i

MBA VI

Master of Business Administration Program

in

Management and Finance 2009- 2011

IMPROVING CUSTOMER SATISFACTION WITHIN PUBLIC UTILITY COMPANIES

By

ARUN M. BHAGWANDIN

SURINAME

2011

Supervised by

Dr. Mirdita Elstak

This paper was submitted in partial fulfillment of the requirements for the Master of Business

Administration ( MBA) degree at the FHR Lim A Po Institute and the Maastricht School of

Management ( MSM), the Netherlands, December 2011.

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ACKNOWLEDGEMENT

First of all I would like to express my sincere gratitude to my supervisor, Dr. Mirdita Elstak, for her

helpful advice during the whole process. Her positive approach kept me motivated during the whole

thesis process. I would like to thank all MBA VI colleague students for the superb time we spent

together during these extraordinary two years. Patricia, Kenneth and Shiefran, you guys are truly

amazing. We spent many hours preparing for exams, motivating each other to carry on, reaching the

finish and having a lot of fun. Thanks for being there for me!

I also would like to thank my colleagues at work, who supported me during this study, especially for

their good suggestions and their help in preparing my thesis.

A word of appreciation goes out to my employer, NV Energiebedrijven Suriname, for providing me the

opportunity to do this study.

I also would like to thank my mother for providing me with the opportunity to study despite all the

difficulties she faced in live. Mama, you are truly the best!

Special thanks, and love goes out to my wife Carol and son Shawn, whose support and understanding

have given me the inspiration to complete this Study.

Arun

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ABSTRACT

Customer satisfaction has great value for private as well as public organizations, it is essential for

survival and key for success. Because companies worldwide are facing increasing competition more

attention is being put on customer satisfaction.

This research deals with the impact that service recovery has on satisfaction with service recovery in

Suriname for public utilities operating in a monopolistic market structure. Public utility companies

globally as well as in Suriname are facing changing market conditions. Understanding the customer

and his needs and successfully satisfying those needs are some of the challenges for the public utility

companies. Customer complaints can help to meet this challenge, in order to solve problems and retain

the customer. It is an important source from which companies can learn and improve the product and

service they deliver. Service recovery is identified as a critical instrument in a monopolistic

environment to help improve customer satisfaction.

The aim of this study is to investigate how service recovery affects customer satisfaction in Public

utility companies. With this knowledge public utility companies in Suriname can develop policies and

strategies that can help improve customer satisfaction, which will result in services that are more

aligned with the needs of their customers.

After a research model was developed, data was collected trough a survey that was carried out under

domestic customers of the EBS who live in capital Paramaribo.

The most important outcome of this study is that perceived justice with service recovery does improve

satisfaction with service recovery and that customers value the outcome of the redress seeking the

most. Public utilities in Suriname can design their complaint process in such a way that both the

company and the customer can benefit from it. This result is consistent with other studies carried out in

competitive markets elsewhere. This research has shown that in the present context corporate image

does not moderate the relationship between perceived justice with service recovery and satisfaction

with service recovery.

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The outcome of this research contributes to important knowledge, that support the need for public

utilities in Suriname to start incorporating these practices in their organizations, especially those

companies that are facing changing market situations in the near future.

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Table of content

ACKNOWLEDGEMENT ........................................................................................................................ ii

ABSTRACT ............................................................................................................................................. iii

CHAPTER I: INTRODUCTION .............................................................................................................. 1

1.1 Introduction .................................................................................................................................................... 1

1.2 Importance and relevance of the subject area ................................................................................................. 3

1.3 Problem definition .......................................................................................................................................... 4

1.4 The research objectives .................................................................................................................................. 5

1.5 Research Questions ........................................................................................................................................ 6

1.6 Research Methodology ................................................................................................................................... 6

1.7 Research limitations ....................................................................................................................................... 7

1.8 Generalizability .............................................................................................................................................. 7

CHAPTER II: LITERATURE REVIEW ................................................................................................ 8

2.1. Introduction ................................................................................................................................................... 8

2.2 Customer satisfaction ..................................................................................................................................... 8

2.2.1 The importance of customer satisfaction for organizations ................................................................... 10

2.2 Customer complaint behavior ....................................................................................................................... 10

2.3.1 Types of complaint responses ................................................................................................................ 11

2.3.2 Antecedents to complaint behavior ....................................................................................................... 13

2.3.3 Effects on companies if customers do not complain ............................................................................. 15

2.3.4 Influence of customer complaint behavior on customer satisfaction .................................................... 16

2.4 Customer satisfaction in public utilities in Suriname ................................................................................... 17

2.4.1 Service recovery theories ....................................................................................................................... 18

2.4.2 Results from satisfaction with service recovery .................................................................................... 21

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2.4.3 Corporate image .................................................................................................................................... 22

2.5 Conceptual model ......................................................................................................................................... 23

CHAPTER III: RESEARCH METHODOLOGY .................................................................................. 26

3.1 Introduction .................................................................................................................................................. 26

3.1.1. The EBS ................................................................................................................................................ 27

3.2 Research approach ........................................................................................................................................ 28

3.3 Research strategy .......................................................................................................................................... 28

3.3.1 The survey ............................................................................................................................................. 29

3.4 Validity and reliability .................................................................................................................................. 31

3.4.1 Validity .................................................................................................................................................. 31

3.4.2 Reliability .............................................................................................................................................. 31

3.5 Data gathering .............................................................................................................................................. 32

3.6 Data analysis ................................................................................................................................................. 36

CHAPTER IV: RESEARCH FINDINGS............................................................................................... 38

4.1 Introduction .................................................................................................................................................. 38

4.2 Descriptive analyses ..................................................................................................................................... 38

4.3 Hypothesis testing ........................................................................................................................................ 43

4.3 Additional analysis ....................................................................................................................................... 52

CHAPTER V: DISCUSSION ................................................................................................................. 57

5.1 Introduction ................................................................................................................................................. 57

5.2 Main findings ............................................................................................................................................... 58

5.2.1. Customer satisfaction is critical for PU‟s ............................................................................................. 59

5.2.2 Customers value the outcome of the process more than the treatment ............................................... 61

5.2.3 Corporate image does not seem to matter when it comes to the impact of service recovery on

satisfaction ...................................................................................................................................................... 62

5.3 Answers to research question ....................................................................................................................... 63

5.4 Conclusion .................................................................................................................................................... 64

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5.5 Recommendations ........................................................................................................................................ 65

5.6 Limitation and implication for further research............................................................................................ 67

GLOSSARY............................................................................................. Error! Bookmark not defined.

LIST OF ABBREVIATIONS ................................................................................................................. 69

LIST OF FIGURES ................................................................................................................................ 72

LIST OF TABLES .................................................................................................................................. 73

BIBLIOGRAPHY ................................................................................................................................... 74

APPENDICES ........................................................................................................................................ 80

Appendix A: Regression analysis exclusive moderating variable ...................................................................... 80

Appendix B: Regression analysis inclusive interaction term distribution justice * corporate image ................. 81

Appendix C: Regression analysis inclusive interaction term informational justice * corporate image ............ 82

Appendix D: Regression analysis inclusive procedural justice * corporate image ........................................... 83

Appendix E: Regression analysis inclusive interaction term interactional justice * corporate image ............... 84

Appendix F: Regression analysis for model summary ....................................................................................... 85

Appendix G: Questionnaire ................................................................................................................................ 86

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CHAPTER I: INTRODUCTION

1.1 Introduction

Nowadays, customers are more demanding towards companies because of the increased

abundance of choices. Customers have become increasingly critical of corporate actions and more

demanding of marketplace reforms. Because industries and firms worldwide are facing more

intense competition, slower growth rates, and pricing pressures, more attention is being placed on

customer satisfaction. Customer satisfaction is an important determinant of customer retention

which has a very strong effect on profitability ( Reichheld and Sasser 1990). It plays a very

prominent role in marketing policy and public policy formulation ( Fornell and

Wernerfelt1987,1988;Simon 1974). This thesis interprets satisfaction as a feeling which results

from a process of evaluating what was received against what was expected, the purchase decision

itself and/or the fulfillment of needs and wants ( FecỈikovaẮ, 2004).

To be able to increase customer satisfaction it is important that organizations conduct sound

research in this field. Customer satisfaction research helps to identify how companies are

performing from the perspective of the customer. It gives the company the opportunity to

understand how their customers are experiencing the level of service they are providing, and it

further provides very valuable information, such as, highlighting an area where the product or

service needs improving.

Increasingly, public service providers have come to realize that they must provide products and

services that are soundly based on their customer needs. As a response to these developments,

many providers are directing their strategies towards increasing customer satisfaction.

The trend in the world regarding public utilities is favoring trade openness, deregulation of

markets and further retreat of states from economic activities. Public utilities in different Latin

American countries, such as Suriname, are facing challenges of deregulation, privatization and

increasing customer demands ( Inter American Bank publication, reference no. IFM- 127,

February 2002). In this thesis public utilities are defined as organizations that provide services to

the general public such as water, energy, telecommunication and transportation

(Investorwords.com, 2011).

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This research will not focus on the products that public utilities provide but on the services that

are very critical in the value creating process.

In many developing countries such as Suriname, Public Utilities are government owned and they

mostly operate as a monopolistic company. Some of the public utilities in Suriname are indirectly

protected by the government against competition, because competition in the market is not

allowed yet. These state owned monopolies have market power which gives them little incentives

to improve the quality of their services.

Increasingly, utility companies have come to realize that customer satisfaction has great value for

them, even if they are operating in a regulated market (Elliot and Serna, 2005). It is essential for

survival and key for success. Customer satisfaction has become an important indicator of quality

and future revenue of a company. We experience that customer expectations are changing

upwards, with a higher emphasis on the quality of services (Donnelly and Shui 1999). Service

levels that were accepted a generation ago are no longer acceptable for the current generation.

Companies will have to improve their products and services accordingly if they want to keep their

customers satisfied.

“The best thing a company can do is to make it easy for customers to complain. Listening is not

enough, however. The company must respond quickly and constructively to complaints”( Kotler,

2003,p.73). Customer complaints can help solve the problem and retain the customer. Customer

complaints are an important source from which companies can learn, resolve the root cause and

improve the product and service (Brouwn et al, 1996, McCollough et al, 2000; Priluck and Lala,

2009, Vos et al, 2008). In this thesis the following is meant with customer complaints: multiple

sets of behavior and non- behavioral responses, triggered by a unsatisfactory purchase episode

(Singh, 1990a). Traditionally companies are focused on improving customer satisfaction through

a positive point of view, by focusing on elements like service quality, price and innovation.

Different research (Brown et al, 1996; McCollough et al, 2000; Priluck and Lala, 2009; Vos et

al,2008) state that customer complaints are an important source of market intelligence which

companies should use to learn from. There has been little research into the characteristics of

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complainers in governmental monopolistic services (Bard Tronvoll, august 2006). Especially in

monopolistic utility companies, customers do not have the opportunity to withdraw from the

relationship. Also these companies do not have many other options to improve customer

satisfaction. In these circumstances customer complaints are an effective tool for service recovery,

which can lead to improvement of customer satisfaction and an opportunity for the customers to

express their opinion to the company.

1.2 Importance and relevance of the subject area

We recently have experienced the liberalization of the telecom market in Suriname for example.

Telesur, the former monopolist in the telecom market had no choice than to become a customer

oriented company in order to compete with the two other players that had been allowed in the

market. The former monopolist‟s main goal has become to satisfy or, better yet, delight their

customer in order to survive in this new competitive environment. In recent years the Surinamese

government has allowed the stateoil power company to enter the energy market. They have been

granted permission to generate energy and sell this to the EBS, this is the start of upcoming

changes in the energy market.

Improving customer satisfaction within public utility companies in Suriname is a challenge,

because these companies are 100% government owned and are mostly operating as a monopolist.

In general these companies do not face competition, and create insufficient incentives to guide

resource allocation based on customer preferences. But changes are ahead, the current government has

mentioned a regularity board for the electric utility sector (annual speech of the President of Suriname,

October 2010).

The level to which companies are capable of satisfying their customers is an indication of its

general health and its future prospects (Claes Fornell,1992). It is therefore of great importance

that public utility companies develop policy and strategies to improve customer satisfaction,

which will result in products and services that, are more aligned with the needs of their customers.

Understanding the customer and his needs and successfully satisfying those needs are some of the

challenges for the public utility companies in entering a new future of higher customer demand,

deregulation and competition.

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This study will be conducted within the public Electricity Company in Suriname. According to

the Maslow theory electricity is a basic good that mostly is experienced as a dissatisfier.

Customer‟s satisfaction does not necessarily increase when the utility companies deliver energy

of better quality. The customers simply expect these companies to deliver the products 24/7, and

nothing less. As mentioned earlier the focus in this thesis will be on services that create great

value in the relationship between the public utility company and the customers rather than the

product they deliver.

Although knowledge about customer satisfaction in general exists, there is need for research

about the impact that customer complaints which leads to a service recovery has on customer

satisfaction in public utility companies. It will provide knowledge about the customers view and

opinion about the company and the services they provide. This is especially relevant in a process

of transformation from a monopolistic environment to an environment of increasing customer

demand and upcoming deregulation and competition. In this process of change it is also important

for the public utilities to research what the customers‟ perception is about their corporate image

and what influence this has on the organization. Corporate image works as a filter through which

an organization‟s whole operation is perceived, it reflects a company‟s overall reputation. It

impacts the customer‟s evaluation of service quality, satisfaction and loyalty. With this

knowledge these companies will be able to use service recovery1 more effectively and use this

information further as a vital source in service development and value creation.

1.3 Problem definition

As competition increases globally and customers become more demanding, the emphasis on

customer satisfaction has increased for business organizations. Different literature studies in the

field of customer satisfaction have shown that customer satisfaction has a substantial impact on

financial health and results of companies.

Because customers of public utility companies also demand the best product and services from

these companies and competition and deregulation have been introduced into this market,

1 Service recovery can be defined as the provider’s action when something goes wrong (Gronroos, 1988).

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customer satisfaction has also become critical for these companies. Not only the products public

utility companies deliver such as water, electricity and telephone communication are important,

mostly these are not the issues customers are dissatisfied about. Moreover the services that are

provided by the public utility companies are essential for the customer. Poor services provided

have a major impact on customer satisfaction for public utility companies. Some of the important

services provided by these companies are billing, managing outages, opening hours of their

offices, connections and claims. From the literature review it became clear that for monopolistic

public utility companies customer‟s voice is an important instrument that can be used to improve

customer satisfaction. Customer complaints and the service recovery that follows thereafter are

opportunites for both the customer and the company to gain profits by.

Given the information above the following problem statement is formulated:

How can service recovery help improve customer satisfaction within public utility companies?

1.4 The research objectives

The main purpose` of this study is to research how service recovery affects customer satisfaction

in Public utility companies. The following objectives were formulated:

- To determine how customer complaint behavior in public utility companies in Suriname

influences customer satisfaction;

- To determine which variables influence customer satisfaction the most in the case of

public utilities in Suriname;

- To assess how service recovery can improve customer satisfaction for public utility

companies in Suriname.

A model will be presented with which public utility companies can assess which elements of

service recovery affect customer satisfaction the most.

With these results service recovery strategies can be adjusted and customer satisfaction can be

improved. Further the outcome of this study can be used by monopolistic utility companies in the

transformation process from monopolist to a more customer focused utility, facing higher

customer demand, deregulation and competition.

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1.5 Research Questions

Based on the research objective of this study the following research questions will be studied:

The main research question of this study is: How does service recovery influence customer

satisfaction in public utility companies?

The following sub research questions will be answered:

What are the most important determinants of customer complaint behavior in PU‟s?

How does service recovery impact customer satisfaction in PU‟s?

What moderating roles does organizational image play in the relationship between perceived

justice of service recovery and customer satisfaction?

1.6 Research Methodology

To conduct this research a quantitative research method will be applied and the research approach

will be a deductive study. With this approach hypotheses will be tested in order to answer the

research questions.

This study will focus on the domestic customers of the Energiebedrijven Suriname (from now on

mentioned as the EBS) in Paramaribo, the capital of Suriname.

A questionnaire will be developed to investigate how complaining customers perceive service

recovery. With the information gained this research will try to reveal how service recovery

potentially improves satisfaction for public utility companies in Suriname.

Regression analysis will be used to identify the relationship between the dependent and

independent variables. Regression analysis is applied to understand how the value of the

depended variable (perceived customer satisfaction with service recovery) changes when any of

the independent variables vary.

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1.7 Research limitations

This research is subject to the following limitations:

- This study will be conducted at the EBS. This can be seen as a limitation because there

can be some specific characteristics within the EBS that cannot be translated to other

PU‟s. But in the author‟s opinion, on the other hand, there are many similarities, such as

type of company and global and regional trends that are applicable for other PU‟s and that

this study has an implication that goes beyond the EBS.

- A questionnaire will be carried out in Paramaribo, were more than 65% of the customers

of the EBS live. This can be seen as a limitation, but at the same time the researcher does

not expect the results of the study to be different if the survey was carried out in more

cities, because more than 65% of the domestic customers live in Paramaribo.

1.8 Generalizability

This study can be relevant for other monopolistic utilities that are facing a transformation process

of increasing customer demands, upcoming deregulation and competition, especially when the

application of traditional customer satisfaction variables is not a suitable option. The research

can be added to broader research of customer complaints in regard to public utilities. It can be

consulted by others that are planning to study customer complaints or are facing similar problems

from a management perspective.

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CHAPTER II: LITERATURE REVIEW

2.1. Introduction

This chapter will give an overview of literature and models regarding customer satisfaction,

customer complaint behavior and service recovery. Different concepts of customer satisfaction,

customer complaint behavior and service recovery will be discussed in order to give a clear idea

about the research area of this study.

First the importance of customer satisfaction will be explained, followed by the importance of

customer complaints behavior. Further the elements that determine customer complaint behavior

will be discussed. After this the importance of service recovery that is initiated by a complaint

will be discussed. Finally the relationship between service recovery and satisfaction with service

recovery will be reviewed in the context of monopolistic public utility companies.

2.2 Customer satisfaction

In the literature there are two main interpretations of satisfaction. Satisfaction as a process and

satisfaction as an outcome of a customer experience (Parker and Mathews, 2001). Customer

satisfaction as a process is defined as an evaluation between what the customer received and what

the customer expected (Oliver, 1977, 1981;Olson and Dover, 1979;Tse and Wilton, 1988),

emphasizing the perceptual, evaluative and psychological processes that contribute to customer

satisfaction ( Vavra, 1997, p.4). This approach is the most widely adopted description of customer

satisfaction and many research studies have been conducted to understand the process approach of

satisfaction (Parker and Mathews, 2001).The process approach has its origin in the discrepancy

theory, which argues that satisfaction is determined by the perception of a difference between a

standard and the actual performance ( Porter, 1961). If the customer‟s expectation is fulfilled, the

customer is satisfied, if not, dissatisfaction occurs. The confirmation/ disconfirmation paradigm

provides the grounding for the vast majority of customer satisfaction studies (Caruana et al.,

2000).

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The early concepts of customer satisfaction studies have defined satisfaction as a post choice

evaluation judgment regarding a specific purchase decision ( Oliver, 1980, Churchill and

Suprenant, 1992; Bearden and Teel, 1983; Oliver and De- Sarbo, 1988).

The outcome approach of satisfaction is defined as the end- state satisfaction which is the result of

a consumption experience. It can be the outcome that occurs without comparing expectations

( Oliver, 1996) or a cognitive state of reward, or an emotional response that may have occurred as

the result of the comparison between expected and actual performance or the comparison of

reward and costs to the anticipated consequences (Vavra,1997,p.4).

In other streams of research the focus has been on the nature of customer satisfaction in relation

with emotion, fulfillment and state (Parker and Mathews, 2001). In addition to this, some scholars

argue that although traditional models assume that customer satisfaction is essentially the

outcome of cognitive processes, there are suggestions that affective processes can also contribute

substantially to prediction and explanation of customer satisfaction (Fornell and Wernerfelt, 1987;

Westbrook, 1987; Westbrook and Oliver, 1991). In different study‟s authors also argue that

satisfaction should not be viewed as a transaction- specific phenomenon but as a judgment that is

based on the cumulative experience that is made with a certain product or service (Wilton and

Nicosia, 1986).

In this thesis satisfaction is interpreted as a feeling which results from a process of evaluating

what was received against what was expected, the purchase decision itself and/or the fulfillment

of needs and wants ( FecỈikovaẮ, 2004). The study will be built on the concept of the process

approach of satisfaction.

The relevance of this definition to this study is mainly that it indicates that customers of public

utility companies not only assess the purchased product but also the additional services provided

as an overall experience during the whole process.

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2.2.1 The importance of customer satisfaction for organizations

Many studies have been conducted about customer satisfaction in the past decades. These studies

emphasize the importance of satisfaction for organizations from different angles. Satisfied

customers tend to maintain their consumption pattern or consume more of the same product or

service. Satisfaction has become an important indicator of quality and future revenue of a

company (Anderson, 1998). It influences purchasing behavior and satisfied customers tend to be

loyal customers, but loyal customers are not necessarily satisfied, especially in PU‟s where they

have no choice but to remain loyal. Research further shows that market share and customer

satisfaction are positively correlated ( Fornell, 1992).) Satisfied customers are more likely to have

a greater repurchase level and recommend the product and service to their acquaintances

(Zeithhamel et al, 1999). Because competition has entered the utility sector and customers

demand also has increased, customer satisfaction has become an important factor for PU‟s. In

order to compete and survive in the changing market, PU‟s must intensively focus on satisfaction.

2.2 Customer complaint behavior

Customer complaint behavior is a “process that emerges if the service experience lies outside the

customer‟s acceptance zone during the service interactions or in the evaluation of the service – in

– use”, (Tronvoll, 2008, p.8). In order to initiate a complaint, the customer must have experienced

a critical incident which triggers a complaint process. The initiated complaint process is being

influenced by different resources such as type of product, time, money, complaint channels,

Tronvoll (2008). Therefore, customer complaint behavior cannot be seen as a simple expression

or negative feelings during and after the consumption or usage of goods and services. Customer

complaint behavior must be seen as a behavioral process that occurs during the service

interaction, Tronvoll (2008).

Customer complaints can be considered as a phenomenon with which organizations have to deal

with in one way or another. From the perspective of the customer it can be stated that customer

complaint should be facilitated and it must motivate organizations to find a solution of some kind

for the customer. The emergence of complaints could be a start for organizations for analysis,

improvement or elimination of some practices that may have caused this complaint.

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Mohamed Zairi ( 2000) developed a four stage model that argues that to achieve continued

improvement of customer satisfaction there should be a cycle that starts with listening to the voice

of the customer, then analyzing the comments, developing actions and finally implementing the

actions defined. Voicing the problem is part of the customer complaint behavior process. It

provides the service provider with knowledge about the service failure and their satisfaction level.

By applying this model, Public utility, companies can utilize customer complaints as an effective

tool to continuously improve customer satisfaction.

Figure 1, four stage model to improve satisfaction.

2.3.1 Types of complaint responses

It is important for public utility companies facing changed market conditions to gain knowledge

about the complaint behavior of their customers. It is essential to gain insight about the complaint

responses of dissatisfied customers. The exit, voice and loyalty theory of Hirschman (1970) is one

of the first theories to conceptualize customer complaint responses.

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When critical service failures occur dissatisfied customers‟ responses (coping strategies) can be as

follow;

- Take no action;

- Negative word of mouth ( negative WOM) about the company;

- Directly complain to the company;

- Complain to a third party.

Taking no action

Many customers remain silent when service failures occur. The different antecedents discussed in

paragraph 2.3.2 have an influence on these customers their complaint behavior. Some customers

evaluate the cost of complaining versus the benefits of the outcome. The opportunity to solve the

problem is lost when the customer fails to voice the service failure. The reputation of the provider

can be harmed from negative word of mouth among the different dissatisfied customers.

Negative word of mouth

Customers can decide to spread their dissatisfying experiences with their social network. A

(Worth of mouth) WOM message has the potential to reach many receivers through various

exchanges. Negative WOM provides the dissatisfied customer with an outlet, the customer can

vent its negative emotions (Zeelenberg and Pieters, 2004). The emergence of the social media has

increased the impact of WOM, damaging the image of company‟s and PU‟s.

Third party complaint

A third party complaint indicates that the dissatisfied customer turns to an external agency to file

a complaint. Complaining to a third party is important because it represents a higher order action

than the other three coping strategies ( Feick, 1987). If the customers do not get a satisfactory

response they may choose to complain to consumer protection organizations and other

governmental protection departments. While a small number of dissatisfied customers use this

form, the cases they redress tend to be very serious and are highly damaging for the companies

( TARP, 1985), and leading to potential financial risk.

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Directly complaining to the company (voice)

Voicing their dissatisfaction is a highly active form of complaining. Compared to the other coping

strategies, voicing is least harmful for providers, because it provides the service provider with

customer feedback with which it can improve product and service quality ( Fornell and

Wernerfelt, 1987). The customers decision to voice indicate that they belief that the company can

and will try to solve the problem (McKee et al, 2006). It is also possible that customers can use

multiple coping strategies.

Customer complaint behavior has been given extensive attention in this chapter because of its

importance for the customer and the service provider. To be able to improve customer satisfaction

within monopolistic public utility companies, understanding customer complaint behavior is

essential and can be seen as the starting point of this process. Customer complaint behavior and

its effect on customer satisfaction is the context in which this study is conducted. This study starts

with the effects of customer complaint behavior on customer satisfaction and focuses further on

the service recovery process. After the customer voices the service failure, the service provider is

able to act in a proper way. This statement emphasizes once again that the service recovery

process starts after the service provider gains knowledge of the failure.

2.3.2 Antecedents to complaint behavior

The confirmation/ disconfirmation paradigm provides the conceptual foundation on which the

study of Customer Complaint Behavior is built (Blodgett and Granbois,1992),. The confirmation/

disconfirmation paradigm is an evaluative process by which the consumer compares the

performance of a product or service with its initial expectation. Many studies have been

conducted to reveal the antecedents of customer complaint behavior Tronvoll ( 2008).

These studies argue that it is possible to categorize the factors that influence customer complaint

behavior into four main constructs:

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Situational factors

These factors assume that dissatisfied customers objectively evaluate the level of service failure,

what the cost and benefit will be of complaining and the probability of success. Customers

complain because of two reasons (Hirschmann, 1970):

- an assessment by the customer about the probability that the company would take action

to correct the addressed problem and

- an assessment by the customer if it is worth to complain to the company.

Based on these factors the dissatisfied customers decide whether or not to complain.

Different studies show that the majority of dissatisfied customers don‟t voice their complaints

to the company (Best and Andreasen, 1977).

Individual factors

These factors drive or restrain dissatisfied customers for taking action because of the kind of

people they actually are. Younger people are expected to have a higher complaint level than older

people. Customers with a higher educational level are known to complaint easier than customers

with a lower education level ( Gronhaug and Zaltman ,1980). The subcategories of individual

factors are psychological, demographical, personality, emotional, social, cultural and experience.

Provider/ service factors

This factor assumes that the service failure is related to the service provider or the service. The

type of organization, its reputation, responsiveness, friendliness and the promptness of the

employees are important factors. The subcategories are service provider and the service itself.

Market factors

Market factors may encourage complaint behavior and competition increases consumer

satisfaction (Johnson, 1998). The subcategories are market and market structure. There is

evidence that market structure has an influence on complaint behavior (Hirschman, 1970;

Andreasen, 1985; Singh, 1990b, 1991; Kolodinsky, 1993, 1995),. In a competitive market

structure there are a large number of buyers and a large number or sellers, each buyer or seller is

relatively small compared to the total market. If any individual increases or decreases purchase or

output, this does not affect the balance in the market ( Tronvoll, 2007,p.36). The low switching

15

barrier in the market can lead the customer to switch to another provider if the provider attempts

to increase the price or if, in the perception of the customer, the quality of the product or service

decreases. Companies will do their upmost to satisfy the customer in a competitive market,

because dissatisfied customers have the opportunity to switch to another provider if the provider

does not respond sufficiently to the service failure.

A monopolistic market structure has a large number of buyers but only one supplier. The

individual buyer is very small compared to the supplier and is not able to affect the total demand

in the market. Because there is no other alternative, a decrease in quality does not lead to any

decrease in demand (Tronvoll, 2007, p.36).

In a monopolistic market structure, customer complaint behavior appears to follow a “different set

of rules” from those operating in a competitive market, Tronvoll, 2008. Public services are known

to have a higher rate of dissatisfaction than other services and products ( Day and

Bodus,1977;Fornell et al.,1996;Johnson et al.,2002). Given that dissatisfaction is an important

condition for complaints, Singh, 1991 and Kolodisnky, 1995 argue that customer complaints are

low in monopolistic markets which are characterized by no or little competition. This illustrates

that consumers who wish to complain in a monopolistic market have to overcome some barriers

which do not seem to appear in the competitive market. Because there are no alternatives, a

change in the quality does not lead to a change in the demand. The provider does not necessarily

take corrective steps because the possibility to switch to another provider is not available.

The analysis of public utility services has been rather unexplored in publications. The main reason

for this can be that, globally public utility companies have had national or regional monopoly,

circumstances that did not force these companies to apply marketing- based approach. As PU‟s

globally are facing challenges of deregulation, privatization and increasing customer demands

studying services of these PU‟s are gaining more value.

2.3.3 Effects on companies if customers do not complain

A customer that fails to complain about the perceived service or product failure is in fact a

concern for any company because the company misses the opportunity to obtain valuable

feedback with which it can solve the problem and retain the customer.

16

Consider the following facts:

- Customers with problems mostly do not react and only 2% complain about it;

- A customer with a problem tells it to 9 other people;

- Satisfied customers tell this to 5 other people;

- Keeping a current customer costs about 1/7 of the total cost of acquiring a new one (Keki,

1995, p.28).

It is frequently stated that a lack of customer feedback from dissatisfied customers is a potential

loss of current and potential future customers. This makes it important to understand the customer

by gaining more knowledge about the customer complaint process. As argued earlier the market

situation of PU‟s is changing. It is not only about loyalty, repurchase opportunities and customer

retention. The opinion of the public is becoming important also. In the past years we notice that

angry and frustrated customer‟s voice their negative experience through the internet creating huge

damage to the image of the providers.

2.3.4 Influence of customer complaint behavior on customer satisfaction

Perceived service failure experienced by customers is a great concern for companies because of

the impact it has on the outcome of products or services. When a service failure is experienced the

customer can choose to exit, voice (complain), complain to a third party or do nothing. Customer

complaints allow companies to get customer feedback which in return can be used in making

improvements to increase customer satisfaction, loyalty, long-term sales and profits, (Fornell and

Wernefelt, 1987).

Effective handling of customer complaints and associated problems can have a positive impact on

customer trust and commitment towards companies (Tax et al. (1998). Complaint handling is seen

as a vital “moment of truth” in maintaining and developing customer relationships (Berry and

Parasuraman 1991, Dwyer et al.1987). A complaint of a customer and a poor handling of a

service recovery have a major impact on company‟s financial future. Therefore it is important to

get feedback from customers through customer‟s complaints.

17

Public utility companies worldwide are changing their attitude because they are increasingly

operating in deregulated markets. Countries like the UK and the United States of America as a

result of liberalization started to develop their own marketing strategies.

In markets with state regulated prices and monopolies, consumers had cheap access to the

services, but on the other hand they were defenseless against the service providers. Companies

that still have partial monopoly face new challenges. Utility companies have become to realize

that there is competition and that this competition will become sharper.

2.4 Customer satisfaction in public utilities in Suriname

The market place sends out two kinds of signals about unsatisfactory performance to public

policy makers as well as marketers, these are exit2 and voicing

3 ( Hirschman ,1970). Hirschman

states further that exiting behavior is the classic “invisible hand”, when working well, it signals

the need for intervention. Voicing becomes important when exiting is impossible or when the

customers doesn‟t get the restitution he thinks he‟s entitled to.

Service failures are inevitable, they are not avoidable even for the best performing organizations.

The effective management of customer responses to service failures is very important, especially

when customers do not have an opportunity to switch to another provider. In the service failure

context, service recovery can be seen as a second service encounter. In competitive markets,

negative service failures can cause the defection of customers that are becoming more intolerant

of mediocrity. Understanding the service recovery process has become very important. A service

failure can destroy customers‟ loyalty, but successful implementation of service recovery

strategies may prevent customers‟ defection ( Lewis and Spyrakopoulos, 2001). It is important for

organizations to understand which factors make service recovery programs successful. For public

utility companies in Suriname service recovery can become an important instrument in increasing

customer satisfaction. After customers perceive a problem which means that their expectations

were not met, then they obtain another set of expectations – service recovery expectations ( Lewis

and Spyrakopoulos, 2001). A positive service recovery, in other words, when expectation of the

2 Dissatisfied customer decides not to shop again and take their business somewhere else , Hirschman ( 1970).

3 Complain about the dissatisfaction to the seller, Hirschman, (1970).

18

service recovery is exceeded, will increase customer satisfaction. But, if the service recovery

negatively confirms to the expectation of the customer, this will reduce customer satisfaction.

This indicates that in the context of service failures, followed by a service recovery, customer

satisfaction also results from an evaluation process. The customer compares their recovery

expectation with their perception of the recovery received.

In monopolistic markets, service recovery is an effective option to satisfy customers when they

complain about service failure.

Electricity for instance is a commodity and has few specialties‟ when comparing with other

services. Customers belief that electricity is a naturally given supply, they rarely compare the

benefits with its price, it has a continuous supply and the quality has not been changed since its

invention. These factors lay the emphasis for these kind of utilities increasingly on the services

provided rather on the product itself ( Hetesi and Reketteye, 2002).

2.4.1 Service recovery theories

Customers voicing their dissatisfaction with poor services give these service providers the chance

to recover these service failures. What is done (the compensation) and how it is done (the

employee interaction with the customer) influences the customers perception of the service

recovery ( Andreassen,2000). Although managers realize how important service recovery is for

customer retention, how to do this effectively remains a challenge.

Initial dissatisfaction leads to a cognitive appraisal, which in return will determine what the

customer will do (Kim, Wang and Mattila, 2010). Complaining to a third party, doing nothing,

spreading negative information about the company (negative word- of- mouth) are different ways

the customer can choose to deal with the dissatisfaction, yet they are not likely to lead to probable

service recovery. But voicing the dissatisfaction directly to the company will create an

opportunity for service recovery.

The fairness theory can be seen as the dominant theoretical framework applied to service recovery

(Tax and Brown, 2000) This theory relates to the perceived fairness of a transaction ( Boote,

1998). Equity is experienced when the relative inputs and outputs from the two parties involved in

the transaction are perceived to be equal. When customers experience a perceived inequity in the

19

exchange they become disappointed, regretful or upset, which can lead to customer complaints.

Afterwards, customers make their judgment based on the level to which the service recovery

process was fair and these judgments influence their satisfaction ( Chebat and Slusarczyk, 2005).

Customers mostly evaluate the fairness of a service recovery by four factors:

- The fairness of the decision making criteria, the policies and procedures used to generate

the final outcome ( procedural justice);

- The fairness and appropriateness of the generated tangible outcome ( distributive justice) ;

- The information provided about the causes of the service failure (informational justice)

and

- The way in which the service complaint handling process is carried out (interactional

justice), (Tax and Brown ( Chebat and Slusarczyk, 2005n, 199; Tax et al., 1998).

Procedural justice

Procedural justice is the customers‟ perception of fairness about the policies, procedures and

different criteria used by the company, which led to the outcome (Blodgett et al, 1998). There are

five elements on procedural justice: process control, decision control, timing/speed, accessibility

and flexibility ( Laventhal et al ( 1980). Procedural justice is important in service recovery

because customers might be satisfied with the service recovery, but could be still unhappy,

because the process endured to seek redress was dissatisfying (Kelly et al, 1993). The speed with

which the problem is solved is an important element of procedural justice. Therefore, it can be

expected that the longer it takes to solve the problem the more the customer‟s perception that

procedural justice was violated. If the dissatisfied customer experiences the redress seeking

process positively, this influences the satisfaction level of the customer. As one of the important

elements of the service recovery process the following hypothesis is formulated to measure the

influence that procedural justice has on satisfaction with service recovery:

H0: Procedural justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1: Procedural justice in service recovery has a positive impact on customer satisfaction with

service recovery.

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Distributive justice

Distributive justice is primarily concerned with the outcome of the recovery seeking process. It is

about the effort the service provider made to solve the customer‟s problem and whether the

outcome offsets the cost the dissatisfied customer incurred in the redress seeking process

( Greenbery, 1990; Gilland, 1993). Some of the most quoted outcomes of distributive justice are

compensation, replacement, apologies (Blodget et al, 1997; Goodwin and Ross, 1992; Hoffman

and Kelly, 2000; Tax et al, 1998).Prior experience with the service provider and information how

other customers were treated in more or less same situation and the seriousness of the customers

loss are taken into account in the dissatisfied customers‟ assessment whether the compensation

was fair (tax et al., 1998). If the outcome of redress seeking process was experienced as fair, it

will have a positive influence on satisfaction level of the customer. It is expected that higher

levels of compensation leads to higher perceived justice evaluations. Distributive justice has a

major effect on customer‟s repatronage and negative WOM intentions. The following hypothesis

is formulated to measure the influence distributive justice has on customer satisfaction with

service recovery:

H0: Distributive justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1: Distributive justice in service recovery has a positive impact on customer satisfaction with

service recovery.

Interactional justice

Interactional justice focuses on how fair the interpersonal treatment was which the customer

received during the process (Tax et al., 1998,p 62). They have identified five important elements

of interactional justice: effort, empathy, explanation/ causal account, honesty and politeness. In

the case of service recovery, interactional justice is being referred to the way in which the

recovery process is operationalized and the outcome presented to the customer. The manner in

which managers and employees communicate with customers and the efforts made to resolve

problems affect customer satisfaction (Mohr and Bitner, 1995). Being polite, apologizing and

willingness to listen to the customer are critical in service encounters (Blodgett et al., 1997). To

21

measure how the customers experience how they were treated by the PU and their employees and

the influence interactional justice has on satisfaction with service recovery, the following

hypothesis is formulated:

H0: Interactional justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1: Interactional justice in service recovery has a positive impact on customer satisfaction

with service recovery.

Informational justice

Informational justice is about the adequacy and truthfulness of the information provided by the

company explaining what caused the service failure (Colquit, 2001). The justice dimensions of

informational justice focuses on the equity of the justification and the explanation the company

offers to the customer. It‟s about the decisions and about the reason behind the things that caused

the problem. Providing customers with proper information during the service recovery process is

very important. Because of this importance the influence of informational justice on service

recovery will be studied with the following hypothesis:

H0: Informational justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1. Informational justice in service recovery has a positive impact on customer satisfaction

with service recovery.

2.4.2 Results from satisfaction with service recovery

Perceived justice with a service recovery strategy would affect customer satisfaction level.

Customers are likely to react positively if initial service failures are revolved successfully (Tax et

al., 1998). In this study satisfaction with service recovery will be researched further in the context

of public utility companies.

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2.4.3 Corporate image

Corporate image has an impact on the organizations competitive standings, it‟s positioning and

also its capacity to increase customers loyalty, which leads to attracting new customers. This

research reviews corporate image from the marketing approach. In the marketing approach

corporate image is described as an overall impression that society has of an organization ( Abratt,

1989; Barich and Kotler, 1991; Bernstein, 1992; Dowling, 2001). Corporate image is viewed as

the response of customers to the total offering of the company and defined as the sum of ideas and

beliefs. It further can be seen as” a function of the accumulation of purchasing/ consumption

experiences over time “( Andreassen and Lindestad, 1998) and it consists of two main

components:

- A functional component, which is related to tangible attributes that can be measured more

easily.

- An emotional component, which is linked with psychological dimensions that are

manifested by attitudes and feelings towards a company.

These particular feelings are derived from experiences of individuals with an organization and

from the processing of information on the different attributes that determines the indicators of

corporate image. Therefore, corporate image is the result of the aggregate processes by which

customers compare the differences of the various attributes of companies ( Dowling, 1993).

Corporate image is essential for companies, it is key to security and maintaining public trust. It is

an important factor in the customers overall evaluation of service quality that is provided by a

company. It can be defined as the perception of a company that customers‟ hold in their

memories. Because it works as a filter through which an organization‟s whole operation is

perceived, it reflects a company‟s overall reputation. It impacts the customer‟s evaluation of

service quality, satisfaction and loyalty (Andreassen and Lindestad, 1998; Zins, 2001). In this

research corporate image is investigated as a moderating variable. This study will try to reveal

what impact corporate image has on perceived justice in service recovery and on satisfaction with

service recovery. It will try to investigate whether the image of the PU influences the customer‟s

perception about the way it handles the service recovery process. The following four hypotheses

are formulated to achieve this:

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Hypothesis

H0: Image does not positively moderate the relationship between interactional justice in

service recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between interactional justice in service

recovery and customer satisfaction with service recovery.

Hypothesis

H0: Image does not positively moderate the relationship between distributive justice in service

recovery and customer satisfaction with complaint handling.

Hl: Image positively moderates the relationship between distributive justice in service

recovery and customer satisfaction with service recovery.

Hypothesis

H0: Image does not positively moderate the relationship between procedural justice in service

recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between procedural justice in service

recovery and customer satisfaction with service recovery.

Hypothesis

H0: Image does not positively moderate the relationship between informational justice in

service recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between informational justice in service

recovery and customer satisfaction with service recovery.

2.5 Conceptual model

Public utility companies globally are facing changing market conditions. These changes make it

inevitable for these companies to apply marketing concepts to continuously improve their

services. Research has shown that customer complaint is an important tool for organizations to get

feedback from dissatisfied customers.

In this research we will investigate how service recovery is perceived by the complainers. When

customers are not satisfied and choose to complain, companies try to recover the service failure.

24

Perceived justice with service recovery is the independent variables and distributive, procedural,

informational and interactional justice regarding the service recovery will be operationalized. We

will measure how complaining customers of public utility companies in Suriname perceive

service recovery and what effect the service recovery has on satisfaction. In this study satisfaction

with the service recovery is the dependent variable. Corporate image is the moderating variable.

Figure 2, conceptual model.

It must be mentioned that the studies that established these theories were mainly conducted in the

USA and Europe. Most of the studies that have been used in this literature review have been

conducted in a competitive or loose monopoly market structure. Little academic research

information about customer complaint behavior, customer responses, service recovery and

customers characteristics are available in a monopolistic market structure.

The theories and arguments discussed in the literature review confirm the importance of customer

satisfaction for organizations. From the various literature reviewed, enough theoretical arguments

25

have been found that customer satisfaction can be of great importance for public utility

companies. The importance of customer complaint behavior and service recovery and its positive

impact on customer satisfaction are being discussed in this research. With the knowledge gained

from this literature review it is quite interesting to study how the different concepts of customer

service and the positive impact of service recovery on customer satisfaction can be utilized for

public utility companies in Suriname. Because most of the literature reviewed, has been

conducted in competitive environments, valuable insights can be gathered with this research.

As research indicates, service recovery can be a critical instrument for monopolistic public utility

companies to increase satisfaction for their customers.

26

CHAPTER III: RESEARCH METHODOLOGY

3.1 Introduction

As mentioned in chapter one there are very clear signs of upcoming competition in the utilities

industries in Suriname. In the telecom market competition has been introduced, and in the energy

market the government has allowed more parties to generate energy and sell this to the EBS. As

argued in chapter one and two the focus on the customer needs on behalf of the PU‟s will become

of great importance.

From the start the desire was to conduct a study in the field of customer satisfaction regarding the

public utility sector in Suriname. In the early stage of exploration it became quite clear that such a

study was not conducted in recent years in Suriname. This created an excellent opportunity to

contribute to quality improvement of services provided by PU‟s in Suriname. After having

explored the literature about customer satisfaction and discussions conducted with several

professors of the Lim A Po institute for Social studies the decision was made to conduct this study

within the EBS. As this research progressed, it became clear which challenges PU‟s are facing in

Suriname, the topic was narrowed down to the influence customer complaints has on customer

satisfaction in public utilities in Suriname. The effect that service recovery has on customer

satisfaction after a complaint has been dropped will be investigated further.

In this chapter the reader is provided with a clear outline of how this study about improving

customer satisfaction within PU‟s in Suriname is carried out. The theory described in chapter two

is used to determine which variables of perceived justice with service recovery, satisfaction with

service recovery and corporate image are analyzed and operationalized. This chapter further

consists of five paragraphs. Paragraph 3.2. deals with the research approach, the study approach

chosen is explained in more detail and the research questions are formulated . Paragraph 3.3.

gives the reader more insight about the research strategy followed, whereby paragraph 3.4

discusses the reliability and validity of this study.

27

Paragraph 3.5 describes the data collection process and paragraph 3.6 discusses how the data was

analyzed.

3.1.1. The EBS

Although we regard the EBS as a monopolist, there are different providers of energy in Suriname.

One part is done by the government, mostly in the interior of Suriname and the other major part is

covered by the EBS.

Figure 3, shows the number of customers per district.

The EBS owns and operates the EPAR and the ENIC systems, the two largest systems in their

operation. In total, three main power plants are connected to the EPAR transmission &

distribution network, of which one plant is owned by NV EBS and the others by private

companies. The private companies deliver power to NV EBS and can as such be considered as

independent power producers with whom the Government, as the sole shareholder of EBS, has

entered into power purchase agreements. Currently the EBS has 983 employees and is delivering

energy to 132, 452 customers.

Since the beginning of 2011the EBS is undergoing a major restructuring process. The company

has a new management, who has placed a huge emphasis on the customer focus of the company.

28

During the preliminary research of this thesis some interesting movements in the company‟s

structures were noticed in order to increase the customer focus. Referring to the earlier mentioned

changes in the public utility sector and the restructuring within the EBS there was a good fit to

conduct this research at the EBS. As customers also are becoming more demanding in Suriname

and the utility market is subject of increasing competition and deregulation, we see another

interesting development. In this specific situation the EBS transformation is also being initiated

by the company itself. These developments will serve the objective of this study well, because the

company also acknowledges that customers must be served with services that are more in line

with what they really need.

3.2 Research approach

To conduct this study a quantitative research approach is applied. A deductive study approach

was chosen whereby hypotheses were formulated from the theory regarding satisfaction with

service recovery, fairness of the complaint handling process and the corporate image. After the

research model was designed and the main variables were chosen, a questionnaire was developed

to measure these variables. The questionnaire was presented to customers that had filed a

complaint earlier. The questionnaire included questions to measure the different variables of the

research model (see appendix 1).With the data gathered and analyzed from the questionnaire the

hypotheses were tested.

3.3 Research strategy

This part of the study gives the reader an overview of the general plan of how the researcher will

answer the research questions that has been set.

As mentioned in chapter one the following problem statement was formulated in this study:

How can service recovery help improve customer satisfaction within public utility companies?

To conduct this study the following research questions were formulated:

The main research question of this study is: How does service recovery influence customer

satisfaction in public utility companies?

29

The following questions will be answered in this research:

1. What are the most important determinants of customer complaint behavior in PU‟s?

2. How does service recovery impact customer satisfaction in PU‟s?

3. What moderating roles does organizational image play in the relationship between

perceived justice of service recovery and customer satisfaction?

In this study we have a combination of “how” and “what” questions being asked. The “what”

question is being answered by conducting extensive literature study and the goal was to develop

hypothesis for further testing. The “how” question is being answered by conducting a survey

among customers of the EBS that have experienced the complaint handling and service recovery

process of the EBS. Survey is found to be a more suitable approach to gain a better understanding

of the research area and is more appropriate for a quantitative study.

3.3.1 The survey

As mentioned earlier, part of the strategy was to conduct a survey, which allows researchers to

collect large data from a sizable population in an economical way. Since the aim of this study was

to assess whether service recovery could help improve customer satisfaction within public utilities

in Suriname, the main focus is the customer‟s experience. A questionnaire was part of the strategy

to achieve this goal. Information of two existing questionnaires was used to develop the one for

this study. A pilot test was conducted to detect eventual weaknesses in the design of the

questionnaire. In addition to answer the questionnaire, these respondents were asked for

additional evaluations such as whether the statements made sense to them and whether they were

easy to understand. On average, 10 minutes was needed to fill in a questionnaire.

The sample size for this survey is held on a minimum of 350 questionnaires to test the regression

model. In the period of the 28th

of August till the 5th

of September 2011 the survey was carried out

in different areas of capital the Paramaribo. At the end of the study 365 questionnaires were filled

in and analyzed. Customers were selected for the sample by using the following three criteria:

- The survey was conducted under customers that live in capital Paramaribo, because more

than 65% of the customers of the EBS live in Paramaribo.

30

.

Figure 4, displays the different customers segment in Paramaribo.

- The EBS has a customer base of domestic, commercial and industrial customers.

Figure 5, displays different customer segments in Suriname.

This study is conducted among the domestic customers. This choice was made because,

during the research period it became clear that the domestic customers had a wider variety

of complaints that they dropped at utility companies in Suriname, compared with the

31

commercial and industrial customers. Also the domestic customers represent a larger

quantity than the other two customer groups.

- The customers must have experienced a service failure and reported this to the EBS in some

way (by mail, orally or in writing).

3.4 Validity and reliability

To reduce the possibility of getting answers wrong, necessary attention in designing the research

was paid to reliability and validity.

3.4.1 Validity

Validity is essential because it is important that the findings are really about what they appear to

be. The following steps were taken to ensure the validity of this research:

- Data was collected from reliable resources and only from domestic customers that live in

Paramaribo that have filed a complaint earlier;

- The questionnaire was developed based on literature review and major parts of it were

earlier used and tested in other research;

- The questionnaire was pilot tested by 12 persons;

- The data was collected in a period of 10 days, in this period of time no major events

happened regarding the research topic.

3.4.2 Reliability

Reliability is important to assure that the data collection methods used will yield consistent

findings if similar observations and conclusions were made by other researchers. A measure is

reliable to the degree that it supplies consistent results. With the assistance of SPSS the reliability

analysis was made. The following steps were taken to ensure the reliability of this research:

- The questionnaire was divided in four parts to assure proper focus of the responders.

32

- Data has been collected based on the frame of reference of discussed theories described in

this research. It is important that if a different researcher follows the same procedure and

uses the same questionnaire objects, the same conclusions will be made.

- The alpha cronbach test is taken for each variable, see table below.

Table 4, reliability scores.

As can be seen the chronbach alpha was in most cases between .81and .88. There was only one

relialibilty of .66 but overall the scores were reasonable according to statics. From the results

above the conclusion can be drawn that the data gathered was reliable.

3.5 Data gathering

To conduct this study, both secondary and primary research had to be carried out. The secondary

research was done to identify and select customers who complained earlier about a service failure

to the EBS in order to carry out the primary research. To understand the importance of each

statement a five- point Likert scale was used: 1= completely disagree, 2= disagree, 3 = neutral, 4=

agree and 5 = completely agree.

The questionnaire consisted of four parts; the first three parts were designed to operationalize the

research model. Statements were developed to measure the four independent variables clustered

into perceived justice, the dependent variable, satisfaction level with service recovery, and the

moderating variable, corporate image. The fourth part of the questionnaire consisted of

demographical factors.

Scale Questions Excluded

1 Procedural Justice 5 0.86

2 Informational Justice 5 0.88

3 Interactional Justice 5 0.86

4 Distributive Justice 3 0.81

5 Satisfaction with service recovery 3 0.88

6 Corporate Image 4 0.46 Question 24 en 25 0.66

33

Customer Satisfaction

Satisfaction with service recovery was measured to establish whether the customer was satisfied

with the steps taken by the EBS in the service recovery process. To measure the satisfaction with

service recovery three statements were formulated, with which the researcher tries to reveal the

satisfaction level of service recovery regarding customers of the EBS. Two of the statements

made were: “I had a positive experience when complaining to the EBS” and “In my opinion, EBS

has provided me with a satisfactory answer to the problem, on this specific occasion”. The

reported reliability of the initial scale used was .94. The reliability of the scale used in this

specific study is .88.

Perceived Justice with service recovery

The variable of perceived justice contained 4 sub categories:

Distributive justice;

Distributive justice was measured to investigate to which level the customer was satisfied with the

outcome of the service recovery process. There were three statements regarding this category that

is mainly trying to measure the effort the service provider made to solve the problem. One of the

statements in this part was: The final solution provided by the EBS was fair given the time and

hassle. The reported reliability of the initial scale used was .85. The reliability of the scale used in

this specific study is .81.

Procedural justice;

Procedural justice was measured to establish to which degree the customer found the decision

making process to be fair. This category that is mainly investigating the fairness of the policies,

procedures and different criteria used by the service provider to solve the problem contained five

statements. Some of the statements in this part of the questionnaire were: “I believe the EBS has

fair policies to handle problems”, “I believe that the complaints procedure of the EBS was

sufficient for me to solve the problem” and “The EBS responded quickly to my problem after I

had done my complaint”. The reported reliability of the initial scale used was .88 and the

reliability of the scale used in this specific study is .86

34

Informational justice;

Informational justice was measured to investigate to which degree the EBS customers found the

information they were provided with during the recovery process to be valuable for them. To

investigate how the customers experienced the information about the adequacy and the

truthfulness of the information provided by the company explaining what caused the problem,

there were five statements developed in the questionnaire. “I believe the EBS‟s explanation

regarding the causes behind the problem was reasonable” and “The EBS communicated the details of

the recovery of the services clearly, were two of the statements to measure informational justice. The

reported reliability of the initial scale used was .87 and the reliability of the scale used in this

specific study is .88

Interactional justice;

Interactional justice was measured to establish whether the customers were treated fair during the

service recovery process. With five statements formulated in the questionnaire, I wanted to reveal

how fair the employees treated the customers during the complaint process. Three of the

statements in this part of the questionnaire were: „The EBS employees did everything they could

to solve my problem”, “The employees of the EBS seemed interested in my problem” and “The

employees of the EBS understood my problem”. The reported reliability of the initial scale used

was .85 and the reliability of the scale used in this specific study is .86.

Image;

In the research model corporate image was the moderating variable. With this variable the

researcher wanted to reveal how the corporate image influenced the satisfaction with service

recovery and the perceived justice with the complaint handling. There were four statements in the

questionnaire to measure the impact of corporate image. During the analyses process two

statements were removed because the reliability of corporate image was not acceptable taking the

different statistical norms into consideration. One of the statements to measure the corporate

image was: “The EBS is considered to be one of the best companies in Suriname”. The reported

reliability of the initial scale used was .77 and the reliability of the scale used in this specific study

is .66.

35

Control variables

The fourth part of the questionnaire covered the demographical variables age, gender, income and

education. These demographical factors will not only be used to generate background information

of the respondents but also will be used to assess whether there are specific patterns between the

different groups of customers

Education

Complainers tend to belong to higher socio- economic groups (Bearden et al. ( 1980) and

Gronhaug and Zaltman ( 1980). They suggest that consumers who belong to these groups have

greater resources like self- confidence and information in dealing with problems. They state

further that these consumers tend to perceive less risk of humiliation in complaining. People from

upper socio- economic groups are able to buy more products and for this reason alone they

are more likely to experience more problems ( Gronhaug and Zaltman ,1980). Together with their

greater purchasing experience, this is likely to enhance complaining behavior.

Age

Most studies suggest that younger consumers are more likely to complain ( Andreasen and Best,

1977;Bearden,1983;Bearden et al.,1980;Gronhaug and Zaltman, 1980;Warland et al.,1975). They

grew up in a society that is more demanding and in which customers are encouraged to voice their

dissatisfaction.

Income

Income is suggested to be positively correlated to complaints ( Andreasen, 1988). The majority of

studies indicate a high correlation between high education and complaint frequency. Customers

with a higher income are considered to purchase more and thereby face a higher risk to encounter

a service failure.

Gender

Some studies suggest that females have a greater tendency to complain ( Hustad and Pessemier,

1973;Solnick and Hemenway, 1992), whereas one article has suggested that males have a greater

propensity to complain (Hogarth and English, 2002). These studies argue that females are more

focused on voicing their views during and giving their opinion during the recovery process.

36

3.6 Data analysis

After collecting the data, the process of analysis began. The outcome of the questionnaires was

analyzed in excel and the statistical program, SPSS. Five regression analyses were conducted to

test my model. With the first regression analyses I tested the hypotheses one till four and with the

other four analyses I tested the last four hypotheses. The constructs in this study were measured

using the Likert scales, adapted from previous investigations into specifics of customer

satisfaction research. The standard deviation, mean and mode of the independent, dependent and

the moderating variables are illustrated in the following tables:

37

Statistics

Moderator

Satisfaction Pro_Justice Info_Justice Inter_Justice Dist_Justice Corp_Image

Valid 365 365 365 365 365 363

Missing 0 0 0 0 0 2

3.2342 3.3619 3.3926 3.7186 3.3639 3.2562

3.6667 3.6 3.6 4 3.6667 3.5

4 4 4 4 4 4

1.03311 0.83226 0.81428 0.72039 0.9325 0.87739Std. Deviation

Statistics Dependent Variable

N

Mean

Median

Mode

Statistics Independent Variables

38

CHAPTER IV: RESEARCH FINDINGS

4.1 Introduction

This chapter gives the reader an outline of the findings of the data collected through the questionnaires.

It consists of 4 paragraphs: paragraph 4.2 provides the descriptive analysis of this research, mostly the

demographic data. Paragraph 4.3 deals with the findings of the hypothesis testing. The last paragraph

4.4 deals with additional analysis.

4.2 Descriptive analyses

The target group of the survey is the domestic customers that live in Paramaribo and have filed a

complaint in writing or orally to the EBS. From the approximately 500 customers approached to

participate, at the end of the survey process 365 questionnaires were processed.

In this research age, gender, education and income were included as characteristics of the complainers.

In chapter two these complaint characteristics were explained by reviewing different literature. The

result of the above listed demographics about the respondents who participated in this research is

further discussed:

Age

The survey consisted of five age groups. The majority of the respondents belonged to the age group of

35- 49 years, these were 146 of the 365, and it accounted for 40,3% of the total. The second large

group belonged to the age group of 50- 64 years, which was 119 of the 365 and accounted for 32, 9 %

of the total.

39

865

Figure 6, shows to which age group the different respondents belong.

Gender

From the 365 respondents participated in this research, more than half, 191 (53,1%) were male and

169 ( 46,9 %) were female.

Figure 7 gives an overview of the age of respondents.

40

Education

Figure 8 illustrates respondents‟ field of study in 7 categories plus the option “other”. The respondents

are from a wide variety of educational level, showing us that 101 respondents (28, 1 %) have a high

school level.

Figure 8, number of respondents based on their education level.

41

Income

The questionnaire consisted of seven possibilities to measure the income of the different respondents.

The majority of the respondents belong to the first three income groups, 89 belong to the group of <

SRD 1200, 92 to the group of SRD 1200- 2000 and 66 belong to the group of SRD 2000- 2800. These

first three groups are 69,2 % of the total.

Figure 9, shows an overview of the income of the respondents.

Correlation

The Pearson‟s correlation coefficient between the different independent, dependent and the moderating

variable are displayed in the table below. The table presents a two- tailed significance of each

correlation.

42

Table 5, shows the correlation coefficients of the different variables.

Pro Info Inter Dist Satis

Justice Justice Justice Justice faction

Education

Gender

Income

Pro Justice -0.044

0.444

Info Justice -0.022 .780**

0.707 0.000

Inter Justice -0.012 .697** .761**

0.834 0.000 0.000

Dist Justice -0.052 .729** .720** .558**

0.364 0.000 0.000 0.000

Satisfaction -0.035 .731** .697** .608** .776**

0.538 0.000 0.000 0.000 0.000

Corp Image -0.089 .391** .398** .375** .308** .361**

0.117 0.000 0.000 0.000 0.000 0.000Sig. (2-tailed) 0.442 0.044 0.034

-0.041 -.106* .112*Pearson Correlation

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

0.506 0.858 0.036

Pearson Correlation

Sig. (2-tailed) 0.688 0.218 0.225

-0.035 -0.009 .111*

Sig. (2-tailed)

Pearson Correlation

Sig. (2-tailed) 0.404 0.013 0.734

0.044 -.130* 0.018Pearson Correlation

-0.021 -0.065 0.064

Sig. (2-tailed) 0.433 0.028 0.094

0.041 -.116* 0.088Pearson Correlation

Sig. (2-tailed) 0.425 0.116 0.392

-0.042 -0.083 0.045Pearson Correlation

Sig. (2-tailed) 0.000 0.000 0.103

-0.094.227** .421**Pearson Correlation

Sig. (2-tailed) 0.134 0.614

0.08 -0.027Pearson Correlation

Sig. (2-tailed) 0.129

-0.081Pearson Correlation

Sig. (2-tailed)

Age Pearson Correlation

Age EducationGender IncomeCorp

Image

Correlations

43

The correlation between the variables indicates the strength of association or relationship between two

variables. The correlation coefficient is an important measure to indicate the relationship. The values

for the correlation coefficient (r) and their effect according to the statistics theory are:

Table 6, value and effect of correlation coefficient.

Pallant, 2007

4.3 Hypothesis testing

The reader is referred to paragraph 2.5for the formulated hypothesis of this study. To be able to follow

the findings of this research clearly the independent and the dependent variables are stated briefly.

There are four independent variables in this study: Procedural justice, distributive justice, interactional

justice and informational justice. To test the research model consisting of the four independent

variables, four hypotheses were formulated. Also four hypotheses were formulated to test the influence

of the moderating variable, corporate image.

Regression analyses were applied for the hypothesis testing. It was used to explain which predictors

(independent variables) contribute substantially to the outcome (dependent variable). In these analyses

the unstandardized coefficient of the beta was used to explain the strength of the relationship between

the different variables.

In the regression analyses the p – value was computed. A p – value is the probability, computed using

the test statistic, that measures the support or lack of support provided by a sample for the null

hypothesis. The theory of statistics states that if the p – value is less than or equal to the level of

significance (α), the null hypothesis can be rejected. The level of significance (α) is the probability of

making a Type I error, that is we reject H0 when it is true. The level of significance in this research is

0.05. Some guidelines statisticians suggest for interpreting p- values are:

- Less than 0.01- overwhelming evidence to conclude H1 is true;

- Between 0.01 and .05- strong evidence to conclude H1 is true;

R coefficient R coefficient Effect

.10 to .29 -.10 to - .29 small effect

.30 to .49 or -.30 to- .49 medium effect

.50 to 1.0 -.50 to -1.0 large effect

44

- Between 0.05 and .10- weak evidence to conclude H1 is true;

- Greater than 0.10- insufficient evidence to conclude H1 is true, ( Anderson, Sweeny, Williams,

Freeman and Shoesmith, 2009);

To test the eight hypotheses five regression analyses were carried out. The first regression analysis was

used to test the first four hypotheses. To test whether corporate image moderates the relationship

between the independent and the dependent variables four separate interaction terms ( predictor*

moderating variable) were included in the regression analyses ( Baron and Kenny, 1986).To test

hypothesis five- eight, separate regression analyses were conducted with the four independent

variables, the moderator and the four respective interaction term. The results of these five regression

analyses are displayed in the table below.

45

Table 7, results of regression analyses

Model 1 Model 2 Model 3 Model 4 Model 5

-0.925*** -0.616 -0.909* -0.601 -0.556

Age -0.037 -0.035 -0.037 -0.037 -0.038

Education 0.110** 0.108** 0.11** 0.109** 0.109**

Income -0.032 -0.033 -0.032 -0.035 -0.033

Gender 0.120* 0.114 0.12* 0.118* 0.113

Distributive justice 0.531*** 0.436*** 0.531*** 0.531*** 0.529***

Interactional justice 0.218*** 0.225*** 0.214 0.229*** 0.233***

Procedural justice 0.260*** 0.264*** 0.26*** 0.165 0.255***

Informational justice 0.061 0.052 0.061 0.049 -0.057

Corporate image .078* -0.026 0.072 -0.034 -0.046

Corporate image* Distributive justice 0.03

Corporate image* Interactional justice 0.002

Corporate image * Procedural justice 0.033

Corporate image* Informational justice 0.036

0.688 0.689 0.688 0.688 0.689

0.678 0.678 0.677 0.678 0.678

Interaction terms

Direct effects

Constant

Controls

Satisfaction with service recovery

***P<0.01, **P<0.05,* P<0.10

R²

Adjusted R²

46

Hypothesis 1

H0: Distributive justice in service recovery does not have a positive impact on customer satisfaction

with service recovery.

H1: Distributive justice in service recovery has a positive impact on customer satisfaction with

service recovery.

The regression analyses revealed a significant positive regression between distributive justice and

satisfaction with service recovery. Meaning that the higher the customers‟ distributive justice in service

recovery, the greater their satisfaction in service recovery, β = .531 and p = 0, 000. Because p < 0, 05

the outcome leads to rejection of the null hypothesis and acceptance of the alternative hypothesis.

Hypothesis 2

H0: Interactional justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1: Interactional justice in service recovery has a positive impact on customer satisfaction with

service recovery.

The regression analyses revealed a positive regression between interactional justice and satisfaction

with service recovery. Meaning that the higher the customers‟ interactional justice, the greater their

satisfaction in service recovery, β = .218 and p= .006.Because p < 0, 05 the outcome leads to rejection

of the null hypothesis and acceptance of the alternative hypothesis.

Hypothesis 3

H0: Procedural justice in service recovery does not have a positive impact on customer satisfaction

with service recovery.

H1: Procedural justice in service recovery has a positive impact on customer satisfaction with

service recovery.

The regression analyses revealed a significant regression between procedural justice and satisfaction

with service recovery. Meaning that the higher the customers‟ procedural justice, the greater their

satisfaction with service recovery. β = .260 and p= .001. Because p< 0.05 the outcome leads to

rejection of the null hypothesis and acceptance of the alternative hypothesis.

47

Hypothesis 4

H0: Informational justice in service recovery does not have a positive impact on customer

satisfaction with service recovery.

H1. Informational justice in service recovery has a positive impact on customer satisfaction with

service recovery.

The regression analyses revealed a weak regression between informational justice and satisfaction with

service recovery. Meaning that the lower customers‟ informational justice, the lower their satisfaction

with service recovery. β = .061 and p = .475. Because p> 0, 05 the outcome leads to acceptance of the

null hypothesis and rejection of the alternative hypothesis.

If the different test results of the first regression we see that distributive justice has the highest beta and

informational justice has the lowest.

As mentioned earlier an interaction term (predictor * moderating variable) was included in each of the

following four regression analyses to test the following four hypotheses.

Hypothesis 5

H0: Image does not positively moderate the relationship between distributive justice in service

recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between distributive justice in service recovery and

customer satisfaction with service recovery.

Multiple regression analyses were used to explore the relationship between distributive justice in

service recovery and satisfaction with service recovery, while controlling for corporate image as a

moderating variable. The result of β= .030 and p= .410 suggests that corporate image had little effect

on the relationship between distributive justice in service recovery and satisfaction with service

recovery. Meaning that corporate image does not have a moderating effect on distributive justice. This

outcome and the p- value of .410 leads to acceptance of the null hypothesis and rejection of the

alternative hypothesis.

48

Hypothesis 6

H0: Image does not positively moderate the relationship between interactional justice in service

recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between interactional justice in service recovery

and customer satisfaction with service recovery.

Multiple regression analyses were used to explore the relationship between interactional justice in

service recovery and satisfaction with service recovery, while controlling for corporate image as a

moderating variable. The result of β = .020 and p = .971.suggests that corporate image had little effect

on the relationship between interactional justice in service recovery and satisfaction with service

recovery. Meaning that corporate image does not have a moderating effect on interactional justice.

This outcome and the p- value of .971 leads to acceptance of the null hypothesis and rejection of the

alternative hypothesis.

Hypothesis 7

H0: Image does not positively moderate the relationship between procedural justice in service

recovery and customer satisfaction with service recovery.

Hl: Image positively moderates the relationship between procedural justice in service recovery

and customer satisfaction with service recovery.

Multiple regression analyses were used to explore the relationship between procedural justice in service

recovery and satisfaction with service recovery, while controlling for corporate image as a moderating

variable. The result of β = .033 and p = .419.suggests that corporate image had little effect on the

relationship between procedural justice in service recovery and satisfaction with service recovery.

Meaning that corporate image does not have a moderating effect on procedural justice. This outcome

and the p- value of .419 leads to acceptance of the null hypothesis and rejection of the alternative

hypothesis.

Hypothesis 8

H0: Image does not positively moderate the relationship between informational justice in service

recovery and customer satisfaction with service recovery.

49

Hl: Image positively moderates the relationship between informational justice in service recovery

and customer satisfaction with service recovery.

Multiple regression analyses were used to explore the relationship between informational justice in

service recovery and satisfaction with service recovery, while controlling for corporate image as a

moderating variable. The result of β = .073 and p = .388 suggests that corporate image had little effect

on the relationship between informational justice in service recovery and satisfaction with service

recovery. Meaning that corporate image does not have a moderating effect on informational justice.

This outcome and the p- value of .388 leads to acceptance of the null hypothesis and rejection of the

alternative hypothesis.

The test result of the last four regression analyses shows very weak β‟s. Moderation occurs when the

β‟s are significant. The test results revealed from the last four regression analyses indicate that

corporate image does not moderate in any of these cases. We also see that adding the moderating terms

to the main effects model increased the R² very slightly.

50

Table 8, summary of hypothesis tests

Code Alternative Hypothesis Test Result β; p-value

β =.531

p =.000

β =.218

p =.006

β =.260

p =.001

β =.061

p =.475

β=.030

p =.410

β =.020

p =.971

β =.033

p =.419

β=.036

p =.386

H1, 1Distributive justice in service recovery has a positive impact on customer

satisfaction with complaint handling.Regression Accept

H1, 2Interactional justice in service recovery has a positive impact on customer

satisfaction with complaint handling.Regression Accept

H1, 3Procedural justice in service recovery has a positive impact on customer

satisfaction with complaint handling.Regression Accept

H1, 4Informational justice in service recovery has a positive impact on customer

satisfaction with complaint handling.Regression Reject

H1, 5Image positively moderates the relationship between distributive justice in

service recovery and customer satisfaction with complaint handling.Regression Reject

H1, 6 Image positively moderates the relationship between interactional justice in

service recovery and customer satisfaction with complaint handling. Regression Reject

H1, 7Image positively moderates the relationship between procedural justice in

service recovery and customer satisfaction with complaint handling.Regression Reject

H1, 8Image positively moderates the relationship between informational justice in

service recovery and customer satisfaction with complaint handling.Regression Reject

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Figure 10, hypothesized model

52

4.3 Additional analysis

Although the demographical variables were not part of the hypotheses, in this paragraph the results are

discussed of some additional analyses that were carried out with these variables. The demographical

variables listed in this research were also used as complainer‟s characteristics. The objective was to

examine whether there were differences in the perception of the different customer groups regarding

satisfaction with service recovery, corporate image and the different independent variables. The

ANOVA test was used to conduct this analysis.

Age

The test result shows no significant outcome between the five age groups. After this the analysis was

done once more by clustering the six groups to three, but still no significant results were measured.

This indicates that the different groups of customers do not perceive satisfaction with complaint

handling differently. Table 9, ANOVA results for age.

Ta

Sum of

Squaresdf

Mean

SquareF Sig.

Between Groups 0.584 2 0.292 0.429 0.651

Within Groups 242.111 356 0.68

Total 242.695 358

Between Groups 0.908 2 0.454 0.698 0.498

Within Groups 231.635 356 0.651

Total 232.544 358

Between Groups 0.707 2 0.353 0.706 0.494

Within Groups 178.148 356 0.5

Total 178.855 358

Between Groups 1.712 2 0.856 0.992 0.372

Within Groups 307.286 356 0.863

Total 308.998 358

Between Groups 2.351 2 1.175 1.113 0.33

Within Groups 376.038 356 1.056

Total 378.388 358

Between Groups 0.452 2 0.226 0.299 0.742

Within Groups 269.471 356 0.757

Total 269.923 358

Satisfaction

Corp_Image

ANOVA

Pro_Justice

Info_Justice

Inter_Justice

Dist_Justice

53

Gender

The test result show significant values for satisfaction with service recovery and corporate image.

These results indicate that men and women perceive satisfaction with service recovery and corporate

image differently. Table 10, ANOVA results for gender.

Sum of

Squaresdf

Mean

SquareF Sig.

Between Groups 0.514 1 0.514 0.735 0.392

Within Groups 250.269 358 0.699

Total 250.783 359

Between Groups 1.882 1 1.882 2.821 0.094

Within Groups 238.858 358 0.667

Total 240.74 359

Between Groups 0.061 1 0.061 0.115 0.734

Within Groups 188.488 358 0.527

Total 188.549 359

Between Groups 1.293 1 1.293 1.48 0.225

Within Groups 312.867 358 0.874

Total 314.16 359

Between Groups 4.71 1 4.71 4.446 0.036

Within Groups 379.194 358 1.059

Total 383.904 359

Between Groups 3.469 1 3.469 4.55 0.034

Within Groups 272.974 358 0.762

Total 276.444 359

Satisfaction

Corp_Image

ANOVA

Pro_Justice

Info_Justice

Inter_Justice

Dist_Justice

54

Income

The test result shows no significant outcome between the different income groups. After conducting

this analysis for the initial income groups the analysis was done once more by clustering the seven

groups to three. This analysis still did not show any significant results. This indicates that customers

with differences in income level do not perceive satisfaction with complaint handling differently. Table

11, ANOVA results for income.

Sum of

Squaresdf

Mean

SquareF Sig.

Between Groups 0.521 2 0.26 0.384 0.681

Within Groups 206.819 305 0.678

Total 207.34 307

Between Groups 0.474 2 0.237 0.357 0.7

Within Groups 202.792 305 0.665

Total 203.266 307

Between Groups 0.034 2 0.017 0.034 0.966

Within Groups 149.677 305 0.491

Total 149.711 307

Between Groups 2.359 2 1.179 1.331 0.266

Within Groups 270.175 305 0.886

Total 272.533 307

Between Groups 0.51 2 0.255 0.237 0.789

Within Groups 328.008 305 1.075

Total 328.519 307

Between Groups 3.125 2 1.562 2.002 0.137

Within Groups 238.008 305 0.78

Total 241.133 307

Dist_Justice

Satisfaction

Corp_Image

ANOVA

Pro_Justice

Info_Justice

Inter_Justice

55

Education

Significant differences were measured within the different customer groups regarding interactional

justice and corporate image. In the case of interactional justice these differences were measured in the

customer groups of primary education and high school. In the case of corporate image significant

differences were measured in the customer segment with a primary educational background. These

results indicate that customers of these educational backgrounds perceive interactional justice and

corporate image differently. Table 12, ANOVA results for education.

Sum of

Squaresdf

Mean

SquareF Sig.

Between Groups 3.374 3 1.125 1.615 0.186

Within Groups 247.939 356 0.696

Total 251.313 359

Between Groups 3.903 3 1.301 1.961 0.119

Within Groups 236.136 356 0.663

Total 240.039 359

Between Groups 6.995 3 2.332 4.588 0.004

Within Groups 180.934 356 0.508

Total 187.929 359

Between Groups 4.59 3 1.53 1.763 0.154

Within Groups 308.893 356 0.868

Total 313.483 359

Between Groups 0.997 3 0.332 0.308 0.82

Within Groups 384.492 356 1.08

Total 385.489 359

Between Groups 6.988 3 2.329 3.094 0.027

Within Groups 268.012 356 0.753

Total 275 359

Satisfaction

Corp_Image

ANOVA

Pro_Justice

Info_Justice

Inter_Justice

Dist_Justice

56

In this research different regression models were presented to test the hypotheses, in table 7 crucial

information of these models is displayed such as the R and the R². The R² illustrates how much of the

variability in the outcome can be accounted for the predictors. The R² of the different models slightly

differ from each other. To provide the best model the first regression was used which consisted of the

IV, DV, moderating variable and the different control variable. The value is be held on 68, 8%,

indicating that totality of the predictors account for 68, 8% of the variation in satisfaction. This figure

of 68, 8% indicates that the predictors of this model for a major part explain the variation in

satisfaction. The adjusted R² value illustrates the quality of generalization of the model presented.

Ideally the value of the R² and the adjusted R² are very close. In our model the difference of these

values is 1% (68.8%- 67.8%). This difference indicates that if this research model was derived from the

total population rather than the sample, it would account for 1 % less variation in the outcome.

According to the regression analysis performed it turns out that satisfaction in this research is

determinant as follows: Satisfaction for service recovery = -0.925 + 0.260*Procedural Justice +

0.218*Interactional Justice + 0.513*Distributive Justice

In this chapter the results of the different analyses were displayed in detail. Further analyses will be

carried out and argumentation about the findings will be provided in the next and final chapter.

57

CHAPTER V: DISCUSSION

5.1 Introduction

From the literature review conducted we have learned that this subject is very broad and gains much

attention from public and private organizations globally. In general, there is a lot of literature and

studies regarding customer satisfaction concerning public and private companies. When it comes to

PU‟s in the monopolistic context in Suriname there is not much research information available.

Moreover, in the past 10 years there was little to be found on studies conducted in the field of customer

satisfaction in the monopolistic context facing a transformation process. This study is carried out in the

PU sector in Suriname, a sector that has many challenges ahead. The study started with discussing the

changing environment that PU‟s are facing, and focused further on the importance of customer

satisfaction for these companies. Later on the importance of customer complaint behavior in relation to

the improvement of customer satisfaction was thoroughly emphasized. After this the benefits of service

recovery, which is an important instrument in a monopolistic context to improve customer satisfaction

was researched. Finally the research models with the different variables were operationalized with a

survey conducted among domestic customers of the EBS.

In this final chapter analyses are made of the results obtained from the data. The hypotheses will be

addressed further and argumentation will be provided based on the findings presented in chapter four.

The research questions will be answered based on the analysis and results of the statistical tests

performed in the previous chapter. The theoretical and managerial implications will be discussed and

suggestions for future research will be given. This chapter consists of six paragraphs, in paragraph 5.2

the main findings are discussed. In paragraph 5.3 the research question will be answered. The

conclusions and the recommendations will be discussed in the chapters 5.4 and 5.5. In Paragraph 5.6

the limitation and the implication for further research of this research will be discussed.

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5.2 Main findings

Perceived justice in service recovery is a cluster of four independent variables distributive, procedural,

interactional and informational justice. The dependent variable is satisfaction with service recovery and

the moderating variable is corporate image. The reader is referred to paragraph 2.5 for the conceptual

model. The problem statement of this study was: How can service recovery help improve customer

satisfaction within public utility companies?

The objective of this research was to determine how customer complaint behavior in public utility

companies in Suriname influences customer satisfaction and to determine which variables influence

customer satisfaction the most in the case of public utilities in Suriname. Further the researcher wanted

to investigate how service recovery can improve customer satisfaction for public utility companies in

Suriname. The main research question of this study was: How does service recovery influence

customer satisfaction in public utility companies? This study shows that perceived justice with service

recovery does contribute to satisfaction with service recovery as described in the literature review.

Previous studies have shown that customers voicing about their dissatisfaction with poor services give

service providers the chance to recover these service failures. What is done and how it is done

influences the customer‟s perception of the service recovery. The fairness theory is seen as the

dominant theoretical framework applied to service recovery. This theory relates to the perceived

fairness of a transaction. Customers make their judgment based on the level to which the service

recovery process was fair and these judgments influence their satisfaction ( Chebat and Slusarczyk,

2005). The main contribution of this thesis, drawn from this empirical research in a monopolistic

market, provides for the most part a similar picture. In this study, complaining customers experience

service recovery to have a significant impact on satisfaction with service recovery. The findings of this

study show three important results:

1. Improving customer satisfaction is critical for every company, especially PU‟s facing changing

market conditions.

2. Of the four elements of justice studied in this research, distributive justice has the largest impact

on satisfaction.

3. Corporate image does not have a strong impact on the relationship between justice with service

recovery and satisfaction with service recovery.

59

5.2.1. Customer satisfaction is critical for PU’s

This study shows that companies globally are facing more intense customer service pressures than

before. The changing market situation makes it critical for PU‟s in general, but also those operating in

Suriname to focus more on improving customer satisfaction. The first H0 of this study, that distributive

justice in service recovery does not have a positive impact on customer was rejected and the H1 was

accepted. Distributive justice is primarily concerned with the outcome of the recovery seeking process.

It is about the effort the service provider made to solve the problem and whether the outcome of

recovery seeking process offsets the cost the offended customer incurred. The result tells us that

complaining customers ascribe distributive justice to have the greatest value on satisfaction with

service recovery. The ANOVA test conducted with the control variables age, gender, income and

education in general did not show significant relationships between the independent, dependent and the

moderating variable. Meaning that the different customer segments does not value perceived justice in

service recovery, satisfaction with service recovery and the impact of the moderating variable

corporate image on these two variables differently. Instead, the results show strong similarities between

the different customer groups. This means that customer satisfaction is strongly determent by the

outcome of the recovery process. Therefore, we can conclude that customers in the monopolistic PU

context form their judgments about satisfaction mainly by the outcome. These results can be explained

by the type of product and service investigated in this study. Electricity is experienced as a dissatisfier,

a product that customers simply expect to be available when they need it. Thus, in a PU monopolistic

context coping with a service failure encounter, the outcome of the process is of great importance for

the customer. Management of these companies should implement a complaint management process that

focuses strongly on the outcome of the service recovery process.

The second H0 of this study, that interactional justice in service recovery does not have a positive

impact on customer satisfaction with service recovery was rejected and the H1 was accepted. In the

literature review we defined interactional justice as the focus on how fair the interpersonal treatment

was which the customer receives during the process of seeking service recovery. The result tells us that

customer‟s give interactional justice great value on satisfaction with service recovery. The ANOVA

test conducted with the different control variables mentioned above indicates that customers with

different educational background perceive interactional justice differently. The Tukey post- hoc

analysis revealed that there was a statistically significant difference between the educational group

“other” and the other six educational groups. The group “other” consisting of eight respondents had the

60

lowest mean, 2.85. The other six educational groups showed means between 3.6 and 3.9. The group of

“other” can be seen as a group that doesn‟t have any formal education and they also can be categorized

as the group with the lowest education. An explanation of this result can be that the customer service

employees don‟t have the proper skills to assist this group of customers and that these customers for

instance feel they are not treated respectfully. PU‟s have to focus more on this group of customers. This

result indicates that treating the customer politely and courteously boosts the customer‟s satisfaction

level. Contact employees must possess sufficient interpersonal skills. PU‟s must make proper effort in

training their employees and they must design practices to respond to dissatisfaction regarding all the

different segments. Service encounter employees have to know what they are doing and why they are

doing it, in order to be able to provide the customer with a higher level of service. This result shows the

importance for PU‟s to select employees with empathy and a high level of service orientation. The

PU‟s must be aware that customers of different educational background expect to be approached

differently.

The third H0, that procedural justice in service recovery does not have a positive impact on customer

satisfaction with complaint handling was, rejected and the H1 was accepted. Procedural justice in the

literature review is defined as the customers‟ perception of how fair the policies, procedures and

different criteria were, which were used by the company in the recovery seeking process. Complaining

customers in the context of this study ascribe procedural justice to have a great value on satisfaction

with service recovery. The ANOVA test conducted with the different control variables indicates that

customers do not perceive procedural justice differently and that all the different customer groups have

the same demand on this issue. This indicates that the customers value employees that are empowered

and have the authority to act quickly in solving the problem. Management of PU‟s should focus on

providing their employees with sufficient responsibility and authority to make decisions that solves the

problem. Because of the critical value electricity and the involved services have for customers they

demand that there problem are solved promptly and properly.

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5.2.2 Customers value the outcome of the process more than the treatment

This indicates that customers value fairness of outcomes as a result of the recovery process to be the

most important component. This result is consistent with other studies, in which distributive justice also

was found to have the greatest impact on satisfaction ( Clemmer, 1993; Matilla, 2001). The results

show that complaining customers form their overall judgment about the different aspects of the service

recovery process by the fairness of the outcome, the treatment they received and procedures of the

process. Furthermore we see that these judgments have a positive impact on customer satisfaction.

The fourth H0, that informational justice in service recovery does not have a positive impact on

customer satisfaction with service recovery, was accepted and the H1 was rejected. Informational

justice as defined in this study focuses on the equity of the justification and the explanation the

company offers to the customer. The result of this test tells us that complaining customers in the

context of this study ascribe informational justice to have no significant value on satisfaction with

service recovery. Meaning, that complaining customers facing service failure value information

regarding the cause of the service failure less than the other three elements of perceived justice with

service recovery. Electricity seems to be so important in daily live for customers that the cause of the

problem is valued as less important when a problem occurs. It seems that it is more important for the

customer to get the problem solved as quickly as possible. The ANOVA test conducted with the

different control variables mentioned indicates that customers do not perceive informational justice

differently. The characteristics of the product and services and its importance for the customer show

that PU‟s must focus far more on solving the problem promptly and treating the customer politely and

courteously.

The moderating variable corporate image was introduced in the relationship of the IV and the DV.

With the introduction of this variable the researcher wanted to measure whether corporate image

positively moderates the relationship between the four IV‟s and the DV separately. In the literature

review corporate image is stated to be essential for companies and it is key to security and maintaining

public trust. It is further argued that it is an important factor in the customers overall evaluation of

service quality that is provided by the service provider. It can be defined as the perception of a

company that customers‟ hold in their memories and that it reflects a company‟s overall reputation. The

test results of the hypotheses five, six, seven and eight indicate that corporate image does not have a

significant influence on the relationship of IV‟s and DV variable. This is a notable finding. Looking

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further at the test result we see, that corporate image does not moderate the relationship of the IV and

DV variables. Thus, it does not matter if corporate image is high or low, the effect of perceived justice

in service recovery will be the same on satisfaction with service recovery. The result of this test

demonstrates further that complaining customers differentiated by education, income, gender and age

only perceive corporate image differently in the customer segment education. The Tukey post- hoc

analysis revealed that there was a statistically significant difference between the educational group,

higher vocational education and the other six groups. This group consisting of fifty eight respondents

had the lowest mean, 2.9. The other six educational groups showed means between 3.2 and 3.6. The

groups of higher vocational education together with the group of “university” are the groups of

respondents with the highest education. The results show that the group of “university”, 35 respondents

had a mean of 3.2. This mean is the lowest after higher educational education. This indicates that the

customers with the highest education level perceive the image of the EBS less than the other groups. In

their memories they experience the EBS less favorable regarding their reputation and the service

quality they deliver. It can be that because of their education level they demand more of the EBS than

other customers. They don‟t only demand a speedy and fair outcome of the process, but they also

expect the EBS to deliver better services.

5.2.3 Corporate image does not seem to matter when it comes to the impact of

service recovery on satisfaction

In chapter 2.3.1 it was mentioned that customer complaint behavior in a monopolistic market tends to

follow another set of rules than in competitive markets. This explanation can also be found in the kind

of product and services investigated. This product and its availability seem to be so critical for the

customer that the image the provider has, does not matter that much. Another explanation can be found

in the monopolistic market structure in which the EBS operates. The customer does not have another

option than to buy the product from the EBS, which makes that corporate image does not have the

effect that was suggested in the literature. Thus, it does not matter if corporate image is high or low, the

effect of perceived justice in service recovery will be the same on satisfaction with service recovery.

We see this result also because dissatisfied customers in the context of this study demand the problem

to be solved promptly and properly and they want to be treated politely during this process. Corporate

63

image obviously does not play an important role in for seeing in the need of the customer, the problem

should simply be solved.

5.3 Answers to research question

In this paragraph the research questions will be answered with the knowledge gained from the literature

study and the analysis of the collected data

The main research question of this study was formulated as follows: How does service recovery

influence customer satisfaction in public utility companies? The main research question was divided

into three sub questions.

What are the most important determinants of customer complaint behavior in PU’s? From the

literature study it became clear that the individual, the provider, service and the market factors are the

main factors that determine customer complaint behavior in PU‟s. The kind of people we are, the type

of service involved in the service failure process and the market structure determines customer

complaints behavior importantly in PU‟s.

How does service recovery impact customer satisfaction in PU’s?

In chapter two, paragraph 2.4 is argued that in a monopolistic environment service recovery is an

important tool to satisfy customers when they complain about a service failure. Referring to our

findings in chapter four, the outcome is that the first three sub variables significantly contribute to

satisfaction with service recovery and that the fourth sub variable, informational justice does not

contribute significantly to satisfaction with service recovery. The results show that complaining

customers in the context of this study value the outcome of the service recovery process the most. The

answer to the second research question is that service recovery positively impacts customer satisfaction

in PU‟s.

What moderating roles does organizational image play in the relationship between perceived

justice with service recovery and satisfaction with service recovery?

When it comes to the interaction pattern between perceived justice with service recovery and

satisfaction with service recovery, we see that corporate image does not significantly affect the

relationship between perceived justice with service recovery and satisfaction with service recovery.

64

This finding is important to mention, especially since some studies ( Smidts et al, 2001) have

considered the moderating effect of corporate image. This finding suggests an interesting theoretical

insight since very few studies have been conducted with the moderating affect of the relationship of

perceived justice with service recovery and satisfaction with service recovery in a monopolistic PU

context. This result indicates that it does not matter if corporate image is high or low, the effect of

perceived justice in service recovery will be the same on satisfaction with service recovery. This

contrary to the literature review discussed in this study, which argues that corporate image is an

important factor in the customers overall evaluation of service quality. It can be defined as the

perception of a company that customers‟ hold in their memories and that it reflects a company‟s overall

reputation. Surprisingly this important issue is neglected by customers in the monopolistic PU context,

thus it does not play a significant moderating role.

5.4 Conclusion

This study confirmed that focusing on improvement of customer satisfaction is critical for

organizations. Different researchers argue that nowadays PU‟s increasingly focus on customer

satisfaction because it is critical for financial success. Service recovery was recognized as a valuable

instrument to increase customer satisfaction in the monopolistic context regarding PU‟s. A model was

developed consisting of perceived justice in service recovery as independent variable and satisfaction

with service recovery as dependent variable, to measure customer satisfaction. Corporate image was

included in the model as moderating variable to measure the impact it has on the relationship of the

IV‟s and the DV. The results of this study demonstrate that distributive justice (Q4-6), procedural

justice (Q7-11) and interactional justice (Q17-21) have a high impact on satisfaction with service

recovery. The findings illustrate that distributive justice has the strongest contribution on satisfaction.

These three variables have a contribution of 68,4 % on satisfaction in this model. The study results

demonstrate that informational justice (Q12-16) does not have a significant impact on satisfaction. An

interesting result was that the moderating variable, corporate image, contrary with what was indicated

in the literature review does not have a significant impact on satisfaction. Another interesting result was

contrary to what was described in the literature review regarding complainer characteristics and their

behavior conducted in competitive and loose monopolies. In this present study in general no significant

differences were measured in the way the different customer segment perceive justice in service

65

recovery and satisfaction with service recovery. Only in the case of interactional justice and corporate

image we saw some difference in the customer segment education. The contribution of this study

provides a different picture. This raises the question whether this is a reflection of a PU operating in a

monopolistic market in general or the particular monopolistic PU studied in this research. The results

of this study are significant for four reasons. I, we see that also for PU‟s focusing on satisfaction is

critical. II, we see that these results are consistent with other studies conducted in a competitive

environment, in which distributive justice also was found to have the greatest impact on satisfaction.

This study shows further that customers value the outcome of the process more than the treatment, the

procedures and the information they get during the process. III, we see that corporate image does not

significantly moderate the relationship of the IV‟s and the DV as different research argues. IV, the

different customer segments do not perceive satisfaction differently. These findings can cautiously be

explained by the market structure and the type of product and services this study has covered.

Electricity is a commodity and has few specialties‟ compared to other services. Customer‟s belief that

electricity is a naturally given supply, they rarely compare the benefits with its price, whether it has a

continuous supply or if the quality has been changed since its invention. Customers simply expect to

consume this product to its fullest benefit whenever needed.

5.5 Recommendations

From this research the importance of customer satisfaction for both private and public utility

companies became clear. The study results revealed that service recovery has a positive impact on

satisfaction in PU‟s operating in a monopolistic context. The results brought to light how complaining

customers perceive the different elements of the service recovery process and how satisfied they are

with the service recovery process and outcome. The reader is asked to keep in mind that this study was

carried out for the domestic customers of the EBS. The outcome of the study makes clear how the four

elements of perceived justice with service recovery are experienced by the complaining customers. The

study makes clear that corporate image does not moderate the relationship between perceived justice

with service recovery and satisfaction with service recovery. The study result shows different results

about the customer characteristics.

The outcome of this research reveals important reasons that make it absolutely necessary for PU‟s in

Suriname to start incorporating these practices in their organizations, especially those PU‟s that are

66

facing changing market situations in the near future. PU‟s must learn to treat and solve service failures

in order to reduce the damages they cause to a certain minimum. It is also of great importance in the

service failure context to implement an effective complaint management which is crucial to reach

higher customer satisfaction levels. Perceived justice in service recovery, especially distributive,

procedural and interactional justice are fundamental because they positively impact satisfaction. PU‟s

should pay proper attention to these factors and establish sufficient compensation and apology

strategies and train its employees to act prompt when problems occur. It is important that front office

employees posses sufficient interpersonal and technical skills. PU‟s must make proper training efforts

and design practices to respond to dissatisfaction. Employees must know exactly what they are doing

and why they are doing it, in order to provide the dissatisfied customer with a higher level of customer

satisfaction. Focusing on these issues should allow these companies operating in a monopolistic context

to improve customer satisfaction and prepare them to enter an environment with changing market

conditions and changing customer preferences. The four stage model of Zairi can be applied to achieve

these goals. As confirmed by this study, listening to the voice of the customer has benefits for the

customer as well as for the service provider. With the information gathered the provider can investigate

the root cause and develop sufficient action. This study has clearly shown that the outcome of this

process combined with the treatment the customer gets and the procedures followed are valued the

most by the customer. This makes it very important to focus on solving the problem as quick as

possible. Implementing the actions necessary and monitoring them continuously can help PU‟s to

improve customer satisfaction within PU‟s. This study is conducted within the domestic customers of

the EBS, it is finally recommended to conduct further research within the other customer segments.

This will be helpful in obtaining information regarding the experience the commercial and industrial

customers have with the service recovery process and the impact it has on customer satisfaction.

67

5.6 Limitation and implication for further research

Limitation

This research has some limitations, which constrains the findings of this study. Mainly this study has

three limitations. I, it is conducted in a single organization, which restricts the extent to which the

findings can be generalized to other organizations. But on the other hand, there are many similarities

that are applicable for other PU‟s and this study has an implication that goes beyond the EBS. II, it is

conducted among domestic customers of a PU. This restricts the extent to which the findings of the

study can be used to generalize it to the other two major customer segments, commercial and industrial

customers. The researcher chose to conduct the study within this group because it represents the largest

customer segment and because customer satisfaction nowadays plays a critical role within this group.

This choice was also made because PU‟s in Suriname already have practices that focus more

extensively on the specific issues of corporate customers. III, there is possibility of bias in this research,

since all my variables are measured through one single survey. Also customers that have experienced

the service recovery process some time ago may not have been able to reproduce the information

needed for the questionnaire properly. To minimize potential bias all questionnaires were anonymous

and all the questions were grouped per variable. Also respondents were ensured that there was no right

or wrong answers.

Implication for further research

As the public utility sector in Suriname is expected to undergo changes in the feature, this study can be

used as a starting point and valuable piece for future research. There has been little empirical research

on customer complaint behavior, satisfaction with service recovery and the role that corporate image

has on the relationship between perceived justice on service recovery and satisfaction. If customers are

aware that they cannot switch to another service provider, this will trigger complaint behavior that

probably is different from competitive markets. Future studies can be extended to the difference of

complaint behavior in monopolistic and competitive markets. Much research is done about complainers

in competitive markets, but very little is known about complaining in monopolistic markets. Also

future research should focus on the role that corporate image has on satisfaction in other PU‟s and

whether there are differences in findings with this study. It is important to investigate if this finding

only counts in the case of the EBS or whether it is also applicable for other PU‟s providing different

products and services.

68

It is important that service providers understand the relationship they have with the customer. Service

providers should encourage dissatisfied customers to complain to the provider, which gives the

provider the change to remedy these problems. But if dissatisfied customers are loyal to the provider or

they perceive that complaining is probably fruitless, they might not take action. Customers might not

complain and become silent in a monopolistic market. This is important for this market structure

because there are no external alternative providers to whom the dissatisfied customer can switch to.

The challenge PU‟s are facing in Suriname is how they can anticipate on customer‟s complaints and

how they can facilitate the complaint process to its fullest potential.

With the knowledge and information gathered with my study the Management of the PU‟s will be able

to maximize the service recovery process and thereby improve customer satisfaction. It is

recommended that management of these companies endorse further research on customer satisfaction

issues in PU‟s in the monopolistic context. These studies will help obtain more in depth information,

which can be used to facilitate the change process these companies are facing. Knowing how their

company is doing and what the customer expects from them will be managed more successfully with

proper information in hand.

69

GLOSSARY

Data: The collection of observations and information resulting from the survey process (Forster, 2010).

Population: The set of all elements of interest in a particular study (Anderson, Sweeny, Williams,

Freeman, Shoesmith, 2009).

Pre test: An initial evaluation of the survey design by using a small sub sample of the intended

population for preliminary information (Forster, 2010).

Questionnaire: A form containing a set of questions submitted to people to gain statistical information

(elook.org).

Respondent: A person who is called upon to issue a response of a communication made by another

(Wikipedia).

Sample: A subject of the population (Anderson, Sweeny, Williams, Freeman, Shoesmith, 2009).

Survey: A sampling or partial collection of facts, figures or opinions taken and used to approximate or

indicate what a complete collection and analysis might reveal (Forster, 2010).

Mean: A measure of central location computed by summing the data values and dividing by the

number of observations (Anderson, Sweeny, Williams, Freeman, Shoesmith, 2009).

Beta: Is the probability that a statistical test will generate a false-negative error: failing to assert a

defined pattern of deviation from a null pattern in circumstances where the defined pattern exists

(elook.org).

Regression Coefficients: Measures the contribution of the independent variable to the prediction. Each

coefficient multiplies the corresponding variable in forming the best prediction of the dependent

variable. The C or constant coefficient is the base level of the prediction when all other independent

variables are zero (Forster, 2010).

Standard Errors: Measures the statistical reliability of the regression coefficients where the larger the

standard error, the more statistical noise affects the coefficient. It measures the strength of the residuals

(Forster, 2010).

70

Sample Variance: Is a measure of dispersion. In other words, it shows how the sample data varies

around the mean (Forster, 2010).

Standard Deviation: A measure of variability computed by taking the positive square root of the

variance (Anderson, Sweeny, Williams, Freeman, Shoesmith, 2009).

Degrees of Freedom: Is the number of observations minus the number of coefficients estimated. The

lower the degrees of freedom, the less reliable the estimate is likely to be (Forster, 2010).

R: Measures the "goodness of fit." In other words, it measures the success of the regression in

predicting the values of the dependent variable within the sample. It is the fraction of the variance of

the dependent variable explained by the independent variable (Forster, 2010).

Adjusted R²: Is R adjusted for degrees of freedom. A slightly different variance is used with this

measure than with R². Adjusted R²will increase or decrease depending on whether the improvement in

fit caused by the addition of the new variable outweighs the loss of the degree of freedom (Forster,

2010).

Correlation Coefficient: Measures the strength and direction of the linear relationship between two

variables (X and Y). The value lies between -1 and 1.The larger the correlation coefficient the larger

the linear relationship between these two variables (Forster, 2010).

Level of Significance: The probability of making a Type I error when the null hypothesis is true as an

equality. The level of significance is usually between 0.01 and 0.05 (Anderson, Sweeny, Williams,

Freeman, Shoesmith, 2009).

Test statistic: A statistic whose value helps determines whether a null hypothesis can be rejected

(elook.org).

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LIST OF ABBREVIATIONS

EBS: Energiebedrijven Suriname

IV: Independent Variable

DV: Dependent Variable

PU: Public Utilities

WOM: Word of Mouth

ANOVA: Analysis of Variance

72

LIST OF FIGURES

Figure 1: Four stage model to improve customer satisfaction;

Figure 2: Conceptual model;

Figure 3: Numbers of customers by district;

Figure 4: Different customer segments in Paramaribo;

Figure 5: Different customer segments in Suriname;

Figure 6: Age groups the different customers belong to;

Figure 7: Age of the respondents;

Figure 8: Number of respondents based their education level;

Figure 9: overview of the income of respondents;

Figure 10: Hypothesized model.

73

LIST OF TABLES

Table 1: Information regarding the dependent variable;

Table 2: Information regarding the independent variable;

Table 3: Information regarding the moderating variable;

Table 4: Information regarding the reliability scores;

Table 5: Correlation coefficients of the different variables;

Table 6: Value and effect of correlation coefficients;

Table 7: Results of regression analyses;

Table 8: Summary of hypotheses tests;

Table 9: ANOVA results regarding age;

Table 10: ANOVA results regarding gender;

Table 11: ANOVA results regarding income;

Table 12: ANOVA results regarding education;

74

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APPENDICES

Appendix A: Regression analysis exclusive moderating variable

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error

Beta

1

(Constant) -0.817 0.267 -3.065 0.002

Pro_Justice 0.276 0.074 0.22 3.754 0

Info_Justice 0.073 0.085 0.058 0.864 0.388

Inter_Justice 0.234 0.078 0.158 2.982 0.003

Dist_Justice 0.527 0.058 0.484 9.156 0

leeftijd_NEW -0.041 0.063 -0.023 -0.655 0.513

Onderwijs_NEW 0.108 0.045 0.09 2.423 0.016

Salaris_NEW -0.038 0.061 -0.024 -0.628 0.53

26 Geef uw geslacht aan 0.133 0.07 0.064 1.909 0.057

a. Dependent Variable: Satisfaction

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Appendix B: Regression analysis inclusive interaction term distribution justice *

corporate image

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error

Beta

1

(Constant) -0.616 0.463 -1.33 0.185

Pro_Justice 0.264 0.074 0.21 3.561 0

Info_Justice 0.052 0.085 0.042 0.614 0.54

Inter_Justice 0.225 0.079 0.153 2.849 0.005

Dist_Justice 0.436 0.128 0.401 3.409 0.001

Corp_Image -0.026 0.132 -0.022 -0.194 0.846

26 Geef uw geslacht aan 0.114 0.07 0.055 1.616 0.107

leeftijd_NEW -0.035 0.063 -0.019 -0.552 0.581

Onderwijs_NEW 0.108 0.044 0.09 2.435 0.015

Salaris_NEW -0.033 0.06 -0.021 -0.545 0.586

Moddiscorp 0.03 0.037 0.144 0.825 0.41

a. Dependent Variable: Satisfaction

82

Appendix C: Regression analysis inclusive interaction term informational justice *

corporate image

Coefficients

a

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error

Beta

1

(Constant) -0.556 0.501 -1.109 0.268

Pro_Justice 0.255 0.074 0.203 3.432 0.001

Info_Justice -0.057 0.158 -0.045 -0.357 0.721

Inter_Justice 0.233 0.081 0.158 2.897 0.004

Dist_Justice 0.529 0.057 0.486 9.202 0

Corp_Image -0.046 0.148 -0.04 -0.314 0.754

26 Geef uw geslacht aan 0.113 0.07 0.055 1.614 0.108

leeftijd_NEW -0.038 0.063 -0.021 -0.607 0.545

Onderwijs_NEW 0.109 0.044 0.091 2.442 0.015

Salaris_NEW -0.033 0.06 -0.021 -0.548 0.584

modinforcorp 0.036 0.042 0.167 0.877 0.381

a. Dependent Variable: Satisfaction

83

Appendix D: Regression analysis inclusive procedural justice * corporate image

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

T Sig.

B Std. Error

Beta

1

(Constant) -0.601 0.485 -1.239 0.216

Pro_Justice 0.165 0.139 0.131 1.183 0.238

Info_Justice 0.049 0.086 0.038 0.564 0.573

Inter_Justice 0.229 0.08 0.155 2.868 0.004

Dist_Justice 0.531 0.057 0.488 9.247 0

Corp_Image -0.034 0.144 -0.029 -0.236 0.814

26 Geef uw geslacht aan 0.118 0.07 0.057 1.685 0.093

leeftijd_NEW -0.037 0.063 -0.02 -0.58 0.562

Onderwijs_NEW 0.109 0.044 0.091 2.458 0.015

Salaris_NEW -0.035 0.061 -0.022 -0.585 0.559

Modprocorp 0.033 0.04 0.148 0.809 0.419

a. Dependent Variable: Satisfaction

84

Appendix E: Regression analysis inclusive interaction term interactional justice *

corporate image

Coefficientsa

Model

Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error

Beta

1

(Constant) -0.909 0.521 -1.746 0.082

Pro_Justice 0.26 0.074 0.207 3.503 0.001

Info_Justice 0.061 0.085 0.048 0.713 0.477

Inter_Justice 0.214 0.133 0.145 1.601 0.11

Dist_Justice 0.531 0.058 0.488 9.222 0

Corp_Image 0.072 0.165 0.062 0.436 0.663

26 Geef uw geslacht aan 0.12 0.07 0.058 1.709 0.089

leeftijd_NEW -0.037 0.063 -0.021 -0.593 0.554

Onderwijs_NEW 0.11 0.045 0.092 2.467 0.014

Salaris_NEW -0.032 0.061 -0.02 -0.523 0.602

modintercorp 0.002 0.042 0.007 0.036 0.971

a. Dependent Variable: Satisfaction

85

Appendix F: Regression analysis for model summary

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) -.925 .272 -3.398 .001

Pro_Justice .260 .074 .207 3.516 .001

Info_Justice .061 .085 .048 .716 .475

Inter_Justice .218 .078 .148 2.772 .006

Dist_Justice .531 .057 .488 9.248 .000

Corp_Image .078 .043 .067 1.811 .071

26 Geef uw geslacht aan .120 .070 .058 1.725 .086

leeftijd_NEW -.037 .063 -.021 -.594 .553

Onderwijs_NEW .110 .044 .092 2.471 .014

Salaris_NEW -.032 .060 -.020 -.522 .602

a. Dependent Variable: Satisfaction

Coefficientsa

Model

Unstandardized Coefficients

Standardized

Coefficients

t Sig. B Std. Error Beta

1 (Constant) -.925 .272 -3.398 .001

Pro_Justice .260 .074 .207 3.516 .001

Info_Justice .061 .085 .048 .716 .475

Inter_Justice .218 .078 .148 2.772 .006

Dist_Justice .531 .057 .488 9.248 .000

Corp_Image .078 .043 .067 1.811 .071

26 Geef uw geslacht aan .120 .070 .058 1.725 .086

leeftijd_NEW -.037 .063 -.021 -.594 .553

Onderwijs_NEW .110 .044 .092 2.471 .014

Salaris_NEW -.032 .060 -.020 -.522 .602

a. Dependent Variable: Satisfaction

86

Appendix G: Questionnaire

Customer questionnaire form

Every sentence contains a question or assumption. This you measure on a scale from 1-5. There are no right or wrong answers. We are just interested in your personal opinion.

Compl.

disagree

Dis-

agree

Neither

agree

nor

disagree

Agree

Compl.

agree

1 2 3 4 5

I feel safe in traffic X

Compl.

disagree

Dis-

agree

Neither

agree

nor

disagree

Agree

Comp

l.

agree

1 2 3 4 5

1 I am satisfied with the way the EBS handled my complaints

2 I had a positive experience when complaining to EBS

3 In my opinion, EBS has provided me with a satisfactory

answer to the problem, on this specific occasion.

4 The final compensation I received from EBS was fair, given

the time and hassle

5 It was worth the effort to report my complaint with the

EBS

6 Given the inconvenience caused by the problem, the

compensation I received was adequate

87

7 The EBS responded quickly to my problem after I had done

my complaint

8 I believe the EBS has fair policies in order to address

complaints

9 I believe that the complaints procedure of the EBS was

sufficient for me to solve the problem

10 The EBS staff showed sufficient authority to solve the

problem

11 The EBS staff showed enough skills to solve the problem

12 I think the explanation of the EBS about the causes of the

problem was reasonable

13 The EBS communicated the details of the recovery of the

services clearly

14 The EBS communicated the details of the recovery of the

services on time

15 The EBS adjusted its communication regarding the

recovery of the services to my specific needs

16 The EBS was frank in its communication of the information

how to solve the problem

17 The employees of the EBS seemed interested in my

problem

18 The employees of the EBS understood my problem

19 The employees of the EBS treated me in a friendly manner

20 I felt that the employees of the EBS did everything in their

power to solve the problem

21 In general, the behavior of the employees during the

recovery of the service can be labeled as good

22 People in society have a high opinion of the EBS

23 The EBS is considered one of the best companies in

Suriname

88

24 The EBS has a good reputation in society

25 People like to work for the EBS

The following questions are to get a better picture of the customers of the company. All the information will be treated confidentially.

26. Gender:

male Female

27. Indicate in which age range you are

<16 16-24 25-34 35-49 50-64 >64

28. Indicate the highest obtained education

Primary (K6)

Primary

Vocational

Education

(7-9)

High

School/Technical

School (7-10)

Secondary

Vocational

Education

College (11-

13)

Higher

Vocational

Education

University

Other

29. Indicate within which range your gross salary is (in SRD)

<1200 1200-2000 2000-2800 2800-4000 4000-6000 >6000 n.a.

Thank you very much for your time, effort and assistance in this survey. Please hand your copy of the questionnaire to the pollster.