The impact of quality practices on customer satisfaction and business results: product versus service organizations

Research on the differences in customer satisfaction between product and service organizations has focused on an output perspective, or how customers evaluate performance. This study takes this research inside organizations to analyze and investigate how key internal quality practices of product versus service organizations (employee management, process orientation, and customer orientation) influence customer satisfaction and business results. Using a national quality survey from 482 companies in Sweden, our analysis shows that for product organizations, internal quality practices influence customer satisfaction and business results primarily through an organization's customer orientation. For service organizations, both customer and process orientation impact customers directly, and employee management has a direct impact on business results. The research also supports the claim that organizations with a quality foundation are in a better position to adopt a customer orientation.