Co-creating service recovery after service failure: The role of brand equity

Co-creating service recovery with customers has recently appeared as a new perspective in service research. Prior research demonstrates the effectiveness of co-created recovery strategies in driving customer outcomes, and outlines when co-creating a service recovery is recommended. This paper complements prior research not only by demonstrating the mediating role of outcome favorability in the relationship between co-created service recovery and customer outcomes, but also by showing whether organizations with different levels of brand equity benefit equally from co-creating service recovery with their customers. The results of two experiments show that co-creating a service recovery makes customers believe they received the most favorable solution for the service failure, which in turn influences satisfaction with service recovery and repurchase intentions. In addition, co-creating a service recovery is recommended for organizations with low levels of brand equity, but not for organizations with high levels of brand equity.