Service Recovery, Satisfaction and Customers’ Post Service Behavior in the Malaysian Banking Sector

Abstract

Financial services sector has become so competitive after Malaysia government’s liberalization policy. In order to address this intense competition, banks have shifted their strategy from product-centered to a customer-centered strategy. This study is to test a model related to the relationship between the service recovery, customer satisfaction and the after purchase behavior by the customers. To test the proposed model, 370 self-administered questionnaires were distributed. The analyses based on Structural Equation Modeling (SEM) reveal that there are direct relationships between perceived distributive justice, perceived procedural justice, perceived interactional justice and customer satisfaction in regard to service recovery. The results also show that customer satisfaction increases the level of trust among customers. There is also a high possibility that satisfied customers will spread positive word of mouth that can reinforce the good reputation of the service provider. Bootstrap is used to examine the mediation effects of satisfaction and the results show that customer satisfaction fully mediates the relationship between perceived interactional justice and word of mouth. The results also indicate that customer satisfaction partially mediate the following relationships; perceived distributive justice with word of mouth, perceived procedural justice with word of mouth and perceived interactional justice with perceive trust. However, the fact that this study is conducted by using cross sectional method, focuses on banking industry and covers a small area of the country should be taken into consideration for any generalization of results.