Delivering Superior Customer Service through Dual-level Transformational Leadership: a Multi-level, Multi-source Test of the Moderating Role of LMX Differentiation

Abstract

Conceptualizing superior customer service as behaviors exhibited by people who have direct interactions with customers in the workplace, we proposed a multilevel theoretical model that identified transformational leadership as the primary source, and the quality of leader-member exchange (LMX) as the underlying mechanism through which leadership exerts its positive influence on employee service performance, at both the individual and group levels. We also identified LMX differentiation within the group as a moderator between LMX quality and service performance. Data from 228 leader-member dyads of 23 branches in a large commercial bank revealed that both group-level transformational leadership and group LMX were meaningful group-level constructs that had significant positive effects on group service performance. More intriguingly, LMX differentiation played the role of a cross-level moderator that mitigated such relationship at the group level. The theoretical and practical implications of our findings are discussed in the service organizational context.