The shifting definition of firms moves away from organizations designed to earn financial profits and toward organizations that heed the social requirements of stakeholders, both internal and external to the organization (e.g., Basu and Palazzo, 2008 and Harrison and St. John, 1996). Customers are the most important external stakeholders, without whom a firm loses the very ability to exist. In turn, firms have multiple responsibilities toward customers, including the provision of safe products and information about all relevant product aspects (Whipple & Swords, 1992). Firms also must ensure the discrimination-free treatment of all customer groups (Walsh, 2009), which can pose a challenge for service firms that engage in vast numbers of direct interactions with customers. Robust evidence in business and management literature indicates that some customer groups experience discrimination (Walsh, 2009), which not only raises ethical issues and reputational challenges but also presents a barrier to potentially attractive customer segments (Hymowitz, 2005). This study aims to develop and validate a scale that can measure customers' perceptions of discrimination in service deliveries.
The term “discrimination” denotes the exclusion or disadvantage of a person or entire groups of people because of their membership in a particular social group. Unjust treatment and the experience of disadvantages result solely from group membership, not any objective reasons (Allport, 1954, Plous, 2003 and Walsh, 2009). A common definition recognizes customer discrimination as “differential treatment of customers in the marketplace based on perceived group-level traits that produce outcomes favorable to ‘in-groups’ and unfavorable to ‘out‐groups’” (Crockett, Grier, & Williams, 2003: 1). However, firms are not discriminatory if they adjust service offerings to specific groups on the basis of their customer value or other economic parameters.
Many social science studies still indicate discrimination in different service contexts, such as car purchases (e.g., Ayres & Siegelman, 1995), real estate (e.g., Yinger, 1995), applications for insurance and other financial services (e.g., Turner and Skidmore, 1999 and Wissoker et al., 1998), medical care (e.g., Schulman et al., 1999), restaurants (Rosenbaum & Montoya, 2007), retail browsing (e.g., Boyd, 2003), and soliciting taxi service (e.g., Ridley, Bayton, & Hamilton Outtz, 1989). These studies not only reveal the existence of discrimination but also demonstrate the extent to which membership in a socially disadvantaged or stigmatized group unfairly restricts many areas of social and commercial life (e.g., Feagin and Sikes, 1994, Oliver and Shapiro, 1995 and Williams et al., 2001). The present study focuses on discrimination in the context of service delivery.
Despite substantial empirical evidence regarding the existence of perceived customer discrimination (PCD), extant literature suffers three shortcomings. First, present knowledge about discriminatory behavior comes from heterogeneous sources. In the past, evidence of customer discrimination mainly involved testimonials from those affected, documentation of discrimination cases by anti-discrimination initiatives, or court proceedings (Siegelman, 1998). Moreover, most studies are qualitative and case based (e.g., Crockett et al., 2003, Harris et al., 2005 and Lee, 2000), which limits the generalization of the findings (Graddy, 1997). For example, Walsh's (2009) framework contains antecedents and possible customer-related consequences of perceived customer discrimination, based on a literature review and qualitative interviews with consumers. These qualitative studies provide important insights into the forms of customer discrimination and the perspective of affected customers but cannot generalize the findings beyond the respective service contexts. Second, Walsh (2009) asserts that identifying and managing customer discrimination require a reliable measurement scale. Thus far, no such scale exists. Yet a discrimination scale could assist service companies in measuring customers' perceptions of employees, and therefore the service and the whole company. Third, no quantitative studies embed PCD in nomological (cause-and-effect) networks, which is somewhat surprising because discrimination against customers is a problem for service companies in terms of both legal and business ethics and negative monetary and nonmonetary consequences (Walsh, 2009). Consequently, a scale to measure PCD could enhance and extend empirical, quantitative studies.
In response to these research gaps, this study makes a fourfold contribution. First, the present article contains a literature-based conceptualization of PCD. Second, using this conceptualization, the authors develop and validate a scale for measuring PCD. Third, to examine the scale in terms of nomological validity, the authors formulate hypotheses about two customer-related consequences of PCD and test those predictions. Fourth, with a second sample, this study confirms the predictive validity and known group validity of the scale. This paper concludes with a discussion of practical and theoretical implications.
