the impact of employees customer orientation and service orientation behaviours on customers service...
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The Impact of Employees’ Customer Orientation
and Service Orientation Behaviours on Customers’
Service Evaluation
CHANAKA JAYAWARDHENA *,1, ANDREW M. FARRELL
2 and ANKIT SHARMA
3
Loughborough University Business School, UK
Indian Institute of Information Technology and Technology, Gwalior
* Corresponding Author: 1 Lecturer in Marketing
Marketing & Retailing Group
Loughborough University Business School
LE11 3TU, United Kingdom
Tel: +44 (0)1509 22 88 31
Fax: +44 (0)1509 22 39 60
Email: [email protected]
2 Research Associate
Marketing & Retailing Group
Loughborough University Business School
LE11 3TU, United Kingdom
Email: [email protected]
3 MBA Student
Indian Institute of Information Technology and Management
Gwalior 474010, Madhya Pradesh, India
Email: [email protected]
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The Impact of Employees’ Customer Orientation
and Service Orientation Behaviours on Customers’
Service Evaluation
ABSTRACT
The effects of employees’ customer and service orientation on customers’ perceptions of service
evaluation is an important area of research. In this paper the authors conceptualise and test the
effects of service employees’ customer orientation and service orientation behaviours within an
extended service evaluation model encompassing service quality, service encounter quality, perceived
value and customer satisfaction. Data was collected from 271 grocery shopping customers. Data
analysis incorporates confirmatory factor analysis and structural equation modelling. Findings
indicate that: 1) customer orientation is positively related to service orientation, customers’
perceptions of service encounter quality, and service quality; 2) service orientation is positively
related to customers’ perceptions of service encounter quality, and service quality; 3) customers’
perceptions of service encounter quality are positively related to customers’ perceptions of service
quality, and customer satisfaction; 4) customers’ perceptions of service quality are positively related
to value perceptions; 5) service quality is positively related to customer satisfaction; and 6) customer
satisfaction is positively related to customers’ behavioural intentions. The importance of these
findings for practitioners and academics, research limitations and future research avenues are
subsequently discussed.
Keywords: customer orientation, India, satisfaction, service encounter quality, service evaluation,
service orientation
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INTRODUCTION
Over the years, a considerable amount of research has been devoted to services marketing strategies
(Bolton, Grewal and Levy, 2007) and in the last decade in particular, the international service industry
has received increased attention (Brady et al., 2005; Keillor, Hult and Kandemir, 2004). The result of
this discourse is a growing knowledge regarding service quality evaluation (Cronin and Taylor, 1992;
Parasuraman, Zeithaml and Berry, 1988), derivation of value from service offerings (Bolton and
Drew, 1991; Monroe, 1990; Yang and Peterson, 2004), customer satisfaction (Fornell et al., 1996;
Hellier et al., 2003; Patterson and Spreng, 1997), and customer loyalty (Gupta and Zeithaml, 2006;
Sivadas and Baker-Prewitt, 2000).
In addition to investigation of constructs independently, researchers have recently started identifying
and studying clusters of variables that contribute to customers‘ overall service evaluations (Cronin,
Brady and Hult, 2000; Brady et al., 2005; Kamakura et al., 2002; Maxham, Netemeyer and
Lichtenstein, 2008). Amongst this body of research, certain variables are consistently featured:
perceived service quality, perceived value, customer satisfaction, and behavioural intentions.
However, while research examining customers‘ service evaluation is evolving, investigation of the
antecedent role that service employees play in the overall service evaluation process seems less well
developed (Brady and Cronin, 2001; Hennig-Thurau, 2004). Given that service employees are
recognised as having an important role to play in the formulation of customers‘ service evaluations
(Bitner, 1990; Bitner, Booms and Tetrault, 1990; Donavan, Brown and Mowen, 2004), it appears
worthwhile to investigate the potential impact of employee inputs into this process. With this in mind,
recent work into services marketing has highlighted two particular constructs of interest to employee
research, namely customer orientation (CO) (Brown et al., 2002; Periatt, LeMay and Chakrabarty,
2004; Susskind, Kacmar and Borchgrevink, 2003) and service orientation (SO) (Beatson, Lings and
Gudergan, 2008; Homburg, Hoyer and Fassnacht, 2002; Saura et al., 2005). These two variables are
hypothesised to play an important role in determining the quality of customers‘ service evaluations
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(Brady and Cronin, 2001; Yoon, Choi and Park, 2007). Yet, to date, research has yet to assess the
combined role of both of these employee-specific factors. Furthermore, the mechanisms by which
these two employee orientations may influence service evaluations have only been tentatively
explored (see, e.g., Brady and Cronin, 2001).
This research seeks to rectify this gap, by developing and testing a comprehensive model of
customers‘ service evaluation, with additional investigation of the antecedent role that customer
orientation and service orientation play in this process. As such, this study seeks to evaluate the
relationships between the following variables: customer orientation, service orientation, perceived
service encounter quality, perceived service quality, perceived value, customer satisfaction and
customers‘ behavioural intentions. To the authors‘ best knowledge, this represents the first study to
simultaneously examine these constructs as an extended model of service evaluation.
In addition to the first objective, whilst the volume of services marketing research is considerable, it
has been observed that the majority of work has concentrated on developed market economies (Brady
et al., 2005; Keillor, Hult and Kandemir, 2004). Countries such as India, Russia and China (PRC)
provide unprecedented opportunities to investigate whether Western models of service evaluation are
transferable to non-Western contexts. Therefore, the study‘s second objective is to situate the research
within the context of one such developing economy, namely India. India was chosen because it
represents a significantly different cultural market to that offered by much of today‘s service encounter
research (c.f., Hofstede, 1980).
To summarise, this paper has two major objectives: one, to examine the antecedent role of customer
orientation and service orientation in the service evaluation process; and second, to examine the nature
of the service evaluation process in a developing economy, namely India. The remainder of this paper
is structured as follows. The following section will provide background information on the constructs
under examination. In this section we will formulate our hypotheses and present our conceptual model.
The research methodology will then be detailed in the subsequent section. Section three presents the
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analysis and results of the research. Finally, the paper will conclude with a discussion of study
outcomes and their implications for academics and practitioners, limitations of the study, and
directions for future research.
CONCEPTUAL FRAMEWORK
Service Evaluation
Service evaluation models have recently come into prominence as researchers seek to build a more
comprehensive understanding of the process that customers go through when evaluating the delivery
of services. Within service evaluation research, a number of variables feature prominently: perceived
service quality, perceived value, customer satisfaction, and behavioural intentions (Cronin, Brady and
Hult, 2000; Brady et al., 2005; Kamakura et al., 2002; Maxham, Netemeyer and Lichtenstein, 2008).
Service quality is essentially viewed as how well a delivered service matches customers‘ expectations
regarding that service (Parasuraman, Zeithaml and Berry, 1985; 1988). Perceived value is based on
equity theory and refers to customers‘ assessment of what is right, fair or deserved for the perceived
cost of an offering (Bolton and Drew 1991; Yang and Peterson 2004). Monroe (1990) contends that
buyers‘ perceptions of value are based on a trade-off between the product qualities they perceive in
comparison to the sacrifice they perceive in monetary terms. Satisfaction is described as ―an
evaluation of an emotion‖ (Hunt 1977, pp. 459-460), suggesting that it reflects the degree to which a
consumer believes that the possession and/or use of a service evokes positive feelings (Rust and
Oliver, 1994). Behavioural intentions are seen as indicators of whether or not a customer will remain
with or defect from an organisation (Zeithaml, Berry and Parasuraman, 1996).
When formulating service evaluation models, many researchers rely on attitude theory for theoretical
support. One of the goals of attitude theory is to determine how attitudes drive intentions. Among the
numerous schools of thought on attitudes, the theory of reasoned action (Ajzen and Fishbein, 1980) is
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perhaps the most prominent. The theory of reasoned action postulates that intentions are the direct
outcome of attitudes, subjective norms and beliefs, such that there are no intervening mechanisms
between the attitude and the intention. We therefore specify satisfaction as a central mediating variable
such that the effects of service quality, service encounter quality and value on behavioural intentions
are mediated by satisfaction. The rationale for this model is that since satisfaction is primarily an
affective variable whereas quality and value are cognitive evaluations (Oliver, 1997), a direct link to
intentions is justified by theoretical models that specify a cognition-affect causal ordering (e.g.,
Bagozzi, 1992; Lazarus, 1991). In effect, satisfaction is positioned as an affective-oriented mediator
that follows from quality and value evaluations. Value is included in our model because its presence
has been found to increase service evaluation models‘ ability to explain variance in customers‘
behavioural intentions (Cronin et al., 1997). Further details on the formulation of our service
evaluation model will now be presented.
Service Quality
Service Quality is considered to be an influential determinant of perceived value (Andreassen and
Lindestad, 1998). According to Hellier et al. (2003), perceived value is positively influenced by
perceived quality. Several scholars have reported that customers‘ evaluation of perceived service value
depends directly on customers‘ evaluation of perceived service quality and the interaction between
perceived value and perceived quality remains positive (Hellier et al., 2003; Andreassen and
Lindestad, 1998; Dodds, 1991). Furthermore, Sweeney, Soutar and Johnson (1999) have claimed that
perceived quality is a pivotal determinant of perceived value which in turn is a critical factor in the
decision making process. In light of these findings, we wish to hypothesise that:
H1: Perceived service quality is positively related to perceived value.
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Customer Satisfaction
Because of its potential influence on consumers‘ behavioural intentions and customer retention
(Anderson and Fornell, 1994; Bolton and Drew, 1991; Cronin and Taylor, 1992; Fornell, 1992; Oliver,
1980; Oliver and Swan, 1989), customer satisfaction has been the subject of much attention in the
literature (Bitner and Hubbert, 1994; Cardozo, 1965; Oliver, 1977; 1980; 1981; Olshavsky and Miller,
1972; Olson and Dover, 1979; Rust and Oliver, 1994). A direct positive relationship between
perceived value and customer satisfaction has been indicated by a variety of product and services
studies (Hellier et al., 2003; Fornell et al., 1996; Cronin, Brady and Hult 2000; Patterson and Spreng,
1997; McDougall and Levesque, 2000). As noted earlier, the presence of value in service evaluation
models has been found to increase the models‘ ability to explain variance in customers‘ behavioural
intentions (Cronin et al., 1997). It is believed that customer satisfaction is a consequence of perceived
value (Hallowell, 1996). Fornell et al. (1996) upheld this view and highlight the importance of the
relationship between customer satisfaction and perceived value. In their study, three antecedents of
customer satisfaction are identified: perceived value, perceived quality and customer expectations.
They go on to emphasise that ―the first determinant of overall customer satisfaction is perceived
quality […] the second determinant of overall customer satisfaction is perceived value‖ (Fornell et al.,
1996, p. 96). Value disconfirmation literature also supports the relationship between customers‘
perceived value and customer satisfaction (Hellier et al., 2003). Perceived value can be considered pre
or post purchase (Eggert and Ulaga, 2002; Patterson and Spreng, 1997) as a customer seeks to acquire
additional benefit in comparison to the cost when purchasing a product or service. If the product is
unaffordable and perceived quality is inferior, the customer may not want to buy that product (Dodds,
Monroe and Grewal 1991) – this is a case of pre purchase perceived value. On the other hand,
customer satisfaction can be considered as a post purchase phenomenon (Eggert and Ulaga, 2002)
because the perceived value of a product or service is evaluated following customers‘ experiences with
the product or service. Following the above discussion, on balance, we present the following:
H2 Perceived value is positively related to customer satisfaction.
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There is little agreement over the relationship between perceived quality and customer satisfaction.
Some service evaluations models (e.g., Bitner, 1990; Bolton and Drew, 1991) specify satisfaction as
an antecedent to service quality based on the premise that service quality is a general evaluation
similar to an attitude, and is therefore super ordinate to satisfaction. For example, Bolton and Drew
(1991) advocate that customer satisfaction is affected by disconfirmation, expectation and actual
performance and customer satisfaction, in turn, becomes an input to customers‘ perceptions of service
quality. However, other service evaluation models (e.g., Anderson and Fornell, 1994; Anderson,
Furnell and Lehmann 1994; Gotlieb, Grewal and Brown, 1994) adopt the appraisal-response-coping
sequence (Lazarus, 1991) or the cognitive-emotive causal order (Oliver, 1997), which positions
satisfaction as super ordinate to service quality. According to Parasuraman, Zeithaml and Berry (1988)
perceived service quality is a global judgment or attitude relating to the superiority of the service,
whereas customer satisfaction is a transaction-specific evaluation. Fornell et al. (1996) found that
overall quality, price and expectations affected customer satisfaction and they claimed that customer
satisfaction depended on the anticipated quality of future service as well as the ability of the service to
provide for future needs. In an attempt to unify these diverging views, Cronin and Taylor (1992) tested
both causal orderings of satisfaction and service quality (i.e., service quality satisfaction and
satisfaction service quality) and determined that service quality is an antecedent of customer
satisfaction, reinforcing the view proposed by Parasuraman, Zeithaml and Berry (1985; 1986). On
balance, we seek to evaluate the view that:
H3: Perceived service quality is positively related to customer satisfaction.
Behavioural Intentions
The theory of reasoned action (Ajzen and Fishbein, 1980) suggests that intentions are the direct
outcome of attitudes (and subjective norms). More recent work in attitude theory (e.g., Bagozzi, 1992),
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however, challenges this perspective and contends that attitude theories ―trade specificity for
parsimony‖ (Bagozzi, 1992, p. 201). Such reasoning has led researchers to formulate more complex
models of service evaluation (e.g., Brady et al., 2005; Cronin, Brady and Hult, 2000). A similar
approach is therefore followed in the current study, where a number of antecedent variables to
behavioural intentions are included. However, since satisfaction is primarily an affective variable
whereas quality and value are cognitive evaluations (Oliver, 1997) only satisfaction is positioned as a
direct antecedent to behavioural intentions in our conceptual model, as per the theory or reasoned
action (Ajzen and Fishbein, 1980). Satisfaction being the only variable to link directly to behavioural
intentions is also justified by theoretical models that specify a cognition-affect causal ordering (e.g.,
Bagozzi, 1992; Lazarus, 1991). That is, satisfaction is positioned as an affective-oriented mediator that
follows from quality and value evaluations. In light of this evidence we wish to confirm that:
H4: Customer satisfaction is positively related to behavioural intentions.
Service Encounter Quality
The literature offers broad definitions of service encounters. For example, Shostack‘s (1985) definition
encompasses variables beyond the interpersonal element of a service encounter, including physical
surroundings and self-service technology. On the other hand, more narrow definitions of service
encounters also exist, focusing solely on the interpersonal nature of the encounter. For instance,
Surprenant and Solomon (1987) define the service encounter as a dyadic interaction between the
customer and service provider. This definition draws on their earlier work suggesting that service
encounters are role performances (Czepiel et al., 1985) in which both customers and service providers
have roles to enact. During the service encounter, or ‗moment-of-truth‘, the formation of customer
perceptions is largely based upon the emotional and intangible content of the encounter than on
surroundings (Lemmink and Mattsson, 2002; Stauss and Mang, 1999). Indeed, ―traditionally, service
encounters have been characterized as low tech, high face-to-face contact‖ (Drennan and McColl-
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Kennedy, 2003, p. 296). For the purposes of this paper, Surprenant and Solomon‘s (1987) dyadic
conceptualisation of service encounters as interaction between the service provider and customer is
adopted.
As explained by Farrell, Souchon and Durden, (2001, p. 577), ―service quality represents a customer‘s
assessment of the overall level of service offered by an organisation, and this assessment is often
based upon perceptions formulated during service encounters.‖ Czepiel (1990) also places the specific
short-term service encounter at the heart of customers‘ long-term perceptions of service quality. It
appears from this that positive perceptions of service encounter quality will lead to normative
expectations of the overall quality of the service. Service quality is considered to be a holistic
judgment of quality, and the quality of individual service encounters should contribute towards this
judgment. Thus, we expect that:
H5: Perceived service encounter quality is positively related to perceived service quality.
In light of the discussion regarding Hypothesis 3 (i.e., that satisfaction is an outcome of service
quality) we argue that service encounter quality will also be related to satisfaction. Indeed, ―the
satisfaction process often has a strong social dimension‖ (Fournier and Mick, 1999, p. 15, emphasis in
the original), indicating that it should be related to the quality of the interaction between service
provider and customer. We therefore anticipate the following:
H6: Perceived service encounter quality is positively related to customer satisfaction.
Extending the Service Evaluation Model
In expanding service evaluation models, a natural starting point is the role that service employees play
in the service delivery process (Brady and Cronin, 2001; Susskind, Kacmar and Borchgrevink, 2003).
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Because of this, the service employee-related constructs of customer orientation and service
orientation are included to extend the service evaluation model in this study. Customer orientation and
service orientation were chosen as they have been the focus of recent research in the services
marketing domain (Brown et al., 2002; Homburg, Hoyer and Fassnacht, 2002; Periatt, LeMay and
Chakrabarty, 2004; Saura et al., 2005; Susskind, Kacmar and Borchgrevink, 2003). We therefore
position customer orientation and service orientation as antecedents to our extended model of service
evaluation. Furthermore, whilst customer orientation tends to focus upon both philosophical and
behavioural elements of service delivery (Saxe and Weitz, 1982), service orientation in our study deals
specifically with behavioural-only performance.
Customer Orientation
Despite the amount of research conducted into the customer orientation construct (Brown et al., 2002;
Periatt, LeMay and Chakrabarty, 2004; Saxe and Weitz, 1982; Thomas, Soutar and Ryan, 2001), the
question of how customer orientation influences perceived organisational performance from the
customers‘ perspective is still very much under researched (Brady and Cronin, 2001; Hennig-Thurau,
2004). Customer orientation is most often viewed as a desire by an employee to help customers meet
their needs during the performance of organisational tasks (Brown et al., 2002; Saxe and Weitz, 1982;
Susskind, Kacmar and Borchgrevink, 2003). Our hypothesis concerning the influence of customer
orientation is threefold. Firstly, due to the philosophical nature of customer orientation (Saxe and
Weitz, 1982) we expect it to drive the behavioural aspects of employees‘ service orientation
behaviours (c.f., theory of reasoned action, whereby attitudinal constructs drive behavioural ones,
Ajzen and Fishbein, 1980).
Secondly, customer orientation has previously been linked to positive ratings of employee
performance (Boles et al., 2001; Brady and Cronin, 2001; Brown et al., 2002). We assert that
employee performance ratings are similar to customers‘ perceptions of employee performance during
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service encounters, and as a result we expect customer orientation to relate to service encounter quality
(c.f., Brown et al., 2002; Saxe and Weitz, 1982; Susskind, Kacmar and Borchgrevink, 2003).
Finally, according to the limited amount of research into the area, there is a positive relationship
between customer orientation and customer satisfaction (Hennig-Thurau, 2004; Stock and Hoyer,
2005; Susskind, Kacmar and Borchgrevink, 2003) and customer orientation and service quality (Brady
and Cronin, 2001; Dean, 2007; Rafaeli, Ziklik and Doucet, 2008). According to extended models of
service evaluation (Brady and Cronin, 2001; Cronin, Brady and Hult, 2000; JFAL, 2007), the
relationship between customer orientation and customer satisfaction should be mediated by, amongst
other constructs, service quality perceptions. However, Hennig-Thurau (2004), Stock and Hoyer
(2005), and Susskind, Kacmar and Borchgrevink (2003) did not include service quality perceptions in
their models. Only Brady and Cronin (2001) have tested the relationship between customer
orientation, service quality and satisfaction and they found it to hold. However, their model does not
include measures of service encounter quality or service orientation. Therefore, in the current study,
we expect customer orientation to have a direct influence on service quality directly and an indirect
influence on customer satisfaction, through service quality (c.f., Brady and Cronin, 2001). Based upon
the preceding discussion, we hypothesise the following:
H7: Employees’ customer orientation is positively related to: a) employees’ service orientation; b)
customers’ perceptions of service encounter quality; and c) customers’ perceptions of service quality.
Service Orientation
In the literature, the topic of service orientation has been approached from two differing perspectives:
the organisational level and the individual level (Homburg, Hoyer and Fassnacht, 2002; Saura et al.,
2005). At an organisational level, service orientation is more of a strategic business philosophy (Lytle,
Hom and Mokwa, 1998; Yoon, Choi and Park, 2007), focusing on what management of an
13
organisation considers is important for high quality service to be delivered (Chung and Schneider,
2002). At an individual level, service orientation relates to the behaviours of employees performing
service roles (Gwinner et al., 2005; Hogan, Hogan and Busch, 1984). More specifically, individual
service orientation behaviours are behaviours that an employee considers are important for high
quality service to be delivered (Chung and Schneider, 2002).
In the current study, we investigate service orientation behaviours at the individual level since these,
more than an organisational philosophy, are what will be evaluated by customers in a retail setting. As
a result of this, we adopt an individualistic definition of service orientation as the behaviours
performed by employees that affect the quality of the service delivered to customers of an organisation
(Cran, 1994; Hogan, Hogan and Busch, 1984).
Service orientation on the part of employees is argued to have a positive influence upon the quality of
service delivery (Cran, 1994; Hogan, Hogan and Busch, 1984; Yoon, Choi and Park, 2007). More
specifically, previous work has linked service orientation to courtesy from and competence of
employees (Schneider and Bowen, 1985; Schneider, Parkington and Buxton, 1980), customers‘ overall
quality perceptions (Schneider, Parkington and Buxton, 1980), customers behavioural intentions
(Beatson, Lings and Gudergan, 2008), and overall business performance (Yoon, Choi and Park, 2007),
although none of these studies adopted a comprehensive service evaluation framework as it is the case
in this study.
In the current study, we expect service orientation behaviours to be related positively to both
customers‘ service encounter quality perceptions and their service quality perceptions. This is because
service oriented employees are more inclined to perform service enhancing behaviours during service
encounters with customers (Gwinner et al., 2005; Saura et al., 2005). A higher incidence of service
orientation behaviours should therefore lead to customers‘ perceptions of individual service encounter
quality being increased as well as customers‘ perceptions of the overall level of service quality offered
(c.f., Schneider, Parkington and Buxton, 1980). Based upon this, we hypothesise the following:
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H8: Employees’ service orientation is positively related to customers’ perceptions of a) service
encounter quality; and b) service quality.
<Please Take in Figure 1 about here – in appendix below>
METHODOLOGY
Data was collected in the city of Gwalior, located in Madhya Pradesh, a province in the Northern part
of Central India. Gwalior has a population of approximately 1.2 million people. Questionnaire
respondents were selected through random interception of grocery shoppers in the city. Respondents
were asked to complete the questionnaire based on their most recent grocery shopping service
encounter. Through this process 312 questionnaires were collected. After accounting for missing data,
we were left with 271 usable responses. Respondents were mainly female (51.0%) and under the age
of 40 (57.9%). Table 1 presents respondent characteristics in more detail.
< Take in Table 1 about Here>
Measures
Employees‘ customer orientation was measured using 12 items drawn from the customer orientation
section of the SOCO scale (Saxe and Weitz, 1982). To measure employees‘ service orientation
behaviours we adapted the 5-item scale created by Gwinner et al. (2005). To measure service value we
used three indicators adapted from Sweeney, Soutar and Johnson (1999) and Sirohi, McLaughlin and
Wittink (1998). To measure service encounter quality we used the 8-item measure devised by
15
Jayawardhena et al. (2007). To capture service quality, in line with recent work (e.g., Brady et al.,
2005; Hartline and Ferrell, 1996), we used a subset of 10 variables drawn from the original 22-item
SERVQUAL measure (Parasuraman, Zeithaml and Berry, 1988). In order to capture customer
satisfaction we employed five items based upon the work of Brady et al. (2005), Cronin, Brady and
Hult (2000) and Westbrook and Oliver (1991). Customers‘ behavioural intentions were measured
using four items adapted from Zeithaml, Berry and Parasuraman (1996).
The questionnaire was prepared in English as the third author indicated that English comprehension in
Gwalior was good. A nine-point Likert-type response format ranging from strongly disagree to
strongly agree was used for all indicators. Brady et al. (2005) suggest that use of a nine-point scale is
more successful in maximising respondent specificity compared to the more commonly used five- or
seven-point response format. See Appendix A for item measures.
Upon collection of data, all scales were subjected to a purification process. This involved
recommended assessments of dimensionality, reliability, and validity (Anderson and Gerbing, 1988).
To assess reliability and validity of the model a confirmatory factor analysis (CFA) using LISREL8.7
was conducted. We followed the two-step method recommended by Anderson and Gerbing (1988). To
assess model fit, a covariance matrix was created (Jöreskog and Sörbom, 2002). There are various
ways to test construct validity of a model. In covariance-based structural equation modelling, construct
validity is usually tested with an investigation of convergent and discriminant validity (Gefen et al.,
2000). In general, convergent validity can be assessed via internal consistency by: 1) looking at the
correlations among items which constitute a scale; 2) using scales that have been accepted, used and
proven valid in the field by other researchers; and 3) looking at the strength and significance of item
loadings. Following Homburg and Pflesser (2000), we calculated composite reliability and average
variance extracted scores for scales comprising more than two items, and coefficient alpha for two-
item scales. Composite reliability and coefficient alpha scores should be greater than 0.7 (Nunnally
and Bernstein, 1994). A model can be considered to have good convergent validity if the AVE is
greater than 0.50 as this indicates that more of the variance in the observed variables is explained by
16
the latent construct than by other, external influences (Fornell and Larcker 1981). For the results of the
CFA testing, see Table 2.
<Take in Table 2 about here>
Composite reliability for the study constructs ranged from 0.82 to 0.91 (see Table 2). Parameter
estimates of the hypothesised constructs were high and significant (coefficients ranged from 0.68 to
0.82). The average variances extracted relating to constructs in the model ranged from 0.64 to 0.82.
The fit indices associated with the CFA exceeded acceptable thresholds (Hair et al., 2006). A
combination of fit indices were used because this achieves a good balance between Type I and Type II
error rates when assessing model fit (Hair et al., 2006; Hu and Bentler, 1999). The goodness-of-fit
indices were as follows: NFI = 0.981; CFI = 0.993; RMSEA = 0.055. NFI and CFI indices greater than
0.9 indicate a good model fit (Hair et al., 2006). A root mean square error of approximation (RMSEA)
of less then .05 represents a good fit, whilst a value between 0.05 and 0.08 indicates an acceptable fit
(Browne and Cudeck, 1993). We also considered the ratio of the chi square statistic to the degrees of
freedom present in the model. Diamantopoulos and Siguaw (2000) note that ratios between 5:1 and 2:1
have been preferred in the literature, although Jöreskog and Sorbom (1982) argue that the ratio should
be as close to one as possible. Our test of the chi square to degrees of freedom ratio produced a result
of 1.82 (χ2/df [1317.3/722]).
<Take in Table 3 about here>
As a further test of the convergent validity of the items in each scale and the discriminant validity
between each scale, we analysed each possible pair of constructs by comparing their fit in terms of a
unidimensional model and a two-factor model (Netemeyer, Johnston and Burton, 1990). For all
twenty-one pairs of constructs (see Table 3), the two-factor solution provided a better fit than the
unidimensional solution (i.e., change in X2 value of > 3.84 with a change in degrees of freedom of 1)
offering support for the convergent and discriminant validity of each scale (Anderson and Gerbing,
17
1988). Finally, the correlations between constructs were in the a-priori expected directions, supporting
the nomological validity of the constructs used in the study (Hair et al., 2006). These results taken as a
whole support the psychometric soundness of the measures used in our study (Anderson and Gerbing,
1988; Netemeyer, Johnston and Burton, 1990).
<Take in Table 4 about here>
Results
Table 4 reveals the results of the structural model, along with the hypothesised paths, indicating that
all but one of the hypotheses gained support. Specifically, H1 and H3 were supported as customers‘
perceptions of service quality were positively related to customers‘ perceptions of value (t-value =
12.80) and customer satisfaction (t-value = 5.32). Similarly, customer satisfaction was positively
related to customers‘ behavioural intentions (t-value = 13.59), lending support to H4. Support was
found for H5 and H6, in that customers‘ perceptions of service encounter quality were positively
related to customers‘ perceptions of service quality (t-value = 2.21) and customer satisfaction (t-value
= 2.70). Customer orientation was positively related to service orientation (t-value = 14.08),
customers‘ perceptions of service encounter quality (t-value = 3.46) and customers‘ perceptions of
service quality (t-value = 2.82), supporting H7a, H7b and H7c. Service orientation was positively
related to customers‘ perceptions of service encounter quality (t-value = 3.08) and customers‘
perceptions of service quality (t-value = 4.04), lending support to H8a and H8b. The only hypothesis
that did not receive support was H2 as perceived value was not found to be positively related to
customer satisfaction (t-value = 1.29).
DISCUSSION
Our study sought to extend previous work on service evaluation models by extending the model in two
ways: firstly, through the addition of customer orientation and service orientation behaviours; and
18
secondly, by investigating the model within the context of Indian grocery shopping. Overall, our
results tend to confirm earlier work in the area by Brady et al. (2005) and Cronin, Brady and Hult
(2000). We will now discuss each of our results in turn.
One of the major contributions of our work to the literature is the finding that customer orientation is
positively associated with service orientation, customers‘ perceptions of service encounter quality, and
customers‘ perceptions of service quality. This supports earlier work on customer orientation,
identifying it as an important construct when customers formulate their evaluations of service
provision (Susskind, Kacmar and Borchgrevink, 2003). It may seem simplistic that employees who are
customer oriented seem to make their customers happier than those who are not, but according to
Susskind, Kacmar and Borchgrevink, (2003) this does not diminish the importance of the customer
orientation construct. Managers should therefore concentrate on trying to instil a customer orientation
amongst their employees. More specifically, managers need to get employees to ‗buy in‘ to a customer
orientation philosophy which would then carry over into related behaviours (Saxe and Weitz, 1982).
Perhaps exploring the possibility of incorporating this element into employee incentive schemes might
lead to fruitful results.
The second major finding is that service orientation is positively associated with customers‘
perceptions of service encounter quality and customers‘ perceptions of service quality. Once again,
this adds to recent service orientation literature, confirming the important role that service orientation
plays in the majority of occupations (Beatson, Lings and Gudergan, 2008; Hogan, Hogan and Busch,
1984; Saura et al., 2005). Both customer orientation and service orientation appear to be at the heart of
delivering customised, quality service (Gwinner et al., 2005). As with customer orientation, it becomes
crucial for managers to attempt to instil in their employees a service orientation which should help
them to determine how to deliver demonstrably higher quality services than competitors. This has
implications for both the recruitment and training of service employees (Cran, 1994; Gwinner et al.,
2005). Furthermore, how an organisation manages its internal practices may have implications for how
its customers are subsequently treated (Cran, 1994; Schneider and Bowen, 1985).
19
Customers‘ perceptions of service encounter quality were found to be positively related to customers‘
perceptions of service quality and customer satisfaction. This finding shows that customers‘
perceptions of individual service encounters have an important part to play in the service evaluation
process. Academically, this augments earlier work on service encounter quality (Jayawardhena et al.,
2007), although the current study was conducted in a retail rather than business-to-business context.
Similar work in a retail context indicated that service encounter quality was found only to influence
service quality perceptions and not customer satisfaction (JFAL, 2007). Form a practical standpoint,
managers should be mindful that the quality of each individual service encounter could influence both
customers‘ overall service quality perceptions and their satisfaction, which in turn influences loyalty
behaviours. It shows that each and every service encounter is important, and managers need to make
their employees aware of this. This highlights the importance of being able to maintain high levels of
consistency in service delivery.
Customers‘ perceptions of service quality were found to influence customers‘ perceptions of value.
However, the service quality-value relationship may diminish in usefulness when it is considered that
our later findings indicate that value has no significant positive relationship with customer satisfaction
in the current context. Rather, our findings call into question the place that value has within service
evaluation models investigated in an Indian context. Indeed, our model appears to relate more to
earlier models of service evaluation which focused solely upon the service quality-satisfaction-
behavioural intentions framework. This finding is in direct contrast to the arguments put forward by
Cronin et al. (1997) regarding the importance of including the concept of value in service evaluation
models. It is clear from this that investigation of the construct of value is warranted.
Service quality having a positive association with customer satisfaction is something that was very
much expected. This seems to be one of the caveats of services marketing, and when combined with
the finding that customers‘ satisfaction influenced behavioural intentions, perhaps this goes some way
towards establishing the service quality-satisfaction-behavioural intentions relationship as an empirical
20
generalisation within services marketing. The current results, when combined with similar recent work
in China (JFAL, 2007), could be argued to add somewhat to the global applicability of service
evaluation models. For managers, it appears that prediction of customers‘ loyalty behaviours in non-
Western contexts tends to follow a similar pattern to that of Westernised areas. It might be that
customers who perceive high quality service and are satisfied indicate positive behavioural intentions,
no matter which country or culture they represent. This could have implications for international
marketing strategy, as similar strategies could be implemented across borders.
Perhaps of more interest to researchers is our lack of a result concerning perceived value and its
association with customer satisfaction. Our finding highlights a large discrepancy between the current
study and previous service evaluation work. Cronin et al. (1997) found value to be a significant
contributor to behavioural intentions in 6 different service industries. Cronin, Brady and Hult (2000)
found a significant relationship in each of their four overall models (t-values ranged from 12.25 to
20.22) and, when examining industry-by-industry, found significant results in six out of six industries
(t-values ranged from 4.12 to 5.31). Similarly, Brady et al. (2005) in their overall models found this
relationship to be significant whenever tested for. Likewise, when they ran their country-by-country
comparisons, the relationship was found to be significant whenever tested for (14 out of 14 times). Of
course, it may be that in some aspects of service evaluation, India‘s different culture has a role to play
and this lack of a significant result simply stresses the need for further examination of the value-
satisfaction relationship in similar cultures and countries, such as Pakistan, Nepal, or Sri Lanka. For
managers, the current finding indicates that value is not necessarily a major concern for Indian
customers when determining whether they are satisfied with a particular retail experience. If we are to
speculate on this finding, the purchasing culture might offer some insights – perhaps in the Indian
context bargaining is more common than the western context so that the effect of value on satisfaction
is complicated by satisfaction with the bargain.
Naturally, with any research project, it is prudent to consider limitations and potential improvements
with hindsight. Firstly, this study examined grocery shoppers. The validity of the findings could have
21
been strengthened had other types of service customers been examined. It could also have been useful
to consider potential moderators that could influence service evaluation models, such as a more
detailed examination of cultural differences (c.f., Hofstede, 1980). Second, we measure all constructs
in our conceptual model with one survey conducted at one point in time. While attempts were made to
mitigate the common method variance problem through our survey design (we ensured that all
constructs were separated and the order of construct measures were mixed), its impact can only be
conclusively ruled out if data were collected from different sources or via longitudinal methods. Third,
one potential research stream concerns the construct of value and its applicability in an international
context. Further work is certainly necessary before current service evaluation models can be said to be
globally applicable, and we would urge future work to seek out significantly culturally different
markets to investigate. In addition, a greater range of employee behaviours could have been examined
as possible antecedents to the service evaluation model (e.g., organizational citizenship behaviours).
Furthermore, our study is based upon a cross-sectional analysis, and interpretation of relationships
between variables, especially with regards to inferences of causality, should be done with caution. In
addition, the final construct in our model was behavioural intentions, which may or may not accurately
model customers‘ actual behaviours.
In conclusion, while our study has demonstrated that new insights are possible by examining different
markets, we urge that similar studies in other emerging markets, such as Pakistan, Nepal, or African
nations, and in other industries, such as travel or insurance, are undertaken to deepen our
understanding of extended service evaluation models. This is especially true of studies that seek to
examine the applicability of what tend to be highly ‗Western‘ models of consumer behaviour. Future
work could also look to examine in more detail differences between men and women with regards to
their approaches to service evaluation. Possible differences in gender of employees and customers
could also represent a valid future research pathway. The expansion of service evaluation models also
represents an interesting avenue for future work to explore. Further research could look to examine the
influences of managerial or organisational inputs into the service evaluation process (e.g., leadership).
For example, investigation of antecedents to customer orientation (as per Brown et al., 2002) or
22
service orientation (as per Saura et al., 2005) could help to expand service evaluation models, or
perhaps offer managers more controllable antecedent factors. It would also be interesting to see
models of service evaluation tied into objective performance measures in future studies, as per
Maxham, Netemeyer and Lichtenstein (2008). Currently, as it now stands, this study represents a
extension of prior service evaluation models and we hope that it stimulates further research into this
area of services marketing.
23
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32
Appendix – Figure and Tables
Figure 1: The Influence of Customer Orientation and Service Orientation on Service Evaluation
Customer
Orientation
H7b
H4
H2 H1
H3
H6
H5
H8a
H8b
H7c
Service
Orientation
H7a
Service
Quality
Service Encounter
Quality
Value
Satisfaction Behavioural
Intentions
33
Male 133 49.00% Female 138 51.00%
Age N % Monthly Income (US$) N %
Under 21 28 10.30% Less than $370.00 55 20.30%
21 to 30 63 23.30% $371.00 to $616.00 91 33.58%
31 to 40 66 24.30% $617.00 to $1232.00 93 34.32%
41 to 50 71 26.00% Over $1233.00 32 11.81%
Over 51 43 16.00%
Gender
Table 1: Demographic Characteristics of Respondents
34
n 271 NFI 0.981
χ2 1317.30 CFI 0.993
df 722 RMSEA 0.055
Customer Orientation (CO 8 items) Service Orientation (SO 5 items)
Composite Reliability 0.88 Composite Reliability 0.87
Average Variance Extracted (AVE) 0.80 Average Variance Extracted (AVE) 0.74
Parameter Estimates Range 0.68 – 0.75 Parameter Estimates Range 0.75 – 0.79
Service Quality (SQ 8 items) Value (VAL 3 items)
Composite Reliability 0.91 Composite Reliability 0.82
Average Variance Extracted (AVE) 0.82 Average Variance Extracted (AVE) 0.64
Parameter Estimates Range 0.73 – 0.76 Parameter Estimates Range 0.77 – 0.79
Satisfaction (SAT 5 items) Service Encounter Quality (SEQ 7 items)
Composite Reliability 0.86 Composite Reliability 0.91
Average Variance Extracted (AVE) 0.73 Average Variance Extracted (AVE) 0.80
Parameter Estimates Range 0.72 – 0.75 Parameter Estimates Range 0.74 – 0.78
Behavioural Intentions (BI 4 items)
Composite Reliability 0.86
Average Variance Extracted (AVE) 0.71
Parameter Estimates Range 0.75 – 0.82
Table 2: Confirmatory Factor Analysis Results
35
Customer
Orientation
Service
Orientation
Service
Quality
Service
Encounter
Quality
Value Satisfaction Behavioural
Intentions
Customer
Orientation ----
442.82 502.32 329.07 275.41 216.69 63.83
755.34 852.08 768.55 621.74 471.90 268.56
Service
Orientation 312.52 ----
372.30 308.23 268.90 149.09 190.79
797.14 709.32 623.57 425.45 422.96
Service
Quality 349.76 424.84 ----
450.14 334.76 234.64 51.89
812.53 692.49 521.56 258.43
Service
Encounter
Quality
439.48 401.09 362.39 ---- 335.10 207.32 145.02
606.18 444.27 427.09
Value 346.33 354.67 357.73 271.08 ---- 113.00 164.88
361.28 348.91
Satisfaction 255.21 276.36 286.92 236.95 248.28 ---- 35.48
229.67
Behavioural
Intentions 204.73 232.17 206.54 282.07 184.03 194.19 ----
Above Diagonal: Top Row - Chi Square when correlations are freed; Bottom Row - Chi Square when
correlations are restricted to unity; Below Diagonal: Difference between Chi Square Values
Table 3: Convergent and Discriminant Validity Test results
36
Path Coefficient t-value R2 Fit Indices
H1 SQ VAL 0.938 12.80 SO 0.88
H2 VAL SAT -0.149 1.29 * SEQ 0.86 χ2 = 1224.114
H3 SQ SAT 0.907 5.32 SQ 0.97 df = 735
H4 SAT BI 0.929 13.59 VAL 0.85 CFI = 0.993
H5 SEQ SQ 0.448 2.21 SAT 0.89 NFI = 0.983
H6 SEQ SAT 0.259 2.70 BI 0.78 NNFI = 0.993
H7a CO SO 0.923 14.08 RMSEA = 0.0414
H7b CO SEQ 0.499 3.46
H7c CO SQ 0.314 2.82
H8a SO SEQ 0.448 3.08
H8b SO SQ 0.469 4.04
* path not significant at p < 0.01; all other paths significant at p < 0.01
Note: CO: Customer Orientation; SO: Service Orientation; SQ: Perceived Service Quality; SEQ: Perceived
Service Encounter Quality; VAL: Perceived Value; SAT: Customer Satisfaction; BI: Behavioural Intentions.
Table 4: Path Estimates and Fit Indices for Model Testing
37
Appendix A – Questionnaire Items
Customer Orientation (CO)
1. Their employee tried to help me achieve my goals by satisfying me
2. Their employee had my best interests in mind
3. Their employee asked me to discuss my needs with them
4. Their employee influenced me with information rather than by pressure
5. Their employee tried to find out what kind of service would be most helpful to me
6. Their employee tried to bring me together with a solution that helped me
7. Their employee was willing to disagree with me in order to help me make a better decision
8. Their employee gave me an accurate expectation of what their services will do for me
9. Their employee tried to figure out what my needs were [*]
10. Their employee tried to help me achieve my goals [*]
11. I was offered the service that was best suited to the my needs [*]
12. Their employee answered my questions as correctly as possible [*]
Service Orientation (SO)
1. Their employee enjoyed helping me
2. Their employee enjoyed assisting me with solving my problems
3. I got along well with the employee
4. Their employee provided courteous service
5. Their employee was considerate of my needs
Service Quality (SQ)
1. Their employees offer the personal attention I need from them
2. The behaviour of employees instils confidence in me
3. Their employees are courteous
4. I receive enough individual attention from their employees
5. I can depend on receiving prompt service from their employees
6. I feel safe conducting business with their employees
7. Their employees are able to answer my questions
8. Their employees are never too busy to respond to my requests
9. Their employees have my best interests at heart [*]
10. Their employees understand my specific needs [*]
Service Encounter Quality (SEQ)
2. Their employee communicated coherently
3. Their employee was courteous
4. Their employee provided an informative interaction with me
5. Their employee showed familiarity to me during our encounter
6. Their employee tried to build a friendly relationship with me
7. Their employee was not pushy
8. Their employee focused on not being condescending when communicating with me
9. Their employee possessed the necessary qualifications to provide the service [*]
Value (VAL)
1. Their products are excellent value
2. At this organisation, I get a great deal for my money
3. What I get from this organisation, and its cost, makes it great value
38
Satisfaction (SAT)
1. I am satisfied with the service I receive from this organisation
2. I am happy with the service I receive from this organisation
3. I am delighted with the service I receive from this organisation
4. This organisation‘s services meets my expectations
5. I think I did the right thing when I chose the service from this organisation
Behavioural Intentions (BI)
1. I would classify myself as a loyal customer of this organisation
2. If asked, I would say good things about this organisation
3. I would recommend this organisation to a friend
4. My usage of this organisation has been high
All items were measured on nine-point scales anchored by 1 = strongly disagree to 9 = strongly agree
An item marked with [*] was deleted during the measurement purification process