The Impact of Unionization on Consumer Perceptions of Service Quality: Evidence from Starbucks

By: Isamar Troncoso, Minkyung Kim, Ishita Chakraborty and SooHyun Kim

Format:Electronic
| Language:English
| Pages:42

Abstract

The US has seen a rise in union movements, but their effects on service industry marketing outcomes like customer satisfaction and perceptions of service quality remain understudied. In this paper, we empirically study the impact on customer satisfaction and perceptions of service as measured by online reviews using the recent Starbucks unionization wave as a case study. Using a difference-in-differences approach, we find that average review ratings decrease after unionization, suggesting that overall customer satisfaction decreases after unionization. By further leveraging deep learning textual analysis, we find that such a decline is mainly driven by more negative customer sentiment toward service, especially employee behavior. We suggest that a decrease in employee satisfaction, possibly influenced by Starbucks' management responses such as anti-union strategies and non-participation in negotiations, offers a plausible explanation for these findings.