Post on 22-Mar-2020
DEDICATION
This dissertation is dedicated to my parents: Smt. Rashmi Pathak and Shri. V.B.
Pathak who conceived the noble idea of sending me to school. It is also
dedicated to my In law’s: Late Mangala Bora and Late K.S. Bora, I would also
dedicate this to my husband and beloved partner Mr. Lalit Singh Bora, who
gives me support, love , and encouragement at all times. It is further dedicated
to my lovely son: Atharva Singh Bora.
CERTIFICATE
This is to certify that the research work presented in the Ph.D. thesis entitled “
An analysis of service quality and service performance of the Indian retail
banking industry” has been carried out by Shraddha Pathak, a student of Ph.D
under my supervision and guidance. She has fulfilled all the requirements for
the degree of Philosophy in Applied Economics, of the University of Lucknow,
regarding the nature and prescribed period of work. The work included in the
thesis is all original and done by her.
Date:
Place:
Dr. R.K. Maheshwari
Supervisor,
Professor, Department of Applied Economics
University of Lucknow
i
PREFACE
Purpose of The Study
Although a great number of research studies for service quality take place in the
context of developed countries, similar studies in the context of developing
counties are limited. This descriptive study focuses on the issue of measuring of
service quality in banking sector in a India. In line with the above stated
purpose, this paper attempts to examine the applicability of two popular
measures of service quality in the banking sector in Indian context. The two
popular multi-item scales of measuring service quality are SERVQUAL (
developed and modified by Parasuraman et al.1985, 1988, 1991,1994) and
SERVPERF ( a performanceonly
measure of service quality suggested by Cronin and Taylor, 1992,1994 ). While
measuring service quality through these scales, the dimensionality, reliability
and validity of the said scales are checked in Indian context. Also, the
correlations of service quality with customer satisfaction, positive word-of
mouth and loyalty are examined. From a diagnostic standpoint, SERVPERF
shows Tangibility dimension needs more resources as it is having lowest
performance score (P). However, SERVQUAL shows the greatest gap occurs in
reliability dimension, which requires
ii
According to the US news and world report market research on lost customers
by major companies shows that 14% of the customer left for better product, 9%
for cheaper product, 68% left because of poor service (service provider's
attitude) which can be easily avoided by designing effective customer Service
process, which enables the company to respond. The study clearly demonstrates
the significance of soft service quality in relation to product quality. (Sahil,
M.S.,2005) It is in this context we need to stress on the service quality part as
68% of the customers desert the service provider because of poor service
quality. The behavioral/attitude component of service is major determining
factor on the growth of the company, which complements the performance for
complete customer satisfaction. As such, service quality has become a very
important issue in marketing and has received much attention since the
deregulation of service sector in India, and thus increased competition, of many
service industries (e.g. : banking and telecommunications in the 1980's and
utilities in the 1990's). Service quality has become so important that some
businesses, not only need high levels of service quality for success, but in some
cases, need it for survival (Buzzel nd Gayle, 1987; Chen, Gupta and Rom,
1994; Ford Motor Company, 1990; Germano, 1992; Hauser and Clausing,
1988; Howcroft, 1993; Kearns and Nadler, 1992; Kettingerand Lee, 1995;
Koska, 1990; Lovelock, 1983; Phillips, Chang and Buzzel, 1983; Rudieand
iii
Wansley, 1985; Rust, Zahorik and Keiningham, 1995; Schmenner, 1986;
Thompson, DeSouza and Gale, 1985). Service quality is so important that
companies have gone to great efforts to evaluate and keep records of service
quality levels (Hauser and Clausing, 1988; Phillips, Chang and Buzzell, 1983;
Zeithaml, Parasuraman and Berry, 1990). It is essential to determine how to
achieve high service quality and how to communicate the benefits of service
quality (Howcraft, 1993). Companies such as Federal Express and Xerox are
well aware of the importance and have received rewards for their hard work in
providing quality services (Germano, 1992; Kearns and Nadler, 1992). By
offering high levels of service quality, the Hospital Corporation of America and
Ford Motor Company are another two well known companies that have
benefited in terms of higher returns on investment and higher profits (Ford
Motor Company, 1990; Koska, 1990). Further rewards can come in the form of
increased market share (Buzzel and Gayle, 1987; Phillips, Chang and Buzzel,
1983).
Service quality is defined as how well the service meets or exceeds the
customers'expectations on a consistent basis. The difficulty, however, is that
service quality, unlike product quality, is more abstract and elusive, because of
features unique to services: intangibility, inseparability, heterogeneity and
perishability and is therefore difficult to measure. To remedy this difficulty,
iv
Parasuraman, Zeithaml and Berry (1985) established the “gap model”.
Parasuraman, Zeithaml and Berry (1985) conducted focus groups and
interviewed executives. In doing so, they identified five "gaps" that can cause
quality problems in organizations. The first gap is the consumer expectations-
management perceptions gap. This gap resulted from discrepancies between the
perceptions of executives and the perceptions of consumers on things like
privacy and security issues. Basically, the executives did not understand the
customers' expectations. Service firms also experienced problems in providing
services as quickly as the customers wanted. This created the second gap, which
is called the management perception-service quality specification gap. The third
gap is the service quality specifications-service delivery gap. Executives realize
that this gap includes the vital role of the contact personnel. This is a difficult
aspect of providing services, because of the inconsistency in the behavior of
personnel. The fourth gap is the service delivery-external communications gap.
This gap forms, based on the capability of the firm to deliver what is promised
and to completely inform consumers of all the things the service firm is doing
that benefit customers. Firms should not promise the customer more than the
service firm is capable of delivering. These problems in quality created gap
five. The fifth gap is the difference between the expectations customers have
and the perceptions of service actually received and is pertinent to providing
v
high levels of service quality. That is, gap five is the expected service-perceived
service gap. Parasuraman, Zeithaml and Berry (1988) attempted to measure this
fifth gap by developing the SERVQUAL\ instrument. They performed
exploratory research to examine quality in four service settings (retail banking,
credit cards, securities brokerage, and product repair and maintenance) in order
to understand an area that is under researched and difficult to define. These
researchers found 10 dimensions (reliability, responsiveness, competence,
access, courtesy, communication, credibility, security, understanding/knowing
the customer and tangibles) that customers use across varying service industries
to form expectations and perceptions of services received.
Much of the attention focused on the service quality construct is attributable to
the SERVQUAL instrument developed by Parasuraman, Zeithaml & Berry
(1988) for measuring service quality. Several studies subsequently employed
the SERVQUAL to measure service quality and to assess the validity and
reliability of the scale across a wide range of industries and cultural contexts.
Little is known about service quality perceptions in India (Jain and Gupta,
2004) because research focus has primarily been on developed countries. Given
the relatively mature markets where the service quality scales have been
developed, it seems unlikely that these measures would be applicable to India
without adaptation. Angur, Nataraajan and Jahera (1999) examined the
vi
SERVQUAL in the retail banking industry and reported a poor fit of the scale
to the empirical data. Despite this, several researchers (Sharma and Mehta,
2004; Bhat, 2005) have used the SERVQUAL scale in similar settings with no
assessment of the psychometric soundness of the scale.
Cronin and Taylor (1992) were amongst the researchers who leveled maximum
criticism on the SERVQUAL scale. They provided empirical evidence across
four industries to corroborate the superiority of their 'performance only'
instrument over disconfirmation-based on SERVQUAL Scale
About The Study
The main aim of the research paper is to measure the service quality and service
performance offered by private banks operating in India. Moreover, it tries to
investigate the relationship between service quality, customer satisfaction and
loyalty. The five dimensions of SERVPERF model i.e. reliability, assurance,
tangibility, empathy and responsiveness were used to measure the quality of
service offered by the private banks. In order to achieve the aims, both primary
and secondary sources of data were used. The primary data were collected
through administrating questionnaire. Data from sample of 517 respondents,
who consist of customers of a private and a Government owned bank are
collected using convenience sampling. The past similar research used mail
survey. However, as the likely response rate of mail survey in India is very
vii
poor, personal administration of questionnaire is used in this study.
Respondents are mostly contacted at their homes and offices rather than in
banks. Most of the respondents refuse to fill up a lengthy a questionnaire in
banks when they are in a hurry. In fact, the above sample size is decided based
on time and cost constraints as well as cases-to-variables ratio required for
multi-variate analysis. The results of the regression test showed that offering
quality service have positive impact on overall customer satisfaction. The
research proves that empathy and responsiveness plays the most important role
in customer satisfaction level followed by assurance, reliability and finally
tangibility. The research findings also indicate offering high quality service
increase customer satisfaction, which in turn leads to high level of customer
commitment and loyalty.
viii
ACKNOWLEDGEMENTS
I am greatly indebted to a number of people, without whose assistance, guidance,
support, encouragements, and care, my dream of completing the doctoral program
would have remained a mirage while my hope smoulder in ashes. I am indeed grateful
to my mentor and guide, Dr. R.K Maheshwari, Professor, Dept. Of Applied
Economics, Faculty of Commerce, University Of Lucknow for his invaluable support,
encouragement, and constant constructive feedbacks, which kept me focused, and
Prof. A. Chatterjee, Dean, Faculty of Commerce, University of Lucknow, whose
contributions towards the completion this work is immeasurable. They collectively
brought their experiences, expertise, and in-depth knowledge of research to bear on the
entire process of writing this dissertation. In addition, I am grateful to numerous staff,
management, and customers of banks in Lucknow for their participation and support
for the survey.
I wish to offer special thanks to my Husband, Mr. Lalit Singh Bora for his
encouragement, and support throughout the entire doctoral program. I would like to
thank members of my family and friends, who helped me to complete this program.
ix
TABLE OF CONTENTS
Certificate
Preface i
Acknowledgments viii
List of Tables xii
List of Charts xiii
CHAPTER 1. INTRODUCTION
1.1 Introduction 1
1.2 Definition of Bank 3
1.2 History of banking 4
1.4 History of banking system in India 9
1.5 Economic reforms in banking system 16
1.6 Background of the Study 17
1.7 Origin of the Problem 24
1.8 Purpose of the Study 29
1.9 Focus of the Study 30
1.10 Significance of the Study 30
1.11 Terminology 33
1.12 Assumptions and Limitations 34
1.13 Theoretical/Conceptual Framework 35
1.14 Disposition of thesis 40
CHAPTER 2.REVIEW OF LITERATURE
2.1 Service and Quality 41
x
2.2 Meaning of Service Quality 42
2.2.1 Attributes of Service 45
2.2.2 Measuring Service Quality 49
2.2.3 Models in Service Quality 58
2.2.4 Perception 64
2.3 Concept of Customer Satisfaction 66
2.4 Critical Incident 74
2.5 Concept of Service Performance 77
2.5.1 Service profit chain model 78
2.5.2 Expectation 83
2.5.3 Service Performance gap model 85
2.5.4 Link between service performance and service Quality 96
2.6 Summary 97
CHAPTER 3. METHODOLOGY
3.1 Research Purpose 99
3.2 Hypothesis 100
3.3 Research Design 108
3.4 Measurable Variables 109
3.4.1 Independent Variables 110
3.4.2 Dependent Variables 114
3.5 Sample 116
3.6 Setting 117
3.7 Instrumentation/Measures 117
3.8 Data Collection 119
3.9 Data Analysis 120
xi
3.10 Coding of Data 120
3.11 Summary 123
CHAPTER 4. INTERPRETATION OF DATA
4.1 Introduction 124
4.2 Survey Participation 126
4.3 Demographic Information 127
4.4 Normality of data 138
4.5 Validity and Reliability 140
4.6 Analysis of Hypotheses 144
4.7 Summary of analysis 154
CHAPTER 5. CONCLUSIONS & RECOMMENDATIONS
5.1 Discussions 157
5.2 Implications 164
5.3 Conclusions 167
5.4 Recommendation for Future Research 168
BIBLIOGRAPHY 170
APPENDIX A. LETTER TO RESPONDENTS 185
APPENDIX B. SURVEY INSTRUMENT 187
xii
LIST OF TABLES
Table-1 Antecedents of Service Performance Gap Model 39
Table-2 Coding of Data 121
Table-3 Demographic Information for the Subjects Participating in the Study 128
Table-4 Descriptive Statistics for SERVQUAL variables for expectation dimensions. 129
Table-5 Customer and banker perception for most important and least important
feature
130
Table-6 Descriptive statistics for service quality measurement in terms of
CUSTOMER’s expectations
131
Table-7 Descriptive statistics for service quality measurement in terms of BANKER’s
expectations
132
Table-8 Descriptive statistics for measurement of service Performance variables for
customers
134
Table-9 Descriptive statistics for measurement of service Performance variables for
Bankers
135
Table-10 Data distribution for SERVPERF and SERVQUAL items 138
Table-11 Correlation Perception dimensions 140
Table-12 Reliability Coefficient (cronbach’s alpha) 141
Table-13 Factor Analysis(rotated component Matrix) 143
Table-14 Correlational Analyses for Antecedents of Service Performance and Service
Quality for Customers 146
Table-15 Correlational Analyses for Antecedents of Service Performance and Service
Quality(dependent variables) 148
Table-16 The Means, Standard Deviations, and t-tests for Differences In Antecedents of
Service Performance between Bankers and Customers 149
Table-17 Correlational Analyses for Antecedents of Service Performance and Service
Quality for Customers and Bankers 152
Table-18 The Means, Standard Deviations, and t-tests for Differences in Antecedents of
Service Performance between Government and Private Banks 154
Table-19 . Summary of Hypothesis Test Results 156
xiii
LIST OF CHARTS
Figure 1.1 Performance of bankex over 2002-2012 22
Figure 1.2 Performance of Sensex over 2002-2013 23
Exhibit 1 India’s Share of global banking 27
Figure 1.3 Relationship between service quality and customer satisfaction 36
Figure 1.4 Satisfaction Formation 67
Figure 1.5 Dynamic model of expectations 83
1
CHAPTER 1
INTRODUCTION
The aim of this chapter is to introduce the topic. Further, in this chapter we are discussing
and defining the relevant concepts related to our topic like service quality service performance,
background of the study, origin of the problem, purpose and significance of the study,
terminology, assumptions and limitations of the study are discussed along with an
introduction of the banking industry.
The banking system in India is significantly different from that of other Asian
Nations because of the country‘s unique geographic, social and economic
characteristics. India has a large population and land size, a diverse culture and
extreme disparities in income, which are marked among its regions. There are high
levels of literacy among a large percentage of its population, but at the same time,
the country has a large reservoir of managerial and technologically advanced talents
Between about 30-30% of the population reside in metro and urban cities and the
rest is spread in several semi urban and rural centers.
2
These features are reflected in the structure, size and diversity of the country‘s
banking and financial sector. Until now, banking is generally understood as a place
where financial services are offered viz. checking, savings, and providing credit to the
customers.
Cut throat competition and highly stressed profits have introduced the new marketing
practices in the Indian banking sector and has also brought the customer satisfaction to
the center of the focus. It has become very important for the banks to retain their
existing customer base as well as to enlarge the same. As the numbers of banks are
increasing; customers‘ expectations of service quality is growing. It has become
imperative to measure the service quality of the bank so that the service providers can
assess their level of service quality and identify the quality gaps for improvements.
Service Quality is seen to be one of the main determinants of customer satisfaction.
Product differentiation is impossible in a competitive environment like the banking
industry. Banks everywhere are delivering the same products. Thus, bank
management tends to differentiate their firm from competitors through service quality.
Service quality is an imperative element impacting customers‘ satisfaction level in the
banking industry. In banking, quality is a multi-variable concept, which includes
differing types of convenience, reliability, services portfolio, and critically, the staff
delivering the service. Process of service purchase and delivery is very complex for
both customer and seller. Over the last few decades, researchers have been coming up
3
with different structure in regard to various dimensions of service quality. Technical -
functional quality and image model by Gronroos (1984); GAP model by Parasuraman
et al (1985); The P-C-P attributes (Pivotal that is output, core and peripheral) model
by Philip and Hazlett (1997); Internal service quality involving internal customer and
internal suppliers model by Frost and Kumar (2000) have been developed in order to
find the determinants of the concept of service quality as well as appropriate quality
measurement techniques. But Servqual and Servperf remain widely used scales of
service quality. This study proposes to test dimensionality of a widely used scale
service quality and service performance and their significant dimensions in Indian
context.
1.2 Definition of a Bank
Indian Banking Regulation act 1949 section 5 (1) (b) of the banking Regulation
act 1949 Banking is defined as.
“Accepting for the purpose of the landing of investment of deposits of money from public
repayable on demand or other wise and withdraw able by cheques, draft, order or o
therwise.”
4
“Bank is an establishment for custody of money received from or on Behalf of its
customers. Its essential duty is to pay their drafts unit. Its profits arise from the use of the
money left employed them.”
-Oxford Dictionary
According to Prof. Kinley:
“A bank is an establishment which makes to individuals such advances of money
or other means of payment as may be required and safely made and to which
individuals entrust money or means of payment when not required by them for
use”
1.3 History of Banking
Could you imagine a world without banks? At first, this might sound like a great
thought! But banks (and financial institutions) have become cornerstones of our
economy for several reasons. They transfer risk, provide liquidity, facilitate both
major and minor transactions and provide financial information for both individuals
and businesses.The first banks were probably the religious temples of the ancient
world, and were probably established sometime during the third millennium B.C.
Banks probably predated the invention of money. Deposits initially consisted of
grain and later other goods including cattle, agricultural implements, and eventually
Precious metals such as gold, in the form of easy-to-carry compressed plates.
5
Temples and palaces were the safest places to store gold as they were constantly
attended and well built. As sacred places, temples presented an extra deterrent to
would-be thieves. There are extant records of loans from the 18th century BC in
Babylon that were made by temple priests/monks to merchants. By the time of
Hammurabi`s Code, banking was well enough developed to justify the promulgation
of laws governing banking operations.
Ancient Greece holds further evidence of banking. Greek temples, as well as private
and civic entities, conducted financial transactions such as loans, deposits, currency
exchange, and validation of coinage. There is evidence too of credit, whereby in
return for a payment from a client, a moneylender in one Greek port would write a
credit note for the client who could "cash" the note in another city, saving the client
the danger of carting coinage with him on his journey. Pythius, who operated as a
merchant banker throughout Asia Minor at the beginning of the 5th century B.C., is
the first individual banker of whom we have records. Many of the early bankers in
Greek city-states were ―metics‖ or foreign residents.
The fourth century B.C. saw increased use of credit-based banking in the
Mediterranean world. In Egypt, from early times, grain had been used as a form
money in addition to precious metals, and state granaries functioned as banks. When
Egypt fell under the rule of a Greek dynasty, the Ptolemies (332-30 B.C.), the
numerous scattered government granaries were transformed into a network of grain
6
banks, centralized in Alexandria where the main accounts from all the state granary
banks were recorded. This banking network functioned as a trade credit system in
which payments were affected by transfer from one account to another without
money passing.
In the late third century B.C., the barren Aegean island of Delos, known for its
magnificent harbor and famous temple of Apollo, became a prominent banking
center. As in Egypt, cash transactions were replaced by real credit receipts and
payments were made based on simple instructions with accounts kept for each client.
With the defeat of its main rivals, Carthage and Corinth, by the Romans, the
importance of Delos increased. Consequently it was natural that the bank of Delos
should become the model most closely imitated by the banks of Rome.
Ancient Rome perfected the administrative aspect of banking and saw greater
regulation of financial institutions and financial practices. Charging interest on loans
and paying interest on deposits became more highly developed and competitive. The
development of Roman banks was limited, however, by the Roman preference for
cash transactions. During the reign of the Roman emperor, Gallienus (260-268 AD),
there was a temporary breakdown of the Roman banking system after the banks
rejected the flakes of copper produced by his mints. With the ascent of Christianity,
banking became subject to additional restrictions, as the charging of interest was seen
7
as immoral. After the fall of Rome, banking was abandoned in Western Europe and
did not revive until the time of the causal.
Ironically, the Papal bankers were the most successful of the Western world, though
often goods taken in pawn were substituted for interest in the institution termed the
Monte di Pieta When Pope John XXII (born Jacques d'Euse (1249 - 1334) was
crowned in Lyon in 1316, he set up residency in Avignon. Civil war in Florence
between the rival Guelph and Ghibelline factions resulted in victory for a group of
Guelph merchant families in the city. They took over papal banking monopolies from
rivals in nearby Siena and Became tax collectors for the Pope throughout Europe. In
1306, Philip IV expelled Jews from France. In 1307 Philips had the Knights Templar
arrested and had gotten hold of their wealth, which had become to serve as the
unofficial treasury of France. In 1311 he expelled Italian bankers and collected their
outstanding credit. In 1327, Avignon had 43 branches of Italian banking houses. In
1347, Edward III of England defaulted on loans. Later there was the bankruptcy of
the Peruzzi (1374) and Bardi (1353). The accompanying growth of Italian banking in
France was the start of the Lombard money changers in Europe, who moved from
city to city along the busy pilgrim routes important for trade. Key cities in this period
were Cahors, the birthplace of Pope John XXII, and Figeac. Perhaps it was because of
these origins that the term Lombard is synonymous with Cahorsin in medieval
Europe, and means 'pawnbroker'. Banca Monte dei Paschi di Siena SPA (MPS) Italy
8
is the oldest surviving bank in the world. After 1400, political forces turned against
the methods of the Italian free enterprise bankers. In 1401, King Martin I of Aragon
expelled them. In 1403, Henry IV of England prohibited them from taking profits in
any way in his kingdom. In 1409, Flanders imprisoned and then expelled Genoese
bankers. In 1410, all Italian merchants were expelled from Paris. In 1401, the Bank of
Barcelona was founded. In 1407, the Bank of Saint George was founded in Genoa.
This bank dominated business in the Mediterranean. In 1403 charging interest on
loans was ruled legal in Florence despite the traditional Christian prohibition of
usury. Italian banks such as the Lombards, who had agents in the main economic
centres of Europe, had been making charges for loans. The lawyer and theologian
Lorenzo di Antonio Ridolfi won a case which legalized interest payments by the
Florentine government. In 1413, Giovanni di Bicci de‘Medici appointed banker to
the pope. In 1440, Gutenberg invents the modern printing press although Europe
already knew of the use of paper money in China. The printing press design was
subsequently modified, by Leonardo da Vinci among others, for use in minting coins
nearly two centuries before printed banknotes were produced in the West by the
1390s silver was short all over Europe, except in Venice. The silver mines at Kutná
Hora had begun to decline in the 1370s, and finally closed down after being sacked
by King Sigismund in 1422. By 1450 almost all of the mints of northwest Europe
had closed down for lack of silver. The last money-changer in the major French port
9
of Dieppe went out of business in 1446. In 1455 the Turks overran the Serbian silver
mines, and in 1460 captured the last Bosnian mine. The last Venetian silver grosso
was minted in 1462. Several Venetian Banks failed, and so did the Strozzi bank of
Florence, the second largest in the city. Even the smallest of small change became
scarce. Modern Western economic and financial history is usually traced back to the
coffee houses of London. The London Royal Exchange was established in 1565. At
that time moneychangers were already called bankers, though the term "bank" usually
referred to their offices, and did not carry the meaning it does today. There was also a
hierarchical order among professionals; at the top were the bankers who did business
with heads of state, next were the city exchanges, and at the bottom were the pawn
shops or "Lombard‘s. Some European cities today have a Lombard street where the
pawn shop was located.
1.4 History Of Banking System In India
Banking system plays an important role in growth of economy. The banking sector is
the lifeline of any modern economy. It is one of the important pillars of financial
system, which plays a vital role in the success or failure of an economy. It is a well
known fact that banks are one of the oldest financial intermediaries in the financial
system. The origin of banking in dates back to the Vedic period. There are repeated
references in the Vedic literature to money lending which was quite common as a
10
side business. Later, during the time of the Smritis, which followed the Vedic Period
and the Epic age, banking become a full-time business and got diversified
with bankers performing most of the functions of the present day. The Vaish
community, who conducted banking business during this period. As far back as the
second or third century A.D. Manu the great Hindu Jurist, devoted a section of his
work to deposits and advances and laid down rules relating to rates of interest to be
charged. Still later, that is during the Buddhist period, banking business was
decentralized and become a matter of volition. Consequently, Brahmins and
Kshatriyas, who were earlier not permitted to take to banking as their profession
except under exceptionally rare circumstances, also took to it as their business.
During this period banking became more specific and systematic and bills of
exchange came in wide use. ―Shresthis‖ or bankers influential in society and very
often acted as royal treasurers. Coming to Mughal period, Mughal dynasty started
with Babur ascending the throne of Agra in 1526 A.D. During Mughal period the
indigenous bankers played a very important role in lending money and financing of
foreign trade and commerce. They were also engaged in the profitable business of
money changing. Banking business was, however particularly during the secular and
settled reign of Emperor Akbar was gave the much needed political stability to the
country. Every city, big or small had a ‗Sheth‘ also known as a ‗Shah‘ or ‗Shroff‘,
who performed a number of banking functions. He was respected by all parts of
11
people as an important citizen. In Principal cities, besides shroffs, there was a ‗Nagar
Sheth‘ or ‗Town Banker‘. They were instrumental in changing funds from place to
place and doing collection business mainly through Hundis. The Hundis were
accepted mode of change of money for commercial transactions.
Then, the seventeenth century witnessed coming into India of the English traders.
The English traders established their own agency houses at the port towns of
Bombay, Calcutta and Madras. These agency houses, apart from engaging in trade
and commerce, also carried on the banking business. The development of the means
of transport and communication causing deflection of trade and commerce along new
routes, changing the nature of trade activities in the country were the other factor
which also contributed to the downfall of the indigenous bankers. Partly to fill the
void caused by their downfall and partly to finance the growing financial
requirements of English trade. The East India Company now came to favor the
establishment of the banking institutions patterned after the Western style. The first
Joint Stock Bank established in the country was the Bank of Hindustan founded in
1770 by the famous English agency house of M/s. Alexander and Company. The
Bengal Bank and The Central Bank of India were established in 1785. The Bank of
Bengal, the first of the three Presidency Banks was established in Calcutta in 1806
under the name of bank of Calcutta. It was renamed in 1809 on the grant of the
charter as a Bank of Bengal. The two other presidency banks, namely the bank of
12
Bombay and the Bank of Madras, were established in 1840 and 1843 respectively.
After the Paper Currency Act of 1862, however the right of the note issue was taken
away from them. The Presidency Banks had branches in important towns of the
country. The banking crisis of 1913 to 1917 however brought out the serious
deficiencies in the existing banking system in the country showing the need for
effective co-ordination through the establishment of the Central Bank. After repeated
efforts, the three presidency bank was fused into a single bank under the name of the
Imperial Bank of India in 1921.
The bank was authorized to hold Government balances and manage public debt. It
was not, however, given power to issue notes. The issuing of the currency continued
to be close preserving of the Government of India. The branches of the bank were to
work as clearing houses. It was mainly a commercial bank competing with other
banks. The Imperial Bank of India was nationalized in 1955 by the SBI act.
In the wake of the Swadeshi Movement, a number of banks with Indian management
were established in the country. The Punjab National Bank Ltd. Was founded in
1895, The Bank of India Ltd in 1906, The Canara Bank Ltd. in 1906. The Indian
Bank Ltd. in 1907, the Bank of Baroda Ltd. in 1908, and the Central Bank of India
Ltd. In 1911.
There have been a number of checks to progress to the Banking Industry in the
13
form of bank failures during the last over 100 years. The series of bank crisis
particularly during the time 1913–17, 1939–45 and 1948–53 wiped out many weak
units. Loss in trade or industry affected their credit and solvency. It may however, be
stated that one of the important reasons for the last banking crisis of 1948–53 was the
partition of the country into India and Pakistan. Most of the depositors who were
Hindus migrated from Pakistan to India while a major portion of the assets of the
banks, which failed remained in Pakistan.
Although, Suggestions have been made from time to time that India ought to have a
Central Bank. The Royal Commission on Indian currency and finance recommended
that a Central Bank should be started in India so as to perfect her credit and currency
organization. From 1927 to 1933, there was a proposal and constitutional reforms
law process has been made. It was enacted in due course and became law on the 6th
march 1934 and the Reserve Bank of India started functioning with effect from 1st
April 1935. Banking regulation act was passed in 1949.
The country inherited a banking system that was patterned on the British Banking
System. There were many joint stock companies doing banking business and they
were concentrating mostly in major cities. Even the financing activities of these banks
were confined to the exports of Jute, Tea etc and traditional industries like textile and
sugar. There was no uniform law governing banking activity. An immediate concern
after the partition of the country was about bank branches located in Pakistan and
14
steps were taken to close some of them as desire by that country. In 1949, as many as
55 banks either went into liquidation or went out of banking business. Banking did
not receive much attention of the policy makers and disjointed efforts were made
towards the regulation of the banking industry.
After independence, India adopted a socialist pattern of society as its goal. This
means in non technical language a society with wealth distributed as equitably as
possible without making the country a totalitarian state. In 1955, the Imperial
Bank of India was nationalized and its undertaking was taken over by State Bank
of India. Its transformation into SBI has been effective from July 1, 1955.20 there
were 7 subsidiaries Banks. Their Associate Bank was 5960. The State Bank group
including State Bank of Hyderabad, State Bank of Mysore, State Bank of
Travancore, State Bank of Bikaner and Jaipur, State Bank of Indore, State Bank
of Patiala and State Bank of Saurashtra.
As regards the scheduled banks, there were complaints that Indian Commercial banks
were directing their advances to the large and medium scale industries and big
business houses and that the sectors demanding priority such as agriculture, small
scale industries and exports were not receiving their due share. This was one of the
chief reasons for imposition of social control by amending the banking regulation
act, with effect from 1st February 1969. On 19th July 1969, 14 major banks were
nationalized and taken over they were as under:
15
1. The Central Bank of India Ltd.
2. The Bank of India Ltd.
3. The Punjab National Bank Ltd.
4. The Bank of Baroda Ltd.
5. The United Commercial Bank Ltd.
6. The Canara Bank Ltd.
7. The United Bank of India Ltd.
8. The Dena Bank Ltd.
9. Syndicate Bank Ltd.
10. The Union Bank of India Ltd.
11. The Allahabad Bank Ltd.
12. The Indian Bank Ltd.
13. The Bank of Maharashtra Ltd.
14. The Indian Overseas Bank Ltd.
Each bank was having deposits of more than Rs. 50 crore and having among
themselves aggregate deposits of Rs. 2632 crore with 4130 branches. On 15th
April 1980, six more banks were nationalized. These banks were:
1. The Andhra Bank Ltd.
2. The Corporation Bank Ltd.
3. The New Bank of India Ltd.
16
4. The Oriental Bank of Commerce Ltd.
5. The Punjab & Sind Bank Ltd.
6. The Vijya Bank Ltd.
There were some effects and achievements of nationalized banks. However, there are
some problems relating to NPAs, competition, competency, overstaffing, inefficiency
etc. for the nationalized bank.
1.5 Economic reforms in banking system
The banking system reflects the economic health of the country. The strength of the
economy of any country basically hinges on the strength and efficiency of its
financial system, which in turn depends on a sound and solvent banking system.
Banking Sector reforms were initiated to upgrade the operating standard health and
financial soundness of the banks. The Government of India setup the Narasimham
Committee in 1991, to examine all aspects relating to structure, organization and
functioning of the Indian banking system the recommendations of the committee
aimed at creating at competitive and efficient banking system. Another committee
which is Khan Committee was instituted by RBI in December, 1997 to examine the
harmonization of the role and operations of development financial institutions and
banks. It submitted its report in 1998. The major recommendations were a gradual
17
more towards universal banking, exploring the possibility of gain full merger as
between banks, banks and financial institutions.
Then the Verma Committee was established this committee recommended the need
for greater use of IT even in the weak public sector banks, restructuring of weak
banks but not merging them with strong banks, VRS for at least 25% of the staff. The
Banking Sector reforms aimed at improving the policy frame work, financial health
and institutional infrastructure, there two phase of the banking reforms. Narasimham
Committee provided the blue print for the initial reforms in banking sector following
the balance of payment crisis in 1991.
1.6 Background of the Study
In the last two decades, the Indian retail banking industry has gone through major
transformations and has become competitive as a result of deregulation,
macroeconomic stability, privatization, and the entry of foreign banks, in a
competitive business environment, delivery of service quality has been identified as
a cornerstone for acquiring and sustaining competitive advantages. In a highly
service-oriented industry like retail banking, customers expect organizations to
deliver service quality to their satisfaction. Therefore, to meet the growing service
quality expectations of their customers, retail banks have spent huge proportion of
their budgets on service performance related expenditures. Since customer
18
satisfaction is a function of service performance, it is often envisaged that when
customers‘ expectations are met or exceeded, they become satisfied. Once customers
are satisfied, they become loyal to the service provider. Customer loyalty is
conceived to have a positive correlation with market shares and profitability.
Customer loyalty is founded on the trust and commitment service providers build
with their customers during service encounters.
In the retail banking industry, as the demand for shareholder value grows, pressure
has mounted on managers to seek ways to increase profitability. As Porter noted, a
firm that seeks a competitive lead and profitability must either adopt product
differentiation or cost management measures as a way of creating superior customer
value. In a wide range of service industries, superior customer value creation is
considered an effective strategy for differentiation and increasing profitability. Faced
with competitive pressures, retail banks are challenged to increase not only their share
of market, but also their share of the customers. However, the process of acquiring
new customers appears a yeoman and cumbersome task for many retail banks. Since
the cost of acquisition of new customers continues to increase, Ennew and Binks
(1996) suggested managers should build and maintain long-term relationships with
existing customers as a way of gaining competitive advantages and profitability. In an
era of availability of variety and diversified retail banking services, it is usual for the
media to be inundated with discussions on the service quality of retail banks. In some
19
cases, the discourse in the media has enriched customers‘ knowledge of the poor
service quality of one retail bank or the other. Customer awareness of poor service
quality may cause a service provider to lose the valuable customer base needed to be
competitive. According to previous marketing research, dissatisfied customers are
likely to relay their negative experience to over ten friends or potential customers.
However, providing satisfaction to customers is a daunting task, but one that can
be surmounted if managers understand customers‘ expectations and specifications of
service. Armed with knowledge of customers‘ expectations and specifications,
strategies can then be formulated to ensure service performance is improved to meet
the needs of customers. To enhance the formulation of strategic marketing plans,
information on customers‘ perceptions is highly sought by retail bank management
within the last two decades, several attempts have been made to study consumer
behavior-related issues in several industries, including retail banking, to improve
information on customers‘ expectations of service performance. The research effort
resulted in the formulation of models for the conceptualization of customers‘
perceptions of service quality delivery.
The service performance gap model is one such model, and this explains the
difference between customer expectation and actual service delivered. The model has
been applied and tested in many service industries, including that of banking,
insurance, and health service. However, given the vagaries of customers‘ experiences
20
of service-increased ambiguity and the uncertainty of customer expectation and
perceptions, the need for research in this area has been inexhaustive. Moreover, the
service performance expectation of customers is dynamic, changing from time to
time. In this regard, periodic research is necessary for management to know what
level of service performance will meet the current expectation of customers.
In the last two decades, there has been a growing need for service performance and
service quality research and plentiful investigations have been conducted on the link
of service performance gaps to service quality in the retail banking industry.
Unfortunately, there is no comprehensive study on the relation of service performance
and service quality in the Indian retail banking industry. In addition, there has been no
attempt to test the applicability of the service performance gap model in the Indian
retail banking industry.
Additionally, despite the existence of a many studies on service performance and
service quality constructs, they have mainly focused on the service industries of
developed and a few Asian markets to the neglect of less sophisticated retail banking
markets like that of India. Therefore, one of the questions left unanswered, which
motivated further research, is how the service performance gap model applies in
developing and less sophisticated markets, bearing in mind the effect of culture on
customers‘ behavior. This dissertation harnessed the opportunity of the paucity and
21
gaps in research to investigate the relation of service performance and service quality
in the Indian retail banking industry in anticipation that:
i) it will add a new dimension to the current research attempting to link service
performance to service quality; and
ii) it will assist managers of retail banks with information on customers‘
perceptions of service performance and service quality for strategic marketing
planning.
The banking industry has increasingly become crucial to the development of the
global economy. For this reason, over the last two decades, the governments of
developing economies have deregulated their banking sectors to incentivize the entry
of foreign banks in anticipation it will ignite accelerated economic development by
enhancing local competition, reducing interest rates, and bringing a variety of quality
services to customers. In addition, in developing economies where there is normally
less developed financial intermediation, banks serve as crucial financial agents. In the
1980s, many developing countries embarked on financial sector reforms to promote
savings, investments, and the development of the private sector as a vehicle for
economic growth
The liberalization in the early 1990s has resulted in the conception of various private
sector banks. This has sparked a boom in the country‘s banking sector in the past two
decades. The revenue of Indian banks grew four-fold from US$ 11.8 billion to US$
22
46.9 billion, whereas the profit after tax rose nearly nine-fold from US$ 1.4 billion to
US$ 12 billion over 2001-10. This growth was driven primarily by two factors. First,
the influx of Foreign Direct Investment (FDI) of up to 74 per cent with certain
restrictions. Second, the conservative policies of the Reserve Bank of India (RBI),
which have shielded Indian banks from recession and global economic turmoil.
Figure 1.1 and 1.2 compares the country‘s Banking Index (Bankex) with the Sensex.
The Bankex is an index tracking the performance of important banking sector stocks,
and has grown at a compounded annual growth rate (CAGR) of approximately 20 per
cent over 2003-12. The Figure below shows that the Bankex and the Sensex have had
similar growth trends over the past decade.
4Dr. Krishna Goyal and Vijay Joshi – Indian Banking Industry: Challenges and Opportunities, International
Journal of Business Research and Management, Volume 3, Issue 1, 2012 5 McKinsey Report – Transform to Outperform
6Bombay Stock Exchange
23
The challenges the Indian banking system faced were reflected in the poor service
quality they offered. For example, there were instances where customers spent up to
two hours doing a single transaction. In other instances, banks run out of cash to serve
customers. According to the World Bank study in summary, the Indian banking sector
was characterized by inefficiency and high operating costs, distorted and inflated
profit declarations, insolvencies, capital inadequacy, and high bad debts.
24
1.6 Origin of The Problem
It is often believed that improving service performance is a precursor for gaining a
competitive advantage and increasing both the short- and long-term profitability of
banks. In an ever-growing competitive retail banking industry, winning competition is
predicated on the provision of unique products and services to meet customers‘
expectations. Customers whose expectations are met are considered satisfied and are
potential loyal customers. However, dissatisfied customers are candidates for
defection. Therefore, retail banks are striving to increase their service performance to
meet customer service quality expectation.
In addition, to increase the customer base in a competitive business environment,
it is suggested that managerial efforts should be directed strategically at recruiting
and retaining customers to ensure increased competitive advantages. Competitive
advantages are achieved when the desires of customers are discovered and responded
to more efficiently and effectively than competitors. How successful banks are in this
regard is contingent on the availability of information on customers‘ perceptions of
service quality and service specifications. Since service performance is an antecedent
of service quality, scholarly efforts have been devoted to understanding customers‘
needs and the factors influence service performance.
25
Service performance is considered important in service delivery because it is an
organizational weapon for differentiation and winning competition. In a service
encounter, when the customers‘ expectation of service performance is unequal to the
actual service performance, gaps are created. This postulation is the foundation of the
service performance gap model proposed by Parasuraman et al. (1988, 1990) to
explain the lack of equilibrium of customer expectation and actual service delivered.
This model has been applied in many industries, including retail banking in
developed economies to the neglect of service industries in developing economies. In
a competitive banking environment, managers are not just concerned about service
performance, but about how customers perceive such performance and whether it
meets specifications. Therefore, it is important for management to know the level of
service performance customers expect and the customer‘s perception of the actual
service performance in order to understand the level of customer satisfaction and
retention. Interestingly, according to an American Customer Satisfaction Index
(ACSI) report, the retail banking industry continued to witness a decline in customer
retention due to switching. Provision of poor service quality to customers by banks
has been found to result in declining deposits. The concern over information on a
customer‘s perception of service performance and service quality has motivated
various researchers to attempt investigations on service quality, service performance,
and customer satisfaction. Given the intangibility and heterogeneous nature of
26
service, some previous studies sought to identify how service quality and customer
satisfaction are correlated or measured in various service organizations, especially in
retail banking industry. However, research on the perceptions of bankers and
customers on how the service performance variables are linked to service quality
variables in the retail banking industry has not been given the utmost attention. This
has created a research vacuum that needs to be filled. In addition, the few prior
studies on service quality and performance were conducted in a Western business
environment setting to the neglect of that of developing countries, especially in India.
However, the service industries of emerging and developing countries‘ markets
continue to witness tremendous growth.
According to Bancon report ‗ Transform to outperform‘, In the last decade there has
been a remarkable shift in India‘s position from an emerging market to a major driver
of the global economy. The Indian banking sector mirrors this story in several ways.
Indian banks grew dramatically between 2000 and 2010- revenues have grown more
than four fold from USD 11.8 billion in 2001 to USD 46.9 billion in 2010. Indian
banking is expected to continue growing robustly, at 18 to 20 per cent a year, with
superior profitability— and over 16 per cent return on equity. As a result of this, India
is expected to Increase its share in the global banking revenue pools from 1.5 percent
in 2009 to 2.5 percent in 2015 on the back of underlying assets of approximately USD
3 trillion and deposits of around USD 2.3 trillion( Exhibit 1)
27
Moreover, it is believed that at least five to six Indian banks will reach the top 100
global league over the next decade and the sector will remain the mainstay of India‘s
economic transformation. While the last decade provided a ‗platform for growth‘, the
next decade in Indian banking will Involve the ‗hunt for profitable expansion‘.
Customers are becoming more sophisticated, competition is increasing as the
potential of Indian banking has been discovered. Markets.
With the liberalized banking regime in India and with the continuous implementation
of prudent macroeconomic policies, it is anticipated that foreign banks will continue
to enter the Indian banking market and that banks will continue to invest in
technology and expansion drives. Since the competitive structure of the market is
28
influence by a number of banks, the continuous entry of banks is expected to escalate
the existing competition in the industry. How to increase competitiveness, therefore,
has become one the key challenges of banks in india. Moreover, technological
advancement has led to increases in standards in banking operations and the
empowerment of customers due to the availability of choices. The emerging
competition has resulted in the replacement of the banking bureaucracy and
inefficiency that adversely affected customer service in the past. Customers are also
more educated and demanding improved services now than ever. For these reasons
among others, retail banks in India are compelled to seek better ways to satisfy
customers to ensure loyalty and profitability.
However, retail banks cannot satisfy customers without information on customers‘
perceptions of service quality and on what amount of performance is needed to satisfy
customers. In this regard, research is needed to make such information available.
Parasuraman at al., 1985 proposed a model for evaluating customers‘ perception of
service quality, and Zeithaml et al. (1990) identified factors influencing service
performance gaps. This model has been largely tested in the service industries of
Western countries to the neglect of service industries of developing countries.
The growth and heightened competitiveness of the Indian banking industry provides a
case for further investigation of the link of service performance to service quality.
Previous research on the relationship between the two marketing concepts focused on
29
service organizations in developed and emerging markets‘ settings to the neglect of
countries like India. Further exploration, focusing on the relationship between
service performance and service quality in the Indian banking industry is necessary,
as it will go a long way to assist banks in making improvements to their service
delivery to satisfy consumers
1.8 Purpose Of The Study
This study was primarily purported to investigate the interlink of service performance
and service quality using the service performance gap model proposed by
Parasuraman et al. (1990). Secondly, it was purported to investigate the perception of
customers and bankers of the relation of antecedents or factors of service performance
gaps and dimensions of service quality in the Indian retail banking industry. Thirdly,
the study investigated the difference in the perceptions of bankers and customers of
the link between service performance and service quality. Finally, the study
investigated the differences of the service performance of retail banks within the
category of government owned, private-ownedn banks operating in India. The aim of
this study was to apply the service performance gap model in the Indian retail
banking industry. Based on the result of this research, the best ways to improve the
service performance in the Indian retail banking industry are recommended.
30
1.9 Focus Of The Study
The questions addressed in this study are:
1. In the Indian retail banking industry, what is the perception of customers towards
service performance and service quality?
2. In the Indian retail banking industry, what is the perception of bankers towards
service performance and service quality?
3. In the Indian retail banking industry, is the perception of customers of service
Performance different from that of bankers?
4. What are the significant antecedents of service performance gaps influencing
service quality attributes in the Indian retail banking industry?
5. In the Indian retail banking industry, what is the difference in perception of service
performance of private and government-owned?
1.10 Significance of the Study
A paradigm shift has occurred in marketing, leading to a change in focus from the
traditional exchange of the service marketing model to a customer-centered exchange
marketing or relationship marketing model. The relationship marketing model
requires the service provider to deliver excellent service quality for customer
satisfaction, which leads to repeat purchase and loyalty. Customer loyalty leads to an
31
increased share of market and profitability. To promote long-term relationship with
customers, efforts must be made to understand the key factors influencing the
delivery of service quality . In addition, according to Grandzol and Gershon (1997),
over half of all corporate training dollars are spent on enhancing quality. For this
reason, corporate managers are increasingly becoming interested in understanding
how investment in quality impacts performance outcomes, such as return on
investment, sales, market shares, net revenue, and competitive advantages. Research
on how performance is linked to quality is significant in providing answers to this
management question. The success of a retail bank in a competitive environment
hinges on knowledge of customers‘ expectations and how service performance can be
improved to meet such expectations. Knowledge of how service performance factors
impact service quality dimensions is also needed for strategic planning. This study
was conducted to provide information on Indian retail banking customers and the
nature of the markets to assist management in the decision-making process.
With the liberalization of the banking industry and the government‘s continuous
pursuit of prudential macroeconomic and growth-oriented policies, the competition in
the Indian banking industry is expected to escalate. The growing competition in the
Indian retail banking market requires banks to adopt new ideas to provide customer
satisfaction. Moreover, for banks to succeed in the competitive Indian retail banking
industry, they must understand the expectation of their customers of service quality.
32
Banks must also understand how changes in performance can impact a bank‘s ability
to provide a quality service to meet the expectations of their customers. Therefore,
this study is significant in providing retail banks with information for dealing with
competitive challenges. From a managerial perspective, the results of this study were
expected to:
i) assist the management of retail banks in designing promotional programs to
compete more favorably in the Indian banking industry in the short- and long-term;
ii) provide information on how retail banks‘ service performance and service quality
is perceived in the Indian retailing banking industry;
iii) assist the management of retail banks in strategic planning for recruiting new
ones; and
iv) Provide information to enhance managerial efforts in the improvement of the
performance, skills, and efficiency of employees.
From an academic research perspective, this dissertation is significant because it
comprehensively investigated the link of service providers‘ performance to the
perceptions of customers of the service quality in the Indian retail banking industry. It
also tested the extended relationship marketing model developed by Parasuraman in
the Indian retail banking industry. Furthermore, this research is useful because it
contributed to the body of literature attempting to investigate the link between service
performance and service quality. This study was conducted with the belief and
33
anticipation that it would provide valuable information needed by retail banks in India
to focus on key areas of customers concerns. The results of this research were
anticipated to provide knowledge on which areas of performance management of
banks needed to pay attention to to ensure that more efficiency is injected to ensure
that customers‘ expectations are met. It was further anticipated that with such
knowledge, banks would increase the efficiency and competitive edge crucial for
increasing profitability, which could consequently lead to the development of the
Indian banking sector
1.11 Terminology
Customer Satisfaction
Satisfaction is a relative concept encompassing the customer‘s expectation as well as
the performance of the product (Phillip Kotler)
An affective state or feeling, which is a function of the discrepancies between a
customer‘s expectation and perception on purchase
Perception
It refers to the process of receipt, selection, and interpretation of stimuli to form a
meaningful and coherent picture of the world
34
Retail Banking
Retail banking is when a bank executes transactions directly with consumers, rather
than corporations or other banks. Services offered include savings and transactional
accounts, mortgages, personal loans, debit cards, and credit cards
Service Performance Gap
It refers to the difference between service specifications and actual service delivered
by service providers to customers (Parasuraman).
Service Quality
It represents the difference between customer expectations and the perception of the
service offered.
1.12 Assumptions and Limitations
This research was conducted on the following assumptions.
1. The survey participants will respond honestly to the questions contained in the
questionnaires.
2. The respondents will understand the survey questions being asked.
3. Customers and bankers experiences with services providers will be brought to
bear on their answers.
4. Customers and bankers can speak either English language or Hindi .
5. Bankers and customers of all retail banks will be proportionally represented.
35
The limitations of this research are.
1. The questionnaires were distributed to customers and bankers of banks‘ branches
in HDFC Bank and SBI in Lucknow City Therefore, the research results may not
have captured the cases of all the customers and bankers in the country.
2. The study did not included all the other banks and regional rural banks. However,
rural banks play important role in financial inclusion in India.
3. The questionnaires were prepared in English language .However, there are
customers who cannot speak this language. Therefore, customers who could not
speak English may not have been able to participate properly in this research.
1.13 Theoretical/Conceptual Framework
This study investigated the connection of service performance and service quality and
it application to the Indian retail banking market setting. The conceptual framework
of the study was based on a review of the literature on relationship marketing and the
service performance gaps models of Parasuraman and Zeithaml. Baesd on the
narrowed down scope of literature review above, the relationship between service
quality variable and customer satisfaction can be shown as following. The five score
service quality dimension have been selected by the studies done by Zethaml
(2000:2002).
36
Figure 1.3 : Relationship between service quality and customer satisfaction derived from
the studies done by Zethaml( 2000: 2002). Five service quality dimensions have been
selected from the studies done by (Van Iwaarden, 2003)
The empirical investigation involved testing and applying the service performance
gap model and the seven associated antecedents using a correlation and regression
analysis of the data collected from the survey of the bankers and customers of the 2
37
selected retail banks operating in Lucknow. Other marketing concepts and theories
and models of conceptual importance include the disconfirmation paradigm, role
theory, service encounter, exchange theory, and trust-commitment theory. The 1990s
witnessed a paradigm shift in marketing due to technological advancements, shifting
focus from traditional marketing to relationship marketing. Relationship marketing
can be described as involving: effort to identify, maintain, and build up a network
with individual customers and to continuously strengthen the network for the mutual
benefit of both sides, through interactive, individualized and value-added contacts
over a long period of time. According to Berry (1983), relationship marketing
involves a process of strengthening bonds and building relationships, as well as
providing service to customers, and it compliments a firm‘s efforts at keeping new
customers. Berry indicated that fulfilling promises made to customers is the
cornerstone for maintaining service relationship. To keep relationships with
customers, management should make realistic promises, keep such promises, and
enable employees and systems to fulfill those promises by delivering quality service.
When service providers undertake these three essential activities effectively, service
performance gaps are prevented.
Parasuraman developed a model based on a study of service quality of four
organizations, including that of credit card service. The model defined service quality
as the gap or a set of discrepancies between customers‘ expectations and their
38
perception of quality of service provided. The model postulates that the perception of
a customer is shaped by the size and direction of the gaps between a customer‘s
expectation of service quality and what has actually been served. It is conceptualized
in service marketing literature that customers predict and conceive the outcome of
impending service exchange. Then when the actual delivery takes place, they evaluate
quality by comparing expectation to what is actually delivered. Parasuraman
identified five gaps likely to occur during service encounters. These gaps impact the
relationship between customers and bankers in the banking industry.
He identified five dimensions of service quality comprising reliability,
responsiveness, assurance, empathy, and tangible. Based on these dimensions they
introduced the SERVQUAL. The SERVQUAL is a multiple-itemed instrument for
the evaluation of service quality. It contains 5 dimensions of service quality and
indicators of all the dimensions. The SERVQUAL, both in its original form and
modified version, has been widely used to measure, service performance, service
quality and customer satisfaction constructs in various industries setting .
Parasuraman found that the service performance gap has relationship with service
quality dimensions. Zeithaml shared this view. They identified seven antecedents or
variables influencing service performance gaps and these are briefly
presented in Table 2.
39
Table 2
Antecedents of Service Performance Gap Model
Antecedent of Service Performance
Gap
Description
1,TEAMWORK
This antecedent relates to how the group works and
communicates together. Also the commitment and
willingness of individual members to participate actively
and collectively in the decision making process is central to
bridging service delivery gaps.
2.EMPLOYEE-JOB FIT
This construct relates to employees‘ capabilities in
undertaking job related responsibilities necessary for
closing service performance gaps.
3.TECHNOLOGY-JOB FIT
This refers to the availability and suitability of the
technology required by employee to perform assigned job.
4. ROLE CONFLICT
This is the discrepancies between the expectations of
managers and customers and employees‘ expectation of
their inability to meet the expectation.
5.PERCEIVED CONTROL
This antecedent refers to the how employees react and
handle stress, as well as relates to the culture and procedure
of an organization.
6.SUPERVISORY CONTROL
This antecedent relates to the process of measuring
employees‘ performance.
7.ROLE AMBIGUITY
Role ambiguity occurs when employees lack critical
information in order to perform effectively.
40
1.14 Disposition of thesis
This dissertation contains five chapters.
Chapter 1 presented the introduction, the background of the study, the statement of
problem, the purpose of the study, the rational, the research questions, the
significance of the study, a definition of terms, the assumptions and limitations, and
the theoretical framework of the research.
Chapter 2 presents a comprehensive review of the literature on concepts and
theories associated with the study.
Chapter 3 presents the research methodology, Hypothesis, research design,
measurable independent and dependent variables, sample frame, research setting,
description of the instrument, data collection procedure, data analysis, validity, and
reliability. This chapter presents the ethical consideration of the research.
Chapter 4 provides the detailed outcome of the survey results and detailed analysis.
Chapter 5 focuses on the discussion of the findings, and the implications,
conclusions, and recommendations for further studies.
41
CHAPTER 2
REVIEW OF LITERATURE
This chapter presents a comprehensive review of past and existing literature relevant to the
theoretical and conceptual frameworks for understanding the relation of service performance
and service quality constructs. The objective of the review is mainly to deepen the
understanding of the relationship of the two constructs of this research’s interest. The research
is further anticipated to provide a conceptual basis for testing the service performance gaps
model in the Indian retail banking setting.
2.1 Service and Quality
Service is an elusive construct, which defies a consensual definition, triggering
tremendous academic interest. The word service is derived from the Latin word,
Servitum, which means served by slaves.
According to Kolter (1991) defined service as an intangible benefit whose
ownership cannot be claimed, provided from one entity to another.
42
The term quality stands for the standard of something as measured against other
things of a similar kind; the degree of excellence of something:Quality is defined as
the discrepancy between customers‘ service and expectations. Berry described it as
what actually conforms to customers‘ specifications. In this definition, the customers
are emphasized because they are the focus of modern marketing. Therefore,
customers‘ conceptions of quality are what counts, not that of management.
In this regard, quality is also described as the overall impression created by customers
pertaining to the superiority or inferiority of service rendered. Quality is one of the
three important indexes of companies‘ performance; the others are costs and
productivity. Among the three indicators, quality has been given prominence in the
literature because it is peculiar to both service providers and customers. In a
competitive environment, organizations normally produce the same type of service.
The level of service quality distinguishes one firm from the other.
2.2 Meaning of Service Quality
service quality is an achievement in customer service. It reflects at each service
encounter. Customers form service expectations from past experiences, word of
mouth and advertisement. In general, Customers compare perceived service with
expected service in which if the former falls short of the latter the customers are
disappointed. Service quality has been studied in business management for several
43
years. However, the growth of service marketing as a result of the continuous
dominance of the service sub sector of the global economy has fuelled more academic
interest in service quality theory. To understand fully the concept of service quality, it
is important to attempt a definition and to evaluate various scholarly perspectives.
Although, service quality is an abstract and a complicated concept, researchers have
made many attempts to define it.
From system-thinking paradigm dimension, Service quality has been defined as:
According to Lakhe and Mohanty: a production system where various inputs are
processed transformed and value added to produce some outputs which have utility to
the service seekers, not merely in an economic sense but from supporting the life of
the human system in general, even maybe for the sake of pleasure
Bolton & Drew, Carman, Parasuraman described service quality variously and
contended that it is multidimensional and difficult to measure, test, or verify with a
definitive metric . Reeves and Bednar (1994) reviewed service quality literature and
concluded there was a lack of universal, parsimonious, or all-encompassing definition
of model of quality. According to Sureshchandar , service quality is difficult for
service providers to explain and for customers to evaluate.
44
Bennington and Cummane (1998) found service quality has been defined as
excellence; value conformance to specifications; conformance to requirements;
fitness for use; loss avoidance; and meeting expectation.
Wisniewski observed that the debate on service quality is not only limited to the
definition, but it is extended to the way it is measured. While some authors
conceptualized service quality in the context of performance paradigm like Brown,
Churchill, & Peter, Boulding, Cronin & Taylor, others described it in a
SERVQUAL paradigm Parasuraman supporting the view of its multidimensional
nature
The SERVQUAL model has been widely used by previous researchers in the banking
industry. Some researchers attempted to compare the SERQUAL model to other
metrics. For example, Angur tested both the SERVQUAL and SERVPERF models in
the retail banking. Yet others Avkiran, 1994 modified the SERVQUAL to suit a
specific setting. Avkiran 1994 adopted the SERVQUAL and developed the
BANKSERV instrument to suit his research on the Australian banking industry
specifically. Parasuraman 1990 endorsed modification of the instrument to suit a
particular research circumstance or the other.
Along the SERVQUAL paradigm, Zeithaml defined service quality as the overall
impression of the superiority or inferiority of an organization or its service and
45
product. Customers perceive service quality as the value customers actually receive at
a given price. Customer value is the emotional bond created between a service
provider and a customer after a service or a product is. A number of scholars
Anderson & Narus, Higgins: have attempted linking customer value and customer
perceived service quality. To enhance understanding of service quality and its
correlation to price in predicting purchase decision-making by comsumer some
scharlars.
Bolton & Drew, Zeithaml introduced the value construct into service quality
studies. Perceived value has been conceptualized as tradeoff to perceived quality,
perceived monetary and psychological sacrifice. It is conceptualized that the
interaction between service providers and customers presents an opportunity for
critical judgment to be made on service quality.
2.2.1 Attributes of Service
Much attention has been devoted in the service literature Cronin to identify and
describe attributes of service. As a complex phenomenon, service has different
meanings to different people depending on the prism through which it is
conceptualized.
46
As stated by Lu, it is generally agreed that service is characterized by intangibility; it
involves activities rather than things; it is simultaneously produced and consumed;
and customers are part of the productive process. In an attempt to measure service
quality.
Sasser, Olsen, and Wyckoff listed seven attributes associated with the concept:
confidence and physical security; consistency in transactions; availability of after
service assistance; nature of facilities; customer accessibility to service; and training
provided customers on usage. Other researchers identified attributes of service quality
to encapsulate the attitude of service providers; service providers‘ consideration;
service content; empathy; service speed; sincerity with which problems are handled;
and listening skills and responsibility.
According to Cronin and Taylor (1992), customers in seeking satisfaction do not
just concern themselves with the highest service quality. Other factors like
convenience, availability, and price are also considered. Generally, high service
quality provision involves predicting and delivering service that meets the needs and
expectations of customers. However, due to the multi-dimensional nature of service,
customers may vary in their perception, depending on social demographics like age,
education, gender, quality of life, income, and other status.
47
Khatibi described service as intangible and not easily duplicable. However, service
is differentiable from the perspective of customers on their service performance
expectation. Customers‘ expectations and requirement of service quality must be
understood in order to enhance improvement in service delivery.
Gronross (1984) explained that service quality involves the fulfillment of customer
satisfaction. He elaborated that customers‘ perception of service quality comprises
technical quality, functional quality, and corporate image. While technical quality
relates to the actual service customers received from service providers, functional
quality is manifested in the process of service delivery. Corporate image is associated
with the perception of the organization offering the service. Similarly,
Lehtinen and Lehtinen identified three dimensions associated with service quality:
physical qualities, qualities associated with corporate image, and qualities that
manifest during interaction with customers.
For Rust and Oliver (1994), three factors associated with service quality are :
1. Interaction between customers and service providers
2. Quality of the environment where the service is provided
3. Customers‘ assessment on the results of services
48
Parasuraman identified ten service quality determinants, which can be generalized
in all types of service as:
Tangibles - These comprise physical facilities, the appearance of staff, and the
appearance of equipments and tools used in service provision
Reliability - Receiving consistent treatment at every service encounter or
consistence of service performance
Responsiveness - Preparedness of service personnel to provide service at every
encounter
Competence - the knowledge, skills, and abilities of service personnel and staff
involved in the production of services
Access - The ease with which services can be researched
Courtesy - The respect, friendliness, affability, and politeness of service staff
Communication - Providing comprehensive information to customers in the
appropriate language and through the appropriate channels
Credibility - The trustworthiness, honesty, and validity demonstrated to
customers
Security - The sense of freedom, safety, and confidentiality
Understanding - Promotion of dialogue with customers that leads to an
understanding of the needs of customers
49
These ten dimensions were later condensed into five: tangible, reliability,
responsiveness, assurance, and empathy.
Sureschchandar also proposed five critical factors of customers‘ conception of
service quality. These are as: ―1) core service or service product, 2) human element
of service delivery, 3) systemization of service delivery: non-human element, 4)
tangibles of service-servicescapes, and 5) social responsibility‖.
Szmigin (1993) sub-divided service into actual, perpetual, and results service. Actual
service is the service customers really receive from organizations. Perpetual service
represents the way service is delivered, while result service involves an assessment of
whether the service delivered meets the expectations of customers. Despite the fact
that many characteristics of service quality have been identified, tangible, reliability,
responsiveness, assurance and empathy are commonly used in service research. This
study similarly used these dimensions.
2.2.2Measuring Service Quality
Since service quality is an abstract and multidimensional construct
According to Sureshchandar, it does not lend itself for easy measurement. In
addition, consumers do not easily indicate what level of service meets their
expectations and requirements. However, measuring service quality is important for
50
knowing the level service performance should be improved to. Sound measurement of
service quality also enhances managerial decision-making on marketing strategies.
Schorlarly interest in measuring service quality has resulted in an ever-growing
literature. However, the unique characteristics of service quality, such as
inseparability, intangibility, and heterogeneity, make objective measurement difficult.
Despite this, service quality needs to conceptualized and operationalized.
Service marketing literature identified two school of thoughts associated with service
quality: the Nordic school of thought, formulated based on the two-dimensional
model of Gronross , and the North American school of thought based on the
SERVQUAL model of Parasuraman . The second seems to have gained prominence
in the service marketing research. Prior to the emergence of the SERVQUAL model,
there were several attempts to development models for measuring service quality.
Martilia and James (1977) developed one of the early instruments for measuring
service quality. Their instrument uses the mean importance/performance result
illustrated on a grid with multi dimensions to measure service quality. With this
technique, the four quadrants in the grid provide valuable information on the
attributes to be tested. With their technique, it is suggested that qualitative research
should be first conducted to determine the most important attributes to be measured.
They also proposed separating important measures from performance measure to
51
avoid biases. Other techniques were developed subsequently where service quality
was identified to be multi-dimensional. It was also recognized that any attempt to use
a one-dimension scale failed or yielded ambiguous results.
SERVQUAL‘s framework was founded on the gap theory developed by
Parasuraman. He conceptually designed and modified this instrument use for gap
analysis,, and who operationalized service quality as:
Q=P-E
where Q=service quality, P= customers‘ perception of service, and E=Service
expectation.
The SERVQUAL instrument is designed along two set of metrics. The first set
measures the level of customers‘ expectations of perceived service in a specific
industry.The other metric is purported to measure the level of perceived service
quality of a particular firm . The SERVQUAL, which has five dimensions
of service quality, was initially presented to have ten dimensions, as previously
listed.After scale purification and factor analysis were undertaken, they were later
modified and refined to only five dimensions. Parasuraman defined the five
dimensions as:
Tangible: Physical facilities, equipment, and appearance of personnel
Reliability: Ability to perform promised service dependably and accurately
Responsiveness: Willingness to assist customers and promptly provide service
52
Assurance: Employees‘ knowledge, courtesy, and ability to inspire trust and
confidence.
Empathy: Caring, individualized attention the firm provide its customers
While tangibles, reliability, and responsiveness remained unchanged in the scale
purification process, the other seven dimensions were fused into assurance and
empathy. These five dimensions or attributes have been extensively used to measure
the perceptions of customers of service quality at service encounters. With this
approach, customers are surveyed to measure their service experiences, perception,
and expectation of service quality.
Parasuraman model conceptualized service quality as being influenced by a series of
gaps related to service performance. This model defined service quality as the
difference between customers‘ expected service quality and the perception of quality
of service received. Under the SERVQUAL model, Parasuraman proposed a 22-item
instrument used for measuring performance expectation gaps. The instrument uses
keyconcepts, decisions, and strategies in service quality delivery involving
organizational tasks necessary for closing performance-expectation gaps (Zeithaml &
Parasuraman). Under the SERVQUAL instrument, customers are requested to
provide a rating on their service performance expectations and the perception of the
actual service performance from service providers (Zeithaml & Bitner).
Parasuraman‘s (1985) model developed along with Oliver‘s disconfirmation model
53
(1980) has been criticized for lack of clarity in definition of expectation and how it is
applied in various service industries. Despite its wide usage, some scholars (Babakus
& Boller,Carman,; Cronin & Taylor, Teas,) have criticized the SERQUAL model by
questioning its reliability.
Carman (1990) argued that the five dimensions associated with the SERQUAL
model lack consistency when subjected to cross sectional analysis. Another lapse
identified with the model was that its accuracy is contingent on expectation remaining
constant. However, expectation is not always constant. Carman (1990) criticized the
model for not considering the importance of service attributes. In the course of further
investigation, he found some operational lapses with the gap concept. Based on his
findings, Carman (1990) suggested an alternative method that combined expectation
and perceptions into a single item.
Babakus and Boller (1992) supported Carman‘s (1990) idea of combining
expectation and perception into a single item. Cronin and Taylor (1992) also
criticized the SERQUAL on the grounds that Parasuraman proposition that
theoretically if there were similarities between service quality and attitude, then its
operationalization could be better represented by an attitude-based conceptualization.
They suggested discarding the expectation element of SERQUAL and then proposed
54
the SERVPERF, focusing on performance measure. In this regard, service quality is
not measured as the gap between the customers‘ expectation of service and what is
actually provided, but is measured as a customer‘s perception of the service
provider‘s performance. Other conceptions of the best ways to measure either
assessment of the degree of difference between customers‘ perceptions of service
quality and the actual service provided or the best way to measure service quality
have emerged in the last two decades.
Despite the criticism of the SERQUAL model.
Carman, Cronin & Taylor Observed that it is conceived as effective in service
quality research. It has contributed significantly to the introduction of improvements
in service delivery initiatives in service organizations. For example, a major initiative
was undertaken successfully to improve quality at a United Kingdon bank using the
SERVQUAL Newman found many firms in the UK financial service industry to have
used
SERVQUAL in their quality improvement initiatives. In the era of growing
competition in the retail banking industry, management continue to be interested in
customers‘ perceptions of service quality in order to formulate and implement
marketing programs. Parasuraman model has proven very useful in marketing
55
research and been widely used. It has often been reliably used in international
settings.
Cronin and Taylor recommended it for research in the banking industry. The
SERVQUAL has also been recommended as highly reliable and valid for use in
various service industries‘ research without adoption.In the retail banking industry,
attempts have been made either to apply the SERVQUAL model or to modify it for
specific study.
Avkiran (1994) conducted a study to identify an effective instrument for measuring
the perception of banks‘ branch customers of service quality. He developed a six-
dimensional model for measuring service quality, responsiveness, empathy, staff
conduct, access, communication, and reliability, with 27 items, which was later
reduced to 17 items. Avkiran (1994) found that staff conduct, credibility,
communication, and access to teller service are the most important qualities. The
research framework involved the use of perception to the exclusion of the expectation
construct, which is central to determining gaps in service delivery.
Chang (2007) conducated a study on customer expectations in the Taiwan
banking industry to determine how best service performance of banks could be
enhanced. He adopted the modified version of the SERVPERF instrument designed
56
by Wang in 2003 to collect data from 100 customers of three banks in the Taiwan
banking industry. To ascertain validity and reliability, a 7-point Likert scale was used
to evaluate the participants‘ responses. The result showed that customers expect a
high level of performance from the banking industry and that individual banks need
to improve service quality by examining their internal practices. Although this
research identified customers‘ expectations and the process of improving service
delivery to meet the expectations, sample size limited its validity. The sample size for
the survey was only 100 customers, which may not truly represent the customers in
the entire banking industry. Considering this limitation, Chang (2007) recommended
that further research be conducted on customer expectations and service delivery with
a larger population. The survey did not cover employees, who are important players
in the banking industry. Further research in this area is necessary as different
populations may offer more insight to enrich the marketing research. Another study
similar to Chang‘s is a dissertation by Toelle . He surveyed 200 retail-banking
customers drawn from four banks in the Indonesian banking industry to identify the
link between service attributes, customer value, customer satisfaction, and customer
loyalty. The results indicated that service performance has significant effects on
customer value, customer satisfaction, and loyalty. One limitations of his study is that
it focused on only four banks – two government-owned and two private banks – but
neglected other foreign and regional banks in the Indonesian banking industry. Based
57
on this shortfall, he recommended further studies to evaluate the linkage of the
concepts in different industry or with a different population. One limitations
identified with this study is the sample size. Only 2 banks were selected for this study
for comparison between private and a public bank, but RBI data says that there are
171 different banks that operate in India, as on June 08, 2013. Together, these banks
have 76,003 reporting offices across the country. Therefore, the results cannot be
generalized, creating an opportunity for further studies with larger samples.
The level of service quality has been identified to be influenced by service
performance in the banking industry by Huang. Her study, focused on evaluation of
the level of influence of service performance on service quality, surveyed 20 banks –
government-controlled and 10 privately owned banks in Taiwan. The main objective
was to test a new model of service performance gap on service performance and
quality. In this regard, independent variables, including teamwork, employee-job fits,
perceived control, technology-job fit, supervisor control systems, role ambiguity, and
role conflict, were measured against dependent variables, customers specification,
bankers specification, and service performance gap, using regression analysis and an
instrument proposed by Parasuraman et al. (1990) and used by Chenet. The results
showed that service performance affects all banks. One limitations of her study was
that the data used to test the hypothesis were collected from selected banks in Taiwan.
Therefore, the finding could not be used to generalize the case for all banks. In this
58
regard, she recommended further investigation of how the two constructs, service
performance and service quality, are related under different settings and with different
populations. In line with this recommendation, this study investigates how service
performance is linked to service quality
2.2.3 Models in Service Quality
In the 21st century, the increasingly competitive nature of the retail banking
industry has challenged individual retail banks to differentiate their services in order
to stand out among community of banks. In this regard, banks are striving to use
delivery of service quality to increase competitive advantages. What has become
apparent from the service marketing literature is that products alone cannot procure a
firm competitive advantage. Therefore, it is suggested that for a retail bank to survive
in a competitive business environment, management must focus on service quality
delivery to ensure customer satisfaction.
Customer satisfaction, explained as the feeling of satisfaction emanating from
comparison of perceptions of actual products/services performance against prior
service performance expectation, plays significant role in increasing a firm‘s
competitive advantages. Due to the significance of customer satisfaction, service
marketing literature has also increasingly given it attention. Over the last two
decades, two perspectives have emerged and evolved in service marketing literature:
59
the service profit chain proposed by Heskett and the SERVQUAL model proposed
by Parasuraman.
The service profit chain model conceptualized the positive relationship between
employee satisfaction, service quality, and customer satisfaction, which ultimately
leads to profitability. Various researchers like Anderson & Mittal, Loveman, largely
support the proposition of the service profit chain model. On the other hand, the
SERVQUAL model conceptually identifies similar correlation between employee
satisfaction, service quality, and customer satisfaction, where employee satisfaction
and service quality constructs drive the customer satisfaction construct. However, the
SERVQUAL model identifies service quality as comprising functional and technical
dimensions. From the functional dimension, quality is perceived as complex and is
characterized by heterogeneity, intangibility, inseparability, and uniqueness .
Lovelock contended that the uniqueness of service is manifested in the fact that it is
delivered as performance; customers are part of the production process; quality is
assessed during delivery; it cannot be counted; delivery is prompt; and delivery
channels are not visible or compressed. Past literature largely extended, evaluated,
and tested the two perspectives.
60
Maddern et al. (2007) evaluated the drivers of customer satisfaction and a found
positive link between employee satisfaction and service quality constructs. Since
service quality is an antecedent of customer satisfaction, it is anticipated that
improving service performance positively impacts service quality, leading to
satisfaction.
Emerging literature also challenged the two perspectives. For example, while the
attention given functional quality proposed under the SERVQUAL model is disputed,
the adequacy of a simple linear relationship between profits drivers under the service
profit chain is challenged . In an attempt to conceptualize service quality, researchers
have proposed other models.
Gronross (1988) proposed the Perceived Service Quality model. Under this model,
two types of service quality from the customers‘ perspectives have been identified:
expected quality and experienced quality. In the service delivery process, when the
expected quality matches experienced quality, high perceived service quality is said
to be attained. On the contrary, where there is a mismatch, low perceived quality is
said to be attained. In extending the perceived service quality model, Gummesson
and Gronross (1988) identified four sources of quality: design, production, delivery,
and relation.
61
Boulding similarly developed a behavioral process model of perceived service
quality based on a longitudinal and quantitative survey. Under this model, the
perception of the dimensions of service quality is conceptualized as a function of
prior expectations of service performance during impending encounter. In this regard,
they posit that customers‘ expectations influence the perception of service quality.
Zeithaml et al. (1990) proposed one of the most popular and widely used models in
the service industry: the gaps model. Under the gaps model, service quality is
described as the outcome of the comparison of what customers expect against the
perception of actual service performance. These discrepancies are considered gaps.
Parasuram et al. (1988) identified four internal gaps likely to occur as customers
evaluate service quality: information-related gaps; design-related gaps;
implementation-related gaps; communication gaps; and customers‘ perceptions and
expectations gaps. A fifth gap represents the aggregate of gaps 1–4. The gaps model
prescribed that the marketing goals of service providers should be the focus on
closing these gaps to ensure customer satisfaction. To close the gaps, there is the need
to understand the underlying causes of the gaps.
To understand customer perception of service quality
62
Pieters, Bottschen, and Thelen introduced a model of customer expectation of
service quality that encapsulates three components: the process, the outcome, and
aspects related to the
process. According to Bearden and Teel (1983) to assess these components
practically, variables, including customers‘ complaints, customers‘ attitudes and
expectations, and customers‘ evaluation of the service delivered, must be considered.
Lewis and Broom (1983) described service quality as customer satisfaction. In linking
service quality to service performance, they contended that service quality is
defined by how well actual services delivered matches customers‘ expectations..
As attempts are made to conceptualize service and quality, Gabbott and Hogg
explained that customers have the tendency to evaluating service in two ways:
i)―is it of good quality?‖ and ii) ―Am I satisfied?‖ . These two evaluative
perspectives formed the basis of debate in the service literature. However, there is
consensus on the use of perception and expectation in assessing both service quality
and satisfaction. The possibilities of negative or positive events‘ occurrence during
customers‘ encounters with service providers shape and define the expectations. Prior
experience influences customer expectation, conceptualized as the wants or desire of
customers. With expectation being constant, high levels of performance receive high
quality evaluation from customers.
63
In support to this perspective, Olson and Dover contended that customers‘
expectations encapsulate pretrial beliefs of service quality. Some scholars contend
that customers may exhibit performance expectations in aggregates, such as ideal,
expected, minimal, and desirable. On the contrary, other scholars conceptualized
performance expectation as emanating from experience norm. In most cases, the
studies employed expectations and perceptions as key antecedent constructs. It is also
recognized that how customers perceive their banks‘ services performance
significantly impacts their success
Sureshchander found customers to be more educated now than ever, and therefore,
they expect more value and quality, which they are willing to pay for. The levels of
assistance and courtesies customers expect from their banks have actually heightened.
The heightened expectation can only be met when service performance is improved.
With improved performance, customers will develop a positive perception of service
quality, resulting in loyalty, repurchase, increased market share, and profitability. In
addition, when customers become loyal, firms‘ profits increase as customer
recruitment costs are also eliminated.
64
2.2.4 Perception
A perception construct has been employed to study customers‘ opinions of service
in high involvement and service-oriented industries like banking. Developing an
understanding of the perception of customers is identified as vital in aiding
managerial efforts toward managing excellent service delivery.
Schiffman defined perception as the process through which persons make decisions
regarding selection and interpretation of stimuli to ―form a meaningful and coherent
picture of the world‖. Perception, which entails selection, organization, and
interpretation processes, is unique to individual consumer.
Boulding - perception is developed any time consumers use a service. They believe
that consumers‘ perceptions of service quality are driven by both recency of service
encounter and expectation. This means that customer expectation has a causal
relationship with perception. So that any time the expectations of consumers change,
it could result in change in perception of reality.
Kothari & Sharma- The perception of service quality can be either perception
before contact or perception after contact . With the former, perceived quality is the
combination of prior expectation during service encounter and service delivered
during service encounter. Conversely, perceptions after contact make expectations
65
more practical and realistic after an actual service encounter. Similarly, service
quality has been described as ―subjective perception of customers‖ emanating from
comparison of before service expectation with after service perception.
Cronin and Taylor and Boulding- stated that service quality could be best
conceptualized as an attitude based on customers‘ perceptions of service
performance. The performance construct has also been well researched because of
the critical role it plays in service delivery. Service performance is manifested along
three factors, identified as human element, consistency of service delivery, and
tangibles, the human element of service delivery, which encapsulates staff/customer
interaction, plays an important role in shaping customer perception of service quality.
According to Crane and Lynch (1988), customers may rely upon employees‘
performance cues, including competence, courtesy, and interpersonal skills exhibited
during service delivery, to determine the level of service quality.
Hartline and Jones (1996) also found the performance cues of employees to play a
significant role in the determination of service quality. Globalization and
technological advancement among other macroeconomic factors has resulted in a
transformation of the Indian banking industry, thus, heightening competition . The
banks in the industry are striving to understand their customers in order to establish
66
and maintain high value relationships. In retail banking, customer satisfaction is
considered the ultimate predicator of service performance. In this regard, retail banks
have focused on improving performance as way of recruiting new customers, dealing
with price competition, preventing the loss of customers, and minimizing mistakes.
The rapid evolving nature of the retail banking industry‘s market, where customers
continue to increase standards, has resulted in numerous studies on service
performance, service quality, and customer satisfaction among many important
marketing relations variables
2.3 Concept of Customer Satisfaction
In the competitive banking industry, customers are highly sought because an increase
in customer base is a function of competitive advantages. Customer expectation and
perception of service quality influences satisfaction. The importance of customer
satisfaction has been the source of the growing academic and practitioner interest in
the service industry. For this reason, it has also been well researched in marketing
practice and scholarship in the service industry.
67
Figure 1.4: Satisfaction Formation
The figure 1.4 explains arrow drawn from expectations to perceive quality that
indicated that perceived quality may increase or decrease directly with expectations.
Perceived quality may either confirm or disconfirm pre-purchase expectation. The
determination of the extent to which perceived quality expectation are disconfirmed
in figure by arrow drawn from expectation to perceived quality to disconfirmation.
Satisfaction is positively affected by the expectation and the perceived level of
disconfirmation that is also shown by the arrow in the figure. Disconfirmation and
perceived quality have a stronger impact on satisfaction( Oliver 1980)
In an attempt to define customer satisfaction, various perspectives have emerged.
Churchill & Surprenant, Riordan, Oliver, & Donnelly: Customer satisfaction
represents the feeling of satisfaction emanating from the perception of service
68
performance that meet customers‘ expectations. In other words, it is the discrepancies
between prior customers‘ expectations and their perception of what is actually
received. Similarly,
Kotler (1999) described customer satisfaction as the outcome of customers‘
comparisons of pre-purchase expectations and post-purchase perception. Baker and
Crompton (2000) conceptualized customer satisfaction as a personal experience and
mentality associated with personal expectation and service actually delivered.
Anderson, Fornell, and Lehmann (1994) viewed customer satisfaction as the
experience customers acquire through purchasing and using a product or service.
The increasingly importance of the concept of customer satisfaction in the retail
banking industry has led to a continuous growth of research in the area of customer
satisfaction, especially in its measurement. Contends satisfaction can both be
conceptualized from an affective and cognitive prism. Customer satisfaction is often
conceived to have direct impact on cognitive evaluation of consumers and affective
responses. Some researchers often employ behavioral responses like repeat purchase,
word-of-mouth, and complaint behavior to study customer satisfaction or feelings
regarding products or services. In an attempt to explain the nature and
operationalization of customer satisfaction
69
Oliver (1980) introduced the disconfirmation of expectation model. This model
explains the causal relationship between expectation and service performance, where
customer satisfaction is the function of the causality. Customer satisfaction is
identified to be directly linked to service quality. In this regard, some scholars
consider it as leading to service quality. On the contrary, some have argued that
service quality leads to customer satisfaction. While service quality is considered a
cognitive state, customer satisfaction is conceptualized as an affective state.
Customers‘ willingness to repurchase a service or product is contingent on their
perception of service quality and the continuous flow of value.
Weiner (1986) stated that customers‘ judgments on value have a profound effect on
their perception of satisfaction.He believed that customer satisfaction could be
conceptualized as either an outcome or a process. With customer satisfaction as an
outcome,
Oliver (1997) suggested that customer satisfaction denotes a cognitive and affective
state of being or responses to current consumption experience. With customer
satisfaction as a process, it is believed that customer satisfaction is a function of the
whole consumption process or a specific element of the consumption process,
70
resulting in satisfaction. Researchers with an orientation towards aligning of customer
satisfaction with process, focused on perceptual, evaluative, and psychological
aspects of processes that result in satisfaction
In 2000, Lassar, Manolis, and Winsor set out to investigate the effect of service
quality on customer satisfaction using a 22-item SERVPERF instrument designed by
Cronin and Taylor and a 16-item Technical/Functional instrument proposed by
Gronross . The results showed that as the number of service failure encounters
decrease, functional quality impacts on customer satisfaction intensified.
Disconfirmation Theory
One of the most important theories linking customer satisfaction to perceived
service quality is the disconfirmation of the expectation paradigm proposed by
Oliver(1980). He identified the concept of disconfirmation of expectation as the key
to influencing customer satisfaction. In explaining the effect of customer satisfaction
on attitude changes toward pre-purchase intention, Oliver (1982) argued that
customer satisfaction is a dynamic concept and that its dynamism is expressed in the
expectancy disconfirmation model. According to expectancy-disconfirmation model,
consumers usually engage in comparing the expectation they had before purchase to
service performance after purchase. In this regard, expectations of consumers are
conceptualized as at the adaption level and the starting point of consumer evaluation.
71
Consumers form expectations, and during consumption, they perceive quality,
resulting in either confirmation or disconfirmation. In describing the effect of
satisfaction on attitude change leading to purchase intention, Oliver stated that
Attitude is the consumer‘s relatively enduring affective orientation for a product,
store, or process (e.g. customer service), while satisfaction is the emotional reaction
following a disconfirmation experience which act on the base attitude level and is
consumption specific. An attitude is therefore measured terms more general to
product or store and is less situationally oriented. The concept of
confirmation/disconfirmation paradigm has been the basis of many quality
management studies in the last decade.
Parasuraman (1994) conceptualized customer satisfaction judgment as the
customers‘ perception of the gap between service performance and customer
expectation. The theory of disconfirmation, which focused on explaining how
customer satisfaction evolves, is based on Helson (1948) adaption theory. Adaption
theory states that two consumers may develop different perceptions of the same
service or product based on experience that changed from neutral point of reference.
This means that a customer who experienced good service may perceive subsequent
performances as mediocre, and a customer who experienced bad service may perceive
subsequent performance as above average. The disconfirmation theory states three
72
possibilities: positive, negative, and zero states of disconfirmation. When the service
performance is greater than expectation, positive disconfirmation is said to take place.
On the contrary, where service performance is less than expectation, the situation is
described as negative disconfirmation. Zero disconfirmation is said to occur where
service performance is equal to customer expectation. Therefore, customer
satisfaction is a function of both disconfirmation and expectation. In the same light,
disconfirmation/expectation and disconfirmation theory posit that judgment on
satisfaction is made by the evaluation of the actual service performance
against prior-to-purchase expectation. Expectancy disconfirmation/expectation and
disconfirmation models are explained under two disciplines: organizational behavior.
This theory identifies two states in consumption process. In the first state, consumers
anticipate satisfaction during pre-purchase, and in the second, the satification occurs
after consumption. When the service provided meets the expected satisfaction, it
results in positive disconfirmation. When the service provided is equal to expectation,
it leads to zero disconfirmation, and when it is less than expectation, it results in
negative disconfirmation. The concept of expectation is cardinal to the
operationalization of the disconfirmation model.
Olson and Dover (1979) stated that expectation is the pre-trial beliefs a customer
holds about a service or a product. Therefore, Churchill and Suprenant (1982)
73
contended that expectation represents anticipated performance and that performance
in this context represents ―the perceived amount of product or service attribute
outcomes received‖.
In 1997, Oliver, drawing on the disconfirmation paradigm, identified two underlying
forces that drive the expectancy and disconfirmation process in a market:
assimilation and contrast effect. Assimilation theory states that one reduces the
psychological discomfort caused by an unconfirmed expectancy by changing one‘s
perceptions to bring it more in line with expectations. The theory thrives on the
assumption that consumers are not willing to accept and show discrepancies from
positions held previously, and then assimilate judgment towards their initial feelings
for a product, service, or an event.
Swan and Trawick (1981) classified disconfirmation as inferred and perceived.
Inferred disconfirmation describes the difference in customers‘ prior ratings and the
after rating of a service or product consumed. Perceived disconfirmation, on the
contrary, denotes the perception that service performance is greater or less than
anticipated.
74
2.4 Critical Incident
Another concept discussed in customer satisfaction literature is critical incident
service encounters. Critical incident takes place when there is an interaction between
a customer and service provider, which leads to either achievement of the aim of the
activity/meeting or creates detraction.
Bitner (1990):- all incidents associated with customer satisfaction and dissatisfaction
can be grouped into three: employees‘ responses to failure of serve delivery; response
by employees to the needs and requirement of customers; and unprompted action(s)
of employees that are not requested by customers. Bitner gathered customers‘
information that affects dissatisfaction and satisfaction under three major critical
incidents and explained these as follows:
1. Employees‘ response to failure of serve delivery: This pertains to the availability
and effectiveness of employees in responding to a failure in a service delivery
situation. Out of the customers studied, 23.3% stated that employees‘ responses
contributed to customer satisfaction, while 42.9% asserted that employee responses
contributed to dissatisfaction.
2. Response by employees to the needs and requirement of customers is identified
as the employees‘ responses to the special request, including errors and disruptive
behaviors. In the study, under this category of critical incident, 32.9% of customers
75
believed that employee response influenced satisfaction, while 15.6% believed that
it impacted the level of dissatisfaction.
3. The unprompted action(s) of employees not requested by customers‘ category
means attention paid by employees to customers that is not within the norm. In the
study, 43.8% of customers indicated that they believed employees‘ actions under this
category engendered customer satisfaction, while 41.5% believed it resulted in
dissatisfaction.
From Bitner (1990) study, one gathers that employees must have knowledge as to
how best to deal with critical incidents in order to ensure customer satisfaction.
Employees‘ performances in this regard are seen as having consequential effects on
customer satisfaction. Under the disconfirmation-expectation model, when customer
expectation is lower than the actual service performance, positive disconfirmation
occurs, which may lead to customers staying with service providers. On the contrary,
when expectation is higher than the actual service performance, negative
disconfirmation occurs, leading to customers switching to alternative providers.
Customer switching has also been the subject of academic interest in service
marketing. Switching behaviors have been examined under grounded theory.
76
According to Strauss and Corbin (1990), this involves a detailed analysis of
information gathered on variables associated with customer behaviors to determine
how they are interrelated.
Keaveney (1995) identified eight causes of customers‘ dissatisfaction: pricing;
convenience; core service failures; failure in service encounters; service failure
response; competition; ethical issue; and involuntary switching.
Previous studies have linked customer satisfaction to performance. In 1999, a study of
800 Sears Rebok stores revealed that as employee satisfaction increased by 5%,
customer satisfaction rose by 1.3% and revenue increased by 5% (Treytl, 2002).
Brown and Mitchell (1993) studied 52 branches of large saving banks in the US and
found a significant correlation of customer satisfaction and employee satisfaction
variables, such as work environment, teamwork, atmosphere, and access to
information on timely basis. Improvement in service performance because of
employee satisfaction may lead to a provision of quality service, which then leads to
customer satisfaction. Some researchers have attempted to measure customer
satisfaction using the service quality gaps model.
77
2.5 Concept of Service Performance
Retail banks are increasingly challenged to deliver service quality to meet the ever-
growing and ever-evolving customer expectations. Prior service marketing literature
has shown that customers evaluate service quality by comparing their perception of
actual service performance with their expectation of the service performance formed
from their service experience. There is no universal definition of service performance
despite the growing need for research in this area. Nevertheless, in service literature,
the importance of service performance has been emphasized. Performance construct
has been found to be a critical driver of success of any service-oriented and human
encounter organization, such as a retail bank.
Bloemer, Ruyter, & Kar, 2000: customers base their choice of bank on the potential
of a bank to deliver service quality to meet their expectations. Therefore, service
quality delivery has become the differentiator of one bank from the others. Delivery
of high quality service results in repeat purchase, customer retention, an increased
market share, a competitive advantage and ultimately an increase in profitability.
Poor or low performance, on the other hand, results in a loss of market share as a
result of customer defection. Bloemer, Ruyter, and Kar (2000) identified a correlation
78
between service quality, customer satisfaction, and loyalty. In this regard,
organizations are focused on increasing their performance to harness the benefits that
come with it, that is, competitive advantages and profitability
Leonard & Sasser and Rabin : The growing demand on retail banks by customers
to deliver high quality service has been on the ascendancy since the 1980s,
heightening both academic and practitionerinterest in service marketing scholarship.
With sophisticated customers and increased bank disloyalty, service performance is
increasingly becoming important, but it is also a complex issue. To conceptualize
service performance, many models have been proposed, including service profit chain
model. The service profit chain is one such model to conceptualize service
performance and to align it to constructs, such as service quality, customer
satisfaction, customer loyalty, and profitability. The service profit chain model
emphasizes the role of the employee component of the service performance construct
in any service organization
2.5.1 Service Profit Chain Model
The service profit chain provides the conceptual framework for understanding the
link between the service performance of employees and profitability, customer
loyalty, employee satisfaction, loyalty, and productivity. It also offered an
79
explanation of the quantitative link of employees‘ perceptions of service
performance, customer, satisfaction, and profitability. Under the service profit chain
model, profit and growth are conceived to be influenced primarily by loyalty of
customers. Customer loyalty is also driven by customer satisfaction resulting from
customers‘ perceived values emanating from employees performance.
In supporting the concept of the service profit chain model,
Anderson (2006) identified employees to be critical drivers of organizational
performance, customer loyalty, and increased market share. Customer satisfaction is
said to emanate from interactions between service employees and customers.
Therefore, favorable interaction influences repeat purchase, loyalty, and profitability.
Gelade and Young (2005): customers play a mediation role between employees and
the financial performance of a service organization. Employee attitude toward
customers also plays important role in shaping customers‘ perceptions of service
quality. Positive employee attitudes and behaviors are found to result in high quality
perception, and negative employee attitudes are a source of low quality perception.
Heskett identified the perception of organizational policies, practices, and culture as
driving employees‘ behavior during service interaction. Mixed results have emanated
80
from testing the service profit chain model. In a study of six hotels using the service
profit chain model.
Spinelli and Canavos found a link between employee satisfaction and guest
satisfaction. They indicated that employees responded favorably to teamwork,
decision-making processed, and guest appreciations, but were not satisfied with
money related issues, emphasizing the important role of employee morale in
satisfaction. For guests, they favored courtesies, competence, and timeliness.
Contrary to the proposition of the service profit chain model, in an exploratory study
in the UK.
Abbot (2003): found employees still worked hard to ensure customer loyalty and to
increase profits, even with low morale. This suggested that employee satisfaction is
not the only factor influencing service quality delivery.
In order to help businesses deal with employee productivity, in the 1980s
Gronroos (1983) and Berry (1983) developed the internal marketing concept as a
way of promoting a customer-centric workplace culture in service organizations. This
concept posits that to promote a customer-centric work place environment, senior
management,supervisors, and team members must first treat employees as internal
81
customers of the organization. In this regard, employees‘ needs must be provided
before considering those of the external customers.
Piecy and Morgan (1991) identified some of the needs of employees to include
information, training, support systems, and educational opportunities.
Foreman and Money (1995) identified the primary possible transactions between an
organization and employees as employee development, reward, and provision
of a clear vision aligned to organizational objectives.
The internal marketing concept proposed that to ensure service quality and
customer satisfaction, strategically banks must first strive to deliver service
performance that meets the needs of its employees (internal customers) in order to
position itself for meeting the expectations of external customers. When internal and
external customers are satisfied then the firm can generate new business. In support of
this proposition.
Berry (1991) stated that an organization should first be an internal supplier to its
employees.
82
According to Heskett (1994), service quality is employee-driven and directly
impacted by the human resource practice of organizations. Employee attitudes shape
customers‘ impressions about an organization. Since service is delivered through
frontline employees, who serve as the link between a firm and customers, any
increase in the performance of employees impacts service quality.
As the service quality literature grows, service performance is consistently found
to be an important factor in determining customer satisfaction. In lending support to
the proposition that employees are critical instruments for ensuring customer
satisfaction.
Bowen, Gilliland, and Folger (1999) contended that employees have the tendency
of treating customers similar to the way managers and supervisors treat them. Despite
the fact that many studies exist in service marketing attempting to explain
the importance of the employee construct to service quality, service performance,
customer satisfaction, and profitability, little have focused on linking performance to
quality using both banker and customer perceptions in developing economies. This
has created a vacuum that needs to be filled. The gap model of service quality and the
service performance gap model used in this study relied on customers‘ expectations
and actual service performance to define quality. Therefore, to understand the
83
extended relationship model, there is the need to understand the concept of
expectation.
2.5.2 Expectation
Zeithaml(1993): Expectation is the perimeter or standard by which future
performance is evaluated. Therefore, with expectation being constant, actual service
performance is compared to determine service quality.
Figure 1.5 Dynamic model of expectations
84
The following model is presented for dynamics of expectations:
Fuzzy expectations exist when customers expect a service provider to solve a
problem but do not have a clear understanding of what should be done
Explicit expectation are clear in the customers‘ minds in advance of the
service processes. They can be divided into realistic and unrealistic expectations:
Implicit expectation refer to elements of a service which are so obvious to
customers that they do not consciously think about them but take them for granted(
Gronroos, 2000, 89 f )
In the case of services:
1. Fuzzy expectation may easily prevail and run a high risk of being
disappointed. Customers with fuzzy expectations must be helped by the provider to
make their expectations explicit. This may also happen without the provider‘s
intervention, as a result of user‘s learning process, but this may lead the user to quit
the relationship or to substitute unrealistic for fuzzy expectations.
2. Explicit expectations are likely to be unrealistic, due to their innovative or
experimental character. These expectations must be rapidly brought to realism.
3. Implicit expectations may become relevant when they are not fulfilled: e.g.
the user may incorrectly expect that the support service is free of charge. Implicit
85
expectations should therefore made explicit and it must be clarified whether they are
realistic or not
According to Montfort (2000): customers‘ expectations are formed based on
internal or external cues. With the internal cue based expectation, experiences with a
service provider shape expectation. External cue base expectation, on the other hand,
is shaped by other factors like word-of mouth and communication from a market. As
a standard of comparison, expectation could take the form of a normative or
predictive desire or want. The concept of expectation plays significant role in the
operationalization of service quality and the service performance gap model.
2.5.3 Service Performance Gap Model
The service performance gap model has its antecedent in the original work of
Parasuraman focused on the gaps between customers‘ perception of actual service
delivered and expectations (expectations-perceptions service gap). The service
performance gap model is built on the assumption that customers know what service
providers must provide from prior service experience. This knowledge shapes their
expectations. When service is delivered, then customers compare the quality of the
service delivered to their expectations. If the actual service is below expectations then
there is service gap. People-intensive, interactive organizations like retail banks are
pruned to the threat of the service performance gap. Therefore, in retail banking,
86
employees are considered key to their service quality delivery. In service encounters
with customers, frontline employees mannerisms, behaviors, moods, appearance, and
even language influence customers‘ perceptions of service quality. As part of their
service quality studies since 1983, Parasuraman identified five gaps likely to occur
during service encounters.
The first gap relates to the discrepancy between customer expectations and
bankers‘ perceptions of customers‘ expectations.
Zeitaml et al. (1988) found that often management does not understand what level of
service quality meets the expectations of consumers. Management may also lack
knowledge of what attributes a service must have to meet the expectation of
customers. Moreover, management questions may focus on what level of
performance is needed to provide quality service to customers. Marketing research is
advocated to fill this gap between management‘s perceptions of customer
expectations and consumers‘ expectations. In most cases, service oriented
organizations like banks put more emphasis on improving the efficiency of the
productive process to the detriment of meeting customer expectation. To reverse this
trend, there is the need for market research.
The second gap relates to management‘s perception of service quality and its
inability to set proper service specifications. Management‘s focus on
87
profitability and the quest for cost reduction in the short-term may be the
source of this gap. To fill this gap, it is expedient for managers emphasize
standards and specifications. This also involves a managerial strive to develop
the ability to meet standard and specifications.
The third gap emanates from employees‘ inability to perform up to the set
standards. Therefore, this gap is the discrepancy between employees‘ performance
and the specification or standards set by management in a given productive
circumstance.
To fill this gap, Parasuraman (1985) identified seven theoretic constructs responsible
for the third gap: teamwork, employee-job fit, technology-job fit, perceived control,
supervisory control systems, role conflict, and ambiguity.
The fourth gap is the discrepancy between service and external
communication. This gap emanates from promising performances that are not
realistic, especially through advertisements. This gap also results from a lack of
a functional communication link between departments that need to liaise to
offer services to consumers. In order to remedy this situation in retail banking,
front and back offices needs to have effective communication links both
internally and externally.
The gaps model is important because it enable banks to make a determination as
88
to how to fill the four gaps to balance customer expectation with the perception of
service performance. While the four gaps are mainly related to internal factors, the
fifth gap is mainly external.
The fifth gap is created as a result of occurrence of all the four internal gaps
due to lack of functional communication link. The focus of this study was an
investigation of the factors responsible for the size of the third gap. The
outcome of the study is anticipated to contribute to literature attempting to
explain the correlation of employee performance and service quality.
It is often conceptualized that customers evaluate service quality by comparing
their expectation of service performance with the actual service delivered to them.
When there is discrepancy between customers‘ expectations and service performance,
gaps are created. This is the foundation of the service performance gap model, which
explains the performance gaps between customers and the frontline employees of an
organization ( Parasuraman, 1988). The third gap, as the service performance gap is
often called, emanates from employees‘ inability to perform up to standard. When the
service performance gap occurs, it means that there is discrepancy between
employees‘ performances and the specification or standards set by management in a
given productive circumstance.
To fill this gap, Parasuraman identified seven theoretic constructs responsible for the
size of the third gap, and these are explained as:
89
1. Teamwork. This antecedent related to group cohesiveness, commitment, and
willingness to participate in the decision-making process.
2. Employee-job fit. This construct relates to employees‘ capabilities in undertaking
job related responsibilities.
3. Technology-job fit. This refers to the appropriateness and availability of the
technology required by an employee to perform the assigned job.
4. Role conflict. This is the discrepancy between the expectation of managers and
customers and the employees‘ expectation of their inability to meet the expectation.
5. Perceived control. This antecedent refers to the how employees react to and
handle stress in an organization.
6. Supervisory control systems. This antecedent relates to the process of measuring
employees‘ performances.
7. Role ambiguity. This occurs when employees lack critical information in order to
perform effectively.
Zeithaml (1990) further contended that service quality is highly dependent on the
efficiency of the antecedents of service performance. On the contrary, Parasuraman
identified only teamwork as being correlated to service quality. In addition, in
general, performance is conceptualized as a driver of organizational objectives.
90
In the 21st century, organizations in various industries, including hotel and education,
have focused on increasing performance as a way of providing service quality,
satisfying customers, and increasing profits. The need to use service quality as a
vehicle to increase competitiveness has been considered prudent, propelling
managerial interest in the drivers of performance. Marketing researchers‘ quests to
study the link of service performance factors to service quality related variables have
resulted in mixed conclusions.
Schlesinger and Heskett (1991) employed the service profit chain framework to
explain the effect of human resource factors on service marketing and organizational
profits. They reported that the Forum Corporation‘s study revealed that only 14% of
customers discontinued their loyalty after dissatisfaction with service performance.
This finding confirmed Parasuraman et al. (1984) observation that customers exercise
judgment of service quality based on a comparison of expectation and actual service
performance. Along the lines of this observation.
Parasuraman (1984) defined a set of gaps between executive or management
perceptions of service delivered and that of customers. They rated the customer
perception of service quality from ideal to unacceptable, and suggested that the rating
depended on whether customers‘ expectations were being shorted or exceeded.
91
Based on Parasuraman findings, Zeithaml identified five dimensions of service
quality: tangibles, reliability, responsiveness, assurance, and empathy. These
dimensions have been incorporated into the SERVQUAL model, which is widely
used in service research. Schlesinger and Heskett found the tangibles dimension to be
the least important to customers, while reliability rated the highest. Other researchers
(Fornell; Ittner and Larcker) linked the service quality construct to customer
satisfaction and financial performance.
On the contrary, some researchers hold the view that financial performance, service
quality, and customer satisfaction are not always correlated, and even in some cases,
may have a negative correlation. The contradictory positions held on the effect of
these constructs led to an attempt to offer a mediating perspective. This centrist view
identifies customer satisfaction as the fulcrum that links performance to service
quality.
The different perspectives on the relationship of performance, quality, and
satisfaction can be attributed to the fact that unlike manufacturing and distribution of
physical products, service delivery is unstructured and non-routine. The difference in
delivery processes emanates from the fact that service embodies characteristics, such
as intangibility, simultaneous production, and delivery, as well as customer
participation. In some business environments, service quality delivery has been found
to be less important to customers than other issues. To provide service quality, it is
92
important to understand the level of performance that meets the customer‘s
expectation of service quality. Therefore, research on performance just like quality
has become necessary to achieve this goal.
Marketing literature‘s attempts to measure service quality in terms of performance
Which has been given attention because of its correlation. Some scholars have
identified employees‘ attitudes towards internal dynamics as an important metric of
customer perception of service quality in a marketplace. Other scholars like Berry,
Chase & Garvin, also found teamwork among employees to be instrumental in
providing a quality service for customer satisfaction. Therefore, employee attitude
and teamwork have casual effects on performance.
To define service quality, both Gronross (1982) and Parasuraman (1988) referred
to it as the difference between what customers expect from service providers (i.e.,
expectations) and the perception of service performed. Where there is discrepancy
between the perception of service providers of service quality and perception of
customers of service quality, a service performance gap is said to be created
The performance and quality gaps concept has formed the theoretic basis of many
researches in service marketing scholarship within the last two decades.
93
Parasuraman: pioneering work conceived the discrepancies between service
performance and service expectations to manifest in five gaps or service quality gaps
related to: information and feedback; design; implementation; communication; and
customers‘ perception and expectation. This concept explains the link of performance
to service quality as it postulates that the provision of service quality is contingent on
service performance, employees, and delivery systems. Performance is a yardstick
that can be used to measure the level of quality of service of an organization.
Knowledge of the relationship between service performance gap, service quality, and
customer satisfaction constructs has been crucial for strategic marketing planning in
retail banking. Therefore, it is prudent for retail bankers to understand what level of
service performance may meet the expectation customers to engender satisfaction and
repeat purchase.
The use of the gaps model in measuring service quality and performance has become
popular among scholars and practitioners. Thinking similarly,
Gronroos (1982) contended that normally in evaluating service, quality consumers
compare their expectation of service to the perception of the service they received in
an interaction, and he recommended that management pays attention to the gaps in
measuring quality.
94
Sasser, Olson, and Wyckoff (1978) perceived service quality as involving more than
an outcome and identified three dimensions of service performance: level of
materials, resources and facilities, and employees. On this basis, they further
contended that service quality depends on the way it is delivered, bringing the idea of
performance to the fore.
In the marketing literature, the concept of service performance has been identified
as a component of disconfirmation, which is modeled as a predictor of satisfaction. In
this regard, disconfirmation has been found to relate to service performance construct
in a significant way. One concept that links service performance to service quality is
the value-percept diversity. This means that customers are more satisfied when the
quality of the service provided to them meets their expectation.
According to Johnson (1998): when customers are satisfied with the quality of
service, they may require more, propelling the need for bankers to increase
performance to meet their expectation.
This has led some scholars to anticipate and conclude that service performance and
customer satisfaction are positively correlated. Therefore, measurement of the
performance of an organization with regard to service quality and customer
satisfaction enables management to formulate and implement strategic marketing
95
programs. In research on service performance, research methodologies differ
significantly.
Measuring service performance has gained prominence because it has been identified
as vital in ensuring customer service and gaining competitive advantages. Also, since
service performance is significantly correlated to customer satisfaction, measuring
performance allow banks to deal with complaints from customers about services they
receive.
Tucker (1994) summarized methodologies and findings of past major studies on
service performance and one of the major metrics related to customer service and
performance are the data envelopment analysis. This is a nonparametric quantitative
analytical index for estimating and evaluating productive efficiency to understand
performance.
In the service industry, comparing expectation to actual service performance provides
the best measure of satisfaction.
Chen and Yang (2000) proposed the service performance index, which involved
observation of the number of complaints a firm receives from its customers in order
to generate a reliable index value.
96
2.5.4 The Link between Service Performance and Service Quality
The relationship between service providers and customers thrives and is enhanced
by the perception of service quality in the banking industry. Customers expect banks
to provide a quality service for their satisfaction. In the retail banking industry, it is
important for banks to know their customers‘ perceptions of service quality in order
to influence their purchasing behavior. People normally deliver retail banking
services, even if electronically. Therefore, service quality delivery depends on
employees‘ capabilities and performance. Poor employee performance impacts
negatively on customers‘ perception of service quality. On the other hand, excellent
performance positively impacts service quality.
Employees‘ performance varies, even for the same employee on different
encounters of service to customers. According to role theory, an important
determinant of service delivery process is the congruence of employee and consumer
role behaviours.
The attempts to conceptualize and operationalize service performance have resulted
in the availability of models of performance measures. Some of the models including
the service profit chain and service performance gaps model adopted and
incorporated customer outcomes like customer perception of service quality,
customer satisfaction, and customer perception of organizational performance. In
97
modern retail banking, there is high-level interaction between customers and the
bank‘s staff, which makes customers‘ perceptions of service quality an important
metric of performance.
The disconfirmation paradigm links service quality to service performance.
According to Oliver (1980), the concept of disconfirmation holds that customers
have the tendency to compare their expectation to performance to determine
satisfaction. Performance that meets customer expectations is confirmed, while
performance that exceeds expectation is positively confirmed. On the other hand,
performance that is below expectation is negatively confirmed.
2.6 Summary
Prior literature continues to emphasis the need for research to be conducted into
the effect of service performance on service quality for strategic planning. It is also
obvious that the competition prevailing in the retail banking industry will continue to
grow. To meet the expectations of customers by delivering excellent service,
managers need to know the perception of their customers of service performance.
Research also demonstrated the real need for retail banks to adopt the relationship
marketing model, which is less costly and profitable. Literature showed that there is a
link between service performance, service quality, customer loyalty, competitive
98
advantages, and profitability. However, the relationship is conceptualized and thrives
on information on the customers‘ perceptions of service performance and service
quality. Service organizations continue to search for ways to understand customers
and to promote long-term relationships.
The service performance gap model has been applied in many industries and
settings, but it has not been widely applied in non-Western countries. Therefore, there
is the need to extend its application to less sophisticated market outside the West,
such as the Indian banking industry. The following chapter explains the methodlogy
adopted for this study.
99
CHAPTER 3
METHODOLOGY
This part will provide the conceptual framework based on Literature review. This chapter will
explain the key factors, variables and relationships among theories and models and provides a
theoretical overview; also this chapter will present detailed idea about how the research will be
conducted. This includes research questions, hypotheses, sample selection methods,
measurable variables, data collection methods and data analysis methods.
3.1 Research Purpose
This dissertation investigated the Service Quality in the Indian retail banking
industry. The research questions addressed in this study were:
1. In the Indian retail banking industry, what is the perception of customers of the
relation of service performance and service quality?
2. In the Indian retail banking industry, what is the perception of bankers of the
relation of service performance and service quality?
100
3. In the Indian retail banking industry, is the perception of customers of service
performance different from that of bankers?
4. What are the significant antecedents of service performance gaps influencing
service quality attributes in the Indian retail banking industry?
5. In the Indian retail banking industry, what is the difference in perception of
service performance of private and government-owed?
3.2 Hypothesis
Customers normally have expectations of service, which are developed from
experiences of previous service performance acquired during encounters. Based on
the conception of customers‘ expectations, Zeithaml (1988) defined service quality as
the difference between service expectation and actual service performance. Where
there is lack of equilibrium between customers‘ performance expectations and the
perception of the actual performance of a service provider, service performance gaps
are said to be created. Service quality under this model is considered a function of the
gaps, implying that the wider the gaps, the lower the quality of service and vice versa.
Berry (1988) attributed the service expectation performance gap to a
misunderstanding between what management think are customers expectations and
what customers actually expect.In some cases, management may understand customer
101
expectations and specifications,but the actual service can still fall below expectations,
creating service performance gaps. This situation may emanate from employee-
related factors in service delivery. Drawing on the conception of employees as a
critical factor in meeting service quality expectations, Zeithaml identified seven
constructs or factors influencing service performance gaps in an organization:
teamwork, employee job-fit, technology job-fit, perceived control, supervisory
control systems, role conflict, and role ambiguity.
In the retail banking industry, customers normally expect service to have certain
attributes in order to meet their specifications. The services bankers deliver to
customers may or may not meet customer specifications, resulting in disconfirmation.
To understand the relation of service performance and service quality, this research
involved testing dependent variables of customers‘ perceived specifications, bankers‘
perceived specifications, and the resultant service performance gaps against the
independent variables of antecedents of the service performance gaps of teamwork,
employee job-fit, technology job-fit, perceived control, supervisory control systems,
role conflict, and role ambiguity.
Huang (2004) tested the relationship between these antecedents (independent
variables) against dependent variables of customers‘ perceived specifications,
bankers‘ perceived specifications, and the service performance gap using data from
102
the Taiwan banking industry. The result was mixed and inconclusive as she identified
a number of limitations and suggested further testing of the service performance gap
model in different businesses or cultural settings.
Since this research similarly investigated the relation of service performance and
service quality using data from Indian retail banking industry, the independent
variables of teamwork, employee job-fit, technology job-fit, perceived control,
supervisory control systems, role conflict, and role ambiguity can be tested against
the dependable variable of service specification (as in Huang, 2004). This test was
conducted under the assumption that where there is or is not a service performance
gap, it can be explained by trust and commitment or lack of them in the service
delivery process
Trust is an antecedent of commitment, which is important in relationship marketing.
Based on commitment/trust, exchange and role theories, the influence of the
independent variable on dependent variables and vice versa suggested the below
Hypothesis for this study:
Ho1. In the Indian retail banking industry, customers do not perceive or negatively
perceive a link between the antecedents of service performance gaps and service
quality.
103
Ha1. In the Indian retail banking industry, customers perceive or positively perceive a
significant link between the antecedents of service performance gaps and service
quality.
Ho2. In the Indian retail banking industry, bankers do not perceive or negatively
perceive a link between the antecedents of service performance gap and service
quality.
Ha2. In the Indian retail banking industry, bankers perceive or positively perceive a
significant link between the antecedents of service performance gaps and service
quality.
Ho3.The perception of bankers of service performance is not different from the
perception of customers of service performance in Indian banking industry.
Ha3.The perception of bankers of service performance is different from the
perception of customers of service performance in Indian banking industry.
Ho4. In the Indian retail banking industry, there is no link or negative link of the
antecedents of service performance and perception of bankers and customers of
service quality.
104
Ha4. In the Indian retail banking industry, there is significant link or positive link of
the antecedents of service performance and perception of bankers and customers
of service quality.
Ho5. In the Indian retail banking industry, there is no significant difference in
perceptions of service performance of private and government-owned banks.
Ha5. In the Indian retail banking industry, there is significant difference in
perceptions of service performance of private and government-owned banks.
To test the five Hypothesis and to answer the research questions, the service
performance gaps model developed by Parasuraman, with certain changes was
employed.
The service performance gap model explains the discrepancies between what
customers‘ expect and what they actually receive from service providers. Therefore,
the methodology of this research was conceived along the postulations of the model.
Owing to the uniqueness of the research and the unavailability of empirical data
on the Indian retail banking industry, a quantitative methodology was considered
suitable for data collection. Considering the postulations of the service performance
gap model, as reflected in the literature review, a quantitative survey was considered
an appropriate design. The choice of quantitative method was motivated by the fact
that it allows generalization and provides a lens for presenting a broader picture of a
105
given population. A quantitative method was chosen because it has the potential of
yielding the most relevant and reliable data for testing correlations of the scalable
dependent and scalable independent variables in a study. Moreover, a quantitative
survey allows the use of statistical tools, such as SPSS, for analyzing the relationship
between independent and dependents variables in order to test the Hypothesis and
answer the research questions.
An instrument proposed by Parasuraman et al. (1990) and widely used in many
service quality and service performance researches was adopted for data collection.
The demographic section of the instrument was slightly modified to include questions
on whether a bank was private or public. This change was to allow the collection of
data to match the broad scope proposed in this research. For clarity, the questions on
the five service quality dimensions were highlighted.
The adoption of the instrument was considered appropriate as the research model
and the questions of interest required collection of data along the five dimensions of
service quality – tangibles, reliability, responsiveness, assurance, and empathy by
Parasuraman– and the seven antecedents of service performance gaps – teamwork,
employee-job fit, technology-job fit, role conflict, perceived control, supervisory
control systems, and role ambiguity.
106
Huang (2004) determined the effect of service performance on service quality by
testing the relationship between independent and dependent variables associated with
the two constructs. This study used a similar approach by testing the relationship
between the dependent variables of customers‘ specifications, bankers‘ specifications,
and the service performance gap against the independent variables of the seven
antecedents of service performance gap using quantitative data. The results of the
analysis of the quantitative data helped in testing the Hypothesis and answering the
research questions. The validity and reliability of the adopted instrument has already
been assessed in many service industries, cultures, and settings; therefore, a pretest
was not conducted to test validity and reliability of the instrument.
One of the reasons given by Huang (2004) for the focus on the Taiwanese banking
industry was the growing competition within the industry. Similarly, the Indian
banking industry has witnessed heightened competition, rationalizing extension of her
study. It was envisaged that the result of the test of the two categories of variables
would provide useful insights into how factors associated with service performance
gaps influence service performance and the perception of service quality in the Indian
retail banking industry.
The choice of constructs for this research was informed by the fact that a bank is a
service-oriented organization that relies on the performance of its employees and
management to provide service quality for its customers‘ satisfaction. In a bank,
107
employees are the most valuable instruments for ensuring the provision of a quality
service for its customers‘ satisfaction. Also, in a competitive banking environment,
employees‘ performances play significant role in firms‘ efforts at gaining competitive
advantages. When service oriented organizations put their employees and customers
first, a radical shift is likely to occur in the way success is measured in the marketing
process. They believe that employees‘ loyalties drive performance and that
employees‘ satisfaction drives loyalty. Where there is increased competition,
employees are relied upon to improve service quality through performance for a firm
to gain competitive advantages. The service profit chain
model represents the framework, which links service performance and employees, as
well as customers‘ assessments of quality to a firm‘s profitability.
The service performance gaps model proposed that service performance should be
measured against customers‘ expectations in order to determine service quality.
Customers‘ expectations encapsulate specifications of wants or needs that are
compared to actual service delivery.
The rest of this chapter discusses the research design, measurable variables, the
sample, survey instrument, validity and reliability, data collection procedure, and
analysis associated with this study.
108
3.3 Research Design
Research design can be likened to a kaleidoscope meant to unearth a ‗different
reality‘ based on the way it is used. Any change in the way a methodology is applied
impacts the outcome. As depicted in the literature review, customers are the most
important source of attestation of the service quality of their banks. Bankers can also
attest to service performance of their banks. However, perceptions between bankers
and customers may differ on variety of grounds. To align the perceptions of
customers and bankers on services, it is expedient to link service performance and
service quality using customers‘ and bankers‘ opinions. Therefore, data for this
research was collected through a survey of both bankers and customers.
To test the Hypothesis and answer the research questions, the study was designed
to measure the relation of the independent variables or antecedents of service
performance gaps and the dependent variables or service specifications from
customers‘ and bankers‘ perspectives. To measure service performance and its
relation to service quality, it is expedient to collect information from both customers
and bank employees. For this reason, two sets of self-administered survey
questionnaires were used for collecting the opinions of both customers and bankers
on the services of their banks. Through conducting qualitative studies, Parasuraman
(1990) designed statements with scales for rating the antecedents of service
performance gaps, service quality, and service specifications. This instrument was
109
adopted with the authors‘ permission to collect the perception of customers and
bankers of service performance and service quality.
3.4 Measurable Variables
Through an empirical study, Parasuraman (1990) found service performance
gaps to have a significant influence on the service delivery process. Service
performance gaps, defined as the discrepancy between service expectation or
specification and the actual service delivered is found in previous research to be
influenced by several antecedents. To determine the relationship between service
performance and service quality constructs, customers‘ perceived specification,
bankers‘ perceived specification, and service performance gap (dependent variables)
were measured against teamwork, employee-job fit, perceived control, supervisory
control systems, technology-job fit, role conflict, and role ambiguity (independent
variables). The use of the methodology proposed by Parasurama has been previously
proved to be effective and reliable in measuring the correlation of the antecedents of
service performance gaps and service quality dimensions. The independent and
dependent variables measured in this study are discussed in
detail in the next section.
110
3.4.1 Independent Variables
Teamwork
Teamwork is the collective action of individual employees in an organization
geared towards the attainment of common goals. Teamwork has become a crucial part
ofworking culture in the banking industry. According to Parasuraman (1990),
teamwork involves employees working together and liaising with management with a
sense of commitment to ensure the attainment of the goal of the organization. In the
absence of teamwork, service performance gaps are likely to be created. Previous
researchers have already tested the effects of teamwork on service delivery. Similarly,
in this study, teamwork as an independent variable is measured against service quality
dimensions using a multi item scale based on 5-point Likert scale rated from strongly
disagree to strongly agree.
With the service performance gap instrument, bankers and customers were asked to
describe their feelings of teamwork at the banks where they do business. Therefore,
teamwork was operationalized as an antecedent of service performance gaps.
Employee-Job Fit
Employees-job fit refers to the skills, ability, fitness, and motivation of employees
in an organization. Job-fit can be acquired through training, education, and
experience. Employee-job fit has been found to have significant effect on service
111
performance and service quality. In this study, employee-job fit was measured as an
independent variable against the dependent variables of service quality specifications
and service performance gaps using data collected on a 5-point Likert scale, rated
from strongly disagree to strongly agree as proposed by Parasuraman(1990). The
focus of the measurement was to establish how job fit impacted performance-
expectation gaps.
Technology-Job Fit
Technology-job fit refers to availability or otherwise of the needed technological
expertise or equipments employees need to perform their responsibilities effectively.
Corbett et al. (1989) found a causal relationship between advanced technology, job
satisfaction, and commitment. In this study, technology-job fit was defined as an
antecedent of service performance gap and was measured based on a 5-point Likert
scale rated from strongly disagree to strongly agree. This measurement was purported
to determine benefits accruing from the use of technology on the perception of
bankers and customers on the service performance and service quality.
Perceived Control
Perceived control relates to employees‘ abilities to manage stressful situations.
Control is crucial to the performance of an organization. Organizational ethics, rules,
112
principles, and procedures are enforced through control. Sustenance of the
organizational culture necessary for attainment of organizational goals is based on
sound control system. Control as an antecedent of service performance gap is
important for the success of service-oriented organizations.
Sepector (1986) conducted a meta-analysis of studies related to perceived control and
19 employee outcome variables. It was found that perceived control has positive
effect on level of job satisfaction, commitment, involvement, performance, stress,
absenteeism, and turnover. In this current study, perceived control as an independent
variable was measured using a 5-point Likert scale, rated from strongly disagree to
strongly agree.
Supervisory Control Systems
Supervisory control systems are instrumental in ensuring that work is performed
effectively. Empirical evidence and research have shown that with effective
supervision, employees assume greater roles and are inclined toward working for the
attainment of organizational goals. In a work environment where supervisors are
considerate, effective role conflict and ambiguity are reduced and job satisfaction is
promoted. As Parasuraman (1990) found, the supervisory control systems antecedent
although, has no direct effects on service performance but it is instrumental in
promoting a sense of commitment of employees to the goal of the organization. Like
113
other antecedents or variables, Parasuraman (1990) designed 7-point Likert scale
rated from strongly disagree to strongly agree that was employed in this study to
examine the importance of supervisory control systems in service oriented industries
but with a change, 7-point likert scale was cut to 5- point Likert scale.
Role Conflict
Role conflict relates to conflictual issues at workplace as a result of different and
incompatible roles of employees at the same time. Role, when clearly defined and
assigned, can enhance productivity and efficiency. Where there are role conflicts,
employees are likely to leave their job, and where role is well defined, employee
retention is high. Parasuraman recommended this be measured on a 7-point Likert
scale rated from strongly agree through strongly disagree.
Role Ambiguity
Role ambiguity refers to a lack of clarity and comprehension of the role and
behavior of employees on the assigned task to be performed. Role ambiguity arises
when there is lack of clarity on the role of employees and management. According to
when there is obscurity on the roles of employees on the process of achieving a level
114
of performance, role ambiguity occurs. Role ambiguity was measured using
Parasuraman et al.‘s (1990) 5-point Likert scale rated from strongly disagree to
strongly agree to ascertain the link of role ambiguity of frontline employees
stakeholders, including customers, supervisors, co-workers, organization, and other
managers and service quality personnel.
3.4.2 Dependent Variables
Customers Perceived Specification
In the 21st century, delivery of excellent and superior service quality has become
fundamental to the success of retail banking. Customers are prudent and resentful in
paying for a service that does not meet their expectations. Banks need to meet or
exceed customer expectations in order to create the customer loyalty necessary for
increasing competitive advantages. This behavior of customers is well explained
under the disconfirmation theory in the literature review section. Therefore, bankers
need to be aware of expectation-consciousness of consumers. Customer expectation
or service quality specification can be understood through the measure of customers‘
perception of service. When the perception of customers of service is known, they
can then be influenced to value of the service relative to the cost found value to be a
higher order construct than quality. According to Schneider and Bowen (1995)
115
Customers bring a complex and multidimensional set of expectations to the service
encounter. Customers come with expectations for more than a smile and handshake.
Their expectations include conformance to at least ten service quality attributes (i.e.,
Parasuraman et al.‘s 10 dimensions—reliability, responsiveness, competence, access,
courtesy, communication, credibility, security, understanding, and tangible). To
determine customers‘ expectation from retail banks, their perceived specification was
measured on a 5-point Likert scale rated from strongly disagree to strongly agree.
Bankers’ Perceived Specification
In a competitive environment, offer of a quality service is instrumental to gaining
competitive advantage. Zavvos (1989) identified that dissemination of the
information from banking services has resulted in an increase in customers‘
expectations. However, bankers‘ specifications differ from that of customers. It is,
therefore, expedient for bankers to focus on the increasing expectation of customers
to gain a competitive advantage. Bankers perceived specification was measured using
5-point Likert scale rated from strongly disagree to strongly agree to evaluate bankers
perception of service quality.
116
Service Performance Gap
Zeithaml (1988) defined service performance as the difference between service
specification and service delivery. According to Parasuraman (1990), the service
performance gap is significantly correlated to delivery of service, which has impact
on service quality. At each encounter with bankers, customers evaluate the encounter.
The service performance gap identified is then used to strategize toward provision of
service quality in the future. This variable was measured by calculating the
discrepancy between bankers‘ and customers perceptions‘ of service performance.
3.5 Sample
This research investigated the relation of service performance and service quality in
the Indian retail banking industry. For this reason, the targeted population for the
survey was 517 customers and bankers of 2 selected retail banks operating in India.
For each of the selected banks, 250 bankers and customers were randomly targeted to
fill in a questionnaire indicating how they perceived their banks‘ service quality and
service performance variables.
Choice of sample frame was motivated by convenience and the researcher‘s
judgment. The number of banks selected for this study was proportionately taken as
two. Out of all private and Public sector banks only HDFC Bank and State Bank of
India was taken into account.
117
Valid completed questionnaires were only of those of customers who had been with
their bank for at least a year, and with bankers who had worked for their bank for at
least a year and performed identical functions.
Sampled Banks
HDFC Bank Ltd.
State Bank Of India
3.6 Setting
Data for this research was collected from the Indian Retail banking industry setting.
The banks face similar competition and compete among themselves for new
customers and retention of old customers. The banks market the same
service/products and operate under the same banking regulations and similar market
conditions.
3.7 Instrumentation/Measures
As indicated earlier, the survey instrument originally proposed by Parasuramanan
(1990) was for data collection. Various researchers in different settings have
previously and reliably used same instrument. The only slight modification was the
inclusion of a question on whether banks are private or public (see Appendix B). This
demographic information, although optional, public was envisaged to help provide
118
data on how the link of service performance and service quality applied to banks
within the local and foreign category in the Indian retail banking industry As earlier
discussed in the literature review, the relation of service performance and service
quality is manifested in the existence or lack of gaps between customers‘ expectations
of service quality and the actual service performance. Therefore, questions were
tailored along the antecedents of service performance gaps and dimensions of service
quality to solicit bankers and customers‘ perceptions.
As in Huang (2004), there were two questionnaires: one for customers and one for
bankers. These survey instruments were designed to elicit effectively the respondents‘
opinions on the service quality and service performance of the retail banks operating
in India. The first part of the questionnaire reflected the 22 items in the SERVQUAL
model. This part contained expectation and perception statements that participants
were supposed to rate on a 7-point Likert scale. The second part encapsulated
questions along the five constructs of service quality dimensions: tangible, reliability,
responsiveness, assurance, and empathy. In this part, respondents were required to
rate their banks according to percentages. The third part contained questions along the
seven antecedents identified by Zeithaml, to have influence on service performance
gaps. The last and the fourth part contained questions on demographics.
119
The original questionnaire proposed by Parasuraman (1985) was prepared in English.
To facilitate easy understanding of the content and context of the research, only
English version of the questionnaire was prepared.
3.8 Data Collection
Data for this research was collected using the self-administration of questionnaires
designed in English. With ethical consideration, the questionnaire was designed such
that respondents were given clear instructions on how to complete. The cover letter
attached to each questionnaire explained the purpose of the research, the importance
of respondents‘ participation, the anonymity of participants, and privacy issues. With
cultural consideration, questions were assessed for sensitivity to any issues that may
compromise the privacy of bankers and customers volunteering. The questionnaires
were designed with clear instructions on right of anonymity and right of
discontinuation, which were stated as options. Information on how to contact the
researcher for clarification, questions, and comments was also provided in the cover
letter attached to the questionnaires.
Data from sampled respondents are collected using convenient sampling contacted at
their homes and offices rather than in banks. The past similar research used mail
survey. However, as the likely response rate of mail survey in India is very poor,
personal administration of survey is used in this study.
120
Since the self-administration process was chosen for administration of the
questionnaires, clear instructions were provided in the cover letter. In the case of
customers, the cover letter advised participants on how to fill out and return
completed questionnaires to the premises of their banks on the next visit or
immediately after completion. This process was adopted based on the assumption that
the bank‘s customers would revisit their banks more than once within one month
from distribution date. Volunteering banker-participants were advised to fill out and
keep the completed questionnaires at their premises for personal collection by
researcher.
3.9 Data Analysis
The quantitative data were coded into SPSS for analysis. The data were analyzed
using multiple regressions and correlational analysis to determine the link between
service performance and the service quality be used to explain and interpret the
results.The relation of the independent variables (antecedents) and dependent
variables was tested through various relevant statistical analysis.
3.10 Coding of Data
The SERVQUAL and SERVPERF dimensions are the main variables used in the
study and the researcher coded these dimensions in order to ease the analysis of data
121
collected. Also demographic information was collected from respondents but these
were not coded. Here is the coding of variables.
Table 2 : Coding of Data
S.No
Question
no Coding Construct Questions
1 Q1 TA1 T
an
gib
ilit
y Banks have Modern Equipments
2 Q2 TA2 Physical facilities are virtually appealing
3 Q3 TA3 Well dressed nd neat appearing employees
4 Q4 TA4 Visually appealing materials
5 Q5 R1
R
elia
bil
ity
when bank promises to do something by a certain time they do it
6 Q6 R2 Bankers should show sincere interest in solving the problem
7 Q7 R3 Banks perform the service right the first time.
8 Q8 R4 They provide their services at the time they promise to do so.
9 Q9 R5 Banks maintain their records accurately
10 Q10 RS1
R
esp
on
siven
ess tell customers exactly when services will be performed.
11 Q11 RS2 Employees will give prompt service to Customers
12 Q12 RS3 Employees in banks will always be willing to help customers.
13 Q13 RS4
Employees in banks will never be too busy to
respond to customers requests
14 Q14 A1
Ass
ura
nce
The behavior of employees in banks will instill confidence in
customers.
15 Q15 A2 Customers of banks will feel safe in their transactions
16 Q16 A3 Employees in banks will be consistently courteous with customers
17 Q17 A4
Employees in banks will have the knowledge to answer
customers‘ questions
18 Q18 E1
E
mp
ath
y
Banks will give customers individual attention
19 Q19 E2 Banks will have operating hours convenient to all their customers
20 Q20 E3 Banks will have employees who give customers personal attention
21 Q21 E4 Banks will have customers‘ best interests at heart.
22 Q22 E5
The employees of banks will understand the specific needs of their
customers
122
PART
III
1 S1 T1
Tea
mw
ork
Every Banker is a part of team in the bank
2 S2 T2 Evry banker contributes to team effort in servicing customers
3 S3 T3
Every banker has a sense of responsibility to help fellow employees to do their
jobs well
4 S4 T4 Every banker is an important member of the bank
5 S5 EJF1
Em
plo
yee
-
job
fit
banker feels comfortable in his job in the sense that he is able to perform the job
well
6 S6 EJF2 The banker hires people who are qualified to do their jobs.
S7 TJF1 Tec
hn
olo
gy
job
fit
The bank gives employees the tools and equipment that they need to perform
their job well
8 S8 PC1
Per
ceiv
ed
co
ntr
ol Every banker has the freedom in his job to truly satisfy his customers‘ needs.
9 S9 PC2
feel a lack of control over their job because too many customers demand service
at the same time.
10 S10 PC3
bankers‘ frustrations on the job is, to depend on other employees in serving their
customers.
11 S11 SC1
Su
per
vis
ory
c
on
trol
The supervisor‘s appraisal of employees‘ job performance includes how well
they interact with customers
12 S12 SC2
In the bank, making a special effort to serve customers well does not result in
more pay or recognition.
13 S13 SC3
employees who do the best job serving customers are more likely to be rewarded
than other employees.
14 S14 RC1
Ro
le c
on
flic
t
The amount of paperwork in employees‘ job makes it hard for them to
effectively serve their customers
15 S15 RC2
The bank places emphasis on selling to customers that it is difficult to serve
customers properly.
16 S16 RC3
What a bank‘s customers want employees and bank‘s management wants
employees to do are same.
17 S17 RC4
The bank and the bankers have the same ideas about how their jobs should be
performed.
18 S18 RA1
Role
am
big
uit
y
banker receives a sufficient information from management for what he is
supposed to do in his job
19 S19 RA2 Bankers often feel that they do not understand the services offered by their bank.
20 S20 RA3
Every banker is able to keep up with changes in his (her) bank that affects his
(her) job.
21 S21 RA4 Bankers feel that they have not been well trained by their bank .
22 S22 RA5
Bankers are not sure which aspects of their supervisor will stress most in
evaluating their performance.
123
Summary
The purpose of this research was to investigate the interlink of service performance
and service quality. To accomplish this objective, two set of variables were tested
using analysis of survey data collected from sample of bankers and customers of 2
retail banks in India. The research design was informed by previous studies (Chenet
et al., 2000; Huang, 2004; Parasuraman et al., 1990) and review of literature on the
serviceperformance gap model (Parasuraman et al, 1985, 1988, 1990; Zeithmal et al.,
1988, 1990).
124
CHAPTER 4
INTERPRETATION OF DATA
This chapter presents the data that has been collected and the analysis and
presentation of data according to the research questions. Using quantitative data
collected on customers’ and bankers’ perceptions of services of selected retail banks
in India, this study measured the antecedents of service performance gaps as
independent variables against the dependent variables of customers’ service quality
specifications, bankers’ service quality specifications, and service performance gap
4.1 Introduction
This study investigated the service quality in the Indian retail banking industry using
the service quality and service performance gap model. As proposed in the model,
service performance is the difference between customers‘ expectations and actual
service delivered (Parasuraman ,1988). Where there are discrepancies between
customers‘ expectations and actual service delivered, gaps are created. The model
125
identified the antecedents of service performance gaps – teamwork, employee-job fit,
technology-job fit, perceived control, supervisory control system, role conflict, and
role ambiguity – as critical factors in determining the size of service performance
gaps.
Using quantitative data collected on customers‘ and bankers‘ perceptions of services
of selected retail banks in India, this study measured the antecedents of service
performance gaps as independent variables against the dependent variables of
customers‘ service quality specifications, bankers‘ service quality specifications, and
service performance gap. The objective of the measurement was to ultimately
determine how factors influencing service performance impact service quality
dimensions. Also, the research dwelled on investigating the correlation of the
independent and dependent variables.
The main objective of this analysis was to identify the interlink of the factors
influencing service performance and service quality dimensions. In a related
dimension, the study investigated the difference in perception of service performance
of retail banks within the category of private-owned banks only.
An instrument designed by Parasuraman (1985, 1988) was adopted with a slight
modification of the demographic question for data collection on bankers‘ and
customers‘ perceptions of the antecedents of service performance gaps and service
quality attributes of their banks. The data collection covered bankers and customers
126
of 2 selected banks that have operated in India for at least 10 years and have retail
banking business line. With the survey instrument, data was collected based on 22
items in the SERVQUAL, five service quality constructs, and the antecedents of
service performance gaps, identified by Zeithaml (1990). The rest of this chapter
presents the survey participation, demographic information, analysis related to the
Hypothesis, and the summary of analysis.
4.2 Survey Participation
Although the study anticipated equal representation of bankers and customers of all
selected retail banks, the response rate varied from bank to bank. To maximize
participation, 700 questionnaires were distributed to bankers and customers of 2 retail
banks at their premises with the permission of the banks‘ management. The
respondents‘ task was to rate their perceptions of service quality specifications and
the antecedents of service performance on a 5-point Likert scale from strongly
disagree to strongly agree.
Thirty questionnaires were left at the premises of each of the selected retail bank
branches for completion. Within the given time frame of one month, 229
questionnaire representing 76.2% of total questionnaires distributed, were returned or
retrieved. Of these 229 questionnaires 205 were considered suitable for analysis as
they were complete. The response rate was considered acceptable for analysis. The
127
validity of a returned questionnaire was determined by 85% completeness and a
respondent‘s relationship with one of the selected 2 retail banks as a customer or
banker for at least a year. Researcher covered various branches of HDFC Bank
namely Halwasiya, Pranay Towers, Teekarees Inn, Lekhraj Indira Nagar and Cantt,
and of SBI namely Hazratganj near stadium, Gomti Nagar Viram khand, Bhoothnath
Indira Nagar, Aliganj and Chinhat in Lucknow City.
Customer respondents were captured in Branch offices but as the response ratio was
not so good because of busy schedule and hurry. Therefore, an attempt was made by
the researcher to cover respondents at the workplace or at home. Total of 350
respondents were covered from colleges offices and homes, out of that 312
questionnaire were considered suitable for analysis as they were complete.
4.3 Demographic Information
The demographic information collected on customers and bankers helped to
determine their perceptions of service performance of retail banks within different
categories. Also, it allowed the presentation of a demographic profile of bankers and
customers of the Indian retail banking industry who participated in the study. Table 3
contains the demographic description of the sample.
128
This table reveals that approximately 40% respondents are bankers and 60% are
customers. government owned banks are approximately 32% and private banks are
68%.
Table 3: Demographic data presentation of Bankers and Customers
RESPONDENT Frequency Percent
Customer 312 60.3
Banker 205 39.7
BANK TYPE
Government Owned 166 32.1
Private 351 67.9
YEARS WITH BANK
1-2 80 15.5
2-5 240 46.4
More than 5 197 38.1
EDUCATION LEVEL
High School or Less 33 6.4
Graduate 167 32.3
Post Graduate 170 32.9
Professional Degree 146 28.2
Doctorate 1 .2
AGE
Under 20 33 6.4
20-30 227 43.9
31-40 225 43.5
41-50 18 3.5
51-60 14 2.7
GENDER
Male 356 68.9
Female 161 31.1
PROFESSION
Business 26 5.0
Service 278 53.8
Housewife 37 7.2
Student 176 34.0
129
In this research service quality gaps are identified with the help of 22 variable
constructs designed by Parasuraman, namely Tangibles, Reliability, Responsiveness.
Assurance and Empathy to measure customer satisfaction.
Table 4: Descriptive Statistics for SERVQUAL variables for expectation dimensions.
These SERVQUAL constructs Items are Q1-Q4: Tangibles dimensions; Q5-Q9:
Reliability dimension; Q10-Q14: Responsiveness dimension; Q15-Q17: Assurance
N Mean
Std.
Deviation
Q1 517 3.99 .880
Q2 517 4.07 .795
Q3 517 4.15 .962
Q4 517 4.20 .762
Q5 517 4.19 .838
Q6 517 4.19 .872
Q7 517 4.21 .870
Q8 517 4.15 .898
Q9 517 4.16 .852
Q10 517 4.22 .952
Q11 517 4.24 .818
Q12 516 4.21 .847
Q13 516 4.23 .807
Q14 517 4.11 .941
Q15 517 4.19 .886
Q16 517 4.23 .897
Q17 517 4.23 .846
Q18 517 4.22 .873
Q19 517 4.32 .731
Q20 517 4.36 .786
Q21 517 4.21 .819
Q22 517 4.12 .895
130
dimension; Q18-Q22: Empathy dimension. These dimensions are measured on likert
scale with, 1= Strongly disagree, 2=Disagree, 3=Undecided, 4=Agree and
5=Strongly Agree. Table 4 shows the response (Q20) with mean 4.36, (Q19) with
mean 4.32 and (Q16 and Q17) with mean 4.23 are the constructs where customers
expects highest response, These Questions are Q20= Personal attention, Q19=
convenient operating hours, Q16= Courteous employees and Q17= Knowledgeable
employees.
Table 5: Customer and banker perception for most important and least important feature
MOST IMPORTANT
FEATURE
Respondent
CUSTOMER BANKER
TANGIBLITY 15 20
RELIABILITY 51 20
RESPONSIVENESS 80 100
ASSURANCE 40 32
EMPATHY 124 63
SECOND MOST IMPORATNT
TANGIBLITY 20 25
RELIABILITY 54 25
RESPONSIVENESS 99 89
ASSURANCE 51 40
EMPATHY 88 26
LEAST IMPORTANT
TANGIBLITY 174 137
RELIABILITY 57 66
RESPONSIVENESS 16 0
EMPATHY 65 2
131
Table 5 shows that, there is no significant difference between banker‘s perception and
customer‘s perception. Both banker and customer perceive Empathy as the most
important feature followed by responsiveness, tangibility stands as the least important
aspect of expectation variable. The respondents were asked to rate the most
important, second most important and least important feature out of ten points
cumulatively. The results reveal tangibility as least important feature and empathy as
most important.
Table 6: Descriptive statistics for service quality measurement in terms of CUSTOMER’s
expectations
TANGIBLES N Mean Std. Deviation
Q1 312 3.96 .763
Q2 312 4.06 .876
Q3 312 4.14 .984
Q4 312 4.29 .751
RELIABILITY
Q5 312 4.19 .824
Q6 312 4.20 .868
Q7 312 4.26 .864
Q8 312 4.19 .846
Q9 312 4.22 .790
RESPONSIVENESS
Q10 312 4.22 .930
Q11 312 4.21 .856
Q12 311 4.22 .834
Q13 311 4.21 .791
ASSURANCE
Q14 312 4.05 .927
Q15 312 4.17 .892
Q16 312 4.26 .879
132
Table 7: Descriptive statistics for service quality measurement in terms of BANKER’S
expectations
TANGIBLES N Mean Std. Deviation
Q1 205 4.04 .880
Q2 205 4.09 .963
Q3 205 4.17 .930
Q4 205 4.27 .780
RELIABILITY
Q5 205 4.20 .860
Q6 205 4.18 .881
Q7 205 4.12 .874
Q8 205 4.07 .970
Q9 205 4.05 .930
RESPONSIVENESS
Q10 205 4.21 .987
Q11 205 4.29 .755
Q12 205 4.19 .868
Q13 205 4.26 .832
ASSURANCE
Q14 205 4.19 .959
Q15 205 4.23 .877
Q16 205 4.18 .924
Q17 205 4.28 .827
EMPATHY
Q18 205 4.25 .843
Q19 205 4.31 .692
Q20 205 4.38 .780
Q21 205 4.20 .856
Q22 205 4.08 .890
Q17 312 4.20 .858
EMPATHY
Q18 312 4.20 .892
Q19 312 4.32 .756
Q20 312 4.35 .791
Q21 312 4.21 .796
Q22 312 4.15 .899
133
Table 6 and 7, shows the descriptive statistics of all the questions asked from
respondent
(Customer and Banker) In measurement of customer perception of service quality.
Q1-Q4 are dimensions which are related with tangibility in an excellent bank
(equipments, physical facilities, neatness and materials), Q5-Q9 are dimensions
related with customers perception about bank‘s reliability (time, problem solving
attitude of employees, right services and error free records), Q10-Q13 are related
with responsiveness dimension( prompt services, willingness to serve customers,
not too busy employees to help customers), Q14-Q17 are dimension related with
Assurance( confidence, feeling of safety, courteous and knowledgeable employees,
Q18-Q22 are the dimension of Empathy which includes( individual attention,
convenient operating hours, personal attention, customer‘s interest, understanding
specific needs of customers. These questions were asked from customers as well as
employees on likert scale with 1= Strongly Disagree, 2=Disagree, 3=Undecided,
4=Agree, 5=Strongly Agree.
In case of customers for dimension of ‗Tangibility‘, the highest mean is of 4.29 and
lowest mean of 3.96. The dispersion of data is high with S.D. high upto .984. For
dimension of ‗Reliability‘ the highest mean is of 4.26 and lowest 4.19. The
dispersion of data is moderate with S.D. upto .868. For dimension of
‗Responsiveness‘ the highest mean is of 4.22 and lowest 4.22. The dispersion of data
134
is high with S.D. upto .930. For dimension of ‗Assurance‘ the highest mean is of
4.26 and lowest 4.05, The dispersion of data is high with S.D. upto .927. For
dimension of ‗Reliability‘ the highest mean is of 4.35 and lowest 4.15. The
dispersion of data is moderate.
In case Banker‘s dimension of ‗Tangibility‘, the highest mean is of 4.27 and lowest
mean of 4.06, the dispersion of data is high with S.D. high upto .963. For dimension
of ‗Reliability‘ the highest mean is of 4.20 and lowest 4.05. The dispersion of data is
high with S.D. upto .970. For dimension of ‗Responsiveness‘ the highest mean is of
4.29 and lowest 4.19. The dispersion of data is high with S.D. upto .987. For
dimension of ‗Assurance‘ the highest mean is of 4.28 and lowest 4.18, The
dispersion of data is high with S.D. upto .959. For dimension of ‗Reliability‘ the
highest mean is of 4.38 and lowest 4.08. The dispersion of data is moderate.
Table 8: Descriptive statistics for measurement of service Performance variables for
customers
PERFORMANCE VARIABLES N Mean Std. Deviation
TEAMWORK
S1 312 3.77 1.125
S2 312 3.98 1.144
S3 312 4.14 1.016
S4 312 4.05 1.073
S5 312 4.12 1.038
EMPLOYEE-JOB FIT
S6 312 4.15 1.034
S7 312 3.97 1.145
TECHNOLOGY-JOB FIT
S8 312 4.11 .906
135
PERCEIVED CONTOL
S9 312 4.07 .897
S10 312 4.25 .925
S11 312 4.05 1.031
S12 311 4.19 .946
SUPERVISORY CONTROL SYSTEM
S13 311 4.12 .945
S14 312 4.22 .855
S15 312 4.12 .980
ROLE CONFLICT
S16 312 4.07 .964
S17 312 3.99 1.036
S18 312 4.15 .909
S19 312 4.18 .967
ROLE AMBIGUITY
S20 312 4.26 .830
S21 311 3.91 1.083
S22 312 4.19 .884
Table 9: Descriptive statistics for measurement of service Performance variables for bankers
PERFORMANCE VARIABLES N Mean Std. Deviation
TEAMWORK
S1 205 3.77 1.230
S2 205 3.95 1.115
S3 205 4.16 1.027
S4 205 3.94 1.127
S5 205 4.11 1.014
EMPLOYEE-JOB FIT
S6 205 4.16 1.022
S7 205 4.04 1.052
TECHNOLOGY-JOB FIT
S8 205 4.13 .952
PERCEIVED CONTOL
S9 205 4.14 .883
S10 205 4.13 .922
S11 205 3.96 1.081
136
S12 205 4.11 1.028
SUPERVISORY CONTROL SYSTEM
S13 205 4.08 .933
S14 205 4.09 .898
S15 205 4.10 .936
ROLE CONFLICT
S16 205 4.25 .926
S17 205 4.10 .957
S18 205 4.15 .833
S19 205 4.26 .874
ROLE AMBIGUITY
S20 205 4.13 .982
S21 205 4.07 .975
S22 205 4.11 1.020
Table 8 & 9 shows the descriptive statistics of all the questions asked from
respondent (Customer and Banker) in measurement of customer perception of
service performance. S1-S5 are dimensions which are related with TEAMWORK in
an excellent bank (part of team, contribution in team effort, sense of responsibility,
feeling of importance in and as bank employee), S6-S7 are dimensions related with
customers perception about EMPLOYEE JOB FIT (ability and qualification to
perform job well), S8 is related with TECHNOLOGICAL JOB FIT dimension(
supply of tools and equipments to perform job well ), S9-S12 are dimension related
with PERCEIVED CONTROL ( lot of time in resolving problem, freedom in job to
satisfy customers, dependency on others to solve problem) S13-S15 are the
137
dimension of SUPERVISORY CONTROL SYSTEM which includes(performance
appraisal, customer service and pay hike, customer service and reward system ).
S16-S19 are the dimension of ROLE CONFLICT which measures (amount of
paperwork, emphasis on selling, perception of management and employee towards
job ) These questions were asked from customers as well as employees on likert
scale with 1= Strongly Disagree, 2=Disagree, 3=Undecided, 4=Agree, 5=Strongly
Agree.
In case of customers for dimension of ‗teamwork‘, the highest mean is of 4.14 and
lowest mean of 3.77. The dispersion of data is high with S.D. high upto 1.144. For
dimension of ‗employee-job fit‘ the highest mean is of 4.15 and lowest 3.97. The
dispersion of data is high with S.D. upto 1.145. For dimension of ‗Technology-job
fit‘ mean is of 4.11. The dispersion of data is high with S.D .906. For dimension of
‗perceived control‘ the highest mean is of 4.25 and lowest 4.05, The dispersion of
data is high with S.D. upto 1.031. For dimension of ‗supervisory control system‘ the
highest mean is of 4.35 and lowest 4.15. The dispersion of data is high with S.D.
.980 . For dimension of ‗role conflict‘ highest mean is of 4.18 and lowest 3.99 The
dispersion of data is high with S.D 1.036. In case of ‗Role ambiguity‘ Highest and
lowest mean are 4.26 and 3.91 with dispersion of data as high upto 1.083
138
4.4 Normality of Data
The statistical test to confirm to test normality is measurement of Skewness and
Kurtosis. Skewness refers to the balance of distribution: that is the bell shaped
curve, whereas Kurtosis refers to height of distribution: i.e. taller or flatter
distribution.
Kline(1998) Suggested that all variables in the analysis for univariate skewness and
kurtosis were satisfactory within conventional criteria for normality(the combination
of two or more variables) means that individual variable is normal in a univariate
sense and their combinations are also normal.
Table 10: Data distribution for SERVPERF and SERVQUAL items
Descriptive Statistics
N Skewness Kurtosis
Statistic Statistic Std. Error Statistic Std. Error
Q1 517 -1.187 .107 .794 .214
Q2 517 -1.255 .107 .904 .214
Q3 517 -.957 .107 .092 .214
Q4 517 -1.018 .107 1.089 .214
Q5 517 -.869 .107 .271 .214
Q6 517 -.860 .107 -.057 .214
Q7 517 -.889 .107 .009 .214
Q8 517 -.934 .107 .311 .214
Q9 517 -.778 .107 -.088 .214
Q10 517 -1.418 .107 2.004 .214
Q11 517 -.945 .107 .373 .214
Q12 517 -.913 .107 .298 .214
Q13 517 -.843 .107 .131 .214
Q14 517 -.871 .107 .107 .214
Q15 517 -1.010 .107 .577 .214
139
Q16 517 -1.018 .107 .276 .214
Q17 517 -1.131 .107 1.257 .214
Q18 517 -1.041 .107 .607 .214
Q19 517 -.867 .107 .397 .214
Q20 517 -1.109 .107 .681 .214
Q21 517 -.904 .107 .471 .214
Q22 517 -.828 .107 .004 .214
S1 517 -.785 .107 -.283 .214
S2 517 -1.072 .107 .329 .214
S3 517 -1.253 .107 .991 .214
S4 517 -1.042 .107 .268 .214
S5 517 -1.299 .107 1.186 .214
S6 517 -1.323 .107 1.192 .214
S7 517 -.944 .107 -.041 .214
S8 517 -1.022 .107 .592 .214
S9 517 -.986 .107 .798 .214
S10 517 -1.192 .107 1.136 .214
S11 517 -.968 .107 .217 .214
S12 517 -1.287 .107 1.351 .214
S13 517 -1.029 .107 .650 .214
S14 517 -1.100 .107 1.162 .214
S15 517 -1.000 .107 .429 .214
S16 517 -1.144 .107 .886 .214
S17 517 -1.002 .107 .442 .214
S18 517 -.978 .107 .628 .214
S19 517 -1.264 .107 1.286 .214
S20 517 -1.220 .107 1.364 .214
S21 517 -.856 .107 -.066 .214
S22 517 -1.061 .107 .597 .214
All skewness value according to the guideline suggested by Kine, all variables are
univariate normal and individual variable is normal. So, it can be concluded that data is
multivariate normal and should be used for further multivariate analysis and regression
tests.
140
Table 11: Correlation perception dimensions
Summated
Dimensions 1-4 5-9 10-13 14-17 18-22
TANGIBLES 1
RELIABILITY .599**
1
RESPONSIVENESS .762**
.577**
1
ASSURANCE .680**
.514**
.697**
1
EMPATHY .618**
.558**
.685**
.663**
1
**. Correlation is significant at the 0.01 level (2-tailed).
So it is clear from table 11 that our dependent variable is showing significant
correlation with independent variables In this construct, the correlation between all
independent variables are less than 0.9 therefore, as per guidelines suggested by Pallant,
all variables will be retained
4.5 Validity and Reliability
Checking the reliability and validity of the modified SERVQUAL model made up of
six dimensions, cronbach alpha was computed for each dimension of the SERVQUAL
model and factor analysis carried out to test validity. The Cronbach alpha ranges
between 0 (denoting no internal reliability) and 1 (denoting perfect internal reliability).
The first part of the data analysis was to check the internal reliability of results in order
to determine the credibility of findings results from the study since we are dealing with
multiple-item measure that is the modified SERVQUAL model made up of 5
dimensions measuring service quality. In other words reliability checks whether or not
141
respondents‘ scores on any one indicator tend to be related to their scores on the other
indicators
Table 12: Reliability Coefficient (Cronbach alpha)
Dimension Items
Number of
items
Cronbach
alpha for
dimensions
Cronbach
alpha if
items deleted
TA1 TANGIBILITY 4 0.638 0.603
TA2 0.534
TA3 0.589
TA4 0.592
R1 RELIABILITY 5 0.834 0.765
R2 0.798
R3 0.804
R4 0.802
R5 0.769
RS1 RESPONSIVENESS 4 0.674 0.847
RS2 0.573
RS3 0.612
RS4 0.638
A1 ASSURANCE 4 0.763 0.678
A2 0.717
A3 0.674
A4 0.738
E1 EMPATHY 5 0.801 0.692
E2 0.807
E3 0.661
E4 0.756
E5 0.654
The internal consistency of the modified SERVQUAL items was assessed by
computing the total reliability scale. The total reliability scale for the study is 0.91,
indicating an overall reliability factor slightly same to that of Parasuraman et al.,
142
(1988) study which was 0.92. This reliability value for the study is substantial
considering the fact that the highest reliability that can be obtained is 1.0 and this is
an indication that the items of the five dimensions of SERVQUAL model are
accepted for analysis. Table 12 above shows the reliability scale for all six
dimensions and also, the reliability scale for each dimension calculated when each
item is deleted from the dimension in order to see if the deleted item is genuine or
not. In case cronbach alpha for a dimension increases when an item is deleted it
shows that item is not genuine in that dimension. From table above, it can be
realized almost all the items showed a lower value of reliability when deleted except
E2 and had a higher value showing it is not a true measure under that dimension.
Looking at the reliability coefficients of all five dimensions, some dimensions have
coefficients slightly below 0.7, tangibles (0.638) and responsiveness (0.674). This
could as a result that some items under each dimension seemed too similar. The
dimension, products had a very low reliability coefficient, 0.434 and this could have
been because of the small number of items used in that dimension. Other
dimensions, reliability, assurance and empathy showed coefficients higher than 0.7,
meaning these dimensions comprising of various items show a true measure of
service quality.
143
Table 13 : Factor Analysis(rotated component Matrix)
Items Componenets
1 2 3 4 5
E3 0.859 E4 0.857 E1 0.683 E5 0.684 R5 0.532 A4 0.477 R1
0.797
R4
0.751 R3
0.673
A2
0.581 RS4
0.590
R2
0.528 RS2
0.713
A3
0.669 A1
0.653
RS3 0.463
0.645 RS1
0.506
E2
0.963 TA2
0.760
TA1
0.698
TA3
0.636
TA4
0.456 Extraction Method: Principal Component Analysis
Rotation Method: Varimax with Kaiser Normalization
Table 13 shows the factor loadings for each item in relation to the various factors.
These values in the table show the weight and correlation each item has to a factor or
component. All values below 0.45 are cut off from this table because they are not
significant for analysis. From table 13, it can be realized that items from different
dimensions are regrouped under the same factor and some items from one dimension
144
are found to fall in more than factor like RS3. This factor analysis proves that
SERVQUAL model is not a good measure of service quality in Banking Sector
because we expect to see similar items fall under the same factor showing that they
measure the same thing. In this case, just the items under the tangible dimension fall
under the same factor.
4.6 Analysis of Hypotheses
The analysis related to each of the Hypothesis and research questions are presented in
this section. Firstly, the research questions and Hypothesis are restated, and then the
analysis associated with each hypothesis is presented.
Research Question 1
The first question asked, what in the Indian retail banking industry, is the perception
of customers of the relation of service performance and service quality?.
Hypothesis 1
The first null hypothesis stated that in the Indian retail banking industry, customers do
not perceive or negatively perceive a link between the antecedents of service
performance gaps and service quality, while the alternative hypothesis stated that in
the Indian retail banking industry, customers perceive or positively perceive a
145
significant link between the antecedents of service performance gaps and service
quality.
To address this hypothesis, a correlation matrix that contained the correlations
between the antecedents of service performance and service quality was generated for
customers completing the questionnaire. In addition, step-wise multiple regression
analysis were conducted where each service quality variable served as the dependent
variable and the antecedents of service performance served as the independent or
predictor variables. The regression analysis are considered step-wise because the
independent variables included in the analysis are determined by the computer based
on the strength of the relationship they have with the dependent variable. Only those
variables that have a significant relationship with the dependent variable (i.e., p < .05)
are included in the analysis.
The results of the correlational analysis are presented in Table 14. This table reveals
that none of the antecedents of service performance variables correlated significantly
(i.e., p < .05) with the service quality variables for customers. The step-wise
regression analysis resulted in none of the antecedents of service performance
variables being included in the analysis, since none of these variables had a
significant relationship with any of the service quality variables.
146
Table 14. Correlational Analysis for Antecedents of Service Performance and Service Quality for
Customers
Service Quality Specification (Dependent Variable)
Tangibles Reliability Responsiveness Assurance Empathy
Antecedents of
ServicePerformance
Teamwork 0.003 0.049 0.042 0.000 -0.01
Employee-job Fit -0.017 0.036 0.022 -0.007 -0.018
Technology-Job Fit 0.005 0.053 0.033 -0.024 -0.023
Perceived Control 0.025 0.029 -0.018 -0.011 0.053
Supervisory Control 0.08 0.021 -0.081 -0.073 -0.073
Role Conflict -0.018 0.040 0.017 0.018 0.026
Role Ambiguity -0.032 0.028 0.012 -0.011 -0.065
These results indicate that the null hypothesis, stating that there was no relationship or
a negative relationship between the antecedents of service performance and service
quality for customers, could not be rejected in favor of the alternative hypothesis,
suggesting that there is a positive relationship between these variables. There was no
evidence to conclude from this data that there is a positive relationship between the
antecedents of service performance and service quality variables for customers.
Therefore, it can be concluded that customers in the Indian retail banking industry do
not perceive a significant relation of service performance and service quality.
147
Research Question 2
The second research question asked what, in the Indian retail banking industry, the
perception of bankers of the relation of service performance and service quality is?
Hypothesis 2
The second null hypothesis stated that in the Indian retail banking industry, bankers
do not perceive or negatively perceive a link between the antecedents of service
performance gaps and service quality, while the alternative hypothesis stated that in
the Indian retail banking industry, bankers perceive or positively perceive a
significant link between the antecedents of service performance gaps and service
quality. The same analysis that addressed the first hypothesis were used to address
this hypothesis. The results of the correlational analysis for this hypothesis are
presented in Table 15. This table reveals that only one antecedent of service
performance variable was related to any of the service quality variables. In this case
Employee-Job Fit was related to Assurance (r (204) = .163, p = .02). None of the
remaining antecedents of service performance variables correlated significantly (i.e.,
p < .05) with the service quality variables for bankers. The step-wise regression
analysis resulted in only the Employee- Job Fit being entered into the regression
analysis when the Assurance service quality variable served as the dependent
variable. Further analysis revealed that Employee-Job Fit explained approximately
2.6% of the variance in Assurance.
148
Table 15. Correlational Analysis for Antecedents of Service Performance and Service Quality for
Bankers Service Quality (Dependent Variables)
Tangibles Reliability Responsiveness Assurance
Empathy
Antecedents of
Service
Performance
Teamwork -0.069 0.022 0.079 0.117 0.031
Employee-Job Fit 0.075 0.119 0.12 .163* 0.127
Technology-Job Fit -0.043 0.101 0.11 0.086 0.001
Personal Control 0.002 0.042 0.075 0.041 0.06
Supervisor Control -0.066 -0.112 -0.065 -0.099 0.011
Role Conflict 0.011 -0.021 -0.032 -0.033 0.019
Role Ambiguity -0.023 -0.054 0.039 0.053 0.12
* p < .05
It is important to note that this significant finding should be interpreted with caution
since there were many analysis conducted to address this hypothesis. There were 15
different correlations computed to assess the relationship of the antecedents of service
performance and service quality. Given this many analysis, there is a substantial
chance that a significant finding would emerge even though there was no relationship.
This is known as the Type I error. These results indicate that while there was one
significant correlation, for the most part the null hypothesis, stating that there is no
relationship between the antecedents of service performance and service quality for
bankers, could not be rejected in favor of the alternative hypothesis, suggesting that
there were such relationships. Furthermore, there is little to no evidence to conclude
149
from this data that there is a positive relationship between the antecedents of service
performance and service quality variables for bankers.
Research Question 3
Research question 3 asked whether in the Indian retail banking industry, customers‘
perception of service performance is different from that of bankers.
Hypothesis 3
The third null Hypothesis stated that bankers‘ perception of service performance is
not different from customers‘ perception of service performance in Indian banking
industry, while the alternative hypothesis stated that bankers‘ perception of service
performance is different from customers‘ perception of service performance in Indian
banking industry. To assess if there were differences between customers‘ and
bankers‘ perceptions of the antecedents of service performance variables, a series of
independent tests were conducted. The results of these analysis are presented in Table
16. This table reveals that there were significant differences between customers and
bankers on five of the seven antecedents of service performance variables.
Table 16. The Means, Standard Deviations, and t-tests for Differences in Antecedents of Service
Performance Between Bankers and Customers
Antecedents of
Service Performance Mean SD t p
Teamwork
Customers 4.4 1.33 -5.9 <.001
150
Bankers 4.3 0.662
Employee-Job Fit
Customers 4.34 1.44 -6.12 <.001
Bankers 4.02 0.789
Technology-Job Fit
Customers 4.33 1.55 -2.45 0.015
Bankers 4.64 1.06
Perceived Control
Customers 3.64 1.08 -2.39 0.017
Bankers 3.84 0.703
Supervisor Control
Customers 4.15 0.712 -1.73 0.084
Bankers 4.26 0.646
Role Conflict
Customers 3.85 0.745 1.64 0.103
Bankers 3.75 0.623
Role Ambiguity
Customers 3.95 0.63 11.34 <.001
Bankers 3.34 0.545
There was a stronger agreement with the questionnaire statements by bankers when
compared to customers on the Teamwork (t(514) = -5.90, p < .001), Employee-Job
Fit (t(514) = -6.117, p < .001), Technology-Job Fit (t(514) = -2.45, p = . 015), and
Perceived Control (t(514) = -2.393, p = .017) service performance variables. There
was a stronger agreement by customers on the Role Ambiguity (t(514) = 11.349,
p < .001) service performance variable. This result suggests that there are differences
between the perceptions of bankers and customers. These results led to the rejection
of the null hypothesis for five of the seven antecedents to service performance
variables in favor of the alternative hypothesis, which suggested that there are
151
differences between customers and bankers in their perceptions of the antecedents of
service performance.
Research Question 4
Research question 4 asked what the significant antecedents of service performance
gaps are that influence service quality attributes in the Indian retail banking industry.
Hypothesis 4
The fourth null hypothesis stated that in the Indian retail banking industry, customers
and bankers do not perceive or negatively perceive a link between the antecedents of
service performance gaps and service quality, while the alternative hypothesis stated
that in the Indian retail banking industry, customers and bankers perceive or
positively perceive a significant link between the antecedents of service performance
gaps and service quality. Like Hypothesis 1 and 2, this hypothesis was addressed by
computing a correlation matrix that contained the correlations between the
antecedents of service performance and service quality. Also like in Hypothesis 1 and
2, a series of step-wise multiple regressions were conducted where service quality
variables served as the dependent variable and the antecedents of service performance
served as the independent, or predictor, variables. The results of the correlational
analysis are presented in Table 17. This table reveals that none of the antecedents of
service performance variables correlated significantly (i.e., p < .05) with the service
152
quality variables for customers. The step-wise regression analysis resulted in none of
the antecedents of service performance variables being included in the analysis since
none of these variables had a significant relationship with any of the service quality
variables at the .05 level of significance.
Table 17. Correlational Analysis for Antecedents of Service Performance and Service Quality for
Customers and Bankers
Tangibles Reliability Responsiveness Assurance Empathy
Antecedents of
service Performance
Teamwork -0.01 0.048 0.056 0.029 0.002
Employee-Job Fit 0.015 0.062 0.051 0.036 0.017
Technology-Job Fit -0.01 0.068 0.057 0.008 -0.015
Perceived Control 0.02 0.037 0.035 0.02 0.056
Supervisory Control 0.021 -0.049 -0.073 -0.08 -0.045
Role conflict -0.007 0.019 -0.001 0.001 0.023
Role Ambiguity -0.034 -0.014 0.004 -0.003 -0.015
These results indicate that the null hypothesis, stating that there is a no relationship or a
negative relationship between the antecedents of service performance and service
quality for bankers and customers combined, could not be rejected in favor of the
alternative hypothesis, which suggests that there is a positive relationship. There is no
evidence to conclude from this data that there is a positive relationship between the
antecedents of service performance and service quality variables for customers and
bankers combined.
153
Research Question 5
The fifth research question asked what, in the Indian retail banking industry, the
difference in perception of service performance of private and government-owned
banks is.
Hypothesis 5
The fifth null hypothesis stated that in the Indian retail banking industry, there is no
significant difference in perceptions of service performance of private and government
owned banks, while the alternative hypothesis stated that in the Indian retail banking
industry, there is a significant difference in perceptions of service performance of
private and government-owned banks. A series of t-tests were conducted utilizing type
of bank (i.e., private or government-owned) as the independent variable and the
antecedents of service performance as the dependent variables. The means, standard
deviations, and t tests are presented in Table 18. An inspection of this table shows that
none of the t-tests revealed differences on the antecedents of service performance
variables between respondents who were from government banks and respondents who
were from private banks. These results indicate that the null hypothesis, stating that
there are no differences between government and private banks on the antecedents of
service performance, could not be rejected in favor of the alternative hypothesis, which
suggests that there are differences. Furthermore, there is no evidence to conclude from
154
this data that there are differences between government and private banks on the
antecedents of performance
Table 18. The Means, Standard Deviations, and t-tests for Differences in Antecedents of
Service Performance Between Government and Private Banks
Antecedent of
Service Performance Mean SD t P
Teamwork
Government 4.58 1.27 -0.65 0.516
Private 4.66 1.12
Employee-Job Fit
Government 4.59 1.29 -0.221 0.825
Private 4.62 1.26
Technology-Job Fit
Government 4.37 1.41 -0.81 0.418
Private 4.48 1.38
Perceived Control
Government 3.86 0.921 1.89 0.06
Private 3.67 0.96
Supervisor Control
Government 4.28 0.712 1.59 0.112
Private 4.17 0.678
Role Conflict
Government 3.89 0.669 1.47 0.142
Private 3.79 0.709
Role Ambiguity
Government 3.73 0.663 0.457 0.648
Private 3.70 0.67
4.7 Summary of Analysis
This study primarily investigated the link of service performance and service quality
in the Indian retail banking industry using the service performance gap model. As
shown in Table 18, the data analysis revealed that service performance has some
155
positive link to service quality in the Indian retail banking industry. However, in large
part, the link is not significant and in some cases negative. It is difficult to find a
model that can apply the same across all cultures. Therefore, the mixed results of this
study may be accounted for by the fact that the retail banking culture of India is
different from that of the U.S. and other parts of Asia, where similar studies have
been conducted to test the service performance gaps model. The analysis show that,
to some extent, customers perceive a positive link between service performance and
service quality. However, as can be seen from the analysis, customers largely
perceive service performance as not significantly correlated with service quality, and
in some cases the constructs have a negative link. Similarly, bankers perceive a
significant link between service performance and service quality, but in some cases
they perceive a marginally positive to negative correlation between the two
constructs. In line with the research expectations, there are differences in perceptions
of bankers and customers of service performance factors. The analysis further
revealed that there are no significant differences in the perception of service
performance of retail banks in India, whether these banks are government-owned or
privately owned . Therefore, the analysis answered the six preliminary research
questions that this study intended to address.
156
Table 19 Summary of Hypothesis Test Results
Hypothesis number Statement of Null Hypothesis Test Results
H1 In the Indian retail banking industry, customers do
not perceive or negatively perceive a link between
the antecedents of service performance gaps and
service quality.
Not rejected
H2 In the Indian retail banking industry, bankers
do not perceive or negatively perceive a link
between the antecedents of service performance
gap and service quality
Partially Rejected
H3 Bankers‘ perception of service performance is not
different from customers‘ perception of service
performance in Indian banking industry.
Rejected
H4 In the Indian retail banking industry, there is
no link or negative link between the antecedents
of service performance and the perception of
bankers and customers of service quality.
Not Rejected
H5 In the Indian retail banking industry, there is
no significant difference in the perceptions of
service performance of private and government
owned banks.
Not Rejected
157
CHAPTER 5
CONCLUSIONS & RECOMMENDATIONS
In the previous chapter the data was analyzed. In this final chapter the end
Implications for management, theory and future research will be addressed.
5.1 Discussion
This study investigated the relation of service performance and service quality using
data collected from bankers and customers of selected retail banks operating in India.
In Chapter 4, detailed analysis were conducted to interpret the survey data, test the
Hypothesis, and answer the research questions. In this chapter, the discussions,
implications, conclusions, and recommendations for future studies are presented.
Testing the service performance gap model in the Indian retail banking industry
158
setting was the focus of this study. The main research question from literature review
was whether there was a link between service performance and service quality in the
Indian retail banking industry. Secondary questions posed included:
What is the customers‘ perception of the relation of service performance and
service quality?
What is the bankers‘ perception of the relation of service performance and
service quality
Is the customers‘ perception of service performance different from that of
bankers; what are the significant antecedents of service performance gaps
influencing service quality attributes?
What is the difference in perception of service performance of private and
government owned banks?
To address these questions, five Hypothesis were suggested from literature review on
marketing relationship, trust-commitment model, service-profit chain model, service
encounter, disconfirmation of expectations, and service performance gap model. The
Hypothesis suggested no relationship or alternative significant positive relationship of
the independent variables of antecedents of service performance as proxy for
teamwork, employee-job fit, technology-job fit, perceived control, supervisory
control systems, role conflict, and role ambiguity, and bankers‘ and customers‘
159
perception of service quality dimensions – tangible, reliability, responsiveness,
assurance, and empathy.
In the analysis, each of the antecedents has been tested for its relation with service
quality. The outcome of the data analysis indicated mixed results. Out of the six null
Hypothesis formulated, only one was rejected and one partially rejected. The findings
in part supported previous studies like Chenet, Parasuraman, but in other respects
contrasted with previous research like that of Huang
In an earlier study, the proponents of the service performance gaps model
(Parasuraman 1990) found teamwork, employee-job fit, technology-job fit, and
perceived control to have a significant effect on service quality gaps. In a similar
research using data collected from Taiwanese banking market, Huang (2004) found
evidence supporting or partially supporting Parasuraman (1990) findings. This
present study similarly found to a few significant correlations but mostly no
significant correlations or negative correlations between the antecedents of service
performance and dimensions of service quality.
The first hypothesis proposed no relationship between customers‘ perceptions of the
link between the antecedents of service performance and service quality as the null
hypothesis and a significant relationship of the variables as the alternative hypothesis.
The results presented in Chapter 4 indicate that the null hypothesis could not be
rejected in favor of the alternative hypothesis. Moreover, the results showed that
160
customers do not perceive a positive link between supervisory control and the
dimensions of service quality, except tangible dimension. Perceived control is
believed to have positive relationship with all the dimensions of service quality, but
there is no evidence to suggest a significant correlation. While role conflict and role
ambiguity are perceived to be negatively linked to tangibility, assurance, and
empathy, there is no evidence to suggest their negative effects on service reliability
and responsiveness. To a large extent, the findings in this study identified role
conflict and role ambiguity to be linked negatively to service quality, supporting the
existing theory.
Similar to Parasuraman (1990) and Huang‘s (2004) findings, empirical evidence
showed that customers perceive teamwork, employee-job fit, technology-job fit, role
conflict, and role ambiguity to have some positive link to service reliability and
responsiveness. This finding means that clearly defined and properly assigned roles
can enhance performance and prevent service performance gaps. Where there are role
conflicts, employees are likely to leave their job, and where roles are well-defined,
employee retention is high.
The second null hypothesis suggested that in the Indian retail banking industry,
bankers do not perceive or negatively perceive a link between the antecedents of
service performance and service quality. The alternative hypothesis stated that in the
Indian retail banking industry, bankers perceive or positively perceive a significant
161
link between the antecedents of service performance and service quality. The result of
the correlational analysis shows that employee-job fit is the only service performance
antecedent significantly linked to service quality. This reveals that skillful, well-
trained, and motivated employees are crucial to the delivery of service quality in retail
banking. Prior research emphasized the important role skillful employees play in
determining service quality , and the findings of this research partially support this
view. The finding regarding the significant role that employee-job fit plays in service
quality delivery supports the postulations of the service-profit-chain discussed in
Chapter 2.
However, the perception of customers of the link of employeejob fit to service quality
seems to suggest the contrary. In customers‘ opinion, employee-job fit is negatively
linked to tangible, assurance, and empathy dimensions, but there is no evidence that it
has the same link with reliability and responsiveness. To understand the differences in
customers‘ and bankers‘ perceptions of service performance, as the third research
question indicated, the third hypothesis was formulated. The third null hypothesis
suggested there is no difference between customers‘ and bankers‘ perceptions of
service performance, while the alternative hypothesis suggested that there is a
difference between customers‘ and bankers‘ perceptions of service performance.
The result of the analysis enabled the rejection of the null hypothesis in favor of the
alternative hypothesis. In most part, bankers‘ perception of service performance is
162
found not to be different from that of customers. A strong agreement between
customers and bankers on teamwork, employee-job fit, technology-job fit, perceived
control, and role ambiguity as the antecedents of service performance suggests the
existence of functional communication link between customers and their banks in the
Indian retail banking industry. Effective communication link between customers and
bankers is important in relationship marketing.
Trust and commitment, as Morgan and Hunt (1994) stated, is important in
relationship marketing. The results of this research support this view. The long-term
relationship that firms strive to have with customers thrives on mutual fulfillment of
promises, by both customers and banks emphasized the need for firms to deliver
excellent service and to avoid service performance gaps.
The results of present research reiterated the call for the provision of excellent service
quality to ensure customer satisfaction. The fourth null hypothesis suggested that both
customers and bankers perceive no link between the antecedents of service
performance and service quality. The alternative hypothesis suggested that both
customers and bankers perceive a significant link between the antecedents of service
performance and service quality.
The result showed that the null hypothesis could not be rejected. Although the result
showed the absence of a negative link between employee-job fit and perceived
control variables, they were not significantly correlated with service quality.
163
Supervisory control and role ambiguity are perceived to be negatively linked to
reliability, assurance, and empathy. The inverse relationship between role conflict and
role ambiguity has been identified in previous research (Parasuraman, 1990). This
study supports the postulation of the service performance model that role conflict and
role ambiguity, if not properly managed, create a gap in service quality delivery.
However, contrary to the research expectations, there was no evidence to suggest a
positive link of teamwork and technology-job fit to tangibles. In line with earlier
research , this study found the need for managers of retail banks to focus less on
tangibles and more on empathy and assurance. This finding is also consistent with
Parasuraman (1988). In a study by Othman and Owen (2001), tangible was similarly
rated as least important among the dimensions of service quality. This research also
suggested that there is no difference between government-owned and private retail
banks in terms of performance.
The emerging competition has also resulted in the replacement of banking
bureaucracy and inefficiency that adversely affected customer service in the past.
Therefore, retail banks in India are compelled to seek better ways to provide services
to achieve customer satisfaction and ensure loyalty and profitability. From the
research findings, retail banks, whether government-owned or private-owned, have
performed well competitively since the deregulation of the banking industry.
164
5.2 Implications
The study sought to investigate how service performance factors are linked to service
quality delivery in the Indian retail banking industry. The objective of the
study was to test the effectiveness of the service performance gap model in
understanding and explaining bankers‘ and customers‘ perception of service
performance and service quality of Indian retail banks. After data collection and
regression and correlation analysis, interesting findings were made that have the
following implications.
Firstly, the results of the study imply that the service performance gap model applies
differently in different cultures and market settings. The original study by
Parasuraman (1990) was conducted in the U.S., and Huang‘s (2004) study was
conducted in Asia. This research, in turn, was conducted in India. The results
suggested that testing the service performance gap model in different cultures may
produce varying results. Therefore, culture may have an influence on the perception
of service performance gaps.
Secondly, the results of the test of the second hypothesis revealed a significant
relationship between employee-job fit and assurance. This finding implies that
employees‘ knowledge, skills, and fitness for job can propel a retail bank to gain
competitive advantage over rivals. Over the decade, the banking industry in India is
165
increasingly becoming competitive. In such a competitive environment, customers are
more informed and sophisticated; they face low cost of switching and develop diverse
needs. Therefore, the need is on the rise for retail banks to pay attention to
the training of employees in order to compete favorably. Managers of retail banks
need to focus on service reliability and employee performance more than on the
tangible dimension. The results of this research support this call. The results also
confirmed Chenet (2000) finding that cooperation and employee-job fit are significant
factors influencing service performance. Gronross (2007) added that effective
internal marketing, effective supervisory control, and employee training can prevent
service performance gaps.
Thirdly, the results of the test of the third hypothesis imply that customers and
bankers may have similar perceptions of the factors influencing gaps in service
delivery. However, in other respects, there are differences in bankers‘ and customers‘
perceptions of the link between the antecedents of service performance gaps and
service quality dimensions. For example, while bankers perceive role conflict and
role ambiguity to have a positive link to service quality dimensions, bankers perceive
no such linkage. This contradicts the postulation of the service performance gap
model, which links these variables to service performance gaps.
The implication of this finding is that for firms to gain and increase their competitive
advantage, excellent service must be delivered. In this regard, even where there are no
166
service performance gaps, management must continue to enhance the effectiveness of
the variables influencing service performance gaps to keep their promises to the
customers and sustain long term relationships. Also, in the Indian retail banking
industry, the taste and needs of customers continue to change. Therefore,
management of retail banks needs to continue to enhance the quality of service not
only to maintain their market share, but to maintain their share of customers, as well.
Other implications of the study are:
1. Banks in the Indian retail banking industry need to place great importance on
improving reliability, responsiveness, assurance, and empathy dimensions of their
service quality to be profitable. Although, the tangible dimension seems to be given a
low rating by customers and bankers, there is still a need to pay attention to this
dimension to ensure delivery of service quality.
2. The results emphasize the importance of employee-job fit, implying that
management of retail banks should pay attention to the training needs of employees.
The hiring practices of retail banks in India should be oriented toward recruiting
skillful employees to deliver quality service to stay competitive.
3. In customers‘ view, perceived control is crucial to the delivery of service quality.
Therefore, employees of retail banks in India must be motivated to be able to cope
with and manage stressful situations. Rules and procedures must be clearly stated.
167
5.3 Conclusions
Important conclusions reached in this study are:
1. There is a link of service performance and service quality in many respects, as
suggested in prior literature. However, in some respects, service performance is
found to have either inverse or marginally positive relationship with service quality.
For example, antecedents of service performance gaps such as role conflict and role
ambiguity have been found to negatively impact service quality dimensions such as
reliability, responsiveness, and empathy. This finding confirmed earlier research.
2. Customers and bankers perceive the relation of service performance factors and
service quality dimension similarly, but in some respects differently. As the results of
this study show, there is a strong agreement between customers and bankers on the
effects of teamwork, employee-job fit, technology fit, perceived control, and role
ambiguity on service quality dimensions.
3. Service performance of retail banks in India, whether government-owned,
private-owned, is perceived similarly by both customers and bankers in terms of
service .
4. The service performance gap model, when applied under different business and
cultural environments, may yield different results. This conclusion emanated from the
fact that the results of this research in some respects confirmed prior studies and, in
other areas, contrasted with prior research.
168
5.4 Recommendations for Future Research
This study focused on the Indian retail banking industry due to the growing
competition in the industry emanating from macroeconomic stability, liberalization,
and entry of foreign banks. This competitive environment may be similar to or
different from the banking industries of other countries. For this reason, it is
recommended that future research replicate this study in other countries and
industries. The changing nature of the retail banking industry, customers‘
expectations, global economy, as well as the effect of cultural differences on research
population may necessitate the replication of this study in other settings.
This study found that teamwork, employee-job fit, technology-job fit, perceived
control, supervisory control systems, role conflict, and role ambiguity have a mixed
effect on the perception of service quality dimensions – tangibles, reliability,
responsiveness, assurance, and empathy. However, the research could not establish
the causality and consequentiality of the two sets of variables. Therefore, future
research could focus on the investigation of the causal and consequential relationship
between the antecedents of service performance and service quality dimensions.
Also, this study sampled only retail banks. However, there are different types of
banks in the Indian banking industry. Therefore, future research may focus on other
169
types of banks to test the applicability of the service performance gap model.
Moreover, future research may examine the effects of each of the antecedents of
service performance on other variables such as financial performance of an
organization. This research used quantitative methodology, and future research may
use qualitative or mixed research design to test the link between service performance
and service quality.
170
BIBLIOGRAPHY
Abbott, E. (2003). Does employee satisfaction matter? A study to determine whether
low employee morale affects customer satisfaction and profits in the business-to-
Business sector. Journal of Communication Management. Vol. 7. Issue. 4.
Page: 333 – 339.
Adams, C. W. (2003). Customer satisfaction and customer loyalty are the best
Predictors of customer retention. Retrieved January 30, 2010, from
www.admassixsigma.com/Newsletters/customers_results.htm
Anderson, E. & Fornell, C. (1994), A customer satisfaction research prospectus, in
Rust, R.T. & Oliver, R.L. (Eds), Service Quality: New Directions in Theory and
Practice, Sage Publications, Thousand Oaks, CA.
Anderson, J.C. & Gerbing, D.W. (1988). Structural equation modelling in practice:
Areview and recommended two step approach, Psychological Bulletin, 49, 411 423.
Angur, M. G., Nataraajan, R. & Jahera, Jr. J. S. (1999). ―Service Quality in the
Banking Industry: An Assessment in a Developing Economy‖. International
Journal of Bank Marketing, 17 (3), 116-123.
Avkiran, N. K. (1994). Developing an Instrument to Measure Customer Service
Quality in Branch Banking. International Journal of Bank Marketing. 12(6), 10-18.
Babakus, E., & Boller, G. W. (1992). An empirical assessment of the SERVQUAL
scale. Journal of Business Reaearch, 24, 253-268.
Babakus, E., Bienstock, C., and Scotter, J. (2004). Linking perceived quality and
customer satisfaction to store traffic and revenue growth. Decision Sciences, Vol.
35 No.4, pp.713-37.
Bagozzi, R. P. (1992). Self-Regulation of attitudes, intentions & behaviour, Social
Psychology Quarterly, 55(2), 178-204.
171
Bahia, K. & Nantel, J.(2000). A reliable and valid measurement scale for the
perceivedservice quality of banks. International Journal of Bank Marketing, 18 (2),
pp. 84-91.
Baker, D. A. & Crompton, J.L., (2000). Quality, satisfaction and behavioural
variables,Annals of Tourism Research, 27 (3), 785-804.
Bank, W. (1988), "Build Competitive Advantage through. Customer Service'',
Marketing News, December, p. 16.
Behling, O. & Law, K.S. (2000). Translating Questionnaires and Other Research
Instruments: Problems and Solutions. Thousand Oaks, CA: Sage Publications.
Bejou, D (1997).Relationship marketing: evolution, present state, and future.
Psychologyand Marketing, Vol. 14 No.8, pp.727-36
Bennington, L. & Cummane, J. (1998). Measuring service quality: A hybrid
Methodology. Total Quality Management, 9, 6, 395-405.
Berry, L.L., Parasuraman, A., & Zeithaml, V.A. (1994), "Improving service quality in
America: lessons learned", Academy of Management Executive, Vol. 8 No.2,
pp.32-52
Berry, L.L & Parasuraman, A (1991), Marketing Services, Competing through
Quality, Free Press.
Bilgin, Z. & Yavas, U. (1995) Marketing of consumer credit services in a developing
country: A status report. International Journal of Bank Marketing 13 (5): 31–36.
Bitner, M., Booms, B., & Tetreault, M. (1990), The Service Encounter: Diagnosing
Favourable and Unfavourable Incidents, Journal of Marketing, Vol. 54 No.January,
pp.71-84.
Bitner, M.J. (1990). Evaluating Service Encounters: the Effects of Physical
Surroundings and Employee Responses. Journal of Marketing 54, 69-82.
Bitner, M.J. & Hubbert, A.R. (1994).Encounter Satisfaction versus Overall
Satisfaction Versus Quality. pp. 72-84 in Service Quality: New Directions in Theory
172
and Practice. Roland T. Rust & Richard L. Oliver (Eds.). New York: Sage
Publications,
Bitner, M.J. (1995). Building service relationships: it‘s all about promises. Journal of
the Academy of Marketing Science, 246-51, Vol. 23 No.4, .
Bitner, M., Ostrom, A., & Meuter, M. (2002). Implementing successful self-service
Technologies. Academy of Management Executive, Vol. 16 No.4,
Brown, S. W. & Swartz T.A. (1989). A Gap Analysis of Professional Service Quality.
Journal of Marketing 53 (April).
Bryant, C., Kent, E., Lindenberger, J., & Schreiher, J. (1998).Increasing consumer
Satisfaction. Marketing Health Services, Vol. 18 No.4, pp.4-18.
Carman, J. (1990). Consumer perceptions of service quality: an assessment of the
SERVQUAL dimensions. Journal of Retailing, Vol. 66 No. 1, pp. 33-55.
Chang, C. (2007). Customer Expectation of the Taiwan Banking Industry. Nova
Southeastern University. ProQuest Retrieved May 2009.
Chang, T. & Wildt A. (1994). Price, Product Information and Purchase Intention: An
Empirical Study. Journal of the Academy of Marketing Science, 22, 1, 16-27.
Chenet, P., Tynan, C. & Money, A. (1999). Service performance gap: re-evaluation
and redevelopment. Journal of Business Research, Vol. 46 No.2, pp.133-47.
Churchill, G. & Surprenant, C. (1982).An Investigation into the determinants of
customer satisfaction. Journal of Marketing Research, XIX, (November).
Corbett, J.M., Martin, R., Wall, T.D., & Clegg, C.W. (1989). Technological coupling
as a predictor of intrinsic job satisfaction: A replication study. Journal of
Occupational Behaviour, 10, 91-95.
Corporate Executive Board (2001).Outbound Customer Contact. Council on
Financial Competition, September.
173
Crane, F. G. & Clarke, T. K. (1988). The identification of evaluative criteria and cues
used in selecting services. The Journal of Services Marketing, 2(2), 53-59.
Crane, F.G. & Lynch, J.E. (1988). Consumer selection of physicians and dentists: an
examination of choice criteria and cue usage. Journal of Health Care Marketing, Vol.
8, September, pp. 16-19.
Cronin, J. J. & Taylor, S. A. (1992). Measuring service quality: a re-examination and
extension. Journal of Marketing. 56, 55-68.
Cunningham, L.,Young, C. &Lee, M., (2000). Methodological Triangulation in
Measuring Public Transportation Service Quality. Transportation Journal, 40, 1,
2000, pp.35-37.
Dodds, W.B. Monroe, K.B., & Grewal, D. (1991). Effects of Price, Brand, And Store
Information on Buyers' Product Evaluations. Journal of Marketing Research, 28(3),
pp.307-319.
Douglas, T. & Fredendall, L. (2004).Evaluating the Deming management model of
total quality in services, Decision Sciences, Vol. 35 No.3, pp.393-422.
Dubinsky, A.J, Jolson, M.A, Michaels, RE, Masaaki, K., & Lim, C.U. (1992). Ethical
perceptions of field sales personnel: an empirical assessment. J Pers Sell Sales
Manage Fall;12:9– 22.
Edvardsson, B., Thomasson, B., & Ovretveit, J. (1994). Quality of service: Making it
really work. London: New York: McGraw-Hill Book Co.
Egan, J. (2004). Relationship Marketing: Exploring Relational Strategies in
Marketing (2nd ed.). Harlow: Pearson Education Limited
Ennew, C. T., Reed, G. V. & Binks, M. R. (1993). Importance-performance analysis
and the measurement of service quality. European Journal of Marketing. 27 (2), 59-
70.
Feigenbaum, A. V. (1951). Quality control: Principles, practice, and administration.
McGraw-Hill.
174
Fornell, C. (1992). A National Customer Satisfaction Barometer.The Swedish
Experience. Journal of Marketing. Vol. 56, 6-21
Frei, F.X, Kalakota, R., & Marx, L.M. (1997) Process variation as a determinant of
service quality and bank performance: evidence from the retail banking study.
Wharton School, Center for Financial Institutions Working Paper Series 97-36, 1997.
Fullerton, G. & Taylor, S. (2002).Mediating, interactive and non-linear effects in
service quality and satisfaction with services research. Canadian Journal of
Administrative Sciences, Vol. 19 No.2, pp.124-36.
Gabbott, M. & Hogg, G (1998), Consumers and Services, John Wiley and Sons,
Chichester,
Grönroos, C. (1984). A Service quality model and its marketing implications.
European Journal of Marketing, 12 (8), pp. 588-600.
Gummesson, E. & Gronroos, C. (1987). Quality of Products and Services: A
Tentative Synthesis between Two Models, Services Research Centre, University of
Karlstad, Sweden, .
Gupta, A & Chen, I. (1995), "Service quality: Implications for management
development", International Journal of Quality and Reliability Management, Vol. 12
pp.28 - 35.
Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E. & Tatham, R. L. (2006)
Multivariate Data Analysis, 6th edn., Upper Saddle River, NJ: Prentice Hall.
Hampton G.M. (1993).Gap Analysis of College Student Satisfaction as a Measure of
Professional Service Quality. Journal of Professional Services Marketing, 9(1), 15-
28.
Harris, E. & Fleming, D. (2005). Assessing the human element in service personality
formation: personality congruency and the Five Factor Model. Journal of Service
Marketing, 19(4), 187-198.
Hartline, M.D & Jones, K.C. (1996). Employee performance cues in a hotel service
environment: Influence on perceived service quality, value, and word-of-mouth
175
intentions. Journal of Business Research. Vol. 35, Issue 3, March, Pages 207-
Hays, J. & Hill, A. (2001). A preliminary investigation of the relationships between
employee motivation/vision, service learning, and perceived service quality. Journal
of Operations Management, Vol. 19 No.3, pp.335-49.
Helson, H. (1948). Adaptation-level as a basis for a quantitative theory of
frames of reference. Psychol. Rev., 55, 297-31
Hemmasi, M, Strong, K. & Taylor, S (1994). Measuring service quality for planning
No.4, pp.24-34.
Jabnoun, N., & Al-Tamimi, H.A.H. (2003). Measuring perceived service quality at
UAE commercial banks. International Journal of Quality & Reliability Management,
Vol. 20 No.4, pp.458-72.
Jamal, A., & Naser, K. (2002). Customer satisfaction and retail banking: an
assessment of some of the key antecedents of customer satisfaction in retail banking.
International Journal of Bank Marketing, Vol. 20 No.4, pp.146-60.
Jandt, F. E. (1995). The Customer Is UsuallyWrong! (Indianapolis: Park Avenue
Publishers, 1995).
Johnson, M. D. (1998), Customer Orientation and Market Action, Upper Saddle
River, NJ: Prentice Hall.
Johnston, R. (1997). Identifying the critical determinants of service quality in retail
banking: importance and effect. The International Journal of Bank Marketing, Vol.
15 No.4, pp.111-6.
Kassim, N.M. & Bojei, J. (2002). Service quality: gaps in the Malaysian
telemarketing Industry. Journal of Business Research, Vol. 55 pp.845-52.
Kotler, P. (2006). Marketing management.12Th Ed.. NY: Prentice Hall.
Kotler, P. (1999). Marketing Management: Analysis, Planning, Implementation, and
Control. NJ: Prentice-Hall.
Lakhe, R. R. & Mohanty, R. P. (1995). Understanding TQM in service system.
176
International Journal of Quality & Reliability Management.12(9), 139-153.
Lassar, Walfried M., Manolis, C. & Winsor, R.D. (2000). Service Quality
Perspectives and Satisfaction in Private Banking. International Journal of Bank
Marketing, 18/4, 181-199.
Le Blanc, G. & N. Nguyen (1988).Customers‘ Perceptions of Service Quality
in Financial Institutions. International Journal of Bank Marketing, 6/4, 7-18.
Lehtinen, U. & Lehtinen, J. (1982). Service Quality – A Study of Quality Dimensions.
Service Management Institute, Helsingfors,
Leonard, F.S. & Sasser, W.E. (1982). The incline of quality. Harvard Business
Review, 60, pp. 163-171.146
Leverin, A. & Liljander, V. (2006). Does relationship marketing improve customer
relationship satisfaction and loyalty? International Journal of Bank Marketing, Vol.
24 No.4, pp.232-51.
Levitt, T. (1972). Production Line Approach, Harvard Business Review, (September-
October), 41-52.
Lewis B.R. (1993). Service Quality Measurement, Marketing Intelligence and
Planning,11(4), 4-12.
Lewis, B.R. (1991).Customer care in service organizations. Management Decision,
Vol. 29 No.1, pp.31-4.
Lovelock, C. H. (1991). Services Marketing, Second Edition, Englewood Cliffs,
NJ: Prentice-Hall.
Lu, Y. (1999). Health Service Sites Access Analysis Using Internet GIS. In Robert C.
Williams, Max M. Howie, Carolyn V. Lee, and William D Henriques (eds.)
Geographic Information Systems in Public Health: Proceedings of the Third National
Conference.
Macdonald, J. (1995) Quality and the financial service sector, Managing Service
Quality, 1475, No. 1, pp. 43-46.
177
Machauer, A. & Morgner, S. (2001). Segmentation of bank customers by expected
benefits and attitudes. International Journal of Bank Marketing, Vol. 19 No.1,
pp.6-17.
Malhotra, N.K., Ulgado, F.M., Agarwal, J., & Baalbaki, I.B. (1993). International
services marketing: a comparative evaluation of the dimensions of service quality
between developed and developing countries. World Marketing Congress: Volume
VI, Academy of Marketing Science.
Martilia, J.A. & James. J.C. (1977). Importance-performance analysis. Journal of
Marketing, January, pp. 77-79.
McKinsey, J. (2000). Industry notes: Banking. Retrieved January 30, 2010 from
http://www.enquirer.com/editions/2000/05/30/fin_industry_notes.html
Mentzer, J. T. & Knoard, B. P. (1991).An efficient/effectiveness approach to logistics
performance analysis. Journal of Business Logistics, Vol. 12, No. 1, pp. 353-361
Miller, J. A. (1977). Studying Satisfaction, Modifying Models, Eliciting Expectations,
Posing Problems, and Making Meaningful Measurements in Conceptualization and
Measurement of Consumer Satisfaction and Dissatisfaction, K. Hunt (Ed.), Report
No. 77-103, Marketing Science Institute, Cambridge, MA, pp. 72-91
Mitra, A. (1993). Fundamentals of Quality Control and Improvements. New York
Macmillan.
Montes, F.J., Fuentes, M.M., & Fernandez, L.M. (2003).Quality Management in
Banking Services: An approach studying employee and customer perceptions. Total
Quality Management & Business Excellence,14 (3): 305-324
Moorman, C., Zaltman, G., & Deshpande, R. (1992). Relationships Between
Providers and Users of Marketing Research: The Dynamics of Trust Within and
Between Organizations. Journal of Marketing Research, 29, August, 314-329
Morgan, R. M. & Hunt,.S.D. (1994).The Commitment-Trust Theory of Relationship
Marketing. Journal of Marketing 58(3): 20-45.
178
Mouawad, M. & Kleiner, B.(1996). New developments in customer service training.
Managing Service Quality, 6(2), 49-56.
Newman, K. (2001). Interrogating SERVQUAL: a critical assessment of service
quality measurement in a high street retail bank. International Journal of Bank
Marketing.
19 (3),126-139.
Newman, K. & Cowling, A. (1996). Service Quality in Retail Banking. International
Journal of Bank Marketing. Vol 14, Issue 6
Okoe, F.A., Puni A., Alabi, G., & Damnyang, J.B. (2007). An Assessment Of Service
Oliver R.L. (1997).Whence Consumer Loyalty? Journal of Marketing (Special Issue),
vol.63, p.33-44.
Oliver, R. L. (1996). Satisfaction: A Behavioural Perspective on the Consumer. New
York:McGraw-Hill
Oliver, R. L. (1980). A Cognitive Model of the Antecedents and Consequences of
Satisfaction Dicision. Journal of Marketing Research, 17( Nov.), 460-469.
Owusu-Frimpong, N. (1999). Patronage behaviour of Indian Bank customers.
International Journal of Bank Marketing 17 (7): 335–342.
Palmatier, R.W., Gopalakrishna, S. & Houston, M.B. (2006). Returns on business-
tobusiness relationship marketing investments: strategies for leveraging profits.
Marketing Science,Vol. 25 No. 5, pp. 477-93.
Parasuraman, A. & Grewal, D. (2000), "The impact of technology on the quality-
valueloyalty chain: A research agenda", Journal of the Academy of Marketing
Science, 28 (1), pp. 168-174
Parasuraman, A. Rohit Deshpande. (1984).The Cultural Context of Marketing
Management. in American Marketing Association Educators’ Proceedings, Series 50,
Russel W. Belk, et al, eds., Chicago: American Marketing Association, 176-179.
179
Parasuraman, A., Zeithaml, V.A. & Berry, L.L. (1985). A Conceptual Model of
Service Quality in its Implications for Future Research. Journal of Marketing, 49
(Fall), 41-50.
Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1986), SERVQUAL: A Multiple-
item Scale for Measuring Customer Perceptions of Service Quality. Report No. 86-
108, Marketing Science Institute, Cambridge, MA.
Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1988). SERVQUAL: A Multiple-
item Scale for Measuring Consumer Perceptions of Service Quality. Journal of
Retailing, 64/1 (Spring), 12-40.
Parasuraman, A., Berry, L.L., & Zeithaml, V.A. (1991a). Perceived Service Quality
as a Customer-based Performance Measure: An Empirical Examination of
Organizational Barriers Using an Extended Service Quality Model. Human Resource
Management, 30/3 (Autumn), 335-364.
Parasuraman, A., Valarie A. Zeithaml, & Berry, L.L (1991b). Refinement and
Reassessment of the SERVQUAL Scale. Journal of Retailing, 67/4, 420-450.
Parasuraman, A., Berry, L.L. & Zeithaml, V.A. (1993). More on Improving Service
Quality Measurement. Journal of Retailing, 69 (Spring), 140-147.
Parasuraman, A., Zeithaml, V.A., & Berry, L.L. (1994). Reassessment of
Expectations as a Comparison Standard for Measuring Service Quality: Implications
for Future Research. Journal of Marketing, 58 (January),111-124.
Parker, C. & Mathews, B.P. (2001). Customer satisfaction: contrasting academic and
customers‘ interpretations. Marketing Intelligence & Planning, No.1, pp.38-44.
Piercy, N. & Morgan, N. (1991).Internal marketing - the missing half of the
marketing programme. Long Range Planning, Vol. 24 No.2,
Pieters, R., Bottschen, G., & Thelen, E. (1998).Customer desire expectations about
service employees: an analysis of hierarchical relations. Psychology and
Marketing, Vol. 15 No.8, pp.755-73.
Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and
Companies. New York: Free Press.
180
Porter, M. E. (1985). Competitive Advantage, New York, Free Press.
Pricewaterhousecopers (2010): Indian Banking Survey.India
Pulman, R. (2002).Organizational coach. Retrieved January 30, 2010, from
http://www.robyn.com.au/docs/swt.pdf
Rabin, J.H. (1983). Accent is on quality in consumer goods and services this
decade. Marketing News, 4 March: 12.
Rashid, T. (2003). Relationship marketing: Case studies of personal experiences of
eating out. British food Journal, 105(10), 742-750.
Reeves, C. A. & Bednar, D. A. (1994). Defining quality: Alternatives and
implications. Academy of Management Review, 19, 419-445.152
Ridnour, R E., Lassk, F.G., & Shepherd, C.D., (2001). Strategic Implications of Sales
Culture Variables: An Exploratory Assessment within the Banking Industry.Journal
of Personal Selling and Sales Management, 21 (3), 247-254.
Riordan, E.A., Oliver, R. L., & Donnelly, J.H. (1977).The Unsold Prospect: Dyadic
and Attitudinal Determinants. Journal of Marketing Research, 14 (November), 530-
537.
Roig, J.C.F., Garcia, J.S., Tena, M.A.M and Monzonis, J.L. (2006).Customer
perceived value in banking services, International Journal of Bank Marketing, Vol.
24 No. 5, pp.266-283.
Rust, R. & Oliver, R. (1994). Service Quality: Insights and Managerial Implications
from Frontier. In R. Rust & R. Oliver (Eds.), Service quality, new directions in theory
and practice. London: Sage.
Salkind, N.J. (2000). Exploring Research, 4th ed. (Upper Saddle River, NJ: Prentice-
Hall)
Samli, A. & Frohlich, C. (1992). Service: The competitive edge in banking. Journal
of Services Marketing, Vol. 6, No. 1, pp. 15–22.
181
Swartz, T. & Brown, S. (1989). A gap analysis of professional service quality,
Journal of Marketing, Vol. 53 pp.92 - 98.
Schiffman, L.,Bednall, D., Cowley, E., O'Cass, A.,Watson, J., & Kanuk, L. (2001).
Consumer Behaviour, Australia: Prentice-Hall.
Schlesinger, L.A. & Heskett, J.L. (1991). The Service Driven Service Company.
Harvard Business Review, September-October: 71-81.
Schneider, B. & Bowen,. D, (1995). Wining the Service Game. Harvard Business
School Press, Boston.
Shamdasani, P. N & Balakrishnan, A.A. (2000). Determinants of Relationship
Quality and Loyalty in Personalized services, Asia Pacific Journal of Management.
Vol. 17. November.pp.399.
Sheth, J. N., & Parvatiyar, A. E. (2000). The evolution of relationship marketing. In J.
N. Sheth & A. E. Parvatiyar (Eds.), Handbook of Relationship Marketing. London:
Sage Publications.
Shorter Oxford English Dictionary (1978) Retrieved April, 2, 2010 at.
http://www.askoxford.com/concise_oed/service?view=uk
Shostack, L.(1985). Planning the Service Encounter, in The Service Encounter, eds J.
Czepiel, M. Solomon and C. Suprenant, Lexington Books, 243-54.
Sigala, M. & Christou, E. (2006).Managing Service Quality. Global trends and
challenges in Services. Vol. 16. No.4 pg. 345-348
Solomon, M.R., Surprenant, C., Czepiel, J.A. & Gutman, E.G. (1985). A role theory
perspective on dyadic interaction: the service encounter. Journal of Marketing.99-111
Sousa, R. & Voss, C. A. (2002). Quality management revisited: A reflective review
and agenda for future research. Journal of Operations Management, 20, 91-109.
Spector, P.E (1986).Perceived Control by Employees: A Meta-Analysis of Studies
Stafford, M.R. (1996), 'Demographic discriminators of service quality in the banking
industry', The Journal of Services Marketing, Vol. 10, No. 4, pp.6-22
182
Sureshchandar, G.S., Rajendran, C., & Anantharaman, R.N. (2002). The relationship
between management's perception of total quality services and customer perceptions
of service quality, Total Quality Management, Vol. 13 No.1, pp.69-88.
155
Sureschandar, G.S., Rajendran, C., & Kamalanabhan, T.J. (2001). Customer
perceptions of service quality – a critique, Total Quality Management, Vol. 12
pp.111-24.
Teas, R.K. (1993). Expectations, performance evaluation and consumer‘s perception
of quality. Journal of Marketing 57(4):18-34.
Thompson, P., DeSouza, G., & Gale, B. T. (1985). The strategic management of
service quality, Cambridge, MA: The Strategic Planning Institute, PIMSLETTER
No. 33.
Thompson, T.W, Berry, L.L, & Davidson, P.H (1978), Banking Tomorrow:
Managing Markets Through Planning, Van Nostrand Reinhold Company, New York,
NY,
Treytl, K.J. (2002). The impact of employee satisfaction on customer satisfaction
with the sales interaction. 0-493-92570-8 / 0493925708
Tsikriktsis, N. & Heineke, J. (2004). The impact of process variation on customer
dissatisfaction: evidence from the US domestic airline industry, Decision Sciences,
Vol. 35 No.1, pp.129-42.
Tucker, F. G. (1994).Creative customer service management, International Journal of
Physical Distribution & Logistics Management, Vol. 24, No. 1, pp. 32-40
Voss, C. Roth, A.V. Rosenzweig, E.D. Blackmon, K., & Chase, R.B. (2004). A Tale
of Two Countries. Conservatism, Service Quality, and Feedback on Customer
Satisfaction‘, Journal of Service Research, Vol. 6, No 3, pp. 212-23
Wang, Y., Lo, H. P. & Yang, Y. (2004). An integrated framework for service quality,
customer value, satisfaction: evidence from China‘s telecommunication industry,
Information Systems Frontiers, 6(4), pp.325-40
183
Westbrook, R. A. (1980). A Rating Scale for Measuring Product/Service
Satisfaction. Journal of Marketing 44(Fall):68–72
Westbrook, R A. & Cote, J.A (1979). An Exploratory Study of Non-Product-Related
Influences upon Consumer Satisfaction. InAdvances in Consumer Research, pp.
77–581. Ed. Jerry C. Olson. Ann Arbor, MI: Association for Consumer Research.
Westbrook, R. A. & Oliver, R.L. (1991). The Dimensionality of Consumption
Emotion Patterns and Consumer Satisfaction, Journal of Consumer Research, 18
(June),84-91
Wilson, D. T. (1995). An integrated model of buyer-seller relationships. Journal of
Academy of Marketing Science, 23(4), 335-345.
Yavas, B. & Burrows, T. (1994). A comparative study of attitudes of US and Asian
managers toward product quality, Quality Management Journal, Vol. 4 No.1, pp.41-
56.
Yavas, U. & Yasin, M.M. (2001).Enhancing organizational performance in banks: a
systematic approach, Journal of Services Marketing, No.6, pp.444-53.
Yavas, U., Bilgin, Z., & Shemwell, D. (1997). Service quality in the banking sector in
an emerging economy: a consumer survey, The International Journal of Bank
Marketing, Vol. 15 No.6, pp.217-23.
Zeithaml, V.A. (1988). Consumer perceptions of price, quality, and value: A means-
end model and synthesis of evidence, Journal of Marketing, 52 (3), pp. 2-22.
Zeithaml, V.A., Berry, L.L., & Parasuraman, A. (1996), The behavioural
consequences of service quality", Journal of Marketing, 60 (2), pp. 31-46.
Zeithaml, V. A & Bitner, M. J. (2000), Services Marketing (2nd Ed.), McGraw-
Hill Companies Inc., New York.
Zeithaml, V. A., & Binter, M.J. (1996). Service Marketing. New York. NY: The
McGraw-Hill Companies, INC.
184
Zeithaml, V. A. (1981).How Consumer Evaluation Processes Differ Between Goods
and Services, in Marketing of Services, J. H. Donnelly and W. R. George (ed.),
Chicago, IL: American Marketing Association, 186-190.
Zeithaml, V.A., Berry, L.L., & Parasuraman, A. (1993). The Nature and Determinants
of Customer Expectations of Service. Journal of the Academy of Marketing Science,
Vol. 21, Winter, N. 1, pp 1-12
Zeithaml, V., & Bitner, J. (2003). Services Marketing. New York: McGraw-Hill.
Zeithaml, V.A., Parasuraman, A., & Berry, L.L. (1990). Delivering Quality Service:
Balancing Customer Perceptions and Expectations. New York, NY: Free Press
Zeithaml, V.A., Parasuraman, A., & Malhotra, A. (2002). Service quality delivery
through web sites: a critical review of extant knowledge, Journal of the Academy of
Marketing Science, 30 (4), pp. 362-37
185
APPENDIX A: LETTER TO RESPONDENTS
186
Sub: Questionnaire for Research on Indian Banks
Dear Respondent:
My name is Shraddha Pathak. I am a doctoral candidate at University of Lucknow. I
am conducting a survey on service performance and service quality of banks in India
as part of my dissertation entitled "Service Performance and Service Quality in the
Indian Banking Industry".
I would be very grateful if you could take time to complete the attached
questionnaire. Every effort has been made to keep the questionnaire easy to complete.
Therefore it should take approximately 15 minutes to complete.
Please be advised that you are not required to put your name or information that
identifies you on the questionnaire. The demographic information requested is
anonymous and will be kept completely confidential.
Please also note that participation in this survey is absolutely voluntary. In this
regard, in the course of answering the questions at anytime if you feel uncomfortable
you may discontinue or leave any question(s) unanswered. The report of the survey
will also be made available to you when it is completed.
I will greatly appreciate if you completed the questionnaire and return it back.
I will not hesitate to answer your question(s) related to this survey. I can be reached at
shrads.pathak@gmail.com or 9956901107.
Thank you very much for your time and assistance.
187
APPENDIX B: INSTRUMENTS
188
SERVICE PERFORMANCE GAP QUESTIONNAIRE
Customer Survey
Part I
Directions: This portion of the survey deals with what you think is an excellent bank
that, in your view, delivers excellent quality service. Please indicate the extent of
which features you feel an excellent bank should possess described by each
statement. If you are likely to feel a feature is not at all essential for ,circle number
1. If you are likely to feel a feature is absolutely essential, circle 7. If your feeling is
likely to be less strong, circle one of the numbers in the middle. Remember, there are
no right and wrong answers –we are interested in what you regard as an excellent
bank.
Strongly Strongly
Agree Disagree
TANGIBLES
1 Banks will have modern–looking equipment. 1 2 3 4 5
2 The physical facilities at banks will be visually
appealing.
1 2 3 4 5
3 Employees at banks will be neat-appearing. 1 2 3 4 5
4 Materials associated with service (such as
pamphlets or statements) will be visually
appealing in an excellent bank.
1 2 3 4 5
RELIABILITY
5 When banks promise to do something by certain
time, they do so.
1 2 3 4 5
6 When a customer has a problem, banks will
show sincere interest in solving it
1 2 3 4 5
7 Banks will perform the service right the first time 1 2 3 4 5
9 Banks will insist on error-free records. 1 2 3 4 5
RESPONSIVENESS
10 Employees in banks will tell customers exactly
when services will be performed.
1 2 3 4 5
11 Employees in banks will give prompt service to
Customers
1 2 3 4 5
189
12 Employees in banks will always be willing to
help customers.
1 2 3 4 5
13 Employees in banks will never be too busy to
respond to customers‘ requests.
1 2 3 4 5
ASSURANCE
14 The behavior of employees in banks will instill
confidence in customers.
1 2 3 4 5
15 Customers of banks will feel safe in their
transactions.
1 2 3 4 5
16 Employees in banks will be consistently
courteous with customers.
1 2 3 4 5
17 Employees in banks will have the knowledge to
answer customers‘ questions.
1 2 3 4 5
EMPATHY
18 Banks will give customers individual attention. 1 2 3 4 5
19 Banks will have operating hours convenient to all
their customers.
1 2 3 4 5
20 Banks will have employees who give customers
personal attention.
1 2 3 4 5
21 Banks will have customers‘ best interests at
heart.
1 2 3 4 5
22 The employees of banks will understand the
specific needs of their customers.
1 2 3 4 5
190
Part II
Directions: Listed below are five features pertaining to banks and the services they
offer. We would like to know how important each of these features is to you when
you evaluate a bank‘s quality of service. Please allocate a total of 10 points among the
five features according to how important each feature is to you-the more important a
feature is to you, the more points you should allocate to it.Please ensure that the
points you allocate to the five features add up to 10.
TANGIBLES
1 The appearance of the bank‘s physical facilities,
equipment, personnel, and communication materials..
Points
RELIABLE
2 The bank‘s ability to perform the promised service
dependable and accurately
Points
RESPONSIVENESS
3 The bank‘s willingness to help customers and provide
prompt service
Points
ASSURANCE
4 The knowledge and courtesy of the bank‘s employees
and their ability to convey trust and confidence.
Points
EMPATHY
5 The caring, individualized attention the bank provides
its customers
Points
TOTAL POINTS ALLOCATED 10 Points
Which one feature among the above five is likely to be most
important to you?
(please enter the feature‘s number)
Which feature is likely to be second most important to you?
Which feature is likely to be least important to you?
191
Part III
Directions: Listed below are a number of statements intended to measure your
perceptions about your bank and its operations. Please indicate the extent of which you
disagree or agree with each statement by circling one of the seven numbers next to each
statement. If you strongly disagree, circle 1. If you strongly circle 7.If your feelings are
not strong, circle one of the numbers in the middle. There are no right or wrong answers.
Please tell us honestly how you feel.
Strongly Strongly
Disagree Agree
Teamwork
1 I feel that every banker is part of a team in the bank. 1 2 3 4 5
2 Every banker in the bank contributes to a team
effort in
servicing customers.
1 2 3 4 5
3 I feel that every banker has a sense of responsibility
to help his (her) fellow employees do their jobs
well.
1 2 3 4 5
4 Every banker‘s fellow employees and bankers
cooperate more often than they compete.
1 2 3 4 5
5 I feel that every banker is an important member of
this bank.
1 2 3 4 5
Employee-job fit
6 Every banker feels comfortable in his (her) job in
the sense that he (she) is able to perform the job
well
1 2 3 4 5
7 The banker hires people who are qualified to do
their jobs.
1 2 4 5
Technology-job fit
8 The bank gives employees the tools and equipment
that they need to perform their job well
1 2 3 4 5
Perceived Control
9 Every banker spends a lot of time in his (her) job
trying to resolve problems over which he (she) has
1 2 3 4 5
192
little control. (-)
10 Every banker has the freedom in his (her) job to
truly satisfy his (her) customers‘ needs.
1 2 3 4 5
11 Bankers sometimes feel a lack of control over their
job because too many customers demand service at
the same time. (-)
1 2 3 4 5
12 One of the bankers‘ frustrations on the job is that
they sometime have to depend on other employees
in serving their customers. (-)
1 2 3 4 5
Supervisory control systems
13 The supervisor‘s appraisal of employees‘ job
performance includes how well they interact with
customers.
1
2 3 4 5
14 In the bank, making a special effort to serve
customers well does not result in more pay or
recognition. (-)
1 2 3 4 5
15 In the bank, employees who do the best job serving
customers are more likely to be rewarded than other
employees.
1 2 3 4 5
Role conflict
16 The amount of paperwork in employees‘ job makes
it hard for them to effectively serve their customers
(-)
1 2 3 4 5
17 The bank places so much emphasis on selling to
customers that it is difficult to serve customers
properly. (-)
1 2 3 4 5
18 What a bank‘s customers want employee to do and
what a bank‘s management wants employees to do
are usually the same thing.
1 2 3 4 5
19 The bank and the bankers have the same ideas about
how their jobs should be performed.
1 2 3 4 5
Role ambiguity
20 Every banker receives a sufficient amount of
information from management concerning what he
(she) is supposed to do in his (her) job.
1 2 4 5
21 Bankers often feel that they do not understand the
services offered by their bank. (-)
1 2 3 4 5
193
22 Every banker is able to keep up with changes in his
(her) bank that affects his (her) job.
1 2 3 4 5
23 Bankers feel that they have not been well trained by
their bank in how to interact effectively with
customers. (-)
1 2 3 4 5
24 Bankers are not sure which aspects of their
supervisor will stress most in evaluating their
performance. (-)
1 2 3 4 5
* Statements with a (-) sign at the end are negatively worded and therefore should be
reverse-scored
(i.e., a rating of 4 should be scored as 1, 6 as 2, 3 as 3, and so on).
194
Part IV.
(Demographic Characteristics)
The remaining questions on this survey are concerned with your background and
business experience. This information will help identify trends in the data for
different groups of responders. Please remember that your responses are completely
confidential.
1. What kind of bank are you doing business with?
-------1. Government-controlled bank (public)
-------2. Private bank
2. Approximately for how many years have you done business in this bank___
3. What is the highest level of education you have completed?
-------1. High school or less
-------2. Intermediate
-------3. Graduate
-------4. Post graduate
-------5. Professional degree
-------5. Doctorate
4. Age (Year):
-------1. Under 20
-------2.20 to 30
-------3.31 to 40
-------4.41 to 50
-------5.51 to 60
-------6. Over 60
5. Gender:
-------1. Male
-------2.Female
6. What kind of profession you are into.?
-------1. Business
195
-------2. Service
-------3. Housewife
-------4. Student
196
SERVICE PERFORMANCE GAP QUESTIONNAIRE
Banker Survey
Part I
Directions: This portion of the survey deals with what you think is an excellent bank
that, in your view, delivers excellent quality service. Please indicate the extent of
which features you feel an excellent bank should possess described by each
statement. If you are likely to feel a feature is not at all essential for banks, circle
number 1. If you are likely to feel a feature is absolutely essential, circle 5. If your
feeling is likely to be less strong, circle one of the numbers in the middle. Remember,
there are no right and wrong answers –we are interested in what you regard as an
excellent bank.
Strongly Strongly
Disagree Agree
TANGIBLES
1 Bank will have modern–looking equipment. 1 2 3 4 5
2 The physical facilities at bank will be visually
appealing.
1 2 3 4 5
3 Employees at banks will be neat-appearing. 1 2 4 5
4 Materials associated with service (such as
pamphlets or
statements) will be visually appealing in bank.
1 2 3 4 5
RELIABILITY
5 When bank promise to do something by certain
time, they do so.
1 2 3 4 5
6 When a customer has a problem, bank will
show sincere interest in solving it
1 2 3 4 5
7 Bank will perform the services right the first
time
1 2 3 4 5
8 Bank will provide their services at the time they
Promise to do so.
1 2 3 4 5
9 Bank will insist on error-free records. 1 2 3 4 5
RESPONSIVENESS
197
10 Employees in Bank will tell customers exactly
when services will be performed.
1 2 3 4 5
11 Employees in Bank will give prompt service to
Customers
1 2 3 4 5
12 Employees in Bank will always be willing to
help customers.
1 2 3 4 5
13 Employees in Bank will never be too busy to
respond to customers‘ requests.
1 2 3 4 5
ASSURANCE
14 The behavior of employees in Bank will instill
confidence in customers.
1 2 3 4 5
15 Customers of Bank will feel safe in their
transactions.
1 2 3 4 5
16 Employees in Bank will be consistently
courteous with customers.
1 2 3 4 5
17 Employees in Bank will have the knowledge to
answer customers‘ questions.
1 2 3 4 5
EMPATHY
18 Bank will give customers individual attention. 1 2 3 4 5
19 Bank will have operating hours convenient to all
their customers.
1 2 3 4 5
20 Bank will have employees who give customers
personal attention.
1 2 3 4 5
21 Bank will have customers‘ best interests at
heart.
1 2 3 4 5
22 The employees of Bank will understand the
specific needs of their customers.
1 2 3 4 5
198
Part II
Directions: Listed below are a number of statements intended to measure your
perceptions about your bank and its operations. Please indicate the extent of which
you disagree or agree with each statement by circling one of the seven numbers next
to each statement. If you strongly disagree, circle 1. If you strongly circle 5.If your
feelings are not strong, circle one of the numbers in the middle. There are no right or
wrong answers. Please tell us honestly how you feel.
Strongly Strongly
Disagree Agree
Teamwork
1 I feel that I am a part of a team in the bank. 1 2 3 4 5
2 Everyone in bank contributes to a team effort
in servicing customers.
1 2 3 4 5
3 I feel a sense of responsibility to help my
fellow employees do their jobs well.
1 2 3 4 5
4 My fellow employees and bankers cooperate
more often than they compete.
1 2 3 4 5
5 I feel that I am an important member of this
bank.
1 2 3 4 5
Employee-job fit
6 I feel comfortable in my job in the
sense that I am is able to perform the job well
1 2 3 4 5
7 Bank hires people who are qualified to do
their jobs.
1 2 3 4 5
Technology-job fit
8 The bank gives me the tools and equipment
that I need to perform my job well
1 2 3 4 5
Perceived Control
9 I spends a lot of time in my job trying
to resolve problems over which I have little
control. (-)
1 2 3 4 5
10 I have the freedom in my job to truly
satisfy my customers‘ needs.
1 2 3 4 5
11 I sometimes feel a lack of control over my
job
1 2 3 4 5
199
because too many customers demand service
at the same time. (-)
12 One of the my frustrations on the job is that I
sometime have to depend on other employees
in serving my customers. (-)
1 2 3 4 5
Supervisory control systems
13 My supervisor‘s appraisal of my job
performance includes how well I interact
with
customers.
1
2 3 4 5
14 In bank, making a special effort to serve
customers well does not result in more pay or
recognition. (-)
1 2 3 4 5
15 In bank, employees who do the best job
serving customers are more likely to be
rewarded than other employees.
1 2 3 4 5
Role conflict
16 The amount of paperwork in my job makes it
hard for me to effectively serve their
customers (-)
1 2 3 4 5
17 Bank places so much emphasis on selling to
customers that it is difficult to serve
customers properly. (-)
1 2 3 4 5
18 What bank‘s customers want me to do and
what bank‘s management wants me to do are
usually the same thing.
1 2 3 4 5
19 Bank and I have the same ideas about
how my job should be performed.
1 2 3 4 5
Role ambiguity
20 I receives a sufficient amount of information
from management concerning what I am
supposed to do in my job.
1 2 3 4 5
21 I often feel that I do not understand the
services offered by bank. (-)
1 2 3 4 5
22 I am able to keep up with changes in bank
that affects my job.
1 2 3 4 5
23 I feel that I have not been well trained by
Bank in how to interact effectively with
1 2 3 4 5
200
customers. (-)
24 I am not sure which aspects of my supervisor
will stress most in evaluating my
performance. (-)
1 2 3 4 5
* Statements with a (-) sign at the end are negatively worded and therefore should be
reverse-scored
(i.e., a rating of 7 should be scored as 1, 6 as 2, 5 as 3, and so on).
201
Part III
(Demographic Characteristics)
The remaining questions on this survey are concerned with your background and
business experience. This information will help identify trends in the data for
different groups of responders. Please remember that your responses are completely
confidential.
1. What kind of bank are you doing business with?
-------1. Government-controlled bank (public)
-------2. Private bank
2. Approximately for how many years have you done business in this bank
---------------------
3. What is the highest level of education you have completed?
-------1. High school or less
-------2.Intermidiate
-------3. Graduate
-------4. Post graduate
-------5. Professional degree
-------6. Doctorate
4. Age (Year):
-------1. Under 20
-------2.20 to 30
-------3.31 to 40
-------4.41 to 50
-------5.51 to 60
-------6. Over 60
5. Gender:
-------1. Male
-------2.Female
202
6. What kind of profession you are into.?
-------1. Business
-------2. Service
-------3. Housewife
-------4. Student