Building Customer Loyalty in Intercultural Service Encounters: The Role of Service Employees’ Cultural Intelligence

Abstract

Intercultural service encounters, in which customers and service employees from different cultures interact, are becoming more common in the market. Despite the importance of such encounters for international marketers, limited research attention has been directed to this area. Drawing on social exchange theory, this study examines how frontline employees’ cultural intelligence (CQ) influences customer loyalty outcomes of service quality perceptions. Specifically, the authors propose that the three components of CQ—cognitive, emotional/motivational, and physical—have differential moderating effects on the perceived service quality (PSQ)–customer loyalty link and that these effects vary across two national markets. Data collected with a multirespondent (i.e., frontline service employees and customers) cross-cultural research design indicate that cognitive CQ negatively mitigates the impact of PSQ on customer loyalty in an emerging-market context while emotional/motivational CQ has a positive moderating effect in a mature-market setting. When service employees have high physical CQ, the positive role of PSQ in creating and maintaining customer loyalty is strengthened in both markets. The authors discuss these implications for theory and practice.