Abstract.

The study aims to compare the levels of supportive leadership behavior between private and public companies in the service industry and establish whether there is a corresponding impact on the performance of the firms. The study will be a quantitative survey that will involve the collection of data using a questionnaire as well as an analysis of financial reports of the selected firms and use Microsoft Excel data Analysis tool pack to develop a regression model. In the findings, it is expected that companies in the private sector will have higher performance as compared to those in the public sector. It is also expected that companies with a higher level of supportive leadership practices will have a higher level of employee satisfaction, and higher financial performance.

Background of the Study

Several studies have been conducted to establish the impact of supportive leadership behavior on employee satisfaction and job performance. The conclusions derived from the studies should specify how the applicability differs from one industry to another, and how the inference varies between the private and public sector.  It is worth noting that the work environment in the service industry differs substantially from the work environment in other industries. The work environment in the service industry is more susceptible to quick-paced changes as compared to the work environment in other industries (Bourini, et al., 2019). As such, employee management techniques that may be effective for use by managers in the manufacturing firms do not necessarily produce similar results in banks, or any other firm in the service industry. While employees in industrial manufacturing firms often deal with machines and tools, their counterparts in the service sector deal directly with clients, who can read their moods and respond accordingly. As such, employee psychological and emotional factors that are affected by the working environment are easily noticeable to the clients in the service industry than other industries. For instance, a study by Al-Zoubi and Alomari (2017) revealed that unsatisfied employees provide low-quality services, and the impact of such low-quality services is evident in the tourism and hospitality industries. These two industries involve a direct engagement between employees and clients, and that could be the reason why the impact is noticeable easily.

Firms in the service industry should maintain high levels of employee satisfaction because there is a positive relationship between job satisfaction and customer retention, which then affects firm value. It is reported that satisfied employees are internally motivated and willing to support customers, respond appropriately to customer queries, and meet the customers’ needs satisfactorily (Bourini, et al., 2019). This implies that firms can enhance client satisfaction through employee satisfaction. Firms in the service industry are increasingly recognizing that there is a significant positive relationship between firm value and the employee-customer relationship (Sohail & Jang, 2017).  It is reported that a satisfied customer is highly likely to become a repeat customer, helping the company to maintain a market share and improve shareholder value (Sohail & Jang, 2017). Companies can enhance employee satisfaction and morale for work by encouraging supportive leadership behavior. This study will compare the levels of supportive leadership behavior between private and public companies in the service industry, and establish whether there is a corresponding impact on the performance of the firms.  

Statement of the Problem

The question of whether organizations that provide essential services should be private or owned by the government is a matter that has triggered heated debates for many years (Lyon, et al., 2017). There is a widespread belief that private companies perform better than their public counterparts because of the difference in leadership styles and external influence. Over the past few decades, several companies that provide essential services such as water, electricity, and telecommunications have been privatized in some countries across the world. For instance, the UK privatized water, gas, electricity, and telecommunication services (Lyon, et al., 2017). Similarly, the insurance and banking services in France were shifted to private ownership (Lyon, et al., 2017). This trend calls for a need to establish the differences in the key areas of management between private and public firms, focusing on the elements that are associated with employee satisfaction and productivity.

Quite often, managers of public corporations are forced to adopt burdensome policies, yet they add insignificant value to the performance of the firm (Kaufmann & Tummers, 2017). Consequently, there is a significant decline in job involvement, job satisfaction, and commitment of employees (Kaufmann & Tummers, 2017). This assertion implies that there is an inadequate level of supportive leadership among public companies because of the red tape associated with the environment in which they operate. Therefore, managers are directed by external supervisors as they also direct their juniors, creating a directive leadership behavior. As such, there is a need to evaluate the level of supportive leadership practices among public corporations and private corporations in the service industry, and determine whether there are significant differences. Again, it is essential to determine whether the identified differences in the level of supportive leadership behavior account for the differences in firm performance.

Research Questions

·         Is there a significant difference in the level of supportive leadership behavior between private firms and public firms in the service industry?