Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award



Dr. Rameez Khalid

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Executive Summary

Privatization is the “catch word” in the world now days. A considerable number of developed economies, emerging markets, and developing countries have privatised their SOEs (State Owned Enterprises) in order to increase investment opportunities in the country and ensure the long-term growth of the industrial sector.. In Pakistan, the process of privatization began in the 1980s with similar motives. However, a persevering issue, that still remains in policy as well as management with regards to public domain, is how privatization can impact the quality of service that is offered by a firm. Those in favor of privatization advocates that forces of the market compel private entities to offer superior service quality, whereas those in opposition argue that the quality is likely to be exchanged off against benefits. Drawing on deficient contract and capability speculations, we investigate a more nuanced plausibility: that whether privatization brings a positive influence on the quality of the service that a firm has to offer, and vice versa. For finding out the association of privatization with service quality in Pakistan, this research has been conducted out on three major institutions of Pakistan, namely PTCL, HBL and K-electric that were formerly owned by government. Each of the three firms belong to a different service sector of the country. For measuring the level ofservice quality which is currently offered by these firms, SERVPERF model has been applied in this research which measures service quality based on consumers’ perception. The model consists of 5 major dimensions of service quality; namely “tangibility, responsiveness, reliability, empathy and assurance”. All the original 22 items of SERVPERF scale have been used in this questionnaire while 1 more item was added after conducting the focus group (hence 23 items in total for measuring service quality). A 7-point Likert scale has been adopted for gaging customer satisfaction and feedback against each question. For questionnaire, 600 responses have been collected (200 from each firm) with the convenience sampling approach Both online and offline mediums have been used for collecting the questionnaire data. Focus group has been conducted with the existing customers of the three firms under discussion with the aim of ensuring that the questions designed for questionnaire are appropriate or suitable for accomplishing the research objectives. This focus group served as a pilot test for research questionnaire before it can be distributed to a larger audience. Offline (face to face) medium has been used for conducting the focus group. Post focus group, 1 question has been added in the questionnaire under the tangibility dimension making the total items related to service quality to 23. Total participants selected for conducting the focus group were 9. For comparison with service quality during pre-privatization era, interviews have been conducted with relevant personnel who have been customers of these firms in both pre and post-privatization era. Total 12 interviews were conducted (4 from each firm). Offline (face to face) medium was used for conducting these interviews. The questions were designed to take respondents’ feedback related to service quality offered by the respective firms in both pre and post privatization era on the basis of the same five dimensions of SERVPERF. For analysis of data, application of descriptive as well as inferential statistics have been used while analyzing the responses from questionnaire. Factors like Mean, standard deviation and coefficient of variation have been calculated for descriptive statistics while t-test (2 tailed) has been used for inferential statistics; i.e. calculating the significance of a particular dimension with the test value. Instrument’s reliability has been measured by calculating Cronbach’s alpha while Principle 3 component analysis has been performed through SPSS for ensuring the validity. Interview data, which was qualitative in nature, has been analyzed by comparing the respondents’ feedback on both the eras along with comparing the feedback obtained from questionnaire. The data was analyzed individually for each firm as well as in a combined manner for all three firms under discussion in this research Holistically, the findings of this study conclude that privatization has failed to bring any significant positive impact on improving service quality offered by previously owned state institutions of Pakistan. The overall mean value obtained from questionnaire’s feedback suggests that customers are largely dissatisfied with the quality of service being offered by the privatized firms as 2 out of 3 firms selected for this research showed a mean value in below average or dissatisfaction region. The findings of interview, on an overall basis, conclude that privatization has failed to bring a positive impact on service quality of 2/3 firms when comparing the pre-privatization era to postprivatization era on the same 5 dimensions of service quality. By analyzing the results separately for the 5 dimensions of service quality, conclusion drawn is that tangibility is the only dimension which has improved for all the selected firms after their privatization. For the remaining four service quality dimensions, the findings of questionnaire showed that on overall basis, customers are most dissatisfied with the reliability of the privatized firms as it was the worst rated dimension followed by responsiveness and empathy while assurance was rated as neutral. After going through the outcomes of this study, recommendations were made to both the management of the privatized firms as well as the government of Pakistan. For the management of the privatized firms, recommendations were given in the areas of corporate strategy, marketing, operations, human resource, quality assurance, technology, continuous innovation and R&D. For the government of the country, recommendations were mainly to design a proper framework related to service quality and create an environment of competition before moving ahead with the privatization of any stae owned firm.



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