A Meta-Analysis of Relationships Linking Employee Satisfaction To Customer Responses
A Meta-Analysis of Relationships Linking Employee Satisfaction To Customer Responses
Abstract
   The authors report a meta-analysis of relationships linking employee job satisfaction to customer satisfaction and perceived service quality in
studies that correlate employee data with customer data. Overall, both relationships are positive and statistically and substantively significant.
Moderator analyses show that service industry characteristics (relationship versus encounter, personal versus non-personal) and methodological
characteristics (aggregated versus individual level of analysis, concurrent versus predictive survey) moderate these relationships. Estimation of
a path analytic model using the aggregated data shows that customer-perceived service quality completely mediates the relationship between
employee job satisfaction and customer satisfaction. Implications for research and practice are discussed.
 2008 New York University. Published by Elsevier Inc. All rights reserved.
Keywords: Employee satisfaction; Customer satisfaction; Service quality; Service-profit chain; Meta-analysis
    In retail and other service environments, the interaction                     Such dyadic data, while difficult and costly to obtain, is prefer-
between customers and front-line employees is likely to                           able to estimating relationships on non-dyadic data (e.g., by
importantly affect customer perceptions of the shopping and                       asking employees to rate customer satisfaction or customers
consumption experience. High quality interactions with service                    to rate employee satisfaction). Thus, we limit our review to
providers often result in customer satisfaction despite problems                  studies that have used dyadic data to estimate linkages between
with other aspects of service delivery, whereas dissatisfying                     employee job satisfaction and customer responses.2
experiences with service providers have the potential to ruin oth-                   The accumulated research includes findings of a positive
erwise pleasant service encounters. Service providers often are                   (e.g., Payne and Webber 2006; Homburg and Stock 2004),
the organization in customers perception, and their attitudes,                   negative (e.g., Silvestro and Cross 2000), and non-significant
expressed verbally and non-verbally during customer interac-                      relationship (e.g., Adcock 1999; Brown and Mitchell 1993),
tions, may leave a lasting impression that affects satisfaction,                  leaving in doubt the issues of its strength and substan-
repeat buying, and financial performance (Magi 2003; Schneider                    tive significance. Moreover, little is known about contextual
and Bowen 1995). The financial significance of these interac-                     and methodological influences that moderate the relationship.
tions may not be appreciated by front-line employees, or even                     Understanding the strength and context dependency of this rela-
by management.                                                                    tionship may provide insights into the degree to which employee
    Commensurate with the importance of these issues, a robust                    satisfaction influences customer experiences and how effect
literature has developed regarding interactions between front-                    sizes vary across service contexts and research designs. We
line employees and customers. In particular, researchers have                     assess the strength and context dependency of relationships
focused considerable effort on investigating the relationship
between employee job satisfaction and customer satisfaction,
                                                                                    2 Other meta-analyses (e.g., Brown et al., 2002; Carrillat et al., 2007) address
using data linking employee responses with customer responses.
                                                                                  the relationship between service quality and customer satisfaction across studies
                                                                                  that use only customer data. Because our focus is on linkages between employee
                                                                                  job satisfaction and these outcomes, we limit our review to studies that use dyadic
   Corresponding author. Tel.: +1 713 743 4560.                                  data. The weighted average effect size between service quality and customer sat-
    E-mail addresses: steve.brown@mail.uh.edu (S.P. Brown), slam5@uh.edu          isfaction that we obtain based on dyadic studies is very similar to those obtained
(S.K. Lam).                                                                       by Brown et al. and Carrillat, Jaramillo, and Mulki based on their reviews of
  1 Tel.: +1 713 743 4577.                                                        customer data only studies.
0022-4359/$  see front matter  2008 New York University. Published by Elsevier Inc. All rights reserved.
doi:10.1016/j.jretai.2008.06.001
244                                            S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255
linking employee job satisfaction to customer-perceived service                   assess whether coded study characteristics (e.g., study contexts,
quality and satisfaction in a meta-analysis of studies that corre-                methodological choices made by researchers) can account for
late employee satisfaction data with customer response data.                      between-study variance in effect sizes, and (3) to test whether
   Such insights may provide guidance for managers contem-                        customer-perceived service quality mediates the relationship
plating actions that affect employee and customer satisfaction.                   between employee satisfaction and customer satisfaction based
For example, Walmarts recent decision to employ computer-                        on the aggregated data.
ized scheduling to staff its stores dynamically according to the
number of shoppers in the store is predicated on the assump-                         Previous research on the relationships linking ES to CS
tion that customer satisfaction will increase as a result of having                                         and SQ
the optimal number of employees on hand, while, at the same
time, the move may decrease employee satisfaction by mak-                            Each of the three focal constructs has a long history of
ing work schedules and pay less predictable (Maher 2007). A                       research. Employee job satisfaction (hereafter ES) has been
strong employee satisfactioncustomer satisfaction relationship                   defined as a pleasurable or positive emotional state resulting
would suggest that such moves may not generate the desired                        from the appraisal of ones job or job experiences (Locke 1976,
results. Having a precise understanding of the strength of the                    p. 1300). It has been operationalized as (1) a global reaction to
employee satisfactioncustomer satisfaction relationship will                     overall job circumstances, and (2) perceptions of and affective
furnish guidance for managers facing such trade-offs.                             reactions to different job factors (e.g., work, supervisor, pay, co-
   The analysis will also indicate how employeecustomer                          workers, etc.; Brown and Peterson 1993). Customer-perceived
linkages differ across industry contexts (e.g., personal versus                   service quality (hereafter SQ) has been defined conceptually as
non-personal services, encounter versus relationship business,                    customers perceptions of the difference between prior expecta-
and B2B versus B2C contexts), highlighting conditions in which                    tions and delivered service on different aspects of the service
customer responses are especially sensitive to employee satis-                    experience (e.g., Gronroos 1982; Parasuraman et al. 1988).
faction. Such findings should provide guidance for managers in                    Customer satisfaction (hereafter CS) represents a fulfillment
formulating human resource policy and managing the front-line                     response that involves an assessment that a product or service
workforce in a manner commensurate with customer rela-                            provides a pleasurable level of consumption-related fulfill-
tionship objectives in different business settings (Kumar and                     ment (Oliver 1997, p. 13).
Shah 2004). The meta-analysis is also likely to provide useful                       Both SQ and CS have been defined as perceived perfor-
insights for researchers concerning the effects of methodolog-                    mance relative to expectations, and early in the development
ical decisions by indicating research design factors (e.g., types                 of SQ research, debate ensued over whether they represent dis-
of measures, levels of analysis, sampling frames, and timing of                   tinct constructs (e.g., Bitner and Hubbert 1994; Dabholkar 1993;
data collection) that are systematically related to effect sizes.                 Iacobucci et al. 1994). A dominant view has emerged that they
   Our study addresses the following objectives: (1) to ascer-                    represent distinct but closely related constructs, with SQ rep-
tain whether extant studies converge on a population parameter,                   resenting a cognitive representation of service delivered and
(2) if they do not converge on a population parameter, to                         CS representing the resulting affective response (Brady et al.
Table 1
Comparing and contrasting three conceptual models
Framework              Level of analysis             Temporal horizon     Causal mechanism              Conceptual scope           Representative studies
Emotional contagion    Individual                    Transaction          Transfer through mimicry      Person-to-person           Homburg and Stock
                                                                          of emotional expression       interactions               (2004) and Wangenheim
                                                                          and subjective experience                                et al. (2007)
Serviceprofit chain   Empirical research            Relationship         Employee satisfaction         Quality and value          Jones et al. (2003),
                       calibrated at individual                           increases productivity and    delivered in one-to-one    Silvestro and Cross
                       level, but framework is                            value delivered, which        relationship               (2000), Brown and Chin
                       conceptually applicable to                         enhances customer                                        (2004), Hartline and
                       business-unit level as well                        perceived service quality                                Ferrell (1996), Bernhardt
                                                                          and customer satisfaction                                et al. (2000), Koys (2001),
                                                                                                                                   Netemeyer et al. (2005),
                                                                                                                                   Payne and Webber
                                                                                                                                   (2006), Schlesinger and
                                                                                                                                   Zornitsky (1991), Tornow
                                                                                                                                   and Wiley (1991), and
                                                                                                                                   Keiningham et al. (2006)
Service climate        Empirical research            Relationship         Organizational support        Relationship quality and   Pedrick (1998), Schneider
                       calibrated at SBU level,                           and facilitation of service   satisfaction in            et al. (1980), Yoon and
                       but framework is                                   effort fosters quality        organizational context     Suh (2003), Brown and
                       conceptually applicable to                         service and customer                                     Mitchell (1993), Liao and
                       individual level as well                           satisfaction                                             Chuang (2004), and Yoon
                                                                                                                                   et al. (2001)
                                          S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255                                   245
2005; Oliver 1997). As such, the linkages of ES to both SQ                  ceptions of SQ and, ultimately, CS. Morris and Feldman (1996)
and CS are likely to be strong and based on similar underlying              build on the work of Hochschild (1983) to suggest that ES facil-
processes.                                                                  itates emotional labor, which contributes to perceptions of SQ
   The view that ES positively affects SQ and CS has been                   and CS. Similarly, Ulrich (1992) and Ulrich et al. (1991) main-
grounded primarily on three conceptual models: emotional con-               tain that satisfied employees develop commitment to a service
tagion (Hatfield et al. 1993), the serviceprofit chain (Heskett            ethic, which leads to an understanding of customer expecta-
et al. 1997), and service climate (Schneider 1990). Table 1                 tions and efforts and ability to satisfy them. These perspectives
compares and contrasts these conceptual models in terms of                  suggest that SQ mediates the ESCS relationship, in a man-
the levels of analysis they address, their temporal horizons,               ner consistent with the serviceprofit chain and service climate
causal mechanisms, and conceptual scope. It is important to                 perspectives.
note that their explanations of EScustomer response relation-
ships are not mutually exclusive. In fact, they can perhaps best be                 Moderators of the ESCS, ESSQ relationships
viewed as nested explanations, ranging from a micro-focus on
affect transfer in the context of one-time person-to-person inter-             Meta-analysis makes possible a systematic examination of
actions (emotional contagion) to delivery of superior service               the ESSQ and ESCS relationships across a diverse set of stud-
and value by business units in long-term customer relationships             ies and research contexts. In this section, we present rationales
(serviceprofit chain, service climate).                                    for possible moderators of these relationships. We investigate
   The emotional contagion framework, which has frequently                  four groups of moderators: service characteristics, research con-
been invoked to explain correspondence between employee                     texts, study methods, and publication status.
affect and customer response (e.g., Pugh 2001; Tsai and Huang
2001, 2002), focuses on simple affect transfer in the context of
employeecustomer interactions in limited service encounters.               Service characteristics
It holds that affect transfer alone (i.e., exclusive of quality or
value considerations) is sufficient to account for EScustomer                 The nature of interactions between employees and customers
response relationships.                                                     differs across service contexts. Lovelock (1983) and Gutek et al.
   In contrast, the serviceprofit chain framework holds that               (1999) offer particularly useful classifications of services, which
satisfied employees are more productive and provide better SQ               we use to develop hypotheses and a coding scheme for moderator
and value than less satisfied employees, leading to higher CS.              analyses.
While this view is not incompatible with emotional contagion, its
scope is greater, as it suggests that cumulative perceptions of ser-        Personal versus non-personal services
vice quality and value are foundations of EScustomer response                 According to Lovelocks (1983) classification, whether a ser-
relationships. Because the effects posited by the serviceprofit            vice is performed on a person (e.g., medical services, fitness)
chain are not limited to affect transfer within specific ser-               or on possessions (e.g., television repair) constitutes a major
vice encounters, this model is also better suited to relationship           distinction. Personal services involve up close interactions
marketing contexts than emotional contagion is. Although the                between service providers and customers. Such services are
serviceprofit chain is potentially relevant to analysis of busi-           not amenable to a service factory approach, in which cus-
ness unit-level processes, empirical research grounded on this              tomer interactions are limited to transactional elements and
model has typically been conducted at the individual level of               service production takes place outside of the presence of the
analysis (e.g., Schlesinger and Zornitsky 1991; Ulrich et al.               customer (Chase and Garvin 1989). The service provider and
1991).                                                                      customer engage in close interpersonal contact throughout the
   Finally, the service climate framework (e.g., Schneider et al.           encounter, which provides opportunity for affective cues to be
1992, 1998) posits that employee perceptions of management                  communicated. In contrast, in services performed on possessions
support and facilitation of service performance leads to favor-             personal contact between service providers and customers is
able customer reactions. This view is similar to the serviceprofit         more limited in scope and duration. Under these circumstances,
chain, but it is more explicit regarding how specific employee              service providers may be able to conceal true emotions that are
perceptions of managerial policies and the organizational envi-             counter-normative for the situation through emotional labor
ronment contribute to favorable customer responses. Like the                (Hochschild 1983).
serviceprofit chain model, the effects of service climate can                 Similarly, in personal services, customers can closely observe
potentially be assessed at either the individual or business-unit           the processes and outcomes of service delivery, whereas in ser-
levels of analysis, although empirical research has most often              vices performed on possessions delivery processes often take
been focused on the business-unit level (e.g., Schneider et al.             place in a service factory that is invisible to the customer, while
1980, 1998).                                                                customer interactions occur in a front office or lobby, separate
   Other authors have elaborated behavioral processes underly-              from the space where the core service is performed. In many
ing the chain of effects linking ES to SQ and CS. For example,              cases, it may also be more difficult for customers to evaluate the
Wilson and Frimpong (2004) argue, based on the work of Isen                 outcomes of non-personal as opposed to personal services (e.g.,
(Isen and Levin 1972; Isen et al. 1978), that employees who are             of preventive car maintenance versus a haircut). This reasoning
in a good mood engage in helping behaviors that result in per-              leads to the following hypotheses:
246                                      S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255
H1. The (a) ESCS and (b) ESSQ relationships are stronger                 to-consumer (e.g., Keiningham et al. 2006; Koys 2001) contexts.
in personal services than in services performed on possessions.            Because retailers must be concerned with distribution channel
                                                                           as well as customer service issues, both contexts have direct
Encounter versus relationship businesses                                   implications for retailing, and the relative strength of these rela-
    Gutek et al. (1999) categorize service business models into            tionships at multiple points in the value chain should be of
relationship and encounter businesses. The defining charac-                interest (e.g., Ping 2003).
teristic of relationship businesses is that customers seek out                 Although it has been argued that organizational buying tends
the same provider for each service encounter (e.g., hairstylist,           to be more objective and impersonal than consumer buying (e.g.,
doctor, or dentist). In contrast, in encounter businesses cus-             Robinson et al. 1967), recent research also indicates that personal
tomers interact with a different service provider each time (e.g.,         relational dynamics play an important role in B2B supply rela-
airlines, fast food service). Relationship businesses give employ-         tionships (e.g., Heide and Wathne, 2006; Wathne et al. 2001).
ees time and opportunity to become personally acquainted                   Recent research also indicates that most distribution channel
with customers, understand their needs and expectations, and               relationships are characterized by long-term relational focus
develop personal as well as commercial bonds. In contrast,                 (e.g., Palmatier et al. 2006). This research suggests that link-
transactions in encounter businesses tend to be brief and                  ages between employees and customers in B2B settings may
impersonal. In fact, Gutek and Welsh (2000) observe that                   not be any less personal or subject to processes that lead ES to
customers often react negatively to attempts to turn service               be related to SQ and CS than they would be in B2C contexts.
encounters into pseudo-relationships in encounter businesses             Positive linkages of ES with SQ and CS have been found in both
by being more personal with customers than the situation                   contexts (e.g., Brown and Chin 2004; Yoon et al. 2001). Because
warrants.                                                                  affect transfer mechanisms and service quality outcomes are
    Because relationship businesses involve sustained personal             important in both B2B and B2C contexts, and neither is system-
contact over time, it is likely that SQ and CS will be more closely        atically more or less personal than the other, we assess ESSQ
related to ES in them than in encounter businesses, in which con-          and ESCS relationships in B2B and B2C contexts without
tact is brief and superficial. Sustained contact provides greater          directional hypotheses.
opportunity for diffusion of affect. It is also more difficult for
service providers to disguise counter-normative affective states           Method factors
through emotional labor in relationship (compared to encounter)
businesses, which is likely to lead to greater correspondence                 Studying employeecustomer relationships involves mak-
between their experienced affective states and those of cus-               ing methodological decisions and trade-offs that can affect
tomers. Customers are also more likely to empathize with the               results and conclusions. We investigate the moderating effects
feelings of service providers in relationship businesses than in           of three method factors, including: levels of analysis (individ-
encounter businesses, also leading to greater correspondence               ual employee versus organizational unit), timing sequence of
between their affective states.                                            surveys (employees first or concurrent) and measurement scales
    Social exchange theory would suggest that long-term rela-              (global ES versus ES by job facet).
tionships with valued customers are likely to motivate satisfied
employees to perform well in serving them (Blau 1964). Rela-               Levels of analysis
tionship customers are likely to perceive service performance                  As previously noted, different streams of research investi-
by satisfied service providers as being responsive and empa-               gate relationships linking ES to CS and SQ at different levels
thetic, in addition to being technically competent. In contrast, in        of analysis. For example, research testing specific linkages in
encounter businesses, at best, customers are likely to perceive            the serviceprofit chain (e.g., Schlesinger and Zornitsky 1991)
service performance as technically competent and cheerful. As a            typically views the relationships from the individual level of
result, service providers have greater opportunity to distinguish          analysis, whereas research focusing on service climate issues
themselves through quality service in relationship businesses;             (e.g., Schneider et al. 1980, 1998) typically assesses them at the
thus, customer perceptions are likely to have a higher ceiling             organizational level (e.g., at the store level).
and greater variation than in encounter businesses. Richer and                 Decisions regarding levels of analysis can influence effect
more variable perceptions of service quality are likely to result          sizes. For example, several studies (e.g., Ostroff and Harrison
in a stronger ESSQ relationship in relationship (as compared              1992, 1999; Gully et al. 1995; Judge et al. 2001) have indi-
to encounter) businesses.                                                  cated a stronger job satisfactionwork performance relationship
                                                                           at the organizational level than at the individual level. Aggre-
H2. The (a) ESCS and (b) ESSQ relationships are stronger                 gating data to the unit or organizational level allows researchers
in relationship businesses than in encounter businesses.                   to avoid individual bias in linking employee ratings to orga-
                                                                           nizational outcomes (Schneider et al. 2005). Also, employees
Business-to-business (B2B) versus business-to-consumer                     working together in a collaborative and supportive environment
(B2C)                                                                      may create what Glick and Roberts (1984) and Ostroff and
                                                                           Harrison (1993) refer to as interdependence effects, meaning
   Research linking ES to CS and SQ has been conducted in both             that satisfied employees realize synergies by feeding off of one
business-to-business (e.g., Brown and Chin 2004) and business-             anothers positive affect in customer-focused efforts. Sociolo-
                                               S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255                                                247
gists (e.g., Hannan 1971) have observed that aggregation of data                 study designs.4 On this basis, we venture the tentative hypothesis
to larger units of analysis tends to produce stronger effect sizes.              that:
On this basis, we hypothesize that:
                                                                                 H5. The (a) ESCS and (b) ESSQ relationships are stronger in
H3. The (a) ESCS and (b) ESSQ relationships are stronger                       studies using predictive designs than in studies using concurrent
in studies conducted at the organizational level than in studies                 designs.
conducted at the individual level.
                                                                                      latent constructs rather than the relationship between imperfect measures of con-
 5  The list of included studies and their coded study characteristics can be         structs. Therefore, following standard practice, we correct the study effects for
obtained from the first author.                                                       measurement unreliability.
  6 Although Spector and Levine (1987) indicate that artifact correction can            7 We checked the studies producing these outliers for characteristics that might
result in some bias in estimates of between-study variance, correction for attenua-   account for their seemingly anomalous observations in the overall distribu-
tion for measurement unreliability is standard meta-analytic practice. Correction     tion of effects, but were unable to identify any that might constitute plausible
for measurement unreliability results in estimates of the relationship between        explanations.
                                                                                               S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255                                                                                                                          249
Moderator analyses
                                                       Failsafe, N
                                                                                                                                                                                                                          Service characteristics
                                                                            971
                                                                          1,188
                                                                                            361
                                                                                                                                                                                                                              Results of the service characteristics moderator analyses are
                                                                                                                                                                                                                          presented in Table 3. We report the results of the hypothesis tests
                                                     Q-Test (d.f.)***
                                                                                                                                                                                                                          in the following sections.
                                                                          180.5 (21)
                                                                          136.8 (17)
                                                                                            25.2 (8)
                                                                                                                                                                                                                          Personal versus non-personal. As predicted in H1a and H1b,
                                                                                                                                                                                                                          both the ESCS and ESSQ relationships were stronger in per-
                                                                                                                                                                                                                          sonal services than in services on possessions. Therefore, these
                                                                          0.21 < r < 0.26
                                                                          0.22 < r < 0.27
interval
0.09
                                                       (observed)
                                                       95 percent
interval
                                                                                                                                                                                                                          significant.
                                                       Weighted
                                                                          0.23
                                                                          0.25
0.29
                                                                                                                                                                                                                          Method factors
                                                                                                              Note: ES: employee job satisfaction; CS: customer satisfaction; SQ: service quality. Fixed effects model.
0.23
                                                                          0.16
                                                                          0.26
0.30
                                                                                                                                                                                                                          using data from single firms and those using data from multiple
                                                       observed, r
0.25
                                                                          5,606
                                                                          5,391
2,771
ESCS (all)
removed)
                                                                                                                                                                                                                          and H7b, published studies report stronger effect sizes for both
Table 2
ESSQ
Table 3
Moderator analyses service characteristics
Relationship and moderator      Number of             Cumulative N   Observed, r    Corrected, r a   95 percent              95 percent              QB (d.f. = 1)
                                study effects,                                                         confidence interval     confidence interval
                                k                                                                      (observed)              (corrected)
Note: ES: employee job satisfaction; CS: customer satisfaction; SQ: service quality. Fixed effects model. *Significant at p < 0.10, ** at p < 0.05, *** at p < 0.01.
Significance of Q-statistics indicates rejection of the homogeneity hypothesis. QB = between-group homogeneity statistic.
  a Corrected for measurement error.
Does SQ mediate the ESCS relationship?                                                The meta-analysis indicates that the central links in the
    We addressed the question of whether SQ mediates the                            serviceprofit chain, consisting of the relationships of ES with
ESCS relationship by estimating a path analytic model using                        SQ and CS, are supported by significant positive effects. How-
AMOS with the correlation matrix developed from the meta-                           ever, the analysis also shows significant variability in the strength
analyses of the ESSQ, ESCS, and SQCS relationships as                            of these relationships over service contexts and method factors.
input data. Estimating path analytic models using meta-analytic                     We found a portion of this variance predictable from coded
data has become a common way of testing theoretical propo-                          study characteristics, although a substantial portion remains
sitions using aggregated data (e.g., Brown and Peterson, 1993;                      unexplained.
Geyskens et al., 1999; Viswesvaran and Ones 1995). The struc-
tural model we estimated is represented in Fig. 1. It posits ES                       8 Despite the limitation of not being able to rigorously assess the fit of the
as antecedent to both SQ and CS, and SQ as antecedent to CS.                        structural model to the data, we proceed with the analysis in the interest of
We used the observed correlations in the analysis and fixed the                     addressing the conceptual issue of the mediating effect of SQ on the ESCS
paths linking observed measures to the latent constructs to the                     relationship in the best manner possible given the data limitations.
                                                 S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255                                                  251
Table 4
Moderator analyses method characteristics
Relationship and moderator         Number of          Cumulative N     Observed r    Corrected r a   95 percent              95 percent               QB (d.f.)
                                   study effects, k                                                    confidence interval     confidence interval
                                                                                                       (observed)              (corrected)
Level of analysis
  ESCS                                                                                                                                                 18.9 (1)***
    Organizational                  8                 1,359            0.28           0.34             0.23 < r < 0.33         0.29 < r < 0.39
    Individual                      9                 4,004            0.18           0.21             0.15 < r < 0.21         0.18 < r < 0.24
  ESSQ                                                                                                                                                  5.1 (1)**
    Organizational                  2                    64            0.45           0.53             0.22 < r < 0.63         0.32 < r < 0.69
    Individual                      7                 2,707            0.23           0.28             0.19 < r < 0.26         0.25 < r < 0.32
Sampling frames
  ESCS                                                                                                                                                  1.9 (1)
    Within a firm                  12                 4,854            0.21           0.25             0.18 < r < 0.23         0.22 < r < 0.28
    Multiple firms                  5                   509            0.17           0.19             0.08 < r < 0.25         0.10 < r < 0.27
  ESSQ                                                                                                                                                  0.4 (1)
    Within a firm                   6                 2,276            0.24           0.30             0.20 < r < 0.28         0.26 < r < 0.33
    Multiple firms                  3                   495            0.21           0.27             0.12 < r < 0.29         0.18 < r < 0.35
ES measurement scales
  ESCS                                                                                                                                                  6.0 (1)***
    Overall                        10                 4,587            0.22           0.26             0.19 < r < 0.24         0.23 < r < 0.29
    Facet composite                 7                   776            0.14           0.17             0.07 < r < 0.21         0.10 < r < 0.24
  ESSQ                                                                                                                                                  2.7 (1)*
    Overall                         2                 1,682            0.25           0.30             0.21 < r < 0.30         0.27 < r < 0.36
    Facet composite                 7                 1,089            0.20           0.24             0.15 < r < 0.26         0.20 < r < 0.31
Note: ES: employee job satisfaction; CS: customer satisfaction; SQ: service quality. Fixed effects model. *Significant at p < 0.10, ** at p < 0.05, *** at p < 0.01.
Significance of Q-statistics indicates rejection of the homogeneity hypothesis. QB = between-group homogeneity statistic.
  a Corrected for measurement error.
   Although the focal relationships are positive and statistically                   about substantial increases in customer retention, loyalty, and
significant, the effect sizes are relatively modest. Overall, ES                     equity, as well as in profitability and competitive advantage
accounts for between four and six percent of total variance in CS                    (Reicheld, 1996; Zeithaml 2000). Calibration of these effect
and between six and ten percent in SQ (i.e., based on confidence                     sizes across the accumulated research increases scholars
intervals around the attenuation-corrected correlations).                            and managers ability to assess the leverage that ES has on
   In interpreting these effects, however, we believe it is wise                     downstream links in the serviceprofit chain (e.g., Rucci et al.
for both researchers and managers to regard them as being                            1998).
substantively as well as statistically significant (Rosenthal et al.                    The meta-analysis has also indicated several contextual fac-
2000). In a sense, it is remarkable that ES explains that much                       tors that moderate the ESCS and ESSQ relationships. For
variance in aggregated ratings of CS and SQ, which are also                          example, both relationships are substantially stronger (a) in ser-
likely to be affected also by a number of other factors (e.g.,                       vices performed on people (as compared to services performed
Oliver 1997; Szymanski and Henard 2001). A modest lift in                            on peoples possessions), (b) in studies that are conducted at the
CS and SQ based on dealings with employees is likely to bring                        organizational (as compared to the individual) level of analysis,
252                                       S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255
and (c) when ES is measured globally (as compared to when it                    Path analysis using the aggregated data indicated that SQ
is measured by facet).                                                      completely mediates the relationship between ES and CS. This
    Stronger relationships in personal services (compared to ser-           finding is consistent with the serviceprofit chain; that is, ES
vices performed on possessions) reflect greater opportunity for             leads directly to providing better service, which in turn enhances
affect transfer and observation of service delivery processes               CS. Although this finding does not rule out the emotional con-
and outcomes in contexts where service providers have close                 tagion explanation as a factor in the ESCS relationship, it does
contact with customers throughout the service delivery pro-                 strongly suggest that there is more to the story than simple affect
cess. Although meaningful effects of ES on customer reactions               transferand that enhancement of SQ and perceptions of value
also occur in services performed on possessions, they are much              contribute to CS beyond sharing of simple affect. It should also
greater in personal services. These results strongly suggest the            be noted that SQ and CS are very strongly related, empirically
need for special care in fostering job satisfaction among service           as well as conceptually (e.g., Brown et al., 2002; Iacobucci et
providers who perform such personal services, as their job-                 al. 1995).
related affect leaves a strong imprint on customer perceptions
and satisfaction.                                                           Managerial implications
    The finding of stronger relationships in studies conducted at
the organizational (compared to the individual) level of analysis               The results suggest that retail managers would be ill advised
appears to reflect greater measurement reliability and variability          to take actions that are likely to detract from the job satisfaction
of responses when many responses are aggregated to a super-                 of customer contact personnel. Doing so appears likely to detract
ordinate level of analysis (Hannan 1971; Ostroff and Harrison               from customer satisfaction and perceptions of service quality.
1993). It is also consistent with other meta-analyses (e.g., Gully          For example, Walmarts initiative to staff its stores dynamically
et al. 1995; Judge et al. 2001) that indicate stronger correlations         according to the amount of customer traffic, leading to employee
at the organizational than at the individual level of analysis. The         uncertainty regarding their work schedules and pay, may have
finding suggests that the positive effects of overall workforce             the unintended effects of decreasing employee job satisfaction
morale on customer responses exceed those of individual-level               and, to a lesser extent, customer responses. Our study calibrates
job satisfaction, and that analysis at the individual level tends           the magnitude of the employeecustomer linkages so that man-
to underestimate the cumulative effect of employee job satisfac-            agers can more easily estimate the effects that are likely to occur
tion. This is consistent with the notion of interdependence effects         in their businesses.
(Glick and Roberts 1984; Ostroff and Harrison 1993), whereby                    In considering which stakeholders interests to favor in situa-
employees feed off of one anothers positive affect, creating syn-          tions in which trade-offs are unavoidable, managers should take
ergy effects. This suggests that a strong climate for service (e.g.,        careful note of the effects of employee satisfaction on customer
Schneider et al. 1998) is a powerful tool for creating favorable            responses. For example, managers may have a tendency to
customer reactions.                                                         conclude that customers are the focus of all marketing activities
    The finding that employeecustomer linkages are stronger                and, as such, their interests should be the primary focus of
when job satisfaction is measured globally rather than by facet             organizational activities. While from a marketing perspective
is consistent with conceptualizations of these relationships as             such customer orientation is desirable, it should also be noted
being grounded on simple affect transfer mechanisms and                     (as has been done, for example, by former Southwest Airlines
research showing that positive mood is associated with help-                CEO Herb Kelleher) that customers are not always right  in
ing behavior (Isen et al. 1978). Job satisfaction represents an             fact, they are often wrong  and when they are, their actions
overall attitude, consisting of both cognitive appraisals of spe-           can be demoralizing to front-line service providers (Menon and
cific job elements and feelings about ones overall situation at            Dube 2004; Schneider and Bowen 1995). When push comes to
work. Our findings suggest that simple job-related affect (as               shove on the front line, managers should realize that satisfied,
captured in simple global measures) is more strongly related to             motivated, and committed front-line employees constitute a
customer-perceived service quality and satisfaction than cogni-             powerful engine for delivery of service quality and customer
tive appraisals of job facets are.                                          satisfaction, and that such a workforce can be the firms most
    Unexpectedly, we found the ESSQ linkage stronger in                    valuable asset in developing a loyal customer base (Pfeffer
encounter than in relationship businesses. This finding ran                 1998). Abusive customers are not likely worth the strain they
counter to our reasoning that relationship businesses offer                 place on front-line customers and service delivery systems.
greater opportunity for affect transfer and development of                      Many kinds of managerial actions can potentially enhance
empathy and understanding than encounter businesses do. In                  employee satisfaction and workforce morale (e.g., Huselid 1995;
retrospect, it appears possible that, consistent with the reason-           Pfeffer 1998). Managerial policies and actions that clarify role
ing presented above, this relationship is based on the simplest of          expectations and provide material and psychological support
affect transfer mechanisms and that ES has greatest effect on SQ            for employees are of primary importance. Fostering an orga-
when there is little or no prior acquaintance and no other con-             nizational environment in which service quality and customer
siderations beside the affective tone of a simple exchange taking           satisfaction are primary goals, and in which employee efforts to
place between the service provider and customer. In other words,            provide solutions for customers are supported, recognized, and
ES is likely to matter most when few, if any, other forces are at           rewarded is important (Schneider and Bowen 1995). Empow-
play.                                                                       ering employees to do what is necessary to satisfy customers
                                          S.P. Brown, S.K. Lam / Journal of Retailing 84 (3, 2008) 243255                                               253
without fear of sanction enhances both employee satisfaction                within organizational units, which, as Ostroff and Harrison
and customer responses. Avoiding the temptation to sacrifice                (1993) has shown analytically, leads to stronger correlations
employee interests (e.g., laying off loyal employees) in the inter-         between the same constructs at the organizational than at the
est of meeting short-term financial objectives is a difficult but           individual level. Studies at the different levels of analysis essen-
very important mandate for managers, as employee uncertainty                tially address different objectivesthose at the organizational
about employment status leads to paranoia and distraction from              level focusing on organizational drivers (e.g., service climate;
job focus (Huselid 1995; Pfeffer 1998).                                     Schneider et al. 1998), and those at the individual level analyzing
   The finding that relationships did not differ between B2B and            the interpersonal dynamics underlying the relationships (e.g.,
B2C contexts suggests that employee satisfaction and customer               Pugh 2001). Both types have important contributions to make,
linkages are important throughout the value chain, affecting sup-           but when the objective is assessing the organizational impact of
plier as well as end-user relationships. This implies that efforts          employee satisfaction on customer response and organizational
to enhance employee job satisfaction should be pervasive and                outcomes, metrics calibrated at the individual level of analysis
not focus narrowly on front-line service providers. All internal            are likely to understate the true effects.
and external relationships are likely to benefit from improved                  We have noted practical situations in which organizations
employee satisfaction.                                                      may take actions in the interest of improving customer satis-
                                                                            faction that may at the same time have the effect of decreasing
Theoretical and research implications                                       employee job satisfaction (Maher 2007). This type of situation
                                                                            presents an interesting and potentially researchable dilemma
    Our finding that employeecustomer linkages are stronger                concerning trade-offs between employee and customer satisfac-
in studies that measure job satisfaction globally than in studies           tion. It will be interesting for researchers to consider the total
that measure it by facet suggests that simple job-related affect,           effects of actions intended to enhance customer satisfaction that
rather than elaborate, multi-faceted job perceptions, are primar-           have the (perhaps unintended) effect of decreasing employee
ily responsible for employeecustomer linkages. Although this               satisfaction, or actions intended to enhance employee satis-
interpretation is consistent with existing theoretical accounts of          faction that have the unintended consequence of decreasing
these relationships, the finding also suggests that any employee            customer satisfaction. While such situations must certainly exist
experience of positive affect can potentially generate positive             in practice, they have not been systematically research to date.
customer responses and that, in a sense, job satisfaction serves                                             Conclusions
as a proxy for positive affect experienced on the job. For exam-
ple, Pugh (2001) and Tsai and Huang (2001, 2002) show that                      The meta-analysis indicates statistically significant and sub-
service providers situational (or state, as opposed to trait) affect       stantively important relationships linking employee satisfaction
produces effects on customer responses that are similar to the              to customer satisfaction and perceived service quality. We found
effects of employee satisfaction. In future research, finer-grained         these relationships to be systematically moderated by (a) per-
analyses of employee affect may be able to identify the mini-               sonal versus non-personal service contexts, (b) organizational
mal conditions necessary for employeecustomer affect transfer              versus individual level of analysis, and (c) global versus by-
to occur and the extent to which the cognitive (versus affec-               facet measurement of employee satisfaction. We also found
tive) components of job attitudes and perceptions account for               that perceived service quality completely mediates the job
employeecustomer linkages.                                                 satisfactioncustomer satisfaction relationship in a manner con-
    Our results indicate that SQ completely mediates the ESCS              sistent with the serviceprofit chain conceptualization, which
relationship. This finding suggests that perceptual and cogni-              suggests that emotional contagion alone does not provide a suf-
tive mechanisms play an important role in customer responses,               ficient conceptual account of the relationship. The results show
but it does not rule out the possibility that emotional conta-              employee satisfaction to be a consistently important driver of
gion also plays a role in affect transfer between employees and             customer responses and indicate service and research contexts in
customers. Research under tightly controlled conditions could               which these effects are heightened. Even so, carefully designed
potentially provide further insights into the relative contribu-            research is needed to provide a more precise conceptual account
tions of emotional contagion and service quality to customer                of these relationships, as boundary conditions remain to be
satisfaction judgments. Such research might help to further                 established for the affect transfer and service quality mediation
discriminate between these different conceptual accounts of                 explanations of the relationships.
employeecustomer linkages and indicate boundary conditions
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