The important role of ethical behavior in improving customer loyalty

Abstract

PURPOSE: This research was done to 1). Explain the influence of ethical behavior on customer trust and loyalty. 2) Explain the influence of ethical behavior on customer commitment and loyalty. 3) Analyze the influence of ethical behavior on customer trust and commitment. DESIGN/METHODOLOGY: This research was done using well-structured and comprehensive procedures to examine the relationship among variables in order to obtain valid answers for the research questions. An explanatory design in the form of survey was employed to describe and investigate the relevant phenomena and factual information. FINDINGS: The conclusions of this research are drawn as follows. 1) Ethical behavior has a significant positive influence on trust. This means that the ethical behavior of employees in providing services to customers increases customer trust. 2) Ethical behavior has a positive and insignificant influence on commitment. This implies that ethical behavior shown by employees is not yet able to improve customer commitment. 3) Ethical behavior has a negative and insignificant influence on loyalty. Therefore, ethical behavior does not have any significant role in increasing customer loyalty. 4) Trust has a significant positive effect on customer commitment. This implies that customer trust plays an important role in increasing the commitment of customers. 5) Trust has a significant positive influence on customer loyalty. Thus, stronger trust supports stronger customer loyalty. 6) Commitment has a significant positive influence on loyalty. This implies that the customer’s commitment upon their perception of services provided by employees is able to increase customer loyalty. ORIGINALITY: The population of this study included all Bank customers in Denpasar City. Samples were selected using a purposive sampling method to select samples based on certain specific objectives. Only customers who had completed their transaction at the Bank could be selected as the samples.