An empirical testing of the Service Profit Chain

The service profit chain presents managers a unique opportunity to improve levels of employee and customer satisfaction, profitably. However despite its adoption by managers, tests of the service profit chain have largely been limited to case research and empirical studies of specific links and components. Although researchers have made progress towards understanding the chain, rounds of verification and elaboration must follow theory building. This paper reports the results of an empirical study examining the service profit chain in its entirety based on a research instrument designed specifically for the task at hand. Drawing on a large sample containing customer perceptions, employee points of view and financial figures, our structural equation modeling demonstrates that validity of a managerial model, represented by the service profit chain. This labor of replication and extension bears meaningful fruit. Specifically, each fundamental link of the chain holds under rigorous scrutiny and in the hypothesized direction. Relevant to managers and the academia alike, our findings indicate that fostering employee satisfaction throughout the organization leads to increased customer satisfaction and loyalty, and ultimately, to augmented levels of profitability.