The impact of service quality on cuctomer satisfaction in the hopitality industry luận văn thạc sĩ

Nguyen Nguyen Xuan Thao THE IMPACT OF SERVICE QUALITY ON CUSTOMER SATISFACTION IN THE HOSPITALITY INDUSTRY Differences between the viewpoint of foreign and Vietnamese customers THESI

Nguyen Nguyen Xuan Thao

THE IMPACT OF SERVICE QUALITY

ON CUSTOMER SATISFACTION

IN THE HOSPITALITY INDUSTRY Differences between the viewpoint of foreign and

Vietnamese customers

THESIS OF MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – 2012

Nguyen Nguyen Xuan Thao

THE IMPACT OF SERVICE QUALITY

Assoc Prof Dr NGUYEN DINH THO

Ho Chi Minh City – 2012

ACKNOWLEDGEMENTS

This thesis was made during 06 months from March, 2012 It becomes a memory time in my life when having a lot of stress, difficulty and struggle between deadlines of job and study However, it has opened a vision for me about wild-knowledge which comes from many authors who stay around in the world, having different languages and cultures but bring me an amazing experience which I am grateful for

Knowledge should be accumulated gradually during the school I would like

to say thank you to all professors in the University of Economics Ho Chi Minh City, who already taught and trained me in MBA course

Knowledge also comes from the sharing of friends who were sitting the same class or incidentally appointed the same group with me I thank you for their sharing

Especially, a great thank and special gratitude is addressed to Assoc Prof

Dr Nguyen Dinh Tho, who directly instructs me throughout my thesis with his conscientiousness, patience and knowledge

Finally, I wish to thank my boss of EFS Company Ltd., and my family members for all supporting me during my studying in University

Nguyen Nguyen Xuan Thao

Ho Chi Minh City, October 31 st 2012 Ho

COMMITMENT

I would like to commit that this thesis, “The impact of service quality on

customer satisfaction in the hospitality industry: Differences between the viewpoint of foreign and Vietnamese customers”, was accomplished based on my

research seriously and independently

The data was collected from hotels and restaurants industry in Vietnam by the author in reality It has clear source Thus, the data was trustful handled and conducted by the author

Nguyen Nguyen Xuan Thao

Ho Chi Minh City, October 31 st 2012

TABLE OF CONTENTS

ACKNOWLEDGEMENT I COMMITMENT II TABLE OF CONTENTS III LIST OF TABLES V LIST OF FIGURES V

ABSTRACT 1

Chapter 1 INTRODUCTION 2

1.1 Research Background 2

1.2 Research Motivation 4

1.3 Research Objectives 5

1.4 Research Scopes 5

1.5 Structure of Research 5

Chapter 2 LITERATURE REVIEW, THEORETICAL FRAMEWORK AND HYPOTHESES 7

2.1 Service Quality 7

2.1.1 The SERVQUAL Instrument 9

2.1.2 Applying SERVQUAL in the Hospitality Industry 10

2.1.3 Perceived Service Quality 11

2.2 Customer Satisfaction 14

2.3 Theoretical Framework and Hypotheses 16

2.3.1 Theoretical Framework 16

2.3.2 Research Hypotheses 16

Chapter 3 RESEARCH METHODOLOGY 18

3.1 Research Methodology 18

3.2 Sampling Design 19

3.3 Data Collection Procedures 19

3.4 Data Analyze Procedure 22

3.4.1 Reliability Analysis 22

3.4.2 Descriptive Statistics 23

3.4.3 Factor Analysis (FA) 23

3.4.4 Multiple Linear Regression Analysis 24

Chapter 4 ANALYSIS RESULT 25

4.1 Respondents Demographics 25

4.2 Reliability and Validity of SERQUAL Scales 26

4.3 Dimensions of Service Quality in Hospitality Industry 28

4.4 Overall Perceived Service Quality 31

4.4.1 Correlation Testing 31

4.4.2 Multi-Linear Regression Analysis 32

4.5 Hypothesis Testing and Discussions 35

4.6 Summary 45

Chapter 5 CONCLUSIONS AND RECOMMENDATIONS 47

5.1 Summary of Findings 47

5.2 Practical Implications 48

5.3 Contributions of the Study 49

5.4 Limitations and Future Research 50

REFERENCES 51

APPENDIX 1 55

APPENDIX 2 61

APPENDIX 3 64

APPENDIX 4 67

LIST OF TABLES

Table 2.1 Five Dimensions of Service Quality 10

Table 2.2: The Summary of Research Hypotheses 17

Table 3.1: The Sources of Measurement Scale 20

Table 3.2: Rules of Thumb about Cronbach‟s Alpha Coefficient Size 23

Table 4.1: Demographic Characteristics of the Study 26

Table 4.2: Cronbach‟s Alpha Measures of Variables in the Study 27

Table 4.3 KMO and Bartlett's Test of Five Independent Variables 28

Table 4.4: Rotated Component Matrixa of Independent Variables 29

Table 4.5 KMO and Bartlett's Test and Component Matrix 30

Table 4.6 Correlation of Variables 31

Table 4.7 ANOVAb for Construct 32

Table 4.8 Model Summaryb of the Construct 33

Table 4.9 Coefficientsa of the Construct 34

Table 4.10 Overall Perceived Service Quality 34

Table 4.11 ANOVAb for Satisfaction 38

Table 4.12 Model Summaryb of Satisfaction 38

Table 4.13 Coefficientsa of Satisfaction 39

Table 4.14 Coefficientsa of the Construct for Vietnamese Customers‟ Group 41

Table 4.15 Coefficientsa of Satisfaction for Vietnamese Customers‟ Group 41

Table 4.16 Coefficientsa of the Construct for Foreign Customers‟ Group 43

Table 4.17 Coefficientsa of the Satisfaction for Foreign Customers‟ Group 43

Table 4.18 Comparison Customers‟ Viewpoints 45

LIST OF FIGURES Figure 2.1 Theoretical Framework 16

Figure 4.1 Research Framework for Vietnamese Customers Group 40

Figure 4.2 Research Framework for Foreign Customers Group 42

ABSTRACT

Vietnam is more and more attractive a lot of tourists from other countries in the world Since the life-style is developed rapidly, the customers have more demands on the services, especially in their enjoyable and leisure time The importance of service quality for business performance has been recognized not only in the literature but also in reality because it effects directly on customer satisfaction which leads to the profitability for an organization

This study examined the relationship between the components of service quality, overall perceived service quality and customer satisfaction The respondents were Vietnamese and foreign customers who stayed in hotels or spent their dining in restaurants in Ho Chi Minh City, Vietnam The study used Statistic Package for Social Science (SPSS) to analyze data through Exploratory Factor Analysis (EFA) and regression analysis tools Firstly, the research proposed a model to analyze the effect of service quality factors in the hospitality industry on overall perceived service quality The five service quality variables identified in this study were named as “tangibles”, “reliability”, “responsiveness”, “assurance” and

“empathy” The results indicated that “reliability” and “empathy” have strong positive effect on overall perceived service quality Secondly, the research investigated the impact of overall perceived service quality on customer satisfaction Results showed that overall perceived service quality has a significantly effect on customer satisfaction Finally, the research finding confirmed that there are differences between the viewpoints of Vietnamese and foreign customers on service quality and its impact on their satisfaction differently

Keywords: SERQUAL, Perceived Service Quality, Customer Satisfaction,

Hospitality Industry, Vietnam

CHAPTER 1 INTRODUCTION

to appeal the investment on infrastructure; to open more the tourism trading promotion representative offices in China, Japan, Korea, Thailand, Australia, Malaysia, France and Russia; especially Ha Long Bay just becomes the New World‟s Natural Wonders; last but not least all other industries, e.g hospitality industry related to tourism should be reinforced and enhanced so that to bring the most satisfaction to the tourists

As all above factors, there are a lot of restaurants and hotels to be opened to serve for this demand Besides the services of accommodation and food are provided by local suppliers, there are many famous international hotel and restaurant groups to join this market in Vietnam such as Starwood, Park Hyatt, Hilton Worldwide, Movenpick and so on The customers have more choices about the services and all the service businesses are trying their best to improve their

service quality in order to make customers more satisfied, and that can improve profitable to the firms Therefore, the viewpoint of customers (local and foreign ones) about service quality should be considered and defined how to match with the different levels of customer satisfaction

To help the companies get more success and survival in today‟s competitive environment, there are many researches to define about “quality”, “service quality”

“customer satisfaction” Research shows that quality is defined as “fitness for use” and “those product features which meet customer needs and thereby provide customer satisfaction” (Juran and Godfrey, 1999) Service quality leads to customer loyalty and attraction of new customers, positive word-of-mouth, employee‟s satisfaction and commitment, enhanced corporate image, reduced cost and increased business performance (Berry et al., 1989) Higher levels of service quality produce higher levels of customer satisfaction, which in turn lead to higher levels of customer patronage Customer service quality is a crucial source of distinctive competence and often considered a key success factor in sustaining competitive advantage in service industries (Palmer, 2001) In the hospitality industry, to exist

in the intense competition, hospitality organizations look for ways that they can profitably differentiate themselves One of strategy is the delivery of high service quality (Stevens, Knutson & Patton, 1995) Research has supported that the basic principle that high quality goods and services are favored in the marketplace and has suggested that high service quality performance increases customer satisfaction (Anderson & Fornell, 1994) However, the concepts of service quality are difficult

to define, measure and maintain (Parasuraman, Zeithaml & Berry, 1985) In 1985, Parasuraman et al., defines service quality as a function of the differences between expectation and performance along ten major dimensions such as reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding/knowing the customer, tangibles In later research, Parasuraman et al.(1988) revises and defines the service quality in terms of five dimensions: tangibles, reliability, responsiveness, assurance (combining communication,

credibility, security, competence and courtesy), and empathy (combining understanding and knowing the customer with accessibility) It is called SERVQUAL instrument which becomes the most popular and commonly uses to measure service quality across many different service settings Besides, according

to Parasuraman et al., (1985) service quality is evaluated by the gap between expected service and perceived service It means the customers expect service companies to do what they are supposed to do They expect fundamentals, not fanciness; performance, not promise only At the point of service creation and delivery, all the resources and knowledge of the provider of the service must come together in exactly the right way to ensure an excellent service encounter for the customer At this point, the customers compare their expectations with actual service delivery system performance and ultimately arrive at their perceptions of service quality Or, customer satisfaction as a measure of how customers perceive services delivery (Hernon & Whitwan, 2001) In short, there are many concepts of customer‟s satisfaction, therefore, it is not easy for the managers of hotels and restaurants in Vietnam to define and provide a service quality in order to bring the most satisfaction for their customers

1.2 Research Motivation:

In the hospitality industry, most researchers are interested in maximizing customer satisfaction; satisfied customers tend to return and make the profit to hotel and restaurant business The role of service quality as one of indicators for customer‟s satisfaction and hotels‟ profitability (Kotler et al., 1996), the hospitality organizations should consider any element or factor to fulfill their customer satisfaction In order to identify the impact of service quality factors on customer satisfaction in hospitality industry in Vietnam, I want to conduct a survey to examine the relationship between service quality and customer satisfaction Also, I would like to make a comparison between the viewpoint of foreigners and Vietnamese about the service quality dimensions to understand if their perceptions

of service quality are same or different in two groups Hoping that this survey can

be useful for managers working in restaurant and hotel industry in Vietnam

1.3 Research Objectives:

The objectives of this study are as follows:

 To examine the relationship between the components of service quality and overall perceived service quality

 To examine the impact of overall perceived service quality on customer satisfaction

 To examine the moderating effect of customer viewpoints (Vietnamese

vs foreign customers) on the above relationships

1.4 Research Scopes:

The study will be focused in Ho Chi Minh City It is a biggest city of Vietnam where there are a lot of restaurants and hotels that the customers have more choices in using the services Moreover, in order to achieve the research objectives, the questionnaire should be replied by both of foreigners and Vietnamese customers Ho Chi Minh City is a place having many foreigners who come here for working and travelling

1.5 Structure of Research:

As the common regulation of a thesis, the main structure of research is divided into five parts They are correlative with five chapters in general with the main contents as follows:

 Chapter one is an introduction, will be discussed about research

background, motivation, objectives and structure of the research

 Chapter two, namely literature review, theoretical framework and

hypotheses, will be discussed about a comprehensive literature and give out some definitions of concepts of variables, the hypotheses between variables and build up the framework of research

 Chapter three, namely research methodology, will be described the

methodology of research, sampling design, data collection procedures and data analysis procedures

 Chapter four is the result of analysis This part will be included descriptive

statistics, assessment of measurement model as well as hypothesized model whether it has the good meaning or not

 Chapter five consists of conclusions and recommendations This chapter

will be discussed about summary of findings, conducted the conclusions and implications for management, contributions of the study, limitations and recommendation for future research

CHAPTER 2 LITERATURE REVIEW, THEORETICAL FRAMEWORK

AND HYPOTHESES

The purpose of this chapter is to review and analyze previous research related to the concepts of service quality and customer satisfaction It provides some definitions of service quality, SERVQUAL, the concepts of customer satisfaction and perceived service quality Also, this chapter states out the relationships between variables, and main reasons lead to the framework and hypotheses of research

2.1 Service Quality:

We can define “Service” as the interaction between the customer and the

service‟s provider The International Standard Organization (ISO) defines a service

as a part of the total production concept Services are often “invisibles” and for this reason it is difficult for the supplier to explain and for the customer to analyze

However, the concept of “Quality” must be considered from the customer

perspective because it forms the perception of quality and will determine whether the customer satisfied or not It is the perception of the outcome which will judge

“the service” Bitner and Hubber (1994) say about service “The customer will remember the comfort of the facilities, but they will also remember the interaction they have with members of staff” Juran, Deming and Feigenbaum share the definition of “Quality” as “satisfying customers” or “fitness for purpose” It means that “quality” can be defined as the ability of the organization to determine customer‟s requirements, and then meet or exceed their requirements Besides,

“Quality” is defined either as the “cost to the producer and the price to the customer” or as “meeting the customer‟s requirements in terms of quality, price and availability” This focus is external factors For Blackburn (1998) “customers have expectations and desire concerning the performance and appearance of the product

or the content of a service activity which they believe they should or could obtain

under given circumstances” Furthermore for North (1998), he points out four important characteristics about the concept of “quality” such as not absolute; not

unchangeable; not stable and quality is a "dynamic process" not a "static goal"

As the analysis above, a combination of “Service” and “Quality” – “Service quality” is becoming too important and meaningful for service providers and also for users as well The service quality definitions are very close to the “customer-led” definition Therefore, service quality is a complex, elusive, subjective and abstract concept 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, 1994; Asubonteng et al., 1996) Also, service quality can 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) Some important definitions

of service quality are “service quality is determined by the differences between customer‟s expectations of services provider‟s performance and their evaluation of the services they received” (Parasuraman et al., 1985; 1988) Besides, for Asubonteng et al (1996) “service quality can be defined as the difference between customers‟ expectations for service performance prior to the service encounter and their perceptions of the service received” Ueltschy et al (2004) defines service quality as the consumer‟s judgment about the overall excellence or superiority of the service DeMoranville and Bienstock (2003) identify service quality as a measure to assess service performance, diagnose service problems, manage service delivery, and as a basis for employee and corporate rewards In summary, all previous literatures offer many valuable contributions related to service quality However, in this study, we will focus on the most popular definition of service quality of Parasuraman et al

2.1.1 The SERVQUAL instrument:

In order to measure the quality service, there are many researchers to develop a number of measurement tools Garvin (1983) measures quality by counting the number of internal and external failures Internal failures are observed before a product leaves the factory and external failures are incurred after a unit has been installed Quality is conformance to the customers not to the company‟s specifications Gronroos (1984) classifies service quality into technical and functional quality Technical quality is defined as an evaluation based on what the consumers received as a result of interaction with the service provided Functional quality is defined as an evaluation based on how the service is provided In 1985, three marketing professors from Texas A&M University who are Parasuraman, Zeithmal and Berry publish a set of services quality dimensions and these dimensions are widely recognized by many scholars and have been used in many service firms (Forster, 2001) In the first research, they consider ten dimensions of service quality to determine the perceived services quality consisting of reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding/knowing the customer, tangibles However, over next three year

1988, they narrow the initial ten dimensions of service quality to five dimensions which is called SERVQUAL SERVQUAL (Parasuraman et al., 1988) has gained a wide scale acceptance and has proven to be a popular measurement tool with academicians and practitioners as well The SERVQUAL instrument measures service quality by examining the gap between “expectations” (the service that customers think should be provided) and “perceptions” (what customers think actually has been provided)

The SERVQUAL instrument has five dimensions: tangibles, reliability, responsiveness, assurance (combining communication, credibility, security, competence and courtesy), and empathy (combining understanding and knowing the customer with accessibility) These dimensions are defined by the authors as follows:

Table 2.1 Five Dimensions of Service Quality

Tangibles Physical facilities, equipment, appearance of personnel

Reliability Ability to perform the promised services dependably and

accurately Responsiveness Willingness to help customers and provide prompt service

Assurance Knowledge and courtesy of employees and their ability to

inspire trust and confidence

Empathy Caring, individualized attention the firm provides its

customers

Source: Parasuraman et al (1988)

2.1.2 Applying SERVQUAL in the Hospitality Industry:

In the hospitality industry, a variety of studies have been conducted using the SERVQUAL model The effectiveness of SERVQUAL in studying service quality within hospitality industry has been well established by several researchers such as Lee & Hing, (1995); Wuest, Tas & Emenhelser, (1996); Amstrong, Mok, Go & Chan, (1997); etc.,

Wuest et al (1996) assesses that the importance of services provided by hotels/motels as perceived by mature travelers using the SERVQUAL instrument The results support Parasuraman et al (1998) earlier finding that Assurance and Reliability are the most important dimensions of service quality in both studies Besides, in the Wuest et al (1996) study, Tangibles and Responsiveness are ranked

at the third and the fourth The least important factor is Empathy

Amstrong et al (1997) uses SERVQUAL to examine the impact of expectations on service quality perceptions in Hong Kong‟s hotel industry They collect cross cultural samples of hotel guests in three large hotels The study finds that significant expectation existed between cultural groups The Asian cultural group is significantly different from English heritage group

In the foodservice industry, Bojanie and Rosen (1994) examine the association between service quality as perceived by restaurant clients and its service determinant The results imply that customer expectation exceeded the actual level

of service, as indicated by perception scores The major difference between this model and the original model (Parasuraman et al., 1998) that Empathy dimension is segmented into two dimensions: Knowing customer and Accessibility In this study, the order of ranking is found as Assurance at the first; Reliability at the second; Tangibles at the third; the lowest rating for Knowing customer

The usefulness of the SERVQUAL instrument in measuring and comparing service quality within the fine dining sector of restaurant industry is accessed by Lee & Hing (1995) Customer‟s expectations of service quality, on all dimensions and overall, are similar with Assurance having the highest score Rating of customer‟s expectation of service quality along all five dimensions is higher than perception of service quality The study results found that Assurance and Reliability are the most important dimensions of service quality in restaurant business

2.1.3 Perceived Service Quality:

Perceived service quality is defined by Parasuraman et al., (1988) as “a global judgment or attitude, relating to the superiority of the service” It means that perceived service quality is an attitude of a consumer judgment on the overall service For Kangis and Voukelatos (1997), perceived service quality results from a comparison of consumers‟ expectations with their perceptions of the service actually delivered by supplier It is the evaluation of the service performance that customers received according to whether it meets certain standards

As mentioned above, Parasuraman et al., (1985) service quality is evaluated

by the gap between expected service and perceived service They consider ten dimensions of service quality to determine the perceived services quality In the context of this study, the SERVQUAL instrument by Parasuraman et al., (1988) is used to test the perceived service quality as indicator of customer satisfaction This model consists of five dimensions as follows:

 Tangibles: the appearance of physical facilities, equipment and

personnel This dimension is referring to all facilities, equipment and

staff of hotel and restaurant

It is very important for the hotel and restaurant organizations to be well-prepared all facilities, equipment and the appearance of staff to appeal the customers to use the services of the organizations According to Lau et

al (2005), the tangibles factor is the most important factor of hotel service quality They use neat appearance of staff, availability of modern equipment, the physical facilities and material associated with service are visually appealing such as availability of first aid facilities and instructions, free internet access service for customers, clean and comfortable room, etc., Zeithaml and Bitner (2003) state that tangibles must be strengthened in hospitality services to induce the customer return to a facility Akbaba(2006) states that tangibles positively affect the perceived service quality

Based on research purpose and literature of all theories and articles mentioned above, this is the first hypothesis:

 Hypothesis 1: Tangibles has a positive effect on overall perceived service quality

 Reliability: Ability to perform the promised services dependably and accurately

Reliability is one of the most important factors towards hotel and restaurant services because most of the customer would like to ensure that service provider is able to perform the promised services dependably and accurately (Zeithaml et al., 1990) In additions, according to some other studies, besides tangible factors, there are some intangible factors such as reliability had a direct influence on customer‟s perception of service quality

It leads to the second hypothesis:

 Hypothesis 2: Reliability has a positive effect on overall perceived service quality

 Responsiveness: Willingness to help customers and provide prompt service

Responsiveness is perceived to be the most important dimension (Zeithmal et al., 1990) Therefore, it is important to make sure the employees

of service organizations are in good manners and willing to help the guests The better of employee service behavior, the better of service quality the customers perceived Therefore, the third of hypothesis as follows:

 Hypothesis 3: Responsiveness has a positive effect on overall perceived service quality

 Assurance: Knowledge and courtesy of employees and their ability to inspire trust and confidence

Most of guest will expect to have warm welcoming or guiding correct information or appropriate identification in the certain situation In addition,

if staff is confident on their job with in-depth occupational knowledge that will inspire the truth and confidence to the guests towards to the firms (Parasuraman et al., 1988) In the hospitality industry, most of customers will expect to feel safe and secure in doing transactions with the staff of restaurants or hotels So, this factor can affect on the service quality the customer perceived Therefore, the fourth of hypothesis as below:

 Hypothesis 4: Assurance has a positive effect on overall perceived service quality

 Empathy: Caring, individualized attention the firm provides its customers

This dimension is used to measure service quality based on the ability

of the management of hospitality organizations to understand the customer needs and requirements According to Watkins (1998), the importance of empathy may be the root of the statement, “If ones look at who is wining, it

tends to be companies that see the guest as an individual” Thus, the fifth of

hypothesis:

 Hypothesis 5: Empathy has a positive effect on overall perceived service quality

2.2 Customer Satisfaction:

Customer satisfaction can be defined generally as the mental effects of comparing the customer expectations before using the service and the perceived of actual performance after using the service (Gronroos 1982; Parasuraman et al 1985; Berry et al 1990; Oliver 1997) This definition is also supported by Kotler (2003) which states 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 On the other hand, customer satisfaction is defined as a result of customer‟s evaluation to the consumption experience with the services

As we known, customer satisfaction/ guest satisfaction is the leading criterion for determining the quality that is actually delivered to customers through the product/service and by the service providers (Vavra, 1997) Simply stated, customer satisfaction is essential for corporate survival This creates the challenge

of maintaining high levels of service, awareness of customer expectations and improvement in services and product According to Barsky and Labagh (1992) and Stevens et al., (1995), providing high quality service and enhancing customer satisfaction are widely recognized as important factors leading to the success of companies in the hotel, catering and tourism industries In order to be successful in the industry and to outweigh other competitors, hotel and restaurant providers must provide customers with a perfect service satisfaction

 Measuring customer satisfaction:

Customer satisfaction measurement serves two roles, providing information and enabling communication with customers Perhaps the primary reason for taking the time to measure customer satisfaction is to collect information, either regarding what customers say that needs to be done differently or to assess how well an organization is currently meeting its customer needs (Varva, 1997) A secondary, but no less important function of customer satisfaction measurement in hospitality enterprises is that by surveying customers, an organization is demonstrating its

interest in communicating with its customers-finding out their needs, pleasures, displeasures and overall well-being However, it is impossible to measure the satisfaction of every single customer, those whose opinions are solicited and others, who observe this process, are given a sense of importance and recognition

Cronin and Taylor (1992); Ekinci (2004) found that perceived service quality must be antecedent of customer satisfaction An alternative conceptualized imagines perceived service quality as both an antecedent and a consequence of satisfaction Lacobucci, Ostrom and Grayson (1995) examined the issue both empirically and by comparing structural models and determined that perceived service quality represents an antecedent of customer satisfaction while customer satisfaction also offers an antecedent of perceived service quality Caruana, Ewing and Rameseshan (2000); Baker and Crompton (2000) suggested that in general perceived service quality directly and significantly influences satisfaction From that we have the next hypothesis:

 Hypothesis 6: Overall perceived service quality has a positive effect on customer satisfaction

 Satisfaction level by customer demographics:

Demographic characteristics play a critical role in shaping customers‟ needs The service organizations take demographic characteristics as one of the major determinants of consumers‟ buying behavior Demographic characteristics include customer‟s sex, age, education, occupation, sector, location of domicile, ethnicity, etc., According to Amstrong et al (1997), there are the different expectation existed between cultural groups However, in the limitation of the study, we just consider on the possible influences on customer‟s satisfaction by their demographic characteristic between foreigners and Vietnamese (country factor) So, the seventh

of hypothesis:

 Hypothesis 7: There is a different viewpoint between foreign and Vietnamese customers on service quality and its impact on their satisfaction

2.3 Theoretical Framework and Hypotheses:

2.3.1 Theoretical Framework:

Theoretical framework is mainly based on the literature review According to

previous analysis, the constructs are integrated in a theoretical framework The

framework guides development of the research‟s hypotheses, which examine the

relationships among variables of the research The following is theoretical

CUSTOMER GROUP (Foreigner vs Vietnamese)

OVERALL PERCEIVED SERVICE QUALITY

H1 H2

β6

Table 2.2: The Summary of Research Hypotheses

H1 Tangibles has a positive effect on overall perceived service quality

H2 Reliability has a positive effect on overall perceived service quality

H3 Responsiveness has a positive effect on overall perceived service

quality H4 Assurance has a positive effect on overall perceived service quality H5 Empathy has a positive effect on overall perceived service quality

H6 Overall perceived service quality has a positive effect on customer

satisfaction H7 There is a different viewpoint between foreign and Vietnamese

customers on service quality and its impact on their satisfaction

CHAPTER 3 RESEARCH METHODOLOGY

In this chapter, the major aspects of methodology for quantitative approach

of the study are addressed Accordingly, this chapter will be displayed with some parts such as research methodology, sampling design, data collection procedures and data analysis procedures

3.1 Research Methodology:

This study used a quantitative approach to design and investigate the relationship among research constructs and used survey as the method of investigation The objective of this study was to first examine the relevance of service quality dimensions (SERVQUAL) and overall perceived service quality in the hospitality industry under the context of study The next objective was to establish the relationship of overall perceived service quality and customer satisfaction which was determined by regression analysis And the final objective was to compare the differences between the viewpoint of foreign and Vietnamese customers on service quality constructs and its impact to satisfy them

Questionnaires were made and delivered to the respondents to collect data The respondents were Vietnamese or foreign guests who stayed at least one time in

a hotel or used a casual dining in a restaurant in Vietnam Before conducting the main survey, the pre-test of the questionnaires was done quickly by processing a qualitative interview to know whether items in the questionnaires are reliable and validity or not Once the pre-test‟s result was satisfied, the main survey could be proceeded After being gathered, data would be analyzed by using Descriptive Analysis, Exploratory Factor Analysis (EFA) and Multiple Linear Regression (MLR) through by these methods the issues of research would be empirically answered

3.2 Sampling Design:

About the sample size, in this study, MLR was one of methods to be applied

in analysis According to Tabachnick & Fidell, 2007 (as cited in Nguyễn Đình Thọ (2012), the sample size in MLR depends on significant level, power of the test and the numbers of independent variables and so on There is an empirical formula for choosing sample size in MLR as follows:

n ≥ 50 + 8 p

In which,

 n is the minimum sample size

 p is the total of independent variables

However, EFA was also used in this research, the sample size would be determined by (1) the minimum sample size and (2) the number of variables (Nguyễn Đình Thọ, 2011) According to Hair et al (2006) (as Cited in Nguyễn Đình Thọ, 2011), the minimum sample size for EFA is at 50 (or its ideal at 100), or

to be counted by the observation ratio 5:1 (observations/item) It means that one variable needs minimum five observations It is better if having 10 observations for each variable

In this study, there were totally 05 independent variables Therefore, the observations need to be at 5*10 = 50 The researcher used the ideal sample size at

100 There were 02 groups to be researched Vietnamese and Foreigner Therefore, the researcher targeted to have at least 240 respondents, including 120 Vietnamese and 120 foreign guests who stayed at the hotels or spent their dining in the restaurants in Vietnam from May 2012 to August 2012 With the limitation time, the researcher just selected the respondents by convenient sampling method

3.3 Data Collection procedures:

Data of this study was gathered using the questionnaire surveys which were distributed to hotels and restaurants located in Ho Chi Minh City, Vietnam There were two ways that had been applied for this study to collect the data from the respondents First, the receptionists or managers of hotel and restaurant distributed

the survey forms to customers after the customers used service in the place Second, the questionnaire forms were delivered to the customer‟s email by the restaurant or hotel managers or the researcher

The questionnaires were adapted based on the measure of Parasuraman et al (1988, 1991) and from Westbrook and Oliver (1991) They were designed in English version and then translated into Vietnamese because it would be delivered

in Vietnam First, the questionnaires were used to interview qualitatively 10 guests (05 foreigners and 05 Vietnamese) They were collected back and adjusted some necessary points After the questionnaires were clear enough, they would be delivered to respondents for the main survey

The questionnaires included two sections: Point Scale and Demographic Characteristics There are 22 questions to be divided into 7 groups related to 5 dimensions of service quality and the general viewpoints of customers about overall perceived service quality and satisfaction Scale items were measured on the Seven-point Likert scale from strongly disagree (1) to strongly agree (7)

Table 3.1: The Sources of Measurement Scale

from Service quality

ASR01 Parasuraman,

Zeithaml and Berry

EMP03

Overall Perceived Service Quality (OPSQ)

1 The service quality in this hotel/restaurant is perceived better than the other equivalent ones

OPSQ Parasuraman,

Zeithaml and Berry

(1988, 1991)

Satisfaction (SAT)

1.You feel satisfied with the decision

to visit this hotel/restaurant

3.4 Data Analyze Procedure:

The data was analyzed based on statistical analyzing methods which were used to answer the hypotheses of this study Statistic Package for Social Science (SPSS) software was employed on this study to analyze and present the result of this research

First of all, SPSS software was used to import data Raw data would be imported into spreadsheet of SPSS window Here, data was also coded according to the purpose of study And after that there were some statistical tools to be applied in this study, namely Reliability analysis, Descriptive statistic, Exploratory Factor Analysis (EFA) to find the factor‟s correlation and Multiple Linear Regression to analyze the construct of the model

3.4.1 Reliability analysis:

The reliability testing was used to measure the items of the variables in the questionnaires and the internal stability and consistency of a question can be determined by the coefficient value of Croanbach‟s alpha (Nunnally & Bernstein,

1994) According to Hair et.al (2007), the Rules of Thumb about Cronbach Alpha Coefficient as follows:

Table 3.2: Rules of Thumb about Cronbach Alpha Coefficient Size

Alpha Coefficient Range (α) Strength of Association

0.6 to <0.7 Moderate 0.7 to < 0.8 Good 0.8 to < 0.9 Very good

Source: Hair et al (2007), “Research Methods for Business”

Based on this rule, if the result of a variable has coefficient value higher than 0.7, the questions are reliable and can be used as the measuring tool to measure the concept intended to be measured

3.4.2 Descriptive statistics:

Descriptive statistic was actually used to report the characteristics of the data

such as mean, frequency, standard deviations, percentage and range (Sekara, 2000)

In this study the descriptive statistic was used to consolidate the data to determine the balance of samples about gender, country, age … by checking the frequency and the percentage of each variable This method is useful once comparison between the groups of respondents‟ demographic each other

3.4.3 Factor Analysis (FA):

Factor Analysis (FA) is a primary method to identify the underlying structure

in data (i.e, determine the correlation among a large number of variables) Factor Analysis refers to the cluster of interdependence technique whereas it summaries the information from a large number of variables into factors, depending on their relationships (Hair et al, 2007)

The purpose of factor analysis is to simplify the understanding of the data which can be achieved from either an exploratory or confirmatory perspective (Hair

et al., 2007) In this study, exploratory factor analysis (EFA) was used to identify factors based on data, to maximize the amount of variance explained and to examine its internal reliability From that, the dimensions of service quality (tangibles, responsiveness, reliability, assurance, empathy) in hospitality industry would be discovered under this context

3.4.4 Multiple Linear Regression Analysis:

Multiple Linear Regression analysis had been done to examine the simultaneous effects of several independent variables on a dependent variable that

is interval scaled (Cavana et al, 2001) In this study, multiple linear regression analysis was used to know whether all of the independent variables (tangibles, responsiveness, reliability, assurance and empathy) would significantly add to the variance explained in the dependent variables (overall perceived service quality), and in turn overall perceived service quality was an independent variable to be checked its effect on customer satisfaction Thus, there were six hypotheses (H1 to H6) in this study to be analyzed by using the regression analysis in order to determine of any possible relationship between independent and dependent

variables under the context of the study

Moreover, regression method was also used to analyze between two groups Vietnamese vs foreigner Based on that, the Unstandardized Coefficient Beta (β) would be used to know whether the effect of service quality dimension and customer satisfaction level is different between two groups and if these differences are significant Therefore, the hypotheses 7 (H7) was checked by this analysis tool

In summary, this chapter was discussed about research methodology employed in this study which covered to research framework, sample design, data collection procedures and also discussed about the statistical tools which had been used to analyze the data in this study

CHAPTER 4 ANALYSIS RESULT

This chapter displays the achieved results of study such as sample demographic, statistical analysis, tests of hypotheses, explore the research objectives and withdraw other findings from this study Accordingly, the descriptive analysis will be presented first to show respondents demographics, followed by the exploratory factor analysis (EFA) for measuring model, finally Multiple Linear Regression (MLR) analysis will be performed for hypotheses testing and

 In Vietnamese group, total of respondents was 115 53.9% of them were male and 46.1% were female Most of them had age in the range from 26 – 40 years old (66.1%) and their mainly occupation was professional (60.0%)

 In foreigner group having 105 respondents, there were 52.4% of male and 47.6% of female Almost their occupations were professional (51.4%) and self-employment (20.0%) Their age was mainly also in the range from 26 – 40 years old (49.2%)

Table 4.1: Demographic Characteristics of the Study

Characteristic

Foreigner (n=105)

Vietnamese (n = 115)

Total (n=220) Frequency (%) Frequency (%) Frequency (%) Gender

Male 55 52.4 62 53.9 117 53.2 Female 50 47.6 53 46.1 103 46.8

Age

18-25 19 18.1 25 21.7 44 20.0 26-40 45 49.2 76 66.1 121 55.0 41-60 33 31.4 10 8.7 43 19.5 Over 60 8 7.6 4 3.5 12 5.5

Occupation

Student 9 8.6 15 13.0 24 10.9 Self-employment 21 20.0 16 13.9 37 16.8 Professional 54 51.4 69 60.0 123 55.9 Retired 8 7.6 2 1.7 10 4.5 Other 13 12.4 13 11.3 26 11.8

4.2 Reliability and Validity of SERQUAL Scales:

In this study, the Cronbach‟s Alpha statistic was used to test internal consistency or reliability of group items Generally, the researches consider an alpha of 0.7 as a minimum, although lower coefficient may be acceptable depending

on the research objectives (Hair et al, 2007) According to Nunnally & Bernstein (1994), the measurement has validity and reliability when its alpha is over 0.6

Showed in the Table 4.2 below, the Cronbach‟s Alpha values were high such

as Tangibles α =.845; Responsiveness α = 776; Reliability α =.779; Assurance α

=.867; Empathy α=.890; and Customer satisfaction α =.950 All the alpha values

were around 0.7 to 0.95, it means that the strength of association were good as recommended by Hair et al., (2007)

Furthermore, these alpha values provided evidence that the scales had adequate reliability in measuring the constructs under study or the items of variables were highly correlated each other In summary, it could be conducted that the measurement used in service quality of hospitality industry was reliable in this context

Table 4.2: Cronbach’s Alpha Measures of Variables in the Study Variables Scale Mean

if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Cronbach's Alpha if Item Deleted Tangibles: Alpha = 845

TAN01 23.03 10.515 655 812 TAN02 23.30 10.138 676 807 TAN03 22.85 11.008 619 822 TAN04 22.77 11.090 635 817 TAN05 22.83 11.054 679 807

Responsiveness: Alpha =.776

RES01 11.64 2.589 678 623 RES02 12.01 3.173 527 785 RES03 11.80 2.538 641 666

Reliability: Alpha =.779

REL01 11.54 3.035 594 728 REL02 11.50 2.580 638 676 REL03 11.67 2.504 624 694

Assurance: Alpha =.867

ASR01 17.61 6.302 707 835 ASR02 17.70 5.946 748 818 ASR03 17.70 6.779 681 845 ASR04 17.44 6.475 742 821

Empathy: Alpha = 890

EMP01 11.30 3.784 784 845 EMP02 11.41 3.768 766 862 EMP03 11.30 3.899 808 826

Satisfaction: Alpha =.950

SAT01 12.16 12.16 886 932 SAT02 12.11 12.11 931 898 SAT03 12.04 12.04 866 947

4.3 Dimensions of Service Quality in Hospitality Industry:

In this stage, the data analysis was to explore the dimensions of service quality in hospitality industry First, KMO (Kaiser-Meyer-Olkin measure of sampling adequacy) would be used to test whether the partial correlations among variables are small If the KMO indicator runs from 50 to 1, EFA could be applicable (Nguyễn Đình Thọ, 2011) In addition, Bartlett's test of sphericity tests whether the correlation matrix is an identity matrix If the Berlett‟s Test shows that

p < 05, it means that the variables have correlation together and the application of EFA is suitable

In this survey, the Kaiser-Meyer Olkin measure of sampling adequacy suggested that the sample was factorable (KMO=.899) and significant value p<.05 that proved the sample was significant for factor analysis

Table 4.3 KMO and Bartlett's Test of Five Independent Variables

Kaiser-Meyer-Olkin Measure of Sampling Adequacy .899 Bartlett's Test of Sphericity Approx Chi-Square 2229.337

In order to identify which factors could become the dimension of service quality in this context Exploratory Factor Analysis having extraction method Principal Component Analysis (PCA) and Varimax Rotation had been run to discover the result Showed in the table 4.4, it indicated that there were five factors

to emerge as the dimensions of service quality in this study under the current context of hospitality industry in Vietnam

As above, all items were related to five dimensions since their components exceeded 0.5 There was no item to be rejected The result leaded to the conclusion

Accordingly, having the same method to analyze, the dependent variable

“SATISFACTION” (SAT) was combined from SAT01, SAT02, SAT03 with KMO= 744 and its significant value p<.05 and all components were over 0.5 as Table 4.5 It means that the use of EFA analysis was very applicable And the scale

of dependent variable, customer satisfaction, could satisfy the criteria of reliability, discriminant validity and convergent validity

Table 4.5 KMO and Bartlett's Test and Component Matrix

of Dependent Variable Kaiser-Meyer-Olkin Measure of Sampling Adequacy 744

Bartlett's Test of Sphericity Approx Chi-Square 677.965

4.4 Overall Perceived Service Quality:

4.4.1 Correlation Testing:

In order to determine the relationship between independent variables (TAN, RES, REL, ASR, EMP) and dependent variable (OPSQ), the Pearson‟s correlation coefficient would be calculated If the absolute value of the Pearson's correlation coefficient runs from -1 to 1, we could conclude that two variables have strong correlation The results of the Pearson correlation analysis of this study was shown

in Table 4.6 below:

Table 4.6 Correlation of Variables

** Correlation is significant at the 0.001 level (2-tailed)

According to the result above, it shows that all correlation coefficient were significant having strong correlation All of the independent variables were positively with the dependent variable The table showed that empathy (EMP) had highest correlation with OPSQ (Overall Perceived Service Quality) having Pearson Correlation Coefficient r=0.796 and p<0.001, while the lowest correlation was between RES (Responsiveness) and REL (Reliability) with r=.424

For the association correlation between independent variables and dependent variable, the highest correlation in order as EMP (.796), ASR (.528), REL (.526), RES (.459), TAN (.428) In summary, the result found that all the variables had positive correlation each others Thus, all independent variables would be willing to

be checked their relationship with the dependent variable in next step

4.4.2 Multi-Linear Regression Analysis

Multi – Linear Regression used service quality dimensions as independent variables against a separate measure Overall Perceived Service Quality The items were summed up to reproduce the five original dimensions were analyzed separately against the Overall Perceived Service Quality Based on above correlation analysis, the model construct would be reflected by the formula as follows:

OPSQ = β 0 + β 1 TAN + β 2 RES + β 3 REL+ β 4 ASR+ β 5 EMP + ε

In this model, the dependent variable (OPSQ) would be shown by five independent variables Tangible (TAN), Responsiveness (RES), Reliability (REL), Assurance (ASR), Empathy (EMP) These dimensions request for the analysis has been approved and then entered regression analysis

The ANOVA table tests the acceptability of the model from a statistical perspective The regression row displays information about variation accounted for

by the model The residual displays information about variation that was not accounted for by the model Based on the result in Table 4.7, Sum of Square of Regression (SSr) = 170.187 was much higher than Sum of Square Residual (SSe)=87.899, it conducted that this regression model was suitable and explained by the independent variables mentioned

Table 4.7 ANOVA b for Construct

a Predictors: (Constant), Empathy, Tangible, Reliability, Responsiveness, Assurance

b Dependent Variable: Overall Perceived Service Quality

In addition, the Model summary table 4.8 showed that R2 = 659 and

R2Adj=.651 (smaller R2) It means that this model was fit and all independent variables already explained about 65% variance of the dependent ones

Table 4.8 Model Summary b of the Construct Model

R

R Square (R 2 )

Adjusted R Square (R 2 Adj )

Std Error of the Estimate

a Predictors: (Constant) Empathy, Tangible, Reliability, Responsiveness, Assurance

b Dependent Variable: Overall Perceived Service Quality

Moreover, in order to measure of the strength of the model fit, the standardized residual plots of the given dimensions were observed if having any value of error term for these dimensions As shown in Histogram in Appendix 4.1, the shape of histogram approximately followed the shape of the normal curve, which had standard deviation equal 0.989 (σ # 1) Therefore, the regression assumptions were suitable Also, after checking P-P Plot and Scatter Diagrams (Appendix 4.1), all the residuals gathered around the standardized predicted value at

“0” and the observed values were standing around a straight line It proved that the normality assumption was not violated and the linear regression analysis could be used to test the relationship between the independent variables and the dependent variable of the model

The relative importance of the significant predictors was determined by looking at the standardized coefficients Empathy had the highest standardized coefficients and the lowest significance, which indicated that Empathy was the best predictor Analyzing whole Table 4.9 result, the order of significance for predictors

of Perceived Service Quality was Empathy, Reliability, Assurance, Responsiveness and Tangibles