Structural analysis and measurement of customer perceptions, assuming measurement and specifications errors

Abstract

In previous research (e.g. Cassel et al., 1999,Journal of Applied Statistics26, pp. 435-446; Cassel et al., 2000, Total Quality Management, 11, pp. 897-907) the bias and precision effects, for various specification problems, on the structural analysis and measurement of customer perceptions have been studied. In this paper the combined effects of some of the most significant problems, misspecifications and skew response distributions, and certain types of measurement errors, are studied. The measurement errors considered reflect the bias due to the inertia of respondents in adapting to changes. In the situation of repeated measurements, the later response tends to be biased towards the former response. This effect can be modelled by implementing certain change filtering assumptions. A simulation study using the European Performance Satisfaction Index (EPSI) structure demonstrates that the EPSI measurement methodology using partial least squares is very robust with respect to the problems introduced in the simulations. This is true, in particular, when estimating the inner structure of the model and when estimating the outer measurement relations of the model. The estimated values of the latent variables (such as the customer satisfaction index) are affected in an expected way.