Determinants of recovery satisfaction and service loyalty : the differing effects of service recovery system and service recovery performance

Purpose: This study aims to explore whether frontline employees' service recovery performance as well as customers' recovery satisfaction (RS) act as mediating mechanisms that simultaneously transmit the positive influence of an integrated service recovery system (SRS) on customers' service loyalty (SL). Design/methodology/approach: A total of 134 useable retail banking branch cases (including responses from 134 branch heads, 439 frontline employees and 941 customers) were used to test our model using the partial least squares structural equation modeling (PLS-SEM) approach. Findings: Service recovery system, measured as a higher-order multidimensional construct, has a strong and positive influence on customers' SL. Besides, service recovery performance partially mediates, along with RS, the relationship between SRS and SL. Finally, customers' recovery satisfaction has the strongest influence on service loyalty. Practical implications: This study strongly suggests that practitioners not only focus on implementing an effective SRS but also on leveraging service recovery performance and RS to build sustained customers' loyalty. Practitioners must provide more attention to training their frontline employees, reward and recognize employees and continually evaluate their employees' recovery efforts. Originality/value: The role of frontline employees' service recovery performance and customers' RS as mediating mechanisms in transmitting the positive effect of SRS on customers' SL is investigated using the combined perspectives of social-technical system theory and interdependence theory.