Analysing the effect of environmental factors on service performance

The aim of this paper is to analyse the effect of some environmental variables when analysing efficiency in a service process. For the first time in the grocery retail industry, this paper considers two different approaches employed in the efficiency measurement literature to analyse the influence of environmental factors, and compares the results obtained with a model that does not include the environmental factors. The methodology is based on the estimation of a stochastic parametric function. The results obtained highlight the importance of considering environmental variables when evaluating efficiency in retailing. As a consequence, managers should be aware that differences in performance could be due to more or less favourable environmental conditions. It is important for service assessment programmes to provide precise enough measures for managers to draw the correct conclusion when evaluating their firms' performance.