Factors affecting customer satisfaction in public sector a comparative study between administrative service and transport service in dong nai province

1 | P a g eUNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --- Phan Huynh Van Thao FACTORS AFFECTING CUSTOMER SATISFACTION IN PUBLIC SECTOR: A COMPARATIVE STUD

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

Phan Huynh Van Thao

FACTORS AFFECTING CUSTOMER SATISFACTION IN PUBLIC SECTOR: A COMPARATIVE STUDY BETWEEN ADMINISTRATIVE SERVICE AND TRANSPORT SERVICE IN DONG NAI

PROVINCE

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2013

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business -

Phan Huynh Van Thao

FACTORS AFFECTING CUSTOMER

SATISFACTION IN PUBLIC SECTOR: A

COMPARATIVE STUDY BETWEEN

ADMINISTRATIVE SERVICE AND

TRANSPORT SERVICE IN DONG NAI

PROVINCE

ID: MBUS111039

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR NGUYEN THI NGUYET QUE

Ho Chi Minh City – Year 2013

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ACKNOWLEDGEMENT

It is my fortunate to have Dr Nguyen Thi Nguyet Que as my advisor with her strong

experience and deep involment in the category related to my stated problem She

provided me with sharp advice on how to approach the problem Her penetrating

comments have led to revisions and clarifications of my analysis in this paper She was

also helpful in narrowing down the area of research during my preparation for the final

report She was always gracious with her support First and foremost, I would like to

express my gratefulness to her

I also thank Prof Nguyen Dinh Tho I am extremely grateful and indebted to him for his

expert, valuable guidance, insightful comments, and encouragement extended to me

I would like to express my gratitude to all ISB staffs that supported necessary materials

and helped summit my papers

I am grateful to my boss and my colleagues for their support for this study I also thank

my friends for their encouragement

My special gratitude goes to my parents who have supported to take care of my little

baby in order for me to have time to pursue the program Last but not less, thanks to my

husband who always facilitate me with good conditions to complete my study

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COMMITMENT

I would like to commit that this thesis, “Factors affecting customer satisfaction in

public sector: A comparative study between administrative service and transport service in Dong Nai Province”, was accomplished based on my research seriously and

independently

The data was collected from citizens who had experiences using public service in Dong

Nai province by the author in reality It has clear source Thus, the data was trustful

handled and conducted by the author

Phan Huynh Van Thao

Dong Nai, October 1 st 2013

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ABSTRACT

This study examined the relationships among nine dimensions of service quality and

customer satisfaction toward public service in Dong Nai province and the comparation of

this relationships between public administrative service and public transports service

The surveys were distributed to 230 customers (120 customers rated about public

administrative service and 110 customers rated about public transport service) who had

an experience working with public administrative service and public transport service in

Dong Nai within the last 3 years, a customer was randomly approached to complete a

survey

Firstly, the research proposed a model to analyze the effect of nine dimensions

(tangibility, reliability, responsiveness, competence, courtesy, credibility, access,

communication, and understanding the customer) (Parasuraman et al 1985) of service

quality on customer satisfaction in public service Secondly, the study used Statistic

Package for Social Science (SPSS) to analyze data through Exploratory Factor Analysis

(EFA) Then, the EFA results lead to the revised model identified the five service quality

variables named as tangibility, reliability, competence, access and empathy The results

indicated that tangible and competence have strong positive effect on customer

satisfaction Finally, the research finding confirmed that the impact of dimensions on

customer satisfaction toward a public service is affected by the type of public service

differently (public administrative service and public transport service)

Keywords: Services quality, Customer satisfaction, Public administrative service, Public transport service, and Public service

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TABLE OF CONTENTS

ABSTRACT 5

CHAPTER 1 INTRODUCTION 9

1.1 BACKGROUND OF THE RESEARCH 9

1.2 RESEARCH PROBLEM 11

1.3 RESEARCH OBJECTIVES 13

1.4 RESEARCH METHOD 13

1.5 RESEARCH STRUCTURES 15

CHAPTER 2 LITERATURE REVIEW 17

2.1 INTRODUCTION 17

2.2 LITERATURE REVIEW 17

2.2.1 PUBLIC SERVICES 17

2.2.1.1 DEFINITION OF PUBLIC SERVICES 17

2.2.1.2 CLASSIFICATION OF PUBLIC SERVICES 19

2.2.1.3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES 22

2.2.2 SERVICE QUALITY 23

2.2.2.1 DEFINITION OF SERVICE QUALITY 23

2.2.2.2 SERVICE QUALITY IN PUBLIC SECTOR 24

2.2.3 MODELS OF SERVICE QUALITY IN PUBLIC SECTOR 26

2.2.3.1 THE SERVQUAL MODEL 26

2.2.3.2 THE SERVPERF MODEL 27

2.2.4 PREVIOUS STUDIES ON SERVICE QUALITY IN PUBLIC SECTOR 28

2.3 DEVELOPMENT OF RESEARCH MODEL AND HYPOTHESIS 32

2.3.1 CUSTOMER SATISFACTION 32

2.3.2 SERVICE QUALITY AND CUSTOMER SATISFACTION IN PUBLIC SECTOR 33

2.3.3 THEORETICAL MODEL 37

CHAPTER 3 RESEARCH METHODOLOGY AND DATA ANALYSIS 39

3.1 INTRODUCTION 39

3.2 RESEARCH PROCEDURE 39

3.3 MEASUREMENT SCALE 41

3.4 QUALITATIVE PILOT STUDY 44

3.5 QUANTITATIVE MAIN SURVEY 45

3.5.1 QUESTIONNAIRE DESIGN 45

3.5.2 SAMPLING METHOD 46

3.5.3 DATA ANALYSIS METHODS 47

3.5.3.1 CRONBACH’S ALPHA 47

3.5.3.2 EXPLORATORY FACTOR ANALYSIS (EFA) 48

3.5.3.3 MULTIPLE REGRESSION ANALYSIS 49

CHAPTER 4 RESEARCH RESULTS 50

4.1 INTRODUCTION 50

4.2 DESCRIPTIVE ANALYSIS 50

4.3 ASSESSMENT OF MEASUREMENT SCALE 52

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4.3.1 CRONBACH’S ALPHA COEFFICIENT OF RELIABILITY TEST 52

4.3.2 EXPLORATORY FACTOR ANALYSIS (EFA) RESULT 54

4.3.2.1 EFA FOR INDEPENDENT VARIABLES 54

4.3.2.2 EFA FOR DEPENDENT VARIABLES 57

4.4 HYPOTHESES TESTING 61

4.4.1 TESTING MODEL OVERALL 61

4.4.2 TESTING MODEL IN PUBLIC ADMINISTRATIVE SERVICE 65

4.4.3 TESTING MODEL IN PUBLIC TRANSPORT SERVICE 66

4.5 CONCLUSION 68

CHAPTER 5 CONCLUSION AND IMPLICATION 69

5.1 INTRODUCTION 69

5.2 DISCUSSION OF FINDINGS 69

5.3 MANAGERIAL IMPLICATIONS 73

5.4 LIMITATION OF STUDY AND FUTURE RESEARCH 75

5.5 CONCLUSION 76

REFERENCES 77

APPENDIX 84

APPENDIX 3.1 MEASUREMENT SCALE USED IN QUALITATIVE RESEARCH 84 APPENDIX 3.2 THE QUALITATIVE RESEARCH FINDINGS 86

APPENDIX 3.3 QUESTIONNAIRE 88

APPENDIX 1: ORGANIZATIONAL CHART OF DONG NAI PEOPLE’S COMMITTEE 93

APPENDIX 4.1 FIRST TIME RUNNING- EIGENVALUES 94

APPENDIX 4.2 FIRST TIME RUNNING-FACTOR LOADING 96

APPENDIX 4.3 SECOND TIME RUNNING- EIGENVALUES 98

APPENDIX 4.4 SECOND TIME RUNNING- FACTOR LOADING 99

APPENDIX 4.5 THE EFA IMPLEMENTATION OF DEPENDENT VARIABLE (CUSTOMER SATISFACTION) 100

APPENDIX 4.6 CHARTS OF TESTING HYPOTHESES 101

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LIST OF TABLES

Table 3.7 Cronbach’s Alpha Reliability Coefficient 48

Table 4.1 - Descriptive statistics of the data 51

Table 4.3 - Cronbach’s Alpha coefficients for each measurement scale 52

Table 4.4 KMO and Bartlett's Test for independent variables 55

Table 4.4 Factor Loading of independent variables 56

Table 4.7 - Cronbach’s Alpha results after excluding unsatisfatory items 59

Table 4.8 Results of Pearson Correlations 61

Table 4.9 Model Summary 61

Table 4.10 Results of Multiple Regression 63

Table 4.11 Hypotheses Testing 63

Table 4.12 Coefficients of the construct for public administrative service 66

Table 4.13 Coefficients of the construct for public transport service 67

Table 4.14 Comparison Customer’s Viewpoints 67

LIST OF FIGURES Figure 2.1 Conceptual model linking nine dimensions and customer satisfaction 37

Figure 3.1 Research Process 41

Figure 4.1 The revised conceptual model 60

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CHAPTER 1 INTRODUCTION

1.1 BACKGROUND OF THE RESEARCH

Dong Nai province has 11 administrative units with 171 units of communes, wards and

towns, including Bien Hoa City - the political, economic and cultural center of the

province, Long Khanh Town and other 9 districts (Long Thanh, Nhon Trach, Vinh Cuu,

Trang Bom, Thong Nhat, Dinh Quan, Tan Phu, Cam My and Xuan Loc) The natural area

of Dong Nai is 5,097.1 km2, with total population of more than 2.56 million people,

including 33.23% of urban residents and 66.73% of rural residents (Dong Nai People’s

Committee Brochure, 2012) The People’s Committee of Dong Nai province consists of a

network of 35 organizations provides a range of free and “at-cost” services (Appendix 1)

Government as a big organization has its customers; those customers are the citizens,

businesses and public and private employees Government through its agencies,

departments, and ministries provides information and services for each group of its

customers, and as a result this performance can be judge fairly only by the customers

Service quality is an important dimension of organizational performance in the public

sector as the main output of public organizations is services Moreover, profit is not the

ultimate goal of these public organizations as they have to play different roles such as

facilitator, pace setter and socio-economical developer (Arawati, Baker & Kandampully,

2007)

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The customer is the final judge of the quality of the product or the service or the

information For the private sector, managers are concerned in many aspects that relate to

the customer such as loyalty and retention, but in the public sector in general the

customer (citizen, business), find themselves obligated to deal with different

organizations in the public sector even if they provide their services in inefficient ways

For example, the administrative procedures using at governmental agencies in Vietnam in

general and Dong Nai in particular are bulky and complex that are affecting the

management of Dong Nai People’s Committee on its agencies from District level to local

At the moment, there are quite a high number of complaints filed by the public due to

delays in taking actions and providing services to them by the Vietnamese public

organizations (Dong Nai Department of Internal Affairs, 2006) Headlines of some main

newspapers also highlighted complaints from the public regarding to their dissatisfactions

with the provided services Consequently, service quality is not as expected by the

customers and therefore, it is quite low This matter is a concern to the public since they

are the taxpayers and therefore; they expect good services are provided to them as the

return (Thanh, 2009)

At Dong Nai Department of Internal Affairs, the single window mechanism is being

applied in order to simply administrative procedures However, it is not really effective

for Dong Nai People’s Committee to supervise and inspect administrative procedures Consequently, there are still negative activities such as bureaucracy, corrupt, arrogant

behavior of officials and services… that have made people annoy, reduce their belief on the transparency of government

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In the context of bureaucracy and plodding reform, Dong Nai People’s Committee must

have an appropriate strategy in order to monitor and manage the public service

This study will be as a practical guideline for Dong Nai People’s Committee leader

improves the quality of public services, especially the administrative service and the

transport service in order to meet with the customer’s needs and their satisfaction This

finding will help Dong Nai People’s Committee leader understand obviously about the

components of their service quality affecting to satisfaction of their customers In

addition, the comparison between public administrative and public transport service aims

to provide specific determinants to fit with each context It brings more valuable practical

implications

1.2 RESEARCH PROBLEM

Local authorities in Dong Nai are already engaged in a variety of innovative approaches

to capture the “voice of the customer” - local area forums, citizens’ juries, etc Increasingly, many authorities are also conducting market research surveys of one form

or another These are often a useful first step for services trying to capture data on current

levels of customer satisfaction with services

Since Vietnam gained independence in 1975, the public sector has undergone a number

of transformations Whereas the former was aimed at increasing productivity and

efficiency, the latter established the public sector as the facilitator and regulator of the

economic functions of the private sector (Triantafillou, 2002) It has been noted,

however, that relatively little attention has been given to the application of service quality

in the public service (Kadir et al., 2000) Furthermore, although quality schemes are

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becoming an integral part of public-service management, their impact on service delivery

remains largely unknown (Robinson, 2003)

The majority of researches in last few decades concentrated on the dimensional approach

of service quality (Parves Sultan & Ho Yin Wong, 2010) Parasuraman et al (1985, 1988)

developed the measurement scale SERVQUAL based on the concept quality is the

perception minus expectation Cronin and Taylor (1992, 1994) explored the other

instrument to measure service quality, namely, SERPERF - service performance - based

on the perception component alone Among these scales, SERVQUAL is mostly

criticized and widely applied in many industries (Ana Brochado & Rui Cunha Marques,

2009) However, SERVQUAL and SERPERF were designed as generic measures of

service quality and applied in cross industries, not for any specific field

Measuring service quality and customer satisfaction in public context is one of the most

considerations of authority Although customer satisfaction in public service is also not

an easy task to attempt (Corneliu et al., 2010) and there is no generally measurement

scale for customer satisfaction in public services, the majority of recent studies consider

service quality as an antecedent to customer satisfaction (Garcia, 2009) In Vietnam

public context, service quality and customer satisfaction are the concepts attracting

researchers to investigate the relationships among them however it is very few studies

pay attention to adapt the SERVPERF to identify and measure the dimensions of service

quality affecting to customer satisfaction, so that the generalization is limited

Base on aforementioned analysis about the current situation of public service and existing

findings about service quality and customer satisfaction in public sector area, in an

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attempt to explore the relationships among the nine dimensions (Parasuraman et al 1985)

of service quality and customer satisfaction toward public administrative service and

public transport services, this study employs the dimensions of service quality in public

services context to explain their effects on customer satisfaction and to compare these

relationship between the two sectors: public transport service and public administrative

service All concepts will be explained and analyzed more detailed in the literature review

section

1.3 RESEARCH OBJECTIVES

According to above discussion, this study is formulated to obtain following objectives:

(1) To test the impact of 9 dimensions (tangibility, reliability, responsiveness,

competence, courtesy, credibility, access, communication, and understanding the

customer) (Parasuraman et al 1985) on customer satisfaction

(2) To explore the differences effect of the 9 dimensions on customer satisfaction

between two types of public service (public administrative service and public

transport service)

1.4 RESEARCH METHOD

The research procedure is conduct in two stages, the first one is pilot study which is

implemented through qualitative research and the second one is main survey which is

implemented through quantitative research

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In qualitative research, the purpose is to clarify the concepts and interpret the items in

measurement scales into the public service context based on the standpoint of customers

Furthermore, the necessary adjustments are conducted to enhance the power of the scales

The technique employed was the focus-group interview - the most well-known group

interview technique - because it can provide historical information and the interaction

will enrich the information for research (Donald & Pamela, 2006) It was valuable in the

scenario of this research as helping researcher obtain general background about the topic,

interpret existing researched findings and provide new idea for modifying and

supplementing new components The participants of interview were the people who have

an experience using the public service within the last three years in Dong Nai province

Based on the qualitative research findings, measurement scales are modified before being

employed for main survey in quantitative research

In quantitative research, the survey is undertaken in the Vietnamese language The

questions in the survey is tailored to identify the effects of nine SERVQUAL dimensions

(Parasuraman et al, 1985), on customer satisfaction of service-quality practices and

compare within the public administrative service and the public transport service in Dong

Nai province The surveys were distributed to 230 customers (120 customers rated about

public administrative service and 110 customers rated about public transport service) who

had an experience working with public administrative service and public transport service

in Dong Nai within the last 3 years, a customer was randomly approached to complete a

survey All surveys will either be collected in person or mailed back to the researchers or

online research Customers rated these statements on a five-point Likert-type scale from

provide for interpreting the results of its application from a managerial and statistical

viewpoint (Hair et al., 2010)

1.5 RESEARCH STRUCTURES

This research is constructed in five chapters The first is the introduction of the study The

second is the literatures review and hypotheses Following is the research methodology

and data analysis The next part is research results The discussion, implications and

conclusion comprises the final section of this research

Chapter 1 Introduction

This chapter presents the research background, research problem, research objectives,

research method, and research structure

Chapter 2 Literatures review

This chapter presents overview of previous literatures relating to service quality and

customer satisfaction in the public sector Also, a conceptual framework is built up and

relative hypotheses of research are raised

Chapter 3 Research methodology and Data analysis

This chapter presents about the method and research design used in the current study to

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explore the relationships among nine dimensions of service quality and customer

satisfaction toward public service in Dong Nai province and the comparation of this

relationships between public administrative service and public transports service The

research procedure is implemented through a combination between qualitative research

and quantitative research

Chapter 4 Research results

This chapter presents the descriptive of collected data The reliability and validity of data

will be assessed by using Cronbach’s alpha and EFA After that, the hypotheses and the

effect of demographic variables on customer satisfaction will be tested by the collected

data Consequently, this chapter includes four parts: descriptive analysis, measurement

assessment, hypotheses testing, and testing the effect of demographic variables

Chapter 5 Implications and Conclusion

This chapter reminds the reader of the thesis goal presented on introduction chapter It

shows the connection between the thesis results and the reality applications by suggesting

some strategies for managerial implications This chapter also describes a number of

important limitations needed to be considered and recommends the further research

Therefore, this chapter consists of three parts: conclusion, managerial implications, and

limitation of study and future research

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CHAPTER 2 LITERATURE REVIEW

2.1 INTRODUCTION

This chapter presents overview of previous literatures relating to service quality and

customer satisfaction in the public sector Also, a conceptual framework is built up and

relative hypotheses of research are raised

2.2 LITERATURE REVIEW

2.2.1 PUBLIC SERVICES

2.2.1.1 DEFINITION OF PUBLIC SERVICES

According to Central Institute for Economic Management (CIEM, 2006), public services

always associate to the state supply of these services The term “public services” in

English originates from the category of public commodities In the economic term, public

commodities associate to some natural characteristics; such as: it is a kind of

commodities which is impossible to exclude anyone from using once it has been created;

consumption of a person does not decrease that of others, and; it is impossible to be

discarded, that means even when someone does not want to consume a public

commodity, it still exists Thereby, public commodities are categorized concretely into

pure public commodities that satisfy all the three above-mentioned characteristics; and

impure public commodities that do not satisfy all above characteristics (Kearsey et al,

1998) At first, the definition of “public services” is to present the activities of impure

public commodity supply, firstly used in the Europe after World War II Nowadays, the

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conception of “public service” has been remarkably extended, depending on various approaches

From the viewpoint of state management subjects, researchers on administration field

define public service as activities of state agencies of performing the function of state

administrative management, and assuring public service supply to serve common and

essential needs of the society This way of understanding focuses on the role and

responsibilities of the state on public service supply activities This approach takes the

viewpoint of public commodities’ beneficiaries, considering public service as public service supply activities by the state or private sector to serve essential interests of the

society and the communities (Curry et al, 1998)

In Vietnam, Article 22, the Law on Governmental Organization (2001) stated:

“Ministries, governmental and ministerial – leveled agencies are to carry out functions of state management of industries or professions in the whole nation; state management of

public service belonging to industries and sector; etc.” Thus, the conception of “public services” used here is to emphasize the subjective role of the state on public service supply to the community This does not mean that the state is of monopoly to supply

service to the community On the contrary, the state entirely can socialize some public

services, thereby sharing the workload of supplying the service, including health care,

education, water supply and drainage, etc , with the private sector

In fact, there are some important service serving common needs of the whole community,

but the private sector are not willing to take part in because they do not create profit, or

private sector does not obtain enough power and capital to carry out such service supply,

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for example, vaccination, firefighting, water drainage, etc These are vital service to the

common social life With such service, no one but the state is of capacities and

responsibilities to provide the people with In addition, there are some service, such as

education, healthcare, electricity supply, and pure water supply, that can be provided by

markets but in an inefficient manner, or this can lead to social inequality, monopoly,

overpricing, and adverse impacts on benefits of consumers in particular, and of the whole

society in general In these cases, the state is responsible to supply these services directly

or, to control private markets to serve basic right of the people (Kearsey et al, 1998)

Although public services consist of various types, they all share common characteristics

that are to serve common needs and interests of society, and the state is responsible to

assure such service supply to the society Even when the state transfers the supply of

some of services to the privates sector, it still plays the regulating role, with a view to

assuring the impartial distribution of such services and marking good shortcomings of

markets (CIEM, 2006)

Given the above characteristics, public services can be understood as activities serving

essential needs of society, directly carried out by the state or assigned to the private sector

so as to assure social order equality

2.2.1.2 CLASSIFICATION OF PUBLIC SERVICES

According to the report of CIEM (2006), classification of the public services includes:

- The range of public services: the range of public services varies depending on

institutions of different countries, different periods regarding people living standards in

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relation with economic development levels Therefore, it is impossible to impose a rigid

standard to all countries Some countries take a broad conception of public services;

accordingly, almost all state activities are called public services In Canada, for example,

there are 34 types of public services, ranging from national defense, security, institutions,

to socio-economic policies (job creation, planning, environment protection, and health

care, education, culture, social insurance, etc.) Similarly, the Sweden clearly decentralizes

public services that each governmental level undertakes, thereby, attention is especially

paid to totally free welfare public services (such as unemployment benefits, social

allowances, etc.) In general, almost all nations highly appreciate health care, and

education and training activities

A board coverage of public services as mentioned is a common trend of development in

long term, but in immediate term, it is just proper to nations at a high development level

To countries which are at a low development level like Vietnam, we should focus more

on the state function of serving the society, then, narrowing the scope of public services,

emphasizing more on the most urgent common interests of the people, assuring their

stable and safe lives Importantly, we have to separate public services activities (so far

called non-productive activities) from administrative civil authority activities as soon as

possible, as put forward in the government’s policies, aiming to eliminate the subsidizing

mechanism, lighten the state apparatus, mobilize all potential resources in the society, and

improve quality of public services serving the people

- Categories of public services: public services can be classified based on many different

criteria, according to natures of services, or to forms of certain services, etc For instance,

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in term of supplying objects, public services are divided into three categories, namely:

public services which are directly supplied by the state; public services supplied by

state-owned enterprises; and public services supplied by non-governmental organizations and

the private sector Following, CIEM report (2006) go deeper in types of public services

basing on criteria of natures and effects of supplied services:

(1) Public administrative services: This is a kind of service associating with state

management functions to meet requirements of the people To performs these functions,

the state has to carry out direct services, such as granting permits, certifications,

registration, notarization, visas, resident records, etc (In some countries, public

administrative services are different activities, not belong to the range of public services

In Vietnam, some researchers also share this viewpoint.)

(2) Public non-productive services: Including activities providing necessary social

welfares to the people, such as: health care, education, culture, science, physical training

and sports, insurance, social security, etc Such activities are mostly undertake by state

bodies and organizations, or partly socialized

(3) Public interest services: Being activities of economic characteristic carried out by

enterprises, in line with the state’s requirements, to serve the people, such as water and electricity supplies, environmental sanitation, social infrastructures Of which, a majority

is undertaken by state-owned enterprises, for instance water and electricity supplies in

cities, transportation, and postal services There are some activities in localities carried

out by the private sector, such as: environmental sanitation, waste and rubbish collection

and transports in some small cities, pure water supply in some rural area, etc

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2.2.1.3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES

According to a paper of CIEM (2006) there are some major characteristics of public

service:

- Public services are of sociality, with major aims of serving the community’s interests,

ensuring social equality and stability Thereby, it is possible to see that economics, and

profits are not preconditions driving public services

- Public services serve needs of all citizens, without discrimination against social classes

and statuses, and of wise publicism As objects to be served by the state, all people are

equal to access public services

- Public services do not bring about normal “commodities” but special ones provided by

the state, or by organizations, individuals designated by the state, meetings demands of

the whole society, no matter that provided products are tangible or intangible

- Transactions of public services are not through perfect market relationship Normally,

users of public services do not pay directly In fact, they pay in form of tax payments to

the state revenue There are also some public services their users have to pay a part of or

the whole expenditures; however it is responsibility of the state to supply such services

with non-profit purposes

Given these natures of public services, it is not simple to provide this kind of services in

an effective manner The state has to define services to which it plays a decisive role on

the supply, some others that need to be transferred to the private sector and social

organizations, and ones in which the state and the private sector can share the provision,

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as well as define how the state performs its relative roles of regulation and management

to the issue Experiences of many countries over the last years have shown that in public

service supply, the state just directly provides services that the society cannot or do not

willing to do If the state do not transfer the supply of possible public services to

non-state sectors, and neither reform the public service supply by non-state agencies, the overall

effect of public service supply will decrease, causing adverse impacts to people lives and

the common development of the whole society

2.2.2 SERVICE QUALITY

2.2.2.1 DEFINITION OF SERVICE QUALITY

Service quality is a concept that has aroused considerable interest and debate in the

research literature because of the difficulties in both defining it and measuring it with no

overall consensus emerging on either (Parasuraman et al., 1985; Lewis and Mitchell,

1990; Dotchin and Oakland, 1994a, 1994b; Gaster, 1995; Asubonteng et al., 1996) There

are a number of different “definitions” as to what is meant by service quality One that is

commonly used defines service quality as the extent to which a service meets customers’ needs or expectations (Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a;

Asubonteng et al1996; Wisniewski and Donnelly, 1996) Service quality can thus be

defined as the difference between customer expectations of service and perceived service

If expectations are greater than performance, then perceived quality is less than

satisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985; Lewis

and Mitchell, 1990)

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2.2.2.2 SERVICE QUALITY IN PUBLIC SECTOR

There are two perspectives to the ongoing pursuit of service quality From the perspective

of the service organization, there is a desire to survive and compete in a global

environment From the perspective of the customer, there is a desire for better quality

services Whereas service quality has achieved considerable popularity across the private

sector, the public sector has been slower to take up the concept However, service quality

has now moved to the forefront of public sector management as a result of the combined

pressure of growing customer expectations, an increased focus on revenue, and growing

competition between public and private sector organisations who offer identical services

Not surprisingly, the vast majority of service-quality research in the literature focuses on

the private sector This has resulted in a number of dilemmas which occur when service

quality management practices derived from the private sector are transferred to the public

sector (Buckley, 2003) According to Kearsey and Varey (1998), these dilemmas include:

• multiple, non-financial, conflicting and ambiguous goals;

• lack of agreement on means-end;

• environmental turbulence;

• immeasurable outputs; and

• effects of management intervention unknown

Several studies have suggested that there are a number of distinct differences between

private and public sector organisations (Wamsley, 1990; Zeppou and Sotirakou, 2003)

because the two sectors operate in distinctively different environments In particular,

public-sector organisations operate in an environment characterised by resource

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constraints, market competition, and growing customer expectations (Robinson, 2003) It

has been argued that the public sector is inherently inefficient because of the absence of

incentives that exist in the private sector - which operates in an open market and has a

decentralised model of decision-making (Bhatta, 2001)

The purpose of the public sector (in the current environment) can be viewed as a paradox

- the pursuit of public good and a sustainable competitive advantage (Mathews and

Shulman, 2005) In contrast the private sector’s singular focus is on economic efficiency,

as it is generally viewed that profit and/or cost reduction are key ingredients to survival

and growth (Cooper, 2004; Ranson and Stewart, 1994) The manner in which cash is

allocated in public sectors is therefore based on the needs of the public, whereas

shareholders are central in the private sector’s emphasis on profits and returns (Cooper, 2004)

According to Donnelly et al (1995) regarding to the types of customer, the public sector

caters for two types of customers:

(1) those who pay for the provision of a service; and

(2) those who do not pay for the provision of a service

Public services that charge (and thus generate revenue) are more likely to be in

competition with services offered in the commercial sector, thereby offering the customer

a choice (Robinson, 2003) The relevance of service quality (largely driven by

competition) in this situation is clearly evident On the other hand, it can be argued that

public services that are free of charge are less inclined to adopt service quality practices

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unless pushed by customer demands and government legislation

In term of types of quality, service quality in the public sector tends to make reference to

three areas of quality:

(1) customer quality (what the customer wants from the service);

(2) professional quality (the processes used to meet customer needs); and

(3) management quality (the use of resources to meet customer needs) (Curry and

Herbert, 1998; Ovretreit, 1991; Kadir et al., 2000)

Customer or client quality refers to what customers want from a service at both the

individual and group level, which is measured through customer satisfaction measures

Professional quality relates to procedures and techniques used to meet customer needs,

which are ensured through organisational audits and setting standards Management

quality refers to the efficient use of resources to meet customer demands and is measured

through the broader quality approach of the organisation (Ovretveit, 1991; Curry and

Herbert, 1998)

2.2.3 MODELS OF SERVICE QUALITY IN PUBLIC SECTOR

2.2.3.1 THE SERVQUAL MODEL

The most dominant instrument in measuring service quality is SERVQUAL It was

proposed by Parasuraman, Berry and Zeithmal in 1985 which comprised of 10

dimensions (tangibles, reliability, responsiveness, competence, courtesy, credibility,

access, security, communication, and understanding customers) with 97 items and later

reduced to 5 dimensions (tangibles, reliability, responsiveness, assurance and empathy)

with 22 items

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Numerous studies have attempted to apply the SERVQUAL This is because it has a

generic service application and is a practical approach to the area This instrument has

been made to measure service quality in a variety of services such as hospitals (Babakus

& Glynn 1992), hotels (Saleh & Rylan 1991), travel and tourism (Fick & Ritchie 1991), a

telephone company, two insurance companies and two banks (Parasuraman et al 1991)

Although the SERVQUAL model has received widespread acclaim among academics

who study services marketing and management, the model has attracted critics who have

argued that there is no universal model that caters for all the different contexts and

situations in which service quality operates (Bowers et al., 1994; Brady and Cronin,

2001; Cronin and Taylor, 1992; Gronroos, 1982; Lehtinen and Lehtinen, 1982; Rust and

Oliver, 1994) Researchers, however, consider that not all service-quality determinants

have the same effect on consumer satisfaction

2.2.3.2 THE SERVPERF MODEL

Although SERVQUAL is criticized by many researchers, it still seems to be the most

practical model for measuring service quality (Cuthbert, 1996b) Cronin and Taylor

(1992) suggested that measuring service quality through the gap model was not adequate

in conceptual and operational levels so they approached service quality as derived from

perception of performance only and developed the performance-based instrument to

measure service quality called SERVPERF In essence, SERVPERF was a variant of

SERVQUAL but SERVPERF explained more of the variance in service quality

measurement than SERVQUAL (Cronin & Taylor, 1994) Nevertheless, in the context of

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public sector, SERVQUAL measurement scale is more popular and applied extensively

than SERPERF instrument (Ana Brochado & Rui Cunha Marques, 2009)

Both SERVQUAL and SERVPERF's operationalization relied on the conceptual

definition that service quality is an attitude toward the service offered by a firm resulting

from a comparison of expectations with performance (Parasuraman et al 1985, 1988;

Cronin and Taylor, 1992) However, SERVQUAL directly measures both expectations -

and performance perceptions whereas SERVPERF only measures performance

perceptions SERVPERF uses only performance data because it assumes that respondents

provide their ratings by automatically comparing performance perceptions with

performance expectations Thus, SERVPERF assumes that directly measuring

performance expectations is unnecessary (Cronin and Taylor, 1992)

In Vietnam public context, service quality and customer satisfaction are the concepts

attracting just a few researchers to investigate the relationships among them as well as it

is very few studies pay attention to adapt the SERVPERF to identify and measure the

dimensions of service quality affecting to customer satisfaction, so that the generalization

is limited In this study, the researcher uses SERVPERF approach as an instrument to test

the customers’ satisfaction levels of service quality towards the public administrative

service and the public transport service in Dong Nai

2.2.4 PREVIOUS STUDIES ON SERVICE QUALITY IN PUBLIC SECTOR

Aliah and Tarmize (1998) adapted SERVQUAL (1985, 1988, 1990) to be comprising of

25 items They named it as KualKhi to measure service quality provided by an income

tax payment department in Malaysia Using convenience sampling technique, 300 copies

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of KualKhi questionnaire were distributed to the customers Result of the studies showed

the existence of significant gaps between the expectations of the income tax payers and

the services they accepted such as reliability, responsiveness and empathy These three

gaps are bigger than tangibility and assurance dimensions However, the overall service

quality is high This shows that zone of tolerance exists as the income tax payer are

willing to compromise with quality

On the other hand, Sharifudin (1998/1999; 1999a; 1999b) used SERVQUAL (1994)

instrument to measure service quality at ten public transportation departments By using

stratified sampling technique, 400 copies of SERVQUAL questionnaire were distributed

to the customers and also service providers of six state departments in Selangor, Penang,

Perlis, Terengganu, Pahang, Melaka, two branches at Taiping and Muar and two

sub-departments in Kuala Kubu Bharu and Tapah He found that even though the public

transportation department understands the needs of the customers but the perceptions of

the customers are higher Therefore, this showed that the customers’ expectations were not met

On the other hand, Firdaus (2005, 2006) compared the reliability and validity of three

instruments which are SERVPERF, HEDPERF and combination of the two instruments

HEDPERF contains 41 items whereby 13 items were adapted from SERVPERF and 28

items were generated from literature review and various qualitative research inputs

About 381 useable questionnaires were collected from two public universities, one

private universities and three private colleges He found out that HEDPERF is the best

instrument in measuring service quality provided by higher education institutions due to

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its unidimensionality, reliability and validity However, he only managed to extract four

factors from six original dimensions

Arawati et al (2007) used SERVPERF in determine the relationship between service

quality, service performance and customer satisfaction in 86 Malaysian public

departments From nine of ten service quality dimensions proposed by Parasuraman et al

in 1985, they only managed to extract three dimensions They labeled the three

dimensions as responsiveness, access and credibility They also found out that all these

three dimensions are related to service performance and customer satisfaction

To date, research has shown that quality schemes in the public sector are perceived to

improve facility management and staff motivation (Lentell, 2000, 2001; Robinson, 1995,

1999; Williams, 1998) Furthermore, anecdotal evidence suggests that quality principles

yield positive outcomes in terms of performance and satisfaction in the public sector For

example, Dewhirst et al (1999) stated that the principles of TQM have improved the

operational efficiency of public services To obtain a better understanding of the extent to

which service quality permeates the Vietnamese public sector, a quantitative study

utilizing a slight modification of the original SERVQUAL model was undertaken

At the moment, there are limited studies published on service quality in Vietnamese

public sector that applied SERVQUAL scale such as Vu and Nguyen (2008), Nguyen

(2012)

Nguyen (2012) adapted SERVPERF (1985, 1988, and 1990) to examine the effect of

students’ perceived service quality and the students’ perceived price fairness on student satisfaction The results show that various dimensions in perceived service quality and

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perceived price fairness have positive impacts on student satisfaction It also shows that

when perceived price fairness is taken into account, the variation in student satisfaction is

better explained by comparison with the original Parasuraman’s SERVQUAL model This research can be useful not only for existing higher education institutions in Vietnam

but also for foreign universities planning to enter Vietnam’s education sector

On the other hand, Vu and Nguyen (2008) used SERVQUAL (1994) instrument to

measure customer satisfaction based on service quality gap at a local bank in Vietnam

By using stratified sampling technique, 1,000 copies of SERVQUAL questionnaire were

distributed to the customers in all bank branches nationwide They found that P-E gaps of

different widths existed across all five Service quality dimensions

Though the majority of respondents were quite satisfied with what they perceived from

the bank, the gap was not too broad to be bridged The width of the gap (or the value of

P-E gap) varied depending on each particular aspect of these five service quality

dimensions It is true that no bank can be the best for all customers (Zineldin, 1996) In

addition to the first finding, the study proved that there was an association between

gender and frequency level of respondents while there was no association between age

and the frequency of their bank visits

Besides that, there are some cities and provinces such as Ho Chi Minh City, Da Nang and

Binh Dinh Province etc had design some service quality survey in order to measure the

customer satisfaction toward public administrative service In general, they adapted

SERVPERF to exam the perception of people who use public administrative service at

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their provinces However the authorities still not have the expected result because there

are many bias in the way they do the survey

2.3 DEVELOPMENT OF RESEARCH MODEL AND HYPOTHESIS

2.3.1 CUSTOMER SATISFACTION

Most researchers agree that satisfaction is an attitude or evaluation that is formed by the

customer comparing their pre-purchase expectations of what they would receive from the

product to their subjective perceptions of the performance they actually did receive

(Oliver, 1980) As Kotler (2000, p.36) defined that satisfaction is a person’s feelings of

pleasure or disappointment resulting from comparing a product’s perceived performance

(or outcome) in relation to his or her expectation Additionally, Yi (1990) also stated that

customer satisfaction is a collective outcome of perception, evaluation and psychological

reactions to the consumption experience with a product/service

Customer satisfaction can be defined as the “customer’s response to the evaluation of the

perceived discrepancy between prior expectation and the actual performance of the

product as perceived after its consumption” (Tse and Wilton, 1998, p 204) Research has shown that motivated employees are more likely to have a clear understanding of the

importance of service quality and are therefore likely to provide superior service which,

in turn, positively influences customer satisfaction (Bowen and Lawler, 1992; Schneider

and Bowen, 1985)

2.3.2 SERVICE QUALITY AND CUSTOMER SATISFACTION IN PUBLIC SECTOR

Service quality represents a customer’s assessment of the overall level of service offered

by an organization (Parasuraman et al., 1988), and this assessment is often based on

perceptions formulated during service encounters (Bitner et al., 1990; Johnston, 1995)

The majority of the service dimensions depicted in the conceptual model relate to the

human-interaction elements of service delivery Thus, service quality is depicted as a

product of service dimensions comprised of employee-related behaviors and

organizational practices which, taken together, have the capacity to influence service

performance and customer satisfaction

In addition to improving levels of customer satisfaction (Parasuraman et al., 1991),

service quality has also been shown to provide benefits in terms of differentiation

(Zeithaml and Bitner, 2000), market share, profitability (Buzzell and Gale, 1987), and

developing strategy (Gronroos, 2000) The proposed model uses service dimensions

derived from the original SERVQUAL instrument developed by Parasuraman et al

(1985) The SERVQUAL instrument is accepted as a standard for assessing various

dimensions in service quality (Buttle, 1994), and is based on the concept of

service-quality “gaps” (Parasuraman et al., 1985, 1988)

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Researchers have studied the relationship between service quality and satisfaction

Parasuraman et al (1988) specifically suggested that service quality is an antecedent of

customer satisfaction Customer satisfaction is a key consequence of service quality and

can determine the long-term success of a service organization (Parasuraman et al., 1994)

Customer Satisfaction is a foremost criterion for determining the quality actually

delivered to customers (Vavra, 1997) Improved service quality will result in more

customer satisfaction (Cronin and Taylor, 1992; and Bitner et al., 1994) Thus, this

research exams that the nine dimensions of service quality has a positive influence on

customer satisfaction

Parasuraman et al (1985) developed a measurement scale, SERVQUAL to assess the

service quality on ten dimensions: tangibles, reliability, responsiveness, competence,

courtesy, credibility, access, security, communication, and understanding customers)

This study adapted this measurement scale to exam the effect of nine dimensions of

service quality on customer satisfaction toward public service however it does not exam

the dimension of security which is the freedom from danger, risk or doubt because it is

not realistic in Vietnamese public service

These service dimensions will be considered to relate to distinctive features of

public-service quality and are therefore incorporated in the present conceptual model These

dimensions are:

(1) tangibles - physical characteristics of the service, such as the decor, ambience,

technology, and equipment that are viewed as contributing to a public servant’s ability to provide a desired level of service;

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H1a: There is a positive impact of tangibles on Customer Satisfaction toward the public

service in Dong Nai

(2) reliability - a public servant’s ability to perform promised services in a dependable

and accurate manner;

H1b: There is a positive impact of reliability on Customer Satisfaction toward the public

service in Dong Nai

(3) responsiveness - a public servant’s willingness to assist customers and provide

prompt service while being aware of the need for flexibility in customising services to the

needs of individual customers;

H1c: There is a positive impact of responsiveness on Customer Satisfaction toward the

public service in Dong Nai

(4) competence - possession of the required skills and knowledge to perform services

in the public sector;

H1d: There is a positive impact of competence on Customer Satisfaction toward the

public service in Dong Nai

(5) courtesy - politeness, respect, consideration, and friendliness of a public servant; H1e: There is a positive impact of courtesy on Customer Satisfaction toward the public

service in Dong Nai

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(6) credibility - trustworthiness, believability, and honesty of a public servant;

H1f: There is a positive impact of credibility on Customer Satisfaction toward the public

service in Dong Nai

(7) access - a public servant’s approachability and ease of contact;

H1g: There is a positive impact of access on Customer Satisfaction toward the public

service in Dong Nai

(8) communication - listening to customers and acknowledging their comments, and

keeping customers informed in a language they understand;

H1h: There is a positive impact of communication on Customer Satisfaction toward the

public service in Dong Nai

(9) understanding the customer - making an effort to understand customers and

identify their needs

H1i: There is a positive impact of understanding the customers on Customer Satisfaction

toward the public service in Dong Nai

H2: The impact of 9 dimensions on customer satisfaction toward a public service is

affected by the type of public service (public administrative service and public transport

service)

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2.3.3 THEORETICAL MODEL

This paper examines the relationships among service quality and customer satisfaction

within the context of the public service The proposed conceptual model (as depicted in

Figure 1) is based on nine dimensions of service quality (tangibles, reliability,

responsiveness, competence, courtesy, credibility, access, communication, understanding

the customer) and customer satisfaction

Figure 2.1 Conceptual model linking nine dimensions and customer satisfaction

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The purpose of this paper is therefore to test these relationships within the context of the

public sector, particularly that of Dong Nai For the purpose of the evaluation of the

model, customer satisfaction is evaluated in the present study by the customer on the

basis of the quality of the service (through the impact of nine dimensions) and

comparation customer satisfaction between two types of service (public administrative

service and public transport service) Further, the model does not encompass all of the

elements that are likely to influence service quality and perceptions thereof.

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CHAPTER 3 RESEARCH METHODOLOGY AND DATA ANALYSIS

3.1 INTRODUCTION

This chapter presents about the method and research design used in the current study to

explore the relationships among nine dimensions of service quality and customer

satisfaction toward public service in Dong Nai province and the comparation of this

relationships between public administrative service and public transports service

Chapter 3 also mentions about the procedure to analyze the data collected Accordingly,

the process includes test of Cronbach’s alpha coefficient of reliability, EFA by SPSS

software

3.2 RESEARCH PROCEDURE

The research procedure is conduct in two stages, the first one is pilot study which is

implemented through qualitative research and the second one is main survey which is

implemented through quantitative research The research procedure is presented in Figure

3.1

In qualitative research, the purpose is to clarify the concepts and interpret the items in

measurement scales into the public service context based on the standpoint of customers

Furthermore, the necessary adjustments are conducted to enhance the power of the scales

The technique employed was the focus-group interview - the most well-known group

interview technique - because it can provide historical information and the interaction

will enrich the information for research (Donald & Pamela, 2006) It was valuable in the

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scenario of this research as helping researcher obtain general background about the topic,

interpret existing researched findings and provide new idea for modifying and

supplementing new components The participants of interview were the people who have

an experience using the public service within the last three years in Dong Nai province

Based on the qualitative research findings, measurement scales are modified before being

employed for main survey in quantitative research

In quantitative research, the survey is undertaken in the Vietnamese language The

questions in the survey is tailored to identify the effects of nine SERVQUAL dimensions

(Parasuraman et al, 1985), on customer satisfaction of service-quality practices and

compare within the public administrative service and the public transport service in Dong

Nai province The surveys were distributed to 230 customers (120 customers rated about

public administrative service and 110 customers rated about public transport service) who

had an experience working with public administrative service and public transport service

in Dong Nai within the last 3 years, a customer was randomly approached to complete a

survey All surveys will either be collected in person or mailed back to the researchers

Customers rated these statements on a five-point Likert-type scale from “strongly agree”

(5) to “strongly disagree” (1) Customers rated the level of service quality and their

satisfaction within the past three years.The conceptual model consists of 10 components

with 38 items