In this chapter the literature related to TQM, customer satisfaction and service quality is reviewed in detail with the objective to explore the relationship between these three fields of research. Section 2.1 identifies customer focus as the core component of TQM philosophy. The primary research is based in a developing country (Pakistan) so literature related to critical success factors of TQM in context of developing countries is discussed in detail in section 2.2. Literature related to the concept of customer satisfaction is reviewed in section 2.3. Because service quality is a major determinant of customer satisfaction, service quality models constitute the major portion of section 2.4.
2.1: TOTAL QUALITY MANAGEMENT (TQM)
In 1949 JUSE (Union of Japanese Scientists and Engineers) formed a committee of scholars, engineers and government officials devoted to improve productivity and postwar quality of life in Japan (Kanji, 1990). This step is historically considered as the origin of TQM philosophy (Mahour 2006). This management philosophy was confined to Japan until the early 1980s. It became international when previously unchallenged American industries lost substantial market share in both American and world markets. To regain the competitive edge, American companies began to adopt productivity improvement programs, which had proven themselves successful in other developed countries. One of these improvement programs was TQM. Since then, both the popular press and academic journals have published a plethora of accounts describing both successful and unsuccessful efforts at implementing TQM (Kaynak 2003).
According to Fynes and Voss (2002), one of the most problematic issues confronting researchers in quality management is the search for an appropriate definition. There is no consensus on the definition of TQM (Reed et al. 1996) as different people define it differently. ISO 8402:1994 defines TQM as: Management approach of an organization centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction and benefits to all members of the organization and to society. Ugboro and Obeng (2000) also concluded that TQM is an approach used in 21
directing organizational efforts toward the goal of customer satisfaction. Khan (2003) proposed a philosophy of TQM on the basis of four tenets and suggested that the absolute customer focus is the core component of TQM philosophy. Other tenets of this philosophy are employee empowerment, involvement and development, continuous improvement and use of systematic approach to management (figure 2.1). Figure 2.1 shows that absolute customer focus is the core component of TQM philosophy.
FIGURE 2.1: COMPONENTS OF TQM PHILOSOPHY AND THEIR INTERRELATIONSHIPS
Source: Khan (2003)
Previous studies in TQM can be categorized along several main research objectives. These include identifying critical TQM factors, examining issues and / or barriers in the implementation of TQM and investigating the link between TQM factors and performance (Sebastianelli and Tamimi, 2003). The objective of this research is related to the identification of TQM critical success factors and then its relationship to customer EMPLOYEE EMPOWERMENT, INVOLVEMENT AND DEVELOPMENT ABSOLUTE CUSTOMER FOCUS CONTINUOUS IMPROVEMENT USE OF SYSTEMATIC APPROACH TO MANAGEMENT 22
satisfaction so the literature related to TQM critical success factors and customer satisfaction is reviewed in next sections (2.2 and 2.3). However because the research is based in a developing country (Pakistan), problems in implementing TQM in developing countries are also discussed (subsection 2.2.1).
2.2: CRITICAL SUCCESS FACTORS OF TQM
Various studies have been carried out attempting to identify critical success factors of TQM. They tend to emphasize three different areas (Tari, 2005; Claver et al., 2003) i.e. contribution from quality leaders, formal evaluation models and empirical research. Dale (1999) identifies management leadership, training, employees participation, process management, planning and quality measures for continuous improvement as consistent findings in the work of quality leaders such as Crosby, Deming, Juran, Ishikawa and Feigenbaum. The Malcolm Baldrige National Quality Award (MBNQA), European Quality Award (EQA) and Deming application prize are common formal TQM evaluation models used in the United States of America, Europe and Japan respectively. The main components of these awards are summarized in Table 1. Leadership is the top component of two of these awards.
TABLE 1: COMPONENTS OF VARIOUS TQM EVALUATION MODELS
MBNQA EQA Deming Application Prize Leadership Strategic Planning Human resources - orientation Process management Information and - analysis Customer and market -focus Business results Leadership Employee management Policy and strategy Alliances and resources Process management People results Customer results Society results Key results Policies Organization Information Standardization Development and usage of human -resources Activities ensuring quality Activities for maintenance and control Activities for improvement, result and future plans
Source: Tari (2005)
According to Karuppusami and Gandhinathan (2006), Sila and Ebrahimpour (2005) and Sebastianelli and Tamimi (2003), the research by Saraph et al. (1989) was the first 23
empirical research, which focused on the operationalization of TQM through the identification of critical success factors. Since then the factors that determine success and/or failure in TQM have attracted the attention of many researchers (Najeh and Kara- Zaitri, 2007). Among these, studies by Sila and Ebrahimpour (2002, 2003), and Karuppusami and Gandhinathan (2006) are significant because these researchers summarize previous research in a systematic manner.
Sila and Ebrahimpour (2002) reviewed 347 survey based TQM studies published between 1989 to 2000 and determined that during this period 76 studies in 23 countries focused on the identification of TQM critical success factors. Sila and Ebrahimpour (2002) used factor analysis to identify the 25 most commonly extracted TQM critical success factors from these 76 studies. These factors are given in Table 2.
TABLE 2: 25 TQM CRITICAL SUCCESS FACTORS EXTRACTED FROM SURVEY BASED RESEARCH
Sr. No. FACTORS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20 21. 22. 23. 24. Top management commitment Social responsibility Strategic planning Customer focus and satisfaction Quality information and performance Bench marking Human resources management Training Employee involvement Employee empowerment Employee satisfaction Team work Employee appraisal-rewards and recognition Process management Process control Product/service design Supplier management Continuous improvement Quality assurance Zero defects Quality culture Communication Quality systems Just-in-time 24
Sr. No. FACTORS 25. Flexibility
Source: Sila snd Ebrahimpour (2002)
Sila and Ebrahimpour (2003) extended their previous research and analyzed and compared these 25 factors across studies in 23 countries. They found that top management commitment was the critical success factor covered in each country included in the research. Karuppusami and Gandhinathan (2006) used 37 TQM scale development studies published between 1989 and 2003 to identify 56 critical success factors of TQM. They selected these studies because the reliability and validity of the critical success factors were statistically tested during these studies. On the basis of Pareto analysis, Karuppusami and Gandhinathan (2006) sorted these 56 critical success factors in descending order and divided them into two groups entitled vital few and useful many. In the vital few group 14 factors accounted for 80% of the critical success factors of TQM while the remaining 42 useful many factors accounted for 20% of occurrences frequency only. The 14 factors identified as the vital few are given in Table 3. Karuppusami and Gandhinathan (2006) also confirmed the finding of Sila & Ebrahimpour (2003) that top management commitment is the most critical success factor for TQM.
TABLE 3: 14 VITAL FEW TQM FACTORS
Sr. No. Factors 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Top management commitment Supplier management Process management Customer focus Training Employee relations Product / service design Quality data Role of quality department Human resource management and development Design and conformance Cross functional quality teams Bench marking 25
14. Information and analysis
Source: Karuppusami and Gandhinathan (2006)
This brief review of literature related to critical success factors of TQM therefore suggests that top management / leadership support is overall the most common, important and critical success factor in the implementation of TQM.
However most of the previous research in TQM cited in the review papers above is based on research in developed countries. Quality gurus presented their ideas on the basis of their individual experiences in developed countries. Formal evaluation models of TQM are developed for companies operating primarily in the United States of America, Europe and Japan. This research is based in a developing country (Pakistan) so it is essential to identify the role of top management in previous TQM studies in developing countries. Next subsection of this chapter is therefore about TQM implementation in developing countries.
2.2.1: TQM IN DEVELOPING COUNTIRES
Most of the developing countries have unique characteristics like lack of democracy, instability, corruption, shortage of skilled labour force and raw materials, under utilization of available production capacity, the inferiority and lack of quality standards, high scrap, low purchasing power of customers, inadequate consumers know how, lack of balance between import and export, foreign exchange constraints, incomplete infrastructure etc. (Curry and Kadasah; 2002, Madu, 1997; Mersha, 1997) so the term poor quality is synonymous with the products manufactured in these countries (Mohanty and Lakhe, 2004). However, some of the developing countries are breaking the traditional trade barriers and opening their markets to international competitors, so the demand for quality can no longer be the prerogative of the developed world (Temtime and Solomon, 2002). Speaking at Pakistans first convention on quality, quality guru Crosby stated that nothing is more important to the prosperity of a developing nation than quality. The only way a developing nation can increase its trade activities and develop a sustainable basis is to improve the quality of its products and services (Djerdjour and Patel, 2000). 26
According to Thiagarajan et al. (2001), while TQM in the West lacks theoretical support, knowledge of in developing economies is almost totally lacking. The scant attention given to research in the developed nations, confused by the acknowledged limitations of most of the research findings across national boundaries, has made any efforts to readily learn and transfer empirically sound knowledge to developing economies all the more difficult. It is therefore, important to create TQM knowledge base keeping in view the specific requirements of the developing countries as most of studies on quality management practices have focused on developed countries only (Rao et al., 1997; Al- Khalifa and Aspinwall, 2000) and there is still some lack of information about the nature and stage of TQM implementation in some regions of the world such as Asia, South America, Africa and the Middle East (Sila and Ebrahimpour, 2003). This research is an attempt to reduce this lack of information about TQM implementation in developing countries.
Mahour (2006) identified training and culture as two important barriers in implementing TQM in developing countries. Literature review in the previous section concluded that top management support is the critical success factor of TQM implementation so in the following paragraphs these three factors (top management support, employee training and culture are discussed with reference to developing countries.
Top management in developing countries is mostly not committed to quality initiatives and is reluctant to delegate authority (Djerdjour and Patel, 2002). Studies (Al-Khalifah and Aspinwall, 2000; Temtime and Solomon, 2002, Mersha, 1997) further indicate top management support is the critical barrier in implementing TQM in developing countries. Kaplinsky (1995) identifies reasons for lack of top management support for TQM in developing countries and conclude that in developing countries, many enterprises are family-owned and corporate growth and effective management are constrained by the reluctance of the family to devolve responsibility to professionally trained outsiders.
A second critical barrier in implementation of TQM in developing countries is a cultural change. Bruun and Mefford (1996) recommend that TQM programs in developing 27
countries should be accompanied by changes in organizational culture as programs that are highly successful in the industrialized developed countries often fail in the developing countries because these programs are uncritically adopted without any regard to their congruence with the internal work culture of developing countries (Mendonca and Kanungo, 1996). Yong and Wilkinson (1999) examine cultural issue with in the quality management context from a human resource perspective and argue that Even in culturally homogenous societies, the issue of cultural change plays a key role in determining the success of quality management implementation, but because of the competitive push for the adoption of TQM and the pervasiveness of prescriptive market driven consultancy packages, managers have already neglected to tailor quality initiatives to suit their own organizational cultures. Madu (1997) argues that as multinational corporations have adopted strategies that work well with in the confines of developing economies cultures, developing countries have to tailor quality management practices according to their own culture, as issue is not whether quality management practices should be adopted but how to implement these practices.
Another important concern about TQM implementation in developing Islamic countries like Pakistan is that TQM is alien, not relevant to Islamic cultural and religious norms. Khan (2001) criticizes those who advocate this judgment and argues that there are several Ahadis (sayings of Prophet Muhammad P.B.U.H.) relating to selling of goods, which highlight the responsibility of the seller to explain all the shortcomings of the product explicitly so as to adjust the buyers expectations to the appropriate level. After a clear understanding of all the weaknesses of the product, when the buyer experiences the actual product, he would, at the minimum, be satisfied if not delighted. Islamic norms of business transactions insist on ensuring customer satisfaction that is also the core component of the TQM philosophy. Therefore, it is incorrect to say that the TQM philosophy is alien to Islamic cultural or religious norms and that it would not be applicable in an Islamic country like Pakistan.
The third important factor affecting systemic adoption of TQM is employee training and education as TQM demands a high degree of involvement of all employees and this requires that all employees in the firm receive enough education and training (Gonzalez 28
and Guillen, 2002). According to Madu (1997), if the people of developing economies are better trained and educated, they will be more able to contribute to planning their future and the future of their companies but training infrastructure in these countries is frequently underdeveloped and teaching techniques are still modeled on the now-outdated managerial practices of mass production (Kaplinsky, 1995).
The important question is who can effectively change the culture and allocate sufficient resources for employee education and training? Implementing quality management requires a change of organizational culture and effective leadership is needed to be able to transform the organization in a way that change may become acceptable. Similarly in the perspective of culture, it is the responsibility of management to develop training programs and enrich the knowledge of workers to understand the need for behavioral modifications in order to adopt quality management (Madu, 1997). Therefore it may be concluded that if top management is working effectively, other barriers in the implementation can be over come and lack of top management support is the major barrier in implementation of TQM in developing countries. This conclusion fortifies the conclusion drawn in section 2.2.1 that top management support is the most critical success factor of TQM.
2.3: CUSTOMER SATISFACTION
The word satisfaction is formed combining Latin words satis (enough) and facere (to do or make) (Rust et al. 1996). Since the mid-1980s, when quality management became a widely practiced way to improve product quality, reduce costs and improve customer service, the issue of customer satisfaction has brought about a great deal of ongoing debate (Gustafsson and Johnson, 2004; Wirtz and Lee, 2003).
The definition of satisfaction also shows a strong heterogeneity (Florence et al. 2006). Different authors have defined satisfaction in different ways but Giese and Cote (2000) found that three overall components within virtually every definition of satisfaction might be identified as these capture the specifics of the concept. These components are
* A response (affective or cognitive). 29
* The response concerns a particular focus (e.g. expectations, product and consumption experience). * The response takes place at a particular point in time (e.g. after choice, after transaction, after consumption, based on accumulated experience).
The primary thread of debate in the satisfaction literature nowadays is focused on the nature of the cognitive and affective processes that result in the consumers state of mind referenced to as satisfaction (Jaronski, 2004). The cognitive dimension is the set of information individuals accumulate through direct or indirect experience where as the affective dimension is positive or negative evaluation (Florence et al. 2006). According to this stream of satisfaction research, Yi (1991) categorized customer satisfaction definitions either as an evaluation process or as an outcome of evaluation process. Oliver (1981), Yi (1991) and Fornell (1992) describe satisfaction as an evaluation process where as Tse and Wilton (1988) describes satisfaction as an outcome of evaluation process.
Satisfaction as an evaluation process is based on the disconfirmation of expectations paradigm. Consumers form expectations towards product/service performance and these expectations later serve as standards against which actual product/service performance is evaluated (Oliver, 1980; Churchill and Suprenant, 1982) so it is actually the comparison of expectations and actual perceived performance that results either in confirmation or disconfirmation. If expectations are met, confirmation takes place, otherwise disconfirmation occurs. Disconfirmation may be positive (when perceptions exceed expectations) or negative (when expectations exceed perceptions). Therefore satisfaction is the result of confirmation and positive disconfirmation where as negative disconfirmation guides to dissatisfaction. Use of the term positive disconfirmation was confusing so Anderson and Sullivan (1993) adopted the term affirmation as a substitute for the term positive disconfirmation.
The framework of customer satisfaction as an outcome of an evaluation process is based on the satisfaction as states the paradigm developed by Oliver (1989). Oliver (1997) also found that satisfaction relates to pleasurable emotions, those approaching excitement or delight and tending toward contentment and relaxation; whereas dissatisfaction relates to 30
unpleasant, disappointing and angering emotions. Zeithaml and Bitner (2000) found that satisfaction is related to relief. Studies by Folkes et al. (1987), Mooradian and Oliver (1995) also investigated the relationship between satisfaction and emotion. These studies documented that satisfaction is clearly related to affective evaluations and affective evaluations are antecedents to satisfaction. Although cognitive states have some influence on satisfaction, the concept is strongly related to affective states, or emotions (Wicks, 2004).
Practically all research on customer satisfaction agrees that customer satisfaction is a key component of economic success (Horvath, 2001). There are two different types of evaluations of customer satisfaction from the economic psychology perspective. One is transaction-specific satisfaction and the other is cumulative satisfaction (Johnson et al., 1995). Satisfaction that occurs strictly at time of the service delivery is referred to as transaction-specific satisfaction (Parasuraman et al., 1988; Bitner, 1990) whereas cumulative satisfaction approach defines satisfaction as customers overall experience to date with a product or service provider (Johnson and Fornell, 1991). Fornell et al. (1996) argue that the cumulative satisfaction construct is better able to predict subsequent behaviors and economic performance over a more transaction specific view because customers make repurchase evaluations and decisions based on their purchase and consumption experience to date, not just a particular transaction or episode (Johnson et al., 2001).
The review of literature in this section concludes that satisfaction is mainly influenced by affective states (emotions) and cumulative satisfaction has more vital role in economic success of the companies as compared to the transaction specific satisfaction. The next question is how to measure customer satisfaction?
Many experts concur that the most powerful competitive trend currently shaping marketing and business strategy is service quality (Abdullah, 2006) because of its apparent relationship to customer satisfaction (Bolton and Drew, 1991a). It has been a long-standing debate in the literature whether service quality is an antecedent for satisfaction or vice versa. Bitner (1990) and Bolton and Drew (1991b) suggest that 31
satisfaction is an antecedent of service quality. Zeithaml et al. (1993) used both terms as synonymous because both use expectations and perceptions as key antecedent constructs and both are related to the behavioral intentions, which affect financial success of the business organizations. De Ryter et al. (1997) merged the concepts of service quality and satisfaction in an integrative model and tested the model empirically. This model concluded that satisfaction should be treated as a superordinate construct to service quality as higher levels of service quality results in increased satisfaction. In this research, the determinants of service quality are used as antecedents of customer satisfaction. The following section therefore reviews literature about what service quality is and how various authors conceptualize service quality concept.
2.4: SERVICE QUALITY
Service quality has been a frequently studied topic in service marketing literature (Su et al., 2008). Various definitions of service quality have been proposed in the past (Jain and Gupta, 2004) although it is an elusive and abstract construct that is difficult to define and measure (Cronin and Taylor, 1992). Different authors have defined it differently but most widely accepted definitions are those proposed by Parasuraman et al., (1988) and Cronin and Taylor (1992). Parasuraman et al., (1988) define service quality as the difference between what the customer feels that a service provider should offer and his perception of what the service provider actually offers. However Cronin and Taylor (1992) argue that only perceptions of performance derive service quality and expectations have no value in calculating service quality. The objective of literature review in subsection 2.3.1 is to relate concept of service quality to financial success of the company via customer satisfaction.
2.4.1: MODELS OF SERVICE QUALITY
The model presented by Gronroos (1984) is considered as the first service quality model (Wicks, 2004). In this model the author identified technical quality, functional quality and image as dimensions of service quality (figure 2.2). Technical quality is defined as what the consumer receives as a result of interactions with a service firm and functional quality just the way in which the technical quality is transferred where as image is built 32
up by both technical and functional quality of service. Gronroos concluded that to manage service quality, there must be no gap between the expected service and the perceived service so the Gronroos also used the Disconfirmation paradigm used by Oliver in 1980 in his classic model of customer satisfaction.
FIGURE 2.2: THE GRONROOS SERVICE QUALITY MODEL
On the foundations of model proposed by Gronroos, Parasuraman et al., (1985) developed the gap model (figure 2.3) to measure the elements of service quality.
The various gaps envisaged in this Parasuraman et al., (1985) model (figure 2.3) are:
Gap 1: Difference between consumers expectation and managements perceptions of those expectations, i.e. not knowing what consumers expect. Gap 2: Difference between managements perceptions of consumers expectations and service quality specifications, i.e. improper service-quality standards. Gap 3: Difference between service quality specifications and service actually delivered i.e. the service performance gap. Gap 4: Difference between service delivery and the communications to consumers about service delivery, i.e. whether promises match delivery?
Perceived Service
Image
Technical Quality
Functional Quality
Expected Service
Perceived Service Quality 33
Gap 5: Difference between consumers expectation and perceived service. This gap depends on size and direction of the above-mentioned four gaps. This gap constitutes the theoretical basis of this gap model (commonly called SERVQUAL model) and states: The quality that a consumer perceives in a service is a function of the magnitude and direction of the gap between expected service and perceived service and mathematically can be expressed as:
( ) ij ij k j E P SQ = = =1
where: SQ = Overall service quality k = number of attributes. Pij = Performance perception of stimulus i with respect to attribute j. Eij = Service quality expectation for attribute j that is the relevant norm for stimulus i. 34
FIGURE 2.3: PARASURAMAN ET AL., (1985) SERVICE QUALITY MODEL
Parasuraman et al., (1985) recognized reliability, responsiveness, competence, access, courtesy, communication, credibility, security, understanding/knowing the customer and tangibles as determinants of service quality. Subsequent work by Parasuraman et al., (1988) merged these determinants into the five-component 22-item scale known as SERVQUAL (figure 2.4) on the basis of factor analysis (Cronin and Taylor, 1992).
Reliability, responsive and tangibles were retained as such as identified in 1985 whereas communication, competence, credibility, courtesy and security merged as a construct Word of Mouth Communications Personal Needs
Past Experience
Expected Service
Perceived Service
Service Delivery (including pre- and post-contacts) Translation of Perceptions into Service Quality Specs. Management Perceptions of Consumer Expectations External Communications to Consumers GAP5 GAP4 GAP3 GAP1 GAP2 CONSUMER MARKETER 35
assurance where as access and understanding/knowing the customer merged to form the construct empathy.
FIGURE 2.4: PARASURAMAN ET AL., (1988) SERVQUAL MODEL
Source: Cronin and Taylor (1992)
Parasuraman et al., (1988) described these five dimensions as follow:
Tangibility: Appearance of physical facilities, equipment and communication material Reliability: Ability to perform the promised service dependably and accurately Responsiveness: Willingness to help customers and provide prompt service Assurance: Knowledge and courtesy of the employees and their ability to convey trust and confidence Empathy: The caring and individualized attention, organization provides to its customers
For a number of years, the dominant operationalization of service quality has been Parasuraman et al., (1988) SERVQUAL scale. The foundation of the measure rested on the authors suggestion that service quality should be represented as the difference, or gap, between service expectations and actual service performance (i.e., the disconfirmation paradigm) but Cronin and Taylor (1992) argue that, if service quality is Reliability Responsiv eness Assurance Empathy Perceived Service Quality Tangibles X 1 X 2 X 3 X 4 X 10 X 11 X 12 X 13 X 14 X 15 X 16 X 17 X 5 X 6 X 7 X 8 X 9 X 18 X 19 X 20 X 21 X 22 36
to be considered similar to an attitude, as proposed by Parasuraman et al., (1985, 1988), its operationalization could be better represented by an attitude-based conceptualization. Therefore, they proposed that the expectations scale be discarded in favor of a performance-only measure of service quality that they term SERVPERF (Brady et al., 2002). ij k j P SQ 1 = = where: SQ = Overall service quality k = number of attributes. Pij = Performance perception of stimulus i with respect to attribute j.
The use of performance-only measures is suggested by a number of other studies (Babakus and Boller, 1992; Boulding et al., 1993) though still there is no consensus that which of the two scales (SERVQUAL or SERVPERF) is more suitable for service quality measurement (Jain and Gupta, 2004).
Another major strategic implication in Parasuraman et al., (1988) model was proposed by Boulding et al., (1993). Boulding et al., (1993) reported that firms can try either to increase perceptions or lower expectations in their quest to increase overall service quality. Boulding et al., (1993) concluded that although expectations directly do not affect service quality, it does not mean that they have no effect at all. Boulding et al., (1993) classified expectations as will expectations (WE) and should expectations (SE) and recommended that firms should manage customers will expectations (WE) up and should expectations (SE) down if they want to increase customer perceptions of overall service quality.
The second important contribution of Boulding et al., (1993) model is to link service quality to behavioral intentions. Overall perceived service (OSQ)------Behavioral intentions (BI) link of this model propose that overall perceived service quality is related to the behavioral intentions of the customers. 37
FIGURE 2.5: BOULDING ET AL., (1993) A DYNAMIC PROCESS MODEL OF SERVICE QUALITY
In this model
WE = Will Expectation, SE = Should Expectation, DS = Delivered Service PS = Perceived Service OSQ = Overall Perceived Service BI = Behavioral Intentions
Bitner (1990), Bolton and Drew (1991a,b), Cronin and Taylor (1994) and Venetis and Ghauri (2004) also find that service quality has a positive impact on customers behavioral intentions. Zeithaml et al., (1996) supported this relationship of perceived service quality to behavioral intentions and concluded that behavior of the customers has direct influence on the financial health of the company as service excellence enhances customers inclination to buy again, to buy more, to become less price sensitive and to tell others about their positive experiences. The model (figure 2.6) proposed by Zeithaml et al., (1996) suggests that when service quality is superior, behavioral intentions of the customers are favorable and thus customers are retained. This customer retention results in financial gains and the case is vice versa when service quality is inferior as behavioral intentions are unfavorable and customers defect from the company. WE
SE DS
PS OSQ BI 38
FIGURE 2.6: (ZEITHAML ET AL., 1996) THE BEHAVIORAL AND FINANCIAL CONSEQUENCES OF SERVICE QUALITY
The review of models proposed by Gronroos (1984), Parasuraman et al., (1985,1988), Boulding et al., (1993) and Zeithaml et al., (1996) in this section strengthens the relationship of service quality to the behavioral intentions of the customers and financial gains for the business organizations.
2.5: SUMMARY OF THE CHAPTER
In this chapter the literature related to TQM, customer satisfaction and service quality is reviewed in a systematic order. The chapter starts with brief history of the TQM. Review of TQM literature suggests that absolute customer focus is the core component of TQM philosophy. Available literature suggests that top management support is one of the most critical success factors of TQM, however in developing countries mostly top management is not committed to TQM implementation. This research will recheck this finding.
Though there is significant heterogeneity in defining customer satisfaction, it has been concluded that affective processes are the main antecedents of satisfaction and from the economic psychology perspective, cumulative satisfaction is more important. Relationship between customer satisfaction and service quality is established in which service quality is an ancestor of customer satisfaction. Various models of service quality are presented in section 2.3. This section suggests that service quality relates to the
Favorable BEHAVI ORAL I NTENTI ONS SERVICE QUALI TY Superior I nferior
Remain
BEHAVI OR
Defect
+$ Ongoing Revenue Increased Spending Price Premium Referred Customers
FI NANCI AL CONSEQUENCES
$ Decreased Spending Lost Customers Costs to Attract New Customers Unfavorable 39
behavioral intentions and favorable behavioral intentions are must for financial success of the firms. This means higher the service quality; higher are the chances of financial success because of increased customer satisfaction.