The impact of perceived customer discrimination on negative word-of-mouth: the mediating role of customer embarrassment

Abstract

Disadvantaged or minority customers are always vulnerable to discriminatory treatment by service employees. Discrimination against minority customers has become a frequent headline in the news. The main objective of this research is to construct a model that explains the relationship between perceived customer discrimination, negative word-of-mouth, and customer embarrassment. The paper proposes a direct relationship between perceived customer discrimination and switching intentions and an indirect relationship via customer embarrassment. Furthermore, discriminatory service experiences are classified into three categories to add transparency to customers’ discriminatory experiences. This research also investigates the mediating role played by customer embarrassment. We collected data from minority customers to prove the proposed hypotheses' statistical significance. A survey was designed to collect data from respondents using self-administrative questionnaires. The data collection process was rigorous and yielded 252 useful questionnaires. Direct and indirect hypotheses testing was carried out by using Analysis of Moment Structures software. The research findings reveal that perceived customer discrimination significantly influences customer embarrassment. Furthermore, all perceived customer discrimination, i.e., overt, subtle, and service-level, significantly impact customer embarrassment. It is also found that customer embarrassment statistically impacts negative word-of-mouth. Additionally, the mediating role of customer embarrassment is also successfully substantiated. The paper includes implications for theory and practice, limitations of research, and future research options.