Service Science Perspectives on Intercultural Service Systems

Dr. Bill HefleyCarnegie Mellon University

Workshop on Models of Intercultural Service Systems: Scholarly Discussion for Building a Research Agenda

The University of Puerto Rico, MayaguezMay 20, 2009

Copyright 2009 Bill Hefley (unless otherwise noted)

Abstract• This presentation begins by asking some questions

• What are intercultural differences?• What are services?

• Gaining an understanding of services and their importance in the local and global economies provides a context for the discussion of intercultural services. The concept of service systems and service encounters provide us with a common framework to discuss services and the many interactions that can occur in service settings. Many times the intercultural meeting, or clashing, occurs within the service encounter. Illustrative examples from international settings, many in high-tech settings, can illustrate these encounters.

• However, it is not just at the service encounter or moment of truth where an intercultural gap may be present. This talk concludes with a discussion of other potential intercultural service gaps, challenges in modeling services, and how this workshop may produce outcomes that propel the discourse forward.

Agenda

• What are services?• My recent work with IT services

• Why a focus on services?• GDP• Employment

• Service systems• The Challenges

• Service Encounters• Intercultural encounters• Other potential intercultural service gaps

• Addressing the Challenges – this Workshop

Service defined (after Spohrer, 2006)

• Deed, act, or performance (Berry, 1980)• An activity or series of activities… provided as solution to customer problems

(Gronroos, 1990)• All economic activity whose output is not physical product or construction

(Brian et al, 1987)• Intangible and perishable… created and used simultaneously (Sasser et al,

1978)• A time-perishable, intangible experience performed for a customer acting in

the role of co-producer (Fitzsimmons, 2001)• A change in condition or state of an economic entity (or thing) caused by

another (Hill, 1977)• Characterized by its nature (type of action and recipient), relationship with

customer (type of delivery and relationship), decisions (customization and judgment), economics (demand and capacity), mode of delivery (customer location and nature of physical or virtual space) (Lovelock, 1983)

• Deeds, processes, performances (Zeithaml & Bitner, 1996)

What is a service?

• A service is a provider/client interaction that creates and captures value. (IBM)

• A service is a process consisting of a series of more or less intangible activities that normally, but do not necessarily always, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems.“Service Management and Marketing: A Customer Relationship Approach”, C. Grönroos, 2nd ed., 2000, Chichester, UK: Wiley.

What is service?

• Service is the application of competences for the benefit of another (Vargo and Lusch 2004).

• Service depends on division of labor and effective co-creation of value, leading to complementary specialization and comparative advantage among participants (Normann 2001).

MaglioSpohrer08

What do you think of when I say “services”?

• “The emergence of the ‘‘service economy’’ in the United States has given birth to public policy worries that the country is in the process of being reduced to a nation of orderlies, fast-food workers, and bus boys.”McKenzie (1987, p. 73)

Examples of service industries• Wholesale and retail trade; repair of motor vehicles,

motorcycles, and personal and household goods (‘‘trade services’’ for short; often statistics exclude the motor vehicles subsectors)

• Hotels and restaurants (often identified as HORECA—hotels, restaurants, catering)

• Transport, storage, and communication• Financial intermediation• Real estate, renting, and business activities• Public administration and defense; compulsory social security• Education• Health and social work• Other community, social, and personal service activities

IT Services

• Complex IT service systems are developed and delivered with rich supply chains

• Complex organizational relationships• Complex technology systems

• As the technology evolves, so do the organizational relationships

• Service oriented architectures (SOA), Software as a Service (SAAS), service provisioning

• iterative software development process with customers’ outsourcing to multiple developers and geographies

Client

Service providerHW, SW producer

The eSCM-SP and eSCM-CL are designed to be complementary “best practice” models, providing

guidance to both sides & across all phases of IT/ITES sourcing relationships

Economic products lie along a goods-services continuum - with few pure goods and pure services

• “How to Design a Service”, G.L. Shostack, European Journal of Marketing, 1982, Vol. 16, No. 1, pp. 32-36

Service-DominantEntities

Goods-Dominant

Entities

SALT

NECKTIE

HOUSE

AUTO

TAILORED SUIT

FAST FOOD

TELEVISION

ADVERTISING AGENCY

THEATRE

NURSING

TEACHING

Service products

• Service industries and firms have their main focus on providing service products

• Service products are typically a service function or set of functions marketed as a commodity or public service(Miles08)

Service offerings (adapted from Kopp, 2006)

• Stand-alone service• Design of services into the product• Provision of goods and all related

services (training, parts, support) (i.e. value-added services (Mohapatra, 2006), service encapsulation (Howells, 2000))

• Offer a product as a service (software as a service)

product/service system (PSS)

• A product/service system is the result of the interaction between different actors and technological elements during the use phase.

• PSS design activity should emphasize elements of convergence between several social and technological factors, including:• The social, technological, and cultural frames of the actors

participating in the development of the system, and;• The technological knowledge embedded in the artifacts used

for the service.

• Combination of a heterogeneous mix of elements (people + cultural frames + technological artifacts)

Service as exchange• Service involves a negotiated exchange between a

provider and an adopter (supplier and customer) for the provision of (predominately) intangible assets.

• The exchange is co-generated by both parties, and the process of adoption or consumption is an integral part of the transaction.

• Often the adopter is a coproducer, intimately involved in defining, shaping, and integrating the service.

• The depth of this relationship likely varies considerably between consumer services and enterprise services.• Consumer services: interactions are built around episodic

experiences and brands. • Enterprise services: the interactions are built around long-

term relationships over the life of the enterprise(Chesbrough & Spohrer, CACM, 2006)

Service systems

• Service systems defined as

“value-co-creation configurations of people, technology, value propositions connecting internal and external service systems, and shared information (e.g., language, laws, measures, and methods)”

MaglioSphohrer08

Examples of service systems

Source: Murphy & Hefley, Frontiers in Service Conference 2008

Service-DominantEntities

Goods-Dominant

Entities

Service Exchange through Resource Integration and Value Co-creation

Resource Integrator/Beneficiary(“Firm”)

Resource Integrator/Beneficiary(“Customer”)

Value

Co-

crea

tion

Market-facing and

public and private

resources

Serv

ice

Market-f

acing and

public and p

rivate

reso

urces

$ (Service Rights)

Adapted from Stephen L. Vargo, 2008, Service-Dominant Logic: Prologue, Progress, and Prospects. Presentation at University of Bayreuth, Berlin.

Value Configuration

Service systems are an example of ultra-large-scale systems that are highly dependent on IT

Service systems—the basic unit of analysis of service—are a value coproduction configuration of people, technology, other internal and external service systems, and shared information (such as language, processes, metrics, prices, policies, and laws).1

1 Spohrer, J. et al.(2007). Steps Toward a Science of Service Systems. IEEE Computer 40(1), 71 – 77. 2 Software Engineering Institute. (2006). Ultra-Large-Scale Systems: The Software Challenge of the Future. Software Engineering Institute, Carnegie Mellon University.3 Holmlund, M. (2008). A definition, model, and empirical analysis of business-to-business relationship quality. International Journal of Service Industry Management 19(1), 32-62.

These services are usually instances of ultra-large-scale systems: a dynamic community/network of interdependent and competing organisms (i.e., people, computing devices, and organizations).2

[Holmlund08]

Critical features• Close interaction of supplier and customer

• Interactivity – service processes require the presence and participation of the customer/client (customer intensity) [Miles08, 116]

• Nature of knowledge created and exchanged• Intangibility – may not be a material product, but a transformation

in the state of a material product, people/organizations, or data [Miles08, 117]

• Simultaneity of production and consumption• Combination of knowledge into useful systems• Exchange as processes and experience points; and• Exploitation of ICT and transparency

The critical enabler today is ICT.Chesbrough & Spohrer, CACM, 2006

Fundamental Premises of Service-Dominant Logic

FP1 Service is the fundamental basis of exchange.

FP2 Indirect exchange masks the fundamental basis of exchange.

FP3 Goods are distribution mechanisms for service provision.

FP4 Operant resources are the fundamental source of competitive advantage.

FP5 All economies are service economies.

FP6 The customer is always a co-creator of value.

FP7 The enterprise can not deliver value, but only offer value propositions.

FP8 A service-centered view is inherently customer oriented and relational.

FP9 All economic actors are resource integrators.

FP10 Value is always uniquely and phenomenologically determined by the beneficiary.

Adapted from Stephen L. Vargo (University of Hawai’i at Manoa). “From Goods to Service(s): A Trail of Two Logics.” Presentation for the Service Science Seminar, University of California, Merced, October 9, 2007 & Stephen L. Vargo, 2008, “Service-Dominant Logic: Prologue, Progress, and Prospects.” Presentation at University of Bayreuth, Berlin.

Productivity in the U.S. Services Sector: New Sources of Economic Growth

By Triplett & Bosworth (2004)

• Recipient of the 2005 Harry Freeman Award for its exceptional contribution to knowledge of the U.S. service economy.

• The services industries—which include jobs ranging from flipping hamburgers to providing investment advice—can no longer be characterized, as they have in the past, as a stagnant sector marked by low productivity growth. They have emerged as one of the most dynamic and innovative segments of the U.S. economy, now accounting for more than three-quarters of gross domestic product. During the 1990s, 19 million additional jobs were created in this sector, while growth was stagnant in the goods-producing sector.

• Jack Triplett and Barry Bosworth analyze services sector productivity, demonstrating that fundamental changes have taken place in this sector of the U.S. economy. They show that growth in the services industries fueled the post-1995 expansion in the U.S. productivity and assess the role of information technology in transforming and accelerating services productivity.

Productivity in the U.S. Services Sector: New Sources of Economic Growth Barry P. Bosworth and Jack E. Triplett, Brookings Institution Press. 2004.

We are experiencing continuing changes inthe distribution of GDP in the US economy

23

US GDP

Softwareproduction

Excludes government, agriculture and mining, based on data from Apte and Nath. The information sector includes both primary and secondary information sectors.Adapted from: Karmarkar in Hefley & Murphy, 2008

Where will we experience job growth?

Occupational Outlook Quarterlyhttp://www.bls.gov/opub/ooq/2005/winter/art03.pdf

Service-providing industries are projected to account for most USjob growth, generating almost 19 million new jobs between 2004 and 2014.

This is due, in part, to increased demand for services and the difficulty of automating service tasks.

What industries will experience this growth?

Occupational Outlook Quarterlyhttp://www.bls.gov/opub/ooq/2005/winter/art03.pdf

Services statistics and facts• Services sector is 75% of U.S. labor force • Brazil, Russia, Japan and Germany all have more than

50% of their labor force in services

• Other nations following the pattern driven by urbanization, infrastructure, and business growth

• Intercultural service settings occur within nations and across national boundaries• In a study conducted by Sum et al. (2002), it was found that

approximately six out of every ten new immigrants are employed by service and service-related sectors of the US economy.Sum, A., Fogg, N., Khatiwada, I., Trub’skyy, M. and Palma, S. (2002), Immigrant Workers and the Great American Job Machine: The Contributions of New Foreign Immigration to National and Regional Labor Force Growth in the 1990s, Center for Labor Market Studies, Northeastern University, Boston, MA, cited in Hopkins, et al. Domestic inter-cultural service encounters: an integrated model. Managing Service Quality, 15(4), 2005, 329-343.

The Growth Opportunities

• All national economies are shifting to services – service systems are an important type of complex system• Major industrialized nations are >75% services, developing

nations are close behind – growth is increasingly depends on service innovation at multiple scales - person, family, city, firm, nation

• New workforce skills are needed - to better understand, participate in, manage, and engineer service systems

• Educational system is slowly shifting toward services• National systems are slowly shifting policy to

recognize services and the importance of service innovation as engines for economic growth

Attributes of services economy(Akehurst, 2007, pp. 8)

• Services, especially business services, are present and integrated into every stage of the value chain, with services a crucial necessity for all large and small enterprises (in terms of attracting and retaining customers and sustaining competitive advantage);

• Customised products and services bundled in increasingly different ways based on a strong customer focus and encouragement of long-term relationships;

• Growing internationalisation and competition, with growing interdependence of national economies, with large transnational corporations particularly in banking, finance, insurance, telecommunications, car production and energy;

• Increasing international sourcing of services particularly in banking, telecommunications, finance and travel;

• Increased networking and linkages between businesses, between suppliers and across sectors;

• More effective use in enterprises of intangible assets such as intellectual capital, human, structural and relationship capital;

• More flexible production methods with production changing from dominant physical inputs and product characteristics to know-how and information-based inputs;

• Smaller government sectors with more private services which had previously been provided by the state; and

• A growth of specialised intermediaries providing products of higher quality and making intensive use of ICT.

“Succeeding through Service Innovation”

Service Science is emerging as a distinct field. Its vision is to discover the underlying logic of complex service systems and to establish a common language and shared frameworks for service innovation. To this end, an interdisciplinary approach should be adopted for research and education on service systems.

http://www.ifm.eng.cam.ac.uk/ssme/

America COMPETES ActPublic Law 110–69—Aug. 9, 2007

‘‘service science’’ means curricula, training, and research programs that are designed to teach individuals to apply scientific, engineering, and management disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, and social and legal sciences, in order to encourage innovation in how organizations create value for customers and shareholders that could not be achieved through such disciplines working in isolation.

NB: Italics added for emphasis

Culture

• Culture as defined by the UNESCO as, “the set of distinctive spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs”UNESCO Universal Declaration on Cultural Diversity - 2001

• “Interculturality” refers to the existence and equitable interaction of diverse cultures and the possibility of generating shared cultural expressions through dialogue and mutual respect. Convention on the Protection and Promotion of the Diversity of Cultural Expressions, UNESCO, Paris, 20 October 2005

How is intercultural service different?

• Differences in customer expectations based on cultural differences

• Differences in decision making, communication, coordination styles

• Differences based on individual, family, cultural values• Language differences• Protocol and courtesy differences• Differences in religious needs and values• Communication style differences (verbal and nonverbal)• Differences in logistical needs (currency, transportation,

measurement systems)• Differences in customs (food, holidays, rituals,

celebrations)• ???

Adapted from Aguilar, L. & Stokes, L. Multicultural Customer Service: Providing Outstanding Service Across Cultures. McGrawHill, 1996.

Cultural differences

• Geert Hofstede (2002) identified five views:• Power distance• Collectivism vs. individualism• Feminity vs. masculinity• Uncertainty avoidance• Long-term vs. short term orientation

• Hall’s 5 Dimensions• Space: personal space, ‘place’ in meetings• Material goods: status markers, corner office?• Friendship: degree transitory, quicker or slower trust

mechanisms• Time consciousness: deadline orientation• Agreement process: Formal contracts vs. informal consensus,

discussion in meetings vs. 1-on-1, meetings as ceremonial conclusion

• Other factors added by others:• Emotional vs. neutral, attitude to time, race, class, religion,

attitude to governments and specific vs. diffuse.

Examples of cultures

National

Regional

Local

Corporate

India ― UK

Gulf ― Southern US

Rio de Janiero ― Sao Paulo

BIG corporate ― small startup

Using servicescapes to understand service systems

• Servicescapes coined by MaryJo Bitner to refer to “the role of physical surroundings in consumption settings” and how physical environments relate to activity. 

• Bitner identifies three kinds of tangible service evidence: • people, • process, and • physical cues.

A Framework for Understanding Environment-user Relationships in Service Organizations

Source: Adapted from Mary Jo Bitner, “Servicescapes.”

PHYSICALENVIRONMENTAL

DIMENSIONS

HOLISTICENVIRONMENT

INTERNALRESPONSES

BEHAVIOR

Ambient Conditions

Space/Function

Signs, Symbols, and Artifacts

PerceivedServicescape

Cognitive

Emotional

Physiological

Cognitive

Emotional

Physiological

Employee Responses

Customer Responses

Individual Behaviors

Social Interactions

between and among

customer and employees

Individual Behaviors

Socialscapes refer to the role of social surroundings in service settings and how social environments relate to

service encounters and their outcomes 

PHYSICALENVIRONMENTAL

DIMENSIONS

HOLISTICENVIRONMENT

INTERNALRESPONSES

BEHAVIOR

Ambient Conditions

Space/Function

Signs, Symbols, and Artifacts

PerceivedServicescape

Cognitive

Emotional

Physiological

Cognitive

Emotional

Physiological

Employee Responses

Customer Responses

Individual Behaviors

Social Interactions

between and among

customer and employees

Individual Behaviors

Socialscape

The Charge to Delegates

• What are the unresolved research issues I would like to put on the table for discussion?

• How do we go approaching those research issues from a methodological point of view and what are the recognized limitations of this approach? What do we need to advance this frontier?

Hence, in this evolving global environment where inter‐cultural encounters are ever more common, either in person or mediated by a computer or a phone, we ask you to reflect about the next research frontier for your discipline and deliberate on the following:

The question:

What unresolved

research issues shall we table?

The Service Gap Model

Expect-ations

Service

Gap

Definition of a Service Gap:

The difference between what a client expects to get and what they perceive the service experience was.

*Source: Zeithaml, Valerie. et al., 1990

Example of a service gap: United Airlines Brings

Indian Contact Center Operations In-House• “Amid the ongoing economic slowdown, United Airlines announced plans to

bring back contact center operations in Gurgaon (India) to the US. The move will affect approximately 160 professionals employed in the center.

• Recently, the company announced plans to reduce its headcount by 1,000 from its global workforce, taking the number of retrenchments to about 9,000 by end-2009. Following the closure of the contact center, jobs will be transferred to the company’s call centers in Chicago and Honolulu (Hawaii), where employees handling reservations will fill the vacancies. The company outsourced contact center operations to India about three years ago to save costs.

• Robin Urbanski, spokesperson of United Airlines, stated that the company decided to bring jobs in-house because of the declining satisfaction rate among the carrier’s passengers.

• Urbanski added that the passengers who received answers to their queries through emails were more satisfied than those who called at the contact center.”

• EmergingMarketsNOW Daily Newsletter For Friday, February 13, 2009

Do cultural differences impact the perceptions that lead to service gaps?

• “Our results show individual customer’s cultural orientation, as well as familiarity with a focal service provider, has an impact on perceptions and post-purchase evaluations of both successful and unsuccessful service encounters.”Paul G. Patterson, P. G. & Mattila, A. S. An examination of the impact of cultural orientation and familiarity in service encounter evaluations. International Journal of Service Industry Management, 19(5), 2008, 662-681.

• “Based upon the empirical findings of this research, Taiwan consumers and American consumers have different cognition toward international tourist hotel service quality due to their cultural difference.”

• “Cultural differences do influence consumer behavior.”Hsieh, A. & Tsai, C. Does national culture really matter? Hotel service perceptions by Taiwan and American tourists. International Journal of Culture, Tourism and Hospitality Research, 3(1), 2009, 54-69.

Do provider perceptions also impact?

Taj Mahal Palace hotel, Mumbai, India. Source=Own work |Date=7th September 2007, 4.44 pm. |Author=Greg O'BeirneThis image is licensed under the Creative Commons Attribution ShareAlike 2.5 License.

What is the impact of cultural differences in software development services?

• Sixty-seven percent of U.S. business executives tapped miscommunication arising from cultural differences as a primary cause of outsourcing problems, according to a recent Accenture survey.[http://www.itbusinessedge.com/topics/reader.aspx?oss=18542]

• Project teams in the US often underestimate cultural differences and the associated risks due to the lack of experience in and appreciation for these cultural differences.[Bakalov 2004]

• US clients normally work with extensive written agreements and frequent e-mail contact, while Japanese clients prefer more verbal and continuous communication and less (but more formal) e-mail contact [Krishna et al, CACM, April 2004]

Findings in studies of onshore-offshore vendor meetings

• Our research aims to address that gap by analysing naturally occurring recordings of telephone conferences between offshore vendor staff in India and UK/US employees of a major pharmaceutical company. The research has identified and analysed two important phenomena observed within these communications.

• Firstly, evidence of asymmetries of participation across cultural divides has been documented, and analysed for underlying causes, such as different attitudes to hierarchy and a lack of shared understanding of expected responses.

• Secondly, differences in the rhetorical organisation of conversation by participants have also been observed and clearly documented within transcribed specimens of these conversations.

Findings in studies of onshore-offshore vendor meetings

1. On average a clearly identifiable asymmetry of participation exists within onshore–offshore vendor meetings.

2. That a lack of shared understanding of expected responses results in an increase in asymmetry of participation between Indian Vendors staff and UK/US client staff.

3. That a lack of cues and listener responses results in a disproportionately high occurrence of hyperexplanations within offshoring communications.

4. That a major factor of observed asymmetries of participation is perceived hierarchical differences between Indian Vendor staff and UK/US client staff.

5. That the rhetorical organisation of turns during conflict/negotiation is culturally contexted, and exhibits key contrasts between Indian vendor and UK/US client staff and commonality within these groups.

6. That cultural differences in the rhetorical organisation by many Indian Vendor staff reduce the illocutionary force of their arguments with UK/US client staff.

7. That misunderstandings within cross-cultural communications take a longer and more effort to repair than would be expected within ‘single’ culture communication.Avison, D. & Banks, P. Cross-cultural (mis)communication in IS offshoring: understanding through conversation analysis. Journal of Information Technology (2008) 23, 249–268

Gap Model of Service Quality

Customer

Company

Customer Perceptions

Customer Expectations

Customer Gap (Gap 5): Satisfaction Outcome Gap

Service Delivery Designs

Gap 2

Service Delivery

Gap 3

Communications to Customers

Gap 4

Perceptions of Customer Expectations

Gap

1

Source: Zeithaml & Bitner

Gap Model of Service Quality

• Customer Gap:• difference between customer expectations and perceptions

• Provider Gap 1 (The Knowledge Gap):• not knowing what customers expect

• Provider Gap 2 (The Service Design & Standards Gap):• not having the right service designs and standards

• Provider Gap 3 (The Service Performance Gap):• not delivering to service standards

• Provider Gap 4 (The Communication Gap):• not matching performance to promises

What are the research themes for

Intercultural?

Service?

Systems?

Intercultural Service Systems?

Themes in service research

1. Innovation, new product development and productivity;2. Internationalisation and outsourcing of services;3. The service economy/knowledge economy, structural

changes and regional development;4. Business-to-business services and e-services;5. Service quality, customer relationship management

and retention, service recovery;6. Service encounters;7. Service design and operations management; and8. Service employment.

(Akehurst, 2007, pp. 12)

Service Science Book Series

First book in the series is the proceedings from the SSME Palisades meeting held in October 2006

Service Science, Management and Engineering: Education for the 21st Century

Bill Hefley & Wendy Murphy (Eds.)

55 papers representing 56 institutions and 14 countries - US, Belgium, Finland, Germany, Greece, Italy, Ireland, Netherlands, Portugal, Sweden, UK, Israel, Japan and China

Other titles in the series:

Complex Service Systems, Taylor, R., Tofts, C. Knowledge Services Management, Mills, P.K.

Series URL: www.springer.com/series/8080Book URL: www.springer.com/978-0-387-76577-8

Contact Details

Bill Hefley, Ph.D.Associate Teaching ProfessorProgram Director, MSIT IT Service Management ProgramInstitute for Software Research, School of Computer ScienceCarnegie Mellon University

5000 Forbes Ave. +1-412-268-4576Pittsburgh, PA 15213 USA hefley@cmu.edu

http://www.amazon.com/dp/032155390X

Service Science, Management and Engineering: Education for the 21st Century Bill Hefley & Wendy Murphy www.springer.com/978-0-387-76577-8

Springer series - Service Science: Research and Innovations in the Service Economyhttp://www.springer.com/series/8080