The benefits of the co-creation of failure recovery are well recognized in the literature. So far, however, there has been little discussion about the collaborative process of joint recovery management and the role played by the locus of failure in this process in the Business-toBusiness context. Drawing on service-dominant logic and service logic, this paper attempts to explore the main sources/locus of failure and their roles in the level of supplier and customer collaboration during the failure recovery activities. Through the qualitative interviews with suppliers and customers firms based in Iran, the authors identify the main locus of failure and analyze the level of collaboration in recovery activities between the supplier and customer firms. The result reveals there are four main sources of failure (supplier-induced error, customerinduced error, an environmental factor, and unknown causation of failure) and two recovery management perspectives (reactive vs. proactive) in the B2B context. Our findings indicate that the level of joint recovery changes depending on the source of the failure in the business environment. Particularly, the level of joint recovery can be shown on a spectrum where the minimum level of collaboration is possible when the error is caused by the supplier and the maximum level of joint recovery happens when the root cause of failure is difficult to identify.

The co-creation of value through joint recovery management has attracted increasing interest in the business-to-business (B2B) service context. However, the underlying process of joint recovery management is less understood. Through the qualitative interviews with suppliers and customers firms and applying the conceptual thinking of service-dominant (S-D) logic and service logic, this research explores the joint recovery practice through which the value is co-created in the context of B2B markets. The analysis reveals value emerges from interaction and their resource contributions to six main activities of joint recovery management, including the prevention, identification, notification, analysis, the resolution of failure and the implementation of the mutually selected solution. Interestingly, the findings indicate that the supplier supports the value creation process through recovery activities and by performing different roles, while the customer can engage in recovery management activities by their resource contribution to the recovery activities, which results in the co-creation of monetary and non-monetary values. The current study serves as a tool for scholars and managers who wish to enhance the value co-creation process through joint recovery management activities in B2B settings.

Though service recovery plays a key role in industrial clients’ post-recovery supplier evaluations, the impact of customers’ cultural orientation on the effectiveness of supplier-instigated proactive recovery (i.e., a supplier’s recovery efforts before clients notice/complain) remains tenuous, particularly in emerging (vs. developed) markets. Addressing this gap, we develop a model that examines (a) the moderating role of clients’ cultural orientation on the association of supplier-instigated proactive recovery and client-perceived recovery-related justice, and (b) the impact of customer-perceived justice on relationship quality in the emerging (vs. developed) market context. To test the model, we deploy a cross-cultural scenario-based experiment using 117 Danish industrial clients (i.e., developed market) and 109 Iranian industrial clients (i.e., emerging market). The results suggest that customers’ cultural orientation partially moderates the relationship of suppliers’ proactive recovery and customer-perceived justice, in turn boosting relationship quality in the emerging/developed market context.

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