Service Firms Research Articles

Profitability and Leverage: Different Effects of Negative Profits?

Objective – This study aims to examine the effect of profitability on leverage in firms with negative profits and the sensitivity of the COVID-19 pandemic in explaining the effect of profitability on leverage.Design/Methodology –This study uses unbalanced panel data for 660 firm-year observations over 4 (four) years from 2018 to 2021 on non-financial service firms. Two-stage least square regression was utilized to examine the effect of profitability on leverage.Results –Consistent with several previous studies, this study indicates that profitability negatively affects leverage and has similar results in firms with negative profits. Another finding is that the COVID-19 pandemic is not sensitive to explaining the effect of profitability on leverage. Both the pre-COVID-19 pandemic and during the COVID-19 pandemic, profitability has a similar effect on leverage.Research limitations/implications –This study is conducted over a short period, only four years. The study provides a new perspective on the effect of profitability on leverage in companies with negative profits and the pecking order theory in explaining the relationship between profitability and leverage in the Indonesian context.Novelty/Originality –This study examines the effect of profitability on leverage in firms with negative and positive profits using a two-stage least square (2SLS) in the Indonesian context.

Promoting Strategic Flexibility and Business Performance through Organizational Ambidexterity

The purpose of this paper is to develop a comprehensive structural model to understand the outcomes of organizational ambidexterity (OA) within the manufacturing and service sector. It focuses on evaluating the effects of OA on business performance and strategic flexibility while also exploring the under-researched relationship between strategic flexibility and business performance. To accomplish this objective, an empirical survey was carried out among a sample of 370 Greek manufacturing and service firms. Exploratory and confirmatory factor analyses were utilized to extract and validate the latent constructs examined. Finally, the structural relationships among these latent constructs were determined using structural equation modeling (SEM). The study’s findings reveal the significant contributions of OA to both firm performance and strategic flexibility. Additionally, the results demonstrate the positive influence of strategic flexibility on business performance. This research sheds light on the multifaceted impacts of ambidexterity, offering valuable implications for managers, decision-makers, and practitioners. The outcomes underscore the importance of ambidexterity in various dimensions of business performance and highlight its role in fostering strategic flexibility. This study stands out by offering a holistic model that explicates the outcomes of OA within the manufacturing and service sector. It places particular emphasis on the interplay between business performance and strategic flexibility, an area that has received limited attention in prior research. By empirically examining these relationships and providing practical guidelines, the proposed model enriches our understanding of ambidexterity’s significance and supports further research in this domain within organizations.

Does the Label Fit the Channel? How “Bricks” and “Clicks” Influence Demand for Environmental and Social Sustainability Labels

Service firms are increasingly trying to make their offers more sustainable. In this paper, we contribute to the literature on sustainability in service by investigating the impact of the shopping channel on consumer purchases of alternatives labeled as environmentally and socially sustainable. We theorize that the salience of self-oriented (vs. other-oriented) motives in the online (vs. in-store) channel has a higher fit with self-oriented (vs. other-oriented) benefits signaled by environmental (vs. social) labels, especially for utilitarian (vs. hedonic) products. To test this expectation, we conduct three studies using real-world grocery and beauty retailer datasets that include almost 900,000 purchases either in-store (“bricks”) or online (“clicks”). Using both between-consumer and within-consumer analysis, we find empirical support for our hypotheses. Our conceptual framework and findings suggest that service firms that want to promote environmentally and socially sustainable alternatives will benefit from adapting their strategies to different domains of sustainability labels and shopping channels.

Resilience in service firms: the impact of social capital on firm performance during turmoil

PurposeThis study aims to examine whether social capital contributes to service firms' resilience during crisis.Design/methodology/approachThis study measures social capital via environmental and social (ES) ratings and firm performance via buy-and-hold-abnormal returns derived from Refinitiv ESG and CRSP databases. Using a sample of 404 US service firms, this study runs cross-sectional regressions to estimate the effect of social capital on service firms' crisis returns.FindingsThis study finds that high-social capital service firms outperformed in the first quarter of 2020. The crisis response is heterogeneous among service sub-sectors and diverges (i.e. calming or deepening) over time depending on social capital. Service sub-sector analysis notably posits that social capital impact is positively related to returns of Health- and Business Services and firms with utilitarian nature. The study also indicates that ES commitments targeting internal stakeholders contribute more to resilience. Overall, social capital might be a relevant value driver, generate real impact and provide insurance-like protection for service firms during turmoil.Originality/valueThe service industry is one of the most severely hit industries during COVID-19. However, there is limited knowledge about whether and when social capital creates value in the service industry during crises. This study makes two main contributions: first, it extends to the continuous efforts toward the role of social capital in firm performance, and second, it provides important insights related to the resilience search for service firms.

Solar panel adoption among Mexican small and medium-sized commercial and service businesses

We analyze the determinants of adoption of distributed solar photovoltaic systems, focusing on small and medium-sized commercial and service firms. We use monthly billing data that are perfectly matched with data from a novel survey that gathers information on electricity consumption, stock of electric equipment, and a rich set of firm characteristics in the Metropolitan Area of Aguascalientes, Mexico. Using an econometric model, we find evidence that a set of explanatory variables such as business characteristics, the economic sector, ownership status, stock and usage of equipment and appliances, presence of other solar technologies, and views about the use of renewable energy are important determinants of the probability of adoption of solar panel systems. Furthermore, using machine learning methods to identify the best predictors of solar adoption, we indirectly validate the theory-driven empirical model by assessing a large set of explanatory variables and selecting a subset of these variables. In addition, we investigate relevant cases where a priori solar panel adoption seems to be cost-effective but structural adoption barriers and adoption gaps might coexist for certain groups of electricity users. We also calculate the social cost savings and the avoided CO2 emissions. Finally, based on our results, we provide several policy implications and recommendations.

Navigating multiple accountabilities through managers’ boundary work in professional service firms

PurposeThis study explores the professional work of managers in professional service firms (PSFs) by focusing on the relational position of managers as they interface between diverse groups of actors and navigate a multiplicity of accountabilities.Design/methodology/approachDrawing on an ethnographic study of managers in a Brazilian PSF, this study demonstrates through observations, interviews and shadowing how PSF managers address multiple accountabilities in the conduct of professional work.FindingsTo navigate multiple accountabilities, PSF managers perform several forms of boundary work, which the authors conceptualize as “revamping” and “remolding” operations and “translating” and “transforming” understandings. The form of boundary work performed depends on the configuration of two elements of accountability demands: knowledge orientation and extent of exposure. Although analytically distinct, these elements intertwine, suggesting the need for a dynamic perspective on accountability. The analysis shows that professional work extends beyond fixed or passive views of hierarchical and intrinsic accountability to emphasize that managers exude accountability of an adaptive nature.Research limitations/implicationsThis study illustrates and theorizes the role of boundary work in PSFs, develops its link to accountability, and identifies its scholarly and practical affordances and limitations for understanding managers’ professional work when navigating multiple accountabilities.Originality/valueThe findings reveal perspectives and behaviors of managers embedded in PSFs, illustrating their unstructured and agentic experiences of accountability and boundary work in practice. The insights can be extended to other contexts where managers face multiple accountabilities in conducting professional work.

The Spatial Distribution of Urban Consumer Service Firms: Evidence from Yelp Reviews

A growing literature employs distance-based measures of localization to assess the spatial distribution of firms with a focus on manufacturing across a country. We analyse the spatial concentration of a variety of consumer services firms in the Phoenix, AZ area using geo-referenced Yelp data from over 29,000 establishments. Results from a K-density approach indicate substantial localization and service differentiation among localised firms. Firm concentration varies across service cost and quality; higher quality/cost establishments tend to cluster. Our results further understanding of the modern urban landscape as cities are increasingly centres of consumption.

The Role of Customer Relationship Vulnerability in Service Recovery

The effectiveness of service recovery initiatives has primarily been explained by exchange theories implicitly assuming that the customer desires beneficial relationships. The present research extends studies in this tradition by emphasizing the crucial role of the customer’s vulnerability. Drawing on crisis theory, we argue that the effectiveness of service recovery initiatives is contingent on customer relationship vulnerability (CRV), which is defined as a customer predisposition to psychological harm in relationships with service firms. The findings show that a full-service recovery is not always possible among vulnerable customers. We discuss the implications for theory and service management practice.

How many businesses use CRM software to enhance customer interactions?

Customer relations are a major concern for businesses today, much more so than in the past, as the business environment has become more competitive as a result of the growing number of players on the market. Because services are more complicated than products and more tied to the actual firm than physical products, relationships are even more important in service firms. As a result, companies in this industry must focus even more on consumer relations. This research examined how CRM software or applications are utilized in many businesses or industries to enhance customer interactions, as well as customer demands, satisfaction and loyalty.

Does service modularity enhance new service development performance in supply chains: an empirical study

PurposeCustomer firms and suppliers are valuable knowledge resources that can be used for achieving superior new service development (NSD) performance. This study aims to investigate how supply chain relationship quality (SCRQ) and knowledge sharing promote the success of NSD, and examines service modularity as an important contingency factor that enhances NSD performance in supply chains.Design/methodology/approachBased on service-dominant logic, this study builds a conceptual model to empirically explore the impacts of SCRQ and knowledge sharing on NSD performance, and highlights the moderating effect of service modularity by means of survey methodology of 295 Chinese service firms to test the research hypotheses.FindingsRegression analysis results show that SCRQ has significant positive effects on knowledge sharing and NSD performance; knowledge sharing plays a partial intermediary role between SCRQ and NSD performance; and service modularity partially moderates the relationships between SCRQ, knowledge sharing and NSD performance.Research limitations/implicationsGeneralizations here are limited to Chinese service firms. Service modularity in manufacturing firms experimenting with servitization has yet to be examined and provides a good avenue for future research.Originality/valueThis study contributes to service management literature by providing empirical understanding of how service modularity affects NSD performance in multiprovider contexts. Furthermore, this study offers novel insights on the impacts of inter-firm relationship quality and knowledge sharing in modular collaborative innovation.

BOARD DIVERSITY, POLITICAL CONNECTIONS AND FIRM VALUE: AN EMPIRICAL EVIDENCE FROM FINANCIAL FIRMS IN NIGERIA

The effect of board diversity, political connections and firm value of listed financial service firms in Nigeria is investigated in this study. Firm value, proxied by Tobin's q and computed as the ratio of the firm's market value of equity to the book value of total assets, is the study's explained variable, while board gender diversity, board nationality, board ethnic diversity, and political connections are the study's explanatory variables. The study’s population consists of fifty-one (51) listed financial service firms on the Nigerian Stock Exchange as at 31st December 2020. Thirty-five (35) of these firms made up the sample size for a period of nine years (2012-2020). Data was gathered from the annual reports of the sampled companies and analyzed using the feasible generalized least square regression (FGLS) approach. According to the study, board gender diversity, board nationality, and board ethnic diversity have a positive significant effect on the firm value of listed financial service firms in Nigeria, whereas political connections had a positive but minor effect. According to the findings, the boards of directors of listed financial service organizations in Nigeria should ensure that females are considered for directorship seats on the boards in order to increase their value, as suggested by the resource dependency theory. Also, the board should be made up of foreign directors in order to lure foreign investors to the firm and enhance its value. In addition, the boards of directors of listed financial services firms in Nigeria should consist of a mix of both northerners and southerners to improve firm value.

Effects of customer relationship management on service innovation: moderating role of managers’ risk-taking behavior and interaction frequency

ABSTRACT This study leverages a nested dataset (customers within service firms) to study the link between relationship investment and perceived innovativeness, and its impact on customer outcomes by using an online survey of the private club industry managers and their members. Multilevel data analysis was used to analyze the data. The results showcase that relationship investment has a direct and positive impact on perceived innovativeness, which further positively impacts customer commitment, willingness to recommend, and word-of-mouth. This suggests that for private clubs to have successful and long-term relationships with their members, they need to differentiate their products and services on a continuous basis. Furthermore, the results show managers’ propensity for risk-taking can influence members’ perceptions of the club’s innovativeness directly and moderate the relationship between relational investments and perceived innovativeness.

Flow and let it flow

This study aimed to verify the intensity of the state of flow at work in the perception of accountants who work in accounting services firms. The research, of a descriptive nature, had a quantitative approach, applying a self-completion questionnaire based on the model of Freitas, Damásio, Haddad, and Koller (2019) that highlights the state of flow at work in three dimensions: pleasure at work, intrinsic motivation, and absorption. The respondents were 154 accountants from accounting services firms in Itajaí (Santa Catarina). The indicators were validated through Exploratory Factor Analysis, and descriptive statistics were used to verify the intensity of the dimensions. The results showed that the dimension of the state of flow at work that presented a high degree of intensity was pleasure at work, followed by intrinsic motivation at work and absorption, which reached a medium degree. Thus, it was evidenced that the accountants analyzed, when performing their tasks, enter a state of flow, emphasizing pleasure at work, especially in the statement, “I do my job with great pleasure”. Empirically, knowledge of the state of flow can contribute to the management practices being conducted to promote well-being and thus increase engagement and the way of experiencing work. Theoretically, the results contribute to the expansion of studies in organizational behavior.

Corporate digital responsibility (CDR) in the age of AI: implications for interactive marketing

PurposeDespite all the recent achievements in the field of interactive marketing and artificial intelligence (AI), it is important to consider the ethical implications of these technologies. This paper explains the concept of corporate digital responsibility (CDR) and how it is affected by new advances in AI.Design/methodology/approachThe authors build on the work of Wirtz et al., (2023) and derive several managerial implications for the challenges that AI poses to CDR. CDR refers to a service company's ethical and fair use of data and technology within its digital service ecosystem. It involves establishing standards, protecting customer privacy, conducting external audits and striving for an equitable power dynamic between service firms and their partners.FindingsDespite the risks involved, many companies are not prioritizing good CDR practices. Financial benefits from the collection and use of consumer data, improved customer experience through AI-driven customization and personalization, cost reduction through service automation and the trade-offs between organizational goals and CDR practices can prevent companies from prioritizing good CDR practices.Originality/valueThis is one of the first articles in the service domain to take the concept of CDR and apply it to recent developments in generative AI.Research limitations/implicationsThe emergence of powerful AI tools presents opportunities and challenges. Research opportunities include responsible business restructuring, responsible service automation to ensure fairness and human oversight, addressing dehumanization of service delivery, responsible customer profiling to address privacy and discrimination concerns and preventing AI misuse.

Let’s Talk About Silence: Preventing and Reducing Employee Silence in Professional Service Firms

Let’s Talk About Silence: Preventing and Reducing Employee Silence in Professional Service Firms

Mystery Shopping as a Strategic Management Practice in Multi-Site Service Firms

Mystery Shopping as a Strategic Management Practice in Multi-Site Service Firms

Linking Dynamic Absorptive Capacity and Service Innovation for Born Global Service Firms: An Organization Innovation Lens Perspective

Linking Dynamic Absorptive Capacity and Service Innovation for Born Global Service Firms: An Organization Innovation Lens Perspective

Optimizing Company Performance Through Industrial Coordinator Training : A Practical Needs Assessment

The study of performance is incredibly fascinating. One of them is the way in which mid-level management functions as both a conduit for information to top management and the person in control of subordinates. This study aims to enhance the coordinator of the industrial department's performance. This study's data processing and analysis procedure employs a qualitative approach by carrying out an analysis using the TNA (Training Need Analysis) method. At electromotor engine repair service firms in East Java, this method is used to assess the variables that contribute to delays in the completion of repairs of goods as well as the kind of training provided to coordinators to prevent delays in the completion of repairs of goods. The outcomes show in the study, it was discovered that the absence of effective communication between division coordinators in the industrial department, skill gaps, and workers who are not suited for the job are the main causes of delays in the completion of goods. Because the percentage is still low for corporate performance and still less productive, the performance value in each division, such as industrial repair, is 6.1%, vacuum pump 6.6%, blower 6.2%, fabrication 7.4 and rewinding 7.5% to complete the items.

Accounting for resilience: the role of the accounting professions in promoting resilience

The rising incidence, variety and severity of extreme events that threaten both business and society has increased interest in promoting resilience to such threats. However, relatively little research has explored the potential contributions of the accounting profession to resilience at multiple scales and levels of analysis. To address the need for additional research, in this study we explore the contributions of the accounting profession to resilience during COVID-19. Drawing on a unique database of over 26,000 social media posts by the two principal professional accounting bodies in the UK context (ICAEW, ACCA) and UK-based accounts of the ‘Big 4’ professional services firms (PwC, Deloitte, EY, and KPMG), as well as user-engagement with those posts, we highlight processes by which the accounting profession encouraged resilience among individuals, organisations, and wider society. Our findings illuminate how the accounting profession contributed to resilience by supporting more effective crisis responses (by sharing trusted advice and shaping policy responses), better crisis adaptation (by crafting post-crisis futures and empowering the profession), and improved future crisis anticipation (by challenging complacency and being good citizens). We build on our analysis to propose a new framework characterising pathways for professions contributing to resilience.

Achieving sustained competitive advantage in retail and consumer service firms: The role of entrepreneurial orientation and entrepreneurial bricolage

The vital role of entrepreneurial orientation and entrepreneurial bricolage in creating sustained competitive advantage in retail and consumer service firms is increasingly acknowledged in modern markets. Using data from 246 retail and consumer service firms (hereafter R&CSFs) in Japan, this paper develops and empirically tests a framework delineating how entrepreneurial-oriented R&CSFs strategically combine existing resources while managing risks to differentiate their service portfolios to be competitive. The findings reveal that entrepreneurial orientation and entrepreneurial bricolage influence differentiation advantage and risk management, which, in turn, is associated with creating a sustained competitive advantage (hereafter SCA). This paper adds novel insights to the dynamic capabilities view and retail and service marketing literature by identifying entrepreneurial orientation, entrepreneurial bricolage, and risk management as dynamic capabilities, which allows R&CSFs to create service innovations in resource-constrained environments.