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Previous research considers service recovery as a one-on-one interaction between a service provider and a complaining customer. However, customers frequently complain at the place where they receive the service, making an investigation of the impact of a service recovery on observing customers necessary. Using observational learning theory and attribution theory as theoretical anchors, this paper examines whether observing a service recovery influences the observing customers’ satisfaction and repurchase intentions. In addition, this paper tests whether service quality perceptions mediate, and customers’ locus of control attributions moderate these relationships.

Study 1 tests the main hypothesis using a scenario-based experiment in two settings (restaurant, retail). Study 2 further elaborates on these findings using a scenario-based experiment in a hotel setting.

The findings show that the negative consequences of a failed recovery extend beyond the complaining customers to observing customers, whereas the positive consequences of observing a satisfactory recovery do not influence the observing customer when compared to observing a failure-free service delivery. These relationships are driven by the service quality information customers extract from observing a service recovery. In addition, the results indicate that the negative spill-over effects are attenuated if the observing customer gets information about who caused the failure.

From a theoretical point of view, this study contributes by outlining service recovery's different impacts on complaining and observing customers: whereas service recovery forms a critical for complaining customers, it only acts as a dissatisfier for observing customers. In addition, it is the first to test a potential explanation for why observing a service recovery leads to lower customer outcomes, and provides insights about how service providers might attenuate the negative spill-over effects of a failed recovery.

This research paper aims to provide an understanding of how customers evaluate other customers’ misbehavior, considering the attribution of responsibility and how service employees should react in the respective situation.

Two sequential studies using written scenarios are conducted, including manipulations for responsibility (deviant customer vs employee) and employee effort (high vs medium).

The results show that observing customers perceive misbehavior caused by the deviant customer as more severe and feel more intense negative emotions than when an employee is attributed as being responsible. Employee responsibility, however, elicits higher recovery expectations, which in turn decide the level of employee effort required to ensure observing customers’ satisfaction.

Due to the exploratory research objective and the use of a restricted sample and written scenarios, the studies may be subject to restrictions. Further studies will ensure generalizability.

Because different customer expectations arise from the respective responsibility for customer misbehavior, service employees should be encouraged to differentiate their efforts when approaching misbehavior. In case of their own responsibility, employees need to exert higher efforts to restore a functional service encounter, whereas in cases of customer responsibility, medium efforts are sufficient to stop the misbehaving customer.

This research contributes to understanding of cognitive and emotional responses to customer misbehavior considering the attribution of responsibility and indicates how service employees may handle these situations.

Often, service failures are witnessed by other customers, but little is known about how consumers react to service recovery aimed at other customers. Using the deontic theory of justice, this paper aims to examine consumers' reactions to justice directed toward other customers.

Two studies were conducted to test the hypotheses. Both were 2 x 2 between subjects quasi experimental designs using written scenarios and surveys. The scenarios depicted an observing customer witnessing a service failure and recovery happening to another customer.

Results show that the valence of the recovery attempt impacted the observing customer's reactions and evaluations, and that the observer's processing frame and loyalty status of the victim impacted the observing customer's judgments of fairness and behavioral intentions.

These results provide guidance to service providers by shedding light on the impact of service failures and recovery on surrounding customers.

Deciding on the appropriate level of service is one of the paramount decisions a firm must make. Making this decision more complicated is the debate regarding the viability of aiming for the highest level of service or customer delight. One avenue of research missing from the literature is the impact of providing delight to one customer while in the presence of others. In response the purpose of this paper is to evaluate the emotional and cognitive reactions of the observing customer.

Structural equation modeling was utilized to evaluate a sample of 272 respondents. Additional moderation analysis was conducted on the impact of perceived deservingness.

Findings indicate that the observing customer experiences the dual effects of joy and jealousy which both impact perceptions of unfairness and subsequent behaviors of complaining and repurchase. The perceived deservingness of the customer experiencing the delight is shown to reduce the impact of jealousy on unfairness.

The main limitations include cross-sectional data and the fact that the data were retrospective.

This research suggests that firms should embrace the positive contagion that occurs between the delighted customer and observer while attempting to minimize the impact of jealousy.

This is the first research to quantitatively evaluate the impact of a customer viewing another customer receiving delight.

Service failure and recovery encounters are often witnessed by other customers, but little is known about how these encounters impacts other customers. With an aim to bridge this gap, the purpose of the paper is to explore why and how service recovery directed at a focal customer impacts other customers who are present in the same service environment.

The paper follows a qualitative research methodology. Purposive sampling was used to collect data from 30 customers through semi-structured face-to-face interviews. The data was analysed using thematic analysis.

Findings of the study show that service recovery directed at a focal customer has an impact on other customers' fairness judgments, emotions, service quality perceptions and behaviour. Other customers' behavioural reactions in response to observed service recovery are driven by two different motives: self-interest and moral obligation. Observing customers' cautious behaviour and (re)purchase behaviour are found to be primarily driven by self-interest, whereas their helping behaviour, punishment behaviour and word-of-mouth behaviour are found to be driven by moral obligation.

This study findings contribute to theory development on “other-oriented” effects of service recovery and provides valuable insights for effective management of service failures in the shared service environment.

This is the first study, which qualitatively explores the “other customers” perspective of service recovery in the context of shared servicescape.

This study aims to examine the observing customer’s reactions, namely, gratitude, loyalty to the employee and tipping intention while observing other customer incivility during another customer service failure and the frontline employee’s emotional labor strategy.

A 2 (emotional labor strategy: deep acting vs surface acting) by 2 (service consumption criticality: high vs low) experiment is used to test the hypotheses.

The results reveal that observing an employee’s deep acting emotional labor (vs surface acting) leads to a greater level of gratitude among the affected customers and promotes their tipping and loyalty to the employee. However, there is no significant interaction effect of service consumption criticality and emotional labor strategy on customer gratitude.

This research builds upon the social servicescape, customer misbehavior and emotional labor literature by examining previously untested relationships.

In cases of other customer service failure, managers should effectively communicate to their employees how their emotional labor induces positive customer feedback. Currently, emotional labor is emphasized mostly regarding its negative effects on employees, but this research suggests that serving the recovery expectation of the affected customers, especially when it is served with authentic emotional displays, can promote increased tipping and loyalty behavior.

No research investigates customers’ emotional and behavioral reactions to employee emotional labor in the context of other customer service failure.

Considerable research has examined the negative consequences of customer incivility on employees (e.g. turnover intention and sabotage behavior toward the customer). However, there is scant research investigating how other customers, as observers, may react to incivility. This knowledge gap should be filled because hospitality services are often consumed in the public setting where customers can observe and be influenced by each other. The purpose of this study is to fill this gap by examining observing customers’ willingness to revisit the company following customer incivility.

Participants are American consumers recruited from a crowdsourced online panel. Two scenario-based experimental studies in the restaurant setting are conducted. Customer incivility and relationship norms (communal versus exchange) are manipulated, while relationship closeness is measured.

Study 1 shows that following fellow customer incivility (vs civility), observing customers’ intention to revisit the company was lower when they perceive a distant relationship with the employee. This intention did not differ regardless of incivility and civility when they perceive a close relationship with the employee. Study 2 shows that when observing customers perceive a communal relationship with the employee, their revisit intention was even higher following customer incivility (vs civility).

Hospitality managers need to train employees to identify signs of customer incivility and assume appropriate actions to reduce the negative consequences on observers. Hospitality managers should also communicate their expectations for respectful customer behaviors through an organization-wide campaign. Finally, hospitality businesses should foster a close relationship with their customers, particularly a communal relationship to offset the negative consequences of customer incivility on observers.

This study adds to previous research by challenging the universally negative view of customer incivility. The authors do so by examining the moderating effects of relationship closeness and norms in observer reactions to customer incivility. This study contributes to previous research drawing on script theory and deontic justice theory.

The purpose of this paper is to investigate the effect of interdependent vs independent self-construal on service satisfaction, following the observation of failure and recovery experienced by a fellow customer.

Three experiments were conducted to test the research hypotheses.

After service failure, interdependent observers react less favorably compared to independent observers. After high recovery compensation, interdependent observers react more favorably compared to independent observers. The effects are driven by differences in perceived interactional and distributive justice.

This study uses three scenario-based experiments to test the hypotheses. While providing greater control of the experimental conditions, the external validity of the results is to some extent sacrificed. Moreover, this research does not investigate observers’ reactions to the interactional aspect of recovery.

When handling service failure, firms are required to anticipate and address not only the responses of the target customers involved but also those of potential observers. Providers can accordingly use available customer information to gauge customers’ likely self-construal and to adjust their service delivery and recovery tactics. Providers can influence observing customers’ reactions by creating a servicescape that activates a desired self-construal.

This research is one of a few to examine the effect of service failure and recovery on observing customers, and the first to do so via the lens of self-construal. It contributes to the literature on service failure and recovery and the literature on self-construal and has practical implications for service providers. The value of this research is further highlighted given the increasingly public nature of services and the multicultural context of service delivery.

The purpose of the paper is to examine the conditional role of webcare as a service failure recovery strategy on customers’ hotel booking intentions in presence of different levels of observed severity and review agreement. Furthermore, the study also examines the mechanism through which webcare can shape the adverse effect of observed severity and review agreement on hotel booking intentions.

A 2 (severity: high or low) × 2 (agreement: high or low) × 2 (webcare: webcare or no webcare) between-subject experimental design was conducted to collect responses. Analyses of variance and moderated mediation analysis were performed to analyze the study data.

Prospective customers who observed high severe service failure from a review reported less booking intention. Further, customers’ observed agreement strengthened these behaviors, i.e. customers who are exposed to high severe service failure in high-agreement condition reported low booking intention, as compared to those who exposed to low review agreement condition. Furthermore, results supported the fact that use of appropriate webcare plays a significant role to shape or mitigate the negative effect of severity and agreement on hotel booking intentions via perceived trust.

This is the first in its stream of studies that examined how webcare can be used to tackle the adverse effects of observed severity and agreement, so that perceived trust would be formed to create hotel booking intention.

The purpose of this paper is to investigate the effect of complete versus partial observations of service failure and recovery. This study also aims at investigating the effect of observing customers’ need for cognitive closure and types of compensation that a service provider offers.

Two experiments are conducted to test the research hypotheses. The authors use scenarios describing failure and recovery encounters that occur to a target customer at restaurant settings, and through manipulation of complete versus partial observations, they investigate observers’ attitudes and behavioral intentions.

The results suggest that customers with a partial observation are less forgiving than those with a complete observation. In particular, the former sympathized more with a target customer, blamed a service provider more and a target customer less and had lower repurchase intentions than the latter. The authors find that the need for cognitive closure heightens this tendency following a partial observation of service failure. They also find that following a complete (versus partial) observation, observers reacted more favorably to service recovery when it included (versus did not include) monetary compensation.

This research studies the effect of locus of causality following a partial versus complete observation. Future research could further examine the effect of stability and controllability. Also, the authors examined the effect of the need for cognitive closure on evaluations of service failure following a partial versus complete observation. Future research could examine the effect of some other individual difference variables.

The results offer some measures to be taken by practitioners. In particular, practitioners are advised to not offer monetary compensation when majority of observers have had a partial observation. Moreover, they are advised to offer some explanation in a timely and effective manner to ensure observers who are under the negative impact of a partial observation have some information so that they revisit their service evaluations.

The literature assumes that in failure and recovery incidents, all observing customers would know the entire story. This research challenges this assumption and highlights the key role of observation type (partial versus complete observation). Further, this research examines the effect of the need for cognitive closure on service evaluations following a partial versus complete observation. The current research finds that supposedly favorable measures by a firm (i.e. monetary compensation) may in fact backfire when a partial observation is at play.