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The paper's aim is to test the existence of the service recovery paradox.

To date, much of the literature exploring the service recovery paradox has generated mixed results. The paper argues that a service recovery paradox is a rare event, which makes its measurement difficult, since the “treatment group” sample size is usually too small to produce significant results. For that reason, the existence of the service recovery paradox in a banking context with more than 11,000 customer interviews based on actual customer encounters is tested.

Overall, the survey findings support the argument that a service recovery paradox is a rare event, and the hypothesized mean differences are, albeit significant, not very large, which diminishes their managerial relevance to some degree.

Because of the required extremely large sample size, no multi‐item measures were collected. Furthermore, privacy concerns restricted us from a longitudinal study and from linking the survey results to behavioural data. Both limitations are inherent in the chosen setting.

While a service failure offers an opportunity to create an excellent recovery, the likelihood of a service paradox is very low. The implications of verifying a service recovery paradox do not suggest that ineffective service followed by an outstanding service recovery is a viable strategy.

To the authors' knowledge, this is the first empirical study testing not only the existence of the service recovery paradox, but also exploring its magnitude and frequency. This is crucial because the paradox is a very rare event, which, in turn, limits its managerial relevance.

The purpose of this study is to address the discrepancy between research that supports the service failure recovery and that which does not by examining customer satisfaction in the event of a service failure empirically.

The objective of the study was achieved by conducting role‐play experiments on undergraduate business students.

Analysis showed that a service recovery paradox is most likely to occur when the failure is not considered by the customer to be severe, the customer has had no prior failure with the firm, the cause of the failure was viewed as unstable by the customer, and the customer perceived that the company had little control over the cause of the failure.

This information should benefit service managers since service failures are common and typically trigger heightened customer attention. These findings may stimulate future research because the limitations of this study include the use of undergraduate business students and the examination of only one service setting. Nevertheless, this paper does demonstrate that, under the appropriate conditions, a customer can experience a paradoxical satisfaction increase after a service failure.

The purpose of this paper is to investigate consumer responses to online retailer service recovery remedies following a service failure and explores whether the phenomenon of the service recovery paradox exists within the context of online retailing.

This paper reports on the results of two studies. Study I explores the main and interaction effects of the various dimensions of service recovery justice (i.e. distributive justice, procedural justice, and interactional justice) on customer satisfaction, negative word‐of‐mouth (WOM), and repurchase intention based on the justice theory. Study II investigates whether the phenomenon of the service recovery paradox exists (i.e. whether customers have higher satisfaction, higher repurchase intention, and lower negative word‐of‐mouth after experiencing an effectively remedied service failure as compared to if the service failure had not occurred). A laboratory experimental design is used to test the research hypotheses.

The results show that distributive justice, procedural justice, and interactional justice have a significant positive influence on customer satisfaction. Among the three dimensions of service recovery justice, only distributive justice has a significant positive influence on repurchase intention, and only interactional justice has a significant negative influence on negative WOM. Additionally, both the interaction between distributive justice and procedural justice and the interaction between distributive justice and interactional justice are found to significantly influence customer satisfaction, negative WOM, and repurchase intention. The results also indicate that the service recovery paradox does not appear to exist in the online retailing context.

The findings will allow online retailers to develop more effective strategies for preventing service failure and improving customer satisfaction, negative WOM, and repurchase intention.

This study contributes to the understanding of consumer responses to online retailer's service recovery after a service failure.

Despite having been widely studied in traditional (bricks‐and‐mortar) services, the effect of service failures and recovery (SFR) on customer loyalty has received only limited attention in the context of e‐services. This paper sets out to empirically test the following set of hypotheses in an e‐service setting: H1, service failures have a negative effect on customer loyalty intentions; H2, failure resolution has a positive effect on customer loyalty intentions; H3, satisfaction with the recovery has a positive effect on customer loyalty intentions; H4, outstanding recovery results in loyalty intentions which are more favorable than they would be had no failure occurred (service recovery paradox).

The paper is based on an online survey of actual customers of a commercial e‐banking service.

H1‐H3 are supported, suggesting that: the detrimental effects of failures are also present online; problem resolution leads to increased loyalty; despite the challenging nature of online failures and the reduced degree of human interaction, it is possible to achieve effective recovery in e‐services. H4 is also supported. We observes a recovery paradox effect but it only take place for a small proportion of “delighted” customers, i.e. those who perceived an outstanding recovery. Although unlikely, the impact (size effect) of outstanding recovery on loyalty is substantial.

Future research should examine other types of e‐services.

E‐service delivery systems should be designed with a strong failure‐prevention mindset and include effective service recovery mechanisms. However, in general, e‐service providers should not look at superior recovery as a substitute for error‐free service. Despite not being a viable strategy in general, delighting customers in the recovery may make sense for the most profitable customers.

The paper provides empirical evidence of the effects of SFR in the context of online service, an area which has received limited attention to date. Unlike other research, this paper draws on data from customers of an actual e‐service and therefore benefits from increased external validity.

The service recovery paradox (SRP) is the phenomenon that happens when customer satisfaction level post-service failure and recovery surpasses the customer satisfaction level achieved at error-free service. The aim of this study was to identify how large the size of compensation has to be at recovery for customer satisfaction to surpass that of error-free service (i.e. to identify a threshold value for SRP). The purpose of this is to inform managers how to restore customer satisfaction yet avoid overcompensation.

The paper covers two studies. Study 1 used the novel approach of asking participants who had experienced a service failure in the hotel industry what amount of money (recovery) would make them more satisfied than in the case of error-free service. Study 2 then tested the compensation levels expressed by Study 1 participants to be sufficient for the service recovery paradox to occur.

Study 1 indicated that the threshold for the SRP was (on average) around 1,204 SEK, or just over 80% of the original room reservation price of 1,500 SEK (approx. $180). Study 2 found that (on average) the customer satisfaction of participants who received 1,204 SEK in compensation for service failure marked the point where it surpassed that of error-free service. Participants who received 633 SEK were less satisfied; participants who received 1,774 SEK were more satisfied.

The findings are context-specific. Future research should test the findings' generalizability.

The approach used in this paper could provide managers with a tool to guide their service recovery efforts. The findings could help hotel managers to make strategic decisions to restore customer satisfaction yet avoid overcompensation, given a legitimate service failure in which the organization is at fault.

Numerous previous studies have investigated the occurrence or absence of the SRP at predetermined compensation levels. This paper used a novel approach to find a quantitative threshold at which the magnitude of the recovery effort makes customer satisfaction surpass that of error-free service.

This paper aims to examine the effects of a general service recovery effort in consumers who were not victims of the service failure.

This study uses a 2 × 2 between-subjects design comparing a service failure announcement with apology and an anniversary event announcement, either with a 15% discount or no discount on purchase intentions.

A service recovery effort involving an apology and 15% discount leads to higher purchase intention in consumers who were not victims of the service failure in comparison to a control. The unexpected apology generates surprise, which amplifies the effect of the discount, leading to higher purchase intention.

The results of this study suggest that apologizing and offering a discount for a minor service failure can have positive effects on consumers who were not victims of the service failure. Thus, if a company is unsure which consumers have been affected by a service failure, this study shows that issuing a general apology for the failure does not have negative effects in unaffected consumers.

To the best of the author’s knowledge, this paper is the first to examine the effects of a service recovery effort in consumers who were not victims of the service failure and the first to find evidence of a service recovery paradox in unaffected consumers.

The service recovery paradox (SRP) refers to a particular effect whereby an excellent recovery can turn angry and frustrated customers into loyal ones. Researchers who have studied the SRP have reported mixed findings, with some providing evidence in its support and others not finding any such evidence. To address this discrepancy, this study aims to investigate the SRP.

This study re-examined the phenomenon of the SRP with a field study and provided further evidence in a subsequent experimental study in which the failure and recovery conditions were carefully manipulated.

The results of this study suggest that the SRP was observed in neither the field study nor the scenario experiment.

This study can influence the current service management of restaurants with regard to service failures in several ways.

This research is a pioneering effort to examine the SRP by conducting both a field study and a scenario experiment.

The primary objective of this study is to investigate the effects of service recovery on customer satisfaction. Specifically, it examines the perception of “justice” in service recovery and how it affects the level of satisfaction and behavioral outcomes. In addition, the study also explores whether the “recovery paradox” exists.

Data were collected through a survey using a structured questionnaire. The 428 respondents were analyzed according to whether they did or did not make a complaint to the service providers.

The findings showed that the complainants' level of satisfaction with service recovery was significantly affected by perceived justice. The behavioral outcomes of the complainants in terms of trust, word‐of‐mouth (WOM) and loyalty were also found to be affected by their satisfaction with the service recovery. T‐tests confirmed that the levels of trust, WOM and loyalty were significantly higher for those respondents who were satisfied with the service recovery compared with those who were dissatisfied. Further t‐tests also indicated that respondents who were initially satisfied with the service expressed greater trust and positive WOM compared with the satisfied complainants. Finally, the study showed that dissatisfied complainants would exhibit a lower level of trust and were more likely to engage in negative word‐of‐mouth behavior compared with those who were dissatisfied initially but chose not to complain.

The findings in this paper confirmed the importance of perceived justice in service recovery. Satisfaction with service recovery also leads to a higher level of trust, positive word‐of‐mouth behavior and, to a lesser extent, the level of loyalty. Finally, the lack of support of the “recovery paradox” effect suggests that successful service recovery alone would not bring customer satisfaction to pre‐service failure levels. It is therefore essential to provide service right at the first time.

This is a new study on the service provided by mobile phone service providers in an Asian environment. It also reinforces the important of perceive justice in service recovery and debunks the existence of the “recovery paradox” effect.

This study aims to explore the service recovery paradox (SRP) in business to business (B2B) relationships. Previously, this phenomenon has been identified in consumer-facing industries. The research advances the marketing literature by highlighting the ways in which the antecedents of the service recovery paradox differ between B2B and consumer markets.

This research draws upon findings on the SRP in the consumer setting and service failure literature in business to consumer and B2B contexts. For the analysis, interview data were collected from 43 informants among clients and service providers in the aftermath of a service failure.

The authors propose an exploratory model of the SRP for B2B relationships. In the B2B setting the propensity of eliciting the SRP depends on (1) the characteristics of the service failure, (2) the attributes of the service recovery and (3) the shared subjective perceptions among boundary spanners.

Empowered operating-level employees, straightforward communication, immediate responses and action plans that ensure future conformance are the key factors to turn service failures into increased customer satisfaction.

This study is the first to transfer the SRP from consumer marketing into the B2B domain. Moreover, it derives an exploratory model of the SRP, which can be refined by future research.

Research on the service recovery paradox (SRP) effect has indicated that after recovery from failures in customer service, customers will commonly rate their satisfaction higher than prior to the service failure. However, thus far there has been little research on the cause of this phenomenon. Accordingly, the purpose of this paper is to explore the effect of “guilt” emotions in the context of consumer service.

Three experiments were conducted to test the hypotheses. Data were collected from 532 undergraduate, graduate students and the general people.

The results of the experiments demonstrate that if customers are compensated for service failures by receiving better than anticipated service, they will commonly experience feelings of “guilt.” In an attempt to alleviate this guilt, customers will project their feelings in evaluating a company, and will rate their customer satisfaction more highly. In doing so, the customer feels relief in reciprocating the kindness of the firm; in this way, the firm wins over the customer’s heart.

This is one of the first studies to discuss the effect of guilt in the SRP effect. This research shows that relying on the emotion of “guilt” for receiving exceptional service helps companies to overcome service failures and successfully rebuild their relationships with customers.