Impact of Higher Order Values on Consumer Switching Behavior from Insurance to Takaful

Abstract

This study investigates consumer switching behavior in the context of takaful sector of Pakistan. The purpose of this study is to determine the impact of higher order values on consumer switching behavior from insurance to takaful. The purpose of this study is extended to establish a mediation of positive word of mouth and variety seeking between higher order values and consumer switching behavior. Meanwhile, the moderating effect of similarity of services and switching cost is measured within the relationship of mediating variables (i.e., positive word of mouth and variety seeking) and dependent variable (i.e., switching behavior from insurance to takaful). This research supports the positivist paradigm and objectivism perspective of philosophy. Thus, the present study follows a quantitative research design by adopting survey research method. The survey research method is appropriate for deductive research approach. The sample size of this study is 1,800 individual clients of insurance companies. The data is collected from six major cities of Pakistan including Karachi, Lahore, Faisalabad, Peshawar, Rawalpindi and Islamabad. This is a cross sectional study as data is collected at one period of time by using close ended questionnaire. The present study performs confirmatory factor analysis, common method bias test, and multidimensional scaling analysis to measure the adequacy of data set. Further, the moderated mediation analysis was performed to by using model 14 of Andrew Hayes process macro. The finding reveals that motor insurance is the largest market segment of individual clients participated in this study. The result confirms that all higher order values except self-transcendence value reflects significant effect on consumer switching behavior. However, the findings of moderated mediation analysis reveals that the factor of switching cost and similarity of services produces greater effect on consumer switching behavior. Hence, these factors prevent consumers from taking switching initiatives. This research contributes novel insights into the literature of human values due to the religious and innovative features of takaful. The conservation and self-transcendence values motivate consumers to prefer takaful products on religious grounds; whereas the openness to change and self-enhancement values motivate consumers to prefer takaful products due to innovative concept of takaful. However, this study highlights that the takaful operators should addresses consumers concerns of switching cost and perception of similarity of services. Hence, the findings of this study are equally important for students of business school, takaful practitioners and research scholars. The future studies should replicate this model on Banking sector, Hilal food industry and on Modaraba sector. Further, the future studies should incorporate attributes of theory of consumption value to produce some creative ideas.