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International Journal of Management Vol. 22 No. 2 June 2005 285 Relationships among Internal Marketing, Employee Job Satisfaction and International Hotel Performance: An Empirical Study Ing-San Hwang National Taipei University, Taiwan Der-Jang Chi National Taipei University, Taiwan The concept of internal marketing employed in the service sector is crucial to excellent service provision and successful external marketing which calls for an exploration in details.
Taking this concept into account, this paperptesents an empirical study on the correlations among internal marketing, employee job satisfaction and organizational performance with respect to international hotels in Taiwan. Findings show significant correlations among internal marketing, employee job satisfaction and performance of international hotels. These findings can provide a basis for futurv academic research of related topics as well as a solid reference for business owners and managers in the service sector I. Introduction Several experts (Thomas. 1978; Gronroos. 1990; Kotler. 000) have consecutively proposed a conceptual framework of service marketing known as the “Service Triangle” to incorporate the concepts of Internal Marketing, External Marketing and Interaction Marketing into a more intensive concept, in developing these marketing strategies, attention shall be given to conventional marketing strategies with the aim of providing services that are unique and acceptable to the external customers to win their loyalty. Attention shall also be given to the value of employees, with the goal of determining them to be a contributory to the overall “organizational capital” of the business.
Kotler (2(XX)) explains that internal marketing is more important than conventional external marketing. Further, Greene et al. , (1994) point out that internal marketing is the key to excellent service and to successful external marketing. These two views justify the exploration ofthe marketing concept, i. e.. Internal Marketing, within a business organization in the service sector. Research reveals that the concept and the action of an enterprise’s internal marketing upgrade employee job satisfaction (Tansuhaj et al. , 1991; Rafig and Ahmed. 000; Conduit and Mavondo, 2001). and in turn improve the organizational performance of the enterprise (Pfeffer and Veiga, 1999; Neheker et al. , 2001). This study presents an empirical exploration into the correlations among internal marketing, employee job satisfaction, and organizational performance of the international hotels in Taiwan, and thus to contribute to practical implementation ofthe correlations and additional academic research in the future. 286 International Journal of Management Vol. 22 No. 2 June 2005 11. Literature Review 1.
Implication of Internal Marketing Previous research about internal marketing can be divided into four categories: (1) Treating the Employee as an Internal Customer. Many experts (Sasser and Arbeit, 1976; Berry, 1981; Greene et al.. l994:Cahill, 1996; Hultet al. , 2000) believe that the task of internal marketing is to view the jobs as products; and employees as customers. (2) Developing Employee Customer Orientated Behavior. Piercy and Morgan (1991) address the application of marketing skill in the internal marketing of a company.
They argue that the company should adopt a framework similar to that of its external marketing and develop a marketing program aimed at the internal market. The goal would be to stimulate service awareness and customer oriented behavior. Many other experts share the same viewpoint (Gronroos, 1985;Heskett, l987;Gronroos, 1994; Plefferand Veiga, 1999: Conduit and Mavondo, 2001). (3) Human Resource Management (HRM) Orientation. According to Joseph (1996), internal marketing should be incorporated with HRM theories, technologies and principles.
Cooper and Cronin (2000) believe that internal marketing is comprised of efforts within organizations to train and encourage employees to provide better services. (4) Internal Exchange. Baketal. ( 1994) propose that allowing efficient operation of an exchange relationship between the organization and its employees is the first move to arrive at the organization’s objectives in the external market. Cahill (1996), Pitt and Foreman (1999) share similar comments. 2. Measuring Job Satisfaction Job Description Index (JDI) (Smith et al. 1969) is the most frequently quoted scale when measuring job satisfaction. The scale includes areas like type of job, remuneration, promotion, superior management, and joh associates. However, Spector (1985) has identified some problems with JDI when it is applied to employees from the service sector. Thus Spector developed the Job Satisfaction Survey (JSS) that essentially bringing more to the forefront aspects of satisfaction of remuneration, promotion, management styles and relations, welfare, incentive, operation procedures, associate relationships, job description, and communication. 3.
Measuring an Organization’s Performance Comparatively comprehensive viewpoints on measuring performance of an organization have been introduced since the 197O’s. Indices suggested by Campbell (1977) include general performance, productivity, efficiency, profit, quality, absenteeism, job satisfaction, motivation, morality, organizational growth, and market share. By referring to documentation complied on performance of an organization, Venkatraman and Ramanujam (1986) classify the variables in measuring that performance into three groups: (I) Financial performance (sales growth, profitability andearnings per share).
International Journal of Management Vol. 22 No. 2 June 2005 287 (2) Operational performance (market share product quality, innovation and intrt)duction and new products, marketing effectiveness, added manufacturing value, and technical efficiency); and (3) Organizational performance (inclusive of those two performances described above, consideration of stakeboiders, resolution of various conflicting objectives in a mutual mission, and satisfaction of the objectives of stakeholders).
In research of performance of an organization relates also to the field of general management face certain problems, including the absence of a consistent standard for performance comparison, difficulties in a confinnation of tbe consequences between the topic of study and tbe objective fmanciai pertortnance figures, the failure to access correct fmanciai information, free of window dressing or manipulation by surplus. Some experts propose the use of subjective performance standards (e. g.. the subjective recognition or feeling of those interviewed) as the index of scale (Covin et al. , 1990; Delaney and Huselid, 1996).
Bjoknian and Xlucheng (20(X)), on the other hand, reason that tbe advantages overcome the negatives in using tbe subjective performance for measurement. III. Methodology 1. Conceptual Framework of Study Inline with the literature review and the purpose of study as described at the start of the paper, the conceptual framework of tbe study was configured as illustrated in Fig. I. 2. Hypotheses of Study. Tbe following hypotheses were created for this study based on the conceptual framework for tbe study and literature review: HI: H2: H3: Internal marketing has positive impacts on employee job satisfaction.
Employee job satisfaction has positive impacts on organizational performance. Internal marketing has positive impacts on organizational performance. 3. Design of Survey Questionnaires were used in this study to survey subjects selected from employees vv-orking at international hotels in Taiwan with the goal of acquiring empirical research data. Fig. I. Conceptual Framework Internal Marketing Employee Job Satisfaction Organizational Performance 288 International Journal of Management Vol. 22 No. 2 June 2005 (I) Design of Questionnaires (i) Internal Marketing.
Items to measure this topic were developed essentially on the questionnaires proposed by Wu (2001) and modified pursuant to the interpretations given by Gronroos (1990). To comply wilh the management practices of international tourism industry, four senior managers from international hotels, and two experts specializing in that field, were invited for discussion and modification of the questionnaires. The end result was to delete three of the original twenty-nine (29) questions. The pretest results for the questionnaires indicated good content validity (market survey a =0. 65. arket segregation a=0. 83, internal product portfolio a=0. 73, internal trading price a=0. 80, promotion a=0. 92, and communication a=0. 75). (ii) Job Satisfaction. With hotel management practices as the guiding criteria, eleven (II) questions were reduced to ten (10) questions by referring to by using the scale items of job satisfaction proposed by Spector (1985) and Smith et ai. (1969). and communts from experts. This modification was followed with a further subtraction of one question found to have a factor loading below 0. 5, leaving the questionnaire with nine (9) questions after the pretest.
All nine questions were found to achieve the significant level needed, using the double test of confirmatory factory analysis and reliability analysis (fair remuneration a=0. 75, job conditions a=0. 74, and general concept (iii) Organizational Performance. The scale criteria of organizational performance set forth by Venkatraman and Ramanujam (1986) and Campbell (1977) were utilized, together with comments from experts, to modify the number of questions to seventeen (17). This modification was followed with a subtraction of one question found to have a factor loadmg below 0. 5 through pretest.
Thus the numher of questions was reduced down to sixteen (16) questions, all found t to have a significant level after surviving the double test of confirmatory factory analysis and reliability analysis (financial performance a=0. 78, service performance a=0. 65. and internal performance a=0. 85). (2) Subjects of Study. A total of sixty-one international hotels in Taiwan were utilized for the study. Eight hundred and fifty (850) copies of study questionnaires were mailed pro rata, depending on the relative ratio of the total number of employees (1:20). (3) Return of Questionnaires.
Questionnaires were mailed, commencing mid January of 2003 and continuing until the end of January 2003. Three hundred and ninety-eight (398) copies were returned by the end of May 2003. Three hundred and fifty-nine (359) returned questionnaires were available, producing a valid return rate of 47%. IV. Analysis of Empirical Results I. Linear Structure Hypothetical Model. Based on the framework of the questionnaires, each sub-construct Is weighted to solve the mean value as the scale variable of the concept, and further to avail the linear structure hypothetical model as illustrated in Figure 2.
International Journal of Management Vol. 22 No. 2 June 2005 289 2. Model Analysis and Study Hypotheses Test Results. LISREL analysis is used in this study to examine the correlations among internal marketing, employee job satisfaction and organizational performance (with empirical results illustrated in Figure 3) of international hotels. The degree of positive fitness or good of fitness of the hypothetical model and the test results of each hypothesis is listed in Table 1. Statistical results indicate that the degree of fitness achieves an excellent level (GFI=0. 7 approaching 1; and CFI=0. 97, also approaching I). Three hypotheses have been positively verified (reaching the statistical significant level). V. Conclusions and Proposals The following conclusions and proposals are presented based the statistical analysis of the empirical results ofthe questionnaire study as those results relate to the hypotheses presented in this paper. Fig. 2. Hypothetical Model of Correlations among Internal Marketing, Employee Job Satisfaction and Organizational Performance Market Survey (X|) 4
Fair Remuneration (Y,) Market Segregation (X. , f Employee Job / Job Conditions ( Satisfaction (TI. ) ???*’ A Product Portfolio (X,) Trading Price (X,) Internal Marketing (||) J ‘^???V^ I I Performance (T]J K General Concept Financial Performance (Y^) Promotion (X,) Service Performance (Y,) Communication Internal Performance (Y^) 290 International Journal of Management Vol. 22 No. 2 June 2005 1. Results and Discussions (1) Importance of Addressing Internal Marketing in the Service Sector. According to Lovelock (1996). he service sector features highly intensive contact with customers, and the quality of service achieved relies entirely on the impression the customers have ofthe service person (employee) delivered during the course of providing service (Zeithamal and Bitner. 2000). Therefore, experts believe that the organizational Table 1. Good of Fitness for the Hypothetical Model & Hypotheses Test Results Analysis Hypothesis Internal marketing -??? employee job satisfaction Internal marketing — organizational performance Employee job satisfaction ^ organizational performance *:p