An Institutional Theory Perspective on Retailer Loyalty

Trust has been referred to as the single most powerful relationship marketing tool available to marketers with robust empirical support for the trust—loyalty relationship. However, are there contexts where consumers discount trustworthy providers in their loyalty decisions? Informed by institutional theory, the current study examines consumer evaluations of institutional context as a moderator for the trust—loyalty relationship. Structural equation modeling is used to test a sample of 775 auto parts retail shoppers. Results show that the received wisdom of the trust—loyalty mechanism in the relationship marketing theory is supported only when the institutional context is evaluated as ambivalent where trust/distrust evaluations co-exist. However, institutional context evaluations dominated by trust as well as distrust support retailer value as a mechanism for retailer loyalty. Implications for relationship marketing research and practice from the institutional theory lens conclude the paper.