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Journal of Business Research 66 (2013) 11611167

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Journal of Business Research

Service quality and customer switching behavior in China's mobile phone


service sector
Dapeng Liang a, Zhenzhong Ma b,, Liyun Qi c
a
School of Management, Harbin Institute of Technology, Harbin, Heilongjiang, China
b
Odette School of Business, University of Windsor, 401 Sunset Avenue, Windsor, Ontario, Canada N9B 3P4
c
School of Management, Dalian University of Technology, Dalian, Liaoning, China

a r t i c l e i n f o a b s t r a c t

Article history: Service quality and customer switching behavior are among the most important factors that affect service
Received 1 July 2011 companies' market share and protability, yet they remain understudied in China's service sectors. This
Received in revised form 1 November 2011 study surveys 400 customers to explore the perceived importance of various aspects of service quality and
Accepted 1 December 2011
customer switching behavior in China's mobile phone service sector. The study identies the following
Available online 9 June 2012
seven critical factors, listed in descending order of inuence, that cause customers to switch mobile phone
Keywords:
service providers: core service failure, high price, ethical problems, competition, inconvenience, service en-
China counter failure, and inuence from family/friends/group. The paper concludes with implications of the nd-
Mobile phone service ings for service marketing and for multinational companies expanding into Chinese service markets.
Service market 2012 Elsevier Inc. All rights reserved.
Service quality
Switching behavior

1. Introduction Social values and norms deeply embedded in their cultural back-
ground can affect customers' perceptions of service quality (Ladhari,
Research on service and service marketing shows that customer Pons, Bressolles, & Zins, 2011; Laroche, 2011). Thus, in the context of
retention, not merely customer acquisition, is crucial for service an increasingly globalized world economy, cross-cultural differences
rms (Berry, 1980; Keaveney, 1995). While service quality, relation- in service quality and customer switching behavior deserve more atten-
ship quality, and overall service satisfaction are useful in improving tion from both the academia and practitioners in service industries
customers' intentions to stay with a service rm, what causes cus- (Chang & Chen, 2007; Choi, Kim, & Kim, 2011; Laroche, 2011;
tomers to switch from one service provider to another remains rela- Patterson & Smith, 2003). The complexity of the Chinese market creates
tively understudied (Bell, Auh, & Smalley, 2005; Keaveney, 1995; an ideal venue for academic research on service quality and service in-
Parasuraman, Zeithaml, & Berry, 1988). Understanding customer novation and other relevant variables in China's service market (Ladhari
switching behavior is important because a customer's switching be- et al., 2011; Mazaheri, Richard, & Laroche, 2011; Peng, Lu, Shenkar, &
havior results in the loss of the future revenue stream from that cus- Wang, 2001; Ramasamy, Goh, & Yeung, 2006; Roy, Walters, & Luk,
tomer. In particular, switching by a service customer is a loss for a 2001; Selmer, 2002; Tsui, 2006; Whetten, 2009; Zhou, Su, & Bao, 2002).
rm's high-margin sector of its customer base. The costs associated Following three decades of reform and rapid economic develop-
with acquiring new customers, including account setup, credit ment, China is on its way to becoming the next economic superpower.
checks, and promotional expenses, can be as much as ve times the China is the world's most populous nation, second largest economy,
costs of customer retention efforts (Keaveney, 1995; Peters, 1988). and the largest recipient of foreign direct investment. With over
Operating costs also associate with the rm's identifying the needs three trillion dollars in foreign currency reserves, China becomes mul-
of new customers as well as new customers' becoming familiar with tinational companies' favorite emerging market destination.
the procedures of the rm. Chinese culture is a collectivistic culture, quite different from the
individualistic cultures in the West, and group harmony and group
The authors thank Michael X. Song and two anonymous reviewers for their loyalty are socially desirable (Hofstede, 2001; Peng et al., 2001). Chi-
thoughtful comments on earlier versions of this paper. This study was partially sup- na's economy is experiencing a difcult transition from a planned
ported by a grant from the National Natural Science Foundation of China (Grant #: economy to a market economy, wherein the concepts of service and
71073040) and a Social Science & Humanity Grant of the Ministry of Education
service quality are relatively new to customers. As a result, on the
(Grant# 09YJC790061).
Corresponding author. Tel.: + 1 519 253 3000x4251; fax: +1 519 973 7073.
one hand, Chinese customers have more concerns about product
E-mail addresses: ldp0920@hit.edu.cn (D. Liang), maz@uwindsor.ca (Z. Ma), quality and brand loyalty, but less about service quality and service
qiliyun0127@163.com (L. Qi). encounters. On the other hand, the economic development and the

0148-2963/$ see front matter 2012 Elsevier Inc. All rights reserved.
doi:10.1016/j.jbusres.2012.03.012
1162 D. Liang et al. / Journal of Business Research 66 (2013) 11611167

extensive inuence from the West lead Chinese customers to become provider (Chen & Hitt, 2002; Colgate & Lang, 2001; Dick & Basu,
more aware of the quality of the service they receive. 1994; Murray, 1991; Nilssen, 1992; Patterson & Smith, 2003). For ex-
In addition, there are over 800 million mobile phone subscribers in ample, Kim, Klinger, and Vale (2003) dene switching costs as the
China, where erce competition exists among major mobile phone ser- costs associated with changing suppliers or service providers for a va-
vice providers for acquiring and retaining customers. Although Western riety of economic and psychological reasons. Lam et al. (2004) divide
scholars examine various aspects of customer switching behaviors from switching costs into ve categories, including money, effort, time,
different perspectives (Bell et al., 2005; Burnham, Frels, & Mahajan, new technology, and uncertainty, while Bell et al. (2005) argue that
2003; Jones, Mothersbaugh, & Beatty, 2000; 2002; Keaveney, 1995; switching costs include sunk costs, search costs, and setup costs.
Kerin, Varadarajan, & Peterson, 1992; Lam, Shankar, Erramilli, & Kim, Park, and Jeong (2004) combine previous research on customer
Murthy, 2004; Lieberman & Montgomery, 1988), they place very little retention and customer loyalty and contend that switching barriers
focus on service quality and customer switching behaviors in China's consist of switching costs, the attractiveness of alternatives, and in-
mobile phone service sector. The current study lls this research gap terpersonal relationships. Jones et al. (2000) argue that the loss of a
and provides insights into the brand switching behavior in the broader personal relationship with service providers is a form of switching
Chinese service sector. The results of this study will help to better un- barrier, and Dowling and Uncles (1997) nd that frequent yer pro-
derstand China's service industry and enrich the knowledge about grams form an economic switching barrier.
cross-cultural differences in service quality and service innovation While the literature on service marketing and service manage-
(Laroche, 2011; Luo & Hassan, 2009; Song, Di Benedetto, & Song, ment suggests that a number of factors relate to service switching be-
2000; Song, Di Benedetto, & Zhao, 1999). havior, the direct application of these ndings in the global marketing
and service management has limitations because prior work focuses
2. Conceptual framework on these issues in a Western context, not directly on service switching
in an international context. Further, low service quality and dissatis-
Research on service quality and service marketing reveals a varie- faction represent some of the reasons why customers switch service
ty of reasons why customers choose to stay with their service pro- in the West, but they do not account for all of the reasons. Conve-
viders, resulting in a broad array of literature on service quality, nience, price, and availability might enhance customer satisfaction
customer retention, and customer switching behavior (Bell et al., and ultimately affect customers' behavioral intentions (Cronin &
2005; Keaveney, 1995; Parasuraman, Zeithaml, & Berry, 1985; Taylor, 1992; Keaveney, 1995). In particular, service failure and dis-
Parasuraman et al., 1988). For example, Parasuraman et al. (1985, satisfaction may not have the same effect as in the West in a collectiv-
1988) provide a conceptual model of service quality and develop an istic culture where people often constrain their own feelings and
instrument (SERVQUAL) for measuring service quality. While their emotions (Hofstede, 2001), and thus are less likely to switch service
research bases solely on customers in the West, their pioneering providers as a reaction to service failure or dissatisfaction.
work provides theoretical guidance for the investigation of cross- In her grounded model of customer switching behavior, Keaveney
cultural differences of service quality and related customer behaviors (1995) proposes eight causal variables that may lead customers to
in an international context. Research shows that perceptions of ser- switch service providers across service sectors, including inconve-
vice quality, overall satisfaction, and service encounters affect cus- nience, price, service encounter failure, core service failures, competi-
tomer loyalty and repatronization in various locations (Keaveney, tion, and involuntary factors. The current study moves the research
1995; Kelley, Hoffman, & Davis, 1993; Rust & Zahorik, 1993). General- on customer switching behavior one step further to test its validity
ly speaking, research in this eld focuses on two major areas: (i) why in a Chinese context and to explore customer switching behavior in
customers stay with a service provider, and (ii) what are the switch- China's mobile phone service sector in order to extend the under-
ing costs and barriers. standing of service management and service innovation in a global
In investigating why customers stay with a service provider, context (Song, Song, & Di Benedetto, 2009; Uncles & Kwok, 2009).
LaBarbera and Mazursky (1983) use a panel study to demonstrate
the importance of satisfaction and dissatisfaction in explaining the 3. Method
behavior of repeat purchasers. They report that satisfaction level is a
signicant factor for customer loyalty formation. Gonul, Peter, and This study compiles a list of factors that may affect customers'
Sugawara (1996) measure the correlation between purchase timing switching behavior in China's mobile phone service sector from the
of households, repeat purchase, and the tendency to switch brands grounded model proposed by Keaveney (1995) on why customers
and conclude that different product characteristics inuence the ten- switch service providers and other studies on customer retention
dency to switch: when the purchase interval gets longer, consumers and service quality (Cronin & Taylor, 1992; Lee & Feick, 2001;
are more likely to switch, and when the product is essential and cus- Parasuraman et al., 1985, 1988; Patterson & Smith, 2003; Roos et al.,
tomers buy the product regularly, loyalty would continue. 2004). To verify the validity and relevance of these factors, this
Athanassopoulos (2000) explores the dynamic relationship between study conducts in-depth interviews of a randomly selected sample
customer satisfaction, service, and customer loyalty and suggests of 10 representatives of company subscribers and 10 individual sub-
that customer satisfaction has a positive effect on preventing custom- scribers of the mobile phone service in the Liaoning Province, a pop-
er switching behavior in the banking industry. Roos, Edvardsoon, and ulous region and industry center in the northern part of China. After
Gustafsson (2004) dene three kinds of triggers for switching behav- incorporating the feedback collected in these interviews, this study
ior: situational triggers, inuential triggers, and reactional triggers. creates a questionnaire tailored to collect information about customer
Situational triggers include demographic changes or changes in the switching behavior in China's mobile phone service market.
work situation; inuential triggers are factors associated with the
competitive situation such as competitors' efforts to increase their 3.1. Pilot study
market share; and reactional triggers include critical incidents in in-
teractions between customers and service providers. Based on this ty- To further test the validity of the questionnaire, this study con-
pology, they identify major switching determinants in various ducts a small-scale pilot test using two mobile phone service retailers
sectors, including banking, insurance, telecommunications, super- in Liaoning Province. The pilot study distributes about 200 copies of
market, and social insurance (Roos et al., 2004). the questionnaire with180 copies returned, for a response rate of
A number of scholars examine switching costs and barriers and 90%. Based on the psychometric properties of the questionnaire in
their effects on customers' decisions to stay with a particular service the pilot study, a revised questionnaire comprising 24 items is ready
D. Liang et al. / Journal of Business Research 66 (2013) 11611167 1163

for use in this study with each item representing one reason why cus- low signal quality in making or receiving calls, failure in delivering
tomers may switch their mobile phone service provider. Participants text messages, repeatedly sending the same text messages, sending
will answer on a 5-point Likert scale to what extent a given reason af- spam text messages/calls, and imposing too many testing programs.
fects their decisions in switching mobile phone service providers, The fact that failure to deliver promised services is the leading reason
with 1 representing the least important inuence and 5 representing for Chinese customers to switch mobile phone services is consistent
the most important inuence. with the ndings in the West and this result indicates the universal
importance of service quality across the globe (Keaveney, 1995;
3.2. Procedure Parasuraman et al., 1988). With the key product of mobile phone ser-
vice providers being mobile phone service, core service failure is es-
The main study collects the data with the revised questionnaire. sentially a failure in product quality, which clearly indicates the
This study rst asks participants whether they have the experience utmost importance for mobile phone service providers to rst focus
of switching mobile phone service providers, and only those who on the quality of their delivered products if they want to succeed in
have brand switching experiences participate in this study. This the competition for Chinese service market.
study distributes the questionnaire to four hundred individual mobile
phone service customers in the Liaoning Province, with 341 useful 4.1.2. High price
questionnaires returned, for a response rate of 85.3%; 46.9% of the High price is the second most common reason why Chinese cus-
resulting sample are male, with a variety of occupational backgrounds tomers switch mobile phone services. Although items for service
and different education levels (please see Table 1 for the demograph- prices, price deals, and affordable promotional packages all appear
ic data of the sample). in the earlier version of the questionnaire, the pilot study shows
that the most important of these reasons for customer switching be-
havior is high service price. The factor analysis supports this nding
4. Results and discussions
as well, with high price as the only one single-item factor among all
the categories of service switching reasons. Compared with
Table 2 shows the results of a factor analysis on the 24 different
Keaveney's (1995) study of Western consumers, which nds that
variables that may cause customers to switch mobile phone service
price is the third most common reason for switching services, Chinese
providers in China (using the SPSS 18.0, with the principal compo-
customers seem to place more importance on price as the Chinese
nent analysis and varimax rotation method). The factor analysis pro-
may be more sensitive to service price or service charge. Although
duces seven different categories of reasons why Chinese mobile
the mobile phone gradually becomes an indispensable device for
phone service subscribers switch services, with 63.4% variance
the majority of the Chinese population, mobile phone services are
explained. In descending order of inuence, these categories are:
still relatively expensive for many Chinese customers who are strug-
core service failure, high price, ethical problems, competition, incon-
gling to make ends meet when they try to catch up with the West in
venience, service encounter failure, and family/friends/group impact.
their standards of living.

4.1. Major reasons for service switching among China's mobile phone services 4.1.3. Ethical problems
This category includes unethical, illegal, or other behaviors from
4.1.1. Core service failure service providers that deviate from social norms or imposes psycho-
Core service failure is the most common reason why Chinese cus- logical annoyance on customers in order to obtain customers' compli-
tomers switch mobile phone services. Core service failure includes ance. For example, a service provider might continuously call or send
text messages to remind the customers to pay the bill or a service
Table 1 provider charges the customer a high fee for temporarily stopping
The demographic data of participants. service. An interesting result is that the factor analysis classies
Characteristic Total (N) Percentage (%) high fee for temporarily stopping service as an annoying behavior
by service providers, rather than a price issue. This result may be be-
Age
18 or younger 9 2.6 cause the charge for temporarily stopping service is not for using the
1925 165 48.4 service, but for not using the service. This practice deviates from the
2635 90 26.4 social norm of charging for service and is thus considered unethical,
3645 40 11.7 and thus further leads to customers' service switching to other service
46 or older 37 10.9
Occupation
providers.
Public sector employees 20 5.9
Professionals 21 6.1 4.1.4. Competition
Managerial personnel 4 1.2 With the rapid development in China's mobile phone market, the
Self-employed 87 25.5
major competitors, including China Mobile, China Telecom, and China
Company employees 82 24.0
Students 78 22.9 Unicom, are all ghting for market share and protability. These ser-
Retirees and others 49 14.4 vice providers continuously introduce attractive price packages and
Gender promotional deals in order to retain their own customers and attract
Male 160 46.9 more customers from their competitors, sometimes even resorting to
Female 181 53.1
Education
price wars to improve their own positions in the market. These ser-
Middle school or lower 94 27.6 vice providers may also offer better service packages or better prod-
High school/vocational school 111 32.6 ucts that provide special status and recognition that appeal to
College 95 27.8 customers' sense of social status and identity. Compared with the
University or above 41 12.0
ndings of Keaveney (1995), where competition is the third least im-
Monthly income (RMB)
499 or below 109 32.0 portant category, competitive alternatives seem to play a more im-
500999 112 32.8 portant role in Chinese customers' decisions to switch their service
10001499 74 21.7 providers. This result may be due to the fact that Chinese mobile
15001999 22 6.5 phone service users are more sensitive to service price and thus are
2000 or above 24 7.0
more likely to switch to better deals from other service providers.
1164 D. Liang et al. / Journal of Business Research 66 (2013) 11611167

Table 2
Factor analysis of service switching causes.

Variable items Factor loading

1 2 3 4 5 6 7

Service encounter failure


1. Bad attitudes from service personnel 0.76
2. Service personnel's unprofessional manners 0.72
3. Unresponsive to customer complaints 0.65
4. Cannot get support through the call center 0.64
5. Failure to deliver billing notice in a timely manner 0.51

Competition
1. Competitors have a better reputation 0.77
2. Ads from competitors impress me 0.70
3. Competitor products better t in with my social status/identity 0.69
4. Competitors introduce better packages 0.66

Inconvenience
1. Insufcient number of retailers/kiosks 0.79
2. Limited methods/locations for bill payment 0.76
3. Short hours of operations at retailers 0.74
4. Long transaction processing time at retailers 0.50
5. Limited choices in prepaid phone cards 0.41

Core service failure


1. Sending the same text messages again and again 0.76
2. Failure in delivering text messages 0.66
3. Too many spam text messages/calls 0.63
4. Too many unnecessary testing programs 0.50
5. Low signal quality in making or receiving calls 0.49

Ethical problems
1. Keep calling/sending text messages to remind customers of bill payment 0.66
2. The fee for temporarily stopping mobile phone service is too high 0.62

Family/friends/group impact
1. Companies buy mobile services for employees 0.67
2. Inuence from family/friends 0.67

Price
1. High price 0.89

Variance (%) 26.04 9.80 7.19 6.11 5.32 4.63 4.27


Eigenvalues 6.25 2.35 1.72 1.47 1.28 1.11 1.03

4.1.5. Inconvenience regard to service quality and are thus less likely than their Western
This category includes situations where customers feel the incon- counterparts to switch service providers as a result of poor customer
venience in the product of a service provider, such as an insufcient service encounter.
number of retail locations/kiosks, limited methods of bill payment,
long transaction processing times, short hours of operation, and lim- 4.1.7. Family/friends/group impact
ited choices of prepaid phone cards, which indicates the importance This last category, also the least inuential reason for switching
for service providers to build an extensive service network across behavior, refers to the inuence that people experience from family,
the country and to implement more customer-oriented business friends, and the companies where they work. In China, many mobile
practice in order to serve customers better. phone service providers introduce family plans or friend plans that
offer cheaper prices for calls made among family members or friends
4.1.6. Service encounter failure who use the same service company or network. As a result, if a custo-
This category relates to the quality of the interactions between mer's family members or friends switch service providers, he or she
customers and the employees of the service rms, which is of imme- may switch too. In addition, some companies purchase mobile
diate relevance to mobile phone service providers as well as other phone service for their employees. As a result, if a company chooses
service rms. Service encounter failure includes bad attitudes from to switch service providers, so will the employees.
service rm personnel, the unresponsiveness to customers' com-
plaints, the unprofessional manners in dealing with customers, and 4.2. The impact of demographic factors
the failure of service providers' call centers to provide support. Com-
pared with the results of Keaveney's (1995) study, where service en- This study uses a one-way multivariate analysis of variance (MAN-
counter failure is the second most common reason for switching OVA) to examine the impact of gender, age, education level, and
service providers in the West, service encounter failure is the second monthly income on the perceived importance of various causes of
least important factor for Chinese customers. This result reveals the customer switching behavior. The results show that the perceived
transitional nature of China's economic system which is changing importance of service encounter failure in switching decisions
from a planned economy mainly focusing on the quality of goods/ is greater for male customers than female customers (F = 4.85,
products to a market-centered economy focusing on both service p b .028). This nding reects the fact that women are more tolerant
and product quality. Chinese customers are less demanding with and sympathetic in the Chinese society (Ma, 2010). No gender
D. Liang et al. / Journal of Business Research 66 (2013) 11611167 1165

differences occur for any other category of customer switching be- China, indicating that the service market is still developing and cus-
havior causes. tomers' perception still focuses on product quality rather than on ser-
Perception of family/friends/group inuence on switching deci- vice quality.
sions varies among different age groups (F = 4.05, p b .003). In gener- Third, this study shows that ethical problem is the third most im-
al, the inuence of family/friends/group decreases as age increases, portant reason why Chinese customers switch service providers, but
except for the 18-or-younger group who perceive the family/ ethical problem is the second least important category for Western
friends/group impact as being weaker than the 45-or-younger customers (Keaveney, 1995). This cross-cultural difference might be
group but stronger than the 46-or-older group. No age differences due to the fact that relatively fewer unethical incidents take place in
occur for any other category of service switching causes. the West in dealing with customers, and thus very few customers
The inuence of service encounter failure and family/friends/ switch service providers because of ethical problems in the West. In
group impact becomes stronger as education level increases addition, the impact of family/friends/group is not among the top cat-
(F = 2.46, p b .033 and F = 2.95, p b .014, respectively), indicating that egories of switching behavior causes for Western customers. In other
people with higher educational backgrounds are more sensitive to words, the impact of family/friends/group is not as important in the
the quality of interactions with service personnel and the inuence West as in China. This result reects a typical phenomenon in the col-
from the family/friends and the companies where they work; at the lectivistic culture where families/friends and groups often play very
same time, the inuence of high price decreases as educational level important roles in people's everyday life (Hofstede, 2001; Ma &
increases (F = 2.35, p b .041), which shows that people with higher Jaeger, 2005).
educational background are less sensitive to service price in deciding
whether to switch mobile phone service providers.
Perception of the inuence of service encounter failure on switch- 4.4. Implications and conclusions
ing decisions also varies among different income levels (F = 3.24,
p b .013). The lowest monthly income group (RMB 499 or below) The results of this exploratory study have important implications
and the highest monthly income group (RMB 2000 or above) both in- for researchers and practitioners in service marketing and service
dicate service encounter failure has less inuence in their service management in the international context. From a theoretical perspec-
switching decisions than the other income groups. No signicant dif- tive, this study contributes to the literature of service quality and ser-
ferences occur for any other categories of service switching causes vice innovation by extending the understanding of cross-cultural
among different income groups, which is perhaps surprising given differences in the perceived importance of different aspects of service
that high price is the second most common reason participants in quality and their impact on service switching. The insight into why
this study give for switching services. But this may be an indicator Chinese customers switch mobile phone service providers advances
that people at all income levels nd high price an inuential factor contemporary theory on service marketing by making the theory
in their service switching decisions. more robust to help understand service management in the global
market. Future research would be useful in extending this perspective
4.3. Discussion to understand Chinese service market and customer switching behav-
ior to broaden the scope of service research and facilitate service
This study of service switching behavior in China's mobile phone innovation.
service shows that core service failure, high price, and ethical prob- The identication of seven major categories of customer service
lems of service providers are the top three factors that lead customers switching causes, including core service failure, high price, ethical
to switch service providers and that family/friends/group impact and problems, competition, inconvenience, service encounter failure,
service encounter failure are the least important factors. These results and family/friends/group impact, has important implications for ser-
are similar to the ndings on the perception of service and service vice marketing and service innovation research. Service literature
quality in the West (Keaveney, 1995), and thus provide important in- has largely focused on service quality, satisfaction, quality of relation-
sights for service marketing and service management practitioners in ship, and service design as antecedents of customer retention and
a global context. customer loyalty (Keaveney, 1995). But this study shows that price,
The results of this study also reveal some specic characteristics of competition, ethical issues, and the impact of family/friends/group
the Chinese mobile phone service market and the perceived impor- are also important to better understand customer defections from
tance of different aspects of service quality that are important in glob- service rms, especially in a global context.
al service marketing. First, core service failure is the most important The ndings of this study also have important implications for
factor that causes Chinese mobile phone service customers to switch practitioners in the elds of service innovation and service marketing
service providers, very similar to that in the West (Keaveney, 1995). and for marketing departments of multinationals that are expanding
Such a consistent cross-cultural nding conrms the importance of into Chinese service markets. The ranking of perceived importance
the quality of the core service provided by service rms: the key to of different causes of customer switching behavior suggests a variety
success for service rms in competition, whether domestic or global, of areas in which service practitioners might take action for service
is to focus on providing high-quality products (services) to their innovation in order to prevent customers from switching to other ser-
customers. vice providers. For instance, with core service failure as the most im-
Second, Chinese mobile phone customers rate high price as the portant cause for service switching in Chinese customers, a no-defect
second most inuential factor in their service switching decisions, policy to deliver technically correct services for every customer
whereas Western customers consider service encounter failure to be would be effective in reducing customer switching and increasing
the second most important factor, and high price the third most im- customer retention in China.
portant factor (Keaveney, 1995). Interestingly, Chinese consumers In addition, Chinese mobile phone service customers react strong-
rate service encounter failure as the second least important factor in ly to ethical problems of service rms, an implication for which is that
their service switching decisions. This comparison shows that, on service rms should maintain high moral standards in dealing with
the one hand, while high price will lead to switching behavior both Chinese customers to prevent customer defection. Chinese service
in the West and in China, Chinese customers in the mobile phone ser- rms largely ignore this aspect in the mobile phone sector where
vice sector are more sensitive to price, which is consistent with the the few large service rms are often very arrogant in treating their
differences in the standards of living between the West and China. customers. Service rms that do better in this aspect should be able
On the other hand, service encounter failure is of low importance in to gain unique competitive advantage, an important step for service
1166 D. Liang et al. / Journal of Business Research 66 (2013) 11611167

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