Customer Obsession, Innovation, and Service Quality: Shaping Strategy in Taiwan Firms

Abstract In the era of digital transformation, businesses are forced to realign strategic priorities, innovate their operating models, improve service quality and increase customer-centricity to maintain competitiveness. As customer expectations continue to rise, the extent to which firms adopt customer obsessed behaviours has become a critical topic in contemporary strategic management. However, the limited empirical evidence exists on how customer obsession, innovation and service quality influence firm performance in Asian markets. This study aims to examine the effects of customer obsession, innovation, and service quality on firm performance using accounting-based profitability indicators. Building on the Resource Based View, Dynamic Capabilities and Service-Dominant Logic, the study develops an integrated analytical framework and applies panel data regression techniques to firm level secondary data. The empirical analysis is conducted using data from 50 publicly listed Taiwanese firms over the period from 2020 to 2025. The findings reveal three key insights. First, customer obsession exhibits only a weak association with firm profitability, indicating that the financial returns of customers centric strategies tend to emerge gradually rather than immediately. Second, firm resource variables, particularly innovation related investment and firm scale, demonstrate strong and stable positive effects on profitability outcomes. Third, innovation activities and service quality enhancement show negative short-term effects on financial performance, reflecting the substantial costs associated with innovation investment and service quality improvement. The research contributes additional empirical evidence from the Taiwanese context and proposes an integrated framework linking customer obsession, innovation, and service quality in the analysis of corporate strategy and firm performance.