An empirical study of externality and customer satisfaction

In general, customer satisfaction is derived from the quality of product. Hundreds of studies examine the relationship between the performance of product attributes and customer satisfaction.
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An empirical study of externality and customer satisfactionInternational Journal of Management (IJM)Volume 10, Issue 2, March-April 2019, pp. 52-62, Article ID: IJM_10_02_006Available online at http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=10&IType=2Journal Impact Factor (2019): 9.6780 (Calculated by GISI) www.jifactor.comISSN Print: 0976-6502 and ISSN Online: 0976-6510© IAEME Publication AN EMPIRICAL STUDY OF EXTERNALITY AND CUSTOMER SATISFACTION *Claire Y.T. Ho Ph.D. Student, Department of Business Administration, Nanhua University, Taiwan Miao-Shen Chen Chair Professor, Department of Business Administration, Nanhua University, Taiwan *Correspondence Author Email: claire@mail.dyu.edu.tw ABSTRACT In general, customer satisfaction is derived from the quality of product. Hundreds of studies examine the relationship between the performance of product attributes and customer satisfaction. Instead of conducting an analysis on the influence of attribute performances on customer satisfaction, this study pays close attention to the influences of externality on customer satisfaction in the case of the tourism industry. We examine the externality coming from companion’s behavior on tourist satisfaction in tour groups. The regression results show that companion’s behavior significantly influence tourist satisfaction, no matter the satisfaction is measured from the aspect of tour schedule or tour escort. By encouraging or discouraging some companions customer can enhance tourist satisfaction. In addition, gender and companions will cause different regression results. This reminds us to take consideration of the individual difference when taking actions to enhance satisfaction. These results imply customer satisfaction is not only determined by the performance of product attributes, but also depends on externality. Controlling the influence of externality is an alternative to enhance satisfaction. Keywords: customer satisfaction, tourism, externality, companion’s behavior, quality management. Cite this Article: Claire Y.T. Ho and Miao-Shen Chen, An Empirical Study of Externality and Customer Satisfaction, International Journal of Management, 10 (2), 2019, pp. 52-62. http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=10&IType=21. INTRODUCTIONCustomer satisfaction is the driver to maintain competitive advantage for business (Tsai, Chen,Chan, and Lin, 2011). It is also the most efficient and least expensive source of marketcommunication which plays the key role in achieving business excellence (Dubrovski, 2001).Lots of empirical work show that customer satisfaction contributes to repurchase, cross selling,reduced price sensitivity, and positive word-of-month (Matzler and Stahl, 2000; Matzler et al.,2004). And the positive relationship between customer satisfaction and http://www.iaeme.com/IJM/index.asp 52 editor@iaeme.com Claire Y.T. Ho and Miao-Shen Chenprofitability/shareholder value have been proven by many researchers (Anderson et al., 1994;Oliver, 2014; Stahl et al., 2003; Matzler et al., 2004; Eklof et al, 2018). Though, lots researchershave studied customer satisfaction, we cannot stress its importance too much. In this area, someresearchers propose customer satisfaction is determined by the performance of product attribute(Wall and Berry, 2007; Zhang, Jiang and Li, 2013). Instead, this study examines the influencesof externality, non-product attribute, on customer satisfaction in the case of tourism industry. Just like heaps of research on customer satisfaction which propose customer satisfactiondepends on the performance of product attributes (Bitner, 1990; Chang, 2000; Andaleeb andConway, 2006; Wall and Berry, 2007; Zhang, Jiang and Li, 2013), tourist satisfaction is alsodetermined by the product quality. Basically, the research on measuring the overall levels oftourist satisfaction can be classified into two streams. The first one focuses on measuring thelevels of tourists’ satisfaction with their experiences in particular destination and satisfactionwith specific attributes at service encounter level, such as in a hotel or at an attraction (Foster,2000; Haber and Lerner, 1999; Maddox, 1985; Oh, 1999: Ryan, 1994; Yu and Goulden, 2006).The other stream of studies on tourist’s satisfaction proposes tourism satisfaction is determinedby a series of service encounters as experienced in a hotel, in a travel agency or in a touristattraction (Macintosh, 2002; LeBlanc, 1992). Both of these two streams advocate touristsatisfaction depends on the performance of product attributes. An externality is cost or benefit that affects someone other than the consumers or thesuppliers of a go ...