Thesis: Location Specific Determinants of Foreign Direct Investment - An expl...
THESISFINAL
1. Exploring the Cultural Determinants
of Customer Satisfaction:
An experimental approach
Submitted by Walter Rossi
Supervisor: Dr. Daire Hooper
DT346 MSc in Strategic Management
Submission Date: 28th September 2012
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I hereby certify that this material, which I now submit for assessment on
the programme of study leading to the award of
MSc in Strategic Management (Financial Services)
is entirely my own work and has not been submitted for assessment for
any academic purpose other than in partial fulfilment for that stated above.
Signed ........................................... Friday 28th September, 2012
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Table of Content
1. Introduction....................................................................................................................................10
2. Customer satisfaction, service quality and customer loyalty....................................14
2.1. Customer Satisfaction ............................................................................................................15
2.1.1. Customer Satisfaction as a result of expectation and disconfirmation....15
2.1.2. Satisfaction as result of a psychological and physiological process..........17
2.1.3. Satisfaction as result of perceived equity and inequity..................................18
2.1.3. Affective determinants of customer satisfaction ..............................................20
2.2. Service Quality ..........................................................................................................................21
2.2.1. Customer Satisfaction or Service Quality?...........................................................21
2.3. Customer Delight and Loyalty ............................................................................................22
2.3.1. Understanding Customer Delight............................................................................23
2.3.2. Customer delight and outrage as a function of customer’s needs .............24
2.3.3. Translating customer delight into customer loyalty.......................................25
2.3.4. Defining Customer Loyalty.........................................................................................26
2.4. The importance of reliable customer satisfaction and loyalty metrics .............27
2.4.1. Measuring customer satisfaction.............................................................................28
2.4.2. Measuring customer loyalty ......................................................................................29
3. Culture and cultural determinants of customer satisfaction......................................32
3.1. Culture..........................................................................................................................................32
3.1.1. Culture and Management..................................................................................................33
3.2. Hofstede’s theory of culture ................................................................................................34
3.2.1. Elements of culture........................................................................................................34
3.2.2. The five Dimensions of Culture in Hofstede’s theory......................................35
3.2.3. Criticism of Hofstede’s theory of culture..............................................................37
3.3. Cultural determinants of customer behaviour ............................................................38
3.3.1. Tipping behaviour and culture.................................................................................38
3.3.2. Culture and customer behaviour.............................................................................38
3.4. Cultural determinants of customer satisfaction..........................................................41
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3.4.1. Overview on the cross-cultural customer satisfaction research................41
3.4.2. Country-level differences in customer satisfaction .........................................43
3.4.3. Measuring customer satisfaction in a cross-cultural or international
environment.....................................................................................................................45
3.5. Summarising conclusions on the literature review...................................................46
4. Methodology...................................................................................................................................48
4.1 Why quantitative research...................................................................................................48
4.1.1. Methodological prevalence in cross-cultural customer satisfaction
research..............................................................................................................................48
4.1.2. The contribution of qualitative research to customer satisfaction
research..............................................................................................................................49
4.2. Methodological challenges of the research question................................................49
4.2.1 Methodological bias in customer satisfaction measurement.......................50
4.2.2. Methodological bias in cross-cultural analysis..................................................52
4.2.3. Specific methodological issues in cross-cultural marketing research .....53
4.3. Research objectives and hypotheses ...............................................................................56
4.4. Experimental design...............................................................................................................57
4.4.1. Simulation and scenarios as a research method...............................................59
4.5. Data collection...........................................................................................................................60
4.5.1. Surveys as privileged data collection method on customer satisfaction 60
4.5.2. Survey specific issues in cross cultural research..............................................60
4.5.3. The questionnaire..........................................................................................................61
4.5.4. Scales...................................................................................................................................63
4.5.5. The introductory scenario..........................................................................................64
4.5.6. Sampling.............................................................................................................................65
4.5.7. Survey translation and pre-tests .............................................................................66
4.5.8. Survey administration methods...............................................................................67
4.6. Data analysis..............................................................................................................................67
4.7. Summarising conclusions on the methodology...........................................................69
5. Results and analysis.....................................................................................................................70
5.1. Description of the final sample...........................................................................................70
5.1.1. Cleaning up the sample................................................................................................70
5.1.2. Sample size by group....................................................................................................71
5.1.3. Experience of living abroad .......................................................................................71
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5.1.3. Familiarity with the scenario in the survey ........................................................72
5.1.4. Further Demographic differences between groups.........................................73
5.2. Customer Loyalty and Satisfaction in the ten considered scenarios..................74
5.2.1. Customer loyalty in the two scenarios related to product............................75
5.2.2. Customer loyalty and satisfaction in the two scenarios related to costs 76
5.2.3. Customer satisfaction related to customer services in general..................77
5.2.4. Customer satisfaction related to the representative.......................................78
5.2.5. Customer satisfaction related to the representative behaviour with an
extra factor added..........................................................................................................79
5.2.6. Summary of the descriptive results: comparisons between scenarios and
culture groups..................................................................................................................81
5.3. Hypotheses Testing.................................................................................................................81
5.3.1. Do customers from different countries evaluate the same experience
differently?........................................................................................................................81
5.3.2. What factors are most subject to culture in determining customer
satisfaction?......................................................................................................................83
5.3.3. Do customer satisfaction levels differ between all cultures?.......................84
5.3.3. Does living abroad for more than 4 years have an influence on
satisfaction responses?................................................................................................87
5.4. Summarising conclusions on the findings.....................................................................88
6. Discussion, conclusions and implications ..........................................................................90
6.1. Discussion ...................................................................................................................................90
6.2. Conclusions.................................................................................................................................92
6.3. Limitations..................................................................................................................................93
6.4. Managerial implications........................................................................................................94
6.5. Recommendations for future research...........................................................................95
7. References .......................................................................................................................................97
Appendices
Appendix A: The Questionnaires......................................................................................................107
A.1. English version.......................................................................................................................107
A.1.1. Invitation email............................................................................................................107
A.1.2. Welcome page...............................................................................................................107
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Table of figures
Fig. 2.1: The satisfaction-profit chain by Helgesen.....................................................................26
Fig. 3.1: Manifestations of culture at different levels of depth..............................................35
Fig. 3.2: Learning of Values and Practices......................................................................................35
Fig. 4.1: Example of one of the survey questions........................................................................63
Fig. 5.1: Percentage of respondents who lived abroad for more than four years
by culture group 72
Fig. 5.2: Number of contacts with any kind of customer service in the last year by
culture group.............................................................................................................................73
Table. 5.3: Relative frequencies for the demographic variables by culture group.............74
Table 5.4: Results for item ‘Other online banks are easier to use’...........................................75
Table 5.5: Results for item ‘I feel secure when I use your online banking service’ ..........76
Table 5.6: Results for item ‘Most of your transactions are too expensive’.......................... 76
Table 5.7: Results for item ‘A good customer service should provide a toll-free number’.
......................................................................................................................................77
Table 5.8: Results for item ‘Your phone system seems to be programmed to make it
difficult to get to talk to a real person’............................................................................78
Table 5.9: Results for item ‘It took me too long to resolve my issue’......................................78
Table 5.10: Results for item ‘The representative did not listen to my query’ .......................79
Table 5.11: Results for item ‘Your answers are too standardized and seem to be read by a
computer’ ...................................................................................................................................79
Table 5.12: Results for item ‘My issue was not resolved but your representative was very
friendly’ ......................................................................................................................................80
Table 5.13: Results for item ‘I contacted you several times but just the last
representative I talked with was able to resolve my issue’ ..................................80
Table 5.14: ANOVA Results for the ten Scenarios..............................................................................83
Table 5.15: Effect size of the variable culture in the ten scenarios ............................................84
Table 5.16: Gabriel and Hochberg GT2 tests on the pairwise differences between groups .
......................................................................................................................................85
Table 5.17: Significance of mean differences between responders who lived abroad more
than four years and respondents who did not............................................................88
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Acknowledgements
First of all I want to thank all the respondents of the survey whose
contribution was essential in allowing an adequate data analysis. In particular
Alda, Antonio, Chris, Fiorenza, Kathrin, Kevin and all my friends and colleagues
have to be thanked, who have forwarded the invitation to take the surveys to
their friends, acquaintances and colleagues.
I also want to thank my Supervisor Dr. Daire Hooper for pointing me in the
right direction.
Being not native I have to thank many native speakers who helped me with the
different languages: Peter and Emma for reviewing the final work, Patience and
Ali for the English survey pre-test, Daniel for the German survey back-translation
and pre-test, Francesca and Mattia for the Italian survey back-translation and pre-
test.
I also want to thank my company PayPal for inspiring this work and
supporting me during these two years, and in particular my current and past
managers, Tyler, Fran and Darren who granted me the right amount of flexibility
to pursue this goal.
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Abstract
Customer satisfaction and loyalty have become part of the strategies of
countless companies, especially in the services sector, as they are an accurate and
important indicator of the business performance. The resulting imperative for
every business that aims at improving satisfaction and loyalty is the usage of
metrics that are valid and reliable. A particular challenge for the validity and
reliability of satisfaction measures is determined by the international and cross-
border environment: have customer satisfaction metrics the same meaning in
different markets, are there different factors impacting the perception of quality
by the customer and their responses to customer satisfaction surveys?
Using an experimental approach based on scenarios this thesis wants to
contribute to give an answer to these and more questions. Based essentially on
the definitions and theories about satisfaction as a result of expectations and
disconfirmation by Oliver, and on the theory of Hofstede on the relevance of
culture from a managerial perspective, the main focus is put on the specific
methodological issues that have to be addressed when collecting survey data at
international level.
The collected and analyzed data shows clearly that the responders of the four
considered countries (Germany, Ireland, Italy and USA) answer to customer
satisfaction surveys differently, that results in customer satisfaction means are
different in a statistically significant extent, that the factors impacting the
customer satisfaction answers are also depending on the culture of the
respondent and that acculturation can also play a role in determining customer
satisfaction surveys.
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1. Introduction
The context and the content of business strategy have changed significantly in
the last decades: markets have increased in competition, customers have become
more demanding and the traditional tools and techniques to gain competitive
advantage have been eroded. The development of new products to regain
advantages is still very important, but its effectiveness has become very
questionable because of the speed in which markets evolve and the easiness of
catching up with product developments by competitors. For this reason managers
and marketing planners have started to focus on benefits to the customer that are
less tangible and therefore harder to copy. One of these intangible benefits is
excellence in customer relations, and its direct impact on customer loyalty.
When considering the context of services, the perceived competence of
employees who interact with the customers, their responsiveness and empathy
are proven to be the basis of quality. Also the management of expectations is a
fundamental aspect of quality, as creating excessive expectations can increase the
likelihood of dissatisfaction. In general quality and customer satisfaction have to
become part of the culture of the organisation and a value that is lived by all
employees (Baird et al. 2011). Zeithaml et al. (1985) highlight how heterogeneity,
especially in services marketing, plays a crucial role because of the fact that the
quality and essence of a service might be subject to very high variations from
producer to producer, from customer to customer and from day to day. The more
labour intensive a service is, the higher is the likelihood of variations in the
output.
Both from a relational and a transactional perspective customer satisfaction
has become a focal indicator in strategic decision making: on one side
transaction-specific satisfaction relies on analysing the reaction to the most
recent transactional experience with the firm or the immediate postpurchase
evaluative judgment. On the other side customer satisfaction can also be analysed
as an inclusive construct based on the overall experiences with the firm
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(Garbarino and Johnson 1999). Moreover customer satisfaction and service
quality can be also used as an indicator to measure employee performance, as
suggested by Parasuraman et al. (1991) and can be considered important also
when evaluating affective job outcomes like job satisfaction and organisational
commitment (Ashill et al. 2008).
The strategic relevance of customer satisfaction and loyalty is demonstrated
eventually by the fact that indicators of customer satisfaction and loyalty are
becoming increasingly included in strategic performance management tools like
the balanced scorecard, where these indicators need to be quantified to be
measured, trended and assessed against targets. For this reason, the development
of effective and reliable satisfaction and loyalty metrics becomes essential to
grant a valid inclusion of the relation with the customer, in the strategic planning
of the business (Roslender and Hart 2010).
Even from a shareholder perspective, customer satisfaction has become a
strategic goal as it is proven to be linked to the financial performance of a
business. Anderson et al. (2004), analysing empirical data regarding more than
200 companies in the US, have been able to translate the satisfaction-profit chain
into empirical data, proving that, despite some differences between industry
sectors, firms that achieve higher customer satisfaction also create more
shareholder wealth. Being customer satisfaction an extremely important driver of
customer loyalty and subsequently of profit, it has been embedded in many
organisational processes and it is also considered when developing business
strategies.
Multinational companies rely on data collected in the different markets to use
them within the organisation and develop converging or differentiated business
strategies. But how much can they rely on such measurements? Is summarising
customer satisfaction using numbers and statistics a practical way to include it in
the organisational processes? And if so, are cultural aspects and dimensions
impacting the measurement of customer satisfaction at international level? These
are some of the questions that the following work is trying to address analysing
the relationship between customer satisfaction and culture.
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In the first two chapters the main literature regarding the relationship
between culture and customer satisfaction will be reviewed. The first chapter will
be dedicated exclusively to the definition of customer satisfaction and to the
evolution of research in this field. The main factors that determine customer
satisfaction will be reviewed and analysed across different dimensions. Further
constructs related to the one of customer satisfaction will also be introduced. The
first one is service quality and the second one is customer loyalty. In particular
customer loyalty will be addressed as variable that can determine profit, along
with its relation to customer satisfaction. Specific sections will be dedicated to the
measurement of satisfaction and loyalty, which are the constructs that will be
later considered in the empirical research.
The second chapter will be dedicated to culture, the other major construct in
the research question. After analyzing the meaning of culture, in specific from a
management point of view, using the definition of Hofstede, the most relevant
literature on how culture determines customer behaviour and satisfaction will be
reviewed.
The third chapter is aimed at presenting and motivating the main
methodological decisions that will be taken on how to perform the empirical
research. After a review of the research methods and techniques that have been
used in other studies about the relationship between culture and customer
satisfaction, three types of possible methodological bias will be considered: the
ones related to customer satisfaction and loyalty measurements, the ones related
to the collection and analysis of general cross-cultural data and then, in detail,
also the ones strictly related to customer satisfaction at cross-cultural level. At the
centre of the third chapter there will be the research question, along with the
research objectives and hypotheses that will contribute answering it. Finally a
review of the chosen research design (experimental) and data collection and
analysis techniques, including an innovative survey method, will conclude the
chapter.
The final chapter before the conclusion will include the major results of the
analysis. The most important descriptive details about sample and answers will
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be reviewed, not just to check the assumptions for further statistical analysis but
also to provide the reader with the most interesting details about the collected
data. Eventually in the conclusion the major findings will be reviewed along with
a discussion on the analysis done, on the limitations of the findings and on the
recommendations for future research.
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2. Customer satisfaction, service quality and
customer loyalty
Adding the new dimension of intangible benefits for the customers to the
factors that have to be considered when developing and implementing a new
strategy, means considering the centrality of the concept of customer satisfaction
and of related constructs of customer loyalty and service quality, which are
interconnected and based on the perception that the customer has of the product,
the service and of the brand.
Customer satisfaction has become more and more important in the creation of
business strategies, due to the increased influence of consumers since the mid
1980s, when retail started to develop technologies that provided an information
superstructure and facilitated head office control. This has continued until now,
despite the fact that recession and high-tax regimes in the 1990s have re-
established price as major competitive strategy: several empirical studies have
shown that price is not necessarily the determinant for a purchase. Service itself
became extremely important and the analysis of what this service was supposed
to offer has increased the interest in customer satisfaction massively (Hutcheson
and Moutinho 1998).
Also the fact that interest in service has massively increased due to the major
role played by the tertiary sector in post-industrial economies and to the growing
importance of services provided around the production and delivery of goods has
caused a shift of attention to the needs and the perception of the customers
(Oliver et al. 1997).
A summarising effort on the role of the customer centrality viewpoint is
offered by Rust et al. (2004: 110) using the concept of customer equity, which
they define as ‘the total of the discounted customer lifetime values summed over
all of the firm’s current and potential customers’, and which allows them to
observe how the last decades have seen a shift from a brand- and product-based
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strategy to a customer-based strategy, but that this shift has not been fully
sustained by a change in management practices and metrics.
2.1. Customer Satisfaction
As shown by Giese and Cote (2000) customer satisfaction can be defined in
different ways. In their article they present a literature review where they not
only highlight the differences and similarities in the various approaches to
customer satisfaction, but also summarise how this concept has developed during
the last decades in a synoptic table: they start with a definition by Howard and
Seth (1969) and then describe how it has evolved considering different elements
beyond the rational judgment as, for example, in the definition by Swan et al.
(1982) who along with the conscious evaluation/cognitive judgment mention
also affect of feelings toward the product of service.
2.1.1. Customer Satisfaction as a result of expectation and disconfirmation
A seminal article that has influenced the current understanding of the
construct of customer satisfaction is the one published Oliver (1980) where he
analysed the causes and effects of satisfaction cognition. Starting point of his
study are the constructs of performance-specific expectations and expectancy
disconfirmation, which were introduced in previous literature but still needed to
be organised within a coherent framework that comprehended the relationship
among expectation, disconfirmation, satisfaction and the traditional criteria of
attitude and purchase intention. Given that there was a common understanding
and acceptance of the role and importance of expectations in determining post
purchase evaluations, expectancy disconfirmation was a less defined and
commonly agreed concept: some literature acknowledged that disconfirmation
was always implicit where expectations and performance did not match, some
other saw it as a part of a comparative process that ended in a satisfaction
decision and others defined it as a state between comparison and judgement.
Applying the findings of social and applied psychological research, where
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satisfaction is defined as perceived discrepancy with an initial standard based on
expectations, Oliver (1980) first points out how important the determination of
expectations is, in defining the comparative judgement. Expectations are not
given, they are results of adaptation and influenced by various factors like
product, context and individual characteristics. Previous studies (cf. Oliver 1977,
Swan 1977, Gilly 1979, and Linda and Oliver 1979) had shown how expectations
and disconfirmation, the two variables that determine satisfaction, were
uncorrelated. Subsequently satisfaction can be considered as the outcome of an
addition between expectation level and resulting disconfirmation (Oliver 1980).
When trying to measure expectations, disconfirmation and satisfaction as
different variables within a model, exact definitions and measurements have to be
applied. Expectations are defined by the customers themselves, who assess how
probable positive or negative events are, should they engage in some behaviour
and can be described using two dimensions: the probability of occurrence of a
positive or negative event and the evaluation of that occurrence (how desirable it
is): when a desirable event is likely to occur, or an undesirable event is not likely
to occur, expectations will be high, while low expectations are determined by the
anticipation of the occurrence of an undesirable event or of the not-occurrence of
a desirable event (Oliver 1981).
Disconfirmation measures rely on the assessment of expectations:
disconfirmation is the result of a comparison process of an actual state of nature
with his probability: positive disconfirmation takes place when a desirable event
that is not likely to happen occurs or when an undesirable event that is likely to
occur does not, while negative disconfirmation takes place when high
expectations do not materialize. There are also comparisons that result in a zero
level disconfirmation, which occur when there is no significant difference
between the expected and actual occurrence of desirable and undesirable events.
It is very important to notice at this stage that many empirical studies on
expectations and disconfirmation have confirmed that there is no correlation
between expectation and disconfirmation, and that just the latter correlates with
customer satisfaction (Oliver 1981).
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At the other end of his model, considering the consequences of satisfaction
experiences, Oliver notices how they have an influence both on future purchase
intention and on the post purchase attitude. The resulting framework of
satisfaction is clear: pre-purchase attitude is a function of expectations,
satisfaction is a function of expectations and disconfirmation, and post-purchase
attitude is a function of pre-purchase attitude and satisfaction. Within this
framework, using empirical data, Oliver (1980) demonstrated how expectation
and prior attitude could be considered an adaptation level component that was
consistent throughout time, indicating that the underlying beliefs that trigger
expectations are so internalised, that they can resist for an unspecified period of
time. Also disconfirmation is very persistent: an analysis assessing
disconfirmation separately from expectations has shown that its effects are as
potent as the ones attributed to expectations, and result in determining the future
adaptation level and expectations of new satisfaction experiences (Oliver 1980).
2.1.2. Satisfaction as result of a psychological and physiological process
From a conceptual point of view, customer satisfaction can be understood as
the result of a cognitive process and for this reasons an interesting phenomenon
that has to be studied by consumer behaviourist. The cognitive approach to
satisfaction was originally based on the work of Sherif and Hovland (1961) about
the social judgement theory and in particular to the concepts of assimilation and
contrast, that explain the power of persuasion of a message. Later studies
embraced the theory of comparison with expectations and disconfirmation, but
the psychological meaning of this comparison was not agreed until a synthesis by
Oliver who analysed how satisfaction is assessed in retail settings (Oliver 1981).
Main starting point for Oliver’s (1980)conceptualisation is Helson’s theory on
the adaptation level (Helson 1964), which states that stimuli are perceived just in
relation to an adapted standard is determined by the perception of the stimulus
itself and by the psychological and physiological characteristics of the organism.
Evaluations are then based, once the adaptation level has been created, on the
deviations from the original position. Disconfirmation can subsequently be
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defined as the level of deviation, either positive or negative, from the adaptation
level. In the case of satisfaction this deviation is measured on the deviation from
one’s expectations (Oliver 1981)
Another relevant psychological and physiological aspect of the satisfaction
creation can be explained using the opponent-process theory postulated by
Solomon and Corbit (1974) in regards to the homeostasis, that is to say the
constant level of excitation that the bodies tend to adapt to, when subject to
repeated or continuous stimuli. This physiological process is not observed just in
the case of physical stimuli but also in the case of emotional stimuli: the central
nervous system tends to voluntarily or involuntarily resist against exceedingly
adverse or pleasant emotional deviations. Also in this case the homeostasis level
can be compared to one’s attitude before the product usage in the satisfaction
generation process: once the disconfirmation has taken place, in a second stage
the opponent process provokes an internal reaction that causes satisfaction to go
back to the prior level of homeostasis. What is crucial here is that the sum of
disconfirmation and adverse opposition can be different than zero, causing a
change in the level of expectations and attitude (Oliver 1981).
At this stage it is also very important to stress how change in attitude does not
correspond to a change in perception of satisfaction: attitude is, in fact, a long
term enduring affective orientation towards a product, store or process, and is
not situationally oriented. On the other side, satisfaction, which has a surprise
element as central concept, is the direct emotional reaction to a disconfirmation
experience (Oliver 1981).
2.1.3. Satisfaction as result of perceived equity and inequity
Transaction satisfaction is extremely important in determining the
maintenance of current relationships and the creation of future relationships
facilitating exchange. From a transactional perspective the concepts of equity and
inequity play an important role in the determination of satisfaction. In the case of
sales transaction, the satisfaction of the parties with the transaction relies also on
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the perceptions of equity and inequity by the participants. The link between the
concepts of equity and inequity and satisfaction was introduced by Bagozzi in
1975 and further developed in later studies, who analysed the criteria that let an
exchange be perceived as equitable and identified three different comparisons
that take place when a buyer is involved in a transaction: comparison with the
partner in interaction, comparison with others who interact with the partner at
the same level or some other agency, like a commercial enterprise (Bagozzi
1986).
An overview on the impact of equity and inequity perception on customer
satisfaction is offered by Oliver and Swan (1989) who carried out a study based
on a social-psychological approach. Starting from the assumption that the
determinants of satisfaction are person-dependent, the authors analysed from an
input-output perspective the multidimensional equity components. When all
parties perceive the ratio of outcomes to inputs as equal to all parties, equity
occurs, but, according to their model, there are two intervening variables that
mediate the relation between the perception of equity/inequity and satisfaction:
‘fairness’ and ‘preference’. ‘Fairness’ is a construct that is very similar to ‘equity’
and goes back to the concept of distributive justice. When buyer and seller try to
minimize both inputs and maximize both outputs the transaction tends to be
perceived as fair. Analysing empirical data collected in automobile purchase
transactions, the authors observed how fairness, from a buyer perspective, is a
positive function of the seller’s inputs and of the buyer’s outcomes, but unrelated
to the buyer’s inputs. At the same time preference is positively correlated to the
buyer’s outcomes but negatively correlated to the outcomes for the seller. When
analysing the impact of fairness and preference in their model of customer
satisfaction the authors noticed that fairness is highly correlated with customer
satisfaction, in an even higher extent than disconfirmation. On the contrary
preference is not a predictor of satisfaction. Being the perception of fairness
essential in developing perception of satisfaction and subsequently resulting in
intention to repurchase, fairness becomes a variable that needs to be addressed
from a managerial perspective to support repurchase and customer loyalty
(Oliver and Swan 1989).
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2.1.3. Affective determinants of customer satisfaction
When analysing the concept of customer satisfaction from a cognitive
perspective, an important element to consider is the affective dimension that
determines it. The development of some sort of affect is common in a post-
purchase situation, but this element of the satisfaction building process were
neglected by the research in this field, until Oliver published an article in 1993,
where he added it to his explanatory model of satisfaction.
Previous research on affection was focused on other areas: a study on the
perception of quality of life pointed up how positive experiences of life are not
necessarily inversely correlated with negative experiences and their contribution
to the perception of quality of life are independent. Affections have positive and
negative effects on the satisfaction with the same product simultaneously:
product or services are usually linked to a multiple and complex features and
experiences that can be summarised in both positive and negative affect. The
basic elements that trigger satisfaction are attributes, and satisfaction results
from a judgement of their performance. Because of the nature of affects single
attributes can have crossover effects on other attributes: customers react to
product features performance and positive and negative affects emerge. There
are three dimensions in the determination of satisfaction: cognition, affect and
direct experience. According to Oliver’s expanded attribute based satisfaction
model, attribute satisfaction and dissatisfaction have both a direct and indirect
impact on customer satisfaction: besides influencing customer satisfaction and
dissatisfaction, attribute satisfaction is linked to a positive affect whereas
negative attribute satisfaction triggers negative affect. Both positive and negative
affects shape, along with disconfirmation, attribute satisfaction and
dissatisfaction, the resulting customer satisfaction (Oliver 1993).
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2.2. Service Quality
The concept of service quality has been initially focusing on the customer’s
perceptions of quality: customers are those who define quality, and quality exists
when an organisations supplies goods or services that satisfies their needs.
One paradigmatic definition of service quality is the one provided by
Parasurman et al. (1985), according to whom service quality is a comparative
function between consumer expectations and actual service performance: a
positive disconfirmation of the expectation takes place when an experience is
better than the customer expected.
In the definition of service quality, one important differentiation is the one by
Swan and Combs (1976) who introduced the ‘instrumental’ and the ‘expressive’
dimensions of quality: the first one related to the physical aspect of the service,
the second one to the intangible and psychological aspects of it.
This idea has been further developed by Grönroos (1984) who distinguished
between ‘technical’ and ‘functional’ quality. Technical quality is easy to measure
as it is quantifiable. Examples of technical quality are waiting times at the
counter. Functional quality cannot be easily measured objectively and is related
to the way in which the technical quality is delivered. In the checkout example the
perception on how queues are handled by the supermarket’s staff is can be
considered the determinant of functional quality.
Oliver et al. (1997) observed how the growing importance of the services
sector within the global economic system has made the mangers aware that the
product is just a part of the overall delivery to the customer, and that the service
part of it continuously gaining significance.
2.2.1. Customer Satisfaction or Service Quality?
The semantic boundary between the concepts of customer satisfaction and
service quality is not completely clear. Bolton and Drew (1991) consider
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customer satisfaction as preceding service quality: disconfirmation affects
customer satisfaction and customer satisfaction becomes an input on the
customers’ perceptions of service quality, which is also influenced by
disconfirmation directly. On their turn intentions, that drive behaviours, depend
directly from service value that is determined by service quality.
Customer satisfaction and service quality are thoroughly compared and
integrated in one single concept in an article by Iacobucci et al. (1995). After
reviewing the different developments and different theories about service quality
and customer satisfaction, admitting that from a conceptual point of view the two
constructs are different, they pragmatically proceed suggesting to consider the
two concepts from a customer perspective. Using multiple methods, both
qualitative and quantitative-experimental, the researchers have shown how no
difference can be recognised in the customer’s perception of quality and
satisfaction.
Also Oliver et al. (1997) agree on the fact that customer satisfaction and
service quality are interlinked constructs. Their perspective, in analysing the
relationship between the two concepts is of managerial nature: the increase in the
quality of services offered has determined further research on the issues that
impacted customer satisfaction and dissatisfaction. Moreover the emphasis on
customer satisfaction has been restricted only to the extent that it affects
behavioural outcomes. In the two empirical studies described in their article just
one was clearly showing customer delight resulting in behavioural intentions,
suggesting the existence of moderating variables.
2.3. Customer Delight and Loyalty
When considering satisfaction from a practitioner’s perspective, Oliver et al.
(1997) report that managers of global companies have noticed how customer
satisfaction is crucial, but does not necessarily lead to customer loyalty.
Empirical data show that customer satisfaction is driving customer loyalty:
when the customer’s experience and satisfaction is continually enhanced, the
23. -23-
chance that this customer becomes loyal is higher. Jones and Sasser (1995),
analysing data from the Xerox company, noticed that customers defining
themselves using the highest levels of satisfaction (‘totally satisfied’) were six
more times likely to repurchase products within 18 months. This suggests that
just ‘delighted’ customers are likely to become loyal, even if satisfaction itself,
does not exclusively determine loyalty. Also Oliver and Westbrook (1993)
addressed the delight aspect of satisfaction and, analysing empirical data, noticed
how repurchase intention is better understood not using simple satisfaction, but
‘surprisingly’ positive disconfirmation.
2.3.1. Understanding Customer Delight
The extremes of the satisfaction continuum are linked to emotions: on the
lowest extreme, very dissatisfied customers tend to feel victimised and develop
outrage towards the product or service. Emotionally charged satisfaction levels,
like outrage and delight, are much better explicators than simple satisfaction:
customers who are just satisfied might, in some cases, stay loyal, but even a
modest motivator, might lead them to trying a different product. Delight, in
contrast, drives the customer decision to stay loyal to a specific product or service
and even to offer word-of-mouth support (Schneider and Bowen 1999).
Rust and Oliver (2000) introduce the concept of delight using the theories of
Clemmer (1990) and Levitt (1983), who conceptualised a model of product
features using three concentric rings: in the core ring there are elements that
have to be considered ‘musts’, that is to say attributes that have to be provided
because without them the product would be useless. The next level includes
elements that have just an embellishment purpose to the basic product and that
are defined just as ‘satisfiers’. The outer levels are the so called ‘delights’, that is
to say features that are enjoyable in an unexpected and surprising way. Surprise
is then the sine qua non of customer’s delight and delighted customers not only
tend to become loyal customers, but also start to be product’s advocates by word-
of-mouth.
24. -24-
Empirical data highlighting the role of the surprise factor in determining
customer delight have been collected in two different studies by Oliver et al.
(1997) who demonstrated the sequence surprise, arousal, pleasure and delight,
despite the fact that satisfaction and delight were structurally unrelated in the
data.
Starting with the traditional model that considers expectations and
disconfirmations the drivers of satisfaction, Schneider and Bowen (1999) notice
how meeting expectations regarding service quality, core service or value just
partially explains loyalty. In fact these models explain satisfaction as meeting
expectations, and delight as exceeding experience-based expectations, but
empirical research shows that in many cases, especially for service providers,
reliability of performance (meeting of expectations) does not necessary result in
repurchase or loyalty. The main reason of this is that fulfilling expectations has to
be considered a dynamic construct: expectations keep changing, very often to a
higher standard. A second reason is that defining delight, or exceeding
expectation is a very difficult task, that varies from industry to industry and even
from company to company. It is the dynamic factor of the delight perception that
makes satisfaction an emotional and forward-looking process (Oliver et al. 1997).
Delight, according to Rust and Oliver (2000) has a sort of memory of past
experiences: on one side it might become institutionalised by raising standards
and expectations, and disappear; on the other side memories of delight are
retained and a sort of halo of the product/service/brand, that can also undermine
the correct measurement of customer satisfaction (Wirtz 2003) or re-enact the
delight with consumption or repurchase. For this reason delight can be classified
in two varieties: delight that raises consumers’ expectations and delight that is
appreciated on a onetime basis but might be sought again.
2.3.2. Customer delight and outrage as a function of customer’s needs
Schneider and Bowen (1999) suggest applying a model based on customer
needs in order to understand customer delight and outrage. According to the two
25. -25-
authors the customer has three basic needs: security, justice and self-esteem.
Because customers are first of all human beings, producers and service providers
have to put emphasis on the basic human needs: once the needs are gratified, the
outcome will be delight, if needs are violated the outcome will be outrage. Relying
on the personality theory by Maslow, Schneider and Bowen defined security as
‘the need to feel unthreatened by physical or economic harm’, justice as ‘the need
to be fairly treated’ and self esteem as ‘the need to maintain and enhance one’s
self-image’ (Schneider and Bowen 1999: 38). From a customer delight
perspective, the first imperative is not to violate the needs for security (never
break a promise related to security needs) and justice (as in the model
considering equity and inequity, this need might face some inconsistencies, for
example receiving a deserved treatment is different than receiving a fair
treatment and also different from receiving a treatment equal to others): this will
allow the firm to produce satisfaction. But if a firm wants to generate delight, it
has to sustain the customer’s self esteem: making the customers feel important,
unique, recognizing their particular problems and personal history means
delighting them. For this reason firms have, without exaggerations, to create a
knowable, predictable and friendly environment for the customer, which makes
people feel smart, competent, important and comfortable. Also giving them choice
is a good way to enhance the customer’s self esteem (Schneider and Bowen
1999).
2.3.3. Translating customer delight into customer loyalty
When analysing the managerial implications of their model based on delight,
Rust and Oliver (2000) assessed if a delight program is justified or not by a payoff
in monetary terms, and if customer delight can be considered a successful
strategy. Their answer to this question is positive not unconditional: the success
of a delight program depends first of all on the influence that satisfaction has on
behaviour: a positive trend in satisfaction will drive profits and a decline in
satisfaction with the competitor’s will have the same result. Moreover the
influence of satisfaction on behaviour will drive the takeover of customers of
26. -26-
dissatisfying competitors. A particular attention must also be paid to the fact that
in general, customer delight will result in raising expectations and subsequently
in further difficulties to further delight customers in the future. Despite the fact
that risen expectations, being general, will affect also competitors, a delight
program works better if it addresses features that are not easily copied, if the
delighting company has easy access to competitor’s customers and the customers
are not forgetful, and if the delighting company is able to continue the delight
program in the long period (Rust and Oliver 2000).
2.3.4. Defining Customer Loyalty
A construct linked to customer satisfaction, service quality and their effect on
profitability is customer loyalty. The direct connection of customer satisfaction
and service quality to profitability seems obvious, but Helgesen (2006) tried to
demonstrate the so called ‘satisfaction-profit chain’. In particular, he has carried
out an empirical research on customer satisfaction at individual level in the
order-handling industry that confirmed that customer satisfaction translates
directly in customer loyalty, even if not in a linear direction. An overview of the
satisfaction-profit chain is offered by the following diagram:
Fig. 2.1: The satisfaction-profit chain by Helgesen
Adaptation from: Helgesen 2006.
27. -27-
2.4. The importance of reliable customer satisfaction and customer
loyalty metrics
Customer satisfaction and the resulting customer loyalty are not only
important in defining a company strategy, but also in measuring performance. For
this reason many quantitative metrics have been developed to measure the
satisfaction and quality of products and services.
An important article on the measurability of customer satisfaction, and on the
limits of such metrics, is the one published by Peterson and Wilson (1992) who
did not just review the theoretical approaches on customer satisfaction that
preceded them, but also highlighted the methodological issues that the
measurement of customer satisfaction has to face: the roles played by factors that
are linked to the individual customer, by the measurement process itself and
above all by the context. For this reason they consider self-reports on customer
satisfaction usable just in a very specific context: they cannot be utilised as
absolute measurements and above all cannot be compared between brands or
industries especially if they are not competing directly. The reason of this is that
the variables considered in the self evaluation of satisfaction are very likely to be
too different across industries.
Morgan and Rego (2006) have tried to scientifically review the predictive value
of different customer satisfaction and loyalty metrics in relation to business
performance. Many organisations utilize data collected using customer feedback
surveys to set goals and monitor performance and tend to opt for metrics that are
concise, easy to understand and comprehensive. In their overview of the six main
customer feedback metrics (average customer satisfaction; top 2 box customer
satisfaction; proportion of customers complaining; net promoters; repurchase
likelihood; and number of recommendations) they noticed how academic
researchers are advocate of average customer satisfaction and repurchase
intentions as best predictors, while consultants prefer to work with ‘likelihood to
recommend’ metrics.
28. -28-
2.4.1. Measuring customer satisfaction
A seminal overview on the measurement of the satisfaction construct was
offered 1981 by Westbrook and Oliver. Analysing 80 different ways to measure
various types of satisfaction (job, marital, patient and life satisfaction). All the
measurements analysed relied on varying degrees of methodological rigour, were
lacking an interdisciplinary perspective and, above all, demonstration of
reliability and validity. Across these different types of satisfaction, the
measurements used had three common elements: diversity in the measurement
methods, widespread use of multiple item scales or index measures, and
consistent attention to issues of measure evaluation and valuation. The first step
in measuring satisfaction is defining the domains where it appears: shopping and
patronage at retail outlets, media usage, and the overall participation in the
marketplace. At the core of customer satisfaction the most important element is
affect, that is to say the feeling and emotions that result from the evaluation of
outcomes.
Traditionally, measurements of satisfaction in retail settings are based on a
direct subjective estimation of the overall satisfaction experience by the
customer. The scales used go from three fully labelled points, to 11 points
variables labelled just at the extremes. The usage of multi items scales, as
observed by Westbrook and Oliver (1981), was not very frequent, because of the
concerns related on the approach to follow to aggregate the results. On the other
side the authors admit that the single scales are likely to generate biases in the
results and not to completely capture all the cognitive-evaluative, affective and
conative elements of satisfaction. Starting from the much more differentiated
measurements of other types of satisfaction, the authors assessed five different
types of measures using multiple items, various numbers of points in the scale
and both verbal and non verbal scales labels for measuring satisfaction with two
different types of product. In general the results obtained from the empirical
research showed that all the scales could be considered valid satisfaction
measures. Just one method showed a low level of convergence and
discriminability, the so called Porter scale that assessed the level currently
29. -29-
provided by the product and the level desired by the consumer (Westbrook and
Oliver 1981). The power of using multiple items measurements, like for example
the measurement of expectations, attitude, intention disconfirmation, or the of
other variables like buyer inputs, buyer outcomes, seller inputs, seller outcomes
and disconfirmation has been confirmed also in other studies (cf. Oliver 1980;
Oliver 1981; Oliver and Swan 1989).
2.4.2. Measuring customer loyalty
Many instruments have been created to understand what drives customer’s
loyalty and in specific to measure customer loyalty. One of the most widespread
metric, which used by various industries and several companies worldwide is the
Net Promoter Score. This single metric was introduced by Reichheld in the much
discussed article ‘The One Number You Need to Grow’ (Reichheld 2003), which
has found a significant echo both in industry and academic research, and has been
further developed in further monographs (cf. Reichheld 2006). After analysing
how customer retention and customer loyalty are crucial for a sustainable growth
of the company, Reichheld introduces the concept of Net Promoter Score as a
single metric that summarises customer loyalty and with a very high predictive
value of a company performance. This number is sourced asking customers about
their likelihood to recommend a product, service or a company. After testing
different scales, Reichheld proposed an 11 point scale (from 0, not likely at all, to
10, very likely) as the best for its predictive value. The 11 point scale is divided
into three groups: customer answering 9 and 10 are called ‘promoters’,
customers answering 0 to 6 are called ‘detractors’ and customers answering 7
and 8 are called ‘passives’. The difference between the percentage of promoters
and detractors is the Net Promoter Score. Most part of the literature mentioned
by Reichheld focuses on promoting this new metric, arguing not only that it has
been proven to be very accurate in predicting customers’ behaviour and loyalty,
but also that it is superior to other metrics because it summarised all of them,
discouraging to collect further data on satisfaction and loyalty. This last
30. -30-
advantage, and in particular its simplicity and easiness of use, was probably
crucial in determining the success of the net promoter metric at business level.
According to its inventor, when compared to repurchase intentions, likelihood
to recommend tends to be superior because it allows capturing inertia,
indifference and exiting barriers erected by the company or circumstance. But
empirical research has shown that the role of customer recommendations in
predicting business performance has been significantly overstated by much of the
marketing literature (Morgan and Rego 2006).
As a matter of fact the Net Promoter Approach has been criticised on a number
of grounds, starting from its alleged validity as a single metric and ending with
questioning several assumptions that this metrics relies on (Pingitore et al. 2007).
In particular, Keiningham et al. (2008) questioned the Net Promoter score and its
validity, analysing the two un-peer reviewed studies on which its success relied,
and summarising the previous academic research efforts on this metric. Customer
loyalty is, according to the authors, a multidimensional concept that is difficult to
subsume within one single metric and for this reason its validity as single
predictor might not be as clear as marketed by its inventors. NPS can be
considered both at a micro and macro level. Thanks to its costs, its perceived
sense of credibility, its diffusion in society and also to ubiquitous internet and
mobile phones, word-of-mouth has enormous effects, but these effects are often
hardly measurable (Rust et al. 2000) and no peer reviewed longitudinal research
on the relationship between word-of mouth and firm-level financial outcomes
was performed before the study of Keiningham et al. (2007).
When explaining and developing his theory of NPS, Reichheld (2003) reported
results that Keiningham et al. (2007 and 2008) tried to replicate, but failed, even
using the same methodology. One of the first aspects that they criticised is the
sample size of results by industry in the original study, which was extremely low;
moreover, several methodological details were missing from Reichheld’s study
that led to Keiningham encountering difficulties in its reproduction. But this was
nonetheless possible using different stratagems. The new empirical research
showed that Net Promoter Score is linked to company’s growth, however it is far
31. -31-
from being the single most reliable indicator and this is demonstrated both at
macro and micro level. A comparison at macro level of different loyalty metrics
showed how other metrics, criticised by Reichheld (2003) for not being linked at
all with firm growth, had in many cases a much better explanatory power than
NPS. Also at micro level, Keiningham at al. (2008) were able to show that
recommend intention (and no other metric in the considered comparison), taken
alone, is not and effective predictor of loyalty behaviour, as it leaves a lot of
variance unexplained. In general models that used more than one metric
outperformed by far the single metric ones (Keiningham et al. 2008).
32. -32-
3. Culture and cultural determinants of
customer satisfaction
3.1. Culture
Human and economic behaviour is not only dependent on the physical and
psychological environment, but it is also influenced by the geographical
environment, which includes both physical and man-made parts. The man-made
parts of this environment have been defined by anthropologists as culture
(Herskovits 1955). All social, psychological and economic phenomena, including
human behaviour are not invariant across time and place, and their determinants
are not understandable without considering culture (Triandis et al. 1973). Even
emotions are impacted by culture: Shweder and Sullivan (1993) have listed
different parameters that allow do decompose an emotion from a cultural-
psychological perspective. Different cultural groups tend to have peculiar
emotional reactions related to environmental determinants: self appraisal,
somatic phenomenology, social appraisal, self management and communication.
All parameters might generate different mental states and processes that are at
the same time universal and without uniformity: even if empirical universals in
psychological functioning might exist, they have not to be considered more
fundamental, basic, intrinsic or privileged truths (Shweder and Sullivan 1993).
The most quoted definition of the concept of culture, as a sort of unwritten
rules of the social game, is the one proposed by Hofstede, and related to the
collective phenomenon that is at least partly shared with people who live or lived
within the same social environment: ‘the collective programming of the mind that
distinguishes the members of one group or category of people from others’
(Hofstede et al. 2010: 6). As such culture is not innate, but learned and
distinguishable from human nature and from individual’s personality (Hofstede
et al. 2010). When considering culture using an ‘etic’ definition, as Hofstede and
most of the cultural psychology theorists did, the analysis of the cultural
determinants of business phenomena has to put its focus on the comparative
contrasts of attributes, trying to target the research of universal or culture-free
33. -33-
theories and concepts. But from an ‘emic’ perspective culture can be analysed
considering the point of view of the subjects being studied. From this point of
view culture is a sort of lens through which phenomena are seen and for this
reason it determines the coordinates of social action and productive activity
(Luna and Gupta 2001).
3.1.1. Culture and Management
From a management perspective, culture is a phenomenon that can be
recognised behind general tendencies or persistent preference for certain states
of affairs over others. Selective attention, interpretation of the environmental
factors and also responses can reflect culture, but it is important to note that
while classes of situations might be provided with detailed prescriptions and
norms by the dominant culture, some other remain relatively unregulated.
National cultures are thus not just differentiated by how behaviours are
regulated, but also by what behaviours are regulated, what deviances are
tolerated and by different general consistency and clarity of norms and values
(Tse et al. 1988).
Hofstede, who, according to a 2008 Wall Street ranking, is one of the 16th most
influential business thinkers of the 20th century (Minkov and Hofstede 2011)
proposed a groundbreaking theory in cross cultural studies, discovering all the
relevant dimensions along which cultures can be differentiated, highlighting the
many cultural factors that influence human behaviour and psychological
processes and generating a tremendous amount of research in all the various
social sciences (Triandis 2004).
Hofstede’s theory of culture owes a part of its success and strength to the huge
amount of data considered. The original research was based on the responses of
116,000 questionnaires, on work related values, by employees in 50 different
countries of a large multinational corporation and of its subsidiaries. Despite the
fact that the employees of this company were mostly belonging to the middle
class and were not representative of the absolute country’s scores, the
34. -34-
comparison still has a very strong and evocative comparative strength as it
targeted the relative differences between national cultures. Being similar in many
attributes, like corporate culture, occupation, education, sex and age the main
systematic difference was in nationality (Lynn et al. 1993).
The vast majority of management theories before Hofstede’s paradigmatic
advance in research was essentially ethnocentric, usually based on data about one
single culture or, if on multiple cultures, tending to disregard the role played by
national and cultural differences. According to Hofstede, culture and nationality
are important to management for three main reasons. From a political point of
view, laws and norms are embedded in unique national, legal and educational
systems and influence certain types of behaviours. Also the perception of systems,
laws and other institutional dimensions of nations tend to be different, even in
the case of strong similarities. The second reason for the importance of
nationality at management level is sociological: because of the symbolic value of
nationality to citizens, a part of their identity is defined by it, and the perceived
differences between cultures become reality. The third, last and most important
reason is psychological: our psychological development and socialisation happen
within systems like family and educational institutions that are strongly
influenced by nationality (Hofstede 1983).
3.2. Hofstede’s theory of culture
3.2.1. Elements of culture
At the centre of Hofstede’s theory on culture, there are values, which can be
defined as ‘broad tendencies to prefer certain states of affairs over others’
Hofstede et al. (2010: 9). Besides values, the other elements of a culture are
practices. Hofstede identifies three different types of practices: symbols (vehicles
of communication), heroes (persons who show highly prised characteristics) and
rituals (collective activities that are not functional but socially essential. Hofstede
represents graphically using an ‘Onion’ chart illustrated in figure 1, which shows
the manifestations of culture at different levels of depth (Hofstede et al. 2010).
35. -35-
Fig. 3.1: Manifestations of culture at different levels of depth
Source: Hofstede et al. 2010: p. 9.
Values are at the core of every culture and they are the elements that are least
likely to be influenced by environmental pressures and changes. Values, on the
contrary of practices, are learned in the first years of one’s life, within family and
school, and can barely be changed afterwards. Practices are learned in a second
stage of everyone’s existence, and are usually learned in the work environment,
as per his illustration (Hofstede et al. 2010).
Fig. 3.2: Learning of Values and Practices
Source: Hofstede et al. 2010: p. 10.
3.2.2. The five Dimensions of Culture in Hofstede’s theory
Hofstede states that the world is made up of several national and regional
cultural groups and these groups have a strong influence on organisational
36. -36-
strategies and behaviours. In his original work he identified four dimensions of
cultures that allow him to explain the main differences between cultures. The
relation between the individual and the group (‘individualism versus
collectivism’) is the first dimension in Hofstede’s theory. In societies with high
individualism there is a stronger protection of the rights of the individual: self-
determination, self experience, and personal responsibility are considered very
important. In a collectivistic culture the integration in any kind of network is
crucial as the sense of unity. ‘Power distance’ is the second dimension of national
culture, which indicates to what extent people who have less power are likely to
accept and/or expect an unequal distribution of power. A high power distance
means a very unequal distribution of power. Low power distance signifies a more
uniform distribution of power. Another element in this dimension is the
acceptance of very asymmetric relations with a formal and centralised authority.
The third dimension can be summarised with the question: ‘How likely are people
to accept risk and to renounce to security in life?’ Cultures that tend to avoid
uncertainty are characterised by a lot of written rules, guidelines and security
measures. Their members are more insecure and driven by anxiety. Cultures that
accept uncertainty are more tolerant, have less rules that, in some cases, can even
be changed. Their members are phlegmatic and do not expect their environment
to show emotions. The last dimension in Hofstede’s original theory refers to the
predominant values that are typical for the two genders (masculinity versus
femininity). Hofstede considers solicitude, cooperation and modesty as feminine
values. Masculine values are, on the contrary, competitiveness and self-
confidence. According to the observation of an empirical research on worldwide
IBM employees he found out that every culture considered used to distinguish
between typical masculine and feminine values. At the same time these
differences were far more pronounced in more ‘masculine’ cultures: even if in
masculine cultures women are more competitive, men tend to be far more
competitive than women (Hofstede 1980).
In 1991, eleven years after the publication of his monographic work, Hofstede,
in collaboration with Michael Bond from the Chinese University of Hong Kong
added a 5th dimension, that allowed him to explain aspects of Asian cultures,
37. -37-
affected by the heritage of the Confucian doctrine: Long Term versus Short Term
Orientation. This dimension is basically related to the focus of people’s effort: in
some cultures people are more oriented to the past and the present, other
cultures foster the values towards future reward. Short term orientation is
related to traditionalism, flexibility and egoism. Long term orientation is related
to parsimony and steadiness (Minkov and Hofstede 2011).
3.2.3. Criticism of Hofstede’s theory of culture
The theory of Hofstede has been criticised in many ways. The most important
critics relate on one side to the fact that it is based on specific corporate culture
differences and not at national level. Others criticize the fact that the theory
ignores the differences in values that can be observed within single nations.
There was also criticism on the scientific validity of the theory as it does not
differentiate clearly between values and behaviours, which are tied together just
in some cases (McSweeney 2002), but Hofstede and his research group were able
to respond to every criticism in the editions and articles that followed, showing
that not only the research on IBM employees but also other independent
empirical studies were confirming their assumptions (Hofstede et al. 2010).
A further and increasingly relevant issue related not directly to Hofstede’s
model but to its reception has been highlighted by Sivakumar and Nakata (2001).
Hofstede’s framework has had a huge success, becoming by far the dominant
theory in the area of cross-cultural and international research that includes
culture or value. Because of its predominant role there are high possibilities that
its results and also its methods are misunderstood or misused when carrying out
further research. Many comparative studies tend to use one or two countries
(possibly the ones that are more supportive of the own postulated hypotheses) as
representative for one or more dimensions within Hofstede’s theory, but this
might be problematic as results might be misleading and not indicating trends
related to the considered dimension (Sivakumar and Nakata 2001).
38. -38-
3.3. Cultural determinants of customer behaviour
3.3.1. Tipping behaviour and culture
An exemplary and interesting study on how culture and nationality influence
consumer behaviour is addressing a construct that is different to the one of
customer satisfaction, but more tangible and concrete: tipping. Literature tended
to explain tipping using historical explanations (based on the analysis of historical
documents) and functional explanations (based on a transaction-cost perspective
of the firm: tipping exists as it is the best way to provide service workers with
performance based rewards). Research on the motives that underlie tipping is
much more various and spans from explanations based on the desire for good
service in future encounters, for social approval, for compensating servers
equitably and on a general desire of status and power (Lynn et al. 1993).
Both explanation and motivation for tipping are strongly bounded to cultural
dimensions: if analysed in international scale, all factors that have been
traditionally considered predictors of tip size, bill size, server friendliness, service
quality, server attractiveness, customer sex, dining party size, patronage
frequency, payment methods and miscellaneous are impacted significantly by
cultural aspects. Considering the prevalence of tipping (number of tipped
professions) as dependent variable and Hofstede’s cultural dimensions as
independent variable, Lynn et al. (1993) found out that the dimension that was
able to explain tipping prevalence most was power distance: the more a
Nation/Culture is tolerant of status and power differences between people, the
higher the number of tipped professions (main outlier as exception, Japan). All
other dimensions in Hofstede’s theory had a weaker explanatory power on
tipping (Lynn et al. 1993)
3.3.2. Culture and customer behaviour
Despite the conceptual distance between the constructs of customer behaviour
(intended as decision making process) and customer satisfaction, the two have
39. -39-
various elements in common that allow to better understand the role of culture
on both on purchase intentions and expectations. Nonetheless there is a specific
area of consumer behaviour that is strongly linked with customer satisfaction:
collectivistic consumers because of harmony needs, tend to be relatively loyal and
are less likely to express complaints when they face postpurchase issues; at the
same time they are more likely to engage in negative word-of-mouth (de Moojj
and Hofstede 2011).
The behaviour of any individual is the result of the context in which it takes
place and of the cultural value system that applies to that context. The value
system that applies to specific context is socialised within a particular group (it
might be nation but also family, organisation) over time and included all the
cultural elements that are shared with the other member of the group. At the
same time a specific behaviour might have an influence on the value system in
which it is embedded: taking consumption as an example, a certain purchase by
an individual can be viewed, imitated or rejected by others, and can also become a
norm within the group. From this point of view the role of marketing
communication is basically to act as moderator between culture and consumer
behaviour, either reinforcing the standardizing forces of cultural norms or
empowering the influences by certain individuals on culture (Luna and Gupta
2001).
Using the four elements of culture identified by Hofstede, Luna and Gupta
(2001) describe how each of them can have a role in the way customer behave.
Values, as most important element dictate preferences within a group, and these
preferences may guide most of customer’s behaviour. In a lower extent also
heroes can have an influence of the consumer behaviour exploiting their
association to specific products and brands. Rituals, broadly intended, include
and prescribe the consumption of certain goods, and also the way of
consumption. Because products and services can be charged with meanings, they
can also be elevated to symbols within a culture, which help consumers to define
their social self and express their own identity (Luna and Gupta 2001).
40. -40-
Beyond the direct impact on customer behaviour, there is also an indirect
influence of the four elements of culture, which is mediated both by cognition and
affect. From a cognitive perspective culture is able to shape perceptual
categorisation, perceptual inference and learning: consumer ethnocentrism, for
example, drives the perception of domestic products in comparison with foreign
products (Shimp and Sharma 1987). Also affect is partly determined by culture
and in specific by values: the formation of attitude and intentions is the
determinant of success in advertising: different studies have shown how specific
cultures react differently to advertising that reflects the national and local values,
in particular for publicly used products (Han and Shavitt 1994). And also
evaluations are impacted by culture: in their approach to customer satisfaction
using the equity/inequity construct, Oliver and Swan (1989) highlighted how
tradition and culture play a primary role in determining if transactions are
considered ‘fair’ by the participants.
The role of culture on customer behaviour can also be analysed considering
the concept of self, personality, identity and image. In Western, individualistic
cultures the concepts of the self and personality are much more developed and
society expects individuals to express their autonomy and distinction also in
behaviour across situations. Collectivistic cultures, where the self cannot be
separated from others and the social context, expect individuals to be more
consistent with the rest of the group within the specific situation. Also the idea
that one has about oneself (identity) and the perception of an individual by the
others (image) are strongly impacted by the five dimensions of culture: the
concepts of beauty and its importance in defining the own identity and image are
different across cultures. Eventually, attitudes in general tend to be different in
along the individualism-collectivism dimension: Western cultures tend to aim at a
stronger consistency to each other, and in general to one’s feelings and
behaviours, while collectivistic cultures do not expect individuals to have
consistent attitudes and behaviours that are consistent to those attitudes (de
Mooij and Hofstede 2011).
41. -41-
3.4. Cultural determinants of customer satisfaction
Being the impact of culture on behaviour and also on intentions so strong, it is
hard to discuss about customer satisfaction at international level, without
including culture and values as a variable that has a significant impact on both
expectations and evaluations.
From a practical perspective, multinational companies that operate in different
markets, with customers linked to different cultural values, are the ones who are
the most concerned about this factor. Even in the case that the product offered is
the same, customers might evaluate the quality of the service or their overall
satisfaction in different ways as their expectations might be different, or even just
for the reason that customer satisfaction metrics rely on questionnaires and
scales that, even when translated or localised (if possible) may maintain a certain
level of unreliability because of those cultural differences.
3.4.1. Overview on the cross-cultural customer satisfaction research
The relationship between culture and customer satisfaction is a relatively
recent field of research. Early exceptions were Wikström (1983) who recognised,
analysing the functioning of marketing, how difficult it is to measure customer
dissatisfaction because of the influence of cultural variables and Thorelli (1985),
who compared, considering the adherence to Buddhist’s belief of fatalism, the
attitude and the experience of three Asian ethnic groups related to the perceived
risk and satisfaction with product and information. Just in the Nineties the
number of researchers dedicating their work to the interrelation of culture and
customer satisfaction has increased, creating an own research field. An overview
on the research produced in those years and in particular on the problems related
to the exploration of this issue, is offered by Liu et al. (2001). The authors
analysed ten different approaches to the role of culture and ethnicity on service
quality and customer satisfaction comparing the measures that these articles
analyse, the cultural dimensions considered, the industry context where the
measure is embedded and the findings of the studies.
42. -42-
One of the main characteristics of research highlighted by Liu et al. (2001) is
the variety of analyzed items within the three observed dimensions and in the
combination between them. At the level of measures considered some of them are
related to service quality and the various dimensions that can be used to assess it
(Malhotra et al. 1994; Donthu and Yoo 1998; Furrer et al. 2000; Sultan and
Simpson 2000). Other targeted customer satisfaction in different ways: Winsted
(1999) used eight service encounter dimensions (authenticity, caring, courtesy,
formality, friendliness, perceived control, personalisation, promptness) to
address customer dissatisfaction, Bianchi (2001) focused more on the service
encounter related customer satisfaction and Stauss and Mang (1999) more on the
dissatisfaction measurement. But the range of considered dimensions of
satisfaction measurements is much broader than demonstrated, for example, by
Winsted’s (1997) research on various drivers of satisfaction (authenticity, caring,
control, courtesy, formality, friendliness, personalisation and promptness), by
Mattila’s (1999) consideration of the perception of the physical environment, of
the personal service component and on the hedonic dimension, and by Reisinger
and Turner (1999) who analysed cross-cultural perceptions of service relations
along with the dimensions of relationship rules theorised by Argyle et al. (1986).
The considered cultures, nations and ethnic group are very dissimilar between
the various approaches. Most of the studies are comparisons between single
countries. The most frequently considered culture is the (US) American culture,
often compared with other countries like Japan, Germany, Great Britain, Canada,
India, China, Australia (cf. Winsted 1997 and Stauss and Mang 1999). Some
studies consider broader cultural boundaries like Mattila (1999) who compared
the perceptions of more generalised ‘Western’ and ‘Asian’ customers. Winsted
(1999), used a different approach considering single cultural attributes like
Status-conscious vs. egalitarian, collectivistic vs. Individualistic, to generalize his
results to other countries and cultures showing similar levels of those
characteristics to the countries considered in the study. And this approach,
common in cross cultural study, has been followed also by all those researchers
that used Hofstede’s dimensions as cultural attributes that explained at least one
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part of the analysed satisfaction metric (cf. Malhotra et al. 1994; Furrer et al.
2000; Donthu and Yoo 1998).
Also the industry context considered by research on cultural differences in
customer satisfaction evaluations is very differentiated. Most of the studies in the
sector have been performed in the area of hospitality, because of the higher
likelihood to have intercultural service encounters in the touristic sector and also
because of the necessity to understand expectations and determinants of
satisfaction for specific ethnic and national groups (cf. Reisinger and Turner
1999; Pizam and Ellis 1999; Crotts and Erdmann 2000). Another privileged field
of research on cultural determinant of customer satisfaction is the airline
industry (cf. Stauss and Mang 1999; Sultan and Simpson 2000). Possibly because
of the similarity of the products, which allows keeping several variables under
control, also the banking industry has frequently been considered in research, in
particular addressing particular markets and their specific characteristics (cf.
Donthu and Yoo 1998; Furrer et al. 2000; Bick, Agratt and Möller 1999). Overall
the list of industries that have been used to analyse the impact of culture and
satisfaction is long, and some studies have also been published that consider
different industries at the same time and the how they mediate the role of culture
on determining the level of satisfaction (cf. Malhotra et al. 1994)
3.4.2. Country-level differences in customer satisfaction
An important innovation in the development of cross-cultural satisfaction
measurement is the proliferation in many countries of national customer
satisfaction indices, which try to aggregate measures at national level. The first
index that has been established in 1989 is the Swedish Customer Satisfaction
Barometer (SCSB) intended to measure national satisfaction for domestically
purchased and consumed products and services. In 1994 the American Customer
Satisfaction Index (ACSI) was introduced attempting to measure 2044 companies
from 34 industries. Other countries have later introduced or at list piloted their
own indices and in later years there has also been the pilot test of a European
Customer Satisfaction Index (ECSI). The American Customer Satisfaction index
44. -44-
has been modelled based on the Swedish original and is considered to have been
paradigmatic in the development of most of the other indices. One important
feature of the ACSI is that it considers satisfaction as an overall evaluation of
performance to date: this means that the most recent experience is just one of the
several possible benchmarks that consumers utilize to evaluate the overall
experience (Johnson et al. 2001).
The ACSI is based on 15 survey questions that are used to operationalise six
constructs that make up the model: customer expectations, perceived quality and
perceived value as direct and/or indirect determinants of customer satisfaction,
and complaint behaviour and customer loyalty as results of customer satisfaction.
The main difference with the Swedish Customer Satisfaction Barometer, on which
it is based, is the fact that perceived quality and perceived value are considered
separately. One of the most important requirements for a national index is that it
has to allow benchmarking across time and context: once measured over time it
allows to see if the marketplace is becoming more or less satisfied with the goods
and services provided by individual firms, entire industries and different sectors
of the economy, as well as with the economic life of the nation as a whole. At the
same time it also is intended for comparing how a particular firm is performing
relative to other firms in the industry, sector or nation (Fornell et al. 1996).
The comparability of satisfaction levels across different customers, companies
industries and sectors has always been one of the main characteristics that the
ACSI model has tried to target. The developers of the index were aware that all
measurements that use surveys as input are affected by the fact that the
questionnaire scales might have a different meaning to each respondent. But this
can be overcome treating customer satisfaction as a latent (non-observable)
construct, on a higher level of abstraction. Most research results that tried to
validate the comparability of customer satisfaction modelled using the ACSI have
confirmed that the variation across countries, industries and sectors is accounted
for by variables of industrial organisation (Anderson and Fornell 2000). Johnson
et al. (2002) have addressed this particular issue, analysing the Swedish, German
and American Indices, with an assessment of the systematic differences between
the various countries at social, political, structural and cultural level, concluding
45. -45-
that they remain accurate in assessing different satisfaction levels, while
methodological differences do not appear to explain observed differences in
satisfaction. Eventually, when based on identical or similar models (e.g. ACSI,
SCSB and DK - Deutsche Kundenbarometer - Germany’s Index), the national
indices can be compared, not only regarding the overall results, but also
regarding the pattern of sector differences (Fornell et al. 1996).
3.4.3. Measuring customer satisfaction in a cross-cultural or international
environment
A recent development on the cultural determinants of customer satisfaction is
the one proposed by Morgeson et al. (2010) on the determinants of cross-national
variations in customer satisfaction. As a result of their research, carried out using
standardised surveys across 19 markets, they identified three different sets of
factors: cultural, socioeconomic and political-economic, which can be used as
predictors to understand the variability of the customer satisfaction responses
across markets. The fact that customer satisfaction measurement results appear
to be strongly influenced by cultural variables has attracted a lot of curiosity not
just on the different factors that impact the customer satisfaction itself, but also
on the ones that distinctively impact customer satisfaction survey responses and
subsequently customer satisfaction metrics (Morgeson et al. 2010).
Research on the measurability of customer satisfaction across countries has
mostly been carried out in recent years. A very interesting approach is the one
adopted by Ueltschy et al. (2004) who completed an experimental research on the
perception of both service quality and customer satisfaction by different ethnic
groups (Americans, English-Canadians and French-Canadians) that showed that a
measure that works well for a specific culture may not perform efficiently in an
international scenario because of the differences in the perception of the service
and also in the meaning of the responses. The authors planned a research based
on experimental design and focused their hypotheses on the invariance of
customer satisfaction and service quality across the three observed groups. In
order to implement the experimental approach, very different scenarios were
46. -46-
simulated, asking respondents to imagine themselves in a setting and reporting
how they would feel about the encounter using service quality and customer
satisfaction scales: the setting was a visit to the dentist and the factors considered
a random combination of the various attributes of the dental office, its
surroundings and description of a previous visit. Of the 13 service quality and five
satisfaction measures, five quality and one satisfaction measures are non
equivalent across culture: this means that they can perform well in one (usually
the US) but not in the international arena (Ueltschy et al. 2004).
Veloutsou et al. (2005) carried out a study with similar objectives, based on a
survey of actual customers after the consumption of a product that is very similar
across cultures, a meal in the local branch of an international fast food restaurant
chain: this granted the service provided to be comparable across national
borders. The aim of the study, on the contrary to most of the preceding research,
was not the differences in cross-cultural consumer behaviour, but trying to
develop transferable measures of transactional customer satisfaction (related to a
specific transaction, as opposed to overall satisfaction, which is a cumulative
construct that is including satisfaction with previous transactions and a general
satisfaction with product/company specific features). Despite the initial critical
approach, their findings tended to offer a positive answer to the question about
the possibility of measuring customer satisfaction in different cultures: from the
data they collected it appeared clear that some common satisfaction measures
can be used to gauge satisfaction across international boundaries. In addition
they recommended, however stressing the fact that they are not strictly
necessary, slight modifications to the measurement tools to improve reliability
and suitability of the data (Veloutsou et al. 2005).
3.5. Summarising conclusions on the literature review
The literature review has analysed the two main constructs on which the
research is based: customer satisfaction and culture. Based mainly on the work of
Oliver, who considered customer satisfaction as the result of expectations and
disconfirmation, the first chapter has highlighted how customer satisfaction is a
47. -47-
concept that has been studied for long but has become more and more important
during the most recent decades. Of the various dimensions on which customer
experiences and satisfaction are built, a particular attention has been given to the
psychological dimension, including affects, perception of equity and inequity.
Because of its proximity with customer satisfaction, the concept of service quality
was also introduced along with the role of the actual service performance on
determining satisfaction and expectations. Finally, a third important construct
was introduced because of its relevance in affecting the business performance:
customer loyalty as a function of customer delight is considered by many
companies one of the main targets to reach in order to enhance revenues.
The second chapter of the literature review addressed, after an introduction on
the concept of culture based on Hofstede’s theory, how culture can affect
customer perceptions, behaviour and subsequently satisfaction. An overview on
the main literature on cultural factors that have an impact on customer
satisfaction highlighted how this subject is not new, but the attempt to reconcile
the existing knowledge and build up an encompassing theory on the relation
between the constructs of customer satisfaction and culture is quite recent. A
special attention was given in this sense to the difficulties that are encountered
when measuring customer satisfaction across borders and markets.
Being this field of research relatively new the possibilities of further analysis in
this area are still huge. In particular, the research on assessing the various factors
that have an impact on how expectations, satisfaction and customer satisfaction
metrics are influenced by the cultural environment leaves a big unexplored area
that can be addressed. The following chapters are an attempt to contribute to fill
this gap, offering a specific methodology that might help to discover how different
factors influence customer satisfaction, and in specific the way customer
satisfaction surveys are answered.
48. -48-
4. Methodology
Empirical research requires an educated decision on what methodologies to
use and other decisions related to the way data are collected and analysed. The
scope of this chapter is to offer an overview on the various decisions taken,
highlighting their advantages and limits and describing the major issues that are
strictly related to a specific selected methodological approach, the utilised
techniques and the limitations that result from them.
4.1 Why quantitative research
4.1.1. Methodological prevalence in cross-cultural customer satisfaction research
All the articles in the literature review that opted for empirical research on
customer satisfaction are based on a quantitative research approach.
Subsequently all evaluations on validity and reliability of such data in an
international context tend to use the quantitative approach. The reason for this
choice is not mentioned or rationalised in any of the articles reviewed, but it
seems implicit in the objectives of the various studies that once the measures and
measurability are taken into consideration, the preferred approach is of a
quantitative nature. The few exceptions are related to non empirical studies,
based on a conceptual analysis of previous interdisciplinary literature.
The most common methods to collect data are questionnaires, administered
sometimes to students (cf. Furrer, et al. 2000; Winsted 1997 and 1999), or to
actual consumers in various services (cf. Stauss and Mang 1999; Sultan and
Simpson 2000; Veloutsou et al. 2005 and Donthu and Yoo 1998). Also face-to-face
surveys (cf. Stauss and Mang 1999) or secondary data analysis (cf. Donthu and
Yoo 1998; Morgeson et al. 2010) are frequently used in customer satisfaction
research.
From a data analysis point of view, all main statistical research methods are
being used including ANOVA (Winsted 1999; Furrer, et al. 2000) MANOVA
