Antecedents of Corporate Governance and Customer Satisfaction in the Banking Sector of Zimbabwe

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue XI, November 2020 | ISSN 2454–6186

 Antecedents of Corporate Governance and Customer Satisfaction in the Banking Sector of Zimbabwe

Dr Faitira Manuere¹, Viriri Piason², Whami Martha³, Taurai Manyadze^4
1Department of Entrepreneurship and Business Management, Chinhoyi University of Technology, Zimbabwe
²Department of International Marketing, Chinhoyi University of Technology, Zimbabwe
^3,4Department of Entrepreneurship and Business Management, Chinhoyi University of Technology, Zimbabwe

Abstract
Customer satisfaction remains one of the pillars of company performance in the banking sector of Zimbabwe. The aim of the study is to measure the relationship between customer satisfaction and corporate governance in the banking sector. There are thirteen commercial banks in Zimbabwe. These banks include Agriculture Development Bank of Zimbabwe, BancABC, First Capital Bank Limited, CBZ Bank Limited, Ecobank Zimbabwe Limited, Stanbic Bank Limited, Nedbank Zimbabwe Limited, Metbank, NMB Bank, Stanbic Bank, Steward Bank and ZB Bank. A review of extent literature shows that no study has been done to investigate the impact of corporate governance on customer satisfaction in the commercial banks of Zimbabwe. Therefore, this study makes use of two corporate governance variables. These are: CEO duality and outside directors. A structuredquestionnaire was used to collect primary data for this study. The systematic sampling technique enabled the research to generate a sample of 163 customers from the given commercial banks. Hierarchical regression tests were used to test the hypothesis in this study. The results showed that CEO duality is associated with poor customer satisfaction. However, there is no significant relationship between outside directors and customer satisfaction. The study recommends that commercial banks should provide both efficient and attractive services in order to lure more customers.
Key Words: Corporate governance, CEO duality, outside directors, banking sector, Zimbabwe

INTRODUCTION
The board has a significant role of ensuring that the decisions made by the CEO and the behaviours of the executive members of the board pursue the interest of the main stakeholders of the firm, who are the customers(Finkelstein and D’Aveni, 1994). Several research studies have been carried out to ascertain the relationship between corporate governance practices in the banking sector and customer satisfaction (Peng, 2004; Rechner and Dalton, 1991). Customer satisfaction remains an important organisational outcome today (BaysingerDumi, 2004; Kosnik and Turk, 1991; Zahra, Newbaum and Huse, 2000). The success of any business depends on its ability to create a satisfied customer(Drucker, 1974). Several studies have established that there is a positive relationship between corporate governance and customer satisfaction (Brandy and Cronin,2001). Customers who are satisfied with the products of a bank will always communicate positive information about the firm to friends, relations and new customers (Swanson, 2003;Mithias, Morgeson and Krishnan, 2006, Luo, 2007).According to Luo and Homeburg (2007), customer service information is easily available and this information enables potential customers to make informed decision about the banks’ management and organisational cultures. There is enough evidence to suggest that customer dissatisfaction affect customer satisfaction negatively. Research studies have shown that a highly satisfied customer is six times more likely to pre-purchase the bank’s products compared to a customer who is not satisfied (Jones and Sasser, 1995). Banks are therefore motivated to build a strong customer relationship to reduce high turnover rates in order to increase profitability (Reicheld and Sasser, 1990). Customer satisfaction is capable of improving repeat business, future revenues positive word of mouth, market share productivity, cross-buying and long-term growth. (Fornell et al, 2006).

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