The Impact of Employee Satisfaction on Quality and Profitability in High-Contact Service Industries
This is the Pre-Published Version
The Impact of Employee Satisfaction on Quality and Profitability in High-contact Service Industries
Rachel W. Y. Yee Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: Rachel.wyyee@polyu.edu.hk
Andy C. L. Yeung* Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: lgtandyy@inet.polyu.edu.hk Tel.: (852) 2766 4063 Fax: (852) 2330 2704 *Corresponding Author
T. C. Edwin Cheng Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: lgtcheng@inet.polyu.edu.hk
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The Impact of Employee Satisfaction on Quality and Profitability in High-contact Service Industries
Abstract: The extant operations management literature has extensively investigated the associations among quality, customer satisfaction, and firm profitability. However, the influence of employee attributes on these performance dimensions has rarely been examined. In this study we investigate the impact of employee satisfaction on operational performance in highcontact service industries. Based on an empirical study of 206 service shops in Hong Kong, we examined the hypothesized relationships among employee satisfaction, service quality, customer satisfaction, and firm profitability. Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non-recursive effect on employee satisfaction, leading to a “satisfaction-quality-profit cycle”. Our empirical investigation suggests that employee
satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction. We provide empirical evidence that employee satisfaction plays a significant role in enhancing the operational performance of
The Impact of Employee Satisfaction on Quality and Profitability in High-contact Service Industries
Rachel W. Y. Yee Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: Rachel.wyyee@polyu.edu.hk
Andy C. L. Yeung* Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: lgtandyy@inet.polyu.edu.hk Tel.: (852) 2766 4063 Fax: (852) 2330 2704 *Corresponding Author
T. C. Edwin Cheng Department of Logistics, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong E-mail: lgtcheng@inet.polyu.edu.hk
1
The Impact of Employee Satisfaction on Quality and Profitability in High-contact Service Industries
Abstract: The extant operations management literature has extensively investigated the associations among quality, customer satisfaction, and firm profitability. However, the influence of employee attributes on these performance dimensions has rarely been examined. In this study we investigate the impact of employee satisfaction on operational performance in highcontact service industries. Based on an empirical study of 206 service shops in Hong Kong, we examined the hypothesized relationships among employee satisfaction, service quality, customer satisfaction, and firm profitability. Using structural equations modeling, we found that employee satisfaction is significantly related to service quality and to customer satisfaction, while the latter in turn influences firm profitability. We also found that firm profitability has a moderate non-recursive effect on employee satisfaction, leading to a “satisfaction-quality-profit cycle”. Our empirical investigation suggests that employee
satisfaction is an important consideration for operations managers to boost service quality and customer satisfaction. We provide empirical evidence that employee satisfaction plays a significant role in enhancing the operational performance of