Service quality and customer satisfaction in business to business the case of ready mix concrete industry vietnam

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


Table of Contents
ACKNOWLEDGEMENT ....................................................................................................... 3
ABSTRACT .............................................................................................................................. 4
LIST OF TABLES ................................................................................................................... 5
LIST OF FIGURES ................................................................................................................. 6
Chapter 1 .................................................................................................................................. 7
INTRODUCTION.................................................................................................................... 7
1.1.

Ready-Mix Concrete industry in Vietnam .................................................................. 7

1.2.

Service Quality and Customer Satisfaction in B2B context ...................................... 9

1.3.

Research Objectives .................................................................................................... 11

1.4.

Scope of the research ................................................................................................... 12

1.5.

Expected contributions of research ........................................................................... 12

1.6.

Organization of thesis ................................................................................................. 13

Chapter 2 ................................................................................................................................ 14
LITERATURE REVIEW AND HYPOTHESES ................................................................ 14
2.1.

Literature review ........................................................................................................ 14

2.1.1.

Service experience .................................................................................................... 14

2.1.2.

Service Quality .......................................................................................................... 16

2.1.3.

Customer Satisfaction .............................................................................................. 27

2.2.

Research Model and Hypotheses ............................................................................... 31

Chapter 3 ................................................................................................................................ 36
RESEARCH METHOD ........................................................................................................ 36
3.1.

Quantitative research: Pre-test .................................................................................. 36

3.2.

Quantitative research: Main survey.......................................................................... 37

3.2.1.

Measurement scales ................................................................................................. 37

3.2.2.

Sampling ................................................................................................................... 40

3.2.3.

Data analysis............................................................................................................. 42

Chapter 4 ................................................................................................................................ 46
DATA ANALYSIS AND RESULTS .................................................................................... 46
4.1.

Data statistical analysis ............................................................................................... 46

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4.2.

Identifying and addressing outliers ........................................................................... 47

4.3.

Cronbach’s Alpha coefficient of reliability test ........................................................ 48

4.4.

Exploratory Factor Analysis (EFA) result ................................................................ 48

4.5.

Research Model test .................................................................................................... 50

4.5.1.

Multiple regression .............................................................................................................. 51

4.5.2.

Chow test for moderating effect .......................................................................................... 56

Chapter 5 ................................................................................................................................ 60
DISCUSSION AND CONCLUSIONS ................................................................................. 60
5.1.

Discussion of research results ..................................................................................... 60

5.2.

Contribution and managerial implications for the research ................................... 63

5.2.1.

Contribution for the research .............................................................................................. 63

5.2.2.

Managerial implications of the research .......................................................................... 64

5.3.

Limitations and directions for further research ....................................................... 64

5.4.

Conclusions .................................................................................................................. 66

REFERENCES ....................................................................................................................... 67

APPENDIX ............................................................................................................................. 73

2


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


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 ReadMix 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


LIST OF TABLES
Table 2.1 - B2B Service quality determinants over the time ................................................. 20
Table 4.1 - Descriptive statistics of multiple regression ........................................................ 51
Table 4.2 – Inter-correlations ................................................................................................. 52
Table 4.3 - Model Summary .................................................................................................. 53
Table 4.4 - ANOVA ............................................................................................................... 53
Table 4.5 - Coefficients.......................................................................................................... 54
Table 4.6 - Group Statistics ................................................................................................... 56
Table 4.7 - Summary table for Chow test .............................................................................. 59

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LIST OF FIGURES
Figure 1.1 - B2B Service quality determinants over the time ...................................... 8
Figure 2.1 - Measurement dimensions in SERVQUAL and INDSERV .................... 21
Figure 2.2 - The conceptual framework and its dimensions displayed in middle
column ........................................................................................................................ 26

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Chapter 1
INTRODUCTION
1.1.

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., 1998).
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).

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Figure 1.1: 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.

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1.2.

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.g. Hiseand 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. 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 businessto-business customer service differ to individual service (Gregory.L, 2010). Evidence
has shown that SERVQUAL appears to perform less admirably than B2B contexts
(Babakus and Boller, 1992; Durvasula et al., 1999). Accordingly, researchers have
made some recent attempts to investigate and develop alternative B2B specific scales.

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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.
86). 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

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number of studies in the services marketing literature have reported that these two
constructs are strongly related (e.g., Caruana, 2002; Spreng and Chiou, 2002;
Alexandris et al., 2001; Spreng and McKoy, 1996; Cronin and Taylor, 1992;
Woodside et al., 1989).
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 ReadyMix 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.
1.3.

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


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
1.4.

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.
1.5.

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

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Leadership strategy of the company in selecting his own best solution (i.e. which
determinant should be exploited with the limited budget, etc.).
1.6. Organization of thesis
This research is constructed in five parts. The first is the introduction of the

study. The second is the literatures review and hypotheses. Following is the research
method. The next part is the data analysis and results. Discussion and conclusion
comprise the final section of this research.

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Chapter 2
LITERATURE REVIEW AND HYPOTHESES
Chapter 2 reviews and discusses about the theories of service quality, customer
satisfaction and the relationships between these two concepts in B2B context,
especially in the Ready-Mix Concrete service industry. Accordingly, the existing
researches employed various approaches to measure service quality. Among them,
SERVQUAL are the popular instruments applied in many B2C service fields but
considered at best mixed in B2B context. Therefore, this research approaches four
dimension of INDSERV- the most fundamental and comprehensive scale applied in
B2B context so far - together with the fifth dimension referring to the dynamics of
long-term quality formation in ongoing customer relationships, namely, Potential
quality, Hard quality, Soft quality, Output quality and Buyer-supplier relationship
quality to measure the construct Ready-Mix Concrete service quality. In addition,
basing on practical situation of Ready-Mix Concrete service industry in Vietnam, this
chapter points out the moderating effect of company types on the relationship of each
determinant of B2B service quality and customer satisfaction. Following these
arguments, a research model is set up with six hypotheses.
2.1.

Literature review

2.1.1. Service experience
The concept of “service experience” has been described as the core of the

service offering and service design (Zomerdijk and Voss, 2010); as such, it is a key
concept in the emerging paradigm of service-dominant logic (S-D logic), which
regards the service experience as the basis of all business (Lusch and Vargo, 2006;
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Schembri, 2006; Vargo and Lusch, 2008). Holbrook and Hirschman’s (1982)
pioneering article on the service experience characterized the concept in experiential
and phenomenological terms, which was in accordance with the authors’ view of
consumption as: “. . . primarily subjective state of consciousness with a variety of
symbolic meanings, hedonic responses, and aesthetic criteria”. Twenty years later,
Carù and Cova (2003) observed that the concept of service experience has
subsequently been characterized, often somewhat loosely, in a wide variety of ways –
although most authors continued to restrict the use of the term to specific kinds of
service experience, such as hedonic consumption. Although there is widespread
contemporary agreement on the importance of the concept of service experience in
marketing, it is apparent that there are divergent views on how it should be
characterized. Indeed, no systematic review of the literature on the concept of service
experience was published until Anu Helkkula (2011) seeks to fill this gap in the
literature by undertaking a systematic review and analysis of how the concept of
service experience has been characterized in the contemporary service marketing
literature. The findings from this study has indicated that there are three
characterizations of the concept of service experience including phenomenological
service experience (which relates to the value discussion in service-dominant logic
and interpretative consumer research), process-based service experience (which
relates to understanding service as a sequential process), and outcome-based service
experience (which relates to understanding service experience as one element in
models of service linking a number of variables or attributes to various outcomes).

15

However, in the B2B context, this study supports the viewpoint of Meyer and
Schwager published in 2007. They suggested that customers’ service experience is the
internal and subjective response customers have to any direct or indirect contact with
a company. Direct contact generally occurs in the course of purchase, use, and service
and is usually initiated by the customer. Indirect contact most often involves
unplanned encounters with representations of a company’s products, services, or
brands and takes the form of word-of mouth recommendations or criticism,
advertising, news reports, reviews, and so forth.
Despite scarce empirical evidence, scholars seem to be in agreement of a
conceptual distinction between customers’ service experience and customer
satisfaction. According to Schmitt (2003), satisfaction can be described as an
outcome-oriented attitude that occurs when customers evaluates the performance of a
product according to their expectations of it. In contrast, an experience is
characterized as process-oriented, including value beyond the functional, productdriven determinants of satisfaction. Meyer and Schwager (2007) suggest that customer
satisfaction is the culmination of a series of customer experiences, where degree of
satisfaction is the net result of good experiences minus bad experiences.
2.1.2. Service Quality
Definition of Service Quality
Service quality in the management and marketing literature is the extent to
which customers' perceptions of service meet and/or exceed their expectations for
example as defined by Zeithaml et al. (1996). Parasuraman defines service quality as
“the differences between customer expectations and perceptions of service”

16


(Parasuraman, 1991). They argued that measuring service quality as the difference
between perceived and expected service was a valid way and could make management

to identify gaps to what they offer as services. Zeithaml and Bitner (2003) defined
perceived service quality as a global judgment or attitude relating to the superiority of
a service. It is widely accepted today that service quality is a multi-dimensional
concept. This conceptual definition is valid in both the B2C and B2B context and the
measurement of the service quality concept is mostly based on its dimensions or
determinants (Parasuraman, Zeithaml and Berry, 1988).
B2C & B2B context: SERVQUAL model and INDSERV model
The empirical research has showed that the dimensions of service quality
perceived by an industrial firm or by an individual customer may not totally overlap
each other (Kong and Mayo, 1993). There has been a variety of service quality models
in the literature. One of the most widely used models is the SERVQUAL, which was
developed by Parasuraman, Zeithaml, and Berry, (1988). Based on focus group
interviews with customers and in-depth interviews with executives in consumer
sectors like retail banking and product repair and maintenance, Parasuraman, Zeithaml
and Berry (1985) defined ten dimensions of service quality: tangibles, reliability,
responsiveness, competence, access, courtesy, communication, credibility, security
and understanding the customer. Subsequent research (Parasuraman, Zeithaml and
Berry, 1988) revealed only five dimensions. Tangibles, reliability and responsiveness
remain the same, while assurance and empathy encompass the other seven
dimensions.

17


In the past, it has been assumed that the service quality dimensions found in
consumer settings could be applied to business markets as well. However, in a B2B
environment other determinants may play a role in perceived service quality than the
ones found in a B2C context. B2B service relationships are of a longer-term and
greater-intensity nature. For instance, services purchased from organizations (B2B)
are provided by qualified professionals whose expertise and skills are key elements of

the quality of service provided. They interact closely with managers from the buying
organization and on a very frequent basis (Hausman, 2003). In addition, B2B 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, 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 B2B service provider is not a routine task
(Jackson et al., 1995), even for established providers. What organizations actually
purchase is frequently a customer-specific and quite-unique solution to a specific
problem (Patterson, 1995).
Therefore,

researchers

have

frequently

questioned

and

revised

the

dimensionality of SERVQUAL, with variegated numbers and identities of factors
emerging in different studies. One of the pioneers in this area is Gronros (1984) who
suggested that two types of perceived service quality are of concern for industrial

customers: Technical quality and Functional quality. The former was conceived as

18


encompassing the core operation-related aspects of the service while the latter as
comprising the interaction between individuals from the two organizations.
Following Gronros (1984) original conceptualization, Morgan (1991) proposed
two different but quite similar dimensions: Process elements, i.e. how the service is
delivered with regard to the interaction between the staff from the two companies
(customer and provider) and Outcome elements, i.e. what the customer actually
received from the provider. Another dimension, that of integrative quality, is proposed
by Edwardson et al. (1990) referring to the provider’s ability to ensure that all the subsystems that are required to deliver the service are actually coordinated well enough to
do so.
Later work by Szmigin (1993) furthered the dimension of output quality, which
relates with eventually delivering the service outcome that the customer expects. This
dimension is different from hard quality because a service company may well manage
to put all the required sub-systems to work in a coordinated fashion and still the endresult of the serving endeavor will be less than what the customer expected. Given this
difficulty to relate outcome quality to the efforts and success of the provider, Halinen
(1994) suggests that output quality ought to be broken down in two distinct
dimensions: “Immediate outcome” and “Final outcome quality”. With regard to the
former, it relates to the success of the provider to provide the customer with a solution
to its problem while, the latter describes the effects that the service offered created for
the customer, after it has been implemented.
Furthermore, less service quality measurement methods on B2B services
quality are found in literature: of the 30 articles discussed by Ladhari (2008), only 5

19

focused on a B2B environment (where the buyer is a professional instead of a
consumer), while there are no empirically tested other methods available that are
applicable for all services. Generally, we can distinguish two streams of research: the
SERVQUAL based measures, of which INDSERV (Gounaris, 2005) is an example,
and the conceptualization of Grönroos (1984).
Results of applying SERVQUAL in a B2B context were at best mixed
(Gounaris, 2005), which was reason for Gounaris to develop a new conceptualization
of service quality. Extending the dimensions suggested by Szmigin (1993) and
Bochove (1994), 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 summary, it is considered that the INDSERV scale developed by Gounaris
(Gounaris, 2005a, b, c; Gounaris and Venetis, 2002) is the most fundamental and
comprehensive scale applied in B2B context up to now. Table 1.1 summarizes the
findings in the literature to understand various determinants of basic service quality.
Table 2.1 – B2B Service quality determinants over the time

B2B Service Quality Determinants

Authors

Technical quality and Functional quality

Gronros (1984)

Process elements and Outcome elements

Morgan (1991)

Hard quality, Soft quality and Output quality

Szmigin (1993)

Output quality = Immediate outcome + Final outcome quality

Halinen (1994)

Potential quality

Bochove (1994)

Potential quality, Hard quality, Soft quality and Output quality

Gounaris (2005)

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SERVQUAL
B2C

INDSERV
B2B

Tangibility

Potential
Quality

Assurance

Hard
Process
Quality

Reliability

Soft Process
Quality

Responsiven
ess

Empathy

Output
Quality

Figure 2.1: Measurement dimensions in SERVQUAL and INDSERV
Analyzing Gounaris model and findings, and looking at the adaptations he
actually made to the SERVQUAL measure, it can be concluded as following
(1)

Four dimensions of SERVQUAL (Empathy, Assurance, Reliability and

Responsiveness) load together as one factor, suggesting that they are in fact aspects of
the same dimension. Looking at what these dimensions actually measure, one can say

21

that these dimensions measure almost the same as what (hard and soft) process quality
measures;
(2)

The Tangibles dimension is not present in the INDSERV measure. However,

the Potential Quality dimension resembles a “professional version” of the Tangibles
dimension. Potential quality in the B2C SERVQUAL measure is based on “visually
appealing buildings” and “neat employees”; in the B2B INDSERV measure it is based
on amongst others skilled personnel, network and facilities. Both are elements that the
customer perceives and can associate with (potential) quality of the supplier;
(3)

The INDSERV measure has one dimension that we do not find in the

SERVQUAL: Output Quality (effects that the solution offered created for the client
after it has been implemented (Gounaris, 2005). In Gounaris’ method this dimension
has the following items: the supplied service reaches its objectives, the service has a
notable effect, the service contributes to our image/sales, the service is creative in
terms of its offering, and the service is consistent with our strategy.
Four dimensions of Service Quality in INDSERV model:
Potential quality: Bochove (1994) suggested that a critical dimension of
perceived service quality is that of Potential quality, which 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. This is in line with the findings of
Patterson (1995), who reports that industrial customers have significant difficulty to
assess the provider’s ability to perform the requested service. Gounaris and Venetis
(2002) provide empirical evidence of how this specific dimension influences the
overall evaluation of the service offered by the provider.

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Hard process quality: based on the work of Szmigin (1993), hard quality
pertains to what is being performed during the service process. This notion similar to
Gronrøos’ (1984) “technical quality” conceived as encompassing the core operationrelated aspects of the service such as scheduled kept, budget stayed in, need
understood, etc.
Soft process quality: soft quality pertains to how the service is performed
during the service process according to Szmigin (1993), on the other hand pertains to
the front-line personnel and the interaction between two managers and/or employees
from the two companies such as understanding customer’s needs and personality
match (Morgan, 1991), self-disclosure (Hausman, 2003) and so on. This notion
similar to Gronrøos’ (1984) “functional quality” defined as comprising the interaction
between individuals from the two organizations.
Output quality: referring to the client’s evaluation of the end-results of the hard
and soft parameters or the effects that the solution offered created for the client after it
has been implemented (i.e. whether the supplier contributed to customer’s image or
creative in term of its offering). This dimension is different from hard quality because
a service company may well manage to put all the required sub-systems to work in a
coordinated fashion and still the end-result of the serving endeavor will be less than
what the customer expected.
In 2008, Van der Valk et al. took Grönroos’ (1984) functional-technical
conceptualization as a basis for service quality. They preferred Grönroos’
conceptualization over Parasuraman’s, because it is broader than SERVQUAL. Since
many authors (Axelsson and Wynstra, 2002; Van Weele, 2008) have argued that the

23

relationship between the buyer and the supplier has become important in addition to
price, quality and delivery. This development suggests that when evaluating service
providers, especially in B2B context, companies should not only look at the object of
exchange, but also at the overall relationship. In addition, Grönroos (2000, as cited in
Van der Valk et al., 2008) made a clear distinction between quality at the level of the
service and quality at the level of the relationship. He claims that buyer-supplier
relationship quality refers to “the dynamics of long-term quality formation in ongoing
customer relationships”. 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 longterm oriented.
Van der Valk et al. (2008) added a third dimension to the existing
conceptualization: buyer-supplier relationship, beside functional and technical
dimension. This three-dimension conceptualization however has no measurable items
to measure service quality, and its usefulness has not been supported by empirical
evidence.
Based on the findings from Van der Valk et al. (2008), H.P. Kamping (2009)
from Eindhoven University of Technology applied successfully this conceptualization
in his empirical Master Thesis in developing a method to define and measure service
quality from buying company’s perspective (i.e. Nestle). The dimensions that are used
in the conceptual framework with four as follows:
Service Output Quality: Quality associated with the outcome/result of the
service encounter

24