| Summary: | This study examines the perspectives of retail and service managers and workers to determine what managerial actions should result in superior service quality. The study extends the primary model of service quality in marketing, the Gap Model, using Agency Theory and Transaction Cost Analysis as well as concepts from the Salesforce Management Literature. Workers and managers were surveyed by mail in over 100 industries in the continental U.S. This survey yielded sixty-six manager-employee dyads for analysis. While the results were generally inconclusive, it appears that a variety of environmental variables do moderate the use of different types of control systems in these types of organizations, and that the management of retail and service employees is no simple matter. Some of the results are contrary to theoretical perspectives, while some support them. The strongest result in the study is that the use of clan-based control systems increases the degree of perceived autonomy on the part of the employees ($\beta$ =.611). However, this does not in turn necessarily lead to superior service quality. In addition, different methods of control and compensation do vary in their effectiveness under certain condition, notably when the employees and organization have a long-term perspective toward customer service, and when employees are difficult or costly to replace. These two effects suggest that a relationship approach to the employee management aspect of internal marketing may be an effective paradigm for long-term service effectiveness.
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