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Service Productivity, Satisfaction, and the Impact on Service Firm Performance
Abstract
The role of service productivity in influencing the relationships among employee satisfaction, customer satisfaction, and firm performance through the theoretical lens of service-profit chain is examined. Secondary databases including COMPUSTAT, ACSI, and KLD Stats were used in testing the research hypotheses. Study findings provide broad support for the service-profit chain linking employee satisfaction to firm performance through the mediating effects of service productivity and customer satisfaction, thus extending the body of research on service productivity. These findings suggest that while optimizing profitability, managers simultaneously consider the interrelationships between customer satisfaction, employee satisfaction, and service productivity.
... Research has shown that job satisfaction is correlated with several important employee behaviors, such as absenteeism and turnover (Allen & Bryant, 2012;Huning & Thomson, 2011;Miller & Jhamb, 2022;Mobley, 1977), organizational citizenship behaviors (i.e., those activities that are outside an employee's job description but are necessary to maintain the effective functioning of an organization), and service quality (Parasuraman et al., 1996). Employee job satisfaction has also been linked to customer satisfaction and loyalty (Rew et al., 2020;Snipes et al., 2005;Wolter et al., 2019). In short, employee job satisfaction can have a significant positive or negative impact on the organization's bottom line. ...
... Research has also shown that job dissatisfaction can increase the incidences of deviant and counterproductive work behaviors (see Hershcovis et al., 2007). Furthermore, job satisfaction has been linked to customer satisfaction and loyalty impacting operating costs and long-term market success (Rew et al., 2020;Snipes et al., 2005;Wolter et al., 2019). ...
Employee job satisfaction is an important attitudinal variable for many reasons, and due to the current shortage of workers, it may be even more critical in today’s workplace. Job satisfaction is one of the most studied variables in the organizational behavior literature, mainly because researchers understand its impact on employee turnover and organizational effectiveness. The perception of workplace politics impacts job satisfaction. Most of the past research in the organizational behavior literature has found that employees generally perceive workplace politics negatively. However, there are differences in how employees view and react to organizational politics that are, at least partly, based on individual differences. The purpose of this study is to investigate the moderating effects of employee gender and age on the perceptions of organizational politics-job satisfaction relationship. A primary objective of this study is to provide further clarity on the effect of perceptions of politics in work reward decisions on specific job satisfaction facets for different age and gender groups. This study reports findings from a diverse group of 601 employees employed in more than a dozen organizations representing both the service and manufacturing sectors. We use hierarchical moderated regression analysis to test the study hypotheses to control for spurious variable contamination and isolate the study's main effects. The results support the hypothesis that employee perceptions of organizational politics have a different impact on job satisfaction for different gender and age groups. More specifically, results suggest that older employees are likely to be more negatively affected by perceptions of organizational politics than younger employees. Additionally, this study supports the notion that political decisions affect the job satisfaction of female employees more negatively than male employees in certain circumstances.
... Ketika organisasi merawat karyawan mereka terlebih dahulu dengan memberikan lingkungan kerja yang positif dan menghargai mereka dengan tepat, karyawan lebih cenderung memberikan pengalaman pelanggan yang lebih baik, menciptakan pelanggan setia yang menghasilkan keuntungan lebih besar bagi bisnis. (Hogreve et al., 2021;Rew et al., 2020;Madhani, 2019;Hong et al., 2013;Fazlzadeh et al., 2012;Herington & Johnson, 2010;Christina & Gürsoy, 2009;Yee et al., 2009;Xu & Heijden, 2005;Heskett et al., 1994). Elemen Utama dari Service Profit Chain: 1. Kepuasan Karyawan (Employee Satisfaction). ...
Service Quality Management atau manajemen kualitas layanan adalah aspek krusial dalam operasi bisnis modern, karena bertujuan untuk memastikan bahwa layanan yang diberikan kepada pelanggan memenuhi atau melebihi harapan mereka, sehingga meningkatkan kepuasan dan loyalitas pelanggan. (Alawag et al., 2023; Agarwal & Gowda, 2021; Tusar & Islam, 2021; Madiawati et al., 2021; Nwokorie, 2021; Giao & Thanh, 2020; Prakash, 2019; Jaf et al., 2019; Rajab et al., 2012; Susskind, 2012; Talib et al., 2011; Sureshchandar et al., 2001; Mohanty & Behera, 1996; Gupta & Chen, 1995; Dotchin & Oakland, 1994; Dotchin & Oakland, 1994; Tinkham & Kleiner, 1993).
Pengertian lainnya, Service Quality Management adalah pendekatan sistematis dan terstruktur yang diterapkan oleh organisasi untuk memastikan bahwa layanan yang diberikan memenuhi atau melampaui harapan pelanggan. Service Quality Management mencakup perencanaan, pengendalian, dan perbaikan berkelanjutan dari proses layanan untuk mencapai tingkat kualitas yang konsisten dan tinggi. (Zeithaml, Bitner, & Gremler, 2018; Juran & Godfrey, 1999; Parasuraman, Zeithaml, & Berry, 1988; Grönroos, 1984)
... They also supported the notion of customer satisfaction as a mediator between strategic orientation and performance (see also Kessler et al., 2020;Meli� an-Gonz� alez et al., 2015). Scholars have also identified associations between financial performance and other non-financial indicators such as employee satisfaction (Bamberger et al., 2021), service satisfaction (Rew et al., 2020), and capability development (Jusoh and Parnell, 2008;K€ oseoglu et al., 2013;Parnell, 2021). A similar positive association between non-financial and financial performance is expected. ...
Purpose
Scholars have underscored the importance of organizational authenticity, but it is unclear how it influences the links among market strategy, and nonmarket strategy (NMS) and firm performance. This study addresses this gap in the literature.
Design/methodology/approach
A survey of 294 managers in firms based in the United States investigates configurations among competitive strategy (e.g. cost leadership or differentiation), political and social nonmarket strategy (NMS), authenticity, and firm performance.
Findings
Cost leaders tend to engage in political nonmarket strategy (PNMS), but the interaction does not necessarily improve firm performance. Differentiators are more likely to pursue social nonmarket strategy (SNMS) and perform better, but neither market-nonmarket strategy configuration is inherently optimal.
Research limitations/implications
The results support market-nonmarket strategy configurations but do not prescribe optimal combinations. However, the sample is cross-sector and employs self-reports for firm performance.
Practical implications
Political and social authenticity can enhance firm performance, but nonmarket activity can compromise a firm’s ability to be politically and socially authentic. Authenticity can drive performance, but a firm’s nonmarket activity can compromise its ability to be politically and socially authentic. Firms should view a prospective loss in authenticity as a potential cost of nonmarket activity.
Originality/value
This paper investigates how a firm’s emphasis on market (competitive) strategies, political and social nonmarket strategies, and political and social authenticity impact financial and non-financial performance. It also tests the veracity of two market-nonmarket configurations, cost leadership with political NMS and differentiation with social NMS.
... They also supported the notion of customer satisfaction as a mediator between strategic orientation and performance. Scholars have also identified associations between financial performance and other non-financial indicators, such as employee satisfaction (Bamberger et al., 2021), service satisfaction (Rew et al., 2020) and capability development (Parnell, 2021). ...
Purpose: This study seeks to discover how a firm’s size and its use of both market and non-market strategies (MS and NMS) impact firm performance in South Africa.Design/methodology/approach: We used the Prolific platform to gather survey data from 247 executives and managers across the country representing a variety of firm sizes and industries. Cronbach’s alpha, analysis of variance (ANOVA) and structural equation modelling via partial least squares (PLS-SEM) were then employed to test constructs and hypotheses. Configuration theory and social exchange theory (SET) are the conceptual foundations for this study.Findings/results: Firm size is a driver of the market strategy of differentiation, but not cost leadership. Larger firms are also more likely to pursue both political and social NMS. Differentiation and social NMS positively impact firm performance, but cost leadership and political NMS do not.Practical implications: Managers should emphasise differentiating their products and services rather than being a low-cost provider. When considering various non-market strategies, they should emphasise social NMS. Although large firms are more likely than small firms to pursue political NMS, they do not appear to accrue any benefit.Originality/value: This study fills gaps in the strategy-performance literature by directly linking firm size to strategic choices and by analysing the effects of different types of MS and NMS on firm performance. As such, it is valuable to both academics and practitioners. This study also advances our understanding of MS and NMS in South Africa.
We surveyed 249 Polish and 159 Romanian firms about their nonmarket strategies (NMS). The results revealed similar links among relative firm size, market strategies, NMS, and firm performance. Firm size did not influence market orientation, but it influenced political and social NMS. Firm performance was influenced primarily by global growth and differentiation, not cost leadership. Social NMS, but not political NMS, was a significant performance driver in both countries. Relative firm size was significantly associated with firm performance in Romania but not Poland. Our findings suggest that firms in Central and Eastern Europe (CEE) can integrate market and NMS to drive performance, but NMS creates more value in the social realm than in the political sphere.
Existing literature on university brand loyalty (UBL) has less focused on a marketing-oriented perspective, or relationship marketing, and its impact on testing UBL. The aim of this study is to identity the roles and impacts of trust and commitment, which are main factors that create a relationship, in the relationship between university service quality, student satisfaction (SAT), and UBL and discuss its implications for university approaches of the marketing oriented perspective. A self-report study was conducted with a total sample of 301 undergraduate students from four universities in the USA. PLS-SEM and path analysis were employed to test each hypothetical relationship. This study identified that trust and commitment play important roles as mediators in the relationship between SAT and UBL. Therefore, the findings support contributions of this study by offering implications that universities need to focus on building and maintaining the quality of relationship with students.
The purpose of this study to analysis the effect of training service toward performance of managerial, to analysis the effect of training service toward organization governance, and analysis indirect effect the training service through performance of managerial toward organization governance on BPSDM South Sulawesi Province. The research applied on BPSDM South Sulawesi Province with population as amount 583 employees and samples as amount 237 respondent through Slovin formulation. Data from questioner to analysis with path analysis. The result of research with path analysis obtained: the first, implementation of training service have effected toward organization governance in BPSDM. The second, the practice performance of managerial not yet to support the implementation of training service in effect toward organization governance in BPSDM. The result of test showed that the training service have positive and significant toward organization governance. That meaning the implementation of training service, so can to increase the organization governance. better of implementation the training service so the organization governance in BPSDM South Sulawesi Province more increase it.
The attainment of quality in products and services has become a pivotal concern of the 1980s. While quality in tangible goods has been described and measured by marketers, quality in services is largely undefined and unresearched. The authors attempt to rectify this situation by reporting the insights obtained in an extensive exploratory investigation of quality in four service businesses and by developing a model of service quality. Propositions and recommendations to stimulate future research about service quality are offered.
Purpose
The purpose of this paper is to measure service productivity using the Service Enterprise Productivity in Action (SEPIA) model. The research operationalises only one of the five stakeholder groups, the customer interface which incorporates service complexity (SC), customer interactions, customer channel, customer loyalty (CL) (new) as inputs, and CL (referred and repeat) and willingness to pay as output measures.
Design/methodology/approach
The research extends our understanding of existing service productivity models with the development of the SEPIA model. Data were collected from 14 organisations operating in the Australian travel and tourism industry, which was analysed using a data envelopment analysis input oriented variable return to scale method as applied to the SEPIA model customer interface.
Findings
Four key findings from the research include: customer choice and their ability to pay is a determinant of service productivity; service productivity is a two stage process when measured; SC is not categorical; and quality business systems do impact service productivity.
Research limitations/implications
A limitation of this research is that only one (customer) of the five key stakeholders, customer, employee, manager, supplier and shareholder, was operationalised in this research paper.
Practical implications
The operationalisation of the SEPIA customer interface using transactional data and measuring non-financial, intangible factors of productivity provide managers with insights on what services to offer, when to invest in or promote the use of technology and whether to spend marketing effort on customer acquisition or customer retention.
Originality/value
The SEPIA model positions service firms within a social and service value network and provides a range of customer measures that extend the current capital (K), labour (L), energy (E), materials (M) and service (S), KLEMS measure of productivity and can be used to show the impact customers have on service productivity.
We conduct a systematic exploratory investigation of the effects of firms’ existing service productivity on the success of their new service innovations. Although previous research extensively addresses service productivity and service innovation, this is the first empirical study that bridges the gap between these two research streams and examines the links between the two concepts. Based on a comprehensive data set of new service introductions in a financial services market over a 14-year period, we empirically explore the relationship between a firm’s existing service productivity and the firm’s success in introducing new services to the market. The results unveil a fundamental service productivity-service innovation dilemma: Being productive in existing services increases a firm’s willingness to innovate new services proactively but decreases the firm’s capabilities of bringing these services to the market successfully. We provide specific insights into the mechanism underlying the complex relationship between a firm’s productivity in existing services, its innovation proactivity, and its service innovation success. For managers, we not only unpack and elucidate this dilemma but also demonstrate that a focused customer scope and growth market conditions may enable firms to mitigate the dilemma and successfully pursue service productivity and service innovation simultaneously.
Purpose
In today’s global marketplace, the mantra of many service firms is enhanced efficiency and productivity. To increase their bottom line, firms must also expand revenue. They thus face the challenge of ways to increase revenue through customer satisfaction while also achieving productivity gains. The current study offers insight into the role of various resources that encourage frontline employees to become engaged in the pursuit of achieving organisational goals, ultimately enhancing service productivity and customer satisfaction.
Design/methodology/approach
A total of 252 customer-frontline employee dyadic data were collected at a medium-sized retail bank in Ho Chi Minh City, Vietnam.
Findings
Results show that personal (self-efficacy) and organisational resources impact frontline employee productivity directly and indirectly through employee engagement. Importantly, service productivity is then positively associated with customer satisfaction.
Research limitations/implications
Extending previous investigations based on the job demands-resources (JD-R) model and theories of self-efficacy and conservation of resources (COR), this study’s findings empirically support anecdotal accounts of the positive productivity-customer satisfaction relationship.
Practical implications
Our results also highlight the importance of the management of human and organisational resources to attain this two-pronged goal.
Originality/value
Using dyadic data (customers and FLEs) collected at a medium-sized retail bank, we refute the trade-off effect between attaining employee productivity and customer satisfaction in the service industry. This paper further fills research need to study how various resources available to FLEs can achieve desirable organizational outcomes in service firms – the improvement of both service productivity and customer satisfaction.
A debate about whether firms with superior customer satisfaction earn superior stock returns has been persistent in the literature. Using 15 years of audited returns, the authors find convincing empirical evidence that stock returns on customer satisfaction do beat the market. The recorded cumulative returns were 518% over the years studied (2000-2014), compared with a 31% increase for the S&P 500. Similar results using back-tested instead of real returns were found in the United Kingdom. The effect of customer satisfaction on stock price is, at least in part, channeled through earnings surprises. Consistent with theory, customer satisfaction has an effect on earnings themselves. In addition, the authors examine the effect of stock returns from earnings on stock returns from customer satisfaction. If earnings returns are included among the risk factors in the asset pricing model, the earnings variable partially mitigates the returns on customer satisfaction. Because of the long time series, it is also possible to examine time periods when customer satisfaction returns were below market. The reversal of the general trend largely resulted from short-term market idiosyncrasies with little or no support from fundamentals. Such irregularities have been infrequent and eventually self-correcting. The authors provide reasons why irregularities may occur from time to time.
Purpose
– The purpose of this article is to examine whether the design of chief executive officer (CEO) compensation generates incentives to engage in managerial behavior that enhances customer satisfaction and whether these incentives, in turn, lead to higher firm value.
Design/methodology/approach
– A unique dataset combining customer satisfaction and executive compensation data was used, and the relationship between option sensitivity, customer satisfaction and performance was modeled using simultaneous equations modeling with industry and year fixed effects.
Findings
– Findings suggest that CEO compensation plays an important role in explaining the variation in customer satisfaction and firm value. Specifically, CEO short-term compensation (salary or bonus) has no affect on customer satisfaction or firm value; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes is positively related and also exhibits an inverted U-shaped relationship with customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts negatively with CEO longevity and industry concentration but positively with advertising expenses in affecting customer satisfaction; the sensitivity of CEO wealth from long-term incentive compensation to both stock price changes and customer satisfaction positively affect firm value; and the sensitivity of CEO wealth from long-term incentive compensation to stock price changes interacts positively with customer satisfaction to affect firm value.
Research limitations/implications
– This study suffers from several limitations. First, the sample is limited to firms with ACSI scores available. Second, this study is limited to only publicly traded firms, which limits our ability to generalize regarding customer satisfaction, option sensitivity and firm value.
Practical implications
– This study has several important implications for researchers and managers. The first is that the corporate board appears to view investment in customer satisfaction as similar to an investment in other intangible assets or technology, in that they reward managers with a nonlinear payoff profile. To encourage managers to invest discretionary funds wisely, incentive compensation is important. Second, compensation committees of corporate boards should not allow the option sensitivity to reach extreme levels because, at some point, managers’ incentives appear to shift more toward short-term earnings objectives and away from investment in intangibles, which have a longer-term payoff. Third, if boards are concerned about customer satisfaction and market value, when designing compensation packages, they should shift their focus from the structure of pay to the sensitivity of pay to performance. The exception to this is that for CEOs with very long tenures (or for those close to retirement), high levels of option sensitivity may distort incentives away from a focus on customer satisfaction. Finally, our results indicate that strategies that enhance customer satisfaction provide an incremental benefit in terms of firm value, beyond incentive compensation strategies.
Social implications
– The results indicate that a “stakeholder focus” which includes customers is value adding for shareholders as well. The results also imply that perhaps using a “balanced scorecard” approach to assessing performance in terms of customer satisfaction outcomes, or at least acknowledging the drives of customer satisfaction explicitly, could be an alternative to using highly sensitive incentive-based compensation when such compensation schemes are less desirable.
Originality/value
– Prior research has found that the structure of fixed versus incentive-based compensation impacts customer satisfaction. However, this is one of the first papers to investigate the relationship between the sensitivity of CEO compensation and customer satisfaction. Findings have important implications for boards who seek to structure CEO pay so that CEOs have incentives to enact policies that benefit customers and, in turn, firm performance.
It is the goal of this article to provide noneconomists with an overview of productivity, its measurement and challenges specific to tourism, and the current state of research. The focus is on macroeconomic considerations, not firm-specific productivity. A survey of Organization for Economic Cooperation and Development member and nonmember countries identifies the main input and output measures used as well as the inconsistencies in their application and the data gaps that still need to be addressed. Other research issues yet to be resolved include how to capture the quality aspects of both input and output variables as well as the cocreated value of experiences that are consumed at the moment of production.
Purpose
– This study aims to examine how market orientation (MO), marketing resources and marketing resource deployment are related and impact business-to-business (B2B) firm- and customer-level performance.
Design/methodology/approach
– A self-administrated questionnaire was used to collect data from 251 firms out of a sample of 1000 B2B firms selected from a database of businesses.
Findings
– Marketing resources and marketing capability are complementary in contributing to both firm and customer performance. In addition, they are partial mediators of the relationship between MO and firm- and customer-level performance. Only marketing resources fully mediate the relationship between MO and firm-level performance.
Research limitations/implications
– This study relied on self-reporting by marketing executives, thus inferences about causality should be made with caution. Specifically, the time sequence of the relationships among resource possession and resource deployment and marketing results is not easily discernible with cross-sectional data.
Originality/value
– This study sought to address research gaps in the two research streams; MO-firm performance via the mediating role of marketing resources and deployment, and the resource based view (RBV) resource–deployment interaction. Our contribution to the literature is threefold. First, MO indirectly enhances performance at both firm and customer level via marketing resources and marketing resource deployment. Second, while possessing marketing resources does explain some of the economic rent differentials, the effect depends fundamentally on how firms deploy their marketing resources. Third, our findings suggest research on resources, resource deployment and cross-level firm performance should be conducted at the business process level within firms.
Since the introductory article for what has become known as the “service-dominant (S-D) logic of marketing,” “Evolving to
a New Dominant Logic for Marketing,” was published in the Journal of Marketing (Vargo, S. L., & Lusch, R. F. (2004a)), there
has been considerable discussion and elaboration of its specifics. This article highlights and clarifies the salient issues
associated with S-D logic and updates the original foundational premises (FPs) and adds an FP. Directions for future work
are also discussed.
KeywordsService-dominant logic-New-dominant logic-Service
The concept of productivity is at the heart of economic theory, management science and operational management of firms and organizations. Despite the theoretical and operational importance of this concept, in recent years, its absolutism has been challenged. Services are often at the heart of this critical debate. Both conceptually and methodologically, services are indeed a major challenge to the concept of productivity. The objective of this paper is to review issues raised by services and their relationships with productivity, from two different but related perspectives: (1) a theoretical and methodological perspective focused on the problems involved in defining and measuring productivity, and (2) a strategic perspective focused on identifying generic productivity and performance strategies in service firms and organizations.
Purpose
– How do pricing methods affect firm performance? From both an academic as well as a managerial perspective this question is important. The literature is silent on the relationship between pricing approach and company performance. The aim of this paper is to address this research gap.
Design/methodology/approach
– To address this practical and theoretical deficit, the authors surveyed 1,812 professionals involved in pricing to measure the influence of pricing approach on firm performance.
Findings
– The authors find a positive relationship between value‐based pricing (but not competition‐based pricing) and firm performance. Furthermore, the authors find that the three pricing orientations differently influence firm pricing capabilities, which in turn are positively related to firm performance. This paper is thus the first paper documenting a positive relationship between value‐based pricing and firm performance through a quantitative research design.
Originality/value
– These findings have important theoretical as well as practical implications and suggest that all firms, regardless of size, industry or geography, benefit from value‐based pricing.
The authors present a unified strategic framework that enables competing marketing strategy options to be traded off on the basis of projected financial return, which is operationalized as the change in a firm's customer equity rel- ative to the incremental expenditure necessary to produce the change. The change in the firm's customer equity is the change in its current and future customers' lifetime values, summed across all customers in the industry. Each customer's lifetime value results from the frequency of category purchases, average quantity of purchase, and brand-switching patterns combined with the firm's contribution margin. The brand-switching matrix can be esti- mated from either longitudinal panel data or cross-sectional survey data, using a logit choice model. Firms can ana- lyze drivers that have the greatest impact, compare the drivers' performance with that of competitors' drivers, and project return on investment from improvements in the drivers. To demonstrate how the approach can be imple- mented in a specific corporate setting and to show the methods used to test and validate the model, the authors illustrate a detailed application of the approach by using data from the airline industry. Their framework enables what-if evaluation of marketing return on investment, which can include such criteria as return on quality, return on advertising, return on loyalty programs, and even return on corporate citizenship, given a particular shift in cus- tomer perceptions. This enables the firm to focus marketing efforts on strategic initiatives that generate the great- est return.
The authors propose that the revenue premium a brand generates compared with that of a private label product is a simple, objective, and managerially useful product-market measure of brand equity. The authors provide the conceptual basis for the measure, compute it for brands in several packaged goods categories, and test its validity. The empirical analysis shows that the measure is reliable and reflects real changes in brand health over time. It correlates well with other equity measures, and the measure's association with a brand's advertising and promotion activity, price sensitivity, and perceived category risk is consistent with theory.
Purpose
This study aims to investigate the effects of stress and job satisfaction on the functioning of a company. It seeks to focus on factors affecting stress and job satisfaction such as number of work hours, good relations between management and employees, good function of the group and work related to employees' area of education.
Design/methodology/approach
A random sample of 425 employees in the private and public sector and two stage cluster sampling is first used to collect primary data. Factor analysis is used next to identify the responsible factors for the correlation among a large number of qualitative and quantitative variables and their influence on productivity. Logistic regression is used next presenting many useful elements concerning the function of stress, satisfaction and supportive elements on productivity.
Findings
As expected, increased stress leads to reduced productivity and increased satisfaction leads to increased productivity. When work begins to overlap with workers' personal life this implies a negative effect on productivity. Quality work is more related to conscientiousness and personal satisfaction than work load. Energetic and active individuals affect productivity positively.
Originality/value
The paper presents a number of qualitative variables as factors representing stress and satisfaction. This is achieved using factor analysis. Next logistic regression offers the odds ratio and the corresponding probability of the effect on productivity after a change in stress and satisfaction. The empirical analysis completes the existing literature contrasting different theoretical sets of predictor variables and examining their effect on productivity. Additionally, in the study the states of stress and job satisfaction are the result of the interaction of the environment's demands with the personal characteristics.
This paper draws on the quality profitability emphasis framework of Rust, Moorman, and Dickson (2002) (Rust, Roland T., Christine Moorman, Peter R. Dickson. 2002. Getting returns from service quality: Revenue expansion, cost reduction, or both. (October) 7–24.) to examine the association between customer satisfaction and long-term financial performance among firms that a dual emphasis (focusing on both revenue-expansion and cost-reduction simultaneously, rather than solely emphasizing one over the other). Using a longitudinal data set of 77 firms from the United States, we test this hypothesis and find that the association between customer satisfaction and long-term financial performance is positive and relatively stronger for firms that successfully a dual emphasis. We build on the work of Rust, Moorman, and Dickson (2002), who investigated the financial impact of engaging in the process of achieving a dual emphasis. Collectively, these studies show that while a dual emphasis is desirable for long-run financial success, the a dual emphasis may not be as financially rewarding in the short run. Firms pursuing a dual emphasis need to consider both short- and long-term consequences of their strategy.
Marketing inherited a model of exchange from economics, which had a dominant logic based on the exchange of "goods," which usually are manufactured output. The dominant logic focused on tangible resources, embedded value, and transactions. Over the past several decades, new perspectives have emerged that have a revised logic focused on intangible resources, the cocreation of value, and relationships. The authors believe that the new per- spectives are converging to form a new dominant logic for marketing, one in which service provision rather than goods is fundamental to economic exchange. The authors explore this evolving logic and the corresponding shift in perspective for marketing scholars, marketing practitioners, and marketing educators.
The American Customer Satisfaction Index (ACSI) is a new type of market-based performance measure for firms, industries, economic sectors, and national economies. The authors discuss the nature and purpose of ACSI and explain the theory underlying the ACSI model, the nation-wide survey methodology used to collect the data, and the econometric approach employed to estimate the indices. They also illustrate the use of ACSI in conducting benchmarking studies, both cross-sectionally and over time. The authors find customer satisfaction to be greater for goods than for services and, in turn, greater for services than for government agencies, as well as find cause for concern in the observation that customer satisfaction in the United States is declining, primarily because of decreasing satisfaction with services. The authors estimate the model for the seven major economic sectors for which data are collected. Highlights of the findings include that (1) customization is more important than reliability in determining customer satisfaction, (2) customer expectations play a greater role in sectors in which variance in production and consumption is relatively low, and (3) customer satisfaction is more quality-driven than value- or price-driven. The authors conclude with a discussion of the implications of ACSI for public policymakers, managers, consumers, and marketing in general.
Are there economic benefits to improving customer satisfaction? Many firms that are frustrated in their efforts to improve quality and customer satisfaction are beginning to question the link between customer satisfaction and economic returns. The authors investigate the nature and strength of this link. They discuss how expectations, quality, and price should affect customer satisfaction and why customer satisfaction, in turn, should affect profitability; this results in a set of hypotheses that are tested using a national customer satisfaction index and traditional accounting measures of economic returns, such as return on investment. The findings support a positive impact of quality on customer satisfaction, and, in turn, profitability. The authors demonstrate the economic benefits of increasing customer satisfaction using both an empirical forecast and a new analytical model. In addition, they discuss why increasing market share actually might lead to lower customer satisfaction and provide preliminary empirical support for this hypothesis. Finally, two new findings emerge: First, the market's expectations of the quality of a firm's output positively affects customers’ overall satisfaction with the firm; and second, these expectations are largely rational, albeit with a small adaptive component.
The authors develop a conceptual framework of the marketing–finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concerned with the task of developing and managing market-based assets, or assets that arise from the commingling of the firm with entities in its external environment. Examples of market-based assets include customer relationships, channel relationships, and partner relationships. Market-based assets, in turn, increase shareholder value by accelerating and enhancing cash flows, lowering the volatility and vulnerability of cash flows, and increasing the residual value of cash flows.
Purpose
– The purpose of this paper is to differentiate the production process within services from the dominant manufacturing-based production process, with the objective of delineating the production process in services and highlighting its implication for service productivity.
Design/methodology/approach
– This study critically reviewed the extant literature on the production processes in manufacturing and services from a multidisciplinary perspective and proposed a framework for the service production process and its relationship with service productivity.
Findings
– The production process for services differs from the dominant manufacturing-based production process and entails an input, transformation process and outcome dimensions. Therefore, any advancement in services, particularly the conceptualisation and measurement of service productivity, is dependent on the application of a service-specific production process.
Research limitations/implications
– The understanding and delineation of the production process in services would further scholarly understanding of what is means to be productive in services and the impact on the validity of the conceptualisation and measurement of service productivity and other service-related concepts.
Practical implications
– The proposed service-based production process can further managerial understanding of the measurement and management of productivity in services.
Originality/value
– This paper delineates the production process in services and highlighted its implication for service productivity. This study, therefore, is a step forward in developing service-specific concepts and measures, particularly service productivity.
This article presents managers with a framework for measuring the strength of a brand. It specifically examines ten sets of measures grouped into five categories: loyalty, perceived quality, associations, awareness, and market behavior. Employing these measures can be difficult and their results must be used carefully. However, they have the capacity to provide managers with a set of important and extremely useful measurement tools.
This article reports the results of empirical research on service quality and service productivity management practices. The objective of the research is to gain a better understanding of these practices through a comparative analysis of large and small businesses, of firms delivering services to organizations and to consumers, and of unionized and nonunionized firms. A second objective is to correlate these practices to two performance variables: financial results and perceived customer satisfaction. The most frequent practices have been identified. Various quality practices are associated with customer satisfaction but not with financial results. Productivity practices are less popular than quality practices, but some are related to both financial results and customer satisfaction. An important problem is that quality has been defined and redefined in many ways that often embody elements of productivity.
This paper is about service productivity and perceived service quality. Both a high service productivity and a high customer perceived quality are two main drivers of good performances in service companies and they simultaneously occur as a consequence of a synergy of several drivers such as employees' competences and motivation, organizational efficiency, technical devices availability, information technologies employment, etc. In scientific literature a trade-off between productivity and perceived service quality is asserted and several cases derived both by market observations and academic research could bear such trade-off out. But, is it possible to state that, under some circumstances, such a trade-off between productivity and perceived service quality could be avoided? And if yes, why such certified substitution should not work?In this paper, in order to trace some theoretical answer to the above questions, a managerial model based both on service science and production economics will be proposed. The model aims to find out some key causes that allow to explain the foundations of the mentioned trade-off and the potential conditions for its overcoming; moreover, such model will be employed in order to integrate services' productivity function with new variables and to provide some managerial guidelines for improving service management.
In exemplary service organizations, executives understand that they need to put customers and frontline workers at the center of their focus. Those managers heed the factors that drive profitability in this service paradigm: investment in people, technology that supports frontline workers, revamped recruiting and training practices, and compensation linked to performance. They also express a vision of leadership in somewhat unconventional terms, referring to an organization's "patina of spirituality" and the "importance of the mundane." In this article, Heskett, Jones, Loveman, Sasser, and Schtesinger take a close look at the links in the service-profit chain, which puts hard values on soft measures so that managers can calibrate the impact of employee satisfaction, loyalty, and productivity on the value of products and services delivered. Managers can then use this information to build customer satisfaction and loyalty and assess the corresponding impact on profitability and growth. Describing the links in the service-profit chain, the authors explain that profit and growth are stimulated by customer loyalty; loyalty is a direct result of customer satisfaction; satisfaction is largely influenced by the value of services provided to customers; value is created by satisfied, loyal, and productive employees; and employee satisfaction, in turn, results from high-quality support services and policies that enable employees to deliver results to customers. By completing the authors' service-profit chain audit, companies can determine not only what drives their profit but how they can sustain it in the long term.
The wide variety of productivity measurement methods available for use in services is reviewed. The diversity of the service industries has meant that each field has developed its own productivity measures which have often not been widely disseminated due to the lack of a common professional literature. The available measurement approaches are outlined, including those from the health sector where there has been a sizeable effort at productivity research. A classification scheme is presented to assist in the description and selection of available service productivity measures. The classification scheme is based on (1) complexity of inputs and outputs, (2) degree of customisation, and (3) level of aggregation. The measures of services productivity reviewed are presented in terms of this classification. An approach is suggested for the manager to follow in selecting productivity measures according to this classification and other considerations. While some attributes of services make productivity measurement difficult, it is argued that it is not as problematic as some would think and that a number of approaches are available, especially for the comparison of service units which tend to be far more numerous and homogeneous than factories.
In this study, we examined relations between organizational value systems and the productivity of service workers. Research was conducted in 92 service firms to construct an empirical taxonomy of organizational value systems based on the content focus of values, and the resulting taxonomy was used as a framework to examine the relationship between value system types and individual productivity, conceptualized in terms of job-related behaviors, attachment, and affect. Four value system types were identified, and, as predicted, were shown to be differentially associated with all three ingredients of service productivity. These findings indicate the importance of the value system as a marketing and management tool, and underscore the need for services managers to determine the behavioral and psychological responses that define productive performance in their organizations and to diagnose and develop the value systems that will reinforce them.
Purpose
Quality management requires increasing employee involvement that could empower employees, leading to employee and customer satisfaction. Although the literature describes a picture of increasing job demands and work intensification, the evidence of an association between employee job satisfaction and quality management remains mixed and narrow. The purpose of this paper is to investigate this link in the wider economy, and address the roles of human resource management practices that target direct employee participation (job enrichment and high involvement management) in this relationship.
Design/methodology/approach
The Workplace Employment Relations Survey of 2004 (WERS2004) provides information on British workplaces including the use of specific quality and human resource management practices, employees' job satisfaction and other outcomes. Latent variable analysis identifies employers' approaches to quality management, job enrichment and high involvement management. Workplace‐level regression analyses illustrate the link between job satisfaction and various desired organizational outcomes. Hierarchical two‐level regression models are used to assess the link between quality management at workplaces and employee job satisfaction.
Findings
Although job satisfaction is positively associated with desired workplace outcomes (organizational commitment, productivity and quality), no significant link between quality management and employee job satisfaction is found. By contrast, a positive association between job enrichment and job satisfaction is confirmed, which may be weakened in the presence of quality management.
Practical implications
Given the potential impact of job satisfaction on organizational outcomes, job enrichment features should not be neglected when designing jobs so that an effective quality management strategy can be in place. Some weak positive association between high involvement and quality managements with perceived job demands is also observed, and this should be further investigated in more detailed studies of employee well‐being.
Originality/value
This is a large empirical study on an economy‐wide sample of workplaces and their employees.
In today's business world, the role of quality has become ever more significant for organizations to compete in a global marketplace. Based on the quality management theory, this study empirically examines the relationship between quality-focused human resource practices (QHRP) and organizational performance outcomes. Data from 69 healthcare organizations indicate a strong support for this relationship. A Human Resource (HR) system focused on quality management was directly related to multiple dimensions of organizational performance outcomes (i.e., intangible – employee satisfaction and customer satisfaction – and tangible – profit). Specifically, two measures of QHRP, knowledge management and strategic management, were found to be positively related to the financial performance of firms implementing quality management. Process management is found to be negatively related to employee satisfaction. General Human Resources were positively related to both employee and customer satisfaction. Employee focus of the firms is also positively related to employee satisfaction. In addition, employee satisfaction is also related to both customer satisfaction and financial performance while customer satisfaction is found to be positively related to employee satisfaction. The findings indicate a generally strong positive relationship with the organizational performance outcomes. The results of this study are particularly important in showing HR's contribution to the organization's bottom line.
The American Customer Satisfaction Index (ACSI) is a new type of market-based performance measure for firms, industries, economic sectors, and national economies. The authors discuss the nature and purpose of ACSI and explain the theory underlying the ACSI model, the nation-wide survey methodology used to collect the data, and the econometric approach employed to estimate the indices. They also illustrate the use of ACSI in conducting benchmarking studies, both cross-sectionally and over time. The authors find customer satisfaction to be greater for goods than for services and, in turn, greater for services than for government agencies, as well as find cause for concern in the observation that customer satisfaction in the United States is declining, primarily because of decreasing satisfaction with services. The authors estimate the model for the seven major economic sectors for which data are collected. Highlights of the findings include that (1) customization is more important than reliability in determining customer satisfaction, (2) customer expectations play a greater role in sectors in which variance in production and consumption is relatively low, and (3) customer satisfaction is more quality-driven than value-or price-driven. The authors conclude with a discussion of the implications of ACSI for public policymakers, managers, consumers, and marketing in general.
It is surprising that little empirical research has been conducted in the area of service productivity given its impact on organisational costs. In order to try to encourage such research, this paper provides a structure for analysing productivity in service organisations by distinguishing between operational and customer productivity. The paper also clarifies the meaning of “productivity” and differentiates it from efficiency and utilisation. The authors identify some of the problems in measuring productivity, especially in a service setting, and then use a few examples to illustrate the sometimes counterintuitive relationship between operational and customer productivity.
Purpose – The aim of this study is to examine the relationship between customer satisfaction, earnings and firm value. Design/methodology/approach – A model borrowed from the accounting literature – the Ohlson model – is used to consider the impact of customer satisfaction on Tobin's q – a capital market-based measure of firm performance widely used in marketing research. Data on firm performance is drawn from COMPUSTAT and integrated with data on customer satisfaction from the American Customer Satisfaction Index (ACSI). Findings – Results show that customer satisfaction has a positive impact on firm value. Critically, the authors find that this impact is over and above the impact that earnings has on firm value. They also find that customer satisfaction positively and significantly moderates the earnings-firm value relationship. Research limitations/implications – Findings are limited to firms covered by the American Customer Satisfaction Index and subject to the assumptions underpinning the Ohlson model. Practical implications – This study's demonstration of the complementary relationship between earnings and customer satisfaction in determining firm value should encourage managers to engage with satisfaction as a driver of business performance and value. Originality/value – Findings extend recent studies on the impact of customer satisfaction on business performance. While prior studies either ignore earnings or focus on the relationship between satisfaction and stock returns, the authors show the impact of satisfaction on firm value, in a model that includes earnings. Importantly, they also extend prior studies by showing that the interaction between customer satisfaction and earnings is central to understanding the impact of both satisfaction and earnings on firm value. In addition, they demonstrate the usefulness of an earnings-based valuation model, to explore the relationship between a marketing metric and firm value. The authors' approach may be adopted to consider the impact of other measures of marketing performance. Thus, they hope that this study helps to further bridge the gap between marketing and the financial disciplines.
The service-profit chain has been used as a powerful tool for evaluating the relationship between service effort and profit. However, this framework cannot account for customer satisfaction, which may be the ultimate goal of firms. This article attempts to investigate the relationship between service marketing productivity and profit by using data envelopment analysis and regression to determine the mediating role of customer satisfaction in the service-profit chain. The data from 17 U.S. domestic airlines from 2001 to 2005 indicate a significant association between service marketing productivity and profit and the mediating effect of customer satisfaction.
Technology-based self-service (TBSS) options such as self-checkout systems, price checkers and electronic kiosks are rapidly emerging in brick-and-mortar retail stores. This study builds on existing literature by investigating the significance of service quality attributes of TBSS options in retail grocery stores. Specifically, a conceptual model is developed with proposed hypotheses to infer causation toward TBSS quality from customers' perceptions of TBSS encounters using structural equation modeling. Finally, the paper provides discussion of the research findings and future research questions.
This article presents the latest estimates of publicly funded education productivity in the United Kingdom. From 1996 to 2009 productivity declined by 0.1 per cent, but this marginal fall overall masks three periods of greater change. From 1996 to 1999, productivity grew by 7.1 per cent, with an annual average increase of 2.3 per cent. In this period there was strong output growth, due to growth in the school age population, but only weak growth in inputs. From 1999 to 2007, productivity fell by 9.4 per cent, an annual average fall of 1.2 per cent. Growth in school attendance, once adjusted for quality, was outstripped by a sharp rise in inputs, mainly through the employment of more school support staff. From 2007 to 2009, productivity grew by 2.9 per cent, with an annual average increase of 1.4 per cent, as output grew faster than inputs, due mainly to relatively large improvements in pupil attainment at age 15/16 in England and Wales.
This research investigates the antecedents and consequences of customer satisfaction. We develop a model to link explicitly the antecedents and consequences of satisfaction in a utility-oriented framework. We estimate and test the model against alternative hypotheses from the satisfaction literature. In the process, a unique database is analyzed: a nationally representative survey of 22,300 customers of a variety of major products and services in Sweden in 1989–1990. Several well-known experimental findings of satisfaction research are tested in a field setting of national scope. For example, we find that satisfaction is best specified as a function of perceived quality and “disconfirmation”—the extent to which perceived quality fails to match prepurchase expectations. Surprisingly, expectations do not directly affect satisfaction, as is often suggested in the satisfaction literature. In addition, we find quality which falls short of expectations has a greater impact on satisfaction and repurchase intentions than quality which exceeds expectations. Moreover, we find that disconfirmation is more likely to occur when quality is easy to evaluate. Finally, in terms of systematic variation across firms, we find the elasticity of repurchase intentions with respect to satisfaction to be lower for firms that provide high satisfaction. This implies a long-run reputation effect insulating firms which consistently provide high satisfaction.
The authors report a meta-analysis of relationships linking employee job satisfaction to customer satisfaction and perceived service quality in studies that correlate employee data with customer data. Overall, both relationships are positive and statistically and substantively significant. Moderator analyses show that service industry characteristics (relationship versus encounter, personal versus non-personal) and methodological characteristics (aggregated versus individual level of analysis, concurrent versus predictive survey) moderate these relationships. Estimation of a path analytic model using the aggregated data shows that customer-perceived service quality completely mediates the relationship between employee job satisfaction and customer satisfaction. Implications for research and practice are discussed.
The productivity of a process is related to how effectively input resources are transformed into value for customers. For the needs of manufacturers of physical products, there are widely used productivity concepts and measurements instruments. However, in service processes, the underlying assumptions of these concepts and models do not hold. For example, manufacturing-based productivity models assume that an altered configuration of input resources in the production process does not lead to quality changes in outputs (the constant quality assumption). However, in a service context, changes in the production resources and productions systems do affect the perceived quality of services. Therefore, using manufacturing-oriented productivity models in service contexts are likely to give managers wrong directions for action. Research into the productivity of services is still scarce because of the lack of viable models. The purpose of the present article is to analyse the requirements for the development of a productivity concept for service operations. Based on the analysis, a service productivity model is developed. According to this model, service productivity is a function of (1) how effectively input resources into the service (production) process are transformed to outputs in the form of services (internal efficiency), (2) how well the quality of the service process and its outcome is perceived (external efficiency or effectiveness) and (3) how effectively the capacity of the service process is utilized (capacity efficiency). In addition, service productivity as a learning experience and directions for developing measurement models for service productivity are discussed.
There is widespread belief that firms should pursue superiority in both customer satisfaction and productivity. However, there is reason to believe these two goals are not always compatible. If a firm improves productivity by “downsizing,” it may achieve an increase in productivity in the short-term, but future profitability may be threatened if customer satisfaction is highly dependent on the efforts of personnel. If so, there are potential tradeoffs between customer satisfaction and productivity for industries as diverse as airlines, banking, education, hotels, and restaurants. Managers in these types of service industries, as well as goods industries in which the service component is increasing, need to understand whether or not this is the case. For example, if efforts to improve productivity can actually harm customer satisfaction—and vice-versa—the downsizing of U.S. and European companies should be viewed with concern. It follows that developing a better understanding of how customer satisfaction and productivity relate to one another is of substantial and growing importance, especially in light of expected continued growth in services throughout the world economy.
The objective of this paper is to investigate whether there are conditions under which there are tradeoffs between customer satisfaction and productivity. A review of the literature reveals two conflicting viewpoints. One school of thought argues that customer satisfaction and productivity are compatible, as improvements in customer satisfaction can decrease the time andeffort devoted to handling returns, rework, warranties, and complaint management, while at the same time lowering the cost of making future transactions. The second argues that increasing customer satisfaction should increase costs, as doing so often requires efforts to improve product attributes or overall product design.
A conceptual framework useful in resolving these contradictory viewpoints is developed. The framework serves, in turn, as a basis for developing a theoretical model relating customer satisfaction and productivity. The model predicts that customer satisfaction and productivity are less likely to be compatible when: 1) customer satisfaction is relatively more dependent on customization—the degree to which the firm's offering is customized to meet heterogeneous customers' needs—as opposed to standardization—the degree to which the firm's offering is reliable, standardized, and free from deficiencies; and 2) when it is difficult (costly) to provide high levels of both customization and standardization simultaneously.
To move forward from the model's propositions to the development of testable hypotheses, we argue that services are more likely than goods to have the preceding characteristics. Hence, tradeoffs between customer satisfaction and productivity should be more prevalent for services than for goods. Although this classification is not precise—many services are standardizable and many goods have a service component—it has the advantage of allowing an initial test of the propositions.
The empirical work employs a database matching customer-based measures of firm performance with traditional measures of business performance, such as productivity and Return on Investment (ROI). The central feature of this database is the set of customer satisfaction indices provided by the Swedish Customer Satisfaction Barometer (SCSB). The SCSB provides a uniform set of comparable customer-based firm performance measures and offers a unique opportunity to test the study's hypotheses.
The findings indicate that the association between changes in customer satisfaction and changes in productivity is positive for goods, but negative for services. In addition, while both customer satisfaction and productivity are positively associated with ROI for goods and services, the interaction between the two is positive for goods but significantly less so for services.
Taken together, the findings suggest support for the contention that tradeoffs are more likely for services. Hence, simultaneous attempts to increase both customer satisfaction and productivity are likely to be more challenging in such industries. Of course, this does not imply that such firms should not seek improvements in both productivity and customer satisfaction. For example, appropriate applications of information technology may improve both customer satisfaction and productivity simultaneously.
The findings should provide motivation for future research concerning the nature of customer satisfaction and productivity, as well as appropriate strategy and tactics for each one. It is worth emphasizing that this is an issue that is not only important today, but certainly will become even more important in the future. As the growth of services continues and world markets become increasingly competitive, the importance of customer satisfaction will also increase. To compete in such a world, firms must strike the right balance between their efforts to compete efficiently and their efforts to compete effectively.
In this study, we examined relations between organizational value systems and the productivity of service workers. Research was conducted in 92 service firms to construct an empirical taxonomy of organizational value systems based on the content focus of values, and the resulting taxonomy was used as a framework to examine the relationship between value system types and individual productivity, conceptualized in terms of job-related behaviors, attachment, and affect. Four value system types were identified, and, as predicted, were shown to be differentially associated with all three ingredients of service productivity. These findings indicate the importance of the value system as a marketing and management tool, and underscore the need for services managers to determine the behavioral and psychological responses that define productive performance in their organizations and to diagnose and develop the value systems that will reinforce them.
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