Service quality and customer satisfaction as antecedents of financial sustainability of the water service providers

Abstract

PurposeService quality and customer satisfaction influence the financial performance of service organizations. Hence, the purpose of this paper is to investigate the path relationship of service quality to customer satisfaction to financial sustainability in the water service sector, which is vital to the sustainable future of mankind. Further, these three interrelated constructs and their dimensions are clearly articulated.Design/methodology/approachSERVQUAL questionnaire responses were collected from 635 household families, and the financial sustainability indicators of 56 water providers were gathered as well. Cronbach's alpha and factor analysis were conducted to measure the internal consistency and convergent validity. Path analysis was utilized to evaluate the causal diagram by examining the relationships among service quality, customer satisfaction and financial sustainability using the AMOS software package.FindingsThe results showed that the five dimensions of service quality explain 58% of the customer satisfaction variation. The responsiveness, empathy, assurance and reliability have significant impact on the customer satisfaction where p < 0.05, while the tangible dimension has an insignificant effect. The results also revealed that customer satisfaction has a significant impact on the financial sustainability indicators of the water providers, where p = 0.000 for the debt collection ratio indicator, and p = 0.003 for the financial efficiency ratio indicator.Research limitations/implicationsThis research on financial sustainability is based on evidence about service quality and customer satisfaction in the Palestinian water sector. Future research on financial sustainability of the water sector may focus on the pricing mechanism and debt collection of water service.Practical implicationsThe findings suggest that water providers should recognize the importance of service quality dimensions, which strengthen the customer satisfaction, which, in turn, is a significant driver for their financial sustainability. It is, therefore, sound to draw action-oriented managerial implications from these results.Originality/valueThe study adds to the literature of water service sector and is based on empirical evidence from primary data of household families and secondary data of water service providers from developing countries. This paper also contributes toward the strengthening of sustainability of the water service sector in Palestine – a worthy humanitarian cause. The study provides evidence useful for policy makers toward carving out policies aimed at strengthening the financial sustainability of the water service sector.

A roadmap for the application of PLS-SEM and IPMA for effective service quality improvements

“…As highlighted in the paper, many of the limitations, for instance, not using context-specific comprehensive scales or not extending PLS-SEM results using IPMA, persists, as can be seen in the recent TQM literature (e.g. Ahmed et al, 2022;Hussein et al, 2022;Lin, 2021;Murrar et al, 2021). Therefore, by considering outcome quality and using a comprehensive hierarchical model for service quality measurement, the study makes significant contributions at a theoretical level with a better assessment of service quality measurement.…”

“…Mir et al, 2022) and testing the empirical links between concepts such as perceived quality and satisfaction (e.g. Ahmed et al, 2022;Famiyeh et al, 2018;Lin, 2021;Murrar et al, 2021;Park and Kim, 2022). However, effective service quality improvement pertains to assessing the importance and performance of service quality attributes and using them in an integrated manner for decision-making.…”

“…A review of the recent TQM literature also shows that studies in service quality (e.g. Ahmed et al, 2022;Hussein et al, 2022;Lin, 2021;Murrar et al, 2021) merely provide generic recommendations and fail to look beyond the service quality evaluation and its significant effects on other variables, to appropriately earmark areas for prioritised resource allocation and provide accurate recommendations. Existing literature suggests limited studies applying IPMA in the field of quality management.…”

“…, 2022; Hussein et al. , 2022; Lin, 2021; Murrar et al. , 2021) merely provide generic recommendations and fail to look beyond the service quality evaluation and its significant effects on other variables, to appropriately earmark areas for prioritised resource allocation and provide accurate recommendations.…”

Pengaruh E-Service Quality Terhadap E-Satisfaction Serta Dampaknya Terhadap E-Wom Konsumen Transportasi Online

“…Dalam penelitiannya Murrar et al, (2020) berpendapat bahwa service quality secara signifikan berpengaruh terhadap customer satisfaction yang mana dapat meningkatkan pelanggan untuk mememberikan positive word of mouth mengenai produk atau layanan. Sangat penting untuk perusahaan dalam mengembangkan positive word of mouth, karena dapat meyakinkan pelanggan untuk menggunakan dan membeli produk lebih dari iklan.…”