Apology Or Denial? Violation Type,Response And Consumer Distrust

Violation is a ubiquitous problem that affects every firm at some point in time. It occurs when the seller violates customer’s expectations in the transaction. Previous research indicates that violation increase customers’distrust. When distrust emerges, it strongly depresses economic transactions between two parties. In e-commerce, the public nature of the customer feedback makes the negative consequences of violation even worse. Therefore, a firm’s ability to effectively respond to these complaints is a critical element of its marketing strategy. Conventional wisdom suggests that firms should apologize. While it is important to always show empathy and understanding towards the customers, firms do need to be strategic in terms of their responses. Is apology always the best way to restore the trust and long-term relationship? Are there any circumstances that the firm should deny the alleged violations? We argue that the type of violation is a key element to consider and the firms’responses depend on how customers perceive the violation.Previous research has documented two types of violations:integrity-based and competence-based violation. Research indicates that this kind of competence-based violation is unstable and can be changed easily. The reason is that expertise and skills can be improved through training and learning. Relative to competence, integrity-based violation is stable and difficult to be changed in the future. Research indicated that if the individuals found to be dishonest on one occasion they are more likely to be deemed dishonest in general.When a violation occurs, firms need to respond promptly and provide an explanation. A good social account can have the power to change the customers’initial attribution, and mitigate distrust. Research has documented two different ways of responding to a violation, i.e., apology and denial.We argue that depending on the situation, either social account can help mitigate the distrust and lead to positive outcomes. Specifically, when the violation is perceived to be competence based, apology should be more effective than denial. This is because competence is a relatively unstable attribute, which can be easily improved. In this instance, the willingness to admit an error and make change implied in an apology increase customers’belief that the same violation will be corrected in the future. Therefore the distrust will be mitigated and purchase intention will be higher. On the other hand, if the violation is perceived to be integrity-based, apology can backfire as integrity is a relatively stable attribute that is less changeable. Assuming the responsibility cannot convince the customers that the violation will not occur in the future. Instead, denial can help restore the integrity that is being questioned and mitigate distrust. Therefore, we propose that if the violation is competence-based, apology is more effective than denial in mitigating distrust. If the violation is integrity-based, denial is more effective than apology. The perceived stability of the violation underlies the proposed relationships.Along with an apology or denial, firms often propose some remedial action plan in their response. If a remedial action plan is included in the response, it could show the commitment to change. Even in the case of an integrity-based violation where integrity is perceived to be a stable attribute, an action plan can override this perception and increase people’s belief about the future improvement. Therefore, we propose that with an action plan, apology is always a more effective strategy to mitigate distrust, compared with denial.Similar to violation type, another relevant factor is the domain of the violation. Some violations are more controllable and quick improvements are more realistic such as packaging problems, while other violations are more difficult to fix, at least in the short run, such as the unsatisfactory product quality. In the latter case, we argue that despite the changeable nature of the competence and the willingness to improve signaled in an apology, the perceived stability of the violation will still be high. In this instance, when the domain of the violation is unchangeable, we propose that denial will be more effective in mitigating distrust than apology, regardless of the violation type.In addition to violation domain, another factor that relates to a violation’s changeability is the implicit belief about the violation. Some people believe the integrity is incremental, they believe that integrity is a dynamic character that can be cultivated and developed over a lifetime, while other people believe that integrity is entity, in other word, they believe that people cultivated and developed their integrity over a long time, it hardly to be changed in the short run. When the implicit belief of integrity is incremental, we argue that apology is more effective than denial. When the implicit belief of integrity is entity, we propose that denial will be more effective.As we have discussed the effect of customer’s perceived stability of violation on distrust and purchase intention. While, in fact, there are some violations happened again and again, the facts have shown that the violation is stable. In this situation, apology is less effective in mitigate distrust and increase purchase intention. The reason is other customers’negative reviews indicated they are not remedy the violation after they apology. Sometimes seller only got few complains and a lot of positive reviews in the later time, in other word, the violation is unstable. In this case, if the seller apology to frame the violation to be unstable. Other buyers’ positive reviews in later time have proved the sellers keep their promise of apology. It is better than denial fail to convey a sincere intent to avoid such violations.Six studies were designed to test these hypotheses. These studies contribute to the literature on violation repair and attribution theory in many ways. Firstly, this dissertation takes an in-depth look at the customers’attribution and inference process following a violation, and incorporates the concept of changeability in consumers’stability perception of the violation, a critical determinant of trust and purchase intention. Secondly, while we acknowledge the power of apology, we also identified its boundaries. We show that the intent to change communicated in an apology is not sufficient to recover the distrust, and it works only when the violation cause is relatively high in changeability (e.g., competence) and the domain of the violation is easy to change. Under low-changeability circumstances, on the other hand, we suggest that a defensive strategy such as denial can change consumers’belief more effectively by modifying their judgment on the initial violation. In addition to violation type and domain, the pattern of the reviews for a product offering can also reveal the changeability of the problem. Moreover, this research highlights the importance of remedial action in violation-response and its power in altering people’s changeability perception. It can strength people’s belief in change and enhance changeability even in situations that are innately more stable.