Journal of Business Research 66 (2013) 1161–1167

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Journal of Business Research

Service quality and customer switching behavior in China's mobile phoneservice sector☆

Dapeng Liang a, Zhenzhong Ma b,⁎, Liyun Qi c

a School of Management, Harbin Institute of Technology, Harbin, Heilongjiang, Chinab Odette School of Business, University of Windsor, 401 Sunset Avenue, Windsor, Ontario, Canada N9B 3P4c School of Management, Dalian University of Technology, Dalian, Liaoning, China

☆ The authors thank Michael X. Song and two anthoughtful comments on earlier versions of this paperported by a grant from the National Natural Science F71073040) and a Social Science & Humanity Grant(Grant# 09YJC790061).⁎ Corresponding author. Tel.: +1 519 253 3000x4251

E-mail addresses: ldp0920@hit.edu.cn (D. Liang), maqiliyun0127@163.com (L. Qi).

0148-2963/$ – see front matter © 2012 Elsevier Inc. Alldoi:10.1016/j.jbusres.2012.03.012

a b s t r a c t

a r t i c l e i n f o

Article history:Received 1 July 2011Received in revised form 1 November 2011Accepted 1 December 2011Available online 9 June 2012

Keywords:ChinaMobile phone serviceService marketService qualitySwitching behavior

Service quality and customer switching behavior are among the most important factors that affect servicecompanies' market share and profitability, yet they remain understudied in China's service sectors. Thisstudy surveys 400 customers to explore the perceived importance of various aspects of service quality andcustomer switching behavior in China's mobile phone service sector. The study identifies the followingseven critical factors, listed in descending order of influence, that cause customers to switch mobile phoneservice providers: core service failure, high price, ethical problems, competition, inconvenience, service en-counter failure, and influence from family/friends/group. The paper concludes with implications of the find-ings for service marketing and for multinational companies expanding into Chinese service markets.

© 2012 Elsevier Inc. All rights reserved.

1. Introduction

Research on service and service marketing shows that customerretention, not merely customer acquisition, is crucial for servicefirms (Berry, 1980; Keaveney, 1995). While service quality, relation-ship quality, and overall service satisfaction are useful in improvingcustomers' intentions to stay with a service firm, what causes cus-tomers to switch from one service provider to another remains rela-tively understudied (Bell, Auh, & Smalley, 2005; Keaveney, 1995;Parasuraman, Zeithaml, & Berry, 1988). Understanding customerswitching behavior is important because a customer's switching be-havior results in the loss of the future revenue stream from that cus-tomer. In particular, switching by a service customer is a loss for afirm's high-margin sector of its customer base. The costs associatedwith acquiring new customers, including account setup, creditchecks, and promotional expenses, can be as much as five times thecosts of customer retention efforts (Keaveney, 1995; Peters, 1988).Operating costs also associate with the firm's identifying the needsof new customers as well as new customers' becoming familiar withthe procedures of the firm.

onymous reviewers for their. This study was partially sup-oundation of China (Grant #:of the Ministry of Education

; fax: +1 519 973 7073.z@uwindsor.ca (Z. Ma),

rights reserved.

Social values and norms deeply embedded in their cultural back-ground can affect customers' perceptions of service quality (Ladhari,Pons, Bressolles, & Zins, 2011; Laroche, 2011). Thus, in the context ofan increasingly globalized world economy, cross-cultural differencesin service quality and customer switching behavior deservemore atten-tion from both the academia and practitioners in service industries(Chang & Chen, 2007; Choi, Kim, & Kim, 2011; Laroche, 2011;Patterson & Smith, 2003). The complexity of the Chinesemarket createsan ideal venue for academic research on service quality and service in-novation and other relevant variables in China's servicemarket (Ladhariet al., 2011; Mazaheri, Richard, & Laroche, 2011; Peng, Lu, Shenkar, &Wang, 2001; Ramasamy, Goh, & Yeung, 2006; Roy, Walters, & Luk,2001; Selmer, 2002; Tsui, 2006;Whetten, 2009; Zhou, Su, & Bao, 2002).

Following three decades of reform and rapid economic develop-ment, China is on its way to becoming the next economic superpower.China is the world's most populous nation, second largest economy,and the largest recipient of foreign direct investment. With overthree trillion dollars in foreign currency reserves, China becomes mul-tinational companies' favorite emerging market destination.

Chinese culture is a collectivistic culture, quite different from theindividualistic cultures in the West, and group harmony and grouployalty are socially desirable (Hofstede, 2001; Peng et al., 2001). Chi-na's economy is experiencing a difficult transition from a plannedeconomy to a market economy, wherein the concepts of service andservice quality are relatively new to customers. As a result, on theone hand, Chinese customers have more concerns about productquality and brand loyalty, but less about service quality and serviceencounters. On the other hand, the economic development and the

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extensive influence from the West lead Chinese customers to becomemore aware of the quality of the service they receive.

In addition, there are over 800 million mobile phone subscribers inChina, where fierce competition exists amongmajor mobile phone ser-vice providers for acquiring and retaining customers. AlthoughWesternscholars examine various aspects of customer switching behaviors fromdifferent perspectives (Bell et al., 2005; Burnham, Frels, & Mahajan,2003; Jones, Mothersbaugh, & Beatty, 2000; 2002; Keaveney, 1995;Kerin, Varadarajan, & Peterson, 1992; Lam, Shankar, Erramilli, &Murthy, 2004; Lieberman & Montgomery, 1988), they place very littlefocus on service quality and customer switching behaviors in China'smobile phone service sector. The current study fills this research gapand provides insights into the brand switching behavior in the broaderChinese service sector. The results of this study will help to better un-derstand China's service industry and enrich the knowledge aboutcross-cultural differences in service quality and service innovation(Laroche, 2011; Luo & Hassan, 2009; Song, Di Benedetto, & Song,2000; Song, Di Benedetto, & Zhao, 1999).

2. Conceptual framework

Research on service quality and service marketing reveals a varie-ty of reasons why customers choose to stay with their service pro-viders, resulting in a broad array of literature on service quality,customer retention, and customer switching behavior (Bell et al.,2005; Keaveney, 1995; Parasuraman, Zeithaml, & Berry, 1985;Parasuraman et al., 1988). For example, Parasuraman et al. (1985,1988) provide a conceptual model of service quality and develop aninstrument (SERVQUAL) for measuring service quality. While theirresearch bases solely on customers in the West, their pioneeringwork provides theoretical guidance for the investigation of cross-cultural differences of service quality and related customer behaviorsin an international context. Research shows that perceptions of ser-vice quality, overall satisfaction, and service encounters affect cus-tomer loyalty and repatronization in various locations (Keaveney,1995; Kelley, Hoffman, & Davis, 1993; Rust & Zahorik, 1993). General-ly speaking, research in this field focuses on two major areas: (i) whycustomers stay with a service provider, and (ii) what are the switch-ing costs and barriers.

In investigating why customers stay with a service provider,LaBarbera and Mazursky (1983) use a panel study to demonstratethe importance of satisfaction and dissatisfaction in explaining thebehavior of repeat purchasers. They report that satisfaction level is asignificant factor for customer loyalty formation. Gonul, Peter, andSugawara (1996) measure the correlation between purchase timingof households, repeat purchase, and the tendency to switch brandsand conclude that different product characteristics influence the ten-dency to switch: when the purchase interval gets longer, consumersare more likely to switch, and when the product is essential and cus-tomers buy the product regularly, loyalty would continue.Athanassopoulos (2000) explores the dynamic relationship betweencustomer satisfaction, service, and customer loyalty and suggeststhat customer satisfaction has a positive effect on preventing custom-er switching behavior in the banking industry. Roos, Edvardsoon, andGustafsson (2004) define three kinds of triggers for switching behav-ior: situational triggers, influential triggers, and reactional triggers.Situational triggers include demographic changes or changes in thework situation; influential triggers are factors associated with thecompetitive situation such as competitors' efforts to increase theirmarket share; and reactional triggers include critical incidents in in-teractions between customers and service providers. Based on this ty-pology, they identify major switching determinants in varioussectors, including banking, insurance, telecommunications, super-market, and social insurance (Roos et al., 2004).

A number of scholars examine switching costs and barriers andtheir effects on customers' decisions to stay with a particular service

provider (Chen & Hitt, 2002; Colgate & Lang, 2001; Dick & Basu,1994; Murray, 1991; Nilssen, 1992; Patterson & Smith, 2003). For ex-ample, Kim, Klinger, and Vale (2003) define switching costs as thecosts associated with changing suppliers or service providers for a va-riety of economic and psychological reasons. Lam et al. (2004) divideswitching costs into five categories, including money, effort, time,new technology, and uncertainty, while Bell et al. (2005) argue thatswitching costs include sunk costs, search costs, and setup costs.Kim, Park, and Jeong (2004) combine previous research on customerretention and customer loyalty and contend that switching barriersconsist of switching costs, the attractiveness of alternatives, and in-terpersonal relationships. Jones et al. (2000) argue that the loss of apersonal relationship with service providers is a form of switchingbarrier, and Dowling and Uncles (1997) find that frequent flyer pro-grams form an economic switching barrier.

While the literature on service marketing and service manage-ment suggests that a number of factors relate to service switching be-havior, the direct application of these findings in the global marketingand service management has limitations because prior work focuseson these issues in aWestern context, not directly on service switchingin an international context. Further, low service quality and dissatis-faction represent some of the reasons why customers switch servicein the West, but they do not account for all of the reasons. Conve-nience, price, and availability might enhance customer satisfactionand ultimately affect customers' behavioral intentions (Cronin &Taylor, 1992; Keaveney, 1995). In particular, service failure and dis-satisfaction may not have the same effect as in theWest in a collectiv-istic culture where people often constrain their own feelings andemotions (Hofstede, 2001), and thus are less likely to switch serviceproviders as a reaction to service failure or dissatisfaction.

In her grounded model of customer switching behavior, Keaveney(1995) proposes eight causal variables that may lead customers toswitch service providers across service sectors, including inconve-nience, price, service encounter failure, core service failures, competi-tion, and involuntary factors. The current study moves the researchon customer switching behavior one step further to test its validityin a Chinese context and to explore customer switching behavior inChina's mobile phone service sector in order to extend the under-standing of service management and service innovation in a globalcontext (Song, Song, & Di Benedetto, 2009; Uncles & Kwok, 2009).

3. Method

This study compiles a list of factors that may affect customers'switching behavior in China's mobile phone service sector from thegrounded model proposed by Keaveney (1995) on why customersswitch service providers and other studies on customer retentionand service quality (Cronin & Taylor, 1992; Lee & Feick, 2001;Parasuraman et al., 1985, 1988; Patterson & Smith, 2003; Roos et al.,2004). To verify the validity and relevance of these factors, thisstudy conducts in-depth interviews of a randomly selected sampleof 10 representatives of company subscribers and 10 individual sub-scribers of the mobile phone service in the Liaoning Province, a pop-ulous region and industry center in the northern part of China. Afterincorporating the feedback collected in these interviews, this studycreates a questionnaire tailored to collect information about customerswitching behavior in China's mobile phone service market.

3.1. Pilot study

To further test the validity of the questionnaire, this study con-ducts a small-scale pilot test using two mobile phone service retailersin Liaoning Province. The pilot study distributes about 200 copies ofthe questionnaire with180 copies returned, for a response rate of90%. Based on the psychometric properties of the questionnaire inthe pilot study, a revised questionnaire comprising 24 items is ready

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for use in this study with each item representing one reason why cus-tomers may switch their mobile phone service provider. Participantswill answer on a 5-point Likert scale to what extent a given reason af-fects their decisions in switching mobile phone service providers,with 1 representing the least important influence and 5 representingthe most important influence.

3.2. Procedure

The main study collects the data with the revised questionnaire.This study first asks participants whether they have the experienceof switching mobile phone service providers, and only those whohave brand switching experiences participate in this study. Thisstudy distributes the questionnaire to four hundred individual mobilephone service customers in the Liaoning Province, with 341 usefulquestionnaires returned, for a response rate of 85.3%; 46.9% of theresulting sample are male, with a variety of occupational backgroundsand different education levels (please see Table 1 for the demograph-ic data of the sample).

4. Results and discussions

Table 2 shows the results of a factor analysis on the 24 differentvariables that may cause customers to switch mobile phone serviceproviders in China (using the SPSS 18.0, with the principal compo-nent analysis and varimax rotation method). The factor analysis pro-duces seven different categories of reasons why Chinese mobilephone service subscribers switch services, with 63.4% varianceexplained. In descending order of influence, these categories are:core service failure, high price, ethical problems, competition, incon-venience, service encounter failure, and family/friends/group impact.

4.1. Major reasons for service switching amongChina'smobile phone services

4.1.1. Core service failureCore service failure is the most common reason why Chinese cus-

tomers switch mobile phone services. Core service failure includes

Table 1The demographic data of participants.

Characteristic Total (N) Percentage (%)

Age18 or younger 9 2.619–25 165 48.426–35 90 26.436–45 40 11.746 or older 37 10.9

OccupationPublic sector employees 20 5.9Professionals 21 6.1Managerial personnel 4 1.2Self-employed 87 25.5Company employees 82 24.0Students 78 22.9Retirees and others 49 14.4

GenderMale 160 46.9Female 181 53.1

EducationMiddle school or lower 94 27.6High school/vocational school 111 32.6College 95 27.8University or above 41 12.0

Monthly income (RMB)499 or below 109 32.0500–999 112 32.81000–1499 74 21.71500–1999 22 6.52000 or above 24 7.0

low signal quality in making or receiving calls, failure in deliveringtext messages, repeatedly sending the same text messages, sendingspam text messages/calls, and imposing too many testing programs.The fact that failure to deliver promised services is the leading reasonfor Chinese customers to switch mobile phone services is consistentwith the findings in the West and this result indicates the universalimportance of service quality across the globe (Keaveney, 1995;Parasuraman et al., 1988). With the key product of mobile phone ser-vice providers being mobile phone service, core service failure is es-sentially a failure in product quality, which clearly indicates theutmost importance for mobile phone service providers to first focuson the quality of their delivered products if they want to succeed inthe competition for Chinese service market.

4.1.2. High priceHigh price is the second most common reason why Chinese cus-

tomers switch mobile phone services. Although items for serviceprices, price deals, and affordable promotional packages all appearin the earlier version of the questionnaire, the pilot study showsthat the most important of these reasons for customer switching be-havior is high service price. The factor analysis supports this findingas well, with high price as the only one single-item factor among allthe categories of service switching reasons. Compared withKeaveney's (1995) study of Western consumers, which finds thatprice is the third most common reason for switching services, Chinesecustomers seem to place more importance on price as the Chinesemay be more sensitive to service price or service charge. Althoughthe mobile phone gradually becomes an indispensable device forthe majority of the Chinese population, mobile phone services arestill relatively expensive for many Chinese customers who are strug-gling to make ends meet when they try to catch up with the West intheir standards of living.

4.1.3. Ethical problemsThis category includes unethical, illegal, or other behaviors from

service providers that deviate from social norms or imposes psycho-logical annoyance on customers in order to obtain customers' compli-ance. For example, a service provider might continuously call or sendtext messages to remind the customers to pay the bill or a serviceprovider charges the customer a high fee for temporarily stoppingservice. An interesting result is that the factor analysis classifieshigh fee for temporarily stopping service as an annoying behaviorby service providers, rather than a price issue. This result may be be-cause the charge for temporarily stopping service is not for using theservice, but for not using the service. This practice deviates from thesocial norm of charging for service and is thus considered unethical,and thus further leads to customers' service switching to other serviceproviders.

4.1.4. CompetitionWith the rapid development in China's mobile phone market, the

major competitors, including China Mobile, China Telecom, and ChinaUnicom, are all fighting for market share and profitability. These ser-vice providers continuously introduce attractive price packages andpromotional deals in order to retain their own customers and attractmore customers from their competitors, sometimes even resorting toprice wars to improve their own positions in the market. These ser-vice providers may also offer better service packages or better prod-ucts that provide special status and recognition that appeal tocustomers' sense of social status and identity. Compared with thefindings of Keaveney (1995), where competition is the third least im-portant category, competitive alternatives seem to play a more im-portant role in Chinese customers' decisions to switch their serviceproviders. This result may be due to the fact that Chinese mobilephone service users are more sensitive to service price and thus aremore likely to switch to better deals from other service providers.

Table 2Factor analysis of service switching causes.

Variable items Factor loading

1 2 3 4 5 6 7

Service encounter failure1. Bad attitudes from service personnel 0.762. Service personnel's unprofessional manners 0.723. Unresponsive to customer complaints 0.654. Cannot get support through the call center 0.645. Failure to deliver billing notice in a timely manner 0.51

Competition1. Competitors have a better reputation 0.772. Ads from competitors impress me 0.703. Competitor products better fit in with my social status/identity 0.694. Competitors introduce better packages 0.66

Inconvenience1. Insufficient number of retailers/kiosks 0.792. Limited methods/locations for bill payment 0.763. Short hours of operations at retailers 0.744. Long transaction processing time at retailers 0.505. Limited choices in prepaid phone cards 0.41

Core service failure1. Sending the same text messages again and again 0.762. Failure in delivering text messages 0.663. Too many spam text messages/calls 0.634. Too many unnecessary testing programs 0.505. Low signal quality in making or receiving calls 0.49

Ethical problems1. Keep calling/sending text messages to remind customers of bill payment 0.662. The fee for temporarily stopping mobile phone service is too high 0.62

Family/friends/group impact1. Companies buy mobile services for employees 0.672. Influence from family/friends 0.67

Price1. High price 0.89

Variance (%) 26.04 9.80 7.19 6.11 5.32 4.63 4.27Eigenvalues 6.25 2.35 1.72 1.47 1.28 1.11 1.03

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4.1.5. InconvenienceThis category includes situations where customers feel the incon-

venience in the product of a service provider, such as an insufficientnumber of retail locations/kiosks, limited methods of bill payment,long transaction processing times, short hours of operation, and lim-ited choices of prepaid phone cards, which indicates the importancefor service providers to build an extensive service network acrossthe country and to implement more customer-oriented businesspractice in order to serve customers better.

4.1.6. Service encounter failureThis category relates to the quality of the interactions between

customers and the employees of the service firms, which is of imme-diate relevance to mobile phone service providers as well as otherservice firms. Service encounter failure includes bad attitudes fromservice firm personnel, the unresponsiveness to customers' com-plaints, the unprofessional manners in dealing with customers, andthe failure of service providers' call centers to provide support. Com-pared with the results of Keaveney's (1995) study, where service en-counter failure is the second most common reason for switchingservice providers in the West, service encounter failure is the secondleast important factor for Chinese customers. This result reveals thetransitional nature of China's economic system which is changingfrom a planned economy mainly focusing on the quality of goods/products to a market-centered economy focusing on both serviceand product quality. Chinese customers are less demanding with

regard to service quality and are thus less likely than their Westerncounterparts to switch service providers as a result of poor customerservice encounter.

4.1.7. Family/friends/group impactThis last category, also the least influential reason for switching

behavior, refers to the influence that people experience from family,friends, and the companies where they work. In China, many mobilephone service providers introduce family plans or friend plans thatoffer cheaper prices for calls made among family members or friendswho use the same service company or network. As a result, if a custo-mer's family members or friends switch service providers, he or shemay switch too. In addition, some companies purchase mobilephone service for their employees. As a result, if a company choosesto switch service providers, so will the employees.

4.2. The impact of demographic factors

This study uses a one-waymultivariate analysis of variance (MAN-OVA) to examine the impact of gender, age, education level, andmonthly income on the perceived importance of various causes ofcustomer switching behavior. The results show that the perceivedimportance of service encounter failure in switching decisionsis greater for male customers than female customers (F=4.85,pb .028). This finding reflects the fact that women are more tolerantand sympathetic in the Chinese society (Ma, 2010). No gender

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differences occur for any other category of customer switching be-havior causes.

Perception of family/friends/group influence on switching deci-sions varies among different age groups (F=4.05, pb .003). In gener-al, the influence of family/friends/group decreases as age increases,except for the 18-or-younger group who perceive the family/friends/group impact as being weaker than the 45-or-youngergroup but stronger than the 46-or-older group. No age differencesoccur for any other category of service switching causes.

The influence of service encounter failure and family/friends/group impact becomes stronger as education level increases(F=2.46, pb .033 and F=2.95, pb .014, respectively), indicating thatpeople with higher educational backgrounds are more sensitive tothe quality of interactions with service personnel and the influencefrom the family/friends and the companies where they work; at thesame time, the influence of high price decreases as educational levelincreases (F=2.35, pb .041), which shows that people with highereducational background are less sensitive to service price in decidingwhether to switch mobile phone service providers.

Perception of the influence of service encounter failure on switch-ing decisions also varies among different income levels (F=3.24,pb .013). The lowest monthly income group (RMB 499 or below)and the highest monthly income group (RMB 2000 or above) both in-dicate service encounter failure has less influence in their serviceswitching decisions than the other income groups. No significant dif-ferences occur for any other categories of service switching causesamong different income groups, which is perhaps surprising giventhat high price is the second most common reason participants inthis study give for switching services. But this may be an indicatorthat people at all income levels find high price an influential factorin their service switching decisions.

4.3. Discussion

This study of service switching behavior in China's mobile phoneservice shows that core service failure, high price, and ethical prob-lems of service providers are the top three factors that lead customersto switch service providers and that family/friends/group impact andservice encounter failure are the least important factors. These resultsare similar to the findings on the perception of service and servicequality in the West (Keaveney, 1995), and thus provide important in-sights for service marketing and service management practitioners ina global context.

The results of this study also reveal some specific characteristics ofthe Chinese mobile phone service market and the perceived impor-tance of different aspects of service quality that are important in glob-al service marketing. First, core service failure is the most importantfactor that causes Chinese mobile phone service customers to switchservice providers, very similar to that in the West (Keaveney, 1995).Such a consistent cross-cultural finding confirms the importance ofthe quality of the core service provided by service firms: the key tosuccess for service firms in competition, whether domestic or global,is to focus on providing high-quality products (services) to theircustomers.

Second, Chinese mobile phone customers rate high price as thesecond most influential factor in their service switching decisions,whereas Western customers consider service encounter failure to bethe second most important factor, and high price the third most im-portant factor (Keaveney, 1995). Interestingly, Chinese consumersrate service encounter failure as the second least important factor intheir service switching decisions. This comparison shows that, onthe one hand, while high price will lead to switching behavior bothin the West and in China, Chinese customers in the mobile phone ser-vice sector are more sensitive to price, which is consistent with thedifferences in the standards of living between the West and China.On the other hand, service encounter failure is of low importance in

China, indicating that the service market is still developing and cus-tomers' perception still focuses on product quality rather than on ser-vice quality.

Third, this study shows that ethical problem is the third most im-portant reason why Chinese customers switch service providers, butethical problem is the second least important category for Westerncustomers (Keaveney, 1995). This cross-cultural difference might bedue to the fact that relatively fewer unethical incidents take place inthe West in dealing with customers, and thus very few customersswitch service providers because of ethical problems in the West. Inaddition, the impact of family/friends/group is not among the top cat-egories of switching behavior causes for Western customers. In otherwords, the impact of family/friends/group is not as important in theWest as in China. This result reflects a typical phenomenon in the col-lectivistic culture where families/friends and groups often play veryimportant roles in people's everyday life (Hofstede, 2001; Ma &Jaeger, 2005).

4.4. Implications and conclusions

The results of this exploratory study have important implicationsfor researchers and practitioners in service marketing and servicemanagement in the international context. From a theoretical perspec-tive, this study contributes to the literature of service quality and ser-vice innovation by extending the understanding of cross-culturaldifferences in the perceived importance of different aspects of servicequality and their impact on service switching. The insight into whyChinese customers switch mobile phone service providers advancescontemporary theory on service marketing by making the theorymore robust to help understand service management in the globalmarket. Future research would be useful in extending this perspectiveto understand Chinese service market and customer switching behav-ior to broaden the scope of service research and facilitate serviceinnovation.

The identification of seven major categories of customer serviceswitching causes, including core service failure, high price, ethicalproblems, competition, inconvenience, service encounter failure,and family/friends/group impact, has important implications for ser-vice marketing and service innovation research. Service literaturehas largely focused on service quality, satisfaction, quality of relation-ship, and service design as antecedents of customer retention andcustomer loyalty (Keaveney, 1995). But this study shows that price,competition, ethical issues, and the impact of family/friends/groupare also important to better understand customer defections fromservice firms, especially in a global context.

The findings of this study also have important implications forpractitioners in the fields of service innovation and service marketingand for marketing departments of multinationals that are expandinginto Chinese service markets. The ranking of perceived importanceof different causes of customer switching behavior suggests a varietyof areas in which service practitioners might take action for serviceinnovation in order to prevent customers from switching to other ser-vice providers. For instance, with core service failure as the most im-portant cause for service switching in Chinese customers, a no-defectpolicy to deliver technically correct services for every customerwould be effective in reducing customer switching and increasingcustomer retention in China.

In addition, Chinese mobile phone service customers react strong-ly to ethical problems of service firms, an implication for which is thatservice firms should maintain high moral standards in dealing withChinese customers to prevent customer defection. Chinese servicefirms largely ignore this aspect in the mobile phone sector wherethe few large service firms are often very arrogant in treating theircustomers. Service firms that do better in this aspect should be ableto gain unique competitive advantage, an important step for service

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innovation and to gain the first-mover advantage (Kerin et al., 1992;Lieberman & Montgomery, 1988; Song et al., 2000).

Another potential area service firms could focus on for innovativeservice marketing and management along with China's further moveinto a market economy is the service encounters and interactions be-tween customers and service firms. Because the true concept of ser-vice, manifesting in the interactions between customers and servicefirms, is still evolving in the mobile phone services and many otherservice sectors in China, service firms in China's market could workon improving the quality of interactions between customers and ser-vice firms to form a sustainable advantage in retaining customers andimproving customer loyalty.

Managers and practitioners in service marketing should also notethat Chinese customers in the mobile phone service sector mayswitch providers even if they are satisfied, as may be the case for cus-tomers who switch because of competition, family/friends/group im-pact, and sometimes price. The service literature points out thatcustomers may stay with a service firm even after one or many dissat-isfactory encounters, probably due to switching costs and differentswitching barriers, but future research should also investigate theissue of satisfied customers' switching behaviors, and explore whatexact impact the Chinese market and institutional context have onthe identified critical factors that affect Chinese customers' switchingbehaviors (Tsui, 2006; Whetten, 2009; Zhou et al., 2002).

This study has limitations on the generalizability of the findings.First, this study collects the data from the mobile phone service sectorin China and extension of the findings to other service markets is sub-ject to validation. Future studies should extend this research by usingsamples from other service sectors. Second, this study collects thedata only in the northern region of China. Customers from otherparts of China could have different perceptions of service qualityand causes for switching behavior. In addition, the income levels ofthe participants in this study are relatively low, which might attenu-ate the findings. Future research should include samples from higherincome groups to learn more about the high-end market.

Notwithstanding the qualifications in applying the findings, thisexploratory study provides valuable insights for academia and forpractitioners in the fields of service marketing and service manage-ment in a global context. The results suggest practical guidance formultinational companies expanding into the Chinese market. Furtherstudies would be useful to refine and test these variables, includingconceptualization and operationalization of the identified causes ofservice switching, experimentally modeling and testing the switchingprocess, and identifying other relevant variables, in order to build astronger knowledge base for service marketing and service innova-tion, as well as for examining the specific contextual effects on serviceinnovation and global marketing in an international context.

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