Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/16646
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Title: An empirical study of employee loyalty, service quality and firm performance in the service industry
Authors: Yee, RWY 
Yeung, ACL 
Cheng, TCE 
Issue Date: Mar-2010
Source: International journal of production economics, Mar. 2010, v. 124, no. 1, p. 109-120
Abstract: Taking an operational perspective on the relations between employee loyalty and business performance, we examine the relationships among employee loyalty, service quality, customer satisfaction, customer loyalty and firm profitability, and the contextual factors influencing these relationships. We developed a research model grounded in the service-profit chain notion of Heskett et al. (1994) and empirically tested the model by conducting a survey of 210 high-contact service shops in Hong Kong. Using structural equation modeling (SEM), we observed that employee loyalty is significantly related to service quality, which in turn impacts customer satisfaction and customer loyalty, ultimately leading to firm profitability in high-contact service industries. Using multiple-group analysis of SEM, we found that the effect of employee loyalty on firm profitability through service quality, customer satisfaction and customer loyalty is robust under different scenarios of employee-customer contact level, market competitiveness, and switching cost in the sampled shops. This finding supports the generalizability of the observed relationships in various operating contexts.
Keywords: Customer loyalty
Customer satisfaction
Employee loyalty
Profitability
Service quality
Publisher: Elsevier
Journal: International journal of production economics 
ISSN: 0925-5273
DOI: 10.1016/j.ijpe.2009.10.015
Rights: © 2009 Published by Elsevier B.V.
© 2009. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/.
The following publication Yee, R. W. Y., Yeung, A. C. L., & Edwin Cheng, T. C. (2010). An empirical study of employee loyalty, service quality and firm performance in the service industry. International Journal of Production Economics, 124(1), 109-120 is available at https://dx.doi.org/10.1016/j.ijpe.2009.10.015.
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