Abstract
Several streams of management research have focused on the relationship between organizations, employees, and customers within the context of services. However, this body of work lacks integration and requires an internally consistent framework encompassing critical constructs, causal mechanisms, and levels of analyses. To address these gaps, we reviewed empirical studies with service-related outcomes published in management and organizational behavior journals as well as critical summative and theoretical works within the fields of management and marketing, and constructed an integrative framework for services management theory and research. This framework incorporates constructs and relationships within (individual and unit levels) and across (multilevel and microfoundations) levels of analyses and highlights areas that are ripe for future theoretical development and empirical inquiry.
Services are broadly defined as “the application of specialized competence (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself” (Vargo & Lusch, 2004: 2). Across a variety of contexts (e.g., business, education, government, nonprofit or voluntary settings, and virtual environments), services are characterized by certain key features (Parasuraman, Zeithaml, & Berry, 1985), including intangibility (i.e., they can be known or evaluated only by customers in the act of consumption), heterogeneity (i.e., every service encounter can be considered unique), and simultaneous production and consumption. These features of services align the interests of organizations and customers because customers’ service evaluations and behaviors are largely influenced by the quality of their interaction with the organization and its representatives (Oliver, 1999; Schneider & Bowen, 1995); and customer outcomes, in turn, influence organizational effectiveness (Anderson, Fornell, & Lehmann, 1994). Therefore, a comprehensive study of services requires a multidisciplinary approach (Ostrom et al., 2010) with emphases on both the customer evaluations and reactions to service delivery (i.e., services marketing) and the organizational and employee-related processes yielding these outcomes (i.e., services management).
Despite early studies examining organization–customer relationships (Schneider & Bowen, 1985; Schneider, Parkington, & Buxton, 1980), services as a focal area within management can be considered to be still in its infancy in contrast to the field of services marketing—a field characterized by well-established journals, popular textbooks and curricula, and highly cited primary articles. Given the dominant role that service providers play in determining customer experiences (see Heskett, Sasser, & Schlesinger, 1997), one would expect the field of management to have a body of research on services commensurate to that found in marketing, but it does not. Further, while many management studies provide unique insights into various employee-related mechanisms influencing service delivery (Ryan & Ployhart, 2003) as well as the organizational processes that can affect customer outcomes (Hong, Liao, Hu, & Jiang, 2013), an integrated perspective encompassing different service-critical constructs, causal mechanisms, and levels of analyses is yet to emerge. The current article is motivated by increasing scholarship in services and the belief that management research can provide a unique and significant contribution to the understanding of organization, employee, and customer relationships (Bowen & Schneider, 2014; Rust, 2004). Specifically, we examined the content of 102 empirical studies with service-related outcomes published in 11 management and organizational behavior journals, recent reviews and theoretical works within the field of management (e.g., Bowen & Schneider, 2014; Grandey, Diefendorff, & Rupp, 2013; Hong et al., 2013; Jiang, Lepak, Hu, & Baer, 2012; Ployhart & Moliterno, 2011; Ployhart, Nyberg, Reilly, & Maltarich, 2014; Ryan & Ployhart, 2003), and relevant developments in marketing literature with implications for management (e.g., Kohli & Jaworksi, 1990; Kirca, Jayachandran, & Bearden, 2005; Vargo & Lusch, 2004) to construct an integrative framework representing the domains of services management research and provide future directions for theoretical development and empirical inquiry.
Theoretical Framework
Although an integrative theory of services management does not yet exist, there are consistencies in this research upon which a framework can be built. Fundamental to nearly all work in this area is the connection between the organization and its customers. Most research is organized around an examination of antecedents, or predictors, that are believed to be causally related to customer outcomes through mediating processes. This is consistent with other theoretical examinations within management literature that highlight the importance of considering the antecedents (inputs), mediating processes, and outcomes of various organizational phenomena (Steiner, 1972). More recently, interest has turned to the levels at which management phenomena are conceptualized and studied (Klein & Kozlowski, 2000). Service researchers have mostly investigated either individual-level phenomena, such as employee attributes (i.e., knowledge, skills, abilities, and other characteristics, or KSAOs), attitudes (e.g., job satisfaction), or behaviors (e.g., displayed affect), as predictors of customer outcomes or focused upon unit-level constructs (e.g., human resource management [HRM] practices, organizational climate) as predictors of aggregate customer outcomes, with a few studies focusing on multilevel effects. To comprehensively capture all the variation in extant services management literature, we propose a framework (Figure 1) integrating four research domains represented by quadrants created by the interaction between these two dimensions, that is, antecedents versus outcomes of various service constructs and processes, and the levels at which these constructs and processes occur (i.e., individual employee vs. organization or establishment).
Domains of Services Management Research
The top left quadrant (unit-level linkages) refers to research that address the relationship between organization- or establishment-level (i.e., macro) phenomena influencing unit-level service outcomes. While there is no dominant theory underlying this research domain, most of these macrolevel relationships can be subsumed within a linkage model based on the notion of a service-profit chain, which relates organizational predictors with service outcomes (Heskett et al., 1997). Further, research conducted within this domain acknowledges, but does not explicitly model, the individual-level phenomena that constitute these macrolevel relationships. Upon reviewing the extant literature, we arrived on a consensus that 52 of the 102 published empirical studies (53%) could be categorized as exclusively dealing with macrolevel phenomena. In contrast, research studies conducted with individual service employees as the foci (37%) tend to be rooted in theories examining the interpersonal and intrapersonal processes affecting customer behaviors. This research domain is represented in the bottom right of our integrative framework. One suggested way to bridge the micro-macro divide within management research is through the use of multilevel theories and measurement. Consistent with this, a small body of services management research (10%) rigorously examines the top-down direct and moderating effects of unit-level collective constructs (e.g., service climate, HRM practices) on individual-level constructs (e.g., service performance) and relationships. These studies are represented in the top right of our framework. Finally, the processes underlying the emergence of shared and configural constructs are of key conceptual interest to microfoundations theorists (Barney & Felin, 2013; Nyberg, Moliterno, Hale, & Lepak, 2014). Also of interest is the role of individual actors (e.g., managers) in influencing organizational decisions and actions, including strategy formulation, implementation, and resource orchestration (Felin, Foss, Heimeriks, & Madsen, 2012). We believe that this domain is rich with exploratory potential and include it in our framework on the bottom left. We discuss each of the quadrants or research domains in the following sections with a special emphasis on extant research and future directions. An overview of noteworthy extant research conducted within macro-, micro-, and multilevel research is provided in online Appendix A. A listing of empirical studies identified in the literature review is presented in online Appendix B; note that only a subset of these studies is cited in the manuscript.
Intrapersonal and Interpersonal Processes
Microlevel studies in services contexts are typically focused on understanding the antecedents of, and processes underlying, employee behavior toward customers in a variety of boundary-spanning roles. As a whole, these studies suggest a set of input variables, including employee predispositions and work-related perceptions, processes to actively integrate these to elicit a desired response, and behavioral output evaluated or reported by customers or other observers. A majority of the microlevel studies view the interpersonal expression and intrapersonal management of emotions (55%) as integral to service delivery, while a significant portion of the remaining studies explores the effects of multiple constituencies (e.g., leaders and coworkers) on employees’ attitudes, resultant service behaviors, and customer evaluations of services. In this section, we summarize this research and suggest expansion opportunities (see bottom half of Figure 2).
An Integrative Model of Services Management
Display and Management of Emotions in Services
Theoretical orientation and key findings
The process of emotional contagion (Hatfield, Cacioppo, & Rapson, 1994) is commonly discussed as a reason for the transmission of employee emotions to customers (Pugh, 2001; Tsai, 2001; Tsai & Huang, 2002) and the resultant customer service evaluations (Barger & Grandey, 2006). Moreover, studies grounded in emotional labor theory (Hochschild, 1983) suggest that employees engage in an active process of emotion management (Grandey, 2000) through deep acting (modifying feelings to match display) or surface acting (modifying verbal, facial, and bodily expressions or displays without altering the underlying feelings). Recent meta-analytic evidence suggests that employees who are high on trait negative affectivity as well as those who perceive their work context as emphasizing the suppression of negative emotions (i.e., negative display rules) tend to engage in higher levels of surface acting, while positive display rules and high levels of positive affectivity are associated with deep acting (Kammeyer-Mueller et al., 2013). Similarly, there is evidence linking employee positive mood with customer service behaviors (George, 1991) and start of the workday mood as a predictor of state affect (positive or negative) and subsequent customer-related outcomes (Rothbard & Wilk, 2011). Further, employees’ felt emotions and displayed affect are anteceded by employee traits and predispositions, including negative affectivity (Tan, Foo, & Kwek, 2004), extraversion, neuroticism (Tan, Foo, Chong, & Ng, 2003), emotional expressiveness (Pugh, 2001), and emotional competence (Giardini & Frese, 2008); and situational factors, such as transaction busyness (Pugh, 2001), display rules (Gosserand & Diefendoff, 2005), and climate for service friendliness (Tsai, 2001). On the output side, deep acting has been found to be significantly associated with customer satisfaction and related outcomes (Chi, Grandey, Diamond, & Krimmel, 2011; Groth, Hennig-Thurau, & Walsh, 2009), while surface acting tends to have a small negative effect on customer satisfaction (Hülsheger & Schewe, 2011) and predicts employees’ emotional exhaustion (Grandey, 2003).
These studies also suggest that the effects of emotional labor on both customers and employees can be driven by customers’ reactions. For instance, surface acting is likely to be perceived as inauthentic and prompt a negative reaction from the customer, which subsequently affects the employee (Côté, 2005; Grandey, Fisk, Mattila, Jansen, & Sideman, 2005). Similarly, employees’ suppression of negative emotions can negatively affect customers’ evaluation of services when the services are highly personalized and customer-perceived relationship with the employee is weak (K. Wang & Groth, 2014). Evidence also suggests that the influence of employee emotional display on customers’ emotional display is moderated by customer traits, such as agreeableness and emotional stability (Kim & Yoon, 2012). In addition, customer emotions can themselves influence employees’ emotional display (Tan et al., 2004) as well as their choice of emotion management strategy (Little, Kluemper, Nelson, & Ward, 2013). These findings suggest a feedback loop between customer evaluations and behaviors (output) and employees’ perceptions of the work context, emotions, and emotion management strategies (input and processes) and highlight the intertwined and reciprocal nature of employee–customer exchanges.
Assessment and directions
Emotion management is a dominant presence in services literature and is characterized by theoretically and practically relevant questions (e.g., How do employees and customers affect each other’s moods and emotions? How do employees demonstrate a positive demeanor in often-trying service situations?). As this literature matures, we expect to see a growth in studies examining the transmission of affect between employees and customers in fast-growing virtual service settings, including call centers (Doucet, 2004; Little et al., 2013), where a variety of mechanisms exist to monitor employees’ conformance to display rules, including emotion detection systems and call monitoring (Van Jaarsveld & Poster, 2013). We expect these mechanisms to create higher levels of emotional labor, as opposed to situations where employees are free to interpret social cues and respond in ways that are consistent with their own predispositions and customers’ expectations. Note, however, that research has not found support for Hochschild’s (1983) proposal that increased monitoring and rewarding of emotional labor, such as we see in call centers, make emotional labor more distressing (Grandey & Gabriel, in press). Perhaps monitoring and control of emotional displays, when coupled with support and incentives for behavior, help align employee and organizational goals.
Within the context of virtual settings, emerging research on social media (Hennig-Thurau et al., 2010) raises several questions regarding the transmission and management of emotions (for instance, through tweets or Facebook postings) within very short timespans and across broad audiences. A recent study (Kramer, Guillory, & Hancock, 2014) demonstrated that emotional contagion occurred through the Facebook social network. Researchers manipulated the emotional content of posts that appeared in users’ newsfeeds and found that when positive postings were reduced, people produced fewer positive posts and more negative posts. The opposite pattern occurred when negative posts were reduced. While users might feel discomfort with the fact that the emotional tone of the posts and therefore their own subsequent emotions were manipulated by Facebook, it seems far less controversial that service encounters are consciously manipulated by organizations through employee emotional labor, store layout and olfactory cues, music while on hold, and a variety of other mechanisms. What the Kramer et al. (2014) study suggests is that virtual communications can be a means to the same emotional contagion ends, and the effects can be controlled by the organization and operate outside the customer’s conscious awareness.
Third, we highlight the emergence of theoretical approaches that provide complementary explanations for employee emotional expression or management. One such approach grounded in resources theory (Hobfoll, 1989) suggests that cognitive and motivational mechanisms work along with emotion-based mechanisms in influencing employee emotional expression and behaviors, and reveals that employees with higher amounts of cognitive and motivational resources (i.e., tenure and commitment to service rules) along with higher emotional resources (e.g., self-efficacy for emotional regulation) are less likely to retaliate against customer mistreatment through sabotage (M. Wang, Liao, Zhan, & Shi, 2011). Similarly, affective events theory (Weiss & Cropanzano, 1996) provides a comprehensive explanation for how employees perceive and then emotionally react to negative or positive work events, including customer mistreatment (see Rupp & Spencer, 2006). We recommend more such cognitive-affective-behavioral explanations for positive and negative service interactions.
Finally, as noted previously, several studies have examined the effects of employee traits and predispositions on customer-directed emotional display. We suggest two extensions. First, in addition to broad traits, such as the Big Five, we suggest a reemphasis on more specialized “narrow-bandwidth” traits or work motives, such as customer or service orientation, that have been shown to predict the attitudes and performance of customer-contact employees (Hogan, Hogan, & Busch, 1984; Saxe & Weitz, 1982). A recent study by Ozcelik (2013), for example, indicates that surface acting is seen more in employees who do not share the overall work goals of the organization. Interesting new research also shows that work motives may vary, even on a daily basis (Von Gilsa, Ohly, Trumpold, & Machowski, 2013). Second, employee knowledge and skills have been known to play a key role in determining performance in service contexts (Bettencourt, Gwinner, & Meuter, 2001). Given the evidence that customers evaluate both task performance and emotional facets of the service delivery in forming their overall evaluations, we recommend testing the effects of employees’ service-specific KSAOs on customer outcomes.
Employee Attitudes, Multiple Constituencies, and Interpersonal Processes
Theoretical orientation and key findings
Another stream of microlevel research examines more general employee attitudes and workplace perceptions and their connections to customer satisfaction (Brown & Lam, 2008). This research examines the many determinants of employee perceptions and behaviors, including roles, norms, leadership, and coworkers. Customer-contact roles have traditionally been viewed as boundary spanning (Schneider et al., 1980); that is, service employees simultaneously attempt to satisfy the needs and expectations of internal (e.g., managers, peers) and external constituents. In this context, it has been argued that employees’ perceptions of treatment by the organization as well as their attitudes toward the organization might “spill over” into their attitudes and behaviors toward the customer (Bowen, Gilliland, & Folger, 1999). This assumption is borne out in studies linking employee job satisfaction (Payne & Webber, 2006), perceived role conflict (Jimmieson & Griffin, 1998), and procedural and interactional justice (Masterson, 2001) with customer satisfaction. Further, this research highlights the role played by key constituencies in motivating favorable employee behaviors toward customers. For instance, leaders’ empowering behaviors can increase employee self-efficacy and adaptability and subsequent customer satisfaction and sales (Ahearne, Mathieu, & Rapp, 2005); and on the flip side, employee perceptions of contract breach perpetuated by the supervisor are associated with lower levels of citizenship behaviors directed toward customers and, ultimately, lower customer satisfaction (Bordia, Restubog, Bordia, & Tang, 2012). Similarly, employees who perceive their coworkers as engaging in counterproductive behaviors (e.g., theft, sabotage) are likely to view their workplace as lacking a climate for service and themselves demonstrate lower levels of service performance (Yang, 2008).
Expectedly, given the centrality of customer interactions in service roles, there is also evidence that customers themselves can affect employees’ behaviors. Specifically, customer input and trust can foster high levels of service-related creativity by employees (Madjar & Ortiz-Walters, 2008), and customer mistreatment (customer interactional injustice) might lead to employee sabotage behavior (Skarlicki, van Jaarsveld, & Walker, 2008). There is also evidence that customer evaluations of service providers reflect racial or gender bias (Hekman, Aquino, Owens, Mitchell, Schilpzand, & Leavitt, 2010). Not surprisingly, the reverse is also true, that is, there is evidence of stereotyping and interpersonal discriminatory behaviors directed by employees toward customers. For instance, obese customers are more likely to receive negative interpersonal behaviors than those of perceived average weight, which might result in lower buying behaviors (King, Shapiro, Hebl, Singletary, & Turner, 2006), and pregnant customers are more likely to be treated with benevolence than those who were not perceived to be pregnant (Hebl, King, Glick, Singletary, & Kazama, 2007). In other words, service establishments can be treated as social spaces where both employees and customers might hold social stereotypes and engage in behaviors that are discriminatory in spite of their formal roles that require each to focus on the commercial aspects of this relationship.
Assessment and directions
Several important theoretical developments in management literature are beginning to highlight the complex nature of employee–customer interactions. For instance, while relational job design research demonstrates that the connection between employees and customers can foster empathy, persistence, and prosocial motivation (Grant & Parker, 2009; Turner, Hedas-Halperin, & Raveh, 2008), emotional labor and burnout literature views employee contact with customers as a source of stress. There is opportunity here for researchers to tease apart the positive versus negative effects of employee–customer interactions. Grandey and Diamond (2010) have made one attempt by suggesting that factors such as the content and mode of communication (e.g., communications based on tasks vs. simply affect) and temporal factors (one-time encounters vs. ongoing relationships) can affect service behaviors. Further, we would also like to highlight studies conducted within the context of contingent (or temporary) work suggesting that in long-term service relationships (i.e., engagements longer than a few minutes/hours), customers can take on supportive and relational roles that might facilitate the development of positive employee attitudes and behaviors, and all three parties—organizations, customers, and employees—are closely intertwined within service contexts such that the behaviors of any of these toward the other can influence the outcomes of the entire service relationship (Coyle-Shapiro, Morrow, & Kessler, 2006; Connelly, Gallagher, & Gilley, 2007).
Another promising direction for research involves treating service establishments as social spaces where employees and customers act in and out of their prescribed roles, influencing each other during the process. We have thus far pointed at the negative effects of stereotyping and biases in these contexts, but it is also possible for service establishments to play a transformative role in the lives of their employees and customers (Crockett, Downey, Firat, Ozanne, & Pettigrew, 2013). For instance, recent research on “third places” (i.e., social settings different from home and work) suggests that certain service establishments might be frequented by customers to meet their social and emotional needs, such as friendship, companionship, and support, as opposed to purely commercial motives (Meshram & O’Cass, 2013; Rosenbaum, 2006). Most research, in this regard, has focused on how customers experience and react to these third places. We call for an extension of this work to examine the social relationships that develop between employees and customers in service establishments outside the domain of commercially prescribed transactional roles.
Unit-Level Linkages
At the unit level, the emphasis shifts from the interactions between individual employees and customers to aggregate perceptions, attitudes, and behaviors. A broad framework utilized for this research organizes service antecedents, processes (or mediators), and outcomes along a service-profit chain with organizational variables as the starting point and financial performance as the ultimate outcome of customer satisfaction (Heskett et al., 1997). Recent extensions of this framework identify three sequentially arranged organizational drivers of customer outcomes—HRM and leadership practices, service climate, and employee attitudes and behaviors (Hong et al., 2013)—and list various moderators of the service climate–customer outcome relationship (Bowen & Schneider, 2014). We use this linkage model as the starting point for our review and end with suggestions for its extension (see top half of Figure 2). While financial outcomes are not discussed in this paper, these are acknowledged in this figure as being influenced by customer reactions and behaviors (Anderson et al., 1994).
Theoretical Orientation and Key Findings
Service climate
Service climate, which refers to “employee perceptions of the practices, procedures, and behaviors that get rewarded, supported, and expected with regard to customer service and customer service quality” (Schneider, White, & Paul, 1998: 151), is theorized to affect customer outcomes in two key ways. The first proposed link is direct and suggests that as employees and customers interact with each other, they evolve common perceptions with regard to the organization’s customer-related practices and procedures, leading service climate to correlate with customer evaluations of service (Schneider et al., 1980). Consistent with this viewpoint, early studies provided correlational and cross-lagged evidence suggesting a mutually reinforcing relationship between service climate and customer-perceived service quality (e.g., Schneider et al., 1980, 1998). More recent studies have found that the climate–customer satisfaction relationship is moderated by the frequency of customer contact, thus supporting the importance of employee–customer interactions in creating the association between these two variables (Dietz, Pugh, & Wiley, 2004; Mayer, Ehrhart, & Schneider, 2009). The second, proposed link is indirect, that is, mediated through employee attitudes and service behaviors (Schneider, Ehrhart, Mayer, Saltz, & Niles-Jolly, 2005). According to this view, employees perceiving a favorable climate for service engage in customer-centric behaviors (typically, service organizational citizenship behaviors, or OCBs) that lead to high levels of customer satisfaction (Bowen & Schneider, 2014). Research based on either view emphasizes the importance of studying the moderators or boundary conditions of the service climate–customer outcomes relationship. These moderators include factors relevant to the service transaction itself (e.g., customer contact frequency and service intangibility; Mayer et al., 2009) as well as those referring to the employees’ work context, including climate strength (i.e., the extent to which the climate is shared within the work unit; Schneider, Salvaggio, & Subirats, 2002), internal service (Ehrhart, Witt, Schneider, & Perry, 2011), and other types of climates (McKay, Avery, Liao, & Morris, 2011).
HRM practices
In addition to the direct and indirect effects of service climate on customer outcomes, researchers have examined the antecedents of service climate. One such antecedent is the organization’s HRM practices, which can help set the foundation for employee behaviors oriented toward customer service (Salanova, Agut, & Peiro, 2005; Schneider & Bowen, 1985). While the creation of a positive service climate might also require the design of a service-oriented HRM system (i.e., where employees are selected, trained, and rewarded for services), most studies have focused on a set of high-performance work practices (e.g., empowerment, skills training, rigorous selection) that are viewed as directly or indirectly affecting customer outcomes. For instance, these practices have been found to influence customer outcomes indirectly through the organization’s concern for customer climate (Chuang & Liao, 2010), molar or multidimensional organizational climates (Rogg, Schmidt, Schull, & Schmitt, 2001), organization-level employee morale (Subramony, Krause, Norton, & Burns, 2008), collective job satisfaction (Piening, Baluch, & Salge, 2013), unit-level service-related OCBs (Sun, Aryee, & Law, 2007), unit turnover (Batt & Colvin, 2011), and team-level psychological empowerment (Kirkman & Rosen, 1999; Kirkman, Rosen, Tesluk, & Gibson, 2004). Further, direct effects of HRM practices on service-related outcomes have been observed in longitudinal (Van Iddekinge, Ferris, Perrewé, Blass, Heetderks, & Perryman, 2009) and experimental studies (Peterson & Luthans, 2006).
Unit-level leadership
Unit-level service outcomes are influenced by the type and quality of leadership within the unit. Leaders play a key role in creating the social context within which employees’ service behavior is enacted, thereby influencing customer outcomes. For instance, there is evidence linking service-focused leadership (Schneider et al., 2005), transformational leadership (Liao & Chuang, 2007), and effective leadership (Hui, Chiu, Yu, Cheng, & Tse, 2007) with service climate. Leader behaviors in service units have also been linked with a variety of employee attitudes and behaviors. There is also evidence that directive leadership can promote customer-directed core task proficiency, while empowering leadership increases employees’ proactive behaviors toward customers (Martin, Liao, & Campbell, 2013) and team members’ collective psychological empowerment levels (Kirkman & Rosen, 1999). In contrast, abusive supervision perpetuated by leaders has been linked with counterproductive behaviors of service employees (Detert, Trevino, Burris, & Andiappan, 2007). There is also research indicating that leaders’ attitudes and behaviors can directly affect service outcomes. For instance, manager satisfaction influences customer satisfaction (Netemeyer, Maxham, & Lichtenstein, 2010), and manager turnover has been found to positively influence customer wait times in service establishments (Kacmar, Andrews, Van Rooy, Steilberg, & Cerrone, 2006).
Collective attitudes
Collective job attitudes shared by employees within an establishment or organization have been viewed as proximal predictors of customer outcomes. Collective job attitudes are expected to arise within units through a combination of attraction-selection-attrition (ASA) processes (Schneider, 1987); shared demographic characteristics and, following from this, similar interpretations and evaluations of the work environment (Klein, Conn, Smith, & Sorra, 2001); and collective interpretations and behavioral patterns emerging from interactions between employees (Morgeson & Hoffman, 1999). There is evidence that collective work attitudes predict service outcomes (Conway & Briner, 2012; Netemeyer et al., 2010; Simons & Roberson, 2003; Subramony et al., 2008). However, longitudinal or cross-lagged tests of the directionality of the collective attitudes–customer satisfaction relationship have, in totality, produced mixed results (see Koys, 2001; Ryan, Schmit, & Johnson, 1996; Winkler, König, & Kleinmann, 2012). This presents an opportunity for more multiwave studies in this area as well as an in-depth understanding of the causal mechanisms mediating the bidirectional relationship between employees’ job attitudes and customer evaluations.
Human capital resources (HCR)
In addition to influencing the creation of organizational climates and collective attitudes, HRM practices play critical roles in the acquisition and accumulation of HCR, defined as “individual or unit-level capacities based on individual KSAO’s that are accessible for unit-relevant purposes” (Ployhart et al., 2014: 374). There is evidence that HCR can help organizations accomplish strategic goals and attain valued outcomes (Crook, Ketchen, Combs, & Todd, 2008; Jiang et al., 2012), and by virtue of being valuable, rare, inimitable, and nonsubstitutable, firm-specific or strategic HCR can serve as a source of competitive advantage (Barney, Ketchen, & Wright, 2011). Further, stocks of this resource are internally accumulated by firms through the implementation of HRM practices, such as selection and training (Jiang et al., 2012), and depleted primarily through employee turnover (Nyberg & Ployhart, 2013). While the notion of HCR is relatively new in services management, studies investigating unit-level turnover within service contexts have typically found negative relationships between voluntary turnover (quits) and customer outcomes (Hausknecht, Trevor, & Howard, 2009; Kacmar et al., 2006; Ton & Huckman, 2008). Additionally, there is evidence that voluntary turnover effects are stronger for establishments with a large number of newcomers, high levels of turnover, and low levels of process conformance (i.e., where store managers followed prescribed standards to reduce variations in operations). Other studies have revealed differential effects of various forms of turnover (i.e., downsizing, dismissals, and quits) on organizational outcomes (Batt & Colvin, 2011; McElroy, Morrow, & Rude, 2001). Conversely, there is emerging evidence linking the accumulation of HCR to service outcomes. Specifically, flow or changes in generic human capital over time can influence the flow of unit-specific human capital, which then influences changes in service performance behaviors assessed by customers (Ployhart, Van Iddekinge, & Mackenzie, 2011).
Assessment and Directions
The strength of the service-profit chain model lies in its conceptual and operational simplicity; that is, the connections between organization-level variables and business-relevant outcomes are both empirically based and practically applicable. Recent extensions of this model have included service climate and employee attitudes as mediators of the links between organizational investments and customer evaluations or behaviors (Hong et al., 2013). We add to these mediators HCR, which represents the aggregate accessible KSAOs within the establishment (Ployhart et al., 2014). HCR is an important addition to the list of constructs mediating the relationship between HRM practices and customer outcomes because the accumulation or depletion of service-related KSAOs is likely to affect the aggregate customer service behaviors exhibited by the service workforce, over and above the influence of the social context and motivational mechanisms, including employee engagement. The full list of mediators therefore includes aggregate constructs corresponding to workforce ability (HCR), motivation (collective attitudes), and opportunity (climate)—a conceptualization that is consistent with those provided in strategic HRM theories and meta-analyses (Subramony, 2009). Although emotional labor variables have traditionally been conceptualized as individual-level phenomena, recent work (Niven, Totterdell, Holman, & Cameron, 2013) has also suggested that both emotion regulation and emotion displays could be legitimately studied as unit-level properties. We urge development of this work as it could more fully integrate the two major streams of service work in the management literature.
Recent management research highlights the importance of organizational strategy in influencing HRM systems (e.g., Becker & Huselid, 2006). For instance, a strategic focus on customers is likely to translate into HRM practices, such as selecting customer-oriented employees and training and rewarding for customer-focused behaviors, which in turn would influence climate, collective attitudes, and HCR, with continuing effects downstream. One such firmwide strategic focus, market orientation (Kohli & Jaworksi, 1990; Narver & Slater, 1990), involves (a) understanding customer needs and the gathering of marketing intelligence, (b) dissemination of this intelligence throughout the organization and the coordination between departments to meet these needs, and (c) customer orientation or responsiveness to market. Based upon evidence linking it with a variety of customer-focused organizational practices (Brady & Cronin, 2001) and business outcomes (Kirca et al., 2005), we suggest an incorporation of a firmwide strategic focus on customers as an upstream antecedent of HRM practices within the linkage model.
Another recent extension to the linkage model highlights the importance of exploring the moderators of key relationships between organizational and customer variables, including service features, unit features, and internal service (Bowen & Schneider, 2014). We add to this list of moderators external contextual variables. In service organizations, the effect of communities is particularly salient, as community influences (demographic composition, socioeconomic status, education levels, crime, and consumer preferences) affect the employee–customer relationship (Brief, Butz, & Deitch, 2005). As community racial makeup has an impact on both employee and customer racial composition, an obvious extension of this work is to examine the role that community racial composition may play in conjunction with employee racial composition to affect the service experience. For instance, recent studies have revealed that the match between the demographic diversity of the service establishment and the community’s demographic profile can overcome any negative effects of diversity on customer outcomes (King, Dawson, West, Gilrane, Peddie, & Bastin, 2011) or even enhance customer satisfaction and productivity (Avery, McKay, Tonidandel, Volpone, & Morris, 2012). We also recommend broadening the focus on demographic variables to include income and education levels, urban versus rural status, and regional differences in cultures and preferences—all of which may play main and moderating roles in determining how intraorganizational phenomena impact customers. Other contextual variables might include the industry within which services are delivered (e.g., for profit vs. nonprofit; knowledge based vs. transaction oriented), dynamism of the economic environment, and competition or the availability of alternative service providers. These variables are likely to influence the nature of service delivery (i.e., a higher emphasis on service as a differentiator in a competitive environment), customer evaluations (i.e., higher service standards when the overall quality of services within the industry is high), and the relationship quality of organization–customer relationships (e.g.., higher focus on long-term relationships in business-to-business (B2B) and a transactional focus within retail).
Multilevel Effects
The interactions between employees and customers can be viewed as being embedded within service establishments and as being pervious to higher-level or top-down influences (see top right quadrant of Figure 1). In an early exploration of how these influences combine with employee predispositions, Liao and Chuang (2004) found that employees’ service performance levels were influenced by both their traits (conscientiousness and extraversion) and unit-level characteristics (service climate and employee involvement practices). Similarly, Raub and Liao (2012) reported significant main and interactive effects of unit initiative climate and employees’ general self-efficacy levels on proactive customer service performance (i.e., self-stated, long-term, and persistent service behaviors). Other studies have explored the relationship between individual- and unit-level versions of the same construct and customer service outcomes. For instance, Liao, Toya, Lepak, and Hong (2009) proposed, but did not find, a positive relationship between branch manager ratings of high-performance work practices and employee perceptions of these practices. Grizzle, Zablah, Brown, Mowen, and Lee (2009) examined the main and interactive effects of individual-level customer orientation (a state-like individual difference variable) and unit-level customer orientation climate on service-related OCBs. Similarly, Aryee, Walumbwa, Seidu, and Otaye (2012) reported that high-performance work systems rated by bank branch managers were related to unit-level empowerment climate, which in turn significantly affected service performance. Finally, Vandenberghe, Bentein, Michon, Chebat, Tremblay, and Fils (2007) found that both individual- and unit-level perceived organizational support predicted customer-perceived employee helping behavior.
Assessment and Directions
As the above sample studies demonstrate, multilevel research allows the investigation of main and interactive effects of a variety of employee traits and states and unit-level practices and aggregated perceptions on important customer-related outcomes. The relative paucity of such studies highlights the difficulties of obtaining data at both levels of analysis—especially, customer data at the individual customer level. However, we view this research as essential for the development of services literature and suggest a few additional areas demanding the exploration of multilevel or top-down effects. First, we suggest exploration of the relationship between the organization’s customer-focused strategy and the customer-relevant KSAOs of employees. For instance, it has been suggested that a firmwide customer orientation is likely to succeed in influencing customers when the employee identifies with the organization and demonstrates this focus on satisfying the customer, that is, when employee customer orientation is viewed as an individual-level manifestation of the organization’s customer focus (Saxe & Weitz, 1982). At the individual level, customer orientation, which can be considered a “work value that captures the extent to which employees’ job perceptions, attitudes, and behaviors are guided by an enduring belief in the importance of customer satisfaction” (Zablah, Franke, Brown, & Bartholomew, 2012: 24), has been found to be related to a variety of employee attitudes, perceptions, and behaviors (see Zablah et al., 2012). We suggest an exploration of the top-down effects of the organization’s customer orientation on employees’ customer-oriented attitudes, values, and traits as well as the moderating effects of the latter on the relationship between this organization-level strategy and key service outcomes.
Second, we recommend research on the top-down effects of HRM practices and systems on employee-level KSAOs. There is evidence that the influence of HRM practices on employee attitudes and behaviors is mediated by employee attributions regarding these practices (Nishii, Lepak, & Schneider, 2008). Future multilevel studies might explore the ways in which the consistent versus inconsistent administration of HRM practices affects these perceptions and subsequent attitudes and behaviors (Bowen & Ostroff, 2004). Similarly, we recommend studies linking service-oriented HRM practices with employee-level customer-relevant knowledge and skills, and subsequent service performance, thereby uniting microlevel predictive validity literature with macrolevel strategic HRM studies (Ryan & Ployhart, 2014).
Microfoundations
While top-down effects of organizational and establishment-level variables on individual-level outcomes are beginning to gain ground in services management literature, there is a dearth of research regarding the role of individual constructs and actors in shaping higher-level constructs and effects (bottom left quadrant in Figure 1). Microfoundations are defined as “theoretical explanation, supported by empirical examination, of a phenomenon located at analytic level N at time t (Nt). . . . A baseline micro foundation for level Nt lies at level N – 1 and time t – 1” (Felin et al., 2012: 1353). A collective construct, such as service climate, would be viewed as emerging from the complex aggregation of individual employees’ (N – 1) service perceptions during a previous time period (t – 1). Detailed descriptions of construct emergence have appeared in management literature. For instance, organizational climate, that is, employees’ shared perceptions about a specific facet, has been viewed as emerging from “unambiguous messages communicated to employees about what is appropriate behavior” (Bowen & Ostroff, 2004: 207). Specifically, when organizational practices are distinctive or salient, consistent across time and situations, and agreed upon by employees, strong climates emerge within work units. Another unit-level construct, collective attitudes, is expected to emerge within establishments due to shared work environments (e.g., leaders, coworkers, task characteristics) and common employee dispositions (i.e., traits, values, interests) due to the ASA process (Whitman, Van Rooy, & Viswesvaran, 2010). The formation of climate and collective attitudes also relies upon the process of “double interact,” where employees develop a common set of shared perceptions and attitudes based on their interactions with each other (Morgeson & Hoffman, 1999). Finally, unit-level HCR emerges from individual KSAOs through the interaction between the task environment (i.e., the extent to which the tasks performed by employees requires interdependence and coordination) and enabling processes (e.g., climate or norms, behavioral processes, and emotional bonds between employees) within the work unit (Ployhart & Moliterno, 2011). In sum, collective constructs are built upon individual-level foundational constructs and require certain enabling conditions, such as common employee experiences and predispositions, social interactions, situational cues and signals, and task characteristics, for their formation.
Microfoundations can also help illuminate the role of individual actors in influencing collective phenomena (Barney & Felin, 2013). For instance, there is a large body of strategic management research examining the role of senior leaders’ managerial cognitions in designing and implementing organizational strategy (Narayanan, Zane, & Kemmerer, 2010). Similarly, research on middle managers highlights the work of individual actors who engage in a complex process of sense making and social influence to influence the adoption and implementation of organizational strategies and practices (Wooldridge, Schmid, & Floyd, 2008). Finally, organizational culture research emphasizes the role played by leaders in creating cultures that reflect their own values and beliefs (Schein, 1985). Within services literature, there is qualitative evidence that leaders play a key role in creating customer-oriented practices and a unified customer mind-set within establishments (Kennedy, Goolsby, & Arnould, 2003). Other research within the B2B context indicates that the relationship established between individual employees and customers can translate into important firm-level outcomes (Bendapudi & Leone, 2003). Because employees can be considered the face of the organization, it can be argued that the actions of individual employees can be influential in shaping the fortunes of various types of relationship-based businesses (e.g., consulting and law firms). More broadly, almost all unit-level service outcomes can be considered to emerge from the interactions between individual employees and their customers, and enhancements of these microprocesses are likely in time, and given the appropriate enabling conditions, to predict positive outcomes.
Assessment and Directions
While microfoundation research in services management is in its infancy, it is critically important for a sound theoretical grounding of service-related constructs. Moreover, we believe that a study of individual actors and their impact on firm-level outcomes has both theoretical and empirical value. Such research might include qualitative studies of how leaders adopt customer-oriented strategies, how these strategies are interpreted by HR managers and then translated into HRM systems, and the role of change agents in creating customer orientation throughout the unit. Quantitative studies could also be conducted to examine the effects of a wide range of microlevel actors or phenomena, such as organizational or team leader characteristics and predispositions (e.g., customer orientation), turnover of high-performing individual employees, and acquisition of new “high-potential” employees, on unit-level service outcomes.
Discussion and Conclusions
In the previous sections of this manuscript, we reviewed and organized the extant services management research and provided a comprehensive model tying together key constructs and causal links across levels of analyses. We complete our discussion with three broad sets of suggestions for further development of this domain of inquiry.
Suggestions for Continued Focus on Rigor in Research
Overall, services management research appears to be characterized by rigorous research methodology. For example, all studies included in this review obtained employee and customer service data from different sources, nearly all macrolevel articles published in the last 10 years provided empirical justification for the aggregation of individual-level constructs utilizing indices of interrater agreement and reliability, and time lags were included in a majority of the studies. We recommend a continued emphasis on rigor and suggest some areas for improvement. First among these is the measurement of customer outcomes. Within contemporary research, customers and supervisors constitute the most common sources of customer service ratings, followed by independent observers/raters and, rarely, peers. Not only are these data sources often relevant to the research questions addressed in the studies, but they also minimize the threat of common-source bias. However, there is some evidence that while supervisory ratings are better predictors of customer outcomes than employee self-ratings (Netemeyer & Maxham, 2007), supervisors do not always have direct or indirect access to employee behaviors across a variety of service transactions, and their ratings might not be unbiased reflections of actual employee service behaviors. Similarly, customer ratings of employee behaviors may also suffer from rater biases (e.g., Hekman et al., 2010). Thus, we urge researchers to incorporate objective indicators of customer behaviors, such as retention or its converse, switching behaviors (see Rust & Zahorik, 1993), or share of wallet (Cooil, Keiningham, Aksoy, & Hsu, 2007) in their studies instead of exclusively relying on ratings to measure customer service performance. Also, where possible, we recommend the assessment of actual employee behaviors using independent raters (e.g., Rafaeli, 1989) or unobtrusive measures of employee behavior (Grandey, Goldberg, & Pugh, 2011). Similarly, recorded customer service calls or videotaped employee–customer interactions can provide a wealth of data that can be coded by independent raters (see Van Jaarveld & Poster, 2013).
Second, we recommend an increase in the use of truly longitudinal designs, that is, repeated measures from the same units over time (see Ployhart & Vandenberg, 2010). A large number of studies in our review utilized a time lag between the collection of employee and customer service data, thereby increasing confidence in the causal direction of the described relationships. For instance, research focused on the transmission of affect between employees and customers tended to have very short (usually unspecified) time lags, while studies investigating the relationship between employee perceptions and attitudes and customer ratings usually contained time lags ranging from a few days (Doucet, 2004) to several months (Cable, Gino, & Staats, 2013) or years (Schneider et al., 1998). However, we did notice a paucity of longitudinal studies where multiple waves of employee and customer data were collected over time. These longitudinal studies can help in establishing the directionality of employee–customer relationships while examining how changes in employee variables translate into changes in customer outcomes over time, and vice versa (e.g., Walker, Smither, & Waldman, 2008), and additionally compare the short-term and long-term effects of organizational investments and disinvestments on employee and customer outcomes (Evanschitzky, Wangenheim, & Wünderlich, 2012).
Third, we recommend researchers to consider a triangulation strategy in their studies, that is, to use different methodologies to gain additional insights into the focal issue and to “capture a more complete, holistic, and contextual portrayal of the unit(s) under study” (Jick, 1979: 603). For instance, field studies and controlled lab experiments or simulations can together yield results that help establish causal relationships while simultaneously being generalizable to applied settings (e.g., Liao, 2007; Chi et al., 2011; Grandey et al., 2005). Another opportunity for synergy comes from the combined use of qualitative and quantitative techniques to obtain an in-depth understanding of the phenomenon while not compromising on generalizability (e.g., Di Mascio, 2010). For instance, studies to explore the role of leadership in creating customer-focused climates could be conducted utilizing a mix of qualitative (in-depth interviews with leaders to better understand their decisions related to creating customer-focused strategies and practices) and quantitative (effects of the communicated customer focus on employees’ service behaviors) methods. Similarly, ethnographic studies could be conducted to understand the personal relationships developed between service employees and frequent customers within service establishments, followed up with a quantitative study of the long-term transformative effects of these relationships on both parties.
Suggestions for Emphasizing the Context of Services
As opposed to the manufacturing context, where uniformity can be expected across product delivery (i.e., the features of the same goods do not change across customers), customers’ experiences of services can vary significantly across time (different experiences from the same provider at different times), actors (different service providers and customers), and types of service (e.g., fast food vs. luxury dining). These contextual differences can have significant effects on how organizations can manage services. Ryan and Ployhart (2003) listed seven dimensions along which services can vary, including intangibility, simultaneity, extent of coproduction, service behavior as role prescribed or as extrarole, standardization versus customization of the service (the latter possibly leading to more variability in service delivery and quality), extent of the contact between employees and customers, and the contrast between short-term transactions and long-term relationships. Our review indicated that very little attention has been paid to these distinctions despite the implications of these differences for a deeper understanding and management of customer service behavior. For instance, employee traits are likely to be weaker predictors of customer outcomes in situations that are more standardized, because clear expectations and monitoring of performance are likely to serve as “strong situations” suppressing employees’ individual differences and predispositions. Similarly, contexts where customer service behaviors are role prescribed as opposed to being discretionary are likely to be characterized by higher levels of structured service-focused HRM practices, such as service training and incentives for customer satisfaction. Clearly, there is a need to better understand these contextual effects.
A significant proportion of extant studies have focused on short-term service encounters between employees and customers. Service relationships characterized by multiple interactions and/or an expectation of future interactions have received limited attention (Gutek, Bhappu, Liao-Troth, & Cherry, 1999). Examples of the latter include consulting, accounting, financial advising, health care, and temporary help services. Furthermore, a variety of service organizations—retail stores and airlines among them—are shifting their focus away from short-term sales to long-term customer loyalty by initiating relationship marketing programs. The importance of a focus on relationships is particularly important, given the evidence suggesting that customers within B2B contexts develop loyalty to their salesperson, which translates into loyalty toward the firm (Ahearne et al., 2005). Given the importance of the employee–customer relationship within such contexts, it has been argued that employee turnover can result in a depletion of relational assets and lead to reduced levels of customer loyalty (e.g., Bendapudi & Leone, 2003). Further, a relational focus highlights the importance of utilizing a variety of long-term customer-related outcome measures, such as customer lifetime value (Kumar, Shah, & Venkatesan, 2006) and change in customer satisfaction (Bolton, Lemon, & Verhoef, 2004).
Suggestions for Exploring Synergies With Services Marketing
With a few notable exceptions (e.g., Bowen & Schneider, 2014), services marketing and management literatures appear to have developed in parallel with limited opportunities for cross-pollination, thereby leading to missed opportunities to comprehensively understand services phenomena. Recently, Ostrom and colleagues (2010) identified nine key priorities for service research based on surveys and interviews with academicians and practitioners. These priorities, albeit primarily marketing focused, present several opportunities for synergy between marketing and management researchers. Specifically, we would like to highlight three where management researchers can contribute to an interdisciplinary view of services and two priorities that require services researchers in management to broaden their current areas of focus.
First, improving well-being through transformative service emphasizes issues related to access, sustainability, and customer/societal welfare. Management researchers can contribute to this priority by providing insights related to the treatment of diverse customers within service establishments (Hekman et al., 2010; King et al., 2006), creating a compassionate or caring environment for employees and customers (George, 2014), and exploring the alignment between corporate social responsibility and profitability (Aguinis & Glavas, 2012). Second, creating and maintaining a service culture presents a natural opportunity for management research to contribute findings related to organizational policies and practices that create a firmwide focus on customers (e.g., Schneider et al., 1998; Schneider & Bowen, 1995). A third priority, enhancing the service experience through cocreation, emphasizes the collaborative roles of employees and customers in creating favorable customer outcomes. Here, the large body of research related to emotional contagion, emotional labor, multiple stakeholders, and service climate provides the theoretical and empirical insights related to the reciprocal relationship between employee and customer affect and behaviors.
Conversely, services marketing research highlights the importance of effectively branding and selling services—a neglected area within management research. Unlike products, the brand attributes of services are predominantly generated in customers’ minds through their experience with the organization (Keller, 1993). Thus employee behaviors that are brand conscious and focused on specific brand attributes (e.g., friendly service, clean, professional) are likely to contribute significantly to positive brand images (de Chernatony & Riley, 1999). Further research is clearly needed on the HRM practices, leadership behaviors, and climates that can foster such a brand focus within service organizations. Finally, as noted previously, services marketing researchers have utilized a variety of metrics for measuring and optimizing the value of service, including indicators of customer service speed, quality, and efficiency on the one hand and long-term customer loyalty and lifetime value on the other. These metrics provide the opportunity for services management researchers to expand the criterion space in our studies and explore both the fundamental components of customer experience and the long-term and dynamic nature of customer behaviors.
Conclusion
In a pioneering empirical inquiry into services management phenomena, Schneider (1973: 255) noted that “behavioral scientists do not know whether the impact of formal organizations on organizational members extends beyond the organization.” More than three decades later, the definition of services has evolved from an emphasis on its intangible and experiential qualities to a well-accepted perspective that services are the applications of competences for the benefit of another party (Vargo & Lusch, 2004). This new perspective provides an answer to Schneider’s (1973) statement above: Formal service organizations, by definition, through their members, policies, culture, and other means, have an impact beyond the organization. Our examination of published studies revealed a small but robust body of literature providing significant insights into the relationship between organizations, employees, and customers. This paper contributes to this literature by proposing a framework to integrate various research streams, levels of analyses, and theoretical constructs in addition to providing directions for future research cutting across levels of analyses and disciplinary boundaries.
Footnotes
References
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
