20

CHAPTER 2 TQM, CUSTOMER SATISFACTION AND

SERVICE QUALITY

In this chapter the literature related to TQM, customer satisfaction and service quality is
reviewed in detail with the objective to explore the relationship between these three fields
of research. Section 2.1 identifies customer focus as the core component of TQM
philosophy. The primary research is based in a developing country (Pakistan) so literature
related to critical success factors of TQM in context of developing countries is discussed
in detail in section 2.2. Literature related to the concept of customer satisfaction is
reviewed in section 2.3. Because service quality is a major determinant of customer
satisfaction, service quality models constitute the major portion of section 2.4.

2.1: TOTAL QUALITY MANAGEMENT (TQM)

In 1949 JUSE (Union of Japanese Scientists and Engineers) formed a committee of
scholars, engineers and government officials devoted to improve productivity and
postwar quality of life in Japan (Kanji, 1990). This step is historically considered as the
origin of TQM philosophy (Mahour 2006). This management philosophy was confined to
Japan until the early 1980s. It became international when previously unchallenged
American industries lost substantial market share in both American and world markets.
To regain the competitive edge, American companies began to adopt productivity
improvement programs, which had proven themselves successful in other developed
countries. One of these improvement programs was TQM. Since then, both the popular
press and academic journals have published a plethora of accounts describing both
successful and unsuccessful efforts at implementing TQM (Kaynak 2003).

According to Fynes and Voss (2002), one of the most problematic issues confronting
researchers in quality management is the search for an appropriate definition. There is no
consensus on the definition of TQM (Reed et al. 1996) as different people define it
differently. ISO 8402:1994 defines TQM as: Management approach of an organization
centered on quality, based on the participation of all its members and aiming at long-term
success through customer satisfaction and benefits to all members of the organization and
to society. Ugboro and Obeng (2000) also concluded that TQM is an approach used in
21

directing organizational efforts toward the goal of customer satisfaction. Khan (2003)
proposed a philosophy of TQM on the basis of four tenets and suggested that the absolute
customer focus is the core component of TQM philosophy. Other tenets of this
philosophy are employee empowerment, involvement and development, continuous
improvement and use of systematic approach to management (figure 2.1). Figure 2.1
shows that absolute customer focus is the core component of TQM philosophy.

FIGURE 2.1: COMPONENTS OF TQM PHILOSOPHY AND THEIR
INTERRELATIONSHIPS

























Source: Khan (2003)

Previous studies in TQM can be categorized along several main research objectives.
These include identifying critical TQM factors, examining issues and / or barriers in the
implementation of TQM and investigating the link between TQM factors and
performance (Sebastianelli and Tamimi, 2003). The objective of this research is related to
the identification of TQM critical success factors and then its relationship to customer
EMPLOYEE
EMPOWERMENT,
INVOLVEMENT
AND
DEVELOPMENT
ABSOLUTE
CUSTOMER
FOCUS
CONTINUOUS
IMPROVEMENT
USE OF
SYSTEMATIC
APPROACH TO
MANAGEMENT
22

satisfaction so the literature related to TQM critical success factors and customer
satisfaction is reviewed in next sections (2.2 and 2.3). However because the research is
based in a developing country (Pakistan), problems in implementing TQM in developing
countries are also discussed (subsection 2.2.1).

2.2: CRITICAL SUCCESS FACTORS OF TQM

Various studies have been carried out attempting to identify critical success factors of
TQM. They tend to emphasize three different areas (Tari, 2005; Claver et al., 2003) i.e.
contribution from quality leaders, formal evaluation models and empirical research. Dale
(1999) identifies management leadership, training, employees participation, process
management, planning and quality measures for continuous improvement as consistent
findings in the work of quality leaders such as Crosby, Deming, Juran, Ishikawa and
Feigenbaum. The Malcolm Baldrige National Quality Award (MBNQA), European
Quality Award (EQA) and Deming application prize are common formal TQM
evaluation models used in the United States of America, Europe and Japan respectively.
The main components of these awards are summarized in Table 1. Leadership is the top
component of two of these awards.

TABLE 1: COMPONENTS OF VARIOUS TQM EVALUATION MODELS

MBNQA EQA Deming Application Prize
Leadership
Strategic Planning
Human resources -
orientation
Process management
Information and -
analysis
Customer and
market -focus
Business results
Leadership
Employee management
Policy and strategy
Alliances and resources
Process management
People results
Customer results
Society results
Key results
Policies
Organization
Information
Standardization
Development and usage of human
-resources
Activities ensuring quality
Activities for maintenance and
control
Activities for improvement,
result and future plans

Source: Tari (2005)

According to Karuppusami and Gandhinathan (2006), Sila and Ebrahimpour (2005) and
Sebastianelli and Tamimi (2003), the research by Saraph et al. (1989) was the first
23

empirical research, which focused on the operationalization of TQM through the
identification of critical success factors. Since then the factors that determine success
and/or failure in TQM have attracted the attention of many researchers (Najeh and Kara-
Zaitri, 2007). Among these, studies by Sila and Ebrahimpour (2002, 2003), and
Karuppusami and Gandhinathan (2006) are significant because these researchers
summarize previous research in a systematic manner.

Sila and Ebrahimpour (2002) reviewed 347 survey based TQM studies published
between 1989 to 2000 and determined that during this period 76 studies in 23 countries
focused on the identification of TQM critical success factors. Sila and Ebrahimpour
(2002) used factor analysis to identify the 25 most commonly extracted TQM critical
success factors from these 76 studies. These factors are given in Table 2.

TABLE 2: 25 TQM CRITICAL SUCCESS FACTORS EXTRACTED FROM
SURVEY BASED RESEARCH

Sr. No. FACTORS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20
21.
22.
23.
24.
Top management commitment
Social responsibility
Strategic planning
Customer focus and satisfaction
Quality information and performance
Bench marking
Human resources management
Training
Employee involvement
Employee empowerment
Employee satisfaction
Team work
Employee appraisal-rewards and recognition
Process management
Process control
Product/service design
Supplier management
Continuous improvement
Quality assurance
Zero defects
Quality culture
Communication
Quality systems
Just-in-time
24

Sr. No. FACTORS
25. Flexibility

Source: Sila snd Ebrahimpour (2002)

Sila and Ebrahimpour (2003) extended their previous research and analyzed and
compared these 25 factors across studies in 23 countries. They found that top
management commitment was the critical success factor covered in each country
included in the research.
Karuppusami and Gandhinathan (2006) used 37 TQM scale development studies
published between 1989 and 2003 to identify 56 critical success factors of TQM. They
selected these studies because the reliability and validity of the critical success factors
were statistically tested during these studies. On the basis of Pareto analysis,
Karuppusami and Gandhinathan (2006) sorted these 56 critical success factors in
descending order and divided them into two groups entitled vital few and useful
many. In the vital few group 14 factors accounted for 80% of the critical success
factors of TQM while the remaining 42 useful many factors accounted for 20% of
occurrences frequency only. The 14 factors identified as the vital few are given in
Table 3. Karuppusami and Gandhinathan (2006) also confirmed the finding of Sila &
Ebrahimpour (2003) that top management commitment is the most critical success factor
for TQM.

TABLE 3: 14 VITAL FEW TQM FACTORS

Sr. No. Factors
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Top management commitment
Supplier management
Process management
Customer focus
Training
Employee relations
Product / service design
Quality data
Role of quality department
Human resource management and development
Design and conformance
Cross functional quality teams
Bench marking
25

14. Information and analysis

Source: Karuppusami and Gandhinathan (2006)

This brief review of literature related to critical success factors of TQM therefore
suggests that top management / leadership support is overall the most common, important
and critical success factor in the implementation of TQM.

However most of the previous research in TQM cited in the review papers above is based
on research in developed countries. Quality gurus presented their ideas on the basis of
their individual experiences in developed countries. Formal evaluation models of TQM
are developed for companies operating primarily in the United States of America, Europe
and Japan. This research is based in a developing country (Pakistan) so it is essential to
identify the role of top management in previous TQM studies in developing countries.
Next subsection of this chapter is therefore about TQM implementation in developing
countries.

2.2.1: TQM IN DEVELOPING COUNTIRES

Most of the developing countries have unique characteristics like lack of democracy,
instability, corruption, shortage of skilled labour force and raw materials, under
utilization of available production capacity, the inferiority and lack of quality standards,
high scrap, low purchasing power of customers, inadequate consumers know how, lack of
balance between import and export, foreign exchange constraints, incomplete
infrastructure etc. (Curry and Kadasah; 2002, Madu, 1997; Mersha, 1997) so the term
poor quality is synonymous with the products manufactured in these countries
(Mohanty and Lakhe, 2004). However, some of the developing countries are breaking
the traditional trade barriers and opening their markets to international competitors, so the
demand for quality can no longer be the prerogative of the developed world (Temtime
and Solomon, 2002). Speaking at Pakistans first convention on quality, quality guru
Crosby stated that nothing is more important to the prosperity of a developing nation than
quality. The only way a developing nation can increase its trade activities and develop a
sustainable basis is to improve the quality of its products and services (Djerdjour and
Patel, 2000).
26


According to Thiagarajan et al. (2001), while TQM in the West lacks theoretical support,
knowledge of in developing economies is almost totally lacking. The scant attention
given to research in the developed nations, confused by the acknowledged limitations of
most of the research findings across national boundaries, has made any efforts to readily
learn and transfer empirically sound knowledge to developing economies all the more
difficult. It is therefore, important to create TQM knowledge base keeping in view the
specific requirements of the developing countries as most of studies on quality
management practices have focused on developed countries only (Rao et al., 1997; Al-
Khalifa and Aspinwall, 2000) and there is still some lack of information about the nature
and stage of TQM implementation in some regions of the world such as Asia, South
America, Africa and the Middle East (Sila and Ebrahimpour, 2003). This research is an
attempt to reduce this lack of information about TQM implementation in developing
countries.

Mahour (2006) identified training and culture as two important barriers in implementing
TQM in developing countries. Literature review in the previous section concluded
that top management support is the critical success factor of TQM implementation
so in the following paragraphs these three factors (top management support,
employee training and culture are discussed with reference to developing countries.

Top management in developing countries is mostly not committed to quality initiatives
and is reluctant to delegate authority (Djerdjour and Patel, 2002). Studies (Al-Khalifah
and Aspinwall, 2000; Temtime and Solomon, 2002, Mersha, 1997) further indicate top
management support is the critical barrier in implementing TQM in developing countries.
Kaplinsky (1995) identifies reasons for lack of top management support for TQM in
developing countries and conclude that in developing countries, many enterprises are
family-owned and corporate growth and effective management are constrained by the
reluctance of the family to devolve responsibility to professionally trained outsiders.

A second critical barrier in implementation of TQM in developing countries is a cultural
change. Bruun and Mefford (1996) recommend that TQM programs in developing
27

countries should be accompanied by changes in organizational culture as programs that
are highly successful in the industrialized developed countries often fail in the developing
countries because these programs are uncritically adopted without any regard to their
congruence with the internal work culture of developing countries (Mendonca and
Kanungo, 1996). Yong and Wilkinson (1999) examine cultural issue with in the quality
management context from a human resource perspective and argue that Even in
culturally homogenous societies, the issue of cultural change plays a key role in
determining the success of quality management implementation, but because of the
competitive push for the adoption of TQM and the pervasiveness of prescriptive market
driven consultancy packages, managers have already neglected to tailor quality initiatives
to suit their own organizational cultures. Madu (1997) argues that as multinational
corporations have adopted strategies that work well with in the confines of developing
economies cultures, developing countries have to tailor quality management practices
according to their own culture, as issue is not whether quality management practices
should be adopted but how to implement these practices.

Another important concern about TQM implementation in developing Islamic countries
like Pakistan is that TQM is alien, not relevant to Islamic cultural and religious norms.
Khan (2001) criticizes those who advocate this judgment and argues that there are several
Ahadis (sayings of Prophet Muhammad P.B.U.H.) relating to selling of goods, which
highlight the responsibility of the seller to explain all the shortcomings of the product
explicitly so as to adjust the buyers expectations to the appropriate level. After a clear
understanding of all the weaknesses of the product, when the buyer experiences the actual
product, he would, at the minimum, be satisfied if not delighted. Islamic norms of
business transactions insist on ensuring customer satisfaction that is also the core
component of the TQM philosophy. Therefore, it is incorrect to say that the TQM
philosophy is alien to Islamic cultural or religious norms and that it would not be
applicable in an Islamic country like Pakistan.

The third important factor affecting systemic adoption of TQM is employee training and
education as TQM demands a high degree of involvement of all employees and this
requires that all employees in the firm receive enough education and training (Gonzalez
28

and Guillen, 2002). According to Madu (1997), if the people of developing economies
are better trained and educated, they will be more able to contribute to planning their
future and the future of their companies but training infrastructure in these countries is
frequently underdeveloped and teaching techniques are still modeled on the now-outdated
managerial practices of mass production (Kaplinsky, 1995).

The important question is who can effectively change the culture and allocate sufficient
resources for employee education and training? Implementing quality management
requires a change of organizational culture and effective leadership is needed to be able
to transform the organization in a way that change may become acceptable. Similarly in
the perspective of culture, it is the responsibility of management to develop training
programs and enrich the knowledge of workers to understand the need for behavioral
modifications in order to adopt quality management (Madu, 1997). Therefore it may be
concluded that if top management is working effectively, other barriers in the
implementation can be over come and lack of top management support is the major
barrier in implementation of TQM in developing countries. This conclusion fortifies the
conclusion drawn in section 2.2.1 that top management support is the most critical
success factor of TQM.

2.3: CUSTOMER SATISFACTION

The word satisfaction is formed combining Latin words satis (enough) and facere (to
do or make) (Rust et al. 1996). Since the mid-1980s, when quality management became a
widely practiced way to improve product quality, reduce costs and improve customer
service, the issue of customer satisfaction has brought about a great deal of ongoing
debate (Gustafsson and Johnson, 2004; Wirtz and Lee, 2003).

The definition of satisfaction also shows a strong heterogeneity (Florence et al. 2006).
Different authors have defined satisfaction in different ways but Giese and Cote (2000)
found that three overall components within virtually every definition of satisfaction might
be identified as these capture the specifics of the concept. These components are

* A response (affective or cognitive).
29

* The response concerns a particular focus (e.g. expectations, product and
consumption experience).
* The response takes place at a particular point in time (e.g. after choice, after
transaction, after consumption, based on accumulated experience).

The primary thread of debate in the satisfaction literature nowadays is focused on the
nature of the cognitive and affective processes that result in the consumers state of mind
referenced to as satisfaction (Jaronski, 2004). The cognitive dimension is the set of
information individuals accumulate through direct or indirect experience where as the
affective dimension is positive or negative evaluation (Florence et al. 2006). According
to this stream of satisfaction research, Yi (1991) categorized customer satisfaction
definitions either as an evaluation process or as an outcome of evaluation process. Oliver
(1981), Yi (1991) and Fornell (1992) describe satisfaction as an evaluation process where
as Tse and Wilton (1988) describes satisfaction as an outcome of evaluation process.

Satisfaction as an evaluation process is based on the disconfirmation of expectations
paradigm. Consumers form expectations towards product/service performance and these
expectations later serve as standards against which actual product/service performance is
evaluated (Oliver, 1980; Churchill and Suprenant, 1982) so it is actually the comparison
of expectations and actual perceived performance that results either in confirmation or
disconfirmation. If expectations are met, confirmation takes place, otherwise
disconfirmation occurs. Disconfirmation may be positive (when perceptions exceed
expectations) or negative (when expectations exceed perceptions). Therefore satisfaction
is the result of confirmation and positive disconfirmation where as negative
disconfirmation guides to dissatisfaction. Use of the term positive disconfirmation was
confusing so Anderson and Sullivan (1993) adopted the term affirmation as a substitute
for the term positive disconfirmation.

The framework of customer satisfaction as an outcome of an evaluation process is based
on the satisfaction as states the paradigm developed by Oliver (1989). Oliver (1997) also
found that satisfaction relates to pleasurable emotions, those approaching excitement or
delight and tending toward contentment and relaxation; whereas dissatisfaction relates to
30

unpleasant, disappointing and angering emotions. Zeithaml and Bitner (2000) found that
satisfaction is related to relief. Studies by Folkes et al. (1987), Mooradian and Oliver
(1995) also investigated the relationship between satisfaction and emotion. These studies
documented that satisfaction is clearly related to affective evaluations and affective
evaluations are antecedents to satisfaction. Although cognitive states have some
influence on satisfaction, the concept is strongly related to affective states, or emotions
(Wicks, 2004).

Practically all research on customer satisfaction agrees that customer satisfaction is a key
component of economic success (Horvath, 2001). There are two different types of
evaluations of customer satisfaction from the economic psychology perspective. One is
transaction-specific satisfaction and the other is cumulative satisfaction (Johnson et al.,
1995). Satisfaction that occurs strictly at time of the service delivery is referred to as
transaction-specific satisfaction (Parasuraman et al., 1988; Bitner, 1990) whereas
cumulative satisfaction approach defines satisfaction as customers overall experience to
date with a product or service provider (Johnson and Fornell, 1991). Fornell et al. (1996)
argue that the cumulative satisfaction construct is better able to predict subsequent
behaviors and economic performance over a more transaction specific view because
customers make repurchase evaluations and decisions based on their purchase and
consumption experience to date, not just a particular transaction or episode (Johnson et
al., 2001).

The review of literature in this section concludes that satisfaction is mainly influenced by
affective states (emotions) and cumulative satisfaction has more vital role in economic
success of the companies as compared to the transaction specific satisfaction. The next
question is how to measure customer satisfaction?

Many experts concur that the most powerful competitive trend currently shaping
marketing and business strategy is service quality (Abdullah, 2006) because of its
apparent relationship to customer satisfaction (Bolton and Drew, 1991a). It has been a
long-standing debate in the literature whether service quality is an antecedent for
satisfaction or vice versa. Bitner (1990) and Bolton and Drew (1991b) suggest that
31

satisfaction is an antecedent of service quality. Zeithaml et al. (1993) used both terms as
synonymous because both use expectations and perceptions as key antecedent constructs
and both are related to the behavioral intentions, which affect financial success of the
business organizations. De Ryter et al. (1997) merged the concepts of service quality and
satisfaction in an integrative model and tested the model empirically. This model
concluded that satisfaction should be treated as a superordinate construct to service
quality as higher levels of service quality results in increased satisfaction. In this
research, the determinants of service quality are used as antecedents of customer
satisfaction. The following section therefore reviews literature about what service quality
is and how various authors conceptualize service quality concept.

2.4: SERVICE QUALITY

Service quality has been a frequently studied topic in service marketing literature (Su et
al., 2008). Various definitions of service quality have been proposed in the past (Jain and
Gupta, 2004) although it is an elusive and abstract construct that is difficult to define and
measure (Cronin and Taylor, 1992). Different authors have defined it differently but most
widely accepted definitions are those proposed by Parasuraman et al., (1988) and Cronin
and Taylor (1992). Parasuraman et al., (1988) define service quality as the difference
between what the customer feels that a service provider should offer and his perception of
what the service provider actually offers. However Cronin and Taylor (1992) argue that
only perceptions of performance derive service quality and expectations have no value in
calculating service quality. The objective of literature review in subsection 2.3.1 is to
relate concept of service quality to financial success of the company via customer
satisfaction.

2.4.1: MODELS OF SERVICE QUALITY

The model presented by Gronroos (1984) is considered as the first service quality model
(Wicks, 2004). In this model the author identified technical quality, functional quality
and image as dimensions of service quality (figure 2.2). Technical quality is defined as
what the consumer receives as a result of interactions with a service firm and functional
quality just the way in which the technical quality is transferred where as image is built
32

up by both technical and functional quality of service. Gronroos concluded that to
manage service quality, there must be no gap between the expected service and the
perceived service so the Gronroos also used the Disconfirmation paradigm used by
Oliver in 1980 in his classic model of customer satisfaction.

FIGURE 2.2: THE GRONROOS SERVICE QUALITY MODEL

















On the foundations of model proposed by Gronroos, Parasuraman et al., (1985)
developed the gap model (figure 2.3) to measure the elements of service quality.

The various gaps envisaged in this Parasuraman et al., (1985) model (figure 2.3) are:

Gap 1: Difference between consumers expectation and managements perceptions of
those expectations, i.e. not knowing what consumers expect.
Gap 2: Difference between managements perceptions of consumers expectations and
service quality specifications, i.e. improper service-quality standards.
Gap 3: Difference between service quality specifications and service actually delivered
i.e. the service performance gap.
Gap 4: Difference between service delivery and the communications to consumers about
service delivery, i.e. whether promises match delivery?

Perceived
Service

Image

Technical Quality

Functional Quality

Expected
Service

Perceived
Service
Quality
33

Gap 5: Difference between consumers expectation and perceived service. This gap
depends on size and direction of the above-mentioned four gaps. This gap constitutes the
theoretical basis of this gap model (commonly called SERVQUAL model) and states:
The quality that a consumer perceives in a service is a function of the magnitude and
direction of the gap between expected service and perceived service and mathematically
can be expressed as:

( )
ij ij
k
j
E P SQ = =
=1

where:
SQ = Overall service quality
k = number of attributes.
Pij = Performance perception of stimulus i with respect to attribute j.
Eij = Service quality expectation for attribute j that is the relevant norm for stimulus i.
34

FIGURE 2.3: PARASURAMAN ET AL., (1985) SERVICE QUALITY MODEL


































Parasuraman et al., (1985) recognized reliability, responsiveness, competence, access,
courtesy, communication, credibility, security, understanding/knowing the customer and
tangibles as determinants of service quality. Subsequent work by Parasuraman et al.,
(1988) merged these determinants into the five-component 22-item scale known as
SERVQUAL (figure 2.4) on the basis of factor analysis (Cronin and Taylor, 1992).

Reliability, responsive and tangibles were retained as such as identified in 1985 whereas
communication, competence, credibility, courtesy and security merged as a construct
Word of Mouth
Communications
Personal Needs

Past Experience

Expected Service

Perceived Service

Service Delivery (including
pre- and post-contacts)
Translation of
Perceptions into Service
Quality Specs.
Management Perceptions of
Consumer Expectations
External
Communications to
Consumers
GAP5
GAP4
GAP3
GAP1
GAP2
CONSUMER
MARKETER
35

assurance where as access and understanding/knowing the customer merged to form
the construct empathy.

FIGURE 2.4: PARASURAMAN ET AL., (1988) SERVQUAL MODEL


















Source: Cronin and Taylor (1992)

Parasuraman et al., (1988) described these five dimensions as follow:

Tangibility: Appearance of physical facilities, equipment and communication material
Reliability: Ability to perform the promised service dependably and accurately
Responsiveness: Willingness to help customers and provide prompt service
Assurance: Knowledge and courtesy of the employees and their ability to convey trust
and confidence
Empathy: The caring and individualized attention, organization provides to its customers

For a number of years, the dominant operationalization of service quality has been
Parasuraman et al., (1988) SERVQUAL scale. The foundation of the measure rested on
the authors suggestion that service quality should be represented as the difference, or
gap, between service expectations and actual service performance (i.e., the
disconfirmation paradigm) but Cronin and Taylor (1992) argue that, if service quality is
Reliability
Responsiv
eness
Assurance Empathy
Perceived
Service Quality
Tangibles
X
1
X
2
X
3
X
4
X
10
X
11
X
12
X
13
X
14
X
15
X
16
X
17
X
5
X
6
X
7
X
8
X
9
X
18
X
19
X
20
X
21
X
22
36

to be considered similar to an attitude, as proposed by Parasuraman et al., (1985,
1988), its operationalization could be better represented by an attitude-based
conceptualization. Therefore, they proposed that the expectations scale be discarded in
favor of a performance-only measure of service quality that they term SERVPERF
(Brady et al., 2002).
ij
k
j
P SQ
1 =
=
where:
SQ = Overall service quality
k = number of attributes.
Pij = Performance perception of stimulus i with respect to attribute j.

The use of performance-only measures is suggested by a number of other studies
(Babakus and Boller, 1992; Boulding et al., 1993) though still there is no consensus that
which of the two scales (SERVQUAL or SERVPERF) is more suitable for service
quality measurement (Jain and Gupta, 2004).

Another major strategic implication in Parasuraman et al., (1988) model was proposed by
Boulding et al., (1993). Boulding et al., (1993) reported that firms can try either to
increase perceptions or lower expectations in their quest to increase overall service
quality. Boulding et al., (1993) concluded that although expectations directly do not
affect service quality, it does not mean that they have no effect at all. Boulding et al.,
(1993) classified expectations as will expectations (WE) and should expectations
(SE) and recommended that firms should manage customers will expectations (WE) up
and should expectations (SE) down if they want to increase customer perceptions of
overall service quality.

The second important contribution of Boulding et al., (1993) model is to link service
quality to behavioral intentions. Overall perceived service (OSQ)------Behavioral
intentions (BI) link of this model propose that overall perceived service quality is related
to the behavioral intentions of the customers.
37


FIGURE 2.5: BOULDING ET AL., (1993) A DYNAMIC PROCESS MODEL OF
SERVICE QUALITY













In this model

WE = Will Expectation, SE = Should Expectation, DS = Delivered Service
PS = Perceived Service
OSQ = Overall Perceived Service
BI = Behavioral Intentions

Bitner (1990), Bolton and Drew (1991a,b), Cronin and Taylor (1994) and Venetis and
Ghauri (2004) also find that service quality has a positive impact on customers
behavioral intentions. Zeithaml et al., (1996) supported this relationship of perceived
service quality to behavioral intentions and concluded that behavior of the customers has
direct influence on the financial health of the company as service excellence enhances
customers inclination to buy again, to buy more, to become less price sensitive and to
tell others about their positive experiences. The model (figure 2.6) proposed by Zeithaml
et al., (1996) suggests that when service quality is superior, behavioral intentions of the
customers are favorable and thus customers are retained. This customer retention results
in financial gains and the case is vice versa when service quality is inferior as behavioral
intentions are unfavorable and customers defect from the company.
WE

SE
DS

PS OSQ
BI
38

FIGURE 2.6: (ZEITHAML ET AL., 1996) THE BEHAVIORAL AND FINANCIAL
CONSEQUENCES OF SERVICE QUALITY
















The review of models proposed by Gronroos (1984), Parasuraman et al., (1985,1988),
Boulding et al., (1993) and Zeithaml et al., (1996) in this section strengthens the
relationship of service quality to the behavioral intentions of the customers and financial
gains for the business organizations.

2.5: SUMMARY OF THE CHAPTER

In this chapter the literature related to TQM, customer satisfaction and service quality is
reviewed in a systematic order. The chapter starts with brief history of the TQM. Review
of TQM literature suggests that absolute customer focus is the core component of TQM
philosophy. Available literature suggests that top management support is one of the most
critical success factors of TQM, however in developing countries mostly top management
is not committed to TQM implementation. This research will recheck this finding.

Though there is significant heterogeneity in defining customer satisfaction, it has been
concluded that affective processes are the main antecedents of satisfaction and from the
economic psychology perspective, cumulative satisfaction is more important.
Relationship between customer satisfaction and service quality is established in which
service quality is an ancestor of customer satisfaction. Various models of service quality
are presented in section 2.3. This section suggests that service quality relates to the

Favorable
BEHAVI ORAL
I NTENTI ONS
SERVICE
QUALI TY
Superior
I nferior

Remain

BEHAVI OR

Defect

+$
Ongoing Revenue
Increased Spending
Price Premium
Referred Customers

FI NANCI AL
CONSEQUENCES

$
Decreased Spending
Lost Customers
Costs to Attract New
Customers
Unfavorable
39

behavioral intentions and favorable behavioral intentions are must for financial success of
the firms. This means higher the service quality; higher are the chances of financial
success because of increased customer satisfaction.