Due to the ongoing and dramatic growth in the volume of consumer returns, retailers struggle with the trade-off in returns service strategies between implementing stricter return policies to lower operational costs and environmental footprint versus providing customers with lenient return policies to positively stimulate customers' value perceptions and patronage intentions. This dissertation contributes to knowledge by providing theoretical and practical insights on managing this trade-off. In particular, the dissertation offers three essays on consumer return policy design. The first essay reviews and classifies the inter-disciplinary and multi-method research on consumer return policy design through a holistic conceptual framework and identifies relatively under-explored as well as unexplored research areas. The second essay investigates, through randomized experiments, how return policy leniency across five leniency levers available to retailers affects consumers' purchase intentions and proposes a causal mechanism to explain these effects. The results suggest that monetary and exchange levers are the most effective levers in influencing purchase intentions, whereas time, scope, and effort levers are significantly less so. Further, the findings suggest that perceived service quality and perceived transaction costs in parallel and perceived service value in series mediate the effect of return policy leniency across the levers on purchase intentions. The third essay examines how restrictive changes to long-established lenient return policies impact consumer trust in retailers and the resultant favorable behavioral intentions, and how managerial transparency moderates this impact. Results from randomized experiments suggest that restrictive changes to long-established lenient return policies generally result in decreased consumer trust in the retailer and favorable behavioral intentions. This negative effect becomes stronger in the severity of the restriction. However, managerial transparency in the form of communicating the rationale for the change can help to mitigate this negative effect.
ETD Chair
Abbey, James Bob '85 and Kelly Jordan '86 Professorship in Business
