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The Service Industries Journal ISSN: 0264-2069 (Print) 1743-9507 (Online) Journal homepage: http://www.tandfonline.com/loi/fsij20 Service value and switching barriers: a personal values perspective Pham Ngoc Thuy, Le Nguyen Hau & Felicitas Evangelista To cite this article: Pham Ngoc Thuy, Le Nguyen Hau & Felicitas Evangelista (2016): Service value and switching barriers: a personal values perspective, The Service Industries Journal, DOI: 10.1080/02642069.2016.1158252 To link to this article: http://dx.doi.org/10.1080/02642069.2016.1158252 Published online: 21 Mar 2016 Submit your article to this journal View related articles View Crossmark data Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=fsij20 Download by: [University of New England] Date: 22 March 2016, At: 03:35 THE SERVICE INDUSTRIES JOURNAL, 2016 http://dx.doi.org/10.1080/02642069.2016.1158252 Service value and switching barriers: a personal values perspective Pham Ngoc Thuya, Le Nguyen Haua and Felicitas Evangelistab a School of Industrial Management, HoChiMinh City University of Technology, HoChiMinh City, Vietnam; School of Business, Western Sydney University, Sydney, Australia Downloaded by [University of New England] at 03:35 22 March 2016 b ABSTRACT ARTICLE HISTORY This research aims to investigate how customers, the key actors in a service relationship, perceive service value and switching barriers The study is framed along the means-end-chain theory of personal values and theory of customer resources in the service-dominant logic Hypotheses about the impact of personal values on customer value, switching barriers and customer loyalty were tested using structural equation modeling of survey data obtained from the health care and retail banking sectors in Vietnam The results show that in both sectors, personal values have a significant impact on perceived process and outcome value as well as on perceived economic and relational switching barriers Economic barriers were found to affect loyalty in the banking sector, in the same way that relational barriers affect loyalty in the health-care sector only Loyalty in both sectors is influenced by process but not by outcome value The implications of these findings are discussed Received 29 July 2014 Accepted 10 September 2015 KEYWORDS Personal values; service value; switching barriers; customer loyalty; servicedominant logic Introduction Customer loyalty toward a service has been a popular research topic amongst marketing academics and practitioners alike A review of the extant literature shows that service firms can achieve customer loyalty by improving the value of their offering and the quality of their relationship with the customer (Athanasopoulou, 2009; Chahal & Kumari, 2011; Koller, Floh, & Zauner, 2011; Wang, 2010; Zhang, Doorn, & Leeflang, 2014), as well as by creating switching barriers (Barroso & Picón, 2012; Burnham, Frels, & Mahajan, 2003; Jones, Mothersbaugh, & Beatty, 2000, 2002; Woisetschläger, Lentz, & Evanschitzky, 2011) Value creation is the reason for a firm’s existence (Slater, 1997), and a firm’s success is dependent on how well it delivers what is of value to its customers (Payne & Holt, 2001) Delivering what firms consider to be of value to its customers, which has been the common theme of many previous studies (e.g Parasuraman, Zeithaml, & Berry, 1988; Rust & Oliver, 1994; Sweeney & Soutar, 2001; Walsh, Shiu, & Hassan, 2014; Williams & Soutar, 2009), however, is not enough Firms need to ensure that customers perceive their offering as something of value, otherwise value is not created (Martelo-Landroguez, Barosso-Castro, & Cepeda-Carrión, 2013) Likewise, switching barriers need to be seen from the customer’s point of view (Pick & Eisend, 2014) CONTACT Felicitas Evangelista Australia © 2016 Taylor & Francis f.evangelista@uws.edu.au School of Business, Western Sydney University, Sydney, Downloaded by [University of New England] at 03:35 22 March 2016 P N THUY ET AL The emerging service-dominant logic (Vargo & Lusch, 2004), or service-logic (Grönroos, 2008), advocates that the customer is the co-creator or even the key creator of value in a service process, and the firm serves only as a value facilitator in the customer’s need-satisfying process (Grönroos & Ravald, 2011; Grönroos & Voima, 2012) In this view, the customer is neither just a passive receiver of value, nor a passive respondent to the switching barriers created by the firm Instead, the customer is the focal actor (Grönroos & Voima, 2012; Marterlo-Landroguez et al., 2013) The need to investigate how customers perceive service value and switching barriers, from their own frame of reference and in their own usage context, and how these impact customer loyalty is, therefore, of much importance for theory development and industry practice It has long been accepted that an individual’s value system has a major influence on consumer behavior (Vernon & Allport, 1931; Parsons & Shils, 1951; Rokeach, 1973), and more recent studies have shown that personal values serve as blueprints for perceptions (Ladhari, Pons, Bressolles, & Zins, 2011; Ledden, Kalafatis, & Samouel, 2007; Shaw, Grehan, Shiu, Hassan, & Thomson, 2005) Despite its pervasive role, there have only been a few studies about personal values in the field of services (e.g Durvasula, Lysonski, & Madhavi, 2011; Ledden et al., 2007; Marandi, Little, & Sekhon, 2006; Raajpoot, 2004; Sousa & Coelho, 2011) Therefore, this study was undertaken with the aforementioned research gaps and theories in mind Specifically, our aims are two-pronged First, we build on the means-end theory (Gutman, 1982; Zeithaml, 1988) and the concept of service personal values (Lages & Fernandes, 2005) to develop a theoretical framework that establishes the links among service personal values, switching barriers, perceived service value and customer loyalty Second, we test the relevance and applicability of this framework on membership-based (retail banking) and transaction-based (health care) services in an emerging market, Vietnam The difference between these two types of services in Vietnam is that, in the former, customers have continuous regular contact with the service provider that is governed by some form of contractual agreement, whereas, in the latter, the service tends to be discrete With banks, customers apply to join the ‘club,’ and once a member, a natural relationship with the service provider ensues In contrast, health-care providers need to undertake a proactive effort to move beyond a transactional perspective in order to create an ongoing relationship (Lovelock, Patterson, & Wirtz, 2011) It is in the context of these differences that switching barriers, service value and customer loyalty are examined in this paper Through this study, we hope to fill the gap caused by the lack of attention given to customers’ perceptions in determining service value and switching barriers and to the role of personal values in understanding customer perception and loyalty In addition, because this study was undertaken in an emerging market that is underrepresented in the literature, we hope that the results will be useful to other researchers and practitioners in the field Literature review Personal values and consumer behavior Personal values refer to an individual’s ‘enduring belief that a specific mode of behavior or end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence’ (Rokeach, 1973, p 5) They are the standards that Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL form the basis of beliefs, attitudes and behaviors They serve as the ‘guiding principles in people’s lives’ (Schwartz, 1994, p 88) They provide the basis by which people judge what is good or bad, what is important or unimportant Several methods for measuring personal values exist in the literature The more commonly cited ones are the Rokeach Value Scale (Rokeach, 1973), the List of universal human values (Schwartz & Bilsky, 1990), List of Values (Kahle, 1983) and Values and lifestyles (Mitchell, 1983) Vinson, Scott, and Lamont (1977), Gutman (1982) and Zeithaml (1988) were among the early scholars who established the connection between personal values and consumer behavior Vinson et al (1977) advocate that personal values are responsible for the selection and maintenance of the ends or goals toward which human beings strive and regulate the methods in which this striving takes place They propose a hierarchical link, starting from global personal values (the highest abstract level), to domain-specific values, and, finally, to the specific product attributes (the lowest abstract level) In the same vein, Zeithaml (1988) suggests that the process of evaluating a product or service involves a four-level means-end chain approach (Gutman, 1982; Olson & Reynolds, 1983; Young & Feigin, 1975) At the lowest level, the consumer’s focus is on the service characteristics, concrete service attributes or functional benefits At the second level, the attention is on the quality of the service relative to one’s expectations of it The third level relates to the consumer’s assessment of the benefits and costs of the product or service, that is, product/service value At the fourth and highest level, the consumer evaluates the extent to which the product/service reflects or matches the consumer’s personal values As such, product or service offerings that are congruent with a consumer’s personal values are adopted, while those that are not are rejected In this sense, consumers achieve their personal values through the products or services they acquire or consume (Kahle, 1983), and thus, personal values become a powerful mechanism for understanding and reaching consumers (Durgee, O’Connor, & Veryzer, 1996) Personal values have been found to affect innovative behavior, store choice, attitudes toward e-shopping, preferences for products and brands, acceptance of web-marketing facilities, mall shopping attitude and behavior, internet use and specific shopping motives (Ladhari et al., 2011) Service personal values Applying the general concept of personal values to the field of services, Lages and Fernandes (2005) developed the concept of service personal values, which is defined as ‘a customer’s overall assessment of the use of a service, based on the perception of what is achieved in terms of his own personal values’ (p 1564) Service personal values consist of three dimensions, namely, service value to peaceful life, service value to social recognition and service value to social integration (Lages & Fernandes, 2005) Service value to a peaceful life refers to the extent to which a particular service is perceived to contribute to a pleasurable life, one that is safe and tranquil for its users This dimension reflects a combination of values emanating from Rokeach’s (1973) scale that is used to assess general values at the individual level On the other hand, value to social recognition refers to the perceived ability of a particular service provider to contribute toward the gaining of self-respect, social recognition and status Finally, value to social integration focuses on the perceived ability of a service provider to help strengthen friendship and promote better relationships Based on the studies of Kahle (1983) and Rokeach (1973), P N THUY ET AL the latter two dimensions are said to operate at the social-oriented level All three dimensions are terminal rather than instrumental, and as such, they tend to be more stable and permanent (Pitts, Wong, & Whalen, 1991) In services research, personal values have been found to influence service selection criteria (Allen, Ng, & Wilson, 2002), service quality expectations (Raajpoot, 2004), service value (Ledden et al., 2007) and evaluation of services before and after the buying decision is made (Koo, Kim, & Lee, 2008) Proposed model and hypotheses Downloaded by [University of New England] at 03:35 22 March 2016 Service personal values and switching barriers Switching barriers refer to factors that make it difficult or costly for customers to defect to other service providers (Jones et al., 2002) They are not only economic in nature, they also have psychological and emotional dimensions (Burnham et al., 2003) When customers break away from their existing service provider, they not only spend money, time and effort to search for an alternative provider but can also suffer from emotional discomfort or psychological stress from the break-up In general, switching costs or switching barriers may be categorized into three groups: affective losses, benefit losses and sunk costs (Burnham et al., 2003) Sunk costs include costs associated with breaking the existing relationship and costs necessary to set up a new relationship These sunk costs are non-recoupable (Patterson & Smith, 2003) In this study, for parsimonious reasons, we follow Woisetschläger et al (2011) by combining benefit losses, sunk costs and set-up costs into one construct called economic barrier The other component is termed relational barrier (or social barrier), reflecting the affective costs associated with personal and brand relationship losses (Woisetschläger et al., 2011) Considering that these components are conceptually different, the effect of service personal values on each component is examined separately in this study The justification for the relationship between a customer’s service personal values and his or her assessment of a service provider’s switching barriers is through how he or she employs service personal values to assess the benefits of staying with the current provider and/or the losses associated with joining a new provider By staying with an existing provider, a customer could receive benefits such as special treatments or privileges for being a loyal customer, comfort and time saving due to familiarity with transactional procedures, and established social aspects such as personalization, supportiveness and positive interpersonal interactions with frontline staff and with other customers of the same brand (Jones & Reynolds, 2007) The extent of these perceived benefits would depend on the customer’s perception of how they correspond to his or her service personal values (Vinson et al., 1977; Zeithaml, 1988) The benefits of staying would be thought of as high if these are perceived to contribute toward achieving a peaceful life, social recognition or social integration In contrast, the benefits would be thought of as low if these are perceived as irrelevant or not contributing toward enjoying any of the three service personal values Switching is not only about ignoring the benefits associated with the current provider but also about anticipating the potential losses of joining a new one These losses may be in terms of time and effort spent on searching for and learning about a new provider’s service offerings and service delivery procedures, worries about risk associated with lack Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL of knowledge or experience about the new provider, or tensions when dealing with the new provider’s personnel or staff (Jones & Reynolds, 2007; Burnham et al., 2003) The customer may feel his or her personal life to be less peaceful in this situation The personal values of being socially integrated or recognized by the service staff or the brand community may also be weakened significantly (Vinson et al., 1977; Zeithaml, 1988) The severity of switching barriers would, therefore, depend on how much of a threat to one’s internal peaceful life, social recognition or social integration a change in service providers is perceived by the customer The benefits associated with staying with the current provider and the potential losses associated with joining a new provider may be relational or economic in nature (Burnham et al., 2003; Woisetschläger et al., 2011) If the relational and/or economic benefits of switching are perceived to allow the customer to enjoy a peaceful life, social recognition or social integration, then the service’s relational barriers would be perceived as high On this basis, the following hypotheses are proposed H1: Customers who perceive that staying with a particular service provider would allow them to achieve (a) a peaceful life, (b) social recognition, or (c) social integration would perceive the economic switching barriers to be high H2: Customers who perceive that staying with a particular service provider would allow them to achieve (a) a peaceful life, (b) social recognition, or (c) social integration would perceive the relational switching barriers to be high Service personal values and perceived service value The service-dominant logic paradigm views services as activities that create value (Vargo & Lusch, 2004) According to this paradigm, both the service provider and customer are co-creators of value In a given context, consumers use, combine or integrate their own operand and operant resources to convert the offerings of marketers or providers in order to create value or the perception of value for themselves The value generated by the consumers would be in the form of benefits such as economy, quality, convenience, experience or fulfillment of one’s values These benefits or value is what consumers get in return for the resources they give as a service takes place (Babin & James, 2010) The benefits or ‘gets’ that consumers obtain from a service may be categorized into outcome and process value Outcome value includes those benefits that result from the service encounter, whereas process value refers to the benefits obtained or experienced during the co-creation process This bi-dimensionality of perceived value is based on the idea that a service has two components, namely, technical (i.e outcome) and functional (i.e process) (Grönroos’s, 1982) This categorization is consistent with the view that value for the user or value-in-use is created or emerges during usage, and value is not determined only at the end of the process (Grönroos & Voima, 2012; Parasuraman, Zeithaml, & Berry, 1985) The justification for the relationship between a customer’s service personal values and his/her perception of the service value is through how he or she employs service personal values to assess the service benefits or the ‘gets’ in the get-give conceptualization of service value (Zeithaml, 1988) When assessing the service offering of a particular provider, the customer’s perception of its attributes and the benefits would depend on how well these attributes correspond to or are congruent with the customer’s service personal Downloaded by [University of New England] at 03:35 22 March 2016 P N THUY ET AL values (Rokeach, 1973; Zeithaml, 1988) The benefits would be thought of as high if the service’s attributes would enable him or her to achieve a peaceful life, social recognition or social integration and low if otherwise Any particular service offering can have two types of attributes, namely, functional or process and technical or outcome (Grönroos, 2008) If the process attributes of a service are perceived to enable the customer to achieve a peaceful life, social recognition or social integration, the service would be rated as high in terms of process benefits or process value For example, in a health-care center, clients or patients would perceive a high-process value when they receive friendly and caring attention from the medical staff Such actions would make the patient feel comfortable or less worried (i.e value to a peaceful life) In banking, clients would perceive a high-process value when the frontline staff at a branch office greets them by their first name because this makes them feel important or socially accepted (i.e value to social recognition) Similarly, if the outcome attributes of a service are perceived to allow the customer to achieve some or all of the three components of service personal values, the service created by a specific provider would be rated high in terms of outcome value In a medical center, outcome attributes could come in the form of patients feeling better, having less pain or feeling more confident about their health, and feeling more secured or tranquil (i.e value to peaceful life) In banking, outcome attributes could be in the form of personalized financial advice or providing VIP privilege status (value to social recognition) Thus, the effects of service personal values on perceived service value are hypothesized, as follows: H3: Customers who perceive that a particular service would allow them to achieve (a) a peaceful life, (b) social recognition, or (c) social integration would perceive the outcome value of that service to be high H4: Customers who perceive that a particular service would allow them to achieve (a) a peaceful life, (b) social recognition, or (c) social integration would perceive the process value of that service to be high Switching barriers and customer loyalty Loyalty is conceptualized as consisting of repeated purchases or continued patronage due to a strong internal disposition (Aksoy, 2013; Day, 1969; Han, Kwortnik, & Wang, 2008) Neither repeat purchases nor continued patronage alone constitute loyalty In order for loyalty to exist, the act of re-buying from, staying with or not leaving a service provider has to be guided by a deeply held commitment to or a strong favorable attitude toward the focal service provider and the idea that this patronage pattern occurs despite situational influences and marketing efforts designed to cause otherwise (Oliver, 1999) In this context, loyalty also manifests in other ways, such as by expressing a preference for a service provider over others, saying positive things about the company to others and recommending the company to others (Zeithaml, Berry, & Parasuraman, 1996) Such actions and behavioral intentions are distinguished from spurious loyalty in that spuriousness is driven by situational exigencies rather than by a strong internal disposition (Dick & Basu, 1994) Both economic and relational switching costs are important antecedents of customer loyalty Studies have shown that personal relationships with service providers have a Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL positive effect on customer loyalty, and the same is true for economic barriers (Balabanis, Reynolds, & Simintiras, 2006; Burnham et al., 2003) The investment into a relationship is one reason why consumers stay with their service provider The benefits they obtain from the relationship, which Gwinner, Gremler, and Bitner (1998) identify as confidence, social status and special treatment, could keep them loyal even if they perceive the core service attributes as suboptimal These benefits could increase customers’ dependencies and increase switching costs simultaneously On the other hand, customers are motivated to remain loyal to a service provider in order to minimize the use of their resources, such as the cost of searching for an alternative provider, the cost of breaking a contract, cost of joining with an alternative provider and procedural costs such as completing new forms and other associated transactional requisites Studies (e.g Gronhaug & Gilly, 1991; Ping, 1993) have shown that customers tend to remain loyal even if they are dissatisfied or despite fluctuations in the quality of service received when the costs of leaving the current provider and joining a new one are perceived to be high The effect of switching costs on customer retention has been found by Burnham et al (2003) to be far stronger than satisfaction, even in industries where switching costs are low or in which switching is relatively easy Based on these arguments and findings, the following replications are proposed: R1: Economic barriers have a positive effect on customer loyalty R2: Relational barriers have a positive effect on customer loyalty Perceived service value and customer loyalty The value a consumer derives from a service plays a significant role in determining their loyalty to the service provider Consumers that benefit from their exchanges with a service provider are more likely to have a sustainable long-term relationship with the company They tend to remain loyal if they understand well or clearly recognize the value of staying in the relationship (Gwinner et al., 1998) From a service-dominant logic perspective, it can be argued that customers will become patrons and will remain to be so when they use the service offered by marketers to create value-in-use, provided the objective value or the subjective perception of the service persists (Babin & James, 2010) On the other hand, if customers are unable to create the desired value out of a service activity, it is more likely than not that they will stop buying the service (Grönroos & Ravald, 2011) While the value of a service as mentioned earlier can be categorized into outcome and process value, service value can also be cognitive or emotional Aside from cognitive value, service encounters can also lead to emotional value In a study of business travelers, the quality of the interpersonal relationships that existed between a traveler and travel agent was found to have a direct positive link with loyalty (Macintosh, 2007) Customers who experience positive emotions after a service encounter will want to revisit the providers that have been the source of the positive emotions Conversely, when a service encounter produces negative emotions, loyalty is adversely affected (Sierra & McQuitty, 2005) The direct link between customer value and loyalty has seldom been tested as satisfaction has often been reported to mediate the relationship between these two variables (Chahal & Kumari, 2011) Investigating this direct relationship is, however, important P N THUY ET AL because customer value is the ‘fundamental basis for all marketing activity’ (Holbrook, 1994, p 22), and as such, it is a superordinate goal that regulates loyalty (Sirdeshmukh, Singh, & Sabol, 2002) The customer value creation paradigm is also newer and more widely adopted (Ruiz, Gremler, Washburn, & Carrión, 2008), advocating for a much more comprehensive approach than a simple focus on service quality or customer satisfaction (Vargo & Lusch, 2004; Woodruff, 1997) From a practical point of view, examining the direct effects of value on loyalty has valuable implications for value-based segmentation, communications and service development strategies (Floh, Zauner, Koller, & Rusch, 2014) On this basis, the following replications are formed: Downloaded by [University of New England] at 03:35 22 March 2016 R3: Outcome value has a positive effect on loyalty R4: Process value has a positive effect on loyalty The direct effect of service personal values on customer loyalty When consumers decide to acquire or adopt a particular service, they perceive the service to be self-relevant and capable of fulfilling or enhancing some important personal values (Walker & Olson, 1991) The link between loyalty and personal values can be further explained in terms of the association between an activated attitude (e.g loyalty) and some aspect of self-concept (e.g values), which Johnson and Eagly (1989) refer to as ‘involvement.’ Where attitudes are ‘embedded in the enduring values of the self-structure,’ value-relevant involvement would be difficult to change Extending this line of reasoning to loyalty, if repeated patronage of a service is due to important self-related ends such as a peaceful life, social recognition or social integration (i.e service personal values), then this behavior would be resistant to change (Celsi & Olson, 1988) Similarly, customers who find that all three components of their service personal values are congruent with those of their service provider will remain loyal Value congruence has been found to have a positive effect on affective commitment (MacMillan, Money, Money, & Downing, 2005; Morgan & Hunt, 1994) and repurchase intentions (Jones & Reynolds, 2007; Ping, 1993) Through value congruence, customers can develop customer-company or organizational identification According to social identity theory, organizational identification is similar to sharing the same self-definitional attributes with a company or a brand (Lam, Ahearne, Hu, & Schillewaert, 2010), which, in the context of the present study, is similar to sharing the same personal values with one’s service provider The attitude of a consumer toward a brand or a service provider is said to be related to his or her service personal values (i.e peaceful life, social recognition and social integration), and the stronger this relationship is, the more central that attitude becomes (Dick & Basu, 1994) Central attitudes are intimately felt and cherished by an individual They tend to be stable over time and are strongly associated with knowledge structures in memory and behaviors such as loyalty Unlike less important attitudes, central attitudes are resistant to counter-persuasion, which means that the more central an attitude is toward a brand, the greater is the loyalty of the individual to that brand (Dick & Basu, 1994) Considering that personal values are the underlying determinant of central attitudes, the following hypothesis is proposed: H5: Customers who perceive that a particular service would allow them to achieve (a) a peaceful life, (b) social recognition, or (c) social integration would be loyal to that service Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL Figure Different paths from service personal values to customer loyalty The impact of service personal values on perceived switching barriers and perceived service value and its consequent effects on loyalty are summarized in Figure Service personal values are conceptualized as a second-order formative construct consisting of service value to (a) peaceful life, (b) social recognition and (c) social integration Service personal values are hypothesized to have a positive impact on the two components of switching barriers, namely, economic and relational (H1a,b,c and H2a,b,c) It is also hypothesized to be an antecedent of perceived service value, that is, outcome and process value (H3a,b,c and H4a,b,c) The components of switching barriers and perceived service value are then proposed to have a positive effect on customer loyalty (R1 to R4) Finally, service personal values are deemed to have a positive direct effect on loyalty (H5a,b,c) Method The empirical data for this hypothetico-deductive research were collected from customers of two service industries, retail banking and health care As mentioned earlier, the choice of these industries was guided by the nature of the contractual relationship between the firms and their customers While retail banking is membership-based, health care is a transactionbased service (Lovelock et al., 2011) The context of the study is Vietnam, a non-western, emerging market that is also transitioning from a central planning economy to a form of market socialism These features make Vietnam a particularly appropriate setting for this study because of the expanding role of emerging markets in the global economy The data for this study were collected by personal interviews using a structured questionnaire The potential respondents were existing customers of banks and health-care centers They were approached at different service points, that is, banks, hospitals and clinics, by nine university students who were then enrolled in a research methods course The use of convenience sampling in this study was the only option as it was not possible to obtain or develop a list of bank or health-care center customers in order to draw a simple random sample Convenience sampling is further justified by the fact that the sample is relevant as it is within the theory’s domain and the goal of this study is to test a theoretical model (Calder, Phillips, & Tybout, 1981) The questionnaire was initially developed in English and later translated into 10 P N THUY ET AL Downloaded by [University of New England] at 03:35 22 March 2016 Vietnamese through a translation and back-translation procedure The two translators were university academics who are fluent in both languages After comparing the two English versions, mismatched points were discussed, and the Vietnamese version was revised accordingly Pretests were undertaken by interviewing four customers in each industry, which led to some adjustments in item wordings The measurement scale for service personal values consisted of 12 items reflecting three dimensions, which were adapted from Lages and Fernandes (2005) The scales for process value and outcome value had four items and were adapted from Wang, Lo, Chi, and Yang (2004) and Sweeney and Soutar (2001) Switching barriers (economic and relational) were measured by a 6-item scale derived from Burnham et al (2003), and customer loyalty was measured by a 4-item scale based on Zeithaml et al (1996) and Han et al (2008) Results Sample characteristics The overall sample consisted of 761 respondents, 48% of whom were customers of retail banking and 52% of health-care services The overall sample and the individual subsamples were fairly balanced in terms of gender (52% female vs 48% male) and income level The age groups were slightly skewed In the overall sample, 57.6% of the respondents fell within the 18–35 year age group, whereas only 42.4% were over 35 years The sub-samples of each sector had comparable age distributions Assessment and refinement of measurement scales Exploratory factor analyses (EFA) were initially undertaken on each sub-sample and the overall sample to assess and refine the measurement scales The EFA estimation on the overall sample yielded satisfactory indices: KMO = 0.920, Barlett’s test of sphericity p = 000, total extracted variance = 72.82% and the smallest eigenvalue = 1.133 Satisfactory indices were also obtained from each sub-sample However, the results led to the deletion of three items due to low factor loadings (i.e less than 0.45) The remaining 27 items were then subjected to confirmatory factor analysis (CFA) using AMOS software The full measurement model included eight first-order constructs and their respective reflective items The test for normality of variables showed that the kurtosis (−0.889 to +0.394) and skewness (−0.588 to +0.103) were within acceptable limits (Kline, 2011) In this situation in which the variables are slightly deviated from normality, the use of maximum likelihood estimation is considered appropriate, as the parameter estimates would exhibit minimal bias compared to other methods (Bollen, 1989; Hair, Black, Babin, & Anderson, 2010; Olsson, Foss, Troy, & Howell, 2000) In addition, maximum likelihood also allows for the estimation of fit indices, significance testing of factor loadings and factor correlations, as well as the estimation of confidence intervals (Fabrigar, Wegener, MacCallum, & Strahan, 1999) The measurement model was further refined by eliminating six items that exhibited a high covariance of the error terms (see Table 1) Finally, CFA of the measurement model consisting of 21 items was undertaken on each sub-sample and the overall sample The following are the indices for the overall sample: Chi-square = 400.67; dF = 161; p = 000; THE SERVICE INDUSTRIES JOURNAL 11 Table Scale items and loadings (combined data: banking and health care) Downloaded by [University of New England] at 03:35 22 March 2016 Item wording Std loading Value to a peaceful life: Cronbach alpha = 0.85; CR = 0.85; AVE = 0.66; Mean = 3.50; Std = 0.77 more tranquility more family security more harmony and stability in life a more pleasurable life 0.815 0.825 0.789 Deleted – EFA Value to social recognition: Cronbach alpha = 0.88; CR = 0.88; AVE = 0.72; Mean = 3.05; Std = 0.87 more respect from others the feeling that the world is more agreeable more status more social recognition a more stimulating and adventurous life 0.867 0.865 0.810 Deleted – CFA Deleted – EFA Value to social integration: Cronbach alpha = 0.90; CR = 0.90; AVE = 0.75; Mean = 3.21; Std = 0.85 a higher integration in my group better relationships to strengthen my friendship relationships 0.829 0.891 0.870 Outcome value: Cronbach alpha = 0.73; CR = 0.73; AVE = 0.57; Mean = 3.63; Std = 0.76 In comparison with the money, time and effort I spend … The benefits I receive from X are good The services I receive from X are reasonable X provides me with the benefits I want X gives me what I need 0.747 Deleted – CFA 0.763 Deleted – CFA Process value: Cronbach alpha = 0.81; CR = 0.81; AVE = 0.59; Mean = 3.55; Std = 0.74 In comparison with the money, time and effort I spend … X makes me feel good during the time I use the service X gives me a positive experience during the time I use the service I have an enjoying time during the time I use the service I have a happy time during the time I use the service 0.754 0.764 Deleted – CFA 0.780 Economic barrier: Cronbach alpha = 0.71; CR = 0.71; AVE = 0.56; Mean = 3.22; Std = 0.96 Switching to a new service provider would mean … losing benefits of being a long-term customer probably involve new costs/charges more time and effort for the formalities involved 0.807 Deleted – CFA 0.680 Relational barrier: Cronbach alpha = 0.79; CR = 0.79; AVE = 0.65; Mean = 3.10; Std = 0.96) I have built a very good relationship with people working at X I would miss working with the people at my provider if I switch providers I am more comfortable interacting with the people working for my service provider than I would be if I switch providers Loyalty: Cronbach alpha = 0.90; CR = 0.90; AVE = 0.76; Mean = 3.49; Std = 0.90 I will say positive things about X I will recommend X to others I will come back to X when I need this service in the future I will encourage friends and relatives to choose X Deleted – EFA 0.811 0.804 0.835 0.904 0.871 Deleted – CFA GFI = 0.952; CFI = 0.973; TLI = 0.965; RMSEA = 0.044 The fit indices for the sub- samples are presented in Table These results show that there is a good fit between the measurement model and the data As shown in Tables and 3, the standardized loadings of all items in all cases range from 0.590 to 0.904, and the Average Variance Extracted (AVE) range from 12 P N THUY ET AL Table Discriminant validity of scales Downloaded by [University of New England] at 03:35 22 March 2016 Squared correlation and average variance extracted Peaceful life Social recognition Social integration Outcome value Process value Economic barrier Relational barrier Loyalty Peaceful life Social recognition Social integration Outcome value Process value Economic barrier 0.656 0.242 0.719 0.189 0.304 0.746 0.383 0.201 0.140 0.570 0.364 0.121 0.185 0.157 0.095 0.120 0.156 0.199 0.294 0.238 Relational barrier 0.456 0.184 0.587 0.154 0.557 0.132 0.125 0.218 0.349 0.652 0.163 0.297 0.428 0.191 0.209 Loyalty 0.758 Notes: Values in the lower triangular region represent the squared correlation coefficients Values in the diagonal represent the average variance extracted (AVE) 0.557 to 0.758, all above the acceptable 0.50 limit These results indicate that convergent validity is satisfactory The composite reliability (CR) estimates of the seven constructs fall between 0.714 and 0.904, which are better than the acceptable standards for exploratory research suggested by Kline (2011) The squared correlation coefficients of the 28 pairs of constructs (see Table 2) are all smaller than their respective average extracted variances, which, according to Fornell and Larcker (1981), is an indication that there is no problem with discriminant validity Test of common method variance To address the problem of common method variance, the Harman single factor CFA, which is the most widely known approach (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003), was performed The results showed very low fit indices (Chi-square = 7384.4; dF = 495; GFI = 0.542; CFI = 0.554; TLI = 0.524; RMSEA = 0.135) Thus, common method variance is not the major source of the variations in the observed items In addition, the marker-variable technique was employed in a post hoc fashion (Lindell & Brandt, 2000), as no marker variable was identified prior to data collection With this technique, ‘the smallest correlation among the manifest variables provides a reasonable proxy for common method variance’ (Lindell & Whitney, 2001, p 115) In this study, the smallest correlation is 0.031 (p = 387) between item 51 (economic barrier) and item 30 (value to a peaceful life) This result strengthens the earlier finding that common method variance is not a major problem Structural model estimation using the overall sample After testing and refining the measurement model, the structural model was estimated using the maximum likelihood estimation procedure The structural model consists of five first-order reflective constructs (i.e outcome value, process value, economic barriers, relational barriers and customer loyalty) and one second-order formative construct (service personal values) The latter has three intercorrelated first-order reflective components: value to a peaceful life, value to social recognition and value to social integration THE SERVICE INDUSTRIES JOURNAL 13 Downloaded by [University of New England] at 03:35 22 March 2016 Table Measurement and structural model estimation results Overall sample (761 cases) Banking (363 cases) Health care (398 cases) Measurement model: Chi-squared dF p GFI TLI CFI RMSEA Std item loadings 400.67 161 000 0.952 0.965 0.973 0.044 0.68–0.90 316.43 161 000 0.924 0.948 0.961 0.052 0.72–0.89 413.51 161 000 0.910 0.938 0.953 0.063 0.59–0.93 Structural model: Chi-squared dF p GFI TLI CFI RMSEA 473.15 173 00 0.944 0.959 0.966 0.048 379.54 173 00 0.911 0.936 0.948 0.057 447.62 173 00 0.902 0.938 0.949 0.063 Standardized path coefficients: H1: Service personal values → economic barriers H2: Service personal values → relational barriers H3: Service personal values → outcome value H4: Service personal values → process value R1: Economic barriers → loyalty R2: Relational barriers → loyalty R3: Outcome value → loyalty R4: Process value → loyalty H5: Service personal values → loyalty Peaceful life → Service personal values Social recognition → Service personal values Social integration → Service personal values 0.45 (.002) 0.30 (.002) 0.59 (.002) 0.50 (.002) 0.35 (.009) 0.63 (.003) 0.64 (.003) 0.61 (.003) 0.11 (.035) 0.09 (.138) 0.05 (.371) 0.39 (.003) 0.25 (.002) 0.68 (.002) 0.37 (.002) 0.61 (.004) 0.55 (.003) 0.13 (.039) 0.02 (.678) 0.10 (.266) 0.27 (.005) 0.36 (.008) 0.72 (.003) 0.46 (.002) 0.65 (.004) 0.67 (.005) 0.02 (.924) 0.23 (.047) −0.02 (.914) 0.55 (.003) 0.11 (.216) 0.64 (.002) 0.33 (.004) 0.12 (.043) 0.05 (.587) 0.19 (.004) Note: Numbers in parentheses are p values Within the framework of model specifications presented by Jarvis, MacKenzie, and Podsakoff (2003), this is a type II model The model is identified because the formative construct of service personal values is connected to two first-order reflective uncorrelated constructs namely economic barrier and outcome value (see Panel – Jarvis et al., 2003) The estimated structural model using the combined data from the two sample industries yielded a good fit (Chi-square = 473.15; dF = 173; p = 000; chi-square/dF = 2.73; GFI = 0.944; TLI = 0.954; CFI = 0.966; RMSEA = 0.048) The standardized path coefficients shown in Table indicate that H1a,b,c and H2a,b,c are supported with service personal values showing a significant effect on economic barriers (β = 0.45; p = 002) and on relational barriers (β = 0.50; p = 002) Service personal values also have a significant positive effect on outcome value (β = 0.64; p = 003) and on process value (β = 0.61; p = 003), which are in support of H3a,b,c and H4a,b,c, respectively The effects of switching barriers on loyalty are mixed, with only economic barriers showing a significant effect (β = 0.11; p = 035), supporting R1 but not R2 (β = 0.09; p = 138) Similarly, process value has a significant effect on loyalty (β = 0.39; p = 003), whereas outcome value does not (β = 0.05; p = 371), supporting R4 but not R3 Service personal values also have a significant direct effect on customer 14 P N THUY ET AL Downloaded by [University of New England] at 03:35 22 March 2016 loyalty (β = 0.25; p = 002), supporting H5a,b,c Overall, the total standardized effect of service personal values on customer loyalty (direct effect and via perceived value and perceived switching barriers) is strong, with β = 0.62 and p = 001 The proposed antecedents explain a high 51% of the variance in customer loyalty The results also show that the three components of service personal values differ in terms of their contributions to the formative construct As shown in Table 3, the highest standardized regression coefficient comes from value to a peaceful life (γ = 0.68; p = 002), followed by value to social recognition (γ = 0.37; p = 002) and, lastly, value to social integration (γ = 0.12; p = 043) The bivariate correlation coefficients of these three components range from 0.44 to 0.55, indicating that they are somewhat correlated with one another Cross-service industry analysis To further validate the model, the analyses were replicated on each of the two industries, that is, retail banking and health-care services Both the measurement and structural models were sequentially re-estimated using their respective data sets The results of these analyses are shown in Table The first part of Table shows that the measurement model fits well with the data of both industries, indicating that the measurement model is invariant across the two samples Likewise, the second part of Table shows that there is a good fit between the data from each industry and the structural model The overall picture shows that the proportion of the variance in customer loyalty that is explained by the proposed model stands at 47% for banking, 58% for health care and 51% for the two industries combined The total standardized effect of service personal values on customer loyalty is stable at the same value (β = 0.62) for each industry and for the combined sample The standardized path coefficients for the hypothesized causal relationships, which are shown in the third part of Table 3, indicate that five hypotheses are supported by the data from both industries (at p ≤ 05) and that one is not supported (R3 – outcome value has a positive effect on loyalty) These hypotheses represent the paths from service personal values to economic barriers (H1a,b,c), relational barriers (H2a,b,c), outcome value (H3a,b, c), process value (H4a,b,c), outcome value (R3) and process value (R4), and then to loyalty Thus far, the results are consistent for both industries The causal paths exhibiting inconsistent empirical results (at p ≤ 05) are R1, R2 and H5a, b,c For R1, the standardized coefficient from economic barriers to loyalty is significant at β = 0.13 (p = 039) in banking but is non-significant at β = 0.02 (p = 924) in health care For R2, the standardized coefficient from relational barriers to loyalty is not significant at β = 0.05 (p = 587) in banking but is significant at β = 0.19 (p = 004) in health care For H5a,b,c, the direct effect of service personal values on customer loyalty is significant at β = 0.36 (p = 008) in banking but is non-significant at β = 0.11 (p = 216) in health care These inconsistencies can be explained reasonably well by the different features of retail banking compared to health-care services, which are discussed in more detail in the next section Discussion This study provides empirical evidence on the role of personal values in explaining customer perceptions of service value (i.e perceived value as different from offered value) and Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL 15 switching barriers on two service sectors, retail banking and health-care services By testing the various paths, the current study shows that service personal values are a significant predictor of both perceived switching barriers and perceived service value To our knowledge, this is among the first of the studies that use a single model to estimate the simultaneous effects of service personal values on economic and relational barriers, perceived process and outcome value, and their consequent impact on customer loyalty Based on the results obtained from the combined data and for each sample industry, the effects of outcome value on loyalty are not statistically significant (β = 0.05; β = 0.02 and β = 0.10), whereas the effects of process value are (β = 0.64; β = 0.65 and β = 0.61) It is possible that the outcome benefits are not significant antecedents of loyalty because the offerings and service outcomes obtained by consumers are perceived to be nearly the same or similar across service providers On the other hand, process benefits play a relatively more important role because these benefits are perceived to differ from one provider to another The formative concept of service personal values adopted in this study provides a concrete basis for determining the relative importance of each of the three interrelated personal values In both industries, value to a peaceful life plays a more dominant role than value to social recognition and value to social integration With regard to one’s money and one’s health, it is the internal, personal motivation that dominates rather than the social, village-related aspects of a brand or a service Social integration, however, is significant in health care but not in banking, possibly because Vietnamese consumers see banking as a personal, private or confidential transaction that they not want to share with other people In health care, social integration is a significant dimension of personal values because health is an acceptable topic for conversation, especially among those who share similar health issues and those who go to medical centers in groups for their periodic health checks Knowing what specific personal values are important or relevant when purchasing a particular service would definitely be useful for service development, market positioning and marketing communications Given the diverse features of various services, it is necessary to examine the results obtained from each of the two sample industries While the impact of personal values on economic and relational barriers is substantial in both industries, the impact of these two mediators on loyalty does vary In health care, economic barriers not play a significant role, while relational barriers This may be explained by the customized and the highly interactive process that takes place between a patient and health-care provider From a patient’s point of view, the feeling that one is being looked after, that the health-care provider is concerned about the patient’s health and well-being, and that the health-care provider is someone who has empathy, among others, appears to be a more powerful consideration in staying with the current provider than the economic cost involved in switching to another provider In contrast, the retail banking service industry is characterized by a highly standardized service process, and the service simply acts on a customer’s object or finances rather than the customer himself or herself In the latter case, economic barriers are found to be more important than relational barriers Although the literature has emphasized the role of switching barriers on customer loyalty (e.g Chebat, Davidow, & Borges, 2011; Patterson & Smith, 2003), this manifests in different ways in different service industries Based on this study’s results, it seems that relational barriers are more important in services that apply to a person and that involve a high 16 P N THUY ET AL Downloaded by [University of New England] at 03:35 22 March 2016 level of provider–customer interaction, whereas economic barriers are more important in industries that act on a person’s objects or belongings (such as money or mobile phone) and that involve a highly standardized type of service The results further show that personal values have significant direct effects on loyalty in retail banking but not in health care Due to the level of risks involved, once customers develop some credence based on their relationship with a bank, they generally will not want to switch, even if the quality of the service is less than desirable On the contrary, as one’s health is an important concern for many, consumers find it imperative to switch medical centers the moment they feel that the service they receive could be better Although the total effects of service personal values on customer loyalty are the same across the two sectors (β = 0.62), process value and relational barriers are, as shown above, more important in health care than in retail banking Managerial implications The statistically significant positive relationship between personal values and loyalty in the retail banking sample implies that it would help for banks to build and promote their offerings in terms of the end goals of their target customers Aligning their product or corporate brand with the service value of a peaceful life and, to a lesser extent, the value of social recognition would help promote a positive customer attitude and continued patronage This implication builds on the notion that value congruence is a powerful force that can glue bank customers to their banker and that people will stick it out with the bank that upholds their personal values People who value a peaceful life will want their bank to be strong and stable, with the capacity to keep their customers’ money safe Those who value social recognition would prefer that their bank have a good reputation and a respectable standing in the community With regard to switching barriers, service providers, particularly those in health care, need to be aware that patients have different views regarding how easy or difficult it will be for them to switch to another provider and that these views are influenced by their patients’ personal values The significant role played by process value in building customer loyalty in both sample industries serves to emphasize the importance of ensuring that customers enjoy the service experience or that the service encounter is pleasurable or hassle free and, thus, worth repeating In the case of a medical center, a supportive and less traumatic experience coupled with a sense of trust and confidence in the medical staff and/or the medical staff’s expressed concern for their patients’ well-being are far more important than lower medical fees Finally, with regard to barriers to switching and loyalty, the results imply that banks should focus on building economic barriers, whereas medical centers should emphasize relational barriers Conclusion This study attempts to address the two general questions of how customers, as the key actors in satisfying their needs, perceive the value offered by a service firm in his or her own usage context and how they perceive switching barriers from their own frame of reference As emphasized by Grönroos and Voima (2012), a clear understanding of the roles of the service provider and the customer, or the nature, scope and locus of the Downloaded by [University of New England] at 03:35 22 March 2016 THE SERVICE INDUSTRIES JOURNAL 17 value co-creation process is still needed In this empirical study, we show that a service firm can offer a value proposition to its customers but that this is only one side of the equation The other side is that of the customer, who, based on his or her value system, has to mobilize and integrate resources in order to co-create or avail of a service (Gummesson & Mele, 2010) The value of a service offering becomes real only if the customer acknowledges it to be so It is therefore important to recognize that there could be a difference between the value offerings of a firm and the value-in-use, as perceived by the customer Regarding switching barriers, the findings of this study suggest that the personal value systems of customers should be treated as an important antecedent of perceived switching barriers The decision to switch or stay is not determined solely by the effort of the service firm but, more importantly, by the personal values of its customers The severity of a barrier can only be assessed by the customer, and more often than not, this is done consciously or unconsciously by the customer based on his or her personal values In addition to the above theoretical insights, this study also provides empirical evidence based on large sample data about the role of the customer in the value co-creation process in the context of the service-dominant logic, which, according to Gummesson and Mele (2010), is lacking in the literature Finally, we establish the relevance of personal values in gaining customer loyalty and their strategic implications for two contrasting service sectors, retail banking and health-care services For practical purposes, this study provides compelling support for service providers to undertake commercial market surveys in order to know and understand the personal values of their own customers and to apply this knowledge in identifying their specific target markets and in configuring their service marketing strategies Finally, it should be noted that these findings were obtained in the context of only two service sectors in an 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International Business Review, 23(1), 284–292  ... coefficients: H1: Service personal values → economic barriers H2: Service personal values → relational barriers H3: Service personal values → outcome value H4: Service personal values → process value R1:... central an attitude is toward a brand, the greater is the loyalty of the individual to that brand (Dick & Basu, 1994) Considering that personal values are the underlying determinant of central attitudes,... loyalty and personal values can be further explained in terms of the association between an activated attitude (e.g loyalty) and some aspect of self-concept (e.g values) , which Johnson and Eagly