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Increasingly, customers use social media to voice complaints, making those comments visible to a wide range of uninvolved, virtually present others (VPOs). Many companies seek to shift their complaint-handling efforts away from public online platforms and toward private interactions. However, this approach might not be optimal due to the importance of transparency in social media recovery and its impact on VPOs. Using multiple experiments and building on signaling theory, vicarious learning, and trust repair mechanisms, this study reveals that service recovery transparency acts as an important signal of quality, eliciting trust, and improving VPOs’ word-of-mouth (WOM) and purchase intentions. However, service recovery transparency forms a signal of poor quality when the service recovery is unsuccessful, resulting in negative implications for VPOs’ WOM and purchase intentions. Conditional transparency provides transparency about selected aspects of the service recovery (i.e., the process or result), enabling companies to exploit the positive aspects of transparency and evoke more favorable VPO intentions than would arise with complete opaqueness. Such efforts are necessary because even high brand equity firms suffer when failing to provide recovery transparency.

Service Recovery on Stage: Effects of Social Media Recovery on Virtually Present Others