A comprehensive analysis of student loyalty and its determinants in China’s higher education sector

The sustained growth in the Chinese economy has led to an increasing demand for higher education in China and an increase in the number of institutions offering higher qualifications (Lai & Huang, 2009). Therefore, it is important for higher education institutions (HEIs) to create student loyalty in order to survive in an increasing competitive environment. Student loyalty has been identified as an important strategic theme for HEIs (Helgensen, 2008). Retaining students can develop a solid and predictable financial basis and gain a strategic competitive advantage for the HEIs (Hennig-Thuran et al., 2001). Empirical research on student loyalty and its determinants in the context of HEIs is required if these institutions are going to survive the intense competition within China’s higher education sector (Carvalho & de Oliveira Mota, 2010; Helgesen, 2006). This research uses a hierarchical modelling framework to identify the primary dimensions of Service Quality, and to analyse the interrelationships among the five higher order constructs: Service Quality, Student Satisfaction, Student Involvement, University Image, and Student Loyalty in China’s higher education sector. The possible impacts of mediating variables are also tested. These are: Student Satisfaction on the relationship between Service Quality and Student Loyalty; Student Involvement on the relationship between Service Quality and Student Satisfaction and Service Quality and University Image. Furthermore, a multi-group analysis is conducted in order to investigate perceptual differences of the interrelationships among the higher order constructs between different genders and different years-of-study. 420 university students at Shanghai University and Shanghai Normal University in China participated in the survey. Four focus group interviews and a pilot test preceded the data collection process. Exploratory factor analysis, confirmatory analysis, and structural equation modelling were used as the data analysis techniques in this study. The results confirm four primary dimensions of higher education service quality: Interaction Quality, Physical Environment Quality, Outcome Quality, and Social Factors Quality. The four primary dimensions that drive the overall higher education service quality vary in importance. Outcome Quality is the most important indicator for measuring students’ overall perceptions of higher education service quality, followed by Social Factors Quality, Interaction Quality, and Physical Environment Quality. Moreover, University Image and Student Satisfaction are the two key determinants of Student Loyalty. University Image and Service Quality are two significant determinants of Student Satisfaction. Service Quality and Student Involvement are two important determinants of University Image. Service Quality is the significant determinant of Student Involvement. Student Satisfaction has a partial mediating effect on the relationship between Service Quality and Student Loyalty. Student Involvement has a partial mediating effect on the relationship between Service Quality and Student Satisfaction, Service Quality and University Image. Lastly, the results of multi-group analysis show that the only difference across the Gender groups and Years-of-study groups is observed for the path from Student Involvement to University Image.