Service combinative capabilities and service operations strategy: formulation, process and antecedents

Wang, Chao (2010) Service combinative capabilities and service operations strategy: formulation, process and antecedents. Doctoral thesis, University of London: London Business School.

Abstract

Service companies face even greater challenges due to the direct involvement of customers and the dynamics of customer demand. In order to survive or stay ahead, service companies need appropriate operations strategies that are effective in driving their performance, as well as being in line with their resource profiles. Therefore, two fundamental areas become particularly important: (1) decisions on the strategy content to develop operations strategies that provide the right kinds of capabilities to be competitive, and (2) the means by which capabilities can be built up into a service operations strategy. The literature on both manufacturing and service operations strategy has long recognized the generic capabilities of quality, delivery, cost and flexibility as the most important operational objectives. This dissertation follows this capability-based operations strategy view, and attempts to address the above two questions through three empirical studies. The first study focuses on the first research question by examining the impact of various service operations strategies with different combinative capabilities on business performance. It also investigates the influence of environmental factors on various strategic choices. Following the "sand cone" model, the second study explores the process of establishing a service operations strategy with multiple capabilities. Specifically, it examines the impact of acquiring flexibility, which is situated at the top of the pyramid suggested by the "sand cone" model, on companies' existing capabilities. The third study focuses on an important strategic decision area, organizational mechanisms, and tries to find out how service companies can make use of their structural and contextual organizational mechanisms to improve their service agility. Survey data and panel data are used for this dissertation. Structural equation models, regressions, and data envelopment analysis (DEA) methods are applied in the studies. In general, the findings indicate that service companies can have strategic choices other than being "focused" or "all-round". However, the most effective service operations strategies tend to be rooted in excellence in quality and delivery, which is aligned with the "sand cone" progressive route. In terms of strategy establishment, building additional capability is likely to affect existing capabilities negatively. The magnitude of the impact, however, reduces along the pyramid route. Furthermore, organizational mechanisms, including metaroutines, job enrichment, incentives and trust, can be used to help service companies achieve and improve service agility.