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Systematic performance differences across the manufacturing-service continuum

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Abstract

It is becoming clear that management theories developed for manufacturing may not be wholly applicable to service firms. Evidence suggests that economic rents tend to occur at the business level in manufacturing, whereas they arise at the corporate level in services. We address this issue in terms of the characteristics of goods and services, and their effects on the drivers of firm performance across the manufacturing-service continuum. We deduce that the effects are non-linear and vary according to whether products are tangible standardized goods, customized goods and services, or standardized intangible services.

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Notes

  1. Bear in mind here there are implicit assumptions made by scholars on what constitutes a good or a service.

  2. In the late 1990s, patent law was changed to include business processes, but the number of such patents remains very small compared to utility patents.

  3. This discussion would have fitted equally well under Barriers to Entry, but we elected to include it here because of its implications for efficiency gains and the difficulty service firms have capitalizing on both share and diversification into non-core areas.

  4. Returning to the earlier conceptualization of causal ambiguity where the concepts causal ambiguity and uncertain imitability are held separate (Reed and DeFillippi 1990) overcomes the causal-ambiguity paradox (e.g., Powell et al. 2006; King and Zeithaml 2001) that has arisen through recombination of what competitors and managers do not understand about business inputs and outputs. Causal ambiguity has implications for rent generation, whereas uncertain imitability has greater implications for rent appropriation (as is also evident in the study of Powell et al. 2006 and King and Zeithaml 2001). We stress that we are not commenting on which perspective is more rigorous.

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Authors and Affiliations

  1. Center for Entrepreneurial Studies, Washington State University, Pullman, WA, 99164-4736, USA

    Richard Reed

  2. Management and Labor Relations Department, Nance College of Business Administration, Cleveland State University, 2121 Euclid Avenue, BU 436, Cleveland, OH, 44115-2214, USA

    Susan F. Storrud-Barnes

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Reed, R., Storrud-Barnes, S.F. Systematic performance differences across the manufacturing-service continuum. Serv Bus 3, 319–339 (2009). https://doi.org/10.1007/s11628-009-0073-7

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