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

  • Johnn-Yee Choy
  • Mad Ithnin Salleh


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.


Aarhaug, J. (2016). Taxis as a part of public transport. Federal Ministry for Economic Cooperation and Development. Retrieved from https://www.sutp.org/files/contents/documents/resources/B_Technical-Documents/GIZ_SUTP_TD16_Taxi_EN.pdf
Adeniran, A. O., & Fadare, S. O. (2018). Assessment of passengers’ satisfaction and service quality in Murtala Muhammed Airport (MMA2), Lagos, Nigeria: application of SERVQUAL model. Journal of Hotel and Business Management, 7(2), 188.
Bagozzi, R. P., & Yi, Y. (1988). On the evaluation of structural equation models.
Journal of the Academy of Marketing Science, 16(1), 74-94.
Barabino, B., & Deiana, E. (2013). On the attributes and influencing factors of end-users quality perceptions in urban transport: an exploratory analysis. Procedia-Social and Behavioral Sciences, 87, 18-30.
Berry, L. L., Zeithaml, V. A., & Parasuraman, A. (1985). Quality comes in services, too. Business Horizon, 28, 44-52.
Bettencourt, L. A. (1977). Customer voluntary performance: customers as partners in service delivery. Journal of Retailing, 73(3), 383-406.
Bowen, J. (2021). Benefits of Using Taxi Services Over Public Transport. Retrieved from https://bitrebels.com/lifestyle/benefits-using-taxi-services-over-public-transport/.
Brady, M. K., & Cronin, J. Jr. (2001). Some new thoughts on conceptualizing perceived service quality: a hierarchical approach. Journal of Marketing, 65(3), 34-49.
Brown, A., & LaValle, W. (2021). Hailing a change: comparing taxi and ridehail service quality in Los Angeles. Transportation, 48, 1007-1031.
Chakrabarty, S., Whitten, D., & Green, K. (2007). Understanding service quality and relationship quality in IS outsourcing: client orientation and promotion, project management effectiveness and the task-technology-structure fit. Journal of Computer Information Systems, Winter 2007-2008, 1-15.
Chang, H. Y., Hsiu, C. C., & Gow, L. H. (2006). A study of service quality, customer satisfaction and loyalty in Taiwanese leisure industry. Journal of American Academy of Business, Cambridge, 9(1), 126-132.
Charland, L. C. (2005). The heat of emotion: valence and the demarcation problem. Journal of Consciousness Studies, 12(8-10), 82–102.
Chen, A. S. (2014, December 18). Halina Mohamad best taxi driver. Borneo Post Online. Retrieved from http://www.theborneopost.com/2014/12/18/halina-mohamad-best-taxi-driver/.
Choy, J. Y. (2013). A study of service quality, customer satisfaction, and behavioral intention of consumers for fast food industry in Malaysia. Unpublished master’s dissertation, Universiti Tunku Abdul Rahman, Kampar, Perak, Malaysia.
Cohen, J. (2013). Statistical Power Analysis for the Behavioral Sciences. Routledge.
Coulthard, L. J. M. (2004). A review and critique of research using SERVQUAL. International Journal of Market Research, 46(4), 479-497.
Cronin, J. Jr., & Taylor, S. A. (1992). Measuring service quality: A re-examination and extension. Journal of Marketing, 56, 55-68.
Dabholkar, P. A., Thorpe, D. I., & Rentz, J. O. (1996). A measure of service quality for retail stores: scale development and validation. Journal of the Academy of Marketing Science, 24(1), 3-16.
Dachyar, M., & Rusydina, A. (2015). Measuring customer satisfaction and its relationship towards taxi’s service quality around Capital City Jakarta. International Journal of Engineering and Technology, 16(1), 24-27.
Eboli, L., & Mazzula, G. (2008). A stated preference experiment customer satisfaction for bus transit. Journal of Transportation Planning and Technology, 31(5), 23-509.
Ekinci, Y. Dr. (2001). The validation of the generic service quality dimensions: an alternative approach. Journal of Retailing and Consumer Services, 8, 311-324.
Faizan, A., Kashif, H., Rupam, K., & Jeon, J. M. (2017). The effect of technical and functional quality on guests’ perceived hotel service quality and satisfaction: a SEM-PLS analysis. Journal of Quality Assurance in Hospitality & Tourism, 18(1), 354-378.
Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39–50.
Galeeva, R. B. (2016). SERVQUAL application and adaptation for educational service quality assessments in Russian higher education. Quality Assurance in Education, 24(3), 329-348.
Garcia, D., Archer, T., Moradi, S., & Ghiabi, B. (2012). Waiting in Vain: managing time and customer satisfaction at call centers. Psychology, 03, 213-216.
Grönroos, C. (1990). Service Management and Marketing. Lexington, MA: Lexington Books.
Grönroos, C. (1984). A service quality model and its marketing implications. European Journal of Marketing, 18(4), 36-44.
Hair, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM) (2nd ed.). Sage.
Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019). When to use and how to report the results of PLS-SEM. European Business Review, 31(1), 2-24.
Huddleston, P., Whipple, J., Mattick, R. N., & So, J. L. (2009). Customer satisfaction in food retailing: comparing specialty and conventional grocery stores. International Journal of Retail and Distribution Management, 37(1), 63-80.
Ilhaamie, A. G. A. (2010, June). Service quality in Malaysian public service: some findings. International Journal of Trade, Economics and Finance, 1(1), 40-45.
Ismail, R., Hafezi, M. H., Nor, R. M., & Ambak, K. (2012). Passengers preference and satisfaction of public transport in Malaysia. Australian Journal of Basic and Applied Sciences, 6(8), 410-416.
Johns, N., & Howard, A. (1998). Customer expectations versus perceptions of service performance in the foodservice industry. International Journal of Service Industry Management, 9(3), 248-256.
Jun, M., Yang, Z., & Kim, D. S. (2004). Customers’ perceptions of online retailing service quality and their satisfaction. International Journal of Quality & Reliability Management, 21(8), 817-840.
Kang, G. D. (2006). The hierarchical structure of service quality: integration of technical and functional quality. Managing Service Quality: An International Journal, 16(1), 37-50.
Kang, G. D., & James, J. (2004). Service quality dimensions: an examination of Grönroos’s service quality model. Managing Service Quality: An International Journal, 14(4), 266-277.
Kara, A., Kaynak, E., & Kucukemiroglu, O. (1995). Marketing strategies for fast-food restaurants: a customer view. International Journal of Contemporary Hospitality Management, 7(4), 16-22.
Karen, K., & Boo, H. V. (2007). Culture and service quality expectations: evidence from generation Y consumers in Malaysia. Managing Service Quality, 17(6), 656-680.
Liu, Y., Siali, F., Darun, M. R., & Ismail, M. F. (2014, September 8th-10th). Service quality and customer satisfaction: Rapid Kuantan in Kuantan route, Malaysia. Proceedings of SOCIOINT14-International Conference on Social Sciences and Humanities, Istanbul, Turkey.
Lowry, P. B., & Gaskin, J. (2014). Partial least squares (PLS) structural equation modeling (SEM) for building and testing behavioral causal theory: when to choose it and how to use it. IEEE Transactions on Professional Communication, 57(2), 123–146.
Malay Mail. (2015, July 5). London Cabs Site Rates KL Taxi Drivers as Worst in the World. Retrieved from https://www.malaymail.com/news/malaysia/2015/07/02/london-cabs-site-rates-kl-taxi-drivers-as-worst-in-the-world/926063.
Mangold, G. W., & Babakus, E. (1991). Service quality: the front-stage perspective vs the back-stage perspective. Journal of Services Marketing, 5(4), 59-70.
Mapunda, M. A. (2021). Customers’ satisfaction on bus rapid transit services in Tanzania: the SERVQUAL model perspective. In J. N. Mojekwu, W. Thwala, C. Aigbavboa, L. Atepor, & S. Sackey (Eds.), Applied Research Conference in Africa 2020: Sustainable Education and Development. (pp. 194-208). Springer.
Munusamy, J., Chelliah, S., & Mun, H. W. (2010). Service quality delivery and its impact on customer satisfaction in the banking sector in Malaysia. International Journal of Innovation, Management, and Technology, 1(4),398-404.
Nakhai, B. & Neves, J. S. (2009). The challenges of six sigma in improving service quality. International Journal of Quality and Reliability Management, 26(7), 663-684.
Nguyen-Phuoc, D. Q., Su, D. N., Tran, P. T. K., Le, D. T. T., & Johnson, L. W. (2020). Factors influencing customer's loyalty towards ride-hailing taxi services–a case study of Vietnam. Transportation Research Part A: Policy and Practice, 134, 96-112.
Ocampo, L., Alinsub, J., Casul, R. A., Enquig, G., Luar, M., Panuncillon, N., Bongo, M., & Ocampo, C. O. (2019). Public service quality evaluation with SERVQUAL and AHP-TOPSIS: a case of Philippine government agencies. Socio-Economic Planning Science, 68, 1-14.
Olawole, M. S. (2021). An empirical study of commuters’ satisfaction with taxi service quality in Abeokuta, Nigeria. Transportation Research Interdisciplinary Perspectives, 11, 1-8.
Olly’s Cars. (2020). 5 Benefits of Using a Taxi Service. Retrieved from https://www.ollyscars.uk/5-benefits-using-taxi-service/.
Olorunniwo, F., Hsu, M. K., & Udo, G. J. (2006). Service quality, customer satisfaction, and behavioral intentions in the service factory. Journal of Services Marketing, 20(1), 59-72.
Ooi, B. C., & Ahmad Nazar, S. (2021). Exploring factors influencing e-hailing service in Klang Valley, Malaysia. International Journal Of Business And Economy, 3(1), 32-46.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1994). Alternative scales for measuring service quality: a comparative assessment based on psychometric and diagnostic criteria. Journal of Retailing, 70(3), 201-230.
Parasuraman, A., Zeithaml, V., & Berry, L. (1991). Refinement and reassessment of the SERVQUAL scale. Journal of Retailing, 67(4), 420-450.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1988). SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality. Journal of Retailing, 64(1), 12-37.
Parasuraman, A., Zeithaml, V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49(4), 41-50.
Paul. (2016, May 3). Malaysia crowned as home to be the worst taxi drivers in the world. KL Expat Malaysia. Retrieved from http://www.klexpatmalaysia.com/2016/05/03/malayisa_taxi/.
Pollack, B. L. (2009). Linking the hierarchical service quality model to customer satisfaction and loyalty. Journal of Services Marketing, 23(1), 42-50.
Qin, H., & Prybutok, V. R. (2009). Service quality, customer satisfaction and behavioral intentions in fast-food restaurants. International Journal of Quality and Service Sciences, 1(1), 78-95.
Qin, H., & Prybutok, V. R. (2008). Determinants of customer-perceived service quality in fast-food restaurants and their relationship to customer satisfaction and behavioral intentions. The Quality Management Journal, 15(2), 35-50.
Quek, A. S., & Eze, U. C. F. (2010, June 16th-18th). Evaluating product and service quality in Malaysia: Customers’ perspective. Proceedings of 2010 International Conference on Technology Innovation and Industrial Management, Pattaya, Thailand.
Richard, M. D., & Allaway, A. W. (1993). Service quality attributes and choice behavior. Journal of Services Marketing, 7(1), 59-68.
Rust, R. T., & Oliver, R. L. (1994). Service quality: insights and managerial implications from the frontier. In Rust, R. T., & Oliver, R. L. (Eds.), Service quality: new directions in theory and practice. (p. 1-19). Thousand Oaks, CA: Sage Publications.
Sam, E. F., Hamidu, O., & Daniels, S. (2018). SERVQUAL analysis of public bus transport services in Kumasi metropolis, Ghana: core user perspectives. Case Studies on Transport Policy, 6, 25-31.
Sarstedt, M., Hair, J. F. Jr., Cheah, J-H., Becker, J-M., & Ringle, C. M. (2019). How to specify, estimate, and validate higher-order constructs in PLS-SEM. Australasian Marketing Journal (AMJ), 27(3), 197-211.
Shaaban, K., & Kim, I. (2016). Assessment of the taxi service in Doha. Transport Research Part A: Policy and Practice, 88, 223-235.
Sharma, M. G. (2013). Comparison of public transport service quality: Malaysia and India. Working paper, FORE School of Management, New Delhi.
Soong, P. J. (2015, January 15). Review taxi services. My Sinchew.com. Retrieved from http://www.mysinchew.com/node/105100.
Taxi Auto Fare. (2017). Taxi Review. Retrieved from https://www.taxiautofare.com/my/60/taxi-reviews/Melaka-Taxi-review.
The Mayor of Kuala Lumpur. (2020). Kuala Lumpur Structure Plan 2040. Retrieved from https://www.dbkl.gov.my/klmycity2040/?page_id=4304.
Thiru, Jr. (2014, December 8). Taxi drivers are nation’s ambassadors. The Star Online. Retrieved from http://www.thestar.com.my/News/Community/2014/12/08/Taxi-drivers-are-nations-ambassadors-They-must-be-mindful-of-how-they-conduct-themsleves-with-touris/.
Tripadvisor. (2022). Taxi KLIA2 Service. Retrieved from https://www.tripadvisor.com/ShowUserReviews-g298314-d8677120-r435205630-Taxi_KLIA2_Service-Sepang_Sepang_District_Selangor.html.
Vanichchinchai, A. (2021). An analysis of hospital characteristics on lean and service quality. International Journal of Lean Six Sigma, 12(6), 1184-1208.
Wong, R. C. P., & Szeto, W. Y. (2018). An alternative methodology for evaluating the service quality of urban taxis. Transport Policy, 69, 132-140.
Wu, H. C., & Ko, Y. J. (2013). Assessment of service quality in hotel industry. Journal of Quality Assurance in Hospitality & Tourism, 14(3), 218-244.
Yoh, A., Iseki, H., Smart, M., & Taylor, B. D. (2011). Hate to wait: effects of wait time on public transit travelers’ perceptions. Transportation Research Record: Journal of the Transportation Research Board, 2216(1), 116–124.
Zakaria, Z., Hussin, Z. H, Batau, M. F. A., & Zakaria, Z. (2010). Service quality of Malaysian public transports: a case study in Malaysia. Cross-Cultural Communication, 6(2), 84-92.
Zeithaml, V. A., & Bitner, M. J. (1996). Services marketing. New York, NY: McGraw-Hill.
Zeithaml, V. A., Bitner, M. J., & Gremler, D. D. (2006). Services marketing: Integrating customer focus across the firm (4th ed.). Boston: McGraw-Hill.
Zulkifli, M., & Muhammad Yunus, M. Y. (2019). Comparative study of Uber and taxi in Kuala Lumpur. Journal of Physics: Conference Series, 1358, 1-8.
How to Cite
CHOY, Johnn-Yee; SALLEH, Mad Ithnin. Hierarchical Service Quality Analysis Using Structural Equation Modeling (SEM): A Case on Malaysian Taxi. Asian Journal of Research in Business and Management, [S.l.], v. 4, n. 1, p. 269-286, may 2022. Available at: <https://myjms.mohe.gov.my/index.php/ajrbm/article/view/18123>. Date accessed: 15 june 2024.