1. Strategy-Structure Configurations in the Service Business of Manufacturing CompaniesUniversity of Paderborn PD Dr. HeikoGebauer

2. Service business in manufacturing companiesTransition line from products to services Importance of services for value contributionPerformance-based Tailored solutionsHigh Maintenance servicesPay-per-useService paradoxLowAd-hoc Service supportInvestments in the service business 3. Perspectives on avoiding the service paradox Service-orientation of singledeterminants: (e.g. Eggert et al. 2011; Fang et al. 2008; Tuli et al. 2007, Oliva&Kallenberg 2003, Neu and Brown 2005, Auguste et al. 2004, Windahl and Lakemon, 2010) Strategy Corporate culture Human resource management Organizational structures Coalescence among multiple strategic and organizational attributes (strategic fit) Internal consistence among strategy and structure attributes (Bowen, Siehl& Schneider 1989) Distinctive service capabilities vary across different types of hybrid offerings (Ulaga&Reinartz 2011) Identify the reinforcing business model elements that drive configurational fit (Storbaka 2011) 4. Research propositionThe success of service strategies depends upon the internal congruence between the service strategies and the organizational design factors 5. Selecting the most-suitable approach for assessing strategic fit LowMany (3) Fit as Profile DeviationSpecifity in the functional form of the fit-based relationship(4) Fit as Gestalts(2) Fit as Mediation(5) Fit as Covariation(1) Fit as Moderation(6) Fit as Matching FewHigh Criterion-specific Source: Venkatrama, 1989, p. 425Number of variables in the fit equationCriterion-freeChoice of anchoring the specification of fitbased relationships 6. Selecting the most-suitable approach for assessing strategic fit LowMany (3) Fit as Profile Deviation(4) Fit as Gestalts Conceptualization Recurring clusters of attributes (gestalts)Specifity in the functional form of the fit-based relationship(2) Fit as Mediation Sets of internally consistent variables Number of configurations in the fit equation(5) Fit as CovariationAnalytical issues Factor & cluster analysis (1) Fit as ModerationDescriptive & predictive validity Sub-groups of low- and highperformer(6) Fit as Matching FewHigh Criterion-specific Source: Venkatrama, 1989, p. 425Criterion-freeChoice of anchoring the specification of fitbased relationships 7. Measure development Service strategies formative scale using types of service offerings:1 Number of services (customer service, basic service for the installed base, maintenance services, R&D-oriented services, and operational services) Broadness of services Emphasis on services Organizational design factors - reflective scales using three to five items2 Service orientation of corporate values and employees behavior Service orientation of personnel recruitment, personnel training, and personnel assessment/compensation Organizational distinctiveness between product and service businesses &proximity to customers of the service organization1 2 Homburg et al. (2002) Homburg et al. (2004), Oliva &Kallenberg (2003) 8. Data sample Data collection was preceded by engaged scholarship Written questionnaire, 202 firms were purposively contacted, with 195 positive responses (response rate of 96.5%) Test for non-response bias Information quality: average years of employment (mean=10.14; SD=4.87), knowledge about the service business (mean=2.72; SD=0.80) , and their work experience in the service organization (mean=2.23; SD=0.53) Sample characteristics: e.g., industries, number of employees, company versus strategic business unit Performance measures: The overall profitability (operating margins) is split into 55.4% of the participants achieving more than 5% in the past 3 years and 44.6% achieving less than 5% in the past 3 years 9. Results of both cluster analyses (1) ANOVA Tests forbothclusteranalysisFactorsF-testp-valueService strategiesR&D services Basic services for the installed base Maintenance services Operational services19.530 6.752 2.508 16.3730.000 0.000 0.063 0.000Arrangement of organizational design factorsService orientation of corporate values Service orientation of employees behavior Service orientation of personnel recruitment Service orientation of personnel training Service orientation of personnel assessment/ compensation Organizational distinctivness between product and service business Proximity to customers of the service organization25.838 19.843 4.736 7.266 19.0050.000 0.000 0.004 0.000 0.0006.3500.00110.0320.000 10. Results of both cluster analyses (2) - Cluster Means of Discriminating Variables Cluster 2 (n=77)Cluster 3 (n=34)Cluster 4 (n= 23)0.92 0.14 0.11 0.070.43 0.89 0.12 0.130.21 0.31 0.90 0.120.41 0.51 0.14 0.88Cluster 5 (n=98)Cluster 6 (n=56)Cluster 7 (n=20)Cluster 8 (n=21)0.69 0.21 0.17 0.210.84 0.79 0.73 0.720.85 0.81 0.21 0.230.87 0.85 0.87 0.880.230.770.540.48Organizational distinctiveness between product and service business0.240.760.890.45Proximity to customers of the service organization0.560.690.930.77Factors Basic services for the installed base Maintenance services Operational services R&D servicesService orientation of corporate values Service orientation of employees behavior Service orientation of personnel recruitment Service orientation of personnel training Service orientation of personnel assessment/compensationCluster 1 (n=61) 11. Measure validation Service strategies formative scales1 (a) Content specification, (b) Indicator specification,(c) Indicator collinearity, and (d) External validity Organizational design factors reflective scales (a) Exploratory factor analysis (Sphericity = 4456.334, significance level < 0.001, KaiserMeyer-Olkin = 0.87) (b) Seven interpretable organizational design factors (variance = 71.3%)(c) Communalities (0.63 to 0.86), Cronbachs alpha (0.77 to 0.91) 1 Diamantopoulos 2 Hairet al. (2005)et al. (2001 and 2008) 12. Picturing matches and mismatchesClusters on arrangements of organizational design factors Cluster 5 (n=98)Cluster 6 (n=56)Cluster 7 (n=20)Cluster 4 (n=33) 15 Cluster 3 Strategycl (n=24) usters9Cluster 2 (n=77) Cluster 1 (n=61)31 After sales service provider40 Boldface - high-performance Italics - low performance34 Outsourcing partner 3 Customer support service provider 314810Cluster 8 (n=21) Development partner41412133 13. Strategy-structureconfigurationsAfter-sales service providerCustomer support service providerOutsourcing partnerDevelopment partner Ensuring product functionality (fast reactions to product failures) Dominance of services ensuring customers process efficiency Operational services for takingover customer processes Designing customer processes through co-creation of competencies1A1G FB 0 E1G CDAFB 0 E1G CDAFB 0 EG CDAFB 0 EC D 14. Anecdotal evidences on matches and mismatchesClusters on organizational design factors Cluster 5Cluster 6Cluster 7Development partnerCluster 4Strategy clustersOutsourcing partnerCluster 3 Customer support service providerCluster 2Cluster 1Cluster 8After sales service provider 15. ContributionsTheoretical Implications Instead investigating the single determinants, insights into the role of strategic fit Bridging service strategies with specific configuration of organizational elements Managerial implications Guidance on implementing service strategy through organizational design Insights into separating and integrating service & product business Limitations & future research recommendations Bias due to purposive sampling Replication is recommended Disadvantages of fit as gestalt (fit as moderation or fit as mediation) 16. Thank you very much! & Any questions?