Market competitiveness and quality performance in high‐contact service industries

Abstract

Purpose

The purpose of this paper is to explore conceptually and examine empirically the impact of market competitiveness on employee satisfaction, service quality, and customer satisfaction in high‐contact service industries.

Design/methodology/approach

An empirical study was conducted in high‐contact service shops in Hong Kong. Dyadic data were collected from 210 high‐contact service shops and were analysed using structural equation modelling.

Findings

The results confirm that market competitiveness has a direct impact on service quality, not employee satisfaction. The findings also reveal that service quality affects customer satisfaction, which in turn leads to employee satisfaction, forming a “quality‐customer satisfaction‐employee satisfaction cycle”.

Practical implications

The results recommend that firms take a long‐term perspective towards investment in understanding the competitiveness of the market. Such an understanding helps managers identify and implement appropriate quality‐improvement activities, such as establishing quality standards, providing appropriate job description to service employees, and adopting a customer‐oriented strategy, leading to enhanced customer satisfaction and employee satisfaction in a cyclic manner.

Originality/value

This study contributes to a detailed understanding of how service firms should strategically respond to market competitiveness.

Citation

Yee, R.W.Y., Yeung, A.C.L., Edwin Cheng, T.C. and Lee, P.K.C. (2013), "Market competitiveness and quality performance in high‐contact service industries", Industrial Management & Data Systems, Vol. 113 No. 4, pp. 573-588. https://doi.org/10.1108/02635571311322801