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IJQSS
10,4
366
Received 26 August 2017
Revised 16 January 2018
27 March 2018
Accepted 16 April 2018
International Journal of Quality
and Service Sciences
Vol. 10 No. 4, 2018
pp. 366-383
© Emerald Publishing Limited
1756-669X
DOI 10.1108/IJQSS-08-2017-0072
New services development:
a study in the context of
a health organization
Luciene Eberle, Gabriel Sperandio Milan, Deonir
De Toni and Fernanda Lazzari
Department of Administration, Universidade de Caxias do Sul,
Caxias do Sul, Brazil
Abstract
Purpose – The purpose of this study is to highlight the understanding of the consequent factors of new
services development (NSD) in the literature owing to the impact on organizational competitiveness,
especially in professional services, such as that investigated by health plan operators in the present study.
Design/methodology/approach – The sample (customer of family health plans) consisted of 255 valid
cases. For the analysis of the data, multivariate statistical techniques were used through the modeling of
structural equations.
Findings – The results found evidence of the significant relationships between the NSD considering the
constructs, client orientation, reputation, professional competences and customer retention, as consequences
of the NSD, which impact on the success of the new services launched by the health plan operator from the
perception of the customer.
Practical implications – This implies that health plan operators need to develop new customer-oriented
services by investing in new technologies and having more trained and qualified staff so that they can deliver
superior services and, as a consequence, have a more profitable relationship with customers.
Originality/value – The new services may result in greater organizational performance and greater
competitiveness for health service providers.
Keywords Professional services, Customer retention
Paper type Research paper
Introduction
In increasingly dynamic and competitive markets, the development of new services (new
services development, NSD) plays a key role in creating performance and competitive
advantages for the service providers. Thus, some studies have focused on NSD as a key
factor for companies, as it contributes to the success of innovation in the services economy
(Santos-Vijande et al., 2016).
In theoretical terms, there is evidence that efforts to develop new services should not limit
themselves to the uniqueness of a new offer, but should also cover the delivery system, the
technology used and the processes used in the customer interface (Burton et al., 2017).
Papastathopoulou and Hultink (2012) emphasize that it is necessary to identify research
gaps around the NSD and its managerial contributions to the global economy, as the
practice of creating new services has been recognized as an important element of business
competitiveness (Fitzsimmons and Fitzsimmons, 2008), which can be synthesized as the
delivery of a differentiated service, allowing companies to create and highlight their
offerings in the perception of customers and the market where they are inserted (Ettlie and
Rosenthal, 2011).
 The study by Graciola et al. (2017) shows that NSD success comes from the ability of the New services
service provider management to clearly capture the competitive environment, anticipating development
customer needs and desires. In this sense, it is possible to perceive that studies have a lot to
explore in relation to the NSD, considering that some constructs like the reputation of the
service provider and the retention of customers directly influence the adoption or the
launching of new services (Coutelle-Brillet et al., 2014), as the success of the new services
generally depends on the perception and acceptance of the customer (Jiménez-Zarco et al.,
2011). 367
Due to the need of health-care service companies to survive in a competitive environment
and with demanding customers, the formalization of NSD processes is imposed, priming for
superior quality services delivery, perceived by customers as mutual benefits (Moretti et al.,
2014).
Therefore, the relationships among the constructs, customer orientation, reputation,
professional competences and customer retention were tested with the intention of more
precisely define the consequences that impact on the NSD and influence their profitability.
Customer orientation refers to the degree to which a company obtains and uses customer
information to develop strategies to meet the needs and desires of customers (Feng et al.,
2012). The reputation leads to customer retention because the consistency of customer
experiences over time helps to form customer retention (Helgesen and Nesset, 2007).
However, professional competences correspond to the required knowledge and also to the
technical skills and experiences needed to deal with customer needs (Wu et al., 2015).
First, as regard the proposed theoretical model, it should be pointed out that the starting
point was to understand the relation among the consequences of NSD. The tested model
provides a nomological structure of the constructs that are influenced by the new services
delivered by a health services environment. Based on this discussion, the objective of this
study is to investigate the constructs customer orientation, customer service reputation,
professional competence and customer retention as consequents of the NSD in the context of
a health plan operator in the business to consumer (B2C) segment.

Theoretical model and research hypotheses

A new service is an offer not previously available to a company’s customers resulting from
an increase in the current mix of services or changes made in the service delivery process
(Ordanini and Maglio, 2009). However, NSD is understood as a set of interrelated tasks,
activities, actions and evaluations that result in the launch of a new service (Santos and
Spring, 2013).
There is a significant increase in the number of articles published around NSD in recent
years. However, attempts to develop list of practices taken from key NSD constructs are
limited and the literature available is predominantly based on conceptual discussions
(Graciola et al., 2017).
NSD generates multidimensional impacts, including the customers, the company, the
market and the world. From the customers’ view, NSD aims to fulfill the changing needs of
customers (Narver and Slater, 1990). In the business perspective, NSD has an impact on
marketing, operations, R&D and profitability (Easingwwod, 1986). When it comes to the
market, NSD aims to build a competitive advantage (Ostrom et al., 2010; Burton et al., 2017).
Finally, in the world view, the NSD brings the advancement of innovation, technology and
creativity as benefits (Papastathopoulou and Hultink, 2012).
Therefore, customer orientation is the first construct to be tested, as a consequence of
NSD. Taking into account the traditional emphasis of marketing, customer orientation is
focused on understanding customer needs and gaining profits through satisfaction
IJQSS (Tajeddini, 2011). In this way, customer orientation can be defined as the degree to which the
10,4 business obtains and uses information to develop strategies centered on the customer and
aimed at responding to their needs and desires.
Customer orientation is the key to implementing the marketing concept in the
contemporary organizational context (Smirnova et al., 2017). Given this, customer
orientation is a set of beliefs that establishes needs and satisfaction as business priorities
368 (Menor and Roth, 2008). The authors further emphasize that several studies that discuss
customer orientation use the classic definition of Narver and Slater (1990) as an
organizational culture that increases value both for companies and customers.
Menor and Roth (2008) argue that the customer orientation stands out as a very
important dimension because it captures the company’s ability to observe the competitive
environment and its expertise to anticipate and respond to the evolution of unmet and latent
customer needs.
Customer orientation is designed to help customers make decisions that fit not only
immediate needs but also meet long-term needs and help companies achieve sustainable
growth. Complementing, customer-oriented companies aim at customer equity by efficiently
using the company’s resources to increase the perception of customer value (Valenzuela
et al., 2010).
However, Carbonell and Rodriguez-Escudero (2014) reinforce that the close participation
of the customer enhances the competitive advantage of the service provider and the velocity
in relation to the market, while the vision from the customer increases the novelty of the new
offers and advantages of the services. In this sense, according to Sindakis (2015), health
service organizations must develop profitable customer-oriented services that meet the
needs of all those involved. Thus, the first research hypothesis is:
H1. New services development positively influences customer orientation in the service
provider.
According to Barnett et al. (2006), there are different ways to understand reputation, which
can be represented as a sign, image, brand, identity or intangible asset (Hodovic-Babic et al.,
2011). In contrast, reputation is often represented as a corporate identity (set of symbols), a
corporate image (impressions about the company), a corporate reputation (from a
stakeholder perspective) and capital relative to its economic resources (Philippe and Durand,
2011).
In addition, some evidence indicates that reputation is based on customer perceptions of
a company, as it demonstrates the influence exerted on customers’ decisions to choose a
company or not or even a brand. Evidence also demonstrates familiarity with the company
itself (Walsh and Beatty, 2007). Dahlén et al. (2009) define reputation as a resource based on
past positive experiences, but aiming a look to the future.
Since the past decade, service professionals and academics have recognized the need to
build and maintain a favorable corporate reputation to develop an advantage for the service
provider (Gotsi and Wilson, 2001). The customer orientation is established as a critical
factor, and therefore, marketing strategies should aim at delivering superior value to
customers, favoring a collaborative relationship between the interested parts (Walsh and
Beatty, 2007).
On the other hand, Chahal and Kumari (2014) established service reputation as a two-
dimensional construct formed by customer orientation and emotional appeal. The study by
Yoon et al. (2015) confirmed the relationship between customer orientation and reputation as
determinants of organizational competitiveness. The authors also point out that when it
comes to NSD, it must be based on the opinions of its customers. Therefore, customer
orientation can be considered a global dimension and has a strong relationship with the New services
reputation of the service provider. Therefore, the second hypothesis formulated is: development
H2. Customer orientation positively influences the reputation of the service provider.
Positive reputation can be seen as a differential aspect that promotes continued incentives
for customer to maintain and extend relationships with the service provider (Walker, 2010).
It is important to emphasize that in service providers, reputation increases the ability to
satisfy customers’ needs and desires, as well as to motivate their intention to buy again,
369
increasing customer retention levels (Milan et al., 2015).
In terms of customer retention, Aurier and N’Goala (2010) define it as the ability to
receive current customers, motivating them to use services more intensively and to purchase
additional services (Li et al., 2005). Its main objective is to deepen and broaden relationships
with existing customers to improve financial performance and increase customer value by
maintaining customer loyalty over time.
In services, customer retention can be understood as the customer’s preference for a
particular provider related to the intention to repeat purchases over the time without
necessarily having an emotional link and the need to maintain exclusivity with the service
provider, the brand or the front-line staff that fulfill his or her requests (Reichheld, 1993;
Milan et al., 2015).
Helgesen and Nesset (2007) tested the reputation as a driver for customer retention. The
results of this research show that reputation reflects the degree to which the experiences of
buying or consuming (utilization) increase proximity with the service provider and, over
time, help to form customer retention. Several studies have demonstrated the positive effects
of the service provider’s reputation on customer retention (Walsh et al., 2009). Consequently,
the third research hypothesis was formulated:
H3. The reputation of the service provider positively influences customer retention.
Broadening the discussion, professional competences are defined as the combination of
abilities, knowledge, attitudes and values that support effective and superior performance in
service delivery (McCoy et al., 2013). Service companies that seek to improve customer
orientation should establish policies to increase employee responsibility aiming better
results. When it comes to customer orientation, employees directly influence the service
company’s economic success (Hennig-Thurau, 2004), because the personnel that have
contact with the customers have a great deal of interference in the formation of expectations,
management and control of the customers’ experiences, as well as shaping the general
evaluation of the service (Tajeddini, 2011). However, when customer-oriented companies
invite customers to participate in the NSD, they face the ambiguity of front-line employees,
resulting in conflicts between them (Guo and Wang, 2015).
The customer orientation can be understood as the customer perspective, as they believe
that the company has the capacity to meet their needs (Dean, 2007). On the other hand,
professional competences reflect the attitudes and predispositions of employees to meet
customer’ needs (Brach et al., 2015). Therefore, some authors suggest that studies that test
the impact of customer orientation on professional competencies in services should be
developed (Niedenthal and Brauer, 2012). So, the fourth hypothesis of research was
formulated:
H4. Customer orientation positively influences professional competences.
According to Brach et al. (2015), employees’ empathy, their experiences and reliability affect
their competencies and are directly related to strengthening the customer relationship with
IJQSS the service provider. The professional competences in services also depend on the sincerity
10,4 and truthfulness with which employees treat the customer (Grandey, 2003). However, front-
line staff differ in their individual skills to meet customer needs (Groth et al., 2009).
Professional competences are related to customer-based behaviors and relationships,
based on knowledge, technical skills and experiences to deal with customer needs (Wu et al.,
2015). In addition, service employees must combine efficiency (time use) effectively
370 (customer satisfaction and retention).
Professional competences indicate the willingness of employees to provide excellent
services, and consequently, customer perceive that the company responds to their needs,
causing them to make positive evaluations about the service provider (Wu et al., 2015).
Therefore, Brach et al. (2015) have shown that professional competences demonstrate a
positive effect on customer retention, and Wu et al. (2015) emphasize that other studies need
to test this relationship more accurately. Considering the discussions around the theme, the
fifth research hypothesis could be formulated:
H5. Professional competences positively influence customer retention.
Because the basic purpose of customer orientation is to anticipate and satisfy customer
needs, competence impresses the ability to acquire and retain customers to motivate them to
repurchase from the same company, with the intention of minimizing perceived risks, such
as buying from another service provider by having received higher value, which positively
leads to the expansion of long-term relationships (Rao et al., 2011).
Customer-oriented companies quickly identify and respond to new market opportunities
by obtaining information that enable them to discover and respond to customer needs by
providing unique benefits and higher-quality services (Baker and Sinkula, 2005).
According to Arnold et al. (2011), an orientation toward customer retention needs
information about the focus of the allocation of resources for the management of customer
relationships based on their value in the long term, aiming at the maintenance of current
customers. In addition, a high level of customer retention is likely to lead to a homogeneous
knowledge of the customer portfolio, allowing a better relationship between customer and
service provider.
Because the primary purpose of customer orientation is to anticipate and meet customer
needs, strategies must be focused so that companies can keep up with the necessities and
make changes when necessary, enabling the creation and delivery of superior value to the
customer, raising relationships and reaching customer retention through the expansion of
perceived benefits (Guo and Wang, 2015; Slater and Naver, 1994). In the study by Hennig-
Thurau (2004), customer orientation had a low relationship with customer retention, being
partially supported. However, in the research conducted by Arnold et al. (2011) and Guo and
Wang (2015), customer orientation has improved the depth of customer knowledge and,
consequently, increased customer retention levels. Thus, it is possible to present the sixth
research hypothesis:
H6. Customer orientation positively influences customer retention.
To simplify the understanding, Figure 1 presents the proposed theoretical model,
demonstrating the relationship between the constructs that result from the NSD, considering
B2C, which has family health plans with the respective operator.
Finally, the literature highlights that the success of the new service should use customer
satisfaction as a metric to guarantee the benefits it can provide to its customers (Burton
et al., 2017). In addition, Sindakis (2015) points out that health-care companies need to move
forward in studies that test the importance of customer satisfaction to become more effective
 New services
development
H7
H6

H1 H2 H3
371
H4 H5

Figure 1.
Theoretical model
Source: Elaborated by the authors

and strategically competitive. Thus, Carbonell et al. (2009) and Jiménez-Zarco et al. (2011)
emphasize the need to test the mediation of customer satisfaction in the NSD and customer
retention. To do so, the following hypothesis will be tested:
H7. Customer satisfaction is a mediator between new service development (NSD) and
customer retention.

Research method
In the present study, a cross-sectional survey was applied (Malhotra et al., 2012). The
analysis of the proposed relationships in the theoretical model was performed through
structural equations modeling.

Constructs operation
The items selected for this study were distributed in five constructs: NSD (six items),
customer orientation (eight items), reputation (four items), professional competences (four
items) and customer retention (five items), as presented in Table I. It is worth mentioning
that customer satisfaction was approached as the level of overall satisfaction in a single
question.
The scale defined for the constructs tested in the present study was Likert’s seven-point
type, ranging from “1. I totally disagree” to “7. I totally agree. The Likert scale is commonly
used in marketing research, in addition to being the most recommended for the structural
equation modeling (Awang et al., 2016).

Constructs Scale items Authors

NSD NSD_ 1 to 6 Hu et al. (2009), Kim and Atuahene-Gima (2010)

Customer orientation OC_ 1 to 8 Ordanini and Parasuraman (2011)
Reputation REPUT_ 1 to 5 Milan et al. (2015)
Professional competences CP_ 1 to 4 Wu et al. (2015)
Customer retention RC_ 1 to 5 Milan et al. (2015)
Table I.
Source: Elaborated by the authors Construct operation
IJQSS Once the research questionnaire was developed and structured, the validation of
10,4 content, also known as nominal validity (Malhotra et al., 2012), was carried out, and the
questionnaire was submitted to two experts in the area. Next, the pre-test was applied,
and the data collection instrument was submitted to 15 respondents who have the
family health plan of the operator under study. In general, the respondents did not have
difficulties understanding the questions, and no adjustment was necessary in the
372 questionnaire. It is important to note that the pre-test cases were not incorporated into
the final sample.

Target population and sample definition

The population determined for this research included customer (B2C) of a health plan
operator, living in a city in the state of Rio Grande do Sul, Brazil. It was also defined
that the respondents of the questionnaire should be the ones responsible for acquiring
the health plan in the family health insurance category (private). For this, a convenience
sample was determined among the target population components (Malhotra et al.,
2012). According to Malhotra et al. (2012), convenience sampling tends to be faster, as
one has the freedom to choose the public that will answer, attracting individuals with
different characteristics. The health plan operator has 1.829 customers of the family
health plan (private). Thus, the final sample was collected between March and April of
2017 from individual customers of health plans, identified by the researchers, among
their pairs. In the end, there were 255 valid cases.
For the characterization of the sample, information was collected regarding the profile of
the respondents. Concerning the level of income, 172 (67.5 per cent) respondents receive up
to three Brazilian minimum wages. As for the time that the respondents have been
customers of the health plan operator, there is a tendency to maintain the relationship with
the service provider, indicating a possible evidence of incidence of customer retention. The
duration of customer status averaged 8.61 years.
The last question regarding the characterization of the sample identified that the
most used services of the health plan operator are the medical consultations, with 36.35
per cent, laboratory exams, with 29.05 per cent, and emergency service, with 17.08 per
cent. The service with the lowest percentage of use is home care, with 0.44, with only
three answers.

Data collection and analysis

At the time of data preparation, it was decided to include in the sample only
questionnaires with complete data, being this a recommended procedure for omitted
cases when sample size is sufficient (Byrne, 2016; Hair et al., 2009), known as listwise
deletion. Therefore, from the 261 questionnaires collected, four cases were excluded.
The next step in the data analysis was the detection of outliers, through Z scores (Hair
et al., 2009).
From the univariate atypical observations, there was no case to be eliminated. The
multivariate outliers were investigated by calculating the Mahalanobis distance (D2),
considering values higher than 3 or 4, with significance of p < 0.005 and degree of freedom
(gl = 29). For samples with more than 200 valid cases, which is the case of the present study,
Hair et al. (2009) suggest the adoption of conservative reference levels for the measures D2/gl
(0.005 or 0.001), resulting in values of 3 or 4. Therefore, Case 57 (3.39) and Case 122 (3.24)
presented indices above 3 and were deleted from the database, resulting in a sample of 255
valid cases. Regarding the model, the maximum likelihood estimation (MLE) method was
applied (Kline, 2011). It is also worth noting that the matrix chosen for data entry in this New services
study was the covariance matrix (Byrne, 2016). development
Research results
Constructs individual validity
Considering the validation of the proposed theoretical model, an individual validation of the
constructs was performed (Hair et al., 2009; Kline, 2011). The procedure used to measure the 373
unidimensionality was exploratory factor analysis, and the results were satisfactory, with
an index of 0.000 in the Bartlett sphericity test and 0.954 in the Kaiser–Meyer–Olkin test,
following the indications pointed out in the literature. Besides, when considering the factor
loading of each construct, it is noted that the values are superior then 0.5, as recommended
in the literature, where NSD = 0.823; CO = 0.703; REPUT = 0.556; PC = 0.844; and CR =
0.777. Also, Cronbach’s alpha was calculated to evaluate the reliability of the measurements
and the internal consistency of the data, which should have acceptable indexes of 0.70 or
higher (Malhotra et al., 2012).
The convergent validity of the constructs was analyzed in two ways:
(1) analyzing the variables through their significance and factorial loads based on the
t-values of the indicators of each construct, giving it a significance of (p < 0.05);
and
(2) confirmatory factorial analysis (Kline, 2011; Brown and Moore, 2012) (see Table II).

According to the results, it is noticed that the composite reliability for the tested constructs
was above the recommended value (above 0.70), varying between 0.92 and 0.96. Regarding
the extracted variance, all indices were higher than those presented in the literature, being
between 0.61 and 0.86, as shown in Table II.
The discriminant validity was then tested to verify the distinction between the
constructs, considering a construct as unique in the model tested (Hair et al., 2014). To
identify the discriminant validity between the constructs, the procedure indicated by Fornell
and Larcker (1981) was used, in which the variances extracted from the constructs are
compared with the shared variances that are calculated by the correlations between
constructs to the square, as shown in Table III.
The results of the analysis showed that the variance extracted from the service provider
reputation construct (0.61) was lower than the shared variance with the customer retention
(0.76) construct. This result is repeated in relation to the customer orientation (0.75)
construct with the service provider reputation (0.80), and that can demonstrate a possible
redundancy between these constructs because they are correlated. However, as there is a

Composite
Constructs Explained variances (%) Cronbach’s alpha reliability Extracted variances

DNS 66.89 0.90 0.94 0.71

Customer orientation 64.77 0.92 0.95 0.75 Table II.
Reputation 60.26 0.87 0.92 0.61
Professional competences 82.93 0.93 0.96 0.86
Composite reliability
Customer retention 67.79 0.87 0.92 0.71 and variance
extracted from
Source: Data from the research constructs
IJQSS theoretical basis that supports this relation, it was chosen to keep these constructs in the
10,4 model to be tested.

Structural model validation

From the estimation of the structural model, the validation of the theoretical model was
started, based on the quality of the adjustment measures (Hair et al., 2014; Byrne, 2016). The
374 adjustment measures are based on the MLE estimation method, which reflects the results of
the analyzes of the covariance matrices estimated and observed, as shown in Table IV.
The covariance verification procedure was adopted, as recommended in the literature
when an initial model does not present well-adjusted results (Byrne, 2016). This way, it is
stressed that x 2/df found in this study was 2.09 ( x 2 = 39.87, df = 18).
Observing the adjustment measures, it can be noted that the measures TLI (0.905), NFI
(0.944) and CFI (0.953) presented measures according to the recommended indexes in the
literature, with acceptable values above 0.90. The RMSEA obtained an index of 0.059, and
this adjustment measure presented the index above the recommended in the literature,
between 0.05 and 0.08. However, GFI (0.861) and AGFI (0.824) presented values below the
recommended values in the literature, which is 0.90 (Hair et al., 2009). Besides that,
according to Bagozzi and Yi (2012), these indexes often have no acceptable values.

Hypothesis testing
Continuing the validation of the model, the hypothesis test was performed, examining the
significance and magnitude of the estimated regression coefficients (Hair et al., 2014).
Table V presents the hypotheses, structural paths, non-standard coefficients, standard
errors, standardized coefficients, t-values and probabilities.
According to the results presented, the six initial hypotheses of the study were
statistically supported, being H1 (NSD positively influences customer orientation, b = 0.832,

Constructs NSD OC REPUT CP RC

DNS 0.71
OC 0.66 0.75
REPUT 0.59 0.80 0.61
CP 0.38 0.53 0.56 0.86
RC 0.57 0.69 0.76 0.57 0.71
Table III.
Discriminant validity Source: Data from the research

Measure of adjustment Indexes

RMR 0.102
GFI 0.861
AGFI 0.824
RMSEA 0.059
TLI 0.905
Table IV. NFI 0.944
Measures of CFI 0.953
adjustments per
construct Source: Data from the research
 Structural Non-standard Standardized
New services
Hi paths coefficients (b) Errors coefficients ( b ) t-values p Results development
H1 NSD ! OC 1.225 0.116 0.832 10.567 p < 0.001 Supported
H2 OC ! REPUT 0.714 0.061 0.872 11.666 p < 0.001 Supported
H3 REPUT ! RC 0.306 0.082 0.374 3.735 p < 0.001 Supported
H4 OC ! CP 0.677 0.062 0.754 10.859 p < 0.001 Supported
H5 CP ! RC 0.170 0.049 0.228 3.438 p < 0.001 Supported 375
H6 OC ! RC 0.249 0.078 0.372 3.195 p = 0.001 Supported

Note: Significance level of 0.05 Table V.

Source: Data from the research Testing hypothesis

p < 0.001), H2 (customer orientation positively affects reputation, b = 0.872, p < 0.001), H3
(reputation positively affects customer retention, b = 0.374 p < 0.001), H4 (customer
orientation positively affects professional competences, b = 0.754, p < 0.001), H5
(professional competences positively affects customer retention, b = 0.228, p = 0.015) and H6
(customer orientation positively affects customer retention, b = 0.372, p < 0.001).
According to Hair et al. (2009), another way to verify the effectiveness of the hypothesis
test is through the determination coefficients (R2) based on the multiple squared correlations
of each dependent variable. When considering the determination coefficients (R2), it is
verified that the result for the structural model presented 81.2 per cent of the variance of
customer retention, which is explained by its independent variables, customer orientation,
service provider reputation and professional’s competence, as presented in Table VI.

Mediator effect of customer satisfaction between new services development and customer
retention
When testing the mediation proposed in H7, the linear regression analysis technique was
used, and this procedure was recommended by Zhao et al. (2010), Preacher and Hayes (2008)
and Hair et al. (2014), based on the fact that when analyzing mediation, the indirect effect of
the independent variable on the dependent variable must be significant, and mediation
occurs even if the total effect (c’) is insignificant. The procedure proposed by Zhao et al.
(2010) suggests the use of bootstrapping to estimate the variation of the indirect effect, with
a confidence interval (95 per cent) and without a null effect. Figure 2 shows the relationships
tested in mediation.
Analyzing the results of the mediation, it can be seen that NSD was tested as an
independent variable, customer satisfaction as a mediator variable and customer retention
as a dependent variable. It is noticed that the path between the independent variable and the
mediator variable was significant (A = 0.81; t = 15.43; p = 0.000). Likewise, the relationship

Constructs Coefficients of determination (R2)

Customer orientation 0.692

Reputation 0.761
Professional competences 0.568
Table VI.
Customer retention 0.812 Coefficients of
determination of the
Source: Data from the research theoretical model
IJQSS Customer
10,4 Satisfaction

† b
β = 0,81** β = 0,74**

376 Development
c' c
Developmentofof β = 0,24 β = 0,85** Customer
Customer
New
NewServices
Services Retention
Retention
Figure 2. †[E 60; z = 1,61; p = 0,019
Intervalo de confiança (95%): 0,50 a 0,70
Mediation of the
exchange costs
Notes: The values presented are not standardized; **p < 0.01

between the mediator variable and the dependent variable was also significant (b = 0.74; t =
16.22; p = 0.000).
The significance of the indirect effect of NSD (NSD) in relation to customer retention
measured by customer satisfaction (a  b = 0.60; z = 1.61; p = 0.019) was also observed.
In addition, the confidence interval (95 per cent) for the indirect effect, calculated by
means of 5.000 resamples in the bootstrapping procedure, does not include zero or null
effect (0.50-0.70). The total effect of NSD on customer retention was significant (c =
0.85; t = 15.42; p = 0.000), as well as the direct effect of the NSD on customer retention
(c’= 0.24, t = 4.49; p = 0.000). These results show, therefore, that customer satisfaction
does not play a mediating role in the relationship between NSD and customer retention,
thus not giving support to H7.

Final considerations
Taking into account the proposed theoretical model, the first contribution of the study
was the positive and direct relationship of NSD with customer orientation (H1: NSD !
CO). The results obtained can be related to the literature available, because according to
Nasution and Mavondo (2008), the principles of customer orientation result in a focus
on the company–customer relationships, which reinforce the capacity of the service
providers to adapt quickly to customer needs. The aim here is to transform the new
services so that they have superior success and, consequently, to obtain greater
profitability.
Some studies considered a positive relationship between NSD and customer orientation,
with the aim of offering customized and creative solutions to customer (Jiménez-Zarco et al.,
2011; Wong and Tong, 2012), assuming that companies that care about and involve their
customers in the NSD process are more likely to be more successful in the market where
they operate (Sindakis, 2015).
The second finding supported by the proposed theoretical model, which is a contribution,
is the confirmation of the positive effect between customer orientation and reputation (H2:
CO ! REPUT) and between customer orientation and professional competences (H4: CO !
PC). These results are connected to the literature, which points out that corporate reputation
based on the customer is shaped by dimensions that encompass customer orientation,
referring to customer perceptions of company disposition and the relationship between
customer orientation and the skills the employees have to meet customer needs (Walsh and
Beatty, 2007).
 In addition, Wu et al. (2015) demonstrate in their research that professional competences New services
are perceived when employees show them while communicating and understanding development
customer needs, with the goal of developing deep relationships with customers. In that way,
customers perceive that the organization offers high quality services.
By increasing the contributions of the study, another relationship that proved to be
positive and direct was the impact of reputation on customer retention (H3: REPUT !
CR), keeping in mind that corporate reputation is a challenge for service delivery,
because it creates possible competitive advantages. Taking into account the service
377
sector, after proving H3, it is understood that the service provider companies should
focus their efforts to develop greater competitiveness through technical expertise and a
high reputation, based on the creation of differentials through superior aggregated
values (Marquardt et al., 2011).
Another contribution from this study is the confirmation that the professional
competences positively influence customer retention (H5: PC ! CR). The relevance of such
a contribution is also pointed out by Frey et al. (2013), who explain that the search for
customer satisfaction and retention should be a primary objective for employees, as
customer retention directly influences retention of employees. Therefore, the authors point
out that marketing and human resources issues are connected in companies that offer
professional services, because customer and employees share attitudes and opinions about
the conception and delivery of services.
Finally, it should be noted that the study also confirms the positive impact of
customer orientation on customer retention (H6: CO ! CR), demonstrating that
customer orientation affects long-term relational exchanges. This result is different
from Guo and Wang’s (2015) study, who presented an indirect effect between customer
orientation and customer retention, considering the impact on organizational
performance.
When dealing with the managerial implications, the involvement of the customer, who
assumes the part of co-producer and helps develop new services and innovations, in a long-
term perspective aimed at creating a dynamic and competitive environment. Also, it is
necessary to reflect on the design and implementation of strategies that allow a greater
degree of interaction between customer and company, seeking to achieve a high value and
quality perceived in the services provided. This implies that health plan operators need to
develop new customer-oriented services by investing in new technologies and having more
trained and qualified staff so that they can deliver superior services and, as a consequence,
have a more profitable relationship with customers.
In addition, it turns out that service employees constantly need to deepen their skills and
knowledge. It is also important to keep efforts focused so that front-line service staff can
create an innovative environment. The aim should be the application of tools and processes
that support the NSD, because this can be a decisive factor of organizational performance.
Therefore, the synthesis approach between assimilation and dissemination of NSD has
already pointed to the need of drawing new frontiers between services and manufacturers,
as well as the development of magnification ways of customers’ relationships, aiming at
superior organizational performance.
Besides, the health services segment is based on several types of services, and
therefore, all health plan operators need to develop competitive strategies, involving the
constant search for differentiation through the NSD and advanced technologies. The
focus ought to be on customer retention in different degrees and market segmentation.
When it comes to public policies, the NSD should be stimulated by managers, through
IJQSS the diffusion of innovation, with the aim of offering a more efficient health service for
10,4 the population.
To promote future research, the application of longitudinal studies to examine the
development of each NSD stage in its different forms of application in a practical context,
aiming at monitoring the contribution of the actors involved in the process, is essential.
Also, as a theoretical suggestion, it is suggested to test other constructs such as service
378 innovation, perceived value, value in use, perceived quality, trust and customer loyalty. In
addition, the proposed theoretical model could be tested in other service contexts (financial,
hotel and educational) with the intention of improving the scientific accuracy of the analyzed
constructs, taking into account that NSD impacts performance and organizational
competitiveness.

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Appendix. Scale items

New services development [adapted from Kim and Atuahene-Gima (2010) based on Hu et al. (2009)]:
 NSD1. This health plan operator dedicates some resources to the development of new
services.
 NSD2. The health plan staff is sufficient to handle the new services that need to be
developed.
IJQSS  NSD3. The health plan operator usually develops new services that follow the
10,4 necessities of customers.
 NSD4. The new services developed by the health plan operator are effective when it
comes to time, resources and processes.
 NSD5. This health plan operator offers an adequate environment for new services to be
developed.
382  NSD6. The new services have a tendency to offer a superior quality than the
competitors.
Customer orientation [adapted from Ordanini and Parasuraman (2011)]:
 CO1. The health plan operator has routines and regulations for customer service.
 CO2. The execution of the services is based on accurate information for the
customer.
 CO3. The health plan operator has a good understanding of the customer’s value to the
company.
 CO4. The health plan operator competes mainly based on the differentiation of services
provided.
 CO5. The health plan operator puts the interests of the customer first.
 CO6. The health plan operator is oriented to improve the services according to the needs
of the customer.
 CO7. The greatest asset of the health plan operator are its customers.
 CO8. Managers and employees understand that the company exists to serve its
customers.
Reputation [adapted from Milan et al. (2015)].
 REPUT1. It has the reputation of being honest.
 REPUT2. It has the reputation of worrying about your customers.
 REPUT3. Ithas a distinguished reputation in the market.
 REPUT4. Most companies would like to negotiate with this health insurance
operator.
Professional competences [adapted from Wu et al. (2015)].
 PC1. Front-line employees communicate effectively when dealing with customers.
 PC2. Front-line employees have the ability to meet customer needs.
 PC3. Front-line employees have the technical competences to solve customer’s problems
efficiently.
 PC4. Front-line employees have the knowledge to help customers better understand the
services provided.
Customer retention [adapted from Milan et al. (2015)].
 CR1. I would certainly recommend this health plan operator to others.
 CR2. It is likely that I make good comments about this health plan operator to family and
friends.
 CR3. In the near future, I intend to make more use of the services offered by this health
plan operator.
 CR4. Even if this health plan operator increased the prices of the services we use, we
would still keep being its customers.
  RC5. If a competing health plan operator offered a better price or a discount on the New services
services contracted, I would not switch service providers. development
Customer satisfaction
 CS1. Considering all the above questions, how satisfied are you with the services of your
healthcare provider?

383
Corresponding author
Luciene Eberle can be contacted at: leberle@ucs.br

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