Customer satisfaction and loyalty after service failure and recovery a study in restaurant industry in ho chi minh city of vietnam

CUSTOMER SATISFACTION AND LOYALTY AFTER SERVICE FAILURE AND RECOVERY A study in restaurant industry in Ho Chi Minh City of Vietnam In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business by Pham Thi Thuy MBA03031 International University - Vietnam National University HCMC August 2013 CUSTOMER SATISFACTION AND LOYALTY AFTER SERVICE FAILURE AND RECOVERY A study in restaurant industry in Ho Chi Minh City of Vietnam In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In International Business by Ms. Pham Thi Thuy ID: MBA03031 International University - Vietnam National University HCMC August 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree. Approved: ---------------------------------------------Chairperson ---------------------------------------Advisor ---------------------------------------------Committee member ---------------------------------------Committee member ---------------------------------------------Committee member ---------------------------------------Committee member ACKNOWLEDGEMENT To complete this thesis, I have been benefited from the great deal of help from many people. I would like to take this opportunity to sincerely thank them for all what they have done for me. Fist of all, I would like to express my gratitude to my advisor, Associate Professor Le Nguyen Hau, who has given me guidance, advice, feedback and supervision during the course of my research. Only thank to his help my research was developed, executed and completed. I also do not forget to thank the data collection team who have assisted me in collecting data in such a limited time. Finally, I would like to thank you my family and friends for the continuous support and encouragement given to me. Plagiarism Statements I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions. I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City. Copyright Statement This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author’s prior consent. © Pham Thi Thuy / MBA03031/2013 Table of Contents CHAPTER 1 - INTRODUCTION ............................................................................. 1 1.1 Research background ................................................................................. 1 1.2 Problem statement...................................................................................... 2 1.3 Research objectives.................................................................................... 3 1.4 Contribution of the research ....................................................................... 3 1.5 Research structure...................................................................................... 4 CHAPTER 2 – THEORY FRAMEWORK AND HYPOTHESES ............................. 5 2.1 Theory framework ..................................................................................... 5 2.1.1 Service failure and recovery attributes .................................................. 5 2.1.2 Equity theory........................................................................................ 7 2.1.3 Justice theory and three justice dimensions........................................... 7 2.1.4 Justice evaluation ............................................................................... 10 2.1.5 Justice dimensions and customer satisfaction...................................... 10 2.1.6 Customer satisfaction and loyalty ....................................................... 11 2.1.7 Social Status Orientation and Customer Satisfaction........................... 11 2.2 Research model and hypotheses ............................................................... 12 CHAPTER 3- RESEARCH METHOD................................................................... 14 3.1 Research design ....................................................................................... 14 3.2 Research process...................................................................................... 15 3.3 Data collection......................................................................................... 15 3.4 Data analysis............................................................................................ 20 3.4.1 Coding data ........................................................................................ 20 3.4.2 Descriptive statistics.......................................................................... 21 3.4.3 Reliability test (Cronbach’s Alpha)..................................................... 21 3.4.4 Validity test........................................................................................ 22 3.4.5 Regression analysis ............................................................................ 22 3.4.6 Test effect of moderating variables..................................................... 23 3.4.7 One-way Anova ................................................................................. 23 CHAPTER 4 – RESEARCH RESULTS .................................................................. 24 4.1 Response rate........................................................................................... 24 4.2 Demographic profile ................................................................................ 24 4.3 Descriptive statistics ................................................................................ 27 4.3.1 Distributive justice attribute................................................................ 28 4.3.2 Procedural justice attribute ................................................................. 28 4.3.3 Interactional justice attribute............................................................... 29 4.3.4 Customer satisfaction ......................................................................... 30 4.3.5 Customer loyalty ................................................................................ 30 4.3.6 Modern Status Orientation (MSO) ...................................................... 31 4.4 Result of reliability test ............................................................................ 31 4.4.1 Cronbach’s alpha of three justice variables ......................................... 31 4.4.2 Cronbach’s anpha of customer satisfaction ......................................... 33 4.4.3 Cronbach’s alpha of customer loyalty................................................. 34 4.4.4 Cronbach’s alpha of moderating variable- modern status orientation .. 34 4.5 Result of validity test ............................................................................... 35 4.5.1 Exploratory Factor Analysis (EFA) of independent variables............. 35 4.5.2 EFA of dependent variable – customer satisfaction............................. 38 4.5.3 EFA of dependent variable – customer loyalty.................................... 39 4.5.4 EFA of morderating variable- modern status orientation..................... 41 4.5.5 Rename factors................................................................................... 42 4.5.6 Restate model..................................................................................... 44 The models and hypothesis were restated as followings: ................................. 44 4.6 Regression analysis and hypothesis testing.............................................. 44 4.6.1 Correlation testing .............................................................................. 44 4.6.2 Regression analysis ............................................................................ 45 4.6.3 Hypothesis testing .............................................................................. 47 4.6.4 Test effect of moderating variables..................................................... 48 4.6.5 Analysis of Variance (ANOVA)......................................................... 52 CHAPTER 5 – DISCUSSION AND IMPLICATIONS............................................ 53 5.1 Effect of outcome justice evaluation on customer satisfaction .................. 53 5.2 Effect of interactional justice on customer satisfaction ............................. 54 5.3 Satisfaction and loyalty ............................................................................ 55 CHAPTER 6- CONCLUSION AND RECOMMENDATION ................................. 57 6.1 Conclusion............................................................................................... 57 6.2 Recommendation ..................................................................................... 58 6.3 Limitation and suggestion ........................................................................ 59 REFERENCE .......................................................................................................... 61 APENDIX ............................................................................................................... 64 Apendix 1: Survey Questionnaire (Vietnamese version) ...................................... 64 Apendix 2: Survey Questionnaire (English version)............................................. 69 Apendix 3: Data coding....................................................................................... 73 List of Tables Table 2-1 : Definition of justice elements and representative researchs…………...……..9 Table 3-1: Summary of measurement scale……………………...………………………18 Table 3-2 : Summary of coding variables………………………………………………..21 Table 4-1: Summary of demographic profile…………………………………………….25 Table 4-2: Summary of demographic profile (continued 1)……………………………..27 Table 4-3: Summary of demographic profile (continued 2 )………………………….....28 Table 4-4 : Summary of descriptive statistics of distributive justice…………………….29 Table 4-5 : Summary of descriptive statistics of procedural justice……………………..29 Table 4-6 : Summary of descriptive statistics of interactional justice…………………...30 Table 4-7 : Summary of descriptive statistics of customer satisfaction…………………31 Table 4-8 : Summary of descriptive statistics of customer loyalty………………………31 Table 4-9 : Summary of descriptive statistics of modern status orientation……………..32 Table 4-10 : Reliability coefficient of distributive justice measurement scale…………..33 Table 4-11: Reliability coefficient of procedural justice measurement scale……………33 Table 4-12: Reliability coefficient of interactional justice measurement scale………….34 Table 4-13 : Reliability coefficient of customer satisfaction measurement scale…...…..35 Table 4-14: Reliability coefficient of customer loyalty measurement scale……………..35 Table 4-15 : Reliability coefficient of modern status orientation measurement scale......36 Table 4-16: KMO and Bartlett's Test independent variable)…………… …………….36 Table 4-17: Total Variance Explained (independent variables)…...…………………….37 Table 4-18: Rotated component matrix (independent variables)………………………...38 Table 4-19: KMO and Bartlett's Test (Customer satisfaction)………...………………...39 Table 4-20: Total variance explained (Customer satisfaction)…………………………..39 Table 4-21: Component matrix…………………………………………………………..40 Table 4-22: KMO and Bartlett's Test (Customer loyalty)……………………...………..40 Table 4-23: Total variance explained (Customer loyalty)……………………………….41 Table 4-24: Component matrix (Customer loyalty)……………………………………...41 Table 4-25: KMO and Bartlett's Test (Modern status orientation)………………………42 Table 4-26: Total variance explained (Modern status orientation)……………………...42 Table 4-27: Component matrix (Modern status orientation)…………………………….42 Table 4-28: Summary of renamed factors after EFA…………………………………....44 Table 4-29: Pearson correlations………………...………………………………………46 Table 4-30: Model summary……………………………………………………………..46 Table 4-31: Regression – coefficient of dependent variables……………………………47 Table 4-32: Model summary……………………………………………………………..47 Table 4-33: Regression – coefficient of dependent variables……………………………48 Table 4-34: Summary result of hypotheses test………………………………………… 48 Table 4-35: Summary of regression analyses (by modern status orientation)…………...49 Table 4-36: Summary of regression analyses (by Gender)………………………………50 Table 4-37: Summary of regression analyses (by Age)………………………………….50 Table 4-38: Summary of regression analyses (by Service failure type)………………... 51 Table 4-39: Summary of regression analyses (by Frequency) …………………………..52 Table 4-40: Summary of regression analyses (by Income)…………………...…………52 Table 4-41: Test of Homogeneity of Variance…………………………………………..53 Table 4-42: Result of ANOVA test……………………………………………………...53 List of Figures Figure 2-1: Research model…………………………………………………………13 Figure 3-1: Research process………………………………………………………..15 Figure 4-1: Revised research model…………………………...……………………45 Abstract This research was conducted to examine the evaluation of customers towards result of service recovery of organizations. In this paper the three justice dimensions was employed to explain the customer satisfaction after service failure and recovery in restaurant setting in Ho Chi Minh City fo Vietnam. Convenient sampling method was used to collect data by means of a survey. SPSS software version 20 was used to analyse collected data set. The measurement scales were adopted and adjusted from previous research. Exploratory Factor Analysis was applied to refine measurement scale and reduce factors. Research model and hypotheses were tested using regression analysis. The result of data analysis provided empirical evidence that justice evaluation has positive effect on customer satisfaction after service failure and recovery. The result also confirmed that customer satisfaction and their loyalty had strong correlation. Implications for the organizations in restaurant industry is that in order to better satisfy customers and retain their loyalty besides improving product qualtity, service quality and price service providers should understand the perception of justice evaluation and have effective strategy to recover service failure when it occurs. Keywords: service failure, service recovery, customer satisfaction, loyalty. CHAPTER 1 – INTRODUCTION 1.1 Research background Challenge facing most of organizations now is how to develop and implement strategies aim at satisfying customers, who always have higher demand on better service quality, and retaining their loyalty. Organizations are nowadays copping with high level of competitiveness due to current trend of economic globalization and integration of countries around the world (Yeung 2006). In a competitive market service providers, especially those organizations in the industries that have higher service failure rate such as restaurant, are required to always maintain good quality product and high service level. Many companies consider investment in complaint handling as a way to increase their overall service quality as well as increase customer commitment and build up customer loyalty. However they are not sure how to resolve service failure effectively and how to measure customer satisfaction after service recovery (Tax, Brown and Chandrashekaran 1998) The opinion that companies can increase profit by nearly 100 percent by retaining just 5 percent more of their customers (Reichheld and Sasser 1990) makes service failure and recovery has even more important to organizations, and service failure then becomes one of key factor that directly affect customer switching behavior (Roos 1999). In their reasearch Fisk, Brown, and Bitner (1993) also argued that due to nature of service it is not possible for companies to provide 100% error-free services. Therefore putting effots in resolving customer complaints effectively play an important role in winning back customer trust and their commitment. Consequently, the way how to manage service failure recovery and to know consumer responses to the recovery process are increasingly seen as factors that may separate the more successful organizations from the others. While organizations could be aware of the impact that organization responses to service failure had on customers’ intention of repurchase and their loyalty, they were less sure which aspect of the service failure recovery effort were driving customer satisfaction and their loyalty more than the others. 1.2 Problem statement In recent years the restaurant industry in Vietnam especially in Ho Chi Minh City has been developing quickly and people tend to eat out in restaurants more often than to cook at home. This trend makes the restaurant business more attractive to investors but since Vietnam was opening to globalization to catch up with fast development of the world customers started to require up-to-international standard services. The competition in restaurant industry in Vietnam therefore getting tense than ever before when customers now have more choices than they had in the past. In order to meet higher expectation and demand from customers it is vital for organizations to continuously improve their competitive advantage through their best service quality. The some restaurants, especially big and foreign brands, in Ho Chi Minh City are always rated superior than other local restaurants in term of service quality and complaint handling. This could be easily seen in the multinational fastfood restaurant chains where service quality is high and standardized. These restaurants make the customer complaint procedure easy and flexible to their customers and they also take initiative to recover service failure. This is going to be a big challenge for small and medium local restaurants who would like to compete to gain market share or at least to retain their existing customers. In addition, not so many Vietnamese customer have habbit to lodge in the complaint, when service failure occur they choose to ignore because either complaint processes too complicated or customers do not think that service providers is going to fix the problems for them. Even though some restaurants are very proactive by sending out the satisfaction survey questionaires, customers are still not familiar or not interested in giving restaurants the feedback. Such channels as email, hotline, facebook, website are also not really effective ways for restaurants to get to know the customer evaluation towards their service quality and their service recovery performance. Therefore how to understand current state of how (at what level) customers rate their service failure recovery result for them to take necessary corrective and preventive actions becomes essential for all restaurants. Restaurant is a high interaction or “high contact service” industry which is associated with its high service failure rate as nature of the industry. The bad impact of service failure could be huge because unsatisfied customers who experienced service failure may not go back the restaurant again, they may also talk unconstructive about the restaurant to others and start to look for other restaurants as replacement. Therefore besides trying to offer the diners the best service in the first place it is more important for organizations in this industry to enhance customer satisfaction and increase loyalty after service failures to increase market share and profit at the end. 1.3 Research objectives The main purpose of this thesis is to investigate the evaluation of customers toward service recovery performance of the organizations. The study also examined the impact of customer evaluation on future relationship which is reflected through the loyalty level customers have to organizations after service encounter in the case of restaurant industry in Ho Chi Minh City of Vietnam. The specific objectives of this research therefore are as followings : - To identify the relative importance of individual justice attributes in explaining the customer satisfaction after service failure and recovery. - To recommend alternatives to effectively recover service failure to improve customer satisfaction and customer loyalty. The main questions that this research focuses to explore are : 1. Currently how do customers evaluate the service failure recovery of restaurants in Ho Chi Minh City ? 2. How does the customer satisfaction after service failure and recovery impact the loyalty level of customers with restaurants in Ho Chi Minh City ? 1.4 Contribution of the research The measurement scale and collected data analysis gives management in restaurant industry an idea of how customers evaluate their service recovery performance base on perception of different justices. The findings of this research helps organizations in retaurant industry understand the effect of justice evaluation of customer on their satisfaction after revice failure and recovery. The study also recommends alternatives to improve customer satisfaction and loyalty after service failure and recovery. 1.5 Research structure This research comprises 6 chapters namely Introduction, Theory Framework and Hypotheses, Research Method, Research Results, Discussion and Implication, Conclusion and Recommendation. Chapter 1 (Introduction) introduced the research background, define research problem and research objectives to confirm the necessity for this research. Chapter 2 (Theory framework and hypotheses) presented theoretical background for researched problem; the related theories and previous researches that were used to support data analysis, support the interpretation and discussion of research findings later. Chaper 3 (Reseach method) presented the source of information, data collection and data analysis method as well as the plan for data analysis. Chapter 4 (Research results) analyzed the collected data and inteprete the research result. Chapter 5 (Discussion and implication) discussed the implications of the research results presented in previous chapter in the light of the literature review. Chapter 6 (Conclusion and recommendation) proposed some conclusions and as a result of finding and significance of study, researcher recommended some solution to solve the problem mentioned. CHAPTER 2 – THEORY FRAMEWORK AND HYPOTHESES 2.1 Theory framework 2.1.1 Service failure and recovery attributes According to Polaris Marketing Research, a service failure is defined as a service performance that fails to meet a customer expectations. Service failures could be devided into two main types, which are outcome and processs failure and being mentioned in many service marketing literatures (Bitner, Booms, and Tetreault 1990; Keaveney 1995; Mohr and Bitner 1995). The outcome aspect of service failure involves what customers actually receive from the service, whereas the process dimension is more about how customers receive the service or how the service is delivered to customers (Gronroos 1988, Parasuraman, Zeithaml, and Berry 1985). In other words, in an outcome failure, organization fail to fulfill basic service need or fail to perform core service while for process failure, the delivery of core service is deficient in some way. Service recovery refers to actions an organization takes in response to service failure (Gronroos 1988). When a service failure occurs, service providers try to fix the problem by compensating for the losses that service failures caused to their customers or taking necessary actions to prevent the service failure happen again in future. The service failure recovery performance of organization could be in following forms: Compenstion: Social exchange theory emphasizes role of distributive justice because it relates to the allocation of costs and benefits in achieving equitable exchange relationships (Deutsch 1975, 1985). In term of service recovery, distributive justice perceptions involve the allocation of compensation (in form of discount, refunds, coupons and others) by the organization in response to the inequity that service failure caused. Walster, Berscheid, and Walster (1973) have shown that compensation is a strategy for restoring equity in an exchange relationship when one party has been harmed by the other. Tax, Brown, and Chandrashekara (1998) use content analysis of qualitative evaluation of service complaint experiences to show that compensation is the most important recovery dimension associated with customers’ perceptions of distributive justice. Therefore it was suggested that higher level of compensation should result in higher distributive justice evaluation. Response speed: The issues of timing, responsiveness and customer waiting have been addressed in the complaint and service encounter literatures ( Bitner, Booms, and Tetreault 1990; Clemmer and Scheneider 1993, 1996; Kelly, Hoffman, and Davis 1993; Maister 1985; Parasuraman, Zeithaml, and Berry 1985). A quick recovery response to service failure will enhance customer evaluations (Clark, Kaminski, and Rink 1992; Heskett, and Sasser 1990). Specially the speed with which problems and complaints are handled has been identified as an important dimension of procedural justice (Blodget, Hill and Tax Chandrashekaran 1998). Therefore the longer it takes service firms to recover the service failure, the lower customer evaluate their procedural justice. Apology: In social exchange and equity theories, an apology is viewed as a valuable reward in an exchange relationship (Walster, Berscheid, and Walster 1973). An apology from a service provider could be viewed as the politeness, courtesy, concern, effort and empathy to customers who have experienced a service failure. An apology can help to enhances customer evaluation (Hart, Heskett, and Sasser 1990). An apology also show quality of interpersonal treatment and communication during service recovery process and has been associated with customers’ perception of interactional justice (Blodgett, Hill, and Tax 1997) Recovery Initiation: Service recovery consists of broader course of activities than complaint handling because it includes situations where service failure occurs but no complaint is recorded. An absence of complaint in service failure is because customers sometimes are unable or not willing to complain or in some cases the complaint is not necessary because it has been recognized and acknowledged by the service provider. Studies showed that 70% to 95% of dissatisfied customers do not bother to complain and several researchers have suggested that proactive service recovery effort will enhance customers evaluation of the service provider ( Berry 1995; Johnston 1995; Kelley, Hoffman, and David 1993). Therefore it is good for organizations to always initiate their service recovery effort rather than to wait until customer lodge an official complaint then organization reactively resolve it. When organization initiate a recovery, customer perception of interactional justice should be enhanced, because customers likely to view a proactive effort as an act of courtesy, an implication of honesty and a show of empathic understanding and respect. The service marketing literatures also provides information that different type of failure causes different categories of loss to customers therefore service failure type is expected to impact on customer satisfaction judgements toward service recovery. Therefore, it is expected that three types of service failures, namely staff attitude, staff skill and service procedure have moderating effect on relationship between justice evaluation and customer satisfaction. 2.1.2 Equity theory Equity theory has been applied in customer satisfaction research very early. The equity is about fairness, rightness, or deservedness judgement that we make in reference to what others receive (Oliver 1997, p.194). This theory suggests that in an exchange if customers feel inequitily treated and their input to exchange is not tally with output of the exchange, then there will be not a satisfaction (Goodwin and Ross 1992, Oliver 1997). This theory also suggests that customers are concerned not only with the perceived fairness of the outcome they receive, but also with the perceived fairness of the process used to deliver the outcome (Conlon and Murray 1996). These two concerns were being referred to as distributive and procedural justice, respectively. Some studies also separate out the inter-personal aspect of the procedural justice, referred to as interactional justice, which emphasized the manner in which the process is executed and information is communicated to the customer by the service provider (Seiders and Berry 1998) The equity theory was found very powerful in explaining recovery satisfaction (Smith et al.1999; Tax et al.1998). Assuming that customers often perceive an inequity following a service failure, they then need a justice and they are more likely to engage in equity evaluation (Hoffman and Kelly 2000). It is also argued that because consumers confront a specific service scenarios, the equity, which is based on the comparison between self and others, is more obvious in service rather than product failure situations (Goodwin and Ross 1989; Seiders and Berry 1998). 2.1.3 Justice theory and three justice dimensions An allocation decision has been defined by Bies and Moag (1986) as “ a sequence of events in which a procedure generates a process of interaction and decision making through which an outcome is allocated to someone. This is clarified by Austin (1979,p.24) that “Justice pertains not merely to outcome distribution but also to how the distribution arrived at and the manner by which it is implemented”. Therefore, justice involves not only the outcome but also the procedure of making the decisions lead to the outcome. A three dimensional view of the concept includes : (a) Distributive justice: dealing with decision outcomes. It is evaluated by one of the three decision rules; equality, equity or need (Deutsch 1975). (b) Procedural justice: dealing with decision making procedure. Procedural justice is concerned with the fairness of the procedures used in making decision (Folger and Greenberg 1985). It is the extent to which procedures used to determine a distribution of outcomes (Goodwin and Ross 1990) as it was believed that the way decisions are reached is just as important as the decision itself. (c) Interactional justice: dealing with interpersonal behavior in enactment of procedures and delivery of outcomes. It relates to the interpersonal communications in the decision making process. It emphasizes the style with which a decision is implemented. The presence of a policy or rule does not mean that the policy is fairly applied. Therefore a distinction must be made between a policy and a guideline and how the policy is implemented (Vermunt, Van der Kloot, and Van der Meer 1993). Interactional justice also conveys a common courtesy, politeness, respect, empathy and willingness to listen. The justice theory explains how people judge and response to an outcome, procedure and manner to implement procedure base on their perception of justice . Table 2-1 : Definition of justice elements and representative researchs (Source : Journal of Markeing Vol.62 April 1998, P. 63) Concept Distributive Justice Equity Equality Need Prodedural Justice Process control Definition Dependent variables Previous research Provision of outcomes Satisfaction, repurchase Goodwin and Ross proportional to inputs to an intention, word of (1992), Oliver and exchange. mouth. Desarbo (1988), Oliver and Swan (1989) Equal outcomes regardless Satisfaction, social Greenberg(1990) of contribution to an harmony Deutsch(1985) exchange. Outcomes base on Satisfaction Deutsch (1985) requirements regardless of contributions Decision control Extend to which a person is Satisfaction free to accept or reject a decision outcomes Goodwin and Ross(1992), Kanfer et al.(1987), Lind and Tyler (1988). Brett (1986), Heide and John(1992). Bitner, Booms, and Tetreault (1990) Accessibility Ease of engaging a process Satisfaction Bowen and Lawler(1995) Timing/speed Perceived amount of time taken to complete a procedure Anger, uncertainty, Satisfaction, service quality Fisk and Coney (1982) Maister (1985) Taylor (1994) Flexibility Adaptability of procedures to reflect individual circumstances Market orientation, satisfaction Bitner, Booms, and Tetreault (1990). Narver and Slater (1990) Provision of reason for failure Attributions for failure, satisfaction, fairness Honesty Perceived veracity information provided Satisfaction (complaint handling) Bies and Shapiro(1987) Bitner, Booms, and Tetreault (1990) Goodwin and Ross(1989) Politeness Well-mannered, courteous behavior Complaint evaluation, repurchase intention, satisfaction Effort Amount of positive energy put into resolving a problem Provision of caring, individual attention Anger, satisfaction, trust Interactional Justice Explaination/ causal account Empathy Freedom to communicate Satisfaction, views on a decision process commitment of Service quality, satisfaction Blodgett, Hill and Tax(1997), Clemmer (1988), Goodwin and Ross(1989) Folkes (1984), Mohr and Bitner (1995) Parasuraman, Zeithaml, and Berry (1988) 2.1.4 Justice evaluation Service failure and recovery can be seen as an exchange relationship in which customers experience a loss due to service failure and the organizations attempt to provide a gain, in the form of recovery effort to compensate for the customer’s loss (Homans 1961; Walster, Berscheid and Walster 1973; Watster and Berscheid 1978). Service failure and recovery can be considered mixed exchanges with both utilitarian and symbolic dimensions. Utilitarian exchange envolves economic resources such as money, goods or time, whereas symbolic exchange involves psychological or social resources, such as status, esteem, or empathy (Bagozzi 1975). Service failures can result in loss of economic or social resouces for customers. Hence organizations may attempt to recover it by offering customers in form of compensation, response speed, apology or initiation. Customer then will evaluate the service failure and recovery by comparing the amount of resource lost and gained during the exchange. 2.1.5 Justice dimensions and customer satisfaction Customers evaluate service failure recovery performance in terms of the outcome or benefits they receive as a result of service failure encounter, the procedures organization used to arrive at the outcomes as well as the nature of the interpersonal treatment and communication during the process (Clemmer and Schneider 1996). Social exchange theorists have also identified three dimensions of perceived justice (distributive justice, procedural justice, interactional justice) that influence how people evaluate the exchanges. Service failure and recovery is viewed as a series of actions in which a service failure generates a procedure that will create economic and social interaction between customer and service provider. Therefore it is predicted that customer satisfaction with service failure recovery will be influenced by customer perception of all three dimensions of justice. H1: There is a positive relationship between distributive justice and customer satisfaction with service failure recovery H2: There is a positive relationship between procedural justice and customer satisfaction with service failure recovery H3: There is a positive relationship between interactional justice and customer satisfaction with service failure recovery 2.1.6 Customer satisfaction and loyalty Service failure recovery satisfaction refers to the degree to which the customer perceives the company’s service failure recovery performance as meeting or exceeding his or her expections (e.g., Gilly and Gerb 1982; McCollough, Berry, and Yadaw 2000). Overall customer satisfaction after the service encounter refers to the degree to which the customer perceives the company’s general performance in a business relationship as meeting or exceeding his or her expectation (eg., Anderson and Sullivan 1993). This type of satisfaction is cumulative in nature, whereas service recovery satisfaction reflects a form of transaction-specific satisfaction (e.g., Bolton and Drew 1991). Customer loyalty refers to a strong favourable attitude towards a particular brand and also lead to repeat purchase of the same brand (Day, 1969). Customer loyalty after the service failure recovery refers to the degree to which a customer has continued relationship with a company after the service failure recovery and the degree to which he or she intends to do so in the future. H4: There is a positive impact of overall customer satisfaction after service failure recovery on customer loyalty. 2.1.7 Social Status Orientation and Customer Satisfaction In their study Zeithaml and Bitner (2000) concluded that customer satisfaction is influenced not only by product, service quality and price but also by situation factors and personal factors. Hoyer and MacInnis (2001) also shared the same idea that satisfaction can be associated with feelings, happiness, relief, excitement, and delight. Wilson et al. (2008) found the same result that satisfaction generally is broader than Price, Service and Product, these broader components that affect satisfaction are situation and personal (Wilson et al., 2008). In their paper about status orientation and customer choice of foreign products Tambyah, Nguyen, and Jung (2009) developed and tested a consumer status orientation scale in Vietnam. The status orientation was defined as a construct focusing on consumer belief that obtaining status symbols could help them have their social standing. The two sub-constructs of status orientation were proposed by these authors are TSO and MSO. TSO stands for Traditional Status Orientation which refers to consumers’ orientation toward traditional status symbols while MSO is Modern Status Orientation which is more about modern status symbols. The research found that high MSO consumers are particular demographic in Vietnam who are younger and more educated. The study result explained why those individuals may be strongly influenced by mordern values. Further, high MSO consumers more receptive to new things and have more chances at international experience, thus they’re more likely to influenced by modern style. The findings of the study also confirmed that high MSO consumers tend to choose foreign products while those with low MSO will buy domestic products. In addition, low social status oritentation consumers could easily enjoy their happy life without placing importance on material value. As suggested by the findings from Tambyah, Nguyen and Jung (2009) low MSO consumers consider the care for benefit of the others than themselves, the importance of living a simple and clean life, regardless of wealth. Thefore being rich does not convey high status or display their position in life. From above discussed points, it is predicted that customers with different level of social status orientation may access service recovery performance of organization not in the same way, the Modern Status Orientation was then suggested to have moderating impact on relationship between justice evaluation and customer satisfaction after service failure recovery. Hence the hypothesis was formed as followings: H5: Modern Status Orientation has moderating effect on relationship between justice evaluation and customer satisfaciton 2.2 Research model and hypotheses The research model is presented in Figure 1 below. This model consists of three constructs which are justice dimension, customer satisfaction and customer loyalty. The justice dimension has a three sub-justice dimensions namely distributive justice, procedure justice and interactional justice. Figure 2-1: Research model Status Orientation Distributive justice Procedural justice Satisfaction after service failure and recovery Customer loyalty Interactional justice H1: There is a positive relationship between distributive justice and customer satisfaction after service failure and recovery H2: There is a positive relationship between procedural justice and customer satisfaction after service failure and recovery H3: There is a positive relationship between interactional justice and customer satisfaction after service failure and recovery H4: There is a positive impact of overall customer satisfaction after service failure and recovery on customer loyalty. H5: Modern Status Orientation has moderating effect on relationship between justice evaluation and customer satisfaction. CHAPTER 3- RESEARCH METHOD 3.1 Research design Research design is known as a plan of how research study to be carried out, it gives a description of methods to be used. Main function of a research design is to ensure that data in accordance with the stated problem is collected accurately and economically. In other word, research design is a framework for the research study which guides data collection and data analysis process. The research design, depending upon the needs of researcher may be very detail or it can just provide information required for planning the research project. Research design consist of the aim, the selection of appropriate methodology that best suit research literature (White,2005). The research design and research objective then serve as a guidance to researcher on how to collect and analyse data effectively (Churchill, 1979). This study was conducted using mixed method which includes quantitative, qualitative methods. Quantitative is the main method and supported by qualitative menthod. Survey questionaires was constructed using qualitative and quantitative methods while the finding of the research was drawn from quantitative data analysis result. The mixed methods was used to draw from the strengths and minimize the weaknesses of the quantitative and qualitative research approaches (Johnson & Onwuegbuzie, 2004). 3.2 Research process Define managerial problem, reasearch objectives and scope Discuss results and present recommendation Review literatures Consult with experts on the findings Present research model Indentify data needs, data sources and data collection method Analyse data and interprete the result Plan for data analysis Conduct field survey Figure 3-1: Research process 3.3 Data collection Data sources Based on the data needs two main sources of data which are primary and secondary will be obtained. Primary data was collected from field survey while secondary data was extracted from journal articles, books, internet. The secondary data is used to get better insight on the research topic, to establish platform for theoretical framework constituting the bases of this research, and to design the sample frame and questionnaire for retrieving primary data. According to Biggam (2008), primary data is the information that the researcher finds out by him/herself regarding a specific topic. The main advantage with this type of data collection is that it is collected with the research’s purpose in mind. This means that the information resulting from it is more consistent with the research questions and purpose. Sample The study was conducted in restaurant service setting in Ho Chi Minh City. Restaurant is high interaction or “high contact service” industry which has its important role of emotion. A restaurant does not only simply sell foods but it also sells the hospitalily, which mean the nature and result of restaurant service are both tangible and intangible. Restaurant also presents a service for which failure is common. In short, restaurant industry has mixed characteristics of all service industries and could be the best representative or the best studied subject of service quality and evaluation of service recovery performance. Restaurant is also the industry which is frequently studied by both manager and academic researchers who are interested in customer satisfaction and service recovery (e.g., Boulding, et al.1993) The surveyed sample composed of real consumers who had recently (in three months back) patronized a restaurant. The survey was administered to different customer groups consisting of students, office staffs, house duties, others…those may have different attribute importance weight, this made them the most appropriate for this study. To ensure that the respondents had prior experience with the service provider being evaluated, they were asked to answer structured questions to remind and refresh them about a restaurant which they visited and experienced service failure in the past 3 months. Having customers recalled actual service failure and recovey reduced response bias. The sample size for this finding could be five times compared with number of variables (N) analyzed as recommended sample size by Hair et al. (1998). The N of this study is 31. Data collection method Data was collected using individually completed questionnaires. Students were hired to deliver and collect back pencil-and-paper questionnaires to respondants at different locations. The data collection team was also trained how to give face-to-face explainations about the research’s objective and instruction on how to complete the questionnaire. The questionnaires was also distributed and return via email. Data was obtained from customers in Ho Chi Minh City of Vietnam. Pilot testing Pilot testing involves conducting a preliminary test of data collection tools and procedures to identify and eliminate problems, allowing researcher to make corrective changes or adjustments before actually collecting data from the target population. Pilot testing is the last step in constructing questionnaire process. Pilot testing gives researcher an opportunity to make necessary revisions to data collection procedures to ensure that appropriate questions are being asked, the right data will be collected, and the data collection methods will work. The validity and reliability of questionnaire survey will be examined by pilot respondants. The scales and questions of this study were originally developed in English and then stranslated into Vietnamese. After completing the process of checking and revising, the Vietnamese questionnaire version was pretested in a small convienience sample for final check. Necessary changes were made for the purpose of accuracy and clarity before collecting data. According to Frink (1995) the minimum of selection for pilot questionnaire is 10 respondants, researcher delivered draft questionnaire to 10 people and used their feedback to adjust and eliminate question. After pilot test, there are 35 questions left and some questions are adjusted and reworded to make questionnaire understandable and easier to answer. Questionaire design A comprehensive questionnaire was developed after the thorough literature review. The questionnaire consists of 4 parts, those are: Part 1: General information Part 2: About customer evaluation of service failure recovery performance Part 3: About social status orientation of the informant Part 4: Demographic information The questionnaire inquired respondants to evaluate their dinning experieces and statement about themselves by using 5 point Linkert Scale. Each scale item was attached at numerical 1 having verbal statement “strongly disagree” and the numerical 5 with verbal statement “strongly agree”. Questionaire also consist of demographic questions in order to obtain demographic profile of the respondants. The survey began with repondants reading introduction, explaination of the objective of this study. Questionaires begin by asking subjects a series of general structured questions to remind respondants about a service failure and recovery in a restaurant happened lately which they they remembered the most. Next customers will be asked to answer series of structured questions to reflex their evaluation toward the service encounter, and their overall satisfaction as well as their loyalty. Measurement scale: Scales of this study were adapted and modified from previous researchs of service encounters, justices evaluation, customer satisfaction and loyalty. The summary on measurement scales is presented as in below table: Table 3-1: summary of measurement scales Constructs Measurement scale Selected sources Distributive Jutice Adapted and 1. The outcome I received was fair 2. The compensation I received was appropriate 3. I get what I deserved 4. The outcome I received was right and Tax 5. In resolving my problem the restaurant gave me what I needed (1993) adjusted from Oliver and Swan (1989) Procedural Justice 1. The length of time taken to resolve my problem was longer than necessary 2. The restaurant quickly reacted to my problem 3. The restaurant showed flexibility in dealing with my problem Adapted and adjusted 4. I felt I could easily complain the service failure to this restaurant 5. The service recovery procedure of restaurant shows the care to individual customer 6. The restaurant handled my complaint in thoughtful manner 7. Overall, I felt the restaurant’s service failure recovery procedure from Tax (1993) was fair Interactional Justice 1. The employees were appropriately concerned about my problem 2. The employees put the proper effort into resolving my problem 3. The employees communication with me were appropriate 4. The employees gave me the courtersy I was due 5. The employees proactively fixed my problem Adapted and adjusted from Tax 6. 7. (1993) The employees paid due attention when I talked about the service failure The employees explained the causes led to service failure Customer satisfaction after the service failure recovery 1. 2. Overall, after the service failure recovery, I was very Adapted and satisfied with this restaurant adjusted from Overall, so far, I had positive experiences with this restaurant 3. This restaurant service is better than others 4. Overall, purchase of service from this restaurant was a good decision Bitner and Hubber (1994); Tax, Brown, and Chandrashekaran (1998) Customer Loyalty 1. If I want to go to restaurant I will choose this restaurant 2. I will recommend this restaurant to others who seek my advice 3. It’s very likely that I will go to this restaurant again Adapted and adjusted from Cheng et al.(2008), Gilly and Gelb (1982) 4. I intend to remain loyal to this restaurant in future Measurement of Status Orientation was adapted from Tambyah, Nguyen and Jung 2009. The measurement scales of MSO (Modern Status Orientation) is as followings: 1. Striving to become a rich man would be one of the most important goals in life 2. I admire people who have abilities to earn high incomes 3. I admire people who have a wide relationship network, especially with important people 4. It would be worth considerable effort to obtain luxury products and services. 3.4 Data analysis After collecting the respondent from questionnaires delivered, the first check for completeness was done, items in questionnaire was then coded and input on the data file using SPSS 20 software for analysis later. Descriptive statistic was initially conducted to give an overview of the sample. Then explore factor analysis was also applied to refine the measurement scales.. Next, linear regression analysis was used to test the hypothesis. Finally, we run the T-test and ANOVA test to examine the diferent level of satisfaction and loyalty between object groups in each demographic group. 3.4.1 Coding data Once the questionnaires had been completed, the responses in each question were then coded. These scores were captured in a Microsoft Excel spreadsheet for statistical analysis with respect to Demographic, Justice, Satisfaction and Loyalty variables. In the first section of general information about the participants, there are 4 items were coded, namely, (1) Frequency of dinning out in a restaurant in the last 3 months, (2) Type of restaurant, (3) Type of service failure, (4) Complaint was made to. In section related to demographic, there are five items: gender, age, occupation, monthly income and marital status. The responses in the two remaining sections used 5-point Likert scale from Strongly Disagree to Strongly Agree. The details of subscales were coded as shown in below table: Table 3-2 : Summary of coding variables CONCEPT CONSTRUCT CODING OF OBSERVABLE VARIABLES Distributive Jutice DISTRI01, DISTRI02, DISTRI03, DISTRI04, DISTRI05 Justice dimension (Independent PROCED06, PROCED07, PROCED08, Procedural Justice PROCED09, PROCED10, PROCED11, PROCED12 Factors) INTERA13, INTERA14, INTERA15, Interactional Justice INTERA16, INTERA17, INTERA18, INTERA19 Satisfaction (Dependent Factors) Status Orientation (Moderating Factors) Loyalty SATISF20, SATISF21, SATISF22, SATISF23 LOYALT24, LOYALT25, LOYALT26, LOYALT27 MSO (Modern Status MODERN28, MODERN29, MODERN30, Orientation) MODERN31 3.4.2 Descriptive statistics Descriptive statistics are often used to describe the basic features of the data in a study. They gives summaries about the sample and the measures. Together with simple graphics analysis, they form the basis of virtually every quantitative analysis of data. The purpose of applying this technique is to summarize both variability and the centre of data by using mean and standard deviation. 3.4.3 Reliability test (Cronbach’s Alpha) In this research Cronbach’s Alpha coefficients were computed to evaluate the reliability of the studied factors. Cronbach’s Alpha is the most commonly used and accepted means to measure the reliability (internal consistency) of measurement scale (Hair, 1995). Internal consistency describes the extent to which all the items measure the same thing and hence it is connected to the inner-relatedness of the items within the test (Tavakol et al., 2011). In accessing a multi-item scale, internal consistency reliability assessement is the first necessary step to avoid additional dimensions produced after factor analysis due to gabage items. Value of Cronbach’s Alpha ranges from 0 to 1. According Hair et al.(1998) any item that have Cronbach’s Alpha of less than 0.6 will be eliminated. Reliabilities within 0.7 ranges are considered acceptable and those coefficients over 0.8 are considered good. 3.4.4 Validity test Exploratory Factor Analysis (EFA) is used to examine relationship between variables and evaluate validity of constructs. EFA is a commonly applied statistical technique which is used for data reduction and summarization. In EFA, we can apply KaisaerMeyer-Olkin (KMO) to test the correlation matrix of the variables. The KMO index ranges from 0 to 1, with 0.50 considered suitable for factor analysis. All elements on the diagonal of the matrix should be greater than 0.5 if the sample is adequate (Field, 2000). By performing exploratory factor analysis, researcher can also decide the number of factors to extract in the model if they wish to. According to Kaiser, factor which has eigenvalue 6 times 78 26.2 Food court 43 14.4 Restaurant in hotel 25 8.4 Pub 61 20.5 Quan an gia dinh 101 33.9 Coffee shop 15 5.0 Quan an binh dan 42 14.1 Others 11 3.7 Staffs' attitude 164 55.0 Staffs' skill 47 15.8 Procedures 87 29.2 Waiter/Waitress 107 35.9 Manager 150 50.3 Others 41 13.8 Restaurant type The most serious service failure type Complaint to whom A statistics for the two questions or two variables have multiple answer, namely (1) going to restaurant with whom and (2) type of service failure, were also done and presented in below table. 180 out of 298 people in the survey informed that they often go to restaurant with relatives and family while 158 cases reported that customers go with their friends and colleague. According to the summary going to restaurant alone is not a choice of customers, only 5.7%. As for service failure type, staffs attitude is the most popular service failure and 69.5% surveyed customers reported this failure type. Another two types of service failure were also recorded but lesser cases were counted compare to that of sfaff attitude, the number is 93 cases and 117 cases for staff skill and procedure respectively. Table 4-3: Summary of demographic profile (continued 2 ) Cases Col Response % Go to restaurant alone 17 5.7% Go to restaurant with business partners 36 12.1% Go to restaurant with friends/colleague 158 53% Go to restaurant with relatives/family 180 60.4% 5 1.7% (1) Go to restaurant with whom Go to restaurant with others Total 298 (2) Service failure type Service failure type - staff's attitude 207 69.5% Service failure type - staff's skill 93 31.2% Service failure type – procedure 117 39.3% Total 298 4.3 Descriptive statistics The descriptive statisics in this study is to describe the general opinion of surveyed customers about their evaluation and their statisfaction as well as their loyalty toward a particular restaurant after service failure. The means value shows an estimation of the center of a distribution, in this study means value can be interpreted as average ranking score of the customers when they access service recovery performance of the restaurant. Standard deviation presents the dispersion level of customer ranking score around the mean value. The lesser dispersive the data, the more valuable it is. 4.3.1 Distributive justice attribute Table 4-4 : Summary of descriptive statistics of distributive justice Mean Std. Deviation DISTRI01 Outcome was fair 3.34 .976 DISTRI02 Compensation was appropriate 3.36 .877 DISTRI03 I get what i deserved 3.22 .935 DISTRI04 Outcome was right 3.19 .914 DISTRI05 Restaurant gave what i needed 3.28 .967 The table illustrates that on average customers evaluate distributive recovery performance pretty good, more than 3 score out of 5 score band. The difference of means score of variables is not much but the compensation of the restaurant were rated higher as it has the highest mean value of 3.36. The highest Std. Deviation of the fairness of outcome means that customers evaluate the fairness of outcome much differently between the lowest and the highest rating. 4.3.2 Procedural justice attribute Table 4-5 : Summary of descriptive statistics of procedural justice Mean Std. Deviation PROCED06 Problem resolving time was reasonable 2.94 1.043 PROCED07 Quickly reacted to problem 3.11 .954 PROCED08 Flexible in dealing with problem 3.24 .927 PROCED09 Easy to lodge complaint 3.27 1.008 PROCED10 Shows care to individual customer 3.26 .986 PROCED11 Complaint was handled in thoughtful manner 3.18 1.059 PROCED12 Service failure recovery procedure was fair 3.28 .992 Eventhough the first item of this factor about reasonability of time take to resolve problem was evaluated lowest at 2.94 customers rated the other elements pretty high, all are greater than score 3. The highest Std Deviation of 1.059 means that the opinion of whether their complaint was handled in thoughfull manner is much different among different customers. 4.3.3 Interactional justice attribute Table 4-6 : Summary of descriptive statistics of interactional justice Mean Std. Deviation INTERA13 Employees were concerned about my problem 3.24 .959 INTERA14 Employees put the proper effort 3.17 1.020 INTERA15 Employees communication were appropriate 3.33 .916 INTERA16 Employees gave me the courtersy 3.34 .972 INTERA17 Employees proactively fixed problem 3.16 .971 INTERA18 Employees paid due attention 3.39 .987 INTERA19 Employees explained the causes 3.33 1.018 The descriptive statistic of interactional justice attribute implies that overall customers evaluated the attention the employee of restaurant paid to them higher with means score of 3.39 while they did not rate the employee so good in term of their proactive actions to fix problem with the lowest means of 3.16. The effort of restaurant staffs in resolving problem is not consistently assessed by different customers because the Std. deviation of this variable has the biggest value compare to that of the other variables. 4.3.4 Customer satisfaction Table 4-7 : Summary of descriptive statistics of customer satisfaction Mean Std. Deviation SATISF20 I was very satisfied 3.21 .988 SATISF21 I had positive experiences 3.18 .964 SATISF22 Better than other restaurants 3.10 .957 SATISF23 Purchase of service of this restaurant was a good decision 3.17 .914 Overall customers were satisfied then they rated means of all elements greater than 3 score but customers seem less satisfied when they compare the surveyed restaurants with other restaurants. Std. Deviation of all items are less than 1 means that the difference between highest and lowest rating of each element is not greater than 1 score. 4.3.5 Customer loyalty Table 4-8 : Summary of descriptive statistics of customer loyalty Mean Std. Deviation LOYALT24 Will choose this restaurant 3.19 .924 LOYALT25 Will recommend to others 3.08 .968 LOYALT26 Will go to this restaurant again 3.10 .950 LOYALT27 Intend to remain loyal 2.99 .946 Similarly to Customer Satisfaction level, customers also rated their loyalty level pretty high with means of all element greater than 3 except of the intention to remain loyal. 4.3.6 Modern Status Orientation (MSO) Table 4-9 : Summary of descriptive statistics of modern status orientation Mean Std. Deviation MODERN28 Become a rich man is goal of my life 3.13 .858 MODERN29 Admire people earn high incomes 3.43 1.010 MODERN30 Admire who have a wide relationship network 3.48 .951 MODERN31 Worth obtaining luxury products and services 3.49 .975 The highest mean score of 3.49 in above table indicates that customers highly agreed that it is worth obtaining luxury product and high quality service while they less agreed that becoming a rich man is their life goal and only ranked it 3.13 out of 5 score scale. The opinion of admiring or not admiring people earn high income is not consistent because customers can rank it more than 1 score apart compare with other customers. 4.4 Result of reliability test 4.4.1 Cronbach’s alpha of three justice variables 4.4.1.1 Distributive justice Reliability Statistics Cronbach's N of Alpha Items .854 5 Cronbach’s alpha of this measurement is 0.854 (> 0.6), the Corrected Item Total Correlation of the five variables are all > 0.3 and Cronbach’s Alpha if item deleted variable DISTRI01, DISTRI02, DISTRI03, DISTRI04 or DISTRI05 are all < 0.854. Therefore 5 variables are accepted and can be used for EFA analysis. Table 4-10 : Reliability coefficient of distributive justice measurement scale Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted DISTRI01 .695 .816 DISTRI02 .619 .836 DISTRI03 .683 .819 DISTRI04 .637 .831 DISTRI05 .698 .815 4.4.1.2 Procedural justice Reliability Statistics Cronbach's N of Alpha Items .885 7 The measurement has Cronbach’s alpha of .885. This Cronbach’s alpha is considered high, Corrected Item-Total Correlation of all seven items are > .3 and Cronbach's Alpha if Item Deleted are all .6, Corrected Item-Total Correlation >.3 and Cronbach's Alpha if Item Deleted smaller than Cronbach alpha of factor measurement make the 7 variables of this factor qualified for validity test. Table 4-12: Reliability coefficient of interactional justice measurement scale Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted INTERA13 .756 .868 INTERA14 .692 .875 INTERA15 .641 .881 INTERA16 .707 .874 INTERA17 .678 .877 INTERA18 .664 .879 INTERA19 .682 .877 4.4.2 Cronbach’s anpha of customer satisfaction Reliability Statistics Cronbach's N of Alpha Items .768 4 Cronbach’s alpha of this measurement is .768, Corrected Item-Total Correlation are all >.3, Cronbach's Alpha if Item Deleted of all 4 items are .6). The result of Corrected Item-Total Correlation and Cronbach's Alpha if Item Deleted confirmed that all the 4 items of this factor meet the requirement of EFA analysis. Table 4-14: Reliability coefficient of customer loyalty measurement scale Corrected Item-Total Correlation Cronbach's Alpha if Item Deleted LOYALT24 .802 .918 LOYALT25 .842 .905 LOYALT26 .853 .901 LOYALT27 .839 .906 4.4.4 Cronbach’s alpha of moderating variable- modern status orientation Reliability Statistics Cronbach's N of Alpha Items .808 4 Cronbach’s alpha of this measurement is .808, Corrected Item-Total Correlation are all >.3, Cronbach's Alpha if Item Deleted of all 4 items are [...]... foreign brands, in Ho Chi Minh City are always rated superior than other local restaurants in term of service quality and complaint handling This could be easily seen in the multinational fastfood restaurant chains where service quality is high and standardized These restaurants make the customer complaint procedure easy and flexible to their customers and they also take initiative to recover service failure. .. higher service failure rate such as restaurant, are required to always maintain good quality product and high service level Many companies consider investment in complaint handling as a way to increase their overall service quality as well as increase customer commitment and build up customer loyalty However they are not sure how to resolve service failure effectively and how to measure customer satisfaction. .. loyalty The main questions that this research focuses to explore are : 1 Currently how do customers evaluate the service failure recovery of restaurants in Ho Chi Minh City ? 2 How does the customer satisfaction after service failure and recovery impact the loyalty level of customers with restaurants in Ho Chi Minh City ? 1.4 Contribution of the research The measurement scale and collected data analysis... encounter in the case of restaurant industry in Ho Chi Minh City of Vietnam The specific objectives of this research therefore are as followings : - To identify the relative importance of individual justice attributes in explaining the customer satisfaction after service failure and recovery - To recommend alternatives to effectively recover service failure to improve customer satisfaction and customer loyalty. .. management in restaurant industry an idea of how customers evaluate their service recovery performance base on perception of different justices The findings of this research helps organizations in retaurant industry understand the effect of justice evaluation of customer on their satisfaction after revice failure and recovery The study also recommends alternatives to improve customer satisfaction and. .. satisfaction after service failure and recovery H4: There is a positive impact of overall customer satisfaction after service failure and recovery on customer loyalty H5: Modern Status Orientation has moderating effect on relationship between justice evaluation and customer satisfaction CHAPTER 3- RESEARCH METHOD 3.1 Research design Research design is known as a plan of how research study to be carried... Sample The study was conducted in restaurant service setting in Ho Chi Minh City Restaurant is high interaction or “high contact service industry which has its important role of emotion A restaurant does not only simply sell foods but it also sells the hospitalily, which mean the nature and result of restaurant service are both tangible and intangible Restaurant also presents a service for which failure. .. service failure and recovery in restaurant setting in Ho Chi Minh City fo Vietnam Convenient sampling method was used to collect data by means of a survey SPSS software version 20 was used to analyse collected data set The measurement scales were adopted and adjusted from previous research Exploratory Factor Analysis was applied to refine measurement scale and reduce factors Research model and hypotheses... using regression analysis The result of data analysis provided empirical evidence that justice evaluation has positive effect on customer satisfaction after service failure and recovery The result also confirmed that customer satisfaction and their loyalty had strong correlation Implications for the organizations in restaurant industry is that in order to better satisfy customers and retain their loyalty. .. Satisfaction after service failure and recovery Customer loyalty Interactional justice H1: There is a positive relationship between distributive justice and customer satisfaction after service failure and recovery H2: There is a positive relationship between procedural justice and customer satisfaction after service failure and recovery H3: There is a positive relationship between interactional justice and customer .. .CUSTOMER SATISFACTION AND LOYALTY AFTER SERVICE FAILURE AND RECOVERY A study in restaurant industry in Ho Chi Minh City of Vietnam In Partial Fulfillment of the Requirements of the Degree of. .. evaluate the service failure recovery of restaurants in Ho Chi Minh City ? How does the customer satisfaction after service failure and recovery impact the loyalty level of customers with restaurants... brands, in Ho Chi Minh City are always rated superior than other local restaurants in term of service quality and complaint handling This could be easily seen in the multinational fastfood restaurant