When does a Service Guarantee Work? The Roles of the Popularity of Service Guarantees and Firm Reputation

Liyin Jin, Yunhui Huang, Yanqun He*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review

5 Citations (Scopus)

Abstract

Despite substantial research on service guarantees in the literature, little study has examined how the popularity of service guarantees (SG) in a particular industry affects the effectiveness of SGs. Through four studies, the authors demonstrate an interactive effect between the market-level factor (the popularity of SGs) and the firm-level factor (firm reputation) in affecting consumer's responses to a travel agency's actions in (not) offering an SG. When offering SGs is popular in a given market, consumers perceive a loss from the absence of SGs, and a high-reputation agency will outperform a low-reputation agency in consumer service evaluation when neither agencies offer SGs. However, if both agencies provide guarantees, the SG offered by the high-reputation agency does not necessarily lead to greater service evaluation than that offered by the low-reputation agency. The results reverse when offering SGs is rare in the market, as consumers perceive a gain from the presence of SGs.

Original languageEnglish
Pages (from-to)272-285
Number of pages14
JournalTourism Management
Volume57
Early online date30 Jun 2016
DOIs
Publication statusPublished - Dec 2016

User-Defined Keywords

  • Service guarantee
  • Prospect theory
  • Signaling theory
  • Popularity of service guarantees
  • Firm reputation

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