CHAPTER 2 REVIEW OF RELATED LITERATURE

Introduction

This chapter will present an overview of current literature in the frame of the
presented research problem. The review will cover discussion on service quality
construct and its determinants, models for measuring service quality and the
interplay between service quality and customer satisfaction. Key theories and
arguments are identified from a wide range service quality, customer satisfaction
and higher education literature.

2.1. Service Quality In today‟s competitive environment delivering quality service

is considered an essential strategy for success and survival
(Parasuraman ,Zeithaml and Berry, 1985). Service quality is a concept that has
aroused considerable interest and debate in the research literature because of
the difficulties in both defining it and measuring it with no overall consensus
emerging on either (Wisniewski, 2001). The reason as to why it is difficult to
define and measure service quality is the very essence of services intangibility,
perishability, heterogeneity and inseparability of production and consumption as
their main characteristics.

There are many researchers who have defined service quality in different ways.
Lehtinen U. and J. R. Lehtinen (1982) conceptualized service quality as comprised
of three dimensions: physical quality; interactive quality, and corporate quality.
Physical quality dimensions refer to the quality of physical elements of service,
including tangible products elements that accompany the service offer,
supporting equipment and the physical environment where service takes place.
Interactive quality dimension refers to the quality of interaction between
customer and other elements of service experience, i.e. service personnel, other
customers, and machinery and equipment. Corporate quality is the quality
dimension which is developed through the years of existence of a service
company.

The service quality from the service customer’s perspective means how well the
service meets or exceeds expectations. Because of the customer – oriented
market, service quality is generally defined from the customer’s perspective,
which is usually termed as perceived service quality (Fisk, Grove and John, 2004).
An examination of the available literature suggests that the three themes
underlying the concept of „service quality‟ are that, firstly, service quality is more
difficult for the consumers to evaluate than goods quality. Secondly, that a
perception of service quality is the result of consumers‟ comparison of their
expectations with actual service delivery and finally service quality evaluations are
not made solely on the outcomes of service, they also involve evaluations of the
process of service delivery (Parasuraman et al., 1985).

2.1.2. Models for Measuring Service Quality

During the last three decades, a lot of scientist work on service quality
measurement and many measurements suggested but only some of them were
acceptable and more used by scientists‟. There are mainly two types of service
quality conceptualizations that emerged in the 1980s from the Nordic (Gronroos,
1984) and American (Parasuraman, Zeithaml, and Berry, 1985, 1988) schools of
thought. 2.1.2.1. Nordic (European) model The Nordic model, originated by
Christian Gronroos (1988) had found that two fundamental dimensions have an
impact on the experienced service and the derived customer‟s perceived service
quality. These two dimensions are the technical or outcome dimension and the
functional or process related dimension. The technical quality represents what
the customer actually receives from the total service as a result of the process
and is further known as the outcome dimension. Services are designed to produce
a somehow tangible outcome and therefore customers can think of the quality of
services varying according to the outcome received (Gronroos, 1988). The
functional quality dimension is how the customer receives the service and it
concerns the process of delivering the service. The process delivery is conceived
of as the moment of truth because it encompasses the pivotal moment in the
service experience where the business is truly exposed to the customer through
different levels of customer interaction (Svensson, 2006). These personal or non-
personal interactions will evidently affect the customers‟ evaluation of the 13
perceived service quality. Hence, the evaluation is related to the psychological
level of performance and could be based on the behavior of the company‟s
employees, the skills of the employees or the accessibility of the personnel
needed in the process. A third dimension identified by Gronroos is the corporate
image of the service supplier i.e. the customers‟ view of the company. The
„image bubble‟ functions as a buffer or filter for the technical and functional
quality. Image is considered to have the ability to influence customers
‟perception of the goods and services offered(Zeithaml and Bitner ,1996).Thus,
image will have an impact on customers‟‟ buying behavior .Image is considered
to influence customers‟ mind through the combined effects of advertising ,public
relations ,physical image ,word of mouth and their actual experiences with the
goods and services (Normann,1991).

Gronroos (1988) Six sub-dimensions of service qualities were identified

(Grönroos, 1988): (1) professionalism and skills, (2) attitudes and behavior, (3)
accessibility and flexibility, (4) reliability and trustworthiness, (5) recovery, and (6)
reputation and credibility. Professionalism and skills were regarded as
contributing to the technical quality: reputation and credibility - forming an
image; Expected Quality -Market Communication -Image -Word-of-mouth -
Customer needs Functional Quality: How Technical Quality: What Image
Experienced Quality Total Perceived Quality 14 the other four sub-dimensions are
related to process and therefore correspond to the functional quality dimension.
2.1.2.2. Criticism of the Nordic Quality Model As per Gronroos(2001),the Nordic
model has been introduced conceptually but it lacks operationalization, it does
not offer a practical measurement tool. The focus of the Nordic European school
was on “the conceptualization of service quality without providing strong
empirical evidence to support their position” (Ekinci, Riley, & Fife-Schaw, 1998).
The aforementioned critique of the model is a corner stone of the Nordic school
overall. In this school, theory generation is considered more important to the
development of a discipline as opposed to theory acting as an antecedent to
hypotheses-testing. It includes constant comparison between new and existing
theory and in certain instances, traditional theory testing (Gronroos &
Gummesson, 1985). 2.1.2.3. American model Service quality is viewed as a multi-
dimensional concept. Consumers assess and evaluate a number of factors or
dimensions. The American approach proposes that service quality consists of
reliability, responsiveness, empathy, assurance and tangibles dimension, known
as SERVQUAL (Parasuraman et al., 1996). This model is based on expectancy -
disconfirmation theory, views that service quality is a gap between customers‟
perceptions‟ and expectations‟ of service performance. They try to cover the
weakness of Nordic model by offering a new way for measuring service quality.
SERVQUAL was created to measure service quality and is based on the view that
the customer‟s assessment of service quality is paramount. It is operationalized in
terms of the relationship between expectations and outcomes (Gilmore, 2003) .It
is widely accepted that customers compare the service they expect with
perceptions of the service they receive in evaluating service quality (Grönroos,
1982); (Parasuraman et al., 1985). The instrument has been designed to be
applicable across a broad spectrum of services as such, it provides skeleton
through its expectation/perceptions format encompassing statements for each of
the five service quality dimensions (Parasuraman, et al., 1988). 15 The exploratory
research conducted by (Parasuraman, et al., 1985) reviled that the criteria used
by consumers in assessing service quality fit 10 potentially overlapping
dimensions. these dimensions where, tangibles, reliability, responsiveness,
communication, credibility, security, competence, courtesy,
understanding/knowing customers and access (Parasuraman, et al.,1988)as cited
on (Philip and Hazlett,1997) These were subsequently condensed into five
dimensions of service performance known as SERVQUAL namely this five scale
items are: 1. Reliability: is defined as the ability to perform the promised service
dependably and accurately. 2. Responsiveness: is the willingness to help
customers and to provide prompt service. 3. Assurance: is defined as employees'
knowledge and courtesy and the ability of the firm and its employees to inspire
trust and confidence. 4. Empathy: is defined as the caring, individualized attention
the firm provides its customers. 5. Tangibles: are defined as the appearance of
physical facilities, equipment, personnel, and communication materials. Figure 2:
SERVQUAL Model Responsiveness Assurance Empathy Reliability Expectation
(Expected service) Perceived Service Quality Perception (Perceived Service)
Tangibility 16 Source: Parasurman, Zeithaml &Berry (1988) 2.1.2.4. Criticisms of
SERVQUAL Not with standing its growing popularity and widespread application,
SERVQUAL has been subjected to a number of theoretical and operational
criticisms (Buttle, 1996). SERVQUAL‟s five dimensions may not cover all service
aspects of the organization and are not universal. The number of dimensions
comprising service quality is contextually determined; Babakus and Boller (1992)
suggested that the number of service quality dimensions is dependent on the
particular service being offered. Andersson (1992) pointed to SERVQUAL‟s failure
to draw on previous social research, particularly economic theory, statistics, and
psychological theory. The methodology of comparing the gap between
expectation and perception has also attracted criticism. Cronin and Taylor (1992;
1994) argued that SERVQUAL is paradigmatically flawed because of its ill-judged
adoption of the disconfirmation model. Babakus and Boller (1992) found that the
use of a “gap” approach to service quality measurement is “intuitively appealing”,
they suspected that the “difference in scores does not provide any additional
information beyond that already contained in the perception component of the
SERVQUAL scale”. They found that the dominant contributor to the gap score is
the perception score. Lewis (1993) criticized the use of a seven-point Likert scale
for its lack of verbal labeling for points two to six which may cause respondents to
overuse the extreme ends of the scale. Babakus and Mangold (1992) suggested
using five- point Likert scale on the grounds that it would reduce the “frustration
level” of respondents and increase response rate and quality. The double
administrations of perception and expectation questionnaires may lead to
boredom and confusion and may also be deemed too time consuming (Carman,
1990). 2.1.3. Service Quality in Higher Education Educational service is intangible
and it is produced by the service provider (teacher) and consumed by users
(students) at the same time. Service quality in higher education institutions
cannot be objectively measured, but it is a complex and diverse concept that
should be explored (Hameed & Amjad, 2011). The last decade was characterized
by increasing of competition among higher education institutions. High quality
service is an essential prerequisite for competitiveness and survival in 17 the
market of higher education. The biggest challenge for academic institutions is
which level of quality institutions must achieve in order to remain competitive in
the market. To successfully overcome the aforementioned challenges higher
education institutions are required to identify students' needs and understand the
formation of student perceptions of service quality. Students' expectations
significantly affect the assessment of service quality, and students‟ satisfaction.
For the admission to higher education institutions, students' expectations are
largely based on their past experiences of high school and the positive experience
of students who attend or have attended that program. Besides taking care about
the quality of services, academic institutions are becoming more aware of the
importance of student satisfaction since students' satisfaction has a positive
influence on their decision to continue their education at that institution.
Students' satisfaction influences on student motivation, their attendance and
increase of revenue of educational institution (Vranesevic, Mandić, &Horvat,
2007). 2.1.4. Customer expectations Customer expectations are beliefs about a
service that serve as standards against which service performance is judged
(Parasuraman et al.,1994); what customers think a service provider should offer
rather than what might be on offer (Parasuraman et al.1988). Expectations can be
formed from a variety of sources such as the customer‟s personal needs and
wishes. The customer‟s personal philosophy about a particular service, by
promises (staff, advertising and other communications), by implicit service
promises (such as price and the tangibles associated with the service), by word-
of-mouth communication (with other customers, friends, family and experts), as
well as by past experience of that service (Zeithaml and Bitner, 1996). Customer
expectations are internal standards that customers use to judge the quality of a
service experience. Customers' expectations about what constitutes good service
vary from one business to another. Customer expectations embrace several
different elements, including desired service, adequate service, predicted service,
and a zone of tolerance that falls between the desired and adequate service levels
(Lovelock and Wright, 1999). 1. Desired customer expectation: the level of service
the customer hopes to receive or a combine of what the customer believes about
the performance of service. 18 2. Adequate service expectation: the minimum
level of service that a customer will accept without being dissatisfied. 3. Predicted
Service: the level of service quality a customer believes a firm will actually deliver.
4. Zone of tolerance: the range or gap in which customers do not particularly
notice service performance. It is the extent to which customers recognize and are
willing to accept. 2.1.5. Perceived Service Quality Perceived service quality results
from comparisons by consumers of expectations with their perceptions of service
delivered by the suppliers (Parasuraman et al., 1988). It is argued that the key to
ensuring good service quality perception is in meeting or exceeding what
customers expect from the service. Thus, if perception of the actual service
delivered by the supplier falls short of expectation, a gap is created which should
be addressed through strategies that affect the direction either of expectations or
perceptions, or both (Parasuraman et al., 1988). Chowdhury and Abe (2002) state
that customers‟ perceptions of quality are generally formed on the basis of an
array of cues. These cues basically fall into two categories: intrinsic and extrinsic
cues. Intrinsic cues refer to attributes that cannot be changed without changing
the physical characteristics of the product. Extrinsic cues, however, are attributes
that are not part of physical product. Intrinsic cues are considered as the
fundamental service qualities while extrinsic cues are the external or non-
fundamental service characteristics of a university.

2.1.7. Customer Satisfaction

Customer satisfaction, as a construct, has been fundamental to marketing for

over three decades. Customer satisfaction has been treated as one of the most
important factors for all company and firms that provide products or service. It is
all company’s goal to achieve customer satisfaction and through that the
company will gain competitive advantages to stay survival.

In addition, marketers consider satisfying customers as a key element of business

activities especially in competitive market (Anderson et al., 1994). Parker and
Mathew (2001) expressed that there are two basic definitional approaches of the
concept of customer satisfaction. The first approach defines satisfaction as a
process and the second approach defines satisfaction as an outcome of a
consumption experience. These two approaches are complementary, as often one
depends on the other. Customer satisfaction as a process is defined as an
evaluation between what was received and what was expected, emphasizing the
perceptual, evaluative and psychological processes that contribute to customer
satisfaction. As also noted by other scholars, the process of satisfaction definitions
concentrates on the antecedents to satisfaction rather than satisfaction itself.
Satisfaction as a process is the most widely adopted description of customer
satisfaction and a lot of research efforts have been directed at understanding the
process approach of satisfaction evaluations This approach has its origin in the
discrepancy theory Porter(1961), which argued that satisfaction is determined by
the perception of a difference between some standard and actual performance.

2.1.7.2. Customer Satisfaction Measurement

There are different models used to measure customer satisfaction proposed by

different scholars. From the various models described by researchers, two of the
models of customer satisfaction are the Kano model and American Customer
Satisfaction Index (ACSI). The Kano model was developed in 1984 by Morikis Kano
and his team. Kano model of customer satisfaction classifies attributes based on
how they are perceived by customers and their effect on customer satisfaction.
The model is based on three types of attributes basic or expected attributes which
are the attributed without any major significance of worth mentioning,
performance or spoken attributes which are the expressed expectation of the
customer surprise and delight attributes. Are the attributes which are beyond the
customer’s expectations.

Kano model is used to determine the customer expectations regarding product –

it is used for analyzing customer needs and determining product requirements.
The American Customer Satisfaction Index (ACSI) is the national indicator of
customer evaluations of the quality of goods and services available to U.S
residents since 1994.The ACSI model is a cause- and- effect model with indices for
drivers of satisfaction,(Customer expectations, perceived quality, and perceived
value).Perceived quality is the first determinant of overall customer ,which is the
served market‟s evaluation of recent consumption experience, and is expected to
have a direct and positive effect on overall customer satisfaction. Perceived value
is the second determinant of overall customer, or the perceived level of product
quality relative to the price paid. It is a measure of quality relative to price laid.
Customer expectation is the third determinant of over satisfaction, which
measures the customer‟s anticipation of the quality of a company‟s products or
services. Expectations represent both prior consumption experiences, which
includes some no experiential information. 2.1.7.3. Benefits of Customer
Satisfaction Assessment Naumann (1995) expressed that the reasons for
measuring customer satisfaction may vary among companies, and the success of
the measurement depends on if the measurement is incorporated into the firm‟s
corporate culture or not. However, he suggested four reasons for measuring
customer satisfaction or four important roles of customer satisfaction
measurement:  To get close to the customer – this will help to understand
customers more, their needs, the attributes that are most important, and their
effect on the customer's decision making, the relative importance of the
attributes and the performance evaluation of the firm delivery of each attribute.
This process helps to provide enabling communication with customers. 
Measure continuous improvement - the important attributes of customers can be
incorporated into the internal measurement to evaluate the value-added process
in the company. This process involves comparing performance against internal
standards (process control and improvement), and comparing performance
against external standards (benchmarking).  To achieve customer-driven
improvement – the data collected from customers can be developed into sources
of innovations and this can help to achieve customer driven improvement. This
requires a comprehensive database and not 28 just records of sales. This process
helps to identify opportunities for improvement (quality costing).  To measure
competitive strengths and weaknesses - determine customer perceptions of
competitive choices and companies.  To link customer satisfaction measurement
data to internal system-the market share is not a gauge to measure customer
satisfaction; rather it represents quantity of customers. 2.1.7.4. Factors that
Affect Customer Satisfaction Satisfaction which is vaguely defined as fulfilling the
needs for which a good or service was made is viewed differently in various
industries, over various demographic backgrounds, as well as for individuals and
institutions. Moreover, it has a totally different approach when it comes to
services and products. All along we have been trying to understand quality of
services, quality of products, and satisfaction both in the arena of comfort and in
terms of utility that is, the product or service fulfilling the actual purpose for
which it was made and bought. This is however very important but the fore
mentioned intricacies about satisfaction cannot be under looked. It has been
identified that human needs, quality of services and products, the user-friendly
nature of product and services, and comfort assurance Bailey and Pearson (1983)
are some of the important determinants of customer satisfaction. Even though
different customers will require different levels and combinations of these
variables, they generally are important factors that affect customer satisfaction.
Matzler and Sauerwein(2002), went a step forward to classify factors that affect
customers‟ satisfaction into three factor structures; 1. Basic factors: these are the
minimum requirements that are required in a product to prevent the customer
from being dissatisfied. They do not necessarily cause satisfaction but lead to
dissatisfaction if absent. These are those factors that lead to the fulfillment of the
basic requirement for which the product is produced. These constitute the basic
attributes of the product or service. They thus have a low impact on satisfaction
even though they are a prerequisite for satisfaction. In a nutshell competence and
accessibility 2. Performance factors: these are the factors that lead to satisfaction
if fulfilled and can lead to dissatisfaction if not fulfilled. These include reliability
and friendliness. 29 3. Excitement factors: these are factors that increase
customers‟ satisfaction if fulfilled but does not cause dissatisfaction if not fulfilled
which include project management. 2.1.8. Relation between Customer
Satisfaction and Service Quality To achieve a high level of customer satisfaction,
most researchers suggest that a high level of service quality should be delivered
by the service provider as service quality is normally considered an antecedent of
customer satisfaction (Cronin, Brady, 2001); Anderson, Fornell and Lehmann,
1994; Cronin and Taylor, 1992). However, the exact relationship between
satisfaction and service quality has been described as a complex issue,
characterized by debate regarding the distinction between the two constructs and
the casual direction of their relationship (Brady, Cronin and Brand, 2002).
Parasuraman et al., (1994) concluded that the confusion surrounding the
distinction between the two constructs was partly attributed to practitioners and
the popular press using the terms interchangeable, which make theoretical
distinctions difficult. Interpretations of the role of service quality and satisfaction
have varied considerably (Cronin and Taylor, 1992; Parasuraman, Zeithaml, and
Berry, 1988). Parasuraman et al. confined satisfaction to relate to a specific
transaction as service quality was defined as an attitude. This meant that
perceived service quality was a global judgment, or attitude, relating to the
superiority of the service. Cronin and Taylor (1992) found empirical support for
the idea that perceived service quality led to satisfaction and argued that service
quality was actually an antecedent of consumer satisfaction. Asserted that
consumer satisfaction appeared to exert a stronger influence on purchase
intention than service quality, and concluded that the strategic emphasis of
service organizations should focus on total customer satisfaction programs. The
authors reasoned that consumers may not buy the highest quality service
because of factors such as convenience, price, or availability and that these
constructs may enhance satisfaction while not actually affecting consumers‟
perceptions of service quality. Cronin and Taylor (1992) later conceded that the
directionality of the service quality/satisfaction relationship was still in question
and that future research on the subject should incorporate multi item measures.
The authors suggested restricting the domain of service quality to long-term
attitudes and consumer satisfaction to transaction-specific judgments. 30 2.2.
Empirical Review DeShields et al.(2005) investigated the determinants of student
satisfaction and found that faculty performance , advising staff and lecturing ours
were the most important variables that influenced students‟ college experience
and ultimately satisfaction and retention .The result suggested that faculty
performance and classes had a positive and significant relationship with student
partial experience and advising staff had a positive but insignificant relationship
with student partial experience. A research Kitcharoen (2004) on IPA analysis of
service quality of PHEI in Thailand; in the study modified IPA model was used for a
sample of students and staff of ten randomly selected Thai universities to
investigate the importance of service attributes for service providers‟ and
student‟s evaluation of services. The gap between importance and performance
from both perspectives were also evaluated. The findings of this study discovered
that students‟ satisfaction with a service quality was significantly explained by
age, tangible importance, empathy importance, reliability performance, and
empathy performance. Meanwhile, staff members‟ satisfaction with a service
quality was significantly explained by tangible importance, reliability importance,
assurance importance, and reliability performance. In addition, the study released
that students‟ satisfaction with a service quality positively affected their pride in
the universities. Hassan et al (2008) studied service quality and student
satisfaction in Malaysia using a case study of private higher education institutions.
The findings indicated that the SERVQUAL dimensions of tangibility,
responsiveness, assurance, reliability and empathy had a significant positive
relationship with student satisfaction. Ana (2009) compared instruments for
measuring service quality in Higher Education and concluded that SERVPERF and
HEdPERF present the best measurement scales for examining SERVQUAL in
tertiary education area. Asaduzzaman et al (2013) also examined service quality
and student satisfaction in private universities in Bangladesh using a sample of
550 business students. They study used the SERVQUAL dimensions and the
findings indicated a significant correlation among all the dimensions with student
satisfaction. 31 Dennis (2013) assessed SERVPERF and HEdPERF instruments for
the appropriateness of them to measure service quality in the context of Hong
Kong postgraduate education. The values of the HEdPERF scales are found to be
higher than those of the SERVPERF scales, indicating a superiority of specific
instruments over generic instrument; however the reliability of SERVPERF can be
accepted for employment in the response context. Mang‟unyi and Govender
(2015) examined perceived service quality and customer satisfaction using
student‟s perception of Kenyan private universities using a sample of 522
students. The study used the HEdPERF framework to collect the research data.
Their findings indicated that the service quality dimensions had a positive and a
significant relationship with service quality dimensions had a positive and
significant relationship with service quality which in turn influenced customer
satisfaction. Sheeja et al (2014) investigated Higher Education Performance scale
in Indian Pharmacy education, it found out that there are four factors which
serves as factors for service quality, namely NA;AA,AC and RT. According to
Abdullah (2006a) students‟ perceived access is the most determining factor and it
is more important than other dimensions in determining SERVQUAL. Yen (2013)
carried out a research in Vietnam to measure SERVQUAL in HE sectors so to
comprehend clearly the perception of SERVQUAL in higher education from
Vietnamese students‟ perspective. In this study, SERVQUAL and SERVPERF scales
were both employed to measure the service quality. The research findings
showed Vietnamese students are mostly interested in the dimensions of
responsiveness, tangible elements and assurance. Zaharia (2014) conducted a
study in one of the biggest cities in Malaysia to examine the quality of services
provided to the public. The purpose of research was to measure SERVQUAL in
terms of LA by developing FM-SERVQUAL model of Parasuraman. (Zaharia,
Dogaru &Boaja, 2014).Research results showed that five variables of technology
and six variables of property were less the requirements. Rest of variables
displayed minimum quality level. Randheer (2015) HEdPERF was compared with
SERVPERF and HEdPERF-SERVPERF combined measurement instrument. It was
found that HEdPERF showed a fair fitness proving right representation of
population approximation. 32 2.3. Conceptual Framework and Hypothesis of the
Study A conceptual framework indicates how the researcher views the concept
involved in a study, especially relationships between concepts (Veal, Business
research methods, 2005). This study will be developed based on (Firdaus, 2005)
HEdPERF model. The aim of this model is to capture a context specific view of
service quality in higher education, enabling the whole student experience to be
measured. Firdaus (2005) has measured service quality in higher education in five
aspects as non-academic aspects, academic aspects, access, program issues and
reputation. Cronin and Taylor (1994) state the determinants of service quality
dimensions should be customers (students) rather than the management or
academic staff of the institutions of higher education.