retail marketing key issues

7/29/2019 retail marketing key issues

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The Impact of Service Fairness Perceptionson Relationship Quality

MELISSA N. CLARKDepartment of Management and Marketing, University of North Alabama,

Florence, Alabama

MAVIS T. ADJEIDepartment of Marketing, Southern Illinois UniversityCarbondale,

Carbondale, Illinois

DONNA N. YANCEYDepartment of Management and Marketing, University of North Alabama,

Florence, Alabama

The success of marketing has increasingly become more dependenton the service quality of marketing. It is important that marketersunderstand how the service provided affects the future quality of

the relationship. The overall goal of this study is to understandthe relationships between justice perceptions, transaction-specific

postrecovery satisfaction and relationship quality in a servicefailure=recovery encounter. Based on a sample of 138 respondentsin the restaurant industry, we found that distributive, procedural,and interactional justice all positively impact the customerstransaction-specific postrecovery satisfaction with the service orga-nization, and ultimately, the quality of the customer-firm relation-

ship. Managerial and theoretical implications are provided.

KEYWORDS justice, relationship quality, service fairness

As services have become an important part of most transactions, it isimportant to know how consumers react to service failures in terms of thequality of their relationship with the service provider. If retailers can betterunderstand the impact of service fairness on customers, then they will be

Address correspondence to Melissa N. Clark, Ph.D., University of North Alabama, UNA

Box 5226, Florence, AL 35632. E-mail: [email protected]

Services Marketing Quarterly, 30:287302, 2009Copyright # Taylor & Francis Group, LLCISSN: 1533-2969 print=1533-2977 onlineDOI: 10.1080/15332960902993577

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able to formulate more effective strategies and, ultimately, retain a largernumber of customers.

Previous studies have examined relationship quality (Palmatier, Dant,Grewal, & Evans, 2006; De Wulf, Oderkerken-Schroder, & Iacobucci, 2001;

Kumar, Scheer, & Steenkamp, 1995; Crosby, Evans, & Cowles, 1990), post-recovery satisfaction with a service failure=recovery encounter (Smith,Bolton, & Wagner, 1999; Tax, Brown, & Chandrashekaran, 1998), and fair-ness theory in a service failure and recovery context (McColl-Kennedy &Sparks, 2003; Smith, Bolton, & Wagner, 1999; Tax, Brown, & Chandrashekaran,1998). However, important gaps still remain in this body of literature.

Although the relationships between service fairness perceptions (distri-butive, procedural, and interactional justice), postrecovery satisfaction withthe service organization, and relationship quality have been examined inthe marketing literature (Aurier & Siadou-Martin, 2007; Weun, Beatty, &

Jones, 2004; Tax et al., 1998), it is important to continue to study them to trulyunderstand their influences. These relationships are important for managersto better understand how a successful recovery from a service failure can cre-ate customer satisfaction and retention. Additionally, research on the impactof gender on the various dimensions of service fairness is relatively lacking(McColl-Kennedy, Daus, & Sparks, 2003).

This study adds to the existing literature by combining research onservice fairness and relationship quality. This combination will present amore complete picture of the service failure and recovery and link it to futurerelationship quality. It will also provide guidance for service providers on

how to better handle a service failure.

THEORETICAL DEVELOPMENT

Service Failure and Fairness

Service fairness is a customers perception of the degree of justice ina service firms behavior (Seiders & Berry, 1998). Customers judgmentsof service fairness surface when their experience conflicts with their fairness

standards and they sense either injustice or uniquely fair behavior (Seiders &Berry, 1998). This is especially salient in a services context because customersalready feel vulnerable due to the lack of firsthand experience with the product(Seiders & Berry, 1998). The idea of justice is central to the service fairness con-struct because it serves as the crux of the consumers decision in most cases.

Justice theory purports that customers levels of satisfaction and theirfuture loyalty depend upon whether the customers felt that justice was done(McColl-Kennedy & Sparks, 2003). The study of justice theory in the servicefailure=recovery literature is well established (Smith et al., 1999; Tax et al.,1998; Blodgett, Granbois, & Walters, 1993; Goodwin & Ross, 1992; Lind &

Tyler, 1988). There are three main dimensions of justice: distributive,

288 M. N. Clark et al.


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procedural, and interactional (Clemmer & Schneider, 1996). The distributivedimension involves the perceived fairness of the outcome, the proceduraldimension involves the perceived fairness of the policies by which the out-come was produced, and the interactional dimension involves the treatment

the customer experiences during the service recovery (Smith et al., 1999).

Distributive Justice

Distributive justice refers to the perceived fairness of the tangible outcome ofa dispute, negotiation, or decision involving two or more parties (Blodgett,Hill, & Tax, 1997). This type of justice perception is based on equity theory

which defines a fair exchange as one in which each party to an exchangereceives an outcome in proportion to ones contributions to the exchange(Messick & Cook, 1983). In a service failure context, distributive justice refers

to the restitution offered to the customer to recover from the failure.

Procedural Justice

Procedural justice refers to the policies and procedures used by the serviceprovider to produce the outcome. Fair procedures are consistent, unbiasedand impartial, representative of all parties interests, and are based onaccurate information and on ethical standards (Leventhal, Karuza, & Fry,1980). This dimension is reflective of the timeliness, responsiveness, and con-

venience of the complaint handling process (Blodgett et al., 1997).

Interactional Justice

Interactional justice refers to the way in which a customer is treated throughinterpersonal communication in a service context. It involves the manner in

which the service problem is dealt with by service providers and thespecific interactions between the service provider and the customer(McColl-Kennedy & Sparks, 2003). Interactional justice has been found tohave the greatest impact on trust in a provider and overall customer satisfac-tion (Tax et al., 1998) and also on post service failure behavioral intentions

than do distributive or procedural justice (Blodgett et al., 1997).

Satisfaction With Service Organization After Service Failure=Recovery

Transaction-specific postrecovery satisfaction is an important construct forservice providers to consider. If a customer is dissatisfied with the recoveryeffort after a service failure, they are likely to switch service providers. In fact,service failures and failed recoveries are one of the leading causes of custo-mer switching behavior for service providers (Keaveney, 1995). Customersare generally more dissatisfied with a providers failure to recover than by

the service failure itself (Berry & Parasuraman, 1991).

The Impact of Service Fairness 289


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The broader literature recognizes two types of postrecovery satisfaction:transaction-specific postrecovery satisfaction and cumulative satisfaction.

While some researchers have treated satisfaction as cumulative (Shankar,Smith, & Rangaswamy, 2003), others have treated it as transaction-specific

(Lam, Shankar, Erramilli, & Murthy, 2004; McCollough, Berry, & Yadav,2000; Boshoff, 1999). This research specifically focuses on transaction-specific postrecovery satisfaction, which is the degree to which a customeris satisfied with a service firms transaction-specific service recovery effortfollowing a service failure (Boshoff, 1999). Previous research has found thatconsumers view these two types of satisfaction differently (Bitner & Hubbert,1994). Consumers are likely to comment on particular events of a servicetransaction (e.g. specific employee actions) when asked about transaction-specific satisfaction. Conversely, when asked about overall satisfaction, con-sumers are likely to comment on global impressions and general experiences

with the firm (e.g. honesty of the firm) (Jones & Suh, 2000).The three dimensions of service fairness have been positively linked to

satisfaction with service failure=recovery encounter in the marketing litera-ture (Aurier & Siadou-Martin, 2007; Smith & Bolton, 2002; Smith et al.,1999; Tax et al., 1998; Blodgett et al., 1997; Goodwin & Ross 1992; Oliver& Swan, 1989). The current study will empirically test this relationship andconsider the effect of transaction-specific postrecovery with the service fail-ure=recovery encounter on relationship quality. In sum:

H1: Perceptions of the dimensions of justice are positively related to

transaction-specific postrecovery satisfaction with the service organi-zation, i.e.:(a) Distributive justice is positively related to transaction-specific

postrecovery satisfaction with the service organization after theservice failure=recovery encounter.

(b) Procedural justice is positively related to transaction-specificpostrecovery satisfaction with the service organization after theservice failure=recovery encounter.

(c) Interactional justice is positively related to transaction-specificpostrecovery satisfaction with the service organization after the

service failure=recovery encounter.

Relationship Quality

Relationship quality is a composite measure of relationship strength andprovides the most insight into exchange performance (Crosby et al., 1990;De Wulf et al., 2001). It is commonly thought to be a higher-order constructcomprised of several dimensions related to relationship strength (Kumaret al., 1995; Crosby et al., 1990; Dwyer, Schurr, & Oh, 1987). Relationshipquality is most commonly composed of relationship satisfaction, trust, and

commitment (De Wulf et al., 2001). High-quality relationships between buyers



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and sellers bind the members to each other in such a way that they are ableto reap benefits beyond the mere exchange of goods and currency (Macneil,1980). In the relationship marketing literature, it is the mediator that hasthe most influence on companies objective performance (Palmatier et al.,

2006).

Relationship Satisfaction

Relationship satisfaction is a customers affective or emotional state toward arelationship, typically evaluated cumulatively over the history of the exchange(Palmatier et al., 2006). Satisfaction is important for relationships and has beensaid to be important for increasing cooperation between relationship partnersand leading to fewer relationship terminations (Ganesan, 1994).

Trust

Trust is the confidence in an exchange partners reliability and integrity(Morgan & Hunt, 1994). Berry (1996) states that trust is the single mostpowerful relationship marketing tool available to a company. Spekman(1988) suggests that trust is the cornerstone of long-term relationships. Trustis often an outcome of relationship marketing because by nature trust is acumulative process that develops over the course of repeated, successfulinteractions (Nicholson, Compeau, & Sethi, 2001). Trust leads to successfulrelationships and improvements in communication, cooperation, satisfaction,and purchase intent (Anderson & Narus, 1990; Doney & Cannon, 1997; Mohr& Nevin, 1990; Morgan & Hunt, 1994).

Commitment

Commitment is an enduring desire to maintain a valued relationship(Moorman, Zaltman, & Deshpande, 1992). Commitment is the essentialingredient for successful long-term relationships (Gundlach, Achrol, &Mentzer, 1995). It is an indicator of a long-term orientation in the relationship

(Van Bruggen, Kacker, & Nieuwlaat, 2005). Commitment also leads to greaterrelational social norms and lower opportunistic tendencies (Gundlach et al.,1995) and increased relationship benefits (Morgan & Hunt, 1994).

Prior research has linked satisfaction to components of relationshipquality (Aurier & Siadou-Martin, 2007; Shabbir, Palihawadana, & Thwaites,2007; Garbarino & Johnson, 1999; Tax et al., 1998). Therefore, it is hypo-thesized that transaction-specific postrecovery satisfaction with the servicefailure=service recovery will be positively related to relationship quality.

H2: Transaction-specific postrecovery satisfaction with the service failure=

service recovery will be positively related to relationship quality.



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The Moderating Role of Gender

The distinction between male and female serves as a basic organizingprinciple for every human culture (Bem, 1981). Gender schema theoryproposes that the phenomenon of sex typing derives from gender-basedschematicprocessing (Bem, 1981). This means that people process informa-tion on the basis of their sex-linked associations. Males tend to pursuegoals having personal consequences while females tend to emphasize inter-personal affiliation and a fostering of harmonious relations (Meyers-Levy,1988). Women want their views heard during service recovery attemptsand to be allowed to provide input. Men, in contrast, do not view voiceas important as outcome (McColl-Kennedy et al., 2003). Existing literaturesuggests that men value distributive justice more (McColl-Kennedy et al.,2003; Oakley, 2000; Iacobucci & Ostrom, 1993; Helgesen, 1990; Rosener,

1990) and women value interactional (McColl-Kennedy et al., 2003;Carlson, 1971) and procedural (Sweeney & McFarlin, 1997; Meyers-Levy,1989) justice more.

H3: Gender moderates the effect of perceived justice on transaction-specificpostrecovery satisfaction with the service organization such that;(a) Distributive justice has a stronger impact for males than for

females.(b) Procedural justice has a stronger impact for females than for

males.(c) Interactional justice has a stronger impact for females than for

males.

METHODOLOGY

Sample and Industry

The restaurant industry was used to collect the data for this study. Thesample consisted of randomly selected consumers in a midsized metropoli-

tan area in the Southeast United States. The respondents were customers atfour randomly selected midpriced sit-down restaurants. Several midpricedsit-down restaurants in a midsized metropolitan area in the SoutheasternUnited States were considered for inclusion in the survey, but a randomselection process was utilized to choose the restaurants that would beincluded in the study. The customers were asked to participate in the surveyas they left the restaurant. If they agreed, one of the scenarios was chosen atrandom. The respondents were presented with a service failure scenario andthen asked to answer questions about their perceptions of service fairness,satisfaction and relationship quality. A total of 450 surveys were given out

but 138 completed ones were received, resulting in a response rate of



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30.66%. Of the 138 respondents who completed the survey, 42% are males,52% are females, and 6% did not disclose their gender.

Research Design

The scenario method was used because it is most appropriate for researchingtopics related to subjective reactions to procedures (Lind & Tyler, 1988). Thisis also similar to methods used by prior service fairness researchers (e.g.,Smith & Bolton, 2002; Smith et al., 1999). Role playing is an as-if experimentin which the subject is asked to behave as if he were a particular person in aparticular situation (Aronson & Carlsmith, 1968, p. 26). The most effectivetype of role play is when the respondent is asked to play himself in a familiarsituation (Greenberg & Eskew, 1993).

The scenario and questionnaire were pretested with undergraduate

business students at a midsized university in the Southeast United States.The scenario described a situation in which a customer has a negativeexperience at a restaurant and the customer complains to the server aboutthe problem. There were three different scenarios: one emphasizing distri-butive justice, one emphasizing procedural justice, and one emphasizinginteractional justice. Respondents were asked to imagine themselves as theperson in the scenario and to indicate their perceptions of distributive,procedural, and interactional justice.

The scenarios, which illustrate both service failure and service recoveryencounters, were randomly distributed among the respondents. Each

scenario assumes that the problem is handled, but the level and type ofperceived justice was varied (see Appendix for scenarios).

Measures

The items used to measure the three dimensions of fairness and transaction-specific postrecovery satisfaction with the service organization after the ser-

vice failure=recovery encounter were adapted from Smith et al. (1999). Theitems used to measure relationship quality were adapted from Garbarino

TABLE 1 Descriptive Statistics: Construct Means, Standard Deviations, and Correlationsa

(N138)

Construct Meanb Standard deviation X1 X2 X3 X4 X5

X1 Distribution justice 3.23 1.66 X2 Procedural justice 3.55 1.78 .70 X3 Interactional justice 3.37 1.90 .76 .77 X4 Satisfaction with service 3.50 1.75 .73 .71 .69 X5 Relationship quality 3.51 1.38 .73 .73 .74 .81

aAll correlations are significant (p< .001).b

Scored on a 1 (strongly disagree) to 7 (strongly agree) scale.



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and Johnson (1999). These questions were modified to fit the context forthe current study. All scales were seven-point Likert-type ranging from 1(strongly disagree) to 7 (strongly agree). Table 1 shows the descriptivestatistics of the constructs in our study.

ANALYSIS AND RESULTS

Measure Validation

We used confirmatory factor analysis (CFA) for measure validation (Bollen,1989). Gerbing and Andersons (1988) recommendations were used to assessthe measurement model. Here, each item was restricted to load on its a priorifactor and the factors were allowed to correlate with each other. The mea-surement model demonstrated a good overall fit; v2202.20 (df106),

IFI0.96, CFI0.96, RMSEA .08, SRMR .06. Moreover, all the standar-dized coefficients were significant at the p< .001 level, so no deletions weredone. Table 2 shows the CFA results for measure validation.

The measurement model demonstrates convergent validity since eachindicator loads significantly on the construct they were supposed to repre-sent. Table 2 shows that the t-values for each indicator loadings were signifi-cant, which indicates minimal cross loadings, and establishes convergent

validity (Anderson & Gerbing, 1988).Reliability of the scales was assessed by examining the construct reliabil-

ity of the variables. As Table 2 indicates, all constructs are reliable since allconstruct reliabilities are above 0.70 (Fornell & Larcker, 1981). In addition,the average variance extracted (AVE), which measures the amount of var-iance captured by a constructs scale in relation to variance associated withrandom measurement error, are all above 0.50, indicating reliability (Fornell& Larcker, 1981). Table 2 shows that all AVEs were larger than 0.50.

Discriminant validity was assessed by using the method proposed byAnderson and Gerbing (1988). Evidence for discriminant validity is estab-lished if the constrained models fit (compared with the unconstrainedmodel) is significantly worse using v2 difference test. Table 3 indicates that

all v2

difference values were large and significant, demonstrating discrimi-nant validity.

Hypotheses Testing

Structural equation modeling with AMOS 6.0 was used to test the hypothe-sized model. The hypothesized model showed a chi-square value of 154.53(p< .001) with 90 of freedom. Also, the model has strong goodness-of-fitindices: CFI0.98, TLI0.96, IFI0.98. In addition, RMSEA0.07, indicat-ing a good fit. The results of the hypotheses testing generally support the

model. Specifically, the results indicate that distributive justice (b0.731,



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TABLE 2 Measurement Model and Confirmatory Factor Analysis

Constructs and items (Source ofscales in parentheses)

Cronbachalpha

Constructreliability AVE

Standardizedcoefficient

t-value

Distributive justice (Smith et al., 1999) 0.88 0.89 0.73

The outcome I received was fair. 0.901 13.479I got what I deserved. 0.740 10.003The outcome I received was right 0.905 13.556

Procedural Justice (Smith et al., 1999) 0.84 0.81 0.69The length of time taken to resolve

my problem was appropriate.0.788 10.871

The restaurant showed adequateflexibility in dealing with theproblem.

0.876 12.638

Interactional Justice (Smith et al.,

1999)

0.96 0.95 0.83

The employees were appropriatelyconcerned about the problem.

0.839 12.146

The employees put forth the propereffort into resolving the problem.

0.880 13.088

The employees communicationswith me were appropriate.

0.959 15.221

The employees gave me the courtesyI was due.

0.957 15.165

Relationship Quality: Gabarino andJohnson (1999)

0.96 0.98 0.84

Relationship SatisfactionI am highly satisfied with my

relationship with this restaurant.

0.860 12.580

Compared to the ideal relationshipwith a restaurant, I am satisfiedwith my relationship with thisrestaurant.

0.849 12.315

The quality of the relationship withthis restaurant is consistently high.

0.829 11.884

TrustThis restaurant performs with

integrity.0.898 13.516

This restaurant is reliable. 0.880 13.060

Commitment

I feel a sense of belonging to thisrestaurant.

0.890 13.306

I care about the long-term success ofthis restaurant.

0.840 12.096

I feel strongly motivated to continuemy relationship with this restaurant

0.850 12.394

Satisfaction with Service Organization(Smith et al., 1999)

-

Think about both the problem youexperienced and the restaurantshandling of the problem. How do

you feel about the organization on

this particular occasion?



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t2.67, p< .01), procedural justice (b0.210, t2.15, p< .05), and inter-actional justice (b0.234, t2.10, p< .05) all significantly influencetransaction-specific postrecovery satisfaction with service organization, thus

supporting H1 (ac). We also found support for H2 (b

0.932, t

12.77,p< .001) since the results show that service fairness has a significant effecton relationship quality.

Our proposed model implies that perceptions of service fairness influ-ence relationship quality via transaction-specific postrecovery satisfaction

with the service organization, suggesting mediation. Similar studies have alsofound transaction-specific postrecovery satisfaction to mediate this relation-ship (Tax et al., 1998). To test this mediation in the model, two methods wereusedthe Sobel (1982) method and the Baron and Kenny (1986) method.The Sobel test tells whether a mediator variable significantly carries the influ-

ence of an independent variable to a dependent variable. The Sobel test forthis data indicated that transaction-specific postrecovery satisfaction with theservice organization is indeed a mediator (p< .05) between service fairnessand relationship quality. The Baron and Kenny (1986) method confirmedthe Sobel results with a p-value


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organization (see Figure 1). To test this, we split the sample into males andfemales and then a two-group structural model was used to assess the effectof gender. The results show that distributive justice (H3a) has a strongerinfluence in males (b0.395, t3.65, p< .001), than in females (b0.193,

t

2.01, p< .05) whiles interactional justice (H3c) has a greater impact infemales (b0.299, t3.57, p< .001) than in males (b .114, t1.211, ns),thus supporting H1(a and c). However, the results show that both males(b0.469, t6.65, p< .001) and females (b0.495, t2.61, p< .05) findprocedural justice to be equally important. So H3 was partially supported.

DISCUSSION AND IMPLICATIONS

In this study, we set out to investigate the impact of service fairness percep-

tions on the customers transaction-specific postrecovery satisfaction with theservice organization and eventually, the service provider=customer relation-ship quality. In addition, we examined the moderating role of gender on thespecific dimensions of justice. We found support for the positive relation-ships between the three components of service fairness and satisfaction withthe service organization. We also found a positive relationship betweentransaction-specific postrecovery satisfaction with the service organizationand relationship quality. Finally, we found that gender moderates the rela-tionship between distributive and interactional justice and transaction-specific postrecovery satisfaction with the service organization.

Our results were partially consistent with McColl-Kennedy et al. (2003)in that females respond more to interactional justice while males respondmore to distributive justice. However, contrary to McColl-Kennedy et al.(2003) we did not find gender differences in the effect of procedural justice.The McColl-Kennedy et al. (2003) study found that both females and malesrespond positively to being given a voice in the service process. This differ-ence in findings could be due to the different industries chosen or the differ-ent samples used in the two studies, a point we discuss further in the futureresearch section.

These findings have important implications for service providers. Basedon these results, service providers can better handle service failure andrecovery situations in the marketplace. This is important for service providersto be able to retain customers and keep them satisfied. The results show adifference based on customer gender. Service providers should be aware thatmale customers are more concerned with the outcome (distributive justice),

while female customers are more concerned with the interpersonal commu-nication (interactional justice). By knowing this, service providers can betterserve their customers and have a better chance to enhance the quality of therelationship. Another implication of this study is that, service providers with

limited resources may be able to focus more on some types of justice and not



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others. For instance, service providers with predominantly male customersshould focus their limited resources on enhancing the distributive justiceaspect of service fairness whiles those with female customer should focusmore on interactional justice. As for procedural justice, service providers

should work hard to enhance it regardless of the gender of their target mar-ket since procedural justice is equally important to both males and females.

LIMITATIONS AND FUTURE RESEARCH

Although this study has some important implications for service providers,the results should be viewed within certain limitations. First, the data wascollected from restaurants in a midsized city in the Southeast United States.The results could potentially differ if a different geographic area was used.

Additionally, perceived realism of the scenarios was not measured. Thus,even though nothing in the scenarios seems out of the ordinary, it is possiblethat some of the respondents may have found certain aspects of the scenariosunrealistic. Another limitation stems from the use of scenarios to capture rela-tionship quality, which entails interpersonal interactions. Future research isnecessary on the role of gender in the service failure=recovery encounter.

As mentioned earlier, our results on the moderating impact of gender wasonly partially consistent with that of McColl-Kennedy et al. (2003). As such,future research that focuses on when gender differences arise and whenthere are no gender differences in the effects of service fairness will be ben-

eficial. For example, there may be a three-way interaction at play where per-ceived fairness, gender, and the specific industry (restaurant, hotel, etc.)interact to impact satisfaction with the service organization. Finally, futureresearch could consider the other individual variables like personality traitsthat interact with service fairness to impact satisfaction with the organizationor the service encounter.

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APPENDIX

Scenarios

1. You have just been seated at a restaurant and are given a menu. Yourdrink order is taken. You carefully consider your food options and decide onjust the right thing. The server takes your order and then tells you that theitem you ordered is unavailable. You order something else for dinner whichis also unavailable. You really dont want anything else, but you decide onsomething anyway. The server apologizes for the problem and offers youa free dessert of your choice.

2. Imagine that you go out to eat on a Friday night. When you get to therestaurant, you are seated and promptly greeted by the server. The servertakes your drink order and quickly brings your drink. The server then takes

your food order. After a while your drink glass is empty. The server nevercomes to refill it or to ask you if you need anything. Eventually your foodis served and you ask for a drink refill. The server says he will be right back,but he never comes. You alert the manager about the problem and hequickly refills your glass.

3. You and your family are eating dinner at a restaurant. After you areseated, the server says What do you want? You think he is a little rude,but you decide what you want for dinner and place your order. When yourglass is empty, you ask the server to refill it and he does, but does not seemhappy about it. He does not ask you if you need anything periodically or

thank you for your business. He does not even tell you to have a nice day.The manager overhears the conversation and offers her sincere apologyfor the unfriendly service you received from the server.



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Documents

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