Abstract
This research investigates the moderating role of innate satisfaction in the relationship between customer satisfaction and loyalty. The results from a mixed model estimation using survey data show that innate satisfaction moderates the satisfaction–loyalty relationship asymmetrically and nonlinearly. This finding indicates that at lower levels of satisfaction, an increase in satisfaction leads to a stronger increase in loyalty for innately satisfied customers compared to innately dissatisfied customers. Further, innately satisfied customers and innately dissatisfied customers differ in their responses to service recovery but not service failure. Efforts to increase satisfaction might provide different returns, relative to the innate satisfaction of the target segments.
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