A System Dynamics Approach for Modeling Service Recovery

Abstract

In the era of experience economy, the service industry becomes more and more important around the world. Delivering appropriate services to customers is an important issue for service firms. Hence, High quality services have to be considered critical factors (e.g., service operations, customer needs, service resources or service performance). Furthermore, service firms need to satisfy customers to maintain the long term customer relationship for high business profitability. That is, to achieve high customer satisfaction has been an important topic while delivering services to customers. Service failures are the main cause to influence customer satisfaction. Consequently, establishing a suitable service recovery mechanism is also an essential topic. The service recovery process is extremely complex and difficult for service firms to understand. Although previous studies have emphasized the importance of service recovery, there is less research discussing the effects of the macro viewpoint of the service delivery system. This study uses the system dynamics approach (i.e., causal loop diagrams and stock and flow diagrams) to analyze the influences of service recovery and model the whole service recovery process. Hence, we will conduct several simulations to test the models and policies based on the perspective of system dynamics.