BANGLADESH RESEARCH PUBLICATIONS JOURNAL

ISSN: 1998-2003, Volume: 11, Issue: 3, Page: 204-213, June - August 2015
Revie w Paper

IMPACT OF SUPERIOR CUSTOMER SERVICE, PRODUCT QUALITY AND

CORPORATE SOCIAL RESPONSIBILITIES ON THE REPUTATION OF BANKS:
A STUDY ON COMMERCIAL BANKS OF BANGLADESH

Md. Shariful Islam 1

Md. Shariful Islam (2015). I mpact of Superior Customer Service, Product Quality and Corporate Social Responsibilities on the
Reputation of Banks: A Study on Commercial Banks of Bangladesh. Bangladesh Res. Pub. J. 11(3): 204-213. Retrieve from
http://www.bdresearchpublications.com/admin/journal/upload/1410083/1410083.pdf

Abstract
The banking industry of Bangladesh, is witnessing a renewed focus on Superior
Customer Serv ices, Product Quality and Corporate Social Responsibilities (CSR) on
the reputation of Commercial Banks in Bangladesh. These trends most often
attributed to the enhancement of reputation of the banks which lead to more
stability and profitability. In relation to this, the research paper aims to emphasize
the importance of Customer centric initiativ es, CSR and product quality on the
reputation of the commercial banks of Bangladesh. The main purpose is to
conclude whether the Customer centric initiativ es, CSR and product quality have
positiv e impact on the reputation of the commercial banks of Bangladesh. The
finding revealed that there are positiv e correlation between Customer centric
initiativ es, CSR, product quality and reputation of the banks (r=.820, p<.01). The
findings of this paper suggest that commercial banks must consider Customer
centric initiativ es, CSR and product quality so seriously to increase the reputation of
the organization.

Key words: Customer Service, Product Quality, Corporate Social Responsibilities (CSR),
Commercial Banks, and Bank Reputation.
Introduction
With issues of global concern such as financial stability and good governance as well as
clim ate change, widespread corruption, poverty, and continuing scandals over product
responsibility, the need for businesses to take the lead in developing improved Corporate
Social Responsibility strategies, product quality and Customer centric initiatives for their
business operations has never been more apparent (CSR Asia, 2008). The wind of
globalization has also touched the sail of banking industry of Bangladesh and CSR,
product quality improvement, and Customer centric initiatives are being interwoven into
the psyche of local banking business.
Bank is treated as an important service industry throughout the world. But due to
globalization and free market economy, this industry is facing severe competition in
Bangladesh. Banking sector in Bangladesh can be divided mainly into four categories
which are State owned Commercial Banks (SCBs), Local Private Commercial Banks,
Specialized Banks and Foreign Commercial Banks. At present there are 49 scheduled
banks are operating in Bangladesh. Of these four are State owned Commercial Banks,
five are specialized, 30 are local private commercial banks and 10 are foreign bank.
However, despite many fundamental banking reformations, still domestic banks are
lagging behind on many fronts compared with foreign commercial banks with a wide
range of capitalization, overseas network, modern management expertise, experience,
technological advancement, etc. So, domestic banks are relatively weak in service and
product quality which are the main obstacles to banks reputation and development. As
a result domestic bank managements are now very strictly focusing on improved
Customer centric initiatives and product quality if they are to build positive reputation and
increase profits. Because reputation plays an especially important strategic role in service
markets since the pre purchase evaluation of service quality is necessarily vague, and

*Corresponding Author Email: sharifjumkt39@gmail.com

BBA, MBA, Department of Marketing, Jahangirnagar University, Savar, Dhaka 1342, Bangladesh. Contact
Number: +8801670152474
Superior Customer Service, Product Quality and Corporate Social Responsibilities 205

incomplete. As Julian and Ramashen (1994) said: delivering quality services and products
to customers is essential for success and survival of todays competitive banking
environment. The provision of products and services of high quality enhances reputation,
improves customer retention, attracts new customer through word of mouth, and
increases financial performance, and profitability. On the other hand, banking sector
seems to be the most sensitive to the impact of CSR because of its diverse and complex
stakeholders than the most other sectors of the economy. Bank should be more socially
responsible to enhance its reputation which will lead to gain in large share of profitable
customers and to ensure sustainable development in the long run.
It is therefore important for any commercial bank in Bangladesh to understand the main
drivers of bank reputation as well as to take effectiv e steps to divert these drivers towards
right direction.
Review of Literature
CSR an overview
Corporate Social Responsibility (CSR) is a phenomenon that has been studied for
numerous years without a commonly held or generally accepted operational definition
(MacDonald, E, 1994; Carroll, 1979). Corporate Social Responsibility (CSR) is an evolving
process and its manifestation varies between countries and between cultures. However,
the broad definition of Corporate Social Responsibility highlights a voluntary role of
business in contributing to a better society and a cleaner environment beyond its financial
and capital commitments.
One of the most cited definitions of CSR is proposed by Carroll (1979) as cited by Holcomb
et al (2007). He states that businesses that practice social responsibility attend to
economic, legal, ethical, and discretionary (philanthropic) expectations that society has
of organizations at a given point in time.
Today, many organizations have joined the bandwagon in realizing their CSR agendas;
from a very simple charity of donating to welfare institutions to a more sophisticated
activity like protecting endangered wildlife such as the Royal Bangle Tigers. Generally, the
main areas of corporate responsibility are the social, economic and moral responsibilities
of the firm, as well as the management of the corporate responsibility activities of
businesses (Cannon, T. 1992).
The history of the study of corporate social responsibility can be summarized in terms of
models:
Social-Economic Model;
Stakeholder Model,
Triple bottom line Model.
The social economic model provides an overview of the trends that govern at worldwide
perception regarding corporate social responsibility and puts face to face cost versus
benefits.

Figure 1: Social economic Model of CSR [Source: Quazi and OBrien, 2000]

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Md. Shariful Islam 206

As one can see in figure 01 the model proposes two axes and four distinct quadrants
suggesting the changes that occurred in the concept of corporate social responsibility.
This model takes into consideration only two aspects of the business: profitability and
social responsibility, neglecting the environmental dimension.
CSR within the Banking industry in Bangladesh
The banking industry occupies a unique position in the economy of Bangladesh and that
is why it often attracts more than a casual regulatory attention. The industry in the 21st
century must have a moral face and live up to some modicum of social responsibility.
Though banks are performing many social responsibilities and activities for several years in
the name of social service, the term CSR was not so well known jargon in Bangladesh
even few days back. But now it is well established strategy in banking sector of
Bangladesh. The awareness regarding CSR as part of the corporate agenda in the
banking sector of Bangladesh is a good sign that bank is not just aggressively poised for
bigger profit but also focus their investment strategies on benefits of socially and
environmentally responsible investing. This new global tactic may affect a bank's
relationship with its clients and shareholders. There are market benefits and competitive
advantages for those companies whose business policies integrate CSR (Ogrizek, M.
2004).
Table 1: Main CSR activities performed by the commercial banks in Bangladesh
Market Place Employee Social Community Environment
a. Innovation a. Training and a.Customer a.Education a.Tree
b. Financing Development service b.Donation plantation
in SME b. Health and b.Youth and c.Charity b.Nature day
c. Good Safety sporting d.Scholarship campaign
Governance c. Labor rights activities e.Community c.Recycling
d. Operation d.Career c.Assisting Development d. Wild animal
Network Development borrower Conservation
extends e.Special Loan d. Research
e. Ethical interest rate
Conduct
Source: Primary data
Product Quality and Customer Centric Initiatives in Banks
Researcher found several different conceptualizations of product quality. In marketing
and economics literature quality has been viewed in terms of product attributes. In
contrasts, in the field of operations management, Garvin (1988) defined product quality in
very comprehensive manner. According to Garvin (1988) product quality comprises of the
following eight attributes: performance, features, conformance, reliability, durability,
serviceability, aesthetics, and customer perceived quality.
Banking portfolio, increasing levels of commoditization and fierce competition have
changed the face of banking from a plain vanilla product-centric approach to a
customer-centric delivery model. Commercial banking has long been based on customer
relationships, but today retail banks also recognize the importance of an effective
customer relationship strategy, and the need to become more customer-centric to ensure
long-term success. Financial institutions have begun to recognize the significance of
customer retention on their bottom-line. They are devising strategies to reward customers
for continued loyalty and offering them services in line with their value proposition, in order
to sustain profitable relationships. Whether these strategies represent a paradigm shift or
simply a greater emphasis on the strategies they were pursuing already, many banks
proclaim that being customer-centric will be the epicenter of their ongoing business
practices and ultimately the determinant of their success.

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Figure 2: The Road to Customer-centricity

[Source: www.fiserv.com, The Road to Customer-centricity: Driving Success in tomorrows
Banking Business, Mark Sievewright]

A Customer-centric bank uses business strategies across the company to best serve
customers it is a bank that revolves around its customers and what is best for them. The
culture of a Customer-centric bank is focused around the overall customer experience,
not sales.
Customer-preferred dimensions identified by Manrai and Manrai (2007) were, in order of
importance:
(1) personnel-related considerations (attitudes and behavior of tellers and other staff,
procedures for handling complaints, appearance of staff);
(2) financial considerations (interest earnings, interest payments);
(3) branch environment-related considerations (atmospherics); and
(4) convenience-related considerations (ATMs, opening hours).
What is Bank reputation?
Reputation or Goodwill is one of the important assets of a company specially banking
services providing organization. Reputation plays an especially vital strategic role in
service markets especially in banking sector because, the pre- purchase evaluation of
service quality is necessarily vague and incomplete. Nguyen and Leblenc (2001) defined
reputation as an effective means of predicting the outcome of the service production
process and can perhaps considered the most reliable indicator of the ability of a service
firm to satisfy a customers desires. It is apparent that bank reputation also plays an
important role in the determining of purchasing and repurchasing and behaviors of
customers.
According to Barich and Kotler, (1991): customer loyalty is similarly enhanced especially
in banking industry where quality cannot be evaluated accurately before purchase. It is
also widely acknowledged that a positive reputation is a strategic factor that can be
employed to earn above average profit (Weigelt and Camerar, 1988). Finally, reputation
is a result of the past action of a firm, and can be viewed as a mirror of the firms history of
communicating to its target group about the quality of its product in comparison with
those of competitors, thus reflecting what stakeholders think and feel about the firm and
indicating that the organization is highly esteemed, worthy and meritorious (Weigelt and
Camerer, 1988; Hall, 1993)

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Relationship between Customer-centric initiatives, product quality, CSR and bank

reputation
Banking operations are completely customer dictated and dedicated. The demand for
'banking supermalls' offering one-stop integrated financial services is well on the rise. The
ability of banks to offer clients access to several markets for different classes of financial
instruments has become a valuable competitive edge. Since the population of
Bangladesh is increasing rapidly and demand for banking is also increasing
phenomenally, customer centric initiatives would be the key differentiators for each
banks future success. Thus it is imperative for banks to get useful feedback on their actual
response time and customer service quality aspects of retail banking, which in turn will
help them take positive steps to maintain a competitive edge.
Product quality has become a priority of mangers if they are willing to build a strong
reputation for their firm, Wang and Hing (2003). This is because customer value products
as well as services in the course of accumulating the judgment over time about quality
which determines the effectiveness of the reputation building activities of a firm especially
in service industries (Nguyen and Leblenc, 2001). Julian and Ramaseshan (1994) stated
that, delivering quality product and service to customer is essential for success and
surviv al in todays competitive banking environment. The provision of products of high
quality enhances reputation, improve customer retention, attract new customer through
word of mouth, and increases financial performance and profitability.
Globally, as CSR practices are gradually being integrated into international business
practices and hence is becoming one of the determining factors for market accesses, it is
becoming equally instrumental for local acceptability and reputation. A focus on CSR in
Bangladesh would be useful, not only for improving corporate governance, labor rights,
work place safety, fair treatment of workers, community development and environment
management, but also for industrialization and ensuring global market access with
reputation.
More specifically, corporate reputation comprises a global perception or net assessment
of the organizations social behavior based on stakeholders instrumental or normative
expectation Benjamin, R. I., and Levinson, E. (1993). He proposes that corporate
reputation will be directly and significantly related to corporate social responsibility. They
also added that the positive relationship between corporate social responsibility and
corporate reputation will strengthen as the fit between social initiatives and corporate
strategy increases.
It is apparent that quality product not only benefits by lowering cost through reduced
waste and decreased deficiencies in products, but also increasing competitiveness
through the establishment of a good reputation. Many of these banks have created a
deep, analytical understanding of how customers in these segments prefer to interact to
transact their banking business. Additionally, the more progressive banks assess not only
the relative profitability of customers and segments but their potential lifetime profitability.
Rao (1994) claimed that the reputation is a result of financial performance, production
quality, management effectiveness- or some combination of this various factor that
appeal in one way or another to a firms multiple constituencies. So it is widely agreed in
all manufacturing industries as well as all service industries that Customer-centric initiatives
will certainly contribute to appositive reputation.
Objective of the study
The objective of the study is to identify the relationship among banks Corporate Social
Responsibilities, Product quality, Customer-centric initiatives and banks reputation within
the context of commercial banks of Bangladesh.
Hypotheses of the study
Hypothesis 01: There is a significant relationship between corporate social responsibilities
and bank reputation in the context of commercial banks of Bangladesh.
Hypothesis 02: There is a significant relationship between product quality and bank
reputation in the context of commercial banks of Bangladesh.

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Hypothesis 03: There is a significant relationship between Customer-centric initiatives and

bank reputation in the context of commercial banks of Bangladesh.
Research Design and Methodology
Sample: A total of 240 questionnaires were randomly distributed to customers of particular
banks such as Bank Asia Ltd, NCC Bank Ltd, Brac Bank Lrd, Dutch Bangla Bank Ltd, Prime
Bank Ltd, Pubali Bank Ltd, and AB Bank Ltd.
Data collection: For the descriptive research design, two methods can be employed:
survey and observation (Malhotra, 2003). In this study survey method is used to collect
primary data. A structured questionnaire is used for this purpose. This questionnaire used a
7 point Likert scale to measure a degree of agreement or disagreement with each of a
series of statements (Malhotra 2003, p. 274). Different banks customers were randomly
selected as respondents to elim inate the sampling errors and to ensure the representation
of the population. Again to lessen any sort of potential bias owing to high concentration
of banks customers, questionnaire were distributed to different branches during different
working hours (morning and noon) as well as various days of a week.
Data Analysis: In this study Pearsons Correlation analysis is being used to identify whether
any relationship prevails between the independent and dependent variables. Correlation
analysis is the statistical tool that can be used to describe the degree to which one
variable is linearly related to another (Levin & Rubin 1998)
The objective of the study is to find out the causal relationship among the measured
variables. Here, bank reputation is the dependent variable and customer centric
initiatives, product quality and Corporate Social Responsibilities are considered as
independent variables. In this study researcher tried to detect, if any change in the
independent variable have a changing effect on the dependent one to prove the
relationship exists between these measured variables.
Findings and Analysis
Table 2: Reliability coefficients and descriptive statistics
Variables No of item Alpha Value Mean Std Deviation
Bank Reputation 7 .805 4.65 1.57
CSR 7 .551 6.14 .81
Product quality 7 .932 4.50 1.41
Customer centric initiatives 4 .926 5.22 1.32
n= 240
Here table 2 shows us the value of Alpha, mean and Standard deviation of the variables.
The Alpha values show the reliability of the variables which range from 0-1. The nearer the
value of alpha to 1, the better the reliability is. If the value is low, either there are too few
items or there is very little commonality among the items (Churchill 1979). The calculated
mean for banks customer centric initiatives is 5.22 with a standard deviation of 1.32. This
shows that on an average people think fairly positively about customer centric initiatives.
The mean for overall product quality is 4.50 and has a standard deviation of 1.41. So it can
be interpreted that respondents generally have slightly positive perceptions about banks
overall product quality. Corporate social Responsibility has a mean of 6.14 and a standard
deviation of 0.81. This shows that people have a positive perception on corporate social
responsibilities. The mean value for bank reputation is 4.65 with a standard deviation of
1.57. This gives us the idea that the general people have on an above average
perception regarding bank reputation.
Table 3: Correlation Analysis
Variables CSR Product quality Customer centric Bank
initiatives Reputation
CSR - .335 .500 . 362
Product quality - - .832 .742
Customer centric initiatives - - - .809
Bank Reputation - - -
** Correlation is significant at the 0.01 level (2 tailed)
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Md. Shariful Islam 210

A correlation analysis was conducted on all variables to explore the relationship between
two (02) variables particularly relationships among the independent variables with
dependent variable. The correlation procedure was subject to a two tailed of statistical
significance at two different levels, highly significant (p<.01) and significant (p<.05). In
interpreting the strength of relationships between variables, the guidelines suggested by
Rwontree (1981) were followed.
The results of correlation analysis for all the variables are shown in Table 3. It shows the
correlations among banks Customer centric initiatives, overall product quality, corporate
social Responsibility, and bank reputation in the context of private commercial banks in
Bangladesh. The variable, customer centric initiatives significantly and strongly positively
correlated with the dependent variable bank reputation (r = .809, p< .01). Product quality
is found fairly and positively correlated with bank reputation (r = .742, p< .01). The variable,
Corporate Social Responsibilities is weakly and positively correlated with bank reputation
(r = 0.362, p<.01).
Table 4: Linear regression
Variables R R2 Std. error of the estimate
Customer centric Initiatives .820 .673 .91524
Product Quality
CSR
In table 4 linear regression shows us how much independent variable is influencing
dependent variable. From the R2 it is very apparent that Customer centric initiatives,
product quality and Corporate Social Responsibilities has 67.3% influences on bank
reputation.
Hypothesis Assessment
Hypothesis 01
The first hypothesis is that there is a significant relationship between Corporate Social
Responsibilities and bank reputation in the context of commercial banks of Bangladesh.
The result of correlation analysis reveals that Corporate Social Responsibility is positively
but weakly correlated with bank reputation (r = 0.362, p<.01). Thus, the result of correlation
analysis provides support to hypothesis 1.
Hypothesis 02
The second hypothesis is that there is a significant relationship between product quality
and bank reputation in the context of commercial banks of Bangladesh. The result of
correlation analysis depicts that banks product quality is positively and strongly correlated
with bank reputation (r = 0.742, p< .01). Thus, the result of correlation analysis provides
support to second hypothesis.
Hypothesis 03
Here we can see that the Customer centric initiatives has positive and most significant
correlation with bank reputation (r = 0.809, p< .01). Thus, the result of correlation analysis
provides support to hypothesis 3.
Conclusion
The study can make the following significant contributions in the context of commercial
banks in Bangladesh. First, the findings of this study will disclose the importance and
impact of the relationship of Customer centric initiatives, product quality, Corporate
Social Responsibilities on the reputation of the commercial banks of Bangladesh. Besides
this, it will also help the researchers to extend their understanding of the correlations
among these factors. Second, this study will help the banks management to understand
how to hold loyal clients by satisfying their overall needs, and hold the clients trust upon
the bank which thus results good profit, and enhances reputation as well. Finally, since the
researcher is only considering banking industry here, there is always scope for further study
in other service organizations in Bangladesh like insurance companies, hospitals,
telecommunication companies, hotels, airlines, etc.

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From the result of the correlation analysis it was found that three (03) studied independent
variables are strongly and positively correlated with dependent variable. But from the
result of correlation, it was revealed that Customer centric initiatives is significantly related
to bank reputation thus it seems very important drivers for bank reputation for our clients.
So, Customer centric initiative should be the top most priority and should be taken
especial care for the welfare and development of the bank. Moreover, management
should focus on product quality to cope with the changing environment and demand of
the customers. Therefore, if managers were to become convinced that product quality
plays an important role in the process of positive reputation building, they could identify
the key antecedents and take measure to improve it. On the other hand, now-a-days
organizations are called corporate citizens. So they should contribute in social welfare
which builds a positive image on peoples mind and thus the reputation of bank increases.
Corporate Social Responsibilities represents their belief, values, behavior, culture, etc and
can be also considered as promotional activity. Finally, it is therefore very im portant for
any commercial bank in Bangladesh to take effectiv e measures to improve Customer
centric initiatives, product quality, and Corporate Social Responsibilities to build and
enhance their reputation and thus attract a large share of profitable customers and
maintain a sustainable competitive advantage in the long run.
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