How employer and employee satisfaction affect customer satisfaction: an application to franchise services

Heiner Evanschitzky, Christopher Groening, Vikas Mittal, Maren Wunderlich

Research output: Contribution to journalArticlepeer-review


In small-service settings, how do owner satisfaction, front-line employee satisfaction, and customer satisfaction relate to one another? The authors use generalized exchange theory (GET) to examine how satisfaction levels of these three constituents are reciprocated. The authors examine a European franchise system comprising 50 outlets, 933 employees, and 20,742 customers. Their results show two important findings. First, the effect of owner-franchisee's satisfaction on customer satisfaction is fully mediated by front-line employee satisfaction. Thus, managers of a service outlet can strongly impact the satisfaction and behavioral intentions of their customer base, even without direct contact with them. Second, the link between customer satisfaction and purchase intention is moderated by employee satisfaction at an outlet. The link between customer satisfaction and customer purchase intentions is almost twice as strong when employees are satisfied than when they are not. Thus, there is a "doublepositive effect:" not only does higher employee satisfaction at an outlet directly lead to higher customer satisfaction but it also indirectly strengthens the association between customer satisfaction and their repurchase intentions.
Original languageEnglish
Pages (from-to)136-148
Number of pages13
JournalJournal of Service Research
Issue number2
Early online date17 Dec 2010
Publication statusPublished - May 2011


  • customer satisfaction
  • employee satisfaction
  • manager satisfaction
  • franchisee satisfaction
  • exchange theory
  • purchase intentions
  • service-profit chain


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