Measuring Customer's Perception of E-Commerce Services in Bahrain by Jolito Ortizo Padilla

Measuring Customer’s Perception of E-Commerce Services in Bahrain by Jolito Ortizo Padilla

 

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1.1  Introduction

 

Developing profitable and long-term relationships with customers is a major objective in the e-commerce sector (Webster, 1992; Achrol, 1997). As a result, researchers focused on understanding the pre-requisites for establishing and maintaining long-term and profitable relationships with customers. The emerging area of “relationship marketing” underpins this focus. Within this area, the level of quality in the way a firm delivers its service to industrial customers has also become a central issue.

 In recent years, substantial research has examined the level of quality (and its dimensions) in the performance of a service. Research has found empirical support for the relationship between perceived service quality and business performance (Athanassopoulos et al., 2001; Caruana et al., 1995), probably reflecting the difficulty to imitate (e.g. Hise and Gabel, 1995).

 Consequently, a validated instrument to measure the customer’s perceptions about the service being delivered is crucial, especially since there is evidence which show that the customer’s evaluation of service quality and the resulting satisfaction/dissatisfaction is connected to repurchase, loyalty, and willingness to maintain a long-term relationship with the provider (Iacobucci et al., 1994; Athanassopoulos et al., 2001).

 Responding to this need, researchers have devised and examined various instruments to measure perceived service quality. Nonetheless, in the service realm, most of the research has focused on measuring service quality in the consumer sector and particularly using the Service Quality scale as developed and subsequently modified by Parasuraman et al. (2011) or some variation.

The application of this scale to the consumer sector contrasts sharply with the relative absence of studies employing it in the b2b context (e.g. Durvasula et al., 2012). Moreover, whenever Service Quality was applied results were mixed: While Pitt et al. (2011) report that the instrument’s reliability and validity scored well in the mainframe software sector, Durvasula et al. (2012) found the opposite. In fact, this led the authors to make a call for devising an instrument that will be designed to measure perceived service quality in the b2b context.

Responding to the need for developing and validating an instrument for measuring perceived service quality in the e-commerce context, this study attempts to do so by examining the psychometric properties of service quality vis-a` -vis an alternative measure, individual service. The rest of the paper is organized as follows. First, the differences between consumer and e-commerce services are discussed and the need for tailoring a e-commerce specific measure of perceived service quality is established.

 

Then, a brief discussion of the problems associated with the use of service quality is detailed. Following this, alternative approaches that have been considered in measuring perceived e-commerce services and an integration of these approaches into the suggested measure is offered. Next, the methodology and the analysis of the data are presented. The paper concludes with the discussion of the findings and the limitations and suggestions for future research sections.

 

Conceptualizing and measuring perceived service quality in the e-commerce context

 

The differences between consumer and industrial goods are well documented in the literature and an extensive review would be unessential. Very briefly, the differences in the buying behavior, the evaluation criteria for appraising alternative suppliers, the existence of buying centers are, among others, the most eminent distinctions of industrial buyers. As a result, the marketing effort and priorities of the producers vary accordingly. When it comes to b2b services, the context is even more dissimilar because of the fundamental characteristics of services: Their intangible nature and the inseparability between production and consumption.

 

For instance, services purchased from organizations e- commerce are provided by qualified professionals whose expertise and skills are key elements of the quality of the service provided (Yorke, 1990). They interact closely with managers from the buying organization and on a very frequent basis (Hausman, 2003). In addition, e-commerce services, are far more complex and require the management of a larger number of parameters to ensure their flawless provision and outcome (Lovelock, 1996). Jackson and Cooper (1988), also stress this increased demand for specialization.

1.2  Objectives of the Study

 

1.     The primary objective of the research is to measure the perception of the customers in e-commerce services in terms of service quality which is a critical concern in e-commerce because of its impact on the organizational customers’ own service to their customers.

2.     To evaluate the dimensions of perceived service quality in order to diagnose quality drawbacks in the service they deliver.

 

1.3  Importance of the Study:

 

Perceived quality is important because it is related with satisfaction which is known to influence positively the firm’s performance. Various studies have investigated the link between perceived service quality and buyer’s satisfaction and have demonstrated that satisfaction is related with the ability of the firm’s outcome to meet an optimum level on certain – specific characteristics that are of importance for the buyer. In turn, these characteristics are frequently referred to as “satisfaction drivers” and are at the core of the notion to perceived service quality, as opposed to laboratory quality (i.e. the level of quality depicted on the service blueprint) and delivered quality (i.e. the extent to which the firm’s ability to actually match the standards described in its blueprints). Given that overall satisfaction with the provision of a service is a function of the buyer’s degree of satisfaction with various aspects of the service offered, perceived service quality has been suggested to follow the same rational

 1.4 Research Methodology

 Data collection and sample

 To collect the data a questionnaire was mailed to four companies from different industries. Respondents were identified by approaching companies from four service industries, namely consultants offering middle and senior management training and recruitment services, banks offering corporate banking, software development and maintenance houses and consumer goods Company in the Kingdom of Bahrain. We then asked them to name their five most important customers in terms of the annual income they generate for the firm. We also asked for the details of the line manager of their client with whom they usually liaise more closely. In total, 80 service providers responded positively and collaborated. This process produced a list of four companies from various industries in Bahrain. Although the sample is clearly a cross-section one, such samples are frequently used in research efforts in order to increase the researchers’ ability to generalize. In fact two recent meta-analysis studies (Geyskens et al., 1998; VanderWerf and Mahon, 1997), report that that heterogeneity and the resulting increased variation that is present in cross-section data does not impede the researcher from drawing reliable conclusions because they transcend industry-specific methodologies (Makhija, 2003) as well as attitudes and values (Lowe et al., 2002) and, thus, allow the researcher to draw conclusions that can be generalized (Greene, 1997). With regard to the respondents, the line management positions more frequently were from senior management position (e.g. marketing and/or financial director).

 

1.5 Research Problem

 There are major issues concerning the perception of this service quality measure has been raised since it was originally introduced:

1.     The linkage between satisfaction and quality to assess perceived quality.  

2.     The increased demand for specialization, which in a way is a consequence of the increased customization that is required when serving organizational buyers. As a result, selecting, evaluating and deciding on the continuation of the relationship with a e-commerce service provider. (Jackson et al., 2012).  

1.6 Research Question:

There are questions that need to be answered and explored to resolve pertaining on how e-commerce in the service company can be perceived.

1.     What are the effects that the service offered created for the customer, after it has been implemented?

2.     What dimension of perceived service quality relates to the search attributes that customers use in order to evaluate the provider’s ability to perform the service before the relation has actually begun?

3.     How to capture the communal elements of the interaction between the managers from the companies, such as understanding customer’s needs and personality match?

1.7 Research Hypotheses

The researcher hypotheses measure the customer perception of E-Commerce Services in Bahrain are as follows:

 Ho – The perceived service quality is the main determinants of performance in E- Commerce transactions.

H1 – The perceived service quality is not the determinant of performance in E-Commerce transactions..

 

 

 

1.8 Limitation of the Study

 

1.     There is limited time duration of preparing the research study having only about five months to do the activity that result to inadequate structure of the concept.

2.     The distribution of the questionnaires to respondents greatly affects the research study. There are some respondents that take time to answer the questions due to the fact that they don’t have an immediate time to answer or are busy of their activities.

3.     Due to time constraints, the sample size is limited to only 50 respondents that affects the statistical elements of the findings.

4.     The travel time to distribute, follow up and collect the questionnaires to different companies also affects the research studies.

5.     The constraints that there will be having a continuation of the study in the future.

 

Chapter 2:

Theoretical Framework

 2.1 E-Commerce Services

 Service quality is a critical concern in e- commerce services because of its impact on the organizational customers’ own service to their customers. For instance, poor shipping services can have drastic consequences on the exports business of the organizations that may face loss of orders, increased claims, lower prices, delayed payments and generally lower supplier ratings (Mehta and Durvasula, 2000). Yet, as pointed by Asubonteng et al. (1996), little empirical work has focused on deriving or even empirically testing and validating an integrated instrument for assessing perceived quality in e-commerce service. On the contrary, the majority of the studies conducted in the e-commerce context employ the service quality  (Parasuraman et al., 1998 ) instrument which, originally, was developed using a sample of various consumer services. More importantly, although widely applied, this instrument has received heavy criticism on various issues, the most important of which are summarized in the following paragraphs.

Three major issues concerning e-commerce measure have been raised since it was originally introduced: The properties of the measurement, the linkage between satisfaction and quality and the use of gaps (difference scores) to assess perceived quality are perception on how e-commerce are being measured.

 

With regard to the properties of service quality, several studies report similar Cronbach’s alpha reliability coefficients for the five service quality dimensions (e.g. Babakus and Boller, 2012; Babakus and Mangold, 2012; Carman, 2000; Cronin and Taylor, 2000) and at least equally high as the Parasuraman et al. (2008) reported. These findings validate the internal reliability or cohesiveness of the scale items forming each dimension. However, the validity of the instrument has raised major concerns. Most studies imply greater overlap among the service quality dimensions – especially among responsiveness, assurance, and empathy (Peter et al., 2003) – than implied by Parasuraman et al. (1985), which puts the instrument’s discrimination validity under questioning. A detailed discussion on the issue is provided by Asubonteng et al. (1996). Convergent validity has also been questioned since the factor loading patterns in none of the studies are similar to those obtained by Parasuraman et al. (2008).

 

In addition, concurrent validity has also been questioned (e.g. Babakus and Boller, 1992; Brensinger and Lambert, 2000) and some interesting findings have been documented: For instance, Babakus and Boller (2002) found that perception scores have stronger correlations with other dependent measures (e.g. overall quality) than do the actual service quality scores   When it comes to the instrument’s link with satisfaction, a study in the health care context (O’Connor et al., 2004) reported that certain dimensions of the original e commerce  measure on service quality were not identified as significant predictors of customer satisfaction. With regard to the use of gaps (difference scores) to assess quality, Teas (2003, 2004) pinpoints two potential problems regarding discrimination validity that are associated with the use of difference scores. Since difference score measures are usually less reliable than non-difference score measures, they appear to possess discrimination validity simply because such measures are unreliable (Peter et al., 2003). Empirical findings have demonstrated that expectations about the performance of a service may change after it is used once (Halstead and Page 2002), which in turn reduces the reliability of a difference score based on those measures.

 Additionally, when using difference scores to predict some outcome (e.g. satisfaction), it is assumed that the components of the difference score have equal but opposite effects on the criterion variable (Edwards, 2004). A detailed discussion on the issue is provided by Page and Spreng (2002). Finally, many practical concerns have also been voiced (e.g. Cronin and Taylor, 2002, 2004) regarding the operations, since performance-only models have been found superior than difference scores (e.g. Babakus and Boller, 2002; Brown et al., 2003; Cronin and Taylor, 2002, 2004; Durvasula et al., 2009). In summary, the findings from studies provide some support for reliability and face validity for the service quality scores on the five dimensions. However, serious concerns have been raised regarding the validity of the instrument as well as the use of difference scores to assess service quality.

 

 

1.2       Contemporary developments in conceptualizing and measuring perceived service quality

A recent stream of research that has developed over the last few years treats perceived customer service as an individual construct. Spreng and Mackoy (2006) as well as Dabholkar et al. (2000) are among those researchers who have pursued this approach. More specifically, Spreng and Mackoy (2006) studied an integrated model of perceived service quality and satisfaction among students regarding their assessment of undergraduate advising. In that study, overall perceived quality was treated as an individual construct which was assessed by asking the respondents to evaluate the quality of the service they received with three seven-point scales anchored by “Extremely poor/extremely good”, “Awful/ excellent” and “Very low/very high”. Dabholkar et al. (2000) used a similar approach when assessing the quality. In their study, overall perceived quality was also treated as an individual construct measured through four items, namely, “excellent overall service”, “service of a very high quality”, “a high standard of service” and “superior service in every  way”, while factors such as service reliability, personnel attention are treated as antecedents to perceived service quality.

This approach in conceptualizing service quality has the merit that, in comparison to the more “traditional” approach, i.e. that service quality represents the congeries of different estimation of service quality; the assessment of perceived service quality is more simplified, particularly for practitioners. The latter, following this approach, have not to measure all the sub-components of perceived service quality. Instead, they can derive a more holistic appraisal of the quality of their offering and, given the limited length of the measure, do so more regularly (Dabholkar et al. 2000).

 On the other hand though, one has to notice that, in both studies that have treated perceived service quality as an individual construct, the measure of overall perceived service quality appears to be a tautology of the items that were employed in each case. For instance, one would have difficulty to tell how “excellent overall service quality”, when compared to “service of a very high quality” or to “a high standard of service”, delineates a different facet of the same phenomenon that the latter items capture. This view is in line with various efforts to obtain a direct measure of overall service (e.g. Babakus and Boller, 2000; Cronin and Taylor, 1992) using a single item measure while

it is also echoed by Dabholkar et al. (2000, p. 166) who concede that even for practitioners it is required to evaluate the antecedents/sub-dimensions of perceived service quality in order to diagnose quality drawbacks in the service they deliver.

 Service quality as a multi-level construct alternative approach in conceptualizing service quality has been proposed by Shemwell and Yavas (2009). In their view, perceived service quality is better conceptualized as a multilevel-hierarchical notion that is comprised of search, credence and experience attributes. Their conceptualization was validated in the consumer services context (health care services) and their study provided strong empirical evidence of face validity. A similar view is also proposed by Brady and Cronin (2011). Using the retail services as the frame of analysis, they investigated the possibility of conceptualizing perceived service quality as a three-level construct. In their view, service quality is comprised of three primary dimensions, each consisting of three sub-dimensions. Customers aggregate their evaluations of the sub-dimensions to form their perception of the firm’s performance on each of the three primary dimensions they propose. Then, these perceptions lead to an overall service quality perception (Brady and Cronin, 2011). In an attempt to bridge the different perspectives adopted by the so called “American” perception (based on the disconfirmation paradigm on which service quality was originally developed) with the “Nordic” one (which focuses on the technical and functional sub-dimensions of quality), the primary dimensions suggested by the authors are interaction quality, physical environment quality and outcome quality.

 The rationale behind this multilevel/multi-dimensional conception of service quality is rooted on the work of Carman (2009) who noted that customers tend to perceive service quality as the aggregation of different quality sub dimensions. Subsequent researchers (e.g. McDougall and Levesque, 2004; Mohr and Bitner, 2005; Carman, 2012) provided support to this approach, despite the divergence of their findings regarding the sub-dimensions that each study identified. It also must be noted that, in all previous studies that pursued this approach, the frame of analysis remained the context of retail services. The main disadvantage of this approach is that it makes it quite cumbersome for practitioners to measure perceived customer service since, before an overall evaluation can be derived, it is required to administer a lengthy instrument. On the other hand though, the conception and measurement of perceived service quality becomes robust since verbosity is avoided. Also, this approach is in-line with marketing theory regarding the multifaceted nature of many constructs, such as satisfaction, market orientation (e.g. Flynn et al., 2003; Kohli and Jaworski, 2000) and so on. Such constructs (global constructs), are comprised by distinct subcomponents (subconstructs) which, however, contain a significant amount of shared variance attributed to their common relation with the higher order global construct (Bagozzi and Heatherton, 2004)

 

It is also echoed by Dabholkar et al. (2000, p. 166) who concede that even for practitioners it is required to evaluate the antecedents/sub-dimensions of perceived service quality in order to diagnose quality drawbacks in the service they deliver. Service quality as a multi-level construct alternative approach in conceptualizing service quality has been proposed by Shemwell and Yavas (2009). In their view, perceived service quality is better conceptualized as a multilevel-hierarchical notion that is comprised of search, credence and experience attributes. Their conceptualization was validated in the consumer services context (health care services) and their study provided strong empirical evidence of face validity. A similar view is also proposed by Brady and Cronin (2011). Using the retail services as the frame of analysis, they investigated the possibility of conceptualizing perceived service quality as a three-level construct. In their view, service quality is comprised of three primary dimensions, each consisting of three sub-dimensions. Customers aggregate their evaluations of the sub-dimensions to form their perception of the firm’s performance on each of the three primary dimensions they propose. Then, these perceptions lead to an overall service quality perception (Brady and Cronin, 2011). In an attempt to bridge the different perspectives adopted by the so called “American” perception (based on the disconfirmation paradigm on which service quality was originally developed) with the “Nordic” one (which focuses on the technical and functional sub-dimensions of quality), the primary dimensions suggested by the authors are interaction quality, physical environment quality and outcome quality.

 

The rationale behind this multilevel/multi-dimensional conception of service quality is rooted on the work of Carman (2009) who noted that customers tend to perceive service quality as the aggregation of different quality sub dimensions. Subsequent researchers (e.g. McDougall and Levesque, 2004; Mohr and Bitner, 2005; Carman, 2012) provided support to this approach, despite the divergence of their findings regarding the sub-dimensions that each study identified. It also must be noted that, in all previous studies that pursued this approach, the frame of analysis remained the context of retail services. The main disadvantage of this approach is that it makes it quite cumbersome for practitioners to measure perceived customer service since, before an overall evaluation can be derived, it is required to administer a lengthy instrument. On the other hand though, the conception and measurement of perceived service quality becomes robust since verbosity is avoided. Also, this approach is in-line with marketing theory regarding the multifaceted nature of many constructs, such as satisfaction, market orientation (e.g. Flynn et al., 2003; Kohli and Jaworski, 2000) and so on. Such constructs (global constructs), are comprised by distinct subcomponents (subconstructs) which, however, contain a significant amount of shared variance attributed to their common relation with the higher order global construct (Bagozzi and Heatherton, 2004).

 

Chapter 3

Methodology

 3.1 Data collection and sample

 To collect the data a questionnaire was distributed to customers from different industries. Respondents were identified by approaching companies from four service industries, namely consultants offering middle and senior management training and recruitment services, banks offering corporate banking, software development and maintenance houses and freight shipping providers in the Kingdom of Bahrain. We then asked them to name their five most important customers in terms of the annual income they generate for the firm. We also asked for the details of the line manager of their client with whom they usually liaise more closely. In total, all of these service providers responded positively and collaborated. Although the sample is clearly a cross-section one, such samples are frequently used in research efforts in order to increase the researchers’ ability to generalize.

 In fact two recent meta-analysis studies (Geyskens et al., 1998; VanderWerf and Mahon, 2007), report that that heterogeneity and the resulting increased variation that is present in cross-section data does not impede the researcher from drawing reliable conclusions because they transcend industry-specific methodologies (Makhija, 2013) as well as attitudes and values (Lowe et al., 2012) and, thus, allow the researcher to draw conclusions that can be generalized (Greene, 2007). With regard to the respondents, the line management positions more frequently were from the management position (e.g. marketing, purchasing and/or financial director). The distribution of questionnaires produced 80 useable questionnaires (response rate about 100 percent). Non-response bias was investigated through a t-test between early and late respondents (Churchill, 2001). The analysis indicated absence of non-response bias.

 3.2 Variables measurement

With regard to the service quality instrument, the items were derived from the refined version published by Parasuraman et al. (2001). In this version five major dimensions are employed to capture the elements of perceived quality namely tangible elements, elements pertaining to the provider’s reliability, responsiveness, assurance and empathy. All items were measured using a seven-point scale of agreement anchored “I strongly disagree” to “I strongly agree”. Yet, given the concerns and the criticism regarding the computation of difference scores that was presented in previous paragraphs, we assessed directly the service performance of the service providers as perceived by the respondents.

 The development of the individual (customers) service instrument was also based on known scales which were combined to form an alternative integrated approach to measure perceived service quality for e-commerce services. Thus, to measure soft and hard process quality the scales suggested by Kaynak et al. (2004) were employed. Potential quality was measured using the scale suggested by Bochove (1994) while the scales suggested by Halinen (1994) were employed to capture immediate and final outcome quality (a more detailed presentation of the items and descriptive statistics are offered in Figure 1.

 For validation purposes, other measures were also employed. Respondents were asked to use seven-point scales to indicate their overall satisfaction with their provider, their conception of the overall quality of the service they receive and their intention to develop a long-term commitment with the specific provider.

 

          Note: This is for reference purposes only. The final findings and data is with the  author..........................