Prosocial Compensation Following a Service Failure: Fulfilling an Organization’s Ethical and Philanthropic Responsibilities

Jean-Pierre Thomassen (), Marijke C. Leliveld (), Kees Ahaus () and Steven Van de Walle
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Jean-Pierre Thomassen: University Groningen
Marijke C. Leliveld: University of Groningen
Kees Ahaus: University Groningen

Journal of Business Ethics, 2020, vol. 162, issue 1, No 7, 123-147

Abstract: Abstract Prosocial compensation (PC) is a corporate social responsibility (CSR) practice that involves donating money to a charitable cause on behalf of customers as a means to compensate them for their loss after a service failure. In order to determine the effectiveness of PC, we carried out three experiments while also comparing its effectiveness within private and public settings. Experiment 1 focused on the signaling effects of communicating the promise to offer PC to potential customers in the event of service failure. Results show that, in both private and public settings, PC has positive effects on corporate image, credibility, and word-of-mouth intent. More significantly, PC improved one’s CSR image, whereas more tangible compensation, such as a gift voucher, did not. Experiments 2A and 2B focused on the effects of offering PC after a service failure on perceptions of justice. Results show that PC contributes to perceived distributive justice, procedural justice, and post-recovery satisfaction in both private and public settings. Our study showed that PC could be a relevant new CSR practice for organizations wanting to enhance theirs CSR image while contributing to fulfilling their ethical and philanthropic CSR responsibilities. We discuss the implications of our findings and offer several avenues for follow-up research on this initial study on PC.

Keywords: Corporate philanthropy; Justice theory; Prosocial compensation; Service guarantee; Signaling theory (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10551-018-3992-1

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