Does Service Innovation, Reputation Risk, and Word of Mouth Impact Customer Behavior in Choosing Islamic Banking? An Empirical Evidence in Indonesia
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Abstract
Indonesia is a country with the largest Muslim population in the world. However, since Islamic banks were established in Indonesia in about 20 years, the participation of Muslims in using Islamic banks is relatively low. The purpose of this study is to analyze and find out the impact of service innovation, reputation risk, and word of mouth on customer behavior in choosing Islamic banks as a place for financing, investing, and so on. The research method uses quantitative. with an experimental and survey approach. Probability sampling of 250 questionnaires distributed to customers throughout Indonesia. The research findings show that service innovation and reputation risk have good external validity to the culture of Indonesian society. The most interesting finding is that the word-of-mouth variable greatly increases customer intention and participation in choosing an Islamic bank. Therefore, this research recommends targeting community leaders or opinion leaders to explain Islamic banking to the whole community.
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How to Cite
Widayanti, I. (2023). Does Service Innovation, Reputation Risk, and Word of Mouth Impact Customer Behavior in Choosing Islamic Banking? An Empirical Evidence in Indonesia. Invest Journal of Sharia & Economic Law, 3(2), 189-202. https://doi.org/10.21154/invest.v3i2.7092
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References
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Unerman, Jeffrey. ‘Strategic Reputation Risk Management and Corporate Social Responsibility Reporting’. Accounting, Auditing and Accountability Journal 21, no. 3 (2008): 362–64. https://doi.org/10.1108/09513570810863941.
Ur Rehman, Aziz, Ejaz Aslam, and Anam Iqbal. ‘Intellectual Capital Efficiency and Bank Performance: Evidence from Islamic Banks’. Borsa Istanbul Review, 2021. https://doi.org/10.1016/j.bir.2021.02.004.
Uyanık, Gülden Kaya, and Neşe Güler. ‘A Study on Multiple Linear Regression Analysis’. Procedia - Social and Behavioral Sciences 106 (2013): 234–40. https://doi.org/10.1016/j.sbspro.2013.12.027.
Widayanti, Ipuk. ‘Laporan Akuntabilitas Dan Transparansi Kinerja Instansi Pemerintah ( Studi Kasus Kota Temanggung Jawa Tengah’ 4, no. 1 (2023): 1–13.
Witell, Lars, Hannah Snyder, Anders Gustafsson, Paul Fombelle, and Per Kristensson. ‘Defining Service Innovation: A Review and Synthesis’. Journal of Business Research 69, no. 8 (2016): 2863–72. https://doi.org/10.1016/j.jbusres.2015.12.055.
Baidhowi, Baidhowi. ‘Sharia Banking Opportunities and Challenges in the Digital Era’ 192, no. Icils (2018): 157–61. https://doi.org/10.2991/icils-18.2018.30.
Bodibe, Seipati, Norman Chiliya, and Christopher Tarisayi Chikandiwa. ‘The Factors Affecting Customers’ Decisions to Adopt Islamic Banking’. Banks and Bank Systems 11, no. 4 (2016): 144–51. https://doi.org/10.21511/bbs.11(4-1).2016.05.
Buttle, Francis A. ‘Word of Mouth: Understanding and Managing Referral Marketing’. Journal of Strategic Marketing 6, no. 3 (1998): 241–54. https://doi.org/10.1080/096525498346658.
Choiriyah, Choiriyah, Saprida Saprida, and Emilia Sari. ‘Development of Sharia Banking System In Indonesia’. Mizan: Journal of Islamic Law 5, no. 1 (2021): 17. https://doi.org/10.32507/mizan.v5i1.923.
Dörner, Nadin, Oliver Gassmann, and Heiko Gebauer. ‘Service Innovation: Why Is It so Difficult to Accomplish?’ Journal of Business Strategy 32, no. 3 (2011): 37–46. https://doi.org/10.1108/02756661111121983.
Durst, Susanne, Anne Laure Mention, and Petro Poutanen. ‘Service Innovation and Its Impact: What Do We Know About?’ Investigaciones Europeas de Direccion y Economia de La Empresa 21, no. 2 (2015): 65–72. https://doi.org/10.1016/j.iedee.2014.07.003.
Godes, David, and Dina Mayzlin. ‘Using Online Conversations to Study Word-of-Mouth Communication’. Marketing Science 23, no. 4 (2004). https://doi.org/10.1287/mksc.1040.0071.
Hasbi, M Zidny Nafi. ‘Potret Pelaksanaan Zakat Di Indonesia Sebagai Stimulus Aktualisasi Triple Bottom Line Pada Perusahaan’ 4, no. 1 (2023): 1–13.
Hasbi, M Zidny Nafi, Makhrus Munajat, and Abdul Qoyum. ‘Amwaluna : Jurnal Ekonomi Dan Keuangan Syariah A Conceptual Framework of The Islamic Human Development Index ( I-HDI ) and Its Relationship with Maqāṣid Al - Sharī ’ Ah’, no. 2019 (2023).
Juhandi, Nendi, Bambang Rahardjo, Hestin Agus Tantriningsih, and Mochammad Fahlevi. ‘The GROWTH OF SHARIA BANKING IN ASIA’. Journal of Research in Business, Economics and Management 12, no. 2 (2019): 2341–47.
Lubis, Adelina, Ritha Dalimunthe, Yeni Absah, and Beby Karina Fawzeea. ‘The Influence of Customer Relationship Management (CRM) Indicators on Customer Loyalty of Sharia Based Banking System’. GATR Journal of Management and Marketing Review 5, no. 1 (2020): 84–92. https://doi.org/10.35609/jmmr.2020.5.1(8).
Mulia, Dipa, Hardius Usman, and Novia Budi Parwanto. ‘The Role of Customer Intimacy in Increasing Islamic Bank Customer Loyalty in Using E-Banking and m-Banking’. Journal of Islamic Marketing 12, no. 6 (2020): 1097–1123. https://doi.org/10.1108/JIMA-09-2019-0190.
Nafi’ Hasbi, M. Zidny. ‘The Need for Revitalizing Zakah Regulation Toward Productive Zakah’. Al’Adalah 25, no. 2 (2022): 125–36. https://doi.org/10.35719/aladalah.v25i2.302.
Nafi’Hasbi, M Z, I Widayanti, and ... ‘The Excellence of The Ummah Through The Integration of Islamic Philanthropy and Islamic Social Finance in Realizing Economic Independence’. The 4th International …, 2022.
Noviarita, H, Y Velina, E Ekawati, Hanif, and I. Susanto. ‘Customer Loyalty in Sharia Bank Savings Products’. Utopía y Praxis Latinoamericana 26 (2021): 109–16.
Purnama, Suryari, Andyani Sukmasari, and Rahul Bhandari. ‘The Role of Religiosity as a Mediating Variable in the Relationship between Online Transactions and Customer Satisfaction and Loyalty in Islamic Banking’. Aptisi Transactions on Management (ATM) 5, no. 2 (2021): 143–51. https://doi.org/10.33050/atm.v5i2.1532.
Rahmayati, Rahmayati. ‘Competition Strategy in the Islamic Banking Industry: An Empirical Review’. International Journal of Business, Economics, and Social Development 2, no. 2 (2021): 65–71. https://doi.org/10.46336/ijbesd.v2i2.133.
Ricadonna, Nadia Adriane, Muhammad Saifullah, and Ari Kristin Prasetyoningrum. ‘The Effect of Trust and Brand Image on Customer Retention with Customer Loyalty as Intervening Variables to Customers of Sharia Commercial Banks’. Jurnal Keuangan Dan Perbankan 25, no. 2 (2021). https://doi.org/10.26905/jkdp.v25i2.5145.
Sodikin, Mohamad. ‘Competitive Advantages of Sharia Banks: Role of Ihsan Behavior and Digital Marketing in New Normal’. Journal of Digital Marketing and Halal Industry 2, no. 1 (2020): 1. https://doi.org/10.21580/jdmhi.2020.2.1.5769.
Tajeddini, Kayhan, and Emma Martin. ‘The Importance of Human-Related Factors on Service Innovation and Performance’. International Journal of Hospitality Management 85, no. April 2019 (2020): 102431. https://doi.org/10.1016/j.ijhm.2019.102431.
Unerman, Jeffrey. ‘Strategic Reputation Risk Management and Corporate Social Responsibility Reporting’. Accounting, Auditing and Accountability Journal 21, no. 3 (2008): 362–64. https://doi.org/10.1108/09513570810863941.
Ur Rehman, Aziz, Ejaz Aslam, and Anam Iqbal. ‘Intellectual Capital Efficiency and Bank Performance: Evidence from Islamic Banks’. Borsa Istanbul Review, 2021. https://doi.org/10.1016/j.bir.2021.02.004.
Uyanık, Gülden Kaya, and Neşe Güler. ‘A Study on Multiple Linear Regression Analysis’. Procedia - Social and Behavioral Sciences 106 (2013): 234–40. https://doi.org/10.1016/j.sbspro.2013.12.027.
Widayanti, Ipuk. ‘Laporan Akuntabilitas Dan Transparansi Kinerja Instansi Pemerintah ( Studi Kasus Kota Temanggung Jawa Tengah’ 4, no. 1 (2023): 1–13.
Witell, Lars, Hannah Snyder, Anders Gustafsson, Paul Fombelle, and Per Kristensson. ‘Defining Service Innovation: A Review and Synthesis’. Journal of Business Research 69, no. 8 (2016): 2863–72. https://doi.org/10.1016/j.jbusres.2015.12.055.