Nettelbosje 2 9747 AE Groningen

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Master Thesis

Master of Science in Business Administration

Specialization Organizational & Management Control

Title: The influence of culture on customer complaint behaviour

Faculty of Economics and Business

Nettelbosje 2

9747 AE Groningen

Organization of graduation

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Preface

This master thesis is the final work of my graduation for the Master of Science in Business Administration: Organizational and Management Control at the university of Groningen. I wrote this thesis during an internship at Procter and Gamble Pet Food based in Coevorden, from August 2008 till February 2009.

During this research, I received support, information and advice from different people. First of all, I would like to thank my supervisor Dr. C.P.A. Heijes for his involvement, positive feedback and patience during the whole trajectory of this master thesis.

In addition I would like to express gratitude to my supervisor at Procter and Gamble, Gerben Steggink, for the useful ideas, feedback and support and giving me the opportunity to work on my master thesis in freedom and between friendly colleagues.

Finally, I would like to thank my boyfriend, family and friends for their understanding and interest during this graduation period.

Finishing this study means the start of a new exciting period; following the Master of Science in teaching Economics. I am looking forward to this new period and I am sure that the

experiences of past years will be of great help during this new period.

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Management summary

This thesis is the result of both a literature and a practical research about the influence of culture on customer complaint behaviour. This research is very interesting, because to date only a little research has been carried out to examine whether customer complaining

behaviour differs across different cultures (Liu et al., 2001). It is also a very important topic, because gaining understanding of the cross-cultural differences in different countries learns organizations how to manage the customer complaints process effectively what contributes positively to customer relations.

The practical part of this research is carried out at Procter and Gamble Pet Food based in Coevorden, the Netherlands. With a literature study, it is attempted to gain more insight in customer complaint management within organizations. Besides, some different cultural models are explained to gain more knowledge foundation about the concept culture. These are the models of Edward T. Hall (1966, 1976), Geert Hofstede (1980, 1991, 2001), Trompenaars and Hampden-Turner (1997), Schwartz (1994) and Robert House (1994).

Many dimensions of the different models have their origins in dimensions of culture identified by Hofstede’s model. Hofstede developed a model with five universal dimensions of culture that are largely independent of each other. These cultural dimensions are power distance, individualism-collectivism, masculinity-femininity, uncertainty avoidance and long-term orientation. Because Hofstede’s model is the most robust, it is used in this thesis to explain culture’s influence on customer complaint behaviour.

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Chapter 1: Introduction

In the introduction of this master thesis it is described why the topic of this research is such an important and interesting topic. Besides, the motive for research is explained.

§1.1 Background of the research

One of the most important trends managers face is the increasing emphasis on globalization. In the past, many organizations competed mainly within their home country, but today many firms sell their products all over the world. It is very unusual and a rare situation that a manager nowadays does not have to make decisions in a global context.

One factor that is increasingly popular during the last years and that influences the success of international oriented firms is national culture. The more firms from different parts of the world approach each other, the more important is the concept culture. Culture is a widely researched topic. Some researchers explored the corporate culture and its aspects on firm level, while other researchers focused on the national culture and its aspects on country level. However, to date only a little research has been carried out to examine whether customer complaining behaviour differs across different cultures (Liu et al., 2001).

In this thesis, the customer complaint management system of P&G Pet Care is considered and attention will be paid to the concept culture and the influence of cultural differences on customer complaint behaviour.

Culture is defined on the basis of Hostede’s model. With his dimensional model, differences in customer complaint behaviour in three countries, the United Kingdom, France and Japan, are examined.

§1.2 Motive for research

∗ More information about P&G Pet Care and the Consumer Care Line is provided in §4.1 and §4.2

P&G Pet Care* strives for providing pet products of superior quality. They employ very

strict quality assurance processes to observe the regulations for delivering value to the

customer and to comply with continuous quality improvement. Providing superior quality also means listening to the customer and handle complaints in an efficient way. Complaint

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Currently, P&G has three streams of customer complaints and customer claims. These customer complaints and claims are coming from:

Consumer Care Line*

P&G owned distribution centres, which do have an own consumer care line in their country

Non P&G owned distribution centres, which typically only have a quality assurance at site.

Because P&G Pet Care is a multinational the existing national differences between countries should be taken into account. Multinational companies emphasise these differences and respond with increased flexibility and business strategies to meet local preferences. These cross-cultural differences should also be identified when the complaint handling process is considered. P&G requested this research because they want to understand how cross-cultural differences between countries influence the complaining behaviour of customers.

Understanding the complaining behaviours and cultural aspects of customers from different countries may benefit the management of customer relations.

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Chapter 2: Research design

In this chapter the research design is discussed. This research design includes the problem statement that is subdivided in the research objective, the phrasing of the research question, and the preconditions of the research. Then, the sub questions come up. After this, different types of research are discussed and the type of research that fits this master thesis best. To conclude this chapter, the methodology of this research is handled.

§2.1 Problem statement

To carry out a thorough research, the ideas of De Leeuw (2001) will be used. In his book he describes that a problem statement should include a research objective, the phrasing of a research question and the associated preconditions.

This paragraph will focus on formulating the sub-parts of the problem statement. The research focuses on the problem described in paragraph 1.2.

The problem statement should meet three requirements. The problem statement should be relevant, it should be thoroughly and it needs to be an efficient problem statement.

§2.1.1 Research objective

* More information about P&G Pet Care is provided in §4.1 The research is requested by Iams, a division of Procter and Gamble.

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UK Japan

France

Figure 1 The three selected countries.

§2.1.2 Research question

In what size do cultural differences influence the functioning of Procter and Gamble’s customer complaint management system and how should these cultural differences be taken into consideration when analyzing customer complaint information?

§2.1.3 Preconditions

According to De Leeuw (2001. p.85) the preconditions can be broke up into product-preconditions and process-product-preconditions.

The product-preconditions for this research are:

• The master thesis is written in English language, because the master Organizational and Management Control is completely in English since the educational year 2007-2008.

• The master thesis is credited by 20 European Credits (EC).

The process-preconditions for this research are:

• The research takes place in the period September 2008-February 2009.

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§2.1.4 Relevance, thoroughly and efficiency Relevance

De Leeuw (2001, p.23) supposes: “The relevance-requirement implies that one can indicate if produced information associates the need of information”.

Relevance includes: timely availability, understandable for the ones that need to work with it and to conclude, association with the policy problems.

When this research is finished, it is directly applicable for analysing differences in customer complaint behaviour, so this research is timely available. The people for which this research is written are all quality assurance managers of Procter and Gamble who have an academically background. This may imply that the ones who have to work with the produced information understand the information. This research is automatically associated with the policy

problems of Procter and Gamble, because it will contribute positively to understanding the influence of cultural differences on the customer complaint processes.

Thoroughly

According to De Leeuw (2001, p.23) thoroughly includes all aspects of science that make it possible the results are confidentially. Thoroughly includes: accuracy, precision and

consistency. To accomplish these three aspects, first the problem should be well defined. Then

this research will be approached with literature and after this it will be coupled at the practice situation. On the basis of interviews and the analysis of these interviews the issue will be explored further.

Efficiency

De Leeuw (2001, p.24) defines efficiency within scientific management research as: “striving

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§2.2 Sub questions

To answer the research question, there are different sub questions. These are divided in theoretical and practical sub questions.

Theoretical sub questions:

1) What is known in literature about customer complaint management? 2) How is a good customer-focused complaint system defined?

3) How is culture defined and how is it operationalized in literature?

4) How do cultural differences influence customer’s complaining behaviour?

Practical sub questions:

5) How is the customer complaint management system of Procter and Gamble composed and how are cross-cultural differences taken into consideration by establishing the current system? 6) How do cultural differences influence complaining behaviour of customers of Procter and Gamble Pet Food?

7) In what way should cultural differences be taken into consideration when Procter and Gamble wants to improve the functioning of current customer complaint management system?

§2.3 Types of research

De Leeuw (2001) distinguishes different types of research. Firstly there is the distinction between scientific and practical research. During practical research there is presence of a customer that needs knowledge. This research is than defined as a practical research when the extent of connection with the customer counts as foundation. De Leeuw (2001, p.77) defines five types of research. They are summed up in order of increasing connection with the customer:

1. Pure scientific research 2. Social relevant research 3. Policy relevant research 4. Policy supporting research 5. Problem solving research

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and to satisfy a part of the total needs of information. The concept customer means there are agreements between researcher and customer” (De Leeuw, 2001, p. 76). However, this research also contains some elements of a social relevant research. “A social relevant research aims to find general information that explicitly relates to a social relevant phenomenon currently or in the future” (De Leeuw, 2001, p. 75).

§2.4 Methodology of the research

This research can be split up in two parts. The first part of this research is a literature study. For the literature study, the EBSCO Host database, Emerald and Google Scholar are used to find relevant articles about customer complaint management and cross-cultural aspects that influence the differences of customer behaviour between cultural different countries. Besides the research databases, books are used to find information.

One of the main problems is that the influence of cultural aspects on customer complaint behaviour is an under-researched topic (Liu et al., 2001). Little information was available to accomplish the literature part of this study. Nevertheless, this makes it more interesting for the researcher to carry out practical research and discover new findings. Out of the literature there will be particular points of interest that will give direction to the practical section which will create a more pragmatically focus.

From this point of view the second part of this study is best typified as a policy supporting research. Policy is defined as the system of purposes and measures in behalf of control (de Leeuw, 2001)

To answer the practical sub questions 5, 6 and 7 data are collected on the basis of existing data rapports and interviews. These interviews will be taken at the members of the Consumer Care Line; the supervisor of the European Consumer Care Line, four advisors of the English Care Line, four advisors of the French Care Line, the quality managers of Japan and the Netherlands and several salespersons of Procter and Gamble.

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Chapter 3: Theoretical foundation

This section deals with customer complaint management within organizations. To start, complaint management is introduced and the challenges organizations face in customer complaints handling are discussed. Next, various complaining alternatives are explored. After that, the complaint handling framework of Tax et al. (1998) is explained. The last paragraph presents a Customer Complaint Management System (CCMS) which includes tools from Total Quality Management.

§3.1 Complaint management

Customer complaint behaviour (CCB) is defined by Jacoby and Jaccard (1981) as “an action

taken by an individual which involves communicating something negative regarding a

product or service either to the firm manufacturing or marketing that product or service or to some third-party organizational entity”.

Complaint handling can have a significant effect on customer satisfaction and customer retention rates and word-of-mouth recommendations. In recent years, complaint management has found growing attention in research as well as in practice, along with the intensive

discussion of customer retention (Brown et al., 1996). Customer complaints are an inevitable part of doing business. What sets excellent companies apart is their ability to turn a

dissatisfied customer into a delighted customer. Complaint satisfaction leads to positive attitude changes, positive word of mouth and increased willingness to buy from the same supplier again. Conversely, complaint dissatisfaction has the potential to worsen the situation, stimulate negative word of mouth and drive customers to competitors. Every customer complaint should be seen as an opportunity: a chance to understand where the organization is failing to meet the customer’s expectations, and use this to strengthen the organization. To achieve this, employees must be empowered to address complaints effectively and quickly, and management must have the tools to measure the ways in which the company systems are letting customers down. If handled properly, customer complaints can be some of the most valuable feedback a company can get.

Most organizations that face big challenges in customer complaints handling (Zairi, 2000):

• Suffer from a lack of systemic approach to complaints handling.

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• Are ill-equipped in terms of systems and processes for logging in complaints, processing them, etc.

• Are not proficient with measurement and in particular in non-financial areas such as customer satisfaction and complaints.

• Have adverse cultures and too much of “blame and reprimand” practices.

• Have not embraced the concept of quality management and its related concepts.

The most successful organizations in terms of customer complaint management tend to comply with all of the above mentioned points and much more. The challenge for any organization wanting to succeed in the marketplace and being profitable must start with acknowledging that the customer has to be central in organizational activities. The first purpose of any organization should be serving the customer and then as a result becoming profitable. Not the reverse.

§3.1.1 Complaint behaviour alternatives

There are various alternatives to express customer dissatisfaction. From literature, four sets of actions to differentiate complainers from non-complainers can be summarized.

First, dissatisfied customers can take no actions. Doing nothing or not repurchasing a firm’s product or services are legitimate responses to dissatisfaction (Day, 1984). Singh (1990) classifies these customers as “passives”.

Second, customers can take private actions which refer to actions involving only people internal to the customer’s social circle in informal ways. This may include changing the brand/supplier, worth-of-mouth communication or stop using the product or service. This group of customers is classified as “voicers” (Singh, 1990).

Third, customer can take some form of public actions. These actions involve people and organizations external to the customer’s social circle in more formal ways. This may be seeking redress directly from the seller or manufacturer, reporting to a customer agency, registering a complaint with the seller or manufacturer or taking legal action. This group is classified as “irates” (Singh, 1990).

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negative information (Singh and Wilkes, 1996). This last group is classified as “activists” (Singh, 1990).

Customers who take public actions offer more benefits to companies than customers who take private actions. Public actions make companies aware of the problems customers face and so opportunities are provided for companies to turn dissatisfaction into satisfaction and retain their customers. Besides, it is very important to retain current customers because it will increase their loyalty and their positive word of mouth will attract new customers.

§3.1.2 Complaint handling framework

In this paragraph, on the basis of the complaint handling framework of Tax et al. (1998) a comprehensive understanding of complaint handling evaluations will be provided. This framework integrates complaint handling with variables of relationship marketing and contains concepts from justice literature. They created this framework to help managers developing effective complaint handling programs.

Complaint handling refers to the strategies firms use to resolve and learn from service failures in order to (re)establish the organization’s reliability in the eyes of the customer (Hart,

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Figure 2 The complaint handling framework of Tax et al. (1998)

From the perspective of processes, complaint handling can be viewed as sequence of steps in which a procedure, that starts at the customer with communicating the complaint, creates a process of interaction through which a decision and outcome occurs. Perceived justice is very important in complaint handling because it creates a theoretical understanding of how

customers evaluate responses to their complaints. Justice literature suggests that each part of this stepwise process is subject to fairness considerations and that each aspect of a complaint resolution creates a justice episode (Bies, 1987). Justice offers a comprehensive framework for understanding the complaint process from beginning to completion.

Three dimensions of justice

Distributive justice: is concerned with fair allocation of resources and benefits available. Some possible criteria of distribution are equity, equality and need. Equity means that the outcomes of an exchange should be in proportion to the input while equality means that the outcomes of an exchange are equal regardless of contributions. Distribution on the basis of need means that the outcome is based on requirement regardless of contributions.

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Procedural justice: is concerned with perceived fairness in making and implementing

decisions according to fair processes. Rules must be followed consistently and in such a way so that an unbiased decision is generated. There are five elements of procedural justice; process control, decision control, accessibility, timing/ speed and flexibility. These elements suggest that a fair complaint procedure provides the complainant with some control over a decision process or decision outcome, the complaint procedure is easy to access, is flexible and does not need a big amount of time to be completed. People that carry out the procedures should be neutral. If complainants believe the procedures to be fair, they will be more likely to accept the outcomes and conflicts can be resolved in ways that encourage the continuation of the relationship between the organization and the complainant even when outcomes are unsatisfactory to one or both parties.

Interactional justice: is concerned with perceived fairness of internal and external communication about decisions and procedures. Open, transparent and personal communications make people more sure about themselves and better motivated and

concerned. The inclusion of interactional factors helps explain why some people might feel unfairly treated even though they would characterize the decision- making procedure and outcome as fair. Customer satisfaction is affected by aspects of communication between customers and employees/managers and the effort expended to resolve a conflict. There are five potentially important interactional concepts; explanation, honesty, politeness, effort and empathy. These concepts collectively suggest that fair interpersonal treatment reflects aspects of well-mannered behaviour, concern and honesty in the complaint process and the provision of an explanation and meaningful effort in resolving a conflict.

These three justice dimensions and the belonging concepts are relevant to customers’ assessments of fair recoveries and consequently they are positively related to the extent in which customers are satisfied with the complaint handling process of an organization.

Complaint handling satisfaction and relationship marketing: commitment and trust

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postcomplaint attitudes and behaviours. These postcomplaint attitudes and behaviours of customer satisfaction are very important aspects in driving long term customer relationships. However, these aspects do not fully reflect the factors that determine long term relationships. In the complaint handling framework, the focus is on two variables that are important in relationship marketing; commitment and trust. Kelley, Donnelly and Skinner (1990) state that the organizational commitment of customers is indicative of the organization’s likelihood of developing or maintaining customer identification with organizational goals and values and retaining the customer as an active participant. Logically, satisfaction with complaint handling is positively associated with commitment. Besides, complaint handling satisfaction can also strengthen customer relationships because of the positive association with trust. Trust is strengthened if partners are responsive in ways that acknowledge an individual’s particular needs and affirm their sense of worth (Holmes and Rempel, 1989).

Prior experience with the firm

The last variable the framework deals with is the influence of prior experience (satisfaction or dissatisfaction) with the firm on the variables trust and commitment. The effects of the role of prior experience are smaller than the main effect of satisfaction with complaint handling but very interesting. When a customer has a prior positive experience, this mitigates the effects of dissatisfaction in a greater extent on commitment but not on trust. So a poorly handled

complaint hurts trust among existing customers just as much as it does among customers that buy a product for the first time. This implies that customers that are dissatisfied with the complaint process still might want to deal with the organization on the basis of beneficial future expectations grounded on past experience.

The framework indicates that during a conflict with customers the organization’s reliability and trustworthiness should be demonstrated. Investments in complaint handling can improve evaluations of service quality, strengthen customer relationships and build customer

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§3.1.3 Customer Complaint Management System (CCMS)

In the paragraph above, the customer complaint process is explored with the complaint handling framework of Tax (1998) as foundation. Because now there is more understanding about this process, this paragraph will present a simple yet comprehensive customer

complaint management system which includes tools from Total Quality Management.

Total Quality Management (TQM) can be defined as a systemic and global approach to firm management based on management by process and continuous improvement of business performances by all human resources in order to satisfy explicit or implicit expectations of customers and other stakeholders (Dean and Bowen, 1994).

Quality management systems (QMSs) in organizations are meant to control and improve process and product quality. By their very nature quality management systems tend to mainly rely on formalization of procedures. They contain prescriptions for coordinated activities in organizations in order to control, assure and improve process and product quality (Evans and Lindsay, 2002) and allow employees to better perform their jobs (Ruzevivius, Adomaitiene and Sirvidaite, 2004). In order to have an effective quality management system there should be management input and control processes that contribute to feedback and continuous improvement. The complaints handling process is a very important part of the overall quality management system. The customer complaint process should deliver top management involvement and commitment through adequate acquisition and deployment of resources including personnel training. There also should be a basis for continual review and analysis of the complaints-handling process, the resolution of complaints and process improvements made.

Berry (1996) describes three main factors that limit the proliferation of CCMS:

• CCMS costs are visible and immediate, while their benefits are long-term and indirect.

• Managers doubt customer honesty when voicing a complaint.

• Many unsatisfied customers do not complain, up to two-thirds of unsatisfied customers do not complain (Stephens and Gwinner, 1998)

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scope of TQM. Complaint handling must be interpreted as a management tool to contribute to continuous quality improvement. Their CCMS model contains seven steps. See figure ??

(1) Document the voice of the customer (VOC): Every complaint has to be managed as a single issue. One complaint can contain more useful verbalizations and these should be documented into a worksheet.

(2) Translate VOC into customer needs and problems: For each verbalization, the customer need should be identified.

(3) Analyze and solve the problem: After defining the problem, the affected processes and the causes should be determined.

(4) Exploit customer needs: This means maximizing value to the company. This step allows the organization to identify which processes are related to which customer needs and helps to show which patterns and processes need to be redesigned or improved

(5) Update failure mode effect analysis (FMEA) to avoid recurrence: FMEA is a method for identifying potential failure modes in order to define its effect on a system and to develop an initial preventive system. Steps 4 and 5 allow the organization to establish some relevant preventive actions to be taken that are useful to prevent failure modes and protect identified important customer needs.

(6) Share solutions with affected customer: Customers like to be listened to and

considered. This gives them the feeling they are respected and important. Therefore it is important to respond to a complaint as soon as possible and to give a sincere apology. When a complaint is managed well, it is highly probable that the customer will remain loyal and this stimulates positive word of mouth.

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Figure 3 CCMS model (Bosch and Enriquez, 2005)

A functional customer complaint management system generates knowledge of evolving customer needs. It is a key enabler to a more profitable organization, because it enhances customer satisfaction by creating a customer-focused environment that is open to feedback (complaints), it resolves any complaints received and it enhances the ability of the

organization to improve its product and customer service quality.

§3.2 Cross-cultural differences and customer complaints

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Understanding differences in complaint behaviour due to cultural differences could be helpful to organizations in specific countries. In certain cultures, public voicing of customer

complaints is not considered as socially accepted behaviour (Chiu et al.1988). For instance, certain East Asian cultures are characterized by a strong face concern, which among other things, leads to avoidance of direct confrontation (Chiu et al. 1988). Because such customers are less likely to complain directly to the firm, it may be necessary for businesses operating in those cultures to develop a strategy to encourage direct complaints to diminish the probability of negative word-of-mouth or boycotting the product (Richins 1983b).

Culture is a construct that is not easy to define, because it speaks of the complex whole of aspects such as knowledge, beliefs, laws, morals and habits of human members in a society. Geert Hofstede (2001, p.9) defines culture as “the collective programming of the mind which distinguishes the members of one group or category of people from another.” With just a definition it is difficult to measure culture in different countries. Therefore, some dimensional models are developed. The dimensions of these models provide a base to measure culture and compare cultures of different countries. One of the first researchers that represented different dimensions of culture is Edward Hall (1969, 1976). The most famous and most used theory is that of Hofstede (1980, 1991, 2001). Later on Fons Trompenaars & Charles Hampden Turner (1997), Shalom Schwartz (1994) and Robert House (2004) explored categorizations of national culture. Below, the cultural dimensions of the mentioned researchers are described. Then, the dimensional model of Hofstede, the most important model in cultural research, is related to customer complaint management.

§3.2.1 Hall

Edward T. Hall was an anthropologist who made early discoveries of key cultural factors. He published a few books on cross-cultural communication like “The Hidden Dimension” (1966) and “Beyond Culture” (1976). In his books he identified three different classical dimensions based on context, time and space.

Context (high versus low)

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connections over a long period of time. Members of this culture know what to do and what to think from years of interaction in which there is a minimal transformation of information necessary. Words are not that important as context in which the tone of a voice, face

expression, gesturing, body language and perhaps the family history and social status are in consideration.

In contrast, in a low context culture, more explanation is needed and very little is taken for granted. In low context societies people tend to have many connections but of a shorter period of time for some specific reason. In these societies, cultural behaviour and beliefs may need to be spelled out explicitly so that those coming into the cultural environment know how to behave. Conversations in a low-context culture will be direct and structured. Persons in this culture will place a much higher value on the words spoken than on the non-verbal aspect of communications. Table 1 shows some aspects of the high- and low-context cultures and the resulting behaviours of people in the different contexts.

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Factor High-context culture Low-context culture

Overtness of messages

Many covert and implicit

messages, with use of metaphor and reading between the lines

Many overt and explicit messages that are simple and clear

Locus of control and attribution for failure

Inner locus of control and personal acceptance for failure

Outer locus of control and blame of others for failure Use of non-verbal

communication

Much nonverbal communication More focus on verbal

communication than body language

Expression of reaction

Reserved, inward reactions Visible, external, outward

reaction Cohesion and

separation of groups

Strong distinction between in-group and out-in-group. Strong sense of family

Flexible and open grouping patterns, changing as needed

People bonds Strong people bonds with affiliation

to family and community

Fragile bonds between people with little sense of loyalty

Level of commitment to relationships

High commitment to long-term relationships. Relationship more important than task

Low commitment to relationship. Task more important than relationships

Flexibility of time Time is open and flexible.

Process is more important than product

Time is highly organized. Product is more important than process

Table 1 high- and low-context cultures.

Time (monochrony versus polychrony )

The second concepts of monochrony and polychrony subsume several aspects of how

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time-Factor Monochronic action Polychronic action

Actions Do one thing at a time Do many things at once

Focus Concentrate on the job at hand Are easily distracted

Attention to time Think about when things must be

achieved

Think about what will be achieved

Priority Put the job first Put relationships first

Respect for property

Seldom borrow or lend things Borrow and lend things often

and easily

Timeliness Emphasize promptness Base promptness relationship

factors Table 2 monochronic and polychronic cultures

Space (high territoriality versus low territoriality)

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§3.2.2 Hofstede’s model

The most important model that emerged from the variety of models is, without doubt, Hofstede’s model. Hofstede (1980) developed a model with four universal dimensions of culture that are largely independent of each other. These dimensions of culture are developed by statistical data reduction methods and scales are provided on which different countries are scored (De Mooij, 2004). The cultural dimensions are power distance,

individualism-collectivism, masculinity-femininity and uncertainty avoidance. These four dimensions are based on the Values Survey Module study, which included 72,215 employees working in 66 different national subsidiaries of IBM corporation between 1967 and 1973. Later a fifth dimension was added, the Confucian dynamic or long-term orientation (Hofstede, 1991). This fifth dimension was discovered in a study in which students from 23 countries around the world answered a questionnaire created by Chinese scholars. Hofstede assigned indexes on five dimensions to all countries and linked his dimensions with geographic, demographic, economic and political apects of a society (Soares et al., 2007). This linking to several aspects of a society is what differentiated Hofstede’s work from similar projects. Although Hofstede’s dimensions were developed from just one firm (IBM) they have found to be ‘generalizable’ outside IBM and to represent differences between national cultures well.

In recent years, scholars have raised some concerns about the standardized approach of Hofstede’s model. There is a lot of criticism about the internal validity of the dimensions and the methodology to develop the scales (Baskerville, 2003). The limitations of Hofstede’s model will be discussed in §5.2.

Despite the growing criticism on the approach of Hofstede, his model is the most popular and widely used models in management literature and psychology as far it concerns national culture (Søndergaard, 1994). Hofstede’s study has some appealing attributes, such as the sample size and the codification of cultural traits along numerical indices (Furrer et al. 2000). Below is a brief discussion of the five cultural dimensions identified by Hofstede (1980, 1991, 2001).

The five cultural dimensions of Hofstede

Power distance is defined as “the extent to which the less powerful members of institutions

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Institutions and organizations are the basic elements of society such as the family, school, workplaces and the community. Power distance also reflects human inequality in areas such as prestige, wealth, power and law. People of high power distance show great reliance on centralization and formalization of authority and great tolerance for the lack of autonomy, which fosters inequalities in power and wealth (Hofstede, 1980). Furthermore, they show tolerance in accepting power hierarchy, tight control, vertical top-down communication, and even discrimination by age, gender, family background, education level, race and occupation. Concluding, in societies with a high score on power distance, members accept power and wealth to be distributed unequally. On the other side, in societies with a low score on power distance members would expect the opposite and would strive for equality as far as possible and equal rights for all members. The (former) communist countries score high on power distance, whereas north-western European countries score low on power distance.

Individualism and collectivism is the most researched dimension and argued to be the most

important of the five. These constructs appear to play a particularly prominent role in cross-cultural research in marketing (Gudykunst and Ting-Toomey, 1988). It defines the extent to which members form part of larger groups in a society. Individualism “pertains to societies in which the ties between individuals are loose; everyone is expected to look after himself or herself and his or her immediate family”. Collectivism “pertains to societies in which people from birth onwards are integrated into strong, cohesive groups, which throughout people’s lifetime continue to protect them in exchange for unquestioning loyalty” (Hofstede, 1991 p.51). In an individualistic society where self-concept and free will or freedom prevail, people develop a great sense of autonomy and personal achievement as opposed to a sense of

collectivism and importance of social and security needs (Hofstede, 1980). Individualistic people emphasize job specialization, individual rewards, competitive climate and individual and nuclear family independence. Anglo-American countries usually score high on

individualism. Latin American and Asian countries on the other hand are generally collectivistic.

Masculinity and femininity represent “the dominant sex role pattern in the vast majority of

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on the other hand, show much less difference between the male and female role and define the ideal role both for men and women in ‘feminine’ terms of modesty, quality of life, importance of relationships and a caring attitude. In countries where the masculine index is high people think it is important to have a high opportunity for earnings, getting the recognition when they perform a good job, having the possibility to get a higher-level job, and having a job that is challenging so that they create a sense of accomplishment. In cultures where feminine values are more important, people value a good working relationship with their supervisors, they want to work with people that cooperate well with one another, living in an area that is desirable for themselves and their families is important and they want to feel sure they can work for their company as long as they want. In Japan, masculinity is very high, in the Nordic countries it is very low and the United States take a position in between

Uncertainty avoidance is defined as “the extent to which the members of a culture feel

threatened by uncertain or unknown situations” (Hofstede, 1991 p. 113). That feeling is communicated through anxiety and manifested in a need for a system of rules, structures and tight control. Uncertainty avoidance reflects the level of tolerance for uncertainty and

ambiguities embedded in everyday life (Hofstede, 1980). In societies with low uncertainty avoidance such as Protestant countries, the US, the Netherlands, China and India, members tend to accept uncertainty without much discomfort, take risk easily and show tolerance for opinions and behaviours different from their own. People of high uncertainty avoidance have a strong need to control environment, events and situations such as in Catholic countries, Japan and Russia.

Long versus short-term orientation defines a society’s attitude towards values derived from

Confucianism regarding time, tradition, status and persistence. Long-term orientation is represented by values such as perseverance, ordering relationships by status and having a sense of shame. Short-term orientation is represented by values such as personal steadiness and stability, saving face, respect for tradition and reciprocation of greetings, favors and gifts (Hofstede, 1991, p.165). Long-term versus short-term orientation can be interpreted as

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§3.2.3 Trompenaars & Hampden-Turner

Trompenaars and Hampden-Turner (1997) classify culture in view of a mixture of

behavioural and value patterns. Their research is based on cultural dimensions of executives. They identified seven cultural value categories which are described below. Some of these dimensions are almost identical to Hofstede’s cultural dimensions.

Universalism versus Particularism

In universalistic cultures, people share general rules, codes, values and standards. The rules apply equally to all members in the whole society.

In particularistic cultures, the ideal culture is seen in terms of human friendship and intimate relationships, extraordinary achievement and extraordinary situations. “The spirit (the human character) of the law” is more important than “the letter of the law”. There are rules and laws but these merely codify how people relate to each other.

Individualism versus communitarianism

In a predominantly individualistic culture people place the individual before the community. Individual happiness, fulfilment and welfare are central. People are expected to make

decisions largely on their own and to take care primarily of themselves and their immediate family. In a predominantly communitarian culture people place the community before the individual. It is the responsibility of the individual to act in ways which serve society. By doing so, individual needs will be taken care of naturally.

Specific versus diffuse

In specific cultures, people start with elements. Firstly these elements are analyzed separately, and then they put them back together again. In specific cultures, the whole is the sum of its parts. Each person’s life is divided into many components and every component should be entered individual. Interactions between people are highly purposeful and well-defined. The public sphere of specific individuals is much larger than their private sphere. People are easily accepted into the public sphere, but it is very difficult to get into the private sphere, because each area in which two people encounter each other is considered separate from the other. These people concentrate on hard facts, standards and contracts.

People from diffusely oriented cultures start with the whole and see each element in

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important than each separate element; so the whole is more than just the sum of its elements. Diffuse individuals have a large private sphere and a small public one. Newcomers are not easily accepted into either. But once they have been accepted, they are admitted into all layers of the individual's life.

Affective versus neutral

In an affective culture, it is not an objection to show emotions. It is not considered to hide feelings and to keep them inside. Affective cultures may interpret the less explicit signals of a neutral culture as less important. They may be ignored or even unnoticed. In a neutral culture people think it is incorrect to show your feelings. This does not mean they do not have feelings, it just means that the degree to which feeling may become manifest is limited. They accept and are aware of feelings, but are in control of them. Neutral cultures may think the louder signals of an affective culture are too excited, and over-emotional. In neutral cultures, showing too much emotion may erode your power to interest people.

Achievement versus ascription

Achieved status refers to what an individual does and has accomplished. In achievement-oriented cultures, individuals derive their status from what they have accomplished. People have to prove what they are worth over and over again.

Ascribed status refers to what a person is and how others relate to his or her position in the community, in society or in an organization. People derive their status from birth, age, gender or wealth. A person with ascribed status does not have to achieve to retain his status.

Sequential versus synchronic

In every culture there is an own response to time. This dimension has two aspects: the relative importance cultures give to the past, present, and future, and their approach to structuring time. Time can be structured in two ways. In one approach time moves forward, second by second, minute by minute, hour by hour in a straight line. This is called sequentialism. People in cultures with this time dimension tend to do one thing at a time. They prefer planning and staying on schedule.

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Past-oriented cultures

The future is seen as a repetition of past experiences. Characteristics are respect for ancestors and collective historical experiences.

Present-oriented cultures

Not much value is attached to common past experiences nor to future prospects. People’s life is directed by day-by-day experiences.

Future-oriented cultures

In these cultures human activities are mostly directed toward future prospects. The past is generally not considered to be important to future issues and planning constitutes to be a major activity.

Internal versus external control (Relation with natural environment)

Every culture has developed an attitude towards the natural environment. In internalistic cultures people have a mechanistic view and see nature as a complex machine that can be controlled only if you have the right expertise. These people do not believe in luck or predestination and are ‘inner-directed’. A personal decision is seen as the starting point for every action. When taking advantage of the opportunities you can live the life you want. In externalistic cultures people have a more organic view of nature. Mankind is seen as a nature's force, so you should operate in harmony with the environment. Externalistic people do not believe that they can shape their own destiny. 'Nature moves in mysterious ways', and therefore you never know what will happen to you. The actions of externalistic people are 'outer-directed', adapted to external circumstances.

§3.2.4 Schwartz

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Power

Power strives for the social status and prestige or dominance over people and resources. Individuals like to have leadership and guide other people.

Achievement

Achievement is related to personal success through showing competence according to social standards. Being successful is very important and when others achieved the same goals, status is reduced and greater goals are sought.

Hedonism

Hedonism strives for pleasure and sensuous gratification for oneself. People want to enjoy life.

Stimulation

The need for stimulation is close to hedonism, though the goal is slightly different. Pleasure here comes more specifically from excitement, novelty and challenge in life.

Self-direction

Those who seek self-direction enjoy having independent thoughts and being outside the control of others. They prefer freedom and making independent choices.

Universalism

The universalist seeks social justice and tolerance for all. Understanding, appreciation, tolerance and protection for the welfare are keywords.

Benevolence

People who tend towards benevolence are very giving, they seek to help people who are close to them and they want to preserve and enhance the welfare of people with whom they are in frequent personal contact.

Tradition

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original sense, seeking to preserve the world order as is. Any change makes them uncomfortable.

Conformity

Conformism strives for restraining actions or impulses that are likely to upset or harm others. The person who values conformity seeks obedience to clear rules and structures. They gain a sense of control through doing what they are told and conforming to agreed laws and statutes.

Security

Security concerns safety, harmony and ‘stability of society, relationships and one self’. The safety of the country is very important in these cultures.

§3.2.5 House

Robert House (1994) conducted the international ten-year research program, The Global Leadership and Organizational Behaviour Effectiveness (GLOBE) research. GLOBE is a long-term program designed to conceptualize, operationalize, test, and validate a cross-level integrated theory of the relationship between culture and societal, organizational, and

leadership effectiveness. A team of 160 scholars worked together since 1994 to study societal culture, organizational culture, and attributes of effective leadership in 62 cultures. GLOBE distinguishes nine cultural dimensions explained below.

Uncertainty avoidance

Uncertainty avoidance refers to the extent to which members of an organization or society strive to avoid uncertainty by relying on established social norms, rituals and bureaucratic practices. People in high uncertainty avoidance cultures actively seek to decrease the probability of unpredictable future events that could aversely affect the operation of an organization or society and remedy the success of such adverse effects.

Power distance

Power distance is the degree to which members of an organization or society expect and agree that power should be stratified and concentrated at higher levels of an organization or

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Collectivism 1 (Institutional collectivism)

Institutional collectivism is the degree to which organizational and societal institutional practices encourage and reward collective distribution of resources and collective action.

Collectivism 2 (in-group collectivism)

In-group collectivism is the degree to which individuals express pride, loyalty and cohesiveness in their organizations or families.

Gender egalitarianism

Gender egalitarianism is the degree to which an organization or a society minimizes gender role differences while promoting gender equality.

Assertiveness

Assertiveness is the degree to which individuals in organizations or societies are assertive, confrontational and aggressive in social relationships.

Future orientation

Future orientation is the degree to which individuals in organizations or societies engage in future-oriented behaviours such as planning, investing in the future and delaying individual or collective gratification.

Performance orientation

Performance orientation is the degree to which an organization or society encourages and rewards group members for performance improvement and excellence.

Human orientation

Human orientation is the degree to which individuals in organizations or societies encourage and reward individuals for being fair, altruistic, friendly, generous, caring and kind to others.

§3.2.6 Applying Hofstede´s model

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Most applications of cultural dimensions to marketing and advertising have used the Hofstede dimensions. They are practical due to the limitation to five dimensions, and because they overlap relatively little and cover most countries in the world. Hofstede’s dimensions have become key variables or explanatory features in a wide variety of research (Milner et al., 1993). According to Patterson et al. (2006), there are several reasons to support the use of Hofstede’s typology of culture:

1) This framework is comprehensive and shows meaningful relationships with important demographic, geographic, economic, and political indicators of a society.

2) Hofstede’s work has been confirmed empirically through replications and has been heavily cited as the most important and popular theory on types of cultures. 3) It has consistently proved to be beneficial when adopted in cross-cultural and international studies.

4) Hofstede’s cultural dimensions are highly relevant in explaining cross-cultural behaviour on service recovery attributes across collectivist and individualistic cultures.

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Source Treatment of culture Countries/service context Findings De Wulf et al. (2001)

Used Hofstede's dimensions as

justification for country selection,

not measured.

U.S. the Netherlands, Belgium/

food and apparel retail

Different marketing relationship tactics such as direct mail, preferential treatment, interpersonal

communication and tangible rewards have a differential impact on consumer perceptions of retailer's relationship investment, which in turn affect relationship quality and behavioural loyalty. Liu et al. (2001) Applied Hofstede's dimensions in hypotheses, measured.

U.S., Switzerland, China, Singapore,

South Korea/banking

With superior service, individuals from low individualism or high uncertainty avoidance cultures tended to plan to praise more than individuals from high individualism or low uncertainty avoidance cultures. With poor service, individuals from high individualism or low uncertainty avoidance cultures more often said they would switch, give negative word of mouth, or complain than individuals from low individualism or high uncertainty avoidance cultures. Liu and McClure (2001) Used individualism/collectivism, in-group/out-group as pre-hoc

justification, not measured.

U.S. vs. Korea/retail and restaurant

When dissatisfied, customers in collectivist culture were less likely to engage in voice behavior, but more likely to engage in private behavior (WOM or exit) than customers in an individualist culture. Those who voice dissatisfaction in individualistic cultures were less likely to exit while those who did not voice dissatisfaction in collectivistic cultures were less likely to exit.

Patterson and Smith (2001a) (2001b)

Used Hofstede's uncertainty avoidance,

individualism/collectivism, femininity/ masculinity as pre-hoc justification, not measured.

U.S. vs. Thailand/medical, hairdressers, auto mechanics, travel agents, and retail financial

advisors

While the same set of benefits motivated both U.S. and Thai respondents'

propensity to maintain relationships with a range of service providers, special treatment benefits (reflecting social bonds) were more important for Thai

respondents and confidence benefits were more important for U.S. respondents.

Hui and Au (2001)

Used Hofstede's long-term orientation

as part of pre-hoc justification, not measured.

China vs. Canada/hotel Compared the effects of three kinds of complainthandling

strategies (voice, compensation, and apology) on respondents' justice perceptions and

post-complaint behaviors. Voice had a stronger effect on Chinese than on Canadian respondents, while compensation had a stronger effect on Canadian respondents than on Chinese respondents. Patterson and Smith (2003) Used Hofstede's individualism/ collectivism as pre-hoc justification, not measured. Australia vs. Thailand/travel agency, medical and hairdressers

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west–east cultures, while variations were found across industries.

Warden et al. (2003)

Used Hofstede's dimensions as pre-hoc

Taiwan vs. outside Taiwan/airline

Extended Stauss and Mang (1999)model. Found reduction in inter-cultural failure seriousness can be attributed not to the error itself, but to increased acceptance of the recovery strategy.

Mattila and Patterson (2004a) (2004b) Used Hofstede's individualism/collectivism and uncertainty avoidance as pre-hoc justification, not measured.

U.S., Malaysia, Thailand/restaurant

Compensation (discount and apology) was more effective in restoring a sense of justice to U.S. respondents than to East Asian (Thai and Malaysian) respondents.

Poon et al. (2004)

Used Hofstede's long-term vs. shortterm orientation as pre-hoc justification, not measured.

Canada vs. China/unspecified

Compared to Chinese consumers, Canadian consumers experienced less perceived control in dissatisfying service encounters, blamed themselves less, perceived the provider to have more control over a negative event, and believed the event to be less likely to reoccur. Wong (2004) Used Hofstede's dimensions

as pre-hoc

U.S., Australia, Singapore/restaurant

Compensation improved respondents' assessments of the service encounter in all three countries but only affected repurchase intentions and word of mouth in U.S. sample, not in Singaporean or Australian samples. An apology improved satisfaction for Singaporean and Australian samples but not for U.S. respondents.

Patterson et al. (2006)

Used Hofstede's individualism/

collectivism, power distance, and uncertainty avoidance to develop hypotheses, measured at individual level.

Australia vs. Thailand/hotel Customers with a higher collectivist value orientation perceived more interactional justice when there was an organization-initiated recovery. An apology from a service provider with more status had a greater effect on perceptions of distributive justice for customers with a higher power distance value orientation. Customers with a higher uncertainty avoidance orientation perceived higher levels of procedural justice when given cognitive control over the recovery process.

Table 3 Studies of reactions to service. Source: J. Zhang et al. / Journal of Business Research 61 (2008) 211–224

§3.2.7 Relation between national culture and customer complaint management

The importance of a good complaint management system becomes more and more recognized by the management of organizations. Because of the increasing internationalization of

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of complaining behaviour because of varying concepts of self, perceptions of others and levels of social activity.

Liu et al. (2001) examined the effect of culture on customer behaviour toward services by studying the relationship between culture and behavioural intentions in a service quality context. They studied this relationship with the use of the five dimensions of Hofstede and five common categories of behavioural intentions; loyalty to the company, propensity to switch, positive word of mouth, negative word of mouth and complaining. Because of the topic of this research, based on the five dimensions of Hofstede below reasons for different customer complaint behaviour because of cross-cultural influence are mentioned.

Power distance-complaining behaviour: In cultures with large power distance it is generally

accepted that power is distributed unequally. People that live in a society with a high power distance have a higher power perception what results in expressing their complaining more limited. Members of a society with a low power distance will be less reticent and express their complaints more freely.

Masculinity/femininity-complaining behaviour: Customers from societies that have a high

score on the masculinity index are more likely to complain than customers in more feminine cultures because they are more likely to want to get things straight. Because of this they are more willing to confront a provider of a product or service for the unsatisfactory experience. These customers are more assertive and materialistic than their feminine counterparts what contributes to their more active complaining behaviour. On the contrary, customers from a society with a low masculinity score are less likely to complain.

Uncertainty avoidance-complaining behaviour: In cultures with strong uncertainty avoidance,

customers tolerate uncertainty less and thus they prefer to avoid uncertain situations. These customers are less likely to complain than in cultures with weak-uncertainty avoidance. This is because a complaint can lead to confrontation and people in these cultures are looking more at consensus.

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Long-term orientation-complaining behaviour: In long-term orientation cultures, customers

set great store on developing and maintaining long-term relationships. These people are looking at harmonious relationships with their suppliers. Business relationships in long-term oriented cultures are generally expected to last for decades. They would like to avoid

situations of conflict to preserve social harmony. So in long-term orientation cultures

customers are less likely to complain. Another important argument is that people that are long term oriented have more a sense of shame than people that are short oriented. When

customers in long-term orientation cultures are not satisfied with a product or service they are less tended to complain than customers in short-term oriented cultures because they probably feel more ashamed.

Individualism/collectivism-complaining behaviour: In literature, the dimension

individualism/collectivism is viewed as a very important cultural aspect that influences customer’s behavioural responses to post-purchase dissatisfaction (Watkins and Liu, 1996). As appeared from the description of the different cultural models in §3.2, the dimension individualism/collectivism is the most widely studied and validated of the five. That is why the relation between individualism/collectivism and customer complaint behaviour will be dealt with more extensive.

According to Hui and Triandis (1986) people in individualistic cultures value independence and self-sufficiency and think in terms of “I”. On the other hand, people in collectivist cultures tend to behave according to the social norms that are often designed to maintain social harmony among the members of the in-group and think in terms of “We” (Hofstede, 1980). In collectivist cultures, reactions of people towards events depend on how this relates to the individual’s needs to belong, to fit-in, to engage in actions that are contextually

appropriate, to maintain social harmony, and to save face for self and others (Liu and McClure, 2001). If negative emotions are expressed, they are likely to be discussed in

intimate social settings (Markus and Kitayama, 1990) In contrast, an individualist places more emphasis on the success in being unique, self-expression, and in validating internal “defining” attributes. Because an individualist expresses more, he also expresses more negative

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concerned with my welfare” (Triandis, 1972). This implies that in a collectivistic culture where interactions with many businesses are out-group interactions, avoidance of any unnecessary involvement is likely to be higher than in an individualistic culture (Liu and McClure, 2001). The amount of conflict and distrust could be relatively high during an interaction, so complaining to the retailer or manufacturer is more likely to be avoided than in an individualistic culture. The dimension individualism/collectivism also impacts the way people in different cultures complain. When dissatisfied, customers in an individualistic culture are more likely to voice (seeking redress from the seller) their complaints than those in a collectivistic culture. Moreover, customers in a collectivistic culture are more likely to express private responses (e.g. word-of-mouth-communication) than those in an

individualistic culture (Liu and McClure, 2001). In a collectivistic culture, customers tend not to express their negative emotions outwardly because this is considered as losing face, this in contrast to individualistic customers who are less concerned about losing face and just complain to the seller. However, when collectivists do exit, it is particularly difficult for the offending supplier to regain them as customers (Watkins and Liu, 1996).

Concluding, differences in culture affect if customers complain and if they do, how do they complain. Gaining understanding of the cross-cultural differences learns organizations how to manage the customer complaints process.

From literature some expectations about cultural differences and complaining behaviour are created. In the practical part of this thesis it will be tested to what extent expectations from literature accomplish the practical situation of P&G.

§3.3 Conceptual model

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Customer Complaint Behaviour

United Kingdom

France

Japan

Figure 4 Conceptual model

MODEL

HOFSTEDE

National Culture

Small power distance

Individualism Masculinity Low

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Chapter 4 Results

In the following chapter, the practical situation of P&G Pet Care will be described. This chapter has the objective to gain insight in the practical situation of Procter and Gamble concerning cultural differences and customer complaint behaviour. With the assistance of this insight and the theoretical foundation described in chapter 1 the research question of this research “In what size do cultural differences influence the functioning of Procter and Gamble’s customer complaint management system and how should these cultural differences be taken into consideration when analyzing customer complaint information?” can be answered. In paragraph 4.1 an introduction of Procter and Gamble is given. In paragraph 4.2 the Consumer Care Line of P&G Pet Care will be described. Paragraph 4.4 describes the customer complaint behaviour in the United Kingdom and France. In the last paragraph the Japanese complaint behaviour is explored.

§ 4.1 Procter and Gamble introduction 1

Our core values and principles guide us in everything we do. Learn more about what drives our purpose of providing products and services of superior quality and value to the world's consumers.

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because she is convinced that in these businesses she can keep her leading role and extend this. P&G employs a growth strategy. New products are developed continuously and amounts are invested in acquiring new brands such as Oil of Olay, Gillette and Hugo Boss.

The company’s operations are categorized into 3 Global Business Units that are under divided into Business Segments.

• Beauty Care

o Beauty segment o Grooming segment • Household Care

o Baby Care and Family Care segment o Fabric Care and Home Care segment • Health & Well-Being

o Health Care

o Snacks, Coffee and Pet Care

This thesis focuses on P&G Petcare Coevorden, the Netherlands. P&G Pet Care is part of the Health Care global business unit of Procter and Gamble. This business unit is responsible for producing, packaging, storing and distributing high-qualitative dog and cat kibbles of the brands Iams and Eukanuba (in the Netherlands only available in specialist shops). These two brands are being packed into packages from 60 gram up to 20 kg. Iams is a very important brand of P&G that realizes more than 1 billion net annual sales.

Nettelbosje 2 9747 AE Groningen

Master Thesis

Master of Science in Business Administration

Specialization Organizational & Management Control

Title: The influence of culture on customer complaint behaviour

Faculty of Economics and Business

Nettelbosje 2

9747 AE Groningen

Organization of graduation

Preface

Management summary

Table of contents

Chapter 1: Introduction

Chapter 2: Research design

Chapter 3: Theoretical foundation

United Kingdom

France

Japan

MODEL

National Culture

Chapter 4 Results