The Impact Of Perceived Justice On Behavioural Intentions In Retail Banking: An Investigation Of Explanatory Roles Of Service Recovery And Overall Satisfaction

Abstract

Customers’ behavioural intentions following a service failure is a major concern in the retail banking sector, especially given the fact that the cost of keeping an existing customer is much less than that of acquiring a new one. Service recovery is widely used as a strategy to please a customer after a service failure and yet literature focusing on service recovery ignores the role of overall satisfaction, and in this way, provides an incomplete explanation of the long-term impact of perceived justice on customers’ behavioural intentions. The current study strives to develop and test a service recovery model that explains the relationships among perceived justice, recovery satisfaction and overall customer satisfaction; and their effects on behavioural intentions for a retail bank in a developing economy. The study also seeks to examine the mediation roles of recovery satisfaction and overall satisfaction on the relationship between justice and behavioural intentions. To test the proposed model, data collected from 210 bank customers who recently experienced problems with their bank, were analysed using the partial least squares structural equation modelling (PLS-SEM). The results suggest that the influence of justice on behavioural intentions is mediated by recovery satisfaction and overall satisfaction in series. Thus, the results reveal that the inclusion of overall satisfaction in service recovery models increases their explanatory power. Furthermore, an exploration of the mechanisms that enable justice to influence behavioural intentions stands out as one of the few empirical attempts that can bridge the theoretical gap arising from paucity of studies in this area. The theoretical and practical implications are discussed.