Perceived service quality: Analyzing relationships among employees, customers, and financial performance

The purpose of this paper is to show how firms can enhance their service quality to increase customer satisfaction and thus financial performance? In answer to this question, four factors (i.e. employees, perceived service quality, customers, and financial performance) are critical to the success of service firms. The purpose of this research is to provide a research framework that examines relationships among employees, perceived service quality, customers, and financial performance.

This research develops valid and reliable instruments to measure employee training, a shared understanding, perceived service quality, customer satisfaction, and financial performance. Structural equation modelling is employed to test hypotheses following the research framework.

Drawing on a sample of 129 hotels, the results of this research show that employee training has an influence on perceived service quality. A shared understanding among employees plays a critical role in enhancing perceived service quality. In addition, customer satisfaction mediates between perceived service quality and financial performance.

This research illustrates that management may keep the consistency and reliability of perceived service quality by increasing the capability of employees through training and a shared understanding. In the literature, the relationship between perceived service quality and financial performance has shown a mixed picture; both positive and negative influences. This research provides empirical evidence that customer satisfaction mediates between perceived service quality and financial performance. This research may help service firms understand how the important elements (i.e. employees, customers, perceived service quality, and financial performance) interact to influence the overall performance.