How can ethical brands respond to service failures? Understanding how moral identity motivates compensation preferences through self-consistency and social approval

We examine how the two dimensions of moral identity - internalization and symbolization - impact on customers' relationships with ethical brands, as well as their satisfaction with different types of (private versus public) compensation and apologies following service failures. We propose and find in a field study of customers of a green social enterprise (N = 159) and in an online scenario study (N = 214) that high moral identity internalization is associated with higher satisfaction with private apologies, but not with public apologies and compensation, while high moral identity symbolization is associated with higher satisfaction with public compensation and apologies, but not with private apologies and compensation. Study 2 extends these findings by confirming that self-consistency mediates the relationships between moral identity internalization and private apologies and compensation, while social approval mediates the relationships between moral identity symbolization and public apologies and compensation. Unexpectedly self-consistency also mediated the effect of symbolization on public compensation. Implications of these findings are discussed.