MBA VIII
Master of Business Administration program
2011 – 2013
ADDING SERVICE INNOVATION TO THE VALUE EQUATION
An assessment on the impact of service quality and service innovation on
perceived customer value and customer satisfaction –
the case of the TeleG mobile telecom service by Telesur.
by
Vikash A. Jairam BSc.
Paramaribo, Suriname
December 2013
Supervised by:
Dr. Mirdita Elstak PhD
This thesis was prepared under the conditions and requirements for the degree of Master
of Business Administration (MBA) from the Maastricht School of Management (MSM), the
Netherlands, and the FHR Lim A Po Institute for Social Studies (FHR), Suriname.
MBA Master Thesis
ACKNOWLEDGEMENTS
It is said that the journey is as important as the destination. Very arguable, but what is left unsaid, is
the importance of the support and guidance received to complete the journey. It is to this support and
guidance that I wish to dedicate the following passage.
Primarily, I thank the universal and omniscient energy, which invisibly yet fundamentally guides and
vitalizes us.
My sincere gratitude goes out to my thesis supervisor Dr. Mirdita Elstak PhD, for her friendly but
critical guidance during the whole process.
I wish to thank the Telecommunications Company of Suriname, TELESUR, for the opportunity to
pursue this MBA.
I also wish to thank Drs. A. Lachmon-Alakhramsing for all her suggestions, but especially the
assistance during the survey at the Anton de Kom University of Suriname.
I also thank Etienne Joemai MSc. and my colleague Billey Best, for all the statistics advice and
guidance.
Special thanks and lots of love goes out to my wife Kawieta and son Vashist, for the patience and
understanding for all those long and late hours, for the listening ear and being my sounding board, for all the
support and motivation to be able to complete this study. Thank you guys!
I thank my parents, parents-in-law and the rest of the family, for giving us the unconditional support
during these past two years.
Finally, I wish to thank everyone who in any way has contributed to the successful completion of my
study. Thank you!
Vikash A. Jairam.
March 14, 2014.
Vikash A. Jairam
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ABSTRACT
In the globalized and highly competitive market of today, customers have become very demanding
towards companies because of the increased abundance of choices they now have. To remain competitive,
this has led companies to move beyond price competition to differentiating themselves with high quality
offerings. Within the services sector, this is about delivering excellent service quality, which adds to the
customer’s perceived value, with the aim to gain and increase customer satisfaction.
However, service quality is argued to no longer be enough to remain competitive, as it is becoming a
competitive prerequisite that customers generally expect and thus which needs to be delivered. It is argued
that service innovations are increasingly becoming the main differentiator. Service innovations are generally
about offering new or adapted solutions to the customer’s needs in ways that enhances the perceived value
of the offering. The argument made is that apparently the services landscape is changing, in which the
service quality aspects of core-, relational- and reputational quality are no longer enough to be competitive
and that service innovation might also be playing an important role.
Based on the above, the objective of this study is to evaluate the significance of service innovation
as a service performance driver compared to service quality aspects and to investigate if it significantly
impacts on perceived customer value and customer satisfaction. This assessment can aid service
companies in deriving managerial implications, which can help to indicate current business requirements and
adjust the business strategy, especially in the competitive market environment.
A quantitative research approach was use to reach the study objective, in which the TeleG mobile
telecom service was selected as an appropriate service candidate, as it met certain stated criteria within the
context of service quality, service innovation and customer satisfaction enhancement. A multi-dimensional
model of service innovation is proposed within this study, consisting of the three dimensions of new service
concept, new service process and new technological system as service performance aspects. The model
was empirically tested and has shown to be a consistent and applicable representation of the service
innovation concept, especially as perceived by the customer. Using this model, service innovation was also
empirically shown to significantly impact perceived customer value, which consecutively significantly affects
customer satisfaction.
The findings of this study confirm that indeed the services landscape is changing, as besides service
quality aspects, service innovation is now also playing an important role in the competitive process, as it also
adds to the perceived customer value judgment, which in turn positively affects customer satisfaction.
However, service quality was shown to still have more weight in the perceived customer value relation.
Still, the findings imply that service innovation should also be taken into account when evaluating the
performance of a service offering as perceived by the customer. In this regard, service quality falls short in
capturing the innovative side of the value equation.
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Based on the main findings, the study concludes with the following passages.
FIRST SERVICE QUALITY, AND THEN SERVICE INNOVATION
The primary focus of service enhancement by service providers should first be on service quality and
then on service innovation, as the preceding forms the basis for the latter.
DELIVERING EXCELLENT SERVICE QUALITY IS IMPLICITLY CRUCIAL
The delivery of excellent service quality is implicitly crucial, as this forms the basic attribute of the
offering that is expected by the customers in general. Thus, providers should not fail in the beginning and
deliver the service right the first time, on time and as requested.
CONTINUOUS SERVICE INNOVATION IS CONSECUTIVELY CRITICAL
Subsequently, continuous service innovation is critical, as constantly innovating on the service
offering will add to the service value, enabling providers to better cater to the customer’s present and future
needs, thus helping to provide a more sustainable competitive advantage.
ENSURING CUSTOMER PERCEIVED VALUE ENHANCEMENT IS DEFINING
The enhancement of the customer’s perceived value through service performance aspects like
quality and innovation is defining for the customer’s satisfaction level. In the end, this is key, as the survival
of the company at least depends on having satisfied customers.
In the end, the objective of providing all these service aspects are to better delight and meet the
customers’ needs, to increase the perceived value of the service offering, which is expected to increase the
customer’s satisfaction level. In today’s competitive market environment, being able to satisfy your customer
matters, as it can lead to repeat purchases and positive recommendations to other potential clients,
eventually leading to retention and loyalty, finally translating to financial benefits necessary for survival.
Keywords: Service Innovation, Service Quality, Perceived Customer Value, Customer Satisfaction.
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TABLE OF CONTENTS
ACKNOWLEDGEMENTS ............................................................................................................................ 2
ABSTRACT ................................................................................................................................................. 3
TABLE OF CONTENTS ............................................................................................................................... 5
LIST OF FIGURES .....................................................................................................................................10
LIST OF TABLES .......................................................................................................................................11
CHAPTER 1
INTRODUCTION..............................................................................................................13
1.1
GENERAL INTRODUCTION .......................................................................................................13
1.2
IMPORTANCE AND RELEVANCE OF THE STUDY ....................................................................15
1.3
PROBLEM DEFINITION ..............................................................................................................16
1.4
RESEARCH OBJECTIVE ............................................................................................................17
1.5
RESEARCH QUESTIONS ...........................................................................................................17
1.6
RESEARCH METHODOLOGY OVERVIEW ................................................................................18
1.7
RESEARCH LIMITATIONS..........................................................................................................18
1.8
GENERALIZABILITY ...................................................................................................................18
CHAPTER 2
LITERATURE REVIEW ....................................................................................................19
2.1
INTRODUCTION .........................................................................................................................19
2.2
CUSTOMER SATISFACTION......................................................................................................19
2.2.1
DEFINING CUSTOMER SATISFACTION ............................................................................19
2.2.2
DIFFERENT VIEWS OR PERSPECTIVES OF CUSTOMER SATISFACTION ......................22
2.2.3
THE IMPORTANCE OF CUSTOMER SATISFACTION ........................................................23
2.3
PERCEIVED CUSTOMER VALUE ..............................................................................................24
2.3.1
DEFINITION AND APPROACHES TO PERCEIVED CUSTOMER VALUE ...........................24
2.3.2
RELATION
BETWEEN
PERCEIVED
CUSTOMER
VALUE
AND
CUSTOMER
SATISFACTION .................................................................................................................................28
2.4
SERVICE QUALITY.....................................................................................................................29
2.4.1
APPROACHES AND DEFENITION OF SERVICE QUALITY ................................................29
2.4.2
CONCEPTUALIZATION OF SERVICE QUALITY .................................................................32
2.4.5
INFLUENCE OF SERVICE QUALITY ON PERCEIVED CUSTOMER VALUE ......................37
2.5
SERVICE INNOVATION ..............................................................................................................38
2.5.1
DEFINING SERVICE INNOVATION.....................................................................................38
2.5.2
CONCEPTUALIZING SERVICE INNOVATION ....................................................................40
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2.5.2.1
NEW SERVICE CONCEPT ..................................................................................................40
2.5.2.2
NEW CUSTOMER INTERACTION .......................................................................................41
2.5.2.3
NEW BUSINESS PARTNER ................................................................................................41
2.5.2.4
NEW REVENUE MODEL ...................................................................................................41
2.5.2.5
NEW DELIVERY SYSTEM: PERSONNEL, ORGANIZATION, CULTURE ....................................41
2.5.2.6
NEW DELIVERY SYSTEM: TECHNOLOGY ...........................................................................42
2.5.2.7
INTERRELATIONS BETWEEN THE DIFFERENT DIMENSIONS ..............................................42
2.5.2.8
DIMENSIONS OF SERVICE INNOVATION ...........................................................................43
2.5.3
2.6
INFLUENCE OF SERVICE INNOVATION ON PERCEIVED CUSTOMER VALUE ...............45
CONCEPTUAL MODEL...............................................................................................................46
CHAPTER 3
RESEARCH METHODOLOGY ........................................................................................48
3.1
GENERAL INTRODUCTION .......................................................................................................48
3.2
SERVICE SECTOR SELECTION AND SERVICE PROVIDER CRITERIA....................................48
3.2.1
SERVICE SECTOR SELECTION.........................................................................................48
3.2.2
CRITERIA AND PROVIDER SELECTION ...........................................................................49
3.3
3.2.2.1
SERVICE PROVIDER CRITERIA ...........................................................................................49
3.2.2.2
SERVICE PROVIDER SELECTION .........................................................................................49
RESEARCH METHODOLOGY ....................................................................................................50
3.3.1
RESEARCH INSTRUMENT ................................................................................................51
3.3.2
OPERATIONALIZATION OF VARIABLES............................................................................51
3.3.2.1
SERVICE QUALITY ............................................................................................................51
3.3.2.2
SERVICE INNOVATION .....................................................................................................54
3.3.2.3
PERCEIVED CUSTOMER VALUE ........................................................................................55
3.3.2.4
CUSTOMER SATISFACTION ..............................................................................................56
3.3.3
PILOT STUDY .....................................................................................................................56
3.3.4
MAIN SURVEY ....................................................................................................................57
3.3.5
RESEARCH SAMPLE AND DATA COLLECTION METHOD ...............................................57
3.4
VALIDITY AND RELIABILITY ......................................................................................................58
3.4.1
VALIDITY............................................................................................................................58
3.4.2
RELIABILITY ......................................................................................................................59
3.5
3.5.1
DATA ANALYSES METHODOLOGY ..........................................................................................60
VARIABLE DATA TYPES ....................................................................................................60
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3.5.2
CHAPTER 4
4.2
DATA ANALYSES AND FINDINGS .................................................................................63
DESCRIPTIVE STATISTICS .......................................................................................................63
4.2.1
DEMOGRAPHICS ...............................................................................................................63
4.2.1.1
Gender ............................................................................................................................63
4.2.1.2
Age .................................................................................................................................64
4.2.1.3
Education ........................................................................................................................64
4.2.1.4
Income ............................................................................................................................65
4.2.1.5
Mobile subscription type .................................................................................................65
4.2.2
4.3
STATISTICAL TESTS AND ASSUMPTIONS .......................................................................62
VARIABLES RESULTS........................................................................................................66
4.2.2.1
Service Quality ................................................................................................................66
4.2.2.2
Service Innovation...........................................................................................................66
4.2.2.3
Perceived Customer Value ..............................................................................................67
4.2.2.4
Customer Satisfaction .....................................................................................................67
4.2.2.5
Perceived importance of the variables ............................................................................67
INFERENTIAL STATISTICS ........................................................................................................69
4.3.1
STATISTICAL ASSUMPTION TESTING ..............................................................................69
4.3.1.1
NUMERICAL DATA TYPE ..................................................................................................69
4.3.1.2
NORMALY DISTRIBUTED DATA ........................................................................................69
4.3.1.3
HOMOGENEITY OF VARIANCE .........................................................................................70
4.3.2
CORRELATION ANALYSES................................................................................................71
4.3.3
REGRESSION ANALYSES..................................................................................................72
4.3.3.1
MULTIPLE REGRESSION TEST (H1 AND H2) ......................................................................74
4.3.3.2
SINGLE REGRESSION TEST (H3) ........................................................................................75
4.3.3.3
HYPOTHESIS TESTING ......................................................................................................76
4.3.4
CHAPTER 5
ADDITIONAL TESTS ...........................................................................................................77
DISCUSSION..................................................................................................................78
5.1
OVERVIEW .................................................................................................................................78
5.2
MAIN FINDINGS AND ANSWERS TO THE RESEARCH QUESTIONS .......................................78
5.2.1
FIRST SERVICE QUALITY, THEN SERVICE INNOVATION ................................................79
5.2.2
EXCELLENT SERVICE QUALITY IS IMPLICITELY CRUCIAL .............................................80
5.2.3
CONTINUOUS SERVICE INNOVATION IS CONSEQUTIVELY CRITICAL ..........................80
5.2.4
ENSURING CUSTOMER PERCEIVED VALUE ENHANCMENT IS DEFINING ....................81
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5.3
ADDITIONAL FINDINGS .............................................................................................................82
5.3.1
VARIABLE RESULTS ..........................................................................................................82
5.3.2
DIFFERING PERCEPTION OF SERVICE INNOVATION .....................................................82
5.4
THEORETICAL IMPLICATIONS ..................................................................................................83
5.4.1
EMPIRICAL RECONFIRMATIONS........................................................................................83
5.4.2
THEORETICALLY PROPOSED CONFIRMATIONS ..................................................................83
5.5
MANAGERIAL IMPLICATIONS AND RECOMMENDATIONS ......................................................83
5.5.1
GENERAL IMPLICATIONS AND RECOMMENDATIONS ........................................................83
5.5.2
RECOMMENDATIONS REGARDING THE TELEG SERVICE OFFERING ...................................84
5.6
CONCLUDING ............................................................................................................................85
5.5
LIMITATIONS AND IMPLICATIONS FOR FURTHER RESEARCH ..............................................85
BIBLIOGRAPHY .........................................................................................................................................87
APPENDIX-A
OVERVIEW
OF
DEFINITIONS
AND
INTERPRETATIONS
OF
CUSTOMER
SATISFACTION 96
APPENDIX-B
OVERVIEW OF DEFINITIONS AND INTERPRETATIONS OF CUSTOMER PERCEIVED
VALUE
99
B.1
THE ONE-DIMENSIONAL VIEW OF PERCEIVED CUSTOMER VALUE ...............................100
B.2
THE MULTI-DIMENSIONAL VIEW OF PERCEIVED CUSTOMER VALUE.............................102
APPENDIX-C
OVERVIEW OF DEFINITIONS OF SERVICE QUALITY .................................................105
APPENDIX-D
OVERVIEW OF SERVICE QUALITY CONCEPTUALIZATIONS AND MEASUREMENT
MODELS
106
D.1
Model 1 - The Nordic Service Quality Model (Grönroos, 1984, 1982) ......................................106
D.2
Model 2 - The SERVQUAL Model (Parasuraman, Zeithaml & Berry, 1985, 1988, 1991) .........109
D.3
Model 3 - The SERVPERF Model (Cronin & Taylor, 1992) .....................................................113
D.4
Model 4 - The Three-Component Model (Rust & Oliver, 1994) ...............................................114
D.5
Model 5 - Hierarchical Model (Brady & Cronin, 2001) .............................................................115
D.6
Overall view of the service quality measurement models ........................................................118
APPENDIX-E
OVERVIEW OF DEFINITIONS AND CHARACTERISTICS OF SERVICES ....................120
APPENDIX-F
OVERVIEW OF CONVENTIONAL INNOVATION ASPECTS..........................................122
APPENDIX-G
NEW CORPORATE PHILOSOPHY AND IDENTITY OF TELESUR ................................123
APPENDIX-H
SURVEY/QUESTIONAIRE FORM (ENGLISH VERSION) ..............................................124
APPENDIX-I
SURVEY/QUESTIONAIRE FORM (DUTCH VERSION) .................................................128
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APPENDIX-J
DATA ANALYSES FIGURES .........................................................................................132
APPENDIX-K
MULTIPLE REGRESSION RAW TEST RESULTS .........................................................134
APPENDIX-L
SINGLE REGRESSION RAW TEST RESULTS .............................................................136
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LIST OF FIGURES
Figure 2.1
The expectations disconfirmation theory (EDT) ....................................................................21
Figure 2.2
Research approaches of perceived customer value..............................................................24
Figure 2.3
The tri-dimensional view of service quality ............................................................................35
Figure 2.4
The multi-level view of service quality...................................................................................36
Figure 2.5
The 6D-model of service innovation .....................................................................................40
Figure 2.6
The tri-dimensional view of service innovation ......................................................................44
Figure 2.7
Conceptual research framework ...........................................................................................47
Figure 3.1
Survey response rate ...........................................................................................................58
Figure 4.1
Respondent gender distribution............................................................................................63
Figure 4.2
Respondent age distribution .................................................................................................64
Figure 4.3
Respondent education type distribution ................................................................................64
Figure 4.4
Respondent income distribution ...........................................................................................65
Figure 4.5
Respondent mobile subscription type distribution .................................................................65
Figure 4.6
Hypothesized research model ..............................................................................................77
Figure B.1
Research approaches of perceived customer value..............................................................99
Figure D.1
The Nordic service quality model........................................................................................107
Figure D.2
The GAPS model of service quality ....................................................................................109
Figure D.3
The SERVQUAL model ......................................................................................................112
Figure D.4
The hierarchical service quality model ................................................................................115
Figure D.5
Service quality conceptualization streams ..........................................................................118
Figure J.1
Histogram service quality ...................................................................................................132
Figure J.2
Histogram service innovation .............................................................................................132
Figure J.3
Histogram perceived customer value..................................................................................133
Figure J.4
Histogram customer satisfaction.........................................................................................133
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LIST OF TABLES
Table 2.1
Comparison between the one-dimensional and multi-dimensional approach* ...........................26
Table 2.2
Comparison of the performance perceptions only service quality models..................................33
Table 2.3
Service innovation dimensions and interpretations ...................................................................44
Table 2.4
Overview of construct conceptualizations .................................................................................46
Table 2.5
Hypothesis Overview ...............................................................................................................46
Table 3.1
Overview variables ..................................................................................................................51
Table 3.2A
Operationalization of service quality - relational quality .........................................................52
Table 3.2B
Operationalization of service quality - core quality ................................................................53
Table 3.2C
Operationalization of service quality - reputational quality .....................................................53
Table 3.3
Operationalization of service innovation ...................................................................................54
Table 3.4
Operationalization of perceived customer value .......................................................................55
Table 3.5
Operationalization of customer satisfaction ..............................................................................56
Table 3.6
Cronbach’s alpha score interpretation ......................................................................................59
Table 3.7
Cronbach’s scores of the variables...........................................................................................59
Table 3.8
Data types and attributes .........................................................................................................60
Table 3.9
Overview of employed Likert response scales ..........................................................................60
Table 3.10
Data type per variable ..........................................................................................................61
Table 3.11
Likert scale mean score interpretation ..................................................................................62
Table 4.1
Descriptive statistics - service quality .......................................................................................66
Table 4.2
Descriptive statistics - service innovation .................................................................................66
Table 4.3
Descriptive statistics – perceived customer value .....................................................................67
Table 4.4
Descriptive statistics –customer satisfaction .............................................................................67
Table 4.5
Comparison between direct and indirect calculated mean scores .............................................68
Table 4.6
Final ranking of the dimensions ................................................................................................68
Table 4.7
Skewness and kurtosis interpretation .......................................................................................69
Table 4.8
Skewness and kurtosis measures ............................................................................................70
Table 4.9
Variance ratios.........................................................................................................................70
Table 4.10
Interpretation Pearson’s correlation coefficient .....................................................................71
Table 4.11
Correlation test results .........................................................................................................71
Table 4.12
Interpretation significance levels...........................................................................................73
Table 4.13
Hypothesis Overview ...........................................................................................................73
Table 4.14
Model summary (multiple regression) .................................................................................74
Table 4.15
ANOVA a (multiple regression) .............................................................................................74
Table 4.16
Coefficients (multiple regression) .......................................................................................74
Table 4.17
Model summary (multiple regression) .................................................................................75
Table 4.18
ANOVA a (multiple regression) .............................................................................................75
Table 4.19
Coefficients a (multiple regression) .......................................................................................75
Table 4.20
Hypothesis Overview ...........................................................................................................76
Table 5.1
b
a
b
Overall view of the respondent perceptions ..............................................................................82
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Table A
Overview of definitions and interpretations of customer satisfaction* .......................................96
Table B.1
Summary of one-dimensional research streams of perceived customer value* .......................100
Table B.2
Summary of multi-dimensional research streams of perceived customer value*......................102
Table C
Overview of definitions of service quality ...............................................................................105
Table D.1
Three service quality dimensions in Lehtinen & Lehtinen (1982) .............................................106
Table D.2
Three service quality dimensions in Grönroos (1984) .............................................................107
Table D.3
The five gaps in Parasuraman, Zeithaml & Berry (1985) .........................................................110
Table D.4
The ten dimensions of service quality in Parasuraman et al. (1985) ........................................111
Table D.5
The five dimensions of SERVQUAL in Parasuraman et al. (1988) ..........................................112
Table D.6
The dimensions of the three-component model ......................................................................114
Table D.7
The levels of the hierarchical service quality model ................................................................116
Table D.8
The dimensions of the hierarchical service quality model........................................................116
Table D.9
Comparison of service quality dimensions ..............................................................................119
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CHAPTER 1 INTRODUCTION
1.1
GENERAL INTRODUCTION
In todays globalized and competitive market environment, customers have become more demanding
towards companies because of the increased abundance of choices that they now have. The intense
competition has caused companies to face pricing pressures and slower growth rates (Johnson & Fornell,
1991; Fornell, Johnson, Anderson, Cha, & Bryant, 1996). This has led companies to move beyond price
competition and to differentiate themselves by delivering high quality offerings (Parasuraman, Zeithaml, &
Berry, 1985, 1988, 1991; Cronin & Taylor, 1992).
Within the services sector, this is about delivering excellent service quality that influences the
customer’s perception of the service offering (Zeithaml, 1988). In this regard, service quality can be defined
as an extrinsically perceived attribution based on the customers’ experience in and through the service
encounter (Parasuraman, Zeithaml & Berry, 1990). It has been argued that service quality with its traditional
aspect of core and relational quality are no longer enough to be regarded as a competitive weapon
(Kandampully & Duddy, 1999). Core quality (the more tangible/outcome aspects) has become the basic core
attribute of the offering, which is expected by customers in general (Kandampully & Duddy, 1999). It is the
basic and implicit aspect of the offering that is promised to the customer, which has to be delivered
(McDougall & Levesque, 2000). From the customer’s perspective, it is not only “what is offered” that makes a
service attractive, but “how it is offered”, referring to relational quality (the more intangible/relational aspects).
Customers have thus not only become more critical about the core aspects of the service, as other firms
have similar attributes in their offerings, but also by the way products and services are being offered in terms
of customer services and relations (Kandampully & Duddy, 1999).
Providing service quality, encompassing core quality (what is delivered) and relational quality (how it
is delivered), are thus now seen as basic elements of a service offering, which the service provider needs to
deliver to meet the minimal customer requirements. Core quality should typically be the primary focus of the
firm (delivering the service right the first time) followed by relational quality (maintaining the service delivery
and support). Firms should then ensure that both these aspects enhance the value of the offering as
perceived by the customer, ensuring that the benefit the customer receives is worth the cost of it. Perceived
customer value can thus be defined as the customer’s assessment of the value that has been created for
them by a supplier given the trade-offs between all relevant benefits and sacrifices in a specific use situation
(Flint, Woodruff, & Gardial, 2002). Customers afterwards use the results of the quality perception and value
assessment in their overall evaluation of the service experience, which determines their satisfaction with the
offering (Kandampully & Duddy, 1999; McDougall & Levesque, 2000). Hence, customer satisfaction is
defined as a response to an evaluation of perceived product or service performance, based on the
customer’s judgments of the value that has been created for them (Flint, Woodruff, & Gardial, 1997).
To remain competitive and survive, service companies are thus placing more attention on delivering
excellent service quality that adds to or influences the customers perceived value of the offering as an
experience judgment in an attempt to gain and increase customer satisfaction as the end evaluation of the
offering (Parasuraman et al., 1985, 1988; Zeithaml, 1988; Cronin & Taylor, 1992; Oh, 2000). Service quality,
perceived customer value and customer satisfaction are thus important concepts within this approach.
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Nowadays customers are also comparing new features, options and service concepts between the
different offerings. It is argued that increasingly the main differentiator of a service offering is its newness and
innovation level, referring to service innovations (Botros, 2012). According to den Hertog (2000), in practice
most service innovations appear to be a mix of changes and adaptations of existing services and that service
innovation is a multidimensional phenomenon. Hence, service innovation is defined as a new or considerably
changed service concept, client interaction channel, service delivery system or technological concept that
individually, but most likely in combination leads to one or more (re)new(ed) service functions that are new to
the firm and do change the service/good offered on the market and do require structurally new technological,
human or organizational capabilities of the service organization (Van Ark, Broersma, & den Hertog, 2003).
This implies that a service innovation can take various forms (tangible and intangible) and that it can be
linked to different parts of the value creation process of a service.
Innovation is all about offering new or adapted solutions to customer needs/problems in such a way
that is enhances/adds to the value as defined and used by the customers (Vargo & Lusch, 2004; Michel,
Brown, & Gallan, 2008). Service innovations are closely linked to the concept of perceived customer value,
as they define new ways of creating value for customers (den Hertog, 2010). It is argued that customers will
at least be inclined to continue their relationship with the service provider if the firm maintains their market
leadership, both in exceptional quality and customer service (referring to core- and relational quality), but
also in innovativeness (Kandampully & Duddy, 1999). The argument being made is that competitive
advantage used to come from low prices, high quality and excellent customer service, but lately is also
increasingly depending on service innovations.
In the context of developing innovative service offerings, it has been argued that the service brand
image and provider reputation (corporate/company image) have a strong influence on perceived customer
value and customer satisfaction, as they can influence the customers perception of the value of the offering
when entering new markets or launching innovative services using the existing brand name (Krishnan &
Hartline, 2001; Komulainen, Mainela, Tähtinen, & Ulkuniemi, 2004; den Hertog, 2010). Company- and brand
image are related to each other, as both are concerned with the overall impression of the buildup reputation
in the customers’ mind, and can thus be viewed as one aggregated dimension, namely reputational quality.
Besides core- and relational quality, reputational quality has empirically been shown to be a significant
dimension of service quality (Nimako, Azumah, Donkor, & Adu-Brobbey, 2012), as a positive brand image
and a good company reputation in the mind of the customer influences the perception and evaluation of the
quality of the offering (Grönroos, 1984; Oh, 2000; Jallow, 2013). Reputational quality, in terms of brand
image and company reputation, has also been shown to be a significant driver of perceived customer value
and customer satisfaction, as the influence on the customer’s quality perception adds to the perceived value
judgment of the offering which in turn influences the service experience evaluation and the satisfaction with
the offering (Kandampully & Duddy, 1999; McDougall & Levesque, 2000; Oh, 2000; Nimako, 2012;
Boonlertvanich, 2013). The preceding emphasizes the importance of reputational quality as a service quality
dimension and its relevance regarding new and innovative service offerings, thus indicating that reputational
quality should also be taken into account as a performance driver when assessing service innovations,
besides core and relational quality.
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In this study, service innovation will be the key concept among the other mentioned relevant main
concepts, namely service quality (conceptualized by core, relational and reputational quality), perceived
customer value and customer satisfaction. The challenge of delivering exceptional service quality, but also
continuously having to innovate on the service offering, is only further increasing the competitive pressure on
service companies. In this regard, service quality with its aspects of core, relational and reputational quality
may no longer be enough to be regarded as a source of competitive advantage, but instead have become
more of a competitive prerequisite in which service innovation may now be playing an important role.
1.2
IMPORTANCE AND RELEVANCE OF THE STUDY
Within the services sector, innovation is now being acknowledged as one of the major drivers of the
economic growth and also to be crucial for the competitive process (Cainelli, Evangelista, & Savona, 2006;
Kunttu, 2013), as it is seen as one of the enablers of strategic success and lead to better company
performance in terms of revenue growth (de Brentani, 2001). Innovation brings about financial benefits for
service companies and the ability to provide innovative services faster, cheaper and of higher quality, is seen
a source of strategic success (de Jong, Bruins, Dolfsma, & Meijaard, 2003). Despite the economic,
competitive and strategic significance, the services sector has received relatively less attention regarding
innovation research in favor of technological innovation, which is more relevant for manufacturing industries
(de Jong et al., 2003). In recent years though, innovation research within services has progressed with the
emergence and conceptualization of service innovation (Miles, 1993; Gallouj & Weinstein, 1997; den Hertog
& Bilderbeek, 1999; den Hertog, 2000; de Jong et al., 2003; Van Ark et al., 2003; den Hertog, 2010).
The quality-value-satisfaction interrelation is a key requirement to success and competitive
advantage in the highly competitive market environment, as it leads to price competition protection, costs
reduction, positive word-of-mouth, repeat purchase, reputation enhancement and loyal customers (Kuo, Wu,
& Deng, 2009; Chen & Cheng, 2012; Mackay, 2012). In general, enhancing and measuring the performance
of an offering and the added value as perceived by the customer is important for service providers as it helps
in determining and gauging customer satisfaction, especially in a competitive market environment.
The relevance of this study is that also measuring and evaluating the performance impact of service
innovation can aid service companies in deriving managerial implications, which can help to indicate current
business requirements and adjust the business strategy, especially in the competitive market environment.
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1.3
PROBLEM DEFINITION
The argument being made is that apparently the services landscape is changing, as besides the
service quality aspects of core-, relational- and reputational quality, service innovation is now also playing an
important role in the competitive process. Investigating the significance of service innovation as a service
performance driver, as well as its impact on perceived customer value and customer satisfaction, thus
becomes necessary to empirically substantiate this argument. While there have been studies regarding
innovation in services, most of them where in terms of perceived service innovation attributes towards new
service adoption (Frambach, Barkema, Nooteboom, & Wedel, 1988; Atkinson, 2007; Strutton, Lumpkin, &
Vitell, 2011), service innovation company readiness (Yen, Wang, Wei, Hsu, & Chiu, 2010, 2012) , service
innovation influence on competitive advantage (Wang & Ahmed, 2004; Salunke, Weerawardena, & McCollKennedy, 2013) and influence of innovation on customer value (Nasution, Mavondo, Matanda, & Ndubisi,
2011; Kanten & Yaslioglu, 2012). Little attention has been placed on the performance measurement of
service innovation (Janssen, 2011), especially as perceived by the customer, as the above-mentioned
studies mainly focused on the management’s perception of service innovation, neglecting the customers
perspective/evaluation.
A service innovation will only be successful if it offers added value (benefits over costs) to the
customers compared to other offerings. Perceived value is the value that a customer actually experiences
during the service consumption or usage. This perspective on value is important, as it is the end user who
finally evaluates the performance and the value of an offering (satisfaction) and decides whether to continue
using the service, and not how management sees it.
This study thus aims to fill the gap of the customers perspective by investigating the significance of service
innovation as a service performance driver as perceived by the customer and its impact on perceived
customer value and customer satisfaction. An instrument to measure this significance and impact also
seems to be missing in the literature. This conclusion is corroborated by other researchers who argue that
research should be done to investigate how service innovations can be measured/evaluated regarding
quality and performance (Schwarz, Durst, & Bodendorf, 2012) and that metrics are needed to measure the
impact and outcome of services innovations using a multidimensional approach to performance which allows
management to direct actions to those areas that need intervention (Djellal & Gallouj, 2010; Durst & Mention,
2013). In this regard, this study will also aid in the development and validation of a measurement instrument
regarding service innovation as a service performance driver as perceived by the customer, besides the
service quality aspects of core, relational and reputational quality.
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1.4
RESEARCH OBJECTIVE
The objective of this study is to evaluate the significance of service innovation as a service
performance driver compared to the aspects of service quality and investigate if it significantly impacts on
perceived customer value and customer satisfaction, as the quality-value-satisfaction interrelation has been
argued to be a key requirement to success and competitive advantage.
The results of the study will add to the theoretical understanding of the current significant
performance aspects of service quality and service innovation as perceived by the customer and can be
used by service providers to derive managerial implications on the necessary business requirements and
strategy, especially in the competitive market environment.
1.5
RESEARCH QUESTIONS
Based on the research objectives the following main research question is formulated:
The main research question is:
What is the mutual significance between service innovation and service quality and what is their
impact on perceived customer value and customer satisfaction?
To help better answer the main research question, the following sub research questions are formulated:

What is the mutual significance between service innovation compared to core-, relationaland reputational quality as the dimensions of service quality?

What is the impact of service innovation on perceived customer value?

What is the impact of service quality on perceived customer value?

What is the impact of perceived customer value on customer satisfaction?
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1.6
RESEARCH METHODOLOGY OVERVIEW
This research is a deductive study and has a quantitative approach, as existing theory is used, pre-
conceptualized relationships between variables are measured, hypotheses formulated and tested in order to
answer the research questions. A questionnaire is developed as data measurement/collection instrument, in
which all the earlier mentioned dimensions have been operationalized. A survey is conducted in which a
service offering of a provider that meets certain criteria is evaluated. The intention of the criteria is to help
guarantee as much as possible that the service/provider applies within the context of service quality, service
innovation and customer satisfaction enhancement. In this regard, the TeleG mobile telecom service by
Telesur is chosen as an appropriate service candidate, as it met the stated criteria. For a more detailed
outline of the employed research methodology, reference is made to chapter three of this study.
1.7
RESEARCH LIMITATIONS
As is with every research, this study also has its limitations. The following are formulated:

This study is conducted on a specific service type by evaluating the service/provider to meet certain
criteria in the context of service quality, service innovation and customer satisfaction enhancement.
Although this study forms a basis for further research, it may not yet be enough to derive general
conclusions for all service types within the sector.

The research sample consists of only university students, with the requirement that they are
currently using the service offering under evaluation. Thus, the results research may not be
generalizable for all the different demographic groups within the population.

The questionnaire is carried out in only one city, namely the capital, which is in the more rural
coastal region of the country. Although a large part of the population lives there, this can still be seen
as a limitation as the results of the study can be different if the survey where to be carried out in the
interior of the country for example, where the people live in relatively small communities with their
own specific cultural makeup en service requirements, compared to that of the capital.
1.8
GENERALIZABILITY
This study can be used by other service companies who are striving to improve customer satisfaction
through service innovation and service quality, especially those in competitive markets and facing increasing
customer demands. Besides adding to the current available service marketing literature, the study can also
be used by other researchers who are planning to investigate the same or relating concepts, namely service
innovation, service quality, perceived customer value and customer satisfaction.
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CHAPTER 2 LITERATURE REVIEW
2.1
INTRODUCTION
This chapter gives an overview of the literature regarding the concepts relevant in this study, namely
service innovation, service quality, perceived customer value and customer satisfaction. The aim of
presenting the empirical background of these concepts is not only to give deeper insight of them and to
investigate their importance, but also to show their interrelations. This is important, as it will help to form a
conceptual view of the chain of these relations, which is necessary to be able to develop a theoretical
research framework. Based on the interrelations within the framework, the different hypotheses to be tested
are formulated.
Because the enhancement of customer satisfaction is the resulting and dependent construct within
this study, this concept will be investigated first, followed by its importance. Afterwards the concept of
perceived customer value and its relation on customer satisfaction is looked at. Hereafter, service quality and
its conceptual models are discussed, followed by its influence on perceived customer value and customer
satisfaction. Finally, the concept of service innovation and its influence on perceived customer value and
customer satisfaction are outlined. Its conceptualization is elaborated and its applicability as a service
performance driver is shown.
2.2
CUSTOMER SATISFACTION
2.2.1
DEFINING CUSTOMER SATISFACTION
Customer satisfaction is a term that is mostly used in the marketing literature. In general, it is a
concept that is used to explain the satisfaction response of customers with a product or service offering.
A review of the literature shows that there have been many studies regarding this concept and that many
definitions for customer satisfaction are given. An overview of these different definitions of roughly the last
thirty years is presented in Appendix A. This overview shows that there is a certain variance in the definition
and interpretation of the customer satisfaction concept, which makes arriving at a specific definition, but also
explaining why a certain interpretation is more appropriate within a research context, less straightforward.
In an attempt to develop a guideline for the selection of an appropriate definition for the customer
satisfaction concept in a specific research context, Giese and Cote (2002) developed a procedure to aid with
this. The procedure is derived from a framework for consumer satisfaction, which they developed based on
commonalities of the existing definitions/interpretations in the literature as well as the views of the consumer.
The commonalities are:
1) consumer satisfaction is a response (emotional or cognitive);
2) the response pertains to a particular focus (expectations, product or service itself, consumption
experience, value experience, etc.);
3) the response occurs at a particular time (after consumption, after choice, based on transactional or
accumulated experience, etc.).
(Giese & Cote, 2002)
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According to Giese and Cote (2002), a definition of customer satisfaction should at least be
comprised of these three basic components, namely a response pertaining to a particular focus determined
at a particular time. By working out these three components, researchers should be able to develop or
choose a definition that conceptually best suites their specific research context.
Within this study, the objective is to evaluate the significance of service innovation as a service
performance driver compared to the aspects of service quality and investigate if it significantly impacts on
perceived customer value and customer satisfaction. It is thus about the enhancement of the perceived value
of using a service offering by employing service quality and service innovation, which eventually affects
customer satisfaction. Based on this, the three components from the framework of Giese and Cote (2002) for
this study are derived to be:

the response: the customer’s evaluation of using a service (evaluation response)

the focus: the perceived service performance in terms of value enhancement

the time: post consumption/usage
The same process of identifying the three components per definition has been done and presented
in Appendix A, which is mostly adapted from study by Giese and Cote (2002). Using the above-derived
components for this study, the definition for customer satisfaction from Appendix A that best suites our
contextual setting is from Woodruff and Gardial (1996): “Customer satisfaction is essentially a response to an
evaluation of perceived product or service performance, based on the customer’s judgments of the value that
has been created for them.” (Flint, Woodruff, & Gardial, 1997), as the three derived components of this
definition and this study context overlap the most.
It should be noted that in the overview of the definitions in Appendix A, it comes to attention that the
satisfaction research is mostly dominated by a paradigm by Oliver (1977, 1980), known as the expectations
disconfirmation or EDT theory (Flint et al., 1997; Giese & Cote, 2002), where a gap is calculated by
comparing between the customers’ pre-purchase/usage expectations (desires, feelings or wants of
customers of what a product/service should offer) and the post-purchase/usage performance perceptions
(the customers’ belief/perception about the product/service experience/performance) of the offering. This is
not coincidental, as the expectations disconfirmation paradigm is the traditional theory by which customer
satisfaction has been investigated. The expectations disconfirmation model is illustrated in figure 2.1.
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Various product/service attributes
Actual performance of the
like technical quality, functional
product/service, prior experiences,
quality & credence quality.
referrals & marketing.
Perceptions
Expectations
Comparison
P<E
P>E
P~ E
Positive Confirmation
Confirmation
Negative Confirmation
Enhanced Satisfaction
General Satisfaction
Dissatisfaction
Figure 2.1
The expectations disconfirmation theory (EDT)
(Adapted from Oliver 1977, 1980)
The theory behind the model is that customer expectations are formed before the purchase or use of
an offering. These expectations are used as a standard or frame of reference in the evaluation/judgment of
the actual performance perception. Customers thus arrive at satisfaction feelings or thoughts as a result of
the comparison between the perceived performance and pre-purchase/use expectations. If the performance
of a product or service is seen as equal to what was expected (confirming), the customer is
generally/neutrally satisfied. If it exceeds the expectations (positively disconfirming), the customer is very
satisfied. However, if it falls short of the expectations (negatively disconfirming), the customer will be
dissatisfied with the offering.
Although the expectations disconfirmation theory forms the traditional bases for the customer
satisfaction research, other contextual interpretations and definitions have been developed by other
researchers, as is shown in Appendix A, based on varying research contexts in which another view of the
construct was appropriate. Hence, no definition is better or worse than the other is, but depends on the
specific context of the research.
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2.2.2
DIFFERENT VIEWS OR PERSPECTIVES OF CUSTOMER SATISFACTION
Because of the different definitions of customer satisfaction, the construct has also been generally
conceptualized in different views or perspectives. Customer satisfaction can be viewed as being
transactional or cumulative. According to Oliver (1980) and Boulding et al. (1993), as a transactional
perspective it is based on a post-purchase evaluative judgment of one specific purchase occasion.
According to Fornell (1992), Anderson, Fornell and Lehmann (1994) and Wang and Hing-Po Lo (2002), in
the cumulative perspective, customer satisfaction is conceptualized as an overall customer evaluation of a
product or service based on the total purchase and consumption experiences over a time period (Kuo, et al.,
2009; Agbor, 2011; Nimako, 2012).
For the performance evaluation of customer satisfaction, the cumulative perspective is more useful
and reliable compared to transaction-specific, as it is based on a series of purchase and consumption
moments rather than just one occasion of transaction (Nimako, 2012). It is also useful in predicting the
service companies past, present and future performances (Agbor, 2011). This view has a certain link with
innovation, as it also takes into account future performances, which will likely also be based on innovations
of the existing services. Therefore in this study, customer satisfaction shall also be viewed as cumulative; in
which satisfaction will be conceptualized as a cumulative experience evaluation of the overall service offering
and not of a specific occasion.
In Parker & Mathews (2001), there is also the view of customer satisfaction either as a process or as
an outcome. As a process, it is viewed as an evaluation between what the customer has received (actual
performance) and what was expected before the consumption/purchase (Oliver, 1977, 1981; Olson and
Dover, 1979; Tse and Wilton, 1988). The process approach clearly has its origins in the earlier mentioned
expectation disconfirmation theory, which argues that satisfaction is determined by the perception of the
discrepancy between the received performance and prior expectations.
The process view is the most widely adopted of the two and has been used to understand
satisfaction in many researches. The process approach emphasizes the perceptual, evaluative and
psychological processes that contribute to customer satisfaction. On the other hand, the outcome approach
views customer satisfaction as the end psychological (cognitive, emotional) state of the customer which
results from the consumption experience(s) itself (Parker & Mathews, 2001). According to Oliver (1996) and
Vavra (1997), the outcome can occur without comparing expectations, thus without the evaluative process of
the comparison between expected and actual performance. The outcome approach thus emphasizes the
result of the consumption experience itself, which contributes to the customer’s satisfaction.
Within this study, customer satisfaction will be also viewed as an outcome, as based on the adopted
definition we will be assessing customer satisfaction as an overall response to the evaluation of the
perceived service performance based on the customer’s judgments of the value that has been created for
them (an overall post evaluation response of the consumption experience) and not explicitly compare
between expected and actual performance.
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2.2.3
THE IMPORTANCE OF CUSTOMER SATISFACTION
Within the service marketing literature, customer satisfaction has become an important concept.
According to Johnson et al. (1991, 1996), because of increased competition, industries and companies
worldwide are facing slower growth rates and price pressures. Because of this, greater attention is being
placed on achieving or increasing customer satisfaction (Zangmo, 2011).
Several benefits can be associated with establishing and improving high levels of customer satisfaction.
According to Zeithaml et al. (1996) and Strauss et al. (2001), satisfied customers are more likely to return
and repurchase, while dissatisfied customers are more likely to go elsewhere (Mackay, 2012). According to
Oliver (2010), because of the repeat purchase, satisfied customers can eventually become loyal to the
offering and/or brand (Mackay, 2012). Loyal customers in turn will generate positive word-of-mouth to other
prospective customers because of their good experiences with the offering and thus deliver indirect
advertising (Fornell, 1992; Zeithaml et al. (1996); Raab, Ajami, Gargeya, & Goddard, 2008).
Machado & Diggines (2012) argue that continuously being able to satisfy your customers will eventually add
to the reputation or image of the offering/company and consequently attract more customers. They also
argue that satisfied customers need less incentive to repurchase, thus eventually lowering marketing
expenses (Mackay, 2012). It has also been argued that it costs more to gain a new customer than it does to
retain an existing one (Gummesson, 1994).
Achieving and increasing customer satisfaction is thus important for companies in a competitive market to be
successful, because through satisfied customers organizations can eventually improve their profitability by
expanding their business operations and gaining a larger market share because of the repeat and referral
customers (Heskett, Sasser, & Schlesinger, 1997; Baker, 2013). Hence, companies should constantly aim to
satisfy their customers, but also to constantly measure and improve satisfaction levels.
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2.3
PERCEIVED CUSTOMER VALUE
2.3.1
DEFINITION AND APPROACHES TO PERCEIVED CUSTOMER VALUE
Perceived customer value is often discussed within the marketing literature, generally as a concept
that explains how the value of a product or service offering is perceived by the customer. However, there
seems to be a lack of agreement among scholars regarding its conceptualization and measurement, as
divergent views and thus different definitions are offered within the literature (Sweeney & Soutar, 2001;
Sánchez-Fernández & Iniesta-Bonillo, 2007).
In Sánchez-Fernández & Iniesta-Bonillo (2007), a systematic review has been conducted on the extensive
past research regarding the conceptualization of perceived customer value, resulting in an overview of the
different major approaches. Their study revealed that there are two main views to the operationalization of
perceived customer value, namely a one-dimensional and a multi-dimensional approach. These main views
and their different streams have been illustrated in figure 2.2.
One-dimensional
Price-based studies
Monroe’s research stream
Means-end theory
Zeithaml’s approach
Nature of
Additional research
perceived
customer
value
Woodruff’s value hierarchy
Multi-dimensional
Axiology of value theory
Utilitarian and
Holbrook’s typology of value
hedonic value
Consumption-values theory
Figure 2.2
Research approaches of perceived customer value
(Adapted from Sánchez-Fernández & Iniesta-Bonillo (2007))
To help in the determination of an appropriate definition for perceived customer value within this
study, based on the study of Sánchez-Fernández & Iniesta-Bonillo (2007), a summary of the one- and multidimensional approaches and their inherent streams have outlined in appendix B. For this study, the following
extracts of the summary are important.
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In the one-dimensional approach, perceived customer value is seen as a single overall construct, in
which the costumer’s perception of the value can be measured as an overall evaluation. In this view, the
construct itself can be influenced by multiple antecedents, but does not consist of an aggregation of multiple
subcomponents or aspects. This approach forms the founding body of research for the perceived value
concept and is basically seen from a utilitarian (useful, practical, functional or instrumental) perspective, in
which economic and cognitive (intellectual) reasoning is used to assess the relevant perceived benefits and
costs of the offering. In this regard, customers are seen as rational beings that mainly make market choices
that maximize utility, while constrained by market prices and their income.
Within the one-dimensional approach, the conceptualization of perceived value is thus functional in
nature, where it basically has been assessed as a quality–price relationship or value-for-money (Dodds &
Monroe, 1985; Grewal, Monroe & Krishnan, 1996, 1998), which is about a cognitive trade-off between
perceived quality and the total cost incurred for the offering. Based on the work of Dodds & Monroe (1985),
Zeithaml (1988) adapted the quality–price trade-off view and assessed perceived value more generally as a
trade-off between ‘giving’ and ‘getting’, meaning the value perceived based on what is given (sacrifices, like
monetary costs – price and eventual other costs – and nonmonetary costs – time/effort) against what is
received (benefits, like quality, customer service, performance and brand name/reputation). Perceived
customer value was thus defined as the consumer’s overall assessment of the utility of a product or service
based on perceptions of what is received and what is given (Zeithaml, 1988). This definition has become one
of the most widely used in the study of the perceived customer value concept, as a construct that can be
measured just by asking respondents to rate the value of what they have received in making their purchases
based on what they have given as sacrifice (Sánchez-Fernández & Iniesta-Bonillo, 2007).
Flint, Woodruff and Gardial (2002) complemented the view of Zeithaml by defining a perceived
customer value judgment as the customer’s assessment of the value that has been created for them by a
supplier given the trade-offs between all relevant benefits and sacrifices in a specific use situation. They thus
extended the view of perceived customer value with the customers overall value assessment of the offering,
as well as the sacrifices (price and time/effort) against benefits (quality, customer service, performance and
brand name/reputation) trade-off assessment.
The multi-dimensional approach in contrast views perceived customer value as a construct
consisting
of
multiple
interrelated
aspects/dimensions
that
together
form
an
integrated/holistic
representation. Although the one-dimensional approach possessed the merit of simplicity, the multidimensional approach was suggested by researchers (Bolton & Drew, 1991; Sheth, Newman & Gross, 1991;
Sweeney & Soutar, 2001), as it was argued that the cognitive quality-price trade-off view (value-for-money)
alone is too simplistic and narrow focused and should be multifaceted, as there could be other aspects that
also increase the construct’s usefulness. These researchers argued that a one-dimensional view did not
reflect the complexity of a customer’s perceptions of value, as it failed to take into account intangible
(emotional) factors that form part of the customers evaluation of an offering (Sweeney & Soutar, 2001).
They argued that we were likely to miss out on possible important (emotional) nuances if we limit our
understanding to this narrow point of view (Woodruff, 1997), as the costs and benefits are not continuously
rationally calculated by customers, but that preconceptions and consumption emotions also play a certain
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role in the customers’ experiences and evaluations (Gummerus, 2011). Drawing on these wider view
arguments, the traditional assessment of value from a utilitarian only perspective was combined with a
hedonic (emotional) response, in which an affective (non-cognitive, non-instrumental, experiential)
component reflecting entertainment and emotional worth of the offering was added to the conceptualization
(Sánchez-Fernández & Iniesta-Bonillo, 2007).
Based on the consumption value theory of Sheth, Newman & Gross (1991) (appendix B, section
B.2.4), Sweeney & Soutar (2001) developed a multidimensional model for the measurement of perceived
customer values for consumer goods, termed PERVAL, consisting of the dimensions emotional value (the
utility derived from the feelings or affective states that a product generates), social value( the utility derived
from the product’s ability to enhance social self-concept), functional value (price/value) (the utility derived
from the product compared to its perceived cost reductions) and functional value (performance/quality) (the
utility derived from the perceived quality and expected product performance). This multi-dimensional
measurement model was significant, as it was very operationalizable (Sweeney & Soutar, 2001).
In the study by Lim, Widdows & Park (2006) regarding perceived customer value in the services, the four
value dimensions of Sweeney & Soutar (2001) were adopted and of which three dimensions emerged as
significant, namely: economic, emotional and social value. In the study by Lim et al. (2006), functional value
(price/value) of Sweeney & Soutar (2001) was renamed as economic value to better represent its conceptual
meaning, while functional value (performance/quality), which consisted of attributes that have been regarded
as part of the service quality concept (Cronin, Brady, & Hult, 2000), was dismissed as a value dimension and
used instead as a service quality dimension.
A comparison between the one- and two-dimensional approaches and their differences have been
summarized in table 2.1.
Table 1.1
Comparison between the one-dimensional and multi-dimensional approach*
Approach
One-dimensional
Multi-dimensional
Bases
Economic theory and cognitive psychology
Consumer-behavior psychology
Perspective
Utilitarian
Utilitarian & hedonic
Approach
Cognitive
Cognitive-affective
Focus
How value is evaluated
How value can be improved
Scope
Simplicity
Richness and complexity
Observation
Direct observation of value
Observation through the components
Lack of agreement on the
Lack of agreement regarding the
antecedents of value
components of value
Confusion about the relationship
Confusion about the relationship
among the antecedents
among the components
Widely employed
Seldom employed
Issues
Relative use
*Adapted from Sánchez-Fernández & Iniesta-Bonillo (2007)
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The comparison brings forward that there are noticeable differences (regarding the basis, focus,
scope, observation, issues and use), but also that in certain aspects (perspective and approach) the multidimensional approach forms an extensions of the one-dimensional view. Still, both approaches have their
contributions to the study of perceived value and they should not be seen as each other’s opposites, but
rather as representations of a simple and complex view regarding the nature of the concept (SánchezFernández & Iniesta-Bonillo, 2007).
Although the multi-dimensional approach provides a more comprehensive/holistic representation of the
concept, it should be noted that relatively fewer studies have pursued this view, compared to the onedimensional one. As argued in Sánchez-Fernández and Iniesta-Bonillo (2007), possible reasons could be
that this view is conceptually ambiguous and questionable, as it explains less variance (measurement
spread or dispersion with respect to the mean) and that it confuses relationships between its inherent
dimensions and other constructs. To finalize, the relevant conclusions of their study were that both
approaches have their roles to play in providing either a simplified utilitarian/functional view (onedimensional) or a complex, utilitarian and emotional understanding (multi-dimensional) of the concept. Either
way, the concept implies a value assessment by the customer of the product or service offering.
Based on the preceding, within this study the concept of perceived customer value will be viewed as
a one-dimensional construct, as this approach offers a better practical conceptualization and variance
explanation. Thus, the concept is viewed as a single overall construct, in which the costumer’s perception of
the value will be measured as an overall assessment, as well as the sacrifices (price and time/effort) against
benefits (quality, customer service, performance and brand name) trade-off assessment. By choosing the
one-dimensional approach, the definition of Flint, Woodruff and Gardial (2002), complementing Zeithaml
(1988), comes forward and is adopted in this study. They defined a perceived customer value judgment as
the customer’s assessment of the value that has been created for them by a supplier given the trade-offs
between all relevant benefits and sacrifices in a specific use situation.
Still, the importance of the nuances of perceived customer value regarding the intangible (emotional)
factors that also form part of the customer’s evaluation of an offering from the multi-dimensional view cannot
be dismissed. Hence, in this study, the emotional and social values in Lim et al. (2006) will also be taken into
account in the conceptualization, not as different dimensions, but rather as added measurement variables
within the overall one-dimensional assessment of perceived customer value, besides the sacrifices-benefits
trade-off assessment. The economic and functional value assessments in Lim et al. (2006) will be neglected,
as these have strong similarities with attributes which are regarded as part of value for money (Flint et al.,
2002) and service quality respectively (Cronin et al., 2000).
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2.3.2
RELATION BETWEEN PERCEIVED CUSTOMER VALUE AND CUSTOMER SATISFACTION
Within this study, customer satisfaction has been defined as a response to an evaluation of
perceived product or service performance, based on the customer’s judgments of the value that has been
created for them (Flint, Woodruff, & Gardial, 1997). While perceived customer value has been defined as the
customer’s assessment of the value that has been created for them by a supplier, given the trade-offs
between all relevant benefits and sacrifices in a specific use situation (Flint, Woodruff, & Gardial, 2002).
When looking at these definitions, one can easily confuse one with the other. Although they show
similarities, they are different. Based on the above definition, a perceived customer value judgment is about
the assessment or evaluation of the value provided by the offering as perceived by the customer, taking into
account the trade-off between all benefits received and sacrifices given. Customer satisfaction is about the
response of the customer resulting from the (earlier made) evaluation of the offering, based on the perceived
performance as well as the provided value judgment. According to Woodruff (1997), perceived value
represents the customer’s cognition of the mutual/relational exchange resulting in a net utility derived from
the supplier, while satisfaction reflects the customer’s overall (positive or negative) feeling derived from the
perceived value (Yang & Peterson, 2004). Based on the comparison of the definitions, theoretically
perceived customer value antecedes customer satisfaction, as the value judgment (perceived value) comes
before the evaluation response (satisfaction). Customer satisfaction is thus generally regarded as a postpurchase and post-use evaluation event (Hunt, 1977; Oliver, 1981), which depends on the customer’s
experience of having used the product or service. On the other hand, perceived customer value can occur at
various stages, generally at the consumption stage (Sheth et al., 1991) where the actual use experience is
defining. But, it can also occur in the pre-purchase stage (Woodruff, 1997), as it can be present prior to the
purchase based on earlier experiences or perceptions of an existing image of the product or service offering
(Sanchez, Callarisa, Rodriguez, & Moliner, 2006). The theoretical relation between perceived customer value
and customer satisfaction has been empirically confirmed, as is shown in the following passage.
Within the service marketing literature, many studies have shown that perceived customer value is
an important factor in gaining customer satisfaction (Zeithaml, 1988; Rust & Oliver, 1994; McDougall &
Levesque, 2000; Cronin et al., 2000; Wang et al., 2004; Turel & Serenko, 2006; Hume & Mort, 2008; Kuo et
al., 2009; Chen & Cheng, 2012;). The argument for perceived value being a significant driver of customer
satisfaction is that when customers recognize/perceive higher levels of value in an offering, they are likely to
feel positive about their consumption experience and purchase decision (Oh, 2000; Zeithaml, 1988).
Another consequence of perceiving high levels of value is that current customers are likely to have higher
levels of willingness to buy more of the same or from the same provider (higher repurchase intention) and
lower levels of willingness to look for alternatives (lower switching intention), leading to these customers
being maintained (retention). While, new customers can be attracted through positive word-of-mouth by the
retained customers, which can eventually grow into long-term and profitable relationships, adding value not
only to the customer but also to the service providing company (Fornell et al., 1996; Oh, 2000; Mackay,
2012;). The preceding emphasizes the importance of examining the perceived customer value concept and
its impact on customer satisfaction.
Based on the arguments in this paragraph, the following hypotheses can be formulated:
Hypothesis 1: Perceived customer value has a positive impact on customer satisfaction.
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2.4
SERVICE QUALITY
2.4.1
APPROACHES AND DEFENITION OF SERVICE QUALITY
Within the management and marketing literature, the concept of service quality has been
investigated many times in the past decades (Lewis & Booms, 1983; Grönroos, 1982, 1984, 2001; Zeithaml,
1988; Bitner, Booms & Tetreauly, 1990; Lehtinen & Lehtinen, 1982, 1991; Cronin & Taylor, 1992; Brown,
Churchill, & Peter, 1993; Rust & Oliver, 1994; Parasuraman, Zeithaml & Berry, 1985, 1988, 1990, 1994,
1996; Asubonteng, McCleary & Swan, 1996; Oliver, 1980, 1997; Dabholkar, Shepherd & Thorpe, 2000;
Parasuraman & Zeithaml, 2002; Jain & Gupta, 2004; Seth, Deshmukh & Vrat, 2005). Clearly, the concept
has received a lot of attention and many definitions have been given within the studies of which an overview
is presented in Appendix C.
From this overview, it becomes evident that there seem to be two main approaches to the service quality
concept, namely a perceptions-expectations discrepancy approach (Lewis & Booms, 1983; Grönroos, 1984;
Parasuraman et al., 1988, 1985; Oliver, 1980, 1997; Asubonteng et al., 1996; Parasuraman & Zeithaml,
2002) and a performance perceptions only approach (Parasuraman et al., 1990; Bitner et al., 1990).
The perceptions-expectations discrepancy approach seems to be more dominant, as in most of the
definitions service quality is viewed as the difference between what was expected and what is perceived.
This is not coincidental, as the initial conceptualizations of service quality (Lehtinen & Lehtinen, 1982;
Gronroos, 1982; Parasuraman et al., 1985) had its roots in the expectations disconfirmation theory by Oliver
(1977, 1980). The argument was that a positive service experience will at least depend on the provider’s
ability to understand their customers’ needs and wants (expectations) and their ability to deliver an offering
that meets or exceeds these expectations (performance perceptions) (Boulter & Bendell, 2010). This view
originated from the product quality (physical goods) and customer satisfaction literature, where the
disconfirmation paradigm had already been employed (Oliver, 1977, 1980; Churchill & Surprenant, 1982).
This adopted school of thought is what led to the initial conceptualization of service quality (Lehtinen and
Lehtinen, 1982; Gronroos, 1982, 1984; Parasuraman et al., 1985, 1988) to also have its basis in the
expectations disconfirmation theory (Beaumont-Kerridge, 2001).
In this regard, Lehtinen & Lehtinen (1982) and Grönroos (1982, 1984) are seen as the pioneers in the study
of the service quality concept, while Parasuraman, Zeithaml & Berry (1985, 1998) have mostly led further
research (Pérez, Abad, Carrillo, & Fernández, 2007).
All these authors generally view service quality as a comparison between the customers’ prepurchase/usage expectations and the post-purchase/usage perceptions of performance. If the perceptions
are higher than the expectations, then the service will be considered as of excellent quality; while if the
perceptions are equal to the expectations, than the service is considered to be of good/acceptable quality;
but if the perceptions are lower than the expectations, the service will be considered as bad (below the
expected quality).
Based on the perceptions-expectations discrepancy view, service quality can be defined as a form of
attitude that results from a comparison of expectations with perceptions of performance (Parasuraman,
Zeithaml & Berry, 1988) or as the discrepancy that results from a comparison between a customer’s
perceptions of a service delivery and the customer’s initial expectations of the service provider (Parasuraman
& Zeithaml, 2002).
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Although the expectations disconfirmation approach seems to be more widely accepted, there has
been a lot of criticism (Cronin and Taylor, 1992, 1994; Teas, 1993, 1994; Brown, Churchill & Peter, 1993; Oh
& Parks, 1997; Brady, Cronin & Brand, 2002) regarding the view of service quality as a gap between prepurchase/usage expectations and post-purchase/usage performance perceptions, in which service quality is
evaluated by the arithmetic difference between the two. The main issues with the approach are:

Problems with reliability, variance restriction and predictive validity
According to Brown et al. (1993), the computed expectations-perceptions gap can be seen as
indirect and objective, as it is the researchers’ computed comparison and not directly that of the
subjects. The individual assessments of the expectations and the perceptions though are direct and
subjective, being the opinions of the service users themselves. Hence, these researchers argue that
the effect of indirectly evaluating the difference between the two direct assessments produces
weaker reliabilities than the individual assessments themselves. This causes restricted variance of
the evaluation and generates an undermining effect on the predictive capability of the measurement
model (Oh, 2000; Dabholkar, Shepherd, & Thorpe, 2000).

Consideration of a longitudinal- or a cross-sectional design
When evaluating the gap between pre-purchase expectations and post-purchase performance
perceptions, the argument arises as to whether both the expectations and the perceptions should be
measured in a cross-sectional study (observations of the same subjects within the same timeframe;
relative simultaneous measurements) or using a longitudinal design (observations of the same
subjects over a period of time; time separated measurements) would be more appropriate.
In a longitudinal design, the expectations would be measured before the service delivery and the
perceptions afterwards. This design would seem to be the best approach, as the expectations are
indeed pre-purchase thoughts (cognitive) and/or feelings (emotional), while the perceptions are postpurchase evaluations (the actual perceived performance). Still, in most of the studies, the research
was cross-sectional because of practical limitations, as usually the luxury of questioning respondents
before and after the service purchase/usage event is not available; it is also very time consuming
and more costly to execute (Dabholkar et al., 2000).

Multicollinearity problems
In the computed difference assessment, the service aspects to be evaluated need to be measured
twice, once as an expectation component and once as a perception component. As previously
indicated, the research design is usually cross-sectional because of practical limitations, where both
components are measured simultaneously. According to Oh & Parks (1997), the simultaneous
assessment of the pre-purchase expectations and the post-purchase performance perceptions can
cause multicollinearity problems (high correlation of two or more predictor variables in the same
regression model), as the respondents need to report both their expectations and perceptions almost
simultaneously. This can cause invalid results about the individual predictors and lead to potential
redundancies in the construct conceptualization (Oh, 2000; Dabholkar et al., 2000).
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Based on these concerns, the use of the customers’ expectations in evaluating service quality has
been discouraged and researchers (Cronin and Taylor, 1992, 1994; Teas, 1993, 1994) have suggest that
only the customers’ perception of the service quality performance be used to conceptualize and measure the
concept. Thus in appendix C, there are some definitions in which service quality is formulated only based on
the customers’ perception. In this regard, service quality can be defined as the customer’s overall impression
of the relative inferiority/superiority of the organization and its services (Bitner, Booms & Tetreauly, 1990) or
as an extrinsically perceived attribution based on the customer’s experience in and through the service
encounter (Parasuraman, Zeithaml & Berry, 1990). According to these authors, the concept mainly involves
perceived service quality (how the quality of the service is experienced) and thus it has been elaborated that
service quality is whatever the customer perceives it to be. This view suggests that within service quality, the
customers’ perception is more relevant in assessing their evaluation of the service performance than the
expectancy part of the equation and that the latter can be neglected (Cronin & Taylor, 1992).
To answer whether the expectations disconfirmation approach or the perceived performance only
approach is most appropriate in a given research context, researchers (Parasuraman, Zeithaml, & Berry,
1994; Jain & Gupta, 2004) have assessed both views regarding their diagnostic capability and predictive
power. In this regard, diagnostic capability refers to the ability to pinpoint shortcomings in the service and
identify areas for improvement and management intervention, based on the customers’ perceptions relative
to their expectations. Predictive power refers to the reliability, validity and variance explanation of the overall
service quality performance assessment. The following passage outlines the results of these studies.
The perceived performance only approach provides better predictive power, because of its
psychometric soundness (consistently and accurately measuring what is supposed to be measured) and
greater instrument parsimoniousness (comparability across population groups by demonstrating reliability
and validity). This result is due to the direct and subjective measurements where no arithmetic gap is
calculated. However, the approach is found to be weaker in its diagnostic capability. This means that it has a
weaker ability to identify the service quality aspects that need improvement and management intervention.
The weaker diagnostic capability results from the fact that there is no point of reference for comparison,
referring to the omitted expectations component. There is only an implied comparison with the maximum
attainable score of the performance scale itself, which may suggest improvements to be made in areas
where the performance level may already conform or exceed the (omitted) customers’ expectations.
Because of its better predictive power, the perceived performance only approach is better suited in
assessing the overall service quality of an offering, or the performance of the service provider, or when
service quality comparisons across service industries need to be made.
On the other hand, the expectations disconfirmation approach is far better in its diagnostic capability,
because of the comparison between the performance perceptions and the customers’ expectations. This
provides a more practical and logical diagnosis of the service quality aspects that need improvement. This is
important from a managerial and strategic perspective, as company resources can be effectively allocated to
the determined service quality areas that need improvement in order to meet or exceed the customers’
expectations. The approach is still relatively weaker in its predictive power compared to the perceived
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performance only approach, namely because of the earlier mentioned concerns regarding the indirect
arithmetic perception-expectation difference score. Because of its superior diagnostic capability, the
expectations disconfirmation approach is more suited when the objective is to identify areas that need
managerial intervention in the case of any shortcomings (Parasuraman et al., 1994; Jain & Gupta, 2004).
According to Cronin & Taylor (1992), another issue with the expectations disconfirmation approach is
the double measurement, once for the expectations part and once again for the perceptions part. This
creates a larger data collection task compared to its perceived performance only counterpart, where only the
performance perception component in measured. In this regard, the performance only approach is a
methodological improvement over the disconfirmation approach, as it effectively reduces the number of
items to be measured by 50 percent. In studies where responses form people are necessary, the issue of
ease in data collection and measurement instrument efficiency are a mayor consideration. Respondents
often do not have time for a lengthy questionnaires or interviews and can thus affect the response rate (Jain
& Gupta, 2004). Thus, the consideration would be whether the methodological efficiency and predictive
power of the performance only approach outweigh the diagnostic capability of the disconfirmation approach.
The objective in this study is to evaluate the mutual significance of service innovation compared to
the aspects of service quality as performance drivers and to measure the impact of these dimensions have
on perceived customer value and customer satisfaction. An approach that is strong is predictive power is
thus important. Hence, the performance perceptions approach is better suited for this study and will be
adopted to evaluate the service quality performance as perceived by the customer, as it is superior in its
reliability, validity and variance explanation. The methodological efficiency advantages of the data collection
are also maintained, as the number of measurements points is halved, compared to the disconfirmation
approach. The adopted approach will also help regarding the issue of considering a longitudinal- or a crosssectional study design. As only the performance perceptions need to be reported, the study design no longer
entails two measurement events, thus forfeiting the necessity for a longitudinal design. Using a crosssectional study design to measure service quality has also been supported by Dabholkar et al., (2000).
By using the performance perceptions only approach, the definition that will be adopted in this study is that of
a Parasuraman, Zeithaml & Berry (1990) in which service quality is defined as an extrinsically perceived
attribution based on the customers’ experience in and through the service encounter.
2.4.2
CONCEPTUALIZATION OF SERVICE QUALITY
The conceptualization of the service quality construct at first eluded researchers, mainly due to the
specific characteristics of services. The specific aspects of services have been outlined in Appendix E.
Especially the more intangible nature of services (often a nonphysical outcome), compared to the physical
products in the manufacturing industry, made the operationalization and measurement of the customers'
viewpoint regarding service quality performance somewhat less obvious (Parasuraman et al., 1985). Despite
the specific nature of services, researchers (Lehtinen & Lehtinen, 1982; Gronroos, 1982; Parasuraman et al.,
1985) where able to conceptualize and develop measurement models for the service quality concept based
on an adopted school of thought from the product quality literature. Namely, the use of the expectations
disconfirmation theory, as has been elaborated during the definitions review in the previous paragraph.
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There have since been many studies regarding the conceptualization service quality and thus several
contributions have been made regarding the development of measurement models. Based on a review of the
service marketing literature and the service quality review by Seth, Deshmukh & Vrat (2005), an overview of
the main service quality conceptualizations has been outlined in appendix D. This overview concludes with a
comparison of the dimensions of main conceptual models in table D.9 in appendix D, for both the
expectations disconfirmation- and the perceptions only view.
As the perceptions only approach has been adopted within this study, only the performance
perception models are of main interest, resulting in the more focused overview presented in table 2.2. In this
overview, the dimensions of the different models have been ordered based on the adopted categorization
from the study by Swartz & Brown (1989). Based on earlier studies, these researchers had already identified
and categorized the overriding dimensions of service quality into a “what” (service delivery outcome) and a
“how” aspect (service delivery process and interactions). They argued that because of the more intangible
nature of services, the more tangible service delivery outcome (the “what”) is sometimes more difficult to
evaluate by customers and thus they also rely on other quality measures to form their judgment, referring to
the more intangible service delivery process and interactions (the “how”).
Table 2.2
Comparison of the performance perceptions only service quality models
Service Quality Conceptualizations
Model
Authors
SERVPERF
Dimension Interpretation
Three Component
Hierarchical
Model
Model
McDougall &
Cronin & Taylor
Rust & Oliver
Brady & Cronin
Levesque (2000)
(1992)
(1994)
(2001)
Tangible aspects;
What
Core
Outcome Quality
The Service
Aspect
Quality
(Reliability)
Product
Outcome Quality
Service delivery outcome;
End result of the customerprovider interactions.
Process Quality
How
Relational
Aspect
Quality
(Tangibles,
Responsiveness,
Assurance &
The Service
Interaction
Delivery
Quality
Intangible aspects;
Service delivery processes;
Customer-provider interactions.
Empathy)
Customer perceived service
The Internal
Other
provider and service brand
Environment
Aspects
The External
Environment
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reputation.
Physical
Environment
Quality
Physical service environment or
atmosphere (service delivery
setting).
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In table 2.2, there indeed seems to be a large overlap between the different models for the
interpretation of the “what” and the “how” aspects. Hence, this categorization of the two overriding
dimensions by Swartz & Brown (1989) is still maintained. Thus within this study, the first two main
dimensions of service quality are core (outcome) quality and relational (process, interaction) quality. In this
regard, core quality is the actual service delivery outcome or the end result of the customer-provider
interaction. Core quality was already shown in Grönroos (1984) to be a significant dimension of service
quality, as it is the more tangible aspect or the outcome of the service that the consumer actually receives as
a result of the interaction with the firm. This is an important aspect for the customers’ evaluation of the
received service. Hence, the core quality of a service is argued to be the basic core attribute of the offering,
which is expected by customers in general (Kandampully & Duddy, 1999). It is the basic and implicit aspect
of the offering that is promised to the customer, which has to be delivered (McDougall & Levesque, 2000).
However, as a service offering becomes more standardized, the relational aspects will become more
important in the differentiation process. Hence, it is not only “what is offered” that discerns a service from the
competition, but also “how it is offered”, referring to relational quality (the delivery processes and customerprovider interactions). Customers are thus not only critical about the core aspects of the service, as other
offerings can provide similar basic quality attributes, but also about the relational aspects (Kandampully &
Duddy, 1999). In more recent studies (Seth, Momaya, & Gupta, 2008; Nimako et al., 2012), core or technical
quality and relational or functional quality have been reconfirmed as significant dimensions of service quality.
In the overview of table 2.2, there are also some other dimensions which fall outside the “what” and
the “how” interpretation, namely the internal- and the external or physical environment. The internal
environment regards the service provider- and service brand image as perceived by the customer. Although
not an obvious overriding dimension in the comparison, it has been argued to be a significant dimension of
the service quality perception. The argument is that the image of the company and its services as perceived
by the customer is important for service firms and can be expected to increase based on what is offered
(technical/core quality aspects) and how (functional/relational quality aspects) (Grönroos, 1984, 2001). The
argument continues with that customers bring their previous experiences and overall perceptions of a
provider and/or its brands to each service encounter. In this regard, image is the built up company and
service brand(s) reputation. A positive image in the mind of the customer will also positively influence the
quality perceptions of the offer, creating a preconception in advantage of the provider. However, if bad
service quality often is delivered, the image will incur damage. A negative image can magnify any eventual
shortcomings in the customers’ perception. Hence, company and brand image are also regarded to be
influential aspects of service quality.
Company- and brand image are closely related to each other, as both are concerned with the impression of
the buildup reputation in the customers’ mind. Thus, they can be viewed as one aggregated dimension,
namely reputational quality. In Nimako et al. (2012), reputational quality has empirically been shown to be a
significant dimension of service quality, besides core- and relational quality. In the context of developing
innovative service offerings, it has also been argued that the service brand image and provider reputation
(reputational quality) have a strong influence on perceived customer value and customer satisfaction, as they
can influence the customers perception of the value of the offering when entering new markets or launching
innovative services using the existing brand name (Krishnan & Hartline, 2001; Komulainen, Mainela,
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Tähtinen, & Ulkuniemi, 2004; den Hertog, 2010). Based on the preceding, within this study, reputational
quality will thus also be viewed as a main dimension of the service quality concept.
Regarding the external or physical environment, these refer to the influence of the physical service
environment itself or the service atmosphere (service delivery setting) on the customers’ perception. As
these aspects have a lot to do with the service delivery process and customer-provider interaction, they can
be incorporated as aspects of relational quality.
The first conclusion resulting from the examination of table 2.2 is that within this study, core-,
relational- and reputational quality will be viewed as the main or primary dimensions of service quality, as is
illustrated in figure 2.3. This view positions service quality as a tri-dimensional construct, supporting the
multi-dimensional view of Grönroos (1984, 2001) and Rust & Oliver (1994).
Service Quality
Core Quality
Figure 2.3
Relational Quality
Reputational Quality
The tri-dimensional view of service quality
Another noticeable fact in table 2.2 is that the SERVPERF multi-dimensional model of Cronin &
Taylor (1992) is divided by the two main/overriding dimensions of core (outcome) and relational (process)
quality. SERVPERF on its own namely consists of five dimensions (tangibles, reliability, responsiveness,
assurance and empathy) and is the performance perceptions only equivalent of the well-known SERVQUAL
model (Parasuraman et al., 1988). An overview of two models and the interpretation of their dimensions are
outlined in appendix D, sections D2 and D3 respectively.
According to Parasuraman et al. (1991), the reliability dimensions has some attributes relating to the service
outcome (core quality), while tangibles, responsiveness, assurance and empathy have more to do with the
service process (relational quality). But other researchers (Cronin & Taylor, 1992; Richard & Allaway, 1993)
have argued that based on the interpretations of the dimensions as well as empirical research (Mangold &
Babakus, 1991), the dimensions in general focuses a lot more on the delivery process and customerprovider interactions or functional aspects (relational quality) than on the service-encounter outcome (core
quality). This is also supported by McDougall & Levesque (2000), which also argue that the dimensions
capture the more relational (functional) quality aspects.
In Parasuraman et al. (1988), it has been mentioned that the five dimensions of tangibles, reliability,
responsiveness, assurance and empathy offers a conceptual basis for service quality, which when
necessary can be adapted or supplemented to meet the requirements of a particular research context
(Buttle, 1996). Hence, researchers (Richard & Allaway, 1993; Powpaka, 1996; Brady & Cronin, 2001) have
suggested that the five dimensions can be better seen as aspects of functional (relational) quality and should
thus be employed as such to better measure and understand the intangible side of service quality. This
service quality conceptualization has been employed and verified in the study by Kang & James (2004),
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where the five dimensions where positioned as lower order or sub dimensions under functional quality, while
functional (relational), technical (core) and image (reputational) quality where the higher order dimensions.
The second conclusion is thus that within this study, the main dimension of relational quality can be
best represented by the five functional aspects portrayed in SERVPERF as sub dimensions, as is illustrated
in figure 2.4. This view also positions service quality as a multi-level construct, besides a multi-dimensional
one, consisting of primary- and sub dimensions, thus also supporting the hierarchical view of Dabholkar,
Thorpe & Rentz (1995) and Brady & Cronin (2001).
Service Quality
Core Quality
Relational Quality
Reputational Quality
Tangibles
Assurance
Responsiveness
Empathy
Reliability
Figure 2.4
The multi-level view of service quality
In the multi-level view depicted in figure 2.4, it is noticeable that core- and reputational quality do not
consist of any sub dimensions. Regarding core quality, in various studies in different service settings
researchers have identified attributes that can be used to measure this dimension (Richard & Allaway, 1993;
Brady & Cronin, 2001; Seth et al., 2008). However, the findings suggest that there apparently are no basic or
underlying latent variables that can be used to measure core quality for services in general (Kang & James,
2004). As it is generally accepted that core quality is about the outcome aspects of the service encounter
which influences the customers’ perceptions (Grönroos, 1982, 1990; Rust & Oliver, 1994), attributes to be
used or adopted for the measurement of this dimension will depend on the specific service setting/sector
(Kang & James, 2004; Kang, 2006).
Regarding reputational quality, this dimension refers to the image or reputation of the service
company/provider and of its service brands as perceived by the customer (Grönroos, 1984, 2001; Rust &
Oliver, 1994). Thus, attributes to be used or adopted for the measurement of this dimension should be
derived from these aspects (Kang & James, 2004; Nimako et al., 2012).
To summarize, within this study service quality will be conceptualized as a multi-dimensional and
multi-level construct consisting of three primary dimensions, namely core-, relational- and reputational
quality, in which relational quality is formed by the five SERVPERF dimensions of tangibles, reliability,
responsiveness, assurance and empathy as its sub dimensions. Also, because of the adopted perceptions
only approach, all the service quality dimensions will be measured using only the customers’ performance
perceptions.
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2.4.5
INFLUENCE OF SERVICE QUALITY ON PERCEIVED CUSTOMER VALUE
Studies in the services marketing literature point out that a key requirement to success and
competitive advantage is the enhancement of service quality (Wang, Lo & Yang, 2004; Yang & Peterson,
2004), as it is argued that a strong service quality or performance builds a company’s competitiveness by
earning the customer’s trust and reinforcing image, branding, advertising, selling and pricing (Parasuraman
et al., 1991). In many studies, it has been empirically shown that service quality influences perceived
customer value and consecutively customer satisfaction (Kandampully & Duddy, 1999; McDougall &
Levesque, 2000; Cronin et al., 2000; Oh, 2000). The argument is that customers perceive service quality
based on their purchase/usage experiences (performance) and compare the quality perceptions to the
sacrifices made to acquire the service (Grewal et al., 1996, 1998). Based on these cognitive comparisons
customers form value judgments of the offering, referring to perceived customer value. Thus, the perception
of customer value is derived from the perception of service quality (Heskett et al., 1997; Cronin et al., 2000).
Recently, service quality has also been reconfirmed as a significant driver of perceived customer value and
consecutively of customer satisfaction (Wang et al., 2004; Kuo et al., 2009; Chen & Cheng, 2012; Nimako,
2012).
Based on the preceding, the following hypotheses can be formulated:
Hypothesis 2: Service quality has a positive impact on perceived customer value.
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2.5
SERVICE INNOVATION
2.5.1
DEFINING SERVICE INNOVATION
Within the services sector, innovation research has been receiving a lot of attention lately (Miles,
1993; Gallouj & Weinstein, 1997; den Hertog & Bilderbeek, 1999; den Hertog, 2000; de Jong, Bruins,
Dolfsma, & Meijaard, 2003; Bessant & Tidd, 2007; den Hertog, 2010) as it is now seen as a major driver of
the economic growth and crucial for the competitive process (Cainelli, Evangelista, & Savona, 2006; Kunttu,
2013). Innovation brings about financial benefits for the service providers, because of the ability to provide
innovative services faster, cheaper and of higher quality, is seen a source of strategic success (de Jong,
Bruins, Dolfsma, & Meijaard, 2003). But, more importantly, it is the added value of the innovation as
perceived by the customer that provides the competitive advantage in a service offering (Chapman, Soosay,
& Kandampully, 2002). Before examining the relation of service innovation and perceived customer value,
the concept of service innovation will first be defined and its conceptualization outlined.
Generally, innovation can be examined from a broad perspective in which it is defined as the process
of bringing any new or problem-solving idea into use (Kanter, 1983), to a more outcome-based view in which
it is defined as the process whereby new ideas are transformed through economic activity into sustainable
value-creating outcomes (Livingstone, 2000). An innovation thus presents some novelty or newness that has
some added value rather than being just a good idea (Matthews, 2004). In de Jong et al., (2003), innovation
within services regards:

the development of service products which are new to the supplier (Johne and Storey, 1998).

an offering not previously available to a firm’s customers resulting from additions to or changes in the
service concept (Menor et al., 2002).

encompassing ideas, practices or objects, which are new to the organization and to the relevant
environment (Van der Aa and Elfring, 2002).
Thus within services, innovation essentially regards some change or renewal in the service product,
processes and procedures, which are either new to the company and/or its customers. Because of the
specific characteristics of services (appendix E), innovations within services will differ in approach compared
to the conventional aspects of innovations usually seen in manufacturing (Johne and Storey, 1998; Bernardt,
2000). Hence, the conventional aspects of innovation (appendix F) do not fully apply within the service
context (Tidd, Bessant, & Pavitt, 2001). Thus, according to de Jong et al. (2003) the characteristics of
innovation within services regard the following:

The object of innovation;
In services, the distinction between innovation of the product and the process is less obvious,
because of the simultaneity of services (inseparability of production and consumption), where
product- and process innovations usually coincide/overlap. For example, a new service often goes
together with a new pattern of distribution, client interaction or quality control.
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
The degree of novelty;
Innovations can also be viewed in terms of the degree of novelty, ranging from small or incremental
to innovations that are more radical. The latter are usually large-scale developments with formally
managed processes, almost resembling R&D projects as in manufacturing with special project
teams, while incremental innovations are usually in a less formalized development approach, with
employees alternately working on their daily tasks and their innovative ideas. In practice, it can be
expected that service innovations with a low degree of novelty (incremental innovations) are far more
common than radical service innovations, as they mostly involve small and incremental intangible
changes in processes and procedures, which are easier, have less risk and cost associated with
them. Service firms namely tend to invest less in assets that support innovations, carry out research
and development or buy patents and licenses (Brouwer, 1997).

The dimension of newness;
This is about the newness of the innovation to the developing firm (using a new service concept
which has already been employed elsewhere), the market (new innovation as perceived by the
customers and/or competitors, who are confronted with a previously unfamiliar offering) or both
(Booz, Allen & Hamilton, 1982). According to De Brentani (2001), both dimensions of newness often
coincide in services (more often than in manufacturing), as service managers realize that to increase
the innovation success, both dimensions need to be taken into account.
Based on these characteristics, innovation within services will seldom be limited to changes in the
service product itself and will often coincide or be accompanied with new patters of service delivery,
customer interaction an new or adopted technologies. They will also often be a mixture of major and minor
changes or adaptations of the existing services (den Hertog, 2000; Van Ark, Broersma, & den Hertog, 2003).
Based on this, service innovation has been defined as a new or considerably changed service
concept, client interaction channel, service delivery system or technological concept that individually, but
most likely in combination leads to one or more (re)new(ed) service functions that are new to the firm and do
change the service/good offered on the market and do require structurally new technological, human or
organizational capabilities of the service organization (Van Ark, Broersma, & den Hertog, 2003). Within this
study, this definition will be adopted because of its comprehensive emphasis on the interrelated and
multidimensional nature of the concept.
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2.5.2
CONCEPTUALIZING SERVICE INNOVATION
Based on the multi-dimensional and interactive view of service innovation, den Hertog (2010)
introduced a six dimensional (6D) conceptual model of service innovation. The model outlines various
service innovations in six dimensions, namely (1) new service concept, (2) new customer interaction, (3) new
business partner, (4) new revenue model, (5) new organizational- and (6) technological service delivery
system. The 6D service innovation model is presented in figure 2.5.
Figure 2.5
The 6D-model of service innovation
(Source: den Hertog, 2010)
The interpretation of the six service innovation dimensions model are outlined in the subsequent
sections, based on the explanations given in the studies by den Hertog & Bilderbeek (1999), den Hertog
(2000) and Van Ark, Broersma & den Hertog (2003) and den Hertog (2010).
2.5.2.1
NEW SERVICE CONCEPT
The new service concept is the most widely recognized service innovation dimension (den Hertog,
2000; Avlonitis, Papastathopoulou & Gounaris, 2001), as it relates to the more intangible characteristics of a
new or renewed service. A new service concept can be a new idea or design of how to organize a solution to
a problem, like new shopping formulas or styles (monobrand stores, special occasion shops) or the use of
non-store shopping (home or e-shopping). It can be new combinations of existing service activities (Van der
Aa and Elfring, 2002) like creative new service package combinations or flexible service package options
(client customization), but also imitations of other externally existing services. Although a particular service
concept may already exist in another market, the key argument is that it is novel in its application within its
particular market. A new service concept can thus be new to the providing firm, the local market, the regional
or global market.
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2.5.2.2
NEW CUSTOMER INTERACTION
The new customer interaction refers to changes in the means of customer interaction during service
design, production and consumption. It also highlights the interactive role of the customer, as innovation can
also result from the way the interaction between a service provider and a customer occurs (den Hertog
2000). It is regarded as one of the most important success factors in the new service development process,
as competitiveness and new customer value creation results from systemic interaction (Martin & Horne,
1995). Offerings are also increasingly being marketed and even produced in a client-specific ways and the
interactions can even be electronic, like self-service terminals/kiosks or online self-explanatory client
interfaces.
2.5.2.3
NEW BUSINESS PARTNER
The aspect of new business partner refers to a change in the production of a service, like a joint or
co-production implementation. Apart from co-producing and co-innovating with customers, service
innovations sometimes also require input from partner firms, thus co-innovating and coproducing within the
service value chain. A change in the joint production of a service is like an architectural improvement, which
is often the case when service providers try to bundle existing service functions that are provided by different
actors. For example, a home-shopping service offered by a retailer, requiring partner firms for web design,
online payment handling and logistics for the actual delivery.
2.5.2.4
NEW REVENUE MODEL
The aspect of new revenue model regards the fact that some service innovations are basically about
new ways of pricing or creating revenues. A service innovation that is a new combination/configuration of
existing service elements, a new service bundle, often requires a fitting model of price and cost allocation
considerations and considerable ingenuity in realizing added value that customers are willing to pay for. An
example is an ICT firm selling traditional software packages versus SaaS models (Software as a Service),
which is essentially a new revenue model, where the client no longer acquires expensive software packages
but instead takes a subscription to a service which can be interfaced online.
2.5.2.5
NEW DELIVERY SYSTEM: PERSONNEL, ORGANIZATION, CULTURE
This dimension can be seen as a specific type of customer interaction, as it also regards the
interaction between the provider and the customer. However, it is specifically about the changes in the
organizational arrangements to facilitate changes in the way how services are performed and delivered
(Gadrey, Gallouj & Weinstein, 1995; den Hertog, 2000; Avlonitis et al., 2001). Changes in other dimensions
of service innovation usually also cause the service delivery system and organization to adapt, in order to be
able to facilitate these changes, as new services may require new organizational forms, (inter)personal
capabilities and skills. Some examples are terminal based delivery of services (ATM’s, mobile devices) and
internet based delivery of services.
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2.5.2.6
NEW DELIVERY SYSTEM: TECHNOLOGY
It has been argued that technological innovations are more inherent in manufacturing and that
service innovations are often non-technological (Kandampully, 2002). Though technological options are not a
prerequisite for service innovation, in practice the relationship between a service innovation and technology
is more based on whether the technology is an enabler or facilitator of the innovation. As an enabler, new
and emerging technologies have a push effect, driving new service creation, as they are especially important
in the early stages of the product/service life cycle. Information and communication technology (ICT) for
example, although certainly not the only relevant technological option in service innovation, is particularly
one of the most prevalent. ICT is perceived as an important enabler/driver because of its information
processing efficiency and effectiveness (automated processes and central information databases).
On the other hand, demand-pull generated by technology and customers drives incremental innovation
during later stages of the service life cycle. In this regard, ICT facilitates service innovations, for example, the
use of tracking and tracing systems in logistics and transportation services (den Hertog, 2000).
The difference of innovation in and between service companies can also be in their awareness of
relevant available technological options, the degree of availability, access and implementation of technology
and knowledge and the degree to which the provider acts on the customers’ demand based on their
articulated technological needs. Thus, providing a service with the latest technological options based on the
customers’ expectations is also perceived as a technological service innovation.
2.5.2.7
INTERRELATIONS BETWEEN THE DIFFERENT DIMENSIONS
The multi-dimensional character of service innovation is illustrated well by the 6D-model, as it is an
aggregated conceptual representation of service innovation aspects from many other studies (Gadrey,
Gallouj & Weinstein, 1995; Cook, Goh & Chung, 1999; Avlonitis, Papastathopoulou & Gounaris, 2001; Van
der Aa and Elfring, 2002). Service innovation is thus a concept that comprehends much more than what may
be seen as just a new service concept, as it typically may involves/effects any of the other service innovation
dimensions. A new or adapted service can mean the development of a new service delivery system,
employee training based on the change in the work procedures, processes and client interface or a change
in ICT implementation. Likewise, the implementation of a new technology may result in changes in the other
dimensions as well. Thus, researchers (Gadrey et al., 1995; den Hertog, 2000, 2010; Avlonitis et al., 2001)
have pointed out that service innovations are usually related to changes in various dimensions.
Still, it should be noted that a particular service innovation can display a dominant feature in one of the six
dimensions, which likely also resulted in changes in other dimensions necessary for the implementation and
success of the innovation. Also, an innovation within a certain service type may require distinct resources
and will thus affect certain dimensions more than for another service type. For example, a new service
concept in an ICT company may require more change to the client interface compared to a new service
concept in a logistics company, which may require more change in the delivery system. Likewise, a radical
innovation will probably have more perceivable and influential changes in any of the dimensions than an
incremental innovation would have. Thus in practice, the weight, importance and perceivability of innovations
within the different dimensions will be dependent on the type of service and innovation because of the
interrelationship the dimensions have, resulting in relating changes of varying intensity within the other
dimensions (den Hertog, 2000; De Jong & Vermeulen, 2003).
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2.5.2.8
DIMENSIONS OF SERVICE INNOVATION
According to den Hertog (2010), the conceptual 6D service innovation model provides a framework
for scholars, managers and policymakers to discuss the basic building blocks of service innovation and their
interlinkages at firm level. The model is very useful in describing the diversity of service innovations, which
are usually comprised of some combination of the different service innovation dimensions. These
dimensions also represent the different modes and outcomes of the innovation efforts by service companies
(den Hertog, 2010). They can thus be employed as performance indicators regarding service innovations by
the proving company and are thus also suitable as performance measurement variables.
The main objective of this study is to evaluate if service innovation is a significant service
performance driver compared to the aspects of service quality and if it has a significant impact on perceived
customer value and customer satisfaction. Thus, any service innovation performance indicator to be
employed should be readily perceivable by the customer. In this regard, besides the fact that the service
innovation dimensions of den Hertog (2010) can be used as performance indicators, they should also be
relatively perceivable by the customer.
Based on this criteria, the dimensions of new service concept, new customer interaction, new
revenue model, new organizational delivery system and new technological service delivery system are
applicable as performance indicators, as based on their explanation in the previous sections, they are all
innovations outcomes that should be reasonably perceivable by the customer.
Only the new business partners dimensions can be regarded to be less perceivable by the customer,
as the joint production/creation of services (co-innovation and coproduction) are usually more
backstage/back-office activities and not always directly visible to the customer. Strategic alliances or
partnerships are not always publically known or communicated by companies.
Further, it can be said that the dimensions of new service concept and new revenue model have
certain similarities (relation) with each other, as a new service concept/solution/bundle or new
combination/configuration of existing service elements often requires (coincides with) a fitting model of price
and cost allocation/structure. Thus, both dimensions regard aspects of product and incremental innovation.
Based on this and from the customers’ point of view, new revenue model can be incorporated within the new
service concept dimension.
The dimensions of new customer interaction and new organizational service delivery system also
have certain similarities (relation) with each other, as both regard changes in the provider-customer
interaction, whether it’s the communication during service design, production or the service delivery. The
new organizational service delivery system dimension is also regarded as a specific interaction type in the
customer interface. Besides, changes in the customer interaction (client interface) will probably often require
(coincide with) facilitating changes in the internal organizational arrangements. Both dimensions thus regard
aspects of innovation in the service process. Based on the previous and from the customers’ point of view,
both dimensions can be regarded as one aggregated dimension, termed the “new service process”.
Regarding the dimension of new technological service delivery system, this is viewed as either an
enabler or facilitator of the innovation and thus influences or relates to all the other dimensions. Because of
the multi-relation, it will be maintained as a separate dimension, although renamed as new technological
system as this better matches its representation within this study.
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Based on the above elaboration, within this study, service innovation will be conceptualized as a tridimensional construct, consisting of the dimensions new service concept, new service process and new
technological system, as illustrated in figure 2.6. Based on the studies by den Hertog & Bilderbeek (1999),
Van Ark, Broersma & den Hertog (2003), den Hertog (2000) and den Hertog (2010), the interpretations of
these three service innovation dimensions are summarized in table 2.3.
Service Innovation
New Service Concept
Figure 2.6
Table 2.3
New Service Process
New Technological System
The tri-dimensional view of service innovation
Service innovation dimensions and interpretations
Dimension
Interpretation
Refers to a new or renewed service concept, idea or solution to a problem,
New Service
Concept
based on novel combinations/configurations/bundles of new or existing service
elements, or imitations of other externally existing and competing services, often
requiring or coinciding with a fitting model of price and cost allocation/structure.
Refers to changes in the customer interface or service delivery system. It thus
New Service
Process
regards changes in the means of customer interaction regarding the
communication in service design, production and consumption, or internal
organizational arrangements to facilitate changes in the service delivery and
execution. It also highlights the interactive role of the customer.
Refers to technology as either an enabler or facilitator of the innovation and thus
influences or relates to all the other dimensions. It also regards provider
New
awareness of relevant available technological options, the degree of availability,
Technological
access and implementation of technology and knowledge as well as the degree
System
to which the provider acts on the customers’ demand based on their articulated
technological needs. It is thus also about providing a service with the latest
technological options based on the customers’ expectations.
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2.5.3
INFLUENCE OF SERVICE INNOVATION ON PERCEIVED CUSTOMER VALUE
In today’s competitive global market, companies should focus on their customers’ needs to gain an
understanding of the buyer’s entire value chain (holistic needs), referring to not only as it is today (the current
needs), but also as it changes/evolves over time (anticipated needs) (Slater & Narver, 1994). Companies
should then use the understanding of the buyer’s value chain to mix and match their various products and/or
services (service package/bundle), referring to adaptations of existing services or newly launched services,
and adjust or evolve the processes to deliver and maintain these services (like improved service delivery
rates), to meet the customer’s needs with the goal to influence the customers perceived value of the offering.
Service innovations can thus basically be regarded as value creating activities (Slater & Narver, 1995). For
service providers, innovating services in such a way that enables them to serve their customer’s present and
future needs which adds to their perceived value, is what establishes a firm’s competitive advantage
(Kandampully & Duddy, 1999). Besides, innovation on its own is of lesser significance, as it is the value of
the innovation as perceived by the customer that provides the advantage of the offering (Chapman, Soosay,
& Kandampully, 2002). It is the innovative service packages and creative bundling of existing services
features/functions that augment the value of the offering (Kandampully, 2002).
According to Tether and Metcalfe (2001), service innovations typically transform the state of the customer’s
perceptions (de Jong, Bruins, Dolfsma, & Meijaard, 2003). This influence will add to the customer’s
perception of the value of the service, as has also been suggested in other studies (Flint, Woodruff, &
Gardial, 1997; Kandampully & Duddy, 1999; Komulainen, Mainela, Tähtinen, & Ulkuniemi, 2004). The view
of service innovation as a value creating activity or one that influences/adds to the perceived value of the
offering is important, as it suggests and emphasizes the interrelation between service innovation and
perceived customer value.
Thus, based on the preceding, the following hypotheses can be formulated:
Hypothesis 3: Service innovation has a positive impact on perceived customer value.
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2.6
CONCEPTUAL MODEL
Based on the examination of the different concepts and the elaboration regarding their dimensions in
this chapter, an overview of their conceptualizations is presented in the table 2.4.
Table 2.4
Overview of construct conceptualizations
Construct
Primary Dimensions
Sub Dimensions
Customer Satisfaction
One-dimensional
Perceived Customer Value
One-dimensional
Core Quality
Service Quality
------
Relational Quality
Reputational Quality
-
Tangibles
-
Reliability
-
Responsiveness
-
Assurance
-
Empathy
------
New Service Concept
Service Innovation
New Service Process
------
New Technological System
Based on the different formulated hypotheses within this chapter and the chosen construct
conceptualizations, the conceptual research model that will be used within this study is presented in figure
2.7. The three hypotheses that are illustrated in figure 2.7 are presented in table 2.5.
Table 2.5
Number
Hypothesis Overview
Hypothesis
H1
Service quality has a positive impact on perceived customer value.
H2
Service innovation has a positive impact on perceived customer value.
H3
Perceived customer value has a positive impact on customer satisfaction.
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Service Quality
Core Quality
Relational Quality
Tangibles
Assurance
Responsiveness
Empathy
H1
Reliability
Perceived
Customer
Reputational Quality
Value
Service Innovation
H3
Customer
Satisfaction
H2
New Service Concept
New Service Process
New Technological System
Figure 2.7
Conceptual research framework
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CHAPTER 3 RESEARCH METHODOLOGY
3.1
GENERAL INTRODUCTION
This chapter outlines the employed research methodology to answer the research questions in
chapter 1.5. In this regard, the chosen research instrument, the research sample, the data collection
procedure and concept operationalizations are elaborated.
An important aspect that is first looked at is the identification of relevant service sectors that are
generally considered to be the very innovative. Based on these sectors, a candidate service provider is
chosen which generally adheres to certain criteria regarding service innovation, but also service quality and
customer satisfaction, especially in a competitive market environment. The aim of these criteria is to help
guarantee that the service provider and its offering to be used as research object indeed relates to these
concepts and to increase the reliability and validity of the gathered data.
3.2
SERVICE SECTOR SELECTION AND SERVICE PROVIDER CRITERIA
3.2.1
SERVICE SECTOR SELECTION
Generally, the services industry (or tertiary industry in economics) is very broad and there are many
differing types of service offerings. There are the more distinct and bigger service sectors like for example
healthcare-, financial- , ICT-, travel- , tourism & horeca services, but also less distinct segments like
barbershops and nail salons. Within these varying segments, it is important to identify those service sectors
that are generally considered to have a high degree of innovation, as this will generate focus for the
service/provider selection and help to increase the validity and reliability of the collected data.
Regarding the degree of innovation within the different service sectors, several studies offer an indication or
direction for this. According to Tether et al. (2002), statistical data from the second Community Innovation
Survey (CIS-2, 1996) by Eurostat pointed out that a high innovation intensity was found in technical-,
wholesale- and/or computer services of which the highest proportion of innovators were in the technical
services segment (Matthews, 2004). Interestingly, the most widely given reason by firms for undertaking
service innovation was the improvement of the service quality.
In Miles (2008), statistical data of the fourth Community Innovation Survey (CIS-4, 2002-2004) pointed out
that telecom-, computer- and financial services had high innovation intensity in several EU countries.
The CIS-4 data also indicates that the so-called T-KIBS (Knowledge-Intensive Business Services) segment,
behaves very much like high-technology companies in manufacturing, which generally have high innovation
intensity (Miles, 2008). T-KIBS companies are mainly information and communication technology as well as
technical companies, and are thus the more ICT related services providers, engineering and technical
consulting firms. These companies are known to be highly active innovators, as well as facilitating innovation
in other sectors (Miles, et al., 1995). This is supported by Cainelli et al. (2004, 2006), which state that
technology focused service sectors (software, technical consultancy, engineering, telecommunication) are
more innovative compared to other service sectors (Kunttu, 2013).
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Besides the European market, according to the NSF (National Science Foundation) several
nonmanufacturing industry segments in the United States also exhibited comparatively high degrees of
innovation (Boroush, 2010). In this regard, the ICT sector segment stands out, in which software publishers
and telecommunications/internet service providers exhibited particularly high innovation rates.
Based on the preceding it can generally be assumed that within the services industry, the ICT sector
has a higher innovation intensity compared to other service segments and that within this segment,
especially software and telecommunications/internet service providers stand out. Thus, a service provider to
be chosen for this study should generally be a software or telecommunications/internet service company.
3.2.2
CRITERIA AND PROVIDER SELECTION
3.2.2.1
SERVICE PROVIDER CRITERIA
The selection of a candidate service provider within the identified service segment will generally
need to adhere to certain criteria regarding service innovation, as well as service quality and customer
satisfaction. Preferably, the service provider should operate in a competitive market environment, as this will
generate more incentive or necessity for the pursuance of service quality and customer satisfaction
enhancement, as well as service innovation. Thus, a service provider to be chosen should more or less
adhere to the following criteria:

pursue forms of service innovation,

pursue the enhancement of service quality and

be concerned with the improvement of customer satisfaction.
3.2.2.2
SERVICE PROVIDER SELECTION
This study will be limited within the researcher’s country of residence, namely the republic of
Suriname. Within Suriname, the telecommunication services sector is a relatively mature market and has
even undergone liberalization in 2007 for the mobile phone services part. This has created a fiercely
competitive market environment for this service offering, in which the incumbent telecom service provider
Telesur now has to compete with two new players, which already have other telecom operations within the
Caribbean.
The Telecommunications Company of Suriname (Telesur) is a government owned telecom service
provider that held the monopoly position regarding telecom services for 27 years within Suriname, offering a
mixed portfolio of service offerings like fixed and mobile phone services, wireless- and fixed internet. Being a
monopolist, there was less incentive for them to actively innovate on their service offerings or to necessarily
pursue service quality and customer satisfaction enhancement. However, after the liberalization of the
mobile services market in April of 2007, the company had to adapt because of the new market environment.
In this regard, the company drastically changed its strategic direction from a monopolist to a market driven
company, thus from a reactive to a proactive market approach. The changes encompassed a new corporate
philosophy and identity implementation.
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The significance of these changes in respect to the current study can be elaborated by briefly examining
their substantive aspects, as has been outlined in appendix G. Looking at the aspects of the new corporate
philosophy (meaning of the six philosophy elements and the mission & vision statements), as well as the
new corporate identity (seven corporate values and meaning of the colors of Telesur), the following can be
stated. It becomes clear that Telesur is strategically meaning to pursue the enhancement of service quality
(quality as competitive driver), service innovation (future oriented, service diversification, innovative
solutions, efficient organization and technology leadership) and customer satisfaction (excellent customer
service and market-based solutions).
In practice, this also seems to be the case, as the company is investing in training its front- and back
office employees in providing good customer service (Annual Report Telesur, 2009). The company also got
the highest average score in a customer satisfaction survey of all the telecom providers in the country
(Annual Report Telesur, 2010). Besides these relational quality and customer satisfaction improvements, the
company is also actively trying to enhance the core quality of the network by heavily investing in capacity
and infrastructure extensions (Annual Report Telesur, 2009, 1010) and by implementing a central Network
Operations Center (NOC) to constantly monitor their network (Annual Report Telesur 2011). The company is
also actively involved in service innovations, for example by offering multiple service package options and
terminal based & online service options. Better yet, in 2009 the company held an internal innovation award to
encourage employee creativity. The goal was to identify ideas that where creative and innovative in terms of
quality and service enhancement, which could be turned into improved or new service offerings (Annual
Report Telesur, 2009). In December 2011, the company also inaugurated the Telesur Multimedia Innovation
Laboratory (TMIL) located on the University of Suriname complex. This laboratory is part of a strategic
partnership with the University to stimulate and facilitate innovators in developing new and innovative ideas
that could result in actual commercial ICT services (Telesur Annual Report, 2012).
Based on the above elaboration, the Telecommunications Company of Suriname (Telesur) can be
said to be good candidate as an ICT service provider to be used within this study, as it adheres to the stated
criteria. In this regard, their TeleG mobile service offering is a good service candidate to be used, as the
market is only liberalized for this service segment.
3.3
RESEARCH METHODOLOGY
This research is a deductive study, as existing theory is used to form conceptual relations between
different variables. Based on the formulated hypotheses in the literature review, a conceptual research
model has been formed in chapter 2.6, which illustrates the different conceptual relations. In order to answer
the research questions in chapter 1.5, the formulated hypotheses will be tested using a quantitative
approach. In this regard, the survey method is used in the form of a questionnaire, as the data to be
gathered is about the perceptions of customers for the different concepts of interest. Furthermore,
questionnaires are commonly used in deductive studies and allow for the collection of quantitative data that
can be analyzed using descriptive and inferential statistics.
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3.3.1
RESEARCH INSTRUMENT
A questionnaire was developed as data collection instrument in which all the different variables
(constructs/dimensions) are operationalized. An overview of the different variables is presented in table 3.1.
Table 3.1
Overview variables
Variable
Category
Construct
Dimension
Relational Quality
Service Quality
Core Quality
Reputational Quality
Independent
New Service Concept
Service Innovation
New Service Process
New Technological System
Mediating
Perceived Customer Value
One-dimensional
Dependent
Customer Satisfaction
One-dimensional
The operationalization of the different variables is presented in the next paragraph. It should be
noted that the variables of gender, age, education, income and ‘service subscription type’ have been
included as control variables, as these might influence the different variables in the model. Thus, these
variables have been included as the demographics within the questionnaire, to be able to evaluate possible
patterns within different customer groups.
3.3.2
3.3.2.1
OPERATIONALIZATION OF VARIABLES
SERVICE QUALITY
As elaborated in the literature review, service quality will be conceptualized as a multi-dimensional
and multi-level construct. As a multi-dimensional construct, it consists of the three primary dimensions of
relational-, core- and reputational quality. Based on the adopted performance perceptions only approach, all
the service quality dimensions will be operationalized using only performance perceptions by the customer.
As a multi-level construct, the dimension of relational quality is formed by five sub dimensions of
tangibles, reliability, responsiveness, assurance and empathy. These sub dimensions originate from the
SERVPERF model (Cronin & Taylor, 1992), as they generally focus more on the service delivery processes
and customer-provider interactions or functional aspects of service quality (Brady & Cronin, 2001). The
operationalization is based on items from previous empirical studies (Parasuraman et al., 1994; Zangmo,
2011), which have been adapted to better match the current research context. The operationalization of the
relational quality dimensions is presented in table 3.2A.
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Table 3.2A
Operationalization of service quality - relational quality
Aspects
Code
Operationalization
The service provider…
Tangibles
Reliability
Responsiveness
Assurance
TAN1
has visually appealing facilities (offices and atmosphere).
TAN2
has modern looking office equipment.
TAN3
has employees with a neat and professional appearance.
TAN4
has visually attractive materials (phone cards, brochures).
REL1
provides the services as promised.
REL2
provides the services at the promised time.
REL3
performs its services right the first time.
REL4
is dependable in handling customer service problems.
REL5
maintains error-free records (customer data, usage data, balance).
RES1
keeps its customers informed about service affecting activities.
RES2
gives prompt service to its customers.
RES3
shows its willingness to help customers.
RES4
is never too busy to respond to customer requests.
ASS1
has employees who inspire confidence in customers.
ASS2
makes its customers feel safe in doing business.
ASS3
has employees who are polite and attentive.
ASS4
Empathy
has employees with the necessary knowledge to answer customer
questions
EMP1
gives its customers individual attention.
EMP2
has employees who are compassionate and sympathetic.
EMP3
the customers best interest at heart.
EMP4
has employees who understand the needs of its customers.
EMP5
has convenient business hours.
The dimension of core quality regards the more tangible outcome aspects of the service encounter
that influence the customers’ perceptions of the service quality (Grönroos, 1982, 1990; Rust & Oliver, 1994),
hence service attributes to be used in the operationalization will depend on the specific service setting/sector
(Kang & James, 2004; Kang, 2006).
As the mobile service of a telecom company has been chosen within this study, core quality will be
operationalized using perceived performance outcomes attributes of the mobile service. In this case, these
are the more technically perceivable attributes of its subservices, namely the voice calling-, the value-addedand the mobile internet subservice, but also other service aspects like credit reloading and service
activations. The operationalization is based on items from previous empirical studies regarding core- or
technical quality for mobile telecom services (Seth, Momaya, & Gupta, 2008; Nimako, 2012), which have
been adapted and extended to better match the current research context. The operationalization of the core
quality dimensions is presented in table 3.2B.
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Table 3.2B
Operationalization of service quality - core quality
Aspects
Code
Operationalization
CQV1
The mobile network has good coverage or range.
Voice
CQV2
The ability to make phone calls is generally good.
subservice aspects
CQV3
The clarity of the phone calls is good.
CQV4
Automatic disconnections of phone calls are rare.
SMS subservice
CQS1
Text messages are delivered quickly.
aspects
CQS2
Text messages are delivered successfully.
CQD1
Opening of websites through mobile internet is fast.
CQD2
Downloading media via mobile internet is fast.
CQD3
Video streaming through mobile internet is fast.
Other
CQO1
Upgrading mobile credit is fast.
service
CQO2
Upgrading mobile credit is always successful.
aspects
CQO3
Activating service packages or options is fast.
Data
subservice aspects
Reputational quality regards the image or reputation of the service provider and its service brand(s)
as perceived by the customer (Lehtinen & Lehtinen, 1982; Grönroos, 1984, 2001; Rust & Oliver, 1994).
It is thus be operationalized using attributes that measure those aspects based on items from previous
empirical studies (Kang & James, 2004; Chen & Myagmarsuren, 2011; Nimako et al., 2012), which have
been adapted and extended to better match the current research context. The operationalization of the
reputational quality dimensions is presented in table 3.2C.
Table 3.2C
Operationalization of service quality - reputational quality
Aspects
Code
Operationalization
The mobile service…
Brand
Image
BIM1
has a reputation for good quality.
BIM2
has a reputation for the use of superior technologies.
BIM3
contributes to the social status of its users.
BIM4
has a positive reputation in my social group.
BIM5
has an image of an innovative service offering.
BIM6
has a strong brand image in the market.
The service provider …
Corporate
Image
CIM1
has a reputation for good customer service.
CIM2
is a reliable and professional company.
CIM3
has a reputation of an innovative company.
CIM4
supports many innovative project initiatives.
CIM5
is an active sponsor of community activities.
CIM6
is a socially responsible company.
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In the operationalization of all three quality dimensions, the respondents are asked to rate the degree
that best matches their perceptions regarding the respective quality aspect. Based on the most employed
scale in the reference studies, a five point Likert response scale is used to rate the quality perceptions,
ranging from strongly disagree (1) to strongly agree (5).
3.3.2.2
SERVICE INNOVATION
As elaborated in the literature review, service innovation will also be viewed as a multi-dimensional
construct, consisting of the dimensions new service concept, new service process and new technological
system. As with service quality, the service innovation dimensions are also operationalized as performance
outcome perceptions, by using customer perceivable service aspects. The operationalization is based on
items from previous relating empirical studies (Wang & Ahmed, 2004; Nasution et al., 2011; Yen et al., 2012;
Kanten & Yaslioglu, 2012; Salunke et al., 2013). These have been adapted to better match the current
research context, especially in terms of customer perceivable ability, as the mentioned studies focused on
the management’s perspective. A five point Likert response scale is also used to rate the service innovation
perceptions, ranging from strongly disagree (1) to strongly agree (5). The operationalization of the service
innovation dimensions is presented in table 3.3.
Table 3.3
Operationalization of service innovation
Aspects
Code
Operationalization
The mobile service…
NSC1
has creative service packages (voice, sms and internet combinations).
NSC2
has flexible service package options (client customization).
NSC3
is noticeably different in concept & design, compared to preceding services.
NSC4
is a totally different service experience compared to preceding services.
NSC5
is noticeably different in concept & design, compared to competing services.
NSC6
is a totally different service experience compared to competing services.
NSC7
provider often brings modified or enhanced services to the market.
NSC8
provider often surprises the market with new services.
NSP1
has online service options (procedures, support, usage history).
NSP2
has automated service options (via SMS, ATM).
New
NSP3
provider uses modern interaction media (creative website, social media).
Service
NSP4
provider has mobile shops at special occasions or events.
Process
NSP5
provider offers quick and easy call center support.
NSP6
provider facilities are creative and modern (state of the art).
NSP7
provider has creative and innovative marketing (advertising, promotion).
NTS1
is based on the latest technology.
New
NTS2
has many innovative features (sms to email, calling circles).
Technological
NTS3
provider offers the latest user equipment (mobile devices).
System
NTS4
provider is always the first on the market with the latest technology.
NTS5
provider shows its efforts for service quality improvement.
New
Service
Concept
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A remark regarding the importance of the different service quality dimensions. It should be noted
that, according to the literature, the importance of the different service quality dimensions differs across
services (Carman, 1990; Cronin and Taylor, 1992; Teas, 1993; Taylor and Baker, 1994). The same is said
for the importance and perceivability of service innovations of the different dimensions. The differences
dependent on the type of service and innovation because of the interrelationship the innovation dimensions
have, resulting in relating changes of varying intensity within the different dimensions (den Hertog, 2000; De
Jong & Vermeulen, 2003; den Hertog, 2010).
Thus, a question to directly measure the perceived importance of the different service quality and
service innovation dimensions by the respondents has been included in the questionnaire. In this regard, the
respondents are asked to order and rate these dimensions based on their opinion of importance, by
allocating the numbers between one and six between them. Hereby, "1" indicates the most important and "6"
the least important dimension.
3.3.2.3
PERCEIVED CUSTOMER VALUE
Based on the literature review, perceived customer value is conceptualized as a one-dimensional
construct. In this regard, the first perspective to be utilized is the cognitive and utilitarian view, where the
costumers’ value perception as an overall assessment, as well as a sacrifice versus benefit trade-off
assessment will be used (Zeithaml, 1988; Flint et al., 2002). The second perspective is the hedonic or
emotional view, where the customers’ emotional and social value response will be used (Sweeney & Soutar,
2001; Lim et al., 2006). The construct is operationalized using items from previous empirical studies
(Sweeney & Soutar, 2001; Kuo et al., 2009; Chen & Cheng, 2012), which have been adapted to better match
the current research context. The operationalization is presented in table 3.4, whereby the respondents are
asked to rate the degree that best matches their perceptions regarding the perceived customer value
aspects. As with the previous constructs, a five point Likert response scale will be used to rate the customer
value perceptions, ranging from strongly disagree (1) to strongly agree (5).
Table 3.4
Operationalization of perceived customer value
Aspect
Code
Operationalization
The mobile service...
PVO1
is worth the price I pay.
PVO2
is worth the technical quality.
PVO3
is worth the customer service.
Emotional value response
PVE1
usage makes me feel good.
Social value
PVS1
usage makes a good impression in my social group.
response
PVS2
usage gives me a sense of belonging.
Overall cognitive and
utilitarian response
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3.3.2.4
CUSTOMER SATISFACTION
Based on the literature review, customer satisfaction is also conceptualized as a one-dimensional
construct. In this regard, the cumulative view (Kuo et al., 2009; Nimako, 2012) and outcome view (Parker &
Mathews, 2001; Nimako, 2012) are used in the conceptualization. As a mobile service offering has been
chosen within this study, the outcome view is phrased to measure the overall evaluation responses of the
different possible perceived service performance outcomes. In this regard, these outcomes are the voice
calling-, the value-added- and the mobile internet subservice, but also the customer service. The cumulative
view on the other hand is phrased so to measure the overall evaluation of the total mobile service offering.
Previous empirical studies (Zangmo, 2011; Chen & Cheng, 2012; Nimako, 2012) are used as a guideline for
the operationalization. The operationalization is presented in table 3.5, whereby the respondents are asked
to rate their overall satisfaction level for the outcome and cumulative aspects. As with the previous
constructs, a five point Likert response scale is used to rate the customer satisfaction level, ranging from
least satisfied (1) to very satisfied (5).
Table 3.5
Operationalization of customer satisfaction
Aspect
Code
Operationalization
What is your overall satisfaction level regarding…
Outcome view
Cumulative view
3.3.3
CSO1
the mobile call service (voice)?
CSO2
the mobile internet service?
CSO3
the additional mobile services (sms, voice mail)?
CSO4
the customer service?
CSC1
the total mobile service offering?
PILOT STUDY
To help identify eventual weaknesses in the questionnaire content and design, a pilot study was
undertaken to test and check the instrument regarding aspects like text clarity, question content, answer
scoring method, questionnaire form and layout. In this regard, the respondents were asked to comment on
the questionnaire, especially whether the statements were understandable (made sense) and whether the
scoring options where clear.
The pilot was conducted with a group of eleven (11) people that represented the actual survey
sample, the latter being discussed later on in section 3.3.2. The group was selected by the researcher based
on convenience and consisted of relations of the researcher. Based on the feedback, certain questions
where rephrased for simplicity, while others were aggregated based on their meaning and interpretation. In
addition, the necessary time to complete the questionnaire was measured in order to give future respondents
an estimation of the time needed to complete the questionnaire. The average time necessary to complete
the questionnaire was 20 minutes, which was more than the intended/estimated time of 15 minutes.
According to the respondents, this was mainly caused due to some difficult to interpret
terms/sentences in the introductory texts for the different sections of the questionnaire. Based on this
feedback, the different introductory text where afterwards simplified and also reduced in length.
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3.3.4
MAIN SURVEY
Based on the improvements of the pilot questionnaire, the questionnaire for the main survey was
drawn up. The questionnaire is presented in appendix H and is built up of two main parts. The first part of the
questionnaire consists of an introductory passage that briefly outlines the context of the study. Also, an
example statement is presented, showing how to fill in the questionnaire.
The second part encompasses the actual data collection segment and consists of five sections. The first
section is about the control variables, presented as the demographics or general background information of
the respondents. In this regard, respondent information like gender, age, education, income and service
subscription type is collected. The second section is about the first independent variable, namely service
quality. It thus contains statements regarding service quality perceptions for the different dimensions.
The third section is about the second independent variable, namely service innovation, thus containing
statements regarding service innovation perceptions for the different dimensions. The fourth section regards
the mediating variable and thus contains statements about the perceptions of customer value. The fifth and
last section regards the dependent variable within this study, namely customer satisfaction. It thus contains
statements regarding satisfaction evaluations by the customers for the service offering aspects.
3.3.5
RESEARCH SAMPLE AND DATA COLLECTION METHOD
In this research, the significance of service quality and service innovation on perceived customer
value and customer satisfaction will be assessed. In this regard, a mobile telecom service has been shown
to be a suitable service offering for the assessment. Thus, any respondent within the research sample
should ideally be a user of the service, in this case the TeleG mobile service of the telecom provider Telesur.
This can practically be the whole population of the country, as well as foreigners. Thus, a sample
representing the whole population will be difficult to attain. Based on this practical limitation, a research
sample was selected using non-probability convenience sampling. In non-probability sampling, the units of
the sample are selected based on personal judgment and convenience. This sampling method was chosen,
as it is less costly and also takes less time to collect the data.
In the reference studies, there was no specific frame of reference on which part/group of the
population to target, besides the fact that almost all of the studies used university students as their research
sample. In any case, it can be at least expected that university students should be able to
understand/interpret the questions or statements in the questionnaire more clearly and also take it more
seriously, because of the academic schooling that they are currently receiving. Thus within this study,
university students are also chosen as research sample, but with the requirement that they are currently
using the TeleG mobile telecom service.
As the questionnaire was originally formulated in the English language, a back-to-back translation
was done to the national spoken language of the country, namely the Dutch language. This was done to help
ensure that the respondents would be better able to understand the questionnaire content. The English and
the Dutch version of the questionnaire are presented in appendix H and I respectively. The Dutch version of
the questionnaire was personally distributed in hardcopy, instead of using a digital/online format, to help
achieve a higher response rate.
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After a survey period of one week in which a total of 300 surveys were distributed, 281 (94%) filled in
questionnaires where gathered, of which 252 (84%) samples were found to be useable. The others 29 (10%)
samples were either not completely filled in or had many invalid responses. These where considered
deficient and excluded from the data analyses. An overview of the survey response rate is presented in
figure 3.1
Response Rate
Response
252, 84%
19,
6%
Usable Responses
281, 94%
Unuseable Responses
29,
10%
Figure 3.1
3.4
No Response
Survey response rate
VALIDITY AND RELIABILITY
This section regards the validity and reliability measures that have been taken within this study.
Validity regards the degree to which a measure accurately represents what it is supposed to measure
(Saunders, Lewis, & Thornhill, 2009). It is thus about how well a concept is defined by its measures.
Reliability on the other hand is concerned with the extent to which the data collection and analyses
methodology yield consistent measurements results (Saunders et al., 2009). Thus, it is about how
reproducible measures are when retesting on another occasion. The two measures are related, as both have
to do with the precision of the measurements. However, they are not the same, as one regards the accuracy
of the measurements and the other the consistency. Thus, both aspects are important and should be taken
into account to help assure both the accuracy and consistency of the measurements.
3.4.1
VALIDITY
To help assure the validity of the survey, several measures were taken. Firstly, the service sector
and service/provider to be evaluated were chosen based on criteria relevant to the concepts within the
current study. Secondly, the operationalization of the variables where based on items from previous studies,
although adapted to better fit the current research context. Thirdly, a pilot study was conducted, to check for
eventual weaknesses in the questionnaire content and design, especially if the contents were actually
interpreted as intended. The last measure was a back-to-back translation of the survey between the English
and Dutch language, to help assure that the questions retained their intended meaning and interpretation.
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3.4.2
RELIABILITY
Within this study, multiple items are used in the operationalization of the different variables. Thus, the
internal consistency method is appropriate for the reliability determination of the different variables. The
rationale is that the individual measurement items of each variable should all be measuring the same
concept and thus should be highly intercorrelated (Hair, Black, Babin, Anderson, & Tatham, 2007). The most
frequently used technique for calculating the internal consistency is Cronbach’s alpha coefficient (Saunders
et al., 2009). This coefficient was developed by Lee Cronbach in 1951 and can assume any value between 0
and 1. According to different researchers (Nunnally, 1978; Nunnally & Bernstein, 1994; Fujun et al., 2007), in
practice a cut-off point of 0.70 generally demonstrates that the measurement items together have an
acceptable internally consistency. Higher values are better, while lower values become questionable.
In practice, the Cronbach’s alpha score can be interpreted as presented in table 3.6.
Table 3.6
Cronbach’s alpha score interpretation
Alpha score
Internal consistency
Alpha score
Internal consistency
Excellent
0.7 > α > 0.6
Questionable
0.9 > α > 0.8
Good
0.6 > α > 0.5
Poor
0.8 > α > 0.7
Acceptable
α > 0.9
0.5 > α
Unacceptable
The resulting Cronbach’s reliability scores for the dimensions of the constructs service quality and
service innovation, as well as that of the one-dimensional constructs of perceived customer value and
customer satisfaction are presented in table 3.7.
Table 3.7
Cronbach’s scores of the variables
Variable
Cronbach’s alpha
# of Items
Core Quality
0.778
12
Relational Quality
0.913
22
Reputational Quality
0.870
12
New Service Concept
0.811
8
New Service Process
0.772
7
New Technological System
0.842
5
Perceived Customer Value
(one-dimensional)
0.839
6
Customer Satisfaction
(one-dimensional)
0.702
5
Construct
Service Quality
Service Innovation
Dimensions
From table 3.7, it becomes evident that all the scores are above the cut-off point of 0.70. Based on
the score interpretation in table 3.6, the variables can be stated to either have an acceptable (0.8 > α > 0.7),
good (0.9 > α > 0.8) or excellent (α > 0.9) internal consistency.
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3.5
DATA ANALYSES METHODOLOGY
This paragraph outlines the methodology that will be used during the data analyses. First, the data
type of the different variables is investigated. Based on the identified data types, the applicable tests and
their assumptions are afterwards outlined.
3.5.1
VARIABLE DATA TYPES
The obtained data from the survey will be analyzed with the use of the IBM SPSS v22 statistical
software package. When analyzing data, it is important to be aware of the type of data that is being used, as
this affects the type of analyses that are applicable. According to “The Theory of Scales of Measurement” by
Stevens (1946), the four basic data types are the nominal, ordinal, interval and ratio scales. Based on
Stevens (1964) and Saunders et al. (2009), the main attributes of these scales are presented in table 3.8.
Table 3.8
Data types and attributes
Data type
Group
Attributes
Nominal
Data is descriptive only.
Categorical
Ordinal
Nominal attributes + the values can also be ranked/ordered.
Interval
Ratio
Ordinal attributes + differences between values are equal (equality of interval).
Numerical
Interval attributes + values can be divided & the scale has an absolute zero point.
Thus, the data types follow a certain a hierarchy of measurement in an ascending order of numerical
precision (Saunders et al., 2009). As mentioned in paragraph 3.3.2, all the constructs/variables in the survey
are measured using a 5-point Likert response scale. An overview of this is presented in table 3.9.
Table 3.9
Overview of employed Likert response scales
Construct
Dimension
Likert Responses (Score)
Core Quality
Service
Quality
Relational Quality
Reputational Quality
New Service Concept
Strongly
Service
New Service Process
disagree
Innovation
New Technological
(1)
Disagree
Agree nor
Agree
disagree
(2)
(3)
Strongly
agree
(4)
(5)
Satisfied
Very
System
Perceived
Customer Value
Customer
Satisfaction
One-dimensional
Very
One-dimensional
Dissatisfied Satisfied nor
dissatisfied
(1)
dissatisfied
(2)
Vikash A. Jairam
(3)
satisfied
(4)
(5)
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The Likert responses in table 3.9 are each assigned a unique score, which is a number between 1
and 5 that expresses the mutual ordering and relationship (greater or smaller than) of the responses.
The issue is to which data type these scores belong to, as they are often used as either ordinal or interval.
According to Clason & Dormody (1994), one should differentiate between Likert-type items and Likert scales,
as these each fall within another data type. These researchers describe Likert-type items as single/standalone questions that can be answered using some form of Likert type response, but there is no intention of
combining the item responses to form a composite scale. In this case, the assigned scores/numbers to the
Likert-type items are regarded to be an ordinal data type, as they only express an ordered relationship.
However, a Likert scale is at hand when a variable is composed of multiple Likert-type items/questions that
are combine into a single aggregated score during the data analysis process using mathematical operations,
for example the sum or mean of the multiple scores. Because of the arithmetic operations, the resulting
aggregated or composite Likert scale scores can be regarded as interval data. These composite scores
provide a quantitative measure that can be used to describe concepts like personality traits or other
behavioral aspects. Usually, researchers are mostly interested in these composite scores as these apply to
more possible and stronger statistical tests. This approach regarding the data type for Likert-type items and
Likert scales is also supported by many other researchers (Bryman & Cramer, 2005; Norman, 2010; Brown,
2011; Boone & Boone, 2012).
As was shown in the operationalization of the variables (3.3.2), the different dimensions of service
quality and - innovation as well as the one-dimensional constructs of customer value and –satisfaction are all
built up of several relating groups of questions that together measure the corresponding variable. Based on
the above elaboration regarding Likert scales, the composite scores of the groups of questions (sum or
mean) can all be regarded as Likert scales and are thus labeled as interval data, while the individual
questions themselves are regarded as Likert-type items and are thus of the ordinal type.
In table 3.10, the breakdown of the data type per variable (concept or dimension) is presented.
Table 3.10
Data type per variable
Variable
Likert Response
Dimension
Type
Core Quality
Likert scale
Relational Quality
Likert scale
Reputational Quality
Likert scale
New Service Concept
Likert scale
New Service Process
Likert scale
New Technological System
Likert scale
Perceived Customer Value
One-dimensional
Likert scale
Customer Satisfaction
One-dimensional
Likert scale
All Individual Questions
N/A
Likert-type items
Age, Education & Income
N/A
Gender & Mobile Subscription Type
N/A
Construct
Service
Quality
Service Innovation
Data Type
Interval
Ordinal
Demographics
Vikash A. Jairam
Nominal
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During the data analyses in the next chapter of especially the interval type variables, the composite
scores might not be whole/integer numbers as presented in table 3.9 for the different Likert responses,
because of the arithmetical operations carried out on them. The five Likert response integer scores in table
3.9 (1 until 5) represent the order of agreement with a certain statement. Thus, an interpretation for possible
non-integer scores needs to be available. An interpretation for these possible non-integer results is adapted
from Landman (2005) and is presented in table 3.11.
Table 3.11
Likert scale mean score interpretation
Mean score
4 and higher
Interpretation
The majority of the respondents agrees or strongly agrees with the statement.
Between 3.5 and 4 The majority of the respondents have a neutral to more positive response.
Between 3 and 3.5 The majority of the respondents have a neutral response.
Lower than 3
3.5.2
The majority of the respondents disagrees or strongly disagrees with the statement.
STATISTICAL TESTS AND ASSUMPTIONS
As this research follows a quantitative approach, in the data analyses a distinction is made between
descriptive and inferential statistics. In this regard, descriptive statistics are carried out to explore the
collected data, while the inferential statistics are used to actually analyze the data.
According to Saunders et al. (2009), if the data type is known, than the appropriate descriptive and inferential
statistics also become clear, as every data type has its own applicable tests. Based on Saunders et al.
(2009) and Field (2009), relevant descriptive and inferential statists are employed. Regarding the descriptive
statistics, distribution graphs and mean scores are used to explore the data. In the case of inferential
statistics, there are generally two main categories, namely parametric- and non-parametric tests. Parametric
test are often preferred by researchers, as they are considered to be relatively more powerful because they
use numerical data and take more assumptions/criteria into account. In contrast, non-parametrical test use
categorical data and make less assumptions about the dataset. Based on Saunders et al. (2009) and Field
(2009), the main assumptions for using parametric tests are:

the data must be numerical (interval or ratio type),

the data distribution is relatively comparable to the normal distribution,

the sample has homogeneity of variance,
If these assumptions are not (relatively) satisfied, than non-parametric tests should be used.
Testing these assumptions and choosing the applicable statistics are outlined during the inferential data
analyses in the next chapter.
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CHAPTER 4
DATA ANALYSES AND FINDINGS
This chapter is about the employed data analyses and the findings. The first part outlines the
descriptive statistics, while the second part is about the inferential statistics.
4.2
DESCRIPTIVE STATISTICS
The descriptive statistics is generally about the exploratory analyses of the gathered data and is
used to describe the characteristics of the research sample. First, the demographic data is examined to get a
general idea of the respondent background information. Afterwards, a descriptive analysis of the different
measured variables is outlined to get an overall view of how the data is distributed.
4.2.1
DEMOGRAPHICS
In section 1 of the survey, data was gathered regarding the background information of the
respondents, namely their gender, age, education, income and mobile service subscription type. In this
paragraph, an overview of this data is presented.
4.2.1.1
Gender
The respondent gender distribution is presented in figure 4.1. Of the 252 respondents, 182 (72.2%)
was female, while 70 (27.8%) were male.
Gender
Male
Female
27.8%
72.2%
Figure 4.1
Respondent gender distribution
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4.2.1.2
Age
The respondent age distribution is presented in figure 4.2 and consists of the five age groups that
were used in the survey. Almost all of the respondents belonged to the age group of 18- 35 years, namely
249 of the 252 cases, which accounts for 98.8% of the total. Further, there were only three respondents
within the age group of 36- 45 years. There were no respondents in the other age groups.
Age Group
249
3
0
0
36 - 45 years
46 – 60 years
>= 61 years
0
< = 17 years
18 – 35 years
Figure 4.2
4.2.1.3
Respondent age distribution
Education
The respondent education distribution is presented in figure 4.3 and consists of 5 education types,
plus the option “other”. The distribution represents the respondents’ current level of study. As it was decided
beforehand that the research sample would consist of university students, it is to be expected that this is also
the only education type occurring in the distribution, namely all 252 cases or 100%.
Education Type
252
University
0
0
0
0
0
Higher
vocational
Secondary
scientific
Secondary
vocational
General
formative
Other
Figure 4.3
Respondent education type distribution
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4.2.1.4
Income
The respondent income distribution is presented in figure 4.4 and consists of 6 income categories,
plus a “no income” option. The majority of the respondents reported to have no income (188 = 74.6%), while
the second (41 = 16.3 %) and third (17 = 6.7%) largest groups where respectively in the 1200 and 12002000 range in Surinamese dollars. A few instances of the last two ranges were also registered. Apparently,
most university students in Suriname do not yet have an income.
Income Categories
188
41
17
No income
<1200
1
2
1200-2000 2000-2800 2800-4000 4000-6000
Figure 4.4
4.2.1.5
1
2
>6000
Respondent income distribution
Mobile subscription type
The respondent mobile subscription type distribution is presented in figure 4.5 and consists of 2 service
types, namely a pre-paid and a post-paid option. Almost all of the respondents reported to have a pre-paid
mobile subscription or to use this option the most, namely 244 of the cases (96.8%), while only 8 (3.2%)
reported to have a post-paid service type.
Mobile Subscription Type
244
8
Pre-paid
Figure 4.5
Post-paid
Respondent mobile subscription type distribution
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4.2.2
VARIABLES RESULTS
This paragraph outlines the descriptive statistics of the independent, mediating and dependent
variables. These statistics will be presented per variable, optionally accompanied with any sub variables
(dimensions). The statistics of these variables are all arithmetically calculated directly from the respondent
data, by aggregating multiple relating Likert-type items/questions into composite Likert scales for the different
variables (constructs and/or dimensions) using the mean function in SPSS. As elaborated in paragraph 3.5.1
and presented in table 3.10, these scores are all interval data types. These composite scores will give us an
overall view of the respondent reactions regarding their perceptions of the different aspects of service quality
and -innovation, customer value and -satisfaction. The explanation of the mean scores is based on the
adopted interpretation of Landman (2005), which has already been presented in table 3.11.
4.2.2.1
Service Quality
The service quality variable consists of three dimensions or sub variables, namely core-, relational-
and reputational quality. Their descriptive statistics, as well as that of service quality (overall), are presented
in table 4.1. The mean scores for core- and relational quality lie between 3 and 3.5, which translates into a
majority of the respondents having a neutral response towards these aspects. The same can be said for the
overall service quality mean score. Reputational quality on its own however does have a higher relative
mean score, lying between 3.5 and 4, translating into a majority of the respondents having a neutral to more
positive response towards this aspect of service quality.
Table 4.1
Descriptive statistics - service quality
(sub) variables
N
Min
Max
Mean
Std. Deviation
Core Quality
252
1.42
4.67
3.32
.46776
Relational Quality
252
1.50
4.82
3.28
.50812
Reputational Quality
252
1.67
4.83
3.62
.50684
Service Quality (overall)
252
1.89
4.45
3.41
.41307
4.2.2.2
Service Innovation
Service innovation also consists of three dimensions or sub variables, namely new service concept,
new service process and new technology system. Their descriptive statistics, as well as that of service
innovation (overall), are presented in table 4.2. The mean scores for new service concept and -process lie
between 3.5 and 4, translating into a majority of the respondents having a neutral to more positive response
towards these aspect of service innovation. The same can be said for the overall service innovation mean
score. New technology system however has a lower relative mean score, lying between 3 and 3.5, which
translates into a majority of the respondents having a neutral response towards this aspect.
Table 4.2
Descriptive statistics - service innovation
(sub) variables
N
Min
Max
Mean
Std. Deviation
New Service Concept
252
1.57
5.00
3.58
.53802
New Service Process
252
2.14
5.00
3.73
.46063
New Technology System
252
1.00
5.00
3.39
.69937
Service Innovation (overall)
252
2.25
4.89
3.57
.47343
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4.2.2.3
Perceived Customer Value
Within this study, perceived customer value is viewed as a one-dimensional construct, hence the
absence of any sub variables. The descriptive statistics are presented in table 4.3. The mean score lies
between 3 and 3.5, translating into a majority of the respondents having a neutral response towards this
concept.
Table 4.3
Descriptive statistics – perceived customer value
(sub) variables
N
Min
Max
Mean
Std. Deviation
Perceived Customer Value
252
1.00
5.00
3.28
.69410
4.2.2.4
Customer Satisfaction
Within this study, customer satisfaction is also viewed as a one-dimensional construct and thus also
does not have any sub variables. The descriptive statistics are presented in table 4.4. The mean score lies
between 3 and 3.5, translating into a majority of the respondents having a neutral response towards this
concept.
Table 4.4
Descriptive statistics –customer satisfaction
(sub) variables
N
Min
Max
Mean
Std. Deviation
Customer Satisfaction
252
1.80
4.80
3.34
.58955
4.2.2.5
Perceived importance of the variables
During the survey, the respondents were asked to rate and order the different service quality and
service innovation aspects as service performance indicators, based on their opinion of importance (see
question 72 of the survey, appendix H). The aim was to directly measure the perceived weight/importance of
these dimensions, as according to the literature these tend to vary in different service contexts. A mean
score of these measurements was calculated per variable, as this value represents the respondent’s
average score of the importance or weight for that variable or dimensions.
However, the question was apparently not formulated specific enough, as it was understood
differently by a segment of the respondents. The dimensions were asked to be ordered by dividing the
numbers from 1 to 6 between them based on their perceived importance. Hereby "1" indicated the most
important and "6" the least important aspect. The intention was that any one of the numbers from 1 until 6
was to be used only once, giving each dimension a unique ranking. Regrettably, this was not specifically
stipulated. Out of the 252 respondents, 145 (58%) interpreted the ranking method as intended, while 107
(42%) approached this differently. The latter apparently did not infer from explanation that the intention of a
unique ranking per dimension was the case and used certain rankings more than once. Thus, within this
group certain dimensions received equal rankings, which was not the intension of the assessment.
Still, regarding question 72, both scenarios have been processed separately and their means independently
calculated. The comparison between the calculated means of both scenarios is presented in table 4.5.
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Table 4.5
Comparison between direct and indirect calculated mean scores
Unique Ranking Scenario
Variable
Equal Ranking Scenario
(sub) variables
Service
Quality
Service
Innovation
Mean
Std. Dev.
Rank
Mean
Std. Dev.
Rank
Core Quality
3.20
1.828
5
2.76
1.647
4
Relational Quality
3.07
1.747
6
2.88
1.697
3
Reputational Quality
3.77
1.795
1
3.19
1.838
1
New Service Concept
3.64
1.408
3
3.08
1.632
2
New Service Process
3.69
1.484
2
2.76
1.687
4
New Technology System
3.63
1.844
4
2.61
1.758
5
N (%)
145 (58%)
107 (42%)
Scenario Abbreviation/Code
UM
EM
From table 4.5, it becomes apparent that between the unique measurement (UM) and the equal
measurement (EM) scenario, there seems to be very little similarity as there is only one overlapping ranking,
namely reputational quality. Apparently, optionally being able to assign equal scores compared to a unique
scoring approach, results in a very different ordering. After all, these are very different rating approaches.
Because these two approaches are not reconcilable, their ranking results are also not. Thus, the ranking
data of the EM scenario is unfortunately disregarded from further analyses.
Although the intended UM approach encompasses just a bit more than half of the total sample
(58%), it still offers a smaller representation of the whole because of the relatively large irreconcilable other
42%. Yet, according to Field (2009), the necessary sample size with a standard prediction power of 80%
(β=.8) and a standard probability level of 5% (α=.05) is 783 cases/individuals for detecting small correlation
effects (r=.1), 85 for medium effects (r=.3) and 28 participants for large effects (r=.5). Thus, the sample size
of 145 should still be adequately enough to detect medium size and surely large size correlation effects.
Based on this statistical significance, the intended unique measurement ranking (UM) results will be
maintained and used for the assessment of the perceived weight/importance of the different service quality
and service innovation dimensions. Based on this, the final ranking (customer perceived importance/weight)
of the dimensions as service performance indicators is presented in table 4.6.
Table 4.6
Final ranking of the dimensions
Variable
Rank
Reputational Quality
1
New Service Process
2
New Service Concept
3
New Technology System
4
Core Quality
5
Relational Quality
6
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4.3
INFERENTIAL STATISTICS
The inferential statistics encompass the actual analyses of the gathered data. In this regard,
statistical tests are employed to measure the relation and/or impact between the different variables.
First, the dataset is analyzed to evaluate the relevant inferential test category. Based on this evaluation,
applicable correlations tests are used to indicate if an association or relationship exists between different
variables. Consecutively, applicable regression tests are employed to measure the causal relation between
the different variables. The regression results are used to test the different hypotheses, resulting in either
acceptance or rejection, in order to make inferences about the broader population based on the research
sample used. Finally, additional tests are employed to investigate if there are significant differences in the
perception of the different student groups regarding the different research variables.
4.3.1
STATISTICAL ASSUMPTION TESTING
As mentioned in paragraph 3.5.2, inferential statistics encompass parametric- and non-parametric tests. To
choose the applicable category, the dataset is analyzed regarding the following assumptions.
4.3.1.1
NUMERICAL DATA TYPE
It has already been elaborated in §3.5.1, that the independent (service quality and service
innovation), dependent (customer satisfaction) and mediating (perceived customer value) variables are all
based on Likert scales, which are composite scores (sum or mean) of groups of Likert questions, which are
regarded as interval data. This is a numerical data type, thus satisfying this assumption. The breakdown of
the data type per variable was presented in table 3.10.
4.3.1.2
NORMALY DISTRIBUTED DATA
This assumption has to do with the central limit theorem, which states that as samples get large
(usually > 30) their distribution approaches the normal distribution regardless of the population distribution
with a mean equal to the population mean. According to Field (2009), when analyzing for normality in
relatively larger samples (n > 200), it is better to look for normality visually, instead of using normality
coefficients, as relatively small deviations from normal will still give significant results (non-normal
distribution). In this regard, histograms should be used to visually examine the deviation from the normal
distribution with the help of the skewness and kurtosis measures. According to (Bulmer, 1979) the closer the
skewness and kurtosis are to zero the better. Because values of zero are quite unlikely in practice, as a rule
of thumb the ranges and their interpretations as presented in table 4.7 are suggested. Thus in practice, the
desired range is between −½ and +½.
Table 4.7
Skewness and kurtosis interpretation
Skewness and kurtosis range
Interpretation
less than −1 or greater than +1
highly skewed distribution
between −1 and −½ or between +½ and +1
moderately skewed distribution
between −½ and +½
approximately symmetric distribution
(Source: Bulmer, 1979)
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As a crosscheck, the z-scores (standardized scores) of the skewness and kurtosis can also be
calculated in SPSS. Generally, an absolute value of the z-scores greater than 1.96 is significant at p < .05,
meaning that absolute scores larger than 1.96 indicate a significant non-normal distribution. However, as
significant results arise from relatively small deviations from normality for large samples, it is recommended to
increase this level to 3.29 in these cases (Field, 2009).
The histograms plots (including the normal distribution) of the dependent variables (service quality
and service innovation), the mediating variable (perceived customer value) and the dependent variable
(customer satisfaction) are respectively presented in the figures J1 to J.4 (Appendix J). The skewness and
kurtosis values with their z-scores are presented in table 4.8.
Table 4.8
Skewness and kurtosis measures
Variable
Skewness
Kurtosis
value
z-score
value
z-score
Service Quality
-0.276
-1.801
0.297
0.971
Service Innovation
-0.390
-2.539
0.436
1.426
Perceived Customer Value
-0.371
-2.416
0.192
0.630
Customer Satisfaction
-0.403
-2.629
-0.443
-1.450
The values of all the skewness and kurtosis measures are just between the desired −½ and +½,
which translates into approximately symmetric distributions. The absolute values of the z-scores are all
below the level of 3.29. Based on these findings and the histogram plots, the assumption of having relatively
normal distributed data can be said to have been satisfied for all these variables.
4.3.1.3
HOMOGENEITY OF VARIANCE
This refers to the variances throughout the data being about the same. According to Field (2009),
when analyzing large samples, as is the case, using variance coefficients tot test this assumption will give
significant results even if there are small differences. In these cases, it is recommended to use the Hartley’s
FMax or variance ratio (Pearson & Hartley, 1954). This is calculated by dividing the larger variance of a
group of observations with the smaller variance of another group within the sample. Thus, two groups of
observations for the different variables within the same sample are needed. To achieve this, the data sample
was randomly split in two within SPSS, giving two equal groups. Using descriptive statistics, their variances
where computed and are presented in table 4.9 together with the ratios.
Table 4.9
Variance ratios
Variable
Variance
Variance
Group 1
Group 2
Ratio
Service Quality
0.172
0.170
1.01
Service Innovation
0.205
0.245
1.20
Perceived Customer Value
0.507
0.458
1.11
Customer Satisfaction
0.368
0.326
1.13
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The variance ratio should be smaller than a critical value of ±1.67 for a sample size larger than 60
and an α = 0.05 (Field, 2009). The variance ratios for all the variables are smaller than this critical value, thus
the assumption of equal variances is also satisfied.
Concluding the statistical assumption testing
As all the assumptions for using parametric test are satisfied for this data sample, the use of
statistical tests within this inferential group are applicable. Regarding parametric test options, in Saunders et
al. (2009) the Pearson’s correlation test is recommended for the relationship strength examination and linear
regression for the causal relation testing. These are outlined in the next two chapters.
4.3.2
CORRELATION ANALYSES
The Pearson’s correlation coefficient can range between -1 and 1. The closer it is to -1, the stronger
the negative relationship, while the closer it is to 1, the stronger the positive relationship. A value closer to 0
indicates a weaker relationship. The coefficient can be interpreted more specifically by using table 4.10.
Table 4.10
Interpretation Pearson’s correlation coefficient
Correlation Coefficient
Effect
Correlation Coefficient
Effect
0.10 to 0.29
Small positive effect
-0.10 to -0 .29
Small negative effect
0.30 to 0.49
Medium positive effect
-0.30 to -0.49
Medium negative effect
0.50 to 1.00
Large positive effect
-0.50 to -1.00
Large negative effect
(Source: Field, 2009)
Based on the formulated hypotheses (table 2.5, §2.6), three correlations need to be examined,
namely the relationship between (1) service quality and perceived customer value, (2) service innovation and
perceived customer value and (3) perceived customer value and customer satisfaction. The correlation test
results are presented in table 4.11.
Table 4.11
Correlation test results
Variable
Service
Parameters
Sig. (2-tailed)
Perceived
Pearson Correlation
Customer
Satisfaction
Service Innovation
Perceived
Customer Value
**
Pearson Correlation
Innovation
Customer Value
Service Quality
.644
.000
**
.680
Sig. (2-tailed)
**
.632
.000
.000
.694**
.553**
.666**
Sig. (2-tailed)
.000
.000
.000
N
252
252
252
Pearson Correlation
**. Correlation is significant at the 0.01 level (2-tailed).
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In table 4.11, very significant correlations (p < 0.01) have been marked with two stars. This is done by
SPSS to indicate that the probability that the variables do not have a relationship is very small (<1%) or
inversely that the probability that they do have a relationship is very large (>99%). This p-value is thus
smaller (more significant) than the significance level used within this study, namely p = 0.05.
From the results, the following findings can be listed:
1. There is a very significant correlation between service quality and perceived customer value
(p=.680 (< 0.01)), translating into a large positive effect.
2. There is also a very significant correlation between service innovation and perceived customer
value (p=.632 (< 0.01)), translating into a large positive effect.
3. The correlation between perceived customer value and customer satisfaction is also very
significant (p=.666 (< 0.01)), translating into a large positive effect.
These findings correspond to the proposed effects between all the variables in the formulated hypothesis
within this study.
Although not part of the formulated hypotheses (intended relationship examination), it is still
noteworthy that according to the data in table 4.11, there also seems to be a very significant correlation
between service quality and service innovation (p=.644 (< 0.01)), between service quality and customer
satisfaction (p=.694 (< 0.01)) and between service innovation and customer satisfaction (p=.553 (< 0.01)).
Generally, correlation results only indicate the strength of the relationship, but not its direction (Field,
2009). Thus, to test the direction or causality of the relationship between the variables, regression tests are
employed in the next paragraph.
4.3.3
REGRESSION ANALYSES
Linear or simple regression analysis is a statistical procedure used to test the causal relations
between variables. It is a method of trying to asses/predict how values from one variable (predictor) influence
those of another (outcome variable), by mathematically fitting a linear or straight line in the data that best
describes the data pattern. Based on Field (2009), the assessment is done by examining the following
regression coefficients resulting from the analyses:

R square (R2): this coefficient shows the proportion of the data explained by the model in the
outcome variable that is shared by the predictor variable(s). It is thus about the goodness of fit.

F-value: this value shows the overall significance of the whole regression model. The better the
model, the larger the F-value. Generally, the value should be larger than at least 1 is and its
significance level should also be lower than the critical level chosen within the study.

B-value: this is the gradient of the regression line and represents the strength of the relationship
between the predictor and outcome variable.
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
Beta: this is the standardized version of the b-value. It offers a better comparison among
independent variables than the b-value, since it is expressed in standardized units. The higher the
Beta, the stronger the strength of the relationship between the predictor and outcome variable.

The Sig. value: this represents the significance value of the t-test and shows the probability of the
predictor variable significantly contributing to the model. In other words, if the t-test value associated
with a b-value is significant (less than the critical level α), the predictor is making a significant
contribution to the model.
The critical level or α-value is the chosen probability level within a study to test the null hypothesis
(H0). The smaller the significance value is compared to the α-value, the greater the contribution of
that predictor to the model and the less evidence there is that H0 is true, resulting in its rejection.
Inversely, this means the higher the probability that the alternative hypothesis H1 is true, which thus
should be accepted. Generally, an α-value of 0.05 is regarded to be satisfactory in making relatively
reliable inferences. Some guidelines for more specific interpretations of the resulting significance
levels are presented in table 4.12.
Table 4.12
Interpretation significance levels
Significance Coefficient
Interpretation
Sig < 0.01
Overwhelming evidence that H1 is true
0.01 < Sig < 0.05
Strong evidence that H1 is true
0.05 < Sig < 0.10
Weak evidence that H1 is true
0.10 < Sig
Insufficient evidence that H1 is true
(Source: Anderson, Sweeny, Williams, Freeman and Shoesmith, 2009)
In table 4.13, the three hypotheses within this study have been formulated using H0 and H1.
Table 4.13
Hypothesis Overview
Hypothesis
H10
Service quality has no positive impact on perceived customer value.
H11
Service quality has a positive impact on perceived customer value.
H20
Service innovation has no positive impact on perceived customer value.
H21
Service innovation has a positive impact on perceived customer value.
H30
Perceived customer value has no positive impact on customer satisfaction.
H31
Perceived customer value has a positive impact on customer satisfaction.
There are thus 3 hypotheses that need to be tested. The first two hypotheses both regard the same
outcome or dependent variable, namely perceived customer value. In this regard, a multiple linear regression
is used to test the impact of both predictor/independent variables (service quality and service innovation) on
the outcome variable in one model. The third regression test is a single linear regression, as there is only
one predictor variable, namely the mediating variable of perceived customer value, as well as one outcome
variable, namely the dependent variable of customer satisfaction. Thus, in total 2 regressions are performed
to test the 3 hypothesizes, which are outlined in the next chapter.
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4.3.3.1
MULTIPLE REGRESSION TEST (H1 AND H2)
The results of the multiple regression for testing H1 and H2 are presented in the tables 4.14, 4.15
and 4.16. The first tables is the model summary and describes the overall model. The second table regards
ANOVA test results, which show if the overall model is a significant fit for the data. However, the latter does
not show the individual contribution of the different variables in the model. These details are given by the
third table, which is about the regression coefficients (Field, 2009).
As reference, the raw SPSS output of the multiple regression test has been included in appendix K.
Table 4.14
Model summary
Model
R
1
.725
a
b
(multiple regression)
R Square
Adjusted R Square
Std. Error of the Estimate
.526
.522
.47969
a. Predictors: (Constant), Service Innovation, Service Quality
b. Dependent Variable: Perceived Customer Value
Table 4.15
ANOVA
Model
1
a
(multiple regression)
Sum of Squares
df
Mean Square
Regression
63.629
2
31.814
Residual
57.296
249
.230
120.924
251
Total
F
Sig.
.000
138.261
b
a. Dependent Variable: Perceived Customer Value
b. Predictors: (Constant), Service Innovation, Service Quality
Table 4.16
Coefficients
Model
a
(multiple regression)
Unstandardized
Standardized
Coefficients
Coefficients
B
1
(Constant)
Beta
-1.126
.266
Service Quality
.783
.096
Service Innovation
.486
.084
t
Sig.
Beta
-4.227
.000
.466
8.172
.000
.331
5.809
.000
a. Dependent Variable: Perceived Customer Value
Based on the data in table 4.14, the following findings are listed:

In the model, 52.6% of the variance in perceived customer value is explained by the predictors of
service quality and service innovation (R2 = .526).
Based on the data in table 4.15, the following findings are listed:

There is a high F-ratio (>>1), which are also a very significant (sig < .01).

Thus, overall the model predicts the outcome variable of perceived customer value significantly well.
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Based on the data in table 4.16, the following findings are listed:

In the model, the b-value of service quality is .783 and is very significant (sig<.001). This indicates a
very strong positive relationship with perceived customer value.

The b-value of service innovation is .486 and is also very significant (sig<.001). This indicates a
strong positive relationship with perceived customer value.

Both b-values confirm the direction of the earlier identified positive relationship during the correlation
tests of both service quality and service innovation with perceived customer value.

The Beta of service quality (.466) is relatively larger than that of service innovation (.331), indicating
that service quality has some more predictive strength/weight in the relationship with perceived
customer value, compared to service innovation.
4.3.3.2
SINGLE REGRESSION TEST (H3)
The results of the single regression for testing H3 are presented in the tables 4.17, 4.18 and 4.19.
These three tables describe the same regression aspects as in the multiple regression test, namely the
model summary, the ANOVA test and the regression coefficients.
As reference, the raw SPSS output of the single regression test has been included in appendix L.
Table 4.17
Model summary
Model
R
1
.666
a
b
(multiple regression)
R Square
Adjusted R Square
Std. Error of the Estimate
.444
.442
.44047
a. Predictors: (Constant), Perceived Customer Value
b. Dependent Variable: Customer Satisfaction
Table 4.18
ANOVA
Model
1
a
(multiple regression)
Sum of Squares
df
Mean Square
Regression
38.736
1
38.736
Residual
48.504
250
.194
Total
87.240
251
F
199.650
Sig.
.000
b
a. Dependent Variable: Customer Satisfaction
b. Predictors: (Constant), Perceived Customer Value
Table 4.19
Coefficients
a
(multiple regression)
Model
Unstandardized
Standardized
Coefficients
Coefficients
B
1
(Constant)
Perceived Customer Value
Beta
1.490
.134
.566
.040
t
Sig.
Beta
.666
11.112
.000
14.130
.000
a. Dependent Variable: Customer Satisfaction
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Based on the data in table 4.17, the following findings are listed:

In the model, 44.4% of the variance in customer satisfaction is explained by the predictor of
perceived customer value (R2 = .444).
Based on the data in table 4.18, the following findings are listed:

There is a high F-ratio (>>1), which are also a very significant (sig < .01).

Thus, overall the model predicts the outcome variable of customer satisfaction significantly well.
Based on the data in table 4.19, the following findings are listed:

In the model, the b-value of perceived customer value is .566 and is very significant (sig<.001). This
indicates a very strong positive relationship with customer satisfaction.

This b-value confirms the direction of the earlier identified positive relationship during the correlation
tests of perceived customer value with customer satisfaction.
4.3.3.3
HYPOTHESIS TESTING
Using the results of the regression tests, the three hypotheses within this study are tested in table
4.20. The acceptance or rejection of the hypothesis are based on a significance level of α= .05.
Table 4.20
Hypothesis Overview
Hypothesis
Regression
Sign.
H10 Service quality has no positive impact on perceived customer value.
Result
Reject
.000
H11 Service quality has a positive impact on perceived customer value.
Accept
H20 Service innovation has no positive impact on perceived customer value.
Reject
.000
H21 Service innovation has a positive impact on perceived customer value.
Accept
H30 Perceived customer value has no positive impact on customer satisfaction.
Reject
.000
H31 Perceived customer value has a positive impact on customer satisfaction.
Accept
Thus, within this study al the null hypothesis are rejected and the alternative hypothesis accepted.
Based on the interpretation in table 4.13, there is overwhelming evidence that all the alternative hypotheses
H1 are true.
Based on the conceptual framework (§2.6) the hypothesized model is presented in figure 4.6 together with
the regression results.
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Service Quality
Core Quality
Relational Quality
.783
(.000)
.566
Reputational Quality
Perceived
(.000)
Customer
Value
Service Innovation
New Service Concept
Customer
Satisfaction
.486
(.000)
New Service Process
New Technological System
Figure 4.6
4.3.4
Hypothesized research model
ADDITIONAL TESTS
Within this study, the demographical variables do not form a part of the hypotheses. As mentioned in
chapter 3.3.1, the demographics have been included in the questionnaire as control variables, to be able to
evaluate possible patterns within different customer groups. Thus, they can be used to examine if there are
significant differences in the perception of the different student groups regarding the research variables.
The demographics contained the variables of gender, age, education, income and mobile service
subscription type. For each of these variables, a one-way ANOVA test was employed to investigate if there
are any significant differences between the means of independent groups within these variables.
The only significant result that was produced by the ANOVA tests was for service innovation within
the different groups of gender (F(1,250) = 5.007, p = .026). All other tests results where non-significant.
A Tukey post-hoc test was afterwards run to further investigate the difference, but this could not be
computed, as there were fewer than three groups (only 2) available for the variable, the two groups being
males and females.
According to Saunders et al., (2009), to test whether the means of only two groups that are
independent are different, the independent t–test should be employed, which is actually a special case of the
ANOVA test. The test results of the independent t–test for gender indicated a statistically significant
difference between groups for service innovation (t = -2.238, df = 250, p = .026). These results translate into
men and women perceiving service innovation differently. The mean scores where 3.46 for men and 3.61 for
women, thus a mean difference of 0.15. Based on the interpretations in table 3.11 (§3.5.1), the majority of
the men thus presented a neutral response towards this variable (3 < mean < 3.5), while the majority of the
women presented a neutral to more positive response (3.5 < mean < 4).
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CHAPTER 5
5.1
DISCUSSION
OVERVIEW
This final chapter is about the discussion and conclusions based on the data analyses findings in the
previous chapter. There are four main sections. In the first section, the main findings are presented and
research questions answered. The second section regards some additional findings of this research. Based
on the discussion in the two previous sections, the theoretical and managerial implications are outlined in a
concluding third section. The fourth section forms a concluding paragraph, while the last section presents
some suggestions for possible further research.
It should be noted that this research was conducted on one service offering of an ICT service
provider, namely the TeleG mobile service by Telesur, as it met certain criteria in the context of service
quality, service innovation and customer satisfaction enhancement. This should be taken into account when
generalizing the findings for the whole mobile service sector or even other service types. This does however
lead to a suggestion to further research, as is outlined in paragraph 5.5.
5.2
MAIN FINDINGS AND ANSWERS TO THE RESEARCH QUESTIONS
The objective of this study was to evaluate the significance of service innovation as a service
performance driver compared to the aspects of service quality and if it significantly impacts on perceived
customer value and customer satisfaction, as the quality-value-satisfaction interrelation has been argued to
be a key requirement to success and competitive advantage. To achieve this objective, research questions
where formulated in chapter 1. The main research question was:

What is the mutual significance between service innovation and service quality and what is
their impact on perceived customer value and customer satisfaction?
To help better answer the main research question, the following sub research questions were formulated:

What is the mutual significance between service innovation compared to core-, relationaland reputational quality as the dimensions of service quality?

What is the impact of service innovation on perceived customer value?

What is the impact of service quality on perceived customer value?

What is the impact of perceived customer value on customer satisfaction?
The main research question is thus approached in more detail by answering the sub questions. The
answers to the sub research questions are given in the following four sub-paragraphs, which also represent
the main findings within this study. The main findings are listed to be:

First service quality, and then service innovation.

Delivering excellent service quality is implicitly crucial.

Continuous service innovation is consecutively critical.

Ensuring customer perceived value enhancement is defining.
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5.2.1
FIRST SERVICE QUALITY, THEN SERVICE INNOVATION
The argument made in the problem definition of this study (§1.3), was that apparently the services
landscape is changing, as besides the service quality aspects of core-, relational- and reputational quality,
service innovation is now also playing an important role in the competitive process.
In this regard, the first sub research question was formulated to be:
What is the mutual significance between service innovation compared to core-, relational- and
reputational quality as the dimensions of service quality?
Based on the literature review, service innovation is conceptualized using the three dimensions of
new service concept (NSC), new service process (NSP) and new technology system (NTS). For a more
detailed and level comparison, these three service innovation dimensions where used, representing its
parent concept, within the mutual comparison with the three service quality dimensions. The ranking
assessment of these six service aspects as service performance indicators is outlined in detail in paragraph
4.2.2.5. The results of the final ranking are that, overall reputational quality is ranked as 1st place, while the
three service innovation dimensions of new service process, new service concept and new technology
system are respectively ranked as 2nd, 3rd and 4th. The remaining two service aspects of core quality and
relational quality are respectively ranked as 5th and 6th. These rankings can be interpreted as follows.
Reputational quality has been ranked 1st place of all the service quality and -innovation dimensions
together, followed by new service process. An interpretation of this ranking order is that apparently
reputation is the first most important aspect the customers look at regarding service performance and thus
whether to use or continue using the service. Afterwards, the aspect of new service process is deemed most
important, which is about innovative changes in the customer interface or service delivery system.
Another interpretation of the ranking order is that reputational quality as a service quality dimension
was ranked 1st place, followed by all the three service innovation dimensions. According to the literature,
reputational quality (company- and brand image) is argued to be built up based on what is offered, referring
to core quality, and how, referring to relational quality (Grönroos, 1984). Based on this argument, the 1st
place ranking of reputational quality as a service quality dimension implies that the other two dimensions of
service quality are indirectly also critical yet more as underlying factors. Thus, it can be argued that service
quality as a whole indirectly remains the most important service performance aspect, followed by (all three
dimensions of) service innovation. Arguably, a service offering with a bad reputation probably has a bad
core-, relational or overall service quality level. Although the service might have attractive innovative service
aspects, it is unlikely that customers will be interested because of the bad quality aspects.
Also, as all the three service innovation dimensions of new service process, new service concept
and new technology system where respectively ranked as 2nd, 3rd and 4th, this can be interpreted as service
innovation as a whole being the second most important overall performance indicator, after service quality
which indirectly has been shown to be the most important service performance aspect.
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It should however be noted that this ranking is unfortunately based on only 58% of the total sample
(145 out of 252), because of the different interpretation that the remaining segment of the respondents gave
to the ranking assessment due to the question apparently not being formulated specific enough. The ranking
data of the remaining sample (42%) was regarded as incomparable and unusable and was thus further
disregarded. Still, the sample of 145 has been elaborated to be statistically of an adequate size for detecting
at least medium to large correlation effects. For the specific details, reference is made to paragraph 4.2.2.5.
5.2.2
EXCELLENT SERVICE QUALITY IS IMPLICITELY CRUCIAL
In the literature, it has been argued that to remain competitive and survive, service companies
should deliver excellent service quality that adds to the customer perceived value experience, as this is the
basic and implicit attribute of the offering that is expected by the customer (Parasuraman et al., 1985, 1988;
Cronin & Taylor, 1992; Oh, 2000). In this regard, the following sub research question was formulated:
What is the impact of service quality on perceived customer value?
According to the findings within thus study, a very significant positive causal effect of service quality
on perceived customer value has been found (b=.783, p<.01). This means that service quality significantly
determines the customer’s perception of the service value.
This is further underpinned by the interpretations of the service performance ranking results in the
previous paragraph, were it has been elaborated that service quality as a whole indirectly remains the most
important service performance aspect, followed by (all three dimensions of) service innovation. This is also
reinforced by the fact that the strength or weight of the relationship between service quality and perceived
customer value (Beta=.466) is relatively higher than that of service innovation (Beta=.331).
Based on the above elaboration, it can be said that delivering excellent service quality is indeed the
basic and implicit crucial factor that increases the offered service value as perceived by the customer.
5.2.3
CONTINUOUS SERVICE INNOVATION IS CONSEQUTIVELY CRITICAL
It has been argued in the literature that service quality is no longer enough to be competitive
(Kandampully & Duddy, 1999), but that service innovation now also is being regarded as a major competitive
driver (De Jong et al., 2003; Cainelli et al., 2006; Kunttu, 2013), as it also adds to the perceived customer
value (Chapman at al., 2002). In this regard, the following sub research question was formulated:
What is the impact of service innovation on perceived customer value?
According to the findings within thus study, a very significant positive causal effect of service
innovation on perceived customer value has been found (b=.486, p<.01). This means that service innovation
significantly determines the customer’s perception of the service value.
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However, the strength or weight of the relationship between service innovation and perceived customer
value (Beta=.331) was relatively smaller than that of service quality (Beta=.466). This is also underpinned by
the service performance ranking interpretations (§5.2.1), were service innovation as a whole was elaborated
to be the second most important overall performance indicator after service quality.
Based on the above elaborations, it can be said that continuously innovating on the service offering
is the consecutive critical factor that adds to the offered service value as perceived by the customer.
5.2.4
ENSURING CUSTOMER PERCEIVED VALUE ENHANCMENT IS DEFINING
Achieving and increasing customer satisfaction has been argued to be important for companies in a
competitive market to be successful (Heskett et al., 1997; Baker, 2013). Thus, service providers should
ensure that service performance aspects enhance the perceived customer value, as the value assessment is
used in the overall service experience evaluation which determines the customer’s satisfaction (Kandampully
& Duddy, 1999; McDougall & Levesque, 2000). In this regard, the following sub research question was
formulated:
What is the impact of perceived customer value on customer satisfaction?
According to the findings within thus study, a very significant positive causal effect of perceived customer
value on customer satisfaction has been found (b=.566, p<.01). This means that the value of a service
offering as perceived by the customer significantly determines their satisfaction level of having purchased
and used the service.
Thus, it can be said that ensuring the enhancement of the customer’s perceived value through
service performance aspects like quality and innovation is defining for the customer’s satisfaction.
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5.3
ADDITIONAL FINDINGS
This paragraph outlines some additional findings, besides those that are directly related to answering
the research questions.
5.3.1
VARIABLE RESULTS
Based on the descriptive analyses, an overall view of the respondent’s general perceptions
regarding the service quality, service innovation, customer value and customer satisfaction of the assessed
service offering is presented in table 5.1.
Table 5.1
Overall view of the respondent perceptions
Overall
Interpretation
Mean Score
majority respondent response
Core Quality
3.32
neutral
Relational Quality
3.28
neutral
Reputational Quality
3.62
neutral to more positive
Service Quality (overall)
3.41
neutral
New Service Concept
3.58
neutral to more positive
New Service Process
3.73
neutral to more positive
New Technological System
3.39
neutral
Service Innovation (overall)
3.57
neutral to more positive
Perceived Customer Value (overall)
3.28
neutral
Customer Satisfaction (overall)
3.34
neutral
Service Aspect
This overview quickly shows how the service offering was generally perceived based on the different
service aspects. The perceptions where either neutral or neutral to positive. There were no aspects where
the majority of the respondents agreed or strongly agreed (>4) and neither where they disagreed or strongly
disagreed (<3).
5.3.2
DIFFERING PERCEPTION OF SERVICE INNOVATION
Significant difference between men and women were found regarding the aspect of service
innovation (t = -2.238, df = 250, p = .026). The mean scores where 3.46 for men (majority neutral response)
and 3.61 for women (majority neutral to more positive response), with a mean difference of 0.15.
These findings imply that men and women perceive service innovation slightly differently. In this case, the
perception of service innovation was higher with the women that with the men. This finding forms a
suggestion for possible further research regarding the difference in perception of innovation between men en
women.
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5.4
THEORETICAL IMPLICATIONS
5.4.1
EMPIRICAL RECONFIRMATIONS
Based on the findings, the multi-dimensional view of service quality by the three aspects of core-,
relational- and reputational quality as its three main dimensions, has empirically been reconfirmed to be a
consistent representation of this concept. In addition, the multi-level view of service quality by the five
SERVPERF dimensions (originating from SERVQUAL) as the sub dimensions of relational quality, has been
shown to be a consistent and applicable. The significant influence of service quality on perceived customer
value has also been reconfirmed. The same can be said for the impact of perceived customer value on
customer satisfaction.
5.4.2
THEORETICALLY PROPOSED CONFIRMATIONS
The proposed multi-dimensional conceptualization of service innovation within this study by the three
dimensions of new service concept, new service process and new technological system as service
performance aspects has empirically been shown to be a consistent and applicable representation of the
concept, especially as perceived by the customer. Service innovation has also empirically been shown to
significantly impact on perceived customer value. The findings thus confirm that indeed the services
landscape is changing, as besides service quality aspects, service innovation is now also playing an
important role in the competitive process, as it also adds to the perceived customer value judgment, which in
turn positively affects customer satisfaction. However, service quality was shown to still have more
weight/importance than service innovation in the perceived customer value relation. Still, the findings imply
that service innovation should also be taken into account when evaluating the performance of a service
offering as perceived by the customer. In this regard, service quality with its dimensions of core-, relationaland reputational quality fall short in capturing the innovative side of the equation.
5.5
MANAGERIAL IMPLICATIONS AND RECOMMENDATIONS
5.5.1
GENERAL IMPLICATIONS AND RECOMMENDATIONS
The results of this study can be used by service providers to derive managerial implications on the
necessary business requirements regarding service quality and service innovation. Based on the main
findings, service companies should maintain the pursuit of delivering outstanding service quality, as it is
becoming part of the standard service offering and expected by the customers in general. Management
should thus keep up the constant process of service quality enhancement. However, management should
keep in mind that service innovation is becoming as important as service quality. The necessary priority
should thus also be given to the enhancement of this service aspect. In this regard, service providers should
take into account the multi-dimensional nature of service innovation, as the different dimensions encompass
very different service innovation aspects, offering varying possibilities/avenues for them to innovate on.
Service companies should also be aware that the service innovation dimensions are interrelated. Hence,
changes within one service innovation dimension usually coincide or require relating or fitting changes in one
or more of the other dimensions. The result is thus relating changes within the different dimensions of
varying intensity, which are often necessary for the successful implementation of the service innovation.
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5.5.2
RECOMMENDATIONS REGARDING THE TELEG SERVICE OFFERING
The overview in table 5.1 can also be used to specifically evaluate how the TeleG mobile service
offering was perceived regarding the different service aspects. It thus gives a general idea of how the service
is performing regarding these service aspects.
According to the overview, overall service quality is perceived as neutral. More specifically, this
response comes from core- and relational quality. Apparently, there is much room for quality improvement.
This becomes even more compelling, as service quality generally has been shown to be the basic and
implicit crucial factor that increases the perceived customer value. However, there seems to be a brighter
side, as reputational quality generally still did receive a neutral to more positive response. Apparently, the
service/provider does however have a generally good reputation in the market, which can be used as an
advantage in the quality enhancement endeavor.
When looking at the overall service innovation response, there seems to be a generally neutral to
more positive perception. Specifically, this response comes from the two dimensions of new service concept
and –process. These two aspects thus received a higher perception score than the aspect of new technology
system, the latter being perceived as neutral. This is a bit counter intuitive for a technology company.
A possible argument is that within service innovation, technology is generally either an enabler or facilitator.
It thus drives and/or supports innovation activities within the other service innovation dimensions and may
thus not be as dominant as the other innovation aspects. According to the literature, one or more innovation
dimensions in practice may be more dominant than the others, as the weight and perceivability of
innovations within the different dimensions dependent on the type of service and the innovation, because of
the interrelationship the dimensions have.
Regarding customer value, the overall perception is neutral. Thus, the provider should put a lot more
effort in either adding more to or enhancing the perception of the customer value within their offering. In this
regard, any further enhancements of service performance aspects like service quality and service innovation
should add to the value as perceived by the customer.
The overall neutral response to the customer’s perceived value is reflected in the overall neutral
response of the customers’ satisfaction level. On the positive side, the customer is overall however not
dissatisfied with the service offering. It is thus important for the provider to make haste in shifting the
customer satisfaction toward a more positive level.
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5.6
CONCLUDING
Based on the main findings within this study, this paragraph concludes with the following passages.
FIRST SERVICE QUALITY, AND THEN SERVICE INNOVATION
The primary focus of service enhancement by service providers should first be on service quality and
then on service innovation, as the preceding forms the basis for the latter.
DELIVERING EXCELLENT SERVICE QUALITY IS IMPLICITLY CRUCIAL
The delivery of excellent service quality is implicitly crucial, as this forms the basic attribute of the
offering that is expected by the customers in general. Thus, providers should not fail in the beginning and
deliver the service right the first time, on time and as requested.
CONTINUOUS SERVICE INNOVATION IS CONSECUTIVELY CRITICAL
Subsequently, continuous service innovation is critical, as constantly innovating on the service
offering will add to the service value, enabling providers to better cater to the customer’s present and future
needs, thus helping to provide a more sustainable competitive advantage.
ENSURING CUSTOMER PERCEIVED VALUE ENHANCEMENT IS DEFINING
The enhancement of the customer’s perceived value through service performance aspects like
quality and innovation is defining for the customer’s satisfaction level. In the end, this is key, as the survival
of the company at least depends on having satisfied customers.
In the end, the objective of providing all these service aspects are to better delight and satisfy the
customer, to increase the perceived value of the service offering, which is expected to increase the
customer’s satisfaction level. In today’s competitive market environment, being able to satisfy your customer
matters, as it can lead to repeat purchases and positive recommendations to other potential clients,
eventually leading to retention and loyalty, finally translating to financial benefits necessary for survival.
5.5
LIMITATIONS AND IMPLICATIONS FOR FURTHER RESEARCH
This study of course has its limitations. These are outlined below, eventually together with possible
implications for further research.
This study was conducted on a specific service type, namely a mobile telecom service, based on
certain criteria in the context of service quality, service innovation and customer satisfaction enhancement.
This forms a certain limitation, as it may not yet be enough to derive conclusions for different types of
services within the sector. However, this does form a basis for further research, in which other service types
can be assessed, offering data for cross-comparisons within the services sector.
The mutual significance assessment of service quality and service innovation, as well as their impact
on customer value and customer satisfaction, especially as perceived by the customer, was done for only
one mobile telecom provider. This assessment should be repeated for other mobile telecom providers,
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offering data for cross-comparison, providing grounds for stronger generalizability for this specific service
type.
The research sample consisted of only university students, which were almost all in the age group of
18 – 35 years, with the requirement that they were active users of the service offering. This can also be seen
as a limitation, as the results do not have to be the same for other demographic groups within the population.
For example, the elderly part of the population or the rural communities, which may have other views based
on differing needs. There may also be a difference of perception for other customers groups, for example the
business customer segment. The findings within this study also imply that men and women perceive service
innovation slightly differently. In this case, the perception of service innovation was higher with the women
that with the men. All these differing demographics form grounds for further research.
Within this study, it has been shown that service innovation is becoming an as important factor as
service quality. According to the literature review, innovation is now also being acknowledged as one of the
major drivers of economic growth and also to be crucial for the competitive process. Thus, a study on the
critical factors that stimulate innovation within organizations also forms a suggestion of relating research.
The findings also showed a strong correlation between service quality and service innovation. This
statistical finding can also form grounds for further research, by investigating the conceptual interrelation
between the two constructs and eventual practical implications.
Regarding the employed research instrument within this study, there are some very important
suggestions for improvement. The first and most critical suggestion regards the ranking assessment. The
question should be formulated more specifically, as it was understood differently by a segment of the
respondents. Namely, there should specifically be stipulated that the intention of the assessment is that any
one of the ranking numbers/scores should be used only once, giving each dimension a unique ranking.
Another suggestion is to split up the ranking between the two service concepts of quality and
innovation, creating two groups of three items/dimensions to be ranked. The intention is to have a
conceptually better assessment and also offer the respondents a methodologically easier assessment.
First, the two aspects of quality and innovation as a whole/concept should be ranked by employing two
weights (ranking scores). Afterwards, the three dimensions of quality should be ranked internally, using three
ranking scores. The same should be repeated for the three dimensions of innovation. This will create three
separate smaller ranking assessments which should be easier to rank by the respondents, as they will have
less choices and numbers to think about.
These ranking scores will now also offer the possibility to assess the ranking of the dimensions within their
respective concept. The weight of the internal ranking can be multiplied by the weight of the concept ranking,
still offering the possibility to mutually rank all the six dimensions.
The last suggestion regarding the research instrument is to also include a group of Likert type
questions/items that directly measure the overall service quality and overall service innovation, besides the
indirect measurements using their respective dimensions. The intention is to also allow for regressions to be
done between the dimensions and their respective concept. This will enable us to identify the causal strength
of the dimensions within their concepts, thus further enriching the hypothetical research model.
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APPENDIX-A
Table A
OVERVIEW OF DEFINITIONS AND INTERPRETATIONS OF CUSTOMER SATISFACTION
Overview of definitions and interpretations of customer satisfaction*
Author(s) (year)
Spaulding,
Source
Spaulding, 2011
2011**
Interpretation/definition
Response
Focus
Time
Customer satisfaction is defined as “the number of
customer’s reported
exceeding specified
post
customer’s or percentage of total customer’s,
experience with a firm,
satisfaction goals
consumption
whose reported experience with a firm, its
its products, or its
products or its services (ratings) exceeds
services (ratings)
specified satisfaction goals”.
Oliver, 2010
Harris, 2010
Mackay, 2012
Mackay, 2012
The customer’s pleasurable level of consumption
customer’s pleasurable
regarding the product
during & post
related fulfillment response, regarding the product
level of consumption
or service and/or its
consumption
or service and/or its features offered, described as
related fulfillment
features offered
either under- or over-fulfillment.
response
Customer satisfaction is the customer’s overall
customer’s overall
the customer
during
feeling of contentment with the customer
feeling of contentment
interaction
consumption
interaction”.
Kotler & Keller,
Achour, Said, &
Customer satisfaction as a person’ feeling of
a person’s feeling of
result from comparing
post
2009, 2006,
Boerhannueddin,
pleasure or disappointment resulting from
pleasure or
a product’s perceived
consumption
2002**
2011; Nimako S.
comparing a product’s perceived performance in
disappointment
performance in
G., 2012
relation to his or her expectations.
relation to his or her
expectations
MBA Master Thesis
Author(s) (year)
Schiffman &
Source
Agbor, 2011
Karun, 2004**
Interpretation/definition
The individual’s perception of the performance of
Response
individual’s perception
Focus
Time
performance of the
post
the products or services in relation to his or her
products or services in
consumption
expectations.
relation to his or her
expectations
Zeithaml and
Lee, 2010
Bitner, 2001
Customer satisfaction can be defined as a
consumer’s fulfillment
product or service
during
consumer’s fulfillment response; that is, it is a
response or judgment
feature, or product or
consumption
judgment that a product or service feature, or
service itself providing
product or service itself, provides a pleasurable
a pleasurable level of
level of consumption-related fulfillment”.
consumption-related
fulfillment
Oliver et al.,
Yue, 2012
1997
Customer Satisfaction is an affective and
affective and emotional
emotional response and process of evaluation
response
process of evaluation
during
consumption
when using the product or service of provider.
Heskett, Sasser
Lam, Shanka,
Customer satisfaction is the result of a customer’s
& Schlesinger,
Erramilli, &
1997
customer’s perception
the value received in a
during & post
perception of the value received in a transaction
transaction or
consumption
Murthy, 2004
or relationship.
relationship
Woodruff &
Flint, Woodruff, &
Customer satisfaction is essentially a response to
customer evaluation;
perceived product or
during & post
Gardial (1996)
Gardial, 1997
an evaluation of perceived product or service
customer judgment
service performance;
consumption
performance, based on the customer’s judgments
the value that has
of the value that has been created for them.
been created for them
Vikash A. Jairam
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MBA Master Thesis
Author(s) (year)
Source
Interpretation/definition
Response
Focus
Time
Halstead,
Giese & Cote,
A transaction-specific affective response resulting
transaction-specific
comparison of product
during & post
Hartman and
2002
from the customer’s comparison of product
affective response
performance to some
consumption
Schmidt, 1994**
Yu, 1990
Tse & Wilton,
performance to some pre-purchase standard.
pre-purchase standard
Yeboah &
Satisfaction is a collective outcome of perception,
collective outcome of
consumption
post
Atakora, 2013
evaluation and physical reaction to the
perception, evaluation,
experience with a
consumption
consumption experience with a product/service.
and physical reaction
product/service
The consumer’s response to the evaluation of the
consumer’s response to
perceived discrepancy
post
perceived discrepancy between prior expectations
the evaluation
between prior
consumption
Agbor, 2011
1988**
and the actual performance of the product or
expectations and the
service as perceived after its consumption.
actual performance of
the product
Cadotte,
Giese & Cote,
Conceptualized as a feeling developed from an
Woodruff and
2002
evaluation of the use experience.
Yue, 2012
A consistency between performance of product or
feeling developed
evaluation of the use
during
experience
consumption
consistency between
post
service and customer expectation evaluated by
performance of
purchase
buyers after purchasing.
product or service and
Jenkins, 1987
Engel et al.,
1984**
buyers evaluation
customer expectation
Churchill and
Supernant, 1982
Yue, 2012
A result of purchase and usage that came from
outcome
comparison between
after
the comparison between expected return and
expected return and
purchase and
cost.
cost
usage
* References mostly adapted from Giese and Cote (2002)
** Corresponding to the expectation disconfirmation theory (EDT) by Oliver (1977, 1980)
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APPENDIX-B
OVERVIEW OF DEFINITIONS AND INTERPRETATIONS OF CUSTOMER PERCEIVED VALUE
Price-based studies
One-dimensional
Means-end theory
Nature of
Monroe’s research stream
Zeithaml’s approach
Additional research
perceived
customer
value
Woodruff’s value hierarchy
Multi-dimensional
Axiology of value theory
Utilitarian and
Holbrook’s typology of value
hedonic value
Consumption-values theory
Figure B.1
Research approaches of perceived customer value
(Adapted from Sánchez-Fernández & Iniesta-Bonillo (2007))
MBA Master Thesis
B.1
THE ONE-DIMENSIONAL VIEW OF PERCEIVED CUSTOMER VALUE
In the one-dimensional approach, perceived customer value is seen as a single overall construct, in which the costumer’s perception of the value can
be measured as an overall evaluation. In this view, the construct itself can be influenced by multiple antecedents, but does not consist of an aggregation of
multiple subcomponents or aspects. This approach forms the founding body of research for the perceived value concept and is basically seen from a
utilitarian (useful, practical, functional or instrumental) perspective, in which economic and cognitive (intellectual) reasoning is used to assess the relevant
perceived benefits and costs of the offering. In this regard, customers are seen as rational beings that make market choices that maximize utility, while
constrained by prices and their income (Sánchez-Fernández & Iniesta-Bonillo, 2007). In table B.1, a summary is given of the major studies within the onedimensional research stream.
Table B.1
Summary of one-dimensional research streams of perceived customer value*
Research stream
Major contributors
Agarwal and Teas (2001, 2002, 2004); Dodds and Monroe (1985); Dodds et al. (1991); Grewal et al. (1998a);
Monroe’s proposition
Li et al. (1994); Monroe (1979, 1990); Monroe and Chapman (1987); Monroe and Krishnan (1985); Oh (2003);
Teas and Agarwal (2000); Wood and Scheer (1996)
Baker et al. (2004); Bolton and Drew (1991); Brady and Robertson (1999); Chang and Wildt (1994);
Zeithaml’s approach
Gould-Williams (1999); Hartline and Jones (1996); Kerin et al. (1992); Lapierre et al. (1999); Spreng et al. (1993);
Sweeney et al. (1999); Zeithaml (1988); Flint, Woodruff and Gardial (2002)
Andreassen and Lindestad (1998); Bei and Heslin (1997); Blackwell et al. (1999); Caruana et al. (2000);
Additional research
Chen and Dubinsky (2003); Cronin et al. (1997); Cronin et al. (2000); DeSarbo et al. (2001);
Gallarza and Gil (2006); Grewal et al. (1998a); Kwon and Schumann (2001); Laitamäki and Kordupleski (1997);
McDougall and Levesque (2000); Sinha and DeSarbo (1998); Thaler (1985); Ulaga and Chacour (2001)
*Adapted from Sánchez-Fernández & Iniesta-Bonillo (2007).
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B.1.1
Price-based studies: Monroe’s research stream
Within this stream of research, Dodds & Monroe (1985), Monroe & Chapman (1987) and Monroe & Krishnan (1985) assessed the perception of value
as a quality–price relationship (Sánchez-Fernández & Iniesta-Bonillo, 2007). In Grewal, Monroe & Krishnan (1996, 1998) this became the value-for-money
conceptualization, which is about a cognitive trade-off between perceived quality and the total cost incurred to acquire the offering (Oh, 2000).
B.1.2
Means–end theory: Zeithaml’s approach
This approach is based on the means–end theory of Gutman (1982), which gives a theoretical model that connects consumer’s values with their
behavior. The essence of the theory is that people are result/goal directed and that they use product or service attributes as a means of judging/inferring
desired end states. Zeithaml (1988) used the means–end theory to adapt the model proposed by Dodds and Monroe (1985) and assessed perceived value
more generally as a trade-off between ‘giving’ and ‘getting’, meaning the value perceived based on what is given (sacrifices, like monetary costs) against what
is received (benefits, like the quality attributes of the offering). In this means–end approach, a hierarchal model was proposed based on the relationship
between perceived price, perceived quality and perceived value. The model suggested that people evaluate products or services based on their perceptions
of price, quality and value together, instead of on their objective basis (such as actual price or actual quality only). In the study by Zeithaml (1988), perceived
customer value was eventually defined as the consumer’s overall assessment of the utility of a product or service based on perceptions of what is received
and what is given. This has become one of the most widely cited definitions of the perceived customer value concept as a one-dimensional construct that can
be measured just by asking respondents to rate the overall value of what they have received in making their purchases based on what they have given as
sacrifice (Sánchez-Fernández & Iniesta-Bonillo, 2007).
B.1.3
Additional one-dimensional research approaches
These are other approaches that have also been framed as one-dimensional, which have sought to investigate and explain perceived value through
other variables, like: corporate image (Andreassen & Lindestad, 1998); quality and sacrifice (Cronin, Brady & Hult, 2000); sacrifice, benefit, personal
preference and perceived situation (Blackwell et al., 1999); perceived risk and valence of experience (Chen & Dubinsky, 2003). (Sánchez-Fernández &
Iniesta-Bonillo, 2007)
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B.2
THE MULTI-DIMENSIONAL VIEW OF PERCEIVED CUSTOMER VALUE
The multi-dimensional approach, views perceived customer value as a construct consisting of multiple interrelated aspects or dimensions that
together form an integrated/holistic representation. The multi-dimensional approach was suggested by researchers like Bolton & Drew (1991), Sheth,
Newman & Gross (1991) and Sweeney & Soutar (2001), as it was argued that the cognitive quality-price trade-off view (value-for-money) is too simplistic and
narrow and should be multidimensional, as there could be other aspects that also increase the construct’s usefulness (Sweeney & Soutar, 2001; SánchezFernández & Iniesta-Bonillo, 2007). Drawing on this wider view argument, the traditional assessment of value from a utilitarian only perspective was
combined with a hedonic/emotional response, in which an affective (non-cognitive, non-instrumental, experiential) component reflecting entertainment and
emotional worth of the offering was added to the conceptualization. Compared with the one-dimensional approach, relatively fewer studies have pursued this
multi-dimensional view of perceived customer value (Sánchez-Fernández & Iniesta-Bonillo, 2007). In table B.2, a summary is given of the major studies within
the one-dimensional research stream.
Table B.2
Summary of multi-dimensional research streams of perceived customer value*
Research stream
The customer value hierarchy
Major contributors
Anitsal and Flint (2005); Overby et al. (2004); Overby et al. (2005); Parasuraman (1997);
van der Haar et al. (2001); Woodruff (1997); Woodruff and Gardial (1996)
Utilitarian and hedonic value
Babin and Attaway (2000); Babin and Babin (2001); Babin and Kim (2001); Babin et al. (1994); Chiu et al. (2005);
Lee and Overby (2004)
Axiology or value theory
Danaher and Mattsson (1994, 1998); de Ruyter et al. (1997); Hartman (1967, 1973); Huber et al. (2000);
Lemmink et al. (1998); Mattsson (1991)
Consumption-values theory
Pura (2005); Sheth et al. (1991); Sweeney and Soutar (2001); Sweeney et al. (1996); Williams and Soutar (2000);
Wang et al. (2004)
Holbrook’s typology of consumer value
Bevan and Murphy (2001); Bourdeau et al. (2002); Brown (1999); Holbrook (1994, 1996, 1999);
Holbrook and Corfman (1985); Kim (2002); Leclerc and Schmitt (1999); Mathwick et al. (2001, 2002); Oliver
(1996, 1999); Richins (1994, 1999); Smith (1996, 1999); Solomon (1999); Wagner (1999)
*Adapted from Sánchez-Fernández & Iniesta-Bonillo (2007).
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B.2.1
Means–end theory: Woodruff’s value hierarchy
Woodruff and Gardial (1996) also used/adapted the means–end model of Gutman (1982) to propose a customer value hierarchy with a broader
perspective of value, in contrast to the narrow view of product and service attributes alone. His customer value concept had three hierarchical levels of value
(attributes, consequences and desired end states), where the lower levels are the means by which the higher level ends are achieved and where the plane of
abstraction increased with every higher level. Subsequently, in Woodruff (1997) perceived customer value was defined as a customer’s perceived preference
for an evaluation of those product attributes, attribute performances and consequences arising from use that facilitate (or block) achieving he customer’s
goals and purposes in use situations. Thus, the value hierarchy model included consumption goals, consequences and attributes, but also incorporates
desired value and received value. It emphasized that value arises from the customers learned perceptions, preferences and evaluations where the customer
value thus changes as time passes (Sánchez-Fernández & Iniesta-Bonillo, 2007).
B.2.2
Utilitarian and hedonic value
According to Babin, Darden & Griffin (1994), consuming a product or service offering produces both utilitarian and hedonic outcomes and thus a
value scale was proposed, based on consumer’s evaluations of product consumption experiences, with a utilitarian value dimension (instrumental, taskrelated, rational, functional, cognitive and means to an end) and a hedonic value dimension (reflecting entertainment and emotional worth of the offering, noninstrumental, experiential and affective) (Sánchez-Fernández & Iniesta-Bonillo, 2007).
B.2.3
Axiology or value theory
Hartman (1967, 1973) proposed a more theoretical an integral model of perceived value in terms of extrinsic value (reflecting the utilitarian or
instrumental use of a service as a means to a specific end), intrinsic value (the emotional appreciation of the consumption experience) and systemic value
(referring to the rational or logical aspects of the relationships among concept interactions). Mattsson (1991) adapted this view where he referred to three
generic value dimensions: emotional (focusing on the customers feelings), practical (focusing on the physical and functional aspects of the consumption) and
logical (focusing on the rational and abstract characteristics of the purchase) (Sánchez-Fernández & Iniesta-Bonillo, 2007).
B.2.4
Consumption-value theory
According to the consumption value theory of Sheth et al. (1991), the multi-sided customer’s choice (to buy or not to buy, choosing one product or
service over another and choosing one brand over another) encompasses different forms of value, namely functional (referring to the functional, utilitarian or
physical purpose of the offering), social (the offerings ability to enhance the social self-concept of the customer based on accepted community norms and
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image), emotional (the feelings or affective states that an offering generates, like excitement or disappointment), epistemic (referring to the desire for
knowledge motivated by either intellectual curiosity or novelty/innovation seeking) and conditional (reflecting the contingency/accidentalness of some market
choices on the use situation or set of circumstances faced by the customer). According to Sheth et al. (1991), the consumption value theory rest on the
proposition that the market choice is a function of multiple values, that these value forms make differential contributions in a given choice situation and that
the forms of value are independent. Based on this, various researchers have adapted the model of Sheth et al. (1991) to particular study contexts (Sweeney
& Soutar, 2001; Wang et al., 2004), thus indicating the early steps in the development of a general scale for perceived value (Sánchez-Fernández & IniestaBonillo, 2007). Based on the work of Sheth et al. (1991), Sweeney and Soutar (2001) developed a multidimensional model for the measurement of perceived
customer values of a product or service offering, termed PERVAL, consisting of four dimensions, namely: emotional value (the utility derived from the feelings
or affective states that a product generates), social value( the utility derived from the product’s ability to enhance social self-concept), functional value
(price/value) (the utility derived from the product due to the reduction of its perceived short term and longer term costs) and functional value
(performance/quality) (the utility derived from the perceived quality and expected performance of the product). The PERVAL scale represented an important
step forward in the development of a measurement tool for perceived customer value, as it allowed to empirically test the multidimensional character of the
construct (Sweeney & Soutar, 2001). In Lim, Widdows & Park (2006), this framework was adopted in determining the customer’s perceived value in a service
specific context, in which three value dimensions that emerged to be most relevant, namely economic, emotional, and social value. In the study by Lim et al.
(2006), functional value (price/value) of Sweeney and Soutar (2001) was renamed as economic value to better do justice to its conceptual meaning, while
functional value (performance/quality), which consisted of attributes that have often been regarded as part of the service quality concept (Cronin, Brady, &
Hult, 2000), namely core service quality, was dismissed as a value dimension and used instead as a service quality dimension (Shok et al., 2012).
B.2.5
Holbrook’s typology of perceived value
In Holbrook (1994, 1996, 1999), perceived customer value is defined as an interactive relativistic preference experience, in which the proposed
typology of consumer value is: extrinsic versus intrinsic (instrumental view of an offering as a means to some end versus a consumption experience prized for
its own sake as an end in itself), self-oriented versus other-oriented (something valued by virtue of the effect it has on oneself or for one’s own sake versus an
aspect of consumption positively evaluated because of how others respond or for the sake of someone else) and active versus reactive (involving the
manipulation of some product by its user versus the appreciation of some consumption experience wherein an object affects oneself rather than vice versa).
This view of perceived value thus implies an interaction between a subject (the consumer) and an object (the product) in which it is comparative, personal and
situational (specific to the context) and it embodies a preference judgment. (Sánchez-Fernández & Iniesta-Bonillo, 2007).
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APPENDIX-C
Table C
OVERVIEW OF DEFINITIONS OF SERVICE QUALITY
Overview of definitions of service quality
Author(s) (year)
Parasuraman &
Source
Mackay, 2012
Definition
Service quality can be defined as the discrepancy that results from a comparison between a
customer’s perceptions of a service delivery and the customer’s initial expectations of the service
Zeithaml, 2002*
provider.
Oliver, 1997, 1980*
Service quality can be described as the result from customer comparisons between their
expectations about the service they will use and their perceptions about the service company.
Asubonteng, McCleary &
Nimako, Azumah, Donkor
Swan, 1996*
& Adu-Brobbey, 2012
Bitner, Booms and
Zangmo, 2011
Tetreauly, 1990
Service quality is defined as the extent to which a service meets customers’ needs or expectations.
Service quality is defined as the customer’s overall impression of the relative inferiority/superiority
of the organization and its services.
Parasuraman, Zeithaml
Manani, Bosire, Ombati &
Service quality is an extrinsically perceived attribution based on the customers’ experience in and
and Berry, 1990
Kongere, 2013
through the service encounter.
Parasuraman, Zeithaml
Parasuraman, Zeithaml
Service quality is a form of attitude that results from a comparison of expectations with perceptions
and Berry, 1988*
and Berry, 1988
of performance.
Parasuraman, Zeithaml
Kheng, Mahamad,
Service quality is defined as the degree of discrepancy between customers’ normative expectation
and Berry, 1985*
Ramayah, Mosahab, 2010
for service and their perceptions of service performance.
Gronroos, 1984*
Suuroja, 2003
Service quality is the outcome of an evaluation process, where customers compare their
expectatios with the service they have received.
Lewis & Booms, 1983*
Yue, 2012
Service quality is a measure of how well the service level delivered matches customer
expectations.
* Roots in the expectation disconfirmation theory (EDT) by Oliver (1977, 1980)
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APPENDIX-D
OVERVIEW OF SERVICE QUALITY CONCEPTUALIZATIONS
AND MEASUREMENT MODELS
D.1
Model 1 - The Nordic Service Quality Model (Grönroos, 1984, 1982)
The first contributions regarding the service quality concept originated from Scandinavia and
Northern Europe, namely in Lehtinen & Lehtinen (1982) and Grönroos (1984, 1982). According to
these authors, the issue was to understand how the quality of a service offering is perceived by
customers, as these already have certain expectations before and during the interactive process with
the service provider (Lehtinen & Lehtinen, 1991). This view relates to the expectations disconfirmation
theory by Oliver (1977, 1980), as a basis for their approach.
Lehtinen & Lehtinen (1982) argued that service quality is formed by the qualitative levels of a service
on different dimensions of the service production process, the dimensions being: physical quality,
interactive quality, corporate quality (Lehtinen & Lehtinen, 1991). The explanation of these
dimensions is presented in table D.1.
Table D.1
Three service quality dimensions in Lehtinen & Lehtinen (1982)
Dimension
Interpretation
Relates to the more tangible aspects of the service (physical product,
Physical quality
physical support, physical instruments and environment, needed
for/in the service production process).
Refers to the more intangible aspects of the service (the interaction
Interactive quality
between the customer and the service provider, delivery/provision
process and customer support, needed for the service postcare/maintenance).
Corporate quality
Refers to the image/reputation of the service provider as perceived by
its current and potential customers.
(Adapted from Lehtinen & Lehtinen (1991))
Grönroos (1984, 1982) also proposed a model that was based on the expectations
disconfirmation paradigm, comparing perceived with expected performance. As shown in Figure D.1,
Grönroos also identified three service quality dimensions, namely functional quality, technical quality
and corporate image, of which the explanation is presented in table D.2.
MBA Master Thesis
Perceived
Expectations
Perceptions
Service Quality
Corporate Image
- Market activities
- Standards and ideologies
- Word of Mouth/referrals
- Customers’ needs/wants
- Customer learning
- Earlier experiences
Figure D.1
Technical
Functional
Quality
Quality
(what)
(how)
The Nordic service quality model
(Adapted from Grönroos (1984))
Table D.2
Three service quality dimensions in Grönroos (1984)
Dimension
Interpretation
Represents the way or process of the service delivery - the how aspect -
Functional quality
the customers' perception regarding the interactions during the encounter
with the provider regarding the service provisioning.
Represents the outcome of the service delivery - the what aspect - what the
Technical quality
customer actually receives as the end result from the interaction with the
service provider.
Represents the tradition, ideology, word of mouth, pricing and public
Corporate image
relations aspects/factors of the service provider; how the firm goes about in
doing business as perceived by the customer; the built up reputation of the
firm and their product brand(s).
(Adapted from Seth, Deshmukh & Vrat (2005))
Looking at the explanations, functional and technical quality in Grönroos (1984, 1982)
respectively corresponds to interactive and physical quality in Lehtinen & Lehtinen (1982). In the
study by McDougall & Levesque (2000), technical quality was defined as core service quality, while
functional quality was defined as relational quality. Core- and relational service quality where
measured by asking the respondents to base their evaluation against an ideal encounter/rating of
100%. This however is a performance only measurement, like in the SERVPERF approach, where
there is only an implied comparison with the maximum attainable score of the performance scale,
namely 100% (Chen & Cheng, 2012).
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As corporate quality in Lehtinen & Lehtinen (1982), Grönroos also noted the importance of
corporate image of the service provider (company reputation) as a relevant dimension. According to
Grönroos, corporate image is more of a mediating variable between both functional and technical
quality and the service quality perceptions. He argues that the image of the company as perceived by
the customer is important to service firms and can be expected to increase based on what is offered
(technical quality aspects) and how it is offered (functional quality aspects).
Besides the perceptions on the right side, the overall expectations of the customer on the left
side impact service quality on their part. These perceptions are formed from factors like public
relations and marketing activities, generally accepted standards and ideologies, word of mouth and
referrals, customer learning and earlier experiences. Finally, the service quality of the offer results
from the comparison between the expectations and perceptions of the customer (Yue, 2012;
Chernetskaya & Xiao, 2010; Brady & Cronin, 2001; Kang, 2006).
It should be noted that in Lehtinen (1983), their approach to service quality was reviewed and
differentiated in terms of “process quality” and “output quality”. Here, process quality is viewed as the
customers’ judgment (qualitative evaluation) before and during the service usage/performance, while
output quality is viewed as the customers’ judgment after a service performance. The emphasis was
thus extended from the tangible and intangible aspects of the offer with the instance of the
evaluation/judgment (before/during and after usage) as a process respectively an outcome view of the
offer (Kang, 2006). This extended view corresponded a lot more with that of Grönroos (1982).
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D.2
Model 2 - The SERVQUAL Model (Parasuraman, Zeithaml & Berry, 1985, 1988, 1991)
In an exploratory study by Parasuraman et al. (1985), service quality was proposed as a
function of differences between expectations and performance perceptions along quality dimensions,
which was clearly also based on the expectations disconfirmation theory by Oliver (1977, 1980). In
the process of developing a service quality performance evaluation model, a framework based on an
analysis of gaps was first developed, after conducting thorough research in the form of surveys within
four different service businesses (banking, securities brokerage, credit cards and product repair &
maintenance). The framework can be employed as a basis for the operationalization and
measurement of service quality, but can also assist management in strategy formulation and decision
making processes. The GAPS framework is presented in figure D.2, while the explanation of the gaps
in outlined in table D3.
Word-of-Mouth
Personal Needs
Past Experiences
Expected Service
GAP 5
CONSUMER
Perceived Service
Service Delivery
MARKETER
(including pre- and
External
GAP 4
Communications to
post-contacts)
Consumers
GAP 3
Translation of Perception into
Service Quality Specs
GAP 2
GAP 1
Management Perception of
Consumer Expectation
Figure D.2
The GAPS model of service quality
(Source: Parasuraman, Zeithaml & Berry, 1985)
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Table D.3
The five gaps in Parasuraman, Zeithaml & Berry (1985)
Dimension
Gap 1:
The Knowledge Gap
Gap 2:
The Service Design and
Standard Gap
Gap 3:
The Service
Performance Gap
Interpretation
The difference between the customers’ expectations and
management’s perceptions of those expectations; implying
management not always knowing what customers actually expect.
The difference between management’s perceptions of customers’
expectations and service quality specifications; implying providers not
always adopting the right quality designs and standards.
The difference between service quality specifications and actually
delivered services; implying providers not always delivering the
performance as was specified/marketed.
The difference between service delivery and customer
Gap 4:
The Communication Gap
communications regarding the delivery; implying staff not always
communicating effectively, resulting in the promises not matching the
delivery.
The difference between the customers’ expectations and perceived
service performance; implying the customer perceived service
Gap 5:
The Customer Expectations
Gap
performance not always satisfying the customers’ satisfaction. This
gap largely depends on the variance in size and direction of the
previous four gaps, generating a difference between the marketers’
perception of delivered performance on one side of the spectrum and
the customer/consumer perception of received performance on the
other based on their expectations.
(Adapted from Yue (2012) and Seth, Deshmukh & Vrat (2005))
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In the same study by Parasuraman et al. (1985), ten key categories emerged from the focus
groups in which consumers basically identified similar criteria of service evaluation independent of the
service type. These categories or dimensions are listed in table D.4 accompanied by their
explanation.
Table D.4
The ten dimensions of service quality in Parasuraman et al. (1985)
Dimension
Credibility
Security
Access
Interpretation
Trustworthiness, believability, honesty of the provider and having
the customer’s best interest at heart.
Freedom from danger, risk or confidentiality doubt, both personal
and financial.
Approachability, ease and convenience of contact.
Listening to customers, keeping them informed in a language they
Communication
can understand and ability to explain any aspect regarding the
service.
Making the effort to understand the customer’s needs and
Knowing the customer
requirements; providing individualized attention and recognizing
the regular customer.
Physical/tangible evidence/proof of the service, as well as the
Tangibles
appearance of physical facilities, equipment, personnel and
communication materials.
Reliability
Responsiveness
Competence
Courtesy
Ability to consistently perform the service as promised, both
dependably and accurately.
Willingness and readiness to help customers and provide prompt
service.
Possession of the necessary skills and knowledge of both contact
and operations support personnel, required to perform the service.
Politeness, respect, consideration and friendliness, as well as
clean and neat appearance of contact personnel.
(Adapted from Parasuraman, Zeithaml & Berry, 1985)
Form the many dimensions in table D.4, it becomes clear that customers can use many
aspects to evaluate the service quality performance of an offering and that the concept should be
viewed as a multidimensional construct. In the subsequent study by Parasuraman et al. (1988), a high
correlation or interrelation was found between the ten criteria of service evaluation from Parasuraman
et al. (1985). This led to a further refinement of the original conceptualization with a successive model
in which the ten dimensions condensed into a five-dimensional approach, better known as the
SERVQUAL model. SERVQUAL was more generally applicable across different service contexts
(Mackay, 2012). These five principal dimensions of the SERVQUAL model are explained in table D.5.
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Table D.5
The five dimensions of SERVQUAL in Parasuraman et al. (1988)
Dimension
Interpretation
Physical/tangible evidence/proof of the service, as well as the
Tangibles
appearance of physical facilities, equipment, personnel and
communication materials.
Reliability
Responsiveness
Assurance
Ability to consistently perform the service as promised, both
dependably and accurately.
Willingness and readiness to help customers and provide prompt
service.
Employee’s knowledge and courtesy, ability inspire trust,
confidence and set customers’ mind at ease.
Organizations or employee’s ability to understand the customers’
Empathy
needs and wants, caring for the customer and able to give
individualized attention.
(Adapted from Parasuraman et al., 1988)
Within SERVQUAL, the dimension of assurance encompassed communication, competence,
credibility, courtesy and security form the original model, while the dimension empathy captured
access and knowing the customer (Mackay, 2012).
The SERVQUAL model with its five dimensions is illustrated in figure D.3. Note that the
expectations disconfirmation aspect (comparison between the customers’ expectations and
perceptions) has been maintained based on their original approach in Parasuraman et al. (1985), as
well as the factors that influence the customers’ expectations.
Word-of-Mouth
Personal Needs
Past Experiences
Dimensions of
Service Quality:
Expectations
Tangibles
Perceived Service
Reliability
Quality
Responsiveness
Perceptions
Assurance
Empathy
Figure D.3
The SERVQUAL model
(Source: Yue (2012), adapted from Parasuraman et al. (1988))
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Based on the SERVQUAL model with its five dimensions, a 22-item instrument was
developed for the measurement of service quality per component (expectations and perceptions)
which could be applied in different service contexts. For each statement, the respondents were asked
to separately score their pre-conceived expectations and their performance perceptions of the service
that they have experienced, resulting in a questionnaire with a total of 44 items (22 for each
component).
In Parasuraman, Berry & Zeithaml (1991), the authors categorized the nature of service
quality in an outcome- and process aspect. They elaborated that the SERVQUAL dimensions capture
both these aspects, as reliability is largely concerned with the service outcome, while tangibles,
responsiveness, assurance and empathy have more to do with the service process. They argued that
customers judge the reliability (accuracy and dependability) of the service after delivery, while the
remaining dimensions are evaluated as the service is being delivered.
D.3
Model 3 - The SERVPERF Model (Cronin & Taylor, 1992)
Cronin and Taylor (1994, 1992), among other researchers (Brady, Cronin, & Brand, 2002; Oh
& Parks, 1997; Brown, Churchill, & Peter, 1993; Teas, 1993, 1994) have stated much criticism
regarding the conceptualization of service quality based on the expectations disconfirmation theory.
According to them, measuring service quality performance using an arithmetic difference between
pre-purchase/usage expectations and post-purchase/usage performance perceptions produces
weaker reliabilities than their individual component scores and also causes restricted variance of the
measurement, causing an undermining effect on the predictive capability of the measurement model.
According to them, service quality is about the perception service quality alone - how the quality of the
service is experienced and that service quality is whatever the customer perceives it to be.
They proposed an alternative model named SERVPERF, which was derived from
SERVQUAL, which only comprised of the performance perception component, discarding the
perceptions part. Their reasoning was that service quality can be viewed as a form of attitude and
thus should be conceptualized as such. This could be achieved using the so-called adequacyimportance model by Mazis, Ahtola & Klippel (1975). This model has been used within marketing
literature to investigate customer attitudes and behavior where multiple attributes need to be
evaluated. Within the marketing theory, it theorizes that customer attitudes towards different brands
are driven by the customers’ beliefs regarding the ability of the differing brands to satisfy certain
product/service attribute/performance intensities, which are desired by the customer (Seth,
Deshmukh, & Vrat, 2005). Thus, the perceptions only component of SERVQUAL can be used to
evaluate the performance of a service offering as the customers’ attitude towards the offer (Seth et
al., 2005). According to Cronin and Taylor (1992), SERVPERF explains a lot more of the variance in
the overall measurement of service quality and also delivers a better construct validity compared to
SERVQUAL. As SERVPERF contains only the performance perception component of the
SERVQUAL model with the same five dimensions, the measurement instrument is effectively halved;
resulting in a 22-item questionnaire, which could be applied in different service contexts to measure
the performance evaluation/experience of the offer by the customers.
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MBA Master Thesis
D.4
Model 4 - The Three-Component Model (Rust & Oliver, 1994)
Based on the criticism regarding the conceptualization of service quality based on a
comparison between expectations and perceptions (Cronin and Taylor, 1992); Brown, Churchill, &
Peter, 1993; Teas, 1993), subsequent researches have proposed alternative models to measure the
performance of the service quality construct.
The study by Rust and Oliver (1994) was one of these researches which resulted in the
conceptualization of service quality in the so-called three-component model, which suggested the
following three dimensions to measure the customers’ evaluation of a service offering, namely the
service product, the service delivery and the service environment (Kang, 2006). The explanation of
these three dimensions in presented in table D6.
Table D.6
The dimensions of the three-component model
Dimension
Interpretation
This refers to the customers’ overall perceptions of the service
The Service Product
offering as an outcome; the perception of what is actually
received.
Refers to the customer–employee interaction within the service
The Service Delivery
setting. Since services are generally intangible, the way the
service provider communicates with the customer creates the way
the customer perceives the service delivery.
The service environment is formed by the internal- and external
environment. The internal environment is about the organization
The Service Environment
culture and management philosophy, whiles the external
environment, also named the “servicescape” (Bitner, 1992), which
reflects the service delivery setting (shop atmosphere).
(Adapted from Rust & Oliver (1994) in Kang (2006))
Although Rust and Oliver (1994) did not actually empirically test their conceptualization of
service quality, Brady and Cronin (2001) in their study acknowledged their view by providing empirical
confirmation of the three-component model (Kang, 2006).
Vikash A. Jairam
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MBA Master Thesis
D.5
Model 5 - Hierarchical Model (Brady & Cronin, 2001)
Another research that proposed an alternative view to the conceptualization of service quality,
based on the same criticism regarding the expectations disconfirmation approach, was that of
Dabholkar, Thorpe & Rentz (1995). Besides the view that service quality is a multidimensional
construct, as was the case with the models in the previous studies (Lehtinen & Lehtinen, 1982, 1983;
Grönroos, 1984, 1982; Parasuraman et al., 1985, 1988; Cronin & Taylor, 1994, 1992), Dabholkar et
al. (1995) also proposed the notion of a multilevel perspective. In their study, they identified and
empirically tested this multilevel conceptualization of service quality and proposed the following three
ordered levels: (1) overall perceived service quality, (2) the primary dimensions and (3) the sub
dimensions. Within this approach five primary dimensions were identified on the second level
(physical aspects, reliability, personal interaction, problem solving and policy) and on the third level
there were six sub dimensions (appearance, convenience, promises, doing it right, inspiring
confidence and being courteous & helpful) (Kang, 2006).
Based on the previous studies by Rust & Oliver (1994) and Dabholkar et al. (1995), Brady &
Cronin (2001) proposed a hierarchical and multidimensional model by combining both the threecomponent- and multilevel model into an integrated perspective of service quality. This integrated
model is known as the hierarchical model and encompasses the same three levels of perspective as
in Dabholkar et al. (1995), namely overall perceived service quality (first/top layer), the primary
dimensions (second layer) and the sub dimensions (third layer). There are three primary dimensions
on the second layer (interaction quality, physical environment quality and outcome quality) and each
of these in turn have three sub dimensions on the third layer. The model is presented in figure D.4,
while the explanation of the levels and the dimensions are presented in table D.7 and D.8.
Level 1
Interaction Quality
Service Quality
Physical Environment
Quality
Level 2
Outcome Quality
Level 3
Attitude
R
SP
E
Behavior
Expertise
Ambient
Condition
s
R
R
R
SP
E
SP
E
SP
E
Social
Factors
Design
R
SP
E
R
SP
Waiting
Time
E
R
SP
Tangibles
E
R
SP
E
Valence
R
SP
E
Note: R = a reliability item, SP = a responsiveness item, E = an empathy item.
Figure D.4
The hierarchical service quality model
(Adapted from Brady & Cronin (2001))
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MBA Master Thesis
Table D.7
The levels of the hierarchical service quality model
Level
Perspective
Overall perceived
1
service quality
2
Primary dimensions
3
Sub dimensions
Interpretation
Reflects the overall perception of service quality by the
customer.
Reflects the primary/aggregated dimensions in which the
customers evaluate service quality.
Identifies the individual items (sub dimensions) in which the
customers evaluate service quality.
(Adapted from Brady & Cronin (2001))
Table D.8
The dimensions of the hierarchical service quality model
Primary
Interpretation
Dimensions
Refers to the customer-employee interface. As services
Interaction
Quality
Sub
Dimension
Attitude
are inherently intangible, the perceptions of the quality of
the interpersonal interactions during the service delivery
Behavior
strongly impact the overall service quality perception.
Expertise
Refers to the servicescape (shop environment or
Physical
Environment
Quality
to the physical or created environment to strongly influence
Social Factors
Refers to the actually delivered service. Naturally, the
Quality
Design
the customers’ perceptions of the overall quality of the
service encounter.
Outcome
Ambient Conditions
atmosphere). The intangible nature of services also leads
Waiting Time
quality/performance experience of what is actually received
will also affect the overall perceived service quality.
Tangibles
Valence
(Adapted from Brady & Cronin (2001))
According to Brady & Cronin (2001), the hierarchical model bettered our understanding of the
service quality concept regarding three basis aspects: (1) what defines service quality perceptions, (2)
how these perceptions are formed and (3) what the importance is of where the service experience
(perceptions forming process) takes place.
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MBA Master Thesis
In the model, the nine sub dimensions represent the factors that a customer can reflect on
when evaluating the quality of the interpersonal interactions, the physical environment and the service
outcome, which lead to the formation of their perception of the providers’ performance on each of
these primary dimensions. These perceptions in turn lead to the overall service quality perception
formation by the customer (Brady & Cronin, 2001).
When looking at the model more closely, it actually contains another level below the sub
dimensions. These are actually three of the SERVQUAL dimensions/aspects (Parasuraman et al.,
1988) that have been used to refine the definition/determination of the nine sub dimensions. The
reasoning of Brady & Cronin (2001) is that the sub dimensions form the basis of what needs to be
reliable, responsive, empathetic, assured and tangible. The SERVQUAL aspects can thus be used to
measure how customers differentiate/evaluate the performance of the sub dimensions. Hence, the
SERVQUAL aspects where repositioned in their model as modifiers of the nine sub dimensions. As
these modifiers can theoretically influence any of the nine sub dimensions with varying impact
intensity, they have been positioned beneath every dimension for evaluation depending on the
situational differences of the research context (Brady & Cronin, 2001).
Notably, only reliability, responsiveness and empathy have been retained in the model, as
only these aspects where quantitatively identified in the study by Brady & Cronin (2001) as
descriptors of the sub dimensions. Tangibles was not identified as a descriptor, as it was argued and
shown in other studies (Booms & Bitner, 1981; McDougall & Levesque, 1994) that customers use
tangibles as an intermediary to evaluate service outcomes
and should thus be regarded as a
dimension of outcome quality.
Assurance was discarded, as it did not remain significant in the factor analyses and loaded on
several different sub dimensions. This conclusion was also supported in other researches (Babakus &
Boller, 1992; Carman, 1990; Dabholkar, Shepherd & Thorpe, 2000; Frost & Kumar, 2000). Thus, only
reliability, responsiveness and empathy remained as descriptors for the performance evaluation of the
nine sub dimensions, as these aspects did end up as significant factors (Brady & Cronin, 2001).
Vikash A. Jairam
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D.6
Overall view of the service quality measurement models
Upon examination of the different conceptual models, the segmentation between the
expectations disconfirmation approach and the perceptions only or overall performance approach
quickly comes forward. The segmentation of the service quality models between the two streams is
illustrated in figure D.5.
Service Quality Conceptualization
Perceptions-Expectations
Perceptions Only/Overall
Discrepancy Stream
Performance Stream
Lehtinen & Lehtinen (1991; 1983; 1982);
Grönroos (1984, 1982); Parasuraman et al.,
1988, 1985; Cronin & Taylor (1994, 1992).
Figure D.5
Rust and Oliver (1994); Brady and Cronin
(2001); Dabholkar, Thorpe & Rentz (1995).
Service quality conceptualization streams
Irrespective of the two streams, upon examination of the models it becomes noticeable that
many of the dimensions of the different models seem to have similarities, as they appear to have
overlapping interpretations. In Swartz & Brown (1989) in Kang (2006), a comparison between the
dimensions of the service quality models in the studies by Lehtinen & Lehtinen (1982), Grönroos
(1982) and Parasuraman et al. (1985) has already been made, in which they categorized the
dimensions into a “what” (service delivery outcome) and a “how” aspect (service delivery process and
interactions).
An adapted version of this comparison is presented in table D.9, which has been extended
further with the other mentioned studies in this appendix. Table D.9 offers a good overview of the
different dimensions that have been proposed for the conceptualization within the main service quality
measurement models, for both the expectations disconfirmation- and the perceptions only approach.
Vikash A. Jairam
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Table D.9
Comparison of service quality dimensions
Service Quality Conceptualization
Stream
P-E
P-E
P-E
P
P–E
Dimension Interpretation
P
P
Three
Model
The Nordic Studies
SERVQUAL
SERVPERF
Component
Model
Lehtinen &
Authors Lehtinen
(1982)
What
Physical
Aspect
Quality
How
Aspect
Other
Lehtinen
(1983)
Grönroos McDougall &
Quality
(1992)
(1994)
Cronin (2001)
Outcome Quality
Outcome Quality
The Service
Outcome
(Reliability)
(Reliability)
Product
Quality
Process Quality
Process Quality
(Tangibles,
(Tangibles,
Responsiveness,
Responsiveness,
Assurance &
Assurance &
Empathy)
Empathy)
2001)
(2000)
(1988, 1991)
Interactive Process Functional
Quality
Brady &
Zeithaml & Berry
Quality
Core Quality
Relational
Quality
Model
Rust & Oliver
Levesque
Quality
Hierarchical
Cronin & Taylor
(1984,
Outcome Technical
Quality
Parasuraman,
P
The Service
Delivery
Service delivery outcome;
Tangible aspects;
End result customer-provider interaction.
Interaction Service delivery process; Intangible aspects;
Quality
Customer-provider interaction.
Corporate
Corporate
The Internal
Customer perceived service provider/company
Quality
Image
Environment
and service brand reputation.
Aspects
The External
Environment
Physical
Environment
Quality
Physical service environment or atmosphere
(service delivery setting).
(Adapted and extended from Swartz & Brown (1989) in Asubonteng, McCleary & Swan (1996) and Kang (2006))
(P - E = the perceptions-expectations discrepancy approach; P = the performance perceptions only approach)
Vikash A. Jairam
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APPENDIX-E
OVERVIEW OF DEFINITIONS AND CHARACTERISTICS OF
SERVICES
There are several definitions in the literature regarding what a service is and according to
Cook, Goh & Chung (1999), no single definition can fully encompass the diversity of different services
and the complex attributes that accompany them.
Some often-used definitions of a service are:

an activity or series of activities of more or less intangible nature that normally, but not
necessarily, take place in interactions between the customer and service employees and/or
physical resources and/or systems of the service provider, which are provided as solutions for
customer problems (Grönroos, 1990).

any act or performance that one party can offer to another that is essentially intangible and
does not result in the ownership of anything (Kotler, 1994).

the delivery of help, utility or care, and experience, information or other intellectual content,
where the majority of the value is intangible rather than residing in any physical product
(DISR, 1999).
(Source: de Jong, Bruins, Dolfsma & Meijaard, 2003)
Based on the above definitions, it can be concluded that an offering is a service when it is being
delivered/performed, and that services by nature have distinguishing characteristics that differentiate
them from products/goods in manufacturing. The specific characteristics or nature of services has
already been identified in previous studies (Zeithaml, 1981; Parasuraman et al. 1985; De Brentani,
1991; Miles, 2008) and are:

Intangibility: services generally have higher degrees of intangible attributes compared
to products and the outcome of a service is more in terms of an experience or
solution;

Simultaneity: there is a large inseparability of production and consumption, as
services are generally produced and consumed simultaneously, contrarily to products
which are first produced, then sold and finally consumed;

Perishability: because of the simultaneity, a service generally cannot be stored or
inventoried and is thus time and place dependent in terms of consumption.
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
Interactivity: many service processes require the presence and/or participation of the
customer and are thus often partially co-produced with the customer;

Heterogeneity: services can have a larger variance, as they can more easily be
customized based on the customers’ needs;
It should be noted that in practice products and services cannot be differentiated as easily as
mentioned in the above services characteristics, because not all services are as intangible,
simultaneous, etc., and some (manufactured) products can possess some of these characteristics as
well (de Jong et al., 2003). For example, in some services (juridical- and transport services) the
enclosed documents (contracts, transport/insurance documents) can be regarded as physical/tangible
parts of the service. With software service providers, the software products are often homogeneous
(standard packages). Also, software can be stored on digital media (tangible and relatively
unperishable) and is often not produced and consumed simultaneously.
In manufacturing on the other hand, goods can also have service aspects added to offer as a
package (customer support). Thus, services and products can be seen as two extremes, but also as
intermediary combinations having characteristics of both (Johne & Storey, 1998). When the focus of a
study is on services, it is more useful to view a service as an extreme where the mentioned
characteristics apply to a larger extend.
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APPENDIX-F
OVERVIEW OF CONVENTIONAL INNOVATION ASPECTS
The conventional aspects of innovation stem from manufacturing industry. According to Tidd,
Bessant & Pavitt (2001) these can be classified in the following types:

Product innovation: changes in the products that an organization offers (new or adapted
product design). In manufacturing, these changes are often based on new or adapted
technology implementations. Thus, this type of innovation is also often regarded as
technological innovation.

Process innovation: changes in the way in which the products are created and delivered (new
or adapted business processes).

Position innovation: changes in the context in which the products are introduced in the market
(repositioning of the products’ value in the market).

Paradigm innovation: drastic changes in the underlying mental models, which frame what the
organization does (drastic architectural changes of the offering). Some examples are ebanking, e-investments, mobile payments, etc.
Changes in the innovation aspects can also occur in different modes. These can be relatively
small changes in existing offering, but also complete redesigns. According to Bessant (2003), two
modes of innovation can be differentiated, namely:

Incremental innovation: simple line extensions or minor adaptations (adjustments or
customizations) without an actual product change. This mode is more of an evolutionary
nature (small incremental adaptions to the existing offers).

Radical innovation: product with totally new characteristics, possibly replacing the previous
offering. This mode is more of a revolutionary nature (totally new products within the company
and/or market).
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MBA Master Thesis
APPENDIX-G
NEW CORPORATE PHILOSOPHY AND IDENTITY OF
TELESUR
The new corporate philosophy of Telesur is based on six elements. The first two elements are
quality and cost-control. They are seen as the pillars of the philosophy and the steering factors in the
competitive environment. The other four elements are profit, growth, diversity in services and an
efficient organization. The philosophy change was also accompanied by an updated mission and
vision statement, which are stated below:
Telesur’s new Mission statement:
“Facilitate communication through innovative market-based solutions.”
Telesur’s new Vision statement:
“Remain the leader of communication development in Suriname”.
The new corporate identity was based on corporate values that the company deems as important.
These values are presented in seven commandments, in which the number “7” relates to the seven
letters that form the company name TELESUR and is also found in the company logo, the fingerprint,
existing of seven lines. The company values are to be observed by all company employees, but also
by consultants and contractors. The seven corporate values of Telesur are:

Future oriented

Honest enthusiastic performance of duties

Loyal attitude towards the company

Ongoing education

Optimum cooperation

Excellent Customer service

Respectful and fair internally and toward Customers
The new corporate identity is also are represented by the two colors of Telesur, namely yellow
and blue, that also have words of value associated with them.
The words associated with the color yellow are:

intellect,

honor,

energy,

loyalty,

stimulation of mental activity,

joy,

happiness and

attention.
The words associated with the color blue are:

trustworthiness,

truth,

wisdom,

confidence,

precision in promoting high-tech services,

intelligence and

faith.
(Source: Annual Report Telesur, 2011)
Vikash A. Jairam
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APPENDIX-H
SURVEY/QUESTIONAIRE FORM (ENGLISH VERSION)
Survey / Questionnaire Form
February 2014
This survey is part of a scientific study on the relationship between service quality, service innovation, customer perceived
value and customer satisfaction. Within this study, the TeleG mobile service of Telesur is used as research object.
In this regard, your opinion as the customer is very important, as it is the customer who ultimately decides whether he/she is
satisfied with the service offering. You are kindly requested to completely fill in this survey, which will take about 15 minutes of your time.
Please answer based on your personal experiences with the TeleG mobile service; no answer is right or wrong. The survey is completely
anonymous and your responses will be kept strictly confidential.
Thank you for your participation.
Example: Please give response as shown below for each statement in the survey. Your response namely indicates the
degree to which extent you (dis)agree with the corresponding statement. The degree of agreement can be specified ranging
from "strongly disagree (1)" and "strongly agree (5)." If you are unsure about a statement or do not know the answer,
choose the option "Agree nor disagree". For the complete usability of your responses in statistical analysis, it is important
that you give a response for each statement.
Strongly
EXAMPLE
disagree
1
I feel safe in traffic.
Section 1
Disagree
Agree nor
Agree
disagree
2
3
Strongly
4
X
Background information
Please answer the following four questions about your general background.
1. What is your gender?
4. What is your gross income range in SRD?
□
Male
□
No income
□
Female
□
<1200
□
1200-2000
2. What is your age category?
□
2000-2800
□
17 years or younger
□
2800-4000
□
18 – 35 years
□
4000-6000
□
36 - 45 years
□
>6000
□
46 – 60 years
□
61 years or older
3. Which education type are you currently on?
5. Which TeleG service subscription type do you
□
University education
have? *
□
Higher vocational education (HBO)
□
Pre-paid
□
Secondary scientific education (VWO)
□
Post-paid
□
Secondary vocational education (MBO)
□
General formative education (HAVO)
□
Other: . . . . . . . . . . . . . . . .
* In case u own both subscription types,
mark the one u use the most.
Vikash A. Jairam
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agree
5
MBA Master Thesis
Section 2
2.1
Service quality
Core quality: regards your perceptions of the technical aspects of the TeleG mobile service.
Indicate the extent to which you (dis)agree with the following statements.
#
Strongly
Core quality
disagree
1
6
The mobile network has good coverage or range.
7
The ability to make phone calls is generally good.
8
The clarity of the phone calls is good.
9
Automatic disconnections of phone calls are rare.
Disagree
2
Agree nor
disagree
3
Agree
Strongly
agree
4
5
10 Text messages are delivered quickly.
11 Text messages are delivered successfully.
12 Opening of websites through mobile internet is fast.
13 Downloading media via mobile internet is fast.
14 Video streaming through mobile internet is fast.
15 Upgrading mobile credit is fast.
16 Upgrading mobile credit is always successful.
17 Activating service packages or options is fast.
2.2
Relational quality: regards your perceptions of the interaction and service delivery aspects of the TeleG mobile
service by the service provider Telesur. Indicate the extent to which you (dis)agree with the following statements.
#
Relational quality
The service provider...
Strongly
disagree
1
Disagree
2
Agree nor
disagree
3
Agree
4
18 has visually appealing facilities (offices and atmosphere).
19 has modern looking office equipment.
20 has employees with a neat and professional appearance.
21 has visually attractive materials (phone cards, brochures).
22 provides the services as promised.
23 provides the services at the promised time.
24 performs its services right the first time.
25 is dependable in handling customer service problems.
26 maintains error-free records (customer data, usage data, balance).
27 keeps its customers informed about service affecting activities.
28 gives prompt service to its customers.
29 shows its willingness to help customers.
30 is never too busy to respond to customer requests.
31 has employees who inspire confidence in customers.
32 makes its customers feel safe in doing business.
33 has employees who are polite and attentive.
34 has employees with the necessary knowledge to answer customer questions
35 gives its customers individual attention.
36 has employees who are compassionate and sympathetic.
37 the customers best interest at heart.
38 has employees who understand the needs of its customers.
39 has convenient business hours.
Vikash A. Jairam
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Strongly
agree
5
MBA Master Thesis
2.3
Reputational quality: regards your perceptions of the image of the TeleG service brand and the service provider
Telesur. Indicate the extent to which you (dis)agree with the following statements.
#
Reputational quality
The mobile service...
Strongly
disagree
Disagree
Agree nor
disagree
Strongly
Agree
agree
1
2
3
4
5
1
2
3
4
5
40 has a reputation for good quality.
41 has a reputation for the use of superior technologies.
42 contributes to the social status of its users.
43 has a positive reputation in my social group.
44 has an image of an innovative service offering.
45 has a strong brand image in the market.
The service provider...
46 has a reputation for good customer service.
47 is a reliable and professional company.
48 has a reputation of an innovative company.
49 supports many innovative project initiatives.
50 is an active sponsor of community activities.
51 is a socially responsible company.
Section 3
3.1
Service innovation
New service concepts: regards your perceptions of new or innovative service concepts for the TeleG mobile
service. Indicate the extent to which you (dis)agree with the following statements.
#
New service concepts
The mobile service...
Strongly
disagree
1
Disagree
Agree nor
disagree
2
3
Agree
4
Strongly
agree
5
52 has creative service packages (voice, sms and internet combinations).
53 has flexible service package options (client customization).
54 is noticeably different in concept & design, compared to preceding services.
55 is a totally different service experience compared to preceding services.
56 is noticeably different in concept & design, compared to competing services.
57 is a totally different service experience compared to competing services.
58 provider often brings modified or enhanced services to the market.
59 provider often surprises the market with new services.
3.2
New service processes: regards your perceptions of new or innovative interaction and service delivery processes
for the TeleG mobile service. Indicate the extent to which you (dis)agree with the following statements.
#
New service processes
The mobile service...
Strongly
disagree
1
Disagree
2
Agree nor
disagree
3
Agree
4
60 has online service options (procedures, support, usage history).
61 has automated service options (via SMS, ATM).
62 provider uses modern interaction media (creative website, social media).
63 provider has mobile shops at special occasions or events.
64 provider offers quick and easy call center support.
65 provider facilities are creative and modern (state of the art).
66 provider has creative and innovative marketing (advertising, promotion).
Vikash A. Jairam
Page | 126
Strongly
agree
5
MBA Master Thesis
3.3
New technology systems: regarding your perceptions of new or innovative technology applications in the TeleG
mobile service. Indicate the extent to which you (dis)agree with the following statements.
#
Strongly
New technology systems
disagree
The mobile service...
Agree nor
Disagree
1
Agree
disagree
2
3
Strongly
agree
4
5
67 is based on the latest technology.
68 has many innovative features (sms to email, calling circles).
69 provider offers the latest user equipment (mobile devices).
70 provider is always the first on the market with the latest technology.
71 provider shows its efforts for service quality improvement.
72.
In the table below the aforementioned service quality and service innovation aspects have been listed.
Order these aspects based on your opinion of importance, by dividing the numbers between 1 and 6 in the right
column. Hereby "1" indicates the most important and "6" the least important aspect.
Aspect
Short explanation
Order of importance
Core quality
Technical service aspects.
Relational quality
Interaction and service delivery aspects
Reputational quality
Image of the TeleG brand and the provider Telesur.
New service concepts
New or innovative service concepts.
New service processes
New or innovative interaction and service delivery processes.
New technology systems
New or innovative technology applications.
Section 4
Perceived customer value: regards your perceptions about the offered value of the TeleG mobile service for
you as a customer. Indicate the extent to which you (dis)agree with the following statements.
#
Strongly
Perceived customer value
disagree
The mobile service...
Disagree
1
Agree nor
Agree
disagree
2
3
Strongly
agree
4
5
73 is worth the price I pay.
74 is worth the technical quality.
75 is worth the customer service.
76 usage makes me feel good.
77 usage makes a good impression in my social group.
78 usage gives me a sense of belonging.
Section 5
Customer Satisfaction: regards the evaluation of your satisfaction with the TeleG mobile service.
Indicate the extent to which you (dis)agree with the following statements.
#
Very
Customer Satisfaction
dissatisfied
What is your overall satisfaction level regarding…
1
Satisfied
Dissatisfied
nor
Satisfied
dissatisfied
2
3
4
79 the mobile call service (voice)?
80 the mobile internet service?
81 the additional mobile services (sms, voice mail)?
82 the customer service?
83 the total mobile service offering?
Thank you for your participation.
/-------------------------------------------------/
Vikash A. Jairam
Page | 127
Very
satisfied
5
APPENDIX-I
SURVEY/QUESTIONAIRE FORM (DUTCH VERSION)
Enquête Formulier
Februari 2014
Deze enquête is in het kader van een wetenschappelijk onderzoek naar de relatie tussen service kwaliteit, service innovatie,
klantwaarde en klanttevredenheid. Hierbij wordt de TeleG mobiele service van Telesur gebruikt als onderzoeksobject. Uw
mening als klant is hierbij erg belangrijk, aangezien de klant uiteindelijk beslist of die tevreden is met de dienst. U wordt
vriendelijk gevraagd deze enquête volledig in te vullen, wat ongeveer 15 minuten van uw tijd zal nemen. Geeft u antwoord op
basis van uw persoonlijke ervaringen met de TeleG mobiele service; geen enkel antwoord is goed of fout. De enquête is
volledig anoniem en uw antwoorden zullen strikt vertrouwelijk worden behandeld.
Bedankt voor uw deelname.
Voorbeeld: Geef bij iedere stelling in deze enquête een reactie zoals hieronder aangegeven. Uw reactie geeft namelijk de
mate aan in hoeverre u het (on)eens bent met de betreffende stelling. Hierbij kunt u de mate aangeven variërend tussen
“helemaal oneens (1)” en “helemaal eens (5)”. Mocht u bij een stelling onzeker zijn of het antwoord niet kennen, kiest u
dan voor de optie “eens noch oneens”. Voor de volledige bruikbaarheid van uw reacties bij statistische analyses, is het van
belang dat u bij iedere stelling een reactie hebt gegeven.
VOORBEELD
Helemaal
oneens
Oneens
Eens noch
oneens
Eens
Helemaal
eens
1
2
3
4
5
X
Ik voel me veilig in het verkeer.
Sectie 1
Achtergrond informatie
Beantwoord de volgende vier vragen over uw algemene achtergrond.
1. Wat is uw geslacht?
4. Wat is uw bruto inkomen categorie in SRD?
□
Mannelijk
□
Geen inkomen
□
Vrouwelijk
□
<1200
□
1200-2000
□
2000-2800
2. Wat is uw leeftijd categorie?
□
17 jaar of jonger
□
2800-4000
□
18 – 35 jaar
□
4000-6000
□
36 - 45 jaar
□
>6000
□
46 – 60 jaar
□
61 jaar of ouder
3. Welke type opleiding volgt u nu?
5. Welk TeleG service abonnement hebt u? *
□
Universitair onderwijs
□
Pre-paid
□
Hoger beroepsonderwijs (HBO)
□
Post-paid
□
Voortgezet wetenschappelijk onderwijs (VWO)
□
Middelbaar beroep onderwijs (MBO)
□
Algemeen vormend onderwijs (HAVO)
□
Anders: . . . . . . . . . . . . . . . .
* In geval u beide typen bezit, markeer dan
diegene welke u het meest gebruikt.
Vikash A. Jairam
Page | 128
MBA Master Thesis
Sectie 2
Service kwaliteit
2.1
Kern kwaliteit: betreft uw waarnemingen van de technische aspecten van de TeleG mobiele dienst.
Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Oneens
oneens
Kern kwaliteit
1
6
Het mobiel netwerk heeft een goede dekking of bereik.
7
Het kunnen plegen van telefoongesprekken is doorgaans goed.
8
De duidelijkheid van de gesprekken is goed.
9
Het vanzelf verbreken van gesprekken is zeldzaam.
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
10 Tekst berichten worden snel geleverd.
11 Tekst berichten worden succesvol geleverd.
12 Het openen van websites via mobiel internet is snel.
13 Het downloaden van media via mobiel internet is snel.
14 Het streamen van video’s via mobiel internet is snel.
15 Het opwaarderen van mobiel saldo is snel.
16 Het opwaarderen van mobiel saldo is altijd succesvol.
17 Het activeren van service pakketten of opties is snel.
2.2
Relatie kwaliteit: betreft uw waarnemingen van de dienstverlening en levering aspecten van de TeleG mobiele dienst
door de provider Telesur. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Oneens
oneens
Relatie kwaliteit
De service provider...
1
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
18 heeft visueel aantrekkelijke faciliteiten (kantoren en atmosfeer).
19 heeft modern uitziende kantoorapparatuur.
20 heeft medewerkers met een nette en professionele uitstraling.
21 heeft visueel aantrekkelijk materiaal (belkaarten, brochures).
22 levert de diensten zoals beloofd.
23 levert de diensten op de beloofde tijd.
24 voert haar diensten in een keer goed uit.
25 is betrouwbaar met de behandeling van klantproblemen.
26 onderhoudt foutloze gegevens (klantgegevens, verbruik data, saldo).
27 meld zijn klanten van service onderbrekende werkzaamheden.
28 geeft snelle service aan haar klanten.
29 toont zijn bereidheid om klanten te helpen.
30 heeft het nooit te druk om te reageren op verzoeken van de klant.
31 heeft medewerkers die het vertrouwen in klanten inspireren.
32 geeft haar klanten een veilig gevoel in het zakendoen.
33 heeft medewerkers die beleefd en attent zijn.
34 heeft medewerkers met genoeg kennis om vragen te beantwoorden.
35 geeft zijn klanten individuele aandacht.
36 heeft medewerkers die meevoelend en sympathiek zijn.
37 heeft de beste belangen van haar klanten op het hart.
38 heeft medewerkers die de behoeften van haar klanten begrijpen.
39 heeft handige kantooruren.
Vikash A. Jairam
Page | 129
2.3
MBA Master Thesis
Reputatie kwaliteit: betreft uw waarnemingen van het imago van de TeleG service brand en de service provider
Telesur. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Oneens
oneens
Reputatie kwaliteit
De mobiele service...
Eens
noch
oneens
Eens
Helemaal
eens
1
2
3
4
5
1
2
3
4
5
40 heeft een reputatie voor een goede kwaliteit.
41 heeft een reputatie voor het gebruik van superieure technologieën.
42 draagt bij aan de sociale status van zijn gebruikers.
43 heeft een positieve reputatie in mijn sociale groep.
44 heeft een imago van een innovatief dienstenaanbod.
45 heeft een sterk merkimago in de markt.
De service provider...
46 heeft een reputatie voor goede klantenservice.
47 is een betrouwbaar en professioneel bedrijf.
48 heeft een reputatie van een innovatief bedrijf.
49 ondersteunt vele innovatieve project initiatieven.
50 is een actieve sponsor van gemeenschap activiteiten.
51 is een maatschappelijk verantwoorde onderneming.
Sectie 3
Service innovatie
3.1
Nieuwe service concepten: betreft uw waarnemingen van nieuwe of innovatieve service concepten van de TeleG
mobiele dienst. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Nieuwe service concepten
De mobiele service...
Helemaal
Oneens
oneens
1
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
52 heeft creatieve service pakketten (spraak, sms en internet combinaties)
53 heeft flexibele service pakket opties (klant aanpassingsmogelijkheden).
54 verschilt merkbaar in concept en opzet, ten opzichte van vorige diensten.
55 is een totaal andere service ervaring ten opzichte van vorige diensten.
56 verschilt merkbaar in concept en opzet, ten opzichte van concurrenten.
57 is een totaal andere service ervaring ten opzichte van concurrenten.
58 provider brengt vaak gewijzigde of verbeterde diensten op de markt.
59 provider verrast de markt vaak met nieuwe diensten.
3.2
Nieuwe service processen: betreft uw waarnemingen van nieuwe of innovatieve dienstverlening en levering
processen van de TeleG mobiele dienst. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Nieuwe service processen
De mobiele service...
Helemaal
Oneens
oneens
1
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
60 heeft online service opties (procedures, support, gebruik historie).
61 heeft geautomatiseerde service opties (via SMS, ATM).
62 provider benut moderne interactie media (creatieve website, social media)
63 provider heeft mobiele shops bij speciale gelegenheden of evenementen.
64 provider biedt snelle en gemakkelijke call center support.
65 provider faciliteiten zijn creatief en modern ingericht (state of the art).
66 provider voert creatieve en innovatieve marketing (reclames, promotion).
Vikash A. Jairam
Page | 130
3.3
MBA Master Thesis
Nieuwe technologie systemen: betreft uw waarnemingen van nieuwe of innovatieve technologie toepassingen bij
de TeleG mobiele dienst. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Oneens
oneens
Nieuwe technologie systemen
De mobiele service...
1
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
67 is gebaseerd op de nieuwste technologie.
68 heeft vele innovatieve functies (sms naar e-mail, calling cirkels).
69 provider biedt de nieuwste gebruiker apparatuur (mobiele apparaten).
70 provider is altijd de eerste op de markt met de nieuwste technologie.
71 provider toont zijn inspanningen voor service kwaliteit verbeteringen.
72.
In de onderstaande tabel zijn de eerder genoemde service kwaliteit en innovatie aspecten opgenomen.
Rangschik deze aspecten op basis van wat u belangrijker vindt, door de cijfers van 1 tot en met 6 te verdelen in de rechter
kolom. Hierbij geeft “1” het meest belangrijkste aan en “6” het minst belangrijkste.
Aspect
Korte toelichting
Rangschikking
Kern kwaliteit
Technische service aspecten.
Relatie kwaliteit
Dienstverleningen en levering aspecten door Telesur.
Reputatie kwaliteit
Imago van de TeleG brand en de provider Telesur.
Nieuwe service concepten
Nieuwe of innovatieve service concepten.
Nieuwe service processen
Nieuwe of innovatieve dienstverlening en levering processen.
Nieuwe technologie systemen
Nieuwe of innovatieve technologie toepassingen.
Sectie 4
Waargenomen klant waarde: betreft uw waarnemingen over de toegevoegde waarde van de TeleG mobiele
dienst voor u als klant. Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Oneens
oneens
Waargenomen klant waarde
De mobiele service...
1
2
Eens
noch
oneens
Eens
Helemaal
eens
3
4
5
73 is de prijs die ik betaal waard.
74 is de technische kwaliteit waard.
75 is de klantenservice waard.
76 gebruik geeft mij een goed gevoel.
77 gebruik maakt een goede indruk in mijn sociale groep.
78 gebruik geeft me een gevoel van verbondenheid.
Sectie 5
Klanttevredenheid: betreft de evaluatie van uw klanttevredenheid met de TeleG mobiele dienst.
Geef de mate aan in hoeverre u het (on)eens bent met de volgende stellingen.
#
Helemaal
Ontevreden
ontevreden
Klanttevredenheid
Wat is uw overal tevredenheid ten aanzien van...
1
2
Tevreden
Helemaal
noch
Tevreden
tevreden
ontevreden
3
4
79 de mobiele bel service (voice)?
80 de mobiele internet service?
81 de additionele mobiele diensten (sms, voicemail)?
82 de klantenservice?
83 de totale mobiele dienst?
Bedankt voor uw participatie.
/-------------------------------------------------/
Vikash A. Jairam
Page | 131
5
APPENDIX-J
DATA ANALYSES FIGURES
Figure J.1
Figure J.2
Histogram service quality
Histogram service innovation
Vikash A. Jairam
Page | 132
MBA Master Thesis
Figure J.3
Figure J.4
Histogram perceived customer value
Histogram customer satisfaction
Vikash A. Jairam
Page | 133
MBA Master Thesis
APPENDIX-K
MULTIPLE REGRESSION RAW TEST RESULTS
Regression
Descriptive Statistics
Mean
Std. Deviation
N
Perceived Customer Value
3.2751
.69410
252
Service Quality
3.4065
.41307
252
Service Innovation
3.5671
.47343
252
Correlations
Perceived
Customer Value
Pearson Correlation
Perceived Customer Value
Sig. (1-tailed)
.680
.632
Service Quality
.680
1.000
.644
Service Innovation
.632
.644
1.000
.
.000
.000
Service Quality
.000
.
.000
Service Innovation
.000
.000
.
Perceived Customer Value
252
252
252
Service Quality
252
252
252
Service Innovation
252
252
252
Variables Entered/Removed
Model
1
Service Innovation
1.000
Perceived Customer Value
N
Service Quality
a
Variables
Variables
Entered
Removed
Method
---
Enter
Service
Innovation,
Service
Quality
b
a. Dependent Variable: Perceived Customer Value
b. All requested variables entered.
Model Summary
b
Change Statistics
Model
1
R
.725
a
R
Adjusted
Std. Error of
R Square
F
Square
R Square
the Estimate
Change
Change
df1
138.261
2
.526
.522
.47969
.526
df2
249
Sig. F
Durbin-
Change
Watson
.000
2.053
a. Predictors: (Constant), Service Innovation, Service Quality
b. Dependent Variable: Perceived Customer Value
Vikash A. Jairam
Page | 134
MBA Master Thesis
ANOVA
Model
Sum of Squares
1
a
df
Mean Square
Regression
63.629
2
31.814
Residual
57.296
249
.230
120.924
251
Total
F
Sig.
.000
138.261
b
a. Dependent Variable: Perceived Customer Value
b. Predictors: (Constant), Service Innovation, Service Quality
Coefficients
a
Unstandardized
Standardized
95.0% Confidence
Collinearity
Coefficients
Coefficients
Interval for B
Statistics
Std.
Model
1
B
(Constant)
Service
Quality
Service
Innovation
Error
-1.126
.266
.783
.096
.486
.084
Beta
t
Sig.
Lower
Upper
Bound
Bound
Tolerance
VIF
-4.227
.000
-1.651
-.601
.466
8.172
.000
.595
.972
.585
1.710
.331
5.809
.000
.321
.651
.585
1.710
a. Dependent Variable: Perceived Customer Value
Charts
Vikash A. Jairam
Page | 135
MBA Master Thesis
APPENDIX-L
SINGLE REGRESSION RAW TEST RESULTS
Regression
Descriptive Statistics
Mean
Std. Deviation
N
Customer Satisfaction
3.3437
.58955
252
Perceived Customer Value
3.2751
.69410
252
Correlations
Pearson Correlation
Customer
Perceived
Satisfaction
Customer Value
Customer Satisfaction
1.000
.666
.666
1.000
.
.000
Perceived Customer Value
.000
.
Customer Satisfaction
252
252
Perceived Customer Value
252
252
Perceived Customer Value
Sig. (1-tailed)
N
Customer Satisfaction
Variables Entered/Removed
Model
1
Variables Entered
Perceived Customer Value
a
Variables Removed
Method
---
Enter
b
a. Dependent Variable: Customer Satisfaction
b. All requested variables entered.
Vikash A. Jairam
Page | 136
MBA Master Thesis
Model Summary
b
Change Statistics
Model
R
.666
1
R
Adjusted
Std. Error of
R Square
Square
R Square
the Estimate
Change
a
.444
.442
.44047
F Change df1
.444
199.650
df2
1
Sig. F
Durbin-
Change
Watson
.000
1.941
250
a. Predictors: (Constant), Perceived Customer Value
b. Dependent Variable: Customer Satisfaction
ANOVA
Model
1
Sum of Squares
a
df
Mean Square
Regression
38.736
1
38.736
Residual
48.504
250
.194
Total
87.240
251
F
Sig.
.000
199.650
b
a. Dependent Variable: Customer Satisfaction
b. Predictors: (Constant), Perceived Customer Value
Coefficients
a
Unstandardized
Standardized
95.0% Confidence
Collinearity
Coefficients
Coefficients
Interval for B
Statistics
Std.
Model
1
(Constant)
B
Error
Beta
t
Sig.
Lower
Upper
Bound
Bound
1.490
.134
11.112
.000
1.226
1.754
.566
.040
.666 14.130
.000
.487
.645
Tolerance
VIF
Perceived
Customer
1.000
1.000
Value
a. Dependent Variable: Customer Satisfaction
Vikash A. Jairam
Page | 137
MBA Master Thesis
Charts
/--------------------------------------------------------/
Vikash A. Jairam
Page | 138