Customer Loyalty and the Effects of Commitment towards Suppliers in Malaysian Electrical and Electronics Manufacturing Industry

Abstract

This study investigates the influences of product quality and relational elements, namely trust, cooperation, and communication, on customer loyalty, and mediating effects of commitment in Malaysian electrical and electronics manufacturing industry. It utilizes quantitative methodology, where survey questionnaires are sent to Malaysian electrical and electronics manufacturing firms selected from two directories. A total of 267 returned and useable survey questionnaires were used for data analysis consisting of descriptive analysis, PLS-SEM, and mediation effects. Results of PLS-SEM analysis found that product quality and cooperation have significant influences on customer loyalty. In contrast, trust and communication do not have significant influence on customer loyalty. Mediation effect analysis findings established that commitment significantly mediates four relationships between product quality and customer loyalty, trust and customer loyalty, cooperation and customer loyalty, and communication and customer loyalty. Two relationships between product quality and customer loyalty, and cooperation and customer loyalty are partially mediated by commitment. The other two relationships between trust and customer loyalty, and communication and customer loyalty are fully mediated by commitment. The findings have managerial implications for Malaysian electrical and electronics manufacturing industry, where customer loyalty can be developed with influences of product quality and relational elements, in which not all of them develop customer loyalty in similar way; only cooperation has direct influence on customer loyalty. Nevertheless, with the presence of mediating effects of commitment, all three relational elements can develop customer loyalty indirectly.