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Is strong more vulnerable? An empirical investigation of psychological contract formation, violation, and customer reactions

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  • Su, Lishan
  • Laczniak, Russell N.
  • Walker, Doug
  • Raju, Sekar

Abstract

The authors combine the psychological contract theory with the cognitive appraisal theory of emotions to systematically examine how psychological contract breach affects customer reactions to service failures. In service encounters, customers may perceive a discrepancy between what the brand has promised and what they have received, leading to breach that could potentially evoke feelings of violation and result in retaliatory behaviors. Two online scenario-based experiments reveal that 1) breach and subsequent feelings of betrayal mediate the impact of the strength of psychological contracts on anger in response to service failures, and that 2) breach, betrayal, and anger mediate the impacts of the strength of psychological contracts on partner quality inferences and negative word-of-mouth communication intentions, with the effects being moderated by the reason for the failure (customer fault versus brand fault). These results indicate that managing psychological contracts can help mitigate negative reactions to service failures.

Suggested Citation

  • Su, Lishan & Laczniak, Russell N. & Walker, Doug & Raju, Sekar, 2023. "Is strong more vulnerable? An empirical investigation of psychological contract formation, violation, and customer reactions," Journal of Business Research, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:jbrese:v:168:y:2023:i:c:s0148296323005829
    DOI: 10.1016/j.jbusres.2023.114223
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    References listed on IDEAS

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    4. Tan, Teck Ming & Balaji, M.S. & Oikarinen, Eeva-Liisa & Alatalo, Sari & Salo, Jari, 2021. "Recover from a service failure: The differential effects of brand betrayal and brand disappointment on an exclusive brand offering," Journal of Business Research, Elsevier, vol. 123(C), pages 126-139.
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    Cited by:

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    3. Wang, Jinchao & Luo, Changfu & Dong, Yanfang & Guo, Chu-yu, 2024. "Does intergenerational mobility affect corporate innovation? Evidence from Chinese manufacturing enterprises," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 526-538.

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