The Impact of customer-related strategies on shareholder value: evidence from Taiwan

Document Type

Journal Article


Emerald Group Publishing Limited


Faculty of Business and Law


School of Accounting, Finance and Economics




Smith, M., & Chang, C. (2009). The impact of customer-related strategies on shareholder value: evidence from Taiwan. Asian review of accounting, 17(3), 247-268. Available here


Purpose - Much empirical evidence is in conflict with the expectations of the service‐profit chain which suggests that increases in customer satisfaction will increase customer loyalty and earn additional profits from customers. Management focus on the achievement of customer satisfaction and customer loyalty, and associated investment, might, therefore, be misguided, if they believe that the available empirical evidence supports a link between these variables and firm performance. The purpose of this paper is to help firms understand the value of their intangible assets – most notably the important role played by customers in increasing a firm's value. Design/methodology/approach - On the basis of survey‐based research carried out in the Taiwanese credit card market, this paper generates a structural equation model facilitating the measurement and evaluation of the relative efficiencies of customer‐related strategies. Findings - The findings help managers to understand the relationship between customer‐related strategies (customer acquisition, retention, and add‐on selling) and their impact on customer measures and ultimately firm performance. Customer lifetime value is shown to be the most important indicator of financial performance and the firm's shareholder value; the customer loyalty measure is shown to have no impact on shareholder value, and to be negatively related to the implementation of an acquisition strategy. Research limitations/implications - The paper is conducted within the Taiwanese credit card market, and the findings may not be generalisable to other locations or to other markets. Practical implications - These empirical findings suggest that marketing strategy has a central role in the formulation of financial policy, since such strategies can be shown to have an impact on the financial value of the business. Originality/value - The paper provides further evidence linking customers with firm value, which will be important for management decision making and resource use.





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