Secondly, the composite reliability of all five factors exceeds the minimally acceptable value of 0.6. Moreover, all four factors have variance extracted estimate (AVE) greater than the threshold value of 0.5. Therefore, as a whole, it can be concluded that the perceived service quality scores have good reliability. Four summated scales are created and used as indicators for the latent construct “perceived service quality” in the subsequent structural equation model.
Structural equation model (SEM)
A structural model is fit to the perceived service quality, perceived value, overall satisfaction and loyalty data according to the model structure given in Figure 1. Three paths (perceived value to overall satisfaction, perceived value to loyalty and satisfaction to loyalty) are found to have insignificant negative standardized path coefficients and dropped sequentially based on Wald tests. The goodness of fit indices for the final structural model, shown in the bottom part of Table 3, suggest a good fit to the data: small ratio of chi-square to degree of freedom (< 2), great values of GFI, AGFI, CFI, NFI, NNFI (> 0,9) and small RMR and RMSEA values (< 0.05).