customers’ perceived interaction quality?
The hypothesis building from this research question would be as follows:
H2a→ Customers’ expectation of employee deep acting mediates the direct relationship between employee deep acting and customers’ perceived interaction quality.
H2b → Customers’ expectation of employee deep acting mediates the direct relationship between employee surface acting and customers’ perceived interaction quality.
H3a→ Customers’ expectation of employee surface acting mediates the direct relationship between employee deep acting and customers’ perceived interaction quality.
H3b→ Customers’ expectation of employee surface acting mediates the direct relationship between employee surface acting and customers’ perceived interaction quality.
The above hypotheses test the mediation layer of the model. Testing these hypotheses together in this layer fully examines the objective:
To measure the mediating effects of customers’ expectation of employee deep and surface acting on relationship between employee deep and surface acting and customers’ perceived interaction quality.
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Connecting interaction quality to ‘customer intention to continue the service relationship’
The section ahead connects the customer perceived interaction quality construct to the outcome variable - customer intention to continue the service relationship.
Customer service quality perception and its outcomes
Service quality has been linked to various output variables. Cronin Jr. and Taylor (1992), suggest perceived service quality leads to satisfaction, and satisfaction appears to have a stronger and a more consistent effect on the purchase intention than service quality. With multiple encounters in a service environment, Boulding, Kalra, Staelin & Zeithaml (1993) considered behavioural intentions - mainly repeat purchase and recommendation - as effected by the overall service quality. The effect of service quality on customer behaviour has also been tested along the lines of retention, purchase intention and defection (Zeithaml et al., 1996). A multi-dimensional connection between service quality (RATER dimensions) and customer loyalty dimensions was elaborated by Bloemer, Ruyter & Wetzels (1999). Bloemer et al. (1999) also showed that the scales for testing service quality should probably be customized for different service contexts, as argued by Pollack (2006). These studies found that customer loyalty intention is the primary outcome variable or construct related to service quality. Seiler, Rudolf and Krume (2013) also found that loyalty is an important aspect for private banking employees, since customer referrals play a huge role in attracting new customers to the bank. This is possible if the existing customers continue their service relationships. The loyalty intentions would apply to the customers in service relationships only if they intended to continue the service relationship with their relationship managers, which led to the choice of the outcome variable - ‘customer intention to continue the service relationship’.
An important study conducted amongst private banking customers in Germany also emphasized the human/interpersonal component of service quality (Yavas, Benkenstein & Stuhdreier, 2004). Yavas et al. (2004) found that the manner in which an employee serves the customer - shows willingness to help, and resolves issues for the customer - significantly impacts the behavioural and loyalty outcomes (including the continuity of relationship as a pre- requisite) of the customer. This supports the idea of exploring the impact of customer perceived interaction quality on continuation of relationship between customer and employee.
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Customer perceived interaction quality - service continuity
Service quality has been found to impact loyalty dimensions (mainly repeat purchase, retention, referral and complaining behaviour, with either one, few or all of these dimensions taken into consideration). Literature specifying the construct of the interaction quality dimension is sparse. Every service encounter depends on the interactive process between service provider and receiver; the ultimate outcome of service is derived from the interactive process; the interactive process affects actual performance of the service provider and the receiver; the interactive process has a continuous influence on receiver’s expectations and perceptions of service (Svensson, 2003; Svensson, 2004). This is especially true for people-based high contact services such as banking (Chase, 1978). The concept of remaining in a relationship is very strong in a person-to-person context, since the continuity depends solely on the involved entities - the customers and the employees. This customer-employee bond is sometimes closer than the bond a service receiver (customer) may have with a brand or an organization, and that leads to the final outcome variable - ‘customers’ intention to remain in a service relationship with that particular employee’ (Kandampully, 1998). This relationship can sometimes be so strong that even when the service provider (employee) switches jobs, his/her customer may continue with their relationship with the employee by moving their investments to another bank (Parkington & Schneider, 1979).
The service continuity is being tested in the context of professional, person-to-person relationships. This is so because in private banking the relationship manager may become a more important entity than the associated bank itself.
Why interaction quality and not satisfaction- exclusion criteria?
Spreng and Mackoy (1996) confirmed that perceived service quality and customer satisfaction are two distinct constructs with different antecedents. Spreng and Mackoy (1996) suggested how expectations have a negative impact on satisfaction through disconfirmation, but a positive impact on both satisfaction and perceived service quality, through perceived performance. “Incidents of satisfaction over time result in perceptions of service quality leading to behavioural intentions such as customer repurchase, and loyalty” (Parasuraman et al., 1988, p.16). In the context of service relationships, perceived quality would be more appropriate than satisfaction. Satisfaction as a behavioural intention is more appropriate for a single transaction
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i.e. a service encounter. Satisfaction is predominantly associated with moment-based or transaction-specific contexts, whereas quality is more associated with repeated satisfaction across several encounters (Parasuraman et al., 1988; Spreng & Mackoy, 1996). However, since the focus of this study is on service relationships, it invoves testing perceived interaction quality couples with the intention to continue the service relationship connection.
Interaction quality in the private banking context
Service quality has been defined by a single layer of dimensions (Parasuraman et al., 1985; Parasuraman et al., 1988; Parasuraman et al., 1994); or through hierarchical models (Cronin & Taylor, 1992; Cronin & Taylor, 1994; Dabholkar et al., 1996; Grönroos, 1984; Haywood- Farmer, 1988; Rust & Oliver, 1994). Both of these approaches fail to satisfy the need for specifically and fully defining interaction quality for the purpose of this research. This study views customer perceived interaction quality as a latent construct (Hair Jr., Black, Babin, Anderson & Tatham, 2006) taken from Brady and Cronin’s (2001) hierarchical model of service quality. This model delineates interaction quality as a separate component of service quality, with sub-dimensions of attitude, behaviour and expertise. Interaction quality is particularly relevant for this study, since private banking service is a context where the interpersonal interactions are very high (Karatepe et al., 2005; Lassar et al., 2000). Interaction
quality has high prominence in the context of private banking (Horn & Rudolf, 2011; Sieler,
2013), with hierarchical models proving a better fit because of the inclusion interaction quality in their models. Interaction quality is an ingrained component for a high contact service such as individualized (customized) banking (Horn & Rudolf, 2011).
In the context of this study, financial services, and specifically personal financial advice (private banking), are identified as an area that fosters high-interaction service relationships (Svensson, 2003; Svensson, 2004). In this context, a service relationship might even continue between the two parties even if the financial adviser changes his/her firm (Parkington & Schneider, 1979). This gives rise to the choice of an outcome variable of ‘customer intention to continue the service relationship’ (Kandampully, 1998; Boulding et al., 1993; Zeithaml et al., 1996; Bloemer et al., 1999; Pollack, 2006) as affected by the customer perceived interaction quality.
The above discussion on interaction quality and the outcome variable brings us to the third and last question would be addressed in this thesis:
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Question 3. What is the impact of customers’ perceived interaction quality on customers’