Positive psychological capacities: the mystery ingredient in successful service recoveries? Carol Azab Stetson University, DeLand, Florida, USA Terry Clark Southern Illinois University, Carbondale, Illinois, USA, and Cheryl Burke Jarvis Florida Atlantic University, Boca Raton, Florida, USA Abstract Purpose – This paper aims to explore the influence of frontline employees’ (FLEs’) positive psychological capacities (PPCs) (optimism, hope, resilience and self-efficacy) on service recovery. Design/methodology/approach – A model of FLE PPCs is tested using two studies: a field study (N retail = 205; N restaurant = 160) and between- subject experimental design (N education = 206) in three service settings. Findings – Results show that positive emotions mediate the relationship between PPCs and problem-solving adaptability, and that authenticity of positive emotions moderates the relationship between positive emotions and interactional justice. Surprisingly, problem-solving adaptability positively influences perceptions of distributive justice and interactional justice. A small interaction effect between positive emotions and problem- solving adaptability also was found. Research limitations/implications – The dependent variable (problem-solving adaptability) was measured using an open-ended question evaluated by objective, independent raters rather than a self-reported structured metric, to minimize social desirability bias. Practical implications – Given that the customer complaints to the Better Business Bureau in 2016 were close to one million, most of them occurring in the service sector, service firms need continuous research into improving service recovery. This study argues that firms can improve FLEs’ problem- solving adaptability behavior by training existing FLEs to strengthen PPCs, hiring FLEs that have strong PPCs and fostering positive emotions. Originality/value – This is the first study that examines the effect of PPCs on service recovery outcomes. By incorporating PPCs as antecedents of positive emotions, this paper explains how FLEs can offer a better recovery rather than dictating what they ought to display and say. An explanation of how FLE PPCs influence customer outcomes via the broaden-and-build theory of positive emotions and emotion contagion theory is offered, highlighting a novel path/relationship between FLE positive emotions and problem-solving abilities, and extending emotion contagion to service recovery. Keywords Positive emotions, Frontline service employees, Emotion contagion theory, Positive psychological capacities, Problem-solving adaptability, The broaden-and-build theory of positive emotions Paper type Research paper Introduction Consider the following scenario: Airline representative Sally was finishing her shift. As she checked passengers in for the last flight, it was announced the flight had been canceled. Sally wouldn’t be leaving anytime soon! Tired and irritable, she determined to resolve her customers’ problems. Conjuring up a smile, she turned to face them. They were angry. One was verbally abusive. The cancellation meant he would miss an important meeting. Neither hotel nor a flight voucher could fix his problem. Their anger brought Sally to the verge of tears. However, she remained calm and considered possible options. Eventually, she found a flight on a competing carrier that made the passenger’s connection. The passenger thanked her warmly before hurrying off to his new flight. Exhausted, Sally told herself, “You can do this.” Summoning another smile, she turned to face the next customer. Upon seeing Sally’s first success, this customer smiled hopefully. Sally finally cleared her last passenger, who told her, “Thank you!” Tired but satisfied, Sally said to herself, “I love my job.” This scenario illustrates the critical role played by frontline employees (FLEs) in service failures and recoveries (Hart et al., 1990). If a recovery fails, firms may lose customers, revenues and experience negative word-of-mouth (Weun et al., 2004). Clearly, FLEs such as Sally are key in turning unhappy customers around. As the “face” of the firm, their attitudes and behaviors influence customer reactions in both service failure and recovery (Bitner et al., 1990). Not only are they at the epicenter of service failure, they are critically positioned to improvise solutions, and to display pleasant and affirming emotions in the process (Liao, 2007). The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0887-6045.htm Journal of Services Marketing 32/7 (2018) 897–912 © Emerald Publishing Limited [ISSN 0887-6045] [DOI 10.1108/JSM-11-2017-0407] Azab and Clark gratefully acknowledge God as the source of all true positive psychological capacities. Received 30 November 2017 Revised 25 May 2018 28 July 2018 Accepted 6 August 2018 897