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European Journal of Marketing
Converting service encounters into cross-selling opportunities: Does faith in
supervisor ability help or hinder service-sales ambidexterity?
Ting Yu Paul Patterson Ko de Ruyter
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Ting Yu Paul Patterson Ko de Ruyter , (2015),"Converting service encounters into cross-selling
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Converting service encounters
into cross-selling opportunities
Does faith in supervisor ability help or hinder
service-sales ambidexterity?
Service-sales
ambidexterity
491
Ting Yu and Paul Patterson
University of New South Wales, Sydney, Australia, and
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Ko de Ruyter
Received 8 October 2013
Revised 27 March 2014
28 July 2014
Accepted 14 August 2014
University of Maastricht, Maastricht, The Netherlands
Abstract
Purpose – This paper aims to examine how the motivation and ability of individual employees to sell
influences their units’ capability to align their service delivery with sales in a way that satisfies
customers. It also addresses the potential influence of employees’ confidence in their supervisor’s ability
to sell, such that they predict a joint influence of personal and proxy agency.
Design/methodology/approach – This study uses hierarchical linear modeling to address the
research issues.
Findings – Employees’ learning orientation has a positive influence on service-sales ambidexterity,
but the impact of a performance-avoidance goal orientation is negative, and a performance-prove
orientation has no influence. Proxy efficacy enhances the positive impact of learning orientations due to
the manager’s ability to lead by example, facilitate knowledge sharing and provide advice. However, it
attenuates the impact of self-efficacy on service-sales ambidexterity, because skilled supervisors tend to
take over and eliminate opportunities for employees to build their own skills. It also confirms the
positive influence of service-sales ambidexterity on branch performance.
Originality/value – To examine the emerging service-sales ambidexterity issues raised in frontline
service units, this study adopts a motivation and capability paradigm. It is among the first studies to
address service-sales ambidexterity issues by considering both individual and branch contextual
factors.
Keywords Cross-selling, Self-efficacy, Goal orientation, Proxy efficacy, service-sales ambidexterity
Paper type Research paper
Introduction
Service firms increasingly find that their revenues depend on selling more products to
existing customers. Wells Fargo claims that its household cross-selling ratio of 5.70
financial products is responsible for more than 80 per cent of its revenues, such that the
bank has incorporated cross-selling as a strategic priority for all its retail branches
(Wells Fargo, 2011). A McKinsey & Co. report suggests that firms can add 10 per cent to
their existing revenues by integrating cross and upselling functions into traditional
service centers (Eichfeld et al., 2006). This estimate is based on the premise that in their
encounters with customers, frontline employees (FLEs) develop an in-depth
The authors gratefully acknowledge that funding for this study was provided by the Australian
Research Council (DP110103527).
European Journal of Marketing
Vol. 49 No. 3/4, 2015
pp. 491-511
© Emerald Group Publishing Limited
0309-0566
DOI 10.1108/EJM-10-2013-0549
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492
understanding of their needs, such that these employees are particularly well suited to
identifying sales opportunities, even as they continue to service customers (Sparacino,
2005). However, Mittal et al. (2005) caution that transforming traditional service units
into service- and revenue-generating units can result in unexpected, disappointing
consequences, such as deterioration in both service and sales levels (Aksin and Harker,
1999) and/or employee dissatisfaction (Dart, 2009).
Many employees seek direction and guidance from operational managers, with their
greater status, experience and direct reward power (Yaffe and Kark, 2011). The extent to
which service employees depend on these leaders for guidance regarding ways to start
selling should influence the impact of their own motivation and self-confidence on their
service-sales ambidexterity. However, extant research has been virtually silent on the
influence of operational managers, in terms of either their leadership by example or their
ability to provide a social context that influences FLEs’ willingness and ability to
engage in ambidextrous behavior.
We turn to emerging research that uses the concept of ambidexterity as a theoretical
perspective for examining service-sales conversion. Ambidexterity, or an
organizational entity’s ability to perform seemingly conflicting tasks and pursue
disparate goals simultaneously, provides a compelling conceptual lens on the potential
competitive advantages to be achieved from combining existing competencies (i.e.
service delivery) with new alternative activities (i.e. cross-selling). Most studies focus
instead on contextual mechanisms, such as (support) systems, controls or incentive
schemes, leaving a gap in our understanding of how the motivation and ability of
individual FLEs might predict ambidexterity, beyond pertinent contextual
mechanisms. For FLEs, the challenges of providing service and cross-selling
simultaneously have long been acknowledged (Burton, 1991); however, they have not
been properly addressed. Employees often view selling as incommensurate with service,
which creates psychological barriers to blending the two functions (Jasmand et al., 2012).
Many service firms report disappointing returns, employee disgruntlement and adverse
effects for customers in response to introducing sales initiatives (Aksin et al., 2007).
Service firms thus need a more in-depth understanding of how the motivation and
ability of individual employees to sell influences frontline service units’ capability to
align service delivery with selling, to the satisfaction of customers. This article offers
two contributions in this realm.
First, we assess how FLEs look up to operational managers or team leaders for
guidance or help with integrating sales into the service delivery process. In complex goal
pursuits, people tend to seek guidance or even allow others to take over some decision
control, according to their own perceived ability. We consider proxy efficacy or a
person’s confidence in the knowledge and abilities of a third party to achieve desired
outcomes on his or her behalf (Bray et al., 2001). With this study, we examine whether
proxy efficacy reinforces or interferes with the influence of individual employees’ selling
goal orientations and self-efficacy as predictors of service-sales ambidexterity. Second,
on the basis of social cognition theory, we identify for the first time employee goal
orientation and self-efficacy as important predictors of successful service-sales
ambidexterity. We theorize and empirically assess the predictive ability of these
individual-level predictors, compared with the formative influence of two contextual
mechanisms, performance management and social support – already identified as
important drivers of ambidexterity (Gibson and Birkinshaw, 2004).
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Conceptual background
service-sales ambidexterity
Conceptually, organizational ambidexterity is anchored in the distinction between
exploration and exploitation (Simsek et al., 2009). Most studies of organizational
ambidexterity refer to technological innovation or organizational learning contexts
(Gupta et al., 2006), although some recent introductions of service-sales ambidexterity
concepts include the simultaneous pursuit of service and sales objectives by service
firms (Jasmand et al., 2012). The fundamental premise is that service delivery and selling
are two non-substitutable, interdependent activities. Although selling is commonly
regarded as a revenue-producing activity, and service delivery generally represents an
expenditure, service and sales also can be viewed as interdependent activities, because
the sale of an appropriate item provides a satisfying solution to a customer problem, and
the delivery of service excellence spurs sales (Zeithaml, 2000). A customer who
experiences problems managing a variety of insurance policies might be served well by
an offering of an all-inclusive, hassle-free package from one financial services provider
for example. Because FLEs can simultaneously engage in or switch between service
delivery and selling during the same encounter, ambidexterity is commonly viewed as a
multiplicative concept; the activities are non-substitutable and interdependent. Such a
multiplicative approach also can serve to index performance measures (Cao et al., 2009).
Operationally, service delivery and selling compete for scarce resources, making
trade-offs unavoidable in the simultaneous pursuit of both goals. For example,
successful explorations of cross-selling opportunities could increase average handling
times and require operational managers to relax their thresholds for this service
parameter. Customer service activities also traditionally appear passive and reactive,
centered on well-defined service requests, ready information access, repetition and
standardized processes, with an emphasis on implementation and execution – not unlike
order taking. In contrast with this focus on being reliable, courteous and efficient, both
up- and cross-selling require FLEs to possess greater product knowledge, be proactive
and engage in non-routine tasks to identify sales opportunities. For this task, FLEs must
take risks, have an ability to identify opportunities and close sales, be flexible and face
uncertain returns for their efforts. The uncertainty and variability associated with upand cross-selling thus are incompatible with the efficiency and reliability emphasis of a
customer service role, such that the latter could crowd out the time and effort available
for selling (Jasmand et al., 2012). Success in an ambidextrous service-sales role requires
FLEs to deal with conflicting demands, which create role ambiguity and role conflict, as
well as challenges in the process of pursuing multiple goals. Successfully meeting dual
roles in turn requires motivation, self-confidence and self-belief.
Personal agency and proxy agency
For frontline business units to attain service-sales ambidexterity, employees must
exhibit a range of appropriate, self-regulating behaviors. Recent theoretical advances in
social cognition offer a general consensus that the effective achievement of desirable
outcomes depends on personal agency (Sackett et al., 1998). Personal agency stems from
both motivation and perceived ability, in that people must be both willing and able to
engage in behavioral change (Bandura, 1997). In a service business unit, employees can
choose whether to focus on the sales tasks, how much effort to invest in completing the
assigned sales task and whether to be persistent and continue investing until the task is
Service-sales
ambidexterity
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494
completed. Decisional input related to these options depends largely on the goal
orientation of individual employees. As a motivational construct, goal orientation
indicates individual willingness to invest effort in particular tasks (Covington, 2000).
The notion of self-efficacy instead reflects a person’s ability to cope with work-related
tasks (Crant, 2000). Ample evidence suggests that perceived confidence in one’s own
ability to perform a specific task is a better predictor of behavioral displays than are
actual skills (Bandura, 1997). Self-efficacy beliefs are thus crucial to determining
whether and how people persist in attempting to achieve certain behaviors, particularly
in the face of unfamiliar task challenges (Bandura et al., 1996). We posit that employee
goal orientation and self-efficacy related to selling offer important predictors of a
boundary-spanning work unit’s capability to be ambidextrous.
Social cognition theory also states that people’s adaptation to change is rooted in the
social environment and that vicarious experience has an important role (Bandura, 1997):
It accounts for proxy agency, in addition to personal agency and motivation,
particularly in relation to necessary adaptations to and the internalization of new
activities. In adapting to task demands, people rely on their perceptions of the ability of
third parties who have authority, act as role models, and offer guidance. In this study,
proxy efficacy implies FLEs’ confidence in their manager’s ability to sell in a service
delivery context (i.e. “show them how it is done”). As previous research has
demonstrated, when people do not have direct control over changes and institutional
requirements, they relinquish personal control to a third party to act on their behalf. In
a fitness class, participants count on a trainer to guide them through the exercise
program; FLEs similarly look to managers to lead the class, by guiding and
supplementing their own ability and strengthening their motivation to sell, even in a
service delivery context. Thus, they do not have to worry about choosing the right steps
or procedure to follow; they also gain more resources, in terms of their time and effort, to
exercise service-sales activities because they learn more and get a feel for the impact of
specific actions on goal attainment (Bandura, 1997). Therefore, we regard proxy efficacy
as a stimulus that strengthens the impact of personal agency on service-sales
ambidexterity.
Finally, previous research shows unequivocally that properties of the social context
(contextual mechanisms) are important predictors of ambidexterity (Gibson and
Birkinshaw, 2004). Therefore, we examine the intricate interplay of an individual FLE’s
goal orientation, self-efficacy and proxy efficacy as predictors of service-sales
ambidexterity, using several theory-based research hypotheses.
Hypotheses development
Goal orientation consists of three dimensions: learning orientation, performance-avoid
orientation and performance-prove orientation (Vandewalle, 1997). People with a high
learning orientation seek challenging tasks and persist in dealing with challenging
situations. These employees possess the “desire to develop the self by acquiring new
skills, mastering new situations and improving one’s competence” (Vandewalle, 1997,
p. 1000). They are motivated to acquire necessary new skills and knowledge and less
concerned about failure or mistakes. Instead, they tend to treat mistakes as useful
feedback for their improvement or perceive them as growth opportunities (Sosik et al.,
2004). The dual demands of service and newly added sales targets offer a challenge to
these employees, who must perform an extended, unfamiliar range of activities in
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encounters with customers, which creates a higher likelihood of failure. When FLEs are
motivated by learning though, they are more likely to expend the effort to acquire new
selling knowledge and skills, and then align them with existing service quality
objectives. The adoption of mastery goals prompts greater intrinsic motivation, so
highly learning-oriented employees should tend to persist and better manage the dual
demands of service and sales (Sujan et al., 1994). Accordingly, we hypothesize:
Service-sales
ambidexterity
H1a. A learning goal orientation has a positive impact on service-sales
ambidexterity.
495
A high performance-prove orientation instead leads people to focus on demonstrating
their ability so that they look better than others. They seek approval from their peers
and supervisors (Brett and Vandewalle, 1999) by achieving a high level of performance.
However, these employees need positive reinforcement and feedback. They may regard
challenging tasks as threats to their positive image, yet their desire to demonstrate their
competency leads them to focus on doing what they are good at, such that they should
align service delivery activities with cross-selling effectively. Even if these employees
feel uncomfortable in engaging in attempts to sell, they likely seek to prove their ability
to meet the new targets. Thus, we hypothesize:
H1b. A performance-prove goal orientation has a positive impact on service-sales
ambidexterity.
In contrast, a performance-avoid orientation causes people to regard challenging tasks
as a threat, likely to result in failure (Brett and Vandewalle, 1999). In the face of a
challenging situation, performance-avoid-oriented people pursue maladaptive
responses because they would rather withdraw from activities than run the risk of
failure (Button et al., 1996). Because they need to invest extra effort to succeed, they
believe they have received a signal of their low ability, which discourages further effort
investments to achieve the required demands. Previous research affirms that a
performance-avoid orientation is detrimental to the exhibition of desirable or required
behaviors (Vandewalle et al., 1999) but positively associated with a fear of negative
evaluations by others (Brett and Vandewalle, 1999). The dual demand of combining
service with sales is unfamiliar for most FLEs, so employees with a high
performance-avoid goal orientation are unlikely to display behaviors to meet it.
Therefore, we hypothesize:
H1c. A performance-avoid goal orientation has a negative impact on service-sales
ambidexterity.
A firm’s ambidextrous performance relies on employees’ abilities to manage disparate
tasks and integrate them for cross-fertilization. Self-efficacy thus has emerged as a key
construct for explaining and predicting variations in employees’ job performance. It
relates positively to proactive behaviors (e.g. identifying opportunities to improve,
proactive problem solving and implementation; Crant, 2000). To act ambidextrously,
perform dual roles of service and sales and integrate them well, staff usually must take
some proactive actions. For example, in a customer interaction, the FLEs need to take
the initiative to identify a problem and find a solution, even if not requested by the
customer. The solution might be a new product or an upgrade to an existing product;
staff members with higher self-efficacy should be more likely to enact such
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496
task-appropriate strategies (Marrone et al., 2007). In addition, self-efficacy relates to
employees’ adaptability during service encounters (Ahearne et al., 2005). Higher
self-efficacy increases the chances that a person initiates tasks, sustains effort toward
task accomplishment and persists in the face of difficulties or failure (Mittal et al., 2005).
Therefore, FLEs who are more confident in their ability to sell should be better at
achieving both service and sales objectives during service encounters. We hypothesize:
H2. Self-efficacy has a positive impact on service-sales ambidexterity.
The notion of proxy efficacy has remained virtually unexplored empirically: Bandura’s
(1997) theory has not been tested extensively, and the results that exist are equivocal and
limited to health care and academic contexts. Thus, we seek to develop theory-based
hypotheses regarding the potential moderating role of proxy efficacy. Bray et al. (2001)
conclude that proxy efficacy is not a major determinant of self-efficacy beliefs, and Elias
and MacDonald (2007) find that it is not a direct driver of behavior. Yet Bray et al. (2004)
report that a combination of self- and proxy efficacy accounts for substantial variance in
exercise behavior among novice exercisers. Thus, the influence of proxy efficacy may be
supplementary (Bray et al., 2001), in line with Bandura’s (1997) contention that proxy
efficacy is influential in contexts in which people transfer partial control to an
intermediary who can facilitate their attainment of desired objectives.
When confronted with an unfamiliar, challenging task, some people respond by
actively seeking to learn new knowledge and skills, to be able to manage the task.
Bandura (1997) contends that confidence in the ability of third-party agents (e.g. an
experienced, skillful operational manager) can facilitate this learning and skill
acquisition process, such that it enhances FLEs’ motivation to master selling activities
that promote goal attainment. The transfer of partial control to an agent is common in
social settings that demand behavioral changes or introduce new routines. In a medical
context, for example, Christensen et al. (1996) note that people who experience health
problems are likely motivated to engage in rehabilitation programs, but the assistance
of an exercise consultant can be instrumental for sustaining this motivation. They find
a positive association between renal dialysis patients’ adherence to their healthcare
providers’ recommendations and the amount of confidence those patients have in their
healthcare providers’ abilities (Christensen et al., 1996). Similarly, FLEs who seek to
demonstrate their abilities to coworkers (i.e. performance-prove orientation) likely
achieve better ambidextrous performance when they perceive their operational
manager as competent, such that they adhere to this manager’s advice and mimic his or
her selling behavior. If FLEs possess a performance-avoid orientation, they also should
demonstrate improved performance if their operational manager appears to possess the
requisite knowledge and skills to help them achieve their sales targets. Overall, if people
lack the experience and skills necessary to engage in required but challenging actions,
confidence in a knowledgeable agent who models appropriate behaviors should
strengthen the impact of their motivation. That is, motivated staff already are willing to
pursue service-sales ambidextrous behavior, and their collectively held confidence in
the selling abilities of their manager should reinforce this positive impact on the unit’s
ambidextrous service-sales behavior. Therefore, we propose an interaction hypothesis:
H3. Proxy efficacy strengthens the relationships of (a) learning orientation, (b)
performance-prove orientation and (c) performance-avoid orientation with
service-sales ambidexterity.
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Bandura (1997) suggests that the interaction of motivation and confidence in a proxy
agent contribute to behavioral adaptations and promote individual performance, but he
also notes a dilemma. Using a proxy increases levels of dependence, which ultimately
could “impede the cultivation of personal competencies” (Bandura, 2001, p. 13) and
reduce “opportunities to build skills needed for efficacious action” (Bandura, 1997, p. 17).
Dependence on a proxy agent also might increase the person’s likelihood of constantly
depending on others, which Bandura (2001, p. 13) refers to as “the price of proxy
agency”. When faced with a new challenge, proxy efficacy thus may mitigate the impact
of independent, self-regulatory developments on goal attainment and performance –
particularly when achieving the new, unfamiliar objectives demands collaborative
effort and proxy instruction. In this sense, “people foster self-induced dependencies
when they can obtain valued outcomes more easily by having somebody else do things
for them” (Bandura, 1997, p. 17). For example, the mere effort to master a new skill set
might seem to outweigh its potential benefits. Accordingly, we posit that proxy efficacy
has a negative impact on the self-efficacy–ambidexterity performance relationship.
That is, FLEs’ confidence in the ability of their operational manager to sell during
service delivery attenuates the impact of their own confidence about infusing sales into
service encounters. Admittedly, some congruence must exist between proxy efficacy
and dependency because of the formal, hierarchical relationship between the FLEs and
their branch managers. Yet such relationships do not apply in settings involving
personal trainers or medical therapists for example, though these contexts also have
been objects of investigation in proxy efficacy research. Therefore, we anticipate that at
high levels of proxy efficacy, the impact the self-efficacy on service-sales ambidexterity
diminishes. In relation to the facilitating role of local managers in furthering their
subordinates’ motivational and efficacy beliefs, we propose:
H4. Proxy efficacy weakens the relationship between self-efficacy and service-sales
ambidexterity.
In an influential study, Gibson and Birkinshaw (2004) posit that at the work unit level,
firms’ operational managers must be able to stimulate the pursuit of exploration and
exploitation simultaneously. Contextually ambidextrous organizational units need to
combine contradictory organizational elements and support individual employees in
their exploration and exploitation activities. Furthermore, a business unit’s capacity
for ambidexterity depends on the multiplicative effect of performance management
and social support. Ambidextrous organizations delegate responsibility to the work
unit level, where systemic, formal and informal processes combine to create an
environment that is conducive to the attainment of dual foci. The inherent,
seemingly contradictory tensions of ambidexterity thus can be managed through
the work context. Gibson and Birkinshaw (2004) also report that ambidexterity
relates significantly to a unit’s performance. Although our main research focus is
disentangling the effects of individual motivation and ability on achieving
service-sales ambidexterity, we also assess the impact of these individual factors, in
light of the established influence of contextual mechanisms. Therefore, we
incorporate a corroborating hypothesis:
H5. The joint impact of performance management and social support is positive for
service-sales ambidexterity at the work unit level.
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Finally, we predict a positive relationship between branch-level service-sales
ambidexterity and performance. The dual focus inherent in this type of ambidexterity
should be reflected in organizational performance indicators too. We conceptualize
performance as the combination of sales and satisfaction performance parameters
achieved by the branch:
H6. service-sales ambidexterity has a positive impact on performance at the work
unit level.
498
An overview of our hypotheses appears in Figure 1.
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Methodology
A large nationwide retail bank cooperated for this study, facilitating data collection
among staff in the branch network and providing a branch performance index, which
included customer satisfaction ratings and financial performance. This study focused
on retail banking operations, comprising mainly lending (e.g. personal loans and home
loans), deposit-taking, credit cards and savings accounts. All retail branches in
operation for longer than six months were invited to participate. We distributed
questionnaires to all staff in each of the 350 participating branches and received 2,618
usable questionnaires from 302 bank branches. To ensure a sufficient number of
employee respondents in each branch (Lüdtke et al., 2008), we compared the staff size
and response rate from each branch. If less than 50 per cent of the staff within a branch
responded, we excluded it from further analysis. We obtained a final sample of 2,306
employees representing 267 branches.
Data collection and measures
The measurement scales for all constructs came from prior literature and should offer
content validity (Netemeyer et al., 2003). The Appendix presents a complete list of items
with their factor loadings, reliability and average variance extracted (AVE) statistics.
Branch Context
•
•
Performance Management
Social Support
H5
Employee Characteristics
Goal Orientation
•
•
•
Learning Orientation
Performance-Prove
Orientation
Performance-Avoid
Orientation
H1a-c
Service–Sales Ambidexterity
H2
Self-Efficacy
Figure 1.
Conceptual model
H3a-c
H4
Proxy Efficacy
H6
•
•
Branch
Performance
Customer
Satisfaction
Financial
Performance
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All constructs were measured on seven-point Likert scales. Goal orientation was
captured by Vandewalle’s (1997) 13-item goal orientation scale, which consists of three
dimensions: learning orientation, performance-prove orientation and performanceavoid orientation. For self-efficacy, we used Sujan et al.’s (1994) self-efficacy scale but
modified it slightly to focus on both service- and sales-related skills. The proxy efficacy
measure used four items that captured the staff’s beliefs about the efficacy of their
branch manager, in terms of his or her ability to sell, which we based on existing proxy
efficacy scales (Bray et al., 2004; Elias and MacDonald, 2007). The branch context
measures included 12 items (6 for performance management, 6 for social support). As
recommended by Gibson and Birkinshaw (2004), we considered both performance
management and social support holistically and as non-substitutable; we used a
multiplicative function of the performance management and social support constructs
to measure the branch context, according to an interaction term.
Although prior studies have developed instruments to measure ambidexterity,
mostly using self-reported, survey data, little effort has been devoted to developing a
reliable, valid scale that applies to service and sales at a branch level. For our measure of
service-sales ambidexterity, we therefore adapted items developed by Lubatkin et al.
(2006), who argue that their orientation measure reflects an organization’s ability to
pursue exploration and exploitation goals. All the items loaded significantly on their
respective factors (i.e. service orientation and sales orientation (loadings greater than
0.50), with sound reliability (service ␣ ⫽ 0.89; sales ␣ ⫽ 0.91). We computed the
multiplicative interaction between the service and sales components to determine a
service-sales ambidexterity level for each branch, as commonly used in previous studies
(He and Wong, 2004).
Two key indicators measure branch performance: financial performance and
customer satisfaction. Data for both indicators came from the participating bank for the
most recent financial year. Financial performance was a composite of financial (sales)
measures, including volume of deposits, credit card activity, housing mortgage activity
and personal loan activity. We measured branch financial performance as a percentage
of its overall target, which standardizes this assessment for differences in branch size
and market potential. Because this approach also assessed what the branch was trying
to maximize, it offered operational validity (Gelade and Young, 2005). Customer
satisfaction equaled the average of the customer satisfaction rating reported by
customers. A product term combined financial performance and customer ratings. By
using an objective rather than a subjective measure, we overcame the problem of
self-reported performance bias.
We also identified other factors that might influence both service-sales ambidexterity
and performance for a given branch. Accordingly, we controlled for employees’ age,
gender, tenure and experience, as well as branch size and location (city, suburban and
regional). Including these control variables provides a more robust test of the
hypotheses. Furthermore, we note that FLEs empowered to deal with the tension of
providing services and cross-selling likely suffer from increased workload perceptions,
which could have negative impacts on their service performance (Chan and Lam, 2011).
Although it thus would be helpful to include workload as another control variable, our
data do not provide a valid workload indicator (e.g. number of employees per customer,
number of calls per employee per day).
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Results
Table I presents the descriptive statistics and bivariate correlations for all the variables
in the study. We established convergent and discriminant validity through exploratory
(EFA) and confirmatory factor analyses (CFA) (Diessner et al., 2008). We examined the
values for the goodness-of-fit index (0.93), adjusted goodness-of-fit index (0.91), root
mean square error of approximation (0.05), standardized root mean square residual
(0.06), normed fit index (0.94) and comparative fit index (0.95) (Byrne, 2001; Marsh et al.,
2004). We also examined within-method convergent validity by checking the
significance and magnitude of the item loadings. The Appendix provides the results of
the CFA and reliability tests. All coefficient alpha values were greater than 0.78,
suggesting acceptable reliability (Nunnally and Bernstein, 1994). As for within-method
convergent validity, all items loaded significantly on their respective constructs
(minimum t-value ⫽ 23.78) and had standardized loadings of at least 0.50. To establish
discriminant validity, we followed Fornell and Larcker’s (1981) recommended
procedure. As the Appendix shows, the AVE for all constructs were greater than 0.50
(range: 0.53 to 0.78). We compared each construct’s AVE with the square of the
correlation between any two constructs, and the AVE exceeded the square in all cases.
In addition, chi-square difference tests (1 degree of freedom) indicated that all pairs of
constructs correlated at less than 1 (p ⬍ 0.05).
Aggregation statistics
For our study, the measurement level (employee) for branch context and proxy efficacy
differed from the analysis level (branch). To justify the data aggregation for these
constructs empirically, we performed several tests to demonstrate within-group
agreement and between-branch differences (Dixon and Cunningham, 2006). We used
one-way analyses of variance (ANOVA) to calculate intraclass correlation coefficients
(ICC [1] and ICC [2]) for the branch context (i.e. performance management and social
support) and proxy efficacy (Bliese, 2000). The ICC (1) for branch context and proxy
efficacy were greater than 0 (performance management ⫽ 0.29; social support ⫽ 0.30;
and proxy efficacy ⫽ 0.37) with a correspondingly significant ANOVA test statistic (F).
This value also exceeded the median ICC (1) value of 0.12 in organizational research
(James, 1982). The ICC (2) for branch context and proxy efficacy (performance
management ⫽ 0.68; social support ⫽ 0.68; and proxy efficacy ⫽ 0.78) were above the
acceptable cutoff value of 0.6 (Glick, 1985). According to an interrater reliability
coefficient (Rwg) test (James et al., 1993), the Rwg(j) coefficient for the branch context and
proxy efficacy were far above the acceptable level (performance management ⫽ 0.96;
social support ⫽ 0.97; and proxy efficacy ⫽ 0.97). These results showed high
consistency ratings among employees within branches (James, 1982), which led us to
conclude that the aggregation of branch context and proxy efficacy to the branch level
was appropriate.
We took several measures to mitigate any bias. Following Podsakoff et al.’s (2003)
suggestions, we separated measures of the independent variables from service-sales
ambidexterity by inserting them into separate sections of the instrument. We also
assured respondents of their anonymity, thereby reducing any evaluation apprehension
or demands for social desirability. Next, because the data came from three distinct
sources (customers, objective firm financial performance data and employees), we
sought to minimize common method bias. We investigated the potential impact of
Learning orientation
Performance-prove orientation
Performance-avoid orientation
Self-efficacy
Proxy-efficacy
Branch context
service-sales ambidexterity
Age⫹
Gender⫹⫹
Tenure⫹⫹⫹
Experience⫹⫹⫹
5.66
5.13
3.53
4.85
5.78
31.84
34.30
2.43
1.63
54.53
111.35
0.93
1.16
1.46
1.06
1.24
9.54
9.84
0.98
0.48
55.80
87.11
Employee level
Mean
SD
5.67
5.15
3.55
4.86
5.82
32.00
34.49
2.50
1.61
55.48
116.03
0.47
0.57
0.71
0.54
0.74
5.53
5.46
0.34
0.19
28.62
39.05
Branch level
Mean
SD
2
0.50**
⫺0.08**
0.23**
0.58**
0.42**
0.38**
0.25**
0.53**
0.33**
0.66**
0.38**
0.08**
0.11**
⫺0.07** ⫺0.08**
0.01
0.06**
0.05*
0.09**
1
4
5
6
7
8
9
10
⫹⫹
11
gender
0.01
⫺0.05*
0.37**
⫺0.07**
0.50**
0.65**
⫺0.09**
0.52**
0.49**
0.61**
0.07**
0.23**
0.13**
0.08**
0.15**
⫺0.02
⫺0.12** ⫺0.08** ⫺0.04
⫺0.09** ⫺0.42**
0.06**
0.05**
0.04
0.01
0.05*
0.34** ⫺0.10**
0.08**
0.13**
0.09**
0.06**
0.09**
0.55** ⫺0.30** 0.41**
3
Notes: a Correlations are based on employee-level data (n ⫽ 2,306); ⫹ age consists of four categories, coded as “25 and below” ⫽ 1; “26 – 35” ⫽ 2; “36 – 45” ⫽ 3; “46 and above” ⫽ 4;
is coded as male ⫽ 1, female ⫽ 2; ⫹⫹⫹ tenure and experience are calculated by months L; * p ⬍ 0.05; ** p ⬍ 0.01
1
2
3
4
5
6
7
8
9
10
11
No. Variable
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501
Table I.
Means, standard
deviations and
correlationsa
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common method variance statistically, using multiple tests. We conducted an EFA with
all manifest variables; Harman’s single-factor test indicated that the first factor
accounted for only 37.91 per cent of the variance. We also tested two measurement
models, one with the focal constructs and one that also included a method factor (Paulraj
et al., 2008). The method factor slightly improved model fit (increases of 0.01 in the
adjusted goodness-of-fit index, normed fit index and confirmatory fit index). However,
these slight improvements do not indicate that the results were inflated.
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Hypotheses testing
We used hierarchical linear modeling (HLM) to test H1-H5 (Raudenbush et al., 2004) and
summarize the results in Table II. We first ran a null model including only the dependent
Level and variable
Intercept
Individual-level control variables
Age
Gender
Tenure
Experience
Branch-level control variables
Branch size
Branch location-city
Branch location-suburban
Individual-level antecedents
Learning orientation
Performance-prove orientation
Performance-avoid orientation
Self-efficacy
Branch-level antecedents
Branch context
Null model (M1)
34.502**
With individual-and
branch-level
predictors (M2)
34.479**
34.480**
0.513**
0.080
0.001
0.002
0.472**
0.098
0.001
0.002
⫺0.356
⫺1.071*
⫺1.518**
⫺0.357
⫺1.070*
⫺1.518**
5.171** (H1a)
0.182 (H1b)
–0.372** (H1c)
1.308** (H2)
5.383**
0.163
–0.369**
1.216**
0.703** (H5)
6.354**
Cross-level interactions: individual-level antecedents ⫻ proxy efficacy
Learning orientation ⫻ proxy
efficacy
Performance-prove orientation ⫻
proxy efficacy
Performance-avoid orientation ⫻
proxy efficacy
Self-efficacy ⫻ proxy efficacy
n (Individual-level)
2,306
2,306
n (Branch-level)
267
267
16,852.33
15,647.185
Model deviancea
Table II.
Hierarchical linear
modeling results
With interaction terms
(M3)
0.877** (H3a)
0.158 (H3b)
–0.027 (H3c)
–0.606** (H4)
2,306
267
15,637.212
Notes: * p ⬍ 0.05 (one-tailed); ** p ⬍ 0.01 (one-tailed); a deviance can be used as a measure of model
fit: smaller deviance implies better model fit (Liao and Chuang, 2007)
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variables. To test H1, H2 and H5, we added branch- and individual-level predictors. To
test H3 and H4, we added interaction terms for proxy efficacy with each individual-level
variable in the model. We used the group centering method for Level-1 variables to avoid
the potential confound between a cross-level interaction and a between-group
interaction (Hofmann and Gavin, 1998). To test H6, we aggregated service-sales
ambidexterity to the branch level and performed a multiple regression analysis, such
that we could test the relationship between service-sales ambidexterity and branch
performance (de Jong et al., 2005).
Null model. Table II contains the results of the null model (M1). We also calculated
ICC (1) for service-sales ambidexterity, to illustrate the significant between-branch
variance. The ICC (1) for service-sales ambidexterity was 0.30, such that 30 per cent of
the variance in employees’ perceptions of service-sales ambidexterity resided between
branches, and 70 per cent resided within branches. Therefore, the use of HLM analysis
was appropriate in this case (Marrone et al., 2007).
Adding individual- and branch context-level predictors: H1, H2 and H5. To test our
prediction that goal orientation and self-efficacy are significantly associated with
service-sales ambidexterity, we added goal orientation, self-efficacy, and branch context
(performance management ⫻ social support). As we show in Table II (M2), we found a
positive relationship of learning orientation (H1a ␥ ⫽ 5.171, p ⬍ 0.01) and a negative
link of performance-avoid orientation (H1c ␥ ⫽ ⫺0.372, p ⬍ 0.01) with service-sales
ambidexterity. However, we found no significant relationship between a
performance-prove orientation and service-sales ambidexterity. Thus, H1 received only
partial support. We also confirmed H2 because in Table II (M2), we find a positive
relationship between self-efficacy and service-sales ambidexterity (␥ ⫽ 1.308, p ⬍ 0.01).
Finally, we predicted a positive joint impact of performance management and social
support on services–sales ambidexterity at the work unit (branch) level, and the results
accordingly provided significant support for H5 (␥ ⫽ 0.703, p ⬍ 0.01).
Adding cross-level interaction terms: H3 and H4. Regarding the potential moderating
role of proxy efficacy, to test H3 and H4, we generated four cross-level interaction terms.
The results appear in Table II (M3). We found support for H3a (␥ ⫽ 0.897, p ⬍ 0.01) and
H4 (␥ ⫽ ⫺0.587, p ⬍ 0.01) but not for H3b or H3c.
service-sales ambidexterity and branch performance: H6. Finally, we aggregated
employee-level perceptions of service-sales ambidexterity to the branch level and
performed a multiple regression analysis to uncover any positive relationship between
them. We included branch size and branch location as control variables. The results
indicated a significant positive relationship between service-sales ambidexterity and
branch performance (F ⫽ 11.39, R2 ⫽ 0.148, p ⬍ 0.01); it explained 14.8 per cent of the
variance in branch performance, in support of H6.
Discussion
We examine the service-sales ambidexterity issues raised in frontline service units by
adopting a motivation and capability paradigm, which enables us to explore the impact
of individual heterogeneity on a branch’s ability to be service-sales ambidextrous. Our
study is among the first to address this challenge by considering both individual and
branch contextual factors. Proxy efficacy, or confidence in the operational manager,
exerts an interesting influence on the relationships between employee characteristics
and ambidexterity performance. Confidence in this ability enhances the impact of an
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FLE’s learning orientation on service-sales ambidexterity, mainly due to the manager’s
ability to lead by example, facilitate knowledge sharing and provide advice. Conversely,
our data reveal that an FLE’s confidence in her or his own ability to sell may decrease
when a supervisor displays greater ability and takes over the process. A manager who
tends to dominate training and the sales process thus reduces opportunities for the FLE
to build her or his own skill set. This limitation then prompts FLEs to relinquish some
control if it is the easiest path to take; it even might demotivate them from learning new
required skills. In these circumstances, the intervention of a proxy efficacy agent means
that the FLEs’ self-confidence has a diminished impact on ambidexterity performance.
Contextual factors offer important predictors of service-sales ambidexterity; we thus
find support for prior theoretical findings in a specific, service-sales context.
Furthermore, we demonstrate that the impact of these factors is complemented by FLE’s
motivation and ability. The inclusion of proxy efficacy as a branch-level moderator also
enhances understanding of the nature of these influential factors. Employees’ selling
motivation and ability are associated with service-sales ambidexterity, but not all goal
orientations have equivalent impacts. For example, FLEs’ learning orientation exerts a
positive influence on service-sales ambidexterity, but the impact of the
performance-avoid goal orientation is negative, and the performance-prove orientation
seems to exert no influence at all. These findings match previous, inconsistent results
regarding the relationship between salespeople’s goal orientation and performance
(Ahearne et al., 2010). Blending familiar activities (i.e. service provision) with unfamiliar
ones (e.g. selling) may diminish FLEs’ need to show that they can do well. Some FLEs
actively try to avoid selling because they were not hired to perform such tasks.
The positive association of self-efficacy with service-sales ambidexterity is
consistent with previous studies that have argued that highly self-efficacious people
display flexibility and persistence, which instigates a willingness to experiment by
infusing service delivery with selling attempts. A key issue in pursing service-sales
ambidexterity is resource constraints (March, 1991). The adoption of a flexible and
persistent attitude helps FLEs deal with the apparently conflicting demands of these
two types of activity. Finally, we confirm that service-sales ambidexterity is positively
associated with branch performance. If a branch can successfully pursue both service
and sales goals, its performance improves. This finding encourages a firm to pursue a
dual emphasis service-sales strategy.
Managerial implications
Our findings offer significant managerial implications for retail banking branch
managers who face service delivery– cross-selling tensions. A learning orientation is
important, and branch managers should foster a climate that encourages the acquisition
of new knowledge and skills, such as by providing FLEs with information, relevant
training and exposure to internal and external experts. Learning efforts also need to be
recognized, evaluated and rewarded. However, because staff members with strong
performance-avoid orientations are likely to withdraw from challenging tasks, such as
the simultaneous pursuit of service and sales goals, branch managers need external
mechanisms to motivate these staff. For example, designated rewards might encourage
them to take on challenging tasks (Fry, 2003). Alternatively, branch managers who
assign tasks might give performance-avoid-oriented employees more simple, routine
jobs rather than difficult and challenging tasks. In ambidextrous environments, branch
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managers should also consider ways to release such employees and attract “new blood”
if an ambidextrous environment is really a priority.
Although adding a sales focus to a service unit is not a recent phenomenon (Burton,
1991), many employees continue to have difficulty dealing with the associated
complexity. Self-efficacy is a dynamic construct that can change over time and improve
through training (Gist and Mitchell, 1992). If the overall level of self-efficacy is low,
branch managers should develop training programs to enhance it; continuous training
support is necessary. Such programs require some caution though because branch
managers’ efforts to assist and coach FLEs could have negative impacts on
ambidextrous performance overall. Coaching FLEs who already have high levels of
confidence seems likely to backfire and diminish their confidence. Instead, branch
managers could grant more freedom and power to self-efficacious staff. In general,
branch managers must be aware of the needs of their staff, improve communication
skills and help them be more sensitive and empathetic, especially when training FLEs
who already possess confidence in their ability to sell.
The findings thus have direct implications for retail banking branch managers, but
the implications also may be relevant to other service firms with multiple branches that
simultaneously pursue service and sales targets, such as travel agencies,
telecommunication providers and insurance. In these settings, FLEs face a similar
dilemma when they must perform service and sales-related tasks simultaneously, with
limited resources.
Research implications
Some limitations of our approach suggest directions for ongoing research. First, as we
noted, FLEs empowered to deal with service-sales ambidexterity may suffer increased
workload perceptions that hinder their service performance (Chan and Lam, 2011). Our
surveys did not include a measure of workload or perceived workload, but further
research that integrates this control variable could be insightful. Second, a longitudinal
research design could better reveal whether self-efficacy loses significance for
predicting performance over time (Vancouver et al., 2001). In general, longitudinal
research could clarify the long-term impacts of service-sales ambidexterity on
performance and the possibility of reciprocal effects (Lubatkin et al., 2006), resulting in
a more comprehensive view.
Third, simultaneity conceptually distinguishes organizational ambidexterity from
dynamic capability (Kortmann, 2012). Similar to previous ambidexterity studies, we
assumed that our operationalization of service-sales ambidexterity implicitly featured a
simultaneity aspect, but this assumption has been questioned (Good and Michel, 2013).
Therefore, investigations should include simultaneity in their operationalizations of
ambidexterity. Fourth, the data for our independent and dependent variables came from
the same source, which may create some common method bias. Most ambidexterity
studies similarly rely on self-reported, survey data (Gibson and Birkinshaw, 2004), but
we call on further research to collect objective ambidexterity data, such as objective
indicators of service-sales ambidexterity that explicitly acknowledge simultaneity
characteristics.
Fifth, our assessment of proxy efficacy in relation to ambidexterity remains
preliminary and offers a starting point for further inquiry. The diverging interaction
effects with employee goal orientation and self-efficacy might reflect our
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operationalization of proxy efficacy, as employees’ confidence in their operational
manager’s ability to sell in a service delivery context. Perhaps the emphasis should shift
to capture the ability of a proxy to teach and communicate. Bandura (1997) asserts that
proxy agents can help manage and coordinate the factors necessary for goal attainment;
we hope that additional research incorporates an operationalization of proxy efficacy
that reflects this assistance aspect and tests the robustness of the interaction effects that
we encountered.
Sixth, further research should determine if our proxy efficacy findings hold across
contexts that vary in the extent to which they are proxy led (e.g. self-management teams)
or proxy close (e.g. employees work in close contact with their supervisor or
autonomously). Our research referred to an individual employee context, so these
findings should be extended to include perceptions of collective agency too (i.e. team
efficacy). More research is needed to examine broader ranges of individual
characteristics and organizational factors that might drive service-sales ambidexterity.
In our study context, the sales function was only recently added; studies modeling
successful service-sales ambidexterity could refer instead to industries in which the
twin goals have been an industry norm for some time.
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Service-sales
ambidexterity
509
EJM
49,3/4
Appendix
Measures
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510
Table AI.
Measures and
measurement criteria
Branch context
Performance management
Members of my team are responsible for deciding how to organize our work
Members of my team are responsible for deciding how to achieve our goals
Members of my team are responsible for determining the best way to
satisfy our customers’ requirements
Members of my team are empowered to make the day-to-day business
decisions that enable us to be successful
Members of my team are empowered to change our work processes in order
to improve our performance
The recognition and rewards employees receive for the delivery of superior
work is high
Social support
In our branch, we help each other in serving our customers when needed
In our branch we place a high value on the mutual support of team
members
In our branch, each team member is personally responsible for the
assistance of other members in serving the customer
In our branch, each team member is involved with what is going on in our
team
The job knowledge and skills of employees in our branch to deliver superior
quality work and service is sufficient
The leadership shown by management in our branch in supporting the
service and sales effort is appropriate
Goal orientation
Learning orientation
I am willing to select a challenging task that I can learn a lot from
I often look for opportunities to develop new skills and knowledge
I enjoy challenging and difficult tasks at work where I’ll learn new skills
I prefer to work in situations that require a high level of ability and talent
Performance-prove orientation
I try to figure out what it takes to prove my ability to others at work
I enjoy it when others at work are aware of how well I am doing
I prefer to work on tasks where I can prove my ability to others
Performance-avoid orientation
I would avoid taking on a new task if there was a chance that I would
appear rather incompetent to others
Avoiding a show of low ability is more important to me than learning a new
skill
I prefer to avoid situations at work where I might perform poorly
Self-efficacy
I am good at selling
I know the right thing to do in selling situations
I am good at finding out what customers need
It is easy for me to get customers to see my point of view
Proxy efficacy
Our branch manager has a clear understanding of where we are going
Our branch manager is able to get others committed to his/her dream
Our branch manager provides a good model for me to follow
Our branch manager leads by example
Loadings
t-Value
0.87
0.90
28.02
28.53
0.88
28.18
0.79
26.67
0.73
25.51
␣
AVE
0.91
0.60
0.88
0.53
0.89
0.68
0.85
0.66
0.78
0.55
0.83
0.54
0.93
0.78
0.54
0.66
23.78
0.85
27.27
0.85
27.30
0.83
27.01
0.58
26.68
0.53
0.85
0.86
0.86
0.72
38.98
39.47
39.27
0.72
0.84
0.86
37.01
43.48
0.82
26.43
0.78
0.61
26.31
0.78
0.73
0.75
0.69
32.05
30.47
31.11
0.94
0.96
0.87
0.76
49.56
67.27
91.55
(continued)
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Measures
Service-sales ambidexterity
Service
In our branch, we increase the level of service quality delivered to
customers
In our branch, we constantly survey existing customers’ satisfaction
In our branch, we fine tune what we offer to keep our customers satisfied
In our branch, we continuously improve the reliability of our services
Sales
In our branch, we create new ways to expand client portfolios
In our branch, we look for creative ways to increase the number of sales
In our branch, we explore the sales potential of market segments
In our branch, we actively target new customer groups
In our branch, we penetrate more deeply into our existing customer base
In our branch, we base our success on our ability to explore sales
opportunities
Loadings
0.76
0.70
0.75
0.79
0.91
0.80
0.81
0.77
0.83
0.76
t-Value
␣
AVE
0.89
0.70
32.80
30.50
32.34
511
0.62
33.89
34.53
33.20
35.01
32.84
0.67
Notes: Fit indices: goodness-of-fit index ⫽ 0.93; adjusted goodness-of-fit index ⫽ 0.91; root mean square error of
approximation ⫽ 0.05; square root mean residual ⫽ 0.06; normed fit index ⫽ 0.94; confirmatory fit index ⫽ 0.95.
About the authors
Ting Yu is a lecturer in Marketing at the University of New South Wales. Her major research
interests include organizational ambidexterity (service versus sales; efficiency versus flexibility),
relationship termination management and consumer emotions. Her research has appeared in
Journal of Service Research, Journal of Business Research, Journal of Services Marketing and
Journal of Service Management/International Journal of Industry Management. Ting Yu is the
corresponding author and can be contacted at: ting.yu@unsw.edu.au
Paul G. Patterson is a Professor of Marketing in the Australian School of Business at the
University of New South Wales (UNSW), Sydney, Australia. His research has been published in
numerous leading journals, including Journal of Service Research, Journal of the Academy of
Marketing Science, Journal of Retailing, Journal of International Business Studies, International
Journal of Research in Marketing, European Journal of Marketing and California Management
Review.
Ko de Ruyter is a Professor of Marketing at Maastricht University, The Netherlands. He has
published six books and numerous scholarly articles in, among others, Journal of Marketing,
Management Science, Journal of Consumer Research, Journal of Retailing, Journal of the Academy
of Marketing Science, International Journal of Research in Marketing, Decision Sciences,
Organization Science, Marketing Letters, Journal of Management Studies, Journal of Business
Research, Journal of Economic Psychology, Journal of Service Research, Information and
Management, European Journal of Marketing, and Accounting, Organisation and Society.
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Table AI.