The mediation effect of customer satisfaction on the indirect
relationship between employee satisfaction and financial performance
was assessed using the causal step approach recommended
by Baron and Kenny (1986). The overall purpose of the causal step
method is to establish the conditions for mediation rather than a
statistical test of the indirect effect (MacKinnon et al., 2007). Kenny
et al. (1998) suggest four criteria for complete mediation. First, the
independent variable should have a significant influence on the
dependent variable. Second, the independent variable must be
significantly related to the potential mediator. Third, the mediator
must have a significant relationship with the dependent variable.
Finally, the initially significant relationship between the independent
and dependent variable must become insignificant once the
role of the mediator is accounted for in the process to establish
complete mediation. If only steps one through three are met, then
partial mediation is established.