There are few empirical studies on the economics of quality, and case studies and anecdotes dominate current research. This paper proposes that quality requires resources (input) and that quality has positive effects on economic performance (output). The study is based on quality ratings from 400,000 customers and detailed accounting information from more than 500 hotels. It demonstrates both that quality has positive effects on the hotels' economic performance and that superior quality requires economic resources.
AakerDavid A.JacobsenRobert (1994), ‘The financial information content of perceived quality’, Journal of Marketing Research, Vol 31, May, pp 191–201.
2.
Van AckereAnnWarrenKimLarsenErik (1997), ‘Maintaining service quality under pressure from investors: A system dynamic model as a hands-on learning tool’, European Management Journal, Vol 15, No 2, April.
3.
AndersonEugene W.FornellClaes (2000), ‘The customer satisfaction index as a leading indicator’, in SwartzTeresa A.IacobucciDawn (eds), Handbook of Service Marketing & Management, Sage, Thousand Oaks, CA, pp 255–267.
4.
BernhardtKenneth L.DonthuNaveenKennettPamela A. (2000), ‘A longitudinal analysis of satisfaction and profitability’, Journal of Business Research, Vol 47, No 2, pp 161–171.
5.
BowbrickPeter (1992), The Economics of Quality, Grades & Brands, Routledge, London and New York.
6.
BremsH. (1957), ‘Input–output coefficients as measures of product quality’, American Economic Review, Vol 47, pp 105–118.
7.
BuzzellRobertGaleB.T. (1987), The PIMS-Principles: Linking Strategy to Performance, The Free Press, New York.
8.
BuzzellRobert D.GaleB.T.SultanR.G.M. (1975), ‘Market share – a key to profitability’, Harvard Business Review, January–February, pp 54–73.
9.
CopelandTomCollerTimMurrinJack (1994), Valuation: Measuring and Managing the Value of Companies, University Edition, John Wiley & Sons, New York.
10.
CrosbyP.B. (1979), Quality is Free, McGraw-Hill, New York.
11.
DeightonJ. (1992), ‘The consumption of performance’, Journal of Consumer Research, Vol 19, December.
12.
DemingEdwards (1982), Quality, Productivity and Competitive Position, Centre for Advanced Engineering Study, MIT, Cambridge, MA.
13.
DorfmanR.SteinerP. O. (1954), ‘Optimal advertising and optimal quality’, American Economic Review, Vol 44, pp 826–836.
14.
DeSouzaGlenn (1989), ‘Now service firms must manage quality’, The Journal of Business Strategy, May/June, pp 21–25.
15.
DeSouzaGlennThompsonPhillip (1985), ‘Quality management and the CFO’, FE-Manual, January/February, pp 65–70 (PIMS study).
16.
GarretL.J.SilverM. (1973), Production Management Analysis, second edition, Harcourt Brace Jovanovich, New York.
17.
GarvinDavid A. (1988), Managing Quality: The Strategic and Competitive Edge, The Free Press, New York.
18.
GarvinDavid A. (1987), ‘Competing on the eight dimensions of quality’, Harvard Business Review, November–December, pp 101–109.
19.
GrilichesZiv (1971), Price Indices and Quality Change, Harvard University Press, Cambridge, MA.
20.
GummessonEvert (1988), ‘Service quality and product quality combined’, Review of Business, Vol 9, No 3, St John's University, New York, pp 14–19.
21.
HuLi-TseBentlerPeter M. (1998), ‘Cutoff criteria for fit indexes in covariance structure analysis: Conventional criteria versus new alternatives’, Structural Equation Modelling, Vol 6, No 1, pp 1–55.
22.
JuranJ.M.GrynaFrank M. (1982), Quality Planning and Analysis, Tata McGraw-Hill, New Delhi.
23.
KotlerPhilipFaheyLiamJatusripitakSomkid (1985), The New Competition, Prentice Hall, Englewood Cliffs, NJ.
24.
KordupleskiRayRustRoland T.ZahorikAnthony J. (1993). ‘Why improving quality doesn't improve quality’, California Management Review, Vol 35, Spring, pp 82–95.
25.
KrishnamurthiL.RajS.P. (1991), ‘An empirical analysis of the relationship between brand loyalty and consumer price elasticity’, Marketing Science, Vol 10, No 2, pp 172–183.
26.
LuchsRobert (1986), ‘Successful business compete on quality – not costs’, Long Range Planning, Vol 19, pp 12–17.
27.
LundvallD.M.JuranJ.M. (1974), ‘Quality costs’, in JuranJ.M., Quality Control Handbook, 3rd edition, McGraw-Hill, New York, p 149.
28.
ParasuramanA.ZeithamlValarieBerryLeonard L. (1985), ‘A conceptual model of service quality and its implication for further research’, Journal of Marketing, Vol 49, Fall, pp 41–51.
29.
PhillipsLynnChangDaeBuzzellRobert D. (1983), ‘Product quality, cost position, and business performance: A test of some key hypotheses’, Journal of Marketing, Vol 47, Spring, pp 26–43.
30.
PorterM.E. (1980), Competitive Strategy, The Free Press, New York.
31.
ReichheldFrederick F.SasserW. EarlJr. (1990), ‘Zero defections: Quality comes to services’, Harvard Business Review, Vol 68, September–October, pp 105–111.
32.
RiggsJ.L. (1981), Production Systems: Planning Analysis, and Control, 3rd edition, John Wiley, New York.
33.
RustRoland T.ZeithamlValarie A.LemonKatherine N. (2000), Driving Customer Equity, The Free Press, New York.
34.
RustRoland T.ZahorikJ.KeninghamTimothy L. (1995), ‘Return on quality (ROQ): Making service quality financially accountable’, Journal of Marketing, Vol 59, April, pp 58–70.
35.
SchoefflerSidneyBuzzellR.D.HeanyD.F. (1974) ‘Impact of strategic planning on profit performance’, Harvard Business Review, Vol 52, No 2, pp 137–145.
36.
SteenkampJan-Benedict (1989), Product Quality, Van Gorcum & Comp BV, Assen.
37.
TakamiyaMakoto (1979), Japanese Multinationals in Europe, Discussion Paper Series, Wissenschaftszentrum Berlin, International Institute of Management, September.
38.
TalleyDorsey J. (1991), Total Quality Management. Performance and Cost Measures: The Strategy for Economic Survival, ASQC Quality Press, Milwaukee, WI.
39.
TofflerAlvin (1980), The Third Wave, Bantam, New York.
40.
TroyeSigurd V.ØgaardTorvaldHenjesandInge Jan (1995), ‘The triple importance of service: An empirical model of service and product quality’, in BergadaàMichelle (ed), Marketing Today and for the 21st Century, Ecole Supérieure des Sciences Economiques et Commerciales, Cergy-Pontoise, pp 1135–1154.
41.
TroyeSigurd V. (1990), Markedsføring: Styring av kvalitet, Universitetsforlaget, Oslo.
42.
VenkatramanN.RamanujamVasudevan (1986), ‘Measurement of business performance in strategic research: A comparison of approaches’, Academy of Management Review, Vol 11, No 4, pp 801–814.
43.
ZaltmanGeraldPinsonChristianAngelmarReinhard (1973), Metatheory and Consumer Research, Druden, Hisdale, IL.
44.
ZeithamlValarie A.BitnerMarie Jo (1996) Service Marketing, McGraw-Hill, New York.
