This presentation hightlights how manufacturing companies can align their service strategies with the organizational structures.

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

2. Service business in manufacturing companies
Transition line from products to services
Importance of
services for value
contribution
Performance-based
Tailored solutions
High
Maintenance services
Pay-per-use
“Service paradox”
Low
Ad-hoc Service
support
Investments in the service business

3. Perspectives on avoiding the service paradox
 Service-orientation of singledeterminants:
(e.g. Eggert et al. 2011; Fang et al. 2008; Tuli et al. 2007, Oliva&Kallenberg 2003, Neu and Brown
2005, Auguste et al. 2004, Windahl and Lakemon, 2010)
– Strategy
– Corporate culture
– Human resource management
– Organizational structures
 Coalescence among multiple strategic and organizational attributes (strategic fit)
– Internal consistence among strategy and structure attributes
(Bowen, Siehl& Schneider 1989)
– Distinctive service capabilities vary across different types of hybrid offerings
(Ulaga&Reinartz 2011)
– Identify the reinforcing business model elements that drive configurational fit
(Storbaka 2011)

4. Research proposition
The success of service strategies depends upon the
internal congruence between the service strategies
and the organizational design factors

5. Selecting the most-suitable approach for assessing
strategic fit
Low
Many
(3) Fit as Profile Deviation
Specifity in the functional
form of the fit-based
relationship
(4) Fit as Gestalts
(2) Fit as Mediation
(5) Fit as Covariation
(1) Fit as Moderation
(6) Fit as Matching
Few
High
Criterion-specific
Source: Venkatrama, 1989, p. 425
Number of
variables in the
fit equation
Criterion-free
Choice of anchoring the specification of fitbased relationships

6. Selecting the most-suitable approach for assessing
strategic fit
Low
Many
(3) Fit as Profile Deviation
(4) Fit as Gestalts
Conceptualization
• Recurring clusters of attributes
(gestalts)
Specifity in the functional
form of the fit-based
relationship
(2) Fit as Mediation
• Sets of internally consistent variables
Number of
configurations
in the fit equation
(5) Fit as Covariation
Analytical issues
•
•
Factor & cluster analysis
•
(1) Fit as Moderation
Descriptive & predictive validity
Sub-groups of low- and highperformer
(6) Fit as Matching
Few
High
Criterion-specific
Source: Venkatrama, 1989, p. 425
Criterion-free
Choice of anchoring the specification of fitbased relationships

7. Measure development
 Service strategies – formative scale using types of service offerings:1
– Number of services (customer service, basic service for the installed base,
maintenance services, R&D-oriented services, and operational services)
– Broadness of services
– Emphasis on services
 Organizational design factors - reflective scales using three to five items2
– Service orientation of corporate values and employees’ behavior
– Service orientation of personnel recruitment, personnel training, and
personnel assessment/compensation
– Organizational distinctiveness between product and service businesses
&proximity to customers of the service organization
1
2
– Homburg et al. (2002)
– Homburg et al. (2004), Oliva &Kallenberg (2003)

8. Data sample
 Data collection was preceded by engaged scholarship
 Written questionnaire, 202 firms were purposively contacted, with 195 positive
responses (response rate of 96.5%)
 Test for non-response bias
 Information quality: average years of employment (mean=10.14; SD=4.87),
knowledge about the service business (mean=2.72; SD=0.80) , and their work
experience in the service organization (mean=2.23; SD=0.53)
 Sample characteristics: e.g., industries, number of employees, company versus
strategic business unit
 Performance measures: The overall profitability (operating margins) is split into
55.4% of the participants achieving more than 5% in the past 3 years and 44.6%
achieving less than 5% in the past 3 years

9. Results of both cluster analyses (1)
 ANOVA Tests forbothclusteranalysis
Factors
F-test
p-value
Service
strategies
R&D services
Basic services for the installed base
Maintenance services
Operational services
19.530
6.752
2.508
16.373
0.000
0.000
0.063
0.000
Arrangement of
organizational
design factors
Service orientation of corporate values
Service orientation of employees’ behavior
Service orientation of personnel recruitment
Service orientation of personnel training
Service orientation of personnel assessment/
compensation
Organizational distinctivness between product
and service business
Proximity to customers of the service organization
25.838
19.843
4.736
7.266
19.005
0.000
0.000
0.004
0.000
0.000
6.350
0.001
10.032
0.000

10. Results of both cluster analyses (2) - Cluster Means of
Discriminating Variables
Cluster 2
(n=77)
Cluster 3
(n=34)
Cluster 4 (n=
23)
0.92
0.14
0.11
0.07
0.43
0.89
0.12
0.13
0.21
0.31
0.90
0.12
0.41
0.51
0.14
0.88
Cluster 5
(n=98)
Cluster 6
(n=56)
Cluster 7
(n=20)
Cluster 8
(n=21)
0.69
0.21
0.17
0.21
0.84
0.79
0.73
0.72
0.85
0.81
0.21
0.23
0.87
0.85
0.87
0.88
0.23
0.77
0.54
0.48
Organizational distinctiveness between product
and service business
0.24
0.76
0.89
0.45
Proximity to customers of the service
organization
0.56
0.69
0.93
0.77
Factors
Basic services for the installed base
Maintenance services
Operational services
R&D services
Service orientation of corporate values
Service orientation of employees’ behavior
Service orientation of personnel recruitment
Service orientation of personnel training
Service orientation of personnel
assessment/compensation
Cluster 1
(n=61)

11. Measure validation
 Service strategies – formative scales1
(a) Content specification,
(b) Indicator specification,
(c) Indicator collinearity, and
(d) External validity
 Organizational design factors – reflective scales
(a) Exploratory factor analysis (Sphericity =
4456.334, significance level < 0.001, KaiserMeyer-Olkin = 0.87)
(b) Seven interpretable organizational design
factors (variance = 71.3%)
(c) Communalities (0.63 to 0.86), Cronbach’s
alpha (0.77 to 0.91)
1 – Diamantopoulos
2 – Hair
et al. (2005)
et al. (2001 and 2008)

12. Picturing matches and mismatches
Clusters on arrangements of organizational design factors
Cluster 5
(n=98)
Cluster 6
(n=56)
Cluster 7
(n=20)
Cluster 4
(n=33)
15
Cluster 3
Strategycl (n=24)
usters
9
Cluster 2
(n=77)
Cluster 1
(n=61)
31
After sales
service provider
40
Boldface - high-performance
Italics - low performance
3
4
Outsourcing
partner
3
Customer support
service provider
31
4
8
10
Cluster 8
(n=21)
Development
partner
4
1
4
12
13
3

13. Strategy-structureconfigurations
After-sales service
provider
Customer support
service provider
Outsourcing
partner
Development
partner
• Ensuring product
functionality (fast
reactions to
product failures)
• Dominance of
services ensuring
customers process
efficiency
• Operational
services for takingover customer
processes
• Designing
customer
processes through
co-creation of
competencies
1
A
1
G
F
B
0
E
1
G
C
D
A
F
B
0
E
1
G
C
D
A
F
B
0
E
G
C
D
A
F
B
0
E
C
D

14. Anecdotal evidences on matches and mismatches
Clusters on organizational design factors
Cluster 5
Cluster 6
Cluster 7
Development
partner
Cluster 4
Strategy
clusters
Outsourcing
partner
Cluster 3
Customer support
service provider
Cluster 2
Cluster 1
Cluster 8
After sales service
provider

15. Contributions
Theoretical Implications
Instead investigating the single determinants, insights into the role of strategic fit
Bridging service strategies with specific configuration of organizational elements
Managerial implications
Guidance on implementing service strategy through organizational design
Insights into separating and integrating service & product business
Limitations & future research recommendations
Bias due to purposive sampling – Replication is recommended
Disadvantages of fit as gestalt (fit as moderation or fit as mediation)

16. Thank you very much!
&
Any questions?