THE DIRECT AND INDIRECT EFFECTS OF CUSTOMER FOCUS ON PERFORMANCE IN PUBLIC FIRMS

It has been demonstrated within the literature that the practice of customer focus is significantly associated with customer satisfaction. However, the possibility that the construct of customer focus may affect other relevant measures remains underexplored. As such, this paper discusses the effect that customer focus has on organizational performance, operating upon the premise that customer satisfaction is an end result of other relevant performance measures such as employee satisfaction, innovation, and cost benefits. Data were collected from 205 managers within the public service sector, all of whom were directly involved with the process of customer focus. The results of this study revealed that customer focus is a significant predictor of employee satisfaction, innovation, and customer satisfaction. The structural model developed also indicated that there is an indirect relationship between customer focus and customer satisfaction, as determined by employee satisfaction. In addition, the effect of customer focus on innovation is mediated by employee satisfaction. Therefore, this model implies that the practice of customer focus may enable public firms to increase their levels of performance.