment are identiﬁed, and relevant empirical evidence is provided. An emphasis
is placed on the theories of the stages of relationship development. The second part of
this chapter is devoted to the identiﬁcation and literature review of antecedents to
relationship quality, including consumers’ perceptions of merchandise quality, employee
service quality, retail operations quality, retail facility quality, and business ethics. The
last section of the present chapter provides a literature review regarding the outcomes of

relationship quality.

RELATIONSHIP STUDIES IN THE SERVICE INDUSTRY

The idea of relationship marketing in the service sector is an old one, as expressed
in the old Middle Eastern proverb, “as a merchant, you’d better have a friend in every
town” (Gronroos 1994, p.18). Surprisingly, this old wisdom has not been formally
applied in academic studies of the service industry until recently. Berry was the ﬁrst to
use the “relationship marketing” concept in service marketing studies in 1983 (Barnes

1994; Gronroos 1994). Berry (1983, p.25) deﬁned service relationship marketing as

“attracting, maintaining and enhancing customer relationships in multi-service
organizations.” He outlined ﬁve strategic elements of service relationship marketing: 1)
develop a core service around which to build a customer relationship, 2) customize the
relationship to an individual customer, 3) augment the core business with extra beneﬁts, 4)
price services to encourage customer loyalty, and 5) market to employees so that they, in
turn, will perform well for customers (Berry 1983).

Studies have found that long-term relationships with customers are critical to the
success of retail businesses. Heskett, Sasser, and Schlesinger (1997) have proposed a
“service-proﬁt chain” and argued that the longer customers stay with companies, the
lower the cost to serve them, the higher the volume of purchases they make, the higher
prices they tolerate, and the greater the positive interpersonal communication in which
they engage. Heskett et a1. (1997 ) cited evidence from retailers such as Sears, Intuit, and
Taco Bell to support this argument. In another study, Rose (1990) found that proﬁts on a
service purchased by a ten-year customer were on average three times greater than those
for a ﬁve-year customer. The following empirical studies of the service-proﬁt chain
support many aspects of Heskett, Sasser and Schlesinger’s model (Loveman 1998; Rucci,
Kim, and Quinn 1998).

There have been attempts to understand the motivation of consumers to engage in
a relationship with marketers (Sheth and Parvatiyar 1995; Bagozzi 1995; Wulf et a1.
2001). The principle of reciprocity is considered to be a useful framework to investigate
this motivation by explaining the duration and stability of an exchange relationship (W ulf
et a1. 2001). Even though reciprocity generally has been applied to explain

organizational level relationships in distribution channel research, Bagozzi (1995)

10

indicated that the phenomenon of reciprocity is also present in consumer-ﬁrm
relationships.

Sheth and Parvatiyar (1995) asserted that consumers engage in relational market
behavior because they want to simplify information processing, reduce perceived risk,
and to maintain a state of psychological comfort. Various factors such as family and
social norms, peer group pressure, government mandates, religious tenets, employer
inﬂuences, and marketer policies affect consumer’s behavior in the relationship.

Bagozzi (1995) believed that the more common and determinative motive for
entering a relationship is that consumers see the relationship as a means to fulﬁll goals to
acquire products. He explained when people have goals to acquire a product or use a
service, a relationship then becomes instrumental in goal achievement.

Whether consumers want a relationship with a marketer for goal achievement or
for simplifying the decision making processes, it is apparent from the discussion above
that relationship marketing beneﬁts consumers as well as marketers. The intangible
nature of services makes it more difﬁcult for consumers to evaluate the quality of
services prior to the purchase (Berry 1995).

In addition to the motives discussed above, service relationship marketing has
potential social and psychological beneﬁts for consumers (Berry 1995; Parasuraman,
Berry, and Zeithaml 1991; Jackson 1993; Patterson and Smith 2001). Service encounters
can be viewed as social exchanges, and the interaction between service providers and
customers is a crucial component of satisfaction with the exchange (Patterson and Smith
2001). Jackson (1993) argued that relationship marketing addresses the basic need to feel

important. Parasuraman, Berry, and Zeithaml (1991) reported that customers desire

ll

personalized and close relationships with service providers for both ongoing services
(e. g., insurance, truck leasing) and services provided intermittently (e.g., hotel, repair
services). Other social beneﬁts said to add value to service relationships include a sense
of belonging, recognition, feelings of familiarity, friendship, and social support (Berry
1983, 1995, Barnes 1995, Price and Amould 1999).

Based on the conceptual development of service relationships, many empirical
studies have been reported in various settings of services including insurance (Coulter et
al. 2002), educational services (Hennig-Thurau et al. 2001), ﬁnancial services (Patterson
et al. 2001; Sharma and Patterson 1999; Bejou et al. 1998; Barnes 1997), and retailing
(Reynolds and Beatty 1999; De Ruyter et al. 1998; Macintosh Lockshin. 1997).

(See Table 1.) Most empirical studies that investigate customer-provider relationships in
the service sector include service quality as an antecedent because it affects the
evaluation of the relationship (Patterson et al. 2001; Wetzels et al. 1998; Sharma and
Patterson 1999; Hennig-Thurau et al. 2001; Harrison-Walker 2001). Service quality, thus,
has been a core subject in the service marketing literature. The object of improving
service quality, after all, is to engender customer loyalty (Berry 1995). Service
relationships are expected to produce positive outcomes, such as sales effectiveness and
anticipation of future interaction (Crosby et al. 1990), repurchase intention (Patterson et
al. 2001), intention to stay in the relationship (W etzels et al. 1998), word of mouth

communication (Hennig-Thurau et a1. 2002), and others. (See Table 1.)

12

 

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l7

RELATIONSHIP QUALITY

Assessing the underlying dimensions of a relationship between a service seller
and a consumer is critical to understanding the impact of the relationship on future
interactions. Many researchers urged the identiﬁcation of focal variables that can be used
to assess the success of a relationship. Berry (1995) noted that the characteristics of
successful/unsuccessful relationship marketing programs have not been fully identiﬁed.
Rosen and Surprenant (1998) criticized previous relationship research because it focused
upon satisfaction or quality as the principal assessment measures of the relationship, the
very measures that have been traditionally used to evaluate non-relationship marketing
outcomes.

Customers’ long-term loyalty has been often used to assess the outcome of
successful relationships between customers and businesses (Cusari and Kennedy 2002).
According to Cusari and Kennedy, a long-term loyalty can be deﬁned by three elements:
1) the behavioral element of consumers’ repeat purchasing; 2) an attitudinal component
of customer satisfaction and commitment; and 3) the availability of choices to customers.
However, customer loyalty is an incomplete measure of a customer-business relationship
because it only measures one side of a dyadic relationship.

Because relationship quality is an overall assessment of the strength of a
relationship, it has been used most often as an outcome measure of relationship service
marketing (see Table l, Kumar, Scheer and Steenkamp 1995; Wulf et al. 2001; Hennig-
Thurau et al. 2001; Garbarino and Johnson 1999). Thus, previous research conceptualizes

relationship quality as a higher order construct consisting of several distinct, though

18

related, dimensions (Dorsch, Swanson, and Kelly 1998; Kumar et al.1995). Although
there still exist on-going arguments about which dimensions make up relationship quality,
prior conceptualizations mainly emphasize the critical importance of three indicators:
satisfaction, trust and commitment (W ulf et a1. 2001; Garbarino and Johnson 1999;
Hennig—Thurau and Klee 1997; and Dorsch et al. 1998).

Wulf et al. (2001) conceptualized consumer—retailer relationship quality to be
composed of satisfaction, trust, and commitment. Garbarino and Johnson (1999)
investigated the different roles of satisfaction, trust and commitment in the relationship
between customers and a professional (play) theater. The study treated these three
constructs as separate global evaluations rather than as separate dimensions of
relationship quality. The researchers concluded that even though these three global
evaluations are correlated because of common inﬂuences from component attitudes, they
can be separately identiﬁed and interact differently for different types of customers.

However, there are still many researchers who have employed a uni-dimensional
or bi-dimensional approach to assess relationships. Coulter et al. (2002) used trust to
measure buyer-seller relationships in the insurance industry. They proposed that various
person-related factors (empathy, politeness, similarity) and offer-related factors
(customization, reliability and promptness) affect trust. Commitment was heavily used to
measure the quality of a relationship by Patterson et al. (2001), Wetzels et a1. (1998),
Shanna and Patterson (1999), Shemwell, Cronin and Bullard (1994), and Harrison-
Walker (2001). Crosby et al. (1990) and Dwyer et al. (1987) consider relationship

satisfaction and u'ust to be indicators of the higher-order construct of relationship quality.

19

Three dimensions of relationship quality (satisfaction, trust, and commitment) are

discussed next.

Satisfaction

Relationship satisfaction is deﬁned as a consumer’s affective state resulting from
overall appraisal of his or her relationship with a service provider (Anderson and Narus
1990). Customer satisfaction has been identiﬁed as one indicator of a buyer’s
psychological commitment to a relationship (Dwyer et al. 1987). Store satisfaction results
when a chosen alternative (a store) meets or exceeds a customer’s expectations (Engel et
al. 1990). The basis for this outcome is within the disconﬁrmation paradigm (Oliver,
1980; Zeithaml and Bitner 2000). This paradigm explains that satisfaction is believed to
be evaluated through a matching of expectations and perceived performance.

Czepiel, Rosenberg, and Akerele (1974) proposed that satisfaction with an
organization is a cumulative, attitude-like construct that is composed of satisfaction with
speciﬁc components, such as with people or products. Westbrook (1981) demonstrated
that satisfaction with a retail establishment was an accumulation of separate satisfaction
evaluations with the salespeople, store environment, products, and other factors. Crosby
and Stephens (1987) found that overall satisfaction with life insurance has separate
components of satisfaction with the agent, core service, and organization.

From the literature, conceptualizations of relationship satisfaction with an
organization can be summarized as follows. First, many researchers conceptualize
relationship satisfaction as an affective state (Smith and Barclay 1997) in contrast to

more rational outcomes (Anderson and Narus 1990). Second, it is viewed as a cumulative

20

effect over the course of a relationship compared with satisfaction that is speciﬁc to each
transaction (Anderson, Fomell and Rust 1997). Third, relationship satisfaction is
conceived as having three elements: satisfaction with the contact person, with the core
service, and with the institution.

On the other hand, several researchers argued that satisfaction alone is not a valid
predictor of customer loyalty and purchase behavior (Van Looy, Gemmel, Desmet, Van
Dierdonck, and Semeels 1998; Bloemer and de Ruyter 1998; Wilson 2002). Satisfaction
is a necessary prerequisite for loyalty but it is not sufﬁcient on its own to lead to repeat
purchase and brand loyalty (Bloemer and Kasper 1995; Morgan and Hunt 1994). Thus,
these authors assert that trust with, and commitment to the service provider and the
speciﬁc service brand along with satisfaction are necessary to predict the buying behavior

of customers.

Trust

Trust is a key construct in most models of long-term relationships, both business
as well as personal, and has been studied in the marketing literature (Schurr1985; Sharma
and Patterson 1999). Trust is deﬁned as “a willingness to rely on an exchange partner in
whom one has conﬁdence” (Moorman, Deshpande, and Zaltman 1993, p.82). Similarly,
trust was conceptualized as existing “when one party has conﬁdence in an exchange
partner’s reliability and integrity” (Morgan and Hunt 1994, p.23).

Although both views share the importance of conﬁdence as an underlying element
in relationship trust, Moorman et al. (1993) emphasize the behavioral aspect of trust.

Several studies consider trustworthiness and trusting behaviors as two distinct aspects of

21

trust. Whereas trustworthiness refers to a belief or conﬁdence, trusting behaviors are
related to the willingness to engage in risk-taking behavior, which reﬂects reliance on a
partner. The trust literature suggests that conﬁdence in a partner results from the belief
that the party is reliable and has high integrity, which are associated with such qualities as
consistency, competency, honesty, fairness, responsibility, helpfulness, and benevolence
(Morgan and Hunt 1994). Morgan and Hunt and others argue that a partner’s conﬁdence
about relying on another implies her/his behavioral intention to rely; thus, trustworthiness
is sufﬁcient to cover the meaning of trust (Morgan and Hunt 1994, Wulf et al. 2001;
Anderson and Narus 1990).

Coulter and Coulter (2002) studied the moderating effect of the length of the
customer-business relationship on various factors and trust. They found that both person-
related (e. g., empathy, politeness and customer/service representative) and offer-related
(customization, competence, reliability and promptness) service characteristics inﬂuence
trust in the relationship, and the effect of these factors is moderated by the length of the
relationship.

Schurr and Ozanne (1985) proposed that the trust between a seller and a buyer
leads to more integrative behaviors of a buyer. Integrative behaviors are characterized as
cooperative behaviors that are more likely to result in goal achievement by both buyers

and sellers.

Commitment

Relationship commitment has been viewed as a critical element of

interorganizational relationships (Anderson and Weitz 1992), and considered essential for

22

long-term relationships. In the services relationship marketing area, commitment was also
emphasized as a central concept. Berry and Parasuraman (1991, p.139) argued,
“Relationships are built on the foundation of mutual commitment.”

Some researchers have deﬁned commitment as a customer’s psychological
attachment, loyalty, concern for future welfare, and identiﬁcation and pride in being
associated with the organization (Garbarino and Johnson 1999). Other researchers
emphasized a reciprocal relationship between sellers and buyers and deﬁned the
commitment as an implicit or explicit pledge of functional continuity between exchange
partners (Dwyer et al. 1987; Sharma and Patterson 1999). Emphasizing long-term
relationships, Morgan and Hunt (1994, p.23) deﬁned relationship commitment as “an
exchange partner believing that an ongoing relationship with another is so important as to
warrant maximum efforts at maintaining it; that is the committed parties believe the
relationship is worth working on to ensure that it endures indeﬁnitely.” Speciﬁcally, in
the retail context, Wulf et al. (2001) deﬁned relationship commitment as a consumer’s
enduring desire to continue a relationship with a retailer accompanied by this consumer’s
willingness to make efforts at maintaining it.

According to Wetzels et al. (1998) and Morgan and Hunt (1994), two views of
commitment have dominated the literature. One perspective argues that commitment is
the affective state of mind a partner has toward a relationship with another partner. This
“affective commitment” is based on a sense of liking and emotional attachment to the
partnership (W etzels et al). The other view sees commitment as being more behavioral
than affective. This “calculative commitment” was assumed to stem from a cognitive

evaluation of the instrumental worth of a continued relationship with the organization

23

(Morgan and Hunt). Empirical studies suggested that of these two forms of commitment,
affective commitment is the more effective for developing and maintaining mutually
beneﬁcial relationships between partners (Kumar et al. 1994, Wetzels et al. 1998).
Affective commitment has a strong positive inﬂuence on the intention to stay in a
relationship, the desire to stay in a relationship, willingness to invest in a relationship,
and performance, and a negative inﬂuence on the development of alternatives to the
relationship and opportunistic behavior (W etzels et al. 1998). Sharma and Patterson
(1999) proposed that relationship commitment was a function of communication
effectiveness between two parties, perceived service quality (technical and functional),

and trust.

RELATIONSHIP DEVELOPMENT STAGES

There are several studies proposing that the relationship between buyers and
sellers has developmental stages as the relationship matures. Czeipiel (1990) suggests
that relationships tend to evolve and change over time, with parties developing greater
trust and dependence. His proposed stages include: 1) accumulation of satisfactory
encounters and the expectation of future purchases, 2) active participation based upon
mutual disclosure and trust, 3) creation of a double bond (both personal and economic),
and 4) psychological loyalty to the relationship.

Berry and Parasuraman (1991) classiﬁed relationships on three levels depending
on the types of bonds used to develop customer loyalty. The ﬁrst level employs ﬁnancial

bonds (motivated by economic needs), the second level utilizes social bonds (motivated

24

by social needs), and the third level relies on structural bonds (customization and shared
values). Service customization and competitive advantage differ at the three levels with
the most advanced level of customization and sustainable competitive advantage
occurring at the third level of the relationship. Rosen and Surprenant (1998) asserted that
the Berry and Parasuraman’s typology can provide a useful starting point to determine
the deﬁning elements of each stage in the partnership.

On the other hand, Dwyer, Schurr, and Oh (1987) proposed a ﬁve-stage
framework of relationship development based on Scanzoni’s work (1979). The
relationship development process is composed of ﬁve phases: awareness, exploration,
expansion, commitment, and dissolution (Figurel).

In the ﬁrst stage of the relationship, awareness, interaction between parties has not
transpired (Dwyer et al. 1987). In this stage, consumers become aware of local retail
stores due to geographical proximity or advertising.

When any type of bilateral interaction occurs between buyers and sellers, the
second phase, the exploration stage, begins. Exploration refers to the search and trial
phase in the relationship exchange (Dwyer et a1. 1987 ). A gradual increase in
interdependence is observed while prospective exchange partners ﬁrst consider the
obligations, beneﬁts, burdens and possibility of exchange. However, the exploratory
relationship is very fragile in the sense that minimal resource investment and
interdependence make it easy to terminate the relationship. In the exploration phase, ﬁve
subprocesses (Scanzoni 1979) develop sequentially: 1) attraction, 2) communication and
bargaining, 3) development and exercise of power, 4) norm development, and 5)

expectation development.

25

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26

The third phase of relationship, expansion, refers to the continual increase in
beneﬁts obtained by exchange partners and to their increasing interdependence (Dwyer et
al. 1987). The ﬁve sub—processes identiﬁed in the exploration phase also operate in the
expansion phase. Frazier (1983) explained that the expansion stage is the consequence of
each party’s satisfaction with the other’s role performance and its associated rewards.
When a party fulﬁlls perceived exchange obligations successfully, the attractiveness of
the party to the partner increases, and motivation to maintain the relationship increases
while attractiveness of alternative parties decrease (Frazier 1983; Dwyer et a1. 1987).

Commitment, the fourth phase of the relationship, is the most advanced state of
the buyer-seller relationship. Commitment refers to an implicit or explicit pledge of
relational continuity between exchange partners (Dwyer et al. 1987; Pressey and
Mathews 2000). In this stage, contractual mechanisms and shared value systems between
partners ensure sustained interdependence. The committed relationship is measured with
three aspects of commitment (Dwyer et al. 1987, Scanzoni 1979): 1) inputs to the
relationship -- signiﬁcant economic, communication, and emotional resources may be
exchanged, 2) durability of the relationship -- there should be some durability of the
association over time, and 3) consistency of the relationship -- inputs to the relationship
should be consistent.

The last phase of the relationship, dissolution, refers to the termination of the
relationship. Relationships that fail to continue due to various reasons end up in the

dissolution phase.

27

ANTECEDENT S TO RELATIONSHIP QUALITY

Customer perception of service quality has been considered as the most important
factor to determine the business success of service ﬁrms (Parasuraman et al. 1985;
Gronroos 1994). Studies on service quality components such as that of employees, store
operations, and the service facility are reviewed to provide understanding of their
conceptual domains and the impact on relationship quality. In addition, the quality of
merchandise and business ethics are suggested as antecedents to relationship marketing,

thus, relevant studies are discussed.

Service Quality

The conceptualization and measurement of service quality have been the most
debated in the service marketing literature. There is no consensus on a deﬁnition of
service quality. The most widely used deﬁnition is that of Parasuraman et al. (1985, p.42),
“service quality as perceived by the customer is the degree and direction of discrepancy
between customer service perception and expectations.” It is this gap between
perceptions and expectations, or disconﬁrmation theory, that underlies the formulation of
SERVQUAL, the service quality measure of Parasuraman et al. (1988) and its subsequent
reﬁnements (1990, 1993, 1994). Parasuraman et al. (1988) proposed ﬁve dimensions of
service quality: reliability, responsiveness, assurance, empathy, and tangibility.

During the 19905, the results of service marketing studies advocated customer
service excellence and prescriptions to improve service quality as a way to enhance

customer satisfaction and loyalty. Many studies have identiﬁed a signiﬁcant relationship

28

between service quality and performance. Findings demonstrated that ﬁrms offering
superior service attained higher than normal market share (Buzzel and Gale 1987) and
word-of—mouth recommendations (Parasuraman et al. 1991).

Other studies have used the disconﬁrmation framework by measuring both
expectations and perceptions, and equating service quality evaluation as the difference in
the scores derived from the two measures (Finn and Lamb 1991; Babakus and Boller
1992). However, many of these studies are criticized for the inconsistent results and poor
ﬁt to the disconﬁrmation model. Spreng and Olshavsky (1992) argued that the
disconﬁrmation paradigm suffers due to problems in measuring expectations. Teas (1993)
criticized that the disconﬁrmation model has conceptual, theoretical, and measurement
problems and suggested that alternative models should be used.

Increasingly, researchers are adopting perceptions as indicators of service quality
and ﬁnding that perceptions have better predictive power for customer behavior
(Andaleeb 1996; Mittal and Lassar 1996). Compared to the discontinuation methods,
measuring only perceptions is attractive because it reduces the number of measurement
items signiﬁcantly (Dabholakar, Shepherd and Thorpe 2000). Cronin and Taylor (1992)
compared the results from disconﬁrmation measures to perception measures, and
concluded that perceptions are a better predictor of service quality than disconﬁrmation.

Gronroos (1983) proposed that service quality can be explained by two
components: technical quality and functional quality. Technical quality involves what the
service employees provide during the service provision process. For example, technical
quality might consist of employee knowledge, technical equipment utilized, and technical

solutions implemented. Functional quality refers to how the service is performed by the

29

employees. Functional service quality focuses on the interpersonal contributions made by

the employee to the service encounter.

Retail Service Quality

In the case of retailing, services are designed more to augment core offerings or
add value, rather than to be the core offering itself (I-Iomburg, Hoyer and Fassnacht 2002).
A retail store experience involves more than the core retail service experience in terms of
ﬁnding products a customer wants, interacting with sales associates for the product
information and advice, and various after-sales behaviors such as returns and exchanges.
All of these factors affect customers’ perceptions of retail service. Thus, despite the fact
that measures of service quality for retailers are likely to share common conceptual
underpinnings to those of other services, the unique characteristics of retailing should be
considered to accurately measure customer perceptions of service quality in the retail
environment (Dabholkar, Thorpe and Rentz 1996). For example, Finn and Lamb (1991)
tested SERVQUAL in four different types of retail stores. They found that the ﬁve factor
structure of SERVQUAL model did not ﬁt the data, and concluded that SERVQUAL
could not be used as a valid measure of service quality in a retail setting.

Store image studies have investigated the effects of various store attributes on
consumers’ perceptions of store image. Many of these store attributes are also believed to
impact consumers’ perceptions of service quality. Lindquist (1974) combined models
from 19 studies and came up with nine store attributes that affect customers’ perceptions
of store image: merchandise, service, clientele, physical facilities, comfort, promotion,

store atmosphere, and institutional and post-transactional satisfaction. Doyle and Fenwick

30

(1974) distinguished ﬁve elements: product, price, assortment, styling and location.
Bearden (1977) suggested the following characteristics: price, quality of the merchandise,
assortment, atmosphere, location, parking facilities and friendly personnel. Recently,
Ghosh (1990) proposed that store image is composed of different elements of the retail
marketing mix such as location, merchandise, store atmosphere, customer service, price,
advertising, personal selling and sales incentive programs.

Westbrook (1981) studied the sources of customer satisfaction for a large
conventional department store. He identiﬁed the following factors that affect customer
satisfaction: 1) satisfaction with the salesperson, 2) satisfaction with the store
environment, 3) satisfaction with store merchandising practices, 4) the degree of store
service orientation, 5) product satisfaction, 6) satisfaction with the value offered by a
store, and 7) satisfaction with special store sales. Among these factors, the most
inﬂuential components were satisfaction with salespersons, special sales, products, and
the store environment.

Dabholkar et al. (1996) proposed a hierarchical model of retail service quality
based upon intensive qualitative studies as well as SERVQUAL. The model consists of
ﬁve dimensions that they named physical aspects, reliability, personal interaction,
problem solving, and store policies. Among these dimensions, three dimensions have two
sub-dimensions each: physical aspects have appearance and convenience sub-dimensions,
the reliability dimension has sub-dimensions of promises and doing it right, and the
personal interaction dimension is comprised of inspiring conﬁdence and
courteous/helpful sub-dimensions. To explain the common underlying theme in these ﬁve

dimensions, a higher- order factor of overall retail service quality is proposed to exist.

31

Several studies proposed that service quality is an important predictor of a
customer’s long-term loyalty to a store (Sirohi, Mc Laughlin and Wittink 1998; Zeithml,
Berry and Parasuraman 1996; Baker et al. 2002). Sirohi et al. (1998) found that store
loyalty, measured by intent to continue shopping, intent to increase purchases and intent
to recommend a store, depend on service quality and merchandise quality. There is a
direct link between service quality and patronage intentions. In addition, Taylor and
Baker (1994) found that service quality has a signiﬁcant effect on repurchase intention.
Also, Boulding Kalra, Staelin, and Zeithaml (1993) found a signiﬁcant relationship

between service quality and repurchase intention and willingness to recommend.

Employee Service Quality

As services are characterized by intangibility and inseparability, the role of sales
employees at the point of purchase is critical (Gronroos 1983; Brady and Cronin 2001;
Czepiel 1990). There is evidence to support the notion that the service quality of sales
employees is a critical component of retail service (Crosby et a1. 1990; Sirohi et al. 1998;
Westbrook 1981; Dabholkar et al. 1996) and relationship quality (Garbarino and Johnson
1999; Crosby et al. 1990). Store employee service includes those services provided to
customers by store managers, sales clerks, cashiers, baggers and other retail employees
(Sirohi et al. 1998). Employee service quality has been studied in various service settings
under the terms of “interaction quality” (Brody and Cronin 2001), “satisfaction with the
sales persons” (Westbrook 1981), “personal interaction” (Dabholkar et al. 1996),

“personnel service” (Sirohi et al. 1998) and others.

32

Dabholkar et al. (1996) proposed that personal interaction is one of ﬁve service
quality dimensions, as previously discussed. The authors argued that this dimension is
composed of two sub-dimensions, that are, service employees inspiring conﬁdence and
being courteous/helpful. Personal interaction is related to responsiveness, assurance and
some items from the empathy dimension of SERVQUAL (Parasuraman et al. 1988).
Several empirical studies report that these three dimensions of SERVQUAL are
correlated, and thus, provide support for the uni—dimensional aspect of sales employee
service quality (Babakus and Boller 1991; Carman 1990).

Brody and Cronin (2001) and Czepiel, Solomon, and Surprenant (1985) explained
that customers’ quality perceptions of sales personnel’s interactions are composed of
three distinct factors: attitudes, behaviors, and the expertise of sales personnel. For
example, customers perceive service quality by experiencing whether the staff is friendly
(attitudes), knowledgeable (expertise), and welcoming (behaviors).

Crosby et al. (1990) proposed a conceptual model that hypothesizes the positive
causal effect of sales person similarity and expertise on customers’ views of the quality of
the relationship. The authors refer to social psychology and communication theories to
support the notion that similarity among individuals in a relational context inﬂuences the
satisfaction with the relationship.

Garbarino and Johnson (1999) found that the role of service providers is critical
for the future intentions of both low and high relational customers. They found that for
customers who have a weak relationship with a (play) theater, customers’ satisfaction
with the play actors is the main driver of their overall satisfaction with the theater and

their future intentions. For customers with a strong relationship, satisfaction with the play

33

actor is the main determinant of trust, and customers’ familiarity with the actors is the

main determinant of commitment.

Retail Operations Quality

The quality of retail operations refers to customers’ views about a retailer’s return
policies, store hours, and training and stafﬁng of employees (Sirohi et al. 1998).
Dabholaker et al. (1996) proposed that policy is the ﬁfth dimension of retail service
quality. The policy dimension in their model reﬂects a retailer’s policies. For example,
when customers evaluate whether a store has convenient hours, this is viewed as whether
the store’s policy is responsive to customers’ needs.

Westbrook (1981) reported that credit and charge account policies affect
customers’ satisfaction with a retail store. Also, Oliver (1981) showed that customers
value parking availability for retail shopping. In the study of Korean women in middle-
higher socioeconomic class, Lee and 1111 (1990) investigated the effect of retail operations
on consumer’s store image perception. They found that the return, parking and delivery

policies positively inﬂuence Korean customers’ perception of store image.

Retail Facility Quality

The quality of the retail facility refers to consumers’ perceptions of the physical
aspects of store. Physical aspects are the ﬁrst dimensions of Dabholkar et al.’s (1996)
retail service quality model, as previously discussed. The authors conceptualized the
physical aspects of retail service to include two sub-dimensions, those of appearance and

convenience. Westbrook (1981) found that customers’ satisfaction with the store

34

environment -- layout, spaciousness, organization, and appearance -- positively affects
satisfaction with the store.

The retail literature suggests that store appearance is important to retail customers
(Baker, Grewal and Parasuraman 1994; Bitner 1990). Sihori et al. (1998) proposed that
store appearance is one of three components of service quality along with store
operations and personal service. Also, Dabholkar et al. (1996) reported the results of a
qualitative study that indicated that customers value the cleanliness, and general
appearance of the store, and appearance of the public facilities such as restrooms and
ﬁtting rooms. The retail literature additionally suggests that customers are positively
inﬂuenced by the convenience of shopping that is afforded by the physical aspects of a
store (Dabholkar et a1. 1996; Gutrnan and Alden 1985; Hummel and Savitt 1988;

Mazursky and Jacoby 1985, Oliver 1981).

Merchandise Quality

When consumers shop at a retailer, purchasing products is the major goal. Thus,
the merchandise offered by a retailer is the “core” service. Schneider and Bowen (1995)
argued that in a service business, too much emphasis is placed on the procedures,
processes and contexts for the service, and the organization tends to overlook the core
service.

Sirohi, McLaughlin, and Wittink (1998) deﬁned merchandise quality as a
consumer’s overall quality perceptions of a retailer’s merchandise and variety in
brands/categories. Speciﬁcally, Brucks, Zeithaml, and Naylor (2000) propose that

product quality is composed of ﬁve dimensions: ease of use, versatility, durability,

35

serviceability, performance, and prestige. Parasuraman et al. (1994) explain that the
evaluation of product quality in addition to that of service quality and of price determine
a customer’s satisfaction with a transaction. Further, they found that repeated transaction
satisfaction affects customers’ global impressions of the ﬁrm, such as service quality. In a
study of large grocery stores, the authors found that merchandise quality signiﬁcantly

affects consumers’ store loyalty.

Business Ethics Quality

Researchers of business ethics agree that sound ethics, values, integrity and
responsibility of a ﬁrm are essential to survive in business today (Stodder 1998).
Generally, ethics is deﬁned as a conception of what is “right” and “fair” conduct or
behavior (Carroll 1991; Freeman and Gilbert 1988; Joyner and Payne 2002). Velasquez
(1999) adds that ethics is concerned with judgments involved in moral decisions. With
regard to business, De George (1999) deﬁned business ethics as the interaction of ethics
and business.

Studies suggest that ethics plays a role in the quality of a business relationship
(Bejou et al. 1998). Stodder (1998) cited the Walker information survey of consumers
reporting that 47 percent of those polled responded that they would be much more likely
to buy from a “good” company when other factors such as quality, service and price are
equal. Additionally, seventy percent of consumers responded that they would not do

business with a ﬁrm that was not socially responsible, regardless of price.

36

OUTCOMES OF RELATIONSHIPS

An extensive body of literature links the quality of a business relationship to
positive performance outcomes for both businesses and customers. Crosby et al. (1990)
propose that sales effectiveness and continued future interactions are two outcomes of a
sustained relationship. In this model, sales effectiveness represents a quantitative measure
of overall sales activities within the relationship. The linkage between relationship quality
and sales effectiveness reﬂects sales outcomes of successful client relationships in service
exchange settings. This relationship is consistent with social penetration theory, which
states that partners will continue to deepen a relationship as long as anticipated beneﬁts
exceed anticipated costs (Altman and Taylor 1973).

Kellerman (1987) identiﬁed the anticipation of future interactions as a goal of
dyadic encounters. Customers’ perceptions of anticipated satisfaction with service
providers are likely to impact on the stay-or-leave decision (Crosby et al. 1990). Thus,
the best predictor of a customer’s likelihood to seek future contact with a retailer is the
quality of the relationship that bonds a customer and a retailer. In the following section,
positive outcomes of interactive behavior with retailers are discussed from the

perspective of customers.

Consumer Voluntary Behavior
Sheth and Parvatiyar (1995) proposed that consumer involvement is an important
outcome of relationship marketing. Relationship marketing seeks to increase the

effectiveness of the customer-business interaction through consumer involvement in the

37

design, development, and marketing processes of a company. According to these authors,
consumers are often willing to perform aspects of a marketer’s job as a result of a
successful relationship. In a positive relationship, consumers are provided the opportunity
to perform some of the marketers’ tasks, such as order processing, designing products,
managing information, and so on. When performing these tasks, consumers feel
empowered, and hence, more satisﬁed with the relationship.

Thibaut and Kelley (1959) indicated that a major challenge in interpersonal
relationships is the mutual coordination of appropriate behaviors of the parties. Drawing
from the discussion of employee voluntary behavior in the organizational behavior
literature, Bettencourt (1997) proposed a model of consumer voluntary behavior.
Consumer voluntary behavior refers to helpful, discretionary customer behavior that
assists the ﬁrm to deliver service quality (Bettencourt). Global customer satisfaction,
perceived support for customers and customer commitment are considered as antecedents
of consumer voluntary behavior in this empirical study.

Speciﬁcally, consumer voluntary participation refers to customer behaviors that
reﬂect active and responsible involvement in the governance or development of an
organization. Customers who have considerable experience with the organization are
inexpensive sources of counsel and experts on the customer’s perspective (W olstenholrne
1988). Customer complaints and suggestions may lead to remedying current service

problems, expanding current services, or even creating entirely new services.

38

Store Loyalty

Attention has been given in the marketing literature to the importance of brand
and service loyalty (Cronin and Tylor 1992; Rust, Zahorik, and Keiningham 1995). The
most important aspect of relationship marketing is the new central role given to the
concept of customer loyalty as a marketing goal of a ﬁrm (Hermann 2002). Loyalty refers
to customer behavior that signiﬁes allegiance to and promotion of organizational interests
beyond individual consumer’s interests (Bettencourt 1997). Hermann (2002) deﬁned
customer loyalty as the positive attitudes toward supplier combined with a willingness to
further perform transactions. These deﬁnitions of loyalty shared at least two underlying
notions: one is willingness to continue the transaction with the seller, and the other is

willingness to do business with the seller relatively independently from own interest.

39

CHAPTER III

CONCEPTUAL FRAMEWORK

This chapter is devoted to the proposition of a conceptual framework that
summarizes the relationships between the quality of retail relationships and its
antecedents, such as retail service quality attributes, merchandise quality, and business
ethics, and its outcomes. The proposed conceptual framework draws from two theoretical
assumptions. First, the proposed framework assumes that a customer might build a multi-
level relationship (consumer-employee, consumer-retailer) with a retail business (W ulf et
al. 2001; Garbarino and Johnson 1999; Hennig—Thurau and Klee 1997; Leuthsser 1997;
and Dorsch, Swanson, and Kelley 1998). The present study also adapted the theory of
relationship development to a retail setting. Based upon the work of previous researchers,
a new perspective on the developmental stages of retail relationships is proposed.
Empirically testable hypotheses are proposed based upon two emphasized features of a
retail relationship: a multi-level and the developmental stages of a retail relationship.
Finally, the conceptual framework of retail relationship quality is introduced and

presented in Figure 7.

MULTI-LEVEL MULTI-DINIENSION RETAIL RELATIONSHIPS

The relationship of dyadic partners can be measured through the attribute sets that
link them. These sets pertain to the objects of the customer’s commitment and include the

salesperson, product, and company (Jackson 1985; Wilson 1977). Theories of service

40

quality draw a parallel distinction between the functional/interactive, technical, and
institutional elements of quality (Gronroos, 1990; Lehtinen 1985). Assuming that service
quality is a prerequisite to relationship quality, these elements may also serve as anchor
points for the customer’s views about the quality of the relationship (Crosby et al. 1990).

In the distribution channel literature and general marketing literature, the
relationship between transactional partners implicitly means “inter-organizational”. The
unique characteristics of retailers and other services, where there is a direct encounter
with consumers in the delivery of products and services, makes sales employees an
important factor of business success (Albrecht and Zemke 1985; Schneider and Bowen
1995; Johnson 1996). Thus, it is not surprising to ﬁnd that most service relationship
studies focus on employees (Crosby and Stephen 1987; Parasuraman et al. 1985; Crosby
et al. 1990; Beatty et al. 1996). In these studies, relationship quality represented
interpersonal relationships, customer-organization relationships, and both interpersonal
and customer-organization relationships. Crosby et al. (1990) employed only the
interpersonal aspect to measure customers’ perceptions of satisfaction with and trust of
life insurance services, while other researchers such as Garbarino and Johnson (1999) and
Wetzels et al. (1998), considered only the customer-organization relationship. On the
other hand, Coulter et al. (2002) conceptualized that a positive interpersonal relationship
would lead to a positive organizational relationship that was measured by trust.

There are retail studies that suggest customers are likely to have multi-level
relationships in their retail experience. Ostrom and Iacobucci (1995) contend that
although different types of relationships share commonalities, real differences exist

between person-to-person, person-to-ﬁrm, and ﬁrm-to-ﬁrm relationships. Dodds, Monroe,

41

and Grewal (1991) explained that in retailing, interpersonal relationships exist between
retail salespeople and customers, but customers also establish relationships with the
stores themselves and the brands they sell.

Beatty et al. (1996) made a clear distinction between two levels of relationships:
the consumer-employee relationship and the consumer-retailer relationship. They
differentiated relationship selling from relationship marketing to explain the one-on-one
relationship between customers and sales associates. They proposed a retail relationship
formation/enhancement model based on qualitative research using observations of and
interviews with retail associates and their customers. The model focused on commitment
and orientation to customer service by top management and employees, repeat consumer-
employee interactions based on trust, friendship, and functionality, and development of
customer loyalty with the sales associates and the ﬁrm.

Macintosh and Lockshin (1997) proposed a multi-level retail relationship model
explaining the relationship between consumers’ views about the trust and commitment of
salespeople, and their satisfaction with, trust of, and loyalty to the store. Similarly,
Reynolds and Beatty (1999) proposed a model of relationship beneﬁts and outcomes that
assumes consumers’ different levels of satisfaction with and loyalty to salespeople, and
satisfaction with and loyalty to the company. In their model, Reynolds and Beatty
proposed that the relationship between the consumer and sales person has a causal effect
on the relationship between the consumer and the retailer. With data collected from
customers of department stores and upscale men’s clothing stores, Reynolds and Beatty
(1999) found that satisfaction with a salesperson has a direct effect on the loyalty to the

salesperson and the satisfaction with the company, and loyalty to the salesperson and

42

satisfaction with the company directly affects loyalty to the store. Both satisfaction with
the salesperson and satisfaction with the company signiﬁcantly inﬂuence the buying
behavior.

Based on these studies and ﬁndings, the present study proposes that customers
have multi-level relationships with retailers; that is, a relationship with the employees and
a relationship with the store. Further, we adopted a three-dimensional model of
relationship quality, which is composed of satisfaction, trust, and commitment (W ulf et al.
2001; Garbarino and Johnson 1999; Hennig-Thurau and Klee 1997; Leuthsser 1997; and
Dorsch, Swanson, and Kelley 1998). In the previous study, commitment was used to
represent only the quality of a consumer’s relationship with the ﬁrm, not with sales
employees (Crosby, Evans, and Cowles 1990). Similarly, the present study proposes that
the quality of the consumer-employee relationship has two components: satisfaction and
trust, while the quality of the consumer-retailer relationship has three: satisfaction, trust,
and commitment (Figure 2).

In addition, it is suggested that the consumer-employee relationship is associated
with the consumer-retailer relationship (Figure 2). Beatty et a1. (1996) report that a
customer’s positive feelings towards a salesperson are often transferred to the company.
Speciﬁcally, the authors found that a customer’s primary loyalty was to the sales
associate, which positively inﬂuenced a customer’s loyalty to the store. Macintosh and
Lockshin (1997) reported a similar result. In a study of automobile retailing, Goff, Boles,
Bellenger, and Stojack (1997) found that satisfaction with the salesperson positively
affects satisfaction with the dealer. Based on the discussion and reasoning, the following

hypotheses are proposed:

43

H1 a: A consumer’s relationship with a retailer has two separate, distinct levels:
consumer-employee and consumer-retailer.

HI b: The consumer-employee relationship has two dimensions: satisfaction with and
trust in store employees.

H1 c: The consumer-retailer relationship has three dimensions: satisfaction with, trust in,

and commitment to the store.

H2: A consumer’s relationship with retail employees will have a positive eﬁ‘ect on her
relationship with the retailer.

ANTECEDENT S OF RETAIL RELATIONSHIPS

In this section, a conceptual framework describing the antecedent variables of a
retailer relationship will be proposed. In the previous chapter, service quality components
including employees, retail operations, and retail facility, merchandise quality, and
business ethics were discussed and suggested as antecedents to the relationship. In
addition, empirical studies supporting the association with the quality of the relationship
are reviewed. However, the different effects of these antecedents on two separate levels
of relationship quality (consumer-employee versus consumer-retailer relationship) have
not been previously investigated. This will be a signiﬁcant contribution of the present
study. In the following, the different responsibility of a retailer and a retail employee in
creating and managing ﬁve quality components will be discussed. It is hypothesized that
the different causal effects of these ﬁve components on the two relationship levels will be

determined on the basis of the responsibility in managing ﬁve quality components.

    

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Retail Operations

Among the ﬁve prospective relational antecedents, three variables are more likely
to be controlled by institutional decision making, while the other two depend in part on
employees’ attitudes and behaviors. A component that is wholly dependent on a retailer’s
business decisions is the operations dimension. This service component coincides with
the policy dimension of the Dabholkar et al.’s (1996) service quality model, which

includes aspects of service quality that are directly inﬂuenced by store policy.

Retail Facility

Similarly, the facility component is also determined by a retailer through a
strategic decision-making process. Researchers found that retail companies use store
interiors and exteriors, display windows, layout, and other appearance factors to enhance
their image (Lee and Irn 1990; Kim 1991). Global retailers often replicate exactly the

same store appearance all over the world to maintain their global image (Stemquist 1998).

Merchandise Quality

The merchandise quality dimension also depends heavily on a retailer’s
institutional decision-making. In most large retail companies, the buying function is
centralized and controlled by buying experts at headquarters, and manufacturers. Thus,
retail employees are not usually responsible for the quality of merchandise they sell to
customers. Besides, research by Crosby and Stephens (1987) shows that satisfaction with

the core service is not driven by satisfaction with the service personnel.

46

Employee Service

Contrary to the above three factors, retailers must depend in part upon employees
to deliver personal and ethical services to customers. Employee service is the one service
component that is dependent upon individual employees due to their direct contact with
and delivery to consumers. Although employee performance is partly inﬂuenced by a
retailer’s training and management, the service delivery itself fully relies on each
employee. Crosby et al. (1990) emphasized the role of the salesperson as a primary
contact point for the customer both before and after the purchase. They asserted, “the
salesperson is the company”, and the salesperson “controls” the level of service quality
delivered. In addition, researchers suggest that sales personnel develop different levels of
customer orientation by themselves. Individual sales personnel differences, such as
product knowledge, politeness, empathy, and other characteristics, affect the level of

customer orientation to retail employees.

Business Ethics

A retailer’s business ethics is primarily determined by organizational values and
culture (Kelly et al. 1990). The organizational ethical climate affects employees and
stimulates them to commit to the organization. Thus, customers are likely to evaluate
business ethics partly through the attitudes and behavior of employees. On the other hand,
customers are also likely to perceive business ethics through non-personal cues, such as a
return policy. Thus, consumers will perceive that both the retail business and the

employees have responsibility for the perceived quality of business ethics.

47

On the basis of this reasoning, it is possible to classify the ﬁve antecedents by
customers’ perceptions of the management responsibility for each (Figure 3). The quality
of merchandise, retail operations, and retail facilities are classiﬁed as high responsibilities
of the retailer, and low responsibilities of the employees; business ethics is a high level of
retailer and employee responsibility; employee service is a high employee responsibility
and a low retailer responsibility. Figure 4 depicts the proposed associations between the
ﬁve antecedents and the two levels of the retail relationship. As it is assumed that
customers can differentiate the different responsibilities for the antecedents, their

associations with speciﬁc relationship levels are hypothesized as follows.

H3a. A consumer ’s perception of the quality of merchandise will have no effect on her
consumer-employee relationship.

H3b. A consumer’s perception of the quality of merchandise will positively aﬂect her
consumer-retailer relationship.

H4a. A consumer ’s perception of the quality of employee service will positively aﬁ'ect her
consumer-employee relationship.

H4b. A consumer’s perception of the quality of employee service will have no effect on
her consumer-retailer relationship.

H5a. A consumer’s perception of the quality of retail operations will have no eﬁect on
her consumer-employee relationship.

H5b. A consumer’s perception of the quality of retail operations will positively affect her
consumer-retailer relationship.

H6a. A consumer’s perception of the quality of the retail facility will have no effect on
her consumer-employee relationship.

H6b. A consumer’s perception of the quality of the retail facility will positively aﬁect her
consumer-retailer relationship.

H 70. A consumer’s perception of a retailer’s business ethics will positively aﬁect her
consumer-employee relationship.

H 7b. A consumer’s perceptions of a retailer’s business ethics will positively aﬁ‘ect her
consumer-retailer relationship.

48

Figure 3. Responsibility for Quality Components

 

 

 

 

 

 

 

 

Merchandise
High Retail Operations Business Ethics
Retail Facility
5‘
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32 Medium
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a:
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Low Medium High

 

 

Employee’s Responsibility

 

49

 

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50

DEVELOPNIENTAL STAGES AND OUTCOMES OF RETAIL

RELATIONSHIPS

As discussed in Chapter II, Dwyer et al. (1987) assume that relationships will
experience ﬁve developmental stages: awareness, exploration, expansion, commitment,
and, possibly, dissolution. Their conceptual model can be summarized as: 1) a
relationship has a life cycle like a new product, which begins with awareness by
customers and continues through to commitment, and possibly to dissolution; 2)
unilateral relationships develop into reciprocal relationships; 3) commitment is the most

advanced form of a relationship.

Using Dwyer et al.’s (1987) model as a framework, the present study proposes a
conceptual model of retail relationship development. (See Table 2.) Applicable
relationship quality components and expected outcomes are discussed for each stage of
the model based on the literature.

At the beginning of a relationship, it is the seller (retailer) who has a motivation to
engage in a long-term relationship and send a stimulating message to the buyer
(consumer). According to Dwyer et al. (1987), a consumer is likely to become aware of a
retailer due to the retailer’s geographical proximity, advertising, and other promotional
efforts. Therefore, at the stage of awareness, no true relationship exists. Through several
repeated transactions, a consumer begins to develop shared norms and expectations with
a retailer, thus, a relationship begins to develop. At this early stage, which is the
exploration stage, a consumer’s motivation to engage in the relationship starts to develop.

However, bonding at this stage is weak and fragile because a consumer doesn’t have a

51

ﬁrm trust and commitment to the retailer. Consumer satisfaction with each transaction
develops to an overall satisfaction with the store, and increase the perceived quality of
relationship.

The third stage of Dwyer et al.’s (1987) model, expansion, can be interpreted as
the mid-level in the development of a relationship. Accumulated satisfaction and the
reduced attractiveness of alternatives lead to deepened satisfaction and trust. Expected
outcomes at this level of the relationship are behavioral loyalty and positive word-of-
mouth. Once a consumer reaches this stage, s/he will have a strong motivation to develop
the relationship for his or her own beneﬁt. The literature suggests that a relationship with
trust beneﬁts both selling and buying parties (Morgan and Hunt 1994).

Finally, when a consumer is engaged in a mature relationship, s/he will develop a
commitment to the retailer, in addition to satisfaction and trust. A relationship at the
mature stage absorbs signiﬁcant economic, communication, and emotional resources
from both parties. Both parties expect the relational bonds to be consistent and durable.
Various kinds of positive outcomes are expected, including behavioral and affective
loyalty, buyer participation and cooperation, and high ﬁnancial performance. A summary
of the developmental stages of a retail relationship are presented in Table 2.

Loyalty researchers have argued that buying behavior itself cannot be used as an
indicator of consumer’s satisfaction with a seller (Liljander and Roos 2002; Curasi and
Kennedy 2002). Curasi et al. (2002) identiﬁed consumer segments that are trapped in a
relationship with service providers due to various reasons, including no practical
alternatives and high switching costs. Liljander et al. (2002) explains that customer

relationships exist along a continuum from spurious to true relationships. According to

52

the authors, customers in both true and spurious relationships may continue to buy the
service and appear to be equally satisﬁed. However, a true relationship is different from a
spurious one in terms of the customer’s trust, beneﬁts, and commitment. Also, Garbarino
and Johnson (1999) propose that for customers with a high relational orientation, trust
and commitment are intermediate constructs between service attitudes and future
intentions, while for customers with low relational orientations, overall satisfaction is an
intermediate between component attitudes and intentions.

Researchers suggest that the development of a relationship is a personal-speciﬁc
and an industry-speciﬁc phenomenon (Curasi and Kennedy 2002; Reynolds and Beatty
1999; Wulf et al. 2001). Reynolds and Beatty (1999) explain that a consumer’s
motivation to maintain a relationship with a retail salesperson is related to four factors:
time poverty, shopping enjoyment, shopping conﬁdence, and social needs. Wulf et al.
(2001) found that consumer relationship proneness signiﬁcantly moderates the impact of
perceived relationship investment on relationship quality. The analysis of multi-country
samples reveals that the impact of a perceived relationship investment is stronger when
customers are more prone to engage in relationships with sellers (W ulf et a1. 2001).

The previous ﬁndings suggest that consumers go through the ﬁve developmental
stages of a relationship differently. Customers with a higher proneness to enter a
relationship would move to the commitment stage quickly and easily, and maintain a
stable relationship for a long time. On the other hand, customers who have low
relationship proneness, high time poverty, and low social needs might not develop their
relationship beyond the awareness or exploration stages. Thus, the individual differences

in the development of a relationship should be considered in a relationship model.

53

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54

In the present study, the intention is to compare customers in the early stage to
those in the mature stage of a relationship. To measure a consumer’s developmental stage
in a relationship with a retailer, this study used the length of time the consumer had
shopped at the store. Considering the comprehensiveness of the model and the sample
size, this study compared long-term relationship to short-term relationship consumers.

As discussed in the literature review, Chapter II, consumer voluntary
participation and store loyalty are proposed as potential outcomes of the two levels of
retail relationships. The Retail Relationship Development Model proposed that consumer
voluntary behaviors are only observed with consumers at the commitment stage. Thus,
consumer voluntary participation was hypothesized to mediate retail relationships and
store loyalty only for long-term relationship consumers.

This study adopted Sheth and Parvatiyar’s (1995) recommendation, which
emphasized the importance of institutional relationship rather than interpersonal
relationship. Thus, it was hypothesized that the consumer-retailer relationship has a
stronger effect on store loyalty than does the consumer-employee relationship. Based on
the previous discussion and reasoning, the following hypotheses are proposed (Figures 5

and 6).

H8a. Trust in the employee will be more important for long-term rather than short—term
customers in their consumer-employee relationship.

H8b. Trust in the store will be more important for long-term rather than short-term
customers in their consumer-retailer relationship.

H9. Commitment to the store will be more important for long-term rather than short-term
customers in their consumer-retailer relationship.

55

HIOa.For long-term customers, the consumer-retailer relationship will positively affect
their consumer voluntary participation.

HI 0b.F or short-term customers, the consumer-retailer relationship will not aﬂect their
consumer voluntary participation.

H1 0c.F or long-term customers, consumer voluntary participation will positively affect
their store loyalty.

HI Ia. For both long- and short-term customers, the consumer-employee relationship will
have a positive eﬁect on their store loyalty.

HI I b.F or both long- and short-term customers, the consumer-retailer relationship will
have a positive effect on their store loyalty.

H1 1 c.F or both long- and short-term customers, the consumer-retailer relationship will

have a stronger effect on their store loyalty than will the consumer-employee
relationship.

56

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58

CHAPTER IV

RESEARCH METHODS

In this section, discussions of research design, sample selection, and data
collection procedures are presented. Then, the questionnaire items that measure each
construct of the proposed model are discussed. Finally, data analysis methods and

procedures to test the proposed model and hypotheses are provided.

RESEARCH DESIGN

To test the proposed model, both qualitative and empirical methods were used. In
the qualitative phase, a focus group interview was conducted with 10 Koreans living in
the U.S. to examine the applicability of the model to Korean consumers. The group was
composed of ﬁve full-time students and ﬁve housewives. All the participants had been
living in the U.S. for one to three years while attending the university or accompanying
their spouses who were studying in the university. All the participants had lived in Seoul
before they moved to the U.S. Participants were asked to express their opinions regarding
their relationships with department stores in Korea. The proposed constructs of
relationship quality, satisfaction, trust, commitment, participation, and relevant store
attributes that affect store patronage were discussed.

Focus group participants generally agreed that the proposed model of retail

relationships were applicable to Korean consumers’ relationships with department stores.

59

They believed that consumers’ relationship with retail employees was distinctly different
from their relationship with a department store. Most participants believed that
employees at Korean department stores were not properly trained, and their services did
not meet the expectations of department store customers. Half of the focus group
participants had a favored store where they had shopped for a considerable time. They
agreed that they felt a connection to that speciﬁc store. Some participants agreed that they
felt that the department store is part of their lives, and would behave in favor of the store.
The rest of the participants did not have any one department store where they preferred to
shop.

Information gathered from the focus group interview was incorporated with the
literature review to develop the survey instrument for the empirical study. The
quantitative study was designed as a cross-sectional study using a within-subjects design.
The study used a self-report survey instrument. Detailed procedures of the quantitative

study are described in the following section.

SANIPLE SELECTION AND DATA COLLECTION

The population for the study was female Korean consumers who reside in Seoul,
Korea and its satellite cities. This study only included female consumers to avoid the
potential error variance caused by gender differences. In the focus group interview, it was
suggested to include only females in the study because the majority of department store

customers are women. The city of Seoul has a population of 10,000,000 (The City of

60

Seoul 2000) and consists of 25 regions (“Gus”). These 25 regions are different in terms of
population and demographics. For example, the average cost for renting a similar size
apartment unit in Kangnam Gu could be expected to be three times higher than the cost in
Dobong Gu (Real Estate Bank, 2003). As it was necessary to assure a broad spectrum of
geographic and socioeconomic groups for the study, the sample should include various
regions of Seoul. Thus, based on geographic factors and average rent costs, Seoul was
divided into ﬁve areas: central, north eastern, north western, south eastern, and south
western area. (See Table 3.)

Satellite cities have been developed recently by the Korean government to reduce
the increasing cost of living in Seoul. For the present study, three major satellite cities,
Bundang, Ilsan, and Kwacheon, were included. Kwacheon is located to the south of
Seoul, and Bundang is to the south of Kwacheon. The characteristics of the residents in
both cities were well-educated and middle to high income professionals (Korea National
Statistics Bureau 2003). Thus, these two cities were combined as southern satellite cities.
Ilsan is located on the northwest border of Seoul. The city provides relatively affordable
housing for people who work in northwestern Seoul.

Six graduate students at a major Korean university were hired as research
assistants to collect data. Following extensive training sessions to ensure consistency of
administration and breadth of distribution of the questionnaires, each assistant was
assigned to a speciﬁc area. For the six identiﬁed areas, apartment complexes ranging

from twenty to one thousand units were chosen as survey sites. Once apartment

 

5 “Gu” is a sub-municipal under the city government. Seoul is composed of 25 gu. Jongro gu has the
smallest population of 170,118, while Kangnam gu has more than 633,000 residents (The City of Seoul,
2000).

61

complexes in each area were identiﬁed, the research assistants visited the units and made

contact with the residents.

Table 3. Data Collection Sites

 

 

 

 

 

 

 

Areas 33:38:22“; On Department Stores
Central Middle Jongro, Chunggu, Lotte,
Yongsan Shinsegae,
Galleria
Northeastern Lower to middle Dongdaemoon, Lotte (2),
Sungdong, Kwangjin, Shinsegae,
J ungrang, Sungbook, Hyundae (2)
Kangbook, Dobong,
Nowon
Northwestern Middle Eunpyung, Seodaemoon, Lotte,
& Ilsan Mapo, Ilsan Hyundae
New Core
Southeastern Upper Seocho, Kangnam, Lotte (2)
Songpa, Kangdong Shinsegae
Galleria,
Hyundae (3)
New Core
Southwestern Lower (Yangcheon), Kangseo, Lotte (2)
Guro, Kuncheon, Shinsegae
Youngdungpo, Hyundae
Dongjak, Kwanack
Southern Middle Bundang, Kwacheon Lotte,
Satellite Cities New Core

 

Residents of every third apartment unit were approached to participate in the

study. Only female residents were asked to participate to the survey. When a resident

answered the door, the research assistant introduced himself/herself and brieﬂy explained

the purpose of the survey while showing the cover letter that explains the purpose of the

study (see Appendix B). If the resident agreed to participate, the interviewer left the

questionnaire along with a small gift of appreciation. Before leaving the unit, the assistant

62

secured the participant’s phone number and address, and arranged to phone for a return
visit within three to seven days to retrieve the completed survey.

Based on the number of outlet branches (Retail News, January 8, 2003), revenue
(Mae-i1 Economics Daily, February 16, 2003) and the focus group discussion, ﬁve
department stores were selected. To assure that the subjects in the six areas have the same
access to the selected retailers, the store locations of each retailer were identiﬁed. (See
Table 3.) For each of the six data collection areas, at least two department stores are
available. (See Table 4.) Subjects were instructed to select only one store and to focus on

that store as they answered the survey questions.

Table 4. Department Stores Selected for the Study

 

 

Stores Number of Outlets6
Lotte 1 1
Shinsegae 4
Galleria 3
Hyundai 8
New Core 4

 

Cited from Retail News, January 8, 2003

 

Lotte department store was selected most often by 187 respondents, Hyundae
department store and Shinsegae were selected next by 89 and 84 respondents,
respectively. Twenty-three respondents chose Newcore department store, and twelve
selected Galleria department store. The covariance matrix of four department store
respondents (Lotte, Hyundae, Shinsegae and New core) for 15 items contained in the

relationship constructs (satisfaction with employee, trust in employee, satisfaction with

 

6 Number of outlets in the survey area.

63

store, trust in store, and commitment to store) were compared to examine systematic
differences among respondents who selected different stores. No signiﬁcant differences

were observed. Thus, the total sample was used in the study.

INSTRUMENT

All of the measures used in the study were developed and tested in previous
studies. (See Table 5.) The competing measures for each construct were carefully studied
and compared. Based upon the validity and reliability of the measures in the original
study and focus group discussion, appropriate measures were chosen for the present study.
Some adaptations were made to items to make them applicable to the department store
shopping situation.

Asian populations are believed to have a central tendency when responding to
Likert-type scales, which refers to a predisposition to answer survey questions using the
midpoint or midsection of a research scale (Si and Cullen 1998). Korean researchers
recommend a seven-point scale for Korean respondents since it provides a ﬁner gradation
of responses than a ﬁve-point scale (Hwang 1997; Kim and Pysarchik 2001). Thus, this
study used seven-point scale measures. A description of the constructs and associated

measures follows.

 

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68

Merchandise Quality: Merchandise quality is deﬁned as the consumers’ judgment
about a product’s overall excellence or superiority (Zeithaml 1988). Based on Zeithaml’s
original study (1988), Brucks, Zeithaml, and Naylor’s (2000) three-item measurement
was used. These three items were designed to capture the prestige, versatility, and
performance of the product associated with a retail business. (See Section II in Appendix
A).

Employee Service Quality: The study used 10 items from Cronin, Brady, and Hult
(2000) to measure service quality, which were originated by Parasuraman, Zeithaml, and
Berry (1985). In the present study, employee service quality is deﬁned as the consumer’s
overall impression of the relative inferiority/superiority of the service provided by the
employees of a retail ﬁrm (Bitner and Hubbert 1994). (See Section II in Appendix A).

Retailer Operations Quality: To measure the quality of retail operations seven
items were adapted from previous studies. Out of six items measuring perceptions of
store operations from Sirohi et al. (1998), three items were chosen for the study. In
addition, three of six items from the retailer policy service quality scale from Dabholkar,
Thorpe, and Rentz (1996) were used. The six items excluded from the present study were
either overlapping with other constructs, such as product quality and employee service
quality, or speciﬁcally designed for the original study and not applicable to the present
study. Instead, one item asking about retailer’s return and exchange policies was included
based upon the focus group interview. (See Section II in Appendix A).

Retail Facility Quality: To measure the quality of the physical retail facility, six

items of Dabholkar, Thorpe, and Rentz’s (1996) scales were used. The scale was

69

composed of three items to assess the appearance of the physical facility and three items
to measure the convenience of the facility. (See Section II in Appendix A).

Business Ethics Quality: To measure the business ethics of the retailer, McIntyre,
Thomas, and Gilbert’s (1999) approach was used. McIntyre et al. adopted 11 items from
Levy and Dubinsky’s (1983) 18-item scale of customer-related ethical situations. (See
Section H in Appendix A).

Relationship Quality with Retailers: The present study adopted Wulf, Odekerken-
Schroder and Iacobucci’s (2001) conceptualization and measurement of relationship
quality with three dimensions: satisfaction with the store (3 items), trust in store (3 items),
and commitment to store (3 items). (See Section III-A in Appendix A).

Relationship Quality with Employees: Customers’ perceptions of the quality of the
relationship with sales employees were conceptualized by two dimensions: satisfaction
with employees (3 items) and trust in employees (3 items). These measures were adopted
from Crosby et a1. (1990) and Wulf et al. (2001 ), respectively. (See Section III-B in
Appendix A).

Loyalty: Customers’ store loyalty was measured by one items from Bettencourt
(1997). (See Section IV in Appendix A.)

Consumer Voluntary Participation: Customers’ voluntary participation was
measured by seven items adopted from Bettencourt (1997). (See Section IV in Appendix
A).

Relationship Stage: To measure consumers’ current relational stage with a retailer,
an open-ended questions were asked of the subjects: How long have you been shopping

at this store? (See Section I in Appendix A)

70

The survey instrument was developed in English, and then translated into the
Korean language by a bi—lingual Korean scholar who was not involved in the study. Then,
the translated Korean instrument was back translated into English by another bi-lingual
Korean. On the basis of the comparison between the original and the back translated
instruments, identiﬁed problems were addressed to achieve construct equivalence. The
translated instrument was pre-tested on 30 Korean students and housewives temporarily
residing in a Midwestern city of the U.S. In addition, researchers at a major Korean
university reviewed the Korean version of the instrument. Some revisions were made to

improve question clarity, comprehension and readability.

71

CHAPTER V

RESULTS AND DISCUSSION

The purpose of this chapter is to report the ﬁndings from statistical analysis of the
collected data and to interpret and discuss these ﬁndings. The demographic
characteristics of the sample are described ﬁrst, then the reliability and validity of the
measures are reported. Three groups of hypotheses are tested with structural equation
modeling methods. The ﬁrst model was analyzed to test Hla to H2. A latent SEM
analysis with second-order structure was conducted to test the multi-level multi-
dimensional structure of the retail relationships and the causal relationship between the
two second-order factors. Three additional competing models were tested to conﬁrm the
multi-dimensional structure of the retail relationships. Then, path analysis was conducted
to test H3a to H7b to analyze the association between the ﬁve retail attributes and two
levels of retail relationships. The third group of hypotheses, H8a to H1 1c, were tested by
a two-group SEM comparison analysis. Finally, a discussion of ﬁndings concludes this

chapter.

DEMOGRAPHIC CHARACTERISTICS OF THE SAMPLE

Respondents of the survey study were asked to report their demographic

information including age, residential address, marital status, education, income, and

occupation. This demographic information is reported in Table 6. Four hundred and eight

72

usable questionnaires were collected in Korea. The sample was all female. The age of the
sampled respondents ranged from 20 to 61 with an average age of 38. About 73 percent
of the sample was married. Residents of the southeastern area of Seoul constituted 44
percent of the sample, while central area residents accounted for only 3.4 percent and
southern satellite city residents 2.4 percent. As presented in Table 3 in Chapter IV (p. 61),
the southeastern area of Seoul is a newly developing residential area with eight major
department stores (2 Lotte, 3 Hyundae, Shinsegae, Galleria, and New Core). Thus, it was
relatively easier to access female consumers who were willing to share their department
store shopping experiences. On the other hand, the central area of Seoul is a commercial
and public administrative center that hosts the city hall and the headquarters of many
large companies. Large residential apartment complexes are scarce in this area, thus, it
was difﬁcult to access female consumers who stay at home during the day.

About 44 percent of the sample had a university degree or higher educational
background. Respondents with a high school degree or below constituted about 13
percent of the sample. (See Table 6.) Twenty-ﬁve percent of the sample reported that
their monthly family income was between two million won ($1,693) and four million
won ($3,387). Another 27 percent of the respondents had a monthly family income of
four million won ($3,387) and above but less than six million won ($5,080).

National statistics in 2000 revealed that 18 percent of the S. Korea population
over 25 years had a university degree or higher education, and about 77 percent of the
households had a monthly family income of less than two million won ($1,693). (Korean
National Statistics Ofﬁce, 2000.) Thus, compared to the general population in Korea, the

sample of this study represented people with higher education and income. The ﬁndings

73

of this study should be interpreted in light of the highly educated and afﬂuent sample.

About 50 percent of the sample was either unemployed or a full-time housewife.

Respondents who were sales employees accounted for 6 percent of the sample and

students accounted for 5 percent.

Table 6. Demographic Characteristics of Sample (N--408)

 

 

 

 

 

 

 

 

 

 

 

 

Percent . Percent
Age N (% ) Marital Status N (%)
20-29 91 22.3 Single 106 26.0
30-39 149 36.5 Married 297 72.8
40-49 1 18 28.9 Others 3 .7
50-59 41 10.1
60-61 9 2.2
Residence N Peg/gm Education N Pe(r%c1;nt
Central 14 3.4 High school degree 51 12.5
Northern 81 19.9 or below
Northwestern ' 57 14 Students 26 6.4
Southeastern 178 43.9 2-year college degree 66 16.2
Southwestern 57 14 University degree 132 32.4
Southern Satellite Cities 10 2.4 Master’s degree or 48 11.8

higher

Monthly Family Income N P2773”
Less than 1 million won ($ 846.63) 13 3.2
1 million won and above but less than 2 million won ($1,693.25) 65 15.9
2 million won and above but less than 3 million won ($2,539.88) 53 13.0
3 million won and above but less than 4 million won ($3,386.50) 49 12.0
4 million won and above but less than 5 million won ($4,233.13) 63 15.4
5 million won and above but less than 6 million won ($5,079.75) 48 11.8
6 million won and above but less than 7 million won ($5,926.38) 17 4.2
7 million won and above 10 2.4

 

US $1=1181.16 Korean Won (July 2003)

The respondents were informed prior to their agreement to participate in the study

that they need not answer any question with which they were uncomfortable. It appears

that many Korean respondents were reluctant to answer some personal questions, thus,

74

 

there were many missing answers to the socioeconomic questions such as income and

educational level.

CONFIRMATORY FACTOR ANALYSIS

All measures were analyzed for measurement reliability and validity following the
guidelines offered by Anderson and Gerbing (1988) and J oreskog and Sorbom (1989).
The full model of the present study involves 11 multi-item constructs. The conﬁrmatory
factor analysis was performed for these 11 constructs using EQS 5.7, and the results are
reported in Table 7. The covariance matrix for the conﬁrmatory factor analysis is
reported in Appendix C.

In the initial model, the Lagrange Multiplier Test indicated that some items from
the antecedent factors and the Consumer Voluntary Participation factor were cross-loaded
and these cross-loaded items caused a poor model ﬁt to the data. The cross-loaded items
were deleted one by one until an acceptable model ﬁt to the data was accomplished. As
the primary purpose of the CFA was to test the discriminant validity of the measures, no
cross-loadings were allowed in the speciﬁcation. The items excluded in the ﬁnal model of
the CFA are reported in Appendix D.

Also, the LM Test indicated that the items of the ﬁve relationship quality factors
(Satisfaction with Employees, Trust in Employees, Satisfaction with Store, Trust in Store,
and Commitment to Store) were signiﬁcantly cross-loaded with other factors. Garbarino
and Johnson (1999) warned that the satisfaction, trust, and commitment measures could

be inﬂuenced by the halo effect. In addition, as these constructs were measured by similar

75

questions, respondents of the study may intentionally try to be consistent in their answers
to these questions. Thus, it is reasonable to assume that these factors contributed to the
common variance of the observed variables. The model was respeciﬁed to estimate the
error covariance of the cross-loaded items. Finally, the resulting CFA model ﬁt was
improved to x2=1452.91, df=454, p<.001, CFI=0.86, RMSEA=0.07. (See Table 7.) Even
though the chi-square test result was signiﬁcant, the CFI and RMSEA were considered
acceptable considering the large number of items and factors, and the decision was made
to continue with the analysis. The largest standardized residuals ranged between 0.054
and 0.122. All factor loadings were signiﬁcant, thus, convergent validity was achieved. In
addition, as there were no cross-loaded items, discriminant validity was achieved
(Anderson and Gerbing, 1988).

The reliabilities of all eleven constructs (Satisfaction with Employees, Trust in
Employees, Satisfaction with Store, Trust in Store, Commitment to Store, Merchandise
Quality, Employee Service Quality, Retail Operations Quality, Retail Facility Quality,
Business Ethics, Consumer Voluntary Participation) were between .54 and .94. (See
Table 7.) The commitment to Store and Merchandise Quality factors had somewhat low
reliabilities, .54 and .59, respectively. Previous studies recommended a reliability of .7
for the conﬁrmatory approach and .6 for the exploratory approach (Hair et al. 1998).
However, as all items in these two factors had signiﬁcant loadings, the decision was
made to continue the analysis with these factors. Thus, these low reliabilities should be

considered when the analysis results are interpreted.

76

Table 7. Item Measurement Properties: Conﬁrmatory Factor Analysis Results

 

In this survey, we are interested in your experiences when
shopping in department stores in Korea. From the following

 

 

 

 

 

 

 

. . . Stand. T- Cronbach
list, please choose a store. Please indicate your level of Loa din Value Al ha
agreement or disagreement with each of the following g p
statements as you think about the store mu identiﬁed.

Satisfaction with Employees .72
I am very satisﬁed with its employees. .84 18.61
I am very pleased by the employees at the store. .70 14.86
I have a favorable relationship with the employees at the .49 9.64
store.
Trust in Employees .94
The employees at the store give me a feeling of trust. .92 24.03
I have trust in the employees at the store. .94 25.36
The employees at the store give me a trustworthy .90 23.08
impression.
Satisfaction with Store .73
As a regular customer, I have a high quality .53 10.70
relationship with this store.
I am happy with the efforts this store is making towards .92 18.59
regular customers like me.
I am satisﬁed with the relationship I have with this .65 12.99
store.
Trust in Store .79
This store gives me a feeling of trust. .82 19.17
I have trust in this store. .56 11.98
This store gives me a trustworthy impression. .86 20.28
Commitment to Store .54
I am willing “to go the extra mile” to remain a customer of .46 7.27
this store.
I feel loyal towards this store. .58 8.70
Even if this store would be more difﬁcult to reach, I would .60 8.84
still keep buying there.
Merchandise Quality .59
This store has an excellent variety of products. .60 10.84
The products at this store are among the best. .71 12.34
Excluded items:

This store has excellentJroducts.

 

77

 

Employee Service Quality

I can depend on receiving prompt service from its
employees.

The behavior of its employees instills conﬁdence in
me.

I feel safe conducting business with the employees at this
store.

 

Excluded items:
Its employees offer the personal attention I need from them.
Its employees are never too busy to respond to my requests.

The employees at this store are able to answer my questions.

I receive enough individual attention from its employees.
The employees at this store have my best interests at heart.
The engoloyees at this store understand my speciﬁc needs.
Retail Operations Quality
This store provides plenty of convenient parking for
customers.
This store has enough employees to meet customer
needs.
This store provides adequate training of employees.
This store has a manager to be able to resolve questions and
problems.

 

Excluded items:

This store has operating hours convenient to all of their
customers.

This store accepts most major credit cards.

This store has a customer-friendly retum-exchange policy.

Retail Facility Quality

The layout at this store makes it easy for customers to ﬁnd
what they need.

The layout makes it easy for customers to move around the
store.

 

Excluded items:

This store has modem-looking equipment and ﬁxtures.

The physical facilities at this store are visually appealing.

Materials associated with this store ’s service (such as
shopping bags, catalogs or statements) are visually
attractive.

This store has clean, attractive, and convenient public areas
(restrooms, ﬁtting rooms).

78

.65

.77

.74

.37

.65

.82
.72

.87

.85

.76
13.84

17.03

16.22

.70
7.22

13.80

18.64
15.57

.85
16.98

16.53

 

Business Ethics Quality

The employees at this store do not assist those less likely to
buy.

This store makes excuses about the products when they are
either not in the store or already sold out.

The employees at this store pressure a customer into a
purchase.

This store makes excuses when merchandise is not
ready.

 

Excluded items:

This store gives preferential treatment to certain customers.

The employees at this store ignore a prospective customer
for one he believes will be better.

The employees at this store are likely to buy merchandise
before it is available to customers.

This store takes a return from customers when the items
should not be accepted.

This store sells a more expensive product when a less
expensive one would be best for customers.

This store withholds information of an upcoming sale that
will include the item the customer is buying.

This store hoards free samples meant for customers.

Consumer Voluntary Participation

I let this store know of ways that they can better serve my
needs.

I make constructive suggestions to this store on how to
improve its service.

IfI have a useful idea on how to improve service, I get it to
someone at this store.

If a price is incorrect to my advantage, I still advise someone
at this store.

 

Excluded items:

When I experience a problem at this store, I let somebody
know so they can improve the service.

If I notice a problem, I inform an employee of this store even
if it does not affect me (e. g., broken glass in aisle, dairy
items past expiration date).

If an employee at this store gives me good service, I let
him/her know it.

Model Fit
x2=1452.91, df=454, p<.001
CFI=O.86. RMSEA=0.07

.49

.79

.76

.73

.87

.92

.72

.29

9.62

17.30

16.46

15.55

20.70

22.36

16.24

5.76

.78

.78

 

79

HYPOTHESIS TESTING

Relationship Quality Model with Second-Order Factor Components

H1 a: A consumer’s relationship with a retailer has two separate, distinct levels:

consumer-employee and consumer-retailer.

HI b: The consumer-employee relationship has two dimensions: satisfaction with

and trust in store employees.

HIc: The consumer-retailer relationship has three dimensions: satisfaction with,

trust in, and commitment to the store.

H2: A consumer ’s relationship with retail employees will have a positive effect on

her relationship with the retailer.

A latent SEM analysis using Maximum Likelihood estimation was conducted to
test the second-order factor model of relationship quality and the causal relationship
between the two second-order factors (Consumer-Employee Relationship and Consumer-
Retailer Relationship). (See Table 8 and Figure 7.) The results indicated that the proposed
model had a signiﬁcant chi-square value, but it was considered an acceptable ﬁt to the
data based on the CFA and RMSEA (12:21679, df=70, p<.001; CFI=.96; RMSEA=.07).
There were no cross-loadings between the two second-order constructs and all item
loadings for each factor were signiﬁcant. Thus, Hypothesis 1a was supported.

To test the second-order factor model with the two-dimensional structure of
consumer-employee relationships (Satisfaction with Employees and Trust in Employees)
and the three-dimensional structure of consumer-retailer relationships (Satisfaction with
Store, Trust in Store, Commitment to Store), competing models were analyzed. (See
Table 9.) The objective of the comparison of competing models is to ﬁnd the best ﬁtting

model from among the set of models. As this study compares models that have a different

number of construct (non-nested model comparison), chi-square difference test was not

80

conducted, and ﬁt index were compared (Hair, Anderson, Tatham, and Black 1998). The
ﬁrst competing model was a uni-dimensional consumer-employee relationship model
with a three-dimensional consumer-retailer relationship model (Satisfaction with Store,
Trust in Store, Commitment to Store). The SEM results showed that the model ﬁt to the
data was acceptable (XL-237.89, df=72, p<.001, CFI=0.95, RMSEA=0.08, Table 9).
However, it was not better than the proposed model (x2=216.79, df=70, p<.001,
CFI=0.96, RMSEA=0.07).

The second competing model is speciﬁed to be composed of the two-dimensional
consumer-employee relationship (Satisfaction with Employees and Trust in Employees)
and a uni-dimensional consumer-retailer relationship. The model ﬁt was not acceptable
for this model (x2=486.44, df=73, p<.001, CFI=0.88, RMSEA=0.12). (See Table 9.) The
last competing model was composed of a uni-dimensional consumer-employee
relationship and a uni-dimensional consumer-retailer relationship. This model also
showed a poor ﬁt to the data (x2=505.84, df=75, p<.001, CFI=0.87, RMSEA=0.12, Table
9). In conclusion, the proposed model of relationship quality (two-dimensional consumer-
employee relationship and three-dimensional consumer-retailer relationship) was superior
to other competing models of relationship quality. Thus, Hypotheses lb and 1c were
supported.

Finally, the t-values indicated that the consumer-employee relationship had a
signiﬁcant positive effect on the consumer-retailer relationship (F7F6=.85, p<.01). (See

Figure 7, Table 8.) Thus, Hypothesis 2 was supported.

81

Table 8. Results of Second-Order Factor Analysis with Path Analysis: Two Levels of

Relationship

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Measurement Model Structural Model
Parameters Estimates T-Values Parameters Estimates T-Values
VlFl .75 A F1F6 .90 a
V2F1 .67 12.72 F2F6 .99 13.16
V3F1 .64 12.11 F3F7 .59 a
V4F2 .92 A F4F7 .83 7.74
V5F2 .96 35.98 F5137 .39 4.31
V6F2 .89 29.16 F7F6 .85 7.14
V7F3 ~55 A Disturbance Variance
V8F3 .87 10.36 D1 D1 .13 3.36
V9F3 .76 10.50 D2D2 .01 .15
V10F4 -78 A D3D3 .24 5.40
V11F4 .57 11.60 D4D4 _13 4,73
V12F4 .89 16.30 D5D5 .22 3.61
V13F5 -47 A D6D6 .04 2.71
V14F5 .58 5.59 Error Covariance
V15F5 .62 5.57 E7E3 .20 4.56
Error Variances E8E3 .13 3.26
ElEl .80 10.67 E9E3 .18 5.01
E2E2 .73 12.02 E10E7 .07 2.17
E3E3 .7 8 12.42 E13E7 .15 3.07
E4E4 .44 10.05 E14E7 .36 6.01
ESES .36 6.86 E15E7 .27 3.73
E6E6 .48 11.60 E10E8 .13 3.85
E7E7 .75 12.96 E10E9 .24 6.42
E8E8 .51 4.98 E1 1E9 .20 5.52
E9E9 .75 8.93 E12E9 .18 4.97
E10510 .62 10.01 E13E11 .43 7.40
EllEll .80 13.23 E14E11 .39 6.08
E12E12 .52 5.82 E15E11 .10 1.36
E13E13 .86 11.43
E14El4 .80 9.02
E15E15 .82 7.97

 

 

x2=216.79, df=70, p<.001

CFI=0.96

RMSEA=0.07

 

F1=Satisfaction with Employees; F2=Trust in Employees;

=Satisfaction with Store;

F4=Trust in Store; F5=Commitment to Store; F6=Consumer-Employee Relationship;

F7=Consumer-Retailer Relationship; V1 to V15=Indicators for F1 to F5; E1 to E15=Errors for

V1 to V15; D1 to D5=Disturbance for F1 to F5 ; D6=Disturbance for F7

82

 

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84

Path Analysis for Retail Attributes and Retail Relationship

The phi matrix of the conﬁrmatory factor analysis was used as an input for path
analysis, as suggested by Calantone (2003) due to the complexity of the model to test
hypotheses 3a, 3b, 4a, 4b, 5a, 5b, 6a, 6b, 7a, and 7b. The phi matrix is reported in
Appendix C. As proposed in the previous analysis, relationship quality was speciﬁed to
be two second-order factor models. The ﬁve retail attribute variables were speciﬁed to
have causal effects on the two second-order factors (Consumer-Employee and Consumer-
Retailer Relationships). (See Figure 4, p. 50.)

The ﬁnal model showed a signiﬁcant chi-square but satisfactory CFI and RMSEA
ﬁt to the data (122120.94, df=19, p<.001, CFI=0.96, RMSEA=0.10). (See Table 10 and
Figure 8.) The largest standardized residuals ranged from .0.016 to 0.144. In the
following section, the result of each hypothesis test is reported.

The group of hypotheses (H3a to H7b) proposed an association between the two
relationship levels (Consumer—Employee and Consumer-Retailer) and the retail attribute
variables (Merchandise, Employee Service, Retail Operations, Retail Facility, Business
Ethics). These hypotheses were tested based on path analysis using t-tests. (See Figure 8
and Table 10.) Two-tail tests were used for H3a, H4b, H5a, and H6a, and one-tail tests

were used for H3b, H4a, H5b, H6b, H7a, and H7b.

85

Table 10. Results of Path Model: Two Levels of Relationship Quality and Retail

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attribute Variables
Model Error Variances
Parameters Estimates T-Values Parameters Estimates T-
Values
VlFl .86 A ElEl .26 9.98
V2F1 .91 23.41 E2E2 .17 7.15
V3F2 .58 A E3E3 .66 13.25
V4F2 .91 11.75 E4134 .17 3.90
V5F2 .36 6.42 E5E5 .87 13.99
F 1V6 -.27 -5.56 Disturbance Variance
F1V7 .75 10.65 D1D1 .22 8.66
F1V8 .12 2.11 D2D2 .09 4.68
F1V9 '12 3'20 Covariance among Exogenous
F1V10 .17 4.33 Variables
”V6 -19 3'37 V6V7 .72 11.73
F2V7 .07 .80 V6V8 56 9 90
F2V8 .13 2.21 V6V9 .38 7°17
”V9 .01 -17 V6V10 ' 22 4 30
“V10 '01 '32 V7V8 .80 12.61
F2“ '57 6'28 V7V9 .45 8.33
V7V10 —.47 -8.58
V8V9 .40 7.58
V8V10 -.48 -8.73
V9V10 -.19 -3.73
x2=120-94. df=19, p<.001
CFI=0.96
RMSEA=0. 10

 

 

V l=Satisfaction with Employees; V2=Trust in Employees; V3=Satisfaction with Store;
V4=Trust in Store; V5=Commitment to Store; V6=Merchandise Quality; V7=Employee
Service Quality; V8=Retail Operations Quality; V9=Retai1 Facility Quality; V10=Business
Ethics Quality; F1=Consumer-Employee Relationship; F2=Consumer-Retailer Relationship;
E1 to E15=Errors for V1 to V55; D1 to D5=Disturbance for F1 to F2

86

 

Figure 8. The Summary of Path Analysis: Two Levels of Relationship Quality and Retail

Attribute Variables

 

 

 

 

Employee.7 Service

 

 

ﬂ Mercvha6ndise

 

V8
Retail Operations

 

 

 

 

 

V9

Retail Facility

5

 

 

 

 

 

V10

Business Ethics

 

 

 

E1 1 E2

 

 

 

 

 

 

    

 

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Satis WIEm Trust in Em
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Vl=Satisfaction with Employees; V2=Trust in Employees; V3=Satisfaction with Store;

V4=Trust in Store; V5=Commitment to Store; V6=Merchandise Quality; V7=Employee Service
Quality; V8=Retail Operations Quality; V9=Retail Facility Quality; V10=Business Ethics Quality;
F1=Consumer-Employee Relationship; F2=Consumer-Retailer Relationship

* p<.05 **p<.01

87

Merchandise Quality

 

H3a. A consumer ’s perception of the quality of merchandise will have no eﬂect on
her consumer-employee relationship.
H3b. A consumer’s perception of the quality of merchandise will positively affect her
consumer-retailer relationship.
H3a proposed that consumers’ perceptions of merchandise quality would have no
effect on the consumer-employee relationship. However, the t-value indicated there is a
signiﬁcant negative relationship between these two variables (F 1V6=-.27, p<.01). (See
Table 10 & Figure 8.) As predicted in hypothesis 3b, t-test results indicated that

merchandise quality had a positive effect on consumer-retailer relationship (F2V6=.19,

p<.01). Thus, hypothesis 3b was supported but hypothesis 3a was not supported.

Employee Service Quality
H4a. A consumer’s perception of the quality of employee service will positively aﬁect
her consumer-employee relationship.
H4b. A consumer’s perception of the quality of employee service will have no eﬂect
on her consumer-retailer relationship.
As H4a proposes, t-values indicated that employee service positively affected the
consumer-employee relationship (F1V7=.75, p<.01). (See Table 10.) At the same time,

employee service showed no effect on the consumer-retailer relationship (F2V7=.07, n.s.).

Thus, both H4a and H4b were supported.

Retail Operations Oualig/

H5a. A consumer ’s perception of the quality of retail operations will have no effect
on her consumer-employee relationship.

H5b. A consumer’s perception of the quality of retail operations will positively aﬁ‘ect
her consumer-retailer relationship.

88

T-values in the proposed path model analysis showed that the quality of retail
operations positively affects both consumer-employee (F 1V8=.12, p<.05) and consumer-
retailer relationships (F2V8=.13, p<.05). (See Table 10.) Thus, H5a was not supported,

while H5b was supported.

Retail Facility Quality
H6a. A consumer’s perception of the quality of the retail facility will have no effect on
her consumer-employee relationship.
H6b. A consumer ’s perception of the quality of the retail facility will positively affect
her consumer-retailer relationship.
Regarding the quality of the retail facility on the relationship perceptions, contrary
to the hypothesis, the retail facility positively affects the consumer-employee relationship
perception (F1V9=.12, p<.01). (See Table 10.) Surprisingly, the t-value showed that the

retail facility has no effect on the consumer-retailer relationships (F2V9=.01, n.s.). Thus,

both H6a and H6b were not supported.

Business Ethics Quality
H 7a. A consumer’s perception of a retailer’s business ethics will positively affect her
consumer-employee relationship.
H 7b. A consumer’s perceptions of a retailer’s business ethics will positively aﬁect her
consumer-retailer relationship.
Regarding the effect of business ethics, analysis results showed that consumers’

perceptions of retailers’ business ethics positively affect the consumer-employee

relationship (F1V10=.17, p<.01). (See Table 10.) However, the t-value showed that a

89

consumer’s perception of retail ethics had no effect on the consumer-retailer relationship

(F2V10=.01, n.s.). Thus, H7a was supported, but H7b was not supported.

The Effect of Relationship Length on Retail Relationships and the Outcomes

To test the third group of hypotheses, H8a to H12c, it was necessary to divide the
sample according to their stage of development in a relationship. Ideally, the sample
should have been divided into ﬁve groups of consumers, according to the awareness,
exploration, expansion, commitment and dissolution stages of a relationship, as discussed
in the previous chapter. (See Table 2, p. 54.) However, the sample size of the study did
not permit ﬁve gradations. Thus, the total sample was divided into two groups of
consumers - one group of longer and the other group of shorter relationship history with
the store.

The subjects of this study were asked “How long have you been shopping at the
selected store?” The respondents were asked to answer either in months or years. When a
respondent answered in years, it was transformed into months. The range of the
relationship length was from 3 months to 360 months, with a mean of 82.7 months. The
median was 72 months, and the mode was 12 months. Consumers who had a 72-month or
longer relationship with the store were grouped as long relation group (N=197), and
consumers with a 60-month or shorter relationship were grouped as short relation group
(N=204).

A two-group comparison SEM analysis was conducted. Previous studies
suggested that the group equivalence could be tested at several levels: 1) phi (correlation

among latent variables) constrained, 2) lamda (factor loadings) constrained, 3) phi, lamda

9O

constrained, and 4) phi, lamda, theta-delta constrained (Myers, Calantone, Page and
Talyor 2000). As the primary purpose of conducting two group analysis in this study is to
test the moderating effect of the length of the relationship on the retailer relationships and
the mediating role of consumer voluntary participation, only the relationships among the
latent variables were compared. Since the two groups are essentially a contingent model
composed by the respondents’ relationship length, the test of ﬁrst order factors is not
strictly required. Instead, the inequivalence in ﬁrst order factor loadings was tested at the
CFA stage (Calantone 2003). To accomplish this, conﬁrmatory factor analysis was
performed separately for each group, and measurement validity for each group was
examined. One item from the Trust in Employees factor, one item from the Commitment
to Store factor, and four items from the Consumer Voluntary Participation factor were
deleted due to signiﬁcant cross-loadings. The model ﬁt for the long-term relationship
group was acceptable with x2=241.95, df=80, p<.001, CFI=0.92, RMSEA=0.10. The
short-term relationship group also showed an acceptable model ﬁt of x2=252.18, df=80,
p<.001, CFI=0.91, RMSEA=0.10.

Then, a path model with latent variables was tested with cross-group constraints.
All eleven-path coefﬁcients were constrained so as to compare the two groups; two of
these constraints were for identiﬁcation purposes. Initially, the model was analyzed with
the nine constraints, and then these constraints were released one by one based on LM
test results. Three constraints were found to contribute to the inequality of the two-group
model, and two of three constraints were released. (See Table 11.) The last constraint of
V5F2 was for identiﬁcation purposes. The ﬁnal analysis showed the model ﬁt was

acceptable (x2=543-73. df=175, p<.001, CFI=0.90, RMSEA=0.07).

91

Each hypothesis test result is reported in the following section. Two-tail tests

were used for H10b, and for the rest of the hypotheses, one-tail tests were used.

Table 11. Chi-square Difference Tests

 

 

 

Model Equality Released 2:2 Difference (df=1)
(1, F5, F9) = (2, F5, F9) 20.98**
(1, F2, F8) = (2, F2, F8) 8.49**

"\(1, V5, F2) =(2, V5, F2) 636*
(1, F7, F6) =(2, F7, F6) 1.91
(1, F7, F8) =(2, F7, F8) 1.00
(1, F6, F9) =(2, F6, F9) 0.61

(1, v15, F5) =(2, V15, F5) 0.39
(1, F7, F9) =(2, F7, F9) 0.34
(1, F4, F9) = (2, F4, F9) 0.26
(1, F6, F8) =(2, F6, F8) 0.03
(1, F9, F8) =(2, F9, F8) 0.01

*p<.05 **p<.01

F1=Satisfaction with Employees; F2=Trust in Employees; F3=Satisfaction with Store;
F4=Trust in Store; F5=Commitment to Store; F6=Consumer Voluntary Participation; F7=Store
Loyalty; F8=Consumer-Employee Relationship; F9=Consumer~Retailer Relationship

92

Table 12. Results of Two Group Comparison: Long-Term Relationship Model

 

 

 

 

 

 

 

Measurement Model Structural Model
Parameters Estimates T-Values Parameters Estimates T-Values
V 1F 1 .68 a F1F8 .62 a
V2F1 .96 8.16 F2F8 .94 7.35
V3F1 .52 7.52 F3F9 .69 a
V4F2 .92 a F4F9 .79 6.78
V5F2 .94 25.74 F5F9 .59 5.51
V7F3 .48 a F6F8 -. 16 -.98
V8F3 .77 7.37 F6F9 .28 1.61
V9F3 .69 6.59 F7F6 .19 3.40
V10F4 .77 a F7F8 -.24 -1.50
V1 1F4 .85 9.94 F7F9 .60 3.70
V12F4 .93 12.47 F9F8 .82 7.05
V13F5 .77 a
V15F5 .68 5.60
V16F6 .92 a
V17F6 .88 13.36
V18F6 .63 9.55
V19F7 1.00 a
Error Variances Disturbance Variances
ElEl .69 7.645 DlDl .37 6.01
E2E2 .06 .744 D2D2 . 10 a
E3E3 .64 9.358 D3D3 .17 3.17
E4E4 .15 4.284 D4D4 .18 4.23
E5E5 .13 2.949 D5D5 .55 3.88
E7E7 1.08 9.165 D6D6 1.33 7.46
E8E8 .49 5.164 D7D7 1.37 8.19
E9E9 .56 6.661 D8D8 .050 a
E10E10 .33 7.856
E11E11 .89 8.813
E12E12 .15 2.991
E13E13 .60 3.986
E15E15 .97 5.667
E16E16 .23 2.796
E17El7 .31 4.486
E18E18 1.34 9.232
E19E19 0 a

 

 

 

 

 

 

F 1=Satisfaction with Employees; F2=Trust in Employees; F3=Satisfaction with Store;
F4=Trust in Store; F5=Commitment to Store; F6=Consumer Voluntary Participation; F7=Store
Loyalty; F8=Consumer-Employee Relationship; F9=Consumer-Retailer Relationship

93

 

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Table 13. Results of Two Group Comparison: Short-Term Relationship Model

 

 

 

 

 

 

 

 

 

 

 

Measurement Model Structural Model
Parameters Estimates T-Values Parameters Estimates T-
Values
V 1F1 .71 a F1F8 .94 a
V2F1 .78 8.99 F2F8 .84 9.13
V3F1 .70 8.57 F3F9 .69 a
V4F2 .92 a F4F9 .94 8.46
V5F2 .99 25.74 F5F9 .12 .80
V7F3 .72 a F6F8 -.20 -.98
V8F3 .86 11.77 F6F9 .31 1.61
V9F3 .85 1 1.46 F7F6 .18 3.40
V10F4 .86 a F7F8 -.29 -1.50
Vl 1F4 .53 7 .44 F7F9 .65 3.70
V 12F4 .80 12.38 F9F8 .90 7.05
V 13F5 .49 a
V 15F5 .28 5.60
V 16F6 .83 a
V17F6 .95 15.56
V18F6 .83 13.80
V19F7 1.00 a
Error Variances Disturbance Variances
ElEl .49 7.28 DlDl .06 1.59
E2E2 .37 6.23 D2D2 .31 4.43
E3E3 .69 7.83 D3D3 .28 4.92
E4E4 .20 5.13 D4D4 .09 1.65
E5E5 .03 .56 D5D5 .21 1.79
E7E7 .49 8.1 1 D6D6 1.69 6.74
E8E8 .28 5.62 D7D7 1.97 8.67
E9E9 .29 6.03 D8D8 .05 a
E10E10 .26 5.40
E1 1E1 1 .98 9.22
E12E12 .50 7.08
E13E13 .67 4.99
E15E15 2.48 8.87
E16E16 .78 7.44
E17El7 .24 2.49
E18E18 .87 7.57
E19E19 0 a

 

 

 

 

 

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F4=Trust in Store; F5=Commitment to Store; F6=Consumer Voluntary Participation;

F7=Store Loyalty; F8=Consumer—Employee Relationship; F9=Consumer~Retailer

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96

H8a. Trust in the employee will be more important for long-term rather than

short-term customers in their consumer-employee relationship.

H8b. Trust in the store will be more important for long-term rather than short-

term customers in their consumer-retailer relationship.

The results of a chi-square difference test indicated that the chi-square change was
signiﬁcant when the equality constraint for the Trust in Employees and Consumer-
Employee Relationship was released between the two groups (szz8.49, p<.01). (See
Table 11.) For both groups, factor loadings of F2F8 were positively signiﬁcant, but the
long-term group’s loading (F2F8=.94, p<.01, Table 12) was signiﬁcantly higher than that
of the short-term group (F2F8=.84, p<.01, Table 13). The chi-square difference test
indicated that the release of the Trust in Store and Consumer-Retailer Relationship
equality constraint (F4F9) did not signiﬁcantly improve the model ﬁt (sz=0.26, n.s.).
(See Table 11.) In other words, the association between Trust in Store and Consumer-
Retailer Relationship was not different in the long-term and short-term relationship
groups. Thus, H8a was supported, but H8b was not supported.

H9. Commitment to the store will be more important for long-term rather than

short-term customers in their consumer-retailer relationship.

The chi-square difference test showed the release of equality constraint of
Commitment to Store and Consumer-Retailer Relationship (F5F9) signiﬁcantly improves
the model ﬁt (Table 11). Factor loading of F5F9 was signiﬁcant in the long-term group,
but not in the short-term group, and the long-term relationship group’s loading (F5F9=.59,

p<.01, Table 12) was signiﬁcantly higher than that of the short-term group (F5F9=. 12,

n.s., Table 12; Ax2=20.98, p<.01). (See Table 11.) Thus, H9 was supported.

97

H10a.For long-term customers, the consumer-retailer relationship will positively
affect their consumer voluntary participation.

H1 0b.F or short-term customers, the consumer-retailer relationship will not aﬁect
their consumer voluntary participation.

HIOc.For long-term customers, consumer voluntary participation will positively
aﬁect their store loyalty.

The results of the two- group comparison model showed that for both long- and

short-term groups the Consumer-Retailer Relationship does not signiﬁcantly affect

Consumer Voluntary Participation (long-term group, F6F9=.28, n.s., Table 12 & Figure

9; short-term group, F6F9=.31, n.s., Table 13 & Figure 10). In the long-term group,

Consumer Voluntary Participation signiﬁcantly affected Store Loyalty (F7F6=.19, p<.01).

Thus, H10a was not supported, but H10b and H10c were supported.

H I I a. F or both long- and short-term customers, the consumer-employee
relationship will have a positive eﬂect on their store loyalty.

HI Ib.F or both long- and short-term customers, the consumer-retailer
relationship will have a positive effect on their store loyalty.

H1 1c. For both long- and short-term customers, the consumer-retailer

relationship will have a stronger eﬁect on their store loyalty than will the
consumer-employee relationship.

The results of the two- group model showed that for both the long- and short-term

groups, the consumer-employee relationship does not affect store loyalty (long-term

group F7F8=-.24, p<.01, Table 12 & Figure 9; short-term group F7F8=-.29, p<.01, Table

13 & Figure 10). The consumer-retailer relationship, however, signiﬁcantly affects

consumers’ store loyalty (long-term group F7F9=.60, p<.01, Table 12 & Figure 9; short-

98

term group, F7F9=.65, p<.01). (See Table 13 & Figure 10.) Therefore, H1 1a was not

supported, but H1 1b and H1 1c were supported.

DISCUSSION

The results of this research study indicated that the proposed conceptual model is
useful in explaining the multiple levels of consumer relationships with Korean
department stores, the antecedents of these relationships, and the different structures of
these relationships based upon the stage of the relationship (short-term versus long-term).
The results indicated that the consumer-employee relationship is important for Korean
consumers, and this consumer-employee relationship mediates consumers’ quality
perceptions of various retail attributes and the consumer-retailer relationship. The
consumer-retailer relationship was found to determine the store loyalty of Korean
consumers. Thus, this study found that Korean consumers’ department store loyalty is
determined by the following causal relationship: consumers’ quality perceptions of
retailer attributes 9 consumer-employee relationship 9 consumer-retailer relationship
9 store loyalty. Three groups of hypotheses were tested using CFA, second—order factor
analysis, path analysis, and two-group comparison path analysis. In the next section, the

results of the hypothesis testing are discussed and interpreted.

Two Levels of the Relationship
The results of the second-order factor analysis conﬁrmed 1) two levels of the

retail relationship: consumer-employee relationship and consumer-retailer relationship, 2)

99

a two-dimensional structure of the consumer-employee relationship (satisfaction with
employees and trust in employees) and a three-dimensional structure of consumer-retailer
relationship (satisfaction with store, trust in store, commitment to store) and 3) the causal
effect of consumer-employee relationships on consumer-retailer relationships. The
ﬁnding that two levels of the retail relationship exist is consistent with the previous
studies of Wulf et al. (2001) and Garbarino and Johnson (1999).

However, it was noted that the ﬁrst-order factors reflected differing strengths of
association with the respective second-order factors, even though all of the parameter
coefﬁcients estimated in the model between ﬁrst-order and second-order factors were
statistically signiﬁcant. Especially for the consumer-retailer relationship, commitment to
the store showed the lowest standardized coefﬁcient estimate (F5F7=.39, See Figure 7)
among the three ﬁrst-order factors (satisfaction with store F3F7=.59; trust in store
F4F7=.83). This ﬁnding indicated that satisfaction and trust with the retailer were more
important in the consumer-retailer relationship than was commitment to the department
store in general.

As the previous studies reported, commitment is observed in the most advanced
relationship (Dwyer et al. 1987; Morgan and Hunt 1984). The committed relationship
often implies some degree of sacriﬁce and effort of engaging parties to continue the
relationship (W etzels et al. 1998). In the focus group interview, some participants
expressed their reluctance to go “the extra mile” to shop at their favorite store, even when

they are satisﬁed with and trust the store.

100

Antecedents and Retail Relationship

This study proposed a conceptual model of ﬁve retail attributes as antecedents to
two levels of consumer relationship (consumer-employee and consumer-retailer) on the
basis of perceived responsibility and control of each attribute. Based upon the literature,
an underlying assumption of this study was that Korean consumers likely believed that
merchandise, retail operations, and retail facilities were controlled by a retailer’s policies,
while individual employees had more control over the services they performed for
customers. We presumed that business ethics were controlled by both department stores
and their employees.

The empirical results of this study demonstrated somewhat weak support for these
conceptual propositions. The most surprising ﬁnding was the negative effect of
merchandise quality on the consumer-employee relationship. Merchandise quality was
expected to have an affect only on the consumer-retailer relationship and not on the
consumer-employee relationship because merchandise was more likely to be determined
by institutional decision-making, not by an individual employee’s performance. One
possible explanation is a measurement problem, which may be reﬂected in the low
reliability of the merchandise quality factor (u=.54).

More importantly, the researcher believes that the negative relationship
between merchandise quality and the consumer-employee relationship could be explained
by a unique aspect of the Korean department store system. Department stores in Korea
are similar to those in Japan; they are upscale and carry many prestigious brands. Korean
department stores’ dependence on these brands is signiﬁcant due to the intensifying

competition with large discount stores. It is common that the salespersons in these luxury

101

brand departments are hired and paid by importers or manufacturers, not by the store.
Strategically, importers recruit sales employees who are young and attractive to perform
as “walking manikins” to attract their target consumers. These sales employees, dressed
up with the luxurious clothes and accessories displayed at the store, often cause customer
complaints about their arrogant attitudes and poor service. In the focus group interview
that was conducted prior to the empilical study, Korean consumers expressed their
frequent dissatisfaction with department store employees. They further indicated that this
dissatisfaction was stronger for upscale department stores and luxury fashion
departments in the department stores. Thus, even though luxury brands are usually
perceived as high quality products, it is possible that consumers’ negative views about the
service and attitudes of the salespeople overshadow their views of merchandise quality.
The retail operations of Korean department had a positive effect on both

consumer-employee and consumer-retailer relationships. Store operations were
measured by seven items developed by Sirohi et al. (1998) and Dabholkar et al. (1996).
Through CFA, three items were excluded in the ﬁnal analysis due to cross-loadings with
other factors. The remaining four items included three items related to employee stafﬁng
and managerial capability. Therefore, this ﬁnding was reasonable given the items that
measured this factor.

Four of the ﬁve retail attributes (employee service, retail operations, retail
facilities, and business ethics) showed positive effects on the consumer-employee
relationship, while only merchandise quality and retail operations positively affected the

consumer—retailer relationship. This ﬁnding supported the notion that the two levels of

102

the relationship were distinctly different from each other and that each had a different
role in explaining the overall retail perceptions of Korean consumers.

The results indicated that it was the consumer-employee relationship that was
directly affected by various retail attributes, however, this consumer-employee
relationship ultimately affected the consumer-retailer relationship. Through the ﬁve retail
attribute factors (merchandise, employee service, retail operations, retail facilities, and
business ethics), the consumer-employee relationship explained about 74 percent of the
total variance, while the consumer-retailer relationship explained only about 6 percent.
However, due to the strong association between the consumer-employee and consumer-
retailer relationships, the indirect effect of the ﬁve antecedents explained about 23

percent of the consumer-retailer relationship.

Relationship Length and Retail Relationship

A two— group SEM comparison found that the length of time a consumer shopped
at a department store (short-term versus long-term) positively inﬂuenced his/her
perception of the store and its employees. Speciﬁcally, trust in employees was more
important in the consumer—employee relationship for consumers with a longer
relationship with the department store, and store commitment was more important for
long-term consumers in the consumer-retailer relationship. This ﬁnding indicates that
although Korean consumers’ commitment to a store is a weak component of the
relationship when compared to satisfaction and trust generally, consumers with a longer
relationship feel more committed to the store than do consumers with a shorter

relationship.

103

These ﬁndings conﬁrmed the theories of relationship development that
emphasized the increasing roles of commitment and trust as a relationship between two
parties develops (Czeipiel 1990, Dwyer et al. 1987). As discussed in the previous chapter,
commitment is the most advanced state of a buyer-seller (consumer-retailer) relationship.
When a consumer shows a commitment to a retailer, the business might expect that the
relationship will last for a long time with signiﬁcant economic and communication input
from the consumer. Thus, increasing consumer commitment to the store as well as
earning consumer trust in the store should be the goals of department stores as they build
relationships with their consumers. As previously discussed, trust was found to be the
most important component of both consumer-employee and consumer-retailer

relationships for long-term customers.

Retail Relationship and Its Consequences

This study did not support the mediating role of consumer voluntary participation
between either the consumer-employee or the consumer-retailer relationships and store
loyalty. For both long- and short-term customers, the consumer-retailer relationship
marginally affected consumer voluntary participation (p=.055), and the consumer
employee relationship did not affect it at all. For both groups, consumer voluntary
participation signiﬁcantly affected a consumer’s store loyalty.

Consumer voluntary participation is a relatively new concept, which has been
introduced to the retail literature. Thus, there is little empirical work to guide us in
understanding this construct in consumer behavior. A possible explanation of this ﬁnding

is that Korean consumers are less involved with retail stores than their western

104

counterparts. For example, previous studies suggested that Asian consumers are less
likely to complain to retailers regarding their dissatisfaction with products. Thus, Korean
consumers may not feel that retailers have a great deal of interest in their perceptions or
satisfaction.

It should be noted that only the consumer-retailer relationship had a positive effect
on consumers’ store loyalty, while the consumer-employee relationship had no effect on
store loyalty. This ﬁnding isn’t surprising in view of the inattention Korean retailers have
given to developing relationships between their employees and their customers.
Recruiting and training sales employees are often the responsibility of suppliers or
manufacturers’ not of department stores. Thus, the primary interest of sales employees in
each department is to sell their own products, and these employees do not necessarily try
to represent the department store or to promote the interests of the entire store. While it
appears that an institutional level relationship between the retailer and its customers is
more important in affecting customer store loyalty, Korean retailers should not overlook
the fact that individual level consumer-employee relationships have an indirect effect on

store loyalty through the consumer-retailer relationship.

105

CHAPTER VI

SUMMARY AND CONCLUSIONS

The purpose of this chapter is to summarize the study that was discussed in
Chapter I through Chapter V and report implications from the research ﬁndings. The
objectives of the study, relevant literature review, development of the conceptual
framework, research design and methods, and empirical study ﬁndings are summarized in
the following section. Managerial implications of the present study are then discussed.
Finally, discussion of the study limitations and recommendations for future studies

conclude this chapter.

SUMMARY OF INTRODUCTION AND RESEARCH OBJECTIVES

Relationship marketing literature emphasizes that a stable relationship between
consumers and marketers is beneﬁcial for both parties. This perspective has been adopted
in service literature, and many service marketing researchers have investigated the effects
of consumer-service provider relationships on business performance.

The present study has ﬁve unique contributions to the existing literature in the
service marketing area. First, this study proposed two levels of relationship quality
between consumers and Korean department stores (consumer-employee relationship and
consumer-retailer relationship). Previous studies have focused on the relationship

between consumers and sales employees in retail relationships. In addition to individual

106

relationships between consumers and employees, this study suggested that consumers’
relationships with retailers could be a more important measure of the quality of the
relationship.

Second, the proposed model simultaneously examined the effect of Korean
department stores’ service, products, and facilities on customers’ perceived relationship
with the store and its employees. There have been a limited number of studies that have
incorporated these three critical aspects in the same model.

Third, this study proposed that consumers’ perceptions of Korean department
stores’ business ethics affects their relationship with retailers. Previous causal marketing
studies found that businesses who are perceived to practice ethical marketing are viewed
positively by their consumers. In the present study, the effects of business ethics on
consumers’ positive behaviors were hypothesized to be affected by the quality of the
consumer-retailer relationship, but not by the quality of the consumer-employee
relationship.

Fourth, the study investigated the different roles of satisfaction, trust, and
commitment based upon a consumer’s length of relationship with the department store.
Speciﬁcally, by comparing short-term customers to those in a more developed
relationship with a retailer, this study was able to identify the critical elements of the
relationship that lead to store loyalty.

Finally, this study incorporated a newly emerging concept in retail literature, that
of the role of consumer voluntary participation, relative to the length of the relationship
with the department store. Speciﬁcally, the study examined whether a consumer’s

voluntary participation mediates the relationship between a store and store loyalty.

107

In the present study, the researcher proposed a conceptual framework and
associated model to explain Korean consumers’ relationships with and shopping
behaviors in department stores. Speciﬁcally, this study aimed: 1) to propose and test the
multiple levels and dimensions of a consumer’s relationship with a retailer, 2) to
determine the effect of antecedent variables on the retail relationships, 3) to determine the
effect of the retail relationships on consumer store loyalty, 4) to determine the effect of
the length of the relationship on the dimensions of the retail relationships, and 5) to
determine the effect of the relationship on the mediating role of consumer voluntary

participation between the retail relationship and consumer store loyalty.

SUNIMARY OF LITERATURE REVIEW

In Chapter II, the literature relevant to the present study was reviewed. First,
studies of buyer-seller relationships in the service literature were studied. The conceptual
meaning of relationship quality was investigated by reviewing various studies reporting
the positive inﬂuence of long-term relationships on service businesses and the various
motivations of parties who engage in a relationship. Based on this conceptual
development, previous empirical studies in various service settings (insurance, education,
ﬁnance, retailing, and other services) were reviewed. Service was identiﬁed as the most
critical antecedent affecting consumers’ perceptions of quality relationships in the
empirical studies that investigated customer-provider relationships. In addition, service

relationships are expected to produce positive outcomes such as sales increases,

108

anticipation of future interaction, word of mouth effect, and intention to repurchase and
stay in the relationship, among others.

Following this discussion, the literature review concentrated on the relationship
quality construct itself. The major dimensions of a relationship (satisfaction, trust, and
commitment) were deﬁned, conceptually related to other constructs, and discussed
relative to other studies. The next section of the literature review was devoted to
relationship development stage theories. Several views of relationship development were
reviewed, and a ﬁve-stage framework of relationship development proposed by Dwyer,
Schurr, and Oh (1987) was described in detail.

In the general literature review, a customer’s perception of service quality has
been identiﬁed as the most important antecedent to the relationship. Studies on service
quality components such as that of employees, store operations, and the service facility
were reviewed to provide an understanding of their conceptual domains and their impact
on the relationship. In addition, merchandise quality and business ethics were discussed
as antecedents to relationships and the relevant studies also were reviewed.

In the ﬁnal section of Chapter II, studies investigating outcomes of relationships
were reviewed. The concept of consumer voluntary behavior was introduced and

discussed.

SUMMARY OF CONCEPTUAL FRANIEWORK

Chapter HI was devoted to the pr0position of a conceptual model, which was

developed on the basis of the previous literature ﬁndings. The conceptual model

109

summarizes the relationships between the quality of a retail relationship and its
antecedents, such as merchandise, employee service, retail Operations, retail facility and
business ethics, and the resulting outcomes.

The proposed conceptual framework draws from two theoretical perspectives.
First, the proposed framework assumes that a consumer might build a dual-level
relationship (consumer-employee, consumer-retailer) with a retail business. The model
proposed a three-dimensional consumer-retailer relationship, composed of satisfaction,
trust, and commitment, and a two-dimensional consumer-employee relationship
composed of satisfaction and trust. In addition, it was hypothesized that the consumer-
employee relationship positively inﬂuences the consumer-retailer relationship. For these
two levels of relationships, ﬁve antecedent retail attributes were expected to have a
differential impact on a consumer’s perception of the relationship, which was predicated
on decision making control.

The conceptual framework also adopted a theory of relationship development.
That is, according to the stage of development of a consumer-retailer relationship, the

relationship was expected to have a different structure.

SUMNIARY OF RESEARCH METHODS

There were two phases to the present study: the qualitative phase and quantitative
phase. In the qualitative phase, a focus group interview was conducted with 10 Koreans
living in the U.S. Through the focus group interview, the concept of relationship quality,

satisfaction, trust, commitment, participation, and important store attributes affecting

110

store patronage were discussed. Information gathered from the focus group interview was
incorporated with the literature study to develop the conceptual model and, ultimately,
the survey instrument for the empirical study.

The population of the study was Korean female consumers who reside in greater
Seoul, Korea. To select survey sites, greater Seoul was divided into six areas based on
geographic factors and average rent cost to include a broad spectrum of demographic and
socioeconomic groups in the study. For the six identiﬁed areas, apartment complexes
ranging from twenty to one thousand units were chosen as survey sites. Residents of
every third apartment unit were approached and asked to participate in the study.

Based on the number of outlet branches, revenue, and the focus group discussion,
ﬁve department stores were selected. To assure that the subjects in the six areas have the
same exposure to the selected stores, the store locations of each retailer were identiﬁed.
The subject was instructed to select only one store upon which to respond to the survey.

All of the measures used in'the study were developed and tested in previous
studies. The instrument was developed in English, and then translated into the Korean
language. To ensure translation validity, back-translation was conducted. The quality of
merchandise, employee service, retailer operations, retail facility, business ethics,
satisfaction, trust, commitment, and customer voluntary participation were measured with
multiple items on 7-point scales.

Six research assistants were selected from a major Korean university to collect
data. The assistants collected data over a four-week period during July and August 2003.
Of the 600 questionnaires that were distributed, 408 completed and usable questionnaires

were returned, yielding a response rate of 68 percent.

111

SUNIMARY OF EMPIRICAL RESULTS

Conﬁrmatory factor analysis was conducted for all multi-item constructs used in
the model. Based on LM tests, cross-loaded items were deleted. The resulting model ﬁt
was acceptable (x2=1452.91, df=454, p<.001, CFI=0.86, RMSEA=0.074). To test
hypotheses, three analyses were conducted: second-order factor analysis, path analysis,
and two-group comparison path analysis.

First, to test hypothesis la, 1b, lc, and 2, a latent SEM analysis using Maximum
Likelihood estimation was conducted. This analysis was designed to test the second-order
factor model of relationship quality and the causal relationship between the two second-
order factors (Consumer-Employee Relationship and Consumer-Retailer Relationship).
The results indicated that the proposed model had an acceptable ﬁt to the data (x2=216.79,
df=70, p<.001; CFI=.96; RMSEA=.07). There were no cross-loadings between the two
second-order constructs and all item loadings for each factor were signiﬁcant. Hypothesis
1a, lb, lc, and 2 were all supported as summarized in Table 14.

The phi matrix of the conﬁrmatory factor analysis was used as an input for path
analysis to test hypotheses 3a, 3b, 4a, 4b, 5a, 5b, 6a, 6b, 7a, and 7b. As proposed in the
previous analysis, relationship quality was speciﬁed to be two separate second-order
factor models, and ﬁve antecedent variables were speciﬁed to have causal effects on the
two second-order factors (consumer-employee and consumer-retailer relationships). The
ﬁnal model showed a satisfactory ﬁt to the data (x2=120.94, df=19, p<.001, CFI=0.96,
RMSEA=0.10, See Table 9 and Figure 7). The largest standardized residuals ranged

from .0.016 to 0.144.

112

T-values for path coefﬁcients showed mixed results for hypotheses testing. The
analysis found that consumer-employee relationship quality is signiﬁcantly affected by
the quality of the merchandise, employee service, retailer operations, retail facility, and
business ethics. On the other hand, the consumer-retailer relationship was found to be
affected only by the quality of merchandise and retail operations. The results of
hypothesis testing are summarized in Table 14.

To test the third group of hypotheses H8a to H1 lc, it was necessary to divide the
sample according to the development of the relationship with the Korean department
store. The consumer sample was divided into two groups — a long-term relationship group
with a 72+ month shopping experience with a retailer (N=197) and a short-term group
with less than 72 months shopping experience (N =204).

A two-group comparison SEM analysis was conducted. First, conﬁrmatory factor
analysis was performed for each group separately, and measurement validity for each
group was examined. One item from trust in employees, one item from commitment to
store, and four items from voluntary participation were deleted due to signiﬁcant cross-
loadings. The model ﬁt for the long-term relationship group was acceptable with
12241.95, df=80, p<.001, CFI=0.92, RMSEA=0.10. The short-term relationship
consumer group also showed an acceptable model ﬁt of x2=252.18, df=80, p<.001,
CFI=0.91, RMSEA=0.10).

Then, a path model with latent variables was tested with cross-group constraints.
All eleven-path coefﬁcients were constrained so as to compare the two groups. Initially,
the model was analyzed with these eleven constraints, and then these constraints were

released one by one based on LM tests. Three constraints were found to contribute to the

113

inequality of the two-group model, and two of three constraints were released (Table 11).
The last constraint of V5F2 was for identiﬁcation purpose. The ﬁnal analysis showed the
model ﬁt was acceptable (x2=543.73, df=175, p<.001, CFI=0.90, RMSEA=0.07).

The analysis indicated that trust in the employee becomes more important for the
long-term customers in the consumer-employee relationship, and store commitment is
more important for long-term consumers in the consumer-retailer relationship. The
mediating role of consumer voluntary participation between relationship quality and store
loyalty was not found. Despite the length of the relationship, the consumer-retailer
relationship marginally affected consumer voluntary participation (p<.10). Finally, only
the consumer-retailer relationship had a positive effect on a consumer’s store loyalty
regardless of the length of the relationship and a marginal effect on voluntary

participation, while consumer-employee relationship had no effect on either variable.

MANAGERIAL IMPLICATIONS

This study found that, regardless of the duration of the relationship between a
Korean consumer and a department store, it is the consumer-retailer relationship that
ultimately affects a consumer’s store loyalty. The consumer-employee relationship only
affects store loyalty indirectly through the consumer-retailer relationship, even though the
causal association between these two factors was very strong and almost 32% of the total
variance of the consumer-retailer relationship was explained by the consumer-employee
relationship. This ﬁnding implies that the two levels of retail relationship are distinct

from each other and have different roles in the causal chain of store loyalty among

114

Korean consumers. Thus, the Korean department store retailers should develop a dual
approach in their relationship building programs. In other words, the customer
relationship should be planned at two levels: relationship with the retail company and
relationship with its employees.

Despite the ﬁndings of this empirical study, Korean department stores have not
understood the critical role of the consumer-employee relationship. Retailers should
launch employee training programs that educate sales employees to have a friendly
attitude and deliver better service to customers. Speciﬁc consumer-employee behaviors
should be modeled in the training programs to be clear about the behavioral expectations
of employees. Also, training programs should be designed to encourage employees to
have a stronger belongingness and loyalty to the department store.

Employee training is a challenge for Korean department stores because suppliers
or manufacturers typically take charge of sales stafﬁng for their brands in the department
stores. This practice has caused a disconnection between the loyalty of the sales
employee and the store, which has resulted in poor service and attitudes among sales
employees.

To improve the consumer-retailer relationship, Korean department stores should
focus upon merchandise quality and retail operations, as these were found to be two
important determinants of the consumer-retailer relationship. Therefore, a retailer should
develop customer-friendly policies regarding operational issues such as parking, stafﬁng,
and employee education to increase customer’s satisfaction with the store. Enhanced
store operations is likely to also have a positive effect on the consumer-employee

relationship, as was determined in the study.

115

This study found that the longer a Korean consumer has shopped at a department
store, the more likely he/she will be to trust and be committed to the retailer. Thus,
Korean department stores should realize the value of their existing customers who have
shopped at the store for a long time. Their marketing programs should be designed to

reward long-term customers of the store.

LINIITATIONS AND RECOMNIENDATIONS FOR FUTURE STUDIES

The present study selected Korean department stores to investigate Korean
consumers’ relationships with these stores and their employees. Compared to other retail
formats, department stores emphasize the service quality they deliver to their customers.
Thus, customers’ perceptions of their relationship with retail employees as well as the
retailer are critical matters in the department store business. This study empirically
showed that a consumer’s relationship with store employees signiﬁcantly affects their
relationship with a department store.

It is not clear, however, that Korean customers’ relationships with employees are
equally important for other types of retailers, such as large discount stores or convenience
stores. It would be interesting to examine whether the importance of the consumer-
employee relationship changes regarding the consumer-retailer relationship when the
retailer’s emphasis is more on low price and better value. Thus, it is necessary to test the
proposed model in other retail settings in the future.

The empirical research design of this study allowed subjects to choose the

department store to which they referred when answering the questions. This method has

116

an advantage of higher external validity and generalizability of the ﬁndings, but at the
same time, the data analysis could suffer from higher error variances caused by different
store choices. Thus, it would be interesting to conduct another study and sample the
customers of a single retail ﬁrm to examine their relationships. The results of that study
could be compared to those of the present study.

The results of the study did not support the mediating role of consumer voluntary
participation between relationship quality and store loyalty for long-term retail consumers.
This study suggests that consumer voluntary participation is a desirable behavior from the
perspective of retailers, because the construct has high predictability of consumer store
loyalty. Consumer voluntary participation is a relatively new concept in the retail
literature, therefore, further investigation of its role in consumer shopping behaviors is
warranted. Also, possible antecedents and moderating variables related to voluntary
behavior should also be investigated in future studies.

This study was conducted in Korean, a collectivist country. Results from this
study could be compared to those of other collectivist countries and also to individualistic
countries to see if the results hold in countries with different cultural characteristics. Also
it will worth to test the model with a sample of different demographic proﬁles to examine

the generalizability of the model.

117

Table 14. Summary of Hypotheses Testing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hypotheses Results

A Second Order Factor Analysis

Hla. A consumer’s relationship with a retailer has two separate, Supported
distinct levels: consumer-employee and consumer-retailer.

H1 b: The consumer-employee relationship has two dimensions: Supported
satisfaction with and trust in store employees.

H1 c: The consumer-retailer relationship has three dimensions: Supported
satisfaction with, trust in, and commitment to the store.

H2: A consumer’s relationship with retail employees will have a Supported
positive effect on her relationship with the retailer.

A Path Analysis

H3a. A consumer’s perception of the quality of merchandise will have Not supported
no eﬂect on her consumer-employee relationship.

H3b. A consumer ’s perception of the quality of merchandise will Supported
positively affect her consumer-retailer relationship.

H4a. A consumer’s perception of the quality of employee service will Supported
positively aﬂect her consumer-employee relationship.

H4b. A consumer’s perception of the quality of employee service will Supported
have no eﬂect on her consumer-retailer relationshlbL

H5a. A consumer’s perception of the quality of retail operations will Not supported
have no effect on her consumer-employee relationship.

H5b. A consumer’s perception of the quality of retail operations will Supported
positively affect her consumer-retailer relationship.

H6a. A consumer’s perception of the quality of the retail facility will Not supported
have no effect on her consumer-employee relationship.

H6b. A consumer ’s perception of the quality of the retail facility will Not supported
positively aﬁ‘ect her consumer-retailer relationship.

H 7a. A consumer’s perception of a retailer’s business ethics will Supported
positively affect her consumer-employee relationship.

H 7b. A consumer 's perceptions of a retailer’s business ethics will Not supported
positively aﬁect her consumer-retailer relationship.

A Two Group Comparison Analysis

H8a. Trust in the employee will be more important for long-term rather Supported
than short-term customers in their consumer-employee
relationship.

H8b. Trust in the store will be more important for long-term rather Not supported
than short-term customers in their consumer-retailer relationship.

H9. Commitment to the store will be more important for long-term Supported
rather than short-term customers in their consumer-retailer
relationship.

H1 0a.F or long-term customers, the consumer-retailer relationship will Not supported
positively affect their consumer voluntary participation.

H10b.For short-term customers, the consumer-retailer relationship will Supported

 

 

118

 

 

not aﬂect their consumer voluntary participation.

 

 

 

 

 

HI 0c.F or long-term customers, consumer voluntary participation will Supported
positively aﬁ’ect their store loyalty.

H1 1a. F or both long- and short-term customers, the consumer- Not supported
employee relationship will have a positive eﬁect on their store
loyalty.

H1 1b. F or both long- and short-term customers, the consumer-retailer Supported
relationship will have a positive effect on their store loyalty.

H1 1 c. F or both long- and short—term customers, the consumer-retailer Supported

relationship will have a stronger effect on their store loyalty than
will the consumer-employee relationship.

 

 

119

 

APPENDIX A

SURVEY INSTRUMENT

120

The Efﬁcacy of Consumer-Employee and Consumer-Retailer Relationships
in Predicting Store Loyalty Among Korean Consumers

Section I.

In this survey, we are interested in your experiences when shopping in department stores in Korea.
From the following list, please choose a store. If you have NO shopping experience with any of the
listed stores, please identify a department store with which you are familiar on the line next to “other”.
When responding to the questions from Section II to Section V in this questionnaire, we would like

you to think about this store.

 

 

Lotte Shinsegae
Galleria Hyundai
New Core Other

 

 

 

1. Of the stores listed, indicate which one you will focus on in the survey?

2. During the last 3 months, how often have you visited this store?

3. During the last 3 months, how often have you shopped at this store?

4. How long have you been shopping at this store? Months g Years

Section 11.

Please indicate your level of agreement or disagreement with each of the following statements as you
think about the store you identiﬁed in Section I.

Disagree Disagree Disagree Neither Agree Agree Agree
Extremely Quite Somewhat Agree nor Somewhat Quite Extremely
Disagree

’r This store has excellent products. 1 2 3 4 5 6 7

'r This store has an excellent variety of l 2 3 4 5 6 7
products.

‘r The products at this store are among the best. 1 2 3 4 5 6 7

‘r I can depend on receiving prompt service 1 2 3 4 5 6 7
from its employees.

‘r Its employees offer the personal attention I 1 2 3 4 5 6 7
need from them.

‘r Its employees are never too busy to respond 1 2 3 4 5 6 7
to my requests.

‘r The behavior of its employees instills l 2 3 4 5 6 7
conﬁdence in me.

i I feel safe conducting business with the l 2 3 4 5 6 7
employees at this store.

‘r Its employees are courteous. l 2 3 4 5 6 7

‘r The employees at this store are able to 1 2 3 4 5 6 7
answer my questions.

‘r I receive enough individual attention from its 1 2 3 4 5 6 7
employees.

'r The employees at this store have my best 1 2 3 4 5 6 7
interests at heart.

'r The employees at this store understand my 1 2 3 4 5 6 7
speciﬁc needs.

’r This store provides plenty of convenient 1 2 3 4 5 6 7
parking for customers.

'r This store has operating hours convenient to l 2 3 4 5 6 7

all of their customers.

121

Disagree Disagree Disagree Neither Agree Agree Agree

Extremely Quite Somewhat Agree nor Somewhat Quite Extremely
Disagree

This store accepts most major credit cards. 1 2 3 4 5 6 7

This store has enough employees to meet 1 2 3 4 5 6 7
customer needs.

This store provides adequate training of l 2 3 4 5 6 7
employees.

This store has a manager to be able to resolve l 2 3 4 5 6 7
questions and problems.

This store has a customer-friendly return- 1 2 3 4 5 6 7
exchange policy.

This store has modern-looking equipment 1 2 3 4 5 6 7
and ﬁxtures.

The physical facilities at this store are l 2 3 4 5 6 7
visually appealing.

Materials associated with this store’s service 1 2 3 4 5 6 7

(such as shopping bags, catalogs or
statements) are visually attractive.
This store has clean, attractive, and 1 2 3 4 5 6 7
convenient public areas (restrooms,
ﬁtting rooms).

The layout at this store makes it easy for 1 2 3 4 5 6 7
customers to ﬁnd what they need.

The layout makes it easy for customers to l 2 3 4 5 6 7
move around the store.

This store gives preferential treatment to l 2 3 4 5 6 7
certain customers.

The employees at this store ignore a l 2 3 4 5 6 7

prospective customer for one he
believes will be better.

The employees at this store do not assist l 2 3 4 5 6 7
those less likely to buy.

The employees at this store are likely to buy 1 2 3 4 5 6 7
merchandise before it is available to
customers.

This store takes a return from customers 1 2 3 4 5 6 7
when the items should not be accepted.

This store makes excuses about the products 1 2 3 4 5 6 7
when they are either not in the store or
already sold out.

The employees at this store pressure a l 2 3 4 5 6 7
customer into a purchase.

This store sells a more expensive product 1 2 3 4 5 6 7

when a less expensive one would be
best for customers.

This store makes excuses when merchandise 1 2 3 4 5 6 7
is not ready.
This store withholds information of an 1 2 3 4 5 6 7

upcoming sale that will include the item
the customer is buying.

This store hoards free samples meant for l 2 3 4 5 6 7
customers.

122

Please indicate your level of agreement or disagreement with each of the following statements as you
think about the store you identiﬁed in Section I.

Disagree Disagree Disagree Neither Agree Agree Agree
Extremely Quite Somewhat Agree nor Somewhat Quite Extremely
Disagree
r As a regular customer, .I have a high 1 2 3 4 5 6 7
quality relationship With this store.
'r I am happy with the efforts this store is
making towards regular customers 1 2 3 4 5 6 7
like me.
r I am satisﬁed With the relationship I l 2 3 4 5 6 7
have With this store.
> This store gives me a feeling of trust. 1 2 3 4 5 6 7
‘r I have trust in this store. 1 2 3 4 5 6 7
r This store gives me a trustworthy l 2 3 4 5 6 .7
impreSSlon.
r I am Willing ‘to go the extra mile to l 2 3 4 5 6 7
remain a customer of this store.
‘r I feel loyal towards this store. 1 2 3 4 5 6 7
‘r Even if this store would be more
difﬁcult to reach, I would still keep 1 2 3 4 5 6 7
buying there.
‘r Most people who are important to me
would think I should shop at this 1 2 3 4 5 6 7
store.
‘r Most people who are important to me
would think that it is good for me 1 2 3 4 5 6 7

to shop at this store.

Section III-B.
Please indicate your level of agreement or disagreement with each of the following statements as you
think about the employees of the store you identiﬁed in Section I.

Disagree Disagree Disagree Neither Agree Agree Agree
Extremely Quite Somewhat Agree nor Somewhat Quite Extremely
Disagree
‘r I am very satisﬁed with its employees. 1 2 3 4 5 6 7
‘r I am very pleased by the employees at this 1 2 3 4 5 6 7
store.
‘r I have a favorable relationship with the l 2 3 4 5 6 7
employees at this store.
‘r The employees at this store give me a 1 2 3 4 5 6 7
feeling of trust.
‘r I have trust in the employees at this store. 1 2 3 4 5 6 7
‘r The employees at this store give me a 1 2 3 4 5 6 7

trustworthy impression.

123

Section IV
Please indicate your level of agreement or disagreement with each of the following statements as you
think about the store you identiﬁed in Section I.

Y

I say positive things about this store to
others.

I encourage friends and relatives to shop at
this store.

I make an effort to use this store for all of
my department store needs.

I try to help keep this store clean (e.g., not
leaving plastic bags on product
displays, leaving shelf displays neat).

The employees at this store get my full
cooperation.

I carefully observe the rules and policies of
this store.

I go out of my way to treat this store’s
personnel with kindness and respect.

I let this store know of ways that they can
better serve my needs.

I make constructive suggestions to this
store on how to improve its service.

If I have a useful idea on how to improve
service, I get it to someone at this
store.

When I experience a problem at this store,
I let somebody know so they can
improve the service.

If I notice a problem, I inform an
employee of this store even if it does
not affect me.

If an employee at this store gives me good
service, I let him/her knows it.

If a price is incorrect to my advantage, I
still advise someone at this store.

Section V.
Please answer for the following questions.

I.

2.

Disagree
Extremely

Disagree
Quite

Disagree
Somewhat

Neither

Agree
nor
Disagree

4

4

4

Agree
Somewhat

Agree Agree
Quite Extremely

6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7
6 7

Of the total amount you spent in department stores, what percentage do you spend in this

department store?

%

 

Of the last 10 times you showed at a department store, how many times did you shop at this

store?

 

How often do you buy in this department store compared to other department stores? Please

check at the appropriate response.
DEvery time
CIAlmost every time
[Sometimes
[Not very often
EINever

124

Section VI -A
Please indicate the degree to which each statement describes your general attitudes toward shopping
related activities regardless of the store.

Disagree Disagree Disagree Neither Agree Agree Agree
Extremely Quite Somewhat Agree nor Somewhat Quite Extremely
Disagree
'r I have favorite brands I buy over and l 2 3 4 5 6 7
over.
> Once I ﬁnd a product or brand I like I l 2 3 4 5 6 7
stick with it.
'r I go to the same stores each time I shop. 1 2 3 4 5 6 7
i I change brands I buy regularly ® 1 2 3 4 5 6 7
’r I enjoy talking with sales people and 1 2 3 4 5 6 7
other shoppers who are interested
in the same things as I am.
'r I like having a salesperson bring I 2 3 4 5 6 7
merchandise out for me to choose
from.
‘r I enjoy seeing mall exhibits while 1 2 3 4 5 6 7
shopping.
Section V] -B

Please indicate the degree to which the each statement characterizes your attitudes toward shopping at
any department store.

Disagree Disagree Disagree Neither Agree Agree Agree
Extremely Quite Somewhat 12:39:: Somewhat Quite Extremely
'r The price charged by department stores is l 2 3 4 5 6 7
similar.
‘r All department stores offer a similar range 1 2 3 4 5 6 7
of services.
‘r All things considered, most department 1 2 3 4 5 6 7
stores are similar.
‘r All department stores are much the same, 1 2 3 4 5 6 7
so it would not really matter if I
changed.
‘r I like shopping at department stores. 1 2 3 4 5 6 7
’r I look forward to my regular department 1 2 3 4 5 6 7
store shopping trip.
‘r‘: I hate department store shopping ® 1 2 3 4 5 6 7
f Department store shopping is boring® 1 2 3 4 5 6 7
~r Department store shopping is fun. 1 2 3 4 5 6 7

125

Section VII.
Please ﬁll in the blank or check the appropriate response for each question.

1. Your gender: Male Female

2. Your age (in years)

 

3. Your address Gu Dong
4. Your present marital status:

ClSingle

DMariied

DOther

5. Please check the category that most accurately identiﬁes your total monthly family income.

DLess than 1,000,000 Won

DMore than 1,000,000 but less than 2,000,000 Won

ClMore than 2,000,000 but less than 3,000,000 Won

DMore than 3,000,000 but less than 4,000,000 Won

UMore than 4,000,000 but less than 5,000,000 Won

UMore than 5,000,000 but less than 6,000,000 Won

ClMore than 6,000,000 but less than 7,000,000 Won

Cl More than 7,000,000 Won

6. Your occupation:
DPersonal business/business owner, < 9 employees
DPersonal business/business owner, > 9 employees
CISales and service, salesperson
DSkilled worker/tradesperson, manual worker
DBusinessperson, technical worker
DMarketing and management (executive level)
DSpecialist or freelancer (ex: professor, medical doctor, lawyer, artist)
DStudent
DHousewife
ClUnemployed or other

7. Your education:
CISome high school
Ell-Iigh school degree
DSome junior college/no degree
Cllunior college degree (2 year)
ClSome university/no degree
DUniversity student
DBachelor’s (undergraduate) degree
EIGraduate student
DMaster’s degree or higher

126

APPENDIX B

CONSENT FORM

127

The Efﬁcacy of Consumer-Employee and Consumer-Retailer Relationships
in Predicting Store Loyalty Among Korean Consumers

Dear Prospective Survey Participant,

The attached questionnaire is a part of the research of one of my graduate students
at Michigan State University (MSU) in the U.S. Because this project is focused on
consumers’ views about the quality of their relationships with Korean retailers, there are
questions in the survey about various aspects of retail stores, consumers’ relationships
with sales personnel and retailers, purchase-related attitudes and buying behaviors.

You are invited to participate in this study by completing the accompanying
survey, which will take approximately 20 minutes to complete. There are no right or
wrong answers to any questions; we are just interested in your views and experiences in
your consumer-business relationships. You indicate your voluntary agreement to
participate by completing and returning this questionnaire. You may discontinue
participation at any time without penalty. Also, you may chose not to answer any
question. If you choose to participate in the study, you will be given a small gift, and a
research associate will arrange, at your convenience, to pick up your completed
questionnaire.

 

Your privacy will be protected to the maximum extent allowable by law. All of
your answers will be treated with strict conﬁdence and your responses will be reported
together so that you will not be identiﬁed in any way. The answers you give to questions
will never be linked to you in any way. Only the principal investigators will have access
to the data. The completed questionnaires will be stored in a locked cabinet, and coded
data will be stored in password protected computers in a room that is regularly locked.
After 10 years, the electronic data and the completed questionnaires will be destroyed.

There are potential beneﬁts to your participation involved in this study. . Once
completed, it is anticipated that the researchers will be able to better identify retailers’
offerings that are of greatest importance to consumers. With this information, retailers
will be able to more efﬁciently and effectively invest their resources to provide the types
of products and services sought by consumers, potentially resulting in lower costs and a
positive business-consumer relationship. Therefore, Korean consumers including you
may beneﬁt in the marketplace from the application of the results of the study

Should you have any questions about this project, please contact Ho Jung Choo
by regular mail: On-Cheon 2 Dong, 1057-14, Dong Rae, Pusan, Korea, phone: 051-552-
0438, or e-mail: chooho@msu.edu. A copy of the results of the study will be provided to
you upon request. If you would like a copy of the summarized results, please supply your
name and address on the attached pre-addressed & pre-stamped postcard and send. You

 

128

may also contact Dr. Dawn Pysarchik by regular mail: 209 International Center,
Michigan State University, East Lansing, MI 48824, U.S.A., fax: 1-517- 353-7254, or
email: riysarchi@msu.edu. In case you have questions or concerns about your rights as a
research participant, please feel free to contact Ashir Kumar, MD, Michigan State
University’s Chair of University Committee on Research Involving Human Subjects by
phone: 1-517-355-2180, fax: 1-517-432-4503, email: ucrihs@msu.edu, or regular mail:
202 Olds Hall, East Lansing, MI 48824. Your participation is greatly appreciated.

 

Sincerely,
Dawn 1. Pysarchik Ho Jung Choo
Associate Professor Ph D. Candidate

129

APPENDIX C

EQS PROGRAM INPUT AND COVARIANCE MATRIX

130

CONFIRMATORY FACTOR ANALYSIS INPUT

ITITLE

cfal

/SPECIFICATION S
DATA='C:\WINDOWS\Desktop\analysis\data_cfa.ess';
VARIABLES=69; CASES=408;

METHODS=ML;
MATRIX=RAW;

[EQUATIONS

V4: +*F2 +E4;
V5: +*F2 +E5;
V6: +*F2 +E6;
V7: +*F3 +E7;
V8: +*F3 +E8;
V9: +*F3 +E9;

V10=
V11:
V12:
V13 =
V14:
V15 =
V16:
V17=
V18 =
V20:
V21:
V22:
V25 =
V26:
V32:
V35 =
V36=
V37:
V43:
V44:

+ *F4
+ *F4
+ *F4
+ *F5
+ *F5
+ *F5
+ *F6
+ *F6
+ *F6
+ *F7
+ *F7
+ *F8
+ *F8
+ *F8
+ *F9
+ *F9
+ *F9
+ *F9

+ E10;
+ E11;
+ E12;
+ E13;
+ E14;
+ E15;
+ E16;
+ E17;
+ E18;
+ E20;
+ E21;
+ E22;
+ E25;
+ E26;
+ E32;
+ E35;
+ E36;
+ E37;

+ *F10 + E43;
+ *FlO + E44;

V47 =
V50 =
V51 =
V53 =
V63 =
V64 =

+ *Fll
+ *Fll
+ *Fll
+ *Fll
+ *F12
+ *F12 + E64;
V65 = + *F12 + E65;
V69 = + *F12 + E69;
NARIANCES
F2toF12=1.00;

E4 = *;

E5 = *;

E6: *;

E7 = *;

E8 = *;

+ E47;
+ E50;
+ E51;
+ E53;
+ E63;

131

E9 = *;

E10 = *;

E11 = *;

E12 = *;

E13 = *;

E14 = *;

E15 = *;

E16 = *;

E17 = *;

E18 = *;

E20 = *;

E21 = *;

E22 = *;

E25 = *;

E26 = *;

E32 = *;

E35 = *;

E36 = *;

E37 = *;

E43 = *;

E44 = *;

E47 = *;

E50 = *;

E51 = *;

E53 = *;

E63 = *;

E64 = *;

E65 = *;

E69 = *;

ICOVARIANCES

F2 TO F12=*;
e6,e7=*;e6,e8=*;e6,e9=*; e8,e10=*;e8,e11=*; e8,e12=*;
e15,e16=*;e15,e17=*;e15,e18=*;
e4,e10=*;e4,e1l=*;e4,el2=*;
e15,e4=*;e15,e5=*;e15,e6=*;
e6,e16,=*;e6,e17=*;e6,e18=*;
ILMTEST

IPRINT

ﬁt=all;

fI’ECHNICAL

IEND

132

COVARIANCE MATRIX OF CONFIRMATORY FACTOR ANALYSIS

1.281
0.638
0.376
0.273
0.052
0.264
0.153
0.437
0.392
0.1 1 1
0.194
0.401
0.313
0.350
0.261
0.156
0.221
0.290
0.158
0.067
-0.107
0. 196
0. 196
0.187
0.186
0.207
-0.236
-0.220
-0.177
-0.040
0.077
0.002
-0.012
0.085

V5

V 6 V 7
1.198
0.682 1 .086
0.465 0.51 1 0.933
0.339 0.453 0.579
0.449 0.579 0.782
0.125 0.098 0.149
0.219 0.161 0.252
0.210 0.111 0.139
0.284 0.332 0.441
0.203 0.261 0.326
0.413 0.394 0.299
0.437 0.435 0.521
0.484 0.515 0.591
0.539 0.479 0.635
0.120 0.195 0.247
0.258 0.310 0.432
0.338 0.259 0.560
0.235 0.222 0.439
0.300 0.348 0.445
0.058 0.165 0.398
0.187 0.221 0.373
0.267 0.320 0.507
0.319 0.299 0.416
0.098 0.185 0.316
0.064 0.144 0.292
-0.238 -0.300 -0.387
-0.448 -0.194 —0.375
-0.514 -0.346 -0.467
—0.302 -0.307 -0.401
0.125 0.028 0.072
0.099 0.047 0.048
0.200 0.130 0.125
0.085 0.091 0.295

V8

1.623
0.808

0.562
0.475
0.216
0.414
0.41 1
0.370
0.599
0.613
0.633
0.158
0.416
0.367
0.328
0.380
0.138
0.283
0.293
0.158
0.312
0.284
0.098
0.123
-0.207
-0.091
0.400
0.245
0.536
0.201

133

V9

V10
V11
V12
V13
V14
V15
V16
V17
V18
V20
V21
V22
V25
V26
V32
V35
V36
V37
V43
V44
V47
V50
V51
V53
V63
V64
V65
V69

V 9
1.312
0.251
0.244
0.150
0.524
0.402
0.437
0.733
0.771
0.764
0.238
0.560
0.566
0.518
0.554
0.317
0.547
0.548
0.438
0.388
0.331
-0.254
-0.221
-0.382
-0.293
0.138
0.054
0.249
0.175

V10

1. 177
0.277
0.456
0.096
0.144
0.167
0.268
0.230
0.287
-0.042
0.172
0.155
0. 136
0.103
0.120
0.057
0.086
0.049
0.208
0.172
0.074
-0.039
0.003
0.061
0.351
0.248
0.416
0. 164

V11

1.554
0.676
0.130
0.037
0.209
0.219
0.256
0.21 1
0.033
0. 125
0. 155
0.087
0.103
-0.009
0.055
0.064
0.005
0.193
0.259
0.163
-0.056
-0.1 13
-0.066
0.252
0.1 19
0.098
-0.281

V12

2.298
0.143
0.094
0.184
0.271
0.286
0.238
-0.036
0.083
0.183
0.033
0.1 1 1
0.196
0.095
0.141
-0.102
0.190
0.154
-0.016
-0.214
-0.326
-0.248
—0.091
-0.096
-0.043
-0.1 19

1.1 1 1
0.583
0.389
0.670
0.746
0.736
0.184
0.416
0.508
0.575
0.485
0.391
0.402
0.496
0.430
0.333
0.188
-0.319
-0.358
-0.445
-0.470
0.200
0.176
0.174
0.247

134

V14
V15
V16
V17
V18
V20
V21
V22
V25
V26
V32
V35
V36
V37
V43
V44
V47
V50
V51
V53
V63
V64
V65
V69

V20
V21
V22
V25
V26
V32
V35
V36
V37
V43
V44
V47
V50
V51
V53
V63
V64
V65
V69

V 14
0.890
0.467
0.537
0.532
0.540
0.085
0.322
0.412
0.308
0.399
0.162
0.209
0.357
0.317
0.320
0.231

-0.277

-0.212

—0.269

-0.144
0.081
0.005
0. 185
0.221

V 20
1.156
0.576
0.377
0.342
0.319
0.174
0.270
0.232
0.157
0.193
0.065
-0.1 15
-0.092
0.062
-0.158
0.015
0.019
-0.040
-0.060

V15

1.106
0.681

0.717
0.649
0.042
0.129
0.270
0.264
0.281

0.081

0.202
0.257
0.315

0.196
0.175

-0.387
-0.166
-0.240
-0.1 14
-0.066
—0.01 8
0.160
0.197

V21

1.571
0.553
0.462
0.493
0.362
0.399
0.467
0.310
0.385
0.279
-0. 137
-0.248
-0.229
-0.206
0.145
0.065
0.202
0.076

V16

1.155
1.077
0.999
-0.001
0.340
0.403
0.586
0.558
0.342
0.391
0.471
0.416
0.353
0.345
-0.459
-0.387
-0.431
-0.382
0.177
0.1 18
0.196
0.167

V22

1.299
0.546
0.583
0.183
0.393
0.526
0.420
0.362
0.268
-0. 126
-O.356
-0.416
-0.245
0.122
0.018
0.183
0.303

V17

1.307
1.1 16
0.098
0.387
0.460
0.598
0.552
0.303
0.449
0.523
0.497
0.401
0.366
-0.497
-0.457
-0.544
-0.540
0.175
0.137
0.178
0.245

V25

1.089
0.655
0.532
0.51 1
0.505
0.441
0.329
0.240
-0.318
-0.360
-0.222
-0.340
0.041
0.004
0.109
0.104

V18

1.325
0.032
0.407
0.517
0.61 1
0.576
0.397
0.477
0.552
0.520
0.315
0.321
-0.396
-0.495
-0.524
-0.488
0.312
0.285
0.381
0.421

V26

1.124
0.444
0.367
0.478
0.498
0.318
0.259
-0.332
-0.384
-0.342
-0.290
0.074
0.043
0.339
0.151

135

V32
V35
V36
V37
V43
V44
V47
V50
V51
V53
V63
V64
V65
V69

V44
V47
V50
V51
V53
V63
V64
V65
V69

V63
V64
V65
V69

V32

1.801

0.404
0.360
0.282
0.279
0.341
-0.297
-0.430
-0.273
-0.256
0.023
-0.061
-0.035
0. 1 17

V44

0.985
-0.232
-0.271
-0.220
-0.093

0.174

0.077

0.186

0.121

V63

2.000
1.549
1.357
0.533

V35

1.078
0.537
0.529
0.253
0.314
-0.217
-0.279
-0. 183
-0. 183
0.009
-0.060
0.089
-0.026

V47

1.981
0.889
0.600
0.530
0.359
0.204
0.142
0.076

V64

1.900
1.443
0.519

V36

0.994
0.639
0.292
0.288
-0.316
-0.390
-0.428
-0.434
0.148
0.126
0.233
0.213

V50

1.834
1.048
1.031
0.132
-0.012
-0.054
-0.007

V65

2.455
0.699

V 37 V 43
1.089
0.286 1.161
0.256 0.789
-0.420 -0.100
-0.396 -0.219
-0.312 -0.208
-0.238 -0.121
0.115 0.137
0.140 0.052
0.253 0.202
0.162 0.138
V 51 V 53
1.782
1.058 1.782
0.123 0.011
-0.011 -0.015
-0.305 0.006
-0.231 -0.137
V 69
2.288

136

SECOND-ORDER FACTOR ANALYSIS INPUT

fl‘ITLE
cfa_rq 1_LOTTE
/SPECIFICATIONS
data='C:\WINDOWS\Desktop\analysis\rq.ess';
VARIABLES: 15; CASES=408;
MET HODS=ML;
MATRIX=raw;
IEQUATIONS
V 1=F1+E1;
V2=*F1+E2;
V3=*F1+E3;
V4=F2+E4;
V5=*F2+E5;
V6=*F2+E6;
V7=F3+E7;
V8=*F3+E8;
V9=*F3+E9;
V 10=F4+E10;
V11=*F4+E11;
V 12=*F4+E12;
V13=F5+E13;
V 14=*F5+E14;
V15=*F5+E15;
F1=F6+D1;
F2=*F6+D2;
F3=f7+D3;
F4=*F7+D4;
F5=*F7+D5;
F7=*F6+D6;
N ARIANCES
F6=*;
E1 TO E15=*;
D1 TO D6=*;
/covariance
e9,e10=*;
e9,e1 l=*;
e9,e12=*;
e7,e13=*;
e7,e14=*;
e7,e15=*;
e1 1,e13=*;
e1 1,e14=*;
e1 1,e15=*;
e 10,e7=*;
e10,e8=*;
e10,e9=*;
e3,e7=*;
e3,e8=*;
e3,e9=*;

137

/LMTEST

PROCESS=SIMULTANEOUS;

SET=PVV,PFV, PFF,PDD,GVV,GVF,GFV,GFF,BVF,BFF;
/PRINT

digit=3;

linesize=80;

ﬁt=all;

ITECHNICAL

IEND

138

SECOND-ORDER FACTOR ANALYSIS COVARIANCE MATRIX

<<<<<<<<<<
axoooqouniswto...

<<<<
:35:

V15

V

V12
V13
V14
V15

11

V 1
1.1 18
0.590
0.400
0.689
0.763
0.757
0.1 17
0.298
0.335
0.457
0.433
0.541
0.1 14
0.125
0.140

V 6
1.310
0.246
0.524
0.502
0.617
0.604
0.749
0.266
0.220
0.245

V12

1.601
0.790
0.540
0.488
0.223

V2

0.860
0.443
0.527
0.546
0.530
0.169
0.186
0.310
0.316
0.396
0.394
0.159
0.040
0.085

V7

1.275
0.622
0.415
0.262
0.031
0.253
0.154
0.452
0.391

V13

1.310
0.234
0.252
0.156

V3

1.092
0.667
0.727
0.636
0.381
0.391
0.436
0.285
0.349
0.426
0.166
0.222
0.181

1. 166
0.726
0.453
0.318
0.438
0.1 14
0.252
0.206

V14

1.148
0.288
0.476

V4

1.143
1.085
0.988
0.297
0.410
0.466
0.508
0.579
0.724
0.255
0.240
0.273

1.042
0.532
0.480
0.600
0.084
0.147
0.127

V15

1.549
0.688

V5

1.309
1.1 16
0.356
0.490
0.510
0.587
0.605
0.770
0.210
0.257
0.298

V10

0.924
0.556
0.772
0.130
0.260
0.144

2.320

139

PATH MODEL INPUT

fI'ITLE

path_part
ISPECIFICATION S
VARIABLE=12; CASES=408;
METHODS=ML;
MATRIX=COVARIANCE;
IEQUATIONS
V2=+F1+E1;
V3=+*F1+E2;
V4=+*F1+E3;
V5=+F2+E4;
V6=+*F2+E5;
F1=+*V7+*v8+*V9+*V10+*V11+*F2+D1;
F2=+*V7+*v8+*v9+*v10+*V11+D2;
NARIANCES

E1 TO E5=*;

D1 TO D2=*;
ICOVARIANCE
V7,V8=*;

V8,V9=*;

V11,V9=*;

V9,V7=*;

V10,V8=*;

V10,V9=*;

V11,V8=*;

V10,V7=*;

V11,V7=*;

V11,V10=*;
[CONSTRAINT
(F1,V9)=(F2,V9);
/MATRD(

741.49

0.066 1

2.537 0.523 1

7.763 0.225 0.337 1

6.026 0.382 0.6 0.237 1

4.371 0.491 0.688 0.293 0.783 1

-0.395 0.319 0.521 0.11 0.436 0.325 1

3.765 0.437 0.709 0.274 0.727 0.677 0.715 1

-2.319 0.378 0.656 0.174 0.642 0.602 0.563 0.801 1

2.132 0.098 0.398 0.236 0.378 0.392 0.38 0.453 0.404 1
-3.368 -0.395 -0.4 -0.198 -0.471 -0.486 -O.218 -0.47 -0.48 -0.188 1
-0.166 0.122 0.109 0.071 0.145 0.166 0.074 0.07 0.123 0.114 0.0371
ILMTEST

[PRINT

ﬁt=all;

[TECHNICAL

IEND

140

TWO-GROUP COMPARISON INPUT

ITITLE
cfal
ISPECIFICATIONS
GROUPS=2;
DATA='C:\WINDOWS\Desktop\ana1ysis\re31.ess’;
VARIABLES=69; CASES=191;
METHODS=ML;
MATRIX=RAW;
/EQUATIONS
V4 = + F2 + E4;
V5 = + *F2 + E5;
V6 = + *F2 + E6;
V7 = + F3 + E7;
V8 = + *F3 + E8;
V9 = + *F3 + E9;
V10 = + F4 + E10;
V12 = + *F4 + E12;
V13 = + F5 + E13;
V14 = + *F5 + E14;
V15 = + *F5 + E15;
V16 = + F6 + E16;
V17 = + *F6 + E17;
v58=f7+e58;
v63=f8+e63;
V64 = + *F8 + E64;
V65 = + *F8 + E65;
F2=F9+D1;
F3=*F9+D2;
F4=*F9+D3;
F5=F10+D4;
F6=*F10+D5;
f9=*f10+d6;
f8=*F9+*F10+d7;
f7=*F9+*F10+*f8+d8;
NARIANCES
F10=*;

= *;
E5 = *;
E6 = *;
E7 = *;
E8 = *;
E9 = *;
E10 = *;
E12 = *;
E13 = *;
E14 = *;
E15 = *;
E16 = *;
E17 = *;

141

e58=0;

e63=*;

E64 = *;

E65 = *;

D1 TO D5=*;
d6=.05;d7=*;d8=*;
ICOVARIANCES
e6,e7=*;e6,e8=*;e6,e9=*;E5,E14=*;
e8,e10=*;e8,e12=*;
e15,e16=*;e15,e17=*;
e4,e10=*;e4,e12=*;
e4,e7=*;e4,e8=*;e4,e9=*;
e4,e13=*;e4,e14=*;e4,e15=*;
e15,e4=*;e5,e5=*;e15,e6=*;
e6,e16,=*;e6,e l7=*;e10,e7=*;e10,e9=*;
e13,e16,=*;e13,e17=*;el7,e14=*;
e13,e7=*;el3,e8=*;e13,e9=*;
IEND

[TITLE

cfal

/SPECIFICATIONS
DATA='C:\WINDOWS\Desktop\analysis\re32.ess';
VARIABLES=69; CASES=199;
MET HODS=ML;
MATRIX=RAW;
[EQUATIONS

V4 = + F2 + E4;

V5 = + *F2 + E5;

V6 = + *F2 + E6;

V7 = + F3 + E7;

V8 = + *F3 + E8;

V9 = + *F3 + E9;

V10 = + F4 + E10;

V12 = + *F4 + E12;

V13 = + F5 + E13;

V14 = + *F5 + E14;

V15 = + *F5 + E15;

V16 = + F6 + E16;

V17 = + *F6 + E17;
v58=f7+e58;

v63=f8+e63;

V64 = + *F8 + E64;

V65 = + *F8 + E65;

F2=F9+D1;

F3=*F9+D2;

F4=*F9+D3;

F5=F10+D4;

F6=*F10+D5;

f9=*f10+d6;

f8=*F9+*F10+d7;
f7=*F9+*F10+*f8+d8;

142

N ARIANCES
F10=*;
E4 = *;

= *;
E6 = *;
E7 = *;
E8 = *;
E9 = *;
E10 = *;
E12 = *;
E13 = *;
E14 = *;
E15 = *;
E16 = *;
E17 = *;
e58=0;
E63 = *;
E64 = *;
E65 = *;
D1 TO D5=*;
d6=.05;d7=*;d8=*;
ICOVARIANCES
e6,e7=*;e6,e8=*;e6,e9=*;E5,E14=*;
e8,e10=*;e8,e12=*;
e15,e16=*;e15,e17=*;
e4,e10=*;e4,e12=*;
e4,e7=*;e4,e8=*;e4,e9=*;
e4,el3=*;e4,e14=*;e4,e15=*;
e15,e4=*;e5,e5=*;e15,e6=*;
e6,e16,=*;e6,e17=*;e10,e7=*;e10,e9=*;
e13,e16,=*;e13,e17=*;e17,e14=*;
e13,e7=*;e13,e8=*;e13,e9=*;
ICONSTRAINT
(1,v12,f4)=(2,v12,f4);
(1 ,f3,f9)=(2,f3,f9);
(1,F8,F9)=(2,F8,F9);
(1,F8,F10)=(2,F8,F10);
(1,f7,F9)=(2,f7,F9);
(1 ,t7,F10)=(2,f7,F10);
(1,t7,F8)=(2,f7,F8);
(1,f9,f 10)=(2,f9,f 10);
ILMTEST
[PRINT
ﬁt=all;
IT ECHNICAL
IEND

143

TWO-GROUP COMPARISON COVARIAN CE MATRIX

GROUP]
V 4 V 5
V 4 1.108
V 5 0.713 1.060
V 6 0.630 0.755
V 7 0.453 0.505
V 8 0.343 0.321
V 9 0.609 0.522
V 10 0.087 0.039
V 12 0.272 -0.017
V 13 0.072 0.214
V 14 0.162 0.288
V 15 0.455 0.474
V 16 0.401 0.466
V 17 0.523 0.543
V 58 0.686 0.340
V 63 0.174 0.069
V 64 0.239 0.131
V 65 0.251 0.195
V 9 V 10

V 10 -0.015 0.878
V 12 0.179 0.215
V 13 0.433 -0.040
V 14 0.494 0.011
V 15 0.669 0.108
V 16 0.714 0.043
V 17 0.860 -0.067
V 58 0.525 0.516
V 63 0.022 0.476
V 64 0.010 0.533
V 65 0.259 0.640

V 15 V 16
V 15 1.319
V 16 0.899 1.209
V 17 0.948 1.185
V 58 0.453 0.419
V 63 -0.231 0.063
V 64 —0.015 0.164
V 65 0.219 0.364

V 64 V 65
V 64 2.556
V 65 2.062 2.702

V6

1.013
0.515
0.421
0.689
—0.008
0.104
0.350
0.396
0.528
0.564
0.664
0.280
0.032
0.108
0.277

V12

2.703
-0.030
-0.093

0.127

0.159

0.162

0.931
-0.364
-0.263
-0.294

V17

1 .414
0.446
-0.010
0.103
0.260

V7

1.010
0.496
0.852
0.040
0.095
0.469
0.476
0.550
0.562
0.699
0.547
-0.026
0.019
0.177

V13

0.966
0.578
0.546
0.590
0.698
0.120
-0.046
0.084
0.249

V58

2.479
0.371
0.389
0.316

V8

1.366
0.615
0.255
0.158
0.302
0.489
0.487
0.440
0.473
0.617
0.238
0.143
0.524

V14

0.923
0.542
0.571

0.580
0.182
0.055
0.083
0.308

V63

2.490
1 .994
1.765

144

V9

V10
V12
V13
V14
V15
V16
V17
V58
V63
V64
V65

V15
V16
V17
V58
V63
V64
V65

V64
V65

1.151
0.676
0.394
0.382
0.447
0.206
0.326
0.409
0.147
0.291
0.404
0.468
0.108
0.236
0.1 18
0.1 12

V10

1.427
0.819
0.250
0.292
0.196
0.430
0.437
0.649
0.31 1
0.028
0.227

V16

1.027
0.949
0.373
0.273
0.098
-0.020

V65

V6

1.058
0.512
0.550
0.526
0.184
0.133
0.296
0.242
0.357
0.373
0.362
0.149
0.036
-0.025
0.132

V12

1.816
0.320
0.357
0.236
0.406
0.495
0.650
0.156
0.084
0.182

V17

1.163
0.578
0.352
0.168
0.099

0.820
0.609
0.700
0.227
0.180
0.416
0.163
0.049
0.448
0.483
0.289
0.207
0.1 19
0.057

V13

1.250
0.586
0.260
0.733
0.796
0.379
0.400
0.247
0.122

V58

1.846
0.547
0.425
0.459

1.743
0.906
0.775
0.325
0.505
0.296
0.183
0.622
0.657
0.626
0.608
0.408
0.527

V14

0.757
0.390
0.459
0.504
0.337
0.076
—0.079
-0.021

V63

1.625
1.210
1.102

145

APPENDIX D

ITEMS EXCLUDED IN THE CONFIRMATORY FACTOR ANALYSIS DUE TO

CROSS-LOADINGS

146

 

ITEMS

 

Merchandise Quality

This store has excellent products.

 

Employee Service Quality

Its employees offer the personal attention I need from them.
Its employees are never too busy to respond to my requests.
The employees at this store are able to answer my questions.
I receive enough individual attention from its employees.
The employees at this store have my best interests at heart.
The employees at this store understand my speciﬁc needs.

 

Retail Operations Quality

This store has operating hours convenient to all of their customers.
This store accepts most major credit cards.
This store has a customer-friendly return-exchange policy.

 

Retail Facility Quality

This store has modem-looking equipment and ﬁxtures.The physical facilities at this store
are visually appealing.

Materials associated with this store’s service (such as shopping bags, catalogs or
statements) are visually attractive.

This store has clean, attractive, and convenient public areas (restrooms, ﬁtting rooms).

 

Business Ethics Quality

This store gives preferential treatment to certain customers.

The employees at this store ignore a prospective customer for one he believes will be
better.

The employees at this store are likely to buy merchandise before it is available to
customers.

This store takes a return from customers when the items should not be accepted.
This store sells a more expensive product when a less expensive one would be best for
customers.

This store withholds information of an upcoming sale that will include the item the
customer is buying.

This store hoards free samples meant for customers.

 

Consumer Voluntary Participation

 

When I experience a problem at this store, I let somebody know so they can improve the
service.

IfI notice a problem, I inform an employee of this store even if it does not affect me
(e.g., broken glass in aisle, dairy items past expiration date).

If an employee at this store gives me good service, I let him/her know it.

 

147

 

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