Asia Pacific Management Review 17(3) (2012) 301-319
www.apmr.management.ncku.edu.tw
Why do Some Business Relationships Persist Despite Dissatisfaction?
A Social Exchange Review
Venkata Yanamandrama,* Lesley Whiteb
a
School of Management and Marketing, University of Wollongong, NSW 2522, Australia
b
Faculty of Business, Charles Sturt University, NSW 2795, Australia.
Received 28 March 2010; Received in revised form 16 August 2010; Accepted 1 June 2011
Abstract
This paper reviews the relevant theories and marketing literature to develop a
theoretical foundation for understanding the process and outcome of struggling business-tobusiness (B2B) customer relationships. Specifically, the paper provides a social exchange
perspective of the factors that influence the likelihood of dissatisfied customers remaining
in a present relationship by serving as deterrents to discontinuing the relationship. In doing
so, the paper identifies the common features of, noteworthy differences among, and gaps in
these theories. The paper also connects determinant factors to an outcome variable in order
to explain what drives a customer in managing an unsatisfying business relationship, and
therefore makes a conceptual contribution by proposing the effect of mediating variables,
namely dependence and calculative commitment. Support for the hypothesised
relationships would imply that specific investments are related to dependence or calculative
commitment, which continues to play a role in generating customer outcomes.
Keywords: Social exchange theory, dissatisfied customer, business-to-business, service
1. Introduction1
Customers are commonly dissatisfied with the relationship they have with their service
providers (Colgate and Lang, 2001), but how customers react to dissatisfaction is the
crucial issue for marketing managers (Richins, 1987). Just as satisfied customers are not
necessarily loyal (Rowley and Dawes, 2000), dissatisfied customers are not always disloyal
(Hirschman, 1970). This paper reviews the relevant theories and marketing literature to
develop a theoretical foundation for understanding the process and outcome of struggling
B2B customer relationships.
Although previous research provides a foundation for understanding the development,
defection and maintenance of sound relationships, only limited work exists on the
continuation of trouble B2B relationships (Tahtinen and Vaaland, 2006). Scholars note that
future research should examine reasons to remain in a B2B services context (Colgate et al.,
2007) and also explore the impact of dissatisfaction on the effects of buyer entrapment in a
business service context (Liu, 2006). Moreover, no research has hitherto proposed
mediating factors under the condition of dissatisfaction in the B2B services sector. The
*
Corresponding author. E-mail: venkaty@uow.edu.au
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literature argues that the alternative outcomes of a customer either ending or continuing a
struggling relationship not only depend on the determinant factors or switching barriers,
but also on the essential nature of the relationship (Tuominen and Kettunen, 2003).
This paper makes three contributions to marketing theory on why dissatisfied
customers stay in a relationship. First, the paper provides a social exchange perspective of
the factors that serve as deterrents to discontinuing the relationship. Second, the paper
connects determinant factors to an outcome variable in order to explain what drives a
customer in managing an unsatisfying customer relationship. Third, the paper focuses on a
business services context, which is an under-researched area for this research problem.
The remainder of the paper is organised as follows. It begins with a review of the broad
social exchange framework, followed by a discussion of the “investment model” (Rusbult,
1980), the “model of cohesiveness” (Levinger, 1979) and the ‘tripartite model of
commitment’ (Johnson, 1973). These theories together incorporate important economic and
social forces and also the fair/unfair distribution of the economic and social forces that
guide the outcome of struggling relationships (Rusbult et al., 2006).
The following section identifies the common features of, noteworthy differences among
and gaps in these theories, and then delineates the choice of concepts to investigate the
reasons that influence the likelihood of remaining in a present relationship by serving as
deterrents to discontinuing the relationship. We then report key B2C (business-to-consumer)
and B2B marketing studies in this area, synthesize the existing marketing literature and
propose mediating hypotheses. The study concludes with discussion and suggestions for
future research.
2. Literature review
2.1 Social exchange framework
Ouchi (1980) argues that parties engaged in exchange relationships can serve their
long-range goals by looking beyond short-term, financially driven interests and considering
the welfare of their exchange partners. In this regard, social exchange theories serve as one
explanation for justifying exchange decisions, where parties evaluate relationships in a
behavioural context for achieving the goals of the relationship (Thibaut and Kelley, 1959).
A social exchange framework refers to any theoretical approach that focuses on the
exchange of resources between or among people. Different exchange models emphasise
some (but not all) of the four components of a social exchange framework: (1) balance of
rewards and costs; (2) fairness or equity of the exchange; (3) comparison level; and (4)
comparison level for alternatives (Sprecher, 1998). The basic premise of the social
exchange framework, and each of these theories, is that “each party in a dyad engages in a
diverse set of exchanges to influence each other and attain the most favourable outcomes
— that is, to maximise rewards and minimise costs” (Byers and Wang, 2005, p. 204).
Because these theories assess the nature of relationships by providing rules for evaluating
the fair dispersal of economic and social value, the social exchange framework is important
for understanding relationship development, relationship satisfaction and relationship
stability (Rusbult et al., 2006). The following section reviews the social exchange theories
relevant to the development of hypotheses in this current study.
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2.1.1 Investment model
The investment model (eg, Rusbult, 1980) is based on the principles of interdependence
theory (Thibaut and Kelley, 1959) and employs interdependence constructs namely
satisfaction (which is influenced by the extent to which a partner fulfils the individual’s
most important needs) and poor quality of alternatives, to analyse the tendency to persist in
a relationship. Thus, interdependence theory identifies two means (satisfaction and quality
of alternatives) through which dependence grows, where dependence refers to “the extent
to which an individual “needs” a given relationship or relies uniquely on the relationship
for attaining desired outcomes” (Rusbult et al., 2006, p. 618). However, there is added
component build into the investment model. Specifically, the model argues that satisfaction
and quality of alternatives do not fully explain dependence, and it accounts for the
development of dependence and commitment in two respects. First, it asserts that
dependence is influenced by satisfaction, quality of alternatives and investment size.
Investments enhance dependence because the act of investment increases the costs of
ending a relationship, in that defecting would mean leaving behind cumulative investment,
thus serving as a powerful psychological inducement to persist (Rusbult et al., 2006).
Dependence describes the additive effects of wanting to persist (feeling satisfied), needing
to persist (having high investments) and having no choice but to persist (possessing poor
alternatives) (Rusbult et al., 2006). Second, the model suggests that commitment emerges
as a consequence of increasing dependence. Ultimately, an individual’s decision to remain
in or terminate a relationship is most directly influenced by feelings of commitment, which
is a subjective state that includes both cognitive and emotional components, and directly
influences a wide range of behaviours in an ongoing relationship, and also summarises the
nature of an individual’s dependence on a partner (Rusbult et al., 2006). The model further
suggests that feelings of commitment are influenced by positive forces such as strong
satisfaction, which make the individual want a relationship more, and also by negative
forces, such as investing important resources.
2.1.2 Levinger’s model of cohesiveness
The model of cohesiveness (Levinger, 1979) defines cohesiveness as an individual’s tie,
bond or union in a relationship, and posits that the durability of a personal relationship
depends on three broad types of forces: (1) current attractions, or the forces that drive
individuals toward a relationship, (2) alternative attractions, or the forces that pull
individuals away from their relationship and (3) barriers, or the forces that influence the
likelihood of remaining in a present relationship by serving as deterrents to discontinuing
the relationship, even when attraction forces reduce or cease to exist. The three broad types
of forces are assumed to exert independent effects on cohesiveness and probability of
persisting in a relationship (Rusbult et al., 2006). Thus, according to the model, a greater
level of cohesiveness will result from a high level of attraction, a high level of barriers and
a low level of alternative attractions.
2.1.3 Johnson’s tripartite model of commitment
The tripartite model of commitment (Johnson, 1973) considers commitment as a
motivation to continue in a personal relationship. The model focuses on people making
decisions and acting within situational opportunities and constraints, which are in turn
shaped by larger-scale structural arrangements. Specifically, the model identifies three
bases of commitment: (1) personal or “want to” commitment, (2) moral or “ought to”
commitment and (3) structural or “have to” commitment. Personal commitment represents
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a person’s desire and choice to stay in a relationship, and results from positive attitude
towards ones’ partner, positive attitude toward the relationship, and relational identity or
the extent to which the relationship is part of one’s self-identity. Moral commitment
represents a felt obligation to remain in a relationship, and results from the moral
obligation not to end the relationship, the sense of personal obligation to one’s partner, and
the need to maintain consistency in one’s beliefs and cultural values. Structural
commitment represents a feeling that one must remain in the relationship, and results from
the unavailability of or relative unattractiveness of available alternatives, social pressure
such as their network not approving of relationship dissolution, the difficulty of processes
necessary to end the relationship, and irretrievable investments, such as expenditures of
resources and/or effort, time, sacrifice and pledges.
The model argues that when low levels of personal and moral commitments are present,
the effect of structural commitment will become more prominent and will contribute to a
sense of being entrapped in the relationship. Consequently, a partner will feel constrained
by the costs of dissolution to stay. The following section reviews the common features of,
noteworthy differences among, and gaps in the most prominent extant theories of
commitment reviewed in this section.
3. Comparison of theoretical models
The models proposed by Levinger, Rusbult and Johnson share four common features
(Rusbult et al., 2006). First, all three models directly or indirectly consider the positive
forces that induce an individual into a relationship. These positive forces are termed
“attraction” in Levinger’s model, “satisfaction” in Rusbult’s and “personal commitment” in
Johnson’s. Second, all three models consider investments that bind an individual to a
relationship. These forces are termed “barriers” (Levinger), “investment size” (Rusbult)
and “irretrievable investments” (Johnson). Third, all three models consider alternative
quality. These forces are termed “alternative attractions” (Levinger), “quality of
alternatives” (Rusbult) and “availability of” or “attractiveness of available alternatives”,
although presented as a dimension of structural commitment (Johnson). Fourth, all three
models propose that the net outcome of factors promoting stability is to generate increased
motivation to continue. This motivation is termed “cohesiveness” (Levinger),
“commitment” (Rusbult) and “motivation to continue” (Johnson). The three theories also
attempt to explain “unjustified persistence or the tendency to remain involved in a
relationship that is not particularly satisfying” (Rusbult et al., 2006, p. 616).
However, the three models differ in how they categorise the variables that promote
commitment (Rusbult et al., 2006). For example, while Johnson’s model suggests that
social pressure, termination procedures, irretrievable investments and potential alternatives
are components of structural commitment, Levinger considers social pressure, termination
procedures and irretrievable investments as components of barriers. Rusbult regards social
pressure, termination procedures and irretrievable investments as part of investments. With
respect to alternatives of attractiveness, both Levinger and Rusbult deem alternatives to be
a separate force, while Johnson considers alternatives to be part of structural commitment.
Each of the three models has some limitations (Rusbult et al., 2006). Levinger’s model,
developed as an integrative tool to explain commonalities across diverse findings such as
attractions, alternative attractions and barriers, advances no instrument to measure model
constructs. Johnson’s model distinguishes between different types of commitment, but does
not provide clear operational definitions of constructs, and presents no overall measure of
commitment.
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Several gaps in Rusbult’s investment model underpin this current research’s
investigation. First, according to the model, commitment is the primary force in
relationships. Drigotas and Rusbult (1992, p. 62) argue that the emphasis on commitment
“served to deemphasize the original interdependence construct for predicting persistence in
struggling relationships, namely the degree of dependence on a relationship ―
dissatisfying as it is, the relationship may nevertheless fulfil important needs that cannot be
fulfilled in alternative relationships”. Thus, researchers using the investment model to
explain persistence in dissatisfying relationships should include both dependence and
commitment. Drigotas and Rusbult (1992) propose a model of break-up decisions
extending interdependence theory, and find support for several relationships: (1)
dependence is a primary determinant of commitment, (2) commitment mediates the
relationship between dependence and decisions to remain and (3) commitment mediates the
relationship between other features of the relationship and stay-leave decisions.
Second, empirical work that uses the investment model supports the claim that
persistence in struggling relationships is partially attributable to poor alternatives and high
investments (Rusbult and Martz, 1995). This suggests that poor alternatives and high
investment may better explain a constraint-based component of commitment, rather than
using a global construct of commitment, which Rusbult, Martz and Agnew (1998) define as
“intent to persist in a relationship, including… feelings of psychological attachment” (p.
359).
The investments described in the investment model are similar to the relationshipspecific investments (RSIs) proposed in B2B relationships (Williamson, 1985). Evidence
exists that RSIs can be made at both the inter-organisational level and interpersonal levels
— usually termed “switching costs” and “interpersonal relationships” respectively (Wathne
et al., 2001). Switching costs arise from organisational-level investments in transactionspecific assets (Williamson, 1985); while interpersonal relationships derive from an
individual’s investment in social capital (Coleman, 1988). Thus, when examining
investments in business exchange relationships, Rusbult’s investment concept is
represented by switching costs and interpersonal relationships. Regarding commitment,
Johnson (1973) refers to structural commitment as the feeling that one must remain in the
relationship, suggesting that it is a constraint-based commitment. The marketing literature
also discusses several constraint-based forms of commitment, including viewing
commitment as entirely calculative (eg., Geyskens, Steenkamp and Scheer, 1996; Gilliland
and Bello, 2002).
Overall, by adapting the social exchange framework to business exchange relationships,
the constructs of attractiveness of alternatives, investments at the inter-organisational and at
the interpersonal level (namely switching costs and interpersonal relationships respectively)
hold the most promise in explaining dependence and calculative commitment (Rusbult et
al., 2006). These constructs influence the likelihood of remaining in a present relationship
(repurchase intentions) by serving as deterrents to discontinuing the relationship. In order
to confine its scope, this paper only proposes the mediating relationships between the
determinant factors and behavioural outcomes.The next section reviews the key B2C and
B2B empirical studies on relationship ending and staying in the marketing literature.
4. Empirical studies on relationship ending and staying
Tables 1 and 2 report the key B2C and B2B marketing studies on relationship ending
and staying, which focus on the process or behaviours associated with relationship
ending/switching; the factors that influence ending/switching behaviour; and the factors
that influence the likelihood of remaining in a present relationship by serving as deterrents
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to discontinuing the relationship. The studies provide evidence that dissatisfaction arising
from service failures or with the quality of service outcome or interaction, acts as a
breakdown trigger (Roos, 1999) or a predisposing factor (Halinen and Tahtinen, 2002) and
provokes a change in a customer’s attitude towards the switching (Bansal and Taylor,
1999). This alters the current state of the relationship (Anton, Camarero and Carrero, 2007)
and initiates the dissolution process (Coulter and Ligas, 2001). During the dissolution
process, there may be a temporary or permanent, fading, in the relationship strength
between the customer and the service provider, where the outcome of the process may be
unknown (Tuominen and Kettunen, 2003).
However, the dissolution process includes several stages, which may act as critical
decisive moments, because the customer firm can use a voice strategy including
complaining and negotiating with its partner in order to restore the relationship
(Alajoutsijarvi, Moller and Tahtinen, 2000; Halinen and Vaaland, 2002). The decision to
delay or stop the ending process may further depend on swaying factors (Roos, 1999),
mooring variables (Bansal, Taylor and James, 2005), attenuating factors (Tahtinen and
Vaaland, 2006) or switching barriers (Burnham, Frels and Mahajan, 2003; Colgate and
Lang, 2001; Colgate et al., 2007; Jones, Mothersbaugh and Beatty, 2002; Panther and
Farquhar, 2004). These variables, if found to be “potent enough” (Colgate et al., 2007, p.
212), will influence the likelihood of remaining in a present relationship by serving as
deterrents to discontinuing the relationship. Conversely, if they are not potent enough, the
customer may consider leaving the service provider (Bansal, Taylor and James, 2005), or
actually leave (Keaveney, 1995).
Studies that have investigated deterrents to discontinuing the relationship, with the
exception of Colgate and Lang (2001) and Colgate et al. (2007), examine determinant
factors or switching barriers predicatively − by asking customers to consider dropping their
service provider instead of an actual switching consideration. Therefore, investigating a
group of customers (namely stayers) who have considered switching, but decide to stay
with their service providers, would offer “insight into true behaviour rather than predicted
behaviour” (Colgate et al., 2007, p. 211). Colgate et al. (2007) examined stayers who had
recently considered switching their service provider, but ultimately decided to stay.
However, their investigation was in a B2C services context, and their sample also included
customers who were comfortable and/or satisfied with their current provider, although
whether those customers were comfortable and/or satisfied as a consequence of service
recovery or otherwise is unknown. Thus, a gap exists in the research: to investigate the
reasons customers stay amongst dissatisfied complaining customers who have considered
switching — in a B2B services, rather than in a B2C services context.
Among the studies that have considered deterrents to discontinuing the relationship,
only a few investigated this subject in a B2B market. Extant examples have studied the
effects of: (1) switching costs (Lam et al., 2004; Ping, 1993; Sengupta, Krapfel and
Pusateri, 1997; Tahtinen and Vaaland, 2006; Wathne, Biong and Heide, 2001); (2)
interpersonal relationships (Tahtinen and Vaaland, 2006; Wathne, Biong and Heide, 2001);
and (3) unattractiveness of alternative providers (Ping, 1993; Tahtinen and Vaaland, 2006);
Of these, only Tahtinen and Vaaland (2006) examine “struggling” business relationships.
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307
Author
Focus of Research
Method
Product/Organisation
Fornell (1992)
Factors that deter customers from discontinuing the relationship
Survey
Various services
Keaveney (1995)
Critical incidents causing switching behaviour
Interviews
Various services
Colgate, Stewart and
Kinsella (1996)
Reasons for switching service providers
Survey
Financial services
Stewart (1998)
Process of customer exit
Interviews
Banking services
Roos (1999)
Critical incident and critical path leading from the trigger of the
incident to switching (process of switching)
Interviews
Supermarket
Coulter and Ligas (2000)
Stages in dissolution process
Interviews
Various
Jones, Mothersbaugh and
Beatty (2000)
Factors that deter customers from discontinuing the relationship
Survey
Banking and hair
styling services
Ganesh, Arnold and
Reynolds (2000)
Characterize differences between switchers and stayers in aspects
such as satisfaction, involvement and loyalty
Interviews
Banking services
Colgate and Hedge (2001)
Process of switching by examining the antecedents that influence
both switching behaviour and formal complaints made prior to
exit
Survey
Banking services
Colgate and Lang (2001)
Factors that deterred customers from discontinuing the
relationship
Survey
Banking and insurance
(student market)
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Table 1. Key studies on switching and staying in B2C markets
Focus of Research
Method
Product/Organisation
Keaveney and
Parthasarathy (2001)
Characterize differences between switchers and stayers with
aspects relating to attitude, behavior and socio-demographic
characteristics
Survey
Online services
Jones, Motherbaugh and
Beatty (2002)
Various dimensions of switching costs that deterred customers
from discontinuing the relationship
Survey
Banking and
hairstylists
Burnham, Frels and
Mahajan (2003)
Various dimensions of switching costs that deterred customers
from discontinuing the relationship
Survey
Credit card and
telephone services
Patterson and Smith
(2003)
Factors that deterred customers from discontinuing the
relationship
Survey
Travel agencies and
medical services.
Tuominen and Kettunen
(2003)
Phase preceding the relationship ending process
Survey
Airline services
Bansal, Irving and Taylor
(2004)
Factors influencing service provider switching
Survey
Auto repair services
Panther and Farquhar
(2004)
Factors that deterred customers from discontinuing the
relationship
Survey
Financial services
White and Yanamandram
(2004)
Factors that deterred customers from discontinuing the
relationship
Interviews
Survey
Financial services
Bansal, Taylor and James
(2005)
Factors influencing service provider switching
Survey
Auto repair and
hairstyling services
Gustafsson, Johnson and
Roos (2005)
Effects of customer satisfaction, relationship commitment
dimensions and triggers on customer retention
Interviews
Survey
Telecom. Services
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308
Author
Focus of Research
Method
Product/Organisation
Vazquez-Carrasco and
Foxall (2006)
Factors that deterred customers from discontinuing the
relationship
Survey
Hairdressing
Anton, Camarero and
Carrero (2007)
Factors and mediating variables that influence switching with a
focus on variables that weaken the relationship and those that
precipitate dissolution
Survey
Automobile insurances
services
Colgate et al. (2007)
Factors that deterred customers from discontinuing the
relationship including satisfaction
Interviews
Survey
Various services
Jones et al. (2007)
Effects of factors that deterred customers from discontinuing the
relationship on relational outcomes
Survey
Banks, cable TV,
phone and hairstylists.
Wieringa and Verhoef
(2007)
Factors influencing service provider switching
Survey
Energy services
Survey
Banks, health
insurance,
supermarkets, mobile
telecom providers and
automotives.
Bügel, Buunk and Verhoef Factors influencing customer commitment
(2010)
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Author
Table 2. Key studies on switching and staying in B2B markets
Focus of Research
Method
Ping (1993)
Antecedents and response intentions of hardware retailers when Survey
there are problems with suppliers
Hardware retailers
Heide and Weiss (1995)
Factors that influence whether buyers stay with an existing provider Survey
or switch to a new provider once the consideration set is formed
Computer workstations
Young and Denize
(1995)
Reasons for continuing relationships despite mistakes by suppliers
Interviews
Accountants
Ennew and Binks (1996)
Links between customer retention, defection, and service quality
Survey
Banks
Sengupta, Krapfel and
Pusateri (1997)
Factors that deter customers from discontinuing the relationship
Interviews, Survey
Various
Gronhaug, Henjesand
and Koveland (1999)
Reasons why long-term relationships fade away
Case Study
Furniture production
Haugland (1999)
Factors that influence the duration of buyer–seller relationships by
investigating the differences between ongoing relationships and
terminated ones
Longitudinal
Interviews and
Questionnaires
Farmed salmon
Alajoutsijarvi, Moller
and Tahtinen (2000)
Communication strategies at a particular stage of the dissolution
process
Case Study
Various
Giller and Matear (2001) Process of relationship ending
Case Study
Various
Wathne, Biong and
Heide (2001)
Interviews
Banking
Determinants of switching
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Product/Firm
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310
Author
Focus of Research
Method
Product/Firm
Lam, Shankar, Erramilli
and Murthy (2004)
Antecedents of customer retention
Survey
Courier services
Tahtinen and Vaaland
(2006)
Factors that deter customers from discontinuing the relationship
Interviews
Oil industry
Tidstrom and Ahman
(2006)
Process of ending inter-organizational cooperation by identifying
the reasons and stages of the ending
Longitudinal Case
Study
Construction industry
Bogomolova and
Romaniuk (2009)
Reasons for brand defection
Interviews
Financial service
Yen and Horng (2010)
Factors that drive switching intention
Survey
Electronics
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5. Mediating hypotheses
The social exchange theories reviewed thus far provide a basis for proposing that
dependence and/or calculative commitment mediate the effect of satisfaction, investments
and the attractiveness of alternatives on repurchase intentions. Since this research focuses on
unsatisfactory relationships, it is only possible to extend mediating hypotheses between
investments, attractiveness of alternatives and repurchase intentions.
Regarding investments, the literature has found a significant association between
switching costs and repurchase intentions/loyalty, in a B2C services context (Bansal and
Taylor, 1999; Burnham, Frels and Mahajan, 2003; Jones, Mothersbaugh and Beatty, 2002);
and in a B2B context (Lam et al., 2004; Wathne, Biong and Heide, 2001). Within the
switching costs domain, the dimension of benefit-loss costs is consistently found to have a
strong impact on behavioural/repurchase intentions, although the relationship between
benefit-loss costs and repurchase intentions has only been investigated in a B2C services
context (Jones, Mothersbaugh and Beatty, 2002; Patterson and Smith, 2003). Jones,
Mothersbaugh and Beatty (2002) expected benefit-loss costs to be more strongly associated
with repurchase intentions than are other switching costs, and found support for their
hypothesis. Thus, given that the direct effect of benefit-loss costs on repurchase intentions are
powerful in a B2C services context, it seems unlikely that dependence or calculative
commitment should completely mediate the relationship between benefit-loss costs and
repurchase intentions in a B2B services context either. The only study located that proposes
mediating hypotheses between switching costs and repurchase intentions is Bansal, Irving
and Taylor (2004), who found that calculative commitment partially mediated the
relationship between switching costs and switching intentions in a B2C services context. This
reasoning and associated evidence led to the following hypotheses:
H1: Dependence partially mediates the relationship between benefit-loss costs and
repurchase intentions.
H2: Calculative commitment partially mediates the relationship between benefit-loss costs
and repurchase intentions.
According to the investment model, commitment partially or wholly mediates the effects
of investments on decisions to remain. Rusbult, Martz and Agnew (1998) operationalised
investments as the perceived magnitude of the relationship assets that would be lost if the
relationship were to be terminated. Therefore, according to the investment model,
commitment partially or wholly mediates the effects of sunk costs on a decision to remain or
leave. The consumer services marketing literature contains evidence on the direct effect of
sunk costs on repurchase intentions in a B2C services context (Jones, Mothersbaugh and
Beatty, 2002). Additionally, if investments in assets that are specific to a particular
environment are considered important, and if losing those investments would have little value
outside a particular relationship, then this should increase a customer’s dependence and a
customer’s calculative commitment respectively, and these in turn should increase the
customer’s repurchase intentions. Since a strong effect of sunk costs on repurchase intentions
has not been demonstrated in a marketing context, the relationship between sunk costs and
repurchase intentions could be argued to be completely mediated by either dependence or
calculative commitment. This reasoning leads to the following hypotheses:
H3: Dependence completely mediates the relationship between sunk costs and repurchase
intentions.
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H4: Calculative commitment completely mediates the relationship between sunk costs and
repurchase intentions.
Regarding interpersonal relationships that are considered as investments at the
interpersonal level (Wathne, Biong and Heide, 2001) a qualitative study found that a personal
relationship was the primary motivation to stay in a business service relationship, even if
strong reasons to seek another provider existed (Young and Denize, 1995). The present study
argues that interpersonal relationships are less important than switching costs in influencing
dependence or calculative commitment, which suggests a weak effect. For example,
researchers investigating transaction-specific assets argue that human asset specificity
(relationship-specific investments at the interpersonal level) may originate in unconscious
learning-by-doing processes, which are probably redeployable to alternative relationships
after time. They thereby become general investments, and therefore, may have lesser impacts
on perceived dependence than firm-level switching costs (Noorderhaven, Nooteboom and
Berger, 1998). Similarly, evidence exists that social bonds have no influence on calculative
commitment between customers and suppliers in complex buying situations (Han and Wilson,
cited in Wilson, 1995) or in the B2B context (Cater and Zabkar, 2009), because a company
can rarely justify bad decisions based on friendship between boundary-spanning personnel
alone (Gounaris, 2005). Since mediating effects are typically proposed when evidence
emerges of a relatively strong direct effect between a predictor variable and an outcome
variable (Baron and Kenny, 1986), a mediating proposition is not offered regarding
interpersonal relationships.
Regarding attractiveness of alternatives, mixed results are evident across studies. For
example, Jones et al. (2000) found no significant association between attractiveness of
alternatives and repurchase intentions when modelled with switching costs and interpersonal
relationships. However, they did find that the relationship between attractiveness of
alternatives and repurchase intentions was moderated by satisfaction. In contrast, Patterson
and Smith (2003), in a B2C services context, found that the attractiveness of alternatives had
a significant, though a small negative effect on behavioural intentions when satisfaction,
interpersonal relationships and various switching costs were included in the model. Similarly,
Bansal et al. (2004) and Bansal et al. (2005), in a B2C services context, found a significant
relationship between attractiveness of alternatives and switching intentions. In a B2B context,
Ping (1993) found no significant association between attractiveness of alternatives and
loyalty, but found a significant association between attractiveness of alternatives and
intention to leave. In a subsequent study, Ping (1994) found that overall satisfaction
moderates the association between attractiveness of alternatives and intention to leave. In
view of the conflicting findings, and the fact that mediating effects are typically proposed
when there is evidence of a relatively strong direct effect between a predictor variable and an
outcome variable, we do not propose a mediating effect hypothesis between the attractiveness
of alternatives and repurchase intentions. Figure 1 depicts the proposed model for
establishing mediation, which involves four steps (Baron and Kenny, 1986). First, the
independent variable must be significantly associated with the dependent variable. Second,
the independent variable must be significantly associated with the presumed mediator. Third,
the presumed mediator must be significantly associated with the dependent variable. Finally,
the previously significant relationship between the independent variable and dependent
variables should become non-significant when the mediator is included; if it does, then the
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W-L. Chu et al. / Asia Pacific Management Review 17(2) (2012) 301-320
direct effect is said to be fully mediated. However, if the effect of the previously significant
relationship between the independent variable and the dependent variable in only reduced,
and not zero, when the mediator is included, then the direct effect is said to be partially
mediated.
This current study proposes mediation relationships only. It is possible to extend
hypotheses between other variables of the social exchange framework (independent variables
namely interpersonal relationships and attractiveness of alternatives, and dependent variables
namely dependence and calculative commitment); however, these are not the focus of this
current paper.
Dependence
Repurchase
Switching Costs
(Benefit-loss and
sunk costs)
Intentions
Calculative
Commitment
F
igure
1. Proposed mediation relationships
6. Discussion
Support for the hypothesised relationships would imply that the potential loss of special
privileges if the customer were to switch from their current service provider is related to a
feeling of dependence on the service provider. This degree of dependence on the relationship
continues to play a role in generating customer outcomes. The potential loss of special
privileges also results in calculative commitment, which influences a customer to intend to
continue repurchasing services. The mediation mechanisms imply that sunk costs are related
to dependence or calculative commitment more than repurchase intentions, and that
dependence or calculative commitment continues to play a role in generating customer
outcomes.
An understanding of the mediating function of the key variables of dependence and
calculative commitment can also be advantageous for service managers in inducing
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W-L. Chu et al. / Asia Pacific Management Review 17(2) (2012) 301-320
dissatisfied customers to stay. For example, a service provider might choose to foster
customer retention by increasing various switching costs. However, a time lag persists
between the introduction of these measures and the outcome. In the interim, service providers
can monitor changes in customers’ dependence and calculative commitment — thus
increasing managerial awareness of the reasons for continuing the relationship. However,
service firms that retain dissatisfied customers may be encouraging the spread of negative
word-of-mouth, who may become hostile, engaging in communication sabotage (Jones,
Mothersbaugh and Beatty, 2000).
While customers may repurchase services because of the perception that switching costs
and resultant dependence and calculative commitment are high, offending service firms may
not be insured against customer defection over the long-term. This is because the losses from
service failures would be outweighed more heavily than the gains received during complainthandling (Smith, Bolton and Wagner, 1999). From this point of view, dependence may be
experienced as one of the costs of participating in a particular relationship (Sabatelli and
Shehan, 1993). Consequently, customers may wish to reduce their dependence on the service
provider, unless a substantial recovery takes place, where equity and satisfaction are restored
to their original levels.
One solution to managing struggling customer relationships may be to adopt a strategic
perspective on service failure management, because of its potential to contribute to firms’
learning at organisational levels (La and Kandampully, 2004). Such learning can not only be
used to make improvements in the service firms’ outcome, procedural and interactional
aspects of complaint handling, but also “to create a set of knowledge that can be used
for…transformational change…, with the ultimate objective being to establishing a
sustainable competitive advantage based on superior customer value” (La and Kandampully,
2004, p.392). By adopting a strategic perspective on service failure management, overall
satisfaction regains the focus. Overall satisfaction, in turn, has a strong impact on customer
retention and profitability (Oliver, 1997).
7. Conclusion and future research
The literature suggests that switching barriers or factors play a major role in retaining
customers. This research proposes that the alternative outcomes of a customer either ending
or continuing a dissatisfactory relationship depend on the switching barriers or determinant
factors, and also on the essential nature of the relationship, such as dependence or calculative
commitment. Thus, this paper has considered the influence that complex relationships have in
responding to struggling B-to-B service relationships, and has a laid a foundation for further
research concerning the retention of dissatisfied customers.
Future research could seek empirical support for the hypotheses presented here. In
addition, scholars investigating customer retention note that further research is needed to
understand the moderating characteristics of relationships (for example, Homburg and
Giering, 2001). One variable that future research could investigate is the moderating effect of
the duration of the relationship. In turn, the effect this has on the effect that switching costs
and commitment have on relationship outcomes may be of interest from a managerial
perspective. For example, knowledge on how short- and long-term relationships differ could
help managers to develop specific strategies for both relationship types (Verhoef, Franses and
Hoekstra, 2002.
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