Recently innovative, technology-based services like mobile apps are on the rise (Hoyer et al. 2010; Ostrom et al. 2010). Such technology-based services (TBS) require the customer to co-create the service by actively engaging in the service provision and consumption (Gronroos 2011, forthcoming; Witell et al. 2011). Therefore, it is no surprise that, customer co-creation has become one of the dominant research topics in recent years. However, despite the theoretical and practical relevance, empirical results on customer co-creation, especially for TBS are scarce ( Bolton and Saxena-Iyer 2009; Dong et al. 2008; Meuter et al. 2005). Furthermore, no one has yet examined the downsides of customer co-creation. More specifically, no one has examined the ramifications of failed co-created TBS. Thus, the present paper examines how the degree of co-creation (high vs. low) will affect customer satisfaction in case of successful and failed TBS. Additionally, we test the effectiveness of proactive and reactive service recovery to counteract the possible negative consequences of service failures for TBS.
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