A set of foundation issues that support employee work and service quality is conceptualized as a necessary but not sufficient cause of a climate for service, which in turn is proposed to be reflected in customer experiences. Climate for service rests on the foundation issues, but in addition it requires policies and practices that focus attention directly on service quality. Data were collected at multiple points in time from employees and customers of 134 branches of a bank and analyzed via structural equation modeling. Results indicated that the model in which the foundation issues yielded a climate for service, and climate for service in turn led to customer perceptions of service quality, fit the data well. However, subsequent cross-lagged analyses revealed the presence of a reciprocal effect for climate and customer perceptions. Implications of these results for theory and research are offered.

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