DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN BUSINESSTO-BUSINESS CONTEXT OF VIETNAMESE INFORMATION TECHNOLOGY COMPANIES IN HO CHI MINH CITY In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In Marketing By Ms. Duong Thi Hoang Trang ID: MBA06037 International University – Vietnam National University HCMC August 2014 -i- DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN BUSINESS-TO-BUSINESS CONTEXT OF VIETNAMESE INFORMATION TECHNOLOGY COMPANIES IN HO CHI MINH CITY In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In Marketing by Ms Duong Thi Hoang Trang ID: MBA06037 International University - Vietnam National University HCMC August 2014 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree. Approved: ---------------------------------------------- ------------------------------------------- -Chairperson Supervisor ---------------------------------------------- ------------------------------------------- -Committee member Committee member -ii- ACKNOWLEGEMENT This thesis is done with great deal of supporting from the wonderful people, who showed significant concern towards me during the time of working on this dissertation. I would like to take this opportunity to express my sincere gratitude to them. I wish to express my deepest gratitude to Dr. Le Thanh Long for his great supervision and continuous support as well as providing critical insights during the course of my research. I would like to extend my thanks to all people who spend their valuable time for completing all questionnaires, especially for their assistance, coordination and support during the research survey process. Last but not least, I want to say thankful to my family, who always beside me and give me power to complete my dissertation. With many thanks, -iii- PLAGIARISM STATEMENTS I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions. I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Ho Chi Minh City. -iv- COPYRIGHT STATEMENT This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author’s prior consent. ©Duong Thi Hoang Trang/MBA06037/2014 -v- Table of Contents Chapter 1: INTRODUCTION .......................................................................................... 1 1.1. Research background:........................................................................................ 1 1.2. Rationales and Problem statement:.................................................................... 3 1.3. Research question: ............................................................................................. 4 1.4. Research objectives: .......................................................................................... 4 1.5. Scope of research: .............................................................................................. 5 1.6. Significance of research: ................................................................................... 5 1.7. Research structure: ............................................................................................ 5 Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL ................................ 7 2.1. General concept: ................................................................................................ 7 2.1.1. Business-to-business (B2B): ............................................................................ 7 2.1.2. Information technology (IT): ........................................................................... 8 2.2. Customer Loyalty: ............................................................................................. 8 2.2.1. Definition: ........................................................................................................ 8 2.2.2. Importance of customer loyalty: .................................................................... 10 2.3. Antecedents of customer loyalty: .................................................................... 11 2.3.1. Customer satisfaction: ................................................................................... 12 2.3.2. Trust:.............................................................................................................. 13 2.3.3. Commitment: .................................................................................................. 14 2.3.4. Switching Cost: .............................................................................................. 15 2.4. Research model and hypothesis:...................................................................... 16 -vi- Chapter 3: RESEARCH METHODOLOGY ................................................................. 18 3.1. Research design: .............................................................................................. 18 3.2. Research process: ............................................................................................ 20 3.3. Measurement design: ....................................................................................... 21 3.3.1. Customer loyalty measurement: .................................................................... 21 3.3.2. Customer satisfaction measurement: ............................................................. 21 3.3.3. Trust measurement: ....................................................................................... 22 3.3.4. Commitment measurement: ........................................................................... 23 3.3.5. Switching cost measurement:......................................................................... 24 3.4. Questionnaire design: ...................................................................................... 25 3.4.1. Preliminary research: .................................................................................... 25 3.4.1.1 First draft of questionnaire: ......................................................................... 25 3.4.1.2 Interview: ..................................................................................................... 26 3.4.2. Pilot test: ........................................................................................................ 27 3.4.3. Final format of questionnaire: ....................................................................... 28 3.5. Data collection method: ................................................................................... 32 3.6. Population and Data Sampling: ....................................................................... 33 3.7. Data analysis method: ...................................................................................... 35 3.7.1. Coding data: .................................................................................................. 35 3.7.2. Descriptive statistics: ..................................................................................... 37 3.7.3. Reliability and Validity test: .......................................................................... 38 3.7.3.1 Reliability test: ............................................................................................. 38 3.7.3.2 Factor analysis: ........................................................................................... 38 3.7.4. Regression analysis: ...................................................................................... 39 Chapter 4: DISCUSSION AND FINDINGS.................................................................. 41 4.1. Response rate: .................................................................................................. 41 -vii- 4.2. Demographic data: ........................................................................................... 41 4.3. Descriptive Statistics: ...................................................................................... 42 4.3.1. Customer loyalty: ........................................................................................... 42 4.3.2. Customer satisfaction: ................................................................................... 43 4.3.3. Trust:.............................................................................................................. 44 4.3.4. Commitment:.................................................................................................. 45 4.3.5. Switching Cost: .............................................................................................. 46 4.4. Results of Reliability test:................................................................................ 48 4.4.1. Cronbach’s Alpha for independent variables:............................................... 49 4.4.1.1. Customer Satisfaction: ................................................................................ 49 4.4.1.2. Trust: ........................................................................................................... 49 4.4.1.3. Commitment: ............................................................................................... 50 4.4.1.4. Switching Cost: ........................................................................................... 51 4.4.2. 4.5. Cronbach’s Alpha for dependent variables: Customer Loyalty: ................... 52 Results of Validity test: ................................................................................... 53 4.5.1. The components scale: ................................................................................... 53 4.5.2. Customer Loyalty scale: ................................................................................ 64 4.6. Official Research Model:................................................................................. 66 4.7. Regression analysis: ........................................................................................ 67 4.7.1. Correlation analysis: ..................................................................................... 67 4.7.2. Regression analysis: ...................................................................................... 69 Chapter 5: CONCLUSION AND RECOMMENDATION............................................ 77 5.1. Conclusion ....................................................................................................... 77 5.2. Recommendation ............................................................................................. 77 5.3. Limitation and future research ......................................................................... 83 -viii- REFERENCES ............................................................................................................... 84 APPENDIX .................................................................................................................... 92 Appendix 1: Structured interview ................................................................................ 92 Appendix 2: Survey Questionnaire (English Version): ............................................... 95 Appendix 3: Survey questionnaire (Vietnamese version) .......................................... 100 Appendix 4: Descriptive Statistics ............................................................................. 105 Appendix 5: Result of reliability test ......................................................................... 107 Appendix 6: Result of exploratory factor analysis ..................................................... 111 -ix- LIST OF TABLES Table 1.1: ICT Development Investment (IDI) ranks of Viet Nam and the Southeast Asian countries from 2002-2012 ....................................................................... 2 Table 3.1: Fundamental differences between qualitative and quantitative research strategies .......................................................................................................... 19 Table 3.2: Customer Loyalty Measurement ................................................................... 21 Table 3.3: Customer Satisfaction Measurement ............................................................. 22 Table 3.4: Trust Measurement ........................................................................................ 23 Table 3.5: Commitment Measurement ........................................................................... 24 Table 3.6: Switching Cost Measurement ........................................................................ 25 Table 3.7: Final format of questionnaire ........................................................................ 32 Table 3.8: Summary Information of the Survey Sampling Method ............................... 35 Table 3.9: Subscales coding ........................................................................................... 37 Table 4.1: Summary of Demographic Data .................................................................... 41 Table 4.2: Customer loyalty descriptive statistics .......................................................... 42 Table 4.3: Customer satisfaction descriptive statistics ................................................... 44 Table 4.4: Trust descriptive statistics ............................................................................. 45 Table 4.5: Commitment descriptive statistics................................................................. 46 Table 4.6: Switching cost descriptive statistics .............................................................. 47 Table 4.7: Reliability test’s result – Cronbach’s Alpha.................................................. 48 -x- Table 4.8: Reliability coefficient of customer satisfaction measurement scale.............. 49 Table 4.9: Reliability coefficient of trust measurement scale ........................................ 50 Table 4.10: Reliability coefficient of commitment measurement scale ......................... 51 Table 4.11: Reliability coefficient of switching cost measurement scale ...................... 51 Table 4.12: Reliability coefficient of customer loyalty measurement scale ................... 52 Table 4.13: The KMO and Bartlett's component measurement coefficient of factors affect the Customer Loyalty ............................................................................ 53 Table 4.14: Extraction Sums of Squared Loadings round 1st ........................................ 55 Table 4.15: Exploratory Factor Analysis round 1st ........................................................ 57 Table 4.16: Extraction Sums of Squared Loadings round 2nd ....................................... 59 Table 4.17: Exploratory Factor Analysis round 2nd ....................................................... 61 Table 4.18: Extraction Sums of Squared Loadings round 3rd ........................................ 62 Table 4.19: Exploratory Factor Analysis round 3rd ....................................................... 64 Table 4.20: Customer Loyalty scale KMO and Bartlett's coefficient............................. 65 Table 4.21: Extraction Sums of Squared Loadings ........................................................ 65 Table 4.22: The Results of factor analysis of Customer Loyalty scale .......................... 66 Table 4.23: Correlation matrix between the variables .................................................... 68 Table 4.24: Regression analysis round 1st ..................................................................... 70 Table 4.25: Summary result of hypotheses test round 1st .............................................. 71 Table 4.26: Regression analysis round 2nd .................................................................... 72 -xi- Table 4.27: Summary result of hypotheses test round 2nd ............................................. 73 Table 5.1: The trust creation process .............................................................................. 80 -xii- LIST OF FIGURES Figure 1.1: Vietnam IT Industry Revenue from 2011-1013 ............................................. 3 Figure 2.1: Conceptual Framework ................................................................................ 17 Figure 3.1: Research process .......................................................................................... 20 Figure 4.1: The research model studying factors affecting Customer Loyalty .............. 66 -xiii- ABSTRACT Customers are key asset of organization and customer loyalty plays important role in business survival. Especially, in Information Technology (IT) industry, business customers seem to be easy to switch many suppliers because of intensive competition. Therefore, this research aims to determine factors which affect loyalty of business customer in Information Technology Industry in Ho Chi Minh City (HCMC) Conceptual model was proposed after an extensive review of the literature and practical situation of IT industry in HCMC. Data was collected from 220 IT business customers who made purchasing decision. Descriptive statistics, reliability test, factor analysis, correlation testing, regression analysis, T- test, One-way ANOVA were applied to analyze and test hypothesis of conceptual model. Results of the study show that customer satisfaction, trust, and commitment positively and significantly influence customer loyalty. In addition, customer satisfaction and trust are primary antecedent of customer loyalty. In contrast, switching costs does not influence customer loyalty. Keywords: customer loyalty, customer satisfaction, trust, commitment, switching cost, IT industry. -xiv- -xv- Chapter 1: INTRODUCTION The first aim of this dissertation is to determine factors affect customer loyalty towards information technology (IT) business-to-business (B2B) context in Ho Chi Minh City. In this chapter, researcher would like to introduce an overview of the IT industry in Vietnam. Then the research problem, the research question and the research objectives, scope and limitation, the significance of this study and the structure of this thesis are presented. 1.1. Research background: Overview of the Information Technology (IT) industry in Vietnam: According to the ranking of the report on Measuring of Information Society by the International Telecommunication Union (ITU), the ICT (Information and Communication Technology) Development Index of Viet Nam continued to rise 5 places from 86th to 81st, ranked 4th in the Southeast Asia and ranked 12th among 27 countries in the Asia- Pacific region. In the past 10 years (2002-2012), Viet Nam had a spectacular breakthrough from position 107 to position 81 with a jump of 26 steps. The IDI ranking is based on 3 main sub-indexes such as ICT assess, ICT use, and ICT skills where Viet Nam was highly rated by ITU in terms of IT applications with a rank of 76th among 161 countries worldwide in 2012 (White Book, 2013, p.17) -1- Table 1.1: ICT Development Investment (IDI) ranks of Viet Nam and the Southeast Asian countries from 2002-2012 (Source: White Book, 2013, p.17) In spite of facing difficulties and challenges caused by the economic crisis, the IT industry kept being a high growth rate economic sector. This sector simultaneously has asserted a diffuse impact on boosting other sectors and fields of the economy and society and create more jobs and improve laborers’ income. The total revenue of IT industry in 2012 reached about 25.5 billion USD, and increase of 86.3% compared to the same period of 2011 (White book, 2013, p.13). Vietnam IT industry is more and more development with total revenue was amounted over 39 billion USD, increasing by 55% compared with recent year of 2012. Although Vietnam’s ranking seems to be stable in worldwide evaluation in the period time from 2013 to 2014, the striking point of Vietnam that IT industry was considered and recognized by international organization -2- through Vietnam belonging to top 10 among Asia-Pacific countries which lead in software outsourcing (White book, 2014). Figure 1.1: Vietnam IT Industry Revenue from 2011-1013 ( Source: White Book, 2013; White Book, 2014) 1.2. Rationales and Problem statement: Over the last decade, in Vietnam, information technology had become the industry which had high growth rate, contributed nearly 7% GDP (VCCI, 2013), and had many opportunities to develop in the future. In order to maximize profitability in long-term, firms know that customers are key asset of organization and customer loyalty has a significant role in business survival. Unfortunately, it is undoubtable that customers nowadays tend to consider other potential competitive alternatives even they are satisfied with their suppliers, especially with development of internet, the world -3- becomes flatter with plain information thoroughly. Companies need a competitive advantage to stand out from the competition. Hence, it is necessary to determine factors affecting customer loyalty in business-to-business context. To survive and develop in intensively competitive environment nowadays, especially in the information technology industry, suppliers must know the way to attract more and more customers and build a long-term relationship with them as well as step by step obtain customer’s loyalty through many factors. From the above reasons, author would like to study business customer loyalty and choose the topic as follows: Determining factors affect customer loyalty in business-to-business context of Vietnamese information technology companies in Ho Chi Minh City 1.3. Research question: From problem statement, the study will investigate the following research questions: Which factors affect customer loyalty in business-to-business context of Vietnamese Information Technology Companies in Ho Chi Minh City? 1.4. Research objectives: This research is aimed to: - To determine which factor has most impact on customer loyalty in business-tobusiness context of Vietnamese information technology companies in Ho Chi Minh City. - To make the recommendations in order to improve customer loyalty for companies in information technology industry. -4- 1.5. Scope of research: The present study has certain limitations, and caution is therefore advised with respect to the generalizability of the results. The simplicity of the examining of loyalty ignores both the existence of different phases of loyalty in a relationship continuum and the complexity of service/product offerings. In addition, due to limitation of time and cost constraints, the sample size for the research is only confined to those customers responded within three month. Moreover, the data is gathered at one point of time. This dissertation will concentrate on Vietnamese information technology companies in Ho Chi Minh City which have primary business involving trading and distribution in IT hardware product such as computers (laptop, PC,LCD, accessories), servers, etc…and software (Microsoft, Oracle, etc…) 1.6. Significance of research: This dissertation contributes to determine factors which impact customer loyalty in business-to-business context of Vietnamese information technology companies. Researchers expect that the findings of this study will help managers to understand the way to manage long-term relationship with their customer through many factors affecting customer loyalty. In addition, author also hopes these findings will be valuable and can be extended more in other industries in future study. 1.7. Research structure: This dissertation comprises 5 chapters as below: - Chapter 1: Introduction -5- This chapter gives a brief introduction about research background; problem solving of customer loyalty in the information technology companies and objectives of research. - Chapter 2: Literature review and research model This chapter introduces conceptual framework about some related concepts and theories of the study, then hypotheses are built based on these basic concepts. - Chapter 3: Research Methodology This chapter states the method used in research which includes data collection and sampling and also the way how to analyze data in order to test the measurement and conceptual framework. - Chapter 4: Discussion and Findings This chapter presents and discusses the results of the correlation analysis of the research hypothesis and the assessment of the reliability of the research data. After presenting the results of the research in the previous chapter, the implications of these results are now discussed in the light of the literature review. - Chapter 5: Conclusion and Recommendation Draw out the conclusion and research limitations are identified and recommendations of the research are also discussed in this chapter. -6- Chapter 2: LITERATURE REVIEW AND RESEARCH MODEL In this chapter, researcher aims to list some literatures relevant to this dissertation. Firstly, it would be started with the information technology business-to-business concept. Next, definition and importance of customer loyalty, and then followed by the most important and popular factors which affect customer loyalty are presented. These factors are customer satisfaction, trust, commitment, and switching cost. 2.1. General concept: 2.1.1. Business-to-business (B2B): Frauendorf et al. (2007, p.9) defined “the field of business-to-business as one which, in brief, describes transactional relations between business partners, including business enterprises organization, and governmental institutions”. The customers in a B2B market would hereby be referred to as industrial customers, which was common in the B2B literature (e.g. Homburg and Rudolph, 2001), while the organization of the industrial customer would be referred to as the customer organization.Kotler &Proeftsch (2006) stated that business to business (B2B) is a business that runs in industrial markets that have products or other services for sales, rent, and supplied to other business. This reloading subdealer business also runs in business to business (B2B) manner and focuses on the customers. Compared to consumer markets the industrial markets usually involves “greater levels of decision-making input and high transaction costs” (Russell-Bennett et al., 2007, p. 1253) and the buying process is more rationalized and involves long-term relationship (Cooper and Jackson, 1988). Products are more technically complex, more money, -7- people and procedure are involved and products are often specialized to the customer organization (Cooper and Jackson, 1988) 2.1.2. Information technology (IT): Information technology (IT) is the application of computers and telecommunications equipment to store, retrieve, transmit and manipulate date, often in the context of a business or other enterprise. The term is commonly used as a synonym for computers and computer networks, but it also encompasses other information distribution technologies such as television and telephones (Wikipedia.org) To summarize, in this dissertation, information technology companies are defined as companies whose primary businesses activities are associated with technology industry which includes computer hardware, software, and computer services as well as concentrates on distribution or trading area. 2.2. Customer Loyalty: 2.2.1. Definition: The concept of customer loyalty has been supported much consideration and attention from both academics and practical in many industries. According to Stank, Goldby& Vickery (1998) customer loyalty is defined as long-term commitment to repurchase involving both a favorable cognitive attitude towards the selling firm and repeated patronage. Oliver (1999) defined it as “a deeply held commitment to re-buy or re patronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and -8- marketing efforts have the potential to cause switching behavior”. Dwayne Ball (2004) defined loyalty in a more specific way in both attitude and behavioral intentions (repurchase or purchase frequency), and attitudinal component. Behavioral loyalty was repeated transactions (or percentage of total transactions in the category) and attitudinal loyalty was often defined as both positive affect toward the relationship’s continuance, and the desire to continue to remain in the relationship, and was sometimes defined equivalently with relationship commitment (Morgan and Hunt, 1994). There were two factors in loyalty items, active loyalty (word-of-mouth and intention to use) and passive loyalty (not switching even under less positive conditions). Although there are so many different definitions about customer loyalty, there seem to be two basic approaches. One is the behavioral approach and another is the attitudinal approach. On the one hand, in behavioral approach, Reichheld (2003) defined customer loyalty as: “… to make an investment or personal sacrifice in order to strengthen a relationship with a supplier who treats him well and gives him good value in the long term even if the supplier does not offer the best price in a particular transaction. In additional, Rauyruen& Miller (2007, p.23) supposed that customer loyalty is the willingness of average business customers to repurchase the service and the product of the service provider and to maintain a relationship with the service provider/ supplier. Furthermore, Homburg, Giering,& Menon (2003) mentioned that it is the degree of a firm’s intention to continue the relationship with the supplier and to -9- expand the quantity and volume of this relationship consequently, customer loyalty is about much more than to repeat purchases.” On the other hand, attitudinal approach, Rauyruen& Miller (2007, p.23) defined customer loyalty is the level of customer’s psychological attachments and attitudinal advocacy towards the service provider/ supplier. Moreover, Briggs et al. (2007, p.1146) also cited that customer attitudinal loyalty is a buyer’s overall attachment or deep commitment to a product, service, brand, or organization. To sum up, customer loyalty in this dissertation is defined not only the behavioral loyalty which is to make frequent repurchases consistent in the future and attitudinal approach which is to make an effort and investment in order to remain a long-term relationship with a company 2.2.2. Importance of customer loyalty: After the 1990s, customer loyalty became an important research question in marketing research. There was an observable worldwide shift toward loyalty marketing in most of the sectors across various industries (Alok Kumar Rai, Srivastava Medha, 2013). Ming XU (2013) pointed out that some empirical studies had proved that the chance for selling products to current customers was 50%, and the chance for selling products to a new customer was 15%. If customer loyalty decreased by 5%, business profit would go down by 25%. If customer retention rate increased by 5%, business profit would grow by 85%; 60% of new customers were due to current customer’s recommendations. Depending on the industry, an improvement of 5% in customer retention lead to an increasing of 25% to 85% in profits (Kerin, Hartley, &Rudelius, -10- 2009; Reichheld&Sasser, 1990). Moreover, many research showed that businesses spent more than five times as much to obtain a new customer than to retain an existing one (Kotler & Keller, 2006; Willls, 2009). Loyal customers seem to be less to switch to other competitor merely because of price, and they even repeat purchases than non-loyal customers. Loyal customers are likely the most important assets of a company. It is necessary to understand that keeping loyal customers means increasing long-term profit for business. Hence, customer loyalty is the main destination that firms have to build through concerned factors. Other factors besides customer loyalty play roles in driving a company’s growth–economics; however, customer loyalty is clearly one of the most important drivers of growth (Reichheld, 2003). To sum up, in this dissertation, researcher would like to test factors influencing customer loyalty including customer satisfaction, trust, commitment, switching cost. 2.3. Antecedents of customer loyalty: Customer loyalty in service may be affected by many different variables which vary among services, according to the specific characteristics of each service industry (Harrison, 2000; Lewis & Soureli, 2006). From the findings of many previous studies and some experts in this IT business trading supposed that Customer Satisfaction, Trust, Commitment, and Switching Cost are significant relationship with Customer Loyalty in the business-to-business context. Hence, in this study, researcher would like to test its relationship with customer loyalty. -11- 2.3.1. Customer satisfaction: Kotler (1997) stated that customer satisfaction was personal feelings which arose from a comparison between customer’s perception of product features or results, and their expectations of products. Civilai et al. (2007) summarized that: “Relationship satisfaction is a higher-order construct consisting of the buyer’s satisfaction with financial returns derived from the sales of the supplier’s products, with the supplier’s products and with the supplier’s sales representatives”. This outcome measure allowed for economic satisfaction (financial returns derived from sales of the supplier’s products) as well as non-economic satisfaction (e.g. the satisfaction that could be derived from interpersonal relationships with the supplier’s sales representatives).” (Civilai et al., 2007: p.918). Customer satisfaction usually resulted in three behavioral results: word-of-mouth advertising, repeated purchase, and brand commitment (Ming XU, 2013, p.58). Effect of customer satisfaction of customer loyalty: In many previous studies, especially in business-to-business context, several researchers showed that there was a link between satisfaction and loyalty exists. Many studies have found that higher levels of customer satisfaction could lead to greater customer loyalty (Anderson & Sullivan, 1993; Alok Kumar Rai, 2013; Srivastava Medha, 2013; Beerli et al, 2004; Bolton & Drew, 1991; Boulding et al., 1993; Einar W. Aaby Hirsch, 2011; Fornell, 1992; Levesque, & McDougall, 1996; Lewis &Soureli, 2006, Shaimaa S. B. Ahmed Doma, 2013; Stephen L. Sondoh et al, 2007). Beerli et al. (2004) strongly affirmed that the relationship between satisfaction and loyalty is positive and statistically significant, which satisfaction has a greater weightier on loyalty than switching -12- costs. It is strongly show that customer satisfaction, in the highly competitive market, is regarded as the substance of organizational success, because customer satisfaction can lead to customer retention and then to profitability for the organization (Jamal & Naser, 2002). Therefore, enhancing customer satisfaction should be a key driver for firms in building and improving customer loyalty. The following hypothesis would test this relationship in this study: H1: Customer satisfaction is positively related to customer loyalty. 2.3.2. Trust: Trust was defined as a willingness to rely on an exchange partner in whom one has confidence, which meant that there had to be a belief in the other partner's trustworthiness that resulted from the expertise, reliability or intentionality of that partner (Ha et al, 2004). Trust was acted as a behavioral intention or behavior that reflected reliance on the other partner and involves uncertainty and vulnerability on the part of the trustee. Effect of trust on customer loyalty: Zinkeldin M. & Jonsson P. (2000) advocated that the high levels of trust characteristics of relationship exchange enable parties to focus on the long-term benefits of the relationship and willingness not try to exploit the new relationship at the expense of long-term cooperation. It is claimed that there is a positive relationship between customer trust and customer loyalty in previous research (Alok Kumar Rai, Srivastava Medha, 2013; Chaudhuri& Holbrook, 2001; Gundlach & Murphy, 1993; Lau & Lee, 1999, Ming XU, 2013; Shaimaa S. B. Ahmed Doma, 2013). -13- Ball et al. (2004) contended that in a competitive market, lack of trust obstructs loyalty formation. Kassim and Abdullah (2010) studied the link between trust and customer loyalty in two cultural contexts i.e., Malaysia and Qatar and found it to be significant. Trust as an element of customer loyalty had an influence on building customer loyalty (Aydin &Ozer 2005; Chen & Xie 2007; Du Plessis 2010). Thus, trust has been considered as an important role in enhancing customer loyalty. This study will therefore test the following hypothesis: H2: Trust is positively related to customer loyalty. 2.3.3. Commitment: Commitment existed when a partner believed the relationship was important enough to warrant maximum efforts at maintaining that relationship in the long term (Kong Shin Yee, 2008, p.16). Zineldin M (2000) defined relationship commitment as: “An exchange partner believing that an ongoing collaborative relationship with another is so important as to warrant maximum efforts at maintaining it; that is, the committed party believes the relationship is worth working on to ensure that it endures indefinitely” (Zineldin M., 2000, p.249). Effect of commitment of customer loyalty: Commitment and loyalty are two concepts connected but different. Beyond the favorable or unfavorable appreciation of the brand, commitment played the role of stabilizing the behaviors in time irrelevantly of the circumstances, being an essential component of long-term loyalty (Morgan and Hunt, 1994). Commitment helped customers to develop positive -14- intentions towards an extension of the brand to new categories of products moderating the effects of negative information about the brand on the changes of consumers’ attitudes (Ruben, 2007). This the case of B2B context, many previous studies demonstrated that there are positive relationship between commitment and customer loyalty (Armando Luís Lima de Campos Vieira, 2008; Alok Kumar Rai, Srivastava Medha, 2013; Azamhaghkhah et al, 2013; Ming XU, 2013; Shaimaa S. B. Ahmed Doma, 2013). Thus, this study will test the following hypothesis: H3: Commitment is positively related to customer loyalty. 2.3.4. Switching Cost: Porter (1997) defined switching cost was relative to ongoing cost take place in using particular building re-purchase relationships with suppliers; switching costs were past costs taking place in changing suppliers. Effect of switching cost on customer loyalty: Switching costs would play an exit barrier in a less satisfied relationship. Because of switching costs, customers needed to pay more in changing products and service suppliers. Switching costs could be regarded as an exit barrier in service relationship, and exert important influence on supplier changing decision making. Chen and Wang (2009) stated that switching costs may range from termination costs imposed by current service provider to costs of joining another service provider. Barroso and Picón (2012) chose Spanish insurance market for studying various dimensions of switching costs and their antecedents as well as outcomes and proposed that switching cost is a higher-order construct which is a composition of six dimensions namely (i) benefits loss costs; (ii) personal relationship loss costs; (iii) -15- economic risk costs; (iv) cost of searching and evaluation; (v) set-up costs; and (vi) monetary loss cost. Each of these six dimensions reflected customer’s perception of time, money or efforts involved in switching. Gronhaug& Gilly (1991); Fornell (1992); Ping (1993, 1997) found switching costs to be positively related to customer loyalty. Bateson and Hoffman (1999) argued that customer satisfaction and switching costs were believed to be the most significant predictors of repurchase intentions or re-peat buying behavior. Kotler (1997) pointed out there were two main ways to retain loyal customer: (1) increase the level of customer satisfaction; (2) increase customer switching costs. Jones et al. (2000) stipulated that switching costs influence customer loyalty through its interaction with customer satisfaction.Alok Kumar Rai, Srivastava Medha (2013) opined that switching cost was one of the antecedents that had positive relationship with customer loyalty. The following hypothesis will be tested to know whether switching cost impact on customer loyalty in the context of this study. H4: Switching cost is positively related to customer loyalty. 2.4. Research model and hypothesis: Although many previous researchers had various studies about the customer loyalty, it seemed that so few researches applied in information technology industry. After reviewing above-mentioned literature as well as basing on many previous studies about business customer loyalty in different industries, researcher would like to synthesize and examine factors that affect customer loyalty in business-to-business context of Vietnamese information technology companies. A casual model in proposed in which the dependent variable is customer loyalty and independent variables regarded as -16- the antecedent of loyalty are customer satisfaction, trust, commitment, and switching cost. Figure 2.1: Conceptual Framework Due to above framework, the hypotheses are formed as follows H1: Customer satisfaction is positively related to customer loyalty H2: Trust is positively related to customer loyalty H3: Commitment is positively related to customer loyalty H4: Switching cost is positively related to customer loyalty. -17- Chapter 3: RESEARCH METHODOLOGY In this chapter, researcher would like to mention two main parts including research design and measurement scales. Moreover, tools for testing the research questions and hypothesizes are also presented. 3.1. Research design: The research design is a comprehensive master plan of the research study to be undertaken, giving a general statement of the methods to be used. The function of a research design is to ensure that requisite data in accordance with the problem at hand is collected accurately and economically. Simply stated, it is the framework, a blueprint for the research study which guides the collection and analysis of data. The research design, depending upon the needs of the researcher may be a very detailed statement or only furnish the minimum information required for planning the research project. According to Babbie and Mouton (2004), there are different types of social research methods that can be identified from the literature, namely exploratory research, descriptive research and explanatory research. Babbie and Mouton (2004) concluded that the aims for social research vary a great deal, ranging from, gaining new sights into the phenomenon; undertaking preliminary investigation before a more structured study of the phenomenon is done; describing central concepts and constructs of a phenomenon; determining priorities for the research and developing new hypotheses about existing phenomena. Since the objective of the research is to determine and examine factors affect IT business customer loyalty in Ho Chi Minh City, the research design for this study is an exploratory case study that is analyzed through mixed method. -18- Quantitative research is an inquiry into an identified problem, based on testing a theory, measured with numbers, and analyzed using statistical techniques. The goal of quantitative methods is to determine whether the predictive generalizations of a theory hold true. In contrast, qualitative research approaches reality from a constructivist position, which allows for multiple meanings of individual experiences. In this approach a researcher develops a complex, holistic picture, analyses words, reports detailed views of informants, and conducts the study in a natural setting (Creswell, 2007). The goal of qualitative research is to explore and understand a central phenomenon in a qualitative research study (Creswell, 2005) Table 3.1: Fundamental differences between qualitative and quantitative research strategies Type of research Qualitative Research Quantitative research In-depth interview and focus group Research approaches Surveys and tracking studies discussion Sample size and error sampling Sampling Recruitment of participants procedure Data collection Questionnaire design Interview with discussion guide instrument Pre-test and modify questionnaire Data collection Carry out interviews or focus group Briefing interviews process discussion Actual fieldwork Full transcript Statistical analysis Impressionistic collation of data and Report writing Analysis/ report -19- analysis Presentation Debrief of client (Source: Thomas Tan Tsu Wee, 2001) In this dissertation, qualitative method is used for an exploratory study while quantitative method is used for a main survey which is executed for data collection to test the proposed hypothesizes. The research was performed through two phases: (1) an exploratory study, (2) a main survey. The purpose of the exploratory study was for exploring and refining the relevant items and building a questionnaire. Furthermore, the main survey was also discussed in data collection, analysis of collected data as well. 3.2. Research process: Figure 3.1: Research process Define research problem and identify Give conclusion and ....................................................................................................................................... research objectives recommendations Review related literature Findings Build conceptual framework Test hypothesis Produce draft questionnaires Restate research model Conduct pilot test Analyze data Generate final questionnaire Process data Define samples and sample size -20Collect data 3.3. Measurement design: Measurements were based on the literature review of previous studies and semistructured interviews with some high level managers and business customer in the pilot tests. 3.3.1. Customer loyalty measurement: Measurement Author/Source Say positive things about this supplier to others Shun Yin Lam (2004) Buy other series of products from this supplier Shun Yin Lam (2004) Continue to buy products from this supplier Ming XU (2013) Buy other series of products from this supplier Ming XU (2013) Consider this supplier as my first choice when IT Shun Yin Lam (2004) consultancy services are needed Even though other suppliers provide more favorable Ming XU (2013) conditions, customer will not consider them Willing to establish a closer long-term relationship Ming XU (2013) with this supplier Table 3.2: Customer Loyalty Measurement 3.3.2. Customer satisfaction measurement: Measurement Author/Source Feel satisfied with the relationship with this Kong Shin Yee (2008) supplier -21- Supplier completely meets customer's Ming XU (2013) expectations Supplier provides financial assistance during Ming XU (2013) difficult times Supplier shows a sincere interest in solving Ming XU (2013) complaints Employees work in a tidy professional way Kong Shin Yee (2008) The benefits that customer receive from maintaining relationship with this supplier Kong Shin Yee (2008) exceed those that customer can obtain elsewhere Dealing with this supplier is less risky Kong Shin Yee (2008) Supplier’s product/service quality perform much Kong Shin Yee (2008) better than the competitors This supplier is very close to ideal supplier in Ming XU (2013) customer heart Table 3.3: Customer Satisfaction Measurement 3.3.3. Trust measurement: Measurement Author/Source We believe this supplier will comply with terms Ming XU (2013) specified in the contract In our relationship, this supplier gives us reliable Kong Shin Yee information and advice (2008) -22- Kong Shin Yee We opine we can always trust the supplier (2008) Kong Shin Yee We think the supplier keeps promises (2008) Shaimaa S. B. Ahmed We think this supplier has good will reputation Doma (2013) We believe the process of negotiation with this supplier is fair, and supplier and we have equal Ming XU (2013) status We think this supplier is consistent in providing Shaimaa S. B. Ahmed quality services Doma (2013) We suppose this supplier is reliable in providing Shaimaa S. B. Ahmed unique services Doma (2013) We suppose our interests are taken into Kong Shin Yee consideration in this supplier’s important (2008) decisions. Table 3.4: Trust Measurement 3.3.4. Commitment measurement: Measurement Author/Source We believe this supplier and we share the same Ming XU (2013) aim in cooperation. -23- Deciding to work with this supplier was a definite Zineldin M. success for my firm &Jonsson P. (2003) Our relationship required maximum effort and Zineldin M. involvement &Jonsson P. (2003) Our company is fully open & honest in its Zineldin M. relationship with this supplier &Jonsson P. (2003) Company deserves repeat purchasing and Zineldin M. recommendations &Jonsson P. (2003) We intend to maintain and develop this Zineldin M. relationship with this supplier &Jonsson P. (2003) Zineldin M. We have a strong commitment to this supplier &Jonsson P. (2003) Table 3.5: Commitment Measurement 3.3.5. Switching cost measurement: Measurement Author/Source If we changesupplier, we are not sure which level Ming XU (2013) of products and services I can Obtaining information on other suppliers costs a lot Ming XU (2013) of time, effort, and money Even if we can get information on other manufacturers, we should spend a lot time in Ming XU (2013) strengths and weaknesses evaluation -24- We need time to learn and be familiar with new manufacturer's products and services if we change Ming XU (2013) supplier. Making new supplier understand what we want and establish good relationship requires a lot of time Ming XU (2013) after changing supplier Changing supplier means that we will give up preferential policies only long-term customers could Ming XU (2013) enjoy Table 3.6: Switching Cost Measurement 3.4. Questionnaire design: The questionnaire was designed to match with the objectives of the study and conceptual framework. Although the questionnaire was chosen from many previous studies, it was considered carefully whether suitable in the context of study which concerned in IT business customer in Ho Chi Minh City. 3.4.1. Preliminary research: 3.4.1.1 First draft of questionnaire: The first draft of the questionnaire includes two parts, which one is customer’s evaluation about loyalty and the antecedents of loyalty as well as another is customer’s information. In the first part, there were five components including customer loyalty (with 8 statements), customer satisfaction (with 9 statements), trust (with 8 statements), -25- commitment (with 8 statements), and switching cost (with 6 statements). Five-point Likert-scale, ranged from 1 (strongly disagree) to 5 (strongly agree) is used. To sum up, there were total 39 statements in this part, which described the customer’s experience in the constructs of the research model. In the second part, customer’s information is asked including age, gender, working experience, education level, and job situation, scale of business, and type of business. 3.4.1.2 Interview: Semi structured interviews were conducted to further explore other factors which the close ended questionnaires could not delve. Therefore, a draft structured questionnaire was delivered to 7 people including 5 IT business customers (1 purchasing director-business owning with medium scale business, 2 purchasing director-business owning with small scale, 1 purchasing manager who works for small retailer, 1 purchasing manager who works for big retailer, and 2 high level managers who work in distributor and vendor have had experience in this field). Based on their feedbacks, the draft questionnaire would be added or eliminated the items in order to make them more understandable and suitable in the context of this study. After interview, based on respondent’s comments, researcher would like toadd some variables basing on literature review and practical feedbacks to customize each measurement to this context of study: In Customer Satisfaction Questionnaire: add “We think employees work in a tidy professional way” -26- 3.4.2. Pilot test: Pilot testing involves conducting a preliminary test of data collection tools and procedures to identify and eliminate problems, allowing researcher to make corrective changes or adjustments before actually collecting data from the target population. . Pilot testing gives researcher an opportunity to make revisions to instruments and data collection procedures to ensure that appropriate questions are being asked, the right data will be collected, and the data collection methods will work. Researcher delivered draft questionnaire to 20 IT business customers and used their feedback to adjust and eliminate questions. After pilot test, there were 38 questions left (first draft with 39 statements, then, after interview added one more statement) and some questions are adjusted to make questionnaire understandable and easier to answer. After interview, based on respondent’s comments, researcher not only added/deleted some variables but also adjusted or replaced some questions which had unclear meaning: - In fact, the original questionnaire was started with customer loyalty questions, after feedbacks, it would rather to move to them to end of questionnaire. - In Trust questionnaire: “believe that this supplier does not disclose business secrets between us” was replaced by “believe the process of negotiation with this supplier is fair, and supplier and we have equal status” because of making respondent confuse with other question; “suppose this supplier is integrity” was replaced by “suppose our interests are taken into consideration in this supplier’s important decisions” because of “integrity” was considered too general; added “suppose this supplier is reliable in providing unique services”. To sum up, in -27- Trust questionnaire, after pilot test, researcher added 1 item, and replaced 2 other items. Finally, there is 9 items instead of 10 items in Trust scale. - In Commitment questionnaire: removed “Strong sense of belongingness to the company” because of synonym with other question. Hence, there is 7 items instead of 8 items in Commitment scale - In Customer satisfaction questionnaire: removed “maintain long-term business relationship with this supplier” because of synonym with other question. Hence, there is 9items instead of 10 items in Customer Satisfaction scale - In Customer Loyalty questionnaire: removed “purchase products in this supplier are valuable” because of making confuse for respondent. Hence, there is 7 items instead of 8 items in Customer Loyalty scale. 3.4.3. Final format of questionnaire: Based on the result of pilot test, the questionnaire was redesigned and refined to make all words in statements more comprehensive and all items of measurement appropriate for conducting a full-scale study. The final format of the questionnaire also had the same structure like the first draft of questionnaire covering customer’s evaluation on loyalty and the antecedents of loyalty as well as customer’s information. There were two parts in the questionnaire including 38 items with 5 points Likert-scale which 1 means “strongly disagree”, 3 means “ neutral”, and 5 means “ strongly agree” in the first part; the second part mentioned demography including 5 questions to ask customer’s information. -28- Basing on the items of constructs, and to avoid the language barrier the initial Vietnamese draft of questionnaire was designed. First, the questionnaire was translated from English into Vietnamese, then, conducted with the pilot test to check the meaning whether it was appropriate with the context of study and the correspondents. Appendix 2 And Appendix 3 were shown English and Vietnamese version of the questionnaire Variables Statement Code We will continue to buy products from this supplier CL1 We will buy other series of products from this supplier CL2 We would say positive things about this supplier to others CL3 We would recommend this supplier to other people who Customer loyalty seek our advice CL4 We would consider this supplier as my first choice when IT consultancy services are needed CL5 Even though other suppliers provide more favorable conditions, we will not consider them CL6 We are willing to establish a closer long-term relationship with this supplier. CL7 We think this supplier completely meets my expectations CS1 Customer We suppose that our supplier provides financial satisfaction assistance during difficult times CS2 This supplier is very close to ideal supplier in my heart CS3 -29- We would opine this supplier shows a sincere interest in solving complaints CS4 We think dealing with this supplier is less risky CS5 The benefits that we receive from maintaining my relationship with our supplier exceed those that we can obtain elsewhere CS6 We think employees work in a tidy professional way CS7 We suppose this supplier’s service quality perform much better than the competitors CS8 We are satisfied with the relationship we have with this firm CS9 We believe this supplier will comply with terms T1 specified in the contract We believe the process of negotiation with this supplier T2 is fair, and supplier and we have equal status. Trust We think this supplier has good will reputation T3 We think the supplier keeps promises T4 We suppose our interests are taken into consideration in T5 this supplier’s important decisions. In our relationship, this supplier gives us reliable T6 information and advice We suppose this supplier is reliable in providing T7 unique services -30- We think this supplier is consistent in providing quality T8 services We opine we can always trust the supplier T9 We intend to maintain and develop this relationship C1 with this supplier Our relationship required maximum effort and C2 involvement Our company is fully open & honest in its relationship C3 with this supplier Commitment Company deserves repeat purchasing and C4 recommendations We believe this supplier and we share the same aim in C5 cooperation Deciding to work with this supplier was a definite C6 success for my firm We have a strong commitment to this supplier C7 If we changesupplier, we are not sure which level of SC1 products and services Changing supplier means that we will give up Switching Cost preferential policies only long-term customers could SC2 enjoy If we changesupplier, it will take lot of time SC3 If we changesupplier, it will take lot of effort SC4 -31- If we changesupplier, it will take lot of money SC5 Making new supplier understand what we want and establish good relationship requires a lot of time after changing supplier SC6 Table 3.7: Final format of questionnaire 3.5. Data collection method: In order to identify the objective of determining factors influence business customer loyalty, this study incorporated both primary and secondary sources of data. Secondary data will be collected from several of sources both online and offline such as books, theories and previous studies from the internet, etc…Primary data for this research will be collected from the questionnaire and in-depth interview. The secondary data of this study is gained from many sources like e-sources, library books, and journals/articles. This data is used to get better insight on the research topic, to establish the viable platform for the theoretical framework constituting the bases of this research, and to design the sample frame and questionnaire for retrieving the primary data. Another advantage of using secondary data is its comparability character. The researcher used it to validate and compare the data get through questionnaire to existing literature and articles. Primary data sets are collected by the researchers who will also examine that data. Researchers collect primary data directly through interviews, questionnaires, focus groups, observation, the examination of primary sources such as writings or speeches, or a variety of other such collection methods (Vartanian, 2010, p.3) -32- As this study is basically empirical in nature, primary data was gathered from IT business customers who have had power to decide buying product from supplier to answer the above questions. Hence, the more emphasize is inclined to the primary data source. Primary data is gathered from interview and survey as below: - In-depth interviews: interview both IT business customers who have had power to decide buying product and high level managers to identify the factors which are appropriate with context of the study. - Questionnaire: measure each of the components through a survey of total 38 items and 5 questions for demography of respondent 3.6. Population and Data Sampling: The unit of analysis is where information about the study is collected. In present study, a Vietnamese information technology companies are used as the units of analysis. Realistically, costs are usually the main factor determining sample size. According to the literature when utilizing factor analysis, it is critical that more subjects than variables are sampled for algebraic reasons, and that the ratio of subjects to variables ranges from 2:1 and 100:1 (Costello & Osborne, 2005), with a preference towards larger ratios to improve factor reliability. Costello and Osborne (2005) are of the opinion that a sample subject to item ratio of 2:1 is insufficient, they note that even with large subject to item ratios, for instance 20:1, exploratory factor analysis (EFA) is still prone to error. The variability in the literature suggests there is contention in terms of ideal sample size, and that this is as yet an unsettled dispute. However, the ratio of 5:1 is considered the rule of thumb by contemporary writers (Hair et al., 2010). In factor analysis, a sample -33- size of 100 or greater is advised (Hair et al., 2010). A sample of 100 is sufficiently large enough to produce reliable factors. If less than 100 subjects is used then replication studies are required using other samples for purposes of validity. This study focuses on Vietnamese information technology companies in Ho Chi Minh City as the population. It also applies the 5:1 principle (Hair et al., 2010) in determining sample size. In this study, there were 38 items, since there were 38 observations for all variables, so the minimum number of interviewees taking part in research is S = 190 (5 x 38). Generally, the sample size is collected to round up at least to 190 respondents in order to get the result more reliable for this study. The sample in this study consists of 450 people who worked in purchasing department at IT Company or who had power to decide buying product in Ho Chi Minh City. Although two hundred seventy-six questionnaires was obtained, there were 56 questionnaires that were incorrect because of inappropriate research objects and lack of necessary information, which results in remaining 220 valid questionnaires utilized as data for research. Target Population Active IT business customer in Ho Chi Minh City, Vietnam Active IT business customers who had at least one purchasing transaction from 1st Jan to 31st March, 2014. Sample Method Respondents are IT business customer who work in purchasing department and/or have power to making buying product decision. Methodology Questionnaire -34- Sample size At least 190 respondents Duration 3 months ( from 15 April to 15 July, 2014) Table 3.8: Summary Information of the Survey Sampling Method 3.7. Data analysis method: Valid questionnaires were coded, and then the raw collected data would be processed by SPSS software (version 20). Data go through these analysis methods: 3.7.1. Coding data: Once the questionnaires had been completed, the responses in each question were then coded. These scores were captured in a Microsoft Excel spreadsheet for statistical analysis with respect to Demographic, Leadership and Employee Commitment variables. In section related to demographic, there are five items: age, gender, working experience, education level and working position. Age: an nominal variable ranges as following: - Under 30 years old: coding = 1 - 30 – 40 years old: coding = 2 - Over 40 years old: coding = 3 Gender: a nominal variable ranges as following: - Male: coding = 1 - Female: coding = 2 Working experience: an nominal variable ranges as following: - Under 2 years: coding = 1 - 2 to 5 years: coding = 2 -35- - More than 5 years: coding = 3 Education level: an nominal variable ranges as following: - College, Bachelor: coding = 1 - Master: coding = 2 - Others: coding = 3 Working position: an nominal variable ranges as following: - Purchasing Staff: coding = 1 - Purchasing Managers: coding = 2 - Purchasing Directors: coding = 3 Scale of Business: an nominal variable ranges as following: - Less than 20 people: coding= 1 - From 20 to 100 people: coding= 2 - More than 100 people: coding=3 Type of Business: an nominal variable ranges as following: - Dealer: coding=1 - Retailer: coding=2 The responses in the two remaining sections used 5-point Likert scale from Strongly Disagree to Strongly Agree and were coded as following: - Strongly Disagree: coding = 1 - Disagree: coding = 2 - Neither Agree Nor Disagree: coding = 3 - Agree: coding = 4 - Strongly Agree: coding = 5 -36- The details of subscales were coded as shown in below table: CODING OF OBSERVABLE CONCEPT CONSTRUCT VARIABLES Age, Gender, Working AGE, Demographic (Control GENDER, Experience, Education Level, EDUCATION, Factors) WORKING, POSITION, Working Position, Scale of SCALE, TYPE Business, Type of Business CS1, CS2, CS3, CS4, CS5, CS6, Customer Satisfaction, Customer Satisfaction CS7, CS8, CS9 Trust, Commitment, Trust T1, T2, T3, T4, T5, T6, T7, T8, T9 Commitment C1, C2, C3, C4, C5, C6, C7 Switching Cost SC1, SC2, SC3, SC4, SC5, SC6 Switching Cost (Independent Factors) Customer loyalty CL1, CL2, CL3, CL4, CL5, CL6, Customer Loyalty (Dependent Factor) CL7 Table 3.9: Subscales coding 3.7.2. Descriptive statistics: Descriptive statistics are used to describe the basic features of the data in a study. They provide simple summaries about the sample and the measures. Together with simple graphics analysis, they form the basis of virtually every quantitative analysis of data. The common purpose of these techniques is to summarize both variability (that is the spread of the numbers) and the center of data by using mean and standard deviation, -37- respectively. In this research, this technique was used to evaluate customer loyalty, customer satisfaction, trust, commitment, and switching cost. 3.7.3. Reliability and Validity test: Reliability and validity are two key components to be considered when evaluating a particular instrument. 3.7.3.1 Reliability test: Reliability test through Cronbach’s alpha as a method that is frequently used that assessing the consistency of the entire scale. Geogry&Mallery (2003) cited that the following rules of thumb: “_>0.9- Excellent, _>0.8- Good; _>0.7- Acceptable; _>0.6Questionable; _>0.5- Poor; and _ 0.5) testing Bartlett's value with significance level (Sig. = 0000 0.5) Bartlett's testing value with significance level (Sig. = 0000 [...]... Which factors affect customer loyalty in business- to -business context of Vietnamese Information Technology Companies in Ho Chi Minh City? 1.4 Research objectives: This research is aimed to: - To determine which factor has most impact on customer loyalty in business- tobusiness context of Vietnamese information technology companies in Ho Chi Minh City - To make the recommendations in order to improve customer. .. by step obtain customer s loyalty through many factors From the above reasons, author would like to study business customer loyalty and choose the topic as follows: Determining factors affect customer loyalty in business- to -business context of Vietnamese information technology companies in Ho Chi Minh City 1.3 Research question: From problem statement, the study will investigate the following research... key asset of organization and customer loyalty plays important role in business survival Especially, in Information Technology (IT) industry, business customers seem to be easy to switch many suppliers because of intensive competition Therefore, this research aims to determine factors which affect loyalty of business customer in Information Technology Industry in Ho Chi Minh City (HCMC) Conceptual model... significantly influence customer loyalty In addition, customer satisfaction and trust are primary antecedent of customer loyalty In contrast, switching costs does not influence customer loyalty Keywords: customer loyalty, customer satisfaction, trust, commitment, switching cost, IT industry -xiv- -xv- Chapter 1: INTRODUCTION The first aim of this dissertation is to determine factors affect customer loyalty towards... chance for selling products to a new customer was 15% If customer loyalty decreased by 5%, business profit would go down by 25% If customer retention rate increased by 5%, business profit would grow by 85%; 60% of new customers were due to current customer s recommendations Depending on the industry, an improvement of 5% in customer retention lead to an increasing of 25% to 85% in profits (Kerin, Hartley,... customer loyalty, it seemed that so few researches applied in information technology industry After reviewing above-mentioned literature as well as basing on many previous studies about business customer loyalty in different industries, researcher would like to synthesize and examine factors that affect customer loyalty in business- to -business context of Vietnamese information technology companies. .. technology business- to -business concept Next, definition and importance of customer loyalty, and then followed by the most important and popular factors which affect customer loyalty are presented These factors are customer satisfaction, trust, commitment, and switching cost 2.1 General concept: 2.1.1 Business- to -business (B2B): Frauendorf et al (2007, p.9) defined “the field of business- to -business as... flatter with plain information thoroughly Companies need a competitive advantage to stand out from the competition Hence, it is necessary to determine factors affecting customer loyalty in business- to -business context To survive and develop in intensively competitive environment nowadays, especially in the information technology industry, suppliers must know the way to attract more and more customers and... researcher would like to test factors influencing customer loyalty including customer satisfaction, trust, commitment, switching cost 2.3 Antecedents of customer loyalty: Customer loyalty in service may be affected by many different variables which vary among services, according to the specific characteristics of each service industry (Harrison, 2000; Lewis & Soureli, 2006) From the findings of many previous... understand that keeping loyal customers means increasing long-term profit for business Hence, customer loyalty is the main destination that firms have to build through concerned factors Other factors besides customer loyalty play roles in driving a company’s growth–economics; however, customer loyalty is clearly one of the most important drivers of growth (Reichheld, 2003) To sum up, in this dissertation, .. .DETERMINING FACTORS AFFECT CUSTOMER LOYALTY IN BUSINESS- TO -BUSINESS CONTEXT OF VIETNAMESE INFORMATION TECHNOLOGY COMPANIES IN HO CHI MINH CITY In Partial Fulfillment of the Requirements of. .. 1: INTRODUCTION The first aim of this dissertation is to determine factors affect customer loyalty towards information technology (IT) business- to -business (B2B) context in Ho Chi Minh City In. .. Which factors affect customer loyalty in business- to -business context of Vietnamese Information Technology Companies in Ho Chi Minh City? 1.4 Research objectives: This research is aimed to: - To