Employee empowerment has been recognised as one of the most desirable managerial practices in the hospitality industry, where frontline employees directly interact with customers to provide services. The extant literature has investigated the impact of empowerment on organisational outcomes; however, relatively few studies have investigated the outcomes of empowerment from customers’ perspective. Moreover, little is known regarding the impact of group dynamics on empowerment, such as how employees perceive empowerment compared to peers in the same team, or how within-group disparity of empowerment affects employees’ work performance. Furthermore, hospitality businesses are often operating in teams, but most studies have adopted a single level approach without considering the impact of empowerment from different levels. Hence, this research sets out to bridge these gaps in the literature.

This research aims to examine an integrated research model of empowerment from the perspectives of managers (the empowering), employees (the empowered), and empowerment disparity, which captures within-group differences in employees’ perceptions of empowerment, to fill in the gaps in the empowerment literature. The integrated model provides additional but crucial evidence of the impact of empowerment from the perspective of customers and presents psychological contract as a mediation mechanism at an individual level. The multilevel relations between managers’ assessment of their empowering behaviour and their nested employees are investigated. At a cross-level, the moderating role of group dynamics, termed “empowerment disparity,” is examined in terms of the relationship between empowering behaviour and psychological empowerment, and between psychological empowerment and psychological contract.

To fulfil the research aims, a positivist paradigm was followed. A quantitative research approach through a questionnaire survey method was employed, drawing on primary data from a matched sample of 2,129 customers from 286 employees with their managers, from 51 restaurants in five provinces in Thailand. Multiple theories were applied to provide theoretical support for the proposed hypotheses. Both individual and cross-level hypotheses were tested using a hierarchical linear modelling analysis. To the best knowledge of the author, this is the first research to examine multiple perspectives of empowerment (i.e., managers, employees, and customers) at multiple levels.

At the individual level, this study confirmed a significant impact of psychological empowerment on both employee and customer outcomes. Psychological contract partially explained the influence of psychological empowerment on work engagement. Customers’ assessments of interaction quality were also significantly affected by employees’ perceptions of empowerment and psychological contract. At the multilevel, managers’ empowering behaviour was found to significantly influence employees’ perceptions of empowerment and psychological contract. Additionally, empowerment disparity moderated the effect between managers’ empowering behaviour and employees’ perceptions of empowerment, and between psychological empowerment and psychological contract. As such, the effects of the empowering and the empowered were found to be stronger among high empowerment disparity within a team.

The key contribution of this study is that it provides empirical evidence that managers’ perceptions of their empowering behaviour influences employees’ perceptions of empowerment and psychological contract, and consequently, influence employees’ work engagement and customers’ evaluations of interaction quality during the service encounter. It also advances current knowledge of empowerment by introducing and examining empowerment disparity as a group dynamic construct. As one of the first to have integrated multiple aspects of empowerment in one study, these findings make meaningful contributions to both the academic literature and the hospitality industry. Given the findings, hospitality researchers and practitioners are encouraged to find a way to effectively empower their employees, considering the positive role of the sense of disparity in a workgroup.