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European Scientific Journal October 2015 /SPECIAL/ edition Vol.1 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
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THE MEDIATING EFFECT OF SATISFACTION
ON STUDENT LOYALTY TO
HIGHER EDUCATION INSTITUTION
Anusorn Kunanusorn, PhD
School of Management and Information Sciences,
University of Phayao, Phayao Thailand
Duangporn Puttawong, PhD
Faculty of Business Administration, Rajamangala University of Technology
Thanyaburi, Thanyaburi Thailand
Abstract
Main purposes of this study were to examine links between student
perceived value, student trust, university image, and student satisfaction to
student loyalty and to describing an influence relationship of mediator
variables in student loyalty model. The model was tested through the use of
Partial Least Squares (PLS) structural equations methodology. Empirical
data were drawn from 100 private university students in the upper north of
Thailand. Questionnaire method and multi - stage sampling techniques were
used in collecting data with an error 1% sample size. Data analysis with
descriptive statistics and structural equations model analysis were used to
test hypothesis model. Results from this study indicated that the student
satisfaction (SATIS) and three antecedent variables: university image
(IMAGE), student trust (TRUST), and student perceived value (PERC) have
positive influence to student loyalty (STULOY) with statistical significant
level 0.05. This model was perfectly fit with an empirical data and was
predicted by student satisfaction and antecedent variables up to 82.5%.
Moreover, the results also show that student perceived value was the
construct that most influence to university image and student trust, and
strongly indirect influence to student satisfaction. The influence of perceived
value is also relevant to student loyalty via student satisfaction. The most
important issue is an impact of student satisfaction variable that has highest
directly influence and transmits relative influence linkage between
antecedent variables and dependent variable. In conclusion, student
satisfaction was a mediating variable and it implied that the student
satisfaction was the major driver of student loyalty.
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Keywords: Student Loyalty, Student Satisfaction, University Image,
Student Trust, and Student Perceived Value
Introduction
As a result of rapid expansion of educational system in Thailand,
higher learning industry, especially after the passing of The Private Higher
Education Institution Act of 2003 and its Second Revision of 2007 (“Thai
Higher Education: Policy &Issue”, [Online]) growing very fast. The growth
in the number of both public and private higher education institutions is
reflected by an increase in the numbers of institutions established from year
1996 to 2014. It was reported that, in 2014, there were 80 public universities,
and private universities and colleges increased to 72 consisting of 52 private
higher education institutions and 20 community colleges. (The Office of the
Higher Education Commission, 2015).
Acknowledging the competitive situation within the industry, the
competition situation among higher education institutions in the north of
Thailand is becoming highly obvious when recruiting students at the higher
educational level and the survival rate are predominantly based on customer
loyalty and satisfaction (Athiyaman, 2000). Especially for, the private higher
education institutions that have to maintain student interest and introduction
potential students to the institutions, which would help improvement the
survival rate of the institutes.
Student attraction and student retention can help administrators of
higher education institutions to better make decisions concerning the
allocation of scarce resources (Johnson & Gustafson, 2000). Thus, the
insight concerning student retention and student satisfaction should be the
greatest important issues for determining the most appropriate strategic
management in order to ensure long-term successful performance of both
public and private institutions.
According to literature review, it is indicated that student satisfaction
was an antecedent variable to student loyalty, and both are positively
correlated. This meant that when students were satisfied with a university,
they would display positive attitudes and behavior toward the institution.
This was evident and expressed by words of mouth and buzz words about the
good name and reputation of the university which were positive indicators
that students would further their education at the university. Thus, building
up student satisfaction and loyalty is the most important to be key objectives
especially to private institutions (Helgesen & Nesset, 2007; Henning -
Thurau & et al., 2001).
It was found that student loyalty is a key objective desired by many
higher education institutions for several reasons (Henning - Thurau & et al.,
2001) including: 1) Tuition fees are the main source of income for most
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privately owned universities. Retaining students means developing a solid
and predictable financial basis for future university activities. 2) Service
marketing theory on customer participation (Rodie & Kleine, 2000) indicates
that a student with loyalty to his or her education institution may (as the
external factor in the service production process) positively influence the
quality of teaching through active participation and committed behavior. 3)
After graduation, a loyalty student may continue to support his or her
academic institution (a) financially; (b) through word-of-mouth promotion to
other prospective, current, or former students; and (c) through some form of
cooperation.
As mentioned above, it is showed that a high competition in private
higher education would strongly affect the stability of private higher
education institutions, which induced and triggered to the researcher’s
interest in doing this research. In this regard, this research aimed to find
correlation and affection between five latent variables, namely, student
loyalty, student satisfaction, university image, student trust, and student
perceived value. Using the Partial Least Squares (PLS) structural equations
modeling to find the relationships and influences of antecedent variables to
student loyalty, and also examines the effect of student satisfaction as a
moderating variable that mediates the relationships linking institution
perceived value, institution image, and institution trust with student loyalty.
Literature Review
This article outlines the findings of a research study undertaken on
the antecedent variables that affected student loyalty. As building up more
satisfaction and loyalty to institutions was an important strategy, Thomas
(2011), Mohamad (2009), Marzo - Navarro & et al. (2005b) and Schertzer &
Schertzer (2004) found that student satisfaction and student loyalty were the
most important key objectives of private university. And also found that,
student satisfaction was antecedent and mediating variable to student loyalty.
Previous research frameworks with respect to these constructs of latent
variables are discussed below.
Student Loyalty
According to the literature review (Athiyaman, 1997; Helgesen &
Nesset, 2007; Mohamad, 2009; Thomas, 2011), Student loyalty refers to the
loyalty of a student after his or her time at educational institution. Student
loyalty has both short term and long term impact on educational institution.
Student loyalty is the combination between student willingness to provide
positive words of mouth about the institution and recommendation
concerning educational institution to family, friends, employers, and
organizations whenever opportunities are. However, student loyalty also
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contains an attitudinal component and behavioral component (Henning -
Thurau & et al., 2001; Marzo - Navarro & et al., 2005a). The loyalty students
are influencing teaching quality positively through active participation and
committed behavior (Rodie & Kleine, 2000). By maintaining long term
loyalty and satisfaction of students, they are directly increasing the stability
of the academic institutes. If the aforementioned latent variables are
improved, the likely results will include an increase in motivation of student
loyalty towards educational institution.
This paper bases measurements of student loyalty on the attitudinal
component of the concept such as attitude about cognitive, affective, and
conative attitude. Moreover, in terms of behaviors, there were manifest
variables about commitment as repurchase, patronize, recommendation of
the university to others, returning to repeat in higher education and returning
to join activity with educational institution.
Student Satisfaction
Satisfaction is an overall customer attitude towards a service
provider, or an emotional reaction to the difference between what customers
anticipate and what they receive, herein regarding the fulfillment of some
needs, goals or desire. An importance of satisfying student to retain them for
profit-making institutions, satisfying the admitted students is also important
for retention. It might be argued that dissatisfied students may cut back on
the number of courses or drop out of college completely. Hence, student
satisfaction or dissatisfaction leads to intention to stay or to quit which in
turn leads to student retention or attrition (Kara & De Shields, 2004). This
means that student satisfaction has an important antecedence and is a major
driver of student loyalty (Thomas, 2011).
In higher educational institutions, satisfaction is positive and
significant. There is a general assumption in this study that satisfaction may
increase loyalty predictor of student loyalty (Athiyaman, 1997; Henning -
Thurau & et al., 2001; Schertzer & Schertzer, 2004; Marzo – Navarro & et
al., 2005b; Helgesen & Nesset, 2007; Brown & Mazzarol, 2009, Mohamad,
2009). Moreover, there is positively correlation and significantly strong
affect between student satisfaction and student loyalty. It was also found that
where student have choices the link between satisfaction and loyalty is
linear, as satisfaction is raised loyalty is also raised (Douglas & et al., 2006).
However, student satisfaction has the highest degree of association with
student loyalty both directly and totally, representing total effect about three
times higher than the effect of image of university (Helgesen & Nesset,
2007). The following hypothesis has been formulated:
H1: Student Satisfaction (SATIS) has a significant direct positive
effect on Student Loyalty (STULOY)
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Nevertheless, student satisfaction is seen as a potential antecedent of
student loyalty and as mediator of constructs which can be a linkage between
independent and dependent variables in the model. Moreover, the finding of
the study support the literature that student perceived of value, image of
university, and student trust to university are the antecedent variables to
student satisfaction and the consequences of student loyalty (Ryu & et al.,
2008; Mohamed, 2009).
University Image
Image is an overall impression that a person has about an object. It
bases on incomplete information, and it differs from various institutions
(Kotler & Fox, 1995). Image has an impact on customer perceptions of
communications and operations of firms in many aspects (Gronroos, 2001).
Organizations would be considered as having a good image if customers
perceived they could receive benefits or interests from organizations. The
favorable corporate image of a firm may be helpful in competitive market,
since it might differentiate a firm from its competitors (Mohamad, 2009).
Image always appears as one of the variables with the greatest direct
influence in satisfaction and also has a considerable influence in loyalty
(Alves & Raposo, 2007). According to literature reviews (Helgesen &
Nesset, 2007; Mohamad, 2009; Brown & Mazzarol, 2006), it was found that
a university image is directly and positively influence on student loyalty.
And also found the effect of student satisfaction significantly mediates the
relationship between university image and student loyalty.
Nevertheless, image is the one which has the most influence in the
formation process of satisfaction, but there are other antecedents to effect
university image and the consequences of student satisfaction. The following
hypothesis has been formulated:
H2: University Image (IMAGE) has significant positive direct effect
on Student Satisfaction (SATIS)
Student Trust
Trust was defined as the willingness to rely on an exchange partner in
whom one has confidence (Moorman & et al., 1993). In business, trust is
viewed one of the most relevant antecedents of stable and collaborative
relationships (Akbar & Parvez, 2009). Trust is essential for building and
maintaining long-term relationships (Singh & Sirdeshmukh, 2000). Thus, if
someone is loyal to his or her institution, he or she trusts the institution. In
educational field, students’ trust develops through personal experiences with
the educational institution. The students’ trust may be understood as their
confidence in its integrity and reliability, and it is based on the personal
experiences of students with faculty members (Henning - Thurau et al.,
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2001; Aritonang, 2014). As mentioned above, trust is also understood as a
direct antecedent of loyalty and as a prerequisite variable of loyalty.
According to the literature review (Moorman & et al., 1993;
Aritonang, 2014; Chu & et al., 2012; Michell & et al., 1998; Henning -
Thurau & et al., 2001; Rojas - Mendez & et al., 2009; Chu & et al., 2012)
found that trust has an important role in explaining loyalty and also as
fundamental element in developing loyalty. Numerous studies in an
education sector have also empirically validated the link between student
trust and student loyalty. Although trust has no significant impact on loyalty
but trust has direct positively related to satisfaction. Thus, trust is a predictor
of student loyalty and also as a mediating effect between satisfaction and
loyalty. Therefore, the following hypothesis has been formulated:
H3: Student Trust (TRUST) has a significant positive direct effect on
Student Satisfaction (SATIS)
Student Perceived Value
Perceived value is defined as consumer’s overall assessment of the
utility of a product [or service] based on perceptions of what is received and
what is given (Zeithaml, 2000). In higher educational institution, student’s
overall appraisal of the net worth of the service is based on the student's
assessment of what is received (benefits provided by the service) and what is
given (costs or sacrifices in acquiring and utilizing the service). Meanwhile,
student’s overall perception of service value positively impacts upon
student’s overall service satisfaction.
According to the literature review (Andersen & Lindestead, 1998;
Hellier & et al. 2003; Yang & Peterson, 2004; Wen & et al., 2005; Akbar &
Parvez, 2009), it is indicated that perceived value has been identified as
driver of satisfaction. For the relationship of perceived value and satisfaction,
it was found that student perceived value directly and significantly affected
student satisfaction but not significantly directly affected student loyalty.
Moreover, they found that student perceived value has in-direct effect on
student loyalty through student satisfaction. However, student perceived
value also has associated impact with university image and student trust.
Aforementioned, it has examined the mediated causal links between student
perceived value and student loyalty, which has mediated by student
satisfaction besides examining the direct relationship between student trust
and university image. Therefore, following hypotheses have been
formulated:
H4: Student Perceived Value (PERC) has significant positive direct
effect on University Image (IMAGE)
H5: Student Perceived Value (PERC) has significant positive direct
effect on Student Trust (TRUST)
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Conceptual Frame Work
According to reviewing the literatures, there are three independent
latent variables which effects student satisfaction: student perceived value,
student trust, and university image. Also, student satisfaction is an
antecedent or mediator of a construct which is assumed to be the driver of
student loyalty, as will be subsequently discussed. The conceptual frame
work and relations between latent variables of this research are presented in
Figure 1.
Figure 1 Latent Variable Relations Frame Work
Research Methodology
Population and Samples
The subjects of this research were undergraduate students in private
higher education institutions in the northern region of Thailand. Northern
region is divided into two geographical areas, namely the upper north region
and the lower north region. Students in the research sample were recruited
from full-time students in all of the main campuses of six private universities
in three provinces of the upper north region, which covered Chiang Mai,
Chiang Rai, and Lampang Provinces. The private universities are consisted
of Payap University, North-Chiang Mai University, Far-Eastern University,
Chiang Rai University, and Lampang Inter-Tech College.
The multi-stage random sampling technique was used in collecting
data with an error of 1% sample size. The total sample consists of 100
students; 68 females and 32 males, with effective response rate of 100%.
Measure of Concepts
This research was a quantitative research and adopted the concept of
constructs in the model from Thomas (2011), Mohamed (2009), and
IMAG
SATI
STU
PERC
TRUS
H1
H2
H
3
H4
H5
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Helgesen & Nesset (2007). The model had been adjusted as latent and
manifest variables in accordance with environment and culture of population
aimed to be studied. An operational definition in questionnaire was tested
and modified in case of some operational definitions that suitable for
operation in the field.
Due to complex nature of the model, the Partial Least Squares (PLS)
structure equation modeling approach was used to test the model. This
procedure allowed us to test the proposed structure of the model totally. Each
construct was covered by a set of multiple items in the questionnaire.
Questions were about their service experiences which derived into two parts;
the first one was a socio-economic status questionnaire, and the other one
was a questionnaire requesting information about constructs of five latent
variables which including of student loyalty, student satisfaction, university
image, student trust, and student perceived value.
Measurement for independent and dependent variables used was a
seven-point Likert type response format, with “strongly disagree” to
“strongly agree” (1= strongly disagree, 2= disagree, 3= somewhat disagree,
4= neither agree nor disagree, 5= somewhat agree, 6= agree, 7= strongly
agree). In measurement model, 18 indicators were used to measure study of
latent constructs; eight for the two external constructs; student satisfaction (4
indicators) and student loyalty (4 indicators), and 10 for the three internal
constructs; student trust (3 indicators), university image (3 indicators) and
student perceived value (4 indicators).
Data Analysis
The data analysis was divided into two parts: 1) validating the
measurement model and validating the structural model (Figure 1) linking
these constructs and, 2) testing the hypotheses. The Partial Least Squares
(PLS) structural equations modeling is used for testing theory associated
with latent variable models since the complexity of the theoretical model and
the presence of both reflective and formative indicators (Brown & Mazzarol,
2006). However, this method was used because of its robustness against
distributional constraints of more traditional analysis methods (e.g. AMOS
or LISREL) and suitability for a smaller sample size than more common
SEM techniques. Smart PLS 3.0, a leading PLS-SEM package, was used in
this study.
Analytical Results
Initially, results from description of respondents were summarized
that 68.0% of them were females and 32.0% were males. Their average age
ranges were between 21 to 22 (48.0%) and their average GPA ranges were
between 2.01 to 2.50 (37.0%). Most of their families’ occupations (40.0%)
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were commercial/private business or self-employment, while 57.0% were
approximately 30,000 THB earning per month per family.
Validating Measurement Model and Validating Structural Model
The Partial Least Squares (PLS) algorithm is used to test the
structural equation models. This approach consists of an iterative process
that maximizes the predictive and explanatory powers of the models, which
are assessed in terms of the R2 values of the dependent variables (between
0.756 to 0.850). These values are very high for all models given their
complexity (see Table 2).
Figure 2 Estimated Structural Model for Student Loyalty
Result of the estimated PLS structural model in Figure 2 indicated the
final model with path loading coefficients significant at level 0.05. The
model demonstrated the linkages among perceived value, institution image,
institution trust, student satisfaction, and student loyalty. This model
moderately explained 81.1% respectively of variance in the student loyalty
(STULOY) through the effect of direct antecedent variable (student
satisfaction) and the indirect effect of the second variables, namely, the
institution image (IMAGE), institution trust (TRUST), and student perceived
value (PERC). Inner model path coefficient sizes and significance in Figure
2 indicated that the strongest direct effect from student satisfaction (SATIS)
to student loyalty (STULOY) which was at level 0.901. In the second
antecedent variables, it was found that the strong direct effect from student
perceived value (PERC) to institution trust (TRUST) was at level 0.907 and
institution image (IMAGE) was at level 0.870.
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Table 1 Summary of Results for Reflective Outer Model
Latent
Variable
Indicators
Mean
Loading
Indicator
Reliability
(loadings2)
Composite
Reliability
AVE
STULOY
Recomm
5.597
0.926
0.857
0.951
0.829
Commit
5.322
0.911
0.830
Refer
5.637
0.894
0.799
Repur
5.337
0.911
0.830
SATIS
Prosatis
5.813
0.912
0.832
0.956
0.844
Acprosat
5.420
0.951
0.904
Osatis
5.562
0.926
0.857
Tsatis
5.293
0.884
0.781
IMAGE
Recogn
5.360
0.938
0.880
0.963
0.896
Uimage
5.522
0.968
0.937
Acimage
5.737
0.934
0.872
TRUST
Inptrust
5.522
0.950
0.903
0.970
0.914
Inutrust
5.447
0.957
0.916
Rexpect
5.432
0.961
0.924
PREC
Nwserv
5.543
0.926
0.857
0.970
0.890
Nwexpect
5.076
0.927
0.859
Ustand
5.430
0.972
0.945
Socval
5.480
0.947
0.897
In outer model, the measure’s quality using the Indicator Reliability
(see Table 1) of each measured variable was examined to ensure the
measurement variable (MVs) load meaningfully to their related constructs.
Overall, the MVs loading are all relatively large and positive. An individual
indicator reliability was exceeded 0.707 to ensure that at least half of the
variance in the observed variable is shared with the construct. Moreover, in
Table 2, Cronbach’s alpha value of all latent variables are shown to be larger
than 0.6 (between 0.931 to 0.958), so high levels of internal consistency
reliability have been demonstrated among all four reflective latent variables.
An Average Variance Extracted (AVE) is used to check the validity
of the measurement model which is widely used. To ensured discriminant
validity of the constructs, the AVEs of the latent variables should be greater
than the square of the correlations among the latent variables. For each
construct, the AVEs squared root exceeds its shared variance with other
constructs, confirming that the constructs are independent from each other.
Average communalities of the measures by construct are close to 0.70,
implying good consistency (see Table 2), which ensures that the model show
good discriminant validity.
Therefore, to check the validity of the model from Table 1, the result
indicated that discriminant validity is well established. For example, the
latent variable SATIS’s AVE is found to be 0.844, hence, its square root
becomes 0.919 (in Table 2). This number is larger than the correlation values
in the column of SATIS (0.907, 0.843 and 0.854) and also larger than those
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in the row of SATIS (0.850). Similar observation is also made for the latent
variables IMAGE, TRUST and PERC respectively.
Table 2 Assessment of the Validity of the Latent Variables
Latent
Variables
Latent Variable Correlations
Cronbach’s
R2
STULOY
SATIS IMAGE TRUST PERC
STULOY
0.910
0.931
0.8
11
SATIS
0.90
1
0.919
0.938
0.850
IMAGE
0.86
4
0.907
0.947
0.942
0.756
TRUST
0.75
1
0.843
0.826
0.956
0.953
0.822
PERC
0.79
1
0.854
0.870
0.907
0.943
0.958
0.000
Testing the Hypotheses
The estimated model is presented in Figure 2 where the significant
path is highlighted and the ability of the model to explain variation in the
endogenous variable is indicated for each construct. The model explain
81.1% of the variation in student loyalty (STULOY). Consistently with
previous research, the explanatory power is larger for the model (Thomas,
2011; Helgesen & Nesset, 2007). The estimated coefficients are statistically
significant against a Student-T distribution at a significance level of 0.05
when t-test greater than 1.96. Table 3 shows relationships between constructs
which are all statistically significant level at 0.05.
Table 3 T-Statistics for Path Estimates
Hypothesis
Path coef.
t-test
Result
H1 : SATIS -> STULOY
0.901
37.968 **
Accept
H2 : IMAGE ->SATIS
0.662
7.926 **
Accept
H3 : PERC->IMAGE
0.870
23.349 **
Accept
H4 : TRUST->SATIS
0.296
2.753 **
Accept
H5 : PERC ->TRUST
0.907
26.069 **
Accept
Note: ** significant at 5% level (t > 1.96)
The five main concepts of the research model (student loyalty,
student satisfaction, university image, student trust, and student perceived
value) are likely by five path estimates that are all hypothesized to be
positive (Hypothesis 1 - Hypothesis 5). The findings support all hypotheses
are significant at the 0.05 level. This suggests that student satisfaction
(SATIS) has a significant direct positive effect on student loyalty (STULOY)
(Hypothesis 1); university image (IMAGE) has a significant positive direct
effect on student satisfaction (SATIS) (Hypothesis 2); student trust (TRUST)
has a significant positive direct effect on student satisfaction (SATIS)
(Hypothesis 3); student perceived value (PERC) has a significant positive
direct effect on university image (IMAGE)” (Hypothesis 4); “student
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perceived value (PERC) has a significant positive direct effect on student
trust (TRUST)” (Hypothesis 5).
The direct effect from student satisfaction (SATIS) to student loyalty
(STULOY) is 0.901 (p < 0.05), cf. Figure 2. Taking into consideration the
indirect effects via institution trust (TRUST) and institution image (IMAGE),
the total effect from student satisfaction to student loyalty is 0.811. This
suggests that student satisfaction has the highest degree of association with
student loyalty both directly and totally, and also is including the indirect
effects. In Table 3 shows that the positive hypotheses are supported and the
proposed relationships are significant. Thus, if hypothesis 1 is supported, we
can explain that student satisfaction is positive driven of student loyalty
(H1). However, student satisfaction is driven by two factors: institution
image (H2) and institution trust (H3). Moreover, student perceived value is
driven to institution image (H4) and institution trust (H5). The results from
this study (including measures of overall quality and overall outcomes) also
provides support to the hypothesized relationships.
In the developed structural model of student loyalty, it provides better
understanding about the influence of each factor towards student loyalty.
Findings of the study are summarized that, the positive correlation between
student satisfaction and student loyalty is strong. Student perceived value is a
causal variable that put effect on the student satisfaction, and there are
influenced by intervening variables via institution image and institution trust.
The student satisfaction, as a mediating variable, is the only one antecedent
variable that put effect on the dependent variable in this model, student
loyalty model. It is implied that the student satisfaction was the major driver
of the student loyalty.
Conclusion
Results from this study indicated that the student satisfaction
(SATIS) and 3 antecedent variables - university image (IMAGE), student
trust (TRUST), and student perceived value (PERC) have positive influence
to student loyalty (STULOY) with statistically significant level at 0.05. The
model is perfectly fit with the empirical data and is predicted by student
satisfaction and antecedent variables up to 81.1%. The findings of this study
support the literature that perceived value is the antecedent to student
satisfaction and the consequences of student satisfaction is student loyalty
(Mohamed, 2009, Thomas, 2011, Helgesen & Nesset, 2007; Henning -
Thurau & et al., 2001, Yang & Peterson, 2004).
Moreover, the results indicated that every latent variable affected the
loyalty toward private higher education institutions, and also show that,
student perceived value is the construct that most influence to university
image and student trust and strongly indirect influence to student
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satisfaction. The influence of student perceived value is also relevant to
student loyalty via student satisfaction. The most important is the impact of
the student satisfaction variable that has highest directly influences and
significantly mediates the relationship between perceived value and student
loyalty. Finding in this study is concluded that student satisfaction is the
mediating variable in this model and it implies that student satisfaction is a
major driver of student loyalty. Therefore, student loyalty has become an
important strategic theme for higher educational institutions planning.
The research suggests some specific areas for the improvement of
higher education institutions to create satisfaction among students. To attack
to this, institutions should recognize student retention activities by initiating
institutional satisfaction to students. They can be variety activities depended
on background, institutional nature, location, and also institutional
philosophy.
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