The strongest link: service-profit chain as a conduit for enabling entrepreneurial orientation and multidimensional service performance

Abstract

The paucity of literature to integrate the duality of customer and employee strategic orientations of an organization with its service operational inputs for achieving superior returns has provided an impetus to examine the significance of internal processes and behaviours as a mediating mechanism in the entrepreneurial orientation–firm performance relationship. Grounded in dynamic capabilities theory, in this article, we aim to extend the previous literature on operations management by investigating the role of the service-profit chain (SPC) in relating entrepreneurial orientation with performance—new products, subscribers, and revenues—in the telecom service industry. The study draws on archival performance data provided by the Telecom Regulatory Authority of India, combined with the primary data collected from 179 managers working in private telecom organizations in India. The findings of our study show that entrepreneurial orientation positively influences new product success only if internal and external SPCs are strong. However, entrepreneurial orientation is negatively and nonsignificant related to gross revenue. Subscriber base, another important factor that helps in establishing the positive and significant link between entrepreneurial orientation and gross revenue, is higher under stronger internal SPC. Thus, the managers must emphasize more on employee job conditions to pursue strong customer orientation in improving service operations. The findings have implications for strategic and operations’ considerations in a service context.