1. Malaysian Hotel Industry and CSR:

The hotel industry in Malaysia has experienced tremendous growth, due to the booming travel and tourism trade. The hotel industry will continue to offer copious commercial opportunities for the country and businesses alike. In 2010, tourist arrivals to Malaysia reached a new high of 24 million. In addition, Malaysia is also famous for diversity of food due to its multi-national ethnics. In recent years, restaurant industry is one of the service sectors which its growth and internationalization have become increasingly significant. The influence of western culture and the subsequent entry of multinational restaurants set a considerable change in lifestyles and the food choices of Malaysian. In many other parts of the world, dining out is one of the fastest growing service aspects. Based on ACNielsen survey 2004, nearly all Filipino (99%), Taiwanese and Malaysian (98%) and Hong Kong people (97%) are restaurants’ patrons. It is not over to say that, the eating out culture has become a way of life for all.

Taking above information into account, study focuses on in-house restaurant hotels in Malaysia regarding factors determining the creation of loyalty among customers. Thus, it is imperative for restaurants owner to identify the factors, which influence consumer’s choice in choosing one restaurant over the others, in order to be successful in the new or existing market. What this research is going to achieve to provide a better insight regarding new global concept of corporate social responsibility and its influence on customer satisfaction which can lead to loyalty. Much has been written on what constitutes CSR and although many viewpoints exist, Carroll’s (1979) conceptualization of the responsibilities of firms has remained a consistently accepted approach, particularly with respect to empirical study. Carroll’s (1979) conceptualization includes four social responsibilities, namely:

1. The economic responsibility to generate profits, provides jobs, and creates products that consumers want;

2. The legal responsibility to comply with local, state, federal, and relevant international laws;

3. The ethical responsibility to meet other social expectations, not written as law (e.g. avoiding harm or social injury, respecting people’s moral rights, doing what is right and just); and

4. The discretionary responsibility to meet additional behaviors and activities that society finds desirable (e.g. contributing resources to various kinds of social or cultural enterprises; providing employee benefits such as training and improved salaries).

Corporate social responsibility as new concept involves many firms and industries which can take advantage of CSR and make better view of their organization. As a result, being socially responsible as a firm can lead to keep more customers satisfy and loyal.

2. Problem Statement:

From previous researches can conclude that one of the certain ways of growing profit is to make customers loyal. As such, customer loyalty has been well-researched topic in the hospitality industry. According to studies, customers display differing degrees of loyalty or allegiance in various aspects of their daily interactions. People who are in charge of hotel industry and hotel owner should find out the most effective factors to provide customer loyalty, in order to apply them into their policy and strategy. Hence, in this research paper, the problem statements are as follows:

First, what are the key determinants that contributing to corporate social responsibility at in-house restaurant hotels in Malaysia? This problem statement will serve as the basis of this research.At the best of researcher knowledge, no previous studies examined the influence of three variables of CSR including employee support, community relation and environment support towards customer satisfaction in restaurant industry up to this date.

Second, subsequent problem statement arises is whether customer satisfaction exerts some influence in driving loyalty at in-house restaurant hotels in Malaysia; As loyalty is deeming as essential in the growth of businesses, Generating loyalty is one of major marketing objective which is followed by key players in different industries and deliver to business customers (Bansal and Gupta, 2001). According to (Bowen and Chen, 2001) customer should feel more than satisfaction and just making customers satisfied could not be enough. This will result customer loyalty. Making loyalty is going to be one of obligation for each business to achieve competitive advantage.

Lastly it is of great interest of this research on whether switching cost can moderate the satisfaction-loyalty relationship. Previous researches have revealed that switching costs can assume a significant moderating effect on customer loyalty through satisfaction. Study of (Heesup Han et al, 2009) which has focused on switching barrier in restaurant industry suggested this identification of dimensions of switching barriers for additional research through test of its applicability, also in other context. Moreover, the identified positive and negative barriers may enable restaurant managers to better understand inhibiting factors of customer switching, and they can be used as a valuable tool to develop customer retention strategies.

3. Research Objective:

The overall objective of this research is to provide insight on in-house restaurants hotels loyalty, which shed light into the establishment of successful those kind restaurants in Malaysia, by taking into consideration the understanding in the areas of consumer perception, customer satisfaction and loyalty. Most marketing literature cited that loyalty is a direct reflection of customer experience with the service/product. The role of affect is an important aspect of loyalty. Particularly, satisfaction plays a crucial role in determining future patronage of a service provider (Oliver, 1999); (Hess and Story, 2005); (Berschler, 2006). Hence, it is pertinent to understand what drives customer satisfaction. In this research paper, one of the research objectives is “Identifying the key determinants that contributing to corporate social responsibility towards customer satisfaction at in-house restaurants hotels in Malaysia.” This objective will serve as the basis of this research. The subsequent objective arises whether customer satisfaction exerts some influence in driving loyalty at the in-house restaurants hotels. Lastly, observing the role of switching cost as a moderator on customer satisfaction and loyalty relationships would be the research final objective.

4. Corporate Social Responsibility(CSR):

CSR is referred to the combined approach of social, environmental and economic indicators in marketing strategies. It seems tough to find a unique definition for describing CSR. Frankental (2001) argued that” CSR is a vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning.”

Carroll’s (1979) indicates that approach of concept of responsibility is continually accepted for firms especially regarding the empirical study. It is suggested that four social responsibilities are involved in conceptualization: First one is economic responsibly, which provide jobs and on demand product and getting profit. Second is legal responsibility, to obey laws and regulation of local government as well as international rules. Third is ethical responsibility, to fulfill the other expectation in society which is not defined by law for example considering and valuing social moral right. Finally, is discretionary responsibility to perform activities which is preferable by society such as increasing the salary of employee and providing training for them or providing resources for different sort of social businesses. Furthermore, Whooley (2004) argued that the main issues in CSR are “Marketplace, Workplace, Environment and Community”.

One CSR dimension which is considered the most by researchers is the one taken by (Bhattacharya and Sen, 2004), however other dimensions are available as well (Kotler and Lee, 2005). Six dimensions that are suggested by (Bhattacharya and Sen, 2004) and sourced from Socrates, the corporate social ratings monitor published by KLD Research, were: different employee factors such as gender and race, supporting and maintaining the employee such as considering safety, regarding the products, anything make products better and favorable like R&D, safety in product, another dimension is how it affects the surrounding environment, overseas activities like considering interior and exterior design of shop, supporting and lastly considering the social communities like art community or providing shelter for unfortunate people.Below in Table 1 there are more dimensions which is used to adopt in this research.

Table.1. Corporate Social Responsibility Dimension

Construct

Dimensions

Elements

Source

Corporate Social Responsibility

Employee Support

Community Relation

Environment Support

Food Quality

Does it seem this restaurant is a good place to work for?

Does the restaurant consider to health and safety of staffs?

Does it seem restaurant treat staff well?

Dose the restaurant try to create new job opportunity?

Does the restaurant have any relation to charity groups?

Does restaurant contribute to the local community?(e.g.support for housing)

Does the restaurant have any volunteer program?

Does restaurant have any recycling(green) program?

How much food waste the restaurant produces daily/monthly?

Does restaurant plan different sized portion properly?

Food ingredients are prepared from high quality material

Prepared foods are from GM free products

Food ingredients are from organic products

Leaflets describing fat content of meals are available

(Fombrun et al., 2000; Walsh

and Beatty, 2007)

(Sen and C.B. Bhattacharya,2004), (Yuhei Inoue and Seoki Lee,2010)

(Fombrun et al., 2000; Walshand Beatty, 2007)

(Sen and C.B. Bhattacharya,2004), (Yuhei Inoue and Seoki Lee,2010), Doan Thi Thuy Trang(2011),

(Sen and C.B. Bhattacharya,2004), (Yuhei Inoue and Seoki Lee,2010), Doan Thi Thuy Trang(2011)

(Monika J.A. and Morven G., 2005) , (Lelec, 2006)

(Monika J.A. and Morven G., 2005)

(Monika J.A. and Morven G., 2005), (Doan Thi, 2011)

(Monika J.A. and Morven G., 2005)

4.1. CSR and Employee Support:

The theory of employee justice argued that the amount of fairness which expresses and shows in company cause general justice perception of firm among employee (Cropanzano et al, 2001). Study indicates that perception of fairness from work-place has positive influence on employee well-fair. The typical example could be seen in the job satisfaction and stress (Colquitt et al., 2001). Another thing that is affected by perception of fairness from workplace is the outcome of organization according to research. For instance, it can lead to decrease the total duration of being absent from workplace as well as increase the level of commitment.(Colquitt et al., 2001).

4.2. CSR and Community Relation:

In the retail environment, CSR either in the form of support for a non-profit organization and/or positive ethical practices (use of non-sweat shop labor), led to store loyalty, emotional attachment to the store and store interest, which then impacted customer behaviour in the form of the percentage of shopping done at the store and the amount of purchases (Lichtenstein et al., 2004). A company alliance with a non-profit organisation enhanced attitudes towards the brand, no matter whether the cause was familiar or unfamiliar (Lafferty and Goldsmith, 2005). Those aware of an actual corporate philanthropy initiative had more positive attitudes to, and stronger identification with, the company, higher brand purchase and investment intent and greater intent to seek employment with the company than those unaware of any initiative (Sen et al., 2006).

4.3. CSR and Environment support:

According to the study of Bhattacharya and Sen (2004) one of their proposed six dimensions of CSR was the impact of CSR on the environment (e.g. environmentally friendly products, pollution control). Furthermore in the study of (Peter Jones and Daphne Comfort, 2005) on the UK’s top ten retailers one of their considerations regarding CSR was impact on environment. According to their study environmental issues were the earliest and are now the most commonly reported set of CSR agendas amongst the top ten retailers. These environmental issues include energy consumption and emissions, raw material usage, water consumption, waste, the volume of packaging, recycling, genetically modified foods and the use of chemicals.

4.4. CSR and Customer Satisfaction:

Corporate social responsibility or CSR engagement is another element to provide better understanding from customers and might enhance customer satisfaction. (Sen and Bhattacharya, 2001). CSR provides customers with the perception of being valued by companies, like being understood and respected. (Gardberg and Fombrun , 2006) also indicate that customers behaviors relies on positive effect of CSR as companies with positive CSR offer customers large amount of close and friendly relationship which in turn has an impact of having a supportive and positive customers. Five hundred companies were analyzed to find a direct association between CSR and customer satisfaction( Luo and Bhattacharya ,2006). They identified the customer satisfaction as a certain mediator factor which affects the relationship between CSR and value of the company in the market. They also indicated that companies which are less innovative in compare with others, CSR declines the customers satisfaction level which in turn it has an impact on the reduction of market value.

5. Customer Satisfaction and Loyalty Relationship:

Satisfaction has been defined and measured in different ways over the years (Oliver, 1997). One of the latest formal definitions of satisfaction as a composite construct of an overall evaluation has been developed by Oliver (1997), who proposed it to be “the consumer’s fulfillment response, the degree to which the level of fulfillment is pleasant or unpleasant” (p. 28). This study defines satisfaction as a consumer’s accumulative, overall evaluation of positive affective responses (Oliver, 1997) of a given product category.

The most widely agreed-on definition of loyalty is a behavioural response expressed over time (Dick and Basu, 1994). Oliver (1997, p. 392) defines loyalty as “a deeply held commitment to repurchase a preferred product or service in the future”. Combinations of past frequent behaviour and intention to repurchase (Nijssen et al., 2003; Pritchard et al., 1999) are also used to assess a global and cumulative loyalty measure.

Researchers assume that the relationship between satisfaction and the different facets of attitudinal, intentional and behavioural loyalty is positive, but varies between products, industries and situations (Szymanski and Henard, 2001). It becomes increasingly important that researchers consider the customer satisfaction measurement in order to achieve loyalty (Sivadas and Baker-Prewitt, 2000). (Fornell, 1992) believed that more customer satisfaction leading to more loyal customers for businesses also encouraging customers to not leave the competition. There are other views in this aspect such as (Anton,1996) who argued that satisfaction has a positive relationship with repurchase decision, also could lead customers to recommend it to others, making loyalty and increasing market share. Customers who feel loyalty towards the firm will purchase again and again over a long time (Evans and Berman, 1997).

6. Switching Cost as a Moderating Variable in Satisfaction-Loyalty Relationship:

Switching cost is referred to the perceived cost customers would bare once they change their service provider (Porter, 1998). Jackson (1985) indicated this cost includes physical, economical and psychological cost together. The switching cost is supposed to be a cost of non-loyal customers who defect the brand to competitors for switching to another brand. It is not only about the financial and monetary cost customers should bare through changing service providers but also is related to all effort and time they spent to find a better deal (Kim et al, 2003).

In recent years, there are many researches have been done to examine the role of switching cost as a moderating on the relationship between customer satisfaction and loyalty (Jones et al., 2007; Burnham et al., 2003). It is supposed that high switching cost will decrease the positive impact of satisfaction on loyalty. Switching cost can make customers to maintain their relationship with firm in fluctuation of their satisfaction regardless of in what extent they are satisfied with firm (Bansal et al, 2004; Burnham et al, 2003; Jones et al, 2000) There are other studies shows that the relationship between customer satisfaction and loyalty is lessen while switching cost perceived high in that segment in compare of the situation with less perceived switching cost ( Joneset al., 2000). Therefore, from mentioned studies can conclude that switching cost could have an impact as a moderator on customer loyalty due to making customers less sensitive to satisfaction when it goes high (Hauser et al., 1994).

7. Proposed Research Frame Work:

To evaluate corporate social responsibility impact on customer satisfaction this study followed the model by (Jorge Matute-Vallejo, Rafael Bravo and José M. Pina, 2009), (Loureiro.S., Sardinha. M.D., Reijnders. L., 2012), (Gianfranco Walsh, Boris Bartikowski, 2011) and some other previous literatures which totally provided a combination of whole aspect of corporate social responsibilities including Economic Responsibility, Legal Responsibility, Ethical Responsibility and Philanthropic Responsibility.

Customer satisfaction also in this research measured as overall satisfaction as an important advantage of the cumulative satisfaction construct over transaction-specific viewpoint is that, it is better able to predict subsequent behaviors and economic performance (Johnson et al., 2001).

8. Hypothesis Development:

H1: employee support has a positive impact on corporate social responsibility

H2: community relation has a positive impact on corporate social responsibility

H3: environment support has a positive impact on corporate social responsibility

H4: food quality has a positive impact on corporate social responsibility

H5: corporate social responsibility has a positive impact on customer satisfaction.

H6: customer satisfaction has a positive impact on customer loyalty

H6: The relationship between satisfaction and customer loyalty weakens as the switching costs increase

9. Research Methodology:

The measurement technique used in this study was the self-administered survey technique. The quantitative phase of this study employed a self-administered, cross-sectional survey design. The survey technique has several strengths that provide rationale for its use in this study. First, surveys are particularly effective when used for descriptive, explanatory, and exploratory purposes. Furthermore, survey research is probably the most frequently used method of data collection in the retail industry (Mason et al., 1993). Also, the use of survey is an effective vehicle for collecting information from a wide range of respondents.

In addition, surveys, especially self-administered ones, make large samples more feasible (Babbie, 1998). The ability to consider large number of data from a wide variety of respondents also enhances the potential generalizability of findings. Moreover, survey research allows for a direct and systematic measurement of large number of variables simultaneously. In summary, a survey design is deemed to be the most suitable methodology for this phase of the study. Survey research allows for: (1) the measurement of a large number of variables across a wide range of respondents; (2) the ability to examine naturally occurring, rather than artificial phenomenon, and (3) greater potential generalizability of the findings.

Moreover, questionnaires distributed through face-to-face method. A logical explanation of why this method appears to be so effective is that the face-to-face nature or personal contact between interviewer and respondent usually facilitates and enhances communication. Moreover, the fact is that the interviewer's mere presence motivates the respondent to cooperate (Mayer, 1974). For these reasons, a survey design is most suitable for addressing the overall research question and hypotheses developed in this thesis.

9.1. Sampling procedure and Design:

Step 1: Define the Target Population

The target population of this research is event organizers from corporation. The mail sample would be 100 organizers of corporation who have managed for their organization being served at fine-dining inside hotels of Klang Valley, Malaysia since last year. Organizers should select the same fine-dining more than once since last year.

Step 2: Select the Data Collection Method

The primary data are gathering through self-administered survey (questionnaire), personal interview and email. In this research, the 7-point Likert scale is used for respondent to rank important of the variables and its attributes. A 7-point scale was used in an endeavor to improve the reliability of the scales (Churchill and Peter, 1984). The 7-point scale was also encouraged because it was hoped that it would discourage respondents from using the mid-point, by making it less obvious than a five-point scale, On the other hand, a midpoint is provided for respondents who were neutral on the scale, and this eliminated any anxiety that may have been caused by forcing respondents to select a predisposition. Consequently, 7 or 9-point numerical scales are recommended for structural equation modelling, as a sufficient range of score values introduces variance (Schumacker and Lomax, 1996). Hence, a consistent scoring procedure was maintained throughout the questionnaire, and negatively worded statements were scored post data collection by reversing the scale. The secondary data source was used through collected information from journals, articles, reference books, websites and etc.

Step 3: Select the Appropriate Sampling Method

The sampling design that was being selected is the non-probability sampling method and convenience based sampling. The justification of selecting the convenience sampling is because this method satisfactorily meets the sampling needs, primary virtue of low cost and the easiest to conduct within the short research period (Cooper and Schindler, 2006).

Step 4: Determine Necessary Sample Sizes and Overall Contact Rates

McQuitty (2004) suggested that it is important to determine the minimum sample size required in order to achieve a desired level of statistical power with a given model prior to data collection. Schreiber et al (2006) mentioned that although sample size needed is affected by the normality of the data and estimation method that researchers use, the generally agreed-on value is 10 participants for every free parameter estimated. Although there is little consensus on the recommended sample size for SEM (Sivo et al, 2006), Garver and Mentzer (1999), and Hoelter (1983) proposed a ‘critical sample size’ of 200. This research follows the Hair et al(2004) which for this research the sample size would be 100 respondents.

10. Method of Analysis:

The procedures used to analyze the data for the purposes of addressing and answering the research question and hypotheses of this study range from simple correlation analysis to more sophisticated structural equation modeling and path analysis. Preliminary univariate statistical analysis was conducted to screen the data, while initial statistical analyses were conducted using SPSS version 10.0 (Coakes and Steed, 2001) to examine the reliability and validity of the scales used in this study. In addition, further statistical analyses such as correlation analysis, exploratory and confirmatory factor analyses were conducted to explore the relationships between the constructs in the research proposed model. In other words, in this research structural modeling analysis enables researcher to examine the hypothesized relationships. Structural equation modeling (SEM) was employed because it is generally considered more suitable for the model that involves complicated variable relationships. SEM allows analysis of both the measurement model and the structural model. It cannot only address measurement errors but also allows the examination of the factor analysis and hypothesis testing together (Gefen et al., 2000).

11. CONCLUSION:

After studying many literatures to assess corporate social responsibility impact on customer satisfaction this study follows (Loureiro. S., Sardinha. M.D., Reijnders. L., 2012), (Jorge Matute-Vallejo, Rafael Bravo and José M. Pina, 2009), (Gianfranco Walsh, Boris Bartikowski, 2011) and other related previous literatures which totally provided a combination of whole aspect of corporate social responsibilities including Economic Responsibility, Legal Responsibility, Ethical Responsibility and Philanthropic Responsibility.

Customer satisfaction in this research measured as overall satisfaction as an important advantage of the cumulative satisfaction construct over a more transaction-specific view point is that, it is better able to predict subsequent behaviours and economic performance (Johnson et al., 2001)

Next step of this research is to examine the relationship between customer satisfaction and loyalty by considering the moderating role of switching cost component. Accordingly this research used (Sunghyup S.H.,2010) and (Heesup Han and Kisang Ryu, 2009) to assess loyalty which was focused on measuring attitudinal loyalty; as especially in the hospitality industry, the attitudinal approach to assessing the level of customer loyalty should be more focused (Back, 2005). Loyalty in the hospitality field involves attitudinal and emotional commitment to a provider/brand (Schall, 2003). Many customers have multiple memberships in various branded restaurants or hotels (Mattila, 2001). To assess switching barrier study used mostly the work by (Zhilin Yang and Robin T. Peterson, 2004) and (Heesup Han, Ki-Joon Back , and Betsy Barrett , 2009).

Although this research tries to cover the effect of CSR on customer satisfaction at in-house restaurant hotel as a kind of fine dining restaurant, the whole restaurant industry has not been investigated regarding research objective. In addition, there are some other variables of corporate social responsibility which could be evaluated in future studies. In relationship between customer satisfaction and loyalty this study examined switching cost as a moderator while there are some other moderating variables still could influence this linkage.

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Received on 29.01.2015 Modified on 13.02.2015

Asian J. Management; 6(4): Oct. -Dec., 2015 page 249-255

DOI: 10.5958/2321-5763.2015.00036.0