Being Close or Being Happy? The Relative Impact of Work Relationship and Job Satisfaction on Service Quality

It is generally recognized that, to ensure high-quality services, service industries, especially the labour intensive ones, need to have satisfied customer-contact employees. However, an under-researched issue relating to the management of service operations concerns employee relationships. Close work relationships, in particular, those between frontline staff and their supervisors, are likely to positively influence employee attitudes during service delivery. This paper examines the relative impacts of leader-member exchange (LMX) and job satisfaction on service performance in labour-intensive, high-contact services. First, the relationships among empowerment, LMX, job satisfaction and service quality are modelled. Next, the moderating effects of employee-customer contact time on these relations are examined. The results show that, contrary to traditional wisdom, job satisfaction does not impact service quality, once LMX is included in the model. This suggests that, work relationships between employees and their supervisors impact service quality more directly than job satisfaction does. Leader-member relationships get enhanced and remain essentially stable under both high and low service contact times in empowered environments.