Customer Perceived Value in B2C Service Industries: A Higher-order, Formative Factor Structure

Abstract

This study proposes a higher-order formative model of service value which has two second order drivers, named benefits and costs and each of these second order drivers reflects several first-order drivers. It also empirically compares the proposed model with two alternative higher-order models with regard to the specification and level of abstraction. This research empirically tests the proposed model in three distinct service categories and compares the proposed model with two alternative higher-order models by means of the specification and level of abstraction. The findings of this study indicate that the higher-order model of service value may be better specified by a formative rather than a reflective model and the overall abstraction of service value is reasonable at a third-level rather than second-level. The results provide empirical evidence for a higher-order formative measurement model of service value for researchers and a guidance for practitioners of service organizations to monitor and manage this construct.