Abstract
ABSTRACT Building on the justice theory, managerial responses (MRs) to negative online reviews are investigated for their service recovery efficacy. MRs (>2,000) for 106 hotels were analyzed for interactional, procedural, and distributive justice and matched with their property-level room revenue, total revenue, and gross operating profit. Service recovery’s importance was empirically demonstrated via a negative association between negative reviews and performance outcomes and a positive association between MRs and performance outcomes. Justice-based MRs revealed differential impacts on performance outcomes: those with interactional justice were most effective in improving profitability. Findings further highlighted product positioning as a moderator. On one hand, interactional justice worked for lower-positioned hotels by being positively associated with total revenue. On the other hand, distributive justice backfired by being negatively associated with total revenue, suggesting that compensation in service recovery does not necessarily add value.
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