a cross-national comparison of consumer perceptions of service recovery.pdf

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A Cross-National Comparison of ConsumerPerceptions of Service RecoveryKyuho LeeMahmood A. KhanJae-Youn K o

ABSTRACT . This paper explores the cross-cultural impacts of service recoveries such as the con-sumer propensity to spread positive or negative word-of-mouth about casual dining restaurants.Am erican and Korean con sum ers were comp ared in an effort to identify w hether they had any dif-ferences or sim ilarities in the effects of service recovery in terms of word-of mouth and future pa-tron age . The results of the study reveal that consumers have different be haviors on service recoveriesin terms of future patronage , word-of-mouth intent and loyalty according to their culture. In general,Korean con sum ers' word-of-mouth intent, patronage, and loyalty tended to increase mo re significantlythan those of American customers after successful service recoveries. doi:10.13(X)/J073v24n01_01 [Ar-ticle copies available for afee from The Haworth Document Delivery Service: 1-800-HAWORTH. E-mail ad-dress: Website: 2008 by The HaworthPress. All rights reserved.]KEYWORDS. Service recovery, service failure, word-of-mouth communication, loyalty

U.S. restaurant chains have expanded their tic m arket's growth rate, 6.3% , in 2005operation globally at a rapid pace due to fierce (Technomic Inc., 2006). As more and moredomestic competition, market saturation, and Am erican restauran t chains are expected tocontinuing economic downturn in the U.S. Ac- expand to global markets, developing and im-cording to Technom ic's report, approximately plementing successful global service strategies120 U.S. restaurant chains operate 48,000 res- according to the characteristics of each markettaurants abroad, which have generated a total of is necessary in order to succeed in foreign mar-$40 billion (Mehegan, 2002). With growing kets (de Mooji, 1998; Khan, 1999).domestic competition and market saturation. In particular, creating a competitive servicetheU .S.restau rantindustry needstoex plore in- recovery strategy is crucial in maintaining atemational m arkets in order to grow (Sack, high level of service quality as well as cus-2001). For instance, the United States' top 100 tomer satisfaction because service or productrestaurant chains' international sales increased failures are unavoidable. Furthermore, Becker,8.5 percent in 2005, which outpaced the domes- Murrmann, Murrmann, and Cheung (1999) as-Kyuho Lee is Assistant Professor, Department of Management and International Business, Western CarolinaUniversity, 219 Belk Building, Western Carolina University, Cullowhee NC 28723 (E-mail: klee@em ail. wcu.edu).Mahmood A. Khan is Professor, Department of Hospitality & Tourism Management, Pamplin C ollege of Business,Virginia Tech, 7054 Haycock Road, F alls Church, VA 22043, USA (E-m ail: [email protected]). Jae-Youn K o isAssistant Professor, College of Tourisrn & Hotel Management, Kyung-Hee University, Hoegi-dong, Dongdaemun-gu, Seoul, Korea (E-mail: [email protected]).

Journal of Travel & Tourism Marketing, Vol. 24( 1 ) 208Availahle online at http://jttm.haworthpress.com 2008 by The Haworth Press. All rights reserved.doi:10.1300/J073v24n01 01 1


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JOURNAL OF TRAVEL & TOURISM MARKETING

serted that consumers' service expectationsdiffer significantly on the basis of their culture.U.S. restaurant chains need to develop custom-ized service design in such a way as to maxi-mize consumers' satisfaction.How ever, very little research has focused onthe cross-cultural aspects of service recovery,even though a number of researchers (Davis,1998; Hart, Heskett, & Sasser, 1990; Leong &Kim, 2002; Maxham, 2001; McDougall &Levesque, 1999; Sundaram, Jurowski, & Web-ster, 1997 ; Swanson & Kelley, 2001 ) have beeninvestigating a variety of subjects related to ser-vice recovery. As a growing number of U.S.restaurant chains place im portance on interna-tional m arkets as part of their growth strategy inthe global economic era, the need for a globalperspective on the understanding of service re-covery has become more important (Becker,2000).The purpose of this study is to compareAm ericans with Koreans in order to investigateif the perception and preferences of service re-covery differ between these countries. In addi-tion, tiie study will examine how culture canaffect word-of-mouth intent and loyalty withrespect to service recovery. Furthermore, thisstudy focuses on service recovery in casual res-taurants because the casual dining restaurantsegment involves more service interactions be-tween customers and service providers in com-parison to the situation in fast-food restaurants,thereby allowing researchers to investigate theunderlying dimensions of service recovery indetail (Khan, 1999).Koreans were chosen to compare withAm erican consumers because K orea is one ofthe fastest-growing international markets forU.S. restaurant firms (W. G. Kim & Chon,2003). A merican casual restaurant chains havebeen successful in Korea because of Americanrestaurant chains' well-developed operationsystems, high quality service, and Korean pref-erences for Am erican brand restaurants (W. G.Kim & Chon; Nam, 2002). For instance, cur-rently there are over 100 Outback Steakhousesin Korea, a country whose size is almost thesame as that of the state of Indiana.An additional cultural difference betweenAm erica and Korea is aligned with the purposeof the study. According to Hofstede's study(2001), Korea belongs to a high coUectivistic

and high uncertainty avoidance society, whereasAmerica is highly individualistic and less of anuncertainty avoidance society.The research is designed to answer the fol-lowing questions:

How does culture influence the percep-tions of service recovery? Are there any different preferences of ser-vice recovery between Americans andKoreans? Are there any significant relationships be -tween culture and word-of-mouth intentas well as loyalty after receiving eithersatisfactory or dissatisfactory service re-covery?

UTERATURE REVIEWImpact of Culture Over Service Recoveryand Word-of-Mouth

Word-of-mouth communication providesface-to-face, often vivid information, which ishighly credible. This information can influenceothers' beliefs about a particular restaurant, andtheir intentions to pu rchase from there. Restau-rants and Institutions surveyed over 1,400consumers to identify factors which influenceconsumers' restaurant selections. Respon-dents indicated that a recommendation fromfriends or relatives is the most impo rtant factorwhen they selected a restaurant (Hume, 2003).The survey also indicated that a positive evalu-ation of a restaurant from friends or relativescould influence the ir decision mo re pow erfullytiian TV or radio advertising. Hoffman andChung (1999) examined the impact of dissatis-fied customers' word-of-mouth patterns. Ac-cording to their study, dissatisfied customerswere strongly disposed to spread negativeword-of-mouth to their friends and familymembers. About seventy-five percent of res-taurant customers shared their negative serviceexperiences with friends or family, w hile only38 % of restaurant customers shared their goodservice experiences with others. The study sug-gests that restaurant operators need to correctany service mistakes or errors before the cus-tomers leave their restaurants because these er-rors mightinfluence future pa trons'd ecisio ns.


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Susskind (2002) argued that equity theory isthe principal mechanism by which consum ersevaluate service outcomes against their ser-vice expectations. Equity theory suggeststhat consumers evaluate service experiencesby assessing the balance between what theyreceive and what they expected. With therapid development of the Internet, the impact ofword-of-mouth has become powerful as therenow exists a non-confrontational option fornegative feedback. Unlike past consumers whowere able to spread their service experiences toonly a limited number of their close acquain-tances, recent customers can express their ser-vice experiences easily on a website. Thisoption gives global Internet users access to anyof the word-of-mouth information posted to theInternet (Swanson & Kelley, 2001).Eccles and Durand (1998) claimed that cus-tomers who have experienced a good servicerecovery were likely to share that experiencebecause of psychological reciprocity. Reci-procity is a term describing the psychologicaltendency of humans who want to return the fa-vor when they receive something that theyconsider good. For example, consumers whoreceived a good service recovery m ight returnthe favor by returning to the restaurant orspreading positive word-of-mouth. Max ham'sstudy (2001) suggested that effective servicerecovery might facilitate consum ers' future re-purchase intent, whereas ineffective servicerecovery could discourage that intent. A moderateor high service recovery is positively correlatedto high customer satisfaction, repurchase in-tent, and positive-word-of-mouth.

Culture has influenced consumer servicevalue systems, expectations, and preferences(Donthu & Yoo, 1998; Stauss & Mang, 1999;Winsted, 1997). An essential element of theservice industry is frequent dynamic interac-tion between employees and customers; with-out customer participation, service canno t bemade. Since customers play an important rolein the produc tion of the service process by be-ing involved in the service delivery process,cultural factors could play an important rolein evaluating service, unlike situations inwhich customers purchased products w ithouthuman interaction (Stauss & Mang). These dif-ferent cultural values lead consumers to havedifferent service expectations and evaluations

(Becker et al., 1999; Cheung, Murrmann,Murrmann, & Becker, 2004 ; Winsted).For example, Asian consumers placed morevalue on the professional service dimensionsuch as courteous service style because mostAsian countries have hierarchical status sys-tems. At the same time, the dimension of cor-diality, which involves eye contact andfriendly service, was more valued in the U .S.because the U.S. has a low power distanceamong peo ple; thus, failure to make eye con-tact rriight rela te to a shame or gu ilt (Becker etal., 1999). As customers have different serviceexpectations according to their culture, theculture might influence consumers' servicerecovery p references. For exam ple, in h ierar-chical Asian societies in which status is empha-sized, a managerial apology as a service recoverymethod might be preferred rather than an em -ployee's apology.

Hall and Hall (1990) claimed that the type ofcommunication context is a major factor differ-entiating Western culture and Asian culture.They developed a context in which one canbetter understand cultural differences andproposed that context be the informationsurrounding an event. According to the au-thors, peop le from a high-co ntext culture of-ten tended to exchange information andshare personal stories with each otherwillingly and quickly because most of thecountries that have a high-context cultureemphasize group-oriented and collectivisticthought. Korea and Arabic countries belong tohigh-context cultures. In contrast, people inlow-context cultures, such as Americans andWestern Europeans, usually do not share per-sonal or other information between people;such cultures respect privacy between col-leagues and friends. Those countries are moreindividual-oriented, while countries like Koreaand Japan are group-oriented.D. Kim, Pan, and Park (1998) verifled Halland Hall's description of high and low-contextcultures through an empirical study. They con-flrmed that Korea and China are countries thathave a high-context culture whereas A merica isa country with a low-context culture. Based onHall and Hall (1990), as well as D. Kim et al., itcan be predicted that Korean consum ers in thishigh-context culture are more likely to sharetheir restaurant service recovery experience


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with their acquaintances because people inhigh-context cultures tend to share their per-sonal information with friends and relatives.On the other hand, A merican consumers, posi-tioned in a low-context cu lture, are less likelyto share their restaurant service experienceswith their acquaintances because people in alow-context culture tend to be hesitant in shar-ing personal information with acquaintances,de Mooij (1998) claimed that people inhigh-context cultures are more likely to gatherinformation through their social network (e.g.,family, friends, and colleagues), while peoplein low-context cultures tend to collect informa-tion through more objective means (such asdata and books). In general, people in high-con-text cultures belong to a collectivistic society,whereas people in low-context cultures belongto an individualistic society (Hofstede, 2001 ).Consumers' Complaint Behaviors

Hart et al. (1990) suggested that listening tocustom ers' complaints is the firststep for a ser-vice company to improve service quality andsolve service problems. How ever, dissatisfiedcustomers often tend not to complain; rather,they prefer to leave and choose a competitor(Spreng & Mackoy, 1996). Plymire (1991)pointed out that one of the reasons that themajority of customers were not willing tocomplain is because they are hesitant to re-veal personal feelings to other peop le in pub-lic. Subsequently, it is necessary for servicestaff or managers to encourage customers'complaints to see if problems can be solved incases of service failures. Consumers' com-plaints allow servicefirms o solve problems ifthere are any service problems or service fail-ures. About94% of customers would be w illingto express their problems in cases in which em-ployees facilitate customer complaints proacvely(Plymire).

In spite of the growing importance of com-plaint handling, many service firms have notdeveloped competitive complaint handlingstrategies (Gilly, Stevenson, & Yale, 1991).Compared to the manufacturing industry, inwhich the organizational structure regardingconsum ers' complainthand linghas been estab-lished systematically, the service industry,whose organizations typically involving many

hierarchical structures, have not developedsustainable strategies to handle consumers'complaints effectively (Hart et al., 1990). Forinstance, most major manufacturing firms runa department that deals with consum ers' com-plaints; consumers are able to make their com-plaints simply by contacting the department byphone, letter, or email.Tax, Stephen, and Chandrshekaran (1998)argued that there is a strong relationship be-tween consum ers' perceived fairness and con-sumers' complaint behaviors. According toTax et al., there are three different types of fair-ness that are involved in the process of consum-ers' complaints. These types of fairness includeinteractional justice, procedural justice, anddistributive justice. Interactional justice is re-lated to fairness in interpersonal treatment by aservice operator during a complaint process.For example, consumers are often frustratedbecause ofthe way they are treated by rude ser-vice employees. Procedural justice is related tothe fairness ofthe complaining process. Typi-cally, the time-consuming and rigid nature ofthe complaint handling process could leadconsumers to perceive a low level of proce-dural justice (Taxetal.). Distributive justice isrelated to the outcomes or benefits that con-sumers receive from a service operator, due toinitial service failures. Tax et al. further pro-posed that these three types of ustice inuence.consumers' satisfaction significantly duringthe complaint handling process.Richins (1983) found that dissatisfied cus-tomers who complained about their unsatisfac-tory service experiences to service operatorswere more likely to return to the same serviceestablishments, compared to dissatisfiedcustomers who did not express their dissatis-factions to service operators. In addition, cus -tomers are more likely to engage in spreadingnegative word-of-mouth if service firms' ser-vice recovery efforts are limited concerningconsumers' complaints of initial service fail-ures.Cross-Cultural Perspective of Complaintsand the Relationship Between Complaintsand Service Recovery

According to Huang, Huang, and Wu(1996), culture infiuences the pattern of con-


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sumer complaint strongly. These researchersinvestigated the relationship between culturalcharacteristics and responses to unsatisfactoryhotel service by analyzing differences betw eenJapanese and American customers. Japanesecustomers were more likely not to complainabout poo r hotel service; they simply refused toretu m to the hotel (Fields, 2000; Huang et al.).Meanwhile, Anierican customers tended tocomplain directly about service failure. In thespirit of American individualism, Americansvalue freely ex pressing the ir opinions in pub lic.These differences in complaint pattern towarddissatisfactory service result from differentcultures. In general, Asian culture is stronglyaffected by Confucianism; complaining aboutsom eone in public is not valued socially, sincekeeping social harmony is important.

In Ko rea, which is influenced by Confucian-ism, consumers are more likely to be conscien-tious toward others and be moral in front ofothers because of the value placed on societalharmony (Na & Marshall , 1999). Com plainingto someone in public might lead to hum iliationfor someo ne, which is considered im polite andrude in Korea. For exam ple, if a custom er w asnot satisfied with poor service in a restaurant,he/she m ight not com plain about the poor ser-vice to a server or a man ager bec ause the cus-tomer w ould not wan t to hum iliate the server ormanager in public. Consequently, managersand employees in Korea need to be trained todetect and ad dress initial service failure, sinceKorean customers are less likely to complainabout service failures than American custom-ers.Mueller, Palmer, Mack, and McMullan(2003) compared American consumers' att i-tudes about service recovery and complaint be-haviors with Irish consumers' perceptions ofservice recovery and complaint types. The re-

sults of the study indicated that there are littledifferences between American and Irish con-sum ers ' attitudes abou t service failures and ser-vice recovery. The authors concluded thatAm erican an d Irish culture are veiy similar; asmight be expected, there are not many differ-ences between the two countries ' consumers.Wong (2003) investigated how culture influ-ences consum ers' service recovery perceptionsand preferences. Wong adopted Hofstede'scultural dimensions (such as power distance

and individualism) to see how H ofstede's cul-tural dimension affects consumers' servicerecovery preferences. The results of the studyrevealed that consumers' cultural values areclosely related to consu mers' att itudes tow ardservice failures and service recovery prefer-ences. For exam ple, an apology is a mo re effec-tive service recovery strategy than compen sationin high-power distance cultures. On the otherhand, compensation appeals to consumers inlow-power distance and high individualisticcultures such as the U . S . W ong claimed that thesocial status between consum ers and cu stomersis very high in high-power distance cultures,and that consumers in high-power distance cul-tures tend to look for intangible service recov-ery from restaurant operators.Yuksel, Kilinc, and Yuksel (2006) investi-gated if there were any significant differencesamong Turkish, British, Dutch, and Israelitourists ' complaint behaviors in a hotel. Theresults of the study found that culture plays asignificant role in consumers' complaint be-haviors. For instance, in comparison to T urkishtourists, British tourists are mo re likely to com-plain to staff or write a complaint letter to thehotel in the event of service failures in hotels.

METHODInstrument

A critical incident technique (CIT ) was u sedto explore the cross-national impact of servicerecovery on repurchase intent, loyalty, andwo rd-of-mo uth intent after a restau rant's initialservice failure. CIT has been employed bymany researchers (Bitner, Boo ms, & T etreault ,1990; B . Chung & Hoffman, 1998; Hoffman &Chu ng, 1999; Kelly, Hoffman, & Dav is, 1993;Susskind, 2002). It is an appropriate researchmethod in discovering the underlying sourcesof satisfaction and dissatisfaction in serviceencounters (Bitner et al.).

In order to develop the service recovery clas-sification, an extensive categorization processfor each of the critical incidents w as first und er-taken. This process included the followingsteps: half of the respon dents in both Korea a ndthe U.S. were asked to report a service failureincident which eventually was resolved via the


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good service recovery approach. The other halfof the respondents in both Korea and the U.S.were asked to report service failure incidentsthat resulted in dissatisfaction. Because cus-tom ers' w ord-of-mouth intent, loyalty, and fu-ture patronage differ based on their satisfactionof service recovery after initial service failures,two different types of survey questionnaireswere developed based on previous studies(Bitner et al, 1990; Leong & Kim, 2002;Maxham, 2001; Swanson & K elley, 2001).Questionnaire A was designed to identify theimpact of satisfactory service recovery; the re-spondents were asked to report a satisfactoryservice recovery experience in a casual restau-rant that resulted in increased satisfaction andloyalty towards the restaurant.Questionnaire Binvestigated the effect of unsatisfactory servicerecovery; respondents were asked to describetheir negative service experiences due to inap-propriate handling of service recovery in acasual dining restaurant, which resulted in de-creased satisfaction. Initially, questionnaireswere developed in K orean; the questionnaireswere then translated into English. The d etails ofquestionnaire A 's items are as follows:

A brief description of the service failurethat resulted in satisfactory service recov-ery in a casual dining restaurant. Three items measuring overall satisfac-tion with the service recovery, the type ofservice recovery that customers received,and the type of service recovery that theywould have liked or preferred to have re-ceived. One item measuring consumer intent tospread positive word-of-mouth regardingthe service recovery that they received ona scale of 1 to 7, with 7 being "stronglyagree" and 1 being "strongly disagree." Two items relating to consum er future pa-tronage of, and loyalty to the restaurant ona scale of 1 to 7, wii 7 being "stronglyagree" and 1 being "strongly disagree." Respo ndents' demographic information,such as gender, age, marital status andschool year.

The only difference between questionnaireA and B is that subjects entailed describing ser-vice failure experiences which resulted in a sat-

isfactory service recovery in questionnaire Awhile subjects needed to describe service fail-ures which resulted in satisfactory service re-covery experiences in questionnaire B.In order to assure comparable results, the re-search limited the respondents' service recov-ery experiences to U.S. casual dining restaurantchains such as Outback Steakhouse andBennigan's, which are also popular in Korea.The definition of casual restaurant is explainedon the qu estionnaire of the study based on a def-initionfromNation's R estaurant News (Duecy,2006) as follows : casual dining signifies restau-rants that have table service, serve liquor, andhave a per-person check average of $ 14 or lessfor lunch and $22 or less for dinner. Outback

Steakhouse and Cheesecake Factory are someof examples in the casual dining restaurant seg-ment. Subjects of the study were instructed torecord any service failures which w ere critical.Before the data were collected, the question-naires w ere pilot-tested to detect any errors orunclear components. Forty American under-graduate students majoring in hospitality man-agement at a state university participated in thepilot test. Twenty Korean undergraduate stu-dents majoring in hospitality management at ametropolitan university in Seoul, South Koreaparticipated in the same pilot test. The results ofthe pilot test indicated that both questionnaire Aand B were understandable and easy to read.After adequate knowledge and training withthe method, one doctoral student in Korea andone in the U nited States collected critical inci-dents from respondents during the months ofSeptember and October 2003. After the datawere collected, the researchers sorted the datausing the incident classification system of theCIT, which was used by B. Chung and Hoffman(1998) as well as Bitner et al. (1990). The threeservice categories selected were: {\) Servicedelivery system failures; (2) Employee re-sponse to imp licit or explicit customer requestsand (3) Unprompted and unsolicited em ployeeactions. The first category, service deliverysystem failures, included product defects,slow service and facility problems. The sec-ond category, employee response to implicitor explicit customer requests, included em-ployee response to customer special requestssuch as the omission of special food ingredi-ents. The last category was about unp rompted


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and unsolicited employee actions, which con-stitute behavior by employees that is unex-pected and unwelcome by customers.Participants

A total of 300 copies of questionnaire A weredistributed to American and Korean universitystudents and a total of 300 copies of question-naire B were distributed to American and K o-rean university students. For questionnaire A,satisfactory service recovery case, 88 question-naires were received from Americans and 79questionna ires were collected from K orean stu-dents. For questionnaire B, 86 questionnaireswere collected from American students while72 questionnaires were collected from Koreanrespondents.

RESULTSParticipants

Most of the respondents in both countrieswere single (American respondents: 98%; Ko-rean respondents: 96%). The majority of theAmerican respondents were aged between19-25 years old. Only two percent ofthe Ameri-can respondents w ere between 26 and 35 yearsold. On the other hand, eighty-two percent ofthe Korean respondents were between 19-25years old, while 16% ofthe Korean respondentswere between 26-35 years old. Fifty-six per-cent of the American respondents were female ;60% of the Korean respondents were female.The demographic profiles of both Americanand Korean respondents w ere similar and wellmatched, which led the results ofthe study to bevalid.Research Method

In an effort to examine the research ques-tions, Chi-square tests, t-tests, and ANOVAtests were used. The results ofthe study are pre-sented in the following section. To ensure if thedata of the study meet the assumptions of thestatistical tests required in t-tests and ANOVAtests, normality tests were conducted using his-tograms. The analysis of histograms indicatedthat the data are normally distributed, which

satisfies the assumption of t-tests and ANOVAtests.Service Failure Results

Table 1 summarizes the types of restaurantservice failures based on the responses re-ceived. This service failure classification wasdeveloped founded onB itne reta l.'s (1990) ser-vice failure classification, which has been usedwidely among service researchers. The servicefailure classification includes three categories:service delivery failure, employee failure to re -spond customers' requests, and unpromptedand unsolicited em ployee actions or attitudes.As shown in Table 1, more than 50 percent ofservice failures were related to a service deliv-ery system failure in both countries (America:56.8% in satisfactory service recovery, 50% inunsatisfactory service recovery; Korea: 77% insatisfactory service recovery, 59% in unsatis-factory service recovery). Within the servicedelivery system failure, product defects werethe mostfrequently-mentionedfailure by bothAmerican and Korean respondents. In the cate-gory of employee failure, the failure of em-ployee response to customer special requestswas the least-mentioned service failure by bothAmerican and Korean respondents (Americasatisfactory service recovery: 9%; unsatisfac-tory service recovery: 14%; Korean satisfac-tory service recovery: 3.8%; unsatisfactoryservice recovery: 11.1%).

In the "unprom pted" category, service fail-ure caused by the mishandling of orders wasmostfrequentlymentioned by both the Ameri-can (14.8%) and Korean (13.9%) respondentsin satisfactory service recovery cases.Type of Service Recovery Receivedand Preferred Service Recovery

Respondents were asked to record the type ofservice recovery that they received regardingthe initial service failure as well as the servicerecovery that they would have preferred to re-ceive. Table 2 outlines the satisfactory servicerecovery case, summarizing the type of servicerecovery that the respondents received, as wellas the service recovery that was preferred.As seen in Table 2, half of the Am erican re-spondents received free meals, followed by a


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TABLE 1. Service Failure Classification by Type of Incident Output

Category of servicefaillira

SatisfactoryN (%)

Type of incident OutputAmerica

UnsatisfactoryN (%) SatisfactoryN (%)Korea

UnsatisfactoryN (%)

ProductdetectsTastes of foodHair or material inthe food

Unreasonabiy siow or unavaiiableserviceFacility and silverware problems(restaurant is dirty, noisy)Menu is not availableSpiii water or food, or sauce

Group 1. Total

Group21 (23.9)

7 (8.0)17(19.3)

1(1.1)1(1.1)3 (3.4)

50 (56.8)

1. Service delivery16(18.6)

8 (9.3)15(17.4)

2 (2.3)2 (2.3)43(50)

25 (31.6)17(21.5)12(15.2)

3 (3.8)

4(5.1)61 (77.2)

14 (20.9)12(17.9)

9(13.4)3 (4.5)1 (1.5)1 (1.5)

40 (59.7)Group 2. Em ployee response to customer requests (professionalism)Adding or omitting special ingredients

Request speciai cooking (steaktemperature)Seating probiems (handling w aitinglists, reservation)

Group 2. Total

1(1.1)5 (5.7)2 (2.3)8(9.1)

1 (1.2)7(8.1)4 (4.7)12(14)

1 (1.3)2(2.5)

3 (3.8)

1 (1.5)6 (9.0)

7(10.5)Group 3. Unprompted and unsolicited em ployee actions or attitude

Employee behaviors such as attentionpaid to customers or kindnessO rd er pro ble ms W ro ng ord er

Lost orderErrors in bill

Group 3. TotalGrand total

10(11.4)13(14.8)

5 (5.7)2 (2.2)

30(34.1)88

15(17.4)9(10.4)

6 (7.0)1(1.2)

31 (36.0)1 86

3 (3.8)11 (13.9)

1 (1.3)15(19.0)

79

10(14.9)8(11.9)

1 (1.5)1 (1.5)

20 (29.8)1 67TABLE 2. Comparison of Type of Service Recovery Received and Preferred Service Recovery Am ongAmerican and Korean Respondents Based on Satisfactory Service Recovery Experiences

Recovery typeFree mealReplacementManagerial ApologyDiscountEmployee apologyCouponOthers

Received Service RecoveryAmerican

A/(88)50.0%15.9%13.6%9.1%5.7%5.7%

KoreanA/(79)16.5%26.6%21.5%16.5%15.2%3.8%

Preferred ServiceAmerican

A/(88)52.3%11.4%4.5%12.5%3.4%5.7%10.2%

RecoveryKoreanA/(79)44.3%11.4%16.5%17.7%3.8%6.3%

food replacement (32.9%) and a managerialapology (30.5%). More than half of the Am eri-can respondents (52.3%) indicated that their pre-fened service recovery was a free meal. Theleast-preferred service recovery types among the

American respondents were an employee apo l-ogy (3.4%) and a coupon (5.7%). Other types inTable 2 included the following: the subjectswould receive both a free meal and a m anage-rial apology or an em ployee apology together.


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In contrast to A mericanrespondents, K oreanrespondents indicated that food replacement(26.6%) was the service recovery that they re-ceived most often, followed by a managerialapology (21.5%) following their satisfactoryservice recovery experiences. However, Ko-rean respondents pointed out that a free meal(44.3%) was the service recovery that theywould most prefer as a service recovery, fol-lowed by a discount (17.7%). A Chi-squaretest was conducted to see if there is a signifi-cant difference statistically between Am ericanand Korean respondents. The results of theChi-Square test indicated that the type of ser-vice recovery received in the event of satisfac-tory service recovery is significantly differentbetween American and Korean subjects, x^ (5, N= 167) = 23.28, p < .001. Also, the result oftheChi-Square test showed that there is a significantdifference statistically in the case of preferredservice recovery, y} (5, N = 167) = 15.23, p


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fects word-of-mouth intent (F = 25.131,P


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Lee, Khan, and Ko 11

According to the results of the t-tests mea-suring satisfactory service recovery, three vari-ables, which include overall satisfaction {df=165, i-statistic = 2.687, p = .008), positiveword-of-mouth intent {df= 165, i-statistic =- 4 . 4 0 4 , p = .000), and loyalty (df= 165, t-statistic =2.935,p = .004) were significantlydifferent between American respondents andKorean respondents. As shown in Table 5, Ko-rean respondents' positive word-of-mouthintent is significantly higher than that of Ameri-can respondents (Korean word-of-mouth m ean:5.48; American word of mouth m ean: 4.53).As seen in Table 6, the results of negativeword-of-mouth intent were significantly dif-ferent between American and K orean respon-dents (df= 154, i-statistic = -2.147, p = .007).Korean respondents intended to spread nega-tive word-of-mouth more than American re-spondents. Unsatisfactory service recoverywas much m ore likely to negatively affect loy-alty (df= 154, i-statistic = -4.764,/? = .000) andfuture patronage intent (df= 154, i-statistic =3.893, p = .000) for Korean respondents thanAmerican respondents. Interestingly, Ameri-can respondents' future patronage intent wasmuch higher than that of the Korean respon-

dents even though the overall satisfaction of theservice recovery was significantly lower thanthat of the Korean respondents {df= 154, t-statistic = - 2. 1 45 , p = .033).

DISCUSSION AND CONCLUSIONThe purpose of this study was to investigatehow culture affects consumer perceptions ofservice recovery in a restaurant service opera-tion and whether there are any differences be-tween American and Korean respondents interms of the impact of service recovery by us -ing such factors as word-of-inouth, future pa-tronage intent, and loyalty. In general, the

results of the study revealed that there were anumber of different characteristics relative toservice recovery among American and K oreanrespondents.First, the word-of-mouth intent of Korean re -spondents is much higher compared to theAmerican respondents in both satisfactory andunsatisfactory service recovery incidents. Ko-rean respondents showed their strong intent tospread positive word-of-mouth after havingsatisfactory service recovery experiences inTABLE 5. Sa tisfactory Service R ecovery

Variables

Overall satisfaction of servicerecoveryPositive word-of-mouth intentLoyalty impactFuture patronage intent

Mean ScoreAmerican

5.674.535.115.53

Korean5.245.485.755.72

f-value2.687

- 4 . 4 0 4- 2 . 9 3 5- 1 . 1 6 2

p-value

. 0 0 8 "

.000*

. 0 0 4 "

.247Note: 7-pointUkertscales ranging from 1to7 , where 1 = very dissatisfied and7 =very satisfied or1=s trongly disagree and7= strongly agreeSignificant at .001"Signif icant at .010

VariablesOverall satisfaction of servicerecoveryNegative word-of-mouth intentDisloyalty impactFuture patronage intent

TABLE 6. Unsatisfactory Service RecoveryMean

American2.634.764.683.97

ScoreKorean

3.085.465.832.90

i-value

- 2 . 1 4 5- 2 . 7 4 7- 4 . 7 6 43.893

p-value

. 0 3 3 "

. 0 0 7 "

.000*

.000*Note: 7-point Likert scales rangingfron i1to7, where 1 = verydiss atisfiedan d7= very satisfied or 1=stronglyd isagreean d7=strong ly agreeSignificant at .001Significant at .05


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contrast to that of American respondents (Ko-rean mean of positive word-of-mouth intent:5.48 vs. American mean of positive word-of-mouth intent: 4.53). Similarly, in the unsat-isfactory service recovery incident, the Koreanrespondents strongly expressed their intent toshare the negative service recovery experiencewith their friends and family mem bers in com-parison to that of American respondents (K o-rean mean of negative word-of-mouth intent:5.83 vs. American mean negative word-of-mouth: 4.68).

One ofthe plausible reasons for why Koreanrespondents are very willing to share their ser-vice recovery experiences with their familymem bers and friends, w hether they are satisfac-tory or unsatisfactory, is that Koreans belong toa high-context culture (Hall & Hall, 1990; D.Kim et al., 1998). People in a high-context cul-ture are more likely to share their personalinformation and experiences with their ac-quaintances, whereas people in a low-contextculture, such as Americans, are reluctant toshare their personal information and experi-ences with others because they highly value pri-vacy (de Mooij, 1998; D. Kim et al.). Due tothese cultural conditions, the results ofthe studymake sense, explaining why word-of- mouthintent might be much higher for Korean re-spondents than for American respondents.Because consumers considered a recom-mendation from friends or family to be themost reliable information source in selectinga restaurant, the significance of consumerword-of-m outh intent should not be ignoredin the competitive restaurant industry environ-ment (Hum e, 2003).Thus, U.S. restaurant operators who alreadyhave operated their restaurants in Asian regionsor plan to develop Asian markets need to under-stand Asian consumers' strong intent toword-of-mouth on their service experiencesand develop a competitive strategy to facilitateconsumers' positive word-of-mouth. For in-stance, U.S. operators might engage in localcharity activities to create positive brand im-ages, and local charity activities mightm otivateAsian consumers to spread positive word-of-mouth among their acquaintances.Secondly, in terms of future patronage in-tent, the results of this study showed a signifi-cant difference between American and Korean

respondents in both satisfactory and unsatisfac-tory incidents. Korean respondents' futurepatronage intent is higher than that of Americanrespondents in the satisfactory service recoveryincidents (future patronage intent mean: Ko-rean: 5.72; Am erican: 5.53). On the other hand,the results showed that unsatisfactory servicerecovery experiences discourage return to arestaurant by both American and Koreanrespondents. Interestingly, the American re-spondents expressed their intent to return to arestaurant much m ore than the Korean respon-dents did after an unsatisfactory service recov-ery incident (future patronage intent mean:Korean: 2.90; American: 3.97). One of theprobable reasons that Korean respondents, un-like American respondents, showed a high in-tent not to return to a restaurant in which theyhad an unsatisfactory service recovery experi-ence might be that Korean culture has a muchhigher uncertainty avoidance tendency thanAmericans do.According to Hofstede's study (2001), peo-ple in a high uncertainty avoidance culture aremore likely to minimize exposure to uncertainsurroundings and situations. In this case, Kore-ans, belonging to a high uncertainty avoidanceculture, would not want to return to a restaurantin which they have had an unsatisfactory ser-vice recovery experience because they feelmuch less comfortable about the restaurant ser-vice and products due to the restaurant failing toprovide appropriate service recovery (Wong,2003). American respondents do not feel thisdiscomfort because they belong to a culture thathas relatively low uncertainty avoidance.Therefore, restaurant operators in Asian coun-tries having high uncertainty avoidance need toestablish competitive service recovery strate-gies proactively because establishing strategicservice recovery can minimize consumers'risks associated with restaurant service andfood quality. Consequently, U.S. restaurantchain operators need to develop competitiveservice strategies in such a way as to minim izeKorean consumers' perceived risks since Ko-rean consumers are concerned about servicefailures in restaurants and are sensitive aboutthe risks that they might face in restaurants. F orinstance, developing a competitive serviceguarantee strategy might be helpful to relieveKorean consumers' perceived risks. A chain


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restaurant might develop a 100% unconditionalcustomer satisfaction guarantee iri an effort toreduce consumers' perceived risks (Hart,1988). Service guarantees have proved to bereliable and competitive service weapons inreducing consum ers' perceived risks (Hart).Third, the Korean respondents indicated thata satisfactory service recovery experience af-fected their loyalty more it did for American re-spondents. Similarly, an unsatisfactory servicerecovery incident influences disloyalty fromKorean respondents more so than from Am eri-can respondents. This result is consistent withprevious studies indicating that Americanstend to be generous about service failures(Mueller et al., 2003). One of the potential rea-sons that service recovery affects restaurantloyalty more highly for Korean respondentsthan Am erican respondents in both satisfactoryand unsatisfactory service recovery might bebecause trust plays an important role in Asianconsumers' decision-making process whencompared to Western consum ers, who tend tomake a decision based on controlled, logicalthinking (T: Z. Chung, 1991).

Hofstede and Bond (1988) postulated thatAsians based on Confucian philosophy are in-clined to value strong reciprocation of favors ascompared to people in Western countries. K o-reans are more likely to return to a restaurant inwhich they have had a positive experience be-cause they feel obliged to return the positive fa-vor, thus increasing and sustaining patronage.Therefore, the Korean respondents would givemore trust to the restaurant offering a satisfac-tory service recovery and would distrust therestaurant providing an unsatisfactory servicerecovery, unlike Am erican respondents.In general, a free m eal is the most preferredservice recovery strategy for both Americanand Korean respondents. Fo r the Am erican re-

spondents, a discount is ranked as the secondmost-preferred service recovery; for Koreanrespondents, a managerial apology is thesecond most-preferred service recovery in re-sponse to unsatisfactory service recovery inci-dents. Thisfinding s consistent with previousstudies showing that distributed justice,which can be established by allocatingbenefits or resources such as com pensation tocustomers to recover initial service failures,play an important role in increasing overall cus-

tomer satisfaction (Smith, Bolton, & W agner,1999; Wong, 2003). Since the samples of thepresent study are university students who tendto visit a casual restaurant for leisure and plea-sure purposes rather than business purposes, acompensation strategy might be effective tothem. However, other demographic groupssuch as business people might have differentservice recovery preferences depending on thecriticality of initial service failures (Smith etal.). Furthermore, a managerial apology is aneffective service recovery strategy for Koreanrespondents. One of the possible reasons forwhy a managerial apology is an effective ser-vice recovery tactic is because Asian culture'splaces an emphasis on saving face (Becker,2000).

Asian culture has a strong power distance be-tween customers and guests, which means therelationship between customers and front-lineservers might not be equal. Therefore, Asiancustomers might like managers to be involvedin any service recovery situations and explain,as well as apologize, to them about initial ser-vice recovery situations. If managers intervenein a service recovery process, A sian customersmightregard the managers'intervention as sav-ing their face in public. Therefore, giving toomuch empow erment regarding service recov-ery to front-line employees might not bevaluable in Asian countries (Becker, 2000).Rather, restaurant managers need to involvethemselves m ore actively in any service failuresituations in Korea and play a significant role inthe process of service recovery because Koreanconsumers are m ore likely to expect managersto be involved in the service recovery proc ess.When restaurant operators develop a servicerecovery strategy, the operators should beaware that consumers look for more than anapology . Nonetheless an apology might be ef-fective in circumstances in which restaurantoperators need to establish a more systematicand competitive service recovery compensa-tion strategy which allows restaurant operatorsto tackle any service failure situations morediplomatically.

In conclusion, the results of the study ex-posed several underlying differences in servicerecovery impacts between American and Ko-rean respondents. It is clear that nationality, in-cluding the subtleties of culture, plays a major


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role in factors such as word-of-mouth, cus-tomer loyalty, and intent. It is strongly recom-mended that chain restaurant operators takeinto account these differences in both customerbehavior and preferences when they establishand develop service recovery strategies andstandards in their international operations. Forinstance, U.S. restaurant operators should de-velop customized service recovery strategies ineach international market reflecting consum-ers' cultural differences in order to maximizethe effects of service recovery and capture con-sumers' loyalty and satisfaction. Establishingtailored service recovery training modules ineach international market might be helpful.Even though this paper presents interestingresults regarding cultural impacts of service re -covery, the study includes a few limitations,which should be examined within future re-search projects. Here we discuss some of thoselimitations and p rovide directions for future re-search projects. First, the study used universitystudents for the samples in both America andKorea. It is a convenient sampling. Therefore,the samples of the study might not be represen-tative of all Koreans and Am ericans. However,the similarity of demographic characteristics inboth samples would increase the validity oftheresults ofthe study. Furthermore, the key targetmarket for American restaurant chains in K oreais young and educated customers who are morefamiliar with western food and lifestyle in com-parison with the older Korean generation(Song, 2004). In addition, several researchers(Furrer, Liu, & Sudharshan, 2000; Lee &Ulgado, 1997; Liu, Furrer, & Sudharshan,2001) used university student sampling suc-cessfully in their cross-national service market-ing research since a student sample is relativelya homogeneous group in terms of job-relatedstages in their life cycle. Therefore, researchersbelieve that the results of this study would bevalid and can be extrapolated to the generalpopulation and the casual restaurant business.Furthermore, this study did not consider cer-tain factors such as the degree of criticality ofthe initial service failure and the circumstancesof the service performed, which might affectconsumer service recovery preferences and thelevel of satisfaction relevant to service recov-ery. Therefore, researchers m ight need to de-velop future research that controls for these

variables, and then com pare the results of theirstudy with this study to see if there are any sig-nificant differences. This study is also limitedto restaurant operations. It might be necessaryto investigate service recovery cases in the h o-tel industry based on international travelers.With the increasing globalization of interna-tional travelers, this kind of study will bebeneficial to global hotel operators as well.

Also, this study did not include research hy-potheses because the study was designed as anexploratory study. Researchers who designstudies similar to the present one could developresearch hypotheses and com pare the results oftheir studies with this study. In addition , futureresearch investigating other major culturalgroups' service recovery perceptions and pref-erences could help U.S. restaurant operatorsbetter develop effective service recovery tac-tics. As mentioned above, the current studycontains several limitations, but at the sametime, the results ofthe study provid e empiricalanalysis of some important service m anagerialissues as well as underlying impacts of cultureon service recovery, facts which are relevantfor both service operators and academia. Wehope that this study, although exploratory innature, will encourage others to reevaluate gen-erally-accepted concepts and m otivate them toundertake empirical service management re-search projects.

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SUBMITTED: January 23, 2006FINAL REVISION SUBMITTED:January 17, 2007ACCEPTED: January 22, 2007REFEREED ANONYMOUSLY

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