How risky are services? An empirical investigation on the antecedents and consequences of perceived risk for hotel service

• Company reputation of hotels and perceived price play important roles in influencing purchase psychological, social, performance, and financial risk perceptions.
• Risk aversion and face consciousness are important individual-level antecedents of perceived risks.
• Psychological and social risks positively affect word-of-mouth.
• Performance risk negatively affects customer word-of-mouth and positively affects switching intention to another hotel.
• Psychological, social, performance, and financial risks for the hotel partially mediate the relationships between the firm-level and individual-level antecedents and customer responses.

Previous research does not systematically investigate the antecedents and consequences of perceived risk for services in emerging markets. The present research aims to fill this void in the literature and examines the determinants and consequences of consumer risk perceptions for an experience service, hotel service. The present research models the antecedents at both the firm (company reputation and perceived price) and individual consumer (risk aversion and face consciousness) levels, and the consequences comprise word-of-mouth communication and switching intention. Though perceived risk is a multidimensional construct, past research tends to operationalize risk narrowly as either performance or financial risk. The author overcomes this limitation by studying perceived risk at the component level, and examines psychological, social, performance and financial risks separately. The results of a survey on Chinese consumers who have purchased hotel service recently indicate that both firm-level and individual-level antecedents directly influence perceived risk. While psychological and social risks positively affect word-of-mouth, they do not have significant influence on switching intention. In addition, performance risk increases switching intention but decreases word of mouth. The author discussed the theoretical and managerial implications, and suggested future research directions.