Korean-Standard Service Quality Index: Development and Application


Youjae Yi and Jun Youb Lee (2005) ,"Korean-Standard Service Quality Index: Development and Application", in AP - Asia Pacific Advances in Consumer Research Volume 6, eds. Yong-Uon Ha and Youjae Yi, Duluth, MN : Association for Consumer Research, Pages: 164-170.

Asia Pacific Advances in Consumer Research Volume 6, 2005      Pages 164-170


Youjae Yi, Seoul National University, Korea

Jun Youb Lee, Kyunghee Cyber University, Korea


The overall level of service quality was rather low in Korea over the past decade. However, recently Korean customers had the increasing opportunities to experience advanced services due to globalization. As they came to have the increasing needs for high quality services, many companies tried to improve service quality to strengthen competitiveness. There is an increasing need for service quality measurement that reflects Korean conditions.

In an effort to meet the needs for new service quality measurement, we have developed the Korean Standard-Service Quality Index (KS-SQI). The purpose of this study is to provide a brief description of the KS-SQI model. In the paper we wish to develop an index of service quality that can be applied to various services, to apply the service quality index to various services in Korea, and to confirm consequences of service quality improvement from the viewpoints of company and customers.



Much research on service quality has employed the SERVQUAL model developed by Parasuraman, Zeithaml, and Berry (1985, 1988, 1991, 1993). The SERVQUAL model posits five dimensions of service quality (tangibles, reliability, responsiveness, empathy, assurance) and employs 22 items for measurement.

Although the SERVQUAL model has been used widely in the field (Asubonten et al. 1996, Babakus and Boller 1992), several researchers have raised conceptual issues with the model (e.g., Brown, Churchill and Peter 1993, Cronin and Taylor 1992, 1994). Furthermore, there were a few problems in employing the SERVQUAL model in Korea. The dimensions were rather too abstract and general for the general public. Also, it has often been claimed that the SERVQUAL model needs more emphasis on outcome quality (cf. Gronroos 1984). In developing a new model, we have thus adjusted the model by considering the Korean conditions and bolstering the outcome dimension.


Based on a series of pre-tests we changed the names of SERVQUAL dimensions with easy expression, and we added more outcome quality dimensions to the SERVQUAL model. We came up with a new measurement model that has ten dimensions in all.

This model was then tested with a preliminary field survey. Correlations between items were scrutinized so that highly correlated items were integrated and unclassified items were eliminated. As a result, ten dimensions of the initial model were reduced to eight dimensions.

Figure 1 illustrates these changes and describes the new model. We named the model as KS-SQI considering KS (Korean Standard) mark that is a symbol of Korean quality certification. The "tangibles" dimension is renamed as "physical evidence’ dimension, whereas "empathy" dimension was divided into two dimensions: "receptiveness" and "accessibility".

Model Description

The new model has a total of eight dimensions, and these dimensions are briefly described below.

It has 4 dimensions of outcome quality: primary needs fulfillment, unexpected benefits, contract performance, and creativeness.

*Primary Needs Fulfillment

Fulfillment of primary needs that customers hope to get through the service

Ex) in the restaurant industry: taste of food

*Unexpected Benefits

Additional service offers that customer did not expect.

Ex) in the restaurant industry: a gift for customer’s birthday celebration

*Contract Performance

To keep its promise when a service company promises to do something

Ex) punctuality, to do what was said exactly, to perform the service right the first time


To offer differentiated service or to develop a unique service

Ex) in the tourism industry: a new course for tour

In addition to the outcome quality dimensions, the KS-SQI model has 4 dimensions of process quality: receptiveness, credibility, accessibility, and physical evidence. Definitions and examples of these dimensions are as follows.


Employee’s kindness to help customer and provides quick service

Ex) a quick response to the customer’s request


Service provider’s fidelity and honesty, preparation against dangerous situations?

Possession of necessary technology and knowledge to serve its customer

Ex) physical and psychological safety


Accessibility and ease of contact

Ex) convenient time and place to visit a service site

*Physical Evidence

Physical facilities, equipments and employee appearance that reflect service quality well

Ex) building, Internet homepage, uniform, etc.


To test the KS-SQI model, we have conducted interviews and a field survey. Data were gathered from personal interviews conducted at four department stores in Seoul, Korea. A total of 255 usable questionnaires were collected. The 56% of respondents were men.




Each dimension was measured with two items related to the service quality of department stores. A 7-point scale format (1=strongly disagree, 7=strongly agree) was adopted in the survey. These items are as follows.

Primary Needs Fulfillment

The _ _ _ department store provided services that I want.

I could shop what I want in the _ _ _ department store.

Unexpected Benefits

I was impressed with unexpected service (birthday card, gift etc.) I received from the _ _ _ department store.

The _ _ _ department store provided extra services.

Contract Performance

The _ _ _ department store did exactly as promise.

The _ _ _ department store provided service within promised time.


The _ _ _ department store provides a unique service.

The _ _ _ department store reflects customer needs in response to the changeable environment.


Employees of the _ _ _ department store are never too busy to respond to my request.

The _ _ _ department store gives me individual attention.


I can trust employees of the _ _ _ department store.

The _ _ _ department store tries to make customers feel safe.


The _ _ _ department store is located in a convenient area.

The _ _ _ department store has operating hours convenient to all customers.

Physical Evidence

The _ _ _ department store’s physical facilities are suitable for the service.

Employees of the _ _ _ department store are neatly appearing.


A confirmatory factor analysis (CFA) was conducted to test the KS-SQI model. Figure 2 shows the results of CFA. The results of CFA support the measurement model and the KS-SQI measurement model is empirically confirmed.

We have also compared alternative weighting schemes of the measurement model. We compared the overall fit of the simple mean model with that of the weighted mean model in regression analysis. In the result the simple mean model yields the best fit. Therefore, the KS-SQI adopts the simple mean model in computing the overall index measure.







We expanded the KS-SQI measurement model to a model on consequences of service quality (cf. Zeithaml, Berry and Parasuraman 1996). Conceptually, we proposed that service quality has impacts on business performance and people’s happiness. Figure 3 illustrates the conceptual model of consequences of service quality.

The conceptual model posits relationships among, perceived service quality, customer satisfaction, business performance, and people’s happiness. Perceived service quality is expected to have a positive effect on customer satisfaction (Iacobucci, Ostrom and Grayson 1995). Business performance often consists of customer acquisition and retention (Rust and Zahorik 1993, Yi 1990), and these variables are affected by customers’ intention to repurchase and to spread positive word-of-mouth, which can be defined as service loyalty.

The service quality is also expected to enhance subjective quality of life and peoples’ general happiness; that is, the higher service quality is, the higher consumption life and people’s happiness (Clarkson and McCrone 1998, Huxley and Warner 1992). Thus, service quality will have effects on subjective quality of life indirectly.

We made three hypotheses from the conceptual model of consequences of service quality. Besides, one might say that customer satisfaction is critical for service loyalty but not for subjective quality of life. As subjective quality of life is affected mainly by economic conditions, family and social status, the effects of customer satisfaction may be relatively low. We proposed H4 that customer satisfaction will have a stronger effect on service loyalty than on subjective quality of life.

H1: Service quality is positively related to customer satisfaction.

H2: Customer satisfaction is positively related to service loyalty.

H3: Customer satisfaction is positively related to subjective quality of life.

H4: The effect of customer satisfaction on service loyalty is greater than that on subjective quality of life.


The conceptual model and hypotheses were tested with a field survey of department stores in Seoul, Korea. A quota-sampling frame was employed to ensure the representative sample of the population.




Service quality (SQ) had two measures: general service quality and KS-SQI. General service quality was measured by asking respondents about the perception of overall service quality with a 7-point scale. The KS-SQI was operationalized as a mean of 16 items for 8 dimensions, which can be seen as formative indicators. Customer satisfaction was assessed with an overall satisfaction measure. Service loyalty measures were repurchase intention and word of mouth. Subjective quality of life measures were consumption life improvement and quality of life improvement.


Overall, the results of LISREL8 provided strong support for the hypotheses. The overall fit of the model was very good: c2 (9)=8.99 (p=0.44), GFI=0.99, AGFI=0.97, RMR=0.012. Figure 4 shows the results of structural model analysis.

The paths regarding service quality, customer satisfaction, service loyalty and subjective quality of life were examined to test H1-H3. The path coefficient from service quality to customer satisfaction was positive and significant: 0.95 (t=13.02), supporting H1. Customer satisfaction had a positive and significant effect on service loyalty: 0.93, t=16.01, and H2 was supported. The effect of customer satisfaction on subjective quality of life was 0.66, which was also significant (t=8.80) and provided support for H3.

H4 states that the path from customer satisfaction to service loyalty is greater than the path from customer satisfaction to subjective quality of life. The path from CS to loyalty is 0.93, whereas the path from CS to quality of life is 0.63. The results seemed to support the prediction of H4.

A formal test of H4 was then conducted with the chi-square difference test. The baseline model was the model with free parameters for both paths, as illustrated in Figure 4. The restricted model introduced the restriction that the two paths are equal by imposing the equality constraint in the model. The difference in chi-square values between the two models can be used to test whether the two paths are statistically different or not.

The restricted model gave the following result: c2(10)=19.78, whereas the baseline model gave the following result: c2 (9)=8.99. The chi-square difference was 10.79, which was statistically significant (p<.01). The chi-square difference test provided support for H4, suggesting that the path from CS to loyalty is greater than that from CS to quality of life.


We applied the KS-SQI to various service industries in Korea. KSA (Korea Standard Association) measured the service quality in a number of service companies in various industries with KS-SQI every year from 2000. KSA increased the number of companies and respondents in the survey each year. Only 57 companies in 14 industries were used in 2000. In 2003, however, 42 industries, 177 companies and 35,400 respondents participated in the survey. Table 1 summarizes the number of companies, industries, and respondents in the KS-SQI national survey.

The KS-SQI score increased every year: 54.8 in 2000, 55.1 in 2001, 59.6 in 2002, and 59.0 in 2003. Nevertheless, the service quality level of Korean service industry is still low, which is below .60. Figure 5 shows these findings.

As Figure 6 illustrates, the scores of process quality dimensions are higher than those of outcome quality dimensions. The highest dimension is 'receptiveness,’ while the lowest is 'unexpected benefits.’

The scores of 'unexpected benefits,’ and 'receptiveness’ dimensions increased every year. Nevertheless, the scores of the other dimensions fluctuated for last 3 years. Figure 7 shows these findings.

Table 2 summarizes the KS-SQI scores by industry. One can see that the score of golf country club is the highest (66.98). The scores of hotel, electronics service center and family restaurant are rather high: 66.14, 63.34, 62.71, respectively. On the other hand, the scores of financial services such as credit card, capital, and life insurance are rather low: 55.35, 52.85, 52.59, respectively.










We have developed and applied a new measurement model of service quality in Korea. The results suggest that the new measurement of service quality (KS-SQI) can be reliably used in theory and practice. The KS-SQI model employs 8 dimensions reflecting both outcome and process.

This study also provides a better understanding of consequences of service quality improvement. Service quality has a strong influence on customer satisfaction and indirect effects on business performance and people’s happiness via customer satisfaction. We have also found that the effect on business performance is stronger than that on people’s happiness.

National surveys have been conducted with the KS-SQI model since 2000. Several interesting findings arise from these surveys. In general, service quality is rather low, all below 60. There is variation in service quality scores across industries. Service quality tends to be high in leisure and well-being service industries, such as country club, hotel, family restaurant, electronic service, etc. On the other hand, service quality seems to be low in financial service industries, such as bank, insurance and credit card. Service quality level also varies by KS-SQI dimension. Proces quality tends to be higher than outcome quality. Among the eight dimensions of KS-SQI, 'unexpected benefits’ is the lowest.




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Youjae Yi, Seoul National University, Korea
Jun Youb Lee, Kyunghee Cyber University, Korea


AP - Asia Pacific Advances in Consumer Research Volume 6 | 2005

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