Existing literature has documented the adverse effects of customer sweethearting in the service industry, including declines in profitability and growth. Customer sweethearting, the act of employees giving unauthorized discounts, free items or preferential treatment to certain customers, often due to personal relationships or favoritism, can significantly undermine revenue and operational integrity. Surprisingly, there has been limited progress in identifying the drivers of customer sweethearting, particularly in highly interactive industries. This study aims to investigate the influence of employee–customer identification on customer sweethearting, with customer tipping behavior serving as a moderating factor.
Drawing on social identification theory, this study developed a conceptual model and used structural equation modeling to empirically test data collected from a survey of 415 servers working in selected restaurants in Dodoma City, Tanzania.
The study findings revealed that employee–customer identification significantly influences customer sweethearting. In addition, the results indicate that customer tipping behavior moderates the relationship between employee–customer identification and customer sweethearting.
The findings suggest that employee–customer identification is a double-edged sword. Therefore, it is recommended that strategies be implemented to monitor and manage interactions between employees and customers during service encounters to minimize its adverse effects on service performance.
By viewing employee–customer identification as a dual-edged driver of customer sweethearting, this study enhances the understanding of the mechanisms behind this behavior. It is one of the few scholarly works aimed at deepening insights into employee deviant behavior by exploring the drivers of prevalent illicit practices, such as customer sweethearting.
