Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

Key Words:
distributive justice, interactional justice, procedural justice, trust, loyalty
INTRODUCTION 
No matter how excellent a hotel delivers service, every hotel business oftentimes makes a mistake in
meeting the expectations of today’s hotel guests, who tend to be more demanding and less loyal than ever before.
Service failure prompts customer dissatisfaction with the service provider, which could possibly lead to customer 
complaint behavior. Hotel guests who are dissatisfied with the service encounter could possibly show any of the four 
reactions: silently exit, spread a negative word-of-mouth communication, voice their complaints to the operator, and 
continue to patronage the same property despite their dissatisfaction (Tax, Brown, & Chandrashekaran, 1998).
Gronroos (1990, p.5) defined service recovery processes as “those actions in which a firm engages to 
address a customer complaint regarding a perceived service failure.” Some researchers suggest that a company’s 
service recovery effort can restore customer satisfaction (Smith, Bolton, & Wagner, 1999), reinforce customer 
relationships, and eventually attain customer patronage (Blodgett, Hill, & Tax, 1997). Superb post-failure recovery 
efforts can induce “service recovery paradox,” coined by McCollough and Bharadwaj (1992), whereby customers 
experiencing a service failure will perceive a higher level of satisfaction than those who did not experience a service 
failure encounter.
Past research reveals that effective complaint handling is positively related to customer loyalty and the 
subsequent customer retention, which eventually leads to long-term profitability (Reichfield & Sasser, 1990; Tax et 
al., 1988). Since hotel companies cannot prevent all customer complaints, they recently have devoted a great deal of 
money and efforts to learn as to how to manage and respond to customer complaints for possible service failures. 
Hotel companies have implemented service recovery programs by empowering employees to immediately solve a 
problem and offering appropriate compensation to a dissatisfied customer (Stoller, 2005).
A justice theory framework appears to gain popularity in explaining how guests evaluate service providers’ 
reactions to service failure/recovery (Maxham III, 2001). Perceived justice is a multi-dimensional concept, 
comprising of three dimensions: distributive justice, interactional justice, and procedural justice. The application of 
the justice framework facilitates a deepening theoretical understanding of the dynamics of the service provider and 
customer relationship (Collie, Sparks, & Bradley, 2000). Notwithstanding the recent advances in understanding the 
effects of perceived justice on post-recovery behavior, there is still a lot of room to learn as to how a service 
provider’s recovery efforts affect subsequent customer relationships with the company. Although some studies have 
been performed on service recovery in the field of the service industry such as the hospitality industry (e.g., Wirtz & 
Mattila, 2004; Ok, Back, & Shanklin, 2005), only a few studies attempted to adopt the relationship marketing 
approach in explaining the relationship among perceived justice with service recovery, satisfaction, and three 
relationship outcome variables: trust, commitment, and loyalty. Considering the importance of outcomes of 
relationship management after service recovery efforts, this study attempts to fill the gap by linking perceived justice 
of the recovery efforts following service failure with important customer relationships. 

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