A social exchange perspective on boosting customer loyalty through culturally competent servers

ABSTRACT

Limited research has examined how employees’ cultural competency may influence customers experience and behaviors. Building on social exchange theory, this study proposed and tested a model focusing on how guest gratitude mediated the relationships between three dimensions of servers’ cultural competency, cultural awareness, cultural knowledge, and cultural skills, on customers’ future behavioral intentions. Using empirical data collected from cross-cultural service encounters in luxury hotels in Australia, findings of the study revealed that cultural awareness and skills were significantly related to guest gratitude that, in turn, significantly influenced customers future behavioral intention. This study contributes to social exchange theory by adopting gratitude as a mediator in the reciprocal relationship between servers’ cultural competency and customer behavioral intentions. The study highlights the importance of training current hospitality employees and preparing future hospitality professionals. In particular, the findings emphasize the importance of enhancing hospitality employees’ cultural competency in cross-cultural service encounters.

有限的研究研究了员工的文化能力如何影响客户的体验和行为. 基于社会交换理论本研究提出并测试了一个模型该模型侧重于客人感恩如何调解服务者的文化能力、文化意识、文化知识和文化技能三个维度与客户未来行为意图之间的关系. 使用从澳大利亚豪华酒店的跨文化服务体验中收集的经验数据研究结果表明文化意识和技能与客人的感激感显著相关进而显著影响客户未来的行为意图. 本研究通过将感恩作为服务者文化能力和顾客行为意图之间的互惠关系的中介为社会交换理论做出了贡献. 该研究强调了培训当前酒店员工和培养未来酒店专业人员的重要性. 特别是研究结果强调了提高酒店员工在跨文化服务中的文化能力的重要性.

KEYWORDS:

• Cultural competency
• guest gratitude
• future behavioral intention
• hospitality

Introduction

Due to globalization processes and the increased diversification of the business world (de Guzman et al., 2016), international travel has become progressively important to people’s work and life. Consequently, in today’s hospitality sectors, employees constantly face cross-cultural service encounters by serving customers with various cultural backgrounds, ethnicities, languages, and who display varied cultural norms and values (Chappel et al., 2002; Grobelna, 2015). Service-intensive organizations, such as hotels, rely heavily on social exchanges between guests and servers. These interactions are essential in developing favorable experiences during service encounters (E. Ma et al., 2022). Positive service experiences between customers and employees are important forms of social exchange in hotels (E. Ma & Qu, 2011). Social exchange theory suggests that social behavior results from an exchange process (Lawler & Thye, 1999), and the establishment of social interactions involves reciprocal interdependence (Blau, 1964). Given the significance of the customer-server exchange, substantial literature has investigated the determinants and variables that impact this interaction (e.g., E. Ma & Qu, 2011; H. Kim & Qu, 2020).

Understanding and appreciating cultural differences, such as knowing how to respond in a culturally appropriate manner, has become essential to determining the success of a customer service experience. Understanding and responding in culturally appropriate ways is representative of an individual’s cultural competency. Cultural competency has been increasingly recognized as a critical capacity in the workplace (Tsaur & Tu, 2019; Vrontis et al., 2021) and is defined as the ability to work and communicate effectively and appropriately with people from different cultural backgrounds (Alizadeh & Chavan, 2016; Stoyanova-Bozhkova et al., 2022). The Federation of Ethnic Communities Councils of Australia (FECCA, 2019) suggested that cultural competency not only ensures smooth and effective communication among individuals from a range of cultural and linguistic backgrounds but also facilitates the creation of a diverse and inclusive working environment, leading to better decision making and service excellence. However, there has been limited research investigating how the cultural competency of service employees influences customers’ perceived experience, attitudes, and behavioral intentions (Hsiao et al., 2021). Although hospitality customers may expect employees to understand and respond in culturally appropriate ways, this is often hard to achieve due to language barriers, limited training and support (reference?). As hotel customers increasingly want and expect memorable experiences, the ability to not only demonstrate cross-cultural understanding but to embed such understanding in service provision provides an interesting challenge to the goal of developing for creating long-lasting relationships between customers and hospitality firms. Given the potential for employee cultural competency in the determination of memorable customer experiences (Bharwani & Jauhari, 2013; Hosany et al., 2022), the pursuit of understanding this phenomenon supports both a promising research agenda and practical application.

Past research has suggested that when customers perceive the benefits of culturally competent service experiences, guest gratitude is often elicited (Lawler, 2001; S. Kim & Lee, 2013). Gratitude is defined as an “emotional appreciation for benefits received, accompanied by a desire to reciprocate” (Palmatier et al., 2009, p. 1). Organization and employees’ efforts at building and maintaining customer relationships and trust are important causes of customer gratitude (Palmatier et al., 2009). When service employees demonstrate extra effort and attention to customers, gratitude can drive customers to reciprocate the benefits received, making them act in ways that will benefit the service provider or organizations (Raggio et al., 2014), such as increased purchasing intentions (Morales, 2005; Septianto et al., 2021), customer trust, commitment, satisfaction, and loyalty (Fazal et al., 2017; Prayag et al., 2019), and increased customer and employees’ prosocial behaviors (J. A. Tsang & Martin, 2019). Gratitude can elevate exchanges between customers and providers from transactional to relational (Ruz-Mendoza et al., 2021). The elicitation of gratitude becomes particularly relevant for the hospitality industry, which is service-intensive and characterized by high personal contact, because it can enhance social exchanges and, therefore, the relationships and reciprocity between customers and service providers (Solnet et al., 2019).

Despite increased research on guest gratitude (e.g., determinants and consequences for service firms), a large portion of extant literature remains limited to retailing and relationship marketing studies (e.g., Audrain-Pontevia & Garnier, 2021; Fazal E Hasan et al., 2014; Morales, 2005; Palmatier et al., 2009; Raggio et al., 2014). Scholars have voiced the need for research on guest gratitude across different industries (D. E. Bock et al., 2016a). Given the relational nature of tourism and hospitality, such as the ability to bring strangers together (Filep et al., 2017), these settings provide a unique context to study gratitude, its antecedents, and consequences. While some studies have been conducted in hospitality specific settings, such as restaurants (D. Bock et al., 2021; Gong et al., 2020; H. Kim & Qu, 2020; Jin et al., 2018; Y. S. Kim & Baker, 2019), wine tourism (Kolyesnikova & Dodd, 2008; Kolyesnikova et al., 2009) and tourism experiences (Filep et al., 2017), there is much more to investigate on the topic. In particular, there is benefit in exploring the perspective of customer in addition to research that has typically considered only the perspective of employees (H. Kim & Qu, 2020; Meira & Hancer, 2021).

C. H. Huang and Lin (2021) and D. E. Bock et al. (2016a) suggest that investigating antecedents of gratitude, particularly concerning employees’ extra-role behaviors that can elicit gratitude, can shed light on how long-lasting relationships and customer loyalty are built. Therefore, this research aims to investigate the mechanism of how service providers’ cultural competency, as demonstrated in service encounters, may influence guests’ gratitude and future behavioral intentions. The study, set with a luxury hotel context, contributes to the literature on social exchange theory between customers and employees in service contexts in two ways: first, it emphasizes the importance of employees’ cultural competency in facilitating positive social exchanges between customers and employees; second, it considers customer gratitude as an important mediator between employees’ social exchanges and customers’ behavioral intentions.

Literature review

Cultural competency

According to Alizadeh and Chavan (2016), cultural competency refers to the ability to work and communicate effectively and appropriately with people from different cultural backgrounds. Cultural competency is highly valuable in hospitality because it is expected that guests from socially and culturally diverse backgrounds will be welcomed and cared for (Lashley, 2000). Service providers play an essential role in creating memorable experiences for all customers (Bharwani & Jauhari, 2013; Cetin & Walls, 2016). Service providers who draw on a combination of cultural knowledge, attitudes, and skills can provide memorable service for customers by acknowledging contextualized cultural values (Hsiao et al., 2021), delivering culturally sensitive service and meeting customer specific expectations through personalized and positive customer experiences (Spector, 2012).

Cultural competency contains multiple dimensions, and the most widely accepted framework (Sue et al., 1996) identifies cultural awareness and beliefs, cultural knowledge, and cultural skills as three essential sub-dimensions. Cultural awareness and beliefs relate to one’s sensitivity to other cultural values and biases (Alizadeh & Chavan, 2016; Sue et al., 1996). Employees with superior cultural awareness respect customers’ cultural values, which helps develop a good relationship with customers (Zhang et al., 2018). Cultural knowledge refers to the knowledge of others’ worldviews, norms, and expectations (Sue et al., 1996). From the customer’s perspective, seeing employees with reasonable knowledge of their culture can facilitate positive exchanges and contribute to a pleasant service experience (Chen et al., 2021; Frese & Fay, 2001; Hosany et al., 2022). Cultural skills are abilities to consolidate culturally sensitive and relevant perspectives by drawing on empathy, adaptability, and/or responsiveness, in cross-cultural interactions, including embedding them in service delivery. Sound cultural skills such as appreciation and respect for cultural differences can help bridge cultural gaps between customers and service employees (Pratono & Arli, 2020; Sizoo et al., 2005). Cultural competency generates the possibility for enhanced reciprocity between guests and employees via the increased opportunity to elicit guest gratitude from respectful, sincere and positive service exchanges.

Cultural competency and customer gratitude – a social exchange perspective

In today’s competitive business world, there is little room for misunderstanding customers’ needs and causing service failure. Being equipped with relevant cultural knowledge and skills allow employees to significantly reduce the risks of behaving in culturally inappropriate ways or causing offense (Constantin et al., 2015; Koc, 2019). Customers feel valued when their uniqueness is accommodated in a culturally respectful, sincere and personalized manner. This often leads to an affective state of gratitude, driving customers to reciprocate these personalized interactions (Bartlett & DeSteno, 2006; Hu et al., 2022). Where employee acts are perceived as altruistic, they are often responded to with loyalty behaviors by customers (Bartlett & DeSteno, 2006; Hu et al., 2022). This reciprocity is well supported by research on social exchange theory hence it’s employment in this study.

We suggest that social exchange theory serves as a theoretical framework to consider the formation of guest gratitude. Social exchange theory assumes that social behavior results from an exchange process (Lawler & Thye, 1999), with the purpose of the exchange to maximize benefits and minimize costs (Fazal E Hasan et al., 2014; Rather, 2018). Social exchange theory explains how the establishment of social interactions involves reciprocal interdependence (Blau, 1964). When a beneficiary perceives a benefit elicited by the action of a benefactor, they feel the need to reciprocate in some way (Assaker et al., 2020; Gouldner, 1960; J. Tsang et al., 2022). This is often seen in service encounters where customers (the beneficiaries) perceive the benefits provided by the efforts of organizations or service providers (the benefactors), eliciting feelings of obligation and gratitude that drives reciprocal behaviors such as staff recognition, loyalty, and positive word of mouth (Bi, 2019; S. Kim & Lee, 2013; Tsaur & Lo, 2020).

Service employees’ cultural competency and efforts in understanding and appreciating customers’ unique culture can be considered an extra benefit by customers. Customers perceiving such benefits are more likely to return this benefit in the form of gratitude and loyalty (Cialdini, 2009; Qi et al., 2020; Settoon et al., 1996). This process is also supported by the affect theory of social exchange (Lawler, 2001). Affect theory proposes successful social exchange helps both benefactor and beneficiary generate positive emotional reactions, such as gratitude (Fazal E Hasan et al., 2014), contributing to the building of trust and long-term relationships (Raggio et al., 2014). Perception by the beneficiary of the cost to the benefactor is a common prerequisite of gratitude (Filep et al., 2017; McCullough et al., 2008). Cost can be in financial terms, such as when an organization and its employees provide small gifts to customers or financially invest in its relationship with customers (Alnawas & Hemsley-Brown, 2019; Gong et al., 2020; Raggio et al., 2014). Cost can also be understood in terms of the time and effort provided to develop relationships with customers. The demonstration of extra effort (such as effort in achieving a better understanding of customers’ cultures), even when such effort might not translate into an outcome for the customer, has been reported as one of the strongest determinants of gratitude (D. E. Bock et al., 2016a; J. A. Tsang, 2006; Jin et al., 2018; Morales, 2005; Raggio et al., 2014). This is highly relevant in hospitality settings where employees are often encouraged to “go the extra mile” and go “above and beyond,” performing extra-role behaviors that exceed their job description and responsibilities. Some of these behaviors are, for example, showing greater concern and providing extra attention to customers’ needs (H. Kim & Qu, 2020; Liu et al., 2018) or demonstrating higher sensitivity and being knowledgeable about their customers’ cultural values and expectations (Bharwani & Jauhari, 2013).

We suggest that customers could interpret employees showing cultural competency as exceeding standard service expectations and, thus, building connections with customer. Such extra efforts is likely to lead to guest gratitude. Additionally, different dimensions of cultural competence may affect servers’ work-related behaviors, and, thus, the service experience. Mkono (2010) states that a person with great cultural awareness is more likely to cater to customers’ diverse needs. This compliments findings by Torres et al. (2014) (Torres et al., 2014), which suggests that customers appreciate culturally respectful acknowledgment from servers and respond with favorable sentiments. Therefore, we propose:

H1.

Servers’ cultural awareness demonstrated in service process is positively associated with guests’ gratitude.

Customer culture expectations play a significant role in associating service quality with overall tourist experience at a destination (Ali et al., 2016; Cetin & Bilgihan, 2016). This puts pressure on employees to be conscious of the dynamics of interaction in different cultures and adapt service delivery that reflect an understanding of this. Employees who are able to accomplish this can create a welcoming environment for guests of diverse backgrounds and who hold diverse expectations for service interactions. These customers are more likely to become loyal when they see themselves and their culture reflected in tourism and hospitality experiences than if they feel like outsiders. It is clear that when cultural knowledge significantly contributes to guest experiences, the possibilities for their positive emotions increase. Thus, the following hypothesis is presented:

H2.

Servers’ cultural knowledge demonstrated in service process is positively associated with guests’ gratitude.

According to Morris and Robie (2001), employee cultural skills are directly and indirectly related to various positive outcomes, such as a positive levels of job performance, work adjustment, and customer satisfaction. Ntsatsi and Parumasur (2012) recommended that organizations need to rely on culturally skilled staff, especially in the front-line positions, to flexibly deliver service to achieve positive outcomes. Similarly, Inkaew (2016) found that employees, working in hotel front office contexts, who demonstrated skills in interpreting cultural norms acted as mediators during cross-cultural encounters. Therefore, we propose the following hypothesis:

H3.

Servers’ cultural skills demonstrated in service process is positively associated with guests’ gratitude.

Guest gratitude and customer behavioral intention

In a service context, guest gratitude can be defined as a positive emotional state that is other-directed as perceived by a customer in their interactions with others (D. E. Bock et al., 2016a; Wang et al., 2020). Guest gratitude involves emotional, cognitive, and behavioral dimensions of appreciation (D. E. Bock et al., 2016a). Guest gratitude arises when a guest feels grateful and/or thankful for a benefitting act occurring during a service encounter (Filep et al., 2017; Wang et al., 2020). Guest gratitude cannot be focused on oneself (Filep et al., 2017; Wang et al., 2020). While a wide range of other emotions can arise from these service encounters, such as happiness, joy, ambivalent or negative emotions, such as frustration or disappointment (Wu & Gao, 2019), gratitude has been linked to its ability to trigger increased positive behavioral intentions (Ball & Barnes, 2017; Fazal et al., 2017). Additionally, unlike obligation, which has been seen to create a sense of indebtedness, resulting in negative emotions and discomfort (Dewani et al., 2016), guest gratitude forms the emotional core of reciprocity and is the driving force in the development and maintenance of long-lasting relational bonds between customers and providers (Fazal C. H. Huang & Lin, 2021; E Hasan et al., 2014).

Guest gratitude stems from the recognition of the relational benefits received and prompts reciprocal behaviors that benefit staff and organizations (D. E. Bock et al., 2016a; Fredrickson, 2004). Feelings of gratitude can be elicited in the relationship between customer, provider and between staff within an organization (L. K. Ma et al., 2017; Raggio et al., 2014) and can also be directed toward people, organizations, or transpersonal entities (e.g., divinity) (Emmons & McCullough, 2003).

Fundamental to the elicitation of gratitude are the intention and motives of the benefactor (e.g., service staff and/or organizations) (Palmatier et al., 2009). Such intentions must be driven by benevolence and genuine desire with behaviors demonstrating sincerity and altruism (J. A. Tsang, 2006; Wang et al., 2020). The recognition and appreciation by the beneficiary that actions by the benefactor was motivated by well-meaning intentions are essential for eliciting and displaying gratitude by the beneficiary (Filep et al., 2017; Raggio et al., 2014). While altruistic intentions remain an essential determinant of gratitude in service settings, customers can also experience gratitude in situations where both customers and providers benefit from the relationship (Raggio et al., 2014). This occurs if the social exchange comes “straight from the heart” and is perceived as authentic and sincere (Ariffin & Maghzi, 2012; Kang et al., 2017).

Gratitude can trigger positive and enjoyable service encounters (Kolyesnikova et al., 2009; Long-Tolbert & Gammoh, 2012) when customers’ needs and desires are met and exceeded through the effort (and extra-effort) of employees (D. E. Bock et al., 2016b; Raggio et al., 2014; Soscia, 2007). Creating personalized experiences by tailoring the interaction with individual customers and having customers’ best interests at heart, rather than financial gains, contribute to the elicitation of gratitude (Dewani et al., 2016; Fazal E Hasan et al., 2014; Ruz-Mendoza et al., 2021). Employees should, therefore, be empowered to adapt behaviors to respond to the individual customer’s specific needs and characteristics (e.g., culture), which includes “bending the rules,” to display and undertake guest-centric actions (Dewnarain et al., 2019; Fazal E Hasan et al., 2014; Wang et al., 2020). As suggested by the affect theory of social exchange (Lawler, 2001), employees’ discretionary behaviors increase customers’ perceived value by providing unexpected and exceptional service and eliciting guest gratitude for receiving personalized benefits from the social exchange (C. H. Huang & Lin, 2021; Wang et al., 2020). Customers are also more likely to experience gratitude when employees possess and display specific attitudes, behaviors, and competencies such as warmth and helpfulness, attractiveness, and emotional and cultural intelligence (Bharwani & Jauhari, 2013; Jin et al., 2018; Y. Huang et al., 2020; Y. S. Kim & Baker, 2019), as well as job-specific abilities, skills, and efficacy (Fiske et al., 2007).

Recent literature has stressed the importance of gratitude in sequent behavioral intentions of customers in service contexts. Researchers such as D. E. Bock et al. (2016a) suggested that guests’ gratitude can trigger guests’ positive affect and motivate them to reciprocate with behaviors that benefit service providers (E. Ma & Qu, 2011; Lee & Ok, 2016). This reflects the reciprocal nature of social exchange. Consequently, gratitude can positively influence customers’ attitudes and behavioral intentions such as the person’s subjective probability that they will perform some behaviors (Ajzen & Fishbein, 1975), such as a customer’s intention to rebook at a particular hotel that demonstrated meaningful cultural understanding. In the case of hospitality service, behavior intentions are often measured by repeat purchases and positive word of mouth. S. Kim and Lee (2013) suggested that gratitude is more suitable to predict favorable reciprocal behavior, as opposed to satisfaction, since customers express their gratitude as a deeper emotional response. This is supported by the reciprocal nature of social exchange (Blau, 1964; E. Ma & Qu, 2011). Chou and Chen (2018) further support that feelings of gratitude can be optimized when service providers offer special treatment (e.g., showing cultural sensitivity) and can lead to stronger behavioral intentions to repurchase/revisit. Therefore, we propose:

H4.

Guest gratitude is positively associated with their future behavioral intention.

Additionally, as discussed above and supported by social exchange theory (e.g., (E. Ma & Qu, 2011; Lawler, 2001), the three dimensions of servers’ cultural competency (cultural awareness, cultural knowledge, and cultural skills) would positively contribute to guests’ gratitude and thus, is likely to indicate guests’ future behavioral intentions. In other words, when customers perceive a personalized interaction or an altruistic act as a “gift,” feeling grateful would make future transactions more likely to happen (Fredrickson, 2004; Morales, 2005), given that gratitude strongly indicates repurchase intentions (Palmatier et al., 2009; Soscia, 2007). Therefore, customers’ gratitude appears to plays a role as the mediator between servers’ cultural competency and customers’ behavioral intention. According to this, we propose:

H5.

Customers’ gratitude mediates the relationship between servers’ cultural awareness and customers’ future behavioral intention.

H6.

Customers’ gratitude mediates the relationship between servers’ cultural knowledge and customers’ future behavioral intention.

H7.

Customers’ gratitude mediates the relationship between servers’ cultural skills and customers’ future behavioral intention.

We demonstrate the conceptual model and hypotheses in Figure 1.

Figure 1. Research framework.

Research method

Research design and measurements

This study employed a quantitative research design. The questionnaire contained two sections: one designed to collect customers’ demographic information and the other to collect customers’ perceptions of hotel employees’ cultural competency, guest gratitude, service experience, and future behavioral intentions. All measures were adapted from previously validated measures and were piloted using 30 conveniently selected hotel customers.

Cultural Competency was measured using 9 items from Michalopoulou et al. (2009) with three items to measure for each dimension; awareness, knowledge, and skill. The Cronbach’s alpha for awareness was .92; the Cronbach’s alpha for knowledge was .93; and the Cronbach’s alpha for skill was .93. Some sample statements were “Staff are aware of the different views on diversity,” “Staff are knowledgeable about my cultural background,” and “Staff value and respect my cultural differences.”

Gratitude was measured using four items from Kolyesnikova et al. (2009). The Cronbach’s alpha for was .95, and a sample statement was “I feel grateful to the hospitality staff here.”

Future Behavioral intentions were measured using three items adapted from W. G. Kim and Cha (2002) The Cronbach’s alpha was .94 and a sample statement was “I would consider visiting the XXX again.”

Sampling and data collection

Data were collected on-site using a self-administered questionnaire completed by customers staying at luxury hotels in an Australian coastal city. Luxury hotels were chosen as the context of the study because customers staying at luxury hotels are generally more culturally diverse and employees tend to receive more training on cultural sensitivity (Manfreda et al., 2022; Shankman, 2019). Using a convenience sampling method (Polit & Beck, 2004), a total of 500 questionnaires were distributed to hotel customers with the assistance of HR managers of 2 luxury hotels. 355 were returned, and after eliminating missing responses, a total of 346 questionnaires were retained for data analysis, representing a valid response rate of 69.2%.

Common method variance check

Ideally, studies with mediating relationships should have data collected in three stages, instead of using a cross-sectional research design to eliminate common method variance bias (Podsakoff, 2017). We performed both priori and post-hoc statistical procedures to address the potential common-method variance bias (Podsakoff, 2017). At the questionnaire design stage, a priori procedure was employed by using previously validated scales to ensure good validity and reliability of measures (Podsakoff, 2017). After data collection, Harman’s one-factor analysis was performed as a post-hoc statistical procedure (Andersson & Bateman, 1997). We fixed all indicators of five constructs as one factor, and the factor generated only explained 35.626% of the total variance (with 50% as a threshold). Both the priori and post-hoc statistical procedures suggest that common method variance was not a major concern for this study.

Data analysis

Data were analyzed using SPSS and Mplus software, and descriptive analysis, Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM) were performed to test the proposed model and hypotheses. Results of the data analysis are summarized in the following section. The data was checked for normality and the skewness and kurtosis were examined using Durbin-Watson values, which fell within [– 1; + 1] range (Ghani & Ahmad, 2010), to warrant the data follows normal distribution before starting the next step analysis.

Results

Profile of respondents

As shown in Table 1, 43.4% of respondents were male, and 56.6% were female. More than half of these respondents were aged between 18–35 years (57.0%) and had a university education (53.2%). Among 346 respondents, 52% were born in other countries, and 48% were born in Australia. Table 2 shows the birth country/region/administrative region of guests born outside of Australia, and as demonstrated, a total of 38 countries, regions, and/or administrative regions were reported. In addition, the Australian population is very culturally diverse. According to the most recent census survey of Australia (Australian Bureau of Statistics, 2022), almost half of Australians have at least one parent born overseas (48.2%), and almost a quarter of Australians (24.8%) speak a language other than English at home. Australians speak some 200 languages, the most common of which, after English, are Chinese (Mandarin and Cantonese), Arabic, Vietnamese, and Italian. Therefore, the sample suits the purpose of our study well.

Table 1. Demographic information.

Characteristics	Frequency (n)	Percentage (%)
Gender
Male	150		43.4
Female	196		56.6
Age
18~24	94		27.2
25~34	103		29.8
35~44	52		15.0
45~55	60		17.3
≥56	37		10.7
Education
Primary	3		.9
High school	67		19.4
University / Diploma	184		53.2
Postgraduate or above	92		26.6
Birth country
Australia	166		48.0
Others	180		52.0
Total	346		100.0

Table 2. Birth Country/Region/Administrative Region.

Name	Frequency (n)
Australia	166
China	32
England	19
New Zealand	19
India	10
Malaysia	10
USA	8
Canada	7
Hong Kong	7
Japan	7
Republic of Korea	7
West Europe (Germany, Italy, Spain, Belgium, Switzerland)	7
Southeast Asia (Philippines, Indonesia, Vietnam)	7
Netherlands	6
Taiwan	6
Africa (South Africa, Turks and Caicos island, Uganda, Botswana, Kenya)	5
Singapore	5
South America (Brazil, Peru)	5
South Asia (Pakistan, Sri Lanka)	5
Macao	2
Papua New Guinea	2
Others (Turkey, Puerto Rico, Egypt, Saint Kitts and Nevis)	4
Total	346

Measurement model

The measurement model results are shown in Table 3. CFA was carried out to assess the measurement model fit (Anderson & Gerbing, 1988). Overall, the results showed that the measurement model fit the data well (Byrne, 2013) with χ² = 553.50, df = 236, χ²/df = 2.34, p < 0.001, CFI =.96, TLI =.95, RMSEA =.06, SRMR =.05.

Table 3. Results of the measurement model.

Construct and Item	SFL	t-values	CR	Cronbach’s alpha	AVE
Awareness			.93	.92	.81
Staff are aware of the different views on diversity.	.83	44.56
Staff make an effort to understand diversity differences.	.94	87.38
Staff seem to be aware of diversity differences.	.92	79.49
Knowledge			.93	.93	.82
Staff are knowledgeable of my cultural background.	.88	60.69
Staff understand my culture’s specific characteristics.	.93	84.55
Staff seem to be well-informed about my culture.	.91	74.82
Skills			.93	.93	.70
Staff are well-trained to properly treat someone with the same ethnic or cultural background as mine.	.83	43.70
Staff possess the skills that are needed to treat a customer from diverse cultural background.	.86	52.49
Staff value and respect my cultural differences.	.85	48.82
Staff demonstrate knowledge about client’s culture.	.83	45.65
Staff know how to communicate appropriately with me in a culturally appropriate way	.86	51.86
Staff try to communicate using a variety of verbal and nonverbal messages with me	.79	35.45
Gratitude			.95	.95	.83
I feel grateful to the hospitality staff on the Gold Coast.	.89	71.99
I feel thankful to the hospitality staff on the Gold Coast.	.95	132.21
I feel appreciative to the hospitality staff on the Gold Coast.	.95	135.87
I feel a desire to say “thank you” to the hospitality staff on the Gold Coast.	.85	54.03
Future Behavioural Intention			.94	.94	.84
I would consider to visit the Gold Coast again	.94	88.51
I will recommend the Gold Coast to others.	.92	76.99
There is a strong likelihood that I will re-visit the Gold Coast.	.89	64.33

Note: SFL = standardized factor loading, CR = composite reliability, AVE = average variance extracted.

The reliability was verified using Cronbach’s alpha and composite reliability (CR). As Table 3 shows, the Cronbach’s alpha values and composite reliability of all constructs ranged from .92 to .95, exceeding the recommended cutoff value of .70 (Hair et al., 2010). Convergent validity and discriminant validity were also assessed. For convergent validity, the CFA results reveal that the standardized factor loadings of all items ranged from .93 to .95, which were greater than .50 (Fornell & Larcker, 1981). Moreover, the average variance extracted (AVE) of all constructs ranged from .70 to .84, exceeding the threshold value of .50 (Fornell & Larcker, 1981), supporting good convergent validity. For discriminant validity, the square root of each construct’s AVE was higher than its highest correlation with other constructs (Table 3), indicating that each construct had good discriminant validity. Additionally, Table 4 shows the correlations, means, and standard deviations of the variables. The correlation results among variables indicated preliminary support for proposed hypotheses. Table 5 shows the t-test results on the constructs between the respondents from Australian and other countries. All constructs have shown no significant differences between the respondents from Australian and other countries.

Table 4. Descriptive statistics and correlation table.

Construct	Mean	SD	1	2	3	4	5
1. Awareness	4.82	1.14	.90
2. Knowledge	4.65	1.25	.65**	.91
3. Skills	4.79	1.10	.72**	.78**	.84
4. Gratitude	5.62	1.09	.55**	.51**	.62**	.91
5. Future Behavioural Intention	5.97	.96	.39**	.38**	.48**	.66**	.91

Boldfaced diagonal elements are the square root of AVE values. Off-diagonal elements are the correlations between constructs. **p < 0.01.

Table 5. Results for mean differences on the constructs between Australia and others.

Construct	Country	N	Mean	SD	Sig.
Awareness	Australia	166	4.77	1.12	.07
	Others	180	4.97	1.22
Knowledge	Australia	165	4.67	1.20	.19
	Others	180	4.69	1.38
Skill	Australia	165	4.81	1.09	.11
	Others	178	4.92	1.28
Gratitude	Australia	165	5.57	1.12	.32
	Others	179	5.72	1.07
Future Behavioural Intention	Australia	166	6.25	1.04	.69
	Others	179	6.06	1.08

Hypothesis testing

First, we examined the main and mediating effects in Figure 1. The estimated structural model showed satisfactory model fit (χ² = 501.08, df = 253, χ²/df = 1.98, p < 0.001, CFI =.96, TLI =.96, RMSEA =.05, SRMR =.04). Demographic factors (i.e., age, gender, education, birth country) and tourism information were controlled in the model. Each hypothesis was assessed by determining the signs and magnitudes of parameters, and results for hypotheses testing are concluded in Table 6 and Figure 2.

Figure 2. Results of hypotheses testing.

Table 6. Structural model results.

Paths	Standardized estimates	SE	t-values
Direct effects
Awareness →Gratitude	.21**	.08	2.61
Knowledge → Gratitude	−.09	.10	−.92
Skills → Gratitude	.56***	.12	4.67
Gratitude → Future Behavioural Intention	.59***	.05	12.14
Indirect effects	Standardized estimates	BootSE	Bootstra 95% CI
Awareness →Gratitude→ Future Behavioural Intention	.13*	.05	[.02, .22]
Knowledge →Gratitude→ Future Behavioural Intention	−.05	.06	[−.14, .06]
Skills →Gratitude→ Future Behavioural Intention	.33***	.08	[.15, .45]

Note: SE = standard error; ***p < 0.001, **p < 0.01, *p < 0.05; Control variables: age, gender, education, tourist status, Australian citizenship, birth country (all effects of control variables on Future Behavioural Intention were not significant).

H1, H2 and H3 assumed that perceptions of the hospitality employees’ cultural awareness, knowledge, and skills had positive effects on guest gratitude. The results (Table 5) showed that cultural awareness (β = .21, p < 0.01) and skills (β = .56, p < 0.001) had a significant positive effect on gratitude, while the effect of cultural knowledge on gratitude was not significant. Thus, H1 and H3 were supported, while H2 was not. As proposed, the results also indicated that guest gratitude significantly affected customer future behavioral intention (β = .59, p < 0.001), supporting H4.

To further test the mediating effects of gratitude, a bias-corrected percentile bootstrapping was performed at 95% confidence intervals (CI) with 5,000 bootstrap samples (Preacher & Hayes, 2008). Table 5 showed that the indirect effects of cultural awareness (standardized indirect effect =.13, p < 0.05, 95% CI = [.02, .22]) and skills (standardized indirect effect =.33, p < 0.001, 95% CI = [.15, .45]) on future behavioral intention via gratitude were significant. However, the indirect path of cultural knowledge on future behavioral intention via gratitude was not significant. For the two dimensions of cultural awareness and skills, both the direct and indirect effects on future behavioral intention were significant. This indicates that gratitude plays a partially mediating role. Thus, H5 and H7 were supported, but H6 was not supported.

Discussion

This study makes significant contributions to literature, theory and practice. Specifically, it enhances the understanding of cultural competency in hospitality contexts. Additionally, the study highlights how gratitude, generated from positive social exchanges between employees and customers, is associated with customers’ future behavioral intentions. We discuss, in detail, each contribution in the following sections.

Cultural competency and customer behavioral intention

Although customer loyalty has been a central topic of discussion for decades and has been investigated from various perspectives (Bowen & Chen, 2001; Heskett, 2002; Hussein et al., 2018; Kumar & Shah, 2004; Mody et al., 2019; Rather & Camilleri, 2019; Shuqair et al., 2019), relatively limited research has been devoted to cross-cultural contexts and the role of employees’ cultural competency in delivering service encounters. Our study suggests that service employees demonstrating cultural competency might be considered one of the ways that “extra mile” experiences builds and enhances customer loyalty. In particular, the findings suggest that cultural awareness and skills have positive impact on hotel guest experiences and their intentions to return. These results offer beneficial insight to the value of guest perception and appreciation of both employee cultural awareness and skills.

The lack of support for cultural knowledge’s role on guest gratitude raises questions as to whether cultural knowledge is of value in eliciting gratitude. For example, is it possible that an employee’s cultural knowledge is not easily perceived by guests or is difficult for employees to translate this into service behaviors? Knowledge is often seen as fluid, dynamic, and abstract. As such, knowledge can be difficult to measure until translated into tangible outputs (i.e., tests, articulation, or displays of such knowledge) (Hislop et al., 2018). If this is the reason why cultural knowledge was not perceived as important to guest experience, than employees, and their organizations, would be under pressure to translate cultural knowledge into perceptible behaviors. This would suggest that cultural knowledge is valuable but imperceptible to guests. Arguably, cultural knowledge, in this study, was demonstrated through the cultural awareness and skills of employees. For example, an employee’s culture-specific greeting display is the tangible manifestation of that employee’s cultural knowledge. In this case, the customer witnesses both cultural knowledge and skill, perceiving, however, only the behavior and classifying this as cultural skill. Cultural knowledge may be understood to be shuttled or carried invisibly through the behaviors of cultural awareness and skill. If this is the case, the conceptualization of cultural competency may need to be revisited to acknowledge this categorical/practical difference in how guests and consumers perceive cultural competency sub-dimensions. This insight opens possibilities for further conceptualization and exploration.

Guest gratitude’s role in customer-employee exchange

This study makes important theoretical contributions by examining customer-employee interaction from the perspective of social exchange. Most studies focus on the social exchanges between leaders and subordinates (e.g., Meira & Hancer, 2021; Pfrombeck et al., 2020), and between coworkers (e.g., Qi et al., 2020; Takeuchi et al., 2011). Limited studies examine social exchanges between customers and employees (e.g., E. Ma & Qu, 2011; H. Kim & Qu, 2020). Such a focus is useful given the customer-oriented and service-intensive nature of the hospitality, tourism and related industries. This study contributes to the existing social exchange theory by presenting guest gratitude as a bridging variable for reciprocal behavior in tourism and hospitality settings. Congruent with past research (e.g., D. E. Bock et al., 2016a; Dewani et al., 2016; Wang et al., 2020), this study highlights how gratitude mediates the relationship between employees’ extra-effort (cultural awareness and skills) and the creation of long-lasting relationships with customers. This relationship deserve more research in hospitality and tourism settings given its relationship-intensive nature (Filep et al., 2017).

Further, this study has answered calls to increase investigation on antecedents of gratitude, specifically employees’ extra-role behaviors (C. H. Huang & Lin, 2021; D. E. Bock et al., 2016a). This study reports on the role of cultural competency to elicit gratitude and, in return, behavioral intentions. This study enhances the understanding of building customer behavioral intentions through gratitude. Oravecz et al. (2020) suggests that reciprocity is stronger and lasts longer when gratitude is experienced. While research has been limited on gratitude’s role in service experience (Audrain-Pontevia & Garnier, 2021), this study suggests that gratitude-eliciting behaviors, such as displays of cultural awareness and skills, are a valuable organizational investment not only for immediate positive benefit but for long-term gain (e.g., return/repurchase intentions). This contribution to social exchange theory can, thus, be applied to a range of employee abilities and skills as they are employed in service interactions for the elicitation of gratitude. Arguably, gratitude should be adopted as a valuable, if not essential, component of social exchange best practice.

Practical implications

This study provides several practical implications for hospitality and tourism firms. The findings of this study can be used to review hiring practices. To ensure the presence of culturally competent employees, a hotel should start even before the employees are recruited. The hotel’s official website, job advertisements, job descriptions, and interview questions should all emphasize the value and desire for employees that are culturally competent. During the recruitment, prospective candidates can be asked to share past personal or professional experiences in which they have responded in a culturally appropriate manner. Alternatively, candidates could be presented with cultural scenarios, hypothetical and/or simulated, to observe their responses and course of action. This offers an opportunity to observe verifying level of cultural awareness and skills.

The role of ongoing cultural training should not be underestimated. Hospitality firms should devote attention and resources to developing training programs that nurture and develop cultural competency, including on-the-job training. Particularly at the beginning of employment, “buddying” new employees with more senior or experienced staff who demonstrate an elevated level of cultural competency, can provide a platform for the demonstration and imitation of cultural competence as well as provide advice and mentorship if and when culturally difficult situations arise. Employees can also be upskilled through on-site and online training programs initiated by another professional body (e.g., Go with Tourism) or the hotel itself. Developing these training programs with all stakeholders (e.g., human resource team, hotel managers, and direct supervisors) can make training most relevant and targeted.

Cultural competency can also be reinforced in managing service encounters across the span of guest experience, including prior to post-experience consumption. For instance, during the reservation process and guest check-in, employees could be prompted to record gleaned information about the arriving guests so that service be appropriately tailored to their unique culture and communicated across departments. This could be done through programmed and artificial intelligence (AI) prompts in reservation or other guest data systems. For example, Chinese travelers could avoid being assigned to a room containing a number 4 whereas Italian travelers could avoid allocation to rooms containing 17. This computer prompts can assist operational decisions and alert frontline staff to cultural preferences. The more prepared the frontline employees are, the less misunderstanding and conflicts will occur in service delivery.

Hotel can create and improve cultural competency among their workforce by hiring and retaining culturally diverse employees. Not only will the workforce have capacity to meet several different cultural needs and backgrounds with personal insight and authentic responses but colleagues inadvertently educated and increase awareness of peers. Hsiao et al. demonstrated that the heterogeneity of cultures among staff increased motivation and satisfaction levels among staff. Coupled with this study, the value of culturally diverse staff is significant. Consequently, leveraging the cultural knowledge of individual employees and creating increased opportunities for guests’ needs to be recognized, understood, and acted upon.

Limitation and future intention

When focusing on cultural competency, we recommend that future research investigates cross-cultural service encounters in multiple cultural settings, such as countries that significantly vary from an Australian context, and varied hospitality contexts, such as airlines or restaurants. Such efforts can help achieve a more comprehensive understanding of cultural competency’s role in affecting customer gratitude and behavioral intentions, including loyalty. This would help sketch out how cultural expectations of the host culture influence understandings as well as how those cultural expectations change in different contexts.

This study used a cross-sectional research design supported by survey data using a convenient sampling method. Cross-sectional research should also be treated carefully when applying research findings in other contexts. We encourage future research to test the theoretical models in other contexts (e.g., beyond the luxury hotel segment) or use a longitudinal research design to further verify causal relationships. We also encourage research utilizing qualitative approaches to provide an in-depth exploration of the interactions between employees and customers in cross-cultural service encounters.

Third, although the findings of the study confirmed the importance of cultural competency, it did not investigate how cultural competency could be trained and nurtured in hospitality settings and education. This opens up promising research directions for the future.

Disclosure statement

No potential conflict of interest was reported by the author(s).