UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Le Thi Binh Phuong SERVICE QUALITY AND CUSTOMER SATISFACTION IN BUSINESS-TO-BUSINESS: THE CASE OF READY-MIX CONCRETE INDUSTRY IN VIETNAM MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. Vo Thi Ngoc Thuy Ho Chi Minh City – Year 2014 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Table of Contents ACKNOWLEDGEMENT. 4 LIST OF TABLES. 5 LIST OF FIGURES.
Ready-Mix Concrete industry in Vietnam. Service Quality and Customer Satisfaction in B2B context. Scope of the research. Expected contributions of research.
Organization of thesis. 14 LITERATURE REVIEW AND HYPOTHESES. Research Model and Hypotheses. Quantitative research: Pre-test.
Quantitative research: Main survey. 46 DATA ANALYSIS AND RESULTS. Data statistical analysis. 46 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.
Identifying and addressing outliers. Cronbach’s Alpha coefficient of reliability test. Exploratory Factor Analysis (EFA) result. Research Model test.
Chow test for moderating effect. 60 DISCUSSION AND CONCLUSIONS. Discussion of research results. Contribution and managerial implications for the research.
Contribution for the research. Managerial implications of the research. Limitations and directions for further research. 73 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Foremost, I would like to express my sincere gratitude to my supervisor Dr.
Vo Thi Ngoc Thuy for her continuous support, for her patience, motivation, enthusiasm, and immense knowledge. Her guidance helped me over the time of research and writing this master thesis. Besides my supervisor, I would like to thank the ISB Research Committee: Prof. Nguyen Dinh Tho, Prof.
Nguyen Dong Phong, Prof. Nguyen Thi Mai Trang, Prof. Nguyen Thi Nguyet Que and Prof. Tran Ha Minh Quan, for their encouragement and insightful comments.
My sincere thanks also go to all of respondents, without whom, this research would have been impossible. Le Thi Binh Phuong February 2014 3 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT This study empirically examines the different impacts of B2B Service Quality’s determinants on Customer Satisfaction in Vietnam Ready-Mix Concrete industry and explores the moderating role of Ready-Mix Concrete Company Type variable on these relationships. Whereby, it provides a comparison of these impacts extent between two types of Ready-Mix Concrete Company, local company and foreign company. Chow test was used to test these impacts, utilizing a sample of 122 industrial customers of three Ready-Mix Concrete Companies.
The results indicate that all determinants of B2B Service Quality including Potential quality, Hard process quality, Soft process quality, Output quality and Buyer-supplier relationship quality play important role in explaining Overall Customer Satisfaction toward Ready-Mix Concrete service. Furthermore, the results also support that Read- Mix Concrete Company type moderates the relationship between each determinant of B2B Service Quality and Overall Customer Satisfaction. Accordingly, that degree of Overall Customer Satisfaction for Foreign Company is higher than Local Company is appropriate with the current situation in Vietnam Ready-Mix Concrete service. Indeed, it is a meaningful implication for manager in contributing into cost leadership strategy in case he has to make decision on selecting best solution for service quality improvement with limited budget.
The research findings also engage with some limitations in the strength of measurement scale, the sampling method as well as the fitness between the research model and data which results in the valuable directions for further researches in future. 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 2.1 - B2B Service quality determinants over the time .1 - Descriptive statistics of multiple regression .7 - Summary table for Chow test. 59 5 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1.1 - B2B Service quality determinants over the time .1 - Measurement dimensions in SERVQUAL and INDSERV .2 - The conceptual framework and its dimensions displayed in middle column. 26 6 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1 INTRODUCTION 1.
Ready-Mix Concrete industry in Vietnam In this era of intense competition and difficult economic environment, all industries in Vietnam have faced many challenges. It is no doubt that construction area in generally and Ready-Mix Concrete industry in specifically is in the same situation. In today’s global marketplace, the key to sustainable competitive advantage lies in delivering service with high quality that will in turn result in customer satisfaction (Shemwell et al. Concrete is a mixture of three basic ingredients: sand, gravel (crushed stone) and Ready-Mix Concrete, as well as chemical compounds known as admixtures.
Combining this mixture with water causes the Ready-Mix Concrete to undergo an exothermic chemical reaction called hydration, turning Ready-Mix Concrete into a hard paste that binds the sand and gravel together. Moreover, ready-mix concrete is concrete mixed with water at a plant and transported directly to a construction site. Ready-Mix is a perishable product that needs to be delivered within an hour and a half before it becomes too stiff to be workable (Alan, 2010). 7 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1: Ready-Mix Concrete Supply Chain Source: Insights (2013) – an internal newspaper in Holcim Vietnam Ready Mixed Concrete is also referred as the customized concrete products for commercial purpose.
The Ready-mix Concrete Company offer different concrete according to user's mix design or industrial standard. Associate with the growth of Ready-Mix Concrete companies in Vietnam in quantity and quality, customers have more choices for their experiencing services. Although almost these companies aim to serve the construction industry better, to offer high quality products, comprehensive solutions and services to many projects from individual houses to large projects (Insights, 2013), customers complaints are unavoidable. At every turn, customers are assessing how the company performance as an insurance provider matches their expectations.
To be able to compete better in the market, most of Ready-Mix Concrete companies are trying to observe customers satisfaction level and then improve their service quality. 8 LUAN VAN CHAT LUONG download : add luanvanchat@agmail. Service Quality and Customer Satisfaction in B2B context In recent years, substantial research has examined the level of quality (and its dimensions) in the performance of a service. Ekinci (2003) indicates that the evaluation of service quality leads to customer satisfaction.
Rust and Oliver (1994) define satisfaction as the “customer fulfillment response,” which is an evaluation as well as an emotion-based response to 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. 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. Responding to this need, researchers have devised and examined various instruments to measure perceived service quality.
However, most of the research has focused on measuring service quality in the end consumers and particularly using the SERVQUAL scale as developed and subsequently modified by Parasuramanet al. (1991) or some variation. In the other hand, dimensions of business- to-business customer service differ to individual service (Gregory. Evidence has shown that SERVQUAL appears to perform less admirably than B2B contexts (Babakus and Boller, 1992; Durvasula et al.
Accordingly, researchers have made some recent attempts to investigate and develop alternative B2B specific scales. 9 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com At the present, the most important contribution to this area has been the INDSERV scale proposed and developed by Gounaris (Gounaris, 2005a, b, c; Gounaris and Venetis, 2002). Gounaris proposed that B2B service quality should be composed of, at least, four dimensions: potential quality, hard process quality, soft process quality and output quality. In 2008, Van der Valk et al.
added one more dimension to the existing conceptualization originated from Gronroos (1984): buyer-supplier relationship. This dimension has a more long-term and dynamic character and supported empirically by Kamping (2009). When evaluating service providers in B2B context generally and in Ready Mix Concrete industry specifically, companies should not only look at the object of exchange, but also at the overall relationship. While service quality is “basically static”, relationship quality is dynamic in the sense that it represents how quality develops over time.
Consequently, service quality is short-term oriented and relationship quality is long-term oriented. Relationship quality is very highly significant in Ready Mix Concrete industry. Therefore, the fifth dimension will be brought into this study as a determinant affecting customer satisfaction and tested in the context of Ready-Mix Concrete industry in Vietnam. According to Zeithmal and Bitner (2003), “satisfaction is the consumer fulfillment response.
It is a judgment that a product or service feature, or the product or service itself, provides a pleasurable level of consumption-related fulfillment” (p. It has been suggested that satisfaction is a broader concept than service quality. It includes both cognitive and affective evaluations, while service quality evaluations are mainly a cognitive procedure (Tian-Cole and Crompton, 2003; Oliver, 1997). A 10 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com number of studies in the services marketing literature have reported that these two constructs are strongly related (e., Caruana, 2002; Spreng and Chiou, 2002; Alexandris et al., 2001; Spreng and McKoy, 1996; Cronin and Taylor, 1992; Woodside et al.
Given aforementioned situation, this paper is an attempt to put forth the role of five dimensions of B2B service quality in affecting customer satisfaction in the context of Ready-Mix Concrete industry in Vietnam with the different type of Ready- Mix Concrete companies: local and foreign. The reason why for making distinction is that there is a clear difference between local and foreign company in the same play station about many aspects such as investment capital, supply chain, staff capability, training program, etc. In Vietnam, the foreign Ready-Mix Concrete Company takes many advantages over local company. This empirical study employs the dimensions of B2B service quality through INDSERV scale to explain the customer satisfaction.
All concepts will be explained and analyzed more specifically in literature review section. Research Objectives According to above discussion, this study is formulated to obtain following objectives: (1) To investigate the different impacts of B2B service quality’s determinants on customer satisfaction in Vietnam Ready-Mix Concrete industry (2) To examine the moderating effects of Ready-Mix Concrete Company Type: the impact degrees of each determinant of B2B service quality (potential 11 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com quality, hard process quality, soft process quality, output quality and buyer – supplier relationship quality) on customer satisfaction are distinct depending on local or foreign company 1. Scope of the research The empirical setting in this research is the Ready-Mix Concrete companies in the context of Ho Chi Minh City, Vietnam. Particularly, data collected from industrial customers of three Ready-Mix Concrete companies in Ho Chi Minh City and put into analysis and comparison.
Expected contributions of research According to the theoretical perspective, this study contributes to the application of the INDSERV model into the context of Ready-Mix Concrete industry in Vietnam. It is a meaningful outcome for the researchers in this specific B2B service industry since it turns the successful investigation of combining four dimensions of INDSERV scale with additional fifth dimension: buyer – supplier relationship quality. Regarding to the managerial implications, this finding will help Ready-Mix Concrete companies understand obviously about the components of their service quality affecting satisfaction of their customers whereby they can improve their performance for increasing the level of customer satisfaction. In addition, the comparison between foreign and local Ready-Mix Concrete companies aims to provide specific determinants to fit with each context.
In era of global recession, all companies plan efforts towards effective and efficient investment on improving service quality. The expected results of this study would have contributed into Cost 12 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Leadership strategy of the company in selecting his own best solution (i.