The impact of employee satisfaction and service quality on perceived firm's performance in high contact service industry of Pakistan

This paper presents a model to establish the relationships amongst the employee satisfaction, service quality, customer satisfaction, customer loyalty and firm performance in service sector of Pakistan. We developed a research model in the high contact service industry and tested empirically by conducting a survey of high-contact service industries including Telecom, Banking, Healthcare, Hotel, Fashion and Universities from major cities of Pakistan. Using structural equation modeling (SEM), it is observed that employee satisfaction, customer satisfaction and customer loyalty are significantly related to firm's performance while surprisingly employees in the service industry of Pakistan consider service quality insignificant for firm performance, which may be one of the decisive causes of Pakistan's less participation in the world service market. This finding supports the generalizability of the observed relationships in a range of operating contexts.