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Faculty of Business
2012
Why do some business relationships persist despite
dissatisfaction? a social exchange review
Venkata K. Yanamandram
University of Wollongong, [email protected]
Lesley White
Charles Sturt University
Publication Details
Yanamandram, V. K. & White, L. (2012). Why do some business relationships persist despite dissatisfaction? a social exchange review.
Asia Pacific Management Review, 17 (3), 301-319.
Research Online is the open access institutional repository for the University of Wollongong. For further information contact the UOW Library:
[email protected]
Why do some business relationships persist despite dissatisfaction? a social
exchange review
Abstract
This paper reviews the relevant theories and marketing literature to develop a theoretical foundation for
understanding the process and outcome of struggling business-to-business (B2B) customer relationships.
Specifically, the paper provides a social exchange perspective of the factors that influence the likelihood of
dissatisfied customers remaining in a present relationship by serving as deterrents to discontinuing the
relationship. In doing so, the paper identifies the common features of, noteworthy differences among, and
gaps in these theories. The paper also connects determinant factors to an outcome variable in order to explain
what drives a customer in managing an unsatisfying business relationship, and therefore makes a conceptual
contribution by proposing the effect of mediating variables, namely dependence and calculative commitment.
Support for the hypothesised relationships would imply that specific investments are related to dependence or
calculative commitment, which continues to play a role in generating customer outcomes.
Keywords
business, despite, do, dissatisfaction, social, exchange, review, relationships, why, persist
Disciplines
Business | Social and Behavioral Sciences
Publication Details
Yanamandram, V. K. & White, L. (2012). Why do some business relationships persist despite dissatisfaction?
a social exchange review. Asia Pacific Management Review, 17 (3), 301-319.
This journal article is available at Research Online: http://ro.uow.edu.au/commpapers/3186
Why do Some Business Relationships Persist Despite Dissatisfaction?
A Social Exchange Review
Venkata Yanamandram (Corresponding author)
School of Management & Marketing,
University of Wollongong,
NSW 2522, Australia.
Phone: +61 2 4221 3754
Fax: +61 2 4221 4154
Email: [email protected]
Lesley White,
Faculty of Business,
Charles Sturt University,
NSW 2795, Australia.
Why do Some B2B Relationships Persist Despite Dissatisfaction?
A Social Exchange Review
Abstract
This paper reviews the relevant theories and marketing literature to develop a
theoretical foundation for understanding the process and outcome of struggling business-tobusiness (B2B) customer relationships. Specifically, the paper provides a social exchange
perspective of the factors that influence the likelihood of dissatisfied customers remaining in a
present relationship by serving as deterrents to discontinuing the relationship. In doing so, the
paper identifies the common features of, noteworthy differences among, and gaps in these
theories. The paper also connects determinant factors to an outcome variable in order to
explain what drives a customer in managing an unsatisfying business relationship, and
therefore makes a conceptual contribution by proposing the effect of mediating variables,
namely dependence and calculative commitment. Support for the hypothesised relationships
would imply that specific investments are related to dependence or calculative commitment,
which continues to play a role in generating customer outcomes.
Keywords: Social exchange theory, dissatisfied customer, business-to-business, services
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1.
Introduction
Customers are commonly dissatisfied with the relationship they have with their
service providers (Colgate and Lang, 2001), but how customers react to dissatisfaction is the
crucial issue for marketing managers (Richins, 1987). Just as satisfied customers are not
necessarily loyal (Rowley and Dawes, 2000), dissatisfied customers are not always disloyal
(Hirschman, 1970). This paper reviews the relevant theories and marketing literature to
develop a theoretical foundation for understanding the process and outcome of struggling
B2B customer relationships.
Although previous research provides a foundation for understanding the development,
defection and maintenance of sound relationships, only limited work exists on the
continuation of troubled B2B relationships (Tahtinen and Vaaland, 2006). Scholars note that
future research should examine reasons to remain in a B2B services context (Colgate et al.,
2007) and also explore the impact of dissatisfaction on the effects of buyer entrapment in a
business service context (Liu, 2006). Moreover, no research has hitherto proposed mediating
factors under the condition of dissatisfaction in the B2B services sector. The literature argues
that the alternative outcomes of a customer either ending or continuing a struggling
relationship not only depend on the determinant factors or switching barriers, but also on the
essential nature of the relationship (Tuominen and Kettunen, 2003).
This paper makes three contributions to marketing theory on why dissatisfied
customers stay in a relationship. First, the paper provides a social exchange perspective of the
factors that serve as deterrents to discontinuing the relationship. Second, the paper connects
determinant factors to an outcome variable in order to explain what drives a customer in
managing an unsatisfying customer relationship. Third, the paper focuses on a business
services context, which is an under-researched area for this research problem.
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The remainder of the paper is organised as follows. It begins with a review of the
broad social exchange framework, followed by a discussion of the ‘investment model’
(Rusbult, 1980), the ‘model of cohesiveness’ (Levinger, 1979) and the ‘tripartite model of
commitment’ (Johnson, 1973). These theories together incorporate important economic and
social forces and also the fair/unfair distribution of the economic and social forces that guide
the outcome of struggling relationships (Rusbult et al., 2006).
The following section identifies the common features of, noteworthy differences
among and gaps in these theories, and then delineates the choice of concepts to investigate the
reasons that influence the likelihood of remaining in a present relationship by serving as
deterrents to discontinuing the relationship. We then report key B2C (business-to-consumer)
and B2B marketing studies in this area, synthesise the existing marketing literature and
propose mediating hypotheses. The study concludes with discussion and suggestions for
future research.
2.
Literature Review
2.1
Social Exchange Framework
Ouchi (1980) argues that parties engaged in exchange relationships can serve their
long-range goals by looking beyond short-term, financially driven interests and considering
the welfare of their exchange partners. In this regard, social exchange theories serve as one
explanation for justifying exchange decisions, where parties evaluate relationships in a
behavioural context for achieving the goals of the relationship (Thibaut and Kelley, 1959).
A social exchange framework refers to any theoretical approach that focuses on the
exchange of resources between or among people. Different exchange models emphasise some
(but not all) of the four components of a social exchange framework: (1) balance of rewards
and costs; (2) fairness or equity of the exchange; (3) comparison level; and (4) comparison
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level for alternatives (Sprecher, 1998). The basic premise of the social exchange framework,
and each of these theories, is that ‘each party in a dyad engages in a diverse set of exchanges
to influence each other and attain the most favourable outcomes — that is, to maximise
rewards and minimise costs’ (Byers and Wang, 2005, p. 204). Because these theories assess
the nature of relationships by providing rules for evaluating the fair dispersal of economic and
social value, the social exchange framework is important for understanding relationship
development, relationship satisfaction and relationship stability (Rusbult et al., 2006). The
following section reviews the social exchange theories relevant to the development of
hypotheses in this current study.
2.1.1.
Investment Model
The investment model (eg, Rusbult, 1980) is based on the principles of
interdependence theory (Thibaut and Kelley, 1959) and employs interdependence constructs
namely satisfaction (which is influenced by the extent to which a partner fulfils the
individual’s most important needs) and poor quality of alternatives, to analyse the tendency to
persist in a relationship. Thus, interdependence theory identifies two means (satisfaction and
quality of alternatives) through which dependence grows, where dependence refers to ‘the
extent to which an individual “needs” a given relationship or relies uniquely on the
relationship for attaining desired outcomes’ (Rusbult et al., 2006, p. 618). However, there is
added component build into the investment model. Specifically, the model argues that
satisfaction and quality of alternatives do not fully explain dependence, and it accounts for the
development of dependence and commitment in two respects. First, it asserts that dependence
is influenced by satisfaction, quality of alternatives and investment size. Investments enhance
dependence because the act of investment increases the costs of ending a relationship, in that
defecting would mean leaving behind cumulative investment, thus serving as a powerful
psychological inducement to persist (Rusbult et al., 2006). Dependence describes the additive
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effects of wanting to persist (feeling satisfied), needing to persist (having high investments)
and having no choice but to persist (possessing poor alternatives) (Rusbult et al., 2006).
Second, the model suggests that commitment emerges as a consequence of increasing
dependence. Ultimately, an individual’s decision to remain in or terminate a relationship is
most directly influenced by feelings of commitment, which is a subjective state that includes
both cognitive and emotional components, and directly influences a wide range of behaviours
in an ongoing relationship, and also summarises the nature of an individual’s dependence on a
partner (Rusbult et al., 2006). The model further suggests that feelings of commitment are
influenced by positive forces such as strong satisfaction, which make the individual want a
relationship more, and also by negative forces, such as investing important resources.
2.1.2. Levinger’s Model of Cohesiveness
The model of cohesiveness (Levinger, 1979) defines cohesiveness as an individual’s
tie, bond or union in a relationship, and posits that the durability of a personal relationship
depends on three broad types of forces: (1) current attractions, or the forces that drive
individuals toward a relationship, (2) alternative attractions, or the forces that pull individuals
away from their relationship and (3) barriers, or the forces that influence the likelihood of
remaining in a present relationship by serving as deterrents to discontinuing the relationship,
even when attraction forces reduce or cease to exist. The three broad types of forces are
assumed to exert independent effects on cohesiveness and probability of persisting in a
relationship (Rusbult et al., 2006). Thus, according to the model, a greater level of
cohesiveness will result from a high level of attraction, a high level of barriers and a low level
of alternative attractions.
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2.1.3. Johnson’s Tripartite Model of Commitment
The tripartite model of commitment (Johnson, 1973) considers commitment as a
motivation to continue in a personal relationship. The model focuses on people making
decisions and acting within situational opportunities and constraints, which are in turn shaped
by larger-scale structural arrangements. Specifically, the model identifies three bases of
commitment: (1) personal or ‘want to’ commitment, (2) moral or ‘ought to’ commitment and
(3) structural or ‘have to’ commitment. Personal commitment represents a person’s desire and
choice to stay in a relationship, and results from positive attitude towards ones’ partner,
positive attitude toward the relationship, and relational identity or the extent to which the
relationship is part of one’s self-identity. Moral commitment represents a felt obligation to
remain in a relationship, and results from the moral obligation not to end the relationship, the
sense of personal obligation to one’s partner, and the need to maintain consistency in one’s
beliefs and cultural values. Structural commitment represents a feeling that one must remain
in the relationship, and results from the unavailability of or relative unattractiveness of
available alternatives, social pressure such as their network not approving of relationship
dissolution, the difficulty of processes necessary to end the relationship, and irretrievable
investments, such as expenditures of resources and/or effort, time, sacrifice and pledges.
The model argues that when low levels of personal and moral commitments are
present, the effect of structural commitment will become more prominent and will contribute
to a sense of being entrapped in the relationship. Consequently, a partner will feel constrained
by the costs of dissolution to stay. The following section reviews the common features of,
noteworthy differences among, and gaps in the most prominent extant theories of
commitment reviewed in this section.
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3.
Comparison of Theoretical Models
The models proposed by Levinger, Rusbult and Johnson share four common features
(Rusbult et al., 2006). First, all three models directly or indirectly consider the positive forces
that induce an individual into a relationship. These positive forces are termed ‘attraction’ in
Levinger’s model, ‘satisfaction’ in Rusbult’s and ‘personal commitment’ in Johnson’s.
Second, all three models consider investments that bind an individual to a relationship. These
forces are termed ‘barriers’ (Levinger), ‘investment size’ (Rusbult) and ‘irretrievable
investments’ (Johnson). Third, all three models consider alternative quality. These forces are
termed ‘alternative attractions’ (Levinger), ‘quality of alternatives’ (Rusbult) and ‘availability
of or ‘attractiveness of available alternatives’, although presented as a dimension of structural
commitment (Johnson). Fourth, all three models propose that the net outcome of factors
promoting stability is to generate increased motivation to continue. This motivation is termed
‘cohesiveness’ (Levinger), ‘commitment’ (Rusbult) and ‘motivation to continue’ (Johnson).
The three theories also attempt to explain ‘unjustified persistence or the tendency to remain
involved in a relationship that is not particularly satisfying’ (Rusbult et al., 2006, p. 616).
However, the three models differ in how they categorise the variables that promote
commitment (Rusbult et al., 2006). For example, while Johnson’s model suggests that social
pressure, termination procedures, irretrievable investments and potential alternatives are
components of structural commitment, Levinger considers social pressure, termination
procedures and irretrievable investments as components of barriers. Rusbult regards social
pressure, termination procedures and irretrievable investments as part of investments. With
respect to alternatives of attractiveness, both Levinger and Rusbult deem alternatives to be a
separate force, while Johnson considers alternatives to be part of structural commitment.
Each of the three models has some limitations (Rusbult et al., 2006). Levinger’s
model, developed as an integrative tool to explain commonalities across diverse findings such
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as attractions, alternative attractions and barriers, advances no instrument to measure model
constructs. Johnson’s model distinguishes between different types of commitment, but does
not provide clear operational definitions of constructs, and presents no overall measure of
commitment.
Several gaps in Rusbult’s investment model underpin this current research’s
investigation. First, according to the model, commitment is the primary force in relationships.
Drigotas and Rusbult (1992, p. 62) argue that the emphasis on commitment ‘served to
deemphasize the original interdependence construct for predicting persistence in struggling
relationships, namely the degree of dependence on a relationship ― dissatisfying as it is, the
relationship may nevertheless fulfil important needs that cannot be fulfilled in alternative
relationships’. Thus, researchers using the investment model to explain persistence in
dissatisfying relationships should include both dependence and commitment. Drigotas and
Rusbult (1992) propose a model of break-up decisions extending interdependence theory, and
find support for several relationships: (1) dependence is a primary determinant of
commitment, (2) commitment mediates the relationship between dependence and decisions to
remain and (3) commitment mediates the relationship between other features of the
relationship and stay-leave decisions.
Second, empirical work that uses the investment model supports the claim that
persistence in struggling relationships is partially attributable to poor alternatives and high
investments (Rusbult and Martz, 1995). This suggests that poor alternatives and high
investment may better explain a constraint-based component of commitment, rather than
using a global construct of commitment, which Rusbult, Martz and Agnew (1998) define as
‘intent to persist in a relationship, including… feelings of psychological attachment’ (p. 359).
The investments described in the investment model are similar to the relationshipspecific investments (RSIs) proposed in B2B relationships (Williamson, 1985). Evidence
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exists that RSIs can be made at both the inter-organisational level and interpersonal levels —
usually termed ‘switching costs’ and ‘interpersonal relationships’ respectively (Wathne et al.,
2001). Switching costs arise from organisational-level investments in transaction-specific
assets (Williamson, 1985); while interpersonal relationships derive from an individual’s
investment in social capital (Coleman, 1988). Thus, when examining investments in business
exchange relationships, Rusbult’s investment concept is represented by switching costs and
interpersonal relationships. Regarding commitment, Johnson (1973) refers to structural
commitment as the feeling that one must remain in the relationship, suggesting that it is a
constraint-based commitment. The marketing literature also discusses several constraintbased forms of commitment, including viewing commitment as entirely calculative (eg.,
Geyskens, Steenkamp and Scheer, 1996; Gilliland and Bello, 2002).
Overall, by adapting the social exchange framework to business exchange
relationships, the constructs of attractiveness of alternatives, investments at the interorganisational and at the interpersonal level (namely switching costs and interpersonal
relationships respectively) hold the most promise in explaining dependence and calculative
commitment (Rusbult et al., 2006). These constructs influence the likelihood of remaining in
a present relationship (repurchase intentions) by serving as deterrents to discontinuing the
relationship. In order to confine its scope, this paper only proposes the mediating relationships
between the determinant factors and behavioural outcomes.
The next
section reviews the key B2C and B2B empirical studies on relationship ending and staying in
the marketing literature.
4.
Empirical Studies on Relationship Ending and Staying
Insert Table 1 here
Insert Table 2 here
9
Tables 1 and 2 report the key B2C and B2B marketing studies on relationship ending
and staying, which focus on the process or behaviours associated with relationship
ending/switching; the factors that influence ending/switching behaviour; and the factors that
influence the likelihood of remaining in a present relationship by serving as deterrents to
discontinuing the relationship. The studies provide evidence that dissatisfaction arising from
service failures or with the quality of service outcome or interaction, acts as a breakdown
trigger (Roos, 1999) or a predisposing factor (Halinen and Tahtinen, 2002) and provokes a
change in a customer’s attitude towards the switching (Bansal and Taylor, 1999). This alters
the current state of the relationship (Anton, Camarero and Carrero, 2007) and initiates the
dissolution process (Coulter and Ligas, 2001). During the dissolution process, there may be a
temporary or permanent, fading, in the relationship strength between the customer and the
service provider, where the outcome of the process may be unknown (Tuominen and
Kettunen, 2003).
However, the dissolution process includes several stages, which may act as critical
decisive moments, because the customer firm can use a voice strategy including complaining
and negotiating with its partner in order to restore the relationship (Alajoutsijarvi, Moller and
Tahtinen, 2000; Halinen and Vaaland, 2002). The decision to delay or stop the ending process
may further depend on swaying factors (Roos, 1999), mooring variables (Bansal, Taylor and
James, 2005), attenuating factors (Tahtinen and Vaaland, 2006) or switching barriers
(Burnham, Frels and Mahajan, 2003; Colgate and Lang, 2001; Colgate et al., 2007; Jones,
Mothersbaugh and Beatty, 2002; Panther and Farquhar, 2004). These variables, if found to be
‘potent enough’ (Colgate et al., 2007, p. 212), will influence the likelihood of remaining in a
present relationship by serving as deterrents to discontinuing the relationship. Conversely, if
they are not potent enough, the customer may consider leaving the service provider (Bansal,
Taylor and James, 2005), or actually leave (Keaveney, 1995).
10
Studies that have investigated deterrents to discontinuing the relationship, with the
exception of Colgate and Lang (2001) and Colgate et al. (2007), examine determinant factors
or switching barriers predicatively − by asking customers to consider dropping their service
provider instead of an actual switching consideration. Therefore, investigating a group of
customers (namely stayers) who have considered switching, but decide to stay with their
service providers, would offer ‘insight into true behaviour rather than predicted behaviour’
(Colgate et al., 2007, p. 211). Colgate et al. (2007) examined stayers who had recently
considered switching their service provider, but ultimately decided to stay. However, their
investigation was in a B2C services context, and their sample also included customers who
were comfortable and/or satisfied with their current provider, although whether those
customers were comfortable and/or satisfied as a consequence of service recovery or
otherwise is unknown. Thus, a gap exists in the research: to investigate the reasons customers
stay amongst dissatisfied complaining customers who have considered switching — in a B2B
services, rather than in a B2C services context.
Among the studies that have considered deterrents to discontinuing the relationship,
only a few investigated this subject in a B2B market. Extant examples have studied the effects
of: (1) switching costs (Lam et al., 2004; Ping, 1993; Sengupta, Krapfel and Pusateri, 1997;
Tahtinen and Vaaland, 2006; Wathne, Biong and Heide, 2001); (2) interpersonal relationships
(Tahtinen and Vaaland, 2006; Wathne, Biong and Heide, 2001); and (3) unattractiveness of
alternative providers (Ping, 1993; Tahtinen and Vaaland, 2006); Of these, only Tahtinen and
Vaaland (2006) examine ‘struggling’ business relationships.
5.
Mediating Hypotheses
The social exchange theories reviewed thus far provide a basis for proposing that
dependence and/or calculative commitment mediate the effect of satisfaction, investments and
11
the attractiveness of alternatives on repurchase intentions. Since this research focuses on
unsatisfactory relationships, it is only possible to extend mediating hypotheses between
investments, attractiveness of alternatives and repurchase intentions.
Regarding investments, the literature has found a significant association between
switching costs and repurchase intentions/loyalty, in a B2C services context (Bansal and
Taylor, 1999; Burnham, Frels and Mahajan, 2003; Jones, Mothersbaugh and Beatty, 2002);
and in a B2B context (Lam et al., 2004; Wathne, Biong and Heide, 2001). Within the
switching costs domain, the dimension of benefit-loss costs is consistently found to have a
strong impact on behavioural/repurchase intentions, although the relationship between
benefit-loss costs and repurchase intentions has only been investigated in a B2C services
context (Jones, Mothersbaugh and Beatty, 2002; Patterson and Smith, 2003). Jones,
Mothersbaugh and Beatty (2002) expected benefit-loss costs to be more strongly associated
with repurchase intentions than are other switching costs, and found support for their
hypothesis. Thus, given that the direct effect of benefit-loss costs on repurchase intentions are
powerful in a B2C services context, it seems unlikely that dependence or calculative
commitment should completely mediate the relationship between benefit-loss costs and
repurchase intentions in a B2B services context either. The only study located that proposes
mediating hypotheses between switching costs and repurchase intentions is Bansal, Irving and
Taylor (2004), who found that calculative commitment partially mediated the relationship
between switching costs and switching intentions in a B2C services context. This reasoning
and associated evidence led to the following hypotheses:
H1: Dependence partially mediates the relationship between benefit-loss costs and repurchase
intentions.
H2: Calculative commitment partially mediates the relationship between benefit-loss costs
and repurchase intentions.
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According to the investment model, commitment partially or wholly mediates the
effects of investments on decisions to remain. Rusbult, Martz and Agnew (1998)
operationalised investments as the perceived magnitude of the relationship assets that would
be lost if the relationship were to be terminated. Therefore, according to the investment
model, commitment partially or wholly mediates the effects of sunk costs on a decision to
remain or leave. The consumer services marketing literature contains evidence on the direct
effect of sunk costs on repurchase intentions in a B2C services context (Jones, Mothersbaugh
and Beatty, 2002). Additionally, if investments in assets that are specific to a particular
environment are considered important, and if losing those investments would have little value
outside a particular relationship, then this should increase a customer’s dependence and a
customer’s calculative commitment respectively, and these in turn should increase the
customer’s repurchase intentions. Since a strong effect of sunk costs on repurchase intentions
has not been demonstrated in a marketing context, the relationship between sunk costs and
repurchase intentions could be argued to be completely mediated by either dependence or
calculative commitment. This reasoning leads to the following hypotheses:
H3: Dependence completely mediates the relationship between sunk costs and repurchase
intentions.
H4: Calculative commitment completely mediates the relationship between sunk costs and
repurchase intentions.
Regarding interpersonal relationships that are considered as investments at the
interpersonal level (Wathne, Biong and Heide, 2001), a qualitative study found that a personal
relationship was the primary motivation to stay in a business service relationship, even if
strong reasons to seek another provider existed (Young and Denize, 1995). The present study
13
argues that interpersonal relationships are less important than switching costs in influencing
dependence or calculative commitment, which suggests a weak effect. For example,
researchers investigating transaction-specific assets argue that human asset specificity
(relationship-specific investments at the interpersonal level) may originate in unconscious
learning-by-doing processes, which are probably redeployable to alternative relationships
after time. They thereby become general investments, and therefore, may have lesser impacts
on perceived dependence than firm-level switching costs (Noorderhaven, Nooteboom and
Berger, 1998). Similarly, evidence exists that social bonds have no influence on calculative
commitment between customers and suppliers in complex buying situations (Han and Wilson,
cited in Wilson, 1995) or in the B2B context (Cater and Zabkar, 2009), because a company
can rarely justify bad decisions based on friendship between boundary-spanning personnel
alone (Gounaris, 2005). Since mediating effects are typically proposed when evidence
emerges of a relatively strong direct effect between a predictor variable and an outcome
variable (Baron and Kenny, 1986), a mediating proposition is not offered regarding
interpersonal relationships.
Regarding attractiveness of alternatives, mixed results are evident across studies. For
example, Jones, Mothersbaugh and Beatty (2000) found no significant association between
attractiveness of alternatives and repurchase intentions when modelled with switching costs
and interpersonal relationships. However, they did find that the relationship between
attractiveness of alternatives and repurchase intentions was moderated by satisfaction. In
contrast, Patterson and Smith (2003), in a B2C services context, found that the attractiveness
of alternatives had a significant, though a small negative effect on behavioural intentions
when satisfaction, interpersonal relationships and various switching costs were included in the
model. Similarly, Bansal, Irving and Taylor (2004) and Bansal, Taylor and James (2005), in a
B2C services context, found a significant relationship between attractiveness of alternatives
14
and switching intentions. In a B2B context, Ping (1993) found no significant association
between attractiveness of alternatives and loyalty, but found a significant association between
attractiveness of alternatives and intention to leave. In a subsequent study, Ping (1994) found
that overall satisfaction moderates the association between attractiveness of alternatives and
intention to leave. In view of the conflicting findings, and the fact that mediating effects are
typically proposed when there is evidence of a relatively strong direct effect between a
predictor variable and an outcome variable, we do not propose a mediating effect hypothesis
between the attractiveness of alternatives and repurchase intentions. Figure 1 depicts the
proposed model for establishing mediation, which involves four steps (Baron and Kenny,
1986). First, the independent variable must be significantly associated with the dependent
variable. Second, the independent variable must be significantly associated with the presumed
mediator. Third, the presumed mediator must be significantly associated with the dependent
variable. Finally, the previously significant relationship between the independent variable and
dependent variables should become non-significant when the mediator is included; if it does,
then the direct effect is said to be fully mediated. However, if the effect of the previously
significant relationship between the independent variable and the dependent variable in only
reduced, and not zero, when the mediator is included, then the direct effect is said to be
partially mediated.
This current study proposes mediation relationships only. It is possible to extend
hypotheses between other variables of the social exchange framework (independent variables
namely interpersonal relationships and attractiveness of alternatives, and dependent variables
namely dependence and calculative commitment); however, these are not the focus of this
current paper.
15
6.
Discussion
Support for the hypothesised relationships would imply that the potential loss of
special privileges if the customer were to switch from their current service provider is related
to a feeling of dependence on the service provider. This degree of dependence on the
relationship continues to play a role in generating customer outcomes. The potential loss of
special privileges also results in calculative commitment, which influences a customer to
intend to continue repurchasing services. The mediation mechanisms imply that sunk costs
are related to dependence or calculative commitment more than repurchase intentions, and
that dependence or calculative commitment continues to play a role in generating customer
outcomes.
An understanding of the mediating function of the key variables of dependence and
calculative commitment can also be advantageous for service managers in inducing
dissatisfied customers to stay. For example, a service provider might choose to foster
customer retention by increasing various switching costs. However, a time lag persists
between the introduction of these measures and the outcome. In the interim, service providers
can monitor changes in customers’ dependence and calculative commitment — thus
increasing managerial awareness of the reasons for continuing the relationship. However,
service firms that retain dissatisfied customers may be encouraging the spread of negative
word-of-mouth, who may become hostile, engaging in communication sabotage (Jones,
Mothersbaugh and Beatty, 2000).
While customers may repurchase services because of the perception that switching
costs and resultant dependence and calculative commitment are high, offending service firms
may not be insured against customer defection over the long-term. This is because the losses
from service failures would be outweighed more heavily than the gains received during
complaint-handling (Smith, Bolton and Wagner, 1999). From this point of view, dependence
16
may be experienced as one of the costs of participating in a particular relationship (Sabatelli
and Shehan, 1993). Consequently, customers may wish to reduce their dependence on the
service provider, unless a substantial recovery takes place, where equity and satisfaction are
restored to their original levels.
One solution to managing struggling customer relationships may be to adopt a
strategic perspective on service failure management, because of its potential to contribute to
firms’ learning at organisational levels (La and Kandampully, 2004). Such learning can not
only be used to make improvements in the service firms’ outcome, procedural and
interactional aspects of complaint handling, but also “to create a set of knowledge that can be
used for…transformational change…, with the ultimate objective being to establishing a
sustainable competitive advantage based on superior customer value” (La and Kandampully,
2004, p.392). By adopting a strategic perspective on service failure management, overall
satisfaction regains the focus. Overall satisfaction, in turn, has a strong impact on customer
retention and profitability (Oliver, 1997).
7.
Conclusion and Future Research
The literature suggests that switching barriers or factors play a major role in retaining
customers. This research proposes that the alternative outcomes of a customer either ending or
continuing a dissatisfactory relationship depend on the switching barriers or determinant
factors, and also on the essential nature of the relationship, such as dependence or calculative
commitment. Thus, this paper has considered the influence that complex relationships have in
responding to struggling B-to-B service relationships, and has a laid a foundation for further
research concerning the retention of dissatisfied customers.
Future research could seek empirical support for the hypotheses presented here. In
addition, scholars investigating customer retention note that further research is needed to
17
understand the moderating characteristics of relationships (for example, Homburg and
Giering, 2001). One variable that future research could investigate is the moderating effect of
the duration of the relationship. In turn, the effect this has on the effect that switching costs
and commitment have on relationship outcomes may be of interest from a managerial
perspective. For example, knowledge on how short- and long-term relationships differ could
help managers to develop specific strategies for both relationship types (Verhoef, Franses and
Hoekstra, 2002).
18
Table 1 Key Studies on Switching and Staying in B2C Markets
Author
Focus of Research
Fornell (1992)
Keaveney (1995)
Colgate, Stewart and Kinsella
(1996)
Stewart (1998)
Roos (1999)
Coulter and Ligas (2000)
Jones, Mothersbaugh and
Beatty (2000)
Ganesh, Arnold and Reynolds
(2000)
Colgate and Hedge (2001)
Colgate and Lang (2001)
Keaveney and Parthasarathy
(2001)
Jones, Motherbaugh and
Beatty (2002)
Burnham, Frels and Mahajan
(2003)
Patterson and Smith (2003)
Method
Factors that deter customers from discontinuing the relationship
Critical incidents causing switching behaviour
Reasons for switching service providers
Survey
Interviews
Survey
Process of customer exit
Critical incident and critical path leading from the trigger of the
incident to switching (process of switching)
Stages in dissolution process
Factors that deter customers from discontinuing the relationship
Interviews
Interviews
Characterize differences between switchers and stayers in
aspects such as satisfaction, involvement and loyalty
Process of switching by examining the antecedents that
influence both switching behaviour and formal complaints made
prior to exit
Factors that deterred customers from discontinuing the
relationship
Characterize differences between switchers and stayers with
aspects relating to attitude, behavior and socio-demographic
characteristics
Various dimensions of switching costs that deterred customers
from discontinuing the relationship
Various dimensions of switching costs that deterred customers
from discontinuing the relationship
Factors that deterred customers from discontinuing the
relationship
19
Interviews
Survey
Product/
Organisation
Various services
Various services
Financial services
(student market)
Banking services
Supermarket
Interviews
Various
Banking and hair
styling services
Banking services
Survey
Banking services
Survey
Banking and insurance
services
Online services
Survey
Survey
Survey
Survey
Banking and
hairstylists
Credit card and
telephone services
Travel agencies and
medical services.
Author
Focus of Research
Method
Tuominen and Kettunen
(2003)
Bansal, Irving and Taylor
(2004)
Panther and Farquhar (2004)
Phase preceding the relationship ending process
Survey
Product/
Organisation
Airline services
Factors influencing service provider switching
Survey
Auto repair services
Factors that deterred customers from discontinuing the
relationship
Factors that deterred customers from discontinuing the
relationship
Factors influencing service provider switching
Survey
Financial services
Interviews,
Survey
Survey
Financial services
Effects of customer satisfaction, relationship commitment
dimensions and triggers on customer retention
Factors that deterred customers from discontinuing the
relationship
Factors and mediating variables that influence switching with a
focus on variables that weaken the relationship and those that
precipitate dissolution
Factors that deterred customers from discontinuing the
relationship including satisfaction
Effects of factors that deterred customers from discontinuing the
relationship on relational outcomes
Factors influencing service provider switching
Factors influencing customer commitment
Interviews,
Survey
Survey
White and Yanamandram
(2004)
Bansal, Taylor and James
(2005)
Gustafsson, Johnson and Roos
(2005)
Vazquez-Carrasco and Foxall
(2006)
Anton, Camarero and Carrero
(2007)
Colgate et al. (2007)
Jones et al. (2007)
Wieringa and Verhoef (2007)
Bügel, Buunk and Verhoef
(2010)
20
Auto repair and
hairstyling services
Telecom. services
Hairdressing
Survey
Automobile insurances
services
Interviews,
Survey
Survey
Various services
Survey
Survey
Banks, cable TV,
phone and hairstylists.
Energy services
Banks, health
insurance,
supermarkets, mobile
telecom providers and
automotives.
Table 2 Key Studies on Switching and Staying in B2B Markets
Author
Ping (1993)
Heide and Weiss
(1995)
Young and Denize
(1995)
Ennew and Binks
(1996)
Sengupta, Krapfel and
Pusateri (1997)
Gronhaug, Henjesand
and Koveland (1999)
Haugland (1999)
Alajoutsijarvi, Moller
and Tahtinen (2000)
Giller and Matear
(2001)
Wathne, Biong and
Heide (2001)
Lam, Shankar,
Erramilli and Murthy
(2004)
Tahtinen and Vaaland
(2006)
Focus of Research
Antecedents and response intentions of hardware retailers when there
are problems with suppliers
Factors that influence whether buyers stay with an existing provider or
switch to a new provider once the consideration set is formed
Reasons for continuing relationships despite mistakes by suppliers
Method
Survey
Interviews
Product/Firm
Hardware
retailers
Computer
workstations
Accountants
Links between customer retention, defection, and service quality
Survey
Banks
Factors that deter customers from discontinuing the relationship
Interviews, Survey
Various
Reasons why long-term relationships fade away
Case Study
Factors that influence the duration of buyer–seller relationships by
investigating the differences between ongoing relationships and
terminated ones
Communication strategies at a particular stage of the dissolution
process
Process of relationship ending
Longitudinal
Interviews and
Questionnaires
Case Study
Furniture
production
Farmed salmon
Various
Case Study
Various
Determinants of switching
Interviews
Banking
Antecedents of customer retention
Survey
Courier services
Factors that deter customers from discontinuing the relationship
Interviews
Oil industry
21
Survey
Author
Tidstrom and Ahman
(2006)
Bogomolova and
Romaniuk (2009)
Yen and Horng (2010)
Focus of Research
Process of ending inter-organizational cooperation by identifying the
reasons and stages of the ending
Reasons for brand defection
Method
Longitudinal Case
Study
Interviews
Product/Firm
Construction
industry
Financial service
Factors that drive switching intention
Survey
Electronics
22
Figure 1 Proposed Mediation Relationships
Dependence
Switching Costs
(benefit-loss and
sunk costs)
REPURCHASE
INTENTIONS
Calculative
Commitment
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