Today we identify service articles published in Marketing, Management, Operations, Productions, Information Systems & Practioner-oriented Journals in the last month.
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Nastasoiu, A. and M. Vandenbosch (2019): Competing with loyalty: How to design successful customer loyalty reward programs, Business Horizons, 62(2), pp.207-214
For industries with low switching costs, customer loyalty programs (LPs) have potential to drive differentiation and sustain a competitive advantage. However, incentives provided through LPs also have a potential to escalate into costly price wars. In this article, we discuss how to design successful customer loyalty reward programs that bring value to participants and that cannot be emulated by competitors easily. We focus on three distinct aspects of improvement: personalization, reward types, and additional services. Through personalization, companies can leverage the knowledge they already have on their customers to tailor offers that they find relevant and appealing. For the reward structure, we argue in favor of a certain degree of opacity. We also encourage loyalty programs to consider giveaways that are unique and difficult to imitate and to use all the information they have available to provide rewards that fit with each customers’ idiosyncratic situation or preference. Finally, competitive LPs should look beyond offers and rewards. In addition to purchases, LPs can reward participants for other desirable behaviors; they can also provide additional services that impose minimal costs on firms, but bring value to customers.
Link: http://dx.doi.org/10.1016/j.bushor.2018.11.002 [Google]
(2019): The Downside of Attentive Service, Harvard Business Review, 97(2), pp.29-29
The article discusses a study on customer service which suggests that perceptions of high service attentiveness, or service that is perceived to be excessive in frequency, overly intensive in warmth, or providing unsolicited care and information, varies between Chinese and North American cultures.
Link: http://dx.doi.org/ [Google]
Empson, L. (2019): How to Lead Your Fellow Rainmakers, Harvard Business Review, 97(2), pp.114-123
In most corporate settings, leaders are expected to inspire and direct employees—leading is something they do to followers. But in professional service firms, the situation is different. These firms tend to be full of powerful, opinionated experts who prize their autonomy. They don’t easily accept the role of follower—and may be just as unwilling to act as leaders. A leader’s authority is contingent upon their consent, which can be quickly withdrawn. In this context, leadership has to be a collective, not an individual, endeavor. It requires a grasp of three key dynamics: Establishing legitimacy. To be accepted by their peers, leaders have to keep demonstrating an ability to generate revenue. Maneuvering politically. Achieving consensus requires social astuteness and networking skill, and peers must believe the leader is acting in their interests. Negotiating perpetually. To strike a balance between asserting control and giving peers autonomy, leaders must always negotiate. These dynamics are both in flux and interconnected, and leaders have to constantly manage them. INSET: Guiding Principles for Leading in a Professional Service Firm.
Link: http://dx.doi.org/ [Google]
Casidy, R. and M. Nyadzayo (2019): Drivers and outcomes of relationship quality with professional service firms: An SME owner-manager perspective, Industrial Marketing Management, 78(), pp.27-42
Strong relationships are important, particularly for business partners dealing with business-to-business (B2B) professional service providers, as the quality of the relationship can serve as a proxy for evaluating the service delivery. Grounded in the RM paradigm, this study focused on this unique inter-firm business exchange between professional service firms (PSFs) and small and medium-sized enterprises (SMEs) in order to investigate the drivers and outcomes of relationship quality (RQ). Specifically, we utilized a mixed-methods approach to understand (i) the key dimensions of RQ and its drivers, (ii) the mechanism through which RQ affects relational outcomes (i.e. loyalty and willingness-to-pay premium price), and (iii) the moderating role of relationship duration and perceived risk among these relationships in a B2B professional service context. The results from a survey of 324 SME CEOs and/or owner-managers confirmed the importance of relationship value in mediating the effects of RQ and its outcomes, particularly in long-term relationships and under high-risk situations. The authors discuss the implications of the findings for theory and practice in the PSF context, and acknowledge the research limitations. Highlights • We investigate the drivers and outcomes of firms’ relationship quality (RQ) with professional service firms. • Interaction, and Benevolence are positive drivers of RQ. • Relationship value mediate the relationship between RQ, loyalty, and willingness-to-pay premium price (WTP). • The mediating role of relationship value is only significant in high risk situations. • The mediating role of relationship value on loyalty is significant regardless of relationship duration.
Link: http://dx.doi.org/10.1016/j.indmarman.2017.09.011 [Google]
Heirati, N. and V. Siahtiri (2019): Driving service innovativeness via collaboration with customers and suppliers: Evidence from business-to-business services, Industrial Marketing Management, 78(), pp.6-16
Service innovativeness represents a key source of competitive advantage and a research priority. However, empirical evidence about how service firms successfully offer novel and meaningful services is scarce, particularly in the context of business-to-business (B2B) service firms. Drawing on the B2B collaborative perspective and KBV, we aim to investigate when customer and supplier collaboration are more beneficial to drive service novelty and meaningfulness. Using data of 186 B2B service firms, the results reveal that collaboration with customers and suppliers are not equally beneficial to drive both novelty and meaningfulness and their outcomes can be amplified or lost under specific conditions. Customer collaboration is more beneficial to increase novelty in the presence of exploratory learning and employee collaboration. Contrary, supplier collaboration drives novelty only at higher levels of exploratory learning. Further, supplier collaboration is more beneficial to improve meaningfulness at higher levels of employee collaboration. Finally, the positive outcomes of both customer and supplier collaboration disappear in the presence of knowledge tacitness. Our findings provide new insights about drivers and contingencies that affect different aspects of service innovativeness. Highlights • Collaboration with customers and suppliers drive novelty and meaningfulness aspects of service innovativeness differently • Customer collaboration increases novelty at higher levels of exploratory learning and cross-functional collaboration • Supplier collaboration drives novelty only in the presence exploratory learning • Supplier collaboration is more beneficial to improve meaningfulness at higher levels of employee collaboration • The positive outcomes of both customer and supplier collaboration disappear when the level knowledge tacitness is high
Link: http://dx.doi.org/10.1016/j.indmarman.2017.09.008 [Google]
Mustak, M. (2019): Customer participation in knowledge intensive business services: Perceived value outcomes from a dyadic perspective, Industrial Marketing Management, 78(), pp.76-87
Knowledge intensive business services (KIBS) are considered a cornerstone of contemporary developed economies. Successful production and delivery of these services, and thus their perceived value outcomes, highly depend on customer participation (CP) in the service processes. However, the extant understanding of the perceived value outcomes of CP, which is crucial to the appropriate inducement and integration of organizational resources in service processes, is limited. Through the exploratory investigation of three dyadic cases, each comprising one customer and one service provider organization engaged in a knowledge-based service project, this study addressed this crucial topic. Results indicated four categories of perceived value outcomes emerged through CP: functional, economic, relational, and strategic values. The study provides insights on the evolution of value perceptions over time, the individual value components within each value category, and perceptual similarities and differences between customer and provider organizations. Further, these results indicate that various value outcomes of CP receive divergent levels of attention from personnel in different organizational hierarchies. The paper provides useful and applicable suggestions for managers, especially in the context of technology-based KIBS and solutions. Highlights • Perceived value outcomes of CP in KIBS differ significantly than consumer contexts. • They include: functional, economic, relational and strategic values. • The perceived value outcomes become more inclusive over time. • Individual value components within each category differ to customers and providers. • Personnel from various organizational hierarchies focus on different value outcomes.
Link: http://dx.doi.org/10.1016/j.indmarman.2017.09.017 [Google]
Wilden, R., S. Gudergan, M. A. Akaka, A. Averdung and T. Teichert (2019): The role of cocreation and dynamic capabilities in service provision and performance: A configurational study, Industrial Marketing Management, 78(), pp.43-57
The success of a professional service firm (PSF) relies on its capabilities for leveraging relationships with clients – i.e., cocreation capabilities (CCs) – and adapting to changing environments – i.e., dynamic capabilities (DCs). Previous research shows that the interaction of these two organizational capabilities and the multidimensional configuration of DCs. However, little is known about how CCs and DCs are jointly configured within PSFs and how trade-offs between these distinct capabilities relate to service provision and performance across different firms. This study explores the path dependent nature of higher- and lower- order capabilities and uses data from 279 marketing advisory firms to investigate how different configurations of higher-order CCs and DCs are associated with lower-order service provision capabilities (SPCs) and similar or different performance. We find that CCs can substitute for DCs, and that DCs and CCs can compensate for SPCs in achieving higher levels of customer-based performance. However, the same does not apply for financial performance in which CCs do not appear to overcome deficiencies in DCs and SPCs. Also, firms can have similar SPCs and experience similar financial performance while emphasizing the use of either DCs or CCs; suggesting DCs and CCs may substitute for each other. Highlights • This paper investigates higher-order and lower-order capabilities for professional service firms. • This study establishes the importance of dynamic capabilities and cocreation capabilities for service provision. • This study provides novel evidence from a survey of 279 marketing advisory firms. • The analyses reveal five configurations of capability portfolios with differences in customer-based or financial performance.
Link: http://dx.doi.org/10.1016/j.indmarman.2018.06.008 [Google]
Chan, J., P. Mojumder and A. Ghose (2019): The Digital Sin City: An Empirical Study of Craigslist’s Impact on Prostitution Trends, Information Systems Research, 30(1), pp.219-238
Do solicitation sites lead to an increase in prostitution trends in United States? We shed light on this issue by examining the impact that Craigslist (via its Erotic Service section) has on prostitution incidence using a data set consisting of 1,796 U.S. counties from 1999 to 2008. Our analysis shows that prostitution levels increased by about 17% on average upon the introduction of the Craigslist. We find that the Craigslist has led to the increase in both independent sex workers and workers operating under commercial vice groups. However, it is the latter that is growing at a greater rate, which bears important implications for policies concerning sex trafficking. Craigslist’s entry increases prostitution in both counties that have existing prostitution trends and those that do not, although the former set of counties experience a larger growth relative to the latter. Finally, we also found evidence suggesting that efforts in utilizing Craigslist for prostitution arrests are not catching up with the growth in prostitution trends induced by the site. In sum, online platforms can be utilized in unintended manners that facilitate illegal activities. Policy makers and website owners need to be aware of such impacts to implement the proper guidelines. The internet facilitates information flow between sex workers and buyers, making it easier to set up paid sexual transactions online. Despite the illegality of selling sexual services online, Section 230 of Communications Decency Act shields websites from liability for unlawful postings by third parties. Consequently, websites such as Craigslist have become a haven for prostitution-related ads. With prostitution-related sites still in operation, it is imperative to understand the link between these sites and prostitution trends. Specifically, in this paper, we quantify the economic impact of Craigslist’s entry on prostitution incidence and identify potential pathways in which the website affects the sex industry. Using a national panel data set for 1,796 U.S. counties from 1999 to 2008, our analyses suggest that entry of Craigslist to a county leads to a 17.58% increase in prostitution cases. In addition, the analyses reveal that a majority of prostitution activity on Craigslist is induced by organized vice groups, in addition to voluntary participation by smaller set of independent providers. Further, we find site entry has a stronger impact in counties with a past history of prostitution and produces spillover effects in neighboring locations that are not directly served by Craigslist. Sex workers providing niche sexual services are found to increase with site entry. In addition, we learn that site entry leads to an increase in transactions of existing workers and also attracts new workers to the market. We find that the increase in prostitution arrests does not catch up with the growth in prostitution trends brought in by Craigslist. Finally, we find complementarity effects between erotic and casual sex ads in leading to the increase of prostitution. Our results contribute broadly to the emerging literature on the societal challenges associated with online intermediaries and internet penetration, and serve to provide guidelines for policy makers in regulating the sex industry in the internet era. The e-companion is available at https://doi.org/10.1287/isre.2018.0799.
Link: http://dx.doi.org/10.1287/isre.2018.0799 [Google]
Chen, W., B. Gu, Q. Ye and K. X. Zhu (2019): Measuring and Managing the Externality of Managerial Responses to Online Customer Reviews, Information Systems Research, 30(1), pp.81-96
Managerial responses to online customer reviews not only affect customers who receive the responses but may also influence subsequent customers who observe the responses. This externality arises because of the public nature of online interactions. However, prior studies were mainly in offline settings where such externality rarely exists. In this study, we assess the magnitude of such externality. Using a difference-in-difference-in-differences framework and matched hotels across two large travel agencies, we find that managerial responses indeed have a significant and positive impact on the volume of subsequent customer reviews. The impact on the review valence is not evident, which can be attributed to the unique design of identity disclosure in our research context. Furthermore, our results suggest nuances that were not known in the prior literature. For example, responding to positive and negative reviews may have different effects on future reviews, and managers should provide detailed responses to negative reviews but brief ones to positive reviews. Our results offer managerial implications to service providers on how to improve customer engagement in the interconnected online environment. The online appendix is available at https://doi.org/10.1287/isre.2018.0781.
Link: http://dx.doi.org/10.1287/isre.2018.0781 [Google]
Sousa, R. and G. J. C. da Silveira (2019): The relationship between servitization and product customization strategies, International Journal of Operations & Production Management, 39(3), pp.454-474
Purpose The purpose of this paper is to examine the relationship between product customization and servitization strategies, specifically the relationship between product customization strategy intensity and degree of servitization (offering of basic and/or advanced services) and the moderating role of product customization strategy alignment on that relationship.Design/methodology/approach The authors develop and test hypotheses through partial least squares path modeling to analyze data from the Sixth International Manufacturing Strategy Survey, involving 931 manufacturers in 22 countries.Findings The results indicate that customization strategy intensity is positively associated with the offering of basic and advanced services; these relationships are not moderated by customization strategy alignment.Practical implications Manufacturers pursuing product customization strategies may be especially well positioned to servitize, even those with misalignment in strategic choices. Paradoxically, while manufacturers of standard products might look at servitization as an attractive strategy to differentiate their value proposition, they appear to be less servitized than manufacturers pursuing product customization.Originality/value This is one of the first studies to examine how manufacturing strategy choices (intensity and alignment) influence the adoption of servitization strategies. The study introduces manufacturing strategy as a contingency factor that influences the adoption of servitization, answering calls for the study of servitization contingencies.
Link: http://dx.doi.org/10.1108/IJOPM-03-2018-0177 [Google]
Zou, W., S. A. Brax, M. Vuori and R. Rajala (2019): The influences of contract structure, contracting process, and service complexity on supplier performance, International Journal of Operations & Production Management, 39(4), pp.525-549
Purpose: To build a more comprehensive understanding of factors affecting the success of service contracting, the purpose of this paper is to investigate the influences of service complexity, contract structure and contracting process on the buyer-perceived supplier performance in business-to-business (B2B) services. Design/methodology/approach: A research model is developed based on transaction cost economics and the research on service contracting. The model is tested by the survey data collected. Professional focus groups on LinkedIn are used to generate the list of potential respondents. The sample consists of 177 purchasing professionals from 25 countries. Findings: The results indicate that three major contract dimensions and follow-up management practices positively influence buyer-perceived supplier performance. Furthermore, service complexity amplifies the effects of incentives designed in the contract and the buyer’s follow-up contract management on perceived supplier performance. Research limitations/implications: The sample consists of respondents from 25 countries and provides good geographic coverage. However, the results should be generalized with caution because not all countries were represented equally. Practical implications: The study suggests a framework and guidelines for purchasing managers to improve the design and management of service contracts to secure good performance from their supplier. Originality/value: This paper contributes to understanding the performance-enhancing aspects of designing and monitoring service contracts in B2B contexts. It also adds to the knowledge of the role of service complexity in successful B2B service purchasing.
Link: http://dx.doi.org/10.1108/IJOPM-12-2016-0756 [Google]
Cohen-Vernik, D., A. Pazgal and N. B. Syam (2019): Competing with co-created products, International Journal of Research in Marketing, 36(1), pp.63-82
The practice of upstream firms (suppliers) and downstream firms co-creating products (goods or services) together has a long history in business markets. We analyze the strategic choices of two competing downstream firms who simultaneously decide whether or not to co-create with an upstream supplier. Within this framework we incorporate endogenous pricing and effort choices by the upstream supplier and the downstream firms. Downstream firms contemplating co-creation with a supplier are faced with a trade-off. On the one hand they can benefit from the supplier’s innovation efforts and therefore obtain a better product. On the other hand, they are confronted with the adverse effect of their own innovation efforts spilling over to their rivals via the supplier who would sell the co-created product to all firms. Our model captures this tension and offers several insights. First, we show that all the channel members (the supplier and the firms) are getting higher profits when they all co-create together, as compared to the situation where there is no co-creation and the Supplier alone designs the product. However, we also demonstrate that the abovementioned trade-offs provide an incentive for firms to deviate from this outcome, sometimes resulting in no-co-creation between the downstream firms and upstream supplier in equilibrium. Further, we show that in the competitive co-creation environment, ex-ante symmetric firms may pursue asymmetric strategies in equilibrium. The asymmetric equilibrium, in which only one of the two firms co-creates with the supplier, is obtained when the degree of price sensitivity to competitor’s product in the consumer market is moderate. Third, we find two types of asymmetric equilibria. For moderately low degrees of price sensitivity, all parties prefer the asymmetric outcome. For moderately high price sensitivity, both firms prefer co-creation, but the supplier will refuse to co-create with one of them thereby enforcing the asymmetric outcome. Thus, a strategic supplier’s role is critical in that it expands the region where the asymmetric equilibrium takes place, beyond the one preferred by the firms themselves. We also show that, when firms compete in the end-consumer market, the supplier may exert lower innovation effort when it co-creates with two firms as compared to one. This is not the case in the absence of competition between the downstream firms. Finally, and counterintuitively, a higher degree of product fit for the rival can actually benefit the co-creating firm in the asymmetric outcome, even though it improves its rival’s product.
Link: http://dx.doi.org/10.1016/j.ijresmar.2018.11.001 [Google]
Andreini, D., G. Pedeliento, L. Zarantonello and C. Solerio (2019): Reprint of “A renaissance of brand experience: Advancing the concept through a multi-perspective analysis”, Journal of Business Research, 96(), pp.355-365
Brand experience is one of the most promising concepts to emerge in consumer research over the last decade. However, unlike other brand-related concepts, it has often been considered implicitly, not explicitly, in consumption dynamics. This paper aims to advance knowledge of the concept through an extensive literature review, covering studies that mention the phenomenon of brand experience both explicitly and implicitly (i.e., using relationship theory, service-dominant logic and consumer culture theory). We propose a multi-level framework encompassing the psychological, relational, social and cultural dynamic forces that may enhance the understanding of brand experience. In addressing the micro-, macro- and meso-levels of the proposed framework, we set out a research agenda designed to support a renaissance of brand experience in literature.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.05.047 [Google]
Banik, S., Y. Gao and F. K. Rabbanee (2019): Status demotion in hierarchical loyalty programs and its effects on switching: Identifying mediators and moderators in the Chinese context, Journal of Business Research, 96(), pp.125-134
Hierarchical loyalty programs (HLPs) are widespread across many service industries; however, research on the effects of status demotion in an Eastern cultural context is relatively scant. Based on the psycho-evolutionary theory of emotions, the theory of embarrassment and the literature on losing face, this study explores the effect of status demotion on customers’ intentions to switch service providers in the Chinese context. By doing so, the study examines how feelings of frustration and social discomfort mediate the relationship between status demotion and the switching intentions of Chinese airline HLP members. It further examines how relationship age and gender moderate the link between status demotion and feelings of frustration and social discomfort. Three hundred and forty-seven active members of airline HLPs in China participated in a structured survey. The data collected were then analyzed using partial least squares-based structural equation modeling. The results show that status demotion causes members to experience feelings of frustration and social discomfort, which further lead them to switch service providers. These effects of status demotion on frustration and social discomfort are found to be higher (lower) among the members with longer (shorter) relationship age and male (female) members. The findings of the study have significant theoretical and managerial implications.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.11.010 [Google]
Garcia-Blandon, J., J. M. Argilés-Bosch and D. Ravenda (2019): Is there a gender effect on the quality of audit services?, Journal of Business Research, 96(), pp.238-249
Should we expect a gender effect on the quality of audit services? Both the behavioural economics literature and the glass ceiling for women in the audit profession suggest an affirmative answer to this question. We conduct the study with a sample of Spanish-listed companies for the period between 2008 and 2015 and use the quality of the client’s financial statements as a proxy for the quality of audit services. The results provide sound and consistent support for a positive female auditor effect on the quality of audit services. Although our figures suggest that men and women tend to audit different types of clients, the results are not driven by these differences. Moreover, the gender effect occurs from the very first year of the appointment of a female partner to replace a male auditor. This study may contribute to challenging stereotypes and may be informative for the ongoing political debate regarding the under-representation of women in senior management levels.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.11.024 [Google]
Gozman, D. and L. Willcocks (2019): The emerging Cloud Dilemma: Balancing innovation with cross-border privacy and outsourcing regulations, Journal of Business Research, 97(), pp.235-256
The pervasive adoption of outsourcing and Cloud technologies proceeds apace, but the challenges and risks inherent in Cloud arrangements are causing concern amongst regulators globally. How well prepared are financial services multinationals for regulatory compliance? Cloud based Fintech companies are disrupting traditional banking models, signaling that highly regulated firms must adopt Cloud technologies. The paper focuses on understanding specific risks in relation to Cloud adoption, and the regulations and penalties for non-compliance being put in place. From the findings, we theorize a framework for deciding when to engage strategically with, or avoid Cloud technologies. This helps executives balance the need to innovate with the need to manage compliance risk. We then detail emerging effective practices for managing Cloud based innovation on a sustainable basis. While we focus on global financial services, the analysis applies to all regulated industries, wherever Cloud based innovations impact materially on business-critical services.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.06.006 [Google]
Iglesias, O., S. Markovic and J. Rialp (2019): How does sensory brand experience influence brand equity? Considering the roles of customer satisfaction, customer affective commitment, and employee empathy, Journal of Business Research, 96(), pp.343-354
Building a favorable sensory brand experience is crucial in services settings to strengthen the competitive position of a brand and its equity. However, little empirical research exists in this area. Additionally, and surprisingly, most of the research on service brand experience neglects the importance of employees. This study investigates the effect of sensory brand experience on brand equity in the banking industry, through customer satisfaction and customer affective commitment. It also examines whether employee empathy moderates the impacts of sensory brand experience on customer satisfaction and customer affective commitment. Based on data collected through a panel of 1739 customers, the hypothesized structural model is tested using path analysis. Results show that sensory brand experience has a positive indirect impact on brand equity, through customer satisfaction and customer affective commitment. Customer satisfaction positively influences customer affective commitment, and employee empathy negatively moderates the relationship between sensory brand experience and customer satisfaction.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.05.043 [Google]
Razmdoost, K., L. Alinaghian and H. J. Smyth (2019): Multiplex value cocreation in unique service exchanges, Journal of Business Research, 96(), pp.277-286
While the temporal nature of value cocreation (i.e., the interdependencies between/among past, present, and future value cocreation) is acknowledged in the literature, the processes and mechanisms through which these interdependencies are deliberately managed (i.e., multiplex value cocreation) are not examined. Our study aims to unravel the “black box” of multiplex value cocreation by investigating the processes and mechanisms through which actors manage the temporal nature of value cocreation in unique service exchanges. The research design is a multiple case study comprising four firms engaged in the definition, design, and delivery of mega-infrastructure projects. Our results showed that multiplex value cocreation involves two core processes of institutional work and resource reconfiguration that are reciprocally interrelated, driven by actor motives and conflicts and facilitated by interaction mechanisms. We further propose that emerged institutions and existing previous similar service exchanges may eliminate the need for multiplex value cocreation in routine service exchanges.
Link: http://dx.doi.org/10.1016/j.jbusres.2018.11.046 [Google]
Wan, L. C. and R. S. Wyer (2019): The Influence of Incidental Similarity on Observers’ Causal Attributions and Reactions to a Service Failure, Journal of Consumer Research, 45(6), pp.1350-1368
Observers’ reactions to a service failure and their attributions of responsibility for its occurrence can depend on fortuitous characteristics of the protagonists that happen to draw their attention. Four field and laboratory experiments show that when observers have an incidental similarity to one of the persons involved in a service failure (the customer or the service provider), their attention is drawn to this protagonist, often leading them to construe the situation from this person’s perspective and consequently to blame the protagonist less for the negative event they observe. However, when an incidentally similar protagonist is rude or has an undesirable personal characteristic (i.e. obesity), observers’ greater attention to that person increases their attributions of responsibility to him or her rather than decreasing it. These opposing effects of incidental similarity on attributions influence not only observers’ evaluations of the persons involved in the situation they observe, but also their willingness to patronize the establishment. These effects occur both when observers actually witness a conflict offline and when they consider it online on the basis of reviews.
Link: http://dx.doi.org/10.1093/jcr/ucy050 [Google]
Logkizidou, M., P. Bottomley, R. Angell and H. Evanschitzky (2019): Why Museological Merchandise Displays Enhance Luxury Product Evaluations: An Extended Art Infusion Effect, Journal of Retailing, 95(1), pp.67-82
Museological displays infuse luxury products with artistic value. • The artistic infusion in museological displays occurs even if no artwork is in situ. • Products in museological displays benefit from an extended art infusion effect. • Products are perceived to be more luxurious, less risky and thus more purchasable. • Visual appeal and service level expectations constitute complementary explanations. As retailers are increasingly turning to museum and art gallery inspired techniques for displaying luxury products (museological display formats), we investigate whether such staging elicits more favorable product evaluations. Providing an extension to Hagtvedt and Patrick’s (2008) classic art infusion effect, we propose that artistic essence is transferred to displayed merchandise via a second-order spillover effect, enhancing its perceived luxury to consumers. Across three experiments, the museological display format outperformed a more conventional, non-museological product display. Consumers reported higher purchase intentions, via a process whereby the merchandise was first perceived as being more luxurious and then less risk inducing. Explanations for why the museological display heightened perceptions of product luxury relating to service expectations, contamination, and visual appeal were also tested, but support for the extended art infusion effect remained undiminished.
Link: http://dx.doi.org/10.1016/j.jretai.2018.11.001 [Google]
Adida, E. and F. Bravo (2019): Contracts for Healthcare Referral Services: Coordination via Outcome-Based Penalty Contracts, Management Science, 65(3), pp.1322-1341
This work focuses on the business-to-business interaction between a service requester and a service provider in a healthcare environment. The requester is the primary caregiver responsible for managing the health of a population of patients. When a patient requires advanced care outside of the requester’s expertise, the requester refers the patient to a provider and pays for the referral services. Treatment may succeed or fail, and in the case of failure, the requester incurs further follow-up costs. The requester may exert preventive effort to reduce the volume of referrals. The provider may exert nonreimbursable effort to reduce the chance of treatment failure. We analyze payment contracts between the two firms. We find that fee-for-service (FFS) induces neither system nor social optimum effort outcomes. However, a penalty contract can generally coordinate the effort decisions with either the system optimum or the social optimum. Furthermore, we find that patients may benefit from having a coordinating contract replace FFS. However, the types of procedures that make a coordinating contract most advantageous for the requester and provider are not necessarily the same as those that make the patients better off than under FFS. Yet, in most cases, the coordinating contract improves social welfare, as compared to FFS, and brings it close to the social optimum. Hence, the requester–provider coordinating contract can be considered as an improvement over FFS for the entire system. The online appendix is available at https://doi.org/10.1287/mnsc.2017.3000. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.3000 [Google]
Bastani, H., J. Goh and M. Bayati (2019): Evidence of Upcoding in Pay-for-Performance Programs, Management Science, 65(3), pp.1042-1060
Recent Medicare legislation seeks to improve patient care quality by financially penalizing providers for hospital-acquired infections (HAIs). However, Medicare cannot directly monitor HAI rates and instead relies on providers accurately self-reporting HAIs in claims to correctly assess penalties. Consequently, the incentives for providers to improve service quality may disappear if providers upcode, i.e., misreport HAIs (possibly unintentionally) in a manner that increases reimbursement or avoids financial penalties. Identifying upcoding in claims data is challenging because of unobservable confounders (e.g., patient risk). We leverage state-level variations in adverse event reporting regulations and instrumental variables to discover contradictions in HAI and present-on-admission (POA) infection reporting rates that are strongly suggestive of upcoding. We conservatively estimate that 10,000 out of 60,000 annual reimbursed claims for POA infections (18.5%) were upcoded HAIs, costing Medicare $200 million. Our findings suggest that self-reported quality metrics are unreliable and, thus, that recent legislation may result in unintended consequences. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2996. This paper was accepted by Vishal Gaur, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2996 [Google]
Bimpikis, K. and M. G. Markakis (2019): Learning and Hierarchies in Service Systems, Management Science, 65(3), pp.1268-1285
Motivated by diverse application areas such as healthcare, call centers, and crowdsourcing, we consider the design and operation of service systems that process tasks with types that are ex ante unknown, and employ servers with different skill sets. Our benchmark model involves two types of tasks, Easy and Hard, and servers that are either Junior or Senior in their abilities. The service provider determines a resource allocation policy, i.e., how to assign tasks to servers over time, with the goal of maximizing the system’s long-term throughput. Information about a task’s type can only be obtained while serving it. In particular, the more time a Junior server spends on a task without service completion, the higher her belief that the task is Hard and thus needs to be rerouted to a Senior server. This interplay between service time and task-type uncertainty implies that the system’s resource allocation policy and staffing levels implicitly determine how the provider prioritizes between learning and actually serving. We show that the performance loss due to the uncertainty in task types can be significant and, interestingly, that the system’s stability region is largely dependent on the rate at which information about tasks’ types is generated. Furthermore, we consider endogenizing the servers’ capabilities: assuming that training is costly, we explore the problem of jointly optimizing over the training levels of the system’s server pools, the staffing levels, and the resource allocation policy. We find that among optimal designs there always exists one with a “hierarchical” structure, where all tasks are initially routed to the least skilled servers and then progressively move to more skilled ones, if necessary. Comparative statics indicate that uncertainty in task types leads to significantly higher staffing cost and less specialized server pools. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2976 [Google]
Chan, T. H., F. de Véricourt and O. Besbes (2019): Contracting in Medical Equipment Maintenance Services: An Empirical Investigation, Management Science, 65(3), pp.1136-1150
Maintenance service plans (MSPs) are contracts for the provision of maintenance by a service provider to an equipment operator. These plans can have different payment structures and risk allocations, which induce various types of incentives for agents in the service chain. How do such structures affect service performance and service chain value? We provide an empirical answer to this question by using unique panel data covering the sales and service records of more than 700 diagnostic body scanners. We exploit the presence of a standard warranty period and employ a matching approach to isolate the incentive effects of MSPs from the confounding effects of endogenous contract selection. We find that moving the equipment operator from a basic, pay-per-service plan to a fixed-fee, full-protection plan not only reduces reliability but also increases equipment service costs. Furthermore, that increase is driven by both the operator and the service provider. Our results indicate that incentive effects arising from MSPs leads to losses in service chain value, and we provide the first evidence that a basic pay-per-service plan—under which risk of equipment failure is borne by the operator—can improve performance and reduce costs. This paper was accepted by Gad Allon, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2993 [Google]
Rajan, B., T. Tezcan and A. Seidmann (2019): Service Systems with Heterogeneous Customers: Investigating the Effect of Telemedicine on Chronic Care, Management Science, 65(3), pp.1236-1267
Medical specialists treating chronic conditions typically face a heterogeneous set of patients. Such heterogeneity arises because of differences in medical conditions as well as the travel burden each patient faces to visit the clinic periodically. Given this heterogeneity, we compare the strategic behavior of revenue-maximizing and welfare-maximizing specialists and prove that the former will serve a smaller patient population, spend more time with the patients, and have shorter waiting times. We also analyze the impact of telemedicine technology on patient utility and the specialists’ operating decisions. We consider both the case when specialists can freely set their own fee for service and the case when fees are set exogenously by a third-party payer. We prove that with the introduction of telemedicine, the specialists become more productive and the overall social welfare increases, although some patients, unexpectedly, will be worse off. Our analytical results lead to some important policy implications for facilitating the further deployment of telemedicine in the care of chronically ill patients. This paper was accepted by Serguei Netessine, operations management.
Link: http://dx.doi.org/10.1287/mnsc.2017.2979 [Google]
Wu, C., A. Bassamboo and O. Perry (2019): Service System with Dependent Service and Patience Times, Management Science, 65(3), pp.1151-1172
Motivated by recent empirical evidence, we consider a large service system in which the patience time of each customer depends on his service requirement. Our goal is to study the impact of such dependence on key performance measures, such as expected waiting times and average queue length, as well as on optimal capacity decisions. Since the dependence structure renders exact analysis intractable, we employ a stationary fluid approximation that is based on the entire joint distribution of the service and patience times. Our results show that even moderate dependence has significant impacts on system performance, so considering the patience and service times to be independent when they are in fact dependent is futile. We further demonstrate that Pearson’s correlation coefficient, which is commonly used to measure and rank dependence, is an insufficient statistic, and that the entire joint distribution is required for comparative statics. Thus, we propose a novel framework, incorporating the fluid model with bivariate dependence orders and copulas, to study the impacts of the aforementioned dependence. We then demonstrate how that framework can be applied to facilitate revenue optimization when staffing and abandonment costs are incurred. Finally, the effectiveness of the fluid-based approximations and optimal-staffing prescriptions is demonstrated via simulations. This paper was accepted by Noah Gans, stochastic models and simulation.
Link: http://dx.doi.org/10.1287/mnsc.2017.2983 [Google]
Bellos, I. and S. Kavadias (2019): When Should Customers Control Service Delivery? Implications for Service Design, Production & Operations Management, 28(4), pp.890-907
What do a Mongolian stir‐fry restaurant and a medical lab providing home testing solutions have in common? They are both innovative services that base their success on customers controlling part of the service delivery. These providers allow service tasks to be performed by the customers as a means of shaping the overall experience and not strictly as a means of “outsourcing” the service. Motivated by such practices, we explore whether and how should providers allocate the control of different tasks of their service to the customers. We model services as multistep processes with each step affecting customers’ experience at other steps. At certain steps the provider may hold an “expert” role and be more capable of performing than the customers, whereas at other steps she may hold an “administrative” role and be less capable of performing than the customers. We distinguish between routine services, where the service outcome must conform to standardized specifications, and non‐routine services, where the value of the service outcome relies on subjective dimensions. We show that the optimal design is determined by an economically intuitive rule whereby the provider controls the steps based on the marginal benefit she can derive compared to self‐service. For routine services, this rule translates to managing “blocks” of steps because the provider benefits from containing the volatility of the experiences across the service even when this implies the provision of service steps with a negative marginal benefit, that is, steps which she is less capable of performing than the customers. Instead, in non‐routine services providers should focus on the value advantage they can ensure through a “core provision” even if this implies forgoing control of steps for which they are more capable of performing than the customers and from which they can derive positive marginal benefit. This implies that in non‐routine services the provider exercises more control up to a certain process length; beyond that she delegates more steps to the customers. When customers differ in their abilities to perform the different steps, the provider may offer a service line. Service lines facilitate better segmentation than a single service offering, but their economic benefit exhibits an inverted “U‐shaped” relationship with respect to the number of steps that a service comprises. Finally, we find that competition between two providers who differ in their capabilities to perform a service results in service design differentiation where the more capable provider offers a higher‐end “focused service” against a lower‐end “super‐service” offered from the less capable provider.
Link: http://dx.doi.org/10.1111/poms.12956 [Google]
Coban, E., A. Heching and A. Scheller‐Wolf (2019): Service Center Staffing with Cross‐Trained Agents and Heterogeneous Customers, Production & Operations Management, 28(4), pp.788-809
We model a real‐world service center with cross‐trained agents serving customer requests that are heterogeneous with respect to complexity and priority levels: High priority requests preempt low priority requests and low‐skilled agents can only serve less complex requests, while high skilled agents can serve all requests. Our main aim is to dynamically assign requests to agents considering the priority and complexity levels of requests. We model this system as a Markov chain that is infinite in multiple dimensions and thus is not amenable to exact analysis. We therefore apply approximation and bounding techniques to develop a tractable, novel algorithm using the Matrix Analytic Method. Our algorithm closely approximates the operations of the real‐world service system under a simple but effective threshold‐based request‐assignment policy. Extensive computational results demonstrate the usefulness of our algorithm to minimize costs given an existing staffing configuration, as well as in helping to make long‐term staffing decisions. In addition, our algorithm also has at least two orders of magnitude shorter computation times than each replication of simulation. Hence, it is both fast and accurate.
Link: http://dx.doi.org/10.1111/poms.12951 [Google]
Feng, T., Z. J. Ren and F. Zhang (2019): Service Outsourcing: Capacity, Quality and Correlated Costs, Production & Operations Management, 28(3), pp.682-699
This paper studies how to design service outsourcing contracts to ensure fast, quality services from an independent service provider. The outsourcer does not have perfect information about the service provider’s capacity cost (i.e., cost of providing fast service) and quality cost (i.e., cost of achieving a high quality level). Moreover, the two unknown costs may be positively, or negatively, correlated with each other. We solve for the outsourcer’s optimal outsourcing contract, and show that the structure of the optimal contract depends on the relationship between the costs. Specifically, we highlight the following observations when the two costs are negatively correlated: First, under certain conditions, the outsourcer may be able to squeeze the supplier’s profit (information rent) to zero for an intermediate range of cost realizations; second, it is possible that the service supply chain is coordinated by using the outsourcer’s optimal contract. We then examine the performance of two classes of commonly observed contracts that are relatively simple to implement. It has been found that these simple contracts generally perform well when the costs are positively correlated, but they could perform much worse when the costs are negatively correlated. Our results therefore caution outsourcing companies that the potential trade‐off between capacity cost and quality cost may require a careful design of outsourcing contracts.
Link: http://dx.doi.org/10.1111/poms.12949 [Google]
