Extending the service profit chain: the mediating effect of employee productivity

Abstract

Purpose The purpose of this paper is to address the gap in the literature by extending the service profit chain (SPC) model and testing the validity of the proposed model in high-contact service contexts rather than by testing the key elements of the SPC in regard to a single business. Design/methodology/approach The study uses the exploratory factor analysis to identify a set of observables to use in representing the relationships included in the proposed extended model and employs the structural equation modeling to test the eight proposed hypothesis. Findings The study shows that the best-fit structural model supports the notion that employee internal service quality drives employee satisfaction that drives employee loyalty and employee productivity. In addition, employee productivity is shown as partially mediating the relationship between employee satisfaction and employee loyalty. Practical implications The results presented in this study have managerial implications and shed light on the importance of operational factors in the service industry, in particular high-contact services. Originality/value The integration of operations management and SPC still remain limited in the literature. Therefore, the study extends the SPC by integrating other operational factors, namely, employee productivity and internal service quality, and tests its validity in high contact services where the prolonged contact between the customer and the service system creates more opportunities to influence a customer’s perception of service quality.