Determining adequate tangible compensation in service recovery processes for developed and developing countries: The role of severity and responsibility

• Satisfaction with the service recovery (SSR) differs across countries.
• SSR with different types of tangible compensation depends on failure severity.
• SSR with different types of tangible compensation depends on responsibility.

This study examines effects of different compensation types on satisfaction with the service recovery in different failure severity and responsibility conditions. We additionally integrate cultural and economic developmental differences by studying two completely different countries (Madagascar and Switzerland). We propose a framework based on social exchange, regulatory focus, and attribution theories to explore differences in satisfaction with service recovery across these countries. The empirical results indicate that satisfaction with service recovery as a consequence of using different types of tangible compensation varies considerably depending on cultural and person-specific factors.