CROSS CULTURAL DIFFERENCES IN THE EFFECT OF WORD OF MOUTH IN RELATIONAL SERVICE EXCHANGE

CROSS CULTURAL DIFFERENCES IN THE EFFECT OF WORD OF MOUTH IN RELATIONAL SERVICE EXCHANGE

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RELATIONAL SERVICE EXCHANGE Jan H. Schumann, Technische Universität München Florian v. Wangenheim, Technische Universität München Anne Stringfellow, Thunderbird School of Global Management Zhilin Yang, City University of Hong Kong Vera Blazevic, University of Maastricht Sandra Praxmarer, University of Wollongong G. Shainesh, Indian Institute of Management Bangalore Marcin Komor, University of Economics at Katowice Randall Shannon, Mahidol University Fernando Jimenez, University of Texas at El Paso Introduction Word-of-mouth (WOM) is of major importance for the development of trust in service relationships (Berry and Parasuraman, 1991). WOM is also critical in customers’ purchase decision-making (Bansal and Voyer, 2000; Ettenson and Turner, 1997), reduces switching behavior (Money, 2004; v. Wangenheim and Bayón, 2004), and supports new customer acquisition (v. Wangenheim and Bayón, 2007). For this reason, service companies make substantial investments in programs fostering customer referral and communication among their existing customers. Due to an increasing internationalization of services (WTO, 2009), international service providers need to develop strategies that fit target groups in different countries. This would be a challenge for global service providers if the impact of WOM differed across countries and referral increasing activities yielded varying levels of return. First evidence for such differences exists, showing for example country differences in the number of consulted referral sources in the decision for a service provider (e.g. Fong and Burton, 2008; Mangold, Miller, and Brockway, 1999; Money, Gilly, and Graham, 1998). Although the topic has recently gained increased research interest (for a review on cross-cultural services research see Zhang, Beatty, and Walsh, 2008), we still need to understand much better how these referral sources influence customers’ evaluation of their service provider. The present paper aims to fill this void and contributes to existing research in two ways. First, we examine the effect of WOM on the customers’ relational satisfaction, service quality perceptions, and customer trust. Second, we explore country differences in the effect of WOM on the relational outcomes. The Effect of WOM on Customer Evaluations in Service Relationships It is widely accepted that services are more difficult to evaluate and expose customers to a higher risk than products (Murray and Schlacter, 1990). This applies because customers often lack the knowledge and expertise to fully understand and evaluate the service (Ostrom & Iacobucci, 1995). To reduce this risk, service customers engage to a larger extent in information acquisition activities when evaluating a service provider (Murray, 1991). A highly powerful information source in services is WOM (Zeithaml, Berry, and Parasuraman, 1996). Accordingly, v. Wangenheim and Bayón (2004) find a higher perceived influence of WOM under conditions of
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This note was uploaded on 10/12/2010 for the course BA 306 taught by Professor Z during the Spring '10 term at American University of Central Asia.

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CROSS CULTURAL DIFFERENCES IN THE EFFECT OF WORD OF MOUTH IN RELATIONAL SERVICE EXCHANGE

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