Co-Creation and Service Recovery Process Communication - Effects On Satisfaction, Repurchase Intentions, and Word of Mouth

Serv Bus
DOI 10.1007/s11628-016-0311-8
EMPIRICAL ARTICLE
Co-creation and service recovery process

communication: effects on satisfaction, repurchase
intentions, and word of mouth
Rodolfo Vázquez-Casielles1 • Vı́ctor Iglesias1 •
Concepción Varela-Neira2
Received: 23 September 2014 / Accepted: 8 April 2016

Springer-Verlag Berlin Heidelberg 2016
Abstract After service failure situations, firms often carry out transactional
activities to achieve customer recovery (CR), using corrective actions to restore the
exchange (e.g., economic and social compensations). Furthermore, during the ser-
vice recovery process, firms can encourage activities of co-creation (CC) to prevent
similar future failures. This paper discusses the importance of CC and service
recovery process communication (RPC), in which customers are informed of the
adoption of solutions to address the cause of the failure, so as to avoid the same
problem happening again. Experimental studies investigate the impact, individually
and together, of CR, CC, and RPC on satisfaction, repurchase intentions, and word
of mouth. The results indicate that CC and RPC improve customer’s satisfaction,
repurchase intentions, and word of mouth. Firms that want to maximize the return
on their efforts to prevent service failures, should encourage CC, develop solutions
to prevent future failure recurrence, and implement strategies of RPC. Firms must
decide how to promote CC and which media to use for RPC.
Keywords Service recovery process Repurchase intentions Word of mouth

Co-creation Service recovery process communication
& Concepción Varela-Neira

conchi.varela@usc.es
1
Department of Business Administration, Facultad Ciencias Económicas y Empresariales,
University of Oviedo, Avenida del Cristo, s/n, 33006 Oviedo, Spain
2
Department of Business Administration, Facultad Ciencias Económicas y Empresariales,
University of Santiago de Compostela, Avenida del Burgo, s/n, Campus Norte,
15782 Santiago de Compostela, Spain
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R. Vázquez-Casielles et al.
1 Introduction
The firm develops its activity within a context of great progress in communication
technologies, where customers are highly informed. Customers are more prone to
provide feedback (to the firm and/or other customers) on the purchased products and
the problems in the service delivery, and to sometimes participate in co-creation
(CC) activities to show how causes of these problems could be solved, so as to avoid
the same problem happening again. This has been favored by the new technologies,
which have changed the nature of the complaint and have encouraged the
development of the company–customer relationship (Andreassen and Streukens
2013). The firm has specialized personnel to deal with problems associated with the
service recovery process. However, it also has Facebook pages, Twitter profiles,
brand communities, and specific sections in its corporate webpage to encourage
firm–customer interaction. All of this seeks to design efficient complaint resolution
mechanisms, improve customer collaboration and dialog, and encourage CC in the
service recovery process (Johnston and Michel 2008).
As service failures have the potential to reduce overall customer satisfaction
(Cambra-Fierro et al. 2015a), understanding the role of corrective actions and co-
creation in the service recovery process could be fundamental. A review of the key
literature reveals two fundamental requirements for the service recovery process.
First, the service recovery process requires an operational vision regarding the
complaint handling process. This is a transactional activity of the firm, interested in
providing a solution to the problem to achieve customer recovery (CR) and avoid
negative emotions (Schoefer and Diamantopoulos 2008). It implies taking
corrective actions to restore the exchange (Cunliffe and Johnston 2008), in the
form of economic compensations (money refund, product or service replacement,
discounts in future purchases, repairs, and payment of additional expenses), social
benefits (employees’ empathy, friendliness, courtesy, explanations regarding the
reason of the failure and its solution, and apologies), and timeliness or quick
response (this provides an economic compensation -saving additional economic
resources and effort on the part of the consumers- and social benefits -making
customers feel that the firm cares about them-). The implementation of corrective
actions to restore the exchange has different effects on satisfaction, repurchase
intention, and word of mouth (Wirtz and Mattila 2004; Gelbrich and Roschk 2011;
Nikbin et al. 2013), depending on the type of failure and relationship quality
(Vázquez-Casielles et al. 2007, 2010; Cambra-Fierro et al. 2015b).
Second, the service recovery process also requires a strategic vision, which
implies that the firm should learn from complaints (Vos et al. 2008) and perform a
critical review of the service delivery process’ activities to find the cause of the
problem (Smith et al. 2009; Smith and Karwan 2010), adopt solutions to address the
cause of the failure, and avoid the same problem happening again. For this purpose
it is possible to develop strategies to facilitate interaction between the firm or its
employees and customers (e.g., through CC activities), so as to get ideas to solve the
cause of the failure. Learning from failures through CC activities may be more
important than simply recovering individual customers. What seems to annoy
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Co-creation and service recovery process communication…
customers after a service recovery is not that they were not satisfied but rather their
belief that the system remains unchanged, which makes it likely that the problem
will arise again (Michel et al. 2009). Learning from failures moves the service
recovery process away from a one-off transactional activity toward a strategic
activity that improves systems and processes to ensure future customers are satisfied
and costs are reduced (Lovelock and Wirtz 2010).
This paper contributes to the strategic vision of the service recovery process in
two ways. First, although the analysis of CC has been the goal of important
research, mainly as a relevant topic in the service-dominant logic literature (Vargo
et al. 2008; Grönroos 2012), there are very few studies that focus their attention on
the effects of CC in the service recovery context. Previous research by Roggeveen
et al. (2012) indicates that, when the firm is not responsible for the failure, co-
creation activities in the service recovery process affect customer evaluations, such
as satisfaction and repurchase intention. We extend this knowledge by providing an
understanding of the consequences of co-creation when the firm was responsible for
the service failure. We also perform an analysis of the effects of co-creation on word
of mouth. Second, we not only consider the impact of co-creation activities in the
service recovery process, but also offer an understanding of the effects of service
recovery process communication (RPC) on satisfaction, repurchase intention, and
word of mouth. The service literature highlights the relevance during CR of
communicating the corrective actions taken to restore the exchange (through
economic or social compensations) and giving explanations of the cause of the
failure (Gelbrich 2010). However, the service recovery process communication
(RPC)—which consists of keeping customers informed about changes or improve-
ments performed by the firm during the service recovery process to address the
cause of the failure and avoid problem repetition—is relatively neglected. We
demonstrate that firms that want to maximize the return on their investment in the
service recovery process should encourage CC and implement strategies of RPC.
Based on these contributions, our study provides a practical basis to improve the
recovery service process and increase satisfaction, repurchase intentions, and word
of mouth.
2 Theoretical framework
2.1 Value creation and co-creation
The concept of value has been the object of many definitions (Sánchez-Fernández
et al. 2009). Currently, the concept of value is associated with customer experience
(Verhoef et al. 2009; Heinonen et al. 2010). Vargo and Lusch (2008) indicate that
service value is determined at the point of using, consuming, or experiencing the
outcomes of service (value in use). The firm generates only potential value that
customer then turns into value in use. According to the Service-Dominant Logic’s
arguments (Vargo and Lusch 2004, 2006; Vargo 2008, 2009), the firm’s role is to
combine resources to make value propositions and help the customer create value
(Ballantyne et al. 2011b; Grönroos 2011).
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The firm promotes customer interactions and uses them as platform to co-create
value (Lusch et al. 2009). CC is a function of firm–customer interactions (Grönroos
2008). The firm can invite customers to offer ideas on how to facilitate and create
potential value (Voima et al. 2011; Grönroos 2012). The firm can also incorporate
the customer voice and encourage his/her participation in all/some stages of the
generation, development, launch, and commercialization of products (Nordin and
Kowalkowski 2010; Grönroos and Voima 2013).
To sum up, value creation refers to the creation of value in use by the customer
and CC is a function of the interaction between the firm or its employees and the
customer. The firm is not restricted to developing propositions of potential value
and facilitating value. It also has the possibility of co-creating value with the
customer (Grönroos and Voima 2013). A service failure is an opportunity for CC
and learning (Fig. 1). The goal is for the firm (or its employees) and the customer to
interact and get involved in offering ideas to solve the cause of the failure in the
service recovery process.
2.2 Co-creation in the service recovery process
The first principle of service quality is ‘‘to do it right the first time’’, which
facilitates for potential value. Still, service failures keep happening, even if
sometimes they are due to causes external to and uncontrollable by the firm. In these
circumstances, how the firm handles and solves problems, determines the
customer’s future satisfaction and loyalty (Wirtz and Mattila 2004).
To solve problems, the firm needs to know the reasons for the complaint. Studies on
consumer behavior have identified different reasons why customers express their
COMPANY COMPANY
Facilitates Value: Products and services Co-Creation
CUSTOMER
Co-Creation Creates Value: Experiences
Service failure
Service recovery process
To solve the cause of the failure
CO-CREATION
Company-customer interaction to:

● Know the customer’s opinion regarding the service failure
● Encourage customers to generate ideas to solve the problem
● Develop measures to correct the cause of the failure
● Communicate the service recovery process
Fig. 1 Service recovery process and co-creation
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opinion on service problems (Gelbrich and Roschk 2011): (1) to get money refund or
product replacement; (2) to communicate anger; (3) to share their experience with
other customers, advising them on how to proceed to avoid the same problem or how
to solve it; (4) to contribute to service improvement and avoiding problem repetition.
The complaint handling process is a transactional activity of the firm meant to
achieve CR. It implies taking corrective actions to restore the exchange, in the form
of economic compensations, social compensations, and quick response. CR can
restore trust in the firm and prevent defection to the competition. However, learning
from failures may be more important than simply recovering individual customers.
One acid test, failed by many organizations, is the ability to take problem data from
customers or staff and turn it into real improvements. An efficient service recovery
system should enable learning from complaints (Iglesias et al. 2015). For this
purpose, it is possible to develop strategies of CC with the customers, so as to invite
the expression of their opinion on a problem and how to solve the cause of the
failure. This feedback can be obtained through direct contact between customer and
employee, a phone call, a special section for ideas, and innovation’s proposals in the
website, social network, or brand community. In all of these cases, the goal is to
solve the cause of the failure.
To sum up, to invite a customer to offer ideas enables a dialog and learning
process that aims to improve the value proposal and the development of strategies
related to the service recovery process (Grönroos and Helle 2010). As a
consequence of these feedback and customer interactions, the firm has the
opportunity to influence the creation of value in use through the value CC process
(Grönroos 2012).
For CC to help solve the cause of the failure and create value in use, it would
imply establishing firm–customer interaction procedures that are (Lovelock and
Wirtz 2010):
1. Proactive. The service recovery process could then start before the customer’s
complaint (Lin 2010). Signs of potential problems can be detected during the
service delivery (before it ends) by directly asking the customer if everything is
all right.
2. Preplanned. To know the usual problems, thanks to customer interaction, and to
have prepared alternative contingency plans to offer an immediate CR response.
This alternative is valid in the short term, while the firm tries to modify its
products or service delivery systems to avoid the repetition of the problem.
3. Promoting learning. To determine the cause of the problem and, through
customer dialog and interaction, adopt the appropriate strategies to avoid future
recurrence (La and Kandampully 2004). The service failure is a learning
opportunity. The firm’s ability to collaborate with the customer through CC
activities and, thus, learn from failures will enable it to offer new services that
could improve its long-term results (Sajtos et al. 2010; Slater 2008). When the
firm has an effective feedback from its customers regarding the failure cause, a
learning process happens that encourages the development of solutions based on
the incorporation of relevant information to the service design and delivery
process (Alam 2006).
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To sum up, CC happens when customers interact with firms or their employees,
offering ideas, and/or participating in the improvement of the service recovery
process that avoids problem recurrence.
Ballantyne and Varey (2006) highlight the role of CC, of customer dialog in
terms of mutual learning, as it helps the firm understand not only how to satisfy the
customer but also the customer’s perspective and desires, promoting long-term
relationships and loyalty behaviors (Payne et al. 2008; Ballantyne et al. 2011a).
Therefore, customer involvement with the firm, by participating in CC activities,
should positively influence his/her attitude, increasing satisfaction, repurchase
intentions, and word of mouth (Dong et al. 2008; Roggeveen et al. 2012). Hence:
H1 Customers who participate in CC perceive a more favorable (a) satisfaction,
(b) repurchase intentions, and (c) word of mouth, than customers who do not
participate in CC.
In service failure situations, customers can expect firms (and their employees) to
not only carry out corrective actions in the form of economic and social
compensations, but also to adopt solutions that avoid failure recurrence. The
fulfillment of these expectations will positively influence customer attitude and
behavior (Dong et al. 2008; Zhu et al. 2013). When individuals are subject to a CR
strategy and also believe that their CC efforts help solve the cause of the failure,
they are motivated to continue the interaction with the firm to propose and develop
ideas and avoid future failure recurrence. Therefore, it can be expected that a joint
effect of CR and CC will originate higher loyalty levels than the sole effect of a CR
strategy (Roggeveen et al. 2012). Although both CR and CC are effective strategies
to improve the customer assessment of the firm performance when faced with a
service failure situation, CC participation during CR enables higher satisfaction,
repurchase intention, and word of mouth. Hence:
H2 CC improves assessments of (a) satisfaction, (b) repurchase intentions, and
(c) word of mouth, obtained with a CR strategy.
2.3 Communication of the service recovery process
When the firm carries out CR strategies, it should communicate the performed
activities (Homburg and Fürst 2007). Gelbrich (2010) analyzes the effectiveness of
this communication linking it to explanations during and after a service failure
complaint. To do so, several communication alternatives, which are implemented
during CR, can be distinguished: (1) retrospective explanations looking to inform
the causes of the problem; (2) corrective measures taken to restore the exchange in
the form of economic or social compensations; and (3) prospective explanations
looking to notify the intention to improve the service recovery process.
In this investigation the concept of communication during CR is expanded by
considering recovery process communication (RPC). The firm improves the service
recovery process by solving the cause of problems historically suffered by its
customers and decides to report this improvement. Therefore, RPC differs from
communication during CR in several aspects (Van Vaerenberg et al. 2012): (1) it
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takes place some time after the complaint and CR, the time required to remedy the
cause of the failure and avoid future problems; (2) it can be delivered to all
customers (not just those who have had problems) regardless of whether they
complain and/or participate in CC.
RPC is an indicator of the commitment undertaken by the company through the
development of solutions to prevent the cause of failure. Therefore, it can be
expected for RPC to be an effective strategy to improve satisfaction, repurchase
intention, and word of mouth (Gelbrich and Roschk 2011; Van Vaerenberg et al.
2012). Hence:
H3 Customers who receive RPC have a more favorable (a) satisfaction, (b) re-
purchase intention, and (c) word of mouth, than customers who do not receive this
communication.
When individuals are subject to a CR strategy and after some time the firm
informs them that it has also adopted strategies to solve the cause of the failure, the
perception that the firm has devoted time and resources to the improvement of the
value proposal inherent to this new offer is reinforced (Ballantyne et al. 2011a, b).
The firm’s strategic vision to find the cause of the failure, solve it, and inform the
customer of the adopted measures, creates a favorable image that has a positive
effect on loyalty (Smith et al. 2009; Smith and Karwan 2010). Therefore, it can be
expected for the joint effect of CR and RPC to originate higher satisfaction,
repurchase intention and word of mouth levels than that obtained with just a CR
strategy. Hence:
H4 RPC improves assessments of (a) satisfaction, (b) repurchase intentions, and
(c) word of mouth, obtained with a CR strategy.
RPC also enhances the usefulness of CC. The customer perceives that his/her
opinions and/or participation in the development of solutions for addressing the
cause of the failure have been taken into account and have enabled the firm to carry
out a critical review of the service delivery process (Smith and Karwan 2010).
Through customer interaction and the development of learning processes that result
from this direct collaboration, the firm has had the opportunity to discover
alternative processes for the service delivery that had not been initially considered
(Dong et al. 2008). Therefore, it can be expected for the joint effect of CC and RPC
to originate higher satisfaction, repurchase intentions, and word of mouth than that
obtained with just a CC strategy (Van Vaerenberg et al. 2012). Hence:
H5 RPC improves assessments of (a) satisfaction, (b) repurchase intention, and
(c) word of mouth, obtained with a CC strategy.
3 Methodology
This study employs experimental methodology and interviews. It aims to analyze

the main effects of CC and RPC on satisfaction, repurchase intention, and word of
mouth. It also aims to investigate the interaction effects of RC, CC, and RPC.
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3.1 Research design
The study involved 480 individuals from several cities in Spain. The experiment
was developed with two different samples (240 each) for two types of problems
associated with different retailer’s offers: gift voucher to be used on future
purchases and sale of computer products. The sample distribution was done by
levels of age (26 % between 18 and 24 years, 39 % between 25 and 44 years, 36 %
over 45 years), gender (50 % women, 50 % men) and occupation (26 % students,
74 % workers). Respondents were regular customers of the retailers analyzed. We
conducted the experiment in the context of various retailers (computer retailer and
department store).
The research is designed as a 2 9 2 9 2 between-subjects experiment.
Participants were randomly assigned to each of the eight experimental conditions.
Participants were asked to imagine themselves as the customer in the given situation
of each scenario. The manipulated independent variables were: CR offering to solve
the problem and compensating for the inconveniences endured (YES vs. NO),
customer interaction through CC to improve the service recovery process in the
future and solve the cause of the failure (YES vs. NO), and RPC to all customers
(YES vs. NO). Appendices 1 and 2 describe some scenarios.
After reading the scenario, participants rated satisfaction with the problem
solution, repurchase intentions, and word of mouth. Each dependent variable was
measured with the items listed in Appendix 3.
Tests were performed for unidimensionality, reliability and construct validity. An
exploratory factor analysis (EFA) for the scale items resulted in the expected
construct solutions (view Appendix 3). A confirmatory factor analysis (CFA) with
three factors (satisfaction, repurchase intentions, and word of mouth) was jointly
conducted for the gift voucher and computer products using EQS 6.1. The results
indicated a good fit (Comparative Fit Index = .998 and Root Mean Square Error of
Approximation = .046).
In Appendix 3 we summarize the statistical properties of the constructs. We also
tested for discriminant validity (with AVEs and correlations). The results (see
Appendix 4) indicate that there is discriminant validity among satisfaction, purchase
intentions, and word of mouth. This justifies the use of three independent constructs
(satisfaction, repurchase intentions, and word of mouth) in the subsequent statistical
analyses. Therefore, the objective of the following section is to analyze the effects
of RC, CC, and RPC on satisfaction, repurchase intentions, and word of mouth.
4 Results
4.1 Manipulation of independent variables
To analyze the manipulation of the independent variables, three items were

employed. The evaluations obtained indicate that respondents correctly interpreted
each of the two levels of the independent variables. Individuals who received a
solution to their problem showed a significantly higher score on the item ‘‘The firm
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compensates the customer for the problem’’. Similarly, individuals who interacted
with the firm to create a CC process showed a significantly higher score on the item
‘‘The firm interacts with the customer to exchange ideas on how to improve service
in the future’’. Finally, individuals who received RPC showed a significantly higher
score on the item ‘‘The firm informs customers of the adoption of appropriate
decisions to avoid failure recurrence’’.
Interviewees also rated the realism of the scenarios. The mean value (M = 5.9) is
an indication of the experiment validity. Moreover, customers believe that the
service failure can be classified as quite important or severe (M = 5.7), representing
a major drawback for the buyer.
4.2 Main findings
To test the hypotheses, three analyses of variance (ANOVA), one for each
dependent variable, were carried out (Table 1). When the main effects and their
average values are examined (Table 2), CR has a positive impact on customer
satisfaction, repurchase intention, and word of mouth (p = .000). For example,
those individuals who were not subject to CR show less satisfaction (M = 2.462),
repurchase intention (M = 2.486), and word of mouth (M = 2.414) than those who
were subject to CR (M = 6.040; 5.896; 5.861).
However, although CR ensures loyalty through corrective actions focused on
economic or social compensations, the need for changes to solve the cause of the
problem and avoid future failures cannot be forgotten. These changes may result
from CC activities. Moreover, it may be necessary to notify customers of the
improvement in the service recovery process. As a consequence, the effects of CC
and RPC were also estimated.
As Tables 1 and 2 show, the main effects of CC and RPC also exist (p = .000).
Customers who do not participate in CC show less satisfaction (M = 4.073),
repurchase intention (M = 4.050), and word of mouth (M = 3.948) than those who
participate in CC (M = 4.873; 4.804; 4.796). Therefore, hypotheses H1a, H1b, and
H1c are supported. When the firm does not communicate the recovery process,
customers show less satisfaction (M = 3.753), repurchase intention (M = 3.715),
and word of mouth (M = 3.688) than when solves the cause of failure and notifies
all customers of this service recovery process (M = 4.750; 4.667; 4.578). Hence,
H3a, H3b, and H3c are also supported.
ANOVA results also show significant interaction effects (Table 1). Interaction
CR-CC and CR-RPC are significant for satisfaction (FCR-CC = 21.9, p = .000; FCR-
RPC = 75.3, p = .000; Fig. 2), repurchase intention (FCR-CC = 8.0, p = .000; FCR-
RPC = 56.1, p = .000; Fig. 3), and word of mouth (FCR-CC = 6.5, p = .002; FCR-
RPC = 65.2, p = .000; Fig. 4).
CC improves customer evaluation after a failure, regardless of the firm’s CR
strategies (Table 3). When there is a CR strategy, CC improves satisfaction (Mno-
CC = 6.008, MCC = 6.383; t = 3.87, p = .000), repurchase intention (Mno-CC =
5.833, MCC = 6.350; t = 5.28, p = .000), and word of mouth (Mno-CC = 5.771,
MCC = 6.379; t = 6.00, p = .000). When the firm does not implement a CR
strategy, CC improves satisfaction (Mno-CC = 2.138, MCC = 3.363; t = 6.87,
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Table 1 Summary of ANOVA

Satisfaction Repurchase intention Word of mouth
F Sig. F Sig. F Sig.
Customer recovery (CR)

Gift voucher problem 1418.2 .000 1449.6 .000 1389.3 .000
Tablet problem 2468.8 .000 2558.3 .000 2954.1 .000
Total 3610.1 .000 3680.1 .000 3731.3 .000
Co-creation (CC)
Tablet problem 76.1 .000 81.9 .000 93.3 .000
Total 115.5 .000 130.6 .000 144.2 .000
Communication (RPC)
Tablet problem 198.7 .000 210.8 .000 209.9 .000
Total 280.5 .000 286.5 .000 254.4 .000
Recovery 9 co-creation
Tablet problem 13.5 .000 3.9 .021 6.4 .020
Total 21.9 .000 8.0 .002 6.5 .020
Recovery 9 communication
Tablet problem 49.9 .000 36.9 .000 45.8 .000
Total 75.3 .000 56.1 .000 65.2 .001
Co-creation 9 communication
Tablet problem 2.5 .082 2.7 .068 2.1 .085
Total 2.8 .062 2.8 .062 2.3 .069
CR 9 CC 9 RPC
Gift voucher problem 1.9 .156 .8 .449 1.4 .355
Tablet problem .1 .916 .9 .428 1.1 .339
Total .8 .451 .1 .914 .3 .756
p = .000), repurchase intention (Mno-CC = 2.267, MCC = 3.258; t = 6.15, p =

.000), and word of mouth (Mno-CC = 2.125, MCC = 3.212; t = 6.97, p = .000),
reducing their negative levels. Hence, hypotheses H2a, H2b, and H2c are also
supported.
RPC improves customer evaluation after a service problem, regardless of the
firm’s CR strategies (Table 3). When there is a CR strategy, RPC improves
satisfaction (Mno-RPC = 5.800, MRPC = 6.281; t = 5.91, p = .000), repurchase
intention (Mno-RPC = 5.631, MRPC = 6.161; t = 6.41, p = .000), and word of
mouth (Mno-RPC = 5.639, MRPC = 6.083; t = 4.90, p = .000). When the firm does
not implement a CR strategy, RPC improves satisfaction (Mno-RPC = 1.706,
MRPC = 3.219; t = 12.07, p = .000), repurchase intention (Mno-RPC = 1.800,
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Table 2 Main effects

Total
Recovery (CR)
YES 6.040 5.896 5.861
NO 2.462 2.486 2.414
t statistics 39.50 40.11 40.34
Sig. .000 .000 .000
Co-creation (CC)
YES 4.873 4.804 4.796
NO 4.073 4.050 3.948
t statistics 3.65 3.60 3.99
Sig. .000 .000 .000
Communication (RPC)
YES 4.750 4.667 4.587
NO 3.753 3.715 3.688
Sig. .000 .000 .000
Gift voucher problem
Recovery (CR)
YES 5.936 5.806 5.714
NO 2.472 2.547 2.456
t statistics 26.17 26.37 25.77
Sig. .000 .000 .000
Co-creation (CC)
YES 4.829 4.817 4.792
NO 3.988 3.971 3.825
Sig. .000 .000 .000
Communication (RPC)
YES 4.678 4.617 4.500
NO 3.731 3.74 3.669
Sig. .000 .000 .000
Tablet problem
Recovery (CR)
YES 6.144 5.986 6.008
NO 2.453 2.425 2.372
t statistics 29.90 30.58 31.94
Sig. .000 .000 .000
Co-creation (CC)
YES 4.917 4.792 4.800
NO 4.158 4.129 4.071
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Table 2 continued
Sig. .000 .000 .000

Communication (RPC)
YES 4.822 4.717 4.675
NO 3.755 3.694 3.706
Sig. .000 .000 .000
Fig. 2 Interaction effects for satisfaction (total)
Fig. 3 Interaction effects for repurchase intention (total)
MRPC = 3.172; t = 11.99, p = .000), and word of mouth (Mno-RPC = 1.736,

MRPC = 3.092; t = 12.10, p = .000), reducing their negative levels. Thus,
hypotheses H4a, H4b, and H4c are also supported.
The interaction effects CC-RPC are not significant at 95 % (Table 1) to
satisfaction (FCC-RPC = 2.8, p = .062), repurchase intention (FCC-RPC = 2.8,
p = .062), and word of mouth (FCC-RPC = 2.3, p = .069). It indicates that the
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Fig. 4 Interaction effects for word of mouth (total)
contribution of RPC to satisfaction, repurchase intentions, and word of mouth when

a CC strategy that exists is not different from the one already provided when there is
no CC. Thus, hypotheses H5a, H5b, and H5c are not supported.
Finally, the average values obtained in this empirical research show that CR
together with CC is a slightly more effective strategy (Msatisfaction = 6.383;
Mrepurchase = 6.350; Mwom = 6.379) than CR together with RPC (Msatisfac-
tion = 6.281; Mrepurchase = 6.161; Mwom = 6.083). Furthermore, a customer
involved in CC after a lack of a CR strategy has lower levels of satisfaction
(Msatisfaction = 3.363), repurchase intention (Mrepurchase = 3.258), and word of mouth
(Mwom = 3.212) than a customer who receives a CR strategy without participating in
CC (Msatisfaction = 6.008; Mrepurchase = 5.833; Mwom = 5.771). The same applies to
RPC. A customer who receives RPC after a lack of a CR strategy, has lower levels of
satisfaction (Msatisfaction = 3.219), repurchase intention (Mrepurchase = 3.172), and
word of mouth (Mwom = 3.092) than a customer who receives a CR strategy without
RPC (Msatisfaction = 5.800; Mrepurchase = 5.631; Mwom = 5.639).
5 Contribution, implications, and limitations
This investigation explores the role of CC in the service recovery process. We

contribute to the emerging CC literature with an empirical study on how CC
activities performed after a service problem to avoid the future recurrence of the
cause of the failure affect customer evaluations (satisfaction, repurchase intention,
and word of mouth). This research also contributes to the CC literature by creating
new knowledge on the implications of RPC after solving the cause of the failure.
While a previous research analyzed the impact of CC during the service recovery
process on satisfaction and repurchase intention (Roggeveen et al. 2012), it
examined service failures that were not caused by the company but rather by an
uncontrollable environmental factor. We extend this knowledge by providing an
understanding of the consequences of co-creation when the firm was responsible for
the service failure. Our study not only considers co-creation activities in the service
123
Table 3 Second-order interaction effects

Interaction effects Means
Recovery Co-creation Satisfaction GVP = 6.258

TAP = 6.508
TOT = 6.383
Repurchase intention GVP = 6.233
TAP = 6.467
TOT = 6.350
Word of mouth GVP = 6.233
TAP = 6.525
TOT = 6.379
Recovery No co-creation Satisfaction GVP = 5.800
TAP = 6.217
TOT = 6.008
TAP = 6.042
TOT = 5.833
TAP = 6.058
TOT = 5.771
Recovery Communication Satisfaction GVP = 6.156
TAP = 6.406
TOT = 6.281
TAP = 6.283
TOT = 6.161
TAP = 6.267
TOT = 6.083
Recovery No communication Satisfaction GVP = 5.717
TAP = 5.883
TOT = 5.800
TAP = 5.689
TOT = 5.631
TAP = 5.750
TOT = 5.639
No recovery Co-creation Satisfaction GVP = 3.400
TAP = 3.325
TOT = 3.363
TAP = 3.117
TOT = 3.258
123
Table 3 continued
Interaction effects Means

TAP = 3.075
TOT = 3.212
No recovery No co-creation Satisfaction GVP = 2.175
TAP = 2.100
TOT = 2.138
TAP = 2.217
TOT = 2.267
TAP = 2.083
TOT = 2.125
No recovery Communication Satisfaction GVP = 3.200
TAP = 3.239
TOT = 3.219
TAP = 3.150
TOT = 3.172
TAP = 3.083
TOT = 3.092
No recovery No communication Satisfaction GVP = 1.744
TAP = 1.667
TOT = 1.706
TAP = 1.700
TOT = 1.800
TAP = 1.661
TOT = 1.736
GVP gift voucher problem, TAP tablet problem, TOT total
recovery process, but also offers an understanding of the effects of service recovery
process communication (RPC) on customer evaluations (satisfaction, repurchase
intention, and word of mouth). In addition, we discriminate between customers who
receive a CR strategy after a service problem (economic and social compensations)
and those who do not. So this paper, attempts to conceptualize the connections
among service failure, CR strategy, CC, and RPC.
Drawing on our empirical study, we identify significant benefits of CR, CC, and
RPC. This study demonstrated that using CC to find solutions to the cause of the
service failure improves the positive evaluation after a CR strategy. Buyers, who are
123
subject to a CR strategy to solve a service problem and also participate in CC to

generate solutions and avoid the cause of the failure in the future, consider that the
firm invests in long-term relationships with them. This increases the levels of
satisfaction, repurchase intention, and word of mouth. Thus, unlike other studies
that focus on CR strategies (Homburg et al. 2010; Gelbrich and Roschk 2011), this
investigation demonstrated that CC in service failure situations complements (not
replaces) the effects of CR.
Our study shows that when the firm has not been able to implement a CR strategy
after a service failure, to encourage customer participation in CC activities can
mitigate the negative evaluation. In these cases, CC is an indicator of the firm’s
good intentions and its propensity to invest in preventing failure recurrence.
However, only after a good CR policy, the recovery of previous levels of
satisfaction, repurchase intention, and word of mouth would be expected.
Results also suggest that RPC increases satisfaction, repurchase intention, and
word of mouth. On the one hand, customers who received a CR strategy after a
service failure and were later informed that the firm had taken appropriate measures
to prevent the problem from happening again, not only perceive that the firm has
compensated them for the problem, but that it has also made investments for the
relationship to be maintained long term. Thus, RPC improves the positive
evaluation after a CR strategy. On the other hand, RPC can reduce the negative
consequences of lack of an adequate CR strategy. For some firms, it is difficult to
solve in the short term a customer-specific problem. However, they are prepared to
analyze customer complaints (inviting them, if deemed appropriate, to CC), solve
the cause of failure, and report on the measures taken to ensure that it does not
happen again. Anyway, the reduction of the negative consequences of a lack of a CR
strategy is expected to depend on the time between failure and RPC.
We found that CC facilitates, in addition to CR, the obtention of slightly better
customer evaluations than CR together RPC. CR with CC provides information on
the occurrence of the problem and on the customer proposal to affect its cause and
prevent it from happening again. CR with RPC provides information on the
occurrence of the problem so that the firm takes appropriate measures (in this case
without customer collaboration) incorporating improvements in the service recovery
process that influence the cause of the problem. In addition, both CC and RPC
attenuate the negative effects of a lack of an adequate CR strategy, but cannot
restore the desired level of satisfaction, repurchase intention, or word of mouth as
CR.
Overall, both the investment in CR activities and the investment in activities
related to the service recovery process (CC and RPC) are of great interest to the
firm. They are not isolated decisions but complementary activities in a long-term
strategy. This justifies the need for investment in CC systems to solve the cause of
the problems and later enhance RPC, by focusing on the actions taken.
5.1 Managerial implications
Since zero defects are an unattainable goal, it is essential to develop a CR strategy.

To the extent that CC improves customer attitudes, it is also advisable to invest in
123
firm–customer interaction activities. In CC the question is no longer ‘‘What can we

do for you?’’ but rather ‘‘What can you do with us?’’ Promoting customers’ creative
thinking through CC leads to the generation of new ideas, which are directly aligned
with the customers’ needs and requirements. CC results not only in marketing
strategies to solve the cause of the failure, but also in a strengthening of the
relationship with customers. However, not all CC activities with customers, even if
they suggest ideas for solving the failure’s cause, will generate innovations.
Listening is not enough; firms have to put these ideas into action. Innovation based
on co-creation depends on the firm’s ability to turn ideas into reality. Co-creation
means high barriers to competitors, especially when it enables the development of
innovations to create value in use, related to the solution of the cause of the service
failure. Furthermore, for a CC strategy to be a viable alternative in the service
recovery process, several issues must be considered.
First, customers must be involved in the service recovery process. They must not
perceive that they perform activities that correspond to an employee. Customers’
involvement depends on their positive evaluation of the collaboration and their
perception that the firm will take their opinions into consideration to improve the
service recovery process and correct the cause of the problem. Many firms involve
customers in the innovation and service recovery process after a failure. However, it
is also necessary to train employees to interact with customers and develop
innovations to prevent the cause of the failure. Both customers and employees have
to want the interaction, to be willing to collaborate and co-create with a vision of
long-term relationships.
Second, CC development must be efficient, i.e., the investment made to optimize
the service delivery process and avoid the cause of the failure must be lower than
the benefits obtained with CC.
Third, although CC is an alternative to innovate and avoid failure recurrence, it is
also possible to adopt an improvement strategy in the service recovery process
without resorting to CC. In the latter case, it is necessary to communicate the
improvements that have been implemented to avoid problem recurrence. Success
will depend on the speed with which the service recovery process is changed and
communication of the improvements made by the firm spreads. RPC is a
particularly effective strategy as a complement to CR, even when there is no CC.
Fourth, CC does not guarantee an error-free service delivery but goes beyond the
simple act of CR. The operational vision of CR is overcome and a strategic vision to
avoid the cause of failure is adopted, thanks to CC and the consequent learning
process, allowing future improvements in service delivery.
Fifth, the firm must decide how to promote CC. It can do so by enhancing
employee–customer interaction and also by developing a section on the corporate
website, a brand community, or a social networking presence to facilitate CC.
Finally, the firm must also decide which media to use for RPC. RPC can be
individualized to each customer. For example, by sending an email explaining the
failures and the solutions adopted to address the cause of the problem. To inform
through the employee’s personal contact with the customer, improves the latter’s
attitude towards the relationship with the firm. The new media also enable the firm
123
to announce improvements in the service recovery process through Facebook and

Twitter.
5.2 Limitations and future lines of research
Several limitations of this study provide opportunities for future research. First, this
research has used scenario-based experiments, which may affect the validity of the
conclusions drawn. Although it is a widely accepted methodology, it would be
appropriate to extend the research to real situations where the customer is
participating in CC activities. Second, the failure scenarios involve important
problems. It would be necessary to analyze more deeply the effects of CR, CC, and
RPC when the problem is unimportant. Third, this study shows the positive
influence of CC and RPC on repurchase intentions and word of mouth. An extension
of this research could examine their effects on behavior (purchase quantity,
purchase frequency, level of expenditure). Fourth, this research has analyzed the
effects of CC and RPC on customers who have experienced a service failure. It
would also be necessary to study the effects of CC and RPC on customers who have
not experienced a service failure, in order to determine whether or not these actions
favor an increase in their levels of satisfaction, repurchase intentions, and word of
mouth. Finally, future research should explain how to involve customers in CC and
to what extent their expectations of a long-term relationship with the firm are
fulfilled by CC activities and RPC.
Appendix 1: Scenario for gift voucher
Please imagine that you are the customer in the situation outlined in the following scenario
PROBLEM IN THE SERVICE DELIVERY
You regularly go to a department store to shop for various product categories (textiles, footwear, food,
household product, toiletries). You have the retailer’s card and use it for your payments. You receive at
home a personal letter that attaches a 20 euros free voucher if your purchase exceeds 60 euros. In your
next purchase in the textile and footwear section you spend 100 euros (paid with the retailer’s card) but
the employee forgets to scan the gift voucher that you give him to get the discount. You become aware
of this problem as soon as you get home and review the receipt. You phone the retailer to complain and
the employee who answers tells you that at this time the staff responsible for complaints is not available.
The employee takes note of your phone number and promises to contact you in the morning to solve the
problem. Three days later you have not received any phone calls
CUSTOMER RECOVERY SCENARIO
You call back to the large retail store. The employee who answers explains why they have not contacted
you: because he wrote your telephone number down wrong. In a few minutes you will receive a call
from the Customer Service Department. In accordance with the promise made, you receive a call from
the Customer Service Department apologizing for the inconvenience, showing empathy and returning
into your checking account the discount amount and an additional 3 %
CO-CREATION SCENARIO
The employee and you exchange ideas on various actions and strategies that can be taken to prevent this
problem from recurring in the future. The accumulated experiences of the customer with the firm’s
systems, products and services enable a dialog and interaction between customer and employee that
leads to innovations. The employee records the opinions exchange, shows gratitude for your
participation and encourages you to continue working with the firm to implement these innovations and
ensure their success. This can be done through the firm website, a virtual community created for this
123
purpose, Facebook or Twitter. The goal is for the retailer to resolve the cause of the failure, through
interaction with the customer
RECOVERY PROCESS COMMUNICATION SCENARIO
After some time, the retailer, based on customer complaints and comments for this type of service failure,
decides to adopt a new strategy to improve the service delivery process. By means of its website, a
personalized letter, social media, and direct email, it announces the introduction of a new computerized
system for gift vouchers through the customers’ loyalty cards. When making purchases, the gift voucher
discount is automatically loaded without scanning the coupon. Thus, employees do not need to perform
any activity nor make service mistakes associated with forgetting to scan gift vouchers. It also thanks all
customers for their ideas and opinions to implement this new strategy
Appendix 2: Scenario for unavailable computer product
Please imagine that you are the customer in the situation outlined in the following scenario
PROBLEM IN THE SERVICE DELIVERY
You go into a computer store to buy a TABLET. An employee assists you and after an opinion exchange
you choose the TABLET brand. However, at the time the product is not in stock. The employee
processes the order, writes down your phone number and promises that the product will arrive in the
next 3 days and you will be notified so that you could come pick it up. Two weeks later you have not
received any phone calls
CUSTOMER RECOVERY SCENARIO
You call back to the computer store. The employee who answers explains why they have not contacted
you: because he wrote your telephone number down wrong. In a few minutes you will receive a call
from the Customer Service Department. You receive a call from the Customer Service Department
apologizing for the inconvenience, showing empathy, and informing you that the product has arrived
and you can pick it up at the store. They also offer a 30 euros discount coupon to use at the store for any
product you want, related or not to the TABLET
CO-CREATION SCENARIO
The employee and you exchange ideas on various actions and strategies that can be taken to prevent this
problem from recurring in the future. The accumulated experiences of the customer with the firm’s
systems, products and services enable a dialog and interaction between customer and employee that
leads to innovations. The employee records the opinions exchange, shows gratitude for your
participation and encourages you to continue working with the firm to implement these innovations and
ensure their success. This can be done through the firm website, a virtual community created for this
purpose, Facebook or Twitter. The goal is for the retailer to resolve the cause of the failure, through
interaction with the customer
RECOVERY PROCESS COMMUNICATION SCENARIO
After some time, the store, based on customer complaints and comments for this type of service failure,
decides to adopt a new strategy to improve the service delivery process. By means of its website, a
personalized letter, social media, and direct email, it announces the introduction of a new computerized
system for tracking orders that allows customers to know the status of the order at all times. When a
requested product that was out of stock arrives at the store, the software sends an automatic notification,
thus, preventing this type of failure from happening again in the future. It also thanks all customers for
their ideas and opinions to implement this new strategy
123
Appendix 3: Measures
Satisfaction.Adapted from Maxham and Netemeyer (2002) and Homburg and Fürst (2005)
EFA CFA
Cronbach’s Alpha = .971 Factor Standardized factor

Composite reliability = .969 loading loading
Average variance extracted = .913
In my opinion the firm provided a satisfactory resolution .968 .936
to my problem on this particular occasion
I am satisfied with this firm’s handling of the problem .976 .968
Regarding this particular event, I am satisfied with the firm .975 .962
% Explained variance 94.668
Repurchase intentionsAdapted from: Zeithaml et al. (1996)

EFA CFA
Cronbach’s Alpha = .968 Factor loadings Standardized factor loadings

Composite reliability = .967
In the future, I will continue using this firm .968 .950
I will consider this firm as my first choice whenever .971 .953
I need this product category again in the future
If you had in the market similar products provided .969 .953
by competitors, how likely would you be to
continue using the services from this firm?
Word of mouthAdapted from: Maxham and Netemeyer (2002) and

Maxham and Netemeyer (2003)
EFA CFA
Cronbach’s Alpha = .974 Factor loadings Standardized factor loadings

Composite reliability = .973
How likely are you to spread positive word .974 .956
of mouth about this firm?
I would recommend this firm to my friends .976 .961
If my friends were looking for these product .976 .965
categories, I would tell them to try this firm
123
Appendix 4: Discriminant validity: AVE and squared correlations

among constructs
Satisfaction Repurchase intentions Word of mouth
Satisfaction AVE = .913

Repurchase intentions .682 AVE = .906
Word of mouth .805 .719 AVE = .923
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Co-creation and service recovery process

Rodolfo Vázquez-Casielles1 • Vı́ctor Iglesias1 •

Received: 23 September 2014 / Accepted: 8 April 2016

Keywords Service recovery process Repurchase intentions Word of mouth

& Concepción Varela-Neira

2.1 Value creation and co-creation

2.2 Co-creation in the service recovery process

Company-customer interaction to:

Fig. 1 Service recovery process and co-creation

2.3 Communication of the service recovery process

This study employs experimental methodology and interviews. It aims to analyze

3.1 Research design

4.1 Manipulation of independent variables

To analyze the manipulation of the independent variables, three items were

4.2 Main findings

Table 1 Summary of ANOVA

F Sig. F Sig. F Sig.

Customer recovery (CR)

p = .000), repurchase intention (Mno-CC = 2.267, MCC = 3.258; t = 6.15, p =

Table 2 Main effects

Satisfaction Repurchase intention Word of mouth

Sig. .000 .000 .000

Fig. 2 Interaction effects for satisfaction (total)

Fig. 3 Interaction effects for repurchase intention (total)

MRPC = 3.172; t = 11.99, p = .000), and word of mouth (Mno-RPC = 1.736,

Fig. 4 Interaction effects for word of mouth (total)

contribution of RPC to satisfaction, repurchase intentions, and word of mouth when

5 Contribution, implications, and limitations

This investigation explores the role of CC in the service recovery process. We

Table 3 Second-order interaction effects

Recovery Co-creation Satisfaction GVP = 6.258

Word of mouth GVP = 3.350

GVP gift voucher problem, TAP tablet problem, TOT total

subject to a CR strategy to solve a service problem and also participate in CC to

5.1 Managerial implications

Since zero defects are an unattainable goal, it is essential to develop a CR strategy.

firm–customer interaction activities. In CC the question is no longer ‘‘What can we

to announce improvements in the service recovery process through Facebook and

5.2 Limitations and future lines of research

Appendix 1: Scenario for gift voucher

Appendix 2: Scenario for unavailable computer product

Cronbach’s Alpha = .971 Factor Standardized factor

Repurchase intentionsAdapted from: Zeithaml et al. (1996)

Cronbach’s Alpha = .968 Factor loadings Standardized factor loadings

Word of mouthAdapted from: Maxham and Netemeyer (2002) and

Cronbach’s Alpha = .974 Factor loadings Standardized factor loadings

Appendix 4: Discriminant validity: AVE and squared correlations

Satisfaction Repurchase intentions Word of mouth

Satisfaction AVE = .913

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