How Service Recovery Saves the Buyers: The Role of Forgiveness

Abstract

When a service failure occurs, this negative disconfirmation of expectations is likely to result in a variety of unfavorable consequences such as customer dissatisfaction, negative word of mouth, increased costs, and customer revenge. Therefore, understanding how companies can effectively respond to service failure has become a very important area to both academicians and practitioners. Despite the topics of service failure and service recovery that have attracted considerable research attention in the past decade, customer’s psychological reaction to firm’s effort to address the service failure remains understudied. Drawing on equity theory, this study examines how customer’s perceived interactional, procedural, and distributive justice influence customer return intention through the impact of perceived forgiveness. This study focuses on the neglected, but important, mediation effects of perceived forgiveness. Based on a survey of 501 customers, the results find that distributive justice has the strongest impact on perceived value followed by procedural justice and interactional justice, respectively. In addition, customer forgiveness positively and strongly affects customer return intention.