Service Recovery in Transition Economies: Russia and China

While processes for transition from planned to market economy vary, there is one common outcome from the transition process – more discriminating customers. Growing customer expectations increase the possibility of failing to meet those expectations. In competitive market economies service failures are accompanied by new consequences of lost customer loyalty. These potential losses to service providers that can result from service failures necessitate the implementation of service recovery. In this study researchers investigated the role of service recovery in two major economies that are currently in transition from a planned to a market economy: Russia and China. Four recovery systems were examined within the context of two levels of service failure criticality. Service recovery system design was found to matter in customer recovery in both Russia and China, but Chinese respondents reported higher levels of recovery success. Interaction effects also suggest that the common experience of transition from planned to market economy did not produce exactly the same response to service recovery efforts.