To Punish Or to Forgive: Examining the Effects of Consumer Penalties on Perceptions and Behavioral Intentions Towards the Service Provider

Lan Xia, Bentley University, USA
Monika Kukar-Kinney, University of Richmond, USA
Consumer penalties such as late fees are common in retail settings and are typically associated with negative consumers’ perceptions and behaviors towards the provider. This research focuses on potential positive effects of a penalty arising from customer-provider interaction. We show that perceived flexibility of penalty handling enhances feeling of gratitude and fairness perceptions, which further promote loyalty, intention to advocate, and future compliance. Previous relationship with the service provider and the reason for non-compliance (customer’s fault or uncontrollable situation) also influence fairness perceptions. The research provides important theoretical and managerial implications for administering and managing consumer penalties.
[ to cite ]:
Lan Xia and Monika Kukar-Kinney (2011) ,"To Punish Or to Forgive: Examining the Effects of Consumer Penalties on Perceptions and Behavioral Intentions Towards the Service Provider", in NA - Advances in Consumer Research Volume 38, eds. Darren W. Dahl, Gita V. Johar, and Stijn M.J. van Osselaer, Duluth, MN : Association for Consumer Research.