1.1 Research Background
Service firms need to provide satisficing experiences for customers to generate profitability, increase market share or simply stay in the business. However, in the world of doing business, it is impossible to totally avoid service failures. Service failures in general come in various forms:
severe the wrong food that is not customers’ order, delayed flights, unqualified meal, and when it occurs, it potentially affects the relationship between customer and the service providers, resulting in customer displeasure, negative world-of-mouth and customer defection. In this case, managers need to immediately response by providing some corrections in order to restore unfavorable intentions and maintain positive relationship with customers.
Service recovery is defined as actions taken by a firm to respond to a service failure (Gronroos,1988). Service recovery strategies are immediately implemented by a firm and its employees in order to return the satisfaction to customers (Danaher & Mattsson, 1994; Sparks &
McColl-Kennedy, 2001). The eventual purpose of service recovery is to calm dissatisfied customers by proper actions to reduce possible harm to customer relationships and also a firm’s negative reputation, which are caused by service failures (Ha & Jang, 2009; Zemke, 1993).
However, it is unlikely that service firms can avoid all service failures from happening, they can learn to successfully respond to service failures. A good service recovery strategy can influence positive impacts. Previous studies have presented strong links between effective service recoveries and customer satisfaction, customer loyalty, repurchase intentions, and long-term relationships.
In order to basically understand effective service recovery, previous studies have developed justice theory as the main framework for studying service recovery procedures (McColl- Kennedy
& Sparks, 2003). A justice theory framework has achieved popularity in clarifying how customers evaluate a firm’s responses toward service failure and recovery. In this theory, perceived justice is a multi-dimensional concept including three dimensions: distributive, procedural, and interactional justice.
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1.2 Problem Statement and Research Objectives
Zero defect is an unachievable target for the restaurant industry. No restaurant business likes mistakes or shortcomings, however infrequent service failures are unavoidable regardless of how hard standards and procedures are or how much employee training is well-organized (Hart et al, 1990; Johnston, 1999). As a result, managers and employees spend a huge amount of time trying to respond to service failures and unsatisfied customers (Johnston, 1999).
Although restaurants might not be able to prevent errors from occurring, they can learn from the mistakes that they make (Hart et al., 1990). Service failures help a business to detect the causes of poor performance and to improve its service procedures and employee training (Brown, 1997).
Furthermore, firms can provide swift and effective service recovery efforts to respond to a service problem and to turn an angry and unsatisfied customer into a highly satisfied one. A study of consumers in the airline, hotel, and restaurant industries found that most customers who received apologies, attentive assistance, and compensation from service employees after encountering service failures actually perceived the experience as very favorable (Bitner et al., 1990).
The main objectives of this study are following:
1. Examine how justice perceived justice after service failures affect customer satisfaction in restaurants.
2. Examine how customer satisfaction in turn affects customers’ loyalty in restaurants.
Accordingly, following are the research questions that will be answered by this study:
1. How perceived justice after service failure influence the customer satisfaction in restaurant setting?
2. How customer satisfaction after service failure influence the customer loyalty in restaurant setting?
3. How customer satisfaction after service failure affect the word-of-mouth intention in restaurant setting?
4. Does customer loyalty have an influence on the word-of-mouth intention in restaurant setting?
5. Do people with different background have different customer satisfaction after service
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6. Do people with different background have different brand loyalty after service failure?
7. Do people with different background have different word-of-mouth intention after service failure?
With above questions and objectives of the study, people can have a better understanding about the important of perceived justice and service recovery to achieve the customer satisfaction and customer loyalty after a service failure. The success of this study will be helpful for future researchers in development of restaurant industry in Vietnam.
1.3 Research Significance
The lack of academic attention in the field of service recovery is also showed on the limited experimental studies that have been conducted over the time. Blodgett, J.G., Hill, D. J. and Tax, S.
S. (1997) confirmed "given the acknowledged importance of service recovery, it is surprising that so few large-scale field studies have focused on this topic." Similarly, Greenberg, Jerald (1990) stated, “...limited attention is given to recovery, little is known about how customers evaluates recovery efforts, what constitutes successful recovery and the potential (and limit) of recovery to convert customer dissatisfaction to satisfaction”. Furthermore, Hoffman, D.K. & Kelly, S.W.
(2000) have proposed few experiential studies have studied about service recovery and customer loyalty.
However, most service recovery researches investigate customers’ perceived justice on customer satisfaction customer loyalty in general or some in retail, airlines and hotel industry, and limited works focus on how consumers assess recovery resolution in restaurant industry.
In addition, Chebat and Slusarczyk (2005) perceive that the specific influences of the three justice dimensions on customer loyalty are not similar. Moreover, work examining whether the justice dimensions also influence satisfaction with service recovery inversely is absent for the literature. Maxham and Netemeyer (2002) studied the effects of perceived justice on satisfaction with service recovery, but they did not investigate the relative effects of the justice dimensions. In addition, Río-Lanza et al., (2009) state that since not three dimensions of justice have the same effect, especially in illustrative satisfaction, they propose that three dimensions of perceived justice needed to be analyzed separately rather than in a combined form.
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Bearing this in mind, this paper efforts to contribute to this literature by examining the effects of justice slanted towards recovery on customer satisfaction and loyalty in restaurants in Vietnam after service failures. In particular, how the three dimensions of perceived justice affects customer satisfaction and how satisfaction influences customer loyalty will be examined.
Consequently, the information in this study will help firms which are doing business in restaurant industry have a more clearly evaluation of the importance of service recovery and perceived justice after a service failure. Accurate actions and strategies after service failure happened can reverse the situation, turn an angry and upset customer into a highly satisfied one.
Previous studies showed that service recovery can lead to customer satisfaction, customer loyalty, favorable behaviors in the future and moreover, can improve overall firms’ performance. This study can be helpful for managers in managing the firm’s performance in restaurant setting.
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