Responding to negative reviews? The interplay of management response strategy and service failure type

ABSTRACT Restaurants often struggle with their approach to respond to service failure online. In this scenario-based experiment, the researchers study the effectiveness of management response types along with two overarching types of service failure concerning three outcomes. Some of the significant results are that it is not important whether the restaurant offers compensation or apology; as long as management responds to negative reviews, company’s reputation management works and customers are willing to shop from the restaurant. However, interestingly, with respect to customers’ recovery satisfaction, the findings underscored that companies should either not respond at all or should compensate dissatisfied customers instead of only writing an apology. Concerning the simultaneous existence of the technical and functional dimensions of a service failure regarding customers’ recovery satisfaction and their willingness to purchase from the restaurant, the findings underlined the centrality of technical dimension that is in contradiction with prior research findings. A discussion on findings is presented along with recommendations for future research.