Luận văn thạc sĩ UEH factors affecting customer satisfaction in public sector, a comparative study

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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

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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

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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.

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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 1

st 2013

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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.

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TABLE OF CONTENTS

ABSTRACT.........................................................................................................................5

CHAPTER 1. INTRODUCTION........................................................................................9

1.1 BACKGROUND OF THE RESEARCH.................................................................9

1.2 RESEARCH PROBLEM.......................................................................................11

1.3 RESEARCH OBJECTIVES ..................................................................................13

1.4 RESEARCH METHOD.........................................................................................13

1.5 RESEARCH STRUCTURES ................................................................................15

CHAPTER 2. LITERATURE REVIEW...........................................................................17

2.1 INTRODUCTION..............................................................................................17

2.2 LITERATURE REVIEW...................................................................................17

2.2.1 PUBLIC SERVICES.........................................................................................17

2.2.1.1 DEFINITION OF PUBLIC SERVICES....................................................17

2.2.1.2 CLASSIFICATION OF PUBLIC SERVICES.........................................19

2.2.1.3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES........................22

2.2.2 SERVICE QUALITY........................................................................................23

2.2.2.1 DEFINITION OF SERVICE QUALITY...................................................23

2.2.2.2 SERVICE QUALITY IN PUBLIC SECTOR............................................24

2.2.3 MODELS OF SERVICE QUALITY IN PUBLIC SECTOR...........................26

2.2.3.1 THE SERVQUAL MODEL.......................................................................26

2.2.3.2 THE SERVPERF MODEL ........................................................................27

2.2.4 PREVIOUS STUDIES ON SERVICE QUALITY IN PUBLIC SECTOR......28

2.3 DEVELOPMENT OF RESEARCH MODEL AND HYPOTHESIS....................32

2.3.1 CUSTOMER SATISFACTION........................................................................32

2.3.2 SERVICE QUALITY AND CUSTOMER SATISFACTION IN PUBLIC

SECTOR.....................................................................................................................33

2.3.3 THEORETICAL MODEL................................................................................37

CHAPTER 3. RESEARCH METHODOLOGY AND DATA ANALYSIS ....................39

3.1 INTRODUCTION..................................................................................................39

3.2 RESEARCH PROCEDURE ..................................................................................39

3.3 MEASUREMENT SCALE....................................................................................41

3.4 QUALITATIVE PILOT STUDY ..........................................................................44

3.5 QUANTITATIVE MAIN SURVEY .....................................................................45

3.5.1 QUESTIONNAIRE DESIGN.............................................................................45

3.5.2 SAMPLING METHOD ....................................................................................46

3.5.3 DATA ANALYSIS METHODS.......................................................................47

3.5.3.1 CRONBACH’S ALPHA. ...........................................................................47

3.5.3.2 EXPLORATORY FACTOR ANALYSIS (EFA). .....................................48

3.5.3.3 MULTIPLE REGRESSION ANALYSIS..................................................49

CHAPTER 4. RESEARCH RESULTS.............................................................................50

4.1 INTRODUCTION..................................................................................................50

4.2 DESCRIPTIVE ANALYSIS .................................................................................50

4.3 ASSESSMENT OF MEASUREMENT SCALE...................................................52

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4.3.1 CRONBACH’S ALPHA COEFFICIENT OF RELIABILITY TEST..............52

4.3.2 EXPLORATORY FACTOR ANALYSIS (EFA) RESULT.............................54

4.3.2.1 EFA FOR INDEPENDENT VARIABLES ...................................................54

4.3.2.2 EFA FOR DEPENDENT VARIABLES........................................................57

4.4 HYPOTHESES TESTING.................................................................................61

4.4.1 TESTING MODEL OVERALL ........................................................................61

4.4.2 TESTING MODEL IN PUBLIC ADMINISTRATIVE SERVICE..................65

4.4.3 TESTING MODEL IN PUBLIC TRANSPORT SERVICE ............................66

4.5 CONCLUSION ..................................................................................................68

CHAPTER 5. CONCLUSION AND IMPLICATION......................................................69

5.1 INTRODUCTION..................................................................................................69

5.2 DISCUSSION OF FINDINGS ..............................................................................69

5.3 MANAGERIAL IMPLICATIONS........................................................................73

5.4 LIMITATION OF STUDY AND FUTURE RESEARCH....................................75

5.5 CONCLUSION ......................................................................................................76

REFERENCES ..................................................................................................................77

APPENDIX........................................................................................................................84

APPENDIX 3.1 MEASUREMENT SCALE USED IN QUALITATIVE RESEARCH

84

APPENDIX 3.2 THE QUALITATIVE RESEARCH FINDINGS..............................86

APPENDIX 3.3 QUESTIONNAIRE...........................................................................88

APPENDIX 1: ORGANIZATIONAL CHART OF DONG NAI PEOPLE’S

COMMITTEE ..............................................................................................................93

APPENDIX 4.1 FIRST TIME RUNNING- EIGENVALUES....................................94

APPENDIX 4.2 FIRST TIME RUNNING-FACTOR LOADING .............................96

APPENDIX 4.3 SECOND TIME RUNNING- EIGENVALUES...............................98

APPENDIX 4.4 SECOND TIME RUNNING- FACTOR LOADING .......................99

APPENDIX 4.5 THE EFA IMPLEMENTATION OF DEPENDENT VARIABLE

(CUSTOMER SATISFACTION)..............................................................................100

APPENDIX 4.6. CHARTS OF TESTING HYPOTHESES......................................101

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LIST OF TABLES

Table 3.7 Cronbach’s Alpha Reliability Coefficient .........................................................48

Table 4.1 - Descriptive statistics of the data......................................................................51

Table 4.3 - Cronbach’s Alpha coefficients for each measurement scale...........................52

Table 4.4. KMO and Bartlett's Test for independent variables.........................................55

Table 4.4. Factor Loading of independent variables .........................................................56

Table 4.7 - Cronbach’s Alpha results after excluding unsatisfatory items........................59

Table 4.8. Results of Pearson Correlations........................................................................61

Table 4.9 Model Summary ................................................................................................61

Table 4.10 Results of Multiple Regression........................................................................63

Table 4.11 Hypotheses Testing..........................................................................................63

Table 4.12 Coefficients of the construct for public administrative service.......................66

Table 4.13 Coefficients of the construct for public transport service ...............................67

Table 4.14 Comparison Customer’s Viewpoints...............................................................67

LIST OF FIGURES

Figure 2.1. Conceptual model linking nine dimensions and customer satisfaction. .........37

Figure 3.1 Research Process..............................................................................................41

Figure 4.1. The revised conceptual model.........................................................................60

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CHAPTER 1. INTRODUCTION

1.1 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. (Dong Nai People’s

Committee Brochure, 2012). 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).

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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.

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