James L. Thomas, Scott J. Vitell, Faye W. Gilbert and Gregory M. Rose

Service marketers and retailers have long been interested in determining what drives customer satisfaction ratings. Customers often experience difficulty in judging the quality and value of services due to their inherent intangibility. To assess the service experience, customers must use tangible and intangible evidence found within the service environment. In this research, we examine customer responses to ethical and unethical cues in the environment and evaluate the impact of these ethical evaluations upon satisfaction with the service.

Our results confirm prior research showing that customers evaluate cues found within the service environment. Customers notice ethical and unethical evidence and perceptions formed from this examination impact satisfaction (dissatisfaction) with the service received, even in instances of service success. Perhaps of greatest interest, our results show that when ethical conduct is expected, evidence to the contrary (unethical conduct) has a strong impact on customer evaluations of service performance. On the other hand, when ethical conduct is expected, cues signaling that such conduct will be provided do not result in any enhanced customer response.

Since customers lack tangible features to use to evaluate service quality, other cues, such as a codes of ethics displayed on the wall and/or accurate price estimates, may be used to judge service performance. The service context for this study, automotive repair, is one where people generally rely on the service provider to ensure a proper solution for a problem. Using videotaped scenarios, a customer is shown to experience service success (the car is repaired and the price charged is the same) with three different cues provided in the environment: ethical, neutral, and unethical.

Based upon traditional American expectations of trust, we believe that our respondents expected ethical treatment. Hence, they do not react to the positive cues in the service environment. We found, for example, little difference in respondent performance ratings between the ethical cue scenario and a neutral scenario. We conclude that as long as the service provided lies within an expected norm of treatment, respondents are pleased with the ethics of the provider and with the performance of the service. However, when respondents are exposed to unethical cues, or behavior that is outside the expected norm, perceptions of ethics and the evaluation of the performance of the service diminish dramatically.

Specifically, respondents who encountered "unethical" cues, such as a wide price range for an estimate of the cost, were less sure of the ethics of the provider and were clearly less satisfied with service performance despite the fact that the car functioned in each case. For these respondents, successful service performance was not sufficient to overcome perceptions of questionable ethics, particularly for services that require trust such as automotive repairs.

The implications of the study may affect the due diligence with which service providers approach the concept of ethics within the environment. Employees who engage in customer contact must understand and receive appropriate training for such encounters. The results of this study clearly show the implications of actions that cause customers to question the ethics of a provider in that satisfaction declines despite service outcome success.

Managers of service firms or of the service component for retail operations should manage participant perceptions by articulating the values of the organization to all constituents. If customer contact employees are to communicate the values of the organization to customers, then upper level managers in the firm must identify and aid employees to avoid unethical signals to any constituent group.