Petrcaived justice in service recovery and recovery satisfiction and customer loyalty a studyof education service in viet nam luận văn thạc sĩ

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

PHAM THI MAI PHUONG

PERCEIVED JUSTICE IN SERVICE RECOVERY AND
RECOVERY SATISFACTION AND CUSTOMER LOYALTY:
A STUDY OF EDUCATION SERVICES IN VIET NAM

MASTER OF BUSINESS (by Honour)

Ho Chi Minh City-Year 2013


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

PHAM THI MAI PHUONG

PERCEIVED JUSTICE IN SERVICE RECOVERY AND
RECOVERY SATISFACTION AND CUSTOMER LOYALTY:
A STUDY OF EDUCATION SERVICES IN VIET NAM

ID: 22110047

MASTER OF BUSINESS (by Honour)

SUPERVISOR
Dr. NGUYEN DONG PHONG

Ho Chi Minh City-Year 2013


ACKNOWLEDGEMENTS
I would like to express my deeply sincere gratitude to my Supervisor, Dr.Nguyen Dong Phong,
for his valuable, enthusiastic guidance and advice on effective method. He helps me to
understand the research method thoroughly. His value experience and professional knowledge
give me opportunities to recognize issues deeply. His inspiration to me played an important role
in finishing my research. Furthermore, I would like to express my gratitude to Dr. Nguyen Thai
Hoang; his excited lectures encouraged me to explore more how to apply research method to a
research.
Besides, I would like to thanks to respondents who have supported me a lot in answering
questionnaire and interview, which really help me to complement my research. Another source
of motivation I would like to thank is my classmates ISB Mbus 2011 for a mutual support by
sharing, discussing ideas, knowledge and experiences in the term of research.
And an honorable mention I want to send my gratitude to my family, friends for their
understanding and helping to collect data for completing my thesis.

Ho Chi Minh City, Viet Nam
05thJan, 2014

Pham Thi Mai Phuong

i


ABSTRACT
The purpose of this research is to empirically investigate the relationships of Service Recovery
(Interactional Justice, Procedure Justice, and Distributive Justice) and Customer Satisfaction,

between Customer Satisfaction and customer Loyalty. The empirical setting is implemented in
the English teaching Service in a developing economy of Viet Nam, particularly in Ho Chi Minh
City.
The findings of this study reveal that Vietnamese Customers who perceive Interactional Justice,
Procedure Justice, and Distributive Justice feel satisfied after complaining. Customers consider
perception of Distributive is the most important to response their behavior and attitude towards
English teaching service after encountering a service failure.
They appreciate resolving of complaints by outcomes which they received compared to what
they required. Besides, Consumers also observe treatment and response of employees when they
complaint to Centers. Customers expect courteous and respectful communication from
employees when they response with customer’s problem. A good attitude with caring and
concerning about what customers experienced and uncomfortable is good criteria for customers
to evaluate Service Recovery of Center. Study also found that procedure of Service Recovery is
more efficient when Center train employees how to communicate with customers to make them
tell their problems. Because, it is very difficult to know how customers value service if they do
not discuss anything about this.
The research affirm that Satisfaction of Customer after handling complaints impacting on
customer Loyalty significantly. Thus, this result contributes to the literature review of studies in
English teaching Service that Service Recovery is always an important factor to improve the
customer satisfaction and customer Loyalty.
Key words: service recovery, perceived justice, recovery satisfaction, customer loyalty.

ii


TABLE OF CONTENTS
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENTS
LIST OF FIGURES

LIST OF TABLES
CHAPTER 1: INTRODUCTION ............................................................................................. 1
1.1 RESEARCH BACKGROUND .............................................................................................. 1
1.2 PROBLEM IDENTIFICATION ............................................................................................ 2
1.3 RESEARCH OBJECTIVES AND QUESTION .................................................................... 4
1.4 SIGNIFICANCE OF THE RESEARCH................................................................................ 4
1.5 RESEARCH SCOPE .............................................................................................................. 5
1.6 RESEARCH METHODOLOGY ........................................................................................... 5
1.7 LIMITATION......................................................................................................................... 6
1.8 THESIS STRUCTURE .......................................................................................................... 6
CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL MODEL .......................... 8
2.1 SERVICE RECOVERY ......................................................................................................... 8
2.1.1 Interactional Justice ........................................................................................................... 11
2.1.2 Procedural Justice .............................................................................................................. 11
2.1.3 Distributive Justice ............................................................................................................ 12
2.2 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY ....................................... 13
2.2.1 Customer Satisfaction ........................................................................................................ 13
2.2.2 Customer Loyalty .............................................................................................................. 14
2.3 CONCEPTUAL MODEL .................................................................................................... 16
CHAPTER 3: RESEARCH METHODOLOGY ................................................................... 17

iii


3.1 QUANLITATIVE RESEARCH …………………………………………………………..
3.2 CONSTRUCTION OF MEASUREMENT .......................................................................... 17
3.2.1 Measurement Scale of Interactional Justice ...................................................................... 18
3.2.2 Measurement Scale of Procedural Justice ......................................................................... 19
3.2.3 Measurement Scale of Distributive Justice ....................................................................... 20
3.2.4 The measurement of customer satisfaction after handling complaint ............................... 21

3.2.5 The measurement of Customer Loyalty ............................................................................ 21
3.3 DATA COLLECTION ......................................................................................................... 22
3.3.1 Source of data .................................................................................................................... 22
3.3.2 Questionnaire ..................................................................................................................... 22
3.4 SAMPLE .............................................................................................................................. 24
3.5 DATA COLLECTION PROCEDURE ................................................................................ 25
3.6 DATA ANALYSIS .............................................................................................................. 26
CHAPTER 4: RESULTS OF DATA ANALYSIS AND DISCUSSION .............................. 28
4.1 SAMPLE DISCRIPTION .................................................................................................... 28
4.1.1 Name of English center respondents used to experienced ................................................ 29
4.1.2 Cost of English center respondent used............................................................................. 29
4.1.3 The profession, gender and age of respondents................................................................. 30
4.2 RELIABILITY ANALYSIS OF MEASUREMENT SCALES ........................................... 31
4.2.1 Reliability analysis result of measurement scale of Interactional Justice ......................... 31
4.2.2 Reliability result of measurement scale of Procedural Justice .......................................... 32
4.2.3 Reliability analysis result of measurement scale of Distributive Justice........................... 33
4.2.4 Reliability analysis result of measurement scale of Recovery Satisfaction ...................... 34
4.2.5 Reliability analysis result of measurement scale of Loyalty ............................................. 35
4.3 EXPLORATORY FACTOR ANALYSIS ........................................................................... 36
4.3.1 EFA for group of predictors .............................................................................................. 36
4.3.2 EFA for group of items of Customer Satisfaction and Loyalty measurement Scale ......... 38
iv


4.4 MULTIPLE REGRESSION ANALYSIS ............................................................................ 40
4.4.1 Revised Conceptual Model................................................................................................ 40
4.4.2 Multiple Regression Testing Assumptions ........................................................................ 40
4.4.3 Multiple Regression Analysis 1......................................................................................... 45
4.5 DISCUSSION....................................................................................................................... 50
CHAPTER 5: CONCLUSION AND MANAGERIAL IMPLICATION ............................ 52

5.1 CONCLUSION .................................................................................................................... 52
5.2 MANAGERIAL IMPLICATION ........................................................................................ 53
5.3 LIMITATION....................................................................................................................... 55
REFERENCES ......................................................................................................................... 56
APPENDICES........................................................................................................................... 59
APPENDIX 1: SURVEY FORM ............................................................................................ 59
APPENDIX 2: RESULTS F CRONBACH’S ANPHA ......................................................... 63
APPENDIX 3: RESULTS OF EFA ........................................................................................ 79
APPENDIX 4- RESULTS OF MULTIPLE REGRESSION ................................................ 91

v


LIST OF FIGURES

Figure 1: Conceptual Model

14

Figure 2: The process of research

15

Figure 3: Name of English center respondents used to experienced

27

Figure 4: Tuition fees of English course respondents used to experienced

28

Figure 5: Gender and age of respondents

29

Figure 6: Profession of respondents

30

Figure 7: Revised Conceptual Model

38

vi


LIST OF TABLES
Table 1: List of Interviewers

17

Table 2: Measurement Scale of Interactional Justice

18

Table 3: Measurement Scale of ProcedureJustice

19

Table 4: Measurement Scale of DistributiveJustice

19

Table 5: Measurement Scale of customer satisfaction after handling complaint

20

Table 6: Measurement Scale of Customer Loyalty

21

Table 7: The result of delivery questionnaires

24

Table 8: Cronbach’s Alpha of scale of Interactional Justice

31

Table 9: Cronbach’s Alpha of scale of ProceduralJustice

32

Table 10: Cronbach’s Alpha of Scale of Distributive Justice

33

Table 11: Cronbach’s Alpha of Scale of Satisfaction

34

Table 12: Cronbach’s Alpha of Scale of Loyalty

35

Table 13: EFA result of Predictors

36

Table 14: EFA result of Satisfaction and Loyalty

37

Table 15: Results of Multiple Regression Analysis 1

40

Table 16: Result of Simple Regression Analysis

43

vii


Chapter 1: Introduction

CHAPTER 1: INTRODUCTION
1.1 RESEARCH BACKGROUND
Today, the number of language center increase significantly every year, accounting for 40%
of kind of culture center in Viet Nam while the number of student studying in the language

center stand for 70% compare to others. This proved that second language was and is getting
become more important in our life. Since Viet Nam has joined WTO, there were many
foreign companies invested in Viet Nam. This leads to local company need more human
resources have ability to use English. Ho Chi Minh City is the biggest city in Viet Nam,
which is united culture center, developed economic, and education. Therefore, there are a lot
of English centers opened to meet demand of English studying for millions of students and
employees. Besides local English centers, many international group built and developed a
chain of English center such as Ila, AMA…They are big competitors to VUS, Outer-space
language, VAS, and others.
Due to developed society, expectation of customer about service becomes higher. They
demand more strict requirements. Therefore, the possibility which the service producers
deliver services in failure is bigger. Service failure is defined as those situations when the
service fails to live up to the customer‟s expectations (Michel, 2001). It is clear that service
failure is inevitable. When customers dissatisfy with service received then they will respond
by reaction such as emotional reaction (anger, disappointment, regret) or behavior reaction
(complaining, negative mouth to mouth or switching of these providers to others). The bad
case is that they will do negative mouth to mouth of services. It is coined that mouth to
mouth advertising is very effective and quick. Thus, the important is providers have to
handle complaints and resolve problems to maintain customers and avoid negative word of
mouth. Recently there have been many studies about this problem, they found out remedy
for service failure which helps company change lose to win. The one of effective therapies
to ease customer dissatisfaction is service recovery. When firms handle complaint and
failures effectively this can have a great effect on customer retention rates, defect the spread
of damaging word of mouth and improve bottom-line performance (Morrisson and
Huppertz, 2010). However, the degree of success might depend on the type of service
1


Chapter 1: Introduction
involved, the type of failure (Mc Dougall and Levesque, 1999) that appeared and the speed

of reaction. Several studies have found that good service recovery practices could lead to
higher loyalty, satisfaction and retention rates (Johnston and Michel, 2008; Millet et al.,
2000). Johnston and Michel (2008) have explored that service recovery has a positive
impact on process improvement as well as on customer‟s attitude and retention. Others
found that good relationships between customers and services providers after service
recovery are conducted successfully. Clearly, the effect of Service recovery has meaningful
in maintaining customers. If service recovery is ineffective or poor that triggers to
disappointment of customer again (failure in recovery). This may lead to the loss of
confidence in the firm and possible defection; consequently negative word of mouth
communication will spread significantly.
1.2 PROBLEM IDENTIFICATION
Service recovery refers to the actions taken by an organization to resolve the problems caused by
service failure (Gronroos, 1990). Some customers do not complaint even they dissatisfy with the
service (Stephens and Gwinner, 1998). However, it does not mean that they are happy with what
they received. The reasons for not complaining are plentiful which might lead to their belief of
service decrease significantly. Consequently, they will use other service or give a negative word
of mouth to their relatives, friends and the consequences are potentially devastating to a
company, resulting in increased “opportunity cost” (Fornell and Wernfelt, 1987 and Vorhees
et. al.,

2006),

lost market share and declining profitability (e.g. Estelami, 2000). Thus,

employers should have a sensible ability to recognize whether service delivery is failure or not to
give proper solution of service recovery. Since service failure is inevitable then clear explanation
of service failure should be recognized to employees and customers to help them curb
dissatisfaction of customers. In order to retain consumers, after a failure of delivery service then
providers have to fix their mistake by some actions such as apology, compensation, empathy,
explanation, replacement, .., called service recovery. However, an inadequate action can be

second failure. Thus, managers have to aware about what is service failure and effective service
recovery. Since necessary of service recovery is not examined accurately with service providers
in Viet Nam, the study aims to make clear the relationship between service recovery and
customer satisfaction and customer loyalty.
2


Chapter 1: Introduction
In order to more understand about effective service recovery, reserachers have ultilized justice
theory as the main framework for evaluating service recovery Procedure (McColl-Kennedy &
Sparks, 2003). A justice theory framework has gained popularity in explaining how customers
examine service providers‟ reactions to service failure/recovery. There are three dimensional
concept perceived in this theroy including distributive, procedural and interactional justice.
Recently, many researchers have studied the relationship between service recovery based on
multi-dimensional concept and customer satisfaction and loyalty.However, it is necessary to
study more deeply in vietnamese context and Education industry. Specifically, study aims to
analyze complainter‟s responses to service recovery on three these dimensions.
1.3 RESEARCH OBJECTIVES AND QUESTION
The purpose of study is to find out what predictors of service recovery influence on
customer satisfaction and customer loyalty toward English Education industry in Viet Nam.
The study will explore the relationship between interactional justice, procedural justice,
distributive justice and customer satisfaction after handling complaint, loyalty in the term
word of mouth and retention. This research is aiming to answer the following question:
How interactional justice impact on recovery satisfaction?
How procedural justice impact on recovery satisfaction?
How distributive justice impact on recovery satisfaction?
How service recovery effect on customer satisfaction and customer loyalty?
What process of service recovery that English center should pay attention to remedy service
failure?
Findings from this research will be helpful for English centers in Viet Nam in understanding

their customer requirements, deeper considering in serving customers, looking back what
they had then give some solutions to improve their services.

3


Chapter 1: Introduction
1.4 SIGNIFICANCE OF THE RESEARCH
Customer loyalty is concerned with the likelihood of a customer returning, making business
referrals, providing strong word of mouth, as well as offering references and publicity
(Bowen &Shoemaker, 1998).Thus, for a company maintaining and increasing customer
loyalty is very necessary. However, the question is how to raise customer loyalty. The
earlier studies proved there are positive relationships between service recovery, customer
satisfaction and customer loyalty. Since many results of previous research proved and
coined the positive relationship between good service recovery and customer loyalty (Tax at
el, 1998, Kim at el, 2003) then Service recovery is the most important factor to recover
service failure to customers.
Even though some variables of service recovery in fields such as hotel, restaurant, bookstore
online, auto mobile identified and studied the relationship between them and customer
satisfaction but in Education industry, especially the case in English center at Viet Nam have
been not conducted yet. The research aims to study the effect of perceived Justice including
three predictors of service recovery: interactional justice, Procedural justice, and distributive
justice on customer satisfaction and loyalty. Significantly, the research will find out how
each predictors impact on customer satisfaction. Because the influence of each factor on
satisfaction may be different then it is useful if we can evaluate exactly how interactional,
distributive, and Procedural justice affect on customer‟s perception about service recovery
quality. This helps Center to adjust and train employees clearer and more comprehensive the
important of their behaviors, communication, and response to customers when something
wrong occurs.

Thus, the research of service recovery will value with English center

generally.
1.5 RESEARCH SCOPE
This Study aims to analyze the influence of recovery service to customer satisfaction and
customer loyalty towards English teaching services. In order to find the relationship between
variables such as failure of serving, service recovery, customer loyalty, the research tends to
discover what customers(English learners) received from the services and how bad they feel

4


Chapter 1: Introduction
when they get a wrong services, how good they feel after the centers apply service recovery
or repair employee‟s treatments to customers. The research focuses on studying behavior
and purchasing habit and of English learners who are mostly students, white-collar
employees in Ho Chi Minh City.
1.6 RESEARCH METHODOLOGY
This research is applied the quantitative method which were reviewed the theoretical
background adaptable to the context. The study used integration between qualitative
research to predict variables and quantitative to statistic the number of questionnaires of
survey to conduct test. The data will be collected and then validated by Cronbach Alpha
Reliability Analysis and selected by Exploratory Factor Analysis. Final step is testing model
by using Multiple Regression Analysis by SPSS version 20.0.
1.7 LIMITATION
This research is focusing on the survey interviewed respondents who have been experienced
studying language at English centers in Ho Chi Minh City only. This study concentrates to
interview respondents which are students, white-collar employees. Data collection is
sending paper questionnaire and google.doc to all participants over one month. Due
convenience sample and the characteristic is not represent for all people then the findings

might not express exact representative opinion.
1.8 THESIS STRUCTURE
Chapter 1:
Introduction: This chapter includes a brief overview of the research background, problems
and objectives, methodology as well as the limitation.
Chapter 2:
Literature review and conceptual model: This chapter comprises of definition related to
English teaching service, deep review of previous researches on the service failure, service
5


Chapter 1: Introduction
recovery, customer satisfaction, customer loyalty and the basis of building conceptual
model.
Chapter 3:
Research methodology: This chapter shows the research process, measurement scale,
preliminary assessment of measures and data collection Procedurals as well as the data
analysis process.
Chapter 4:
Data analysis result and Discussion: This chapter consists of the official assessment of
measures, hypotheses testing, data analysis results and interpretation.
Chapter 5:
Conclusion and Implication:
This chapter will include the findings and providing the theoretical and managerial
implications and proposing specific recommendations for English center managerial level in
Ho Chi Minh City.

6

Chapter 2: Literature Review And Conceptual Model

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL MODEL
2.1 SERVICE RECOVERY
Service recovery can be defined as actions which designed to solve problems, alter negative
attitudes of dissatisfied customers, and lead to retain these customers (Miller et al, 2000).
This does not mean that service recovery just be useful in the case of troubles or
dissatisfaction. Service recovery help the firm to seek out and deal with service failure
(Johnston, 1995). What is seeking out and dealing with service failure, which take action to
distinguishes recovery from complaint handling, because there are many customers who
dissastisfy but not complaint. Instead, they just switch the service to another provider.
The greatest barrier that prevents service recovery done effectively is just only 5 – 10% of
dissatisfied customers choose to complain following a service failure (Tax and Brown,
1998). Instead, they choose the way to talk negative thing to third part (friend, relative, and
other consumers). There are some reasons that lead to customer complaint or not complaint
customer providers. Customers think that the organization will be irresponsive; they do not
wish to encounter the individual responsible for the failure; consumers are not sure about
their rights and the firm‟s obligations; the high cost in time and effort of complaining also
make them confused. Identifying service failure is difficult if customers do not make
comment. Thus, if the customer complains, it should be considered as a gift (Barlow and
Moeller, 1996). Careful listening to take right actions will return customers „belief and
loyalty. From this literature, company should believe that effective complain management
will help to improve consumer loyalty. Therefore, what companies need to do first is
encourage dissatisfied customers to complain. Bitner, Booms, and Tetreault (1990) found
that the way employee respond toward service failure directly relate to customer satisfaction
and dissatisfaction.
Findings from prior researches, service failures could be sorted into service delivery system
failures, gap between needs and requests, unprompted/unsolicited employee actions, and
problematic customers (Bitner, Booms, and Tetreault, 1990). While Lewis and
Spyrakopoulos (2001) stated service failures including organization Procedurals, mistakes,

7


Chapter 2: Literature Review And Conceptual Model
employee behavior, functional/technical failures, and actions/omissions of the organization
that are against the sense of fair trade. According to Lewis and Spyrakopoulous (2001),
although service failure is a catastrophic action which destroy customer‟s loyalty, but a
successful implement of recovery service could prevent defection of what consumers
experienced.
The necessity for service recovery is brought about by service failure. Smith el at (1999)
state service recovery “includes situations in which a service failure occurs but no complaint
is lodged by the customers” (p. 359). Thus, manager should aware of customer behaviors
and attitudes to define what they really expect. Recovery management is considered to have
an significant effect on customer evaluations because consumers tend to be more
emotionally involved in recovery service than in routin service encouter (Bitner et al, 1990).
Service recovery is proved that it affects customer satisfaction and, as a consequence,
customer loyalty (Smith et al., 1998; Tax & Brown, 1998). There are a lot of studies have
found that satisfaction with the service recovery directly influence on customer‟s intention
to repurchase and to recommend the service provider (Lewis & McCann, 2004; Maxham,
2001). Theory of Service recovery paradox showed that customer with experience of service
failure which received worth recovery from service recovery activities will be more satisfied
than customer did not involve a falling down of service. However, if service recovery is
inadequate to remedy failure then it is a second failure which is very serious.
Customers‟ satisfaction and future loyalty is dependent on customers‟ feelings on whether they
have been treated fairly or not. Customers expect a service recovery to be fair in order to
recover their satisfaction and loyalty. Literature on customer complaint management shows that
consumers expect “fair” resolutions to product and service failures (Blodgett et al., 1997).
Similarly, there are 3 factors that customers use to evaluate perception of Justice with the
service recovery including outcomes, procedural justice, and interactional treatment (Goodwin
and Ross, 1992, Smith et al., 1999). Smith et al. (1999) developed a comprehensive model of

customer satisfaction with service failure/recovery encouters and tested in restaurant and
hospital industries. They found that customers prefer to receive recovery that match with type
and magnitude of failure. Besides, Blodgett et al., (1997) suggested to evaluate customer
8


Chapter 2: Literature Review And Conceptual Model
behaviour after using recovery on three justice components: interactional justice, Procedural
justice and distributive justice. The effects of perceived justice with service recovery and
customer satisfaction has stated by a number of researchers.
Distributive justice (aiming on the outcome of the recovery process)
Procedural justice (the process undertaken is assess in order to enter in the final outcome)
Interactional justice (how the manner in which the process is implemented and what the
customer is received (Hoffman et al., 2000)
The connection between the varied justice dimensions is complex owing to their interactive
effects. Sparks and McColl-Kennedy (2001) conducted a research about the relationship
between procedural, interactional and distributive justice related to service recovery and
satisfaction; he found that satisfaction varied significantly depending on the various
combinations of recovery measures. Additionally, Ok et al. (2005) suggest that there were a
positive connection between three dimensions of justice and recovery satisfaction.
Similarly, Wirtz and Mattila (2004) demonstrate

that

recovery

outcome

(e.g.,

compensation), Procedurals an distributive justice impact on post-recovery satisfaction in a
restaurant setting.
2.1.1 Interactional Justice
Interactional Justice includes the way employees treat and communicate with consumers
during the complaint episode. There are six items have been studied: courtesy, honesty,
offering explanations, empathy, endeavor, and offering apologies (Clemmer, 1988; Tax et
al., 1998). The most recent conceptualization of justice suggests that interactional justice can
be divided into two dimension in analyzing comprised Interactional treatment and
informational justice (Colquitt, 2001; Mattila and Cranage, 2005). Informational justice was
considered by the perceived adequacy and truthfulness of information explaining the causes
of unfavorable outcomes (Colquitt, 2001). There were some researchers studied in restaurant
field about role of information in service failure situation. Customers expect to receive a
clear, suitable, comprehensive about the problems or any troubles that they had to encounter
in services. Information inadequacy increase consumer frustration (Susskind, 2005) and an
9


Chapter 2: Literature Review And Conceptual Model
informed choice go up customer loyalty following a service failure, as a result of customers‟
willingness to share responsibility (Cranage, 2004).
In order to examine the importance of service recovery to customer satisfaction in Education
field, this following hypothesis will be conducted.
H1: Interactional justice impact on customer satisfaction positively
2.1.2 Procedural Justice
The second dimension is Procedural Justice which concerns the policies and Procedurals
used by companies during complaint processes and include six items: flexibility,
accessibility, process control, decision control, response speed and acceptance of
responsibility (Blodgett et al., 1997; Tax et al., 1998; Thibaut & Walker, 1975). The speed
with which service failures are corrected or complaints are handled is one of the important
predictors of customer perceptions of procedural justice (Blodgett et al., 1997, Tax et al.,

1998). In service recovery context, procedural justice is consider as the customer‟s
perception of justice for several stages of Procedural and processes needed to recover
service failure (Mattila, 2001). Procedural justice concentrates on the way outcome is
reached.
In order to examine the importance of service recovery to customer satisfaction, this
following hypothesis will be conducted:
H2: Procedural justice has a positive effect on Recovery Satisfaction
2.1.3 Distributive Justice
Distributive Justice is emphasized by the equity theory. Distributive justice is the allocation
of benefits and costs between parties in a transaction. In the complaint context, distributions
are seen as tangible outcomes offered by the company to the complainer. As a result, many
service organizations have suggested compensation for dissatisfied customers by actions
such refunds, credits, discounts and apology to make peace. Or in some case, they can
combine these actions to ease customer anger. When an individual perceive that what they
10


Chapter 2: Literature Review And Conceptual Model
receive is not equitable then they feel distress (Waster et al., 1973), which in turn motivates
him/her to restore the distributive justice. Researchers found that justice perception in
tangible outcomes has an positive effect on recovery evaluation ( Boshoff, 1997; Goodwin
& Ross, 1992; Hoffman et al., 1995; Smith et al., 1999). Distributive justice was measured
by “fairness”, “justice”, “need”, “value”, and “reward” of outcome by some researchers
(Smith et al., 1994; Wirtz & Mattila, 2004).
In order to examine the importance of service recovery to customer satisfaction, this
following hypothesis will be conducted.
H3: Distributive justice impact on Recovery Satisfaction positively
2.2 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY
2.2.1 Customer Satisfaction
Although there were a lot of research on satisfaction but a definition of satisfaction is not

agreed in common for this concept. Oliver (1997) addresses this definitional issue by noting
that “Everyone knows what satisfaction is until asked to give a definition. Then it seems,
nobody knows” (p.13). Most of consumer satisfaction perceived as an evaluate process.
Particularly, customer satisfaction was considered as a summary concept such as fulfillment
response (Oliver, 1997), overall evaluation (Fornell, 1992), summary attribution
phenomenon (Oliver, 1992).
Researchers portray customer satisfaction as either cognitive or an affective response.
According to Westbrook and Reilly (1983), satisfaction is as an emotional response, while
others consider satisfaction as a buyer‟s cognitive state (Howard and Sheth, 1969). Halstead,
Hartman, and Schmidt (1994) considered customer satisfaction as an affect response that
focuses on product performance against some pre-purchase standard during or after
consumption. Besides, there are some definition of satisfaction which is a mixed of response
including both cognitive and affective dimensions (Oliver, 1997).

11


Chapter 2: Literature Review And Conceptual Model
According to Oliver (1997), customer satisfaction is believed to link to loyalty and drive to
the firm‟s profitability. When customer feel satisfied they tend to re-purchase products and
even they advertise the service to others. The basic idea is that satisfaction enhance
profitability by expanding the business by increasing market share, earning customer
loyalty, improving a brand‟s reputation by talking positively about service with their
relative, friend or recommend the service to other customers. This lead to the firm can sell
more product and rising margins and other strategies (Barsky and Nash, 2003). Research
based on the American Customer Satisfaction Index supported empirically that customer
loyalty is positively related to customer satisfaction (Fornell, Johnson, Anderson, Cha, &
Bryant, 1996). Thus, some previous studies reported a relationship between satisfaction and
loyalty.
2.2.2 Customer Loyalty

Customer Loyalty is considered commonly as consumer‟s behavioral loyalty and attitudinal
loyalty (Parasuraman et al., 2005). Behavioral loyalty is expressed as repeated transactions,
or called percentage of total transactions in category). Thus, it can be measured by
observation. Attitudinal loyalty is often defined as positive affect toward both continuance
of the relationship and the desire to remain customer‟s trust with the firm, and is also
defined as equivalent to relationship commitment. Questionnaire method is used to measure
attitudinal loyalty.
Researchers addressed that customer loyalty express through behavior of customer which
usually has satisfaction of service quality. Customer loyalty is recognized as the actual
repurchase behavior of a customer as the behavioral aspect, mostly attitude and behavior are
consistent, and that attitude refers future behavior. Reichheld and Sasser (1990) stated the
company just retains 5 percent more its customer then the profit can increase by 25 percent
to 125 percent. Then, it is believable that there is a positive correlation between loyal
customers and profitability. Belief of customers to product will reinforce them to consume
goods more. When ones trust the company, they will be willing to welcome and buy new
launches. This helps the company save advertising cost. In addition, word of mouth is very
effective way to bring product to consumers. Thus, companies should adjust their strategies
12


Chapter 2: Literature Review And Conceptual Model
to hold customers to achieve optimal customer value delivery as customer value including
costs and benefits of keeping for a company.
Oliver et al. (1997) define customer loyalty as:
A deeply held commitment to re-buy or re-patronize a prefrred product/service consistently in the
future, thereby causing repetitive same-brand or same brand-set purchasing despite situational
influences and marketing efforts having the potential to cause switching behaviour.
In general, there are three distinctive approaches to measure loyalty:
1 behavioral measurement;
2 attitudinal measurement; and

3 composite
The third approach, composite measurements of loyalty, combines the first two dimensions
and measure loyalty by customers' product preferences, propensity of brand-switching,
frequency of purchase, regency of purchase and total amount of purchase.
Loyalty and satisfaction are related, although also clearly distinct. In some studies,
researchers have found that higher satisfacton has been proposed to be related higher
loyalty. (Morrisson and Huppertz, 2010; and Sousa and Voss, 2009).
The hypothesis is identified as follow:
H4: Recovery Satisfaction has a positive effect on Loyalty
2.3 CONCEPTUAL MODEL
The effect of service recovery on customer satisfaction and customer loyalty was conducted
in some previous research. However, these studies took place mostly in Europe and
American. Less attention has been devoted to the effects of service recovery on consumer
satisfaction and customer loyalty in Viet Nam context. Thus, this study aims to contribute a
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Chapter 2: Literature Review And Conceptual Model
growing understanding of the importance of service recovery by examining the relationship
between service recovery, customer satisfaction and customer loyalty in English Education
environment
In order to improve or remedy service failure, managers should understand types and cause
of service failure to have the best strategy. This study aims to investigate following this
conceptual framework.

Interactional
Justice

H1

Procedural
Justice

H2

Distributive
Justice

H3

Recovery
Satisfaction

Figure 1: Conceptual Model

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H4

Consumer
Loyalty


Chapter 3: Research Methodology

CHAPTER 3: RESEARCH METHODOLOGY
This research aims to inherit results of previous research then the data collection will
conducted by combination of qualitative and quantitative research through individual
interview and questionnaire survey. In order to be convenience for respondents then the
survey will be conducted by both paper and online.

The research process of this study was conducted as Figure 2 below:
Literature review
Interview
Develop theory model
Develop model
Design first draft questionnaire

Pilot Sample size n=30

Final Questionnaire
Main survey

Sample size n=130

Cronbach‟s Alpha analysis

To evaluate the reliability of
measurement

Exploratory Factor Analysis

To evaluate validity of items

Testing Hypotheses by Multiple
Regression analysis
Conclusion and Managerial
Implication

Figure 2: The process of research

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Chapter 3: Research Methodology
3.1 QUALITATIVE RESEARCH
In the first step, a interview was conducted to 10 respondents (1 student in FPT University,
one in economics and one in international university who studied English at ILA, 1 in
Economics University but studied English at EL center, 1 studied at VUS, 1 student in Law
University and one in economic who studied in VAS, 3 students in ISB who studied English
at other center) to defined appropriate variables in Viet Nam context, especially English
center. The primary study was conducted at universities such as university of economics,
RMIT university, international University, FPT University, some participants from Viet tin
bank and master classes of ISB (international school business). This step helped the author
had a general view about the research problem and considered situations of English centers
in Ho Chi Minh City. The results collected from interviews showing that when learners
experienced a course of English in center, they encountered some kind of service failure
such as unexpected course delay or unenthusiastic teachers, inappropriate level
arranging…and when they complained to employees, they did expect more than what they
received or even they did not complain because they thought employees would not fix the
problems then they just switched services. While 9 out 10 had ever met some unhappy
situation in English center, only one felt really satisfied with the service come from British
Council, who experienced 1 course. They also provided information about the way
employees get complaints and solve them. Most of them said that after a service failure,
centers try to fix it but they do not really work and adapt customer‟s expectation. From
interviews, the results received that response speed of situation might different among
centers and cases. Besides, 3 out 10 stated that service recovery at centers are good, 5
respondents felt poor, 1 for very poor and 2 for very good.
Next step based on previous research about the impact of perceived justice on customer
satisfaction and loyalty, the authors established 4 hypotheses of the study. After that, the
author adjusted the model and provides the preliminary the scale for questionnaire of the

study.
Finally, the qualitative research gave the meaningful result that all scales were clearly
understood by the respondents. The respondents agreed that these items and concept in the
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