Is lean service promising? A socio-technical perspective

Abstract

Purpose -This research contributes to the ongoing debate about the effectiveness of lean practices in the service sector. Design/methodology/approach -This paper examines the impact of lean service on firm operational and financial performance. Exploratory factor analysis is used to reduce the data and identify the underlying dimensions of lean service, and partial least squares structural equation modelling (PLS-SEM) is used to test the developed model. Findings -The results indicate that the social bundles of lean service had an independent positive impact on firm operational and financial performance. Furthermore, while the technical bundles had an independent positive effect on only the operational performance, they interacted with the social bundles to improve both the operational and financial performance. The findings suggest that service managers must follow a systematic approach when implementing lean service practices without focusing on one side of the system at the expense of the other. Practical implications -The paper highlights the importance of implementing lean service as a socio-technical system if service firms are to achieve the best possible benefits from their implementation. The motivation factor (social side) and the customer value factor (technical side) are capable of improving all operational performance dimensions and profit margin even if implemented alone. Therefore, service managers with limited resources are encouraged to start lean service implementation with practices within these factors. However, they can also expect improved operational and financial performance from implementing other factors as they positively interact to further improve performance. Originality/value -Viewing lean service as a socio-technical system, this paper incorporates a larger set of lean practices than previous studies and demonstrates empirically their capability of improving service firms' operational and financial performance. It contributes significantly to the emerging literature on lean service by empirically testing the mechanism through which lean service affects firm performance.

The relationship between investments in lean practices and operational performance

“…Accordingly, our research offers an additional important contribution to the lean literature by testing the moderating role of OIC. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 This study also contributes to the intellectual capital literature by providing insights into the individual effects of human, structural and social capital on operational performance , Zhang et al, 2017 and how these dimensions can be used to enhance the efficacy of lean practices (Hadid et al, 2016). We did not find evidence of interaction effects between the ILP and human capital.…”

Lean service, business strategy and ABC and their impact on firm performance

“…Whilst the scope of the term "lean" has extended over time, the essence of the concept has remained the same. Like lean manufacturing, lean service seeks to eliminate waste from processes to improve customer value (Shamsuzzaman et al 2018;Hadid, Mansouri, and Gallear 2016). It assumes that all organisations are comprised of a set of processes and activities which can be controlled and continuously improved (Allway and Corbett 2002).…”

“…This helps differentiators to improve productivity through avoiding or minimising rework time due to quality issues. In addition, by removing wasteful activities from processes, lean practices enable differentiators to shorten lead time which results in better responsiveness to customers (Shamsuzzaman et al 2018); a necessary attribute for companies operating in volatile markets (Hadid, Mansouri, and Gallear 2016;Lei, Hitt, and Goldhar 1996). Furthermore, despite the ability of differentiators to compensate for additional costs by increasing prices, they still consider operating costs through their higher use of ABC for more relevant cost information (Naranjo-Gil, Maas, and Hartmann 2009).…”

“…This improves employee productivity by reducing the time spent on rework activities along with all associated costs (Piercy and Rich 2009). Moreover, lean practices focus on improving the work environment by grouping activities and people needed for delivering similar products/services in the same area (Hadid, Mansouri, and Gallear 2016). This can help cost leaders reduce unnecessary movements of employees, which contributes to higher productivity and efficiency.…”

“…Lean service is designed to improve processes by focusing on NVAs from customer perspective (Hadid, Mansouri, and Gallear 2016;Shah and Ward 2003). The basic premise of the system is that by eliminating NVAs, several benefits can be achieved including a reduction in operating costs, higher productivity and efficiency, improved flexibility, enhanced customer satisfaction and profitability (Nielsen, Kristensen, and Grasso 2018;Shamsuzzaman et al 2018;Agarwal et al 2013).…”