There is contrasting views on service recovery and customer satisfaction. There is a specific phenomenon called 'Service Recovery Paradox' that looks into to impact of service recovery on customer behavior. There is ample literature on Service Recovery Paradox that will help you in your question.

The following papers should be helpful to your topic:

• Brown, S. W., Cowles, D. L. and Tuten, T. L. (1996) Service recovery: its value and limitations as a retail strategy, International Journal of Service Industry Management, 7, 5, pp. 32-46.
• Michel, S., Bowen, D. and Johnston, R. (2009) Why Service Recovery fails: Tensions Among Customer, Employee, and Process Perspectives, Journal of Service Management, 20, 3, pp. 253-273.
• Smith, A. K. and Bolton, R. N. (1998) An Experimental Investigation of Service Failure and Recovery: Paradox or Peril?, Journal of Service Research, 1, 1, pp. 65-81. 

Dear Mogili,

This is an interesting question which has been porously tested in literature. Hower, new perspectives to service recovery are emerging in recent times, this thus imply that you can research into it in your context and domain of interest.

A positive perception of service recovery in terms of complaints handling and  providing a necessary platform for speedy redressal adds to customer satisfaction. Much of literature in the said field is available to help you better. 

A different perspective and love to see theoretician able to add practical application into theoretical papers. The practical paper on managing customer satisfaction, loyalty and retention. There are interrelated in real practical world. If you want answer from practical perspective, important to have service recovery of customer satisfaction as more expensive to get new customers than retain old ones.

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HI Rama,

I would see this from two different vantage points. Some consumers who might not relate with the brand which under consideration would not appreciate the work done my the organization as he/she would expect the product to be of good quality at first place and not corrected later. Same is with service too. However, if you understand the consumer psychology, you can see that some other consumers would see the correction from the companies as a gesture for extra sevice and giond an extra mile to help the consumer (Here too, the mistake should have been there in the first place). It all depends on how an organization propagates its agenda of service delivary.