Service Classification and Management Challenges

Abstract Coincident with the increasing importance of services as a primary component of the economies in developed countries, a number of theoretically derived service typologies have been developed, yet there has been virtually no empirical validation of the proposed ideas. We conducted a survey of 273 managers in four service industries (Fast Food, Auto Repair, Retail Sales, Legal Services) to test how management challenges differ across different service industries. We also empirically tested a widely accepted service typology developed by Schmenner (1986) within the context of management challenges. Discriminant analysis was utilized to test the degree to which companies can be classified into groupings similar to the Schmenner's service process matrix according to empirical data rather than anecdotal observations. Our findings indicate that the while the service process matrix can be partially validated using empirical data, the distinctions between various industries are much "fuzzier" in practice. Different service industries can be classified according to empirical data, but misclassifications do occur. In particular, misclassifications are most prevalent where two service industries share a common characteristic as described by the service process matrix. Introduction As the post-industrial economy evolves, the service sector continues to increase in importance, both in terms of its contribution to the gross domestic product (GDP) of all advanced economies and in terms of the percentage of workforce employed in services. For example, it has been predicted that the service sector will account for more than 88% of the workforce in the United States by the year 2001 (Fitzsimmons & Fitzsimmons, 1994). Accordingly, the last decade has witnessed an increased emphasis on teaching and research of service management issues by business schools and professional organizations. In response to the increased importance of services, numerous articles on issues related to the effective management of service operations have appeared in both academic and practitioner based publications (for example, Chase & Hayes; 1991, Karmarker & Pitbladdo, 1995; Kellogg & Nie, 1995; Lovelock, 1992; Roth & Van Der Velde, 1991). Several of these articles present typologies of services and provide directions for improving quality, productivity and operating efficiency, however relatively little has been done to empirically test the proposed ideas. This article presents an empirical assessment of the management challenges proposed by one of the widely accepted service typologies -- the service process matrix (SPM) developed by Schmenner (1986). We gathered data relating to management challenges experienced by managers of four different types of service industries (Fast Food, Auto Repair, Retail Sales and Legal Services). These services were chosen because they differ in terms of various attributes of service delivery systems as suggested by the SPM. Based on empirical data collected from 273 managers, we show how management challenges differ across four types of services. In addition, we provide an empirical test of how well the four types of industries described by Schemnner (1986) can be classified using empirical data. The remainder of the article is divided into four sections. First, we present a review of various service typologies; Next we describe the research methods used in the study; Third, we present the results of our analysis; and Finally, we present a discussion of the implications of the findings from this research. Service Typologies This section offers a review of various service classifications schemes that have been developed, as well as a discussion of their relative strengths and weaknesses (Table 1). This review is provided in order to illustrate that while a variety of insightful conceptual typologies have been developed, there is a need to provide empirical validation in order to identify whether these typologies accurately model reality, as well as identify any shortcomings. …