Considered Service-specific journals were Journal of Service Research, Journal of Service Management, Journal of Services Marketing, Journal of Service Theory and Practice, Service Industries Journal, Cornell Hospitality Quarterly, and Service Science.
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Agrawal, A., J. Gans and A. Goldfarb (2020): how to win with machine learning, Harvard Business Review, 98(5), pp.126-133
Many companies can dramatically improve their products and services by using machine learning—an application of artificial intelligence that involves generating predictions from data inputs. Amazon, Google, and other tech giants are already experts at taking advantage of this technology. Smaller enterprises and late entrants, however, may be unsure how to do likewise to gain market share for themselves. This article suggests that early movers will be successful if they have enough training data to make accurate predictions and if they can improve their algorithms by quickly incorporating feedback derived from customers’ behavior. Latecomers will need a different approach to be competitive: The secret for them is to find untapped sources of training or feedback data, or to differentiate themselves by tailoring predictions to a special niche.
Das, G., R. Roy and M. T. Spence (2020): The mitigating effect of matching regulatory focus with arousal‐inducing stimuli in service failure situations, Psychology & Marketing, 37(10), pp.1420-1432
Service failures are pivotal touchpoints that can reduce customer satisfaction, encourage negative word‐of‐mouth, and ultimately impact a firm’s market share. We advance a novel perspective that after a service failure occurs, matching incidental arousal‐inducing stimuli to one’s regulatory orientation can make the negative experience stemming from the service failure less deleterious. In three experiments (two stock out scenarios and one involving a rude salesperson), after a service failure, promotion‐focused and prevention‐focused individuals were exposed to high versus low arousal‐inducing stimuli. Three approaches available to retailers were used to manipulate arousal levels: background pictures (Study 1), colors (Study 2), and music (Study 3). When high (low) incidental arousal‐inducing stimuli were presented to those with a promotion (prevention) focus, this raised satisfaction, loyalty, and referral for brands compared to when promotion (prevention)‐focused individuals were exposed to low (high) arousal‐inducing stimuli. Changes in self‐rated arousal and affect valence levels (arousal and valence levels were measured after the service failure and then after exposure to the incidental arousal‐inducing stimuli) mediated the effect on these consumer behaviors. These insights extend theory by considering the combined effect of regulatory focus and affect. They also have practical relevance.
Anke, J., J. Poeppelbuss and R. Alt (2020): It Takes More than Two to Tango: Identifying Roles and Patterns in Multi-Actor Smart Service Innovation, Schmalenbach Business Review, 72(4), pp.599-634
Smart service systems enable innovative value propositions based on smart products and data-driven value creation. Grounded in service-dominant logic as our theoretical lens, we argue that smart service innovation takes place in ecosystems of collaborating actors, as a single actor does not possess all required resources and competencies. We empirically explore smart service innovation using an interview study of 14 experts who were involved in real-world smart service systems engineering projects. As a result, we conceptualize 17 roles that describe the resources and competencies required for smart service innovation at an abstract level. Through the analysis of actor-role constellations in our sample of projects, we further identify four patterns that exhibit different strategic approaches to smart service innovation. Our results advance the theoretical understanding of smart service systems through an empirically grounded systematization of roles, which reflect the resources and competencies required for smart service innovation. With this study, we shed light on the multi-actor and inter-organizational settings of service innovation processes, which have been under-researched so far. Our insights are further helpful for practitioners, who participate in the smart service innovation and who need to analyze their strategic position in service ecosystems.
Zhang, Z., G. Nan and Y. Tan (2020): Cloud Services vs. On-Premises Software: Competition Under Security Risk and Product Customization, Information Systems Research, 31(3), pp.848-864
Because of its on-demand feature and flexible pay-as-you-go mechanism, cloud service dramatically reduces the up-front information technology expenses that may deter many clients from implementing on-premises software. The associated security risks and low customization capability, however, create challenges for the adoption of cloud service. We study the competitive implications of security risks and customization capability on consumer purchase choices and vendors’ pricing and investment strategies. Although cloud services are perceived to be more vulnerable to cyberattack, our results demonstrate that in high-security-loss environments, using cloud service yields a lower average expected loss for consumers as compared with on-premises software. By endogenizing vendors’ investment decisions, our investigation highlights that the cloud vendor does not necessarily economically benefit from investing in addressing cloud security, especially in low-security-loss environments. We also find that the on-premises vendor’s security and customization investments act as strategic substitutes in low-security-loss environments and, under certain conditions, complement in high-security-loss environments. We further examine welfare-maximizing security investments and find that the socially optimal investment requires greater effort to improve cloud security in low-security-loss environments and to improve on-premises software security in high-security-loss environments. Cloud computing services are transforming business and government at an ever-increasing rate. The associated security risk and low customization capability, however, create challenges for the adoption of cloud services. In this paper, we construct a game-theoretical model that involves two vendors—one that provides cloud service on a pay-per-use basis and the other that sells on-premises software at a one-time licensing fee—and consumers who are heterogeneous in their usage frequencies in an environment in which negative security externalities are present. We study the competitive implications of security risk and product customization capability on consumer purchase choice and vendors’ pricing and investment strategies. Although it is generally believed that cloud services are more vulnerable to security breaches, our results demonstrate that in high-security-loss environments in which consumers incur a large loss per use if struck by attacks, using cloud service yields a lower average expected loss for consumers compared with on-premises software. By endogenizing vendors’ investment decisions on security and customization, our investigation highlights that in low-security-loss environments, the cloud vendor has no incentive to invest effort in reducing security risk, but the on-premises vendor will increase security investment when the probability of attacks on its product becomes higher. We also find that the on-premises vendor’s security and customization investments act as strategic substitutes in low-security-loss environments and, under certain conditions, complements in high-security-loss environments. We further examine welfare-maximizing security investments and find that the socially optimal investment requires greater effort to improve cloud security in low-security-loss environments and to improve on-premises software security in high-security-loss environments.
Herhausen, D., O. Emrich, D. Grewal, P. Kipfelsberger and M. Schoegel (2020): Face Forward: How Employees’ Digital Presence on Service Websites Affects Customer Perceptions of Website and Employee Service Quality, Journal of Marketing Research (JMR), 57(5), pp.917-936
Confronted with increasing digitalization, service firms are challenged to sustain customer loyalty. A promising means to do so is to leverage the digital presence of service employees on their website. A large-scale field study and several experimental studies show that the digital presence of service employees on the firm website increases current website service quality perceptions and positively shapes memories related to employee service quality perceptions from past service encounters. Both effects indirectly increase customer loyalty and, in turn, financial performance, and are amplified by employee accessibility and a service firm’s customer orientation. The authors examine further boundary conditions for the memory process: only service employees evoke the beneficial spillover effect to employee service quality perceptions, and the spillover effect does not generalize to evaluations of product quality. Remarkably, an employee’s digital presence, although factually unrelated, augments customer perceptions of service employees’ competence and commitment and thus strengthens rather than erodes service employees’ role in customer–firm relationships. Theoretical and managerial implications deepen the understanding of how to add a human touch to digital channels.
Vivian Zheng, X., L. Jenny Ji and C. Su (2020): Mitigating the Negative Effects of Regional Clustering in Franchising: The Roles of Governance Mechanisms, Journal of Retailing, 96(3), pp.434-444
• Regional clustering of franchised outlets can be used as a firm-level strategy. • There are both positive and negative financial impact of regional clustering. • Contract completeness amplifies the negative impact of regional clustering. • Franchisor support mitigates the negative impact of regional clustering. Many franchisors employ regional clustering as an expansion strategy and benefit from it financially in its early stage. However, the positive effect of regional clustering tends to reach its maximum at a certain point, and franchisors may be forced to slow down expansion because of the escalating intra-brand competition within the cluster. What governance mechanisms should firms employ to mitigate the negative effects of regional clustering and reap more financial benefits from it? Building upon agency theory and emerging literature on regional clustering in marketing, we postulate that the density of regional clustering of franchised outlets has an inverted U-shaped impact on franchisor financial performance. To mitigate the negative effects of regional clustering, we hypothesize that franchisors can employ more flexible contracts that allow franchisees to engage in local innovation. In addition, the services provided by the franchisor help enhance the competitiveness of the franchise system and serve as a buffer for the negative effect of regional clustering. The results from an analysis of 84 franchise systems over a 10-year period (2003–2012) have largely supported our hypothesis. Hence, our findings offer actionable managerial insights on how firms may minimize the negative effects of regional clustering by deploying governance mechanisms properly.
Berry, L. L. and R. L. Adawi Awdish (2020): Health Care Organizations Should Be as Generous as Their Workers, Annals of Internal Medicine, (), pp.
Generosity is a service organization’s most powerful opportunity to excel (1). Being generous with employees strengthens their sense of community, security, loyalty, and trust and inspires them to go the extra mile to serve others. That discretionary effort—the difference between the effort workers voluntarily expend versus what they must expend to avoid penalty—is critical to the success of all service organizations, especially in health care.
Du, L. and Q. Li (2020): A Data-Driven Approach to High-Volume Recruitment: Application to Student Admission, Manufacturing & Service Operations Management, 22(5), pp.942-957
Problem definition: Service providers often recruit a large number people over a short period of time, a practice known as high-volume recruitment. In this study, we describe a data-driven approach that can be used to streamline the recruitment process and aid decision making. The recruitment process consists of two stages: screening and interview. All candidates are evaluated in the screening stage, but only those with sufficiently high screening scores are short-listed for an interview. After the interview stage, offers are made based on the screening and interview scores. We define the error rate as the probability that a candidate who is rejected during either stage might have had a higher job performance than the median job performance of the candidates recruited had he or she been accepted. To ensure the error rate is no higher than a certain level, how many candidates should be short-listed, and, after the interview, how should candidates be ranked based on the two scores? Academic/practical relevance: High-volume recruitment is challenging because decisions have to be made for many people, under tight time constraints, and under uncertainty. Our approach does not require knowledge about the cost of evaluating candidates and the utility of selecting candidates; hence, it is easier to implement in practice. We apply the approach to the process of recruiting students for a postgraduate business program. Methodology: We use stochastic modeling and regression. Results: We provide a procedure for estimating the error rate as a function of the percentage of candidates short-listed for interviews. We show that the estimated error rate is asymptotically unbiased and converges to the true error rate in probability. We then run a linear regression analysis to estimate the relationship between job performance and the screening and interview scores. In a case study involving a postgraduate business program, the job performance measure we adopt is the grade point average in the program, observable only for the students enrolled in the program. We find that the interview score is statistically significant, but the screening score is not. Managerial implications: For the postgraduate program, our study demonstrates that the time-intensive interview process has substantial value. We should increase, rather than reduce, as suggested by the program administrators before our study, the weight assigned to the interview score and the time spent on the interview process. Knowing the relationship between the error rate and the percentage of candidates short-listed for interviews, the program administrators can determine the appropriate percentage for any given error rate deemed acceptable and improve the ranking of candidates. Our approach is general and can be applied to other high-volume recruiters.
Trenz, M., D. J. Veit and T. Chee-Wee (2020): DISENTANGLING THE IMPACT OF OMNI CHANNEL INTEGRATION ON CONSUMER BEHAVIOR IN INTEGRATED SALES CHANNELS, MIS Quarterly, 44(3), pp.1207-1258
“Brick-and-mortar” retailers, when expanding their businesses to online channels, can either add a separate online channel or integrate channels to enhance service offerings. Although past studies on channel choice have yielded insights into factors affecting consumers’ channel preference, there is a dearth of research that sheds light on when and why massive investments into channel integration would be preferred over online optimizations. To this end, we construct and validate a theoretical model that posits omni channel integration services for acquisition and recovery as predictors of consumers’ online channel preference through influencing their perceptions of convenience and risk. Our experimental study reveals how distinct configurations of cross-channel service offerings affect consumers’ channel evaluations and decisions, as well as how complementarities from channel integration across transaction and post-transaction phases can prevail over pure online substitutes. Consequently, this study bridges diagnostic and prescriptive research streams on multichannel and omni channel retail by attesting to channel integration as a viable channel differentiator. From a practical stand point, we compare 12 distinct channel configurations with regard to consumers’ core evaluative criteria and highlight the value of omni channel integration since efficiency improvements to the online channel can only serve as a partial substitute to channel integration.
Elgeti, L., I. Danatzis and M. Kleinaltenkamp (2020): Customer capabilities for solution offerings in business markets, Industrial Marketing Management, 90(), pp.44-59
Solutions in business markets aim to solve business customers’ organizational problems by providing end-to-end offerings consisting of customized combinations of goods and services along the customers’ business processes. While the effective integration of customer resources and processes is key for solution success, prior research predominantly focusses in delineating only those capabilities that provider firms necessitate to offer solutions. Yet, it remains unclear which capabilities customer firms require to develop, deploy, and use solutions effectively and how these capabilities differ across different solution types. This study addresses these gaps by combining a critical literature review on organizational capabilities of business customers with empirical insights gained in 20 in-depth interviews with representatives of provider firms across a wide range of industries. Using the repertory grid method, this study identifies five broader capability sets consisting of 16 organizational customer-firm capabilities and demonstrates their importance for different types of solution offerings. Theoretically, this study advances research on solution capabilities by explicating the nature, composition, and relevance of a portfolio of capabilities that customer firms require to bring into the solution process. Managerially, the results can assist solution providers in evaluating, choosing, and developing their customer base during the solution development and deployment process. • This paper delineates which capabilities customer firms require to develop, deploy, and use solutions effectively and how these capabilities differ across different solution types • Solution-specific operational and dynamic customer capabilities are key for solution success • Using the repertory grid method and drawing on 20 in-depth interviews with representatives of provider firms, 16 organizational customer firm capabilities emerge • Capabilities are further subsumed into five aggregated key capability sets, namely interactional capabilities, sourcing capabilities, experience utilization capabilities, internal organizational capabilities, and innovation capabilities • Customer capabilities are particularly critical when solutions are designed to improve customer efficiency rather than to facilitate customer performance gains
Huikkola, T., R. Rabetino, M. Kohtamäki and H. Gebauer (2020): Firm boundaries in servitization: Interplay and repositioning practices, Industrial Marketing Management, 90(), pp.90-105
The present study analyzes how servitization delineates a manufacturer’s boundaries. Based on interviews with 57 senior managers and extensive secondary data collected from four global solution providers, this study contributes by revealing how servitization shapes firm boundary decisions and repositioning practices. First, the results demonstrate that servitization changes a manufacturer’s a) identity from technology-focused to customer-centric, b) capabilities to integrate technology development with customer value understanding, c) power position in the manufacturing ecosystem from upstream to downstream, and d) efficiency logic toward a service factory logic. Second, this study describes the interplay among these boundary lenses in servitization. The developed framework can assist managers in their strategy implementation when moving toward servitization. • This empirical study exposes that a manufacturer’s transition from products to services requires firm’s boundary changes. • Manufacturers must consider the dynamic interplay among the four boundary lenses when moving toward servitization. • Firms should have a clear overall plan and rules concerning the actions and practices they will accomplish to drive that change. • Alliances/joint ventures are common practices in the upstream, whereas acquisitions/new investments are used in the downstream.
Pardo, C., B. S. Ivens and M. Pagani (2020): Are products striking back? The rise of smart products in business markets, Industrial Marketing Management, 90(), pp.205-220
• Smart products are defined through their physicality and ecosystemic nature. • A two-dimension typology is presented. • Four types of Smart Business Products are described. • ‘Digital enhancement’, ’embeddedness’ and ‘transformativeness’ are discussed. The business world is experiencing a shift away from ‘physicality’ due to the ubiquitous growth of the service sector and a progressive shift from selling product to offering service. Yet, at the same time, with regard to technology-based phenomena such as the Internet of Things (IoT), it is physical products equipped with sensors that are at the centre of the transformation. Our research seeks to understand how business products become smart products. It focuses on how product physicality (visibility of smartness; additional functions) and product ecosystems (product connectedness; degree of autonomy) are changing, and the resulting issues for marketing managers. We propose a typology of smart products along two dimensions: ‘ Product Attributes’ and ‘ Ecosystemic attributes’. We distinguish four categories of smart products: More Efficient Products (MEPs), Augmented Products (APs), Products as a Node (PN), and Products as a Hub (PH). In each category, a product acquires a certain degree of ‘digital enhancement’, ’embeddedness’ and ‘transformativeness’, as we describe. We also discuss several implications of our work both at the theoretical and managerial levels.
Polova, O. and C. Thomas (2020): How to perform collaborative servitization innovation projects: the role of servitization maturity, Industrial Marketing Management, 90(), pp.231-251
Although current literature indicates that openness and collaboration are crucial for success in an innovative servitization solution within interorganisational servitization projects, research is limited compared to that on product and technology innovation projects. Moreover, this emerging servitization literature is limited to the traditional lead-firm perspective within larger consortiums. To help redress the balance, our research studied six collaborative servitization projects in mobile information and communication technologies (mICT) to explore why some open innovation efforts succeed in simultaneous service and product innovation with a market application of innovative solution, while others do not. The study provides empirical evidence that only a small number of projects resulted in an effective servitization innovation solution. This conclusion emphasises the complexity of creating service innovation in the mICT sector. By comparing better performing servitization projects with those that were less successful suggests that higher performance, in terms of novel service development, requires more than mere strong intention, adequate leadership and change management competencies. Rather, it also requires real servitization maturity in terms of a shared servitization framework and market-oriented innovation. • Current studies on collaborative interorganisational servitization innovation only consider the traditional lead-firm view. • This paper explores larger industry and research consortiums undertaking collaborative servitization innovation projects. • The study shows that project success demands that dissimilar partners achieve close collaboration and clear value sharing. • We show success also requires real servitization maturity in their servitization framework and market-oriented innovation.
Kc, D. S., B. R. Staats, M. Kouchaki and F. Gino (2020): Task Selection and Workload: A Focus on Completing Easy Tasks Hurts Performance, Management Science, 66(10), pp.4397-4416
How individuals manage, organize, and complete their tasks is central to operations management. Recent research in operations focuses on how under conditions of increasing workload individuals can decrease their service time, up to a point, to complete work more quickly. As the number of tasks increases, however, workers may also manage their workload by a different process—task selection. Drawing on research on workload, individual discretion, and behavioral decision making, we theorize and then test that under conditions of increased workload, individuals may choose to complete easier tasks to manage their load. We label this behavior task completion preference (TCP). Using six years of data from a hospital emergency department, we find that physicians engage in TCP, with implications for their performance. Specifically, TCP helps physicians manage variance in service times; however, although it initially appears to improve shift-level throughput volume, after adjusting for the complexity of the work completed, TCP is related to worse throughput. Moreover, we find that engaging in easier tasks compared with hard ones is related to lower learning in service times. We then turn to the laboratory to replicate conceptually the short-term task selection effect under increased workload and show that it occurs because of both fatigue and the sense of progress individuals get from task completion. These findings provide another mechanism for the workload-speedup effect from the literature. We also discuss implications for both the research and the practice of operations in building systems to help people succeed. This paper was accepted by Serguei Netessine, operations management.
Tan, T. F. and S. Netessine (2020): At Your Service on the Table: Impact of Tabletop Technology on Restaurant Performance, Management Science, 66(10), pp.4496-4515
Some industries, such as healthcare and financial services, have reported significant productivity gains from introduction of new technologies. However, other more traditional, labor-intensive industries are lagging behind. We use granular data to examine the impact of a customer-facing technology (a tabletop device that facilitates the table service process) on the check size and meal duration aspects of restaurant performance. The restaurant chain in our study implemented tabletop devices in a staggered manner, offering us a quasi-experimental setting in which to apply a difference-in-difference technique and identify the causal effect of the technology. We find that the tabletop technology is likely to improve average sales per check by approximately 1% (95% confidence interval is from 0.8% to 1.02%), and reduce the meal duration by close to 10% (95% confidence interval ranges from −9.94% to −9.54%). The combination of these two effects increases the sales per minute or sales productivity by approximately 11%. Various robustness checks of our empirical strategy and post hoc analyses find that tabletop technology allows low-ability waiters to improve their performance more significantly than high-ability waiters. In addition, the technology does not change the staffing level. Overall, our results indicate great potential for introducing tabletop technology in a large service industry that currently lacks digitalization. This paper was accepted by Vishal Gaur, operations management.
Wang, J. and M. Hu (2020): Efficient Inaccuracy: User-Generated Information Sharing in a Queue, Management Science, 66(10), pp.4648-4666
We study a service system that does not have the capability of monitoring and disclosing its real-time congestion level. However, the customers can observe and post their observations online, and future arrivals can take into account such user-generated information when deciding whether to go to the service facility. We perform pairwise comparisons of the shared, full, and no queue-length information structures in terms of social welfare. Perhaps surprisingly, we show that the shared queue-length information may provide greater social welfare than full queue-length information when the hassle cost of the customers entering the service facility falls into some ranges, and the shared and full queue-length information structures always generate greater social welfare than no queue-length information. Therefore, the discrete disclosure of congestion through user-generated sharing can lead to as much, or even greater, social welfare as the continuous stream of real-time queue-length information disclosure and always generates greater social welfare than no queue-length information disclosure at all. These results imply that a little shared queue-length information—inaccurate and lagged—can go a long way and that it may be more socially beneficial to encourage the sharing of user-generated information among customers than to provide them with full real-time queue-length information. This paper was accepted by Terry Taylor, operations management.
Perera, S., M. Dawande, G. Janakiraman and V. Mookerjee (2020): Retail Deliveries by Drones: How Will Logistics Networks Change?, Production & Operations Management, 29(9), pp.2019-2034
Emerging technologies such as drone delivery services enable retailers to cost‐effectively offer unprecedented delivery speed and adaptable delivery lead times using dedicated aerial vehicles for individual orders. A natural and important question arises: What is the impact of a drone delivery system (DDS) on a retailer’s extant logistics parameters, for example, the number of customer‐facing delivery centers (last‐mile warehouses) it uses and delivery lead times it offers? On the one hand, the ability to reach customers faster than through traditional means argues for more centralization of delivery services. On the other hand, more decentralization can allow the retailer to offer hitherto unheard‐of delivery lead times and thereby spur demand. We show that, as drone technology matures and becomes more cost‐effective, delivery networks will become increasingly decentralized while delivering products at faster speeds. While perfect delivery customization—under which each demand location is offered a customized delivery guarantee—is theoretically feasible under a DDS, it may not be practical to implement such a finely differentiated delivery strategy. Instead, we show that retailers can recover a significant portion of the profit under this ideal scenario by offering limited delivery‐time customization, that is, partitioning the market into a few delivery “zones” and offering the best feasible delivery guarantee for each zone. In physically congested metropolitan markets, where retailers may be forced to operate with only a few delivery centers, it may be optimal to operate a DDS by offering delivery guarantees that are inferior to the best possible in order to throttle unprofitable demand. In such markets, the effectiveness of limited delivery‐time customization increases as the extent of physical congestion increases.
Zayas‐Cabán, G., E. J. Lodree and D. L. Kaufman (2020): Optimal Control of Parallel Queues for Managing Volunteer Convergence, Production & Operations Management, 29(10), pp.2268-2288
Volunteer convergence refers to the influx of volunteers to affected areas after large‐scale disasters. There are not only many benefits to volunteer convergence, but it also creates significant logistical challenges that can impede relief efforts. This study examines polices for admitting volunteers into organized relief operations, and for assigning admitted volunteers to relief tasks. We represent this problem as a queueing system where, in addition to customer arrivals and departures, random server arrivals and abandonments are also present. Then, using a Markov decision process framework, we analyze server admission and assignment policies that seek to minimize relief tasks holding costs as well as volunteer holding and rejection costs. We show that the classic cμ rule, a server allocation policy that determines where to put servers based on relief tasks holding costs and processing requirements, is optimal under both collaborative and non‐collaborative service regimes and when batch server arrivals are allowed. Additionally, we find that the optimal server admission policy is a complex state‐dependent policy. As a result, we propose a class of admission heuristics that depend on the number of workers in the system and the remaining system workload. In a numerical study, we show that our heuristic policies perform well with respect to long‐run average costs, waiting times, number of volunteers in the system, and number of volunteers idling in the system over a range of parameter values and distributions that are based on real data from a case study. As such, they promise volunteer coordinators an effective and simple way to manage disaster volunteers.