Impact of service personal values on service value and customer loyalty: a cross-service industry study

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Service BusinessAn International Journal ISSN 1862-8516Volume 6Number 2 Serv Bus (2012) 6:137-155DOI 10.1007/s11628-011-0121-y

Impact of service personal values on servicevalue and customer loyalty: a cross-serviceindustry study

Le Nguyen Hau & Pham Ngoc Thuy

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EMPI RICAL ARTICLE

Impact of service personal values on service valueand customer loyalty: a cross-service industry study

Le Nguyen Hau • Pham Ngoc Thuy

Received: 5 July 2011 / Accepted: 14 October 2011 / Published online: 29 October 2011

� Springer-Verlag 2011

Abstract This study investigates the customer’s perception of service value based

on theory of personal values. A formative structural model is developed and tested

using the data surveyed from three service industries in Vietnam. Results show a

positive impact of service personal values on service value. Then, service value and

satisfaction are proved as two mediating constructs in the impact of service personal

values on customer loyalty. Satisfaction and loyalty are, thus, not only determined

by the supplier’s service itself, but also the customer’s personal values. This con-

solidates the value co-creation perspective rather than the traditional value exchange

in service research.

Keywords Service personal values � Service value � Satisfaction �Loyalty � Vietnam

1 Introduction

With the emergence of the service dominant logic (S-D) perspective (Vargo and

Lusch 2004), service and value are the two inseparable concepts that qualify as

candidates for the title as the preeminent marketing concept (Gronroos 2008; Babin

and James 2010). Value creation for customer represents a new paradigm in which

creating and sustaining a firm’s competitive advantage require a more comprehen-

sive approach than a simple focus on service quality or customer satisfaction (Ngo

and O’Cass 2010; Ruiz et al. 2008). However, despite the important role of value

L. N. Hau (&) � P. N. Thuy

School of Industrial Management, HoChiMinh City University of Technology—Vietnam,

Bldg. B10—268 Ly Thuong Kiet Str., Dist. 10, HoChiMinh City, Vietnam

e-mail: [email protected]; [email protected]

P. N. Thuy

e-mail: [email protected]; [email protected]

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Serv Bus (2012) 6:137–155

DOI 10.1007/s11628-011-0121-y

Author's personal copy

creation, ‘‘the knowledge on how value is created, by whom and for whom is

scarce’’ (Gronroos and Ravald 2011, p. 6).

In marketing literature, the term ‘‘perceived service value’’ is used to emphasize

that from customer side, service value can only be perceived subjectively (Babin

and James 2010). The current study, while adopting this notion, uses the term

‘‘service value’’ for short. The question is then how service value is perceived or

created by an individual consumer? Particularly, what is the basis for the subjective

judgment of service value? To address this question, the current study employs the

concept of service personal values (Lages and Fernandes 2005), which is rooted in

the theory of personal values (Rokeach 1973; Schwartz 1992).

The second issue to be addressed in this study relates to the roles of service value

and customer satisfaction in predicting customer loyalty. Although these concepts

have been widely studied, their interdependence has been discussed controversially

(Boksberger and Melsen 2011). For instance, Ngo and O’Cass (2010) suggested to

move marketing away from a focus on creating customer satisfaction to creating

customer value. They argued that although customer satisfaction is established in

the marketing literature as the most important construct to determine loyalty,

empirical studies show that consequences of customer satisfaction not always lead

to success. Given the difference in the conceptual nature of customer satisfaction

and customer loyalty, the question is that if service value is to replace (or

supplement) customer satisfaction on a firm’s focus, then what is the explanatory

power of service value in comparison with customer satisfaction toward customer

loyalty?

Given the above-mentioned issues, the current study develops and tests a

structural model on the related constructs in which service personal values and

service value are conceptualized as second-order formative constructs. Empirically,

it tests the impact of service personal values on service value. Then, it investigates

the impact of service personal values and service value on customer satisfaction and

loyalty, by which the role of service value and satisfaction on loyalty is to be

delineated.

The rest of this paper is organized as follows. Following this introduction, the

next section presents the literature background and model/hypothesis development.

Then, the research method is reported, which is followed by two sections on the

empirical results and discussions. Finally, theoretical contributions, managerial

implications and research limitations comprise the last section of this paper.

2 Literature background and the research model

2.1 The concept of service value

Literature reveals that the conceptualization of service value can be grouped into

three overlapping categories, namely the value components perspective, benefits/

costs ratio perspective and means-ends perspective (Khalifa 2004). Among these

perspectives, the most prevalent conceptualization is premised on theory of rational

choice in which value is posited as a trade-off between perceived benefits and

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perceived costs (Babin and James 2010; Zeithaml 1988). Accordingly, service value

is defined as the consumer’s overall assessment of the utility of a service based on

perceptions of what is received and what is given (Zeithaml 1988). Gronroos (2008)

emphasized the experiencing aspect of service value by giving another definition:

‘‘value for customers means that after they have been assisted by a self-service

process or a full-service process they are or feel better off than before’’ (p. 303). The

present study adopts the ‘‘gets versus gives’’ paradigm (Zeithaml 1988) with an

emphasis on the customer experience after service consumption to explain the post

purchase states of customers.

2.2 Service value as a second-order formative construct

To date, the majority of studies conceptualize service value either as a

unidimensional construct (e.g., Wang 2010), or a reflective multidimensional

construct (e.g., Liu et al. 2005). Only recently, some studies take an alternative

approach in which the framework remains Zeithaml’s (1988) model but service

value is presented as a higher-order formative construct. The number of formative

components ranged from two to six (Chen and Hu 2010; Ruiz et al. 2008; Lin et al.

2005; Whittaker et al. 2007).

Unidimensional conceptualization of service value has an advantage of

simplicity. However, it ignores the conceptual richness of the construct (Ruiz

et al. 2008). On the other hand, multidimensional reflective conceptualization of

service value is ‘‘not only problematic but in many cases conceptually incorrect’’

(Ruiz et al. 2008, p. 1278) because reflective modeling requires all components to

covary highly with one another (Jarvis et al. 2003). In this case of service value, the

benefit components may not correlate with the sacrifice components.

Based on the taxonomy of multidimensional constructs suggested by Jarvis et al.

(2003), the present study conceptualizes service value as a second-order formative

construct which consists of two interrelated components, namely process value (or

functional value) and outcome value (or technical value). Within each component,

the Zeithaml’s (1988) trade-off principle is still applied. That is, benefits and

sacrifices are embedded in the way customers perceive process value and outcome

value.

The process–outcome approach adopted in this study has its root in Gronroos

(1982) who views a service as consisting of technical (i.e., outcome) and functional

(i.e., process) components. It is also congruent with Babin et al. (1994) who

proposed a bi-dimensional model of value. Utilitarian value results when a

consumer evaluates a consumption as successful in that a desired end result is

achieved (i.e., outcome value). Hedonic value, on the other hand, results when a

consumption is in and of itself gratifying (i.e., process value). Although

operationalizing models with many dimensions may well be appropriate in some

contexts, the bi-dimensions adopted in this study prove parsimonious and able to

account for a wide variety of consumption experiences (Babin and Harris 2009).

Moreover, although one dimension reflects the outcome and the other reflects the

process aspect, these two dimensions of service value are not mutually exclusive.

While a firm can provide expertise in providing consumers with ‘‘get’’ components

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that lead to process value or outcome value, outcome value does not exclude process

value and vice versa (Babin and James 2010).

2.3 How is service value created?

Based on the service logic perspective, the firm and the customer co-create value.

Babin and James (2010) explained that marketer accomplishes the service exchange

by stating value propositions that customers can use to create value through the

firm’s offerings. When the service functions properly, the customer is better off

because he/she has enjoyed the value-in-use, and the marketer is also better off

because he/she has realized value-in-exchange through the exchange of resources

with the consumer. In fact, there exists an unsettled debate over whether service

providers are co-creators of service value (Vargo and Lusch 2004) or are only the

facilitators of service value (Gronroos 2008). Yet, what is clearer is that service

value is the end result of service exchange (Babin and James 2010). While this

explanation provides interesting insights, it focuses on the interaction between

service providers and customers. The question about how service customers

evaluate the value after they consume still remains unclear.

From a consumer view, Khalifa (2004) explained that service value accumulates

through the four levels. First, functional value, i.e., an outcome that the customer

obtains from basic service features. Second, solution value obtained by extending

the service offerings to include activities the customer usually performs to acquire

and use the service. Third, experience value involves adding intangible being

created as the customer becomes part of the transformation process rather than mere

recipient of its end result. Finally, meaning value links the immediateness of the

experience to the durability of strongly held personal philosophy.

2.4 The concept of service personal values and its structure

Personal values are defined as ‘‘an enduring belief that a specific mode of conduct or

end-state of existence is personally or socially preferable to an opposite or converse

mode of conduct or end-state of existence’’ (Rokeach 1973, p. 5). They can be

understood as desirable goals, varying in importance, that serve as guiding

principles in people’s lives (Schwartz 1992). They are the value system of each

individual which forms the background of his/her life style.

In service contexts, Lages and Fernandes (2005) developed a model of personal

values which is termed service personal values based on Rokeach (1973) and

Schwartz (1992). Accordingly, service personal values comprise three reflective

components, i.e., value to a peaceful life, value to social recognition and value to

social integration. Value to a peaceful life refers to an individual consumer’s

assessment if a service makes or brings his/her life pleasurable, more tranquility,

safety and/or harmony; if it protects or defends the consumer from threats to life or

pressures on it. Value to social recognition refers to the consumer’s assessment if a

service helps gain respect from others, strengthening social status, or achieving a

more fulfilled and stimulating life. Personal value related to social integration

brought back by a service if it improves his/her relationships with family, friends,

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and the society. These relationships better integrate the individual into the society/

community (Lages and Fernandes 2005).

The current study adopts these three components. However, it is proposed that

they would be formative components rather than reflective ones. Conceptually,

value to a peaceful life refers to the inner life of a customer. Value to social

recognition and value to social integration relate to his/her outer life. They cannot

be used substitutably as reflections of personal values, although they might

intercorrelate to one another due to the inner-outer balance of a human life (Thuy

and Hau 2010). They should be components that together form the overall service

personal values residing within an individual (Jarvis et al. 2003).

2.5 The proposed model and hypotheses

The proposed model for this study is presented in Fig. 1. Accordingly, the second-

order formative construct of service personal values is modeled as an antecedent of

service value (H1), customer satisfaction (H2) and customer loyalty (H3). Service

value is also a second-order formative construct, which is explained by service

personal values. It, in turn, influences customer loyalty directly (H4) and via the

mediation of customer satisfaction (H5).

2.5.1 Service personal values and service value

The impact of personal values on consumer attitude and behavior has been studied

by a number of researchers. Durgee et al. (1996) advocated that one of the best ways

to understand and to gain customers is to understand their personal values system.

Personal values form standards, which lead to the formation of beliefs, attributes

and finally to purchase behavior (Carlson and Kacmar 2000). Personal values

provide the basis for cognitive structure and attitudes of a person toward other

people and objects (Kamakura and Novak 1992). They represent the expectation of

a person’s life and are used as a judgment frame to solve conflicts, to make

VALUE TO A PEACEFUL LIFE

VALUE TO SOCIAL INTEGRATION

VALUE TO SOCIAL RECOGNITION

SERVICE PERSONAL VALUES

CUSTOMERSATISFACTION

PROCESSVALUE

OUTCOMEVALUE

SERVICEVALUE

CUSTOMERLOYALTY

H1

H4H3 H2 H5(mediating effect)

Fig. 1 The proposed model for the impact of service personal values on service value and loyalty

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decisions, to perceive and adjust the relationships between an individual and the

society (Lages and Fernandes 2005).

Studies show that service personal values have an influence on consumer

evaluation toward the service after the buying decision is made (Koo et al. 2008). It

is the service personal values that motivates the consumer to seek for the latent

benefits that the service offers to him/her and then, once being consumed, assesses

the service value based on how it fits his/her personal values (Zeithaml 1988).

Taking the view of means-end theory, Huber et al. (2001) explain that in the service

consumption process, means are the service, and end is personal values. Based on

the assessment of concrete features of a service (lowest abstract level), consumers

will transform them into service value (medium abstract level) before assessing how

it fits with his/her personal values (highest abstract level). In the same vein, Khalifa

(2004) explained this process by using the term experience value and meaning

value. Accordingly, the relation between service value and service personal values

reflects the links between the immediateness of the service experience value and the

durability of strongly held personal philosophy, i.e., meaning value.

Thus, it is reasonable to believe that customer uses his/her service personal

values as a framework to evaluate the value of the service being consumed.

Consequently, it is hypothesized that:

H1 Service personal values have a positive impact on service value.

2.5.2 Service personal values, satisfaction and loyalty

Customer satisfaction toward a service is an emotional feeling after using the

service which is a transaction-specific evaluation (Oliver 1981). A customer’s

feeling of satisfaction is a result of a comparison process between perceived

performance and one or more comparison standards, such as expectations

(Parasuraman et al. 1988). In this case, the comparison standard is formed by

personal values which is the personal framework to judge how good/bad the service

is (Koo et al. 2008). The customer is satisfied when he/she feels that the service

performance fits well with his/her personal framework (confirming). If it remains

below expectations, the customer will be dissatisfied (disconfirming).

On the other hand, customer loyalty refers to the strength of the relationship

between an individual’s relative attitude and repeat patronage (Dick and Basu

1994). It reflects favorable attitudes toward a service/product and commitment to

repurchase it. Marketing scholars agree that customer loyalty is much more

important for a brand than customer satisfaction (Pleshco and Baqer 2008).

Lages and Fernandes (2005) argued that the sequence of values–attitude–

behavior is also applied to post purchase states, i.e., customer satisfaction and

loyalty. The dual impact of service personal values on loyalty (i.e., direct impact

and indirect impact via satisfaction) is empirically supported by Thuy and Hau

(2010). They explained that service personal values provide the basis to determine

not only the immediate emotional response to the service performance, which is

transaction-based, but also the customer loyalty, which is fairly enduring attitude

toward the service brand. Upon using the service, the consumer judges the service

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based on his/her personal values. The result of this judgment immediately leads to

the extent of consumer satisfaction. Moreover, customer satisfaction is not the only

drive to customer loyalty (Pleshco and Baqer 2008). Some empirical studies found

that service personal values also have a direct positive impact on customer loyalty

(Thuy and Hau 2010). Given these diversifying results, the current study proposes

and tests a relationship between service personal values and satisfaction, and

another relationship between service personal values and loyalty.

It is, therefore, hypothesized that:

H2 Service personal values have a positive impact on customer satisfaction.

H3 Service personal values have a positive impact on customer loyalty.

2.5.3 Service value, satisfaction and loyalty

Service value is seen as a measuring stick to assess the extent to which service has

succeeded after being consumed (Babin and James 2010). Service value,

satisfaction and loyalty are deemed to be distinct constructs but closely related to

one another. Satisfaction has been conceptualized as a unidimensional construct,

largely due to the assumption that it varies along a continuum from unfavorable to

favorable (Westbrook and Oliver 1991). In contrast, service value is a multidi-

mensional construct which is antecedent to satisfaction (Parasuraman 1997).

Literature also shows a strong link between service value and loyalty. Based on the

cognitive-based perspective, Zeithaml (1988) posited a direct impact of service

value on behavioral outcome (i.e., loyalty), neglecting the roles of satisfaction (i.e.,

an affective construct). Other authors argued that cognitive variables are mediated

by affective ones to result in conative outcomes (e.g., Eggert and Ulaga 2002). That

is, service value has an impact on satisfaction which, in turn, impacts on loyalty.

Ruiz et al. (2008) tested separately the direct impacts of service value on satisfaction

and on customer loyalty (e.g., repurchase intentions) and found strong empirical

supports to these relations.

Additionally, it is widely accepted that satisfaction is a strong predictor of

repurchase intentions, word-of-mouth, or loyalty (Eggert and Ulaga 2002). This

positive relationship has been supported in many empirical studies (e.g., Bigne et al.

2008; An and Noh 2009). However, this is not always the case. Reichheld (1994)

indicated that customers who describe themselves as satisfied are not necessarily

loyal. Lin et al. (2005) found that the effect of service value on satisfaction and

loyalty is depended on the way service value is modeled (i.e., formative, reflective

multidimensional or unidimensional reflective).

Given these inconclusive results, the present study proposes and tests the impact

of service value on customer loyalty via two paths, direct impact and indirect impact

via customer satisfaction. Therefore, it is hypothesized that:

H4 Service value has a positive impact on customer loyalty.

H5 The impact of service value on customer loyalty is partially mediated by

customer satisfaction.

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3 Method

3.1 The empirical research setting

The empirical setting for this study is three service industries in Vietnam, an

emerging economy in the South East Asia. With a stable and high growth rate of 9%

over the last decade, Vietnam has placed it as the second-highest growth economy

in the region, after China. This fast growing economy has facilitated the service

sector to expand remarkably during the last decades. Moreover, Vietnam is

undergoing a transition from central planning to a form of market socialism. Such a

transitional and emerging economy may experience unprecedented changes in

social, legal, and economic aspects (Zhou et al. 2005). Additionally, being one of

the Eastern Confucius cultures, Vietnamese cultural values may also affect

consumer value systems and behaviors. All these features make Vietnam an

appropriate setting for this study, given the situation that ‘‘the existing body of

research suffers from an important limitation, viz., most of it has been conducted in

high income, industrialized countries’’ (Burgess and Steenkamp 2006, p. 338) while

‘‘emerging markets are natural laboratories in which theories and assumptions about

their underlying mechanisms can be tested, generalizations derived and boundary

conditions identified’’ (Burgess and Steenkamp 2006, p. 337).

The three service industries selected in this study included airlines service,

banking service and healthcare service (health examination and consultation). They

represent a wide range of service characteristics (see Appendix) such as the nature

of service act (i.e., on body vs. on object), the relationship with customers (i.e.,

membership vs. transaction) and the demand fluctuation (high vs. low) (Lovelock

1983).

3.2 Research design and measures

The model and hypotheses were tested using survey data obtained from respondents

who were customers of one of the three types of service in Vietnam. The total

sample size was 1,069 cases which included 308 cases in airlines service, 363 cases

in banking service and 398 cases in healthcare service. Within each service industry,

informants were selected using convenient sampling method. Data were collected

by means of a structured questionnaire through face-to-face interviews at various

airports, banks and hospital/medical centers. Data collectors were nine university

students who were taking the course research methods in business. This data

collection technique was used successfully in many studies before (e.g., Ruiz et al.

2008). The questionnaire was firstly designed in English and then translated into

Vietnamese through a translation and back-translation procedure. The English–

Vietnamese translation was undertaken by one translator, and the back translation

was done by another one. The two translators were university academics who are

fluent in both languages. After comparing the two English versions, mismatched

points were discussed among the two translators and the researcher. The Vietnamese

version was then revised accordingly. Pretest was also conducted by means of

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interviews with four customers in each industry in order to refine the wordings of

questionnaire items.

As mentioned earlier, service personal values and service value are conceptu-

alized as second-order formative constructs, while customer satisfaction and

customer loyalty are unidimensional reflective constructs. Service personal values

are composed of three dimensions (i.e., value to a peaceful life, value to social

recognition and value to social integration) which are measured by 12 reflective

items (Lages and Fernandes 2005). Service values are composed of two dimensions,

i.e., process value and outcome value. Each of these dimensions was measured by 4

items that were adjusted from Wang et al. (2004) and Sweeney and Soutar (2001).

Additionally, one global item (i.e., ‘‘Overall, I receive from X the value which is fairwith the money, time and effort I spend’’) was employed to make the formative

model identified (Hair et al. 2010). Customer satisfaction and loyalty were measured

by four items for each. These items were adjusted from Oliver (1997) and Zeithaml

et al. (1996). All measures were in the five-point Likert form (Table 2).

4 Results

4.1 Sample characteristics

Of the total 1,069 respondents, about 28.8% were customers of airlines service,

while 34% of banking and 37.2% of healthcare services. As shown in Table 1, the

Table 1 Sample characteristics

Whole sample Airlines Banking Healthcare

Frequency % Frequency % Frequency % Frequency %

Number of respondents 1069 100 308 28.8 363 34.0 398 37.2

Gender

Female 533 49.9 137 44.5 189 52.1 207 52.0

Male 536 50.1 171 55.5 174 47.9 191 48.0

Age group

18–25 283 26.5 95 30.8 76 20.9 112 28.1

26–35 359 33.6 109 35.4 126 34.7 124 31.2

36–45 175 16.4 50 16.2 59 16.3 66 16.6

46–55 166 15.5 41 13.3 67 18.5 58 14.6

[55 86 8.0 13 4.2 35 9.6 38 9.5

Income

Low 179 16.7 41 13.3 42 11.6 96 24.1

Upper low 402 37.6 117 38.0 135 37.2 150 37.7

Medium 369 34.5 106 34.4 141 38.8 122 30.7

High 119 11.1 44 14.3 45 12.4 30 7.5

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sample was fairly balanced in terms of customer gender, age group and income

level.

4.2 Assessment and refinement of measurement scales

Exploratory factor analysis (EFA) was first employed to have preliminary

indications of dimensionality and construct validity. This procedure was undertaken

on all scales combined. The factor pattern yielded by EFA fully matches the

designed structure, i.e., seven first-order dimensions, in which each item loaded

highly on its designate scale. However, 2 out of 28 items were eliminated from the

original scales due to cross loading (Table 2). Then, the remaining 26 items were

submitted to confirmatory factor analysis (CFA) using AMOS software program

(Arbuckle and Wothke 1999) to assess the full measurement model representing

relations among all constructs and associated items. The results showed that kurtosis

values of all variables were within -0.421 to ?0.252, and their skewness values

ranged from -0.529 to -0.042. Although the data exhibit slight deviations from

normal distribution, it was appropriate for maximum likelihood (ML) estimation to

be applied (Kline 1998).

Refinement was made by eliminating 7 further items due to high covariance of

error terms (see Table 2). Eventually, CFA of the full measurement model with the

remaining 19 items yielded the following measures: v2 = 267.95; dF = 131; p =

0.000; v2/dF = 2.045; GFI = 0.974; TLI = 0.983; CFI = 0.987; RMSEA =

0.031. The HOELTER index of 633 was far above the threshold value of 200

which indicated that the sample size was large enough for this analysis (Byrne

2001). It is also noted that no offending estimates were found (Hair et al. 2010). All

these statistics showed that the full measurement model fits the data set in this

empirical study.

As shown in Table 2, all item loadings on their designate constructs range from

0.726 to 0.885. Variance extracted (VE) values range from 0.549 to 0.739 which

were all above 0.50. Thus, convergent validity of scales was satisfactory.

Discriminant validity of all scales was also achieved for the correlations between

21 pairs of constructs range from 0.267 to 0.646 which were well below 1.00. Based

on the 19 remaining items, composite reliability of the seven first-order constructs

was estimated which range from 0.709 and 0.894, all exceeded acceptable standards

for exploratory research (Kline 1998).

4.3 Model estimation using the whole sample

The structural model was then estimated using ML estimation. In this model, service

personal values and service perceived value were specified as multidimensional

formative constructs, while customer satisfaction and loyalty were unidimensional

constructs. Model estimation yielded a good fit: v2 = 674.48; dF = 157;

p = 0.000; v2/dF = 4.30; GFI = 0.944; TLI = 0.944; CFI = 0.954; RMSEA =

0.056.

The resulting standardized estimates (Table 3) indicated that service personal

values have a significant effect on service value (b = 0.30; p = 0.003). Service

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Table 2 Scale items and CFA estimates

Item wording Std. loading

Value to a peaceful life: (comp. reliability = 0.804, VE = 0.672)

… more tranquility 0.826

… more family security 0.814

… more harmony and stability in life Eliminated through CFA

… a more pleasurable life Eliminated through EFA

Value to social recognition: (comp. reliability = 0.865, VE = 0.682)

… more respect from others 0.839

… the feeling that the world is more agreeable 0.844

… more status 0.793

… more social recognition Eliminated through CFA

… a more stimulating and adventurous life Eliminated through EFA

Value to social integration: (comp. reliability = 0.894, VE = 0.739)

… a higher integration in my group 0.819

… better relationships 0.885

… to strengthen my friendship relationships 0.873

Outcome value: (comp. reliability = 0.709, VE = 0.549)

In comparison with the money, time and effort I spend…The benefits I receive from X is good 0.726

The services I receive from X is reasonable Eliminated through CFA

X provides me with the benefits I want 0.756

X gives me what I need Eliminated through CFA

Process value: (comp. reliability = 0.812, VE = 0.591)

In comparison with the money, time and effort I spend…X makes me feel good during the time I use the service 0.761

X gives me a positive experience during the time I use the service 0.750

I have an enjoying time during the time I use the service Eliminated through CFA

I have a happy time during the time I use the service 0.794

The global reflective item measuring service perceived value

Overall, I receive from X the value which is fair with the money, time and effort I spend

Satisfaction: (comp. reliability = 0.831, VE = 0.621)

I am satisfied with my decision to choose X 0.784

My choice to use the service of X was a wise one 0.783

I am sure it was the right thing choose X Eliminated through CFA

I have really enjoyed myself with X 0.797

Loyalty: (comp. reliability = 0.878, VE = 0.706)

I say positive things about X 0.826

I recommend X to others 0.866

I come back to X when I need this service in the future 0.829

I encourage friends and relatives to choose X Eliminated through CFA

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personal values also have a significant direct effect on satisfaction (b = 0.20;

p = 0.002) and a significant direct effect on customer loyalty (b = 0.20; p =

0.003). Then, service value has a significant effect on customer satisfaction

(b = 0.45; p = 0.003) and a significant direct effect on loyalty (b = 0.30;

p = 0.003). Satisfaction has significant effect on loyalty as well (b = 0.36;

p = 0.001). In aggregation, as shown in Table 4, the total effect of service personal

values on satisfaction (direct effect and via the mediation of service value) is

b = 0.34; p = 0.005. The total effect of service personal values on loyalty (direct

Table 3 Estimation results by different service industries

Estimates Whole

sample

(1069 cases)

Airlines

service

(308 cases)

Banking

service

(363 cases)

Healthcare

service

(398 cases)

Measurement model

v2 267.95 190.43 264.21 276.43

dF 131 131 131 131

p 0.000 0.000 0.000 0.000

GFI 0.974 0.940 0.930 0.931

TLI 0.983 0.965 0.953 0.963

CFI 0.987 0.973 0.964 0.971

RMSEA 0.031 0.038 0.053 0.053

Std. item loadings range 0.73–0.88 0.65–0.88 0.72–0.89 0.75–0.93

Structural model

v2 674.48 281.64 406.19 624.36

dF 157 157 157 157

p 0.000 0.000 0.000 0.000

GFI 0.944 0.919 0.904 0.871

TLI 0.944 0.936 0.921 0.891

CFI 0.954 0.947 0.935 0.910

RMSEA 0.056 0.051 0.066 0.087

Standardized path coefficients

Personal values ? service value 0.30 0.43 0.14ns 0.22

Personal values ? satisfaction 0.20 0.23 0.23 0.25

Personal values ? loyalty 0.20 0.26 0.26 0.08ns

Service value ? loyalty 0.30 0.16ns 0.26 0.48

Service value ? satisfaction 0.45 0.34 0.60 0.42

Satisfaction ? loyalty 0.36 0.35 0.36 0.33

Value to peaceful life ? personal values 0.62 0.39 0.51 0.92

Value to social recognition ? personal values 0.40 0.68 0.50 0.01ns

Value to social integration ? personal values 0.18 0.01ns 0.28ns 0.17ns

Outcome value ? service value 0.41 0.62 0.43 0.10ns

Process value ? service value 0.64 0.38 0.66 0.90

ns Non-significance at p = 0.05

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effect and via the mediation of service value and the mediation of satisfaction) is

b = 0.41; p = 0.003. The total effect of service value on loyalty (direct effect and

via the mediation of satisfaction) is b = 0.46; p = 0.003. It is, thus, concluded that

the all five hypotheses are all supported by the data set in this study.

The results also showed that the three components (first-order constructs) of

service personal values (second-order formative construct) contribute unequally to

this aggregate construct. As shown in Table 3, the highest standardized regression

coefficient is 0.62 (p = 0.002) for value to a peaceful life; then 0.40 (p = 0.002) for

value to social recognition and the lowest (but still significant) coefficient is 0.18

(p = 0.037) for value to social integration. Moreover, the correlation coefficients

between pairs of components ranged from 0.46 to 0.52 indicating that there are

interactions among these three dimensions of service personal values. On the other

side, the two standardized coefficients representing the causal paths from process

value (b = 0.64; p = 0.003) and outcome value (b = 0.41; p = 0.001) to service

value indicating the unequal contributions of these two interrelated dimensions

(r = 0.65; p = 0.002) to the second-order construct of service value.

4.4 Cross-service industry comparison

In order to validate the model and investigate the strength of causal paths across

different service industries, the model was estimated using separate data sets

representing airlines service, banking service and healthcare service. In doing so,

the measurement model was firstly estimated by each data set to ensure its fit across

the three service industries. Then, the structural model was estimated by each data

set to compare to resulting estimates. The results are presented in Table 3.

The first part of Table 3 showed that the data of each service industry fit

satisfactorily with the measurement model. These results ensure the invariance of

measurement scales across the three service industries. The second part of Table 3

indicated that the structural model fits well with the data of airlines and banking

services. However, GFI = 0.871 and TLI = 0.891 are slightly lower than the

threshold of 0.90 in the healthcare service.

The resulting estimates in Table 3 showed that the effect of service personal

values on satisfaction and satisfaction on loyalty was fairly stable across the three

Table 4 Standardized direct, indirect and total effects between constructs

Paths (from–to) Standardized coefficient

Direct effect Indirect effect Total effect

Service personal values–service value 0.30 0.30

Service personal values–satisfaction 0.20 0.14 0.34

Service personal values–loyalty 0.20 0.21 0.41

Service value–satisfaction 0.45 0.45

Service value–loyalty 0.30 0.16 0.46

Satisfaction–loyalty 0.36 0.36

All standardized coefficients are significant at p \ 0.05

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service industries. However, other estimates changed from one service to another.

The path coefficient from service personal values to service value ranged from 0.43

in airlines to 0.22 in healthcare to 0.14 in banking service. The direct effect of

service personal values on loyalty was the same (b = 0.26) in airlines and banking,

but dropped to 0.08 in healthcare service. The direct effect of service value on

loyalty increased from 0.16 in airlines, to 0.26 in banking and 0.48 in healthcare

service. The effect of service value on satisfaction was 0.34 in airlines, 0.60 in

banking and 0.42 in healthcare. The relative contribution of three components to

service personal values was different across service industries. In airlines service,

the strongest contribution was from value to social recognition (0.68). Value to

peaceful life contributed most (0.92) in healthcare. In banking, value to peaceful life

and value to social recognition contributed equally (0.51 and 0.50, respectively).

Similarly, outcome value contributed highest to service value in airlines (0.62). In

contrast, process value was strongest (0.90) in healthcare. In banking, outcome

contributed 0.43 and process value contributed 0.66. These changing statistical

results were interpreted and discussed in the next section.

5 Discussions

The discussion of results is organized around four aspects of the study. First, this

study is among attempts to tackle the question on how value is created by the

individual customer upon experiencing a service or what is the basic framework he/

she uses for service value judgment? To address this question, the concept of service

personal values has been employed to explain service value and predict customer

loyalty. The answers to these questions provide insights on what ‘‘happens’’ in

consumers when they finish receiving a service.

The results indicate that, on the customer side, service personal values are the

basis to explain a customer evaluation of a service value. Service personal values

also have a direct impact on post-purchase states of customers, i.e., customer

satisfaction and loyalty. It is thus concluded that service personal values are one of

key concepts to understand customer attitude and behavior. This study also

confirmed that service value has a significant impact on satisfaction and customer

loyalty. The analysis of mediating effect (Zhao et al. 2010) revealed that in the

causal paths between service personal values and customer loyalty, service value

and customers satisfaction are two partial mediating constructs. These results

confirmed that service value and customer satisfaction could not be substitutable as

being suggested by some scholars (Ngo and O’Cass 2010; Ruiz et al. 2008). Rather,

they should be complementary yet distinct concepts (Eggert and Ulaga 2002). Thus,

it is advocated that service value deserves the title as preeminent marketing concept,

as suggested by scholars (e.g., Gronroos 2008; Babin and James 2010), particularly

in the emerging S-D logic perspective (Vargo 2011).

Second, the findings in this study were based on evidence from an emerging

economy. This research setting provides additional value to the global knowledge of

service value and service personal values. It is of special importance because service

personal values are embedded in the social and cultural configurations of the

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country where consumers live (Schwartz et al. 2001). Therefore, developing and

testing the theoretical model in this emerging market would be a necessary step

before the global knowledge of service personal values and service value can be

claimed (Burgess and Steenkamp 2006).

The generalizability of the results is further attributed by the test conducted on

different service industries, i.e., airlines, healthcare, and banking. Given the diverse

characteristics of services, the test would enrich the understanding of the two key

concepts in different services. Although the cross-service test resulted in all

hypotheses being supported, each service has its own features that vary the effect

size of the relationships under investigation. For example, on the relationship

between service personal values and service value (Table 3), the effect size is

highest in airlines and lowest in banking. The direct effect of service personal values

on loyalty keeps nearly unchanged in airlines and banking, while drops to non-

significance in healthcare. The direct impact of service value on loyalty increases

from airlines to banking to healthcare service, while the direct impact of service

value on satisfaction varies. Especially, the direct effect of service personal values

on satisfaction and that of satisfaction on loyalty are stable across the three services.

Overall, the model explained a significant percentage of 45% variance of customer

loyalty. The number ranged from 37% for airlines, 46% for banking and 54% for

healthcare service. These findings indicated that in service research, although

context-free general theory is always important, context-specific theory may also be

as important as well because they provide the background for specific managerial

implications for the industry (Burgess and Steenkamp 2006).

Third, regarding the conceptualization of key concepts, this study specified

service personal values and service value as second-order formative constructs

which are theoretically more appropriate. According to Jarvis et al. (2003), the

reflective conceptualization of second-order constructs that are truly formative one

may significantly inflate the structural parameters being estimated. Therefore, the

empirical findings in the current study (i.e., path coefficients), although not being

substantially high, strongly consolidate the hypothesized relationships as they are

deemed to be conservative. Moreover, the formative conceptualizations of service

personal values and service value facilitate the understanding of relative contribu-

tions of each component within a given service industry. Particularly, in airlines

service, the strongest contributor to service personal values is value to social

recognition. Value to peaceful life contributes most in healthcare service. In

banking, value to peaceful life and value to social recognition contribute equally.

The fourth aspect is about the conceptualization of service values as composing

of process value and outcome value, given that the benefits-sacrifice paradigm was

adopted. This approach departs from previous studies which attempted to introduce

as many dimensions of service value to explore all alternative aspects of the

construct (Ruiz et al. 2008). It was in line with the view that customers form their

perceptions of a service by evaluating each of the dimensions which then leads to an

overall perception (Brady and Cronin 2001). From the practical view, it is more

parsimonious for managers to handle in the marketing practice. When being applied

to a specific service, the identification of separate contribution of process value and

outcome value to the overall service value provides more diagnostic information for

Impact of service personal values 151

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the improvement of service value. This particular study showed that in airlines

service, outcome value contributes stronger than process value. In contrast, in

healthcare service, the contribution of process value is much stronger than that of

outcome value. Based on these varying results, managerial recommendations for

each service would be developed.

6 Conclusion

This study is an attempt to respond to the need for knowledge in the service sector

which is essential for measuring any country’s economic progress, its quality, and

its future (Lee et al. 2007). It adds an insight in the role of service personal values as

a basic framework a consumer uses to judge a service. It also confirmed the

importance of service value and satisfaction as two distinct mediating constructs in

the impacts of service personal values on customer loyalty. These findings

suggested that satisfying customers and making them loyal are not only determined

by the service supplier in offering value to customers, but by the customer’s

personal value system as well. This consolidated the notion of value co-creation

rather than the traditional value exchange perspective in service research. The

empirical setting of multiple services in the emerging economy of Vietnam helps

improve the global validity of the relationships under study, as being emphasized by

Burgess and Steenkamp (2006) that ‘‘it is paramount for the future of marketing

science and practice that we conduct more research in so-called emerging markets’’

(p. 338).

From the managerial perspective, the knowledge of which component of personal

values customers are most motivated when they consume a specific service and the

relative contribution of process and outcome value to the overall service value

would definitely help firms improve their performance. This knowledge serves as a

basis for the allocation of the firm’s limited resources and effort on designing/

implementing the service, communicating the service offerings and interacting with

customers. Particularly, marketing managers of airlines service in emerging markets

should emphasize personal value to social recognition in their communication

messages and should invest resources and effort in improving the outcome value of

customers. In banking industry, service effort should emphasize in creating process/

hedonic experience to customers while communication messages should emphasize

equally between personal value to peaceful life and personal value to social

recognition. Managerial implications for healthcare service can also be drawn in the

same way.

The present findings should be interpreted in the context of a number of potential

limitations, based on which further research is suggested. First, the three dimensions

of service personal values were adopted from Lages and Fernandes (2005).

Concerning the social/cultural-dependent nature of the construct, further research

may try more components from the original theory of personal values (Schwartz

et al. 2001). Second, given the diverse characteristics of different types of services,

further research should extend the empirical data to other services. Particularly in

this study, the structural model does not fit well with the data in the healthcare

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service (GFI = 0.871), given the well-fit measurement model. Further theoretically

justified structural path(s) may be explored to improve the robustness of the

empirical findings. Third, comparisons of the empirical findings resulted from the

different research contexts (e.g., developed vs. emerging economies; or Western vs.

Eastern cultures) are suggested to improve the generalizability of the findings.

Appendix

See Table 5.

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