Kim 2011
Kim 2011
Kim 2011
To cite this article: Hyun Jeong Kim (2011) Service Orientation, Service Quality, Customer
Satisfaction, and Customer Loyalty: Testing a Structural Model, Journal of Hospitality Marketing &
Management, 20:6, 619-637, DOI: 10.1080/19368623.2011.577698
INTRODUCTION
619
620 H. J. Kim
chain restaurants from other countries, particularly from the United States.
For example, quick-service restaurants like McDonald’s, Wendy’s, and Pizza
Hut appeared in Korea in the mid- and late-1980s while mega casual-dining
chains such as T.G.I. Friday’s, Bennigan’s, Outback Steakhouse, and Chili’s
penetrated the Korean market in the 1990s (Park, 2009). Korean operators
also became sophisticated, developing their own chains or specialty restau-
rants to draw diners away from foreign-brand chain restaurants (Park, 2009).
Taken together, these phenomena have intensified the competition in the
restaurant industry.
As the market became saturated and the global economic recession,
which started in the late 2000s, dragged on, the Korean restaurant indus-
try ceased to enjoy its traditional influx of customers. Within the hospitality
industry, the competition has led many organizations to look for profitable
ways of differentiating themselves. One such strategy is the delivery of high
service quality (Zemke & Algright, 1985; Stevens, Knutson, & Patton, 1995).
High service quality increases customer satisfaction and produces measur-
able long-term benefits in market share and profitability (Anderson, Fornell,
& Lehmann, 1994). From the managerial point of view, the ultimate goal is
to attract and maintain customers. Hospitality operations have learned that
attracting new clients takes four to five times as much money as maintaining
existing ones (Bowen & Basch, 1994); therefore, customer retention is a key
to survival in the hospitality industry.
Numerous studies have indicated that customer satisfaction, service
quality perceptions, and customers’ decision to remain loyal or switch ser-
vice providers are significantly affected by the customer-oriented attitude
or behaviors of contact employees. (Bitner, 1990; Crosby & Stephens, 1987;
Ekiz, 2009; Schneider, Parkington, & Buxton, 1980; Surprenant & Soloman,
1987). However, empirical research to find the relationships among these
constructs is limited. The objective of this study is to develop and validate a
conceptual model that integrates the relationships among service orientation,
service quality, customer satisfaction, and customer loyalty in the context of
casual dining restaurants in Korea.
Service Quality
In the early 1980s, the manufacturing industry implemented total quality
management (TQM) and similar approaches. As service did not resemble
physical goods due to its intangibility, heterogeneity, and inseparability of
production and consumption, it was difficult to define and measure the
concept of service quality (Parasuraman, Zeithaml, & Berry, 1985). Unlike
quality concepts from the manufacturing sector, service quality experts in the
service industry developed a unique service quality concept using consumer
behavior models.
With the emphasis on the voice of the customer, service quality was
defined as the difference between customer expectations of service and the
perceptions of the actual service received (Parasuraman, Zeithaml, & Berry,
1988). This popular concept resulted in the creation of the SERVQUAL instru-
ment (Parasuraman et al., 1988). Originally, SERVQUAL was proposed as a
generic measure that could be applied to any service. However, Carman
(1990) indicated that SERVQUAL must be customized to the service in ques-
tion. In the hospitality industry, a modified version of SERVQUAL, DINESERV
was developed to measure service quality in restaurants (Stevens et al.,
1995).
Researchers have disagreed about the best way to operationalize the
SERVQUAL instrument (Cronin & Taylor, 1992; Parasuraman, Berry, &
Zeithaml, 1993). Cronin and Taylor (1992) demonstrated that the perceptions
battery alone explains more variances in the structural model. However,
Parasuraman et al. (1993) argued that the decision depends on the objec-
tive of the study; difference scores are useful for the purpose of diagnosing
service shortfalls, whereas perception ratings alone are useful when explain-
ing the variance in some dependent variables. Because the objective of this
study is to investigate the interrelationships (or causal relationships) among
the four constructs (service orientation, service quality, customer satisfaction,
622 H. J. Kim
H1: A high degree of service orientation for the contact employee has
a positive and significant effect on the customer’s perception of
service quality.
supported this definition and proposed that satisfaction derived from indi-
vidual transactions (Oliver, 1981), leads to a more general construct, service
quality (or attitude), which in turn leads to customer loyalty. Cronin and
Taylor (1992) hypothesized that service quality mediates customer satis-
faction and future purchase intentions; that is, customer satisfaction is an
antecedent of service quality. However, the empirical result in this non-
recursive LISREL model suggested that service quality is an antecedent of
customer satisfaction. Accordingly, the relationship between service quality
and customer satisfaction is hypothesized as follows:
After the earlier proposed paths (H1 through H5) were put together,
two mediating relationships became apparent: service quality as a
mediator between service orientation and customer satisfaction (Service
Orientation → Perceived Service Quality → Customer Satisfaction); and cus-
tomer satisfaction as a mediator between service quality and customer loyalty
(Perceived Service Quality → Customer Satisfaction → Customer Loyalty).
Therefore, the following additional hypotheses are put forward:
Service Quality
Service Customer
Orientation Loyalty
Customer
Satisfaction
METHOD
Sample and Procedure
Data were collected from one chain of casual dining restaurants located
in Seoul, Korea. A total of seven restaurants in the chain participated in
this study. Frontline employees who made frequent face-to-face contacts
with diners (i.e., waitpersons and bartenders) were invited to this study. A
total of 169 usable questionnaires assessing service orientation were gath-
ered from contact employees, while 508 usable questionnaires measuring
service quality, customer satisfaction, and customer loyalty were gathered
from diners. Questionnaires for customers were distributed by participating
employees during the lunch (noon to 3:00 p.m.) and dinner (5:00 p.m. to
8:00 p.m.) periods. The employees were instructed to solicit male and female
customers of various age groups at the time of the survey distribution and
to recruit a minimum of three customers. Customer participants completed
the questionnaire after receiving service from the employee who attended
to them.
The researcher coded employee surveys numerically and assigned one
specific number to each contact employee. Customer questionnaires were
coded with the same number assigned to the particular server or bar-
tender so that the researcher could match employee questionnaires with
customer evaluations. Customers placed the completed questionnaire in an
envelope, sealed it, and handed it to the employee. The employee kept
customers’ questionnaires, along with their own questionnaire, in a large
envelope until all questionnaires in the unit had been completed. Then, all
the questionnaires were collected and handed to the researcher. As a token
626 H. J. Kim
Survey Instrument
To assess employee service orientation, Groves’ (1992) scale was selected.
Groves’ (1992) scale, which originated in the United States, was subject to
factor analysis in order to assess its validity in Korean culture (Kim et al.,
2003). The factor analysis by Kim et al. (2003) indicated that four factors
(customer focus, prior customer relationship, service under pressure, and
organizational support) were more appropriate for Groves’ (1992) measure
and several items were eliminated because of low factor loadings. Therefore,
the shortened version with four factors (after the elimination of low-factor-
loading items) was used to assess contact employees’ service orientation
in this study. The sample items for the four factors are: “I will go out of
my way to provide good service to customers” (Customer Focus); “People
I have served before ask for me” (Prior Customer Relationship); “Our ser-
vice procedures make it easy for me to give excellent customer service”
(Organizational Support); and “Sometimes I forget to smile when the restau-
rant is really busy” (Service Under Pressure). The four factors each yielded a
coefficient alpha of >.70, with an overall coefficient alpha of .78. All of the
statements were rated on a 5-point scale ranging from 1 (strongly disagree)
to 5 (strongly agree).
To evaluate service quality of the participating restaurants, the per-
ceptions battery of DINESERV was utilized. DINESERV consists of 29 items
with five service quality dimensions (tangibles, assurance, reliability, respon-
siveness, and empathy), which originated from the SERVQUAL measure of
Parasuraman et al. (1988). Five dimensions of DINESERV were not con-
firmed using the customer data of this study. Previous studies have also
reported inconsistent outcomes on the five-factor structure of SERVQUAL
(Carman, 1990; Babakus & Boller, 1992). The results of this study suggested
the existence of three subdimensions in tangibles and indistinguishability
between the responsiveness and assurance dimensions. The first tangibles
dimension focused on appearance of physical facilities and staff; the second
pertained to menu of the restaurant; and the third emphasized comfort and
cleanliness of facilities. Consequently, six factors (Tangibles I, Tangibles II,
Tangibles III, Reliability, Combination of Responsiveness and Assurance, and
Empathy) were used for this study. The alpha values for the six constructs
of DINESERV ranged from .78 to .93, with an overall coefficient alpha of .96.
All DINESERV items used a 7-point scale ranging from 1 (strongly disagree)
to 7 (strongly agree).
Customer satisfaction was assessed with two items (α = .76). The first
item assessed the “summary psychological state” derived from a consumer’s
dining experience. The item was stated as “Overall, I am satisfied with this
Service Orientation, Service Quality, Satisfaction and Loyalty 627
Data Analysis
Prior to data analysis, the questionnaires from customers, collected by each
employee, were averaged and then paired with the questionnaire from the
employee who attended to the customers. Hypotheses were tested using a
structural equation modeling (SEM) method with LISREL 8.71 (Joreskog &
Sorbom, 2004). Input for the LISREL 8.71 program consisted of a 14 × 14
covariance matrix. Four latent variables and 14 indicators were constructed
for the model (see Figure 2). The four latent variables included service ori-
entation, service quality, customer satisfaction, and customer loyalty. The 14
indicators included: (a) four from employee service orientation (Customer
T1 T2 T3 R R/A E
CF Service Quality
0.47
0.29* 0.08
0.52
PCR 0.90 RI
Service 0.73** Customer
0.61
OS Orientation Loyalty
0.78
0.49
0.08 0.84**
Customer EA
SUP
Satisfaction
0.75 0.89
S1 S2
RESULTS
Model Fit
The overall chi-square for the measurement model was 107.12 with 71
df and a p value less than .0057. When the chi-square is not significant
(p > .05), the model fit is appropriate; that is, there is no significant differ-
ence between the actual matrix and the predicted matrix (Loehlin, 1992).
The small p value of the model indicated a significant difference between
the actual matrix and the predicted matrix. The chi-square statistic is known
to be very sensitive to sample size and the number of parameters estimated;
thus, using the normed chi-square (χ 2/df ) is appropriate (Hair et al., 1998;
Wheaton, Muthen, Alvin, & Summers, 1977). The normed chi-square had
a value of 1.51 (107.12/71) for the measurement model. This falls well
Service Orientation, Service Quality, Satisfaction and Loyalty 629
Std.
Model χ2 df χ 2/df GFI AGFI NFI RMSR
within the recommended levels of 1.0 to 2.0 (Hair et al., 1998), indicat-
ing that the model fit is acceptable. In addition to the normed chi-square,
other fit indices (GFI = .93; AGFI = .88; NFI = .91) fell around the desired
level of .90, revealing that the model is representative of the observed data
(Bentler & Bonett, 1980; Hair et al., 1998). Lastly, the standardized RMSR
(.05) suggested that the magnitude of the differences between the actual
and predicted covariance matrices are relatively small (Brown & Chdeck,
1993).
The overall chi-square for the structural model was 108.51 with 72 df
(p < .0055). Table 1 shows no significant difference between the structural
model and the measurement model (chi-square difference = 1.4, df = 1).
Because the measurement model allows all latent constructs to covary freely,
a comparison of the conceptual model to the measurement model is one
indication of adequate model fit. A lack of significant difference between
the two models implied that the data supported the theory. Other fit values
for the structural model were almost identical to those of the measurement
model (Normed chi-square = 1.51; GFI = .93; AGFI = .88; NFI = .91;
standardized RMSR = .05), satisfying the acceptable fit criteria mentioned
earlier.
Another method of evaluating the model fit is to examine the mod-
ification indices (chi-square reduction computed for each nonestimated
relationship). The modification indices suggested that the proposed model
fit could be improved by freeing additional correlations among measure-
ment errors. However, because those relationships could not be justified
theoretically, no changes were made to the model (Joreskog, 1993).
Parameter Estimates
The significance of the parameter estimates was judged using t values. The
critical t values are 1.96 for the 0.05 significance level and 2.58 for the 0.01
significance level. Table 2 presents the summary statistics of the measure-
ment model with LISREL estimates (factor loadings) and Table 3 presents
the path coefficients for the structural portion of the proposed model. An
examination of Table 2 reveals that each relationship between the latent
variables and their respective indicators are large, and all are statistically
significant (t > 2.58, p < .01). All latent variables displayed acceptable
630 H. J. Kim
Average
Factor Composite variance
Variables M SD loadings t value α reliability extracted
LISREL
Proposed model relations estimate t value Indirect effect t value
This study contributes to the existing body of literature by its unique research
design. Previous studies that argue the positive associations between
frontline employees’ service orientation and customer outcome variables
632 H. J. Kim
such as satisfaction often gathered the ratings of all study variables from cus-
tomers (e.g., see Donavan & Hocutt, 2001; Brady & Cronin, 2001). However,
the present study depends on two data sources: Service oriented behav-
iors were reported by frontline employees themselves (i.e., servers and
bartenders) and dining customers provided their perceptions of service qual-
ity, satisfaction, and loyalty to the service company. This research design
reduces the impact of common method variance (i.e., single source) and
therefore the results are more likely to present reliable, true effects of ser-
vice orientation (predictor) on customer perceptions of a service company
(outcomes).
This study supports the prevalent theory or common belief that
customer-oriented companies benefit at multiple levels. Specifically, it shows
that frontline employees (i.e., servers and bartenders) with a high degree of
service orientation influence restaurant diners’ perceptions of service qual-
ity and ultimately lead to diners’ satisfaction and loyalty. It sends a crucial
message to restaurateurs as to how important it is to have customer-oriented
staff members. This study adopted the approach of service orientation as a
function of innate traits and situational or environmental factors. Following
this approach, restaurant operators should come up with a proper person-
ality trait profile and hire people that fit that profile. Some recent studies in
the hospitality field have pointed out the fundamental role of the individual
employee’s personality traits in work engagement and burnout (Kim, Shin,
& Swanger, 2009; Kim, Shin, & Umbreit, 2007). Despite such recruitment
efforts to select the applicants with suitable personality traits, companies
may find that employees, who are hired, have different levels of customer
focus. This situation indicates the significance of the other variable in the
service orientation equation—a situational or environmental factor. Practical
and useful environmental or situational factors to enhance employee service
orientation may include: offering ongoing training and rewarding good per-
formance of employees. The benefits of rewards and proper training in the
hospitality industry have been well documented (Kim, Tavitiyaman, & Kim,
2009).
Another key issue addressed in this study is the relationships among
service quality, customer satisfaction, and customer loyalty. The results con-
firmed that customers’ decisions to remain loyal depend directly on their
satisfaction (Cronin & Taylor, 1992) and found that customers’ perceptions
of service quality have an indirect influence on customer loyalty via customer
satisfaction (Perceived Service Quality → Customer Satisfaction → Customer
Loyalty). Rust and Oliver (1994) explained the relationship between service
quality and customer satisfaction best. They suggested that quality is one
of the many potential service dimensions that are factored into customer
satisfaction. Similarly, Westbrook (1981) indicated that satisfaction comes
from multiple sources, and a higher level of satisfaction with certain sources
might compensate for lower levels of satisfaction with others. Rust and
Service Orientation, Service Quality, Satisfaction and Loyalty 633
Third, Groves’ (1992) instrument used for this study is designed for the
restaurant business and the population of this study comprises employees in
casual dining restaurants in Korea. Therefore, generalization of this study’s
findings to other service industries (e.g., airlines, travel agencies, hotels) and
other cultures is limited. To validate the result of this study in different hos-
pitality or service segments, it is necessary to choose a service-orientation
measure that may be applicable to a broad spectrum of service jobs to assess
frontline employees’ service orientation. One exemplary measure is the
service-orientation scale recently developed by Donavan et al. (2004). Their
scale items are created using diverse service settings (e.g., travel agency,
financial services, food service) and the measure includes the four service
orientation components (pamper, read, deliver, and personal relationship).
Finally, the proposed model in this study is rather simple because it
investigates the impact of service orientation as a whole on customer satis-
faction and service quality. In the future, it is feasible to build more complex
service orientation models. For example, it would be interesting to see the
influence of service orientation on customer outcomes such as perceived
service quality, customer satisfaction, and revisit intention after splitting ser-
vice orientation into innate personality traits and environmental variables. In
this scenario, researchers could compare the two distinctive service orien-
tation components (personality vs. environmental factor) and assess which
component is more influential on customer outcome variables. The results
of these kinds of models may assist industry practitioners in terms of how
to prioritize the use of their financial resources in the human resource areas
(e.g., recruitment vs. service training).
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