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 [1994], 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.