At your service!?

Material Information

At your service!? public sector service quality in monopolistic versus competitive environments
Alternate title:
Public sector service quality in monopolistic versus competitive environments
Kilkenny, Regina
Place of Publication:
Denver, Colo.
University of Colorado Denver
Publication Date:
Physical Description:
vi, 176, [22] pages : illustrations ;

Thesis/Dissertation Information

Doctorate ( Doctor of Philosophy)
Degree Grantor:
University of Colorado Denver
Degree Divisions:
School of Public Affairs, CU Denver
Degree Disciplines:
Public Administration
Committee Chair:
deLeon, Peter
Committee Members:
Buechner, John C.
Cason, Forrest M.
deLeon, Linda
Emmert, Mark


Subjects / Keywords:
Government monopolies -- Public opinion -- United States ( lcsh )
Government competition -- Public opinion -- United States ( lcsh )
Industrial policy -- Public opinion -- United States ( lcsh )
Postal service -- Evaluation -- Statistical methods ( lcsh )
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )


Includes bibliographical references (pages 160-176).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Doctor of Philosophy, Public Administration.
General Note:
School of Public Affairs
Statement of Responsibility:
by Regina Kilkenny.

Record Information

Source Institution:
|University of Colorado Denver
Holding Location:
|Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
30953860 ( OCLC )
HE6371 .K55 1992 ( lcc )

Full Text
Regina Kilkenny
B.A., University of Colorado, 1980
M.P.A., University of Colorado, 1983
A thesis submitted to the
Faculty of the Graduate School of the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
Public Administration

This thesis for the Doctor of Philosophy
degree by
Regina Kilkenny
has been approved for the
Graduate School of Public Affairs
Peter deLeon
Linda deLeon
Mark Emmert

1992 by Regina Kilkenny
All rights reserved.

Kilkenny, Regina A. (Ph.D., Public Administration)
Thesis directed by Professor Peter deLeon
When a government bureaucracy is perceived as
unresponsive or lacking public accountability, its credibility is
undermined and, more significantly, the credibility of the entire
government is undermined. A literature review reveals these
critical trends: dramatic declines in perceived bureaucratic
responsiveness; a shift from a production-oriented to a service-
oriented economy; a continual scarcity of public resources to meet
public demands; and, an increasingly more sophisticated customer
base whose demands are being appeased by private sector
organizations. A void exists in the quantitative measurement of
monopolies and the assessment of citizen-customer expectations
and perceptions of services.
RESEARCH HYPOTHESIS: Customers of public monopolies
are less satisfied with government service provided by those
organizations than customers of government when the entity has
competitors. In other words, all things being equal, there are
differences in service quality, as determined by the public
customers, when a public agency operates in a competitive versus a
monopolistic environment.

This and several secondary hypotheses were tested based
upon results from a SERVQUAL survey randomly mailed to
Colorado and Wyoming residents and businesses to assess their
expectations of excellent government services and their perceptions
of service quality of the U.S. Postal Service's monopolistic (first
class) and competitive (fourth class/parcel post and Express) mail
The most consequential research finding shows that there is
no statistically significant difference in satisfaction levels between
customers of monopolistic and competitive government services.
Also, these findings confirm other research showing significant
differences between expectations and perceptions of service quality
in public and private organizations.
This argues against the need to create competitive situations
for government. Based upon these results, what is more important
to the citizen-customer is the closing of the service quality gaps in
government, particularly in terms of responsiveness, reliability and
empathy. Increasing the responsiveness of bureaucracies can be
done, but government need not shed its monopolistic structure to
make significant strides toward incorporating the expectations and
perceptions of its customers into provision of excellent services.

Nothing can be achieved alone, especially this thesis, and I am
appreciative of the support and guidance of many. There are a few
people I would like to single out for special recognition.
First, I would like to thank each individual who took the time to
fill out the questionnaire and return it to an unknown student
researcher. I would not have had the quantitative data for this research
without the survey responses.
Second, special acknowledgment is due to the Jim Baldwin
Foundation and the Doctoral Students Association of the Graduate
School of Public Affairs. Their financial assistance helped defray
survey expenses.
Third, thanks to Hal Rainey, Valarie Zeithaml, Marc Holzer, E.S.
Savas and Bob Denhardt for their personal response to my research
questions. They took the time from their rigorous schedules to help me
understand their field and to share their resources.
Fourth, I am particularly grateful to each member of my thesis
committee who contributed in their own unique way. John Buechner
continually found the time with his hectic schedule to encourage my
academic and professional career, providing sage advise along the
way. Mark Emmert saw the spark of interest I had for customer

service and nurtured it throughout my classwork and thesis. Linda
deLeon's blend of statistics, marketing and private sector experience
was combined with pep talks and intellectual stimulation to help me
move forward. Forrest Cason offered positive strokes regularly and
served as an outstanding example of the public manager facing tough
challenges in government's competitive and monopolistic
Peter deLeon, chairperson of the committee, served as an
extraordinary mentor who intuitively seemed to know when to
encourage and when to push, when to criticize constructively and
when to inspire. He has the uncanny ability to keep an eye on the
details while looking at the global context.
Finally, I am appreciative of the values my family instilled in me
-- those of appreciating the rewards of higher education and of setting
and achieving goals. My husband, Mark Weglowski, continually
served as the patient, proud supporter who helped me get through the
tough as well as the fun times!
A special thanks to each of you. There is a part of you reflected
in these pages.

1. INTRODUCTION........................................1
Background/Theoretical Framework for the Study......1
Research Questions to Be Investigated...............8
Significance of Research............................9
Organization of Thesis.............................11
2. LITERATURE REVIEW..................................13
Introduction ......................................13
Bureaucratic Responsiveness and Accountability.....13
Economic Theories.............................25
Social Sciences Analogs.......................27
Customer Service ..................................38
Customer Service in Monopolies.....................41
Summary ...........................................47
3. HYPOTHESES FORMULATION.............................51
Introduction...................................... 51
U.S. Postal Service................................51
Background/History of the U.S. Postal Service.51
Monopolistic and Competitive Provision of Postal

Purpose for Selecting Postal Service as Research
Focus ......................................60
Definition of Key Terms .............................61
Public Sector Customers........................62
Customer Satisfaction .........................63
Public Monopoly and Public Competition ........65
Bureaucratic Responsivness.....................65
Research Hypotheses .................................66
Primary Hypothesis.............................67
Secondary Hypotheses...........................67
Rival Hypotheses.....................................71
Validation or Rejection of Hypotheses................73
4. RESEARCH METHODOLOGY................................76
Introduction...................................... 76
Research design......................................76
Units of Analysis..............................79
Research Population............................80
Survey Instrument..............................80
Validity ......................................83
Data Collection......................................87
Mailing of Surveys.............................87
Return Rate....................................88
Data Analysis........................................89
5. RESEARCH FINDINGS ..................................92

Empirical Findings Regarding Research Hypotheses.....92
Additional Findings/Results..........................121
Differences Between Customers of Competitive
Differences Between Competitive and
Monopolistic Customers' Ideology............122
Differences in Political Affiliation and U.S. Postal
Service as Business.........................124
Demographic Differences........................125
Estimating Nonrespondents......................126
Findings as Compared with Other Research
Summary of Findings..................................130
Conclusions .........................................132
Conclusions Based Upon Findings................132
Alternative Explanations for Findings..........136
Impact of Study in Terms of What Was Learned.. 138
Strengths, Weaknesses and Limitations of
Research ...................................140
Implications ........................................143
Implications for Professional Practice.........143
Implications for Scholarly Understanding of
the Field...................................145
Implications for Future Research Studies.......147
Recommendations for Further Research...........148

Recommendations for Changes in Professional
Recommended Modifications in Accepted
Theoretical Constructs...................153
Recommendations Concerning Changes in
Organization, Procedures, Practices, Behavior.. 156
BIBLIOGRAPHY ...........................................160
A. Survey instrument with cover letter.........177
B. Comments provided by respondents............185

Background/Theoretical Framework for the Study
"If there's anything a public servant hates to do, it's something for
the public." C. Northcote Parkinson
Traditional values in American society have been embraced within
its system of governance and management. The field of public
administration reflects those major principles of efficiency, effectiveness,
equity, and accountability -- collectively known as bureaucratic
responsibility. Retaining public servants accountable is fundamental to
government and requires a balance; scandals result when too few controls
are in place and rigid, inflexible systems result when there are too many
In his 1979 television address, President Carter expressed his
concern about a "fundamental threat to American democracy...a crisis of
confidence...that strikes at the very heart and soul and spirit of our
national will....The gap between our citizens and our government has
never been so wide," he said (Lipset and Schneider, 1983: 13). Analysis of
American attitudes shows a dramatic increase in citizen distrust of
government since the early 1960s. From 1964 to 1980, the percentage of
Americans who agreed that "government is pretty much run by a few big
interests looking out for themselves" increased from 29% to 70% (1983: 16-
17). Additional signs that citizens do not believe government is
responsive enough are reflected in answers to the question "Over the

years, how much attention do you feel the government pays to what the
people think when it decides what to do ~ a good deal, some, or not
much?" Those that answered "a good deal" fell from 32% surveyed in
1964 to 8% in 1980 (1983: 24-25). This declining confidence by citizens fuels
their strong feelings of alienation.
Several obstacles to accountability include the existence of
incompetent political overseers, corrupt career public servants, an anti-
democratic ethos, bureaucratic inertia, and anonymity of public officials or
the "faceless bureaucrat" syndrome (Caiden, 1988: 27).
Another reason for the lack of government accountability given
recent attention is that government largely operates as a monopoly
(Hirschman, 1970; Bish and Warren, 1972; Scherer, 1973; Wagner and
Weber, 1975; Roessner, 1977; Lynn, 1981; Savas, 1982; Chubb and Moe, 1988;
Osborne and Gaebler, 1992). That perception is substantiated by quite
limited empirical research. E.S. Savas (1982), among others, claims that
one of the reasons that government is less responsive to its customers is
because of government's monopolistic environment. Economic theory
supports that contention by holding that a competitive environment
results in better products and processes, in addition to serving as an
efficient method of resource allocation (Mueller, 1970).
Abraham Lincoln's declaration that the American government
should be "of the people, by the people, and for the people" enshrines
responsiveness. Disturbingly, relatively recent writings contend that
government is no longer responsive (Levitt, 1973; Rieselbach, 1975;
Salamon and Wamsley, 1975; Fried, 1976; Mladenka, 1981; Rosen, 1989;
Kettl, 1990; Garment, 1991; Osborne and Gaebler, 1992) for a number of
reasons (e.g., inadequate oversight mechanisms of the courts or
legislatures and a political process that is fraught with scandals, gridlock
and wealthy political action committees). Here, however, our focus will
be on public bureaucracies and their attempts to poll and then respond to

citizen demands, particularly given government's natural and often
legally-mandated monopoly.
Over the past decade, elected and appointed government officials
are becoming more sensitive to issues of accountability and performance
measurement. Several authors have identified a trend that public
officials, in response to difficult economic conditions, "have been forced to
ask what is happening to clients as a result of the programs that are funded
by tax dollars. Performance measurement is necessary to convince a
skeptical public that people are getting reasonable value for their tax
dollars" (Hatry, 1989:471).
Lester Salamon and Gary Wamsley contend that bureaucracy is not
democratically responsive to the broad mass of citizenry but to the
"relevant others" with power because of features inherent in public
bureaucracies (1975:187).
Responsiveness, in short, is not simply a matter of movement but
of direction, and agencies will tend to move over time in the
direction of those willing and able to devote economic resources,
expertise, status, sense of efficacy, and connections, or any of the
other components of political clout to influencing their operations.
Believing that citizens indeed play a prominent role and defending
the government bureaucracy, Charles Goodsell makes the case for citizens-
as-customers to serve as the appraisers of bureaucracy.
In a society and polity where approval by the citizenry of
government is valued in its own right, citizen perceptions should
count as innately important. It would seem undemocratic to
contend otherwise. Of course lay citizens are not well informed on
program eligibility requirements, bureaucratic rules and procedures,
budget-necessitated priorities, and other "objective" realities. They
are not experts, and thus will not evaluate bureaucracy as experts.
Nevertheless, they are the ultimate judges of whether government
works and is thus acceptable. Moreover, for them the system's

success is not merely a matter of intellectual debate but high-stakes
issues such as whether one waits two hours in an office to see the
right person, whether one is treated by the people there as a human
being, and whether one's government check actually arrives and on
time. How better to evaluate bureaucracy? [author's emphasis]
Here, Goodsell's philosophy that citizen-customers know good service
when they see it should serve as an early warning system for public
administrators. Heeding such advise years ago could have resulted in
significant strides in citizen-customer relations for government officials.
Anthony Downs writes of bureaucratic decision making and the
role of the bureau's "customers" who place a high demand on the services
because they do not have to pay for them, which in turn results in system
overload. Therefore, bureaucrats develop nonpecuniary prices for their
services in order to discourage outside requests and to provide rewards to
the agency's members. Downs' "Law of Non-Money Pricing" proposes
that "[organizations that cannot charge money for their services must
develop non-monetary costs to impose on their clients as a means of
rationing their outputs." Examples of such "quasi-prices" include long
delays, demands for reciprocal favors, and red tape (1967:188-189). Many
of these tend to protect administrators from excessive demands for their
services, but, at the same time, they also isolate administrators from
customer needs and thus can render administrators less responsive. This
is an important issue to keep in mind as we discuss the public
administrators' attempt to balance limited resources with an increasingly
more demanding citizenry.
Based upon his extensive review of literature of government
responsiveness and accountability, Kenneth Mladenka draws three
First, elected officials are incapable of effectively mounting any
significant challenge to the bureaucracy's unquestioned superiority.
The bureaucracies are the new urban machines. Fragmented

authority, nonpartisan and at large elections, civil service reforms,
the triumph of professional management, and the power of
municipal employee unions insulate bureaucrats from popular
control....Second, bureaucrats are unresponsive to public
preferences. At best, responsiveness is limited to the demands of
client groups or to the interests of the powerful few. Professional
administrators enjoy a monopoly over information, experience,
and expertise. Institutional arrangements emphasize efficiency and
economy and inhibit responsiveness to public preferences....
The divisibility of urban services, the tremendous variation in
service needs and demands, the highly subjective nature of citizen
evaluations, the multiplicity of neighborhood organizations, and
the fragmentation of political and administrative authority provide
a chaotic system incapable of responding to the immense variety of
articulated and conflicting preferences. Third, elected officials
themselves are unaccountable to the electorate and unresponsive to
majority preference. The urban electorate is highly
unrepresentative of the population, political authorities respond to
the politically active, elections seldom reveal public preferences,
and elected officials are little concerned with voter disapproval.
Although he paints a dismal picture of bureaucratic responsiveness, his
words provide a context that reflects the complexities of the challenges
that public administrators face, especially that of meeting a multitude of
demands in a political environment from an increasingly frustrated and
discontented citizenry.
In a more upbeat tone, Anthony Downs discusses the importance of
the relationship of public officials to the public and the requisite
translation of public needs into policy implementation. His economic
theory of democracy takes into consideration differing government
behaviors (e.g., democracy vs. totalitarian state).
Because every government is run by men, and because all men
must be privately motivated to carry out their social functions, the
structural relation between the function of government and the
motives of those who run it is a crucial determinant of its behavior.
This relation is, in essence, the political constitution of society. It
determines the effective relationship between the government and

the governed (i.e., the rest of society) whether the latter have a
direct voice in choosing the former or not. In other words, the
constitution specifies the contents of the social welfare function,
because it provides a rule for transforming individual preferences
into social action. (1957: 290)
Public organizations should be held accountable by what goals are
met as well as what goals they choose to meet. Also, in democracies,
public organizations should be and often are expected to behave in a
responsive manner, since democratic power emanates from the people
and not a ruling elite. The test of a responsive public organization in a
democracy, according to Fried (1976: 49), is how well national and
community preferences, and the policies and actions of the bureaucratic
agencies, suit each other."
In Warren Bennis and Philip Slater's discussion of democracy as
inevitable, they explain that democracy is "a system of values a climate
of beliefs governing behavior which people are internally compelled to
affirm by deeds as well as words" (1968: 4). The values they list include
participation or involvement of the citizen, rather forward thinking for
that time. Thus, we have seen public administration scholars describe
from varying perspectives and with diverse levels of optimism the need
to incorporate citizen needs in order to achieve bureaucratic
Another segment of society contends that because government
operates largely as a monopoly, it does not need to exhibit responsiveness
and does not need to attend to the will of the people (Hirschman, 1970;
Savas, 1982; Chubb and Moe, 1988; Osborne and Gaebler, 1992).
Monopolies are believed inherently to defy responsiveness to the
customer, and government monopolies are considered to have few
incentives to adapt to their customers' demands. Few methods of
ensuring accountability are exerted, leaving government monopolies

Together with a sense of decline in government responsiveness and
concerns about poorer service quality from monopolies, America is
shifting from a manufacturing economy to a service economy, where
"relationships are becoming more important than physical products"
(Albrecht and Zemke, 1985: v) and where there is an orientation toward
customer service. According to the Census Bureau and the Department of
Commerce, service ("industries whose output is intangible") comprises
60% of the jobs in the United States (Albrecht and Zemke, 1985: 3).
Services includes four broad categories: 1) transportation, communications
and utilities; 2) wholesale and retail trade; 3) finance, insurance, and real
estate; and, 4) business services, personal services, and most nonprofit
entities. Karl Albrecht and Ron Zemke cite estimates that up to 88% of
America's workers will be in the service sector by the year 2000 (1985: 183)
and assert that organizations must be service-focused due to the shifting
economy and increasingly service-conscious world. According to them,
more customers expect it, competitive positioning demands it, and the
bottom line can benefit from it. Market researchers have concluded that
today's customers are more sophisticated, demanding more efficient and
responsive service.
According to Karl Albrecht and Lawrence Bradford, among others,
the orientation toward service and the customer is widespread in the
1990s. "Customers are more aware, more demanding, and more
aggressive, than at any time in history. We are in the middle of a
consumer revolution" (1990: 52).
There are additional reasons for service orientation, contends
Rosabeth Moss Kanter. "Good customer relationships reverberate not
only in current sales but also in future effectiveness and growth....Timely
knowledge of changing customer requirements makes it possible to guide
production more efficiently, reducing waste, inventory costs, and returns
and experience shows that customers are also one of the major founts of
ideas for innovation" (1989: 129). In other words, customer relations must

receive more attention in this service- and efficiency-conscious
Finally, Jerome Rosow opines that service orientation improves
organizational productivity and profitability. "The quality of service is as
important a factor in the productivity equation as the quality of a
product....If anything, the importance of service is growing" (1981: 267).
This increased emphasis on service translates into citizens scrutinizing
government services even more than before, given the added focus in the
private sector. "In the long run, the most important single factor affecting
a business unit's performance is the quality of its products and services,
relative to those of competitors" (Zeithaml, Parasuraman and Berry, 1990:
9). This observation is equally germane to both the private and public
Research Questions to Be Investigated
Based upon the recent direction in certain public administration
circles to question government's responsiveness due to its role as a
monopoly, the major research question, then, will be is a monopolistic
environment associated with less governmental accountability and
responsibility? And do citizens view government services unfavorably at
least partly because government holds a monopoly?
Similarly, is there a perceived difference in public service delivery
when a competitive environment exists? Are customers less satisfied
with service delivery in the public sector when a monopolistic
environment exists? Could the measurement of expectations and
perceptions of service quality in the two environments (i.e., monopolistic
and competitive) help public managers understand their customers and
help students of public administration understand bureaucratic

accountability? Would customers continue to seek government services if
competition existed? Could levels of bureaucratic responsiveness be
measured, and improved, by studying levels of expected and perceived
service by the customers of government?
Significance of Research
When a government bureaucracy is perceived as unresponsive or
lacking public accountability, its credibility is undermined, and so is the
credibility of the entire government. Conversely, when government
bureaucracies are perceived to operate in a responsive and accountable
manner, that credibility is enhanced. The symbolism of government
actions is far-reaching -- including its underlying themes of independence,
freedom, individual rights, and social equity. Lack of credibility in
government portends an erosion in those values as well as in the popular
support of that government.
H. George Frederickson notes dramatic changes taking place in
public attitudes about government and other institutions and advocates a
recovery of civism as key to more effective public administration, and
thus, government. "The effective public administration of the future
should be intimately tied to citizenship, the citizenry generally, and to the
effectiveness of the public managers who work directly with the citizenry"
[author's emphasis] (1982: 502).
Public perceptions, whether they reflect reality or not, have a critical
effect on the image of government bureaucracy. Changing those
perceptions, including public distrust of government, cannot happen
overnight. However, steps can be taken to measure citizen attitudes to
establish benchmarks. Public administrators can compile quantitative data
about what the citizen-customer expects of government and match those

expectations with the citizen-customer's perceptions of services delivered.
Strategies can be developed, based on areas of strengths and weaknesses, to
improve the image and behavior of public administration. One of the
most direct strategies for increasing public confidence in government is to
improve the perceived quality of service received and perceived by the
Indeed, public administration scholars recognize the need for
quantitative research of citizen attitudes. Charles Goodsell encourages
further investigation of the public encounter. "Obviously evaluation
must move beyond self-serving program evaluations sponsored by
agencies themselves or by professional or client organizations" (1981: 242).
He stresses the need to place more emphasis on comparison.
Only by comparatively empirical studies will we begin to appreciate
the range of encounters in both form and quality. Some of the
variables that might constructively be incorporated into
comparative studies are political and national culture, nature of
program, type of organization, purpose of the encounter, the
encounter's duration and scope, the medium and setting of the
encounter, demographic characteristics of participants, attitudinal
and personality characteristics, the position and status of the official
within the organization, and the degree of economic and
psychological independence of the citizen, [emphasis added] (1981:
The ramifications of this research for public management could be
significant in light of four factors briefly outlined in this introduction, to
be explored further in the next chapter:
a dramatic decline in perceived bureaucratic responsiveness;
a shift from a production-oriented to a service-oriented
economy where customers' expectations are more
extensively measured in the private sector, which, in turn,
increases the pressure on government sectors as service

a continual scarcity of public resources to meet public
demands; and,
an increasingly more sophisticated customer base whose
demands are being appeased by more and more private sector
The import, therefore, of this research is timely and potentially far-
reaching, addressing the raison d'etre of public bureaucracies and
juxtaposes the traditional operations of government bureaucracies in
other words, public services -- with the current trends. This research deals
directly with the role of citizens and their monopolistic government, as
well as perceptions of government responsiveness and accountability by
its customers.
Organization of Thesis
Chapter One began with an introduction of responsiveness in
government, linked to its primary role as a monopoly, and the emerging
interest of service organizations to understand their customers. Chapter
Two follows with a more extensive review of relevant literature in
bureaucratic responsiveness and accountability, customer service, and
governments as monopolies and reveals a void in the assessment of
expectations and perceptions of the citizen-customer in government in
general as well as monopolistic and competitive environments. Research
hypotheses are developed in Chapter Three, following a review of the
history of the U.S. Postal Service and recent dialogue regarding its
provision of monopolistic versus competitive mail services. Chapter
Four describes the research methodology, including design, data collection
and data analysis. Research findings are outlined in Chapter Five, where
each research hypothesis is examined in light of the data. In Chapter Six,
conclusions from the research findings are drawn and implications and

recommendations are discussed for future research and for the practice
and theory of public administration. A copy of the survey instrument can
be found in Appendix A, followed by written comments from the
respondents in Appendix B. Finally, the bibliography lists sources cited
throughout this thesis.

This chapter develops the notion that the field of public
administration is indeed grappling with the major questions of
bureaucratic responsiveness and accountability and identifies some
attempts to operationalize the measurement of responsiveness. The
tension between protection/accountability and responsiveness for the
public administrator is also discussed. A variety of literatures is reviewed
that deals with responsiveness of monopolies, with a brief discussion of
economic theory and social science analogs, followed by recent writings
about public monopolies. Customer service literature is reviewed, with
particular attention given to limited writings in customer service in
monopolies. The chapter concludes with a summary of what is known
and not known about responsiveness to the citizen-customer of
monopolistic bureaucracies, and discusses the lack of bureaucratic theory
to provide a base for these research questions.
Bureaucratic Responsiveness and Accountability
Robert Fried writes that "an obvious and perhaps growing gap
separates what the American people expect of administrative performance
and what they are getting, or at least what they think they are getting"
[author's emphasis] (1976: 8). He contends that public trust in responsive

public policy formulation and execution reached its high point in the early
years of Lyndon Johnson's presidency, to be replaced with political
cynicism in the Watergate years. The decrease in the public's faith was
due to increasing distrust in government and large bureaucracies.
While Donald Kettl contends that public administration reached its
pinnacle of public and political acceptance not during the Johnson years
but with the New Deal, he agrees that public administration's prominence
has dropped significantly.
The perception of governmental failure that plagued the late 1960s
and early 1970s undermined the nation's belief that government
could play a positive role. These perceptions, coupled with
bureaucrat bashing by top politicians during the 1970s and 1980s,
caused the public image of public administration to sink to a new
low. (1990: 411)
In his ascetic discussion of the conflicting tasks that public servants
face, Aaron Wildavsky writes,
Bureaucrats are supposed to see themselves as public servants.
They serve society by protecting it from itself; they serve the state by
protecting it from becoming society. Here we have a concept of a
public interest without the public. At long last we know what the
public interest is, namely, an interest not held by anyone in society.
(1988: 754-755)
With a more optimistic perspective, Charles Goodsell posits that
citizens view the "water glass" of public administration as half full rather
than half empty.
Direct reports from citizens on their experiences with bureaucracy
as distinct from generalized conventional wisdom on the subject
indicate that they perceive far more good than bad in their daily
interactions with it. Client polls, public opinion surveys, exit
interviews, and mailed questionnaires all repeat the same basic
finding that the majority of encounters are perceived as satisfactory.
Bureaucracy is reported as usually providing the services sought

and expected. Most of the time it lives up to acceptable standards of
efficiency, courtesy, and fairness. (1985: 139)
He posits that a "major cause for chronic underestimations" of
bureaucratic performance is that Americans hold unrealistic expectations.
But, to ascribe to his sanguine view, one would have to accept other
tenuous assumptions that perceptions even ill-informed ones do not
His contention that government services are satisfactory at a
minimum is not supported by the recent report from the National
Commission on the Public Service, chaired by Paul Volcker. It addresses
the lack of confidence in government and the erosion in the attractiveness
of public service at all levels. A primary reason for the lack of
attractiveness is due to
years of "bureaucrat bashing" by candidates for elective office,
reinforced by too many instances of ethical lapse, [which] have
eroded the sense of pride that once came with government service.
Careers that once were seen as proud and lively are increasingly
viewed as modest and dull even demeaning. Today, sadly, fewer
than half the government's most senior and most successful
executives are willing to recommend a career in public life to their
children. (1989: 12)
According to Alan Abramowitz, the public attitude toward
government has changed dramatically since the late 1960s. "Trust in
political leaders has been replaced by cynicism. Confidence in both
governmental and nongovernmental institutions has declined" (1980:
177). He argues that the "new cynicism and new pessimism" of
Americans are due to growing dissatisfaction with government
performance, especially during times of civil and social unrest.
American attitudes toward government and politics at present
could best be described as ambivalent. If there are no major shocks
to the political system in the near future, a restoration of trust and
confidence is quite conceivable. On the other hand, a new crisis,

such as a prolonged economic slump or an unpopular war, could
result in a gradual erosion of regime support and, eventually,
demands for structural change. The future of American political
culture depends largely on the future performance of American
political institutions in dealing with the problems of economic
stagnation and international tension. (1980: 207)
This quotation reflects a continuing and ultimately destructive tension:
the public reliance on government to solve problems while at the same
time discounting the ability of government to reach and maintain that
The public interest movement provides another example of
tension, as researched and described by John Guinther. In this case, the
clash is between those who believe that government has a moral
obligation to provide justice for all its citizens and those who espouse the
philosophy that government's purpose is to produce an orderly and secure
society. Populist thinking assume^ "that government's idea of the public
interest and the peoples idea often collide, and when they do the people's
idea should be paramount" (1976: 209). However, in light of rising levels
of political alienation experienced by American citizens, the public interest
movement does not seem to be "winning the war" in enhancing
bureaucratic responsiveness.
Government performance is rated differently based upon the level
of government providing the service. A 1981 Roper Organization survey
that asked if the phrase "efficient and well run" characterizes the federal
government, 74% said no while 49% said no regarding local government's
performance. When a 1979 Roper survey asked to rate the management of
government agencies, 27% thought the federal government's
management was excellent or good, as compared to state government's
"approval rating" of 51%; local government received a 59% approval
rating. However, when asked about their confidence level in various
levels of government, 19% of the respondents to a 1985 Lou Harris poll
stated a high level of confidence in the federal government, as compared

with 16% expressing the same level of trust in state government and 18%
in local governments. The levels of responses to the same questions
posed eight years earlier were approximately 3-4% points higher than the
1985 responses for each level of government. That is, confidence in
government dropped from the late 1970s to mid-1980s but the order
remained consistent among the local, state and federal levels of
government. (National Commission on the Public Service, 1989: 77-80).
Regional differences also can be found in levels of political
alienation or bureaucratic responsiveness. The "Volcker Commission"
identified surveys that reflected varying levels of government support
along regional lines.
In fact, midwestern respondents were more supportive, and those
from the South least supportive, that government, rather than the
individual, is responsible for citizens' well-being. The South
(followed by the West) reflects the strongest beliefs that the federal
government has too much power and that it should be curtailed.
The South leads other regions in support of the federal
government's ethical standards; and, with minor exceptions, the
South and Northeast reflect the greatest levels of trust and
confidence in it. The Northeast gives the federal government
slightly higher marks on performance, while the South has the
strongest beliefs that government offers opportunities to get ahead.
The Northeast is the more favorable and the South least so about a
young person choosing the federal services as a career. The two
regions hold equally favorable views of federal department and
agency officials. The West has the most favorable impressions of
government workers in general, with more affinity for state and
local governments. (National Commission on the Public Service,
1989: 88-89)
Kenneth Mladenka lists several reasons for the perceived
nonresponsiveness of bureaucracies. First, the urban reform movement
destroyed the basis for political control of bureaucracy. Second,
bureaucracies have a monopoly on information, experience, expertise and
budget-setting. Third, bureaucrats determine the distribution of resources.
Fourth, bureaucratic structures determine performance in terms of

efficiency and economy rather than responsiveness. Fifth, street-level
bureaucracies are structured to limit citizen responsiveness. Sixth,
individual citizens do not have the same level of personal skills and
resources to understand the bureaucratic game. Seventh, urban political
systems fragment services which hinders responsiveness and
accountability. Finally, even if elected officials exerted more control over
bureaucrats, elected officials themselves are also considered unresponsive
and unaccountable (1981: 147-148).
Others contend that governments operating in a democracy have an
even greater responsibility to be responsive to the needs of the people than
non-democratic governments (Ippolito and Walker, 1972; Rieselbach, 1975;
Fried, 1976; Osborne and Gaebler, 1992). That does not mean that
governments must always meet the public's demands but that links must
exist between public preferences and governmental action. Citizens do not
carry out the public's business; they empower elected and appointed
officials to do so (Ippolito and Walker, xiii).
In studying the responsiveness of American bureaucracies, Fried
lists ten questions as summary criteria for responsiveness, many
involving the direct or indirect input of citizens. They are:
1. Do the administrative agencies [in public organizations] obey
the policy directives of the legislature and the chief
2. Do administrative agencies follow public opinion, try to
discover public preferences, do their best to inform the public
about the alternatives?
3. Do the agencies respond to criticism? Do they change their
behavior to answer the criticisms?
4. Is there much organized opposition to, and criticism of,
agency performance?
5. Do the agencies receive favorable rather than unfavorable
attention from the legislature, the chief executive, and other
political elements?
6. Do the agencies seek to publicize and make explicit the bases
for their decisions?

7. Are the agencies eager to consult the opinions of more than a
few interested parties?
8. Are the institutions consulted by the agency representative of
the publics for which they claim to speak?
9. Are the agencies staffed with people from a broad sample of
social environments?
10. Do the agencies persist in trying to enforce unpopular laws
and implement unpopular policies? (1976: 55)
Lester Salamon and Gary Wamsley recognize that public
organizations are responsive to the relevant others" who hold the power.
Among their several suggestions to offset those pressures are two that
involve the citizen: through educating administrators "to be more
sensitive to broad public interests, to the forces that narrow
responsiveness, and to ways that they can move organizations toward the
broader interest, as by broadening participation in decision-making
processes. Finally, citizen awareness and participation may be
heightened..."(1975: 187). The practicality of these ideas remain to be seen,
but the intent to include the broad citizenry and to avoid selective
responsiveness is clear.
There are explanations why a bureaucracy might wish to distance
itself from its public, claiming, indeed, that this distancing results in '
"better administration. Major conflicts exist between normative models
of pluralist democracy and administrative efficiency, as summarized by
Douglas Yates (1982: 32-33):
concentration of power:
where power lies:
heart of democratic process:
pluralist model
dispersed, divided
suspicion about it
politicians, interest groups,
and citizens
political bargaining and
individuals' and political
actors' own determination
of interest and utility
efficiency model
emphasis on executive
professional bureaucrats
and experts
strong urge to keep
politics out
technical or scientific
rationality (better done by
detached experts than

His models quickly highlight the difficult almost contradictory tasks of
public administrators to manage a responsive bureaucracy that
concomitantly runs efficiently.
According to Yates (1982), some fear that excessive control or
accountability can cripple bureaucratic functioning and responsiveness.
Peter Self posits that the "tensions between the requirement of
responsibility or 'accountability' and those of effective executive action can
reasonably be described as the classic dilemma of public administration"
[authors emphasis] (Fesler, 1980: 312). James Fesler (1980: 312) states that
..."controls, therefore, may dull administration's responsiveness to the
The conflict between accountability and responsiveness can pull
bureaucrats in opposite directions. James Q. Wilson reflects, "Obviously
the more a bureaucracy is responsive to its clients -- whether those clients
are organized by radicals in Mothers for Adequate Welfare or represented
by Congressmen anxious to please constituents -- the less it can be
accountable to presidential directives" (1967: 5). However, it can be argued
that the presidential directives should also include clients demands;
whether these client groups are similar will be problematic.
Some civil service reforms have been designed to make the
bureaucrat less responsive to individual needs.
The excessively rigid procedures for entering and advancing in
most merit systems have long been recognized as being a decided
hindrance to effective management practices. In order to
compensate for the lack of managerial discretion occasioned by such
rigidities, career civil servants as well as other highly qualified
individuals have either been advanced or initially installed
through a fudging of the civil service regulations this is the same
process by which politicos are foisted upon the merit system.
(Shafritz, Hyde, and Rosenbloom, 1981: 65)

Another example shows that bureaucratic responsiveness can be
helped or hindered according to decision-making patterns that are
nominally established to ensure accountability in such areas as personnel
Decision-making styles minimize responsiveness when they
involve complete elaboration of rules and regulations covering all
contingencies; lack of discretion to apply or modify the rules;
isolation of decision-makers from outside influence (protection
against local pressure); centralized decision-making; hierarchy as
opposed to bargaining and discussion; little emphasis on flow of
ideas and innovations upward; little emphasis on exchange of ideas
among equal units; and an assumption of consensus and unity.
(Fried, 1976: 408-409)
Additional measures of accountability often result in alienating the
bureaucrat from the citizen, resulting in decreased understanding for
citizen needs and demands and a lack of bureaucratic responsiveness.
Michael Lipsky also discusses the tension between accountability and
responsiveness. "This is a great strength and a great weakness of the
public services. It provides a measure of responsiveness to clients when
the organization of bureaucratic service tends toward neglect or rigidity.
But by virtue of providing another focus of accountability it also means
that street-level bureaucrats are less controllable" (1980: 162). In other
words, street-level bureaucrats are provided less discretion and flexibility
to respond to their clients when additional accountability measures are
put in place to standardize the implementation of policies, such as specific
procedural manuals or performance audits.
Laurence Lynn also understands the challenge public
administration faces and states that the problem of bureaucracy is the
accountability problem.
It is not so much because bureaucrats arbitrarily and deliberately
decide to impose their will on the rest of us but because bureaucrats

are seeking invulnerability to criticism from the powerful
constituencies that are the sources of their creation and sustenance
by trying to be fair to all of them. (1981: 43)
Once the bureaucracy problem is couched in terms of an
accountability problem, then public officials can address issues of
accountability. Difficulties still arise when addressing the problem of
accountability and responsibility and the linkage to responsiveness.
But even if ways are found to make the public accountability of
public officials more effective, there arises one even more
profoundly intractable problem: namely, when the various
difference concepts of accountability (constitutional, judicial, quasi-
judicial, consultative, procedural, economic, commercial or
professional) conflict, or when the different bodies to which public
officials are responsible (executive, legislative, judiciary, pressure
group, professional association, consultative committee, regulatory
board, mass media, clients, volunteers) conflict, which has
precedence? (Caiden, 1988: 35)
Thus, public officials must recognize the delicate balance between
accountability and responsiveness and create systems to facilitate the
realization of both.
In terms of responsiveness, examples of empirical measures are
difficult to find. Gabriel Almond and Sidney Verba's comparative survey
of responsiveness between five countries, done in 1959-60, showed the
United States ranked lower than its British and German counterparts and
higher than its Italian and Mexican counterparts. The questions included
the following: "If you explained your point of view to the officials, what
effect do you think it would have? Would they give your point of view
serious consideration, would they pay only a little attention, or would they
ignore what you had to say?" Of the U.S. citizens polled, 48% expected
serious consideration; 59% of the British citizens and 53% of the German
citizens expected serious consideration. Of the respondents from Italy and

Mexico only 35% and 14%, respectively, expected serious consideration
Almond and Verba's questions to measure treatment of citizens
and selective responsiveness of government were: "Suppose there were
some question that you had to take to a government office for example,
a tax question or housing regulation. Do you think you would be given
equal treatment I mean, would you be treated as well as anyone else?"
Results of the survey showed that 83% of the U.S. respondents expected
equal treatment, which was the same percentage of British respondents,
and a greater percentage than the German (65%), Italian (53%) and
Mexican (42%) respondents (1963: 108).
Another measurement of responsiveness has been done by Richard
Claude, who summarizes a dozen years of Supreme Court rulings and
ranks issue responsiveness according to areas where the Court granted
more than 50% favorable answers to individual claims against
government (1975: 135). Responsiveness as reflected in public opinion, he
posits, must meet eight conditions:
(1) Needs must be felt and expressed. (2) A decision-making body
must be accessible to those expressing such needs. (3) These
expressions must be taken into account. (4) Some mechanism must
be available for the decisional body to discriminate according to the
intensity of the demand. (5) The decision-makers must be capable of
a reply. (6) They must ground their reply on some justification
which distinguishes the rules from arbitrariness. (7) The reply must
be pertinent and germane, if not sympathetic, to the request. (8) A
decision must be timely and not excessively dilatory in resolving
the conflict. (131)
While Claude's conditions for responsiveness have merit, rulings
by the high court against government claims should not be considered to
reflect responsiveness to the citizen or the government agency but should
reflect justice according to the Constitution. It is interesting that Claude
does not interpret the Court's rulings in favor of the individual claimant

as less responsive to government agencies, since indeed government
agencies may reflect public sentiment more appropriately than the perhaps
narrow and self-interested individual claims.
Still another measurement of responsiveness in this instance, in
the state and local government bureaucracy has been done by Ronald E.
Weber. He cites a Harris poll conducted for Senator Edmund Muskie that
compares confidence levels of the public vis-a-vis state and local officials.
He also establishes a continuum running from 0.00 ("complete
nonresponsiveness to mass public opinion") to 1.00 ("perfect
responsiveness to majority public opinion") and measures how well the
states responded to the will of the people. Based on his sampling in a few
policy areas, he finds that states generally were more responsive to public
opinion than previously thought. Average responsiveness scores for the
fifty states in 1962 and 1967-69 reflect high levels of responsiveness in
nonfiscal policy making. However, lower average scores for tougher
firearms controls indicate that the states were not responding to wants of
the mass public on that particular issue (1975: 195-196). This substantiates
Salamon and Wamsley's position that government is more responsive to
the "relevant others" who hold the power, in this case the National Rifle
In Bernard Rosen's writings of holding public bureaucracies
accountable, he recognizes tensions between the governed and those
governing, or their respective visions:
Establishing permanent citizen-participation mechanisms requires
some reconciliation of natural points of conflict between agency
responsibilities and interests of citizens. In implementing laws,
public administrators try to satisfy the broad public interest with an
eye to long-term needs. Individual citizens often bring a narrower
view of the problem and an interpretation of the public interest in a
shorter time frame. On the other hand, the cumulative insights of
a citizen group can add significant depth and breadth to an
understanding of the needs of the citizenry and to the consideration
of alternatives. (1989: 88)

Rosen addresses a critical issue that must be addressed when attending to
demands of the general public -- merging the interests of the citizenry who
come with anecdotal information and personal wishes that may be vested
in self-interest with those of the public administrator who may have more
technical knowledge and understanding of the broader issues and effects of
public policy.
Douglas Yates writes that bureaucrats profess allegiance to
"administrative process values" such as responsiveness and
accountability. However, defining such words is more difficult.
Does responsiveness mean being available to hear the complaints of
a citizen or congressman, or does it mean recognizing those
complaints and satisfying them? Does accountability mean simply
that a government official can give a reason for an action or a
policy? Or does it mean giving reasons that are "satisfactory" to the
citizen or congressman? (1982: 172)
Here, responsiveness is minimally regarded as the interest and availability
of government officials to hear the complaints in an open-minded
manner. While expressed citizen desires need not be met, the perception
alone of access and concern by those governing would go a long way
toward improving bureaucratic responsiveness.
Economic Theories
According to classic economic theory, competition not only serves
as a mechanism to allocate resources among industries, it determines the
fate of each industry. Efficiency is rewarded through profits; inefficiency is

punished with losses. Thus, the profit incentive results in better products
and processes. When a competitive industry becomes monopolized and
becomes "price maker, instead of price taker", it results in higher prices
and lower output. "Consumer sovereignty is thwarted, because too little
of the monopolized item will be produced. And not only will consumers
suffer from higher prices, but fewer resources labor and capital will be
employed" (Mueller, 1970: 8). Therefore, he dispels the popularly-held
notion that monopolistic environments result in lower prices and greater
productivity due to economies of scale.
An industrial economist, Frederic Scherer, considers factors that
should be taken into account when applying general equilibrium analysis
theory to the real world. "For one, the whole concept of efficient resource
allocation is built upon the fundamental belief that the consumer is
sovereign; that individual preferences are what count in the ledger of
social values" (1973: 19). Therefore, he also rejects the notion that
monopolies result in lower prices.
The vast majority of information regarding monopolies deals with
these economic issues; some have focused specifically on the relative costs
of service delivery and efficiency (Kefauver, 1965; Mueller, 1970; Bish and
Warren, 1972; Scherer, 1973; Bennett and Johnson, 1979; Florestano and
Gordon, 1980; Spann, 1983; Chubb and Moe, 1988; Fornell and Wernerfelt,
1988). Some writings have discussed public attitudes toward monopolies
(Lipset and Schneider, 1983; McDowell, 1984; Lyons and Lowery, 1989),
including two Harris surveys. In 1975, 63% of those polled agreed, and
22% disagreed, with the statement "[cjompetition between products and
services whereby the consumer buys the better product and services is the
only way that consumer interests will be protected." When polled in 1976,
72% of the respondents agreed that "[cjompetition among companies is the
best way to ensure better quality products and services." Thirteen percent
disagreed (Lipset and Schneider, 1983: 250-251).

In summary, economists tend to shy away from the customer-
orientation of monopolies in the marketplace. Little to no attention is
given in the economic arena to the impact of the monopolistic versus
competitive environment in the impact on service quality as determined
by the customer or in the organization's resultant levels of
Social Sciences Analogs
Public and Private Sector Comparisons. While most economic
theory deals with private sector monopolies and address costs and prices,
Robert Bish and Robert Warren draw parallels between public and private
sector monopolies and generally address customer preferences.
The tendency for private monopolists to fail to meet the criteria of
production efficiency and responsiveness to diverse preferences is
well known. When groups within a city cannot obtain the type or
amount of municipal service they wish, they normally have no
alternative way of obtaining it. The absence of political access can
have the same effect as the absence of competition in a market.
This similarity between public and private monopolies points to an
anomalous aspect of traditional proposals to centralize
governmental functions on a regional scale. (1972: 99)
In his discussion of public versus private sector differences,
Laurence Lynn writes that "[i]ndeed, the purpose of much, if not most,
government activity is to do what the private sector will not do or will not
do in the same way as government. A goal of numerous public programs
is precisely to 'incur losses', to provide services that private firms could
not provide as a profit, or to subsidize their provision by those
firms....There is no analogue to failure, no competitors waiting to move
in, no independent group of auditors or analysts whose profession is to
assess management performance" (1981: 126). Indeed, Lynn and Bish and
Warren (1972) consider governments as monopolies, serving the citizens

in a less than satisfactory manner due to the lack of adequate incentives
for responsiveness and efficiency.
Government's response to private sector monopolies includes
regulation and strict controls.
Every society must adopt a system of social control over its
economy. One alternative is government ownership and operation
of economic enterprise. At the other extreme, economic enterprise
may be privately owned and operated entirely independent of
government control. The latter policy of so-called laissez-faire,
either implicitly or explicitly, places complete reliance on market
forces to achieve private performance in the public interest.
Between these polar extremes lies a spectrum of public regulation of
private enterprise. (Mueller, 1970: 127)
Antitrust laws and tough government oversight were put in place to
"maintain sufficiently competitive market structures and market conduct
to insure that private enterprise performs in a socially acceptable manner"
One reflection of the move away from public sector monopolies is
the trend of privatization. In E.S. Savas' cost comparison of public and
private enterprises in municipal service, he cites reasons why one sector
may be better than the other in service provision. The absence of
competition is one factor that separates the two.
Government agencies, it is argued, are better able to capture
economies of scale, do not make a profit, generally do not pay taxes,
and thereby are lower cost producers than their counterparts in the
private sector. Often it is argued further that the quality of services
provided by public agencies will be higher, because of greater
dedication by public servants, greater responsiveness to the citizen-
consumer, and more faithful attention to realisation of the basic
public benefits that public goods are intended to provide....On the
other hand, critics of government agencies point to the general
absence of competitive forces, personnel systems that because of
patronage and civil service fail to relate rewards to performance,
the use of political rather than economic criteria for making

decisions on the type and timing of capital investments, budgeting
processes and incentive systems that encourage agency growth, the
lack of a market mechanism by which to measure agency
performance, and a scale of operations that is often far from
optimal. (1980: 251)
Anthony Downs takes a slightly different approach toward public
and private organizations, more reflected in differences in semantics than
philosophy. While he does not specifically address monopolistic
environments, he identifies distinctions between the two sectors. He does
not compare the relative efficiency of public and private organizations
because bureaus and "nonbureaus," respectively, perform different
functions and cannot be compared one operates in a "nonmarket" and
the other operates in a free market (1967: 39-40).
Comparisons between public and private schools reflect differences
in "success rates" of university Ph.D. students (Sisk, 1981) and in
environment and organization (Chubb and Moe, 1988). David Sisk tests
C.M. Lindsay's theory, whereby government enterprises do not establish
product value by market price but by measuring product attributes. Since
Congress defined output by patient days and not patient care, Lindsay
compared VA hospitals with proprietary and voluntary hospitals and
found that hospital stays averaged longer in VA hospitals than voluntary
hospitals since incentives existed to keep wards filled but not to provide
care. Sisk notes that in public universities, tuition rates were held below
market, thereby preventing market valuation and encouraging a reliance
on a market attribute of funding based on enrollments. His results show
more enrollment years per degree in public universities since universities
managers divert resources from instruction toward enrollment (Sisk,
Public choice theory believes that the rational, self-interested
individual of economic theory can be used as a model for citizens and
public officials (Lovrich and Neiman, 1984: xxi). Roessner writes that
some public choice theorists argue that "the nature of public goods is such

that their value cannot easily be measured and used as a management
tool. As a consequence, public managers try to manage employee behavior
directly rather than to manage by output measure (e.g., profit) as is
common in the private sector" (1977: 346). Sisk's and Lindsay's findings
support that argument.
John Chubb and Terry Moe study the relationship between
democratic control and the organization of schools and found that "public
schools are quite literally at a systematic disadvantage" due to constraints
placed on them operating in an open, democratic environment. (1988:
1067). Private schools have the freedom to determine their own goals,
standards and methods within broad constraints to the market system.
"They must please their consumers -- students and parents if they are to
prosper" (1988: 1067). In finding that private schools outperform public
schools, they speculate that "the key to [public] school improvement is not
school reform, but institutional reform -- a shift away from direct
democratic control" (1988: 1085) where constraints in the public sector are
so burdensome as to hinder productivity and thus the ability to respond to
the customer's needs.
In comparing perspectives between economic theory, organizational
theory, public administration, and political science, Roessner finds
different incentives for innovation between the public and private sectors.
For most economists, then, the absence of a competitive
environment implies that public organizations will be less efficient,
less responsive to demand, and less innovative than private ones.
Their response to this situation -- to recommend introducing
competitive elements into the delivery of public goods and services
~ suggests a belief that the problem is inherent but not intractable.
(1977: 361)
He suggests that some elements of competition could be introduced into
public service delivery, such as publicizing differences in service quality
and costs among jurisdictions.

Public Sector Monopolies. Government is widely considered to be
at least partially monopolistic. For example, Robert Bish and Robert
Warren state that "[m]ost local governments hold a monopoly position as
producers of municipal goods and services for their citizens. A large city
or an urbanized county is analogous to a multiproduct firm with exclusive
rights to production and sales within a specified territory" (1972: 102).
David Ammons' study of productivity improvement includes ten unique
constraints on public managers, one of which is "[t]he monopolistic
market situation of many local agencies, which limits their incentive to
innovate or adapt" (1983: 27-28). Savas contends that [m]any government
agencies are monopolies, in effect" for several reasons. First, he contends
that government's principal function is to provide services that are
monopolies or near monopolies. Second, consolidation of different,
overlapping government agencies results in the surviving agency as a
monopoly. Finally, local district mergers, annexations and city expansion
create area-wide monopolies (1982: 20). It is quite arguable that
government's main purpose is to serve as a monopoly its primary
function is to provide services to a broad citizenry, many of which are not
provided by businesses. That does not mean that government is a
monopoly to meet the end of service provider; its role as a monopoly is a
means to the end, not an end itself.
Economist Frederic Scherer writes that proponents of public
monopoly claim several advantages, which he adds are "more conjectural
than real".
Perhaps the most important [advantage] from an economic
standpoint, it is a way to secure the benefits of size in industries
with large minimum optimal scales without suffering the
disadvantages of monopolistic pricing. Other alleged advantages
include the channeling of returns on capital to the commonwealth
rather than to private individuals, the ability to raise capital at no
risk premium through government risk-pooling, and the reduction

of alienation by convincing workers that they ultimately own and
control the main branches of industry. (1973: 420)
He continues by comparing public enterprises (publicly-owned and
operated firms) with private sector monopolies.
To be sure, the incentive to raise prices and restrict output is
probably not as strong in public enterprises as it is in private
monopolies. Altruism serves as a check, as do controls by the
central government and the absence of stock options and other
ownership motives. However, the pressure to reduce costs and
innovate is also weaker than in all but those private firms most
heavily insulated from competition. Political intervention and
rigidities introduced by government accountability standards and
civil service procedures may impose a further drag on public
enterprise efficiency. (Scherer, 1973: 421)
E.S. Savas asserts that, "[ljacking competitors, a monopoly agency is
inexorably driven to exercise its power and exploit its monolithically
secure position." He contends that government borrows a private sector
tactic "tie-in sales" -- which forces consumers to buy unwanted goods or
services. He cites a police department that says,
"If you want uniformed police to do patrol work, you have to have
uniformed police to answer the telephones and enforce parking
regulations, too." Such a department resists creation of a separate,
low-cost, specialized, civilian unit whose function is solely to
enforce parking regulations. Its reasons for resistance include a
desire to maximize both the number of police officers and the
departmental budget, but also, it is sometimes whispered, to retain
the power to extend courtesies to grateful offenders and police-fund
contributors. (1982: 21)
Savas continues that
[t]he failure to understand the distinction between providing for a
service and producing the service has led to a curious reliance on
monopoly mechanisms for delivering public services....Total
dependence on a single supplier, whether a government agency or a

private firm, is dangerous. Without choice and flexibility the
consumer of public services, the citizen, is subject to endless
exploitation and victimization. He and his government should
have a chance to shop around, for when choice is replaced by
compulsion, the fundamental relationship between citizens and
public employees is drastically altered: there are no public servants
any more [author's emphasis] (1982: 134-135).
Savas has support for portions of his theory, including Marc Holzer
and Arie Halachmi (1991) and David Osborne and Ted Gaebler (1992).
Holzer and Halachmi "accept the premise of government's critics that
monopolies are inherently inefficient...but reject the premise that the
private sector is inherently more efficient or effective" (1991: 7-8). Most
privatization supporters are willing to throw the public "baby out with the
bath water" and look to the private sector for all the solutions. Osborne
and Gaebler contend that competition "forces public (or private)
monopolies to respond to the needs of their customers" (1992: 82).
Four factors affect the efficiency of governmental provision of
services, according to Robert Spann: pricing of governmental outputs; the
size of the political unit versus the optimum scale of operation;
competition from alternative sources of supply; and, the mobility of the
citizenry. Competition between the public and private sectors exist in
areas such as hospitals, on-campus university hotels, and power
companies. He posits that
[Competition from private firms may also lead to a higher quality of
government services. A government enterprise cannot survive
long if its customers can get a product more to their liking from a
privately owned firm in the marketplace. Privately owned firms
must produce what consumers desire or they go out of business.
Thus, privately owned firms have a strong incentive to produce the
type of output the public desires (measured by the fact that the
public is willing to pay for it). Government enterprises, when in
competition with private firms, must be able to produce a product
of similar quality or they will have no customers. (1983: 336)

However, Spann fails to provide empirical evidence supporting his
Bish and Warrens study of organization of government units
questions the consolidation of units into regional government as an
attempt to reduce fragmentation. They consider centralization of
government anomalous to private sector monopolies where [t]he
tendency for private monopolists to fail to meet the criteria of production
efficiency and responsiveness to diverse preferences is well known" (1972:
99). Tradeoffs for the citizen are significant, as they continue.
The more numerous the political units, the more accurately a
citizen may indicate his preferences, but the more costly it will be in
terms of his own participation. Conversely, the fewer the political
units, the more difficult it will be to express preferences on any
single good or service, but the less costly will be his own
participation....This choice problem is often called the menu
problem: Do you purchase everything a la carte -- e.g., one unit for
each good -- or bn a dormitory contract specifying every meal for a
school year with one decision? (1972: 105)
They contend that Gordon Tullock's optimum demand-articulating
framework may fit somewhere in between the expression of demand and
production (1972: 105) and recommend contracting with the private sector,
which separates the demand-articulating units (e.g., school board) from
the production units (e.g., private firm which provides educational
Richard Wagner and Warren Weber examine the supply of public
output in metropolitan areas and conclude that
[t]he budgetary consequences of an increase in the line of services by
government seems to be explained more adequately by an
assumption of monopolistic behavior than by one of competitive
behavior. Our empirical results indicate that the determinants of
total expenditures and the composition of public budgets are
affected by the organization of government. Such results would not

occur if governments were competitive. Consequently, the "public
service industry" government would seem more appropriately
classified as monopolistic than as competitive....The analysis in this
paper should not be interpreted as disputing the proposition, which
has since come to be cited in the literature as the "Tiebout
Hypothesis," that an increase in the number of competing and
overlapping governments will lead the public economy more
closely to perform as a competitive industry. Rather, our analysis
suggests only that the provision or [sic] services through a
fragmented and overlapping system of local government is not a
perfect substitute for the provision of services through a
competitive market. As George Orwell might have said, "All
governments are monopolistic, only some are more monopolistic
than others." (1975: 683-684)
Another writer states that it is more dangerous when government
acts as a monopoly. [I]t should not be forgotten that giving any one body
exclusive control over an indispensable service poses dangers that go far
beyond the ledgerbook of expense. These dangers are heightened when
the monopolist is the government and is therefore entitled to defend its
prerogatives. The monopoly invariably will be used to nurture the
ideological predilections of those who control it" (Wooldridge, 1970: 51).
Michael Lipsky notes the lack of competitive services available for
governments clients, particularly the poor.
Clients in street-level bureaucracies are nonvoluntary. This point is
obvious in coercive public agencies such as police departments, but
is also applies when the coercive dimensions of the relationship
between the agency and the client are less clear. This is because
street-level bureaucrats often supply essential services which
citizens cannot obtain elsewhere. Government agencies may have a
monopoly on the service, clients may not be able to afford private
services, or they may not have ready access to them. Potential
welfare recipients in a sense "volunteer" to apply for welfare, for
example, but their participation in the welfare system is hardly
voluntary if they have no income alternatives. (1980: 54)

Putting a different twist on degrees of dominance and competition
in bureaucracies, Douglas Yates states, "Some bureaucracies occupy a
relative monopoly in their fields; others participate in an oligopoly
structure; still others are characterized to one degree or another by
competition in their areas of operations." (1982: 136) He contends that
"there are few if any pure monopolies among public bureaucracies" with
the possible exception of the FBI and CIA at the height of their power
(1982:136). Instead, bureaucracies face strong horizontal and/or vertical
competition in terms of policy making. Horizontal competition exists
among different institutions in federal government (e.g., the State
Department and the National Security Council) and vertical competition
exists among different levels of government bureaucracies (e.g., federal,
state and local levels).
Yates' view of competition differs substantially from that of many,
including, for example, Osborne and Gaeblers views of different sources
of competition for government work: public vs. private where public
agencies bid against businesses; private vs. private where government asks
private firms to perform public services through load shedding,
procurement or contracting; and, public vs. public where government
agencies compete to provide services such as education through the public
school's voucher system (1992: 84-90).
Marc Holzer and Arie Halachmi also encourage looking at
competition for the public sector more broadly than just privatization of
public service. Their "government as competitor" approaches are intra-
government service delivery and mirror Osborne and Gaebler's
approaches. The first part of the tripartite model of competition for
delivery of government services proposes open competition where
government agencies would bid along with private firms on service
provision regardless of their locus or mission in order to capitalize on
their investments through economies of scale or use of extra capacity. For
instance, a school district may perform maintenance services for a police
department. The second component of the tripartite model is that of open

competition only within government to ensure public accountability and
the retention of management and emergency capacities in areas such as
public safety and public education (from kindergarten to post-graduate
school). Finally, the third portion posits that government's capacity for
competition would expand either through the creation of consulting
functions which have the government knowledge base and would float
from one government entity to another or through the establishment of
government corporations with enhanced flexibility (1991). In another
paper, Halachmi and Holzer warn that the creation of government
corporations or public authorities can create organizations less responsive
than private organizations due to the "shield from the effects of some
market forces" (1991: 24). Since "government corporations are supposed to
retain the public interest and to hold it above the profit motive" the
questions remain in terms of "how to balance the need for responsibility
and accountability with the need to assure immunity from undue political
pressure" (1991: 24). "To be competitive, public agencies should be free
from the constraints of parochial considerations. However, at the same
time, they should be responsive to the wishes the public express directly or
through its elected officials. The need to balance short- and long-term
considerations (e.g., the general will and the general welfare) creates a
special problem in the case of public agencies that need to compete with
other agencies or private entities" (1991: 24).
With the understanding that government agencies compete with
each other for limited resources, this thesis addresses the more common
definition of monopoly and competition that the majority of the literature
reviewed here has implied and that Osborne and Gaebler specifically
define that of limiting or providing choices to the citizen in government
service provision. In other words, the use of the terms government
competition and monopoly here should not be confused with Yates'
description of vertical or horizontal competition within government
branches in determining resource allocation.

Customer Service
Nearly all customer service literature focuses on customer
satisfaction with products and is found in the private sector. In fact,
"consumers' satisfaction with services is a relatively unexplored
area....Service marketers may not always understand what consumers
expect in a service" (Webster, 1991: 6). Marketing researchers have relied
on survey instruments and polls to determine the levels of customer
satisfaction and attitudes. Many recent writings have proposed private
sector systems to incorporate customer preferences (Cron, 1974; Albrecht
and Zemke, 1985; Czepiel, Solomon, and Surprenant, 1985; Parasuraman,
Zeithaml, and Berry, 1986; Davidow and Uttal, 1989; Kanter, 1989;
Zeithaml, Berry, and Parasuraman, 1990). However, various proven
customer-oriented programs in the private sector, including Total Quality
Management, are beginning to be applied in the public sector with
increasing interest and successes (Osborne and Gaebler, 1992).
A. Parasuraman, Valarie Zeithaml and Leonard Berry (1985, 1986,
1987, 1990, 1990, in press, in varying order of the primary author's name)
reviewed the organizational behavior and marketing literature and
developed an instrument to measure gaps in service quality. They found
gaps between: 1) management perceptions and customers' perceptions; 2)
management perceptions and service quality specifications; 3) service
quality specifications and service delivery; and, 4) service delivery and
external communications. The final gap is a function of all four gaps is
"the quality that a consumer perceives in a service is a function of the
magnitude and direction of the gap between expected service and
perceived service" (1985: 46). Measurement ol the differences between
customers' expectations and perceptions is gaining in application in public
and private sector settings.

Regarding limited attention in the customer service literature in
the public sector of quantifiable measurements, Anthony Maluccio studied
the client-worker relationship in the social work environment and found
significant differences in expectations and their evaluations of the service
delivery (1979). Aaron Wildavsky observes that the way clients are
viewed in a political context affects customer relations in the public
organization. Governmental agencies use budgetary strategies to maintain
or increase program funding, and some take advantage of the client-
worker relationship. He writes, "Informing one's clientele of the full
extent of the benefits they receive may increase the intensity with which
they support the agency's request" (1979: 66).
Harry Hatry, among others, recommends regularly polling public
customers through citizen/client surveys to obtain feedback on service
quality. "Clients, after all, are the recipients of most government services,
and their ratings of government services should be of critical importance
to public officials" (1989: 474-475).
A city managers plea for immediate change in the profession
includes a cry for customer responsiveness. Bill Kirchhoff writes that the
privatization movement "clearly demonstrates that much of what we
public sector managers do can be done equally well and at a lower cost by
entrepreneurs. We will become an extinct profession if we dont ask who
our customers are and what they want us to do for them. These are
opportunities that should not be subordinate to problems" (1990: 2).
Witness the popular interest in, which borders on obsession with,
W. Edwards Deming and his Total Quality Management approach to the
workplace. Public officials are hungry for the TQM adaptation of the
consumer revolution to the governmental work setting. James Swiss
warns that TQM be "reformed" before it is implemented into government
programs. He writes

orthodox TQM can easily do more harm than good because it can
encourage a focus on the particularistic demands of direct clients
rather than the needs of the more important (but often inattentive)
customers, the general public. Orthodox TQM can also cause an
organization to neglect or even -- if Deming's advice is followed
dismantle such established systems as MBO, program budgets, and
performance monitoring systems that set clear output goals and
monitor results....Reformed TQM, however, jettisons orthodox
TQM's hostility to output goals and measurements, deemphasizes
its demand for output uniformity and organizational culture
continuity, and sensitizes managers to the dangers of satisfying just
an immediate clientele. Yet at the same time, reformed TQM saves
the orthodox principles of employee empowerment, continuous
improvement, and quantitative tracking of product quality and of
client reactions. (1992: 359-360)
Although research has been done on the delivery of service
(LaLonde and Zinszer, 1976; Prottas, 1979; Stipak, 1979; Fitzgerald and
Durant, 1980; Arrington and Jordan, 1982; Ferris, 1982; Wilson, 1983;
Davidow and Uttal, 1989), its organizational context (Bish and Warren,
1972; Fowler, 1974; Cupps, 1977; Azarnoff and Seliger, 1982; Ferris, 1984;
Hines, 1984; McDowell, 1984), and the relationship between clients and
workers (Finer, 1931; Maluccio, 1979; Lipsky, 1980; Goodsell, 1981;
Hasenfeld and Steinmetz, 1981; Hart, 1984; Czepiel, Solomon, and
Surprenant, 1985; Lovrich, Steel, and Mahdun, 1986; Lewis, 1990), the
"public customer" has rarely been questioned about service expectations
and perceptions, particularly vis-a-vis perceptions and expectations in
monopolistic or competitive environments within government. Also,
much of the private sector service delivery literature stresses the need for
a comprehensive, strategic approach to customer service. None of the
literature specific to the public sector ties citizen surveys to an overall
customer strategy that encompasses all areas of customer service in
Of recent interest in the public sector is surveying citizens about
service provision and its quality although empirical research is lacking in
the assessment of customer attitudes and its incorporation into public

service provision. The previous review of literature in government
responsiveness revealed limited references to and little empirical research
on assessing the needs and expectations of the citizens. A combination of
empirical customer service assessment and its impact on overall
government responsiveness has not been adequately addressed in the
literature, particularly when competition for the public agency services
may or may not exist. Many opine that the lack of government
competitors results in less responsive bureaucracies but no one provides
quantitative data to support their contentions.
Customer Service in Monopolies
A handful of writers have made the transition from responsiveness
to customers in the private sector to the public sector acting as a
monopoly. "While a natural monopoly, which urban governments are
implicitly assumed to be, is theoretically able to supply a market at a lower
average cost than two or more producers, incentives for efficient and
responsive performance may be lacking" (Bish and Warren, 1972: 102).
A substantial body of law in this country is based on the assumption
that monopolies in the private sector are neither responsive to
consumer preferences nor subject to normal market
controls....There is also growing evidence that monopolistic
producers of municipal goods and services follow patterns of
behavior similar to those which public policy seeks to restrain in
the private sector. The absence of output measures, the lack of
revenues related to production, and the inability of citizens to
utilize alternative producers all contribute to the similarity in
performance of public and private monopolistic enterprises....Public
goods and services are difficult to measure primarily because of
their intrinsic characteristics....but a major source of difficulty may
also be related to the behavior of the monopolistic producer. It is to
his advantage to produce only information which makes him look
relatively efficient and responsive, and to suppress or restrict access
to information which would permit citizen-consumers or elected

officials to truly evaluate efficiency. (Bish and Warren, 1972: 106-
As reviewed earlier and reinforced here through Bish and Warren's
examples, public monopolies are analogous to their private sector
counterparts due to similarities in performance and attitudes and in terms
of how their monopolistic environment is perceived by their customers.
This begs the question: do public sector monopolies operate differently
from private sector monopolies in terms of customer service? It is
important to look at what scarce references exist in literature regarding
customer service in monopolies, particularly government monopolies.
Two clear distinctions between monopolies in the private sector
and the public or "nonprivate" sector are drawn by Alan Waters.
First, those in the private sector unless receiving the legal support
of government are subject to continual threats from new
technologies, new entrants to their industry, substitute products or
services, or changes in the demand for their output. Monopolies in
the private sector do not survive. The dreaded giants of yesterday -
railroad barons, coal barons, cotton magnates, cattle barons --
become the supplicants for public subsidy and protection in a couple
of decades. Those in the nonprivate sector survive. Second,
monopolies in the private sector generate visible financial profits or
losses. Those in the state sector always generate "profits," seldom in
the form of cash, but profits nonetheless. (1987: 40)
Others have explained public sector service delivery through
empirical research, which compared the efficiency of public versus private
provision of goods and services but not in terms of customers' attitudes or
service satisfaction (Roessner, 1977; Stevens, 1978; Bennett and Johnson,
1979; Baumol, 1980; Lynn, 1981; Sisk, 1981; De Alessi, 1982; Gold, 1982;
Spann, 1983; Chubb and Moe, 1988; Allen, Chi, Devlin, Fall, Hatry, and
Masterman, 1989; Tyer, 1989; Wise, 1990). Airlines, electric utilities, fire
protection, hospitals, and trash collection in the public and private sector
have all been studied in terms of relative costs. Robert Spann concludes

that [f]or the majority of activities, private producers can provide the
same services at the same or lower costs than can public producers. In
some case, the costs of private firms are half that of government agencies
for producing the same goods or services" (1983: 346). Here, cost is the sole
criterion. While surely not irrelevant, it is an inadequate proxy for
determining bureaucratic responsiveness to its customers.
The relative performance of municipal and contract refuse
collection has also been studied in terms of relative costs (Savas, 1977a;
Stevens, 1978; Bennett and Johnson, 1979). Public and private sector trash
collection costs and rates have been studied in many different ways with
varying results: from no or insignificant differences (Hirsch, 1965) to
government costs adding up to twice the costs of private providers (Spann,
1983) to government costs decreasing over a number of years to outbid
private contractor costs (Osborne and Gaebler, 1992). Peter Kemper and
John Quigley's research findings contradict those of Robert Spann.
"Collection cost appears to vary systematically with the organization of
collection, even after controlling for other factors. Private collection
appears to be about 30% more expensive than municipal collection, which,
in turn, appears to be about 25% more expensive than contract collection"
(1976: 110). James Bennett and Manuel Johnson attempt to identify all
costs to public and private sectors, including taxes and licenses paid by the
private sector and public sector vehicle maintenance costs, and support
Spann's findings that the private sector is more efficient than government
in trash collection (1979: 61). Therefore, given several attempts to identify
empirically savings or additional costs regarding public versus private
sector service delivery, research results vary widely, are inconclusive, and
consider costs and not the expectations and perceptions of service
providers by their customers.
Further review of relevant literature reveals discussion of the
differentiation between "public and "private goods (Bish and Warren,
1972; Champney, 1988; De Alessi, 1982) and the involvement of citizens in
the production of government services (Brudney and England, 1983;

Ferris, 1984; Fisk, Kiesling, and Muller, 1978), but again in terms of
efficiency and economy and not in terms of comparing customer
satisfaction with services. Empirical research has been done (Savas, 1977a,
1980; Florestano and Gordon, 1980) and models developed (Hirschman,
1970; Jerison, 1983; Wagner and Weber, 1975) regarding competitive versus
monopolistic environments in government.
If dissatisfied, what alternatives are available to consumers of
monopolies? Albert Hirschman states that one of two options available to
the customer is to "exit" or stop buying the monopolistic firm's products.
The second option is to "voice" or express dissatisfaction directly to the
organization or to appeal to the organization for change. Loyalty is the
process of allowing voice to play its role under the threat of exit. As
Hirschman explains, "exit" belongs more within the economic realm
through its use of the market to defend the customer's welfare or improve
his position and "voice" is considered the more political alternative due to
its graduated articulation of opinions (1970).
In applying the concept of "exit, voice and loyalty" to public
monopolies, one realizes that indeed rather few options are open to the
citizen-customer. One could exit by "voting with one's feet"; that is,
moving to a different government district. One could voice dissatisfaction
through the political system. Given the decline in public confidence in
American government discussed earlier and the amorphous message sent
through the ballot box, it becomes clear that the dissatisfied citizen-
customer has limited influence in monopolistic government.
A "loose" monopoly, a phrase used by Hirschman, is a monopoly
where it is possible for consumers to exit, although it is unlikely they
would do so. Alan Andreasen's study of consumers shows that when they
were dissatisfied with health care -- a "loose" monopoly system -- they did
not exit and were reluctant to voice objections. When they voiced
objections, it was of little help due to the structure of the system.

Andreasen recommends requiring physicians to obtain systematic
feedback from all consumers for re-licensure (1983).
Acknowledging that not all monopolies are responsive to their
clientele, Frank Thompson studies "an essential monopoly", a civil
service office in city government. He concludes that this "people
processing" agency tries hard to be responsive to client needs and the
success of those "responsiveness attempts" is unclear. At times, attempts
to please the customer (e.g., a minority applicant) work against the needs
of the client (e.g., the agency striving for competence or specialized skills).
He concludes that
Meager as the response of the [civil service] office to minority
spokesmen may seem, this response would probably have been less
had the office been forced to compete for the business of the
departments. Nonetheless, the behavior of the Oakland personnel
agency cautions against great reliance on monopoly processors to
guard against client interests. (1976: 413)
There is limited discussion of customer satisfaction with service
provided by monopolies and even less empirical research (Savas, 1977;
Myers, 1990). One study of potential nursing home customers touched
briefly on the concept when it asked them to rate proprietary versus
nonproprietary nursing homes. The only statement regarding service
quality was "[n]o general inferences about quality can be drawn based on
mode of ownership alone" (Spann, 1983: 345).
Some theorists contend that because government operates largely as
a monopoly, it does not feel the need to exhibit responsiveness and does
not need to attend to the will of the people (Hirschman, 1970: 55-56; Chubb
and Moe, 1988: 1068-1070; Savas, 1982: 21-22; Osborne and Gaebler, 1992:
180). Still unanswered is the question of the measurable impact on public
service attitudes and bureaucratic responsiveness when government acts
as a monopoly. In other words, while many public administration
thinkers can be quoted in terms of their beliefs that public monopolies are

unresponsive to the citizen-customer, no quantitative data are provided.
Further, they do not recognize the need to gather such information. Thus,
although many posit that public monopolies are less responsive than
those that have competition, a void in polling the citizen-customer exists.
In one of two examples of empirical research regarding service
quality of government monopolies, Savas researched refuse collection
over five years in terms of economic performance (cost per ton and cost
per household), workload performance (tons collected per truck per shift)
and measure of quality (telephone calls to the city agency per year per
household) -- the latter he admits is a "not very satisfactory" measurement
of quality and citizen satisfaction. He finds that citizens are about equally
satisfied with contract and municipal collection and the number of
telephone complaints had declined in both areas when competition was
introduced into the marketplace. He concludes that
the perceived quality of service also appears to be improving.
Although these data do not prove causality, that is, they do not
prove that competition was the cause of the improvement,
additional operational information provides further support for the
theory that: "competition, the presence of a yardstick systematically
used for comparison of alternative delivery systems, was primarily
responsible for the large observed increase in productivity." (Savas,
1977a: 720-721)
In the second example of measurement of service quality in
government, Thomas Myers surveyed students about perceived customer
contact personnel in the local post office, the local bank, the local Division
of Motor Vehicles, and the local grocery store as compared with their
community college, if not apples and oranges, then at least no better than
lemons and limes. While his survey did not specifically address
government as a monopoly, not unexpectedly given his sample, he did
find differences between levels of customer satisfaction with higher grades
given for the performance of the businesses than the public sector agencies
across the board (1990: 70-71).

In summary, many authors identify differences between public and
private sector organizations in service delivery costs or production, as well
as differences between monopolistic and competitive environments in
service delivery costs or production. Many believe that government acts
as a monopoly much of the time.
Many authors have described that bureaucratic responsiveness
could be enhanced through citizen involvement (Ippolito and Walker,
1972; Rieselbach, 1975; Salamon and Wamsley, 1975; Weber, 1975). Other
research has identified a reasonably exhaustive set of factors that influence
service quality, as perceived by the customers (Brown and Swartz, 1989;
Zeithaml, Berry, and Parasuraman, 1987). Some have looked at the
government employee and citizen-customer relationships (Finer, 1931;
Maluccio, 1979; Lipsky, 1980; Goodsell, 1981; Hasenfeld and Steinmetz,
1981). Still others have identified differences between government and
private sector organizations (Roessner, 1977; Bennett and Johnson, 1979;
Lynn, 1981; Gold, 1982; Spann, 1983; Chubb and Moe, 1988), as well as
differences between monopolistic and competitive environments
(Mueller, 1970; Bish and Warren, 1972; Savas, 1977a, 1977b, 1980, 1981;
Bennett and Johnson, 1979; Florestano and Gordon, 1980; Chubb and Moe,
1988). Most, such as Osborne and Gaebler (1992) and Savas (1982), are
anecdotal in their evidence.
However, the consideration of citizen-customer expectations and
perceptions in monopolistic and competitive public sector environments
is not a well-researched area. Hirschman's theory of customer action
(1970), exit, voice or loyalty has not been empirically tested outside of
Andreasen's survey of health care consumers (1983). Savas theorizes that
governments as monopolies do not have to consider citizen-consumer

requests, but he lacks empirical data to support that contention (1982).
Savas' admittedly weak measurement of customer satisfaction in his
comparative study of refuse collection (1977) was telephone complaints.
In no cases were any attempts made to sample customers regarding their
perceptions of service quality. Comparison of public and private schools
by Chubb and Moe (1988) and Sisk (1981) reflect differences between the
two, including differing incentives in their customer orientation, but
again both fall short by failing to measure empirically those differences.
While Wagner and Weber (1975) provide empirical research into
the costs of service provision by monopolistic and competitive entities,
they do not address the service quality aspect of whether customers were
pleased with either service. Spann (1983) discusses advantages of
competition in the public sector but provides no empirical evidence.
Goodsell's (1981) description of the public encounter stressed the need for
the conduct of empirical research regarding organizational type.
Some limited examples of research regarding citizen satisfaction
levels exist. Savas' survey (1977a) of refuse collection considered citizen
satisfaction in terms of telephone complaints to the city agency, an
incomplete and potentially misleading measure of satisfaction or
perceptions of service. Thompson's study of a civil service agency
considered the attention to its customers and prioritization of requests for
its multiple customers-constituencies (1976). Spann's one-sentence
mention of customers expectations of service quality from the public
sector begs further research and discussion (1983). Myers' research (1990)
holds the most promise in terms of beginning to assess levels of customer
satisfaction with government and private sector services, although
monopolistic or competitive differences are not specifically considered. As
a result, much is yet to be learned about the customer in a government-as-
monopoly environment and the expectations and perceptions of citizen-
consumers about bureaucratic responsiveness in that environment as
compared to a competitive environment.

Public organizations are by their very nature "service
organizations" and responsive to the public for different reasons than the
private sector must be responsive. Managers in the public sector are under
pressure to respond to political environments and to provide more
services at a constant level of funding or to provide the same level of
service with fewer resources. Public administrators also face the difficult
task of balancing accountability controls with increased responsiveness.
Trends in the service industry reflect the need for increasing attention to
the demands of the public sector customers. Therefore, public managers
would benefit from measuring gaps in customer service and the impact on
the general effectiveness of their organization, specifically, its
responsiveness and accountability.
Studying the perceived gap between citizen/customer preferences
and policies and actions of public organizations could provide a better
understanding of the level of organizational responsiveness to the
citizenry. Studying whether the type of competitive environment makes
a difference in public customer satisfaction could provide a powerful
insight into bureaucratic accountability. This research addresses public
perceptions of bureaucratic behavior. It identifies a need for quantifiable
data to measure gaps in service quality that can be used by public
administrators to close those gaps i.e., to provide better service which,
in turn, can enhance the image of public bureaucracies and positively
affect expectations and perceptions of bureaucratic responsiveness.
Review of the literature shows considerable attention by some of
the most noted thinkers in public administration and political science to
the issue of government responsiveness but also shows an inadequate
amount of empirical research regarding the needs and expectations of the

citizen-customer, despite repeated recommendations of linkages between
the public official and the public. A combination of customer service
assessment and its impact on overall government responsiveness has not
been adequately addressed in the literature, especially in those instances
where competition for the public agency may exist. In areas where
government competition has been discussed, which is often intertwined
in the privatization discussions (e.g., Savas, 1982; Holzer and Halachmi,
1991; Osborne and Gaebler, 1992), empirical data have not been provided to
back up contentions of unresponsiveness by public monopolies.
Bureaucratic theory regarding the responsiveness of monopolies,
which would serve as the appropriate theoretical base for this research, is
conspicuously absent. That is, bureaucratic theorists have addressed
responsiveness or the lack thereof to a number of groups, yet there is a
significant void in economic and bureaucratic theories regarding
monopolistic responsiveness that would embrace these research
questions. It makes finding a home for these research questions, and the
ultimate findings, difficult if not impossible. Bureaucratic theorists have
not grappled with customer service challenges where government
agencies act in a monopolistic or competitive environment.
Examining results and synthesizing different theories from this
research would help public managers know if measuring the differences
between public customers' expectations and organizational
competitiveness could provide information to improve bureaucratic
responsiveness. This information would be available to public
administrators as they decide their course of action to balance the need for
public accountability with the desire for public responsiveness.

Prior to discussion of the formulation of the primary and secondary
hypotheses and potential rival hypotheses, it is important to review the
background of the government agency whose performance is being
assessed here, to understand its provision of services in monopolistic and
competitive environments, and to study the reasons for selecting the U.S.
Postal Service as the governmental entity to investigate customers'
attitudes and levels of satisfaction. This chapter will also define key terms,
outline the research hypotheses and provide alternate hypotheses.
U.S. Postal Service
Background/History of the U.S. Postal Service
Dating back to 1691, when Thomas Neale was named postmaster
general of the British possessions in America, the U.S. Postal Service has
operated as a monopoly, although certain types of mail deliveries are no
longer under monopolistic control (e.g., parcel post, overnight). Prior to
1970, Congress determined much of the working conditions of the postal
service, from controlling postage rates to setting employees' salaries. The
Postmaster General was a political appointee and served as a member of

the President's cabinet before the enactment of the 1970 Postal
Reorganization Act. At that time, an "independent establishment" was
created, directed by an eleven-member Board of Governors, nine of whom
are appointed by the President and confirmed by the U.S. Senate, plus the
Postmaster General and the Deputy Postmaster General. As a quasi-
governmental entity, its employees are not subject to the civil service
system and their compensation is to be comparable to private sector
analogs. Congressional appropriations equal to 10% of the total costs of
operating the postal service were to be paid for 10 years, then reduced 1%
per year for 5 years, in an attempt to have the U.S. Postal Service become
self-supporting (Fowler, 1977). Government appropriations actually
decreased from 13.2% of total revenue in 1975 to 2% of total revenue in
1987 (Statistical Abstract of the United States, 1989: 542). Postal rates are
proposed by a special commission of five presidential appointees and can
be overturned by unanimous vote by the Board of Governors (Fowler,
The major objectives of the 1970 Postal Reorganization Act were 1)
to remove political influence from postal operations; 2) to allow the postal
service to operate in a more business-like manner through providing the
ability to incur debt and taking the employees out of the civil service
system; and, 3) to shift the cost of postal service from government to all
users of the postal system (American Enterprise Institute, 1976).
The postal service was reorganized to a government corporation,
generally considered to be the most autonomous form of governmental
Since [government corporations] are generally free of the traditional
legislative restrictions on employment practices, internal decisions,
and financing, government corporations have, at least theoretically,
the kind of managerial flexibility needed by the government in
performing certain kinds of activities efficiently and effectively.
(Tiernay, 1981: 7)

Other examples of government corporations, also called public authorities
or quasi-public entities, include the Federal Deposit Insurance
Corporation, the Tennessee Valley Authority, the Pension Benefit
Guaranty Corporation, the Commodity Credit Corporation, the St.
Lawrence Seaway Development Corporation, and the University of
Colorado Hospital Authority. However, some critics of the problems at
the Postal Service trace them back to its unique organization -- "its
peculiar history as a public agency in private-sector clothing" (Linsley,
Since its reorganization in the early 1970s, the U.S. Postal Service
continues to struggle with its image as a slow-moving bureaucracy as well
as with certain encumbrances that its private sector counterparts do not
have. The media paints a less than glowing picture of the U.S. Postal
Service. "News accounts...typically cast the Postal Service as a
governmental leviathan, stifler of private initiative, and protector not of
the public interest but of its own bureaucratic domain" (Tiernay, 1981: 141).
An editorial blasting the "Postal Disservice" blames its woes on the
publicly authorized monopolistic environment. "The evidence is strong
that where private markets are allowed to function -- fax service, Federal
Express, UPS, etc. consumer demands are being realized. Where the
governmentally controlled entity reigns, consumer satisfaction withers"
(Suhrke, 1991).
As the largest civilian employer, with more than 800,000 employees,
the U.S. Postal Service delivers 154 billion pieces of mail per year. "It
handles more mail in one day than Federal Express...handles in a year"
(Judis, 1988: 32). In light of its competition in areas not restricted by
statute, such as overnight delivery and parcel post, the U.S. Postal Service
has stepped up the marketing of its services. With an advertising budget
over $40 million, it spends more than any other federal agency except for
the U.S. Army (Nichols, 1989: 20). While postal officials would argue
those advertising dollars are designed to enhance the image of the entire

U.S. Postal Service, regardless of competition, the bulk seems to be spent
for Express mail delivery.
With the Postal Reorganization Act, Congress "left many of the old
rules intact," including a bloated and overpaid workforce, a history of
authoritarian management, and powerful unions (Linsley, 1990: 19). The
U.S. Postal Service is burdened with regulations that its private sector
counterparts are not, including a rate changing structure that takes eight
months. Certain regulations do not allow mail carriers, who often know
if an addressees name is misspelled or if only part of a household is
moved, to make the changes themselves. "Operators on the letter-sorting
machines are not allowed to take the initiative to key in the right ZIP code
when, for instance, they see a Chicago letter with a Cleveland ZIP code.
They have to key in the Cleveland code and wait for the mistake to be
remedied at the local post office two or three days later" (Judis, 1988: 34).
Another example of the constraints that the U.S. Postal Service faces
is the unionization of about 89% of its workforce. Union contracts limit
part-time postal employees to 10%, whereas 40% of United Parcel Service
(UPS) employees work part-time a more efficient method of covering
peak periods (early evening and early morning) in mail sorting (Judis,
1988). Unions have not hesitated to exert their power and have quashed
attempts to improve services. For instance, a 1989 contract with Sears to
put postal outlets in their stores staffed with Sears employees resulted in
unions threatening boycotts and Sears' eventually closing the outlets.
Even the selling of postage stamps in grocery stores has been denounced by
union representatives. One stated that "I am opposed to anybody else
selling stamps, because it would be denying dedicated people the work
they were hired to do" (Bovard, 1991: 14).
Although UPS and Federal Express pay their workers wages
comparable to the U.S. Postal Service, labor costs comprise 83% of the U.S.
Postal Service budget, as compared to 60% of UPS and 51% of Federal
Express (Judis, 1988). Canada's semi-privatized postal system took big steps

to realize a profit of $96 million in 1988-89 through "cluster box" mail
delivery in lieu of door-to-door delivery, franchising rural post office to
local storekeepers, providing volume discounts, and establishing a price
schedule that varies according to time and distance. The price paid for
these innovations include three major strikes and 73 union protests
(Linsley, 1990).
Despite capital investments totaling nearly $12 billion in the 1980s,
productivity at the U.S. Postal Service lags far behind non-farm private
sector productivity growth. A recent analysis shows U.S. Postal Service
productivity averaging a decline of a tenth of a percentage point each year
since 1980, whereas non-farm productivity increased 7.7% above its 1980
level (Linsley, 1990).
All such competitive delivery systems such as UPS and Federal
Express are legally allowable under the "private express statutes," which
continue to prohibit private carriage of first class mail (general
correspondence such as letters and postcards). Several widely publicized
court cases have resulted when certain firms have attempted to capture
some of the U.S. Postal Service's letter carrier business (Tiernay, 1981: 141).
Competition is tough for an agency "saddled with a cumbersome rate-
change structure and union contracts that effectively prohibit it from
competing in such areas as pick-up of packages" (Nichols, 1989: 20).
In his discussion of the U.S. Postal Service, William Wooldridge
believes that government monopolies are less responsive to their
customers. "Unresponsiveness to the varying requirements of users is
almost inevitably built into a government monopoly, for the impetus to
adaptations must struggle through a Congress properly more interested in
other things and simply not equipped to manage a business" (1970: 28). In
response to others who contend that the U.S. Postal Service holds a
"natural monopoly," you can almost hear him shriek:

The notion prevails that it costs one firm much less to deliver two
letters than it costs two firms to deliver one letter apiece.
Commentators conjure up the specter of four postmen from four
different companies following each other up the sidewalk to a
single house and each handling over a single letter to the occupant,
as a cost higher than necessary if all four letters had been entrusted
to one man. A true natural monopoly should also be an inevitable
monopoly, for sooner or later competitors will be unable to match
the smaller unit costs that accompany increasing size and
consequently will have to abandon the business to a giant. A plastic
geranium blooms more naturally than a monopoly that requires
penal statutes for its protection. Particularly for a government
department that starts with ninety-nine percent of the market and
therefore enjoys the maximum possible benefit of any economies of
scale, profitable competition from private citizens should pose no
threat. (1970: 26-27)
A question that has not been settled by economists is whether the
U.S. Postal Service has a natural monopoly "in which marginal cost is
everywhere below average cost" (U.S. General Accounting Office, 1992: 60).
Economist Frederic Scherer defines natural monopolies or oligopolies as
cases where "the minimum optimal scale of production is so large that
there is room in a given market for only one or at most a very few firms
realizing all production and distribution economies of scale" (1973: 519-
520). A private consultant argues that the U.S. Postal Service is indeed a
natural monopoly, and therefore a repeal of the private express statutes
and the resultant competition would result in a "private USPS [that]
would hold its own in the marketplace" (Bandow, 1988: 27). The General
Accounting Office report concludes that economies of scope probably exist
at the U.S. Postal Service, where one firm can produce multiple products
or services more economically than several different firms. In other
words, it appears that "the Postal Service can provide the general public
with all classes of mail service at less cost than several individual firms
each providing a single class of mail service on a nationwide basis" (1992:

Over the past two decades, the U.S. Postal Service lost nearly 20% of
its parcel delivery service to UPS, Federal Express and other competitors.
In fact, Federal Express's market share since its incorporation in 1971 now
amounts to almost 50% of the $6 billion business, compared to the U.S.
Postal Service's 12% market share (Nichols, 1989: 20-23). The entry of
competition into its once-protected monopoly has shown the inability of
the U.S. Postal Service to compete. Indeed, it experienced a dramatic
decline from 100% to 12% in market share within two decades when
private businesses were allowed to provide overnight mail delivery.
The Postal Service's share of the parcel post delivery market is less
than 4%. Ironically, the equal treatment that the Postal Service strives for
has been its weakness in the parcel post and overnight mail delivery
(Linsley, 1990: 19-21). Taking a different cut at market share, this time in
terms of overnight mail delivery, Federal Express holds 48.3% of the
market share, followed by United Parcel Service at 26%, Airborne Express
at 9.2%, the U.S. Postal Service at 6%, Emery Worldwide at 3.2% and
various other providers making up the remaining 7.3% (Pearl, 1990).
With the ability of private competitors to offer volume discounts, which
the U.S. Postal Service cannot offer due to charges of unreasonable
discrimination among mailers, even the U.S. Government uses Federal
Express as its shipper of overnight mail because of the reduced price.
Monopolistic and Competitive Provision of Postal Services
Critics hold that "mail service in America is slow and unreliable
because the government has a monopoly" and "as long as the Postal
Service can legally quash its competitors, it need not exert itself for its
customers" (Bovard, 1991: 10).
While the U.S. Postal Service maintains its legal monopoly on the
delivery of first class letters and third class addressed advertising (also
known as bulk business mail and commonly referred to as "junk mail")
challenges to its stronghold position in other areas have surfaced in the

last several years. Examples include its stiffest competition in the fourth
class (small parcel) market by UPS, Roadway Package Systems and by
buslines; delivering parcels by Federal Express, Emery, Airborne and
others; delivering advertising material and magazines such as the Wall
Street Journal and Reader's Digest by private firms; and companies,
particularly utilities, having their employees deliver statements.
The growing popularity of the facsimile machines, electronic funds
transfer systems (which also handle direct-deposits programs and point-of-
sale terminals, and provide the ability for bank customers to transfer funds
from one account to another over the telephone) and electronic mail over
computer lines all reduce the need for postage and therefore the U.S.
Postal Service first class mail system (Tiernay, 1981 and U.S. General
Accounting Office, 1992). Transmissions through electronic technologies
were estimated at 7 billion messages in 1991 (U.S. General Accounting
Office, 1992: 37), and is surely to increase.
First class mail accounted for 54.4% of the mail volume and 63.6%
of the revenues for the U.S. Postal Service in 1991, and mail volume has
grown by 78% from 50 billion pieces of mail in 1971 to 89 billion pieces in
1991. Most of the increase in first class mail is attributed to the increase in
financial services (e.g., banks, insurance companies, and credit card
companies), the largest sender of first class mail to households, accounting
for about 40% of the business-to-household mail (U.S. General Accounting
Office, 1992).
Fewer and fewer items are being transmitted through the
traditional first class mail system, threatening a reduction in the U.S.
Postal Service's enterprise that maintains its legal monopoly. Linsley
contends that the monopoly is "aimed primarily at maintaining a revenue
stream for the Postal Service rather than excluding other carriers from
doing business" (1990: 21).

Free-market economists assert that a repeal of the Postal Service's
monopoly on letter mail delivery would result in a more efficient
allocation of economic resources and would better serve the public
interest, arguing that a monopoly leads to unnecessarily high prices for the
consumer. Others suggest, however, that private entrepreneurs would
only engage in "cream-skimming" the process of identifying and then
serving only the more profitable markets. Postage rates for the remaining
mail would be dramatically increased unless the U.S. Postal Service
received substantial subsidies from Congress (Tiernay, 1981: 141-143).
After largely ignoring the postal service for six years, in the late
1980s the Reagan Administration touted a plan to eliminate the Postal
Service's monopoly. James C. Miller, Director of the Office of
Management and Budget, claimed that the "public has everything to gain
from competition and nothing to lose" despite complaints of varying rates
and delivery. "People will become used to differential prices. You learn
that you have to pay more for dinner than for lunch" (Judis, 1988: 54).
A policy analyst at the conservative Cato Institute argues that
pressure is mounting to end the U.S. Postal Service's monopoly in first
class mail delivery, citing increased efforts by the Third Class Mail
Association to repeal the monopoly and progress in other countries such
as Britain, South Africa and South Korea. James Bovard asks, "Who
believes the U.S. would be better off if the government outlawed Federal
Express and United Parcel Service?" (1991: 15). A member of the Postal
Rate Commission believes the trend toward privatization may encourage
the U.S. Postal Service to contract out some of its services while
maintaining its monopoly.
Clearly, the American public demands many services, including
postal services. At the same time, they want them performed
honestly and efficiently with a minimum of cost. They don't really
care whether the services are delivered by public or private
employees. But they are outraged when costs are unreasonable and

when those responsible display a business-as-usual attitude rather
than looking for ways to improve. (Crutcher, 1988: 23)
However "efficient" such a market-oriented action might seem, a
repeal of the postal monopoly seems unlikely due to the political
consequences to Congress of either drastically reducing postal service in
less populated (more expensive to service) markets or dramatically
increasing prices at a time when there are no politically strong proponents
demanding the monopoly repeal (Tiernay, 1981; Bandow, 1988; Crutcher,
1988). More attention is being paid in the 1990s to the U.S. Postal Service's
eroding financial picture. A recent General Accounting Office report cites
the U.S. Postal Service's declining competitive position over the past two
decades, since the Postal Reorganization Act, particularly in the fourth
class and overnight mail markets. It attributes the active exploration of
alternative means of communication, such as private carriers and
electronic communication, to substantial rate increases since 1988.
Without more flexibility in rate-setting, especially in terms of demand-
based pricing, and the U.S. Postal Service's lessening ability to shift costs
from third and second class mail to first class mail delivery, it could result
in increased pressure on Congress to open postal markets to competition
or subsidize the expensive national delivery network through
appropriations (U.S. General Accounting Office, 1992).
Purpose for Selecting Postal Service as Research Focus
The primary purpose for selecting the U.S. Postal Service as the
governmental entity to research in the area of customer service is due to
its provision of different services in monopolistic and competitive
environments. Other possibilities of monopolistic and competitive
environments in the public sector that were considered include education
(including higher education), trash collection, and health care. Education
and health care settings are highly specialized in their delivery of services
and do not operate under the same organizational structure. Trash
collection has been researched rather thoroughly albeit inconclusively -

and varies based upon vendor and structure. Therefore, provision of
monopolistic and competitive services through various entities
discourages the comparison of "apples to apples." Additionally, the
primary interest in this research was to focus on a universal service
provided by a public sector agency that crosses geographic and
socioeconomic lines, where each "customer" would have recent and
ongoing first-hand experiences with various services.
As a government corporation, the U.S. Postal Service serves as a
single entity which provides monopolistic services (e.g., first class mail)
alongside competitive services (e.g., parcel post and overnight mail).
Within the same structure, with the same government oversight and
often provided by the same employees, the U.S. Postal Service serves as
one entity serving a broad base of customers around the globe in both
monopolistic and competitive services. As a quasi-governmental entity,
its structure allows it the most flexibility enjoyed by government agencies
while it retains its image as a governmental bureaucracy in the general
public's eye. Therefore, the selection of the U.S. Postal Service as the
research "site" tests customers attitudes of a government that provides
service in both monopolistic and competitive settings. Furthermore, the
U.S. Postal Service has a significant degree of flexibility relative to its
public sector colleagues to attend to its customers and become more
responsive if it wishes.
Definition of Key Terms
Before the hypotheses are proposed and explained, certain key terms
require definition based on diverse usage in the literature and through
common language. Although the interpretation of terms may vary, this
explanation will provide a common understanding for their application
throughout this thesis.

Public Sector Customers
Some public sector researchers have termed the citizen/public
official interaction as a "public encounter" "the interaction of citizen and
government official as they communicate to transact matters of mutual
interest." Some examples of "public encounters," broken down into
purposes, are information exchange (e.g., recruitment of Army candidates,
census enumerator), service (e.g., public campgrounds, food stamps), and
control or constraint (e.g., taxation, law enforcement) (Goodsell, 1981: 5-6).
These public encounters are not considered mutually exclusive or
exhaustive. In fact, public encounters also vary by who initiates the
encounter, duration and scope of the encounter, and medium and setting
of the encounter.
In this paper, the terms "public customer," "citizen-customer and
"citizen" are used interchangeably because the citizen becomes a customer
of public services depending on the degree of direct or indirect benefit (e.g.,
air pollution control, traffic signal synchronization) and on varying points
in time (e.g., snow-plowed streets, unemployment, police protection).
Wagenheim and Reurink define customers of public administration as
"all citizens, segments of citizens buying or receiving goods or services
such as social services and licensing, business, economic development,
and voluntary non-profit groups who have dealings with the public
sector" (1991: 264). They also suggest that the definition of public customer
is "a person with whom one has to deal" such as other public agencies or
internal divisions.
Here, public customer is one who receives service(s), directly or
indirectly, from a public entity. This research focuses on the service-
oriented public encounter through the U.S. Postal Service where the
public customer is a consumer as mailer or recipient of first class, fourth
class and/or Express mail services.

Customer Satisfaction
For the present purposes, customer satisfaction shall be as defined
by Parasuraman, Berry, and ZeithamI (1985) where expected service (ES) is
equal to perceived service (PS). They also envisioned gradations of
satisfaction levels. "[P]erceived service quality is further posited to exist
along a continuum ranging from ideal quality to totally unacceptable
quality, with some point along the continuum representing satisfactory
quality" (1985: 48). Where a customer perceives service quality on the
continuum depends on the nature of the discrepancy between the
customer's expectations and perceptions of that service quality. They
propose that
(a) When ES > PS, perceived quality is less than satisfactory and will
tend toward totally unacceptable quality, with increased discrepancy
between ES and PS; (b) when ES = PS, perceived quality is
satisfactory; (c) when ES < PS, perceived quality is more than
satisfactory and will tend toward ideal quality, with increased
discrepancy between ES and PS. (1985: 48-49)
In other words, service is considered satisfactory when the perceived
quality of service delivered matches the customer's expected level of
service quality. This research focuses on measuring levels of customer
satisfaction and not on ideal quality. However, measuring where quality
falls short of customer expectations provide data to help public managers
meet and exceed, when desired, those expectations.
It is interesting to note that the simple satisfaction expression where
ES = PS also portends that holding down customers' expectations while
delivering a constant or even lower level of service would also result in
satisfactory service quality. The service provider may wish to focus efforts
on maintaining or reducing customers' expectations rather than increase
the service quality in areas such as enhanced reliability or responsiveness.
Therefore, satisfaction can be realized through changing perceptions or
expectations or some combination of both.

Satisfaction of service quality is broken out into ten criteria or
dimensions used by customers in their judgments, which was further
refined into a total of five dimensions. A listing as prepared by the same
group of researchers (Zeithaml, Berry, and Parasuraman, 1990: 21-22)
follows, along with definitions:
Tangibles: Appearance of physical facilities, equipment, personnel,
and communication materials.
Reliability: Ability to perform the promised service dependably and
Responsiveness: Willingness to help customers and provide
prompt service.
Competence: Possession of the required skills and knowledge to
perform the service.
Courtesy: Politeness, respect, consideration, and friendliness of
contact personnel.
Credibility: Trustworthiness, believability, honesty of the service
Security: Freedom from danger, risk, or doubt.
Access: Approachability and ease of contact.
Communication: Keeping customers informed in language they
can understand and listening to them.
Understanding the Customer: Making the effort to know customers
and their needs.
As the service quality instrument was refined by its creators, the
dimensions of competence, courtesy, credibility, and security were grouped
together under a broader dimension of assurance and dimensions of
access, communication and understanding the customer were
consolidated into a broader dimension of empathy. Therefore, the

resultant five service dimensions are: tangibles, reliability, responsiveness,
assurance (which includes competence, courtesy, credibility, and security),
and empathy (which combines access, communication and understanding
the customer) (Zeithaml, Berry, and Parasuraman, 1990).
Public Monopoly and Public Competition
In this paper, public monopoly shall mean the exclusive ownership
or control of a specific service provided by a government agency. An
example of a public monopoly is the delivery of first class mail by the U.S.
Postal Service as mandated by federal law. First class mail includes letters,
postcards and general correspondence. Public competition shall mean that
alternative mechanisms of service delivery are available through a non-
government agency, such as fourth class mail (competing with its non-
government counterparts UPS and Roadway Package Systems) and Express
Mail (competing with Federal Express, Airborne and other private sector
businesses). Fourth class mail, also known as parcel post, covers packages
weighing from one to seventy pounds. Express mail is the overnight
delivery of letters and small packages. While parcel post and Express mail
could be considered "substitutes," in economic terms, for first class mail, it
is more appropriate here to consider them competing directly with UPS
and Federal Express, among others.
Bureaucratic Responsiveness
Definitions of responsiveness in the literature vary. Richard
Claude, in studying the responsiveness of the U.S. Supreme Court, defines
responsiveness as "the taking of nonarbitrary, pertinent, and timely action
by a decisional body in reply to expressed preferences by clients,
constituents, or some segment of the public" (1975: 131). Another
definition of responsiveness is "the congruence between the goals the
organization or administrative systems pursues and the goals desired by
the people to whom the organization is responsible and under whose

authority it operates" (Fried, 1976:15). Fried breaks responsiveness down
further into subquestions: responsiveness to whom and where is
responsiveness or outside control focused? responsiveness about what
and what is its scope? what channels does responsiveness follow? what is
proper and inappropriate responsiveness? Still another definition, as
noted above under dimensions of service quality, is the perceived
willingness to help customers and to provide prompt service (Zeithaml,
Berry, and Parasuraman, 1990: 21). This marketing-oriented definition
will not be used in this instance because it is too narrow in the context of
the research of bureaucratic responsiveness.
In this paper, responsiveness shall be as defined by Fried (1976): the
congruence between organizational goals and the goals of those to whom
the organization is responsible. Here, the quantitative measurement of
responsiveness is through service quality gap analysis, which measures
the gap between expectations and perceptions of service received,
supplemented with a series of statements that public customers answer
(e.g., "For the most part, the government serves the interests of a few
organized groups, such as business and labor, and isn't very concerned
about the needs of people like myself" and "It seems to me that the
government often fails to take necessary actions on important matters,
even when most people favor such actions").
Research Hypotheses
This research is structured to test a primary hypothesis regarding
"public customer" service in monopolistic and competitive environments
and several secondary hypotheses that provide a deeper understanding of
customers' perceptions, expectations and demographic and ideological

Primary Hypothesis
The primary research hypothesis of this thesis is:
Hi: Customers of public monopolies are less satisfied with
government service provided by those organizations than customers of
government when the entity has competitors. In other words, all things
being equal, there are differences in service quality, as determined by the
public customers, when a public agency operates in a competitive
environment versus when a public agency operates in a monopolistic
Ho: There is no statistically significant difference in perceptions of
service quality between customers of competitive and monopolistic
environments in the public sector, all things being equal.
Secondary Hypotheses
There are several secondary hypotheses that either are subsets of the
primary hypothesis or posit other, potentially less statistically significant
relationships in the data in order to gain a better understanding of the
citizen-customer of a monopolistic or competitive government
Hsi: Customers' perceptions of services delivered are lower when
provided by a monopolistic government than by a government that has
Note that the "perceptions" part of the satisfaction equation is
isolated here in order to look at it separate from expectations of public
customers of monopolistic and competitive entities. This tests the notion
that the quality of service as provided by a monopolistic entity will be
perceived by the customer as lower than if the service were provided by an
entity with competition.

Hs2^ There are larger gaps between customers' expectations and
perceptions of service delivered by a monopolistic government than by a
government that has competition.
Here, the hypothesis focuses on the differences between satisfaction
levels of customers of monopolistic government and posits that overall
satisfaction levels are lower in customers of monopolistic governments.
While this is similar to the primary hypothesis, this breaks down the
satisfaction equation into its two components: perceptions and
expectations. More specifically, this posits that the gap, or difference,
between service perceptions and service expectations of customers of
monopolistic governments is significantly larger than those of customers
of competitive governments.
Hs3: Citizens who feel more alienated from government perceive
low service quality from government in general and more so when that
service is delivered by a monopolistic government service provider.
This suggests that those who have high levels of alienation from
government will have lower levels of satisfaction of government services,
particularly when those services are provided in a monopolistic
environment. It is not clear whether that may be due to higher
expectations or due to perceptions of lower service quality. This bridges
the theoretical base of bureaucratic responsiveness to the applied
measurements of service quality in monopolistic government service
Hs4: When customers have a choice (that is, when their
government has competition), they perceive that the governmental entity
is more responsive. In other words, there are significant differences
between perceptions of service quality by monopolistic customers and
perceptions by competitive customers.

This presumes that the element of choice, categorized by Hirschman
(1970) as the "exit" concept, makes a difference to the customer in
perceiving a more responsive governmental entity. Here, the customer
may consider the government more responsive due to the pressure of
competition. In other words, the government agency recognizes that if the
customer is not pleased with the service and has the opportunity to exit,
the government agency works harder to keep the customer and that
increased level of responsiveness is measurable.
Hs5: The largest gap in service quality is in reliability measures. The
second largest gap is in responsiveness, followed by empathy and
assurance, and the smallest gap is in tangible measures.
Here, it is postulated that gaps in service quality will replicate earlier
research findings in the private sector, performed in competitive
environments (Zeithaml, Berry, and Parasuraman, 1990). Further, this
will test specific components of government service, including
expectations and perceptions of those five dimensions of service quality.
Hs6: Gaps in service quality when a government agency has
competition are closer to those of private sector-competitive businesses
than gaps in service quality of a monopolistic government agency.
This suggests again that there is a link between government when it
has competition and the private sector acting in a competitive setting.
Therefore, validation of this hypothesis would provide another
measurement of the competitive aspect of customer satisfaction.
Measurement of this hypothesis will be done by comparing earlier
research results by Zeithaml, Berry, and Parasuraman. Through public-
private sector comparisons, this will test whether public customers have
level expectations for both government and business or whether they
expect more or less of government. It could also indicate whether
customers perceive that government provides better or worse service that
private sector service providers.

Hs7: More Republicans than Independents or Democrats
believe that government should not act as a monopoly and therefore
reflect lower satisfaction levels of government in general.
This theorizes that committed Republicans, generally characterized
as friends of business and suspicious of government activity particularly
when that activity competes with the private sector or when that activity
is perceived as discretionary, will be less satisfied with government's
actions. The party with a platform of "less government is better" will
seem less satisfied with government interventions, especially since this
government entity competes in many ways with the private sector.
Hs8: There are significant differences in service quality as
determined by frequent customers of government when compared with
less frequent customers of government.
What is unknown about the public customer until now is their
expectations in general about government and in particular about certain
types of postal service, in quantitative terms. This research also can
measure frequent customers, particularly large organizations who receive
and mail thousands of pieces each week, and compare their expectations
with less frequent customers.
Hs9: There are significant differences in service quality between
those customers who believe the U.S. Postal Service is more like a
business and those who do not believe so.
Analysis of the survey results can compare the SERVQUAL scores
regarding service quality with the respondent's general feelings about the
operation of the U.S. Postal Service regarding several philosophical
statements, including "The U.S. Postal Service is run like a business" and
"If I could take my 'business' somewhere other than the U.S. Postal
Service, I would."

HslO: Service quality in the public sector is significantly different
from service quality in the private sector as determined by the customers.
While public administrators and others bemoan the fact that
customers make comparisons between the public and private sectors in
terms of efficiency and productivity and that service levels are often cited
as a vast difference between the two sectors, empirical data may not make
the distinction. This hypothesis tests the notion that the public indeed
perceives or expects that government services are different from business
Rival Hypotheses
There are two rival hypotheses identified here and discussed in
terms of their potential use in lieu of the primary or secondary
hypotheses. In other words, these rival hypotheses could provide
additional explanations for research results or could lead to different
conclusions and therefore need to be considered. This section reflects an
attempt to identify, and rebut, rival hypotheses that could invalidate the
research results. Here, rival hypotheses are reviewed separately, followed
by a brief discussion regarding their plausibility.
Hri: Competitive government agencies and those firms who
compete with government agencies have more resources, including time
and money, to obtain and analyze customer demand.
The reasoning for this hypothesis is based on an assumption that
competitive government agencies must keep in touch with their
customers' demands in order to successfully compete and therefore will
prioritize resources to compile data about their customers to capture that

market. Therefore, this theorizes that some or all of the differences
between customers satisfaction levels of monopolistic and competitive
governments is due to the fact that competitive governments spend more
resources trying to please the customer. This argument implies that
governments who use extra resources to understand their customers will
benefit from the additional information received.
Indeed, differences between monopolistic and competitive
governments may be due to the prioritization of resources to analyze and
meet customer demand. It could also be due to the attraction of different
employees to work in either environment. While the answers would be
interesting to know, the questions are beyond the scope of this research.
The intent here is to determine if indeed there are measurable differences
in service quality between monopolistic and competitive environments.
If that is the case, then further research into understanding the root of
such differences in service quality is quite appropriate and would be highly
Hr2: Legal constraints are looser for competitive entities, even
Review of the legal constructs of the U.S. Postal Service reinforce
the contention that federal law continues its strong constrictions on the
long-held monopoly of first class mail services while competition is
encouraged through "looser" statutory language. Therefore, the reason for
selecting the U.S. Postal Service to compare its monopolistic and
competitive services is based on its organizational structure and personnel
policies that cover both services. Unions represent different aspects of
mail service, such as mail handlers, mail carriers, and window clerks, yet
postal employees handle all types of mail, including first class, parcel post
and overnight mail. What cannot be measured is the amount of choice a
customer of the U.S. Postal Service feels that he or she has, given the
variety of statutory and union-mandated constraints.

In summary, while there are other potential reasons for coming to
the same conclusion, this research has checks in place to separate out
differences in expectations and perceptions of public customers of
monopolistic and competitive governments. This research does not
intend to understand various organizational cultures between public and
private sectors and monopolistic and competitive entities but to shed light
on customer attitudes where they have not been understood before, even
though the venue is limited.
Validation or Rejection of Hypotheses
It is important to consider the impact of rejection or validation of
the primary and secondary hypotheses on this research and that
undertaken by other researchers. The examination of the hypotheses in
light of the data will provide empirical findings to substantiate or discount
intuitive contentions.
If the primary hypothesis is validated, what does that mean in
terms of public administration in general and government accountability
and responsiveness in particular? If there is a difference between
customer satisfaction levels when government entities operate in a
competitive environment versus a non-competitive environment, then
public administration scholars can focus on those differences and attempt
to close the gap of expectations of service delivery between bureaucrats and
citizens (e.g., in the post office). Further, this will add empirical evidence
to the debate over what should be the appropriate behavior and actions of
government administrators to its citizens-customers. Public managers can
learn from competitive private sector organizations in terms of how they
strive for and sustain customer satisfaction. Public policy makers can look
at methods either to encourage government monopolies to be more

responsive, which may include lessening strict controls, or purposefully to
create competitive environments.
If the primary hypothesis is not validated, what does that mean for
the field of public administration? Attention can be turned away from
market structures and toward strategic, systemic changes in public
organizations and their services. In other words, if differences in
performance are insignificant, then government entities can focus on
empirical data captured regarding customer performance and work to
change perceptions or expectations of government service, regardless of
the competitive posture. Theorists who have not studied monopolistic
responsiveness empirically would need to re-think their contentions, at
least in the area of postal service. The potential differences between postal
service and other government service could be studied further to
determine if all government service shows that monopolistic or
competitive environments do not affect the delivery of service and make
public management decisions accordingly. Finally, public policy scholars
(e.g., Savas and Osborne and Gaebler) and policy makers may need to
reconsider attempts to privatize government services with the sole
purpose of creating more responsive service providers, for the data might
contradict their recommendations in important ways.
Validation or rejection of the secondary hypotheses in light of
respective validation or rejection of the primary hypothesis would
provide a greater understanding of the customer satisfaction expression in
the areas of expectations and perceptions through, for example, the
dissection of expectations and perceptions of service quality. Public
administrators would receive quantifiable data regarding dimensions of
their public service, and would identify gaps in dimensions of service.
Scarce resources could be prioritized and then directed to the areas where
the gaps are the greatest or where public opinion determines the greatest
benefit would be. The process of breaking down into sub-categories pieces
of the primary hypothesis also provides a better understanding of the
government/public customer relationship. Studying whether the type of

competition a public agency faces may shed some light on how the public
sector can increase customer satisfaction with its services in specific ways.
In general, then, either validation or rejection of the hypotheses
will result in information which public administrators can incorporate
into their decision-making and planning. Empirical testing of the
responsiveness of government monopolies will take the public
administration debate one step further and will avoid a never-ending
theoretical dialogue absent quantitative data.

This chapter presents the research design, including the
independent and dependent variables, the units of analysis, and the
research population. Discussion of the research's internal and external
validity are followed with the data collection used, including the mailing
of the surveys and the return rate. Procedures for data analysis are also
Research Design
The research design is to identify differences in customer
satisfaction with service quality between the competitive and
monopolistic environments within the public sector entity, the U.S. Postal
Service. Customer expectations are compared with their perceptions.
Further comparisons are made according to the type of service delivered
and according to demographic and ideological information provided by
the respondents.
The primary hypothesis and many of the secondary hypotheses
require the measurement of the gaps between citizens' expectations and

perceptions of performance in the public sector. The well-tested
instrument, SERVQUAL, created by the team of Zeithaml, Parasuraman
and Berry (1985,1986,1987,1988,1990,1990, and in press, in varying order
of the primary author's name) began with their conceptualization of
service quality and the development of a 97-item survey to capture ten
dimensions of service quality identified in their exploratory phase, which
included several focus groups. Through a series of repeated data collection
and analysis steps, they refined and condensed the 97-item instrument to
eliminate about two-thirds of the survey and to consolidate the ten
dimensions of service quality to five. Administration of the refined
survey to four independent samples of 190 customers each verified the
reliability and validity of the condensed scale. After further refinement,
the current 22-item instrument was produced.
The SERVQUAL instrument has been applied by its creators in four
private sector environments: a bank, a credit-card issuer, an appliance
repair and maintenance firm, and a long-distance telephone company.
Cynthia Webster (1989) and James Carman (1990) separately modified and
applied SERVQUAL in various businesses. According to Valarie
Zeithaml, SERVQUAL application in the public sector is more limited.
The Internal Revenue Service is preparing for dissemination of thousands
of surveys in late Spring, 1992. Thomas Myers, as a doctoral candidate in
Virginia, adapted the SERVQUAL survey by adding an additional service
dimension of "equity" and polled students of a Virginia community
college about its service quality as compared to the Department of Motor
Vehicles, a bank, a grocery store, and the U.S. Postal Service (1990).
SERVQUAL was adapted for this research to measure gaps in
customer service from the U.S. Postal Service in areas where it holds a
monopoly (first class mail delivery; its monopoly of third class mail
delivery is not surveyed here) and in areas where the Postal Service has
varying degrees of private sector competition (fourth class mail,
commonly referred to as parcel post, and Express mail delivery).
SERVQUAL questions customers about their general perceptions of

excellent service in the particular environment (e.g., excellent
government), followed by surveying their perceptions about a specific
entity's service (e.g., first class mail delivery by the U.S. Postal Service). In
addition, several demographic and ideological questions were posed to test
the remaining hypotheses, to better understand the citizen-customer and
to measure the perceived role of monopolistic and competitive
environments in public service quality. (See Appendix A for a sample
The dependent variable (Y) is the service quality gap between
citizens-customers' expectations and their perceptions of organizational
performance, as conceptualized by the team of Parasuraman, Zeithaml,
and Berry (1986). The dependent variable is measured by the difference
between expectations and perceptions about service delivery from a
customer's perspective. SERVQUAL, the instrument used in this
research, breaks down attitudes about those five dimensions in individual
areas of:
Tangibles the appearance of physical facilities (e.g., post offices),
equipment, personnel (e.g., mail carriers and postal clerks), and
communication materials (e.g., U.S. Postal Service brochures and
Reliability -- the ability to perform the promised service dependably
and accurately (e.g., Express Mail arrives by 10:30 a.m. the next day)
Responsiveness the willingness to help customers and provide
prompt service (e.g., postal workers' interest in solving problems)
Assurance -- the knowledge and courtesy of employees and their
ability to convey trust and confidence (e.g., postal workers are
personable and trustworthy), and

Empathy -- caring, individualized attention provided to the
customers (e.g., postal workers showing concern for the customer).
"Overall Service Quality" as termed by Parasuraman, Zeithaml, and
Berry (1986) measures the aggregate of five dimensions of service quality.
Therefore, the SERVQUAL scores are more dimension-specific than scores
of "Overall Service Quality"; the combination of these provide
quantifiable data to measure satisfaction with service quality of the U.S.
Postal Service.
The primary independent variable (X) is the competitive mode of
the public entity. In this research design, the level of customer satisfaction
of the U.S. Postal Service's first class mail, representing a public entity that
operates as a monopoly, is measured and compared with satisfaction
levels of customers of the same public entity which competes with the
private sector (e.g., U.S. Postal Service's parcel post competes with UPS
and Express mail services competes with Federal Express, UPS, Airborne
and others). Other independent variables are demographic and
philosophical in nature, including gender, age, political ideology, mail
volumes, and income levels for individuals and gross revenues for
organizations. Measurement of these variables provide basic information
about postal customers.
Units of Analysis
This research has two units of analysis: first, the individual (citizen-
customer) in terms of personal experiences as a public customer; and
second, the organization through the perceptions of the individual
serving in an official mail room supervisory capacity in a large business.
Mail room personnel were surveyed to determine whether frequency of
contact with the U.S. Postal Service related to differing levels of
expectations and perceptions of service quality. Furthermore,
organizational units in terms of different mail services (e.g., first class,

parcel post, Express mail) in the U.S. Postal Service are considered a unit of
analysis due to the comparisons that can be made between public and
private sector entities.
Research Population
The population surveyed is postal customers in the United States
Postal Service's "Denver division," which encompasses all of Colorado
and Wyoming, totaling 1,762,393 households, P.O. boxes and businesses,
with a combined population of 3,747,982. (According to the Universal
Postal Union, world mail volume is 401,227,250,000 pieces, of which the
U.S. Postal Services handles about 40%. As a point of comparison, the U.S.
has less than 5% of the worlds population.)
Survey Instrument
Measurement of gaps in service quality were based on a random
sample of customers and organizations who use the U.S. Postal Service.
SERVQUAL measured differences between customers' expectations and
customers' perceptions of service delivered in five service dimensions:
reliability, assurance, responsiveness, empathy and tangibles.
SERVQUAL's reliability and factor structure, as well as an assessment of
its validity, have been well documented and tested over several years.
SERVQUAL scores are effective in accounting for variation in
overall service quality scores. This augments the evidence
presented by Parasuraman and colleagues (1988) in support of
SERVQUAL's validity. Moreover, although multicollinearity
among four of the five dimensions precludes clear-cut
interpretations of the regression coefficients, the general pattern of
these coefficients -- reliability having the strongest coefficients,
assurance and responsiveness having the next strongest, and
empathy and tangibles the weakest -- is consistent with the pattern
in the results reported elsewhere (Parasuraman et al., 1988). The
apparent robustness of the SERVQUAL scale, despite the
modifications made to it as discussed in the Pretest and Refinement
of Survey Instruments section, is encouraging. It suggests that

SERVQUAL can be meaningfully used to measure customer
perceptions of service quality in a wide variety of industries.
(Parasuraman, Berry, 1990: 38-39)
The questionnaire used to test the hypotheses consists of five parts,
the first two of which are the SERVQUAL instrument: a 22-item section
that asks expectations about excellent governments in general, a 22-item
section that asks perceptions about service received from the U.S. Postal
Service in either first class, fourth class or Express mail, a 6-item section
that asks for responses to different statements about the U.S. Postal Service
and/or monopolies, an 8-item section that asks about political alienation
from government in terms of attitudes about perceived incapability and
attitudes of discontentment, and a 9-item section that asks demographics
in the case of individual customers or a 3-item section that asks for annual
revenue and mail volume of organizations. Therefore, separate analysis
of the general expectations of government can be performed, as well as a
specific understanding of perceptions of performance by the U.S. Postal
Service in three different areas, and the difference between their
performance and expectations furnishes the level of satisfaction or the
"gap" in service quality in five different service dimensions (tangibles,
responsiveness, reliability, assurance, and empathy) or in combination, an
overall service quality score. Completion time for the survey ranged from
nine to twelve minutes.
A sample size of 245 for each of the three postal categories (first
class, parcel post/fourth class, and Express mail) was required to achieve a
confidence level of 95% (the confidence that an investigator has that a
sample estimate is within a 5% range of the population parameter) and an
accuracy level of 0.05 (which reflects how close the sample statistic is to the
population parameter). The sample size was determined according to
O'Sullivan and Rassel's formula (1989: 130-131), with the assumption
from previous research that about 84% of the respondents' expectations of
service quality exceeded their perceptions of service quality received
(Parasuraman, Berry, and Zeithaml, 1990: 27-28).

Earlier application of the SERVQUAL instrument shows response
rates from five different industries averaging 21% for customers (ranging
from 17 to 25%) (Parasuraman, Berry, and Zeithaml, 1990: 16). Therefore,
the sample size for the individual postal customer was doubled from 245
to 490 for each of the three mail categories in anticipation of a lower
response rate. The mailing to mail room personnel in organizations
remained at 245 in each of the three mail categories. Therefore, a total of
2,205 surveys were mailed.
Individual First Class Parcel Post Express Mail TOTAL
citizen-customers 490 490 490 1,470
Mail room personnel
in organizations 245 245 245 735
TOTAL 735 735 735 2,205
The critical link between the adapted SERVQUAL instrument and
the research hypothesis lies in the instrument's ability to measure
quantitatively service quality (considered here to be the difference between
service expectations and perceptions) as perceived by the citizen-
customers. These survey results compare expectations and perceptions
about service quality from the organizational and individual perspectives
in three environments: one monopolistic (first class mail) and two
competitive (parcel post or fourth class mail and Express mail).
Comparison of service quality between the two environments was used to
test the primary research hypothesis (as well as the secondary hypotheses):
there are differences in service quality, as determined by the "customers,
when a public agency operates in a competitive environment versus
when a public agency operates in a monopolistic environment.

In order to keep the questionnaire length manageable to encourage
responses, all recipients were not asked their perceptions of three separate
types of mail service. Instead, the questionnaires were staggered with one
asking about perceptions of first class service, another survey asking a
different individual about perceptions of fourth class service and still
another asking about perceptions of Express mail service. As a result, each
respondent answered questions about one area of postal service (first class,
fourth class or Express mail) while all respondents answered questions
about their general expectations of excellent government service.
Internal validity is defined as "the approximate validity with which
we infer that a relationship between two variables is causal or that the
absence of a relationship implies the absence of a cause." (Cook and
Campbell, 1979: 37) In Donald Campbell's list of threats to internal
validity, which produce rival explanations to explain effects, he recognizes
that not all may be relevant in every research case. They are: 1) history
(events occurring between pre-testing and post-testing), 2) maturation
(changes that happen due to passage of time), 3) instability (fluctuations in
sampling persons or components), 4) testing (the effect of taking a test
upon the scores of a second testing), 5) instrumentation (changes in
calibrating the instruments which may produce changes in the
measurements), 6) regression artifacts ("pseudo-shifts occurring when
persons or treatment units have been selected upon the basis of their
extreme scores"), 7) selection (biases from differential recruitment of
comparison groups, producing different mean levels), 8) experimental
mortality (the loss of members of comparison groups), and 9) selection-
maturation interaction (biases from different rates of maturation or
autonomous change). He states that many of these experimental "faults"
can be avoided, primarily through the use of randomization and control
groups (Campbell, 1977: 174-175).

Because this research design is quasi-experimental and descriptive
and does not intend to measure causality, addressing each of the previous
threats to its internal validity is not critical. What is important is that the
randomization in the distribution of these research surveys helps to avoid
some threats to internal validity, although certainly the lack of control
groups and pre- and post-testing does not ameliorate other internal
threats. Also, public perceptions and beliefs about government seem to
change only slowly. All in all, internal validity appears relatively strong
in this research because the public entity under study in both its
competitive and its monopolistic modes operates under a similar
organizational structure and experiences similar constraints where the
different service components were compared, therefore providing the
internal consistency for comparison purposes.
While differences between first class (monopoly) and fourth class
(competitive) mail regulations, for example, can be found, the same
agency provides similar service(s) to similar customers (e.g., the
neighborhood post office and mail delivery provide nearly all services).
When customers enter a post office, they may be utilizing any or all
services that the U.S. Postal Service has to offer: first class, second class,
third class, fourth class and Express mail services. Comparing the
differences in customer satisfaction when the agency operates as a
monopoly as opposed to a competitor shows relationships between the
two, although causality or its direction cannot be implied.
In re-examining the reliability and validity of the SERVQUAL
instrument based upon questions raised by another researcher,
Parasuraman, Berry and Zeithaml performed additional analyses. They
report that regression analysis found a high degree of convergence
between the revised SERVQUAL scale and a separate measure of service
quality which supported the scale's construct validity. Examination of
whether the constructs measured by SERVQUAL were associated
empirically with measures of conceptually related variables further

supported the validity of the SERVQUAL scale (Parasuraman, Berry, and
Zeithaml, in press).
Campbell's list of threats to external validity address validity
problems involved in the interpretation of data and address "the
approximate validity with which we can infer that the presumed causal
relationship can be generalized to and across alternate measures of the
cause and effect and across different types of persons, settings and times
(Cook and Campbell, 1979: 37). They are: 1) interaction effects of testing
(pre-testing's effect in changing the respondents sensitivity or
responsiveness to the experimental variable), 2) interaction of selection
and experimental treatment ("unrepresentative responsiveness of the
treated population"), 3) reactive effects of experimental arrangements
(conditions that make the setting atypical, also known as the "Hawthorne
effect), 4) multiple-treatment interference (where different treatments
applied together result in effects atypical of separate application of
treatments), 5) irrelevant responsiveness of measures (since all measures
are complex, they all include irrelevant components that produce effects),
and, 6) irrelevant replicability of treatments (replication of complex
treatments may not include components actually responsible for the
effects) (Campbell, 1977:175-6).
Again, since pre- and post-testing were not done in this instance,
some of the external threats either cannot be eliminated or are irrelevant
here. Indeed, Campbell's issue of replicability of treatments has been
addressed by the creators of the SERVQUAL survey. In defense of
criticisms from Carman, another researcher who "customized" the
SERVQUAL scale and questioned its dimensionality based upon his own
replications, Parasuraman, Berry, and Zeithaml responded as follows
Nevertheless, it is logical to expect that as the difference between the
original study and replication widens, the replication will become
an increasingly stringent test of the original study's conclusions. In
other words, when a replication differs greatly from the original
study, as is the case with Carman's study, the evidence from the

replication must be unequivocally against the original studys
conclusions for lowering one's confidence in them. Likewise, when
a replication is quite similar to the original study, as is the case in
our [recent] study, relatively strong support from the replication
would be necessary for boosting one's confidence in the original
study's conclusions. When judged against these criteria, the
findings from both Carman's study and our study suggest that one
can continue to have confidence in the robustness of SERVQUAL's
structure and psychometric properties, (in press, 20-21)
Even with the empirical evidence supporting the replicability and
validity of SERVQUAL, external validity in this research is less clear.
Although the U.S. Postal Service spans the country and interacts with
customers daily, it differs from other government agencies in its quasi-
governmental status and its provision of unique services. However, the
survey results can be considered indicative because of the measurement of
customer expectations and perceptions of a large, government-controlled
bureaucracy that has literally hundreds of millions of citizen-customers.
Additionally, many government corporations or quasi-public entities
have more relaxed constraints than their government agency colleagues.
Results will provide insight to the bureaucrat-customer relationship in
one large, expansive organization with several functions where public
managers are free from many traditional government constraints (e.g.,
civil service system).
The generalizability of the results may be strengthened because the
Postal Service serves a heterogeneous population that is geographically
dispersed. Comparing two different competitive modes of postal service,
Express mail and parcel post, may reach different socioeconomic groups
(e.g., perhaps more affluent people take advantage of Express mail
services; perhaps less affluent people use parcel post because it is less
expensive than first class mail or shipping through its competitor, UPS).
In addition, by closely replicating the SERVQUAL scale, comparison of
these research results with the previous private sector findings of the
SERVQUAL creators and survey results of other researchers are possible.

Data Collection
Mailing of Surveys
The questionnaire and its cover letter were mailed to a random list
of 1,470 postal customers in Colorado and Wyoming received from a
Denver political consulting firm, including those not registered to vote.
(A survey can be found in Appendix A.) In addition, the questionnaire
was mailed to mail room supervisors in 735 organizations in Colorado
and Wyoming identified through Dun & Bradstreet's Million Dollar
Directory (approximately every third name), a listing of businesses
meeting at least one of the three following criteria: 250 or more employees,
$25 million or more in sales volume, or tangible net worth greater than
Each customer who received a survey was asked to complete it
within a three-week timeframe and return it in a return-postage-paid
envelope. A phone number was listed in several places throughout the
survey in the event that the respondent had any questions. Only one call
was received, requesting additional information. Attempts to return the
call were unsuccessful and the individual returned the survey blank,
protesting that costs of government services were not included in the
The rationale for distributing the sample through the mail is that
all contact with postal customers involves the element of "mail." For
example, not all customers have face-to-face contact with a window clerk
or mail carrier. However, all customers have in common the desire to
mail materials or receive materials through the mail. Thus, it seems
entirely appropriate to have the survey delivered through the U.S. Postal

Return Rate
Of the 2,205 surveys mailed, total returns numbered 436, excluding
three nondeliverables. The number of usable responses, after culling the
eight returned that did not answer any survey questions, amounted to 428.
Of the 1,470 individual customer surveys mailed, 259 or 17.6% were
returned usable, and 169 or 23% of the 735 organizational users responded.
Based on the number of usable responses and a combination of the
organization and individual surveys, the response rate was 19.4%. That
matches closely with Parasuraman, Berry and Zeithaml's experience of
customer return rates averaging 21% and ranging from 17 to 25% (1990:
Individual First Class Parcel Post Express Mail TOTAL
citizen-customers 95 80 84 259
Mail room personnel
in organizations 65 58 46 169
TOTAL 160 138 130 428
In terms of the sample's representativeness of the population of
Colorado and Wyoming, the demographics of the respondents
corresponded closely with the demographics of the states' residents in
terms of gender. For example, the combined population of Colorado and
Wyoming residents is 49.6% male and 50.4% female. Of the survey
respondents, 51.4% were male and 48.6% female. Political affiliation
representation was also relatively close. For instance, 37.5% of Colorado
and Wyoming's voters are registered Republican, compared with the
survey results of 35.7%; 33.1% of the registered voters are Democrats,
compared with 32.4% of the survey respondents. The remaining 29.5% of
the populations registered as unaffiliated compare with 32% of the survey

respondents. (Numbers have been rounded.) Therefore, the survey
respondents somewhat over-represent males and unaffiliated voters.
Data Analysis
Survey results were analyzed using t-test scores to determine
whether differences between comparison groups were statistically
significant, using analysis of variance (ANOVA) to compare variations
between and within groups, and using chi-square to estimate joint
distribution of the variables as if they occurred randomly in the
population. The Statistical Package for the Social Sciences (commonly
referred to as SPSSx) computer package was used on the University of
Colorado's mainframe computer.
Based on Alreck and Settle's (1985) table to assist in application of
the appropriate statistical tools, given that the independent variables
(gender, political affiliation) are categorical or ordinal (age, income level,
frequency of use) and the service quality statements and ideological
statements are continuous dependent variables, t-test analysis serves as
the best statistical test of significance to determine whether the difference
between arithmetic averages of two groups (e.g., monopolistic versus
competitive customers' expectations of service quality) was statistically
significant. When more than two groups' means were compared and the
dependent variable remains continuous and the independent variable
remains categorical, ANOVA serves as the best statistical test of
significance -- for example, when comparing customers' alienation scores
with overall perceptions of service quality and the monopolistic or
competitive mode of government.
When the dependent variables of service quality and ideological
statements are placed into compressed categories (e.g., disagree, neither