Impact of total quality services on financial performance: role of service profit chain

Abstract

Total quality service (TQS) has a great potential to address quality problems in a wide range of industries and improve organisational performance. The principles of total service quality allow the effective management of service organisations [Ooi, K. B., Cheah, W. C., Lin, B., & Teh, P. L. (2012). Total quality management practices and knowledge sharing: An empirical study of Malaysia’s manufacturing organisations. Asia Pacific Journal of Management, 29(1), 59–78] and are one of the most important factors in attaining business excellence [Dahlgaard-Park, S. M. (2011). The quality movement: Where are you going? Total Quality Management, 22(5), 493–516]. The purpose of the study is to examine the impact of TQSs on internal service quality (ISQ) and its impact on employee satisfaction. Further, the study examined the effect of employee satisfaction on external service quality (ESQ) through employee loyalty and employee commitment. In addition, the impact of ESQ on customer satisfaction and the effect of customer satisfaction on financial performance have also been examined. Data were collected from the automobile showrooms/service stations. A total of 85 executives, 380 employees and 289 customers were contacted from Jammu Province (J&K, North India). Exploratory factor analysis, confirmatory factor analysis and structural equation modelling techniques have been used to study the proposed relationships. The findings revealed a positive and significant impact on the direct and indirect structural relationship between TQS, ISQ, employee satisfaction, employee commitment, employee loyalty, ESQ, customer satisfaction and financial performance. Implications and limitations of the study have also been discussed.