Quality of work life and performance – An ad hoc investigation of two key elements in the service profit chain model

Abstract

Service profit chain is a well‐received model to explain the sustainable competitiveness of many service organizations. The model attributes a service organization’s financial and market performance to its relationships with its customers and employees. According to the service profit chain, internal service quality serves the foundation of the model and it ignites a chain effect leading to an organization’s growth and profitability in the end. The purpose of this study is to provide an ad hoc analysis of two key elements of the service profit chain. Specifically, this research explores the direct linkage between performance in growth and profitability and quality of work life, which is a proxy for internal service quality in the service profit chain model. The performance of companies with a reputation of high quality of work life were contrasted to a control group of S&P 500 companies using COMPUSTAT data.