Punitive switching costs and behavioral responses in the context of contractual services

Yi-Fei Chuang, Cong-Minh Dinh and Wei-Min Lu

Management Research Review, 2023, vol. 46, issue 11, 1559-1584

Abstract: Purpose - Contractual services are characterized by features such as termination fees, long-term commitment, and complex terms. When customers find better deals from other providers, they may want to switch, but contractual obligations prevent them from doing so. Thus, this study aims to draw upon the stimulus-organism-response paradigm and theories of emotion regulation to examine how punitive switching costs (PSCs) can evoke negative emotions (NEs) from customers and, consequently, lead to negative behavioral responses in contractual service settings. Design/methodology/approach - This study collected data from 395 customers of telecommunications companies, fitness centers, tutoring firms/centers, and house leasing companies in Taiwan. We tested the hypotheses using partial least squares structural equation modeling via SmartPLS 3.0. Findings - The results show that NEs partially mediate the relationship between PSC and customers’ switching intention and negative word-of-mouth. This study also finds alternative attractiveness (AA) and service recovery (SR) do not moderate the PSCs–NEs relationship, but AA does directly influence NEs. Originality/value - First, this study contributes to the literature on switching costs by exploring how PSC exerts a detrimental impact on behavioral responses. Second, this study adds to the literature on service failures by identifying the mediating role of NEs in such a relationship.

Keywords: Punitive switching costs; Negative emotions; Switching intention; Negative word-of-mouth; Alternative attractiveness; Service recovery; Stimulus-organism-response; Emotion regulation; Contractual service; Service lock-in (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:mrrpps:mrr-07-2022-0474

DOI: 10.1108/MRR-07-2022-0474

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