Uncertainty Reduction Approaches, Uncertainty Coping Approaches, and Process Performance in Financial Services

Abstract

Developing a better understanding of the impact of uncertainty on process performance has been recognized as an important research opportunity in service design (Hill, et al., 2002). Within this general research stream, our study focuses on the question of what managers can do to most effectively address operational uncertainty and mitigate its negative effects. To begin to address this question, we report on an exploratory study using a sample of professionals in the financial-services industry who acted as informants on 108 financial-services processes. These professionals were sampled from a population of graduates of a university in the northeastern region of the United States who were employed in the financial-services industry. Based on these processes, we empirically examine the relationship between responses to operational uncertainty and process performance after controlling for customer mix, other uncertainty sources, and process type characteristics. Our findings suggest that process improvement-an uncertainty reduction approach related to the internal functioning of the process-as well as several uncertainty coping approaches are associated with better performing processes. However, uncertainty reduction approaches related to customer involvement with, and demands on, the process are not associated with better performing processes. We discuss the implications of our findings for determining what actions managers can take to reduce the negative performance effects of operational uncertainty and how managers can decide which of these actions to take. We conclude with a discussion of the limitations of our study. † Corresponding author. 150Uncertainty Reduction Approaches

Customer involvement and service firm internationalization performance: An integrative framework

“…The customer interaction approach also acknowledges that customer involvement involves a certain level of uncertainty; this approach asserts that customer involvement may distract employees' attention and coordination efforts (Skaggs & Huffman, 2003) and may increase the likelihood of decreased customer satisfaction due to escalated expectations (Goodman et al, 1995;Mayer, Ehrhart, & Schneider, 2009). However, this approach argues further that these uncertainties can be effectively mitigated or managed (Field et al, 2006) and that customer involvement may result in certain benefits. For instance, customer involvement helps service firms gain access to critical knowledge-based resources (Lengnick-Hall, 1996), design high-quality services (Von Hippel, 1998), achieve lower costs and timely delivery (Yli-Renko, Autio, & Sapienza, 2001), accelerate innovation speed (Lettl, Herstatt, & Gemuenden, 2006), and lower defect levels (Slater & Narver, 1995).…”

“…Moreover, customer involvement also involves the costs of coordinating with customers and increases the risk of failing to satisfy customers' escalated expectations about the quality of services (Goodman, Fichman, Lerch, & Snyder, 1995). Empirical studies on domestic firms and customer involvement have thus generated mixed results, showing a positive relationship (e.g., Dietz, Pugh, & Wiley, 2004;Svendsen, Haugland, Grønhaug, & Hammervoll, 2011), no relationship (e.g., Carbonell, Rodríguez-Escudero, & Pujari, 2009), and even a negative relationship (e.g., Feng, Sun, & Zhang, 2010;Field, Ritzman, Safizadeh, & Downing, 2006).…”

Linking supply chain strength to sustainable development: a country-level analysis

“…The average of the items was computed to form the 'green corporatism' variable and subsequently used for analysis, e.g., Refs. [47,48]. 3 Social sustainabilitydthree indicators were used to measure the degree of social sustainability: (i) fair labor practices, (ii) corporate social involvement, and (iii) the Gini Index.…”

Process design principles in service firms: Universal or context dependent? A literature review and new research directions

“…Directly measuring the impact of design principles on process performance, however, poses some problems. The difficulty of measuring the success of the use of OM practices at the process level was noted by Field et al (2006), who emphasise that collecting robust and reliable process performance data is not easy. This issue surfaces in an empirical study by Safizadeh et al (2003) in which the authors use a perceptual measure of performance to evaluate service delivery processes in the financial services sector.…”