The impact of firm reputation and failure severity on customers' responses to service failures

Abstract

PurposeThis study seeks to investigate the impact of firm reputation for service quality on customers' responses to service failures. Firm reputation is defined as customers' perceptions of how well a firm takes care of customers and is genuinely concerned about their welfare.Design/methodology/approachAn experiment design methodology was utilized to test the conceptual model. The respondents were adult passengers waiting for flights at a major airport.FindingsOverall, the findings revealed that excellent reputations provide firms with a “buffering effect”, insulating them from some of the negative consequences of failures. Firm reputation moderated the relationship between failure severity and satisfaction, lowered attributions of controllability and stability, and led to higher repurchase intentions following service failures. Attributions of controllability and stability were related only to repurchase intentions; satisfaction did not fully mediate these relationships.Research limitations/implicationsA limitation is the use of an experimental methodology. Other methods would enhance the external validity of the findings.Practical implicationsThe findings of this study provide compelling evidence that a firm's reputation can be one of its most important assets. Carefully building and maintaining this reputation is paramount for continued success in any industry, but especially important for service firms where failures are inevitable.Originality/valueVery little research has examined the effects of firm reputation. This study contributes by testing the impact of firm reputation on customers' responses within a service failure context.