Petrcaived justice in service recovery and recovery satisfiction and customer loyalty a studyof education service in viet nam

ABSTRACT The purpose of this research is to empirically investigate the relationships of Service Recovery Interactional Justice, Procedure Justice, and Distributive Justice and Customer

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

*************

PHAM THI MAI PHUONG

A STUDY OF EDUCATION SERVICES IN VIET NAM

MASTER OF BUSINESS (by Honour)

Ho Chi Minh City-Year 2013

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

*************

PHAM THI MAI PHUONG

A STUDY OF EDUCATION SERVICES IN VIET NAM

ID: 22110047

MASTER OF BUSINESS (by Honour)

SUPERVISOR

Dr NGUYEN DONG PHONG

Ho Chi Minh City-Year 2013

ACKNOWLEDGEMENTS

I would like to express my deeply sincere gratitude to my Supervisor, Dr.Nguyen Dong Phong, for his valuable, enthusiastic guidance and advice on effective method He helps me to understand the research method thoroughly His value experience and professional knowledge give me opportunities to recognize issues deeply His inspiration to me played an important role

in finishing my research Furthermore, I would like to express my gratitude to Dr Nguyen Thai Hoang; his excited lectures encouraged me to explore more how to apply research method to a research

Besides, I would like to thanks to respondents who have supported me a lot in answering questionnaire and interview, which really help me to complement my research Another source

of motivation I would like to thank is my classmates ISB Mbus 2011 for a mutual support by sharing, discussing ideas, knowledge and experiences in the term of research

And an honorable mention I want to send my gratitude to my family, friends for their understanding and helping to collect data for completing my thesis

Ho Chi Minh City, Viet Nam

05thJan, 2014

Pham Thi Mai Phuong

ABSTRACT

The purpose of this research is to empirically investigate the relationships of Service Recovery (Interactional Justice, Procedure Justice, and Distributive Justice) and Customer Satisfaction, between Customer Satisfaction and customer Loyalty The empirical setting is implemented in the English teaching Service in a developing economy of Viet Nam, particularly in Ho Chi Minh City

The findings of this study reveal that Vietnamese Customers who perceive Interactional Justice, Procedure Justice, and Distributive Justice feel satisfied after complaining Customers consider perception of Distributive is the most important to response their behavior and attitude towards English teaching service after encountering a service failure

They appreciate resolving of complaints by outcomes which they received compared to what they required Besides, Consumers also observe treatment and response of employees when they complaint to Centers Customers expect courteous and respectful communication from employees when they response with customer’s problem A good attitude with caring and concerning about what customers experienced and uncomfortable is good criteria for customers

to evaluate Service Recovery of Center Study also found that procedure of Service Recovery is more efficient when Center train employees how to communicate with customers to make them tell their problems Because, it is very difficult to know how customers value service if they do not discuss anything about this

The research affirm that Satisfaction of Customer after handling complaints impacting on customer Loyalty significantly Thus, this result contributes to the literature review of studies in English teaching Service that Service Recovery is always an important factor to improve the customer satisfaction and customer Loyalty

Key words: service recovery, perceived justice, recovery satisfaction, customer loyalty

TABLE OF CONTENTS

ACKNOWLEDGEMENT

ABSTRACT

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

CHAPTER 1: INTRODUCTION 1

1.1 RESEARCH BACKGROUND 1

1.2 PROBLEM IDENTIFICATION 2

1.3 RESEARCH OBJECTIVES AND QUESTION 4

1.4 SIGNIFICANCE OF THE RESEARCH 4

1.5 RESEARCH SCOPE 5

1.6 RESEARCH METHODOLOGY 5

1.7 LIMITATION 6

1.8 THESIS STRUCTURE 6

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL MODEL 8

2.1 SERVICE RECOVERY 8

2.1.1 Interactional Justice 11

2.1.2 Procedural Justice 11

2.1.3 Distributive Justice 12

2.2 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY 13

2.2.1 Customer Satisfaction 13

2.2.2 Customer Loyalty 14

2.3 CONCEPTUAL MODEL 16

CHAPTER 3: RESEARCH METHODOLOGY 17

3.1 QUANLITATIVE RESEARCH ………

3.2 CONSTRUCTION OF MEASUREMENT 17

3.2.1 Measurement Scale of Interactional Justice 18

3.2.2 Measurement Scale of Procedural Justice 19

3.2.3 Measurement Scale of Distributive Justice 20

3.2.4 The measurement of customer satisfaction after handling complaint 21

3.2.5 The measurement of Customer Loyalty 21

3.3 DATA COLLECTION 22

3.3.1 Source of data 22

3.3.2 Questionnaire 22

3.4 SAMPLE 24

3.5 DATA COLLECTION PROCEDURE 25

3.6 DATA ANALYSIS 26

CHAPTER 4: RESULTS OF DATA ANALYSIS AND DISCUSSION 28

4.1 SAMPLE DISCRIPTION 28

4.1.1 Name of English center respondents used to experienced 29

4.1.2 Cost of English center respondent used 29

4.1.3 The profession, gender and age of respondents 30

4.2 RELIABILITY ANALYSIS OF MEASUREMENT SCALES 31

4.2.1 Reliability analysis result of measurement scale of Interactional Justice 31

4.2.2 Reliability result of measurement scale of Procedural Justice 32

4.2.3 Reliability analysis result of measurement scale of Distributive Justice 33

4.2.4 Reliability analysis result of measurement scale of Recovery Satisfaction 34

4.2.5 Reliability analysis result of measurement scale of Loyalty 35

4.3 EXPLORATORY FACTOR ANALYSIS 36

4.3.1 EFA for group of predictors 36

4.3.2 EFA for group of items of Customer Satisfaction and Loyalty measurement Scale 38

4.4 MULTIPLE REGRESSION ANALYSIS 40

4.4.1 Revised Conceptual Model 40

4.4.2 Multiple Regression Testing Assumptions 40

4.4.3 Multiple Regression Analysis 1 45

4.5 DISCUSSION 50

CHAPTER 5: CONCLUSION AND MANAGERIAL IMPLICATION 52

5.1 CONCLUSION 52

5.2 MANAGERIAL IMPLICATION 53

5.3 LIMITATION 55

REFERENCES 56

APPENDICES 59

APPENDIX 1: SURVEY FORM 59

APPENDIX 2: RESULTS F CRONBACH’S ANPHA 63

APPENDIX 3: RESULTS OF EFA 79

APPENDIX 4- RESULTS OF MULTIPLE REGRESSION 91

LIST OF FIGURES

Figure 1: Conceptual Model 14

Figure 2: The process of research 15

Figure 3: Name of English center respondents used to experienced 27

Figure 4: Tuition fees of English course respondents used to experienced 28

Figure 5: Gender and age of respondents 29

Figure 6: Profession of respondents 30

Figure 7: Revised Conceptual Model 38

LIST OF TABLES

Table 1: List of Interviewers 17

Table 5: Measurement Scale of customer satisfaction after handling complaint 20

Table 8: Cronbach’s Alpha of scale of Interactional Justice 31

Table 10: Cronbach’s Alpha of Scale of Distributive Justice 33

Chapter 1: Introduction

CHAPTER 1: INTRODUCTION

1.1 RESEARCH BACKGROUND

Today, the number of language center increase significantly every year, accounting for 40%

of kind of culture center in Viet Nam while the number of student studying in the language center stand for 70% compare to others This proved that second language was and is getting become more important in our life Since Viet Nam has joined WTO, there were many foreign companies invested in Viet Nam This leads to local company need more human resources have ability to use English Ho Chi Minh City is the biggest city in Viet Nam, which is united culture center, developed economic, and education Therefore, there are a lot

of English centers opened to meet demand of English studying for millions of students and employees Besides local English centers, many international group built and developed a chain of English center such as Ila, AMA…They are big competitors to VUS, Outer-space language, VAS, and others

Due to developed society, expectation of customer about service becomes higher They demand more strict requirements Therefore, the possibility which the service producers deliver services in failure is bigger Service failure is defined as those situations when the service fails to live up to the customer‟s expectations (Michel, 2001) It is clear that service failure is inevitable When customers dissatisfy with service received then they will respond

by reaction such as emotional reaction (anger, disappointment, regret) or behavior reaction (complaining, negative mouth to mouth or switching of these providers to others) The bad case is that they will do negative mouth to mouth of services It is coined that mouth to mouth advertising is very effective and quick Thus, the important is providers have to handle complaints and resolve problems to maintain customers and avoid negative word of mouth Recently there have been many studies about this problem, they found out remedy for service failure which helps company change lose to win The one of effective therapies

to ease customer dissatisfaction is service recovery When firms handle complaint and failures effectively this can have a great effect on customer retention rates, defect the spread

of damaging word of mouth and improve bottom-line performance (Morrisson and Huppertz, 2010) However, the degree of success might depend on the type of service

Chapter 1: Introduction

involved, the type of failure (Mc Dougall and Levesque, 1999) that appeared and the speed

of reaction Several studies have found that good service recovery practices could lead to higher loyalty, satisfaction and retention rates (Johnston and Michel, 2008; Millet et al., 2000) Johnston and Michel (2008) have explored that service recovery has a positive impact on process improvement as well as on customer‟s attitude and retention Others found that good relationships between customers and services providers after service recovery are conducted successfully Clearly, the effect of Service recovery has meaningful

in maintaining customers If service recovery is ineffective or poor that triggers to disappointment of customer again (failure in recovery) This may lead to the loss of confidence in the firm and possible defection; consequently negative word of mouth communication will spread significantly

1.2 PROBLEM IDENTIFICATION

Service recovery refers to the actions taken by an organization to resolve the problems caused by service failure (Gronroos, 1990) Some customers do not complaint even they dissatisfy with the service (Stephens and Gwinner, 1998) However, it does not mean that they are happy with what they received The reasons for not complaining are plentiful which might lead to their belief of service decrease significantly Consequently, they will use other service or give a negative word

of mouth to their relatives, friends and the consequences are potentially devastating to a company, resulting in increased “opportunity cost” (Fornell and Wernfelt, 1987 and Vorhees

et al., 2006), lost market share and declining profitability (e.g Estelami, 2000) Thus, employers should have a sensible ability to recognize whether service delivery is failure or not to give proper solution of service recovery Since service failure is inevitable then clear explanation

of service failure should be recognized to employees and customers to help them curb dissatisfaction of customers In order to retain consumers, after a failure of delivery service then providers have to fix their mistake by some actions such as apology, compensation, empathy, explanation, replacement, , called service recovery However, an inadequate action can be second failure Thus, managers have to aware about what is service failure and effective service recovery Since necessary of service recovery is not examined accurately with service providers

in Viet Nam, the study aims to make clear the relationship between service recovery and customer satisfaction and customer loyalty

Chapter 1: Introduction

In order to more understand about effective service recovery, reserachers have ultilized justice theory as the main framework for evaluating service recovery Procedure (McColl-Kennedy & Sparks, 2003) A justice theory framework has gained popularity in explaining how customers examine service providers‟ reactions to service failure/recovery There are three dimensional concept perceived in this theroy including distributive, procedural and interactional justice Recently, many researchers have studied the relationship between service recovery based on multi-dimensional concept and customer satisfaction and loyalty.However, it is necessary to study more deeply in vietnamese context and Education industry Specifically, study aims to analyze complainter‟s responses to service recovery on three these dimensions

1.3 RESEARCH OBJECTIVES AND QUESTION

The purpose of study is to find out what predictors of service recovery influence on customer satisfaction and customer loyalty toward English Education industry in Viet Nam The study will explore the relationship between interactional justice, procedural justice, distributive justice and customer satisfaction after handling complaint, loyalty in the term word of mouth and retention This research is aiming to answer the following question:

How interactional justice impact on recovery satisfaction?

How procedural justice impact on recovery satisfaction?

How distributive justice impact on recovery satisfaction?

How service recovery effect on customer satisfaction and customer loyalty?

What process of service recovery that English center should pay attention to remedy service

failure?

Findings from this research will be helpful for English centers in Viet Nam in understanding their customer requirements, deeper considering in serving customers, looking back what they had then give some solutions to improve their services

Chapter 1: Introduction

1.4 SIGNIFICANCE OF THE RESEARCH

Customer loyalty is concerned with the likelihood of a customer returning, making business referrals, providing strong word of mouth, as well as offering references and publicity (Bowen &Shoemaker, 1998).Thus, for a company maintaining and increasing customer loyalty is very necessary However, the question is how to raise customer loyalty The earlier studies proved there are positive relationships between service recovery, customer satisfaction and customer loyalty Since many results of previous research proved and coined the positive relationship between good service recovery and customer loyalty (Tax at

el, 1998, Kim at el, 2003) then Service recovery is the most important factor to recover service failure to customers

Even though some variables of service recovery in fields such as hotel, restaurant, bookstore online, auto mobile identified and studied the relationship between them and customer satisfaction but in Education industry, especially the case in English center at Viet Nam have been not conducted yet The research aims to study the effect of perceived Justice including three predictors of service recovery: interactional justice, Procedural justice, and distributive justice on customer satisfaction and loyalty Significantly, the research will find out how each predictors impact on customer satisfaction Because the influence of each factor on satisfaction may be different then it is useful if we can evaluate exactly how interactional, distributive, and Procedural justice affect on customer‟s perception about service recovery quality This helps Center to adjust and train employees clearer and more comprehensive the important of their behaviors, communication, and response to customers when something wrong occurs Thus, the research of service recovery will value with English center generally

1.5 RESEARCH SCOPE

This Study aims to analyze the influence of recovery service to customer satisfaction and customer loyalty towards English teaching services In order to find the relationship between variables such as failure of serving, service recovery, customer loyalty, the research tends to discover what customers(English learners) received from the services and how bad they feel

Chapter 1: Introduction

when they get a wrong services, how good they feel after the centers apply service recovery

or repair employee‟s treatments to customers The research focuses on studying behavior and purchasing habit and of English learners who are mostly students, white-collar employees in Ho Chi Minh City

1.6 RESEARCH METHODOLOGY

This research is applied the quantitative method which were reviewed the theoretical background adaptable to the context The study used integration between qualitative research to predict variables and quantitative to statistic the number of questionnaires of survey to conduct test The data will be collected and then validated by Cronbach Alpha Reliability Analysis and selected by Exploratory Factor Analysis Final step is testing model

by using Multiple Regression Analysis by SPSS version 20.0

1.7 LIMITATION

This research is focusing on the survey interviewed respondents who have been experienced studying language at English centers in Ho Chi Minh City only This study concentrates to interview respondents which are students, white-collar employees Data collection is sending paper questionnaire and google.doc to all participants over one month Due convenience sample and the characteristic is not represent for all people then the findings might not express exact representative opinion

1.8 THESIS STRUCTURE

Chapter 1:

Introduction: This chapter includes a brief overview of the research background, problems

and objectives, methodology as well as the limitation

Chapter 2:

Literature review and conceptual model: This chapter comprises of definition related to

English teaching service, deep review of previous researches on the service failure, service

Chapter 1: Introduction

recovery, customer satisfaction, customer loyalty and the basis of building conceptual model

Chapter 3:

Research methodology: This chapter shows the research process, measurement scale,

preliminary assessment of measures and data collection Procedurals as well as the data analysis process

Chapter 4:

Data analysis result and Discussion: This chapter consists of the official assessment of

measures, hypotheses testing, data analysis results and interpretation

Chapter 5:

Conclusion and Implication:

This chapter will include the findings and providing the theoretical and managerial implications and proposing specific recommendations for English center managerial level in

Ho Chi Minh City

Chapter 2: Literature Review And Conceptual Model

CHAPTER 2: LITERATURE REVIEW AND CONCEPTUAL MODEL

2.1 SERVICE RECOVERY

Service recovery can be defined as actions which designed to solve problems, alter negative attitudes of dissatisfied customers, and lead to retain these customers (Miller et al, 2000) This does not mean that service recovery just be useful in the case of troubles or dissatisfaction Service recovery help the firm to seek out and deal with service failure (Johnston, 1995) What is seeking out and dealing with service failure, which take action to distinguishes recovery from complaint handling, because there are many customers who dissastisfy but not complaint Instead, they just switch the service to another provider

The greatest barrier that prevents service recovery done effectively is just only 5 – 10% of dissatisfied customers choose to complain following a service failure (Tax and Brown, 1998) Instead, they choose the way to talk negative thing to third part (friend, relative, and other consumers) There are some reasons that lead to customer complaint or not complaint customer providers Customers think that the organization will be irresponsive; they do not wish to encounter the individual responsible for the failure; consumers are not sure about their rights and the firm‟s obligations; the high cost in time and effort of complaining also make them confused Identifying service failure is difficult if customers do not make comment Thus, if the customer complains, it should be considered as a gift (Barlow and Moeller, 1996) Careful listening to take right actions will return customers „belief and loyalty From this literature, company should believe that effective complain management will help to improve consumer loyalty Therefore, what companies need to do first is encourage dissatisfied customers to complain Bitner, Booms, and Tetreault (1990) found that the way employee respond toward service failure directly relate to customer satisfaction and dissatisfaction

Findings from prior researches, service failures could be sorted into service delivery system failures, gap between needs and requests, unprompted/unsolicited employee actions, and problematic customers (Bitner, Booms, and Tetreault, 1990) While Lewis and Spyrakopoulos (2001) stated service failures including organization Procedurals, mistakes,

Chapter 2: Literature Review And Conceptual Model

employee behavior, functional/technical failures, and actions/omissions of the organization that are against the sense of fair trade According to Lewis and Spyrakopoulous (2001), although service failure is a catastrophic action which destroy customer‟s loyalty, but a successful implement of recovery service could prevent defection of what consumers experienced

The necessity for service recovery is brought about by service failure Smith el at (1999) state service recovery “includes situations in which a service failure occurs but no complaint

is lodged by the customers” (p 359) Thus, manager should aware of customer behaviors and attitudes to define what they really expect Recovery management is considered to have

an significant effect on customer evaluations because consumers tend to be more emotionally involved in recovery service than in routin service encouter (Bitner et al, 1990)

Service recovery is proved that it affects customer satisfaction and, as a consequence, customer loyalty (Smith et al., 1998; Tax & Brown, 1998) There are a lot of studies have found that satisfaction with the service recovery directly influence on customer‟s intention

to repurchase and to recommend the service provider (Lewis & McCann, 2004; Maxham, 2001) Theory of Service recovery paradox showed that customer with experience of service failure which received worth recovery from service recovery activities will be more satisfied than customer did not involve a falling down of service However, if service recovery is inadequate to remedy failure then it is a second failure which is very serious

Customers‟ satisfaction and future loyalty is dependent on customers‟ feelings on whether they have been treated fairly or not Customers expect a service recovery to be fair in order to recover their satisfaction and loyalty Literature on customer complaint management shows that consumers expect “fair” resolutions to product and service failures (Blodgett et al., 1997) Similarly, there are 3 factors that customers use to evaluate perception of Justice with the service recovery including outcomes, procedural justice, and interactional treatment (Goodwin and Ross, 1992, Smith et al., 1999) Smith et al (1999) developed a comprehensive model of customer satisfaction with service failure/recovery encouters and tested in restaurant and hospital industries They found that customers prefer to receive recovery that match with type and magnitude of failure Besides, Blodgett et al., (1997) suggested to evaluate customer

Chapter 2: Literature Review And Conceptual Model

behaviour after using recovery on three justice components: interactional justice, Procedural justice and distributive justice The effects of perceived justice with service recovery and customer satisfaction has stated by a number of researchers

Distributive justice (aiming on the outcome of the recovery process)

Procedural justice (the process undertaken is assess in order to enter in the final outcome)

Interactional justice (how the manner in which the process is implemented and what the customer is received (Hoffman et al., 2000)

The connection between the varied justice dimensions is complex owing to their interactive effects Sparks and McColl-Kennedy (2001) conducted a research about the relationship between procedural, interactional and distributive justice related to service recovery and satisfaction; he found that satisfaction varied significantly depending on the various combinations of recovery measures Additionally, Ok et al (2005) suggest that there were a positive connection between three dimensions of justice and recovery satisfaction Similarly, Wirtz and Mattila (2004) demonstrate that recovery outcome (e.g., compensation), Procedurals an distributive justice impact on post-recovery satisfaction in a restaurant setting

2.1.1 Interactional Justice

Interactional Justice includes the way employees treat and communicate with consumers

during the complaint episode There are six items have been studied: courtesy, honesty,

offering explanations, empathy, endeavor, and offering apologies (Clemmer, 1988; Tax et al., 1998) The most recent conceptualization of justice suggests that interactional justice can

be divided into two dimension in analyzing comprised Interactional treatment and informational justice (Colquitt, 2001; Mattila and Cranage, 2005) Informational justice was considered by the perceived adequacy and truthfulness of information explaining the causes

of unfavorable outcomes (Colquitt, 2001) There were some researchers studied in restaurant field about role of information in service failure situation Customers expect to receive a clear, suitable, comprehensive about the problems or any troubles that they had to encounter

in services Information inadequacy increase consumer frustration (Susskind, 2005) and an

Chapter 2: Literature Review And Conceptual Model

informed choice go up customer loyalty following a service failure, as a result of customers‟ willingness to share responsibility (Cranage, 2004)

In order to examine the importance of service recovery to customer satisfaction in Education field, this following hypothesis will be conducted

H1: Interactional justice impact on customer satisfaction positively

2.1.2 Procedural Justice

The second dimension is Procedural Justice which concerns the policies and Procedurals

used by companies during complaint processes and include six items: flexibility, accessibility, process control, decision control, response speed and acceptance of

responsibility (Blodgett et al., 1997; Tax et al., 1998; Thibaut & Walker, 1975) The speed

with which service failures are corrected or complaints are handled is one of the important predictors of customer perceptions of procedural justice (Blodgett et al., 1997, Tax et al., 1998) In service recovery context, procedural justice is consider as the customer‟s perception of justice for several stages of Procedural and processes needed to recover service failure (Mattila, 2001) Procedural justice concentrates on the way outcome is reached

In order to examine the importance of service recovery to customer satisfaction, this

following hypothesis will be conducted:

H2: Procedural justice has a positive effect on Recovery Satisfaction

2.1.3 Distributive Justice

Distributive Justice is emphasized by the equity theory Distributive justice is the allocation

of benefits and costs between parties in a transaction In the complaint context, distributions are seen as tangible outcomes offered by the company to the complainer As a result, many service organizations have suggested compensation for dissatisfied customers by actions such refunds, credits, discounts and apology to make peace Or in some case, they can combine these actions to ease customer anger When an individual perceive that what they

Chapter 2: Literature Review And Conceptual Model

receive is not equitable then they feel distress (Waster et al., 1973), which in turn motivates him/her to restore the distributive justice Researchers found that justice perception in tangible outcomes has an positive effect on recovery evaluation ( Boshoff, 1997; Goodwin

& Ross, 1992; Hoffman et al., 1995; Smith et al., 1999) Distributive justice was measured

by “fairness”, “justice”, “need”, “value”, and “reward” of outcome by some researchers (Smith et al., 1994; Wirtz & Mattila, 2004)

In order to examine the importance of service recovery to customer satisfaction, this

following hypothesis will be conducted

H3: Distributive justice impact on Recovery Satisfaction positively

2.2 CUSTOMER SATISFACTION AND CUSTOMER LOYALTY

2.2.1 Customer Satisfaction

Although there were a lot of research on satisfaction but a definition of satisfaction is not agreed in common for this concept Oliver (1997) addresses this definitional issue by noting that “Everyone knows what satisfaction is until asked to give a definition Then it seems, nobody knows” (p.13) Most of consumer satisfaction perceived as an evaluate process Particularly, customer satisfaction was considered as a summary concept such as fulfillment response (Oliver, 1997), overall evaluation (Fornell, 1992), summary attribution phenomenon (Oliver, 1992)

Researchers portray customer satisfaction as either cognitive or an affective response According to Westbrook and Reilly (1983), satisfaction is as an emotional response, while others consider satisfaction as a buyer‟s cognitive state (Howard and Sheth, 1969) Halstead, Hartman, and Schmidt (1994) considered customer satisfaction as an affect response that focuses on product performance against some pre-purchase standard during or after consumption Besides, there are some definition of satisfaction which is a mixed of response including both cognitive and affective dimensions (Oliver, 1997)

Chapter 2: Literature Review And Conceptual Model

According to Oliver (1997), customer satisfaction is believed to link to loyalty and drive to the firm‟s profitability When customer feel satisfied they tend to re-purchase products and even they advertise the service to others The basic idea is that satisfaction enhance profitability by expanding the business by increasing market share, earning customer loyalty, improving a brand‟s reputation by talking positively about service with their relative, friend or recommend the service to other customers This lead to the firm can sell more product and rising margins and other strategies (Barsky and Nash, 2003) Research based on the American Customer Satisfaction Index supported empirically that customer loyalty is positively related to customer satisfaction (Fornell, Johnson, Anderson, Cha, &

Bryant, 1996) Thus, some previous studies reported a relationship between satisfaction and

Researchers addressed that customer loyalty express through behavior of customer which usually has satisfaction of service quality Customer loyalty is recognized as the actual repurchase behavior of a customer as the behavioral aspect, mostly attitude and behavior are consistent, and that attitude refers future behavior Reichheld and Sasser (1990) stated the company just retains 5 percent more its customer then the profit can increase by 25 percent

to 125 percent Then, it is believable that there is a positive correlation between loyal customers and profitability Belief of customers to product will reinforce them to consume goods more When ones trust the company, they will be willing to welcome and buy new launches This helps the company save advertising cost In addition, word of mouth is very effective way to bring product to consumers Thus, companies should adjust their strategies

Chapter 2: Literature Review And Conceptual Model

to hold customers to achieve optimal customer value delivery as customer value including costs and benefits of keeping for a company

Oliver et al (1997) define customer loyalty as:

A deeply held commitment to re-buy or re-patronize a prefrred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing despite situational influences and marketing efforts having the potential to cause switching behaviour

In general, there are three distinctive approaches to measure loyalty:

Loyalty and satisfaction are related, although also clearly distinct In some studies, researchers have found that higher satisfacton has been proposed to be related higher loyalty (Morrisson and Huppertz, 2010; and Sousa and Voss, 2009)

The hypothesis is identified as follow:

H4: Recovery Satisfaction has a positive effect on Loyalty

2.3 CONCEPTUAL MODEL

The effect of service recovery on customer satisfaction and customer loyalty was conducted

in some previous research However, these studies took place mostly in Europe and American Less attention has been devoted to the effects of service recovery on consumer satisfaction and customer loyalty in Viet Nam context Thus, this study aims to contribute a

Chapter 2: Literature Review And Conceptual Model

growing understanding of the importance of service recovery by examining the relationship between service recovery, customer satisfaction and customer loyalty in English Education

environment

In order to improve or remedy service failure, managers should understand types and cause

of service failure to have the best strategy This study aims to investigate following this conceptual framework

Consumer Loyalty

Chapter 3: Research Methodology

CHAPTER 3: RESEARCH METHODOLOGY

This research aims to inherit results of previous research then the data collection will conducted by combination of qualitative and quantitative research through individual interview and questionnaire survey In order to be convenience for respondents then the survey will be conducted by both paper and online

The research process of this study was conducted as Figure 2 below:

Figure 2: The process of research

Literature review Interview Develop theory model Develop model

Exploratory Factor Analysis

Design first draft questionnaire

Final Questionnaire

Main survey Cronbach‟s Alpha analysis

Testing Hypotheses by Multiple Regression analysis

Sample size n=130

To evaluate validity of items

To evaluate the reliability of

Chapter 3: Research Methodology

3.1 QUALITATIVE RESEARCH

In the first step, a interview was conducted to 10 respondents (1 student in FPT University,

one in economics and one in international university who studied English at ILA, 1 in Economics University but studied English at EL center, 1 studied at VUS, 1 student in Law University and one in economic who studied in VAS, 3 students in ISB who studied English

at other center) to defined appropriate variables in Viet Nam context, especially English center The primary study was conducted at universities such as university of economics, RMIT university, international University, FPT University, some participants from Viet tin bank and master classes of ISB (international school business) This step helped the author had a general view about the research problem and considered situations of English centers

in Ho Chi Minh City The results collected from interviews showing that when learners experienced a course of English in center, they encountered some kind of service failure such as unexpected course delay or unenthusiastic teachers, inappropriate level arranging…and when they complained to employees, they did expect more than what they received or even they did not complain because they thought employees would not fix the problems then they just switched services While 9 out 10 had ever met some unhappy situation in English center, only one felt really satisfied with the service come from British Council, who experienced 1 course They also provided information about the way employees get complaints and solve them Most of them said that after a service failure, centers try to fix it but they do not really work and adapt customer‟s expectation From interviews, the results received that response speed of situation might different among centers and cases Besides, 3 out 10 stated that service recovery at centers are good, 5 respondents felt poor, 1 for very poor and 2 for very good

Next step based on previous research about the impact of perceived justice on customer

satisfaction and loyalty, the authors established 4 hypotheses of the study After that, the author adjusted the model and provides the preliminary the scale for questionnaire of the study

Finally, the qualitative research gave the meaningful result that all scales were clearly

understood by the respondents The respondents agreed that these items and concept in the

Chapter 3: Research Methodology

research concerning with their evaluation to Service Recovery Perception and leads to Satisfaction

Table 1: List of interviewers

Bui Ngoc An Tam Female 26 Brishtish Council Rmit

3.2 CONSTRUCTION OF SCALE

Scale

This research use interval scale to measure the difference of feeling of individuals Interval scale allows us to perform certain arithmetical operations on the data collected from the respondents This helps us to figure out the mean and the standard deviations of the responses on the variables (Uma Sekaran and Roger Bougie, 2010) Particularly, the study will use Likert-type including 5 levels to examine judgment of customers of services

Validity

Validity is concerned with whether we measure the right concept (Uma Sekaran and Roger Bougie, 2010) Factor analysis is used to confirm the dimensions of the concept that the research defined

Chapter 3: Research Methodology

Reliability

“The reliability of a measure indicates the extent to which it is without bias (error free) and hence ensures consistent measurement across time and across the various items in the instrument” (Uma Sekaran and Roger Bougie, 2010)

3.2.1 Measurement Scale of Interactional Justice

The measurement scale of interactional justice involves the way employees treat and communicate with consumers during the complaint episode There are six items have been studied: courtesy, honesty, offering explanations, empathy, endeavor, and offering

apologies The scale was adopted from Tax et al., 1998

Table 2: Measurement Scale of Interactional Justice

3.2.2 Measurement Scale of Procedural Justice

The measurement scale of Procedural justice which concerns the policies and Procedurals used by companies during complaint processes and includes six items: flexibility,

Adopted

Tax et al.,

1998

INTER1 They communicated honestly with me

INTER2 The people courteous to me

INTER3 I was given a reasonable explanation as to why the

original problem occurred

INTER4 They seemed very concerned about my problem

INTER5 They tried hard to resolve the problem

INTER6 The people apologized for the problem

Chapter 3: Research Methodology

accessibility, process control, decision control, response speed and acceptance of

responsibility The scale was adopted from Blodgett et al., 1997; Tax et al., 1998

Table 3: Measurement Scale of Procedural Justice

3.2.3 Measurement Scale of Distributive Justice

The measurement scale of distributive justice concerns distributions are seen as tangible outcomes offered by the company to the complainer (e.g., item replacement or refund).The

scale was adopted from Tax et al., 1998

PRO7 I got a chance to tell them the details of my problem

PRO8 I had some control over the result I received from the

complaint

PRO9 They responded quickly to my complaint

PRO10 They adapted their complaint handling Procedurals to

satisfy my needs

PRO11 They made it easy for me to voice my complaint

PRO12 They assumed responsibility for the problem

Chapter 3: Research Methodology

Table 4: Measurement Scale of Distributive Justice

3.2.4 The measurement of customer satisfaction after handling complaint

The measurement scale of customer satisfaction measure an affect response that focuses on product performance against some pre-purchase standard during or after consumption, here the situation is after complaining The scale adopted from Santos and Rossi (2002)

Table 5: Measurement Scale of customer satisfaction after handling complaint

3.1.5 The measurement of Customer Loyalty

The measurement scale of Customer Loyalty measures customers' product preferences, word

of mouth and retention The scale adopted from Zeithaml et al (1996.)

Adopted

Tax et al.,

1998

DIS13 The result of the complaint was right

DIS14 In resolving the complaint, the company gave me what I

needed

DIS15 The result of the complaint was what I expected

DIS16 I received what I required

Santos and Rossi

(2002)

SAT17 I was happy with how the organization handled my

complaint

SAT18 I was pleased with the manner in which the

complaint was dealt with

SAT19 Overall, I was not satisfied with the way the

complaint was handled

Chapter 3: Research Methodology

Table 6: Measurement Scale of Customer Loyalty

3.3 DATA COLLECTION

3.3.1 Source of data

Data is obtained from primary sources by interview individuals through face to face

interview and answering questionnaire via mail

3.3.2 Questionnaire

Mail Questionnaire designed including 4 Part

Part 1: General Information

The information of English centers such as name, address, problems that customer

encounter

Part 2: Survey content

Service Recovery, including Interactional justice, Procedural justice and distributive justice Customer Satisfaction, measure how customer feels after complaint was dealt with

Customer Loyalty, measure what loyalty behavior of customers

Zeithaml et al (1996)

LOY20 I recommend this center to friends,

neighbors and relatives

LOY21 I encourage my friends and family to

make business with this center

LOY22 I do most of my business with this center

LOY23 I do more business with the center in the

future

Chapter 3: Research Methodology

Part 3: Privacy Information

Requirement of respondent information: gender, occupancy, age

Questionnaire was designed to reflect judgment of customers about service There are not wrong or right answers Each question included 5 level of satisfaction such as Likert type Each level responds feeling of customers about assumption If they satisfy definitely then they click on agree completely If they do not agree at all then click on disagree definitely The rest of levels are agree, disagree and neutral Clearly, Likert scale is used to measure the constructs as follow:

in the measurement of scale eliminated because they showed that there was a misunderstanding and confusion of respondents in answering questionnaire

3.4 Sample

This study targets customers of English center in Ho Chi Minh City I collaborated with consultancy department in English center to email online survey to them; I also sent paper and email to students of Rmit, international university of Ho chi Minh city and FPT

Chapter 3: Research Methodology

University and students of master course in ISB Survey was designed by Google doc who could satisfy the number of response automatically

Sample size

The sampling method was the non-probability sampling with convenience method The method applied to test the reliability of measurement scale was Cronbach‟s Alpha, the factor loading was tested by EFA (Exploratory Factor Analysis) and the hypotheses were tested by Multiple Regression

A data set satisfied requirement of EFA was five times the number of variables and at least more than 100 (Hair et al., 1998)

N=5k (k: number of variables) and n>100

Therefore, in this study, the minimum sample required by EFA was n=5*23=115

The minimum sample for multiple regression analysis must ensure the formula of n> 50+8m (m: number of independent variables)

As there were four independent variables in this study, the minimum sample required to run multiple regression in this research was n > 82

As a result, the minimum sample size in this study was 115 which would be satisfied both EFA and multiple regression analysis

3.5 Data collection Procedure

The processes of the data Procedural were taken as following:

- Step 1: Collect data from Pilot Survey, 30 questionnaires were sent to respondents and the

author received all of them However, in the process of asking and collecting data, the author realized that there were some items make responders hard to understand After collecting this data, the author tried to run SPSS to test for the reliability of concepts and run EFA to evaluate the validity of concepts

Chapter 3: Research Methodology

-Step 2: Adjusted questionnaire to make sure respondent understand clearly about what

questionnaire refer to

-Step 3: The author issued the questionnaire to the respondents

200 questionnaire mails were sent to students of universities including FPT University, university of economics, national university, Rmit University

50 questionnaire papers were sent to Master student of ISB

The questionnaire was uploaded to Google docs‟ link and sending to networking

Table 7: The result of delivery questionnaires

Name of University Number

of issuing

Number of collecting

Percent (%)

3.6 Data Analysis

Cronbach’s coefficient alpha reliability analysis

The items in the research will be tested by Cronbach‟s coefficient alpha (Cronbach‟s alpha; Cronbach, 1946) The higher the coefficients the better the measuring instrument The closer Cronbach‟s alpha is to 1, the higher the internal consistency reliability Generally, reliabilities over 0.8 are good, those in the 0.7 range, acceptable but less than 0.6 are considered to be poor

Chapter 3: Research Methodology

The corrected Item- Total Correlation of each variable would be higher than 0.3 to ensure that item moderately correlated with most of other items and would make a good component

of this summated rating scale

Exploratory Factor Analysis

The Exploratory Factor Analysis was used when the underlying structure of a data set is unknown In this research, the Exploratory Factor Analysis was applied to examine the relations among variables by understanding the constructs that underlie them and to determine the appropriateness of factor analysis This analysis also examined the significant loadings for variables load on a factor (Hair et al., 1998)

Multiple Regression Analysis

In order to analyze the relationship between variances, analysis technique widely used is correlation and regression Correlation analysis will measure linear relationship between two variables Correlation works for data based on numeric scales where the numbers are meaningful Regression analysis also looks at the relationship between two or more variables Regression analysis has a differences from correlation analysis is Regression analysis looks at the statistic dependence between a dependence variable and one or more independent variables Then try to predict the impaction of the independent variables on the dependent variable So a regression analysis assess pattern of existing relationship but correlation analysis look at the strength of the relationship

The responses will be entered into the computer Therefore, the data is used to test the following hypotheses, which were formed

SPSS 20.0 will be used to analyze the relationship between variables and the R square must

be higher than 0.5 as it showed how much the variance of independent variable was explained by the model R-square would tell us how much of the variance in the dependent variable was explained by the model According to Pedhazur (1982), the overall R-square for the whole model was calculated by the formula

Chapter 3: Research Methodology

RM 2 = 1- (1-R12)*(1-R22)

In which:

- R12 is the correlation between Predictors and Recovery Satisfaction

- R22 is the correlation between Recovery Satisfaction and Customer Loyalty

- RM 2is the overall correlation of the whole model

Chapter 4: Results Of Data Analysis And Discussion

CHAPTER 4: RESULTS OF DATA ANALYSIS AND DISCUSSION

This chapter presented the informative description of sample, the assessment of measures and the result of hypotheses testing This chapter included five parts: sample description, reliability analysis, exploratory factor analysis, multiple regression of testing hypothesis and the result interpretation

4.1 SAMPLE DISCRIPTION

Based on the research methodology in chapter 3, 200 questionnaire mail was sent to students

of universities including FPT university, university of economics, national university, Rmit university and 50 questionnaire paper was sent to Master students of ISB, belong to Economics University of HO Chi minh On the other hand, the questionnaire was uploaded

to Google docs‟ link and sending to networking After the survey implementation, there were 115 responding answers received through Google docs and 65 paper answer received With total 180 answer received, after checking 50 questionnaires got errors, there were 130 answers appropriate and valid to put in data set As a result, 130 samples were satisfied the minimum requirements of sample size in this study,

The descriptive statistics were obtained from the frequency analysis of SPSS 20.0 and the informative data of sample were detailed as follows:

4.1.1 Name of English center respondents used to experienced

The respondents of this survey listed 25 specifics name of English center in Hi Chi Minh city and the graph below summarized the name of English center with high percentage of using by respondents The top five centers with high use frequency were VUS, VAS, Elite, Ila, Space

Chapter 4: Results Of Data Analysis And Discussion

Figure 3: Name of English center respondents used to experienced

4.1.2 Cost of English center respondent used

The tuition of English course had been ranged in four sections and the highest cost used by 46% respondents of this survey was the range of from 4 million VND to 5 million VND per course

The second high tuition fee was the rate from over 2 million to below 4 million and with 30% and 15% used course at tuition under 2 million and just 9% respondent used the coursed at tuition over 5 million

Chapter 4: Results Of Data Analysis And Discussion

Figure 4: Tuition fees of English course respondents used to experienced

4.1.3 The profession, gender and age of respondents

In this survey, there were 55% female and 45% male respondents And most of respondent (70%) 18-24 years old presented a high percentage of answer from young people who study English at centers, only 25 % respondents aged from 25-35 years old and only 5% over 35 years old In addition, the high rate of 68% respondents was students and 25% white-collar employees represented the sample characteristics of this sample data set

Figure 5: Gender and age of respondents

Chapter 4: Results Of Data Analysis And Discussion

Figure 6: Profession of respondents 4.2 RELIABILITY ANALYSIS OF MEASUREMENT SCALES

4.2.1 Reliability analysis result of measurement scale of Interactional justice

In order to assess the six items that was summed to create the Interactional justice formed a reliable scale, Cronbach‟s Alpha was computed The alpha for six items was 0.808 but the Corrected Item-Total Correlation of Item INTER1 was only 0.277 lower than 0.3 and if the item was deleted, the alpha of this scale would be increased to 0.829 Therefore, the item INTER1 was deleted in order to ensure a good component of this summated rating scale, The Cronbach‟s Alpha was computed again for remaining five items The alpha for five items was 0.829, which indicated that the items form a scale that had reasonable internal consistency reliability The Corrected Item-Total Correlation of each item was greater than

0.3, the lowest was 0.557 Therefore, these items would be qualified to run the EFA `

Table 8: Cronbach’s Alpha of scale of Interactional Justice

Chapter 4: Results Of Data Analysis And Discussion

Cronbach’s Alpha of

scale of Interactional

Justice = 0.829

Scale Mean if Item Deleted

Scale Variance if Item Deleted

Corrected Item-Total Correlation

Squared Multiple Correlation

Cronbach's Alpha if Item Deleted

4.2.2 Reliability result of measurement scale of Procedural Justice

In order to assess the six items that was summed to create the Procedural Justice formed a reliable scale, Cronbach‟s Alpha was computed The alpha for six items was 0.854, which indicated that these items form a scale that had reasonable internal consistency reliability The Correct Item-Total Correlation of each item was greater than 0.3 and the lowest was 0.577 Therefore, these six items would be qualified to run EFA