Service Innovation and Customer Satisfaction: The Mediating Role of Customer Value Creation

ABSTRACT

Quiet recently, service innovation is seen as a key way of firm survival, and has gained lots of attention not only from academic scholars but also industry experts. However, there have been some erroneous perceptions that innovation is a preserve of manufacturing businesses and as a result, scholarly evidence suggests that the practice has not gained much attention within services business settings. The study explores the relationships among service innovation, customer value creation and customer satisfaction. More specifically, the research draws on the signaling theory and expectation disconfirmation theory to examine the role played by service innovation in enabling telecommunication operators in Ghana to create customer value in order to achieve customer satisfaction amidst the constraints in the business environment. Through extensive literature review, a conceptual framework, and empirical results from 510 registered subscribers of at least one telecommunication network in Greater Accra, the study employs exploratory and confirmatory factor analyses along with structural equation modeling to evaluate the proposed model for understanding the relationships among the constructs, as well as examining the mediating effect. The study finds that a service firm‟s ability to achieve customer satisfaction is dependent on how telecommunication operators harness and deploy their service innovation activities. In addition, the study showed that, customer value creation mediates the relationship between service innovation and customer satisfaction. Thus, service innovation must create value for customers in order to better enhance customer satisfaction. The study recommends that the conceptual framework should be further tested in other industries using other methodologies to authenticate its applicability. The theoretical and practical implications of the results are also discussed in the thesis.