American Journal of Economics

p-ISSN: 2166-4951    e-ISSN: 2166-496X

2015;  5(2): 243-250


Addressing Service Quality to Increase Students’ Satisfaction and Retention in Malaysian Private Higher Education Institutions

Santhi Raghavan, Ganesh R.

OUM Business School, Open University Malaysia

Correspondence to: Santhi Raghavan, OUM Business School, Open University Malaysia.


Copyright © 2015 Scientific & Academic Publishing. All Rights Reserved.


The world of business has become increasingly demanding and turbulent for its survival. Marketing in concentration of consumer behavior plays an important role in society and business world by helping people satisfy their needs and wants and mainly helping organizations decide what to produce through the emphasis of value. Likewise, private education institutions’ survival is primarily focused towards its students’ satisfaction and retention level. Much literature has been produced to explore student satisfaction and retention in the conventional higher education settings, which provides guidance as to possible factors that may influence customer satisfaction and retention. This conceptual paper researches the concept of customers as co-value creator. It is important for private higher education institution in Malaysia now to reach the mainstream of business survival through the concentration of service quality with the integration of customers/students as co-creators.

Keywords: Service Quality, Student Satisfaction, Student Retention, Private Higher Education Institutions, Value Co-Creation

Cite this paper: Santhi Raghavan, Ganesh R., Addressing Service Quality to Increase Students’ Satisfaction and Retention in Malaysian Private Higher Education Institutions, American Journal of Economics, Vol. 5 No. 2, 2015, pp. 243-250. doi: 10.5923/c.economics.201501.31.

1. Introduction

Rendering the expected value in competitive business environment in concentration of quality of service is an important element for business success, and experts concur that the most powerful competitive tool currently reshaping marketing and business strategy is service quality (Eraghi & Atharinejad, 2012). In any business irrelevant of manufacturing or service industry, service quality has been emphasized with profitability and is seen as an important competitive advantage for repeat purchase or customer retention (Kayabasi et al., 2013). It leads to highly positive word of mouth on feedback, customer loyalty and competitive product and service differentiation (Kimani, Kagira, & Kendi, 2011).
In education industry, the competitive environment has given its customers groups many options for different study programmes and education institutions (Choy et al., 2012).
It is crucial to clearly understand the service quality factors that enable education institution to attract, retain students and also to expect prospective students (Vatta & Bhatara, 2013). Any higher education institutions would want to gain competitive edge in their current business and in future, may need to search for effective and creative ways to attract, retain and develop stronger relationships with students and parents particularly.
Parents are another important customer group, reason being they make key decision in financing or sponsoring their children. As interpreted in Kimani et al., (2011) focusing on the customer i.e. students, is an essential principle of service quality, and the customers of a higher education institution fall into five groups; students, employees, government and its public sector, and the industry with its wider community. In addition Abdullah, (2006b) further specified these customer groups by indicating as internal customer, employers, government, parents and general public. In business the customer groups can be referred also as stakeholders of an organisation (Lai, Lau, Yusof & Chew, 2011; Syed et al., 2011; Ebert & Griffin, 2007).
Service quality can essentially be indicated as a strategic force and it is a key issue in the current business (Eraghi & Atharinejad, 2012). It is no surprise that business practitioners as well as education institutions are paying importance to accurately measuring and understanding issues affecting service quality output. Education institutions and universities at large are driven towards commercial competition imposed by environmental challenges and private colleges, universities or university colleges or education institutions, in general, has emphasized the increasingly need not only with what the society values in the skills and abilities of their graduates, but essentially on how students feel about their programme learning experience as a whole (Talmacean & Domnica, 2013; Lai et al., 2011).
Customer satisfaction is a very important element in the formation of customer’s desires for future purchase (Lai et al., 2011; Syed et al., 2011; Mittal & Kamakura, 2001). In addition to that, satisfied customers will probably talk to others about their good experience which is regarded as positive word of mouth. This practice is common in the Middle Eastern cultures, where the social life has been shaped in a way that social communication with other people improves the society (Jamal & Naser, 2002). This is also generally practice in other societies before purchasing or experiencing a product or service.
The objective of this conceptual paper is to examine the relationship of service quality on student satisfaction towards student retention.
The specific objectives of the research are as follows:
1. To examine the relationship between academic staff support with students’ satisfaction towards retention.
2. To examine the relationship between programme dimensions with students’ satisfaction towards retention.
To achieve the study objectives, the following research questions are formulated:
1. Is there a relationship between academic staff support with students’ satisfaction towards retention?
2. Is there a relationship between programme dimensions with students’ satisfaction towards retention?
The hypotheses are generated by reviewing previous related conceptual and empirical studies’ findings and results on the relationship between education institution service quality dimensions, namely academic staff support and programme dimension. in focus towards satisfaction and retention. Statements in favour of a particular relationship between the related variables are then developed as the research hypotheses. They are as follows:
Ha1: Academic staff support is positively related to students’ satisfaction towards retention.
Ha2: Programme dimension is positively related to students’ satisfaction towards retention.
In terms of the significance of this conceptual research paper, the investigation carried out here is to identify factors responsible for private higher education institutions undergraduate students’ satisfaction towards retention. A major benefit and importance of this research is the prospective possibilities in which student attrition rate at the undergraduate level can be reduced and with that, ultimately increase the rate of retention in the institution.

2. Literature Review

In the turbulent business environment, service quality concept has been established in the subjects of marketing and service management for companies’ sustainable competitive advantage with customer satisfaction and retention (Lee, 2013; Freitas & Costa, 2012; Mosahab et al., 2010; Ismail, Alli, Abdullah & Parasuraman, 2009; Ruiz, Castro & Diaz, 2012; Skalen, 2009). In continuing business sustainability and return on investment (ROI) with concentration of competition there is a clear focus in the paradigm of service quality to the customer as value co-creator through service dominant logic. Here the marketer works out value proposals and the customers are the individuals who create value from the consumption of the products or services (Vazquez et al., 2013; Grönroos, 2008).
According to Grönroos (2008) the service perspective on business marketing is merely an activity of value creation rather than market offering. The activity itself has an inbuilt ability to transform the potential value, generally referred to as utility for a particular customer, into actual value. In the basic origin the concept of service encompasses at least three different aspects: service as an activity; service as a standpoint of the customer’s value creation; and service as a viewpoint with provider’s activities (Gummesson & Grönroos, 2012; Grönroos, 2008).
In the education industry of higher learning the embracement students’ satisfaction and education quality concepts are viewed as a crucial point for their success and survival (Vatta & Bhatara, 2013). Basically in purchasing physical goods, customers become the owners of these goods; reason being ownership is transferred from the vendor to the customer (Ebert & Griffin, 2007). Service differs, here a customer receives the right to that service for only in a particular amount of time and it is commonly interpreted that service bought would not be able to return. Grönroos (1998) interprets it as a process of consumption where the consumer perceives the production process as part of the service consumption and not just the outcome, as in marketing of tangible goods.

2.1. Satisfaction and Service Quality

Most of empirical studies in education institutions have produced evidence that service quality leads to students’ satisfaction (Long et al., 2014; Talmacean et al., 2013; Lee & Ryu, 2013; Odeh, 2012; Alnaser & Al-Alak, 2012; Bergamo et al., 2012; Nesset & Helgesen, 2009) but review of literature highlights that there is lack of consensus on the definition of satisfaction as a concept with service quality and generally there are no clear accepted instrument for customer satisfaction in higher education institution (Danjuma & Rasli, 2012; Alnaser & Al-Alak, 2012).
Basically most of the models of satisfaction often compares students’ expectations to the observed service quality encounter that are referred as service quality gap but evidence has made certain that in application of performance only paradigm minus the expectation has given positive effect to students’ perceptions of service quality and with that, satisfaction directly affects students intention to evaluate the education institution favourably (Tuan, 2012; Alnaser & Al-Alak, 2012; Abdullah, 2005, 2006a). Regardless of which focus is applied, higher education institution seek to provide high service quality in every part of its process in order to be in favour of student as primary consumer’s fulfillment response; reason being satisfaction is indicated as the consumer’s fulfillment response and service quality is considered as the key performance measurement for excellence in the education industry (Talmacean & Domnica, 2013; Alnaser & Al-Alak, 2012; Ferguson & Phau, 2012; Iuliana & Mihai, 2011; Wei, 2011; Oliver, 1997; Tuan, 2012).
Overall perceived service quality is an antecedent to satisfaction and it is also a major prerequisite for establishing and sustaining students’ satisfaction and retention and also students’ future referrals (Vatta & Bhatara, 2013; Talmacean & Domnica, 2013; Zabadi, 2013; Danjuma & Rasli, 2012).

2.2. Retention

Retention of customer is the key factor in business and it is defined as a particular firm’s capability to provide a customer not only a buying product, but together with a relationship pattern in a specific period of time (Bergamo, et al., 2012). As competition increases in the current turbulent education business environment and with the emergence of knowledge as a driver of economic development higher education institutions and business industry worldwide encounter slower growth rate, price pressures which has brought serious attention on customer satisfaction and retention (Danjuma & Rasli, 2012; Rahman et al., 2012).
Satisfaction is the key building block which will be able to retain the firm’s customers or students in reference to education institutions (Tuan 2012; Rahman et al., 2012). Retention of customers will have strong effect on the particular education institution’s profitability (Lee, 2013; Tuan, 2012; Danjuma & Rasli, 2012). In this context Danjuma and Rasli (2012) posits that satisfaction is an essential element for customer attachment which will lead to continuity of the student in the education institution which refers to student retention.
In reference to education industry Tinto’s model which was developed in 1975 highlighted that persistence occurs when a student successfully integrates into the institution academically and socially (Bergamo, et al., 2012; Tinto, 1975). Generally integration is influenced by pre-college characteristic and goals as well as interactions with peers and faculty and together with the out of classroom factors (Lawson et al., 2012; Bergamo et al., 2012; Tinto, 1975; Jensen, 2011).

2.3. Academic Staff Support

In academic achievement as interpreted by Korkmaz, (2007), the discussions about education are mostly focused on the level of attainment of the desired learning objectives. When student achievement is low then some critical factors related to teaching and learning should be closely examined, such as qualities of teachers and school curricula, appropriateness of teaching strategies to students’ development levels, and atmosphere and climate related to students learning and integration (Bergamo et al., 2012; Lawson et al., 2012; Korkmaz, 2007). In that focus, the question of what characteristics makes effective institution can be listed as in rank order. One: guaranteed and viable curriculum, two: challenging goals and effective feedback, three: parental and community involvement, four: safe and orderly environment, and finally collegiality and professionalism (Korkmaz, 2007).
If an education institution is to be a true learning community, both teachers and students must have the opportunity to help develop the policies and practices that affect them (Long, Ibrahim & Kowang, 2014; Sahney, Banwet & Karunes, 2004). Above all lecturers have a significant impact on student achievement and directly affect how students learn, what they learn, how much they learn, and the process of teaching and learning is the central part to students’ evaluation of service quality (Vatta & Bhatara, 2013). The effect a lecturer in classroom can have on student achievement is very clear because student achievement begins and ends with the quality of the lecturer, the instructional programme, and his or her leadership qualities (Korkmaz, 2007). In that order of concentration, Stronge (2002) puts forward on the qualities of effective teachers into six categories, (teacher as a person, classroom manager and organiser, organising for instruction, implementing instruction, and monitoring student progress and potential). These qualities inter relates on how Vatta and Bahatta, (2013) interpreted that lecturer’s role and their contact with students leads to the central part to students’ evaluation of service quality.

2.4. Programme Dimension

In developing recognised higher education institution, it is important to possess the element of recognised programme in context of accreditation and reputable or industrial specializations because in decision making process of prospective students, the factors of academic reputation, service, employment prospect and teaching are the most crucial areas (Lawson et al., 2012; Brewer & Zhao, 2010). In addition, similar concentration are looked at by students in United States of America for academic reputation and followed by programme issues which leads to the perception of service quality (Hanaysha et al., 2011) Even though the selection of a higher education is different from consumer products and it is often more complex in reference to quality, cost and career implication, nevertheless it is argued that a dynamic brand function applied to higher education has the same effect as it does in other commercial contexts (Brewer & Zhao, 2010).
In the higher education institution’s current competitive environment, it is important to understand the student’s preference of a particular education institution. With these the effort in strategizing its marketing tools will be effective and target oriented. Soutar and Turner (2002), examines university preference using a form of conjoint analysis known as adaptive conjoint analysis (ACA), in order to investigate the important attribute to high-school leavers in Australia, found that there were four most important factors in the university preference which are; academic reputation, course suitability, job prospects, and teaching quality (Soutar & Turner, 2002).
From the review of relevant research on student preference and the choice of education institution, it was brought to the attention by Lin (1997), that investigation reveals on students’ choice of an education institution is particularly on the quality of the education offered as well as with other attributes such as reputation, career opportunities, faculty qualification, academic standard, curriculum and facilities, student life and traineeships.
These aspects, as well as other references are taken into consideration in the construction and execution of the questionnaire for this research paper.

3. Methodology

This study applies an exploratory survey which integrates the adaptation from Abdullah (2006a, 2006b) and Tinto (1975, 1993) instruments as the basis for this research framework. These established scales are applicable in a university setting, and its test-retest reliability and construct validity has been previously certified in countless other studies.
This research utilizes the quantitative research methodology involving a sample of data collected based on the year of 2011’s “SETARA ‘11” that measures the quality of teaching and learning at Level Six (6) of the Malaysian Qualification Framework (undergraduate level) in universities and university colleges in Malaysia. With that, Tier 4 and Tier 5 classified private higher education institution will be used as guiding list in selecting the private higher education institution and its undergraduate students.
To obtain the responses from the respondents, the survey and its questionnaires will be handled with close supervision. The operational details are as follows: first, letter for seeking approval for the survey will be sent to the private higher education institution who are in Tier 4 and Tier 5 of the (SETARA ’11) list. Second, upon approval request for faculty assistance will be made for selecting the students and class for the survey to be conducted. Three, introduction of the survey will be made and the distribution of the questionnaires will be carried out by the researcher. The completed questionnaires are to be collected back before the student leaves the class room. Any enquiries from the students will be handled ethically and professionally and the respondents are given the freedom to complete the questionnaire as they wish without any control mechanism or influencing element.
Great care will be given to ensure that the statement in the questionnaire are properly structured, focused, phrased and asked in a manner that is not personal to the respondents. The scale utilized in the questionnaire is in orientation of scale method with seven point scales, ranging from 1 = “very strongly disagree to 7 = “very strongly agree”.
As for the numbers of respondents it is estimated that about 10 private higher education institutions from Selangor and Kuala Lumpur will participate with the respondents’ rate of 40 students from each private higher education institution. These will lead to a total of 400 respondents who will be involved in the study. It is the interest of the study to have high number of respondents and also in accordance with Sekaran (2005), citing Krejcie and Morgan (1970), population size is decided by referring a Sekaran’s table that to ensure a good decision model, it is appropriate to have 400 respondents for a study that involves more than 100,000 students. In this respect an increase of 30% is included which brings to a total of 520 copies of questionnaires to be distributed to achieve high percentage of rate of return.

3.1. Conceptual Framework for the Research

Basically the conceptual framework established for this study was based on the review of the concepts put forward in the above section. The conceptual framework particularly presents the integration of the concepts relevant to the problem statement and the research objectives. It is important to note that even though the conceptual framework covers various independent and moderating variables, as for this research the academic staff support & programme dimension are selected as independent variables for discussion purposes.
In Figure 1, in total the framework attempts to focus on areas integrating each of the concepts put forward above into a collective manner. The study in total will exercise the references which defines the concepts and constructs for study, as indicated on the relationship of independent variables, namely administrative support, career placement and employability, academic staff support, institutional factors, programme dimension and information system in focus towards the dependent variables of satisfaction and retention. In addition, it also investigates at the moderating variables such as perceived value, programme fees and coping academically and socially.
Figure 1. Conceptual Framework for this Research
In the order of service quality, satisfaction and retention, it can be indicated that service quality as an antecedent to satisfaction and satisfaction as antecedent to retention. Accordingly, customer satisfaction can be considered as an assessment of service quality in an education institution based on performance.
The research identifies two broad criteria:
First, the paradigms should focus customer satisfaction in relation to education institution service quality dimensions.
Second, models should be appropriate for customer satisfaction and retention process in relation to service quality provided in private higher education institution.
Accordingly, only the performance paradigm, which has been derived from the perceived performance theory for modeling customer satisfaction and retention in relation to service quality, is focused. As such, the proposed conceptual framework of the research will be as per figure 1 below.

3.2. Pilot Study

The pilot study is divided into two stages. First, the expert opinion stage, where the draft questionnaire was tested with academic subject expert, practitioners and researchers for evaluation of quality attributes used in the questionnaire in the context of clarity, correctness and simplicity. Apart from that, the questionnaire objectiveness was compared to subjectiveness of service quality performance, comprehensibility of the instrument, confirmation of content validity was evaluated and investigated (Wirtz & Mattila, 2001).
In the second stage, respondents were selected from three private higher education institution and a total of 40 respondents were involved in the pre-test or a pilot study of the structured questionnaire. This was referred to in accordance with the general rule of thumb to take 30 respondents or greater to estimate a parameter or may range from 25 to 100 respondents for the size of pilot study (Cooper & Schindler, 2010; Lancaster, Dodd & Williamson, 2004). Apart from that, as for the internal consistency measures, according to Sekaran (2005), it is essential to examine the appropriateness of the questionnaires and also its comprehension. This is important, reason being the research instrument is adapted and modified from other related studies which has been done previously in order to suit the research objectives.

3.3. Preliminary Data Analysis

One of the most commonly utilized indicators of internal consistency is the Cronbach’s alpha coefficient, and the pilot study indicated well above the minimum requirement of alpha coefficient value of 0.70 for both the exogenous and endogenous variables.
This study produced above 0.80 in the Cronbach’s Alpha Coefficients. According to Pallant (2010) value above 0.70 are considered acceptable; however values above 0.80 are preferable. In addition, the corrected item-total correlation values was above 0.50 shown in the Item-Total Statistics, each item have high degree correlations with the total score. This indicates that the item is measuring the same from the scale as a whole. Table 1 highlights the details.
Table 1. Cronbach’s Alpha Coefficients for the Variables (Pilot Study)

4. Conclusions

In private higher education institutions the students’/ customers’ positive perception on the institution is a crucial factor for survival in the competitive environment. The primary focus of this research were twofold. First, the conceptualisations of service quality for superior measurement performance capability. The other is to develop ideal core variables that a private higher education institution should be emphasised with for satisfaction and retention of its customers as co-creators. This will eventually play an important role in the private higher education business strategy for long run survival as well as for capitalisation of competitive advantage.

4.1. Expected Outcomes

The study is expected to suggest that education institutions service orientation should have strong academic reputation with good academic staff support and programme dimension. The academic staff teaching quality for the students’ success will be a clear determinant for student students’ satisfaction and retention. In addition, with appropriate programme dimension, there will be a positive reflective concentration for the private higher education institution’s marketing implications in projecting value in its service quality.


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