I Can Forgive You, But I Can’t Forgive the Firm: An Examination of Service Failures in the Sharing Economy

Abstract

Despite rapid growth of the sharing economy, little is known about consumers’ reactions when sharing services fail. Drawing on attribution theory, in three studies we show that consumers forgive such service failures varyingly, depending on the controllability and the locus of attribution of the failures. Specifically, when a failure has low controllability, consumers are more forgiving when it is attributed to an individual service provider than when it is attributed to a service enabling organization. Empathy toward the service provider explains the increased forgiveness. However, no difference in forgiveness is observed in the case of highly controllable failures, irrespective of the source of attribution. Furthermore, the effect of two recovery strategies – compensation and apology – also varies depending on these conditions. Theoretical and managerial implications are discussed.