Is Discretionary Preferential Treatment Bad to Nonbeneficiaries? The Emotional Pathways of Envy and Boundary Conditions

Abstract

Offering discretionary preferential treatment (DPT) to selected customers is a prevalent practice in service industries, yet its nature and effects on nonbeneficiaries are unclear. Drawing from social comparison and appraisal theories and relationship marketing literature, this study examines how nonbeneficiaries appraise and respond to witnessing service employees offering DPT to others through the separate emotions of malicious and benign envy, that drive their respective contrasting reactions. Nonbeneficiaries’ relationship strength with the employee and the continuity (one-off versus continuous) of the preferential treatment both alter the proposed effects on experiences of envy. A customer survey and three experiments (laboratory and field) consistently affirm the distinctiveness of DPT and support a dual pathway model of the mediating processes of malicious and benign envy due to DPT on nonbeneficiaries’ behavioral outcomes (e.g., derogating the beneficiary, cooperating with the employee, loyalty to the service company). The findings also uncover a double-edged sword effect of a strong nonbeneficiary–employee relationship: It enhances the effects of DPT on both malicious and benign envy. Interestingly, this enhancing effect of relationship strength for eliciting malicious (benign) envy can be reduced (strengthened) if the preferential treatment is offered on a continuous rather than one-off basis.