The relationshipbetween strategy

and firm size

263

International Journal of ServiceIndustry Management

Vol 13 No 3 2002 pp 263-285 MCB UP Limited 0956-4233

DOI 10110809564230210431974

Relationship betweenoperations strategy and size inengineering consulting firms

Daniel Arias ArandaUniversidad de Granada Granada Spain

Keywords Service operations Strategy Size Engineering Consultants

Abstract The relationship between strategy and firm size has been broadly considered andstudied in strategic management literature However this topic has not been paid as muchattention in the operations management field in manufacturing studies The aim of this study isto analyse the relationship between operations strategy and firm size in a sample of engineeringconsulting firms According to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms In this context small firms tend to followcustomer-oriented operations strategies medium sized firms tend to follow process-orientedoperations strategies and larger firms tend to follow service-oriented operations strategies

IntroductionThe relationship between strategy and firm size has been broadly considered andstudied in strategic management literature (see for example Andrews 1971Argyris 1985 Dess and Davis 1984 Herbert 1984 Miller 1981 Rich 1992)However this topic has not been paid as much attention in the operationsmanagement discipline (Swink and Way 1995) Moreover when consideringservice firms studies directly relating to strategy and size are even scarcer(Bozarth and McDermott 1998) Most of them just do not consider size as amoderating variable (see among others Ettlie 1995 Mills et al 1998 Morita andFlynn 1997 Smith and Reece 1999)

The aim of this study is to analyse the relationship between operationsstrategy and firmsrsquo size in a sample of engineering consulting firms Operationsstrategy is measured through a set of items configuring nine dimensions Sizeis measured through firm turnover Our main goal is to verify whether servicefirms pursue different operations strategies according to different turnoverlevels Multivariate regression analysis is the statistical tool used for this studyFirst we will review the concept of operations strategy and its possiblerelationship with firmsrsquo size in the context of service operations management

Operations strategy and sizeOperations strategy has received intense treatment for more than three decades(Nieto AntolotildeAcircn et al 1999) Such interest has not excluded incorrect assumptionsabout the environment Moreover many studies have neglected environmental

T h e c u r r e n t is s u e a n d f u l l te x t a r c h iv e o f th is jo u r n a l i s a v a i la b le a t

httpwwwemeraldinsightcom0956-4233htm

The author wishes to thank Professor Antonio RodrotildeAcircguez Duarte (Universidad Complutense deMadrid) for his inestimable help with the statistical processing of this paper Nevertheless theauthor is the only person responsible for possible mistakes and omissions

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264

factors in operations strategy research (Flynn et al 1995 Hayes and Schmenner1978 Skinner 1969 Wheelwright 1984)

Historically operations strategy was not considered as a source of competitiveadvantage until 1956 when Miller and Rogers (1956) distinguished betweenoperations and business strategy The notion of operations strategy as part of thebusiness unit is relatively recent (Skinner 1978 Hayes and Wheelwright 1984) Infact the operations function was relegated in the past to the mere accomplishmentof efficiency standards through time resources and space optimizationthroughout the development of the scientific work management principles(Abernathy and Corcoran 1983 Chandler 1991) The concept of operationsmanagement (OM) considers that there is one only right approach to manageproduction activities Skinner (1969) was the first to set the basic principles forelaborating an operations strategy

Different firms have different strengths and weaknesses so they canchoose their own way to be competitive

In a similar manner different production systems have different operationsfeatures so there is not necessarily a unique standard production system

The main operations function goal is to develop a production system thatreflects the firmrsquos implicit priorities and tradeoffs related to its specificcompetitive situation and strategy all of that through interrelated andinternally consistent decisions

OM literature identifies two main elements allowing the definition of operationsstrategy Those are established from a functional point of view The first elementis related to those goals that the OM function must achieve (Skinner 1978) Thiselement is known as the operations task which is built from those capabilitiesthat the OM function must develop in order to create a competitive advantage forthe firm Some of those tasks are quality cost reliability and flexibility (Heizerand Render 1996) Hill (1989) defines operations strategy considering thedevelopment of those tasks that allow the firm to focus on the customer instead offocusing on the production process

As a result operations strategy is defined by the group of decisions related tothe structure of the production system including the systems and policies thatdefine the infrastructure of the firm (Clark 1996 p 45) Hence the operationsfunction confronts different alternative decisions which configure the OMperformance (Hayes and Wheelwright 1984) However the operations strategymust be consistent with all strategy levels (Anderson et al 1989 Buffa 1984Miller and Roth 1994 Roth and Miller 1990 1992 Swamidas and Newell 1987) inorder to support and be part of the whole firmrsquos strategy (Hayes and Wheelwright1984) In the long term the operations strategy success depends on the capabilityto generate abilities in order to achieve a competitive advantage for the firm in aproactive way (Ferdows and De Meyer 1990 Hayes and Wheelwright 1984 Hill1989) Consequently operations strategy can be defined as a vision of theoperations function that depends on the corporate management for decision

The relationshipbetween strategy

and firm size

265

making This vision must be integrated with the firmrsquos strategy and is frequentlyreflected in a formal plan Output of the operations strategy should be a consistentstandard for the decision-making process in order to achieve a competitiveadvantage for the firm (Schroeder 1992 p 2) Operations strategy also feeds backthe firmrsquos corporate strategy (Hayes 1985)

Once the operations strategy concept has been defined the different types ofoperations strategies are to be determined Strategic management as well asorganizational design academicians have analyzed this topic on many occasions(Hambrick 1983 Fahey and Christensen 1986 McGee and Thomas 1986) Thereis a limited number of feasible strategies for each productive configuration (Millerand Friesen 1984 Miller 1986) so strategic models based on productiveconfigurations are generally classified into taxonomies and typologies (Miller andFriesen 1984 Meyer et al 1993) Typologies describe ideal models each onerepresenting a unique combination of organizational attributes (Doty and Glick1994) Hence there might not be any organization that fits perfectly in adetermined ideal model Anyway a firmrsquos identification with one of the idealmodels could imply significant improvements in the organizational performance(Venkatraman 1989 Venkatraman and Prescott 1990)

On the other hand taxonomies do not define ideal models but they classifyorganizations in mutually exclusive and exhaustive groups (Doty and Glick1994) Taxonomies are derived either from multivariate statistical techniques orfrom mere observation (Wheelwright and Hayes 1985) Bozarth and McDermott(1998) review different taxonomies and typologies for productive configurations(see Tables I and II)

Table ITaxonomies of

strategic configurations

Authors DevelopmentLevel ofanalysis Grouping Variables

Stobaugh andTelesio (1983)

Conceptualfrom casestudy

Firmstrategicunit

Three strategictypes low costtechnological andmarketingintensive

Eight dimensionsbased on decisionsabout plant andtechnologymanagement

Wheelwrightand Hayes(1985)

Conceptualfrom fieldwork

Strategic unit Four stages thatdescribe thestrategic role ofOM internallyand externallyneutral andinternal andexternal support

Strategic focustoward OM levelof involvement instrategic decisions

Miller andRoth (1994)

Empiricalfrom 164firms clusters

Productionstrategic unit

Three types ofstrategy riskevaders marketoriented andinnovators

11 competitivepriorities

Source Adapted from Bozarth and McDermott (1998 p 432)

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266

Different studies relate operations strategy to other management variablesHowever firm size is not even considered in many empirical works (Berry et al1991) Moreover empirical models are tested and validated for manufacturingfirms of significantly different sizes without further analyses (see Minor et al1994) For service industries and due to service heterogeneity firm size turnsinto a complex variable to consider in service operations management studiesHence the size variable can be more effectively controlled in single sectorstudies

The relationship between operations strategy and firmrsquos size is supported bythe contingency theory (Lawrence and Lorch 1967) according to whichenvironmental and structural contingencies make some strategies moreeffective than others Therefore if firmrsquos size is a clear structural contingencyit should influence operations strategy in some way Nowadays firmrsquos size as a

Table IITypologies of strategicconfigurations

Authors DevelopmentLevel ofanalysis Grouping Variables

Hayes andWheelwright(1979 1984)

Conceptualfrom casestudy

Productionplant

Four types ofprocesses shopbatch line andflow

Process flowproduct volumeandstandardization

Richardsonet al (1985)

Empiricalfrom a64-firmsample

Firm Six types ofstrategy three ofthem based ontechnology twobased on productcustomization andone based oncosts

Three dimensionsvolume productvariety and degreeof innovation

Hill (1989) Conceptualbased onplantresearch andliteraturereview

Productionplant

Five types ofprocesses projectjob shop line andcontinuous

More than 20aspects aboutproducts marketsproductioninvestment andinfrastructure

Kotha andOrne (1989)

Conceptualpartiallybased onPorter (1980)

Strategic unit Eight types ofstrategy based oncombinations ofthree dimensions

Three dimensionscomplexity of theprocess structureproduct line andorganizationalscope

Ward et al(1994)

Conceptualbased onliteraturereview

Firmstrategicunit

Fourconfigurationsniche marketscope low costand leanproduction

16 dimensionsmeasuring fourareas strategyenvironment andproductioncapabilities

Source Adapted from Bozarth and McDermott (1998 p 433)

The relationshipbetween strategy

and firm size

267

contingent variable is specially considered in studies related to finance andindustrial economics Recent research shows how resources availability limitsRampD investments and acquisition of technology (Poyago-Theotoky 1998Garvey 1994) Therefore firm growth emerges as the key factor to reach newand larger markets (Schutjens and Wever 2000 Van Wissen 2000) Processtechnologies allow firms to produce and serve focused on higher volumedemands Hence larger firms display low degrees of asymmetry in their riskacross recession and expansion states which makes them less sensitive tocredit market conditions (Perez-Quiros and Timmermann 2000) Substitutionof workforce by technology is especially relevant for medium and large firmsbecause of over employment of smaller firms (Smith 1998)

In this context we deduce and suggest the following pattern of behaviour forengineering consulting firms in order to state our hypothesis Smallengineering consulting firms usually tend to focus on a few segments ofcustomers in such a way that service delivery systems are designed tocustomize most service-products by combining general use technologies andintensive workforce These small firms specialize in delivering specific serviceswith a high customer orientation Medium sized firms have larger capacities toserve a wider range of customer segments However acquisition of specializedtechnology is still not available to these firms Such technologies are profitableonly to satisfy larger demands for which these firms lack capacity On theother hand the combination of general technologies and intensive workforcedoes not allow these firms to customize services in the same way smaller firmsdo Therefore medium sized firms focus on segments of customers with similarneeds so service process optimisation can be achieved Finally larger firms areable to combine both customisation and process optimisation through thecombination of general use and specialized technologies and workforce Theselarger firms try to offer customers integral services by standardizing earlystages of service delivery and customizing final specifications

Consequently the main hypothesis to be tested is

H1 Operations strategy is closely related to firm size in engineeringconsulting firms

This main hypothesis can be split into the following sub-hypotheses

H1a Small firms tend to follow customer-oriented operations strategies

H1b Medium firms tend to follow process-oriented operations strategies

H1c Larger firms tend to follow service-oriented operations strategies

Dimensions in service operations strategyLiterature on service operations management identifies three basic operationsstrategies according to the firmrsquos focus of activities Therefore serviceindustries can pursue process service or customer-oriented operationsstrategies (see among others Johnston 1994 Haynes and Du Vall 1992 Bowenand Youngdahl 1998 Hart 1995 Desatnik 1994 Berry and Parasuraman

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268

1997 Lusch et al 1996 McCutcheon et al 1994 Tersine and Harvey 1998Collier 1994 1996 Sampson 1996) From a reflective analysis of these studiesnine dimensions configuring the basic service operations strategies wereextracted These are

(1) type of operations layout

(2) pushpull orientation of the service delivery process

(3) degree of process standardisation

(4) number of different services offered

(5) use of information technologies (cost reduction vs service improvement)

(6) back and front office activities relationship

(7) human resources specialisation

(8) degree of customer participation and

(9) new service design and development

Type of operations layout directly influences the way operations are configuredin the service delivery process A process layout tends to organise servicedelivery as a sequential activities process (Bowen and Youngdahl 1998) Onthe opposite side product layout does not imply task sequentiality This leadsto task development with no pre-established order (Johnston 1994) Mixedlayouts in which only a part of the service delivery process is sequential whileother parts are developed according to service specific characteristics are alsoconsidered (Haynes and Du Vall 1992)

Pushpull orientation of the process determines the production philosophy ofthe service delivery Pull oriented service firms initially consider customerneeds when developing service activities Activities do not end until the servicefirm has satisfied perceived customer expectations (Bitran and Hoech 1990Hart 1995) Push oriented service firms undertake important investments inproduction capacity in order to satisfy demand Demand is fostered throughstrong marketing efforts (Tersine and Harvey 1998 Hart 1995) Again mixedpushpull configurations are considered

Degree of service standardisation is referred to as the extent to which taskprocedures are pre-established Therefore it also influences employeesrsquoempowerment (Bowen and Schneider 1985 Mills and Morris 1992)Standardisation intends to minimise variability in the service delivery processso procedures of developing each task are limited (Hart 1996)

The number of different services offers measures the degree ofdiversification of the firm according to the final productsservices delivered(Desatnik 1994) This dimension shows how the firm is oriented towards manyor few customer segments (Lewis and Klein 1984) It also regards how relatedthe final productsservices are so a firm offering two productsservices lineswith few similarities between them is considered to retain a higher degree of

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

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270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

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274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

265

making This vision must be integrated with the firmrsquos strategy and is frequentlyreflected in a formal plan Output of the operations strategy should be a consistentstandard for the decision-making process in order to achieve a competitiveadvantage for the firm (Schroeder 1992 p 2) Operations strategy also feeds backthe firmrsquos corporate strategy (Hayes 1985)

Once the operations strategy concept has been defined the different types ofoperations strategies are to be determined Strategic management as well asorganizational design academicians have analyzed this topic on many occasions(Hambrick 1983 Fahey and Christensen 1986 McGee and Thomas 1986) Thereis a limited number of feasible strategies for each productive configuration (Millerand Friesen 1984 Miller 1986) so strategic models based on productiveconfigurations are generally classified into taxonomies and typologies (Miller andFriesen 1984 Meyer et al 1993) Typologies describe ideal models each onerepresenting a unique combination of organizational attributes (Doty and Glick1994) Hence there might not be any organization that fits perfectly in adetermined ideal model Anyway a firmrsquos identification with one of the idealmodels could imply significant improvements in the organizational performance(Venkatraman 1989 Venkatraman and Prescott 1990)

On the other hand taxonomies do not define ideal models but they classifyorganizations in mutually exclusive and exhaustive groups (Doty and Glick1994) Taxonomies are derived either from multivariate statistical techniques orfrom mere observation (Wheelwright and Hayes 1985) Bozarth and McDermott(1998) review different taxonomies and typologies for productive configurations(see Tables I and II)

Table ITaxonomies of

strategic configurations

Authors DevelopmentLevel ofanalysis Grouping Variables

Stobaugh andTelesio (1983)

Conceptualfrom casestudy

Firmstrategicunit

Three strategictypes low costtechnological andmarketingintensive

Eight dimensionsbased on decisionsabout plant andtechnologymanagement

Wheelwrightand Hayes(1985)

Conceptualfrom fieldwork

Strategic unit Four stages thatdescribe thestrategic role ofOM internallyand externallyneutral andinternal andexternal support

Strategic focustoward OM levelof involvement instrategic decisions

Miller andRoth (1994)

Empiricalfrom 164firms clusters

Productionstrategic unit

Three types ofstrategy riskevaders marketoriented andinnovators

11 competitivepriorities

Source Adapted from Bozarth and McDermott (1998 p 432)

IJSIM133

266

Different studies relate operations strategy to other management variablesHowever firm size is not even considered in many empirical works (Berry et al1991) Moreover empirical models are tested and validated for manufacturingfirms of significantly different sizes without further analyses (see Minor et al1994) For service industries and due to service heterogeneity firm size turnsinto a complex variable to consider in service operations management studiesHence the size variable can be more effectively controlled in single sectorstudies

The relationship between operations strategy and firmrsquos size is supported bythe contingency theory (Lawrence and Lorch 1967) according to whichenvironmental and structural contingencies make some strategies moreeffective than others Therefore if firmrsquos size is a clear structural contingencyit should influence operations strategy in some way Nowadays firmrsquos size as a

Table IITypologies of strategicconfigurations

Authors DevelopmentLevel ofanalysis Grouping Variables

Hayes andWheelwright(1979 1984)

Conceptualfrom casestudy

Productionplant

Four types ofprocesses shopbatch line andflow

Process flowproduct volumeandstandardization

Richardsonet al (1985)

Empiricalfrom a64-firmsample

Firm Six types ofstrategy three ofthem based ontechnology twobased on productcustomization andone based oncosts

Three dimensionsvolume productvariety and degreeof innovation

Hill (1989) Conceptualbased onplantresearch andliteraturereview

Productionplant

Five types ofprocesses projectjob shop line andcontinuous

More than 20aspects aboutproducts marketsproductioninvestment andinfrastructure

Kotha andOrne (1989)

Conceptualpartiallybased onPorter (1980)

Strategic unit Eight types ofstrategy based oncombinations ofthree dimensions

Three dimensionscomplexity of theprocess structureproduct line andorganizationalscope

Ward et al(1994)

Conceptualbased onliteraturereview

Firmstrategicunit

Fourconfigurationsniche marketscope low costand leanproduction

16 dimensionsmeasuring fourareas strategyenvironment andproductioncapabilities

Source Adapted from Bozarth and McDermott (1998 p 433)

The relationshipbetween strategy

and firm size

267

contingent variable is specially considered in studies related to finance andindustrial economics Recent research shows how resources availability limitsRampD investments and acquisition of technology (Poyago-Theotoky 1998Garvey 1994) Therefore firm growth emerges as the key factor to reach newand larger markets (Schutjens and Wever 2000 Van Wissen 2000) Processtechnologies allow firms to produce and serve focused on higher volumedemands Hence larger firms display low degrees of asymmetry in their riskacross recession and expansion states which makes them less sensitive tocredit market conditions (Perez-Quiros and Timmermann 2000) Substitutionof workforce by technology is especially relevant for medium and large firmsbecause of over employment of smaller firms (Smith 1998)

In this context we deduce and suggest the following pattern of behaviour forengineering consulting firms in order to state our hypothesis Smallengineering consulting firms usually tend to focus on a few segments ofcustomers in such a way that service delivery systems are designed tocustomize most service-products by combining general use technologies andintensive workforce These small firms specialize in delivering specific serviceswith a high customer orientation Medium sized firms have larger capacities toserve a wider range of customer segments However acquisition of specializedtechnology is still not available to these firms Such technologies are profitableonly to satisfy larger demands for which these firms lack capacity On theother hand the combination of general technologies and intensive workforcedoes not allow these firms to customize services in the same way smaller firmsdo Therefore medium sized firms focus on segments of customers with similarneeds so service process optimisation can be achieved Finally larger firms areable to combine both customisation and process optimisation through thecombination of general use and specialized technologies and workforce Theselarger firms try to offer customers integral services by standardizing earlystages of service delivery and customizing final specifications

Consequently the main hypothesis to be tested is

H1 Operations strategy is closely related to firm size in engineeringconsulting firms

This main hypothesis can be split into the following sub-hypotheses

H1a Small firms tend to follow customer-oriented operations strategies

H1b Medium firms tend to follow process-oriented operations strategies

H1c Larger firms tend to follow service-oriented operations strategies

Dimensions in service operations strategyLiterature on service operations management identifies three basic operationsstrategies according to the firmrsquos focus of activities Therefore serviceindustries can pursue process service or customer-oriented operationsstrategies (see among others Johnston 1994 Haynes and Du Vall 1992 Bowenand Youngdahl 1998 Hart 1995 Desatnik 1994 Berry and Parasuraman

IJSIM133

268

1997 Lusch et al 1996 McCutcheon et al 1994 Tersine and Harvey 1998Collier 1994 1996 Sampson 1996) From a reflective analysis of these studiesnine dimensions configuring the basic service operations strategies wereextracted These are

(1) type of operations layout

(2) pushpull orientation of the service delivery process

(3) degree of process standardisation

(4) number of different services offered

(5) use of information technologies (cost reduction vs service improvement)

(6) back and front office activities relationship

(7) human resources specialisation

(8) degree of customer participation and

(9) new service design and development

Type of operations layout directly influences the way operations are configuredin the service delivery process A process layout tends to organise servicedelivery as a sequential activities process (Bowen and Youngdahl 1998) Onthe opposite side product layout does not imply task sequentiality This leadsto task development with no pre-established order (Johnston 1994) Mixedlayouts in which only a part of the service delivery process is sequential whileother parts are developed according to service specific characteristics are alsoconsidered (Haynes and Du Vall 1992)

Pushpull orientation of the process determines the production philosophy ofthe service delivery Pull oriented service firms initially consider customerneeds when developing service activities Activities do not end until the servicefirm has satisfied perceived customer expectations (Bitran and Hoech 1990Hart 1995) Push oriented service firms undertake important investments inproduction capacity in order to satisfy demand Demand is fostered throughstrong marketing efforts (Tersine and Harvey 1998 Hart 1995) Again mixedpushpull configurations are considered

Degree of service standardisation is referred to as the extent to which taskprocedures are pre-established Therefore it also influences employeesrsquoempowerment (Bowen and Schneider 1985 Mills and Morris 1992)Standardisation intends to minimise variability in the service delivery processso procedures of developing each task are limited (Hart 1996)

The number of different services offers measures the degree ofdiversification of the firm according to the final productsservices delivered(Desatnik 1994) This dimension shows how the firm is oriented towards manyor few customer segments (Lewis and Klein 1984) It also regards how relatedthe final productsservices are so a firm offering two productsservices lineswith few similarities between them is considered to retain a higher degree of

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

266

Different studies relate operations strategy to other management variablesHowever firm size is not even considered in many empirical works (Berry et al1991) Moreover empirical models are tested and validated for manufacturingfirms of significantly different sizes without further analyses (see Minor et al1994) For service industries and due to service heterogeneity firm size turnsinto a complex variable to consider in service operations management studiesHence the size variable can be more effectively controlled in single sectorstudies

The relationship between operations strategy and firmrsquos size is supported bythe contingency theory (Lawrence and Lorch 1967) according to whichenvironmental and structural contingencies make some strategies moreeffective than others Therefore if firmrsquos size is a clear structural contingencyit should influence operations strategy in some way Nowadays firmrsquos size as a

Table IITypologies of strategicconfigurations

Authors DevelopmentLevel ofanalysis Grouping Variables

Hayes andWheelwright(1979 1984)

Conceptualfrom casestudy

Productionplant

Four types ofprocesses shopbatch line andflow

Process flowproduct volumeandstandardization

Richardsonet al (1985)

Empiricalfrom a64-firmsample

Firm Six types ofstrategy three ofthem based ontechnology twobased on productcustomization andone based oncosts

Three dimensionsvolume productvariety and degreeof innovation

Hill (1989) Conceptualbased onplantresearch andliteraturereview

Productionplant

Five types ofprocesses projectjob shop line andcontinuous

More than 20aspects aboutproducts marketsproductioninvestment andinfrastructure

Kotha andOrne (1989)

Conceptualpartiallybased onPorter (1980)

Strategic unit Eight types ofstrategy based oncombinations ofthree dimensions

Three dimensionscomplexity of theprocess structureproduct line andorganizationalscope

Ward et al(1994)

Conceptualbased onliteraturereview

Firmstrategicunit

Fourconfigurationsniche marketscope low costand leanproduction

16 dimensionsmeasuring fourareas strategyenvironment andproductioncapabilities

Source Adapted from Bozarth and McDermott (1998 p 433)

The relationshipbetween strategy

and firm size

267

contingent variable is specially considered in studies related to finance andindustrial economics Recent research shows how resources availability limitsRampD investments and acquisition of technology (Poyago-Theotoky 1998Garvey 1994) Therefore firm growth emerges as the key factor to reach newand larger markets (Schutjens and Wever 2000 Van Wissen 2000) Processtechnologies allow firms to produce and serve focused on higher volumedemands Hence larger firms display low degrees of asymmetry in their riskacross recession and expansion states which makes them less sensitive tocredit market conditions (Perez-Quiros and Timmermann 2000) Substitutionof workforce by technology is especially relevant for medium and large firmsbecause of over employment of smaller firms (Smith 1998)

In this context we deduce and suggest the following pattern of behaviour forengineering consulting firms in order to state our hypothesis Smallengineering consulting firms usually tend to focus on a few segments ofcustomers in such a way that service delivery systems are designed tocustomize most service-products by combining general use technologies andintensive workforce These small firms specialize in delivering specific serviceswith a high customer orientation Medium sized firms have larger capacities toserve a wider range of customer segments However acquisition of specializedtechnology is still not available to these firms Such technologies are profitableonly to satisfy larger demands for which these firms lack capacity On theother hand the combination of general technologies and intensive workforcedoes not allow these firms to customize services in the same way smaller firmsdo Therefore medium sized firms focus on segments of customers with similarneeds so service process optimisation can be achieved Finally larger firms areable to combine both customisation and process optimisation through thecombination of general use and specialized technologies and workforce Theselarger firms try to offer customers integral services by standardizing earlystages of service delivery and customizing final specifications

Consequently the main hypothesis to be tested is

H1 Operations strategy is closely related to firm size in engineeringconsulting firms

This main hypothesis can be split into the following sub-hypotheses

H1a Small firms tend to follow customer-oriented operations strategies

H1b Medium firms tend to follow process-oriented operations strategies

H1c Larger firms tend to follow service-oriented operations strategies

Dimensions in service operations strategyLiterature on service operations management identifies three basic operationsstrategies according to the firmrsquos focus of activities Therefore serviceindustries can pursue process service or customer-oriented operationsstrategies (see among others Johnston 1994 Haynes and Du Vall 1992 Bowenand Youngdahl 1998 Hart 1995 Desatnik 1994 Berry and Parasuraman

IJSIM133

268

1997 Lusch et al 1996 McCutcheon et al 1994 Tersine and Harvey 1998Collier 1994 1996 Sampson 1996) From a reflective analysis of these studiesnine dimensions configuring the basic service operations strategies wereextracted These are

(1) type of operations layout

(2) pushpull orientation of the service delivery process

(3) degree of process standardisation

(4) number of different services offered

(5) use of information technologies (cost reduction vs service improvement)

(6) back and front office activities relationship

(7) human resources specialisation

(8) degree of customer participation and

(9) new service design and development

Type of operations layout directly influences the way operations are configuredin the service delivery process A process layout tends to organise servicedelivery as a sequential activities process (Bowen and Youngdahl 1998) Onthe opposite side product layout does not imply task sequentiality This leadsto task development with no pre-established order (Johnston 1994) Mixedlayouts in which only a part of the service delivery process is sequential whileother parts are developed according to service specific characteristics are alsoconsidered (Haynes and Du Vall 1992)

Pushpull orientation of the process determines the production philosophy ofthe service delivery Pull oriented service firms initially consider customerneeds when developing service activities Activities do not end until the servicefirm has satisfied perceived customer expectations (Bitran and Hoech 1990Hart 1995) Push oriented service firms undertake important investments inproduction capacity in order to satisfy demand Demand is fostered throughstrong marketing efforts (Tersine and Harvey 1998 Hart 1995) Again mixedpushpull configurations are considered

Degree of service standardisation is referred to as the extent to which taskprocedures are pre-established Therefore it also influences employeesrsquoempowerment (Bowen and Schneider 1985 Mills and Morris 1992)Standardisation intends to minimise variability in the service delivery processso procedures of developing each task are limited (Hart 1996)

The number of different services offers measures the degree ofdiversification of the firm according to the final productsservices delivered(Desatnik 1994) This dimension shows how the firm is oriented towards manyor few customer segments (Lewis and Klein 1984) It also regards how relatedthe final productsservices are so a firm offering two productsservices lineswith few similarities between them is considered to retain a higher degree of

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

267

contingent variable is specially considered in studies related to finance andindustrial economics Recent research shows how resources availability limitsRampD investments and acquisition of technology (Poyago-Theotoky 1998Garvey 1994) Therefore firm growth emerges as the key factor to reach newand larger markets (Schutjens and Wever 2000 Van Wissen 2000) Processtechnologies allow firms to produce and serve focused on higher volumedemands Hence larger firms display low degrees of asymmetry in their riskacross recession and expansion states which makes them less sensitive tocredit market conditions (Perez-Quiros and Timmermann 2000) Substitutionof workforce by technology is especially relevant for medium and large firmsbecause of over employment of smaller firms (Smith 1998)

In this context we deduce and suggest the following pattern of behaviour forengineering consulting firms in order to state our hypothesis Smallengineering consulting firms usually tend to focus on a few segments ofcustomers in such a way that service delivery systems are designed tocustomize most service-products by combining general use technologies andintensive workforce These small firms specialize in delivering specific serviceswith a high customer orientation Medium sized firms have larger capacities toserve a wider range of customer segments However acquisition of specializedtechnology is still not available to these firms Such technologies are profitableonly to satisfy larger demands for which these firms lack capacity On theother hand the combination of general technologies and intensive workforcedoes not allow these firms to customize services in the same way smaller firmsdo Therefore medium sized firms focus on segments of customers with similarneeds so service process optimisation can be achieved Finally larger firms areable to combine both customisation and process optimisation through thecombination of general use and specialized technologies and workforce Theselarger firms try to offer customers integral services by standardizing earlystages of service delivery and customizing final specifications

Consequently the main hypothesis to be tested is

H1 Operations strategy is closely related to firm size in engineeringconsulting firms

This main hypothesis can be split into the following sub-hypotheses

H1a Small firms tend to follow customer-oriented operations strategies

H1b Medium firms tend to follow process-oriented operations strategies

H1c Larger firms tend to follow service-oriented operations strategies

Dimensions in service operations strategyLiterature on service operations management identifies three basic operationsstrategies according to the firmrsquos focus of activities Therefore serviceindustries can pursue process service or customer-oriented operationsstrategies (see among others Johnston 1994 Haynes and Du Vall 1992 Bowenand Youngdahl 1998 Hart 1995 Desatnik 1994 Berry and Parasuraman

IJSIM133

268

1997 Lusch et al 1996 McCutcheon et al 1994 Tersine and Harvey 1998Collier 1994 1996 Sampson 1996) From a reflective analysis of these studiesnine dimensions configuring the basic service operations strategies wereextracted These are

(1) type of operations layout

(2) pushpull orientation of the service delivery process

(3) degree of process standardisation

(4) number of different services offered

(5) use of information technologies (cost reduction vs service improvement)

(6) back and front office activities relationship

(7) human resources specialisation

(8) degree of customer participation and

(9) new service design and development

Type of operations layout directly influences the way operations are configuredin the service delivery process A process layout tends to organise servicedelivery as a sequential activities process (Bowen and Youngdahl 1998) Onthe opposite side product layout does not imply task sequentiality This leadsto task development with no pre-established order (Johnston 1994) Mixedlayouts in which only a part of the service delivery process is sequential whileother parts are developed according to service specific characteristics are alsoconsidered (Haynes and Du Vall 1992)

Pushpull orientation of the process determines the production philosophy ofthe service delivery Pull oriented service firms initially consider customerneeds when developing service activities Activities do not end until the servicefirm has satisfied perceived customer expectations (Bitran and Hoech 1990Hart 1995) Push oriented service firms undertake important investments inproduction capacity in order to satisfy demand Demand is fostered throughstrong marketing efforts (Tersine and Harvey 1998 Hart 1995) Again mixedpushpull configurations are considered

Degree of service standardisation is referred to as the extent to which taskprocedures are pre-established Therefore it also influences employeesrsquoempowerment (Bowen and Schneider 1985 Mills and Morris 1992)Standardisation intends to minimise variability in the service delivery processso procedures of developing each task are limited (Hart 1996)

The number of different services offers measures the degree ofdiversification of the firm according to the final productsservices delivered(Desatnik 1994) This dimension shows how the firm is oriented towards manyor few customer segments (Lewis and Klein 1984) It also regards how relatedthe final productsservices are so a firm offering two productsservices lineswith few similarities between them is considered to retain a higher degree of

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

268

1997 Lusch et al 1996 McCutcheon et al 1994 Tersine and Harvey 1998Collier 1994 1996 Sampson 1996) From a reflective analysis of these studiesnine dimensions configuring the basic service operations strategies wereextracted These are

(1) type of operations layout

(2) pushpull orientation of the service delivery process

(3) degree of process standardisation

(4) number of different services offered

(5) use of information technologies (cost reduction vs service improvement)

(6) back and front office activities relationship

(7) human resources specialisation

(8) degree of customer participation and

(9) new service design and development

Type of operations layout directly influences the way operations are configuredin the service delivery process A process layout tends to organise servicedelivery as a sequential activities process (Bowen and Youngdahl 1998) Onthe opposite side product layout does not imply task sequentiality This leadsto task development with no pre-established order (Johnston 1994) Mixedlayouts in which only a part of the service delivery process is sequential whileother parts are developed according to service specific characteristics are alsoconsidered (Haynes and Du Vall 1992)

Pushpull orientation of the process determines the production philosophy ofthe service delivery Pull oriented service firms initially consider customerneeds when developing service activities Activities do not end until the servicefirm has satisfied perceived customer expectations (Bitran and Hoech 1990Hart 1995) Push oriented service firms undertake important investments inproduction capacity in order to satisfy demand Demand is fostered throughstrong marketing efforts (Tersine and Harvey 1998 Hart 1995) Again mixedpushpull configurations are considered

Degree of service standardisation is referred to as the extent to which taskprocedures are pre-established Therefore it also influences employeesrsquoempowerment (Bowen and Schneider 1985 Mills and Morris 1992)Standardisation intends to minimise variability in the service delivery processso procedures of developing each task are limited (Hart 1996)

The number of different services offers measures the degree ofdiversification of the firm according to the final productsservices delivered(Desatnik 1994) This dimension shows how the firm is oriented towards manyor few customer segments (Lewis and Klein 1984) It also regards how relatedthe final productsservices are so a firm offering two productsservices lineswith few similarities between them is considered to retain a higher degree of

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

269

productservice amplitude than a firm offering many related productsserviceslines

Use of information technology (IT) is considered according to twoparameters On one side IT can be used in order to reduce costs through forinstance substitution of workforce by technology (Berry 1995) On the otherside IT investment can be made for final service improvement for instancethrough simulation technology to verify service quality and reliability

The relationship between front and back office activities is referred to asphysical location as well as to workforce information exchange Such arelationship directly affects customer perception of service delivery When bothactivities are physically separated customer effort to obtain information aboutback office activities is higher and will be moderated by the mechanisms ofinformation exchange between both front and back office activities (Price et al1995 Lusch et al 1996) However physical closeness of both activitiesincreases information effectiveness and reliability for the customer (Chase1981)

Degree of workforce specialization intends to determine personnelversatility when accomplishing various and different activities Hence the staffcan be prepared either to undertake one or few specific tasks or else to carryout any activity totally or partially (George 1990 McCutcheon et al 1994Tersine and Harvey 1998) A more versatile workforce responds more quicklyand efficiently to environmental changes while highly specialized personneltend to be more rigid (Ashford and Humphrey 1993 Schneider and Bowen1993 Bowen and Lawler III 1995) This fact is especially relevant for thoseservice firms that have IT with a high degree of obsolescence at the basis oftheir activity

Degree of customer contact and participation relates to the level ofinteraction between customer and service delivery process Such interactioncan be utilised either to transfer some activities to customers in order to reduceprocess costs or to customise service delivery (Bolton and Drew 1991 Cadotteand Turgeon 1988) In the first case the customer acts as staff by developingtasks of the service delivery process (Lampel and Mintzberg 1996) In thesecond case the customer exchanges information with the service deliveryactivities which will be developed in the firm (Collier 1994 1996 Gouillart andSturdivant 1994)

Finally intensity of design and development of new services refers towhether or not the firm sets new service delivery procedures through new taskorganisations and investments in specific resources Therefore it is possible toknow through this dimension the firmrsquos intention to innovate in new processesand services (Bowen and Youngdahl 1998 Berry et al 1991 Sampson 1996)

MethodologySample and the sampling procedureThis study was conducted in the context of engineering consulting firms inSpain The previously stated dimensions of operations strategy are of

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

270

particular importance in this service sector Three firm types (civil industrialand environmental) were considered covering most activities of engineeringconsulting firms Table III shows the main activities of every type

According to the Spanish Ministry of Industry (1998) the nature of the workundertaken such firms in Spain is determined by the following intermediariesrsquopatterns

Operations are design to primarily satisfy internal demand Only 10 percent of average turnover of the sector comes from outside markets Morethan 55 per cent of turnover derives from public administration projects

Intermediate demand plays a fundamental role as it allows constructorsto act as intermediate suppliers for final demands of infrastructures andequipment

It is a knowledge-intensive sector Fixed workforce costs representabout 65 per cent of all fixed costs of the sector due to the need to hireprofessional staff

Most projects performed are prototypes Hence production processesare not easily industrialised

Investments are written off in short periods of time especially forcomputer equipment that has to be continually renewed in order toremain competitive

These firms tend to centralise resources for service delivery Onlymultinational firms have offices abroad for commercial purposes this iswhy no distinction was made between overall firm size and averageoffice size (Table IV shows the operations patterns of these firmsaccording to the Spanish Ministry of Industry (1998))

Initially a copy of the questionnaire was sent to ten firms representing everyturnover and activity group as a pre-test They were asked not to answer thequestionnaire but to remark on all doubts or possible mistakes detected Only

Table IIIMain activities ofengineering consultingfirms

Main activities of engineering consulting firmsCivil Industrial Environmental

Transportation andcommunications

Hydrology andhydraulics

Geology and geodeticsAgronomy fishing and

cattleTown planning and

architecture

EnergyMiningIndustrial plantsChemical plants

Environmentprotection

Management and useof natural resources

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

271

small syntactic changes were made but none of the firms remarked ondifficulties for concept understanding or misuse

The data for the empirical investigation of the model were obtained througha field study in Spain Data were collected from participating firmspredominantly via e-mail to the operations managersexecutives or equivalenthaving a high level of responsibility in their companies The SpanishAssociation of Spanish Engineering Consulting Firms (Tecniberia) provided allinformation about addresses and firm names Initially and in order to attractthe maximum number of participating firms an e-mail was sent to all firmsregistered in Tecniberia soliciting their participation while stressing theimportance of the study The researchers considered a total of 129 firms with aturnover higher than 150000 euros As a second step a copy of thequestionnaire was sent to all of them A total of 12 firms requested thequestionnaire to be sent via ordinary mail with a 100 per cent response rateNon-respondents were contacted as much as three times in order to get them toparticipate in the study Of these usable data were collected from a total of 71firms (55 per cent) The questionnairersquos original language was Spanish Table Vshows a description of the sample according to the five turnover categories

Comparing the sample distribution with the sector as a whole no significantdiscrepancies were observed Most of the firmsrsquo turnover ranges from 300000to 3000000 euros (60 per cent approximately of the total sample) On the otherhand civil engineering firms represent the higher percentage of the sample (49

Table IVOperations patterns

(1) Customer needs and wishes detection for project configuration(2) Feasibility and environmental impact studies(3) Information exchange with customer for final technical and technological specifications(4) Plans and budgets elaborations(5) Project contract development with final specifications and project termination dates(6) Project development(7) Project delivery to customer(8) Post-sale services

Source Spanish Ministry of Industry (1998)

Table VSample distribution(turnover and group

activity)

Group of activityCivil Industrial Environmental

Cat Turnover (euros) Firms Per cent Firms Per cent Firms Per cent

1 lt 300000 7 200 3 250 7 2922 300000-600000 11 314 3 250 7 2923 600001-3000000 11 314 4 333 8 3334 3000001-6000000 3 86 0 00 2 835 gt 6000000 3 86 2 167 0 00

Total 35 1000 12 1000 24 1000

Source Own processing

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

272

per cent) compared to 17 per cent of industrial engineering and 34 per cent ofenvironmental engineering Table VI shows the turnover distribution of thefirms according to Spanish Ministry of Industry (1998)

MeasuresQuestions related to operations strategy are based on a five-point Likert scaleEvery one of the nine dimensions of operations strategy was clearlyrepresented in differentiated blocks in the questionnaire Control questionswere included in order to verify internal consistency of the questionnaire Forevery dimension a set of items was included in the questionnaire Questionsrelated to service strategies were developed after an extensive literature reviewand inputs from a panel of service managers For every item a Likert scaleranging from 1 (completely agree) to 5 (completely disagree) was used tomeasure agreement of the operations managersexecutives with such items (seeAppendix)

Partial indicators were developed in order to identify the firm positioning forevery operations strategy dimension Such indicators combine the differentitems corresponding to each dimension in order to measure the firmsrsquo trends Aglobal indicator was developed to measure operations strategy according tosuch trends taking into account that the indicatorrsquos rank should flow between 1and 5 values in order to be consistent with the Likert scale previously used Soit was designed as follows

Ebn ˆ 5permilhellipPb

iˆa Ain iexclPd

iˆc Aindagger Dagger jhellipPd

iˆc Ain iexcl 5Pb

iˆa Ainj Dagger 1Špermiljhellip5

Pbiˆa Ain iexcl

Pdiˆc Aindaggerj Dagger jhellip

Pdiˆc Ain iexcl 5

Pbiˆa Ainj Dagger 1Š

where

Ebn = the indicator

Ain = the score obtained in question i of block n in the questionnaire Rank[ab] represents questions scoring towards one of the trends in each block

Rank [cd] represents questions scoring towards opposite extremes of rank [ab]in each block

Hence hellipPd

iˆc Ain iexcl 5Pb

iˆa Aindagger represents the smallest reachable valuesupposing that one firm scores the highest (score 5) in all questions for one ofthe trends and the lowest (score 1) in all questions of the opposite trend On theother hand hellip5

Pbiˆa Ain iexcl

Pdiˆc Aindagger represents the smallest reachable value

for a firm positioned at one extreme scoring the lowest (score 1) and the highest

Table VIDistribution inpercentage ofengineering consultingcompanies in Spain

Turnover (euros) lt300000300000-600000

600001-3000000

3000001-6000000 gt6000000

Percentage of firms 273 323 272 6 72

Source Spanish Ministry of Industry (1998)

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

273

(score 5) for the opposite trends Once the extremes and possible intermediatevalues have been obtained the indicator transforms this rank in a scale from 0to 5 by adding to the value obtained the smallest reachable value plus 1 Thevalue obtained is finally divided by the highest reachable value adding thelowest value plus 1 in order make the scale positive Finally the obtained valueis multiplied by 5 to transform it to the 0 to 5 scale

Partial indicators of the nine dimensions of operations strategy wereobtained so combining these partial indicators into a global indicator firms areclassified according to the operations strategy they pursue Such indicatorintends to resume the multidimensional nature of operations strategyTherefore it is possible to know every firmrsquos positioning in or near one of thethree basic strategies previously defined

Inter-item analysis was used to check scales for internal consistency orreliability Specifically Cronbachrsquos reliability coefficient (alpha) is calculatedfor each scale (dimension) as recommended by empirical research in operationsby many researchers (Flynn et al 1995 Swamidass and Newell 1987 Smithand Reece 1999) Cronbachrsquos alphas and trends for every dimension accordingto the indicator values are shown in Table VII

Usually a value of 07 in the Cronbachrsquos alpha is considered as adequate inorder to ensure reliability of the internal consistency of the questionnaire(Nunnally 1978) However a margin of 05 to 06 is generally consideredadequate for exploratory work (Nunnally 1978 Srinivasan 1985) Constructvalidation is a process of demonstrating that an empirical measure correspondsto the conceptual definition of a construct (Schwab 1980) Consequently threetypes of validity can be established nomological or theoretical validity verticalvalidity and horizontal or criterion-related validity We can argue that themeasurement instrument establishes the basis for nomological or theoreticalvalidity since all items are developed through an extensive review of the

Table VIIOperations strategy

dimensions

Operations strategy dimension Cronbachrsquos alpha Value near 0 Value near 5

I Type of operations layout 05981 Fix MovingII Push andor pull orientation of the

service delivery process 06530 Pull PushIII Degree of process standardisation 06844 Low HighIV Number of different services offered 06240 Narrow BroadV Use of information technologies (cost

reduction vs service improvement)06775 Service

improvingCostreduction

VI Back office and front officeinterrelationship 08826 Close Separate

VII Human resources specialisation 06310 Versatile RigidVIII Degree of customer participation 07580 Cost

reductionServiceadaptation

IX New service design anddevelopment 09331 Low High

Source Own processing

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

274

service operations strategy body of research Factor analysis was used to checkunidimensionality of scales which provides evidence of a single latentconstruct (Flynn et al 1995) Cronbachrsquos alpha values address vertical validitywhich describes the extent to which a scale represents its construct Evidenceof criterion-related validity is presented through the Browne and Cudeck (1993)cross-validation index for covariance structure modelling Index value for thisresearch is 0642 which indicates a high probability that the model results areconsistent with population parameters Table VIII shows the definition of theservice operations strategies according to the nine basic dimensions

ResultsAn initial scatterplot (see Figure 1) shows the spread of firms along the fiveoperations strategies considered Strategies are shown in a continuum alongthe possible values of the global indicator This continuum lets us observe howclose firms are according to the operations strategy pursued so firms includedin a determined category with high values are closer to those firms with lowvalues in the next category Three groups can be identified at a first glanceFirst a group of seven firms score values from 0 to 1 in operations strategywhich means they pursue a customer oriented strategy or similar according tothe previous nine strategy dimensions and the value of the final indicator Atotal 26 firms pursue service oriented or similar strategies scoring values from1 to 3 Finally a group of 28 firms are closely pursuing a process oriented orsimilar strategy by scoring from 3 to 5

An X-Y plot of operations strategy vs firmrsquos turnover lets us see how firmsare distributed along the different strategies according to size As we canobserve firms with the highest and lowest turnover tend to score between thevalues 1 and 3 while medium sized firms tend to score between 4 and 5

After an initial approximation to data distribution a multiple regressionanalysis was performed in order to test the main hypothesis and each of thesub-hypotheses Table IX shows the P-value in the previous ANOVA analysisto be less than 001 so there is a statistically significant relationship betweenthe variables at the 99 per cent confidence level The output shows the resultsof fitting a multiple linear regression model to describe the relationshipbetween operations strategy and two independent variables The equation ofthe fitted model is

Operations strategy= 00604618 + 226107Turnoverndash 0420298Squared_Turnover

The R-squared statistic indicates that the model as fitted explains 31646 percent of the variability for the operations strategy variable (see Table IX) Theadjusted R-squared statistic is 296356 per cent The standard error of theestimate shows the standard deviation of the residuals to be 0979206 Themean absolute error (MAE) of 0837237 is the average value of the residualsThe Durbin-Watson (DW) statistic tests the residuals to determine if there isany significant correlation based on the order in which they occur in the data

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

275

Table VIIIDefinition of the

service operationsstrategies according to

the nine basicdimensions

Dimension Process oriented Customer oriented Service oriented

I Process layout Serviceprocess activities aremainly sequentialService location isusually not movableMain process goal isspace optimisationWorkforce is highlyspecialised

Product (service)layout Service deliverytasks are neithersequential nor fixedlocated Tasksallocation is flexible

Layout is hybridalthough usuallyprocess orientedService delivery taskstend to be sequentialthough task variabilityleads to a significantdegree ofcustomisation throughchanges in location

II High investments incapacity satisfy largedemands supported bystrong marketingefforts Process is pushoriented

Service deliveryprocess is pulloriented Customersatisfaction drivesservice deliveryprocess

Operations are pulloriented Processcapacity tends to below Only smalldemands can besatisfied

III Most activities arestandardized There isone or few ways toachieve servicedelivery tasks Taskvariability is to beminimised Workprocedures are pre-established

Most service deliveryactivities arecustomised There arefew pre-establishedprocedures to developservice delivery tasks

Most process activitiesare customizedalthough customisationrange is small Thereare many differentways to accomplishtasks Pre-definedgeneral proceduresdrive service delivery

IV Range of differentservices offered isshort and services areusually closely related

Differentiation of theservices provided ishigh Every servicedelivered can beconsidered asunique

There are few differentservices offered all ofthem being closelyrelated Diversificationis low

V New technologiesinvestments areaccomplished in orderto reduce costsWorkforce tends to bereplaced by technology

Use of and investmentin new technologieshas as the main goalto increase customersatisfaction

Use of and investmentin new technologiestends to balance costreduction andcustomisation

VI Back and front officeactivities arephysically separated inorder to increaseefficiency

Back and front officeactivities arephysically integratedby sharing personnelCustomer gets on lineinformation aboutservice delivery

Back and front officeactivities tend to bephysically separatedalthough they sharepersonnel Suchseparation is usuallydue to spaceoptimisation

(continued)

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

276

Since the DW value is less than 14 there may be some indication of serialcorrelation However after plotting the residuals versus row order no patterncould be determined

In determining whether the model could be simplified the highest P-value onthe independent variables is 00000 belonging to the turnover variable Sincethe P-value is less than 001 the highest order term is statistically significant atthe 99 per cent confidence level Figure 1 shows also the fitted line of this model

Table VIII

Dimension Process oriented Customer oriented Service oriented

VII Workforce is highlyspecialized Versatilityis low Every workeraccomplishes one offew very specific tasks

Personnel are nothighly specialised buttrained for versatilityAnybody must be ableto develop any tasktotally or partially

Personnel are veryspecialized Howeverthey are trained forversatility and fastadaptation toorganisational andtechnology change

VIII Low customer contactCustomer participatesin the service processonly to reduce costsfor the firm

High degree ofcustomer contact inorder to customiseservice

Degree of customercontact is highCustomer participationin the service deliveryprocess is high inorder to customizeservice

IX Design anddevelopment of newservices and processesis not stronglysupported

High intensity indesign anddevelopment of newservice New servicesand processes arebeing developedcontinually

Low intensity indesign anddevelopment of newservices and processes

Source Own processing

Figure 1Plot of operationsstrategy with predictedvalues

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

277

As it can be observed an inverted U form configures the fitted model lineaccording to the quadratic equation

ConclusionsAccording to the results there is a significant relationship between operationsstrategy and size in consulting engineering firms Small firms tend to followcustomer-oriented operations strategies medium firms tend to follow process-oriented operations strategies and larger firms tend to follow service-orientedoperations strategies So the main hypothesis and the three sub-hypotheses arepositively contrasted for engineering consulting firms Hence we believe thatthe results presented in this study provide valuable information related to themanagement of service operations Even though the current research wasexploratory in nature it presented a better understanding of managementissues related to a determined service industries size

Also a pattern for the life cycle of consulting engineering firms can beextracted from the results Consequently increases in firmsrsquo capacity use oftechnology and customer segments seem to be the three key factors foroperations strategy changes and flexibility in this type of service industrySmall engineering consulting firms perform customized and flexible operationsstrategies When they grow standardised and more rigid operations strategiesare implemented Finally larger firms balance both flexibility andstandardisation in the service delivery system through higher investments intechnology and human resources

Table IXMultiple regression

analysis

Dependent variable operations strategyParameter Estimate Standard error T statistic P-value

Constant 00604618 0535823 00112839 09105Turnover 226107 0423928 533362 00000Turnover^2 ndash0420298 00751008 ndash559645 00000

Analysis of varianceSource Sum of squares Df Mean square F-ratio P-value

Model 301864 2 150932 1574 00000Residual 652014 68 0958844Total (corr) 953878 70

NotesR-squared = 31646 percentR-squared (adjusted of df) = 296356 percentStandard error of est = 0979206Mean absolute error = 0837237Durbin-Watson statistic = 0569112

Source Own processing

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

278

The conclusions of this study are also relevant to practitioners not only foroperative decisions such as staffing training and scheduling but also for thosestrategic decisions that position the firm in a determined servicemarketHence decisions related to firmrsquos growth should be closely attached to thoserelated to process technology investments in order to be competitivePractitioners should also consider that the firmrsquos operations strategy definesthe way firms are going to manage the service delivery process So acquisitionof new process technology is going to modify the way the firm servescustomers Moreover it can also change focusing patterns on customersegments Therefore target segments can differ according to firm size orelsewhere the same customer segments may be served in a different way byfirms of different sizes A competitive advantage can be obtained byidentifying the preferred service delivery system for customers

Even though this paper presents interesting results related to servicemanagement the study contains limitations which should be dealt with infuture research projects Now we discuss some of those limitations and providedirections for future research projects

The current study implicitly assumes that the service customer and process-oriented strategies are a precise classification Another related issue involvesthe selection of the nine dimensions as classification scheme for analysis Asmentioned earlier in the paper service management literature contains anumber of typologies and taxonomies However there is not enough empiricalsupport for the proposed concepts Therefore future research should be directedtowards empirically testingvalidating the proposed ideas in different servicesectors With respect to the current study itself a few issues are of concern Forexample since we developed the 53-item questionnaire based on serviceoperations literature it is possible that certain other important operationsmanagement issues were ignored

Direction for future researchThe findings of this study answer some of the questions about therelationship between service operations strategy and size It has beenobserved that firm size affects operations strategies significantly Thisresearch also suggests the importance of concentrating on a few appropriatestrategies rather than implementing all the available ones One of the areasof future research is the investigation of the appropriateness of an individualstrategy or a combination of strategies that may benefit a particular serviceindustry Recommendations can be made to implement a group of strategiescategorized by different classes and sizes of industry these will be asignificant contribution to the literature on operations strategyAdditionally significant control variables should be identified in order todevelop new models that moderate the relationship between size andoperations strategy In addition the application of this model to differentservice sectors remains to be tested

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

The relationshipbetween strategy

and firm size

279

As mentioned before the current study contains several limitations but atthe same time provides empirical analysis of some important service operationsmanagement issues We hope that this study although exploratory in naturewould encourage others to reconsider generally accepted concepts andhopefully motivate them to undertake empirical service management researchprojects in different service sectors

References

Abernathy W and Corcoran J (1983) ` Relearning from the old masters lessons of the Americansystem of manufacturingrsquorsquo Journal of Operations Management Vol 3 No 4 pp 155-67

Anderson JC Cleveland G and Schroeder RG (1989) ` Operations strategy a literaturereviewrsquorsquo Journal of Operations Management Vol 8 No 2 pp 1-26

Andrews KR (1971) The Concept of Corporate Strategy Irwin Homewood IL

Argyris C (1985) Strategy Change and Defensive Routines Pitman Publishing London

Ashford BE and Humphrey RH (1993) ` Emotional labor in service roles the influence ofidentitiesrsquorsquo Academy of Management Review Vol 18 No 1 pp 88-115

Berry LL (1995) On Great Service A Framework for Action The Free Press New York NY

Berry LL and Parasuraman A (1997) ` Listening to the customer ndash the concept of a service-quality information systemrsquorsquo Sloan Management Review Vol 38 No 3 pp 65-76

Berry W Bozarth C Hill T and Klompmaker J (1991) `Market segmentation analysis informulating operations analysisrsquorsquo Journal of Operations Management Vol 10 pp 363-87

Bitran GR and Hoech J (1990) `The humanization of service respect at the moment of truthrsquorsquoSloan Management Review Vol 31 No 2 Winter pp 89-96

Bolton RN and Drew JH (1991) `A multistage model of customerrsquos assesment of servicequality and valuersquorsquo Journal of Consumer Research Vol 17 pp 375-84

Bowen DE and Lawler EE III (1995) ` Empowering service employeesrsquorsquo Sloan ManagementReview Summer

Bowen DE and Schneider B (1985) ` Boundary spanning role employees and the serviceencounter some guidelines for management researchrsquorsquo in Czepiel JL Soloman MR andSurprenanCF (Eds) The Service Encounter Lexington Books Lexington MA

Bowen DE and Youngdahl WE (1998) ` `Leanrsquo service in defense of a production-lineapproachrsquorsquo International Journal of Service Industry Management Vol 9 No 3 pp 207-25

Bozarth C and McDermott C (1998) ` Configurations in manufacturing strategy a review anddirections for future researchrsquorsquo Journal of Operations Management Vol 16 pp 427-39

Browne M and Cudeck R (1993) Alternative Ways of Assessing Model Fit Kluwer PublishingDordrecht

Buffa ES (1984) Meeting The Competitive Challenge Dow-Jones-Irwin Homewood IL

Cadotte ER and Turgeon N (1988) ` Dissatisfiers and satisfiers suggestions for consumercomplaints and complimentsrsquorsquo Journal of Consumer Satisfaction Dissatisfaction andComplaining Behaviour Vol 1 pp 74-79

Chandler A (1991) Scale and Scope The Dynamics of Industrial Capitalism Harvard UniversityPress Cambridge MA

Chase RB (1981) ` The customer contact approach to services theoretical bases and practicalextensionsrsquorsquo Operations Research Vol 29 No 4

Clark KB (1996) ` Competing through manufacturing and the new manufacturing paradigm ismanufacturing strategy passeAcircrsquorsquo Production and Operations Management Vol 5 No 1pp 42-58

IJSIM133

280

Collier DA (1994) The Service-Quality Solution Using Service Management to Gain CompetitiveAdvantage Irwin Homewood IL

Collier DA (1996) ` Tight and loose comprehensive customer contact (3C) plansrsquorsquo Advances inService Marketing and Management JAI Press Greenwich CT Vol 5 pp 153-68

Desatnik R (1994) `Managing customer service for the 21st centuryrsquorsquo Journal for Quality andParticipation Vol 17 pp 30-6

Dess G and Davis PS (1984) ` Porterrsquos (1980) generic strategies as determinants of strategicgroup membership and organizational performancersquorsquo Academy of Management JournalVol 27 pp 467-88

Doty H and Glick W (1994) ` Typologies as unique form of theory building toward improvedunderstanding and modellingrsquorsquo Academy of Management Review Vol 19 No 2 pp 230-51

Ettlie JE (1995) `Product-process development integration in manufacturingrsquorsquo ManagementScience Vol 41 No 7 pp 1224-37

Fahey L and Christensen HK (1986) ` Evaluating the research on strategy contextrsquorsquo Journal ofManagement Vol 12 No 2 pp 167-83

Ferdows K and De Meyer A (1990) ` Lasting improvements in manufacturing performance insearch of a new theoryrsquorsquo Journal of Operations Management Vol 9 No 2 pp 168-84

Flynn B Sakakibara S Schroeder R Bates K and Flynn J (1995) ` Empirical researchmethods in operations managementrsquorsquo Journal of Operations Management Vol 9 No 2pp 250-84

Garvey GT (1994) ` Should corporate managers maximize firm size or shareholder wealth Atheory of an optimal trade-offrsquorsquo Journal of the Japanese and International Economies Vol 8No 3 pp 343-52

George W (1990) ` Internal marketing and organizational behavior a partnership in developingcustomer-conscious employees at every levelrsquorsquo Journal of Business Research Vol 20pp 63-70

Gouillart F and Sturdivant F (1994) ` Spend a day in the life of your customersrsquorsquo HarvardBusiness Review January-Februarypp 116-25

Hambrick DC (1983) ` Some tests of the effectiveness and functional attributes of Miles andSnowrsquos strategic typesrsquorsquo Academy of Management Journal Vol 1 pp 5-25

Hart CWL (1995) `Mass customization conceptual underpinnings opportunities and limitsrsquorsquoInternational Journal of Service Industry Management Vol 6 No 2 pp 36-45

Hart CWL (1996) `Made to orderrsquorsquo Marketing Management Vol 5 pp 11-23

Hayes RH (1985) ` Strategic planning ndash forward in reversersquorsquo Harvard Business Review March-April pp 111-19

Hayes RH and Schmenner RW (1978) ` How should you organize manufacturingrsquorsquo HarvardBusiness Review Vol 56 No 1 pp 105-18

Hayes RH and Wheelwright SC (1979) ` Link manufacturing process and product life cyclesrsquorsquoHarvard Business Review Jan-Feb pp 133-40

Hayes RH and Wheelwright SC (1984) Restoring Our Competitve Edge Competing throughManufacturing John Wiley amp Sons New York NY

Haynes RM and Du Vall PK (1992) ` Service quality management a process controlapproachrsquorsquo International Journal of Service Industry Management Vol 3 No1 pp 14-24

Heizer J and Render B (1996) Production and Operations Management Strategic and TacticalDecisions Prentice Hall Englewood Cliffs NJ

Herbert TT (1984) ` Strategy and multinational organization structure an interorganizationalrelationship perspectiversquorsquo Academy of Management Review Vol 9 pp 259-71

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Hill T (1989) Manufacturing Strategy Text and Cases Irwin Homewood IL

Johnston R (1994) ` Operations from factory to service managementrsquorsquo International Journal ofService Industry Management Vol 5 No 1 pp 49-63

Kotha S and Orne D (1989) ` Generic manufacturing strategies a conceptual synthesisrsquorsquoStrategic Management Journal Vol 10 pp 211-31

Lawrence PR and Lorsch JW (1967) Organization and Environment Harvard UniversityPress Boston MA

Lewis RC and Klein DM (1984) Taking Off on Service Intangibles Theoretical and PracticalImplications for Marketing Service Workshop on Research in Service Businesses InstitutdrsquoAdministration des EntreprisesAix-en-Provence

Lusch R Boyt T and Schuler D (1996) ` Employees as customers the role of social controlsand employee satisfaction in developing patronagersquorsquo Journal of Business Research Vol 35pp 239-52

McCutcheon DM Raturi AS and Meredith JR (1994) `The customisation-responsivenesssqueezersquorsquo Sloan Management Review Winter pp 89-99

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Miller D (1981) ` Toward a new contingency approach the search for organizational gestaltsrsquorsquoJournal of Management Studies Vol 18 pp 1-26

Miller D (1986) ` Configurations of strategy and structure towards a synthesisrsquorsquo StrategicManagement Journal Vol 7 pp 233-49

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Miller S and Rogers D (1956) Manufacturing Policy Irwin Homewood IL

Mills J Neely A Platts K and Gregory M (1998) `Manufacturing strategy a pictorialrepresentationrsquorsquo International Journal of Operations amp Production Management Vol 18No 11 pp 1067-85

Mills PK and Morris JH (1992) ` Some moderating effects of client-interaction need onperceived technology and structure in service providersrsquo tasksrsquorsquo International Journal ofService Industry Management Vol 3 No 1 pp 4-13

Minor III ED Hensley RL and Wood Jr D (1994) `A review of empirical manufacturingstrategy studiesrsquorsquo International Journal of Operations amp Production ManagementVol 14 No 1 pp 5-25

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Spanish Ministry of Industry (1998) El Sector de la Ingenieria Civil en EspanAuml a Ministerio deFomento EspanAumla

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and firm size

283

Swink M and Way MH (1995) `Manufacturing strategy propositions current researchrenewed directionsrsquorsquo International Journal of Operations amp Production ManagementVol 15 No 7 pp 4-26

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Appendix Set of items used to measure operations strategy dimensions for servicemanagement

Block AI LayoutAspects of a fixed layout

(1) Service delivery activities are performed in a pre-established and fixed place

(2) Production resourcesare sequentially located

(3) Resources for service delivery are located in order to optimise space and maximiseefficiency

(4) Downstream tasks are never performed until upstream tasks are over

(5) Every worker is assigned to an exclusive task

(6) System efficiency goals have priority when designing service delivery process

Aspects of a movable layout

(7) Service delivery activities are performed where it is more convenient for the customer

(8) Production resourcescan move to those places where service is delivered

(9) Resources for service delivery are located in order to optimise customer satisfaction andfinal service delivery

(10) Workers assignation is made on a rotation basis

(11) Workers perform different tasks in the same shift

(12) Customer satisfaction goals are to have priority when designing servicedelivery process

Block AII Pushpull orientationPush orientation

(13) Important marketing efforts are made in order to attract new customers

(14) A crucial marketing goal is that customer is delivered as much services as possible

(15) Production output is always maximised

IJSIM133

284

Pull orientation

(16) Important service delivery efforts for improvement are made in order to increase

customersrsquo satisfaction

(17) A crucial marketing goal is that customer is satisfied

(18) Customer satisfaction is more important than output optimisation

Block AIII Level of standardisation

(19) Service delivery system is designed so there is one or a few ways to perform everytask

(20) Variability is continually decreasedalong the service delivery process

(21) Most work proceduresare pre-established and cannot be modified

(22) Empowerment degree is very low

(23) All incidents not prevented in the work procedures must be communicated to a superiorfor resolution

(24) There is a proceduresbook which is known by all workers

(25) Most service delivery activities are oriented towards service customisation

Block AIV Different services offered

(26) The firm offers a wide range of different services

(27) All offered services are customised

(28) New services are continually offered to customers

(29) The firm delivers one of few very specialised services

(30) Services are delivered to satisfy one or a few small customer segments

Block AV Use of information technologies

(31) Acquisition of information technologies is oriented towards costs reduction

(32) Workforce is replaced by new technologies when possible

(33) Customers can send or receive information about service delivery through information

technologies such as Internet EDI WAP etc

(34) Acquisition of information technologies is oriented towards customer satisfaction

(35) Decisions about information technologies adoption are made on the basis of tasksimprovements from the workerrsquos point of view

(36) Decisions about information technologies adoption are made on the basis of service

customisation

Block AVI Back and front office activities

(37) Front office activities are physically separated and differentiated from the back officeactivities

(38) The customers cannot access those service activities in which they are not required

(39) Personnel of front office activities works exclusively there and never in back officeactivities

The relationshipbetween strategy

and firm size

285

Block AVII Human resources

(40 Personnel are highly specialised

(41) Personnel are able to perform various and different tasks

(42) Job rotation is commonly used

(43) More than half of our personnel are university graduates

(44) Training is given crucial importance in the firms budgets

Block AVIII Customer participation

(45) Service delivery process is designed so customer performs by himherself thoseactivities heshe is qualified for

(46) Customer performs part of the service delivery activities in order to reduce costs

(47) Customer is informed in detail about all previous activities heshe has to perform beforeservice delivery

(48) Customer knows about cost reductions due to hisher participation in the servicedelivery process

(49) Customer participates in the service delivery process in order to customise service

Block AIX Design and development of new products

(50) New procedures for service delivery are continually developed

(51) New services are continually developed

(52) Customer opinions are indeed considered when designing new services

(53) There is an exclusive team for service design and development

The relationshipbetween strategy

and firm size

285

Block AVII Human resources

(40 Personnel are highly specialised

(41) Personnel are able to perform various and different tasks

(42) Job rotation is commonly used

(43) More than half of our personnel are university graduates

(44) Training is given crucial importance in the firms budgets

Block AVIII Customer participation

(45) Service delivery process is designed so customer performs by himherself thoseactivities heshe is qualified for

(46) Customer performs part of the service delivery activities in order to reduce costs

(47) Customer is informed in detail about all previous activities heshe has to perform beforeservice delivery

(48) Customer knows about cost reductions due to hisher participation in the servicedelivery process

(49) Customer participates in the service delivery process in order to customise service

Block AIX Design and development of new products

(50) New procedures for service delivery are continually developed

(51) New services are continually developed

(52) Customer opinions are indeed considered when designing new services

(53) There is an exclusive team for service design and development