In service encounter, value creation comes not only from customer-to- service provider interaction but also from customer-to-customer interaction (CCI). A number of studies have demonstrated that the CCI plays an important role in perceived service quality, value creation, and customer satisfaction. Although prior researcher have explored the effect of CCI, they have focused more on traditional service encounter which service employee is present than on technology-based self-service (TBSS) encounter without employee presence. TBSS is an activity or benefit based on hard technologies that service providers offer so that customers can perform the service, or parts of the service by themselves. Focal customers can be influenced directly or indirectly by other customers in service encounter. To examine the effect of ICCI on service quality in TBSS, we conducted two studies. Study 1 focus on the impact of ICCI on service quality and the mediation of service experience. Study 2 explore whether the service failure moderates the relationship between ICCI and service experience. In experiment 1, a single factor (other customers: presence VS. absence) experiment was conducted with two different level of ICCI. Results show that compared with other customer absences when other customer presences focal customer perceived service quality is lower. That is, ICCI has a significant main effect on service quality. In addition, Experiment 1 provided evidence that a partial mediating factor underlying the relationship between ICCI and service quality was customers’s emotion. In experiment 2, A 2 (other customers: presence VS. absence) × 2 (service failure: yes VS. no) between subject design was conducted. An ANOVA on negative emotion yielded a significant ICCI × service failure interaction. The participants in the other customer presence condition experienced service was more discomfortable when the service was failed than when the service was succeeded. However, this effect was strengthened for the other customer absence condition. With advances in information technology, there has been a proliferation of self-service technologies across the services sector in the past decade. The quality and experience of technology-based self-service are very much worth the attention of service providers. Our study reveals the effect of ICCI on service quality and the mechanism by the mediation of negavtive emotion and the boundary condition of the link between ICCI and negative emotion. These results suggest that service providers should avoid ICCI, such as providing closed ATM, kiosk, and so on. In addition, the firms should try their best to guide customer to ensure the production and delivery of self-service to reduce service failures.

• Zhongpeng Cao(Northeastern University, China)
• Yanyan Zhang(Northeastern University, China)