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Introduction
As service providers find it increasingly difficult to create a differential advantage in
service delivery, the service environment[1] itself becomes a fertile opportunity for
market differentiation. In this context of increasing competition, service firms must be
certain that their service environments appeal to customers. Recognizing the
importance of service environments to consumer behavior, service providers are
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1993; Mano and Oliver, 1993; Miniard et al., 1992; Mattila and Enz, 2002). In addition,
customers experiencing more positive emotions during service encounters will also be
more likely to visit again and spread positive word-of-mouth, building loyalty
(Liljander and Strandvik, 1997; Stauss and Neuhaus, 1997; Oliver et al., 1997; Wong,
2004).
Service environments play an important role in service delivery because
environments can foster pleasant emotional reactions, while strengthening customer
perceptions and retention (Bitner, 1992; Baker et al., 2002; Sherman et al., 1997; Tsai
and Huang, 2002). Research in environmental psychology has produced a body of
knowledge examining interactions between service environments and human
behaviors. Earlier research by Mehrabian and Russell (1974) offers a
multi-dimensional perspective in environmental psychology. Their framework,
based on the stimulus-organism-response (S-O-R) paradigm, suggests environmental
stimuli lead to an emotional reaction that drives consumers behavioral responses.
Donovan and Rossiter (1982) and Donovan et al. (1994) employed the
Mehrabian-Russell (M-R) environmental psychology model to show individuals
perceptions and behaviors, within a given environment, are the result of emotional
states created by the environment. Specifically, environmental stimuli affect emotional
states of pleasure and arousal that in turn affect behaviors. In other words, the features
of environment (S) can have a measurable impact on behavior (R) while being mediated
by an individuals emotional state (O) that is influenced by the environment. In the M-R
model, emotional responses are measured using the pleasure, arousal, and dominance
(PAD) scale, three orthogonal dimensions of emotions that underlie any emotional
responses to environmental stimuli. Pleasure refers to the affective state of feeling
good, happy, pleased or joyful. Arousal is the extent to which an individual feels
stimulated, excited, alert or active, while dominance is the degree to which an
individual feels influential, in control, or important. Pleasure influences response
behavior, while arousal interacted with pleasure such that it also increased response
behaviors (Donovan and Rossiter, 1982; Donovan et al., 1994). Pleasure and arousal
both positively influence purchase behavior (Baker et al., 1992)[2]. Many studies have
also been conducted on environmental stimuli as predictors of emotional responses and
behaviors, such as time spent in a store and incremental spending (e.g. Jang and
Namkung, 2009; Sherman et al., 1997). However, these studies are quite inconsistent in
their measurement of the social environment, while customer perception variables,
such as satisfaction, are still unexplored.
Typologies of service environment elements vary widely across studies. The most
widely cited typology is Bitners (1992) servicescape, focusing on the physical aspects
of the environment, including ambient and design factors. However, for many service
firms, the influence of other individuals (i.e. customers and service employees) is also
critical often more important than physical environments (Tombs and
McColl-Kennedy, 2003). For example, a customers experience in a restaurant may
be negatively influenced by rowdy customers at a neighboring table, even though the
physical environment is excellent. This introduces a social environment, with other
people playing influential roles. The elements of service environment can thus be
categorized into social and physical environments (Baker, 1987; Baker et al., 1994;
Sherman et al., 1997), both affecting customer emotion and service outcomes (Baker
et al., 2002).
Although the social aspect of any service environment is commonly considered very
important, the topic has received limited academic attention. Research addressing
social environments has been limited and inconsistent. While a social environment
includes both service employees and other customers, no existing empirical research
has examined both simultaneously. Previous work has been asymmetrical, focusing
only on perceptions of service employees (e.g. Baker et al., 1992, 1994, 2002; Sherman
et al., 1997; Yoo et al., 1998; Harris and Ezeh, 2008) or perceptions of other customers
(Brady and Cronin, 2001). There is a large gap concerning the symmetric aspect of the
social environment that normally includes both service employees and other
customers. The current research addresses this gap by including customer climate[3]
a customers perception of the social environment shared with other customers. Tombs
and McColl-Kennedy (2003) pointed out the importance of emotional contagion from
service employees to customers, addressing the important role of displayed emotion in
social servicesape for more comprehensive empirical work. In response, we include
employee displayed emotion as part of the social environment, completing the
symmetry. Distinct from previous research, this study constructs more complete and
realistic social environments that include employee displayed emotion and customer
climate.
Moreover, previous studies tend to follow the S-O-R paradigm, with a heavy
emphasis on R (customer behavior) variables as service outcomes in developing their
research frameworks. Customer perceptions such as satisfaction are often ignored. To
address this, the current research further includes satisfaction in addition to behavioral
intentions to comprehensively explore the relationship of service environments with
customer emotion, perceptions, and service outcomes.
Social environment, customer emotion, and satisfaction
Employee displayed emotion, customer emotion, and satisfaction. Research on
emotional contagion suggests that service employees expression of emotions can
produce a corresponding emotional state in customers (Hatfield et al., 1994; Pugh,
2001; Tsai and Huang, 2002). McHugo et al. (1985), for example, reported that
exposure to smiling or frowning images produced corresponding changes in the
facial expressions of viewers. Pugh (2001) found that when service employees
smile, increase eye contact, display gratitude, and extend greetings, customers
experience more positive emotion. Tsai and Huang (2002) also show that sales
clerks positive affective delivery creates inner cues that contribute to customers
experience of positive emotions. This emotional contagion occurs outside of
conscious awareness (Pugh, 2001). When exposed to employees positive emotional
displays, customers are likely to mimic the employee expressive behavior
subconsciously during the service encounter (Barger and Grandey, 2006). This
mimicking alters the customers own emotional state (Hennig-Thurau et al., 2006),
leading to our first hypothesis:
H1. Service employees displayed emotion is positively related to customer
positive emotion.
Service encounter satisfaction is a response to an individual transaction, in contrast to
a customers general assessment of a firms service (Bitner, 1990; Mano and Oliver,
1993). In general, people appraise others who express positive emotion as more likable
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and courteous, all else being equal, when in a transactional or business relationship
(Clark and Taraban, 1991; Harker and Keltner, 2001) or service context (Grandey, 2003;
Tsai and Huang, 2002). Customers often interpret an employees emotional display as
part of the service (Grove and Fisk, 1997), suggesting customers hold expectations
about the display of positive emotions (Tsai and Huang, 2002). Thus, an employees
displayed emotions will influence a customers satisfaction. Previous research has
supported that service with a positive affective delivery impacts customer impression
of the service encounter (Bitner, 1990; Pugh, 2001; Tsai and Huang, 2002). Barger and
Grandey (2006) and Hennig-Thurau et al. (2006) also found employee smiling had a
significant impact on encounter satisfaction. Therefore, we propose:
H2. Service employees displayed emotion is positively related to customer
satisfaction.
Customer climate, customer emotion, and satisfaction. Customer climate refers to a
customers perception of the environment, shared by other customers receiving service,
in which he/she plays an integral role (Baker, 1987; Brocato and Kleiser, 2005; Grove
and Fisk, 1997). Other customers are often viewed as part of the service environment
(Martin and Pranter, 1989; Brocato and Kleiser, 2005; Huang, 2008). Customers provide
each other cues useful in service assessment (Baker et al., 2002; Hui and Bateson, 1991).
Interaction among customers within service sites influences emotions (Huang, 2008;
McGrath and Otnes, 1995; Moore et al., 2005). When other customers manners and
behaviors align with expectations, more positive emotions are encouraged. On the
other hand, a customer interfering with others tends to encourage negative feelings.
For example, noisy children screaming and running around a restaurant can lead to
negative emotions for most customers. More positive interactions among customers
can lead to a favorable service experience (Brocato and Kleiser, 2005; Huang, 2008).
Davies et al. (1999) and Moore et al. (2005) also suggest that positive
customer-to-customer interaction serves to highlight a shared experience, enhancing
enjoyment of the service. Therefore, we propose:
H3. Customer climate is positively related to customer positive emotion.
Though firms may view the behavior of customers as uncontrollable, consumers
consider firm management of customers behaviors an important component of the
service process (Bitner et al., 1994; Harris and Reynolds, 2003; Martin, 1996; Moore et al.,
2005). Past research has found the presence of other customers within a service
environment influences levels of satisfaction (Martin and Pranter, 1989; Brocato and
Kleiser, 2005; Moore et al., 2005; Wu, 2007, 2008). The appearance, behavior, and
number of other customers can affect service perception (Baker, 1987; Bitner, 1990;
Brocato and Kleiser, 2005; Harris et al., 1997; Moore et al., 2005). In addition, interaction
among customers is an important aspect of the service experience and subsequent
service evaluation (Bitner, 1990; Huang, 2008; Langeard et al., 1981; Moore et al., 2005;
Prahalad and Ramaswamy, 2000). Positive customer-to-customer experience can
increase service satisfaction (Martin and Pranter, 1989; Moore et al., 2005). Therefore,
we propose customer climate will positively influence customer satisfaction.
H4. Customer climate is positively related to customer satisfaction.
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Jang and Namkung (2009) and Wakefield and Blodgett (1994) also suggested that
positively perceived ambient and design factors in physical environments lead to
greater satisfaction. We thus propose:
H7. Ambient factors are positively related to customer satisfaction.
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Figure 1.
Conceptual framework
Methods
Research procedures
Customers of fashion apparel retailers participated in the current research. Fashion
apparel stores were selected, following Sherman et al. (1997), to ensure that emotional
state and service environments would be relevant to the shoppers buying experience.
To ensure consistency, only fashion apparel retail stores were sampled (Sherman et al.,
1997). These stores carry the type of merchandise most amenable to this study in that
they sell high-involvement goods with sufficient interactions between customers and
social/physical environments (Flicker and Speer, 1990; Sherman et al., 1997). Prior to
the research, stores were screened to ensure that only those stores that matched the
characteristics of a fashion store or boutique were selected (Sherman et al., 1997). Ones
emotional state or perception of a store is far less likely to be a salient if one is, for
example, taking a quick trip to a drug store for cold medicines or bandages.
There are two separate data sources for this study:
(1) employee displayed emotion collected by trained observers; and
(2) customer exit interviews.
Sixteen research assistants trained by a marketing research firm were recruited for this
study. Each research assistant acted as a field observer, collecting information on
employee displayed emotions and soliciting opinions from customers (Tsai and Huang,
2002).
A random sample of fashion apparel retailers were selected for this study. Each
observer visited each store (Finn and Kayande, 1999) during regular business hours,
randomly selecting customers and time frames based on a sampling schedule that
employed various time frames based on random selection. Sample schedules were
generated based on peak/off-peak time intervals (morning, afternoon, and evening)
during weekdays and weekends. The observers next selected target customers, noting
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service interaction throughout the entire service delivery, including the employees
displayed emotions. Employees and customers were not aware of the presence of
observers during the service interaction. The observer then followed the customer
outside the retail location and formally requested cooperation in rating emotions and
various perceptions. Respondents were given a gift after completing the survey. The
total sample included 296 pairs of employees and customers (see Table I for sample
characteristics). The sample included 74.9 percent female, with the overall customer
age ranging from 18 to 65.
Measures
To empirically test the hypotheses, multi-item scales from previous studies were
adopted for this study (see Appendix). Following Pugh (2001) and Tsai and Huang
(2002), units of analysis for employees displayed emotions included greeting,
speaking in a rhythmic vocal tone, smiling, making eye contact, thanking, and
talking actively. Perceived customer climate was measured with three indicators
regarding perception of other customers derived from Brady and Cronin (2001),
including overall impression of other customers as well as other customers
influence on service provision and customer perceptions[4]. Items measuring the
design and ambient characteristics of physical environments were adopted from
Baker et al. (2002), Bitner (1992), Sherman et al. (1997), and Yoo et al. (1998). Design
factors included layout, facilities, and color, while ambient factors included air
quality, light, music, and odor.
Four emotion items were adopted from Hennig-Thurau et al. (2006), including
elated, peppy, enthusiastic, and excited[5]. Participants were asked to indicate their
level of agreement with the four items. To measure customer satisfaction, we used
three items adopted from Chiou et al. (2002). Behavioral intention was operationalized
through four items based upon Cronin et al.s (2000) study: say positive things about
them, recommend them to other consumers, remain loyal to them, and spend more with
the company.
A questionnaire was constructed and pretested in four rounds to ensure questions
were understood as intended and to assess the feasibility of the survey approach. Each
item related to the studied constructs was rated on a seven-point Likert scale, ranging
from strongly disagree (1) to strongly agree (7).
Category
Age
Gender
Education
Table I.
Sample characteristics
,20
20-29
30-39
40-49
$50
Male
Female
Junior high school or below
High school
College or university degree
Master degree or above
Results
Test for common method bias
Common-method bias can cause problems if data from single informants are used for
dependent and independent variables. Accordingly, we employed Harmans
single-factor test as reviewed by Podsakoff et al. (2003). Common-method variance
does not appear to be a problem in the present study because the variance explained by
the first factor extracted in the factor analyses was not greater than 50 percent
(Podsakoff et al. 2003)
Total measurement model estimation
We tested our measurement model using LISREL VIII ( Joreskog and Sorbom, 1996). A
27-item CFA, including six items from employees displayed emotion, three indicators
from perception of other customers, four items from ambient factor of physical
environments, three items from design factor of physical environments, four items
from customer positive emotions, four items from service encounter satisfaction and
four items from customer behavioral intention, was employed as the primary data
analysis tool. Results suggested a good fit overall (x 2 490:93, df 294,
RMSEA 0:045, GFI 0:90, AGFI 0:87, NFI 0:97, NNFI 0:98, IFI 0:99,
CFI 0:99, SRMR 0:044).
For internal consistency, a reliability assessment was conducted using Cronbachs
coefficient a to ensure items for each factor were internally related. The final a values
all surpassed 0.7, a common threshold for exploratory research (Nunnally and
Bernstein, 1994), showing satisfactory reliability. We also evaluated reliability by
means of composite scale reliability (CR; Chin, 1998; Fornell and Larcker, 1981). For all
measures, the CR is well above the cut-off value of 0.70, exhibiting satisfactory
reliability. See Table II for details.
Further, we assessed convergent validity by first reviewing the t-tests for the factor
loadings in the CFA (Anderson and Gerbing, 1988). All factor loadings in the CFA for
the total measurement model were statistically significant (with all t values at p ,
0:01 level), demonstrating convergent validity (Kumar et al., 1998). Discriminant
validity is exhibited when the unconstrained model fits significantly better than the
constrained model (Bagozzi and Heatherton, 1994). Pairwise chi-square difference tests
indicated that in each case, the chi-square difference statistic is significant at the 0.01
level, providing evidence of discriminant validity.
Structural model results
After confirming the total measurement model, the structural model was estimated,
producing the following statistics: x 2 475:16; x 2 =df 1:59, NFI 0:97,
NNFI 0:99, CFI 0:99, IFI 0:99, GFI 0:90, AGFI 0:87, RMSEA 0:043.
Results indicated an acceptable level of fit between the hypothesized model and the
data. Estimated structural coefficients were next examined to evaluate individual
hypotheses (see Table III).
As predicted, employees affective delivery was positively related to customer
emotion (g11 0:15, t 2:67, p , 0:01) and customer satisfaction (g21 0:16,
t 2:72, p , 0:01), providing support of H1 and H2. Customer climate was also
positively related to customer emotion (g12 0:23, t 3:42, p , 0:01), thereby
confirming H3. In addition, customer climate has a positive relationship with customer
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Table II.
Confirmatory factor
analysis results
Standardized
loading *
t-value
0.67
0.76
0.62
0.72
0.68
0.59
0.55
0.76
0.82
0.77
0.64
0.68
0.76
0.74
0.66
0.78
0.80
0.77
0.77
0.70
0.74
0.81
0.89
0.81
0.92
0.91
0.85
11.96
14.28
10.91
13.37
12.31
10.39
9.19
13.47
14.77
14.71
11.65
12.21
14.63
13.80
11.97
14.78
15.74
14.90
14.98
13.04
14.27
16.48
18.83
16.53
20.27
20.02
18.06
Coefficient
alpha
Composite
reliability
0.83
0.85
0.73
0.75
0.79
0.81
0.76
0.77
0.85
0.85
0.85
0.80
0.93
0.93
Notes: Chi-square (x 2) 490.93, d.f. 294, RMSEA 0.045, GFI 0.90, AGFI 0.87,
CFI 0.99; *All item loadings were significant at p , 0.01
satisfaction (g22 0:17, t 2:55, p , 0:01), supporting H4. Consistent with both H5
and H6, ambient factors were positively related to customer emotion (g13 0:28,
t 2:16, p , 0:05) and customer satisfaction (g23 0:27, t 2:21, p , 0:05). Design
factors have positive influence on customer emotion (g14 0:29, t 2:21, p , 0:05) and
customer satisfaction (g24 0:27, t 2:08, p , 0:05), providing support of H7 and H8.
Customer emotion was also positively related to customer satisfaction (b21 0:19,
t 2:42, p-value , 0:01) and behavioral intention (b31 0:24, t 2:94,
p-value , 0:01), thereby confirming H9 and H10. Results also supported H11,
where customer satisfaction had a positive relationship with behavioral intention
(g32 0:45, t 5:03, p-value , 0:01).
Relationship
H1: Employee displayed emotion ! Customer emotion
H2: Employee displayed emotion ! Service satisfaction
H3: Customer climate ! Customer emotion
H4: Customer climate ! Service satisfaction
H5: Ambient factors ! Customer emotion
H6: Ambient factors ! Service satisfaction
H7: Design factors ! Customer emotion
H8: Design factors ! Service satisfaction
H9: Customer emotion ! Service satisfaction
H10: Customer emotion ! Behavioral intentions
H11: Service satisfaction ! Behavioral intentions
Model fit
x2
df
RMSEA
GFI
AGFI
NFI
NNFI
CFI
IFI
Completely standardized
coefficient
t-value
0.15(g 11) * *
0.16(g 21) * *
0.23(g 12) * *
0.17(g 22) * *
0.28(g 13) *
0.27(g 23) *
0.29(g 14) *
0.27(g 24) *
0.19( 21) * *
0.24( 31) * *
0.45( 32) * *
2.67
2.72
3.42
2.55
2.16
2.09
2.21
2.08
2.42
2.94
5.03
475.16
298
0.043
0.90
0.87
0.97
0.99
0.99
0.99
Discussion
Although the effect of service environments on consumer emotion has been well
explored by marketing researchers, a model that includes comprehensive social and
physical environments is still lacking. This has restricted the understanding of how
service environments influence customer emotion and perceptions. Therefore, this
study fills this research gap by developing a more comprehensive model that includes
both social and physical environments in order to better understand the effect of
service environments on service results. Specifically, this study contributes
theoretically and practically to existing service environment research through
empirical work that expands the conceptualization of social environments to include
both employee behavior (displayed emotion) and customer climate. This
comprehensive approach extended the M-R model by taking a further step in
understanding the distinct effects of each environmental factor on customer responses.
Additionally, distinct from past research, this research contributes methodologically to
service environment research by adopting a different survey method that utilizes
observers noting employee affective delivery in addition to customer survey method to
better investigate displayed emotion from service employees (Pugh, 2001; Tsai and
Huang, 2002). Furthermore, another contribution of this study is the extension of the
M-R environmental stimuli-emotional state-behavior paradigm by including
satisfaction in the current model, confirming that service environments not only
affect customer emotion and behavior, but also customer perceptions such as
satisfaction.
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Table III.
Path estimates for
proposed model
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2. While the PAD scale is simple and intuitive, it was not designed to capture the entire domain
of emotional experience (Richins, 1997). Limitations have been recognized in its use to
measure consumption-related emotions (Yoo et al., 1998). Thus, this scale is suggested as
inadequate for capturing consumer emotions during consumption (Babin et al., 1998; Jang
and Namkung, 2009). Based on these previous studies, the current research adopts the
discrete emotion approach for measuring customers emotional responses.
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4. Brady and Cronin (2001) used only the perceptions of other customers as a social factor,
excluding the role of service employees. To fit our definition of social environment, we
re-termed perceptions of other customers as customer climate which was explained in
footnote 2.
5. As mentioned previously, Jang and Namkung (2009) and Yoo et al. (1998) have suggested
that the unipolar view is more appropriate in understanding consumption emotion. The M-R
scale offers a bipolar framework for emotional responses to environmental stimuli, that
cannot not adequately characterize the nature and range of emotional experiences
encountered in service consumption (Richins, 1997; Yoo et al., 1998). The unipolar view for
investigating service experiences appears more suitable because the bipolar
conceptualization allows for ambivalence of the joint occurrence of pleasant and
unpleasant states as well as indifference or the occurrence of neither pleasant nor
unpleasant states (Jang and Namkung, 2009). Babin et al. (1998) also suggested that, despite
its convenience, the bipolar view was inadequate for capturing consumer emotions.
Therefore, this research adopted a unipolar (discrete emotion) approach to measure
consumers emotional responses instead of Mehrabian and Russells (1974) bipolar
pleasure-arousal approach. The discrete emotion approach regards all human emotions as
originating from several basic emotions. More complex emotions are the result of a mixture
or interaction of the basic emotions (Jang and Namkung, 2009). Therefore, a customer
emotion scale with four basic items adopted from Hennig-Thurau et al. (2006) was used for
this study.
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Appendix. The measures
Employee displayed emotion
EDE1:
Greeting.
EDE2:
EDE3:
Smiling.
EDE4:
EDE5:
Thanking.
EDE6:
Talking actively.
Customer climate
CC1:
I find that this companys other customers leave me with a good impression of its
service.
CC2:
This companys other customers do not affect its ability to provide me with good
service.
CC3:
This company understands that other customers affect my perception of its service.
Ambient factor
AF1:
AF2:
Comfortable lighting.
AF3:
Pleasant music.
AF4:
Pleasant odors.
Design factor
DF1: Organized layout.
DF2: Attractive facilities.
DF3: Pleasing color scheme.
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372
Customer emotion
CE1:
Elated.
CE2:
Peppy.
CE3:
Enthusiastic.
CE4:
Excited.
Customer satisfaction
SAT1:
SAT2:
SAT3:
Behavioral intention
BI1:
BI2:
BI3:
BI4: