The role of quality, value and structural factors on exit, voice, loyalty and neglect in the relationship between law firms and corporate clients

© 1995 Dr. Margaret Ruth BeatonThe purpose of the research was to enhance understanding of business-to-business relationships. The subject of the study was the relationship between professional service providers, specifically legal firms, and their corporate clients. The client-firm relationship was conceptualised and analysed in terms of a model consisting of two components, referred to as the transactional and the relational components. The two components of the model were linked by perceived value, being the dependent variable for the transactional component and an independent variable for the relational component. No previous work has empirically investigated the linking role of value between quality and price, on the one hand, and clients' behavioural intentions, on the other. To address this gap in the literature an holistic perspective including both the transactional and relational aspects of the client-firm relationship was necessary. A multidisciplinary approach drawing on and integrating previous research in the fields of services marketing, relationship marketing, economics and organisational behaviour was used to achieve this objective. Arguments on the transactional component were presented to understand how corporate clients defined and evaluated the quality of the professional service 'product' and to identify the role of perceived quality and price (monetary and non-monetary) in determining the value provided by law firms. For the relational component, arguments were presented to examine the influence of perceived value and the structural factors of available alternatives, switching costs and investment in predicting clients' behavioural intentions. Clients' behavioural intentions were defined as loyalty, voice, neglect and exit. The research was conducted from the perspective of the client. The measures of the constructs of quality, price, value, structural factors and behavioural intentions were derived partly from prior research and partly from the qualitative field work. Multiple regression and logistic regression were used to test the significance of the hypotheses. The results for the transactional component of the model showed that three dimensions, namely competence, people attributes and service delivery, determined perceived quality. Image played no role in this evaluation. Furthermore, the three dimensions influenced one another in the manner in which quality was perceived. Quality was found to be more important than monetary price in predicting perceived value. Non-monetary price had the least influence. A new construct termed 'cost consciousness' was identified. Cost consciousness reflected the law firm's sensitivity to the costs incurred by the client. This factor was as important as monetary price in determining clients' perceptions of value. The study found perceived value contributed more to clients' behavioural intentions than did the structural factors of alternatives, switching costs and investment. Loyalty was the only one of the four behavioural intentions that was influenced by value and all of the structural factors. As predicted, value appeared to play a linking role between quality and price in determining behavioural intentions. These intentions ultimately determine the direction and longevity of relationships between corporate clients and their legal providers