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Procedia - Social and Behavioral Sciences 211 (2015) 277 – 284

Available online at www.sciencedirect.com

ScienceDirect

1877-0428 © 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license

(http://creativecommons.org/licenses/by-nc-nd/4.0/ ).

Peer-review under responsibility of the Organizing Committee of the 2nd GCBSS-2015

doi:10.1016/j.sbspro.2015.11.035

2nd Global Conference on Business and Social Science-2015, GCBSS-2015, 17-18 September2015, Bali, Indonesia

The Impact of Corporate Social Responsibility, Service Experience

and Intercultural Competence on Customer Company Identification,

Customer Satisfaction and Customer Loyalty (Case Study: PDAM

Tirta Khatulistiwa Pontianak West Kalimantan)

Nur Afifah

a

*, Afandi Asnan

b

a Faculty of Economic, University of Tanjungpura, Pontianak, West Kalimantan, Indonesia. 78124b PDAM Tirta Khatulistiwa Pontianak, West Kalimantan, Indonesia.

Abstract

This study combines two views, the first view is stating that consumer behaviour is influenced by the experience of the servicereceived and the second view is about customer company identification formed due to corporate social responsibility towards theenvironment and intercultural competence in providing services to customers. The purpose of this study was to determine theimpact of corporate social responsibility, service experience and intercultural competence on customer company identification and

customer satisfaction as well as its impact on customer loyalty in PDAM Tirta Khatulistiwa Pontianak.

© 2015 The Authors. Published by Elsevier Ltd.Peer-review under responsibility of the Organizing Committee of the 2nd GCBSS-2015.

Keywords: CSR, service experience, intercultural competence, customer company identification, customer satisfaction, and customer loyalty.

1. Introduction

PDAM Tirta Khatulistiwa Pontianak is a company managed by the Regional Government of Pontianak in West

Kalimantan, whose function is to provide water services to the people in Pontianak. Until 2014 the number of

customers as well as the performance of PDAM Tirta Khatulistiwa Pontianak showed continuous increase. Therefore,

* Coresponding author. Tel: +6281345932220.

E-mail address: [email protected]

© 2015 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license(http://creativecommons.org/licenses/by-nc-nd/4.0/ ).Peer-review under responsibility of the Organizing Committee of the 2nd GCBSS-2015

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278 Nur Afifah and Afandi Asnan / Procedia - Social and Behavioral Sciences 211 (2015) 277 – 284

this study combines two concepts, the first concept is a modern view in which corporate social responsibility done by

the company impact on the customer company identification, customer satisfaction and customer loyalty, and the

second concept is a traditional view in which customers are loyal because of the experience of services provided so

that the impact on the customer company identification is not affected by corporate social responsibility.

Corporate social responsibility activities, at this time, are an important consideration in the business world and

become interesting study for academics. It is due to the rule as a strategy to build the image (Marin, Ruiz, and Robio,

2009), to achieve a competitive advantage (Ki, Song, Lee, Lee, and Bernhard, 2013), to affect perception andconsumer behavior (Berens, Van, and Van, 2005). Although, corporate social responsibility activities are initially

related to social issues (Walsh and Bartikowski, 2013), corporate social responsibility can cause a positive perception

of customers, and improvement of customer self esteem in expressing better social picture to the community, which

resulted in corporate social responsibility fosters customer perception in identifying the company. Therefore corporate

social responsibility is part of the promotion and marketing of the company (Chen, Chang, and Lin, 2012). Contrary

to the fact mention above, corporate social responsibility activities do always affect the consumer behaviour. This is

because the customers buy something for personal needs not for social (Beckmann, Christensen and Christensen,

2001), so the company should be able to create customer satisfaction with services provided by the company.

Customer satisfaction continues to draw attention in research as it can provide benefits to companies, such as

WOM behavior and loyalty (Walsh and Bartikowski, 2013). As a result, the company strives to create services

experience which satisfies the customer expectations, since it has an important influence on consumers' evaluation

and satisfaction (Manhasa and Tukamushabab, 2015). Thus, services experience provided by the company may effecton customer company identification and consequently will affect customer satisfaction and loyalty. Therefore,

companies must be able to prepare service employees who understand the characteristics of customer, thus

intercultural competence owned by employees could affect services experience delivered which may affect the

evaluation of the service (Paswan and Ganesh, 2005), customer satisfaction (Hopkins, Nie, and Hopkins, 2009) as

well as the intention of repurchase (Ihtiyara, Ahmad, and Baroto, 2013).

The purpose of this study was to determine the impact of corporate social responsibility, service experience and

intercultural competence on customer satisfaction and customer company identification as well as its impact on

customer loyalty in PDAM Tirta Khatulistiwa Pontianak.

2. Literature Review and Research Hypothesis

2.1.

Corporate Social Responsibility (CSR)

The concept of corporate social responsibility has been analyzed and extensively studied by experts since the

1950s, especially regarding the effect on consumer (Lombart and Didier, 2014). Nevertheless, the concept of corporate

social responsibility is very diverse (Saedi, Sofian, Saeidi, Saeidi, and Saeidi, 2015), but Carroll (1979; 1991), defines

corporate social responsibility is the social responsibility of business which includes economic, legal, ethic and

philanthropic community expectations on the organization at any given time. Many corporate social responsibility

researchers adopt the concept of Carroll because in addition to identifying the company's obligation to the community,

systematically discriminate corporate social responsibility than just making a profit (Saedi, Sofian, Saeidi, Saeidi, and

Saeidi, 2015).

Some researchers have performed studies about impact of corporate social responsibility on customer satisfaction

and loyalty (Bolton and Matilla, 2015), customer company identification (Martínez and Del Bosque, 2013).

2.2. Service Experience (SE)

Since 1990s become early stages of the study about service experience and become a phenomenon (Helkkula,

2010). service experience is defined as personal subjective reactions and feelings of consumer when consuming or

using the service. Shostack (1985), Service experience called "Service Encounters", is the time period in which the

consumer directly interact with the service. Service experience is influenced by service personnel, consumer, physical

environment and performance of services (Changa and Horng, 2010), or physical facilities, service personnel and core

services (Greenwell, Fink, and Pastore, 2002), or covering core service, service personnel and service scape (Grace

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and O'Cass, 2004; 2005). In brief, service experience has an important effect on consumer evaluations and satisfaction

with the services provided (Manhasa and Tukamushabab, 2015).

Research on the influence of services experience on customer company identification are still rarely studied,

therefore, to see the effect of the service experience on customer company identification researcher rely on customer

satisfaction disconfirmation expectation theory (Oliver, 1997). On the other hand, customer company identification is

the context for the customer to respond the experience of company performance as the previous expectation (Martinez

and Del Bosque, 2013).

2.3. Intercultural Competency (IC)

To be able to provide a positive service experience to customers, indispensable of understanding about cultural

factors, especially in multicultural societies (Ihtiyara, Ahmad, and Baroto, 2013). Therefore, in doing research on the

service experience, is very important to pay attention to intercultural competence, which has been widely ignored

because intercultural competence affect customer choice, personal orientation (Sharma, Tam and Kim, 2012), service

evaluation (Ihtiyara, Ahmad, and Baroto, 2013), customer satisfaction (Hopkins, Nie, and Hopkins, 2009) and

purchase intention (Teng and Laroche, 2007). Intercultural competency is a competence of the employees regarding

to knowledge, skills and attitudes in cultural diversity and customs.

Despite a variety of many definitions, there is no consensus about intercultural competency affect on intercultural

interaction (Lloyd and Luk, 2011). People who have high "Intercultural Competency" show a greater ability to learnaspects of other cultures, such as: foreign languages and cultural norms.

2.4.

Customer Company Identification (CCI)

Basically, the identification of organizations is related to employees. However, as the time goes the concept of

organization identification has been expended and studied in marketing researches (Martínez and Del Bosque, 2013),

The researches explain the relationship between customer and companies based on identification phenomenon.

Characteristics of identity is an important characteristic derived from successful marketing relationship in the extent

of one side could obtain significant social benefits from the relationship (Marin, Ruiz, and Robio, 2009).

Customer company identification is a cognitive state of self, categorization, connection and closeness of consumers

to companies carried by the subjective process of comparison between organizational identity of the consumers

themselves (Martínez and Del Bosque, 2013). In other words, cognitive, connection and closeness imply perceptualbetween organization and personal identity, where the existence of shared values play an important role. Thus,

customer company identification is derived from psychological conditions attached to the consumers so that

consumers become concerned about companies that positively stimulate their loyalty to the company. Customer

company identifications have an influence on customer loyalty (Bhattacharya and Sen, 2003; Arikan, and Gunar,

2013). On the other hand, there are also some studies claim the effects of customer company identification on customer

loyalty indirectly and through customer satisfaction (Martínez and Del Bosque, 2013).

2.5. Customer Satisfaction (CS)

Customer satisfaction as an important concept in marketing and has been used as a benchmark to measure the

performance of companies (Manhasa and Takumashaba, 2015). Service quality can improve customer satisfaction and

later on can encourage customer positive desires. High quality service can drive positive customer desires, and viceversa (Su, 2011).

Kotler and Amstrong (2012) stated that customer satisfaction is the level of one's feelings after comparing products

performance that gets along with his expectations. Satisfaction or dissatisfaction of consumers is a response to the

evaluation of discrepancy or disconfirmation perceived between previous expectations and actual product

performance that is felt after use.

2.6. Customer Loyalty.

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Gramer and Brown (2006) provide a definition of loyalty, namely the degree of the extent to which a consumer

show repeat purchase behavior of a service provider, has a disposition or tendency of positive attitude toward service

providers, and only consider using this service provider when there is a need to use this service.

In conclusion, loyalty is a condition where the consumer will be devoted to re-purchase continuously. A loyal

customer is not only a buyer who make repeat purchases, but also the who maintains a positive attitude toward service

providers.

2.7.

Research Hypothesis.

There are twelve hypothesis proposed in this research, including: H1. Corporate social responsibility affects on

customer company identification, H2. Corporate social responsibility affects on customer satisfaction, H3. Corporate

social responsibility affects on customer loyalty, H4. Services experience affects on customer company identification,

H5. Services experience affects on customer satisfaction, H6. Services experience affects on customer loyalty, H7.

Intercultural competence affects on services experience, H8. Intercultural competence affects on customer satisfaction,

H9. Intercultural competence affects on customer loyalty, H10. Customer company identification affects on customer

satisfaction, H11. Customer company identification affects on customer loyalty, H12. Customer satisfaction affects

on customer loyalty.

3.

Methodology

This type of research is explanatory research, with purposeful sampling technique of 210 customers from three

regions of service offices in PDAM Tirta Khatulistiwa Pontianak. Corporate social responsibility variable (Anderson

and Sullivan, 1993; Suh and Yi, 2006). Services experience variable (Greenwell, Fink, and Pastore, 2002; Grace and

O’Cass, 2004; 2005; Yang and Chang, 2011). Intercultural competence variable (Sharma, Tam and Kim, 2012;

Briones, Tramontano, Caprara, and Arenas, 2009). Customer company identification variable (Bhattacharya and Sen,

2003). Customer satisfaction (Shemwell, Yavas and Bilgin, 1998: 165). Customer loyalty (Bowen and Shing, 2001).

The analysis technique used is inferential statistical approach SEM (Structural Equation Modeling) and the analysis

technique used is the Smart PLS 3.2.1. program (Partial Least Square).

4. Research Finding

Results of this study to detail can be seen in Tabel.1.

Tabel 1. Values Path Koefisien, T Statistic and Values P.

Mean, STDEV, T-Values, coeficience internals, coeficience internals bias connected, samples

Original

Sampel (O)

Sample

Mean (M)

Standar Error

(STERR)

T Statistics

(│O/STERRI│) P Values

CCI Cust Loyalty 0,271 0,263 0,131 2,076 0,038

CCI Cust Satisfactions 0,088 0,097 0,107 0,824 0,410

CSR CCI 0,226 0,241 0,088 2,562 0,011

CSR Cust Loyalty 0,177 0,174 0,098 1,808 0,071

CSR Cust Satisfactions -0,063 -0,060 0,112 0,568 0,670CS Cust Loyalty 0.482 0,483 0,118 4,086 0,000

IC Cust Loyalty -0,222 -0,208 0,121 1,834 0,067

IC Cust Loyalty 0,309 0,293 0,140 2,204 0,028

IC Services Experience 0,676 0,673 0,079 8,569 0,000

SE CCI 0,470 0,472 0,089 5,272 0,000

SE Cust Loyalty 0,163 0,164 0,123 1,327 0,185

SE Cust Satisfaction 0,376 0,388 0,148 2,549 0,011

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Hypothesis testing results in Table 1, will be explained as follows; H1. Corporate social responsibility has

significant influence on customer company identifications in which the statistics T value of 2,562 and the P value of

0.011, the result support the study of this study conducted by (Martinez and Del Bosque, 2013; Sen and Korschun,

2006). This is because when the customer assumes that the company has conducted corporate social responsibility

activities, the customer by themselves has identified that the company has increased customers’ self-esteem in order

to express better social perspectives (Aquino and Reed II, 2002), Thus, the customers' perception of corporate social

responsibility activities show a positive effect on customer company identification.

H2. Corporate social responsibility has no significant influence on customer satisfaction in which the statistics T

value is 0.568 and P value is 0.570, the result is not in line with the study conducted by (Carvalho, Sen, Mota and de

Lima, 2010; Martinez and Del Bosque, 2013; Luo and Bhattacharya, 2006), but in accordance with the study (Lee and

Heo, 2009). Corporate social responsibility has no influence on customer satisfaction because, basically consumers

buy products/services in order to meet their needs and desires, it support (Beckmann, Christensen and Christensen,

2001) who stated that consumers buy something for personal reasons and not for social reasons.

H3. Corporate social responsibility has no significant influence on customer loyalty in which the statistics T value

of 1.808 and the P value of 0.071. The result is not support the study of (Marin, Ruiz, and Robio, 2009; Lee, Park,

Rapert, and Newmann, 2012). H2 and H3 have not influence, because PDAM Tirta Khatulistiwa Pontianak is the only

company owned by local government (monopoly). Consequently, customers do not have alternative to meet the needs

of clean water. Corporate social responsibility activities do not become the most dominant criterion in purchasing

behavior, traditional criteria such as price, quality remain most dominant option (Boulstridge and Carrigan, 2000;

Marin, Ruiz, and Robio, 2009), for customers of PDAM Tirta Khatulistiwa Pontianak. The important role of quality

of course, in the context of clean water service, the quality still become measurement for customers (Cronin and

Taylor, 1992; Parasuraman and Zeithaml, 1991).

H4. Services experience has significant influence on customer company identification in which the statistics T

value is 5.272 and the P value is 0.000. The relationship between services experience and customer company

identification is on basic concepts of customer satisfaction disconfirmation expectation theory (Oliver, 1997), which

propose that customers could be more satisfied when the performance of the company exceeds or reach the previous

expectation. Thus, the service experience is a personal subjective reactions and consumers’ feelings when consuming

or using the service, therefore the services experience aspects should play an important role in how the service image

conceptualized by customer. A strong relationship between the service organization and customer is important because

when a customer is not satisfied, cause the loss of business. This is because the services experience is one of the most

important and critical factors that affect consumers' evaluation on service performance (Otto and Ritchie, 2000). In

line with the opinion (Padgett and Allen, 1997; O'Cass and Grace, 2004), who stated that the experience is a useful

conceptualization to understand the service brand image because it represents the customer perspective about the

service and symbolic meaning made for the services consumption. Therefore (He and Li, 2011) stated that the

consumer identification with the company in the services sector, namely the perception of service quality has been

perceived, thus received service experience give a positive effect on customer company identifications.

H5. Services experience has significant influence on customer satisfaction in which the statistics T value is 2.549

and the P value is 0.011. The result support the studies conducted by (Luoh and Tsaur, 2011; Otto and Ritchie, 2000).

On the other hand, H6. Services experience has no significant influence on customer loyalty in which the statistics T

value is 1.327 and the P value is 0.185. The result of this study is not in line with (Greenwell, Fink, and Pastore, 2002).

Due to the fact that customers evaluate some quality targets, environmental services and personnel, in addition to the

benefits of the services provided. In order to be able to provide unforgotten services experience, the company should

be able to hire service employee who understand the characteristics of the customer. It is very important to understand

the customer, especially those customer with different cultural backgrounds.

H7. Intercultural competence has significant influence on the services experience in which the statistics T value is

8.569 and the P value is 0.000. Some studies have considered the importance of cultural issues in the context of

marketing services (Sharma, Tam and Kim, 2012; Baker, Cronin and Hopkins, 2009). However, empirical studies of

the role of intercultural competence in service experience evaluation is still limited. While H8. Intercultural

competence has significant influence on the customer satisfaction in which the statistics T value is 2.204 and the P

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value is 0.028 The result of this study supports (Teng and Laroche, 2007). However H9. Intercultural Competence

does not significantly influence on customer loyalty in which the statistics T value is 1.834 and the P value is 0.067.

Several studies reveal that customer satisfaction can improve the company's long-term financial performance

(Williams and Naumann, 2011), and have positive influence on loyalty (Chenet, Dagger, and O’Sullivan, 2011). H9

rejection might be caused by personnel competency in the service department of PDAM Tirta Khatulistiwa Pontianak

which has not meet the customer expectations, in addition to the core benefits of services that have not been got by

the customer.H10. Customer company identification has no significant influence on customer satisfaction in which the statistics

T value is 0.824 and the P value is 0.410, this study does not support (Martinez and Del Bosque, 2013). In H11.

Customer company identification has significant influence on customer loyalty which the statistics T value is 2.076

and P value is 0.038, this result support (Bhattacharya and Sen, 2003; Martinez and Del Bosque, 2013).

Finally, H12. Customer satisfaction has significant influence on customer loyalty in which the statistics T value is

4,086 T statistics and the P value is 0.000, This result support (Anderson and Sullivan, 1993; Bloemer and De Ruyter,

1998; Suh and Yi, 2006).

5. Conclusion

Corporate social responsibility has significant positive effect on customer company iIdentifications, but has no

effect on customer satisfaction and customer loyalty. While the service experience has significant effect on customercompany identifications and customer satisfaction, it has no significant effect on customer loyalty. Intercultural

competence has significant effect on services experience and customer satisfaction, but has no effect on customer

loyalty. Customer company identifications has no significant effect on customer satisfaction but has no effect on

customer loyalty. Furthermore, customer satisfaction has significant effect on customer loyalty. This possibility

because the possibility of PDAM Tirta Khatulistiwa Pontianak is a monopoly company, where customers do not have

another choice to meet the needs of clean water. Eventually, corporate social responsibility does not become the most

dominant criteria for customers. Traditional criteria such as price, quality still become a dominant consideration for

customers (Boulstridge and Carrigan, 2000; Beckmann, Christensen and Christensen, 2001; Marin, Ruiz, and Robio,

2009). Therefore, PDAM Tirta Khatulistiwa Pontianak should be more focused on the customer satisfaction of core

services experience, service personnel and physical facilities (Greenwell, Fink, and Pastore, 2002).

Research Limitations

Sampling was carried out at the end of the month above the 20th of each month so that the customers who come

to PDAM Tirta Khatulistiwa Pontianak dominated by delinquent customers, so customers who have not arrears cannot

be explore more deeply, as well as the distribution of samples of different intercultural customers.

Future Research

For future research, it is needed to increase the number of samples and to arrange the schedule of sampling process

to be after 20th of each month, Additionally, the spread of samples to cover cross-cultural perspectives is also

considerable. Finally, since PDAM Tirta Khatulistiwa customer comes from intercultural communities, researchers

need to consider distinguishing the variable of customer satisfaction in intercultural perspective.

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