Does Diversity Climate Lead to Customer Satisfaction? It Depends on the Service Climate and Business Unit Demography

Extending insights from Cox's interactional model of cultural diversity [Cox, T. H., Jr. 1994. Cultural Diversity in Organizations: Theory, Research and Practice. Berett-Koehler, San Francisco], we examine the influence of diversity climate on customer satisfaction, a key business-unit outcome. In addition, we explore service climate and minority and female representations as boundary conditions of the diversity climate-customer satisfaction relationship. Utilizing longitudinal data from 59,592 employees and 1.2 million customers of 769 store units of a large U. S. national retail organization, the results reveal that, as hypothesized, diversity climate is positively and significantly related to customer satisfaction measured a year later. Moreover, the diversity climate-customer satisfaction relationship is most strongly positive in predominately minority, highly pro-service store units, whereas female representation exhibits null moderating effects. These findings have important research and practical implications.