Client perceived service and satisfaction in business to business professional tax consultant services

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business

Nguyen Thi Ngoc Phuong

Client perceived service and satisfaction
in business-to-business professional tax
consultant services

ID: 22110046

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. Vo Thi Ngoc Thuy

Ho Chi Minh City- 2014


Master thesis

Acknowledgement

I would like to express my gratitude to my supervisor, Dr. Vo Thi Ngoc Thuy, for the
patient guidance, encouragement and advices she has provided throughout the time preparing
this thesis. In addition, I would like to thank all the members of committee and professors at
International School of Business and my colleagues for their great orientation, instructions
and comments for my further improvement of my thesis.
Thanks to all participants in the research survey for their kind support and
cooperation. Finally, I also would like to thank family and friends who always support and
encourage me a lot.
Nguyen Thi Ngoc Phuong
March 2014

Master thesis

Abstract

This thesis attempts to empirically confirm the applicability of La et al.' s (2009)
conceptual model regarding client perceived value in professional business-to-business
service in professional tax services in the context of Vietnam. It endeavors to expand the
concept of value and satisfaction in business-to-business professional tax services in the
context of Vietnam. This is the first research representative in the context of Vietnam that is a
theoretical contribution to the research on value and client satisfaction from an Asian
behavior perspective.
The results show that in the context of professional tax consultant services m
Vietnam, clients tend to perceived performance and value in the same stage called perceived
service. There are five factors which are empirically confirmed having positive effects to
perceived service i.e. technical skills, interpersonal skills, customer orientation, reputation
and relationship with tax authorities. In addition, perceived service is a key contributing
factor to client satisfaction. The results also indicate that the impacts of reputation and
relationship with tax authorities on perceived service are not different in terms of firm's
international experience and nature of engaged services, respectively.
In addition, the research aims to provide managerial implications. Based on the
finding, discussion and recommendations in the research, professional tax firms can have
further actions to address client's need and more improve the level of customer satisfaction.

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Master thesis

CONTENTS
Acknowledgement ................................................................................................................ i
Abstract ............................................................................................................................... ii
Chapter 1:

Introduction ................................................................................................ 1

1.1

Research background .............................................................................................. 1

1.2

Research problem ................................................................................................... 2

1.3

Research objectives ................................................................................................. 3

1.4

Scope ofthe research .............................................................................................. 3

1.5

Significance ofthe research .................................................................................... 4

1.6

Structure of the thesis .............................................................................................. 5

Chapter 2:

Literature review ........................................................................................ 6

2.1

Literature review ..................................................................................................... 6

2.2

Qualitative analysis ............................................................................................... 16

2.3

Hypothesis ............................................................................................................ 22

Chapter 3:

Methodology ............................................................................................. 26

2.1

Methodology ........................................................................................................ 26

2.2

Measurement ........................................................................................................ 27

Chapter 4:

Data Analysis ............................................................................................ 32

3.1

Purifying data ....................................................................................................... 32

3.2

Measurement analysis ........................................................................................... 32

3.3

Hypothesis testing ................................................................................................. 38

3.4

Moderator testing .................................................................................................. 45

Chapter 5:

Discussion and Conclusion ....................................................................... 48

4.1

Results Discussion ................................................................................................ 48

4.2

Managerial implication ......................................................................................... 52

4.3

Conclusion ............................................................................................................ 53

4.4

Limitation and Further research directions ............................................................ 53
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REFERENCE .................................................................................................................... 55
APPENDIX ....................................................................................................................... 57

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LIST OF TABLES AND FIGURES
Tables
Table 1: Summary of qualitative analysis' results ................................................................ 20
Table 2: Summary of indicators of the constructs used in the research model ...................... 28
Table 3: The Cronbach alpha coefficients of components .................................................... 33
Table 4: Exploratory Factor Analysis .................................................................................. 34
Table 5: Extracted Factors ................................................................................................... 37
Table 6: The Cronbach alpha coefficients of new components ............................................ 38
Table 7: Summary of regression results: Factors having impacts on Perceived Service ........ 41
Table 8: Relationship among independent variables (Technical Skills, Interpersonal Skills,
Customer Orientation, Reputation, Relationship with Tax Authorities) and dependent variable
(Perceived Service) ............................................................................................................. 42

Table 9: Summary of regression results: Factor having impact on Client Satisfaction .......... 44
Table 10: Relationship between independent variable (perceived service) and dependent
variable (client satisfaction) ................................................................................................ 44
Table 11: Summary of Chow test results ............................................................................. 46

Figures
Figure 1: Summary of qualitative analysis' results .............................................................. 22
Figure 2: Proposed Conceptual Model of Client Perceived Value and Satisfaction in
Business-to-Business Professional Tax Services in Vietnam ............................................... 25
Figure 3: Conceptual Model of Client Perceived Value and Satisfaction in Business-toBusiness Professional Tax Services in Vietnam ................................................................... 39
Figure 4: Regression results: Factors having impacts on Perceived Service ......................... 43
Figure 5: Summary ofthesis results .................................................................................... 47

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Chapter 1:

Introduction

1.1 Research background
In the intensively competetive landscape of the world's economy in general and
Vietnamese' in specific, almost all industries have faced many challenges and difficulties.
The professional tax consultant service industry is not an exception. In order to gain
competitive advantage, service firms today are required to deliver superior client value (Flint,
Woodruff and Gardial, 2002). Value has been linked to loyalty, increased profits, long term
survival and competitive advantage (Khalifa 2004; Woofruff 1997; Hamel and Prahalad
1994; Day and Wensley 1988). However, the definition of value is often vague and the

interpretation might be very different between the client and the service provider due to
different perspectives. This might be the reason why many scholars state that 'how" clients
interpret value is more important than 'how' service providers believe what value is supposed
to be (Blois, 2004). This concept is further complicated when studying professional services,
which are more complex and intangible than regular services, meaning clients often have
difficulty in confidently evaluating performance outcome (La, Patterson and Style, 2009).
Understanding clients' view of value which links to the comprehension of clients' perceived
performance is a one of critical success factors for almost of the firm especially professional
firms. La, Patterson and Style (2009) find significant strong positive relationship from
performance that completely mediates the relationship to satisfaction through value to
satisfaction in professional business-to-business services.
Professional tax services are professional services provided by professional tax firms
whose staff- tax consultants- are experts in tax law. Together with the growth of economy
and the complex of many types of business and transactions, tax law become more
complicated than ever, especially in emerging countries where there are frequent changes in
tax regulations and practices. Professional tax services advise or consult clients based on


Master thesis
interpretation of the most updated tax law and experience on current practices which many
clients do not have inside their organizations. Therefore, except the company with extremely
simple financial affairs, the others are about to seek to appoint a firm to provide tax services.

1.2 Research problem
In line with the difficult economic environment as well as the growth in both quality
and quantity of many professional tax service firms in Vietnam, clients have more choices to
satisfy their needs. The competition in this industry becomes fiercer. Thus, almost these firms
more focus on how client perceives the firm's service performance and value which is proved
having connections to client satisfaction that in turn should be the ultimate goal of all firms
(Morgan et al, 2005).

In recent years, substantial research has examined the client perceived performance,
client perceived value (and its determinants) in business-to-business professional services.
Research has also found empirical support for the relationship between client perceived
performance and client satisfaction through value (La, Patterson and Style, 2009). In addition,
previous research show the evidence indicating that client satisfaction in turn connects to
repurchase, loyalty, and willingness to maintain a long-term relationship with the service
provider (Iacobucci et al., 1994; Athanassopoulos et al., 2001 ). Consequently, many
researchers desire to examine the determinants of client perceived performance and to
confirm the relationship between client perceived performance and client satisfaction through
value in various professional services in particularly. However, most of the research has
focused on examine antecedents of value and what value means as well as what impacts on
client satisfaction in business-to-consumer professional services using Parasurama (1985 and
1988) and Gronroos (1984)measurement model and its dimensions. Little research has been
devoted to examine client perceived value and client satisfaction in business-to-business
professional services sector. Currently, researchers have made some recent attempts to

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Master thesis
investigate and develop alternative B2B specific scales in some specific industries such as
engineering consultant, software, etc. The most significant contribution to this era has been
the conceptual model for client-perceived value and satisfaction in an international
perspective in developing economies developed by La et al. (2009).

1.3 Research objectives
Given the unique characteristics of the professional tax services which are provided
on a basis of tax regulations and current practices, a study focus on examining client
perceived value and client satisfaction in professional tax services sector applying La et al.' s
(2009) conceptual model would be useful for both practitioners and researchers. Since the

level of development of tax regulations and practices are different among countries, this study
specifically focus on business-to-business professional tax services in Vietnam.
Further to the above discussion, this study aims to obtain following objectives:
1) To examine the antecedents of client perceived performance;
2) To test the effect of client perceived performance to client perceived value in
professional tax services in Vietnam;
3) To test the effect of client perceived value to client satisfaction with
professional tax services in Vietnam; and
4) To explore factors/ situations (moderators) leading to the different influence of
these factors to client perceived service in the context of Vietnam.

1.4 Scope of the research
Initially, the qualitative analysis will be conducted to confirm whether the factors
having significant effect to client perceived performance and client perceived value as well as
the factors/ situations leading to the different influence of these factors to client perceived
performance and value in La et al.'s (2009) conceptual model are applicable in professional
tax services in the context of Vietnam. Through this process, the analysis is expected to

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Master thesis
identify factors that reflect the unique characteristics of the professional tax service in
Vietnam.
Then, data for quantitative analysis are collected to confirm the identified factors and
their moderators. The sampling frame for this study was clients of tax consultant firms in Ho
Chi Minh City where most of the largest tax consultant firms place their offices. Their clients
can spread from Da Nang to Ca Mau and are engaged in various industries.

1.5 Significance ofthe research

This thesis attempts to confirm the applicability of La et al.' s (2009) conceptual
model are applicable in professional tax services in the context of Vietnam. It is expected that
this model will be further modified to reflect the reality of the professional tax services in
Vietnam through qualitative analysis to confirm/ disconfirm the applicability of the factors/
relationship and/or introduce of new factors/ relationship relative to client perceived

•

performance, value and satisfaction. Then quantitative analysis is conducted to provide
empirical evidence to strengthen the results of qualitative analysis. It endeavors to expand the
concept of value and satisfaction in business-to-business professional tax services in the
context of Vietnam. This is the first research representative is in the context of Vietnam that
is a theoretical contribution to the research on value and client satisfaction from an Asian
behavior perspective.
In addition, the research aims to provide managerial implications. This finding is
expected to help professional tax firms understand deeply about the factors having significant
effect to client perceived performance and value in a client's perspective such as technical
skills, interpersonal skills, customer orientation, relationship with tax authority, and
reputation. Based on this understanding and finding, professional tax firms can have further
actions to address client's need and more improve the level of customer satisfaction. In
addition, exploring the factor leads to different influence of factors having significant effect

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Master thesis
to client perceived performance and value is extremely important for the firms in this sector
to identify their relative competition in comparison with others. Further to that, the firms can
set up strategy in order to be more competent and successful.

1.6 Structure of the thesis
This thesis comprises 5 chapters. Chapter 1 is the introduction which gives an
overview of research background, problems, objectives, scope and significant ofthe research.
The next section is Chapter 2 which provides a review of the literature on client perceived
performance and its factors; client perceived value and satisfaction in service, qualitative
study and hypotheses. Then the thesis continues with Chapter 3 - the discussion about
methodology followed by empirical investigation and its results in Chapter 4. The thesis ends
with Chapter 5 - discussion about the results, managerial implication and limitation.

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Chapter 2:
2.1
2.1.1

Literature review

Literature review
Client perceived performance and its antecedents

Client perceived performance
According to Oliver (2006), Performance itself is the perceived amount of product or
service outcomes received, usually reported on an objective scale bounded by good and bad
levels of performance (e.g. courteous/ discourteous service). While quality is a judgment of
performance excellence, these two concepts (i.e. performance and quality) are frequently
confused with each other (Oliver, 2006).
Researchers argue that service quality is unlike product quality due to its

characteristics i.e. inherent intangibility, inseparability of service provision and consumption,
heterogeneity and perishability (Zeithaml, Parasuraman, and Berry, 1990). This nature
combined with the complex technical nature of professional service (engineering, consulting,
project management, etc.) make the service quality more difficult to be evaluated (La,
Patterson and Style, 2009).
Many researches focus on examine the measurement of service quality and its
dimensions. However, attitude toward the number of service quality dimensions are not
identical. There is a consensus in the opinion that service quality should have three basic
elements (Pollack, 2008, p.539): the quality of results, the quality of interaction and the
quality of service environment. The quality results is the real result that client received.
Through this real result, clients can assess actual benefits that are expected. Clients often
measure this result in a fairly objective way. The quality of interactions refers to the
assessment of the overall interaction among client and service team members like the way of
converting input into output. Clients perceive this element through their own subjective
judgments. The third element is the quality of service environment that refers to service

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Master thesis
firms' facilities and again, it is subject to clients' review. Corresponding to this
understanding, Ghobadian, et. al., (1994, p. 50-51) introduce the dimensions of service
quality including technical quality of the service (encountering actual result) and functional
quality of interaction between service provider and client; and company's image as a result of
the abovementioned dimensions as well as cost of service, communication activities,
company allocation, internet site accessibility, skill and behavior of team members. This
understanding focuses on evaluate service quality through analyzing elements of service
quality and its corresponding dimensions which are measured by clients through their
perceived performance of service providers. In short, this understanding assesses service
quality through the client perceived performance of service providers in terms of real results,

interaction and service environment.
The European school of thought led by the work of Gronroos ( 1984) put forward that
clients perceive service quality from two viewpoints: the technical quality and the functional
quality of the service. Technical quality has to deal with the 'what' element to answer the
question whether the service meets clients' expectation while functional quality involves the
manner in which the service is delivered. Both technical quality and functional quality have
to do with client perceived performance of the service. Thus, it can be said that client
perceived performance is the initial point to adjust the quality of service and perceive service
value.
With the same opinion, Lovelock (1999 and 1995) named two components of each
service package 'core services' and 'supplementary services'. Ferguson, Paulin, Pigeassou
and Gauduchon (1999) refer core services as representation of the firm's basic competency in
a

creating value with and for clients (p.59). On the other hand, supplementary services are
combination of other service elements such as supporting and facilitating services.

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In the present of business-to-business professional services especially current practice

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of tax professional firms, the core service refer to the capability of utilizing technical or
intellectual know-how/ expertise to provide solutions to a client's issue. The core service in

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this context is equivalent to technical quality/ performance in Gronroos' school of thought
(1988 and 1984). Accordingly, supplementary services refer to Gronroos' (1988 and 1984)
functional quality/ performance i.e. the 'how' (services are delivered) components.
Moreover, professional services are purchased in order to get competence and
resources they do not have inside the organization (Czemiawska and Smith, 20 I 0). It means
that many clients do not have technical knowledge/ 'know-how' to confidently evaluate the
quality of the service they purchase. As a result, clients often evaluate professional service
quality and value through the performance of service firms that they perceived (La, Patterson

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and Style, 2009). Conceptual Model of Client perceived Value and Satisfaction of La,

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Patterson and Style (2009) suggest that there are two main components contributing to client
perceived performance i.e. people-related factors (including interpersonal skills, technical
skills and customer orientation) and firm-related factors (comprising innovation and
reputation). The relationship between a service provider's behavior (in terms of interpersonal
skills, technical skills and customer orientation) as well as the firm's innovativeness and
reputation and perceived performance have been tested in various studies in both consumer
and professional settings (e.g., Day and Barksdale Jr., 1992; Paulin, Ferguson and Payand,
2000; LeBlanc and Nguyen, 1996).
Technical skills

Technical skills is a one of factors that client seek to when evaluating a firm's
performance (Ellis and Watterson 2001; Burke 1996). This factor refer to personnel's
knowledge and expertise, understanding of clients' business model and needs, and
competitor's service (Rentz, Shepherd, Tashchian, Dabholkar and Ladd 2002) as well as

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Master thesis
industry background (Coviello, Ghauri and Martin, 1998). Further to the nature of tax
professional services which are provided on the basis of the most updated tax regulations and
current practices, technical skills is considered the most important factor having significant
effect to to client perceived performance. Technical skills can be assessed via real results of
the services, in this case it is equivalent to technical quality in Gronroos' (1988 and 1984)
school of thought and Lovelock's (1999 and 1995) core services.

Interpersonal skills
Due to the intangibility and inseparability of service provision and consumption,
every service engagement requires high level of interaction between service firm and client's
personnel (Laing, Lewis, Foxall and Hogg, 2002), interpersonal skills is also one of key
criteria using to evaluate performance of a professional service firm. Interpersonal skills
factor is understand that the ability of service team member express him/herself verbally and
non-verbally, and to build relationship with clients (Rentz et al., 2002). In the context of
professional tax service, interpersonal skills play a vital role in improvement of level of client
perceived performance.

Customer orientation
Recent empirical investigations indicate that customer orientation is an antecedent of
service performance which eventually contributes to clients' overall service quality/
performance evaluation (Brown, Mowen, Donovan and Licata, 2002; Brady and Cronin,
200 I; Harline, Maxham and McKee, 2000). Customer orientation emphasizes the ability of a
firm to attain customer information, analyze it to set priorities for improvement, and use these
priorities to drive service and process change (Johnson, 1998; Johnson and Gustafsson,
2000). By gaining a better understanding of customer needs and the use of this knowledge to
design better services (Nilsson, Johnson and Gustafsson, 2001), a customer should have a

direct impact on client perceived value.

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Master thesis

Innovation
That innovation leads to superior performance (Agarwal, Erramilli and Dez 2003;
Han, Kim and Srivastava 1998; Zahra, de Belardino and Boxx, 1998) is supported by a
considerable amount of marketing and management literature. It plays both direct and
indirect role in contributing to the firm's performance as well as assisting the firm to gain
competitive advantage (Agarwal, Erramilli and Dez 2003; Vakola 2000; Bharadwaj,
Varadarajan and Fahy, 1993). In a professional tax services perspective, the role of
innovation in firm's performance is not clear due to the nature of tax service i.e. based on the
tax regulation. Therefore, the contribution of innovation in performance of professional tax
firm need to be further tested.

Reputation
The firm's general reputation as well as its reputation in a specific functional area are
top of choice criteria in business-to-business professional services (Dawes, Dowling and
Patterson, 1992). The concept of firm's reputation is defined as a set of economic and noneconomic factors credited by a firm based on its past actions (Weigelt and Camerer, 1998).
Professional tax services are mix of business and legal consultant services. Based on that
nature, together with uncertainty during the selection process, clients rely on a firm's
reputation through word-of-mouth or track record (Lin and Wei, 1999). In other words,
reputation helps the firm approach client more easily. In the circumstances in which clients
lack of expertise in evaluating technical quality of professional services (most of the case),
the firm's reputation can help enhance the level of reliability of client in services they
purchase and therefore have positive influence on client perceived value.
In the context of Vietnam, professional tax services are growing in both quality and

quantity. In addition, outsourcing is the practice which has been recently applied in many
Vietnam companies especially in tax services. Therefore, many clients do not possess their

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Master thesis
own process to evaluate quality of professional tax services. Consequently, clients tend to
evaluate a firm's performance through resource-based view of the firm. In line of the above,
La, Patterson and Style's (2009) Conceptual Model of Client perceived Value and
Satisfaction is considered as the most appropriate start-point model to examine client
perceived value and client satisfaction in tax professional services in Vietnam. However, due
to the difference in the context and the specific characteristics of professional tax service, this
model will be further examined and modified to ensure the appropriate applicability.
2.1.2

Moderating factors on client perceived performance and its antecedents

Country of origin

The mentioned Conceptual Model, La, Patterson and Style (2009) additionally argue
that the link between a firm's resource and perceived performance is contingent upon the
Country of origin ("COO") effect. Many studies confirm that COO has influenced the
relationship between consumer ethnocentrism and heuristic evaluation of products in the
consumer marketing context. Recent reviews and evidence shown by Peterson and Jolibert
(1995) and Verlegh and Steenkamp (1999) and La, Patterson and Style (1997) indicate that
COO plays an important role in pre-purchase attitude formation, customer perception of
performance and quality; and purchase intention.
There is also evident state that favorable country perceptions lead to favorable
inferences about product attributes and subsequent favorable evaluation (Gurhan-Canli and

Maheswam, 2000). In line with previous literature, La, Patterson and Style (2009) believe
that the COO effect moderates clients' judgment on a firm's overall perceived performance.
To illustrate, La, Patterson and Style (2009) give a example i.e. when client perceived
COO is unfavorable (negative), then the client will be surprised (i.e. expectation exceeded)
when the service provider demonstrates high technical skills (for instant) and concomitant
high overall performance in the core service. Under the opposite condition, i.e. favorable

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Master thesis
(positive) client perceived COO; it is argued that the client already shapes the expectation at a
high level of demonstrated technical skills. Therefore, technical skills and overall
performance will not strongly influence each other, especially when overall performance is
below what is expected. In short, under converse conditions i.e. unfavorable (negative) COO,
clients' perceptions of service provider's technical skills will have a stronger impact on
overall performance than the other conditions. Similar arguments are applied for other factors
i.e. interpersonal skills, customer orientation, innovation and reputation.

Firm's international experience
Another moderator examined in La, Patterson and Style's (2009) Conceptual Model is
firm's international experience which moderates for the relationship between the firm's
reputation and perceived performance with the argument that from the client's viewpoint,
international experience may increase the perception of reliability, capability and credibility.
La, Patterson and Style (2009) authors stated that a firm's overall performance perceived by
its international clients is likely to be different compared to its domestic clients. For instance,
a domestic client may perceived the performance of a domestic professional service firm
through its staff's technical skills as well as his/ her excellent interpretation skills given they
(client and service provider staff) are sharing the same beliefs, culture and language. In
contrast, with the same criteria like that, it is not enough for a foreign professional service

firm to win the engagement in a foreign country unless it can offer a differentiated service
(performance) and some "bonus" value. This value-added differentiation, for example, might
be the firm's international reputation or the service personnel's demonstrated ability to
interact with clients from diverse cultures along with his experiences in dealing with a broad
base of foreign clients. Kotabe, Murray and Javalgi (1998) considered this as one of the
supplementary services that international clients seek and a source of competitive advantage.
In other words, the presence of the firm's international experience will strengthen a cliet's

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Master thesis
perception of the firm's reputation in relation to its performance. Hence, it can be said that
international related factor such as firm's international experience (e.g., the number of
foreign clients that it has dealt with, the amount of resources that it has allocated in overseas
markets) to some extent will play a primary part in international clients' eyes in assessing the
value and/ or firm's performance.
2.1.3

Client perceived value

Oliver (2006) defines value as a judgment that compares the likely outcomes of
purchasing to the input forgone. As a result, value is a result of comparison between what to
be received (e.g. performance) to the acquisition costs (e.g. financial, psychological, effort).
This definition is other words of Heskett et al.'s (1994) that client perceived value results
when clients compare weighted "get" factor to "give" factor.
Client perceived value is a notion that has lately been receiving attention from
industrial marketing researchers (Razavi, Safari, Shafie and Khoram, 2012; Boksberger and
Melsen, 2011; Eggert and Ulaga, 2006; Fiol and Alcaniz, 2009; Sanchez et al, 2006; Teas and
Agarwal, 2000). Roig et al, (2009) define it as a construct formed by two parts, one of

benefits received (economic, social and relational) and the other of sacrifices made (price,
time, effort, risk and convenience) by the client. Razavi, Safari, Shafie and Khoram (2012)
note that general definition of value is client's perception of the subjective worth of some
activity or subject considering all net benefits and costs of consumption.
Trasorras, Weinstein and Abratt (2009, p. 617) noted that "[ ... ] customer value is
created when the perceptions of benefits received from the transaction exceed the costs of
ownership". He also cites three sources of competitive advantage i.e. operational excellence,
product leadership and customer intimacy regarding this matter. One of these strategic
approaches can be a company's main source of value creation.

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Master thesis
Client perceived value is also what customers want from the service (Razavi, Safari,
Shafie and Khoram, 2012). In many case, quality of services and benefit it offers often
become client perceived value drivers (Bolton and Drew, 1991; Zeithaml, 1988). Based on
economic value and consumer behavior theories, Jayanti and Ghosh (1996) formulated
perceived value as a direct consequence of perceived quality. Many studies support this
association (e.g. Andreassen and Lindestad, 1998, Chang and Wang, 2011; Edward and
Sahadev, 2011) where found a positive relationship between perceived performance and
value.
Lapierre (1997) and Day (2002) suggest taking into account some contextual or
situation factors when studying the dynamics of value assessment. Patterson's (2000)
examines the client's product-norm experience as a moderating factor in the satisfaction
paradigm. His empirical findings demonstrate that the association of the professional service
provider's performance and client satisfaction is dependent on whether clients are highly
experienced with consulting services. Similarly, Andreassen and Lindestad ( 1998) argued
that customer with low degree of service expertise are less capable in evaluating the quality
attributes of complex services confidently. In other words, the strength of linkage between

perceived performance and perceived value is contingent upon the degree of experience
possessed by the client (La, Patterson and Style, 2009).
In the context of professional services (consultancy, engineering projects, legal
advice, etc.) which are highly customized, technically complex and intrinsically difficult for
clients (especially inexperienced ones) to evaluate the outcomes, La, Patterson and Style
(2009) argue that when a client has little or no experience, any performance attributes will
directly contribute to perceived value. For that, he raises two reasons: one is that clients do
not have competent expertise in evaluating both perceived performance and value; another is

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Master thesis
due to the shortage of purchasing and consuming experience that assist them in comparing
and contrasting between projects.
2.1.4

Client satisfaction

Satisfaction is defined by Oliver (1997, p.l3) as "the consumer's fulfillment
response", a post consumption judgment by the customer that a service provides a pleasing
level of consumption-related fulfillment, including under- or over-fulfillment. Boshoff and
Gray (2004) point out that satisfaction is not inherent in the product or service itself; rather,
satisfaction primary depends on the client's perceptions of the attributes of the product or
service. Therefore, different customers will express varying levels of satisfaction for the same
experience or service encounter (Ueltschy et al, 2007).
Satisfaction is a positive or negative feeling that results when comparing expectations
and performances related to a buying or to a consumption experience (Kotler and Keller,
2012; Lendrevie, Levy and Lindon, 2009). In service market, client satisfaction is often
measured as the difference between service expectations and the experiences. Oliver (1980)

looked at satisfaction via disconfirmation of expectations. According to him, client
satisfaction can be a function of the expectation (adaptation) level and perceptions of
disconfirmation. Both expectations and perceptions also have been found to influence
customer satisfaction and subjective disconfirmation under various circumstances (Churchill
and Surprenant, 1982).
Satisfaction is perceived as "a key determinant of organization success" with a
positive influence over repeated sales and/or repurchases intensions and increase customer
loyalty (Lewin, 2009). Similarly, Fomel et al. (1996) consider that overall satisfaction is a
fundamental indicator of the firm's past, current, and future performance. However, they
found that service firms have significant lower client satisfaction scores than manufacturing
firms. Their study also revealed that satisfaction is more quality-driven than price-driven in

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Master thesis
service market. Further to that, they state that the main two determinants of client satisfaction
are perceived quality and perceived value.
Client perceived value is generally linked to the perceived performance and
satisfaction paradigm (e.g., Paulin, Ferguson and Payaud, 2000). Woodruff (1997) reports
that perceived value reflects the client's cognitive perception of the relative exchange with
their providers and satisfaction mirrors the general feeling derived from the value perceived
by the client. Roig et al (2009) confirm that perceived value has an indirect effect on loyalty
via satisfaction. There also exists empirical evidence demonstrating the positive relationship
between perceived value and satisfaction (La, Patterson and Style, 2009; Anderson and
Mittal, 2000; Chang and Wang, 2011; Edward and Sahadev, 2011; Cronin et al., 2000; Roig
et al., 2009, Yang and Peterson, 2004).

2.2 Qualitative analysis
As mentioned above, unlike other professional services, professional tax services are

provided on the basis of current tax regulations and practices. In addition, in the context of
Vietnamese economy, professional tax services are not newly introduced services but due to
high cost and not complex financial transactions of many Vietnam companies, these services
have not been widely used. Most clients of this sector are large corporations or foreign own
companies whose transactions are complicated, involved overseas parties and they pay much
attention on how to have effective tax system. In line of the above, to understand deeply
Vietnamese professional tax market as well as confirm/ modify the factors having significant
effect to client perceived performance and satisfaction in this industry, a qualitative study by
means of in-depth interview (face-to-face - 60% and through telephone - 40%) was
conducted. The interviews were undertaken with three (3) senior managers of professional
tax firms (two of Ernst & Young Co., Ltd. and one ofNexia ACPA Auditing & Consulting
Co. Ltd) and two chief accountants as representative of clients. Each interview took place in

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around half an hour. The information collected in such interviews was then interpreted using
sentence method - analyzing phrases in the answers to get the main points addressing the
questioned matters, draw conclusion and confirm with the interviewees.
The results of the interviews confirmed four elements of technical skills,
interpersonal skills, customer orientation and reputation as factors having significant effect to
client perceived performance. The association between the firm's innovation and perceived
performance was not confirm. Again, this is due to the nature of professional tax services are
based on tax regulations and practices whose changes are out of control of professional tax
firms. In addition, the innovation if exists would be the improvement in service process or
solutions suggested to clients in a planning service engagement. However, in context of
Vietnam where the economic transactions are in the development stage, strategies for
effective operation or effective tax system or solutions for issues are often followed the ones
applied by developed countries previously. Therefore, innovation is not considered as a factor

having significant effect to client perceived performance. This is empirically proved by
research of La, Patterson and Style (2009). Their explanation is that clients are lacking
technical judgment of a professional service. Even if it is not the case, clients still cannot
comprehend how innovation contribution to firm's performance. Interview's results also
confirmed the moderator role of the firm's international experience in the relationship of
reputation and perceived performance.
In addition to that, the results of the in-depth interview introduced two factors having
significant effect to client perceived performance i.e. service fee and relationship with tax
authorities. The concept of service fee introduced here is not the same as what clients "give"
concept. Service fee concept is understood as a benchmark through that client can estimate
the service quality among other competitors of the firm and can form their expectation of
what they would receive or their perceived performance. This is support by the thought that

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Master thesis
higher service fee often represents higher service quality and thus what client would perceive
from the firm's performance would be higher. This term was used and tested in consumer
services as reference price. Expected service quality plays a key role in reference price
formation due to the price to quality relationship demonstrated by many authors (Ziethaml,
1988). Due to the intangible nature of services, consumers use price as a cue that signals
service quality or perceived performance. This is especially important in the case of 'pure'
services where there are few physical signals for consumers to evaluate potential service
quality. (Dickinson, J.B. and Dickinson, C. D., 2012).
Another added factor having significant effect to is relationship with tax authorities.
Although professional tax services are based on both tax regulations and practices, given tax
regulations in Vietnam do not develop together with the rapid growth of the economic
transactions in quantity and complexness, most ofthe complicated cases, the current practices
are applied. In the lack of tax regulations in some special cases, sometime tax authorities

have their own interpretation of regulations and based on that, they examine the issue of a
specific company. In addition, majority of clients of professional tax services are companies
having difficult tax issue that there is no clear guidance in regulation. In that case, a good
relationship with tax authorities will contribute outstanding value to the service firm. This
relationship helps the firm easily interact with the tax authorities or tax officers who are in
charge of its client and via that the firm can obtain the treatments/ practice of those people/
authorities. Acknowledge this relationship, clients tend to appreciate the work of professional
tax firm and thus they perceive performance of the firm at a higher level.
However, the association between relationship with the tax authority and perceived
performance depends on the nature of engaged services. Professional tax services in nature
can be divided into two types: compliance services and advisory services. Compliance
services are services provided in order to assist clients in complying with tax regulations

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Master thesis
(required by regulations). For example, company is required to file the corporate income tax
declaration annually within 90 days from the end of tax year. Advisory services are services
provided for management purposes in order to plan for the company's future operations. For
example, board of management plan to open a new business line. During this stage, how to
comply with tax regulations is also a matter need to consider. In line with that, the company
seeks to appoint a professional firm to assist in providing advice on what regulations to
comply with and what they can do to save tax, improve operation and according risks.
Assisting the client in audit defense e.g. explain to the tax authorities or draft official letter to
answer the tax authorities' challenges is another example of professional tax advisory service.
According to that, compliance services do not require much interaction with tax authorities.
In contrast, clients more focus on relationship of the firm with relevant tax authorities when
they have tax issue and need advices from tax experts. Therefore, practical experiences of
interviewees indicate that the association between relationship with tax authorities and

perceived performance is stronger in advisory services than in compliance services.
Regarding effects of COO as a moderator in the relationship of technical skills,
interpersonal skills, customer orientation, innovation and reputation and perceived
performance, these effects are not confirmed in the context of Vietnam professional tax
services. Together with the localization strategies of many professional tax firms, number of
foreign tax consultants in Vietnam reduces significantly in recent years. This does not impact
much on the service quality as well as performance of professional tax firms in Vietnam.
Given the foreign tax consultants have advanced knowledge in the field of tax and legal, they
may not understand deeply the tax practices in Vietnam. In addition, language is the largest
barrier for foreign tax consultants in interaction with tax authorities. Although they have a
support team to help them in this matter, clients do not feel comfortable to work with them
when they are challenged by tax authorities and need assistance in response/ defense to tax

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authorities. One more reason is that Vietnamese chief accountants as representative of client
prefer to work/ interact with Vietnamese tax consultant.
Literature review indicates that the association of the professional service provider's
performance and client satisfaction is dependent on the level of client buying experience. In
other words, in the different level of client buying experience of professional services, the
perceived performance will correspondingly influence at a different level on perceived value.
However, this statement is not confirmed through the qualitative analysis. The reason is that
people in charge of tax/ finance/ accounting department of a company are always people
having more or less experience in this field as a competence criterion when appointing them
as a head of these departments. In addition, there may be the first time a firm provide tax
services to a company but not is the first time the chief accountant or any relevant people as
representative of clients interact with service firm. Therefore, at least, there is a basis based
on that client can assess the performance and value of the service they receive. Consequently,

in the practice of professional tax services in Vietnam, client buying experience is not a
moderator in examining the relationship between perceived performance and client perceived
value.
Table 1: Summary of qualitative analysis' results
In La et al. 's
Results of
(2009)
No.,~I'.

FaCtor/ Moderator

qualitative
conceptual
analysis
model

Factors having significant effect to client perceived performance
I

Interpersonal skills

Included

Confirmed

2

Technical skills

Included

Confirmed

20