Enhancing CSR and purchase intent in service recovery: investigating the interplay of prosocial compensation, hedonic and luxury purchases

Purpose: As a company’s corporate social responsibility (CSR) image can protect from the backlash of a service failure, it is important to remind customers of the company’s CSR commitment when a service failure occurs. One novel mechanism for doing so is through a prosocial service recovery. However, explorations of such service recovery strategies are relatively unknown. Thus, this paper aims to examine how recoveries including prosocial elements compare to those only utilizing monetary compensation strategies and to explore boundary conditions for such effects. Design/methodology/approach: This research utilizes an experimental design approach across three studies. Participants were recruited from Amazon’s Mechanical Turk. Findings: This research demonstrates that a recovery including prosocial (vs only monetary) elements can positively impact purchase intent through the firms’ CSR perceptions. The authors show that the benefits of prosocial compensation are contingent on the motivation for visiting a company (e.g. hedonic vs utilitarian) as well as the degree to which the company is perceived as luxurious. Originality/value: The series of studies provides important theoretical contributions to services marketers by advancing the understanding of novel recovery strategies and demonstrating when companies should initiate such strategies. Implications of the findings and directions for future research are explored.