UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Truong Ngoc Quang Duy THE EFFECTS OF PERCEIVED JUSTICE WITH SERVICE RECOVERY ON CUSTOMER SATISFACTION, LOYALTY AND WORD OF MOUTH IN RESTAURANT SERVICES IN HOCHIMINH CITY MASTER OF BUSINESS (Honours) Hochiminh City – 2015 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Truong Ngoc Quang Duy THE EFFECTS OF PERCEIVED JUSTICE WITH SERVICE RECOVERY ON CUSTOMER SATISFACTION, LOYALTY AND WORD OF MOUTH IN RESTAURANT SERVICES IN HOCHIMINH CITY ID: 22130014 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. PHAM NGOC THUY Hochiminh City – 2015 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT Firstly, I would like to express my deep gratitude to my supervisor, Dr. Pham Ngoc Thuy, for her expertly instructions over the course. Without her insight and professional guidance, I would not complete this study.
I would also like to send deeply thanks to all members of ISB’s Committee for their valuable advices and constructive comments, which helped me in correcting this research. Finally, I’m so grateful my family, my close friends, and my colleagues for encouraging and supporting me for all the time. TIEU LUAN MOI download : skknchat@gmail.com STATEMENT OF DECLARATION I hereby certify that this thesis and its contents are my own work and effort, as part of my Master of Business studies. All the sources of information and materials used in this study have been fully acknowledged.
ii TIEU LUAN MOI download : skknchat@gmail.com LIST OF CONTENTS ACKNOWLEDGEMENT. ii STATEMENT OF DECLARATION. iii LIST OF CONTENTS. iv LIST OF TABLES.
vi LIST OF FIGURES. viii CHAPTER 1: INTRODUCTION .2 Statement of problem .4 Scopes of the study .5 Significance of the study. 4 CHAPTER 2: LITERATURE AND HYPOTHESES .1 Overview research context .2 Definitions of concepts .3 Relationships between main concepts .4 Proposed research model. 14 CHAPTER 3: RESEARCH METHODOLOGY .3 Pilot study results .5 Data analysis method.
27 iii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 4: DATA ANALYSIS .2 Validity Analysis - Exploratory Factor Analysis .3 Reliability Analysis – Cronbach’s Alpha Analysis .1 Simple regression analysis .2 Multiple regression analysis. 40 CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND LIMITATIONS .3 Limitations and future research. 57 Appendix A: Research questionnaire (Vietnamese version). 57 Appendix B: Research questionnaire (English version).
61 Appendix C: Output summary of pilot study. 65 Appendix D: KMO and Bartlett’s Test results for all variables (before and after deleted one unsuitable item). 69 iv TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 2.1: Summarize hypotheses of the research.1: Original measurement scales for the variables .2: Measurements comparison table .1: Respondents’ demographic characteristics description .2: Rotated Component Matrix of all variables (first test) .3: Rotated Component Matrix of all variables (after deleted one item) .4: Reliability test results for all variables .5: Correlations test of simple regression analysis .6: ANOVA of simple regression analysis .7: Coefficients of simple regression analysis .8: Correlations test of multiple regression analysis.9: Model summary of multiple regression analysis .10: ANOVA of multiple regression analysis .11: Coefficients of multiple regression analysis .12: Summary of regression analysis and hypotheses testing. 46 v TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2.1: Proposed research model .1: Revised research model.
35 vi TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Retaining customers’ loyalty and attracting new customers is the target of every company in every business. In order to reach that target, their managers always try to satisfy the customers at the utmost capability. However, in some unexpected circumstances, the firms cannot avoid some mistakes or service failures throughout the service process (Komunda & Osarenkhoe, 2012). Hence, satisfying customers by service recovery plays an important role in reducing the damage in relationship between the firms and customers after service failures (Kau & Loh, 2006).
In the world, justice theory has been a significant approach for service recovery research (Wen & Chi, 2013). However, still little research has demonstrated its effects to customer loyalty and its relationship with word-of-mouth intentions, especially in Vietnam. According to Vietnam Competition Authority - Ministry of Industry and Trade’s annual report (2015), restaurant is one of the industries which received most of complaints. The purpose of this study is to examine the effects of perceived justice to customer satisfaction with service recovery, and the relationships between customer satisfaction with service recovery, loyalty, and word-of-mouth in restaurant sector.
Using a structured questionnaire, a survey is conducted with 304 appropriated respondents. As a result, the research found that four justice dimensions (i., distributive justice, interactional justice, procedural justice, and informational justice) had positive relationships with customer satisfaction with service recovery, in which, distributive justice was the factor which influenced to customer satisfaction with service recovery the most, following by interactional justice, informational justice, and procedural justice respectively. Besides, the study confirms also the positive impact of customer satisfaction with service recovery to customer loyalty and word-of-mouth. After these findings, the managerial implications as well as research’s limitations are also presented.
vii TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1 INTRODUCTION 1.1 Research background Every company does want to satisfy their customers, to compete with the rivals by supplying high quality products and/or service, competitive price, and excellent customer services, etc… However, even a company which gained a lot of experiences in customer services cannot avoid service failures, which are identified as failures of core service, or products and policy failures (Komunda & Osarenkhoe, 2012). Service failures occur throughout the service delivery process, and possibly lead to many consequences as complaints and dissatisfactions. In fact, customer complaints are natural consequences in any industry or any service activity, not only because making mistake is an unavoidable feature of human being (Michel et al., 2009; Rio-Lanza et al., 2009), but also because of non-human errors (Kau & Loh, 2006). Customers, who are not satisfied with any service of the firm, tend to have antipathies to the firm, and turn to be the customers of other competitors, or even become a negative communication channel of the firm.
Therefore, service recovery is a very important activity, as a second effort of the firms, in order to retain the customers to the company or at least, “reduce the damage in relationship” (Kau & Loh, 2006, p.111), and to maintain a positive image of the company in customers’ mind after service failures. In order to examine the relationship between service recovery and customer satisfaction toward such activities, many researchers employ and focus on the justice theory (Tax et al., 1998; Smith et al., 1999), meanwhile some studies examine emotional perspective to evaluate customer satisfaction with service recovery from failures (Varela- 1 TIEU LUAN MOI download : skknchat@gmail.com Neira et al. Even there are other approaches which have been explored to explain the customers’ complaint satisfaction, including “outcome complaint satisfaction” and “process complaint satisfaction” (Stauss, 2002, p. 176), or evaluating service recovery from disconfirmation perspective (McCollough et al., 2000), perceived justice theory provides a significant approach for service recovery research (Wen & Chi, 2013).
In many studies, there are three dimensions of perceived justice in service recovery context which have been suggested are distributive justice, procedural justice, and interactional justice (Tax et al., 1998; Smith et al. However, in recent studies, informational justice is examined as the fourth dimension of service recovery perceived justice (Mattila & Cranage, 2005; Varela-Neira et al. In line of service recovery and customer satisfaction, many researchers mention trust as a consequence of satisfaction though its relationship with loyalty still unclear (Tax et al. In addition, as a finding, previous studies which examined service recovery justice, have together confirmed the effects of customer satisfaction with service recovery to customer behavior of patronage intention (Tax et al., 1998; Stauss, 2002) and word-of-mouth (Kau & Loh, 2006; Wen & Chi, 2013).2 Statement of problem In Vietnam, restaurant industry has been developed significantly recently; serve millions of people every year, including Vietnamese and foreign travelers.
However, according to the Vietnam Competition Authority - Ministry of Industry and Trade’s annual report (2015) about the number of complaints of customers received in 2014, restaurant was one of the industries which received most of complaints. From a preliminary survey in many restaurants in Hochiminh city, there are many complaints from customers. Most of 2 TIEU LUAN MOI download : skknchat@gmail.com complaints are related to the service ability (deliver wrong dishes, or not in a timely manner, etc…), staffs’ attitudes, service procedures, or about the environment (Vo & Pham, 2013). More than that, customers usually concern about the service quality of restaurants while providing the recovery service after failures, including attitudes of employees, service time for the recovery, adequate explanations, or the results of recovery compare with their expectations, etc… These practices are interpreted in literatures of customers’ justice perception, customer satisfaction, loyalty, and word of mouth in recent researches.
In contrast, although many studies have analyzed the relationship between perceived justice and customer satisfaction in service failure and recovery situations, still little research has demonstrated its effects to customer loyalty and its relationship with word-of-mouth intentions.3 Research objectives This study aims to examine the effects of perceived justices to customer satisfaction with service recovery, including four dimensions (i., distributive justice, interactional justice, procedural justice, and informational justice). The study also investigates the relationships between customer satisfaction with service recovery, loyalty, and word-of-mouth in restaurant sector.4 Scopes of the study The objects of this study are customers that visiting the restaurants, suffering service failures, and have been provided service recoveries from such restaurants in Hochiminh city. The study will approach these customers, interview them for the problems, and conduct the survey in order to collect data for the research. 3 TIEU LUAN MOI download : skknchat@gmail.5 Significance of the study Successful service recoveries often help customers to rate the firm more favorably after the recovery than prior to the failure (Choi & Choi, 2014).
There is no denying that satisfaction with service recovery is a critical factor in ensuring customer loyalty (Choi & Choi, 2014; Stauss, 2002). Understanding of which factors effect to customer satisfaction in service recovery take a significant role in helping the managers of restaurant services companies to achieve and retain customer loyalty, which will lead to re-purchase activities and positive word-of-mouth.6 Thesis structure This thesis is structured into five chapters. Firstly, introduction chapter presents an outline of this research. This chapter starts with background of the research, raises the research problems which explain the motivation for doing this research.
Besides, this chapter raises research objectives, the scopes of study, and significances of this research in practice. Secondly, chapter two reviews and summaries the literatures of related concepts from previous studies, including customer justice perception, customer satisfaction with service recovery, customer loyalty, and positive word-of-mouth. This chapter also provides the relationships of these concepts, and arguments the hypotheses, and then come to proposed research model. Thirdly, chapter three introduces research methodology which is used to empirically test the research model.
After that, chapter four presents the results of data analysis. Finally, chapter five ends this study with discussions the research’s findings, points out limitations of this research, and suggestions for next studies. 4 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 2 LITERATURE REVIEW AND HYPOTHESES This chapter is going to generalize some prominent works related to the current topic, and introduce the related literatures and concepts, which have been discovered in previous studies. The mentioned concepts, including customer justice perception, customer satisfaction to service recovery, customer loyalty, and word-of-mouth, are discussed in pair, in order to argue the hypotheses, and construct to the model.1 Overview research context In previous studies, which have discovered service recovery efforts of service providers, overall satisfaction is used to explain its affections, and its relationship with loyalty, and word-of-mouth activities (Spreng et al.
Recently, XiaoRan and Omar (2014) examine the relationship between service recovery activities and customer overall satisfaction with recovery efforts.