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Demystifying Intercultural Service Encounters: Toward a Comprehensive Conceptual Framework

Piyush Sharma, Jackie L. M. Tam, Namwoon Kim

The Hong Kong Polytechnic University First Author (Also the Corresponding author): Dr. Piyush Sharma, Assistant Professor Department of Management and Marketing The Hong Kong Polytechnic University Hung Hom, Hong Kong Phone: +852-2766-7367, Fax: +852-2765-0611 Email: mspiyush@inet.polyu.edu.hk Second Author: Dr. Jackie L. M. Tam, Assistant Professor Department of Management and Marketing The Hong Kong Polytechnic University Hung Hom, Hong Kong Phone: +852-2766-7951, Fax: +852-2765-0611 Email: msjackie@inet.polyu.edu.hk Third Author: Dr. Namwoon Kim, Professor Department of Management and Marketing The Hong Kong Polytechnic University Hung Hom, Hong Kong Phone: +852-2766-7141, Fax: +852-2765-0611 Email: msnam@inet.polyu.edu.hk Keywords: Adequate service level, interaction comfort, intercultural competence, inter-role congruence, perceived cultural distance, perceived service level, satisfaction Acknowledgement: This research is supported by a grant from the Department of Management and Marketing, Faculty of Business, The Hong Kong Polytechnic University, Hong Kong.

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Demystifying Intercultural Service Encounters: Toward a Comprehensive Conceptual Framework

ABSTRACT

Customers and employees from different cultures are increasingly interacting with each other. However, there is little research in this area and it focuses mostly on the customers’ perspective. This article presents a conceptual framework for intercultural service encounters applicable to both customers and employees. Findings from an exploratory qualitative study show that perceived cultural distance and intercultural competence influence inter-role congruence, interaction comfort, adequate and perceived service levels, and satisfaction. These findings have important managerial implications for managing the expectations and perceptions of customers and employees involved in the intercultural service encounters, and improving their satisfaction with the service experience.

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INTRODUCTION

Intercultural service encounters (ICSE) involve customers and service employees from

different cultures (Stauss and Mang 1999). Such service encounters have increased tremendously

in recent years with the rise in the numbers and purchasing power of ethnic minorities (Furrer

and Sollberger 2007); as well as explosive growth in international travel and immigration as a

result of rapid globalization (Ng, Lee, and Soutar 2007). In fact, recent estimates show that about

200 million people live outside their countries of origin (United Nations 2006); and about 800

million tourists traveled overseas in 2006 (World Tourism Organization 2007).

Despite such large numbers underlining the importance of intercultural service

encounters around the world, there is no comprehensive conceptual framework to guide research

into the socio-psychological process underlying these encounters. As a result, prior studies only

explore a few aspects of ICSE, e.g., customer experience (Barker and Härtel 2004), culture shock

(Stauss and Mang 1999), cross-cultural interaction comfort (Paswan and Ganesh 2005),

intercultural sensitivity (Sizoo 2006; Sizoo et al. 2005), and consumer ethnocentrism (Javalgi

and Martin 2007; Sharma 2005; Ueltschy et al. 2007).

Prior research shows that customers from different cultures have significantly different

attitudes towards service employees and expectations from them; and this affects the ways they

interact with service employees and evaluate service performance (Mattila 1999; Raajpoot 2004;

Stauss and Mang 1999). Customers may also indulge in cultural or national stereotyping when

choosing a service provider across a wide range of services (Hopkins, Hopkins, and Hoffman

2005; Javalgi and Martin 2007; Ueltschy et al. 2007). On the other hand, many culturally diverse

customers perceive discrimination inherent in some service employees’ behavior, leading to

perceptions of inequitable service and lower satisfaction levels (Barker and Härtel 2004). Others

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argue that some ethnic customers are less experienced and have communication difficulties

prompting them to blame the service employee for poor service (Bendapudi and Berry 1997).

Hence, it seems both customers and employees are responsible for the success or failure

of an intercultural service encounter. However, prior research in this area focuses mostly on the

customers’ point of view with little attention to the employees’ perspective, despite the dyadic

nature of most service encounters and evidence of divergence in the attitudes and perceptions of

customers and employees (Bitner, Booms, and Mohr 1994; Iacobucci and Hopkins 1992).

The absence of employee attitudes, perceptions and behaviors in these studies raises

serious concerns about the validity and real-life application of their findings (Svensson 2006).

This is a particularly major problem in the study of ICSE because customers and employees from

different cultures have different expectations and perceptions about service encounters (Zhang,

Beatty, and Walsh 2008). Hence, there is a clear need to understand the differences in the

perceptions and behaviors of customers and employees, and explore how these differences may

affect the process and outcome of intercultural service encounters.

In this paper, we address this need with a common conceptual framework to represent the

employees’ as well as customers’ perspective in intercultural service encounters. We first discuss

the theoretical background of intercultural interactions using the theory of cultural identity and

the similarity-attraction paradigm. We then identify seven important constructs based on our

extensive literature review, representing expectations and perceptions of both customers and

employees including perceived cultural distance, intercultural competence, inter-role congruence,

interaction comfort, adequate and perceived service levels, and satisfaction. Next, we develop

our conceptual framework using these constructs and put forth ten testable propositions about

their inter-relationships, including many direct and indirect effects.

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We also describe an exploratory qualitative study consisting of fifty in-depth interviews

with customers and employees from different cultures, conducted in Hong Kong across several

service categories including food and beverages, hospitality, retail, and travel. The findings from

this study help us with a preliminary assessment of all our propositions. Finally, we discuss some

implications and limitations of our research along with directions for future research.

THEORETICAL BACKGROUND

People in different cultures have strikingly different construals of the self, of others, and

of the interdependence of these two, and these construals can influence, and in many cases

determine, the very nature of individual experience, including cognition, emotion, and

motivation (Markus and Kitayama 1991). Prior research on intercultural relations has focused on

ethnic minorities, immigrants and sojourners using several important concepts, e.g., acculturation

(Berry 2005, 1974), cross-cultural adjustment (Ward and Kennedy 2001; Ward and Rana-Deuba

2000), and ethno-cultural identity conflict (Leong and Ward 2000; Ward 2008).

Cross-cultural contact is associated with several problems such as misattributions,

communication gaps, stereotyping, ethnocentrism, prejudice, discrimination and cultural distance

(Stening 1979). Cultural identity and cultural distance also have a strong influence on the process

of psychological and socio-cultural adjustment (Searle and Ward 1990; Ward 2008). Bennett

(1986) offers a six-stage developmental model of intercultural sensitivity in which people move

through six different stages as their experience of cultural differences becomes more complex

and their own intercultural competence increases: (1) denial of difference (isolation); (2) defense

(perceiving cultural differences as a threat to their worldview); (3) minimization (accepting

superficial differences while maintaining the assumption that people are basically the same); (4)

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acceptance (recognizing the viability of different cultural norms); (5) adaptation (knowing

enough about another culture to intentionally shift frame of reference and modify behavior to fit

its norms); and (6) integration (reconciling cultural differences and forging a multicultural

identity). According to this model intercultural effectiveness is a result of active engagement

with cultural differences through adaptation and integration.

In this context, we argue that an ICSE gives an opportunity to the new immigrants to

learn about their host culture in order to adapt and integrate better. However, tourists may not

feel the need to integrate because of their limited interaction with the host culture. Hence, most

of them may stay in a stage of denial or defense. On the other hand, sojourners and international

business travelers may learn a bit more about other cultures because of their more frequent travel

although they may tend to minimize the differences between their culture and others in the

beginning before eventually learning to accept them. We can use Bennett’s Six-stage Model to

understand the differences in the attitudes and behaviors of these three categories of individuals

(tourists, sojourners, and immigrants) involved in intercultural service encounters as customers.

However, Bennett’s model does not help us understand the attitudes and behaviors of

service employees, which may vary depending on whether they belong to the dominant or

minority host culture, or if they too are immigrants. Moreover, the members of the dominant host

culture may not develop intercultural sensitivity unless they interact with other cultures in their

daily lives or they travel overseas. Therefore, it is important to develop a more comprehensive

conceptual framework for intercultural service encounters that allows us to study the perceptions

and behaviors of both customers and employees (Keillor et al. 2007).

The similarity-attraction paradigm provides the theoretical basis for a dyadic exchange

process in intercultural service encounters. Similarity is the extent to which individuals are alike

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with respect to attitudes, values, personal attributes or other characteristics (Smith 1998); and it

leads to greater attraction towards the other party in social interactions (Byrne 1971),

interpersonal friendships (Morry 2007), marriages (Houts, Robins, and Huston 1996), and

voluntary interactions (McPherson and Smith-Lovin 1987) as well as buyer-seller relationships

(Smith 1998) and other organizational settings (Tsui and O'Reilly 1989).

Similarity enhances liking, which makes the information exchange easier and efficient,

and helps in influencing or shaping attitudes (Dellande, Gilly, and Graham 2004). Smith (1998)

suggests that interaction is easier and less cognitively challenging with others who have similar

attitudes, values, activities or experiences. People feel more comfortable dealing with others who

share similar attributes with themselves because it facilitates open communication, helps develop

mutual understanding and strengthens interpersonal bonding (Spake et al. 2003). On the other

hand, interactions among individuals with dissimilar values, morals, and interpersonal norms are

more likely to experience conflict (Lin and Guan 2002).

Cultural distance is defined as the extent to which two cultures are different (or distant)

from each other in terms of a cultural dimension (Chirkov, Lynch, and Niwa 2005); resulting

from differences in various elements of culture, e.g., language, social structure, religion, standard

of living, and values (Triandis 2000, 1994). It has been used to explore a wide range of topics

such as entry mode choice (Kogut and Singh 1988), expat adjustment and coping (Selmer, Chiu,

and Shenkar 2007; Stahl and Caligiuri 2005), and acculturation process (Galchenko and van de

Vijver 2007; Greenland and Brown 2005). Greater cultural distance between the home and host

cultures is associated with greater difficulties in the adjustment process for sojourners,

international travelers, and immigrants (Ward, Bocher, and Furnham 2001).

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From the above discussion we find that intercultural competence and perceived cultural

distance are two important constructs used in the study of intercultural interactions. In the next

section we describe these two constructs and identify five more relevant constructs based on our

extensive review of the intercultural interaction and service encounters literature to develop our

conceptual framework and propositions about the inter-relationships among all these constructs.

CONCEPTUAL FRAMEWORK

Perceived Cultural Distance (PCD)

In the context of ICSE, cultural proximity and cultural distance are likely to influence

customer satisfaction because of their different pre-conceptions and expectations (Weiermair

2000). Customers also show significant differences in their perceptions about service experiences

with culturally different employees (Kulik and Holbrook 2000). For example, customers tend to

prefer employees with the same race as themselves because of greater trust and familiarity, thus

cross-race interactions result in more unfavorable outcomes than same-race interactions.

Most studies operationalized cultural distance using a composite index calculated as the

combined deviation of one country’s score from that of another based on Hofstede’s (1980)

cultural dimensions, namely power distance, uncertainty avoidance, masculinity-femininity, and

individualism-collectivism (Kogut and Singh 1988). However, there are major concerns about

the conceptual and methodological properties (e.g., cross-cultural equivalence) of such an

operationalization of cultural distance and hence researchers have called for individual measures

of cultural distance (Shenkar 2001; Sousa and Bradley 2006).

To address these concerns, we propose to operationalize cultural distance as ‘perceived

cultural distance’, a measure of the overall difference that individuals from various cultures

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perceive between each other (Ng, Lee, and Soutar 2007); and expect it to influence the

expectations and perceptions of both customers and employees involved in ICSE.

Interaction Comfort (IC)

Triandis (1994) suggests that most of us are ethnocentric and tend to view the behavioral

norms of our own culture as correct. Hence, interactions between people from different cultures

create a sense of discomfort due to perceived differences in behavioral norms. Spake et al. (2003)

consider that comfort during the interaction may affect the success of service delivery. This is

especially relevant for services which require customers’ co-operation to achieve a satisfactory

outcome. Clearly, if a customer feels uncomfortable in interacting with a service provider, the

customer may be unwilling to comply with the service provider or supply information needed to

complete the service. We argue that in the context of intercultural service encounters a lack of

awareness about various elements of each other’s culture related to key service attributes (e.g.,

serving with a smile, touching or joking with each other) may result in greater misunderstanding

and dissatisfaction compared to service encounters within one’s own culture.

In one of the few studies of intercultural service encounters that account for interaction

comfort explicitly, Paswan and Ganesh (2005) showed a negative association between perceived

cultural distance and interaction comfort, i.e., greater similarity between the home and host

cultures increases intercultural interaction comfort and vice versa. However, these researchers

operationalized “interaction comfort” as a manifestation of the cultural distance between service

employees and customers from different cultures, rather than treating them as two distinct

constructs. Hence, we need to differentiate between these two different constructs and to

explicate their roles in intercultural service encounters. In this research, we conceptualize

‘interaction comfort’ as a distinct construct and incorporate it into our conceptual framework.

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In the context of intercultural service encounters, Hopkins et al. (2005) suggest that a

successful outcome will be more likely if a service employee’s cultural background (e.g.,

language and communication, style, demeanor and or physiognomy) is perceived to be similar to

a customer’s cultural background. When service employees and customers share common

language, values and norms, it facilitates communication and improves the predictability of their

behavior. Hence, drawing on the similarity-attraction paradigm, we posit that individuals who

perceive greater cultural distance with people from other cultures may not feel comfortable in

intercultural service encounters. In other words, higher PCD may be associated with lower

interaction comfort and vice versa. Therefore, we propose as follows:

P1: Perceived cultural distance is negatively associated with interaction comfort.

Inter-Role Congruence (IRC)

Several social theories have been used to explain the behavior of customers and

employees in a service encounter. Interdependence theory (Surprenant, Solomon, and Gutman

1983) suggests that both the parties in a service encounter (service employee and customers) are

dependent on each other because the behavior of one party influences the outcomes received by

the other. Role theory (Solomon et al. 1985) argues that many service encounters are relatively

standard and involve elementary social interactions. Therefore, customers and service employees

have clearly defined roles and scripts for their roles in such service encounters. Any deviation

from these scripts may disrupt their performance and lead to dissatisfaction (Bitner et al. 1997).

Since role behaviors are interdependent in a dyadic service context, a successful service

outcome depends on mutual coordinated actions of both employees and customers (Solomon et

al. 1985). Role clarity (RC) is defined as the extent to which both parties involved in a social

exchange understand each others’ role expectations (Solomon et al. 1985). However, customers

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and employees even in two similar cultures (US and Netherlands) can have different perceptions

about each others’ roles, affecting their attitudes and behavior towards each other (Goodwin and

Verhage 1989). Moreover, research on service encounters shows that even if customers and

employees understand each others’ role, they may not always agree with their role expectations

from each other (Bitner, Booms, and Mohr 1994). Hence, we need to go beyond role clarity to

understand what actually happens during intercultural service encounters.

In this context, we look at inter-role congruence (IRC), the degree of agreement between

both parties on each others’ roles in a social interaction, based on social role theory (Solomon et

al. 1985). Employees and customers are expected to understand and agree with each other’s roles,

and perform accordingly; otherwise confusion and misunderstandings may arise, leading to a less

satisfactory service experience. We argue that inter-role congruence is likely to be a more

important element of intercultural service encounters compared to role-clarity because it involves

not only understanding each others’ roles but also agreeing with these role descriptions.

Based on Hofstede’s (1980) cultural dimensions, Stauss and Mang (1999) argued that

customers from high power distance cultures, who see themselves in a superior position

compared to service employees, may perceive a service employee's friendliness as an effort to be

equal to them and hence judge such behavior negatively. Moreover, individualistic customers

may expect an adaptation of the service to their needs and swapping of traditional gender roles

may irritate customers from masculine societies. Similarly, customers from high uncertainty

avoidance cultures may find the behavior of employees from low uncertainty avoidance cultures

unacceptable. Hence, it seems that customers and employees may have low inter-role congruence

in intercultural service encounters, resulting in dissatisfactory experiences.

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One of the most common themes in the exploratory studies of intercultural service

encounters is the use of stereotypes (Barker and Härtel 2004; Davis and Thornton 2005).

Stereotypes about the service employee’s race affect customers’ interaction with the service

employee and their ability to establish and maintain a relationship (Davis and Thornton 2005).

Moreover, many customers (especially ethnic minorities) perceive outright discrimination or

lower levels of service from some service providers, mostly those from the ethnic majority

(Barker and Härtel 2004). We propose that such stereotypes and negative perceptions in

intercultural service encounters may result from a lack of understanding and agreement about

each others’ role (i.e., lower level of inter-role congruence).

On the other hand, customers and employees from similar cultures share common values,

styles, and rules of behaviors, and hence they may be able to understand each other’s needs and

expectations, and also agree with each other’s role expectations (Stauss and Mang 1999). To

summarize, customers and employees from dissimilar cultures (i.e., higher PCD) may not agree

with each others’ service roles and expectations (i.e., lower inter-role congruence) due to lack of

familiarity; whereas customers from similar cultures (i.e., lower PCD) may understand and agree

with each others’ roles to a greater extent (i.e., higher inter-role congruence). Hence, we propose:

P2: Perceived cultural distance is negatively associated with inter-role congruence. Adequate Service Level (ASL)

Different levels of customer expectations exist in a service encounter (Zeithaml, Berry,

and Parasuraman 1993). Desired service is the level of service that the customer hopes to receive;

a blend of what a customer believes the service ‘can be’ and ‘should be’. Adequate service is a

level of service that the customer will accept; in other words, a lower threshold of acceptable

service. The difference between the desired and adequate service levels is termed the ‘Zone of

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Tolerance’, representing the extent to which customers recognize and are willing to accept

variability in the quality of service from one service encounter to another (Zeithaml, Berry, and

Parasuraman 1993). Desired service level is relatively idiosyncratic and stable, increasing

gradually with accumulated experience; whereas adequate service level moves readily up or

down due to contextual factors.

Interestingly, since Zeithaml et al.’s (1993) seminal work on the different service levels

and the zone of tolerance, most studies in this area focus on the customers’ perspective (e.g.,

Gwynne, Devlin, and Ennew 2000; Johnston 1995; Liljander and Strandvik 1993; Nadiri and

Hussai 2005; Reimann, Lünemann, and Chase 2008; Teas and DeCarlo 2004; Yap and Sweeney

2007). However, most service encounters are dyadic in nature, hence just like customers, the

employees may also have desired and adequate service levels, and a zone of tolerance. We argue

that employees may not be able to deliver their best service at all times due to various individual

and situational influences. Instead, most of the time they may only provide a service level within

their zone of tolerance, i.e., between their desired and adequate service levels.

We propose that the employees’ desired service level may be the highest level of service

that they would ideally like to deliver; it may probably match with the desired or ideal service

level of the customers or be a bit lower depending on the employee’s experience and job-related

attitudes. In contrast, the employees’ adequate service level may be the minimum level of service

they are willing to provide. We also suggest that a customer’s ASL may generally lie within the

employee’s zone of tolerance, resulting in a satisfactory service experience most of the time.

However, service failure may occur if the employee’s ASL is lower than the customer’s ASL

(lies below the customers’ zone of tolerance).

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We further suggest that customers may sometimes even have an ASL lower than that of

an employee; and this is more likely in intercultural service encounters because when interacting

with culturally distant employees, customers may not be confident of getting even a bare

minimum level of service due to their lack of familiarity with each others’ role expectations. In

fact, prior research shows significant cross-cultural differences in customer expectations (Donthu

and Yoo 1998; Furrer, Liu, and Sudharshan 2000; Laroche, Kalamas, and Cleveland 2005).

According to role theory, lack of clarity or agreement about each others’ roles has an

adverse impact on the efficacy of group or dyadic performance (Solomon et al. 1985). In the

context of service encounters, customers and employees assign specific roles to each other and

these perceived roles tend to persist over time, because it helps them reduce risk and effort by

looking for signs of deviation from their definitions of each other’s perceived roles (Hopkins,

Hopkins, and Hoffman 2005). Based on this, we argue that customers and employees with a high

degree of inter-role congruence, i.e., understanding and agreement about each others’ roles, may

be more willing to adjust their adequate service levels compared to those with lower levels of

IRC.

The customers’ ASL is the lowest service level they are willing to accept; hence we argue

that compared to customers with lower IRC, those with higher IRC may be willing to accept

lower service levels from employees with a different cultural background (i.e., high PCD). In

contrast, the employees’ ASL is the lowest service level they are willing to provide; hence

compared to employees with lower IRC, those with higher IRC may be willing to provide higher

service levels to customers with a different cultural background than their own. In other words,

we expect an opposite relationship between inter-role congruence and adequate service level for

the customers and employees. Hence, we propose as follows:

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P3a: Inter-role congruence is positively associated with adequate service level for employees. P3b: Inter-role congruence is negatively associated with adequate service level for customers.

Perceived Service Level (PSL)

Perceived service quality is defined as “a global judgment, or attitude, relating to

superiority of the service” (Parasuraman, Zeithaml, and Berry 1988); and perceptions are defined

as consumers' beliefs concerning the service received (Parasuraman, Berry, and Zeithaml 1985)

or experienced (Brown and Swartz 1989). Prior research focuses mostly on customer

expectations (Ofir and Simonson 2007; Tam 2007; Zeithaml, Berry, and Parasuraman 1993) and

perceptions (Meyer and Schwager 2007; Yim, Chan, and Hung 2007), with little attention to the

employees’ expectations and perceptions, especially in the context of intercultural service

encounters.

In fact, prior research has used the attribution theory to explain that customers and

employees may have significantly different perceptions about the actual service delivered even

within the same cultural context (Bitner, Booms, and Mohr 1994). Specifically, employees may

not associate customer dissatisfaction with their own predispositions, attitudes, or behaviors;

customers, on the other hand, may blame the employees rather than themselves (Bitner, Booms,

and Mohr 1994). We argue that these differences in customer and employee attributions and

perceptions may be even greater in intercultural service encounters because of their different

cultural backgrounds and knowledge. Hence, we include perceived service level as an important

element in our conceptual framework.

According to the social identity theory, individuals tend to categorize themselves into one

or more social groups, and define their social identity on the basis of the membership of the

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group (Tajfel et al. 1971; Tajfel and Turner 1986). This act of categorizing individuals into an in-

group and out-group exaggerates perceived differences among the groups, leading them to favor

their in-group members at the expense of out-group members, by giving the in-group members

more favorable evaluations or allocations of rewards (Tajfel et al. 1971).

Applying social identity theory to the context of intercultural service encounters, we

argue that employees and customers, who identify each other as members of the same in-group,

feel more comfortable in dealing with each other and hence, may display more understanding,

favoritism and tolerance toward each other. Hence, customers and employees from similar

cultures may rate each other more favorably compared to those from different cultures. In other

words, greater perceived cultural distance may be associated with lower interaction comfort,

which in turn may adversely affect the perceived service level. Similarly, lower perceived

distance may be associated with higher interaction comfort, which may lead to a more favorable

perceived service level. Hence, we propose as follows:

P4: Interaction comfort is positively associated with perceived service level. Intercultural Competence (ICC)

Intercultural or cross-cultural competence is the ability to think and act in appropriate

ways with people from other cultures (Friedman and Antal 2005). It is also called intercultural

sensitivity, the ability to discriminate and experience relevant cultural differences (Bhawuk and

Brislin 1992; Hammer, Bennett, and Wiseman 2003); intercultural effectiveness, the general

assessment of the ability for effective intercultural communication (Cui and Awa 1992; Hammer,

Gudykunst, and Wiseman 1978); and cultural intelligence, the ability to gather, interpret, and act

upon different cues to function effectively across different cultural settings (Earley and Ang

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2003). Despite these different definitions there is consensus about its influence on intercultural

interactions (Ward 2008).

Individuals with higher intercultural competence exhibit greater ability to learn different

languages and about other cultures; they also communicate effectively, and adapt and integrate

with other cultures (Redmond 2000). Employees with high intercultural sensitivity score higher

on service attentiveness, revenue contribution, interpersonal skills, job satisfaction, and social

satisfaction (Sizoo et al. 2005); and service employees’ intercultural competence relates

positively with customer satisfaction (Yu, Weiler, and Ham 2001). However, other studies of

intercultural service encounters explore customer expectations and reactions without accounting

for intercultural competence (Kulik and Holbrook 2000; Lin et al. 2007; Ryoo 2005).

Based on prior research, we argue that customers and employees with higher intercultural

competence (ICC) are likely to feel more comfortable and exhibit greater inter-role congruence

in intercultural service encounters compared to those with lower levels of ICC (Friedman and

Antal 2005; Koester and Olebe 1988). People with higher ICC display more respect and empathy

for people from other cultures, respond to unfamiliar situations and behaviors in a nonjudgmental

way without showing visible discomfort, and proactively use their knowledge of other cultures to

anticipate different expectations in various situations (Lustig and Koester 2006).

In contrast, lower levels of ICC may cause discomfort in intercultural interactions. For

example, most Japanese interpret gestures such as talking loudly or putting hands in one’s pocket

while talking to them as a put down (Kowner 2002). As a result, many Westerners who are not

aware of these nuances possibly due to their lower ICC, make the Japanese feel low in status,

albeit inadvertently most of the times. In fact, for this reason many Japanese avoid interacting

with Westerners or are hesitant and less confident in such interactions. Hence, the following:

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P5: Intercultural competence is positively associated with interaction comfort.

Individuals with higher ICC have greater knowledge about other cultures and are able to

use this knowledge quite effectively with people from other cultures, compared to those with

lower intercultural competence (Earley, Murnieks, and Mosakowski 2007). Therefore, we

suggest that higher ICC may also help in reducing the uncertainty and discomfort generally

associated with ICSE. Moreover, individuals with higher ICC may not only be more aware of

cross-cultural differences in service roles and expectations; they are also more likely to agree

with these differences. This may result in greater inter-role congruence. In other words,

intercultural competence may have a direct positive effect on inter-role congruence. Hence,

P6: Intercultural competence is positively associated with inter-role congruence.

Next, we examine the influence of intercultural competence (ICC) on the association of

PCD with interaction comfort (IC) and inter-role congruence (IRC). Prior research on the link

between cultural distance and customer perceptions shows mixed results; some suggest a positive

(Stauss and Mang 1999; Warden, Liu, and Huang 2003) and others a negative influence

(Hopkins, Hopkins, and Hoffman 2005). Similarly, the influence of cultural distance on

behavioral intentions is not clear; some show that customers prefer destinations with similar

cultures to their own (McKercher, Wong, and Lau 2006; Ng, Lee, and Soutar 2007); whereas

others found only a moderate effect of cultural distance on behavioral intentions (Crotts 2004;

Crotts and Erdmann 2000).

This lack of consensus on the influence of cultural distance on customer satisfaction in

service encounters highlights the complexity of the relationship between cultural distance and

customer satisfaction. We suggest that ICC may explain these mixed findings by moderating the

influence of perceived cultural distance on customer perceptions. Prior research shows that

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culturally intelligent people suspend judgment in an intercultural interaction until they have more

information beyond the ethnicity of the other person; are more aware of the nuances of different

cultures; and are able to use this knowledge to adjust their own behavior (Triandis 2006).

Hence, we argue that individuals with higher ICC may be able to overcome the negative

impact of PCD to a greater extent and feel more comfortable in their interactions with people

from other cultures compared to those with lower ICC. In other words, higher PCD may not

affect the interaction comfort for people with higher ICC as much as for those with lower ICC.

P7: The negative association between perceived cultural distance and interaction comfort is weaker for individuals with high vs. low intercultural competence. We proposed earlier that PCD is negatively associated with IRC. However, we also

argued that customers and employees with higher ICC may experience higher levels of IRC

because they are open to learning about other cultures and willing to comply with their social

norms (Earley, Murnieks, and Mosakowski 2007). Therefore, we propose that compared to

individuals with lower ICC, those with higher ICC may experience higher levels of IRC even

when dealing with people from a significantly different cultural background than their own (i.e.,

high PCD). On the other hand, there may be no such difference between individuals with lower

and higher ICC when they deal with people from a similar cultural background (i.e., low PCD);

thus, ICC may moderate the negative association between PCD and IRC. Hence, we put forth the

following proposition:

P8: The negative association between perceived cultural distance and inter-role congruence is weaker for individuals with high vs. low intercultural competence.

Satisfaction (SAT)

Many studies have explored the link between employee satisfaction and customer

satisfaction albeit with mixed results; showing mostly a positive (Chi and Gursoy 2008;

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Homburg and Stock 2004; Loveman 1998; Payne and Webber 2006), but also a negative

(Silvestro and Cross 2000), or non-significant (Brown and Mitchell 1993) relationship. Others

show that perceived service quality mediates this relationship (Brown and Lam 2008), and that it

is not moderated by the level of customer-employee interaction (Wangenheim, Evanschitzky,

and Wunderlich 2007). However, most of these studies use employees’ job satisfaction and

customers’ overall satisfaction with a service provider rather than their satisfaction with a

specific service encounter. Hence, there is little empirical evidence about how the differences in

their perceptions and attributions may affect their judgments about each other’s performance in a

service encounter (Bitner, Booms, and Mohr 1994; Chung-Herrera, Goldschmidt, and Hoffman

2004).

Customer satisfaction is ‘an emotional state that occurs in response to an evaluation of an

interaction experience’; thus, it seems to combine the emotive and evaluative aspects of a

customer’s service experience (Oliver 1997). Prior research shows that customer comfort during

a service encounter has a positive impact on perceived service quality, which then positively

affects satisfaction (Dabholkar, Shepherd, and Thorpe 2000). However, no such findings are

reported for the link between employee comfort and satisfaction with a service encounter.

We argue that understanding the process underlying the differences in customer and

employee satisfaction with a service encounter is an even more important issue for intercultural

service encounters because of significant differences in their attitudes, expectations and

perceptions about each other. We also proposed earlier that the perceived cultural distance

between customers and employees coupled with inter-role congruence may lead to differences in

their interaction comfort. We now argue that it would ultimately affect their satisfaction with the

service encounter by influencing their desired and adequate service levels.

21

Prior research shows that perceived employee effort (Mohr and Bitner 1995),

involvement (Liao and Chuang 2004), and performance (Dolen, Ruyter, and Lemmink 2004;

Schneider and Bowen 1985) have a positive effect on customer satisfaction. Similarly,

employees feel higher overall satisfaction with their job as well as its various facets, if their

performance is appreciated by customers and supervisors (Brown and Lam 2008). Therefore, we

propose that perceived service levels may be positively associated with satisfaction for both

customers and employees. Hence, we propose as follows:

P9: Perceived service level is positively associated with satisfaction. We also argued earlier that inter-role congruence is associated positively with adequate

service level for employees and negatively for customers. In other words, customers with higher

IRC may be willing to adjust their ASL downwards; whereas employees with higher IRC may be

willing to adjust their ASL upwards. We extend this argument to propose that having adjusted

their ASL downwards the customers may be more likely to feel satisfied with a service. Hence,

for customers, a lower ASL may be associated with higher satisfaction and vice versa for a given

perceived service level.

To understand the picture on the employee side, we first need to define employee

satisfaction with a service encounter. We propose that employee satisfaction is also an affective

response to the cognitive evaluation that the employees make about any service encounter.

Moreover, as argued earlier, the desired service level for the employees is similar to or a bit

lower but seldom higher than the customers’ desired service level; however their adequate

service level may not be related to the customer’s adequate service level. Instead it may depend

on various factors including their length of experience, past performance, and job satisfaction.

22

In fact, we earlier defined employees’ adequate service level as the minimum level of

service they are willing to provide. Hence, we argue that in assessing their satisfaction with the

service encounter, employees’ adequate service level may be the yardstick against which they

measure their performance. In other words, employees will feel satisfied with their performance

as long as their perceived service level is higher than their adequate service level. We propose

that having adjusted their ASL upwards, the employees may be less likely to feel satisfied with

their performance. Therefore, we also expect a negative relationship between employees’

adequate service level and their satisfaction. Hence, we put forth our final proposition as follows:

P10: Adequate service level is negatively associated with satisfaction.

< Insert Figure 1 about here >

All the above propositions are shown graphically in figure 1. Next, we describe a

qualitative study conducted in Hong Kong to seek preliminary support for all our propositions.

EXPLORATORY STUDY

Using an exploratory research design with a qualitative approach, we conducted 50 in-

depth interviews with customers and employees from different cultures in a variety of service

settings. This approach is similar to procedures used in prior research to develop and test

marketing theory (Parasuraman, Berry, and Zeithaml 1985; Zeithaml, Berry, and Parasuraman

1993). We chose five service categories (Food and Beverages, Retailing, Entertainment,

Hospitality and Transportation) as all these are high contact services involving direct face-to-face

interaction between customers and employees from different cultures (Youngdahl and

Ramaswamy 2008). Due to such high incidence of ICSE, these services provide a rich setting for

exploring the complex socio-psychological process underlying such encounters (Hopkins,

Hopkins, and Hoffman 2005; Sizoo et al. 2005).

23

We chose Hong Kong as the setting for this study as it is one of the most popular urban

tourist destinations in the world besides being an important economic center and business hub in

the Asia-pacific region. Interestingly, its 7 million population is mostly Chinese (95%), but it

attracts four times this number as visitors from all over the world (28 million in 2007), thus

providing an interesting mix of different cultures at any given time. Moreover, its Chinese

population is not homogeneous either, and consists of several ethnic groups based on the place in

China from where their forefathers migrated (Cantonese, Hakka, Hokkien, Shanghainese, and

Teochew). In fact, people in many of these different ethnic communities continue to speak their

own dialects and prefer their own ethnic cuisine even today. Clearly, Hong Kong is a multi-

cultural metropolis and intercultural service encounters are an integral part of its vibrant social

and commercial life (McKercher, Wong, and Lau 2006), thus, it is an appropriate setting for this

study.

We interviewed twenty-five customers and service employees each, with diverse cultural

backgrounds and countries of origin (Hong Kong, Mainland China, India, Korea, Malaysia,

Nepal, Pakistan, the Philippines, Australia, Spain, Mexico, the UK and the USA) to ensure

adequate variance in our sample and representation of the diverse ethnic mix in Hong Kong. The

in-depth interviews with the employees and customers were conducted at different locations all

over Hong Kong, lasting about 30-45 minutes each. We used interview guides that were prepared

in English first, then translated into Chinese and back-translated into English by two different

business faculty members from outside the research team. One of the researchers, a local Chinese,

conducted the interviews in Chinese whereas the other two researchers conducted the remaining

interviews in English. All the interviews were recorded and transcribed into the interview scripts.

24

Next, we analyzed these scripts using well-established practices reported in prior research

(Zeithaml, Berry, and Parasuraman 1993). Besides comparing notes after each interview and

attending some of the initial interviews together, each researcher reviewed all the scripts

independently. We then shared our inferences with each other and discussed these in great detail

over several meetings. Using this approach to combine our individual and collective insights

about the consistency of the patterns of responses from the in-depth interviews, we were able to

identify all the seven constructs and their interrelationships included in our conceptual

framework.

FINDINGS

The findings provide preliminary support for all our propositions. First, we found a

negative association between PCD and interaction comfort (P1), as shown below:

Abdul (late 40’s) is an ethnic-Pakistani, born in HK. He and his family speak fluent Cantonese, yet he thinks the local shopkeepers treat them like foreigners because of their looks (high PCD) making them feel uneasy (low IC). Hence they feel more comfortable (high IC) shopping at stores run by the Nepalese and Indians (low PCD). (P1 Customer)

Silvia (early 20’s), an ethnic-Chinese guest relations executive at HK Disneyland, enjoys dealing with Canadians (high IC) because she feels quite close to them having spent a few years in Canada before moving back to HK (low PCD). However, she is not at all comfortable dealing with the mainland Chinese (low IC) despite being Chinese herself because she thinks they have a very different culture (high PCD). (P1 Employee)

Similarly, we found evidence of a negative association between PCD and IRC (P2), as

seen in the following examples:

Jenny (early 30’s) is an ethnic-Chinese supervisor at a coffee shop. She notices that Japanese (lower PCD) are polite and nice; they clear up and take the magazines and newspapers back to the rack afterwards (high IRC), unlike Pakistanis and Indians (high PCD) who tend to ask for extras and make a mess on the table (low IRC). (P2 Employee)

Nimmi (late 50’s) is an ethnic-Indian lady who moved to HK 23 years ago. After living in HK for all these years, she is still unhappy that the local Chinese staff in the shops and

25

restaurants (high PCD) do not chat or joke with her (low IRC) as the shopkeepers and waiters back home in India (low PCD) used to do (high IRC). (P2 Customer) We also found a positive association between inter-role congruence and adequate service

level for employees (P3a), a negative association between inter-role congruence and adequate

service level for customers (P3b), and a positive influence of interaction comfort on perceived

service level for both customers and employees (P4):

Ken (late 20’s) is an ethnic-Nepalese coffee-shop supervisor who understands different food habits and preferences of customers from various cultures, unlike his colleagues. For example, he knows many Indians are pure Hindu vegetarians, so they are concerned about the use of meat, garlic and many other ingredients in the food. Therefore, he considers it as a part of his role to explain the ingredients of various foods served at his outlet to his Indian customers (high IRC), whereas many of his Chinese colleagues do not think it is a part of their role (low IRC) and are quite irritated by such queries. (P3a)

Roger (late 50’s) is an Australian businessman who likes talking to Indian call center (high IC) executives because they listen to him patiently even if they are not always able to solve his problems quickly, which should be the role of customer service executives according to him (high IRC). As a result, he is not only willing to lower his expectations for a quick resolution of his problem (P3b) but also thinks the Indian call center executives provide a better service than those from other countries. (P4 Customer)

We also found a positive association between ICC and IC (P5) as well as ICC and IRC

(P6) in our interview transcripts. As we can see in the following examples, Lucy and Tammy

have different levels of intercultural competence and that seems to have a differential impact on

their inter-role congruence as well as interaction comfort in intercultural service encounters.

Lucy (late 40’s) is an ethnic-Chinese supermarket supervisor and had worked for 20 years in a restaurant chain. She understands a lot of things about other cultures such as Muslims don’t eat Pork and Hindus don’t eat Beef. She has also learnt that Westerners like to smile and greet others whereas the Japanese tend to bow even to strangers (high ICC). With all her experience she feels quite comfortable dealing with customers from other cultures (high IC), understands their different role perceptions and has learnt to be more patient and tolerant in dealing with them (high IRC).

Tammy (early 20’s) is an ethnic-Chinese working at a retail shop in HK Disneyland. Like many of her colleagues she has never traveled outside HK or worked with foreigners before (low ICC). Hence, she does not like interacting (low IC) with the foreigners as

26

they all have such different expectations; the Westerners want them to smile and joke with them all the time while the some Asians want them to look after their kids (low IRC).

Similarly, we also found support for the positive moderating influence of intercultural

competence on the association of PCD with IC (P7), and PCD with IRC (P8) as follows:

Ken, the coffee-shop supervisor uses his knowledge about the food habits and preferences of people from other cultures (high ICC) to understand their expectations and serve them accordingly (high IRC). He also enjoys serving all kinds of customers (high IC). In contrast, John, his ethnic Chinese colleague has many negative stereotypes about people from other cultures (low ICC) so most of the time he is not sure how to deal with them (low IRC) and this makes him very uncomfortable in serving such customers (low IC).

Eva (early 20’s) is a Filipino domestic helper who arrived in HK only a few months ago. This is the first time she has been living away from home (low ICC) and is having a hard time adjusting to her new life (low IC) here because she is still not sure about her role and the role of her host family (low IRC). On the other hand, Julie (late 20’s) another Filipino domestic helper has been in HK for more than 5 years and has learnt to deal with people from other cultures (high ICC). She enjoys her work (high IC) and has a good rapport with the family she works for (high IRC).

Finally, we also found support for the positive association of satisfaction with perceived

service level (P9), and negative with adequate service level (P10) as follows:

Bob (early 30’s) is an Australian, who moved to HK a few years ago with his Chinese wife. He expected service employees in HK to use English because it was a British colony until recently (high ASL). Hence, he feels quite dissatisfied and irritated (low SAT) with shop employees who make no effort to learn English (low PSL). However, he is quite happy with some older taxi drivers because they speak good English (high PSL). Cybil (early 30’s) is a flight stewardess who frequently flies all over the world and has learnt to adjust her service according to the passengers’ nationality and personality. For example, she bows to the Japanese passengers and uses a few words in their language (high ASL). However, she seldom gets a smile or thank you leaving her dissatisfied (low SAT). On the other hand, she ignores the South Asian passengers’ request for extra drinks (low ASL) but feels satisfied because it helps her avoid extra work (high SAT).

In sum, we found preliminary support for all our propositions. However, our study

consisted of only fifty in-depth interviews with customers and employees, and this small sample

size is insufficient to provide any conclusive evidence about the validity of all the constructs

included in our conceptual framework and their inter-relationships. Moreover, our findings are

27

based on our subjective interpretation of the interview transcripts. Therefore, future research

using a quantitative approach is needed for a more rigorous test of our propositions.

DISCUSSION

Our research makes several conceptual contributions. First, unlike prior research in this

area, we go beyond exploring cross-cultural differences between customer expectations and

perceptions based on various cultural dimensions or simply describing various aspects of

intercultural service encounters. Instead, we develop a comprehensive conceptual framework

with seven relevant constructs (perceived cultural distance, inter-role congruence, interaction

comfort, intercultural competence, adequate and perceived service levels, and satisfaction) based

on an extensive review of intercultural interaction and service research. With this framework, we

are able to explore the inter-relationships among these important constructs to throw some light

on the complex socio-psychological process underlying intercultural service encounters.

We put forth ten testable propositions based on this framework. Specifically, using the

similarity-attraction paradigm we suggest that perceived cultural distance is an important trigger

in most intercultural service encounters because of its direct negative impact on inter-role

congruence (the extent to which customers and employees agree with each others’ role

definitions) and interaction comfort. We posit that inter-role congruence and interaction comfort

mediate the influence of PCD on adequate and perceived service levels, respectively.

Interestingly, inter-role congruence has a positive association with adequate service level for

employees and negative for customers, whereby both employees and customers with high inter-

role congruence seem to adjust their adequate service levels but in opposite directions. We also

propose that satisfaction with the service encounter is positively associated with perceived

service level and negatively with adequate service level for both customers and employees.

28

We suggest that intercultural competence plays a pivotal role in intercultural service

encounters, with a direct positive influence on inter-role congruence and interaction comfort as

well as a positive moderating influence on the influence of PCD on inter-role congruence and

interaction comfort. In other words, intercultural competence seems to mitigate the negative

impact of perceived cultural distance on the expectations and perceptions of both customers and

employees in an intercultural service encounter. Thus, we integrate the various findings on the

role of intercultural sensitivity and cross-cultural knowledge in the area of intercultural

interaction by incorporating intercultural competence in our conceptual framework.

Second, we use a common framework for both customers and employees, to explain the

underlying mechanism of intercultural service encounters using mediating and moderating roles

of different constructs. Thus, we show how these constructs influence or interact with each other

to shape the expectations and performance of both customers and employees. By adopting this

approach, we address a long standing demand to acknowledge the interactive and dyadic nature

of most interpersonal service encounters, and to show that customers and employees experience

similar socio-psychological processes when interacting with each other (Svensson 2006, 2001).

We report findings from an exploratory qualitative study consisting of fifty in-depth

interviews conducted with customers and employees from diverse cultural backgrounds in a wide

variety of service settings, providing preliminary support to all our propositions. Specifically, we

found that both customers and employees evaluate their experience in an intercultural service

encounter based on a complex process with their intercultural competence as a key determinant

of their interaction comfort and inter-role congruence, as well as a moderator of the association

between perceived cultural distance and these two variables. We also found that satisfaction with

the service encounter depends on both perceived as well as adequate service levels.

29

This research provides several useful guidelines for the managers. First, it highlights that

intercultural service encounters are becoming increasingly important for service companies

dealing with customers and employees across different cultures especially in the international

tourism and shopping sectors and for international hubs such as Dubai, Hong Kong and

Singapore that depend heavily upon global trade, tourism and shopping for their economic

prosperity and growth. Hence, this is an issue that the managers and decision-makers in the

service firms around the world can no longer neglect in order to attract and retain the rapidly

growing lucrative market segments consisting of customers with diverse cultural backgrounds.

Second, we propose that service employees or customers are not solely responsible for

the success or failure of intercultural service encounters. Rather, it is a combination of their

intercultural competence, inter-role congruence and perceived cultural distance which influences

the process and outcomes of such encounters including perceived and adequate service levels,

and satisfaction. Since customer and employee satisfaction are both linked to the firm’s

profitability (Chi and Gursoy 2008; Loveman 1998), managers need to make sure that the

problems likely to arise from interaction between customers and service employees from

different cultures are pre-empted and dealt with in a planned, appropriate manner rather than

leaving these to chance or the creativity of the front-line personnel.

Finally, we hope this research will motivate service companies experiencing intercultural

encounters to invest in identifying, motivating and retaining service employees with higher

levels of intercultural competence and training them to improve their inter-role congruence.

Based on our synthesis of the literature on intercultural interactions and service areas, we

propose that both these constructs may play an extremely important role in intercultural service

encounters. Employees with higher levels of intercultural competence are more likely to have a

30

higher inter-role congruence with customers from different cultures and be willing to adjust their

service level according to their diverse role expectations. This will help service firms ensure

greater satisfaction for their customers as well as employees, and build stronger loyalty in

today’s increasingly diverse and competitive marketplace.

LIMITATIONS AND FUTURE RESEARCH

Our research raises some important questions and methodological challenges for future

research. First, empirical testing of the conceptual framework and propositions would require

psychometrically sound measures for all the seven constructs for both customers and employees.

We recommend adapting the existing reliable and valid measures for this purpose, such as

intercultural competence (Friedman and Antal 2005), inter-role congruence (Schommer 1994),

interaction comfort (Paswan and Ganesh 2005), perceived cultural distance (Goto and Chan

2005), adequate and perceived service levels (Parasuraman, Zeithaml, and Berry 1994), and

satisfaction (Brady et al. 2005). Moreover, many of these constructs may be correlated with each

other and therefore future research will need to establish construct (convergent and discriminant),

nomological and predictive validity for all these new measures besides controlling for common

method variance in their measurement.

Second, despite the popularity and practical appeal in service research, there is hardly any

research on the adequate and perceived service levels in the study of intercultural service

encounters (Yap and Sweeney 2007). Researchers have called for investigations into their

influence on the specific service quality dimensions and outcomes, rather than relying on an

overall quality measure and its outcomes (Teas and DeCarlo 2004). Moreover, findings in prior

research on the slope of the relationship between service quality and behavioral intentions at

different service levels have been mixed (Yap and Sweeney 2007; Zeithaml, Berry, and

31

Parasuraman 1996). Future research may extend our conceptual framework to explore the impact

of different service levels on the behavioral intentions of customers in intercultural service

encounters.

Third, our exploratory study consisted of fifty in-depth interviews with customers and

employees from many different cultures, which is an appropriate sample size in view of the

exploratory nature of this study. However, this sample is rather small to generalize the findings

to the entire population covered in our study. Future quantitative approaches are needed to test

the framework in a statistically significant manner. Fourth, this study is focused on high contact

services involving direct face to face contact between the customers and employees. Future

research may also explore indirect intercultural contact between customers and service

employees using phone or email in contexts such as offshore call centers (Keiningham et al.

2006; Roggeveen, Bharadwaj, and Hoyer 2007; Sharma, Mathur, and Dhawan 2008, 2006).

Specifically, it would be useful to examine to what extent the use of technology to standardize

the service delivery process helps in improving the outcomes of intercultural interactions.

Finally, we use Bennett’s (1986) six-stage model to suggest that the attitudes and

behaviors of three different categories of customers (tourists, sojourners and immigrants) in

intercultural service encounters may be significantly different from each other due to their

different degrees of acculturation. However, our conceptual framework focuses on customers

and employees in general and not on the differences among different types of customers. Hence,

future research may use this classification to explore the differences among these three

categories of individuals to provide further insights in this area of growing importance.

32

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Satisfaction

Adequate service level

Inter-role congruence

Perceived service level

Interaction comfort

Intercultural competence

P1 (-)

P2 (-) P3b (-)

P4 (+)

P10 (-)

P9 (+)

P6 (+)

P5 (+)

Perceived cultural distance

P3a (+)

P7 (+)

P8 (+)

Satisfaction

Adequate service level

Inter-role congruence

Perceived service level

Interaction comfort

Intercultural competence

P1 (-)

P2 (-) P3b (-)

P4 (+)

P10 (-)

P9 (+)

P6 (+)

P5 (+)

Perceived cultural distance

P3a (+)

P7 (+)

P8 (+)

Figure 1 – ICSE Conceptual Framework