Client perceived service and satisfaction in business to business professional tax consultant services

Further to the above discussion, this study aims to obtain following objectives: 1 To examine the antecedents of client perceived performance; 2 To test the effect of client perceived pe

International School of Business

Nguyen Thi Ngoc Phuong

Client perceived service and satisfaction

in business-to-business professional tax

consultant services

ID: 22110046

MASTER OF BUSINESS (Honours)

SUPERVISOR: Dr Vo Thi Ngoc Thuy

Ho Chi Minh City- 2014

Acknowledgement

I would like to express my gratitude to my supervisor, Dr Vo Thi Ngoc Thuy, for the

patient guidance, encouragement and advices she has provided throughout the time preparing this thesis In addition, I would like to thank all the members of committee and professors at

International School of Business and my colleagues for their great orientation, instructions

and comments for my further improvement of my thesis

Thanks to all participants in the research survey for their kind support and cooperation Finally, I also would like to thank family and friends who always support and

encourage me a lot

Nguyen Thi Ngoc Phuong

March 2014

Abstract

This thesis attempts to empirically confirm the applicability of La et al.' s (2009)

conceptual model regarding client perceived value in professional business-to-business service in professional tax services in the context of Vietnam It endeavors to expand the concept of value and satisfaction in business-to-business professional tax services in the context of Vietnam This is the first research representative in the context of Vietnam that is a

theoretical contribution to the research on value and client satisfaction from an Asian

behavior perspective

The results show that in the context of professional tax consultant services m Vietnam, clients tend to perceived performance and value in the same stage called perceived

service There are five factors which are empirically confirmed having positive effects to

perceived service i.e technical skills, interpersonal skills, customer orientation, reputation

and relationship with tax authorities In addition, perceived service is a key contributing factor to client satisfaction The results also indicate that the impacts of reputation and

relationship with tax authorities on perceived service are not different in terms of firm's

international experience and nature of engaged services, respectively

In addition, the research aims to provide managerial implications Based on the

finding, discussion and recommendations in the research, professional tax firms can have

further actions to address client's need and more improve the level of customer satisfaction

CONTENTS

Acknowledgement i

Abstract ii

Chapter 1: Introduction 1

1.1 Research background 1

1.2 Research problem 2

1.3 Research objectives 3

1.4 Scope ofthe research 3

1.5 Significance ofthe research 4

1.6 Structure of the thesis 5

Chapter 2: Literature review 6

2.1 Literature review 6

2.2 Qualitative analysis 16

2.3 Hypothesis 22

Chapter 3: Methodology 26

2.1 Methodology 26

2.2 Measurement 27

Chapter 4: Data Analysis 32

3.1 Purifying data 3 2 3.2 Measurement analysis 32

3.3 Hypothesis testing 38

3.4 Moderator testing 45

Chapter 5: Discussion and Conclusion 48

4.1 Results Discussion 48

4.2 Managerial implication 52

4.3 Conclusion 53

4.4 Limitation and Further research directions 53

•

REFERENCE 55

APPENDIX 57

LIST OF TABLES AND FIGURES Tables Table 1: Summary of qualitative analysis' results 20

Table 2: Summary of indicators of the constructs used in the research model 28

Table 3: The Cronbach alpha coefficients of components 33

Table 4: Exploratory Factor Analysis 34

Table 5: Extracted Factors 37

Table 6: The Cronbach alpha coefficients of new components 38

Table 7: Summary of regression results: Factors having impacts on Perceived Service 41

Table 8: Relationship among independent variables (Technical Skills, Interpersonal Skills, Customer Orientation, Reputation, Relationship with Tax Authorities) and dependent variable (Perceived Service) 42

Table 9: Summary of regression results: Factor having impact on Client Satisfaction 44

Table 10: Relationship between independent variable (perceived service) and dependent variable (client satisfaction) 44

Table 11: Summary of Chow test results 46

Figures Figure 1: Summary of qualitative analysis' results 22

Figure 2: Proposed Conceptual Model of Client Perceived Value and Satisfaction in Business-to-Business Professional Tax Services in Vietnam 25

Figure 3: Conceptual Model of Client Perceived Value and Satisfaction in Business-to-Business Professional Tax Services in Vietnam 39

Figure 4: Regression results: Factors having impacts on Perceived Service 43

Figure 5: Summary ofthesis results 47

Chapter 1: Introduction

1.1 Research background

In the intensively competetive landscape of the world's economy in general and Vietnamese' in specific, almost all industries have faced many challenges and difficulties

The professional tax consultant service industry is not an exception In order to gain

competitive advantage, service firms today are required to deliver superior client value (Flint,

Woodruff and Gardial, 2002) Value has been linked to loyalty, increased profits, long term survival and competitive advantage (Khalifa 2004; Woofruff 1997; Hamel and Prahalad

1994; Day and Wensley 1988) However, the definition of value is often vague and the interpretation might be very different between the client and the service provider due to

different perspectives This might be the reason why many scholars state that 'how" clients

interpret value is more important than 'how' service providers believe what value is supposed

to be (Blois, 2004) This concept is further complicated when studying professional services, which are more complex and intangible than regular services, meaning clients often have difficulty in confidently evaluating performance outcome (La, Patterson and Style, 2009)

Understanding clients' view of value which links to the comprehension of clients' perceived

performance is a one of critical success factors for almost of the firm especially professional firms La, Patterson and Style (2009) find significant strong positive relationship from

performance that completely mediates the relationship to satisfaction through value to

satisfaction in professional business-to-business services

Professional tax services are professional services provided by professional tax firms

whose staff- tax consultants- are experts in tax law Together with the growth of economy and the complex of many types of business and transactions, tax law become more complicated than ever, especially in emerging countries where there are frequent changes in

tax regulations and practices Professional tax services advise or consult clients based on

interpretation of the most updated tax law and experience on current practices which many

clients do not have inside their organizations Therefore, except the company with extremely simple financial affairs, the others are about to seek to appoint a firm to provide tax services

1.2 Research problem

In line with the difficult economic environment as well as the growth in both quality

and quantity of many professional tax service firms in Vietnam, clients have more choices to

satisfy their needs The competition in this industry becomes fiercer Thus, almost these firms more focus on how client perceives the firm's service performance and value which is proved

having connections to client satisfaction that in turn should be the ultimate goal of all firms (Morgan et al, 2005)

In recent years, substantial research has examined the client perceived performance,

client perceived value (and its determinants) in business-to-business professional services Research has also found empirical support for the relationship between client perceived

performance and client satisfaction through value (La, Patterson and Style, 2009) In addition, previous research show the evidence indicating that client satisfaction in turn connects to

repurchase, loyalty, and willingness to maintain a long-term relationship with the service

provider (Iacobucci et al., 1994; Athanassopoulos et al., 2001 ) Consequently, many researchers desire to examine the determinants of client perceived performance and to

confirm the relationship between client perceived performance and client satisfaction through

value in various professional services in particularly However, most of the research has

focused on examine antecedents of value and what value means as well as what impacts on

client satisfaction in business-to-consumer professional services using Parasurama (1985 and 1988) and Gronroos (1984)measurement model and its dimensions Little research has been devoted to examine client perceived value and client satisfaction in business-to-business

professional services sector Currently, researchers have made some recent attempts to

investigate and develop alternative B2B specific scales in some specific industries such as

engineering consultant, software, etc The most significant contribution to this era has been the conceptual model for client-perceived value and satisfaction in an international

perspective in developing economies developed by La et al (2009)

1.3 Research objectives

Given the unique characteristics of the professional tax services which are provided

on a basis of tax regulations and current practices, a study focus on examining client perceived value and client satisfaction in professional tax services sector applying La et al.' s

(2009) conceptual model would be useful for both practitioners and researchers Since the

level of development of tax regulations and practices are different among countries, this study

specifically focus on business-to-business professional tax services in Vietnam

Further to the above discussion, this study aims to obtain following objectives:

1) To examine the antecedents of client perceived performance;

2) To test the effect of client perceived performance to client perceived value in

professional tax services in Vietnam;

3) To test the effect of client perceived value to client satisfaction with

professional tax services in Vietnam; and

4) To explore factors/ situations (moderators) leading to the different influence of

these factors to client perceived service in the context of Vietnam

1.4 Scope of the research

Initially, the qualitative analysis will be conducted to confirm whether the factors having significant effect to client perceived performance and client perceived value as well as the factors/ situations leading to the different influence of these factors to client perceived

performance and value in La et al.'s (2009) conceptual model are applicable in professional

tax services in the context of Vietnam Through this process, the analysis is expected to

•

identify factors that reflect the unique characteristics of the professional tax service in

Vietnam

Then, data for quantitative analysis are collected to confirm the identified factors and

their moderators The sampling frame for this study was clients of tax consultant firms in Ho

Chi Minh City where most of the largest tax consultant firms place their offices Their clients can spread from Da Nang to Ca Mau and are engaged in various industries

1.5 Significance ofthe research

This thesis attempts to confirm the applicability of La et al.' s (2009) conceptual

model are applicable in professional tax services in the context of Vietnam It is expected that this model will be further modified to reflect the reality of the professional tax services in Vietnam through qualitative analysis to confirm/ disconfirm the applicability of the factors/

relationship and/or introduce of new factors/ relationship relative to client perceived

performance, value and satisfaction Then quantitative analysis is conducted to provide empirical evidence to strengthen the results of qualitative analysis It endeavors to expand the concept of value and satisfaction in business-to-business professional tax services in the context of Vietnam This is the first research representative is in the context of Vietnam that

is a theoretical contribution to the research on value and client satisfaction from an Asian behavior perspective

In addition, the research aims to provide managerial implications This finding is

expected to help professional tax firms understand deeply about the factors having significant

effect to client perceived performance and value in a client's perspective such as technical skills, interpersonal skills, customer orientation, relationship with tax authority, and

reputation Based on this understanding and finding, professional tax firms can have further actions to address client's need and more improve the level of customer satisfaction In

addition, exploring the factor leads to different influence of factors having significant effect

to client perceived performance and value is extremely important for the firms in this sector

to identify their relative competition in comparison with others Further to that, the firms can set up strategy in order to be more competent and successful

1.6 Structure of the thesis

This thesis comprises 5 chapters Chapter 1 is the introduction which gives an

overview of research background, problems, objectives, scope and significant ofthe research

The next section is Chapter 2 which provides a review of the literature on client perceived

performance and its factors; client perceived value and satisfaction in service, qualitative study and hypotheses Then the thesis continues with Chapter 3 - the discussion about

methodology followed by empirical investigation and its results in Chapter 4 The thesis ends

with Chapter 5 - discussion about the results, managerial implication and limitation

Chapter 2: Literature review

2.1 Literature review

2.1.1 Client perceived performance and its antecedents

Client perceived performance

According to Oliver (2006), Performance itself is the perceived amount of product or

service outcomes received, usually reported on an objective scale bounded by good and bad

levels of performance (e.g courteous/ discourteous service) While quality is a judgment of

performance excellence, these two concepts (i.e performance and quality) are frequently

confused with each other (Oliver, 2006)

Researchers argue that service quality is unlike product quality due to its

characteristics i.e inherent intangibility, inseparability of service provision and consumption,

heterogeneity and perishability (Zeithaml, Parasuraman, and Berry, 1990) This nature combined with the complex technical nature of professional service (engineering, consulting,

project management, etc.) make the service quality more difficult to be evaluated (La, Patterson and Style, 2009)

Many researches focus on examine the measurement of service quality and its

dimensions However, attitude toward the number of service quality dimensions are not

identical There is a consensus in the opinion that service quality should have three basic elements (Pollack, 2008, p.539): the quality of results, the quality of interaction and the

quality of service environment The quality results is the real result that client received

Through this real result, clients can assess actual benefits that are expected Clients often

measure this result in a fairly objective way The quality of interactions refers to the

assessment of the overall interaction among client and service team members like the way of converting input into output Clients perceive this element through their own subjective

judgments The third element is the quality of service environment that refers to service

a

firms' facilities and again, it is subject to clients' review Corresponding to this understanding, Ghobadian, et al., (1994, p 50-51) introduce the dimensions of service quality including technical quality of the service (encountering actual result) and functional

quality of interaction between service provider and client; and company's image as a result of the abovementioned dimensions as well as cost of service, communication activities,

company allocation, internet site accessibility, skill and behavior of team members This

understanding focuses on evaluate service quality through analyzing elements of service

quality and its corresponding dimensions which are measured by clients through their

perceived performance of service providers In short, this understanding assesses service quality through the client perceived performance of service providers in terms of real results,

interaction and service environment

The European school of thought led by the work of Gronroos ( 1984) put forward that

clients perceive service quality from two viewpoints: the technical quality and the functional

quality of the service Technical quality has to deal with the 'what' element to answer the question whether the service meets clients' expectation while functional quality involves the

manner in which the service is delivered Both technical quality and functional quality have

to do with client perceived performance of the service Thus, it can be said that client perceived performance is the initial point to adjust the quality of service and perceive service value

With the same opinion, Lovelock (1999 and 1995) named two components of each

service package 'core services' and 'supplementary services' Ferguson, Paulin, Pigeassou and Gauduchon (1999) refer core services as representation of the firm's basic competency in

creating value with and for clients (p.59) On the other hand, supplementary services are

combination of other service elements such as supporting and facilitating services

In the present of business-to-business professional services especially current practice

of tax professional firms, the core service refer to the capability of utilizing technical or

•

intellectual know-how/ expertise to provide solutions to a client's issue The core service in

• this context is equivalent to technical quality/ performance in Gronroos' school of thought

(1988 and 1984) Accordingly, supplementary services refer to Gronroos' (1988 and 1984) functional quality/ performance i.e the 'how' (services are delivered) components

Moreover, professional services are purchased in order to get competence and

resources they do not have inside the organization (Czemiawska and Smith, 20 I 0) It means that many clients do not have technical knowledge/ 'know-how' to confidently evaluate the

quality of the service they purchase As a result, clients often evaluate professional service

quality and value through the performance of service firms that they perceived (La, Patterson

• and Style, 2009) Conceptual Model of Client perceived Value and Satisfaction of La,

• Patterson and Style (2009) suggest that there are two main components contributing to client

perceived performance i.e people-related factors (including interpersonal skills, technical

skills and customer orientation) and firm-related factors (comprising innovation and

reputation) The relationship between a service provider's behavior (in terms of interpersonal

skills, technical skills and customer orientation) as well as the firm's innovativeness and

reputation and perceived performance have been tested in various studies in both consumer and professional settings (e.g., Day and Barksdale Jr., 1992; Paulin, Ferguson and Payand,

2000; LeBlanc and Nguyen, 1996)

Technical skills

Technical skills is a one of factors that client seek to when evaluating a firm's

performance (Ellis and Watterson 2001; Burke 1996) This factor refer to personnel's knowledge and expertise, understanding of clients' business model and needs, and

competitor's service (Rentz, Shepherd, Tashchian, Dabholkar and Ladd 2002) as well as

industry background (Coviello, Ghauri and Martin, 1998) Further to the nature of tax

professional services which are provided on the basis of the most updated tax regulations and current practices, technical skills is considered the most important factor having significant

effect to to client perceived performance Technical skills can be assessed via real results of the services, in this case it is equivalent to technical quality in Gronroos' (1988 and 1984)

school of thought and Lovelock's (1999 and 1995) core services

Interpersonal skills

Due to the intangibility and inseparability of service provision and consumption, every service engagement requires high level of interaction between service firm and client's

personnel (Laing, Lewis, Foxall and Hogg, 2002), interpersonal skills is also one of key

criteria using to evaluate performance of a professional service firm Interpersonal skills

factor is understand that the ability of service team member express him/herself verbally and non-verbally, and to build relationship with clients (Rentz et al., 2002) In the context of

professional tax service, interpersonal skills play a vital role in improvement of level of client perceived performance

Customer orientation

Recent empirical investigations indicate that customer orientation is an antecedent of service performance which eventually contributes to clients' overall service quality/

performance evaluation (Brown, Mowen, Donovan and Licata, 2002; Brady and Cronin,

200 I; Harline, Maxham and McKee, 2000) Customer orientation emphasizes the ability of a

firm to attain customer information, analyze it to set priorities for improvement, and use these priorities to drive service and process change (Johnson, 1998; Johnson and Gustafsson, 2000) By gaining a better understanding of customer needs and the use of this knowledge to

design better services (Nilsson, Johnson and Gustafsson, 2001), a customer should have a direct impact on client perceived value

Innovation

That innovation leads to superior performance (Agarwal, Erramilli and Dez 2003; Han, Kim and Srivastava 1998; Zahra, de Belardino and Boxx, 1998) is supported by a considerable amount of marketing and management literature It plays both direct and indirect role in contributing to the firm's performance as well as assisting the firm to gain

competitive advantage (Agarwal, Erramilli and Dez 2003; Vakola 2000; Bharadwaj,

Varadarajan and Fahy, 1993) In a professional tax services perspective, the role of

innovation in firm's performance is not clear due to the nature of tax service i.e based on the tax regulation Therefore, the contribution of innovation in performance of professional tax firm need to be further tested

Reputation

The firm's general reputation as well as its reputation in a specific functional area are

top of choice criteria in business-to-business professional services (Dawes, Dowling and Patterson, 1992) The concept of firm's reputation is defined as a set of economic and non-

economic factors credited by a firm based on its past actions (Weigelt and Camerer, 1998) Professional tax services are mix of business and legal consultant services Based on that

nature, together with uncertainty during the selection process, clients rely on a firm's reputation through word-of-mouth or track record (Lin and Wei, 1999) In other words,

reputation helps the firm approach client more easily In the circumstances in which clients lack of expertise in evaluating technical quality of professional services (most of the case),

the firm's reputation can help enhance the level of reliability of client in services they

purchase and therefore have positive influence on client perceived value

In the context of Vietnam, professional tax services are growing in both quality and quantity In addition, outsourcing is the practice which has been recently applied in many Vietnam companies especially in tax services Therefore, many clients do not possess their

own process to evaluate quality of professional tax services Consequently, clients tend to evaluate a firm's performance through resource-based view of the firm In line of the above,

La, Patterson and Style's (2009) Conceptual Model of Client perceived Value and Satisfaction is considered as the most appropriate start-point model to examine client

perceived value and client satisfaction in tax professional services in Vietnam However, due

to the difference in the context and the specific characteristics of professional tax service, this

model will be further examined and modified to ensure the appropriate applicability

2.1.2 Moderating factors on client perceived performance and its antecedents

Country of origin

The mentioned Conceptual Model, La, Patterson and Style (2009) additionally argue

that the link between a firm's resource and perceived performance is contingent upon the Country of origin ("COO") effect Many studies confirm that COO has influenced the

relationship between consumer ethnocentrism and heuristic evaluation of products in the consumer marketing context Recent reviews and evidence shown by Peterson and Jolibert

(1995) and Verlegh and Steenkamp (1999) and La, Patterson and Style (1997) indicate that

COO plays an important role in pre-purchase attitude formation, customer perception of performance and quality; and purchase intention

There is also evident state that favorable country perceptions lead to favorable inferences about product attributes and subsequent favorable evaluation (Gurhan-Canli and

Maheswam, 2000) In line with previous literature, La, Patterson and Style (2009) believe

that the COO effect moderates clients' judgment on a firm's overall perceived performance

To illustrate, La, Patterson and Style (2009) give a example i.e when client perceived

COO is unfavorable (negative), then the client will be surprised (i.e expectation exceeded) when the service provider demonstrates high technical skills (for instant) and concomitant

high overall performance in the core service Under the opposite condition, i.e favorable

(positive) client perceived COO; it is argued that the client already shapes the expectation at a high level of demonstrated technical skills Therefore, technical skills and overall performance will not strongly influence each other, especially when overall performance is

below what is expected In short, under converse conditions i.e unfavorable (negative) COO,

clients' perceptions of service provider's technical skills will have a stronger impact on overall performance than the other conditions Similar arguments are applied for other factors

i.e interpersonal skills, customer orientation, innovation and reputation

Firm's international experience

Another moderator examined in La, Patterson and Style's (2009) Conceptual Model is firm's international experience which moderates for the relationship between the firm's

reputation and perceived performance with the argument that from the client's viewpoint,

international experience may increase the perception of reliability, capability and credibility

La, Patterson and Style (2009) authors stated that a firm's overall performance perceived by its international clients is likely to be different compared to its domestic clients For instance,

a domestic client may perceived the performance of a domestic professional service firm through its staff's technical skills as well as his/ her excellent interpretation skills given they

(client and service provider staff) are sharing the same beliefs, culture and language In

contrast, with the same criteria like that, it is not enough for a foreign professional service

firm to win the engagement in a foreign country unless it can offer a differentiated service

(performance) and some "bonus" value This value-added differentiation, for example, might

be the firm's international reputation or the service personnel's demonstrated ability to interact with clients from diverse cultures along with his experiences in dealing with a broad

base of foreign clients Kotabe, Murray and Javalgi (1998) considered this as one of the

supplementary services that international clients seek and a source of competitive advantage

In other words, the presence of the firm's international experience will strengthen a cliet's

perception of the firm's reputation in relation to its performance Hence, it can be said that international related factor such as firm's international experience (e.g., the number of foreign clients that it has dealt with, the amount of resources that it has allocated in overseas

markets) to some extent will play a primary part in international clients' eyes in assessing the

value and/ or firm's performance

2.1.3 Client perceived value

Oliver (2006) defines value as a judgment that compares the likely outcomes of

purchasing to the input forgone As a result, value is a result of comparison between what to

be received (e.g performance) to the acquisition costs (e.g financial, psychological, effort) This definition is other words of Heskett et al.'s (1994) that client perceived value results

when clients compare weighted "get" factor to "give" factor

Client perceived value is a notion that has lately been receiving attention from industrial marketing researchers (Razavi, Safari, Shafie and Khoram, 2012; Boksberger and

Melsen, 2011; Eggert and Ulaga, 2006; Fiol and Alcaniz, 2009; Sanchez et al, 2006; Teas and

Agarwal, 2000) Roig et al, (2009) define it as a construct formed by two parts, one of

benefits received (economic, social and relational) and the other of sacrifices made (price, time, effort, risk and convenience) by the client Razavi, Safari, Shafie and Khoram (2012)

note that general definition of value is client's perception of the subjective worth of some

activity or subject considering all net benefits and costs of consumption

Trasorras, Weinstein and Abratt (2009, p 617) noted that "[ ] customer value is

created when the perceptions of benefits received from the transaction exceed the costs of ownership" He also cites three sources of competitive advantage i.e operational excellence,

product leadership and customer intimacy regarding this matter One of these strategic approaches can be a company's main source of value creation

Client perceived value is also what customers want from the service (Razavi, Safari, Shafie and Khoram, 2012) In many case, quality of services and benefit it offers often become client perceived value drivers (Bolton and Drew, 1991; Zeithaml, 1988) Based on economic value and consumer behavior theories, Jayanti and Ghosh (1996) formulated

perceived value as a direct consequence of perceived quality Many studies support this

association (e.g Andreassen and Lindestad, 1998, Chang and Wang, 2011; Edward and

Sahadev, 2011) where found a positive relationship between perceived performance and value

Lapierre (1997) and Day (2002) suggest taking into account some contextual or

situation factors when studying the dynamics of value assessment Patterson's (2000)

examines the client's product-norm experience as a moderating factor in the satisfaction

paradigm His empirical findings demonstrate that the association of the professional service

provider's performance and client satisfaction is dependent on whether clients are highly experienced with consulting services Similarly, Andreassen and Lindestad ( 1998) argued that customer with low degree of service expertise are less capable in evaluating the quality

attributes of complex services confidently In other words, the strength of linkage between

perceived performance and perceived value is contingent upon the degree of experience

possessed by the client (La, Patterson and Style, 2009)

In the context of professional services ( consultancy, engineering projects, legal advice, etc.) which are highly customized, technically complex and intrinsically difficult for

clients (especially inexperienced ones) to evaluate the outcomes, La, Patterson and Style

(2009) argue that when a client has little or no experience, any performance attributes will

directly contribute to perceived value For that, he raises two reasons: one is that clients do not have competent expertise in evaluating both perceived performance and value; another is

due to the shortage of purchasing and consuming experience that assist them in comparing and contrasting between projects

2.1.4 Client satisfaction

Satisfaction is defined by Oliver (1997, p.l3) as "the consumer's fulfillment

response", a post consumption judgment by the customer that a service provides a pleasing level of consumption-related fulfillment, including under- or over-fulfillment Boshoff and

Gray (2004) point out that satisfaction is not inherent in the product or service itself; rather,

satisfaction primary depends on the client's perceptions of the attributes of the product or

service Therefore, different customers will express varying levels of satisfaction for the same

experience or service encounter (Ueltschy et al, 2007)

Satisfaction is a positive or negative feeling that results when comparing expectations and performances related to a buying or to a consumption experience (Kotler and Keller,

2012; Lendrevie, Levy and Lindon, 2009) In service market, client satisfaction is often measured as the difference between service expectations and the experiences Oliver (1980)

looked at satisfaction via disconfirmation of expectations According to him, client satisfaction can be a function of the expectation (adaptation) level and perceptions of

disconfirmation Both expectations and perceptions also have been found to influence

customer satisfaction and subjective disconfirmation under various circumstances (Churchill and Surprenant, 1982)

Satisfaction is perceived as "a key determinant of organization success" with a

positive influence over repeated sales and/or repurchases intensions and increase customer loyalty (Lewin, 2009) Similarly, Fomel et al (1996) consider that overall satisfaction is a

fundamental indicator of the firm's past, current, and future performance However, they found that service firms have significant lower client satisfaction scores than manufacturing

firms Their study also revealed that satisfaction is more quality-driven than price-driven in

service market Further to that, they state that the main two determinants of client satisfaction

are perceived quality and perceived value

Client perceived value is generally linked to the perceived performance and

satisfaction paradigm (e.g., Paulin, Ferguson and Payaud, 2000) Woodruff (1997) reports

that perceived value reflects the client's cognitive perception of the relative exchange with

their providers and satisfaction mirrors the general feeling derived from the value perceived

by the client Roig et al (2009) confirm that perceived value has an indirect effect on loyalty

via satisfaction There also exists empirical evidence demonstrating the positive relationship

between perceived value and satisfaction (La, Patterson and Style, 2009; Anderson and Mittal, 2000; Chang and Wang, 2011; Edward and Sahadev, 2011; Cronin et al., 2000; Roig

et al., 2009, Yang and Peterson, 2004)

2.2 Qualitative analysis

As mentioned above, unlike other professional services, professional tax services are

provided on the basis of current tax regulations and practices In addition, in the context of

Vietnamese economy, professional tax services are not newly introduced services but due to

high cost and not complex financial transactions of many Vietnam companies, these services have not been widely used Most clients of this sector are large corporations or foreign own

companies whose transactions are complicated, involved overseas parties and they pay much

attention on how to have effective tax system In line of the above, to understand deeply Vietnamese professional tax market as well as confirm/ modify the factors having significant

effect to client perceived performance and satisfaction in this industry, a qualitative study by means of in-depth interview (face-to-face - 60% and through telephone - 40%) was

conducted The interviews were undertaken with three (3) senior managers of professional tax firms (two of Ernst & Young Co., Ltd and one ofNexia ACPA Auditing & Consulting

Co Ltd) and two chief accountants as representative of clients Each interview took place in

around half an hour The information collected in such interviews was then interpreted using sentence method - analyzing phrases in the answers to get the main points addressing the questioned matters, draw conclusion and confirm with the interviewees

The results of the interviews confirmed four elements of technical skills,

interpersonal skills, customer orientation and reputation as factors having significant effect to

client perceived performance The association between the firm's innovation and perceived

performance was not confirm Again, this is due to the nature of professional tax services are based on tax regulations and practices whose changes are out of control of professional tax

firms In addition, the innovation if exists would be the improvement in service process or

solutions suggested to clients in a planning service engagement However, in context of

Vietnam where the economic transactions are in the development stage, strategies for effective operation or effective tax system or solutions for issues are often followed the ones applied by developed countries previously Therefore, innovation is not considered as a factor

having significant effect to client perceived performance This is empirically proved by

research of La, Patterson and Style (2009) Their explanation is that clients are lacking

technical judgment of a professional service Even if it is not the case, clients still cannot comprehend how innovation contribution to firm's performance Interview's results also

confirmed the moderator role of the firm's international experience in the relationship of reputation and perceived performance

In addition to that, the results of the in-depth interview introduced two factors having

significant effect to client perceived performance i.e service fee and relationship with tax

authorities The concept of service fee introduced here is not the same as what clients "give"

concept Service fee concept is understood as a benchmark through that client can estimate the service quality among other competitors of the firm and can form their expectation of

what they would receive or their perceived performance This is support by the thought that

higher service fee often represents higher service quality and thus what client would perceive from the firm's performance would be higher This term was used and tested in consumer services as reference price Expected service quality plays a key role in reference price

formation due to the price to quality relationship demonstrated by many authors (Ziethaml,

1988) Due to the intangible nature of services, consumers use price as a cue that signals

service quality or perceived performance This is especially important in the case of 'pure'

services where there are few physical signals for consumers to evaluate potential service quality (Dickinson, J.B and Dickinson, C D., 2012)

Another added factor having significant effect to is relationship with tax authorities

Although professional tax services are based on both tax regulations and practices, given tax

regulations in Vietnam do not develop together with the rapid growth of the economic

transactions in quantity and complexness, most ofthe complicated cases, the current practices

are applied In the lack of tax regulations in some special cases, sometime tax authorities

have their own interpretation of regulations and based on that, they examine the issue of a

specific company In addition, majority of clients of professional tax services are companies

having difficult tax issue that there is no clear guidance in regulation In that case, a good

relationship with tax authorities will contribute outstanding value to the service firm This relationship helps the firm easily interact with the tax authorities or tax officers who are in

charge of its client and via that the firm can obtain the treatments/ practice of those people/

authorities Acknowledge this relationship, clients tend to appreciate the work of professional

tax firm and thus they perceive performance of the firm at a higher level

However, the association between relationship with the tax authority and perceived

performance depends on the nature of engaged services Professional tax services in nature

can be divided into two types: compliance services and advisory services Compliance

services are services provided in order to assist clients in complying with tax regulations

(required by regulations) For example, company is required to file the corporate income tax

declaration annually within 90 days from the end of tax year Advisory services are services

provided for management purposes in order to plan for the company's future operations For

example, board of management plan to open a new business line During this stage, how to comply with tax regulations is also a matter need to consider In line with that, the company

seeks to appoint a professional firm to assist in providing advice on what regulations to

comply with and what they can do to save tax, improve operation and according risks

Assisting the client in audit defense e.g explain to the tax authorities or draft official letter to

answer the tax authorities' challenges is another example of professional tax advisory service

According to that, compliance services do not require much interaction with tax authorities

In contrast, clients more focus on relationship of the firm with relevant tax authorities when

they have tax issue and need advices from tax experts Therefore, practical experiences of interviewees indicate that the association between relationship with tax authorities and

perceived performance is stronger in advisory services than in compliance services

Regarding effects of COO as a moderator in the relationship of technical skills,

interpersonal skills, customer orientation, innovation and reputation and perceived

performance, these effects are not confirmed in the context of Vietnam professional tax services Together with the localization strategies of many professional tax firms, number of

foreign tax consultants in Vietnam reduces significantly in recent years This does not impact

much on the service quality as well as performance of professional tax firms in Vietnam

Given the foreign tax consultants have advanced knowledge in the field of tax and legal, they

may not understand deeply the tax practices in Vietnam In addition, language is the largest barrier for foreign tax consultants in interaction with tax authorities Although they have a

support team to help them in this matter, clients do not feel comfortable to work with them when they are challenged by tax authorities and need assistance in response/ defense to tax

authorities One more reason is that Vietnamese chief accountants as representative of client

prefer to work/ interact with Vietnamese tax consultant

Literature review indicates that the association of the professional service provider's

performance and client satisfaction is dependent on the level of client buying experience In

other words, in the different level of client buying experience of professional services, the perceived performance will correspondingly influence at a different level on perceived value

However, this statement is not confirmed through the qualitative analysis The reason is that people in charge of tax/ finance/ accounting department of a company are always people

having more or less experience in this field as a competence criterion when appointing them

as a head of these departments In addition, there may be the first time a firm provide tax

services to a company but not is the first time the chief accountant or any relevant people as

representative of clients interact with service firm Therefore, at least, there is a basis based

on that client can assess the performance and value of the service they receive Consequently,

in the practice of professional tax services in Vietnam, client buying experience is not a moderator in examining the relationship between perceived performance and client perceived

value

Table 1: Summary of qualitative analysis' results

In La et al 's

Results of (2009)

conceptual

analysis model

Factors having significant effect to client perceived performance

3 Customer orientation Included Confirmed

Moderators in the relationship

Firm's international experience as a moderator

performance

Nature of professional tax services as a

moderator in the association between

relationship with tax authorities and perceived

performance

Effects of COO as a moderator in the

relationship of client perceived performance

Client buying experience as a moderator in the

and client perceived value

The results of quahtattve analysts are Illustrated m the below figure:

Figure 1: Summary of qualitative analysis' results

Aiming to the purpose of provision of managerial implication on the practice of professional tax services in Vietnam, this study will focus on examine the client perceived

value and satisfaction in business-to-business professional tax services in Vietnam based on

the theory reviewed through the literature review and confirmed by qualitative analysis

As mentioned in the literature review, in the lack of technical knowledge/ 'know

how' to confidently evaluate the quality of purchased services, clients often assess service quality and value through the performance of service firm that they perceived (La, Patterson

and Style, 2009) Also according to this research and various studies in both consumer and professional settings (e.g., Day and Barksdale Jr., 1992; Paulin, Ferguson and Payand, 2000;

•

LeBlanc and Nguyen, 1996), service provider's behavior (in terms of interpersonal skills,

technical skills and customer orientation) as well as the firm's innovativeness and reputation have been tested having impacts on client perceived performance However, the conducted qualitative analysis only confirmed the impacts of interpersonal skills, technical skills,

customer orientation and reputation on client perceived performance but innovation

Therefore, in the context of business-to-business professional tax services, it is hypothesized:

• H 1: Technical skills have significant effect to client perceived performance;

• H2: Interpersonal skills have significant effect to client perceived performance;

• H3: Customer orientation has significant effect to client perceived performance;

• H4: Reputation has significant effect to client perceived performance;

In addition, the results ofthe qualitative analysis introduced two factors having significant effect to client perceived value i.e service fee and relationship with tax authority

Service fee mentioned here was considered as a signal of service quality in consumer

services For the purpose of this thesis, this term is further test to check whether it can be applied in professional services, especially professional tax services in the context of

Vietnam Regarding the relationship with tax authority, given this factor reflects the unique

nature of professional tax services in Vietnam as stated by the industrial experts as mentioned

in the qualitative analysis, this thesis attempt to empirically prove for this statement Thus, it

is hypothesized:

• H5: Service fee has significant effect to client perceived performance;

• H6: Relationship with tax authority has significant effect to client perceived

perceived quality (J ayanti and Ghosh, 1996) Many studies support this association (e.g

Andreassen and Lindestad, 1998, Chang and Wang, 2011; Edward and Sahadev, 2011) where found a positive relationship between perceived performance and value Further, McDougall

and Levesque's (2000) empirical study of four different types of services has indicated that

perceived value is a critical contributing factor to client satisfaction which also exceeded the contribution of service quality in explaining satisfaction Therefore, the following hypotheses

are proposed:

• H7: A firm's perceived performance has significant effect to client perceived value

• H8: Client perceived service have significant effect to client satisfaction

As described above, in terms of nature, professional tax services comprise two types

of services i.e compliance services and advisory services Compliance services assist clients

in compliance with tax regulations while advisory services are provided to address clients'

tax issues in a tax audit or build effective tax plans for future operations As a consequence, based on practical experience, experts in this field (i.e interviewees) state that the association

between relationship with tax authorities and perceived performance is stronger in advisory

services than compliance services Therefore, it is hypothesized that:

• H9: The relationship between relationship with tax authority and perceived

performance will be stronger in advisory services than in compliance services (nature

of engaged services);

La, Patterson and Style (2009) argue that from the client's viewpoint, international

experience may increase the perception of reliability, capability and credibility which in turn

are criteria based on which clients assess the reputation of a service firm Thus, firm's

international experience is considered as a moderator in relationship between firm's reputation and client perceived performance and hypothesized as follows:

• HlO: The relationship between reputation and perceived performance will be stronger under high (rather than low) level of firm's international experience

Figure 2: Proposed Conceptual Model of Client Perceived Value and Satisfaction

in Business-to-Business Professional Tax Services in Vietnam

Technical skills

Interpersonal

skills Customer

perceived value

satisfaction

Chapter 3: Methodology

2.1 Methodology

The sampling frame for this study was clients of tax consultant firms in Ho Chi Minh

City where most of the largest tax consultant firms place their offices Their clients can spread from Da Nang to Ca Mau and are engaged in various industries

The adopted questionnaire from previous research (will be discussed in detail in the measurement section) was developed and pre-tested (in an interview approach) with various

academic and industrial experts to detecting ambiguous questions, check for face and content

validity of the measurement scales, and certify the wording of the items The small sample

for pre-test is similar to that carried out by File, Cermak and Prince's (1994) study with the

purposes of detecting ambiguous questions, checking for face and content validity of the

measurement scales, and certifying the wording of the items After this step, 5 point scale was

more preferable and comfortable for the participants given 7 point scale made them a little bit

confused when answering the questions Therefore, the questionnaire was adopted using 5

point scale for all constructs

The final questionnaire was then formatted in the online-survey form and sent to clients of professional tax firms in Ho Chi Minh City Face to face interview was also

conducted whenever possible to fulfill the survey questionnaire There were 227

questionnaires sent out and 132 were obtained in which 120 questionnaire were considered as

usable The others were eliminated due to several reasons such as lots of unanswered

questions, insufficient information, etc

The sample size of 120 is considered appropriate pursuant to Stevens ( 1996) who

recommend that for social science research, about 15 subjects per predictor are needed for a

reliable equation The research model of this thesis totally has 8 predictors Thus, 120

observations are acceptable

•

Tabachnick and Fidell (2007) also give a formula for calculating sample size that a researcher wishes to use: N >50+ 8m (where m is the number of independent variables) According to that, the sample size needed in the case of this research thesis with 8

independent variables have to bigger than 114 observations Hence, again 120 observations

are sufficient for a reliable equation

2.2 Measurement

All constructs were measured by multiple-items scales All of the scales were in tum

adopted from study about "Client Perceived Value in Professional B2B Services - An International Perspective in Developing Economies" (La, Patterson and Style, 2009) most of

which were adopted from studies in international marketing and services literature and their

modification for their study context (Professional B2B Services) For instance, interpersonal skills and technical skills were both adopted from Rentz et a! (2002) while customer

orientation was drawn from Saxe and Weitz (1982) Likewise, reputation was adapted from

Caruana's (1997) modification to fit the current context Indicators measuring client

perceived performance were drawn from Petterson, Johnson and Spreng's (1997) study

As mentioned above, variables of service fee and relationship with tax authorities and moderator of nature of engagement were introduced in the qualitative analysis through in-

depth interview with industrial experts and clients of professional tax firms Also on this

interview, participants believed that these variables could be measured through certain

indicators Given the unique characteristics of the professional tax services in Vietnam and

the lack of theories covering these variables in the same context, suggested indicators in the in-depth interview were adopted

Regarding value concept, it has been studied in consumer services However, it is

challenging to measure perceived value in a B2B service setting (La, Patterson and Style,

2009) Thus, multiple items measuring client perceived value were taken from various studies

'

such as Eggert and Ulaga (2002), Sweeney, Soutar and Johnson (1999) and Patterson and Spreng (1997) According to La, Patterson and Style (2009), client satisfaction has not been developed in validated measurement scale in the professional B2B service setting, and thus

their study used five items drawing from previous research (McDougal and Levesque, 2000;

Caruana, Money and Bethon, 2000) to measure this construct This study adopted the same

from research of La, Patterson and Style (2009) mentioned above

Measuring items of firm's international experience were adopted from La, Patterson

and Style's (2009) study which in tum were taken from the initial measures of Cavusgil and

Zou's (1994) of'intemational competence' and amended wordings accordingly

The items and scales applying to measure all the constructs used in this thesis are

summarized in the below table More details about the original scales are disclosed in Appendix 1

Table 2: Summary of indicators of the constructs used in the research model

• Ability to express him/herself non-verbally

• General speaking! communication skills Interpersonal • Awareness and understand of the non-verbal communication of

Technical skills

Customer

• Ability to control and regulate non-verbal display of emotion

(Scale: 1 = Very Poor; 5 = Very Excellent)

(Below are additional items suggested by the expert panel and drawn from

other studies)

• Knowledge of our operation

• Knowledge of our needs/ issues

• Competence of the service provider team

(Scale: 1 = Very Poor; 5 = Very Excellent)

• Tried to help us achieve our goals

• Offered the service that is best suited to our problem

(Below are additional items suggested by the expert panel and drawn from

other studies)

• Was willing to disagree with us in order to help us make a better decision

• Pro-active in contact us to discuss about our issues/ problems

(Scale: 1 = Strongly disagree; 5 = Strongly agree) (Below are additional items suggested by the expert panel and drawn from

other studies)

• Reliable service

• Expertise in this specific area

• Competitive competence of service provider team

(Scale: 1 = Not well regarded; 5 = Well regarded) (Below are additional items suggested by the expert panel)

• Competitive service fee

• The service fee was used as a benchmark for the service quality

(Scale: 1 = Strongly disagree; 5 = Strongly agree)

• Good relationship with tax authorities

• Abilities to discuss/ negotiate with relevant tax authorities regarding our issues

• With information/ advice from the service provider team, we are not surprised at the practice of relevant tax authorities

(Scale: 1 = Strongly disagree; 5 = Strongly agree) (Below are additional items suggested the expert panel

other studies)

• Kept your Company regularly informed of progress

• Made sure the service provider team understood your Company's aims and goals

• The tax consultant team made sure thoroughly understood the

i'

problem before commencing

• Responded promptly when your Company contact the tax

•

consultant team

• Produced reports and presentations of the highest standard

• Went "the extra mile" when necessary to ensure you were satisfied at the end of the assignment

(Scale,· 1 =Strongly disagree; 5 = Strongly agree)

• Firm X has delivered what your Company want and expected

• Considering the fee paid and what firm X delivered, overall your

value • Overall, firm X provided better value compared to other firms

offering similar service

(Scale: 1 =Strongly disagree; 5 = Strongly agree)

• Your Company is very satisfied with our decision to commission firm X

Client • If your Company had to do it all over again, your Company

• Firm X has met or exceeded your Company's expectations

(Scale: 1 =Strongly disagree; 5 = Strongly agree)

• Firm X's international experience in this type of project is substantial

• Firm X had allocated a sizable number of full time employees on

international • Firm X had a significant number of clients in international

other studies)

• Feel more reliable to assign a professional tax firm with good Nature of relationship with tax authorities to provide advisory service

engagement • That professional tax firm has good relationship with the tax

authorities or not does not have significant impact on decision in choosing a firm among others for the compliance service

(Scale: 1 = Strongly disagree; 5 = Strongly agree)

The above scales were then used to develop the questionnaire for further steps The

final questionnaire (English version) is disclosed in Appendix 1

Chapter 4: Data Analysis The collected data in this thesis was analyzed in the process of the four (4) phases using SPSS software as follows:

Frequency analysis shows that there is no missing value in the data set (i.e 120 valid obtained observations) This analysis also indicates that distribution of each item is

approximately normal distribution given their Skewness and Kurtosis approximately range from -1 to 1 Explore analysis finds out thirteen (13) outliers (i.e observation No 14, 16, 19,

27, 40, 48, 50, 62, 69, 72, 86, 117 and 118) in total for three (03) dependent variables in the research model (i.e Perceived Performance, Client Perceived Value and Client Satisfaction) After elimination of outliers, the data set has 107 observations left

Results of the above analysis are disclosed in detailed in Appendix 2

3.2 Measurement analysis

To purify the measures, Cronbach's Alpha and Exploratory Factor Analysis ("EPA") were employed

Evaluating scale based on Cronbach 's Alpha

Cronbach's Alpha analysis indicated good measures (Nunnally, 1978) when all

Cronbach's Alpha coefficients for each ofthe scales are above 0.7 as in Table 1 below

Table 3: The Cronbach alpha coefficients of components

Based on the above analysis, Cronbach Alpha are all above 0.7 Thus, these scales are

considered appropriate to further analysis in next steps Please refer to Appendix 2 - The 1st

Cronbach alpha coefficients of components for further details of the above Cronbach alpha

analysis

Evaluating scale by using Exploratory Factor Analysis ("EFA '')

After checking the reliability of the scale, EF A is employed That the method is

chosen to analyze the factors is the principal components method with varimax rotation

In order to test the convergence of items in measuring a variable and discriminant of

variables in the research model, EF A was conducts for all variables including all independent and independent variables

KMO and Bartlett's test's results in the factor analysis showed that the coefficient of KMO is high (equal to 0.872 > 0.5) with significance level (Sig.) of 0.000 (<0.05) All of

these indicate that EF A is appropriate

;

With eigenvalues greater than 1, there are seven (7) factors extracted and the extracted

variance was 70.220% (greater than 50%), which met requirement

Table 3 below is the extracted factors and its items as well as loading factor of each

item

Table 4: Exploratory Factor Analysis

Rotated Component Matrix"

Extraction Method: Principal Component Analysis

Rotation Method: Varimax with Kaiser Normalization.'

a Rotation converged in 7 iterations

Variables whose factor loading is less than 0.5 will be removed because the sample is

not very big (Field 2000, p 440) According to that, analysis in SPSS was conducted to omit

loading factor which is lower than 0.5 Based on the analysis of the Rotated Component

Matrix (a) (Table 4), PER25 and CLI.PER28 whose loading factors are not show meaning that they are lower than 0.5 Thus, these items are deleted from research factors given its contribution in estimation of factors is not significant