Managing Service Quality Using Data Envelopment Analysis

Abstract

This study introduces a new managerial tool for evaluating and managing service quality. This new approach treats service quality as an intermediate variable, not the ultimate managerial goal, and makes use of data envelopment analysis (DEA), a nonparametric technique that allows for the relative comparison of a number of comparable organizational decision-making units (Sexton 1986).Using data from 497 customer surveys collected at 13 different grocery store locations for a major supermarket chain in the southeast region of the United States, relative efficiency scores and prescriptive guidance for improvement were generated for each store. These results were then used to compare the benefits of this new approach to that of existing service quality performance evaluation techniques. The evidence suggests the DEA technique provides a unique and much needed perspective that would help a manager to obtain optimal levels of service quality dimensions that are directly linked to critical performance outcomes for the organization.