Sectoral Heterogeneity in New Service Development: An Exploratory Study of Service Types and Success Factors

The service industry is of fundamental relevance for the economies of industrialized countries, as the service industry produces the highest growth in the gross domestic product. In this regard, new service development (NSD) represents a critical resource for competitive survival and a decisive factor of growth in the service industry. However, service firms across many industries are increasingly faced with the challenge of determining how best to manage their development of new service offerings. Although researchers have shown growing interest in NSD issues, this area is still underutilized. Furthermore, although the heterogeneity of the service industry has been emphasized for years, the current body of research on NSD mainly focuses on specific service environments, providing data that are often not comparable across different service sectors. Additionally, there is no study to date that comprehensively examines innovation activities and the relevance of service innovations’ success factors within different service industries. The aim of this exploratory study is to establish a more balanced picture of the nature of innovation activities in terms of NSD characteristics and success factors in the heterogeneous service industry. From this perspective, this paper begins with an examination of the factors that contribute to the success of NSD. Based on a meta‐analysis of new service success factor studies, 17 different success determinants are classified and aggregated to service‐related success determinants. Subsequently, a cluster analysis of 1016 service companies is used to identify different service innovation types. For the service sector, four service innovation types are determined: efficient developers, innovative developers, interactive adopters, and standardized adopters. Furthermore, based on interviews with service innovation managers, the previously identified success factors are examined for each innovation type using a standardized survey. Finally, based on the results of this exploratory study, the paper concludes with recommendations for NSD management and research propositions for each service innovation type. These propositions support innovation managers to successfully manage service innovations for the innovation type they are operating in.     

The value and effects of introducing high standard train and bus concepts in Blekinge, Sweden

A set of improvements were introduced on a railway line in the south of Sweden in January 1992, including a new train concept, improved timetable and lower fares. The new train replaced a combination of old rail cars and standard coaches (bus). Furthermore, 18 months later, a new high comfort coach (bus) service was introduced as a complement to the train timetable to increase the number of departures. Forecasts from a national four-step model system, based on Revealed Preference data, which did not cover explanatory factors like mode concept, comfort, mode image, was made and compared with a forecast based on stated preference data choice model. Both type of forecasts were compared to travel statistics. Stated Preference data have been collected from car drivers, coach and train passengers. The set of improvements have been included in the SP alternatives presented to the subjects. A structured logit model, a regression model and a linear programming model are compared. Unstructured and structured logit models are compared. Logit models have been estimated and used to form a mode choice model which predicts the changes in market shares between the train and car. The choice model forecast coincide, accidentally, with actual demand 8–9 months after the introduction of the set of improvements (a 40% increase in journeys). The set of improvements, including the new train service, has proven to be a success with more than 100% increase in travel after only two years of operation. Differences in estimated logit models for 1991 and 1992 are explained as partly due to asymmetry effects and partly to shortcomings in the SP data collection technique. Logit model estimates for train and coach are compared. The value of high standard coach service, running in parallel to the train, is estimated. The new coach gained few new passengers and also a much lower monetary value than the train by both train and bus passengers.     

Fighting against the odds

The fight for power is not only over immediate rents, but also over advantageous positions in future power struggles. When incumbency yields an extra fighting edge, current struggles involve high stakes as a victory today may guarantee the victory also tomorrow. Such an incumbency edge may stem from the control of the army, the police and other instruments reserved for the government. The conclusions drawn from static conflict models are turned on their head when the fight is also over the incumbency edge. A sharper incumbency edge increases the implicit prizes of winning. The fighting intensity may therefore rise when the strength of each side becomes more unequal. Unbalanced fights can last long and become particularly severe. This is in contrast to the standard result that equal strengths give the most intense fighting. Received: June 2004, Accepted: December 2004, We want to thank the editor and a referee.     

Indivisibilities,lotteries, and sunspot equilibria

Summary We analyze economies with indivisible commodities. There are two reasons for doing so. First, we extend and provide some new insights into sunspot equilibrium theory. Finite competitive economies with perfect markets and convex consumption sets do not allow sunspot equilibria; these same economies with nonconvex consumption sets do, and they have several properties that can never arise in convex environments. Second, we provide a reinterpretation of the employment lotteries used in contract theory and in macroeconomic models with indivisible labor. We show how socially optimal employment lotteries can be decentralized as competitive equilibria without lotteries once sunspots are introduced.We thank Kenneth Arrow, Aditya Goenka, Ed Green, Jeremy Greenwood, Walter Heller, Steve Matthews, Herve Moulin, Roger Meyerson, Jim Peck, Patrick Kehoe, Ramon Marimon, Ed Prescott, Richard Rogerson, Nancy Stokey and Raghu Sundaram for their comments. We also thank participants in seminars at Northwestern, Yale, USC, Cornell, Barcelona, Madrid, Santander, and the Canadian Economics Association annual meetings in Victoria. We are grateful to the National Science Foundation (through grants SES-8606944 and SES-8821225), the Center for Analytic Economics, the Thorne Fund, and the University of Pennsylvania Research Foundation for research support. The views expressed here are those of the authors, and not necessarily those of the Federal Reserve System or the Federal Reserve Bank of Minneapolis.     

SLUM DWELLERS' HOUSEHOLD CONSUMPTION PATTERN AND ITS IMPLICATION FOR COST RECOVERY IN SLUM UPGRADING: Evidence from Dhaka, Bangladesh

Strong emphasis has recently been placed on recovery of improvement costs from slum dwellers for sustainable development of low-income urban settlements. Furthermore, socio-economic stratification of slum dwellers is perceived to influence their consumption and investment patterns in the city. Against this background, populations in six slums in Dhaka, stratified into house owners and renters, were studied. Results show that renters have stronger ties with their rural origin where they are likely to return and remit a significant portion of their income, leaving a limited amount for consumption and investment in the city. In contrast, owners have stronger attachment to the city, remit negligible amounts to their village of origin and pay more attention to city consumption and investment. Consequently, any cost recovery approach to slum upgrading implies heavy reliance on owners. But renters can also be expected to share the cost, to some limited extent, in the form of property tax or community services charges. The key point here is the concurrence of renters and owners on the sharing of costs and benefits.     

Reply on comment to “small firms and the merger mania”

Research on performance differences between small and large firms is booming. It emerges relatively separated from the mainstream Industrial Organization Literature. Inspired by Levy's comment on an earlier paper we try to bridge the gap between the two areas. Especially we screen non cooperative game theoretical models for predictions on performance differences. Most of them forecast higher profits for larger firms, but there exist also some models which predict the opposite for very specific circumstances.     

On Weitzman's ‘recession resistant’ employee compensation arrangements

This note presents a slight modification of the alternative pay systems discussed by Weitzman (1983). The modification preserves the recession resistance property, yet guarantees that the workers already in the firm, will not become worse off by the conversion to the new pay system even when no other firm converts to it.