Quality moderates market competition: evidence of Taiwanese service industry
International Journal of Quality & Reliability Management
ISSN: 0265-671X
Article publication date: 3 October 2016
Abstract
Purpose
The purpose of this paper is to examine the direct and interactive effects of audit service quality and audit market concentration on performance of public accounting firms in Taiwan.
Design/methodology/approach
Empirical data of this study come from registered public accounting firms in Taiwan, an industrial data. From the perspective of industrial economics and based on the structure-conduct-performance paradigm (Cowling and Waterson, 1976), this study use OLS to test the linear regression equation.
Findings
Empirical results indicate that both audit service quality and audit market concentration have positive effects on performance. The interaction terms between audit service quality and audit market concentration are positively related to performance.
Practical implications
This documents that human capital is the core resource in public accounting firms which could enhance performance through higher audit service quality under intense market competition. Specifically, facing increasingly competitive audit market, public accounting firms response to the hostile situation by employing auditors with higher educational level, more work experience, with professional licenses, and taking more continuing professional education.
Originality/value
Few previous researches consider the effects of either market concentration or audit service quality on firm performance. This study simultaneously examines the relation among audit service quality, audit market concentration, and performance of public accounting firms. With the results, this study contributes knowledge to human resource and quality management-related literatures.
Keywords
Citation
Yang, Y.-F. and Chen, Y.-S. (2016), "Quality moderates market competition: evidence of Taiwanese service industry", International Journal of Quality & Reliability Management, Vol. 33 No. 9, pp. 1332-1345. https://doi.org/10.1108/IJQRM-08-2013-0133
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited