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IJBM 31,2

How service quality influences brand equity


The dual mediating role of perceived value and corporate credibility
Sadia Jahanzeb
Department of Public Administration, Fatima Jinnah Women University, Pakistan and International Islamic University, Islamabad, Pakistan

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Tasneem Fatima
Faculty of Management Sciences, International Islamic University, Islamabad, Pakistan, and

Muhammad Mohsin Butt


Nottingham University Business School, The University of Nottingham Malaysia Campus, Semenyih, Malaysia
Abstract
Purpose The aim of this study is to test a holistic model that investigates the direct influence of service quality on building consumer based brand equity, along with the mediating role of corporate credibility and perceived value. Design/methodology/approach A self-administrated questionnaire was used to collect data from the customers of local and foreign banks in the Islamabad and Rawalpindi regions of Pakistan. The hypothesized relationships were tested using structural equation modeling procedure. Findings The results suggest that perceived value and corporate credibility fully mediate the relationship between perceived service quality and consumer based brand equity. Practical implications This study is managerially important for two reasons. First, it will help managers to focus on a more integrated and holistic approach in building consumer based brand equity of their service firms. Second, it will provide clear guidelines for managers regarding how investments in different aspects of important marketing constructs can influence consumer preferential relations with a brand. Originality/value This research is probably the first to investigate a holistic model that explores the causal relationships among service quality, perceived value, corporate credibility and consumer based brand equity of service organizations. Keywords Service quality, Consumer based brand equity, Corporate credibility and perceived value, Brands, Banks, Pakistan Paper type Research paper

International Journal of Bank Marketing Vol. 31 No. 2, 2013 pp. 126-141 r Emerald Group Publishing Limited 0265-2323 DOI 10.1108/02652321311298735

Introduction Recent research in the area of consumer-based brand equity suggests a fundamental shift from conceptualizing and measuring the construct, to exploring its causal relationships with analytically and cognitively driven concepts in the marketing discipline (Faircloth et al., 2001; He and Li, 2011; Spry et al., 2011). Despite some scholarly advancement in this new research direction, service branding remains the least explored area, when it comes to investigating the causality between the service
All authors contributed equally to this paper.

quality of a firm and its consumer-based brand equity (He and Li, 2011). It is surprising to notice that despite the categorical establishment of the fact that consumer-based brand equity in the service context is inherently different from product-based brand equity, only a handful of previous studies have empirically explored the linkage between a firms perceived service quality and its consumer-based brand equity (Berry, 2000; He and Li, 2011; Jensen and Klastrup, 2008). In fact, among them, He and Li (2011), were the first to explicitly propose a model that investigated the direct impact of overall service quality along with the mediating role of perceived value in predicting the consumer-based brand equity of a service brand. Nonetheless, several opportunities exist to improve and expand on their latest work. Examination of the past academic literature suggests that besides perceived value, corporate credibility has the strongest potential to mediate the relationship between service quality and consumer-based brand equity. For example, a body of literature is available that suggests the role of corporate credibility as a consequence of customer perceived service quality (Folkes, 1988; Fombrun, 1998; Spry et al., 2011; Swilley and Goldsmith, 2007; Zeithaml, 2000). Furthermore, a number of past studies also suggested that corporate credibility helps to differentiate renowned brands from their less known counterparts (Aaker and Joachimsthaler, 2000; Farquhar, 1989; Keller, 1993). In a relatively recent attempt, Papasolomou and Vrontis (2006) also reported that stronger brand equity prevails for those brands that exhibit higher brand credibility. Thus it is quite clear from these previous studies that corporate credibility was used either as the consequence of service quality or as an antecedent of consumer-based brand equity. Finally, service quality is considered to be an important and direct antecedent of consumer-based brand equity, as it provides a reason for customers to differentiate a brand from its competitors (Pappu et al., 2005). Therefore, it is logical to argue that some portion of a firms corporate credibility is the result of its superior service quality that can also generate positive associations for a brand, thus becoming a potential candidate as a mediating variable between service quality and consumerbased brand equity (Erdem and Swait, 1998). To the best of our knowledge, this research will be the first to propose a model that explores the mediating role of corporate credibility in generating consumer-based brand equity for service organizations. Investigating the role of corporate credibility is extremely important as investment in building corporate credibility has become a strategic aspect of firms marketing strategy to ensure long-term sustainability (Zhang and Rezaee, 2009). For example, companies spend millions of dollars to develop their identity and credibility in the eyes of stakeholders, and it will be a huge waste of resources, if these investments failed to materialize in customer preferential treatment of a brand. Nonetheless, little empirical evidence is available about its antecedents or consequences in the area of service branding. In addition, none of the previous studies explored the entire set of structural relationships among service quality, perceived value, corporate credibility and consumer-based brand equity in a holistic model. Investigating these structural relationships among most critical antecedents of consumer-based brand equity for service brands might help in developing a holistic model that appears simple, yet delivers highly valuable information to marketers. This structural model is managerially important for two reasons. First, establishing that service quality not only directly influences brand equity but also mediates through other related but distinct variables, such as perceived value and corporate credibility, will help managers to focus on a more integrated and holistic approach in building

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consumer-based brand equity of their service firms. Second, it will provide clear guidelines for managers, on how investments in different aspects of important marketing constructs, can influence consumer preferential relations with a brand. The reminder of the paper is organized in the following way. First, we discuss the relevant literature and proposed a model based on the existing gaps in the literature. This was followed by a section on research methodology. Then the results of the analysis are presented and discussed. Finally a conclusion is provided that look at academic and managerial implications, limitations and areas for future research. Literature review and hypothesis development Service quality The literature pertaining to the definition of service quality is broadly grouped into technical and functional perspectives. The technical perspective caters to the nature of the service provided, while the functional perspective explores the mode of service nroos, 1983). Marketers generally advocate a functional approach when provision (Gro it comes to measuring a firms service quality. The primary reason for preferring a functional approach is based on the argument that a consumer normally analyses and perceives service quality differently compared to an expert. Therefore, it is not appropriate to use technical aspects for gauging consumer service quality perceptions (Donabedian, 1980). SERVQUAL is one of the most commonly accepted models to measure the service quality of a firm. It defines service quality as a gap between customers general expectations of a service and its actual delivery by a specific provider. Founded on the expectancy disconfirmation paradigm, Parasuraman et al. (1991) suggested that service quality can be assessed through a comparative evaluation of customers global expectations about a particular service and their perceptions of services received from a specific supplier. SERVQUAL has been rigorously tested as a measurement tool to evaluate organizations capabilities to deliver quality services in multiple contexts and cultures (Chen and Chang, 2005). However, the expectations perception gap model is widely criticized for its unstable reliability and discriminant validity results (Wang et al., 2004). This issue is largely resolved by only measuring the customers perceptions of service quality. Critics argue that a performance-based measurement approach is more appropriate because at its core, service quality is purely a consumer attitude (Sureshchandar et al., 2001). Moreover, it is also common practice to modify the original scale to suit a particular service context. For example, Karatepe et al. (2005), used a modified SERVQUAL scale to identify a four-dimensional (service environment, interaction quality, empathy and reliability) model of service quality in a banking context. This study also adopts the Karatepe et al. (2005) four-dimensional model to measure the service quality of Pakistani banks. Service quality is considered to be an important and direct antecedent of consumer-based brand equity, as it provides a reason for customers to differentiate a brand from its competitors (Pappu et al., 2005). Yoo et al. (2000), were the pioneers of empirically exploring a direct relationship between perceived quality and consumer-based brand equity. Their results suggested a significant but weak relationship between perceived quality and consumer-based brand equity. However, other studies do not always revealed empirical evidence for a direct relationship between perceived quality and consumer-based brand equity. Most of the investigations exploring the direct relationship between perceived quality and

consumer-based brand equity were in manufacturing context. For example, in a study of the Turkish beverage industry, researchers found that among four antecedents ( perceive quality, brand awareness, brand association and loyalty) of consumer-based brand equity, only brand loyalty was able to significantly predict consumer-based brand equity (Atilgan et al., 2005). Similarly, Tong and Hawley (2009) also attempted to explore the linkage between brand quality and consumer-based brand equity for the sportswear brands in China. Nonetheless, they also reported non-significant results for the direct relation between brand quality and consumer-based brand equity. He and Li (2011), were able to report a positive and direct influence of overall service quality on the consumer-based brand equity of a service brand. Surprisingly though, in the last decade, only a handful of studies have empirically explored the relationship between perceived service quality and consumer-based brand equity in service contexts (He and Li, 2011; Jensen and Klastrup, 2008; Roberts and Merrilees, 2007). This indicates that the empirical evidence to support a direct relationship between service quality and brand equity is far from conclusive and needs further investigation. Based on the above discussion, therefore, this study presents the following hypothesis: H1. Service quality is positively related to consumer-based brand equity. Among other possible outcomes of perceived service quality, such as enhanced perceived value, greater satisfaction, loyalty and corporate credibility, it is the latter that is probably the least explored relationship of all. Attribution theory provides the theoretical foundation for the linkage between service quality and corporate credibility. Attribution theory suggest that when people face difficulty to fully understand an event, they tend to find an explanation by assigning a cause to an observed event to achieve better understanding and greater control of their lives and environment (Folkes, 1988). Previous studies have suggested that the corporate credibility of a brand can be attributed to variables such as customer perceived value and service quality (Folkes, 1988; Fombrun, 1998; Zeithaml, 2000). This idea was further validated in a recent empirical investigation which suggested that online service quality and perceived value are important antecedents of corporate credibility (Caruana and Ewing, 2010; Swilley and Goldsmith, 2007). Despite the significant importance of the critical relationship between the service quality and corporate credibility, only a handful of empirical investigations were published in last two decades that explore this relation. Based on the above arguments, we propose that service quality will positively influence the corporate credibility of a firm: H2. Service quality is positively related to corporate credibility. Perceived value. Perceived value is a holistic concept measuring consumers cognitive and utilitarian perceptions. In a service context, perceived value is a customers comparative evaluation of the benefits and sacrifices resulting from the usage of a service (Teas and Agarwal, 2000; Zeithaml, 1988). Customers are primarily motivated to consume a service, if they perceive that a particular brand offers better gains or a meaningful reduction in its acquisition cost (Dodds et al., 1991). Therefore, one of the prime objectives of a firm should be to focus on continuously improving its customer-related value delivering mechanism to ensure greater perceived value for its brands (Payne et al., 2000). However, any strategic business investment can only

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be justified if the causality between such investments and desirable outcomes can be empirically demonstrated. This is why it is hardly surprising to note that the relationships among service quality, perceived value and customer satisfaction always draw significant research attention (Cronin et al., 2000; McDougall and Levesque, 2000; Sweeney et al., 1997). For nroos (1996) example, several subsequent researchers agreed with Ravald and Gro conclusion that the customer perceived value of a service can be enhanced in two ways, either by offering superior service quality or by diminishing the customer perceived cost associated with acquiring such services (Heskett et al., 1997; Parasuraman and Grewal, 2000; Teas and Agarwal, 2000). Based on previous studies that draw a positive association between service quality and perceived value, we propose the following hypothesis: H3. Service quality is positively related to perceived value. Furthermore, recent studies have also suggested perceived value as a stronger predictor of behavioural intentions than either satisfaction or perceived quality (Cronin et al., 2000). This belief has led some researchers to test perceived value as a vital precursor of a brands equity (He and Li, 2011). However, this relationship is not tested extensively and thus needs further validation. Based on the above findings, we propose the following hypothesis: H4. Perceived value is positively related to brand equity. Previous studies have also suggested that perceived value is a common construct between the quality of service and brand equity (He and Li, 2011; Parasuraman and Grewal, 2000). The mediating role of perceived value for the relationship between service quality and consumer-based brand equity is based on the argument that consumer perceptions of the inherent characteristics of service quality can help to reinforce favourable brand associations that eventually derive strong brand equity for service companies (Bell et al., 2005; de Chernatony and Segal-Horn, 2003). Thus, we propose the following hypothesis: H4b. Perceived value will mediate the relationship between service quality perceptions and brand equity. Corporate credibility Consumer perception of a corporation plays an important role in influencing attitudes towards its advertisements, products and resulting purchase decisions (Newell and Goldsmith, 2001). Thus, it is not surprising to find out that those corporations that fail to generate positive credibility usually struggle to attract and retain customers (Fombrun, 1998; Newell and Goldsmith, 2001). Erdem and Swait (1998) borrowed from early work on communicator credibility (Hovland et al., 1953), to build their concept of corporate credibility. Nonetheless, corporate credibility differs from the traditional and more rigorously investigated concept of source credibility, where instead of a spokesperson, celebrity or any other individual, it is the corporation behind a message whose credibility is measured from a consumer perspective (Newell and Goldsmith, 2001).

Corporate credibility refers to the consumers trust in a firms abilities and expertise to deliver products/services that can satisfy their demands (Erdem and Swait, 1998; Fombrun, 1998). Expertise implies the extent to which a source holds valid assertions, whereas trustworthiness pertains to the level of confidence in the intent of that source to convey legitimate contentions (Hovland et al., 1953). Past research suggested that corporate brand credibility can help to differentiate renowned brands from their unknown counterparts (Farquhar, 1989; Keller, 1993; Spry et al., 2011). Credible brands enjoy lower information processing costs and are associated with lower perceived risk. Hence they promote brand equity by enhancing their value beyond functional aspects (Erdem and Swait, 2004). In a nutshell, brand credibility is the central pillar around which a firm can build and manage its brand equity (Erdem and Swait, 1998; Erdem et al., 2006; Spry et al., 2011). The relationship between corporate credibility and brand equity is borrowed from brand signalling theory. The brand signalling theory suggests that brands serve as signals for transmitting information to their target customers, who live in a marketplace that embodies imperfect and asymmetric information (Erdem and Swait, 1998; Erdem et al., 2006; Spry et al., 2011). In a recent research, Spry et al. (2011), reported a strong and positive relationship between brand credibility and consumer-based brand equity. Thus we hypothesize the following: H5. Corporate credibility is positively related to brand equity. Apart from a direct relationship between corporate credibility and brand equity, there is a strong possibility that corporate credibility plays a mediating role between service quality and consumer-based brand equity. Corporate credibility qualifies as a mediating variable because it has been studied as a consequence of service quality as well as the antecedent of consumer-based brand equity in multiple past investigations. Past research supports the role of corporate credibility as a consequence of customer perceived service quality (Folkes, 1988; Fombrun, 1998; Zeithaml, 2000). Similarly, a number of past studies also suggested that corporate credibility helps to differentiate renowned brands from their less known counterparts (Farquhar, 1989; Keller, 1993). In a relatively recent study, Papasolomou and Vrontis (2006) reported that stronger brand equity prevails for those brands that exhibit higher brand credibility. Similarly, in a B2B context, it was found that organizational buyers are more concerned with corporate brand credibility than individual brands or products (Kuhn et al., 2008). Thus, it is evident that corporate credibility serves as an important antecedent of brand equity. Finally, past literature also provides evidence for a direct relationship between service quality and brand equity (He and Li, 2011; Jensen and Klastrup, 2008; Roberts and Merrilees, 2007). Thus one can argue that corporate credibility fulfills all the requirements to qualify as a mediating variable between service quality and consumer-based brand equity. Therefore we hypothesize the following: H5b. Corporate credibility mediates the relationship between service quality and brand equity. Brand equity Brand equity creates value for organizations by increasing the efficacy of marketing activities, generating a higher degree of brand preference, favourable purchase intentions, increased market share and higher returns for its shareholders

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(Aaker, 1996; Bailey and Ball, 2006; Berry, 2000; Chang and Chieng, 2006; Farquhar, 1989). Research on brand equity is usually categorized into financial and consumerbased perspectives. Consumer-based brand equity is the outcome of consumer knowledge and value of a brand, largely resulting from the systematic marketing efforts of a provider (Christodoulides and de Chernatony, 2010). Others define brand equity as a linkage with the name, design or symbol of a product or service which enhances its value beyond its functionality and lends it a differential advantage (Keller, 1993). It is a subjective evaluation of a brand, in addition to its objective assessment of perceived value (Ambler, 2003; Farquhar, 1989; Rust and Verhoef, 2005). A review of past literature on the topic, suggests various conceptualization and measurement attempts, which should be viewed more as conforming than challenging (Erdem and Swait, 1998). For instance, Aaker (1996) suggested brand equity as a second order construct represented by brand awareness, brand association, perceived quality and brand loyalty. On the other hand, Keller (1993) defined consumer-based brand equity as the differential effect of a consumers brand-related knowledge on his/ her response towards a companys marketing mix strategies. Brand knowledge was further divided into awareness and image (associations). Brand awareness is the consumers ability to recall or recognize a brand and the brand image is the set of associations related to a brand (Keller, 1993). Consumer-based brand equity can be measured using a direct or indirect approach. The indirect approach operationalized the construct through its manifestation, while the direct approach captures the consumer preferences or utilities (Christodoulides and de Chernatony, 2010; Swait et al., 1993; Yoo et al., 2000). The current study focuses on the consumer-based brand equity using an outcome/direct approach that takes into account the differential effects of brand knowledge on consumers responses to the marketing activities of a brand (Keller, 2008). More important than its conceptualization and measurement is its relation with other analytically and cognitively driven concepts in the marketing literature (Chaudhuri, 1995; Faircloth et al., 2001). Attempts to relate brand equity with other relevant but distinct variables in consumer research is limited. Most of the previous studies have investigated the impact of consumer-based brand equity dimensions on the overall brand equity of a brand (Tong and Hawley, 2009). Nonetheless, the structural relationship among most critical antecedents of consumer-based brand equity for service brands might help in developing a holistic model that appears simple yet delivers highly valuable information to marketers. Based on the review of the existing literature, we propose that customer perceived service quality, perceived value and brands corporate credibility are the most important antecedents of a service firms brand equity. Figure 1 presents the proposed holistic model.

CC H2 SQ H3 H1 H4 PV H5 BE

Figure 1. Research model

Notes: SQ, service quality; CC, corporate credibility; PV, perceived value; BE, brand equity

Research design and methodology A self-administrated questionnaire was used to collect data from the customers of local and foreign banks in the Islamabad and Rawalpindi regions of Pakistan using intercept in the bank retail environment. As it is not possible to obtain a list of bank customers, non-probability sampling was used. A total of 400 questionnaires were distributed out of which 302 usable responses were received, giving a response rate of more than 75 per cent. The questionnaire consisted of two sections. The first section dealt with collecting the standard demographics. The second section measured the variables proposed in the model, using the scales adopted from the previous studies. Special attention was paid to use the service quality scale specifically developed for the banking context. Table I presents the details of the scale used to measure the service quality, perceived value, corporate credibility and consumer-based brand equity. All the items were measured using a five-point Likert type scale (where 1 strongly disagree and 5 strongly agree). The sample consisted of 150 females (49.7 per cent) and 152 males (50.3 per cent) having an average age of 30.5 years; 78 respondents were aged below 25 years (25.8 per cent), 116 were between the age range of 25-30 years (38.4 per cent), 44 were between the age of 31-35 years (14.6 per cent), and 64 respondents were older than 36 years (21.2 per cent). Approximately 35 per cent of the respondents had a bachelors degree, 47 per cent were masters degree holders and 12 per cent had an MPhil, or PhD qualification. Approximately, 40 per cent of the respondents earned less than 250 US dollars per month while 27.8 per cent had a monthly income within the range of 450-500 US dollars. Lastly, 32.5 per cent of the respondents had a monthly income above 500 US dollars. Respondents were asked to recall their banking service experience with their primary bank while answering the survey questions. This allowed participants to select their most frequently used bank in case a respondent has accounts with multiple banks. This approach permitted a reasonable level of salience, accessibility and diagnostic power (He and Li, 2011). Data analysis Confirmatory factor analysis (CFA) was carried out using maximum likelihood estimation method to establish the reliability and validity of the constructs. As service

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Construct Corporate credibility Newell and Goldsmith (2001) Service quality Karatepe et al. (2005) Perceived value Cronin et al. (2000) Brand equity Yoo et al. (2000)

No. of items 8 20

Item EXP Trust SE IQ E R PV2 PV3 BE1 BE2 BE3

b 0.77 0.64 0.63 0.78 0.79 0.69 0.65 0.82 0.77 0.86 0.83

a 0.68 0.80

AVE 0.502 0.534

CR 0.72 0.81

3 3

0.70 0.85

0.572 0.665

0.70 0.86 Table I. The item loadings, Cronbachs a and the AVE

Notes: b, standardized loadings; a, Cronbachs a; AVE, average variance extracted; CR, composite reliability

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quality and brand credibility were multidimensional constructs, we proceeded with creating composite variables based on a priori dimensions for both these variables. This method was recommended and used in the past literature, particularly where the objective was to reduce the models complexities (Bagozzi, 1981; Butt and De Run, 2010). CFA model results were assessed using multiple fit indices such as w2, goodness of fit index (GFI), normal fit index (NFI) and root mean square error of approximation (RMSEA). The results of the four-factor (service quality, perceive value, corporate credibility and brand equity) measurement model indicate that the data fits well with the hypothesized model. The results of multiple fit indices like GFI (0.935), AGFI (0.895), CFI (0.949) and RMSEA (0.075) were quite close or above the cut-off criteria (Fornell and Larcker, 1981). Nonetheless, an inspection of the modification indices revealed that error terms for PV1 and service reliability (R) generate the highest modification index. Thus we remove PV1 from the measurement model to improve convergent validity. The results of the modified measurement model indicated an excellent fit to the data (GFI: 0.960, AGFI: 0.931, CFI: 0.977 and RMSEA: 0.053). Apart from Cronbachs a, the other way to examine the quality of a measurement model is to examine the loading of individual items on their respective latent variables. All the loadings were statistically significant and above the minimum criteria of 0.50 (Kline, 2005; Shammout et al., 2007). Furthermore, to measure the convergent validity of the measurement model, this study applied Fornell and Larckers (1981), criteria of average variance extracted (AVE) to evaluate the convergent validity. As a rule of thumb, an AVE 40.50 indicates convergent validity. Discriminant validity was assessed by estimating correlations between the factors. A correlation of o0.85 indicates the discernment validity of a construct (Kline, 2005; Shammout et al., 2007). All the constructs were randomly assigned to be correlated. All the variables demonstrate a correlation of o0.85. Table I presents the item loadings, Cronbachs a, AVE and the composite reliability of the scales. Table II presents the results of means, standard deviations and correlations of the measured variables. All the variables were significantly correlated; however, the strongest correlation was found between service quality and perceived value (r 0.76) and the lowest correlation was observed between service quality and brand equity (r 0.61). The hypothesized relationships in the model (Figure 1) were tested using structural equation modelling (SEM). SEM is a set of tools and techniques that can simultaneously solve all the equations in a causal model that consists of either manifested (observed) or latent (unobserved) variables (Chin et al., 2008). Furthermore, estimating the measurement errors provides strong reasons to prefer this approach

1 1. Service quality (SQ) 2. Perceived value (PV) 3. Corporate credibility (CC) 4. Brand equity (BE) Mean Standard deviation (SD)

Table II. Means, standard deviations, correlations, for the variables of interest in this study

0.76* 0.75* 0.61* 3.67 0.63

0.65* 0.69* 3.63 0.79

0.62* 3.76 0.67

3.51 0.93

3.67 0.75

3.69 0.74

3.64 0.70

3.62 0.77

Note: *Correlation is significant po 0.01 (two-tailed)

over traditional ways of using regression models to investigate the mediating relationships. Therefore, we tested all variables simultaneously as proposed in the initial research model (Figure 1) to establish whether corporate credibility and perceived value fully or partially mediate between the service quality and consumer-based brand equity of a firm. The hypothesized model was assessed using multiple fit measures such as w2; GFI; NFI; and the RMSEA. The results of the full structural model reported a significant w2 (w2 72.38, df 39, p 0.00), however, due to the sensitive nature of this test, researchers generally assess model fit with the help of other fit indices (Chin et al., 2008). The results of multiple fit indices like CMIN/df (1.859), GFI (0.959), AGFI (0.931), CFI (0.976) and RMSEA (0.054) were above or quite close to the cut-off criteria, indicating that the data fit reasonably well to the proposed research model (Fornell and Larcker, 1981). The overall model fit result allowed us to proceed with testing individual hypotheses with the help of standardized path coefficients and their respective t-values. A standardized path coefficient of 40.30 reflects a medium effect while a value of 0.50 or above reflects a large effect. Furthermore, a standardized estimate should be 40.30 in order to generate a meaningful discussion of the results (Chin, 1998). On the other hand, an absolute t-value should exceed the threshold level of 1.96 (as p-value o0.05). All the standardized path coefficients were significant and were in the range of medium to large effect size. As shown in Table III, service quality has a positive and significant impact on corporate credibility (b 0.76) and perceived value (b 0.78) thus, supporting H2 and H3. These findings are in line with previous studies which suggested that service quality significantly influences perceived value (Cronin et al., 2000; He and Li, 2011) and corporate credibility (Caruana and Ewing, 2010; Folkes, 1988; Fombrun, 1998; Zeithaml, 2000). For example, Yang and Peterson (2004) reported a positive influence of online service quality on customer perceived value. Similarly a recent investigation of telecom customers revealed that overall service quality positively influences customer perceived value (He and Li, 2011). Similarly, perceived value has a positive and significant direct impact on brand equity (b 0.54), supporting H4. This is also in line with past empirical findings which reported that perceived value is strongly correlated with customer willingness to pay a premium price (He and Li, 2011; Netemeyer et al., 2004). Finally, corporate credibility had a positive impact on brand equity (b 0.32). Although, a small number of researchers empirically explored this relationship, those who did explore it, found a significant relationship between corporate credibility and brand equity. For example, Spry et al. (2011) developed a model to investigate the interrelationships between endorser credibility, brand credibility and

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Proposed causal relations H1 H2 H3 H4 H5 Service quality to brand equity Service quality to corporate credibility Service quality to perceived value Perceived value to brand equity Corporate credibility to brand equity

SE 0.055 0.766 0.782 0.540 0.324

CR 0.320 8.235 10.678 3.698 2.549

p 0.749 *** *** *** 0.011

Note: ***po 0.05

Table III. Standardized estimates of the paths in the models

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consumer-based brand equity, and found that brand credibility is positively linked with consumer-based brand equity. This allows us to accept H5. Furthermore, the standardized estimates and their p-values for the model indicated that all suggested paths remain statistically significant, except the direct path from service quality to brand equity. This non-significant path from service quality to brand equity confirms the fully mediating role of perceived value and corporate credibility. This allows us to accept H4b and H5b. The results are not surprising, however, as these results provide reasons, why many researchers in the past have failed to establish a direct relationship between service quality and consumer-based brand equity (Atilgan et al., 2005). Table III presents the standardized path coefficients and their respective critical ratios for the model. Discussion As discussed earlier, it is important to note that despite the categorical establishment of the fact that consumer-based brand equity in the service context is inherently different from product-based brand equity, only a handful of previous studies have empirically explored the linkage between a firms perceived service quality and its consumer-based brand equity. The primary objective of this study was to test a holistic model that investigates the direct effect of service quality on building brand equity, along with the mediating role of corporate credibility and perceived value. To the best of our knowledge, previous studies have not explored both these relationships in a holistic model for service organizations in general and the banking industry in particular. The results of our study suggest that perceived value and corporate credibility fully mediate between perceived service quality and consumer-based brand equity. The results of this study suggest that service quality has a strong and positive influence on corporate credibility. This large effect (b 0.76) of service quality on corporate credibility indicates that consumer perceptions of a firms service quality greatly enhanced its corporate credibility. Similarly, service quality was able to influence customer perceive value of a service brand. This result is also in line with the previous findings that suggest a strong and positive relationship between a firms service quality and value perceived by its customers (He and Li, 2011; Yang and Peterson, 2004). It implies that those customers who perceive that a service brand deliver quality services, considered it as a value creating entity. Similarly, perceived value has a positive and significant direct impact on brand equity (b 0.54). This is also in line with past empirical findings which reported that perceived value is strongly correlated with customer willingness to pay a premium price (He and Li, 2011; Netemeyer et al., 2004). Corporate credibility also had a positive impact on brand equity (b 0.32) suggesting a moderate influence of corporate credibility on consumer-based brand equity of service firms. Although this relationship is rarely explored in the past, those who did explore it found a significant relationship between corporate credibility and brand equity. For example, Spry et al. (2011) developed a model to investigate the interrelationships between endorser credibility, brand credibility and consumer-based brand equity, and found that brand credibility is positively linked with consumer-based brand equity. The establishment of perceived value as a fully mediating variable in our model suggests that consumers perceptions regarding the service quality of a bank translate into perceived value, which then dictates their overall preference towards the corporate brand of a bank. A similar relationship was found to be partially mediating

in a recent study of high-tech service providers (He and Li, 2011). Two possible reasons can be provided for slightly different results. First, the difference in type of service industry and the country of research might be responsible for these differences. Second, compared with other researchers, who used multiple regressions, we tested our model using SEM and thus can argue that our results are more reliable and stable. Furthermore, results of this study suggest that alongside perceived value, corporate credibility also fully mediates the relationship between the service quality and brand equity of a service firm. It is interesting and important to note that in the banking context, service quality not only serves as a means to satisfy customer expectation about the standard of a service, but also enhances trust in a firm abilities and expertise to deliver these services. This trust, earned through the provision of consistently excellent service by a bank, serves as a source that predicts a customers ultimate preference in shaping a firms brand equity (Zeithaml, 2000). Nonetheless, the total effect of the service quality, perceived value to brand equity path was higher compared with the service quality, corporate credibility to brand equity path. Although it appears that creating higher value is strategically more important as compared to the credibility of a brand, this simple explanation might not be true. In our view, corporate credibility is something of a must and thus its presence might not help in generating significant amounts of brand equity. However, if it is not present, then it might cause a more negative impact on service brand equity. Therefore, it will be interesting to explore the same model in high and low credibility brands to empirically establish our interpretations. Managerial implications and limitations There has been much emphasis on improving service quality in the banking industry without considering its influence on important outcomes such as the perceived value, corporate credibility and consumer-based brand equity of a service firm. This study suggests that service quality is not only important as a standalone variable, but is interlinked with other marketing constructs in generating consumer preferential attitudes towards a service brand. Thus a firms service strategy should not only focus on building and delivering excellent service quality but also on communicating other aspects of a firm such as brand credibility and higher perceived value in the eyes of their customers. Therefore, it is important to notice that all the constructs in this research model are interrelated. It means that an integrated approach should be followed in developing the overall business strategy for a bank. It is extremely productive for managers to identify that how different aspect of service quality contributes towards building corporate credibility and customers perceive value of their banking services. As the impact of different aspects of service quality may varies from one country to another and from one segment to another, it is the job of a manager to identify the strongest aspects of service quality that contributes towards building corporate credibility or helps in enhancing customers perceive value. For example, if a country is riddle with financial crises, it will be meaningful to investigate that how service reliability contributes in boosting customer trust. Similarly, managers can build their servicescape in order to signal their expertise in delivering excellent banking services. It is also important to note that perceive value has the strongest effect on customers preferential treatment towards their bank. However, this research only provides the empirical evidence of a global influence of perceive value without specifying the further breakdown of specific activities that can strengthen its relationship with

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consumer-based brand equity. Managers must understand that apart from delivering excellent banking services there are other ways to enhance customer perceive value which will subsequently enhance consumer-based brand equity of a firm. For example, mangers can explore the possibilities of looking beyond creating functional values and seeking possibilities of emotionally engaging with their customers. This engagement can be personal as well as impersonal and could provide a point of difference. For example, the famous slogan of Master Card there are somethings money cant buy is a successful example of creating an emotional value of a finical brand. Finally, it is important to highlight some of the limitations of this research. First of all this study is based on a single industry, i.e. the banking sector. Future studies may consider multiple sectors to support the generalizability of these results. Second future research may explore the individual impact of service quality sub dimensions on perceived value, corporate credibility and brand equity so that each can be manipulated for a specific outcome.
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