Hierarchical Service Quality Analysis Using Structural Equation Modeling (SEM): A Case on Malaysian Taxi

This study was intended to examine the impact of two dimensional service quality, namely Techical quality and Functional quality toward consumer satisfaction of taxi service in Malaysia. Development of the research framework was based on adaptation of Parasuraman’s SERVQUAL model and Grönroos’s Two-Dimensional model. The Technical quality is conceptualized as the second-order measured constructs with three first-order constructs namely, Waiting time, Tangibles and Valence, while the Functional quality is conceptualized as second-order measured constructs with four first-order constructs namely, Reliability, Assurance, Empathy and Responsive. A total of 250 surveys were collected from tourists who had used Malaysian taxi service in Selangor, Wilayah Persekutuan Kuala Lumpur, Johor, Penang, and Perak. The target respondents were screened by using quota sampling technique where location was used as control category or quota in the first stage and in second stage was based on judgment. Partial least squares structural equation modeling (PLS-SEM) method were used to analyse the measurement and structural model as well as for hypothesis testing. Results found that Technical quality and its dimensions (Tangibles and Valence), Functional quality and its dimensions (Reliability, Empathy and Responsiveness) have significant influence on the consumer satisfaction in Malaysian taxi services. While, the Waiting time and Assurance do not bring any significant effect on consumer satisfaction. The empirical outcomes from this study are predicted to have a substantial impact of the success of taxi service in Malaysia, which now have terrible image from public due to their services. On top of that, it is also projected to enhance knowledge and literatures in the domain of service quality by providing more comprehensive service quality model and its determinants.