Industry CharIndustry Characteristics and Consumer Dissatisfactionacteristics and Consumer Dissatisfaction

SUMMER 1991
VOLUME 25, NUMBER 1
19
JAGDIP SINGH
Industry Characteristics and

Consumer Dissatisfaction
Drawing upon Hirschman's (1970) theory, a conceptual framework
is developed that attempts to explain how industry characteristics are
likely to influenee consumers' responses to dissatisfaction. Findings
from consumer complaining behavior literature are also incorporated.
Several hypotheses are derived and tested utilizing data from three
different service categories. Despite the parsimony of Hirschman's
theory, the results are encouraging. Also, the stability and validity of
the results are examined under several different contingencies. Implications for researchers, practitioners, and public policy officials are
discussed
and
directions
for
research
outlined.
The study of industry characteristics and their impact on consumer

satisfaction and welfare are an important and growing area of
research. In fact, in a recent content analysis of The Journal of Consumer Affairs, Geistfeld and Key (1986) found that, over a ten-year
period (i.e., 1975-1984), more articles were published on the subject
of "market structure and operation" than on any of the other ten
designated areas. In a similar vein, the study of consumer dissatisfaction (e.g., complaint behaviors, redress) is also an important area of
research. Researchers, practitioners, and public policy officials are
beginning to recognize that the extent of consumer dissatisfaction in
the marketplace and the manner in which it is handled (i.e., by consumers and sellers) are key indicators of consumer loyalty, discontent, and welfare (Andreasen 1984; Gilly 1987; TARP 1986).
Despite their importance, few studies have examined the interrelationships between industry characteristics and consumer dissatisfaction. Much research has tended to accumulate evidence documenting the variation in dissatisfaction levels and complaint behaviors across different industries (e.g.. Day and Ash 1979; Best and
Andreasen 1977), paying little attention to explaining this variation.
This paper aims to fill this gap in the literature by explicitly studyJagdip Singh is Assistant Professor of Marketing, Department of Marketing and Policy
Studies, Case Western Reserve University, Cleveland, OH.
The Journal of Consumer Affairs, Vol. 25, No. 1, 1991
0022-0078/0001-019 $1.50/0
1991 by The American Council on Consumer Interests
20
THE JOURNAL OF CONSUMER AFFAIRS
ing the relationship between industry characteristics and consumers'

responses to dissatisfaction. Specifically, the paper utilizes a conceptual framework, based largely on Hirschman's (1970) model, to
propose several hypotheses for the impact of industry characteristics
on consumers' responses to perceived dissatisfaction (e.g., complaint
behaviors), sellers' responsiveness to complaints, and consumers'
satisfaction with sellers' response (e.g., redress). Hirschman's model
has received extensive attention in the political science literature (see
Laver 1976 for review), and its applications in psychology (e.g.,
Rusbult, Johnson, and Morrow 1986), organizational behavior (e.g..
Spencer 1986), and consumer behavior (e.g., Andreasen 1985; Singh
1990) have begun to appear. As such, Hirschman's model is likely to
offer a solid foundation for developing the conceptual framework
and positing testable hypotheses. Following this, the paper empirically examines the proposed hypotheses utilizing a purposive selection of three service industries. Because services usually entail higher
consumer dissatisfaction than manufactured products (Best and
Andreasen 1977; Marketing News 1980), it is desirable to focus on
service industries. In addition, the hypotheses are tested under
several different contingencies so as to ascertain the stability and
validity of the underlying processes. Moreover, this allows delineation of dissatisfaction responses into one of three categories: (a)
macro-driven responses, i.e., where industry characteristics play a
dominant role on consumers' responses, (b) micro-driven responses,
i.e., where individual factors play a dominant role, and (c) mixed
responses, i.e., where both industry and individual factors interplay
in affecting dissatisfaction responses. Finally, several implications
for researchers, managers, and public policy officials are elaborated.
The paper begins with a discussion of the conceptual framework.
CONCEPTUAL FRAMEWORK
Hirschman (1970) views the marketing systemthat is, firms,

competitors, and consumersin a rather unconventional manner.
He posits that some deterioration in the functioning of firms, and the
quality of products they deliver are inevitable, occurring as a result of
"unspecified random causes" (4). Within this context, Hirschman
focused on identifying mechanisms that underlie the general condition of "reparable lapses" within a given industry, that is, when
deterioration in firms and their outputs can be potentially self-
SUMMER 1991
VOLUME 25, NUMBER 1
21
corrected within the marketing system. For such reparable lapses,

Hirschman posited that no external (e.g., government) regulation is
necessary in the interest of societal and consumer welfare. Alternatively, some industries may be characterized by a general status of
"irreparable lapses," that is, when atrophy in firms and their outputs
goes uncorrected within the system; resulting in continued decline in
the performance of firms, product quality, consumer satisfaction,
and, consequently, societal welfare. Some form of regulation is mandatory in this case to stem the deterioration of consumer and social
welfare.
Interestingly, the key mechanisms identified by Hirschman as
underlying reparable or irreparable lapses are closely related to consumer dissatisfaction. In particular, processes related to, "how consumers respond to perceived dissatisfaction?" and "how sellers in
different industries react to dissatisfied consumers' responses?" are
thought to be central to an understanding of the general, long-term
status (i.e., reparable or irreparable) of lapses within a given industry
(Andreasen 1988). Because of Iheir centrality, each of these processes
is discussed in greater detail.
Consumers' Responses to Dissatisfaction
A dissatisfied consumer, according to Hirschman, has three potential options: (a) exit, (b) voice, and (c) loyalty. By exit a consumer
voluntarily terminates an exchange relationship such as by switching
patronage to another product, service, and/or retailer. Exit is perceived as "painful" since it involves certain amount of effort, such as
switching costs and searching for alternatives. In contrast, voice is
conceptualized as an attempt to change rather than escape from an
objectionable state of affairs. Most voice attempts are directed at
sellers and entail effort and motivation on the part of consumers.
Interestingly, Hirschman views the loyalty option passively because
"loyal" consumers neither exit nor voice. They continue to stick with
the dissatisfying product/seller and "suffer in silence confident that
things will soon get better" (38). Thus, loyalty in Hirschman's model
does not necessarily imply positive feelings toward the product/
seller.
The consumer complaining behavior (CCB) literature, however,
documents several additional dissatisfaction responses. For instance.
Day et al. (1981) list nine broad categories for alternative responses
22
to unsatisfactory experiences, ranging from complaining to friends

and relatives (negative word-of-mouth, W-O-M) to seeking redress
from third parties (e.g., consumer protection agencies, courts, etc.).
Recently, Singh (1988) found that a parsimonious structure underlies
the various dissatisfaction responses. His results show that a threedimensional structure appears to be congenial with data and evidences discriminant and external validity. Specifically, this structure
consists of: (a) voice dimension, encompassing responses directed
towards parties directly involved in the dissatisfying experience (e.g.,
salesperson, retailer, seller), (h)private dimension, including negative
W-O-M communication (e.g., to friends and relatives) and exit from
exchange relationship, and (c) third-party dimension, involving complaints to formal agencies not directly involved in the exchange relationship (e.g., consumer agencies).
Furthermore, CCB literature suggests that consumers often utilize
a wide variety of responses that can be successfully categorized into
the preceding three dimensions (Singh 1988). For this reason, it
appears desirable to explicitly recognize and consider voice, private,
and third-party responses. Although Hirschman's model does not
include such a diversity of responses, the key hypotheses in his framework easily submit themselves to such extension (cf., Singh 1990).
Note that these dimensions are not posited as mutually exclusive
responses. Instead, the framework accepts that consumers may often
engage in multiple responses; such as voice and private responses.
Sellers' Reactions to Consumers' Responses
Hirschman posits that sellers' reactions to consumers' responses

will vary significantly depending upon the nature of the industry
involved in the dissatisfying experience. In order to highlight these
effects, he identified three typical industry structures: (a) competitive, (b) monopolistic, and (c) loose monopoly. A competitive structure is typified by a large number of competing firms, perfect information to evaluate various alternatives (by consumers), low initiation
and exit costs (for consumers), and consumers' tendency to comparison shop. Under this situation, the most obvious response for dissatisfied consumers is to exit since they have knowledge about alternatives and exit costs are minimal (Hirschman 1970). As market
share declines resulting from exit, it provides feedback to managers
to either correct for declines in product/service offering or perish.
SUMMER 1991
VOLUME 25, NUMBER 1
23
Not surprisingly, competitive firms are alert and responsive to consumer complaints should dissatisfaction be voiced. Hirschman likens
this mechanism to the Invisible Hand, "the sort of mechanism economics thrives on" (15).
On the other hand, a monopolistic structure is described by a single
firm, no alternatives for consumers, and very high switching costs
because the only other option is to go without the focal product/
service. In this situation, dissatisfied consumers have no choice but to
voice. In turn, voice provides the key mechanism for communicating
dissatisfactions to management, and collective voice sets in motion a
process that could repair "lapses" in such firms.
Andreasen (1985, 137) observes that most contemporary industries
are neither fully competitive nor completely monopolistic markets.
Instead, they are characterized by loose monopoly conditions. For
this reason, Hirschman especially focused on such industry structures
(as will this study). Although Hirschman did not explicitly identify
the key attributes of loose monopoly markets, based on his original
work and subsequent expositions by Andreasen (1984; 1985) six key
characteristics can be deduced. These are shown in Table 1.
Ideally, the loose monopoly condition occurs when consumers perceive that: (a) few alternatives to the offending product/service are
available (AALT), (b) their knowledge about different offerings is
limited (RINFO), (c) they are unable to detect poor product/service
(CKNO), (d) the time gap between buying a product/service and
finding out that it was of poor quality is long (LRCY), (e) complaint
actions (voice/private) leave little impact on the sellers/providers
(LIMP), and (f) several psychological inhibitions dissuade them from
complaining about poor product/service (PCOS). Andreasen's
research shows that the physician care "industry" meets most of
these criteria.
When consumer dissatisfaction occurs in such loose monopoly
markets, Hirschman posits that consumers would tend to neither
take voice nor exit (i.e., private) actions. Instead, they would tend to
be passively "loyal." Consider, for instance, the physician care
industry. Consumers find exit unattractive since they lack knowledge
about and ability to evaluate health care, several psychological inhibitions discourage such actions, and even if some patients take such
actions it may leave little impact on the physician (Andreasen 1984,
130). Likewise, voice is not attractive because physicians usually discourage questions regarding treatment and consumers lack knowl-
24
TABLE 1
Key Dimensions of Loose Monopoly Construct and its Operational Measures
(Listed Items are for Auto-Repair Category)
Dimension
Definition/Operational Items
Availability of Alternatives (AALT)
Definition. Consumers' beliefs about availability of alternative providers/sellers who

would provide better product/service and/or care more about customer satisfaction.
Hirschman notes that in a loose monopoly although alternatives are available they are not
perceived as providing better product/service (1970, 24-25, 44-45).
Operational Items. (1) One could change the auto-repair shop one goes to, but there is no
guarantee that the other shop would care more about customer satisfaction. (2) One can
always find another auto-repair shop which provides comparable or better parts and/or
service (reversed).
Restricted Information (RINFO)
Definition. Consumers' perceptions about the customs (or norms) prevalent in an industry
that restrict the amount of information available to customers. Examples of such customs
are discouragement of advertising and comparison shopping practices. Such restrictive
customs are usually common in loose monopolies (Hirschman 1970, footnote 27; Andreasen 1985).
Operationai Items. (1) Most auto-repair shops advertise about the parts and services they
provide (reversed). (2) It is appropriate to visit an auto-repair shop just to check prices
(reversed). (3) Auto-repair shops provide customers with enough information about the
parts/services needed (reversed).
Consumer Knowledge (CKNO)
Definition. Consumers' beliefs about their ability to judge the quality (e.g., if it is poor) of
the various products/services offered by different industries. Hirschman observes that for
loose monopolies, buyers are usually unable to detect poor product/service (1970, 24-25).
Operationai Items. (1) One can obtain published evaluations for the service quality provided by different auto-repair shops (reversed). (2) Most consumers are able to detect if the
parts and/or service they obtained from an auto-repair shop were of poor quality
(reversed).
Long Repurchase Cycle (LRCY)
Definition. Consumers' perceptions about the time it takes between buying a product/
service and finding out that it was of poor quality in different industries. Andreasen (1984)
notes that loose monopolies are generally characterized by longer LRCY, thus making providers less responsive to customer problems.
Operationai Items. (1) It often takes a long time (e.g., several months) to find out that what
you got fixed from an auto-repair shop was of poor quality. (2) It is easy to tell when a part
or service you obtain from an auto-repair shop is not good (reversed).
Lack of Impact (LIMP)
Definition. Consumers' beliefs about the impact (or lack thereof) of taking actions (e.g.,
complain, exit) in response to poor quality product/service in different industries. Andreasen (1984; 1985) as well as Hirschman (1970, 45-46) observe that voice and/or exit actions
are perceived as having little impact in loose monopolies.
SUMMER 1991
VOLUME 25, NUMBER 1
25
TABLE 1 {continued)
Dimension
Definition/Operational Items
Operational Items. (1) Most auto-repair shops are eager to satisfy you if you tell them that
you are dissatisfied (reversed). (2) Many auto-repair shops would not care even if you told
them that you would never come to them gain.
Psychological Costs (PCOS)
Definition. Consumers' perceptions about the psychological costs or inhibitions involved in
taking some action in response to poor quality product/service in different industries.
Loose monopolies are usually characterized by psychological inhibitions on the part of consumers to take voice and/or exit actions (Hirschman 1970, 26).
Operational Items. (1) It is appropriate to complain to auto-repair store manager about
poor parts or service (reversed). (2) It is important to build a relationship with auto-repair
personnel (e.g., manager) to obtain good service. (3) No explanation is necessary if one
decides to stop patronage of an auto-repair shop.
edge to complain effectively (Andreasen 1984). As such, in loose

monopoly markets, channels for communicating quality declines are
relatively "blocked." A mechanism that can correct for lapses in
such markets is largely absent, resulting in higher levels of consumer
dissatisfaction and lower societal welfare.
Furthermore, Hirschman (1970) observes that because there are
some competitors, a loose monopoly further blunts the impact of
market forces in regulating the industry. This occurs because the more
knowledgeable and sophisticated consumers, who might normally
voice complaints and regulate the actions of sellers (e.g., as in a
monopolistic condition), tend to exit because they are aware of alternatives and are sufficiently aggressive to switch (Andreasen 1984). At
the same time, other consumers swallow their dissatisfacion believing
that they have few options and, consequently, appear to be "loyal"
to the seller. This "flight" of sophisticated consumers combined with
the "loyalty" of the majority affords sellers in loose monopolies
many of the benefits of a "true" monopoly without the aggravation
of voice that the latter must endure (Hirschman 1970; Andreasen
1984).
It is intuitively obvious that few industries would meet all criteria
of loose monopoly markets. Instead, most industries may possess
more or fewer loose monopoly conditions. In the present study, the
selection of service industries was motivated by a desire to obtain
variance in loose monopoly conditions. The service categories were
not selected at random. Instead, it was felt desirable to a priori select
26
those industries that were highly likely to exhibit different amounts

of loose monopoly conditions. This variation is germane to fully
understanding the impact of industry structure on consumer dissatisfaction. A combination of secondary (i.e., published studies) information and a pilot study were utilized to facilitate this selection.
PILOT STUDY: SELECTING SERVICE INDUSTRIES
The aim was to select three service industries that were at the high
(i.e., depicts most, if not all, features of loose monopoly markets),
low (i.e., portrays few characteristics of loose monopoly markets)
and midpoints along the loose monopoly continuum. This selection
was arrived at by implementing the following steps. First, secondary
data and published studies were collected for several service industries. Second, these data were analyzed with a view to formulate a
preliminary choice for three industries that met the preceding criterion. This analysis narrowed the choice to medical care, automotive
repair, and grocery retailing services. Third, a profile for the selected
industries on each of the loose monopoly characteristics (Table 1)
was developed. This profile is summarized in Table 2.
Table 2 reveals that while medical care and grocery retailing denote
the high and low points, respectively, on the loose monopoly continuum, automotive repair falls somewhere in between. Andreasen's
research offers support for the location of medical care industry. For
automobile repair, note that consumer knowledge about (and ability
to judge) service problems is usually limited (Day and Landon 1976),
long repurchase cycles are common, and few "better" alternatives
are available. By contrast, few psychological barriers exist since
research shows that consumer complaints are highest for auto-repair
problems (Best and Andreasen 1977). For grocery industry, a review
suggests that it exhibits few, if any, features of loose monopoly
markets (Reese and Alexander 1985). Consumers have significant
knowledge about grocery products, several alternatives are available,
repurchase cycles are short, and consumers often shop on the basis of
price. Likewise, psychological inhibitions for complaining are relatively low. However, it is recognized that these profiles are subjectively derived, and are not validated. To address this limitation, a
pilot study was conducted to evaluate the validity of the service categories selected.
27
VOLUME 25, >fUMBER 1
SUMMER 1991
TABLE 2
Evaluative Summary of Three Service Categories
on Loose Monopoly Characteristics
(Based on Secondary Data)
Industry
Characteristic
Grocery
Auto-Repair
Medical Care
AALT
Many competing
firms with no
dominant player
{Progressive Grocer
1983)
Few, if any, restrictions in the flow of
information (Progressive Grocer 1981)
Easy to judge quality
Many options are

available (Webbink
1978)
Supply of physicians is
restricted (Andreasen
1985)
Effort is required to obtain information (e.g.,

quotes) (Ritchie, Claxton, and Claxton 1979)
Relatively difficult to
ascertain quality
because of technical
nature (Day and
Landon 1976)
Varies from long to
very long
Advertising and price

communication is not
customary (Cahal
1962)
Complex service; very
difficult to assess
quality (Benham and
Benham 1975)
RINFO
CKNO
LRCY
LIMP
PCOS
Relatively small
because of its
perishable nature
No information
available
No inhibitions in
complaining
Little impact because

complaints about
auto repair to third
parties are highest
(Bearden, Crocket,
and Graham 1979)
Few hindrances in
complaining (Bearden,
Crocket, and Graham
1979)
Varies; generally
relatively long
(Andreasen 1984)
Many consumers perceive doctors to be
unresponsive to
patient problems
(Andreasen.1985)
Complaining is
generally considered
inappropriate
(Andreasen 1984)
Operationalization of the "Loose Monopoly" Construct and

Research Design
Initially 18 items were developed (based on definitions in Table 1)

with at least two items for each of the six dimensions. Based on a process of reverse classification using three judges (i.e., asking judges to
classify a scrambled pool of 18 items into the six dimensions based on
their definitions), inconsistent items were deleted. This process
reduced the items to 14. Next, the 14 items were reworded for each of
the three service categories selected, resulting in a pilot questionnaire
of 42 items (Table 1). The pilot questionnaire was then given to a
28
nonrandom sample of faculty and staff (excluding marketing faculty).

Two reasons suggest why this sample may not produce overly biased
results: (1) as household members, the focal sample has had some
experience with the three service categories selected, and (2) giving
equal representation to staff and faculty reduces, to some extent, the
effect of certain systematic biases (e.g., highly educated sample).
Nevertheless, the limitation of a systematic sample is recognized. A
total of 51 responses were received (90 percent response rate). None
had missing values. All responses were confidential. A five-point
"Strongly Agree-Strongly Disagree" Likert scale was utilized, with
higher numbers representing greater agreement with the prevalence
of a loose monopoly characteristic.
Findings and Discussion
Several conclusions can be drawn from the results of pilot study

(Table 3). First, the null hypothesis that the mean values are equivalent for the three service categories is rejected for the overall measure
(F = 54.33, p < .001) as well as for the various dimensions (F-values
range from 5.79 to 52.46) of the loose monopoly construct. The only
exception is the AALT dimension for which the F-statistic is borderline. This suggests that the service categories differ significantly along
the loose monopoly continuum. Second, medical care depicts the
highest mean value for individual dimensions as well as overall summary measure, with the only exception lack-of-impact (LIMP)
dimension. This pattern supports the contention that, of the three
industries investigated, medical care service is most like a loose
monopoly.
Third, the lowest mean values occur consistently for grocery service category. For the summary measure and five of the six dimensions, consumer perceptions concerning grocery industry were lowest. The only exception is CKNO, for which the mean value for
grocery category is higher in magnitude than that for automotive
repair, although the difference is not statistically significant (p =
.05). Finally, the mean values for automotive repair invariably lie
between the grocery and medical care means, except for LIMP. In
addition, the separation between the overall mean values is greater
than three standard deviations (cf., F = 54.33, p < .001). Taken
together, these findings suggest that automotive repair is perceived as
significantly different from both medical care and grocery services.
SUMMER 1991
VOLUME 25, NUMBER 1
29
TABLE 3
Evaluative Summary of the Three Service Categories
on Loose Monopoly Characteristics
(Based on Pilot Study)
Industry'
Characteristic
AALT
RINFO
CKNO
LRCY
LIMP
PCOS
Overall Mean
Grocery
Auto-Repair
Medical Care
F-value''
2.86
(.10)
2.15
(.12)
3.05
(.13)
1.85
(.13)
2.47
(.15)
1.46
(.06)
13.84
(.40)
3.11
(.11)
2.76
(.12)
2.86
(.14)
3.24
(.14)
3.38
(.16)
1.92
(.08)
17.27
(.38)
3.17
(.12)
3.76
(.10)
3.50
(.13)
3.67
(.12)
2.94
(.15)
2.25
(.10)
19.28
(.34)
2.15
49.65**
5.79**
52.46**
8.99**
21.75**
54.33**
Mean values with standard error in parentheses. Note, items were coded so that higher values
imply greater, loose monopoly conditions.
"F-statistic for the null hypotheses that the mean values are not different across the three service categories.
**p < .01.
and lies somewhere in between the preceding industries along the

loose monopoly continuum. Results from the pilot study provide empirical support for earlier conclusions drawn from secondary data.
The grocery, automotive repair, and medical care services, indeed,
present distinctly different loose monopoly conditions and seem
appropriate for more rigorous analysis. However, as these service
categories are utilized for further study, results obtained are likely to
manifest effects of (1) greater or fewer loose monopoly conditions (as
intended) and (2) idiosyncratic aspects of individual services.
HYPOTHESES FOR SELECTED SERVICE INDUSTRIES
Hirschman's theory offers several hypotheses for the variation in

consumer dissatisfaction and responses across industries with varying
loose monopoly conditions. This study focuses on three major
30
aspects of this theory for empirical verification, namely, (a) dissatisfaction responsesconsumers' responses to perceived dissatisfaction, (b) perceived responsivenessconsumers' perceptions about
the responsiveness of providers to voiced complaints, and (c) satisfaction with responseconsumers' felt satisfaction with the manner
in which the complaint was resolved by the providers. Discussion of
these aspects follows.
Dissatisfaction Responses
It follows from Hirschman's model that dissatisfied consumers

would tend to use voice actions less frequently when their dissatisfaction involves industries which exhibit more features of loose monopoly markets. This is so because in industries characterized by more
loose monopoly conditions, such as medical care, voice actions are
generally discouraged (e.g., psychologically or due to lack of impact).
Conversely, voice responses are less likely to be discouraged in markets such as grocery retailing which face more competitive and few
loose monopoly conditions. Such markets may well encourage voice
responses as a strategy to counter competitive pressures (e.g.. Business Week 1984). CCB studies provide indirect suport for these arguments (also Andreasen 1984; 1985). For instance. Best and Andreasen (1977) report that, for the case of medical/dental care, only 22.5
percent of the respondents took voice action. In contrast, for automotive repair, voice action was taken by 48.4 percent of respondents.
Other researchers have investigated the effect of structural factors
(e.g., number of competitors) on dissatisfaction responses using
industry as the unit of analysis (Fornell and Robinson 1983; Fornell
and Didow 1980). This research suggests that while concentration of
sellers is not related to perceived dissatisfaction (Fornell and Robinson 1983), the number of competing firms is significantly related to
voice (Fornell and Didow 1980). This is in accord with Hirschman's
theory. Thus, the following hypotheses were proposed for empirical
verification.'
'Although these hypotheses have been examined by Singh (1990), their inclusion here is
useful for two reasons. First, discussion of voice responses (i.e.. Hi and Hj) along with private
and third-party CCB (i.e., H3 to He) provides a complete picture of the effects of industry
characteristics on consumer dissatisfaction. Second, and more importantly, this study offers a
deeper understanding of the preceding hypotheses by exploring the impact of different contingencies on the results for voice responses. Research (including Singh 1990) does not tackle
voice responses at such depth.
SUMMER 1991
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31
Hi: The incidence of voice actions will vary significantly across the
three service industries investigated.
H2: The incidence of voice actions will be the lowest in medical care
industry, and the highest in grocery retailing. For autoniotive
repair, the use of voice would lie somewhere in hetween the preceding extremes.
It can be deduced from Hirschman's theory that private responses

(i.e., exit and negative W-O-M) would tend to be more frequently
utilized the less a given industry manifests loose monopoly conditions. When dissatisfaction involves grocery products, exit is a likely
response. This is so because better alternatives (e.g., competing
grocery stores) are available and psychological inhibitions for exit are
absent. Negative W-O-M responses are generally uninhibited for
markets such as grocery retailing. By contrast, private responses are
likely to be less prevalent in medical care dissatisfaction because the
nature of the industry presents few payoffs from such actions. Thus,
the following hypotheses were proposed.
H3: The incidence of private actions will vary significantly across the
three service industries investigated.
H4: The incidence of private actions will he lowest in the medical
care industry. For grocery retailing industry, private actions
would he the most frequent response, and somewhere in between for automotive repair.
In the preceding hypotheses, private actions are considered as a

combination of exit and negative W-O-M CCB, Although consistent
with previous research (Singh 1988), important differences between
these CCB should be noted in terms of market signals.^ Exit provides
a direct market signal to the seller via loss of market share. In contrast, negative W-O-M offers a potentially indirect market signal
because when a dissatisfied consumer gripes to friends and relatives,
they may or may not switch patronage from the offending seller.
Results of Richins (1983) and TARP (1986), however, suggest that
^Thanks to an anonymous reviewer for pointing out this difference.
32
W-O-M is likely to be powerful market signal. Because of these differences, hypotheses H3 and H4 were examined separately for exit
and W-O-M actions.
Unfortunately, Hirschman did not consider third-party actions.
Key concepts in his model can be extended to subsume such actions.
Most likely consumers will utilize third-party channels for resolving
their dissatisfaction when direct mechanisms (e.g., voice) are not
fruitful or are perceived to be unresponsive. It follows that consumers would tend to use more third-party actions the more a given
industry displays loose monopoly conditions. This is because voice
actions in such industries are either discouraged or lack much impact.
Consequently, third-party actions provide an alternative, and in
some circumstances, the only avenue for redress. Previous studies
have not focused on the variation in third-party behaviors across
industries with different market structures. Therefore, the following
hypotheses were proposed.
H5: The incidence of third-party actions will vary significantly
across the three service categories.
Hfi: The incidence of third-party actions will be highest in the medical care industry. For grocery retailing industry, third-party
actions would be the least frequent response, and somewhere in
between for automotive repair.
Perceived Responsiveness
The extent of loose monopoly conditions in an industry is also likely to impact on consumers' perceptions about the responsiveness of
providers to their just complaints. Specifically, in industries depicting high levels of loose monopoly conditions (e.g., medical care), dissatisfied consumers might perceive that providers are not generally
receptive to complaints, and the likelihood of obtaining redress is
remote. This follows from Hirschman's notions of "lack of impact"
(LIMP) and "psychological costs" (PCOS) (Table 1). That is, the
more an industry mimics a loose monopoly, the more a dissatisfied
consumer is likely to perceive a situation with restricted information
to judge service quality and limited power in obtaining redress
because voice lacks impact. Conversely, as per Hirschman's theory,
industries that are more competitive and evidence fewer loose
SUMMER 1991
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33
monopoly conditions (e.g., grocery retailing) are more likely to foster

a sense of responsiveness to customer complaints in order to survive.
Unfortunately, the preceding aspect of Hirschman's theory has not
been directly tested. Instead, there is considerable indirect evidence.
In many service and product industries, managers have attempted to
thwart the threat of increasing competition with increasing responsiveness to customer complaints. The automobile industry is a case in
point. After several years of languishing in a state of loose monopoly,
this industry was awakened by increasing foreign competition. In
response to this competition, the U.S. auto industry focused on consumer satisfaction and responsiveness to customer problems as the
pivotal point for a "comeback" strategy (e.g., Murtha 1989). Sellers
(1988, 94) documents similar changes in other industries and concludes, "with consumers smarter, choosier, and more demanding
than ever before, courting the complainers has become an essential
part of business." Based on the preceding discussion, the following
hypotheses were examined.
H?: The perceived responsiveness of providers to consumers' complaints will vary significantly across the three service industries
investigated.
Hs: The responsiveness of providers to consumers' complaints were
perceived to be the lowest in medical care industry, and the
highest in grocery retailing. For automotive repair, providers'
responsiveness would lie somewhere in between the preceding
extremes.
Satisfaction with Response
Consistent with the preceding arguments, it follows from Hirschman's model that the more an industry displays loose monopoly conditions, the greater the likelihood that consumers will remain dissatisfied with providers' actual responses to voice actions. This is because
providers in loose monopolies have little incentive to satisfy customer
complaints as repurchase cycles are long (i.e., LRCY, Table 1) and
voice actions are devoid of much power (i.e., LIMP, Table 1). By
contrast, in industries characterized by few loose monopoly conditions, competition is relatively high, and voice actions are potent.
Consequently, in such industries providers are likely to foster higher
34
satisfaction (than the case for loose monopolies) in customers who

voice their dissatisfaction.
Research has not systematically evaluated the preceding hypothesis. However, some early studies are suggestive of empirical support
for these arguments (Andreasen 1988). Best and Andreasen (1977)
report that far fewer people (34.5 percent) perceived that their voiced
problems were satisfactorily addressed for medical/dental problems
when compared to other services (44 percent). Consequently, the
following hypotheses were proposed.
H9: The consumers' satisfaction with providers' response to voice
will vary significantly across the three service industries investigated.
Hio: The consumers' satisfaction level with providers' response
would be the lowest in medical care industry, and the highest in
grocery retailing. For automotive repair, this satisfaction level
would lie somewhere in between the preceding extremes.
Evaluating Hypotheses Hi to Ho Under Different Contingencies
The results obtained for the preceding hypotheses were further

evaluated by exploring the effects of several contingencies. In particular, effects due to sex, age, education, income, and level of perceived dissatisfaction were examined. These variables were selected
because previous CCB research suggests that they have important
influences on consumers' responses to dissatisfaction (e.g., Singh
and Howell 1985). For each variable (e.g., sex), the sample was
divided into two groups (e.g., male and female), and the various
hypotheses were then tested individually. Differences in results across
the two groups for each hypothesis were noted. This offered an
opportunity for deeper understanding since the vjiriability in results
due to different contingencies can be empirically ascertained. If,
indeed, the results remain largely invariant to different contingencies, the underlying model can be viewed as a valid and compelling
portrayal of real-life dissatisfaction processes.
More importantly, use of individual-level contingency variables
helps identify processes that are either macro-, micro-driven, or
mixed. This stems from comparing the aggregate results (i.e., by
pooling data across all contingency variables) with those obtained
SUMMER 1991
VOLUME 25, NUMBER 1
35
under different contingencies (e.g., for males and females separately

in the case of "sex" contingency) for each hypothesis. If results
under different contingencies are generally consistent with aggregate
results, then they imply that the underlying process is relatively insensitive to variation in individual differences; instead, they may reflect
stable characteristics of the industries investigated. In this instance,
the underlying process is categorized as macro-driven. On the other
hand, if results are highy sensitive to individual differences (i.e.,
aggregate results are largely inconsistent with those obtained under
each of the different contingencies), the underlying process is categorized as micro-driven. Finally, where aggregate results are consistent with findings for some, but not all, of the contingency variables,
the underlying process is thought to reflect a combination of individual and industry characteristics; in this sense, it is mixed. It should
be noted that the preceding categorization is based on the contingency variables investigated. Use of other contingency variables
might yield different categorizations. Because it is nearly impossible
to include all potential contingency variables in a single study, readers should note this as a limitation of the study and a point for further research.
THE STUDY
Data Collection
Different mail questionnaires were developed for each of the three

service industries. Per usual practice, items (see measures below)
were modified somewhat to be relevant to each industry. The population of interest was defined as households that had a dissatisfying
experience with a given service category (e.g., medical care). Because
sampling frames of such a population are not easily available, a substitute procedure, suggested by Robinson (1979) where a random
sample of households is asked to preselect themselves based on
whether or not they can recall a recent dissatisfying experience, was
adopted. For each industry, a random sample of 1,000 households
was utilized for mailing the questionnaire packet. Followup was
accomplished by sending a reminder card as well as telephone callbacks using the crisscross directory.
The number of responses received for analysis were: automobile
repair = 155; medical care = 166; and grocery shopping = 176.
36
Response rates cannot be precise because this involves estimating

the proportion of the number of respondents to the number of
households who had experienced a dissatisfaction with a specific service category. The denominator of this proportion, households that
had a dissatisfying experience, is an elusive number. However, telephone callbacks provided some estimate for this term. In all 1,500
telephone callbacks were made, 500 for each service category. Telephone numbers were obtained from the crisscross directory. A contact rate of about 80 percent was achieved (up to three calls were
made to those not initially reached). Of those contacted, at least 70
percent stated that they had not responded because they could not
recall a dissatisfying experience with the specific service category. In
contrast, those who had experienced a "recent" problem were eager
to participate and "let some one know" about their dissatisfaction.
The dissatisfaction experience rate of 30 percent based on telephone
callbacks is consistent with research (Best and Andreasen 1977). Best
and Andreasen (1977) report that 21 percent of their sample had
experienced some dissatisfaction with automotive repair. For other
categories, the rate was much lower. Thus, the 30 percent estimate
appears to be rather liberal. Based on this liberal estimate for the percentage of households that had experienced some dissatisfaction, a
pessimistic estimate of response rates for the three surveys are automobile repair = 52 percent; medical care = 54 percent; and grocery
shopping = 59 percent. Some responses had to be excluded because
of incomplete data. Usable responses range from 116 in automotive
repair to 125 in medical care. Table 4 summarizes the demographic
characteristics from the three surveys.
Measures
Respondents were asked to describe a dissatisfying experience in

the service category that they remembered most clearly. Measures for
consumers' responses to dissatisfaction, perceived responsiveness of
providers, satisfaction with providers' response, and several other
variables (not utilized in the present study) relating to their dissatisfying experience were obtained. Items were slightly reworded so that
they would appear relevant to the service category.
In particular, dissatisfaction responses were assessed by asking
what the respondent did after experiencing the stated problem. Voice
actions were measured by three items (e.g., for auto repair: (1) com-
SUMMER 1991
37
VOLUME 25, NUMBER 1
TABLE 4
Demographic Characteristics of the Three Samples
Service Category
Demographic Characteristics
Grocery
Auto-Repair
Medical Care
Chi-square*
(p-value)
(percents)
Sex
Male
Female
27
73
67
33
30
Age
s 2 5 years
>25, <35 years
>35, < 50 years
> 50 years
22
30
23
25
8
18
39
35
10
22
29
39
21
66
10
77
10
70
13
13
20
White Collar
Blue Collar
Unemployed/Retired
14
27
32
27
28
27
26
19
25
21
15
39
Education
High School
Trade School
College
Graduate School
27
6
47
20
13
4
53
30
23
7
Race
White
Black
Hispanic/Other
91
2
7
93
3
4
88
3
9
Income ($)
s 20,000
> 20,000, 30,000
> 30,000, < 50,000
> 50,000
34
19
32
15
17
13
39
31
29
23
29
19
Marital Status
Single
Married
Divorced/Widowed/
Separated
70
Occupation
Professional
49.06
(.00)"
23.90
(OO)"^
11.88
(.02)"
24.47
(.00)'=
10.00
(.12)=
48
22
4.67
(.32)"
20.70
(.00)'=
^Based on the null hypothesis that the distribution of the sample for the demographic characteristic is the same across the three service categories.
"Degrees of freedom = 2.
'^Degrees of freedom = 6.
""Degrees of freedom = 4.
38
plained to the store on my next trip, (2) went back to the store immediately and asked them to take care of the problem, (3) called up the
store and told them about the problem); private actions by two items
(e.g., for auto repair: (1) decided never to shop again at that store, (2)
told friends and relatives about my bad experience); and third party
actions by two items (e.g., for auto repair: (1) complained to a consumer agency (e.g.. Better Business Bureau), (2) took some formal
action against the store). For all seven items, a dichotomous (Yes/
No) scale was utilized. Multiple responses were allowed. Responses
were coded as either 0 (No) or 1 (Yes). Specifically, if an individual
reported "Yes" to any one or more voice items, the voice measure
was coded as 1, otherwise a zero was recorded. Similar coding was
implemented for private and third-party measures.
Perceived responsiveness was assessed by asking the respondent to
rate the likelihood that the provider would take remedial action
assuming the respondent had complained to the provider (i.e., voice
action). In all, four items were used to assess this measure utilizing a
six-point "Very Likely-Very Unlikely" Likert scale. These items are
listed in Table 7 (first column).
Satisfaction with response was measured by utilizing a ten-point
"Not Satisfied at Ail-Completely Satisfied" scale. Respondents were
asked to record how they felt about the whole incident after they had
taken a complaint action.
Perceived level of dissatisfaction with the reported unsatisfactory
experience was assessed by utilizing a ten-point "Not at All SatisfiedCompletely Dissatisfied" scale. Respondents were asked, "Overall
how dissatisfied were you before you did anything about the problem?" (emphasis original). Finally, information regarding several
demographic variables (e.g., age, sex, education, and income) was
obtained for classification purposes. The specific variables utilized
and the distribution of respondents across these variables is provided
in Table 4.
RESULTS
Dissatisfaction Responses
Hypotheses Hi to He were examined by utilizing contingency

tables. Specifically, hypotheses H,, H3, and H5 for the variation in
voice, private, and third-party actions were investigated by comput-
SUMMER 1991
VOLUME 25, NUMBER 1
39
ing a contingency table. A x^ statistic provided a basis to test these

hypotheses. In addition, Cramer's V was calculated to obtain measures of association in the contingency tables (Kendall and Stuart
1979, 588). Following this, hypotheses Hz, H4, and He were tested by
examining frequency counts for each service category. This testing
focused on ascertaining the match between the pattern of variation
for actual CCB with the hypothesized pattern based on Hirschman's
theory.
Results are summarized in Table 5. For voice and private responses, the variation across three service categories is significant (x^
values of 41.2 and 32.04, p < .001). In addition, when exit and
W-O-M actions are considered separately, the variation is still significant (x^ = 32.04 and 26.9, respectively). Hypotheses Hi and H3 are
supported. In contrast, while incidence of third-party actions is lowTABLE 5
Results for Variance in Voice, Private, and Third-Party CCB
(Hypotheses H, through He)
Service Categories
Grocery
AutoRepair
Medical
Care
H, andHj.- Voice CCB

Raw Responses
Percent of Respondents
94
76
98
84
Ha and H,: Private CCB^

Raw Responses
Exit CCB (percent)'
40
32
13
W-O-M CCB (percent)'
Hypotheses"
Hj and H^: Third-Party CCB

Raw Responses
x'"
Cramer's V
59
48
41.20
0.34
70
60
34
81
66
49
32.04
0.30
34.04
0.27
28
57
57
26.90
0.27
4
3
11
9
7
6
4.17
(.125)
0.11
"Because the dependent measures are dichotomous (i.e., Yes/No) variables, data are presented
for "yes" responses only. Note, " n o " responses are redundant and can be derived from the
table.
''Tests the null hypothesis that the dependent measure (e.g., voice CCB) is independent of the
service category. P-value in parentheses.
'This is a measure of association derived from x^.
"Because the private CCB is a combination of exit and negative word-of-mouth actions, information is provided on its components as well as for further clarity.
'Only the percentage of respondents who took such actions is listed.
40
est in grocery retailing (in accord with Hirschman's theory), variation

is not statistically significant (x^ = 4.17, p = .12) indicating that
hypothesis Hj is not supported. This precludes the testing of He
because meaningful conclusions about the pattern of third-party
responses across service catgories cannot be drawn when the variation itself is random.
The pattern of voice responses suggests partial support for H2. In
accord with H2 incidence of voice is lowest in medical care (48 percent of respondents). Although it was expected that voice response
would be most frequent for grocery problems, in actuality automotive-repair dissatisfactions yield the highest use of voice (84 percent
of respondents). However, the difference between the incidence of
voice in grocery and automotive repair is not statistically significant
(P = .05).
The pattern for private responses is diametrically opposite to
hypothesis H4. Although private options were expected to be least
frequently utilized for medical care problems, in actuality private
responses are most frequently used for this industry (66 percent of
respondents). This pattern is evident even when exit and negative
W-O-M actions are analyzed individually. However, this is consistent
with more recent research which found that over 63 percent of dissatisfied patients had changed physicians (exit), a much higher percentage than most previous research (Andreasen 1985).' Paradoxically, while grocery industry was hypothesized to yield the highest
incidence of private CCB because it depicted few features of loose
monopolies, it in fact resulted in the lowest private rate (32 percent of
respondents; exit = 13 percent, W-O-M = 28 percent). In an earlier
comprehensive survey of consumer dissatisfaction. Best and Andreasen (1977) reported that only 11 percent of respondents had used a
private option for grocery-shopping problems. While the results of
this study are somewhat consistent with previous studies, they call
into question the notion that private actions decline with increasing
loose monopoly conditions.
The effects on the preceding results due to contingencies for dif^The exit rate in Andreasen's (1985) research could also be higher due to the fact that consumers were asked if they had changed physicians in response to "serious" dissatisfactions
over a five-year period. This study focused on a single episode of dissatisfaction that the
respondents remembered "most clearly." Although not directly asked for "serious" problems, the mean dissatisfaction level was fairly high (i.e., on a 0-10 scale, grocery = 6.65, auto
repair = 7.31, and medical care = 7.95).
SUMMER 1991
VOLUME 25, NUMBER 1
41
ferent levels of dissatisfaction, age, educational background, income

levels, and sex of the respondents are summarized in Table 6. In this
table, the support for the individual hypothesis is evaluated as being
consistent (indicated by "YES") or as being inconsistent ("NO")
with the aggregated results of Table 5. In terms of overall support
(see Table 6), hypothesis Hi is strongly supported because, under all
contingencies, the results are consistent with aggregated results.
Variation in voice response across the service categories appears to
stem from systematic differences in the three industries, rather than
as an effect due to individual differences. Likewise, results for
hypothesis Hs (Table 5) also evidence strong support under different
contingencies. In this case, lack of systematic variation across the service categories is reaffirmed. For/>r/vfl/e responses, results are mixed.
In three of the ten levels of contingencies (i.e., low level of dissatisfaction, high age group, and male respondents), the results for H3 are
inconsistent with aggregated data. Similar results emerged when exit
and W-O-M were analyzed separately (for this reason, they are not
shown in Table 6)." Variation in private responses appears to be a
joint function of underlying structural factors of industries and several individual variables.
In order to further understand these joint effects. Table 6 also
evaluates the overall effect of different contingencies. The effect is
categorized as "strong" if the results differ substantially for low and
high levels of a contingency variable. For instance, the effects for
level of dissatisfaction are "strong" since while H3 is not supported
under "low" dissatisfaction (x^ = 1.2, p = .54), it is strongly supported when dissatisfaction is "high" (x^ = 32.0, p < .01). In addition, the effects for H, are much stronger under "high" dissatisfaction (x^ = 37.7, p < .001) than under the "low" condition (x^
= 9.4, p < .01). This suggests that under "high" dissatisfaction
level, the hypothesized effects of loose monopolies become more
prominent.
At .01 level of significance, no conclusions were discordant for exit and negative W-O-M
under the various contingencies. Specifically, the following c^ values were obtained for exit and
negative W-O-M under different contingencies: (1) level of dissatisfactionhigh: exit = 1.3,
W-O-M = 2.06; low: exit = 23.7, W-O-M = 23.9; (2) agehigh: exit = 22.9, W-O-M =
24.1; low: exit = 6.8, W-O-M = 7.6; (3) educationhigh: exit = 23.0, W-O-M = 14.89; low:
exit = 9.21, W-O-M = 15.7; (4) incomehigh: exit = 14.8, W-O-M = 20.0; low: exit =
12.58, W-O-M = 11.0; and (5) sexmale: exit = 3.61, W-O-M = 4.3; female: exit = 25.6,
W-O-M = 22.5.
42
TABLE 6
Effects on the Results for Hypotheses H,, H3, and H5,
under Different Contingencies
Hypotheses
Contingency
LeveP
H,
Ha
H,
Support"
x"
Support"
Yes
9.4
( <.O1)
No
37.7
( <.O1)
Yes
22.1
Yes
x"
Support"
1.2
Yes
x"
Overall
Effect
Level of
Dissatisfaction
Low
High
Yes
Age
Low
Yes
( <.O1)
High
Yes
16.4
(<.O1)
No
8.9
(:<.oi)
Yes
(.54)
32.0
.O1)
4.2
(.12)
Yes
Strong
1.9
(.38)
34.0
(<.O1)
No
4.2
Yes
6.0
(.03)
(.12)
Strong
.01
(.99)
Education
Low
Yes
High
Yes
32.3
( <.O1)
Yes
Income
Low
Yes
Yes
High
Yes
16.0
( <.O1)
19.9
( <.O1)
21.6
No
Yes
19.5
(.01)
15.7
(<.O1)
Yes
1.7
Yes
(.42)
3.04
(.22)
21.8
(<.O1)
14.4
.O1)
Yes
4.61
(.09)
Yes
1.3
Weak
Weak
(.51)
Sex
Male
Yes
( <.O1)
Female
Overall
Support
Yes
21.3
( <.O1)
Strong
Yes
1.4
(.49)
33.2
.O1)
Mixed
Yes
5.5
(.07)
Yes
Mixed
3.5
(.17)
Strong
"Variables were categorized into two groups by utilizing the midpoint of the scale for the level
of dissatisfaction, male and female for sex, and the median point for the distribution of the
remaining variables.
"This evaluates if the results obtained for the individual groups support the results from the
aggregated data (i.e.. Table 5).
in parentheses.
SUMMER 1991
VOLUME 25, NUMBER 1
43
The effects due to age of the respondent are also strong. Younger
resondents are more likely to exhibit variation in private (H3) and
third-party (H5) responses (x^ = 34.0 and 6.0, p < .01 and .03) than
older respondents (x^ = 4.2 and 0.01, p = .12 and .99). Female
respondents are significantly more likely to manifest variability in
negative W-O-M and exit behaviors (x^ = 33.2, p < .01) than their
male counterparts (x^ = 1.4, p = .49). This indicates that hypothesized effects of loose monopolies on CCB are more conspicuous in
responses of younger and female consumers. For contingencies due
to educational and income level, the results do not present any systematic differences.
Perceived Responsiveness
Because the dependent variable for hypotheses H7 and Hg was

intervally scaled, analysis of variance (ANOVA) techniques were
employed. Initially, a multivariate analysis of variance (MANOVA)
was utilized to test H7 with the four responsiveness items as the
dependent variables and the three service industries as the single
"treatment" variable. The MANOVA approach has an important
advantage in that it accounts for the intercorrelations among dependent variables. Following this, ANOVAs were run for the individual
responsiveness items in order to localize items that contribute to
overall significance. For hypothesis Hg pairwise comparison of
means was implemented. These comparisons were planned a priori.
Specifically, for each dependent variable, three comparisons were
planned, between (a) grocery and medical care, (b) grocery and automotive repair, and (c) automotive repair and medical care. In order
to control the probability of an experimentwise Type I error rate
within five percent, the Type I error per comparison was set at {.05/3
= 0.0167}, in accord with Dunn's test.
MANOVA results for the four responsiveness items (Table 7 bottom panel) suggest that mean values for these items differ significantly across service categories (F = 5.41, p < .001). Individual
ANOVAs (Table 7 second column) indicate that the null hypothesis
for equal means is rejected for each and every item (F-values range
from 4.97 to 18.85, p < .01). This strongly supports H7.
Examination of Table 7 reveals that, in all cases, perceived responsiveness is highest for grocery retailers, and lowest for medical care
providers, in accord with Hirschman's model. Statistically, the com-
44
TABLE 7
Results for Variance in Perceived Responsiveness
(Test of Hypotheses H, and H,)
Mean Values'^
Responsiveness Item"
AutoF-value'' Grocery Repair
Assume you reported the incident to the

how likely is it that the store' would. . e
1. apologize but do
12.21
nothing "^
(<.OO1)
2. take appropriate action
18.85
to take care of your
(<.OO1)
problem
3. solve your problem and
6.91
give better service to
(.001)
you in the future
4. be more careful in
4.97
(.007)
future and everyone
would benefit
Multivariate Results
Wilks' X
F-value
p-value
Comparisons'"
Medical
Care
G>M
G>A
A>M
<.001
0.74
<.OO1
<.OO1
0.06
<.OO1
store.
4.17
(.18)
4.09
(.18)
4.78
(.16)
4.36
(.16)
3.06
(.18)
3.46
(.16)
3.86
(.15)
3.74
(.16)
3.11
(.15)
<.OO1
0.58
<.0O4
3.75
(.15)
3.48
(.16)
3.07
(.15)
.002
0.23
.063
0.889
5.415
<.OO1
*Items are listed for automotive-repair category. For other categories, items were modified
slightly in order to enhance relevance.
''F-value is based on ANOVA with the responsiveness item as the dependent variable, and the
service category as the treatment. The p-value is in parentheses.
'^Standard error of the mean is in parentheses.
"These are pairwise planned comparisons in accord with hypothesis Hs. " G " stands for the
mean value for grocery, " A " for automotive repair, and " M " for medical care.
^All items were assessed by using a six-point "Very Likely-Very Unlikely" Likert scale, with
higher numbers representing higher likelihood.
'^This item was reverse scored to be consistent with other items.
parison for grocery retailers and medical care providers is significant

for all four items at p = .0167 (recall this controls overall Type I
error to five percent). For three of the four items, the comparison
between automotive repair and medical care providers is significant.
None of the other comparisons are statistically significant. This suggests that, in general, grocery and automotive repair providers are
perceived by consumers as significantly more responsive to their
voiced problems than are medical care providers. This provides partial support for hypothesis Hs.
Table 8 summarizes the effects of different contingencies. In terms
45
VOLUME 25, NUMBER 1
SUMMER 1991
is
U3
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HI
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46
of overall support, the results for item 2 (i.e., "take appropriate

action to take care of your problem") are strongly supported, while
item 1 (i.e., "apologize but do nothing") receives mixed support. In
contrast, support for item 3 is weak since in four of the ten levels the
results are inconsistent with aggregate data. Likewise, for item 4,
results are inconsistent for six of the ten levels, indicating weak support. Note that items 3 and 4 pertain to responsiveness in the future
(for instance, item 4 is, "be more careful in future and everyone
would benefit"; Table 7), unlike items 1 and 2 which focus solely on
perceived responsiveness to the specific problem. This indicates that
perceptions of providers' responsiveness to a specific problem are
robust and stable reflections of underlying structural factors of service categories. However, for providers' responsiveness to future
problems, these perceptions appear to reflect individual differences
as well as underlying structural factors.
Results for overall effects (Table 8 last column) provide greater
insights into these joint relationships. These effects are mostly due to
differences in the support for items 3 and 4 for different contingencies. For items 1 and 2, such differences are marginal, with education
and dissatisfaction levels as the exceptions. As such, the analysis
focuses on items 3 and 4.
Strong effects are obtained for age and sex of the respondent.
Younger respondents are more likely to depict variability in providers' responsiveness to future problems (i.e., items 3 and 4) across
industries (F = 5.2 and 6.58, p < .01) than older consumers (F =
1.93 and 0.8, p > .05). Females perceive greater differences in providers' responsiveness (F = 5.6 and 6.7, p < .01) than their male
counterparts (F = 2.7 and 1.5, p > .05). Consistent with the effects
for age and sex, consumers with lower income level perceive greater
variation across service categories. This effect is categorized as
"weak" because the variation in items 3 and 4 for low income
respondents is borderline (statistically). Finally, mixed effects are
obtained for dissatisfaction and education levels of the respondents.
These effects are more prominent for providers' responsiveness to
the specific problem (i.e., items 1 and 2). In particular, consumers
with higher education and dissatisfaction levels perceive greater variation in providers' responsiveness to a specific problem. The finding
that educated consumers are able to discriminate better among providers' responsiveness in different industries is in accord with Hirschman's suggestion that sophisticated consumers are more aware of
SUMMER 1991
VOLUME 25, NUMBER 1
47
various alternatives and sellers' responses to marketplace dissatisfaction.

Consistent with the preceding analyses, hypothesis Hg was tested

utilizing an ANOVA design with satisfaction as the dependent variable and service categories as the three-level treatment. Following this,
hypothesis H,o was tested by implementing three-pairwise comparisons with per comparison error rate set at .0167 in accord with the
preceding discussion.
Consumers' satisfaction with providers' response to their voiced
problems varies significantly across service categories (F = 15.82, p
< .001). This strongly supports hypothesis Hg. In addition, consumers are most satisfied with grocery retailers' response (mean =
7.01, standard error - .33), and least satisfied with medical care providers (mean = 4.42, standard error = .33). For automotive repair,
consumers are moderately satisfied (mean = 5.53, standard error =
.33). The pairwise comparison between grocery retailers and each of
the other categories is significant at p = .0167. However, the comparison between automotive repair and medical care is borderline (p
= .0179). These results generally support hypothesis Hio. It appears
that the extent of consumer satisfaction, even when they voice their
problems, is intimately linked to structural factors within an
industry.
Additional evidence in support of preceding results follows from
the analysis of different contingencies (see Table 9). In terms of overall support. Table 9 suggests that the aggregated results presented are
upheld in nine of the ten contingencies, indicating strong support.
The only exception is low dissatisfaction level, for which the satisfaction evaluations do not differ significantly (F = 0.67, p = .51). The
manifestation of structural factors (of industries) in consumers' satisfaction with providers' response appears to be largely invariant to
different contingencies.
Important effects due to contingency variables are also evident in
Table 9. In particular, differences in consumers' satisfaction with
providers' response are heightened under high dissatisfaction (F =
17.24, p < .01), but tend to diminish when dissatisfaction level is low
(F = 0.67, p = .51). Also, while the effects due to low and high educational levels are similar in direction, they differ in terms of their
48
TABLE 9
Effects on the Results for Satisfaction with Response
under Different Contingencies
Contingency
LeveP
Level of Dissatisfaction
Age
Education
Income
Sex
Overall Support
Overall
Effect
Support *"
F-value'^
Low
No
High
Yes
0.67
(.51)
17.24
Low
Yes
6.06
(.002)
High
Yes
9.94
Low
Yes
5.25
(.007)
High
Yes
11.47
Low
Yes
High
Yes
6.69
(.001)
10.96
Weak
Male
Yes
Female
Yes
6.43
(.002)
9.95
Weak
Strong
Weak
Mixed
Strong
^Variables were categorized into two groups by utilizing the midpoint of the scale for the level
of dissatisfaction, male and female for sex, and the median point for the distribution of the
remaining variables.
''This evaluates if the results obtained for the individual groups support the results from the
aggregated data (see text).
^This is the F-statistic for the null hypothesis that, for this group, the mean values for the satisfaction with response item are equal in the three service categories. P-value is in parentheses.
Strength. Specifically, for high educational level, differences in satisfaction with response across service categories are more pronounced
(F = 11.47, p < .001) than for respondents with low educational
level (F = 5.25, p = .007). This suggests that while satisfaction with
providers' response is strongly influenced by structural factors, these
effects are likely to become more potent the more consumers feel dissatisfied and/or higher their educational level. For other contingency
variables, effects are generally weak.
SUMMER 1991
VOLUME 25, NUMBER 1
49
DISCUSSION AND IMPLICATIONS
Certain limitations of this study should be noted. The findings are

based on responses from households in the Southwest United States.
To the extent that these respondents are idiosyncratic, the generalizability of results may be affected. The test of hypotheses was limited
to dissatisfactions resulting from grocery, automotive repair, and
medical care problems. For a more rigorous examination, more
product/service categories need to be examined. Purposive selection
of service categories with varying loose monopoly conditions
afforded a reasonable basis for examining the key propositions. At
the same time, it is recognized that the results obtained not only
reflect the effects of greater or fewer loose monopoly conditions
(which was intended) but also of unique features of the specific industries selected (which was not intended). Additionally, the research
design adopted (i.e., recall of a dissatisfying experience) is likely to
highlight the more serious dissatisfactions. As such, the results may
not be generalizable to the entire set of marketplace dissatisfactions.
Moreover, the study is based on cross-sectional data. Usual caveats
for determining sequential effects from such data are applicable. One
particular limitation of the cross-sectional design is that behaviors
and cognitions leading up to those behaviors are collected at the same
time. How the complaint was actually handled by the service provider may have affected responses.
The motivation for this study lies in understanding the impact of
loose monopoly conditions at the industry level on dissatisfactionrelated responses at the individual level. The specific contribution
stems from the fact that while previous studies have been preoccupied with documenting variation in dissatisfaction responses across
industries, this paper examines a theoretical model that attempts to
explain such variations. Based largely on Hirschman's model, it was
hypothesized that certain measurable structural differences among
industries (i.e., loose monopoly conditions) would likely manifest in
consumers' responses to dissatisfaction, perceptions of providers'
responsiveness to complaints, and satisfaction with sellers' attempts
at redress. Moreover, these hypotheses were examined under different contingencies. This allowed the delineation of dissatisfaction
responses into one of three categories: (a) macro-driven responses
effects of structural factors play a dominant role on consumers'
responses, (b) micro-driven responseseffects of individual factors
50
play a dominant role, and (c) mixed responsesboth structural and

individual factors interplay in affecting dissatisfaction responses.
The findings of this study reveal that while voice is largely a macrodriven response, private actions are probably mixed responses. Dissatisfied consumers are significantly less likely to use voice actions
when their problems involve medical care instead of either grocery or
automotive-repair problems, in accord with Hirschman's theory.
Additionally, the variation in voice actions remained significant
under all analyzed contingencies. The notion that the more an industry manifests characteristics of loose monopolies, the more it is likely
to be perceived to restrict voice actions, appears to be a valid portrayal of real-life processes. For private actions a different picture
emerges. First, variation in private actions, while significant, is in a
direction opposite to that of voice actions and stated hypotheses. In
other words, the findings indicate that the more an industry mimics
a loose monopoly, the more likely consumers would use private
actions. Second, the variation in private actions is influenced by
industry as well as individual characteristics (i.e., mixed response). In
particular, this variation is enhanced (diminished) for the case when
the level of dissatisfaction is high (low), and the respondent is female
(male) or younger (older).
Preceding differences between patterns for voice and private responses are intriguing. A potential explanation for these patterns
could be that consumers utilize compensatory mechanisms to relieve
their dissatisfaction; that is, where voice is inhibited due to psychological or external reasons (e.g., as in medical care problems), consumers attempt to compensate for this restriction on voice with
greater use of private (i.e., exit and negative W-O-M) actions. Presumably this underlies consumers' motivation to "do something
about their dissatisfaction," and hopefully get "even with the provider." Conversely, when voice is uninhibited and serves to redress
dissatisfactions, consumers may compensate by less frequent use of
private actions. This notion of compensatory mechanisms is clearly
evident for grocery (voice = 76 percent, private = 32 percent; exit =
13 percent, W-O-M = 28 percent) and medical care (voice = 48 percent, private = 66 percent; exit = 49 percent, W-O-M = 57 percent)
dissatisfactions. It appears that the more an industry mimics a loose
monopoly, the more likely dissatisfied consumers compensate for the
perceived loss of voice option by gains in exiting to alternative sellers
and/or voicing to friends and relatives.
SUMMER 1991
VOLUME 25, NUMBER 1
51
Automotive repair presents an anomalous case, with both voice (84

percent) and private (60 percent) responses at a high level (also exit =
34 percent, W-O-M = 57 percent). A likely reason for this anomaly
is that while automotive-repair industry does not present conditions
which might inhibit voice (Tables 2 and 3), consumers neither perceive auto-repair providers as responsive sellers (Table 7) nor are
satisfied with their actual response. As such, while voice is possible, it
lacks potency. Probably this lack of potency interferes in the operation of a compensatory mechanism between voice and private
responses. Nevertheless, it cannot be ruled out that the selection of
service categories and/or idiosyncracies stemming from the nature of
the responding sample could be confounding factors. More research
to understand CCB patterns is needed.
If supported, such compensatory mechanisms offer significant
implications. Practitioners may find that the encouragement of voice
has an all around positive effect. When consumers voice their dissatisfactions and sellers are responsive, the use of private actions (exit
and negative W-O-M) is likely to be less frequent. By facilitating
voice, managers may not only reduce the indirect impact of negative
W-O-M concerning their products and services, but may also retain
the loyalty of their customer base (i.e., because of reduced exit).
Recent TARP (1986) studies appear to support this prescription. For
instance, over 46 percent of the consumers indicated that they would
not exit when voice was feasible, even though their complaints were
not satisfactorily addressed. In instances where managers were
responsive and tended to satisfy voiced complaints, the portion of
consumers indicating that they would remain loyal (i.e., not exit)
increased to 70 percent. Consequently, the counter-intuitive notion
that the effective encouragement and facilitation of complaints (i.e.,
voice) may actually help increase brand loyalty (and profitability)
and contain the negative effects of other private actions appears to
hold considerable merit.
From a public policy perspective, this study provides insights on
regulation issues. Regulation by self-policing mechanisms (e.g., state
medical boards) and/or competitive forces (e.g., fear of losing
market share to competitors) is thought to be generally sufficient to
ensure consumer welfare and satisfaction in a wide range of U.S.
industries. In contrast, the conceptual framework presented places
greater emphasis on consumers' responses to dissatisfaction and
sellers' responsiveness in determining the effectiveness of regulatory
52
mechanisms. The case of medical care, and to some extent automotive repair, exemplifies why this latter approach is more insightful.
Several self-regulatory mechanisms are in place for delivering consumer satisfaction and welfare in the medical care industry (e.g.,
medical boards, increasing competition, HMOs/PPOs, etc.). However, the mere presence of such mechanisms appears to be insufficient to deliver consumer welfare (Andreasen 1984). When the focus
is shifted to dissatisfaction, a clearer picture emerges. Consumers dissatisfied with medical care appear to (a) voice their problems least
frequently, and (b) perceive that medical care providers are least
responsive to complaints, when compared to the other industries
investigated. Additionally, even when dissatisfied consumers complain, medical care providers are more likely to leave these consumers
dissatisfied. The notion that the preceding responses refiect industry
characteristics (i.e., medical care) is reinforced because these results
remain largely invariant over several contingencies. It is noteworthy
that while private actions are the highest for medical care, secondary
data and the pilot study indicate that such actions are less likely to
leave an impact on medical care providers. Taken together, these
results reaffirm Andreasen's (1985, 140) contention that "consumers
are not policing the health care industry internally" and lend credence to C. Everett Koop's (1989) impassioned commentary:
[W]e seem to have a system of health care that is distinguished by a virtual
absence of self-regulation on the part of those who provide that carehospitals and health-care workers, primarily physiciansbut distinguished as well
by the absence of such natural marketplace controls as competition in regard
to price, quality or service (10).
Public policy officials may wish to supplement self-regulatory mechanisms in the medical care industry with channels that will strengthen
consumers' rights and protect their interests by providing avenues for
facilitating voice and redress of just complaints.
Likewise, the focus on dissatisfaction responses in automotiverepair industry provides an insightful perspective. The automotiverepair industry is also characterized by several self-regulatory mechanisms (e.g.. Better Business Bureau, AUTOCAP [automobile consumer action panel], significant competition, etc.). This industry
poses few, if any, inhibitions on voice and private actions (Table 5;
voice = 84 percent, private = 60 percent). As such, consumers
appear to be able to complain freely about their perceived dissatisfac-
SUMMER 1991
VOLUME 25, NUMBER 1
53
tions. Are these self-regulatory and dissatisfaction mechanisms sufficient to deliver consumer satisfaction and welfare? Probably not.
Results of this study suggest that consumers are no more satisfied
with auto-repair providers' response to complaints than they are with
medical care providers. Compared to grocery retailers, auto-repair
providers do a significantly poorer job of redressing consumers'
complaints. Consistent with this, respondents in the pilot study noted
that their complaints have the least impact (i.e., LIMP) in autorepair industry (Table 3). Consequently, the relative uninhibited use
of voice and private actions in auto-repair industry appears to be a
misleading indicator of consumer welfare, as these actions appear to
lack potency. Hirschman (1970, 122) was especially concerned about
such structures where firms (or service providers) are "not particularly sensitive to the particular reaction (voice, exit) it happens to provoke" in its consumer base, resulting in gradual "decline and decay"
in consumer welfare.'
The findings appear to suggest that, in evaluating consumer welfare and satisfaction in different industries, public policy officials
must shift their focus away from the mere presence of self-regulatory
mechanisms to a comparative analysis of dissatisfaction responses
and consumers' satisfaction with providers' redress actions. Answers
to questions along the lines of "What do consumers do when they are
dissatisfied?" and "Are providers responsive to consumers' complaints?" appear to be more reliable barometers of consumer welfare
in different industries.
In terms of further advancements in theory, this study offers
several implications for researchers. First, it seems evident that thirdparty responses are complex decisions, which are neither dominated
by industry characteristics nor by traditional demographic variables
(except, possibly age). Researchers should explore other decisionmaking models to better understand these actions. Models have been
proposed by Ursic (1985) and Singh (1989). Thus, as far as thirdparty actions are concerned, research on these models offer promising avenues at this time. Second, this study clarifies the role of
'An anonymous reviewer suggested an alternative explanation. The reviewer suggests that if
many dissatisfied consumers continue to voice in auto-repair industry, ultimtely this collective
voice is likely to provoke reform. In this sense, the conclusion that voice "lacks potency" in
auto repair may be a reflection of short-term state of affairs not of long-term trends. Unfortunately, the data cannot sort through these explanations.
54
several contitigency variables. The level of dissatisfaction appears to

have a strong effect on voice and private responses, as well as on
satisfaction with response. Much research has suggested that the level
of dissatisfaction has a marginal, if any, role in consumers' complaint responses (Day 1984). This study refines previous thinking
because the dissatisfaction level appears as a significant moderating
variable. Likewise, effects of age and sex were significant, especially
for private actions and perceived responsiveness. Researchers may
wish to incorporate such contingencies in attempts to understand dissatisfaction responses. Third, clear differences appear to underlie
consumers' choice of voice and private responses. Notably, voice actions are relatively macro-driven; private actions are mixed. An implication is that researchers are likely to find important differences in
the psychological process that predict (and explain) voice and private
responses (Day 1984). Finally, this study provides sufficient evidence
to conclude that industry characteristics appear to influence consumers' choice of dissatisfaction response. The proposed conceptual
framework provides an initial approach for understanding this process. Future research which enhances this model and seeks to integrate it with other psychological variables appears to promise fruitful
returns.
CONCLUSION
This study aimed to empirically investigate several hypotheses that

attempt to tie structural factors in different industries (i.e., "loose
monopoly" conditions) to individual consumers' responses (and perceptions) concerning marketplace dissatisfaction. This hypothesized
manifestation of macrolevel factors in microlevel behavior was based
largely on Hirschman's Exit, Voice and Loyalty framework (1970),
although findings from CCB literature were also incorporated. Substantively, this study moves away from the usual descriptions of the
incidence of complaint behaviors in different industries, to examine
models that explain such differences in CCB. Despite the inherent
simplicity of the proposed model, this initial study shows encouraging support for the conceptual framework. In addition, other studies
in the CCB literature have begun to document that Hirschman's
model yields interesting insights into the understanding of CCB processes (Andreasen 1985; Singh 1990). Because of its theoretical foun-
SUMMER 1991
VOLUME 25, NUMBER 1
55
dations and parsimony, Hirschman's model appears to be a good

starting point for research in modeling consumers' responses to
marketplace dissatisfaction.
REFERENCES
Andreasen, Alan R. (1988), "Consumer Complaints and Redress: What We Know and What
We Don't Know," in The Frontier of Research in the Consumer Interest, E. Scott Maynes
et al. (eds.), Columbia, MO: American Council on Consumer Interests: 675-722.
Andreasen, Alan R. (1985), "Consumer Responses to Dissatisfaction in Loose Monopolies,"
Journal of Consumer Research, 12(September): 135-141.
Andreasen, Alan R. (1984), "Consumer Satisfaction in Loose Monopolies: The Case of
Medical Care," Journal of Public Policy and Marketing, 2: 122-135.
Bearden, William O., Melissa Crockett, and Stephen Graham (1979), "Consumer Propensityto-Complain and Dissatisfaction with Automobile Repairs," in Refining Concepts and
Measures of Consumer Satisfaction and Complaining Behavior, H. Keith Hunt and Ralph
Day (eds.), Bloomington, IN: Bureau of Business Research: 35-43.
Benham, Lee and Alexandra Benham (1975), "Regulation Through the Professions: A Perspective on Information Control," The Journal of Law and Economics, 13: 421-447.
Best, Arthur and Alan R. Andreasen (1977), "Consumer Responses to Unsatisfactory Purchases: A Survey of Perceiving Defects, Voicing Complaints, and Obtaining Redress,"
Law and Society Review, ll(Spring): 701-742.
Business Week (1984), "Making Service a Potent Marketing Tool" (June 11): 164-170.
Cahal, M. F. (1962), "What the Public Thinks of the Family Doctor: Folklore and Facts,"
GP, 25: 146-157.
Day, Ralph L. (1984), "Modeling Choices Among Alternative Responses to Dissatisfaction,"
in Advances in Consumer Research, Volume XI, Thomas Kinnear (ed.), Provo, UT: Association for Consumer Research: 496-499.
Day, Ralph, K. Gabricke, T. Schaetzle, and F. Staubach (1981), "The Hidden Agenda of
Consumer Complaining," Journal of Retailing, 57(Fall): 86-106.
Day, Ralph L. and Stephen B. Ash (1979), "Consumer Responses to Dissatisfaction with
Durable Products," in Advances in Consumer Research, Volume VI, William Wilkie (ed.),
Ann Arbor, MI: Association for Consumer Research: 438-444.
Day, Ralph L. and E. Laird Landon (1976), "Collecting Comprehensive Consumer Complaint Data by Survey Research," in Advances in Consumer Research, Volume III, B. B.
Anderson (ed.), Ann Arbor, MI: Association for Consumer Research: 263-268.
Fornell, Claes and Nicholas Didow (1980), "Economic Constraints on Consumer Complaining Behavior," in/Irfvances/n ConiMmer/fejearcA, Volume VII, Jerry C. Olson (ed.), Ann
Arbor, MI: Association for Consumer Research: 318-323.
Fornell, Claes and William Robinson (1983), "Industrial Organization and Consumer Satisfaction/Dissatisfaction," Journal of Consumer Research, 9(March): 403-412.
Geistfeld, L. and R. Key (1986), "A Decade in Perspective 1975-84: Focus and Trends in
The Journal of Consumer Affairs," The Journal of Consumer Affairs, 20(Summer):
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Gilly, Mary (1987), "Postcomplaint Processes: From Organizational Response to Repurchase
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Hirschman, Albert O. (1970),'Ari7, Voice and Loyalty: Responses to Decline in Firms, Organizations and States, Cambridge, MA: Harvard University Press.
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SUMMER 1991

VOLUME 25, NUMBER 1

Industry Characteristics and

The study of industry characteristics and their impact on consumer

THE JOURNAL OF CONSUMER AFFAIRS

ing the relationship between industry characteristics and consumers'

Hirschman (1970) views the marketing systemthat is, firms,

VOLUME 25, NUMBER 1

corrected within the marketing system. For such reparable lapses,

THE JOURNAL OF CONSUMER AFFAIRS

to unsatisfactory experiences, ranging from complaining to friends

Hirschman posits that sellers' reactions to consumers' responses

VOLUME 25, NUMBER 1

THE JOURNAL OF CONSUMER AFFAIRS

Availability of Alternatives (AALT)

Definition. Consumers' beliefs about availability of alternative providers/sellers who

VOLUME 25, NUMBER 1

edge to complain effectively (Andreasen 1984). As such, in loose

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those industries that were highly likely to exhibit different amounts

VOLUME 25, >fUMBER 1

Many options are

Effort is required to obtain information (e.g.,

Advertising and price

Little impact because

Operationalization of the "Loose Monopoly" Construct and

Initially 18 items were developed (based on definitions in Table 1)

THE JOURNAL OF CONSUMER AFFAIRS

nonrandom sample of faculty and staff (excluding marketing faculty).

Several conclusions can be drawn from the results of pilot study

VOLUME 25, NUMBER 1

and lies somewhere in between the preceding industries along the

Hirschman's theory offers several hypotheses for the variation in

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It follows from Hirschman's model that dissatisfied consumers

VOLUME 25, NUMBER 1

It can be deduced from Hirschman's theory that private responses

In the preceding hypotheses, private actions are considered as a

^Thanks to an anonymous reviewer for pointing out this difference.

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VOLUME 25, NUMBER 1

monopoly conditions (e.g., grocery retailing) are more likely to foster

THE JOURNAL OF CONSUMER AFFAIRS

satisfaction (than the case for loose monopolies) in customers who

The results obtained for the preceding hypotheses were further

VOLUME 25, NUMBER 1

under different contingencies (e.g., for males and females separately

Different mail questionnaires were developed for each of the three

THE JOURNAL OF CONSUMER AFFAIRS

Response rates cannot be precise because this involves estimating

Respondents were asked to describe a dissatisfying experience in

VOLUME 25, NUMBER 1

THE JOURNAL OF CONSUMER AFFAIRS

Hypotheses Hi to He were examined by utilizing contingency

VOLUME 25, NUMBER 1

ing a contingency table. A x^ statistic provided a basis to test these

H, andHj.- Voice CCB

Ha and H,: Private CCB^

W-O-M CCB (percent)'

Hj and H^: Third-Party CCB

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est in grocery retailing (in accord with Hirschman's theory), variation

VOLUME 25, NUMBER 1