Investigating the employee–customer relationship in a utilitarian context

This research, drawing on dyadic data, is one of the first to assess the significance of employee satisfaction in driving customer satisfaction and service quality within a utilitarian context. Multi-level structural equation modelling is employed to analyse 974 customers directly matched to 95 employees across 15 retail grocery stores. Our key empirical finding is that within a utilitarian context, and using a multi-level approach, employee satisfaction does not have a significant direct effect on either customer satisfaction or customer service quality perceptions. Perceptions of price competitiveness assume a more significant role in both customer satisfaction and service quality perceptions than employee satisfaction. Utilitarian store managers should focus their efforts on appropriate service strategies where employee satisfaction still plays a key role.