Killing two birds with one stone: Cross-selling during service delivery

JBR-07945; No of Pages 9 Journal of Business Research xxx (2013) xxx–xxx

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Journal of Business Research

Killing two birds with one stone: Cross-selling during service delivery Paul Patterson a,⁎, Ting Yu a, Narumon Kimpakorn b a b

School of Marketing, The University of New South Wales, Australia Faculty of Business, Chiang Mai University, Chiang Mai, Thailand

a r t i c l e

i n f o

Article history: Received 29 April 2013 Received in revised form 28 October 2013 Accepted 14 November 2013 Available online xxxx Keywords: Cross-selling Service Frontline employee Productivity Dual emphasis strategy

a b s t r a c t Operational efficiency is a central goal of service firms. The past decade witnessed the replacement of people with IT systems in service industries, yet the spotlight recently shifted to how frontline employees (FLEs) might perform a dual role by achieving sales and service goals simultaneously. This study examines the predictive ability of three well-established constructs (psychological climate perceptions, leader–member exchange, and employee self-efficacy) to model sales and service performance empirically across a range of service settings. The authors also examine the moderating impacts of environmental dynamism and employee experience, to identify the conditions in which climate, leader–manager exchange, and self-efficacy have greater or weaker impacts on FLEs' ability to meet both sales and service targets. The results indicate the significance of all three main effects in driving sales and service performance and support the moderating effects of environmental dynamism and experience. © 2013 Elsevier Inc. All rights reserved.

1. Introduction Increased productivity is the mantra of many service firms today. In the highly competitive global marketplace, service firms must grow revenue and reduce costs—that is, achieve more with less. In this vein, many service firms focus on how to motivate frontline employees (FLEs) to add, beyond a predominately customer service or sales role, the responsibility for achieving both sales and service targets. Such FLEs must provide sufficiently high levels of service quality and also devote energy to explore up- and cross-selling opportunities (Mittal, Anderson, Sayrak, & Tadikamalla, 2005; Rust & Huang, 2012). Inspired by this potential to increase revenues while keeping operating costs constant, major financial players such as Bank of America, British Airways, Kasikorn Bank (Thailand), and Commonwealth Bank (Australia) assign cross-selling responsibilities to FLEs to achieve productivity increases. This approach reflects a dual-emphasis strategy (Mittal et al., 2005; Rust, Moorman, & Dickson, 2002), such that capable firms adopt a cost and a revenue emphasis together to manage profitability through both efficiencies and customer satisfaction. Imposing sales and service targets offers promising potential for increasing productivity but also creates challenges (Murcott, 2007; Reider, 2008). In addition, one report suggests that firms can increase revenues by 10% by integrating crossand upselling functions into traditional service centers (Eichfeld, Morse, & Scott, 2006), but some observers suggest that this figure is closer to 50% (Murcott, 2007). ⁎ Corresponding author. Tel.: +61 2 9385 1105. E-mail addresses: [email protected] (P. Patterson), [email protected] (T. Yu), [email protected] (N. Kimpakorn).

As Rust et al. (2002) and Mittal et al. (2005) recognize, transforming traditional service units into service- and revenue-generating units can also lead to unexpected, disappointing consequences, such as deterioration in both service and sales (Aksin & Harker, 1999) or employee dissatisfaction (Dart, 2009). Selling is incommensurate with service, which creates high psychological barriers to blending the functions (Jasmand, Blazevic, & de Ruyter, 2012). For example, Starbucks' falling share price and lack of U.S. growth likely resulted from demoralization among frontline baristas because management, in pursuit of productivity gains, imposed sales performance targets in a setting differentiated by the delivery of exceptional service and personal engagement with customers (Berfield, 2009). In turn, the purpose and contribution of this study is twofold: to examine the explanatory power of FLE selfefficacy (individual difference variable), the psychological climate for sales and service (organizational contextual variable), and leader– manager exchange (interpersonal dynamic variable) in predicting sales and service performance, and to test the moderating impacts of environmental dynamism and job experience. 2. Background To date, marketing literature rarely considers the simultaneous pursuit of customer service and sales goals. Sales literature tends to focus on the performance outcomes of various sales behaviors (Plouffe, Hulland, & Wachner, 2009); customer service research addresses the service encounter, customer experience, engagement, and accompanying value creation (Bitner, Booms, & Tetreault, 1990; Brodie, Hollebeek, Jurić, & Ilić, 2011; Oliver, 1980). Few studies attempt to combine the streams (cf. Jasmand et al., 2012). Selling even may be incompatible with excellent customer service; a retail salesperson with specific

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Please cite this article as: Patterson, P., et al., Killing two birds with one stone: Cross-selling during service delivery, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.11.013

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sales targets minimizes customer engagement (customer service) time, resulting in unsatisfying overall customer experience. A bank teller at rush hour, faced with a lengthy queue, must decide whether to deliver quality service by dealing with each customer efficiently, to reduce wait times, or explore up- and cross-selling opportunities that may increase sales but slow down the service. Traditional, passive customer service activities center on well-defined service requests, ready information access, repetition, and standardization, with emphases on implementation and execution, as well as on being reliable, courteous, and efficient. In contrast, up- and cross-selling require FLEs to possess greater product knowledge, be proactive, take risks, identify sales opportunities, engage in non-routine tasks, close sales, and be flexible, all for uncertain returns. The uncertainty and variability associated with up- and cross-selling are incompatible with the efficiency and reliability emphasis of a customer service role, such that the latter may limit the time and effort devoted to selling (Jasmand et al., 2012). Successfully performing dual roles also requires self-confidence and self-belief. Self-efficacy, which refers to the person's belief in his or her ability to succeed in specific situations, is central to Bandura's (1977) social cognitive theory, which emphasizes the role of observational learning and social experience. By recalling how others act in an environment, FLEs determine their own work (and social) behaviors and cognitive processes. Thus FLEs' psychological climate perceptions likely shape their understanding of job expectations and guide work behavior (Lam, 2012). Finally, leader–member exchange (LMX) likely has a strong influence on organizational service–sales performance (Simsek, Heavey, Veiga, & Souder, 2009). The relationship between staff and a direct supervisor also reflects an important aspect of the work environment that should affect employee performance (Goodwin, Bowler, & Whittington, 2009). With regard to likely moderators, work experience is perhaps the most commonly encountered and researched personnel concept, with only a weak impact on job performance (Quinones, Ford, & Teachout, 1995). Consumers' brand experience (analogous to work experience)

serves as a moderator in previous studies that model customer satisfaction, perceived performance, commitment, and even loyalty (Johnson & Mathews, 1997; Patterson, 2000), because past experience shapes how people perceive uncertainty and ambiguous purchase situations (Thøgersen, 2002). Therefore, FLEs' on-the-job experience should moderate the impacts of LMX and climate on service and sales performance. Finally, the present research includes environmental dynamism (Joshi & Campbell, 2003) as a moderator, because the impact of a dramatically changing competitive environment and FLEs' expectations may override other signals and weaken their impacts on performance. Fig. 1 depicts this conceptual framework. 2.1. Research hypotheses 2.1.1. Self-efficacy Self-efficacy helps explain and predict variations in employees' onthe-job performance (Pimpakorn & Patterson, 2010) and customer perceptions of service quality (Hartline & Ferrell, 1996). A central component of Bandura's (1977) social learning theory, self-efficacy is a person's beliefs about his or her abilities to mobilize resources and successfully execute a specific task in a given context. Self-efficacy relates positively to proactive behaviors (e.g., identifying opportunities to improve processes, proactive problem solving, proactive implementation (Crant, 2000). To integrate dual service and sales roles, staff must be proactive. For example, during a service encounter, an FLE might take the initiative to identify a customer's problem and solution, even before being requested by the customer. Staff with high self-efficacy thus should generate more task-appropriate strategies (Marrone, Tesluk, & Carson, 2007). Bandura (2001) suggests that human agency plays a larger role in human behavior than previously thought. If decisions reflect individual perceptions, more than rewards and punishments (cf. Kreitner & Luthans, 1984), self-efficacy may determine how effectively and efficiently an employee completes work tasks. Specifically, higher self-efficacy should increase the likelihood that the employee

Fig. 1. Contingency model of frontline employees' pursuit of service–sales goals.

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initiates tasks, sustains task accomplishment efforts, and persists in the face of difficulties or failure (Mittal, Ross, & Tsiros, 2002; Salanova, Peiró, & Schaufeli, 2002). This discussion implies that FLEs with high selfefficacy generate task-appropriate strategies and embrace dual roles, so that H1. Employees' self-efficacy associates positively with the achievement of service and sales goals. 2.1.2. Psychological climate A psychological climate consists of employees' perceptions of certain work behaviors as encouraged, supported, and rewarded, such that the climate fosters the desire or provides a rationale to encourage a certain type of behavior (Raub & Liao, 2012). With these perceptions, people can interpret events, predict possible outcomes, and assess the appropriateness of intended actions. In particular, FLEs' perceptions of organizational climates shape understanding of job expectations and work behaviors (Lam, 2012; Paulin, Ferguson, & Bergeron, 2006), suggesting an individual-level analysis (Parker et al., 2003). The psychological climate sends a broad range of signals; most studies address the signals that spark a certain type of behavior, depending on the strategic focus or research interest, such as initiative, innovation, or safety (Schneider, White, & Paul, 1998); or improved service quality (e.g., Raub & Liao, 2012). This study proposes that the strategic effort to pursue service and sales goals simultaneously creates a service–sales climate, as a subset of the psychological climate, that reflects employees' perceptions of the extent to which their firm emphasizes service and sales, which signals the FLEs to work toward those dual goals. Therefore: H2. Employees' perceptions of the service and sales climate associates positively with their service–sales performance. 2.1.3. Leader–member exchange (LMX) The relationship-based approach to leadership challenges the assumption that leaders display consistent behavior toward every subordinate; instead, leaders may develop different relationships with different subordinates. Differences in various leader–member relationships influence subordinates' job performance (Schriesheim, Castro, & Cogliser, 1999). In turn, leader–member exchange (LMX) offers a relational construct, focusing on the depth and quality of a worker's unique social exchange relationship with an immediate supervisor (Li, Liang, & Crant, 2010; Schriesheim et al., 1999). Ratings of LMX reflect the level of mutual understanding and trust, as well as the parties' compatibility in working as an effective team (Janssen & van Yperen, 2004). Employees gain better support from good relationships with leaders, in return for their loyalty and commitment (Liao, Liu, & Loi, 2010). To pursue service and sales goals simultaneously, FLEs must put in additional effort and be competent and creative to deal with sometimes conflicting priorities. A good exchange relationship with a supervisor fosters feelings of personal obligation, gratitude, and trust that drive FLEs to “go the extra mile” (Goodwin et al., 2009; Vidyarthi, Liden, Anand, Erdogan, & Ghosh, 2010). Moreover, supervisors provide jobrelated information, resources, and socio-political support that are crucial to competence development and learning (Bezuijen, Van Den Berg, Van Dam, & Thierry, 2009). Although leaders often lack time or resources and may be unable to provide sufficient support (Eisenberger et al., 2010), FLEs who have a high quality exchange relationship with supervisors tend to receive more positive encouragement and recognition for their work. Therefore, members with strong LMX take creative initiatives to meet performance goals, especially when they believe that their supervisors might implement those ideas, and feel less threatened by new ideas that fail (Liao et al., 2010). Whereas both LMX and psychological climate send signals to FLEs to pursue simultaneous service and sales goals, climate sends signals

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through organizational rewards and support (i.e., non-relational reinforcement), whereas LMX fosters this pursuit by encouraging the employee's perceived obligation to “pay back” the direct supervisor, a form of relational-based reinforcement (Hofmann, Morgeson, & Gerras, 2003). Furthermore, the psychological climate reflects an employee's perception of the firm-level emphasis, whereas LMX reflects the employee's psychological contract with an immediate supervisor, leading to certain behavior to honor the contract (Avolio, Walumbwa, & Weber, 2009). Because good LMX increases FLEs' competence and willingness to perform dual roles, this research predicts: H3. LMX associates positively with the achievement of service and sales goals. 2.2. Moderator variables 2.2.1. Environmental dynamism Fig. 1 indicates that sales–service climate and LMX exert direct impacts on a firm's performance, though this impact may vary in different conditions. For example, organizations (and employees) interact with the external environment, and environmental dynamism is an important facet (Grewal, Comer, & Mehta, 2001). Environmental dynamism refers to the rate of change in an organization's environment (Simsek, 2009). Service firms function in environments that are dynamic—that is, frequently changing or shifting and characterized by increasing competition, evolving customer expectations and preferences, and shifting industry boundaries (Joshi & Campbell, 2003). Changing customer expectations and evolving competitor actions are relevant for this study. First, service firms seek to increase productivity by increasingly outsourcing some functions. Second, service firms substitute technologies for labor (AAP Reuters, 2012). Together with increased competition in most services, these developments mean that job security and firm survival likely dominate employees' thoughts in industries with high environmental dynamism. Without the ability to predict environmental changes, FLEs feel less certain of outcomes of invested efforts, which depend on factors beyond their control, and thus suffer more stress and anxiety (Ensley, Pearce, & Hmieleski, 2006). In a highly dynamic environment, even with a strong sales–service climate and good LMX, staff still may be reluctant to invest the effort required, because of their perceptions of risk, hardship, and obstacles. Empirical evidence of a moderating effect of environmental dynamism is rare though (Cao, Gedajlovic, & Zhang, 2009; Wang & Li, 2008). No study explores this moderator in the relationship between organizational forces, such as sales–service climate or LMX, and performance. Individual actions and reactions in a work environment depend on the behaviors that individuals observe and experience (i.e., service–sales climate and LMX); the decision to invest more effort also depends on personal judgments of necessary effort and likely obstacles, as well as uncertainty about the return on investment (Bandura, 1999). In a more stable environment, staff feel more certain about the investment, which lowers the perceived risk of hardship and obstacles. In turn, the service–sales climate and LMX have maximal positive impacts on sales and service performance. In a highly dynamic environment though, the positive impact of climate and LMX on performance likely diminishes. Thus: H4. In conditions of lower environmental dynamism, (a) sales–service climate and (b) LMX have greater impacts on FLEs' service–sales performance than in conditions of higher dynamism. 2.2.2. Job experience Work experience refers to previously experienced and perceived events and situations that relate directly to the execution of current task performance. Such job-relevant knowledge, gained over time, is relevant for many human resource functions (Quinones et al., 1995) and may moderate relationships among sales force perceptions and performance too (Russ & McNeilly, 1995). According to marketing literature,

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consumer experience similarly influences consumers' evaluative processes and moderates various linkages leading to satisfaction, loyalty, or brand commitment (Patterson, 2000). The current study focuses specifically on experience with the specific job role under investigation, rather than on more general experience in various positions, because an FLE's focal job experience may create conditions that compensate for lower self-efficacy. Experience relates to knowledge, so an inexperienced FLE might not have acquired the skills, techniques, or psychomotor habits that produce superior sales and service performance, such that this employee must rely more heavily on self-confidence. Self-efficacy is a motivational belief in the person's capabilities to complete a specified task, as required for service delivery (Van Beuningen, de Ruyter, Wetzels, & Streukens, 2009). Along similar lines, the sales–service climate should exert a greater impact on service–sales performance when the FLE has more experience, because experienced employees tend to be more responsive to a climate that offers support and rewards. In interpreting the work environment, employees integrate day-to-day perceptions with broader climate perceptions (Dietz, Pugh, & Wiley, 2004). Furthermore, experienced employees should place a premium on excellent communications with their supervisor. The present study thus anticipates a lag effect (Earley, Northcraft, Lee, & Lituchy, 1990), such that less experienced FLEs have insufficient time to appreciate the value of good communications with a supervisor. Therefore, H5. With more focal job experience, (a) FLE's self-efficacy has a weaker impact on their performance, but (b) the sales–service climate and (c) LMX have greater impacts on performance, compared with a condition with less focal job experience. 3. Method A cross-sectional survey conducted in Thailand collected data from 212 FLEs in five service industries who dealt face-to-face with customers and who were responsible (and rewarded) to achieve both customer service and sales targets. 3.1. Data collection The present research started with 12 qualitative interviews of FLEs and their supervisors to gain insights into the factors that drive service–sales performance, as well as the moderating factors that might strengthen or weaken their impacts. Five service organizations in different industries (life insurance, telecommunications, cosmetics, retail banking, and retailing) agreed to participate in the study and granted access to FLEs for the data collection. In addition, the authors received permission to obtain supervisor ratings of the service–sales performance of each FLE. The employees had direct, customer-facing, sales and service roles (i.e., no call center operators). The sample profile consisted of 70% female and 30% male respondents, with 25% aged 18–25 years, 51% 26–35 years, and 24% older than 35 years. The average tenures were 5.1 years (SD = 5.0) in the focal industry and 4.17 years (SD = 4.9) in the current organization. The sample sizes for each industry were as follows: retailing 88, banking 45, insurance 36, telecommunications 30, and cosmetic clinic 13. Because the study measures came from Western origins, their application to an Eastern, collectivist culture might suffer from divergent meanings. Twelve exploratory, in-depth interviews were conducted in Thailand by one of the authors with bilingual research assistants. This phase established construct equivalence (i.e., functional, conceptual, and category) for the questionnaire administered in Thai. The English version of the questionnaire was forward-translated by bilinguals whose mother tongue was Thai (Hambleton, 1993), then backtranslated by bilingual authors whose native language was English (Brislin, Lonner, & Thorndike, 1973), to establish equivalence of meaning. Finally, pretests of the instructions, sequences of questions, and

interviewing techniques with 12 respondents ensured equivalent English meanings of these elements. Following pilot tests, MBA students distributed the self-administered questionnaires to employees in the five cooperating firms, located in an urban area of Thailand's second largest city, Chiang Mai. The management support for the study combined with the personal distribution and collection of questionnaires by an independent third party (students from a well-known, highly reputable regional university) prompted high response rates of 75–84% across the industries, so nonresponse concerns were not an issue. 3.2. Measures The study constructs all came from prior literature that demonstrated their sound measurement properties and construct validity. Moreover, a confirmatory factor analysis procedure confirmed the constructs' sound measurement properties. The dependent variable, service–sales performance, came from each FLE's direct supervisor, who rated each employee's performance separately for sales and service. Without a published scale on which to draw, this study used two newly developed questions with a seven-point Likert scale: “This employee sells more than other colleagues” and “This employee delivers better service quality than their colleagues.” These items have both face and content validity and accord with Rossiter's (2002, 2011) calls to use single, general item measures in appropriate circumstances. In accordance with similar studies (e.g., Atuahene-Gima, 2005; Gibson & Birkinshaw, 2004), the dependent variable (FLEs' service–sales performance) was operationalized as an index of supervisor-rated service and sales performance. Among the independent variables, self-efficacy was the extent to which employees felt confident about their job skills and abilities to achieve sales and service tasks. This measure used a four-item, sevenpoint Likert scale developed by Sujan, Weitz, and Kumar (1994). The assessment of sales–service climate used a four-item Likert scale adapted from Yoon, Beatty, and Suh (2001), which included both sales and service components. The seven items to capture LMX came from Janssen and van Yperen (2004). For the two moderator variables, environmental dynamism relied on the four-item scale from Grewal et al. (2001), and the focal job experience measure entailed how long (in years) each respondent worked in the current position in the company. This latter measure is common in management research (Earley et al., 1990; Quinones et al., 1995). As noted, extensive pretesting assessed the relevance and meaning of the items, which resulted in minor modifications to suit the industries and the cultural context. All questions and the measurement properties appear in Table 1. 3.3. Control variables Demographics (gender and age) served as control variables. To assess whether industry type had an impact, this research split the sample into industries with membership relationships (i.e., retail banking, telecommunications) versus those without such relationships (Lovelock, 1983). The former have access to considerable customer data and thus greater opportunity to cross-sell products while still providing given levels of service. This categorization served as an industry dummy variable in the analysis. These control variables allow for more robust tests of the hypotheses. 3.4. Scale evaluations Other than the index of FLE service–sales performance, the constructs underwent scale purification using confirmatory factor analysis (CFA). In establishing the unidimensionality of the self-efficacy, climate, LMX, and environmental dynamism measures, after dropping one item from the self-efficacy scale, no standardized residual covariances were greater than ± 2.58. An overall measurement model (including self-

Please cite this article as: Patterson, P., et al., Killing two birds with one stone: Cross-selling during service delivery, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.11.013

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the data for all independent and moderator variables came from FLEs' self-reports, the supervisors provided the dependent variable values.

Table 1 Measurement constructs table. Constructs and items

Factor loadingª

Service–sales climate 1. Consistency of service performance is emphasized in my company. 2. A reputation for good service is stressed in my company. 3. Consistency of sales performance is emphasized in my company 4. In my company achieving sales targets is stressed LMX 1. My supervisor would be personally inclined to help me solve problems in my work. 2. My working relationship with my supervisor is effective. 3. My supervisor considers my suggestions for change. 4. My supervisor and I are suited to each other. 5. My supervisor understands my problems and needs. 6. My supervisor recognizes my potential. Self-efficacy 1. I am good at selling. 2. I know the right thing to do in selling situations. 3. I am good at finding out what customer need. 4. I am good at servicing customers. Environmental dynamism 1. We face a lot of competition for sales. 2. Our competitors are constantly trying to increase their customer service. 3. Customer's expectation keeps changing. 4. Things are changing rapidly in our industry

Reliability

4. Results .81

.79 .90 .86 .61 .89 .64 .75 .79 .90 .84 .67 .80 .78 .85 .70 .48 .88 .82 .89 .79 .72

efficacy, sales–service climate, LMX, and environmental dynamism) also underwent CFA. Each scale, considered simultaneously in the model, provided a test of convergent and discriminant validity. The overall model statistics indicated good fit (χ2 = 335.08, d.f. = 129, χ2/df = 2.60, p = .00, goodness-of-fit index = .86, adjusted goodness-of-fit index = .89, confirmatory fit index = .91, root mean residual = .04, root mean error of approximation = .09, normed fit index = .85). Table 1 contains the standardized parameter estimates and reliabilities.

3.5. Assessing validity To ensure the conceptual distinction of the constructs (self-efficacy, sales–service climate, LMX, environmental dynamism), this study applied the procedure described by Fornell and Larcker (1981). As an indication of convergent and discriminant validity, the average variance extracted (AVE) for each construct was greater than the squared correlation between that construct and any other construct. The major constructs thus were discriminant, as indicated by the correlation matrix in Table 2. Common method variance was unlikely, because though

The hypotheses tests relied on moderator regression and subgroup analyses (Chow tests). All three main effects variables (self-efficacy, sales–service climate, and LMX) were significant in the base and moderator models, in support of H1, H2, and H3, respectively. The combined independent variables explained 20.4% of the variance in service–sales performance (Model 2) (F = 6.14, p b .00). Adding the interaction terms (Model 3) increased the variance explained to 27.9% (F = 5.89, p b .00). The beta coefficients remained stable across the two models. The R-square values were similar to those in prior studies and indicated that the variables reasonably predicted FLEs' service–sales performance (Table 3). Furthermore, the significant increase (p b .00) in variance explained by the moderated regression procedure indicated the importance of the moderator variables. The beta coefficients for the moderated regression model were .30 (p b .00) for self-efficacy, .25 (p b .00) for LMX, and .13 (p b .05) for climate, reflecting their relative importance in explaining service–sales performance. The tests for the moderating effects used moderator regressions (after mean-centering the variables), followed by subgroup analysis and a Chow (1960) test. In the subgroup analysis, the repeated ordinary least squares regression reflected the “low” and” high” scores on the two moderator variables (environmental dynamism and experience). The procedure thus split the total sample into lower and higher groups for each moderator variable, reflecting the top and bottom 45%; excluding the middle 10% increased the amount of contrast between groups (Kohli, 1989; Patterson, 2000). The Chow test assessed any significant differences in the form (slope) of the regression models (Appendix A). The moderated regression analysis (Model 3) supported H4b but not H4a. Specifically, environmental dynamism weakened the LMX–service–sales performance connection (β = −.13, p b .05), as confirmed by the subgroup analysis (low β = .24, p b .000; high β = .10, p b .05). Fig. 2 presents the significant interactions. The regression analysis for the environmental dynamism–climate interaction was not significant, though the subgroup analysis (Chow test) was significant at p b .00 (see the Appendix A). Thus environmental dynamism was a quasi- rather than a pure moderator (Sharma, Durand, & Gur-Arie, 1981). In support of H5a, when focal job experience was low, the selfefficacy–service–sales performance linkage was stronger (β = − .19, p b .00). A similar result emerged from the subgroup analysis (Appendix A), with β = .44 in the low job experience condition and β = .13 in the high condition (p b .00). The regression analysis results also supported H5c but rejected H5b. That is, the moderator regression for LMX showed β = .15 (p b .01), and the subgroup analysis indicated modest support, according to β values of .24 in the high and .14 in the low job experience group (p b .10). For H5b, the only support came

Table 2 Correlation matrix and AVE results. Variables

Mean

SD

1

2

3

4

5

6

7

8

9

1.Service–sales performance 2. Self-efficacy 3. Sales–service climate 4. LMX 5. Experience 6. Environ dynamism 7. Gender 8. Age 9. Industry

27.4 4.9 3.8 3.3 4.2 4.0 – – –

11.10 .98 1.00 .96 2.70 1.01 – – –

– .34 .24 .34 −.05 .12 −.06 .03 .00

.51 .10 .25 .02 .21 −.20 .06 .06

.66 .40 .01 .38 −.02 .00 .06

.59 .06 .31 −.01 −.08 .05

– .02 .01 .61 .04

.65 −.05 .07 .09

– .09 .05

– .07

–

Notes: Values in bold are the average variances extracted (AVE). LMX = leader–member exchange.

Please cite this article as: Patterson, P., et al., Killing two birds with one stone: Cross-selling during service delivery, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.11.013

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Table 3 Regression analysis results. Variable

Control variables Gender Age Industry

Model 1 Control variables

Model 2 Independent variables

−.05 .04 .01

−.01 .04 .04

Main effects Self-efficacy Climate LMX Experience ED Interaction effects ED × self-efficacy ED × climate ED × LMX Experience × self-efficacy Experience × climate Experience × LMX R2 Δ R2 ΔF

.27⁎⁎⁎ .14⁎ .22⁎⁎⁎ .06 −.07

.00

.20

Model 3 Interaction terms .01 .08 .02

.30⁎⁎⁎ .13⁎ .25⁎⁎⁎ −.04 −.17⁎⁎ .04 −.09 −.13⁎ −.19⁎⁎⁎ .08 .15⁎⁎ .28 .08 (.28–.20) 3.12⁎

Notes: LMX = leader–member exchange. ED = environmental dynamism. Industry dummy variable: membership relationship services = 1, non-membership services = 0. Because all hypotheses are directional, one-tailed t-tests were employed. ⁎ p b .05. ⁎⁎ p b .01. ⁎⁎⁎ p b .001.

from the subgroup analysis (p b .01), so experience represented a homogolizer moderator (Sharma et al., 1981). These interactions appear graphically in Figs. 3 and 4. Finally, the age, gender, and industry control variables were not significant. 5. Discussion Prior literature separately examines the selling function and customer service experiences, but few studies examine the alignment of sales and service (Yu, Patterson, & Ruyter, 2013). The present study contributes to an understanding of aligning FLEs' sales–service performance and extends work by Jasmand et al. (2012) by examining the relevant phenomena in a face-to-face service situation and introducing additional, previously unexplored variables related to individual differences (self-efficacy), organizational contexts (sales–service climate), and interpersonal elements (LMX). Finally, this study introduces two moderators (environmental dynamism and experience) to identify

Fig. 3. Interaction of experience and efficacy on service–sales performance.

contingency conditions in which the antecedents have stronger or weaker impacts on successful performance. The transformation of service units into blended sales–service environments is challenging but also potentially financially rewarding. Recent studies indicate a positive relationship between the pursuit of twin service–sales goals and financial performance, together with improved customer satisfaction (Yu, Patterson, & de Ruyter, 2013), which offers a compelling rationale for such a strategy. The current findings reinforce this business case for the introduction of a service–sales alignment strategy and offer important managerial implications for both lower and top management in service organizations where FLEs must pursue both service and sales goals. Successfully pursuing twin roles requires self-confidence and selfbelief. The empirical results confirm that self-efficacy has the greatest relative impact (β = .30); determines how a person approaches goals, tasks, and challenges; and represents the single strongest driver of successful ambidextrous performance, even with considerable heterogeneity. Similarly, previous works show that efficacy relates positively to adaptability and innovativeness in service encounters (Ahearne, Mathieu, & Rapp, 2005). From a managerial perspective, efficacy should be an important criterion when managers recruit new FLEs. Lower-level managers who work closely with FLEs also must identify the strengths and weaknesses of each and provide appropriate training opportunities to improve their knowledge and skill base, especially for the junior FLEs with less work experience. Specific, customized training can be rigorously introduced to instill confidence, in combination with coaching

Note: Standardized Z scores are plotted

Fig. 2. Interaction of environmental dynamism and LMX on service–sales performance.

Fig. 4. Interaction of experience and LMX on service–sales performance. Note: Standardized Z scores are plotted.

Please cite this article as: Patterson, P., et al., Killing two birds with one stone: Cross-selling during service delivery, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.11.013

P. Patterson et al. / Journal of Business Research xxx (2013) xxx–xxx

and mentoring by branch managers and office veterans. Regular positive feedback and public recognition of achievements can enhance FLEs' self-efficacy. Top management might make staff development an important performance indicator for local managers, to encourage mentoring and coaching. Even though managers are often time poor, every effort should be made to develop and mentor individual FLEs in their quest to achieve twin goals of sales and service. Still, the alignment of service and sales remains complex. As Peters (2011) notes, managers offer the best predictors of employee satisfaction and productivity. Managers implement systems and cultures to create supportive contexts that can shape individual employee behavior. The relationship between FLEs and their direct supervisor reflects an important aspect of the work climate that enhances employee performance and innovative behavior, as exemplified by the strong impact of LMX in this study (β = .25). In addition to the level of mutual understanding and trust, LMX reflects the compatibility of the leader and employee as an effective team. Local managers should ensure high quality exchange relationships with their FLEs, especially experienced ones. A high quality exchange relationship encourages FLEs to exert additional effort to pursue service–sales targets. Regular meetings with FLEs might encourage closer relationships and open communications; in turn, closer relationships with FLEs help local managers identify FLEs' needs and thus provide appropriate support. Finally, sales–service climate, with the smallest impact (β = .13), is nonetheless significantly associated with performance. A climate emphasizing service and sales sends signals from top management to ensure that FLEs work toward organizational goals and reward them accordingly. The alignment of sales and service requires managers to take an active approach to creating a branch climate that fosters such the desired behavior. Employees' perceptions of the psychological climate shape their understanding of expectations and guide work behaviors. Local managers thus should engage office veterans in the education and socialization of newcomers and less experienced FLEs. For top management, it is crucial to ensure that organization-wide processes and systems consistently emphasize both service and sales, rather than one or the other. Internal communication needs to specify clear targets so FLEs are clear about managerial expectations; the organization's system also should reward FLEs for meeting both service and sales targets. For example, Singapore Airlines enjoys a consistent top ranking among international airlines; its ability to maintain high levels of customer satisfaction and reduce operational costs stems from an organizational culture that puts customer service and innovation front and center (Heracleous & Wirtz, 2010). Managers should emphasize both service excellence and sales targets during recruitment, training, design of reward systems, and promotion decisions. Such a climate, once instilled, also is difficult for competitors to copy. Finally, in implementing such actions, managers should consider the impacts of two important contingency conditions. First, in service industries facing highly dynamic environments (e.g., industry convergence, disruptive technologies, rapidly changing customer expectations), LMX has a diminished impact on sales–service performance. Managers therefore need to maintain open communications and transparency to develop trust with FLEs and inform them of any changes. Local supervisors in particular should monitor changes in the competitive landscape to assist FLEs in dealing with such challenges. In turn, FLEs should perceive less negative impacts of a dynamic external environment, allowing for a maximal positive impact of LMX on FLEs' service–sales performance. An astute manager could even frame dynamism as a challenge to galvanize the branch and motivate FLEs. Second, job experience reduces the effect of both self-efficacy and LMX on sales–service ambidexterity. Perhaps unsurprisingly, more experienced FLEs are less receptive to new challenges and good relationships with managers; instead, experienced workers seek to perform tasks in the usual manner. These employees present challenges for managers; “new blood” might become a necessity if experienced FLEs refuse to undertake additional efforts.

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6. Limitations and research directions Further research could consider other individual difference, organizational, interpersonal dynamic, or even contextual constructs that might affect service–sales performance, especially considering that the greatest variance explained was only 25% in this study (Table 3). Other constructs could complete the proposed performance model. For example, researchers might investigate the extent of FLE engagement, perceptions of rewards (e.g., bonus for meeting both sales and service targets), and dispositional factors. The cross-sectional data prevented any investigation of the reciprocal relationship between LMX and service–sales performance. Prior studies illustrate potential reciprocal effects between LMX and constructs such as job satisfaction (Volmer, Niessen, Spurk, Linz, & Abele, 2011) but cannot indicate clearly if similar reciprocal effects exist with service–sales performance. Additional research should explore this possibility with longitudinal data. Furthermore, LMX can be rated by both leaders and members (Gerstner & Day, 1997), but this study used only member ratings. Further studies should explore leader ratings to determine if a similar relationship exists. Finally, caveats are necessary in terms of generalizability. The data collection spanned five service industries. The industries featured both membership- and non-membership-based services, as well as medium (retail banking) and low (telecommunications) contact services (Lovelock, Patterson, & Wirtz, 2011). Other notable service industry categories exist too. The extent to which the results might generalize to highly customized, professional services (e.g., consulting, financial services, healthcare) remains open to debate. This study, undertaken in an Eastern, collectivist culture, requires replication in Western, individualistic cultures to assess the extent to which diverse cultural norms and values affect the findings. A more ambitious project might collect comparable industry and FLE data simultaneously across multiple Western and Eastern cultures to assess the cross-cultural equivalence of the parameter estimates. Acknowledgment The authors gratefully acknowledge the financial support from the Australian Research Council (DP110103527). Appendix A. Subgroup analysis

Descriptive results. Low

High

Moderator variables

n

Mean

STD

n

Mean

STD

Environmental dynamism Focal job experience

97 97

5.09 0.82

0.85 0.78

91 99

6.85 7.52

0.20 4.85

Standardized (β) parameter estimates (unstandardized). (n = 201)

Self-efficacy

Climate

LMX

Adj R2

Chow test (F)

Low ED

.19c (.24) .48 (.44) .44a (.50) .13 (.15)

.27a (.31) .01 (.01) .07b (.08) .23 (.26)

.24c (.30) .10 (.14) .14d (.18) .24 (.28)

.23

41.90

High ED Low experience High experience

.18 .25

27.70

.20

Notes. ED = environmental dynamism, LMX = leader–member exchange. Parameter estimates were significant between low and high condition subgroups: a p b .00. b p b .01. c p b .05. d p b .10.

Please cite this article as: Patterson, P., et al., Killing two birds with one stone: Cross-selling during service delivery, Journal of Business Research (2013), http://dx.doi.org/10.1016/j.jbusres.2013.11.013

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