Managing the global service transition: employees’ reactions and management responses

Abstract

Despite the importance of global engineering services (GES) to many manufacturing companies, this area of research has not been studied extensively. This paper explores the role of employees in a manufacturer's transition to a global engineering services provider. Based on the literature, a conceptual framework is defined, which specifies the dynamic interaction between employee reactions and management responses to determine the transition outcome. Evidence is presented from a single case study based on 21 interviews and observations as well as documents and media information. The findings empirically demonstrate how employee resistance, support and rejection of the globalisation strategy develop, resulting in the need for continuous management responses to ensure global integration. Exemplar employee reactions are prioritisation of local over global customers in service delivery due to lack of ownership, which were responded to by designing new organisational procedures to ensure local prioritisation of global customers with service contracts. This study contributes to the emerging field of global operations management by studying the operational contributions of employees and the respective management responses. This research focuses specifically on global services as a novel focal area within this emerging field.

When servitized manufacturers globalise: becoming a provider of global services

“…As a result of these partly contradicting drivers, global service providers experience tensions embodied in the need to integrate and optimise the relative emphasis on global integration and local variations (Pana and Kreye, 2021;Zhang et al, 2016). In other words, Becoming a provider of global services global service providers face an "innovation-integration dilemma" (Monteiro and Birkinshaw, 2017) or the "paradox of external embeddedness" (Andersson et al, 2002) reflecting that local subsidiaries need to be locally embedded for successful service delivery and integrated into the corporate network to transfer those ideas.…”

“…As a result of these partly contradicting drivers, global service providers experience tensions embodied in the need to integrate and optimise the relative emphasis on global integration and local variations (Pana and Kreye, 2021; Zhang et al. , 2016).…”

“…, 2016), legal services (Malhotra and Morris, 2009), insurance (Wirtz et al. , 2015), and logistics (Pana and Kreye, 2021). If these service-related capabilities are transferred from one subsidiary to other units in the global network, the competence of the global service provider is upgraded (Andersson et al.…”

“…This means that intellectual asset, such as people, system knowledge, and learning are critical to their delivery (Roth & Menor, 2003). This applies also to engineering services, where the knowledge and skills embodied by the individual service employee defines how the service is delivered and ultimately perceived by the customer (Pana & Kreye, 2021;Raddats et al, 2017). Third, services require close customer contact and involvement of the customer for providing inputs (Chase & Apte, 2007;Schmenner, 1986).…”

“…Global services offer the benefit of global efficiency through the leveraging of available capabilities across the network (Zhang et al, 2016), including standardising processes and network integration (Zhang et al, 2016) and reversely implementing knowledge from different local markets into the global network (Monteiro & Birkinshaw, 2017). The type of services provided by servitized manufacturers require capabilities related to a variety of knowledge-intensive and creative processes (Baines & Lightfoot, 2014), including engineering skills and expertise (Zhang et al, 2016), legal services (Malhotra & Morris, 2009), insurance (Wirtz et al, 2015), and logistics (Pana & Kreye, 2021). If these service-related capabilities are transferred from one subsidiary to other units in the global network, the competence of the global service provider is upgraded (Andersson et al, 2002).…”