Over the past decades, the hospitality industry has been considered the most important driver of the travel industry worldwide. As the first service tourists require when they arrive at a destination, it has an important impact on travelers’ satisfaction and return intent (Haddioui & Jahidi, 2017). Vietnam’s tourism industry is experiencing significant growth, with an increasing influx of international and domestic tourists. Nevertheless, the rate of return visitors to renowned tourist destinations such as Sapa, Ha Long, Hue, Da Nang, and Hoi An remains notably low. These visitors constitute approximately 6 percent of total visitors, with up to 90 percent of international tourists visiting Vietnam for the first time. Likewise, among domestic tourists, 39 percent are visiting for the first time, 24 percent are returning, and only 13 percent are coming back for the third time. Tourists generally do not plan to revisit tourist destinations primarily due to the lack of quality products and entertainment services provided by hotels, which leaves customers dissatisfied and devoid of unique experiences. Additionally, to staff upscale hotels, high-quality human resources often must hire foreigners with diverse cultural backgrounds, resulting in challenges in interaction between leaders and employees. It ultimately leads to low business efficiency and competitiveness.

In a market economy characterized by increasingly intense competition, competitiveness within the hotel sector must emphasize enhancing performance through improved service quality and the pursuit of differentiation. With a growing focus on customer orientation, hotel managers are beginning to recognize holistic quality management as an approach that necessitates a positive organizational culture and management style transformation. This transformation entails providing services that align with the expectations of all employees through continuous improvement (Haddioui & Jahidi, 2017). In order to effectively address service restoration challenges and meet the demands posed by discerning customers, competitors, and globalization, numerous hospitality enterprises have allocated substantial resources to adopt and implement total quality management strategies (Demirbag et al., 2006). These strategies aim to achieve sustainable competitive advantages over rival firms (Powell, 1995), resolve customer issues, and shift customer perceptions from dissatisfaction to satisfaction. In the past, TQM was developed and identified as quality inspection, quality control, quality assurance, and TQM. Today, TQM is a comprehensive management method that combines Eastern and Western psychology and practices and three core management areas: process/operations management, human resource management, and strategy (Dahlgaard-Park et al., 2013).

Research on TQM has definitively demonstrated that it is extensively adopted and effectively implemented to enhance the performance of enterprises across nearly all sectors of the economy (Irfan & Kee, 2013). TQM also provides substantial advantages to organizations in achieving performance through streamlined operations, favorable financial outcomes, and heightened employee and customer satisfaction (Kongolo & Dlamini, 2014). While prior research has identified a correlation between TQM and performance within the service industry (Samat et al., 2006), the predominant focus of existing literature remains on investigations within the manufacturing sector (Kapuge & Smith, 2007). Consequently, service organizations must leverage TQM as a strategic instrument to enhance performance and service quality.

Located in Southeast Asia, Vietnam is ranked among the developing countries with the highest economic growth rates in the region (average 5.13 percent during 2020-2024) and ranked the 35th largest economy in the world measured by nominal gross domestic product (GDP) by International Monetary Fund. The top service sectors in Vietnam are tourism, accommodation, restaurants, retail, real estate, etc. The tourism and accommodation industry emerged as a crucial bright spot in Vietnam’s economy. With an abundant workforce, diverse natural resources, and unique cultural values, Vietnam is becoming an attractive investment destination for leading hotel and resort groups worldwide, namely Marriott International, Hilton Hotels and Resorts, etc. Foreign direct investment (FDI) is constantly coming to Vietnam. During 2021, Vietnam attracted 26 FDI projects in the accommodation service industry with a total capital of 170.59 million dollars. The rapid development of many multinational hotel groups in Vietnam has led to the strong growth of service sectors such as real estate and retail services, combined with domestic hotel enterprises’ integration into the global supply chain. From 2011-2021, many domestic enterprises started to build their quality management systems as a strategic weapon to improve competitiveness, demonstrating a strong commitment to service quality. They focus on internal issues such as process control, supplier selection, and final product/service inspection. Many enterprises have selected ISO 9001 as a starting point. However, they are pretty limited compared to developed countries and significantly lower than some Southeast Asian countries, such as Thailand and Indonesia. The certification in service organizations is especially low; only an average of 11.7 percent have already been certified. This disappointing number of certificated service organizations shows that, in fact, most enterprises gave crucial services, whereas the quality of provided services isn’t a critical priority.

The influence of TQM dimensions on employee and customer satisfaction warrants extensive investigation across both developed and developing nations, including Vietnam. Specifically, do TQM enhance the performance of hospitality enterprises in fostering employee and customer satisfaction in emerging countries, with particular emphasis on Vietnam? There are many similarities and differences in the market environment and management practices between Vietnam’s transitional economy and developed nations. These distinctions may give this study valuable insights for Vietnamese hospitality enterprises and other emerging economies. The main objective of this study is to address the gaps in existing literature regarding TQM dimensions by examining the current state of TQM implementation and its effects on employee and customer satisfaction within Vietnamese hospitality enterprises. The study used judgment sampling methods and Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis techniques to evaluate the data collected from questionnaires distributed to 106 hotels in Vietnam.

2.1. Total quality management in the hospitality industry

According to Flynn et al. (1994), TQM is viewed from a broader perspective as an integrated approach to achieving and sustaining high-quality output, involving all levels and functions of the organization to deliver high-quality products or services to customers. More recently, Demirbag et al. (2006) describe TQM as a management philosophy that aims to foster continuous improvement within the organization, with participation from all employees to achieve customer satisfaction by producing better, cheaper, faster, and safer products than competitors. Recently, researchers have considered TQM a multidimensional concept comprising soft TQM (e.g., small group problem solving, employee suggestions, task-related training for employees, etc.) and hard TQM (e.g., continuous improvement, process management, quality information, etc.) (Zeng et al., 2015).

For hospitality enterprises, TQM is vital for addressing the challenges of high technology, globalization, and market integration (Pereira-Moliner et al., 2012). TQM is the only method capable of enhancing service quality because it represents a continuous improvement process, utilizing customer feedback to more effectively and efficiently elevate service quality. Historically, various studies have employed TQM concepts to elucidate service quality within the service industry (Rust et al., 1995).

2.2. Employee satisfaction

Bouranta et al. (2019) argue that employee satisfaction is the psychological comfort derived from job evaluations or the perception that employees effectively perform their work and achieve work values. Permana et al. (2021) point out that employee satisfaction is a state of happiness, a pleasant feeling derived from evaluating one’s work or reflecting on one’s professional experience.

In summary, employee satisfaction refers to the positive feelings that arise after assessing the completed work or related tasks. Employees who are satisfied with the job evaluation results often express this satisfaction, making them more likely to achieve high efficiency in their work process and generally perform better than those dissatisfied with the job evaluation outcomes.

2.3. Customer satisfaction

Customer satisfaction is the feeling experienced after consumption, based on comparing perceived performance with initial expectations (Oliver, 1999). It represents a level of perception that arises from the difference between expected results and customer expectations (Saeed et al., 2021). Like employee satisfaction, customer satisfaction is essential for the hospitality industry (Amin & Aldakhil, 2017). It enables hotel firms to assess how customers perceive the service and the overall experience.

In the hospitality industry, Barsky and Nash (2003) argued that an essential strategy for hospitality businesses to achieve customer satisfaction is to recognize and anticipate customer needs while utilizing all means to fulfill them. In fact, without customer satisfaction, retaining customers and sustaining businesses becomes complicated. Therefore, customer satisfaction is a core factor in the success of the hotel industry, which can be achieved by meeting customer needs during their first visit to foster loyalty and encourage a return to the hotel (Poon & Low, 2005). Saeed et al. (2021) found that customer satisfaction relies on hospitality, accommodations, the quality of food and beverages, hotel amenities, entertainment, security and safety, service innovation, transportation, location, appearance, pricing, and the payment process. A recent study by Jang et al. (2018) also identified 30 important hotel attributes from the customer’s perspective, emphasizing that employee attributes positively impact customer satisfaction. From a quality management viewpoint, Wang et al. (2012) and Bouranta et al. (2017) regard customer satisfaction as the degree to which customers are satisfied with what is provided and how front-line employees deliver it.

2.4. Analytical framework and hypothesis development

The underlying theory establishes the analytical framework, specifically contingency theory. Contingency theory, developed by Lawrence and Lorch (1967), seeks to explain the expansion and success of organizations. From a management standpoint, contingency theory emphasizes the role and impact of situational factors on the operational effectiveness of organizations (Silvestro, 2001). Additionally, contingency theory is a lens for examining the relationships between TQM practices and organizational performance (Sila, 2007; Jayaram et al., 2014). This approach asserts the significant influence of situational factors on TQM practices, employee outcomes, and performance (Yazdani, 2022). This study discusses the effectiveness of TQM dimensions in achieving superior business performance, including employee and customer satisfaction.

Numerous studies highlight the significant impact of TQM practices on the operational efficiency of service enterprises (Talib & Rahman, 2013). However, each study identifies different key success factors of TQM (Bouranta et al., 2019; Amin & Aldakhil, 2014; Bouranta et al., 2017; Talib & Rahman, 2013; Lenka et al., 2010; Bach, 2016; Yeng et al., 2018; Al-Ababneh, 2021). Based on a thorough evaluation of both theory and research findings domestically and internationally, the author proposes five dimensions of TQM by integrating elements of hard and soft TQM as follows:

Leadership exemplifies the active involvement of business leaders in conveying their dedication to Total Quality Management (TQM), thereby ensuring the seamless integration of TQM principles into organizational operations, promoting innovation, and augmenting the organization's operational efficiency. Yeng et al. (2018) emphasized that the leadership style is paramount for hotel managers, contributing to employee and customer satisfaction while enhancing financial performance. In light of this foundation, the following hypothesis is hereby proposed:

H1: Leadership will be positively associated with employee satisfaction.

Human resources constitute essential assets within any organization (Nguyen & Uong, 2023). They assume a pivotal role in the operations of hotels, significantly contributing to enhancing quality and performance (Sunil et al., 2021). Consequently, human resource management activities are strategically important, offering long-term value to the hotel sector (Claver et al., 2006). The TQM framework for human resource management encompasses empowerment, training, recruitment processes, and safety practices. Through efficacious human resource management, employees can augment their professional competencies, job satisfaction, and long-term commitment to the organization (Haynes & Fryer, 2000). Furthermore, the human resource management process assists employees in orienting themselves towards customer service, thus fostering an understanding of the nature of service work within the hospitality industry. Therefore, human resource management is crucial in enhancing hotel performance (Chand, 2010). In light of the arguments mentioned above, the following hypothesis may be proposed:

H2: Human resource management will be positively associated with employee satisfaction.

Customer orientation: Business orientation posits that customer trust and satisfaction are fundamental factors for organizations in the marketplace to uphold a competitive advantage. Bouranta et al. (2019) assert that a customer-oriented approach is imperative, as enterprises within the hospitality sector must adopt a customer-centric perspective to comprehend their desires, needs, and expectations, thus delivering the most suitable services tailored to the customer. When a hotel genuinely commits to a customer-oriented philosophy, it facilitates customer satisfaction, subsequently fostering employee satisfaction. In light of the arguments above, the following hypothesis can be proposed:

H3: Customer will be positively associated with employee satisfaction.

Strategy denotes the course of action undertaken by the hospitality industry to attain its objectives (Sunil et al., 2021). Selecting an appropriate strategy is imperative for the successful operation of hotels. In TQM, strategy is vital in fulfilling hotel objectives and enhancing overall performance (Cukovic et al., 2003). Researchers’ findings indicate that strategic planning significantly influences hotel enterprises’ performance (Bouranta et al., 2017). Based on the preceding argument, the following hypothesis may be proposed:

H4: Strategy will be positively associated with employee satisfaction.

Process management encompasses the extensive application of statistical methodologies to assess, regulate, and evaluate the service delivery and operational processes within a hotel enterprise. Bach (2016) posits that effective process management facilitates the establishment of an optimal, equitable, and conducive working environment, which enhances employee satisfaction, subsequently leading to improved work efficiency and contributing to the hotel’s growth. In light of the argument, as mentioned earlier, the following hypothesis may be proposed:

H5: Process management will be positively associated with employee satisfaction.

Technology application: The capacity of an organization to recognize the significance of external technological advancements, assimilate them, and integrate them into its operational processes is crucial, particularly within the hospitality sector. Rahman and Bullock (2005) assert that implementing technology in organizational operations is vital, as it contributes to reducing labor costs and working hours, simultaneously enhancing revenue, facilitating customer interactions, and promoting systematic and efficient organizational functioning. Based on the premise as mentioned earlier, the following hypothesis may be proposed:

H6: Technology application will be positively associated with employee satisfaction.

Continuous improvement: The consistent and diligent efforts of the organization operating within the hospitality sector, particularly those of the staff, aim to enhance, augment, and refine various aspects of the processes and services implemented in the hotel. Amin et al. (2017) underscored encouraging employees to adopt a proactive stance in their work, demonstrating creativity and adaptability in customer service. This approach fulfills customer needs and fosters higher employee engagement and satisfaction. Based on the argument mentioned above, the following hypothesis may be proposed:

H7: Continuous improvement will be positively associated with employee satisfaction.

In the profit-service chain, the role of employees in fostering customer satisfaction is paramount. Consequently, managers must prioritize engaging and developing front-line employees who deliver services. This technology supports these efforts and initiatives that enhance employee training and customer satisfaction, as these factors drive profit growth (Schroeder & Goldstein, 2017). The research conducted by Tranfield and Akhlaghi (1995) indicates a significant correlation between employee satisfaction and customer satisfaction. Furthermore, enhanced employee satisfaction contributes additional value by facilitating superior service delivery, positively influencing customer satisfaction, and subsequently fostering organizational growth and profitability (Pantouvakis & Bouranta, 2013). Additionally, various studies hypothesize that employee attitudes can differ markedly and play a crucial role in determining employee performance, customer satisfaction, and overall financial performance (Chi & Gursoy, 2009). Drawing from this theoretical framework and the preceding discussion, the following hypothesis may be proposed:

H8: Employee satisfaction will be positively associated with customer satisfaction.

Fig. 1. Analytical framework

Data collection and analysis

3.1. Data collection

This study employs measurement scales derived and developed from the research of Yeng et al. (2018), Bouranta et al. (2019), Rahman and Bullock (2005), and Bach (2016). The survey was conducted in 157 Vietnamese hotels in Hanoi and Ho Chi Minh City, representing the northern and southern regions, respectively, in 2024. Only hotels with a minimum of 10 employees were included in this study. This criterion ensured the formal routines and processes necessary for Total Quality Management (TQM). In 2023, 8,000 Vietnamese organizations had been certified, of which 960 were service organizations, including hotel enterprises in Hanoi and Ho Chi Minh City, accounting for approximately 30 percent of the total. Thus, Hanoi and Ho Chi Minh City may be considered sufficiently representative of hotel enterprises implementing TQM practices in Vietnam. The hotels invited to participate in this survey were selected from the enterprise registry of the Hanoi and Ho Chi Minh Tax Departments. Invitations and questionnaire items, written in Vietnamese, were directly sent to 157 hotels, resulting in 115 responses, thereby achieving a response rate of 73.2 percent. Following a preliminary review, nine questionnaires were discarded due to insufficient information, leaving 106 responses succinctly summarized in Table 1.

In each hospitality enterprise, the respondents for TQM practices and performance indicators are hotel managers or representatives with judgment sampling. The questionnaire items were evaluated on a five-point Likert scale (1 = strongly disagree, 3 = neither agree nor disagree, 5 = strongly agree).

Table 1. Demography of survey respondents

3.2. Measurement model

The first step in the data analysis process is the measurement model; this analysis is carried out for the attributes of the item’s and constructs’ reliability, convergent and discriminant validity as measurements of the latent variables, which includes:

• Reliability test: the item’s reliability was calculated with standardised outer loadings (λ) exceeding 0.5 and the constructs’ reliability is assessed using Cronbach’s Alpha and Composite Reliability (CR) with the accepted level is 0.7, indicating internal consistency (Hair et al., 2019);
• Convergent validity: convergent validity is measured through the average variance extracted (AVE) over threshold 0.5 (Fornell & Lacker, 1981);
• Discriminant validity: discriminant validity was calculated with the HTMT ratio of constructs lower than 0.85 (Henseler et al., 2015);

The measurement model’s results prove that the collected data are reliable, convergent, and discriminantly valid and can be used to assess the structural model. Additionally, a descriptive analysis of TQM practices implemented by the hotel enterprises shows that leadership with the highest commitment to quality management was ranked 3.89 and came second after customer orientation, followed by human resource management with mean scores of 3.76 and 3.57. TQM practices related to human factors are more focused than technical factors, such as process management, technology application, and continuous improvement in Vietnamese hotel enterprises.

3.3. Structural model analysis

The next step is to conduct a structural model analysis. The study used SmartPLS 4.0 to test the structural model and hypotheses to confirm to what extent the causal relationships that the model proposed specifies are consistent with the data available, which includes:

• Predictive power: the predictive power of the structural model is measured using R2 should surpass 0.31 and out-of-sample predictive power (Q2) should be higher than zero (Hair et al., 2019);
• Testing hypothesis: Using a bootstrapping technique with a re-sampling of 5,000 to calculate the path coefficients, p-values (< 0.05) and t-statistics (> 1.96) (Hair et al., 2019);
• Multicollinearity: the problem of multicollinearity is assessed through the VIF with the accepted level must not be threshold 10 (Henseler et al., 2015).
• Effect size: the effect size of the relationships is assessed through f2 values of 0.02, 0.15 and 0.35 showing the small, medium and large impact (Cohen, 2013).

Table 2 revealed insignificant connections between strategy and technology application to employee satisfaction. Therefore, six hypotheses are supported, while two are not accepted. The results showed that leadership, human resource management, customer orientation, process management, and continuous improvement significantly positively impact employee satisfaction; thus, H1, H2, H3, H5, and H7 were supported. Additionally, the direct effect of employee satisfaction on customer satisfaction was positive and significant, leading us to accept H8.

Table 2. Results of the hypothesis test

* significant at p < 0.05; ** significant at p < 0.01; *** significant at p < 0.001

Table 3 show the R2 values have an appropriate predictive power, as all the dependent constructs have determination coefficients that surpass 0.31. Additionally, our study also found the values of VIF, f2 and Q2 within the suggested range. Next, Table 4 summarises the results of the intermediary effect between variables.

Table 3. Saturated model results

Table 4. Decompositions of path coefficient

4.1. Discussion

The study results show that employee satisfaction is explained by leadership style, human resource management, customer orientation, process management, and continuous improvement. This finding is consistent with the conclusions of Yeng et al. (2018), Chand (2010), Bouranta et al. (2019), Bach (2016), and Amin et al. (2017). It is reasonable because focusing on employees by focusing on processes for the hotel to operate effectively as expected, continuous improvement to support the daily tasks of employees, and leaders who always value, trust, and encourage employees are proven to be predictive factors that have a significant impact on the satisfaction of the hotel employee. The study also indicates that employee satisfaction has a significant positive effect on customer satisfaction. This finding is similar to the outcomes of Pantouvakis and Bouranta (2013) and Chi and Gursoy (2009). This means that the more satisfied employees are with their jobs, the more perfect they serve the services to customers, and it is a prerequisite to upgrade customer satisfaction.

More importantly, a difference in the research results is that two factors of strategy and technology application in TQM hurt employee satisfaction, leading to refuting the H4 and H6 hypotheses. This result does not support the views of Bouranta et al. (2017) and Rahman and Bullock (2005). The reasons are explained as follows: Firstly, the TQM strategy requires maintaining high-quality standards in all processes, which can affect increased workload and pressure on employees. Furthermore, in the context of the hospitality industry in Vietnam, the relationship between employees and customers is often personalized. Simultaneously, TQM focuses on standardizing processes, which are unsuitable for the working culture and negatively impact employee satisfaction. Second, studies have shown that technology reduces workload, shortens time, and improves employee productivity, making them more satisfied (Rahman & Bullock, 2005). However, this study shows that hotels applying technology do not bring satisfaction to employees. It is a new finding explained by the fact that hotels abuse technology, leading to the constriction of employees; they are subject to the supervision of technological devices and lose initiative in their work. Moreover, when technology takes over part of employees’ work, they lose interest and joy.

4.2. Implications

Theoretically, the study contributes to the addition of knowledge in the field of quality management. It identifies the relationship between TQM dimensions and customer satisfaction through employee satisfaction in hotels in Vietnam. TQM scales are developed and tested primarily in developing countries. However, with some adjustments in line with the socialist-oriented market economy and business conditions of hotel enterprises in Vietnam, the scales used in this study proved reliable and valuable. Therefore, this study can serve as a theoretical basis and documentation for further studies developed in other developing countries.

Practically, the study supplements the model of measuring employee and customer satisfaction through TQM dimensions. In addition, it has far-reaching implications for various stakeholders, such as TQM researchers and hotel managers. It will lead to the identification of new areas and the creation of new frameworks to promote further research on organizational performance and create opportunities for the service-profit chain in both the manufacturing and service sectors of the economy.

Based on the study results, Vietnamese hotel businesses must focus on balancing different factors in TQM. Hotel managers should avoid over-investing in a single dimension and must be adaptable, carefully considering which elements to implement in TQM to align with the hotel's business circumstances. Additionally, hotel managers should ensure that there is always enough information to evaluate the status and progress of various TQM dimensions. This will allow for effective management of the hotel’s quality system and enhance employee and customer satisfaction, ultimately leading to the hotel’s success.

The study examined how factors in TQM affect employee and customer satisfaction at Vietnamese hotel enterprises. It identified five TQM factors, including leadership, human resource management, customer orientation, process management, and continuous improvement, that directly and indirectly impact employee satisfaction. In contrast, strategy and technology applications do not affect employee satisfaction in Vietnamese hotel enterprises. Furthermore, the research revealed that employee satisfaction positively influences customer satisfaction.

Although the research objectives have been met, the study remains limited due to the small sample size; it is not representative since it focuses narrowly on a single survey subject at 3 to 5-star hotels in two cities in Vietnam. This groundwork lays the foundation for future research by increasing the sample size, broadening the research scope, and incorporating more diverse dimensions of TQM.

Data availability statement

The corresponding author can readily provide the datasets created and analyzed for this work. therefore, inquiries regarding the data that is available in this paper should be directed to the corresponding author.

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