Analyzing the Effects of Corporate Reputation on the Competitiveness of Telecommunication Industry Using the Structural Equation Modelling

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Journal of Statistical Modeling and Analytics

Vol.2 No.2, 29-42, 2011

Analyzing the Effects of Corporate Reputation on the Competitiveness of Telecommunication Industry using the Structural Equation Modelling: The Case of Kelantan 1

Zainudin Awang1 Faculty of Computer and Mathematical Sciences UiTM Kelantan E-mail: zainudin888@kelantan.uitm.edu.my

ABSTRACT The competition for customers among telecommunication firms in Malaysia is fierce. The competition is not only limited to new customers but also to the existing customer base. In this fiercely competitive environment, customers are highly exposed to offers and counter offers from the competing firms. At the same time various persuasive messages are delivered to encourage customers to switch their service provider. Perhaps the corporate reputation of a firm could provide certain competitive edge which could help the growth and survival of a firm into the future amid the highly competitive environment. This study attempts to assess the influence of corporate reputation of the firms on their competitive advantage in the market from the customers’ perspective. The study sampled 1000 individual customers in Kelantan who have been using the mobile service at a minimum of three years. The selected respondents have been experiencing the service provided by more than one telecommunication operators. The data were collected using self-administered questionnaires and analyzed using Structural Equation Modeling (SEM) in AMOS 16.0. The study found that the direct impact of firms’ corporate reputation on their competitive advantage is not significant at α = 0.05. Instead, the impact of corporate reputation on competitive advantage is indirectly through perceived value and perceived quality of the service. In other words, the firms should communicate their favorable corporate reputation effectively to the market so that the customers’ perception level towards their products and service would arise. In other words, the firm’s corporate reputation could help the marketability of its products or services if it could trigger the positive perception of quality and value of products or services in the mind of their potential customers. The findings provide important implications to the telecommunication operators in their effort to increase their customer base and, more importantly, to ensure the interest the customers towards the firm is preserved! Keywords: Corporate Reputation, Perceived Quality, Competitive Advantage

Introduction
The competition for customers among telecommunication services providers in Malaysia is very stiff. In this highly competitive marketing environment, the existing customers as well as potential customers are heavily exposed to various advertising messages from the competing firms through all sorts of media communication. The existing customers of a service provider are encouraged to switch their service to the competing firm by offering certain incentives. Among the incentives offered to the switchers are switching benefits, price reduction, flexible service, and attractive package. Certainly, there are service providers which would feel threatened that their customer base could be affected by the persuasive offer. These firms, in turn, would design their own loyalty programs in order to retain their customer base at bay, and at the same time would launch their own switching incentives to attract customers of other service providers into their service. In the end, customers are being exposed to various offers and counter offers from these competing service providers. ISBN 978-967-363-157-5 © 2010 Malaysia Institute of Statistics, Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA (UiTM), Malaysia * An earlier version of this paper was presented at the Regional Conference on Statistical Sciences 2010 on 13 – 14 June 2010 at Kota Bharu, Kelantan, Malaysia, jointly organized by Institut Statistik Malaysia and Universiti...
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