International SCIENTIFIC RESEARCH CENTER Journal of Business Economics and International Journal of Business Economics and Management Studies Vol. 6, No. 2, 2018, pp. 80-89. Management Studies ISSN 2348-3016 www.scientificrc.com Explaining the Mediating Role of Communication Quality in Relation to Social Responsibility and Service Innovation with Customer loyalty in Tehran’s Refah Bank Branches Farhad Hanifi, Shahrzad Mahmoodi Department of Business Management, E- Campus, Islamic Azad University, Tehran, Iran Abstract The purpose of this study is to investigate the relationship between social responsibility and innovation of banking services with loyalty of customers of Refah Bank through the mediating role of communication quality. From purpose viewpoint, this is an applied research, and from data collection viewpoint, this is descriptive- survey. The research population included all customers who use services provided by Refah Bank in the city of Tehran. Due to the dispersion of the statistical population, cluster sampling method was used to select the branches. Based on the unlimited population size formula, sample size was estimated 384 at 95% confidence level with a standard deviation of 0.5; therefore, 384 questionnaires were distributed. The structural equation modeling techniques have been used to conduct the necessary analyses. The research findings showed that social responsibility and banking service innovation have a positive and significant effect on customer loyalty. Also, the mediating role of communication quality in the relationship of social responsibility and banking service innovation with customer loyalty in Tehran’s Refah Bank branches was confirmed. Keywords: Communication Quality, Social Responsibility, Service Innovation, Customer Loyalty Introduction Customer loyalty is one of the most important factors in determining the success of organizations in business and profitability. Therefore, the creation and implementation of measurement and monitoring systems of customer satisfaction as the most important indicator in regard with improving performance are considered to be one of the basic requirements of today’s organizations (Martinuzzi, 2012). In this regard, organizations must be able to provide new, unique and competitive products and services in today’s changing markets, so that they can place themselves in today’s dynamic and complex markets and gain competitive advantage for themselves. The acquisition and exploitation of new experiences and knowledge to create continues changes and fundamental developments in enterprises, and on the other hand, the exploration and exploitation of opportunities in the form of new goods and services as a capability for individuals and enterprises, are proposed as the central objectives of theories of learning organization and the pattern of business enterprises (Stanaland et al., 2011). On the other hand, the banking industry is significantly investing in activities relate to corporate social responsibility. The desire to invest in social responsibility shows that this is not a cost, restriction or the right act to do, but rather a source of competitive advantage (Behrouzi et al., 2013). Addressing social responsibility increases loyalty among customers (Jung & Yoon, 2013). 80 International Journal of Business Economics and Management Studies Volume 6, Issue 2, pp. 80-89 Although social responsibility, loyalty and service innovation have a long history in the world, unfortunately in Iran, the importance and status of this sector have not been addressed in the fields of science and domestic business policy. In this regard, by examining the performance of Refah Bank, we can see the volatile and controversial trend of this sector over the past few years; while experts consider the potential of social responsibility and expansion of innovation in services based on the expansion of customers’ satisfaction and loyalty improvement in terms of better performance more than this. However, understanding the role of service innovation in customer satisfaction has a significant impact on the successful performance and development of this bank. In this research, it is tried to examine the impact of social responsibility and service innovation on customers’ loyalty in Refah bank, and it seeks to provide strategies for developing this communication and highlighting the role of service innovation in Refah bank. Therefore, the main issue is how social responsibility and service innovation are related to customers’ loyalty in Refah bank through the role of communication quality. Theoretical framework and research background Social responsibility Corporate social responsibility is a concept of particular activity or social responsibility on a voluntary base (Lai et al., 2010). Corporate social responsibility is compulsory in terms of ethical responsibilities. Corporate social responsibility goes beyond the economic and legal obligations of a company to avoid social harms, even when the business does not directly benefit. Altruistic corporate social responsibility is humanitarian which includes good involvement of various social stakeholders, even if the time or money commitment sacrifices part of the business profitability. A general definition of corporate social responsibility that has been approved is not yet verified. Corporate social responsibility is a concept in which the corporates inculcate social and environmental concerns in their business operations, and it is defined in a voluntary manner in regard with engagement with its shareholders. Additionally, corporates social responsibility aims to achieve business success that rewards ethical values and respect for individuals, communities and natural environment (Barnes, 2012). Customer loyalty The concept of customer loyalty and creation of loyal customers in the business context is described as “creating a customer commitment to deal with a particular organization and purchasing goods and services more frequently” (Javanmard & Soltanzadeh, 2009). Loyalty is defined as a deep commitment to repurchase or patronize a preferred good or service in future (Allen Broyles et al., 2011). In other words, customers’ desire to select a product or business from other products for meeting a particular need is called loyalty (Haghighi et al., 2003). Jacoby and Chestnut (1978) summarized the definition of loyalty and created a conceptual definition. According to their definition, loyalty is an introduction to customers’ behavioral responses in choosing an option from several options in a time frame that can be shown as a function of decision-making process (Chang, 2005). Service innovation Innovation refers to creativity which has come to the fore. In other words, innovation means a creative thinking realized in organizations. Innovation is to provide new product, process and service to the market. Innovation is the use of mental abilities to create a new thought or concept (Fung et al., 2010). Service innovation is to adopt an opinion or behavior that is new to the industry, market or general environment of an organization (Mirkamali, 2011). Schumpeter summarizes innovation in five ways: invention of a new product, invention of a new production method, opening of the new market, opening of a new source for providing raw materials or semi- fabricated goods, and management of a new organization in an industry; the first two groups belong to technological innovation, and the last three groups are called organization’s innovation. Innovation is categorized based on the type of change of classification, and classification based on the intensity and speed of change (Rosell & Lakemond, 2012). Communication quality Communication quality is recognized as a set of intangible values leading to long-term relationships expected between parties (Adeyanju, 2012). Communication quality is an information system that tracks customer relationship with the company and allows employees to instantly and promptly extract information about customers, including past and recent sales, service records and important registries or contacts in regard with unresolved issues. A customer relationship management system stores all information about its users in a 81 International Journal of Business Economics and Management Studies Volume 6, Issue 2, pp. 80-89 database. The main objective of the communication quality is to maximize the value of customers’ life span in the organization. A customer relationship management can be defined as a business strategy that results in increased revenue and profit through customer satisfaction (Amaladoss & Manohar, 2013). Empirical background of research Mojoudi et al. (2015) examined the impact of corporate social responsibility on customer loyalty and showed that corporate social responsibility has a positive and direct effect on perceived service quality and satisfaction. The results also showed a positive relationship between satisfaction and behavioral and attitudinal loyalty in bank’s customers. This research provides results in regard with corporate social responsibility and perceived service quality that can be used by banks’ managers. Fazlzadeh (2015) investigated the impact of corporate social responsibility on competitiveness with respect to the moderating role of intellectual capital and innovation. The results of estimating data indicated that corporate social responsibility can affect competitiveness. In addition to this direct effect, it can also affect competitiveness through the channel of innovation and intellectual