Longitudinal impact of perceived fairness after service failures: Evidence from online travel agencies

Abstract

The drivers of customer repurchase intentions following service recovery are dynamic and it is vital to accurately identify them. Yet, how the relationship between perceived fairness and its outcomes evolves remains unclear. Using a longitudinal examination of customers who use online travel agencies, this study tests research gaps using a latent growth model. The findings demonstrate that customers’ perceptions of fairness and their behavioral intentions are more pronounced immediately following a service failure and moderate slowly over time. Notably, recovery satisfaction increases during the early stage of recovery efforts and then decreases during its later phase. Avoidance intentions, however, continue on a downward slope. Analysis indicates that the effect of diluted recovery satisfaction during late-stage recovery is not directly related to avoidance intentions. Indeed, this study reveals that recovery satisfaction is limited in reducing avoidance intentions under conditions where it declines slowly. These findings suggest that perceived fairness is the underlying mechanism of service recovery theory.