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This study focuses on the link between strategic orientations and performance outcomes and introduces a potential mechanism for managing the productivity–quality tension and improving effectiveness of service companies. Specifically, it identifies frontline mechanisms comprising autonomy, cohesion, and feedback that help explain when and why the simultaneous pursuit of quality and productivity orientations has positive or negative effects on unit revenue, efficiency, and customer satisfaction. The proposed frontline mechanism, in which frontline autonomy acts as the key mediator and unit cohesion and feedback are salient moderators, is found to be crucial in transmitting the impact of quality and productivity orientations and blunting the productivity–quality trade-offs that result from pursuit of multiple strategic goals.

The authors empirically test the conceptual framework using survey data from 423 employees in 30 strategic business units in the health care industry, as well as longitudinal unit-level performance and customer satisfaction data for the corresponding units. The results indicate that frontline autonomy mediates the positive impact of productivity and quality orientations on unit revenue and customer satisfaction and its negative impact on unit efficiency. Feedback magnifies the influence of frontline autonomy by simultaneously enhancing its positive effect on satisfaction and its negative effect on efficiency. In contrast, unit cohesion strengthens the positive effect of frontline autonomy on revenue and customer satisfaction without augmenting its negative effect on unit efficiency.

For managers who need to pursue productivity and quality goals simultaneously, this study offers insights into managing strategic dilemmas that stem from the pursuit of multiple goals in face-to-face service settings. The impact of both productivity and quality orientations on unit revenue and customer satisfaction depends less on orientation intensity and more on the amplifying and mitigating effects of the frontline mediation mechanism. Although managers risk productivity–quality trade-offs when they design frontline jobs for autonomy, unit cohesion and feedback work to modulate the nature and degree of such trade-offs. Building unit cohesion in autonomous frontline units can potentially eliminate the productivity–quality trade-off effect for unit revenue and substantially diminish the trade-off for customer satisfaction while leaving the effect on unit efficiency unaltered. Enhancing feedback weakens the impact of the productivity–quality trade-off on customer satisfaction but also amplifies the trade-off effect for unit efficiency. Thus, concurrent consideration of frontline autonomy, unit cohesion, and feedback factors is needed to manage the trade-off effects of productivity and quality orientations. Overall, the study findings urge managers and researchers to shift focus away from strategic orientations and toward unit-level mechanisms to find clues for managing strategic dilemmas such as productivity–quality trade-offs. 

Biography
Detelina Marinova is Assistant Professor of Marketing at the University of Missouri- Columbia. She received a double BS (summa cum laude) in Chemistry and Marketing from WV Wesleyan College and a MS in Quantitative Analysis, and she received a PhD in Marketing from the University of Cincinnati. Marinova’s research interests lie at the intersection of marketing strategy and econometric modeling. Her current research focuses on enhancing the financial impact of marketing strategies; the effect of knowledge and market learning on innovation and firm performance; and the role of judgment dynamics in managerial, consumer, and employee decision making in organizations. Her research has been funded by the Institute for the Study of Business Markets and the National Institute of Health. She has published her research in Journal of Marketing and Journal of Marketing Research. She teaches managerially oriented courses at the undergraduate and MBA levels, including Marketing Strategy, Product and Brand Management, and Marketing Research.

Jun Ye is Assistant Professor of Marketing in the Lundquist College of Business at the University of Oregon. He received his PhD in marketing from Case Western Reserve University. He teaches undergraduate-level marketing strategy. His research interests center on the interface of marketing strategy and services marketing. His recent projects focus on marketing strategy implementation in service organizations, the deliberate learning of service employees, and the financial implications of the different dimensions of service quality.

Jagdip Singh is Professor of Marketing in the Weatherhead School of Management at Case Western Reserve University in Cleveland. Jagdip’s research involves building and sustaining effective and enduring connections between organizations and their customers, especially in service industries. This research explores organizational dilemmas that arise in developing customer connections based on trust and value relationships. In a related line of research, Jagdip studies how firms organize, implement, and support change and knowledge management to balance the competing goals of productivity and quality in the frontlines. He also studies conflicts of interest in professional markets, concentrating on the medical profession and Big Pharma. Dr. Singh has published his findings in journals such as Journal of Marketing, Journal of Marketing Research, Academy of Management Journal, Management Science, Psychological Assessment, Journal of the American Medical Association, Journal of the Academy of Marketing Science, Journal of Retailing, and Journal of Personal Selling and Sales Management. 

Journal of Marketing, Vol. 72, No. 2, March 2008
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