The effect of service innovation on customer behavioral intention in the Taiwanese insurance sector: the role of word of mouth and corporate social responsibility
| Published date | 02 January 2020 |
| DOI | https://doi.org/10.1108/JABS-06-2018-0168 |
| Date | 02 January 2020 |
| Pages | 341-360 |
| Author | Jui-I Chang,Chen-Ying Lee |
| Subject Matter | Strategy,International business |
The effect of service innovation on
customer behavioral intention in the
Taiwanese insurance sector: the role
of word of mouth and corporate
social responsibility
Jui-I Chang and Chen-Ying Lee
Abstract
Purpose –Service innovation has been one of the essential elements to meet the customers’
requirements, but fewstudies discuss service innovation regarding behavioralintention in the insurance
industry. This paperaims to investigate the effects of service innovationon customer behavioral intention
and examinesthe role of word-of-mouth (WOM)and corporate social responsibility(CSR).
Design/methodology/approach –This paper used a survey to assess consumer behavioral intention
regarding service innovation activities from life insurance. Questionnaires were administered to
consumers who have purchased life insurance in Taiwanand the survey questions were tested through
factoranalysis. An analysis of multiple and hierarchicalregression was performed to testthe hypotheses.
Findings –The empirical results demonstrate that life insurance service innovation has a significantly
positive influence on WOM and behavioral intention. Additionally,WOM has a partially mediating effect
between service innovation and behavioral intention. Furthermore, the study indicates that CSR has a
moderatingeffect on the relationship betweenservice innovation and behavioralintentions.
Originality/value –Considering the uniqueness of this study in the context of Taiwan, the research
draws on signaling theory as the framework to explore service innovation and the impact of social
responsibility on consumer behavioral intentions in the Taiwanese insurance industry. Additionally, the
results can be considered a service marketing strategy and are applicable to the financial service
industryin some developing Asian countries
Keywords Service innovation, Customer behavioural intention, Corporate social responsibility,
Word of mouth, Life insurance
Paper type Research paper
1. Introduction
Service has become an extremely important issue in the global economy. In many
developed countries, more than70 per cent of gross domestic product (GDP) is dependent
on services (Moritz, 2005). Vargo and Lusch (2008) suggest that service-dominant logic
(SDL) has become more important in service science. The insurance industry is closely
connected to services. Particularly, the insurance industry has emphasized service,
relationships, interactions, customer’s behavior and co-creating value with customers. From
an SDL perspective, customers are value co-creators leading to a specific application and
development of customer competences. These competencies and specialized customer
skills then enable companies to adopt the role of the customer in the value creation
Jui-I Chang is based at the
Department of Insurance
and Finance, National
Taichung University of
Science and Technology,
Taichung, Taiwan.
Chen-Ying Lee is based at
the Department of Risk
Management and
Insurance, Shih Chien
University, Taipei, Taiwan.
Received 5 June 2018
Revised 29 June 2019
Accepted 27 August 2019
DOI 10.1108/JABS-06-2018-0168 VOL. 14 NO. 3 2020, pp. 341-360, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 341
process. Potential changes in the role of the customer can affect the way in which services
are purchased, used and paid for (Michel et al.,2008).
The Taiwanese insurance industry has experienced continued vigorous growth.
According to Swiss Reinsurance Company (2017) statistics, Taiwan’s insurance
penetration (i.e. the ratio of insurance premiums to GDP) ranked second in the world in
2016, at 19.99 percent. Compared with the UK (10.16 per cent) and the USA (7.31 per
cent), Taiwan’s insurance penetration is high. Life insurance is a professional service that
is characterized by high consumer involvement due to the importance of tailoring
products to specific needs, the variability of the products available, the complexity
involved in the policies and processes, and ultimately, the need to involve the consumer
in every aspect of the transaction. Furthermore, life insurance also faces new challenges,
such as diversification of service competition, co-marketing of financial holdings, and
competition in financial technology trends. Increasingly intensive competition results in
low margins for insurers and more disloyal customers, ultimately leading to higher
customer acquisition and retention costs. Trapped between eroding prices and higher
costs, insurance companies experience significant profit squeezes. In such a situation,
the literature usually recommends the innovation of new insurance services (Haller, 2000;
Maas and Graf, 2008). Insurers aim at maintaining and advancing their competitiveness
through value-added services (Haller, 2000). On the other hand, they also wish to use
value-added services to influence customer behavior regarding insurance services.
The ability to modify customer behavior structure is beneficial for achieving competitive
advantages and creating differentiation opportunities (Payne et al.,2008). Therefore,
service innovation is a significant factor in maintaining a firm’s competitive advantage in
an increasingly service-centered economy (Chen et al., 2016).
Service innovation can be changed through technology, organizational structure, market
behavior or the addition of new services (Gallouj, 2002). This innovation in services offered
by the business is an endeavor to reduce the gap between the needs and expectations of
consumers. Service innovation combines the knowledge of customers and frontline staff
and has strong impacts on sales (Melton and Hartline, 2010). Awan and Zahra (2014) find
that innovation plays a key role in changing consumerbehavior and the growth of innovative
firms. Mahmoud et al. (2018) also suggest that a new service concept or process has a
positive and significant relationship with customer satisfaction. Furthermore, in financial
services, Nekrep (2013) suggests that insurers have initiated three main types of innovation
including market innovation (entry into market segments new to the company), product
innovation (new insurance service and its development) and process innovation (improved
internal capabilities). Through an initial study of service innovation in the financial service
context, YuSheng and Ibrahim (2019) reveal that service innovation has a direct influence
on service delivery and customer satisfaction. Due to the expected increase in financial
innovation in the future, breaking the traditional marketing channels and related financial
products, and the changing behavior and demands of consumers, service innovation is
increasingly important to the life insurance industry. Service innovations are becoming the
main tool of competition in the market, which provides an opportunity to add value to
insurance companies.
In addition, word-of-mouth (WOM) is considered the most important information source in
consumers’ purchasing decisions (Jalilvand and Samiei, 2012) and will have an impact on
customer behavioral intention. However, in life insurance, the longer customers remain with
a company, the less likely they are to submit claims (Peppers and Rogers, 2004).
According to Lombardi (2005), retaining customers is crucial for life insurers as a long-
lasting relationship with customers results in greater instances of cross-selling and positive
recommendation intentions. Therefore, the customer’s behavioral intentions may affect the
life insurance company’s operating results. Insurers consider customer behavioral
intentions as the most importantdeterminant of service marketing and economic success.
PAGE 342 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 14 NO. 3 2020
To continue reading
Request your trial