How store managers’ employee climate perceptions affect frontline employee, customer and store performance outcomes: an examination in the small-store setting

Purpose The purpose of this paper is to examine the effects of store managers’ employee climate perceptions on frontline employee (FLE), customer and store performance outcomes in the small-store setting. Design/methodology/approach This study derives the findings from a multi-source data set acquired in partnership with a North American-based retailer that includes survey responses from 1,133 store managers, 5,591 FLEs and 16,488 customers. This paper matches survey responses to corporate records and store sales and operations data. Findings This study finds that store managers’ employee climate perceptions affect FLEs both directly and indirectly, through store manager social support behaviors. This paper tests the boundary conditions for these findings by examining the moderating effects of store-level FLE tenure heterogeneity and competitive intensity. Study results provide partial support for the hypothesized relationships with regard to FLE tenure heterogeneity, but not competitive intensity. Research limitations/implications This research is subject to many of the limitations common to a survey-based study. While the use of one retailer provided opportunities to examine store-level performance data, future research would benefit by using a more expansive data set spanning several companies and industries. Moreover, as the current study was set in the small-store setting, future research should explore how store managers’ influence fluctuates depending on store size and the mechanisms through which organizational priorities flow through other management levels (e.g. department managers) in large retailers. Practical implications Study results provide managerial guidance regarding the implementation of an employee climate for the delivery of an enhanced customer experience and superior financial performance. Originality/value Although researchers have paid considerable attention to employees’ psychological and organizational climate perceptions, this study makes a unique contribution by examining the effects of store managers’ employee climate perceptions on FLE, customer and store-level outcomes.