Influence of Perceived Value on Customer Loyalty of the Telecommunication Industry in China: Mediating Role of Psychological Contract

Yue Huang; Lu Suo

Authors

Yue Huang Graduate School, Stamford International University, Bangkok, 10250 Thailand
Lu Suo Graduate School, Stamford International University, Bangkok, 10250 Thailand

Keywords:

Customer loyalty, Perceived value, Psychological contract, Telecommunication

Abstract

This study examines the influence of customer-perceived value on the loyalty of customers who have suspended services, with a focus on the mediating role of the psychological contract within China's telecommunications industry. It distinguishes itself from prior research through its novel emphasis on the telecom sector, particularly China Broadnet, a late-market entrant facing unique competitive pressures. Unlike earlier studies that primarily explore general associations among product quality, customer satisfaction, perceived value, and loyalty, this research highlights the psychological contract as a key mechanism shaping loyalty, especially among customers at the brink of service suspension. Utilizing purposive sampling, data were collected via online surveys from 490 Chinese consumers who had interacted with telecom service providers regarding service suspension within the past year. This sampling approach ensured the inclusion of participants with direct and relevant experiences, aligning with the study’s objective of investigating the interplay between psychological contracts and customer loyalty. The sample effectively reflects the customer dynamics in China's telecom industry, focusing on individuals who had visited broadcaster business halls for service-related concerns. Survey distribution was facilitated by broadcaster sales personnel who engaged directly with customers, providing online survey links via email, SMS, or QR codes at critical touchpoints, such as service suspension or follow-up communications. Structural Equation Modeling (SEM) was conducted by AMOS 28 to analyze the data, yielding robust insights into the relationships among perceived value, psychological contracts, and loyalty. The findings reveal several key insights: 1) Customer perceived value directly and positively influences both dimensions of customer loyalty, attitudinal and behavioral; 2) There is a positive relationship between customer perceived value and both transactional and relational psychological contracts; 3) Each dimension of the psychological contract significantly affects attitudinal and behavioral loyalty; and 4) The influence of perceived value on customer loyalty is partially mediated by the psychological contract, encompassing both transactional and relational aspects. These results underscore the critical role of perceived value and the psychological contracts in fostering customer loyalty within the telecommunications sector. They offer practical implications for service providers seeking to improve customer retention. For instance, China Broadnet could implement personalized retention strategies targeting customers nearing service suspension, such as tailored service bundles or loyalty rewards that address perceived value gaps. Additionally, establishing clear communication channels and consistently fulfilling customer service commitments can reinforce psychological contracts, thereby reducing churn and enhancing customer retention. These measures align with the study's findings and may help providers maintain a competitive edge in a highly dynamic market.

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