UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --------------------------- Phan Huynh Van Thao FACTORS AFFECTING CUSTOMER SATISFACTION IN PUBLIC SECTOR: A COMPARATIVE STUDY BETWEEN ADMINISTRATIVE SERVICE AND TRANSPORT SERVICE IN DONG NAI PROVINCE MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2013 1|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business --------------------------- Phan Huynh Van Thao FACTORS AFFECTING CUSTOMER SATISFACTION IN PUBLIC SECTOR: A COMPARATIVE STUDY BETWEEN ADMINISTRATIVE SERVICE AND TRANSPORT SERVICE IN DONG NAI PROVINCE ID: MBUS111039 MASTER OF BUSINESS (Honours) SUPERVISOR: DR. NGUYEN THI NGUYET QUE Ho Chi Minh City – Year 2013 2|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT It is my fortunate to have Dr. Nguyen Thi Nguyet Que as my advisor with her strong experience and deep involment in the category related to my stated problem. She provided me with sharp advice on how to approach the problem.
Her penetrating comments have led to revisions and clarifications of my analysis in this paper. She was also helpful in narrowing down the area of research during my preparation for the final report. She was always gracious with her support. First and foremost, I would like to express my gratefulness to her.
I also thank Prof. Nguyen Dinh Tho. I am extremely grateful and indebted to him for his expert, valuable guidance, insightful comments, and encouragement extended to me. I would like to express my gratitude to all ISB staffs that supported necessary materials and helped summit my papers.
I am grateful to my boss and my colleagues for their support for this study. I also thank my friends for their encouragement. My special gratitude goes to my parents who have supported to take care of my little baby in order for me to have time to pursue the program. Last but not less, thanks to my husband who always facilitate me with good conditions to complete my study.
3|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com COMMITMENT I would like to commit that this thesis, “Factors affecting customer satisfaction in public sector: A comparative study between administrative service and transport service in Dong Nai Province”, was accomplished based on my research seriously and independently. The data was collected from citizens who had experiences using public service in Dong Nai province by the author in reality. It has clear source. Thus, the data was trustful handled and conducted by the author.
Phan Huynh Van Thao Dong Nai, October 1st 2013 4|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT This study examined the relationships among nine dimensions of service quality and customer satisfaction toward public service in Dong Nai province and the comparation of this relationships between public administrative service and public transports service. The surveys were distributed to 230 customers (120 customers rated about public administrative service and 110 customers rated about public transport service) who had an experience working with public administrative service and public transport service in Dong Nai within the last 3 years, a customer was randomly approached to complete a survey. Firstly, the research proposed a model to analyze the effect of nine dimensions (tangibility, reliability, responsiveness, competence, courtesy, credibility, access, communication, and understanding the customer) (Parasuraman et al. 1985) of service quality on customer satisfaction in public service.
Secondly, the study used Statistic Package for Social Science (SPSS) to analyze data through Exploratory Factor Analysis (EFA). Then, the EFA results lead to the revised model identified the five service quality variables named as tangibility, reliability, competence, access and empathy. The results indicated that tangible and competence have strong positive effect on customer satisfaction. Finally, the research finding confirmed that the impact of dimensions on customer satisfaction toward a public service is affected by the type of public service differently (public administrative service and public transport service) Keywords: Services quality, Customer satisfaction, Public administrative service, Public transport service, and Public service.
5|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ABSTRACT.1 BACKGROUND OF THE RESEARCH .1 DEFINITION OF PUBLIC SERVICES .2 CLASSIFICATION OF PUBLIC SERVICES .3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES .1 DEFINITION OF SERVICE QUALITY .2 SERVICE QUALITY IN PUBLIC SECTOR .3 MODELS OF SERVICE QUALITY IN PUBLIC SECTOR .1 THE SERVQUAL MODEL .2 THE SERVPERF MODEL .4 PREVIOUS STUDIES ON SERVICE QUALITY IN PUBLIC SECTOR .3 DEVELOPMENT OF RESEARCH MODEL AND HYPOTHESIS .2 SERVICE QUALITY AND CUSTOMER SATISFACTION IN PUBLIC SECTOR. RESEARCH METHODOLOGY AND DATA ANALYSIS .4 QUALITATIVE PILOT STUDY .5 QUANTITATIVE MAIN SURVEY .3 DATA ANALYSIS METHODS .2 EXPLORATORY FACTOR ANALYSIS (EFA).3 MULTIPLE REGRESSION ANALYSIS.3 ASSESSMENT OF MEASUREMENT SCALE. 52 6|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 CRONBACH’S ALPHA COEFFICIENT OF RELIABILITY TEST.2 EXPLORATORY FACTOR ANALYSIS (EFA) RESULT.1 EFA FOR INDEPENDENT VARIABLES .2 EFA FOR DEPENDENT VARIABLES.1 TESTING MODEL OVERALL .2 TESTING MODEL IN PUBLIC ADMINISTRATIVE SERVICE.3 TESTING MODEL IN PUBLIC TRANSPORT SERVICE. CONCLUSION AND IMPLICATION .2 DISCUSSION OF FINDINGS .4 LIMITATION OF STUDY AND FUTURE RESEARCH.1 MEASUREMENT SCALE USED IN QUALITATIVE RESEARCH 84 APPENDIX 3.2 THE QUALITATIVE RESEARCH FINDINGS.
88 APPENDIX 1: ORGANIZATIONAL CHART OF DONG NAI PEOPLE’S COMMITTEE .1 FIRST TIME RUNNING- EIGENVALUES .2 FIRST TIME RUNNING-FACTOR LOADING .3 SECOND TIME RUNNING- EIGENVALUES.4 SECOND TIME RUNNING- FACTOR LOADING .5 THE EFA IMPLEMENTATION OF DEPENDENT VARIABLE (CUSTOMER SATISFACTION). CHARTS OF TESTING HYPOTHESES. 101 7|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3.7 Cronbach’s Alpha Reliability Coefficient .1 - Descriptive statistics of the data .3 - Cronbach’s Alpha coefficients for each measurement scale. KMO and Bartlett's Test for independent variables.
Factor Loading of independent variables .7 - Cronbach’s Alpha results after excluding unsatisfatory items. Results of Pearson Correlations .10 Results of Multiple Regression.12 Coefficients of the construct for public administrative service .13 Coefficients of the construct for public transport service .14 Comparison Customer’s Viewpoints. 67 LIST OF FIGURES Figure 2. Conceptual model linking nine dimensions and customer satisfaction.
The revised conceptual model. 60 8|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.1 BACKGROUND OF THE RESEARCH Dong Nai province has 11 administrative units with 171 units of communes, wards and towns, including Bien Hoa City - the political, economic and cultural center of the province, Long Khanh Town and other 9 districts (Long Thanh, Nhon Trach, Vinh Cuu, Trang Bom, Thong Nhat, Dinh Quan, Tan Phu, Cam My and Xuan Loc). The natural area of Dong Nai is 5,097.1 km2, with total population of more than 2.56 million people, including 33.23% of urban residents and 66.73% of rural residents. The People’s Committee of Dong Nai province consists of a network of 35 organizations provides a range of free and “at-cost” services (Appendix 1).
Government as a big organization has its customers; those customers are the citizens, businesses and public and private employees. Government through its agencies, departments, and ministries provides information and services for each group of its customers, and as a result this performance can be judge fairly only by the customers. Service quality is an important dimension of organizational performance in the public sector as the main output of public organizations is services. Moreover, profit is not the ultimate goal of these public organizations as they have to play different roles such as facilitator, pace setter and socio-economical developer (Arawati, Baker & Kandampully, 2007).
9|Page LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com The customer is the final judge of the quality of the product or the service or the information. For the private sector, managers are concerned in many aspects that relate to the customer such as loyalty and retention, but in the public sector in general the customer (citizen, business), find themselves obligated to deal with different organizations in the public sector even if they provide their services in inefficient ways. For example, the administrative procedures using at governmental agencies in Vietnam in general and Dong Nai in particular are bulky and complex that are affecting the management of Dong Nai People’s Committee on its agencies from District level to local. At the moment, there are quite a high number of complaints filed by the public due to delays in taking actions and providing services to them by the Vietnamese public organizations (Dong Nai Department of Internal Affairs, 2006).
Headlines of some main newspapers also highlighted complaints from the public regarding to their dissatisfactions with the provided services. Consequently, service quality is not as expected by the customers and therefore, it is quite low. This matter is a concern to the public since they are the taxpayers and therefore; they expect good services are provided to them as the return (Thanh, 2009). At Dong Nai Department of Internal Affairs, the single window mechanism is being applied in order to simply administrative procedures.
However, it is not really effective for Dong Nai People’s Committee to supervise and inspect administrative procedures. Consequently, there are still negative activities such as bureaucracy, corrupt, arrogant behavior of officials and services…. that have made people annoy, reduce their belief on the transparency of government. 10 | P a g e LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com In the context of bureaucracy and plodding reform, Dong Nai People’s Committee must have an appropriate strategy in order to monitor and manage the public service.
This study will be as a practical guideline for Dong Nai People’s Committee leader improves the quality of public services, especially the administrative service and the transport service in order to meet with the customer’s needs and their satisfaction. This finding will help Dong Nai People’s Committee leader understand obviously about the components of their service quality affecting to satisfaction of their customers. In addition, the comparison between public administrative and public transport service aims to provide specific determinants to fit with each context. It brings more valuable practical implications.2 RESEARCH PROBLEM Local authorities in Dong Nai are already engaged in a variety of innovative approaches to capture the “voice of the customer” - local area forums, citizens’ juries, etc.
Increasingly, many authorities are also conducting market research surveys of one form or another. These are often a useful first step for services trying to capture data on current levels of customer satisfaction with services. Since Vietnam gained independence in 1975, the public sector has undergone a number of transformations. Whereas the former was aimed at increasing productivity and efficiency, the latter established the public sector as the facilitator and regulator of the economic functions of the private sector (Triantafillou, 2002).
It has been noted, however, that relatively little attention has been given to the application of service quality in the public service (Kadir et al. Furthermore, although quality schemes are 11 | P a g e LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com becoming an integral part of public-service management, their impact on service delivery remains largely unknown (Robinson, 2003). The majority of researches in last few decades concentrated on the dimensional approach of service quality (Parves Sultan & Ho Yin Wong, 2010). Parasuraman et al (1985, 1988) developed the measurement scale SERVQUAL based on the concept quality is the perception minus expectation.
Cronin and Taylor (1992, 1994) explored the other instrument to measure service quality, namely, SERPERF - service performance - based on the perception component alone. Among these scales, SERVQUAL is mostly criticized and widely applied in many industries. However, SERVQUAL and SERPERF were designed as generic measures of service quality and applied in cross industries, not for any specific field. Measuring service quality and customer satisfaction in public context is one of the most considerations of authority.
Although customer satisfaction in public service is also not an easy task to attempt (Corneliu et al., 2010) and there is no generally measurement scale for customer satisfaction in public services, the majority of recent studies consider service quality as an antecedent to customer satisfaction (Garcia, 2009).