Impact of service quality on satisfaction and loyalty at manufacturer-distributor dyad: Insights from Indian SMEs

Abstract

Purpose: The purpose of this paper is to investigate the role played by service quality (SQ) in manufacturer–distributor working partnerships in the context of Indian small and medium enterprises (SMEs), and present two models which propose and validate that contributions toward SQ, made by both the manufacturing unit and distribution firm lead to satisfaction which consequently results in business-to-business (B2B) loyalty. Design/methodology/approach: The research design for this study includes a combination of literature review, exploratory interviews with a focus group and a questionnaire survey conducted through interview schedule from 101 information rich and willing respondents working in SMEs of northern India. Findings: The paper brings out scales foe measuring organizational (internal) and distributor (external) SQ. Further, two models using structural equation modeling are developed. Model-I examines the effect of organizational SQ on distributor SQ. Model-II examines the impact of distributor SQ on satisfaction and loyalty and also tests a set of four propositions related to their working relationship. The models are empirically tested and are found to be fit. Research limitations/implications: Future researchers may validate these scales, and empirically test the proposed models in alternate settings. Insights derived from this study may be transferred to other partnerships, which may exist in a manufacturing supply chain including suppliers, employees, retailers and end consumers. Practical implications: This study would be of interest to SME practitioners interested in improving SQ with their distributors. The study also finds support for strengthening collaborative relationships with B2B partners to achieve a win-win situation. Originality/value: There are very few empirical studies that measure SQ w.r.t. distribution function in SMEs and the concept is in nascent stage, especially in Indian setting.