Adoption of e‐Processes by Service Firms: An Empirical Study of Antecedents

This paper investigates empirically antecedents of the adoption of web‐based processes (e‐processes) by service providers. We examine whether rational efficiency (expressed by expected performance benefits and access to new markets), the bandwagon effect (expressed by external pressure), and barriers (both internal and customer related) influence Internet use for transactions (e‐transactions) and/or to extend the relationships between service providers and their customers (e‐CRM). The findings, based on a sample of 338 service firms, show that rational efficiency and the bandwagon effect drive both types of e‐processes. Conversely, only internal barriers have a negative impact on adoption of e‐processes, while barriers related to customers do not have a significant impact. These findings have important academic and managerial implications, given the limited evidence regarding the implementation of e‐processes in services.     

The Influence of Service Orientation on B2B e‐Service Capabilities: An Empirical Investigation

E‐Services, or the company's portfolio of service offerings available to its customers through the Internet, are an emerging area of interest to operations management. Yet little is known about the operations and capabilities needed for provision of business‐to‐business (B2B) e‐services. This paper aims to make a contribution toward closing this gap. First, we develop a new construct of B2B e‐service capability, a term that captures a generic set of five interrelated and complementary dimensions: (1) e‐service recovery, (2) e‐customization, (3) ease of navigation, (4) service portfolio comprehensiveness, and (5) information richness. These combined operational abilities are associated with B2B service delivery, including its portal design, technology architecture, and mix of product and service offerings. They are posited to be necessary for delivering effective B2B e‐services. We also argue that, both service orientation (SO) and customer receptivity to technology, influence B2B e‐service capability. We empirically test a path model using structural equation modeling on a sample of 181 businesses that have deployed B2B e‐services. We find that the influence of SO on performance is not direct but rather mediated by the e‐service capability, a finding that holds for both goods producers and service providers. We suggest that a firm's SO may mitigate industrial customers' resistance toward conducting business online.     

Impact of Customer Traffic and Service Process Outsourcing Levels on e‐Retailer Operational Performance

Many service firms deliver services via a mix of internally developed and delivered (i.e., insourced) and externally developed and delivered (i.e., outsourced) service processes. Service process outsourcing is especially common in e‐retailing. Portions of e‐retail customer ordering processes and delivery processes can be digitized and contracted to third‐party vendors. Via outsourcing, service systems change from dyadic to triadic. Prior research examines consumer perceptions of dyadic (consumer to e‐retailer) outcomes, but little research considers service co‐delivery with outsourcing partners (i.e., triadic systems). Literature also does not focus on joint associations of service process outsourcing and customer traffic with e‐retailer operations. We analyze several years of data on North American e‐retailers. We first examine factors associated with e‐retailer outsourcing levels, for front‐end and back‐end service processes. We observe customer traffic is positively associated with future outsourcing. We then examine how outsourcing moderates associations between contemporaneous customer traffic and e‐retailer operational performance, as measured by numbers of processed orders, website response times, and customer satisfaction. Results suggest outsourcing levels are associated with operational outcomes, yet surprisingly, high outsourcing and high traffic jointly may not benefit e‐retailers.     

Does Security Impact E‐procurement Performance? Testing a Model of Direct and Moderated Effects

Despite the widespread adoption of e‐procurement and the critical role of information security in these situations, academic research examining the relationship between information security and e‐procurement performance has been surprisingly minimal. This study represents an interdisciplinary approach to present and test a theoretical model that links security in e‐procurement processes to e‐procurement performance. E‐procurement performance is measured as a combination of cost savings, order quality, and satisfaction of fulfillment as perceived by buyers. The model also posits that two aspects of the procurement process will enhance the value of security in e‐procurement, namely, process complexity and process interdependence. We empirically examine these relationships using data collected from procurement managers. Our results have important implications for managing the e‐procurement process.     

Encounter Satisfaction in E‐tailing: Are the Relationships of Order Fulfillment Service Quality with its Antecedents and Consequences Moderated by Historical Satisfaction?

This study focuses on whether historical satisfaction with an e‐tailer (HSat) moderates baseline relationships in order fulfillment service quality models. HSat is defined as satisfaction with the e‐tailer spanning all transactions except the current encounter. Encounter satisfaction (ESat) is defined as the consumer's satisfaction with the current transaction. In the baseline model, four order fulfillment service quality (OFSQ) dimensions managerially relevant to consumer e‐tailing are examined: timeliness, availability, condition, and billing accuracy. The baseline structural model results support that OFSQ dimensions impact ESat, which in turn predicts two key consequences—repurchase intention and word‐of‐mouth. Adaptation theory is used to model the role of HSat, while controlling for transaction recency, vendor familiarity, and competitive pricing. HSat is shown to have pervasive main and interaction effects upon all baseline model relationships. These moderation effects have great managerial relevance. For example, the results illustrate a phenomenon similar to the service recovery paradox, wherein when a negative service encounter is followed by a highly positive service recovery event, previously dissatisfied consumers, as compared to previously satisfied consumers, respond with higher levels of current satisfaction. For managers, this finding is encouraging because policies that create highly positive events for consumers can thus supersede past negative experiences. Our results show however that HSat cannot be completely superseded by current OFSQ or current ESat.     

Assessing Markups,Service Quality,and Product Attributes in Music CDs' Internet Retailing

We investigate trade‐offs among markups, service quality, and product attributes across customer, Internet retailer, and wholesaler echelons. Research has documented the reality of retail price dispersion, but little is known about how retail markups, in particular, are related to service quality and product attributes. For example, do Internet retailers deliver superior service in return for high markups? Do product characteristics affect the relationship between service and markups for retailers? To examine these issues, we first developed a model of Internet retail profitability that separates revenues and costs related to sales from other profit sources. This framework allowed us to position our work alongside the extant literature about Internet retailing. Moreover, it led us to synthesize service quality dimensions found in Internet retailing studies. We subsequently developed a critical‐event study based on the profit model and the synthesis of service quality dimensions to delineate service aspects that retailers should emphasize to address buyers' utility. Finally, we collected data from Internet purchases across retailers to isolate markup‐service quality trade‐offs along our delineated service aspects. We find that high markups are associated with superior performance across service quality dimensions. Furthermore, this trade‐off becomes more acutely defined when products with variable popularity are transacted.     

An Exploratory Study of the Impact of e‐Service Process on Online Customer Satisfaction

Although extensive academic research has examined the dynamics of interpersonal interactions between service providers and customers, much less research has investigated customer service encounters through technological interfaces such as the Web in electronic commerce transactions. Corporate websites have become an important point of contact with customers for many companies. Service has been described as one of the most important attributes for online business to influence traffic and sales. However, more research is needed to understand how Web‐based technological capabilities of services affect customer satisfaction. In this paper, we propose viewing the interface between online buyers and sellers through the lens of service management to identify possible determinants of online customer satisfaction. A company's website is considered its electronic service delivery system. We look at this electronic service delivery system from its process point of view. Our findings indicate that as the electronic service delivery system process improves, a customer's perception of the website's ease of use increases, leading to increased service value and perceived control over the process, which increases customer satisfaction. The research provides evidence that the technological capabilities embedded in the website processes are an important factor in determining service quality and ultimately online customer satisfaction.     

Dynamic Pricing in e‐Services under Demand Uncertainty

High volatility of the e‐services market, due to increasing competition, low life cycle of products, and easy availability of information about competing service offerings to customers, makes the demand for service offerings quite uncertain. Revenue management in such markets calls for real‐time techniques to learn the demand and its dependence on both the price and the service level associated with the service offering. We assume firms reply on exploratory approaches for demand estimation, in which firms experiment with different service offerings in order to simultaneously learn the demand while doing business. Such exploration and learning process can be costly without supervision. As reported by Rothschild (Journal of Economic Theory, 9 185‐202, 1974), traditional Bayesian dynamic control approaches may conclude with suboptimal offerings. We propose a novel demand learning approach that is guaranteed to converge to the optimal offering. The approach combines simulated annealing algorithm with Bayesian learning. We further present intelligent techniques that adaptively reduce the effort of exploration on suboptimal service offerings so as to improve the long‐run average profit.     

Coping with Time‐Varying Demand When Setting Staffing Requirements for a Service System

We review queueing‐theory methods for setting staffing requirements in service systems where customer demand varies in a predictable pattern over the day. Analyzing these systems is not straightforward, because standard queueing theory focuses on the long‐run steady‐state behavior of stationary models. We show how to adapt stationary queueing models for use in nonstationary environments so that time‐dependent performance is captured and staffing requirements can be set. Relatively little modification of straightforward stationary analysis applies in systems where service times are short and the targeted quality of service is high. When service times are moderate and the targeted quality of service is still high, time‐lag refinements can improve traditional stationary independent period‐by‐period and peak‐hour approximations. Time‐varying infinite‐server models help develop refinements, because closed‐form expressions exist for their time‐dependent behavior. More difficult cases with very long service times and other complicated features, such as end‐of‐day effects, can often be treated by a modified‐offered‐load approximation, which is based on an associated infinite‐server model. Numerical algorithms and deterministic fluid models are useful when the system is overloaded for an extensive period of time. Our discussion focuses on telephone call centers, but applications to police patrol, banking, and hospital emergency rooms are also mentioned.     

Adaptive versus Proactive Behavior in Service Recovery: The Role of Self‐Managing Teams

In this article, we develop a conceptual model of adaptive versus proactive recovery behavior by self‐managing teams (SMTs) in service recovery operations. To empirically test the conceptual model a combination of bank employee, customer, and archival data is collected. The results demonstrate support for independent group‐level effects of intrateam support on adaptive and proactive recovery behavior, indicating that perceptual consensus within service teams has incremental value in explaining service recovery performance. In addition, we provide evidence that adaptive and proactive recovery behavior have differential effects on external performance measures. More specifically, higher levels of adaptive performance positively influence customer‐based parameters (i.e., service recovery satisfaction and loyalty intentions), while employee proactive recovery behavior contributes to higher share of customer rates.     

Reserving Capacity for Urgent Patients in Primary Care

This paper examines the effect of the common practice of reserving slots for urgent patients in a primary health care practice on two service quality measures: the average number of urgent patients that are not handled during normal hours (either handled as overtime, referred to other physicians, or referred to the emergency room) and the average queue of non‐urgent or routine patients. We formulate a stochastic model of appointment scheduling in a primary care practice. We conduct numerical experiments to optimize the performance of this system accounting for revenue and these two service quality measures as a function of the number of reserved slots for urgent patients. We compare traditional methods with the advanced‐access system advocated by some physicians, in which urgent slots are not reserved, and evaluate the conditions under which alternative appointment scheduling mechanisms are optimal. Finally, we demonstrate the importance of patient arrival dynamics to their relative performance finding that encouraging routine patients to call for same‐day appointments is a key ingredient for the success of advanced‐access.     

Operational Impact of Service Innovations in Multi‐Step Service Systems

Service quality is an important attribute that is used to characterize many service systems. In this study, we examine a service system with two consecutive steps that have shared resources. The service process consists of a base service (first step in the process) followed by a second step that adds additional value. We first look at a social surplus maximizing service provider (SP) who decides the optimal service capacity and re‐optimizes in response to changes in the speed of service of the first step due to local innovations. Our main objective is to explore using simple and stylized models, the effect on the service system of local innovations in step 1 that decrease this step's service times. We find that the effect of such innovations can sometimes lead to the worsening of certain critical service quality measures when SPs are monopolists. Next, using a model of competition, we find that this effect continues to hold in settings where SPs compete for arrivals. Our results have interesting consequences for many service systems and may help explain some of the unintended effects of service innovations reported in the literature.     

Managing Internet Product Returns: A Focus on Effective Service Operations

Product returns present one of the biggest operational challenges in the world of Internet retailing due to the sheer volume and cost of processing returns. But returns also represent an often‐missed opportunity to manage customer relationships and build customer loyalty to the retailer. Based upon data from a survey of 464 customers of five different Internet retailers, this article explores how firms' returns management systems affect loyalty intentions. We draw upon extant literature in the fields of Internet retailing, service quality, supply chain management, and customer satisfaction/loyalty to develop a model and a set of hypotheses relating ten latent variables in the service returns offering area. Our resulting structural equation model provides evidence of the impact of the returns management system upon customer loyalty intentions. The model also identifies effects on loyalty intentions arising from customers' satisfaction with, and perceptions of, the value of the returns service offered. These findings will help inform managers' choices regarding investment in the returns management system as an element of service quality improvement and a potential means of improved profitability. In addition, this study's empirical exploration and testing of a returns management model in the Internet retailing environment is a contribution to the currently underrepresented body of academic literature linking marketing and supply chain management in the context of end consumers.     

Competition and Coordination in Two‐Tier Public Service Systems under Government Fiscal Policy

As a result of government budgetary limits and rapid market growth, many public service systems—such as health care—are characterized by extensive customer wait times that have become a serious problem. This problem might be solved by allowing private firms to enter these markets, which would provide customers with a choice between a free (governmental) public service provider (SP) and a fee‐charging (or “toll”) private SP. In such a two‐tier service system, the two SPs are differentiated by service quality and cost efficiency. This study focuses on the competition and coordination issues for two‐tier service systems with customers who are sensitive to both service quality and delay. The free system attempts to maximize its expected total customer utility with limited capacity, whereas the toll system attempts to maximize its profit. Neither goal is aligned with the social welfare goal of the public service. To achieve the social welfare goal, the government plays a crucial role in coordinating the two‐tier service system via the budget, the tradeoff of social members' goals, and tax‐subsidy policies. Using a mixed duopoly game, we establish Nash equilibrium strategies and identify the conditions for the existence of the two‐tier service system. We employ several interesting and counter‐intuitive managerial insights generated by the model to show that the public service can be delivered more efficiently via customer choice and SP competition. In addition, we show that a relatively low tax‐subsidy rate can almost perfectly coordinate the two SPs to achieve most of the maximum possible benefit of the two‐tier service system.     

Impact of Value‐Added Service Features in e‐Retailing Processes: An Econometric Analysis of Web Site Functions

We examine the impact of three classes of Web site functions (foundational, customer‐centered, and value‐added) upon e‐retailer performance. Using secondary panel data for 2007–2009 on operating characteristics of over 600 e‐retailers, our econometric analysis finds that only the value‐added service functions are positively associated with changes in e‐retail sales revenues across time. We also observe a decreasing marginal impact of deploying additional value‐added service features. To account for possible alternate explanations, we control for firm‐ and time‐specific fixed effects, merchant types, merchandise categories, and order fulfillment strategies. By further decomposing e‐retail sales revenues into Web site traffic, conversion rate, and average order value, we find that Web site functions affect e‐retail sales revenues mainly through their impact on Web site traffic. Our investigation demonstrates the empirical research usefulness of the Voss conceptual e‐service sand cone model. Our results identify for managers where to focus ongoing e‐retailing system development efforts, yet suggest that focusing too many retailing capabilities on exploratory and experimental value‐added service features may backfire, potentially leading to worsening e‐retailer performance.     

An Information‐Processing Approach for Evaluating In‐Store Retail Operational Design Strategies

We develop a model to evaluate retail store operational design strategies using an information‐processing perspective of organizational design. We propose that three model constructs pertaining to in‐store shopper task uncertainty—the product mix complexity, the service production complexity, and the product mix changeover—create shopper encounter information requirements (IR). These requirements can be met using specific retail service operational design choices for managing shopper encounters, namely, designing layouts for self‐service (SS) and providing employees with task empowerment (TE). The model is then operationalized using a two‐stage approach to develop new multi‐item, measurement scales. The psychometric properties and predictive validity of the scales and model are then confirmed by using structural equation modeling with survey data from 175 merchandise retail store managers. We find that our model can be generically applied across the retail industry to understand how shopper encounter IR motivate retailer store design choices and can be used to determine whether to design stores for SS or to provide store employees with TE. We then evaluate the efficacy of the studied store design choices on customer delivery satisfaction, and offer some suggestions for future research.     

Service Personnel,Technology, and Their Interaction in Influencing Customer Satisfaction*

Managing both the technologies and the personnel needed for providing high‐quality, multichannel customer support creates a complex and persistent operational challenge. Adding to this difficulty, it is still unclear how service personnel and these new communication technologies interact to influence the customer's perceptions of the service being provided. Motivated by both practical importance and inconsistent findings in the academic literature, this exploratory research examines the interaction of media richness, represented by three different technology contexts (telephone, e‐mail, and online chat), with six customer service representative (CSR) characteristics and their influences on customer satisfaction. Using a large‐sample customer survey data set, the article develops a multigroup structural equation model to analyze these interactions. Results suggest that CSR characteristics influence customer service satisfaction similarly across all three technology‐mediated contexts. Of the characteristics studied, service representatives contribute to customer satisfaction more when they exhibit the characteristics of thoroughness, knowledgeableness, and preparedness, regardless of the richness of the medium used. Surprisingly, while three other CSR characteristics studied (courtesy, professionalism, and attentiveness) are traditionally believed to be important in face‐to‐face encounters, they had no significant impact on customer satisfaction in the technology‐mediated contexts studied. Implications for both practitioners and researchers are drawn from the results and future research opportunities are discussed.     

Integrated Order Scheduling and Packing

We consider an integrated production–distribution scheduling model in a make‐to‐order supply chain consisting of one supplier and one customer. The supplier receives a set of orders from the customer at the beginning of a planning horizon. The supplier needs to process all the orders at a single production line, pack the completed orders to form delivery batches, and deliver the batches to the customer. Each order has a weight, and the total weight of the orders packed in a batch must not exceed the capacity of the delivery batch. Each delivery batch incurs a fixed distribution cost. The problem is to find jointly a schedule for order processing and a way of packing completed orders to form delivery batches such that the total distribution cost (or equivalently, the number of delivery batches) is minimized subject to the constraint that a given customer service level is guaranteed. We consider two customer service constraints—meeting the given deadlines of the orders; or requiring the average delivery lead time of the orders to be within a given threshold. Several problems of the model with each of those constraints are considered. We clarify the complexity of each problem and develop fast heuristics for the NP‐hard problems and analyze their worst‐case performance bounds. Our computational results indicate that all the heuristics are capable of generating near optimal solutions quickly for the respective problems.     

The Role of Clinical and Process Quality in Achieving Patient Satisfaction in Hospitals

Managers constantly struggle with where to allocate their resources and efforts in managing the complex service delivery system called a hospital. In the broadest sense, their decisions and actions focus on two important aspects of health care—clinical or technical medical care that emphasizes “what” the patient receives and process performance that emphasizes “how” health care services are delivered to patients. Here, we investigate the role of leadership, clinical quality, and process quality on patient satisfaction. A causal model is hypothesized and evaluated using structural equation modeling for a sample of 202 U.S. hospitals. Statistical results support the idea that leadership is a good exogenous construct and that clinical and process quality are good intermediate outcomes in determining patient satisfaction. Statistical results also suggest that hospital leadership has more influence on process quality than on clinical quality, which is predominantly the doctors' domain. Other results are discussed, such as that hospital managers must be mindful of the fact that process quality is at least as important as clinical quality in predicting patient satisfaction. The article concludes by proposing areas for future research.