Exploring service recovery and justice theory in the Libyan Airline industry

321 Pages·2013·4.61 MB·English

by  Ramadan, Ayad

Exploring service recovery and justice theory
in the Libyan Airline industry

Ayad Giuma Ayad Ramadan

A thesis submitted to
The University of Gloucestershire in accordance with requirements of the
degree of Doctor of Philosophy in the Faculty of Business,
Education and Professional Studies

July 2012
Declaration

I declare that the work in this thesis was carried out in accordance with the regulations of the
University Gloucestershire and is original except where indicated by specific reference in the
text.

No part of the thesis has been submitted as part of any other academic award. The thesis his
not been presented to any other education institution in the United Kingdom or overseas.
Any views expressed in the thesis are those of the author and in no way represent those of the
University.

Signed……………………………………. Date……………………………………………….

i
Abstract
The services industry is the fastest growing sector of the global economy, and central to its
success. This research is concerned with observations of service recovery and its impact on
customer satisfaction, and focuses on recovery after service failure, including factors such as
compensation, speed, and apology, and their effect on customer perceptions of justice,
including distributive, procedural and interactional justice. This exploratory and explanatory
study seeks to provide information and understanding of the impact of service recovery and
customer satisfaction on each other, by investigating the effect of service failure and recovery
on customer perceptions of justice in two Libyan airlines.

The theoretical framework of the study is derived from the literature, and is based on a set of
interlinking relationships between elements of service recovery (apology, speed and
compensation), their effect on customer perceptions of justice (interactional, distributive and
procedural) and their logical outcome, which is customer satisfaction. Central to the
framework is the conceptualisation of a model of service failure, perceptions of justice, and
service recovery as a single continuous process which has as its outcome a level of customer
satisfaction.

The study starts from the theoretical view point that justice is a necessary component of
customer satisfaction, and uses a questionnaire to collect data relevant to the three issues
(service recovery, justice and customer satisfaction), which appear in the theoretical model. A
total of 584 questionnaires were distributed to the customers of two Libyan airlines at
Tripoli‟s international airport, collecting data customer perceptions of service failure
recovery efforts. The statistical package SPSS was employed to analyse the raw data and the
findings represent a set of relationships established between elements of service recovery and
perceptions of justice.

The study represents a contribution to knowledge about the relationships between service
recovery and justice, using data collected in a developing country and in an industry of vital
importance to national development yet opens to international competition. Theoretical and
methodological contributions in the form of the study‟s model and questionnaire establish a
basis for further research into this area in other developing countries and other industries.

ii
Dedication

This thesis is dedicated to my wife, and to my daughters – Shada, Nada and Janna. Without
their unerring support and loving patience, this research project would have never come to
fruition.

iii
Acknowledgments

After a doctoral thesis is compiled, acknowledging all individuals who should be recognized
is almost an impossible task. However, there are some people who need to be named on an
individual basis because without them it would not have been possible to get to this stage. It
gives me great pleasure to acknowledge the guidance and help of my supervisors, Philippa
Ward and Christine Williams during the stages of the work presented in this thesis. They
commented extensively to bring this project alive. They have also given continual support
and an encouragement, spent an enormous amount of time in “brain-storming” discussion
sessions and consistently offered constructive criticism of the highest quality.

I am thankful to Associate Dean, Professor Barry Davies, for generously solving problems I
faced during my scholarship. I also wish to thank everybody at the University of
Gloucestershire business school for their substantial support during the course of my PhD.

Last, but not least, special thanks to my wife, my mother, my brother and my sisters who
have unfailingly provided me with emotional and intellectual nourishment: I am especially
thankful for their unconditional love and support. Words cannot adequately express my love
and gratitude for their presence in my life.

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TABLES OF CONTENTS

DECLARATION ..................................................................................................................................... I
ABSTRACT........................................................................................................................................... II
ACKNOWLEDGMENTS ........................................................................................................................IV
TABLES OF CONTENTS ........................................................................................................................ V
TABLE OF FIGURES .................................................................................................................... VIII
LIST OF TABLE ...............................................................................................................................IX
CHAPTER 1 INTRODUCTION ......................................................................................................... 1
BACKGROUND ..................................................................................................................................... 1
THE PURPOSES OF THE STUDY ............................................................................................................. 3
RESEARCH QUESTIONS ....................................................................................................................... 6
RESEARCH OBJECTIVES ...................................................................................................................... 6
RESEARCH SUBJECT ............................................................................................................................ 6
THE EFFECT OF SERVICES RECOVERY ON CUSTOMER SATISFACTION ................................................. 7
METHODOLOGY .................................................................................................................................. 8
RESULTS OF STUDY ............................................................................................................................. 9
CONTRIBUTIONS OF THE STUDY ......................................................................................................... 9
STRUCTURE OF THIS THESIS .............................................................................................................. 11
SUMMARY ......................................................................................................................................... 12
CHAPTER 2 LITERATURE REVIEW ........................................................................................... 13
INTRODUCTION ................................................................................................................................. 13
BACKGROUND ................................................................................................................................... 15
THE NATURE OF SERVICE ................................................................................................................. 17
EVOLUTION OF SERVICES MARKETING LITERATURE ....................................................................... 18
THE DEFINITION OF SERVICE RECOVERY ......................................................................................... 19
THE CONCEPT AND MEASUREMENT OF SERVICE RECOVERY .......................................................... 20
CONSEQUENCES OF SERVICE RECOVERY PERFORMANCE ................................................................ 21
SERVICE RECOVERY AND SERVICE FAILURE LITERATURE .............................................................. 23
INDEPENDENT THEORETICAL SUPPORT - BEYOND SERVICES MARKETING ..................................... 26
SERVICE RECOVERY AND JUSTICE.................................................................................................... 26
SERVICE SUCCESS AND RECOVERY .................................................................................................. 28
SERVICE RECOVERY AND THE AIRLINE-PASSENGER RELATIONSHIPS ............................................. 29
SERVICE RECOVERY: THE ACTION FRAME ...................................................................................... 31
THE PROCESS OF SERVICE RECOVERY ............................................................................................. 32
SERVICE RECOVERY AND CUSTOMER COMPLAINTS ........................................................................ 33
CUSTOMER RESPONSES TO SERVICE FAILURE ................................................................................. 34
JUSTICE THEORY ............................................................................................................................... 36
DISTRIBUTIVE JUSTICE ..................................................................................................................... 38
PROCEDURAL JUSTICE ...................................................................................................................... 39
INTERACTIONAL JUSTICE .................................................................................................................. 39
THE RELATIONSHIP BETWEEN THE DIMENSIONS OF JUSTICE .......................................................... 40
JUSTICE AND CUSTOMER RElATIONSHIPS..............................................................................42
CUSTOMER SATISFACTION AND SERVICE RECOVERY ...................................................................... 44
DEFINITION OF SATISFACTION .......................................................................................................... 45
CUSTOMER SATISFACTION/DISSATISFACTION AND THE DISCONFIRMATION PARADIGM ................ 48
PERCEIVED PERFORMANCE .............................................................................................................. 49
LIMITATIONS OF THE DISCONFIRMATION PARADIGM ...................................................................... 49
CUSTOMER SATISFACTION AND CUSTOMER LOYALTY .................................................................... 50
STUDIES OF THE INTERACTIONS OF SERVICE FAILURE, SERVICE RECOVERY AND CUSTOMER
SATISFACTION. ................................................................................................................................. 51
COMPLAINTS IN THE AIRLINE INDUSTRY ......................................................................................... 54
COMPLAINT BEHAVIOUR RESPONSES ............................................................................................... 54
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SATISFACTION WITH COMPLAINT OUTCOME ................................................................................... 55
CUSTOMER COMPLAINT AND BUSINESS PERFORMANCE .................................................................. 56
INITIAL THEORETICAL MODEL RESULTING FROM THE LITERATURE REVIEW ................................. 59
SUMMARY ......................................................................................................................................... 60
CHAPTER 3 THE DEVELOPMENT OF LIBYAN CIVIL AVIATION ..................................... 62
INTRODUCTION ................................................................................................................................. 62
AIRLINE BUSINESS MODELS ............................................................................................................. 64
THE AFRICAN AVIATION INDUSTRY ................................................................................................. 65
WEAKNESSES IN THE SUSTAINABILITY OF AFRICAN AIRLINES........................................................ 65
THE MIDDLE EAST‟S RAPIDLY DEVELOPING AVIATION MARKET ................................................... 67
STRONG PROSPECTS FOR FURTHER AIRLINE INDUSTRY GROWTH ................................................... 69
AIRLINE MARKETING ....................................................................................................................... 74
LIBYAN AFRICAN AVIATION HOLDING COMPANY (LAAHCO)....................................................... 75
TRIPOLI INTERNATIONAL AIRPORT .................................................................................................. 79
AIRPORT EXPANSION (TRIPOLI‟S NEW AIRPORT) ............................................................................ 79
SUMMARY ......................................................................................................................................... 81
CHAPTER 4 RESEARCH DESIGN AND METHODOLOGY ..................................................... 83
INTRODUCTION ................................................................................................................................. 83
RESEARCH PHILOSOPHY ................................................................................................................... 83
REALISM ........................................................................................................................................... 85
POSITIVISM ....................................................................................................................................... 87
EXPLANATORY RESEARCH ............................................................................................................... 89
RESEARCH QUESTIONS ..................................................................................................................... 89
RESEARCH OBJECTIVES .................................................................................................................... 89
RESEARCH APPROACHES .................................................................................................................. 90
INDUCTIVE APPROACH ..................................................................................................................... 93
RESEARCH PROCESS ......................................................................................................................... 95
QUANTITATIVE APPROACH ............................................................................................................... 95
RESEARCH STRATEGIES .................................................................................................................... 97
TIME HORIZONS ................................................................................................................................ 98
DATA COLLECTION METHODS.......................................................................................................... 98
QUESTIONNAIRE DESIGN .................................................................................................................. 99
PATH DIAGRAM OF THE QUESTIONNAIRE MODEL ......................................................................... 103
SAMPLING METHODS ...................................................................................................................... 105
DETERMINATION OF SAMPLE SIZE ................................................................................................. 108
FIELD RESEARCH ............................................................................................................................ 109
FACTOR ANALYSIS ......................................................................................................................... 111
Exploratory factor analysis versus confirmatory factor analysis ....................................................... 111
Ordinal regression technique ............................................................................................................. 113
NON-PARAMETRIC STATISTICS ....................................................................................................... 114
VALIDITY AND RELIABILITY........................................................................................................... 115
DATA ANALYSIS TECHNIQUES ....................................................................................................... 117
Quantitative Data................................................................................................................................ 117
SURVEY RESEARCH ........................................................................................................................ 118
MEASUREMENT AND SCALES ......................................................................................................... 119
OPERATIONAL DEFINITIONS ........................................................................................................... 121
Independent Variable .......................................................................................................................... 121
The Measurement of Service recovery .................................................................................. 121
MEASUREMENT SCALE ................................................................................................................... 122
INTERVENING VARIABLE ................................................................................................................ 123
Measurement of Distributive Justice...................................................................................... 123
Measurement of Procedural Justice ....................................................................................... 124
Measurement of interactional Justice ..................................................................................... 125
Measurement of Overall Justice ............................................................................................. 125
DEPENDENT VARIABLE ................................................................................................................... 126
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Measurement of Customer Satisfaction .......................................................................................... 126
FACTOR ANALYSIS APPLIED ........................................................................................................... 127
CRONBACH‟S ALPHA ...................................................................................................................... 128
CORRELATION METHODS TO CONFIRM RELIABILITY AND INVESTIGATE ASSOCIATION ............... 128
CORRELATION COEFFICIENTS ......................................................................................................... 129
PEARSON'S PRODUCT MOMENT CORRELATION COEFFICIENT ....................................................... 130
RESPONSE RATE ............................................................................................................................. 130
R SQUARE TABLES .......................................................................................................................... 131
SUMMARY ....................................................................................................................................... 131
CHAPTER 5 RESULTS AND ANALYSIS .................................................................................... 133
INTRODUCTION ............................................................................................................................... 133
DESCRIPTIVE STATISTICS ............................................................................................................... 135
FACTOR ONE: SERVICE RECOVERY COMPENSATION ...................................................................... 138
FACTOR TWO: SERVICE RECOVERY SPEED .................................................................................... 140
FACTOR THREE: SERVICE RECOVERY APOLOGY ........................................................................... 142
FACTOR FOUR: DISTRIBUTIVE JUSTICE .......................................................................................... 143
FACTOR FIVE: PROCEDURAL JUSTICE ............................................................................................. 144
FACTOR SIX: INTERACTIONAL JUSTICE .......................................................................................... 145
FACTOR SEVEN: CUSTOMERS SATISFACTION ................................................................................. 146
FACTOR ANALYSIS FOR ALL ITEMS ................................................................................................ 148
SERVICE WITHOUT WEAK ITEMS .................................................................................................... 150
JUSTICE WITHOUT WEAK ITEMS ..................................................................................................... 151
FACTORS BASED ON SELECTED ITEMS ........................................................................................... 152
CORRELATION RESULT ................................................................................................................... 154
REGRESSION RESULTS .................................................................................................................... 155
CONTEXTUAL IMPLICATIONS OF THE FINDINGS ............................................................................. 159
CHAPTER 6 CONTRIBUTION, LIMITATIONS AND CONCLUSION .................................. 161
INTRODUCTION ............................................................................................................................... 161
OVERVIEW OF THE RESEARCH ........................................................................................................ 161
RESULT AND IMPLICATIONS ............................................................................................................ 162
DISCUSSION OF THE QUESTIONNAIRE RESULTS ............................................................................. 165
The service recovery factors; compensation, apology………………………………………………….165
Perceptions of justice - distributive justice ..................................................................................... 175
Perceptions of procedural justice ................................................................................................... 177
CONCLUSION ................................................................................................................................... 178
Perceptions of interactional justice ................................................................................................ 179
THE EFFECT OF INTERACTIONAL JUSTICE ON CUSTOMER SATISFACTION ..................................... 181
CONTRIBUTION ............................................................................................................................... 182
THE MODIFIED SERVICE RECOVERY MODEL ................................................................................. 183
CUSTOMER SERVICE FUNCTIONS.................................................................................................... 187
LIMITATIONS OF THE STUDY .......................................................................................................... 188
THE RESEARCHER‟S PERSONAL REFLECTION ON THE STUDY. ....................................................... 194
REFERENCES ............................................................................................................................... 197
APPENDIXES 1: ENGLISH QUESTIONNAIR...........................................................................214
APPENDIXES 2: ARABIC QUESTIONNAIR…………………………………………………215
APPENDIXES 3: STATISTICAL METHODS…………………………………………………220
APPENDIXES 5: FACTOR ANALYSIS……………………………………………………….266
APPENDIXES 6: LIBYAN AIRLINES, FLY AFRIQIYAH AIRWAYS RELIABILITY……...293

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TABLE OF FIGURES

Title PAGES
FIGURE 1-1: CONCEPTUAL MODEL OF THE IMPORTANCE OF SERVICE RECOVERY IN 05
AIRLINES TO ANTIONAL STRATEGIC DEVELOPMANT
FIGURE 2-1: THE ELMENTS OF SERVICE RECOVERY 35
FIGURE 2-2: THE ELMINTS OF JUSTIC 44
FIGURE 2-3: THE ELMENTS OF CUSTOMER SATISFACTION 58
FIGURE2-4: INITIAL THEORETICAL MODEL RESULTING FROM THE LITERATURE 60
REVIEW
FIGURE3-1: FORCES INFLUENCING THE MOVEMENT FROM SERVICE RECOVERY TO 63
NATIONAL STRATEGIC DEVEL OMENT
FIGURE 4-1: RESEARCH PROCESS ONION(SOURCE:2003) 85
FIGURE 4-2: PATH DIGRAM OF THE QUESTINNAIRE MODEL 104
FIGURE5-1: P-P PLOT FOR THE RESIDUALS OF FITTED MODELS BAS BASED ON 155
DIMENSIONS
FIGURE5-2: P-P PLOT FOR THE RESIDUALS OF FITTED MODELS BASEDON ITEM 157
FIGURE6-1: THE IMPORTANCE OF PERSONAL ENCOUNTERS TO CUSTOMER 171
SATISFACTION
FIGURE6-2: MODIFIED MODEL OF SERVICE RECOVERY IN THE LIBYAN AIRLINE 184
INDUSTRY

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LIST OF TABLE

Title PAGES
Table 2-1: An overview of research findings with regard to the most influential relationships 53
between service recovery, justice and customer satisfaction
Table 3-1: Stages in the development of Commercial Civil Aviation 64
Table 3-2: Strategic business factors for airline models 64
Table 4-1 :Table comparing the conflicting views of the traditionally extreme schools of thought 88
Table 4-2: The source of questionnaire 100
Table 4-3: The Nationality of Respondents 108
Table 4-4: Questionnaire Language requested 108
Table 4-5: Cronbach α Value 117
Table 4-6 :Measurement of Service recovery (compensation) 122
Table 4-07: Measurement of Service recovery (speed) 123
Table 4-08: Measurement of Service recovery (Apology) 123
Table 1-09: Measurement of Distributive Justice 124
Table 1-10: Measurement of Procedural Justice 124
Table 1-11: Measurement of interactional Justice 125
Table 1-12: Measurement of customer satisfaction 126
Table 1-13: Summary of the ranges of correlation coefficient and how they are interpreted 129
Table 5-1: Demographic Statistics for Main Study (n=584) 135
Table 1-2: Purpose of travel 137
Table 5-3: Which class are you travelling today 137
Table 5-4: Are you satisfied with the fare you paid on this rout 137
Table 5-5: Are you frequent flyer with either Libyan or Afriqiah airline 138
Table 5-6: With which airline are you a frequent flyer 138
Table 5-7: Libyan Airlines 138
Table 5-8: Fly Afriqiyah Airways 139
Table 5-9: Whilst travelling with any of the Libyan airlines, can you clearly recall a recent flight 139
when you experienced a problem that you complained about to a member of airline staff during
your trip
Table 1-10: When you made your complaint, with which airline were you travelling 139
Table 5-11: Selection of compensation items using corrected item total correlation 140
Table 5-12: Selection of speed itms using corrected itm total correlation and alpha 141
Table5-13: Selection of apology items using corrected item total correlation and alpha 142
Table 5-14: Selection of distributive justice items using corrected item total correlation and alpha 143
Table 5-15: Selection of procedural justice items using corrected item total correlation and alpha 144
Table 5-16: Selection of interactional justice items using corrected item total correlation and alpha 145
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