Nexus Between Brand Transgression and Brand Forgiveness Among Islamic Banking Customers in Malaysia

Abstract

Studies examining the interplay between brand transgression and brand forgiveness is notably sparse especially in the context of Southeast Asian banking customers. The purpose of this research is to add to the existing literature by examining the impact of brand transgression, which is represented by negative past experience image incongruence, and corporate wrongdoing on brand forgiveness among Islamic banking customers in Malaysia. The increasing surge in interest in unfavorable brand relationships has sparked concerns about its impact on brand forgiveness. As a result, this theoretical argument, which lacks empirical proof, has to be statistically tested. The current study was conducted utilizing a non-probability purposive sampling technique among clients in the Klang Valley who had poor experiences with Islamic banking services. Data analysis included descriptive statistics, exploratory factor analysis, and multiple regression on a total of 211 valid replies. The findings show that two elements of brand transgression, image inconsistency, and corporate wrongdoing, have a major impact on brand forgiveness. However, the other dimension namely negative past experience was found to be non-significant to brand forgiveness. Research implications and directions for future studies are also discussed in this paper.

1. Introduction

In a fiercely competitive industry, the Islamic banking sector is finding it increasingly difficult to retain consumers following a negative service incident or transgression. The fact that the Islamic banking business is growing rapidly over the world (Rama, 2017) highlights the critical necessity to provide great service with minimal infringement to customers. Although the Islamic banking industry has acquired exceptional popularity among both Muslim and non-Muslim customers (Rama, 2017), it cannot ensure that the services provided will be fully free of transgression. This is owing to the service’s subjective nature and intangibility. Furthermore, as the Eleventh Malaysian Plan (RMK-11) is strategizing on the transformation of the Malaysian service industry to achieve greater heights, there are timely needs for the Islamic banking industry to shift the paradigm to deliver service with less transgression.

Nonetheless, recent marketing research trends have seen a shift to include negative brand interactions as a focal point of the study (brand transgression, service failure, product harm crises, and double deviation). As a result, it is critical to conduct such empirical investigations, particularly among Malaysian institutions that provide Islamic banking services. This study examines the impact of brand transgression on brand forgiveness, drawing on previous research on unfavorable brand relationships. Because Fetscherin and Sampedro (2019) discovered that the literature is silent on the underlying role of forgiveness following a transgression, their attempt will fill a vacuum in branding research. Fetscherin and Sampedro (2019) hold the same viewpoint, arguing that less emphasis has been paid to investigating how brand violation might lead to forgiveness. Although most prior research had used an experimental-based design with vignettes and manipulations, this study will add to the body of knowledge because it was conducted utilizing real life consumer experiences with Islamic banking services. On the other hand, the choice of the Islamic banking sector as the study’s framework is timely, given that several financial kinds of literature have demonstrated that service quality is important.

This paper consists of five main sections. The first is a general introduction to the discussed topic. The second section is a literature review that discusses the main relevant area of the topic is the concept of brand transgression and brand forgiveness. The third section is the research methodology. The fourth section is the results and findings from data analysis, and the last section is the discussion and research implications.

2. Literature Review

2.1. Brand Transgression

There are numerous definitions that facilitate brand transgression as its concept has evolved since the past few decades. Brand transgression, according to Sinha and Lu (2016), is defined as violations of implicit or explicit rules directing relationship performance and assessments, which can result in positive or negative reactions depending on the cause of the transgression. Brand transgression, on the other hand, is sometimes lumped in with service failure since it involves wrongdoings by brands, as well as disagreement or friction between a customer and a company, its brand, or its offering (Khamitov et al., 2019). One of the marketing disciplines that investigates the occurrence of a negative incident or disagreement between customers and a corporation is known as brand transgression (Khamitov et al., 2019). Understanding brand transgression is important from a variety of perspectives since it has been studied in fields such as anthropomorphism, cross-cultural studies, sport management, neuroscience, and consumer culture theory (Fetscherin & Sampedro, 2019). If no meaningful action is done to address the situation, the brand violation may have negative consequences. Existing research shows that brand transgression can result in a brand losing a large number of existing customers, a negative reputation, and financial losses (Fetscherin & Sampedro, 2019) As a result, an adequate solution or service recovery should be in place to ensure that the negative impact of brand violation can be minimized, particularly when the problem’s magnitude is large (Mai et al., 2021; Muhammad Hafiz et al., 2017). Affected customers can also respond in a variety of ways to a brand transgression. They may want to avoid the service provider or act in an unfavourable way for the company, as well as disseminate negative word-of-mouth to others (Grégoire et al., 2009). All of these negative signals should notify the service provider, as they all indicate a deterioration in the relationship between the client and the brand.

Brand transgression is a multidimensional construct and can be categorized into performance-related (negative past experience), value-related (corporate wrongdoing), and image-related (image incongruence). Thus, this study has employed these three dimensions to examine its influence on brand forgiveness in the context of Islamic banking services.

According to Fetscherin and Sampedro (2019), a performance-related crisis is related to an unfavorable experience a consumer has with a product or service. Such experiences might relate to product malfunction, disappointment with the service, or negative associations with the product’s country of origin. In most cases, negative experience occurs when the actual performance of the product or service falls below their expectations. According to Dutta and Pullig (2011), one of the examples related to the performance-related crisis was the detection of lead or harmful chemicals that was far above the federal recall standard in Mattel toys. As a result, Mattel recalled more than 21 million Chinese-made toys on the fear they were tainted with lead paint and tiny magnets that children could accidentally swallow.

Value-related crises, on the other hand, is concerned with corporate wrongdoing that may arise from moral misconduct, false communication, or unethical or unlawful firm behavior (Fetscherin & Sampedro, 2019). Similarly, Dutta and Pullig (2011) defined a value-related crisis as a social or ethical issue involving any of the brand’s principles. One example of a values-related dilemma is the exclusion of ladies from the Saudi Arabian IKEA catalog. Corporate wrongdoings can cause clients to have negative views about the brand and harm the company’s reputation. This emphasizes the importance of comprehending the role of corporate misconduct and its impact on the customer-firm relationship.

In addition, image related crisis can be described as a situation in which the image of the brand is no longer aligns with a consumer’s self-image (Fetscherin & Sampedro, 2019). In other words, the customer no longer wants to be associated or feel ashamed with the firm’s brand due to brand transgression. This shows that the aspect of self-image incongruence should be addressed accordingly as it may lead to negative emotions towards the brand.

2.2. Brand Forgiveness

One of the most important steps in repairing damaged relationships and capturing customers’ hearts is forgiveness (Fernández-Capo et al., 2017; Sinha & Lu, 2016). Forgiveness has long been studied in theology, philosophy, and psychology, but it has only recently been explored in marketing studies. As a result, the concept of forgiveness remains imprecise and underdeveloped, with no specific definition to reflect it. When people believe they have been wronged, they will forgive, avoid, reconcile, or seek retribution as one of their natural reactions (Aquino et al., 2006). Generally, forgiveness can be defined as an act of letting go of negative emotions and can be classified into forgiveness of self, the forgiveness of others, and forgiveness of situations (Fetscherin & Sampedro, 2019). From the standpoint of branding, forgiveness can be directed in marketing. Theorized as a distinct and important emotion, brand forgiveness demands the consumer to forgive the brand after a transgression. Understanding brand forgiveness is critical because it has the potential to mend shattered customers and establish loyalty (Sinha & Lu, 2016). Tsarenko and Tojib (2015) also discovered that customer brand forgiveness could aid in the repair of damaged relationships. As a result, a brand forgiveness study can assist organizations in identifying the variables that allow people to forgive the brand after a transgression. This is owing to the fact that forgiveness has gotten a lot of press for its capacity to repair a strained connection between a client and a business (Donovan, 2012).

A number of previous studies have found a link between brand transgression and forgiveness, with the severity of the transgression affecting the likelihood of forgiving (Fetscherin & Sampedro, 2019). This supports Hassey’s (2019) claim that customers find it difficult to forgive firms that break the customer-brand relationship norm. As previously said, brand transgression can be divided into three categories: negative past experience bad prior experiences, corporate wrongdoing, and image incongruence. Fetscherin and Sampedro (2019) show that these three characteristics of brand transgression can influence brand forgiveness in previous investigations. Therefore, considering the interplay of antecedents that facilitate brand forgiveness, this study infers the following hypotheses:

H1: The lesser the negative past experience, the more likely forgiveness is.

H2: The lesser the image incongruence is, the more likely forgiveness is.

H3: The lesser the corporate wrongdoing is, the more likely forgiveness is.

3. Methodology

The hypothesized associations were investigated in this study utilizing data acquired from customers who had a negative experience while using Islamic banking services in Malaysia. Experts in services marketing and Islamic banking approved the questionnaire items, which were adapted from prior studies. Before collecting data, expert validation was sought to assure the quality, reliability, and validity of all questionnaire items (Othman et al., 2021). The questionnaire items used to measure negative past experience, corporate wrongdoing, image incongruence, and brand forgiveness were slightly modified from prior studies as shown in Table 2.

All items were measured on a 5-point Likert-type scale ranging from 1 (strongly disagree) to 5 (strongly agree). Screening questions were included at the beginning of the questionnaire to ensure that only respondents who encountered negative experience with Islamic banking services were included in the study. Furthermore, only banks that provide Islamic banking services in the Klang Valley, Malaysia, were chosen as the study’s location. Klang Valley was selected due to the growing numbers of banks that offers Islamic products and services. As a result, finding respondents that fulfill the essential criteria will be easier for the researchers.

The non-probability purposive sampling technique was used to distribute 300 surveys. When the researcher has specific requirements for the sample member, the researcher might use the purposive sampling technique (Collins, 2017; Zikmund et al., 2012). As a result, extra screening questions were asked to guarantee that only clients who met the study’s criteria were included. As a result, only those who had a negative experience with Islamic banking services were considered for this research. Furthermore, because there was no list of clients who had a negative experience with Islamic banking services, probability sampling was not possible. By the cut-off date for data collection, 211 returned questionnaires were usable for preliminary and advance data analysis. 89 responses were discarded due to issues such as missing data, outliers, suspicious response, and no previous negative experience with any Islamic banking services. In addition, Harman’s single-factor test, as proposed by Omar et al. (2021) and MacKenzie and Podsakoff (2012), was used to examine the potential impact of Common Method Variance (CMV). The test was carried out by inputting all of the measuring items into SPSS, and the findings revealed that the individual factor that explained the most variance was 33.32 percent. Therefore, it can be concluded that CMV was not a likely contaminant as the results indicate that neither a single factor nor a general factor represents the majority of the covariance.

4. Results

4.1. Descriptive Statistics

The demographic data provided an overview of the participants in this study and their characteristics. Females made up the bulk of respondents (59.7%), with males coming in second (40.3 percent). The majority of respondents (68.2%) were between the ages of 20 and 29, followed by those between the ages of 30 and 39 (10.9%), 40 to 49 (8.5%), under 20 (8.5%), and only 8 respondents were over the age of 49. (3.8 percent). A bachelor’s degree (50.7 percent) was the most common level of education, followed by a diploma (18.5 percent), a master’s (16.1 percent), a high school diploma (14.2 percent), and a Ph.D. (0.5 percent). This suggests that the majority of the responders are well-educated. Additionally, most of the respondents of this study had more than 3 years of relationship with the bank. Table 1 presents the descriptive statistics of the characteristics of the respondents.

Table 1: Demographic Profile of the Respondents

4.2. Validity and Reliability Test

To determine to construct validity, an exploratory factor analysis (EFA) was used (Hair et al., 2013; Zikmund et al., 2012). EFA can be used to examine the underlying patterns of questionnaire items and to help determine whether they can be condensed into a smaller set of factors (Hair et al., 2013). The value of KMO was 0.881 based on the EFA results, and Bartlett’s test was significant (p = 0.000). As a result, EFA was deemed appropriate, according to Pallant (2013), who stated that the KMO value should be greater than 0.6, and Bartlett’s test should be significant (0.05) for EFA to be accepted. The number of elements to be retrieved was determined using an eigenvalue of 1.0 as the minimum requirement. According to Hair et al. (2013), substantial factor loadings require factors with eigenvalues greater than 1.0. The first EFA analysis yielded a four-factor structure (eigenvalues >1.0) that explained over 57% of the variance. However, due to one item with factor loadings less than 0.5, the result had to be revised. Only components with factor loadings greater than 0.5 were kept since they are deemed practical and significant (Lu et al., 2016; Maskey et al., 2018). The item was “my dislike for this bank is linked to the poor performance of its service”. Following that, the problematic item was identified and deleted from further factor analysis.

After deleting the problematic items from the EFA results, a clean four-factor solution was produced with variance explained of 58 percent. The revised KMO was 0.871, with a statistically significant Bartlett’s test (p = 0.000). The four factors, as well as their items, factor loadings, eigenvalues, individual variance explained, and Cronbach’s Alpha values, are listed in Table 2. The Cronbach Alpha scores in this study were all over 0.7, indicating that the questionnaire questions had very strong internal consistency reliability (Hair et al., 2013; Maskey et al., 2018).

Table 2: Exploratory Factor Analysis (EFA) and Reliability Analysis

Negative past experience, image incongruence, and corporate wrongdoing were all found to be associated with brand forgiveness (p < 0.01). In addition, a diagnostic test for multicollinearity and collinearity was performed. A tolerance value of less than 0.10, according to Hair et al. (2013) and Sekaran and Bougie (2010), is considered troublesome. Multicollinearity was not considered a concern in the data because none of the tolerance values fell below 0.10. Hair et al. (2013) and Sekaran and Bougie (2010) claimed that a VIF scores greater than 10 shows multicollinearity. Because the VIF values for the current data were less than 10, there was no evidence of multicollinearity.

Table 3: Correlations Among Variables

Note: *p < 0.05, **p < 0.01, ***p < 0.001

4.3. Hypotheses Testing

The regression results for brand forgiveness are shown in Table 4. By regressing multiple aspects of brand transgression as an independent variable and brand forgiveness as a dependent variable, the model examined H1, H2, and H3. The model was significantly adjusted using R² = 0.21 ( p < 0.001). Two independent variables appeared to contribute significantly to the variance in the regression equation – image incongruence (H2) and corporate wrongdoing (H3). H2 was accepted at p < 0.001. H3 was also accepted as a consequence of the regression, which proved that lesser image incongruence and corporate wrongdoing leads to better brand forgiveness. The model, however, did not support H1 (negative past experience). It indicates that clients will not forgive the bank, even if they have had fewer negative experiences with Islamic banking services.

Table 4: Results of Regression Analysis

Note: *p < 0.05, **p < 0.01, ***p < 0.001.

5. Discussion, Implications and Future Research

5.1. Discussion

The goal of this research is to learn more about brand transgression and forgiveness in the context of Islamic financial services. Although brand transgression is unavoidable, the value of brand forgiveness should not be overlooked, as it is one of the most important factors in repairing strained relationships (Fernández-Capo et al., 2017) and regaining customer loyalty (Sinha & Lu, 2016). The study’s findings yielded a mixed bag of outcomes. In this investigation, three hypotheses were investigated, but only two were accepted (H2 and H3). In light of these findings, the findings show that image incongruence and corporate wrongdoing have a substantial influence in affecting brand forgiveness. Specifically, customers will only forgive the Islamic banking service providers if they feel that the level of image incongruence and corporate wrongdoing are not that severe. The findings are consistent with Fetscherin and Sampedro (2019) who found that lesser image incongruence will lead customers to be more forgiving. This is possible because the bond between clients and Islamic banking brands is so strong that the concept of “self” is included in the brand (Park & MacInnis, 2018; Ran et al., 2016). The demographic profile reveals a strong bond between customers and banks, with the majority of respondents stating that they had been with the bank for more than three years. According to studies by Tsarenko and Tojib (2015) and Aaker et al. (2004), brand relationships can grow stronger over time, and this strong link can help to prevent unfavorable reactions (Tsarenko & Tojib, 2015). Because the marketing literature is quiet on the relationship between image incongruence and brand forgiveness (Fetscherin & Sampedro, 2019), this discovery has added to the present body of knowledge.

As a result, the data show that corporate wrongdoing can influence brand forgiveness. Less corporate wrongdoing in Islamic financial services, in particular, will lead to greater brand forgiveness. Although customers may be less satisfied with Islamic banks that engage in corporate wrongdoing (Alnsour et al., 2021), the data show that customers are nevertheless prepared to forgive, which is similar to empirical evidence presented by Fetscherin and Sampedro (2019). Customers are likely to be tolerant of corporate wrongdoing if the corporation is always attempting to express “the proper tone” during the transgression, according to this logic (Ran et al., 2016). Customers are more likely to forgive misconduct if the corporation admits culpability or apologizes when a problem occurs. An apology has been viewed as one of the most practicable ways for addressing transgression, according to Brocato et al. (2012) and Xie and Peng (2009). Furthermore, if a transgressor apologizes, people are more likely to forgive him or her (McCullough & Worthington, 1999; Struthers et al., 2008). Limited studies have empirically investigated the direct association between corporate wrongdoing and brand forgiveness, so our findings add to a growing corpus of research on unfavorable brand relationships.

The only hypothesis that was not accepted is related to the role of negative past experience in influencing brand forgiveness (H₁). This finding was contrary, however, to the initial prediction that lesser negative past experience will lead Islamic banking customers to be more forgiving. This is inconsistent with the findings of studies conducted by Fetscherin and Sampedro (2019). Despite the discrepancies, non-significant results should not be overlooked because they may signal that additional investigation of the data will reveal valuable insights (Drotar, 2009; Hewitt et al., 2008). Furthermore, a significant finding by itself is insufficient evidence to conclude a certain occurrence, as non-significant results may be produced as a result of the research setting, research questions, or maybe the method of operationalizing the hypothesis (Sedlmeier, 1999).

One probable explanation for the non-significant result is that not all customers react in the same way, even if unfavorable reactions to previous experiences may appear natural and justified (Tsarenko & Tojib, 2015). Other underlying elements, such as the severity of the transgression, the length of the relationship, brand attachment, and emotional state, may impact the non-significant results. Furthermore, it is possible that a negative past experience did not lead to brand forgiveness, since some customers tend to disregard the fact that the company made a mistake (Tsarenko & Tojib, 2015).

5.2. Implications and Future Research

This research adds to our knowledge of negative brand relationships by examining the critical role of brand forgiveness in dealing with brand transgression among Malaysian Islamic banking consumers. This study found that if the perceived amount of image incongruence and corporate wrongdoing isn’t too extreme, Islamic banking clients can create brand forgiveness. Although negative previous experience (H₁) did not have a significant impact on brand forgiveness, its value should not be overlooked in future studies, as Fetscherin and Sampedro (2019) discovered in a study of customers in the United States. In contrast to previous research, this study adds to our understanding of the impact of brand transgression on brand forgiveness among Malaysian Islamic banking clients. To the best of the researchers’ knowledge, there is very little research on this forgiving process that focuses on Islamic banking consumers. This study can help banks understand how the notions of brand transgression and brand forgiveness are linked, and how gaining a certain level of forgiveness might lead to positive outcomes in the future. However, further research is needed to determine the long-term effects of brand forgiveness. The researchers expect that by doing so, they will be able to shed light on how bank management should prepare for transgression and that the findings from this and future studies will be taken into account.

This study has limitations, despite the extensive literature review, meticulous analysis, and interesting conclusions that arose from it. The current study, like all empirical studies, may have limitations that future researchers will be able to solve. To begin, future researchers may want to replicate this study in different locations, as brand forgiveness research in Malaysia is still limited. Airlines, hospitality, health services, public service, telecommunications, and food services are relevant settings to consider. Further research in other settings could produce similar or different results than the current investigations. A comparison of multiple study settings may be considered, which would add to the body of knowledge. Second, future researchers can consider about using experimental-based design, which is popular in Western countries. Because some respondents may experience memory bias (Jha & Balaji, 2015) when recalling their negative brand experience (particularly if the incident occurred more than one year), an experimental-based approach is suitable in exploring negative brand relationships (Muhammad Hafiz et al., 2021; Nikbin et al., 2010, 2014). Furthermore, because respondents are not obliged to recall their real adverse experiences, using an experimental based design can prevent negative bias from influencing their responses (Nguyen et al., 2021). Finally, future studies are suggested to extend the current research framework by considering integrating moderating or mediating variable such as relationship length, religiosity, magnitude of failure or corporate image. The inclusion of additional variables can enrich the current stock of knowledge related to negative brand relationship.