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Service guarantee as a recovery strategy: the impact of guarantee terms on perceived justice and firm motives

Service guarantee as a recovery strategy: the impact of guarantee terms on perceived justice and firm motives
Service guarantee as a recovery strategy: the impact of guarantee terms on perceived justice and firm motives
Purpose
When a service fails, the guarantee policy of the firm can be employed as a recovery strategy. The terms of the guarantee determine the amount of payout and the ease of invoking the policy. The guarantee terms can, therefore, influence customer perceptions of recovery fairness and inferences about the firm’s intentions in providing fair recovery. The study examines the impact of guarantee terms on customer perceptions of justice, motive attributions and repatronage intentions.

Design/methodology/approach
A between-subjects experiment was conducted in parcel delivery services.

Findings
Customer perceptions of justice vary across guarantee payout levels. Payout in the form of a discount does not restore justice perceptions, and leads to inferences that the firm offered the guarantee to maximise its profits. Conversely, full refund restores justice. Full refund plus discount is perceived as undeserved, and does not enhance justice perceptions. A moderately easy-to-invoke guarantee is perceived as fair, when it includes full refund. Inferences of negative firm’s motives, however, diminish perceived fairness of easy-to-invoke guarantees.

Research limitations/implications
Future research could examine the interaction of guarantee scope with payout and ease of invocation, and how types of motives differentially impact justice perceptions.

Practical implications
Full refund can enhance justice perceptions, whereas discount is perceived as unfair. Firms should offer full refund as guarantee payout, but refrain from offering a discount. Flexibility should be embedded in guarantee invocation procedures.

Originality/value
This study demonstrates that service guarantees employed as recovery strategies signal justice and the firm’s motives.
1757-5818
117-143
Crisafulli, Benedetta
930306a5-4f20-459b-b4a7-180fdda61c8f
Singh, Jaywant
db6316ed-e404-4c5a-873c-6e97c94fe531
Crisafulli, Benedetta
930306a5-4f20-459b-b4a7-180fdda61c8f
Singh, Jaywant
db6316ed-e404-4c5a-873c-6e97c94fe531

Crisafulli, Benedetta and Singh, Jaywant (2016) Service guarantee as a recovery strategy: the impact of guarantee terms on perceived justice and firm motives. Journal of Service Management, 27 (2), 117-143. (doi:10.1108/JOSM-10-2015-0309).

Record type: Article

Abstract

Purpose
When a service fails, the guarantee policy of the firm can be employed as a recovery strategy. The terms of the guarantee determine the amount of payout and the ease of invoking the policy. The guarantee terms can, therefore, influence customer perceptions of recovery fairness and inferences about the firm’s intentions in providing fair recovery. The study examines the impact of guarantee terms on customer perceptions of justice, motive attributions and repatronage intentions.

Design/methodology/approach
A between-subjects experiment was conducted in parcel delivery services.

Findings
Customer perceptions of justice vary across guarantee payout levels. Payout in the form of a discount does not restore justice perceptions, and leads to inferences that the firm offered the guarantee to maximise its profits. Conversely, full refund restores justice. Full refund plus discount is perceived as undeserved, and does not enhance justice perceptions. A moderately easy-to-invoke guarantee is perceived as fair, when it includes full refund. Inferences of negative firm’s motives, however, diminish perceived fairness of easy-to-invoke guarantees.

Research limitations/implications
Future research could examine the interaction of guarantee scope with payout and ease of invocation, and how types of motives differentially impact justice perceptions.

Practical implications
Full refund can enhance justice perceptions, whereas discount is perceived as unfair. Firms should offer full refund as guarantee payout, but refrain from offering a discount. Flexibility should be embedded in guarantee invocation procedures.

Originality/value
This study demonstrates that service guarantees employed as recovery strategies signal justice and the firm’s motives.

Full text not available from this repository.

More information

e-pub ahead of print date: 8 March 2016

Identifiers

Local EPrints ID: 436070
URI: http://eprints.soton.ac.uk/id/eprint/436070
ISSN: 1757-5818
PURE UUID: acfbec7d-0ce1-4efe-91cd-810639f1a7e8
ORCID for Jaywant Singh: ORCID iD orcid.org/0000-0002-0766-0162

Catalogue record

Date deposited: 27 Nov 2019 17:30
Last modified: 17 Dec 2019 01:20

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