The Influence Mechanism of Corporate Image: in Examining of Consumer Satisfaction SMSEs Indonesia

Abstract

The coronavirus disease (COVID-19) outbreak has greatly affected the global economy, including Indonesia. One of them is the micro small medium entreprise (MSME) sector, which is one of the sectors that drive a country's economy. This article aims to assess the impact of the COVID-19 outbreak on MSME businesses, how people are still consistently using Indonesian MSME products because they are familiar with their image and quality, so that MSME can still maintain their existence against the crisis in the era of the Covid-19 pandemic and the new normal. In this paper, we propose a customer satisfaction model, starting from service quality factors and product quality factors that have a positive effect on company image mediated by familiarity with the Structural Equation Modeling (SEM) approach in the sample data International Sustainable Competitiveness Advantage 2020 15 of 444 MSME user respondents in Indonesia.

Full text

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International Sustainable Competitiveness Advantage
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The Influence Mechanism of Corporate Image: in Examining of Consumer
Satisfaction SMSEs Indonesia
Vigory Gloriman Manalu 1, Wenti Ayu Sunarjo2, Eman Sulaiman3
1Ph. D. Student, Universitas Jenderal Soedirman, Lecturer, Universitas Kuningan, vigoryglo@gmail.com, Indonesia.
2Ph. D. Student, Universitas Jenderal Soedirman, Lecturer, Universitas Pekalongan,wentyaa@gmail.com, Indonesia.
3Ph. D. Student, Universitas Jenderal Soedirman, Lecturer, STIE Cirebon, emans.aero@gmail.com, Indonesia.
ABSTRACT
The coronavirus disease (COVID-19) outbreak has greatly affected the global economy, including Indonesia. One of them
is the micro small medium entreprise (MSME) sector, which is one of the sectors that drive a country's economy. This
article aims to assess the impact of the COVID-19 outbreak on MSME businesses, how people are still consistently using
Indonesian MSME products because they are familiar with their image and quality, so that MSME can still maintain their
existence against the crisis in the era of the Covid-19 pandemic and the new normal. In this paper, we propose a customer
satisfaction model, starting from service quality factors and product quality factors that have a positive effect on company
image mediated by familiarity with the Structural Equation Modeling (SEM) approach in the sample data of 444 MSME
user respondents in Indonesia.
Keywords: Service Quality, Product Quality, Familiarity, Corporate image, Customer Satisfaction, SME.
1. Introduction
The epidemic that is currently a global case, namely the Coronavirus (COVID-19) outbreak has greatly affected
the global economy, including Indonesia. The impact of Covid-19 has been felt in various fields, especially the
economic sector. One of the sectors of the economy that has experienced a decline is in the Micro, Small and
Medium Enterprises (UMKM) sector. This is because MSMEs occupy a strategic position in the economy in
general. As we know in ASEAN, MSMEs have generated jobs of around 50% to 95% (Islam, 2020). This is also
acknowledged by Indonesia, that MSMEs in Indonesia are one of the strategic sectors in the national economy
that help absorb labor.
Small businesses which are part of MSMEs are among those affected by the COVID-19 crisis. It can be seen
that many small businesses have temporarily closed their businesses, due to constraints on business cash flow
(Baker, Judge, Baker, & Judge, 2020). The impact felt by MSMEs during the Covid-19 pandemic can be seen in
table 1.
1Corresponding Author: Vigory Gloriman Manalu. E-mail: vigoryglo@gmail.com

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Tabel 1. The effect of Covid-19 SME Indonesia
Effect
(%)
Decreasing Sales
56.0
Difficulties Capital
22.0
Product Distribution Barriers
15.0
Difficulties Raw Materia
4.0
The decline in sales experienced by MSMEs during the pandemic has greatly influenced market changes. The
influence of the market is currently changing rapidly, and in this present era, namely in the era of global services
that is rapidly developing an industry that prioritizes the depth and breadth of services as well as service quality,
especially during a pandemic that requires MSMEs to be able to survive. One way to survive for most MSMEs
is to understand what the customers demand (Hsu, Chen, & Hsueh, 2006). Therefore, a correct understanding of
whether customers perceive high quality service has become an important issue and a requirement for the
operation of any company or organization.
Other research also shows that companies must have an important factor in influencing the success of the
company (Ahuja, I.P.S & Khamba, 2008), namely how a company is able to improve service quality is the main
method of management to increase customer loyalty and satisfaction (Su & Teng, 2018). in the end have an
impact on the success or success of the company.
Furthermore, according to Zeithaml, Berry, & Parasuraman (1996), research on the effect of service quality on
customer behavior can be categorized as positive behavioral intentions and negative behavior intentions. Service
quality will be able to measure customer satisfaction. In Chien & Chi (2019) study, service quality has a
significant enhancing effect on the company's image from trade shows, and both have a significant positive effect
on consumer satisfaction. The improvement will be seen significantly with experience. So in line with this, the
findings of research conducted by (Zhanga, Heb, Zhouc, & Gorpd, 2019) show that experience affects image
formation; however, there are complicated boundary conditions for this effect. Conformity between objects and
individual values and expectations is what is important. For example, we observe that an individual's state
experience is negatively associated with a political corporate image (CI) because of the substantial political
differences between China and Western countries.
A company will optimize the quality of its product or service and its variability can affect the relationship the
company has with its customers, making customers vulnerable to competitive bidding (Grewal, Krishnan, Baker,
& Borin, 1998; Tax, 2006). In line with our research objectives, namely to examine the impact of the COVID-
19 outbreak on MSME businesses, how people are still consistent in using Indonesian MSME products because
they are familiar with their image and quality, so that MSMEs can still maintain their existence in facing the
crisis in that era.
Referring to the findings of Shafi, Liu, & Ren (2020) that because of the COVID-19 outbreak and due to the
lockdown, many SMEs have been severely affected. As a result, these businesses face various problems such as
finance, supply chain disruption, decreased demand, decreased sales and profits, in addition three quarters of
companies expect a decrease in sales of more than 60%, while more than two thirds of participating companies
expect a decrease in profits of more than 60%. During 2020. So we are trying to explore the existence of
Indonesian SMEs that are able to maintain their existence with many risks and conditions during the Covid-19
pandemic with the hope of being a contribution for SMEs to refer to the efforts made by Indonesian MSMEs in
defending their businesses from the current crisis conditions.

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2. Literatur Review
2.1 Customer Satisfaction in SME
The reactions reflecting consumer satisfaction can be viewed as a pointer impacting their business
unwaveringness. As indicated by (Zeithaml et al., 1996), research because of administration quality on customer
behavior can be arranged as sure and negative social expectations. At the point when a client's assessment of an
organization's items or administrations arrives at a specific level, signifying increased satisfaction (Chien & Chi,
2019). In the current business atmosphere where it is hard to manufacture new customer bases, the expense of
growing new client bunches frequently surpasses that of keeping up the current ones (Solomon, 2010).
Westbrook (1987) believed that fulfillment is for the most part viewed as an interceding variable in purchaser
repurchase goal. The better an association's administration, the more noteworthy will be consumer loyalty, which
further influences their social goal, bringing about a positive turn of events (Zeithaml et al., 1996; Boulding et
al., 1993; Gronholdt et al., 2000). Just when firms comprehend their clients' social aims and put forth an attempt
to understand the desires for products or administrations just as incite positive reactions in the clients, will there
be a longterm and maintainable ability to make exchanges. Firms would then be able to have economical
activities (Kim et al., 2017). Henceforth, this gives an important reference to organizations in their drawn out
activities (Wu & Li, 2017).
2.2 Service Quality
The basic for the Service Quality scale is the gap model proposed by (Parasuraman, Zeithamal, & Berry, 1985).
SERVQUAL (Service Quality) idea has been scrutinized and examined broadly. For example, (Cronin Jr &
Taylor, 1992) created SERVPERF, an assistance based measure, featuring the shortcomings of SERVQUAL
model created by (Parasuraman, Zeithamal, & Berry, 1988; Parasuraman, Zeithaml, & Berry, 1994) comprises
of five measurements completely: tangibility, reliability, assurance, responsiveness and empathy, generally
utilized in administration quality assessments in various exploration regions. Quality assistance has risen as a
significant determinant of consumer loyalty and informal correspondence (Lang, 2011).
Expanding on the establishment laid by (Kang, 2006), this paper thinks about the two parts of administration
quality. Moreover, practical help quality is conceptualized as a second-request build having the five components
of SERVQUAL as its measurements (Parasuraman et al., 1988). Most past conceptualizations of administration
quality essentially embrace an intelligent viewpoint to estimation (Kang & James, 2004). Notwithstanding, a
few analysts fight that the develop of utilitarian quality (Ladhari., Souiden, & Ladhari, 2011) would not apply
differing consequences for its five subdimensions and it may be more proper to treat the five components of
SERVQUAL as developmental markers of the second-request build (Carr, 2007).
Kim & Woo (2008) conducted exploration on South Korea's presentations, utilizing the idea of SERVQUAL,
and proposed and checked the measurement of the nature of career expo administrations and the exhibition of
exhibitors. Service quality has a critical improving impact on the corporate image of the exchange shows, and
both have huge constructive outcomes on customer satisfaction (Chien & Chi, 2019).
H1: service quality has a positive effect on familiarity
H3: service quality has a positive effect on corporate image

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2.3 Product Quality
Quality is conformance to requirements (Crosby, 1979). According to this view, item quality is inseparable from
meeting details. A very much made Mercedes is an excellent car, as is an all around made Chevette. The basic
issue is whether the last item adjusts to the plan and execution norms that have been set for it, and not the
substance or legitimacy of those guidelines (Garvin, 1984).
A Firms ought to be carefully characterize the components of value on which they would like to contend, and
should then center their energies here. Such a decision is essential on the grounds that every component of value
forces various requests on a firm. Dimensions of Product Quality (Garvin, 1984): Performance (primary product
characteristics), Features ("bells and whistles"), Reliability (frequency of failure), Conformance (match with
specifications), Durability (product life), Serviceability (speed of repair), Aesthetics ("fits and finishes"),
Perceived quality (reputation and intangibles).
Wong, Boon-itt, & Wong (2011) estimated Product Quality utilizing item imperfection rate, item execution, and
item dependability. (Xu, Huo, & Sun, 2014) hold that Product Quality assessment includes item execution,
dependability, congruity with norms, security, and consumer loyalty. As indicated by (Huo, Zhao, & Lai, 2014),
Product Quality is chiefly showed in item execution, conformance to built up principles, strength, dependability,
feel, and generally item quality saw by customer.
H2: product quality has a positive effect on familiarity
H4: Product quality has a positive effect on corporate image
2.4 Familiarity
Two significant approach are accessible for operationalizing and estimating product familiarity (Park & Lessig,
1981). One is to quantify product familiarity as far as how much an individual thinks about the item; the other is
to gauge commonality as far as how much an individual considers the item. As indicated by the last mentioned,
product familiarity depends on the individual's self-report of the amount she thinks about the item (Lichtenstein
& Fishhoff, 1977). The previous approach (measure of information) adds to understanding the effect of memory
substance on the chief's assessment and decision choices; the last mentioned (self-assessed familiarity) gives
data about leaders (Park & Lessig, 1981).
Familiarity with a brand or product has been proposed to assume a significant part in consumer decision-making
(Kuhzady et al., 2020). For example, in the field of web based shopping, there are different examinations that
found that decreasing the apparent danger and commonality drives the social expectations (Nepomuceno,
Laroche, & Richard, 2014). Actually, by increasing trust with the item/brand and familiarity, it goes about as a
powerful heuristic sign that decidedly influences the future buying intention (Benedicktus, Brady, Darke, &
Voorhees, 2010). Concerning, the commonality is distinguished as the full of feeling assessment of a voyager
from a particular objective (Han & Yamana, 2016). By tolerating familiarity as a multidimensional develop,
Prentice (2004) suggested seventy of familiarity (Lee & Tussyadiah, 2012), which include 1) experiential
familiarity, (2) informational familiarity, (3) educational familiarity, (4) self-assured familiarity, (5) expected
familiarity, (6) proximate familiarity, and (7) self-described familiarity.
Dimention for this research of familiarity adoption from (Foroudi, Melewar, & Gupta, 2014): The company and
the product are familiar, The company and the product are original and unique, The company has products for
today's consumer, The company and its product offers the kind of products (Park & Lessig, 1981). Previous
experience with the different products that exist in the market (Duncan & Moriarty, 1998; Laroche, Kim, &

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Zhou, 1996; Park & Lessig, 1981), Information to make an informed judgment about the company's product
and services' (Laroche et al., 1996; Park & Lessig, 1981), The company and the product a feeling of goodwill
(Laroche et al., 1996; Park & Lessig, 1981).
H5: Familiarity has a positive effect on corporate image
2.5 Corporate image
The corporate image idea went to the front during the 1950s mid 1960s, with remarkable commitments being
made by (Bolger and Boulding, 1956; Bristol, 1960; Crespi, 1961; Martineau, 1958; Spector, 1961) and a few
creators started to investigate the connection between the corporate image and the brand (Swanson, 1957; Tyler,
1957) Apparently, crafted by (Boulding, 1956) and (Martineau, 1958) were the most persuasive of the above
mentioned, with Boulding (1956) clarifying the basic significance of picture to the human mind, and, besides,
taking note of that there was from the earlier connection between an individual's image of an association and
their resultant conduct toward the element (John M.T. Balmer, Lin, Chen, & He, 2020).
According to (Gray & Balmer, 1998), a corporate image identifies with the psychological picture held of an
association by an individual and is the thing that strikes a chord when an individual sees or hears the organization
logo as well as corporate name. It speaks to the entirety of impressions as well as discernments held of an
association (Bromley, 1993; Davies, Chun, DaSilva, & Roper, 2003; Kennedy, 1977) corporate picture is
comprised of practical and passionate implications (Kennedy, 1977). The corporate image has been seen
basically from a corporate image the board point of view regarding the controlling, or forming, of a corporate
image or can in some cases be perceived as an expansive, single generalization image where usually held
impression of a firm are shared, even across partner gatherings (J. M. T. Balmer & Greyser, 2003).
H6: Corporate image has a positive effect on consumers satisfaction
3. Research Method
This study uses quantitative methods to examine the relationship between variables. The data was collected using
a questionnaire and distributed online using a probability and convenience sampling technique. The
consideration of this sampling is based on micro small medium entreprise (MSME) in Indonesia (Jawa Tengah).
Respondents were asked to fill in various statements related to research variables with a Likert scale of 1 to 5
with the description of the answer options as; 1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree, and 5 =
strongly agree.
The question items used in the questionnaire are an extension of previous research, service quality (Chien & Chi,
2019), product quality (Chien & Chi, 2019), familiarity (Foroudi et al., 2014), corporate image (Hult, Sharma,
Morgeson, & Zhang, 2019), and costumer satisfaction (Chien & Chi, 2019), adapted to the context of the study.
The collected data is analyzed using structural equation modeling (SEM). The measurements and structural tests
are performed to ensure a good model and results. The goodness of fit (GoF) model is reviewed based on the
criteria (Hooper, Coughlan, & Mullen, 2008), which are presented in Tabel 1 Rule of thumbs for the goodness
of fit.
Tabel 1 Rule Goodness of Fit
Criteria
Threshold
Rule of thumb
CMIN/DF
< 2.00
Good
< 5.00
Acceptable

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GFI
> 0.95
Good
AGFI
> 0.90
Good
RMSEA
< 0.06
Good
0.05 - 0.10
Fair
> 0.10
Poor
NFI
> 0.90
Good
CFI
> 0.90
Good
4. Result
This study collected 444 respondents who had purchased products from MSMEs in the Central Java region.
Characteristics of the respondents 57% of the respondents are women, 43% are men, and have an age range of
29-34 years 44%. A total of 187 (42%) respondents had high school education, and 194 (43%) respondents had
an income of Rp. 500,000 - Rp. 2,000,000. a complete data description is presented in Table 2.
Tabel 2. Descriptive respondent
Variable
Description
Amount
Percentage
(%)
Gender
Male
188
42,30%
Female
256
57,70%
Age
17-22 years old
56
12,60%
23-28 years old
113
25,40%
29-34 years old
196
44,10%
35-40 years old
43
9,60%
>40 years old
36
8,20%
Educatio
n
High school
187
42,10%
Undergraduate
145
32,60%
Graduate
80
18%
Postgraduate
32
7,30%
Income
per
month
Rp500,000 – Rp
2,000,000
194
43,60%
Rp2,000,000 –
Rp4,000,000
165
37,10%
Rp4,000,000 –
Rp8,000,000
80
18%
> Rp8,000,000
5
1,20%
The measurement model in this study was tested using factor analysis and confirmatory factor analysis (CFA).
These two tests aim to check the validity and reliability of each model item. The value of the loading factor on
all items in this study> 0.50 and the Average Variance Extracted (AVE) value> 0.60 so that it can be said that
the question items of this study are valid (Bagozzi & Yi, 1988; Hu & Bentler, 1999). Furthermore, if the value
of Composite Reliability (CR) > 0.70, it can be said that the variable is reliable. Table 3 shows that all variables
have a CR value above 0.70 so that it can be said that the research data is reliable. Tabel 3 Construct reliability
and convergent validity

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Construct and indicator
Factor loading
CR
A
V
E
Service Quality
0,77
0
,
5
4
The services provided by Indonesian umkm
are good
0,67
The services provided by the Indonesian
umkm are accurate
0,73
Indonesia SME service is responsive and
reliable
0,77
Product Quality
0,76
0
,
5
2
Indonesian SME products are very useful to
me
0,67
There is no doubt about the quality of
Indonesia's SME products
0,714
Indonesian SME products are more attractive
than products from other countries
0,753
Familiarity
0,78
0
,
5
6
I am very familiar with the umkm product
0,65
Indonesian SME provides products that
consumers currently need
0,79
SME is well-known for providing detailed
information about its products
0,78
Corporate Image
0,78
0
,
6
4
I prefer Indonesian SME products
0,87
I prefer Indonesian umkm products compared
to products from other countries
0,74
Costumer Satisfaction
0,85
0
,
7
5
I feel satisfied using Indonesian SME products
0,91
I am not interested in looking for alternatives
to Indonesian SME products
0,866
The Gof of the research model is evaluated by the indicators presented in Table 1. The CMIN / DF score of this
model is 2.105 (<2.00) which means acceptable, the GFI score is 0.959 which means good, the AGFI score is
0.935 which means good, the RMSEA score is 0.050. good, the NFI and CFI scores are 0.890 and 0.938,
respectively, which indicates a good GoF model. Overall, all scores indicate that the GoF of this model is fit and

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can be continued (Hooper, Coughlan, & Mullen, 2008).
**Significant at ρ-value < 0,01
Figure 1. Structural model test
The hypothesis of the relationship proposed between service quality and familiarity is proven to be positively
and significantly related (H1 Supported). The relationship between product quality and familiarity is proven to
be positively and significantly related (H2 Supported), the relationship between service quality and corporate
image is positively and significantly related (H3 Supported), the relationship between product quality and
corporate image is positively and significantly related (H4 Supported), the relationship between familiarity and
corporate image is positively and significantly related (H5 Supported), and the relationship between corporate
image and customer satisfaction is positively and significantly related (H6 Supported).
5. Disscusion
The Covid-19 virus outbreak which is currently a world problem has a profound impact on all sectors, especially
the economic sector, but each country makes a lockdown strategy for the sustainability of the country's economy,
such as the results of research by Rahman, Zaman, Tau, & Al-turjman (2020) modeling lockdown as a problem
of grouping and designing dynamics clustering algorithm for local lockdown by considering pandemic, economy
and mobility aspects.
Our research aims to examine the impact of the COVID-19 outbreak on MSME businesses, how people are still
consistent in using Indonesian MSME products because they are familiar with their image and quality, so that
MSMEs can still maintain their existence in facing the crisis in that era, so we propose service quality and product
variables. quality as the independent variable, customers satisfaction as the dependent variable, and familiarity
and corporate image as the mediating variable. Our study was measured by 444 respondents who had purchased
products from MSMEs in the Central Java region using 13 question items. Then we processed the results of the
respondents' answers using structural equation modeling (SEM).
Service
Quality
Familiarity
Product
Quality
Corporate
Imgae
Costumer
Satisfaction
0,182**
0,240**
0,236**
0,266**
0,616**

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The results of the analysis show that the six hypotheses are supported, in hypothesis 1 the proposed relationship
between service quality and familiarity is proven to be positively and significantly related, hypothesis 2 the
relationship between product quality and familiarity is shown to be positively and significantly related,
hypothesis 3 is the relationship between service quality and corporate image is positively and significantly
related, hypothesis 4 the relationship between product quality and corporate image is positively and significantly
related, hypothesis 5 the relationship between familiarity and corporate image is positively and significantly
related, and hypothesis 6 the relationship between corporate image and customer satisfaction is also proven to
be correlated significantly. positive and significant.
With this hypothesis, it is said that the service quality and product quality that exist in MSMEs greatly affect
familiarity, if MSMEs do not provide quality to their products and services, it will be difficult for consumers to
recognize them well. Meanwhile, good service quality and product quality will also have an impact on the image
of SME which is driven by familiarity, consumers will say the image of the company is good or not based on
quality and how familiar they are with the company. Furthermore, the image of the company will have an impact
on customer satisfaction. Consumers are satisfied with the quality provided by the company and will become
very familiar and think that the company has a good image because they feel satisfied every time they buy its
product.
6. Conclusion
This research is a research that contributes to MSMEs during the Covid-19 pandemic and the new normal era,
where to maintain consumer satisfaction with their products, consistency is needed in the quality of products and
services, by maintaining quality, consumers will easily remember your MSME products and will have an impact
on a good judgment on the company's image. With this, consumers will continue to buy your MSME products
because they are very familiar with the quality you provide. This can encourage Indonesian MSMEs to maintain
their existence.
This research is inseparable from its limitations, including because it was carried out during a pandemic, the
researchers were unable to obtain information related to conducting direct interviews with consumers and SMEs,
it is highly recommended for researchers who can conduct interviews directly to reinforce the findings. In
addition, this study does not have a specificity for respondents, because we distributed the questionnaire using
an online form, so we do not limit the contributing respondents with specific specifications, we do it on all
respondents who are willing and are consumers of Indonesian MSMEs. So for advanced researchers, they can
conduct a survey on respondents with special specifications, so that the results are more focused. Likewise, for
the variables we use, we focus on corporate image, so the next researcher can add or replace with other variables
that are relevant or more specific.
Acknowledgments
The author is grateful for the support given, in this case the Indonesian people who are spread across several
cities in Indonesia who are willing to become respondents in our research.
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