The relationship between employee satisfaction and customer satisfaction

The relationship between employeesatisfaction and customer satisfaction

Hoseong Jeon

Hallym University, Chuncheon, Korea, and

Beomjoon ChoiCalifornia State University, Sacramento, California, USA

AbstractPurpose – This study aims to examine whether the relationship between employee satisfaction (ES) and customer satisfaction (CS) is bilateral orunilateral based on dyadic data. In addition, it seeks to examine the role of moderating variables which have incremental impacts on this link.Design/methodology/approach – The authors conducted an empirical test on this relationship in an educational service context. Structural equationmodeling was employed to test the hypotheses.Findings – Results indicate that employee satisfaction leads to CS but CS did not affect ES, which suggests that the relationship between ES and CS isunilateral rather than bilateral. The findings also demonstrate that the dispositional variables (i.e. self efficacy, cooperative orientation) moderate theimpact of ES on CS.Research limitations/implications – This study provided theoretical implications for the ES-CS relationship.Practical implications – This finding suggests that top level management in the service industry must take an active role in recruiting employees whoare confident in their abilities and who display pro-social dispositions.Originality/value – The linkage between ES and CS has been previously examined but the findings have been inconsistent. The authors used dyadicdata to investigate the relationship between ES and CS and found the influence of ES on CS but not vice versa.

Keywords Employee satisfaction, Customer satisfaction, Self efficacy, Cooperative orientation, Perceived fairness, Supervisory support, Employees,Customers

Paper type Research paper

An executive summary for managers and executive

readers can be found at the end of this article.

Efforts to enhance customer satisfaction have been considered

critical by many organizations, particularly those in the service

sector (Schmit and Allscheid, 1995) and hence, have been

researched by numerous studies. Despite vast research

previously conducted on the relationship between the

employee satisfaction and customer satisfaction, Schmit and

Allscheid (1995) assert that further conceptual and empirical

evidence is needed to reveal the relationship between

employee satisfaction and customer satisfaction.In previous research, employee satisfaction (hereafter ES)

has been frequently measured by asking customers’

perception of employee and customer satisfaction (hereafter

CS) also has been measured by employees via survey. Though

the use of indirect measures in assessing ES and CS is quite

common, it still remains unclear whether this practice is

appropriate. As an alternative attempt to measure customer

and employee satisfaction more accurately, Schmit and

Allscheid (1995) employed dyadic data from both the

customer and employee surveys and simultaneously estimate

both employee and customer model. They assumed employee

job satisfaction was influenced by the work climate produced

by the customers, linking employee model and customer

model simultaneously. But each model was estimated based

on different level of data: The employee model was based on

the individual level, whereas customer model was based on

data collected at the multiple offices of a service-oriented

organization. As such, previous research which attempt to

identify the ES-CS relationship had potential limits in gauging

the focal constructs.To show a comprehensive framework depicting the

interplay of ES-CS, the present study tested the ES-CS

relationship in the causal models which incorporates key

constructs instead of just considering focal variables (i.e. ES

and CS) (Brown and Lam’s, 2008). In an attempt to uncover

the link between ES and CS, this paper reviews information

derived from relevant prior research and investigate whether

the relationship between employee satisfaction and customer

satisfaction is bilateral or unilateral. This study also examines

the role of moderating variables which have incremental

impacts on this link.

Hypothesis development on ES-CS relationship

The influence of ES on CS

The influence of employee satisfaction on customer

satisfaction has received considerable attention in marketing

literature and practice in recent years. It has been argued that

behavior of satisfied employees plays an important role in

shaping customers’ perceptions of business interactions

(Spiro and Weitz, 1990). This phenomenon may occur as

The current issue and full text archive of this journal is available at

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Journal of Services Marketing

26/5 (2012) 332–341

q Emerald Group Publishing Limited [ISSN 0887-6045]

[DOI 10.1108/08876041211245236]

332

satisfied employees are more apt to be friendly, enthusiastic,

attentive, and empathetic toward customers (Beatty et al.,1996; Rafaeli, 1993).

According to the concept of partner effects, a person is in

some way, verbally or nonverbally, influenced by thecharacteristics and behaviors displayed by his or her

counterpart (Dolen et al., 2002). Additionally, the contagioneffect explains how satisfied employees influence others

around them to feel good (Hatfield et al., 1993). As such,

Schneider and Bowen (1985) said that employee jobsatisfaction is positively related to customers’ perceptions of

service. This notion suggests that employees who have higherlevels of job satisfaction also believe they are able to deliver

excellent service (Schlesinger and Zornitsky, 1991). It is also

expected that happy or satisfied employees are more inclinedto share these positive emotions with customers (Brief and

Motowidlo, 1986). This was also consistent with Brown andLam (2008) who provided the empirical evidences showing

the robust relationship between employee job satisfaction andcustomer satisfaction. Thus, the following hypothesis is

proposed:

H1-1. Employee satisfaction will positively influencecustomer satisfaction.

The influence of CS on ES

Compared to the influence of ES on CS, the impact in the

opposite direction (from CS to ES) is supported by a fewtheories such as the social exchange theory (Konovsky and

Pugh, 1994) and the psychological contract theory (Robinson

and Morrison, 1995). Central to these conceptions is thenorm of reciprocity (Netemeyer et al., 1997): Customers

satisfied with their counterpart will engage in cooperativebehavior as reciprocation for those who have benefited them

(Bateman and Organ, 1983; Schnake, 1991). Beatty et al.(1996) and Gremler and Gwinner (2000) found that

customers who developed a bond with the employees also

were likely to care about employee wellbeing. If customers likethe performance of the employee and express gratitude or

satisfaction, in turn, it is also expected to lead to a higher levelof employee satisfaction (Dolen et al., 2002). In other words,

positive reinforcement from customers increases the

satisfaction of sales employee (Beatty et al., 1996). In asimilar vein, Bitner et al. (1990) posit that customers’ inputs

make important contributions to enhancement of servicequality, leading to employee satisfaction. Goodwin and

Gremler (1996) also argue that employees are concernedabout customers’ feelings and are pleased when customers

display appreciation for quality service. Based on these

notions, this study argues that customer satisfactioninfluences the job satisfaction of their counterpart. Therefore:

H1-2. Customer satisfaction will positively influence serviceproviders’ job satisfaction.

Sample and procedures

This study was administered with the cooperation of one of

leading private education companies in Korea. This company

has a business model of providing educational servicesthrough private tutors who visit the customers’ homes on a

regular basis. Private education services in Korea can beregarded as a commercial exchange because customers pay for

the education services received and private tutors are

considered service employees to their customers (Williams

and Anderson, 2005; Yi and Gong, 2008). Educational

services seem to be good contexts for testing our researchpurpose as the customers could interact with employee on a

regular basis and can observe the counterparts. To test thesehypotheses, dyadic data incorporating both the customer and

the corresponding employee were developed. This studyrecruited the customers and the corresponding private tutors

to test the ES-CS link.The surveys were administered as follows: First, 500

customer samples were randomly selected from about 50,000

customers nationwide. Questionnaires were sent to 372customers who agreed to participate in the survey. After one

month, 285 questionnaires were returned to us. It turns outthat the sample represents the customer pool appropriately

based on similarity of demographics between the final sample

and the population. Second, the survey for employees wasadministered. Those who correspond to customers who

respond to surveys were recruited for the purpose of probingthe ES-CS relationship. Since there are no multiple customers

from a single tutor, it could be said that customers are notnested within tutors. Finally, 227 samples (227 pair of

customers and corresponding employees) were used in the

final analysis after discarding the incomplete questionnaires.

Measures

This study used measures for key variables from existingstudies and literature by slightly modifying them into the

context of the current study (educational service). All

constructs were assessed by multiple items using five-pointscale ranging 1 ¼ strongly disagree to 5 ¼ strongly agree.

Figure 1 explains the simultaneous model considering bothemployee and customer perspectives.

Employee model

This study examined five constructs in the employee model.Each was role ambiguity, role conflict, job satisfaction,

commitment, and intent to stay. Used were items developedby Ho et al.’ (1997) to assess employee role ambiguity and

role conflict. Also, this study measured employee job

satisfaction with the items proposed by Netemeyer et al.(1997) and Hartline and Ferrell (1996). Commitment, the

employee’s identification with organization, was assessed withthe items developed by Ganesan and Weitz (1996). Intent to

stay was measured by items established by Good et al. (1996).

Customer model

In the customer model, five different constructs were

considered: interaction quality, outcome quality, customersatisfaction, trust, and customer loyalty. Interaction quality

and outcome quality were measured by applying an adaptedversion of Brady and Cronin’s (2001) model tailored for the

context of educational service. Customer satisfaction was

assessed by adapting the items of Mano and Oliver (1993)and Bettencourt (1997). These items were used to measure

customer’s responses to service experience with the employee.Customer trust was measured by the four items proposed by

Ramsey and Sohi (1997). This study also defined customer

loyalty as the customer having intention to do the businesswith the organization in the future and engaged in positive

word-of-mouth communication about it. Customer loyaltywas assessed by modifying items developed by Zeithaml et al.(1996).

The relationship between employee and customer satisfaction

Hoseong Jeon and Beomjoon Choi


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Analysis

Structural equation methodology was applied to test thehypothesized model. In order to specify the model, each of theconstructs was represented by multiple measures. The firststep in the model testing was to conduct a multiple items’reliability and validity check by applying confirmatory factoranalysis to confirm if the multiple items sufficiently measurethe proposed constructs. Next, the hypothesized model wasassessed by estimating the standardized path coefficients foreach proposed relationship.

Reliability and validity checks

The first step of the reliability and validity check was toconfirm the overall goodness-of-fit indices of themeasurement model. In Table I, this study presents theresults for both the customer model and the employee model.Since the GFI and AGFI may contain inconsistencies due tosampling characteristics (Hoyle and Panter, 1995), this studysubstituted two fit indices with TLI and CFI. x2 and RMSEAare also included as fit indices since it is generallyrecommended to incorporate at least 4 indices to confirmgeneral fitness (Kline, 1998).

In conducting confirmatory factor analysis, added wererelated variables such as customer satisfaction in the employeemodel and employee satisfaction in the customer model. Theindices of employee model include the following results: thechi-squire statistic was 367.5 with 194 degree of freedom,comparative fit index (CFI) was 0.989, TLI was 0.986, andthe root mean square error of approximation (RMSEA) was0.063. The fitness of customer model was x2

ð155Þ ¼ 247:3,CFI ¼ 0.995, TLI ¼ 0.993, RMSEA ¼ 0.051. According tothe outcomes, the model fitness was adequate for both modelsbecause the values of CFI and TLI in the 0.90 range havebeen known as the adequate fit for these indices and RMSEAis lower than the criteria proposed by Browne and Cudeck(1992).

The reliability and inter-correlations of the constructs arereported in Tables I-III. Given that this study consisted ofdyadic data, this process conducted within each domain. InTable I, the evidence of internal consistency is provided by thecomposite reliability. It is regarded as a less constraining index

for measuring internal consistency compared to Cronbach’salpha (Homburg and Giering, 2001). All values are higherthan the criteria proposed by Venkatraman (1990), as Table Ishows, the composite reliability ranged from 0.627 to 0.883.

Also, the correlations (F estimates) among the latentvariables are included in Tables II and III. Table II containsthe outcomes of the employee model and Table III presentsthe results of customer model. This study performed test ofdiscriminant validity among the factors based on F estimates.Table II showed that there are no correlation estimates whichcomprise 1 in confidence intervals (F^ 2SE) at the employeemodel. Also, the AVE values were greater than the squared F

coefficients (Bagozzi and Yi, 1988). Thus, it could be saidthat all measurements achieved criterion for discriminantvalidity (Anderson and Gerbing, 1988). The values ofcorrelation estimates ranged from 20.483 to 0.844. In thecustomer model, the confidence intervals of all F values(F^ 2SE) were also under 1 and the square roots of AVEvalues were greater than the F coefficients. These outcomesalso explained that all estimates achieved the criterion fordiscriminant validity in the customer model. Table III showsthat the values of correlation estimates ranged from 0.419 to0.850 in the customer model.

Results

According to the model fitness analysis, our hypotheseslinking the employ model with the customer model fitwell (x2

(584) ¼ 939.4, CFI ¼ 0.987, TLI ¼ 0.985,RMSEA ¼ 0.052). The overall fit of the structural modelwas adequate, and the standardized path estimates indicatesignificant relationships among the constructs. In Table IV,this study present the results of the structural equation modeldepicted in Figure 1. All paths were statistically significantwith the only exception occurring in the path from customersatisfaction to job satisfaction. Since the unilateral model canbe nested in the bilateral model, the improvement in fit isassessed by comparing the chi square difference between thebilateral model and each unilateral model.

The model testing is conducted by comparing the baselinemodel (i.e. bilateral model) with the test model (i.e. unilateralmodel) in which imposes a relationship of zero on the path

Figure 1 Comprehensive model based on dyadic data




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from ES to CS or on the path from CS to ES at the bilateral

model. The results of these comparisons, reported in Table V,

indicate that failure of the path from ES to CS causes it to fit

the data significantly worse than the baseline model,

supporting H1-1. On the other hand, the chi square

difference between the unilateral model assuming a path

from ES to CS and the baseline model indicates that adding a

path from CS to ES does not improve its fit. Therefore, H1-2was not supported.

Discussion

H1 provided partial support for our conceptions derived from

the previous studies related with the ES-CS relationship. The

influence of employee satisfaction on customer satisfaction

was found to be significant, supporting H1-1, but the path

from customer satisfaction to employee satisfaction (H1-2)

was not significant. This partial support indicates that the

relationship between employee satisfaction and customer

satisfaction is unilateral rather than mutual. Given no

significance of customer satisfaction on employee

Table II AVE and correlation among the latent variables in the employee model

Role ambiguity Role conflict Job satisfaction Commitment I-T-S

n Standard error n Standard error n Standard error n Standard error n Standard error

Role ambiguity 1.000

Role conflict 0.249 0.011 1.000

Job satisfaction 20.483 0.022 20.422 0.020 1.000

Commitment 20.524 0.010 20.638 0.014 0.795 0.022 1.000

I-T-S 20.357 0.030 20.538 0.035 0.679 0.050 0.844 0.039 1.000

Average variance extracted (AVE)Employee model 0.723 0.606 0.680 0.775 0.719

Table III AVE and correlation among the latent variables in the customer model

Interaction quality Outcome quality

Customer

satisfaction Trust Loyalty

n Standard error n Standard error n Standard error n Standard error n Standard error

Interaction quality 1.000

Outcome quality 0.619 0.028 1.000

Customer satisfaction 0.850 0.025 0.692 0.030 1.000

Trust 0.505 0.019 0.419 0.024 0.485 0.019 1.000

Loyalty 0.502 0.025 0.495 0.034 0.445 0.024 0.786 0.029 1.000

Average variance extracted (AVE)Customer model 0.737 0.644 0.730 0.758 0.729

Table I The Composite reliability of employee model and customer model

Composite reliability

Role Role Job Interaction Outcome Customer

ambiguity conflict satisfaction Commitment I-T-S quality quality satisfaction Trust Loyalty

Employee model 0.757 0.627 0.761 0.883 0.742

Customer model 0.761 0.697 0.742 0.863 0.856

Table IV Standardized path estimates and t-value

Estimate SE t-value

Employee modelRole ambiguity ! job satisfaction 20.455 0.125 23.640

Role conflict ! job satisfaction 20.425 0.234 21.816

Job satisfaction ! commitment 0.802 0.116 6.913

Job stisfaction ! customer satisfaction 0.133 0.050 2.660

Commitment ! intent to stay 0.859 0.224 3.834

Customer modelInteraction quality ! customer satisfaction 0.762 0.114 6.684

Outcome quality ! customer satisfaction 0.433 0.048 9.020

Customer satisfaction ! trust 0.503 0.110 4.572

Customer satisfaction ! job satisfaction 0.051 0.116 0.439

Trust ! loyalty 0.785 0.110 7.136

Notes: t-values of 1.65 or greater are significant at the 0.05 level, andt-values of 1.96 or greater are significant at the 0.01 level

Table V Test of model comparisons

df Dx2ð1Þ

Bilateral model vs unilateral model (from CS to ES) 1 3.7 *

Bilateral model vs unilateral model (from ES to CS) 1 0.5

Note: *Means p , 0.10




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satisfaction, employee satisfaction seems to be affected less by

customer satisfaction, possibly more by other factors (e.g. pay,

co-workers, and supervisor). Simply stated, the results show

that employees’ job satisfaction leads to an increase in

customer satisfaction, however, not vice versa.Brown and Lam (2008) found variables such as service

characteristics, research contexts, and study methods

moderated the relationship between ES and CS, but

employee’s disposition and work climate factors which were

proven to be critical variables in the domain of employee

satisfaction research were not included. Hence, we investigate

how dispositional variables moderate the relationship between

ES and CS.

Hypothesis development on moderating effect

Dispositional variables

Personality factors have been known to account for the

differences in job attitudes (Staw and Ross, 1985). Among

various dispositional variables, this study posits that self

efficacy acts as a moderating variable. Self efficacy is a core

concept in social cognition theory (Yi and Gong, 2008) andrefers to individuals’ judgments that they have capabilities to

perform their job or fulfill duty appropriately. Self efficacy also

pertains to judgments about what one is capable of doing a

task with whatever skills one possesses (Bandura, 1986).

McKee et al. (2006) said that individuals who have more

confidence in their abilities tend to exert more effort to

perform particular behaviors, persist longer in order to

overcome obstacles and set more challenging goals than those

who have less confidence in their abilities. It is also expected

that people with high self efficacy generally set a higher level

of outcome expectations and are more likely to achieve theirdesired outcomes (Pereay et al., 2004). As such, employees

with higher self efficacy are expected to show more confidence

in their abilities and are more likely to provide quality service

to the customers. This, in turn, is expected to lead to a higher

level of customer satisfaction. Therefore:

H2-1. Employee self efficacy moderates the ES-CS

relationship: For employees who score high on self

efficacy, employee satisfaction will be more positivelyrelated to customer’s satisfaction.

A person’s social orientation often shows his or her willingness

to cooperate (Declerck and Bogaert, 2008). This disposition

has been regarded as distinct personal trait compared to other

traits since Kurzban and Houser (2001) showed that

individual differences in cooperative behavior were not

correlated with other personality factors such as the “Big

5”. Iedema and Poppe (2001) suggested that social valueconsists of five different constructs: cooperation,

individualism, competition, altruism, equality and maximin.

Among these constructs, cooperation is considered the most

pro-social oriented social value and it also leads to pro-social

behaviors (Iedema and Poppe, 2001).Given that cooperative orientation may lead to service

employees’ discretionary behavior which is often accompanied

by delivery of high quality service (Bettencourt, 1997; Groth,

2005), this study argues that cooperative orientation

moderate the relationship between ES and CS. That is,

employees with more cooperative orientation will be more

likely to engage in pro-social behavior and this will, in turn,

lead a higher level of cooperation, helpfulness, and kindness

(Lengnick-Hall et al., 2000). This cooperative orientation

will, in turn, improve customer satisfaction. Therefore:

H2-2. The employee’s cooperative orientation moderates the

ES-CS relationship: For those individuals who score

high on cooperative orientation, the corresponding

employee satisfaction will be more positively related

to customer’s satisfaction.

Organizational variables

Supervisory behaviors have been found to exert important

effects on job satisfaction of employee (Corner et al., 1989;

Kohli, 1985). In general, supervisory behaviors are

categorized into three types: person-organization fit,

organizational justice, and supervisory supports (Netemeyer

et al., 1997). In the present research, organizational justice

and supervisory support were our focal points and hence, this

study investigates whether organizational justice (in

particular, perceived fairness) and supervisory support

moderate the impact of ES on CS.The notion of reciprocity suggests that when employees

perceive fair treatment from the organization, they respond by

delivering high quality service to their customers. Empirical

studies also suggest that fairness perceptions affect job

satisfaction, which, in turn, positively affect job performance

(Dubinsky and Levy, 1989; Livingstone et al., 1995). Based

on these principles, this study predicts employees who

perceive fairness via appropriate rewards at the workplace

are more willing to deliver high level of services in interaction

with customers and this, in turn, increase customer

satisfaction. Therefore:

H2-3. Perceived fairness in reward allocation moderates the

ES-CS relationship: For those who score high on

perceived fairness, employee satisfaction will be more

positively related to customer’s satisfaction.

Employees’ perception about supervisory support, the degree

of support and consideration an employee recognizes from a

supervisor (Netemeyer et al., 1997), often influences their job

satisfaction (Wofford and Liska, 1993). The path-goal theory

also suggests job satisfaction is highly related to leadership

support (Brown and Peterson, 1993; Podsakoff and Hui,

1993). This indicates that a leader can increase employee

fulfillment and their job satisfaction by constructing more

fluid paths and help them attain their career goals (Churchill

et al., 1993). According to Ilies and Scott (2006), increased

satisfaction causes employees to engage in behaviors which

could be critical for organizational success as long as their

personal goals are aligned with organizational support. Thus,

this study posits that employees with high perceptions of

leadership support deliver a higher quality of customer

service, and this will also enhance customer satisfaction. For

this reason, the following hypothesis is proposed:

H2-4. Supervisory support moderates the ES-CS

relationship: For those who score high on perceived

supervisory support, employee satisfaction will be

more positively related to customer’s satisfaction.

Employee self efficacy was measured using four items developed

by Sujan et al. (1994). This scale measures the degree to which

employees feel confident with their job skills and their abilities to

successfully perform their job. Employee cooperative

orientation was measured from the employee’s perspective.




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Modified were three items from Bettencourt’s (1997) model to

create better fit for the situation of educational services.

Perceived fairness in relation with reward allocation was

measured by use of 3 scales from Netemeyer et al. (1997). This

study measured supervisory support by adapting 4 items

proposed by Netemeyer et al. (1997) and Babin and Boles

(1996). Figure 2 explains our research schemes in this study.

Results

The reliability of the constructs is reported in Table VI.

Evidence of internal consistency is provided by the composite

reliability since it is a less constraining index compared to

Cronbach’s alpha (Homburg and Giering, 2001). All values

are higher than the criteria proposed by Venkatraman (1990).The purpose of this study is to examine how the effect of ES

on CS differs according to the employee’s disposition and

work climate factors. To compare parameters across groups,

variance must be measured in a common metric for all groups

(Yoo, 2002). When testing the quality of factor loadings, the

present research imposed equality constraints on factor

loadings across the two groups, with fixed and free

parameters remaining consistent with that specified in the

baseline model for each group. As shown Table VII, full

metric invariance was supported; the chi-square differences

between the non-restricted model and full metric invariance

model were insignificant in the each moderator variable.This study verifies hypotheses through the chi-square

difference test (Dx2). This test has two steps. The first step is

to develop a constraint model by imposing an equality

constraint on the focal link. The second step is to compare the

chi-square between the free model and the constraint model.

The respondents were divided into two groups of high vs low

score based on the median of aggregated data representing

moderating variables (Stone and Hollenbeck, 1989) and

compared group differences to our focal link. With regards to

self efficacy, H2-1 predicted that this disposition would

moderate the effect of ES on CS. The result show that the

higher self efficacy, the greater impact of ES on CS

(Dx2ð1Þ ¼ 3:5, p , 0:10) though it was marginally significant.

The results also indicate that when the higher cooperative

orientation group is compared to the lower counterpart, a

greater impact of ES on CS is shown (Dx2ð1Þ ¼ 3:0, p , 0:10),

supporting H2-2 though this was marginally significant.

Unlike our expectations, H2-3 and H2-4 were not supported.

The results of the analyses are reported in Table VIII.

Discussion

Our results indicate partial support for the moderating effect

within H2. While H2-1 and H2-2 were marginally supported,

H2-3 and H2-4 were not supported. The culmination of our

outcomes asserts that dispositional variables moderate the

relationship between ES and CS, yet the same does not hold

true for organizational variables. Testing of H2-1 and H2-2

suggests that personal traits influence emotional interactions

between employees and customer. This is because satisfied

employees with high self efficacy or cooperative orientation

are more likely to display positive emotion, which stems from

job satisfaction, in interacting with customers. However,

unlike our predictions, organizational variables such as

supervisory support and perceived fairness did not moderate

the relationship between ES and CS. Organizational variables

may have little impact in helping employees’ job satisfaction

turn into higher quality service in interaction with customers

which also leads to higher level of satisfaction. The results

indicate that the personal trait of satisfied employees

facilitates efficacious interactions with customers but the

perception about organizational activities only have

diminutive effects on transferring employee satisfaction to

the customer. Our findings reinforce the importance of

recruiting the right employee especially in the educational

service business.

Figure 2 Comprehensive model explaining moderating effect

Table VI The composite reliability of moderating variables

Composite reliability

Self

efficacy

Cooperative

orientation

Perceived

fairness

Supervisory

support

0.705 0.772 0.777 0.899




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Great discussion and conclusion

This study identifies the ES-CS relationship by relating

customer satisfaction to employee performance model. Some

of the previous research probing this link was criticized for the

practice of measuring focal variables. For example, employee

satisfaction was assessed from the customer’s perception

under the assumption that it could be regarded as a good

proxy for true employee satisfaction (Vilares and Coelho,

2003). Different from previous research, the present research

was conducted based on dyadic data incorporating both the

customer and the corresponding employee as the unit of

analysis.The results of H1 suggest that the ES-CS relationship is

unilateral rather than mutual. In particular, using dyadic

data, this study found out employees’ job satisfaction leads to

customer satisfaction but not vice versa. This finding is

noteworthy because a possible common method bias has

been ruled out in the present study since it has been

analyzed based on dyadic data. We also examined the

variables which moderate the relationship between ES and

CS. For a hypothesis testing, two key variables –

dispositional variables and organizational variables were

identified. Self-efficacy and cooperative orientation are

considered dispositional variables while perceived fairness

and supervisory support are considered organizationally

related variables. This study found only dispositional

variables – self efficacy and cooperative orientation –

marginally moderate the effect of ES on CS. This indicate

that the higher the self efficacy/cooperative orientation, the

greater the impact of ES on CS.

Theoretical and managerial implications

The contribution of this current study is to relate the ES-CS

link to comprehensive models – employee models and

customer models – which were proved in previous research.

The findings of this analysis are consistent with the service-

profit chain perspective proposed by Heskett et al. (2008). It is

noteworthy to demonstrate that the relationship between

employee satisfaction and customer satisfaction is unilateral

rather than mutual. Our reasoning regarding this unilateral

relationship is as follows: Employee satisfaction and customer

satisfaction may have different antecedent variables. Customer

satisfaction may be determined depending on interaction with

employees and emotional bonding or connection during the

interaction, whereas employee satisfaction seems to be less

affected by customer satisfaction. Perhaps employees perceive

that customer evaluations are not relevant to their job

satisfaction, which are more likely to be determined by

factors such as salary, work environment, co-workers,

supervisors, and benefits. Simply put, customer satisfaction

may not be critical in forming employees’ job satisfaction.

According to our results, it is possible that previous research

which supported reciprocal effects from CS to ES might be

caused by methodological limitations measuring the

relationship ES and CS.The results also show that dispositional variables were

found to be moderating the ES-CS relationship marginally.

These findings could be interpreted that satisfied employees

with high self efficacy or cooperative orientation might be

more inclined to share these emotions with customers. When

the affective state interacts with personal traits, it generates

episodic behaviors such as discretionary action and extra role

behavior. This finding also suggests that top level

management in the service industry must take an active role

in recruiting employees who are confident in their abilities and

who display pro-social dispositions.

Limitations and future research

Although the results of the current study have little concern

for common method variance, there are some other problems

that may limit the implications of study. First, by using

educational services to probe the ES-CS relationship, the

outcomes of this study might be applicable in the educational

service context. Further studies in other types of services

seem necessary to generalize the outcomes of this study.

Another potential problem with the current study is the

relative simplicity of the comprehensive model tested. The

number of the variables examined in this study was relatively

small when considering that there were many other aspects in

relation to personality traits or organizational variables. To

further our understanding of the relationship between

Table VII The test for metric invariance

Self efficacy

Cooperative

orientation Perceived fairness Supervisory support

n df n df n df n df

Full metric invariance (x2) 1,727.7 1,196 1,784.7 1,196 1,733.1 1,196 1,743.8 1,196

Non restricted model (x2) 1,690.1 1,170 1,758.9 1,170 1,694.4 1,170 1,726.4 1,170

Dx226 37.6 25.8 38.7 17.4

Note: Dx226 value of 38.9 or greater are significant at the 0.05 level

Table VIII The results for the effect of moderating variables in ES-CSlink

High group Low group

Path

estimates

Path

estimates Dx2(1)

n t-value n t-value n df

Dispositional variablesSelf efficacy 0.209 2.718 0.034 0.574 3.5 1 *

Cooperative orientation 0.314 2.340 0.076 1.595 3.0 1 *

Organizational variablesPerceived fairness 0.144 2.218 0.055 0.732 0.9 1

Supervisory support 0.189 2.353 0.055 0.848 1.7 1

Note: *Means p , 0.10




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employee satisfaction and customer satisfaction, more

variables need to be included in the model by obtaining

more information from both employees and customers.

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About the authors

Dr Hoseong Jeon is an Associate Professor in the Department

of Business Administration at Hallym University. He receivedan MA in Advertising at Michigan State University and PhD

in Business Administration at Seoul National University. Hiscurrent research interests include customer relationshipmanagement, advertising effects and determinants of

customer loyalty. Dr Jeon’s research has been published inthe journals such as Journal of the Academy of MarketingScience.

Dr Beomjoon Choi is an Assistant Professor of Marketing

at the College of Business Administration, California StateUniversity, Sacramento. He earned his PhD from the

University of Kansas. Dr Choi’s recent research includes:sequential decision making, marketing communication,

prejudice, service failure and recovery. Dr Choi’s researchhas been published in numerous journals such as InternationalJournal of Electronic Commerce, Serviced Industries Journal, andJournal of Education for Business. Beomjoon Choi is the

corresponding author and can be contacted at:[email protected]

Executive summary and implications formanagers and executives

This summary has been provided to allow managers and executivesa rapid appreciation of the content of the article. Those with aparticular interest in the topic covered may then read the article




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in toto to take advantage of the more comprehensive description ofthe research undertaken and its results to get the full benefit of thematerial present.

You might think that a service employee who feels happy withhis or her job will have an attitude towards the customerwhich makes that customer feel good about themselves. Inother words one person’s demeanour would have a positiveaffect on the other – more simply, that employee satisfactionleads to customer satisfaction. And you’d be right to thinkthat. You might even think it’s common sense.

You might also think that the reverse is true – that acustomer’s satisfaction with the service delivery affects theemployee’s satisfaction. Maybe you might even think that thatwas common sense too. But you’d be wrong. At leastaccording to research conducted in an educational servicecontext in Korea (where private tutors visit customers’ homeson a regular basis) which suggests that the employeesatisfaction (ES) customer satisfaction (CS) relationship isunilateral rather than mutual. In short, it found thatemployees’ job satisfaction leads to customer satisfactionbut not vice versa.

This might be because employee satisfaction and customersatisfaction may have different antecedent variables.Customer satisfaction may be determined depending oninteraction with employees and emotional bonding, whereasemployee satisfaction seems to be less affected by customersatisfaction. Perhaps employees perceive that customerevaluations are not relevant to their job satisfaction, whichare more likely to be determined by factors such as salary,work environment, co-workers, supervisors, and benefits.

Consequently, customer satisfaction may not be critical informing employees’ job satisfaction. It is possible thatprevious research which supported reciprocal effects fromCS to ES might be caused by methodological limitationsmeasuring the relationship ES and CS.

Study results show that dispositional variables were foundto be moderating the ES-CS relationship marginally. Thesefindings could be interpreted that satisfied employees withhigh self efficacy or cooperative orientation might be moreinclined to share these emotions with customers. When theaffective state interacts with personal traits, it generatesepisodic behaviors such as discretionary action and extra rolebehavior. This finding also suggests that top levelmanagement in the service industry must take an active rolein recruiting employees who are confident in their abilities andwho display pro-social dispositions.

In “The relationship between employee satisfaction andcustomer satisfaction”, Hoseong Jeon and Beomjoon Choitested two key variables which might moderate therelationship between ES and CS – dispositional variablesand organizational variables. Self-efficacy and cooperativeorientation are considered dispositional variables while

perceived fairness and supervisory support are considered

organizationally related variables. This study found only

dispositional variables marginally moderate the effect of ES

on CS. This indicates that the higher the self efficacy/

cooperative orientation, the greater the impact of ES on CS.The influence of employee satisfaction on customer

satisfaction has received considerable attention in marketing

literature and practice in recent years. It has been argued that

behavior of satisfied employees plays an important role in

shaping customers’ perceptions of business interactions. This

phenomenon may occur as satisfied employees are more apt

to be friendly, enthusiastic, attentive, and empathetic toward

customers.According to the concept of partner effects, a person is in

some way verbally or nonverbally influenced by the

characteristics and behaviors displayed by his or her

counterpart. Additionally, the contagion effect explains how

satisfied employees influence others around them to feel good.

As such, it has been said that employee job satisfaction is

positively related to customers’ perceptions of service. This

notion suggests that employees who have higher levels of job

satisfaction also believe they are able to deliver excellent

service. It is also expected that happy or satisfied employees

are more inclined to share these positive emotions with

customers.Compared to the influence of ES on CS, the impact in the

opposite direction, although not supported by this research,

has had support of theories such as the social exchange theory

and the psychological contract theory. Central to these

conceptions is the norm of reciprocity: Customers satisfied

with their counterpart will engage in cooperative behavior as

reciprocation for those who have benefited them. Previous

research found that customers who developed a bond with the

employees also were likely to care about employee wellbeing.

If customers like the performance of the employee and express

gratitude or satisfaction, in turn, it is also expected to lead to a

higher level of employee satisfaction. In other words, positive

reinforcement from customers increases the satisfaction of

sales employee.The results here – applied in the context of an educational

service – might not, of course, be applicable elsewhere. Also,

the number of the variables examined in this study was

relatively small when considering that there were many other

aspects in relation to personality traits or organizational

variables. To further our understanding of the relationship

between employee satisfaction and customer satisfaction,

more variables need to be included in the model by obtaining

more information from both employees and customers.

(A precis of the article “The relationship between employee

satisfaction and customer satisfaction”. Supplied by Marketing

Consultants for Emerald.)




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