The Mediating Effect of Satisfaction on Customer Loyalty in Oursourcing Relationships and its Determinants

The increase in the number of hotel guests indicated that hotels in Malaysia needed to provide more services to their guests. Since hotels are exposed to high fixed costs, they need to outsource some specific services in order to reduce their internal costs. The increase in the number of hotel guests has led to a larger demand for outsourcing of services, and hotel managers have now been exposed to a wider choice of service providers that are willing to provide the specific services they require. This situation has made it easier for hotels to switch from one service provider to another. Therefore, service providers should try to increase the loyalty of existing customers (hotel managers) because it costs less to maintain an existing customer than attracting new customers. While the key objective of relationship marketing is to maintain customer loyalty there is, however, little agreement as to which antecedents should be used to achieve this objective. In response, this study proposed a model of relationship marketing that empirically investigates, in one single model, the effect of perceived value, switching costs, and satisfaction on customer loyalty. This study examined the relationships between perceived value and switching costs on satisfaction and customer loyalty in the Malaysian hotel outsourcing relationships. The mediating effects of satisfaction on the links between perceived value and switching costs on customer loyalty will also be tested. A total of 158 managers from hotels ranging from 1 to 5 Star hotels participated in the study via questionnaire. Data collected were analyzed using SPSS for descriptive statistics while hypotheses testing were conducted using Partial Least Squares with SmartPLS. With the exception of switching costs, results of this study revealed that perceived value significantly influenced customer loyalty while satisfaction was found to mediate the relationship. The findings suggested that perceived value and customer satisfaction play important roles in influencing customer loyalty towards the service provider. The results of this study will assist scholars and practitioners in terms of developing appropriate programs in relationship management. error. A value of AVE exceeding 0.5 demonstrates that more than 50% of the variance of the construct is due to its indicators (Liu et al. , 2011). Results show that the AVE is between 0.596 and 0.771. The CR values are between 0.869 and 0.933, which are above 0.7 as suggested by Fornell and Larcker (1981). The CR values indicate that all items have adequate reliability assessment scores. In sum, all items comply with convergence validity and reliability requirements. the service providers when making their decision to stay loyal with the current service providers. The findings do not support the study where perceived value positively and significantly affects customer loyalty. This result suggests that the existence of switching costs will not have any impact on the decision of the business customers to stay loyal with the present service providers. The result of this study is consistent with the research findings by Lee et al. (2001) in the mobile phone service in the Swedish telecommunication industry.