Investigating the mediating role of service innovation in firm performance: An empirical research

Abstract

The aim of this paper is to investigate the relationship between total quality management (TQM), service innovation and firm performance in the Pakistan’s service industry. An empirical survey was performed and there were 190 participants from financial service firms in Pakistan. Regression analysis was employed in this study to investigate the tri-dimensional relationship between TQM, service innovation and firm performance. In the context of financial firms, this research examines how TQM practices adopted and managed to boost service innovation and whether and how TQM practices is going to influence the firm performance through the mediating role of service innovation. A research framework and the related hypotheses are suggested. Direct and indirect impact of each construct of TQM practices on organizational performance was determined. Data analysis discloses that, extent of TQM implementation has a positive and significant influence on service innovation as well as on organizational performance. Furthermore, a positive but a weak relationship was observed between service innovation and organizational performance. The direct relationship between TQM and organizational performance outperforms the indirect relationship of service innovation and organizational performance. It has contributed in the sense that past researchers have not considered the tri-dimensional relationship between TQM, service innovation and firm performance.