The Relationship between Marginal Utility, Productivity and Profitability in Service Organizations
DOI:
https://doi.org/10.24086/cuejhss.v9n2y2025.pp8-17Keywords:
Marginal utility, productivity, profitability, Service sector, Iraqi private universitiesAbstract
This research investigates the relationships among marginal utility, profitability, and service productivity in the context of private universities in Iraq. Data were collected from 400 lecturers in Erbil, within the Kurdistan Region, and analyzed through structural equation modeling to evaluate the study’s hypotheses. Results reveal that while marginal utility can improve service productivity, it may come at the expense of profitability highlighting a potential trade-off. In contrast, profitability has a direct positive impact on service productivity and acts as a mediator in the link between marginal utility and service performance. These findings provide practical insights for university leaders, emphasizing the need to strike a balance between efficient resource use and financial viability. The study also advances theoretical understanding by questioning conventional assumptions about the marginal utility–profitability relationship, calling for more nuanced models in higher education resource and financial planning. Limitations include the narrow focus on Iraqi private universities and a short-term analysis; future research should broaden the scope and explore long-term implications.
Downloads
References
Ahl, R. E., Cook, E., & McAuliffe, K. (2023). Having less means wanting more: Children hold an intuitive economic theory of diminishing marginal utility. Cognition, 234, 105367. DOI: https://doi.org/10.1016/j.cognition.2023.105367
Alshehadeh, A. R., Elrefae, G. A., Qirem, E., Ali, I., Hatamleh, H. M., & Alkhawaja, H. (2024). Impact of profitability on investment opportunities and its effect on profit sustainability. Uncertain Supply Chain Management, 12(2),871-882. DOI: https://doi.org/10.5267/j.uscm.2024.1.001
Archibald, R. B., & Feldman, D. H. (2011). Why does college cost so much? Oxford University Press. DOI: https://doi.org/10.1093/acprof:oso/9780199744503.001.0001
Bairwa, S. L., Nagappan, P., Atodaria, Z., & Khartode, N. P. (2023). Basic Concepts of Economics. Academic Guru Publishing House.
Bryson, J. R., Sundbo, J., Fuglsang, L., Daniels, P., Bryson, J. R., Sundbo, J., ... & Daniels, P. (2020). Service Operations and Productivity. Service Management: Theory and Practice, 87-104. DOI: https://doi.org/10.1007/978-3-030-52060-1_5
Curs, B. R., & Singell Jr, L. D. (2010). Aim high or go low? Pricing strategies and enrollment effects when the net price elasticity varies with need and ability. The Journal of Higher Education, 81(4), 515-543. DOI: https://doi.org/10.1080/00221546.2010.11779063
Denisov, A., Feklin, E., & Ignatov, A. (2021). Provisions of the marginal utility theory in the solution of bus servicing issues in the Arctic zone of Russia. Transportation Research Procedia, 57, 136-144. DOI: https://doi.org/10.1016/j.trpro.2021.09.035
Feng, X., & Goli, A. (2023). Enhancing business performance through circular economy: a comprehensive mathematical model and statistical analysis. Sustainability, 15(16), 12631. DOI: https://doi.org/10.3390/su151612631
Froud, J., Haslam, C., Johal, S., & Williams, K. (2020). (How) does productivity matter in the foundational economy? Local Economy, 35(4), 316-336. DOI: https://doi.org/10.1177/0269094220956952
Geo, A. (2023). R-Squared (R2) – How much variation is explained? Research Methods in Medicine &Health Science, 0(0), 1-6.
George, M. L. (2022). An overview on laws of utility: exploring consumer preferences and decision-making. SAARJ Journal on Banking & Insurance Research. www. saarj. com, 109.
Grayson, K., Nyamazana, M., & Funjika-Mulenga, P. (2016). Management quality, productivity, and profitability in Zambia. International Growth Center. F-41303-ZMB-1.
Hair, J.F., Hult, T.M., Ringle, C.M., Sarstedt, M., Danks, N.P & Ray. S. (2021). An introduction to structural equation modeling. Springer. DOI: https://doi.org/10.1007/978-3-030-80519-7_1
Johnston, R. and Jones, P. (2004). Service productivity: Towards understanding the relationship between operational and customer productivity. International Journal of Productivity and Performance Management, 53(3), 201-213. DOI: https://doi.org/10.1108/17410400410523756
Kenton, W. (May 04 2024). The Law of Diminishing Marginal Utility: How It Works, With Examples. Investopedia. https://www.investopedia.com/terms/l/lawofdiminishingutility.asp
Latupeirissa, J. J. P., Dewi, N. L. Y., Prayana, I. K. R., Srikandi, M. B., Ramadiansyah, S. A., & Pramana, I. B. G. A. Y. (2024). Transforming public service delivery: A comprehensive review of digitization initiatives. Sustainability, 16(7), 2818. DOI: https://doi.org/10.3390/su16072818
Lehmann, C., Lehmann, C., & Berg. (2019). Exploring Service Productivity. Springer Science and Business Media. DOI: https://doi.org/10.1007/978-3-658-23036-4
Martin, J. W. (2021). Lean Six Sigma for the Office: Integrating Customer Experience for Enhanced Productivity. Productivity Press. DOI: https://doi.org/10.4324/9781003049494
Massoudi, A. & Fatah, S. (2021). Advancing small and medium-size enterprises’ performance by adopting marketing and service innovation. International Journal of Procurement Management, 14(6), 742-758. DOI: https://doi.org/10.1504/IJPM.2021.117884
Massoudi. A. (2022). Reviving performance by adopting chameleon style of leadership. Journal of Management and Business Education, 5(1), 1-19. DOI: https://doi.org/10.35564/jmbe.2022.0001
Massoudi, A. H., Agha, A. M., & Zamoum, K. (2025). Bridging AI Marketing and Customer Loyalty. Cihan University-Erbil Journal of Humanities and Social Sciences, 9(1), 106-113. DOI: https://doi.org/10.24086/cuejhss.v9n1y2025.pp106-113
Massoudi, A. (2024). The Mediating Effect of Occupational Stress between Paradoxical Leader and Compulsory Citizenship Behaviour. Journal of Organisational Studies and Innovation, 11(3), 1-18. DOI: https://doi.org/10.51659/josi.23.207
Pompe, F. (2022). Firm-level productivity and profitability effects of managerial and organizational capabilities and innovations. Università degli Studi di Perugia. https://projectuntangled.eu/wpcontent/uploads/2022/03/Firm_level_productivity_and_profitability.pdf
Roemer, E., Schuberth, F. and Henseler, J. (2021), HTMT2–an improved criterion for assessing discriminant validity in structural equation modeling. Industrial Management & Data Systems, 121(12), 2637-2650. DOI: https://doi.org/10.1108/IMDS-02-2021-0082
Tenucci, A., & Supino, E. (2020). Exploring the relationship between product-service system and profitability. Journal of management and governance, 24(3), 563-585. DOI: https://doi.org/10.1007/s10997-019-09490-0
Todorova, T. (2021). Diminishing marginal utility and the teaching of economics: A note. Journal of Research in Educational Sciences, 12(14), 25-31. https://doi.org/10.14505/jres.v12.14.02 DOI: https://doi.org/10.14505/jres.v12.14.02
Twisk, J.W. (2024). Indirect effects in mediation analyses should still include measures of uncertainty and, when appropriate, test for statistical significance. Journal of Clinical Epidemiology, 171, 111393. DOI: https://doi.org/10.1016/j.jclinepi.2024.111393
Wu, L. W., Wang, C. Y., & Rouyer, E. (2020). The opportunity and challenge of trust and decision-making uncertainty: Managing co-production in value co-creation. International Journal of Bank Marketing, 38(1), 199-218. DOI: https://doi.org/10.1108/IJBM-02-2019-0061
Ye, J., Dong, B., & Lee, J. Y. (2017). The long-term impact of service empathy and responsiveness on customer satisfaction and profitability: a longitudinal investigation in a healthcare context. Marketing Letters, 28, 551-564. DOI: https://doi.org/10.1007/s11002-017-9429-2
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Aram H. Massoudi, Samir S. Hamdi, Muslim N. Zaidan, Kenan I. Alsayegh
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License [CC BY-NC-ND 4.0] that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
