Borucki, Chester C; Burke, Michael JAuthor InformationView Profile. Journal of Organizational Behavior; Chichester Vol. 20, Iss. 6, (Nov 1999): 943-962.
Within the management and organizational behavior literatures, organizational climate (or indicators thereof) has often been viewed as a causal antecedent of a firm's performance (cf. Burke and Litwin, 1992; Kopelman, Brief and Guzzo, 1990; Nadler and Tushman, 1980). For instance, the linkage between climate constructs and organizational performance is generally conceptualized within the organizational behavior literature as follows: societal and organizationally espoused values will engender particular types of general and human resource management practices; these management practices will in turn influence employee perceptions of the work environment and employee behaviors; and ultimately, individual behaviors will directly impact organizational functioning. Consequently, research within the fields of management and organizational behavior (cf. Denison, 1990; George and Bettenhausen, 1990; Sutton and Rafaeli, 1988) has largely focused on studying bivariate (often correlational) relationships between particular employee perceptions and behaviors and organizational performance variables.
A related stream of research has highlighted the importance of a climate for service (Cronin and Taylor, 1992; Schneider, 1990; Schneider and Bowen, 1995) and its impact on employee behavior. This latter literature emphasizes the impact of general and human resource management practices on not only employees' perceptions and behaviors, but also those of customers. Researchers within this domain have typically examined bivariate relationships between employee perceptions of service environment characteristics, customer perceptions of service environment characteristics, and customer satisfaction with service quality (cf. Burke et al., 1996; Johnson, 1996; Ryan, Schmit and Johnson, 1996; Schmit and Allscheid, 1995; Schneider, Parkington and Buxton, 1980; Schneider and Bowen, 1985; TornowandWiley, 1991;Wiley, 1991). In a few studies (Paradise-Tornow, 1991; Ryan et al., 1996; Tornow and Wiley, 1991; Wiley, 1991), researchers have examined bivariate relationships between employee perceptions of service environment characteristics, customer satisfaction with service quality, and organization or business unit financial performance. This literature has demonstrated consistent positive relationships between employee perceptions of service environment characteristics and customer satisfaction with service quality. However, empirical evidence of the linkage between organizational financial performance indicators and both employee and customer perceptions of service environment characteristics (organizational climate) has been mixed. As discussed in more detail below, a number of factors including small sample sizes, use of unadjusted financial performance measures, and a lack of attention to issues of data aggregation may have contributed to these mixed findings.
In our view, the above lines of research have been more successful in addressing the problem of determining or quantifying bivariate (correlational) relationships between aggregated employee perceptions and aggregated customer perceptions, than in explicating the roles of employee and customer perceptions as determinants of organizational financial performance. We view the former of these two issues as less critical than the latter, in that (a) aggregated employee and customer perceptions are not necessarily considered as unique variables in causal frameworks at the organization-level of analysis, and (b) direct relationships may not be hypothesized or expected when aggregated employee perceptions, aggregated customer perceptions, and financial performance variables are considered in causal frameworks within service contexts.
To date, a causal framework at the organizational level of analysis linking service climate constructs, employee service behaviors, and organizational financial performance has not appeared in the literature. The current research attempts to address this deficiency by building upon received theory and empirical research findings in the management, organizational behavior, and marketing literatures. Appropriately testing such a framework requires addressing a number of methodological issues including the measurement of individual and organizational level variables as well as the assessment of interrater agreement to justify data aggregation. These latter issues are discussed in greater detail in subsequent sections of this manuscript.
The purpose of this paper is to test a path model at the store-level of analysis of hypothesized relationships between importance of service to different levels of management, retail service climate variables, sales personnel service performance, and financial performance. Our primary focus is on the role of organizational climate variables as hypothesized antecedents to sales personnel performance and organizational performance. This focus does not preclude the possible effect of external environmental factors, strategy variables, and structure variables on organizational performance discussed in more elaborate models of organizational functioning (e.g., Burke and Litwin, 1992; Nadler and Tushman, 1980), nor is the hypothesized path model presented below inconsistent with the potential influence of these additional variables.
Some hypothesized antecedents and effects of service climate
The path model presented below linking service climate variables and organizational performance is based, in part, on Burke, Borucki and Hurley's (1992) work on retail service climate. Burke et al. (1992) proposed that employee work climate perceptions at the higher-order factor level reflect employees' cognitive appraisals of the behavior of agents toward (a) employees' well-being in the organization's internal environment, and (b) the well-being of other organizational constituencies or stakeholders (e.g., customers) in the task environment, respectively. Focusing on employees and customers as the two primary stakeholder groups in a retail service environment, Burke et al.'s (1992) confirmatory factor analytic results (with data collected from 18,457 sales personnel in 567 stores) provided support for viewing individual (psychological) work climate perceptions as comprised of two higher-order factors which they labelled 'Concern for Employees' and 'Concern for Customers'. Burke et al. (1992) and Geehr and Burke (1994) have emphasized that although the general factors of Concern for Employees and Concern for Customers (see Table 1) are correlated, the distinction between perceptions of well-being for employees and for customers, which was confirmed in both of their studies, offers a coherent conceptualization of psychological climate from a multiple stakeholder perspective. These authors recognize the possibility that other organizing frameworks (i.e., rationales for higherorder factors underlying first-order climate dimensions) or representational systems may describe the structure of employees' work climate perceptions (cf. Burke et al., 1992, p. 727).
The nature of Concern for Employees and Concern for Customers and the first-order factors that comprise them suggest that these variables may be predictive of sales personnel behavior at the store-level of analysis. Furthermore, research conducted by Ryan et al. (1996), Schmit and Allscheid (1995), Tornow and Wiley (1991), and Wiley (1991) suggests that aggregated (average) climate perceptions may be linked to aggregated employee performance and organizational or business unit financial performance. We now turn to a discussion of hypothesized linkages between antecedents and effects of service climate at the store-level of analysis.
Hypothesized linkages between management variables and service climate variables
Although it is well recognized that elements of the general environment (e.g., society, government, economy, technology) can have a profound impact on organizational functioning, our point of departure in discussing the path model in Figure 1 is the influence of top management on shaping managerial perceptions of the importance of service climate. This latter notion is not new. As pointed out by Hegner (1991), the philosophers Hegel ([1821] 1970) and von Mohl ([1846] 1962) were among the early writers who suggested that managing the service delivery system to address customer needs is a prerequisite for customer well-being. If an organization is to deliver service along dimensions that customers perceive as important (e.g., tangibles, reliability, responsiveness, assurance, and empathy; Parasuraman, Berry and Zeithaml, 1991), then its internal environment and subsystems must be coordinated and managed to facilitate the attainment of the desired level of service. More specifically, managerial practices (e.g., goal setting, merchandise management) and human resource-related practices (e.g., staffing, training, compensation) need to be developed to deliver this desired level of service (GroE nroos, 1990; Lovelock, 1988)
Within the management and organizational behavior literatures, organizational climate (or indicators thereof) has often been viewed as a causal antecedent of a firm's performance (cf. Burke and Litwin, 1992; Kopelman, Brief and Guzzo, 1990; Nadler and Tushman, 1980). For instance, the linkage between climate constructs and organizational performance is generally conceptualized within the organizational behavior literature as follows: societal and organizationally espoused values will engender particular types of general and human resource management practices; these management practices will in turn influence employee perceptions of the work environment and employee behaviors; and ultimately, individual behaviors will directly impact organizational functioning. Consequently, research within the fields of management and organizational behavior (cf. Denison, 1990; George and Bettenhausen, 1990; Sutton and Rafaeli, 1988) has largely focused on studying bivariate (often correlational) relationships between particular employee perceptions and behaviors and organizational performance variables.
A related stream of research has highlighted the importance of a climate for service (Cronin and Taylor, 1992; Schneider, 1990; Schneider and Bowen, 1995) and its impact on employee behavior. This latter literature emphasizes the impact of general and human resource management practices on not only employees' perceptions and behaviors, but also those of customers. Researchers within this domain have typically examined bivariate relationships between employee perceptions of service environment characteristics, customer perceptions of service environment characteristics, and customer satisfaction with service quality (cf. Burke et al., 1996; Johnson, 1996; Ryan, Schmit and Johnson, 1996; Schmit and Allscheid, 1995; Schneider, Parkington and Buxton, 1980; Schneider and Bowen, 1985; TornowandWiley, 1991;Wiley, 1991). In a few studies (Paradise-Tornow, 1991; Ryan et al., 1996; Tornow and Wiley, 1991; Wiley, 1991), researchers have examined bivariate relationships between employee perceptions of service environment characteristics, customer satisfaction with service quality, and organization or business unit financial performance. This literature has demonstrated consistent positive relationships between employee perceptions of service environment characteristics and customer satisfaction with service quality. However, empirical evidence of the linkage between organizational financial performance indicators and both employee and customer perceptions of service environment characteristics (organizational climate) has been mixed. As discussed in more detail below, a number of factors including small sample sizes, use of unadjusted financial performance measures, and a lack of attention to issues of data aggregation may have contributed to these mixed findings.
In our view, the above lines of research have been more successful in addressing the problem of determining or quantifying bivariate (correlational) relationships between aggregated employee perceptions and aggregated customer perceptions, than in explicating the roles of employee and customer perceptions as determinants of organizational financial performance. We view the former of these two issues as less critical than the latter, in that (a) aggregated employee and customer perceptions are not necessarily considered as unique variables in causal frameworks at the organization-level of analysis, and (b) direct relationships may not be hypothesized or expected when aggregated employee perceptions, aggregated customer perceptions, and financial performance variables are considered in causal frameworks within service contexts.
To date, a causal framework at the organizational level of analysis linking service climate constructs, employee service behaviors, and organizational financial performance has not appeared in the literature. The current research attempts to address this deficiency by building upon received theory and empirical research findings in the management, organizational behavior, and marketing literatures. Appropriately testing such a framework requires addressing a number of methodological issues including the measurement of individual and organizational level variables as well as the assessment of interrater agreement to justify data aggregation. These latter issues are discussed in greater detail in subsequent sections of this manuscript.
The purpose of this paper is to test a path model at the store-level of analysis of hypothesized relationships between importance of service to different levels of management, retail service climate variables, sales personnel service performance, and financial performance. Our primary focus is on the role of organizational climate variables as hypothesized antecedents to sales personnel performance and organizational performance. This focus does not preclude the possible effect of external environmental factors, strategy variables, and structure variables on organizational performance discussed in more elaborate models of organizational functioning (e.g., Burke and Litwin, 1992; Nadler and Tushman, 1980), nor is the hypothesized path model presented below inconsistent with the potential influence of these additional variables.
Some hypothesized antecedents and effects of service climate
The path model presented below linking service climate variables and organizational performance is based, in part, on Burke, Borucki and Hurley's (1992) work on retail service climate. Burke et al. (1992) proposed that employee work climate perceptions at the higher-order factor level reflect employees' cognitive appraisals of the behavior of agents toward (a) employees' well-being in the organization's internal environment, and (b) the well-being of other organizational constituencies or stakeholders (e.g., customers) in the task environment, respectively. Focusing on employees and customers as the two primary stakeholder groups in a retail service environment, Burke et al.'s (1992) confirmatory factor analytic results (with data collected from 18,457 sales personnel in 567 stores) provided support for viewing individual (psychological) work climate perceptions as comprised of two higher-order factors which they labelled 'Concern for Employees' and 'Concern for Customers'. Burke et al. (1992) and Geehr and Burke (1994) have emphasized that although the general factors of Concern for Employees and Concern for Customers (see Table 1) are correlated, the distinction between perceptions of well-being for employees and for customers, which was confirmed in both of their studies, offers a coherent conceptualization of psychological climate from a multiple stakeholder perspective. These authors recognize the possibility that other organizing frameworks (i.e., rationales for higherorder factors underlying first-order climate dimensions) or representational systems may describe the structure of employees' work climate perceptions (cf. Burke et al., 1992, p. 727).
The nature of Concern for Employees and Concern for Customers and the first-order factors that comprise them suggest that these variables may be predictive of sales personnel behavior at the store-level of analysis. Furthermore, research conducted by Ryan et al. (1996), Schmit and Allscheid (1995), Tornow and Wiley (1991), and Wiley (1991) suggests that aggregated (average) climate perceptions may be linked to aggregated employee performance and organizational or business unit financial performance. We now turn to a discussion of hypothesized linkages between antecedents and effects of service climate at the store-level of analysis.
Hypothesized linkages between management variables and service climate variables
Although it is well recognized that elements of the general environment (e.g., society, government, economy, technology) can have a profound impact on organizational functioning, our point of departure in discussing the path model in Figure 1 is the influence of top management on shaping managerial perceptions of the importance of service climate. This latter notion is not new. As pointed out by Hegner (1991), the philosophers Hegel ([1821] 1970) and von Mohl ([1846] 1962) were among the early writers who suggested that managing the service delivery system to address customer needs is a prerequisite for customer well-being. If an organization is to deliver service along dimensions that customers perceive as important (e.g., tangibles, reliability, responsiveness, assurance, and empathy; Parasuraman, Berry and Zeithaml, 1991), then its internal environment and subsystems must be coordinated and managed to facilitate the attainment of the desired level of service. More specifically, managerial practices (e.g., goal setting, merchandise management) and human resource-related practices (e.g., staffing, training, compensation) need to be developed to deliver this desired level of service (GroE nroos, 1990; Lovelock, 1988)
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