The moderating role of perceived risk in loyalty intentions: An investigation in a service context

Purpose: The objectives of this study are twofold: to investigate the impact of service encounter quality dimensions on perceived value, customer satisfaction, and loyalty, and to examine the moderating effect of perceived risk on the relationship of loyalty with perceived value and customer satisfaction in high contact services. Design/methodology/approach: A questionnaire survey was adopted. Data were collected from customers who had used either hairdressing services or health care services in the past three months. Confirmatory factor analysis was used to evaluate the validity of the measures and structural equation modeling was used to assess the hypothesized relationships. Findings: Technical quality and empathy were found to display a positive effect on satisfaction in both hairstylist and physician samples. Physical environment was found to display a positive effect on satisfaction in the physician sample, but not in the hairstylist sample, and its effect on perceived value was non-significant in both samples. The results also showed that there was a significant difference between low and high perceived risk groups in both samples with respect to the relationship between satisfaction and loyalty, and the relationship between perceived value and loyalty. Research limitations/implications: The study was conducted in a professional and relational service context, thus the scope for generalization of the results to other contexts may be limited. Moreover, this study focused on performance risk. Originality/value: This study provides empirical support for the moderating role of perceived risk in the relationship between satisfaction and loyalty, and the relationship between perceived value and loyalty.