Do Organizational Policies Matter? The Impact of Service Guarantee on Customer Perceptions of Recovery Fairness

Delivering fair service recovery is crucial to restoring customer satisfaction and repatronage. This study contends that organizational policies impact recovery fairness perceptions. Underpinned by signaling and justice theories, the study examines the influence of service guarantees on customer perceptions of recovery fairness. Given that businesses extensively use service guarantees, knowledge on perceptions of fairness towards such policies is relevant to designing effective guarantees. Employing a scenario-based experiment, this study shows that fairness varies according to the type of guarantee payout. The pledge for monetary compensation has differential impact on fairness perceptions, discount offers lower fairness and increase negative motive attributions. Theoretical and managerial implications are discussed.