The effect of service recovery on socially distant third-party customers: an experimental research on emotions, forgiveness, repatronage intention and WoM

Purpose Service failures usually occur in front of third-party customers. Third-party customers react emotionally and behaviorally to service failure and recovery efforts aimed at focal customers. However, there is a gap in the literature on how third-party customers react to a service failures incident and a recovery over another customer, depending on how socially close or distant they are from. This study investigates the effect of third-party customers' emotions on consumer forgiveness, negative word-of-mouth (WoM) and repatronage intentions in the service recovery process by comparing close and distant third-party customers. Design/methodology/approach This study utilizes a 2 (social distance to the focal customer: close, distant) × 2 (service recovery: yes, no) between-subjects design. The authors used a scenario-based experiment to test the proposed hypotheses. A total of 576 respondents were involved in the study. Findings The results from the authors' scenario-based experimental study show that positive and negative emotions felt by distant third-party customers are higher than those of close third-party customers. In addition, the effect of positive emotions on customer forgiveness is more substantial for distant third-party customers. Third, moderated-mediation analysis indicates that social distance has a moderator effect only on the relationship between positive emotions and customer forgiveness. Originality/value This study contributes to the service literature by comparing socially close and socially distant third-party customers' reactions to service failure and recovery attempts.