Value of Customer Co-created Engagements in Service Failure and Recovery

The advantages of customer co-creation of value within the context of a service are widely acknowledged. Despite the importance of customer expectations to service failures in a high-engagement service context, there is little research on the relationships between customer engagement, customer expectation of service recovery, and service outcomes (e.g., word-of-mouth [WOM]). Even more urgent is the lack of research on the type of service recovery that can counteract customers’ exaggerated expectations of service recovery and restore service outcomes. Given that an increasing number of businesses are encouraging customers to co-create services and that failures are unavoidable, it is crucial to comprehend how to regain customer satisfaction and how to generate positive behavioural intentions in the context of co-created service failure. In an effort to fill research gaps, the current study attempts to determine which service recovery strategy (e.g., assistance, compensation, apology only, assistance plus compensation) that reflects industry practises has the greatest impact on co-created service failure recovery. This study aims to demonstrate that a high level of customer input at the outset of the service provision process is correlated with high expectations of recovery and low levels of customer satisfaction. The results also indicated that co-created service recovery, as opposed to firm and customer recovery, has a greater impact on customer satisfaction. Additionally, the contrasting effects of each service recovery type on positive and negative WOM are presented. In addition, when customers engage in the service recovery process in self-service technology contexts, they are more likely to report higher levels of role clarity, perceived value of future co-creation, satisfaction with the service recovery, and intention to co-create future value. The current research has significant implications for academics and managers who wish to recover failed high-engagement service encounters effectively.