Jan Wieseke

Social Identity and the Service-Profit Chain

The conventional service-profit chain (SPC) proposes that a firms financial performance can be improved through a path that connects employee satisfaction, customer orientation, customer satisfaction, and customer loyalty. In this article, a complementary SPC that is built on both a conventional path and a social identity-based path is introduced. The latter SPC path centrally builds on customer- and employee-company identification as a core construct. Using a large-scale triadic data set that includes data from employees, customers, and firms, the authors find strong support for the extended SPC, which accounts for important customer (loyalty and willingness to pay) and firm (financial performance) outcomes. In addition, the effects of company identification exist incrementally beyond the effects of the conventional SPC path.

The Role of Leaders in Internal Marketing

There is little empirical research on internal marketing despite its intuitive appeal and anecdotal accounts of its benefits. Adopting a social identity theory perspective, the authors propose that internal marketing is fundamentally a process in which leaders instill into followers a sense of oneness with the organization, formally known as “organizational identification” (OI). The authors test the OI-transfer research model in two multinational studies using multilevel and multisource data. Hierarchical linear modeling analyses show that the OI-transfer process takes place in the relationships between business unit managers and salespeople and between regional directors and business unit managers. Furthermore, both leader-follower dyadic tenure and charismatic leadership moderate this cascading effect. Leaders with a mismatch between their charisma and OI ultimately impair followers’ OI. In turn, customer-contact employees’ OI strongly predicts their sales performance. Finally, both employees’ and sales managers’ OI are positively related to their business units’ financial performance. The study provides empirical evidence for the role of leaders, especially middle managers, in building member identification that lays the foundation for internal marketing.

Customer Satisfaction, Analyst Stock Recommendations, and Firm Value

Although managers are interested in the financial value of customers and researchers have pointed out the importance of stock analysts who advise investors, no studies to date have explored the implications of customer satisfaction for analyst stock recommendations. Using a large-scale longitudinal data set, the authors find that positive changes in customer satisfaction not only improve analyst recommendations but also lower dispersion in those recommendations for the firm. These effects are stronger when product market competition is high and financial market uncertainty is large. In addition, analyst recommendations at least partially mediate the effects of changes in satisfaction on firm abnormal return, systematic risk, and idiosyncratic risk. Analyst recommendations represent a mechanism through which customer satisfaction affects firm value. Thus, if analysts pay attention to Main Street customer satisfaction, Wall Street investors should have good reason to listen and follow. Overall, this research reveals the impact of satisfaction on analyst-based outcomes and firm value metrics and calls attention to the construct of customer satisfaction as a key intangible asset for the investor community.

Marketing Performance Measurement Systems: Does Comprehensiveness Really Improve Performance?

Comprehensive performance measurement systems such as the balanced scorecard have received considerable attention in marketing. However, whether and under which circumstances comprehensiveness as a performance measurement system property is desirable and contributes to firm performance is still a subject of debate in research and practice. To address this issue, the authors use dyadic field data from marketing managers and management accounting executives and extend prior work by developing and testing a more complex, contingency-based model. The empirical results confirm the developed framework. In particular, the results show that the relationship of comprehensiveness in a marketing performance measurement system to firm performance is conditional. Marketing alignment and market-based knowledge mediate this relationship, depending on marketing strategy, marketing complexity, and market dynamism. These insights explain mixed findings of previous research and provide important implications for research and managerial practice.

The Identity-Matching Principle: Corporate and Organizational Identification in a Franchising System

This paper examines corporate and organizational identification in franchisee organizations from the perspective of the social identity approach. We propose the identity-matching principle (IMP) as a heuristic for understanding and predicting the different effects of nested identifications. According to the IMP, when identifications and relevant behavioural or attitudinal outcomes address the same level of categorization, their relationship will be stronger. A study is presented with employees (n=281) matched to managers (n=101). Supporting the IMP, organizational identification (but not corporate identification) predicted customer-oriented behaviour on the level of the local organization, whereas corporate identification (but not organizational identification) predicted attitude toward corporate citizenship behaviour. Furthermore, multilevel analyses showed that these relationships were enhanced in organizations where managers displayed the respective behaviours themselves to a greater extent. Implications for theorizing about leadership and organizational attachments are discussed alongside recommendations for organizational practitioners.

On the Role of Empathy in Customer-Employee Interactions

While the service literature repeatedly emphasizes the role of empathy in service interactions, studies on empathy in customer-employee interactions are nearly absent. This study defines and conceptualizes employee and customer empathy as multidimensional constructs and empirically investigates their impact on customer satisfaction and customer loyalty. A quantitative study based on dyadic data and a multilevel modeling approach finds support for two effects of empathy in service interactions. The study reveals that customer empathy strengthens the positive effect of employee empathy on customer satisfaction, leading to more “symbiotic interactions.” The findings also indicate that empathic customers are more likely to respond to a dissatisfying encounter with “forgiveness,” in the sense that customer empathy is able to mitigate negative effects of customer dissatisfaction on customer loyalty. From these empirical results, the authors derive several implications for service research and the management of service encounters. In particular, the present study provides a valuable basis for strategies of “interaction routing,” that is, matching customers and employees on the basis of their psychological profiles to create smooth and satisfying service interactions. The authors elaborate on approaches to implement this strategy in service organizations.

Willing to Pay More, Eager to Pay Less: The Role of Customer Loyalty in Price Negotiations

This article is the first to empirically examine the effect of customer loyalty in retail price negotiations. Across three field studies and one negotiation experiment, the authors establish what they call the “loyalty–discount cycle”: in price negotiations with salespeople, loyal customers receive deeper discounts that, in turn, increase customer loyalty, resulting in a downward spiral of a companys price enforcement. The reason for the positive effect of customer loyalty on discount is twofold: (1) loyal customers demand a reward for their loyalty and invoke their elevated perceived negotiation power, and (2) to retain loyal customers, salespeople grant discounts more willingly. Furthermore, the mechanisms are moderated by the basis of a customers loyalty (price vs. quality) and the length of the relationship between the salesperson and the customer. To escape the loyalty–discount cycle, salespeople can use functional and relational customer-oriented behaviors. The study helps managers and salespeople optimize their price enforcement and servicing of loyal customers.

Warm Glow or Extra Charge? The Ambivalent Effect of Corporate Social Responsibility Activities on Customers’ Perceived Price Fairness

Prior research has firmly established that consumers draw benefits from a firms engagement in corporate social responsibility (CSR), especially the feeling of a “warm glow.” These benefits positively affect several desirable outcomes, such as willingness to pay and customer loyalty. The authors propose that consumers do not blindly perceive benefits from a firms CSR engagement but tend to suspect that a firms prices include a markup to finance the CSR engagement. Taking customers’ benefit perceptions and price markup inferences into account, the authors suggest that CSR engagement has mixed effects on consumers’ evaluation of price fairness and, thus, on subsequent outcomes such as customer loyalty. The authors conduct one qualitative study and four quantitative studies leveraging longitudinal field and experimental data from more than 4,000 customers and show that customers indeed infer CSR price markups, entailing mixed effects of firms’ CSR engagement on price fairness. The authors find that perception critically depends on customers’ CSR attributions, and they explore the underlying psychological mechanisms. They propose communication strategies to optimize the effect of CSR engagement on perceived price fairness.

Engaging Customers in Coproduction Processes: How Value-Enhancing and Intensity-Reducing Communication Strategies Mitigate the Negative Effects of Coproduction Intensity

Coproduction offerings, in which customers engage in the production of goods and services, are ubiquitous (e.g., ready-to-assemble products, self-service technologies). However, although previous research has predominantly identified beneficial aspects of coproduction in contrast to traditional firm production, the pivotal role of coproduction intensity within coproduction processes has largely been neglected. Furthermore, little is known about strategies that firms can employ to positively influence customers’ perceptions of coproduction processes. Drawing on a large field experiment with 803 customers engaging in actual coproduction processes, the current study makes a first attempt to address these research voids. The results show that coproduction intensity negatively affects customers’ satisfaction with the coproduction process. Furthermore, the study offers first insights into how firms can mitigate these negative effects by employing corporate communication strategies that either emphasize specific coproduction value propositions (value-enhancing communication strategies) or highlight additional coproduction service supplements (intensity-reducing communication strategies).

How Leaders’ Motivation Transfers to Customer Service Representatives

Motivating customer service representatives (CSRs) to their highest performance levels is a major task of service unit managers. However, previous studies focused on the impact of leader behavior on follower motivation, while the influence of leader motivation on follower motivation has not been investigated yet. Thus, the authors develop and test a multilevel framework for the motivation spillover principle, which holds that the three components of Vroom’s motivation theory transfer from managers to CSRs. The authors apply this framework to the context of service technology adoption and test it with a matched multilevel sample of 387 service unit managers, 1,018 CSRs, and objective company records. The results support the notion of a motivation spillover from managers to CSRs, which exists incrementally beyond the direct effect of manager’s adoption behavior on CSR’s adoption. However, not all motivation components transfer unconditionally but are contingent on charismatic leadership and manager-CSR similarity——a finding that implies for researchers that an undifferentiated view of motivation in multilevel settings might not suffice. For organizations, the findings suggest that managers are important multipliers of motivation and thus organizations should direct their motivation efforts toward middle-level managers, as they might turn into serious roadblocks to CSR motivation.