Keywords

service recovery, self-esteem, generational differences, Millennials, Generation Z, compensation

Abstract

While a significant amount of research has been conducted to assess the effectiveness of service recovery based on various factors, there is limited research on emerging customer segments, specifically Generation Z and Millennials. Justice theory has been predominant in service recovery literature, however, recent studies suggest that self-esteem can provide valuable insight into understanding customers’ evaluations of service recovery. This research focuses on how Generation Z and Millennial customers evaluate service recovery efforts in the context of restaurants. The main objective of this study is to examine how these customers perceive economic (compensation) and psychological (apology) service recovery strategies, considering generational differences. Additionally, this research examines the role of self-esteem in the service recovery evaluation process. The research design consists of a 2 (compensation: yes vs. no) x 2 (apology: yes vs. no) x 2 (generation: Millennials vs. Generation Z) between-subjects quasi-experimental design. Online surveys were distributed to those between the ages of 18-44 in the United States. Results from 358 participants indicated that compensation significantly affected self-esteem (H1 supported), as did an apology (H2 supported). The highest self-esteem was observed when both strategies were provided; however, compensation alone yielded nearly the same effect (H3 partially supported). No interaction effects between each recovery method and generation group were found (H4a-H4b not supported). Finally, increased self-esteem positively influenced customer satisfaction, loyalty, and electronic word-of-mouth intentions (H5a-H5c supported). The findings of this research suggest that offering a tangible resolution after a service failure may be more effective for young customers within the hospitality industry.

Completion Date

2025

Semester

Spring

Committee Chair

Ro, Heejung

Degree

Master of Science (M.S.)

College

Rosen College of Hospitality Management

Identifier

DP0029353

Document Type

Dissertation/Thesis

Campus Location

Rosen College of Hospitality Management

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