ANTECEDENTS AND CONSEQUENCES OF CORPORATE IMAGE: CONVENTIONAL AND ISLAMIC BANKS

AWAN, HAYAT MOHAMMAD; HAYAT, SAHAR; FAIZ, RAFIA

doi:10.1590/S0034-759020180407

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ARTIGOS • Rev. adm. empres. 58 (4) • Jul-Aug 2018 • https://doi.org/10.1590/S0034-759020180407 copy

ANTECEDENTS AND CONSEQUENCES OF CORPORATE IMAGE: CONVENTIONAL AND ISLAMIC BANKS

Antecedentes y consecuencias de la imagen corporativa: Bancos convencionales e islámicos

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

Islamic and conventional banks differ in basic philosophy and objectives although both perform the same service. This study used cognitive, affective, and conative sequence to examine antecedents and consequences of corporate image of conventional and Islamic banks in Pakistan. Self-administered questionnaires collected empirical data from 320 respondents. It was found that non-firm communication and corporate social responsibility significantly relate to brand familiarity and corporate image in case of Islamic banks. Brand familiarity significantly builds corporate image, which confirms the cognitive, affective, and conative sequence. Corporate image creates positive brand attitude and intention to use banking services. In case of conventional banks, only firm communication significantly relates to corporate image and brand familiarity. The relationship of corporate image with brand attitude and intention to use the service are similar to Islamic banks. This study can help banks to invest in building respective antecedents which can increase intention to use their services.

KEYWORDS:
Corporate image; Islamic banks; conventional banks; intention to use; mediation

	Conventional	Islamic
Status of money	Money is considered as a commodity. It can be traded and rented out	Money is just a medium of exchange. It can't be traded at a value higher than its face value (Usmani, 1998Usmani, M. T. (1998). An Introduction to Islamic Finance. Karachi: Idaratul Ma’arif.)
Source of earning	Interest is charged on the basis of time value of money	Profit is earned on trade/rent of assets
Sharing of Loss	Banks charge interest even if the borrower suffers loss	Banks share the profit/loss with the client (Wilson, 2006Wilson, R. (2006). Islam and business. Thunderbird International Business Review, 48(1), 109-123. doi: 10.1002/tie.20088 https://doi.org/10.1002/tie.20088... )
Exchange of goods and services	Exchange/trade of assets is not mandatory for running finance or cash finance.	Exchange/trade of assets is mandatory for every type of financing (Wilson, 2006Wilson, R. (2006). Islam and business. Thunderbird International Business Review, 48(1), 109-123. doi: 10.1002/tie.20088 https://doi.org/10.1002/tie.20088... )
Relationship between bank and client	Borrower and lender	Partners in business
Risk sharing	Business and asset risk are not shared by bank	Bank shares risk of asset
Religious and ethical values	Banks have no problem if client is involved in a business which is legal in a country	Islamic banks are engaged only in legally, ethically, morally, and religiously allowed activities (Siddiqui, 2004Siddiqui, M. N. (2004). Riba, bank interest and the rationale of its prohibition. Jeddah: Islamic Research and Training Institute.)
Late payment penalty	Late payment fine is a source of income for banks.	Islamic banks cannot charge any extra amount on the loan. Therefore, late payment fine is just to discourage clients from default and this income is used for charity (Siddiqui, 2004Siddiqui, M. N. (2004). Riba, bank interest and the rationale of its prohibition. Jeddah: Islamic Research and Training Institute.; Usmani, 1998Usmani, M. T. (1998). An Introduction to Islamic Finance. Karachi: Idaratul Ma’arif.)

Variable	Scale
1. Corporate Social Responsibility	Adapted from Lichtenstein, Drumwright, and Braig (2004)Lichtenstein, D. R., Drumwright, M. E., & Braig, B. M. (2004). The effect of corporate social responsibility on customer donations to corporate-supported nonprofits.Journal of Marketing,68(4), 16-32.
3. Brand Familiarity	Adapted from Dawar (1996)Dawar, N. (1996). Extensions of broad brands: The role of retrieval in evaluations of fit.Journal of Consumer Psychology, 5(2), 189-207. doi: 10.1207/s15327663jcp0502_05 https://doi.org/10.1207/s15327663jcp0502...
4. Non-Firm Communication	Adapted from Villarejo-Ramos and Sánchez-Franco (2005)Villarejo-Ramos, A. F., & Sánchez-Franco, M. J. (2005). The impact of marketing communication and price promotion on brand equity.Journal of Brand Management,12(6), 431-444. doi: 10.1057/palgrave.bm.2540238 https://doi.org/10.1057/palgrave.bm.2540... ; Bambauer-Sachse and Mangold (2011)Bambauer-Sachse, S., & Mangold, S. (2011). Brand equity dilution through negative online word-of-mouth communication.Journal of Retailing and Consumer Services,18(1), 38-45. doi: 10.1016/j.jretconser.2010.09.003 https://doi.org/10.1016/j.jretconser.201...
5. Security	Adapted from Flavián, Torres, and Guinalíu (2004)Flavián, C., Torres, E., & Guinalíu, M. (2004). Corporate image measurement: A further problem for the tangibilization of Internet banking services. International Journal of Bank Marketing,22(5), 366-384. doi: 10.1108/02652320410549665 https://doi.org/10.1108/0265232041054966... and Ming-Chi Lee (2008)
6. Corporate Image	Adapted from Evans (1979)Evans, R. (1979). Bank selection: It all depends on the situation.Journal of Bank Research, 9(Winter), 242-245.; LeBlanc and Nguyen (1996)LeBlanc, G., & Nguyen, N. (1996). Cues used by customers evaluating corporate image in service firms: An empirical study in financial institutions.International Journal of Service Industry Management, 7(2), 44-56. doi: 10.1108/09564239610113460 https://doi.org/10.1108/0956423961011346... ; O'Cass and Grace (2004)O’Cass, A., & Grace, D. (2004). Exploring consumer experiences with a service brand. Journal of Product & Brand Management,13(4), 257-268. doi: 10.1108/10610420410546961 https://doi.org/10.1108/1061042041054696...
7. Brand Attitude	Adapted from Ruth and Simonin (2003)Ruth, J., & Simonin, B. (2003). “Brought to you by brand A and brand B”: Investigating multiple sponsors’ influence on consumers’ attitudes toward sponsored events. Journal of Advertising, 32(3), 19-30.; Lafferty and Goldsmith (2005)Lafferty, B. A., & Goldsmith, R. E. (2005). Cause-brand alliances: Does the cause help the brand or does the brand help the cause? Journal of Business Research, 58(4), 423-429. doi: 10.1016/j.jbusres.2003.07.001 https://doi.org/10.1016/j.jbusres.2003.0...
8. Intention to Use	Adapted from O'Cass and Grace (2003)O’Cass, A., & Grace, D. (2003). An exploratory perspective of service brand associations. Journal of Services Marketing, 17(5), 452-475. doi: 10.1108/08876040310486267 https://doi.org/10.1108/0887604031048626... ; Lafferty (2007)Lafferty, B. A. (2007). The relevance of fit in a cause-brand alliance when consumers evaluate corporate credibility. Journal of Business Research,60(5), 447-453. doi: 10.1016/j.jbusres.2006.09.030 https://doi.org/10.1016/j.jbusres.2006.0... and Shukla (2010)Shukla, A., Sharma, N. K., & Swami, S. (2010). Website characteristics, user characteristics and purchase intention: Mediating role of website satisfaction.International Journal of Internet Marketing and Advertising ,6(2), 142-167. doi: 10.1504/IJIMA.2010.032479 https://doi.org/10.1504/IJIMA.2010.03247...

Constructs	Conventional Banking		Islamic Banking
Constructs	CR	Extracted Variance	CR	Extracted Variance
1. Corporate Social Responsibility (CSR)	0.798	0.746	0.812	0.781
2. Firm Communication (FCM)	0.925	0.841	0.842	0.712
3. Brand Familiarity (BF)	0.816	0.782	0.911	0.815
4. Non-Firm Communication (NFCM)	0.823	0.755	0.921	0.823
5. Security (SEC)	0.713	0.682	0.725	0.692
6. Brand attitude	0.818	0.718	0.824	0.726
7. Intention to use	0.912	0.841	0.922	0.866
8. Corporate Image (CI)	0.93	0.61	0.91	0.55

		Relation		Direct		Indirect		Note
		Relation		Estimate	P-Value	Estimate	P-Value	Note
CI	<---	BF	H1	0.364	0.008			Supported
CI	<---	FCM	H2	0.451	0.019	0.054	0.016	Supported
BF	<---	FCM	H3	0.149	0.022			Supported
CI	<---	NFCM	H5	-0.023	0.633	0.187	0.005	Not supported
BF	<---	NFCM	H6	0.514	0.013			Supported
CI	<---	CSR	H8	0.291	0.012	0.003	0.889	Supported
BF	<---	CSR	H9	0.007	0.889			Not supported
CI	<---	SEC	H11	0.010	0.782	0.013	0.581	Not supported
BF	<---	SEC	H12	0.036	0.599			Not supported
BA	<---	CI	H14	0.693	0.039			Supported
ITU	<---	CI	H15	0.246	0.009	0.436	0.012	Supported
ITU	<---	BA	H16	0.628	0.009			Supported

		Relation		Direct		Indirect		Note
		Relation		Estimate	P-Value	Estimate	P-Value	Note
CI	<---	BF	H1	0.294	0.009			Supported
CI	<---	FCM	H2	-0.077	0.293	-0.006	0.746	Not supported
BF	<---	FCM	H3	-0.019	0.766			Not supported
CI	<---	NFCM	H5	0.195	0.032	0.054	0.055	Supported
BF	<---	NFCM	H6	0.183	0.048			Supported
CI	<---	CSR	H8	0.311	0.013	0.157	0.005	Supported
BF	<---	CSR	H9	0.533	0.010			Supported
CI	<---	SEC	H11	0.017	0.759	0.017	0.372	Not supported
BF	<---	SEC	H12	0.057	0.386			Not supported
BA	<---	CI	H14	0.627	0.011			Supported
ITU	<---	CI	H15	0.427	0.005	0.258	0.009	Supported
ITU	<---	BA	H16	0.412	0.019			Supported

Fitnessindex	Required value	Conventional results	Islamic results
Chi-Square P-value	>0.05	0.046	0.055
CMIN/DF	2.00-5.00	2.404	5.087
GFI	>0.90	0.964	0.929
AGFI	>0.90	0.964	0.909
RMSEA	<0.08	0.084	0.075
RMR	<0.08	0.065	0.076
IFI	>0.90	0.979	0.917
NFI	>0.90	0.965	0.902
CFI	>0.90	0.979	0.914
NNFI/TLI	>0.90	0.936	0.918

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