A Multilevel Investigation of Factors Influencing Employee Service Performance and Customer Outcomes

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® Academy of Management Journal 2004, Vol. 47, No. 1, 41-58.

A MULTILEVEL INVESTIGATION OF FACTORS INFLUENCING EMPLOYEE SERVICE PERFORMANCE AND CUSTOMER OUTCOMES HUI LIAO Rutgers, the State University of New Jersey AICHIA CHUANG National Taiwan University of Science and Technology Previous work on service performance has focused on either organization- or individual-level analysis. This multilevel study of 257 employees, 44 managers, and 1,993 customers from 25 restaurants demonstrated that both individual- and store-level factors were significantly associated with employee service performance: conscientiousness and extraversion explained within-store variance, and service climate and employee involvement explained between-store variance. Further, employee service performance aggregated to the store level explained between-store variance in customer satisfaction and loyalty. In response to an increasingly competitive marketplace, growing research attention is being devoted to factors contributing to desirable customer outcomes. Front-line service employees, placed at the organization-customer interface and representing an organization to its customers, play a pivotal role in service encounters, which often involve dyadic interactions between customers and service employees (Solomon, Suprenant, Czepiel, & Gutman, 1985). Empirical evidence shows that, to the extent employees are able to deliver high-quality service, customers are more likely to generate favorable evaluations of service encounters, experience higher satisfaction, and increase their purchases and the frequency of their future visits (e.g., Borucki & Burke, 1999; Bowen, Siehl, & Schneider, 1989). Therefore, it is important to understand what predicts employee service performance. The purpose of this study was to develop and test a multilevel framework in which employee service performance was examined as a joint function of employee individual characteristics and service environment characteristics. Previous work on service performance has focused on either organization- or individual-level analysis. In work addressing organizational factors, a common theme is that if an organization values service and establishes practices that facilitate and reward excellent service, a "climate for service" is likely to emerge (Schneider, 1990). This service climate will in turn influence service performance, which will ultimately impact customer satisfaction (Borucki & Burke, 1999; Johnson, 1996). This body of literature emphasizes the impact of managerial practices and service climate on customer perceptions of service quality and business-unit financial performance at the store level of analysis (e.g., Borucki & Burke, 1999; Johnson, 1996; Schneider, White, & Paul, 1998). On the other hand, researchers who are interested in studying service performance at the individual level of analysis (e.g., Barrick & Mount, 1991; Frei & McDaniel, 1998) have linked employees' personalities to their service performance. Both approaches have made significant contributions to explaining service performance. However, neither approach adequately accounts for service performance. The store-levelonly (or macro) approach ignores meaningful individual differences, while the individual-levelonly (or micro) approach neglects contextual factors that can significantly influence and constrain individual behavior (Kozlowski & Klein, 2000). Examining one level at a time prevents one from knowing whether factors at one level remain important in explaining service performance after 41

This study was supported by a grant from the Alfred P. Sloan Foundation through the University of Minnesota's Food Industry Center. A version of this work received the Best Doctoral Paper Award from the OB/OT/OD Division of the Southern Management Association (SMA). We are grateful to the organization that participated in this research. We thank Jonathan Seltzer and Steven Smela for their assistance in data collection....
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