Tnc Cultural Soft Power And Its Impact On Customer Loyalty Mechanism Studies

The Chinese culture has always been a culture that emphasizes on soft power. The soft power of culture has also been regularly practised by the emperors and governors in our history. Yet many of the Chinese corporations have experienced difficulties in getting the support and endorsement from the stakeholders of the local nation when they expand overseas. We have learnt that the success of setting up of an institution depends a lot on the situational and regulatory environment. Therefore, a critical factor that affects the success of a multinational corporation in getting the acceptance or endorsement of the local nation is the ability of this corporation in adapting to or even changing the environment it is in. When the corporation can develop its soft power through creating a strong and powerful culture as well as communicating this culture based on a thorough understanding of the needs of their stakeholders, it will legitimize itself with the consumers and the local market from the legal, regulatory and cognitive perspectives, while enhancing its adaptability to the regulatory and technical environments as well as increasing the loyalty of its customers.Through theoretical analyses, this paper establishes a model that illustrates how the soft power of culture can affect customer loyalty. It also verifies several assumptions based on the results of an empirical research on Chinese consumers of multinational corporations. The findings of the empirical research are:(1) Generally speaking, the soft power of culture has a strong positive relationship with customer loyalty. Because there are 3 dimensions in interpreting the content of soft power of culture, this study looks into the effect of each of these 3 dimensions has on customer loyalty. Results show that all the 3 dimensions-the ability in building corporate culture, the ability in communicating the corporate culture and the understanding of stakeholders'needs-have a strong positive relationship with customer loyalty.(2) Generally speaking, organizational legitimacy has a strong positive relationship with customer loyalty. Because there are 3 dimensions in interpreting organizational legitimacy, this study looks into the effect of each of these 3 dimensions has on customer loyalty. Results show that all the 3 dimensions-the pragmatic legitimacy, moral legitimacy and cognitive legitimacy-have a strong positive relationship with customer loyalty.(3) The quality of customer relationship of a corporation has a strong positive relationship with its customer loyalty. The quality of customer relationship has a mediating effect on the relationship between the ability of building corporate culture, the ability in communicating the corporate culture, the understanding of stakeholders' needs and customer loyalty respectively.(4) Organizational legitimacy has a mediating effect on the relationship between the ability of building corporate culture, the ability in communicating the corporate culture, the understanding of stakeholders'needs and customer loyalty respectively.(5) The local experience of a foreign institution has a positive moderating effect on the relationship between the ability of building corporate culture, the ability in communicating the corporate culture and customer loyalty respectively, but not so on the relationship between the understanding of stakeholders'needs and customer loyalty.(6) Customer's nationalism has a negative moderating effect on the relationship between the ability in communicating the corporate culture, the understanding of stakeholders'needs and customer loyalty respectively, but not so on the relationship between the ability of building corporate culture and customer loyalty.The new findings and academic contribution of this paper include:(1) A development in the theory of the soft power of culture. First of all, it provides an in-depth look at the definition of soft power in corporate culture and its dimensions. The soft power in corporate culture is the ability of a corporation in attracting its stakeholders and getting their co-operation through managing its own culture and creating a cultural influence on these stakeholders. There are 2 levels of meaning in this definition:firstly, the soft power of culture is not equivalent to the power of culture. Secondly, from an external perspective, the soft power of culture is interpreted as a source of authority or power (or influence); while from an internal perspective, it is regarded as the corporation's capabilities. The soft power of a corporation's culture can be observed externally in 3 ways:the impact (or attractiveness) of the culture, the pull (or retention) factor of the culture, and the alignment capability of the culture. On the other hand, the development of such soft power depends on 3 dimensions:the ability of building corporate culture, the ability in communicating the corporate culture, and the understanding of stakeholders'needs. Secondly, this paper provides a hierarchy of the soft power of culture. There are 3 levels of culture of which soft power can be developed:materialistic culture, regulatory culture and spiritual culture. Thirdly, this paper describes the process and model of the development of the soft power of culture. It starts from the development of such power through creating the ability of building a strong corporate culture and understanding of stakeholders'needs, while cultivating this culture at the materialistic, regulatory and spiritual levels such that the corporation has strong values and ethics that are endorsed by their customers, through which it will attract, retain and align with these customers. (2) The establishment of a measuring scale for the soft power of corporate culture. Based on the 3 dimensions of the soft power of culture and using Root Cause Analysis, we conducted in-depth interviews with senior corporate executives and academics to understand how such soft power can be developed. Then through pilot tests and semi-open questionnaires, we have developed a measuring scale for the soft power of culture. This measuring scale can be further refined and enhanced by the future studies of this area. (3) Introduced and developed the theory of organizational legitimacy in this area of study. This paper has used the theory of organizational legitimacy in looking at managing multinational corporations, analyzed the impact of organizational legitimacy on customer loyalty at the international level, as well as studied how the soft power of culture can affect customer loyalty through acquiring organizational legitimacy. Using the 3 dimensions of how organizational legitimacy can be acquired, and by conducting in-depth interviews, pilot tests and empirical studies, we have also developed a measuring scale for organizational legitimacy.