A Cross-National Service Strategy to Manage Product Returns: E-Tailers' Return Policies and the Legitimating Role of the Institutional Environment

Global e-tailers face product returns from across the world, but research on service strategies for successful product return handling in culturally diverse markets is virtually nonexistent. This study examines the drivers of product return-related customer behavior across Western and Eastern cultures. Using a multimethod approach comprising two surveys and one experiment, results from the major Western (United States) and Eastern (China) retail markets show varying patterns for product return behavior and a uniform pattern for repurchase intention. Specifically, return policies that imply high effort restrictiveness decrease product returns in Western but not Eastern cultures, while the perceived customer-oriented institutional environment increases product returns in Eastern but not Western cultures. For repurchase intention, we find that effort restrictiveness in both cultures decreases repurchase intention, while the perceived customer-oriented institutional environment increases repurchase intention. We also find self-interest and legitimacy as the mechanisms responsible for the effect of perceived institutional environment, an important context variable in international marketing that has been neglected in the product return context. These findings enhance our understanding of product returns in different cultural environments and offer valuable insights for an adequate service strategy in product return management by global e-tailers.