Developing a framework for rewards in combined production/service businesses: The case of tipping in the restaurant industry

Examines monetary rewards in businesses that combine technical and functional aspects of service. Focusing on the restaurant industry, develops a framework that explains tipping as a reward for the two service dimensions. The technical elements of service are rewarded by dollar tip and the functional elements of service are rewarded by percent tip. An overlap between technical and functional elements results in a conflict between dollar tip and percent tip and, it is suggested, result in a magnitude effect. The framework was tested empirically in a sample of restaurants. The findings indicated that customers' evaluation of the service interaction can be summarized by four main components. Multiple regressions provide initial support to the framework, tying the technical elements to dollar tip and functional elements to percent tip.