(Luận văn thạc sĩ) factors affecting customer satisfaction in public sector a comparative study between administrative service and transport service in dong nai province

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
---------------------------

Phan Huynh Van Thao

FACTORS AFFECTING CUSTOMER
SATISFACTION IN PUBLIC SECTOR: A
COMPARATIVE STUDY BETWEEN
ADMINISTRATIVE SERVICE AND
TRANSPORT SERVICE IN DONG NAI
PROVINCE

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2013
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UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
---------------------------

Phan Huynh Van Thao

FACTORS AFFECTING CUSTOMER
SATISFACTION IN PUBLIC SECTOR: A
COMPARATIVE STUDY BETWEEN
ADMINISTRATIVE SERVICE AND
TRANSPORT SERVICE IN DONG NAI
PROVINCE

ID: MBUS111039

MASTER OF BUSINESS (Honours)

SUPERVISOR: DR. NGUYEN THI NGUYET QUE

Ho Chi Minh City – Year 2013
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ACKNOWLEDGEMENT
It is my fortunate to have Dr. Nguyen Thi Nguyet Que as my advisor with her strong
experience and deep involment in the category related to my stated problem. She
provided me with sharp advice on how to approach the problem. Her penetrating
comments have led to revisions and clarifications of my analysis in this paper. She was
also helpful in narrowing down the area of research during my preparation for the final
report. She was always gracious with her support. First and foremost, I would like to
express my gratefulness to her.
I also thank Prof. Nguyen Dinh Tho. I am extremely grateful and indebted to him for his
expert, valuable guidance, insightful comments, and encouragement extended to me.
I would like to express my gratitude to all ISB staffs that supported necessary materials
and helped summit my papers.
I am grateful to my boss and my colleagues for their support for this study. I also thank
my friends for their encouragement.
My special gratitude goes to my parents who have supported to take care of my little
baby in order for me to have time to pursue the program. Last but not less, thanks to my
husband who always facilitate me with good conditions to complete my study.

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COMMITMENT
I would like to commit that this thesis, “Factors affecting customer satisfaction in
public sector: A comparative study between administrative service and transport
service in Dong Nai Province”, was accomplished based on my research seriously and
independently.
The data was collected from citizens who had experiences using public service in Dong
Nai province by the author in reality. It has clear source. Thus, the data was trustful
handled and conducted by the author.

Phan Huynh Van Thao
Dong Nai, October 1st 2013

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ABSTRACT
This study examined the relationships among nine dimensions of service quality and
customer satisfaction toward public service in Dong Nai province and the comparation of
this relationships between public administrative service and public transports service.
The surveys were distributed to 230 customers (120 customers rated about public
administrative service and 110 customers rated about public transport service) who had
an experience working with public administrative service and public transport service in
Dong Nai within the last 3 years, a customer was randomly approached to complete a
survey.
Firstly, the research proposed a model to analyze the effect of nine dimensions
(tangibility, reliability, responsiveness, competence, courtesy, credibility, access,
communication, and understanding the customer) (Parasuraman et al. 1985) of service
quality on customer satisfaction in public service. Secondly, the study used Statistic
Package for Social Science (SPSS) to analyze data through Exploratory Factor Analysis

(EFA). Then, the EFA results lead to the revised model identified the five service quality
variables named as tangibility, reliability, competence, access and empathy. The results
indicated that tangible and competence have strong positive effect on customer
satisfaction. Finally, the research finding confirmed that the impact of dimensions on
customer satisfaction toward a public service is affected by the type of public service
differently (public administrative service and public transport service)
Keywords: Services quality, Customer satisfaction, Public administrative service, Public
transport service, and Public service.
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TABLE OF CONTENTS
ABSTRACT.........................................................................................................................5
CHAPTER 1. INTRODUCTION ........................................................................................9
1.1 BACKGROUND OF THE RESEARCH ................................................................. 9
1.2 RESEARCH PROBLEM ....................................................................................... 11
1.3 RESEARCH OBJECTIVES .................................................................................. 13
1.4 RESEARCH METHOD ......................................................................................... 13
1.5 RESEARCH STRUCTURES ................................................................................ 15
CHAPTER 2. LITERATURE REVIEW ...........................................................................17
2.1 INTRODUCTION .............................................................................................. 17
2.2 LITERATURE REVIEW ................................................................................... 17
2.2.1 PUBLIC SERVICES ......................................................................................... 17
2.2.1.1 DEFINITION OF PUBLIC SERVICES .................................................... 17
2.2.1.2 CLASSIFICATION OF PUBLIC SERVICES ......................................... 19
2.2.1.3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES ........................ 22
2.2.2 SERVICE QUALITY........................................................................................ 23
2.2.2.1 DEFINITION OF SERVICE QUALITY ................................................... 23
2.2.2.2 SERVICE QUALITY IN PUBLIC SECTOR ............................................ 24
2.2.3 MODELS OF SERVICE QUALITY IN PUBLIC SECTOR ........................... 26

2.2.3.1 THE SERVQUAL MODEL ....................................................................... 26
2.2.3.2 THE SERVPERF MODEL ........................................................................ 27
2.2.4 PREVIOUS STUDIES ON SERVICE QUALITY IN PUBLIC SECTOR ...... 28
2.3 DEVELOPMENT OF RESEARCH MODEL AND HYPOTHESIS .................... 32
2.3.1 CUSTOMER SATISFACTION ........................................................................ 32
2.3.2 SERVICE QUALITY AND CUSTOMER SATISFACTION IN PUBLIC
SECTOR ..................................................................................................................... 33
2.3.3 THEORETICAL MODEL ................................................................................ 37
CHAPTER 3. RESEARCH METHODOLOGY AND DATA ANALYSIS ....................39
3.1 INTRODUCTION .................................................................................................. 39
3.2 RESEARCH PROCEDURE .................................................................................. 39
3.3 MEASUREMENT SCALE .................................................................................... 41
3.4 QUALITATIVE PILOT STUDY .......................................................................... 44
3.5 QUANTITATIVE MAIN SURVEY ..................................................................... 45
3.5.1 QUESTIONNAIRE DESIGN ............................................................................. 45
3.5.2 SAMPLING METHOD .................................................................................... 46
3.5.3 DATA ANALYSIS METHODS ....................................................................... 47
3.5.3.1 CRONBACH’S ALPHA. ........................................................................... 47
3.5.3.2 EXPLORATORY FACTOR ANALYSIS (EFA). ..................................... 48
3.5.3.3 MULTIPLE REGRESSION ANALYSIS. ................................................. 49
CHAPTER 4. RESEARCH RESULTS .............................................................................50
4.1 INTRODUCTION .................................................................................................. 50
4.2 DESCRIPTIVE ANALYSIS ................................................................................. 50
4.3 ASSESSMENT OF MEASUREMENT SCALE ................................................... 52
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4.3.1 CRONBACH’S ALPHA COEFFICIENT OF RELIABILITY TEST.............. 52
4.3.2 EXPLORATORY FACTOR ANALYSIS (EFA) RESULT............................. 54
4.3.2.1 EFA FOR INDEPENDENT VARIABLES ................................................... 54

4.3.2.2 EFA FOR DEPENDENT VARIABLES........................................................ 57
4.4 HYPOTHESES TESTING ................................................................................. 61
4.4.1 TESTING MODEL OVERALL ........................................................................ 61
4.4.2 TESTING MODEL IN PUBLIC ADMINISTRATIVE SERVICE.................. 65
4.4.3 TESTING MODEL IN PUBLIC TRANSPORT SERVICE ............................ 66
4.5 CONCLUSION .................................................................................................. 68
CHAPTER 5. CONCLUSION AND IMPLICATION ......................................................69
5.1 INTRODUCTION .................................................................................................. 69
5.2 DISCUSSION OF FINDINGS .............................................................................. 69
5.3 MANAGERIAL IMPLICATIONS ........................................................................ 73
5.4 LIMITATION OF STUDY AND FUTURE RESEARCH.................................... 75
5.5 CONCLUSION ...................................................................................................... 76
REFERENCES ..................................................................................................................77
APPENDIX ........................................................................................................................ 84
APPENDIX 3.1 MEASUREMENT SCALE USED IN QUALITATIVE RESEARCH
84
APPENDIX 3.2 THE QUALITATIVE RESEARCH FINDINGS .............................. 86
APPENDIX 3.3 QUESTIONNAIRE ........................................................................... 88
APPENDIX 1: ORGANIZATIONAL CHART OF DONG NAI PEOPLE’S
COMMITTEE .............................................................................................................. 93
APPENDIX 4.1 FIRST TIME RUNNING- EIGENVALUES .................................... 94
APPENDIX 4.2 FIRST TIME RUNNING-FACTOR LOADING ............................. 96
APPENDIX 4.3 SECOND TIME RUNNING- EIGENVALUES............................... 98
APPENDIX 4.4 SECOND TIME RUNNING- FACTOR LOADING ....................... 99
APPENDIX 4.5 THE EFA IMPLEMENTATION OF DEPENDENT VARIABLE
(CUSTOMER SATISFACTION) .............................................................................. 100
APPENDIX 4.6. CHARTS OF TESTING HYPOTHESES ...................................... 101

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LIST OF TABLES
Table 3.7 Cronbach’s Alpha Reliability Coefficient ......................................................... 48
Table 4.1 - Descriptive statistics of the data ...................................................................... 51
Table 4.3 - Cronbach’s Alpha coefficients for each measurement scale........................... 52
Table 4.4. KMO and Bartlett's Test for independent variables ......................................... 55
Table 4.4. Factor Loading of independent variables ......................................................... 56
Table 4.7 - Cronbach’s Alpha results after excluding unsatisfatory items ........................ 59
Table 4.8. Results of Pearson Correlations ........................................................................ 61
Table 4.9 Model Summary ................................................................................................ 61
Table 4.10 Results of Multiple Regression........................................................................ 63
Table 4.11 Hypotheses Testing .......................................................................................... 63
Table 4.12 Coefficients of the construct for public administrative service ....................... 66
Table 4.13 Coefficients of the construct for public transport service ............................... 67
Table 4.14 Comparison Customer’s Viewpoints. .............................................................. 67

LIST OF FIGURES
Figure 2.1. Conceptual model linking nine dimensions and customer satisfaction. ......... 37
Figure 3.1 Research Process .............................................................................................. 41
Figure 4.1. The revised conceptual model ......................................................................... 60

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CHAPTER 1. INTRODUCTION
1.1 BACKGROUND OF THE RESEARCH
Dong Nai province has 11 administrative units with 171 units of communes, wards and
towns, including Bien Hoa City - the political, economic and cultural center of the
province, Long Khanh Town and other 9 districts (Long Thanh, Nhon Trach, Vinh Cuu,
Trang Bom, Thong Nhat, Dinh Quan, Tan Phu, Cam My and Xuan Loc). The natural area

of Dong Nai is 5,097.1 km2, with total population of more than 2.56 million people,
including 33.23% of urban residents and 66.73% of rural residents. (Dong Nai People’s
Committee Brochure, 2012). The People’s Committee of Dong Nai province consists of a
network of 35 organizations provides a range of free and “at-cost” services (Appendix 1).
Government as a big organization has its customers; those customers are the citizens,
businesses and public and private employees. Government through its agencies,
departments, and ministries provides information and services for each group of its
customers, and as a result this performance can be judge fairly only by the customers.
Service quality is an important dimension of organizational performance in the public
sector as the main output of public organizations is services. Moreover, profit is not the
ultimate goal of these public organizations as they have to play different roles such as
facilitator, pace setter and socio-economical developer (Arawati, Baker & Kandampully,
2007).

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The customer is the final judge of the quality of the product or the service or the
information. For the private sector, managers are concerned in many aspects that relate to
the customer such as loyalty and retention, but in the public sector in general the
customer (citizen, business), find themselves obligated to deal with different
organizations in the public sector even if they provide their services in inefficient ways.
For example, the administrative procedures using at governmental agencies in Vietnam in
general and Dong Nai in particular are bulky and complex that are affecting the
management of Dong Nai People’s Committee on its agencies from District level to local.
At the moment, there are quite a high number of complaints filed by the public due to
delays in taking actions and providing services to them by the Vietnamese public
organizations (Dong Nai Department of Internal Affairs, 2006). Headlines of some main
newspapers also highlighted complaints from the public regarding to their dissatisfactions
with the provided services. Consequently, service quality is not as expected by the

customers and therefore, it is quite low. This matter is a concern to the public since they
are the taxpayers and therefore; they expect good services are provided to them as the
return (Thanh, 2009).
At Dong Nai Department of Internal Affairs, the single window mechanism is being
applied in order to simply administrative procedures. However, it is not really effective
for Dong Nai People’s Committee to supervise and inspect administrative procedures.
Consequently, there are still negative activities such as bureaucracy, corrupt, arrogant
behavior of officials and services…. that have made people annoy, reduce their belief on
the transparency of government.
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In the context of bureaucracy and plodding reform, Dong Nai People’s Committee must
have an appropriate strategy in order to monitor and manage the public service.
This study will be as a practical guideline for Dong Nai People’s Committee leader
improves the quality of public services, especially the administrative service and the
transport service in order to meet with the customer’s needs and their satisfaction. This
finding will help Dong Nai People’s Committee leader understand obviously about the
components of their service quality affecting to satisfaction of their customers. In
addition, the comparison between public administrative and public transport service aims
to provide specific determinants to fit with each context. It brings more valuable practical
implications.
1.2 RESEARCH PROBLEM
Local authorities in Dong Nai are already engaged in a variety of innovative approaches
to capture the “voice of the customer” - local area forums, citizens’ juries, etc.
Increasingly, many authorities are also conducting market research surveys of one form
or another. These are often a useful first step for services trying to capture data on current
levels of customer satisfaction with services.
Since Vietnam gained independence in 1975, the public sector has undergone a number
of transformations. Whereas the former was aimed at increasing productivity and

efficiency, the latter established the public sector as the facilitator and regulator of the
economic functions of the private sector (Triantafillou, 2002). It has been noted,
however, that relatively little attention has been given to the application of service quality
in the public service (Kadir et al., 2000). Furthermore, although quality schemes are
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becoming an integral part of public-service management, their impact on service delivery
remains largely unknown (Robinson, 2003).
The majority of researches in last few decades concentrated on the dimensional approach
of service quality (Parves Sultan & Ho Yin Wong, 2010). Parasuraman et al (1985, 1988)
developed the measurement scale SERVQUAL based on the concept quality is the
perception minus expectation. Cronin and Taylor (1992, 1994) explored the other
instrument to measure service quality, namely, SERPERF - service performance - based
on the perception component alone. Among these scales, SERVQUAL is mostly
criticized and widely applied in many industries. (Ana Brochado & Rui Cunha Marques,
2009). However, SERVQUAL and SERPERF were designed as generic measures of
service quality and applied in cross industries, not for any specific field.
Measuring service quality and customer satisfaction in public context is one of the most
considerations of authority. Although customer satisfaction in public service is also not
an easy task to attempt (Corneliu et al., 2010) and there is no generally measurement
scale for customer satisfaction in public services, the majority of recent studies consider
service quality as an antecedent to customer satisfaction (Garcia, 2009). In Vietnam
public context, service quality and customer satisfaction are the concepts attracting
researchers to investigate the relationships among them however it is very few studies
pay attention to adapt the SERVPERF to identify and measure the dimensions of service
quality affecting to customer satisfaction, so that the generalization is limited.
Base on aforementioned analysis about the current situation of public service and existing
findings about service quality and customer satisfaction in public sector area, in an
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attempt to explore the relationships among the nine dimensions (Parasuraman et al. 1985)
of service quality and customer satisfaction toward public administrative service and
public transport services, this study employs the dimensions of service quality in public
services context to explain their effects on customer satisfaction and to compare these
relationship between the two sectors: public transport service and public administrative
service. All concepts will be explained and analyzed more detailed in the literature review
section.
1.3 RESEARCH OBJECTIVES
According to above discussion, this study is formulated to obtain following objectives:
(1) To test the impact of 9 dimensions (tangibility, reliability, responsiveness,
competence, courtesy, credibility, access, communication, and understanding the
customer) (Parasuraman et al. 1985) on customer satisfaction.
(2) To explore the differences effect of the 9 dimensions on customer satisfaction
between two types of public service (public administrative service and public
transport service).
1.4 RESEARCH METHOD
The research procedure is conduct in two stages, the first one is pilot study which is
implemented through qualitative research and the second one is main survey which is
implemented through quantitative research.

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In qualitative research, the purpose is to clarify the concepts and interpret the items in
measurement scales into the public service context based on the standpoint of customers.
Furthermore, the necessary adjustments are conducted to enhance the power of the scales.
The technique employed was the focus-group interview - the most well-known group
interview technique - because it can provide historical information and the interaction

will enrich the information for research (Donald & Pamela, 2006). It was valuable in the
scenario of this research as helping researcher obtain general background about the topic,
interpret existing researched findings and provide new idea for modifying and
supplementing new components. The participants of interview were the people who have
an experience using the public service within the last three years in Dong Nai province.
Based on the qualitative research findings, measurement scales are modified before being
employed for main survey in quantitative research.
In quantitative research, the survey is undertaken in the Vietnamese language. The
questions in the survey is tailored to identify the effects of nine SERVQUAL dimensions
(Parasuraman et al, 1985), on customer satisfaction of service-quality practices and
compare within the public administrative service and the public transport service in Dong
Nai province. The surveys were distributed to 230 customers (120 customers rated about
public administrative service and 110 customers rated about public transport service) who
had an experience working with public administrative service and public transport service
in Dong Nai within the last 3 years, a customer was randomly approached to complete a
survey. All surveys will either be collected in person or mailed back to the researchers or
online research. Customers rated these statements on a five-point Likert-type scale from

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“strongly agree” (5) to “strongly disagree” (1). Customers rated the level of service
quality and their satisfaction within the past three years.
The reliability and validity of measurement scales were evaluated by using Cronbach’s
alpha and exploratory factor analysis. Then, multiple regression analysis is used to
provide for interpreting the results of its application from a managerial and statistical
viewpoint (Hair et al., 2010).
1.5 RESEARCH STRUCTURES
This research is constructed in five chapters. The first is the introduction of the study. The
second is the literatures review and hypotheses. Following is the research methodology

and data analysis. The next part is research results. The discussion, implications and
conclusion comprises the final section of this research.
Chapter 1. Introduction
This chapter presents the research background, research problem, research objectives,
research method, and research structure.
Chapter 2. Literatures review
This chapter presents overview of previous literatures relating to service quality and
customer satisfaction in the public sector. Also, a conceptual framework is built up and
relative hypotheses of research are raised.
Chapter 3. Research methodology and Data analysis
This chapter presents about the method and research design used in the current study to
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explore the relationships among nine dimensions of service quality and customer
satisfaction toward public service in Dong Nai province and the comparation of this
relationships between public administrative service and public transports service. The
research procedure is implemented through a combination between qualitative research
and quantitative research.
Chapter 4. Research results
This chapter presents the descriptive of collected data. The reliability and validity of data
will be assessed by using Cronbach’s alpha and EFA. After that, the hypotheses and the
effect of demographic variables on customer satisfaction will be tested by the collected
data. Consequently, this chapter includes four parts: descriptive analysis, measurement
assessment, hypotheses testing, and testing the effect of demographic variables
Chapter 5. Implications and Conclusion
This chapter reminds the reader of the thesis goal presented on introduction chapter. It
shows the connection between the thesis results and the reality applications by suggesting
some strategies for managerial implications. This chapter also describes a number of
important limitations needed to be considered and recommends the further research.

Therefore, this chapter consists of three parts: conclusion, managerial implications, and
limitation of study and future research.

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CHAPTER 2. LITERATURE REVIEW
2.1 INTRODUCTION
This chapter presents overview of previous literatures relating to service quality and
customer satisfaction in the public sector. Also, a conceptual framework is built up and
relative hypotheses of research are raised.
2.2 LITERATURE REVIEW
2.2.1 PUBLIC SERVICES
2.2.1.1 DEFINITION OF PUBLIC SERVICES
According to Central Institute for Economic Management (CIEM, 2006), public services
always associate to the state supply of these services. The term “public services” in
English originates from the category of public commodities. In the economic term, public
commodities associate to some natural characteristics; such as: it is a kind of
commodities which is impossible to exclude anyone from using once it has been created;
consumption of a person does not decrease that of others, and; it is impossible to be
discarded, that means even when someone does not want to consume a public
commodity, it still exists. Thereby, public commodities are categorized concretely into
pure public commodities that satisfy all the three above-mentioned characteristics; and
impure public commodities that do not satisfy all above characteristics (Kearsey et al,
1998). At first, the definition of “public services” is to present the activities of impure
public commodity supply, firstly used in the Europe after World War II. Nowadays, the

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conception of “public service” has been remarkably extended, depending on various
approaches.
From the viewpoint of state management subjects, researchers on administration field
define public service as activities of state agencies of performing the function of state
administrative management, and assuring public service supply to serve common and
essential needs of the society. This way of understanding focuses on the role and
responsibilities of the state on public service supply activities. This approach takes the
viewpoint of public commodities’ beneficiaries, considering public service as public
service supply activities by the state or private sector to serve essential interests of the
society and the communities (Curry et al, 1998).
In Vietnam, Article 22, the Law on Governmental Organization (2001) stated:
“Ministries, governmental and ministerial – leveled agencies are to carry out functions of
state management of industries or professions in the whole nation; state management of
public service belonging to industries and sector; etc.” Thus, the conception of “public
services” used here is to emphasize the subjective role of the state on public service
supply to the community. This does not mean that the state is of monopoly to supply
service to the community. On the contrary, the state entirely can socialize some public
services, thereby sharing the workload of supplying the service, including health care,
education, water supply and drainage, etc. , with the private sector.
In fact, there are some important service serving common needs of the whole community,
but the private sector are not willing to take part in because they do not create profit, or
private sector does not obtain enough power and capital to carry out such service supply,
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for example, vaccination, firefighting, water drainage, etc. These are vital service to the
common social life. With such service, no one but the state is of capacities and
responsibilities to provide the people with. In addition, there are some service, such as
education, healthcare, electricity supply, and pure water supply, that can be provided by
markets but in an inefficient manner, or this can lead to social inequality, monopoly,

overpricing, and adverse impacts on benefits of consumers in particular, and of the whole
society in general. In these cases, the state is responsible to supply these services directly
or, to control private markets to serve basic right of the people (Kearsey et al, 1998).
Although public services consist of various types, they all share common characteristics
that are to serve common needs and interests of society, and the state is responsible to
assure such service supply to the society. Even when the state transfers the supply of
some of services to the privates sector, it still plays the regulating role, with a view to
assuring the impartial distribution of such services and marking good shortcomings of
markets (CIEM, 2006).
Given the above characteristics, public services can be understood as activities serving
essential needs of society, directly carried out by the state or assigned to the private sector
so as to assure social order equality.
2.2.1.2 CLASSIFICATION OF PUBLIC SERVICES
According to the report of CIEM (2006), classification of the public services includes:
- The range of public services: the range of public services varies depending on
institutions of different countries, different periods regarding people living standards in
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relation with economic development levels. Therefore, it is impossible to impose a rigid
standard to all countries. Some countries take a broad conception of public services;
accordingly, almost all state activities are called public services. In Canada, for example,
there are 34 types of public services, ranging from national defense, security, institutions,
to socio-economic policies (job creation, planning, environment protection, and health
care, education, culture, social insurance, etc.) Similarly, the Sweden clearly decentralizes
public services that each governmental level undertakes, thereby, attention is especially
paid to totally free welfare public services (such as unemployment benefits, social
allowances, etc.) In general, almost all nations highly appreciate health care, and
education and training activities.
A board coverage of public services as mentioned is a common trend of development in

long term, but in immediate term, it is just proper to nations at a high development level.
To countries which are at a low development level like Vietnam, we should focus more
on the state function of serving the society, then, narrowing the scope of public services,
emphasizing more on the most urgent common interests of the people, assuring their
stable and safe lives. Importantly, we have to separate public services activities (so far
called non-productive activities) from administrative civil authority activities as soon as
possible, as put forward in the government’s policies, aiming to eliminate the subsidizing
mechanism, lighten the state apparatus, mobilize all potential resources in the society, and
improve quality of public services serving the people.
- Categories of public services: public services can be classified based on many different
criteria, according to natures of services, or to forms of certain services, etc. For instance,
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in term of supplying objects, public services are divided into three categories, namely:
public services which are directly supplied by the state; public services supplied by stateowned enterprises; and public services supplied by non-governmental organizations and
the private sector. Following, CIEM report (2006) go deeper in types of public services
basing on criteria of natures and effects of supplied services:
(1) Public administrative services: This is a kind of service associating with state
management functions to meet requirements of the people. To performs these functions,
the state has to carry out direct services, such as granting permits, certifications,
registration, notarization, visas, resident records, etc. (In some countries, public
administrative services are different activities, not belong to the range of public services.
In Vietnam, some researchers also share this viewpoint.)
(2) Public non-productive services: Including activities providing necessary social
welfares to the people, such as: health care, education, culture, science, physical training
and sports, insurance, social security, etc. Such activities are mostly undertake by state
bodies and organizations, or partly socialized.
(3) Public interest services: Being activities of economic characteristic carried out by
enterprises, in line with the state’s requirements, to serve the people, such as water and

electricity supplies, environmental sanitation, social infrastructures. Of which, a majority
is undertaken by state-owned enterprises, for instance water and electricity supplies in
cities, transportation, and postal services. There are some activities in localities carried
out by the private sector, such as: environmental sanitation, waste and rubbish collection
and transports in some small cities, pure water supply in some rural area, etc.
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2.2.1.3 MAJOR CHARACTERISTICS OF PUBLIC SERVICES
According to a paper of CIEM (2006) there are some major characteristics of public
service:
- Public services are of sociality, with major aims of serving the community’s interests,
ensuring social equality and stability. Thereby, it is possible to see that economics, and
profits are not preconditions driving public services.
- Public services serve needs of all citizens, without discrimination against social classes
and statuses, and of wise publicism. As objects to be served by the state, all people are
equal to access public services.
- Public services do not bring about normal “commodities” but special ones provided by
the state, or by organizations, individuals designated by the state, meetings demands of
the whole society, no matter that provided products are tangible or intangible.
- Transactions of public services are not through perfect market relationship. Normally,
users of public services do not pay directly. In fact, they pay in form of tax payments to
the state revenue. There are also some public services their users have to pay a part of or
the whole expenditures; however it is responsibility of the state to supply such services
with non-profit purposes.
Given these natures of public services, it is not simple to provide this kind of services in
an effective manner. The state has to define services to which it plays a decisive role on
the supply, some others that need to be transferred to the private sector and social
organizations, and ones in which the state and the private sector can share the provision,
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as well as define how the state performs its relative roles of regulation and management
to the issue. Experiences of many countries over the last years have shown that in public
service supply, the state just directly provides services that the society cannot or do not
willing to do. If the state do not transfer the supply of possible public services to nonstate sectors, and neither reform the public service supply by state agencies, the overall
effect of public service supply will decrease, causing adverse impacts to people lives and
the common development of the whole society.
2.2.2 SERVICE QUALITY
2.2.2.1 DEFINITION OF SERVICE QUALITY
Service quality is a concept that has aroused considerable interest and debate in the
research literature because of the difficulties in both defining it and measuring it with no
overall consensus emerging on either (Parasuraman et al., 1985; Lewis and Mitchell,
1990; Dotchin and Oakland, 1994a, 1994b; Gaster, 1995; Asubonteng et al., 1996). There
are a number of different “definitions” as to what is meant by service quality. One that is
commonly used defines service quality as the extent to which a service meets customers’
needs or expectations (Lewis and Mitchell, 1990; Dotchin and Oakland, 1994a;
Asubonteng et al1996; Wisniewski and Donnelly, 1996). Service quality can thus be
defined as the difference between customer expectations of service and perceived service.
If expectations are greater than performance, then perceived quality is less than
satisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985; Lewis
and Mitchell, 1990).

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2.2.2.2 SERVICE QUALITY IN PUBLIC SECTOR
There are two perspectives to the ongoing pursuit of service quality. From the perspective
of the service organization, there is a desire to survive and compete in a global
environment. From the perspective of the customer, there is a desire for better quality

services. Whereas service quality has achieved considerable popularity across the private
sector, the public sector has been slower to take up the concept. However, service quality
has now moved to the forefront of public sector management as a result of the combined
pressure of growing customer expectations, an increased focus on revenue, and growing
competition between public and private sector organisations who offer identical services.
Not surprisingly, the vast majority of service-quality research in the literature focuses on
the private sector. This has resulted in a number of dilemmas which occur when service
quality management practices derived from the private sector are transferred to the public
sector (Buckley, 2003). According to Kearsey and Varey (1998), these dilemmas include:
•

multiple, non-financial, conflicting and ambiguous goals;

•

lack of agreement on means-end;

•

environmental turbulence;

•

immeasurable outputs; and

•

effects of management intervention unknown.

Several studies have suggested that there are a number of distinct differences between

private and public sector organisations (Wamsley, 1990; Zeppou and Sotirakou, 2003)
because the two sectors operate in distinctively different environments. In particular,
public-sector organisations operate in an environment characterised by resource
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constraints, market competition, and growing customer expectations (Robinson, 2003). It
has been argued that the public sector is inherently inefficient because of the absence of
incentives that exist in the private sector - which operates in an open market and has a
decentralised model of decision-making (Bhatta, 2001).
The purpose of the public sector (in the current environment) can be viewed as a paradox
- the pursuit of public good and a sustainable competitive advantage (Mathews and
Shulman, 2005). In contrast the private sector’s singular focus is on economic efficiency,
as it is generally viewed that profit and/or cost reduction are key ingredients to survival
and growth (Cooper, 2004; Ranson and Stewart, 1994). The manner in which cash is
allocated in public sectors is therefore based on the needs of the public, whereas
shareholders are central in the private sector’s emphasis on profits and returns (Cooper,
2004).
According to Donnelly et al. (1995) regarding to the types of customer, the public sector
caters for two types of customers:

(1)

those who pay for the provision of a service; and

(2)

those who do not pay for the provision of a service.

Public services that charge (and thus generate revenue) are more likely to be in

competition with services offered in the commercial sector, thereby offering the customer
a choice (Robinson, 2003). The relevance of service quality (largely driven by
competition) in this situation is clearly evident. On the other hand, it can be argued that
public services that are free of charge are less inclined to adopt service quality practices
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