Enhancing Customer Experience in the Service Industry : A Global Perspective [1 ed.] 9781443886192, 9781443884969

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Enhancing Customer Experience in the Service Industry

Enhancing Customer Experience in the Service Industry A Global Perspective Edited by

Levent Altinay and Surya Poudel

Enhancing Customer Experience in the Service Industry: A Global Perspective Edited by Levent Altinay and Surya Poudel This book first published 2016 Cambridge Scholars Publishing Lady Stephenson Library, Newcastle upon Tyne, NE6 2PA, UK British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Copyright © 2016 by Levent Altinay, Surya Poudel and contributors All rights for this book reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the copyright owner. ISBN (10): 1-4438-8496-0 ISBN (13): 978-1-4438-8496-9



TABLE OF CONTENTS

Introduction ................................................................................................. 1 Enhancing Customer Experience in the Service Industry Surya Poudel and Levent Altinay SECTION ONE: SERVICE CO-CREATION Chapter One ................................................................................................. 8 Customer Value Facilitation: The Service Experience within a Heritage Tourism Context John Melvin Chapter Two .............................................................................................. 25 Emergent Service Quality during Co-Creation: The Service Provider’s View Wieslaw Urban Chapter Three ............................................................................................ 46 Rethinking Wealth Management from a Production Perspective: An Ethnomethodological Inquiry into increasing Perceived Added Value Philip Chowney and Emmanuel Fragnière Chapter Four .............................................................................................. 60 Exploring the Impact of Culture in Ethnic Restaurants: Case of a Spanish Restaurant in London Saloomeh Tabari and Hadyn Ingram SECTION TWO: SERVICE MANAGEMENT Chapter Five .............................................................................................. 82 Globally Networked Learning for Intercultural Competence: A Collaboration between Courses in Lebanon and the United States Susan Coultrap-McQuin and Ina A. P. Issa



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Chapter Six .............................................................................................. 103 Reverse Logistics: The Difference between Service and Manufacturing Industry Alena Klapalová and Radoslav Škapa Chapter Seven.......................................................................................... 130 The Effect of Personality Traits on Organizational Silence: A Research on Service Industry Canan Çetin, Melisa Erdilek Karabay, Esra Dinç Özcan and Erkan Taúkran Chapter Eight ........................................................................................... 153 Customer Services Styles of Hotel Employees in Thailand: National Culture based or Culturally Free? Worarak Sucher and Catherine Cheung SECTION THREE: SERVICE EVALUATION Chapter Nine............................................................................................ 184 Traditional Hospitality as Experienced by Tourists Gurel Cetin Chapter Ten ............................................................................................. 202 Environmental and Individual Influences on Impulse Buying in Organized Retail Alka Sharma and Ankita Nanda Chapter Eleven ........................................................................................ 224 Perceptual or Epistemic Curiosity: Cultural Motivations and Experiences of Visitors to Alanya Castle Muhammet Kesgin and Aydin Çevirgen Chapter Twelve ....................................................................................... 254 A Study of Factors Contributing to Tourist Satisfaction at Heritage Sites in India Gaurav Tripathi and Sandeep Munjal Conclusions ............................................................................................. 273 Complexities of Enhancing Customer Experience in the Service Industry: A Global Perspective Levent Altinay and Surya Poudel



INTRODUCTION ENHANCING CUSTOMER EXPERIENCE IN THE SERVICE INDUSTRY SURYA POUDEL AND LEVENT ALTINAY

The service industry includes the sectors that provide services to individual consumers and businesses. The industry does not produce any tangible goods or end products and is considered a tertiary sector of the economy. Though it is virtually impossible to compile an exhaustive list of services, the major sectors are tourism, recreation, hospitality, banking, healthcare, transportation, trade, communication, insurance and education. Once characteristic of the Western world, the service sectors are now omnipresent (Xu 2014). However, the share of the service industry in the economy varies across countries. To illustrate, the estimated contribution of the service sector to GDP in 2013 was 46.1% in China, 56.9% in India, 68.1% in Brazil, 78.9% in the United Kingdom, and 79.4% in the United States (Central Intelligence Agency 2014). The growth of the service industry is promising in both developed and developing countries. For example, the share of the service sector of the GDP of China increased from 39% in 2000 to 45% in 2012 (World Bank 2014). Similarly, the share of the service industry of the GDP of the United Kingdom was 72% in 2000 and 79% in 2012. The service industry is the biggest source of employment in the world and is predicted to grow faster than other industries in the future (Xu 2014). The growth and expansion of the service industry have prompted academic attention in the last three decades. Research has been conducted on various themes, including growth of the service industry, the factors affecting the growth and service quality (Campbell, Fayman and Heriot 2011; Eichengreen and Gupta 2013; Gohmann, Hobbs and McCrickard 2008; Oliva and Sterman 2001; Rogelio and Sterman 2001; Tarí HerasSaizarbitoria and Dick 2014). One of the established research topics in the area of service quality is management of customer experience (Dawes and

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Introduction

Rowley 1998; Frow and Payne 2007; Maklan and Klaus 2011; Meyer and Schwager 2007; Palmer 2010; Verhoef et al. 2009). This research has been invaluable for understanding customer expectations, enhancing customer satisfaction, building customer loyalty and improving service quality (Chen and Chen 2010; Deng et al. 2010; Fornell et al. 1996; Mascarenhas, Kesavan and Bernacchi 2006; Rust et al. 1999; Zeithaml, Berry and Parasuraman 1993). A review of literature shows that most of the past research on service quality in general, and customer experience management in particular, has been conducted in developed countries such as the United States, the United Kingdom and Germany. In addition, there are several theories and methodologies, such as service-dominant (SD) logic (Vargo and Lusch 2004), reverse logistics (Rogers and Tibben-Lembke 2011), the five factor model of personality (Digman 1990), Hofstede’s cultural framework (Hofstede 2001), ethnomethodology (Garfinkel 2002), and critical incident technique (Butterfield at el. 2005), which are not adequately utilized in customer experience and service quality research. Further, there are emerging research areas related to service management, including service co-creation, service co-production and value co-creation, which are yet to be researched. This book attempts to address the research gap by chronicling the findings of empirical studies conducted over several developed and developing countries across the world, including the United States, the United Kingdom, Switzerland, the Czech Republic, Turkey, Lebanon, India and Thailand. The chapter authors not only examine various new issues related to the enhancement of customer experience, but also use novel approaches to study established research agendas. The concept of this book originated at the sixth International Conference on Services Management held in North Cyprus, June 23–26, 2013. Organized by the Oxford School of Hospitality Management and supported by twelve academic journals in the service industry field, the conference attracted more than 160 delegates from 30 countries. The papers presented in the conference were related to virtually all sub-fields of the service industry including tourism, hospitality, banking and transportation. The conference provided a forum to present, discuss and spread not only the recent theoretical advancements related to the service industry but also the results of empirical studies conducted in different settings. Realizing that it was worthwhile to share the conference findings with a larger audience, we decided to publish an edited volume consisting of selected papers from the conference.

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This book has an introduction and a conclusion, enclosing twelve chapters in three sections. The first section, Service Co-Creation, includes four papers exploring and comparing the actions/perspectives of hosts and clients in service co-creation and co-production. John Melvin in chapter one investigates the value co-creation process within the context of family visits to Edinburgh Castle—Scotland’s most popular paid attraction. Wieslaw Urban in chapter two proposes a quality co-creation model containing service co-creation typology from the host perspective using the critical incident technique. Philip Chowney and Emmanuel Fragniére in chapter three conduct an ethnomethodological inquiry to study tacit knowledge leading to loyalty between banks and their clients in the Swiss private banking sector. Saloomeh Tabari and Hadyn Ingram in chapter four explore the impact of culture in ethnic restaurants, with a Spanish restaurant in London as a case study. The second section is on Service Management and includes four papers related to the management and enhancement of services from the host perspective. Susan Coultrap-McQuin and Ina Issa in chapter five assess two virtual collaborations between students in Lebanon and the United States aimed to engage students in cross-cultural communication and prepare them for cross-cultural encounters. Alena Klapalová and Radoslav Škapa in chapter six examine the difference in reverse logistics between the service and manufacturing industries in the Czech Republic. Canan Çetin, Melisa Erdilek Karabay, Esra Dinç Özcan and Erkan Taúkran in chapter seven examine the relationship between employee personality traits and organization silence using the survey data obtained from service industry employees in østanbul, Turkey. Worarak Sucher and Catherine Cheung in chapter eight explore whether national cultural orientation influences the customer service styles of Thai hotel employees. Four papers pertaining to client evaluation of different types of services are included in the third section, Service Evaluation. Gurel Cetin in chapter nine explores the dimensions of traditional hospitality in Istanbul, a Turkish urban tourist destination. Alka Sharma and Ankita Nanda in chapter ten analyse the effects of in-store stimuli, emotions and hedonism, and personal factors on impulse buying. Muhammet Kesgin and Aydin Çevirgen in chapter eleven investigate the cultural motivations and experiences of tourists visiting Alanya Castle in Turkey. Gaurav Tripathi and Sandeep Munjal in chapter twelve explore the factors affecting tourist satisfaction in the contexts of heritage sites in India.

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We believe that this book is useful for academics and practitioners alike. The chapters present the most recent theoretical advancements and findings of empirical studies in the service industry field. The papers not only document the recent progress but also discuss the research gap in the services management literature. We believe that the cases presented in the book could be used as teaching materials for undergraduate- and graduatelevel courses related to tourism, hospitality and other service industries. For practitioners, the book could be an invaluable source to identify the practical solutions for the enhancement of customer service in various subfields of the service industry. Since the cases presented are taken from different continents, the book has an international appeal.

References Butterfield, Lee D., William A. Borgen, Norman E. Amundson, and AsaSophia T. Maglio. 2005. "Fifty Years of the Critical Incident Technique: 1954-2004 and Beyond." Qualitative Research 5: 475–497. Campbell, Noel, Alex Fayman, and Kirk Heriot. 2011. "Growth in the Number of Firms and the Economic Freedom Index in a Dynamic Model of the US States." Journal of Economics and Economic Education Research 12: 51–64. Central Intelligence Agency. 2014. “The World Factbook.” https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html Chen, Ching-Fu, and Fu-Shian Chen. 2010. "Experience Quality, Perceived Value, Satisfaction and Behavioral Intentions for Heritage Tourists." Tourism Management 31: 29–35. Dawes, Jillian, and Jennifer Rowley. 1998. "Enhancing the Customer Experience: Contributions from Information Technology.” Management Decision 36: 350–7. Deng, Zhaohua, Yaobin Lu, Kwok Kee Wei, and Jinlong Zhang. 2010. "Understanding Customer Satisfaction and Loyalty: An Empirical Study of Mobile Instant Messages in China." International Journal of Information Management 30: 289–300. Digman, John M. 1990. "Personality Structure: Emergence of the Five-Factor Model." Annual Review of Psychology 41: 417–40. Eichengreen, Barry, and Poonam Gupta. 2013. "The Two Waves of ServiceSector Growth." Oxford Economic Papers 65: 96–123. Fornell, Claes, Michael D. Johnson, Eugene W. Anderson, Jaesung Cha, and Barbara Everitt Bryant. 1996. "The American Customer Satisfaction Index: Nature, Purpose, and Findings." The Journal of Marketing 60: 7–18.

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Frow, Pennie, and Adrian Payne. 2007. "Towards the ‘Perfect’Customer Experience." Journal of Brand Management 15: 89–101. Garfinkel, Harold. 2002. Ethnomethodology's Program: Working Out Durkheim's Aphorism. New York: Rowman and Littlefield Publishers. Gohmann, Stephan F., Bradley K. Hobbs, and Myra McCrickard. 2008. "Economic Freedom and Service Industry Growth in the United States." Entrepreneurship Theory and Practice 32: 855–74. Hofstede, Geert H. 2001. Culture's Consequences: Comparing Values, Behaviors, Institutions and Organizations Across Nations. Thousand Oaks, CA: Sage. Maklan, Stan, and Philipp Klaus. 2011. "Customer Experience: Are We Measuring the Right Things?" International Journal of Market Research 53: 771–92. Mascarenhas, Oswald A., Ram Kesavan, and Michael Bernacchi. 2006. "Lasting Customer Loyalty: A Total Customer Experience Approach." Journal of Consumer Marketing 23: 397–405. Meyer, Christopher, and Andre Schwager. 2007. "Understanding Customer Experience." Harvard Business Review 85: 116. Oliva, Rogelio, and John D. Sterman. 2001. "Cutting Corners and Working Overtime: Quality Erosion in the Service Industry." Management Science 47: 894–914. Palmer, Adrian. 2010. "Customer Experience Management: A Critical Review of an Emerging Idea." Journal of Services Marketing 24: 196–208. Rogers, Dale S., and Ronald Tibben-Lembke. 2011. "An Examination of Reverse Logistics Practices." Journal of Business Logistics 22: 129–48. Rust, Roland T., J. Jeffrey Inman, Jianmin Jia, and Anthony Zahorik. 1999. "What You Don't Know About Customer-Perceived Quality: The Role of Customer Expectation Distributions." Marketing Science 18: 77–92. Tarí, Juan José, Iñaki Heras-Saizarbitoria, and Gavin Dick. 2014. "Internal and External Drivers for Quality Certification in the Service Industry: Do They Have Different Impacts on Success?" Service Business 8: 337–54. Vargo, Stephen, and Robert Lusch. 2004. “Evolving to a New Dominant Logic for Marketing.” Journal of Marketing 68: 1–17. Verhoef, Peter C., Katherine N. Lemon, A. Parasuraman, Anne Roggeveen, Michael Tsiros, and Leonard A. Schlesinger. 2009. "Customer Experience Creation: Determinants, Dynamics and Management Strategies." Journal of Retailing 85: 31–41. World Bank. 2014. “World Development Indicators.” http://wdi.worldbank.org/table/4.2. Xu, Li D. 2014. “Guest Editorial: Advances of Systems Research in Service Industry.” IEEE Systems Journal 8: 791–3.

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Zeithaml, Valarie A., Leonard L. Berry, and Arantharanthan Parasuraman. 1993. "The Nature and Determinants of Customer Expectations of Service." Journal of the Academy of Marketing Science 21: 1–12.



SECTION ONE: SERVICE CO-CREATION





CHAPTER ONE CUSTOMER VALUE FACILITATION: THE SERVICE EXPERIENCE WITHIN A HERITAGE TOURISM CONTEXT JOHN MELVIN

Abstract One of the key research endeavours of marketing is to better understand value and its formation. With service-dominant logic emerging as the dominant paradigm in marketing thought, the concept of “value co-creation,” where service users and providers combine resources to create value, has become a key approach to services marketing research. Customers’ new role in the co-creation process is critical to understanding competitiveness and competitive advantage, yet service-dominant logic has largely been neglected in tourism management studies. Through investigating the value creation process within the context of family visits to a heritage visitor attraction, this study contributes to literature on service management and marketing. It advances the conceptual development and understanding of the value creation process, and adds to the limited awareness of the visitor experience within tourism literature. Providing an in-depth understanding of the motivations and interactions of families can assist managers in providing for this key market segment. Keywords: consumer behaviour, services marketing, heritage tourism, value co-creation, family interaction



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Introduction Marketing is by far the most salient business perspective on tourism, and tourism marketing has become an established field in its own right (Li and Petrick 2008). However, there is a growing realisation within mainstream marketing of the inadequacy of marketing theory developed in previous decades, where product-centred approaches were prevalent (King 2002; Vargo and Lusch 2004). Building on service marketing and relationship marketing theory, the “service-dominant” theories on marketing as proposed by Vargo and Lusch (2004) have attracted significant interest from both within the field of marketing as well as from business management. Since its conception, “service-dominant logic” (S-D logic) has rapidly emerged as the dominant paradigm and the cutting edge in marketing thought (Tynan and McKechnie 2009). Arguing that marketing has moved from exchanges of goods to service provision, S-D logic holds that the value of a service is its “value in use” as defined by customers, rather than embedded “exchange value” decided by sellers. Traditionally, customers were viewed as an “operand” resource, for marketers to examine, analyse and then promote products to. From an applied perspective, organisations operating with this new mindset adopt a more collaborative approach with their customers. Within S-D logic, customers are seen as “operant resources,” producing effects and value that can potentially emerge from user-provider interactions when these resources are utilised. Rather than being located at the end point of the organisation’s sales and marketing activities, customers instead play a much more active and integrated role (Grönroos 2011; McColl-Kennedy et al. 2012). As cocreators of a service experience, customers are active in co-creating value whilst interacting with service providers. This new mindset obliges organisations to redefine their operations with the aim of facilitating customers’ value creation. Through these interactions with their customers, organisations can achieve their own desired value outcomes; in addition, these processes allow them to increase their own operant resources, a process that enhances their ability to provide customers with solutions (Li and Petrick 2008; Lusch and Vargo 2004; Vargo and Lusch 2006). Customers’ new role in the co-creation process is thus critical to understanding competitiveness and competitive advantage (Shaw, Bailey and Williams 2011). The academic literature within tourism management studies has been criticised for neglecting key developments in marketing management such



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as S-D logic (Shaw, Bailey and Williams 2011). Within service marketing literature, limited critical attention on the definition and meaning of key constructs of S-D logic has hampered its conceptual development and empirical application. Questions regarding when the process starts and ends, what is included in the process, and how different customers perceive value-creating situations in different ways are all relative unknowns awaiting more substantial consideration (Grönroos 2011). In order to address these issues, this study utilises the S-D logic approach to value creation as a lens to examine customer value creation. In doing so it also answers the call of Brodie, Saren and Pels (2011), who identified an urgent need for empirical research that will allow the development of a “middle-range” theory to bridge the gap with the current “grand theory” nature of S-D logic. The context of this study is family visits to Edinburgh Castle and the investigation of their interactions with each other as well as other customers and the service provider. Despite their importance as a customer segment and many calls for further research, families remain a relatively under-represented group in both management and tourism research. In adopting a family perspective, this study answers calls for their inclusion and follows the recent efforts of authors such as Kerrane, Hogg and Bettany (2012) to refocus research attention and capture the voices of children and their parents.

Literature Review S-D Logic S-D logic consists of 10 foundational propositions that have been debated and refined in the decade since its inception (the original propositions can be found in Vargo and Lusch [2004]; after generating considerable debate these were revised and can be found in Vargo and Lusch [2008]). At the heart of S-D logic is the proposal by Vargo and Lusch that service is the basis of economic exchange. Defining service as the application of resources linked to competences (knowledge and skills), they view the interactions between customers and providers as involving the integration of resources to create value (Vargo and Lusch 2004; 2008). It is through this integration process that value emerges for customers and organisations. It is the organisation’s responsibility to facilitate this value creation through the careful and purposeful design of the service provision process. This includes the physical and online service environment and



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other channels for providing service, such as the company website, social media sites or call-centres. At a general level the claims within S-D logic have been widely accepted within the marketing community, though there have been areas of considerable difference as to the interpretation and conceptualisation of some of the foundational propositions. This study challenges the claim in the sixth foundational proposition that value can only be jointly co-created between organisations and customers. Believing that this view is overly simplistic and not representative of the value-creating process in a visitor attraction context, this study empirically investigates what form this takes. This belief follows other authors (e.g. Grönroos 2011; Grönroos and Ravald 2009) who believe that customers can create value through their own activities and without the need to interact with the service provider. Value co-creation between the customer and the provider is possible only where their respective value-creating processes overlap (Grönroos 2011). The aim of this study is to bring a more nuanced understanding of customer interactive processes through empirically investigating how value is created within the service environment. This can reveal how value is created by families through their interactions within the family group, with other customers and with the service provider. The ninth foundational proposition states that all actors in service encounters are resource integrators. Although progress has been made in advancing conceptualisation of the value-creation process, much work remains to be done and there have been numerous calls for empirical studies that can refine understanding. Of importance here is the contention that this understanding can be developed through consideration of the social context in which service encounters take place. The social drivers associated with the encounter are central in determining actors’ value perceptions and how they utilise resources to create value. “This social context implies norms and values that exert a profound influence on both the service exchange and the value co-creation process” (Edvardsson, Tronvoll and Gruber 2011, 329). In considering resources that can facilitate value creation, it is important to consider the characteristics of the two main resource types. Operand resources are physical resources, such as raw materials or products, and are typically static in nature. Operant resources are much more dynamic in nature and include skills, knowledge and competencies that companies and customers can draw upon. This study can build on some recent articles that have empirically investigated value creation in different service settings (see, in particular



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Echeverri and Skålén 2011; McColl-Kennedy et al. 2012). These studies revealed a number of value-creating activities that have improved understanding of the processes involved. The former was one of the earliest works to empirically apply the tenets of S-D logic and established a typology of interactive practices within a public transport context, whilst the latter provided an in-depth analysis of patients’ approaches and interactive styles within a healthcare setting.

Tourism and the Visitor Experience The tourism product—the tourist experience—displays all the characteristics of services: intangibility, inseparability from production and performance to its consumption, lack of heterogeneity and lack of ownership (Prentice, Witt and Hamer 1998; Williams and Soutar 2009). This enables the tourism sector to adopt new marketing theories, such as S-D logic (Li and Petrick 2008). The beneficial experience gained by the visitor is an integral component of the tourism product (Pernecky and Jamal 2010; Prentice, Witt and Hamer 1998). Travel provides a sense of escape and freedom, and affects the emotional, intellectual, spiritual and physical aspects of the individual (Gilbert and Abdullah 2004). Providers should ensure the experiences are as real, compelling and memorable as possible to engage each customer in an inherently personal way (Pine and Gilmore 1998). Whilst there are growing trends for tourism managers to develop ways to utilise customers’ operant resources to co-create value (e.g. Shaw Bailey and Williams 2011), the tourism literature has been much slower to investigate the tenets of S-D logic in a tourism context. More work needs to be done to better understand the visitor’s role in creating or co-creating value from the experience (Prebensen and Foss 2011), and the organisation’s role in facilitating this (Grönroos 2011). This study aims to contribute to the limited understanding available on the visitor experience, and how interactions at different stages of a visit can add to the value that visitors gain from the experience. In their analysis of operational management within heritage visitor attractions, Sharples, Yeoman and Leask (1999) describe the service delivery process, outlining how such attractions provide a carefully designed “interface” that balances visitor needs with the particular conditions and limitations that the site operates within. As most attractions were not designed to welcome large numbers of visitors, this interface must be designed around the site’s physical location and layout. The visitor interface within heritage attractions has three main facets: interpretation, attraction staff and



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ancillary services. Interpretation comprises the methods used to tell the story of the site and its significance to the visitor, which can range from operand resources such as leaflets and audio-visual displays to operant resources including the skills and knowledge of guides and costumed reenactors. The attraction also employs staff to perform duties such as ticketing and stewarding. The ancillary services are those such as cafés and restrooms that are provided to supplement visitors’ experiences. The design and upkeep will also compete with other operating costs of the attraction, including the considerable amounts that must be allocated for site operation and conservation. Visitor interactions must be carefully managed so as to not damage the site and preserve its unique atmosphere. As well as having a major role in influencing visitor value perceptions, the design of the interface also has important managerial implications, such as the intentions of visitors to spend money, recommend it or visit it again (Alegre and Garau 2010; Rodriguez del Bosque and Martin 2008). Within tourism research, the importance of gaining a deeper and truer understanding of under-researched groups of visitors such as families is identified as one of the key areas in helping to better understand tourism (e.g. Edwards, Martinac and Miller 2008). There is a pressing need for deeper insights as existing research on families assumes too much homogeneity and too little disagreement (Bronner and de Hoog 2008). This study aims to help develop a better appreciation of families’ experiences at heritage visitor attractions to provide recommendations on service design and delivery to enhance visitors' experience.

Methods The context of this study’s family value creation was Edinburgh Castle, Scotland’s most popular paid attraction (VisitScotland 2013). It is run by Historic Scotland, a quasi-governmental organisation, and is its cash cow, raising over £17 million—around 55% of its income. It has consistently been rated as a five-star visitor attraction by VisitScotland, the national organisation tasked with promoting tourism, and in 2013 welcomed over 1.4 million visitors. As well as revenue generation, Historic Scotland must pursue social, cultural and educational goals as part of its operational remit, such as widening access to under-represented groups including local families. To empirically test the concepts of interactive value formation and value facilitation, I adopted grounded theory methods to analyse the data



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generated from family visits to Edinburgh Castle, a heritage attraction of international renown and part of a UNESCO World Heritage Site. Edinburgh Castle is a large and elaborate service environment (Bitner 1992), containing a number of indoor and outdoor areas, including two cafés and three retail outlets. This provides wide and varied opportunities for customers and staff to interact in the process of service provision and consumption. Two streams of in-depth interviews were conducted, with the aim of investigating both user and provider perspectives on the consumption experience and how the design of the service environment facilitates customer-customer and customer-staff interactions. Initially, I conducted interviews with nine staff at the castle and Historic Scotland head office. Interviewing executive and operational staff allowed me to develop a deeper insight into the management issues they are operating under, and a better understanding of the perceptions of service providers on how value can be realised within the service environment. Challenges included the ordeals in incorporating the needs of a variety of stakeholders ranging from UNESCO to the British Armed Forces (the castle is also an active army base), the difficulties in balancing conservation with access and also the various social, political, cultural and economic factors driving Historic Scotland’s policy making. I then conducted in-depth interviews with 20 local families who were recruited through local schools. Each family was interviewed twice at their home. An initial interview took place prior to their visit to establish family perspectives on the motivations and expectations of their service encounter. A post-visit interview was then conducted to investigate the practices family members had engaged in when attempting to realise value and their assessments. Participating families were mixed in both composition and in their socioeconomic backgrounds. Fourteen out of the 20 families were traditional “nuclear” families, with the others a mixture of single parent and “blended” families, where the adults were living together but were not married. However, the families were purposively selected, in that they contained at least one child between 11 and 17 years. An additional method was employed during the course of the research, as the 10 later families were provided with a video camera to take with them during their visit. This was used to record significant incidents involving interactions within the service environment, as well as aspects of their visit that they wanted to elaborate on. The video clips proved highly enriching, not just in allowing me to view first-hand their interactive value practices



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but also aspects of interactions with the service interface, other family members and other customers. I supplemented the interviews with covert observations of other visitors whilst on-site to become thoroughly familiar with both the service environment and also patterns of visitor behaviour within. I undertook covert field observations on 10 different days to observe first-hand how service users interacted with each other and the service interface to create value. The observations generated extensive field notes and photographs, with each observation session ranging from three to five hours. In line with a grounded theory approach, codes were extracted from observations and the interview transcripts that pertained to the activities and issues discussed with families and provider staff. These led to the development of themes that were then compared and contrasted with codes and themes identified from the other interviews.

Results Building on the fundamental notion that value in service settings is collaboratively realised through user-provider interactions, intra-group interactions and interactions with other customers were found to play a crucial role in determining user value assessments and value outcomes. This was in addition to interactions with the service interface. The research also supports the conceptualisation of the value creation process made in particular by relationship marketers and the Nordic School that value is not “co-created” but is instead “facilitated” (e.g. Grönroos 2011). Following the research on value practices and interactions by Echeverri and Skålén (2011) and McColl-Kennedy et al. (2012), 20 value practices that both create and destroy value for family members were induced, and organised into four thematic categories. As shown in Table 1.1 below, these categories are: user decision-making, evaluating, realising and attaining. These conceptual themes emerged from analysis of the interviews and observational data and through developing thematic codes to capture the complexity of the family’s interactions. Guidance was also provided by the previous studies referred to in the literature review (Echeverri and Skålén 2011; McColl-Kennedy et al. 2012). However, as the contexts were considerably different, new thematic codes were created and a large number of new activities were identified.



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Decision Making A significant amount of intra-family interactions were related to decisionmaking within the service environment. This was often in relation to what aspect of the attraction to interact with and in what order, in light of the available time and interests of the family members. Situational assessments were made on group and individual levels, and the needs of younger children were given priority. The DE family was a single parent family headed by the mother (DEF) and her two teenage sons, DES1 (aged 17) and DES2 (aged 13). When it came to doing things together they all had very different interests, and it was accepted that as well as the collective outcomes the family hoped to achieve, DES1 had a number of individual anticipated outcomes that he could best achieve by himself. Whilst the family obviously wanted to create memories and have shared experiences from visiting the castle together, DES1 chose to only selectively engage in such group activities. He had a much stronger interest in gaining deeper experiential value than DEF or DES2, and prioritised having deeper and more active interactions with the attraction interface. Physically interacting with the site was supplemented by taking care to learn about different aspects of the castle and its history. This is illustrated by the following extract, where DES1 is answering my question as to how they decided what to do together: DES1: I'll probably have a list of things that I want to do and I'll either take them [DEF and DES2] with me or just go and do them myself. DEF: [laughs] We'll probably follow behind you [DES1] like little sheep until we get really bored and then we'll go to the café. DES1: Yeah, ’cause I'll end up looking at the museum for about 15 minutes and his [DES2’s] attention span will just snap.

This short exchange illustrates the coalition building that regularly occurred within the DE family. The mother and her younger son formed a coalition built on shared interests whilst the older son prioritised his own interests, with the family temporarily splitting up to incorporate these diverse interests.

Evaluating The evaluating category captures the family members’ appraisals of their visit. A significant modifying factor was the understanding that the castle was a unique location and despite being a five-star visitor attraction was



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not purpose-built for tourism. Previous experience of visiting attractions along with more general leisure experiences the family had experienced influenced their evaluations. The imagined and real experience of others was also a reference point for comparison and evaluation. There was an interesting expectation that the castle management should provide a service at a level commensurate with its five-star status. This expectation was like an unwritten contract with the service provider, and the families’ negative evaluations were often a result of this contract being broken through service failure or poor provision. Whilst this was sometimes due to families’ own experiences, this was often when families witnessed other visitors’ interactions being impaired as a result of this service failure. The BC family was a single-parent family, and the mother (BCF) and her two sons (BCS1 and BCS2) were enjoying interacting with costumed reenactors dressed as WW1 soldiers when another visitor affected the family’s experience, interrupting it by initiating her own conversation with the actors. BCF said: So we sort of moved away, cause, em, an American lady came up and spoke to them … she had a very loud American accent [she then went on to identify an object the WWI re-enactors had brought with them as the lady had recognised it as similar to one she had found in her attic that had belonged to her Scottish grandfather]. You know [she] had a real reason to be in Scotland and the fact that these artefacts were, em, out on the table, and the fact that she was able to speak to somebody about it, oh, it would have been absolutely priceless for her … it was really, really good.

Despite feeling slightly upset at being displaced by another customer, by observing her interactions the group felt satisfaction and pride that the castle had facilitated such an obviously poignant and meaningful experience. The group also took into consideration her nature as an elderly overseas tourist, particularly when it became apparent she had a very special reason for being in Scotland and for interacting with the WWI reenactors.

Realising This category covers the aspects of family visits relating to creating and co-creating value during the process of interacting with the attraction. Children and their parents spoke about learning or expanding their learning and their enjoyment at doing this in such a unique location. There was an appreciation amongst both generations that aspects of the castle visit would not be perfect, and that they would have to endure instances of



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service failure, such as interpretation machines not working, long queues or inclement weather conditions. Coping with these was often a source of value for families, with members taking satisfaction in adapting or persevering. The GR family consisted of the father (GRM), his partner (GRF) and the father’s son (GRS), and as the latter was 17 years old they particularly enjoyed connecting with the site on many different levels. As GRS was more mature and thoughtful, both GRM and GRF valued and respected his contribution to the family’s collective enjoyment and derived considerable value from this. For the GR family, a key value-creating activity from the overall visit was the intra-group interactions on their individual and collective experiences. The following excerpt involves GRF expressing her delight at how they had been able to discuss the visit and what it had meant on many levels. Well he enjoyed it, you know. He's not always a grumpy teen, you know, he does have, you know, I think his school course had prepared him for a lot of stuff … but, em, nonetheless, he could respond to it as a building, as a historic site, as an iconic site … so it's definitely still interesting for him, even the, you know, the insouciance of teenagerhood [sic] … it still spoke to him, so, there's something about it that everybody's going to enjoy.

Attaining This final category relates to the value that families derive from the outcomes of internal and external interactions. The post-visit interviews contained rich descriptions of the value that families had gained from reaffirming ties with one another through spending time and doing joint activities. This related to how the family’s operant resources had been enhanced or reinforced through the visit. This also covers the value that parents or children gained through displaying their knowledge or abilities to enhance the group’s experience by their interactions. The JP family were from overseas but had lived in Edinburgh for several years, and their older daughter had been to the castle a few times with her local primary school. Through her visits and through learning about aspects of Edinburgh and Scottish history at school, she was by far the most knowledgeable in the family about the castle and its background. This visit enabled her to reassume her role of expert. Due to her language abilities and her increasing cognitive ability, this was a role she often adopted given the particular situation within the family. She had taken a



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lead role in the planning of the visit and her insider knowledge of many aspects of the castle interface significantly enhanced the family’s collective affective and cognitive interactions. Table 1.1. Visitor interactive categories and activities

Decision making

Interactive Category

Value Creating Activity Coalition Building

Informing Negotiating Priming Prioritising

Accepting Appraising

Evaluating

Comparing



Expecting

Sharing

Description

Forming temporary coalition with other group member(s) in order to strengthen bargaining position and improve chances of desired outcome being adopted by the group. Providing full or selective information to other group member(s) to enhance the likelihood of desired outcomes being attained. Adopting various approaches whilst attempting to achieve desired outcomes. Verbal and non-verbal communication designed to influence other group member(s) before and during decision-making. Putting the needs of oneself or others first Visitors appreciate the unique circumstances of the service environment and provider when evaluating their experiences. Visitors evaluating in light of past service consumption experiences, as well as experiences and reviews from friends and other visitors. Visitors positively and negatively rating their own experiences in relation to the observed and imagined experiences of others. Expectation that service provider will provide a level of service and experience commensurate with the perceived and actual status of the service environment. Locals’ and regular users’ satisfaction in the enjoyment and appreciation of value other customers can derive from the service experience.

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Competing Connecting

Realising

Coping Deviating Observing

Achieving

Attaining

Acquiring

Bonding Empowering

Visitors attempting to acquire use of and access to desired resources when availability is not guaranteed. Visitors forming, reaffirming or reassessing affective and cognitive links with the service environment through individual or group interactions with operand and operant resources Visitors contending with adverse conditions including weather, service or product unavailability and service failures. Visitors ignoring, bending or breaking rules and norms pertinent to the situation. Visitors passively interacting through watching the interactions of other group members and other visitors for learning or entertainment. Satisfaction from meeting individual and group goals relating to the service experience. Learning, reaffirming and reassessing individual and group knowledge and skills through internal and external interactions and sense making. Reaffirming and enhancing intra-family bonds through particular aspects and global impressions of the visit. Visitors enhancing their standing within the group through display and utilisation of individual resources or the ability to successfully integrate external resources.

Discussion and Conclusions This study contributes to an enhanced understanding of the interactive value creation process at the heart of the service encounter, and reveals significant insights into the behaviours of the under-researched family group. A range of different roles adopted by family members at different stages of the service experience is identified as well as the iterative processes driving their adoption. The findings of this study add to the conceptual understanding of customer interactions within a complex service environment. Although interactions are an integrated part of the marketing process, their implications for value



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creation have not yet been considered, as S-D logic literature fails to fully grasp their significance (Grönroos 2011). It builds on and extends the conceptualisation of the value creation and co-creation process by revealing the importance of the service provider in facilitating customer value creating activities. Interactions are a key construct in value creation (Grönroos and Ravald 2009) and the heritage visitor attraction service environment provided a revealing context to investigate this. Through identifying interactive categories and activities, this study builds on the limited amount of empirical research using S-D logic and helps reveal more on the processes involved. The results suggest that while the Foundational Premises are a convenient point of reference for the study of services marketing, they are perhaps too general to be equally applicable to all sectors of the service economy. Within a complex service environment such as a visitor attraction where multiple opportunities exist for visitor-visitor, visitor-interface interactions (including the staff), the sixth foundational premise does not hold true as visitors were capable of creating value though the unilateral integration of their own resources. The results may be applicable to other complex service environments, such as hotels and restaurants that offer a number of interactive opportunities. This study has also advanced understanding of the visitor experience within tourism literature, and hopefully more research will be done using S-D logic to investigate other forms of tourism and hospitality. From a practitioner perspective, it is clear that the service environment should be tailored to both adults and young customers to facilitate family satisfaction and memorable experiences. Opportunities for service users to integrate their resources unilaterally, in collaboration with the service provider, should be developed. In a visitor attraction context, technology offers incredible opportunities to enhance the service experience in this regard. Freeing the service provider from costly renovations to the physical environment (that may not be possible in a protected building such as Edinburgh Castle), technological methods can allow more tailored provision at individual or group level. Through considered design, these can also facilitate interactions between aspects of the interface that they would otherwise not have known about or contemplated. This study aims to make the value-creation debate more tangible for tourism academics, marketers and policymakers, and show the benefits of considering how organisations can best facilitate customer value for mutual benefit. It is hoped that future studies in similar or different contexts seek to combine user and provider perspectives on the service experience as this has proved an effective method for advancing



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practitioner and theoretical understanding. The successful adoption of video footage in better appreciating the service experience is apparent and it is hoped that other researchers can adopt such methods in other settings.

References Alegre, Joaquín, and Jaume Garau. 2010. “Tourist Satisfaction and Dissatisfaction.” Annals of Tourism Research 37 (1): 52–73. Baker, Julie, Michael Levy, and Dhruv Grewal. 1992. “An Experimental Approach to Making Retail Store Environmental Decisions.” Journal of Retailing 68 (4): 445–60. Bitner, Mary Jane. 1992. “Servicescapes: The Impact of Physical Surroundings on Customers and Employees.” Journal of Marketing 56 (April): 52–71. Brodie, Roderick, Mike Saren, and Jacqueline Pels. 2011. “Theorizing about the Service Dominant Logic: The Bridging Role of Middle Range Theory.” Marketing Theory 11 (1): 75–91. Bronner, Fred, and Robert de Hoog. 2008. “Agreement and Disagreement in Family Vacation Decision-making.” Tourism Management 29: 967– 79. Echeverri, Per, and Per Skålén. 2011. “Co-creation and Co-destruction: a Practice-theory based Study of Interactive Value Formation.” Marketing Theory 11 (3): 351–73. Edvardsson, Bård, Bård Tronvoll, and Thorsten Gruber. 2011. “Expanding Understanding of Service Exchange and Value Co-Creation: a Social Construction Approach.” Journal of the Academy of Marketing Science 39 (2): 327–39. Edwards, Deborah, Ivo Martinac, and Graham Miller. 2008. “Research Agenda for Innovation in Sustainable Tourism.” Tourism and Hospitality Research 8 (1): 56–61. Gilbert, David and Junaida Abdullah. 2004. “Holidaytaking and the Sense of Well-being.” Annals of Tourism Research 31 (1): 103–21. Grönroos, Christian. 2011. “Value Co-creation in Service Logic: a Critical Analysis.” Marketing Theory 11 (3): 279–301. Grönroos, Christian, and Annika Ravald. 2009. “Marketing and the Logic of Service: Value Facilitation, Value Creation and Co-creation, and their Marketing Implications.” Working Paper. Hanken School of Economics, June. Kerrane, Ben, Margaret Hogg, and Shona Bettany. 2012. “Children’s Influence Strategies in Practice: Exploring the Co-constructed Nature



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of the Child Influence Process in Family Consumption.” Journal of Marketing Management 28 (7–8): 809–35. King, John. 2002. “Destination Marketing Organisations—Connecting the Experience Rather than Promoting the Place.” Journal of Vacation Marketing 8 (2): 105–8. Li, Xiang, and James Petrick. 2008. “Tourism Marketing in an Era of Paradigm Shift.” Journal of Travel Research 46 (February): 235–44. McColl-Kennedy, Janet, Stephen Vargo, Tracey Dagger, Jillian Sweeney and Yasmin van Kasteren. 2012. “Health Care Customer Value Cocreation Practice Styles.” Journal of Service Research 16: 471–87. Pernecky, Tomas and Tazim Jamal. 2010. “(Hermeneutic) Phenomenology in Tourism Studies.” Annals of Tourism Research 37 (4): 1055–75. Pine, Joseph and James Gilmore. 1998. “Welcome to the Experience Economy.” Harvard Business Review (July–August): 97–105. Prebensen, Nina and Lene Foss. 2011. “Coping and Co-creating in Tourist Experiences.” International Journal of Tourism Research 13: 54–67. Prentice, Richard, Stephen Witt, and Claire Hamer. 1998. “Tourism as Experience: The Case of Heritage Parks.” Annals of Tourism Research 25: 1–24. Rodríguez del Bosque, Ignacio, and Héctor Martin. 2008. “Tourist Satisfaction—a Cognitive-affective Model.” Annals of Tourism Research 35 (2): 551–73. Sharples, Liz, Ian Yeoman, and Anna Leask. 1999. “Operations Management.” In Heritage Visitor Attractions, edited by Anna Leask and Ian Yeoman. London: Cassell. Shaw, Gareth, Adrian Bailey, and Allan Williams. 2011. “Aspects of Service-dominant Logic and its Implications for Tourism Management: Examples from the Hotel Industry.” Tourism Management 32 (2): 207–14. Tynan, Carolin, and Sally McKechnie. 2009. “Experience Marketing: a Review and Reassessment.” Journal of Marketing Management 25 (5– 6): 501–17. Vargo, Stephen, and Robert Lusch. 2004. “Evolving to a New Dominant Logic for Marketing.” Journal of Marketing 68 (January): 1–17. Vargo, Stephen, and Robert Lusch. 2008. “Service Dominant Logic: Continuing the Evolution.” Journal of the Academy of Marketing Science 36 (1): 1–10. VisitScotland (2013) “Edinburgh Castle.” http://www.visitscotland.com/info/see-do/edinburgh-castle-p245821.



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Williams, Paul, and Geoffrey Soutar. 2009. “Value, Satisfaction and Behavioural Intentions in an Adventure Tourism Context.” Annals of Tourism Research 36 (3): 413–38.



CHAPTER TWO EMERGENT SERVICE QUALITY DURING CO-CREATION: THE SERVICE PROVIDER’S VIEW WIESLAW URBAN

Abstract The purpose of this study is to examine service co-creation taking into consideration how quality is being achieved. Particularly attention is focused on the emergent nature of service requirements during co-creation. For an in-depth investigation of the emergence of service requirements, the Critical Incident Technique was employed. A series of interviews with direct service staff representatives were conducted. During each interview, a set of open-ended questions was asked. A total number of 168 descriptions of incidents were collected and analysed according to content analysis principles. The in-depth incident analysis allowed the identification of the collection strategies of service co-creation. The study proposes the Quality Co-creation Model, which contains co-creation typology from the service provider’s viewpoint. There are four types of service co-creation: driven by the customer, driven by the service provider, shot in the dark, and customer assistance. Keywords: service co-creation, co-creation typology, service coproduction, service quality, Critical Incident Technique

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Introduction It is believed that value co-creation and service co-production allow a better understanding of the nature of service. Furthermore, these concepts are opening the way for improving services throughout various sectors. Open space left by a service provider for mutually created value with an engaged customer pays off in many ways, namely as customer loyalty (Auh et al. 2007) and better-suited service products (Etgar 2008). The literature output offers many specific snapshots capturing the phenomenon of co-creation. Moreover, co-creation and co-production are perceived in many ways that overlap each other, and some authors recognise the continuum from co-production to co-creation (Chathoth et al. 2013). In the co-creation context, some authors encourage service providers to change their mindset towards focusing much more attention on customers in their own context (Heinonen et al. 2010). But there is still a scarcity of knowledge about the detailed ways in which providers and customers perform their roles and inuence each other in processes of co-creation (Grönroos and Ravald 2011). The quality point of view can be beneficial for deeper explorations of co-creation affairs. Therefore, this study aims to take advantage of quality management theory for further exploration of co-creation in services. The main issue of this study, which allows theorizing and concluding, is in what manner the service provider becomes aware of what service requirements should be followed and fulfilled. Nevertheless, according to quality management theory, requirements give the basis for quality conceptualization (Harvey and Green 1993).

Literature Review Service Co-creation Co-creation has many meanings as well as theoretical and empirical contexts. Most of the studies are focused on the co-creation of value, and this approach is considered as a breakthrough concept for service theory. Serious advantages emerge when the customer is deeply engaged in the service product design stage (Edvardsson et al. 2010; Edvardsson et al. 2011; Morelli 2009; Saarijärvi, Kannan and Kuusela 2013). Authors observe a kind of shift toward more active customers, so that rms increasingly engage customers in their new product/service development processes (Saarijärvi, Kannan and Kuusela 2013). Co-design is when the service provider collaborates and acts collectively with customers (Payne, Storbacka and Frow 2008), thanks to which new service products emerge.

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During this process of co-design, the latent and hidden needs of customers are uncovered, and the service provider motivates customers to employ their creative potential in new service product development (Saarijärvi, Kannan and Kuusela 2013). Edvardsson et al. (2011) argue that using customers’ experiences in use contexts is an important factor in new service development and service system design. Innovativeness is closely related to service design. Edvardsson et al. (2010) state that customer co-development is a core concept in understanding innovations in services. The authors report that co-creation leads firms and network-based innovations; thanks to the involvement of a complex combination of activities and interactions between firms and other network actors (Perks, Gruber and Edvardsson 2012). Co-creation has a positive impact on product success when developing incremental innovations (Gustafsson, Kristensson and Witell 2012). It is also important in radical innovations (Gustafsson, Kristensson and Witell 2012; Perks, Gruber and Edvardsson 2012). Moreover, according to research, an innovation strategy via co-creation activities is considered as playing an important role in achieving competitive advantages; it happens through the integration of customers’ views into organisations’ key operations (Reay and Seddighi 2012). Customers can be integrated as interpreters and translators during various phases of the service innovation process (Edvardsson et al. 2010). Authors also identify five elementary “cocreations” in the innovation process: co-ideation, co-evaluation, co-design, co-test and co-launch (Russo-Spena and Mele 2012). The other face of co-creation is when a customer carries out selected parts of the service by himself/herself. This kind of co-creation is most often called co-production. This co-production is based on customer participation within organization-defined parameters, so that work in the services process is transferred from the service provider to the customer (Bolton and Saxena-Iyer 2009). Others consider co-creation as a special case of outsourcing, where some service tasks are delegated to customers who want to minimize their costs (Xue and Harker 2003). Examples of cocreation as self-service are self-checkout at the grocery store (Bolton and Saxena-Iyer, 2009) and self-assembly furniture by Ikea (Co-creation: New Pathways to Value 2009). According to Etgar (2008) co-production is directly linked to customization. Moreover, this author argues that customization constitutes the primary goal of co-production. Others suggest that it leads to stronger perceptions of customization (Auh et al. 2007). In co-production the

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customer plays the role of an active participant in service delivery, thus giving the participant the potential to customize his or her world (Cocreation: New Pathways to Value 2009). The customer’s creation is limited only to making the proper choice between offered options. Coproduction helps to fragment market offers and assists the operation of one-to-one marketing (Etgar 2008). The customer is provided with information pertaining to resources, dened a priori by the service provider, which can be used for customization during the exchange process (Chathoth et al. 2013). Co-creation goes beyond the customization of services (Chathoth et al. 2013) and beyond the selection of pre-determined options (Bolton and Saxena-Iyer 2009). Also, it must not mean shifting work from the service provider to the customer (Grissemann and Stokburger-Sauer 2012). Cocreation, understood as a service process carried out collaboratively with the customer, wholly or partially, pays particular attention to the customer’s participation in the performance of various activities occurring in the service process (Auh et al. 2007; Etgar 2008), and the customer’s engagement in the co-creation of the offering itself (Ramaswamy 2009). According to many studies (Andreu et al. 2010; Grissemann and Stokburger-Sauer 2012; Grönroos and Voima 2013; Payne, Storbacka and Frow 2008), the main issue of co-creation is intense and dialoguing customer-company interactions in which the provider’s staff listen and react promptly to customer needs (Grissemann and Stokburger-Sauer 2012). Whilst co-creating the service process the costumer contributes to it in a considerable manner (Auh et al. 2007; Füller et al. 2009; Grissemann and Stokburger-Sauer 2012). Füller et al. (2009) note that co-creation activities are voluntary actions of the customer, while others say that customer participation is spontaneous behaviour (Bolton and Saxena-Iyer 2009). But another side of the service encounter, i.e. the service provider’s staff, similarly perform creatively and openly with the engagement (Dong, Evans and Zou 2008; Grönroos and Voima 2013). Moreover, according to some authors (Füller et al. 2009), it is the role of the service provider to make the customers enjoy their participation. Both parties’ collaborative participation in the individually tailored and unique service process gives rise to co-creation (Prahalad and Ramaswamy 2004; Vargo and Akaka 2009). Co-creation, in terms of a jointly performed service process, is the field of interest in this study.

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Service Co-creation from Service Quality Perspectives Quality is still an important issue in service companies. Service marketing literature is dominated by quality, meant as customer perception. Perceived service quality is an outcome of the evaluation process, where the customer compares expectations of the service with the actually received service product (Grönroos 1984). This meaning of service quality is also conceptualized as service quality gap (Parasuraman, Zeithaml and Berry 1985). However, it should be emphasized that this conceptualization of service quality is not easy to grasp exhaustively in a quantitative manner, mostly because of the elusive nature of customers’ expectations (Morrison Coulthard 2004; Rosen, Karwanb and Scribner 2003; Taylor and Cronin 1994; Teas 1993). Considering that service quality is perceived as a kind of subjective customer interpretation of his/her service experience (Lehtinen and Lehtinen 1991), many researchers suggest measuring only the customers’ perception of a service (e.g. Cronin and Taylor 1994; Dabholkar, Thorpe and Rentz 1996; Gounaris 2005; Stevens, Knutson and Patton 1995). Quality management literature distinguishes a few more approaches to quality that exist in organizations. Garvin (1988) identifies five principal approaches to understanding quality. The transcendent sense of quality, which has its roots in classical philosophy, expresses idealistic perfection and the excellence of a performer. Another meaning, called manufacturing-based, is conformance to the described requirements. Excellence in this sense means meeting defined specifications and getting it right first time. This is coherent with quality as freedom from deficiencies, as Juran (1992) proposed. Similarly, according to ISO 9000:2005, the definitional standard supporting ISO 9001, the notion of quality is meant as the degree to which a set of inherent characteristics fulfils requirements. Authors consider that quality meant as conformance to requirements is very useful whilst carrying out operations in any organization, including service systems (Blind and Hipp 2003; Prajogo 2008; Zajarskas and Ruževiþius 2010). Indeed, customers are often the source of critical information necessary for the effective delivery of the service (Yen, Gwinner and Su 2004), and some of this information might be codified in service blueprints (Bitner, Ostrom and Morgan 2008) or other means of codified requirements, like manuals and operational procedures. Finally, it should be underlined that quality should always be referred to as a relative phenomenon (Harvey and Green 1993) composed of two elements: the requirements and the actually achieved object state.

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One of the interesting questions concerning co-creation is “What exactly are the processes involved in value co-creation?” (Vargo, Maglio Akaka 2008). Grönroos (2011), in his conceptual model of value co-creation in services, apart from listing provided resource categories, specifies in cocreation a series of activities, namely accessibility effect, interactive communication, and peer communication. McColl-Kennedy et al. (2012) identify co-creation roles, activities and interactions in healthcare services, and their investigations through exploring hospital patients’ behaviours and attitudes. The investigation allowed the identification of five cocreation practice styles, i.e. “team management,” “insular controlling,” “partnering,” “pragmatic adapting” and “passive compliance.” These styles demonstrate strategies used to perform and deal with co-creation by hospital patients. Others notice a set of practices in the co-creation of innovations (Russo-Spena and Mele 2012). These practices are forms of engaging customers in various stages of the innovation process. Moreover, in the literature a scale is proposed for measuring customer co-creation behaviours (Yi and Gong 2013). It is very characteristic for the abovementioned studies that the researchers’ focus point is the consumer. Authors affirm that co-creation does influence service quality (Bolton and Saxena-Iyer 2009; Finsterwalder and Tuzovic 2010; Vamstad 2012). It happens because of extensive, two-way communication between staff and users (Vamstad 2012), as well as customer feedback, which is likely to provoke an adjustment from the company to reduce the discrepancy the customer is signalling through their feedback (Tronvoll 2007). But in fact, co-creation has not been researched very often in the context of service quality, particularly with the consideration of mechanisms (including activities and practices) of achieving service quality during the co-creation process. Vargo, Maglio and Akaka (2008) suggest a better understanding of emergent quality that occurs during co-creation. Eichentopf, Kleinaltenkamp and Stiphout (2011) state that, although service providers perceive customers as their partial employees, it is still unexplored how both sides contribute to value creation, and what exactly occurs in the co-creation process. The purpose of this study is to examine service co-creation incidents with regard to how quality is being achieved by the service provider.

Methods Better understanding of how quality is achieved whilst the service process is co-created with the customer needs deep insight into individual cases of

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service processes, and so it was decided to employ a qualitative research approach. The critical incident technique (Flanagan 1954) was chosen as an appropriate method to investigate this issue. This method consists of indepth interviews with respondents who experienced situations that meet specific criteria. It is based on getting people to tell stories about things which have happened to them (Lockwood 1994). The respondents’ stories are gathered and analysed with the support of content analysis techniques. The critical incident technique can be employed to investigate various aspects of a service over the duration of an encounter’s enactment (Wong and Sohal 2003). For example Nicholls (2005) collected and grouped 190 critical incidents, and Zhang, Beatty and Mothersbaugh (2010) reported 142 incidents for further analysis. The interviews were carried out with direct contact staff representatives recruited from different service sectors. One respondent described only one incident. The author and a few trained field researchers carried out the interviews. Attention was focused on many customer services, considering that service co-creation occurs broadly. The research considers co-creation as a jointly created service process, with the significant contribution of the customer, who at least partly, but recognisably, affects the course and shape of the service process. The main questions respondents were asked are as follows. (1) Have you ever been in a situation during service provision when a customer influenced the shape of the service process and participated in service creation? Please describe this situation in detail. (2) When and how were quality requirements related to this situation determined; in other words, how did you come to know how you should perform a service to achieve quality? Please explain in detail. (3) What was most important for an accurate determination of the customer’s quality requirements in this particular situation? Explain as thoroughly as you can. If necessary, these questions were supplemented by additional ones in order to achieve exhaustive descriptions of incidents. The interviews were conducted by a group of trained field researchers during winter 2012/2013. Incidents were recorded and afterwards transcribed onto an Excel spreadsheet. In total, 168 reliable descriptions of incidents were collected. All of them were repeatedly analysed and categorised. Each set of answers was analysed as one item.

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Results and Discussion Identification of Incident Categories Categorisation of incidents was carried out in several iterations. The names of some categories were changed and incidents transferred from one category to another. One incident was qualified to more than one category. The researcher tried to gather typical actions in categories leading to establishing the requirements and what was necessary to discover them. Finally, 13 categories of incidents on methods of determining the requirements were formed. Table 2.1 below presents the discovered categories with numbers of incidents. Table 2.1. Categories of incidents Category Customer’s concept Cooperation Visualization Interview Monitoring Options Instructions Customer criteria Prediction Customer's work contribution Negotiation Perfection Ingeniousness

Number of incidents 54 35 20 18 15 13 10 10 9 8 6 6 5

First of all, it was observed that the majority of co-creation situations occur at the beginning of the service process. During the first phase of the process a simultaneous determination of all requirements concerning the whole process takes place. The most frequently occurring approach to cocreation is based on the “customer’s own concept” delivered to the service provider, which gives shape to the whole service process. It should be noted that this approach does not exclude others—like, for example, the one just mentioned—and each incident might be qualified to more than

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one category. The category “customer’s concept” groups one-third of the incidents, i.e. 54 incidents. A fragment of a description of an incident qualified to the category “customer’s concept” is as follows. I had the opportunity to co-create kitchen furniture with a customer who presented me with a rough sketch of the furniture, prepared by herself, with precise measurements of cabinets, as well as the choice of colour, countertop and handles, according to her taste. The situation was very clear to me because I knew what was expected; I was absolutely sure what the desired results of my work were (cabinetmaking services, male, age 18–30).

In the category “customer’s concept,” the customers always bring to the services provider a comprehensive concept of the desired services. This concept is explained to the provider’s staff, and this forms a kind of quality guidance. The concept might be presented in many ways. In the reported situations, orally explained concepts occurred very often, as well as concepts drawn by customers, shown with the support of pictures, etc. The initially proposed concept might be changed and influenced by many factors, most often as a result of confrontation with the opinions of the service provider. To a certain extent, the category “visualization,” covering 20 incidents, is linked to this category. This is a kind of scheme based on the utilization of pictures, among other things, for supporting the explanation of service requirements. Visualization is used by both sides of the service encounter. For example, a hairdresser helping themselves in the determination of requirements uses photos, and, similarly, their clients bring pieces of clothing to help themselves in the explanation of requirements. Another way of accomplishing service co-creation and determining requirements relies on the continuous cooperation of the two service sides. The “cooperation” category had 35 incidents. Incidents in this category involve the continuous engagement of the customer, which lasts from the beginning of the process to the end. Incidents from previously analysed categories do not describe authentic engagement, which appears in incidents in the “cooperation” category. Moreover, these incidents are characterized by the deep interests of customers and offers of help for service staff. In some of the collected incidents’ descriptions, the authentic engagement of service staff was also reported. A fragment from this category is as follows. During the patient’s treatment I was kept informed about the feelings of the patient, which allowed me to adjust the treatment to the actual needs …

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Chapter Two Cooperation with the patient was a necessary aspect of properly performed massage treatment, which was to bring the best therapeutic effect (physiotherapy, female, age 18–30).

A similar approach to service co-creation is when customers are so engaged that they provide their own personal work during service provision, partially relieving staff of their duties. This is the category named “customer's work contribution,” with 8 incidents. It should be noted that these incidents do not concern standardized steps of the service process planned as self-service. This is a step further from the “cooperation” category. The customer is not only engaged, but does some activities by themselves. For example, a respondent reported this kind of situation, citing a client who said “I know how to do this, so I will help” (auto repair services, male, age 30–40). Another approach for service co-creation consists of service staff asking a set of open-ended questions, intentionally implemented at some stage of the service process, known as the “interview” category, with 18 incidents. During the interview, the service provider gets to know what the service requirements are. As reported by respondents every time, the questions are directed to a customer as one continuous stream, and not always at the beginning of the service process. In some way similar to this method is the category “options,” with 13 incidents, which is based on the presentation of many options to the customer, with the customer finally choosing one of them. In reported situations, the set of questions and the set of proposed options did not appear as standardized or prepared in advanced. Conversely, questions were always asked individually to each customer, and, similarly, the presented options were always individually tailored to the customer. Coherent with these categories is the category “ingeniousness,” with 5 incidents, where service requirements are determined thanks to the inventiveness of service staff. In some incidents customers acted as controller; they systematically checked how the service process was being performed, and thanks to this played the role of co-creator. These comprised the “monitoring” category, with 15 incidents. From the quality point of view, customers provided frequent feedback on whether the process fulfilled the desired requirements. Another scheme was based on giving systematic instructions on how service staff should perform the process, which comprised the “instructions” category with 10 incidents. In both categories, the customer takes the role of supervisor, instructing or controlling the process.

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The opposite approach is employed in the next few categories. In these incidents, uncertainty and the indescribability of requirements appear very often. The “customer criteria” category, with 10 incidents, consists of situations where the service provider relies upon previously acquired discernment of what is important to the customer, but these criteria are known to be very general. They form the requirements which lead service provider staff throughout the service process. Even worse for the staff is the situation qualified to the “prediction” category, with 9 incidents, where service staff face the challenge of making sense of what the customer really expects. Anticipation is needed, not because staff fail to ask a customer, but because it is sometimes the only option in a particular service context. The “perfection” category, with 6 incidents, reports cocreation situations where the quality requirements were performed perfectly by the staff, which means performing the process as well as possible. And finally there is the “negotiation” category, which differs from all the above-discussed. It involves a situation where quality requirements are decided after some kind of negotiation, during which different trade-offs are taken into consideration and seriously discussed by both sides. Observing how service requirements emerge during each individual service process, it was possible to recognize in a reconditioned manner the possible faces of service co-creation; the identified types of co-creation activities partially go beyond those specified by the literature. In the category “customer’s concept,” the customers bring their own comprehensive concept of how to perform the service process. In the literature, a similar role of the customer is presented in the context of innovativeness. Russo-Spena and Mele (2012) mention “co-ideation” as the collection of techniques targeting the acquisition of new ideas from the customer. The co-creation method mentioned in this study does not refer to innovations, and is not based on facilities and procedures intentionally prepared by the service provider. McColl-Kennedy et al. (2012) mentioned “partnering” as the co-creation practice style, which relies upon collaboration between customers and service staff. The “cooperation” category identified in this study also relies on partnering cooperation between both sides. But in fact, McColl-Kennedy et al. (2012) analysed only the customer’s side. In this study the “monitoring” category means strict, continuous control by the customer. The assessment of new ideas, whilst co-creating innovations, is meant by Russo-Spena and Mele (2012) and McCollKennedy et al. (2012) as specifying some kinds of distanced controlling by

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customers. The co-creation methods identified in this study concern a great deal of communication between both sides of the service encounter. According to the gathered data, during co-creation both sides frequently support each other by using pictures and other requisites for more efficient communication and better mutual understanding (“visualisation” category). Another communication method lies in in-depth interviews as a step in the co-created service process (“interview” category). These are coherent with the views from the literature underlining the importance of communication (e.g. Auh et al. 2007; Grönroos and Voima 2013; Payne, Storbacka and Frow 2008; Vamstad 2012), although the authors do not precisely specify communication logic. Also, Yi and Gong (2013), in their customer co-creation behaviour scale, mention intensity of information sharing during co-creation.

Model Development Critically analysing the incidents from two theoretical viewpoints, cocreation theory and quality management, two variables emerged as vital. The first of them concerns the question of how clearly service staff know service requirements during each service process, and the second concerns how much the customer contributes to service staff obtaining desirable requirements. These two variables allowed the drawing of the Quality Cocreation Model, where the above-mentioned characteristics were employed as axes. The map is shown in Fig. 2.1 below. The circles symbolizing the categories are in proportion to the size of the categories. Clarity of requirements

CoͲndrivenbyprovider

CoͲndrivenbycustomer 7

11

High

3

4

2

1

6

5

10

8

13

12

Low 9

Shotinthedark Low

Fig. 2.1. Quality Co-creation Model

1Customer’sconcept 2Cooperation 3Visualization 4Interview 5Monitoring 6Options 7Instructions 8Customercriteria 9Prediction 10Customer'sworkcontribution 11Negotiation 12Perfection 13Ingeniousness

Customerassistance High

Customer'scontribution torequiermentsdetermination

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It is possible to recognise four types of co-creation, and these four are quadrants of the matrix. The most numerous quarter is the right upper one, which is “co-creation driven by the customer.” This kind of category is characterised by an effective process of service requirement emergence. Finally, the service provider has a clear view of what is required in each particular service process. This requirement recognition is done with the active support and contribution of the customer. In the centre of this quarter there is the category “customer’s concept,” where a customer brings a comprehensive concept of the required service product to the service provider. In this type of co-creation the service provider has a passive role, and to some extent acts as a servant. But on the other hand, the service provider is in a favourable position because it clearly knows what to target. The next quarter (upper left) shows the type of co-creation where the service provider has a dominant role, particularly in terms of discovering requirements. The services provider uses some techniques to help the customer determine their requirements. The service provider takes advantage of clearly knowing what the requirements are for the service process. The customer plays a more passive role in this co-creation type. The passive role of the customer during co-creation was also observed by McColl-Kennedy et al. (2012) in one co-creation practice style called “passive compliance.” A technical issue should be noted here. Whilst positioning categories on the map a dilemma sometimes occurred because of the inner diversity of incidents. In such cases, the circle was situated based on the proportion of the particular incident’s characteristics. For instance, in the category “visualisation” there are more incidents where service provider staff used visualization techniques, so circle 3 is situated left of centre, towards the “low” state of the variable “customer’s contribution.” Lower quarters are characterised by the low clarity of requirements, so the quarter on the left side, where customer contribution is also low, is called “shot in the dark.” In this type of co-creation the service provider is not exactly sure what the desired shape of the service process is. Not being sure, the service staff find themselves in a situation of uncertainty. This observed requirement of uncertainty is coherent with opinions mentioned in the literature. According to authors, customer involvement may raise the overall level of uncertainty during the service process (Auh et al. 2007; Grönroos and Voima 2013). Others underline that the risk of value destruction appears, and is connected with difficulties for the service provider in knowing what situation and mental state the customer is in at

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that specific moment (Grönroos and Voima 2013). Furthermore, there are voices suggesting that the service provider should anticipate the customer’s needs (Edvardsson et al. 2011), which inherently contains uncertainty. Superior service occurs when frontline staff are willing to go above and beyond their job descriptions to ensure total customer satisfaction (Hunter 2011). Generally, the incidents gathered in this study indicate that there exists not only emergent requirements, but also uncertain requirements. The right lower quarter is the co-creation type where the customer contributes significantly, but the requirements are still not known to the service provider in a clear manner. The role of the service provider is to follow promptly and obligingly, in an anticipatory manner, what a customer will say, do or decide. This co-creation type is called “customer assistance,” and only one of the identified categories is qualified to this cocreation type. Finally, it should be underlined that in a service process there might coexist a few co-creation types; however, the analysed stories have been qualified to more than one category.

Conclusions The research approach utilised in this study left plenty of room for the respondents to interpret what co-creation is. Two conditions were addressed in the first open-ended question: occurrence of any kind of influence by the customer on the service process shape, combined with any form of customer participation in the process. This approach allowed insight into the service provider’s view of co-creation, and a refreshed interpretation of co-creation methods. The investigation was focused on the quality issue during co-creation. The study proves that the requirements, which are one of the two parts of quality (the second one is the actual, achieved state), are discovered each time for each individual service process. Looking from this perspective, it can be seen that cocreation has many faces. The view of co-creation which emerges from this study shows that customers might take part as co-creators performing very different roles, from, for example, that of a controller or instructor, through active worker, to that of an interviewee who is answering all questions asked. Also, the service provider plays different roles, from an interviewer, through a negotiation party, to a passive supporter of the customer’s work. This shows the wide range of roles that both actors may play during the co-

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created services. The literature suggests the authentic engagement of two: the service staff and the customer (Dong, Evans and Zou 2008; Grönroos and Voima 2013), including affecting commitment (Auh et al. 2007). This study confirms these opinions, but at the same time shows its many shades. This commitment, according to the study, may be symmetrical or asymmetrical. The thirteen categories, being to some extent similar to cocreation activities and practices recognized by other authors (McCollKennedy et al. 2012; Russo-Spena and Mele 2012; Yi and Gong 2013), are the elementary strategies for service co-creation. These strategies emerge by the mutual consent of both sides of the service process, and they seem to be the best option in each case, assuring the highest value for the customer. The study shows that co-creation incidents can be characterized by different customer contributions to requirement determination. Moreover, service requirements can be recognisable by the service provider to a limited extent. This observation allowed the recognition of four types of service co-creation (the Quality Co-creation Model). The co-creation type most often occurring is “driven by the customer,” where the customer behaves actively, contributing significantly to the requirement setting. This type is very coherent with the majority of views on co-creation, meant as a jointly performed service process in marketing literature. Apart from this type, there is co-creation “driven by the service provider,” where the provider’s staff play the more active role in contributing to the requirement recognition. Besides these there are “shot in the dark” and “customer assistance” co-creation. Whilst achieving quality, the organization always treats the customer as the overriding determinant of what the quality requirements are (Yen, Gwinner and Su 2004). On the other hand, the traditional understanding of organizational systems, including the quality management system, perceives quality requirements as relatively stable and comprehensively described guidance (Garvin 1988; ISO 9000:2005; Juran 1992). This study investigates quality as an emergent phenomenon, as suggested for cocreation by Vargo, Maglio and Akaka (2008). Indeed, in the co-creation environment service requirements can be obtained no earlier than when each individual service process starts. This fact provides challenges regarding how to organize service organizational systems that would be so responsive as to learn a comprehensive meaning of requirements. But besides the fact of “emergent quality” existence, there is also quality for which requirements are not fully emerged (types: “shot in the dark” and “customer assistance”). In these cases, the service provider operates under

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conditions of uncertainty and very often relies on the intuition and personal experience of employees. These types of co-creation are characterized by the elusive nature of service requirements. Therefore, it can be concluded that another quality meaning exists, and this one could be named “elusive quality.”

Implications and Limitations This study has some implications for theory and practical management in the service industry. First of all, quality management theory should clearly mark out two more service quality meanings, namely “emergent quality” and “elusive quality,” which can take place whilst the service process is co-created with the customer. Furthermore, thanks to the quality point of view, it is possible to get in-depth views on co-creation. Studies on cocreation should more often take into consideration the two focal points, the customer and the organizational service system, at the same time. This might bring about new interesting models and discoveries. The set of co-creation strategies discovered in this study, as well as the cocreation types, is of educational value for service companies. These systematics allow the building of better organizational solutions to deal with co-creation specific to each company. In particular, the “elusive quality” to be reached at a high level should be supported by proper training programmes for direct service employees. Moreover, in this case the personal qualities of employees are also very important. However, the identified co-creation strategies and types still need further in-depth research and extended managerial guidance. This study also implies that whilst co-creating a service, and targeting to achieve excellent service quality, the initial phase of the service process is crucial. During this stage, the essence of co-creation, from the point of view of quality, happens because there is the possibility to learn what the criteria of the perfect service process are. The limitations of this study come from two facts: this study utilises a qualitative approach, and there were no restrictions to service sectors. In fact, these limitations were built in at the research design stage, which was intended to take advantage of explorative investigations. Therefore, the generalization of quantitative observations is very risky. Furthermore, some new co-creation strategies might be discovered, particularly in service sectors.

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CHAPTER THREE RETHINKING WEALTH MANAGEMENT FROM A PRODUCTION PERSPECTIVE: AN ETHNOMETHODOLOGICAL INQUIRY INTO INCREASING PERCEIVED ADDED VALUE PHILIP CHOWNEY AND EMMANUEL FRAGNIÈRE

Abstract The financial crisis and the end of banking secrecy have left the Swiss private banking sector with a new challenge—how to regain their disillusioned customers’ faith. Since the trusted relationship of wealth management is damaged, the time has come to reconsider what the client needs in terms of service in order to re-establish long-term loyalty between banks and their clients. Using ethnomethodology as our research tool, we have been able to study the tacit knowledge involved in this relationship. Having interviewed 80 people, we were able to study this tacit knowledge leading to loyalty in private banking. The semi-structured interviews reveal that the salient attributes are more emotional than functional, and that the risk appetite diagnosis process is not well understood by clients and thus does not generate sufficient perceived value for them. Consequently, we can question whether the business model of private banks is sustainable. Keywords: wealth management, ethnomethodology, banking, loyalty, service science, banking secrecy

Swiss

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Introduction The Swiss private banking sector needs to be reinvented following the disappearance of banking secrecy. Banking secrecy has, up until recently, allowed Swiss banks to minimize taxes for their clients through the careful allocation of assets. Not being required to notify taxing authorities, tax avoidance is considered a civil offence (in comparison to tax evasion, which is a criminal offence). The business model of a private bank can be described as follows: in the front office, a wealth manager adopting an artisanal approach is in charge of establishing the risk profile of their clients, whereas in the back office a fully industrialised process handles operations and fund management issues (Dubosson, Fragnière and Tuchshmid 2009). A majority of Swiss private banks have recently announced in the press their wish to externalise their back-office operations in order to cut costs. What they don't realise is that they might also lose some potential perceived value attributes, also key to customer loyalty. In a context where banks are rethinking their ways of functioning, this paper aims to assess how this can be done from a production perspective. Our main research question addresses whether it is enough for a wealth manager to solely focus on the diagnosis of a risk profile for the client as well as reporting tasks. As a subtopic, we explore the possibility for the wealth manager to recuperate some activities of the back office that are today not designed to provide perceived value for the clients (Shostack 1987). This research provides the Swiss banks with elements of service design that are typically not explored within traditional financial approaches. This chapter is organised as follows. In the next section, our literature review presents the main findings of service science related to our topic. Then, the methods section explains the two ethnographic surveys conducted to collect the data analysed in the results section. We finally discuss and conclude it with a set of specific propositions.

Literature Review Service science is an emerging academic field that attempts to better address the particularities of service production (Maglio and Spohrer 2008). The raw material of service production is known to be knowledge. In service science, we make the distinction between explicit and tacit knowledge. Whereas explicit knowledge can be articulated, codified and readily transmitted to others, tacit knowledge, based essentially on know-

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how and experience, cannot (Fragnière, Nanchen and Sitten 2012). In working towards the notion of “service management” that takes a holistic view of the client’s overall satisfaction with the delivery of a service and seeks to adjust all organisational functions to the pursuit of this goal, Grönroos (1993) illuminates the need for service science as a way to fully understand the nature and value of coproduction. In today’s growing service economy, it is essential for service providers in both the private and public sectors to understand the important roles that creativity, empathy and implicit knowledge play in service coproduction in order to meet the demand for highly customised, expertise-dependent service experiences (Spohrer et al. 2007). These factors are even more linked to the business basis for strong service design when considering the notion that there is a strong relationship between customer satisfaction and “willingness to pay” (Homburg, Koschate and Hoyer 2005). In contrast, a Mercer Oliver Wyman survey in 2005 on European wealth management finds that clients are more interested in service level, brand, privacy and “peace of mind” than in superior investment performance. Many managers continue to promote their investment offerings and performance rather than these apparently more valued characteristics of service. They posit that companies are failing to take advantage of client insights and preferences. Most private banking services are engaged on the basis of quality, not price. Abratt and Russell (1999) found that the consistency of a bank’s service and the client’s level of trust need to be fully enhanced to ensure confidence between the parties. Regular communication with clients is one positive way to enhance the banking relationship and the service levels. However, there is a public perception that banks still lack a certain amount of transparency and sometimes even honesty. Bodescot (2006), for example, found that some banks furtively slip in-house funds into their mutual funds in order to protect their own margins and boost their own units. Bowen and Schneider (1995) suggest managing clients as if they were employees, since there is so much to be gained from client involvement. Professional firms have already taken into account the role of knowledgeable clients and established new processes to benefit from their expertise (Anand, Gardner and Morris 2007).

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Methods Research Context Despite the political and economic challenges the Swiss wealth management sector has faced over the past few years, it remains at the centre stage of worldwide financial activity. Created by the Swiss Banking Act of 1934, banking secrecy is still one of the main aspects of private banking even after the agreement between the Swiss and United States governments that resulted in UBS providing information on American clients suspected of tax evasion to US authorities. Throughout this transitional period, Swiss banks have been nevertheless able to report positive net new money figures for the last three years (Birchler et al. 2013) and have continued to attract much undeclared foreign wealth. As mentioned in the literature review, in service science a service is purchased as long as certain elements of perceived added value (otherwise known as the salient attributes) are providing sufficient benefits for the clients. The banking secrecy is effectively perceived as one of the main salient attributes. Following the amendment of the confederation in January 2012, Switzerland has officially denied banks the guarantee of this salient attribute, which is precisely the context of this research. Swiss wealth managers now have to look for new kinds of salient attributes and this is what we are exploring in this paper. Given that banking secrecy was a salient attribute that relied on law, if there is a potential to develop salient attributes in the future we are looking for banking skills based on know-how.

Research Approach This section presents the role that ethnomethodology plays in service science (Fragnière, Nanchen and Sitten 2012). Because most services rely on human factors such as expertise, implicit knowledge, empathy and other immeasurable qualities, most quantitative modelling techniques are insufficient for studying and evaluating the current state of a service environment. Ethnomethodology provides a useful tool for studying the contexts, behaviours and activities that compose a given service environment, and for gathering the information and insights necessary for suggesting iterative improvements (Makino et al. 2009). Garfinkel (1996) stated that “ethnomethodology’s fundamental phenomenon and its standing technical preoccupation in its studies is to find, collect, specify, and make instructably observable the local endogenous production and

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natural accountability of immortal familiar society’s most ordinary organisational things in the world, and to provide for them both and simultaneously, as objects, and procedurally, as alternate methods.” Saunders, Lewis and Thornhill (2012) state that: “its purpose is to describe and explain the social world that the research subjects inhabit in the way in which they would describe and explain it. It is a very appropriate strategy in business, if the researcher wishes to gain insights about a particular context and better understand and interpret it from the perspectives of those involved.” Thus, the ethnomethodology approach is well suited for understanding the underlying constituents of loyalty in a specific area such as private banking. Ethnomethodology is used to reveal belief systems and social codes that are typically associated with a wealth management experience. The semistructured interviews (Combessie 1999) were designed to provide respondents with enough freedom to discuss and share their experiences with the analyst, who would then either redirect the interview to explore additional patterns, or conduct further interviews (Gavard-Perret et al. 2008). Semi-structured interviews were used in two distinct phases. The first phase of interviews was held between 2009 and 2011. We conducted 60 interviews with wealth managers and clients to understand the key elements of the wealth management service experience and the related perceived value attributes. The questions are “mirror questions,” meaning the same question could be addressed at the same time to a wealth manager and a client, bearing minimal modifications in the way they were posed. The researchers first met the respondents and asked for a few details, such as their age and professional situation (in the case of clients). Some of the questions included in the first series of interview were: x What are the elements that allow you to feel comfortable with your wealth manager? x What accounts for you staying with your wealth manager? x Are you more of a craftsman or a link in the banking chain? The second phase of interviews was held between 2012 and 2013. We held 26 semi-structured interviews with the aim of looking at how the wealth manager "produces" their client’s risk profile assessment. As in the first phase, the same questions were asked to both managers and clients of Swiss banks. Some of the questions asked in the second phase were: x How do you approach the issue of investment risk with your customers and how do you estimate it?

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x When diagnosing and defining the risk profile of your clients, what personal freedom do you have in relation to the investment policy of your institution? x How do you verify your client’s knowledge on the subject of risk? x How do you manage the risk of non-performance in relation to the targets set by the investor (your clients)? x If your portfolio is not performing relative to your targets, who would you consider to be most responsible: yourself, your wealth manager, his team, the economy, and why? x Do you know the inherent risks linked to your investment structure (portfolio), and can you describe them?

Data Analysis Interviews were transcribed and then analysed using a coding process (Miles and Huberman 1994). After an initial review of the transcripts, we elaborated a set of codes based on key themes and concepts that were present in the data. The descriptive codes were organized into four main categories: decisive initial service experience, making the client comfortable, main constituents of loyalty, and becoming a craftsman, for phase one, and two main categories, variant initial risk assessment and managing investment risk, for phase two. These six broad categories each contained a set of sequentially numbered individual codes. For example, our specific codes within the theme “decisive initial service experience” included: (a) the first meeting, (b) portfolio performance, (c) feeling, (d) trust, and (e) common understanding.

Findings Our research shows that the emotional aspects of service matter more to clients than financial performance aspects. We also found that by only doing the risk assessment profile too little problem resolution takes place, therefore reducing the potential of perceived value. After presenting the semi-directed interview questions, we are now going to see in what ways the first series of semi-directed interviews has shown that the salient attributes are more emotional (i.e. trust) than functional (i.e. portfolio performance), and why the risk appetite diagnosis process is not well understood by clients and thus does not generate sufficient perceived value for them. To simplify the analysis, we have used a selection of questions from the interviews as the main outline of our research, all illustrated with quotes from the respondents. We first present the phase one findings,

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based on the interviews held between 2009 and 2011; we then move on to the phase two interviews, held between 2012 and 2013. The first phase of interviews is analysed under the main four themes and related codes, as previously mentioned in the data analysis section. The second phase of interviews is discussed in the same manner.

Phase One Research Findings Theme 1: Decisive Initial Service Experience The interview results show that during the casual conversation that takes place shortly after the wealth manager and the client meet, generally covering topics such as family, health, personal interests and business, it is crucial that the wealth manager evaluate what his or her client’s needs are whilst also installing a climate of trust. This assessment must evolve throughout the meetings to meet the client’s ever-evolving needs. A senior wealth manager said, “The customer profile changes over time. If the client presents a certain profile at age forty-five, this profile will not be the same when he or she retires aged sixty-five. Expectations and appetite for risk will evolve over the years.” The interview results also show, almost unanimously, that for the wealth manager the first meeting with a new client is the most important. It determines whether the client will entrust their money with them and whether they will bond. Beyond the performance of the portfolio, what stands out in a significant manner here is the “feeling” a client gets for their wealth manager, based on a sense of trust and common understanding. Theme 2: Making the Client Comfortable The elements allowing a client to feel at ease are many. For the client to feel comfortable, the essential component is, again, trust. The interview contains recurrent answers, such as the respect of the clients’ privacy, always dealing with the same person rather than a replacement colleague, good portfolio performance, accessibility of the manger, professionalism of the manager and the advantage of the manager being a friend of the family. These elements all contribute positively to the client feeling at ease, and therefore trusting their wealth manager. The elements that stood out through the emphasis from the respondents were the depth of communication with the wealth manager and their sincerity. The language used by the manager must be understandable, that is to say commensurate to the size of the client’s portfolio, as well as having the ability and will to understand. The client does not generally appreciate an incomprehensible

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or condescending language, potentially leading to a lack of trust. If the manager makes proposals that are not in line with the expectations of the client, the trusted relationship will be lost. To feel at ease, the client must feel that the manager is there to provide information that will enable them to make optimal decisions in terms of their financial strategy. A Client (entrepreneur, 65 years old) said, “When I meet with my wealth manager, he presents me with a report on my current financial situation. He speaks in manner really adapting to my own logic; to my personal way of understanding, because it is important for me to understand the situation. This person knows me very well and is able to reassure me on the preservation of the level of quality of life for my family and myself.” The form of communication depends on the client’s profile and his or her expectations. A wealth manager stated that, “with customers from the entrepreneurial, liberal segments, my objective is to challenge them, they love it. However, for some of the private client segments, we tend to act more as slaves because they need to be pampered.” In conclusion, the most important elements that came from this question are the language of the wealth manager and his or her sincerity. Having established what allows a client to feel at ease, we then looked at what would insure a client’s loyalty to their wealth manager. Theme 3: Main Constituents of Loyalty Three main constituents of loyalty emerged from our interviews: rapport, performance and the bank. In terms of rapport, time plays the most important role here. Established trust is difficult to replace because it is built over several years. Rapport and trust are the key elements that maintain a longstanding relationship between the client and his or her wealth manager. As with a doctor, you no longer need to repeatedly explain things and the client benefits from the fact that the person in front of them knows them well. A client (an entrepreneur, 40 years old) stated that, “I have no wish whatsoever to start all over again with someone else and have to tell them all about my life.” Another client (a marketing director, 36 years old) expressed, “There is a real quality of service because of our longstanding relationship. I’m not treated like just another customer.” These clients, benefiting from long-term relationships with their wealth managers, will tend to stay loyal to their banker rather than their bank. As a client said, “I’m bound to my wealth manager. If he changes banks, I’ll follow him.” For a relatively smaller portion of respondents, although trust and friendship are established, their main priority is the financial performance of the portfolio. This client profile is willing to change banks or banker immediately if unsatisfied at this level.

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So, this client remains as long as he or she is satisfied with level of portfolio performance. A client said, “I tend to not stay long with any wealth manager, or more precisely with a well-defined investment strategy. Therefore, I am not dependent on a particular wealth manager and can change when need be.” Another client supports that, “Even if I have a good friendship with my wealth manager, if a different bank satisfies me more, I’ll leave my wealth manager whilst remaining good friends.” For a minority of interviewees, the bank is primordial and has the greatest influence on the long-lasting relationship. These clients give consideration to the reputation of the bank. Even so, this relationship changes naturally over time towards that of the wealth manager, due to their tacit knowledge being highly valued by the client. A wealth manager expressed that, “I would say that initially there is an 80:20 ratio in favour of the bank for these clients, and that as time passes and the relationship develops, the ratio evens out.” As a general rule, the higher the loyalty between a wealth manager and his or her bank, the lower the loyalty between this wealth manager and their clientele; and the lower the loyalty between the bank and the wealth manager, the higher the loyalty between the wealth manager and the clients. Theme 4: Becoming a Craftsman This question allows us to assess the actual capacity of individual wealth managers inside the private banking industry to actually change things. A craftsman would feel relatively more independent than someone considering themselves to be more of a link in a banking “production line,” simply executing orders from their hierarchy and following protocol. The answers depended on the financial institution the wealth manager worked for, their years of experience and the amount of money they were dealing with. Generally, the more years of experience a wealth manager gains, the more one becomes independent. A wealth manager stated, "It goes without saying that the environment in which everyone works is going to affect their way of handling things. I mean, if one is in a family business, managers tend to behave more like a friend than a manager, the reverse is also true because in the bigger, more ‘industrial’ banks the managers all have a similar mode of conduct which somehow prevents them from fully opening to their customers.” A manager working at Credit Suisse, for example, will feel more like a link in an industrial chain because of the importance of the infrastructure behind them. The first set of interviews brings us to the following conclusion—in terms of performance perceived by the client, the wealth managers’ service

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delivery takes primacy over financial gain. This means that, in terms of being loyal to one’s bank, a majority of clients favour the relationship they have with their wealth manager over the performance of their financial assets. Swiss banks have to compete on the basis of quality of service, but it’s not the financial aspect but the social experience that they need to focus on. A wealth manager asserted, “We must not forget that we are dealing with people's money, which has a particularly emotional side. Banks more or less all offer the same products; the service will make the difference." Having found through our research that the emotional aspects of service matter more to clients than financial performance aspects, we now go on to find out how, by only doing the risk assessment profile, too little problem resolution is taking place, therefore reducing the potential of perceived value.

Phase Two Research Findings Theme 5: Variant Initial Risk Assessment In response to the question "Could you describe briefly and in chronological order a typical meeting with your client?”, a wealth manager answered that, “Of course we try to assess whether we have met the customer's expectations in terms of performance and risk.” Further on, in response to the question "How do you approach the issue of investment risk with your customers and how do you estimate it?”, the manager said, “… we try to understand what the expectations are to assess whether the client understands the concept of risk.” When asked by the interviewer “How do you feel?”, the same manager said, “We have a written form that is filled in with the customer and is added to the client’s file for legal reasons …." We notice that the vocabulary used by the banker suggests an attempt to define the risk profile with an estimate (including a certain error margin), whereas the legal paper added to his file suggests something quite specific. There is a clear dissonance between these two parts of the same risk assessment method. Theme 6: Managing Investment Risk In response to the question "How do you approach the issue of investment risk with your customers and how do you estimate it?”, a wealth manager replied, "Our basic advice to the client is to never invest in something they cannot control.” Later, in response to the question "How do you manage the risk of non-performance in relation to the targets set by the investor?", the same wealth manager replied, “It’s difficult to answer … in the case of

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Madoff, for example, we can’t control a speculative bubble, you cannot control it.” Uncertainty is present in the mind of the client. But, his perception of the uncertainty of the risk at the time of the interview will affect his risk profile. The informal exchange between the client and his banker has an influence that one can more or less control whilst defining the risk profile. There is a certain margin allowing space for human error. A wealth manager explained, "In terms of risk estimation, the bank provides us with forms to guide us if we have no idea of the customer profile … this can be helpful, but with the experience and knowledge in behavioural finance, one knows pretty quickly who our customer is and what he expects of us.” From one bank(er) to another, different procedures are applied, more or less rigorously, to complete the same task—produce value for the client through fully understanding his or her needs and making sure they are fully knowledgeable on what their risk assessment means. We see here that, based on the intricate uncertainty that comes with financial investment, only an attempt to fully assess the client’s profile is achieved. This results in too little problem resolution taking place during the risk assessment, the ultimate affect occasioning the reduction of potential perceived value.

Discussion A crucial point that emerges from our research is that, once the clients’ trust is considered as acquired, the banker retreats slightly, not paying as much attention to the client as before. This is confirmed with remarks relating to the question of a typical meeting between a banker and the client and the importance of the first meeting. This first meeting is crucial in establishing a relationship between the bank and its clientele, the problem being that the initial quality of the service is hard to maintain without “invading” the customer’s time and wishes, even though the need for more proximity is still felt. Maybe the key to resolving the problem is finding ways to do this without repeating the first meeting ritual but still conveying this same level of attention in other ways. Another important point that emerges is the responsibility in the case of non-performance in relation to the targets set by the investor. It appears that, if all investors were to take full responsibility from the very start of the investment process, co-production would be significantly increased and therefore “perceived value” added furthermore. Even if this seems at first to be paradoxical, because the client would play a more proactive role in the management of their portfolio, they would naturally increase their

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own visibility on what the banking service really provides to its customers. This is obviously not a solution for everyone, but it does stress the following question: is investing a solution for everyone? Is it normal that everyone should assume that a certain amount of money should naturally increase in value, without any effort on their behalf? It seems to be a given that money simply makes more money. The problem lies in the fact that banks are not going to acquire clients if they tell them right from the start that, if they could guarantee substantial financial increases, they wouldn’t necessarily be employed by banks but doing something else with their systematically and successfully acquired fortunes. On the other hand, clients are not going to understand, let alone accept, the fact that banks can lose part of their wealth. So, we reach a natural “compromise” that consists of creating a “fog of confusion” around the service that they are offering to the client. If we turn this fog of confusion into a concrete, dynamic situation where the client must take on a proactive role, then at the very least we will get closer to a more responsible, realistic and sustainable situation. Having used an ethnomethodological basis in order to develop this proposition, a further validation, using a quantitative survey, is deemed necessary. In the case where this proposition turns out to be verified, there would be an urgent need for wealth management to focus their attention on elements of tacit knowledge that convey trust and loyalty. If the quality of the relationship is to be the real differentiator of the future, then financial institutions need to arm their relationship managers with relevant skills, tools and training so that they can fully meet the needs of their clients.

Conclusions We can question whether the current business model for private banks is sustainable in the sense where our findings suggest that, rather than attempting to optimize financial products in terms of yield and risk, other ways should be explored that take into account the concept of perceived added value in relation to elements of trust, the ability to understand and define financial objectives and the risk appetite of the client based on know-how. Our research shows that the emotional aspects of service matter more to clients than financial performance aspects. However, we also find that by only doing the risk assessment profile too little problem resolution is taking place, therefore reducing the potential of perceived

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value. Consequently, the only way to get wealth management back on a sustainable track is through the wealth manager who has to regain control over the majority of the service process and activities (e.g. investment allocation, risk management, back-office operations) that nowadays tend to rely on hidden labour division. Practically, this would mean a return to artisanship rather than industrialisation over the full wealth management service process.

Acknowledgements We wish to thank the participants having followed the Masters in Luxury Management at the HEG between 2009 and 2013.

References Abratt, R., and J. Russell. 1999. “Relationship Marketing in Private Banking in South Africa.” International Journal of Bank Marketing 17 (1): 5–19. Anand, N., H. K. Gardner, and T. Morris. 2007. “Knowledge-based Innovation: Emergence and Embedding of New Practice Areas in Management Consulting Firms.” Academy of Management Journal 50 (2): 406–28. Birchler, U., C. Bührer, R. Hegglin, L. Meier, and F. Reeh. 2013. The International Private Banking Study 2013. University of Zurich Department of Banking and Finance. Bodescot, A. 2006. “La multigestion a Gagné ses Gallons.” Le Figaro, June 9. Bowen, D. D., and B. Schneider. 1995. Winning the Service Game. Boston, MA: Harvard Business School Press. Cohen A. L., P. P. Maglioa, and R. Barret. 1998: “The Expert Browser: How to Leverage Distributed Organizational Knowledge.” Paper presented at the Workshop on Collaborative Information Seeking at CSCW´98, Seattle, WA. Combessie, J-C. 1999. La méthode en sociologie Paris: La Découverte. Dubosson M., E. Fragnière, and N. Tuchshmid. 2009. “Wealth Management ‘Manufacturing’: Delivering More Value?” The Journal of Wealth Management 11 (4): 48–59. Frangière E., F. Moresino, J. Tuberosa, and N. Turin. 2013. “L’Etude de Marché en pratique: méthodes et applications.” Editions de Boeck.

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Fragnière, E., B. Nanchen, and M. Sitten. 2012. “Ethnomethodology and Theatre-based Reenactement in Service Design Experiments.” Service Science 42, Informs, 89–100. Garfinkel, H. 1996. “Ethnomethodology’s Program.” Soc. Psych. Quart. 591: 5–21. Gavard-Perret M. L., D. Gotteland, C. Haon, and A. Jolibert. 2008. Méthodologie de la recherche: réussir son mémoire ou sa thèse en sciences de gestion. Paris: Pearson Education France. Grönroos, C. 1993. “From Scientific Management to Service Management: A Management Perspective for the Age of Service Competition.” J. Service Indust. Management 51: 5–20. Homburg C., N. Koschate, and W. D. Hoyer. 2005. “Do Satisfied Customers Really Pay More? A Study of the Relationship between Customer Satisfaction and Willingness to Pay.” J. Marketing 692: 84– 96. Makino Y., K. Furuta, T. Kanno, S. Yoshihara, and T. Mase T. 2009. “Interactive Method for Service Design using Computer Simulation.” Service Sci.1 (2): 121–34. Maglio, P. P., and J. Spohrer. 2008. “Fundamentals of Service Science.” Journal of the Academy of Marketing Science 36 (1): 18–20. Mercer Olivier Wyman. 2005. European Wealth Management Survey. Miles, M. B., and A. M. Huberman. 1994. Qualitative Data Analysis, 2nd edition. Thousand Oaks: Sage Publications. Saunders, M., P. Lewis, and A. Thornhill. 2012. Research Methods for Business Students, 4th edition, Upper Saddle River, NJ: Harlow Pearson Education. Shostack, G. L. 1987. “Service Positioning through Structural Change”, Journal of Marketing 51 (1): 34–43. Spohrer J., P. P. Maglio, J. Bailey, and D. Gruhl. 2007. “Steps Toward a Science of Service Systems.” Computer 40: 71–7. Zablah A. R., D. N. Bellenger, and W. J. Johnston. 2004. “An Evaluation of Divergent Perspectives on Customer Relationship Management: Towards a Common Understanding of an Emerging Phenomenon.” Industrial Marketing Management 33 (4): 475–89. Zineldin M. 2006. “The Royalty of Loyalty: CRM, Quality and Retention.” Journal of Consumer Marketing 23 (7): 430–7.

CHAPTER FOUR EXPLORING THE IMPACT OF CULTURE IN ETHNIC RESTAURANTS: CASE STUDY OF A SPANISH RESTAURANT IN LONDON SALOOMEH TABARI AND HADYN INGRAM

Abstract Literature suggests that culture is a powerful force, but this concept is difficult to define and characterise. Service interactions occur between customers, service providers and their stakeholders, and their individual and organisational culture affect all parties. This study examines why Londoners are attracted to ethnic restaurants and whether culture acts as an attraction or a barrier their visit. These service interactions are rich and simultaneous phenomena that are best explored through qualitative research. Accordingly, customer interviews and observational data were taken in a Spanish restaurant in London. The case study data reinforces the view that restaurants satisfy more than biological needs, acting as a social meeting place for like-minded people. The conclusions emphasise the strength of culture as a formative force and how difficult it may be to change cultural behaviour. Nevertheless, authenticity in ethnic restaurants may be diluted over time, giving way to a gastronomic interpretation that may be more acceptable to diners in the host nation. Keywords: organisational culture, ethnic restaurants, Spanish food, service interactions, London.

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Introduction How does culture impact upon organisations and customers? Does it enhance a service interaction or might it act as a barrier between the server and the served? In a consumerist economy, there is a need to identify and analyse any factors that may diminish customer satisfaction, and culture may be one of those factors. For example, the national cultures of various actors such as managers, staff, agents, suppliers and customers may affect the nature of service interactions. Culture may affect perceptions, expectations, understanding and ultimately satisfaction with those service interactions. In hospitality and tourism organisations, the service interaction is at the heart of customer satisfaction, but there is little empirical research that can help in understanding, analysing and managing these interactions effectively. This chapter investigates the impacts of culture in ethnic restaurants, which are rich with daily service interactions, but about which little is written. Accordingly, the approach is a cautiously exploratory one, which first reviews some of the literature and research on national and organisational culture—concepts that sound similar, but are fundamentally different. Subsequently, the context of eating out, restaurants and ethnic restaurants are addressed and the restaurant service interaction explored. Practical issues are considered in a case study of a Spanish restaurant in London, and some implications are suggested. Finally, the chapter concludes with a discussion of the managerial consequences of this research for restaurants and the hospitality industry.

Literature Review National Culture National culture has been characterised in the literature as absolute differences between the total or complete culture of those in one nation and that of others (Mead 1962). Fromm (1966) suggests that it can be considered as a nationally separate part—a “core” or “nucleus.” Hofstede (1980) adds that national culture is a “common component” as a wider culture that holds both global and sub-national constituents. Cultural beliefs and values have different meanings in different nations and countries where individuals have grown up with their own customs and culture. People from different cultures have diverse cultural values, rules of social behaviour, perceptions and social contacts, which could have a direct influence on their lifestyle, work, leisure and consumer behaviour (Richardson and Crompton 1988). However, culture can change over time

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with regard to its adoptive nature, and traditional values may evolve because of economic and social changes. Some questions might be posed about national culture. For example, are there any differences between nations? Can nations really possess and exhibit a culture? Is it correct to classify a culture based on nationhood? Some researchers suggest that each nation has a distinctive, influential and describable culture (Hickson and Pugh 1995). On the other hand, Anderson (1991) defines nations as imagined communities and Wallerstein (1990, 33–4) argues that researchers are now able to “operationalise the concept of culture … in any way that enables us to use it for statements that are more than trivial.” The main focus of this chapter is to explore the relationship between nations and expectations towards service. Can nations have any effect on customer expectations and is it important to understand these differences? How should the hospitality industry react to this variety of nations? There are a great deal of difficult but interesting questions on this topic. Crotts and Litvin (2003) suggest that country of residence provides a stronger meaning for cultural differences compared to country of birth or citizenship. However, Hofstede (1997) comments that the impression of culture in families during their childhood helps construct one’s mental program that strengthens during the years at school and in work. Once internalised, culture will remain relatively resistant to change over the path of one’s lifetime. This suggests that country of birth or residency seems to be a more accurate and suitable identifier of a person’s national culture (Hofstede 1997). Therefore, culture is most often viewed as synonymous with country or nationhood, perhaps for convenience. It is clear that cultures are not homogenous, but layers of culture in fact exist (Hofstede 1991). National culture can also be used to analyse and explain behaviour. Research shows that temperature and climate have an effect on national culture as well as on individualism by acting as a limiting and motivating influence on the type of social processes and economic activities (Parker and Tavassoli 2000). For example, climate may affect the amount of time spent outdoors, shopping behaviour and moods. As has been suggested, cultural norms and beliefs play key roles in shaping people’s perceptions, dispositions and behaviour (Markus and Kitayama 1991). Thus, hospitality and tourism managers need to understand their customers’ national culture in order to meet their expectations and avoid disappointing them. Marketers at the end of the twentieth century were faced with the challenge of multicultural marketplaces. Since then, firms have been

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forced to operate in multicultural environments because of the globalisation of markets and international competition (Douglas and Samuel Craig 1997). According to Jamal (1998), ethnic minorities have increasingly become an essential part of urban life in many regions of the world. Similarly, Ford (1996) comments that the population of ethnic minorities in UK has risen during the past decades. These changes in international marketing have highlighted the need for more cross-cultural understanding of consumer behaviour (Briley, Morris and Simonson 2000; Hampton, van Gent and Aart 1984). Some researchers point out that differences in value systems across a variety of cultures can be related to major differences in consumer behaviour (Gong 2003). Hence, crosscultural adaptation attempts to explain the dynamic relationship between the person and their environment and the ability to adapt. With the advent of globalisation in business, the need for cross-cultural understanding is more important than ever (Gertsen 1990). In this regard, cross-cultural research often looks to Hofstede's definition of culture. Hofstede defines culture as "collective programming of the mind that differentiates members of one group or category of people from another" (in Luna and Gupta 2001, 46). Similarly, McCracken (1988) argues for culture as a blueprint of human activity, inferring that culture is an organising factor combining social and productive activities that shape behaviour. Hofstede shapes his culture theory by providing five dimensions of national cultural variability: the power distance index, the uncertainty avoidance index, the individualism index, masculinity and long-term orientation (Confucian dynamism). He points out that these cultural dimensions generally characterise national culture as an "average guide of beliefs and values" (Hofstede 1983, 78). According to the Hofstede dimensions, consumer behaviour will be different according to country background, beliefs and values as individuals or groups. Luna and Gupta (2001) discuss the elements of a cultural value system which each and every individual has in common with the group to which they belong, as well as idiosyncratic values, which are exclusive to the individual. Individuals' value systems have been developed over time as they have been socialised with an exacting group (Hofstede 1983; Luna and Gupta 2001). However, Geertz (1973) argues that culture cannot be separated from the individual—it is an inherent quality. Hence, culture has a direct relationship to consumer behaviour and managers need to follow a framework to give them a better understanding (Hofstede 1991; Geertz 1973).

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As a result, the relationship between these four elements of values, symbols, rituals, heroes and consumer behaviour is not so simple, and more research is needed to better understand it. This mutual relationship between immigrants and their host culture is known as acculturation, which is one of the factors that create cultural understanding, and which includes bi-directional links between immigrants and their host culture (Hofstede 1997). This suggests that immigrants not only adapt (acculturate) to their host culture, but may change the culture as well. However, Padilla and Perez (2003) comment that acculturation is different from assimilation, suggesting that changes can happen to any group involved in the cultural encounter.

Organisational Culture Organisations also have their own specific and individual cultures that affect the way in which goods and services are delivered to customers. Culture in organisations is also rather difficult to define. For example, Alvesson (1995) suggests that the culture metaphor comprises organisational symbolism and postmodernism. Similarly, Martin (1992) includes integration, differentiation and fragmentation. However, rather than aid understanding, it has been argued that the diverse nature of perspectives into the study of culture has added to the complexity of the concept within organizational theory (Ogbonna and Harris 2002). Can organisational culture be changed and managed? Some studies show that managers believe that culture change is feasible, while most theorists hold that this is a misguided view (Krefting and Frost 1985). Martin (1992) agrees that changing culture is a difficult task. On the other hand, the concept of role theory has an important place in each organisation. As Handy (1985, 62) remarks, the “definition of any individual’s role in any situation will be a combination of role expectations.” Moreover, members of a work group with different demographic backgrounds may have dissimilar belief structures (Margarethe and Bantel 1992). Furthermore, in hospitality organisations there are a number of cultural issues that can be important for managers (Wilkins and Patterson 1985). For example, Kemp and Dwyer (2001) believe that developing a strong culture may enhance the efficiency of the organisation, and it has been shown that there is a strong and direct link between culture and company profitability (Tidball 1988). LeBlanc and Mills (1995) highlight the fact that a strong organisational culture is a prerequisite to organisational improvement and performance in the sector.

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Eating Out and Ethnic Restaurants Medlik (2003, 142) defines a restaurant as an “establishment providing food for consumption on the premises to the general public.” In developed countries travelling for the consumption of food away from home has become a leisure activity, and “eating out” both a physiological necessity and an occasion to relish. Walton (2000, 66) remarks that “growing affluence and increased transport encouraged more travel and leisure eating for increasing numbers,” and hospitality outlets have “emerged to meet these needs.” This phenomenon is associated with the rise in disposable income and, in consumer-driven economies, has led to the provision of greater choice in varieties of foods and styles of service. This, coupled with greater social mobility, has resulted in entrepreneurial expatriates setting up ethnic restaurants in the style of their country of origin. There is considerable research about the way in which consumers choose products and services, but less research concerning the impact of cultural awareness on restaurant choice. Ethnic restaurants are a common feature on UK high streets and provide a wide choice of cuisines, styles of service and venues for meals to be eaten either in the restaurants or taken home. Mintel (2014) estimates that eating out in the mature UK market is worth £33.4 billion, growing by 3% in 2014. More people are eating out as disposable income grows and the cost of a restaurant meal becomes comparatively less expensive. For today's modern lifestyles, eating out and sampling the variety of ethnic foods of restaurants in most multicultural cities have become popular forms of socialisation, leisure and entertainment. Despite this popularity, there is little empirical research that explores the cultural ways in which food is offered in ethnic restaurants and received by their customers. For example, to what extent are ethnic foods accepted and understood by potential customers? At the heart of these questions are fascinating issues of how different cultures are affected and adapted by each other in the context of a restaurant meal. Meanwhile, Jamal (1998) points out the reason for the rise in ethnic food consumption with British consumers could be because of an exposure of mainstream consumers to a variety of ethnic groups and their business activities, such as ethnic restaurants and ethnic supermarkets. Ethnic restaurants not only serve as eating establishments, but also function as cultural ambassadors that communicate foreign food to local customers (Muñoz and Wood 2009). Studies suggest different definitions of ethnic foods. For example, Utami (2004) defines food as a regional specific cuisine that tends to reflect the exacting characteristics of its local

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origin. The Food Marketing Institute defines ethnic food as a product that a meticulous ethnic (racial, national) or cultural group favours. Moreover, Turgeon and Pastinelli (2002, 252) suggest that “an ethnic restaurant is a restaurant that signboard or publicity clearly promises the national or original cuisine of another land.” Olsen, Warde and Martens (2000) suggest that non-British restaurants can be regarded in the UK as ethnic restaurants. They propose that an ethnic restaurant can be considered as one serving dishes of foreign origin including Chinese, Italian, Mexican, Spanish, Turkish and Thai rather than typical local food. In the ethnic restaurant, perhaps the most important factor is unique taste and ingredients: “the obvious attraction of ethnic restaurants is getting the food which customers are not able to cook at home” (Robinson 2007, 80). The concept of ethnic food is associated with the food of various countries and the culinary ingredients that belong to a specific culture. Ethnic food refers not only to individual ingredients mostly used by each culture, but also includes the way of seasoning, preparing, cooking and consuming that makes the dish unique to a particular ethnic group (Gómez-Gallego and Juan 2009). Further, ethnic foods are available through different channels like retail chains, fast food ethnic restaurants, takeaways and restaurants. Meanwhile, a variety of ethnic food is available and the most widespread cuisines can be broadly classified into Asian, Arab and Mexican (GómezGallego and Juan 2009). Restaurant customers in London enjoy a wide range of eating out choices from themed branded outlets to independent ethnic restaurants. In the UK, the market for ethnic food is more developed compared to Europe. Some research forecasts that the consumption of ethnic foods will rise by 45.1% between 2012 and 2016 (Ethnic Foods Market Report). Restaurant choice may be a matter of personal choice, fancy and perhaps habit. Ladki and Nomani (1996) suggest that customers choose their restaurant according to factors such as quality and taste, and ethnic foods have become popular because they offer a variety of flavours as well as healthy meals. Meanwhile, Branco and Salay (2001) argue that price, a suitable place and friendly employees might attract customers. Thus, the concept of ethnic food is associated with the national food and culinary ingredients that belong to a specific culture and/or country. Ethnic food has grown in popularity and is a firm favourite for Londoners who eat out.

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Conceptual Model The service interaction is a phenomenon that occurs simultaneously between the customer and service provider, as depicted in Fig 4.1 below. The quality of the interaction is affected by the individual culture which both customer and service provider bring to the contact. Quality and satisfaction are also affected by the organisational culture in which the service interaction takes place. Individual customers are influenced by their upbringing, religion and culture, while service providers are also influenced by individual cultures as well as the culture of the organisation. Having explored the concepts and their interrelationships, this chapter explores some of the reasons for the popularity of ethnic cuisine, which is often very different in style and service from the regular culinary experience of British consumers. To what extent is this difference a contributory factor to its popularity, and is this sustainable over time? In order to further investigate this phenomenon a case study of a Spanish restaurant is used. INDIVIDUAL CULTURE

Customer stakeholders

Customer

SERVICE INTERACTION

Service provider

Organisation stakeholders

ORGANISATIONAL CULTURE

Fig. 4.1. The impact of individual and organisational culture in the service interaction.

Methods Spanish Food The history of Spanish food is related to the Iberian Peninsula, a location that is almost completely surrounded by water, and its culture, language, music and art. Accordingly, much of the cuisine involves seafood and the Mediterranean diet. Spanish gastronomy has also been affected by other nations, for example the Phoenicians who left a variety of sauces, the

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Greeks who brought olive oil to the country, and the Romans, Carthaginians and Jews, whose basic cooking and dishes were influential. Perhaps the greatest impact came from the invading Moors (Medina 2005b; Ethnic Foods Market Report). In Spanish culture, eating with family, friends and colleagues is important and sharing food is considered a social relationship. It is not common to see a person eating alone in a restaurant because meals are usually a family affair. The traditional method of serving food in Spain involves casseroles (clay cazuelas), which are popular red-coloured dishes on which food is brought to the table directly from the oven (Medina 2005b). This tradition is still followed in many parts of Spain. Spanish food is known in other countries as “tapas” (small portions of food or snacks), which in Spain are served as an adjunct to drinks but in other countries comprise a meal of small dishes, rather like the eastern Mediterranean “mezze.” Some typical Spanish dishes include Paella (a cooked rice dish), Chorizo (a spicy sausage) and Sangria (a chilled wine punch) (Ibid.). Spain has also influenced the transatlantic “Tex-Mex” food offerings often sold by branded chains of restaurants, while mainstream Spanish food is often sold in independent restaurants run by expatriate Spaniards. It is difficult to be precise about the number of Spanish restaurants in London, but there is evidence of growing popularity. For example, a Mintel survey report remarks that Spanish/tapas restaurants are the most popular among European cuisine venues (apart from pizza/pasta), visited by nearly half of all diners, with opportunities in the South East/East Anglia region, and particularly those areas within the London commuter belt (Mintel, Menu Flavours, June 2012). This popularity is due to customer demand for different flavours and healthy food.

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Selection of Case Study The qualitative case study methodology was adopted for this research project as the most appropriate design. A case study is defined by Veal (2005) as a pragmatic examination that studies a contemporary trend within its natural context. Case studies are useful where interest of the investigation is on unique rather than normal conditions, and the case study method is appropriate when attention and focus are on the unique and individual aspects of a case. Yin (2009) stresses that the importance of context; the boundaries between phenomena investigated and the context. Further, Yin argues that the goal is to design good case studies and to collect, present and analyse data fairly. A further goal is to bring the case study to closure by writing a compelling report. London is widely recognised as the multicultural, multi-ethnic and multilingual capital city of the United Kingdom, consisting of many people from different nations with a range of cultural and ethnic backgrounds. One of the ways people from different backgrounds represent their cultural values is via the consumption of food at a variety of food services. The focus of this case study is an ethnic restaurant in the city of London which serves Spanish cuisine and whose name has been changed to La Tapas because of ethics and confidentiality. The particular restaurant was selected for several reasons. Most of the employees are Hispanic and can speak Spanish and English fluently and the restaurant just serves Spanish cuisine; however, the customers are from a variety of ethnic backgrounds. In addition, the restaurant is located in a crowded area with a high footfall and a wide variety of restaurants, many of them ethnic restaurants. This study uses semi-structured interview questions with ten restaurant customers. The questions were delivered informally to obtain qualitative information. Further, the restaurant service periods were closely observed to obtain a qualitative view of the richness of the service interactions and the influence of culture on their quality.

Results The experimental study sought to investigate the extent to which a Spanish restaurant operator and his customers accepted Spanish food as part of their daily diets. The interviewees came from different backgrounds, and 8 out of 10 had tried Spanish food before and previously visited the restaurant. The general view was that they chose to come to the restaurant

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because of the environment, the taste of the foods, and for some because it was near to their workplace. For the two new customers, this was their first visit to a Spanish restaurant. They liked the environment, decor, background Spanish music and friendly employees who greeted them in Spanish. They said that "they came to try new tastes and have a different experience." Some interviewees had been to Spain and wanted to "recall the good memories of their vacation." Another was studying the Spanish language and wanting to find out more about their culture and cuisine. A further interviewee was Spanish and said that she felt at home in the restaurant, although the food at La Tapas was not the same as that served in Spain. The interviews suggest that these customers came to the restaurant for specific reasons that reflected their interest in Spain. The aims of the participant observation were to provide opportunities to observe customer behaviour and reactions. La Tapas is designed with plenty of seating space for customers. Traditional Spanish music plays in the background while customers are dining. The customers seemed to enjoy the music and this may help to add to the atmosphere and authenticate the cultural experience as much as possible. Similarly, the design uses traditional Spanish artefacts and paintings, with the warm “sunny” colours associated with the Iberian Peninsula. This authenticity is underpinned by the free use of the Spanish language by staff, such as: hola (greeting), bienvenida (welcome), buen provecho (bon appetite) and adios (goodbye). All of this adds to the atmosphere that creates the illusion of being in Spain in the city of London—perhaps an escapist experiential leisure experience, which the diner may relish in a busy and maybe mundane urban life. The case study suggests that customers were looking for a taste of a different culture to which they were attracted, either by language, customs or cuisine. Similarly, the service provider sought to enrich this experience of the service interactions (as shown in Fig. 4.1 below) by using authentic Spanish phrases and ensuring that the environment was as “Spanish” as possible in a London street. Thus, as in the Fig. 4.1 model, the service interaction represents the place where individual culture meets organisational culture in the connection between the customer and service provider. Both stakeholders derive benefit from the relationship. The service provider is achieving profit and promoting their native culture, while the customer obtains a culinary experience that is probably very different from normal. Service interactions in a multicultural city such as London serve to enhance cultural understanding between nations, and

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perhaps align attitudes while adapting both guest and host cultures. In summary, the respondents expressed satisfaction with the quality of service, and that satisfaction was related to their interest in Spain, despite the doubts about the true authenticity of the meal experience. Meals are not only spaces for refuelling, but also opportunities to socialise with likeminded people.

Discussion The case study suggests that culture, both individual and organisational, is an important factor in shaping the service experience. Observations revealed that the influence of socialising is high in friendship groups by explaining participants' decisions to choose the place of eating at lunchtime. For example, students from a collectivist culture like Korea have been influenced by identification such as value, while students from a more individualistic culture, like the United States, have been influenced by internalisation. (Bagozzi and Lee 2002). In addition, consumer research concludes that those from more collectivist cultures, like French Canadians, were more demanding to both utilitarian and value expressions compared to those from more individualistic cultures (Mourali, Laroche and Pons 2005). Wood and Muñoz (2007) observe that ethnic restaurants could be the second most influential socialising agents of foreign cultures after media. They believe that media often represent foreign cultures in a stereotypical manner; however, the hospitality field could provide a more detailed and accurate cultural insight to consumers (Wood and Muñoz 2007). Some studies (for example Tian 2001) suggest that ethnic restaurants play more than one role in society. As well as providing food, they also provide a social outlet and experience in a variety of cultures. This small-scale research study suggests that culture does indeed enhance the meal experience and some diners actively seek restaurants whose cultures interest them. Some were prepared to be marginally disappointed that the restaurant did not offer as authentic a meal as might be experienced in Spain, but perhaps regular diners with disposable incomes seek variety. The highstreets of London certainly offer a wide choice of ethnic and cultural dining opportunities. In immigrant ethnic restaurants, researchers argue that food is the last item that needs to be changed and adopted after migration (Jamal 1998; Mennell 1992; Murcott 1983). Nevertheless, there is some anecdotal evidence that, over time, restaurant food does indeed adapt to its host

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culture. For example, curry and pizza are some of the earliest and most popular foods to be seen in UK highstreets and both have adapted to their host environments. The spicy heat of a curry served in a London restaurant would probably not compare to one served in India. Similarly, the choice of pizza toppings (for example pineapple) would probably be condemned by purists in Italy. National cuisines became important in the nineteenth century in most European countries during the first stages of globalisation and nation building. In other words, the process of spreading national cuisines was an answer to increasing international contacts and political, economic and cultural competition. The large-scale diversification of cuisines in today’s market could be the best explanation for the global processes of generic standardisation, and perhaps the best example is the McDonaldization idea of food culture (Möhring 2008; Ritzer 1993). Markets have tried to adapt foreign products for their own use, combining global and local interests, and this has been termed “glocalisation” (Roudometof and Robertson 1998). Ethnic restaurants grew rapidly around the world in the 1980s and have become a most important part of the food industry. Meanwhile, the UK had the largest ethnic food market in Europe by sales (Basu 2004; Zelinsky 1998). Therefore, dining in ethnic restaurants is a social and cultural practice that has sometimes been defined as a substitute for travel, and might, for the migrant, bring back the feeling of being at home. Thus, many ethnic restaurants in the UK choose their styles of furniture and decoration to reflect a cultural architecture, which reinforces the importance of aesthetics and imagination in dining (Finkelstein 1989a; Peckham 1998b). Tian and Wang (2010) suggest that such restaurants do not just seek to satisfy biological needs, but play a deeper role in society. According to Perner (2010a), the decision-making processes of consumers can vary according to different cultural backgrounds. This means that ethnic restaurants serve as plausible natural environments to observe and understand the wide variety of decisions made by consumers. Hence, the consumption of food is a universal biological behaviour that has been shared by all humans, regardless of background. In this regard, food is an important and staple factor of human need that enables people with different ethnic backgrounds to engage in socialisation with others, since food and culture are interrelated (Tian 2001). Culture for anthropologists is a key area of study, and many other facets of life and phenomena revolve around it. Culture is not random, but provides the basis for individuals to form internal adaptive systems and helps to

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cope with and adopt new environments, in terms of the physical realm as well as the social domain (Wood and Muñoz 2009). Further, Sukalakamala and Boyce (2007) note that the preparation and serving of food is one of the most important elements of ethnicity for each ethnic group, in which each has different characteristics in the foodservice industry that help them to have a unique cuisine. So, the ethnic preparation and serving of their food brings the opportunity for immigrants to preserve their culture in a new environment—a little touch of home in a new country.

Conclusions and Further Research The research suggests that national culture exerts a powerful force both upon those who grow up under its spell and those others who are attracted to it for different reasons. However, culture is a difficult concept to pin down and accurately define. Perhaps, like personality, culture may not be easily discarded or changed because heritage and “roots” are proudly handed down to children. Diversity is celebrated in a multicultural city like London. It seems therefore logical that immigrants, especially those with limited skills and opportunities, might seek to earn a living by serving their own food in a foreign land in which they have settled. After all, in developed countries there are high levels of disposable income and gastronomic variety offers greater choice to increasingly discerning customers. It also seems clear that, over time, authentic ethnic food and service might be diluted, especially as second-generation children to immigrant families adapt more easily than their parents to host cultures and languages, and London in the twenty-first century is a good example of this. While restaurant owners and staff may encourage cultural authenticity by using phrases in their own language (as in the case study), they usually want to maximise revenue and make their customers feel comfortable. The case study findings highlight the need for ethnic restaurants to clearly explain to customers the exact nature of the food offering, especially for new customers, in order to make them feel comfortable. Ethnic restaurants, even in London, probably cannot expect to survive by just serving customers from their native land and culture. Thus, restaurants must adapt to survive, just as immigrants must acculturate and, over time, become an integral member of their host community. Just as tapas bars in London have adapted to offer meals rather than small plates of food with drinks (as in Spain), so restaurants must adapt to survive. Perhaps the

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Darwinian principle of adaptation and fitness applies to restaurants as well as animals. This chapter has offered an exploratory view of the relationship between culture and restaurants using a small-scale exploratory study from which it is difficult to generalise. There is clearly scope for more research to be done to explore how the power of culture in the hospitality industry actually does work, and how this power might be used by managers to both differentiate their products and services as well as enhance customer satisfaction.

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SECTION TWO: SERVICE MANAGEMENT





CHAPTER FIVE GLOBALLY NETWORKED LEARNING FOR INTERCULTURAL COMPETENCE: A COLLABORATION BETWEEN COURSES IN LEBANON AND THE UNITED STATES SUSAN COULTRAP-MCQUIN AND INA A. P. ISSA

Abstract In this chapter, we share our experiences from two virtual collaborations between students in Lebanon and students in the United States. The collaborations included discussions and group projects related to a common topic: women as leaders in global business. The purpose of the collaboration was to engage students in cross-cultural communication and prepare them for cross-cultural encounters by increasing their cultural self-awareness and knowledge of another culture. Our assessments showed that crosscultural communication skills improved and that students increased their intercultural competence. We encourage educators in hospitality and tourism to consider using globally networked learning in their programs. Keywords: intercultural competence, cross-cultural collaboration, globally networked learning, hospitality



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Introduction Everywhere people are on the move outside their own regions and countries. Professional employees of international companies are often transferred from place to place over the course of their careers. Others move for economic opportunities; according to the UN Population Fund, in 2010 3% of the world’s population lived outside their home country (UNFP n.d.). Still others are moving around the world for pleasure; as a result, the travel and tourism industry alone now accounts for 1 in 11 jobs worldwide, according to the World Economic Forum in 2013 (Blanke and Chiesa 2013, xiii). Whether people are moving into new cultural situations because of professional responsibilities, pleasure or economic opportunities, they are bringing with them cultural practices to be negotiated in their new environments. Our project, using globally networked learning, was designed to help prepare students to work successfully in such complex and shifting environments. Our project involved virtual collaborations between students in Lebanon enrolled on a course called “International Cross-Cultural Management” and students in the United States enrolled on a course called “Women, the Workplace, and the Law.” The collaboration activities lasted five weeks each time and included discussions and group projects related to a common topic—women as leaders in global business. The students communicated asynchronously using a shared learning management website. Our courses were not part of a hospitality management curriculum, though both were taught as part of business degree programs. Nevertheless, we believe that students of hospitality and tourism in particular can benefit from similar globally networked learning in their studies, because they are so often exposed to people from different cultural backgrounds. Those in the field of hospitality and tourism must function effectively among guests, co-workers, and suppliers from different cultural backgrounds. In order to determine the extent to which the students completing the collaboration felt more confident in cross-cultural situations and to determine whether or not they demonstrated growth in intercultural competencies, we undertook a variety of assessments before, during and after our collaborations in the fall and spring semesters of 2012–13. Using various measures, including surveys of students’ self-reports as well as their examinations and written documents, we were able to learn about the effects of the collaborations on our students. These assessments have helped us not only to make changes in our assignments for our particular



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courses but also to draw some conclusions about the overall effectiveness of globally networked learning.

Literature Review Globally Networked Learning and Intercultural Competence Globally Networked Learning (GLN) is a relatively new pedagogy designed to promote the active engagement of students in cross-cultural communication and learning. The Center for Global Geography Education describes GLN as “international collaborations that promote active learning and cross-cultural student inquiry and discovery … founded in the idea that international, intercultural, and geographic knowledge, skills, and values are necessary … [to] succeed in a globalized world” (Ray et al. 2012, 26). Similarly, the Center for COIL (Collaborative On-line International Learning) in the State University of New York defines such courses as “a new approach to teaching and learning that brings together geographically distant instructors and students from different linguacultural backgrounds to communicate and collaborate … emphasizing experiential learning [in a way that] broadens and deepens their understanding of course content while building cross-cultural communicative capacity through academic and personal engagement with the perspectives of global peers” (Guth 2013, 2). Doreen Starke-Meyerring and Melanie Wilson, editors of Designing Globally Networked Courses (2008), point to a variety of similar visions shaping globally networked courses, such as helping students actively and collaboratively address global issues, questioning “culturally bounded assumptions,” developing “cross-cultural literacy” and having the opportunity to “critically examine … their own identities” and assumptions (Starke-Meyerring and Wilson 2008, 8–10). GLN is an innovative pedagogy of experiential, crosscultural learning that is being developed in many different disciplines. No matter what the content of the linked courses or projects might be, students in GLN courses will find themselves involved in actively learning not only course content but also what is often labeled “intercultural competency attitudes, knowledge and skills.” There is an enormous body of literature devoted to definitions of and the need for intercultural competence; an excellent collection of writings on intercultural competence edited by a leader in the field, Darla Deardorff, is entitled The Sage Handbook of Intercultural Competence (2009). In her synthesis of the conceptualizations of intercultural competence expressed by various



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scholars in that book, she points to “themes” of “relationship development and of identity, the importance of context and interconnectedness in intercultural competence, the need for transcendence of boundaries, the transformation of differences, and the need for genuine respect—and humility—toward each other” (265). In another publication, Deardorff offers a succinct definition of intercultural competence as behaviours that demonstrate “effective and appropriate behavior and communication in intercultural situations” (Deardorff 2011, 66). Published reports from groups of professors who have taught GLN courses indicate that students believe they have benefited from their cross-cultural collaborations by gaining an increased understanding of disciplinary content as well as intercultural learning. We have been particularly interested in the findings indicating an increase in intercultural learning. Assessment data from eight courses in the SUNY COIL Institute for Globally Networked Learning in the Humanities showed students expressing positive feedback regarding “having access to different points of view,” being able to “see their own culture in a different light,” and developing “a high level of awareness of ‘self’ and ‘other’” as well as improved language skills and ‘communicative competence’” (Guth 2013, 22). In an evaluation of the collaborations of 9 groups in 10 countries, scholars from the Center for Global Geography Education found, not always conclusively, that the students did gain confidence in “their understanding of strategies for addressing global concerns” (Klein and Solem 2008, 258). A study of the virtual collaboration projects of almost six thousand students in 43 countries on international management courses revealed that students in those projects had a statistically significant increase in “cultural intelligence,” an increase in confidence of working with “cultural diversity” and “language differences,” as well as a “better understanding of other cultures,” reductions in “perceived intergroup differences,” and improvements in “cross-cultural collaboration selfefficacy” (Taras et al. 2013, 424, 430). Other assessment reports on smaller cohorts also reveal students’ gains in aspects of intercultural competence. Lynn Patterson and her colleagues observed that by linking students on a geography course in the United States with those on a social development course in Columbia that they were able to develop some empathy and acceptance of each other, to develop “creative” ways of communicating to overcome language barriers, and to be flexible in trying to overcome “cultural obstacles” (Patterson et al. 2012, 194). Students in an Information Systems collaboration involving a technology management course in the United States, a project



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development course in the United States, and a programming course in India reported they had “learned the values of effective communication … project ambiguity, and working in global, virtual teams” (Davis et al. 2009, 365). Marketing students in collaboration linking courses in the US, France and India found that their students believed the project gave them “increas[ed] knowledge of other cultures and global business,” and that the project changed their views of the other country, though not all students developed their “cultural intelligence” as much as the professors hoped (Knight et al. 2010, 70–1).

The Tourism and Hospitality Industry According to the World Travel and Tourism Council, the tourism and hospitality industry is the largest and fastest growing industry in the world, and it employs over 255 million people worldwide, 8.7% of the global workforce (Turner 2012, 3). Statistics from the International Labor Organization (ILO) and the United Nations World Tourism Organization (UNWTO) indicate that the tourism and hospitality industry will experience rapid growth in the near future, and will continue to act as an important employment generator worldwide (ILO n.d., 2; UNWTO 2014, 1). Because of the nature of the industry, people working in the different industry segments interact with people from different cultures regularly, and intercultural awareness is an important force for creating mutual understanding among the industry players. As a response to the development and growth of the tourism and hospitality industry, many higher education institutions offering related degree programs are in the process of internationalizing their programs with the aim of producing students capable of working in a global environment (Brookes and Becket 2011, 241). The internationalization of higher education comprises two main parts: attracting students from different parts of the world to study at the same university and preparing students for a globalized world (Hanson 2010, 71). Because of the economic advantages of enrolling international students and students’ demand for international degrees from recognized universities, a good deal of research has been conducted about the experience and well-being of international students (Shiel 2008, v–xiiiv). Recently, however, more researchers and concerned faculty members are showing interest in terms of how higher educational institutions can prepare students for a globalised world through internationalization of the content and experiences of degree programs.



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Traditionally, the internationalisation of tourism and hospitality degree programs has been in the form of sending students abroad to complete their mandatory internships at hospitality establishments, and through international student exchange programs such as the Erasmus project in the European Union (Barron and Dasli 2010, 78). There are many rewards in terms of increasing students’ intercultural competence with such programs, but there are also difficulties in terms of costs, legal requirements, organisation of travel and accommodation and follow-up, among others. Globally networked learning offers a different opportunity in terms of cross-cultural exposure by letting students interact virtually with those from another country to develop the attitudes, knowledge and skills of intercultural competence that students have shown they develop in other disciplines that have used GNL.

Our Pedagogical Approach and Methods of Assessment Overview of the Two Collaborations Our project began when Ms Issa responded to a mass email forwarded by her supervisor and written by Dr Coultrap-McQuin proposing a virtual collaboration between the students in Coultrap-McQuin’s class and another one on a similar topic. Once we agreed that we each had a section of our courses on the same topic—women leaders in global business—we began planning for the overlapping time in our courses. During our first semester working together, we broke the students into groups and suggested weekly discussion topics (for example, introduce yourself and learn about your partners, discuss stereotypes of women, and so forth). In the first semester, students were asked to complete two projects: a wiki focused on women leaders in both countries and a PowerPoint presentation of an imaginary company, located in both countries, that was interested in recruiting women with the potential to become managers and leaders in the company. Based on the results of the first semester, we made some changes in our approach and expectations for the second semester. In the second version of our collaboration, students were not broken into groups until the fourth week, were given clearer directions explaining our expectations, and were asked to complete only the one project of creating a presentation for an imaginary company. While both versions of the course resulted in increasing students’ confidence in their intercultural communication skills and intercultural competence, the second semester was definitely a richer experience for the students, who had the



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opportunity to interact with and learn from the whole group for three weeks before breaking into smaller groups. As a first step in thinking about assessment, we discussed learning outcomes that included the characteristics we believe are central to intercultural competence. These learning outcomes share much in common with other definitions found in the literature on intercultural competence. As a result of the collaboration we hoped our students would develop and demonstrate: x Attitudes of intercultural competence, including respect, curiosity, empathy, and openness to others’ perspectives x Skills of intercultural communication, including being able to listen and communicate effectively across cultural and language differences, and x Cultural awareness related to the self and others.

Our Assessments We assessed the students on these learning outcomes in a variety of ways before, during and after the course. Open-ended reflections and exam questions as well as discussions, emails and other communication with our students gave us a great deal of information about what learning occurred each semester. In the first semester, our students also participated in a preand post-survey on intercultural competence administered by the COIL (Collaborative On-Line International Learning) project of the State University of New York. In the second semester, we administered our own version of that survey as one method of assessment of students’ learning (see Appendix A). The findings we are reporting here are drawn from our post-survey results as well as students’ open-ended comments during two semesters. The survey presented students with a variety of prompts, stated in positive or negative terms, asking them to evaluate their own learning as a result of the collaboration. Responses were recorded on a 5-point Likert scale of options, including strongly agree, agree, neutral, disagree and strongly disagree. We had approximately 40 students each semester, or 80 students overall, participating in the collaborations. More than half completed the post-survey in the first semester and all students completed the post-survey in the second semester.



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Students were overwhelmingly positive about the experience overall, though they also experienced the frustrations of the asynchronous collaboration across time zones and of teamwork when some members were not participating fully. In terms of expanding their intercultural competence, students self-reported and we observed positive improvements. Our findings are in line with the positive findings of other assessments of intercultural competence in GNL courses that have been reported in the literature.

Findings Attitudes of Intercultural Competence, including Respect, Curiosity, Empathy and Openness to Others’ Perspectives The majority of our students both semesters described themselves in ways that showed they thought they had gained in openness and respect for others (see Table 5.1 below). Students “strongly agreed” or “agreed” that, as a result of the collaboration, they were more open to others than previously. As can be seen from Table 5.1 below, after the spring 2013 collaboration, 94% of students from Lebanon and 100% of students from Oswego agreed or strongly agreed that, as a result of the collaboration, they were now more open to those from different cultural, religious or socioeconomic backgrounds. Moreover, 81.8% of students from Oswego and 94.5% of students from Lebanon reported that after the collaboration they were more interested in working with people from different cultures. While the picture of students’ increasing confidence in relating to others is very positive overall, there are some responses that are puzzling, such as why there is not more interest in the events of other countries. Untangling the reasons for some of the lower responses is an ongoing process. Nevertheless, the power of this experience to spark students’ interest in those who are different from themselves is clear in the data.



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Table 5.1. Student responses related to attitudes of intercultural competence Fall 2012 After taking this course which involved collaboration with students from another country,

Oswego (N = 17)

Lebanon (N = 10)

Spring 2013 Oswego (N = 22)

Lebano n (N = 18) 94.0%

I am more open to those from 76.5% 100% 100% different cultural, religious or socioeconomic backgrounds I am more interested to work 71.4% 100% 81.8% 94.4% with others who may not look or talk like me I am more likely to participate in 47.7% 80% 81.8% 88.9% international or intercultural activities I am more interested to keep 52.9% 66.7% 77.3% 27.8% abreast of news and events in my partner country Note: Percentages reported are the totals of students who chose “agree” or “strongly agree” as their responses to the prompts.

Students’ reflections on the experiences after the Fall 2012 collaboration revealed many students talking about the rewards of the collaboration being a greater openness to others. In their commentaries, those in the United States said things such as: “we tend to be afraid of interactions with other cultures because we don’t know the outcome but in reality there’s nothing to be afraid of,” “I am more interested in learning about other cultures than I initially suspected,” and “the way we were talking back and forth I almost forgot that we were from a different country.” At the end of Spring 2013, the students in the United States expressed appreciation for learning about another culture and a greater openness and respect for other countries. Among their remarks were comments indicating that the greatest reward was “learning about a country I knew nothing about.” Others said, “It made me realize that I should be more understanding of other cultures,” and “I think the greatest reward for me was just having normal discussions … I got to know them on a personal level and could relate to them better.” Similarly, the students from Lebanon expressed greater openness and respect for their partners in the United States. After the Fall 2012 semester, students said such things as: “one of the most important things I learned during the collaboration is that we have to accept and respect another culture to be able to work together," "I thought it was going to be very



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difficult to collaborate with students in another country because I thought we were different, but it was surprisingly easy," and "I expected the foreign students to be arrogant, since they are from the US and we are from Lebanon, but everyone in my group was friendly and helpful." Responses during the spring semester from the students repeated the same sentiments. They reported that the greatest rewards included “talking, meeting, and getting to know people from a different culture,” gaining “respect for other people,” and “meeting new colleagues and friends, [gaining] new experiences.” These comments and others suggest that, after the collaborations, the students in Lebanon as well as the United States felt a new openness and respect for their partners.

Skills of Intercultural Communication, including being able to Listen and Communicate Effectively across Cultural and Language Differences The majority of our students in both semesters described themselves as having more confidence in their own intercultural communication skills (see Table 5.2 below). They “strongly agreed” or “agreed” that they were better able to communicate and work with others, including those whose first language was not their own. Furthermore, they had come to appreciate the importance of learning other languages than their own. In Table 5.2 below, after the fall 2012 collaboration 94.1% of students from Oswego and 90% of students from Lebanon reported that they were better able to communicate with individuals with different cultural backgrounds. After the spring 2013 collaboration, 95.5% of students from Oswego and 100% of students from Lebanon agreed or strongly agreed that learning another language was helpful. While percentages vary from semester to semester, it is clear that the overall impact of the collaboration was perceived by students to be positive in terms of increasing their skills of intercultural communication.



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Table 5.2. Student responses related to skills of intercultural communication Fall 2012 After taking this course which involved collaboration with students from another country,

Oswego (N = 17)

Lebanon (N = 10)

Spring 2013 Oswego (N = 22)

Lebano n (N = 18) 100%

I am more confident about No data No data 72.7% communicating with people whose first language is not my own I am better able to communicate 94.1% 90.0% 81.8% 83.3% with individuals who have different cultural backgrounds I am more confident working 65.7% 70.0% 81.7% 50.0% (studying) with different cultural backgrounds I better understand that learning 68.0% 70.0% 95.5% 100% another language is helpful Note: Percentages reported are the totals of students who chose “agree” or “strongly agree” as their responses to the prompts.

The comments from students on both sides of our collaborations showed increasing adaptability and flexibility in terms of communicating with students from another culture and an improved ability to listen to and understand others. Some of the students in Lebanon were hesitant in the beginning about communicating with those whose mother tongue was English, and they were worried they could not contribute as well to the discussion forums and the assignment because of language problems. However, toward the end of the collaborations, the Lebanese students reported that communication had improved greatly, and communicating with the US students was easier than expected. After the fall 2012 collaboration, the Lebanese students made comments like, "I have learned the importance of communication, and how to express myself so that others understand what I mean," "I thought it would be difficult to communicate with foreigners since we do not have a common background, but I was wrong! We had many things in common," and "It was difficult to communicate with the other students in the beginning, but after some time I felt we knew each other, and then it was much easier." After the spring 2013 collaboration, two of the Lebanese students said, “The greatest reward with the collaboration was communicating with students from different nationalities and cultures,” and “The best part was the discussions with the Oswego students.”



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Likewise, students in the United States after the fall semester 2012 said, “I have learned that talking and communicating with people you don’t know does not have to be intimidating,” and “I [now] have experience with communicating with people from another country.” One pointed out, “This experience helped me learn how to communicate efficiently with those collaborators in another country.” In the spring, several commented on what they perceived to be language barriers making it a challenge to communicate, but others remarked on developing communication skills. Some US students mentioned that the rewards of the collaboration included “learning … that I can work around a language or cultural barrier,” “being able to communicate and have conversations with students from another country,” and “being able to talk with others who are in different cultures and who have different views than I do.”

Cultural Awareness Related to the Self and to Others The majority of our students believed that after the collaboration they were more aware of their own cultural perspectives and more sensitive to those of others (see Table 5.3 below). They “strongly agreed” or “agreed” with statements describing an increased understanding of the impact of culture. Table 5.3 below shows that after the spring 2013 collaboration, 95.1% of students from Oswego and 100% of students from Lebanon agreed or strongly agreed that they were more aware and sensitive to cultural differences and similarities. A slightly lesser percentage of the students— 83.6% from Oswego and 88.9% from Lebanon—agreed or strongly agreed that they were better able to understand their own culture as a result of the collaboration. Table 5.3. Student responses related to cultural awareness Fall 2012 After taking this course which involved collaboration with students from another country,

Oswego (N = 17)

Lebanon (N = 10)

Spring 2013 Oswego (N = 22)

Lebano n (N = 18) 88.9%

I am better able to understand 68.8% 80.0% 86.3% my own culture I am more aware and sensitive to 88.3% 90.0% 95.1% 100% cultural differences and similarities Note: Percentages reported are the totals of students who chose “agree” or “strongly agree” as their responses to the prompts.



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On both sides of the collaboration, students’ reflections expressed their gains in cultural understanding. A US student wrote, “This experience was eye-opening because you really don’t realize how different other cultures can be when you live in your own for so long,” and another reported that the “facts [about Lebanon] are very interesting and caused me to think about our own culture and its norms.” A third said, “I’ve learned that women in Lebanon face many of the same challenges, and expectations socially for women are also very similar. I wasn’t expecting this result because of the cultural differences, but as it turns out we have much more in common than we do different.” Another learned that the Lebanese, “see life in a way that many Americans don’t—to be happy and many Americans are in such a rush.” Another US student also observed that this project “was an excellent way of breaking down cultural barriers for myself. If I have another opportunity to do something like this, I won’t start off by thinking that the people I will be communicating with are so different.” Another added, “It changed my outlook on how I should go about talking with fellow employees who may not share the same culture as I do.” In Lebanon, the students expressed a greater understanding of their own cultural perspectives as a result of the collaboration. They reported: “The two most difficult things with this collaboration were time differences and internet connection problems in Lebanon; but these things are the reality and this collaboration forced us to find ways to work together despite these problems." Another commented that he “learned more about how to organize my time to work with people from a different country." This awareness of their own cultural framework also suggests an important gain in intercultural competence. For example, Lebanese students reported that, "students from other countries share the same way of thinking, and I was surprised to see that we also share the same values." "The most positive aspect with this experience,” another reported, “was getting to know people from a different background, and beginning to understand their way of thinking." While the Lebanese students knew a great deal about the United States prior to the collaboration, this experience gave them a much deeper and more personal understanding related to students of their own age there. Some of them also expressed surprise about the similarities and differences. One said, "I learned that stereotypes about women are somehow similar between the two countries,” while another reported, "I



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have learned that women are treated better in the US, and they have much more opportunities than in Lebanon.” A third said, "I always thought that things were so much better in the US, but this collaboration taught me that there are many problems in the US as well."

Discussion On both sides of the collaboration, students concluded that they had learned valuable lessons in intercultural competence. The students’ comments and the survey results suggest that that globally networked learning can help students to develop the attitudes, knowledge and skills of intercultural competence that are needed in the global workforce today. Our students expressed attitudes of respect, curiosity and openness to others’ perspectives; the ability to listen to and communicate effectively with those who come from different backgrounds and who speak different languages; and an increasing awareness of the ways in which culture influences their own perspectives as well as those of others. One US student summarized the experience by saying: “This experience gave me the opportunity to overcome language barriers, learn how to work with time zone differences, and taught me about global and cultural differences.” Similarly, one Lebanese student reported: "I would like to work outside of Lebanon, and I feel this experience has prepared me for what to expect in my future career.” These comments well reflected the positive impact of globally networked learning on our students. While the experience of globally networked courses is valuable, there are challenges in creating a globally networked learning opportunity for students. Like other team-teaching experiences, the instructors need to plan together and make decisions related to their own classes about how to integrate the expectations of the other teacher. For example, we took time to talk on Skype every week, discussing what was happening in the course and comparing our evaluations of students’ progress, even though we both graded our own students. Second, this online, asynchronous collaboration was a new experience for many of the students, so some needed to learn the technology before they could participate. Others needed to learn how to use the shared collaboration site; in our case, it was a learning management system, but it could have been a website. Third, this was like other online teaching in that written directions to students had to be very precise, with instructors’ expectations articulated more clearly than if all the students were together in a room talking about the assignment. Fourth, students needed help to reflect on what they were learning and how they



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were learning it. In the first version of the course especially, we had to deal with students’ frustrations about what other students were doing or not doing. And, since we wanted them to be thoughtful about developing their intercultural competence, we had to be sure that we allotted time for them to reflect on their experiences. Despite these sorts of issues, both instructors and students agreed that our collaborations were valuable learning experiences. As the instructors in this collaboration, we, like the students, developed a friendship as well as a strong professional respect for one another. We learned more about each other’s country and cultural habits, and we, too, gained a deeper understanding of the impact of culture on our own lives. The greatest reward for us, however, is what we observed to be the positive impact on our students in terms of their gains in self-confidence and understanding of other cultures. The rewards of globally networked learning need to be extended to education in the tourism and hospitality industry. Demand for graduates with the capabilities to work in the global hospitality industry has been recognized by academics, professionals and students alike, and higher education institutions have a responsibility in terms of developing students with an understanding of different cultures and their own. Our findings suggest that globally networked courses offer higher education institutions a chance to internationalize their hospitality programs by encouraging virtual collaborations between students in different countries. Tourism and hospitality educators will find globally networked courses an exciting opportunity to interact and develop a program of collaboration with educators from different cultures, and, at the same time, offer their students cross-cultural exposure as encouraged by higher education institutions pursuing internationalisation efforts. To make this happen, educational institutions wishing to promote globally networked learning in their curriculum need to provide backing in terms of support, such as technical assistance, funding, training and hiring of graduate assistants (Guth 2013; Starke-Meyerring and Wilson 2008). With institutional support for the creation and teaching of GNL courses, students in tourism and hospitality programs can develop the intercultural competencies described in this paper. There are still many research opportunities for others to explore that are relevant to globally networked learning. Some of the most interesting include developing and refining assessment methods and evaluating students’ activity during collaborations. We need studies of the most



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effective platforms for collaboration, of faculty incentives for collaborations, and of comparisons with other methods of developing intercultural competence. We need tourism and hospitality educators to adapt this pedagogy and assess its results.

Conclusions This paper has presented the experiences and outcomes of two virtual collaborations between students in Lebanon and the United States. The findings show that the students who participated in the collaborations improved their communication skills and showed increased intercultural competence, as we have defined it. Our students truly grew in their ability to use “effective and appropriate behavior and communication in intercultural situations” (Deardorff 2011, 66). As a result of our experiences, we believe that globally networked learning opportunities ought to be more common in the educational experiences of all our students. Such collaborations have the advantages of being inexpensive and relatively easy to take on, as long as the faculty members are willing to dedicate the time and effort to course development. The chances for success will be better when best practices are shared by faculty members who have participated in such collaborations, so we hope this paper has contributed to that discussion. Most firmly, we believe that cross-cultural collaborations are particularly useful for hospitality and tourism students because of the frequent interactions with people from different cultures. With the exceptional growth of the tourism industry in the past years, intercultural competence and good communication skills are necessities for anyone to succeed in this field. It is time that faculty members in hospitality and tourism begin to explore the vast learning opportunities of globally networked learning.

References Barron, P., and M. Dasli. 2010. “Towards an Understanding of Integration amongst Hospitality and Tourism Students using Bennett’s Developmental Model of Intercultural Sensitivity.” Journal of Hospitality, Leisure, Sport and Tourism Education 9 (2) (2010): 77–88. Blanke, Jennifer and Thea Chiesa (eds). 2013. The Travel and Tourism Competitiveness Report 2013. World Economic Forum. www3.weforum.org/docs/WEF_TT_Competitiveness_Report_2013.pdf.



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Brookes, M., and N. Becket. 2011. “Internationalising Hospitality Management Degree Programmes.” International Journal of Contemporary Hospitality Management 23 (2): 241–60. Davis, Alanah, Matt Germonprez, Stacie Petter, Dawna Drum, and Jake Kolstad. 2009. “A Case Study of Offshore Development across IS Courses: Lessons Learned from a Global Student Project.” Communications of the Association for Information Systems 24 (21) (March): 351–72. http://aisel.aisnet.org/cais/vol24/iss1/21. Deardorff, D. K. 2011. “Assessing Intercultural Competence.” New Directions for Institutional Research 149: 65–79. Deardorff, Darla K. (ed.). 2009. The Sage Handbook of Intercultural Competence. Los Angeles: Sage. Guth, Sarah. 2013. “The COIL Institute for Globally Networked Learning in the Humanities: Final Report.” Albany: State University of New York. http://coil.suny.edu/sites/default/files/case_study_report.pdf. Hanson, L. 2010. “Global Citizenship, Global Health, and the Internationalization of Curriculum: a Study of Transformational Potential.” Journal of Studies in International Education 14 (1): 70–88. ILO. “Sectoral Brief: Hotels, Catering, and Tourism Employment.” n.d. http://www.ilo.org/wcmsp5/groups/public/---ed_dialogue/--sector/documents/briefingnote/wcms _162187.pdf. Klein, Phil, and Michael Solem. 2008. “Evaluating the Impact of International Collaboration on Geography Learning.” Journal of Geography in Higher Education 32 (2) (May): 245–67. Knight, Peter, Ina Freeman, and Irfan Butt. 2010. “A Tri-continental Global Collegiate Marketing Project—Reflections and Recommendations.” Refereed Paper Extended Abstract. Proceedings of the Marketing Management Association: 70–2. Patterson, Lynn M., Paula Botero Carrillo and Rigoberto Solano Salinas. 2012. “Lessons from a Global Learning Virtual Classroom.” Journal of Studies in International Education 16 (2): 182–97. Ray, Waverly C., Osvaldo Muniz-Solari, Phil Klein, and Michael Solem. 2012. “Effective Online Practices for International Learning Collaborations.” Review of International Geographical Education Online 2 (1) (Spring): 25–44. http://www.rigeo.org/vol2no1 /2.2.RIGEO-VOL.2.NO.1-2.pdf . Shiel. C. 2008. “Introduction.” In Enhancing the International Learning Experience in Business and Management, Hospitality, Leisure, Sport, Tourism. edited by R. Atfield, and P. Kemp, v–xiiiv. Newbury: Threshold Press.



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Starke-Meyerring, Doreen. 2008. “Cross-boundary Knowledge Making in Globally Networked Learning Environments,” Conference Presentation at SUNY Center for Online Collaborative Learning. Purchase, NY, November 14. http://webpages.mcgill.ca/staff/group1 /dstark1/web/starke-meyerring/area1.htm. Starke-Meyerring, Doreen and Melanie Wilson (eds). 2008. Designing Globally Networked Learning Environments: Visionary Partnerships, Policies, and Pedagogies. Rotterdam, The Netherlands: Sense Publishers. Taras, Vas, Dan V. Caprar, Daniel Rottig, Riikka M. Sarala, Norhayati Zakaria, Fang Zhao, Alfredo Jimenez, Charles Wankel, Weng Si Lei, Michael S. Minor, Pawel Bryla, Xavier Ordenana, Alexander Bode, Anja Schuster, Erika Vaiginiene, Fabian Jentae Froese, Hanoku Bathula, Nilay Yajnik, Rico Baldegger, and Victor Zengyu Huang. 2013. “A Global Classroom? Evaluating the Effectiveness of Global Virtual Collaboration as a Teaching Tool in Management Education.” Academy of Management Learning & Education 12 (3): 414–35. http://dx.doi.org/10.5465/amle.2012.0195. Turner, R. 2012. “The Comparative Economic Impact of Travel and Tourism,” World Travel and Tourism Council. Oxford: Oxford Economics. http://www.wttc.org/site_media/uploads/downloads /The_Comparative_Economic_Impact_of_Travel__Tourism.pdf. UNFP. n.d. “Migration: A World on the Move,” www.unfpa.org/pds/migration.html. UNWTO. 2014. World Tourism Barometer 12 (January). http://dtxtq4w60xqpw.cloudfront.net/sites/all/files/pdf/unwto_barom14 _01_jan_excerpt.pdf.

Appendix A: Post Survey to Collaboration Anonymous Survey after Collaboration Class name: Date: Please answer the following questions as truthfully as possible. There is no right or wrong answer. Circle/color your answers. 1. Before this collaboration I interacted regularly with people who are from other countries or cultures. Yes No



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If yes, how often? At least once a day, At least once a week, At least once a month If yes, where? On campus, at home, in my workplace, other ___________________ 2. I have studied or traveled abroad. Yes No Indicate the length of time abroad: In response to the following questions, indicate whether you Strongly Agree (SA), Agree (A), Neither Agree nor Disagree (N), Disagree (D), or Strongly Disagree (SD). After taking this course which involved collaboration with students from another country, I am… 3. more aware and sensitive to cultural differences and similarities. SA A N D SD 4. more confident about communicating with people whose first language is not my own. SA A N D SD 5. better able to understand my own culture and personal perspectives. SA A N D SD 6. better able to communicate with individuals who have different cultural backgrounds. SA A N D SD 7. less interested in studying or travelling to other countries. SA A N D SD 8. more confident about working with individuals with different cultural backgrounds than my own. SA A N D SD 9. less interested in keeping abreast of news and events in my partner country. SA A N D SD



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10. more interested in working only with those who look and talk like me. SA A N D SD 11. more open to those from different national, cultural, religious or socioeconomic backgrounds. SA A N D SD 12. more likely to participate in events or groups with an international composition. SA A N D SD 13. less interested in learning about global or international issues. SA A N D SD

Please rate your level of agreement or disagreement relating to the following statements. 14. At the end of the collaboration, I better understand why learning another language can be helpful. SA A N D SD 15. Even though the collaboration is over, I am likely to remain in contact with some of my classmates from the partner country. SA A N D SD 16. If I could take another course with an online collaboration, I would do it again. SA A N D SD 17. Overall, I would judge my own learning from the collaboration as very worthwhile. SA A N D SD 18. What do you think were the greatest rewards with the collaboration? (Use back if needed) 19. What do you think were your biggest challenges with the collaboration? (Use back if needed)



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20. What recommendations for the instructors do you have for improvements in future collaborations? (Use back if needed)



CHAPTER SIX REVERSE LOGISTICS: THE DIFFERENCE BETWEEN THE SERVICE AND MANUFACTURING INDUSTRIES ALENA KLAPALOVÁ AND RADOSLAV ŠKAPA

Abstract This chapter examines reverse logistics management in services and presents some managerial issues of service companies concerning reverse logistics in comparison to manufacturing companies. The data were collected through personal interviews. The findings reveal several differences between reverse logistics in services compared to other industries. Specifically, we found that reverse logistics of services is driven substantially more often by issues surrounding customer relationships and marketing concerns, while corporate responsibility, concern for the environment, government regulation and cost reduction are more frequently drivers introduced by the managers of manufacturing companies. Services, particularly in small-sized companies, are more innovative in their reverse logistics policies, and the impact of reverse logistics on profitability is perceived to be substantially higher in comparison to manufacturers. The results show that reverse logistics in services might be a very promising area of research that can help enrich the current knowledge of reverse logistics in general. This paper has both managerial and theoretical implications for extending the existing knowledge gap of reverse logistics in services. Keywords: reverse logistics, service business, drivers, commitment, attitude

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Introduction Since the end of World War II, services have accounted for most of the economic activity in developed countries, with rapid growth in their share of gross domestic product and employment in the developing economies during recent decades (Chesbrough and Spohrer 2006; Baltacioglu et al. 2007). Due to the growing trend of product unbundling and outsourcing (Gospel and Sako 2010; Wilson et al. 1990), coupled with rapid innovation and the invention of new and more sophisticated products and several socio-demographic trends and lifestyles, new types of services have enriched the spectrum of supply with the aim of satisfying the very specific and niche needs of customers. Nevertheless, there is nearly no reflection of this magnitude of services in the area of reverse logistics literature, as the entrepreneurial activities are less, more or wholly independent from manufacturing companies. Our presumption is that some of the many potential reasons for this neglect can lie in certain specificities of services, particularly in the so-called “IHIP concept” (intangibility, heterogeneity, inseparability and perishability—see the literature review below) and in the likely prevalent opinion among academics of the nonexistence of reverse logistics activities in service industries. This can be connected with the features of services perceived as distinct mentioned above and other typical characteristics of services in the current body of service business knowledge, e.g. prevailing micro and small companies in services that can result in a considerable amount of the substance of reverse logistics. Such a lack of interest can have negative implications for knowledge building. Our paper is the first outcome of ongoing longitudinal research on reverse logistics management in the Czech Republic commenced in 2012, that places special attention on exploring service industries. Only a small part of the various issues explored is presented in the text, serving as an entry into the analyses of other aspects of service business reverse logistics management in comparison to manufacturing companies. We consider the following areas to be deeply interconnected, significantly affecting other areas of reverse logistics management, and as such selected for this paper: the motives, reasons or driving forces for our involvement in reverse logistics management; the matter of planning as the initial point for proceeding with other managerial functions (bearing in mind the circle or spiral character of management); the importance of reverse logistics for competitiveness; the innovativeness of reverse logistics policy and changes in policy during the last five years; and viewing reverse logistics as a profit-contributing factor as well as the profitability of companies in

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general in comparison to their competitors. This research examines if and how reverse logistics in the service business differs in reverse logistics involvement and managerial commitment from other industries.

Literature Review Reverse Logistics Management Generally speaking, reverse logistics can be described as a part of supply chain management in the case when companies must or want to work with returns from customers due to various reasons. These include distribution and manufacturing returns (e.g. obsolete products or equipment, byproducts and scraps), recalls, packaging (reusable) and waste (e.g. surpluses from inefficient use and purchase, damaged inventory, production errors, disposable packaging, etc.). Summarizing the point of “what,” the content of reverse logistics is predominantly a material one and comprises flows of products of miscellaneous character and in different stages of the product lifecycle, packaging and waste and commodities (Fleischmann et al.1997; Amini and Retzlaff-Roberts 1999; De Brito 2004; Blackburn et al. 2004; Fernández 2004; Krikke, le Blanc and van de Velde 2004; Badenhorst 2010). Such reverse flows emerge in any point of forward production and supply processes, and it is the role of reverse logistics to manage them properly, i.e. to try to avoid these flows, minimize their amount and recapture maximum value. Management of reverse logistics comprises all managerial functions (planning, organising, decision-making, staffing and coordinating, communication, budgeting, control, measurement, evaluation, reporting and leadership) (Klapalová 2011). For instance, Stock (1998, 20) specifies the role of logistics in managing reverse flows as lying in “product returns, source reduction, recycling, material substitution, reuse of materials, waste disposal, and refurbishing, repair and remanufacturing.” The issue of reverse logistics arose in the 1970s, developing from the ongoing changing character of supply and distribution management and in theory as a new concept and area of new knowledge (De Brito 2003; Fernández 2004). There are four basic phases of evolution of reverse logistics research: (1) Optimizing the engine—focus on cost-minimization when handling with reverse flows; (2) Linking frontend to engine—focus on value maximisation and coordination of supply chain; (3) Linking backend to engine—focus on so-called closing the loop and designing dynamic system over the entire product life cycle; and (4) Moving from

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local to global CLSC (Closed Loop Supply Chain) management—focused on the globalisation aspect of reverse logistics with the concern of socalled triple-bottom-line (Corrêa and Xavier 2013). There are two seminal works that can be considered as the fundamentals of reverse logistics theory. The first is the book Going Backwards: Reverse Logistics Trends and Practices written by Rogers and Tibben-Lembke in 1998, based on a research project supported by the Reverse Logistics Executive Council and the American third party logistics service supplier GENCO Distribution System. The other is the doctoral thesis by De Brito titled “Managing Reverse Logistics or Reversing Logistics Management?” published in 2004, based on De Brito’s research within REVLOG (the European Working Group for Reverse Logistics), financially supported by the European Commission and realized during 1997–2002. Rogers and Tibben-Lembke’s book represents the first published work on reverse logistics knowledge proceeding from practice and focused on many diverse themes. The authors were also among the first to stress the importance of reverse logistics management for competitiveness and success and detected some driving forces for reverse logistics management that have a strategic role. The most frequently mentioned by companies surveyed were competitive reasons, legislation recapturing value, recovering assets and margin protection and good corporate citizenship. De Brito’s doctoral thesis offers the first broad framework for managing reverse logistics universally with the basic questions: why? (drivers and reasons); what? (types and characteristics of reverse flows); how? (processes and recovery options in reverse logistics); and who? (actors and their roles). De Brito and Dekker (2003) identified three groups of drivers: economic (in the form of direct and indirect gains, e.g. cost reduction, green image, improved customer/supplier relations, anticipating/impeding legislation), legislation (protecting consumers and their rights and protecting environment) and corporate citizenship. Rubio, Chamorro and Miranda (2008) carried out a thorough examination of 186 articles published in 26 journals during the period 1995–2005 (with the introduction of some publications for the year 2006), directly related to reverse logistics and product recovery as well. Only one of these articles was devoted to services, and concerned repair services (Amini, RetzlaffRoberts and Bienstock 2005). For the examination, the classification of reverse logistics research suggested and employed by Dekker et al. (2004) was employed. According to the classification, three fundamental areas of research can be observed in literature (having both theoretical and empirical characters): (1) management of the recovery and distribution of

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end-of-life products; (2) production planning and inventory management; and (3) supply chain management issues. All of the articles are from the field of production and operation management concerning manufacturing industries, in most cases with some examples from retail and/or wholesale. Pokharel and Mutha (2009) published a review of 7 books, 6 conference proceedings and 151 journal publications on reverse logistics up to 2008. The review shows that research themes are related to three broad parts: (1) inputs to reverse logistics (new or used products or parts, or recycled materials); (2) processes (collection, inspection, processing, remanufacturing, consolidation) and structure (location and allocation problems, identification of supply chain system, inventory control, coordination and the use of reverse logistics system for modular structure) of reverse logistics; and (3) outputs of reverse logistics processes (recycled materials, spare parts, remanufactured products and waste material disposal). Their review also encompasses several articles on repair and after-sale services (namely the ability to provide the services and location). The authors also discuss the character of the majority of research carried out previously and point to the fragmented research streams, mostly in the form of individual themes such as inventory, capacity planning and network design. Lambert, Riopel and Abdul-Kader (2011) modelled a conceptual framework for reverse logistics decisions with three hierarchical levels: strategic, tactical and operational. The need to incorporate reverse logistics activities into the overall business strategies is also examined, for instance by Marien (1998) and Gooley (2003). Daugherty et al. (2001; 2005), Richey et al. (2005), Skinner et al. (2008), Prahinski and Kocabasoglu (2006), Hsiao (2010) and Jack, Powers and Skinner (2010) belong to those few authors who have subsequently paid attention to the matter of (managerial, financial, technological) commitment to reverse logistics. Alvarez-Gil et al. (2007) identified a strong (and statistically reliable) relationship between the progressive attitude and commitment of managers and the likelihood that the company should establish programmes for the development of reverse logistics. The managers of companies who understand the role of reverse logistics formulate policies within their overall business strategy and try to set effective and efficient programs to support reverse logistics activities (Daugherty et al. 2002; Richey et al. 2005; Stock and Mulki 2009; Lambert, Riopel and Abdul-Kader 2011). Since policy is the fundamental instrument for the future direction of the company’s development and aids sustaining and improving competitiveness, it should be adequately flexible and innovative, and react to the changes in the environment or even be proactive.

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Besides the above-mentioned drivers, there are other motives for companies to be interested in reverse logistics. Johnson (1998), Mollenkopf and Closs (2005), Breen (2006) and Mollenkopf, Frankel and Russo (2011) elaborated the idea of reverse logistics as the source of value for stakeholders. Jayaraman and Luo (2007) and Stock (2001) dealt with the possibility of gaining competitive advantage and differentiation when managing reverse flows properly, as with corporate social responsibility. Ravi, Ravi Shankar and Tiwari (2005) employed an interpretive structural modelling (ISM) based approach to develop a model for productivity improvement in the computer industry, with several variables such as drivers of reverse logistics contributing to productivity improvement. They found that environmental concerns act as an initial point or basic element for the rest of the variables in this industry. Fernández (2004) introduced several examples of profitability with their roots in reverse logistics. Škapa (2012) found evidence supporting the relationship between the hierarchical incorporation of reverse logistics into companies’ plans and business profitability. Other examples of drivers are the needs of the customers as well as those of the suppliers or other stakeholders (e.g. government and community), demand, requirements and, as the case may be, even pressure (Breen 2006; Verstrepen et al. 2007; Piotrowicz 2008). Rogers et al.’s (2002) paper follows up with customer focus and describes how changes in return policy can enhance the satisfaction and loyalty of customers. Thus, reverse logistics can help companies to improve or keep the relationships with customers and/or suppliers stabile; thus enhancing their loyalty and satisfaction, which is extremely important for service businesses (Amini and Retzlaff-Roberts 1999; Ellram, Tate and Billington 2004; La and Kandampully 2004).

Specificities of the Service Business and Reverse Logistics Management The service industry has grown over the last decades to dominate economic activity both in advanced industrial and emerging economies. Yet, the scientific understanding of services does not correspond with the empirical practice and omits a lot of matters (Chesbrough and Spohrer 2005). Several empirical studies have shown that reverse logistics have a relation to the particular industry. In other words, individual industries and sectors differ from each other according to the specific content of reverse flows (the type, volume and share of reverse flow types and categories), ways of handling reverse flows (or processes and activities that are involved in reverse logistics to deal with individual types and categories of

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reverse flows), or forces that trigger and drive the interest and involvement of managers to deal with reverse logistics issues (Rogers and TibbenLembke 1998; Daugherty, Autry and Ellinger 2001). Reverse logistics, as is indicated above, deals primarily with tangibles. The literature shows that no special academic debate about the intangibles of reverse logistics content has taken place until now. Rogers et al. (2001, 2) stated: “If no goods or materials are being sent backward, the activity probably is not a reverse logistics activity.” We feel a certain hesitance on this question, as they used the word “probably” in their explanation of what is and is not reverse logistics. The “materiality” of reverse logistics is stressed in one of the most-cited definitions of reverse logistics: “The process of planning, implementing, and controlling the efficient, costeffective flow of raw materials, in-process inventory, finished goods, and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.” (Rogers and Tibben-Lembke 1998, 2). Nevertheless, this definition also includes an intangible constituent—information. Serving as the general knowledge, one of the distinct characteristics of services distinguishing them from manufacturing industries seems to be this intangibility. There is almost a dyadic view of products and services based on the tangibility as the boundary where services are characterized as intangible immaterial activities or processes. Yet, broadly speaking, intangibility is not properly understood. Service, as such, is intangible and is an abstract utility based on processes and performances provided (Vargo and Lusch 2004). Nonetheless, the provision of a substantial part of services is supported more or less by tangible elements (Teboul 2006, in Angelov 2010), with dependence on the position of a particular service of the tangible product—the intangible service continuum (Shostack 1977). This is nearly “a must,” especially for marketing and selling purposes. The abstractness of services has to be captured, described and to some extent visualized by something that can be seen, smelt or touched; in the words of Shostack, (1977, 77) providing “peripheral cues.” In this case there is space for discussion of Baltacioglu et al.’s idea (2007, 109) stating that the “intangibility of services is the main reason why a number of logistics activities cannot be applied to service supply chains.” In other words, there are services with more or less tangible inputs (resources) and outputs that can fall into reverse flows from various reasons, and companies in service business have to cope with them. Intangibility belongs to the IHIP-based paradigm (together with heterogeneity, inseparability and perishability) (Tronvoll et al. 2011). Inseparability can be explained by the realization of

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production and consumption simultaneously in most services, and from another point of view by the significant importance of the producerconsumer/customer interaction throughout the service creation and delivery process (Gliatis and Minis 2007). Although there is the possibility to standardize some types of services, or at least some part of some types of services, the abstract character of services mentioned above means that services could also be described as experiences that are highly individual and dependent on many variables that are more or less manageable, catchable and obvious (Baltaciouglu et al. 2007). Experience is largely in the minds of the customers, and translating imagination to service providers is very difficult. Except for the introduced facts, this is the point of the heterogeneity of services grounded in individual customers and service providers (La and Kandampully 2004). In many services, the power of individual evaluations of quality, for example, can result in some types of reverse flows emerging (e.g. product returns due to complaints). This is even stronger in personal services with direct interaction between customers and service providers and specifically when the customer has considerable power thanks to the many competitors on the market. Perishability is another matter in many services, especially in services that have a seasonal character where their product and production are dependent on the flow of time and weather or other environmental circumstances that are impossible to influence. The IHIP paradigm of services means several consequences for reverse logistics management in service businesses. First, we expect that reverse logistics in services would be significantly market- and customer-focused and marketand customer-dependent, especially in motives and drivers for reverse logistics management. As Oom do Valle et al. (2009, 2) claim, the customer is “the first intervenient in any reverse system.” Secondly, most services are highly labour intensive (Baltacioglu et al. 2007), and the importance of human resources is a dominant factor in the emergence of reverse flows (poor or wrong performance by employees), and can also stand as one of the main barriers for properly reversing logistic management. In the question of planning in services due to the prevalence of micro and small enterprises, lower planning activity concerning reverse logistics can be assumed (Stonehouse and Pemberton 2002). Company size and the existence of a direct contact in services accent the need to promote good relationships with (very often individual) customers and enhance their loyalty and favour and lower bargaining power towards suppliers. Another aspect of many services is a higher share of lesseducated persons, for instance in such types of services as hospitality,

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tourism, repair, personal physical services and so on. Owner motivation and lack of strategic planning because of lack of time, lack of expertise, inadequate knowledge of planning processes, reluctance to share strategic ideas with employees and others, size of business, business lifecycle stage and other internal implementation barriers were assigned as the strategic planning barriers for future growth of small companies (Wang, Walker and Redmond 2007). Pasanen (2005) reported that the often-introduced internal barriers are limited access to finance, lower level of professionalism, problems with qualified personnel recruitment and a higher dependency on customers and suppliers, which come hand-in-hand with the lower ability to gain an optimal economy of scale. Such factors also prove to be influential in the case of reverse logistics, for instance in attitudes, some managerial aspects and perception of various environmental factors. However, Susman, Warren and Ding (2006), among others, conclude that high pressure from customers and competitors make service companies be more innovative in operational excellence in their search for differentiation and survival as well as profitability. There is an obvious lack of concern in the area of reverse logistics research in services probably due to the points introduced above with just a few exceptions of green management in hospitality and transportation (Kasanava 2008; Tzschentke 2008). Therefore, the research presented in this chapter has a predominantly exploratory character with the major objective being to investigate if and how differently serviced business companies behave in some aspects of reverse logistics. The research questions (RQ) formulated for the investigation are as follows: RQ 1. What are the differences in motives of engagement in reverse logistics in services and in manufacturing? RQ 2. How does the managerial attention to reverse flows differ in services and in manufacturing? RQ 3. How does the manager’s view on reverse flows differ in services and in manufacturing? RQ 4 Does the size of companies have some influence on the findings? (with the secondary impact on the differences between services and manufacturers.)

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Based on a literature review, we presuppose the existence of differences in the structure and focus on drivers for reverse logistics management, in the planning of reverse logistics activities and in profitability, but no differences in reverse logistics policy innovativeness and perception of the reverse logistics importance between services and manufacturers.

Methods and Materials Research Instrument Data were collected by means of a questionnaire; the questions were adapted from the research papers of Rogers and Tibben-Lembke (1998) and Klapalová (2007). In several cases, the set of responses in the closedended questions of Rogers and Tibben-Lembke were supplemented with additional relevant responses, which were applied in the more recent research works of De Britto and Dekker (2003), De Britto (2003) and Gecker and Vigoroso (2006). This step broadens the variety of potential answers that cover the real practice of reverse logistics management nowadays. The respondents were asked 27 main questions, which were (in many cases) elaborated into more detailed sub questions. The majority were constructed as close-ended questions with the dichotomous and nominal response options. In this chapter, only a part of the collected variables was utilized. The respondents were identified in terms of their job position in a company (top manager, operation and logistic department, or other department), the company’s affiliation (name and industry), and the company’s size (measured by number of employees). The first research topic touched the motives of the companies’ engagement in reverse logistics. Thus, the respondents were asked whether a particular driver (out of the 15 given on the list) was or was not a motive of the company’s interest in reverse logistics. The variable related to the second research topic measured the extent of planning of reverse logistics in a company—a multiple choice question asked if reverse logistics were planned on a strategic level (company-wide and departmental), a tactical and operational level, or whether there were no plans for it. The third topic elaborated on the economic aspect of reverse logistics and the company’s policy toward them. Two 7-point scale questions measured the profitability of a company in general (highly loss-making vs. highly profitable, and below vs. above the industry average profitability). The percentage impact of reverse logistics on a company’s profitability was

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acquired by an open-ended question, which resulted in the recoded ratio scale variable. The policy of reverse flows was measured on three 7-point scales in terms of necessity (reverse flows are “useless and annoying” vs. “essential and a must to deal with”), innovativeness of reverse flows policy (low vs. high) and the extent in change of the policy during the last five years (no change vs. radical change). It is necessary to highlight that the majority of answers represent the subjective statements of informants as a result of the fact that many of our questions asked for the data that companies don’t measure, collect and reprocess. The impact of reverse logistics on corporate profitability is a typical example; the percentages provided by respondents are just estimations, a fact resulting from the answers to questions related to performance measurement (also contained in the questionnaire). Because the questions introduced above were employed in one of the authors’ earlier studies, no additional pretesting was done.

Sample and Data Data were collected in 2012 through structured personal interviews with the representatives of companies operating on the Czech market. The single informant approach was chosen due to resource restrictions. The companies were selected on the principles of direct and indirect contacts of the researchers; this convenience sampling was accepted because of the explorative nature of the research.

Data Analysis To identify industry-related differences, the companies were divided into two groups depending on their affiliation: services and manufacturers (independent variable). The differences in the responses of the two groups were identified by means of statistical testing. Thus, the analytical part relies on the application of statistical tools such as frequency analysis, crosstabs, Ȥ² test, Mann-Whitney U (for scale questions) and t-test (for ratio scale variable - the percentage impact of reverse logistics on corporate profitability). All calculations were conducted in SPSS v.21. Industry affiliation itself was asked in an open-ended question; the responses were categorized according to the statistical classifications of economic activities of the European Union—NACE. The companies were then coded into the groups of the services and the manufacturers.

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Results Respondents’ Profiles The sample analysed consists of 270 cases, of which 63% belongs to services (according to their respective core business activity) and the remaining 37% represents the manufacturing companies. Whereas the service group is quite homogenous (the majority of cases operated in the hospitality industry), the manufacturing group is a mix of businesses operating in mechanical engineering, or the chemical and construction industry. The detailed view of the sample structure (see Table 6.1) reveals that the majority of companies consist of small enterprises; this claim is more evident in the group of services. Table 6.1. Structure of companies covered in the sample (N=270) Industry Affiliation Small Medium Large All Manufacturing 45.0% 29.0% 26.0% 37% Services 80.6% 12.4% 7.1% 63% Combined 67.4% 18.5% 14.1% 100% The only personal characteristic surveyed was the job position of the respondents. In this respect, the top managers are slightly more present (39.2%) in the sample than the representatives of operations and logistics departments (25.4%), and the representatives of other departments (35.4%). This variable differs in manufacturing and service companies, F² (2, N = 268) = 6.280, p = .043. The proportion of top managers and other departments in the service sample is higher, but the proportion of operations and logistics departments is lower when compared to the manufacturing sample (see Table 6.2). This issue might be explained by the size of companies in services due to the fact that small companies do not need specialization and top managers are usually involved in most of the processes to some extent. Table 6.2. Job position of respondents related to industry affiliation (N=268) Job Position Industry Top Operations and Other Affiliation Managers Logistics Department Department Manufacturing 35.0% 34.0% 31.0% Services 41.7% 20.2% 38.1% Combined 39.2% 25.4% 35.4%

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Drivers of Reverse Logistics The results related to differences in the motives of engagement in reverse logistics (RQ 1) are presented in Table 6.3. The presence of particular motives/drivers (measured in relative frequency) is sorted in decreasing order according to the combined (both manufacture and service) sample. The driver of “higher customer satisfaction” is the most important, and “community” is the least important. There are some differences between the two groups, not only in relative counts of drivers but also in the relative position/rank of particular drivers, among others. To examine whether the differences across industry affiliation are significant, we conducted a series of chi-square tests. Out of 15 given drivers, the chisquare tests were statistically significant at the 0.05 level in four of them, and two were significant at the 0.01 level. In services, the motives with a higher proportion are “competitive reasons,” “customers’ loyalty,” “differentiation” and “image.” On the contrary, manufacturers could be characterized by a more frequent presence of “environmental concern” and “corporate responsibility.” This leads to the proposition that reverse logistics in services are driven more by motives that can be termed proactive and marketing-oriented, i.e. in the centre of their strategy and goals is the customer, fulfilling his/her expectation and supporting loyalty. The ambition is to provide a service that differentiates the company from its competitors and that increases the competitiveness of services. Of course, the manufacturers follow the same goals too; however, they focus more on other stakeholders at the same time. More specifically, their reverse logistics are a part their corporate responsibility programs and environmental activities; the ambition of the manufacturer might be to put a favourable spin on the environmental impact of their operations and react to government requirements. Manufacturers also see the possibility to reduce costs through reverse logistics more often.

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Table 6.3. Drivers of reverse logistics in companies (N = 265) Drivers

Industry Affiliation

F²

p

3.23

.073

75.5%

1.05

.305

67.3%

10.54

.001

Higher customer satisfaction

Comb. 88.3%

Serv. 91.0%

Manu. 83.7%

Services to customers

78.6%

80.8%

Competitive reasons

78.2%

84.4%

Cost reduction

75.9%

72.5%

81.6%

2.84

.092

Customers’ loyalty

74.8%

80.2%

66.3%

6.39

.011

Image

68.0%

73.1%

60.2%

4.71

.030

Differentiation

63.5%

74.3%

45.9%

21.46

.000 .467

Customers’ interest/press

59.8%

61.7%

57.1%

0.53

Value recapturing

56.8%

60.5%

51.0%

2.25

.133

Productivity increase

51.1%

53.3%

46.9%

0.10

.318

Environmental concern

33.1%

26.3%

43.9%

8.61

.003

Suppliers’ interest/press

30.4%

32.9%

26.5%

1.19

.275

Corporate responsibility

26.7%

21.0%

36.7%

7.84

.005

Government Requirements

18.8%

15.6%

24.5%

3.21

.073

Community

12.4%

13.8%

10.2%

0.72

.396

The above-mentioned findings need to be checked for the influence of the “third” variable—the size of the company (RQ 4). Thus, it was necessary to prove which variable (size or industry affiliation) was more likely to be related to the identified differences. For this reason, the same analysis of drivers was repeated on a subsample, which consisted of small companies (N=179). Ideally, all the tests should be recalculated for all three subsamples: small, medium and large companies. Whereas the sample of manufacturers is distributed quite equally in terms of the company’s size (see Table 6.1), services mainly consist of small firms (80.6%), meaning that the resulting sample size of the medium as well as of the large companies would be rather insufficient for valid statistical testing. The statistical tests for medium and large companies were omitted for this reason In spite of several differences, it is apparent that the results are similar (see Table 6.4). The rank of drivers is the same as the rank for the whole sample with the exception of three mutually switched couples of drivers (services to customers vs. competitive reasons, for example). The MannWhitney tests remained statistically significant in three variables out of the

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six that were significant for the whole sample. The three significant variables relate to the higher focus on customers, supporting the finding that higher marketing orientation is service industry specific. Higher frequencies in both “environmental concern” and “corporate responsibility” (i.e. the specifics of manufacturers) were not confirmed by statistical testing. However, this could be due to the smaller sample size and low frequencies in data. To summarize, the additional analysis speaks rather in favour of the validity of the above findings. Table 6.4. Drivers of reverse logistics in small companies (N=179) Industry Affiliation

Drivers

F²

p

Comb.

Serv.

Manu.

Higher customer satisfaction

89.4%

91.8%

82.2%

3.25

.071

Competitive reasons

83.2%

88.1%

68.9%

8.87

.003

Services to customers

76.5%

79.9%

66.7%

3.26

.071

Customers’ loyalty

76.5%

80.6%

64.4%

4.89

.027

Cost reduction

73.2%

71.6%

77.8%

0.65

.560

Image

70.9%

73.9%

62.2%

2.22

.136

Differentiation

70.9%

76.9%

53.3%

9.05

.003

Customers’ interest/press

60.9%

63.4%

53.3%

1.44

.230

Value recapturing

58.7%

61.9%

48.9%

2.37

.161

Productivity increase

49.2%

51.5%

42.2%

1.16

.282

Suppliers’ interest/press

31.3%

31.3%

31.1%

0.00

.977

Environmental concern

28.5%

26.1%

35.6%

1.47

.225

Corporate responsibility

22.3%

20.1%

28.9%

1.48

.223

Community

13.4%

15.7%

6.7%

2.35

.125

Government Requirements

13.4%

13.4%

13.3%

0.00

.986

Managerial Attention to Reverse Logistics Managerial attention (RQ 2) was determined through the question about the incorporation of reverse logistics into the planning activities of companies. Table 6.5 shows that reverse flows are part of 41% of corporate strategy plan, 35% of functional/departmental strategy plans, 39% of tactical plans and 64% of operational plans. Surprisingly, almost half of the businesses (49%) do not plan reverse flows at all. It is apparent that a group of companies that plan reverse flows overlaps with the group of companies that do not plan. Thus, the respondents who indicated both

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any kind of “planning” and “no planning” option in the respective question probably referred to the fact that a part of reverse flows activities are planned and others are not. Table 6.5. Differences in planning of reverse flows (N=265) Industry Affiliation

Company Plan

F²

p

Corporate strategy plan

Comb. 41.0%

Serv. 45.0%

Manu. 36.0%

1.66

.245

Functional/departmental strategy plans

35.0%

35.0%

36.0%

0.10

.791

Tactical plans

39.0%

42.0%

34.0%

1.56

.242

Operational plans

64.0%

62.0%

67.0%

0.97

.351

No plan

49.0%

50.0%

46.0%

0.25

.701

In terms of differences between services and manufacturers, it is obvious that the percentages across groups vary more or less in all five categories of planning. The differences, however, are not enough for the chi-square tests to be statistically significant at 0.05. Again, the previously introduced conclusion was tested on a subsample of small firms to eliminate the relationship with the company’s size (RQ 4). The chi-square tests were nonsignificant except for the tactical planning, F² (2, N = 179) = 5.623, p = .021. Therefore, planning is partially affected by the company’s size; small services plan reverse flows more often (45% have tactical plans) than manufacturers (25%). To sum up, the data support the idea that the planning of reverse flows is conducted to a similar extent in both groups, which might indicate that managerial attention is probably similar in both groups. In small services, however, managerial attention to tactical planning is higher.

Management’s View on Reverse Flows To supplement the previously mentioned findings concerning the attention to reverse flows, other aspects of the viewpoints of managers were of interest to us, i.e. the perception of the “necessity of reverse logistics,” “innovativeness of reverse flows policy,” “change in reverse flows policy,” “profitability of reverse flows,” “corporate profitability” and “relative corporate profitability” (RQ 3). Table 6.6 shows the construction of the variables in terms of an interpretation of the extremes, and the central tendency (median). The answers to all variables are spread equally around the mid-scale point

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(Mdn=4), except for necessity (Mdn=5), suggesting that reverse logistics is slightly perceived as a necessary issue. Table 6.6. Managers’ view on reverse logistics (N=266) Variable Necessity

Combined Median 5

Policy innovativeness

4

Change in policy

4

Profitability of reverse flows Corporate profitability

4

Relative corporate profitability

4

Scale interpretation (1–7 scale) Useless and annoying (1)–Essential and a must to deal with (7) Low innovativeness (1)–High innovativeness (7) No change during the last 5 years (1)– Radical change during the last 5 years (7) Highly loss-making (1)–Highly profitable (7) Highly loss-making (1)–Highly profitable (7) Below the industry average profit (1)– Above the industry average profit (7)

4

The view of service and manufacturing companies is revealed in Table 6.7. Based on medians, we can conclude that managers in both groups see reverse flows similarly; the only slight differences are apparent in “change in policy and corporate profitability.” Mann-Whitney tests were applied because all variables are ordinal and deviate from normal distribution as suggested by the statistically significant Kolmogorov-Smirnov tests as well as the graphical analysis of variables (Q-Q plots). The interpretation of the results in Table 6.7 is straightforward—there is no statistically significant difference in five out of six variables. The only difference is that services see themselves to be equally successful as competitors (“relative corporate profitability” within the industry), whereas manufacturers classify themselves as slightly more profitable than competitors, U = 6925.5, Z = -2.040, p = .041. Table 6.7. Test of differences from the viewpoint of managers (N=266) Variable

Serv. Mdn. M

Manu.

N

U

Z

p

Mdn. M

Necessity

5

4.8 5

4.8 264 7974.5 -.15

.878

Policy innovativeness

4

3.8 4

3.8 265 7861.0 -.57

.670

Change in policy

4

3.8 3

3.7 263 7747.5 -.43

.566

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Profitability of reverse flows

4

4.5 4

4.5 264 7898.0 -.29

Corporate profitability

4

4.3 5

4.4 266 7437.5 -1.37 .172

Relative corporate profitability 4

3.9 4

4.3 264 6925.5 -2.04 .041

.774

The view on profitability of reverse flows can be elaborated by additional analysis of the estimated percentage impact of reverse logistics on corporate profitability. This piece of information was acquired by an openended question. The answers of the respondents varied between -30% (i.e. a decrease in overall corporate profitability due to reverse flows by 30%) to a 50% increase. The average calculated for the whole sample (M = 7.2 %, N = 188) endorses the idea of the slightly optimistic opinions of managers. The comparison of services and manufacturers resulted in surprising outcomes—the impact of reverse logistics in manufacturing companies is substantially lower, t(186) = -3.331, p = .001. The impact of reverse logistics in 9.8 % was classified on a scale question as “neutral to slightly profitable” in services; however, the same classification (neutral to slightly profitable) done by manufacturers was related to the nominal impact of 2.51%, which illustrates the diversity in perceptions. This phenomenon cannot account for the different economic conditions (and therefore the different expectations) in services and manufacturers, as both groups evaluated their economic condition equally (corporate profitability: M = 4.3 for manufacturers vs. M = 4.4 for services; see Table 6.7). Finally, the results were tested for the relationship with company’s size (RQ 4). The medians of all variables analysed (as listed in Table 6.7) are the same for the subsample of small firms; “policy innovativeness” is the only exception, Mdn = 4 for services, Mdn = 3 for manufacturers. This difference is statistically significant, U = 2242.0, p = .019, which suggests that small services are more innovative in their reverse logistics programs. The results for profitability are similar in small firms. The view on profitability measured on scale (Mdn = 4) is associated with an average profitability estimation of 11.75% in services and 2.45% in manufacturers. However, the view on “relative corporate profitability” does not differ significantly in the small companies as opposed to the whole sample. Based on the additional results, the company size is related to the phenomenon analysed only partially, and specifically to the innovativeness of reverse logistics. Thus, the findings calculated on the whole sample can be provisionally accepted regardless of the company’s size factor.

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Discussion The specificities of reverse logistics in services were identified in (and limited to) three distinct fields: motivation, managerial attention and management’s view regarding reverse logistics. The analysis of motives for reverse logistics revealed one major difference between services and manufacturers—typical motives (or drivers) in services are related to the customer and marketing. As reverse logistics are connected to (and presumably can affect) a customer loyalty and corporate image, they can be used to differentiate the products offered by the service providers and increase their competitiveness. Our findings correspond with existing knowledge as presented in literature reviews (see, for instance, Susman 2006), although existing empirical evidence is largely missing. The motives mentioned above are present in manufacturers too. However, they are driven by the requirements of other stakeholders, which we can assume to be the government, employees, municipalities and miscellaneous advocacy groups. Therefore, manufacturers may see reverse flows as a potential tool for fulfilling the requirements of stakeholders or protecting the company against such requirements. The divergences of motives in the two groups can account for the more extensive environmental impact of manufacturers—they need an instrument (like reverse logistics) that would diminish the negative consequences of production on the environment and improve the relationships with certain stakeholders. However, such problems are less urgent in services (Banerjee 2002), and we can assume that this is because of their largely intangible character of production. As a consequence, the role of customer relationships gains relatively on importance in services, and thus reverse logistic could support marketing goals much more here. The second research question is focused on managerial attention. One way to learn about (in)attention to reverse flows is to infer this piece of information from the extent of planning. It is hard to believe that any important element of corporate operations would not be incorporated in strategic, tactical or operational plans. If a company draws up strategic, tactical and/or operative plan(s) for reverse flows (i.e. when it invests its energy in planning), such a fact can be interpreted as an indicator of higher managerial interest when compared to a company that plans reverse flows by no means. Therefore, the attention was measured by the scope of reverse logistics planning.

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The data showed that operative planning is the most common form (for two thirds of the companies focussed on). This means that managers pay attention to it and take the issue seriously. However, we cannot speak of any statistically significant differences between services and manufacturers, which implies that reverse flows might be of similar importance to both groups. There was just one such difference discovered that shows that small services plan reverse logistics more often on a tactical level. The intangible character of a product (or at least part of a product) itself might not be an argument for neglecting reverse flows. Nevertheless, our survey did not deal with the issue of intangibility thoroughly, and from the structure of the sample it can be deduced that the majority of companies in services from our sample work with tangible resources (most of them do their business in the so-called “HORECA” sector, comprising hotels, restaurants and cafés). The conclusions related to the second research question can be accepted only with reservations, which relates to the measurement instrument. The “extent” of planning was measured by a very simple question that was unable to capture the whole complexity (quantity and quality) of planning process. Thus, the reliability in this case is limited to a certain extent. The third analytical part presented rather similar results; the perception of the representatives of services are close to those from manufacturing. The data revealed that innovativeness in reverse logistics, its necessity and the flexibility of policy are not directly related to industry affiliation, which is once again in harmony with the literature review about the urgency of innovativeness in services as the reaction to customer needs and demands and competitive pressure. The only dissimilar finding relates to profitability. While the results measured on a scale question were the same in the both groups, the analogic open-ended question demonstrated that services experienced a higher impact of reverse logistics on profitability. This suggests that the expectations of services are higher. This heterogeneous view could be the starting point for the further analysis of service-related specifics. Despite the findings stated above, it is too early to conclude the discussion about the details of reverse logistics in service companies. The main reason for this and the limitations of the study presented are contained in the fact that the analysis was not comprehensive; it did not cover all the important parts of reverse logistics, just some of them. Another limitation regards the simplification of dividing the sample into two broad groups only (manufacturers vs. services). Any further research

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should work with a more precise affiliation. Another way to solve this problem is to group companies not according to industry affiliation, but to the intangibility of a representative product (proportion of tangible vs. the intangible part of the whole product). We propose that product intangibility is at the very heart of the differences we are looking for. It might be the critical variable for understanding the difference between services and manufacturers. The final limitation concerns the methodology applied: the aim of the paper is to provide introductory information about the topic; for that reason, only univariate and bivariate analyses were used. Due to technical limitations, the single informant approach was chosen, which means that a rather complex system within a company like reverse logistics was described by one person only, resulting in subjective perceptions distorting the data to a certain degree All in all, three implications can be drawn from the data presented. Reverse logistics, which has been perceived as an activity connected exclusively to the manufacturing sector, is playing its part in services too. The analysis of motives suggests that there is a slight difference in motives for reverse logistics engagement. Therefore, we can expect that there is a difference in the reverse logistic tools applied and actions done in services because of the motives/aims the services are aiming at. These motives are linked to customer relationships management, whose importance is not neglected by manufacturing companies but not perceived as connected to reverse logistics as often as it is with services. Such findings can serve as an inspiration for manufacturers who are possibly more concentrated on the tangible issues of reverse logistics. The second implication relates to profitability. The representatives of services estimated the impact to be four times higher than manufacturers. This means that the reverse logistics initiatives might be even more important in services as they appear to be related with higher profitability. However, to understand the causality, the process of value creation in the field of reverse logistics in services needs to be further researched, as stated above. The third implication refers to the innovativeness of the reverse logistics policy. Results show that it is the small services that are more innovative than manufacturers and bigger companies in services. This can be related to the higher flexibility of small companies and the need to respond to various environmental forces. We can conclude that such innovativeness pays off when combined with the supporting result of higher profitability of this group of companies. Nevertheless, this conclusion should also be examined in future research.

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Conclusions For several decades, scholars in logistics and supply chain management paid attention to material flow and how to optimize it. Their work resulted in a broad variety of theoretical concepts, models and theories that (in many cases) proved to be successful and effective in business practice, especially in manufacturing companies and retail. However, logistical concepts for service companies are rare. Despite the fact that the discussion about “service logistics” started more than two decades ago, it is still in its early stages. This paper highlights one aspect of logistics within this discussion by focusing on reverse logistics and comparing managerial views on these activities in manufacturers and services. The analysis, which focused on three particular issues related to reverse logistics, showed that services are driven by different motives, while reverse logistics appears rather similar in other aspects in the service industry compared to manufacturers.

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Acknowledgement The Czech Science Foundation supported this research as part of the project called Reverse Flows Management as a Means of Value Creation (project number: GA13-14704S). The authors would like to acknowledge

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the efforts of the reviewers who have helped to improve the manuscript significantly.

CHAPTER SEVEN THE EFFECT OF PERSONALITY TRAITS ON ORGANISATIONAL SILENCE: A RESEARCH ON THE SERVICE INDUSTRY CANAN ÇETIN, MELISA ERDILEK KARABAY, ESRA DINÇ AND ERKAN TAùKIRAN

Abstract The concept of organisational silence is elusive in management and organisational behaviour sciences. Yet, very few empirical studies have been conducted to reveal adequate evidence for organisational silence in corporations. The purpose of this study is to examine the relationship between employee personality traits and organisational silence. Specifically, we examined the effect of five personality traits (extraversion, emotional stability, agreeableness, conscientiousness and openness to experience) on three types of organisational silence, namely defensive, acquiescent, and prosocial silence. The data were obtained from a survey conducted on 143 employees in the service industry in østanbul, Turkey. The results show that extraversion and agreeableness have a significant effect on defensive silence. It is also found that both extraversion and agreeableness have a significant positive effect on pro-social silence. The results further indicate that extraversion and openness to experience have a negative effect on acquiescent silence, but agreeableness has a positive effect on it. Keywords: personality, Big Five, organisational silence, service industry.

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Introduction In recent decades the service sector has experienced rapid growth and has become the driving force behind developed economies. Corporations have recently focused on ensuring the organisational dynamics and development of employees, including the motivation to engage in decision-making processes as much as possible. This is particularly valid for the service sector, where the employee's productivity is asserted as an important input, mainly for the labour and knowledge-intensive industries (Kavak and Vatansever 2007). Hence, the increase of highly qualied staff within the service sector, particularly within business services, appears as a clear indicator of the increasing interdependence of economic activities from different sectors (Hipp and Grupp 2005; Miles et al. 1994). Today, it is asserted that employee power in the organisation is the most important factor for maintaining a competitive advantage. Besides, it is very important to have knowledge about personality to maximise the outcome of the employee power in an organisation (Hogan 2008). Personality is therefore highly essential for the managerial applications in an organisation. On the other hand, organisational silence is directly related to organisational problems and issues that need to be taken into account especially by managers (Morrison and Milliken 2000). Individuals face several problems in their organisations. Sometimes, the employee, as an important aspect of the issue, may wish to speak out on the points that are missing, as sometimes that person may have the ability to observe a problem from outside in order to address it. Therefore, it can be assumed that employees can take action or behave differently when they face several issues based on their personalities, circumstances and many other attributes. Most interesting among all those attributes is the silence of the employee. The purpose of this study is to measure the effect of personality traits (i.e., extraversion, emotional stability, conscientiousness, openness to experience, and agreeableness) on silence behaviour. This research is the first attempt to examine and explain the relationship between organisational silence and personality in the related literature. This chapter proceeds with a literature review, empirical findings, discussion, conclusion and further recommendations.

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Review of Literature Introduction to Service Sector The service sector, also referred to as the tertiary sector, comprises activities that are not included in the extracting primary sector (e.g. mining, agriculture and fishing) and the manufacturing secondary sector (e.g. industry and trade). Apart from this conceptualisation as a residual category, services are often determined as invisible, non-perishable and intangible. An additional feature of the service sector is that production and consumption occur simultaneously, through immediate interaction between consumers and service providers (Breitenfellner and Hildebrandt 2006) Fostered by the response to the growth of the service sector, the issue of service management has attracted significant interest amongst scholars (Oke 2007; Vuorinen, Järvinen, and Lehtinen 1998). Synergies appear between the product and service sectors in most technology industries, but the differences in the nature of their value creation and delivery call for different types of design, development trade-offs and decision frameworks (Nambisan 2001). The line between the rendering of services and the provision of goods is, nonetheless, increasingly blurred. Software programs are a good example of this phenomenon—they can be delivered physically (CD-ROM) or they can be made available through online services. Not least because of these definition problems, the concept of services must be investigated in closer detail (Breitenfellner and Hildebrandt 2006). To be precise, services provide immediate utilities to their clients, whereas manufactured products provide potential and standardised utilities sold on an anonymous market. The problem of these kinds of services is how to organise a decent valuing system that takes into account the value of the real outcome or performance containing high risks and uncertainty, and that also counts for the often required non-monetary work to tap the potential utility of high-quality services (Anxo and Storrie 2000). Additionally, services are extremely heterogeneous, difficult to define, differentiate and classify. Despite these difficulties, the tertiary sector continues to appeal for wider national and international attention (Breitenfellner and Hildebrandt 2006). The main features of the service include abstractness, perishability, synchronisation and heterogeneity. Abstractness of service refers to the difficulty concerning the identification and measurement of the service offered in an objective manner, which represents impalpable and abstract

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elements. Perishability of the service refers to the challenges of storage its conservation due to its immediate depletion. As can be seen, the abstractness and the perishability of a service require the validity of both production and consumption at the same time (Kavak and Vatansever 2007). Synchronisation of service, also known as the concurrency of services, states that the manufacturing and the consumption of the services will take place at the same time. In a hospital, when the doctor provides the health services to a patient, the patient consumes this service immediately (Zengin and Erdal 2000, 47). Heterogeneousity (or Heterogeneity) of service emphasises that there can be differences in terms of quality and standardisation highlights within the services produced (Zengin and Erdal 2000). Besides, services have a time dimension (i.e. they start and end at a particular time and have no lifecycle since there is only the duration of the service creation and submission). Furthermore, due to the fact that people in the organisation perform services, they consist of comparing the performance of the actual service, customer expectations within service quality, and a set of activities driven by human behaviour (Zengin and Erdal 2000). Table 7.1. Categorisation of services Types of Services Distribution services

Business services

Social services

Personal services Capital intensive services



Scope Involve activities such as sale, maintenance and repair of motor vehicles and motorcycles; retail sale of automotive fuels; wholesale trade and commission trade, retail trade, repair of personal and household goods; water and air transport, supporting and auxiliary transport activities except the activities of travel agencies, communications Include financial intermediation, insurance and pension funding except compulsory social security, activities auxiliary to financial intermediation, real estate activities, renting of machinery and equipment, computer and related activities, research and development (R&D), legal, technical, advertising and other business activities. Comprise activities in the areas of public administration, defence, compulsory social security, education, health and social work Involve various segments of hotels and catering and private households with employed persons Involve sectors such as energy, telecommunications, energyelectricity, wholesale trade, retail trade, transports, airlines and hotels

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Knowledge intensive services

Include sectors such as accounting, management, consultancy, engineering and architecture, marketing and advertising, nancial services, legal services, market research, publishing and public relations Sources: Anand and Delios (1997); Breitenfellner and Hildebrandt (2006); Erramilli and D’Souza (1995); Hipp and Grupp (2005); Kocack (2003); SanchezPeinado and Pla-Barber (2006).

The service sector covers a disparate set of activities ranging from electricity generation to banking and retail trade (see Table 7.1). The most common are distribution services, business services, social services, personal services, capital-intensive services and knowledge intensive services. According to Breitenfellner and Hildebrandt (2006), the first two subsectors, distribution and business services, can be further associated with intermediary or production-oriented services that serve as inputs for the production of goods and services belonging to other (sub)sectors. The second two subsectors, social and personal services, construct the collective category of final or consumption-oriented services, destined for ultimate consumption (Breitenfellner and Hildebrandt 2006). The traditional structure of business began to shuffle as the transition process of becoming a knowledge society gained momentum (Kocack 2003). The trend towards a knowledge-intensive economy supports structures in which human capital and knowledge-intensive business service companies emerge due to the fact that knowledge as an asset is already affirmed as an invisible source of wealth for the corporations (Çetin and Karabay 2010; Hipp and Grupp 2005). The determination and measurement of the enterprises’ intellectual assets contribute through the illustration of the performance and profitability of the company (Karabay 2011). In such circumstances, knowledge-intensive rms need to train employees in the rm’s know-how, providing that full control is maintained over the innovations generated from this knowledge transfer. Capital-intensive service rms, on the other hand, are less influenced by the cultural differences between countries when providing their services (Sanchez-Peinado and Pla-Barber 2006). In the following section, the basic dynamics of service industry that lead organisations and play a critical role in business are highlighted.

Emerging Prominence of the Service Sector The growing importance of the service sector and an essential measure of weight in the economy make the service sector by far the most important

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sector in industrialised economies (Breitenfellner and Hildebrandt 2006; Zengin and Erdal 2000). The service industry is important in the sense that it consists of activities that change or add value directly to other economic units or goods belonging to other economic units (Fernandes 2008). It is assumed that, in the new era, the services are going to be crucial in the field of international competition for markets and locations, since commissions for services will not be restricted by national frontiers (Blind 2006). Services also appear as the main source of job creation in OECD countries, often compensating for job losses in manufacturing. Business services, such as computing, information services and R&D services, generated more than half of all employment growth in many countries in recent years. These sectors help to improve the competitive performance of other sectors of modern economies. The growing importance of services in the economy implies that efforts to improve standards of living, boost productivity and create jobs must focus increasingly on the service sector (Sheenan 2006). Several factors contribute to the expansion of the service economy. At the macroeconomic level, increasing manufacturing productivity and growing competition from developing countries limit employment growth in manufacturing and motivate efforts to focus on higher value-added activities. At the firm level, rising investment in intangibles, growing emphasis on knowledge management, a renewed focus on core competencies and outsourcing play major roles (Sheenan 2006). Another issue is that the application of information and communications technology doubts the presumption that its cost necessarily rises faster than that of manufactures. It has led services to be produced locally, sourced over long distances and traded across borders. The traditional services that once dominated business, such as lodging, meal preparation and housecleaning, today have been significantly supplemented by modern banking, insurance, computing, communication and business services (Eichengreen and Gupta 2009). The new information and communication technology has already had noteworthy effects on various service sectors. This technology could be seen as being the first major technological innovation that has directly addressed parts of the service sector, as many services often entail the processing of information (Anxo and Storrie 2000). The service sector thereby not only accounts for the largest proportion of employment and value added but also creates the most jobs. This is particularly the case for business services and, to a lesser extent, for social services (Breitenfellner and Hildebrandt 2006).

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Fostered by the issues mentioned above, there has been an increase in competitiveness in the service industry that requires the strategic reconsideration of the actions taken by the companies. The adoption of marketing strategies and principles, the effectiveness of which has been verified in the market of tangible products, is essential for guaranteeing the profitability and survival of organisations in the future (Martínez and Pina 2005). Ultimately, the service sector continues to share a large amount of production, employment, investment and trade, which in turn has led to profound changes in many countries fundamentally in terms of transformation of the non-tradable goods. This, by and large, includes many components of services such as the liberalisation of national and international regulations and the creation and development of new services based on telecommunications and information technologies (SanchezPeinado and Pla-Barber 2006). In the following section, the traits particularly influential in the service sector regarding the behaviour of organisational silence are explained with a view to pointing out the basis of the research design of the study.

Five-Factor Model of Personality Personality traits are dened as dispositions to demonstrate a particular kind of response across various circumstances (Caprana and Cervone 2000). The five-factor model of personality is the most frequently used model for personality classifications in the literature (Barrick and Mount 1991; Bakker et al. 2002; Judge, Bono and Joyce 2000; Judge et al. 2000). The five factors include extraversion, emotional stability, agreeableness, conscientiousness and openness to experience (Barrick and Mount 1991). Extraversion is characterised by being sociable, gregarious, assertive, talkative and active (Barrick and Mount 1991, 3). Extraverts show positive emotions, a higher frequency and intensity of personal interactions, and a higher need for stimulation. Further, extraversion is in general associated with a tendency to reappraise problems positively (Bakker et al. 2002, 4). Emotional stability is often associated with being calm, secure and selfassured. However, it also concerns people with low emotional stability, neurotic tendencies such as nervousness, emotional distress, insecurity, instability and unhappiness (Özcan 2011, 76). Agreeableness is characterised by a desire to get along with and have sympathy for the problems of other (Moynihan and Peterson 2008, 324). An agreeable person is cooperative and likeable (Judge et al. 1999, 625). Conscientiousness is frequently associated with self-discipline, achievement striving, dutifulness and competence (Bakker et al. 2002, 6).

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A conscientiousness person is characterised by the tendency to be purposeful, responsible and determined (Moynihan and Peterson 2008, 324). Openness to experience is characterised by intellectance (philosophical and intellectual) and unconventionality (imaginative, autonomous, and nonconforming) (Judge et al. 1999, 625). This personality trait is related to scientific and artistic creativity, divergent thinking, low religiosity and political liberalism. (Judge, Heller and Mount 2002, 531)

Organisational Silence Today’s fiercely competitive environment, changing demands of consumers, the high and complex technological forms of firms, and globalisation force organisations to demand from their workforce more and more than in previous periods. From this point of view, taking initiative, bringing creativity and innovation, bearing the responsibility and above all speaking up for the betterment of the organisation are the main issues expected from employees (Quinn and Spreitzer 1997, 36). However, many employees choose not to voice their opinions and concerns about matters in their organisations because of fear of being characterised as troublemaker in the organisation (Huang, Van de Vliert and Van der Vegt 2005, 461; Vakola and Bouradas 2005, 443). In addition, Morrison and Milliken (2000, 708) state that organisational silence is the result of fundamental beliefs held by managers, including (a) the manager’s fear of negative feedback, and (b) a set of implicit beliefs held by managers. Individuals in organisations face a choice over whether to speak up or remain silent about concerns that they have at work. Individuals make this choice within the context of a social system that has implicit norms about the desirability of speaking up within the context of an organisational hierarchy in which bosses who do not wish to hear about problems can punish people for doing so. Not surprisingly, to remain silent about developing issues or problems is a decision they often take (Morrison and Milliken 2003, 1353). Silence can be observed at two different levels: individual and organisational. At individual level, silence can be defined as the intentional withholding of information by employees from others, which is referred to as employee silence (Johannesen 1974, 29). When most employees choose to keep silent about organisational matters, silence becomes a collective behaviour, which is referred to as organisational silence (Morrison and Milliken 2000, 706). At this level, organisational silence refers to employees’ intentionally withholding ideas, information

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and opinions with relevance to improvements in work and work organisations. Pinder and Harlos (2001, 334) define the concept as the withholding of any form of genuine expression about the individual’s behavioural, cognitive and/or affective evaluations of their organisational circumstance to persons who are perceived to be capable of effecting change or redress. In the given literature, the silence as a behaviour is investigated in various researches (Çakc 2007; Alparslan 2010), which associate the concept with motivation (Sözen, Yelo÷lu and Ateú 2009), commitment (Ülker and Kanten 2009), organisational citizenship behaviour (Klçlar and Harbalio÷lu 2014) and mobbing (Gül and Özcan 2011). The literature has an abundant source of evidence with regard to silence behaviour since there exist various studies that associate personality traits with several topics like organisational commitment (Bildik 2009), leadership (Zehir and Erdo÷an 2011), and employee voice behaviour (Walumbwa and Schaubroeck 2009), which is the opposite type of behaviour that appears in an organisation compared to silence. This study explores the interface between personality and silence, which has not yet been investigated. A thorough examination of the extant literature shows that organisational silence can occur in different forms (Dyne, Ang and Botero 2003; Pinder and Harlos 2001). According to Pinder and Harlos (2001), organisational silence can be differentiated as two basic forms: acquiescent silence (passive withholding of relevant ideas based on submission and resignation) and quiescent (defensive) silence (the more active withholding of relevant ideas in order to protect the self, based on the fear that the consequences of speaking up will be personally unpleasant). Dyne, Ang and Botero (2003) add one more type of organisational silence to the classification of Pinder and Harlos, which is pro-social silence, referring to the withholding of work-related information for the benefit of others. Within this context, organisational silence can be classified as three different forms: acquiescent silence, defensive silence and pro-social silence.

The Relationship between Personality and Organisational Silence The five-factor model of personality is the most frequently used model for personality classifications in the literature. Many studies have been conducted to examine the relationship between personality traits measuring the Big Five and job performance (Barrick and Mount 1991; Mount et al. 1998), career success (Judge et al. 1999), burnout (Bakker et

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al. 2002), leadership (Judge, Bono and Joyce 2000), and job satisfaction (Judge et al. 2000; Judge et al. 2002). On the other hand, silence is a powerful force in organisations but has not received the rigorous attention that it deserves (Dyne, Ang and Botero 2003, 1363). Perlow and Williams (2003, 3) argued that the phenomenon of employee silence is one of the critical organisational concerns, yet little empirical work has been done in the field (Dyne, Ang and Botero 2003, 1363; Milliken, Morrison and Hewlin 2003). The literature of organisational silence dates back to the beginning of the 2000s. Morrison and Milliken (2000), Morrison, Milliken and Hewlin (2003), Dyne Ang and Botero (2003), and Pinder and Harlos (2001) have given direction to the literature related to organisational silence. The studies mainly focus on the relationship between organisational silence and leadership and organisational justice (Bildik 2009; Detert and Burris 2007; Karacao÷lu and Cengiz 2009; Pinder and Harlos 2001; Taskiran 2010), locus of control (Askun, Bako÷lu, and Berber 2010), and organisational commitment (Tangirala and Ramanujam 2008; Vakola and Bourada 2005). As can be seen above, most of the studies focus on organisational variables such as leadership, organisational commitment, and organisational justice. Yet, few studies focus on the individual factors affecting organisational silence. Çakc and Çakc (2007) define the behaviour of remaining silent as an individual choice. Çakc (2007) has also recommended that the individual factors such as personality and cultural values need to be studied. Within this context, this study has been conducted to determine the relationship between personality traits and organisational silence. We propose that employees’ personality traits have a notable impact on their choice of remaining silent. Therefore, the following hypotheses were created. Hypothesis 1: Employees’ acquiescent silence behaviour is influenced by their personality traits. Hypothesis 2: Employees’ defensive silence behaviour is influenced by their personality traits. Hypothesis 3: Employees’ pro-social silence behaviour is influenced by their personality traits.

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Methods Sample and Data Collection The purpose of this study is to identify the impact of personality traits on organisational silence. A survey using questionnaires was conducted to collect field data from the residents of Istanbul, Turkey. The sample consists of people employed in various service sectors including information technology, higher education, insurance and banking. The surveys were distributed to three hundred people and 162 surveys were returned. After the omission of incomplete surveys there remained 143 useable surveys. Therefore, the turnaround ratio is 47.3%. .

Measures The questionnaire used in the research consists of three parts. In the first part, the 10-item personality traits inventory developed by Gosling et al. (2003), taking the five-factor model as a basis, was used. This scale consists of ten items aiming to measure five sub-dimensions: extraversion (two items), agreeableness (two items), conscientiousness (two items), emotional stability (two items) and openness to experiences (two items). All items were measured on a five-point scale ranging from strongly disagree (1) to strongly agree (5). Five of the items were reverse scored for this scale. In the second part, the organisational silence scale developed by Dyne, Ang and Botero (2003) was used. This scale consists of 15 items aiming to assess three sub-dimensions: acquiescent silence (five items), defensive silence (five items) and pro-social silence (five items). All items were measured on a five-point scale ranging from strongly disagree (1) to strongly agree (5). In the third part, close-ended questions were developed to determine the demographical characteristics of the participants.

Results Respondents’ profile Table 7.2 below shows that 53.8% of the participants were male and 46.2% were female; 35.7% were married and 64.3% were unmarried. Similarly, 17.5% were aged 18–25 years, 65.7% were 26–35 years, 15.4% were 36–45 years, and 1.4% were 46 years or above. In terms of education, 4.2% of the participants were high school graduates, 34.2% had a bachelor’s degree, 52.4% had a master’s degree, and 9.2% had a PhD.

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The table further shows that 18.9% had work experience of less than one year, 24.3% had 1–5 years, 30.2% had 6–10 years, and 26.6% had more than 11 years work experience. Table 7.2. Demographic characteristics of the respondents (N=143) Characteristics Frequency Percentage Age 18–25 years 25 17.5 26–35 years 94 65.7 36–45 years 22 15.4 46–55 years 2 1.4 Gender Male 77 53.8 Female 66 46.2 Marital status Married 51 35.7 Unmarried 92 64.3 Education High school 6 4.2 Bachelor’s degree 22 15.4 Master’s degree 85 59.4 PhD 30 21.0 Work Experiences < 1 year 27 18.9 1–5 years 41 28.7 6–10 years 41 28.7 11–15 years 32 22.4 > 11 years 2 1.4

Dimensions on the Organisational Silence Scale Fifteen items relating to the organisational silence scale (i.e. employees’ remaining silent behaviour) were factor analysed using principal component analysis with varimax rotation. Only the factors with Eigen value one or greater were retained, and items with factor loading less than .50 were also dropped from the analysis. The reliability of the factors in organisational silence was tested by Cronbach’s alpha.

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Table 7.3. Factor analysis on the organisational silence scale Items on organisational silence scale

Factor 1 Defensive .82

Omitting pertinent facts in order to protect him/herself Withholding solutions to problems .80 motivated by fear Not speaking up and suggesting ideas .80 for change based on fear Withholding relevant information due .75 to fear Avoiding expressing ideas for .75 improvements due to self-protection Withholding ideas about how to .65 improve the work around here based on being disengaged Withholding confidential information based on cooperation Protecting proprietary information in order to benefit the organisation Refusing to divulge information that might harm the organisation Protecting confidential organisational information appropriately, based on concern for the organisation Withstanding pressure from others to tell organisational secrets Unwilling to offer suggestions for change Passively withholding ideas based on resignation Passively withholding ideas about solutions to problems Keeping any ideas for improvement to him/herself because of low selfefficacy to make a difference Eigenvalue (percentage of total 6.80 (30.32) variance) Cronbach’s alpha .92

Loadings Factor 2 Pro-social

Factor 3 Acquiescent

.84 .82 .78 .71

.69 .80 .75 .71 .61

2.81 (20.67) .85

1.01 (19.90) .86

The principal component analysis yielded three factors explaining a total of 70.90% of the variance for the entire set of variables (see Table 7.3 above). Factor 1 was labelled defensive silence due to the high loadings by the following six items: omitting pertinent facts to protect him/herself,

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withholding solutions to problems because of being motivated by fear, not speaking up and suggesting ideas for change based on fear, withholding relevant information due to fear, avoiding expressing ideas for improvements due to self-protection, and withholding ideas about how to improve the work around here based on being disengaged. This first factor explains 30.32% of the variance and the Cronbach’s alpha is .92. The second factor was labelled pro-social silence due to the high loadings by the following five items: withholding confidential information based on cooperation, protecting proprietary information in order to benefit the organisation, refusing to divulge information that might harm the organisation, protecting confidential organisational information appropriately based on concern for the organisation, and withstanding pressure from others to tell organisational secrets. The variance explained by this factor is 20.67% and the Cronbach’s alpha is .85. Finally, factor 3 was labelled defensive silence due to the high loadings by the following four items: unwilling to speak up with suggestions for change, passively withholding ideas based on resignation, passively keeping ideas about solutions to problems, and keeping any ideas for improvement to him/herself because of low self-efficacy to make a difference. This third factor explains 19.90% of the variance and its Cronbach’s alpha is .86. The results confirmed that organisational silence consists of three dimensions, and as in the original scale the dimensions are named acquiescent silence, defensive silence and pro-social silence.

Relationship between Organisational Silence and Personality Type The personality trait inventory used to classify personality traits in this research is a scale aiming to measure many dimensions with a small number of questions. The short version has 10 questions—two for each dimension. This does not allow statistical analysis of dimensions and computation of reliability. The ten-item personality inventory is less reliable and correlates less strongly with other variables since it is the short version (Gosling 2003, 523). Taking these reasons into consideration, the score for each personality type is obtained by averaging the two items used to measure the particular dimension. Table 7.4 below summarises the means, standard deviations and correlations among the study variables. The results of correlations analysis show that the extraversion has significant negative correlation with defensive silence (r = -.31, p < .01) and acquiescent silence (r = -.427, p