The antecedents of relationshipquality in Malaysia and

New ZealandNelson Oly Ndubisi

Nottingham University Business School, Nottingham University,Selangor, Malaysia

Catheryn Khoo-LattimoreTaylor’s University, Lakeside Campus, Malaysia

Lin YangSchool of Marketing and International Business,

Victoria University of Wellington, Wellington, New Zealand, and

Celine Marie CapelThe University of Nottingham Malaysia Campus,

Selangor, Malaysia

Abstract

Purpose – The purpose of this paper is to examine the relationship between the relational dynamics,namely trust, personalisation, communication, conflict handling and empathy, and relationshipquality in the banking industry of two culturally dissimilar nations – Malaysia and New Zealand.

Design/methodology/approach – Bank customers in Kuala Lumpur, Malaysia and Dunedin, NewZealand were surveyed using a questionnaire. Bank intercept technique was used in administering theinstrument. A total of 358 customers (comprising 150 from Malaysia and 208 from New Zealand)provided the data for the study. Multiple regression analysis was used to estimate the hypothesizedrelationships.

Findings – The results of the study show that the five relational dynamics explain 84 percent and 76percent of variations in relationship quality in Malaysia and New Zealand respectively.Communication, trust, and empathy are significantly related with relationship quality in bothcountries, whereas personalisation has a significant impact on relationship quality in New Zealand butnot in Malaysia. The results also reveal that conflict handling is significantly and marginallyassociated with relationship quality in New Zealand and Malaysia respectively.

Research limitations/implications – Although the study was conducted on the banking industry,the outcome may be relevant to other service sectors. Further, understanding relational dynamics indifferent cultures is important, as the study has shown; thus integrating culture in the relationshipmarketing/management models would advance the understanding of culture roles in consumers’perceptions of and influences on relationship quality.

Originality/value – The paper assesses and compares the impact of relational dynamics onrelationship quality among bank customers from two different cultures. By comparing oppositecultures this study is an advance over past single country studies, and enhances the prospect ofgeneralizing the findings.

Keywords Culture (sociology), Banking, Malaysia, New Zealand

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0265-671X.htm

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Received January 2007Revised March 2008

Accepted March 2008

International Journal of Quality &Reliability Management

Vol. 28 No. 2, 2011pp. 233-248

q Emerald Group Publishing Limited0265-671X

DOI 10.1108/02656711111101773

IntroductionRelationship marketing (RM) has been defined as “the process of identifying andestablishing, maintaining, enhancing, and when necessary terminating relationshipswith customers and other stakeholders, at a profit, so that the objectives of all partiesinvolved are met, where this is done by a mutual giving and fulfillment of promises”(Gronroos, 2000, p. 98). Associated to the subject of relationship marketing is thequality of the relationship. Jarvelin and Lehtinen (1996) refer to relationship quality(RQ) as a customer’s perception of how well the whole relationship fulfils his or herexpectations, predictions, goals and desires. Hence, RQ is a bundle of intangible value,which augments products or services and results in an expected interchange betweenbuyers and sellers (Levitt, 1986). The more general concept of RQ points to the overallimpression that a customer has when a service delivery occurs (Ndubisi, 2006, 2007;Wong and Sohal, 2002), which is an important prerequisite to a successful long-termrelationship.

The benefits of RM and RQ for organizations have already been researched(Alexander and Pollard, 2000; Colgate and Stewart, 1997; Goff et al., 1997). Inparticular, an examination of the literature reveals that there is a significant amount ofstudy on the advantages of relationship marketing exclusively within the bankingindustry (Colgate and Hedge, 2001; Lees et al., 2007; Lewis and Soureli, 2006; Ndubisi,2007). This is not surprising given that the banking sector has been experiencingincreasing competitive activity with flotation, mergers and new market entrants(Bellou and Andronikidis, 2008). In addition, the intangibility of the offerings in thebanking industry highlights the importance of customer relationships (Dibb andMeadows, 2001), which has been linked to customer loyalty (Ndubisi et al. 2007), and inturn to profitability (Trubik and Smith 2000). Trubik and Smith (2000) and Garland(2002) found strong, direct relationship between customer loyalty and customerprofitability in the banking industry. Thus, generally, it pays for organizations tomaintain quality relationship with customers. However, given the significant sacrificeand investment required to build quality relationship with customers, the possibility ofdifferent drivers of relationship quality existing in different markets, and the potentialfor differential market responses to relationship building efforts/strategies of firms, itis not possible to generalize on the antecedents and consequences of relationshipquality without undertaking a cross-cultural study. Thus, the objective of this researchis to examine whether national culture plays a role in the association of the relationaldynamics on customer perceived relationship quality. Although various dimensionshave been used to reflect culture, the cultural clustering has typically been defined bynational and geopolitical boundaries hence in this research, we chose respondents fromMalaysia and New Zealand as the comparative study groups because they exhibitsignificant cultural differences.

The rest of the paper is organized as follows: the next two sections reviews extantliterature on relationship quality, relational dynamics or the relationship marketingdimensions, the concept of national culture and the dimensions of culture, and alsoshows the link between culture and the relational dynamics and relationship quality.This section also holds the study’s hypotheses. The next section shows themethodology of the research including data collection and analysis procedures. This isfollowed by the discussion of the findings and the study’s limitations and future

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research direction. Finally, the implications of the research are presented and someconclusions drawn from the outcomes.

The underpinnings of relationship qualityResearchers (e.g. Gummesson, 1987; Hennig-Thurau et al., 2002; Wong and Sohal, 2002)have documented various relational dynamics. More specifically, these dimensionshave been identified as empathy (Ndubisi, 2004; Yau et al., 2000), trust (Morgan andHunt, 1994; Wong and Sohal, 2002; Selnes, 1998), communication (Sharma andPatterson, 1999; Palmatier et al., 2006), conflict handling (Dyer and Song, 1997; Songet al., 2000) and personalization (Berry, 1995; Gordon et al., 1998). In this study we averthat the relational dynamics namely empathy, trust, communication, conflict handlingand personalization will have influence on relationship quality in Malaysia and NewZealand. We also aver that the robustness of these relationships will differ between thetwo countries based on their cultural differences. This line of argument is representedin the schema (Figure 1).

Empathy is defined as the ability to understand someone else’s desires and goals(Yau et al., 2000). Empathy reduces reliance on legal governance because exchangepartners who are governed by the principle of empathy tend to treat others in themanner they would like to be treated (Ndubisi, 2004). Empathy is linked at a culturallevel to the ability of an individual to see situations from another’s perspective, thoughnot necessarily agreeing with such a perspective. One way to develop a uniquerelationship is to develop empathy.

Communication means providing information that is timely and can be trusted-including information if delivery problem occurs; information on quality assurance;procedural information to customers and opportunity for customer feedback, etc.Palmatier et al. (2006) posit that communication enhances relationship quality andbuilds stronger relationship. This is supported by another study which found thatintensive communication occurs in close relationships (Holden and O’Toole, 2004).Although it has been found that communication style can differ widely between

Figure 1.The schema of the

research relationships

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receiver-focused amongst Asians or sender-centered between Westerners (Yum, 1988),communication has been identified as one of the conditions that must be fulfilled by theexchange partners for any relationship exchange (regardless of culture) to occur(Kotler, 1988).

Trust is defined as a willingness to rely on an exchange partner in whom one hasconfidence (Moorman et al., 1993). Schurr and Ozanne (1985) defined the term as thebelief that a partner’s word or promise is reliable and a party will fulfil his/herobligations in the relationship. Generally, the strength and quality of a relationship relyon the level of trust – the higher the trust level, the stronger the relationship will be.Loyalty and trust for exchange partners in a relationship is an obligation and renderedwithout anticipation of reciprocity (Yau et al., 2000). Disregarding this obligation canseriously damage one’s reputation and lead to many disadvantages. Indeed, one wouldexpect a positive outcome from a partner on whose integrity one can rely onconfidently (Morgan and Hunt, 1994).

Conflict handling refers to the supplier’s ability to avoid potential conflicts andsolve manifest conflicts before they create problems (Dwyer et al., 1987). It also pointsto the ability to discuss the arisen problems and their solutions openly. Ndubisi (2007)categorized conflict handling into preemptive (which strive to forestall sources ofconflicts) and reactive CH which tries to solve manifest problems and make servicerecoveries. While service recoveries positively affect the relationship-quality (e.g.,Mattila and Patterson, 2004), there are other important areas which have been largelyignored – the ways service firms can avoid service failures (e.g., Vazquez-Casielleset al., 2007) through preemptive conflict handling. Conflicts generally result fromperceived inequity (Adams, 1963), therefore preempting the sources of inequity andforestalling it will increase perceived relationship quality.

Personalization is concerned with the degree to which the supplier can tailor therelationship to the customers. Studies have shown that personalization is one of themost successful relationship-building initiatives used by firms and is a significantdimension impacting on RQ (Bettencourt and Gwinner, 1996; Claycomb and Martin,2001). To our knowledge, there has been no academic literature investigating the role ofculture in impacting personalization on relationship quality.

Profiles of Malaysia and New ZealandAccording to the latest census held in 2000, the total population of Malaysia was 23.27million people (APCD, 2008) but today it is estimated to be 25 million. According toAPCD, 65.1 percent were Bumiputera (Malays), while Chinese and Indians comprised26.0 percent and 7.7 percent respectively. Sarawak’s predominate ethnic groupcomprised 30.1 percent Ibans while Chinese and Malays comprised 26.7 percent and23.0 percent respectively; Sabah is predominately comprised of the ethnic groupKadazan Dusun (18.4 percent) followed by the Bajas and Malay groups of 17.3 percentand 15.3 percent respectively (APCD, 2008). While the official language is BahasaMalaysia, English language is widely spoken.

New Zealand has a population of slightly less than four million people with mostliving in the key cities (Taylor, 2007). According to Taylor, the large majority of thepopulation (89 percent) has a European heritage, primarily English. Therefore, Englishis the predominant language and Christianity the largest religion. The Maori, aPolynesian people who were the earliest inhabitants of New Zealand make up the

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remaining population. Though Maori and Europeans freely intermarry and havesimilar ways of life, each maintains its identity, so social and cultural aspects remaindistinct for each group. The standard of living is high, and their literacy rate is 100percent.

The role of cultureNational culture has been defined as patterns of thinking, feeling and acting that arerooted in common values and societal conventions (Nakata and Sivakumar, 2001).While culture is widely studied in the organizational literature, only recently havequality and relationship researchers began to examine culture in these domains.Hofstede (1980), Hofstede (2001) and Hofstede and Bond (1988) suggested that thecultures of different nations can be compared in terms of five dimensions. They areindividualism-collectivism, power distance, uncertainty avoidance, masculinity-femininity, and long term orientation. Table I shows the definition of culture andthe scores of Malaysia and New Zealand on each of the dimensions.

In the following section, we present competing theoretical arguments in each case.For instance, in the case of individualism-collectivism, we first make the case abouthow trust, empathy, communication and conflict handling will be more important in acollectivistic culture like Malaysia and how personalization will be more important inindividualistic NZ in building relationship quality. We also make the contrasting caseabout how personalization will be more important in high power distance culture likeMalaysia as this will help to further clearly mark class differences.

The individualism versus collectivism dimension points to the relationship betweenan individual and other members of a society. Individualism refers to a loose socialframework where members look after themselves and their immediate families. On theother hand, a collectivist society indicates a preference for a tight knitted social

Dimension Definition (based on Hofstede, 1980)Malaysiascore

NZscore

Individualism-collectivisma

A loosely (v. tightly) knit social framework inwhich people are supposed to take care ofthemselves and immediate families only v.people feel absolute loyalty to their in-group andexpect the in-group to look after them

26 79

Power distance The extent to which a society accepts the factthat power is inequitably distributed

104 22

Uncertainty avoidance The extent to which ambiguity and uncertaintyare threatening and avoided

36 49

Masculinity-femininityb The extent to which assertiveness and successare dominant values – the extent to which caringfor others, quality of life, and people aredominant social values

50 58

Long-term orientation The extent to which future-oriented values suchas persistence and thrift are dominant

–c 30

Notes: aHigher value indicates greater individualism; bHigher value indicates greater masculinity;cThere is no score for Malaysia on LTO dimension; Figures in italics indicate that scores areremarkably different

Table I.Cultural dimensions and

Malaysia-NZ scores

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framework in which individuals expect their relatives to look after them forunquestioning loyalty. In highly collectivistic cultures, the emphasis is on the group,rather than the individual. People are more likely to value quality relationship andnurture it. Hence the overall predictive power of the relational dynamics will be greaterin Malaysia compared to New Zealand. Therefore trust, communication, and empathywill be more important in a collectivistic culture like Malaysia in building qualityrelationship than in an individualistic culture like NZ. Personalisation will be moreimportant in an individualistic culture like NZ in building relationship quality ascustomers continue to seek for customizations that will further distinguish them fromother members of the society.

The large versus small power distance dimension is the extent to which themembers of the society accept inequality and power in institutions and organisations.In a large power distance society, people have a propensity to accept unequaldistribution of power without any demand for justification. In a small power distancesociety, people demand justification for power inequalities and are not prepared toaccept inequalities willingly. In NZ for example, we expect the relational dynamics tohave influences on relationship quality due to its low power distance. We also expectconflict handling to be of significant influence as preemptive conflict handling andopen and free discussion of problems is more of a hallmark of low power distanceculture than a high power distance society. Also due to the sophistication of the NZmarket, personalisation is expected to have important influence on relationship qualitycompared to less sophisticated Malaysian market.

The strong versus weak uncertainty avoidance dimension considers the degree ofanxiety about uncertainty and ambiguity. Strong uncertainty avoidance specifiesintolerance by members of the society towards uncertainty and ambiguity. In contrast,weak uncertainty avoidance suggests a more relaxed and tolerant attitude by membersof the society towards the future. The masculinity versus femininity dimension relatesto the division of roles between the sexes in a society. Masculinity stands for a societalpreference for competition, while femininity embodies an inclination to placerelationships with people above money, to help others, to care for the weak and topreserve the quality of life. Since Malaysia and NZ are relatively close in their scores onthese dimensions, differences in relationship quality and relational dynamics may notbe explained by these dimensions. High long-term orientation cultures place greatervalue on persistence over quick results. These cultures also place a greater emphasison being thrifty. Individuals are less likely to choose to transact with businesses orindividuals they have no relationship with. Nonetheless, since there is no score forMalaysia on long-term orientation, we make no speculation based on this dimension.

Extant literature (e.g. Ndubisi, 2004) has speculated that certain determinants ofrelationship quality are stronger in some cultures and weaker in others. Thisspeculation however, has not been tested empirically. Given the dearth of research inthe role of culture on relationship quality, this research attempts to enhance currentunderstanding in this area. Taken together our critical assumptions are that:

. personalisation will be more important in building quality relationship inindividualistic cultures (e.g. NZ) as compared to collectivistic ones (e.g. Malaysia);

. conflict handling will be more important in individualistic and low powerdistance NZ compared to collectivistic and high power distance Malaysiabecause open and free discussion of problem is not the norm in Malaysia and

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preemptive conflict handling will be valued more in sophisticated market like NZcompared to less sophisticated Malaysian market; and

. trust, communication and empathy will be important in both cultures, albeit theirassociation with relationship quality will be relatively more robust incollectivistic Malaysia than in individualistic NZ.

Thus, we hypothesized the following:

H1. The impact of empathy on relationship quality will be stronger in Malaysiathan in New Zealand.

H2. The impact of communication on relationship quality will be stronger inMalaysia than in New Zealand.

H3. The impact of trust on relationship quality will be stronger in Malaysia thanin New Zealand.

H4. The impact of conflict handling on relationship quality will be weaker inMalaysia than in New Zealand.

H5. The impact of personalization on relationship quality will be weaker inMalaysia than in New Zealand.

MethodologyThe population of this study is bank customers in the cities of Kuala Lumpur, Malaysiaand Dunedin, New Zealand. A bank intercept method was used in both countries toadminister the questionnaire. Participation by the respondents was absolutelyvoluntary. Out of 500 survey form administered in each location, 150 usable responseswere received in Malaysia and 208 in NZ. This translates to 30 percent and 42 percentresponse rates respectively.

The construct measurements were adapted from different sources. Trust items wereadapted from past studies (Churchill and Surprenant, 1982; Ndubisi, 2007);communication and conflict handling items were adapted from Morgan and Hunt(1994). Items for empathy were developed based on Ndubisi (2004); personalisation andrelationship quality items were adapted from Churchill and Surprenant (1982), Morganand Hunt (1994), and Ndubisi, 2007). These items were measured on a five-point- Likertscale ranging from ‘strongly disagree’ to ‘strongly agree’. Table I shows the items usedfor each construct and their loadings, communalities and reliability estimates based onCronbach’s alpha values.

Factor analysis was performed on the items to establish their suitability for themultivariate analysis. Based on acceptance of factor loadings of above 0.50 (Hair et al.,1998), the results indicated valid construct measures. Table II shows key factors, itemsand loadings, communalities and reliability statistics. Twenty-four items loaded on sixfactors out of the original 28. Owing to high cross loading, one item was dropped fromtrust (Employees of the bank show respect to customers) and three from empathy (Thebank demonstrates willingness to understand my feelings; the bank demonstrates anability to understand my feelings; and benevolence can be used to describe the bank’scustomer service policy). Total variance explained by the factors was 77.30 percent. Allfactor loadings were statistically significant at p , 0.05. Thus overall convergentvalidity was established.

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Key dimensions and items Loadings Communalities Cronbach’s alpha

F1 – Relationship quality (variance ¼ 56.79%) 0.92RQ1: My relationship with the organization isdesirable 0.63 0.760RQ2: My relationship with the organization meetsmy goals 0.72 0.813RQ3: My relationship with the organization fulfilsmy expectations 0.69 0.809RQ4: Overall, I have a good relationship with theorganization 0.68 0.747F2 – Personalisation (variance ¼ 5.65%) 0.91PS1: The organization makes adjustments to suit myneeds 0.77 0.777PS2: The organization offers personalized services tomeet customers’ needs 0.76 0.800PS3: The organization is flexible when its servicesare changed 0.74 0.774PS4: The organization is flexible in serving my needs 0.73 0.831F3 – Empathy (variance ¼ 5.13%) 0.90EM1: Employees of the organization exercisegoodwill when dealing with customers 0.77 0.773EM2: Employees of the organization try to putthemselves in the customer’s position 0.79 0.766EM3: Employees of the organization provideadequate care and attention to customers 0.71 0.783EM4: Employees of the organization showcompassion to customers 0.80 .810F4 – Trust (variance ¼ 3.85%) 0.92TR1: The organization is very concerned withsecurity for my transactions/personal information 0.73 0.798TR2: The organization’s promises are reliable 0.73 0.805TR3: The organization is consistent in providingquality service 0.65 0.771TR4: The organization fulfills its obligations tocustomers 0.62 0.791TR5: I have confidence in the organization’s services 0.62 0.819F5 – Conflict handling (variance ¼ 3.11%) 0.82CH1: The organization tries to avoid potentialconflicts 0.75 0.731CH2: The organization tries to solve manifestconflicts before they create problems 0.80 0.802CH3: The organization has the ability to openlydiscuss solutions when problems arise 0.60 0.728F6 – Communication (variance ¼ 2.76%) 0.86CM1: The organization provides timely andtrustworthy information 0.50 0.723CM2: The organization provides information whenthere is a new service 0.73 0.807CM3: The organization makes reliable promises 0.50 0.693CM4: Information provided by the organization isalways accurate 0.50 0.638

Notes: Total variance (%) ¼ 77.30; KMO ¼ 0.965; Approx. Chi Square ¼ 6575.59; df ¼ 276; Sig.¼ 0.000

Table II.Factor loadings andconstruct reliability

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The scale reliability of each dimension was assessed using Cronbach’s alpha assuggested by Feldt et al. (1987). Reliability estimates (Cronbach’s Alpha) for theconstruct’s dimensions are shown in Table II, i.e. Relationship quality (0.92), Trust(0.92), Personalisation (0.91), Communication (0.86), Conflict Handling (0.82), andEmpathy (0.90), suggesting a high degree of reliability. The results have well exceededthe 0.60 lower limit of acceptability (Hair et al., 1998). Thus the internal consistency ofthe instrument was confirmed.

Results and discussionTable III is the summary of the demographic composition of the respondents. The tableshows that the respondents represent a wide range of the population in terms of age,gender, race, education, marital status and income in both countries. The number ofmale and female respondents was more evenly distributed in New Zealand than inMalaysia (60.7 percent and 39.3 percent in Malaysia and, 45.2 percent and 50 percent inNew Zealand respectively). This may be because of the conservative nature ofMalaysian women compared to their NZ counterparts. The majority of the respondentsin both Malaysia and NZ were between the ages of 18 and 28, confirming that“generation Y” were more responsive to survey than any other age group. There weremore respondents with post graduate degrees from NZ than Malaysia, a reflection ofthe NZ’s higher literacy rate. There were more divorcees in the NZ sample than in thecollectivistic Malaysia sample. The number of unreported cases or missing values was

Malaysia New ZealandProfile Description No. % Description No. %

Age 18-28 years 72 48.0 18-28 years 76 36.529-42 years 40 26.7 29-42 years 41 19.743-60 years 35 23.3 43-60 years 65 31.260 years above 1 0.7 60 years above 17 8.2Not reported 2 1.3 Not reported 9 4.3

Gender Male 91 60.7 Male 94 45.2Female 59 39.3 Female 104 50.0

Not reported 10 4.8Highest educational qualification Secondary or below 17 11.3 Secondary or below 80 38.5

High school/diploma 53 35.3 High school/diploma 25 12.0Degree/professional 75 50.0 Degree/professional 67 32.2Postgraduate 5 3.3 Postgraduate 25 12.0

Not reported 11 5.3Marital status Single 89 59.3 Single 103 49.5

Married 59 39.3 Married 73 35.1Divorced 2 1.3 Divorced 18 8.7

Not reported 14 6.7Monthly income No income 26 17.3 No income 21 10.1

Below RM2,000 25 16.7 Below NZD2,000 91 43.8RM2,000-RM3,999 31 20.7 NZD2,000- NZD3,999 47 22.6RM4,000- RM5,999 32 21.3 NZD4,000- NZD5,999 16 7.7RM6,000- RM7,999 17 11.3 NZD6,000- NZD7,999 6 2.9RM8,000- RM9,999 10 6.7 NZD8,000- NZD9,999 8 3.8RM10,000 and above 9 6.0 NZD10,000 and above 5 2.4

Not reported 14 6.7

Table III.Respondents’

demographic profile

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more in the NZ data than in the Malaysia data. This may be a consequence of lowpower distance in NZ, which brings about freedom of choice and expression, wherebythe respondents are not daunted to withhold any information they wish not to disclose.It may also be a reflection of strong individualism, with greater tendency to considerthings as personal, compared to the more open and secret-sharing collectivistic society.

Testing for associationThe results of the regression analysis in Table IV show that, in Malaysia, trust,personalisation, communication, conflict handling and empathy contributesignificantly (F ¼ 152:926; p ¼ 0:000) and predict 84 percent of variance inrelationship quality. As for New Zealand, the results of the regression analysis inTable V show that trust, personalisation, communication, conflict handling andempathy contribute significantly (F ¼ 110:7916; p ¼ 0:000) to relationship quality,predicting 76 percent of the variance. In other words, these five relationship marketingdimensions predict a significant change in relationship quality, albeit the explanatorypower of the relational dynamics is greater in Malaysia than in NZ. The strongcollectivistic culture in Malaysia is a plausible explanation for the differences.

The results in Table IV further show that, in Malaysia, there is a significantrelationship between trust, communication, and empathy and relationship quality at 5percent significance level. It means that perceived relationship quality depends on thelevel of trust (or trustworthiness), empathy and communication ability of the bank. Thepositive sign of the beta coefficients shows that the higher the level of trust, empathyand communication of the bank, the greater the relationship quality perceptions ofcustomers. Conflict handling has only a marginal relationship with relationship quality

Variables Beta coefficients t-value p-value

Empathy 0.199 3.706 0.000Communication 0.367 4.796 0.000Trust 0.343 5.163 0.000Conflict handling 0.103 1.681 0.095Personalisation 0.014 0.216 0.829Constant 20.106 20.760 0.448

Notes: R 2 ¼ 0.842; F ¼ 152.926; Sig. F ¼ 0.000

Table IV.Regression analysis forMalaysia

Variables Beta coefficients t-value p-value

Empathy 0.154 3.153 0.002Communication 0.362 5.194 0.000Trust 0.312 5.134 0.000Conflict handling 0.121 2.121 0.035Personalisation 0.121 2.349 0.020Constant 20.151 20.835 0.405

Notes: R 2 ¼ 0.759, F ¼ 110.791, Sig. F ¼ 0.000

Table V.Regression analysis forNew Zealand

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(at 10 percent significance level, whereas personalisation has no significantrelationship with relationship quality even at 90 percent confidence level.

The results for New Zealand in Table V show that there is significant relationshipbetween all five factors and relationship quality at five percent significance level. Thisindicates that the higher the level of trust (or trustworthiness), empathy,personalisation, communication, and conflict handling ability of the bank, the higherthe level of customer perceived relationship quality.

Limitations and future researchAlthough the objectives of this research were met, we identified two limitations in thecourse of the study. First, the study focuses specifically on the banking industry. Thisemphasis could limit generalisation of the findings to the entire service sector. Thislimitation however, presents an opportunity for future research in this area. Futureresearch should examine different service sectors to reduce possible service typeinfluences, and to elicit responses from a wide variety of service provider types basedon Bowen’s (1990) three service firm classification. Bowen’s (1990) taxonomy of servicefirms includes:

(1) those services directed at people and characterized by high customer contactindividually customized service solutions (e.g. health/medical care);

(2) services directed at an individual’s property, in which moderate to low customercontact is the norm and the service can be customized only slightly (e.g. retailbanking); and

(3) services typically directed at people that provide standardized service solutionsand have moderate customer contact (e.g. hotel/restaurant service).

By comparing these different sectors, the findings stand a better chance to begeneralized.

Another direction for future research is to include other less common relationalmarketing keystones not covered in this study. Some examples include equity,mutualism, and competence. These were not studied in the present work, whichconcentrated on the stronger relationship variables as identified by extant literature.By adopting a more comprehensive list, a richer understanding of the phenomenon canbe gained.

Implications and conclusionsSeveral implications of the study are discussed – theoretical, cultural and managerialimplications. As the study shows consumers’ perception of a quality relationship isculture-bound. Cultural values play a significant role in the association of the relationaldynamics with relationship quality in Malaysia and New Zealand’s banking sectors.

Theoretically, all the culture-based hypotheses proposed in the paper are supported byempirical evidence. H1 (The impact of empathy on relationship quality in Malaysia willbe stronger than in New Zealand) was supported as shown by the results. The impact ofempathy on RQ in Malaysia with b of 0.199 is stronger than in New Zealand with b of0.154. Based on the higher beta coefficient for empathy in Malaysia we can conclude thatH1 is supported. Although there is no doubt that bank customers in Malaysia and New

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Zealand perceive empathy as a strong contributor to their perceived RQ with their banks,it is a stronger determinant amongst Malaysians in a collectivist society.

H2 (The impact of communication on relationship quality in Malaysia will bestronger than in New Zealand).was also supported as communication contributes moreto a customer’s perceived RQ in Malaysia (b ¼ 0:367) than it does in New Zealand(b ¼ 0:362). This has been anticipated as the literature review pointed out that theability to communicate is a ‘must-have’ condition for any relationship exchange tooccur, however, since societies marked by strong ingroup and tight knit have morefrequent communication and higher tendency for sharing of secrets, communicationhas a stronger impact on relationship quality in Malaysia than it does in NZ. Similarly,trust is an important determinant of relationship quality in both Malaysia and NewZealand, but more so in collectivistic Malaysia. The results justify the acceptance of H3(The impact of trust on relationship quality in Malaysia will be stronger than in NewZealand), based on the beta coefficient for trust which is larger in Malaysia (b ¼ 0:343)than New Zealand (0.312).

H4 (The impact of conflict handling on relationship quality in Malaysia will be weakerthan in New Zealand) was also supported by empirical evidence. There is significantrelationship found between conflict handling and customer relationship quality in NewZealand (p-value ¼ 0:035). However, this is not the case in Malaysia as only a marginalrelationship was unveiled at 10 percent significance level. Further explanation could bederived from the very nature of the Malaysian (or even larger Asian) society as well as theoperationlisation of conflict handling in the study. Conflict handling in the studyemphasizes open discussion of the problem and solution which is actually un-Asian. MostMalaysians see this kind of open discussion as confrontational, thus they are unlikely tosubscribe to this type of conflict handling strategy. Another key element of conflicthandling in the study is its preemptive rather than reactive approach. Proactiveapproaches like this are more likely to be appreciated in more sophisticated markets likeNZ, where as the Malaysian market once described as “yesterday people” by one of theworld’s leading authority in marketing management – Philip Kotler, may still be verycontent with reactive approaches such as service restoration. As such, conflict handling isthis study has important implication for relationship quality in NZ but not in Malaysia.Also collectivists’ focus on harmony and success and their tendency to avoid opendiscussion of problems is understandable. As a collectivist society, Malaysians may bemore concerned about how their actions impact groups than are individualists (Hui andTriandis, 1989), hence open discussion of problems may be shunned. They are also morewilling to sacrifice personal interests for group welfare (Thomas et al., 2003) by not beingconfrontational as many of them will see open discussion of problems with the serviceprovider. Lastly, the high power distance in Malaysia can result in restriction to freedomof expression (including complaints about service failures and dissatisfaction), therebylimiting the degree of openness in discussing problems instead a resort to privatecomplaint behaviours. Malhotra et al. (2008) had documented that Malaysians generallyare more likely to complain privately (to family and friends) about service failures anddissatisfaction than complain to the service provider as they view the latter approach asconfrontational and against the spirit of harmonious co-existence.

Lastly, H5 (The impact of personalization on relationship quality in Malaysia willbe weaker than in New Zealand) was supported because personalisation showedsignificant relationship with customer perceived relationship quality at five percent

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significance level in New Zealand (p ¼ 0:02), but it was not a significant determinantof relationship quality in Malaysian. Two plausible explanations for this outcome arethe strong individualism culture and relatively sophisticated market in NZ. Sincepersonalisation can help to reinforce individual differences and uniqueness, it is morelikely to be effective in building relationship quality in a highly individualistic culturesuch as NZ than in a collectivistic culture like Malaysia. Indeed, group approval andsimilarity are both well received and acceptable in Malaysia. Moreover, personalisationis a service delivery strategy that is likely to appeal to sophisticated markets who areconstantly demanding for greater value. Less sophisticated markets are more easilyimpressed, thus it may not require personalized or customized service to satisfy themand positively shape their relationship quality perceptions. For sophisticated andindividualistic markets like NZ, personalisation can be both a useful strategy fordelighting customers and a way to show them they are special to the organisation. Bydifferentiating and customising solutions to their unique needs and tastes, financialservices organisations in this market are also demonstrating a level of competence thatis needed in order to delight such informed and highly demanding market. On the flipside the collectivist society puts more emphasis on a caring and sharing interactionwith others, it emphasizes the similarities among members of the society more thantheir differences, hence, personalisation which stresses differences and uniquenessturns out to be a weak determinant of relationship quality.

Managerially, banks need to understand what customers in one culture rank asimportant attributes to relationship quality, which may differ from those in another. Asthe research revealed, offering personalized services and demonstrating high conflicthandling ability were perceived as important determinants of relationship quality byNew Zealand bank customers as individualists, but they are not the case for collectivistslike Malaysians. International banks will need to modify their global marketingstrategies to take into account the impact of cultural differences in the perception of thedeterminants of good relationship quality. On the other hand, we also found somesimilarities in this study. More specifically, it was found that trust, communication andempathy contribute significantly to relationship quality no matter what the culturecontext is. This implies that when banks offer their services to either collectivism/highpower distance-oriented or individualism/low power distance-oriented customers, theymust gain customers’ trust by consistently fulfilling their promises and offering reliableand quality service. Banks will also need to communicate effectively by providingtimely, accurate and trustworthy information on new services and any changes in theirservices. In addition, banks must show a strong empathy in the bank-customerrelationship by maintaining fairness, creating win-win situations and providing mutualsupport. It is also germane to mention that while trust, communication and empathy areimportant in the opposite cultures, their impact on relationship quality is more robust inMalaysia, where they are the only relational dynamics out of the five examined in thispaper with the potency to favourably shape relationship quality perceptions ofconsumers of financial services.

In sum, for the banking industry in the international context, it is important tounderstand that the cultural values of a given market are critical inputs to thedevelopment of effective relationship marketing strategies. Specifically, culture has akey role to play in building quality relationships as well as in designing strategies forenhancing perceived relationship quality.

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Corresponding authorNelson Oly Ndubisi can be contacted at: olynel@hotmail.com

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