Factors Affecting Customer Loyalty to Application Service Providers in Different Levels of Relationships

Application service providers are trying their best to enhance existing customers’ loyalty because of the prosperous and competitive market. Customers switch suppliers based on economic evaluation. Other suppliers easily imitate the competitive edge derived from price and cost factors. From social exchange theory and relationship management, psychological factors are important for industrial customer loyalty formation in addition to economical considerations. The comparative importance of psychological and economical considerations in variant context is further explored based on relational exchange theory and relationship development process. Results show that both psychological and economical factors influence customers’ loyalty to ASPs, yet affective commitment is more important than continuous commitment. Paying more attention to psychological considerations may be good in B2B relationships. Value-added service and service quality deepen affective commitment in turn promote loyalty. Improving service quality is a necessary criterion for loyalty. Increasing investment size and reducing attractiveness of alternatives enhance continuous commitment. An important finding is that relationship age and frequency moderate the association among continuous commitment, affective commitment and loyalty. In the case of high relationship age/frequency, affective commitment is the major contributor, while continuous commitment primarily contributes to loyalty in the case of low relationship age/frequency. Implications and limitations are discussed.

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