The road to consumer forgiveness is paved with money or apology? The roles of empathy and power in service recovery

Following service failure, there are two main forms of recovery—economic recovery and emotional recovery. Nonetheless, prior research has not examined the differential effects of these two forms of service recovery on consumer forgiveness nor their underlying mechanisms. The authors propose that the efficacy of each recovery strategy is mediated by consumer empathy toward the firm, which is neglected in service research. The main effect is moderated by consumers’ power state, particularly their perceived power against firms. Results of four studies in two countries (i.e., a field experiment, a lab experiment, and two online experiments) show that emotional recovery, compared to economic recovery, is more effective at eliciting both consumer empathy and forgiveness toward the firm. In addition, high-power consumers exhibit forgiveness through the serial mediation effects of perceived fairness and empathy, while low-power consumers show forgiveness through empathy alone. These findings have significant theoretical and practical implications.