How much control do managers really have over customer satisfaction?

Abstract

This dissertation examines the extent to which a firm's efforts to improve customer satisfaction are constrained or limited by industry characteristics and country differences. Specifically, we examine the extent to which industry characteristics and country differences, rather than managers, determine customer satisfaction. Positing customer satisfaction as a market-based measure of firm performance, and extending the Industrial Organization and International Business literatures, we suggest customer satisfaction to be jointly determined by managerial actions, industry characteristics, and country specifics. We examine this premise using American Customer Satisfaction Index, Swedish Customer Satisfaction Barometer, and Korean National Customer Satisfaction Index data, providing a comprehensive nationally representative sample of goods and services. Additionally, given the nature of the problem---firms nested within industries, nested within countries---we used a hierarchical linear Bayes methodology, rendering unbiased estimates and a rigorous approach to the research questions. We find that customer satisfaction is indeed jointly determined by managerial actions, industry characteristics and country differences. We also find that industry characteristics and country differences explain a very significant portion (around 80% on average) of cross-industry and between-countries variance in customer satisfaction, explaining some of the frustration experienced by managers trying to understand and influence customer satisfaction.