The Effect of Performance Failures on User Satisfaction: Evidence From a Natural Experiment

ABSTRACT Despite long‐standing interest in satisfaction with public services and organizations, our knowledge of how responsive user satisfaction is to real‐world performance fluctuations remains limited. Existing cross‐sectional studies may suffer from selection bias, while survey experiments may overstate performance information effects, as the salience of such information is artificially primed. We exploit a unique opportunity to study the link between performance failure and user satisfaction dynamically, as news of a major performance failure within the Danish National Board of Social Services happened to break during fielding of a satisfaction survey among the Board's users. Our analysis shows no negative effects of the performance failure on user satisfaction. These findings suggest that in real‐world settings—where citizens draw on many information sources when forming judgments—performance effects on satisfaction are weaker than prior studies suggest. Thus, satisfaction data cannot be assumed to automatically reflect changes in service providers' performance and reputation.