Strategy-Structure Configurations in the Service Business of Manufacturing Companies

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• Heiko Gebauer
• Thursday 28 May 2009, 12:30-13:30
• Lecture Room, Institute for Manufacturing.

If you have a question about this talk, please contact Peter Wild.

A new trend seems to be emerging for multinational manufacturing companies to make a strategic reorientation into becoming service providers. For some companies such as Kone and IBM , the revenues from services are 50% or more of their total sales. Despite the increasing interest in exploring various aspects of service management in manufacturing companies, existing research has not focused on the interdependencies between different service strategies and organizational designs.

The first part of the presentation explores service strategy and patterns of service strategy changes in manufacturing firms and indicates how each pattern corresponds with modifications in organizational design elements. The service strategies explored are customer service strategy after-sales service providers, customer support service providers, outsourcing partners and development partners. This finding draws on a longitudinal study using a survey of 97 manufacturers of capital goods.

The second part of the presentation concentrates in more detail how each service strategy is supported by organizational design factors related to the service orientation of corporate culture, the service orientation of human resource management and the service orientation of organizational structures. The findings support the idea that in order to succeed with a chosen service strategy, a specific strategy-structure configuration is needed. The fit between service strategies and the configuration of organizational design factors is tested in a sample of 195 manufacturing companies.

The third part of the presentation examines the relationship among heterogeneity complexity of customer needs, customer centricity, innovativeness, service differentiation and business performance. A empirical investigation of a survey among 332 Swedish manufacturing companies is presented. The key findings of the study is a strong emphasis on service differentiation that makes a manufacturing firm’s strategies for customer centricity less sensitive to increasing heterogeneity complexity of customer needs and increases a firm’s payoff for customer centricity. In contrast, the payoff from innovativeness seems to be higher if the firm focuses their resources on either product or service innovations. The findings illustrate the complexity interrelation between customer centricity, innovativeness, service differentiation when explaining what drives company performance.

This talk is part of the Cambridge Service Alliance Forum series.

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