Cultural and distributive justice in firm's response to product failure

Abstract

Extant research suggests that in a service failure context, consumer's power distance value orientation interacts with the nature of the firm's response to influence perceptions of distributive justice and satisfaction. We examine whether this interaction is applicable in a goods failure context. In our study that uses an experimental design and data from Canada and Hong Kong, we find that for consumers with high power distance value orientation perception of distributive justice remains the same regardless of the status (higher versus lower) of the individual providing an apology for the goods failure; whereas for consumers with lower power distance value orientation justice perceptions will be lower when the apology is provided by an individual of higher status (versus lower status). These findings are contrary to the findings in a service recovery context and therefore reveal that cultural value orientations (e.g., power distance) may shape customer reactions to the nature of organizational responses in goods and service contexts differently. Justice perceptions further influence customer satisfaction, which is a key for complaints management.