Scandinavian Journal of Educational Research

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Modelling and Managing Student Loyalty: A Study

of a Norwegian University College

Erik Nesset & Øyvind Helgesen

To cite this article: Erik Nesset & Øyvind Helgesen (2009) Modelling and Managing Student
Loyalty: A Study of a Norwegian University College, Scandinavian Journal of Educational
Research, 53:4, 327-345, DOI: 10.1080/00313830903043117

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Scandinavian Journal of Educational Research
Vol. 53, No. 4, August 2009, 327–345

Modelling and Managing Student Loyalty: A Study of a Norwegian

University College
Erik Nesset and Øyvind Helgesen
Aalesund University College
ØyvindHelgesen
Scandinavian
10.1080/00313830903043117
0031-3831
Original
Taylor
402009
53
oh@hials.no
000002009
&Article
CSJE_A_404484.sgm
andFrancis
(print)/1470-1170
Journal
Francis Ltdof Education
(online)
Research

Higher education institutions are becoming increasingly businesslike, a shift that is

transforming student loyalty into an important strategic theme for universities and
colleges. This paper reports a “cross-over” study that uses well-known theories from
service marketing in a new context, that of educational services addressing customer
perspectives on the student role. The study draws on recent research on National
Customer Satisfaction Index models, with loyalty as the ultimate dependent variable.
The role of affects is embedded in the model, which also includes student satisfaction
and students’ perceptions of the school’s reputation, as well as cognitive quality drivers.
Three important findings are reported. First, the main results are in compliance with
findings in the general literature on service marketing, strengthening the robustness of
this modelling framework. Second, affects seem to be important mediators of quality
drivers on satisfaction, and thus indirectly on student loyalty. Third, learning quality is
the cognitive antecedent that by far has most influence on loyalty.
Keywords: affects, reputation, student loyalty, student satisfaction

Student loyalty is becoming an increasingly important strategic theme for higher educa-
tion institutions (Helgesen & Nesset, 2007a; Sauer & O’Donnell, 2006). Several factors
contribute to making student loyalty an important issue for institutions offering higher
education, such as increased performance-based public funding, new legislation designed to
reform higher education, increased student mobility, and increased global competition. The
Bologna Declaration of June 1999 put in motion a series of reforms to make European
Higher Education more compatible and comparable, and more attractive both for Europeans
and for students and scholars from other continents. One of the main objectives of the
Bologna Process is to enhance and facilitate student and teacher mobility by removing
obstacles and improving the international recognition of degrees and academic qualifica-
tions. Retaining matriculated students is therefore perceived as being as important as attract-
ing and enrolling them. The most important consequence of loyalty is the positive link to
business performance (Helgesen, 2006; Zeithaml, 2000). Thus, higher education institutions
will reap great benefits by developing insights into student loyalty and drivers influencing
loyalty (Hennig-Thurau, Lager, & Hansen, 2001; Kotler & Fox, 1995; Tinto, 1993).

Erik Nesset, Institute for International Marketing, Aalesund University College; Øyvind
Helgesen, Institute for International Marketing, Aalesund University College.
The authors would like to thank two anonymous reviewers for their thoughtful comments on an
earlier version of this paper.
Correspondence concerning this article should be addressed to Erik Nesset, Aalesund University
College, Institute for International Marketing, 6015 Aalesund, Norway. E-mail: en@hials.no
ISSN 0031-3831 print/ISSN 1470-1170 online
© 2009 Scandinavian Journal of Educational Research
DOI: 10.1080/00313830903043117
http://www.informaworld.com
328 NESSET AND HELGESEN

Despite the growing importance of this strategic theme, empirical research on student
loyalty is relatively scarce, particularly when it comes to more structural (causal) based
empirical analyses. This is somewhat surprising as the recent development of structural
models, such as the National Customer Satisfaction Index (NCSI) models, has spurred
their extensive use in the structural estimation of customer satisfaction and related
constructs (e.g. quality drivers and loyalty) for a variety of goods and service sectors
(Zeithaml, Bitner, & Gremler, 2006). In this paper students are viewed as the main
“customers” of an educational institution, which means that literature regarding customers
is relevant in understanding an institution’s relationships with students. However,
defining the customer concept in the context of an educational institution is not a trivial
undertaking. Various constituencies may be categorized as customers, including students,
employers, families, and society (Marzo-Navarro, Pedraja-Iglesias, & Rivera-Torres,
2005).
The purpose of this paper is threefold. First, the paper aims at complementing the empir-
ical literature on loyalty modelling by conducting a “cross-over” study in the new context
of a highly credential-based educational service provider. Second, the analysis will show
how the general modelling approach needs to be adjusted to take account of particular
features in this sector and thus contribute to model development. Third, the analysis will
identify processes and activities to increase student loyalty and the financial performance of
the institution. The two first purposes are mainly of academic interest, while the last one
should have important practical interest for the management of institutions offering higher
education.
The structure of the paper is as follows. The next section presents a conceptual model
as well as hypotheses. The context, the data, and the research methodology are then briefly
discussed, followed by a presentation of the results. The paper ends with a discussion of
findings and their implications for managers, presents some limitations and suggestions for
further research, and offers a conclusion.

The Conceptual Model and Hypotheses

The Proposed Model
Various theoretical and conceptual frameworks and models include linkages among
loyalty, satisfaction, reputation, and antecedents, as has been done in this study. Examples
of this are NCSI models (Chan, Hui, Lo, Tse, Tso, & Wu, 2003; Johnson, Gustafsson,
Andreassen, Lervik, & Jasung, 2001), balanced scorecard approaches and business models
(Kaplan & Norton, 2004; Rucci, Kirn, & Quinn, 1998), quality models and quality awards
for business excellence (Heaphy & Gruska, 1995; Hoque, 2003), and different service qual-
ity approaches (Seth, Desmukh, & Vrat, 2004). Apart from analyses under the NCSI
approach, analyses generally pay less attention to relationships between reputation and
loyalty than to relationships between satisfaction and loyalty, and analyses of the drivers of
loyalty often exclude affective variables (Chebat & Slusarczyk, 2005; Mattila & Enz, 2002).
Another appealing feature of the NCSI approach is that it is consistent with both economic
psychology and welfare economics regarding the definition of one of the key concepts,
customer satisfaction. By defining satisfaction as the customers’ overall experience to date,
i.e. cumulative satisfaction, this concept is synonymous with consumption or experience
utility (Seigyoung & Johnson, 2005).
 MODELLING AND MANAGING STUDENT LOYALTY 329

Figure 1 presents the study’s conceptual model and hypothetical relationships. The
model draws on recent research in service marketing in general and NCSI models in
particular, with loyalty as the ultimate dependent variable, and perception of reputation
and satisfaction as important explanatory variables (Johnson et al., 2001; Johnson,
Hermann, & Gustafsson, 2002; Zeithaml et al., 2006). In the latest version of the
Norwegian NCSI model, emotional aspects are incorporated in a variable termed affective
commitment, which, together with calculative commitment, mediate the effects of satis-
faction on loyalty (Johnson et al., 2001). Both of these commitment variables may be
seen as barriers to switching, the first one being a psychological barrier and the second
one a more rational economic one. However, in the particular context of educational
services, the Bologna Process, with its emphasis on new, flexible, and standardized
modular study programs in the European higher education area, has torn down barriers to
student mobility, making switching barriers of less relevance. Emotional aspects are
instead modelled as mediators of cognitive quality drivers on satisfaction. This approach
is supported by Zeithaml et al. (2006), who state that “specific emotions may also be
induced by the consumption experience itself, influencing a consumer’s satisfaction with
the service” (p. 111).
There is a common research assumption that customer loyalty relates positively to the
Figure 1. The structural model and hypotheses.

performance of business units both at an aggregate level and at the individual customer level
(Helgesen, 2006). Thus, the main objective of a business unit that employs the concepts
shown in Figure 1 is (long-term) profitability, which implies that the marketing concept is
the basis of the prevailing business philosophy.

Positive
affect

Satisfaction
IT quality

Learning Loyalty
quality

Facility Reputation
quality

Negative
affect

Figure 1. The structural model and hypotheses.

330 NESSET AND HELGESEN

Student Loyalty
Researchers define customer loyalty in different ways (Dick & Basu, 1994; Lam,
Shankar, Erramilli, & Murthy, 2004; Oliver, 1997). Oliver defines customer loyalty as “a
deeply held commitment to rebuy or repatronize a preferred product or service consistently
in the future, despite the fact that situational influences and marketing efforts having the
potential to cause switching behavior” (Oliver, 1997, p. 392), while Lam et al. (2004) see it
as “a buyer’s overall attachment or deep commitment to a product, service, brand, or orga-
nization” (p. 294). The definition of students as loyal customers has an important contextual
aspect. An educational institution benefits from having loyal students not only when
students are formal attendees. The success of an educational institution also depends upon
the loyalty of former students. Therefore, student loyalty refers to loyalty both during and
after a student’s period of study at an educational institution (Hennig-Thurau et al., 2001).

Reputation
Different researchers offer various approaches to defining an entity’s reputation, such
as “the esteem in which people hold it” (Theus, 1993, p. 281), or as “the overall estima-
tion in which a company is held by its constituents” (Fombrun, 1996, p. 37). In sum, a
reputation is the overall perception of an organization, what the organization stands for,
what people associate with the organization, and what an individual may expect when
buying the products or using the services of the organization (MacMillan, Money,
Downing, & Hillenbrand, 2005). All aspects of an organization’s interaction with
stakeholders form the organization’s reputation (Schuler, 2004). An organization’s
reputation, therefore, reflects the history of past actions, representing both internal and
external stakeholders’ perceptions. Loyalty relates positively to a favourable corporate
reputation (Johnson et al., 2001). The student’s perception of reputation is very important
regarding attracting and retaining students (Standifird, 2005). These arguments suggest
the following hypothesis:
H1: The perception of the reputation of the university college positively influences
student loyalty.

Student Satisfaction
Various definitions exist regarding customer satisfaction (Giese & Cote, 2000;
Hausknecht, 1990; Kotler & Keller, 2006; Oliver, 1997), for example, as “a judgment that
a product or service feature, or the product or service itself has provided (or is providing) a
pleasurable level of consumption-related fulfilment, including levels of under- or over-
fulfilment” (Oliver, 1997, p. 13) or as “a person’s feelings of pleasure or disappointment
resulting from comparing a product’s perceived performance or outcome in relation to his
or her expectations” (Kotler & Keller, 2006, Appendix G7). Customer satisfaction is thus a
summary psychological state or a subjective summary judgement based on the customer’s
experiences compared with expectations. Elliot and Healy (2001) proposed that student
satisfaction is an attitude that results from the evaluation of the students’ experiences
regarding educational services.
Student satisfaction positively influences student loyalty (Helgesen & Nesset, 2007a;
2007b). Researchers also view reputation as an overall or post-experience attitude upon
 MODELLING AND MANAGING STUDENT LOYALTY 331

which customer satisfaction has a positive impact (Johnson et al., 2001; Oliver, 1980).
These arguments suggest the following hypotheses:
H2: Student satisfaction positively influences student loyalty.
H3: Student satisfaction positively influences the perception of the reputation of the
university college.

Affective Variables
Oliver (1997, p. 294) states that “the concepts of emotion, affect, and mood are
frequently used interchangeably, but can be differentiated. Affect refers to the feeling
side of consciousness, as opposed to thinking, which taps the cognitive domain.”
Different researchers conceive and measure affect as a two-dimensional construct
consisting of positive and negative affects (Laros & Steenkamp, 2005; Watson, Clark,
& Tellegen, 1988). Watson et al. (1988) define the term “Positive Affect as reflecting
the extent to which a person feels enthusiastic, active and alert,” while the construct
“Negative Affect is a general dimension of subjective distress and unpleasurable
engagement” (p. 1063).
Both positive and negative affects relate to customer satisfaction (Selnes & Grønhaug,
2000; Szymanski & Henard, 2001). Research regarding job satisfaction and quality of life
shows the same dual-processing mechanism (Agho, Mueller, & Price, 1993; Horley &
Little, 1985; Mykletun, 1985). These arguments suggest the following hypotheses:
H4: Positive affect positively influences student satisfaction.
H5: Negative affect negatively influences student satisfaction.

Cognitive Quality Drivers

A number of researchers use evaluation standards that are independent of any particular
service context to help identify attributes of products and services, such as SERVQUAL
(Parasuraman, Zeithaml, & Berry, 1988; 1994) and SERVPERF (Cronin & Taylor, 1992).
Even while these scales help identify a set of drivers with general relevance, one should also
consider additional dimensions that emanate from industry-specific contexts (Abdullah,
2005; Elliot & Shin, 2002).
Product and service attributes (cognitive quality drivers) relate both to positive and
negative affects as well as to satisfaction (Mano & Oliver, 1993; Oliver, 1993). Research on
job satisfaction and quality of life issues also reveals the same mechanisms (McKennell,
1978; Organ & Near, 1985). This duality (cognitive and affective drivers) also characterizes
other business areas, such as market communication (Buck, Anderson, Chaudhuri, & Ray,
2004; Ruiz & Sicilia, 2004) and sales promotion (Laroche, Pons, Zgolli, Cervellon, & Kim,
2003).
Many potential variables may represent cognitive quality drivers. A main concern is to
select variables that are important and that indicate the best ways to increase student
loyalty and value for the money (McNair, Polutnik, & Silvi, 2001; Woodruff, 1997).
Based on earlier research on student loyalty (Helgesen & Nesset, 2007a, 2007b) this study
proposes the following three cognitive quality drivers: students’ evaluation of the “learn-
ing quality,” the “facility quality,” and the “IT quality.” The five dimensions of service
quality as advocated by the SERVQUAL model seem to be accounted for in these three
332 NESSET AND HELGESEN

measures, but not as single dimensions. In particular, an evaluation of “learning quality”

seems to capture the intangible dimensions of reliability, responsiveness, assurance, and
empathy. The multidimensional aspect of this quality driver may be understood by using
the “service provision as drama” metaphor, in which the main service provider, the
professor, is the main actor in the drama: “When you consider the quality of the education
you are receiving in college, you are certain to focus much of your evaluation on your
professor’s delivery of classes” (Zeithaml et al., 2006, p. 63). Because of the context and
the specific data sample (engineering students), tangibles are split into measures called
“facility quality” and “IT quality.” The following hypotheses are offered for these three
cognitive quality drivers:
H6: Learning quality positively influences positive affect.
H7: Learning quality negatively influences negative affect.
H8: Learning quality positively influences student satisfaction.
H9: IT quality positively influences positive affect.
H10: IT quality negatively influences negative affect.
H11: IT quality positively influences student satisfaction.
H12: Facility quality positively influences positive affect.
H13: Facility quality negatively influences negative affect.
H14: Facility quality positively influences satisfaction.

Research Methodology
The Data Sample
The data source is a survey (October 2005) among bachelor-level engineering students
at Aalesund University College in Norway. The sample consists of 240 respondents (of
whom 208 are male) representing about 58% of all full-time engineering students. Twenty-
six of the questions in the questionnaire represent the items measuring eight latent variables
according to the model in Figure 1. The mean age of the respondents is 24.9 years. A
comparison of this sample to the number of students in each field of studies suggests that
this sample is not non-representative of engineering students. However, 87% of the respon-
dents in the sample are male, which nevertheless can cause some concerns about the ability
to make generalizations based on the data. Simple t-tests of differences in mean values of
the items between male and female respondents do not reveal any significant difference in
any of the items at the 5% level. Only two of the items show significantly different values
between the sexes at the 10% level. Similar t-tests on the 32 female respondents and a
random sub-sample (of equal size) of the male respondents reveal no significant differences
at the 10% level. These findings support the assumption of the sample as representative,
regardless of gender.

Measures
This study mainly evaluates the concepts of positive affect, negative affect, satisfaction,
reputation, and loyalty, (cf. Figure 1 and the discussion above). The research community at
large does not agree on how to measure these concepts. A number of researchers have
recommended different approaches (Davies, Chun, da Silva, & Roper, 2004; Fornell, 1992;
Helm, 2005; Oliver, 1997).
 MODELLING AND MANAGING STUDENT LOYALTY 333

This data analysis uses 18 items to measure the five main concepts and eight items to
measure the three cognitive antecedents. All indicators originally used a seven-point Likert
scale where 1 = the least favourable response alternative (very unsatisfied) and 7 = the most
favourable response alternative (very satisfied). The analysis converts these measurements
to a scale from 0 to 100. Appendix A contains statistical metrics for the 26 items. Appendix
B shows the correlation matrix.
As recommended by Ryane, Buzas, and Ramaswamy (1995), this study measures
satisfaction by asking three questions relating to summary judgement, comparison with
expectations, and comparison with an ideal situation, respectively. These three questions
belong to the cumulative experience level rather than the transaction specific level. As
indicated by Olsen and Johnson (2003), such cumulative evaluations are likely to be better
predictors of loyalty than evaluations at the transaction specific level. This study also
includes a fourth question concerning students’ spontaneous assessment of their satisfac-
tion with the university college (cf. Appendix A). This question might be interpreted as
either a transaction specific or a cumulative specific perception, and thus could cause
some degree of measurement ambiguity. Validity and reliability tests help decide whether
this is a problem or not.
There are also various ways to measure corporate reputation (Fombrun, 1996;
Lemmink, Schuijf, & Streukens, 2003), of which three are chosen: perception of the
university college’s reputation among a circle of acquaintances, perception of the univer-
sity college’s reputation among the general public, and perception of the university
college’s reputation among employers. The study also uses three items to measure
loyalty: probability of recommending the university college to friends/acquaintances,
probability of attending the same university college if starting again, and probability of
attending new courses/continuing education at the university college (Dick & Basu, 1994;
Oliver, 1997).
The literature offers numerous approaches and scales to measure affect (Laros &
Steenkamp, 2005; Richins, 1997; Watson et al., 1988). This study uses four items to
measure positive affect regarding the students’ feelings about being affiliated with the
university college: inspiration, pride, admiration, and respect. Similarly, four items
measure negative affect: frustration, anger, anxiety, and feelings of chaos.
Regarding the first cognitive quality driver (learning quality), the measure consists of
four items reflecting evaluation of the professional quality (of lectures), pedagogical quality
(of lectures), service attitude, and study guidance. The measure of evaluation of facility
quality uses two items: evaluation of the library and evaluation of the reading room. The
measure of evaluation of the IT quality also uses two items: student evaluation of Class-
fronter (a web communications tool to/from students) and evaluation of the data services
(cf. Appendices A and B).

Analytical Approach
This study employs a two-step confirmative modelling strategy to test the hypotheses of
the theoretical model shown in Figure 1 (Hair, Black, Babin, Anderson, & Tatham, 2006),
by using LISREL VIII (Jöreskog & Sörbom, 1996; Jöreskog, Sörbom, Du Toit, & Du Toit,
2001). The first step of this approach develops and establishes a congruent and congeneric
measurement model, and the second step tests the hypotheses by analysing structural
models.
334 NESSET AND HELGESEN

Results
The Measurement Model
Appendices A and B show the statistical metrics of the items and the correlation coeffi-
cients between them, respectively. Table 1 contains two absolute goodness-of-fit measures
(χ2 and Root Mean Square Error of Approximation [RMSEA]), one incremental goodness-
of-fit measure (Comparative Fit Index [CFI]), and one badness-of-fit measure (Standardized
Root Mean Square Residuals [SRMR]), as well as standardized coefficients of the variables
and three measures of convergent validity (Cronbach’s alpha [CA], construct reliability
[CR], and variance extracted [VE]). The RMSEA has a value of 0.050, CFI has a value of
0.95, and SRMR has a value of 0.053, all indicating good fit.
The variables positive affect, negative affect, satisfaction, reputation, and loyalty are
endogenous variables in the structural analysis. They are also the most interesting variables
in hypothesis testing. These variables all contain items with loadings above 0.50, and all
have CA, CR, and VE that exceed acceptable minimum levels, indicating convergent
validity for all variables. Similar measures for the three exogenous variables (cognitive
quality drivers), learning quality, facility quality, and IT quality also show convincing
indications of convergent validity.
This study examines discriminant validity of the constructs by comparing the square of
the correlation coefficient between any two constructs with their respective VEs. If their
VEs are larger than the square of their correlation coefficient, the variables are truly distinct
constructs. There is a problem only with loyalty and satisfaction. A less restrictive test of
discriminant validity would be to restrict the correlation between the variables to unity and
compare the chi-squares of the restricted and the unrestricted models. There is a significant
change in chi-squares (79.98) between the unrestricted and the restricted model, which
suggests that the two variables are different concepts. Another indication of discriminant
validity of the concepts in the model is the fact that the overall fit is quite satisfactory,
considering that there are no cross-loadings and no covariance between or within construct
error variances (i.e. a congeneric measurement model).

The Preferred Structural Model

Table 2 shows fit indices and standardized path coefficients for the preferred structural
model. The fit is good according to all the indices, with an RMSEA of 0.049, a CFI of 0.95,
and a SRMR of 0.053. The R2 indices in Table 2 show that the model explains as much as
75% of the variation in both student satisfaction and student loyalty. The model also
explains a substantial share of the variation in reputation (R2 is 0.42). In a comparable anal-
ysis based on the Norwegian NCSI model that estimated links between customer loyalty,
satisfaction, commitment, and corporate image in five service sectors (airlines, banks,
buses, gas stations, and trains) the R2 of loyalty, satisfaction, and image ranged between
0.46–0.63, 0.49–0.56, and 0.19–0.33, respectively (Johnson et al., 2001).
Data support all five hypotheses (H1–H5) concerning the endogenous variables in the
structural model. This is in accordance with findings in the general empirical literature on
service marketing research. Both positive and negative affects have significant effects on
satisfaction, but the positive affect has a much stronger influence than the negative affect.
In addition, positive affect has a significant positive effect on reputation. This is not a
hypothesized link, but was added to the model because it improved the model fit. The affect
Table 1
Measurement Model Results: Model Fit, Standardized Coefficients and Convergent Validity Measures

Learning Facility Positive Negative

quality quality IT quality affect affect Satisfaction Reputation Loyalty

Evaluation of professional quality (of lectures) 0.76

Evaluation of pedagogical quality (of lectures) 0.76
Evaluation of service attitude 0.77
Evaluation of study guidance 0.70
Evaluation of the library 0.77
Evaluation of the reading rooms 0.69
Evaluation of Classfronter (web communications tool to/from students) 0.70
Evaluation of data service 0.79
Positive affect 1 (inspiration) 0.65
Positive affect 2 (pride) 0.84
Positive affect 3 (admiration) 0.68
Positive affect 4 (respect) 0.63
Negative affect 1 (frustration) 0.72
Negative affect 2 (anger) 0.79
Negative affect 3 (anxiety) 0.63
Negative affect 4 (chaotic) 0.71
Satisfaction with the university college (spontaneous judgement) 0.80
Satisfaction with the university college in general 0.93
Satisfaction with the university college compared with expectations 0.77
Satisfaction with the university college compared with an ideal one 0.74
Perception of the univ. college reputation among your circle of 0.90
acquaintances
Perception of the univ. college reputation among employers 0.78

Note: Model fit: χ2 (Minimum Fit Chi-square): 428.48 (df = 271). Root Mean Square Error of Approx. (RMSEA): 0.050. Comparative Fit Index (CFI): 0.95.
Standardized Root Mean Square Residual (SRMR): 0.053.
MODELLING AND MANAGING STUDENT LOYALTY 335
Table 1
(Continued)

Learning Facility Positive Negative

quality quality IT quality affect affect Satisfaction Reputation Loyalty

Perception of the univ. college reputation among the general public 0.88
Probability of recommending the university college to friends/ 0.98
acquaintances
Probability of attending the same university college if starting anew 0.53
Probability of attending new courses/further education at the univ. college 0.79
Convergent validity:
Cronbach’s alpha (CA) 0.83 0.68 0.71 0.79 0.80 0.88 0.89 0.79
336 NESSET AND HELGESEN

Construct reliability (CR)a 0.84 0.70 0.72 0.80 0.80 0.89 0.89 0.82
Variance Extracted (VE)b 0.56 0.53 0.56 0.50 0.51 0.66 0.73 0.62

Notes. aConstruct reliability: (Σinλi)2/{(Σinλi )2+(Σinδi)}, where λ is standardized loading, n is number of loadings, and δ is error variance. bVariance extracted: (Σinλi2)/
n , where λ is standardized loading and n is number of loadings. Model fit: χ2 (Minimum Fit Chi-square): 428.48 (df = 271). Root Mean Square Error of Approx.
(RMSEA): 0.050. Comparative Fit Index (CFI): 0.95. Standardized Root Mean Square Residual (SRMR): 0.053.
 MODELLING AND MANAGING STUDENT LOYALTY 337

Table 2
Structural Model Results: Standardized Path Coefficients, t-values, and Model Fit of the Structural
Model

Path Hypothesis Stand. coeff. t-value

Reputation → Loyalty H1 0.18 3.31***

Satisfaction → Loyalty H2 0.75 11.90***
Satisfaction → Reputation H3 0.37 2.55**
Positive affect → Satisfaction H4 0.36 5.13***
Negative affect → Satisfaction H5 −0.20 −3.52***
Learning quality → Positive affect H6 0.38 4.35***
Learning quality → Negative affect H7 −0.39 −4.20***
Learning quality → Satisfaction H8 0.43 6.24***
IT quality → Positive affect H9 0.17 1.88*
IT quality → Negative affect H10 0.13 1.30
IT quality → Satisfaction H11 0.09 1.51
Facility quality → Positive affect H12 0.19 2.15**
Facility quality → Negative affect H13 −0.21 −2.13**
Facility quality → Satisfaction H14 0.06 0.95
Positive affect → Reputation 0.21 2.10**
Model fit: R2 structural equations:
χ21 (Minimum Fit chi-square): Loyalty: 0.75
434.39 Satisfaction: 0.75
RMSEA : 0.049 Reputation: 0.42
CFI: 0.95 Positive affect: 0.35
SRMR: 0.053 Negative affect: 0.21
Notes. *** p < 0.01; ** p < 0.05, * p < 0.10.

variables were originally thought of as different state-of-mind reflections that were

transaction specific and, as such, should not have any influence on reputation or loyalty.
This holds for loyalty, as an estimation (not presented) of a model including links from
affect variables to loyalty shows insignificant coefficients. However, it does not hold for
reputation.
Affective responses seem to mediate the relationships between cognitive antecedents
and satisfaction, and to some extent reputation, while satisfaction further mediates the rela-
tionships between affective responses and loyalty both directly and via reputation. The anal-
ysis further confirms H6 (learning quality influences positive affect), H7 (learning quality
influences negative affect), H8 (learning quality influences satisfaction), H12 (facility quality
influences positive affect), and H13 (facility quality influences negative affect); H9 (IT qual-
ity influences positive affect) is, however, only weakly confirmed (at the 10% significance
level).
The preferred structural model may be considered as a result of a “from general to
specific” testing procedure. A general unrestricted model with affect variables having both
direct and indirect effects on loyalty shows good fit according to a variety of common fit
measures (RMSEA = 0.049, CFI = 0.95, SRMR = 0.053). By imposing different restrictions
on this general model, several nested models may be obtained. In the preferred structural
model (cf. Table 2) the direct links from the two affect variables to loyalty are excluded
338 NESSET AND HELGESEN

(zero restrictions). Based on a likelihood ratio (LR) test with two degrees of freedom these
restrictions cannot be rejected (χ2[2] = 3.07). In another nested version, zero restrictions on
the links from the affect variables to satisfaction and reputation, respectively, are clearly
rejected (χ2[4] = 45.08). Explicit testing of the mediating effects of the affect variables is
obtained by imposing zero restriction on the links from the cognitive antecedents to positive
and negative affect in the preferred model (c.f. Table 2), and performing the LR-test. These
restrictions are rejected at the 5% level (χ2[1] = 6.01), implying that affect variables may be
interpreted as mediating variables.

Discussion and Conclusion

Student perception of the university college’s reputation positively influences student
loyalty (H1). Reputation has a direct effect on loyalty of 0.18 (Table 2). The students’ satis-
faction positively influences both student loyalty and their perception of the reputation of
the university college (H2 and H3). Thus, student satisfaction positively influences student
loyalty both directly and indirectly. The total effect from satisfaction to loyalty is 0.82,
consisting of one direct effect (0.75) and one indirect effect, mediated through reputation
(0.07). Positive affect has direct effects on satisfaction and reputation of 0.36 and 0.21,
respectively (Table 2). Negative affect has a direct effect on satisfaction of -0.20. Factoring
in the mediating effects of satisfaction and reputation, the direct and indirect effect of
positive affect on reputation is 0.34. The indirect effect of positive affect on loyalty is 0.33.
Thus, an increase in positive affect of 1 percentage point has about the same total effect on
satisfaction, reputation and loyalty (from 0.33 to 0.36 percentage points). The indirect effect
of negative affect on reputation is −0.08, and −0.16 on loyalty. Thus the total effect of a
reduction in negative affect of 1 percentage point varies; 0.20 on satisfaction, 0.08 on
reputation and 0.16 on loyalty. An increase in positive affect seems to have about twice the
effect of a decrease in negative affect.
The direct effect of learning quality on positive affect is 0.38, about twice the individual
effects of facility quality and IT quality. The direct effect of learning quality on negative
affect is −0.39, also about twice the individual effect of facility quality. The direct and indi-
rect effects of learning imply that an increase in learning quality of 1 percentage point has
a total effect on satisfaction of about 0.64 percentage points. This effect is about four times
higher than the total individual effects of facility quality and about five times higher than
the effect of IT quality. The direct and indirect effects of learning quality on reputation is
0.30, whereas for facility quality it is 0.25, and for IT quality 0.15. These findings suggest
that the indirect effects have much to say in determining total effects, especially for reputa-
tion. The importance of the mediating effects of positive affects and negative affects on
satisfaction is noteworthy. For learning quality the mediating effects of the affective
variables represent an additional effect of about 50% of the direct effect on satisfaction. For
the relationships for other cognitive quality drivers, the mediating effects of the affective
variables represent even more of the entire effect.
Learning quality is by far the most influential variable of the three cognitive quality
drivers with respect to student loyalty. The total effect of this variable is 0.54, about three
times the total effect of facility quality on student loyalty and almost five times the total
effect of IT quality on student loyalty. The loadings of the four items measuring learning
quality are all at the 0.7 level (Table 1), indicating that they are of approximately equal
importance. However, considering the low mean value (about 45) of pedagogical quality
 MODELLING AND MANAGING STUDENT LOYALTY 339

(see Appendix A), this indicator seems to be a natural first choice regarding improvement
efforts. For example, if the mean performance of pedagogical quality is raised by
15 percentage points (from 45 to 60), student loyalty will increase by 2 percentage points.
It should be underscored that when deciding focal activities for a business unit for the
coming period of time, costs should also be taken into consideration (Chiou & Droge, 2006;
Guilding & McManus, 2002; McNair et al., 2001).
The model proposed in this study is just one of many that could be used in order to
analyse relationships between loyalty and related concepts of an institution offering
higher education. Of course, the model should represent what is perceived as being
important for the particular educational institution. It should, however, be emphasized
that by analysing student loyalty, managers will only obtain insight for decision making.
In order to actually increase student loyalty, decisions should be made and activities
initiated in compliance with the value-creating processes that have crucial effects on
student loyalty. In this way managers can manage the institution to increase student
loyalty. As long as the model represents the business logic of the institution, it can be
very useful as a pedagogical tool when considering effects and results of the various
quality activities, for example.
When a focal business area such as pedagogical quality has been identified, this area
could be more closely examined through separate studies. This more detailed insight can be
useful when making decisions. Thus the chosen business model should give an overview as
well as some detail for decision making. In order to control the crucial value-creating
processes, surveys should be worked out periodically. In addition, other items should be
included in order to control the relevancy of the existing model.
This study is based on a type of model from the literature that is often termed service
management or service marketing. The findings indicate that such models may be relevant
for educational institutions when investigating student loyalty. After all, education and
teaching are services with a high degree of experience and credence quality (Kotler & Fox,
1995; Zeithaml et al., 2006). Thus this study demonstrates that service marketing models
may be relevant for educational institutions.
Even though the variance of loyalty explained by the model is rather high (75%), student
surveys may include other variables, e.g. commitment (Bansal, Irving, & Taylor, 2004; Lam
et al., 2004). The variance of reputation explained by the model is rather low (42%), and
positive affect is the only antecedent loading significantly on reputation. The model
explains only 35% of the variance of positive affect and only 21% of negative affect. The
mediating effects of the affective variables and the variances explained make this another
area of great interest for further research.
Institutions of higher learning have had to become much more concerned about student
loyalty because public funding has become increasingly performance-based. Thus, these
institutions are dependent on the production of student credits and professional degrees in
determining their financial performance. It is likely that performance-based funding will be
even more important in the future. Consequently, managers at institutions of higher educa-
tion will benefit from insight into the drivers of student loyalty. Additionally, managers
should consider cost aspects to design cost-effective programs and services. Managers can
identify processes and activities that will increase student loyalty by conducting student
surveys and analysing those surveys thoroughly. In this way, an educational institution
can augment the student value offered, thus increasing student loyalty and the financial
performance of the institution.
340 NESSET AND HELGESEN

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 MODELLING AND MANAGING STUDENT LOYALTY 343

Appendix A

Table A1
Statistical Metrics of the 26 Items (n = 240)

Variables (items/factors/concepts) Symbol Mean SD Skewness Kurtosis

Evaluation of professional quality (of lectures) X1 53.96 21.97 −0.06 −0.49

Evaluation of pedagogical quality (of lectures) X2 45.21 20.54 0.10 −0.29
Evaluation of service attitude X3 60.49 19.76 −0.49 0.43
Evaluation of study guidance X4 55.35 22.10 −0.10 −0.12
Learning quality (X1–X4) ξ1
Evaluation of library X5 66.74 19.25 −0.50 0.92
Evaluation of reading room X6 60.76 24.42 −0.58 0.03
Facility quality (X5–X6) ξ2
Evaluation of Classfronter (web communications tool to/ X7 60.76 20.25 −0.38 0.21
from students)
Evaluation of data service X8 56.67 22.29 −0.34 −0.34
IT quality (X7–X8) ξ3
Positive affect 1 (inspiration) Y1 52.08 19.53 −0.28 0.66
Positive affect 2 (pride) Y2 47.91 20.74 −0.27 −0.16
Positive affect 3 (admiration) Y3 37.99 23.53 −0.07 −0.64
Positive affect 4 (respect) Y4 48.06 22.27 −0.38 0.11
Positive affect (Y1–Y4) η1
Negative affect 1 (frustration) Y5 42.01 24.82 0.22 −0.48
Negative affect 2 (anger) Y6 25.14 26.63 0.88 −0.07
Negative affect 3 (anxiety) Y7 22.99 27.11 1.14 0.50
Negative affect 4 (chaotic) Y8 29.10 25.77 0.71 −0.20
Negative affect (Y5–Y8 ) η2
Satisfaction with the university college (spontaneous Y9 60.76 17.87 −0.32 1.04
judgement)
Satisfaction with the university college in general Y10 59.93 19.10 −0.49 0.87
Satisfaction with the university college compared with Y11 51.25 20.19 −0.44 0.60
expectations
Satisfaction with the university college compared with an Y12 49.58 20.56 −0.10 −0.04
ideal one
(Student) Satisfaction (Y9–Y12) η3
Perception of the univ. college reputation among employers Y13 64.58 17.66 −0.32 0.96
Perception of the univ. college reputation among the general Y14 63.06 17.61 −0.39 0.84
public
Perception of the univ. college reputation among your circle Y15 60.63 17.70 −0.29 0.89
of acquaintance
Reputation (Y13 and Y15) η4
Probability of recommending the university college to Y16 62.22 24.27 −0.58 0.12
friends/acquaintances
344 NESSET AND HELGESEN

Table A1
(Continued)

Variables (items/factors/concepts) Symbol Mean SD Skewness Kurtosis

Probability of attending the same university college if Y17 64.79 28.36 −0.64 −0.34
starting from fresh
Probability of attending new courses/further education at the Y18 51.25 29.26 −0.23 −0.82
university college
(Student) Loyalty (Y16–Y18) η5

Appendix B

Table B1
Correlation Matrix of the 26 Items – part 1 (n = 240)

X1 X2 X3 X4 X5 X6 X7 X8 Y1 Y2 Y3 Y4

X1 1.00
X2 0.63 1.00
X3 0.56 0.57 1.00
X4 0.54 0.51 0.55 1.00
X5 0.27 0.16 0.32 0.19 1.00
X6 0.16 0.12 0.24 0.16 0.53 1.00
X7 0.23 0.21 0.24 0.21 0.25 0.18 1.00
X8 0.26 0.26 0.23 0.19 0.23 0.23 0.56 1.00
Y1 0.38 0.40 0.41 0.29 0.14 0.13 0.28 0.18 1.00
Y2 0.25 0.34 0.32 0.26 0.27 0.33 0.24 0.28 0.54 1.00
Y3 0.19 0.26 0.18 0.16 0.08 0.20 0.15 0.19 0.42 0.61 1.00
Y4 0.28 0.29 0.27 0.29 0.18 0.25 0.22 0.19 0.42 0.49 0.43 1.00
Y5 −0.21 −0.14 −0.26 −0.23 −0.19 −0.05 −0.16 −0.12 −0.25 −0.22 −0.12 −0.03
Y6 −0.21 −0.12 −0.31 −0.26 −0.24 −0.09 −0.12 −0.02 −0.28 −0.18 −0.10 −0.13
Y7 −0.20 −0.07 −0.22 −0.16 −0.15 −0.05 −0.12 −0.08 −0.20 −0.09 0.03 −0.05
Y8 −0.30 −0.19 −0.33 −0.27 −0.21 −0.16 −0.01 0.05 −0.28 −0.19 −0.04 −0.11
Y9 0.43 0.48 0.52 0.48 0.36 0.33 0.32 0.31 0.38 0.50 0.33 0.39
Y10 0.49 0.52 0.57 0.47 0.32 0.26 0.32 0.33 0.47 0.47 0.38 0.41
Y11 0.48 0.49 0.44 0.42 0.23 0.22 0.27 0.21 0.46 0.47 0.38 0.38
Y12 0.35 0.42 0.38 0.35 0.22 0.34 0.24 0.24 0.40 0.47 0.39 0.39
Y13 0.15 0.23 0.34 0.24 0.30 0.32 0.26 0.29 0.26 0.37 0.23 0.33
Y14 0.22 0.26 0.37 0.24 0.26 0.25 0.18 0.30 0.28 0.41 0.26 0.35
Y15 0.28 0.31 0.41 0.35 0.25 0.26 0.19 0.27 0.30 0.41 0.30 0.40
Y16 0.48 0.48 0.55 0.46 0.30 0.28 0.31 0.31 0.47 0.53 0.37 0.44
Y17 0.42 0.37 0.47 0.38 0.28 0.24 0.24 0.29 0.33 0.39 0.18 0.36
Y18 0.29 0.30 0.30 0.32 0.16 0.18 0.11 0.21 0.30 0.30 0.23 0.23
 MODELLING AND MANAGING STUDENT LOYALTY 345

Appendix B (Continued)

Table B2
(continued)

Y5 Y6 Y7 Y8 Y9 Y10 Y11 Y12 Y13 Y14 Y15 Y16 Y17 Y18

X1
X2
X3
X4
X5
X6
X7
X8
Y1
Y2
Y3
Y4
Y5 1.00
Y6 0.59 1.00
Y7 0.50 0.46 1.00
Y8 0.45 0.56 0.47 1.00
Y9 −0.33 −0.35 −0.20 −0.35 1.00
Y10 −0.34 −0.37 −0.25 −0.36 0.76 1.00
Y11 −0.32 −0.28 −0.19 −0.33 0.58 0.70 1.00
Y12 −0.21 −0.14 −0.06 −0.26 0.55 0.69 0.66 1.00
Y13 −0.16 −0.26 −0.10 −0.21 0.37 0.41 0.28 0.33 1.00
Y14 −0.10 −0.19 −0.11 −0.16 0.36 0.46 0.30 0.45 0.71 1.00
Y15 −0.18 −0.23 −0.15 −0.24 0.44 0.56 0.42 0.52 0.67 0.80 1.00
Y16 −0.35 −0.37 −0.21 −0.34 0.65 0.78 0.63 0.61 0.49 0.48 0.59 1.00
Y17 −0.29 −0.32 −0.25 −0.32 0.55 0.61 0.48 0.45 0.43 0.41 0.50 0.77 1.00
Y18 −0.11 −0.17 −0.02 −0.20 0.33 0.41 0.35 0.40 0.32 0.30 0.41 0.52 0.44 1.00