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 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 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 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 Signature:……………………………… Date:…………………………………… ii LIST OF CONTENTS ACKNOWLEDGEMENT ii STATEMENT OF DECLARATION iii LIST OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii ABSTRACT viii CHAPTER 1: INTRODUCTION 1.1 1.2 1.3 Research background Statement of problem Research objectives 1.4 1.5 Scopes of the study Significance of the study 1.6 Thesis structure CHAPTER 2: LITERATURE AND HYPOTHESES 2.1 2.2 2.3 Overview research context Definitions of concepts Relationships between main concepts 11 2.4 Proposed research model 14 CHAPTER 3: RESEARCH METHODOLOGY 17 3.1 3.2 3.3 3.4 Sample size 17 Research process 18 Pilot study results 20 Questionnaire design 26 3.5 Data analysis method 27 iii CHAPTER 4: DATA ANALYSIS 29 4.1 4.2 4.3 Sample characteristics 29 Validity Analysis - Exploratory Factor Analysis 31 Reliability Analysis – Cronbach’s Alpha Analysis 35 4.4 Regression Analysis 37 4.4.1 Simple regression analysis 37 4.4.2 Multiple regression analysis 40 CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND LIMITATIONS 48 5.1 5.2 Findings 48 Managerial implications 49 5.3 Limitations and future research 51 REFERENCES 52 APPENDICES 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 LIST OF TABLES Table 2.1: Summarize hypotheses of the research 14 Table 3.1: Original measurement scales for the variables 22 Table 3.2: Measurements comparison table 24 Table 4.1: Respondents’ demographic characteristics description 30 Table 4.2: Rotated Component Matrix of all variables (first test) 33 Table 4.3: Rotated Component Matrix of all variables (after deleted one item) 34 Table 4.4: Reliability test results for all variables 36 Table 4.5: Correlations test of simple regression analysis 38 Table 4.6: ANOVA of simple regression analysis 39 Table 4.7: Coefficients of simple regression analysis 40 Table 4.8: Correlations test of multiple regression analysis 41 Table 4.9: Model summary of multiple regression analysis 42 Table 4.10: ANOVA of multiple regression analysis 42 Table 4.11: Coefficients of multiple regression analysis 43 Table 4.12: Summary of regression analysis and hypotheses testing 46 v LIST OF FIGURES Figure 2.1: Proposed research model 15 Figure 3.1: Research process 18 Figure 4.1: Revised research model 35 vi 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.e., 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 CHAPTER 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 (Varela1 Smith, A K., Bolton, R N., & Wagner, J (1999) A model of customer satisfaction with service encounters involving failure and recovery Journal of Marketing Research, 36(3), 356-372 Spreng, R A., Harrell, G D., & Mackoy, R D (1995) Service recovery: Impact on satisfaction and intentions The Journal of Services Marketing, 9(1), 15-23 doi: 10.1108/08876049510079853 Stauss, B (2002) The dimensions of complaint satisfaction: process and outcome complaint satisfaction versus cold fact and warm act complaint satisfaction Managing Service Quality, 12(3), 173-183 doi: 10.1108/09604520210429240 Tax, S S., Brown, S W., & Chandrashekaran, M (1998) Customer evaluations of service complaint experiences: Implications for relationship marketing Journal of Marketing, 62(2), 60-76 Varela-Neira, C., Vázquez-Casielles, R., & Iglesias, V (2010) Explaining customer satisfaction with complaint handling The International Journal of Bank Marketing, 28(2), 88-112 doi: 10.1108/02652321011018305 Vietnam Competition Authority (2015) Annual report 2014 Retrieved May 25th, 2015, from http://www.vca.gov.vn/uploads/file/2015/05_26/VCA%20Annual%20Report%20201 4-En%20(final).pdf Vo, Thi Thanh Thao & Pham, Ngoc Thuy (2013) Giữ uy tín với khách hàng tránh lỗi dịch vụ - Mô hình nghiên cứu từ cảm xúc đến hành vi [Keep prestige with customers when unable to avoid service failures – Research model from emotions to behaviors] Journal of Economics Development, (277), 38-48 55 XiaoRan, W., & Omar, R (2014) Service recovery activities and customer satisfaction: Mediating role of justice dimensions: A case study of China Asian Social Science, 10(18), 253-261 Wen, B., & Chi, C G (2013) Examine the cognitive and affective antecedents to service recovery satisfaction International Journal of Contemporary Hospitality Management, 25(3), 306-327 56 APPENDICES Appendix A: Research questionnaire (Vietnamese version) PHIẾU KHẢO SÁT Chào Anh/Chị, tên Trương Ngọc Quang Duy, học viên cao học Viện Đào Tạo Quốc Tế, Trường Đại Học Kinh Tế TP HCM Tôi nghiên cứu ảnh hưởng nhận thức công khách hàng việc khôi phục dịch vụ lên thỏa mãn khách hàng, lòng trung thành lời nói truyền miệng Rất mong Anh/ Chị dành vài phút để trả lời Phiếu khảo sát Sự hỗ trợ Anh/Chị quan trọng cảm kích Trong trình thực phiếu khảo sát này, Anh/Chị có thắc mắc nào, xin vui lòng liên lạc với thông qua địa email: duyhs22@gmail.com số điện thoại 0904690016 PHẦN I: THÔNG TIN TỔNG QUÁT Trong vòng tháng qua, Anh/Chị đến nhà hàng cung cấp dịch vụ ăn uống Tp Hồ Chi Minh: □ 1-2 lần □ 6-8 lần □ 3-5 lần □ > lần Anh/Chị bắt gặp sai sót/lỗi dịch vụ nhà hàng Tp Hồ Chí Minh vòng tháng qua? □ Không! Xin cảm ơn, Anh/Chị dừng khảo sát □ Có! Anh/Chị vui lòng tiếp tục trả lời câu hỏi Trong lần đó, Anh/Chị đến ăn uống nhà hàng với: □ gia đình/ người thân □ đối tác □ bạn bè/ đồng nghiệp □ Mục đích đến nhà hàng lần Anh/Chị là: □ tổ chức tiệc mừng □ giao lưu bạn bè □ hỗ trợ công việc □ thưởng thức ăn Sai sót/lỗi dịch vụ mà Anh/Chị phàn nàn phía nhà hàng thuộc về: □ lực phục vụ □ thái độ nhân viên □ quy trình phục vụ □ không gian, môi trường 57 Anh/Chị có khiếu nại sai sót/lỗi dịch vụ hay ko? □ Không! Xin cảm ơn, Anh/Chị dừng khảo sát □ Có! Anh/Chị vui lòng tiếp tục trả lời câu hỏi Anh/Chị khiếu nại sai sót/lỗi dịch vụ với ai? □ nhân viên phục vụ □ quản lý nhà hàng Sai sót/lỗi dịch vụ có nhà hàng khắc phục hay không? □ Không! Xin cảm ơn, Anh/Chị dừng khảo sát □ Có! Anh/Chị vui lòng tiếp tục trả lời câu hỏi 58 PHẦN II: ĐÁNH GIÁ HOẠT ĐỘNG KHẮC PHỤC LỖI DỊCH VỤ VÀ NHẬN THỨC ĐỐI VỚI DOANH NGHIỆP Gọi X tên nhà hàng mà Anh/Chị gặp phải lỗi dịch vụ cung cấp hành động khắc phục sai sót/lỗi dịch vụ Xin cho biết mức độ đồng ý Anh/Chị phát biểu sau, cách khoanh tròn “O” vào ô điểm tương ứng Trong đó: (1): Hoàn toàn không đồng ý STT (2): Không đồng ý (3): Không có ý kiến (4): Đồng ý Đánh giá Hoàn Hoàn Không toàn Không có ý Đồng ý toàn không đồng ý kiến đồng ý đồng ý (5): Hoàn toàn đồng ý Việc khắc phục bù đắp nhận từ X hợp lý Kết mà nhận từ X là: … thỏa đáng … công Nhân viên X đã: … quan tâm đến sai sót cách thích đáng 5 … khắc phục sai sót cách tận tình … xin lỗi giải thích mực cho sai sót X có quy trình thủ tục: …thỏa đáng để khắc phục sai sót/lỗi dịch vụ …linh hoạt Tôi thấy an tâm đến ăn X Tôi cảm thấy X phản ứng với sai sót cách nhanh chóng 10 Tôi tin X có giải thích hợp lý cho nguyên nhân sai sót 5 Liên quan đến việc khắc phục sai sót/lỗi dịch vụ, X đã: 11 … truyền đạt chi tiết cách thấu đáo kịp thời 59 12 … điều chỉnh giao tiếp thich ứng với yêu cầu cụ thể 13 … thẳng thắn đưa thông tin để xác minh giải vấn đề 14 Tôi hài lòng với cách X khắc phục sai sót/lỗi dịch vụ 15 Tôi có trải nghiệm tích cực khiếu nại X 16 Tôi hài lòng với việc khắc phục sai sót/lỗi dịch vụ X 17 X cho câu trả lời thỏa đáng 18 Tôi cân nhắc X lựa chọn hàng đầu Tôi tiếp tục đến X: 19 … tương lai 20 … đến ăn X có phương án khác 21 Tôi sẵn lòng đề xuất X cho người khác 22 Tôi thường nói tốt X cho người khác 23 Tôi khuyến khích bạn bè người thân đến ăn X Phần III Thông tin cá nhân Giới tính: □ Nam Nhóm tuổi: □ 18 – 23 tuổi □ 31 – 40 tuổi Mức thu nhập tháng: (VND) □ Dưới triệu □ 10 triệu – 14 triệu □ Nữ □ 24 – 30 tuổi □ 41 tuổi □ triệu – 10 triệu □ Trên 14 triệu Cảm ơn quý Anh/Chị hỗ trợ cho nghiên cứu này! 60 Appendix B: Research questionnaire (English version) Dear Sir/Madam, I am Trương Ngọc Quang Duy, a student of Master Program of International School of Business, University of Economics of Hochiminh city I am investigating the impacts of customers’ justice perceptions to customer satisfaction with service recovery, customer loyalty and positive word-of-mouth Your kindly support is very important and highly appreciated Any concern or question related to the survey, please feel free to contact me through email address: duyhs22@gmail.com or phone number 0904690016 PART I: GENERAL INFORMATION Within one month, how many times did you visit restaurants in Hochiminh city: □ 1-2 time(s) □ 3-5 times □ 6-8 times □ > times Did you face to service failures from restaurants in Hochiminh city within one month? □ No! Thank you, you are able to stop the survey from here □ Yes! Please kindly continue At that time, you visited the restaurant with: □ family/ relatives □ friends/ colleagues □ business partner(s) □ alone Your purpose when visiting the restaurant was: □ celebrate a party □ meet with friends □ support to business □ enjoy the dishes Kind of service failure that you have faced with the restaurant was: □ service ability □ service procedure □ staffs’ attitudes □ environment Did you raise the complaint to the restaurant? □ No! Thank you, you are able to stop the survey from here □ Yes! Please kindly continue 61 Who did you complain with? □ staffs □ restaurant’s managers Did you receive service recovery from that restaurant? □ No! Thank you, you are able to stop the survey from here □ Yes! Please kindly continue 62 PART II: EXAMINE CUSTOMER’S PERCEPTIONS TOWARD SERVICE RECOVERY AND RESTAURANTS Name X is the restaurant where you have faced service failures and have been provided service recovery from: Please show your agreement to each statement by marking “O” respectively In which: (5): Totally agree The service recovery or the compensation I received from X was reasonable Totally agree (4): Agree Agree (3): Neutral Neutral (2): Disagree Disagree STT Totally disagree (1): Totally disagree The outcome I received from X: … has been adequate … was fair X’s personnel: … concerned about the failure appropriately 5 … handled the service recovery devotedly … gave me a proper apology and explanation about the failure X has: … fair policies and practices to handle the service recovery … flexible policies and practices to handle the service recovery I feel safe when I visit X I feel X responded to the failure quickly 10 I believe that X has reasonable explanations about the failure Regarding the service recovery, X: 63 11 … communicated the details thougoughly and quickly 12 … tailored to my specific needs its communication 13 … was candid in providing information to justify and solve my problem 14 I am satisfied with the way X provides service recovery 15 I had a positive experience when complaining to X 16 I am very satisfied with X’s service recovery 17 X has provided me with a satisfactory answer to the failure 18 I considered the company as my first choice I will continue to visit X: 19 … in the future 20 … even if other alternatives are available 21 I am willing to recommend X to others 22 I usually say positive things about X to others 23 I will tell my friends and relatives to visit X PART III PERSONAL INFORMATION Gender: □ Male □ Female □ 18 – 23 □ 31 – 40 □ 24 – 30 □ 41 and above Age: Income: (million VND) □ Under □ 10 – under 14 □ – under 10 □ 14 and above Thank you for support this research! 64 Appendix C: Output summary of pilot study In this section, due to the differences from original measurement scales contexts with current study, the subject “company” was replaced by “restaurant” Respondents Original measurements Comments Distributive justice Tô Thanh Thảo Nguyên, age 24, Customer service executive Nguyễn Thị Ánh Ngọc, age 28, Sales executive Tô Thanh Thảo Nguyên, age 24, Customer service executive Phạm Hoàng Trưởng, age 30, Vice purchasing manager Given the inconvenience caused by the failure and the time lost, the service recovery or the compensation I received from the COMPANY was considered reasonable All respondents understood this scale, but suggested to delete the phrase “Given the inconvenience caused by the failure and the time lost” Overall, the outcome I received from the COMPANY in recovery to the failure has been adequate All respondents understood this scale, but suggested to delete the phrase “in recovery to the failure” The outcome I received was fair All respondents understood and agree with this scale Interactional justice Tô Thanh Thảo Nguyên, age 24, Customer service executive Nguyễn Thanh Uyên, age 25, Document executive Tô Thanh Thảo Nguyên, age 24, Customer service executive Nguyễn Thanh Uyên, The COMPANY’s personnel were appropriately concerned about my problem All respondents understood, but suggested to replace “my problem” by “the failure” The COMPANY’s personnel’s communication and care when solving the problem The repsondents suggested rewriting this scale to “The personnel handled the service recovery devotedly” in order to 65 age 25, Document executive has been appropriate understand it meaning easily Tô Thanh Thảo Nguyên, age 24, Customer service executive The COMPANY’s personnel gave me a proper apology and explanation about the problem All respondents understood, but suggested to replace “my problem” by “the failure” Nguyễn Thanh Uyên, age 25, Document executive Procedural justice Tô Thanh Thảo Nguyên, age 24, Customer service executive The COMPANY has fair policies and practices to handle the problem Respondents understand the meaning, but suggested to replace “the problem” by “the service recovery” The COMPANY has shown adequate flexibility in dealing with the problem The company is safe to patronize Respondents suggested rewriting the scale as follow: “The restaurant has flexible policies and practices to handle the service recovery I feel safe when I visit it.” I feel The COMPANY responded in a timely fashion to the problem Respondents understood this scale, but suggested to replace “responded in a timely fashion to the problem” by “responded to the failure quickly” Nguyễn Thanh Uyên, age 25, Document executive Phạm Hoàng Trưởng, age 30, Vice purchasing manager Huỳnh Quốc Vương, age 29, Document dept manager Tô Thanh Thảo Nguyên, age 24, Customer service executive Informational justice Nguyễn Thị Ánh Ngọc, age 28, Sales executive Nguyễn Sê Ha, age 34, Purchasing executive I believe the COMPANY’s explanations regarding the causes behind the problem were reasonable Respondents thought that it was complicated, then suggested rewriting this scale as “I believe that the restaurant has reasonable explanations about the failure.” 66 Nguyễn Thị Ánh Ngọc, age 28, Sales executive Huỳnh Quốc Vương, age 29, Document dept manager The COMPANY communicated the details of the service recovery thoroughly and in a timely manner Respondents understood this scale, but suggested to replace “in a timey manner” by “quickly” The COMPANY tailored to my specific needs its communication regarding the service recovery All the respondents agreed with this scale with no idea The COMPANY was candid in its communication of the information offered to justify and solve my problem All the respondents understood and agreed with this scale Customer satisfaction with service recovery I am satisfied with the way All the respondents understood the COMPANY provides and agreed with this scale service recovery I had a positive experience when complaining to this COMPANY All the respondents understood and agreed with this scale I am very satisfied with the All the respondents understood service recovery of the and agreed with this scale COMPANY Hứa Minh Tân, age 24, Purchasing executive In my opinion, the COMPANY has provided me with a satisfactory Huỳnh Quốc Vương, age answer to the problem, in 29, Document dept this specific occasion manager The respondents understood and agreed with this scale, but think that the phrases “in my opinion” and “in this specific occasion” are not necessary Customer loyalty Nguyễn Thị Ánh Ngọc, When choosing the same Respondent think that the 67 age 28, Sales executive product category, I considered the company as my first choice phrase “When choosing the same product category” is not necessary I will continue to visit the company in the future All the respondents understood and agreed with this scale I will continue to visit the company, even if other alternatives are available All the respondents understood and agreed with this scale Positive word-of-mouth Tô Thanh Thảo Nguyên, age 24, Customer service executive Tô Thanh Thảo Nguyên, age 24, Customer service executive I am willing to recommend the COMPANY and its product/services to others All the respondents understood this scale, but should delete “and its product/services” I usually say positive things about the COMPANY to others All the respondents understood and agreed with this scale I will tell my friends and relatives to use the COMPANY’s products/service All the respondents understood this scale, but need to replace “to use the product/service” by “to visit” 68 Appendix D: KMO and Bartlett’s Test results for all variables (before and after deleted one unsuitable item) KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square 859 3846.818 Df 253 Sig .000 KMO and Bartlett's Test (after deleted one unsuitable item) Kaiser-Meyer-Olkin Measure of Sampling Adequacy Bartlett's Test of Sphericity Approx Chi-Square 855 3745.987 Df 231 Sig .000 69 ... 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. .. 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. .. word -of- mouth intentions should be regarded as separate constructs and that the inclusion of word -of- mouth in the conceptualization of loyalty should be avoided In this context, customers who loyal with