Associate editor's dilemma with inconsistent first/second round review Say I work as an AE for an international journal. I managed to find only two reviewers for a manuscript submitted to the journal lately. Personally, I don't find enough contribution of the manuscript, but it is not fair to not base my final decision on the reviewers' comments. 

For the first round review, both reviewers recommended a minor revision of the manuscript. Reviewer A appears to be more impartial than Reviewer B (who is positively biased). The same decision is delivered to the authors. However, during the second round, Reviewer A suddenly changed his mind to a major revision, which according to himself/herself is due to the failure of the authors to address his/her comments.

For this particular journal, there is usually only two rounds of review, and I don't think a third round will help improve the manuscript anymore. I am inclined to agree with Reviewer A and thereby reject the manuscript. However, it seems unfair to the authors and is hard to justify Reviewer A's change of mind in the second round. 

Now I am inclined to reject the manuscript, but it has to be based on solid grounds. Solid grounds can be found (if I write the review myself, I can certainly make one), but the reviewers did not give me one: if the recommendation is minor revision for the first time, how can it be major revision for the second time? Therefore, it seems to me both the authors and the reviewers did a poor job.

So, how should I make the decision here? If I choose to reject, how do I appear fair to the authors?
The reviewers make recommendations to you, not judgements.  As the associate editor, you have to decide how to interpret those recommendations, taking your own judgement into account.

I think that it is actually reasonable for a reviewer to become peeved if issues that they think are important were not addressed, and therefore judge a paper more harshly.  Usually that goes Major->Reject, rather than Minor->Major, but if it was borderline for the reviewer before, it's not bizarre. The real question is: do you agree that those issues are important?

If you disagree with the reviewer, you can recommend minor revision or acceptance.
If you agree with the reviewer, however, that this paper has some real issues that need to be addressed before it get published, then it's entirely reasonable to request another revision, even a major revision.  In your editorial statement, you then say something like:


  In particular, Reviewer #1 points out that the following issues in the original manuscript have not been addressed in the revision, and these must be addressed for this paper to proceed toward publication: [key issues]


Now the authors have a clear editorial directive for what exactly must be done in their revision.  If they follow this directive, all well and good and they get published; if they refuse to follow it, then you have reasonable grounds for rejection.