Direct and Indirect Effects of Beneficiary Contact and Supervisor Support on Service Performance: Does Perceived External Prestige Matter?

Customers play a significant role in motivating frontline employees. However, little research has examined the impact of employees’ interactions with external beneficiaries in explaining service performance. In the present study, we borrowed from the job characteristics model and social exchange theory to build our model. Drawing on data from 889 frontline service employees and 2667 customers in the microfinance sector, our study demonstrated that supervisor support (an internal factor) and contact with beneficiaries (an external factor) influence employee service performance. We also investigated employee gratitude as an intervening mechanism through which supervisor support and beneficiary contact improve employee service performance. In addition, we found that employees’ perception of the external prestige of their organization is a powerful force linking the above factors with service performance. Our findings advance the understanding of employee service performance, thus providing significant implications for research and practice.