Unlocking Employee Performance Through Internal Marketing: A PLS-SEM Analysis of Organizational Commitment in Nepal's Service Industry

Abstract

Background: Employee performance is critical to service organizations, where employee attitudes and organizational support can directly shape service delivery. Internal marketing practices such as empowerment, rewards, supportive supervisor relationships, and career opportunities can strengthen organizational commitment and enhance employee performance. However, limited evidence exists on these relationships in Nepal’s service industry, particularly regarding the mediating role of organizational commitment.

Purpose: This study investigates the impact of internal marketing practices on job performance, incorporating organizational commitment as a mediating variable. Specifically, it aims to examine the factors of internal marketing influencing job performance in the service industry, identify the challenges faced by employees, and assess managerial solutions to address these challenges.

Design/methodology/approach: Grounded in Social Exchange Theory, an explanatory research design was used to collect data from 391 respondents in Kathmandu Valley's service industry through purposive sampling, and the data were analyzed using PLS-SEM in Smart PLS 4.0.

Findings: Results show that empowerment (β = 0.247, p = 0.000), reward (β = 0.225, p = 0.001), relationship with supervisors (β = 0.275, p = 0.000), and internal promotion (β = 0.144, p = 0.005) significantly predict organizational commitment, which in turn strongly predicts job performance (β = 0.730, p = 0.000), collectively explaining 72.9% of the variance in organizational commitment. Working environment did not significantly predict organizational commitment (β = 0.065, p = 0.253).

Conclusions: The study concludes that internal promotion, empowerment, relationship with supervisors, and reward play a crucial role in shaping organizational commitment, which subsequently drives job performance. Key challenges identified include work-life balance issues, communication gaps, unclear roles and responsibilities, lack of recognition and appreciation, and ineffective performance management, with regular communication, flexibility, and clearly defined roles emerging as the most favored solutions.