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.     

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.     

Market Orientation,Ownership Type,and E‐Business Assimilation: Evidence from Chinese Firms

While more and more firms have implemented e‐business in business operations, a better understanding of the factors that successfully drive the assimilation of e‐business will provide insights for firm executives and practitioners to develop effective strategies for e‐business. Different from previous studies that focus on individual‐level factors related to business executives and top management teams, this study examines how firm‐level strategic and cultural factors shape e‐business assimilation. Based on the strategy and marketing literature on market orientation and firm ownership, we developed a research model to describe how a firm's market orientation impacts e‐business assimilation. The model also describes the moderating effect of firm ownership type on the relationship between market orientation and e‐business assimilation. Based on data from 301 Chinese international trade firms, we found that two dimensions of market orientation (i.e., customer orientation, competitor orientation) had significant effects on e‐business assimilation. However, the third dimension, interfunctional coordination, was only partially significant. In addition, ownership type was a significant moderator of the effects of customer orientation and competitor orientation on e‐business assimilation, although ownership type was not a moderator of interfunctional coordination. Being one of the first studies of the impact of market orientation and firm ownership type on e‐business assimilation, we conclude with a discussion of the implications for future research and practice.     

An Interaction Model of Business Service Production and Consumption

This paper develops a conceptual framework and model of the production and consumption of a business service. The model captures the interacting and dynamic nature of relationships between individuals both within and between client and supplier firms. The role played by the client during the different phases of production of the service will influence the degree to which the final service delivered meets the customer's specifications and the probability of implementation. Some empirical evidence of the complex interactions that occur in the creation of business services is presented and is used to suggest a modified typology of business services.     

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.     

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.     

Customer Learning Processes,Strategy Selection,and Performance in Business‐to‐Business Service Firms*

Learning about customers takes place through relevant dialogues with those customers, also known as customer relationship management (CRM). As relationships develop, information about the customer is gathered in the firm's customer information systems (CIS): the content, processes, and assets associated with gathering and moving customer information throughout the firm. This research develops a measure of CIS management capabilities based on learning organization theory and measured by the ability to get, store, move, and use information throughout the business unit. This measure is then used to analyze customer learning processes and associated performance in the context of marketing strategic decision making. This study of 209 business services firms finds that generic marketing strategy positioning (low‐cost and differentiation) and the marketing tactics of personalization and customization are related to CIS development. Customer information systems development in turn is associated with higher levels of customer‐based performance, which in turn is associated with increased business growth. Since the strongest association with customer‐based performance is strategy selection, the long‐term benefits of the knowledge gained from the CIS may be in the ability to assist in measuring customer‐based performance, rather than in the ability to immediately contribute to performance. Finally, for these firms, customization and personalization are not directly associated with performance and thus may not be necessary to support every firm's marketing strategy.     

Surprise,Anticipation, and Sequence Effects in the Design of Experiential Services

The most salient or peak aspect of a service experience often defines customer perceptions of the service. Across two studies, using the same novel form of a scenario‐based experiment, we investigate the design of peak events in a service sequence by testing how anticipated and surprised peaks influence customer perceptions. Study 1 captures the immediate reactions of participants and Study 2 surveys participants a week later. In both studies, we find a main effect for the temporal peak placement, confirming the positive influence of a strong peak ending. When assessing the peak design strategies of surprise and anticipation, we find in Study 1 that surprise and anticipation moderate the temporal peak placement (e.g., early peak vs. late peak) on overall customer perceptions, with the surprise peak at the end of an experience yielding the strongest effect. In Study 2 we see that the remembered experience of a surprise peak positively affects customer perceptions compared to an anticipated peak regardless of the temporal placement of the peak. We also find that the infusion of a surprise peak ending has a lasting effect that amplifies the peak‐end effect of remembered experiences. Drawing on these findings, we discuss the role of surprise, anticipation, and sequence effects in experience design strategy.     

Revenue Management of Reusable Resources with Advanced Reservations

We consider a revenue management problem wherein the seller is endowed with a single type resource with a finite capacity and the resource can be repeatedly used to serve customers. There are multiple classes of customers arriving according to a multi‐class Poisson process. Each customer, upon arrival, submits a service request that specifies his service start time and end time. Our model allows customer advanced reservation times and services times in each class to be arbitrarily distributed and correlated. Upon arrival of each customer, the seller must instantaneously decide whether to accept this customer's service request. A customer whose request is denied leaves the system. A customer whose request is accepted is allocated with a specific item of the resource at his service start time. The resource unit occupied by a customer becomes available to other customers after serving this customer. The seller aims to design an admission control policy that maximizes her expected long‐run average revenue. We propose a policy called the ε‐perturbation class selection policy (ε‐CSP), based on the optimal solution in the fluid setting wherein customers are infinitesimal and customer arrival processes are deterministic, under the restriction that the seller can utilize at most (1 − ε) of her capacity for any ε ∈ (0, 1). We prove that the ε‐CSP is near‐optimal. More precisely, we develop an upper bound of the performance loss of the ε‐CSP relative to the seller's optimal revenue, and show that it converges to zero with a square‐root convergence rate in the asymptotic regime wherein the arrival rates and the capacity grow up proportionally and the capacity buffer level ε decays to zero.     

Foundations and Implications of a Proposed Unified Services Theory

Diverse businesses, such as garbage collection, retail banking, and management consulting are often tied together under the heading of “services”, based on little more than a perception that they are intangible and do not manufacture anything. Such definitions inadequately identify managerial and operational implications common among, and unique to, services. We present a “Unified Services Theory” (UST) to clearly delineate service processes from non‐service processes and to identify key commonalities across seemingly disparate service businesses. The UST defines a service production process as one that relies on customer inputs; customers act as suppliers for all service processes. Non‐services (such as make‐to‐stock manufacturing) rely on customer selection of outputs, payment for outputs, and occasional feedback, but production is not dependent upon inputs from individual customers. The UST reveals principles that are common to the wide range of services and provides a unifying foundation for various theories and models of service operations, such as the traditional “characteristics of services” and Customer Contact Theory. The UST has significant operational corollaries pertaining to capacity and demand management, service quality, services strategy, and so forth. The UST provides a common reference point to which services management researchers can anchor future theory‐building and theory‐testing research.     

Performance Impacts of Strategy,Information Technology Applications,and Business Process Outsourcing in U.S. Manufacturing Plants

This paper develops a conceptual model to study the role of outsourcing strategies and plant‐level information technology (IT) application infrastructure in the outsourcing of production and support business processes, as well as their subsequent impact on overall plant performance. We validate this model empirically using cross‐sectional survey data from U.S. manufacturing plants. We find that some IT applications are more effective at enabling the outsourcing of business processes than others. For example, the implementation of enterprise management systems is associated with the outsourcing of both production and support processes, whereas operations management systems are not associated with the outsourcing of plant processes. Plants with a low‐cost outsourcing strategy are more likely to outsource support processes than plants with a competency‐focused outsourcing strategy. However, both cost‐ and competency‐based strategies have a positive and similar impact on the outsourcing of production processes. In terms of implications for plant performance, our findings indicate that the outsourcing of production and support processes is associated with higher gross margins. Although plant IT infrastructure is positively associated with favorable on‐time delivery rates, there is no positive association between the incidence of plant outsourcing and on‐time delivery rates. These results have implications for crafting plant‐level outsourcing strategies and for investments in IT systems to facilitate the outsourcing of business processes for enhanced plant performance.     

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.     

International outsourcing of services: A partnership model

The business landscape is currently witnessing widespread migration of service functions from developed nations like the U.S to several foreign destinations as India, China, Ireland, Philippines etc. This happens as more and more firms engage in international outsourcing of services (IOS) to survive in today's highly competitive business environment. Despite increase in IOS, the nature of partnerships involved between clients and their overseas providers have not received adequate attention in the scholarly literature. In this paper, we develop a conceptual model that explains three possible types of IOS partnership. We discuss how these partnerships vary in the way they are conceived and implemented. Propositions are offered after elaborating on each type of partnership. We conclude by discussing the academic and practical implications of our model.     

Product Design and Supply Chain Coordination Under Extended Producer Responsibility

Extended Producer Responsibility (EPR) legislation focuses on the life‐cycle environmental performance of products and has significant implications for management theory and practice. In this paper, we examine the influence of EPR policy parameters on product design and coordination incentives in a durable product supply chain. We model a manufacturer supplying a remanufacturable product to a customer over multiple periods. The manufacturer invests in two design attributes of the product that impact costs incurred by the supply chain—performance, which affects the environmental impact of the product during use, and remanufacturability, which affects the environmental impact post‐use. Consistent with the goals of EPR policies, the manufacturer and the customer are required to share the environmental costs incurred over the product's life cycle. The customer has a continuing need for the services of the product and optimizes between the costs of product replacement and the costs incurred during use. We demonstrate how charges during use and post‐use can be used as levers to encourage environmentally favorable product design. We analyze the impact of supply chain coordination on design choices and profit and discuss contracts that can be used to achieve coordination, both under symmetric and asymmetric information about customer attributes.     

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.     

Re‐storying the Business,Innovation and Entrepreneurial Ecosystem Concepts: The Model‐Narrative Review Method

We propose a novel literature review method in order to systematically trace and reveal the dominant narratives of a body of literature: the model‐narrative review method. We apply this method to an ever‐growing literature on ecosystems in business studies, as it resembles a rich knowledge base with somewhat competing, overarching stories, replete with emplotted characters, systematic puzzles and embellished scientific drama. To interpret these unfolding storylines, we both separately engage with and connect seminal work on business, entrepreneurial and innovation ecosystems. Through thematic reading we map the key themes and scientific puzzles in each ecosystem type. Through enstoried reading we identify how authors construct the plot, narrative setting, emplotted characters, narrative voices and moral lessons around ecosystems. Through rhetorical reading we explicate the rhetorical devices and strategies that claim the relevance of their work. Our findings expose a number of hidden meanings and underlying assumptions, adding transparency to ecosystem rhetorics and enhancing conceptual clarity. Altogether, this method offers a systematic construction of model‐narratives to synthesize and critically reflect upon similarities and differences between related concepts and opens up space for alternative research questions.     

ADAPTING THE QFD APPROACH TO EXTENDED SERVICE TRANSACTIONS

This paper proposes an adaptation of quality function deployment (qfd) for services, more specifically extended service transactions. We propose two modifications to service applications of Qfd. One is the inclusion of higher-level customer needs (consequences, benefits, experiences, and personal values) to incorporate the experiential and personal nature of extended service transactions into the process. The second modification is to use customers' knowledge and expertise regarding service production and delivery as input beyond the house of quality. An interviewing method is proposed for a comprehensive assessment of customer needs at multiple levels. Results from an empirical application of this technique to luxury business hotels support the proposed modifications to Qfd to increase its potential for application to services.     

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.