Do customers complicate control? The impact of customer contact on information asymmetry in employee-supervisor relationships

Employees who have contact with outside customers may obtain private information from these customers, and they may also adapt rules to meet customer demands. This increases information asymmetry between the employees and their supervisors, complicating supervisor control. However, customer contact may also reduce information asymmetry: Customer information may be used by supervisors, whereas customers may have a disciplining effect through increasing employees’ felt accountability and motivation. In a sample of 516 employee–supervisor relationships, I find a negative relationship between outside customer contact and both employee and supervisor assessment of information asymmetry. These relationships are more negative when supervisors and employees are less experienced. Additional analyses show that the relationship is less negative in not-for-profit organizations, where clients typically are less powerful. The results are consistent with outside customers having a disciplining function rather than being a source of private information, and more so when supervisor monitoring is less effective.