Consumer Reactions to Unethical Service Recovery

Ethical business practices have been widely prescribed, but why? Consumer’s views on unethical business practices have been studied, but possibly more important to marketers and researchers are consumer actions and reactions to unethical business practices and the businesses themselves. Do consumers react negatively, or in such a way as to "punish" the unethical business? If so, what is the nature and extent of the punishment? This research seeks answers to these questions by examining consumer reactions, such as complaining and switching, to instances of unethical business practices. Using equity theory, this research proposes that consumers should be willing to tolerate some unethical behavior as long as they feel their investments and outcomes remain proportionately equal. Consumers who perceive that their outcome/investment ratio is proportionately unequal to their comparison other will respond by switching or complaining. In this research consumers were exposed to two types of service failures with different levels of service recovery in vignettes. Costs incurred by the consumer during the service transaction were also manipulated in the vignettes. Significant differences were found for complaint behavior in the failure recovery vignettes tested. Specifically, voice complaint was higher in the high cost service encounters in both types of services tested. The recovery attempt used (ethical, unethical, or none) led to significance differences in the variables of complaint, voice complaint, satisfaction, and quality. Higher satisfaction and quality ratings were found for the ethical recovery attempt and higher intentions to use complaint and voice complaint in the unethical recovery attempts. One significant interaction between cost and recovery attempt was found. Intentions to use voice complaint were higher in the high cost situations of ethical and unethical recovery, while approaching equality at the no recovery attempt.

[1]  Steven A. Taylor,et al.  An assessment of the relationship between service quality and customer satisfaction in the formation of consumers' purchase intentions , 1994 .

[2]  D. Baack,et al.  The Personal Imapact of Ethical Decisiosn: A Social Penetration Theory , 2000 .

[3]  Donelson R. Forsyth,et al.  Personal moral philosophies and moral choice , 1990 .

[4]  Jagdip Singh.  Consumer Complaint Intentions and Behavior: Definitional and Taxonomical Issues , 1988 .

[5]  R. Pitts,et al.  Exploring the structure of ethical attributions as a component of the consumer decision model: The vicarious versus personal perspective , 1991 .

[6]  Vince Howe,et al.  The relationship between ethical and customer-oriented service provider behaviors , 1994 .

[7]  Youjae Yi.  The Effects of Contextual Priming in Print Advertisements , 1990 .

[8]  Catherine A. Cole,et al.  The Effects of Length, Content, and Repetition on Television Commercial Effectiveness , 1993 .

[9]  Richard S. Lapidus,et al.  Customer complaint situations: An equity theory perspective , 1995 .

[10]  Subhash Sharma,et al.  Consumer Ethnocentrism: Construction and Validation of the CETSCALE: , 1987 .

[11]  Deborah Gunthorpe.  Business Ethics: A Quantitative Analysis of the Impact of Unethical Behavior by Publicly Traded Corporations , 1997 .

[12]  The Role of Dual Entitlement and Equity Theories in Consumers' Formation of Fair Price Judgments: An Investigation Within a Business-to-Business Service Setting , 1998 .

[13]  Mary Jo Bitner,et al.  Critical Service Encounters: The Employee's Viewpoint , 1994 .

[14]  C. Goodwin,et al.  Consumer responses to service failures: Influence of procedural and interactional fairness perceptions , 1992 .

[15]  Mary Jo Bitner,et al.  Evaluating service encounters: The effects of physical surroundings and employee responses. , 1990 .

[16]  Jagdip Singh.  Identifying Consumer Dissatisfaction Response Styles: An Agenda for Future Research , 1990 .

[17]  M. Gilly,et al.  A transaction cost approach to consumer dissatisfaction and complaint actions , 1991 .

[18]  John E. Dittrich,et al.  Equity Theory: The Recent Literature, Methodological Considerations, and New Directions , 1978 .

[19]  R. H. Evans,et al.  An Application of Equity Theory to Buyer-Seller Exchange Situations , 1978 .

[20]  Joel J. Davis,et al.  Good ethics is good for business: Ethical attributions and response to environmental advertising , 1994 .

[21]  Terence A. Oliva,et al.  A Catastrophe Model for Developing Service Satisfaction Strategies , 1992 .

[22]  R. E. Berger,et al.  The Effects of Ethical Ideology on Moral Behavior , 1982 .

[23]  John T. Bowen,et al.  Development of a Taxonomy of Services to Gain Strategic Marketing Insights , 1990 .

[24]  Mark A. Davis,et al.  Antecedents to customer expectations for service recovery , 1994 .

[25]  C. Goodwin,et al.  Consumer Evaluations of Responses to Complaints: What′s Fair and Why , 1990 .

[26]  Kailash Joshi,et al.  An Investigation of Equity as a Determinant of User Information Satisfaction , 1990 .

[27]  Mary Jo Bitner,et al.  The Service Encounter: Diagnosing Favorable and Unfavorable Incidents: , 1990 .

[28]  J. E. Swan,et al.  Influence of buyer ethics and salesperson behavior on intention to choose a supplier , 1991 .

[29]  Youjae Yi.  Cognitive and affective priming effects of the context for print advertisements , 1990 .

[30]  Sanford Grossbart,et al.  Influence of Involvement, Commitment and Familiarity on Brand Beliefs and Attitudes of Viewers Exposed to Alternative Ad Claim Strategies , 1988 .