Does Service Recovery Affect Customer Satisfaction? A Study on Co-Created Retail Industry

Abstract

In today's hyper-competitive business environment, customer satisfaction is vital for success. However, in many businesses, service failure may surface despite consistent avoidance efforts. The purpose of this study is to investigate the relationship between service recovery and customer satisfaction in co-created retail industry. Co-created retail industry which reflects the engagement of customers in business value creation is a win-win approach to customers and retailers particularly in context of service recovery. Although predominant attention on service recovery has been assessed in hospitality context especially in hotel and restaurant setting, there are very limited explorations in co-created retail context to lend sufficient understanding for retail recovery management. A conceptual framework and three prepositions were developed indicating that customer satisfaction is influenced by three justice dimensions of service recovery which is outcome justice, procedural justice and interactional justice. Managerial implication of this study is discussed to exhibit the importance of service recovery in winning back the upset customers.

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