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RESEARCH INSIGHT | Cultural Intelligence: A Key to Increasing Customer Loyalty

The Research

The authors examine how frontline employees’ cultural intelligence (CQ) influences customer loyalty outcomes of service quality perceptions. Global customers, with their diverse cultural norms and values, often have strikingly different construals of the self and of others, leading to different expectations and various ways to evaluate service performance. In this context, service providers need to pay more attention to developing specific capabilities to accommodate customers’ culturally based needs and tap into the increasingly lucrative market of international travelers.

Firms should aim to recruit service employees who are capable of functioning effectively in cross-cultural interactions, fostering cultural empathy, and sharing this with customers. Human resources managers should familiarize themselves with the concept of CQ and then integrate specialized tools to evaluate the three CQ components (cognitive, emotional/motivational, and physical) of potential applicants during the screening process.

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What You Need to Know

  • Firms should recruit service employees who can function effectively in cross-cultural interactions, foster cultural empathy, and share this with customers. Human resources managers should familiarize themselves with the concept of CQ and integrate specialized tools to evaluate the three CQ components of potential applicants during the screening process.
  • In addition, CQ can be taught; Current employees’ CQ can be broadened and developed with appropriate training programs.
  • Service providers should develop mechanisms to match customers with preferred frontline employees on the basis of prior evaluations to ensure better customer experience and effective communication.
  • It is crucial for service providers to adapt their loyalty strategies across different national cultures. For example, firms operating in collectivist cultures should focus on improving their service employees’ cultural competences in terms of cognitive and physical CQ to create and maintain customer loyalty. Conversely, managers in individualist cultures should invest more in developing emotional/motivational and physical CQ of their service employees.
 

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.

Nicholas G. Paparoidamis, Huong Thi Thanh Tran, Constantinos N. Leonidou (2019), “Building Customer Loyalty in Intercultural Service Encounters: The Role of Service Employees’ Cultural Intelligence,” Journal of International Marketing, 27 (June), 56–75.