The Loyalty Chain: Linking Employee Commitment, Customer Retention, and Financial Sustainability
DOI:
https://doi.org/10.66635/3dp90485Keywords:
Employee Commitment, Customer Retention, Financial Sustainability, Social Exchange Theory, Service-Profit Chain, PLS-SEM, ADANCOAbstract
Employee commitment has increasingly been recognized as a strategic organizational resource that enhances customer relationships and long-term business performance. Drawing on Social Exchange Theory and the Service-Profit Chain framework, this study examines the direct and indirect relationships among Employee Commitment (EC), Customer Retention (CR), and Financial Sustainability (FS), with customer retention serving as a mediating variable. A quantitative, cross-sectional research design was adopted, and data were collected using a structured questionnaire with validated measurement scales. The proposed model was analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in ADANCO 2.4. The measurement model demonstrated excellent reliability and validity, while the structural model exhibited substantial explanatory power (R² = 0.637 for customer retention and R² = 0.747 for financial sustainability). The results revealed that employee commitment significantly influences customer retention (β = 0.798, p < 0.001) and financial sustainability (β = 0.194, p < 0.01), while customer retention strongly predicts financial sustainability (β = 0.701, p < 0.001). Mediation analysis confirmed that customer retention partially mediates the relationship between employee commitment and financial sustainability. The findings highlight the strategic importance of fostering committed employees to strengthen customer retention and achieve sustainable financial performance, offering valuable theoretical and managerial implications for organizations operating in competitive business environments.
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