A signaling theory approach to relationship recovery

Abstract

Purpose Drawing on signaling theory, the purpose of this study is to investigate the effects of the strength and framing of firm signals sent to repair relationships following relationship violations. Design/methodology/approach Three 2 × 2 scenario-based experiments (total n = 527) manipulate signal strength × violation type (Study 1); signal frame × violation type (Study 2); and signal strength × brand familiarity (Study 3) to examine their dynamic impacts on relationship recovery efforts. Findings Stronger signals are more effective at relationship repair and are especially important following integrity (vs competence) violations. Signals framed as customer gains (vs firm costs) lead to more favorable relationship outcomes. Finally, brands that are less (vs more) familiar see greater benefits from strong signals. Research limitations/implications The three experiments were scenario-based, which may not replicate real-life behavior or capture participants’ actual emotions following a violation, thus future research should extend into real-world recovery efforts. Practical implications Managers should send strong signals (communicating the level of resources invested in the recovery efforts) framed as benefits to the customer, rather than costs to the firm. Strong signals are especially important when brand familiarity is low or an integrity violation has occurred. Originality/value This is the first research to directly apply signaling theory to the relationship recovery process and contributes to theory by examining the role of signal strength; framing of the signal as a customer gain vs firm cost; and the interplay of signal strength and brand familiarity on the relationship recovery effort.

Eliciting positive emotion through strategic responses to COVID-19 crisis: Evidence from the tourism sector

“…Signalling theory provides the grounds to explain the various types of existing signals and the situations in which they are used ( Filieri, Raguseo, & Vitari, 2021 ; Spence, 2002 ). This theory has been frequently used to study relationship recovery ( Kharouf et al, 2020 ) organisational communication to customers ( Wang et al, 2021 ), and to assess product quality signals in eWOM research ( Filieri, Raguseo, & Vitari, 2021 ). In our study, signalling theory is applied to explain how tourism organisations (as signallers) utilize COVID-19 responses (as signals) posted on social media during the global pandemic crisis (as a signalling environment) to communicate with a wide range of consumers (as receivers).…”

“…Various strategies have been proposed in the crisis management literature to prevent, manage, and mitigate the negative effects of crises for firms. For example, research on service failures, such as product recalls and corporate reputation, provides insights into how firms can improve reputations and achieve positive consumer reactions ( Hsu & Lawrence, 2016 ; Kharouf et al, 2020 ). Among the typology of crisis response strategies (e.g., Coombs, 2007 ; denial, diminishment, rebuilding, and bolstering), we selected Wenzel et al (2020) 's four COVID-19 response strategies including retrenchment, preservation, innovation, and exit, as the four strategies are specifically focused on responding to COVID-19, which is the perfect match for our research context.…”

Love is in the air. Consumers' perception of products from firms signaling their family nature

“…Erdem and Swait (2004) found that brands can be perceived as signals of, for instance, not directly observable product quality or other associations with the respective brand. More recently, signaling theory was applied in the marketing context to examine the impact of the strength and framing of signals sent by firms to repair relationships following relationship violations (Kharouf et al, 2020).…”

Corporate Responses to the Coronavirus Crisis and their Impact on Electronic‐Word‐of‐Mouth and Trust Recovery: Evidence from Social Media

“…Consumers may view a defensive announcement as proof of a corporation's determination and efforts to cope with the crisis. Drawing on signalling theory, for example, Kharouf et al (2020) suggest that announcements focusing on retaining existing customers could repair corporate-consumer relationships and result in positive corporate reputations during a crisis. In times of COVID-19, lockdown-induced panic buying led to food retailers imposing purchasing restrictions and limiting operational hours.…”