Customer satisfaction as mediator in the relationship between higher education service quality and student customer loyalty

What the paper says

Purpose This study assesses the mediation role of customer satisfaction in the relationship between higher education service quality (measured as a second order construct) and customer loyalty. Design/methodology/approach A two-stage measurement and structural equation modelling approach is used. Unlike most existing literature, we argue that Parasuraman’s service quality model is hugely misspecified in some service quality studies. A total of 340 responses were obtained using a closed ended questionnaire based on a five-point Likert scale. The measures of service quality, customer satisfaction and customer loyalty/retention were adapted from existing studies. Findings It is found that service quality as a second order construct had an influence on customer satisfaction but had no influence on customer loyalty among student customers. However, service quality had an indirect effect on customer loyalty through customer satisfaction – implying that customer satisfaction has a full mediation effect in the relationship between university service quality and student customer loyalty. Recommendations for future research, practice and policy are made and limitations of the current study are acknowledged. Originality/value Existing literature usually treats service quality as a first order construct proxied by its five dimensions; resulting in studies that defy the laws of ordinary least squares regression, have highly correlated independent variables, likely inflated standard errors and hence produce biased estimates. This study argues that treating university service quality as a second order construct is a better approach and shows how to go about it. The use of developing country context also provides insights into higher education service quality, customer loyalty and satisfaction in resource constrained settings.