Customers’ reactions to other customer caused service failures: the effects of tie strength on customer loyalty

This research examines the reactions of customers who witness other customer caused service failures through two experimental design studies with a sample of 391 and 265 respectively. Study 1 examines a customer caused service failure using a 2 (service recovery: strong/weak) x 2 (firm tie: strong/weak) x 2 (employee tie: strong/weak) design. Both employee and brand tie fail to moderate the negative impact caused by the ineffective service recovery, suggesting service recovery is the most salient to observing customers. To build upon the results, Study 2 examines brand and employee loyalty using a 2 (brand tie: strong/weak) x 2 (employee tie: strong/weak) design when witnessing no service failure. Results find a significant main effect and interaction effect of brand and employee tie on loyalty. The results build upon the social servicescape, observing customer, other customer service failure, tie strength, and loyalty literature.