INTERNAL MARKETING PRACTICES AND EMPLOYEE RETENTION: THE MEDIATING ROLE OF MOTIVATION IN SERVICE-SECTOR ORGANIZATIONS OF A DEVELOPING ECONOMY

Abstract

The retention of employees is a long-term strategic issue to service-based organizations in the developing economies where the culture of internal marketing is yet to be systematically exploited. The research questions examined in this paper include: How do the three internal marketing dimensions (staff development (SD), internal communication (IC), and employee empowerment (EE)) have direct and indirect impact on employee retention (ER)? How does employee motivation (EM) mediate the relationship between the three internal marketing dimensions and employee retention (ER)? The study design was a quantitative, cross-sectional study with structured Likert-scale questionnaires given to 360 employees of the service sector. The analysis of the data was performed with SmartPLS 4 by partial least squares structural equation modeling. Findings affirm that all the three internal marketing dimensions have a direct and significant predictive value for employee motivation and employee retention. Each of the dimension-to-retention pathways is also completely mediated by employee motivation. The findings have important theoretical and practical implications on talent retention strategies for service organizations in developing economies.

Keywords: Internal marketing, employee retention, employee motivation, staff development, internal communication, employee empowerment, developing economy.