• unlimited access with print and download
    $ 37 00
  • read full document, no print or download, expires after 72 hours
    $ 4 99
More info
Unlimited access including download and printing, plus availability for reading and annotating in your in your Udini library.
  • Access to this article in your Udini library for 72 hours from purchase.
  • The article will not be available for download or print.
  • Upgrade to the full version of this document at a reduced price.
  • Your trial access payment is credited when purchasing the full version.
Buy
Continue searching

Servicescape and customer satisfaction: The role of strategy

Dissertation
Author: Patti Lynn Collett
Abstract:
The purpose of this research is to determine if the corporate strategy theory base may be useful in advancing the understanding of service characteristics; specifically, the relationship between particular service industries, competitive strategy and a firm's choice of servicescape dimensions. The design and methodology of this research combines two distinct literature streams with respect to service operations: competitive strategy and operations strategy. First, the operations strategy literature and its evolution into service operations are reviewed to provide a historical foundation for the research and to identify possible research gaps. Next, the strategy literature is reviewed as a possible remedy to these gaps. Combining these views suggests that, in contrast to traditional views that argue for a common positive influence from increased service for all firms, the relative influence of service characteristics is dependent on the competitive approach taken by a firm. The hypotheses generated from this alternative view are tested on a sample of eleven firms drawn from three service industries utilizing perceptions of service characteristics and satisfaction collected from over 1200 customers. The results are generally supportive of the hypotheses, indicating that the impact from higher levels of service characteristics is different depending on the competitive approach taken by a firm. This research adds to the body of knowledge through its integration of two distinct literature streams. The theory and associated empirical findings suggest the importance of considering a firm's strategy--how it chooses to compete--rather than just a simple characterization of the service industry when trying to determine the value of different levels of service characteristic. Academics interested in advancing the growing body of service industry research will gain insight through the strategy synthesis, while practitioners are given tentative guidance about how to focus servicescape dimensions on their particular competitive situations.

TABLE OF CONTENTS ACKNOWLEDGEMENTS ................................................................................................... iii ABSTRACT.......................................................................................................................... v LIST OF ILLUSTRATIONS ................................................................................................. xi LIST OF TABLES .............................................................................................................. xii Chapter Page 1. INTRODUCTION ............................................................................................................. 1 1.1 Introduction ...................................................................................................... 1 2. LITERATURE REVIEW ................................................................................................... 4 2.1 Evolution of Operations Management ............................................................. 4 2.1.1 Corporate Strategy and Manufacturing ........................................... 6 2.1.2 Corporate Strategy and Operations Management Strategy ........................................................... 7 2.2 Evolution of Services Operations Literature .................................................... 8 2.2.1 Service Efficiency ............................................................................ 8 2.2.2 Service Typologies .......................................................................... 9 2.2.3 Beyond Efficiency .......................................................................... 12 2.2.4 Service Concept ............................................................................ 13 2.2.5 Other Management Literature ....................................................... 14 2.3 Evolution of the Strategy Literature ............................................................... 16 2.3.1 Competitive Strategy ..................................................................... 16 2.3.2 The Miles and Snow Strategic Typology ....................................... 17 2.3.2.1 Empirical Summary of the Miles and Snow Strategic Typology .................................................................................... 21

2.3.3 Porter’s Generic Competitive Strategies ....................................... 22

viii

2.3.3.1 Empirical Summary of Porter’s Generic Strategies ....... 25 2.3.4 Combining the Miles and Snow and Porter Strategic Typologies .................................................................... 25

2.3.5 Linking Corporate Strategy and Service Operations ..................... 28 2.4 Servicescape ................................................................................................. 29 2.4.1 Servicescape and Customer Interaction ....................................... 29 2.4.2 Dimensions of Servicescape ......................................................... 32 2.4.2.1 Summary of the Empirical Servicescape Literature ............................................. 34 2.4.3 Perceived Quality, Satisfaction and Behavioral Intentions ............ 35 2.4.4 Strategic Servicescape Considerations......................................... 35 2.5 Linking Services, Competitive Strategy and Servicescape ........................... 36 2.5.1 Defenders, Cost Leaders and Servicescape ................................. 36 2.5.2 Prospectors, Differentiators and Servicescape ............................. 37 2.6. Hypotheses Development ............................................................................ 38 3. METHOD ....................................................................................................................... 41 3.1 Industry and Company Selection .................................................................. 41 3.1.1 Perceptions of Servicescape and Customer Satisfaction ............. 42 3.2. Measure Development, Selection and Assessment ..................................... 43 3.2.1 Strategy Measures ........................................................................ 43 3.2.1.1 Q-Sort Classification ...................................................... 44 3.2.1.2 Archival Strategy Classification ..................................... 46 3.2.2 Measures of Servicescape ............................................................ 51 3.2.3 Measures of Customer Satisfaction .............................................. 52 3.2.4 Control Variables ........................................................................... 52 3.2.5 Assessments of Measures ............................................................ 52 3.3 Data Analysis ................................................................................................. 53 4. RESULTS ...................................................................................................................... 56

ix

4.1 Strategic Categorization of Target Firms ....................................................... 56 4.1.1 Categorization with Archival Measures ......................................... 56 4.1.2 Q-Sort ............................................................................................ 60 4.1.3 Summary and Validity of Strategy Measures ................................ 66 4.2 Development of Servicescape Assessment .................................................. 67 4.2.1 Demographics ............................................................................... 67 4.2.2 Reliability of the Servicescape Measures ..................................... 69 4.2.3 Validity of the Servicescape Measures ......................................... 71 4.2.4 Reliability of the Customer Satisfaction Measures ........................ 72 4.2.5 Validity of the Customer Satisfaction Measures ............................ 73 4.3 Creation of Variables for Analysis ................................................................. 74 4.4 Test of Hypotheses ........................................................................................ 75 4.4.1 Data Preparation and Examination of Assumptions...................... 75 4.4.2 Facility Aesthetics and Customer Satisfaction .............................. 76 4.4.3 Perceived Quality and Customer Satisfaction ............................... 80 4.4.4 Cleanliness and Customer Satisfaction ........................................ 83 4.4.5 Facility Layout and Customer Satisfaction .................................... 86 4.5 Final Hypotheses Summary .......................................................................... 89 5. DISCUSSION AND CONCLUSIONS ............................................................................ 90 5.1 Discussions and Results ............................................................................... 91 5.1.1 Overall Findings............................................................................. 91 5.1.1.1 Facility Aesthetics and Customer Satisfaction .............. 92 5.1.1.2 Perceived Quality and Customer Satisfaction ............... 92 5.1.1.3 Cleanliness and Customer Satisfaction ........................ 93 5.1.1.4 Facility Layout and Customer Satisfaction .................... 93 5.1.2 Summary across Servicescape Characteristics ............................ 94 5.1.3 Summary across Industries ........................................................... 95

x

5.2 Limitations ..................................................................................................... 95 5.2.1 Strategy Typing ............................................................................. 96 5.2.1.1 Q-Sort ............................................................................ 97 5.2.2 Service Characteristics .................................................................. 97 5.2.3 Firm and Industry Sample Limitations ........................................... 98 5.3 Implications and Future Research ................................................................. 98 5.3.1 Implications for Practice ................................................................ 99 5.3.2 Implications for Research .............................................................. 99 5.3.3 Conclusion ................................................................................... 100 APPENDIX A. REPRESENTITIVE SERVICESCAPE MEASURE…………………...……………….. 102 B. TEST RETEST PAIRED SAMPLE TEST ................................................................... 104 C. ARCHIVAL STRATEGY COMPUTATIONS ............................................................... 106 D. Q-SORT COMPUTATIONS ........................................................................................ 108 E. DESCRIPTIVE STATISTICS FOR FACTOR ANALYSIS ........................................... 110 F. CORRELATION MATRIX FOR FINAL FACTORS...................................................... 112 G. CORRELATION MATRIX FOR CONTROL VARIABLES ........................................... 114 REFERENCES ................................................................................................................ 116 BIOGRAPHICAL INFORMATION ................................................................................... 127

xi

LIST OF ILLUSTRATIONS Figure Page 2.1 Service Process Matrix ……………..………………………………….……………… 11 2.2 Porter’s Generic Competitive Strategies …………………………………………….. 23 3.1 Research Models ………..………………………………………..……………..…….. 55 4.1 Rotated Component Matrix ……………...…………………………………………….. 72 4.2 Factor Pattern of Dependent Variable.………………………..…………..…..…….. 74 4.3 Facility Aesthetics and Satisfaction: Prepared Food …….………………………… 77 4.5 Facility Aesthetics and Satisfaction: General Merchandise ….…..……………….. 78 4.6 Facility Aesthetics and Satisfaction: Electronics ….....………..….…………..…….. 78 4.7 Perceived Quality and Satisfaction: Prepared Foods ….…………..……….……… 80 4.8 Perceived Quality and Satisfaction: General Merchandise .….……..…………….. 81 4.9 Perceived Quality and Satisfaction: Electronics .……...…….………………..…….. 81 4.9 Cleanliness and Satisfaction: Prepared Foods ……...….…….…………….……… 83 4.10 Cleanliness and Satisfaction: General Merchandise ……..….…………………….. 84 4.11 Cleanliness and Satisfaction: Electronics ……...……...………..……………..…….. 84 4.12 Layout Accessibility and Satisfaction: Prepared Foods ..………......……….……… 89 4.13 Layout Accessibility and Satisfaction: General Merchandise ..…………………….. 87 4.14 Layout Accessibility and Satisfaction: Electronics …....……….……………..….….. 87

xii

LIST OF TABLES

Table Page 2.1 Miles and Snow and Porter Strategic Typologies Comparisons ……….… 27 3.1 Q-Sort Statements …………………………………………………………..… 45 3.2 Archival measures of the Miles and Snow Strategic Typology…………… 49 3.3 Summary of Porter’s Typology (1980) archival measures ...………….….. 51 4.1 Archival Measures for Strategic Typing ……………………………..……… 59 4.2 Q-Sort Response Sheet …………………………………………………....... 61 4.3 Numeric Q-Sort Typing of selected firms …………………………………… 63 4.4 Final Strategic Typing ………………………………………………………… 66 4.5 Customer Survey Demographics ………………………………………….... 68 4.6 Industry and Firm Survey Demographics …………………….…………….. 68 4.7 Test-Retest Correlation (Independent) ……………………………………… 69 4.8 Independent Variable Composition …………………..…………………….. 70 4.9 Test-Retest Correlation (Dependent) …..…………………………………… 73 4.10 Dependent Variable Composition ………………………..…………………. 73 4.11 Summary of Results: Facility Aesthetics Regressions ….………………… 79 4.12 Summary of Results: Perceived Quality Regressions ……………………. 82 4.13 Summary of Results: Cleanliness Regressions …..……………………….. 85

4.14 Summary of Results: Layout Accessibility Regressions ...………………… 88

4.15 Summary of Hypotheses Results ………………………………………….. 89

1

CHAPTER 1 INTRODUCTION

1.1 Introduction

Historically, research into the management of service operations has been grounded by manufacturing management theory. While efforts have been made to move beyond these foundations (Bowen & Lawler III, 1992), what typically results is merely a manufacturing model that has been given a service “twist” (Larsson & Finkelstein, 1999). As an example, the Service Process Matrix (SPM) offered by Schmenner (1986) simply builds on the Product Process Matrix (Hayes & Wheelwright, 1979) by considering the interplay of a process dimension (labor intensity vs. capital intensity) and a “product” or output dimension (the degree of customer interaction and customization). Similarly, other research into service operations focuses on exploring how services differ from manufacturing with regard to customer interaction (Chase, 1978, 1988), the degree of product variation and labor required (Schmenner, 1986), and the nature of the service output (Collier & Meyer, 1998; Mills, Chase, & Margulies, 1983). Lacking in these broad extensions of manufacturing theory is a means of capturing the nuances of competing for service firms. That is, while the frameworks listed above might categorize two service firms similarly, these firms might differ substantially in the competencies and capabilities they either do or should combine (Roth and Jackson 1995) in the pursuit of competitive advantage. In acknowledging this shortcoming, service researchers have suggested revisions to current frameworks (c.f., Schmenner, 1986). However, even these revisions fail to provide for competitive variety within a given service “type” (Schmenner, 2004). Frameworks focused on categorizing firms by industry or sector challenge both researchers trying to understand services and practitioners trying to develop their firms’

2

capabilities or competencies (Roth and Jackson 1995). As several researchers in strategy and organization theory have noted, firms within an industry are likely to differ on a number of operational dimensions, suggesting that different configurations of services can be equally profitable given consistency between strategy, the characteristics of the service, and customers’ expectations (Miles et al. 1978). This view is beginning to make inroads within the service operations literature, with the recognition that a firm’s strategy may be as important to that firm’s success as the industry or industry segment in which that firm operates (Metters & Vargas, 2000). Given this, an alternative approach to using industry-based classification as a means of understanding service success is to explore the interplay of competitive strategy (Miles and Snow 1978; Porter 1980, 1985) and particular service characteristics (e.g., service quality) as regards their combined effect on important outcomes such as customer satisfaction. To investigate the value of such an approach, this research examines the strategy and service characteristics of a number of different service firms. More specifically, this study categorizes strategically eleven service firms from three different industries. This categorization is then combined with customer perceptions regarding a particular service characteristic – servicescape, the manmade physical surroundings that affect customer perceptions of service (Bitner 1992) – in an exploration of the joint influence of strategy and service characteristics on customer satisfaction. Research into service operations has suggested that service characteristics determine customer satisfaction, but this research has also tended to ignore the influence of competitive strategy; in essence, it is typically implied that the relationship between a particular service characteristic and customer satisfaction is common across all firms within an industry or industry segment (Bitner, 1990; Chase, 1985, 1988; K. Wakefield & J. Blodgett, 1996; Wakefield & Blodgett, 1999). In contrast, this study suggests that strategy influences the relationship between particular service characteristics and customer satisfaction. In so doing, this research contributes to the service operations literature in two ways. First, as it is grounded primarily by the competitive strategy literature, it provides an opportunity for researchers to link to and build

3

on work already established in the strategic management field. Second, in tentatively depicting combinations of service characteristics that may be well suited for particular competitive strategies, it provides guidance to practitioners trying to complete or reconfigure their firms’ competitive repertoires. This dissertation is organized in the following manner. First, in Chapter Two the literature review provides an overview of the manufacturing literature, with its dominant focus on efficiency that served as a foundation for much early service operations research. Utilizing this discussion as a background, the focus then shifts specifically to the management of service operations. Next, several competitive strategy typologies are introduced, compared, summarized, and linked to services. Utilizing two specific typologies, further inquiry is made into the broad linkages between competitive strategy, service characteristics, service expectations, and customer satisfaction. Finally, this literature review turns to a specific service characteristic in articulating several hypotheses regarding servicescape, competitive strategy, and their combined influence on customer satisfaction. In Chapter Three the methodology by which the hypotheses were tested is discussed. In this chapter, firms chosen for study are identified and measures used to operationalize the constructs of interest are discussed. In addition, this chapter discusses the methods by which data were gathered and analyzed in the testing of this research’s hypotheses. Chapter Four reports the actual results, which suggest that firms in the same service sector differed substantially with regard to: a) the layout of service setting; b) the accessibility of facilities; c) the overall cleanliness; and d) customers’ expected quality of the service. Despite these differences, the firms studied appeared to enjoy similar levels of customer satisfaction, a finding consistent with the central thrust of this research. Overall conclusions from this research effort are discussed in Chapter Five, which also explores potential limitations to this research and suggests directions for further study.

4

CHAPTER 2 LITERATURE REVIEW

2.1 Evolution of Operations Management

Historically, manufacturing decisions were typically focused on maximizing production efficiency. Ultimately, the manufacturing policies and procedures that bound the company to particular facilities, equipment, and personnel for years to come were made on loose assumptions of corporate strategy by the engineers in the manufacturing shop. Little consideration was given to the linkage between corporate strategic plans and manufacturing processes. The notion of connecting corporate strategy with manufacturing capabilities was first explored by Skinner (1969) in his research suggesting that manufacturing decisions should be linked to corporate decisions in order to create a fit across the organization. Since then, the efforts of academics and practitioners have resulted in a number of complementary developments. Scholarly work has been focused on developing a linkage between strategy, manufacturing strategies, and manufacturing processes. This stream of research has led to a consensus regarding manufacturing as potentially a strategic weapon given conformance between strategy and particular characteristics of manufacturing processes (Chase & Hayes, 1991; Hayes & Wheelwright, 1984). The work of Skinner (1969) regarding what he termed the “Focused Factory” is characteristic of these approaches. In this research, Skinner (1969) argued that firms should not seek only efficiency from their manufacturing function, but rather the alignment of functional-level capabilities as dictated by competitive and corporate strategies. This primary assertion – firm success depends on a match between corporate strategy, manufacturing strategy and process choices – was supported in a

5

subsequent series of case studies (Skinner, 1974) on firms in electronics, plastics, textile, and steel industries. The alignment question also figures prominently in the manufacturing strategy literature that has emerged in response to Skinner’s (1969; 1974) work. Much of the manufacturing strategy literature emphasizes the interplay between inputs – typically process choice as manifested in capital vs. labor intensity (Hayes and Wheelwright 1979) – and the amount of output variety demanded by the environment or the firm’s competitive strategy (Kotha and Orne 1989). This stream of research ultimately argues that the cumulative pattern of output-informed decisions regarding process choice (Hayes and Wheelwright 1979a, 1979b; Kotha and Orne 1989) leads to competitive capabilities (Teece & Pisano, 1994, 1997) that, if reflective of the firm’s fundamental approach to competing, help secure a sustainable competitive advantage (Fine & Hax, 1985). In all, a review of the manufacturing management and manufacturing strategy literature reveals two consistent themes. The first theme emphasizes the importance of linking manufacturing processes and infrastructure in conformance with overall strategy (Adam & Swamidass, 1989; Adam Jr & Swamidass, 1989; Hayes & Wheelwright, 1984; Hill & Hoskisson, 1987; A. V. Roth & Jackson, 1995; Wheelwright & Hayes, 1985). A second theme focuses on the outcomes or content of the strategic process. Content literature generally focuses on building capabilities that might lead to a sustainable competitive advantage (Barney 1991). Such capabilities follow from a firm’s competitive priorities, generally seen as the emphasis placed on cost, quality, dependability, or flexibility (Wheelwright, 1984). Essentially, in a given industry firms will vary in how they approach these priorities, resulting in competitive postures that are unique relative to one another (Adam Jr & Swamidass, 1989; Hayes & Wheelwright, 1984; Hill & Hoskisson, 1987; A. V. Roth & Jackson, 1995; Wheelwright, 1984; Wheelwright & Hayes, 1985). Crafting such a unique combination of capabilities has been shown to lead to a competitive advantage for organizations, yet guidance on how to create and nurture these linkages has been slow to evolve.

6

2.1.1 Corporate Strategy and Manufacturing The strategy literature has also suggested that in order for firms to develop a lasting competitive advantage they must ensure that decisions across organizational levels (corporate, business, and functional) are consistent (Mintzberg, 1979). A firm’s corporate strategy is typically defined as that firm’s dominant orientation, i.e., the specific areas of overall interest to that firm over a long time horizon. At this level the firm defines the business or businesses in which it plans to compete, along with how the firm will acquire those resources that are necessary. A firm’s business strategy (or the business strategy of a unit within a multi-business firm) refers to: 1) the scope or boundaries of that firm or unit; and 2) the competitive position that firm or unit will seek as a means of effecting or maintaining its competitive advantage (Fine & Hax, 1985). The scope or boundaries of each business specifies the product, market, and service segments in which the firm will compete, while the competitive positioning element of business strategy is intended to focus effort along a consistent path. For example, if a firm is to compete on low cost it may attempt to generate high volume as a means of spurring efficiency; conversely, a firm that competes on product innovation may emphasize research and development to ensure a steady stream of novel products (Porter, 1980). Functional strategies (e.g., operations strategy) are seen as subordinate to the business strategy and, ideally, result in consistent patterns of decisions and tradeoffs (vis-à-vis competitive priorities). In the manufacturing function, such decisions are often characterized as either structural or tactical. Structural decisions are those related to capacity, facilities, technology, and vertical integration. Tactical decisions encompass day-to-day decisions such as workforce skill, quality, production planning, organizational structure, and supporting relationships (Wheelwright, 1984). Consistency across these decisions should lead to manufacturing capabilities that are necessary for the pursuit of a particular competitive strategy. The strategy literature has also suggested that in order for firms to develop a lasting competitive advantage they must ensure that decisions across organizational levels (corporate,

7

business, and functional) are consistent (Mintzberg, 1979). A firm’s corporate strategy is typically defined as that firm’s dominant orientation, i.e., the specific areas of overall interest to that firm over a long time horizon. At this level the firm defines the business or businesses in which it plans to compete, along with how the firm will acquire those resources that are necessary. 2.1.2 Corporate Strategy and Operations Management Strategy

As the previous sections suggest, operations strategy is generally viewed as the collective pattern of decisions made across the operations function. An extensive literature argues that effective operations strategy “is not necessarily the one that promises maximum efficiency, or engineering perfection, [but] rather one that fits the needs of the business and strives for consistency between its capabilities and policies in the business’s competitive advantage” (Wheelwright, 1984). Intriguingly, however, empirical research has been slow to justify this assertion (Anderson, Fornell, & Rust, 1997). For example, the value of consistency between corporate and operations strategy with regard to overall performance was explored by Adam and Swamidass (1989). They found gaps in the operations strategy literature with regard to a number of relationships, particularly those between strategy content and process variables and firm performance. Subsequent research, such as that of Smith and Reece (1999), suggested that the fit between operations choices and the choice of competitive strategy are essential elements in predicting firm profitability. Perhaps the most comprehensive empirical investigation of the linkage between operations strategy and process choice was that of the World Class Manufacturing Project (Flynn, Schroeder, & Flynn, 1999). In this large study of manufacturing plants, researchers found that linking competitive priorities across strategic levels creates a synergistic effect that increases a firm’s competitive performance. Similarly, several years later a study of services was conducted utilizing a similar framework in a service setting (Meyer & Collier, 2001). Their study of the customer service departments of 220 national hospitals suggested that a strong relationship exists between strategic planning and performance. Specifically, they found positive relationships between customer satisfaction and

8

process management as well as the link between operational performance (improved internal capabilities) and overall firm performance. 2.2 Evolution of Services Operations Literature

The most prevalent stream of research with regards to service operations centers on profit margin, largely attained through increased efficiency. In pursuit of efficiency, the earliest service classifications applied Taylor’s “Scientific Management” principles (Taylor, 1972 [c1947]) to insurance companies, mail order firms, and banks (Leffingwell, 1917) with the idea that establishing specific patterns and routines would increase efficiency and, by extension, profitability. However, as noted by this research, the difficulty encountered in predicting customer behavior makes scientific management principles significantly less effective than in manufacturing settings such as machine shops or steam engine plants (Chase & Apte, 2007). It was not until the early years of the fast food industry that scientific management was effectively applied to services. Much as was the case in manufacturing, standardization and simplification facilitated the substitution of capital for labor in the production of a uniform output (e.g., a McDonald’s hamburger), focusing management primarily on monitoring and controlling the process (Norris & Bockelmann, 2000). 2.2.1 Service Efficiency Another effort that emphasized efficiency in service operations was the Production Line Approach (Levitt, 1972). This model suggested that limiting the discretion of personnel through well-defined tasks, standardization, and division of labor, allowed jobs to become both specialized and simplified. Ultimately such an approach would limit the span of control and decrease the necessary worker skill and training, facilitating greater volume, increased productivity, and increased profits. Others have expanded this thinking to include the application of rational management principles such as process mapping to identify problems before they arise and ultimately yield higher production (G. L. Shostack, 1977). With regard to service quality, research suggests that the physical setting, the flow of work through the system, and the content of service jobs leads to service personnel actually designing quality into their service

9

delivery process (Bowen & Lawler III, 1992; Cook et al., 2002). Others describe a decision variable matrix that enables planners to incorporate customer interaction, the delivery system, and the service to create the optimal service system design (Chase & Garvin, 1989). Service efficiency has also been explored empirically. For example, early service research found that standardizing service processes leads to increased volume (Sasser, Olson, & Wyckoff, 1978), while other research has suggested that efficiency is higher when service design is broadened to incorporate service providers, service technology, physical facilities and other equipment (Chase & Hayes, 1991). 2.2.2 Service Typologies Over the last two decades several attempts have been made to categorize services. While differences between the typologies exist, the service literature has been consistent in its recognition that generic service types may differ substantially with regard to efficiency, throughput, and tolerable variation. Several typologies have emerged to conceptualize and catalogue these differences and are discussed briefly below. The Service Process Matrix (SPM) framework categorizes effects on service efficiency along two dimensions: production process and level of customization. This matrix asserts that correctly executed services optimize throughput, increase efficiency, and lead to increased productivity and long-term profitability (Schmenner, 1986). Utilizing an operations perspective, (Schmenner, 2004) suggests “the degree of interaction with and customization for the consumer” can be translated to variation in the provision of service. Low variation would suggest customers demand little customization of the service product. Conversely, high variation would suggest customers demand a large number of variations of and customizations to their service product. The amount of customer interaction and necessary customization are common sources of variation in services and have been found to decrease service productivity (Goldstein, Johnston, Duffy, & Rao, 2002). Schmenner (2004) also argues that, as in manufacturing, services’ throughput time is an important dimension. Throughput time is defined as the time that elapses between: a) the

10

moment when the service and any related facilities or goods are available for use in the service; and b) the moment when that service encounter is complete and the customer exits. More specifically, the throughput time in a general merchandise environment is defined as when the customer places the first item into her/his cart to when she/he leaves the service. In electronics retailing, throughput time is defined as that time between when a customer first begins to seek information through item retrieval to her/his checkout. In the prepared foods industry, throughput time is defined as the time a customer is in the store, also known as door- to-door time (Roger, 2004; Schmenner, 2004). This classification scheme creates four quadrants: 1) the service factory, 2) service shop, 3) mass service, and 4) professional service. The service factory has low variation and low (faster) service transaction time, while the service shop has a high level of variation with low relative throughput time. The mass service has low variation and high (longer) relative throughput time while the professional service has both high levels of variation and high relative throughput time (Schmenner, 1986, 2004). This matrix is graphically depicted in figure 2.1. An important element of the framework presented in figure 2.1 is customer contact, defined as the physical presence of the customer in the system (Chase, 1978). Like relative throughput time this construct is concerned with the movement of the customer through the service system. This construct, however, considers the actual interaction between the employee and customer. Specifically, customer contact is computed as the percentage of time a customer interacts with employees in the system relative to his/her total time in the system. For example, Starbucks may have a low throughput time but high customer contact. In such a case, the customer moves through the system swiftly but, while in the system, she/he requires a substantial amount of interaction with service personnel. Conversely, a customer at Chili’s would tend to have a sizeable throughput time but experience a relatively low customer-contact service. Here, the customer would move through the system slowly but while in the system would not require constant attention. Previous research based on customer contact has categorized general merchandise and consumer electronics retailers as mixed services,

Full document contains 140 pages
Abstract: The purpose of this research is to determine if the corporate strategy theory base may be useful in advancing the understanding of service characteristics; specifically, the relationship between particular service industries, competitive strategy and a firm's choice of servicescape dimensions. The design and methodology of this research combines two distinct literature streams with respect to service operations: competitive strategy and operations strategy. First, the operations strategy literature and its evolution into service operations are reviewed to provide a historical foundation for the research and to identify possible research gaps. Next, the strategy literature is reviewed as a possible remedy to these gaps. Combining these views suggests that, in contrast to traditional views that argue for a common positive influence from increased service for all firms, the relative influence of service characteristics is dependent on the competitive approach taken by a firm. The hypotheses generated from this alternative view are tested on a sample of eleven firms drawn from three service industries utilizing perceptions of service characteristics and satisfaction collected from over 1200 customers. The results are generally supportive of the hypotheses, indicating that the impact from higher levels of service characteristics is different depending on the competitive approach taken by a firm. This research adds to the body of knowledge through its integration of two distinct literature streams. The theory and associated empirical findings suggest the importance of considering a firm's strategy--how it chooses to compete--rather than just a simple characterization of the service industry when trying to determine the value of different levels of service characteristic. Academics interested in advancing the growing body of service industry research will gain insight through the strategy synthesis, while practitioners are given tentative guidance about how to focus servicescape dimensions on their particular competitive situations.