Deriving managerial implications through SERVQUAL gap elasticity in UAE banking

Abstract

Purpose The purpose of this paper is to propose the microeconomics concept of elasticity to estimate the SERVQUAL gap elasticity to derive important insights for service providers to develop the right strategies to bridge the overall gap in service. Design/methodology/approach The dimensions of SERVQUAL adopted from Parasuraman et al. (1988) and Kumar et al. (2009) are first verified for their unidimensionality using structural equation modeling and reliability in the context of United Arab Emirates banking industry. Furthermore, the technique of dominance analysis is used to derive the relative importance of dimensions for different groups of banks. Finally, the stepwise log-linear regression models are used to estimate the gap elasticity to measure the responsiveness of the overall SERVQUAL gap to a change in customers’ perception on different dimension. Findings The results reveal that the dimension which is prioritized as the most important dimension need not to be the one to be targeted under the resource constraint to react faster to the changes of customers’ banking behavior. Originality/value This is probably the first attempt to examine the service quality through gap elasticity. This method is especially useful when the traditional approach to measure relative importance of critical factors fails to clearly discriminate between two or more dimensions, which, in turn, may lead to failure in decision making to choose the right strategies to bridge the overall gap in the service.