Relational Dynamics and Outcomes in Small and Large Service Organizations

Relational Dynamics and Outcomes in Small and Large Service Organizations

Siti Haryati Shaikh Ali (University Technology Mara, Malaysia) and Nelson Oly Ndubisi (Griffith University, Australia)
DOI: 10.4018/978-1-4666-2952-3.ch020
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Abstract

The rapid growth of the service sector and servitization of the manufacturing sector have both contributed to rising competition and have forced managers to look for effective ways to differentiate their services from competitors and competitive edge. Consequently, the value of establishing closer and lasting relationship with customers have come to the fore, and researchers as well as industry practitioners are trying to better understand the best strategies for achieving this goal. This paper evaluates two strategies firms have adopted in trying to build lasting relationship with customers, namely respect and rapport. The purpose of this chapter is to examine the concept of respect and rapport and how they affect customer loyalty. The study draws from existing literature and surveys customers of two service sectors in Asia. The research hypotheses connecting the three dimensions of respect and two dimensions of rapport with customer loyalty were tested using Pearson correlation and multiple regression analysis. These findings lead to research and managerial implications that conclude the chapter.
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Theory, Conceptual Framework, And Propositions

The relationship between interpersonal relational dynamics (namely respect and rapport) and customer loyalty can be better understood from the perspective of justice or fairness theory. Research on organizational justice shows that perceived organizational fairness enhances commitment to the organization (Folger & Konovsky, 1989). When customers have difficulty in collecting information about the fairness of the organization as a whole; they tend to rely on perceptions of distributive, procedural and/or interactional justice to infer about overall organizational fairness (Ali & Ndubisi, 2011). The fairness theory suggests that customers expect a certain level of distributive, procedural and/or interactional fairness in exchange relationship (Adams, 1963; Anderson and Patterson, 2008). Perceived fairness is thought to have important implication on customer satisfaction or dissatisfaction (e.g., Anderson and Patterson, 2008); customer value (Nasution, Mavondo, Matanda & Ndubisi, 2011), commitment (Ndubisi, 2011), and customer loyalty (Ndubisi, 2007; 2012). Against this background, we reason that if employees of service organisations respect and build rapport with customers, they (customers) will perceive interactional fairness leading to loyalty. Similarly, they will increase their loyalty if they perceive distributive or procedural fairness in the outcome or process of the service encounter respectively. Because the focus of this research is on interpersonal relational dynamics, we will focus on interactional justice in the analysis. We thus argue that if service providers apply respect and rapport in their interactions with customers, such gestures are often reciprocated through greater commitment or loyalty to the fair service provider. Such reciprocal behavior is the underlying argument of other social science theories such as the social exchange theory and equity theory. On the flip side, if one party (the customer) feels s/he has not received a fair interactional outcome or, in equity theory terms, her/his input-output ratio is inferior to that of the service provider or other social actors (Anderson and Patterson, 2008), there will be a lack of commitment and greater likelihood of defection. Thus, justice theory provides a succinct and compelling lens for viewing key aspects of interpersonal relational dynamics, and can be used to understand the influences of respect and rapport on customer loyalty.

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