Effects of organizational and serviceperson orientation on customer loyalty

Abstract

Purpose – Within the service industry, the serviceperson enhances customer loyalty by increasing customer benefits and decreasing customer costs, but is also embedded within and influenced by the organizational context. Thus, the influence of a serviceperson's orientation may differ or even conflict with the organization's orientation. There are two purposes to this paper. The paper first aims to develop a conceptual model that clearly distinguishes between benefit- and cost-based explanations of the effect of the serviceperson. The paper's second aim is to examine the impact of the organization on the serviceperson's ability to foster customer loyalty through interactions with customers. Design/methodology/approach – A survey methodology is used and data gathered from managers and customers. Multi-group structural equation modeling is employed to test partial mediation and partial moderation theses. Findings – In line with social exchange theory, the paper finds that a serviceperson's customer orientation can reduce customer costs and increase customer benefits. Furthermore, consistent with the literature on strategic orientations, when the serviceperson's organization evinces a low competitive service orientation, it attenuates the direct effects of a serviceperson's customer orientation on customer loyalty, such that the direct effect no longer exists. Originality/value – The paper shows how multiple direct and indirect pathways connect serviceperson customer orientation to customer loyalty. It also shows how the effect of serviceperson customer orientation on customer loyalty depends on the organizational context and specifically the extent to which the organization embraces a competitive service orientation. The moderating role of organizational context has implications both for social exchange theory specifically and theories of exchange, such as transaction cost analysis more generally.