The risks of providing services

Abstract

Design/methodology/approach: The study develops a conceptual framework of nine propositions (and corresponding diagrammatic representations) of the relationships between: (i) three kinds of risk (operational, strategic, and financial); and (ii) three strategies for the provision of added service (customisation, bundling, and broadening the range of offerings).This conceptual framework is examined empirically by qualitative analysis of data gathered in a three-year longitudinal study of managerial representatives from nine multinational manufacturing firms engaged in the addition of services to their traditional goods offerings. Findings:Eight of the nine propositions are fully supported, and one receives equivocal support. In addition, several contextual factors are identified as moderating influences on the relationships between the three categories of service offering and the three classes of risk. Research implications:The study provides an original conceptual framework and nine research propositions that represent a useful starting point for the development of a formal theory of the risks of providing services. Practical implications;The conceptual framework provides guidance for managers' assessments of the risks accompanying the infusion of added services to the traditional goods offerings of manufacturing companies.Originality/value: This paper provides a novel conceptualisation of service innovation and attendant risk.

Pricing strategies of service offerings in manufacturing companies: a literature review and empirical investigation

“…In other cases, 'to avoid the pricing question, product-centric firms bundled goods and services into an "all-inclusive" offer' (Ulaga and Reinartz 2011, 28). The more the products and services become seamlessly merged to form tailored and integrated solutions, the more these solutions are complex to design and deliver (Davies, Brady, and Hobday 2007) and more the operational and financial risks for the provider (Nordin et al 2011). Offering bundles raises challenges for cost valuation and pricing (Spring and Araujo 2013), as well as conflicts among the company's sales departments (Neely 2009).…”

Service risk perceptions and risk management strategies in business-to-business tourism partnerships

“…The next layer is generic research on risk perceptions in various value chains (Hallikas, Virolainen, & Tuominen, 2002;Hooper & Stobart, 2003;Spekman & Davis, 2004). Third layer represents research on risk management in various service fields, including research on tourism supply chains (Fang, Palmatier, & Steenkamp, 2008;Giarini & Stahel, 1993;Hollman & Forrest, 1991;Nordin, Kindström, Kowalkowski, & Rehme, 2011;Penttinen & Palmer, 2007). The inner layer involves research on perceived risks in tourism.…”

“…Simons (1999) further specified that strategic risks could be related to either competitors (difficulties in differentiating the company's offers from competitors' offers) or customers (failing customer interest in company's services). Third, a financial risk is any risk that influences cash flow (Nordin et al, 2011). Schwartz and Gibb (1999) expanded on the three risk types by adding "reputation risk," which can damage business due to loss of confidence.…”

“…Schiffman and Kanuk (2006) expanded this model to a six-factor model, including functional risk (the product will not perform as expected), physical risk (the product may inflict on self or others), financial risk (the product's price will be too high measured against quality), social risk (the product will result in social embarrassment), psychological risk (the product may damage self-image), and time risk (the product will not perform on time). Nordin et al (2011) studied the relationships between the generic types of risks (operational, strategic, and financial) and different strategies for the provision of value added service among manufacturers (customization, bundling, and range). Research on generic risk types in business describes absolute risks, that is, risks that are assessed objectively by commercial providers.…”

Open Innovation or Innovation in the Open? An Exploration of the Strategy–innovation Link in Five Scale-Intensive Services

“…Innovation in services thus needs another approach to strategy than innovation in manufacturing. 25,26 The reviewed literature exposed a shortage of knowledge on the role of strategy in service innovations in general and in relation to open service innovation in particular. Nevertheless, there are issues addressed that involve strategy in the innovation process, such as the role of clients in the innovation process.…”