The relationship between service quality, customer satisfaction, service quality and customer loyalty A study in Telecommunication Industry of Laos

That means although the relationships among service quality, customer satisfaction and customer loyalty has been well studied, there is a need to confirm each entity’s components and the

NATIONAL ECONOMICS UNIVERSITY

TELECOMMUNICATION INDUSTRY OF LAOS

Specialisation : Industrial Management

Supervisor : Assoc Prof Dr Truong Doan The

A dissertation Submitted to the National Economics University, Vietnam and National University of Laos in fulfillment of requirements for the

degree of Doctor of Philosophy in Economics

HANOI - 2015

ACKNOWLEDGMENTS

The path toward completion of a doctorate is long and often times can seem quite arduous Yet it has been an enriching and rewarding experience for me both professionally as well as personally I would like to express my thanks and appreciation to the many that have encouraged and lifted my spirits along the way I especially want to thank Associate Professor Dr TRUONG DOAN THE, my principal supervisor, for his patient and proficient guidance He has shared expertise

in research methods, inspired me to generate new ideas, and encouraged me to become a higher level scholar

My family has also been especially supportive in my journey to pursue a doctorate To my loving wife for the patience she demonstrated, and the encouragement she provided throughout the long process My children were always there to express their love and appreciation for their dad

Last but not least, I also would like to offer a special thanks to my friends and colleagues within my business organization who have provided their support along the way.Furthermore, I could not complete this thesis without the assistances and supports from interviewee team and interviewers, please receive my deepthankfulness from my heart

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDGMENTS ii

TABLE OF CONTENTSTable of contents i

ABBREVIATION iv

LIST OF FIGURES v

LIST OF TABLE vi

CHAPTER 1: INTRODUCTION 1

1.1 Rationale 1

1.2 Research objectives 4

1.3 Research questions 4

1.4 Research framework 4

1.5 Research method 5

1.6 Structure of the thesis 5

CHAPTER 2: LITERATURE REVIEW ON THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY 7

2.1 Background of service quality, customer satisfaction, and customer loyalty 7

2.1.1 Service quality 7

2.1.2 Customer satisfaction 26

2.1.3 Customer loyalty 36

2.2 Review of theory on the relationship between Service quality, customer satisfaction and customer loyalty 38

2.2.1 Service quality and customer satisfaction 38

2.2.2 Service quality and customer loyalty 38

2.2.3 Customer satisfaction and customer loyalty 39

2.3 Telecommunications and Telecommunication Service 40

2.3.1 Telecommunications 40

2.3.2 Telecommunication services 42

2.3.3 The role of telecommunications in economic growth 44

2.4 Quality of Telecommunication Service and customer satisfaction and customer loyalty 51

2.4.1 Quality of Telecommunication Service 51

2.4.2 Dimensions of Quality of Telecommunication Service 55

2.4.3 Quality of Telecommunication Service, customer satisfaction and customer loyalty 57

CHAPTER 3: OVERVIEW OF TELECOMMUNICATION INDUSTRY IN LAOS 60

3.1 Background of Laos 60

3.2 Economy overview 61

3.3 Demographic Outlook 63

3.4 Overview of telecommunication industry in Laos 66

CHAPTER 4: METHODOLOGY 85

4.1 Overview of the research design 85

4.1.1 Approaches of the research 85

4.1.2 Research hypotheses 86

4.1.3 Evaluation indicators for potential constructs 86

4.1.4 Reliability and item analysis 88

4.1.5 Exploratory factor analysis 89

4.2 Main Survey 90

4.2.1 Survey Sample 90

4.2.2 Questionnaires Development 92

4.2.3 Data collection 95

CHAPTER 5.: ANALYSIS AND RESULT 97

5.1 Descriptive analysis of measurement scales 97

5.1.1 Descriptive analysis of customer satisfaction 97

5.1.2 Descriptive analysis of customer loyalty 97

5.1.3 Descriptive analysis of service quality 98

5.2 Exploratory factor analysis 101

5.3 Reliability Analysis 105

5.3.1 Reliability of telecommunication service quality measurement scale 105

5.3.2 Reliability of customer loyalty measurement scale 107

5.4 The relationship between telecommunications service quality and customer satisfaction 108

5.5 The relationship between telecommunication service quality and customer loyalty 114

5.6 The relationship between customer satisfaction and customer loyalty 119 CHAPTER 6 121

DISCUSSION, CONCLUSION AND RECOMMENDATION 121

6.1 Discussion 121

6.1.1 Service quality scale 121

6.1.2 Relationship between service quality, customer satisfaction and customer loyalty 122

6.2 Conclusion 122

6.3 Recommendation 123

6.4 Limitation of the study and suggestion for future research 124

6.4.1 Limitation 124

6.4.2 Suggestion for future research 124

REFERENCES 126

APPENDIX: QUESTIONAIRES 144

FM Frequency modulation GMS Greater Mekong sub-region GNI Gross national income GSM Global System for Mobile Communications ISPs Internet service providers

ITU International Telecommunication Union Lao PDR Lao People’s Democratic Republic LAT Lao Asia Telecom

LTC Lao Telecommunications MDGs Millennium Development Goals MPT Ministry of Posts and Telecommunications NPTA National Post and Telecommunications Authority NSEDP National Social and Economic Development Plan PAF principal axis factoring

LIST OF FIGURES

Figure 1: Research Model 4

Figure 2 Laos' population pyramid for 2011 63

Figure 3 Mobile market growth (2006 – 2014) 68

Figure 4 Fixed-Line MarketGrowth 2006 – 2011 72

Figure 5 Fixed-Line MarketGrowth 2012-2014 73

Figure 6 LaosInternetMarketGrowth (2003-2011) 75

Figure 7 LaosInternetMarketGrowth (2012-2015) 76

Figure 8 LaosBroadband Market Growth (2005-2011) 78

Figure 9 Laos Broadband Market Growth (2012-2014) 79

LIST OF TABLE

Table 1 Summary previous models on dimensions of telecommunication services

quality 56

Table 2: Laos' Population By Age Group, 1990-2020 ('000) 64

Table 3: Laos' Population By Age Group, 1990-2020 (% of total) 65

Table 4: Laos' Key Population Ratios, 1990-2020 65

Table 5: Laos' Rural And Urban Population, 1990-2020 66

Table 6: Mobile market growth (‘000) 69

Table 7: Laos Telecommunications Subscriber MixSubscriber Mix 70

Table 8: Laos Internet Market by Service 77

Table 9: Competitive Landscape 83

Table 10: Telecoms sector in Laos – Historical Data and Forecasts 84

Table 13 Summary of characteristics of the sample 91

Table 11 Items of customer satisfaction and customer loyalty 93

Table 12 Items of telecommunication service quality 94

Table 14 Descriptive Analysis of Customer Satisfaction Items 97

Table 15 Descriptive Analysis of Customer Satisfaction Items 98

Table 16 Descriptive Analysis of Service Quality Items 99

Table 17 KMO and Bartlett's Test 101

Table 18 Total Variance Explained 102

Table 19 Rotated component Matrix 103

Table 20 Constructs measure telecommunication service quality in Laos 104

Table 21 Item-Total Statistics 105

Table 22 Item-Total Statistics 106

Table 23 Item-Total Statistics 106

Table 24 Item-Total Statistics 107

Table 25 Correlation matrix of relevant variables 108

Table 26 Model Summaryb 109

Table 27 ANOVAa 109

Table 28 Coefficients 110

Table 29 Dummy variables 111

Table 30 Model Summary 112

Table 31 ANOVAa 112

Table 32 Coefficientsa 113

Table 33 Correlations 114

Table 34 Model Summaryb 115

Table 35 ANOVAa 115

Table 36 Coefficientsa 116

Table 37 Model Summary 117

Table 38 ANOVAa 117

Table 39.Coefficientsa 118

Table 40 Model Summaryb 119

Table 41 ANOVAa 119

Table 42 Coefficientsa 120

CHAPTER 1

INTRODUCTION 1.1 Rationale

Telecommunication technology plays a significant role in the flow of information It is an extremely useful tool to spread knowledge and new ideas, which can reduce infrastructure development gap between people in rural and urban area Furthermore, it can improve education, health care services, and encourage business activities In addition, it also plays the crucial role in the national economic development, especially in the developing country like Laos Therefore, telecommunication technology is a way that Lao government uses to generate revenue and create job opportunity for people In addition, the Lao government aims to improve people living standard and increase the ability to compete in global trade for Lao business by giving priority to the development of telecommunication technology with the intention to promote sustainable development of the nation

In line with the new Economic mechanism, the Telecommunication sector in Laos was privatized at the year 1996 as a joint venture with a Thai investor (Shinawana International Public Company Limited) However, this telecom privatization policy has been revised due to the importance of a national telecommunications development strategy which is able to resolve keen issues such

as digital divide among regions and the frequent telephonic traffic congestion caused by a deficiency in the nationwide telecommunication facilities (eg switching and telephone line capacity and human resources) (MCTPC, 1982; MCTPC, 1990 &1995; MCTPC, 1990 – 2007)

Besides, Lao P.D.R has a responsible position for promoting telecom development programs planned for the Greater Mekong sub-region (GMS) This development concept of GMS proposed by Asia Development Bank (ADB) and is applied to an area or regional development approach to GMS, promoting networks

among the six Mekong riparian countries, including supporting activities for a common standard of telecom services availability which is increasing in Laos Telecommunication increased steadily from 2007 to 2011 (MCTPC, 2007 – 2011)

At the present, there are five authorized enterprises which are providing fixed and mobile telecommunication services in Laos All these providers have the government ownerships, including: Lao Telecommunication Corporation Limited (LTC) with Government of Laos (GOL) and Shinawatra (Thailand) share 51% and 49% of possession respectively; Enterprise of Telecommunication Laos (ETL) with GOL 100% but currently become to ETL public; Star Telecom (STL): GOL 51% and Viettel Global 49% (now has been renamed to Unitel); Million international cellular SA (now has been transferred to Vimpelcom Russia (Beeline): GOL 22% and Vimpelcom 78%; and SKY communication Laos (SKY) with private retort 100% (since 2010)

The number of Internet service providers (ISPs) has grown from two forms

in 1990s to about seven after nearly 15 years They are STEA, ETL internet, Lao telecom Planet online, Lane Xang internet, Sky telecom KPL and Mill com The entry of Million and Sky, the large shareholding by Shincorp, the operation of Planet and prevalence of Voice Over Internet Protocol (VOIP) operators show that private investors are willing to invest in Laos even under the current policies and regulatory regime (MPT, 2011) As a result, they face intense competition, including competition from sources not previously existing Over 10 million Laos consumers own and use a mobile phone The Laos government's recent restructuring of state owned monopolistic telecommunication system and further deregulation has led to a more open and free market system

Recent reports show that a cloud of uncertainty seems to be hanging over the whole Laos telecommunication market Subscriber growth is weak after the market had gone backwards for a while The providers are now operating in an environment where the regulator is keeping a tight hold on pricing and competition

is in effect discouraged A further problem emerging for the mobile operators is that

network performance is deteriorating across the board This in turn highlighted two important issues – there has been insufficient investment by the operators in the areas of network maintenance and upgrades, and, secondly, there are obvious deficiencies in the regulatory environment in how the authorities apply and manage network performance standards

How does a firm survive under such turbulent conditions? Traditionally, mobile and land phone providers competed fiercely for new customers In some countries, customers were provided with financial incentives to sign up or switch service from one provider to another Over time, and with the increased saturation

of the market, companies have come to realize their performance can improve by focusing more on retaining customers than constantly a conquest mode As the Laos market provides an increasing range of opportunities for consumers, how can telecommunication service providers maintain customer loyalty? Those question require more research in Laos telecommunication context

A comprehensive survey of the literature reveals that the relationships between service quality, customer satisfaction, and customer loyalty have been examined by numerous scholars, in many studies conducted in varied business/services settings These studies led me to look more closely at the possible positive role of service quality on customer satisfaction and customer loyalty as well as of customer satisfaction on customer loyalty

Additionally, in recent research in multinational telecommunication companies’ performance Kommasith (2014) finds that cultural differences are one

of the important factors affecting the performance of multinational telecommunication companies in Laos That means although the relationships among service quality, customer satisfaction and customer loyalty has been well studied, there is a need to confirm each entity’s components and their relationship in different contexts To date no published work on those relationship has been found

in the context of telecommunication industry in Laos

1.2 Research objectives

This research aims to examine a model of relationships among service quality, customer satisfaction, and customer loyalty in the Laos telecommunication sector That addresses the lack of research of these relationships in terms of research setting and provides information for telecommunication companies in Laos improving their performance and competitive abilities

1.3 Research questions

The following research questions have been addressed in this study:

1 Using a telecommunication services setting in Laos, what are the specific quality attributes that measure service quality, and influence customer satisfaction?

2 Using a telecommunication service setting in Laos, how service quality attributes and customer satisfaction influence customer loyalty?

1.4 Research framework

Drawing from the literature on the relationships among service quality, customer satisfaction and customer loyalty I proposed a research framework that describe the influences of service quality on customer satisfaction and customer loyalty and of customer satisfaction on customer loyalty (see Figure 1)

Figure 1: Research Model

Service quality

Customer satisfaction

Customer loyalty H1

H2

H3

1.5 Research method

After reviewing the literature which reveals that the relationships among service quality and customer satisfaction and customer loyalty has been studied by many researchers in various service fields including of telecommunication Therefore, quantitative approach has been employed to confirm the relationship between service quality and customer satisfaction, service quality and customer loyalty, customer satisfaction and customer loyalty in Laos telecommunication setting Data was collected in a survey of telecommunication customers in Vientiane, then was analyzed by SPSS 20

1.6 Structure of the thesis

This thesis comprises of six chapters

Chapter 1: Introduction (this chapter) has provided an overview of the research, in particular the research problem, research goals and research questions

In addition, the research method also has been identified

Chapter 2: Literature review on the relationship between service quality, customer satisfaction and customer loyalty discusses service quality, customer satisfaction, and customer loyalty in depth, and argues why these entities are worthy

of investigation in Laos telecommunication context

Chapter 3: Overview of telecommunication industry in Laos briefly introduces the background of Laos’ economy and demography This chapter focuses on reviewing the picture of Laos’ telecommunication industry

Chapter 4: Methodology provides explanation for and justification of the research approach used in this research In particular, this chapter describes measurement scales of service quality, customer satisfaction and customer loyalty

in telecommunication; analysis techniques; data collection

Chapter 5: Analysis and result presents analysis procedures of collected data and the results Main analyses are descriptive analysis, exploratory factor analysis, reliability analysis, and tests of proposed relationships

Chapter 6: Discussion, conclusion, and recommendation provides overview

of the key findings and identifies the theoretical and practical contributions that emerged from this research This chapter also points out research limitations and suggestions for future research

2.1 Background of service quality, customer satisfaction, and customer loyalty

2.1.1 Service quality

2.1.1.1 Conceptualization of Service Quality

Service quality is a concept that has aroused considerable interest and debate

in the research literature because of the difficulties in both defining it and

measuring it with no overall consensus emerging on either (Wisniewski, 2001) There are a number of different "definitions" as to what is meant by service quality One that is commonly used defines service quality as the extent to which a service meets customers’ needs or expectations (cited in Dehghan, Zenouzi, & Albadvi, 2012) Service quality can thus be defined as the difference between customer expectations of service and perceived service If expectations are greater than performance, then perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985; Lewis and Mitchell, 1990)

The concept of service quality began to receive substantial attention in the early 1980s with the writings of Gronroos (1982; 1984), Lehtinen and Lehtinen (1982), Lovelock (1981) and others The development of the SERVQUAL (Parasuraman et al., 1985, 1988) performance - expectations gap model, along with its subsequent refinements, played a key role in the establishment of an instrument for the evaluation of perceived service quality Key criticisms of the SERVQUAL instrument on issues such as problems with difference scores and dimensionality inconsistencies across service environments were quickly pointed out by several researchers This review will examine many of these criticisms It will also as investigate alternative instruments used in the measurement of service quality, such

as performance-only and subjective disconfirmation scales

2.1.1.2 Perceived Service Quality

Service quality has been equated to the customer's judgment about a providers overall excellence or superiority (Zeithaml, 1987) Consistent with the concept of excellence or superiority, Parasuraman et al (1988) liken perceived service quality to being a global judgment, similar to an attitude, and relating to the superiority of a service They contend that this form of attitude results from the comparison of expectations with perceptions of performance, and is related to but not equivalent to satisfaction Building upon Oliver's (1980) proposition that satisfaction is a function of the disconfirmation of performance from expectation, Parasuraman, et al (1985; 1988) subsequently put forward that service quality is a

function of the differences between expectation and performance along an established set of quality dimensions In other words, they proposed that the differences between perceived performance and expected performance ultimately determine overall perceived service quality (Lee, Lee, & Yoo, 2000; Parasuraman et al., 1985; 1988) Bolton and Drew (1991a) explored how customers integrate their perceptions of a service to subsequently form an overall evaluation of that service Their findings suggest that customer's prior expectations, along with their perceptions of current performance, coupled with their disconfirmation experiences affect their satisfaction or dissatisfaction with a service This in turn affects the customer's assessment of service quality According to Parasuraman et al (1985, p.46) a customer perceives service quality as "a function of the magnitude and direction of the gap between expected service and perceived service" Gronroos (1988), moreover, contends that customers often perceive quality in a much broader sense than do service providers Therefore, quality within a service organization must be defined in a manner consistent with the way customers define it, so as not

to spend time, effort, and resources inefficiently, by following ineffective courses of action Bolton and Drew (1991b), however, assert that customers' attitudes about service depends largely on their prior attitudes, modified by their perceptions of current performance, along with their prior expectations about performance, and the discrepancy between those expectations and the subsequent perceptions of service quality — suggesting the overall importance of performance They further conclude that attitudes are affected substantially by the assessment of performance and to a lesser extent by disconfirmation O'Neill and Palmer (2003) likewise assert that customers' perceptions of service quality are significantly influenced by their past experience, or lack thereof, relative to a particular service product An experimental design study utilizing college students and an amusement park confirmed their hypothesis

2.1.1.3 Dimensions of Service Quality

Johnston (1995) argues that the determinants (or dimensions) of service quality should be a central concern for service management, as well as for academics and practitioners, in that it is necessary to identify these determinants in order to be able to specify, measure, control, and improve service quality as perceived by the customer Schneider and White (2004) explain that if a researchers sole goal is to predict other constructs, for instance, satisfaction, or behavioral intentions, with a service quality measure, an overall service quality measure would

be sufficient If, however, the primary objective is to manipulate service quality, it

is essential to identify the various aspects that might be potentially influenced to affect the overall judgment These factors are in essence the dimensions of service quality Most conceptualizations of service quality thus far have considered the service quality construct to be multidimensional As such it is reasoned that service quality associated with industrial technical field service should likewise be viewed

as a multidimensional construct

Gronroos (1988) posits that the quality of service, as perceived by the customer, has two dimensions; a technical — or outcome dimension, and a process-related dimension Gronroos (1988) further suggests that the outcome dimension, or technical quality of the outcome, can be measured rather objectively by the customer, since it is what he/she is left with at the end of the process The functional quality of the process itself, on the other hand, cannot be so readily measured and is often perceived quite subjectively by the customer The behavior of a maintenance technician, for instance — how he or she performs the necessary tasks, what they say and how they do it — all influences the customer's perception of the service (Gronroos, 1988)

Gronroos (1988) identifies six criteria of good perceived service quality to be used as guidelines for empirical and conceptual research: professionalism and skills, attitudes and behaviors, accessibility and flexibility, reliability and trustworthiness, recovery, and reputation and credibility He classifies professionalism and skills as

outcome-related, and thus a technical quality dimension quality Reputation and credulity is characterized as image related, while the remaining criteria are considered as functional, or process related dimensions

It has been argued by some, however, that the overall perceived service quality level is not determined solely by the performance level of the technical and functional quality dimensions, but rather by the gap between the expected and the experienced service quality Parasuraman et al (1985) identified ten determinants,

or dimensions that customers use in forming expectations about, and perceptions of service quality: access, communication, competence, courtesy, credibility, reliability, responsiveness, security, tangibles, and understanding / knowing the customer These ten were later reduced to five through exploratory factor analysis

by Parasuraman et al (1988) The five final dimensions factored down to:

Tangibles: Physical facilities, equipment, and appearance of personnel

Reliability: Ability to perform the promise service dependably and accurately

Responsiveness: Willingness to help customers and provide prompt service

Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence

Empathy: Caring individualized attention the firm provides its customers (p.23)

Oliver (1997) notes that this operationalization of service quality, SERVQUAL, in essence measures feature levels which are later summed into dimensions Research by Johnston et al (1990) tested the comprehensiveness of Parasuraman et al.'s (1988) service quality determinants in light of empirical data gathered in ten UK service organizations Their analysis, although generally supportive of the ten determinants, suggested a refined list of twelve from which five additional quality determinants were identified: attentiveness/helpfulness, care, commitment, functionality, and integrity (Johnston 1995) However, the most commonly used service quality instrument SERVQUAL, uses the five dimensions established by Parasuraman et al (1988) Customers entertain expectations of

performance on these service dimensions (Oliver, 1993) Performance perceptions are formed after having observed performance of the service provider The customer then compares these performance perceptions with prior expectations

Reliability Irrespective of the level of intangibility of the service, Bebko (2000) submits that reliability, doing it right the first time, remains the most important service quality expectation Moreover, of the five service quality dimensions originally proposed by Parasuraman et al (1988), reliability is consistently reported as the most important in replication studies Boulding et al (1993) for instance, contend that while service quality is multidimensional, reliability is the key dimension in determining overall perceived service quality In their dynamic model of service quality, they found reliability to be the primary driver of customers' overall service quality perception This seems to hold true in many other studies as well, where different dimensions may surface and supplant one or more of the original five, or collapse the overall number of dimensions into a lesser number, reliability is one that typically remains present in the service quality models Parasuraman et al's (1994) revamp of SERVQUAL, for example, resulted

in the five factor structure being reduced to three The reliability factor, however, remained intact with all five items loading separately onto the factor

Responsiveness Parasuraman et al (1985) identified responsiveness as "the willingness or readiness of employees to provide service it involves timeliness of service" (p.47) Examples of this include calling the customer back quickly, or responding promptly by setting up appointments quickly In review of the Parasuraman et al (1988) responsiveness items in SERVQUAL, however, it is apparent that the wording for the responsiveness items are reflective of traits and behaviors typically associated with consumer retail type settings The phrases

"always willing to help you" and "never to busy to respond to your requests", could indeed apply to the general sense one might get from walking into a store, or up to a counter, or possibly asking for information over the phone Attentiveness might be

an appropriate description

The inflection of these indicator items, however, may be somewhat out of character with what could be expected from a customer in a business-to-business setting whose equipment is down, and judges the ability of the service provider to respond in a timely manner to the request for repair work Responsiveness in field service parlance takes on more of an aspect of "timeliness", thus more so relating to what is termed as response time Response time in industrial field service is described as the sum of queue time and travel time that elapses between the placement of a service call and the arrival of the service engineer at the customer's location (Simmons, 2001) Another matter related to the timeliness aspect responsiveness in technical field service might relate to mean time to repair (MTTR), which has to do with the total time associated with fault finding, and the actual time spent to make the repair of the equipment (Kumar & Kumar, 2004)

While the Parasuraman et al (1985) definition of responsiveness may not fit well in the industrial field service context per say, its characteristics do fit with boundary spanning functions that are essential to the support of the field service organization Responsiveness from a boundary spanning type service, such as call centers, may include response time to answer phones, but also attentiveness and accuracy in the attention to detail of information received from customers in placing requests for service Expressing attitudes of helpfulness, and not appearing too busy

to accurately take information about the customer and the nature of problem for which they are calling to request service certainly apply

Assurance The assurance dimension was initially based on Parasuraman et al.'s (1985) attributes of communication, credibility, security, competence, and courtesy In their development of SERVQUAL in 1988, these attributes combined through factor analysis into a single dimension referred to as assurance Ham et al (2003) summarize the various components associated with assurance as:

"Communication concerns keeping customers informed Credibility involves trustworthiness, believability, and honesty Competence means having the required

skill and knowledge to perform the service Courtesy encompasses politeness, respect and consideration Security is freedom from danger or risk" (p 198)

Because many services are difficult for customers to evaluate there is a need

to develop trust between the customer and the service provider (Lovelock, 2001) Armistead and Kiely (2003) point out that professionalism within an organization's customer service roles builds trust through dependability, respect, empathy, and diplomacy Moreover, they contend that, in the future, effective customer service will require an increasing degree of professionalism from both service management

as well as front line service staff

Burton, Sheather, and Roberts (2003) propose that attribution of problems to factors outside of the control of the service provider are positively associated with customers' perceived performance, satisfaction and behavioral intentions Swanson and Davis (2003), however, based on attribution theory, suggest that the person the customer holds most responsible for the service experience can substantially influence which service quality dimensions take precedence in customer satisfaction

as well as in subsequent behavioral intentions Their findings indicate that customer's consider the contact employee most responsible for the service delivery, and take this into account in the service quality and satisfaction evaluation Professionalism in industrial field service comes into play where the customer support engineer assumes full ownership and responsibility for the service delivery process

The assurance dimension is not always retained in many replication studies Brady and Cronin (2001) did not find assurance to be distinct in the pretest factor analysis and thus did not retain it as a dimension, nor as a modifier of the nine sub-dimensions in their model They cited several other studies (Babakus & Boiler, 1992; Carman, 1990; Dabholkar et al., 2000; Llosa et al., 1998; MacDougal & Levesque, 1994; Mels, et al 1997) in which assurance, was likewise dropped due to measures loading on several different factors, and suggest that this it is largely industry context dependent However, from the conceptual standpoint of technical

field service, a hypothesis in this study suggests that many of the attributes reflected

in the assurance dimension are vital in the assessment of service quality and could align as a single dimension when factor analyzed

The associated concept of professionalism, however, may have significant

impact with tying some of these various dimensions together in field service quality For instance, in a situation in which a difficult problem is experienced on a piece of sophisticated equipment, the amount of time taken to complete a repair may be considered acceptable by the customer if the engineer appears competent and inspires confidence in the customer that their problem will be resolved On the other hand, a similar amount of time taken to repair the equipment may be considered unacceptable if the engineer does not come across as experienced and or knowledgeable, and does not convey a sense of confidence This may indicate that the customer's perception of the mean time to repair (MTTR), a timeliness, or responsiveness determinant, is influenced by the assurance dimension

Qualitative analysis may help in the understanding of how customers classify underlying dimensions within a given service industry As in other studies, it is entirely possible that in the technical field service context the attribute structure

may not perfectly align with the five SERVQUAL dimensions Tangibles, for

instance in the SERVQUAL operationalization, typically involves the physical premises and surroundings in which the service is conducted In field service, however, the physical environment in which the service takes place is typically within the customer's own facility This may indicate that tangibles, in the context

of industrial technical field service, could be limited to the appearance of the service engineer, and the condition of his or her tools, test equipment, materials, and spare parts It is plausible that these indicators may be perceived by the customers as

more relative to a conceptualization of professionalism Likewise, it is possible that

several of the assurance indicators such as competence, courteousness, knowledge

and skills, as well as retained items associated with empathy, may along with

tangibles, collapse into a single "professionalism" dimension in a factor analysis

Carman (1990) suggests that researchers should consider working with the Parasuraman et al.'s (1985) original ten dimensions as opposed to adopting the revised five-factor model In field service, for instance, communication, at least on the surface, would appear to be a highly important factor Communication was one

of the initial ten dimensions, but collapsed into assurance in the five dimension model A typical scenario might involve a service engineer being notified from the call center of a customer service request In many cases it is the responsibility of the field engineer to contact the customer to gain further knowledge of the problem so

as to be prepared for the repair visit, and also to inform the customer with confirmed schedule date and time to be on site Timely communication or the lack thereof by the service engineer, in this case will likely be regarded by the customer

as relating to responsiveness

Once on site, however, the ability of the service engineer to cordially and effectively communicate with the customer in order to better ascertain the precise nature of the problem, as well as to assure that the problem will be handled, is likely

to be perceived by the customer as more in the realm of competence and assurance, perhaps coupled with an element of empathy Invoking communication in a responsiveness item may therefore align with a different factor than invoking communication in an assurance item The nuance of the wording in the construction

of indicator items therefore could substantially affect which dimensions items will load onto in a factor analysis

Some insight might be gained by considering Gronroos's (1988) approach to service quality Here, the "professionalism and skills" dimension is considered as an outcome related criteria Professionalism, according to the Encarta Dictionary, refers to "the skill, competence, or character expected of a member of a highly trained profession" This dimension of service quality according to Gronroos (1988), associates customers' realization that service providers' employees, operational systems, and physical resources have the knowledge and skills required

to solve their problems in a professional way Iacobucci, Ostrom, and Grayson

(1995) in a qualitative critical incidence study, moreover found that customers associated the "expertise of service personnel" with service quality

Researchers have argued that the dimensionality of service quality may substantially depend on the type of service under study (Babakus & Boiler, 1992) Asubonteng et al (1996) moreover, suggest that service quality dimensions are likely to be industry specific Research by Chowdhary and Prakash (2005), furthermore, suggests that a limited number of dominating factors may be the basis around which customers evaluate the service experience In industrial business-to-business technical field service the importance of a limited number of factors could signify that a "professionalism" dimension, for instance, may encapsulate many of the attributes from the SERVQUAL empathy, assurance, and tangibles dimensions

Of course, the dimensions of reliability and responsiveness are typically always critical factors to services in general and likely even more so with regard to field service

As can be understood from the suggestions of Parasuraman et al (1988) refinement of the construct may be appropriate: "Therefore, while SERVQUAL can

be used in its present form to access and compare quality across a wide variety of firms, appropriate adaptation of the instrument may be desirable when only a single service is investigated (p.28)

Many empirical studies have indeed adapted the items used with the SERVQUAL (Parasuraman et al., 1988) instrument, and then analyzed the factor structure of the various service quality dimensions Mels et al (1997) point out that

a regular theme in these studies demonstrates that a wide variety of empirical factor structures are obtained Llosa, Chandon, and Orsingher (1998) note that even customers attempting to evaluate the same service view the underlying dimensions differently Svensson (2001) maintains that the service quality construct, in any given service context, cannot be appropriately operationalized without sufficient refinement of the construct's underlying dimensions This implies that indicator items that are developed to measure the factors must capture the essence of the core

meaning of the dimensions from an empirical perspective Brady and Cronin (2001) likewise advise that service quality determinants may need to be considered at the item level

While the dimensions of the SERVQUAL scale takes only process related quality into account, Llosa et al (1998) point out that perceived service quality has two major facets; service process, but also output (outcome) quality Swanson and Davis (2003) further propose that a positive relationship exists between outcome quality and customer satisfaction

2.1.1.4 The SERVQUAL Instrument

SERVQUAL has been the most popular and widely used measure of service quality since its inception in the late 1980s It was designed to measure service quality as perceived by the customer (Asubonteng, McCleary, & Swan, 1996) The conceptual framework of the SERVQUAL scale was derived from work done by researchers such as Sasser, Olsen, and Wyckoff (1978), Gronroos (1982, Lehtinen and Lehtinen (1982) who examined the meaning of service quality, and then principally from Parasuraman et al.'s (1985) exploratory research in this area The underlying theory for Parasuraman, et al.'s (1985) measure of service quality was based on the premise of Oliver's (1980) disconfirmation model Oliver (1980) had proposed that satisfaction resulted from the disconfirmation of performance from expectation Parasuraman et al (1985, 1988) applied the same concept, the exception being they proposed that service quality resulted from the disconfirmation

of expectations from performance along certain quality dimensions (Lee, Lee, & Yoo, 2000) For SERVQUAL scale construction development, Parasuraman et al (1998) closely followed the procedures recommended by Churchill's (1979) paradigm for developing better measures for marketing constructs

Parasuraman, et al (1988) employed the initial ten determinants identified in their 1985 focus group research on customers' perceptions of service quality, and created items for 22 separate statements to measure expectations, and to measure perception The initial instrument was refined, condensed, and validated through

several stages of data analysis The attributes were factor analyzed and ultimately grouped into the five distinct dimensions: tangibles, reliability, responsiveness, assurance, and empathy The dimensions of assurance and empathy contain the items representing the other seven original determinants In the four industries

examined the reliability dimension showed to be most important with empathy least

important

Important to note is Parasuraman et al (1988) emphasis that the performance-expectation (P-E) service gap concept is different from the disconfirmed expectations concept in traditional consumer satisfaction models The

expectation in SERVQUAL was conceptualized as a normative expectation, whereas the expectation in the satisfaction disconfirmation model was conceptualized as a predictive expectation (Lee et al., 2000) Rust and Oliver (1994) point out that the expectations section of the survey was constructed referencing the

concept of an "ideal" company that delivers excellent quality of service

Diagnostic Utility of Expectations Parasuraman et al (1991) advocate that the measurement of expectations can serve as a diagnostic function for managers Schneider and White (2004) point out that such an approach provides much richer data as compared to using data from performance only measures Kaldenberg, Becker, Browne, and Browne (1997) concur that the primary usefulness of a service quality assessment tool such as SERVQUAL is its diagnostic capability Others likewise agree with the argument that the SERVQUAL scale provides a more pragmatic diagnosis of service quality shortfalls due the presence of gaps between customer expectations and performance (Brown & Swartz, 1989; Jain & Gupta, 2004) This is especially important for management in that the performance-expectations gaps which can be evaluated along the various service quality dimensions McAlexander et al (1994) however, observe in the healthcare setting, for instance, patients have uniformly high expectations relative to all of the SERVQUAL dimensions, which may limit the diagnostic utility of the perception-

expectation gap measurement They therefore posit that customers may have very high quality expectations for all professional services

Debate and Controversy over the SERVQUAL Gap Model

Numerous criticisms of the SERVQUAL gap model have been leveled in various studies since the early 1990s Carman (1990), for instance, argued that Parasuraman et al (1988) dimensions cannot represent a generic measure that can

be applied to any service; rather it must be customized to the specific service — this despite the fact that SERVQUAL was originally designed to provide a generic measure that could be applied to any service Carman's (1990) replication study of four diverse service providers found that in none of the situations was it possible to use the 22 SERVQUAL items exactly as proposed Finn and Lamb (1991), likewise, found that SERVQUAL could not be used as proposed by Parasuraman et

al to assess quality in a wide range of service categories

Cronin and Taylor (1992) raised the question of how should service quality

be conceptualized and measured, and argued that the conceptualization and operationalization of service quality SERVQUAL was inadequate They expressed concern about the model's scale construction and, whether the individual scale items actually describe five separate service quality components as intended Cronin and Taylor (1992, 1994) assert that the disconfirmation-based SERVQUAL scale measures neither service quality nor customer satisfaction Rather, they claim that the SERVQUAL scale appears at best an operationalization of only one of the many forms of expectancy-disconfirmation, citing Boulding et al (1993), Oliver (1993), and even Zeithaml, et al (1993) Buttle (1996, p 11) likewise contends that basing SERVQUAL on an expectations-disconfirmation model is inappropriate, and that

an attitudinal model of service quality would be more fitting

In their evaluation of SERVQUAL and SERVPERF, Cronin and Taylor (1992) concluded that the former is based on a satisfaction paradigm rather that an attitude model They claimed, furthermore, that the empirical analysis of the structural model suggests that it confirms in only two of the four industries studied

Iacobucci et al (1994b), however, raised criticism of Cronin and Taylor's use of exploratory factor analysis to "confirm" the unidimensionality of the combined items of SERVQUAL and SERVPERF, and hence argue that it is unclear if the latter is indeed an improvement, based upon the Cronin and Taylor (1992) study

Another criticism of SERVQUAL is that it is highly inductive in nature and fails to draw from theory in such disciplines as psychology, social sciences and economics (Anderson, 1992; Buttle, 1996; O'Neill & Palmer, 2003) While an inductive approach provides a general framework from which to launch further studies, the industry specific nature of services, may require a deductive approach

Another point of concern in the literature is that typically different types of services are being examined in each of the studies The established precedents are then applied to future research which occurs in yet other different service setting Can universal models be constructed and applied is the question — because if not, how can such definitive conclusions be reached? Cronin and Taylor's (1992) criticism of SERVQUAL makes a good case and point of such reasoning As noted

by Smith (1995), while many researchers commend SERVQUAL for its face and/or content validity, they typically add to, deleted from, or amended the item content of the questionnaire to be more relevant to a specific service situation

Difference Scores Numerous researchers have taken issue with the problems associated with difference scores, which SERVQUAL uses to compute the P-E gap scores (Brown, et al., 1993; Iacobucci et al., 1994b; Peter et al., 1993; Page & Spreng, 2002; Prakash, 1984; Teas, 1993) Difference scores involve the subtraction of scores on one measurement to create a new variable which is used in subsequent data analysis The problem with this approach, according to Prakash (1984) is not conceptual, but rather one regarding measurement

Brown et al (1993) argue that the calculation of such difference score measures can lead to several psychometric problems They first cite reliability, in that if positive correlation exists between the component scores (e.g expectations and performance), the reliability of the resulting difference score will be attenuated

Moreover, the reliability of the difference score will decrease if the reliability of either component scores decreases With the example of SERVQUAL, the expectations and perceptions batteries are typically administered after the service, thus a strong correlation between the two is likely, because the expectations are influenced by the performance Page and Spreng (2002), suggest that difference scores may not present a problem if expectations can be measured at a time prior to the service, with the performance scores evaluated directly thereafter However, the necessary administration of separate surveys to accomplish this would obviously be impractical in many service settings

Another issue raised relative to the use of difference scores is that of discriminant validity, "the degree to which measures of theoretically unrelated constructs do not correlate too highly with one another" (Peter et al., 1993) Brown

et al (1993) point out two problems, one common to all measures, and another unique to measures that are formed as linear combinations of measures from other constructs In the first instance, given that low measure reliability attenuates correlations between constructs, the low reliability of the measure may appear to demonstrate discriminant validity because of its unreliability Difference scores would thus likely be more subject to this phenomenon because they are usually less reliable than non-difference score measures In the second instance Brown et al (1993) note that, theoretically the difference is supposed to represent a construct that is distinct from the variables that represent its component measures In practice, however, they conclude the difference will demonstrate high correlation with, and thus not be distinctive from one or both of the component measures

Dimensionality Concerns While Parasuraman et al (1988) initially claimed that the service quality gap may be characterized by their five dimensions that are generic across service contexts, several authors have questioned the number of dimensions as well as the stability of items across different industries Caruana et al (2000) Babakus and Boiler (1992) question the individual item reliabilities and the convergent and discriminant validity of the SERVQUAL dimensions Spreng and

Singh (1993) likewise questioned the discriminant validity citing that the correlation between the responsiveness and assurance constructs was 97 in their study Asubonteng et al (1996) suggest that differences in the number of empirically derived factors across studies may be due primarily to across-dimensions similarities and/or within-dimension differences Parasuraman et al (1991) even acknowledge the interrelationship of the proposed dimensions prompting the need for oblique rotation of factor solutions in order to obtain more interpretable factor patterns

O'Neill and Palmer (2003) point out that "Many studies have failed to replicate the five dimensions of quality found in the original research, suggesting little generalizability of these emerged dimensions" (p 187) Finn and Lamb (1991) raised the question as to whether the dimensions of service quality are indeed generic and suggest that the construct validity of SERVQUAL should be examined specific to the industry under study before it is used to obtain data and measure customer perceived service quality Their examination indicated that the instrument's five dimensions were insufficient to measure quality across different types of retail service settings Babakus and Boiler (1992), likewise, conclude that the dimensionality of service quality may depend on the type of services under study They ultimately suggest that: “It may not be fruitful to pursue the development of a standard measure scale applicable to a wide variety of services The domain of service quality may be factorially complex in some industries and very simple and unidimensional in others As such, measures designed for specific service industries may be a more viable research strategy to pursue” (P.265)

Cronin and Taylor (1992) posit that scale items that are used to define service quality in one industry may be entirely different in another They suggest that high involvement services such as, for instance, health care services, are likely

to have different service quality definitions than low involvement services, e.g fast food This indicates that a similar argument might be made regarding the construction of scale items relative to industrial field service

Process Orientation Buttle (1996) cites that another criticism of SERVQUAL is focus on process or functional quality, but its lack of measurement

of technical or outcome quality Sureshchandar et al (2002) likewise question the completeness of the SERVQUAL 22 item scale in addressing critical dimensions of service quality; their contention being that most of the items focus mainly on human aspects of service delivery with the remaining on tangibles — what Bitner (1992) refers to as "servicescapes" Some, however, Higgins et al (1991) suggest that outcome quality is contained within the dimensions such as reliability, competence, and security Chumpitaz and Paparoidamis (2004) likewise associate reliability with

a technical dimension While some inter-correlation may exist, it is proposed in this study that indicator items specific to outcome quality must be developed as a separate dimension in order to adequately capture this attribute of service quality in the industrial field service environment Hypothesis tests will then be conducted to determine if relationships exist between outcome quality and key functional quality dimensions in the industrial field service setting

Performance-based Measures Numerous researchers that have questioned the P-E gap SERVQUAL model and have argued that a performance, or perceptions-only, approach offers a more accurate measure service quality Cronin and Taylor (1992) contend that performance-based measures better reflect long-term service quality attitudes in cross-sectional studies Their investigation of the service quality construct across four industries compared SERVQUAL with the performance-only based instrument SERVPERF Their findings claim the latter to outperform the former in perceived service quality variance explanation well as in predicting customer behavioral intentions Lee et al (2000), in a more recent study, likewise, found that the performance-based measures of service quality capture more of the variation of service quality than do difference measures Other replication studies have also found the perceptions-only model to be superior to the P-E gap model in this respect (Behara et al 2002; Brady, Cronin, & Brand, 2002; Jain & Gupta, 2004; Sureshchandar et al 2002)

Other researchers have also found through empirical analysis that perceptions-only measures, SERVPERF, correlate better with overall service quality measures than does the SERVQUAL gap measures (Babakus & Boiler, 1992; Brady et al., 2002; Lee et al., 2000) Brown et al (1993) for instance, found that the perceptions component outperforms SERVQUAL 31 to 26 in predicting behavioral intentions, consistent with Cronin and Taylor's (1992) findings Oliver (1997), however, cautions that performance alone is an unreferenced concept, where meaning is attached only when it can be compared to some standard

Carman (1990) concluded that while expectations are important, and that service providers should indeed discover what customers expect, it is not necessary

to do so at every administration of a perceptions battery He further maintained that the difference scores between expectation and perception certainly should not be factor analyzed Spreng et al (1996), furthermore, caution that the expectations portion of the battery, as administered prior to the performance portion of the battery, can actually influence perceptions of an event

Nonetheless, to many researchers it is intuitively compelling that the P-E measurement provides a more logical and meaningful index than P alone (Morrison Coulthard, 2004) It is argued that if performance is measured alone, respondents will mentally compute P-E regardless, using their own ambiguous conceptions of E

to deliver their response (Llosa et al., 1998; Morrison Coulthard, 2004) Moreover, given that universal performance standards may be impractical to employ, the converse may indeed apply to the use of disconfirmation scales, in that respondents may mentally ascribe standards that makes sense to them compared to their own expectations This agrees with reasoning put forth by Rust, Zahorik, and Keiningham (1996), who argue that service quality can essentially be likened to disconfirmation in satisfaction theory and advocate its direct measurement in relation to expectations of the perception items in SERVQUAL In industrial field service, then, it is important to understand realistic customer expectations and direct performance efforts to meet or exceed those expectations

Although the effectiveness of SERVQUAL in evaluating service quality has been questioned by different authors for diverse reasons, Sureshchandar, et al (2002), point out that there is a general agreement that the 22 items are reasonably good predictors of service quality in its entirety While the perceptions-only assessment of perceived service quality has been supported by many, others however, argue that gap scores are not problematic and can in fact provide more diagnostic information than performance-only scores (Parasuraman et al., 1994; Schneider & White, 2004; Spreng & MacKoy, 1996) Oliver (1993) furthermore, acknowledges that despite ambiguity surrounding the expectations referent "the SERVQUAL instrument illustrates the core of what service quality may mean, namely, a comparison to excellence in service by the customer" (p.71)

2.1.2 Customer satisfaction

Customer satisfaction has been a critical marketing research topic for more than forty years The first research involving the measurement of customer satisfaction occurred in the mid-1960s A seminal experimental study by Cardozo (1965) found that customer satisfaction was not only influenced by perceived product quality but also by the overall shopping experience and expectations Since then, customer satisfaction has been defined in various perspectives From the perspective of antecedents, satisfaction is the consumer's response to the evaluation

of the perceived discrepancy between expectations and perceived performance of the product or service after its consumption (Tse & Wilton, 1988) From the perspective of consequence, customer satisfaction is the generator of repeated buying behavior and the advantage of sustenance and development to any business (Dubrovski, 2001) From the perspective of dissatisfaction, Kondo (2001) asserted that customer satisfaction is reducing customer complaints, which could lead to dissatisfaction Oliver (1997) described satisfaction: Satisfaction is the consumer's fulfillment response It is a judgment that a product or service feature, or the product or service itself, provided (or is providing) a pleasurable level of

consumption-related fulfillment, including levels of under- or over fulfillment (p 13)

Oliver (1997) defines satisfaction as the summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with

a consumer’s prior feeling about the consumer experience Since the early 1990s, service and satisfaction research has grown to include an emphasis on cumulative satisfaction, defined as a customer’s overall evaluation of a product or service provider to date (M D Johnson & Fornell, 1991) Grisaffe (2001) suggests that satisfaction is an indicator of met or exceeded expectations Satisfaction is one driver of recommend and repurchase intentions If a customer received what she or

he expected, the customer is most likely to be satisfied (Reichheld, 1996)

Johnson (2001) proposed that there are mainly two conceptualizations of customer satisfaction The first category of conceptualization can be represented by Oliver (1980) who suggested that measurement of satisfaction should be based on particular product or service transactions which can be defined as post-selection evaluative judgments related to specific buying decisions Another conceptualization was established by such researchers as (Anderson, Fornell, & Lehmann, 1994); Garbarino and Johnson (1999); Mittal et al (1999) who perceived satisfaction in terms of a consumer's total cumulative experiences with a firm, product or service ( cited in Srivastava & Rai, 2013)

The diversity of customer satisfaction definitions represents the complexity

of this construct However, Oliver's definition used in his 1997 study seems to be more consistent with the theoretical and empirical evidence

2.1.2.1 Satisfaction

There is no one clear consensus on the definition of satisfaction, however, many concur that it involves "an evaluative, affective, or emotional response" (Oliver, 1989, p.l) According to Churchill and Surprenant (1982) conceptually, satisfaction is an outcome that results from the comparison of the rewards and costs

of the purchase a consumer makes relative to anticipated consequences They

furthermore distinguish that, operationally, satisfaction can be likened to attitude, given that it can be assessed as an aggregate of particular satisfactions with the various attributes of a service

Pfaff (1977) suggests that satisfaction may be alternatively described from both cognitive and affective models LaTour and Peat (1979), on the other hand, contend that the distinctions between satisfaction and attitude are determined primarily by temporal positioning Following this reasoning, attitude is positioned

as a pre-decision construct, whereas satisfaction is post-decision construct (Churchill & Surprenant, 1982) Rust and Oliver (1994 conclude that customer satisfaction is "a summary cognitive and affective reaction to a service incident (or sometimes to a long-term service relationship) Satisfaction (or dissatisfaction) results from experiencing a service quality encounter and comparing that encounter with what was expected" (p.2)

2.1.2.3 Expectations

Olson and Dover (1979) consider customer expectations to be representative

of pretrial beliefs about a product or service Expectations, according to Churchill and Surprenant (1982) reflect anticipated performance The satisfaction literature suggests that customers may apply different types of expectations with respect to anticipated performance: ideal, expected, minimum tolerable, and desirable (Miller, 1977: Churchill & Surprenant, 1982) Others, however, contend that expectations

should be based on experience norms (Woodruff, Cadotte, & Jenkins, 1983; Cadotte, Woodruff, & Jenkins, 1987)

The concept of "meeting expectations" frequently surfaces in considerations

of service quality (Coye, 2004) In industrial field service, for instance, setting realistic customer expectations, and then striving to meet or exceed those expectations can have a large impact on how a firm is perceived Parasuraman et al (1988) argue that the term "expectations" is used differently in the service quality literature than it is in the consumer satisfaction literature Their contention is that expectations, in the consumer satisfaction literature, are viewed as predictions customers make about what is likely to happen in the course of a transaction or exchange This is similar to Oliver's (1981) assessment that expectations are consumer-defined probabilities of the occurrence of positive or negative outcomes relative to some undertaken behavior In contrast, Parasuraman et al (1988) distinguish that expectations, in the service quality literature, are viewed as desires

or wants of customers, in other words, what customers feel a service provider should provide as opposed to would provide This indicates that, would expectations infer a probabilistic likelihood, whereas should expectations, infer what the customer ultimately desires or considers as ideal

2.1.2.4 Disconfirmation

The disconfirmation paradigm is widely accepted as a view of the process by which customers develop feelings of satisfaction or dissatisfaction (Cadotte et al., 1987) Disconfirmation, according to Oliver (1981) essentially refers to "a mental comparison of an actual state of nature with its anticipated probability" (p.35) As such disconfirmation operates as a fundamental intervening variable relative to the satisfaction construct Churchill & Surprenant (1982) inform that "Disconfirmation arises from discrepancies between prior expectations and actual performance It is presumably the magnitude of the disconfirmation effect that generates satisfaction and dissatisfaction" (p 492)

Swan and Trawick (1981) distinguish between inferred and perceived disconfirmation They first point out that inferred and perceived disconfirmation may appear to measure the same construct, and therefore qualify the differences Inferred disconfirmation is ascribed as being the difference between the customer's post-rating and pre-rating of a product or service Perceived disconfirmation (Oliver, 1980), on the other hand, relates to the customer's perception that performance was better or worse than expected Woodruff et al (1983), further expound that the effects of customers' prior experiences can also influence the disconfirmation process

2.1.2.5 The Relationship of Expectations with Disconfirmation

The disconfirmation-expectation model assumes that a customer's degree of satisfaction is an outcome of a four step process (Hunt, 1977; Oliver, 1980) Relative to the example of retail service, Swan & Trawick (1981) summarize the process as: The process starts with a consumer's pre-purchase expectations, which are beliefs that a retail establishment will achieve a certain performance level on a set of salient attributes (Oliver, 1980a; LaTour & Peat, 1980) In the second step, the consumer shops the store and forms perceptions of store performance on the salient attributes The user compares these perceptions with recalled expectations Expectations are thus either positively disconfirmed (performance exceeds expectations), confirmed (performance equals expectations), or negatively disconfirmed (performance is short of expectations) The result of this comparison process is some perceived level of disconfirmation In the third step perceived disconfirmation determines a level of satisfaction In the fourth step, satisfaction determines the intentions to either patronize or not patronize the store in the future, where intentions are a customer's anticipation of future behavior toward a store (pp.50-51)

Churchill & Surprenant (1982) point out that it is difficult to empirically manipulate disconfirmation independently of expectations and performance, due to the fact that disconfirmation is essentially defined as the difference between these