Should a firm with a reputation for outstanding service quality offer a service guarantee? Jochen Wirtz Associate Professor, Department of Marketing, Faculty of Business Administration, National University of Singapore, Singapore Doreen Kum Student, Department of Marketing, Faculty of Business Administration, National University of Singapore, Singapore Khai Sheang Lee Associate Professor, Department of Marketing, Faculty of Business Administration, National University of Singapore, Singapore Keywords Services marketing, Service quality, Perception, Consumer behaviour, Guarantees, Hotels Abstract Studies reputation for service quality as a potential moderator of the relationship between a service guarantee and its impact on consumer perceptions of service quality, risk and purchase intent. A before-after experimental design, set in the hotel industry, was employed to explore the impacts of a service guarantee for an outstanding versus a good service provider. Contrary to what had been implied in the past, the introduction of an explicit guarantee had no negative effect for the outstanding service provider in our study. In fact, the provision of a guarantee marginally improved expected quality, reduced perceived risk, and had no effect on purchase intent. However, for the good quality provider, the impacts were all positive and strong, and apart from the impact on perceived risk, the effects were significantly stronger than those for the outstanding quality provider. Our findings thus support the hypothesized moderating role of service quality. Introduction Service guarantees are often seen as an effective tool to jump-start quality improvements, to maintain superior quality levels, and to credibly signal high quality (Wirtz, 1998). Recent research has focused on the impact of various guarantee design features on consumer decision making (e.g. McDougall et al., 1998; Fruchter and Gerstner, 1999; Schmidt and Kernan, 1985; Wirtz, 1997; Wirtz et al., 1999). However, little has been done to examine a firm's reputation for service quality as a moderating variable on the impact of a guarantee on consumer perceptions. The role of a firm's reputation as a moderating variable is plausible because a firm known for service excellence may be perceived as offering an implicit guarantee. For example, one would take for granted that Ritz Carlton or McKinsey offered first-class service, and in the as unlikely perceived event of a quality problem, service recovery is fully expected. Hence, an explicit guarantee might puzzle clients as to why it is now necessary for the service provider to explicitly specify and offer a guarantee. It is therefore not clear whether outstanding service providers would benefit from the introduction of an explicit guarantee. We explore this issue by examining a firm's quality reputation as a moderating variable of the impact of an explicit guarantee on The current issue and full text archive of this journal is available at http://www.emerald-library.com The authors thank Shahrin Surif for his research assistance throughout this project, and Irene C.L. Ng for valuable feedback on an earlier draft of this manuscript. Service quality 502 JOURNAL OF SERVICES MARKETING, VOL. 14 NO. 6 2000, pp. 502-512, # MCB UNIVERSITY PRESS, 0887-6045 An executive summary for managers and executive readers can be found at the end of this article