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Crime and Punishment

Examining Customers’ Responses to Service Organizations’ Penalties

Shenandoah University

Amy K. Smith

George Washington University

Service organizations often use various types of penalties without fully understanding the effects on customers’ evaluations. Because customers’ responses to penalties are usually negative, it is important for service organizations to properly administer and manage penalties. However, little is currently known about how customers view such "punishments." This study develops an integrated framework to explain customers’ responses to penalties based on concepts from attribution theory, social justice theory, and expectancy disconfirmation. The study examines the effects of penalty attributes (severity, flexibility, adequacy of an explanation), attributions (i.e., causal inference), perceived justice, disconfirmation, and emotion on customers’ evaluations of penalties imposed by service organizations. This research uses a cross-sectional survey design and collects data online using the critical incident technique. The results show that penalty attributes, attributions, perceived justice, and negative emotion have significant effects on customers’ responses to penalties. The study provides useful guidelines to help service organizations manage penalties.

Key Words: penalty • perceived justice • attribution • emotion • disconfirmation • customer dissatisfaction • service

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