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A Multilevel Investigation of Factors Influencing Employee Service Performance and Customer
Outcomes
Author(s): Hui Liao and Aichia Chuang
Source: The Academy of Management Journal, Vol. 47, No. 1 (Feb., 2004), pp. 41-58
Published by: Academy of Management
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Academy ofManagement Journal
2?04, Vol. 47, No. 1, 41-58.
A MULTILEVEL INVESTIGATION OF FACTORS INFLUENCING

EMPLOYEE SERVICE PERFORMANCE AND
CUSTOMER OUTCOMES
HUI LIAO
Rutgers, the State University of New Jersey
AICHIA CHUANG
National Taiwan University of Science and Technology
Previous work on service has focused on either or individ

performance organization-
ual-level analysis. This multilevel study of 257 employees, 44 managers, and 1,993
customers from 25 restaurants demonstrated that both individual- and store-level
factors were associated with service conscien
significantly employee performance:
tiousness and extraversion explained within-store variance, and service climate and
employee involvement explained between-store variance. Further, employee service

to the store level between-store variance in cus
performance aggregated explained
tomer satisfaction and loyalty.
In responseto an increasingly competitive mar employee individual characteristics and service en
ketplace, growing research attention is being de vironment characteristics.

voted to factors contributing to desirable customer Previous work on service performance has fo
outcomes. Front-line service
employees, placed at cused on either
organization- or individual-level
the organization-customer interface and represent analysis. In work addressing organizational factors,
ing an organization to its customers, play a pivotal a common theme is that if an organization values
role in service encounters, which often involve dy service and establishes that facilitate and
practices
adic interactions between customers and service reward excellent service, a "climate for service" is
employees (Solomon, Suprenant, Czepiel, & Gut to emerge (Schneider, 1990). This service
likely
man, 1985). Empirical evidence shows that, to the climate will in turn influence service
performance,
extent areable to deliver
employees high-quality which will
ultimately impact customer satisfaction
service, customers are
more to fa &
likely generate (Borucki Burke, 1999; Johnson, 1996). This body
vorable evaluations of service encounters, experi of literature the impact of managerial
emphasizes
ence higher satisfaction, and increase their pur and service climate on customer
practices percep
chases and the frequency of their future visits (e.g., tions of service quality and business-unit financial
Borucki & Burke, 1999; Bowen, Siehl, & Schneider, at the store level of
performance analysis (e.g.,
1989). Therefore, it is important to understand Borucki & Burke, 1999; Johnson, 1996; Schneider,
what predicts employee service performance. The & Paul, 1998). On the other hand, research
White,
purpose of this study was to develop and test a ers who are interested in studying service perfor
multilevel framework in which employee service mance at the individual level of analysis (e.g., Bar
performance was examined as a joint function of
rick & Mount, 1991; Frei & McDaniel, 1998) have
linked employees' personalities to their service
performance. Both approaches have made signifi
This study was supported by a grant from the Alfred P. cant contributions to explaining service perfor
Sloan Foundation through the University of Minnesota's mance. However, neither approach adequately ac
Food Industry Center. A version of this work received the counts for service The store-level
performance.
Best Doctoral Paper Award from the OB/OT/OD Division
only (or macro) approach ignores meaningful
of the Southern Management Association (SMA). We are individual while the individual-level
differences,
grateful to the organization that participated in this re
only (or micro) approach neglects contextual fac
search. We thank Jonathan Seltzer and Steven Smela for
tors that can significantly influence and constrain
their assistance in data collection. We also thank Andrew
Theresa Glomb, Joseph individual behavior (Kozlowski & Klein, 2000). Ex
Miner, John Kammeyer-Mueller,
Martocchio, Clint Chadwick, Christina Stamper, Aparna amining one level at a time prevents one from
Joshi, Thomas Lee, and three anonymous reviewers for knowing whether factors at one level remain im
their helpful comments. portant in explaining service performance after
41
42 Academy of Management Journal February
factors at the other level are accounted for. Neither customer-driven employee performance" (1999:
would one know how factors across different levels 178).
interact with one another and jointly determine
service performance. Additionally, results obtained
at one level may not generalize to another level THEORETICAL BACKGROUND AND
without generation of specification errors (Kozlow HYPOTHESES
ski & Klein, 2000).
Employee Service Performance:
In fact, the only study that simultaneously exam
Conceptualization and a Multilevel Perspective
ined individual differences and contextual factors
provides an intriguing picture, indicating that per Employee performance, in general, refers to be
sonality traits are not related to employee customer haviors that are relevant to organizational goals and
service behavior once job characteristics are ac that are under the control of individual employees
counted for (Rogelberg, Barnes-Farrell, & Creamer, (Campbell, McCloy, Oppler, & Sager, 1993). In ser
1999). This study was limited in that it did not vice settings, customers have become an important
specify a conceptual framework for cross-level phe factor in how employee performance is defined
nomena; conceptualized job characteristics at the (Bowen & Waldman, 1999). Bowen and Schneider
individual level, thus measuring individual per (1988) noted three defining characteristics of
ception more than actual context; and contained service?intangibility, simultaneous production
hypothesis tests in which the hierarchical structure and consumption, and customer "coproduction"?
of the data was not considered. However, Rogelberg all of which imply that "the consumer experience
and colleagues' study did indicate that the whole is as important as, if not more important than, the
might not simply be the sum of its parts, thereby consumer good" (Bowen & Waldman, 1999: 164
underscoring the importance of examining the joint 165). Further, the quality of the interaction between
impact and the interactive effects of individual and employee and customer is critical in determining
situational factors. customer satisfaction. Therefore, the behavior of
The present study was an attempt to advance the employee plays an important role in shaping
knowledge in this area in several ways. First, it the customer's perception of service quality. Basing
bridged the macro and micro perspectives by de performance standards explicitly on customer ex
a multilevel framework and providing a pectations encourages employees' engagement in
veloping
more comprehensive picture of what kind of em behaviors that are particularly functional in achiev
ployees engage in good service performance and, at ing desirable customer outcomes (Bowen & Wald
the same time, what kind of organizational inter man, 1999). It is consistent with this customer
ventions facilitate service performance. Second, driven approach to employee performance that in
drawing on the theory of situational strength this study we defined employees' service perfor
(Mischel, 1977), we further integrated the two lev mance as their behaviors of serving and helping
els by investigating interactions across levels to see customers. Employee service performance hence is
whether the impact of individual on distinguished from service effectiveness, which re
personalities
service performance differed in different situations. fers to the results of service performance, such as
Finally, recognizing that organizations do not "per customer satisfaction and retention. Factors be
form" and that it is the individuals in an organiza yond employees' control influence variance in ef
tion who perform in ways that allow it to achieve fectiveness measures, but the behavioral measure
desirable customer outcomes (Kozlowski & Klein, of service performance we employed in this study
2000), we examined to what extent employee ser is less contaminated (Campbell et al., 1993).
vice performance, when aggregated to the store In what follows, we develop hypotheses regard
level, could explain between-stores differences in ing the antecedents and consequences of employee
observed customer outcomes. The current study is service performance. Implicit in the development
the first that we are aware of in which multilevel of our theoretical framework is the recognition that
were to employee ser an organization is an integrated and that
theory and method applied system
vice performance. Using hierarchical linear model individual and organizational characteristics inter
ing (HLM; Bryk & Raudenbush, 1992), we tested the act and combine to shape individual and organiza
proposed model using data on the employees, man tional outcomes (Kozlowski & Klein, 2000). The
agers, and customers of restaurants in a chain in the contribution of this multilevel perspective to or
U.S. Midwest. This study answers Bowen and ganizational science is twofold: Both top-down and
Waldman's call for research that pulls different bottom-up effects on organizational behavior are
sources of data together so that scholars can "better illuminated. A top-down approach establishes the
understand the requirements and consequences of need to conceptualize and assess organization, sub
2004 Liao and 43
Chuang
unit, and group factors that can affect individual employed the "Big Five" personality traits to exam
attitudes, and behaviors. A bottom-up ine effects of personality on service performance
perceptions,
method, on the other hand, makes salient the pro for two reasons. First, convincing evidence of the
cesses that operate to reduce the variability of in validity of the Big Five taxonomy has accumulated
dividual perceptions and behaviors, thus facilitat over the last few decades across different theoreti
ing common interpretations of the emergence and cal frameworks, measures, occupations, cultures,
existence of collective phenomena (Kozlowski & and sources of ratings (De Raad & Doddema
Klein, 2000). Therefore, in addition to the individ Winsemius, 1999; John & Srivastava, 1999). Sec
ual differences factors that have been identified as ond, the use of the unifying Big Five taxonomy
important correlates of service performance in the instead of more specific personality traits facilitates
literature, we identified relevant contextual fea the accumulation of knowledge and comparison of
tures and expected that these factors would have findings across studies of personality. There were
top-down influences on employee service perfor theoretical and empirical reasons to expect that
mance via both a direct and a moderating effect. four of the Big Five personality dimensions would
Also consistent with this multilevel perspective be related to service performance. Two of the traits,
was our expectation that individual employees' conscientiousness and neuroticism, were expected
service performance would combine to form a col to be associated with performance in all jobs, and
lective phenomenon at the organizational level the other two traits, extraversion and agreeable
through bottom-up processes and would signifi ness, were expected to be particularly relevant
cantly relate to organizational effectiveness mea when performance involved interactions with
sures, including customer evaluation of service other people, as it does in a service context (Barrick
quality, customer satisfaction, and customer loy & Mount, 1991). In recent research, cognitive-moti
alty. In our multilevel theory building, we sought to vational work orientations have been proposed as
"connect the dots, making explicit the links be mediators between these personalities and job per
tween constructs previously unlinked within the formance; such mediation would provide addi
organizational literature" (Klein, Tosi, & Cannella, tional theoretical support for personality-service
1999: 243). Figure 1 depicts the theoretical frame performance relationships (Barrick, Stewart, &
work of this study. Piotrowski, 2002).
Conscientiousness. Conscientious individuals
are described as responsible, organ
Individual-Level Antecedents of Service dependable,
ized, hardworking, and achievement-oriented (Bar
Performance: Personalities
rick &Mount, 1991). Because of these positive char
Certain employees may be predisposed to engage acteristics, conscientious people tend to do what is
in positive service-oriented behaviors. This study expected of them to accomplish work. Gellatly
FIGURE 1
A Multilevel Model of Service Performance
Antecedents Service Performance Customer Outcomes
Individual Level Hla-Hld Service

Personality Employee Service Quality
Conscientiousness Performance Customer Satisfaction
Neuroticism Customer Loyality
Extroversion
Agreeableness
Bottom-up
Process H4
Store Level HR Practices Store-Level Service

Employee Involvement Performance
Service Training
Performance Incentives
Service Climate
(1996) showed that conscientiousness related to ship between extraversion and job performance for
performance through expectancy and goal choice. sales representatives. Research has shown a posi
Barrick and colleagues (2002) also argued that con tive relationship between extraversion and the job
scientious individuals have higher intentions for performance of groups in occupations involving
achievement striving, which mediates the relation social interactions (Barrick & Mount, 1991, 1993).
ship between conscientiousness and job perfor Since most of the tasks of service employees con
mance. Indeed, conscientiousness has been found tain interactions with customers, we expected to
to positively associate with job performance in all observe that employees higher on extraversion
occupational groups tested in meta-analyses (Bar would demonstrate better service performance.
rick & Mount, 1991, 1993). Additionally, results of
Hypothesis lc. Individual-level extraversion
Frei and McDaniePs (1998) meta-analysis revealed
will be positively related to employee service
that conscientiousness was positively and strongly
related to customer service orientation, a personal performance.
ity-based measure that had a mean of .50

validity Agreeableness. People who are agreeable are de
predicting service-related criteria across the studies scribed as good-natured, forgiving, courteous, help
they analyzed. ful, generous, and cooperative (Barrick & Mount,
la. Individual-level conscientious 1991). Barrick and colleagues (2002) argued that
Hypothesis
ness will be positively related to employee ser the trait of agreeableness is associated with the
vice performance. proximal motivational intention of communion
striving, which stimulates actions directed toward
Neuroticism. Common traits associated with from other people. Agreeable
obtaining acceptance
neuroticism, the polar opposite of emotional sta individuals are thus altruistic, and
sympathetic,
bility, include being depressed, angry, anxious, to and strive for
eager help others, they cooperation
temperamental, worried, and insecure (Barrick & rather than then, agreeable
competition. Logically
Mount, 1991). It is argued that neurotic traits tend would be expected to be better at help
employees
to inhibit the accomplishment of work tasks (Bar
ing and serving customers. Indeed, the meta-anal
rick & Mount, 1991). Barrick and coauthors also a consis
ysis by Barrick and Mount (1991) showed
pointed out that the neuroticism traits "do not link correlation between
tent, positive agreeableness
to motivational goals and potentially detract from and performance interac
involving interpersonal
rather than enhance performance'5 (2002: 45). Two tions. Additionally, was
agreeableness positively
meta-analytic reviews have indicated a positive re and strongly related to customer service orientation
lationship between emotional stability and job in Frei and McDaniel's work (1998). Thus,
performance (Salgado, 1997;
Tett, Jackson, &
Rothstein, 1991). Moreover, Mount, Barrick, and Hypothesis Id. Individual-level agreeableness
Stewart (1998) demonstrated that emotional stabil will be positively related to employee service
ity was predictive of performance in jobs that in performance.

volve considerable interpersonal interaction, par
ticularly when the interaction involves helping and
Store-Level Antecedents of Service Performance
nurturing others. Finally, in their meta-analysis of
research in service settings, Frei and McDaniel As the employees of a store perform their work,
(1998) found that emotional stability correlated at a they share contextual factors (store-level factors)
mean of .63 with various service-oriented mea that determine how effective they are. From the
sures. Therefore, we propose the following: existing literature, we identified two important
factors?service climate and human resource
Hypothesis lb. Individual-level neuroticism
practices?and examined the relevant theoretical
will be negatively related to employee service
rationales and empirical work. We elaborate
performance. drawn from this examination in the
arguments
Extraversion. Extraverted people are sociable, following subsections.
gregarious, assertive, talkative, and active (Barrick Service climate. There has been increasing
& Mount, 1991). These traits trigger individuals' awareness of the impact of organizational climate
energy level and potency and also may lead to on employee behaviors. In general, the construct of
effective performance. Previous research has iden organizational climate refers to shared perceptions
tified the desire to excel as a basic motivation of among members of an organization regarding or
extraverts (e.g., Lucas, Diener, Grob, Suh, & Shao, ganizational policies, procedures, and practices
2000). Barrick and colleagues (2002) further dem (Schneider, 1990). Studies examining specific di
onstrated that status striving mediated the relation mensions of climate, such as innovation climate
2004 Liao and 45
Chuang
& West, 1998), safety climate formance. Our review of the literature on high
(e.g., Anderson (e.g.,
Hofmann & Stetzer, 1996), and transfer of training performance HR practices indicated employee
climate (e.g., Tracey, Tannenbaum, & Kavanagh, involvement, training, and performance incen
1995), have explained significant variance in spe tives as the most relevant for employee perfor
cific behavioral outcomes. Climate determines how mance in service settings. These practices also
individuals behave by influencing how they think closely capture the "foundation issues" specified
and feel about certain aspects of their environment by Schneider and coauthors (1998) that provide
(Salancik & Pfeffer, 1978). In particular, employees the fundamental support employees require to
we
rely on cues from their surrounding work environ deliver service effectively. In what follows,
ments to interpret events, develop appropriate atti offer the theoretical rationales and empirical
tudes, and understand expectations concerning findings associated with each of these practices.
their behavior and its consequences (Salancik & Involving employees by granting them discretion
Pfeffer, 1978). For example, when there exists a and inviting them to participate in decision making
climate for safety, employees are more committed is one way organizations can improve service per
to safety, more can meet a wide
likely to comply with safety rules formance. Empowered employees
and regulations, and less likely to be involved in range of customer demands and are able to share
accidents (e.g., Hofmann & Stetzer, 1996). the information they collect about customer behav
The current study examines climate and perfor iors, thereby serving customers better and helping
mance in the context of customer service. Service improve service quality. Research has indicated
climate is defined as employees' shared percep that service quality and customer satisfaction were
tions of the policies, and procedures that enhanced when
employees were involved in
practices,
are rewarded, supported, and expected concerning problem-solving idea generation (Schneider, Park
customer services (Schneider et al., 1998). When ington, & Buxton, 1980) and in sharing customer
there is a climate for service, employees have come evaluations (Johnson, 1996). Batt (1999) also found
to understand that superior customer service is ex that service quality and sales were positively re
pected, desired, and rewarded; other things being lated to employee discretion and group self-regula
equal, they are more likely to provide good service. tion. Other research has shown that high-involve
Some empirical evidence supports a relationship ment work systems improved performance,
between service climate and employee service per reduced costs, and increased productivity (e.g., Ap
formance. For example, service climate has been pelbaum, Bailey, Berg, & Kalleberg, 2000; Huselid,
shown to influence store-level service quality (e.g., 1995; Ichniowski, Shaw, & Prennushi, 1997). Thus,
Johnson, 1996; Schneider et al., 1998). We argue
Hypothesis 2b. Store-level employee involve
that favorable store-level service quality cannot be
ment in decision making will be positively re
achieved without elevated service performance on
lated to employee service performance after
the parts of individualemployees inspired by the individual-level are controlled for.
shared service climate and that a relationship be personalities
tween service climate and individual employee ser It is also reasonable to postulate that service
vice performance will exist. Additionally, Borucki training will increase employee service knowledge
and Burke (1999) found a significant, positive rela and skills and consequently improve employee ser
tionship between service climate and employee vice performance. Bishop (1990) documented that
service performance aggregated to the store level. the increase in the productivity of newly hired
Thus, we propose: employees was associated with their participation
in company training programs. Bartel (1994) found
Hypothesis 2a. Store-level service climate will
a positive effect of training on employee productiv
be positively related to employee service per
ity. Additionally, a meta-analytic review revealed
formance after individual-level personalities that training and instruction practices had a posi
are controlled for. tive effect on output quantity and quality and
Human resource
practices.
Human resource cost effectiveness (Guzzo, Jette, & Katzell, 1985).
(HR) practices can play an important role in help Other research has studied a more direct link
ing employees achieve high-quality service. between training and service performance. Evi
These practices, on the one hand, provide em dence showed that new-employee formal training
ployees with the skills, resources, and discretion (Schneider & Bowen, 1985), general service train
they need to meet customer demands, making ing (Johnson, 1996), and gaining knowledge about
them able to deliver high-quality service. On the an organization's environment and about service
other hand, these practices may motivate em (Schneider et al., 1980) were helpful in achieving
ployees to be more willing to provide good per quality service and customer satisfaction. Batt
(1999) also showed that the more training employ situations leave the person more discretion in de
ees were offered, the better was the service quality. termining which behavior to undertake?individ
On the basis of these previous research findings, we ual differences in personality are more to
likely
pose the following hypothesis: influence behavior in weak situations than in
2c. strong situations. These arguments have received

Hypothesis Store-level service-related
some support from the findings of research con
training will be positively related to employee
ducted in laboratory settings (e.g., Beaty, Cleve
service performance after individual-level per
are controlled land, & Murphy, 2001) and in field settings (e.g.,
sonalities for. Barrick & Mount, 1993).
It could be as employees
that are pro The theory of situational strength is also
appli
argued
vided with incentives (for instance, cable to the study of store employees' service
performance
bonuses, wage raises, and promotions), they will behavior. In some
stores, a clear emphasis and
be motivated to strive for excellent service. Many clear requirements and incentives for high-qual
theorists and managers have ar ity service performance may exist. However,
organizational
gued that incentives can motivate good perfor other stores may not provide such unambiguous
mance and induce employees to comply with behavioral expectations. As a result, personality
organizational goals. This view is consistent with may predict individual employees' service per
motivational theories, according to which the ex formance better in some stores than in other
tent to which people strive to meet their needs is stores. The store-level
factors in this
specified
associated with the level of "motivational force" a that con
study may help create strong situation
they encounter. To induce greater motivational strains the expression of personality. As noted in
force, employers need to provide promising links sections, a service climate cre
previous positive
between performance and reward systems and ates a
general service-promoting atmosphere
offer awards their employees value (Vroom, commitment to service quality
through managers'
1964). For instance, the meta-analysis by Guzzo in everyday management; involving employees
and colleagues (1985) indicated that programs in service that employee
management signals
monetary rewards to individual-, group-, or and voice are valued as a way to meet
tying input
performance were related to various customer service sets
organization-wide needs; training
productivity output.
Additionally, performance clear behavioral standards across all aspects of a
incentives such asestablishing reward contin service and incentives
encounter; performance
gencies (Schneider & Bowen, 1985) and recogniz enhance the instrumentality of service behavior
ing superior service (Johnson, 1996) were found
with
rewards.
by linking superior performance
to relate to customer attitudes, overall quality, a
Therefore, the existence of favorable service
and employee service behavior. Thus, climate and these HR practices send clear signals
2d. Store-level to employees that service behaviors and initia
Hypothesis service-perfor
mance incentives will be positively related to tives are expected, desired, supported, and re
service controls warded in a store, thereby creating a strong ser
employee performance, given
individual-level vice-oriented situation. Without these behavioral
for personality.
cues, employees tend to rely on their individual
predispositions to direct their actions. As a re
Situational and Cross-Level Interactions factors will not only have a
Strength sult, these contextual
It has that the relationship "main effect" on employee service performance,
long beensuggested
but will also constrain the effect of personalities
between personality and job performance may not
be the same for all individuals in all situations. The on service performance, thereby exhibiting a
of the situation in which moderating effect. Therefore, we propose the
strength performance
takes place has been frequently discussed as amod following:
erator of the personality-behavior relationship (e.g.,
Barrick & Mount, 1993; Mischel, 1977). In "strong" Hypothesis 3. Store-level service climate and
situations, desirable be HR practices will moderate the relationship
expectations concerning
havior are relatively uniform and unambiguous, between personality and employee service per
and in "weak" situations, such normative formance at the individual level: the relation
expecta
tions about behavior are absent (Mischel, 1977). ships between personality and employee ser
Mischel further suggested that since strong situa vice performance will be weaker in stores with
tions constrain the range of behaviors a person may higher levels of service climate and service
be willing to or able to engage in?while weak inducing HR practices.
2004 Liao and 47
Chuang
Store-Level Service Performance and Customer egy but encourages the franchisees to maintain
Outcomes their individuality and grants them a large degree
of latitude concerning everyday management mat
Effectiveness is the bottom line of any organiza
ters, such as hiring, training, the degree of employ
tion. For a service customers' percep
organization, ees' involvement in decision making, incentive de
tions of service quality, customer satisfaction, and
customer are crucial indicators of effective signs, and so on. We sent survey packages to these
loyalty
ness because of their close relationship with sales
52 restaurants. Each package contained copies of an
and profits, as is evidenced in the liter employee questionnaire (equal to the number of
marketing in each restaurant, which was 25 on the
ature et al., 1998). We expected that employees
(see Schneider 3 copies of a manager 150
individual service performance, average), questionnaire,
superior employee of a customer and return en
when to the store level, would contrib copies questionnaire,
aggregated To ensure the of re
ute to achieving desirable customer outcomes. We velopes. anonymity employee
sponses, we instructed the managers to designate
examined the impact of store-level performance in
an employee representative to collect sealed enve
stead of individual performance on
employee's or set up a central collection
customer outcomes for two reasons. First, most ser lopes from employees,
box where employees could drop off their enve
vice encounters experienced by customers involve
lopes. Employees were also provided the option of
their interactions with and contributions from mul
sending their responses directly to the researchers.
tiple service employees. For example, in the cur
We received 52 manager surveys and 351 em
rent study, a customer's evaluation of his or her
ployee surveys from 30 locations, a number repre
dining experience was determined by the service
senting approximate response rates of 58 percent
performance of the hostess, the "busperson," the
for the restaurants, 56 percent for the managers,
server, the cook, the cashier, and so on. Thus, the
and 46 percent for the employees. We also received
in a store work together as a team to
employees 2,167 customer but were unable to calcu
for a cus surveys
create satisfactory service performance late a response rate, because we did not know how
tomer, and it is the overall level of employee ser
many customers had actually been approached. Fif
vice performance, not the performance of any teen dishwashers who did not speak English and
particular employee, that determines customer out
filled out the Spanish version of the questionnaire
comes. Second, the attraction-selection-attrition
were excluded from the analyses owing to their
(Schneider, 1975), socialization, and social infor
lack of interaction with customers. Thirty-seven
mation processing and learning processes that may
employees whose tenure was less than one month
operate in a store, as well as its shared organiza
were also eliminated from the analyses owing to
tional environment, tend to result in relatively
their lacking sufficient knowledge to provide accu
behaviors and performance across
homogenous rate evaluations of restaurant and proce
within the same a policies
employees store; therefore,
dures. "Listwise" of cases with missing
deletion
store-level service performance will emerge via
values on variables reduced
further the employee
bottom-up processes from individual employee
sample size to 264. Finally, we also excluded 7
and exist as a collective
performance phenomenon. two restaurants from the
employees from analyses,
Borucki and Burke (1999) provided empirical evi
because estimating the models of interest required
dence that aggregated employee service perfor at least 5 respondents per restaurant. The final us
mance customer outcomes. Thus, we
predicted able thus consisted of 257 employees, 44
sample
propose: and customers from 25 franchised
managers, 1,993
4. Store-level service performance restaurants, with the number of employees per res
Hypothesis
will be positively related to customer evalua taurant ranging from 5 to 21 (x = 10.3), the number
tion of service quality, customer of managers ranging from 1 to 3 (x = 1.8), and
satisfaction,
and customer the number of customers ranging from 3 to 147
loyalty. =
(x 81.8).
Eighty-nine percent of the employees in the final
METHODS sample were Caucasian, 31 percent were male, and
45 percent worked full-time; the average age was 26
Participants and Procedures
years old, and the average tenure was 35 months.
Fifty-two stores of a family franchise restaurant To lessen concern about possible sampling bias,
chain operating in several states in the U.S. Mid we first compared sample means for the usable
west were invited to participate in the study. The cases and the cases
dropped on the basis of incom
franchiser designs signature menu items and pro plete information on all relevant variables in the
vides a centralized purchasing and marketing strat employee, manager, and customer samples. Results
of ?-tests indicated the two groups were not statis prepared" and "Imake a mess of things" (reverse
tically significantly different from each other, ex coded) for conscientiousness; "I worry about
on means for the conscientiousness variable and "I mood a lot" for neuroti
cept things" change my
obtained from the employee sample and on means cism; "I start conversations" and "I don't talk a lot"
for the age variable obtained from the customer (reverse-coded) for extraversion; and "I am inter
sample. Specifically, employees with incomplete ested in people" and "I sympathize with others'
information had lower conscientiousness scores feelings" for agreeableness. The coefficient alphas
than those with information = were
complete [d 0.30, .77, .82, .85, and .81, respectively, for these
p < .05), and customers with incomplete responses scales.
were on the average older than those with complete Store-level antecedents. We constructed the
=
responses [d 5.07, p < .01). Further, we calcu store-level constructs by aggregating the individual
lated the binary correlations between the response employee or manager scores to the store level and
rates at restaurants and all variables specified in the testing the within-store agreement. Additionally, as
study for both the employee data and the manager Sirotnik (1980) suggested, we computed the inter
data and found none of the relationships was sta nal consistency reliability estimates for these vari
tistically significant at .05 level. Therefore, we con ables at the store level.
cluded that sampling bias should not be a problem. Employees were asked to rate, on the basis of
theirpersonal observation, their restaurant's cus
tomer service climate on a seven-item ser
Measures global
vice climate scale (Schneider et al., 1998; 1, "poor,"
Variables relevant to the current study as well as to 5, "excellent"; a = .95). An example item is
their corresponding sources of information are de "efforts to measure and track the quality of the
scribed below. We list in the Appendix the com work and service in your restaurant." Managers
plete scales for which we have obtained the per were asked to rate the level of employee involve
missions to reproduce the scale items, and below ment, or the extent to which their employees had
we provide example items for the other scales. influence over decisions at work on a five-item
Employee service performance. Employee ser scale (1, "not at all," 5, "a great deal") modified
vice performance was assessed using the sales per from Haynes, Wall, Bolden, Stride, and Rick (1999).
sonnel service performance measure from Borucki The scale items are listed in the Appendix. The
and Burke (1999). To adapt the measure, prior to coefficient alpha for this scale was .85.
the survey period we both consulted these authors Managers provided information concerning ser
and discussed specific items with restaurant man vice
training by rating the extent to which various
agers at a bimonthly chain gathering they attended. topics related to service performance were empha
We determined that 7 of the original 13 items could sized in the training or orientation of employees (1,
adequately capture the nature of restaurant service "not at all"; 2, "to a moderate extent"; 3, "to a great
performance and the domain of the construct at the extent"). This 13-item scale was based on Stevens,
same time. The Appendix lists these items. The Knutson, and Patton's (1995) DINESERV, a mea
employees were asked to rate their own perfor sure of restaurant service quality. We provide these
mance on an 11-point Likert-type scale with scale items in the Appendix. The scale coefficient alpha
anchors ranging from "completely unsatisfactory" was .91.
(1) to "extremely good" (11). The coefficient alpha Managers provided information about perfor
was .88 for this scale. mance incentives by answering three items we gen
Personalities. Conscientiousness, neuroticism, erated. A restaurant was considered to provide in
extraversion, and agreeableness were each mea centives for good service and coded with a 1 if they
sured by a ten-item scale from the International answered yes to the following: "Some monetary
Personality Item Pool (IPIP)developed by Goldberg rewards, not related to employees' regular pay, are
(1999). The average correlation between "domain provided (e.g., bonus or store coupon)," "Wages are
markers" for the Revised NEO Personality Inven tied directly to
employees' performance," and
tory (Costa & McCrae, 1992) and the corresponding "Good employees are promoted to a higher level
scales in the IPIP is .77, which rises to .94 when position." An internal consistency estimate was not
corrected for attenuation due to the unreliabilities relevant for this dummy-coded variable.
of both scales (Goldberg, 1999). Employees were Customer outcomes. We measured three cus
asked to rate how accurately each item described tomer outcome variables: customer evaluation of
them as they generally were on a five-point Likert service quality, customer satisfaction, and cus
type scale (1, "very inaccurate," 5, "very accurate"). tomer loyalty. Customer evaluation of service
Sample items include the following: "I am always quality was assessed via the 29-item DINESERV
2004 Liao and Chuang 49
(Stevens et al., 1995). Customer satisfaction was using procedures described in Bryk and Rauden
measured with Gotlieb, Grewal, and Brown's bush (1992).
(1994) 3 customer satisfaction items, which were Finally, we examined to what extent store-level
service performance translated into desirable cus
adapted from Oliver (1980). Customer loyalty to the
restaurant the customer visited was as tomer outcomes. Since customers were nested in
particular
sessed with Webster and Sundaram's (1998) 5-item restaurants, we conducted HLM using in
analyses
customer scale. We the items of dividual-level customer-evaluated service quality,
loyalty provide
these scales in the Appendix. The scale anchors customer satisfaction, and customer loyalty as the
for the three scales ranged from 1, "strongly dis outcome variables. At 1, we
level controlled for
to 7, The coefficient al individual customers' age and gender. At level 2,
agree," "strongly agree."
customer we included the average employee service perfor
phas for service quality, satisfaction, and
customer were mance at the store level while controlling for the
loyalty .97, .96, .73, respectively.
level of local competition (assessed as the number
of competing restaurants within a ten-minute
drive).
Data Analysis
Because the key dependent variable of this study,
service performance, was measured via RESULTS
employee
employee self-reports, we assessed the construct of Measures
Validity
validity of this measure by examining its dimen
Construct validity of service performance. We
sionality, criterion-related validity, and discrimi
conducted the following analyses to demonstrate
nant validity. We then checked the viability of the
the validity of the service performance measure in
store-level constructs by examining the within
this data. We first examined the dimensionality of
& Wolf,
group agreement [rwg; James, Demaree, this measure a
by conducting principle compo
1984), intraclass correlation (ICC[1]), and reliability
nents factor analysis with "varimax" rotation and
of the mean (ICC[2]).
obtained a one-factor solution in which all the
The service performance model to be tested was =
items had high "loadings" (average loading .85)
hierarchical, with the dependent variable, em
on the 73 percent
service an individual single factor, which explained of
ployee performance, being the variance. We then examined the criterion-re
level construct, and the predicting variables
span lated validity of the service performance measure
ning the individual and store levels. The data were
by examining its relationship to other measures
also hierarchical, since employees were "nested" in
that should be theoretically related. As reported in
restaurants. We therefore adopted the hierarchical
Table 1, the pattern of correlations was consistent
linear modeling (HLM; Bryk & Raudenbush, 1992) with the aforementioned nomological network. At
method and tested the model in four steps. First,
the individual level, employee service performance
we estimated a null model that had no predictors at was significantly correlated with conscientious
either level 1 (the individual level) or level 2 (the = =
ness (r .33, p < .01), extraversion (r .26, p <
store level) to partition the service performance = <
.01), neuroticism (r -.21, p .01), and agreeable
variance into within- and between-stores compo =
ness (r .29, p < .01); at the store level, service
nents. Second, in a level 1 analysis, within each was significantly ser
performance correlated with
restaurant, service
performance
was
regressed
on
vice climate = < involve
(r .47, p .05), employee
individual-level of = =
grand-mean-centered predictors ment (r .50, p < .01), service training (r .50, p <
personality. A regression line was estimated for customer = <
.01), and satisfaction (r .42, p .05). As
each of the 25 stores in this step. In the third step, these relationships were consistent with
largely
or the level 2 analysis, we used the intercept esti theories about and empirical on service
evidence
mates obtained from level 1 as outcome variables and some of these measures were ob
performance,
and regressed these on the store-level predictors, tained from sources other than the stud
employees
including service climate and HR practices, to as ied here, coworkers, and
including supervisors,
sess the main effects of the store-level factors. In the customers, the results criterion-related
provided
last step, we regressed the slope estimates obtained evidence for the service
validity performance
from level 1 on the store-level factors to detect measure.
cross-level interaction effects. We also computed Further, we examined the discriminant validity
the proportion of variance in service performance of this measure its relationship with
by assessing
explained by individual-level factors lR2Within-store) theoretically unrelated variables gauged by the
as well as by store-level factors same source
(#2between-stores) (employees). No compelling theory or
TABLE 1
Descriptive Statistics and Correlationsa
Variable Means s.d.
Individual-level, employee
1. Conscientiousness 3.74 0.56
2. Extraversion 3.49 0.71 .18**
3. Neuroticism 2.70 0.66 .33** .21*
4. Agreeableness 3.96 0.58 .55** .26* .18**
5. Employee service 8.31 1.75 .33** .26* .21** .29*
performance
Individual-level, customer
1. Age 44.46 17.16
2. Genderb 0.53 0.50 .01
3. Customer evaluation 5.77 0.85 i -i* * * .05*
of service quality
-i***
4. Customer satisfaction 6.09 1.03 1 .06* .69***
5. Customer loyalty 5.75 1.10 .19*** .06* .46*** .55**
Store-level
1. Service climate 3.28 0.43
2. Employee 3.72 0.71 .24
involvement
3. Service training 2.79 0.27 .29 .46*
4. Performance 0.80 0.41 .11 .33 .14
incentives
5. Store-level service 9.35 0.83 .47* .50** .50** .10
performance
6. Customer evaluation 5.77 0.24 .50** .24 .24 .05 .36+
of service quality
7. Customer satisfaction 6.10 0.31 .34+ .28 .21 .07 .42* .89**
8. Customer loyalty 5.77 0.29 .44* .09 .14 .36+ .34+ .81** .83*
a
n = 257; Customers n 1,993; Stores n = 25.
Employees
b
Coded as male, 1; female, 0.
+
p < .10
*
p < .05
< .01
**p
< .001
***p
Two-tailed tests.
empirical evidence suggests that employees from (measured by ten-item

the scale of the IPIP) was
different ethnic backgrounds will deliver different insignificantly to
related employees' self-reported
=
levels of service performance; confirming the ab service performance (r .12, p > .05).
sence of such a difference, our data showed no In sum, the above results demonstrated that the
statistically relationship between eth service performance measure had a single-factor
significant
=
nicity and employee service performance (r .04, structure, was significantly correlated with theoret
p > .10; in the ethnic majority was ically related, yet distinct constructs measured by
membership
coded as 1, and minority membership was coded as the same or different sources, and was uncorrelated
0). Additionally, since the type of service this sam with theoretically unrelated constructs measured
of restaurant did not in by the same source, thus providing construct valid
ple employees provided
volve a high level of technical difficulty, we had ity of this measure.
little reason to expect a significant relationship be Aggregation of store-level variables. We
tween service
performance and employ?es' years of checked the viability of the store-level variables:
education; this again was what the data showed service climate, HR practices, and store-level ser
=
(r .03, p > .10). Finally, there is no convincing vice performance. We computed rwg values for
evidence supporting a significant relationship be these variables and obtained median values of .87
tween openness to experience as an element of for service climate, .93 for employee involvement,
and employee service performance. .98 for service training, .79 for performance incen
personality
Our again fitted with
data this belief; employees' tive, and .94 for store-level service performance.
self-reported scores on this personality dimension These values were well above the convention
rwg
2004 Liao and 51
Chuang
ally acceptable value of .70. We also obtained the tween stores, and 88 percent of the variance resided
following ICC(l) and ICC(2) values: employee within stores.
perceived service climate, .12 and .56; employee Individual-level
predictors only. Hypotheses la,
involvement, .63 and .70; service training, .50 and lb, lc, and Id predict that individual personalities
.58; performance incentive., .17 and .24; and store will be associated with individual employees' ser
level service performance, .12 and .56. All of these vice performance. We estimated a level 1 model
were comparable to the median or recommended including these variables, with no predictors spec
ICC values reported in the literature (see Schneider ified for the level 2 model. As a block, the person
et al., 1998). We thus concluded aggregation was ality variables explained 24 percent of the within
for these variables. store variance. conscientiousness =
justified Specifically, (y
=
.58, p < .001) and extraversion [y .37, p < .001)
had significantly positive relationships with em
HLM Results for the Antecedents of Employee
ployee service performance. Therefore, Hypotheses
Service Performance
la and lc were supported. Contrary to the predic
Null model. hypotheses Our predict that both tions of Hypotheses lb and Id, neuroticism and
individual- and
store-level variables would be sig agreeableness were not significantly related to em
nificantly related to employee service performance. ployee service

performance.
In order for these hypotheses to be supported, there Adding store-level predictors. To test Hypothe
had to be significant between-store variance in em ses 2a, 2b, 2c, and 2d, we estimated an HLM model
ployee service performance. Thus, using HLM, we in which the personality variables were the level 1
estimated a null model in which no predictors were predictors and then regressed the intercept coeffi
specified for either the level 1 or level 2 function to cients obtained from level 1 on the measures of
test the
significance level of the level 2 residual store-level service climate and HR practices at level
= =
variance of the intercept (f00 .35, p < .001). The 2. As reported in Table 2, both service climate [y
=
ICC(l) was .12, indicating 12 percent of the vari .45, p < .01) and employee involvement (y .39,
ance in employee service performance resided be p < .05) demonstrated significant relationships
TABLE 2
Hierarchical Linear Modeling Results for Employee Service Performance0
Null Model
Variable Individual-Level Predictors Adding Group-Level Predictors
Level 1
Intercept 9.33(0.35***) 9.35 (0.35***) 5.66** (0.25***)
Conscientiousness 0.58*** (0.00) 0.51** (0.03)
Neuroticism -0.15 (0.14**) -0.08 (0.18**)
Extraversion 0.37*** (0.06) 0.39*** (0.04)
Agreeableness 0.23 (0.25) 0.32+ (0.19)
Level 2
Service climate 0.45**
Employee involvement 0.28*

Service training 0.45
Performance -0.11
incentives
Within-store residual 2.52 1.92 1.93

variance
b nA
"D2within-store ,??^
D2 *^y c ?q
-*1between-stores
Model deviance 989.42 938.47 933.87
a
n = 257, Stores n = 25. Entries are estimations of the fixed effects (ys) with robust standard errors. Estimations of the
Employees
random variance components (ts) are in parentheses. The ts for the also the between-stores variance in employee
intercepts represented
service performance.
b
Proportion of within-store variance explained by level 1 predictors.
c
Proportion of between-store variance explained by level 2 predictors (after level 1 variables are controlled for).
+
p < .10
*p < .05
< .01
**p
< .001
***p
One-tailed tests.
= =
with serviceperformance, after we had accounted satisfaction (7 .12, p < .01) and loyalty (7 .13,
for individual-level predictors. However, service p < .05). At the store level, the higher the level of
training and performance incentives did not have local competition was, the higher the customers'
significant relationships with service performance. ratings on service quality, satisfaction, and loyalty
As a group, the specified store-level variables ac = .002 for all < .01 for service
(7 outcomes; p
counted for 29 percent of the between-stores vari quality and customer satisfaction, and p < .05 for
ance in service performance. Hence, Hypotheses 2a customer loyalty). Store-level service performance
and 2b were supported, while Hypotheses 2c and and level of local competition explained 40 percent
2d were not. of the between-stores variance in service quality, 50
Testing cross-level interactions. Hypothesis 3 percent in customer satisfaction, and 50 percent in
posits that the store-level variables will moderate customer loyalty.
the relationship between personalities and individ
ual employees' service performance. A prerequisite
DISCUSSION
for testing these cross-level interactions was that
there be significant random variance for the person Prior research on service performance has been
ality variables in the intercepts-as-outcomes mod rather fragmented and has focused on either an
els estimated in the previous step. As reported in organization level or individual level of analysis.
Table 2, in which estimates of the random-variance This study bridged the gap between the macro and
components appear in parentheses, only neuroti micro We proposed
approaches. and tested a mul
- framework
of employee service performance
cism had significant random variance (f22 .18, tilevel
p < .01), suggesting significant variability in the and examined individual-level (that is, personality
level 1 neuroticism-service performance relation variables) and store-level (that is, service climate
ship across stores. We then examined whether this and HR practices) antecedents of service perfor
variance could be explained by store-level factors; mance as well as the impact of cross-level interac
none of these variables was significantly related to tions on service performance. We found that signif
the neuroticism slopes. Therefore, Hypothesis 3 icant variance in employee service performance
was not supported. existed both within and between stores and that
some of the individual factors (conscientiousness
and extraversion) and contextual factors (service
HLM Results for the Impact of Aggregated
climate and employee involvement) specified in
Service Performance on Customer Outcomes
this study explained a moderate amount of this
We further investigated whether employee ser variance. We also found significant between-store
vice performance aggregated to the store level was variance in customer outcomes and that employee
related to desirable customer outcomes. Three service
performance, when aggregated
to the store
HLM analyses were performed, with service qual level through bottom-up processes, contributed to
ity, customer satisfaction, and customer loyalty as the explanation of significant variance in customer
the dependent variables, individual customer age satisfaction and customer loyalty. The results pro
and gender as the level 1 variables, and aggregated vide a "deeper, richer portrait of organizational
service performance and level of local competition life?one that acknowledges the influence of the
as the level 2 variables. The results revealed signif organizational context on individuals' actions and
icant between-stores variance in customer evalua perceptions and the influence of individuals' ac
=
tion of service quality (f00 .03, p < .001), cus tions and perceptions on the organizational con
= <
tomer satisfaction (f00 .02, p .001), and text" (Klein et al., 1999: 243). The present study is
customer = < At the store thus a compelling extension of the previous
loyalty (f00 .02, p .001). ap
level, aggregated store service performance was sig proach to research on service quality, in which
related to customer satisfaction = is limited to micro-only or macro
nificantly (7 .07, investigation
=
p < .05) and customer loyalty (7 .06, p < .05), but only analysis, an approach that ignores influences
itwas insignificantly related to service quality = from other levels. our use of hierarchical
(7 Further,
.03, p > .05). Thus, Hypothesis 4 was partially linear modeling facilitated taking a multilevel ap
at us to investigate
upheld. Of the control variables, age, measured proach, which allowed the impact
the individual level, was significantly related to all of the predictors at different levels on the individ
of the three types of customer evaluations: the older ual-level service performance outcome while main
the customer, the higher the evaluations they gave taining the appropriate level of analysis for these
to the restaurants = < .001 for all out
(7 .01, p predictors (Hofmann, 1997).
comes). Female customers also rated service qual Some insignificant findings of this study are par
=
ity higher (7 .06, p < .05) and reported higher ticularly thought-provoking. Although they might
be consequences of insufficient statistical power appropriate service-oriented personality character

that was due to the small size of the sample, they istics will perform even more poorly when facing
may well suggest necessary modifications in mea such complexity and uncertainty in service pro
surement or model specification in future research. duction. In other words, there may be a three-way
For example, service training and performance in interaction among personality, situation, and the
centives were not found to relate to service perfor nature of the service product. Therefore, itmay not
mance. One possible explanation might be that just be surprising to have observed no interaction ef
because service-related topics are covered in train fects in this sample in which the employees typi
ings does not mean that the employees learn them, cally serve standard items customers order from a
transfer them to the job appropriately, and main menu. Future
study may model this type of three
tain them over time (Tracey et al., 1995). Future way interaction or examine the personality by sit
research should directly measure training effective uation interaction among employees who provide
ness and the transfer of training to actual service customized products (for instance, life insurance
performance in order to examine the impact of products).
training on performance. The reason for the lack of Finally, we found that store-level service perfor
association between performance incentives and mance was associated with customer satisfaction
service performance may be that our dummy-coded and customer loyalty, but not with customer eval
performance incentive measure was an improper uation of overall service quality. One possible ex
"operationalization" of this construct. Or it could planation for this insignificant result regarding ser
be the case that it is the intensity, not the existence, vice quality is that the service quality measures
of performance incentives that matters. Addition used here consisted of various factors, some of
ally, the effectiveness of performance incentives which (for instance, a restaurant's physical infra
hinges on the presence of an accurate performance structure) were the control of indi
clearly beyond
appraisal system; if good performance does not re vidual employees.
ceive favorable evaluations in a consistent and
timely way, the instrumental connection between
Limitations and Future Research
performance and outcomes will be decreased, and
the motivational effect of performance incentives Limitations of this study should be noted. First,
will be decreased in turn. Future research should the primary dependent variable, employee service
measure the accuracy and consistency of perfor performance, was a self-reported measure. One
mance evaluation processes in conjunction with might argue that self-reported measures have their
the intensity of performance incentives. Finally, strengths as assessments of employee performance,
although we examined the impact of monetary in since a job's incumbents possess the best knowl
centives and promotion opportunities, future re edge of how the job is performed. rat
Supervisor
search should examine the role of intrinsic factors ings, the commonly used other-rated source of
such as informal recognition in motivating service employee job performance data, may be both con
performance. taminated by employee impression management
Our cross-level interaction hypotheses based on and invalidated by supervisors' lack of sufficient
the theory of situational strength were not sup opportunity to observe performance. However,
ported in these data. Personality seemed to play an there are some concerns associated with using a
important role in shaping individual employees' self-reported service performance measure. The
service behavior, regardless of the level of service first is that employees tend to overreport their per
climate and the existence of service-supporting HR formance under the influence of social desirability
practices. Previous research on general job perfor bias, resulting in a restriction of range in this vari
mance has largely supported an interactionist per able. Lack of variance will attenuate the estimated
spective, but the only other study examining the relationship between service performance and
interaction between contextual and personality other variables. The fact that the service
perfor
variables in the context ofpredicting service mance variable showed significant relationships
related behaviors (Rogelberg et al., 1999) also failed with most of the theoretically related variables, in
to find a significant interaction effect. Rogelberg cluding variables obtained from other sources (co
and coauthors argued that the interaction effect workers, store managers, and customers) lessened
might be most salient when service providers need this concern and provided evidence regarding the
to create a customized product, a task that is more construct validity of the service per
self-reported
demanding than serving a standard product. We formance measure. Another criticism of self-reports
share a similar sentiment. When there are no clear is the possibility of their introducing common
behavioral expectations, an employee who lacks method bias &Wagner, 1994). To reduce
(Crampton
common method variance, we followed Podsakoff and that existing customers are an avenue to bring
and Organ's (1986) recommendations. In particu ing in new customers and a potential base for
lar, we operationally defined all of the store-level "cross-selling"1 (see Schneider et al., 1998). Thus,
constructs with measures from multiple raters and customer retention is critical for a service organi
used different sources of information, including the zation's survival and success. We found that better
managers, and customers. We also con employee service performance was associated with
employees,
ducted confirmatory factor analyses and found the higher customer satisfaction and increased cus
one-factor structure fitted the data poorly in all tomer loyalty, both of which
determine customer
three data sources. Further, if common method retention. Therefore, it pays for an organization to
variance were high, the pattern of relationships we emphasize high-quality service performance and
observed, which included some absences of rela enhance service performance among employees.
tionship, would be unlikely. Finally, most of the Our study also provides specific recommenda
relationships we saw were consistent with previ tions for improving employee service performance.
ous and theoretical work on service per First, fostering a service-oriented climate helps.
empirical
formance. Therefore, it seems that common method Employees do not work in a vacuum; their perfor
effects did not significantly influence the findings. mance is influenced by the messages management
Nonetheless, those conducting future research sends and by the perceptions employees share
should strive to obtain
service perfor among themselves. Organizations can use this
employee
mance evaluationsfrom multiple raters, including mechanism to guide and educate their employees
themselves, supervisors, peers, and cus as to how the organizations value excellent service
employees
tomers, as each of these sources of ratings can ex and to get policies and procedures implemented.
plain unique variance in performance measures When organizations demonstrate poor management
(Atwater, Ostroff, Yammarino, & Fleenor, 1998). of service, employees may feel that and start to
Drawing on existing research, for the present shirk on their duties. Second, our results suggest it
study we identified a set of key individual and pays to involve employees in decision making by,
contextual correlates of employee service perfor for instance, allowing employees to participate in
mance. However, there are likely to be other factors decisions that affect them and letting them resolve
that have an impact on service performance. For customer complaints on their own. This approach
individual ability and experience, em is consistent with the idea of employee empower
example,
ployees' emotional displays during service encoun ment used in total quality management (TQM). Re
ters, group demographic composition, leadership search on TQM has well documented the value of
style, and tip-sharing schemes among restaurant employees' opinions. When employees have a say
staff are additional individual- and store-level fac in how work is done, they assume responsibility
tors to be considered in the future. and return more effective work. Third, in their em
Another limitation of the current study concerns ployment selection procedures, managers may con
generalizability. While restricting our sider applicants' levels of conscientiousness and
potential
sample to a single occupation from the same organ extraversion, among other selection criteria, to im
ization ruled out superfluous factors associated prove customer service performance.
In sum, the
with different occupations and organizations, the results suggest that having the right employees,
of our results to other service or enforcing a positive service climate, and involving
generalizability
ganizations might be limited. However, the results employees in service management each adds incre
were largely consistent with prior theoretical and mental utility to the others. The fact that these three
work, that are not sam sources of influence were simultaneously signifi
empirical suggesting they
ple-specific. Nonetheless, future replication and cantly related to service performance indicated that
extension of this multilevel are war they didnot merely act as substitutes for each
investigation
ranted. this study employed a cross other, but functioned jointly to achieve superior
Finally,
sectional design, making causal inferences impos employee service performance.
sible. Future research should examine how these In conclusion, the research presented here con
over time. tributes to knowledge on service performance. This
relationships develop
is the first study to bring the micro and macro
perspectives together and to specify and test a
Managerial Implications
The of this study have substantial
results impli
cations for service organizations. It has long been 1
Cross-selling is the strategy of selling new products
recognized that it costs five to eight times more to to current customers on the basis of their previous pur
a one
acquire a new customer than to retain current chases.
multilevel model of the antecedents and conse Campbell, J. P., McCloy, R. A., Oppler, S. H., & Sager,
of service The C. E. A theory of performance. 1993. In N. Schmitt &
quences employee performance.
of putting ser W. C. Borman (Eds.), Personnel selection in organi
findings underscore the importance
zations: 35-70. San Francisco:
vice performance back into its organizational con Jossey-Bass.
text, which is inherently multilevel and integrated. Costa, P. T., & McCrae, R. R. 1992. Revised NEO Per
sonality Inventory (NEO PI-R) and NEO Five
Factor Inventory (NEO FFI) professional manual
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APPENDIX 3. Good employees are promoted to a higher level
Items of Selected position.

Scale Variables
Customer Evaluation of Service Quality0
Service Performance*1
1. Has visually attractive parking areas and building
1. Being friendly and helpful to customers.
exteriors.
2. Approaching customers quickly.
2. Has a attractive area.
visually dining
3. Asking good questions and listening to find out
3. Has staff members who are clean, neat, and
what a customer wants.
appropriately dressed.
4. Being able to help customers when needed. 4. Has a d?cor in keeping with its image and price
5. Pointing out and relating item features to a range.
customer's needs. 5. a menu
Has that is easily readable.
6. Suggesting items customers might like but did 6. Has a visually attractive menu that reflects the
not think of. restaurant's image.
7. Explaining an item's features and benefits to 7. Has a dining area that is comfortable and easy to
overcome a customer's move around in.
objections.
8. Has rest rooms that are clean.
thoroughly
Employee Involvement15 9. Has dining areas that are thoroughly clean.
1. Can employees influence what goes on in the 10. Has comfortable seats in the dining room.
work area as a whole? 11. Serves me in a reasonable amount of time.
2. Do you ask for employees' opinions before 12. Quickly corrects anything that is wrong.
making decisions affecting their work? 13. Is dependable and consistent.
3. Do employees have the opportunity to contribute 14. Provides an accurate guest check.
to meetings on new work 15. Serves my food exactly as I ordered it.

developments?
4. Are employees allowed to participate in 16. Seems to handle busy times smoothly.
decisions that affect them? 17. Provides prompt and quick service.
5. Can resolve customer on 18. Gives extra effort to handle my special requests.
employees complaints
their own? 19. Has who can answer my
employees questions
completely.
Service Training0 20. Makes me feel comfortable and confident in my

1. Keeping the dining area thoroughly clean. dealings with them.
21. Has personnel who are both able and willing to
2. The importance of staff members being clean,
neat, and appropriately dressed. give me information about menu items, their
3. restrooms clean. ingredients, and methods of preparation.
Keeping thoroughly
22. Makes me feel personally safe.
4. Quickly correcting anything that is wrong.
23. Has who seem well-trained,
5. food as ordered. personnel
Serving exactly
competent, and experienced.
6. an accurate check.
Providing guest 24. Seems to give employees so that they
7. Providing quick and prompt service. support
can do their jobs well.
8. Handling busy times smoothly.
25. Has who are sensitive to my
employees
9. Introducing customers to menu items, their
individual needs and wants, rather than always
ingredients, and methods of preparation.
on and
relying policies procedures.
10. customers' in a friendly
Answering questions 26. Makes me feel special.
manner.
27. Anticipates my individual needs and wants.
11. Being sensitive to customers' individual needs 28. Has who are and
employees sympathetic
and wants.
reassuring if something is wrong.
12. Being sympathetic and reassuring if something is 29. Seems to have the customers' best interests at
wrong. heart.
13. Having customers' best interests at heart.
Customer Satisfaction01
Performance Incentives 1. I am happy about my decision to come to this
1. Some monetary rewards, not related to restaurant.
employees' regular pay, are provided (for 2. I believe I did the right thing when I came to this
store coupon or a bonus). restaurant.
example,
2. Wages are tied directly to employees' 3. Overall, I am satisfied with the decision to come
performance. to this restaurant.
Customer Loyalty6
Mr
1. Iwill recommend this restaurant to others.
2. I am sure that Iwill not visit this restaurant
again.
3. Iwill dine at another similar restaurant instead Hui Liao (huiliao@smlr.rutgers.edu) received her Ph.D.
of this particular
one. in human resources and industrial relations from the
4. I consider this restaurant to be University of Minnesota. She is an assistant professor of
reputable.
5. I definitely will not come to this restaurant again. human resource
management in the School of Manage
ment and Labor Relations at Rutgers, the State University
a
Adapted from Borucki and Burke (1999). Reproduced with of New Jersey. Her current research interests include
permission from the Journal of Organizational Behavior. service customer service workforce
b performance, quality,
from Wall, Bolden, Stride, and Rick and work
Adapted Haynes, diversity, job behaviors, group dynamics.
(1999). Reproduced with permission from the British Journal of
Health Psychology, published by the British Psychological So Aichia Chuang earned her Ph.D. at the University of
Minnesota; she is currently an assistant of hu
ciety. professor
c
Adapted from Stevens, Knutson, and Patton (1995). Repro man resource and behavior
management organizational
duced with permission from the Cornell Hotel and Bestaurant in the Department of Business Administration at the Na
Administration Quarterly. tional Taiwan University of Science and Technology. Her
d
Adapted from Gotlieb, Grewal, and Brown(1994) and
research interests include service climate and perfor
Oliver (1980). Reprinted with permission the Journal
from of
mance, fit, and assess
and from the Journal Be person-organization employee
Applied Psychology of Marketing
ment and selection.
search, published by the American Marketing Association,
Richard L. Oliver/Gilbert Churchill, November 1980, XVII,
page 463.
e
Adapted from Webster and Sundaram (1998). Reproduced
A
with permission from the Journal of Business Besearch.

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A Multilevel Investigation of Factors Influencing Employee Service Performance and Customer

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A MULTILEVEL INVESTIGATION OF FACTORS INFLUENCING

Previous work on service has focused on either or individ

employee involvement explained between-store variance. Further, employee service

In responseto an increasingly competitive mar employee individual characteristics and service en

ketplace, growing research attention is being de vironment characteristics.

Antecedents Service Performance Customer Outcomes

Individual Level Hla-Hld Service

Store Level HR Practices Store-Level Service

ity-based measure that had a mean of .50

ity was predictive of performance in jobs that in performance.

2c. strong situations. These arguments have received

Variable Means s.d.

empirical evidence suggests that employees from (measured by ten-item

nificantly related to employee service performance. ployee service

Employee involvement 0.28*

Within-store residual 2.52 1.92 1.93

be consequences of insufficient statistical power appropriate service-oriented personality character

Crampton, S. M., & Wagner, J. A. 1994.

Bishop, J. H. 1990. Job performance, turnover, and wage

(Eds.), The changing nature of performance: 154

taxonomy: History, measurement, and theoretical

theory building: Benefits, barriers, and new develop

of Business and Psychology, 13: 421-435. Wiley.

APPENDIX 3. Good employees are promoted to a higher level

Items of Selected position.

to meetings on new work 15. Serves my food exactly as I ordered it.

Service Training0 20. Makes me feel comfortable and confident in my

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