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When does a service guarantee work? The roles of the popularity of service guarantees and firm reputation

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  • Jin, Liyin
  • Huang, Yunhui
  • He, Yanqun

Abstract

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

Suggested Citation

  • Jin, Liyin & Huang, Yunhui & He, Yanqun, 2016. "When does a service guarantee work? The roles of the popularity of service guarantees and firm reputation," Tourism Management, Elsevier, vol. 57(C), pages 272-285.
    • Handle: RePEc:eee:touman:v:57:y:2016:i:c:p:272-285
    DOI: 10.1016/j.tourman.2016.06.008
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