Year of Publication

2009

Degree Name

Doctor of Philosophy (PhD)

Document Type

Dissertation

College

Business and Economics

Department

Business Administration

First Advisor

Dr. Scott W. Kelley

Abstract

Managers and researchers have become increasingly interested in linking marketing activities to firm financial performance. That is, they desire to make marketing more financially accountable. One approach to achieving this goal has been to “valuate” customers to determine their degrees of profitability over the lifetime of their relationships with firms. However, traditional customer valuation techniques are largely based on quantitative factors and do not account for softer measures such as a customer’s behavior and performance both during and after service encounters.

Additionally, while customer profitability is commonly valuated, employees are not generally assessed in this manner in profit linkage frameworks. This indicates that employee factors have not been deemed to have an equivalent, direct impact on the bottom line. Instead, if included at all, employee factors have mainly been positioned as antecedents to customer factors in past linkage models. Because both customers and employees play essential roles in determining the success of service encounters, both customer and employee factors should be fully considered before profitability is determined.

In this dissertation, an innovative theoretical model is presented in which past profit linkage research is extended to include nonfinancial considerations. This research merges traditional financial valuation methods with nonfinancial metrics to assess organizational performance. Furthermore, a conceptually parallel framework is developed in which both employee and customer factors are hypothesized as links through which service encounter dynamics can be connected to firm financial performance. This research examines the linkages between service interactions, customer and employee outcomes, and overall financial performance.

Within the contexts of two studies, the overall structural model is dissected into comparable performance models and examined within the retail banking and computer services industries. The overall empirical findings provide some evidence of a positive flow of interconnected relationships between service encounter dynamics and firm financial performance. Accordingly, this research presents some indication of the importance of service encounters as antecedents to outcome behaviors that have critical financial consequences.

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