A Study on the Management of Service Recovery Paradox According to Relationship Quality

Service recovery paradox is a phenomenon in which customers become more loyal if the recovery is effectively made after a service failure, compared to low loyal they would be if service was provided without failure. As studies on service recovery paradox are increasing, contradictory claims have emerged. Therefore, this study analyzed whether service recovery paradox really exists and examined how the service failure characteristics moderate the relationship between service recovery and customer loyalty. In order to overcome the limitations of previous studies on service recovery paradox, this study investigated service recovery paradox according to relationship quality between companies and customers. In this study, a survey was conducted with 348 customers who had experienced service failures. The results of the analysis are as follows. First, as a result of analyzing the whole respondents, the existence of the service recovery paradox was confirmed. Particularly, the investigation by customer type according to relationship quality indicated that the service recovery paradox is more likely to appear in customers with a short transaction period that is a quality of the quantitative relationship with company. Second, from the analysis of the respondents as a whole, it could be seen that the severity of service failure, the persistence of service failure, and the controllability of the company all have a significantly negative impact on the service recovery paradox. On the other hand, these moderating effects differed by customer type according to relationship quality. This study has overcome the limitations of pervious studies on the service recovery paradox by considering all customers to be the same and contributed to the importance of service failure characteristics and relationship quality.