Service Productivity: What Stops Service Firms from Measuring It?

Abstract

Productivity measurement poses a challenge for service organizations. Conventional management wisdom holds that this challenge is rooted in the difficulty of accurately quantifying service inputs and outputs. Few service firms have adequate service productivity measurement (SPM) systems in place and implementing such systems may involve organizational transformation. Combining field interviews and literature-based insights, the authors develop a conceptual model of antecedents of SPM in service firms and test it using data from 276 service firms. Results indicate that one out of five antecedents affects the choice to use SPM, namely, the degree of service standardization. In addition, all five hypothesized antecedents and one additional antecedent (perceived appropriateness of the current SPM) predict the degree of SPM usage. In particular, the degree of SPM is positively influenced by the degree of service standardization, service customization, investments in service productivity gains, and the appropriateness of current service productivity measures. In turn, customer integration and the perceived difficulty of measuring service productivity negatively affect SPM. The fact that customer integration impedes actual measurement of service productivity is a surprising finding, given that customer integration is widely seen as a means to increase service productivity. The authors conclude with implications for service organizations and directions for research.

Service Sector Productivity in the European Union Member States

“…Various authors, including Anderson, Fornell, and Rust (1997) and Walsh, Walgenbach, Evanschitzky, and Schaarschmidt (2016), claim that these methods of productivity measurement cannot be used successfully in the service sector. In their opinion, this is hindered, among other things, by the customer's participation in the service provision process and the non-material nature of services, which is difficult to assess quantitatively.…”

“…On the other hand, critics pointed out the problematic effect estimation about input. This view resulted from such service features such as, for example, the impossibility of their storage and their non-material nature (Walsh, Walgenbach, Evanschitzky, and Schaarschmidt, 2016;Blois, 1984).…”

Service Complexity and Service Productivity in E-Mobility: New Insights from Emergency and Roadway Breakdown Services

“…Service productivity. Productivity describes the ratio of output to input [7]. When measuring productivity of services, the integration of the external factor, i.e., the customer, and its immateriality pose the greatest difficulties [8].…”

Service enterprise productivity in action: measuring service productivity

“…At the micro-level, productivity measures the efficient allocation of resources. The study of productivity has its roots in the era of manufacturing and mass production (Sigala 2004;Sigala & Mylonakis 2005), where measures were easily captured and quantified (Joppe and Li, 2016;Walsh et al, 2016). However, as nations have transitioned from manufacturing to service-and knowledge-based economies, productivity growth rates have declined (Byrne, Fernald & Reinsdorf 2016).…”

“…Service delivery becomes increasing complex with the introduction of customer variability and requires managers to make decisions on whether to reduce or accommodate customer-introduced variability (Frei 2006b;Schmenner 2004). Customer variability and the degree to which organisations reduce or accommodate variability affect firm performance (Frei 2006a(Frei , 2006bSchmenner 2004;Walsh et al 2016). Organisations attempt to control or deal with customer variability by grouping, categorising and segmenting customers into homogenous niches (Beltagui, Candi & Riedel 2016;Selhed & Anderson 2014).…”