A thesis submitted in fulfilment of the requirement for the degree of Doctor of Philosophy in

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INTERNATIONAL STUDENTS SATISFACTION AND LOYALTY: A COMPARATIVE STUDY OF

MALAYSIAN AND AUSTRALIAN HIGHER LEARNING INSTITUTIONS

BY

SEYAMA SULTANA

A thesis submitted in fulfilment of the requirement for the degree of Doctor of Philosophy in

Business Administration

Kulliyyah of Economics and Management Sciences International Islamic University Malaysia

JANUARY 2016

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ii

ABSTRACT

In every type of industry including product and service, customer satisfaction and their loyalty are the most crucial and key important parts for the success of the firms. In each and every aspect service industry is more critical and difficult than product industry. It is complex to handle and manage everything in order to make the service customers satisfied and loyal.

Education industry is not an exception as this industry is a provider of services. Here the customers or the consumers are students who have versatile demands. Measuring the satisfaction level and loyalty is more significant in higher learning institutions. The countries which are determined to be established as a extraordinary international educational hubs; have no choice but to find out the most significant factors that affect satisfaction and loyalty of the international students. Therefore, it is indispensable for higher learning educational institutions to measure the level of student satisfaction and loyalty and as a result they have to find out the most influential factors that affect these two dimensions. Only by figuring out these factors the higher learning institutions can decide to invest their time, money and effort on the proper track.

Consequently, this type of research which is conducted to find the factors affecting international student satisfaction and their loyalty has become the part and parcel for a country like Malaysia, which is very closed to become a developed nation and which is able to achieve a position of famous international educational hub. Further, in its vision 2020, Malaysia wants to become one of the acme educational hubs. The country can gain more benefits if the situation can be compared with that of any developed nation like Australia which has become the third best country of the world as an international education nucleus. After the comprehensive review of literatures, it is found that this type of research is already conducted hugely all over the world especially in developed countries. But in Malaysia, this type of study is still needed as the present literatures are not sufficient to enclose all the facts those are required to be found.

Additionally, no literature could provide any comparative study between Malaysia and any developed country. As a consequence, through this study it can be expected to get valuable information for the policy makers of the respected field for the ultimate betterment of international student loyalty as a whole the achievement of the country as a renowned international education arena. Quantitative analysis is used in this study. Stratified random sampling technique is applied to select the respondents. More than 300 respondents were involved from different public higher learning institutions in these two countries. Exploratory Factor Analysis (EFA) is used in order to fit the items under each construct and Structural Equation Modelling (SEM) is applied to measure the relationships between and among the constructs. Here four independent constructs are measured in order to find how significantly each one affects international student satisfaction and loyalty. These factors are academic issues, economic considerations, image plus prestige and infrastructure. It is found in the research that academic issues and economic considerations are more important to the international students who study in Malaysia rather than the international students who study in Australia. Image plus prestige is very important for the international student satisfaction in Australia. There remain several differences in the items under each construct also, even though the moderating effect of the countries is not significant in the case of factors affecting international student satisfaction towards student loyalty. Further research is suggested in order to find out the in-depth information about the internal students regarding their satisfaction and loyalty factors, facts and phenomena by using mixed method or involving qualitative method of study beside quantitative method. On the contrary, PhD and Masters students can be studied separately because of their vast differences in nature, objectives and activities.

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iii

صخلم ثحبلا

ABSTRACT IN ARABIC

برتعي اضر نئبازلا مهئلاوو نم مهأ لماوع حاجنلا

،تاكرشلل ءاوس

تناك تاكرشلا في

لامج تاجتنلما وأ

في لامج

تامدلخا . نكلو قيقتح هذه لماوعلا برتعي رثكأ ةيهمأ ةبوعصو في عاطق تامدلخا هنم

في عاطق تاجتنلما . كانهف ضعب

ديقعتلا في لماعتلا ةرادإو لك ئيش نم لجأ بسك اضر نئبازلا مهئلاوو في عاطق تامدلخا . قبطنيو اذه ىلع ةعانص

ميلعتلا انهوك مدقت تامدلخا . نئبازلاو في عاطق ميلعتلا مه بلاط مهيدل تابلطتم ةددعتم

ةعونتمو . برتعي سايق اضر

بلاطلا مهئلاوو رثكأ ةيهمأ في تاسسؤم ميلعتلا

لياعلا . سيلو ىدل نادلبلا تيلا فدته نبأ حبصت زكارم ةيلود ميلعتلل

نم رايخ ىوس نأ فشتكت لماوعلا رثكلاا ةيهمأ في يرثأتلا ىلع اضر ءلاوو بلاطلا ينيلودلا . كلذل امف نم ليدب نع

سايق اضر بلاطلا مهئلاوو فاشكتساو لماوعلا

رثكلأا ايرثتأ في نيذه نيرصنعلا . طقف نم للاخ زيكترلا ىلع يرصنع

اضرلا ءلاولاو بلاطلل نكيم تاسسؤلم ميلعتلا

لياعلا نبأ ددتح اهرامثتسا تقولل

لالماو في هاتجلاا حيحصلا .

،لياتلباو

نإف لثم اذه

،ثحبلا يذلا يرجأ ةفرعلم لماوعلا ةرثؤلما في اضر ءلاوو بلاطلا

،ينيلودلا دق

امهم حبصأ ادج دلبل لثم

يازيلام تيلا تحبصأ ةبيرق

ادج نم نأ ادلب حبصت اروطتم نكيمو نأ ازكرم حبصت ايلود ميلعتلل . ةصاخو نبأ يازيلام حمطت

نلأ حبصت ازكرم ميلعتلل لولبح 2020 . زيمتتو يازيلام يرثكلبا نم ياازلما ةنراقم لودلبا ةروطتلما لثم ايلاترسا تيلا

تحبصأ لضفأ

ثلثا ةلود في زكارلما ةيلودلا ميلعتلل . دعب ةءارق ةضيفتسم تاساردلل

ةقباسلا ينبت نأ لثم اذه ثحبلا

دق يرجأ في ديدعلا نم لودلا ةصاخو نادلبلا ةمدقتلما . نكلو ةبسنلبا

،يازيلالم كانهف ةجاح ةسام لثلم اذه ثحبلا نلأ

تاساردلا ةيلالحا

تسيل ةيفاك يطعتل لك لماوعلا ةرثؤلما . ةفاضإ لىإ هنأ لا دجوي في تاساردلا ةيلالحا

يأ ةنراقم يازيلالم

عم دلب مدقتم رخآ . كلذل لميأ ثحابلا نأ مدقت هذه ةساردلا تامولعم ةميق

عانصل رارقلا في تلاالمجا ةقلعتلما

عوضوبم هذه ةساردلا نم لجأ ينستح ءلاو بلاطلا ينيلودلا لكك ينستحو عقوم يازيلام زكرمك ليود ميلعتلل . مدختست

هذه ةساردلا ليلحتلا يمكلا قبطتو ةينقت ةنيعلا ةيقبطلا ةيئاوشعلا في

رايتخا ينفدهتسلما نم

ةساردلا . تمو رايتخا رثكأ

نم 300 درف نم تاسسؤم ميلعتلا

لياعلا ةفلتخلما نم نيذه نيدلبلا . تم مادختسا ليلتح

لماعلا فياشكتسلاا نم

لجأ ديدتح رصانعلا تتح لك عوضوم . ةفاضلإبا لىإ كلذ تم مادختسا جذونم ةلداعلما ةيئانبلا نم لجأ ديدتح تاقلاعلا

ينب رصانعلا عيضاولماو . تم سايق ةعبرأ رصانع ةلقتسم نم لجأ ديدتح ىدم ةيهمأ لك اهنم في يرثأتلا ىلع اضر ءلاوو

بلاطلا ينيلودلا . هذهو لماوعلا يه : يحاونلا ةييمداكلأا

تارابتعلااو ةيداصتقلاا

ةروصو ةسسؤلما ةينبلاو ةيتحتلا .

تلصوتو ةساردلا

لىإ نأ يحاونلا ةييمداكلأا تارابتعلااو

ةيداصتقلاا دق

تزاح ةيهمأ بركأ ىدل بلاطلا ينيلودلا نيذلا

اوراتخا يازيلام ةساردلل امنيب لىوأ بلاطلا ينيلودلا نيذلا اوراتخا ايلاترسا ةروصلل ةعمسلاو ةيهمأ بركأ . يقب نأ يرشن لىإ

نأ كانه ضعب تافلاتخلاا ضعبل

تاددلمحا لكل

رصنع نم رصانعلا ةروكذلما ىلع مغرلا نم نأ رثلأا طيسولا ينب

ينتاه ينتلودلا سيل امهم ابم قلعتي لماوعب اضرلا بلاطلل ينيلودلا تيلا رثؤت ىلع مهئلاو . حترقت ةساردلا اثبح اقمعم

ةفرعلم اضر ءلاوو بلاطلا

،ينيللمحا قئاقلحاو رهاوظلاو مادختسبا

بيلاسلاا ةيمكلا

ةيفيكلاو . في

،لباقلما نكيم ءارجإ

ةسارد ةصاخ بلاطب ةاروتكدلا يرتسجالماو لكشب

لصفنم ارظن فلاتخلا مهتعيبط

مهفادهأو متهاطاشنو

.

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APPROVAL PAGE

The thesis of Seyama Sultana has been approved by the following:

______________________

A. K. M. Ahasanul Haque Supervisor

________________________

Mohd. Ismail Sayyed Ahmad Co-Supervisor

________________________

Khaliq Ahmad Internal Examiner

________________________

K Kuperan Vishwanathan External Examiner

_______________________

Murali Raman External Examiner

_________________________

Ssekamaya Siraje Abdallah Chairman

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DECLARATION

I hereby declare that this dissertation is the result of my own research, excluding the literatures reviewed. I further declare that it has not been submitted as a whole for any other degrees at IIUM or other institutions currently or previously.

Seyama Sultana

Signature ……… Date ………..

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COPYRIGHT

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

DECLARATION OF COPYRIGHT AND AFFIRMATION OF FAIR USE OF UNPUBLISHED RESEARCH

INTERNATIONAL STUDENTS SATISFACTION AND LOYALTY: A COMPARATIVE STUDY OF MALAYSIAN AND

AUSTRALIAN HIGHER LEARNING INSTITUTIONS

I declare that the copyright holder of this dissertation are jointly owned by the student and IIUM.

No part of this unpublished research may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the copyright holder except as provided below

1. Any material contained in or derived from this unpublished research may be used by others in their writing with due acknowledgement.

2. IIUM or its library will have the right to make and transmit copies (print or electronic) for institutional and academic purposes.

3. The IIUM library will have the right to make, store in a retrieved system and supply copies of this unpublished research if requested by other universities and research libraries.

By signing this form, I acknowledged that I have read and understand the IIUM Intellectual Property Right and Commercialization policy.

Affirmed by Seyama Sultana

……..……….. ………..

Signature Date

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ACKNOWLEDGEMENTS

Alhamdulillah. All credit goes to Allah, the most compassionate and merciful. At first and foremost I would like to thank Almighty Allah for giving me the capability and patience to complete the dissertation.

It is a great pleasure to acknowledge those people who have provided great support and inspiration during this journey of PhD. Their guidance and suggestions gave immense benefits to complete this thesis.

I would like to give thanks from the core of my heart to my supervisors Prof.

Dr. A. K. M. Ahasanul Haque and Prof. Dr. Ismail S. Ahmad for their enormous support and encouragement. Mentorship of Prof Ahasanul was so significant to conduct the research successfully. His knowledge and experience of research are so fastidious which have enriched my dissertation. He has helped in every possible way to complete this journey. Therefore I want to give very special thanks to him. Prof. Dr.

Ismail Ahmad enhanced the quality of the research and thus I am very much thankful to him.

I would like to mention my parents here for their amazing love and care. I am very much grateful to my husband Md. Abdul Momen for his incredible support from the beginning to the end of this journey. I would love to mention my little baby girl Arissa Momen who has come in my life within this journey and she has not complicated this journey rather her smile has given me a great inspiration to complete this thesis.

I would like to give very special thanks to Prof. Dr. Rafikul Islam, Assoc. Prof.

Dr. Dzuljastri Abdul Razak, and all of my lecturers and examiners for their valuable input in my work. I would like to thank all of my fellow friends in PhD, staffs of post graduate unit and research management centre for their massive contribution in my thesis.

I am very much thankful to IIUM and as a whole to Malaysia for giving me such opportunity in order to study in an international Islamic institute and for the great hospitality of the people of Malaysia.

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CHAPTER TWO: LITERATURE REVIEW ... 24

2.2 Education as a Service Industry ... 25

2.2.1 Characteristics of Service in Education Industry ... 26

2.2.2 Students are the Consumers/Customers ... 27

2.3 Theory of Customer/Consumer Satisfaction ... 28

2.4Proposed Definitions of Student Satisfaction ... 37

2.5Customer/Consumer Loyalty ... 38

2.6Student Loyalty ... 45

2.7Relationships between Customer Satisfaction and Customer loyalty ... 46

2.8Local and International Student Satisfaction ... 48

2.9 Some Relevant Theories ... 59

2.9.1 Expectancy Disconfirmation Theory (EDT) ... 59

2.9.2 Kano Model of Consumer Satisfaction ... 60

2.9.3 Cognitive Dissonance Theory ... 62

2.9.4 Theory of Consumer Behaviour ... 63

2.10 Popular Higher Educational Hubs Worldwide ... 65

2.11 Literature Gap ... 70

2.12 Hypothesis Development ... 70

2.12.1 Academic Issues ... 71

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2.12.2 Economic Considerations ... 74

2.12.3 Image and Prestige ... 76

2.12.4 Infrastructure ... 78

2.12.5 Relationship between Student Satisfaction and Student Loyalty ... 82

2.12.6 Effect of Country of Origin (Malaysia/Australia) ... 83

2.12.7 Summary of Research Hypothesis ... 83

2.13 Conceptual Model (With Hypothesis) ... 85

2.14 Summary ... 85

CHAPTER THREE: METHODOLOGY ... 87

3.1Introduction ... 87

3.2Research Paradigm ... 87

3.3Research Approach ... 89

3.4Research Design Strategy ... 90

3.5Data Collection and Design ... 92

3.5.1 Justification of Survey Methodology ... 93

3.6 Sampling ... 94

3.6.1 Determining the Adequacy of the Sample Size ... 95

3.7 Instrument Development ... 96

3.8Assessing Reliability and Validity of the Questionnaire ... 97

3.9Selecting the Format of Responses/Data Collection and Preparation ... 99

3.10 Data Analysis and Interpretation ... 100

3.10.1 Data Analysis ... 100

3.10.2 Statistical Justification of Structural Equation Modelling (SEM) 104 3.10.3 Philosophical Justification of Structural Equation Modelling ... 105

3.10.4 Theoretical Justification of Structural Equation Modelling ... 106

3.11 Summary ... 107

CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION OF RESULTS ... 108

4.2 Data Screening ... 109

4.2.1 Missing Data ... 109

4.2.2 Illogical, Inconsistent or Illegal Data ... 111

4.3 Data Transformation ... 112

4.4Normality of the Data ... 112

4.5Sample Characteristics ... 112

4.6Reliability of the Instrument ... 117

4.6.1 Reliability for Each Construct ... 118

4.7Factor Analysis ... 119

4.7.1 Application of factor analysis ... 119

4.7.1.1 Sample adequacy ... 119

4.7.1.2Communalities: ... 120

4.7.2 Factor Extraction ... 121

4.7.3 Rotated Factor Matrix ... 122

4.8Application of SEM ... 127

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4.8.1 Confirmatory Factor Analysis or Analysis of Measurement Model 127

4.8.1.1 Model’s Goodness- of- Fit ... 127

4.8.1.2 Absolute Fit Indices ... 128

4.8.1.3 Incremental Fit Indices ... 128

4.8.2 Stages in Structural Equation Modelling (SEM) ... 128

4.8.2.1 Measurement Model ... 129

4.8.2.2 Measurement Model: Student Loyalty Behaviour ... 129

4.8.2.3 Measurement Model: Student Satisfaction ... 132

4.8.2.4 Measurement Model: Academic Issues ... 134

4.8.2.5 Measurement Model: Economic Considerations ... 136

4.8.2.6 Measurement Model: Image and Prestige ... 139

4.8.2.7 Measurement Model: Infrastructure ... 142

4.8.3 Overall Measurement Model (CFA) ... 146

4.8.4 Baseline Model ... 153

4.8.4.1Revised Base Line Model ... 154

4.8.5 Hypothesis Testing ... 156

4.8.5.1H1: Academic Issues have Positive Influence on Student Satisfaction ... 157

4.8.5.2H2: Economic Considerations have Positive Influence on Student Satisfaction ... 159

4.8.5.3H3: University Image and Prestige have Positive Influence on Student Satisfaction ... 160

4.5.8.4H4: University Infrastructure has Positive Influence on Student Satisfaction ... 162

4.8.5.5 H5: Student Satisfaction has Positive Influence on Student Loyalty Behaviour ... 163

4.8.5.6H6: Academic Issues have Direct Positive Influence on Student Loyalty Behaviour ... 165

4.8.5.7H8: Economic Consideration has Direct Positive Influence on Student Loyalty Behaviour ... 166

4.8.5.8H10: Image and Prestige have Direct Positive Influence on Student Loyalty Behaviour ... 167

4.8.5.9H12: Infrastructure has Direct Positive Influence on Student Loyalty Behaviour ... 168

4.8.5.10 Testing Mediating Effect ... 169

4.8.5.11 H7: Student Satisfaction has Mediating Effect between Academic Issues and Student Loyalty Behaviour ... 170

4.8.5.12 H9: Student Satisfaction has Mediating Effect between Economic Considerations and Student Loyalty Behaviour ... 171

4.8.5.13 H11: Student Satisfaction has Mediating Effect between Image plus Prestige and Student Loyalty Behaviour ... 171

4.8.5.14 H13: Student Satisfaction has Mediating Effect between Infrastructure and Student Loyalty Behaviour ... 172

4.8.5.15 Confirming Mediation Effect with SOBEL Test ... 173

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4.8.5.16 H14: Country of Origin (Malaysia/Australia) has Moderating Effect on International Student

Satisfaction towards Loyalty ... 175

4.9Nested Models ... 180

4.9.1 Nested Model One ... 180

4.9.2 Nested Model Two ... 183

4.10 Validity of the Constructs ... 185

4.10.1 Convergent Validity ... 185

4.10.2 Discriminant Validity ... 187

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION ... 188

5.1Introduction ... 188

5.2Summary of the Study ... 188

5.3Discussion of the Findings ... 189

5.3.1 Relationship between Academic Issues and International Student Satisfaction ... 190

5.3.2 Relationship between Economic Considerations and International Student Satisfaction ... 191

5.3.3 Relationship between Image plus Prestige and International Student Satisfaction ... 192

5.3.4 Relationship between University Infrastructure and International Student Satisfaction ... 193

5.3.5 Relationship between International Student Satisfaction and International Student Loyalty Behaviour ... 195

5.3.6 Direct Relationship between Academic Issues and International Student Loyalty Behaviour ... 196

5.3.7 Mediating Effect of International Student Satisfaction between Academic Issues and International Student Loyalty Behaviour... 196

5.3.8 Direct Relationship between Economic Considerations and International Student Loyalty Behaviour ... 197

5.3.9 Mediating Effect of International Student Satisfaction between Economic Considerations and International Student Loyalty Behaviour ... 197

5.3.10 Direct Relationship between University Image plus Prestige and International Student Loyalty Behaviour ... 198

5.3.11 Mediating Effect of International Student Satisfaction between University Image plus Prestige and International Student Loyalty Behaviour ... 198

5.3.12 Direct Relationship between University Infrastructure and International Student Loyalty Behaviour ... 199

5.3.13 Mediating Effect of International Student Satisfaction between University Infrastructure and International Student Loyalty Behaviour ... 200

5.3.14 Moderating Effect of Country of Origin (Malaysia/Australia) on International Student Satisfaction towards International Student Loyalty Behaviour ... 200

5.4Conclusion ... 201

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5.5 Implications and Recommendations for Future Research ... 202

5.5.1 Theoretical Importance ... 203

5.5.2 Practical Importance ... 204

5.6Limitations of the Study ... 205

REFERENCES ... 206

APPENDIX 1: QUESTIONNAIRE ... 227

APPENDIX 2: DESCRIPTIVE STATISTICS OF MALAYSIA AND AUSTRALIA INDIVIDUALLY ... 234

APPENDIX 3: SHAPIRO-WILK TEST FOR NORMALITY ... 238

APPENDIX 4: COMPONENT MATRIX ... 240

APPENDIX 5: COMPONENT TRANSFORMATION MATRIX ... 241

APPENDIX 6: ROTATED COMPONENT MATRIX (FIRST RUN) ... 242

APPENDIX 7: LIST OF UNIVERSITIES IN MALAYSIA AND AUSTRALIA ... 243

APPENDIX 8: NUMBER OF INTERNATIONAL STUDENTS IN MALAYSIA ... 249

APPENDIX 9: SOBEL TEST RESULT ... 250

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LIST OF TABLES

Table 2.1 Customer Satisfaction vs. Customer Loyalty 47

Table 3.1 Assessment of validity and reliability of the questionnaire 98 Table 3.2 Index Category and the Level of Acceptance for Every Index 103

Table 4.1 Sample Characteristics (Gender) 114

Table 4.2 Sample Characteristics (Age) 114

Table 4.3 Sample Characteristics (Marital Status) 115

Table 4.4 Sample Characteristics (Country of Origin) 115

Table 4.5 Sample Characteristics (Occupation) 116

Table 4.6 Sample Characteristics (Education Expenditure) 117 Table 4.7 Overall Descriptive Statistics of the Respondents 117

Table 4.8 Overall Reliability 118

Table 4.9 Reliability for Each Construct 118

Table 4.10 KMO and Bartlett’s Test 119

Table 4.11 KMO and Bartlett’s Test (Malaysia) 120

Table 4.12 KMO and Bartlett’s Test (Australia) 120

Table 4.13 Extracted Communalities 121

Table 4.14 Rotated Factor Matrix 122

Table 4.15 Total Variance Explained 123

Table 4.16 Removed Items under Each Latent Construct 124

Table 4.17 Rotated Factor Matrix (Malaysia) 125

Table 4.18 Table: Rotated Factor Matrix (Australia) 126

Table 4.19 Model Fit Indices and Cut off Values 128

Table 4.20 CFA Result Reporting (Individual Construct) 144

Table 4.21 CFA Result Reporting (Malaysia) 145

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Table 4.22 CFA Result Reporting (Australia) 146

Table 4.23 CFA Result Reporting (Overall) 149

Table 4.24 Overall CFA Result Reporting (Malaysia) 151

Table 4.25 Overall CFA Result Reporting (Australia) 153

Table 4.26 Fit Indices of Revised Baseline Model 156

Table 4.27 Result Reporting of Revised Baseline Model 156

Table 4.28 Standard Regression Weight (Revised Baseline Model) 157 Table 4.29 Standard Regression Weight of the Constituting Relationships

(Mediation1) 170

Table 4.30 Standard Regression Weight of the Constituting Relationships

(Mediation2) 171

(Mediation3) 172

(Mediation4) 173

Table 4.33 Result of Multiple Group Modelling (Constrained Vs

Unconstrained) 176

Table 4.34 Comparison of Fit Indices between Baseline Model and Nested 183 Table 4.35 Comparison of Fit Indices between Baseline Model and Nested 185 Table 4.36 Factor Loadings, AVE and Construct Reliability Computation

for the Constructs 186

Table 4.37 AVE vs. Squared Multiple Correlation Value of the Constructs 187

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LIST OF FIGURES

Figure 1.1 Student visa applications granted by top five countries of

origin 10

Figure 2.1 Factors Affecting Customer Satisfaction towards Customer

Loyalty and Customer Complaint 48

Figure 2.2 Factors Affecting Student Satisfaction 51

Figure 2.3 Student Satisfaction Cycle 53

Figure 2.4 Model of Expectancy Disconfirmation Theory 59

Figure 2.5 Kano Model of Customer Satisfaction 61

Figure 2.6 Model of Cognitive Dissonance Theory 62

Figure 2.7 Consumer Decision Model 65

Figure 2.8 Individual Factors and Portal Effectiveness Affecting User

Satisfaction 79

Figure 2.9 Conceptual Model of the Study Including Hypothesis 85

Figure 3.1 Research Design Strategy 90

Figure 3.2 Framework of the Research Project 91

Figure 4.1 Differences between two Countries based on Demographic

Characteristics (Conceptual Model) 113

Figure 4.2 Individual Confirmatory Factor Analysis (Student Loyalty

Behaviour) 130

Figure 4.3 Individual Confirmatory Factor Analysis of Student Loyalty

Behaviour (Malaysia) 131

Figure 4.4 Individual Confirmatory Factor Analysis of Student Loyalty

Behaviour (Australia) 131

Figure 4.5 Individual Confirmatory Factor Analysis (Student Satisfaction) 133 Figure 4.6 Individual Confirmatory Factor Analysis of Student

Satisfaction (Malaysia) 133

Figure 4.7 Individual Confirmatory Factor Analysis of Student

Satisfaction (Australia) 134

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Figure 4.8 Individual Confirmatory Factor Analysis (Academic Issues) 135 Figure 4.9 Individual Confirmatory Factor Analysis of Academic Issues

(Malaysia) 135

Figure 4.10 Individual Confirmatory Factor Analysis of Academic Issues

(Australia) 136

Figure 4.11 Individual Confirmatory Factor Analysis (Economic

Considerations) 137

Figure 4.12 Individual Confirmatory Factor Analysis of Economic

Considerations (Malaysia) 138

Figure 4.13 Individual Confirmatory Factor Analysis of Economic

Considerations (Australia) 139

Figure 4.14 Individual Confirmatory Factor Analysis (Image and Prestige) 140 Figure 4.15 Individual Confirmatory Factor Analysis of Image and Prestige

(Malaysia) 141

Figure 4.16 Individual Confirmatory Factor Analysis of Image and Prestige

(Australia) 141

Figure 4.17 Individual Confirmatory Factor Analysis (Infrastructure) 142 Figure 4.18 Individual Confirmatory Factor Analysis of Infrastructure

(Malaysia) 143

Figure 4.19 Individual Confirmatory Factor Analysis of Infrastructure

(Australia) 143

Figure 4.20 Overall Measurement Model 148

Figure 4.21 Overall Measurement Model (Malaysia) 150

Figure 4.22 Overall Measurement Model (Australia) 152

Figure 4.23 Baseline Model 154

Figure 4.24 Revised Baseline Model 155

Figure 4.25 Unique Response of the International Students in Malaysia 177 Figure 4.26 Unique Response of the International Students in Australia 178

Figure 4.27 Constrained Model 179

Figure 4.28 Unconstrained Model 180

Figure 4.29 Nested Model 1 182

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Figure 4.30 Nested Model 2 184

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LIST OF ABBREVIAITON

AVE Average Variance Extracted AMOS Analysis of Moments Structures CDT Cognitive Dissonance Theory CFA Confirmatory Factor Analysis CFI Comparative Fit Index

C.R Critical Ratio

CR Construct Reliability

EC Economic Considerations

EDT Expectancy Disconfirmation Theory EFA Exploratory factor analysis

GFI Goodness of Fit Index

HE Higher Education

IF Infrastructure

IP Image and Prestige

KM Kano Model

MOE Ministry of Education

RMSEA Root Mean Square of Error Approximation SEM Structural Equation Modelling

SLB Student Loyalty Behaviour

SPSS Statistical Package for Social Science SS Student Satisfaction

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CHAPTER ONE INTRODUCTION

1.1 INTRODUCTION

An emerging source of foreign exchange earning can be Malaysia’s ever growing and advancing education sector. The country is earning foreign exchange from this segment. And it can earn more from this if it patronages the sector. The global demand for international higher education may increase from 2.173 million in 2005 to 3.720 million by 2025 (IDP, 2007). In another study, it is mentioned that the demand for international higher education may increase from 1.8 million customers to 7.2 million by 2025 where Malaysia, India and China represent 70% of this growth (Jalali, 2011). Hence arises, the importance of international student satisfaction and their loyalty behaviour. The more satisfied the international students are the more they will spread good words of mouth and the more students from abroad will come. It will be just like the pull strategy of marketing rather the push strategy. In service marketing pull strategy can be more effective as it will call for services from the customers or consumers rather pushing the services from the institutions. In education this strategy will work best. The international students of Malaysia themselves can become good advertisement source and at the same time the country will prosper one step ahead by improving the service quality of education.

Therefore the factors that affect international student satisfaction and loyalty have great value to find out. Again if it is possible to compare this with a developed nation like Australia, deeper information will be gained in order to find some common issues to compete and some uncommon issues to convert into competitive advantages.

Australia is not only a highly developed country but also the country has achieved

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third position in the world for its high quality university education in the ranking of University World News (Report, 2008).

Therefore the research emphasizes in determination of the factors that affect the levels of international student satisfaction and it measures how it affects their loyalty in both countries Malaysia and Australia. Afterwards the study compares the results gained from two different data sets.

1.2 BACKGROUND OF THE STUDY

Malaysia is a very attractive place for every type of foreign people with versatile purposes. The country has an excellent weather. It is comparatively cheap than the western parts of the world. It has all modern facilities. It is a Muslim country thus halal food is available and Muslims feel comfortable here. So Muslims of Arabia, Africa and South Asia come here in a large number for tourism, treatment and education. Beside the major sources of foreign exchange income education sector can be another emerging sector of this earning. After the independence of Malaysia, Ministry of Education converted the old system into a new unified national education system. It focused on economic progress, national aspiration and technological development (Education in Malaysia, 2001). The objectives of higher education may include (Noran & Ahmed, 2005): 1. Advancing national integration; 2. Meeting the demand of high level manpower; 3. Improving modern proficiency and technology.

Many higher learning institutions from USA, Canada, UK, Australia, France, Germany and New Zealand have offered franchised degree programs with Malaysian higher education institutions (Ministry of Higher Education (MOHE), 2010).

According to universitymalaysia.net, Malaysia has become a lucrative study destination because of its international reputation and world standard education

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organism. There are 50,000 international students who have come to Malaysia from more than 100 countries. They are studying in different education institutions like schools, colleges, private and public universities, foreign universities branch campuses. Including short-term and professional courses, diplomas, bachelor degree and other post-graduate studies such as master’s degrees or doctoral degrees, they have enrolled.

But influencing knowledge of the students positively is not the only goal of educational institutions rather they should enhance students’ total development (Astin, 1993). In order to do so education institutions should continuously collect information about student satisfaction, which is mentioned as an ‘ever present campus variable’ by many authors (Betz, Menn, Starr & Klingensmith, 1971). It is also mentioned as key outcome of education (Astin, 1993) or ‘quality enhancement tool’, (Harvey, Plimmer, Moon & Geall, 1997). Sometimes decision makers think whatever the services they provide students will be satisfied. But this is not the case at all. Student satisfaction specially, international student satisfaction is a vital issue. If the students are not satisfied they will be de-motivated in study. The after effect will be serious. The unsatisfied foreign students will not only spread bad words of mouth about any university rather they will negatively advertise the country. In this way not only education sector but also tourism sector will be hampered badly and overall international image of Malaysia will be damaged. Thus international student satisfaction and their loyalty behaviour should be monitored and universities should work accordingly. Based on some research papers, facts may include some kind of dissatisfaction among the foreign students in Malaysia. In this group of dissatisfied international students, some students are quite aggressive and spread bad words of mouth about specific institutes or even about the country and are searching for other

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university or country to switch; some of them are trying to solve problems by complaining or in other ways and on the other hand, some students are just neutral in their actions but still dissatisfied. This is a big problem for the education industry of the country and its international image. Thus in order to solve this problem, decision makers or the authority must learn which factors play the contributing roles to satisfy foreign students of Malaysia and ultimately impact on their loyalty behaviour.

Adjustment of the foreign students in another country can be another reason of dissatisfaction. Black and Gregersen (1991) define adjustment as the degree of any person’s physiological adaptation and comfort in a new setting. Studying in a foreign country can be stressful and it requires different types of adjustments. Dissatisfaction may originate from failure in proper adjustment. Adjustment can vary from culture to culture and country to country. Another significant issue is that the adjustment should take place in different universities differently in the same country. Thus adaptation or adjustment in a specific university of foreign country is also important (Israel, 1990).

Many students are quite comfortable in the institutions of their own countries but face difficult problems in the whole new environment of an institute in the foreign land. The differences may include communication system, infrastructure, socio- economic situation, teacher-student relationships, relationships between and among other foreign and local students (Shekarchizadeh et al., 2011). According to Ham (2003), dissatisfaction of foreign students may cause several consequences like, 1. It will hamper the intention of repurchase or international student loyalty; 2. Foreign students will not recommend the university to others who seek advice from them; 3. It may cause switching from one university to another.

Every organization seeks loyal customers which can be gained through by customer satisfaction. Customer satisfaction for any institution is as important as air

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for human life (Jalali, 2011). Among the sectors of services education service has great value. Higher education sector has become increasingly competitive as local and foreign students are more concerned than before and they expect to fund for themselves for their study (Angell et al., 2008). Therefore student satisfaction is a crucial issue in this industry. In this education industry it has become very difficult to create competitive advantages (Cubillo- Pinilla et al., 2009). Educational institutions are searching new ways to create point of difference and competitive advantages as the domestic and international demand and competition have increased (Rasli and Naim, 2005). In order to retain tuition based returns, measuring service quality and student satisfaction are two essentials (Angell et al., 2008).

According to Arambewela and Hall (2011), Australia has entered into international education era lately but this offers the country great challenges and opportunities at the same time. Now the country has increased international students and worldwide goodwill and recognition. In internationalization of education Australia is greatly successful without any doubt. In spite of Australia’s minor contribution (7%) in international education, its importance in local economy is very significant. Nelson (2004) mentioned in 2003 the country earned $5.2 billion by the export of education services. The international education environment is very dynamic. From AEI (2005) the fact revealed, in the sector of higher education international students represent 54% of the total student population and among them 76% are from Asia. All these are lucrative for Australia. But the country needs to cope with global changes and challenges like political, global and social factors which affect the decisions of international students to choose a country for education.

Therefore, the foreign students need to be satisfied and provided with superior education service to make them loyal in the context of Australia.

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Therefore this study suggests the basic dimensions of the satisfaction and loyalty behaviour of international students of Malaysian universities and which sectors need to improve, change or maintain and what are the other facilities can be added for them to enhance their satisfaction. In order to improve the information and to make it more effective the study further analyzes the same factors in Australia and it compares the results of two different countries. As Australia is a developed nation, information gained from the country can be helpful for Malaysian higher learning institutions and foreign student satisfaction and loyalty.

1.3 THEORETICAL UNDERPINNING

There are several researches conducted on the issues of satisfaction of consumers and how it affects their loyalty (Betz, 1970; Mangano and Conado, 1979; Hendry, 1983;

Chadwick and Ward, 1987; Nord, 1997; Belcheir, 1999; Chen, 2000; Guo, 2004). But most of them are on business companies. Thus very few references and literatures can be found on student satisfaction and educational areas (Chen, Hsiao and Lee, 2005).

Thus this study will use consumer behaviour theory in order to find the correlation between customer (student) satisfaction and customer (student) loyalty.

The research is based on several theories of marketing. These are theory of customer satisfaction (Kotler & Armstrong, 2001), expectancy disconfirmation theory (Oliver, 1977), cognitive dissonance theory etc. Details of these theories are discussed in chapter two. The basic thought of consumer satisfaction and loyalty comes from the theory of consumer behaviour. In the theory of customer satisfaction it is mentioned that every customer or consumer has a level of expectation related with any product or service. If any company or institute can meet the expectation of its customers or consumers they will be satisfied. If it fails to do so then the customers will be

A thesis submitted in fulfilment of the requirement for the degree of Doctor of Philosophy in

INTERNATIONAL STUDENTS SATISFACTION AND LOYALTY: A COMPARATIVE STUDY OF

ABSTRACT IN ARABIC

DECLARATION

INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA

ACKNOWLEDGEMENTS

TABLE OF CONTENTS

CHAPTER TWO: LITERATURE REVIEW ... 24

CHAPTER THREE: METHODOLOGY ... 87

CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION OF RESULTS ... 108

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION ... 188

REFERENCES ... 206

APPENDIX 8: NUMBER OF INTERNATIONAL STUDENTS IN MALAYSIA ... 249

LIST OF FIGURES

LIST OF ABBREVIAITON

CHAPTER ONE INTRODUCTION

1.2 BACKGROUND OF THE STUDY

1.3 THEORETICAL UNDERPINNING