Why are a select few service firms better at what they do - year in and year out - than their competitors? For most senior managers, the profusion of anecdotal "service excellence" books fails to address this key question. In this pathbreaking book, world-renowned Harvard Business School service firm experts James L. Heskett, W. Earl Sasser, Jr. and Leonard A. Schlesinger reveal that leading companies stay on top by managing the service profit chain. Based on five years of painstaking research, the authors show how managers at American Express, Southwest Airlines, Banc One, Waste Management, USAA, MBNA, Intuit, British Airways, Taco Bell, Fairfield Inns, Ritz-Carlton Hotel, and the Merry Maids subsidiary of ServiceMaster employ a quantifiable set of relationships that directly links profit and growth to not only customer loyalty and satisfaction, but to employee loyalty, satisfaction, and productivity. The strongest relationships the authors discovered are those between (1) profit and customer loyalty; (2) employee loyalty and customer loyalty; and (3) employee satisfaction and customer satisfaction. Moreover, these relationships are mutually reinforcing; that is, satisfied customers contribute to employee satisfaction and vice versa. Here, finally, is the foundation for a powerful strategic service vision, a model on which any manager can build more focused operations and marketing capabilities. For example, the authors demonstrate how, in Banc One's operating divisions, a direct relationship between customer loyalty measured by the "depth" of a relationship, the number of banking services a customer utilizes, and profitability led the bank to encourage existing customers to further extend the bank services they use. Taco Bell has found that their stores in the top quadrant of customer satisfaction ratings outperform their other stores on all measures. At American Express Travel Services, offices that ticket quickly and accurately are more profitable than those which don't. With hundreds of examples like these, the authors show how to manage the customer-employee "satisfaction mirror" and the customer value equation to achieve a "customer's eye view" of goods and services. They describe how companies in any service industry can (1) measure service profit chain relationships across operating units; (2) communicate the resulting self-appraisal; (3) develop a "balanced scorecard" of performance; (4) develop a recognitions and rewards system tied to established measures; (5) communicate results company-wide; (6) develop an internal "best practice" information exchange; and (7) improve overall service profit chain performance. What difference can service profit chain management make? A lot. Between 1986 and 1995, the common stock prices of the companies studied by the authors increased 147%, nearly twice as fast as the price of the stocks of their closest competitors. The proven success and high-yielding results from these high-achieving companies will make The Service Profit Chain required reading for senior, division, and business unit managers in all service companies, as well as for students of service management.

The Service Profit Chain: How Leading Companies Link Profit and Growth to Loyalty, Satisfaction, and Value (Цепочка создания прибыли в сфере услуг: как ведущие компании связывают прибыль и рост с лояльностью, удовлетворением и ценностью)

Toward the development of a big data analytics capability

Internet and digitization are fundamentally changing and disrupting newspaper companies’ traditional operating models. Disruptive innovation theory offers explanations for why companies succeed or fail to respond to disruptive innovations. This study builds on disruptive innovation theory by ascertaining the role of dynamic capabilities in the performance of response to digital disruption. Empirical results suggest that first-order dynamic capabilities that are created by changing, extending, or adapting a firm’s existing resources, processes, and values are positively associated with building digital platform capabilities, and that these capabilities impact the performance of response to digital disruption. For information systems (IS) researchers, this study clarifies the role of first-order dynamic capabilities in responding to digital disruption. For IS practice, it helps managers to focus on the most promising factors for creating first-order dynamic capabilities, for building digital platfor...

The Role of Dynamic Capabilities in Responding to Digital Disruption: A Factor-Based Study of the Newspaper Industry

The importance of big data and predictive analytics has been at the forefront of research for operations and manufacturing management. Literature has reported the influence of big data and predictive analytics for improved supply chain and operational performance, but there has been a paucity of literature regarding the role of external institutional pressures on the resources of the organization to build big data capability. To address this gap, this paper draws on the resource-based view of the firm, institutional theory and organizational culture to develop and test a model that describes the importance of resources for building capabilities, skills, and big data culture and subsequently improving cost and operational performance. We test our research hypotheses using 195 surveys, gathered using a pre-tested questionnaire. Our contribution lies in providing insights regarding the role of external pressures on the selection of resources under moderating effect of big data culture and their utilisation for capability building, and how this capability affects cost and operational performance.

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Big Data and Predictive Analytics and Manufacturing Performance: Integrating Institutional Theory, Resource-Based View and Big Data Culture

Exploring the relationship between big data analytics capability and competitive performance: The mediating roles of dynamic and operational capabilities

Several studies support the positive link between information technology capability and firm performance, including Bharadwaj (2000) and Santhanam and Hartono (2003), which appeared in MIS Quarterly. We conducted a study to see if this link is still statistically significant. It is now over a decade since the first study was published, during which several significant developments in the IT industry have taken place. Unlike the 1990s, when proprietary information systems prevailed, the 2000s are characterized by more standardized and homogeneous information systems and with the rapid adoption of ERP and web technologies. Thus, we attempted to reexamine the link between IT capability and firm performance with data from the 2000s. Surprisingly, the results of our current analysis showed no significant link between IT capability and firm performance. Contrary to earlier studies, IT leader firms in our study didn't show better financial performance than control firms. We discuss several possible causes for the change in findings and present an in-depth comparison in business performance between the two groups--IT leader and control--over a period extending from 1991 to 2007.

Information technology capability and firm performance: contradictory findings and their possible causes

Information Technology Capability and Firm Performance: Role of Industry

IS Success Model by DeLone and McLean (1992, 2003) has been used to explain how information systems create value for organizations However, IS Success Model does not fully address how users perceive value of an information system It assumes that the information quality, system quality, and service quality automatically generate user satisfaction Users will not be satisfied with information systems of high quality when they perceive that the benefits of using a system do not match or exceed the cost (ie, efforts and time-investment) of learning or using the system Numerous high-profile IT investment failures due to employee dissatisfaction and customer dissatisfaction illustrate the need for understanding the perceived value of IT Therefore, a new construct called Perceived IT Value (PITV) needs to be introduced in IS Success Model to address why some high quality information systems fail to satisfy users In this paper, I propose a research model that expands IS Success Model to reflect PITV

IS Success Model and Perceived IT Value

This study empirically examines the impact of IT capability on firms' performance and evaluates whether firms' IT capabilities play a role in improving employee capability, customer value, customer satisfaction, and ultimately business performance. The results were based on comparing the business performance of the IT leader companies with that of control companies of similar size and industry. The IT leader companies were selected from the Information Week 500 list published annually from 2001 to 2004. For a company to be selected as IT leaders, it needed to be listed at least twice during the period. Furthermore, it had to be listed in the American Customer Satisfaction Index (ACSI) so that its customer satisfaction level could be assessed. Standard & Poor's Compustat and the ACSI scores were used to test for changes in business performance. The study found that the IT leaders had a raw material cost measured by cost-of-goods-sold to sales ratio (COGS/S) than the control companies. However, it found no evidence that firms' IT capability affects employee capability, customer value, customer satisfaction, and profit. An important implication from this study is that IT becomes a commodity and an attempt to gain a competitive advantage by overinvesting in IT may be futile.

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The Impact of IT Capability on Employee Capability, Customer Value, Customer Satisfaction, and Business Performance

Understanding how individuals recognize an emerging technology can have a profound impact on how successfully the technology is adopted. The authors look into how people with different cognitive styles interpret a new technology and arrive at different beliefs of the same technology, which influences the recognition and acceptance of the technology. An experiment was conducted to test whether an individual's cognitive style impacts their beliefs and intention to use RFID, an emerging technology. The study suggests that a person's cognitive style does influence how he/she perceives the usefulness and ease of the technology, as well as his/her attitude and intention to use it. People with introversion, thinking and judging cognitive styles tend to perceive higher ease of use of RFID than those with extroversion, feeling and perceiving cognitive styles. Also, judging types are more likely to better perceive higher usefulness of RFID. The authors also provide discussion on the managerial and theoretical implications of our findings.

Ho-Chang Chae

Papers

Information technology capability and firm performance: contradictory findings and their possible causes

Information Technology Capability and Firm Performance: Role of Industry

IS Success Model and Perceived IT Value

The Impact of IT Capability on Employee Capability, Customer Value, Customer Satisfaction, and Business Performance

Can Cognitive Style Predict Adoption of an Emerging Technology?: A Study of Cognitive Style and Its Influence on the Perception of a New Technology