Satisficing data envelopment analysis: An application to SERVQUAL efficiency

Abstract In an intensively competitive market, measuring the service quality of any entity becomes vital to self-benchmark and, eventually, to improve the service quality beyond the predefined standards by the regulatory authorities. However, competing with similar entity in the market requires extra care towards service quality in order to outperform the peers and, hence, to drive the market. This paper attempts to measure the service quality of Malaysian banks through data envelopment analysis (DEA) based on 688 customers’ survey data in line with predefined service quality dimensions. It has been observed that the primary data involves stochastic noise; hence, such noise has been addressed through stochastic DEA to measure the relative efficiency in terms of the SERVQUAL gap. The proposed model not only reports the service quality efficiency, but also handles the peer analysis and potential improvements in a satisficing approach.

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