UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ************* PHAM THI MAI PHUONG PERCEIVED JUSTICE IN SERVICE RECOVERY AND RECOVERY SATISFACTION AND CUSTOMER LOYALTY: A STUDY OF EDUCATION SERVICES IN VIET NAM MASTER OF BUSINESS (by Honour) Ho Chi Minh City-Year 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ************* PHAM THI MAI PHUONG PERCEIVED JUSTICE IN SERVICE RECOVERY AND RECOVERY SATISFACTION AND CUSTOMER LOYALTY: A STUDY OF EDUCATION SERVICES IN VIET NAM ID: 22110047 MASTER OF BUSINESS (by Honour) SUPERVISOR Dr. NGUYEN DONG PHONG Ho Chi Minh City-Year 2013 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENTS I would like to express my deeply sincere gratitude to my Supervisor, Dr.Nguyen Dong Phong, for his valuable, enthusiastic guidance and advice on effective method. He helps me to understand the research method thoroughly. His value experience and professional knowledge give me opportunities to recognize issues deeply.
His inspiration to me played an important role in finishing my research. Furthermore, I would like to express my gratitude to Dr. Nguyen Thai Hoang; his excited lectures encouraged me to explore more how to apply research method to a research. Besides, I would like to thanks to respondents who have supported me a lot in answering questionnaire and interview, which really help me to complement my research.
Another source of motivation I would like to thank is my classmates ISB Mbus 2011 for a mutual support by sharing, discussing ideas, knowledge and experiences in the term of research. And an honorable mention I want to send my gratitude to my family, friends for their understanding and helping to collect data for completing my thesis. Ho Chi Minh City, Viet Nam 05thJan, 2014 Pham Thi Mai Phuong i LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The purpose of this research is to empirically investigate the relationships of Service Recovery (Interactional Justice, Procedure Justice, and Distributive Justice) and Customer Satisfaction, between Customer Satisfaction and customer Loyalty. The empirical setting is implemented in the English teaching Service in a developing economy of Viet Nam, particularly in Ho Chi Minh City.
The findings of this study reveal that Vietnamese Customers who perceive Interactional Justice, Procedure Justice, and Distributive Justice feel satisfied after complaining. Customers consider perception of Distributive is the most important to response their behavior and attitude towards English teaching service after encountering a service failure. They appreciate resolving of complaints by outcomes which they received compared to what they required. Besides, Consumers also observe treatment and response of employees when they complaint to Centers.
Customers expect courteous and respectful communication from employees when they response with customer’s problem. A good attitude with caring and concerning about what customers experienced and uncomfortable is good criteria for customers to evaluate Service Recovery of Center. Study also found that procedure of Service Recovery is more efficient when Center train employees how to communicate with customers to make them tell their problems. Because, it is very difficult to know how customers value service if they do not discuss anything about this.
The research affirm that Satisfaction of Customer after handling complaints impacting on customer Loyalty significantly. Thus, this result contributes to the literature review of studies in English teaching Service that Service Recovery is always an important factor to improve the customer satisfaction and customer Loyalty. Key words: service recovery, perceived justice, recovery satisfaction, customer loyalty. ii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES CHAPTER 1: INTRODUCTION .3 RESEARCH OBJECTIVES AND QUESTION .4 SIGNIFICANCE OF THE RESEARCH.
6 CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL MODEL .2 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY. 16 CHAPTER 3: RESEARCH METHODOLOGY. 17 iii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.2 CONSTRUCTION OF MEASUREMENT .1 Measurement Scale of Interactional Justice .2 Measurement Scale of Procedural Justice .3 Measurement Scale of Distributive Justice .4 The measurement of customer satisfaction after handling complaint .5 The measurement of Customer Loyalty .1 Source of data .5 DATA COLLECTION PROCEDURE. 26 CHAPTER 4: RESULTS OF DATA ANALYSIS AND DISCUSSION .1 Name of English center respondents used to experienced .2 Cost of English center respondent used.3 The profession, gender and age of respondents.2 RELIABILITY ANALYSIS OF MEASUREMENT SCALES .1 Reliability analysis result of measurement scale of Interactional Justice .2 Reliability result of measurement scale of Procedural Justice .3 Reliability analysis result of measurement scale of Distributive Justice.4 Reliability analysis result of measurement scale of Recovery Satisfaction .5 Reliability analysis result of measurement scale of Loyalty .3 EXPLORATORY FACTOR ANALYSIS .1 EFA for group of predictors .2 EFA for group of items of Customer Satisfaction and Loyalty measurement Scale.
38 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 MULTIPLE REGRESSION ANALYSIS .1 Revised Conceptual Model.2 Multiple Regression Testing Assumptions .3 Multiple Regression Analysis 1. 50 CHAPTER 5: CONCLUSION AND MANAGERIAL IMPLICATION. 59 APPENDIX 1: SURVEY FORM. 59 APPENDIX 2: RESULTS F CRONBACH’S ANPHA.
63 APPENDIX 3: RESULTS OF EFA. 79 APPENDIX 4- RESULTS OF MULTIPLE REGRESSION. 91 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1: Conceptual Model 14 Figure 2: The process of research 15 Figure 3: Name of English center respondents used to experienced 27 Figure 4: Tuition fees of English course respondents used to experienced 28 Figure 5: Gender and age of respondents 29 Figure 6: Profession of respondents 30 Figure 7: Revised Conceptual Model 38 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 1: List of Interviewers 17 Table 2: Measurement Scale of Interactional Justice 18 Table 3: Measurement Scale of ProcedureJustice 19 Table 4: Measurement Scale of DistributiveJustice 19 Table 5: Measurement Scale of customer satisfaction after handling complaint 20 Table 6: Measurement Scale of Customer Loyalty 21 Table 7: The result of delivery questionnaires 24 Table 8: Cronbach’s Alpha of scale of Interactional Justice 31 Table 9: Cronbach’s Alpha of scale of ProceduralJustice 32 Table 10: Cronbach’s Alpha of Scale of Distributive Justice 33 Table 11: Cronbach’s Alpha of Scale of Satisfaction 34 Table 12: Cronbach’s Alpha of Scale of Loyalty 35 Table 13: EFA result of Predictors 36 Table 14: EFA result of Satisfaction and Loyalty 37 Table 15: Results of Multiple Regression Analysis 1 40 Table 16: Result of Simple Regression Analysis 43 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: Introduction CHAPTER 1: INTRODUCTION 1.1 RESEARCH BACKGROUND Today, the number of language center increase significantly every year, accounting for 40% of kind of culture center in Viet Nam while the number of student studying in the language center stand for 70% compare to others. This proved that second language was and is getting become more important in our life.
Since Viet Nam has joined WTO, there were many foreign companies invested in Viet Nam. This leads to local company need more human resources have ability to use English. Ho Chi Minh City is the biggest city in Viet Nam, which is united culture center, developed economic, and education. Therefore, there are a lot of English centers opened to meet demand of English studying for millions of students and employees.
Besides local English centers, many international group built and developed a chain of English center such as Ila, AMA…They are big competitors to VUS, Outer-space language, VAS, and others. Due to developed society, expectation of customer about service becomes higher. They demand more strict requirements. Therefore, the possibility which the service producers deliver services in failure is bigger.
Service failure is defined as those situations when the service fails to live up to the customer‟s expectations (Michel, 2001). It is clear that service failure is inevitable. When customers dissatisfy with service received then they will respond by reaction such as emotional reaction (anger, disappointment, regret) or behavior reaction (complaining, negative mouth to mouth or switching of these providers to others). The bad case is that they will do negative mouth to mouth of services.
It is coined that mouth to mouth advertising is very effective and quick. Thus, the important is providers have to handle complaints and resolve problems to maintain customers and avoid negative word of mouth. Recently there have been many studies about this problem, they found out remedy for service failure which helps company change lose to win. The one of effective therapies to ease customer dissatisfaction is service recovery.
When firms handle complaint and failures effectively this can have a great effect on customer retention rates, defect the spread of damaging word of mouth and improve bottom-line performance (Morrisson and Huppertz, 2010). However, the degree of success might depend on the type of service 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: Introduction involved, the type of failure (Mc Dougall and Levesque, 1999) that appeared and the speed of reaction. Several studies have found that good service recovery practices could lead to higher loyalty, satisfaction and retention rates (Johnston and Michel, 2008; Millet et al. Johnston and Michel (2008) have explored that service recovery has a positive impact on process improvement as well as on customer‟s attitude and retention.
Others found that good relationships between customers and services providers after service recovery are conducted successfully. Clearly, the effect of Service recovery has meaningful in maintaining customers. If service recovery is ineffective or poor that triggers to disappointment of customer again (failure in recovery). This may lead to the loss of confidence in the firm and possible defection; consequently negative word of mouth communication will spread significantly.2 PROBLEM IDENTIFICATION Service recovery refers to the actions taken by an organization to resolve the problems caused by service failure (Gronroos, 1990).
Some customers do not complaint even they dissatisfy with the service (Stephens and Gwinner, 1998). However, it does not mean that they are happy with what they received. The reasons for not complaining are plentiful which might lead to their belief of service decrease significantly. Consequently, they will use other service or give a negative word of mouth to their relatives, friends and the consequences are potentially devastating to a company, resulting in increased “opportunity cost” (Fornell and Wernfelt, 1987 and Vorhees et., 2006), lost market share and declining profitability (e.
Thus, employers should have a sensible ability to recognize whether service delivery is failure or not to give proper solution of service recovery. Since service failure is inevitable then clear explanation of service failure should be recognized to employees and customers to help them curb dissatisfaction of customers. In order to retain consumers, after a failure of delivery service then providers have to fix their mistake by some actions such as apology, compensation, empathy, explanation, replacement, ., called service recovery. However, an inadequate action can be second failure.
Thus, managers have to aware about what is service failure and effective service recovery. Since necessary of service recovery is not examined accurately with service providers in Viet Nam, the study aims to make clear the relationship between service recovery and customer satisfaction and customer loyalty. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com Chapter 1: Introduction In order to more understand about effective service recovery, reserachers have ultilized justice theory as the main framework for evaluating service recovery Procedure (McColl-Kennedy & Sparks, 2003). A justice theory framework has gained popularity in explaining how customers examine service providers‟ reactions to service failure/recovery.
There are three dimensional concept perceived in this theroy including distributive, procedural and interactional justice. Recently, many researchers have studied the relationship between service recovery based on multi-dimensional concept and customer satisfaction and loyalty.However, it is necessary to study more deeply in vietnamese context and Education industry. Specifically, study aims to analyze complainter‟s responses to service recovery on three these dimensions.