Does employee satisfaction influence customer satisfaction? Assessing coffee shops through the service profit chain model

This study examines the interrelations between service climate, organizational identification, employee job satisfaction, and customer perceived value and satisfaction. To achieve this, we apply the service profit chain model to South Korea’s coffee shop industry. Data were collected from 263 employees and 973 customers in Daegu. The hypotheses were tested by conducting a path analysis to investigate the relationship between the variables. Organizational identification and job satisfaction were found to be positively correlated with each other. Additionally, job satisfaction was correlated with customer perceived value, which, in turn, was correlated with customer satisfaction. The findings suggest that a good work environment and service-related training can create a positive service climate for employees, which can subsequently improve customer satisfaction. This study is unique in its application of the service profit chain model on the coffee shop industry in Korea.     

Applying Service Profit Chain model to the Korean restaurant industry

The purpose of this study is to empirically determine the relationship between employees’ constructs such as internal service quality, service ability, employee satisfaction, and organizational commitment, and customers’ constructs such as perceived value, customer satisfaction, customer trust, and loyalty. This relationship was studied by applying the Service Profit Chain model to the Korean restaurant industry. Results show that internal service quality has a significant effect on service ability, and teamwork/communication has a significant effect on employee satisfaction. Employees’ organizational commitment has a significant direct effect on the value perceived by customers. Ultimately, there is an indirect influential relationship between employees’ and customers’ constructs. Implications of these results are discussed, and possible limitations of the study are addressed.     

Incorporating satisfaction measures into a restaurant productivity index

The increasing stature of the foodservice industry in the global service economy suggests that productivity analyses—similar to those performed in non-service-based settings—would benefit multi-unit operators by maximizing their desirable operational outcomes while minimizing expenses and other detrimental conditions such as low job satisfaction. This paper suggests that such analyses might be possible through the application of a holistic productivity metric—one that includes traditional operational variables such as revenue, profit, food cost, and labor cost, and previously ignored variables such as guest and employee satisfaction as well as retention equity. Through data gathered from a single chain's 36 corporate-owned, same-brand casual-theme restaurants located in metropolitan centers across the United States, we found that factors leading to maximum outputs such as controllable profit and retention equity include employee satisfaction in addition to expected variables such as cost of goods sold and number of seats. Most notably, employee satisfaction as an input proved to be the most volatile variable in maximizing operational outputs.     

Customers’ Perceptions of Employee Engagement: Fortifying the Service–Profit Chain

This study investigated the three dimensions of employee engagement: dedication, energy, and absorption from the customer’s perspective. The service–profit chain (SPC) and employee behavior that promotes customer satisfaction and loyalty were examined. The results revealed that certain aspects of employee engagement are more readily perceived by consumers and more likely to promote customer satisfaction and loyalty. Findings showed that energy and dedication combined were most likely to foster feelings of satisfaction and loyalty among hospitality patrons. From a theoretical perspective, the study contributes to the literature by enhancing the SPC, revealing new insight into employee engagement, and linking employee engagement to positive consumer outcomes. Hospitality industry professionals may find that employee engagement benefits the customers’ perceptions of the establishment, ultimately increasing profitability. This study utilizes the SPC in the hospitality context and proposes a new link in the chain: employee engagement.     

Crafting and testing a central precept in service-dominant logic: Hotel employees’ brand-citizenship behavior and customers’ brand trust

Employees play an important role in hotel service branding. Their enactments of positive brand-supportive behaviors help nurture positive customer–brand relationships. This study explores the relationship between employee perceived organizational support, brand citizenship behavior, and customers’ perceptions of brand trust. Two questionnaire surveys were carried out in high-contact hotel service firms collecting employee and customer data by matched-questionnaires. The results of the study indicate that brand-citizenship behavior consists of three components: willingness-to-help, brand enthusiasm, and propensity for further development. Propensity for further development has a significant direct positive effect on the other two components, and the other two components both have significant direct positive effects on customer's brand trust. Employee-perceived higher levels of organizational support increase performance of brand citizenship behavior. The study includes empirical findings, contributions to theory, limitations, and direction for future research.     

The effects of service climate and internal service quality on frontline hotel employees’ service-oriented behaviors

When employees in a service profit chain receive quality internal services, they provide quality services to external customers, but extant research does not address what connects internal and external services. This study espouses service climate as an integral part of the service profit chain by exploring its role in linking internal service management and external service performance, and the boundary conditions in which it operates. Data collected from 538 employees of 81 department managers in 24 Chinese hotels were examined using hierarchical linear modeling. Results suggest that managers’ commitment to service quality affects service climate through empowering leadership, service climate links empowering leadership and employee service-oriented behaviors, and external departments’ internal service quality strengthens the positive effect of service climate on service-oriented behaviors. This study advances the literature by integrating service climate and internal service quality into the service profit chain, helping hospitality managers understand how to foster service-oriented behaviors.     

Advertising expenditure,intangible value and risk: A study of restaurant companies

This study investigates the relationships between advertising expenditure, intangible value, and risk in stock returns of restaurant firms between 2000 and 2005. Tobin's Q was used to examine intangible value, and the variance of common stock return was used to measure the investment risk. The results indicate that the level of advertising expenditure has a significant positive effect on the intangible value of the firm, suggesting that advertising expenditures could help generate intangible value in restaurant firms. However, this study did not support a significant relationship between the advertising expenditure level and the stock return risk of restaurant firms.     

Justice perceptions and drives of hotel employee social loafing behavior

Justice perceptions, justice-related satisfaction, employee commitment, and turnover intention are several positive or negative factors influencing employee social loafing behavior. This study analyzed the relationships between these variables in the context of China's hotel industry. A total of 585 valid responses were collected from employees within different departments at 43 hotels in mainland China. Lisrel 8.80 software was used to test structural equation models and hypotheses in this study. Results show that employee commitment is an important mediator, while turnover intention is the main drive of employee social loafing behavior, and justice-related satisfaction significantly influences employee commitment. Findings of this study can be instructive to hotel managers to improve service quality and guests’ satisfaction with hotels.     

That's Not Fair!

ABSTRACT

Organizational commitment has been shown to be significantly negatively related to employee turnover. Given the high incidence of employee turnover in the hospitality industry, practitioners and academics alike should be focused on a more complete understanding of this phenomenon. The present study is an exploration into the identification of the relationships among organizational commitment, job satisfaction, and organizational justice. The study was conducted with employees of a major casino-hotel. Results indicated that organizational justice has an indirect positive impact on organizational commitment by working through job satisfaction. Practical implications and suggestions for future research are discussed.     

Have restaurant firms been using right recession turnaround strategies?: Evaluating with propensity score measure

Among the diverse strategies that restaurants use in recessions, some studies have shown that strategies that increase advertising, profit margins, or asset turnover have yielded promising results in terms of firm performance. However, the success of these turnaround strategies might be due to the health or size of a firm rather than the implementation of these strategies. Therefore, this study empirically tested this question utilizing the propensity score measure (PSM) due to concerns with selection bias across restaurant segments. The results showed significant improvements in revenue for limited-service and franchise restaurants when aggressive advertising was used but no improvements in profitability. The profit margin strategy had no impact on revenue but affected profitability and stock returns positively for all segments. Finally, the asset turnover strategy had adverse effects on revenue the year after a recession for all segments. These mixed results suggest that managers need to be cautious when implementing recession turnaround strategies.     

Wearable technology in service delivery processes: The gender-moderated technology objectification effect

In the current research, we investigate how employees’ adoption of wearable technology (i.e., a front-line employee using Google Glass for a hotel check-in) influences consumers’ service encounter evaluations and revisit intentions. Building on the theoretical frameworks of technology objectification effect, person sensitivity bias and gender stereotypes, we find that wearable technology has a differential impact on service evaluations based on the employee's gender. Study 1 demonstrates that for female employees, the adoption of wearable technology leads to more favorable customer evaluations in service failure encounters. Study 2 shows that for male employees, the adoption of wearable technology leads to less favorable customer evaluations in service success encounters. We discuss theoretical and managerial implications of these findings.     

Workplace incivility in restaurants: Who’s the real victim? Employee deviance and customer reciprocity

This study expands upon previous literature that focused on examining the impact of managers’ incivility towards their employees and the effects on employee behavior and attitudes, as well as customers’ perceptions and behavior intentions following workplace incivility from the maltreated employees. Using mixed-methods of sequential incident techniques and a scenario-based experiment, the study found that when customers received a good service from the employee who was maltreated by his/her supervisors, customers are more likely to revisit the restaurant and tend to provide more tips to the employee compared to customers who received a bad service from the employee. Also, employees who try to continuously provide a good service to customers regardless of their mistreatment from the manager, trigger customers’ moral unease, thus lead them to give more tips.     

Effect of consumer sentiment on hospitality expenditures and stock returns

Given the importance of consumers to the U.S. economy and especially to the hospitality industry, we explore how consumer sentiment (i.e. confidence in the economy) affects consumption expenditures and stock returns in the hospitality industry.We find that not only does consumer sentiment partly predict changes in future consumption expenditures, but changes in consumer sentiment are contemporaneously related to hospitality industry stock returns. More importantly, our results indicate that changes in consumer sentiment can partly predict changes in stock prices of hospitality firms, an indicator of firm performance. The predictive ability of consumer sentiment can thus be useful to managers in business forecasting, planning, and strategizing for profit maximization.     

Customer co-creation of travel services: The role of company support and customer satisfaction with the co-creation performance

The tourism industry is characterized by high-contact services in which co-creation of customers plays a major role. This paper develops a conceptual model of customer co-creation of tourism services and empirically tests this model in a travel agency context. Applying a SEM-approach, company support for customers is found to significantly affect the degree of customer co-creation. The degree of co-creation further positively affects customer satisfaction with the service company, customer loyalty, and service expenditures. A test of the moderating effect of the customers' satisfaction with their own co-creation performance on satisfaction with the service company and on service expenditures suggests that those customers who are satisfied with their co-creation activities spend more on their travel arrangements, but that they are less satisfied with the company. Important implications for co-creation theory and practice in high-contact service industries can be derived.     

Listen to their heart: Why does active listening enhance customer satisfaction after a service failure?

A service employee’s active listening plays a crucial role in restoring a damaged customer relationship. However, previous studies reveal little about how listening to customer complaints operates in recovering a service failure. The purpose of this research is to explore when and why the employee’s active listening has a positive influence on customer response. We define active listening as (1) listening to customers’ concerns before apologizing and (2) verbally acknowledging them. Using scenario-based experiments, we demonstrate that active listening improves customer satisfaction, which in turn increases tip size (Study 1). Moreover, we find that active listening fosters customers’ perceptions of preferential treatment, which lead to greater customer satisfaction (Study 2). Yet, such positive effects of active listening diminish when customers are unexpectedly offered a complimentary service such as a room upgrade. The implications for academic researchers and marketing managers are discussed.     

A multilevel investigation of the cascading effect of entrepreneurial leadership on employee creativity: Evidence from Chinese hospitality and tourism firms

This study aims to elucidate the cascading effect of entrepreneurial leadership on fostering employee creativity in hospitality and tourism firms. Drawing upon multiple theories (e.g., the affective events theory and conservation of resources theory) and utilizing a multilevel mediation model, this study predicts and examines the cross-level indirect relationship between entrepreneurial leadership and employee creativity, which is sequentially transmitted through employees’ surface acting and work-related flow. Based on a 2-wave longitudinal design, survey data were obtained from multiple sources consisting of 47 leaders and 352 employees in Chinese hospitality and tourism firms. Multilevel structural equation modeling (MSEM) analysis provides empirical support for the cross-level mediation model. This study is among the first to provide empirical evidence of the cross-level effect of entrepreneurial leadership on workplace creativity via surface acting and work-related flow in the service industry, which enriches the leadership literature in the tourism discipline.     

Are hospitality industry IPO stock returns predictable?

We examine the post-IPO excess stock returns of hospitality firms from 1996 to 2012 and find underperformance relative to the market on average. However, there are large differences in returns and some firms significantly outperform. We demonstrate that a substantial portion of this variation can be reliably predicted by utilising pre-IPO financial measures such as firm size, free cash flows, discretionary accruals, and Altman's Z. Our findings are potentially valuable to prospective hospitality IPO investors in selecting which stocks to buy and to hospitality firm managers in setting IPO issue prices.     

Predictors of Service Effort

ABSTRACT

Improving service quality will continue to be a vital goal for hospitality and tourism organizations in the new millennium. As service worker performance directly impacts customer's evaluation of quality, further investigation of methods of improving performance are necessary. Service effort is a construct that has received little attention in the literature, but may be a significant factor in linking employee attitudes and customer perceptions of service quality. This exploratory study tested three popular managerial constructs to determine the extent to which they predict service effort. Using data from 331 service workers from two cruise line operations organizations, motivation, organizational commitment and job satisfaction were regressed against service effort. Results indicate that organizational commitment was the greatest predictor of service effort, followed by motivation. One dimension of job satisfaction (satisfaction with company), failed to yield a significant relationship with service effort, while satisfaction with supervisor yielded a slightly negative coefficient. Implications for hospitality and tourism managers and organizations are discussed.     

Motivational drivers that fuel employees to champion the hospitality brand

Many hospitality organizations have recognized the significance of having strong brands in the marketplace. Given that customers’ brand experiences are greatly affected by frontline service employees, it is crucial that service employees are capable and motivated to transform brand promises into brand realities. This study seeks to build on the emerging Internal Brand Management (IBM) research, by examining employees’ internal drive to go above and beyond their formal job requirement to benefit the brand. Based on motivation theories and the empirical data from 202 hotel employees, we examined the impact of employees’ pro-brand motivation (an internal motivation that is engendered from extrinsic stimuli) and their intrinsic motivation to work on their brand performance. In particular, we identified two significant motivational drivers for employees’ pro-brand motivation namely, employee perceived brand meaningfulness and employee perceived brand value fit. Based on the synergy between employee pro-brand motivation and intrinsic motivation to work, we further proposed an Employee Brand Motivation Matrix reflecting four types of employee motivation that underpins the rationale for employee brand performance. Organizations can use this matrix as a diagnostic tool to segment their workforce, gaining a true appreciation for the extent to which their workforce is willing and able to champion the brand.