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.     

A Mathematical Model of Service Failure and Recovery Strategies*

Understanding the nature of service failures and their impact on customer responses and designing cost‐effective recovery strategies have been recognized as important issues by both service researchers and practitioners. We first propose a conceptual framework of service failure and recovery strategies. We then transform it into a mathematical model to assist managers in deciding on appropriate resource allocations for outcome and process recovery strategies based on customer risk profiles and the firm's cost structures. Based on this mathematical model we derive optimal recovery strategies, conduct sensitivity analyses of the optimal solutions for different model parameters, and illustrate them through numerical examples. We conclude with a discussion of managerial implications and directions for future research.     

Reducing Customer Dissatisfaction: How Important is Learning to Reduce Service Failure?

As service failures are inevitable, firms must be prepared to recover and learn from service failures. Yet, the majority of customers are still dissatisfied with the way firms resolve their complaints. Can learning to reduce service failures reduce customer dissatisfaction, and to what extent are such reductions sustainable? Previous research showed that organizational learning curves for customer dissatisfaction (i) follow a U‐shaped function of operating experience and (ii) are heterogeneous across firms. In this paper, I tease out where the U‐shaped learning‐curve effect and learning‐curve heterogeneity originate: service failure or customers' propensity to complain with a third party given the occurrence of a service failure. Using quarterly data for nine major US airlines over 11 years, I find that the U‐shaped learning‐curve effect and the learning‐curve heterogeneity originate in the propensity to complain. In the long term, reductions in service failure did not translate in sustainable reductions in customer dissatisfaction. Customers' propensity to complain eventually went up. Managing the propensity to complain provides more opportunity for a firm to distinguish itself from competitors.     

Spatial Risk Analysis of Power Systems Resilience During Extreme Events

The increased frequency of extreme events in recent years highlights the emerging need for the development of methods that could contribute to the mitigation of the impact of such events on critical infrastructures, as well as boost their resilience against them. This article proposes an online spatial risk analysis capable of providing an indication of the evolving risk of power systems regions subject to extreme events. A Severity Risk Index (SRI) with the support of real‐time monitoring assesses the impact of the extreme events on the power system resilience, with application to the effect of windstorms on transmission networks. The index considers the spatial and temporal evolution of the extreme event, system operating conditions, and the degraded system performance during the event. SRI is based on probabilistic risk by condensing the probability and impact of possible failure scenarios while the event is spatially moving across a power system. Due to the large number of possible failures during an extreme event, a scenario generation and reduction algorithm is applied in order to reduce the computation time. SRI provides the operator with a probabilistic assessment that could lead to effective resilience‐based decisions for risk mitigation. The IEEE 24‐bus Reliability Test System has been used to demonstrate the effectiveness of the proposed online risk analysis, which was embedded in a sequential Monte Carlo simulation for capturing the spatiotemporal effects of extreme events and evaluating the effectiveness of the proposed method.     

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.     

Modes of Response to Marketing Communications Failures in the Computer Services Industry

Chief executives of 186 computer services companies participated in a survey designed to establish (i) how firms in this sector were likely to respond to serious failures in their marketing communications programmes, and (ii) the factors affecting the mode of response. Businesses can react to a failure radically or conservatively. Radical responses might involve the dismissal of marketing managers, extensive reorganization of the marketing department and the implementation of radical changes in current programmes. Alternatively, a company could intensify the continuation of existing programmes; support, develop and mentor employees; and slightly modify rather than fundamentally alter its current marketing‐communications activities. A number of variables identified from academic literature concerning general organization decline and innovation were applied to the examination of corporate responses to marketing communications failures. In particular, hypotheses were developed and tested regarding the possible influences of managerial rigidity, internal power diffusion, organizational complexity and degree of formality, resource slack and decision‐making style.     

服务补救悖论形成机理研究

探明服务补救悖论的形成过程对服务失误的控制和服务补救策略的制定都具有重要的意义。本研究以满意度变化过程为主线揭示服务补救悖论形成的全过程。研究发现:服务补救悖论形成过程可由服务失误和服务补救两个不同的过程来描述,在服务失误过程中,失误频率、失误严重性和感知失误可控性都会显著促使顾客满意度降低,其中,失误严重性的影响最大;在服务补救过程中,实物和非实物补救水平都可以恢复消费者的满意度,并且二者的差异不大;关系强度对这两个过程的满意度变化均具有显著的调节作用,其中,关系强度低的顾客对于失误频率和失误严重性更加敏感,并且更注重实物补救水平。     

Experience,Service Operations Strategy,and Services as Destinations: Foundations and Exploratory Investigation

This paper explores the customer experience paradigm as it pertains to service operations strategy and design. First, we operationally define and discuss the concept of customer experience. In this context, we propose a reframing of the strategic role of operations strategy as one of choreographing experience‐centric services. We then introduce the concept of services as destinations as an emerging business model for classifying experiential service strategies. Our conceptual typology of experience‐based strategies uses two dimensions: (1) the depth of use of experience as a source of value creation, ranging from brand experience to the services as a destinations business model, and (2) the degree of integration of experience internally within the firm. Using this conceptual typology, we develop five propositions and use multiple cases to illustrate firms' use of these experience strategies. Laying the groundwork for future research, we highlight insights from the qualitative, multiple‐case data as they pertain to service operations strategy and the business model that employs services as destinations. A number of questions for further research are suggested.     

Some Limitations of “Risk = Threat × Vulnerability × Consequence” for Risk Analysis of Terrorist Attacks

Several important risk analysis methods now used in setting priorities for protecting U.S. infrastructures against terrorist attacks are based on the formula: Risk=Threat×Vulnerability×Consequence. This article identifies potential limitations in such methods that can undermine their ability to guide resource allocations to effectively optimize risk reductions. After considering specific examples for the Risk Analysis and Management for Critical Asset Protection (RAMCAP?) framework used by the Department of Homeland Security, we address more fundamental limitations of the product formula. These include its failure to adjust for correlations among its components, nonadditivity of risks estimated using the formula, inability to use risk‐scoring results to optimally allocate defensive resources, and intrinsic subjectivity and ambiguity of Threat, Vulnerability, and Consequence numbers. Trying to directly assess probabilities for the actions of intelligent antagonists instead of modeling how they adaptively pursue their goals in light of available information and experience can produce ambiguous or mistaken risk estimates. Recent work demonstrates that two‐level (or few‐level) hierarchical optimization models can provide a useful alternative to Risk=Threat×Vulnerability×Consequence scoring rules, and also to probabilistic risk assessment (PRA) techniques that ignore rational planning and adaptation. In such two‐level optimization models, defender predicts attacker's best response to defender's own actions, and then chooses his or her own actions taking into account these best responses. Such models appear valuable as practical approaches to antiterrorism risk analysis.     

关系类型对服务失败后顾客反应的影响

本文探讨了真正服务关系、虚假服务关系和偶遇服务关系三种关系类型对服务失败后顾客反应的影响。研究显示,在遭遇服务失败后三种关系类型的反应差异明显,具有真正服务关系的顾客在服务失败后比其它两类关系类型的顾客具有更高的顾客满意度、更少的负面口碑以及更高的重购倾向,而虚假关系的顾客比偶遇关系的顾客又表现出较高的满意度、较少的负面口碑以及较高的重购倾向。所以关系能够提供防御性服务补救作用,而且相对于其它补救策略更显得未雨绸缪。     

Self‐Service Operations at Retail Stores: The Role of Inter‐Customer Interactions

Inter‐customer interactions are important to the operation of self‐services in retail settings. More specifically, when self‐service terminals are used as part of customers’ checkout processes in retail operations without the explicit involvement of retailers as the direct service providers, inter‐customer interactions become a significant managerial issue. In this article, we examine the impact of inter‐customer interactions at retail self‐service terminals on customers’ service quality perceptions and repeat purchase intentions at retail stores. We conduct a scenario‐based experimental design (N = 674) using a 2 × 2 factorial design in which inter‐customer interactions are divided into “positive” vs. “negative” and occur during the “waiting” or during the actual “transaction” stages of self‐services at a retail store. We use attribution theory to develop the hypotheses. The results demonstrate that, through their interactions, fellow customers can exert influences on a focal customer's quality perceptions and repeat purchasing intentions toward a retail store. Furthermore, these influences were impacted by how customers attribute blame or assign responsibility toward the retail store. Service operations managers should leverage these interactions by designing into self‐service settings the capacities and interfaces that are best suited for customers’ co‐production of their self‐service experiences.     

A Typology of Consumers' Emotional Response Styles during Service Recovery Encounters*

Previous efforts investigating consumers' response styles during service failure and recovery encounters have focused on behavioural elements and, by and large, neglected the important issue of emotions elicited in this context. The present study uses experienced emotions during service recovery encounters as a way of classifying complainants and links the resultant typology to the relationship quality indicators of satisfaction, trust and commitment. By doing so, it serves as an empirically grounded basis for subsequently deriving strategies and tactics for successful recovery from service failures. The results reveal four distinct emotional response styles which are associated with perceptions of relationship quality following service recovery encounters. Managerial implications of the findings are discussed and future research directions identified.     

基于外部比较下的服务补救后顾客行为意向的探讨

本研究探讨了同一顾客在一家企业经历了服务失败和服务补救后与在另外一家企业从未遭遇过服务失败的比较下其行为意向,为服务补救的研究提供了新的视角。本研究考察了顾客归因对服务补救预期的影响,验证了顾客的补救预期越高则其满意度越低,满意度越高则其行为意向越积极,证明了顾客的行为意向不仅受到满意度的影响还受到顾客感知的服务失败严重程度的影响。     

Line Balancing in Parallel M/M/1 Lines and Loss Systems as Cooperative Games

We consider production and service systems that consist of parallel lines of two types: (i) M/M/1 lines and (ii) lines that have no buffers (loss systems). Each line is assumed to be controlled by a dedicated supervisor. The management measures the effectiveness of the supervisors by the long run expected cost of their line. Unbalanced lines cause congestion and bottlenecks, large variation in output, unnecessary wastes and, ultimately, high operating costs. Thus, the supervisors are expected to join forces and reduce the cost of the whole system by applying line‐balancing techniques, possibly combined with either strategic outsourcing or capacity reduction practices. By solving appropriate mathematical programming formulations, the policy that minimizes the long run expected cost of each of the parallel‐lines system, is identified. The next question to be asked is how to allocate the new total cost of each system among the lines' supervisors so that the cooperation's stability is preserved. For that sake, we associate a cooperative game to each system and we investigate its core. We show that the cooperative games are reducible to market games and therefore they are totally balanced, that is, their core and the core of their subgames are non‐empty. For each game a core cost allocation based on competitive equilibrium prices is identified.     

Toward Disaster‐Resilient Cities: Characterizing Resilience of Infrastructure Systems with Expert Judgments

Resilient infrastructure systems are essential for cities to withstand and rapidly recover from natural and human‐induced disasters, yet electric power, transportation, and other infrastructures are highly vulnerable and interdependent. New approaches for characterizing the resilience of sets of infrastructure systems are urgently needed, at community and regional scales. This article develops a practical approach for analysts to characterize a community's infrastructure vulnerability and resilience in disasters. It addresses key challenges of incomplete incentives, partial information, and few opportunities for learning. The approach is demonstrated for Metro Vancouver, Canada, in the context of earthquake and flood risk. The methodological approach is practical and focuses on potential disruptions to infrastructure services. In spirit, it resembles probability elicitation with multiple experts; however, it elicits disruption and recovery over time, rather than uncertainties regarding system function at a given point in time. It develops information on regional infrastructure risk and engages infrastructure organizations in the process. Information sharing, iteration, and learning among the participants provide the basis for more informed estimates of infrastructure system robustness and recovery that incorporate the potential for interdependent failures after an extreme event. Results demonstrate the vital importance of cross‐sectoral communication to develop shared understanding of regional infrastructure disruption in disasters. For Vancouver, specific results indicate that in a hypothetical M7.3 earthquake, virtually all infrastructures would suffer severe disruption of service in the immediate aftermath, with many experiencing moderate disruption two weeks afterward. Electric power, land transportation, and telecommunications are identified as core infrastructure sectors.     

The Economic Payout Model for Service Guarantees

Service guarantees consist of a promise to a customer (marketing), the delivery of a service to the customer (operations), and actions to appease the customer when service failures happen (recovery). A part of recovery involves offering the customer an economic and/or noneconomic payout when things go wrong. When the economic payout is too high or low, the impact on the organization and the customer is usually negative. Therefore, determining the size of the economic payout is of critical strategic and tactical importance in businesses. Yet, no systematic quantitative methods are found in the literature to help managers determine the economic payout for service failures. The current ways an economic payout is determined are management judgment, the consensus of customer focus groups, competitive benchmarking, and the use of simple expected value methods. In this article, we define the Economic Payout Model for Service Guarantees (EPMSG) that provides an optimal service guarantee economic payout under certain conditions. The EPMSG and its objective function considers customer revenue over the short‐ and long‐term, the cost of creating and providing the service, the cost of recovery, the probability of a service failure, and the probability of customer retention as a function of economic payout. A numerical example is provided of how EPMSG works. Customer retention probability distributions are examined assuming normal and gamma distributions. We end the article by describing the theoretical contributions, model limitations, managerial implications, and opportunities for future research.     

服务补救中顾客情绪对顾客满意之影响的实证研究

在顾客服务补救满意的研究中,本文引入情绪变量,提出了包含服务失败、服务补救整个过程的研究模型,采用情景模拟的方法进行了实证研究。研究表明:顾客在服务补救后的满意,受顾客服务补救后情绪的影响,而不是受顾客服务失败时的初始情绪的影响。其中,补救后积极情绪对补救满意有显著的正向影响;补救后外在归因消极情绪对补救满意有显著的负向影响。     

Inter‐organizational Quality Management: The Use of Contractual Incentives and Monitoring Mechanisms with Outsourced Manufacturing

Quality‐related incidents involving contract manufacturers (CMs) are becoming increasingly prevalent. The quality management (QM) literature, however, has focused mostly on QM within a single firm. Thus, the need for data‐driven research on managing quality with outsourced production is evident. We investigate the use and effectiveness of external failure penalties and audits of CMs’ facilities to manage inter‐firm quality. Building on agency theory and extant QM literature, this study addresses two research questions: (i) whether the control mechanisms of quality audits and contractual external quality failure penalties are substitutes or complements in use and (ii) whether they are substitutes or complements in their effectiveness at aligning the quality interests of customers and their CMs. Our analysis uses dyadic data gathered from brand‐owning firms and their CMs representing 95 contract manufacturing relationships in Food and Drug Administration (FDA)‐regulated industries. The results indicate that more severe external failure penalties correspond to a lower use of facility audits (i.e., they are substitutes‐in‐use). We also find that both external failure penalties and facility audits have a unique positive effect on the CM's perception of relative quality importance. Finally, some evidence supports the hypothesis that each mechanism is more effective in the presence of the other (i.e., they are complements‐in‐effectiveness).     

Ice‐Breaker vs. Standalone: Comparing Alternative Workflow Modes of Mid‐level Care Providers

Capitalizing on the operational concept of division‐of‐labor, clinics often reduce physician service time by off‐loading some of his/her clinical activities to lower‐cost personnel. These personnel, such as nurse practitioners and physician assistants, are often collectively referred to as “mid‐level providers” (MLPs) and can perform many patient‐consultation tasks. The common rationale is that using an MLP allows the physician to serve more patients, increase patients’ access to care, and, due to MLPs’ lower salaries, improve the clinic's financial performance. An MLP is typically integrated into the outpatient clinic process in one of two modes: as an “ice‐breaker,” seeing each patient before the physician, or as a “standalone” provider, a substitute for the physician for the entirety of some patients’ visits. Despite both of these modes being widely used in practice, we find no research that identifies the circumstances under which either one is preferable. This study examines these two modes’ effects on operational performance, such as patient flow and throughput, as well as on financial measures. Using queueing and bottleneck analysis, discrete‐event simulation, and profit modeling, we compare these two deployment modes and identify the optimal policies for deploying MLPs as either ice‐breakers or as standalone providers. Interestingly, we also find there exists a range of scenarios where not hiring an MLP at all (i.e., the physician works alone) is likely to be most profitable for the clinic. Implications for practice are discussed.     

Systems Analysis of Failures as a Quality Management Tool

Managers and quality practitioners are familiar with the linkage of the words quality and systems to denote a systematic approach to quality, as in BS5750 Quality Systems, say. There is, however, a more specialized use of the word systems that indicates the application of systems thinking and which gives rise to the adjective systemic (of, or pertaining to a system) rather than systematic (carrying out in a planned and orderly fashion). This paper examines the potential for applying systems thinking to the management of quality with particular reference to one branch of systems work: the study of failures. The paper draws comparisons between quality and systems analysis of failures and points out that some failures could equally well be described as quality problems and vice versa. The paper argues that problems at the system level are frequently overlooked or avoided by those undertaking quality improvement programmes, partly because individuals within an organization may experience only different, smaller aspects of a systemic problem and partly because the problem solvers may lack the means or motivation to tackle complex, poorly defined problem messes. It then goes on to suggest that use of a meta–method for problem analysis would enable such problems to be addressed. One such method that has been widely applied in the study of failures, the failures method, is described in detail and its application to a failure/quality problem is outlined.