Social capital, customer service orientation and creativity in retail stores
Introduction
Retail organizations have recently made considerable leaps in their level of market orientation and customer responsiveness. This is particularly true of the global retail chains. It is well understood that responding to customer needs more efficiently and effectively than competitors is an important source of advantage for retailing organizations. While responding to customers' expressed needs and preferences is critical for competitive advantage in retail industries, a balance needs to be struck with the need to be innovative, which improves the retailer's ability to anticipate and cater to customers' emergent or latent needs (Narver et al., 2004). Accordingly, retailers must be both market driven and market driving (Jaworski et al., 2000, Kumar, 1997).
On the surface, these two objectives might appear in conflict. Being market driven largely implies incremental innovation as customers' expressed needs will be largely anchored within an existing business model or framework (Tuominen et al., 2004). Market driving innovation, on the other hand, implies larger steps forward and leads to more radical changes in the way people shop. Accordingly, market driving innovation involves greater risk (Kumar et al., 2000). Although they may require competing business logics (Tuominen et al., 2004), both objectives are pursued successfully by many retail organizations. Clothing retailer Zara, for example, consistently exceeds customers' expectations of contemporary, fashionable design (evidence of being market driven), while having also changed the way customers buy fashion (evidence of market driving).
If retail stores are to attempt to be both market driven and market driving, they must, at a minimum, combine high levels of creativity with superior customer orientation. Creative ideas provide the seed for all innovation (Amabile et al., 1996), while customer orientation helps to channel innovative activity toward the provision of superior customer value. But this in turn raises questions about the sources of, and preconditions for, organizations achieving both high levels of creativity and customer orientation. Accordingly, one of the major questions we seek to answer in this paper is: what kind of organizational context encourages retail firms to be simultaneously creative and responsive to customers?
We contend that having access to, and leveraging, valuable information is central to the achievement of this dual goal. Information must also be disseminated efficiently and accurately, so that members of an organization can respond to customer needs quickly and at the same combine multiple insights to generate new ideas. As a consequence, retail organizations must comprise relationships between members that facilitate both efficient response and a degree of organizational introspection capable of yielding more radical innovation.
Social capital theory (Nahapiet and Ghoshal, 1998)–with its emphasis on relationships, networks, and information flows–is a framework that is especially useful for understanding and analyzing the challenges facing retail stores in being simultaneously market driven and market driving. An organizational commitment to meeting customer needs (i.e., being market driven) will be partly dependent on the level and nature of information flows; something which social capital theory reminds us is driven by the nature of relationships and networks of store employees. Market driving, by contrast, is about ‘escaping the tyranny of served markets’ (Hamel and Prahalad, 1991); something which may be done by encouraging experimentation and trialing new ideas that change customers' perceptions of the nature and purpose of retail stores. Social capital theory is crucial here too because it highlights the importance of two building blocks in organizational creativity: social interaction and diverse resource inputs (Kogut and Zander, 1992, Tsai and Ghoshal, 1998). Our aim, then, is to demonstrate how the creation of social capital allows retail stores to achieve superior performance in both customer service orientation (evidence of being market driven) and store creativity (evidence of market driving).
The paper is organized as follows. First, we discuss the conceptual foundation of our study. Second, based on this theoretical background, we propose a model that specifies the dimensions of social capital-communication openness, trusting culture and shared vision—as antecedents to customer service orientation and store creativity which, in turn, affect the overall performance of the retail store. Third, we describe the research method and present our findings. Finally, the paper concludes with a discussion of the results and implications for management and future research.
Section snippets
Theoretical background
Bourdieu (1983, p.250) defines social capital in terms of resources linked to group membership, and highlights the importance of ‘durable obligations subjectively felt (feelings of gratitude, respect, friendship, etc.)’. Tsai and Ghoshal (1998) investigated the impact of social capital on the internal functioning of firms, focusing on the extent to which social capital facilitates a firm's ability to create value through innovations. Central to these studies is the idea that networks of
Hypothesized model
We argue that open communication, a trusting culture and a shared vision-key components of social capital within organizations—will improve retail store performance. The benefits of social capital are not simply manifested in incremental improvements but also in more dramatic advances in business processes. For this reason we look at the mediating effects of customer service orientation (evidence of market driven improvement) and store creativity (evidence of market driving innovation). Fig. 1
Sample and data collection procedure
The research setting for the survey is a national retail organization employing approximately 20,000 people, the majority of whom are employed in stores. At the time of the study, the organization comprised 130 stores nationally which served as the unit of analysis. Six stores did not qualify for the study as they either sold vastly different lines of merchandise or competed in different markets, or had only just opened prior to conducting the survey. Accordingly, the final number of stores
Data aggregation and validation
We aggregated the employee level data to match the store level of analysis (Klein et al., 1994). We first established that eta-squared (η2) values exceeded the threshold of .20 (Georgopoulos, 1986). Next, we computed within-store agreement with the use of rwg (James, 1982). The rwg for each store exceeded the threshold of .70 which indicated a high level of within-store agreement among respondents. Consequently, we found that store level data aggregation was appropriate. Table 1 shows the
Discussion and implications for management
The expected positive relationship between open communication and customer service orientation (Hypothesis 1) was confirmed. This finding underscores the importance of a relational infrastructure in building an understanding of, and ability to serve, retail customers. This finding is also consistent with the view that an individual's level of customer orientation can be augmented by co-worker openness and willingness to help (Bell and Mengüç, 2002).
The positive impact of communication on store
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