Abstract
Drawing on empowerment theory, this study examines the effect of empowering leadership on frontline employees’ service-oriented citizenship behaviors and the process by which this effect occurs. The authors conceptualize empowering leadership at two levels: individual level and group level. Using multi- and cross-level modeling based on multi-source data (frontline employees and their supervisors) from a national automobile dealership at two different time points, this study finds that group-level empowering leadership explains unique variance in service-oriented citizenship behaviors above and beyond what is explained by individual-level empowering leadership. Further, psychological empowerment and customer learning climate partially mediate the empowering leadership–service-oriented citizenship behaviors relationship at the individual and group levels, respectively. Finally, the results indicate that a climate for customer learning accentuates the positive effect of psychological empowerment on service-oriented citizenship behaviors. Theoretical and practical implications for improving frontline employee’s service-oriented citizenship behaviors are discussed along with directions for future research.
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In 2011, the auto firm sold more than 4 million units worldwide, had global sales exceeding 70 billion USD, and had a net profit surpassing 7 billion USD worldwide. The company has over 820 dealerships in the US and is the 7th largest car company in the US market. However, with the competitive landscape changing in the domestic market where customers have limited domestic auto brands to choose from, customers are increasingly turning to import brands from Europe and Japan. The evolving market has put increasing pressure on this leading domestic brand to find ways to differentiate itself from the pack. One way to stand out in the eyes of customers is to provide excellent customer service (i.e., service-oriented citizenship behaviors) through its dealers. Although the automakers are a manufacturing company, they view service excellence as a core competitive advantage in the South Korean market. This is mainly due to the fact that, unlike in North America, South Korean automakers own dealerships (i.e., a form of forward integration). The implication of this ownership structure is that customers view service in dealerships as an extension of the car ownership experience. Given this unique ownership structure, we felt that the South Korean dealership market was appropriate for studying service-oriented citizenship behaviors. However, whether our model will generalize to markets where dealers are independent from automakers is uncertain and will require further research.
In addition, this automaker, like many others in Korea, places significant strategic importance on how their frontline employees treat customers. Dealers are expected to focus actively on customer service excellence in their region. In this sense, learning how to improve customer service from customers is a conduit to achieving company success in local markets. Although frontline employees perform customer service and sales tasks independently, frontline employees are expected to interact extensively with their coworkers and immediate supervisor. Thus, the dealer setting is an appropriate context for testing the effect of leadership on frontline employees’ service-oriented citizenship behaviors through learning climate and frontline employees’ psychological empowerment.
MLM separates variance for the employee-level effects (within-dealer) from variance for the between-dealer differences for each variable in the model. It also computes separate variance-covariance matrices for each level of analysis. MLM provides a simultaneous estimate of the relationship between variables at different levels (Liao and Chuang 2007). In addition, by controlling for the dealer-level variance, MLM computes more accurate parameter estimates and their corresponding standard errors for the relationships between frontline employee-level variables (Chen et al. 2007).
Although Baron and Kenny’s (1986) original mediation testing procedure has widely been used by researchers in many disciplines, researchers have scrutinized and revised it (e.g., Shrout and Bolger 2002). Most recently, Zhao et al. (2010, p. 204) have recommended that “to establish mediation[,] the Baron-Kenny “three tests + Sobel,” steps should be replaced with one and only one test: the bootstrap test of the indirect effect.” Zhao et al. (2010, p. 198) summarize that (1) “there should be only one requirement to establish mediation, that the indirect effect …be significant,” and (2) “the strength of mediation should be measured by the size of the indirect effect, not by the lack of the direct effect.” Sobel’s z-test has been widely used to test the significance of the indirect path of mediation. The sampling distribution of the indirect effect is not necessarily normal (Preacher et al. 2010) as it is a product term of two parameters (i.e., multiplication of the path coefficient from the independent variable to mediator and from the mediator to dependent variable). Because Sobel’s z-test assumes a normal distribution, the findings may be largely biased. Instead, the bootstrapped multilevel mediation procedure developed by Preacher et al. (2010) provides a more appropriate test of mediation. Bootstrapping mitigates the power problem introduced by non-normality in the sampling distribution of the indirect effect. It computes the indirect effect in each sample by taking a large number of samples from the data. It estimates the indirect effect and generates a 95% confidence interval from the bootstrap samples. The confidence interval that does not contain zero indicates a significant indirect effect (Preacher et al. 2010).
We have employed Mathieu and Taylor’s (2006) steps for testing meso-mediation. As Table 3 reports, we compared the hypothesized model with two other models. First, we estimated a full mediation model (Model 1) which proposes that customer learning climate and psychological empowerment are full mediators in the relationship between empowering leadership and service-oriented citizenship behaviors. Model 1 indicates a good fit to the data (χ 2 (26) = 26.08, TLI = 0.99, CFI = .99, RMSEA = .01). The results support the overall framework of the proposed model by indicating significant relationships between empowering leadership and the mediators (i.e., customer learning climate and psychological empowerment) and between the mediators and service-oriented citizenship behaviors (Mathieu and Taylor 2006). Second, we estimated a partial mediation model (Model 2) by including direct paths from group- and frontline employee-level empowering leadership to service-oriented citizenship behaviors. The direct effect of group-level empowering leadership (γ = .19, p < .05) and individual-level empowering leadership (γ = .14, p < .01) on service-oriented citizenship behaviors is statistically significant. In addition, fit statistics (χ 2 (24) =13.06, TLI = .99, CFI = .99, RMSEA = .01), the chi-square difference test (Δχ2 = 13.02, Δdf = 2, p < .01), and a comparison of AIC and BIC values confirm that Model 2 provides a better fit than Model 1 (lower AIC and BIC values). Overall, Model 2 (i.e., partial mediation model) is more parsimonious and has a better fit than Model 1 (i.e., full mediation). Third, we tested the hypothesized model (i.e., Model 3; Fig. 1) by including the interaction effect in Model 2. A comparison of AIC and BIC values indicates that Model 3 is a better fit to the data than Model 2 (i.e., lower AIC and BIC values).
Alternative Model 1: We examined whether within-dealer agreement (i.e., lack of variance) of group-level empowering leadership (e.g., Ahearne et al. 2010) has significant effects on other variables. In line with previous studies in the literature (e.g., Ahearne et al. 2010), we operationalized within-dealer agreement of the group-level empowering leadership by calculating the standard deviation. Since standard deviation implies lack of agreement (or consensus), we multiplied the standard deviation scores by −1 to obtain agreement (or consensus) scores. Hence, we conclude that the smaller the standard deviation, the greater the frontline employees’ agreement (or consensus) on dealer-level empowering leadership. The model indicated a good fit to the data (χ2 (36) = 17.307, TLI = .99, CFI = .99, RMSEA = .01); however, the chi-square difference test (Δχ2 = .144, Δdf = 6, ns) and a comparison of AIC and BIC values confirm that the hypothesized model still provides a better fit (i.e., lower AIC and BIC values) than the consensus model. In addition, within-dealer agreement on empowering leadership was not significantly related to customer learning climate and service-oriented citizenship behaviors.
Alternative Model 2: We tested whether the effect of group-level empowering leadership has an impact on psychological empowerment (e.g., Ahearne et al. 2005). The model indicated a good fit to the data (χ 2 (29) = 17.500, TLI = .99, CFI = .99, RMSEA = .01); however, the chi-square difference between the hypothesized model and the alternative model was not statistically significant (Δχ2 = .049, Δdf = 1, ns), which confirms that the hypothesized model provides a better fit (i.e., lower AIC and BIC values) than the alternative model. Group-level empowering leadership was not significantly related to psychological empowerment (γ = .021; t = .989).
Alternative Model 3: We estimated an alternative model with two additional variables while keeping all the hypothesized relationships in our proposed model intact: (1) Customer learning climate at the individual level; (2) Psychological empowerment climate (at the dealer level). The alternative model indicated a good fit to the data (χ 2 (40) = 19.87, TLI = .99, CFI = .99, RMSEA = .01). The results supported the overall framework of the alternative model. At the group (dealer) level, both empowering leadership and customer learning climate are related positively and significantly to psychological empowerment climate, and the relationship between empowering leadership and psychological empowerment is partially mediated by customer learning climate. The relationship between customer learning climate and service-oriented citizenship behaviors is fully mediated by psychological empowerment. At the individual level, both empowering leadership and customer learning climate are related positively and significantly to psychological empowerment climate, and the relationship between empowering leadership and psychological empowerment is partially mediated by customer learning climate. The relationship between customer learning climate and service-oriented citizenship behaviors is fully mediated by psychological empowerment. It is worth noting that the alternative model explained 32% of the variance in service-oriented citizenship behaviors, whereas the proposed model explained 37% of the variance in service-oriented citizenship behaviors. This reduction in explained variance may have been caused by two paths that are not supported by the alternative model (i.e., direct effect of group-level empowering leadership and customer learning climate on service-oriented citizenship behaviors). We also found that customer learning climate at the group level (as we hypothesized) has a higher R2 than customer learning climate at the individual level (alternative model approach). This suggests that climate constructs are better off at the group level as opposed to the individual level (even our psychological empowerment construct, when construed at the group level as psychological empowerment climate, had a higher R2 than psychological empowerment at the individual level). Since the proposed model and the alternative model are not nested, we compared the two models using AIC (Akaike Information Criterion) and BIC (Bayesian Information Criterion) values. A comparison of AIC and BIC values indicates that the proposed model (AIC = 113.451; BIC = 306.012) is a better fit to the data than the alternative model (AIC = 179.878; BIC = 514.445) (i.e., lower AIC and BIC values). In comparison to AIC, BIC assigns a greater penalty to model complexity, and so has a greater tendency to pick parsimonious models. Since the proposed model has a lower BIC than the alternative model, the proposed model is more parsimonious than the alternative model.
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Auh, S., Menguc, B. & Jung, Y.S. Unpacking the relationship between empowering leadership and service-oriented citizenship behaviors: a multilevel approach. J. of the Acad. Mark. Sci. 42, 558–579 (2014). https://doi.org/10.1007/s11747-014-0370-0
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DOI: https://doi.org/10.1007/s11747-014-0370-0