Influence of Equity and Channel of Compensation on Customer Responses in Online Service Failure

In this study, influences of the equity of compensation and the channel of compensation were empirically investigated in online service failures. Equity of compensation(recovery) was manipulated at three levels: equity (neither advantage nor disadvantage), advantageous inequity, and disadvantageous inequity. Channel of compensation was manipulated at two levels: personal and online.Data were collected using scenario method. Major findings were (1) there was a strong interaction between the equity and the channel of compensation and (2) only when compensation was equitable, compensation through human channel led to a higher level of customer satisfaction than compensation through online channel. Implications of the current study and the direction for future research were suggested