The service-profit chain: A review and extension

This paper presents a review and suggests an extension of studies on the service-profit chain (S-PC), focusing on the paradoxical relationships among the key S-PC constructs of employee satisfaction, customer loyalty, and profitability. Our review is broad in that it encompasses prior studies in multi-disciplines. We found that many research issues on the S-PC, such as research design, moderating factors, and linearity of the causal relationships had not been addressed in the extant literature. We propose a research model grounded in social exchange theory and the resource-based view of the firm to examine the propositions of the S-PC. The aims of the proposed model are to investigate the causal ordering of the underlying constructs, examine the moderating effects on their linkages, and explore the characteristics of their relationships. This paper contributes to the literature of operations management (OM) and service management by providing important insights and research directions for the S-PC.

[1]  C. Oliver.  SUSTAINABLE COMPETITIVE ADVANTAGE: COMBINING INSTITUTIONAL AND RESOURCE- BASED VIEWS , 1997 .

[2]  V. Mittal,et al.  Satisfaction, Repurchase Intent, and Repurchase Behavior: Investigating the Moderating Effect of Customer Characteristics , 2001 .

[3]  F. F. Reichheld,et al.  Zero defections: quality comes to services. , 1990, Harvard business review.

[4]  Christine T. Ennew,et al.  From customer satisfaction to profitability , 2000 .

[5]  Daniel J. Koys.  The Effects of Employee Satisfaction, Organizational Citizenship Behavior, and Turnover on Organizational Effectiveness , 2001 .

[6]  C. Fornell,et al.  Customer Satisfaction, Market Share, and Profitability: Findings from Sweden , 1994 .

[7]  Martínez Lorente,et al.  Simultaneous Consideration of TQM and ISO 9000 on Performance and Motivation: An Empirical Study of Spanish Companies , 2008 .

[8]  F. Reichheld.  Lead for loyalty. , 2001, Harvard business review.

[9]  P. Ngobo,et al.  Decreasing Returns in Customer Loyalty: Does It Really Matter to Delight the Customers? , 1999 .

[10]  M. Wooden,et al.  The Determinants of Labor Absence: Economic Factors and Workgroup Norms across Countries , 1992 .

[11]  P. Blau.  Exchange and Power in Social Life , 1964 .

[12]  L. Feick,et al.  The impact of switching costs on the customer satisfaction‐loyalty link: mobile phone service in France , 2001 .

[13]  T.C.E. Cheng,et al.  Relationship stability and supplier commitment to quality , 2005 .

[14]  R. Lau.  Quality of work life and performance – An ad hoc investigation of two key elements in the service profit chain model , 2000 .

[15]  Prakash J. Singh,et al.  Empirical assessment of ISO 9000 related management practices and performance relationships , 2008 .

[16]  P. Schoemaker,et al.  Strategic assets and organizational rent , 1993 .

[17]  David P. Lepak,et al.  Human Resource Management, Manufacturing Strategy, and Firm Performance , 1996 .

[18]  T. Cheng,et al.  The impact of specific supplier development efforts on buyer competitive advantage: an empirical model , 2007 .

[19]  R. B. Chase,et al.  Linking the customer contact model to service quality , 1998 .

[20]  Christine T. Ennew,et al.  Customer satisfaction and profitability: A reappraisal of the nature of the relationship , 2002 .

[21]  Gary W. Loveman,et al.  Putting the Service-Profit Chain to Work , 1994 .

[22]  George C. Canavos,et al.  Investigating the Relationhip between Employee Satisfaction and Guest Satisfaction , 2000 .

[23]  W. Edwards Deming,et al.  Out of the Crisis , 1982 .

[24]  Kee-hung Lai,et al.  An empirical assessment of a nomological network of organizational design constructs: From culture to structure to pull production to performance , 2007 .

[25]  Jagdip Singh,et al.  Agency and trust mechanisms in consumer satisfaction and loyalty judgments , 2000 .

[26]  Thomas O. Jones,et al.  Why Satisfied Customers Defect , 1996 .

[27]  K. Kristensen,et al.  The relationship between customer satisfaction and loyalty: Cross-industry differences , 2000 .

[28]  E. Anderson,et al.  Strengthening the Satisfaction-Profit Chain , 2000 .

[29]  Rhian Silvestro,et al.  Dispelling the modern myth - employee satisfaction and loyalty drive service profitability , 2002 .

[30]  Wallace J. Hopp,et al.  On the Interface Between Operations and Human Resources Management , 2003, Manuf. Serv. Oper. Manag..

[31]  T.C.E. Cheng,et al.  Logistics information systems: The Hong Kong experience , 2008 .

[32]  Thomas J. Goldsby,et al.  Effect of service supplier performance on satisfaction and loyalty of store managers in the fast food industry , 1999 .

[33]  A. Roth,et al.  Strategic Determinants of Service Quality and Performance: Evidence from the Banking Industry , 1995 .

[34]  Leonard A. Schlesinger,et al.  Breaking the Cycle of Failure in Services , 1991 .

[35]  R. Hallowell.  The relationships of customer satisfaction, customer loyalty, and profitability: an empirical study , 1996 .

[36]  Dar-Li Yang,et al.  Single-machine group scheduling with a time-dependent learning effect , 2006, Comput. Oper. Res..

[37]  R. Silvestro,et al.  Applying the service profit chain in a retail environment , 2000 .

[38]  M. Gordon,et al.  A Re-Examination of the Relationship between Union Membership and Job Satisfaction , 1995 .

[39]  Ann Marie Ryan,et al.  ATTITUDES AND EFFECTIVENESS: EXAMINING RELATIONS AT AN ORGANIZATIONAL LEVEL , 1996 .

[40]  Gary W. Loveman.  Employee Satisfaction, Customer Loyalty, and Financial Performance , 1998 .

[41]  Richard B. Chase,et al.  The Customer Contact Approach to Services: Theoretical Bases and Practical Extensions , 1981, Oper. Res..

[42]  B. Morris.  The Service Profit Chain: : How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value , 1998 .

[43]  Rosemary L. Batt,et al.  MANAGING CUSTOMER SERVICES: HUMAN RESOURCE PRACTICES, QUIT RATES, AND SALES GROWTH , 2002 .