The Application of Internet-Based Self Service Technology ... · The trend of digital business...

337 International Journal of Applied Business and Economic Research

The Application of Internet-Based Self Service Technology (ISST) on Gamelan Industry (Pentatonic Instruments) in Surakarta...

The Application of Internet-Based Self Service Technology (ISST) onGamelan Industry (Pentatonic Instruments) in Surakarta Indonesia

Yohan Wismantoro1*, Y. Tyas Catur Pramudi1 and Karis Widiatmoko1

1Dian Nuswantoro University, Semarang 50131, Indonesia*E-mail: [email protected]

Abstract: The application of technology-based self-service in service delivery has grown rapidly in recentyears, but our current understanding of customer retention and satisfaction in such contextsremains limited.This paper proposes a conceptual framework that utilizes the construct of relational benefits to explain thelink between ISST (Internet-based self-service technology) attributes and customer loyalty and satisfaction.The results of an empirical study using two contexts and support for a fully mediated model. That is, confidencebenefits mediate the impact of perceived control and performance on customer loyalty and satisfaction, whilespecial treatment benefits mediate the relationship of efficiency and convenience with customer loyalty andsatisfaction.

JEL Classification: M30, M31.

Keywords: Customer retention, Customer loyalty, relational benefits, technology-based self-service.

1. INTRODUCTION

The need for information which is rapidly and easily accessible to any levels of society makes the Internetas social media very necessary and important. It also serves as a business opportunity to take advantage ofadvances in Internet technology as a means for supporting the success of a business, as well as a digitalbusiness trends. The trend of digital business (E-commerce) occurs when the users of digital technologycan achieve marketing goals, including the efforts in the development of marketing concepts, communicatingin a global network, and changing the way enterprises conduct business with customers (Hill and Tobs,2011; Lounsbury, et. al.., 2012). E-commerce provides many facilities for businesses, particularly in termsof dealing with customers, conveying information, and helping to understand customers better (Rodrigues,2015; Sharma, 2016). E-commerce also requires companies to be more creative in design, development,advertisement and sales in order to attract customers.

International Journal of Applied Business and Economic Research 338

Yohan Wismantoro, Y. Tyas Catur Pramudi and Karis Widiatmoko

The above phenomenon shows that the decision of customers to establish long-term cooperationrelationship with a company is increasingly determined by customer ratings on the core product and therelational aspects in an exchange. It means that consumers always compare between interpersonal interactionsand the performance of the products offered. Such concept, in marketing literatures, is called relationalbenefits which allow customers to engage in long-term relationships with service providers and theirpersonnel. Developed literature regarding relationship marketing begins with the question, such as whatkind of relational benefits can be used to maintain a long-term relationship with a company (Barnes, 1994;Gwinner et. al.., 1998; Reynolds and Beatty, 1999).

Hennig-Thurau, et. al.. (2002) conceptualized relational benefit as the antecedent of the quality of aservice. The results of this study also showed that the variables of social benefit and confidence relationalbenefits have direct and significant effect on customer loyalty and word-of-mouth marketing. Therefore,the relational benefit felt by consumers may have a beneficial impact on service providers. However, withmore and more transactions conducted in the absence of contact with employees through the Internetself-service technology, such as Lazada.com and Blibli.com, the important consideration is whether relationalbenefit remains relevant in online context or not. In other words, in the absence of inter-human contact,the relational aspects of the exchange via the Internet may affect positively or negatively to continue todrive customer loyalty and satisfaction.

Even though the perceived benefits of the internet-based self-service (ISST) are getting better, thereremains a potential loss to replace personal contact with the technology-based interactions (Barnes, et. al..,2000; Gremler and Gwinner, 2000). According to Gutek, et. al.. (2000), a customer who has a goodrelationship with a company will be more loyal and be willing to give recommendations to others. Theinterpersonal relationship intertwined in this way is much more important to consumers than the provisionof occasional price or other special services (Gwinner, et. al.., 1998).

If it were not the aspect of the relational benefit explained above, the possible cause is otherfactors that play a role in developing the user’s loyalty of Internet self-service technology. Some researchershave suggested that the factors, such as the performance of technology, the comfort received fromtechnology, the perception to be able to control the use of technology, and the efficiency of the use oftechnology, will positively influence the adoption of self-service technology (Dabholkar, 1996; Meuter,et. al.., 2000).

This paper discusses the role of relational benefits that mediate the relationship of four factors (ISST)with customer loyalty and satisfaction in the gamelan industry. Gamelan is one of Indonesian cultural heritagesas well as human potential to be developed within the framework of the development of creative industries,improvement of public welfare, and the inculcation of the nation’s noble cultural values. This phenomenonhas become an optimistic foothold that creative industry of Javanese Gamelan is one of the assets ofcreative music industry with a great potential. If the appreciation of gamelan in foreign countries increases,it will influence the growing number of gamelan demand.

Furthermore, this study proposed the hypothesis of relational benefit mediation role between theattribute of ISST and customer loyalty and satisfaction. Based on the literature review and hypothesis, thetheoretical model of causality relation was presented, and the survey data were collected from E-commercesites.



2. LITERATURE REVIEW

2.1 Relational Benefits

A strong relationship between customer and company has been proven and documented coherently byprevious researchers (e.g. Aaker, 199]2; Clark and Payne, 1994; McKenna, 1991; Reichheld, 1993, 1996).Referring to the previous research on the benefits obtained by consumers in a long-term relationship witha company (Barnes, 1994; Bendapaudi and Berry, 1997; Berry, 1995), Gwinner et. al.. (1998) developedthree main benefits of the relational benefits of service core product:

1. Confidence benefits;

2. Social benefits; and

3. Special treatment benefits.

Confidence benefit describes the reduction of uncertainty in transaction and the increase of realisticexpectations for a service. Social benefit describes the emotional aspects of relationships and a focuses onpersonal recognition of customers to employees and the development of friendship between customersand employees. Meanwhile, special treatment benefit is a benefit perceived by consumers, both in economicand in special services (customization). The special deals and treatment provided by a company to consumersare to distinguish between special and ordinary consumers (non-relational). The development of the programis still based on the relational benefits on the basis of direct relationship (face-to-face encounters). Whethercustomers perceive the relational benefits in the technology-based service provider interaction or not isstill unknown.

Gwinner et. al. (1998) and Hennig-Thurau et. al.. (2002) also developed a positive relation betweenthree types of relational benefits and customer loyalty. Regardless the type of service, confidence benefit isthe most important type of relationship benefits directly (face-to-face encounter) (Gwinner et. al.., 1998)on loyalty, mainly through satisfaction (Hennig- Thurau et. al., 2002). Given that the issue of security andprivacy in online transactions is a major concern for consumers (Zeitheraml et. al.., 2000), the perceptionof confidence benefit in online transaction has a positive effect on one’s intention to remain in a relationship.

The development of the technique of data warehousing and data mining to record and analyzeconsumer’s shopping behavior enables web-based service providers to provide customized service offeringsfor their customers. The information can also be used by web-based service providers to makerecommendations that fit with the target consumer. Special treatment benefit enables customers to interactwith service providers and is expected to have a positive effect on one’s intention to remain in a relationship(i.e. their loyalty to the service provider). Because internet-based self-service technologies are by definitionexclude interactions with others, there is no chance to develop social relational benefits as described inprevious studies. For this reason, this study limited to confidence and special treatment benefits. Thefollowings are the hypotheses proposed:

H1: Confidence benefits have positive and significant effect on customer loyalty and satisfaction.

H2: Special treatment benefits have positive and significant effect on customer satisfaction and loyalty.

H3: Satisfaction has positive and significant effect on customer loyalty.



2.2 Internet-based Self-service Attributes

Internet-based interaction and E-commerce applications provide the fast growing services, products,and information. In this case, the online service providers of goods and services play an important rolein the development of applications that help customers choose the products and services desired eitherthrough selection of products/services, provision of product information, purchases, and tracking orders.The examples are Lazada.com, Blibli.com, DinoMarket.com, Traveloka, etc. In the context of marketspacein which the products and services are available digitally and can be delivered through information-based channels (Rayport and Sviokla, 1995), customers have the ability to serve themselves without theinterpersonal contact with the employees of a company. Customer evaluation of the attributes associatedwith internet self-service technology is considered important in determining the next use. There arefour attributes that had been discussed in the previous literatures. Many literatures on self-servicetechnology are focused on the consumer intentions to adopt or continue to use technology-based option(Davis, 1986; Davis et. al.., 1992). The followings are the four attributes that will be the important factorsin the adoption of internet-based self-service applications that can influence confidence and specialtreatment benefits.

2.3 Perceived Control

The previous researches had discussed the importance of control considered as an important factor thatled consumers to adopt the form of the self-service of delivery products and services (Langeard et. al..,1981). The construct of control variables was based on one’s assessment of his ability to determine thepurchase for him concerning what was offered by a company (Lee and Allaway, 2002). These factorsencourage the usage of internet and loyalty by enabling consumers to customize the service offering tomeet their specific needs. Consumer perception of the control construct is expected to result in increasedbenefits for the control leads to greater predictability of the occurrence of an exchange

H4: Perceived control as the derivative of Internet self-service technology (ISST) has a positive andsignificant effect on confidence benefits.

2.4 Performance

It is consistent with Dabholkar (1994) that one of the constructs that form ISST is performance. Performancein the Internet-based self-service technology is defined as how technology can operate accurately anddependently. The effect of these variables on satisfaction is reliable and accurate performance of a internet-based self-service technology that can build the feeling of confidence and increases the perception ofconfidence, which will have the effect on customer satisfaction and loyalty.

H5. Performance of Internet-based self-service technology has a positive and significant effect onconfidence benefits

2.5 Convenience

Convenience refers to the ability to use ISST in transaction which is not limited by place and time. Meuteret. al.. (2000), Szymanski and Hise (2000) express how the attribute of convenience perceived by consumershas the effect on satisfaction and loyalty. Improved convenience in the form of the provision of access at



any time and in many places is expected to have a positive effect on the positive perception perceived byconsumers. The special treatment benefits will have the effect on loyalty and satisfaction, which will mediatethe association between outcomes and convenience.

H6. Convenience has positive and significant effect on treatment benefits

2.5 Efficiency

The attribute of efficiency is based on the idea to reduce both the time spent and frequency of face to facebetween buyers and providers when utilizing the Internet Self-Service Technology (ISST). This electronicapplication is used to speed up the transactions in various business activities (airline tickets, car rental, hotelcheck-in, etc.). Consumers will tend to have the perception of special treatment benefits improvement asa result of the perceived efficiency for using this technology.

H7. Efficiency has positive and significant effect on special treatment benefits.

3. RESEARCH METHOD

Based on the literatures above, the model will place the variable of relational benefits as the mediatingvariable between ISST attributes and outcome variables (satisfaction dan Loyalty) as illustrated in the figurebelow:

The construct on Internet Self-Service Technology (ISST) consists of four dimensions; perceivedcontrol, performance, convenience and efficiency. The research population was all consumers/ customersin the industry of gamelan. This study used Non-Probability Sampling techniques using purposive samplingwith the number of samples taken by 150 respondents who used E-commerce sites (Lazada.co.id, Blibi.com,Dinomarket.com etc.) in buying the gamelan (kenong, gong, kendang, boning, and other accessories of gamelan).

Figure 1: Proposed Model of Study

ISST Attributes Relational Benefits Outcome Variables



4. RESULTS AND DISCUSSION

The model used to test the model of causality was Structural Equation Modelling (SEM). Through theanalysis of full model, it showed the presence or absence of model fitness and causality built in the modeltested. After using the measurement model analyzed by confirmatory factor analysis, it indicated that eachvariable can be used to define a latent construct, and then a Full Structural Equation Model can be analyzed.The AMOS processing results for the research model are as follows:

Figure 2: The Construct of Full Structural Equation ModelSource: Primary Data, 2016

4.1 Goodness-of-Fit Test

The goodness of fit test to the model showed that the model fits the data used in the study as shown inTable 1 below:



Table 1Criteria Evaluation of Goodness-of-fit Indices

Goodness-of-fit Index Cut-off Value Data Results Evaluation

X2(Chi-Square) 156,715 Good

Significance Probability � 0.05 0,055 Good

GFI � 0.90 130 Good

AGFI � 0.90 0,899 Marginal

CFI � 0.95 0,959 Good

TLI � 0.95 0,952 Good

RMSEA � 0.08 0,037 Good

CMIN/DF � 2.00 1,206 Good

Source: Processed Primary Data, 2016

Table 1 shows the results of data processing analysis. It appears that all the constructs used to createa model of research in the process of confirmatory factor analysis have met the criteria of goodness-of-fitset. The probability value in this analysis indicates a value above the threshold of significance that is equalto 0.055 or above 0.05 indicating that there is no difference between the sample covariance matrix andpopulation covariance matrix. It means that there is no difference between the sample covariance matrixand population covariance matrix estimated, so the model is acceptable. Reinforced with the goodness offit indices such as the value of GFI at 130 (� 0.90), the value of AGFI at 0.899 (� 0.90), the value of CFIof 0.959 (� 0.95), the value of TLI of 0.952 (� 0.95), RMSEA value of 0.037 (� 0:08), and the valueCMIN/DF at 1.206 (� 2:00), they provide sufficient information for the acceptability of uni-dimentionalityhypothesis that the variables above can reflect the analyzed variables.

The test results to the values of loading factor for each indicator were to know whether a variablecan be used to confirm that the variables with other variables explain a latent variables assessed usingregression weight resulted by the model as follows:

Table 2Regression Weight

Estimate S.E. C.R. P Label

Confident benefit <– Perceived control –,320 ,460 -,695 ,487 par_1

Confident benefit <– Performance 3,014 1,090 2,765 ,006 par_2

Confident benefit <– Customer satisfaction ,706 ,143 4,930 *** par_5

Special treatment benefit <– Conveniene ,036 ,235 ,154 ,878 par_3

Special treatment benefit <– Efficiency ,620 ,222 2,800 ,005 par_4

Special treatment benefit <– Costomer satisfaction ,245 ,159 1,538 ,124 par_7

Customer Loyalty <– Confidence benefit –,436 ,226 -1,927 ,054 par_6

Customer Loyalty <– Special treatment benefit ,391 ,178 2,198 ,028 par_8

Customer Loyalty <– Customer satisfaction ,777 ,193 4,031 *** par_9



In Table 2, through the observation of C.R, it shows that all the regression coefficients are significantlynot equal to zero so that the null hypothesis can be rejected. Then, the alternative hypothesis which statesthat each of these hypotheses about causality presented in the model is acceptable.

5. DISCUSSION

From the construct of research model, the mediating variable of Relational Benefit consisting of thevariables of confident benefits and special treatment benefit can be explained as follows: confident benefitdoes not have the effect on the outcomes variables of satisfaction and loyalty. In other hand, the variableof special treatment benefit does not have the effect on the variable of satisfaction, but it has positive andsignificant effect on the variable of Loyalty. Then, the variable of outcome, which is satisfaction, showspositive and significant effect on the variable of Loyalty.

The effect of ISST variable on the mediating variable of Relational Benefit can be shown as follows:perceived control does not have the effect on confident benefits, but performance has positive and significanteffect on confident benefit. Then, two other variables of ISST, namely convenience, does not have theeffect on the mediating variable of special treatment benefit, whereas the variable of efficiency showspositive and significant results on the mediating variable of special treatment benefit.

The research results indicate that not all ISST variables, such as perceived control, performance,convenience, and efficiency have the effect on the variable of relational benefit. In this case, the users inthe industry of gamelan were more concerned with the factors of performance and efficiency. Likewise,when viewed from the mediating variables, only the variable of special treatment benefit that has thepositive and significant effect on its outcome variable. This phenomenon shows that the customers whoaccess and transact on an E-commerce site felt more benefit directly by utilizing the existing ISST technologyto achieve customer satisfaction and loyalty. Therefore, the perception of confidence benefit in onlinetransaction still has positive effect on one’s intention to remain in a relationship. On the other hand, fromthe outcome variable, it emphasizes stronger that satisfaction variable influence positively and significantlyrelated to the variable of loyalty, given that security and privacy issues in online transactions are majorconcerns for consumers (Zeitheraml et. al.., 2000; Rodrigues, 2015; Sharma, 2016).

6. CONCLUSION

The research on gamelan was directed to discuss the ways including the internal ideas, processes, and techniquesrelated to the innovation and entrepreneurship for the distribution of gamelan evenly and to participate inrealizing the knowledge economy by being an innovator of information and knowledge entrepreneurs.Some of the problems related to the art of gamelan were: the sales system of gamelan was likely to usetraditional marketing model so that it obstructed the fulfillment of the requests. The use of informationtechnology (ISST) is expected to provide the ease of the spreading of gamelan music.

From the research results and referring to some of the latest research in service industry, it shows thatthe support and important role of relational benefit that affect the intensity of consumer loyalty, word-of-mouth behavior, commitment to the organization, and satisfaction with the service provider (Gwinneret. al., 1998; Hennig-Thurau et. al., 2002). The study findings also indicate that relational benefit is a mediationmechanism of ISST attributes that impact on customer satisfaction and loyalty in an increasingly broader



gamelan industry. Thus, it is concluded that the relational aspect of exchange is an important part inunderstanding customer loyalty and satisfaction. Concerning the art of gamelan, along with the widespreadsales of gamelan, it is widely expected to raise the interest in younger generation to the art of gamelan.

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