Submission to POMS/CSO 2007 – London (and best paper award competition)

(Why we need)
An Operations Paradigm for Services
June 15, 2007

ABSTRACT

Paradigms are fundamental frameworks around which disciplines and schools of

thought are established. A survey of research literature shows that the majority of

paradigms associated with services management over the past thirty years have come

from the marketing discipline and perspective. Some of these paradigms have been

recently shown (by marketers) to be invalid. Others can be seen to provide little

discriminatory value and thus few unique managerial insights. Further, some of the

services marketing paradigms are biased against traditional operations management.

Leading researchers from both marketing and operations have been calling for a new

service paradigm. This article reviews paradigms from the literature and proposes a

customer-supplier services paradigm which is founded in operations perspectives.

Benefits and insights coming from the customer-supplier paradigm are described, and the

paradigm is empirically shown to be superior to alternative service paradigms. Thus, the

customer-supplier paradigm is a useful and justified basis for present and future study of

services.

INTRODUCTION

Every field of study is founded on one or more paradigms, which are

philosophical or theoretical frameworks. Paradigms define the basic assumptions of

 2

sciences and disciplines. For example, physics has a paradigm of quantum mechanics

which proposes that discrete particles possess measurable attributes and exhibit

predictable behavior. Quantum mechanics replaced traditional Newtonian mechanics as a

foundational paradigm of physics; Newtonian mechanics was found to adequately explain

some phenomena but to be inconsistent with others.

Paradigms also provide reasonable scope to fields of study. Some physicists have

attempted to devise a “theory of everything” that encompasses all known phenomena (at

least all known phenomena pertaining to physics). Although such hyper-generalizations

are intellectually appealing, rarely do such ideas develop beyond the stage of

imagination.

There have been a number of common paradigms associated with the study of

service businesses, primarily coming from services marketing. These paradigms have

attempted to answer this fundamental question: If one is studying services, what exactly

is being studied? For example, it is common to express a services paradigm in terms of

“goods versus services,” which implies that services are different from goods. If so, the

question then becomes how they differ, and if those differences impact how they should

be managed.

Some have argued that services exist to serve the needs of customers, and

recognize that goods can also serve the needs of customers. The conclusion some have

espoused is that even goods are services—that everything is a service! (e.g., Gummesson

1995, p. 150; Vargo and Lusch 2004b, p. 334) That conclusion would lead one to believe

that the study of services is the study of anything and everything. Such a broad paradigm

provides little value in terms of managerial insight. Advancement of a services discipline

hinges on a belief that services possess managerial differences from non-services.

 3

The fact is, most service paradigms emerging in the past thirty years have come

from the marketing discipline. Although the study of services has benefited greatly from

the marketing contribution, that contribution has come with baggage and is somewhat

biased against operations perspectives. Some services marketing paradigms have been

recently refuted – by none other than luminaries from services marketing. They have

issued a resounding call for new services paradigms. This paper proposes value in

considering service paradigms based on an operational perspective.

The next section will discuss the concept of paradigms. Subsequent sections will

review strengths and weaknesses of common service paradigms, which again primarily

come from marketing perspectives. Two service operations paradigms will be presented,

including a “customer-supplier” paradigm that integrates services marketing and service

operations concerns. One important issue we will address is an appropriate focus of

service classification schemes, be it classifying industries, organizations, outputs, or

processes. Survey results show that the customer-supplier services paradigm is

empirically supported and superior to competing paradigms. Implications of that

paradigm will be briefly described with empirical support. A final section summarizes

general conclusions.

WHY WE NEED A PARADIGM

A paradigm is “a philosophical and theoretical framework of a scientific school or

discipline within which theories, laws, and generalizations and the experiments

performed in support of them are formulated” (Merriam-Webster 2006). Paradigms form

the basis of scientific schools or disciplines. There has been some debate in recent years

about the formation of a service science, largely attributed to IBM’s establishment of a

 4

research center for Services Sciences, Management and Engineering (IBM 2006). For the

present we will be satisfied if services can be justified as a “discipline.”

Thomas Kuhn, one of the leading scientific philosophers of the past century,

describes paradigms as assumptions shared by members of a given discipline (1970).

Thus, an additional element of paradigms is their general acceptance, and a valued

characteristic of new paradigms is their fit within other principles espoused by a given

academic cohort. This does not preclude the possibility of “paradigm shifts,” in which a

new paradigm pulls followers away from prior paradigms.

Paradigms are not only foundational to disciplines, but are useful because they

direct the activities within disciplines. As stated by Lovelock and Gummesson, “A

paradigm shapes the formulation of theoretical generalizations, focuses data gathering,

and influences the selection of research procedures and projects” (2004, p. 21). A truly

useful paradigm will also have practical implications, such as leading to significant

managerial insights.

A “good” services paradigm will need to be foundational, encapsulate common

assumptions, and help specify advancement activities. At a minimum, a services

paradigm should help those studying services decide what a service is and how services

are distinct from “non-services.”

SERVICE PARADIGMS FROM RESEARCH LITERATURE

This section will outline service paradigms (SPs) which have been assumed over

the years as discussed in the literature, including some potential counterarguments. The

first and most naïve services paradigm is not founded upon what services are, but rather

what they are not.

 5

SP1 (residual): Services are economic activities not accounted for by other

sectors of the economy.

The “other sectors” generally include agriculture, mining, manufacturing, and in

some cases construction and utilities (Castells and Aoyama 1994). This services

paradigm has been largely perpetuated by government classification schemes (Schmenner

1995), but also by academics (Morey 1976). In 1934, the US Interdepartmental

Conference on Industrial Classification recommended the development of a system for

standard industrial classification (SIC) (Pearce 1957). The original SIC specification

came in two volumes, one for “manufacturing industries” and the other for

“nonmanufacturing industries” (including services).

The question remained of whether there was any managerial significance involved

in the classification of manufacturing and nonmanufacturing industries. Manufacturing

industries have many management challenges in common—inventory management,

identifying production bottlenecks, and so forth. However, even recent industrial

classification schemes acknowledge that services cover a “wide variety” of industries,

with no clear indication of common managerial issues (US.Census.Bureau 1992).

An early research article alluding to the possibility of some coherence in a

residual definition of services was published by Morey (1976). He studied the operations

of three “nonmanufacturing organizations,” a hospital, a university, and a retail firm. He

concluded that “operations management in the three types of organizations studied is

significantly different from the operations management in a manufacturing organization,

as taught in traditional production courses” (p. 123).

Regardless of any managerial relevance coming from SP1, the logic of a residual

service paradigm is lacking in that it does not tell us what services are, but simply what
 6

they are not (Castells and Aoyama 1994). A residual paradigm is negative in that it

provides a definition by exclusion. Judd asserts that definitions by exclusion are

inherently defective, in that “from the definition itself, nothing can be learned about what

are the essential characteristics of a service” (1964, p. 59).

Judd directs that statement at his own early candidate service paradigm, namely:

SP2 (non-ownership): Services are transactions wherein the object of the

transaction is other than the transfer of ownership of a tangible commodity.

This service paradigm is more specific than SP1 in that it enumerates two

conditions of exclusion: transfer of ownership and the involvement of a tangible

commodity. A counterargument is that SP2 categorize business activities in ways which

are inconsistent with common beliefs about how services behave. According to SP2

public radio broadcasting and the production of prepackaged software would be services,

even though they do not exhibit commonly held managerial characteristics of services

(discussed in the penultimate section). SP2 would exclude services involving the

transformation of tangible items from being services, including restaurants, home

painting, and plastic surgery. Even Judd (1964) points out that, as a definition by

exclusion, SP2 is inherently defective.

Another early services paradigm was espoused by Rathmell, who juxtaposed

goods and services, declaring that “a good is a thing, and a service is an act” (1966, p.

33). This view has been reemphasized by others, who refer to services as deeds,

processes, and personal performances (Berry 1980; Levitt 1972; Lovelock 2001;

Zeithaml, Bitner, and Gremler 2006). A variation on that theme is that services are

products that are processes (Henkoff 1994; Shostack 1987). These service paradigms are

summarized as follows:
 7

SP3 (act/performance): Services are acts performed by one entity for another

entity.

Such a paradigm makes intuitive sense, and we are unlikely to find a

counterexample. Instead, the counterargument to SP3 is that it does not differentiate

services, but may be considered to apply equally as well to non-services such as pure

manufacturing. A person would have to be completely naïve to assume that made-to-

stock manufacturing (a non-service) is other than an act performed by one entity for

another entity. The fact that end consumers cannot observe the manufacturing process

does not diminish the fact that manufacturing acts are being performed. Therefore, SP3

would lead us to believe that every business is a service, and thus SP3 provides no

discriminative value.

Another popular service paradigm focuses on the intangible nature of services.

Pearce calls services “intangible goods” (1981, p. 390), which idea has been echoed by

others (e.g., Bannock, Baxter, and Reese 1982, p. 372; Murdick, Render, and Russell

1990):

SP4 (intangible): Services are intangible products.

Although tangibility-intangibility can be treated as dichotomous, it is commonly

accepted that it exists on a continuum (Shostack 1977; Zeithaml, et al. 2006). SP4 has

been widely quoted over the years, but has recently fallen into disfavor. Laroche,

Bergeron, and Goutaland empirically studied a wide variety of business products

including compact disks, pizza dinners, and checking accounts, and conclude that “some

goods appear to be less tangible than many services” (2001, p. 26).

In their award-winning article, Lovelock and Gummesson further discredit the

intangibility paradigm of services. They observe that intangibility is “the most widely
 8

cited difference between goods and services” (2004, p. 25). They consider two main

types of intangibility: physical intangibility (immaterial) and mental intangibility

(difficult to conceptualize). They point out that although it can be difficult to

conceptualize services prior to purchase, the same is also true of numerous manufactured

products. They describe how servicescapes and other physical elements make services

quite physical and tangible (Bitner 1992). In addition to physical facilities, many if not

most services include tangible facilitating goods (such as paper, auto parts, and medical

supplies) that allow the service delivery and are often purchased by service customers

(Fitzsimmons and Fitzsimmons 2006, p. 20). In summary, Lovelock and Gummesson

conclude that intangibility “is not a universally applicable characteristic of all services”

(2004, p. 27), which conclusion has been echoed by others (Laroche, et al. 2001; Vargo

and Lusch 2004b).

Lovelock’s and Gummesson’s criticism of the intangibility paradigm is imbedded

in criticism of “the current core paradigm of services marketing, namely, the assertion

that four specific characteristics—intangibility, heterogeneity, inseparability, and

perishability—make services uniquely different from goods” (2004, p. 21). These four

characteristics are collectively referred to as IHIP, with common definitions as follows

(Fitzsimmons and Fitzsimmons 2006; Merriam-Webster 2006; Zeithaml, et al. 2006):

• intangibility—incapable of being perceived, especially by the perception of

touch (physical intangibility and mental intangibility described above).

• heterogeneity—unique products (or possibly unique processes).

• inseparability (also called “simultaneity” or “simultaneous production and

consumption”)—consumed at the point of production.

 9

• perishability—discussed in two dimensions: (1) perishable products, meaning

that the process output provides customer benefits for a limited duration, and

(2) perishable capacity, in that capacity without corresponding demand cannot

be utilized to meet future demand.

A detailed literature review by Fisk, et al. concluded that, at least at the time of

their article, IHIP “provided the underpinnings for the case that services marketing is a

field distinct from goods marketing” (1993). That core paradigm is restated as follows:

SP5: Services are characterized by IHIP, and non-services are not

characterized by IHIP.

We have already considered disputations concerning intangibility. Lovelock and

Gummesson make compelling counterarguments against the definitiveness of each of the

IHIP characteristics. They conclude “As a paradigm, the notion that the four IHIP

characteristics make services uniquely different from goods is deeply flawed” (Lovelock

and Gummesson 2004, p. 32).

Lovelock and Gummesson emphasize that there are many exceptions to SP5.

Indeed, IHIP provides some unusual classification of services and non-services.

Heterogeneity classifies art painting as a service, even if the painter is far removed from

the consumer, and classifies standardized quick oil change services as non-services.

Inseparability classifies electric generation (i.e., manufacturing electricity) as a service,

and some services that provide for future consumption—such as dry cleaning and

retirement fund management—as non-services. Perishability would render newspaper

printing as a service (you cannot print future editions), with executive recruiting as a non-

service (since executives can be recruited for future job openings).

 10

At about the same time as the Lovelock and Gummesson article, Vargo and Lusch

published an article on IHIP titled “The Four Service Marketing Myths,” wherein they

conclude that IHIP “(a) do not distinguish goods from services, (b) only have meaning

from a manufacturing perspective, and (c) imply inappropriate normative strategies”

(2004b, p. 324).

The sentiment against IHIP appears to be gaining ground. Grove, et al. surveyed

ten services experts and make the following observation: “Some believe that the field [of

services marketing] has been too preoccupied with minor refinements and argue that bold

change is needed. Perhaps the most provocative comments in this respect are the call to

drop the four characteristics [IHIP] that are commonly used to distinguish services from

goods [marketing]” (Grove, Fisk, and John 2003, p. 112). One of the experts called IHIP

a “misrepresentation” and another declared IHIP to be “service mythology” (Grove, et al.

2003, p. 115).

SKEPTICISM AND THE NEED FOR A NEW PARADIGM

Lovelock and Gummesson begin their article with the query, “Is the academic

field of services marketing in danger of losing its broad and in many respects coherent

perspective?” (2004, p. 20). This skepticism is based on their analysis and conclusion that

“the underlying premises of [the IHIP] paradigm no longer bear up under examination”

(p. 37).

This skepticism about prior service paradigms has been echoed by others.

Edvardsson, Gustafsson, and Roos surveyed eleven top service researchers and conclude

that “on lower abstraction levels a general service definition does not exist. It has to be

determined at a specific time, in a specific company, for a specific service, from a

specific perspective” (2005, p. 119). Vargo and Lusch seem to make the same conclusion
 11

and declare, “We advocate that the strategy of differentiating services from goods should

be abandoned…” (2004b, p. 334).

The experts surveyed by Grove, et al. also revealed “a call to eliminate the goods

versus services distinction altogether” (2003, p. 113). Eliminating the goods versus

services distinction could have serious ramifications. For example, it would likely

undermine the establishment and progress of a cross-functional services discipline since

traditional non-service approaches to functional disciplines would likely be adequate for

the study of services. Johnston (2005) argues that the retreat of services back into

traditional functional areas has already begun. Even though he contends that this

digression might have some benefits, it would be unfortunate if the cross-functional study

of services were to abate.

There are various ways of addressing this services management identity crisis.

Lovelock and Gummesson point out that “one option is to argue that that services

marketing and goods marketing should be reunited under a service banner,” which is the

position taken by Vargo and Lusch (2004a; 2004b). Absorbing the study of services into

marketing and other functional areas would undermine the valued attempts at cross-

functional development.

A second option presented by Lovelock and Gummesson is to recognize that

manufacturing and service enterprises possess managerial differences, but to also accept

that “the differences among services are equally significant and must be acknowledged

by developing separate paradigms for different categories of services” (2004, p. 37). That

would seem to say that the general categorization of “services” is relatively meaningless

and arbitrary. It would leave us with a fragmented services discipline based on a bunch of

industry-specific paradigms.
 12

The third alternative presented by Lovelock and Gummesson is “to look for a new

paradigm that would cut across the traditional goods and services dichotomy.” A survey

of service experts by Grove, et al. also revealed a recommendation to “entertain a

paradigm shift to introduce new perspectives [of services]” (Grove, et al. 2003, p. 113).

This supposes that the problem may not be with the managerial distinctiveness of

services, but rather with the paradigm used to articulate the distinctiveness. This

alternative is to develop a new and more valid services paradigm.

Lovelock and Gummesson pursue this third alternative by presenting a “potential

basis for a new paradigm,” namely “nonownership.” They posit that “transactions that do

not involve a transfer of ownership are distinctively different from those that do” (2004,

p. 34). They contend that services “involve a form of rental or access in which customers

obtain benefits by gaining the right to use physical objects, to hire the labor and expertise

of personnel, or to obtain access to facilities and networks” (p. 34). This paradigm is

summarized as follows: (Lovelock and Gummesson 2004, p. 20)

SP6 (rental/access): “Services offer benefits through access or temporary

possession, instead of ownership.”

This is an intriguing paradigm, although it is not completely new. SP2 presented

by Judd (1964) emphasized the importance of transfer of ownership in distinguishing

goods from services, and Rathmell stated “If a product is purchased, it is a good; but if it

is rented or leased, the rentee or lessee acquires a service” (1966, p. 34). Lovelock and

Gummesson acknowledge this history, but point out that non-ownership has since been

largely overlooked as a characteristic of services.

They point out various implications of the rental/access paradigm, including (1)

manufactured goods can form the basis for services, (2) services involve selling slices of
 13

large physical entities, (3) labor and expertise are renewable resources in services, (4)

time plays a central role in most services, and so forth. It is presented as an alternative

paradigm, but not necessarily the paradigm. Lovelock and Gummesson “do not claim that

it offers a panacea with necessarily general properties,” but offer the rental/access

paradigm as a “lens to present aspects not clearly visible in current theory” (2004, p. 34).

Of course, a services management panacea would be nice.

The rental/access paradigm has interesting implications with regard to self-

service. Lovelock and Gummesson discuss how customers might self-serve by renting

items such as vehicles, tents, power tools, and furniture (2004, p. 35). However, an

alternative is to take ownership of such items and provide self-service, which self-service

use of items might be about the same as if the items were rented. Other authors have

argued that physical goods act as self-service providers, even if the customer enjoys the

benefits of ownership (Sampson 2001, p. 148; Vargo and Lusch 2004a, p. 8).

As with other service paradigms, the rental/access paradigm provides for some

interesting categorizations. Music composition would be classified as a service, since

consumers own the right to listen to the music but not the music itself. Highway

construction is also a service, since highway users simply use the output (although some

people drive like they own the road, even though they do not). Restaurants provide access

to facilities, but provide ownership of the food items, and thus might not be services.

Auto dealerships are interesting—if the sales process ends with the customer signing a

lease then it would be a service but if the customer purchases a vehicle then perhaps it

would not be a service. One might wonder if, other than tax implications, the difference

between leasing and purchasing is not that great.

 14

Another contemporary direction of thinking in services is Vargo and Lusch’s

“Service Dominant (S-D) logic for marketing” (2004a). Their ideas have generated a

tremendous amount of academic discussion within the marketing and services marketing

literature (Lusch and Vargo 2006). Their premise was originally founded upon eight

fundamental propositions, including “the customer is always a coproducer” (of goods or

services) and “the enterprise can only make value propositions” (but enterprises do not

create value themselves).

S-D logic defines services as “the application of specialized competences

(knowledge and skills) through deeds, processes, and performances for the benefit of

another entity or the entity itself,” which is quite similar to SP3 (act/performance) while

focusing on “specialized competencies.” As with SP3, it would be difficult to identify any

firms, service or otherwise, that fail to meet such a broad definition. That broadness is

consistent with Vargo and Lusch’s assertion that all economies are service economies.

MARKETING VERSUS OPERATIONS PERSPECTIVES

It is interesting to note that almost every one of the references cited to this point

come from the marketing discipline, including the criticisms of past and present

paradigms. The fact is that the establishment of a distinct study of services is primarily

attributed to researchers from the marketing discipline. This is poignantly emphasized by

the number of times the general field of services management is referred to as “services

marketing,” even when referring to operational topics such as quality management or

process design.

Further, the service paradigms as discussed above largely come from the

marketing perspective, which is a consumption perspective (Edvardsson, et al. 2005;

Gummesson 1995, p. 250). Rust (2004) asserts that the services marketing perspective
 15

focuses on understanding and serving customers, whereas the service operations

perspective focuses on the design of service delivery systems. The distinction of

marketing and operations in services can be somewhat convoluted, and the perspectives

possess their own inherited biases.

We might suppose that services marketing paradigms focus on what is provided to

customers and how the customer receives benefits from the service, and that service

operations paradigms focus on how services are produced. Note that SP2 through SP6

largely emphasize distinctions that are primarily relevant and observable to customers.

• SP1 (residual) is neither a marketing nor an operations paradigm, and does not

say anything about the nature of services.

• SP2 (non-ownership) says that service customers do not receive ownership of

anything tangible. It does not say how the intangible thing is produced.

• SP3 (act/performance) says that service customers receive an act. For

manufacturing, customers receive a tangible item (which is created by the act

of manufacturing).

• SP4 (intangibility) says that it is difficult for customers to physically touch or

mentally conceptualize the output of services. That does not necessarily imply

that the production of services is intangible.

• SP5 (IHIP) says that service customers receive unique products at the time

they are produced, and that the benefit may or may not last. The production

process may also be unique, and the timing of production is tied to the timing

of demand, implying that SP5 is partially a service operations paradigm.

 16

• SP6 (rental/access), like SP2, says that customers receive benefits by accessing

services, without the need for possession utility. Service providers give access

to the service, but SP6 does not tell how that access is provided.

The consumption perspective is important and valuable, but it may contribute to

some of the SP confusion. The following are three significant problems with paradigms

based on the consumption perspectives.

1. Some service marketing paradigms promote false ideas.

For example, consumers perceive that services are acts but do not perceive the

acts of made-to-stock manufacturing, leading to a false conclusion that being an act is a

distinguishing characteristic of services. The intangibility of services is also a product of

customer perception—customers can observe their automobile being repainted at an auto

painting service and consider the painting process to be intangible, but if they purchase a

painted car coming from an overseas factory they consider the paint simply a tangible

element of the car (and never perceive the process).

2. Some service marketing paradigms provide little or no discriminatory value.

Advocates of service marketing have done much to promote the significance of

services in world economies, and sometimes this is taken to a great extreme. In particular,

some of the leading service marketing researchers espouse the idea that everything is a

service, and that even goods are services (e.g., Gummesson 1995, p. 150; Vargo and

Lusch 2004b, p. 334). Although it is logical to recognize the service value of physical

goods, it is naïve to assume that the production of physical goods is similar to the

production of services. If everything truly were a service then the study of services would

probably have been fully absorbed into traditional disciplines.

 17

3. Some service marketing paradigms are biased against traditional operations

perspectives.

Some consumption paradigms gloss over or ignore the value of traditional non-

service operations. For example, S-D logic states that “the purpose of the firm is not to

make and sell units of output but to provide customized services to customers and other

organizations,” and “investment in manufacturing technologies constrains market

responsiveness,” and “firms will increasingly become more competitive by outsourcing

the manufacturing function” (Vargo and Lusch 2004a, p. 13). Instead, S-D logic “implies

that the goal [of firms] is to customize offerings,… and to strive to maximize customer

involvement in the customization to better fit his or her needs” (p. 12). (Commodity

manufacturers are likely to disagree with this.)

S-D logic is notably marketing-centric, asserting that “Ultimately, the most

successful organizations might be those whose core competence is marketing and all its

related market-sensing processes” (p. 13), and that “marketing should lead the effort of

designing and building cross-functional business processes” (p. 14). Few would disagree

with the importance of marketing functions of firms, although researchers from

operations might not agree that marketing is or should be the universal focal point of all

firms. Admittedly, it is the “S-D logic for marketing” even though it has gained some

ground as a general service paradigm.

Fortunately, the service marketers are not only calling for new paradigms of

services, but they are also at least willing to pay lip service to involving operations and

other disciplines in the effort (Grove, et al. 2003, p. 113; Lovelock and Gummesson

2004, p. 22; Rust 2004, p. 211). Marketing academics have assumed leadership in
 18

advancing the services discipline, and may be demonstrating further leadership in looking

outside of their field for new perspectives.

Could it be that the field of operations management can assist in deriving new

service paradigms? Could it be that prior service paradigms are limited by having too

much reliance on the marketing perspective, and that operations management might

provide the “fresh perspective” sought by Lovelock and Gummesson (2004) and others?

Despite the leadership of services marketing researchers, operations management

researchers have not been idly sitting on the sidelines during the development of the

services discipline. In fact, service operations management researchers published a call

for a new paradigm of services that predates the call-for-a-new-paradigm articles cited

above that came from services marketing. In 1999, Nie and Kellogg published findings

from a survey of 167 operations management professors which concluded that “Service

OM researchers must develop a new paradigm. This should be built on, and clearly

articulate, the fundamental differences between managing service operations and

managing manufacturing operations” (1999, p. 351).

SERVICE PARADIGMS FROM OPERATIONS

Arguably, the preeminent service operations paradigm is the customer contact

model that was introduced by Chase some time ago (1978; 1981; Chase and Tansik 1983;

Wemmerlöv 1990, p. 21). Chase calls services involving a high degree of customer

contact “pure services” and those with a low degree of customer contact

“quasimanufacturing.” One might suppose that processes involving no customer contact

whatsoever would be “pure manufacturing.”

 19

Chase’s fundamental argument is that the potential operating efficiency of

services is limited by the amount of customer contact with service employees. In fact,

Chase goes so far as to prescribe the famous equation:

customer contact time

potential operating efficiency = f(1 – ————————— )
service creation time

In the original recitation, customer contact was defined as “the physical presence

of the customer in the service system” (Chase 1978, p. 138). Although he did not call it a

paradigm at the time, Chase’s ideas can be stated as a services paradigm as follows:

SP7 (customer contact): Services are production processes involving customer

contact.

SP7 is a service operations paradigm in that it describes what service providers do

(they operate under conditions of customer contact). One might assume that it is also a

services marketing paradigm, since it does describe customer involvement (through

contact); however, with the exception of perhaps psychotherapy, the service value

proposition is not in the contact itself, but a result of the contact. In most services, the

contact is necessary to receive the service, but not sufficient to motivate customers. For

example, we might assume that only the loneliest people go to banks simply to be there

and interact with employees—everyone else requires banking transactions.

The customer contact model is useful as a service paradigm because it

differentiates services from non-services and because it leads to numerous managerial

issues for studying. In particular, Chase proposes that operations with high amounts of

customer contact should be managed differently from those involving little or no

 20

customer contact, covering areas such as facility location and layout, capacity planning,

worker skills, production scheduling, and quality control (Chase 1978).

One potential weakness of the customer contact paradigm has been that it focuses

on customer presence in the service system and fails to consider what customers are

doing within the system. Mersha (1990) addressed this concern by revising the definition

of customer contact to differentiate between “active contact” (direct customer contact that

involves interaction) and “passive contact” (direct contact that does not involve

interaction, such as riding a bus). Mersha asserts that active contact is what drives

potential operating efficiency of services. Mersha allows for remote services involving

direct customer contact without requiring customers to be physically present. Remote

services that are mediated by technology have been more recently studied by Froehle and

Roth (2004).

Subsequent to Mersha’s work, Kellogg and Chase (1995) developed a scale of

customer contact encompassing three dimensions: (a) total amount of time customers

spend communicating in the production system, (b) the richness of the information being

exchanged, and (c) the amount of confiding and trust shared between customers and

employees. This scale again demonstrates that customer contact occurs in degrees.

Even an expanded definition of customer contact may fail to capture the variety of

processes that might be considered “services.” Some time ago, Lovelock (1983)

categorized services into four categories:

• services directed at people’s bodies (e.g., health care, passenger

transportation, beauty salons),

• services directed at people’s minds (e.g., education, information services, and

theaters),
 21

• services directed at people’s belongings (e.g., freight transportation, repair

services, dry cleaning, landscaping), and

• services directed at people’s intangible assets (e.g., banking, legal services,

accounting).

The first two service categories certainly involve customer contact. Services in the

latter two categories may involve very little customer contact, yet they strongly exhibit

characteristics considered unique to services. For example, auto repair would be

classified as a low-contact service according to prior definitions of customer contact. One

might think that auto repair thus has high potential operating efficiency, which is not the

case (largely due to the uniqueness of each auto problem). Other operational issues would

lead us to believe that auto repair is closer to a “pure service” than to

“quasimanufacturing.”

A business service example is financial statement auditing, which is directed at

tangible and intangible assets of concern to clients. A typical financial auditing

engagement involves only a limited amount of interaction with clients. The majority of

the billable hours usually involve processing and analyzing information provided by

clients, often at a location removed from the client. The financial auditing process

continues to demonstrate a relatively low potential operating efficiency, often consuming

a great amount of time at large expense, even though the process has a relatively low

portion of customer contact.

The next section will present a different paradigm for services that is

operationally based and more general than the customer contact model. The paradigm is

not focused on what customers get from a service provider nor on what customers
 22

experience with a service provider. Instead, it focuses on what customers give to the

service provider. We call it the customer-supplier paradigm.

THE CUSTOMER-SUPPLIER PARADIGM

Arguably, the central principle of the operations management discipline is the I/O

model: inputs are transformed into outputs through production processes (as depicted in

Figure 1). This model is universal—all processes can be described in terms of the I/O

model. The model applies to service processes just as well as non-service processes, but

the application to service processes is universally distinct from the application to non-

service processes.

Figure 1: Non-Service I/O Model (e.g., make-to-stock manufacturing)

Supplier Production Customer

Inputs Outputs
Process

The customer-supplier paradigm focuses not on what customers do, per se, but on

what customers provide as inputs to service processes:

SP8 (customer-supplier): Services are production processes wherein each

customer supplies one or more input components for that customer’s unit of

production.

SP8 asserts that the universally distinguishing feature of services is the

involvement of customers in production processes by involving inputs that are supplied

by customers. As indicated by Lovelock (1983), customer inputs include customers’

selves, their belongings, and/or their information. Customers are therefore suppliers to

service processes, as depicted in Figure 2. The customer-supplier service paradigm holds

 23

that customer inputs are a necessary and sufficient condition for a service process to be a

service process, and the lack of customer inputs characterizes all non-service processes.

SP8 has broad managerial significance: processes that involve customer inputs possess

management concerns similar to one another, but involve different concerns from

processes not dependent upon customer inputs.

Figure 2: Service I/O Model

Supplier Inputs
Production Outputs Customer
Process

In order to understand the customer-supplier services paradigm, a few definitions

are in order: inputs, customers, and production processes. As used in SP8, inputs are

components of production that come into the process to enable production, not comments

or feedback about production in general (i.e., not general “customer input”). Customers

are individuals or entities who determine if the organization shall be compensated (or

rewarded) for production, which may be consumers or may just be decision makers.

Production processes are sequences of steps that add value and thus warrant

compensation. Details and examples of these essential terms are described in (Sampson

and Froehle 2006), where the paradigm is referred to as the Unified Services Theory

(UST).

Distinction from Co-Production

The customer-supplier services paradigm is related to yet distinct from the well-

studied concept of customer “co-production.” In the services literature, customer co-

production is defined in various ways including “buyer-seller social interaction”

 24

(Wikstrom 1996, p. 10), customers serving as “partial employees” (Mills and Morris

1986), and customer “effort… before, during, and after” service encounters (Youngdahl,

et al. 2003, p. 109). Generally, co-production refers to actions or efforts performed by

customers.

There exists a possibility that the action of providing component inputs might be

considered a special case of co-production, or that customer effort is a special case of

component inputs. Indeed, Larsson and Bowen (1989, p. 217) extend Lovelock’s list of

selves/belongings/information customer inputs by adding customer “actions participating

in the service production”. However, for clarity we distinguish between customer action

(i.e., co-production labor) and supplying component inputs (customers’ selves,

belongings and/or information).

This delineation between component suppliers and labor is clearer under

traditional manufacturing. The usual contribution of “suppliers” to the production

process is the provision of components such as raw materials or parts. Labor does not

normally provide component materials or parts, but provides effort. The concept of co-

production identifies customers as effort-providing actors, whereas SP8 identifies

customers’ selves/belongings/information as things to be acted upon. SP8 defines

services as production processes acting on customers’ selves/belongings/information

regardless of whether or not the customer is participating in the execution of the action.

That having been said, it is difficult to imagine a situation where customers are

co-producers in a narrow sense (actors in production) but otherwise do not provide any

self/belonging/information inputs to be acted upon. The closest example the author can

imagine is the production process of a local cannery that produces canned goods for the

poor and needy. Should the cannery be classified as a service? The cannery is primarily
 25

staffed by volunteer labor, which may or may not be the consumers of the resulting

canned goods. The process appears to be a non-service manufacturing process, even

when staffed by needy volunteers. For one thing, staffing and production does not appear

to be based on demand or even forecasted demand, but based on the arrival of food raw

materials. Yet, many individuals volunteer for mental and spiritual benefits, so from their

perspective the cannery is providing a service.

Customer actions outside of production have also been called co-production

(Chervonnaya 2003; Kellogg, Youngdahl, and Bowen 1997; Youngdahl, et al. 2003).

With the exception of providing inputs, customer actions before and after production are

not unique to services, but occur with all types of processes (Lengnick-Hall 1996, p. 802;

Lovelock and Gummesson 2004, p. 26). Customers save money and do product research

to prepare to purchase manufactured goods (or services). After production, consumers

extract value from products that came from production, be it service or non-service

production. This post-production consumer action is at the center of arguments that

everything is a service (Vargo and Lusch 2004b). Although the broad use of “co-

production” as a defining characteristic of services is precarious, a narrow view (see

Lovelock and Gummesson 2004, p. 29) has merit.

One challenge with including even a narrow view of customer co-production in

the set of customer inputs is the impact on process analysis. A useful way of analyzing

any production process is assessing how inputs are transformed into desired outputs

(Chase and Aquilano 1995, p. 6). Production processes are value adding processes, as

compared with consumption processes which are value extracting (Merriam-Webster

2006). SP8 implies that services are production processes which add value to customer

inputs – transforms their bodies, minds, belongings, or information into something of

 26

greater value to the customer. Those customer inputs are what Constantin and Lusch call

operand resources, defined as “resources on which an operation or act is performed to

produce an effect” (Vargo and Lusch 2004a, p. 2). Labor, on the other hand, is an

example of an operant resource, “which [is a resources] employed to act on operand

resources (and other operant resources).” Arguably, customers patronize services to have

their operand resources transformed in a value-adding way. Their operant resource, i.e.

their co-productive labor effort, is consumed during service production; customers would

be unlikely to pay for the expenditure of their labor operant resource were it not for the

fact that value is simultaneously being added to their operand resources.

Clarification through a Process Paradigm

The concept of services being reliant upon customer inputs is not new, but has

been cited in passing in research literature and other publications (Bitner, et al. 1997, p.

195; Chervonnaya 2003, p. 335; Fitzsimmons and Fitzsimmons 2004, p. 21; Lovelock

2001, p. 37; Silvestro, et al. 1992, p. 66; Wright 1999, p. 5; Zeithaml, et al. 2006, p. 393).

However, the central, defining power of the concept has not been widely recognized. One

reason for this might be that various researchers tend to categorize firms or industries, not

individual processes within firms (Wemmerlöv 1990, p. 24).

The paradigm shift provided by the customer-supplier services paradigm is this:

Customer inputs are the defining feature of services as long as we identify the customer

and specify the process being analyzed. The paradigm is a process perspective: All

businesses, services or otherwise, are composed of processes that transform inputs into

outputs. The customer-supplier paradigm proposes that the one core factor which
 27

distinguishes traditional make-to-stock manufacturing1 from services is not the

occurrence of processes nor the process outputs, but the process inputs. The nature of the

acts differ, as does the nature of the output, but that is primarily due to the nature of the

inputs—customer inputs lead to processes and outputs that are distinct in character from

those devoid of customer inputs.

Consider the example given by Rathmell in his 1966 article “What is Meant by

Services?” As mentioned, Rathmell follows the phrase “a good is a thing and a service is

an act” with the statement, “If a product is purchased, it is a good; but if it is rented or

leased, the rentee or lessee acquires a service” (pp. 33–34). The customer-supplier

services paradigm perspective would say that a product is a good (i.e., a thing) regardless

of whether it is purchased or rented. Customers observe the goods rental process, but

rarely observe the goods manufacturing processes. If a manufacturing process does not

involve customer inputs yet the rental process does, then the rental process, as a service

process, will in all likelihood be less efficient than the manufacturing process, will be

subject to greater variability, will experience lower utilization, and so forth. Service

processes and outputs are fundamentally different from non-service processes and

outputs due to the dependence upon customer inputs.

Therefore, one part of the existing confusion over terms comes from comparing

service processes (acts) to manufacturing outputs (goods). The process of home

construction is an act, whether it is building large quantities of tract homes for future

sales or building a one-of-a-kind custom home for a meticulous client. The output of car

manufacturing, car sales, car repair, and car rental is all cars. The distinguishing question

1
SP8 classifies traditional make-to-stock manufacturing a non-service when it is accomplished without
inputs from customers. Custom manufacturing requires at least an information input from customers,
therefore would be categorized as a service. For more explanation, see (Sampson and Froehle 2006, p. 336)
or (Sampson 2001, p. 142).
 28

of SP8 is, “What are the customer inputs to the given process?” Those processes without

customer inputs are very different from those involving customer inputs, and the degree

and nature of customer inputs provide further insights.

Another form of confusion comes from studying processes that are complex

aggregations of service and non-service processes. As mentioned above, attempting to

classify entire companies as either service companies or non-service companies can lead

to confusion. Even defining a particular line of business can become convoluted. One

might ask “Is a restaurant a service?” A restaurant is a business, not a process. You need

to indicate which restaurant process you are considering in order to identify if it is a

service process. The process of a chef designing new food offerings is not normally

dependent upon customer inputs (other than a consideration of general customer

opinions) and is not a service process—unless it is outsourced, in which case the

restaurant is the customer of the outsource provider. The same is similar for the supply-

procurement process. Seating customers and taking customer orders requires customer

inputs, and is a service process. Preparing food for customers is a “back-office” service

process, as is preparing the check. Restaurants involve goods, and involve both service

and non-service processes.

Service Supply Chains

The other important key to comprehending the customer-supplier services

paradigm is realizing that rarely do processes occur in isolation. Rather, processes exist in

supply chains, wherein one process feeds another process. The field of operations

management approached a renaissance in recent years with the realization that analyzing

and managing a given process without consideration for “upstream” supplier processes or

“downstream” customer processes leads to suboptimal decisions. The field (or sub-field
 29

or meta-field) of Supply Chain Management is primarily concerned with understanding

interactions between such interrelated processes.

As Ellram, Tate, and Billington point out, the representation of services in Supply

Chain Management literature is sparse and inadequate (2004). Some writers claim that

supply chain concepts are relevant to manufacturing and services, but then proceed to

focus on manufacturing examples. The service examples tend to be appendages to

manufacturing supply chains, such as retail. Some services have major goods

components, and thus benefit from approaches such as supplier certification and

selection, synchronous production, and supplier integration. It is not at all clear how to

apply such approaches to services that do not have major goods components.

The customer-supplier services paradigm clarifies service supply chains by

showing how they involve customers both as suppliers of inputs and consumers of

outputs (Sampson 2001, p. 135). Such supply chains are not conveniently linear, but are

bidirectional (see Figure 2 and Sampson 2000). The most effective supply chain

management for services will involve understanding the function, capabilities, and

disposition of customers as suppliers. Just as manufacturing supply chains benefit when

suppliers operate in harmony with the given firm, so service firms benefit when

customer-suppliers act in harmony with the firm.

Integration of Operations and Marketing Perspectives

Although the customer-supplier paradigm originates from the operations

perspective, it is easily reconciled with marketing perspectives, considering that the

offering presented to customers by service providers is a transformation of something that

was previously possessed by the customers (selves, belongings, or information). Thus,

interaction with service customers begins before production (customers providing inputs),
 30

often continues during production, and culminates after production. This is consistent

with Lusch and Vargo’s (2006) idea that traditional manufacturing firms “market to”

customers, whereas service firms “market with” customers.

It is valuable to note that services marketing paradigms can be directly explained

by customer inputs. The perception of non-ownership (SP2) occurs because customers

own their inputs before service delivery, and own their inputs after delivery, thus

reducing the occurrence of transfer of ownership. Services and non-services are both acts

(SP3), but since customers provide inputs to service processes they observe the acts but

when customers do not provide inputs (e.g., for manufacturing processes) they rarely

observe the acts. (SP3 would be better stated “services are customer observable acts….”)

In order for customers to provide inputs to service processes they need access to the

service processes, facilities, and good (SP6). Even the customer contact (SP7) paradigm

can be described in terms of customer inputs motivating customer contact. (SP8 has also

been called the “customer-content” paradigm, as an expansion of the customer contact

theme.)

The customer-supplier paradigm differs from the S-D logic of marketing in that

the customer-supplier paradigm upholds traditional make-to-stock manufacturing. The

customer-supplier paradigm does not propose any dramatic changes in the way

manufactured products should be produced or marketed, as long as products are

appropriately designed for use by service providers or self-serving customers (Sampson

2001, p. 148). Producing commodity products like socks and light bulbs generally

involves no customer inputs, and we expect that traditional mass production, mass

marketing, and mass merchandising will be appropriate for the foreseeable future.
 31

Despite differences in focus and emphasis, the customer-supplier paradigm holds

potential for integrating different perspectives on services. The paradigm simultaneously

focuses on the customer (who provides inputs) and on the production process. The

paradigm also directly relates to human resource management, since dealing with

customer inputs has major implications for job design, employee motivation, human

resource development, and other HR issues (Sampson 2001, Unit 8). Even accounting is

impacted by customer inputs: production which is dependent upon customer inputs

usually has much lower utilization of plant and equipment than manufacturing, making

activity-based costing precarious for services. The customer-supplier paradigm leads to a

cross-functional study of services, and provides a point of common interest for various

perspectives pertaining to services.

EMPIRICAL EVIDENCE

As mentioned previously, one characteristic of paradigms is their general

acceptance by some group at some point in time (Kuhn 1970). An empirical research

question of interest is how the various service paradigms hold up relative to the reasoning

of study subjects from some relevant population. We might have surveyed faculty

perceptions of paradigms, but suspect that would just confirm their biases based on

unsubstantiated ideas perpetuated in academic literature. Instead we studied student

perceptions, which is a convenience sample with interest in academic topics but with less

exposure to the biases of academic literature. The student population is relevant, since

they will be primary consumers of ideas coming from the paradigms held by instructors.

At a minimum, surveying students will reveal which paradigms they are most likely to

buy into given their frame of reference at the time of the study.
 32

An online survey was administered to students at the author’s home institution in

April of 2006. Examples of survey items are listed in Table 1, with all items being

measured on a seven-point “strongly disagree” to “strongly agree” Likert scale. (Of

course, survey items were intermixed so that items for a given scale were not adjacent,

and forms were used to control for response ordering bias.) The full survey had 56 items

that represented 23 multi-item constructs. The survey was subjected to three rounds of

pretests that involved approximately thirty subjects. The survey was publicized through

posters on campus, as well as by an emailing to business school students. (We did not ask

study subjects about their major field of study, but suspect more of them were business

students than from humanities or other majors.)

>> Insert Table 1 about here <<

The survey resulted in 1408 responses. Statistical analysis was run to detect

frivolous or inconsistent responses (such as providing the same answer for every question

just to be entered in the prize drawing), leaving 1372 responses. An additional 40

responses were identified as coming from subjects who had taken the author’s Services

Management course, which were also eliminated due to the potential for instructor-

induced bias. We were left with 1332 usable responses. Each survey instance asked the

subject to respond relative to one of 70 business processes, a sample of which is shown in

Table 2. The fundamental scale of the survey is the SERVICE scale, composed of the

following three items (shown here relative to the process of farming by farmers for

customers who are specified as food consumers):

• Farming is a service business.

• Farming is in a service industry.

• Farming primarily involves providing services to customers (food consumers).

 33

The underlined words changed depending on which of the 70 industries the

subject was responding about (underlines not shown in the actual survey). Admittedly,

the SERVICE scale items refer to the classification of businesses and industries, which is

technically imprecise but conceptually common. However, all items were expressed as

processes (as gerund verbs) to assure evaluative precision. The SERVICE scale has a

Cronbach’s of 0.8864, indicating strong reliability. The meaning of the SERVICE scale

is “[The given process] is considered to be a service.”

>> Insert Table 2 about here <<

Table 2 shows how the business processes vary according to the SERVICE scale.

The processes listed at the top are clearly services in subjects’ minds, and those at the

bottom are clearly non-services, with some in-between examples given. The resulting

discrimination according to the SERVICE construct appears to have good face validity,

particularly at the extremes. Convergent validity of the scale was demonstrated by high

inter-item correlations.

SP Comparison Results/Findings

The survey scales listed in Table 1 assess subjects’ perceptions of the service

paradigms (SPs) reviewed in the prior sections, including separate scales for specific

elements of IHIP. Those scales also had high Cronbach’s values (with a few scale items

being dropped, mean was 0.7718, minimum was 0.6470). Since the paradigms are

supposed to discriminate services, a key question is how each paradigm scale correlates

with the SERVICE scale. High correlation indicates better potential for defining services

than low correlation. Table 3 shows the Pearson correlation coefficients for each scale

relative to the SERVICE scale.

>> Insert Table 3 about here <<

 34

Each correlation coefficient was non-zero at a <0.01 level, which means that they

all can be considered to pertain to the concept of “services.” Nevertheless, there is a wide

range of coefficients. The strongest correlation is for SP8, the customer-supplier

paradigm. This suggests that SP8 has the best ability to predict that subjects would

perceive a given process as being a “service.” The items in the SP8 scale had good

construct validity: the SP8 items correlated much stronger with each other (convergent

validity) than they did with the items from other constructs (discriminant validity). This

affirms that SP8 is a distinct paradigm, and not just a repeat of one of the other

paradigms. (The other SP scales also had good construct validity.)

It may seem odd that the “residual” (SP1) definition by exclusion is the next most

closely correlated service paradigm, since SP1 may be considered a “non-paradigm.”

However, the SP1 significance is actually logical and valuable, since it indicates that there

is in fact a perceived difference between manufacturing/agriculture/extraction and

something else we call “services.” This counters the unfounded logic that “everything is a

service.”

There are statistically significant differences between various correlation

coefficients in Table 3. For example, the differences between the correlation coefficient

of SP8 and those of SP1, SP3, and SP7 are not statistically significant, but correlations for

the other paradigms are (at a <0.01 level). This indicates a statically cost for other than

the top four candidate paradigms. Note that with one exception, the weakest five items

are the IHIP service characteristics. One explanation for those weaker correlations is that

the IHIP characteristics are not defining paradigms but rather “symptoms of services,”

which is to say that they often are manifest in services but do not cause processes to be

services (Sampson 2001, p. 49, 89). We have elsewhere argued that each of the IHIP
 35

characteristics can be directly explained by the presence of customer inputs (Sampson

and Froehle 2006).

Similar Actions in Different Contexts

The logic that services can be defined as such by a reliance on customer inputs

(SP8) is further emphasized through specific process examples included in the study. For

example, the process of “painting cars by auto companies for consumers” (N=36)

produced a mean SERVICE value of 0.843, whereas “painting cars by paint shop

employees for car owners” (N=37) produced a mean SERVICE value of 1.964, the latter

being rated as being more service-like (the difference being significant at <0.01 level).

Either way it is “painting cars,” but the difference is painting cars coming from the

upstream supply chain versus painting cars supplied as inputs by customers, which

manifests a “service” difference in the subjects’ minds.

Another example is musicians recording music such as in a studio (N=36, mean

SERVICE=0.898) compared with musicians giving live musical performances (N=35,

mean SERVICE=1.771), the SERVICE scale difference also being significant at <0.01

level. In either case, the musicians are playing musical instruments—with the latter,

customers provide themselves as inputs to the performance process, but with the former

they do not. You will likely find that musicians themselves describe the action of

performing in front of customers as being quite different from performing in a studio, and

that managing live performances is quite different from managing a studio recording

session. We attribute the managerial differences to the involvement of customer inputs

(their selves and attention) in the live performance process. Distinct managerial

differences were confirmed by additional empirical data.

 36

Managerial Issues

The survey had additional scales pertaining to specific managerial issues. We

identified five characteristics which were highly correlated with the SERVICE scale (at

<0.01 significance level): time-perishable capacity, customer-driven location, time-based

measurement, low entry barriers, and customer as competitor. Details are omitted here for

space reasons. We tested a LISREL structural equation model that represented the five

scales (and one other) as a simultaneous function of both SP8 and SERVICE. The model

had a good fit, with a Root Mean Square Error of Approximation (RMSEA) of 0.054.

Interestingly, the five scales had stronger path coefficients coming from SP8 than from

SERVICE, implying that these “service” characteristics are especially characteristics of

“processes that rely on customer inputs.” This was confirmed by correlating the six

consequence scales with the difference between SP8 and SERVICE (for each subject),

which captures correlation represented in SP8 which is not accounted for in SERVICE.

Four of the correlations were both positive and highly significant (<0.01 level),

suggesting that in some ways there might be more managerial value in studying

“processes that rely on customer inputs” than simply studying “processes considered

services.”

Limitations

One limitation of this test of managerial issues is the limited set of service

characteristics studied. Another limitation of this empirical study is the use of the student

convenience sample, since other populations may report different results. We reduced

one type of bias by removing responses from students attending the Services

Management course. There may be other biases experienced by students, although those

biases may also be present in other possible populations. Future research could look at
 37

and compare service paradigm perceptions for practitioners, researchers, and other

populations.

CONCLUSION

This article has reviewed various service paradigms, largely originating from

services marketing, and has presented an operational paradigm based on customers being

suppliers of process inputs. The customer-supply services paradigm was shown to be

logical, to exhibit strong face validity, and to be empirical supported. Further, the

customer-supplier services paradigm overcomes the biases inherent in service marketing

paradigms. Nevertheless, it is also consistent with ideas coming from the marketing

literature. For example, Lovelock and Gummesson state, “without customers who require

service at a specific time, either to themselves or their possessions, there can be no output

at most service organizations” (2004, p. 30).

The value of the customer-supplier services paradigm is seen in the significant

managerial implications. For example, we observe that comparing “goods” with

“services” is a confusing correlation. It is clearer and more useful to compare service

processes (which involve customer inputs) with non-service processes (which do not

involve customer inputs). Our empirical data also demonstrates that processes which can

be performed with or without customer inputs (e.g., painting and music performance) are

considered more service-like when they have customer inputs than when they do not. In

other words, the reliance upon customer inputs is shown to make a “service” difference.

Discussion of the implications of the paradigm are limited by space; those wanting more

detail are referred to other publications by Sampson (2000; 2001) and Sampson and

Froehle (2006), which again refer to the paradigm as the “Unified Services Theory.”
 38

References

Bannock, G., Baxter, R. E., and Reese, R., 1982. The Penguin Dictionary of Economics,
Penguin Books, Ltd., Harmondsworth, Middlesex, England.
Berry, L. L., 1980. Services marketing is different. Business 30 (3), May/June, pp. 24.
Bitner, M. J., 1992. Servicescapes: The impact of physical surroundings on customers
and employees. Journal of Marketing 56 (2), Apr, pp. 57.
Bitner, M. J., Faranda, W. T., Hubbert, A. R., and Zeithaml, V. A., 1997. Customer
contributions and roles in service delivery. International Journal of Service
Industry Management 8 (3), pp. 193.
Castells, M., and Aoyama, Y., 1994. Paths towards the informational society:
Employment structure in G-7 countries, 1920-90. International Labour Review
133 (1).
Chase, R. B., 1978. Where Does the Customer Fit in a Service Operation? Harvard
Business Review 56 (6), November-December, pp. 137-142.
Chase, R. B., 1981. The Customer Contact Approach to Services: Theoretical Bases and
Practical Extensions. Operations Research 29 (4), pp. 698-706.
Chase, R. B., and Aquilano, N. J., 1995. Production and Operations Management:
Manufacturing and Services, Seventh Edition, Irwin/McGraw-Hill, Chicago.
Chase, R. B., and Tansik, D. A., 1983. The Customer Contact Model for Organization
Design. Management Science 29 (9), pp. 1037-1050.
Chervonnaya, O., 2003. Customer role and skill trajectories in services. International
Journal of Service Industry Management 14 (3), pp. 347-363.
Edvardsson, B., Gustafsson, A., and Roos, I., 2005. Service portraits in service research:
a critical review. International Journal of Service Industry Management 16 (1),
pp. 107-121.
Ellram, L. M., Tate, W. L., and Billington, C., 2004. Understanding and Managing the
Services Supply Chain. Journal of Supply Chain Management 40 (4), Fall, pp. 17-
32.
Fisk, R. P., Brown, S. W., and Bitner, M. J., 1993. Tracking the evolution of the services
marketing literature. Journal of Retailing 69 (1), Spring, pp. 61.
Fitzsimmons, J. A., and Fitzsimmons, M. J., 2004. Service Management: Operations,
Strategy, and Information Technology, 4th Edition, Irwin / McGraw-Hill, New
York.
Fitzsimmons, J. A., and Fitzsimmons, M. J., 2006. Service Management: Operations,
Strategy, and Information Technology, 5th Edition, Irwin / McGraw-Hill, New
York.
Froehle, C. M., and Roth, A. V., 2004. New measurement scales for evaluating
perceptions of the technology-mediated customer service experience. Journal of
Operations Management 22 (1), pp. 1-21.
Grove, S. J., Fisk, R. P., and John, J., 2003. The future of services marketing: Forecasts
from ten services experts. The Journal of Services Marketing 17 (2/3), pp. 107.
Gummesson, E., 1995. Relationship marketing: Its role in the service economy.
Understanding Services Management, W. J. Glynn and J. G. Barnes, eds., John
Wiley & Sons, New York, 244-268.
Henkoff, R., 1994. Service is everybody' s business. Fortune 129 (13), June 27, pp. 48.
 39

IBM, 2006. Services Sciences, Management and Engineering website:

http://www.research.ibm.com/ssme/ (accessed 10/23/2006).
Johnston, R., 2005. Service operations management: return to roots. International
Journal of Operations & Production Management 25 (12), pp. 1278.
Judd, R. C., 1964. The case for redefining services. Journal of Marketing 28 (1), Jan, pp.
58.
Kellogg, D. L., and Chase, R. B., 1995. Constructing an Empirically Derived Measure for
Customer Contact. Management Science 41 (11), pp. 1734-1749.
Kellogg, D. L., Youngdahl, W. E., and Bowen, D. E., 1997. On the relationship between
customer participation and satisfaction: two frameworks. International Journal of
Service Industry Management 8 (3), pp. 206.
Kuhn, T. S., 1970. The Structure of Scientific Revolutions, 2nd Edition, University of
Chicago Press, Chicago.
Laroche, M., Bergeron, J., and Goutaland, C., 2001. A three-dimensional scale of
intangibility. Journal of Service Research 4 (1), Aug, pp. 26.
Larsson, R., and Bowen, D. E., 1989. Organization And Customer: Managing Design
And Coordination. Academy of Management. The Academy of Management
Review 14 (2), Apr, pp. 213.
Lengnick-Hall, C. A., 1996. Customer Contributions to Quality: A Different View of the
Customer-Oriented Firm. Academy of Management Review 21 (3), July, pp. 791-
824.
Levitt, T., 1972. Production-Line Approach to Services. Harvard Business Review,
September-October, pp. 43.
Lovelock, C., 1983. Classifying Services to Gain Strategic Marketing Insights. Journal of
Marketing 47 (3), Summer, pp. 9-20.
Lovelock, C., 2001. Services Marketing, 4th Edition, Prentice Hall, Englewood Cliffs:
New Jersey.
Lovelock, C., and Gummesson, E., 2004. Whither Services Marketing? In Search of a
New Paradigm and Fresh Perspectives. Journal of Service Research 7 (1), August,
pp. 20-41.
Lusch, R. F., and Vargo, S. L., 2006. The Service-Dominant Logic of Marketing: Dialog,
debate, and directions. M.E. Sharpe, Armonk, New York.
Merriam-Webster, 2006. Online dictionary website: http://www.m-w.com (accessed
February 2006).
Mersha, T., 1990. Enhancing the Customer Contact Model. Journal of Operations
Management 9 (3), Aug 1990, pp. 391-405.
Mills, P. K., and Morris, J. H., 1986. Clients as '
'
Partial''Employees of Service
Organizations: Role Development in Client Participation. Academy of
Management Review 11 (4), October, pp. 726-735.
Morey, R., 1976. Operations management in selected nonmanufacturing organizations.
Academy of Management Journal 19 (1), March, pp. 120.
Murdick, R. G., Render, B., and Russell, R. S., 1990. Service Operations Management,
Allyn and Bacon, Boston.
Nie, W., and Kellogg, D. L., 1999. How Professors of Operations Management View
Service Operations? Production and Operations Management 8 (3), Fall, pp. 339-
355.
 40

Pearce, D. W., 1981. The Dictionary of Modern Economics, The MIT Press, Cambridge,
Massachusetts.
Pearce, E., 1957. History of the Standard Industrial Classification. Executive office of the
President, Bureau of the Budget, Office of Statistical Standards, Washington, DC,
(http://www.census.gov/epcd/www/sichist.htm).
Rathmell, J. M., 1966. What Is Meant by Services? Journal of Marketing 30 (4), Oct, pp.
32.
Rust, R., 2004. A Call for a Wider Range of Service Research. Journal of Service
Research 6 (3), Feb, pp. 211.
Sampson, S. E., 2000. Customer-supplier duality and bidirectional supply chains in
service organizations. International Journal of Service Industry Management 11
(4), pp. 348-364.
Sampson, S. E., 2001. Understanding Service Businesses: Applying principles of the
Unified Services Theory, 2nd Edition, John Wiley & Sons, New York.
Sampson, S. E., and Froehle, C. M., 2006. Foundations and Implications of a Proposed
Unified Services Theory. Production and Operations Management 15 (2),
Summer, pp. 329-343.
Schmenner, R. W., 1995. Service Operations Management, Prentice Hall, Englewood
Cliffs, NJ.
Shostack, G. L., 1977. Breaking free from product marketing. Journal of Marketing 41,
April, pp. 73-80.
Shostack, G. L., 1987. Service Positioning through Structural Change. Journal of
Marketing 51 (1), January 1987, pp. 34-43.
Silvestro, R., Fitzgerald, L., Johnston, R., and Voss, C., 1992. Towards a Classification of
Service Processes. International Journal of Service Industry Management 3 (3),
pp. 62.
US.Census.Bureau, 1992. 1992 Economic Census, Definitions of Sectors website:
http://www.census.gov/epcd/ec92/ec92sics.html (accessed February 2006).
Vargo, S. L., and Lusch, R. F., 2004a. Evolving to a New Dominant Logic for Marketing.
Journal of Marketing 68 (1), Jan, pp. 1.
Vargo, S. L., and Lusch, R. F., 2004b. The Four Service Marketing Myths: Remnants of a
Goods-Based, Manufacturing Model. Journal of Service Research 6 (4), May, pp.
324.
Wemmerlöv, U., 1990. A taxonomy for service processes and its implications for system
design. International Journal of Service Industry Management 1 (3), pp. 13-27.
Wikstrom, S., 1996. The customer as co-producer. European Journal of Marketing 30
(4), pp. 6.
Wright, J. N., 1999. The Management of Service Operations, Cassell, London.
Youngdahl, W. E., Kellogg, D. L., Nie, W., and Bowen, D. E., 2003. Revisiting customer
participation in service encounters: Does culture matter? Journal of Operations
Management 21 (1), Jan, pp. 109.
Zeithaml, V. A., Bitner, M. J., and Gremler, D. D., 2006. Services Marketing: Integrating
Customer Focus Across the Firm, Fourth Edition, McGraw-Hill/Irwin, New York.
Table 1: Survey items pertaining to Service Paradigms (SPs) (process=farming)

SP1: Farming is manufacturing, or agriculture production, or natural resource extraction.

SP1: Farming produces something that can subsequently be sold and used by customers
(food consumers).
SP1: Farming is manufacturing work, or farm work, or gathering natural resources.
SP2: Customers (food consumers) ultimately own output that comes from farming.*
SP2: Customers (food consumers) can take the output of farming and sell it to someone
else.*
SP2: Farming involves transferring ownership of products to customers (food
consumers).*
SP3: Farming is an action performed for customers (food consumers).*
SP3: The output of farming is an action performed for customers (food consumers).*
SP3: Farming involves performing actions for customers (food consumers).*
SP3: Farming involves following some procedures. (x)
SP4: The outputs of farming are physical items.
SP4: Farming involves tangible work.
SP4: The output of farming can be touched.
SP4: The output of farming is tangible.*
SP5: The process of farming is the same from one instance to the next.*
SP5 (heterogeneity): The output of farming is the same from one instance to the next.*
SP5 (heterogeneity): The process of farming varies dramatically from one instance to the
next.*
SP5 (heterogeneity): Farming provides pretty much the same thing for every customer.*
SP5 (insep.): Customers (food consumers) begin consuming the output of farming about
the same time as the work of farming is performed.*
SP5 (inseparability): The work of farming is performed at about the same time as
customers (food consumers) receive the output of farming.
SP5 (perishability: The output of farming does not last very long.*
SP5 (perishability): The output of farming is quite perishable.
SP6: Farming involves renting things to customers (food consumers). (x)
SP6: Farming involves allowing customers (food consumers) to access the location,
people, equipment, or technology of farmers.
SP6: For farmers who are farming, customers (food consumers) primarily pay to have
access to the location, or people, or equipment, or technology of the farmers.
SP7: Farming involves a lot of interaction with customers (food consumers).
SP7: Interacting with customers (food consumers) is a key element of farming.
SP7: A lot of the work time in farming is spent interacting with customers (food
consumers).
SP8: Farming involves working on something provided by customers (food consumers).
SP8: Farming is dependent upon customers (food consumers) first providing something
for the farmers to work on.
SP8: Farmers cannot do the work of farming unless customers (food consumers) first
provide themselves, or something that belongs to them, or their information.
*=reverse scale item. (x)=removed to increase scale Alpha.
Table 2: Examples of processes by mean SERVICE scale values
“Services” (highest SERVICE scale means)
• counseling by psychologists for patients (N=34)
• auditing financial records by accountants for client firms (N=35)
• planning travel by travel agents for travelers (N=33)
• dry cleaning laundry by dry cleaners for consumers (N=36)
• management consulting by consultants for client firms (N=35)
• performing surgery by surgeons for patients (N=33)
In-between services and non-services (medium SERVICE means)
• broadcasting sports events by television stations for viewers (N=35)
• leasing new cars by auto dealerships for consumers (N=34)
• broadcasting sports events by television stations for sports team owners (N=38)
• printing newspapers by news publishers for readers (N=36)
• producing electricity by power companies for consumers (N=35)
“Non-services” (lowest SERVICE means)
• farming by farmers for food consumers (N=37)
• printing books by book publishers for book readers (N=34)
• mass producing wood furniture by furniture companies for retail consumers (N=36)
• producing automobiles by auto companies for consumers (N=33)
• refining fuels by oil companies for consumers (N=36)
• mining diamonds by mining companies for jewelry producers (N=35)

Table 3: Correlation of SP scales with the SERVICE scale

Corr* Service paradigm scale
0.504 SP8 (customer-supplier)
0.502 SP1 (residual)
0.470 SP3 (act/performance)
0.469 SP7 (customer contact)
0.418 SP6 (rental/access)
0.352 SP5 (inseparability)
0.325 SP2 (non-ownership)
0.292 SP4 / SP5 (intangibility)
0.189 SP5 (heterogeneous production)
0.171 SP5 (perishable output)
0.159 SP5 (heterogeneous output)
*all Pearson’s correlation coefficients significant at <0.01 level