Service Recovery from the Customer's Perspective: Extending the Consumer-Directed Theory of Empowerment (CDTE)

Abstract

Satisfactory resolution of customers' complaints in service recovery is a critical driver of customer loyalty, positive word-of-mouth, cross-buying from the firm's portfolio of offerings, and firm's long-term financial performance. Yet, despite the costs and benefits associated with service recovery, many customers who encounter service failures are dissatisfied with the handling of their complaints. This research takes a non-traditional approach and empirically investigates the area of service recovery process from the customer's perspective whereby empowering customers to play the central role in service production and delivery may bring about their satisfaction. In the field of tourism and hospitality services, it appears that no study has developed an integrative model capable of investigating effectiveness of service recovery by examining the relationship between customer empowerment and customer satisfaction indicators. Moreover, a growing body of research shows that the issue of service recovery is at the development stage in tourism and hospitality literature, and there is a paucity of empirical research in this area. Thus, this study addresses these gaps by developing a theoretical model of service recovery process. The model proposes that the degree of customer-perceived empowerment during service recovery process determines both the level of customer's affective/cognitive responses and the level of subsequent process complaint satisfaction. A portion of the theoretical model is then examined using regression and Path Analyses to analyze data that was collected through a web survey of undergraduate tourism and hospitality students. The results indicate that process complaint satisfaction is indirectly shaped by customers' perceptions of empowerment and their affective (emotional) and cognitive (process quality and equity/fairness) responses.