The relationship between operating efficiency and service quality: are they compatible?

Transferring and applying manufacturing principles and practices to improve both service efficiency and service quality is an important area of research in service operations. This paper advances this stream of research by examining the compatibility of operating efficiency and service quality. Specifically, our research addresses the following questions: (1) Do operating efficiency and service quality have to be traded off, or can they exist in unison (are they compatible)? and (2) What aspects of service quality have a stronger association with operating efficiency? In disentangling these important issues, we utilise a combination of data envelopment analysis (DEA) and survey-based empirical research methods. Additionally, our focus lies on a novel type of service industry where such research has been sparse. We evaluate the relative operating efficiencies of service driving agencies based on actual transaction data and subsequently analyse differences in service quality dimensions based on efficiencies. Overall, our analyses suggest important strategic decision-making implications for service operations managers and provide novel insights for academic research.