Effectiveness of compensation depending on relationship level: The mediating role of perceived equtiy
Abstract
Previous studies in the area of service recovery deal with issues such as positive impact of recovery efforts on consumer's satisfaction or behavioral intentions using justice theory. However, little efforts have been made to capture the different fairness perceptions as consumer-service organization relationships differ. This study investigated the effectiveness of compensation on behavioral intentions through perceived equity, which is moderated by consumer-service organization relationships. Online survey was conducted to collect data, using hypothetical scenarios manipulating recovery efforts and relationship level conditions. Mediation tests showed that perceived equity fully mediate the effect of compensation on consumer's future behavioral intentions. The results of Analysis of Variance showed that consumer's relationship level with the firm moderates the effect of compensation on consumer's perceived equity and, consequently, their behavioral intentions. Furthermore, when consumers have high customer-organization relationship, there is no difference in the behavioral intentions between those who are compensated and those who are not. Managerial implications for restaurant operations are also discussed.
Degree
M.S.
Advisors
Jang, Purdue University.
Subject Area
Marketing
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