Why have services grown into the dominant sector of developed economies? Our analysis of secondary data shows that business services make the strongest contribution to the rise of the service sector. We use contributions from three related theories economic theories of the firm to explain the force business services have in shaping firms, industries and economies. Business service providers relieve their clients from the costs of asset ownership (Property Rights Theory), unlock management capacity (Resource-Based View) and support their clients in navigating towards their most valuable business opportunities (Entrepreneurial Theory of the Firm). We show how these theories help to build on the non-ownership value provided by business services that result from sound division of labor between organizations. We highlight three areas that call for research and provide opportunities for service science: (1) Systematic design of business-models for fostering service performance, (2) the transformation of high-tech-products into service-hubs, and (3) service-driven innovation and the transformation of R&D into a service sector.

This paper presents a continuous time optimization model for a dynamic pricing and inventory control problem in a dual-channel supply chain system. We consider a manufacturer’s redesign of traditional channel structures, based on customer behaviors, by engaging in direct Internet sales. While the manufacturer and its retailer set optimal pricing and inventory policies dynamically, this study considers both vertical integration and competition of two channels. For the former case, a continuous time optimal control problem is modeled, while for the latter a differential quasi-variational inequality (DQVI) formulation is applied to solve as a Cournot-Nash-Bertrand game. We provide implications for optimal strategies and note the effect of a customer acceptance index.

The author deconstructs the prevailing conceptualization of non-profit marketing and concludes it rests on three principles: voluntary exchange, an open system organization, and self-interest motivation. A review of the genesis of these principles revealed that alternative principles were ignored in the social science literature. Based on a qualitative analysis a revised conceptualization of non-profit marketing was suggested which incorporated the principles of reciprocity, the features of a contingency-choice organization, and altruistic interest motivation. A revised definition of non-profit marketing is offered based on these principles.

A major challenge in service design is the ability to generate useful service concepts for development. New service concepts, however, are often difficult for customers to articulate. In this study we address the idea generation stage of the service development process and suggest the integration of customer scripts to facilitate service concept discovery. We examine the process using data from in-depth laddering interviews with lead users of mobile services across three geographically diverse markets. Results show that the new service concepts generated in this study are applicable in all three markets but usage motivations differ by market. This implies that new service design and developments methods should take account of this and thus we suggest that new method should be developed to meet the industry needs. Our paper proposes one such method.

The intangible and inseparable nature of services is generally thought to increase the risk perceived by consumers when making purchase decisions. This higher level of perceived risk arises because, relative to physical goods, services are characterized by higher levels of experience and credence qualities and lower levels of search qualities. Building brand equity for a service is increasingly recognized as a means of mitigating that risk and creating a strong identity for a service in an increasingly competitive marketplace. The service sector chosen for the empirical research was higher education services in Egypt. In essence, higher education is a professional service characterized by a high level of experience qualities which make the purchase risky and means that branding is important as a source of reassurance to students about the quality of what they will receive. The paper begins with a brief overview of relevant literature and then proceeds to outline the components of brand equity which provide the conceptual framework which guides the research. Subsequently, the empirical work is presented focusing on the comparison between experienced and inexperienced consumers to assess the extent to which corporate brands are able to communicate information about key features of a service. Finally, the results of the survey are discussed and the managerial implications are presented.

Analysis of service quality from the perspective of the customer has generated much attention. The scale most used to develop such studies is the SERVQUAL. This tool has undergone much criticism, mainly focusing on the situational instability shown by the dimensions in certain cases. This work does not reject the proposals of that instrument, but attempts to improve its internal consistency and assess its dimensional structure. To do this, the Enlarged Service Quality Scale (ESQS) has been designed and applied to the university context. The ESQS is mainly characterized by compensating the number of items in all the dimensions, seeking better intra-dimensional consistency. The results confirm the applicability of this scale in non-educational university services, show considerable improvement in its consistency and, further, indicate that the traditional dimensions of SERVQUAL can be reduced and clustered in the macro categories, interactive quality and physical quality. The data also demonstrate the importance of the dimensions related to personalized treatment and interaction in user satisfaction.

New service enterprises are digitally connected value cocreation networks. From this perspective, we analyze how hyper-network models can lead to new understanding for service science. A hyper-network is an integration of multi-layered (role-based) connections of members in a community, such as the Internet and an ecosystem. Hyper-network analysis creates multi-dimensional understanding of network properties, such as the centers of connections between layers (the hyper-hubs or ―value wormholes‖) and the shortened distance between nodes (or, the centrality of members) due to such value wormholes. This paper shows that the common practices of adding new links to an existing random graph (e.g., merging FaceBook with other social networking/ecommerce sites) is equivalent to creating a new layer of a hyper-network; and hyper-network analysis promises to reveal otherwise hidden social structures and thereby yield more accurate estimates for average distance and other properties. Estimation formulae are provided for determining the average vertex-vertex distance and average vertex degree. On this basis, the paper proves that hyper-networks enhance ordinary random graphs in these measures, and hence can probably model real-world social networks better than the previous two-dimensional graphs. The paper suggests that all human networks, including social and economical, maybe fundamentally hyper-networks.

Workflows are used by domain analysts as a tool to describe the synchronization of activities in a business domain. The Business Process Management Notation (BPMN) has become a standard to characterize Workflows. Nevertheless, BPMN alone does not provide tools for aligning business models and IT architectures. Currently, there is not a method which promotes making decisions based on a technique with a probabilistic basis for providing financial value to a [human] workflow. If such method could exist, it would help the domain analyst to understand what sections of the business and IT architecture could be re-engineered for adding value. Markov Decision Processes (MDP’s) can be the centerpiece of such a method. MDP’s are introduced as a means to pinpoint assets to be designed, managed, and continuously improved, while enhancing business agility and operational performance.

We seek means of further improving the process of service innovation by providing conceptual framework that would uniformly model information about a service system. Since value co-creation is achieved through knowledge-based interactions, such a framework should be a connection-oriented one. We propose uniform approach to context-sensitive relationships modeling and representation, based on semantic conceptual modeling, suitable for modeling both service system interactions and information about a service system itself. Its application is illustrated on digital libraries domain. The proposed representation may be combined with goal-driven development methods to allow closer interconnection of goals and value proposition. The paper presents application of an original conceptual reference model of service system, which may provide more elaborated background for service innovation process.

Since Aristotle’s claim that knowledge is derived from the understanding of the whole and not that of the single parts (Aristotle’s Holism), researchers have been struggling with systems and parts in terms of their contents and their relative dynamics. This historic effort evolved during the last century into so-called “systems theory” (Bogdanov, 1922, 1980; von Bertalanffy, 1968, Lazlo 1996; Meadows, 2008). Systems theory is an interdisciplinary theory about every system in nature, in society and in many scientific domains as well as a framework with which we can investigate phenomena from a holistic approach (Capra, 1997). Systems thinking comes from the shift in attention from the part to the whole (Checkland, 1997; Weinberg, 2001; Jackson, 2003), considering the observed reality as an integrated and interacting unicuum of phenomena where the individual properties of the single parts become indistinct. In contrast, the relationships between the parts themselves and the events they produce through their interaction become much more important, with the result that “system elements are rationally connected” (Luhmann, 1990), towards a shared purpose (Golinelli, 2009). The systemic perspective argues that we are not able to fully comprehend a phenomenon simply by breaking it up into elementary parts and then reforming it; we instead need to apply a global vision to underline its functioning. Altough we can start from the analysis of the elementary components of a phenomenon, in order to fully comprehend the phenomenon in its entirety we have to observe it also from a higher level: a holistic perspective (von Bertalanffy, 1968). Systems theory encompasses a wide field of research with different conceptualizations and areas of focus (e.g. Boulding 1956, Maturana and Varela 1975, Senge 1990). Specifically, within management and marketing, a number of authors and scholars have adopted – implicitly or explicitly – a vision of organizations as systems with the aim of analyzing the relationship between organizations and their environment (e.g. Burns and Stalker 1961, Lawrence and Lorsch 1967, Aldrich 1979). The aim of this paper is to provide an overview of systems theories. In particular, focus is given to those that make a specific reference to management. We shall focus on: a) A brief review on multidisciplinary systems theories b) The introduction of basic systems concepts c) The managerial applications of systems thinking This commentary closes the special issue of the Journal of Service Science. It hopes to raise questions, observations and dilemmas in order to foster dialogue about the opportunities and limitations of applying systems theory in management studies and practices.