Title: Service innovation: building a sustainable competitive advantage in higher education

Authors: Boon Liat Cheng; Tat Huei Cham; Michael M. Dent; Teck Heang Lee

Addresses: Department of Marketing, Sunway University Business School, No. 5, Jalan Universiti, 47500 Bandar Sunway, Selangor, Malaysia ' Faculty of Accountancy Management, Universiti Tunku Abdul Rahman, Bandar Sungai Long, 43000 Kajang, Selangor, Malaysia ' Department of Marketing, Sunway University Business School, No. 5, Jalan Universiti, 47500 Bandar Sunway, Selangor, Malaysia ' Faculty of Business, Economics and Accounting, HELP University, Jalan Sri Semantan 1, Bukit Damanara, 50490 Kuala Lumpur, Malaysia

Abstract: The increasing pace of globalisation requires organisations to be innovative in their service provision to remain competitive in their industry. Higher education is one of the examples. Service innovation plays a critical role in helping universities to sustain their operations and gain a competitive edge. Therefore, the study examines the impact of service innovation on student satisfaction, and the extent to which this level of satisfaction can be translated to perceived institutional image and loyalty. The mediation effect of the institutional image is also addressed. Data was collected from 400 respondents and were analysed using structural equation modelling. All factors in service innovation (i.e., product, process, organisational and marketing innovations) have a significant effect on student satisfaction, which positively relates to perceived institutional image and loyalty. Institutional image also mediates the relationship between student satisfaction and loyalty. Implications of the findings and limitations of the study are then discussed.

Keywords: service innovation; satisfaction; image; loyalty; consumer behaviour; higher education.

DOI: 10.1504/IJSEM.2019.105014

International Journal of Services, Economics and Management, 2019 Vol.10 No.4, pp.289 - 309

Received: 10 Apr 2019
Accepted: 21 Jul 2019

Published online: 04 Feb 2020 *

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