Serv Bus DOI 10.1007/s11628-015-0269-y EMPIRICAL ARTICLE Customer-perceived value and loyalty: how do key service quality dimensions matter in the context of B2C e-commerce? Ling Jiang • Minjoon Jun • Zhilin Yang Received: 11 April 2013 / Accepted: 3 February 2015 Ó Springer-Verlag Berlin Heidelberg 2015 Abstract This paper develops a research model to examine the effect of e-service quality dimensions on customer-perceived value and customer loyalty. Based on a survey of 235 online customers, we identify five key e-service quality dimensions: care, reliability, products portfolio, ease of use, and security. Our empirical results show that all the five dimensions have significant and positive impacts on customerperceived value which, in turn, increases customer loyalty. We further examine the mediating role of customer-perceived value in the relationship between each e-service quality and customer loyalty. The results suggest that customer-perceived value plays a partially mediating role in the effect of ease of use, care, product portfolio, and reliability on customer loyalty, and a fully mediating role in the relationship between security and customer loyalty. Managers may be in a position to benefit by employing the model presented in this study in an effort to improve service performance and, hence, retain customers. Keywords E-Service quality Customer-perceived value Customer loyalty B2C e-commerce Service quality dimensions Ling Jiang, Minjoon Jun and Zhilin Yang contributed equally to this work. L. Jiang School of Business, Macau University of Science and Technology, Avenida Wai Long, Taipa, Macau e-mail: lijiang@must.edu.mo M. Jun Management Department, College of Business, New Mexico State University, Las Cruces, NM, USA e-mail: minjun@nmsu.edu Z. Yang (&) Department of Marketing, City University of Hong Kong, Kowloon, Hong Kong e-mail: mkzyang@cityu.edu.hk 123 L. Jiang et al. 1 Introduction The relationship between customer loyalty and its antecedents has been intensively examined (e.g., Ibanez et al. 2006; McMullan and Gilmore 2008; Wang 2010; Zeng, et al. 2009). One issue, in particular, has assumed the status of special importance, in light of the accelerating expansion in the volume of companies and customers embracing e-commerce as a method of operation: How can an organization effectively retain online customers and sharpen its competitive advantage? The literature provides a logical point of departure. In their conceptual study, Parasuraman and Grewal (2000) propose a quality-value-loyalty chain model in a traditional ‘‘bricks-and–mortar’’ business setting, where three factors––service quality, product quality, and price––determine customer-perceived value and, in turn, high customer-perceived value generates loyalty. The authors have raised two important questions for future research directions: ‘‘Can this same conceptual model be applied to technology-based environments?’’ and ‘‘What is the role of key e-service quality in this chain?’’ Researchers have long examined the antecedents of customer loyalty in the traditional brick-and-mortar environment. Relatively modest research effort, however, has been focused on how key dimensions of e-service quality affect customer loyalty through the mediation role of customer-perceived value. We posit that not all service quality attributes have equal impacts on customer-perceived value and loyalty (e.g., Yang et al. 2005). It is imperative, therefore, to uncover, among various potentially predictive service quality attributes, particular dimensions that are most crucial in enhancing customer-perceived value and customer loyalty, and to assess the degree to which they are associated. The study thus intends to address these central research questions in the context of business-to-consumer (B2C) e-commerce. Utilizing the Parasuraman and Grewal’s (2000) conceptual model as a reference point, we examined the linkages between customer-perceived e-service quality dimensions, customer-perceived value, and customer loyalty in the B2C e-commerce context. More specifically, the present study sought to (1) identify the salient e-service quality dimensions; (2) examine the relationships between the derived e-service quality dimensions and customer-perceived value; (3) investigate the association between customerperceived value and customer loyalty; and (4) determine if each key e-service quality dimension has a direct or indirect effect on their loyalty. 2 Conceptual framework and hypothesis development Based on the literature review, we construct a research model of customer-perceived service quality (mainly five key e-service quality dimensions identified in this study)––customer-perceived value-customer loyalty chain (see Fig. 1). The major findings of prior research addressing the key constructs of this study are discussed below. 123 Customer-perceived value and loyalty Key e-Service Quality Dimensions Care Reliability Perceived Value Product Portfolio Ease of Use Customer Loyalty Security Fig. 1 Conceptual model 2.1 Identifications of key e-service quality dimensions It is a formidable task to identify the key e-service quality dimensions because of tremendous number of studies in this arena. To select salient dimensions of e-service quality in our research setting of B2C e-commerce, we first consider the theoretical foundation of B2C e-commerce. Scholars have posited that online services involve interactions between customers and online information systems (e.g., Yang et al. 2004; Yang et al. 2005). Drawn from this theoretical springboard, we review two streams of literature. One is the service quality literature, mainly the SERVQUAL model developed from the traditional service setting (Parasuraman et al. 1988). The other is the information system and Web site design quality literature, which concentrates on computer and networking-based impersonal interactions. Among numerous dimensions of e-service quality, we only consider those attributes that are empirically validated, applicable for our research setting, and are salient in their effects on either customer-perceived service quality or customer loyalty. Key Quality Dimensions Related to Customer Services. The well-known SERVQUAL model (Parasuraman et al. 1988) encompasses appearance of physical facilities, equipment, and personnel (tangible), willingness to help customers and provide prompt service (responsiveness), ability to perform the promised service dependably and accurately (reliability), knowledge and courtesy of employees and their ability to convey trust and confidence (assurance), and approachability, ease of contact, and making the effort to know customers and their needs (empathy) (Parasuraman et al. 1988). Numerous inquiries have sought to apply the SERVQUAL model to discover the attributes of services that contribute most significantly to quality assessments in the online service environment (e.g. Ho and Lin 2010; Lee and Lin 2005; Wolfinbarger and Gilly 2003; Yang et al. 2005; Yang 123 L. Jiang et al. and Peterson 2004; Yen and Lu 2008). These empirical studies have demonstrated that the SERVQUAL’s service quality dimensions can be incorporated into the online setting with appropriate modifications. For example, the tangible dimension approximates the Web site design quality aspects instead of physical facilities, equipment, and personnel. In addition to the dimensions derived from the SERVQUAL model, we further identify one salient dimension, Product Portfolio, through literature review and our focus groups with online consumers. The role of product portfolio in determining e-service quality has been less empirically studied though it has been discussed frequently and is significantly important (Page and Lepkowska-White 2002; Srinivasan et al. 2002; Yang et al. 2004). Many online customers are inclined to patronize firms which offer a substantial variety of goods and services. The primary reason for this preference is that it is more likely that diverse needs can be fulfilled when they arise. This is especially acute for desired products which are not widely distributed or are unavailable at conveniently located physical outlets (Barcia 2000). Thus, a strategy for gaining customer satisfaction and loyalty may be to provide a mix of offerings preferred by target customers. Cho and Park (2001) have identified ‘‘variety of products’’ as one of the seven major dimensions that influence Internet shopper satisfaction. Further, Page and Lepkowska-White (2002) have pointed out that a suitable selection of products and services is one of the important ingredients for developing consumer value in online companies. In the same vein, Srinivasan et al. (2002) have found that online customer loyalty is positively influenced by a wide product mix and a great variety of products within any given category. Another major reason for customer use of the Internet as a purchasing channel is convenience (Jiang et al. 2013). When possible, many customers prefer to fulfill their diverse purchasing needs at one site––‘‘one stop shopping’’. For example, some online banking customers wish to pay bills electronically and automatically, view and print monthly bank statements, and purchase stocks, insurance, and other financial offerings at one Web site. Thus, companies offering a wide range of products may be able to attract incremental numbers of customers to their Web sites. Key Quality Dimensions Related to Online Systems. Most commercial Web sites function as structured and well-defined information systems comprising browsers, search engines, encryption, other e-commerce software, and databases. To measure end-users’ satisfaction with information systems, Doll and Torkzadeh (1988) have developed twelve items that gage five quality dimensions influencing end-user satisfaction. These dimensions are content, accuracy, format, ease of use, and timeliness. The reliability and validity of the scale which they have produced has been confirmed in other studies (Doll et al. 1994; Hendrickson and Collins 1996). Subsequently, several inquiries have been undertaken to identify Web sites attributes which are critical to business success (e.g., Chiu et al. 2005; Li 2007; Yang et al. 2005). For example, Yang et al. (2005) discovered six dimensions of Web portal service quality: usefulness of content, adequacy of information, usability (i.e., user friendliness), accessibility, privacy/security, and interaction. All the dimensions have a significant effect on online service quality and customer satisfaction. Among various aspects of online systems quality, two dimensions, ease of use and security/privacy, have been widely acknowledged as critical in shaping 123 Customer-perceived value and loyalty consumer perceptions of information systems quality (Cox and Dal, 2001; Jiang et al. 2013; Li 2007; Yang et al. 2005; Zeithaml et al. 2002). 2.2 The effect of key e-service quality dimensions on customer-perceived value Customer-perceived value has its root in equity theory which relates the ratio of the consumer’s outcome/input to that of the service provider’s outcome/input (Oliver and DeSarbo 1988). Equity refers to customer evaluation of what is ‘‘fair,’’ ‘‘right,’’ or ‘‘deserved’’ (benefit) for the perceived cost of the offering (Bolton and Lemon 1999). Perceived costs include monetary payments and other sacrifices such as time consumption and consumer stress. Outcomes in equity theory are compared to sacrifices and rewards received by the other party (ies) to an exchange. In this sense, customer-perceived value results from an overall evaluation of the rewards and sacrifices associated with the service. Equity theory is relevant in the e-commerce context, where it is essential for the company to establish an ongoing relationship with a client base. Customers are likely to feel equitably treated if they believe the ratio of their outcome to inputs is comparable to the ratio of outcome to inputs accruing to the company (Oliver and DeSarbo 1988). Further, customers often benchmark a company’s ratio of outcome to inputs by comparing these to ratios for competitors’ offerings. Due to rigorous online competition and the relative ease of instant comparisons, customer values have become more critical in retaining customer loyalty (Yang and Peterson 2004). From this perspective, the present study focuses on service performance as the key reward, and perceived costs as key sacrifices associated with an exchange. Customer-perceived overall service quality has been regarded to have a significant and positive relationship with customer-perceived value (Cronin et al. 2000). In the context of B2C e-commerce, it is not clear whether or not each salient e-service quality dimension significantly affects customer-perceived value. Among the very few studies focusing on the antecedents of customer-perceived value in the context of e-commerce, Chen and Dubinsky (2003) find that three e-service quality attributes, ease of use of the Web site, relevant information, and customer service, along with product quality, collectively and positively affect customer-perceived value through customer experience. They further argue that relevant information provided by the Web site and quality customer service offered by human Web assistants whose task is to assist customers in Web shopping are perceived by consumers to be useful and valuable. On the other hand, unfriendly online user interfaces may lead them to feel confused and ultimately develop negative feelings about the e-shopping experience. From an information system perspective, Teo et al. (2003) find that efficiency and effectiveness of information systems are the key determinants of user-perceived overall value. Based on these limited studies devoted to revealing the effect of various e-service quality dimensions on customerperceived value, we are able to tentatively postulate, H1 Each key e-service quality dimension has a significant, positive impact on Customer-perceived value. 123 L. Jiang et al. 2.3 Customer-perceived value and customer loyalty Customer loyalty is attitudinally measured in terms of (1) customers’ intention to continuously or increasingly conduct business with their present company, and (2) their inclination to recommend the company to other persons (Boulding et al. 1993; Zeithaml et al. 1996). Prior research efforts have identified customer-perceived value as a major precursor of customer loyalty. In the setting of e-commerce, high value is one of the primary motivations for customer patronage (Chen and Dubinsky 2003; Tsao and Tseng 2011; Zeng, et al. 2009). In the empirical study of online customer services, Yang and Peterson (2004) have confirmed that customer value exerts a positive effect on customer loyalty. Customer-perceived value is not necessarily directly related to price. A company may assess a premium price for an offering, but if it attaches useful services to the core products, customers may perceive the value of this service as superior to competitor’s offerings. According to equity theory, everything else being equal, high customer-perceived value can significantly increase customer loyalty (Oliver and DeSarbo 1988). Therefore, H2 Customer-perceived value has a significant, positive impact on customer loyalty. 2.4 E-service quality dimensions and loyalty Loyalty may be influenced by a positive level of satisfaction toward the service provider. In a traditional business setting, many researchers have found a positive relationship between service quality perceptions and customer loyalty (e.g., Cronin et al. 2000; Pollack 2009; Ranaweera and Neely 2003; Zeithaml et al. 1996). Scholars have recently examined this relationship in the context of B2C e-commerce. Heim and Sinha (2001) have investigated the relationship between customer loyalty and the order procurement and order fulfillment processes of e-retailers. They have found that six variables, website navigation, product information, price, product availability, timeliness of delivery, and ease of return, have a significant and positive association with customer loyalty. All of the six variables, except for price, relate to e-service quality dimensions. Focusing on Internet as a self-service technology, Yen and Gwinner (2003) have found that four factors of e-service quality, perceived control, convenience, efficiency, and performance of the technology, have significant and positive effects on customer loyalty through two mediating variables, confidence and special treatment benefits. Zhang and Prybutok (2004) have demonstrated that customer-perceived service quality and two online systems quality attributes, namely Web design and ease of use, have a significant and positive association with customer loyalty. Furthermore, Srinivasan et al. (2002) have empirically found that the greater the levels of care, choice, customization, customer cultivation, community, and positively perceived character of the e-retailer, the greater the e-loyalty of the customer. A thorough review of the e-service quality literature indicates that different key e-service quality dimensions identified by various empirical studies seem to exert a significant effect on customer loyalty. Therefore, 123 Customer-perceived value and loyalty H3a Each key e-service quality dimension has a direct and positive impact on customer loyalty. In line with the quality-value-loyalty chain model proposed by Parasuraman and Grewal (2000), customer-perceived value exerts a mediating effect on the relationship between service quality and customer loyalty. In terms of the role of key e-service quality dimensions, we posit that they can affect either customerperceived value or loyalty. In addition, customer-perceived value has a significant effect on customer loyalty. Thus, the remaining issue is: Will customer-perceived value play a partially or fully mediating role in the relationships between each key service quality dimension and customer loyalty? No prior study has investigated the issue. Following the analytic procedure for testing mediating effects proposed by Baron and Kenny (1986) and our H1, H2, H3a, we propose H3b Customer-perceived value plays a partially mediating role in the relationships between key dimensions of e-service quality and customer loyalty. 3 Method 3.1 Samples and data collection Our sampling frame consisted of e-retailing and financial customers with personal e-mail addresses provided by an online e-mail address broker. An e-mail solicitation letter was forwarded to 4000 subjects randomly selected from the e-mailing list. The message described the research purpose and invited each receiver to participate in the online survey. A total of 1101 e-mails were returned as undeliverable. Of 257 responses, 22 were eliminated because they were incomplete or duplicated (The ISP address of each respondent has been checked) responses. Thus, the effective sample size was 235 and the effective response rate was 8.1 % (235 of 2899). Since the number of collected useable responses was sufficient for further data analysis, follow-up e-mails were not sent. No comparison was made between early and late responses for checking non-response bias, since appropriately 90 % of the responses were garnered within 5 days after the initial e-mail. 3.2 Profile of respondents Of the 235 respondents, 144 subjects answered the questions based on their online finance service experiences (i.e., e-banking and online stock brokerage) and the remaining 91 responded based on their e-retailing service experiences. Approximately, 80.8 % of the respondents were male; 76.9 % were between the ages of 25 and 54; 68.0 % had earned a bachelor’s degree or higher; and 40.1 % earned an annual household income of US $ 70,000 or above. The characteristics of these respondents were similar to Internet user profiles gathered in other studies (e.g., Kehoe et al. 1999; Sheehan and Hoy 2000). As to the computer and Internet usage profile, 90.2 % of the sample had been using personal computers for more than 6 years; 94.1 % reported that they logged 123 L. Jiang et al. Table 1 Means, standard deviations, and correlation matrices Means S.D. 1 2 3 4 5 6 1. Care 4.27 0.71 1.00 2. Reliability 3.56 0.73 0.52** 1.00 3. Product portfolio 3.76 0.70 0.63** 0.36** 1.00 4. Security 3.80 0.71 0.45** 0.56** 0.36** 1.00 5. Ease of use 3.63 0.74 0.47** 0.55** 0.42** 0.51** 6. Customer loyalty 3.59 0.80 0.65** 0.50** 0.41** 0.40** 0.47** 1.00 7. Customer perceived value 3.56 0.65 0.37** 0.35** 0.36** 0.35** 0.42** 0.66** 7 1.00 1.00 ** p \ 0.01 (2-tailed) onto the internet at least once a day on average; and 64.6 % spent more than 6 h per week on browsing Web sites. Table 1 lists means and standard deviations of all the constructs and correlations among them. 3.3 Measures The research instrument was developed based upon the mostly validated measures of prior studies. To ensure content and face validity of the measure, a pretest of the questionnaire was conducted to assess the face validity of the measurement scales. Five academics and four local professionals, who are specialized in e-commerce, reviewed the scales and, based on their feedback, some items were reworded, added, or deleted. Next, the questionnaire was forwarded by an e-mail attachment to 50 online customers selected from two news groups: online financial investment and e-commerce. A total of 14 respondents replied with useful suggestions. Based on their feedback, the questionnaire was further revised and finalized. A total of 37 scale items assessing the key constructs of the present study were developed and included in the survey. A total of 16 items adapted from the SERVQUAL measures were used to gage the five quality dimensions related to customer service except for tangibility, inasmuch as its measurement items are highly relevant to online services. The scale of product portfolio consisted of three items. The first two items, range and variety of product offerings, were adapted from the scale developed by Szymanski and Hise (2000). The last was designed to measure the degree of Internet-related free services (e.g., message board). For the two dimensions of online systems quality, ease of use and security, we adapted measures from Cox and Dale (2001) and Liu and Arnett (2000). The ease of use construct, measured by four items, covered usability of a Web site, organization and structure of online content, ease of conducting transactions, and adequateness of content. The security dimension, assessed by three items, focused on the risk and safety of e-transactions and privacy of personal information. We measured customer-perceived value using an adapted version of a scale verified by Levesque and McDougall (1996). The scale, consisting of five items, indicates that customers tend to compare what they received from a company with (1) what a competitor could offer and (2) what they pay (Oliver and DeSarbo 1988). Previous 123 Customer-perceived value and loyalty studies have measured the construct of customer loyalty by examining their behavioral intentions: (1) consumer willingness to recommend the company (Parasuraman et al. 1988, 1991; Zeithaml et al. 1996), and (2) repurchase intention (Boulding et al. 1993; Zeithaml et al. 1996). The scale, consisting of six items, was adapted from Parasuraman et al. (1991) and Zeithaml et al. (1996). The items measured customers’ willingness to recommend the company and their repurchase intention. For each scale item, a five-point Likert scale was used, anchored by ‘‘1 = strongly disagree’’ and ‘‘5 = strongly agree’’ with ‘‘3 = neutral: neither agree nor disagree’’ as the midpoint. 3.4 Measurement validation We employed Anderson and Gerning’s (1988) two-step approach to evaluate the convergent validity for modeled constructs. We first ran exploratory factor analysis to assess the underlying factor structure of the scale items. A total of 26 scale items addressing the specific characteristics of customer service quality, online systems quality, and product portfolio were subjected to a series of factor analyses. The initial factor analysis extracted six factors. We further eliminated those items that did not load strongly on any factor (below 0.5) or had cross-loadings. Six items were deleted after four iterations. The retained 20 items were factor analyzed again. Five factors were generated. All items in a scale loaded strongly on one factor and weakly on all the other factors, thereby satisfying the requirements of convergent and discriminant validity (Cohen et al. 1992). The issue of common method variance was then found to be no problem in that the first factor failed to comprise a majority of the variance and there was no general factor in the unrotated factor structure (Podsakoff and Organ 1986). In the second phase, confirmatory factor analysis was performed. It indicated that all factor loadings were greater than the recommended 0.4 cut-off and were statistically significant (Nunnally and Bernstein 1994). (See Table 2). Other fit indexes also indicate that the model fitted the data reasonably well. The internal validity of the measurement model appears to be adequate as the composite reliability of each construct is above 0.7 and the average variance extracted (AVE) of each measure extracted more than or equal to 50 % of the variance (Bagozzi and Yi 1988; Fornell 1992). These indicators show the fit of the measurement model to the aggregate data. Therefore, we further ran the structural model to reveal the relationships among the constructs. 4 Results We tested our hypotheses using the structural equation model. As shown in Table 3, All the major fit indexes indicate that the structural model fits well. The five independent variables, care, reliability, product portfolio, ease of use, and security, have statistically significant and positive relationships with customer-perceived value at the significant level of p \ 0.05. Therefore H1 is supported. Insofar as the relative impact of the service quality dimensions on customer-perceived value is 123 L. Jiang et al. Table 2 CFA results of measures Constructs and scale items Load-ing T-value 1. The contact employees understand my specific needs. 0.80 14.65 2. Company employees comply with my requests. 0.68 11.22 Care 3. The company gives me individual attention. 0.77 13.03 4. Top management gives me personal attention when I encounter serious problems. 0.82 16.92 5. Company employees have the knowledge to answer my questions. 0.79 15.44 6. Company employees properly handle any problems that arise. 0.91 17.77 0.92 18.82 Reliability 1. My online transactions are always accurate. 2. The company keeps my records accurately. 0.63 16.09 3. The company performs the service correctly the first time. 0.84 16.46 4. When the company promises to do something by a certain time, it does so. 0.64 15.92 1. Using the company’s web site requires a lot of effort (R). 0.61 10.14 2. The organization and structure of online content is easy to follow. 0.68 11.22 3. It is easy for me to complete a transaction through the company’s web site. 0.77 13.03 4. The company’s web pages have the contents that meet my needs. 0.90 16.32 1. I feel the risk associated with online transactions is low. 0.75 12.74 2. I feel secure in providing sensitive information for online transactions. 0.68 11.22 3. I feel safe in my online transactions. 0.89 16.17 1. The company provides me many useful free services. 0.75 12.74 2. The company provides wide ranges of product packages. 0.69 11.22 3. The company provides services with the features I want. 0.77 13.03 1. Compared to alternative companies, the company offers attractive product costs. 0.58 9.56 2. Compared to alternative companies, the company charges me fairly for similar products/services. 0.87 9.28 3. Compared to alternative companies, the company provides more free services. 0.55 8.85 Ease of use Security Product portfolio Customer-perceived value 123 CR AVE a 0.85 0.58 0.86 0.84 0.58 0.84 0.76 0.51 0.81 0.72 0.56 0.83 0.82 0.50 0.61 0.89 0.57 0.80 Customer-perceived value and loyalty Table 2 continued Constructs and scale items Load-ing T-value 4. Comparing what I pay to what I get, I think the company provided me with good value. 0.95 19.00 5. Comparing what I pay to what I might get from other competitive companies, I think the company provides me with good value. 0.86 16.21 1. I say positive things about the company to other people. 0.91 18.00 2. I would recommend the company to those who seek my advice about such matters. 0.81 13.86 3. I would encourage friends and relatives to use the company. 0.93 18.93 4. I would post positive messages about the company on some Internet message board. 0.80 14.72 5. I intend to continue to do business with the present company. 0.45 5.52 6. I intend to do more business with the present company. 0.69 11.73 Customer loyalty CR AVE a 0.90 0.63 0.91 Model fit indices v2 = 196.80 (P = 0.00), d.f. = 108, v2/d.f. = 1.82, RMSEA = 0.06, GFI = 0.93, CFI = 0.98, NFI = 0.97, NNFI = 0.97 CR composite reliability; AVE average variance extracted concerned, the ease of use dimension is the most significant independent variable with the largest standardized beta coefficient (b = 0.28), followed by care (b = 0.26), product portfolio (b = 0.22), and two ties, reliability (b = 0.15) and security (b = 0.13). The relatively low R2 reflects that the five dimensions of e-service quality only account for a portion of customer-perceived value. Other factors such as price and product quality may also play a critical role in customer perception of service value. Customer-perceived value exerts a significant and positive effect on customer loyalty (b = 0.46). Thus, H2 is supported. Our H3a and H3b examined the direct effect and mediating effect of key e-service quality dimensions on customer loyalty. Among the five dimensions, only security had no significant effect on loyalty. Yet, security has a significant effect on customer-perceived value which in turn affects loyalty. Thus, customer-perceived value plays a full mediating role in the relationship between security and loyalty. The remaining four dimensions have a significant effect on customer loyalty. The most important dimension is care, followed by reliability, ease of use, and product portfolio. Because their coefficients are lower than the coefficient of customer-perceived value, customer-perceived value is considered as partially mediating the effect of the four dimensions on customer loyalty (Baron and Kenny 1986). Thus, both H3a and H3b are only partially supported. 123 L. Jiang et al. Table 3 Structural equation models of key e-service quality dimensions, customer perceived value, and loyalty Independent variable Dependent variable Customer perceived value Loyalty Coefficient t value Coefficient t value Care 0.26 4.30** 0.35 7.31** Reliability 0.15 2.71* 0.16 2.89* Ease of use 0.28 4.59** 0.15 2.69* Security 0.13 2.41* 0.05 0.97 Product portfolio 0.22 3.97** 0.14 2.54* Customer perceived value – – 0.46 13.18** R2 0.25 0.67 Goodness-of-fit statistics Chi-square (p-value) = 137.17(0.00); d.f. = 89; v2/d.f. = 1.53; GFI = .95; RMSR = 0.05; RMSEA = 0.06; (90% CI) = (0.043,0.072) ** p \ 0.01, * p \ 0.05 5 Discussion 5.1 Theoretical implications This study identifies five key dimensions of e-service quality, care, reliability, ease of use, security, and product portfolio, which are considered as substantially important to customer-perceived value. The ‘‘care’’ factor relates to two constructs, employees’ understanding of customer-specific needs and their personal attention to them, and employees’ ability to answer customer questions and resolve problems that arise promptly. The ‘‘reliability’’ dimension concerns accurate e-transactions, accurate records, correct initial performance, and promise accomplishment. Next, the ‘‘ease of use’’ dimension referred to moderate effort required to navigate a Web site, well-organized/structured and easy-to-follow catalogs, and ease of completing an online transaction. The ‘‘security’’ dimension is concerned with online transaction safety and customer privacy. Finally, the ‘‘product portfolio’’ factor referred to useful free services, a wide range of product packages, and desired service features. Our study examines the relative impacts of the e-service quality dimensions on customer-perceived value. Ease of use to be the foremost critical factor in achieving a high level of customer value, followed by care, product portfolio, and two ties, reliability and security. First, the ease of use dimension is directly related to the unique characteristics of online systems. Consistent with the technology adoption model (Davis 1989), this dimension is a major factor leading to customer adoption of and customer-perceived value with online purchasing. In maintaining their Web sites, online companies need to focus on easy navigation for their online systems, well-organized and well-structured e-catalogs, concise contents, and easy-tounderstand terms and conditions, and easy check-out processes in their Web sites. 123 Customer-perceived value and loyalty More specifically, a Web site should be configured to allow customers to conveniently reach a desired Web page from anywhere in the Web site’s hierarchy (Kim and Eom 2002). Otherwise, customers could experience considerable difficulty in navigating pages and might be unlikely to complete desired transactions. The care dimension is the second most important driver of customer-perceived value and the most important factor directly leading to customer loyalty. Care refers to the degree to which online firms provide personalized services to meet their customers’ specific needs. Although a Web site is basically an impersonal medium, in order to attract and retain customers, a company is well-advised to differentiate its products from those of competitors based on its personalized services to customers. Thus, it is recommended that online firms devote special attention to all the pre- and post-purchase customer interface activities designed to establish and maintain long-term customer relationships (Srinivasan et al. 2002). The product portfolio dimension is the third most influential factor for customerperceived value and refers to the range and depth of products and services, and to the provision of free service offerings. Many customers seek products that are unavailable in their local outlets. A limited selection of products or outdated product information is most likely to deter numerous customers from purchasing online. Moreover, a Web site can benefit if it provides a range of adequate service functions in the menu options. It would also be desirable, when feasible, to provide valueadded free services by linking to useful informational Web sites. Finally, the reliability and the security dimensions were a tie. The ‘‘reliability’’ factor related to accurate online transactions, accurate records, correct performance, and fulfillment of promises. In reality, product order fulfillment still remains the most troublesome area for online retailers, and most online consumers feel frustrated with the poor service reliability provided by virtual stores (Parasuraman et al. 2005). A reliable e-service is also one of the most influential determinants for attaining a high level of customer-perceived value. On the other hand, ‘‘security’’ encompasses low risk associated with e-transactions, safeguarding personal information, and safety in completing e-transactions. It has no direct effect on customer loyalty. Yet, consistent with the prevailing viewpoint, security was significant in determining and service value as perceived by online customers. In fact, it is considered that the lack of confidence motivated by the perceived absence of security in the online business environment is a stumbling block to the growth of e-commerce. Consistent with Chen and Dubinsky (2003) and Parasuraman and Grewal (2000), we find that there is a significant and positive relationship between customerperceived value and customer loyalty. It should be noted that obtaining more valuable products is a primary reason that customers choose the Internet as an alternative purchasing channel. As e-commerce has made cost transparency more feasible, the total product cost, not solely the price, has become an increasingly important vehicle for attracting customers. The total cost constitutes both explicit expenses (i.e., product price) and implicit expenses such as shipping costs, return costs, coupon usages, discounts rewards, and free services. 123 L. Jiang et al. As one of our major contributions, this study examines the mediating role of customer-perceived value in the relationship between each e-service quality dimension and customer loyalty. The quality-value-loyalty chain model proposed by Parasuraman and Grewal (2000) only considers overall quality. Our study reveals that customer-perceived value plays a partial role in the effect of ease of use, care, product portfolio, and reliability on customer loyalty, respectively. Thus, customerperceived value mainly has a partial mediating effect on the relationship between each e-service quality dimension and customer loyalty. In addition, customerperceived value plays a full mediating role in the relationship between security and customer loyalty. This finding implies that security as a salient e-service quality dimension can increase customer loyalty only through enhancing customerperceived value. 5.2 Managerial implications The key e-service quality measurement developed in this study is designed to provide an effective tool to assess Internet-based service quality encompassing customer service, online systems, and product portfolio. Online companies can use the quality measurement tool to detect their service quality weaknesses and strengths. Based on their quality assessment and chosen business strategies, online companies can devote corporate resources to the important service quality attributes uncovered by this study. All of the five dimensions do significantly and positively affect the assessment of customer-perceived value and have a direct or indirect influence on customer loyalty. Thus, it is recommended that online firms maintain and sharpen the levels of ease of use, care, product portfolio, reliability, and security simultaneously to broaden a loyal customer base by adoption of diverse Internet-based customer relationship management (e-CRM) features. For example, site customization, one of the important e-CRM features, enables individual customers to readily access information they need by allowing them to filter the content they see, thereby enhancing ease of use and in turn customer-perceived value. Various e-CRM features (see Feinberg and Kadam (2002), for a comprehensive list of e-CRM features) are primarily used for building and reinforcing relationships with existing customers rather than acquiring new ones. Further, constant assessments of customer-perceived service quality based on the five salient dimensions could serve as a continuous service delivery control system to enable prompt corrective actions when service performance on any of these dimensions falls below a customer tolerance level. 5.3 Limitations and future research Caution should be taken methodological concern is The response rate was low online-based questionnaire 123 when generalizing the findings of this study. A that the sample is concentrated on male customers. though it has been a common phenomenon for many surveys. Future research could choose more gender- Customer-perceived value and loyalty balanced samples to validate the findings of this study and address the issue of nonresponse bias. Another limitation lies on our selection of key e-service quality dimensions. While we identify five salient e-service quality dimensions based on literature review, focus groups, and empirical purification, inclusion of these five dimensions is subject to our selection bias and is constrained by the service contexts. We only investigate two industries in the B2C e-commerce: online finance and retailing. Future research could reduce such arbitrary selection of key e-service quality dimensions by (1) including more attributes of e-service quality; (2) surveying more diversified industries; and (3) expanding to B2B e-commerce. If pursued, such a study would enhance sample representativeness and generalization of the empirical results. One important issue raised by this study is how to optimize service quality levels within organizational capabilities, such as financial and human resources, in order to achieve maximum profit by providing customer value and gaining customer loyalty. 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