The service-profit chain: A review and extension

Abstract

This paper presents a review and suggests an extension of studies on the service-profit chain (S-PC), focusing on the paradoxical relationships among the key S-PC constructs of employee satisfaction, customer loyalty, and profitability. Our review is broad in that it encompasses prior studies in multi-disciplines. We found that many research issues on the S-PC, such as research design, moderating factors, and linearity of the causal relationships had not been addressed in the extant literature. We propose a research model grounded in social exchange theory and the resource-based view of the firm to examine the propositions of the S-PC. The aims of the proposed model are to investigate the causal ordering of the underlying constructs, examine the moderating effects on their linkages, and explore the characteristics of their relationships. This paper contributes to the literature of operations management (OM) and service management by providing important insights and research directions for the S-PC.

Keywords:

• loyalty
• profitability
• satisfaction
• service-profit chain
• service quality

Acknowledgements

This study was supported in part by the Hong Kong Polytechnic University under grant number G-YF46.