The Relationship Between Service Innovation, Customer Satisfaction, and Loyalty Intention in Emerging Economies: An Evidence from Ethio Telecom

The service sector is one of the fastest expanding sectors in the global economy that contribute the lion’s share to support nations’ GDP, and it is one of the areas where research on innovation has received a lot of attention. The major aim of this study was to investigate the relationship between service innovation, customer satisfaction, and loyalty intention in the case of Ethio telecom, Ethiopia. Given the nature and objectives of the study, this research used an explanatory research design followed by a quantitative approach. Data was collected through a structured questionnaire from a survey of 384 samples and analyzed using multivariate analysis namely structural equation model (SEM) using path analysis and other descriptive statistics including means and confirmatory factor analysis. The findings of the study revealed that the telecom service firm’s capacity to achieve customer satisfaction is determined by its service innovation significantly and positively. The study also revealed that the relationship between service innovation and loyalty intention was statistically significant and positive. Besides, the study demonstrated that service innovation has both direct and indirect (through the mediation of customer satisfaction) effects on loyalty intention. Finally, based on the results of path analysis, the study uncovered that customer satisfaction directly affects loyalty intention, supporting the claim that customer satisfaction has a significant positive effect on loyalty intention.