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. 2021 Mar 10;7(3):e06404. doi: 10.1016/j.heliyon.2021.e06404

Towards an understanding of corporate image in the hospitality industry East Java, Indonesia

Boge Triatmanto a,∗, Harianto Respati a, Nanik Wahyuni b
PMCID: PMC7966991  PMID: 33748476

Abstract

The purpose of this study is to determine how the perceptions and understandings of hotel managers in East Java to improve the corporate image as a hotel marketing strategy. Research respondents are managers who work in the hospitality industry. A total of ninety-six stars hotel in East Java were assessed. Each star hotel has nine managers so that the study population is 621 managers. The research sample of 232 managers. The sampling technique is simple random sampling. Statistical techniques used Confirmatory Factor Analysis (CFA) and descriptive analysis of mean and mode. This research is related to the success of the hospitality marketing strategy; therefore, it is urgent to conduct an in-depth investigation of the corporate image of the hotel. The results showed that managers who work in the hotel industry better understand the corporate image of the hotel at an psychological level to maintain trust in customers. Trust becomes part of the psychological managers in implementing corporate image practices in the hospitality industry.

Keywords: Corporate image, Functional, Psychological, Hospitality

Corporate image, functional, psychological, hospitality.

1. Introduction

In the past year, the hotel industry in Indonesia has increased, triggered by international networks in the field of tourism and social media. Besides, the implementation of government programs in the sector of building infrastructure such as toll roads, ports and airports strongly support the tourism industry, which ultimately has an impact on the hotel industry. Support from the development of social media also affects the tourism and hospitality industry. The hotel industry in East Java has experienced significant progress. That is due to the support of the industrial sector, education, trade and growth of the many tourist vehicles in East Java developed by the local community.

Continuity of hotel performance must be maintained; for this reason, an appropriate marketing strategy is needed. The effect of implementing a marketing strategy is a corporate image. Some literature that discusses corporate image also includes marketing strategies, i.e. branding (Balmer and Gray, 2003). In practice, many service organizations, such as hotels use communication channels to build a corporate image to position the intended brand or hotel name. Also, service practices are an effort for organizations to obtain image positions (O'loughlin and Szmigin, 2007). The interaction between employees and consumers to create an image has become an interesting study. Many researchers (El-Adly, 2019; Lashley, 2000; Ruetzler et al., 2014; Shafiee et al., 2020) have discussed the interactions between employees/managers and consumers. Many experts argue about that connection. Some discussions conclude that internal revenue and human resource strategies are the essential elements for creating a corporate image (de Chernatony and Segal-Horn, 2003). Internal marketing and human resource management are fundamental elements in creating and maintaining service images (de Chernatony and Segal-Horn, 2003).

Another opinion explained that service organizations such as hotels stated that organizations are brands (Wallace and De Chernatony, 2009). Thus the organizational values are represented by brands. Imagery is part of the discussion about brands (Falola et al., 2018; Minkiewicz et al., 2011). This argument reinforces that when an employee/manager displays a brand through interactive activities with customers, it affects the perception of the company's image. Service organizations such as hotels practice corporate image through the intermediaries of managers in communicating and providing services to consumers (Wallace and De Chernatony, 2009). Employees directly provide values to consumers who later become positive perceptions, beliefs and impressions (Alvarez Dominguez, 2011; Wallace and De Chernatony, 2009).

Some marketing strategies are programmed to obtain positive perceptions, beliefs and impressions from the minds of consumers. This effort can be made through internal and external marketing strategies. Corporate image is the impact of organizational activities to obtain a collection of perceptions, beliefs and impressions from the target market (Aziz, 2018; Heinberg et al., 2018; Singh and Sarkar, 2019) This explanation confirms that corporate image is the primary indicator to assess the success of an organization's marketing strategy.

The dimensions of the corporate image are corporate images from the organizational and individual aspects (Yeo et al., 2011). Regulatory aspects related to the internal efforts of the organization means that the organization seeks to create a positive image for stakeholders and the public. In contrast, the individual aspects are related to aspects of the market where consumers or customers have a perception as a result of the company's marketing activities.

An old view was put forward by (Boulding, 1956) as an expert who proclaimed the meaning of the corporate image. Corporate image is identified into two aspects which are functional and psychological views (Boulding, 1956). In its development, the theory of corporate image by Kennedy (1977) emphasized that practical aspects involve environmental organizations such as attractiveness, advocacy, comfort, service and familiarity. While the psychological issues include non-physical elements such as trust, reputation, awareness and favorability (Dowling, 1986). Research related to the corporate image has been done, but the use of practical and psychological terms to identify a corporate image is still less widespread. Some studies that use functional and psychological indicators include Kandampully (2007) and Christelle (2012) which reinforce previous views. Furthermore, this study uses practical and psychological symbols to measure the corporate image. This research is different from that conducted by Chien and Chi (2019) this study is more consistent using the indicators proposed (Boulding, 1956), to be applied to the hospitality industry in Indonesia. Recent research has been perceived that the company image is formed from corporate branding, which is done to persuade consumers to remain loyal to the company's products (Balmer and Gray, 2003).

This study aims to investigate the responses of several hotel managers in East Java about the corporate image. Researchers are encouraged to want to know related to the hotel sector, which has increased the number of room occupancy. According to the records of the Central Statistics Agency (BPS-Statistics Indonesia) in 2017 amounted to 55.4% and in 2018 increased to 57%. Inevitably this increase comes from hotel marketing activities. Along with the increasing room occupancy, it is necessary to have an explanation of the responses and understanding of hotel managers in East Java about the corporate image. The results of this study can provide information benefits for internal hotel stakeholders such as employees, managers and hotel owners to improve marketing strategies.

2. Critical review

Company image is a collection of perceptions, beliefs and impressions made by an organization so that stakeholders and the public have an opinion of identity (Balmer et al., 2019; Iglesias et al., 2019b). Boulding (1956) as an expert who proclaimed the meaning of corporate image identified corporate image into two views, namely functional and psychological opinions. Kandampully (2007) argues that the practical component is related to something tangible that can be measured easily, while the psychological part according to Kennedy (1977) is associated with psychological manifestation through feelings and behaviour.

According to traditional thinking, research on service images mostly focuses on the functional aspects of service (Christelle, 2012). Thinking about corporate image focusing on physical evidence and the process of how to communicate the values of physical evidence to stakeholders or the public Zeithaml and Bitner (1996). But until now, the literature that discusses corporate image, especially in the service sector still focuses on functional and psychological values (de Chernatony and Segal-Horn, 2003; Wallace and De Chernatony, 2009). The necessary thing in the discussion about corporate image today is that corporate image is not a new concept, especially in the service company concept. The corporate image was discussed by Bristol (1960). The stakeholder's demands on the organization make the company's image determine the organization's success. In principle, the corporate image refers to the internal and external interests of the organization (Dowling, 1986). Therefore the organization chooses a marketing strategy to create a particular perception of the organization.

The concept of corporate image is formed from the development of the brand image concept. Many research results describe the development of brand image which ultimately becomes the company's image (Bristol, 1960; Zhang et al., 2019). Therefore, the company's image is not something new. But at this time, the development of digital information systems with high access speeds has made the corporate image as an urgent main idea to be investigated. de Chernatony and Segal-Horn (2003) explains that there is also a lot of literature that discusses interactions between employees and consumers to create a corporate image. This is known as internal marketing. But internal marketing cannot stand alone. Internal marketing requires the role of competent human resources as an essential element in creating and maintaining a corporate image.

The activity of creating perceptions in the minds of stakeholders through a company's marketing strategy is referred to as forming the company's image (Balmer, 2012; Christelle, 2012). Dowling (1986) defines a company's image as a set of meanings on an object, in this case, is a company, where the purpose comes from perceptions, memories and connections, can also go from one's beliefs, ideas, feelings and impressions. Christelle (2012) determines the meaning of the corporate image is the company's efforts to provide a vision and hope to stakeholders and the public. The views of other researchers explain the corporate image is a picture of the company according to the opinions of customers, shareholders, the people, the media and other parties developed to meet the interests of stakeholders (Jo Hatch and Schultz, 2003). Corporate image is formed through total corporate communication activities (Heinberg et al., 2018). The results of communication are integrated shows that can reconstruct single meaningful information. This only information is called the corporate image. So, Minkiewicz et al. (2011); Tran, Mai An, Bang Nguyen (2015) explained the concept of corporate image is a process.

Each organization has specific public targets. This target is adjusted to the objectives of the stakeholders (Balmer and Gray, 2003; Harinoto et al., 2018). What is avoided is when stakeholders have different goals so that the organization does not have a single, consistent image. This is detrimental to the sustainability of an organization. The failure factor of the company's vision is caused by differences in the objectives of the stakeholders. Roper and Davies (2007) broadened the view of the corporate image that the interests of internal stakeholders such as employees, managers, top leaders, and owners have a fundamental role in forming a single image that is more profitable for the company.

The latest view is explained by Christelle (2012) that corporate image is an outcome that comes from the organization's product and service offerings, organizational member behaviour, company culture and company communication. It was also explained that the company's image was formed from business practices based on environmental protection and social welfare.

In this study, the company's image is formed due to a logical function process, involving all elements and organizational resources (Boulding, 1956; Kennedy, 1977). For example, a description of the quality of a product can be obtained by packaging, colours, logos, symbols, services and other observations. This view explains the company's image from a functional aspect that is physically observable directly. In another aspect, the company's image is formed because of the cognitive component (psychological). This psychological component involves internal stakeholders such as employees, managers and owners—for example, excitement, trust, reputation, caring and other aspects. The image of an organization is obtained from the experiences of internal and external stakeholders. Therefore, the image can be managed through a strategy to manage corporate identity. This strategy needs to be structured to produce the image desired by the organization (Falola et al., 2018; Minkiewicz et al., 2011; Tran and Bang Nguyen, 2015).

The concept of corporate image obtains successive terms such as corporate identity, reputation and personality. So it is expressly undefined. Corporate image is the totality of perceptions, beliefs and impressions of the organization's external parties. The organization's external parties have individual opinions based on judgments made by the company (Iglesias et al., 2019a; Singh et al., 2019; Triatmanto et al., 2019). The hypothesis built in the study wants to prove that the functional corporate image and corporate psychological image are able to measure the company's image in the hotel hospitality industry.

3. Research methodology

This research investigates corporate image variables through two indicators, functional and psychological (Balmer, 2012; Balmer et al., 2019; Boulding, 1956; Kennedy, 1977). while functional indicators measure corporate image through attractiveness, service, familiarity, comfort and advocacy the Psychological indicators measure corporate image through favorability, trust, reputation and awareness (see Figure 1). This type of research is quantitative research. The questionnaire was used as a research instrument to collect data, and apply a Likert scale with a choice of five being strongly agreed; four is agreeing, three is neutral, two is disagreeing, and one is strongly disagreeing. Research respondents are managers who work in star-rated hotels in East Java. The number of managers is 621 managers. Samples were selected as many as 232 managers. The average research sample was 38.16%. This figure is still in the relevant category in determining the research sample. This research did not involve any living creatures, thus any informed consent from any ethical committees is not needed. Data analysis techniques using CFA analysis and description. Before a CFA analysis is carried out, an exploratory factor (EFA) analysis is first carried out, to classify indicators that are variable dimensions (Frane and Hill, 1976). CFA analysis to ensure that the selected indicator can reflect the measured variable. To assess the level of understanding using factor loading figures. Description analysis is used to determine the respondents' perceptions of each measurement. Researchers used the SPSS and Amos programs to conduct data analysis.

Figure 1.

Figure 1

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Research model.

4. Result

This study discusses an in-depth understanding of corporate image by proving the theories and their application in the hospitality industry. The analysis method uses factor analysis to determine the right indicators, and then a confirmatory analysis is carried out to determine the ability of indicators to explain corporate image variables. Exploratory statistical analysis test results have a Kaiser-Meyer-Olkin (KMO) value for the functional corporate image indicator of 0.507, while the psychological corporate image indicator of the Barlett test value is 0.532. Both indicators have Barlett Test values which are also significant at 0.05. These results indicate that factor analysis can be continued. The results of testing using the AMOS program produce factor loading (λ) values, Squared Multiple Correlation (R2) values, and probability values (p) for each research indicator. The results of testing using the SPSS program produce validity r values for each symbol, the Chronbach Alpha value and the average value of the research indicators. The results of the analysis are presented in Table 1.

Table 1.

CFA analysis results and descriptions.

Variable/Indicator r validity λ p R2 mean Chronbach A ranking
CI-1 Functional Corporate Image 4.07 0.76
CI-11 Comfort 0.62 0.82 0.000 0.67 4.17 2
CI-12 Service 0.56 0.81 0.000 0.66 4.05 3
CI-13 Familiarity 0.46 0.76 fixed 0.58 3.91 5
CI-14 Attractiveness 0.73 0.83 0.000 0.69 4.25 1
CI-15 Advocacy 0.47 0.75 0.000 0.56 3.98 4
CI-2 Psychological Corporate Image 4.06 0.89
CI-21 Favorability 0.55 0.81 fixed 0.65 4.02 2
CI-22 Reputation 0.58 0.79 0.000 0.63 3.93 4
CI-23 Trust 0.67 0.98 0.000 0.96 4.33 1
CI-24 Awareness 0.39 0.91 0.000 0.83 3.99 3
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The value of r statistic (α = 0.05; df = 232) is 0.13. The validity test of each research instrument shows that the calculated r-value is greater than the r statistic. For the functional measurement of Corporate Image has an Alpha Chronbach (AC) value of 0.76 and a physicological corporate image of 0.89. The AC value produced exceeds the statistic r of 0.13, meaning that the respondent understands the research instrument, and if asked twice, the respondent has the opportunity to answer consistently. Attraction (CI-14) has a validity value of 0.73. This figure occupies a higher level than the four functional indicators of corporate image. These results indicate that respondents best understand the statement of attractiveness. Trust (CI-23) has a validity value of 0.67. This figure occupies a higher level than the three psychological image indicators of the corporate image. These results indicate that respondents best understand the statement of trust.

The results of the CFA analysis for five functional indicators of corporate image namely comfort (0.82), service (0.81), familiarity (0.76), attractiveness (0.83), advocacy (0.75) have a factor loading value overcome cut-off (0.50). This comparison shows that comfort, service, familiarity, attractiveness, and support can be a reflection of the functional corporate image. The highest loading factor value is the attractiveness indicator (0.83).

Next, the results of the CFA analysis for four psychological indicators of corporate image namely favorability (0.81), reputation (0.79), trust (0.67) and awareness (0.91) have factor loading values overcome cut-offs (0.50). This comparison shows that favorability, reputation, confidence and knowledge can be a reflection of an psychological corporate image. The highest factor loading value is the trust indicator (0.98). The results of the CFA analysis are presented in Figure 2.

Figure 2.

Figure 2

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Confirmatory results of research models.

The results of the Confirmatory Research Model produced a statistical Chi-Square value of 36.78 smaller than the Chi-Square table value (α = 0.05; DF = 26) of 38.88. While the probability of the model produces an amount of 0.078 higher than the error rate (α = 0.05), the meaning of this comparison is to accept the null hypothesis (H0) and reject a hypothesis other than null (Ha). The definition of acceptance of the null hypothesis (H0) is that there is no difference between the model built and the facts. The conclusion from this CFA analysis is that the measurement model for the functional and psychological corporate image is accepted.

The description analysis results for the functional variable corporate image obtained an average Likert scale of 4.07, meaning that respondents responded agreeing that the functional corporate image is perceived positively for comfort, service, familiarity, attractiveness and advocacy (Balmer, 2012; Boulding, 1956; Kennedy, 1977). From these five indicators, it was found that the attractiveness indicator has the highest level position perceived by respondents. Various things can be done by the hotel industry to increase attractiveness by utilizing multiple media to communicate with customers so that it has more appeal compared to competitors. The second sequence is comfort, for service industries such as hotels to provide comfort to customers is the main product that must be highlighted; This is what will actually improve the image of the service company (Balmer, 1956; Foroudi et al., 2019; Heinberg et al., 2018). The third order of indicators that make up the corporate psychological image is service, service by hotel employees is an important concern for consumers; this is a memory that sticks in the minds of consumers to form an image for the hotel (Ortegón-Cortázar and Royo-Vela, 2019; Yusof and Ariffin, 2016). In addition, the familiarity indicator is an indicator that hotel management must pay attention to maintain the company's position in the minds of consumers, while the lowest respondent's perception is advocacy (Boulding, 1956; Kennedy, 1977; Septianto et al., 2021; Stylidis et al., 2020).

Next, the results of the descriptive analysis for the corporate image psychological variable obtained an average Likert scale of 4.06, meaning that respondents responded agreeing that the psychological perception of the corporate image was positively perceived as favorability, reputation, trust, and awareness (Boulding, 1956; Chien and Chi, 2019; Falola et al., 2018). From these four indicators, it was found that the trust indicator had the highest level of position, which was seen positively by the respondents, meaning that in the hotel industry, consumers are more concerned with hotels that are proven to be more reliable (Boulding, 1956; Giovanis et al., 2014; Kennedy, 1977; Yusof and Ariffin, 2016). The second order is awareness; the results of the respondents' choices indicate that hotel guests are aware that their intention is correct because they have a good reputation. The third place is the favorability indicator, meaning that hotel consumers prefer hotels that are already popular and better known for their corporate image. Meanwhile, the lowest respondents' perception was reputation (Septianto et al., 2021; Singh et al., 2019; Yusof and Ariffin, 2016).

5. Discussion

This study explains the meaning of the corporate image of the hospitality industry in East Java divided into two parts, namely, functional corporate image and psychological corporate image (Balmer and Greyser, 2003; Boulding, 1956; Kennedy, 1977). The corporate image of the hospitality industry is reflected by several measures including comfort, service, familiarity, attractiveness, and advocacy. This is in accordance with the theory stated that image could increase positive support in the minds of consumers (Amperawati et al., 2020; Chien and Chi, 2019; Fan, 2005). According to the perceptions of hotel managers in East Java about the functional corporate image is more reflected by the attractiveness of the hotel. The hotel manager believes that the hotel where they work can get customers if the hotel has an appeal. The attractiveness of hotels can be formed from the location of the hotel, hotel facilities, prices that are comparable to the benefits received by customers. These components are offered by hotel managers when interacting with hotel visitors (Falola et al., 2018; Minkiewicz et al., 2011). The intensity of employee interaction with hotel visitors is able to attract visitors to the positive image built by employees in keeping visitors coming back again (An and Han, 2020; Jo Hatch and Schultz, 2003; Steven White and Griffith, 1997). Also, hotel managers in building communication channels, especially internet media or social media, are more focused on attractiveness. For example, most hotel website pages display attractive facilities and infrastructure. For pricing policy made by the hotel, managers are to set prices that have an appeal. This is done to get its charm (Balmer et al., 2020; Heinberg et al., 2018; Singh et al., 2019; Steven White and Griffith, 1997).

Next to the psychological image of the hotel industry is reflected by several measures, including favorability, reputation, trust and awareness. According to the perception of the manager of the hotel in East Java about the psychological corporate image is reflected by the trust that is offered by the hotel (Balmer and Greyser, 2003; Boulding, 1956). The hotel manager believes that the hotel where they work can get many visitors if the hotel is trusted by consumers/customers. This means that every hotel must be able to build psychological awareness in the minds of consumers so that customers can be charged to consume the same brand again (Singh and Sarkar, 2019; Xhema et al., 2018). The trust that a hotel earned can be formed from the safety of visitors and the feeling of privacy. Hotel managers in interacting with hotel visitors always pay attention to a sense of security and privacy to customers or hotel visitors.

This study has adequately demonstrated that the functional corporate image and corporate psychological image are able to form a corporate image as indicators to be considered. In particular, this study has made original contributions to image management, especially for the hospitality service industry and the literature on service marketing management in the hospitality industry. Based on the findings of this study, this study emphasizes that hotel managers should be more intensive in investigating hotel consumers as a way to keep abreast of the latest developments in the market and changing customer trends to innovate according to the values developed in the hospitality service market.

Theoretically, this study has advanced reasoning in marketing management to develop image theory and service marketing management literature on various measures used by consumers to determine consumption choices decisions on vacation in hotels. The findings of this study form a platform for further studies to be replicated in other developing countries that have similar human resource conditions in Indonesia. The conclusions of this study apply to a larger number of hotel managers in developing countries around the world.

6. Conclusion and further studies

According to the perceptions of hotel managers in East Java about the functional corporate image focuses on the attractiveness of hotels, and hotel managers understand how to create an attraction for the hotels they manage. The hotel manager's perception of the psychological corporate image is more focused on the element of trust so that in interacting with customers, hotel managers always pay attention to the component of trust in consumers, customers, and hotel visitors. The findings of this study found that the corporate image of hotels in East Java lies in the attractiveness and the element of trust. So that the minimum standards that must be owned by the manager of the hotel have the knowledge and ability to create confidence and attractiveness of the hotel be worth to be considered and fulfilled as the main condition. For future research, it is recommended to expand research results in other service industries such as in education, financial services, and banking. It is also recommended to expand research in other hospitality industries such as in restaurants and tourist destinations, considering the service industry is more unique compared to other industries. This still needs to be done to strengthen the results of research on corporate image.

Declarations

Author contribution statement

Boge Triatmanto: Conceived and designed the experiments; Performed the experiments; Analyzed and interpreted the data; Wrote the paper.

Harianto Respati: Conceived and designed the experiments; Analyzed and interpreted the data; Contributed reagents, materials, analysis tools or data; Wrote the paper.

Nanik Wahyuni: Performed the experiments; Contributed reagents, materials, analysis tools or data; Wrote the paper.

Funding statement

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Data availability statement

Data included in article/supplementary material/referenced in article.

Declaration of interests statement

The authors declare no conflict of interest.

Additional information

No additional information is available for this paper.

Appendix.

Sample Correlations (Group number 1)

CI_24 CI_15 CI_14 CI_11 CI_12 CI_13 CI_21 CI_22 CI_23
CI_24 1
CI_15 0.38 1
CI_14 0.34 0.61 1
CI_11 0.29 0.61 0.70 1
CI_12 0.35 0.63 0.67 0.65 1
CI_13 0.36 0.55 0.63 0.63 0.62 1
CI_21 0.71 0.32 0.36 0.36 0.35 0.34 1
CI_22 0.72 0.32 0.31 0.29 0.31 0.31 0.73 1
CI_23 0.90 0.37 0.37 0.34 0.38 0.38 0.79 0.77 1
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Regression Weights: (Group number 1 - Default model)

Estimate S.E. C.R. P Label
CI_23 <— X2 1.083 0.057 19.051 ∗∗∗ par_1
CI_22 <— X2 0.956 0.067 14.196 ∗∗∗ par_2
CI_21 <— X2 1
CI_13 <— X1 1
CI_12 <— X1 1.094 0.087 12.551 ∗∗∗ par_3
CI_11 <— X1 0.931 0.073 12.717 ∗∗∗ par_4
CI_14 <— X1 1.007 0.078 12.84 ∗∗∗ par_5
CI_15 <— X1 0.878 0.077 11.435 ∗∗∗ par_6
CI_24 <— X2 1.017 0.059 17.319 ∗∗∗ par_7
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Standardized Regression Weights: (Group number 1 - Default model)

Estimate
CI_23 <— X2 0.979
CI_22 <— X2 0.795
CI_21 <— X2 0.808
CI_13 <— X1 0.759
CI_12 <— X1 0.811
CI_11 <— X1 0.821
CI_14 <— X1 0.831
CI_15 <— X1 0.750
CI_24 <— X2 0.911
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Covariances: (Group number 1 - Default model)

Covariances Estimate S.E. C.R. P Label
X2 <—> X1 0.154 0.028 5.576 ∗∗∗ par_8
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Squared Multiple Correlations: (Group number 1 - Default model)

R Square Estimate
CI_24 0.83
CI_15 0.56
CI_14 0.69
CI_11 0.67
CI_12 0.66
CI_13 0.58
CI_21 0.65
CI_22 0.63
CI_23 0.96
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Factor Analysis – C1

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. ,507
Bartlett's Test of Sphericity Approx. Chi-Square 21,657
df 10
Sig. ,017
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Factor Analysis – C2

KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. ,532
Bartlett's Test of Sphericity Approx. Chi-Square 68,064
df 6
Sig. ,000
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