Evaluating customer satisfaction after service recovery _ a study on the retail banking sector in Vietnam

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Pham Thi Hanh Huong

EVALUATING CUSTOMER SATISFACTION
AFTER SERVICE RECOVERY
A study on the retail banking sector in Vietnam

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

Pham Thi Hanh Huong

EVALUATING CUSTOMER SATISFACTION
AFTER SERVICE RECOVERY
A study on the retail banking sector in Vietnam

ID: 22110024

MASTER OF BUSINESS (Honours)
SUPERVISOR: Dr. TRAN HA MINH QUAN

Ho Chi Minh City – Year 2014

Acknowledgement
This thesis was conducted during 8 months, from August 2013 to April 2014. Working on this
thesis has also given me opportunities to approach exciting knowledge.
First for all, I would like to thank my supervisor professor Tran Ha Minh Quan for his valuable
guidance and feedback which improved many aspects of my thesis.
Also, the great thanks are to my family and friends around me, who are always beside and give
me useful advices during this study.
Sincerely,
Pham Thi Hanh Huong

1


Abstract
Vietnam is one of emerging country with many potential to develop. With the population
over 88 million (2012), Vietnam is potential market to invest especially for banking market.
Nowadays, the number of the banks in Vietnam is increasing rapidly including the local and
foreign banks; the competition for their existence becomes much more difficult than ever. Hence,
this research is going to examine the way to evaluating customer satisfaction after service
recovery in Vietnam retail banking sector. It concludes that ultimate success of any service
recovery program implemented by a bank and can only be measured by maintenance of satisfied
customer. This study reveals that perceived justice plays important role and has significant effect
on emotions and customer satisfaction after service recovery. In addition, the reality of
competition among the banks and how they exist in competitive market like Vietnam will be
mentioned in this research. Conclusion was drawn and it is recommend based on the findings of
the study that the banks in Vietnam should focus more on customers to satisfy them by
improving service recovery.
This study conducted a questionnaire survey to reach retail customers in Vietnam retail

banking. Data has been analysed mainly by descriptive analysis. Analysis results suggest that
how much service recovery effects on customer satisfaction and the specific relationships
between 2 constructs will be come up eventually.
The study concludes that the improvement of perceived justice may increase post-recovery
satisfaction, which ultimately retains valued customers and built loyalty in customers’ perception
in Vietnam retail banking industry.
Key words: Service recovery, Perceived justice, Emotions, Post-recovery satisfaction,
Retail banking.

2


Table of Contents
Acknowledgement .................................................................................................................................................. 1
Abstract ...................................................................................................................................................................... 2
LIST OF APPENDIXS ......................................................................................................................................... 5
LIST OF FIGURES ............................................................................................................................................... 6
LIST OF TABLES ................................................................................................................................................. 7
Chapter 1 ................................................................................................................................................................... 9
INTRODUCTION..................................................................................................................... 9
1.1

Research background.................................................................................................................... 9

1.2

Research problems ...................................................................................................................... 12

1.3

Research Objective ...................................................................................................................... 13

1.4

Research Hypothesis ................................................................................................................... 14

1.5

Thesis structure ............................................................................................................................ 14

Chapter 2 ................................................................................................................................................................ 16
LITERATURE REVIEWS .................................................................................................... 16
2.1

Retail banking service recovery ............................................................................................. 16

2.2

Perceived justice with service recovery .............................................................................. 17

2.3

Emotions .......................................................................................................................................... 18

2.4

Post- recovery satisfaction ....................................................................................................... 20

2.5

Model and Hypothesis ................................................................................................................ 21

2.6

Summary.......................................................................................................................................... 23

Chapter 3 ................................................................................................................................................................ 24
RESEARCH METHODOLOGY .......................................................................................... 24
3.1

Research design process ............................................................................................................ 24

3.2

Sample size ..................................................................................................................................... 25

3.3

Data Collection.............................................................................................................................. 25

3.4

Pilot study ....................................................................................................................................... 26

3.5

Main study ...................................................................................................................................... 26

3.6

Data collection ............................................................................................................................... 27

3.7

Items measurement for service recovery and post-recovery satisfaction .............. 28

3.8

Methodology of data analysis .................................................................................................. 29

3.9

Summary ......................................................................................................................................... 30

Chapter 4 ................................................................................................................................................................ 31
DATA ANALYSIS .................................................................................................................. 31
4.1

Data analysis methods................................................................................................................ 31

3


4.2

Means and standard deviations of variables: ................................................................... 31

4.3

Research sample characteristics ............................................................................................ 33

4.4

Cronbach’s alpha coefficient of reliability test:............................................................... 35

4.5

Exploratory Factor Analysis (EFA). .................................................................................... 38

4.6

Multiple regression analysis for common model ............................................................. 41

4.7

Hypothesis testing result ........................................................................................................... 48

4.8

Summary of findings .................................................................................................................. 51

Chapter 5 ................................................................................................................................................................ 53
CONCLUSIONS AND SUGGESTIONS .............................................................................. 53
5.1

Conclusions..................................................................................................................................... 53

5.2

Managerial implications............................................................................................................ 54

5.3

Research limitation and future research directions ....................................................... 55

References .............................................................................................................................................................. 56

4


LIST OF APPENDIXS
Appendix 1: Questionnaire _English version .............................................................................61
Appendix 2: Questionnaire - Vietnamese version ......................................................................64
Appendix3: First time running – Eigen values ...........................................................................67
Appendix 4: First time running – Factor loading........................................................................68
Appendix 5: Second time running – Eigen values ......................................................................69
Appendix 6: Second time running – factor loading ....................................................................70
Appendix 7: Third time running – Eigen values .........................................................................71

5


LIST OF FIGURES
Figure 1. The proportions of commercial banks over years in Vietnam ................................... 10
Figure2.1 The research model.....................................................................................................22
Figure 3.1 Research process .......................................................................................................25

6

LIST OF TABLES
Table 3.7.1 – Measurement items of Perceived Justice ..............................................................28
Table 3.7.2 – Measurement items of Emotions & post recovery satisfaction ............................29
Table 4.1: Means & standard deviations of variables .................................................................32
Table 4.3.1: Demographic characteristics of sample ..................................................................34
Table 4.4.1: Cronbach’s alpha coefficients for each measurement scale ...................................36
Table 4.4.2: Final results of reliability test .................................................................................37
Table 4.5.1–The result of KMO and Bartlett’s Test conducting EFA ........................................39
Table 4.5.2–Total variance explained conducting EFA..............................................................39
Table 4.5.3 - Exploratory Factor Analysis (EFA).......................................................................40
Table 4.6.1.1–Model Summary ..................................................................................................42
Table 4.6.1.2–ANOVA ...............................................................................................................42
Table 4.6.1.3–Coefficients of multiple linear regression analysis ..............................................42
Table 4.6.2.1–Model Summary ..................................................................................................43
Table 4.6.2.2–ANOVA ...............................................................................................................43
Table 4.6.2.3–Coefficients of multiple linear regression analysis ..............................................44
Table 4.6.3.1–Model Summary ..................................................................................................44
Table 4.6.3.2–ANOVA ...............................................................................................................45
Table 4.6.3.3–Coefficients of multiple linear regression analysis ..............................................45
Table 4.6.4.1–Model Summary ..................................................................................................46
Table 4.6.4.2–ANOVA ...............................................................................................................46
Table 4.6.4.3–Coefficients of multiple linear regression analysis ..............................................46
Table 4.6.5.1–Model Summary ..................................................................................................47
Table 4.6.5.2–ANOVA ...............................................................................................................47

7


Table 4.6.5.3–Coefficients of multiple linear regression analysis ..............................................48
Table 4.7.1–Coefficients of multiple linear regression analysis .................................................51

8


Chapter 1
INTRODUCTION
1.1

Research background
Retail banking sector are one of the best choices towards most of banking in Vietnam that

create the competition in this segment. However, to assert the position and speed up, the banks
always in efforts to diversify products and improve service quality, endeavour creative
innovation to enhance customer satisfaction. It is considered as much important as securing new
customers due to a massive potentiality of generating profits from one loyal customer. According
to Barroso C. and Martin A. (1999), company not only increases the value of its business but it
also could lower the costs by having loyal customers, which may not be achieved by only
attracting new customers. For that matter, many organizations (including banks) that resorted to
having superior service quality have been found to be market leaders in terms of sales and longterm customer loyalty and retention (Anderson and Sullivan, 1993; Boulding et al., 1993; Eklöf J
and Westlund, 2002).
In the past, state-owned commercial banks with advantages in capital and market share
played key role in supporting most of organizations and corporations. Nonetheless, with the
significant development of private entities in the recent years, most of joint-stock commercial
banks have had a remarkable improvement in expansion of their business and service network
for small and medium corporations and their source of funds. Hence, state –owned commercial
banks had almost concentrated on state corporations.
In the recent years, financial investment and banking business activities are developing
quickly in Vietnam. After joining WTO on 11th January 2007, there are dramatically growing
number of foreign banks operated throughout Vietnam and certainly financial market will
develop more. Graph below is shown to see the number of banks increased over years and

9


proportion of charter capital of commercial banks in 2007.
A statistics from State Bank of Vietnam, as of early Q3 2012, The State Bank of Vietnam
identifies six 'state-owned credit institutions' or 'state-owned commercial banks' (SOCBs), 38
urban commercial joint stock banks (CJSBs), 32 branches of foreign banks and five joint venture
banks. There are also 17 finance companies and 54 representative offices of foreign banks. In
terms of the numbers of branches, VietinBank is the largest organisation, with a presence at 138
locations. The other SOCBs also have large networks by local standards. Agribank has 115;
BIDV, 103; VBSP, 65; VDB, 62; and MDHDB, 32. Of the urban CJSBs, theorganisations which
have over 25 branches are: Maritime CJSB (26); Techcombank (38); VIB (42); Sacombank (59);
Vietcombank (59); Eximbank (35); Military Bank (36); ACB (54); Saigonbank (31); VP Bank
(34); and EAB (28). None of the joint-venture banks have more than five branches.
Figure 1. The proportions of commercial banks over years in Vietnam

Source:

Vietnam

Commercial

Banking

Report

Q3

2012,

available

at />i=jIuZUfHKEiTiQej5IGYAw&usg=AFQjCNEKlPFRcYLbasejAxfJceJIy7T9jg

10


One of the ways to build customer's loyalty is that managing service recovery since the
main task of the banks is to provide services to their customers. Service recovery refers to the
actions a supplier takes in order to seek out dissatisfaction (Johnston, 1995) and as a response to
poor service quality, i.e. service failure (Grönroos, 1988; Hart, Heskett, & Sasser, 1990).Since
the cost of gaining a new customer usually greatly exceeds the cost of retaining a customer.
Attracting new customers, by for instance commercials and other marketing actions, is about five
times as expensive as keeping an existing one (Timm, 2001). Therefore, managers are
increasingly concerned with minimizing customer defections. Robinson (1978) underscored the
historic emphasis on consumer orientation, reporting that almost all the studies focused on the
person filing the complaint and the nature of the complaint.
Businesses have much to earn by keeping happy customers. It is less expensive to have a
defensive strategy and keep existing customers than to have an offensive strategy and try to
attract new customers (Mårtensson, 2009). Attracting new customers, by for instance
commercials and other marketing actions, is about five times as expensive as keeping an existing
one (Timm, 2001).
Like the banking industry in other countries, the Vietnam banking business environment
has changed substantially in recent years. Because of financial deregulation and globalization,
banks in Vietnam face severe competition from oversea banks as well as other financial
institutions.
Clearly, with the fast development of banks in Vietnam, if the banks do not have a longterm strategy to have good business performance, they cannot exist in the long run. It is known
commonly that customers are the lifeblood of any banks nowadays. As a result, the service
providers have to put more efforts if they want to be winners in this battle. Improving service
recovery is a way the banks can maintain and attract more customers. Therefore, the challenge is

11


to keep them coming back to you, to provide them with service that is so exceptional they
wouldn't think of taking their business elsewhere. That includes solving their problems (Tschohl,
2010).
The focus of my research is on Vietnam retail banking industry. Service recovery problems
have had a lot of attentions from management and academic circles, especially in market
condition in emerging economies nowadays. The literature on Vietnam retail banking is analysed
to give a knowledge base to examine service recovery improvement. The aim of this research is
to investigate the importance of service recovery, and from then propose some ideas for further
improvement and look at implications. Recognizing the importance and significant impact of
service quality as a competitive weapon is a recent phenomenon in Vietnam banking.
1.2

Research problems
Many years ago, while Vietnam was not the open market, banking system dominated by

state-owned banks. They operated in non-competitive environment, and these banks did not feel
compelled to care about service quality issues. They considered lending and deposit as their
primary services and. Therefore, they just paid attention to branch expansion, gaining market
share and they targeted the mass market for deposits with basically same services. There was not
marketing department in the many banks at that time and they even put low priority to
satisfaction of customer needs. Their training course were primarily transaction (accounting)
oriented.
In recent years, after Vietnam joined WTO 2007, many foreign banks have started to pay
attention to the country’s potential for growth like Vietnam. Vietnamese banks have faced huge
competition from overseas banks and other financial institutions due to globalization and
deregulation. Although, foreign banks in Vietnam still have some limitations for their operations,

they put their effort to establish their presence in retail banking service in the future. And the

12


competition for survival in the banking market has become difficult than ever. As a positive
affecting, Vietnam banking business environment has some substantial changes. There are a lot
of new services offered by the bank such as: ATMs (Automatic Teller Machines), SMS banking,
phone banking, internet banking, credit card, replacement of the new electronic for data
processing to serve customers better.
In the current competition retail banking industry context, customers always have more
opportunities to choose the best provider for them. So, to satisfy customers is extremely
important tasks. There have been many studies on service recovery, but how to reduce service
failures, how to service recovery have effective and satisfy the expectations of the customers is
not mentioned adequately. This study will show the way to recover a service failure and how to
satisfy customer satisfaction after recovery.
Actually, the Vietnam banking system has gone through many huge changes in
competition and higher expectation of customer by offering new products and services,
conducting low-interest strategies and promotion campaigns. However, according to Tschohl,
(2010) happy customers will drive your business. You must care for them, nurture them, and do
whatever it takes to earn their undying loyalty. We all know that advertising can bring a
customer through the doors to your business once. The challenge is to keep them coming back to
you, to provide them with service that is so exceptional they wouldn't think of taking their
business elsewhere. That includes solving their problems. Bank managers believe that customers
will be loyal whether they receive higher value than from other competitors (Dawes & Swailes,
1999).
1.3

Research Objective
The retail banking industry becomes more competitive and complex along with

demanding customers increasingly. How does a bank secure and retain more customers?

13


Furthermore, with respect of the subject of this study, how can banks survive in this dynamic
environment?
This study has two objectives related to perceived justice, customer satisfaction after
service recovery in Vietnam retail banking industry. First, the study explores each construct
which is based on the existing related literature. In addition, measurements of three dimensions
of perceived justice and customer satisfaction are investigated at the same time. The relationship
between service recovery and post-recovery satisfaction will be tested. Second, the research also
seeks to analyze reality of competition among the banks in Vietnam on service recovery. From
then, some proposals and implications for improvement are also raised at the end of research. In
general, the main objective of this research is the goal that that should be achieved during the
thesis. The main objective is shown as below: What should the banks in Vietnam do to improve
service recovery as long-term strategy to attract retail customers?
1.4

Research Hypothesis
Based on the research question and objective, a hypothesis has been developed as

following: There is a positive correlation between perceived justice and post-recovery
satisfaction in retail banking sector.
The idea of this hypothesis is finding out the significant role of service recoveries and
how to improve it and therefore, all banks have realized the importance of concentrating service
recovery as a way to increase post-recovery satisfaction, customer satisfaction, their loyalty, and
to improve their core competence and business performance.
1.5

Thesis structure
This thesis is divided into 5 parts which each of them hold different purposes. There are

appendices given at the end of the thesis for further information which are not for immediate use
to readers. A brief explanation of each part will be given below:

14


I. Chapter 1 - Introduction
This chapter discusses about the research background, problem definition of research, research
objective, and hypothesis. An overview of Vietnam banking industry on service recovery is also
described. This chapter is also closed with structure of the thesis
II. Chapter 2 – Literature reviews
This chapter discusses about the literature review regarding to retail banking service recovery,
perceived justice, positive emotions, negative emotions, post-recovery satisfaction and
relationship between them.
III. Chapter 3 - Research Methodology
This chapter discusses how the researcher is conducting research, what kind of research and how
to collect and measure the data which help the researcher in building this research.
IV. Data analysis
Data from questionnaire is precisely analyzed. Descriptive analysis is mainly used as a method
of analysis. Factor analysis is also done before it investigates the relationship between service
recovery and post-recovery satisfaction. At the end, it defines problems of service recovery
which customers face and proposes recommendation for management in improving service
recovery. This chapter is ended with summary of findings.
V. Conclusion and suggestions
This chapter talks about the final result of research and implications for managerial Vietnam
retail banking. At the end, limitation and future research directions will be discussed.

15


Chapter 2
LITERATURE REVIEWS
This chapter reviews the theoretical framework for this thesis, including factors such as
retail banking service recovery, perceived justice, emotions, and post-recovery satisfaction. This
chapter also proposes hypotheses and model that will be tested in this thesis.
2.1

Retail banking service recovery
In recent years, extant literature has devoted efforts to service recovery. Contributions

include both theoretical model and empirical assessments. The Johnston has cited a definition of
service recovery’s multi-dimensional nature in his study about that subject in 1998. Furthermore,
Bhandari et al. (2007) offer a multi-dimensional approach to evaluate service recovery, suggest
that managing service recovery should be under taken in a similar service, and thus managers
need to understand customers’ recovery expectations.
These studies analyzed service recovery from a variety of different angles, including
organizational responses to service recovery (Davidow, 2003), the relationship between
satisfaction with service recovery and cumulative satisfaction (McCollough et al., 2000), why
certain people do not complain (Stephens and Gwinner, 1998), the influence of the competitive
environment on service firms’ recovery efforts (Estelami, 2000).
Service recovery strategies can be classified tangibly into psychological and tangible
strategies (Miller et al., 2000). Psychological recovery strategies refer to actions that can directly
improve customer psychological dissatisfaction, such as apology and explanation, while tangible
recovery strategies provide tangible compensation, such as provide another free service, refund,
gift, discount, and coupon, to reduce customer practical loss. According to Sheth et al. (2000),
service recovery refers to actions taken by a service provider in an attempt to resolve the problem

that caused a service failure. Effective service recovery results in complainant satisfaction and

16


recovery (Karatepe and Ekiz,2004; Bolton, 1998).
Concern about service failure and recovery is the way banks can maintain and attract more
customers. In addition, service recovery can keep customers’ confidence in a service provider’s
service delivery, increase business with existing clients, attract more new customers, reduce
dissatisfied customers with fewer mistakes, maximize a company’s profits and increase customer
satisfaction (Berry et al., 1994 and Lee et al., 2000).
2.2

Perceived justice with service recovery
Service failures are interpreted as typical conflict, service recovery actions performed to

deal with a service failure can be evaluated based on perceived justice. Banking service
providers and their customers can't prevent the incidents that happen during exchange processes.
Therefore, they expect more equal behavior and they do their evaluation based on perceived
justice.
In general, recovery strategies of a firm are normally evaluated by using the three
components of justice, namely distributive justice, procedural justice, and interactional justice
(Maxham III &
Ennew, 200

etemeyer, 200
Collier

irtz

Bienstock, 200

Mattila, 2004 Chebat
Schoefer, 2008 del

Slusarczyk, 200

Schoefer

o-Lanza et al., 2009).

2.2.1 Distributive justice
Distributive justice concerns the nature of allocation of goods in society. It refers to
whether the failed customer has received monetary compensation. Most failed customers can
perceive distributive justice of service recovery efforts after they have received a discount,
coupons, refund, free giveaways or alternative goods as compensation from the offending service
provider (Goodwin & Ross, 1992; Blodgett et al., 1997; Tax et al., 1998; Hoffman & Kelley,
2000). Distributive justice can be evaluated by customer perception of the fairness, equality,
necessity, and value of the compensation (Blodgett et al., 1997; Tax et al., 1998; Smith et al.,

17


1999; Maxham III & Netemeyer, 2003; Wirtz & Mattila, 2004).
2.2.2 Procedural justice
Procedural justice is perceived fairness customer feels about the service recovery procedure
and standard during service delivery in aspects such as accessibility, timing, process control,
delay and flexibility to adapt to the consumer s recovery needs (del

o-Lanza, 2009).In service

recovery context, procedural justice means the customer’s perception of justice for the several
stages of procedures and processes needed to recover the failed service (Mattila, 2001).
2.2.3 Interactional justice
Interactional justice focuses on interpersonal interactions during the process of service
delivery, it is the fairness customer feels about the way being treated by service providers during
the service recovery interaction process. Interactional justice is generally evaluated by reliability,
clear explanation of the problem, sincerity, apologetic attitude, communication, politeness,
respect, detailed attention to problems, willingness to hear complaints, and resolve the problem
(Blodgett et al., 1997; Smith et al., 1999; Wirtz & Mattila, 2004).
Based on theories, empirical researches and results from direct interviewing with
customers, consider the direct relationship between perceived justice and post-recovery
satisfaction. Hypothesis 1 is thus proposed as follows:


H1a – Perceived distributive justice positively influences post-recovery satisfaction in
retail banking sector



H1b – Perceived procedural justice positively influences post-recovery satisfaction in
retail banking sector



H1c – Perceived interactional justice positively influences post-recovery satisfaction in
retail banking sector

2.3

Emotions

18


Emotion of customers is a paramount importance for service providers. It reflects the
success or failure of the service recovery that customers received, it is also reveal the victory of
service providers when service failure after that. Consistent with previous research by De Witt
&Brady(2003), Keaveney (1995), Stephens & Gwinner (1998) have suggested that customer’s
emotions have important practical implications, because how customers feel about a service
impacts on customer satisfaction definitely after recovering a service failure, post-purchase
intension, negative word of mouth, complaining to third parties and loyalty.
Emotions typically have a specific referent, e.g customer is angered by inattentive service
(Bagozzi et al.,1999). Emotion is defined by Erevelles (1998) as being higher in intensity, and is
usually associated with a stimulus object. Oliver(1997) further pointed out that emotion tends to
be more cognitively involved than affect.
Studies have provided that emotions consist of two dominant dimensions including
positive and negative, they are independent and have distinct tendency (Watson et al., 1988;
Cacioppo & Gardner, 1993; Cacioppo et al., 1997).Customers may display negative emotions if
they are displeased with the recovery outcome or perceive injustice of the recovery process, or
positive emotions in opposite sense (Weiss et al., 1999).
According to Laros & Steenkamp (2005),positive emotion is related to contentment,
happiness, love, and pride, whereas negative emotion is related to anger, fear, sadness, and
shame. Emotions are increasingly viewed as essential in researching how customers evaluate
service failure and recovery (Bagozzi et al., 1999; Weiss et al., 1999; Schoefer, 2008; Schoefer
& Diamantopoulos, 2008).Many researchers (e.g., Weiss et al., 1999
Slusarczyk 200

Schoefer

Ennew, 200

Schoefer, 2008 del

illiam, 1999 Chebat

o-Lanza et al., 2009) studied

post-recovery customer emotions under the framework of perceived justice. Their findings
suggest that low perceived justice leads to highly negative emotions (anger, fury, and

19


unhappiness) and low positive emotions (happiness, pleasure, and joy) (Schoefer & Ennew,
2005).
In service recovery measures applied in the banking industry, increasing the level of
distributive justice raises pleasant emotions, while reducing distributive justice makes customers
disappointed (William, 1999). Increasing distributive justice, procedural justice, and interactional
justice can reduce negative emotions and enhance positive emotions of customers. The
hypothesis designed for this part is based on the following assumptions:


H2a – Perceived distributive justice positively influences positive emotion in retail
banking sector



H2b – Perceived procedural justice positively influences positive emotion in retail
banking sector



H2c – Perceived interactional justice positively influences positive emotion in retail
banking sector



H2d – Perceived distributive justice negatively influences negative emotion in retail
banking sector



H2e – Perceived procedural justice negatively influences negative emotion in retail
banking sector



H2f –Perceived interactional justice negatively influences negative emotion in retail
banking sector

2.4

Post- recovery satisfaction
Post-recovery satisfaction is one of the most important problems concerning all type of

business organizations, which is justified by philosophy of the customer-orientation and main
principles of constant improvement of modern enterprises. In simpler words, post-recovery
satisfaction is the customer’s evaluation of whether a service recovery has met his or her needs

20


and expectations. Obviously, if the performance does not meet expectation, the customer is
dissatisfied. If providers could increase levels of customer satisfaction after service recovery
could maintain customer loyalty and make more profits. For this reason, post-recovery
satisfaction must be measured into a number of analytic parameters. Customer satisfaction after
recovery analysis is considered as the most reliable feedback system, considering that it provides
a direct, effective, meaningful and objective way to get the clients’ expectations and preferences.
Evaluating the customer satisfaction after service recovery is essential task for a company
in order to evaluate the relationship between customers and the performance of its service
recovery. According to Gerson (1993), modern management literatures consider customer
satisfaction as a key task to evaluate a standard of performance a possible standard of excellence
for any business firm. In additions, perhaps, companies are able to evaluate and motive
employees’ performance through measurement of customer satisfaction (Hill, 199 ).
Hypothesis 3is thus proposed as follow:


H3a - Positive emotion positively influences post-recovery satisfaction in retail banking
sector.



H3b - Negative emotion negatively influences post-recovery satisfaction in retail banking
sector.

2.5

Model and Hypothesis
Based on the literature review, author develops hypothesis and theoretical framework of

the model:

21


Perceived Justice

Emotions
(H2a,b,c,d,e,f)

(H3a, H3b)
Positive
Emotions

Distributive Justice

Post-recovery
Satisfaction

Procedural Justice
Negative
emotions

Interactional Justice
(H1a,b,c)

Figure2.1 The research model


H1a –Perceived distributive justice positively influences post-recovery satisfaction in
retail banking sector



H1b – Perceived procedural justice positively influences post-recovery satisfaction in
retail banking sector



H1c – Perceived interactional justice positively influences post-recovery satisfaction in
retail banking sector



H2a – Perceived distributive justice positively influences positive emotion in retail
banking sector



H2b – Perceived procedural justice positively influences positive emotion in retail
banking sector



H2c – Perceived interactional justice positively influences positive emotion in retail
banking sector



H2d – Perceived distributive justice negatively influences negative emotion in retail
banking sector



H2e – Perceived procedural justice negatively influences negative emotion in retail
banking sector

22




H2f –Perceived interactional justice negatively influences negative emotion in retail
banking sector



H3a - Positive emotion positively influences post-recovery satisfaction in retail banking
sector.



H3b - Negative emotion negatively influences post-recovery satisfaction in retail banking
sector.

2.6

Summary
Post-recovery satisfaction is one of the most important problems concerning all type of

service failure, which is justified by philosophy of the customer-orientation and main principles
of constant improvement of modern enterprises. For this reason, post-recovery satisfaction must
be measured into a number of analytic parameters. Evaluating customer satisfaction after service
recovery is considered as a reliable feedback system, considering that it provides a direct,
effective, meaningful and objective way to get the expectations of customers.

23