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Comparison 3 Termination / Continuation Comparison 1 Comparison 2 Relationship quality perception Comparison standard based on: -prior experiences -cultural norms and

values

Comparison standard based on:

-prior experiences -cultural norms and

values Comparison standard based on: - goals - promises - desires Comparison standard based on: - goals - promises - desires Adjusting processes: - equity - fairness - attribution - balancing operations Adjusting processes: - equity - fairness - attribution - balancing operations Episode experiences Episode quality perception Episode quality perception Main evaluation process

Denotes influence and possible temporal order

Figure 8: Relationship quality evaluation (related to the issues, which are in bold).

4.4.1. From episode quality perception to relationship quality

perception

As mentioned in chapter 1.3. relationship quality refers to the perception formed as a result of two level evaluation process concerning all the feasible aspects of relationship. The levels are episode and relationship levels, and are separate, but connected in the evaluation process, which takes place as presented in figure 8. In this chapter, the relationship quality evaluation itself is discussed first, and after that the important matters linked to it, are addressed. These matters include the nature of relationship quality (affective/cognitive), the change caused by episode quality perception in relationship quality perception, and the effect of time on relationship quality evaluation.

Relationship quality evaluation on relationship level is mainly based on comparison between perceived episode quality resulting from a certain episode, and the comparison standard used in relationship quality evaluation (Lehtinen and Järvelin 1995; Järvelin and Lehtinen 1996). In this comparison the actor evaluates the impact of a certain episode quality perception to the existing or current level (i.e. level before the episode concerned) of perceived relationship quality44. In other words, the perceived level of episode quality is compared against the existing level of perceived relationship quality in the context of "expectations" (e.g. goals set for the relationship) placed on the whole relationship. For example, after evaluating an advertising campaign designed by an advertising agency both the client and the agency form an episode quality perception concerning this particular advertising campaign. This episode quality perception, is then compared against the existing relationship quality perception. In the comparison, a decision is made whether the formed episode quality perception about the advertising campaign changes the existing relationship quality perception concerning the whole relationship between the advertising agency and its client. The goals set for the relationship can affect this comparison. For example, if the existing relationship quality perception is not in accordance with the goals and the formed episode quality perception, the episode quality perception is likely to change the existing relationship quality perception to the direction of set goals. Also, in the beginning of the relationship the goals set for the relationship may be the most important comparison standard (together with promises). When relationship quality perception is stabilized, the role of goals can become important in situations where the border is crossed or stressed.

Consequently, the existing relationship quality perception can be regarded as being formed by prior experiences gained during the relationship. The other comparison standards used in relationship quality evaluation serve mainly as boundary setters. The role of border setter relates very closely to the tolerance zone concept (e.g. Zeithaml, Berry and Parasuraman 1991; Liljander and Strandvik 1994; Strandvik 1994). If we take the advertising campaign example, the goals set for the relationship between an advertising agency and its client served as boundary setter for the comparison standard used in the relationship quality evaluation.

One question related to the relationship quality evaluation is whether it is an affective reaction or purely cognitive reasoning. Channel research and interaction approach have taken the same view as customer satisfaction researchers, and they treat satisfaction as an affective reaction (e.g. Anderson and Narus 1984, 1990; Schul, Little and Pride 1985; Ganesan 1994; see for exception Frazier 1983; Frazie, Spekman and O’Neil 1988).

44 _{Liljander and Strandvik (1995b) have indirectly treated the relation between episode} quality and relationship quality in the same manner when discussing the measurement problems linked to the perception of a service episode versus perceptions of a relationship.

Anderson and Narus (1984; 1990), however, also have included cognitive aspects in their models of distributor firm and manufacturer firm working relationships. In their models, the antecedent of satisfaction is a construct called outcomes given comparison level (CL). (See also Thibault and Kelley 1959). According to Anderson and Narus, "outcomes given CL is defined as a firm's assessment of the results (rewards obtained minus costs incurred) from a given working relationship, in comparison with expectations, based on present and past experience, with similar relationships, and knowledge of other firms' relationships" (1990, p. 44; see also 1984, p. 63).

Anderson and Narus (1990) gained different results concerning the relationship between outcomes given CL and satisfaction. In their distributor model, satisfaction was not included at all (because of measurement problems), in manufacturer model outcomes given CL was found to be antecedent of satisfaction together with conflict (negative effect) and trust. According to them, the order of different reactions is that cognition comes first and affect follows. (Ibid.) This conflicts with the view presented by Oliver (1980) in customer satisfaction literature. But, it can be argued in the context; in business situations, rational evaluation often precedes affective reactions. Halinen (1997), also sees satisfaction (both toward exchanges and the whole relationship) as including both affective and cognitive aspects. This view also can be followed in this study. The ordering of different reactions also can be regarded as being highly depended on the situation and the actor.

Also, an interesting question is also how a certain episode affects the level of perceived relationship quality (Liljander and Strandvik 1995b). This effect of episode quality perception on relationship quality perception concerns both the level and content of those perceptions. First, the level is discussed.

If the level of relationship quality perception changes, the perceived relationship quality improves or falls off. The different episode quality perceptions varies in their effect on the relationship quality, and, thus, also on the comparison standard used. The relative importance of different episode quality perceptions in formation of perceived relationship quality is still unclear. We may assume that the most recent episodes are more easily activated from the memory, and thus have a greater impact on comparison and formation of relationship quality45. Also, the episodes which stress the borders of tolerance zones (Strandvik 1994; Woodruff, Cadotte and Jenkins 1983; Zeithaml, Berry and Parasuraman 1991; Halinen 1997), can have a greater importance in comparison than episodes which fit neatly between the zones. These episodes can be either negative or positive in nature (cf. critical events by Halinen 1997). It can be argued that the magnitude of the effect of these kinds of episodes on relationship quality perception is related to the uniqueness of these episodes. Thus, if the negative episodes which

stress the borders of the tolerance zone occur often, the relationship quality perception is likely to change permanently toward a negative direction. On the other hand, if the episode is perceived as positive, the change in the relationship quality perception can be impressive for a certain period of time, but then fade away if the positive episode is not repeated.

It can also be argued, that relationship quality is a cumulation of a series of episodes. The nature of business service naturally is affecting the relationship between episode quality and relationship quality. In continually used services, the episodes are not easily separable, and the relationship quality perception thus can be based on episodes which are easily memorable. In services which have clear episodes, the cumulative episode quality perceptions can form the relationship quality perception (see e.g. Boulding, Kalra, Staehlin and Zeithaml 1993). But, as mentioned earlier, we can only speculate about the ways the episodes affect the relationship quality perception.

In addition to the level of perceived relationship quality also the content of perceived relationship quality can change. This means that the dimensions or the relative importance of the dimensions changes. In this respect, the presentations concerning the effect of episode quality perception, on relationship quality perception, have been limited (e.g. Liljander and Strandvik 1995b; Järvelin and Mittilä 1998). The changes in the content of relationship quality perception are related to the relative importance of the dimensions (Järvelin and Mittilä 1998). Certain critical episodes can, for example, change the relative importance of the dimensions. For example, if the advertising agency heavily exceeds the budget set for the advertising campaign, the economic aspects are likely to increase their importance in relationship quality perception formed after the campaign. Of course the change in level and the content are linked together.

In addition to critical episodes, if the perceived episode quality includes aspects that are perceived as new and important for the whole relationship, the content of relationship quality perception may change (i.e. the dimensions perceived as important in relationship quality perception may change). However, it is not likely that one episode quality perception, which includes new and important aspects, change the content of relationship quality perception. It is more likely that numerous such episode quality perceptions, are needed in order to change the content of relationship quality perception.

The content of relationship quality perception also can be seen as a cumulation of episode quality perceptions. In this process the sub- dimensions according to which the episode quality perception is made are cumulated in the relationship quality evaluation and formed to an upper level concept (see Holmlund 1996). For example, the sub-dimension of communication skill is cumulation to the relationship quality level as improved communication. It has to be noticed, that although some kind of cumulation might take place with respect to the content of relationship

quality perception, the basis of the upper level concepts, on the relationship quality level can always be found from the episode quality level.

In the evaluation of relationship quality, time is an important factor.46 Time is here linked to the age and duration of relationship. The age and duration of the relationship are closely related to the relation between episode quality and relationship quality. Perceived episode quality has a strong affect on relationship quality after the first episode(s) when these two constructs are actually the same. Thus, the first episode quality perception determines both the level and content of relationship quality perception. As time goes by, the episodes become familiar for the actors, and both the perceived episode quality and the comparison standard alone can have a central role in the relationship quality evaluation. In familiar episodes the perceived episode quality and comparison standard used in relationship quality evaluation remind to a large extent, each other, so the effect of comparison (disconfirmation) fades away, and in the end does not exist anymore.

In a way, the whole evaluation process from the episode experiences, to the relationship quality perception, has its crucial point in the connection between episode quality perception and relationship quality evaluation (see also Liljander and Strandvik 1995b). As this point of the evaluation process is the one that has not been studied, the relationship between episode quality perception and the relationship quality evaluation is based mainly on assumptions.