The good guys don't always win: the effect of valence on service perceptions and consequences

Purpose – The purpose of this paper is to advance a new conceptualization of the service encounter that highlights the role of outcome valence as a key antecedent of customer satisfaction. Design/methodology/approach – This study develops and tests a conceptual model using structural equation modeling. Specifically, it adopts recent procedures for assessing direct, mediated, and moderated effects. Findings – The findings demonstrate that valence has a stronger effect on satisfaction than both functional and service environment quality, that satisfaction fully mediates the effects of valence on behavioral intentions, and that consumer involvement moderates the valence‐satisfaction relationship. Research limitations/implications – This research draws attention to the fact that valence is an important research topic and researchers should focus attention on how valence might influence customer evaluations of services. Specifically, it is important to replicate these findings across industries, develop models that consider additional moderating influences, and conduct experiments to investigate the relative effects of valence across different service environment and functional quality conditions. Practical implications – The findings suggest that managers must be aware that valence directly influences customer satisfaction levels and that they can and should account for its effect. Specifically, in some service industries, rewarding employees based on customer satisfaction ratings without controlling for the effects of valence is misguided. Ultimately, failure to account for valence can lead to managerial decisions that may not be in the best interest of the firm. Originality/value – This paper provides a new look at service encounters and suggests that valence is a critical antecedent of customer satisfaction and, in some instances, outcome valence is a more dominant predictor of satisfaction than service environment and functional quality.