Two essays on the behavioural aspect of operations management : employee attributes and customer participation

Abstract

Scholars in operations management (OM) have traditionally approached management problems from a technical systems perspective by adopting management methods such as operational optimisation, systems design and process standardisation. The technical parts of OM generally assume that humans are fully rational in decision-making, problem solving, and system implementation. However, this "rational man" assumption is not always effective as human beings in fact have bounded rationality in some contexts. Taking behavioural approaches, this thesis examines two issues related to behavioural aspect of operations management that are related to employee attributes in a service environment and customer participation through social media in a broad industrial setting. Specifically, the first study examines how the frontline service employees' behaviours and cognition influence service quality. The second one investigates how the linkage between customer participation and customer satisfaction could be different under a social media environment. In the first study, we examined the impact of employee relationships on quality of services in a labour intensive service setting. It is generally recognised in literature 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, especially those concerning frontline staff and their supervisors, are likely to positively influence employee attitudes during service delivery. By utilising triadic survey data drawn from 225 service shops in Hong Kong, we examined the relative impacts of leader-member exchange (LMX) and job satisfaction on service quality while recognising the moderating effects of employee-customer contact time in labour intensive, high contact services contexts. Using structural equation modeling, we found that job satisfaction does not have significant impact on service quality when LMX is included in the model. This suggests that, work relationships between employees and their supervisors influence service quality more directly than job satisfaction does. We further found that the relationships between employees and their supervisors are enhanced in empowered environments. The impact of LMX on service quality is found to remain essentially stable under both high and low service contact times. The findings suggest that cultivating high-quality relationships between managers and their customer-contact employees is an effective means of enhancing service quality in high-contact service operations. In the second study, we investigated whether customer participation in the social media environment do help improve customer satisfaction. In the information age, companies are increasingly using social media for customer contacts and relationship management. However, the use of social media for customer participation is likely to bring both opportunities and challenges for firms. Based on an event study analysis with secondary data collected from Factiva, COMPUSTAT, and American Customer Satisfaction Index over the period 2007-2015, we empirically tested the relationship between customer participation and customer satisfaction. The results show that customer participation through social media could have a negative impact on customer satisfaction. They further show that customer participation through social media could have a more negative effect on larger firms, which are likely to draw higher public attention. Overall, our results indicate that companies need to be aware of the potential risk arising from customer participation in social media; especially for the large firms, where customer expectations and disappointments are likely to be more widespread, intensified, and difficult to manage. Overall, we explored two issues associated with behavioural OM that could have a direct impact on the service quality and customer satisfaction and are critical to assuring the competitive outcomes for firms. We provide empirical evidences of how the bounded rational humans could affect companies' operational performance.