Influence of leadership competency and organizational culture on responsiveness and performance of firms

Purpose – The purpose of this paper is to investigate the operations strategy of service firms (hotels) in order to determine whether the infrastructural aspects of their operational practices, i.e. leadership competency and organizational culture, would affect their responsiveness (as a cumulative capability) to their employees and customers and eventually their performance (increase in revenue). Design/methodology/approach – The approach takes the form of an empirical analysis of data (using structural equation modeling) obtained via a questionnaire survey involving 88 hotels of various ratings in Malaysia. Findings – The findings indicate that leadership competency and organizational culture have positive relationships with responsiveness. In addition, responsiveness has a positive relationship with hotel revenue. These findings imply that leadership competency and organizational culture are important factors for hotels to be responsive to their customers, and in turn responsiveness to customers would improve hotel revenue Research limitations/implications – Some limitations include those that come with cross‐sectional analysis, the use of perceptual measures, and low response rate. Practical implications – Hotel managers need not only to improve their leadership competency but also to instil an organizational culture that is supportive of their employees. These operations practices would make their hotel more responsive to customer needs, which in turn would help to improve their hotel performance. Originality/value – There are differences between this study and prior studies. Leadership competency was examined in the context of service operations practices where evidence was provided that leadership competency would affect cumulative capability of responsiveness of service firms. Organizational culture was viewed in the context of operations practices, where the finding implies that organizational culture practices, such as attentive listening to staff, giving reward and recognition for their performance, and taking care of their welfare, would lead to a positive effect on the ability of a hotel to be responsive toward their customer needs.