Luận án The relationship between service quality, customer satisfaction and customer loyalty: a study in telecommunication industry of Laos

MINISTRY OF EDUCATION AND TRANING NATIONAL ECONOMICS UNIVERSITY VIETNAM MINISTRY OF EDUCATION AND SPORT NATIONAL UNIVERSITY OF LAOS LAOS PADAPPHET SAYAKHOT THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY: A STUDY IN TELECOMMUNICATION INDUSTRY OF LAOS Specialisation : Industrial Management Code : 62340414 Supervisor : Assoc. Prof. Dr. Truong Doan The A dissertation Submitted to the National Economics University, Vietnam and National University of Laos in fulfillment of requirements for the degree of Doctor of Philosophy in Economics HANOI - 2015 i DECLARATION I hereby declare that this dissertation is my own work and effort. The dissertation has not been submitted anywhere for any award. All the sources of information used have been well acknowledged. Signature PADAPPHET SAYAKHOT ii ACKNOWLEDGMENTS The path toward completion of a doctorate is long and often times can seem quite arduous. Yet it has been an enriching and rewarding experience for me both professionally as well as personally. I would like to express my thanks and appreciation to the many that have encouraged and lifted my spirits along the way. I especially want to thank Associate Professor Dr. TRUONG DOAN THE, my principal supervisor, for his patient and proficient guidance. He has shared expertise in research methods, inspired me to generate new ideas, and encouraged me to become a higher level scholar. My family has also been especially supportive in my journey to pursue a doctorate. To my loving wife for the patience she demonstrated, and the encouragement she provided throughout the long process. My children were always there to express their love and appreciation for their dad. Last but not least, I also would like to offer a special thanks to my friends and colleagues within my business organization who have provided their support along the way.Furthermore, I could not complete this thesis without the assistances and supports from interviewee team and interviewers, please receive my deepthankfulness from my heart. i TABLE OF CONTENTS DECLARATION ....................................................................................................... i ACKNOWLEDGMENTS ....................................................................................... ii TABLE OF CONTENTSTable of contents ............................................................ i ABBREVIATION ................................................................................................... iv LIST OF FIGURES ..................................................................................................v LIST OF TABLE ..................................................................................................... vi CHAPTER 1: INTRODUCTION ............................................................................1 1.1. Rationale ...........................................................................................................1 1.2. Research objectives ..........................................................................................4 1.3. Research questions ...........................................................................................4 1.4. Research framework .........................................................................................4 1.5. Research method ..............................................................................................5 1.6. Structure of the thesis .......................................................................................5 CHAPTER 2: LITERATURE REVIEW ON THE RELATIONSHIP BETWEEN SERVICE QUALITY, CUSTOMER SATISFACTION AND CUSTOMER LOYALTY .........................................................................................7 2.1. Background of service quality, customer satisfaction, and customer loyalty ..7 2.1.1. Service quality ...........................................................................................7 2.1.2. Customer satisfaction ...............................................................................26 2.1.3. Customer loyalty ......................................................................................36 2.2. Review of theory on the relationship between Service quality, customer satisfaction and customer loyalty ..........................................................................38 2.2.1. Service quality and customer satisfaction ...............................................38 2.2.2. Service quality and customer loyalty .......................................................38 2.2.3. Customer satisfaction and customer loyalty ............................................39 2.3. Telecommunications and Telecommunication Service ..................................40 ii 2.3.1. Telecommunications ................................................................................40 2.3.2. Telecommunication services ...................................................................42 2.3.3. The role of telecommunications in economic growth .............................44 2.4. Quality of Telecommunication Service and customer satisfaction and customer loyalty ...................................................................................................51 2.4.1. Quality of Telecommunication Service ...................................................51 2.4.2. Dimensions of Quality of Telecommunication Service ..........................55 2.4.3. Quality of Telecommunication Service, customer satisfaction and customer loyalty .................................................................................................57 CHAPTER 3: OVERVIEW OF TELECOMMUNICATION INDUSTRY IN LAOS ........................................................................................................................60 3.1. Background of Laos .......................................................................................60 3.2. Economy overview .........................................................................................61 3.3 Demographic Outlook .....................................................................................63 3.4. Overview of telecommunication industry in Laos .........................................66 CHAPTER 4: METHODOLOGY .........................................................................85 4.1. Overview of the research design ....................................................................85 4.1.1. Approaches of the research ......................................................................85 4.1.2. Research hypotheses ................................................................................86 4.1.3. Evaluation indicators for potential constructs .........................................86 4.1.4. Reliability and item analysis ....................................................................88 4.1.5. Exploratory factor analysis ......................................................................89 4.2. Main Survey ...................................................................................................90 4.2.1. Survey Sample .........................................................................................90 4.2.2. Questionnaires Development ................................................................92 4.2.3. Data collection ........................................................................................95 CHAPTER 5.: ANALYSIS AND RESULT ..........................................................97 5.1. Descriptive analysis of measurement scales ...............................................97 5.1.1. Descriptive analysis of customer satisfaction ............................................. 97 iii 5.1.2. Descriptive analysis of customer loyalty ..................................................... 97 5.1.3. Descriptive analysis of service quality ........................................................ 98 5.2. Exploratory factor analysis ...................................................................... 101 5.3. Reliability Analysis .................................................................................... 105 5.3.1. Reliability of telecommunication service quality measurement scale ... 105 5.3.2. Reliability of customer loyalty measurement scale .................................. 107 5.4. The relationship between telecommunications service quality and customer satisfaction ........................................................................................ 108 5.5. The relationship between telecommunication service quality and customer loyalty ................................................................................................ 114 5.6. The relationship between customer satisfaction and customer loyalty 119 CHAPTER 6. ........................................................................................................ 121 DISCUSSION, CONCLUSION AND RECOMMENDATION. ...................... 121 6.1. Discussion ............................................................................................................ 121 6.1.1. Service quality scale ..................................................................................... 121 6.1.2. Relationship between service quality, customer satisfaction and customer loyalty ....................................................................................................................... 122 6.2. Conclusion ........................................................................................................... 122 6.3. Recommendation ............................................................................................... 123 6.4. Limitation of the study and suggestion for future research ..................... 124 6.4.1. Limitation ...................................................................................................... 124 6.4.2. Suggestion for future research .................................................................... 124 REFERENCES ..................................................................................................... 126 APPENDIX: QUESTIONAIRES ....................................................................... 144 iv ABBREVIATION 2G Second-Generation wireless telephone technology 3G Third-generation technology 4G Fourth Generation ADB Asian Development Bank ADSL Asymmetric Digital Subscriber Line AM Amplitude modulation ASEAN Association of Southeast Asian Nations BMI CDMA Code Division Multiple Access EFA Exploratory factor analysis ETL Enterprise Telecommunications Lao FM Frequency modulation GMS Greater Mekong sub-region GNI Gross national income GSM Global System for Mobile Communications ISPs Internet service providers ITU International Telecommunication Union Lao PDR Lao People’s Democratic Republic LAT Lao Asia Telecom LDB Lao Development Bank LTC Lao Telecommunications MDGs Millennium Development Goals MPT Ministry of Posts and Telecommunications NPTA National Post and Telecommunications Authority NSEDP National Social and Economic Development Plan PAF principal axis factoring UN United Nations v LIST OF FIGURES Figure 1: Research Model ...........................................................................................4 Figure 2. Laos' population pyramid for 2011 ............................................................63 Figure 3. Mobile market growth (2006 – 2014) ........................................................68 Figure 4. Fixed-Line MarketGrowth 2006 – 2011 ....................................................72 Figure 5. Fixed-Line MarketGrowth 2012-2014 ......................................................73 Figure 6. LaosInternetMarketGrowth (2003-2011) ..................................................75 Figure 7. LaosInternetMarketGrowth (2012-2015) ..................................................76 Figure 8. LaosBroadband Market Growth (2005-2011) ...........................................78 Figure 9. Laos Broadband Market Growth (2012-2014) ..........................................79 vi LIST OF TABLE Table 1. Summary previous models on dimensions of telecommunication services quality ........................................................................................................................56 Table 2: Laos' Population By Age Group, 1990-2020 ('000) ...................................64 Table 3: Laos' Population By Age Group, 1990-2020 (% of total) ..........................65 Table 4: Laos' Key Population Ratios, 1990-2020 ...................................................65 Table 5: Laos' Rural And Urban Population, 1990-2020 .........................................66 Table 6: Mobile market growth (‘000) .....................................................................69 Table 7: Laos Telecommunications Subscriber MixSubscriber Mix .......................70 Table 8: Laos Internet Market by Service .................................................................77 Table 9: Competitive Landscape ...............................................................................83 Table 10: Telecoms sector in Laos – Historical Data and Forecasts ........................84 Table 13. Summary of characteristics of the sample ................................................91 Table 11. Items of customer satisfaction and customer loyalty ................................93 Table 12. Items of telecommunication service quality .............................................94 Table 14. Descriptive Analysis of Customer Satisfaction Items ..............................97 Table 15. Descriptive Analysis of Customer Satisfaction Items ..............................98 Table 16. Descriptive Analysis of Service Quality Items .........................................99 Table 17. KMO and Bartlett's Test ........................................................................ 101 Table 18. Total Variance Explained....................................................................... 102 Table 19. Rotated component Matrix ..................................................................... 103 Table 20. Constructs measure telecommunication service quality in Laos ........... 104 Table 21. Item-Total Statistics ............................................................................... 105 Table 22. Item-Total Statistics ............................................................................... 106 Table 23. Item-Total Statistics ............................................................................... 106 Table 24. Item-Total Statistics ............................................................................... 107 Table 25. Correlation matrix of relevant variables ................................................ 108 vii Table 26. Model Summaryb ................................................................................... 109 Table 27. ANOVAa ............................................................................................... 109 Table 28. Coefficients ............................................................................................ 110 Table 29. Dummy variables ................................................................................... 111 Table 30. Model Summary ..................................................................................... 112 Table 31. ANOVAa ................................................................................................ 112 Table 32. Coefficientsa ........................................................................................... 113 Table 33. Correlations ............................................................................................ 114 Table 34. Model Summaryb ................................................................................... 115 Table 35. ANOVAa ................................................................................................ 115 Table 36. Coefficientsa ........................................................................................... 116 Table 37. Model Summary ..................................................................................... 117 Table 38. ANOVAa ................................................................................................ 117 Table 39.Coefficientsa ............................................................................................ 118 Table 40. Model Summaryb ................................................................................... 119 Table 41. ANOVAa ................................................................................................ 119 Table 42. Coefficientsa ........................................................................................... 120 1 CHAPTER 1. INTRODUCTION 1.1. Rationale Telecommunication technology plays a significant role in the flow of information. It is an extremely useful tool to spread knowledge and new ideas, which can reduce infrastructure development gap between people in rural and urban area. Furthermore, it can improve education, health care services, and encourage business activities. In addition, it also plays the crucial role in the national economic development, especially in the developing country like Laos. Therefore, telecommunication technology is a way that Lao government uses to generate revenue and create job opportunity for people. In addition, the Lao government aims to improve people living standard and increase the ability to compete in global trade for Lao business by giving priority to the development of telecommunication technology with the intention to promote sustainable development of the nation. In line with the new Economic mechanism, the Telecommunication sector in Laos was privatized at the year 1996 as a joint venture with a Thai investor (Shinawana International Public Company Limited). However, this telecom privatization policy has been revised due to the importance of a national telecommunications development strategy which is able to resolve keen issues such as digital divide among regions and the frequent telephonic traffic congestion caused by a deficiency in the nationwide telecommunication facilities (eg. switching and telephone line capacity and human resources) (MCTPC, 1982; MCTPC, 1990 &1995; MCTPC, 1990 – 2007). Besides, Lao P.D.R has a responsible position for promoting telecom development programs planned for the Greater Mekong sub-region (GMS). This development concept of GMS proposed by Asia Development Bank (ADB) and is applied to an area or regional development approach to GMS, promoting networks 2 among the six Mekong riparian countries, including supporting activities for a common standard of telecom services availability which is increasing in Laos. Telecommunication increased steadily from 2007 to 2011 (MCTPC, 2007 – 2011). At the present, there are five authorized enterprises which are providing fixed and mobile telecommunication services in Laos. All these providers have the government ownerships, including: Lao Telecommunication Corporation Limited (LTC) with Government of Laos (GOL) and Shinawatra (Thailand) share 51% and 49% of possession respectively; Enterprise of Telecommunication Laos (ETL) with GOL 100% but currently become to ETL public; Star Telecom (STL): GOL 51% and Viettel Global 49% (now has been renamed to Unitel); Million international cellular SA (now has been transferred to Vimpelcom Russia (Beeline): GOL 22% and