Resolving Group Service Failures: Insights from Social Impact Theory

    Project: Research project

    Project Details


    What can a firm do to recover if its service failure affects a group of consumers? Extant service literature focuses on recovery for individual failures, but service failures affecting a group of consumers are increasingly common today. In a group failure, a firm has an option to recover each complaining customer through individual, personalized means or to recover the whole group with mass, standardized means. Conventional wisdom suggests that a mass approach can be more economical, but individual differences are not catered for. In contrast, an individual approach can better cater for each consumer’s unique needs but add to a firm’s costs. Under what different situations can mass and individual recoveries be well received by each individual customer in a group service failure? Our study seeks to shed light on this issue.

    Building on social impact theory (SIT), we view service recovery as a social impact process and argue that the effectiveness of a group-failure recovery, measured by an affected customer’s repurchase intention and negative word of mouth (WoM) intention, depends on what and how a firm offers recovery. We put forward two components of a recovery strategy: what is offered in the recovery mode (economic and social) and how the recovery is offered in the delivery mode (mass and individual). We argue that the interaction between these two modes affects an individual customer’s perceived justice toward the recovery strategy. Perceived justice in turn produces subsequent behavioral conations including repurchase and negative WoM intentions.

    Specifically, we argue that given the nature of service in which value is relatively difficult to assess, mass economic recovery (e.g., announcing a refund in the media to all affected customers) portrays a consistence from the influence source thus enhancing a customer’s perception of distributive justice. In contrast, social resources are subjectively perceived thus individual social recovery (e.g., apology through a personal email) signifies a firm's sincerity thus producing more favorable perceived interactional justice. We hypothesize that perceived justice is a mediator between recovery-delivery mode interaction and recovery effectiveness. We further hypothesize that recovery-delivery interaction is moderated by the three social forces in the SIT, which are impact source’s strength, immediacy, and impact targets’ group size.

    We will empirically test our hypotheses through four experiments of different samples and industries in order to enhance the internal validity of our theory. This study contributes to service-marketing literature by putting forward the social nature of group service recovery. It also contributes to social impact theory by studying the moderating effects, instead of main effects, of social forces. While group service failures are increasingly common in today’s marketplace, our study also provides practical insight to managers so that they can better formulate recovery strategies to resolve group failures.
    Effective start/end date1/11/1230/04/15


    Explore the research topics touched on by this project. These labels are generated based on the underlying awards/grants. Together they form a unique fingerprint.