title: Retail Service Quality in a Transition Economy: The Case of Estonia
Creators: name: McKenzie, J. Brent
Publisher: name: Griffith University
Year: 2006
Subjects: subject: Estonia
subject: transition economy
subject: service quality construct
subject: retail service quality

description: Transition economies are regions/countries defined as transitioning from centrally planned governments, limited private enterprise, non-democratic societies, to free(er) markets, increased privatisation of government owned industries and enterprises, and greater democratic institutions (best exemplified by the former Soviet Union, and countries of Central and Eastern Europe). In contrast to the developed or Western countries of the world, where service industries form the dominant economic sector, the service sector in transition economies historically lagged that of agriculture and manufacturing. Thus, although the investigation of service-related marketing phenomena (such as service quality) has been extensively researched in developed markets, the extension of this research to countries in transition is limited. Furthermore, there appears to be no thorough investigation of the service quality construct within a transition economy. Consequently, this research strives to close a gap that exists within the service quality research literature by extending the study of the construct to regions in transition. Moreover, within the service sector the retail sector has received great attention as a way in which to operationalise measures of the service quality construct, but not so in a transition economy setting. Given these gaps in the extant literature, the research problem answered is: 'How do consumers perceive retail service quality in transition economies?' The literature has been silent on this question, thus, the application of existing measures of retail service quality within developed economies were merged and incorporated within the field of cross-cultural literature to develop a conceptual framework of study. In order to best answer the research question, a series of four research issues were developed: Research Issue One: Can Western concepts of retail service quality construct be applied to a transition economy like Estonia? Research Issue Two: How should the retail service quality construct be conceptualized in Estonia? Research Issue Three: What are the factors of the retail service quality construct in Estonia? Research Issue Four: What is the relationship of the retail service quality construct to shopping behaviour in Estonia? A combination of qualitative and quantitative research methodologies was employed in order to address these issues. The research was conducted using a four-study approach, with each study being built upon the previous findings. Study 1 examined the reliability of existing scale measures of retail service quality extending to a transition economy. This was accomplished by collecting empirical survey data using established retail service quality scale items within the transition economy of Estonia. The findings of Study 1 supported the extant literature that retail service quality is best modelled using a multi-factor structure, but unlike developed economy studies, the three factors of physical aspects, personal interaction, and problem solving best represented the construct. Study 2 was designed to address the non-trivial cultural differences that were highlighted in the literature in terms of measuring retail service quality. A three stage qualitative methodology was developed to understand how these cultural differences reflected on the defining and measurement of retail service quality in Estonia. The combining of the findings of an Estonian critical incident technique (CIT) study, multiple focus groups, and multiple retailer interviews aligned with the proposed three factors of retail service quality found in Study 1, and uncovered Estonian scale items not previously tested in the literature. These findings lent support that the proposed retail service quality factors could go beyond purely West or developed economy measures. Study 3 empirically tested a preliminary retail service quality questionnaire based on the findings of Studies 1 and 2, and tested using Estonian consumers perceptions of their shopping experiences at the five largest department/discount stores in Estonia. Although limited by the small sample size, again the three-factor structure was strongly supported. The final study was to quantitatively test a scale measures with a second, significantly larger sample to confirm scale validity and reliability. Additionally, Study 4 allowed for the testing of the predictive validity of the retail service quality construct within the larger context of retail shopping behaviour, as it relates to attitude to the store brand, and customer store loyalty. This research makes a number of contributions to both knowledge and practice. With respect to research theory, the findings indicate that within Estonia, retail service quality is interpreted at both an integrated level and an attribute level. Estonian consumers understand the concept of retail service quality, and it is a valid construct for measuring retail service. Furthermore, the best structure of the retail service quality construct is one identified by three factors labelled physical aspects, personal interaction, and problem solving. Furthermore, each of the identified factors is a distinct dimension of retail service, and together represents a significant way in which a consumer forms their attitude to the retail brand, which in turn impacts upon customer loyalty. From a retail practice perspective, this research empirically demonstrates the variety of consumer views and perceptions held by consumers in a transition economy with respect to measures of retail service quality. As one of the first known in-depth studies of this topic in a transition economy, the result is a greater understanding of the role that cultural variables have on global, versus regional, versus local, retailer performance drivers. In particular, what legacies of the pre-transition, or communist period, have permanently shaped consumer behaviour, and which aspects are similar to those of the West. Thus, the contribution of this study has applications to both academic theory and retail practice. The research literature has extended the understanding of service quality marketing research, and how the retail service quality construct should be defined and measured within a non-Western environment. The findings confirmed earlier studies that retail service quality is best modelled as a multi-factor construct, and that each construct is best defined using multiple measures. This study also confirmed the need for the inclusion of cross-cultural variables when conducting marketing research within a non-Western environment. For retail practice, the findings of this study have implications for the economic development of transition economies, through improved retail operations of both domestic and foreign retailers, and an increased understanding of how superior service quality can lead to improved customer loyalty and profitability. This research is believed to be the first grounded theory, empirical study within the field of service quality research within a transition economy, thus this thesis research serves as a voice for future transition economy study.