Effects of employee engagement on customer responses: Examining the mediating role of customer engagement

Drawing on emotional contagion theory, this study offers an integrated framework showing the effects of employee engagement (EE) on customer engagement (CE), repeat purchase and word-of-mouth (WOM). The data were collected from 65 employees and 352 customers of 28 retail stores using 2 separate survey instruments. A dyadic data set was created by matching customer data with the employee data corresponding to each store. The findings reveal that two key facets of EE - dedication and absorption - positively influence CE, which eventually influences WOM and repeat purchase. In line with balance theory, CE is found to fully mediate the effects of absorption on WOM and repeat purchase. Furthermore, employee length of service (ELS) is found to moderate the absorption on CE effects. Thus, the findings extend emotional contagion theory and balance theory by providing empirical evidence supporting the differential effects of the facets of EE on CE en route to WOM and repeat purchase. JEL Classification: M31