CHAPTER 2 Literature Review
2.6 IT-enabled Service
services with user interactions features. Besides, an interactive service platform was proposed by Lin and Sun (2007) for interactive digital TV. On the other hand, the customers’ perspective is taken by another stream of thought, such as Cao, et al. (2006) present a dynamic and on-demand service model for achieving the goals of mass customization. Low and Sloan (2001) asserted that the digital interactive service industry has the potential to generate innovation and strategic advantage for existing business. Nevertheless, the focus of this research, IT-enabled interactive service, is scantly discussed.
2.5 Interactive innovation
Interactive innovative projects were widely applied in the classroom curriculum to facilitate learning and teaching (Bruce, 1997), the financial and business services to understand how innovation operates as an interactive process (Barras, 1990).
Kietzmann, (2008) took the lens of a normative interactive innovation framework and explored the interaction problems of mobile RFID technology. Another scholar, Johannesse, (2009), proposed a systemic model and regarded innovation itself as an interactive learning. Lu, et al. (2009) explored the interaction and the impact between the service personnel and the customer on development of service innovation activities. Heretofore, few researches probe into the diffusion of interactive innovation.
2.6 IT-enabled service
Most of the literatures related to IT-enabled service (ITES) were expounding the issue of Business Process Outsourcing (BPO), especially in the case of US-Indo.
(Mukherjee, A and Deb Gupta, P., 2007, Henley, J., 2007, Mahnke, V., Oxcan, S. and Overby, M. L., 2006, Srinivasan T. N., 2005, Ramachandran, K.and Volete, S. V.,
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2004) According to the Wikipedia, ITES is a form of outsourced service which has emerged due to involvement of Information Technology in various fields such as finance, banking, insurance. Some examples are medical transcription, back-office accounting and insurance claim, credit card processing etc. Thus, ITES are often regarded as synonym of BPO to refer to the same set of services and involves outsourcing of one or more complete business processes or entire business function that can be enabled with IT (Mukherjee and Gupta, 2006; NASSCOM, 2010).
Nevertheless, the issue of Information Technology enabled Services (ITeS) has turned to a frontier one in Taiwan since the government targeted to upgrade itself from a key IT manufacturer country to become an important ITeS supplier nation. The scope of IteS was defined as: “the combination of knowledge regarding certain specific areas and information technologies, or the generation of new application ideas based on IT itself, to create innovative technology-based services, new business model and value added” (MOEA, 2006). The Taiwanese government determined to promote the technology-enabled service industry, and this flagship plan would involve twelve categories, namely, financial, distribution, telecommunication and media, medical, health care and care-giving, manpower training, property management, tourism, sporting and recreational, cultural and creative, design, information, and environmental protection (MOEA, 2006).
Given the proximity of IT-enable service to the digital revolution, it can be regarded as the digitally enabled service. In this regard, Rai and Sambamurthy (2006) conceptualized the digitally enabled service management as the capabilities, structures, and processes with which digitized services are conceived and architected, how these services are offered and orchestrated, and how interactions for innovation and production of services are managed (Rai and Sambamurthy, 2006).
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CHPATER 3 ONTOLOGICAL DESCRIPTION OF IT-ENABLED INTERACTIVE SERVICE INNOVATION PROCESS
The extant literature reviewed above reveals that the issue of IT-enabled interactive service innovation (IISI) has gained a lot of interests from academia.
However, a comprehensive and full exploration of the process of IISI is still sparse.
This research conceptualizes the IT-enabled interactive service innovation as the development, deployment, and diffusion of a new interactive service through information technologies (IT) (including the communication and networking) for the customer.
This research attempts to answer the question of how an IISI is transformed from the initial proposal, IT assets, competency, and to the end, the business performance, and what the possible challenges may encounter during the transformation. Therefore, the process theory is adopted as the research approach to conceptualize the process of IISI and to obtain the ontological description of IISI.
As shown in Figure 3.1, the IISI consists of two areas of sub-processes – the new service design/development process and the new service implementation process. The new service design/development process includes service proposal development, service concept development, service component development, service design, service analysis and service component integrating and testing. Triggered by certain external stimuli coming from economic/social/competitor/technology environment or intrepreneur stimulus, the firm should have developed a proposal for the ideal service innovation, which includes the formulation of new services objective/strategy and idea generate and screening; based upon the proposal, then a service concept should have developed to provide a more detailed description of service innovation. Then, the service analysis will determine the potential as part of a profitable business
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venture and authorize the project. A service design should also be conducted to determine a more detailed requirements (and specifications/standard operation procedure/service-standard) of components of IISI that include IT/IS assets (for front/middle/back offices), people (for front/middle/back and MIS offices), and knowledge/know-how (for front/middle/back and MIS offices). Note that the design of service encounter system should adopt the principle of user-centered interaction design. Based upon the perceived service design, each service component should be developed and then tested and integrated via setting up a pilot food chain of service to test the synergy of integrated service components. Key issues include the acceptance of employees (involving culture and organizational issues and incentives), the process re-engineering (cooperation between inter-function or new departments).
Once the new service innovation is ready for rolling out, there is a service transition that transits the pilot food chain of service into a real (internal and external) food chain of service.
In the new service implementation process, this involves the interaction process and the relationship process. The former process comprises of three value activities, which are customer integration, service production, and service recovery. The latter process also includes three activities, namely, customer acquisition, customer retention, and customer recovery. Note that an interaction describes the throughput of a customer via an individual service process; the relationship concerns the customer’s throughput through a relationship with the provider. (Fitzsimmons and Fitzsimmons, 2008; Bruhn and Gerogi, 2006).
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Figure 3.1: The activities associated with the IISI
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CHAPTER 4 RESEARCH METHODOLOGY
This research adopts process theory as research approach to structure the locus of analysis and building the conceptual framework. Moreover, we strive for gaining insights and understanding the retardants in the whole IISI process, thus, the case study methodologies are appropriate for this study.
4.1 Process Theory
Process philosophy refers to identify metaphysical reality with change and dynamics. Process may be integrative, destructive or both together, allowing for aspects of interdependence, influence, and confluence, and addressing coherence in universal as well as particular developments. In management research, process theory provides an explanation for 'how' something happens and a variance theory explains 'why'. Variance approach is appropriate for investigating variable related innovation, yet, it cannot probe backward in time to understand what happened first, next, and so on (Rogers, 2003). Research on the exploration of value transition in a service innovation should be appropriate for adoption of process theory.
The logical structure differences between variance theory and process theory are provided in Table 4.1 (Mohr, 1982, Markus and Robey, 1988). Moreover, scholars like Soh & Markus (1995) suggested that variance theories excel at explaining variations in the magnitude of a certain outcome.
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Table 4.1 Difference between variance theory and process theory Characteristic Variance Theory Process Theory
Outcome A variable A discrete occurrence
Definition The cause is necessary and sufficient for the outcome.
Causation consists of necessary conditions in sequence; chance and random events play a role.
Logical Form If X (independent variable), then Y (dependent variable).
If not X, then not Y; can not be extended to “more X”, or “more Y”.
Elements Variables Discrete outcomes
Assumptions Outcome will invariably occur when necessary and sufficient conditions are present.
Outcomes may not occur even when conditions are present unless a particular “recipe” involving external directional forces and probabilistic processes.
Role of time Irrelevant; Static:
Necessary and sufficient conditions can occur in any order
Crucial; Longitudinal;
The time ordering in which necessary conditions combine is consequential.
How to “read”
the theory
The cause is necessary and sufficient to produce the effects.
Causation consists of necessary conditions occurring in a particular sequence in which change and random events play a role.
Source : Mohr (1982); Markus and Robey (1988)
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Several pieces of the information technology research adopting process theory have appeared in the literature. One is the work on studying the strategic contributions of specific technologies, ATM, and specific processes by Banker and Kauffman (1988). Soh and Markus (1995) conducted a complete process theory to explain why and how IT spending became business performance. The process elements, such as expenditure, IT assets, IT impacts, and organizational performance, were rearranged and use intermediate outcome to fill in the gap of discontinuity in previous “causal but insufficient” relationship study, and moreover, three sub-processes are proposed as the IT conversion process, the IT use process, and the competitive process.
Furthermore, Moony, et al. (1996) provide a base for studying business value of IT by taking a process perspective, clarify the link between organizations and information technology, and propose a process oriented model of IT business value including organization environment, information technology, competitive environment, and operational & management processes.
Tallon, et al. (2000) incorporate corporate goals for IT and management practices as key determinants of realized IT payoffs; propose a process-level model to focus on how IT affects critical business activities within the corporation’s value system. The executives’ recognition that IT investment must be managed like any other capital investment is asserted as well.
Oliva and Kallenberg (2003) elaborated the transition of manufacturing industry from products to services by developing a process theoretical framework of transition patterns.
In this research, we regard the IT-enabled innovative service as a process of developing, deploying, and diffusing an IISI for the customer. Firstly, the stimuli either from external (e.g. economic, social, or competitive factors) or from internal (e.g. entrepreneur) can initiate the IISI, then, the service proposal including the
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detailed service concept needs to be developed, the user-centric interactive service design involves detailed requirements and specifications of service innovation. Next, the service components including IT/IS assets, people, procedure, standard and knowledge should be developed; the following will be the service component integration and testing. Once the IISI is ready, the service will be transited, operated and delivered among the front, middle and back offices. At last, the service experience will be generated for service improving and retention. This ongoing process will be adopted as the research axis to analyze the locus of value transformation through IISI.
4.2 Case study
In general, case studies are the preferred research strategy when “how” or “why”
questions are being posed (Yin, 1994). This research strategy focuses on understanding the dynamics presents within single settings (Eisenhardt, 1989). The essence of a case study, the central tendency among all types of case study, is that it tries to illuminate a decision or set of decisions: why they were taken, how they were implemented, and with what result (Schrammen, 1971). The theme of this research is to delineate the process of value transformation starting from the initial proposal to the final outcome, namely, business performance. Moreover, we also expound the obstacles that erode the value generation. Hence, this context of “how” and “why”
questions should be appropriate for adopting the case study methodology.
As indicated in the research background, the development of IT-enabled interactive service innovation is a state-of-the-art issue and involves a lot of market participants from different sectors. According to the definition provide by Yin (1994),
“A case study is an empirical inquiry that, investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and
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context are not clearly evident”. Thus, a case study strategy should be applicable for the study of IT-enabled interactive service innovation.
Besides, Eisenhardt (1989) proposed a synthesized roadmap for building theory from case study research, which includes getting started, selecting cases, crafting instruments and protocols, entering the field, analyzing data, shaping hypotheses, enfolding literature and reaching closure. Stake (1994) presents three types of case studies, namely, intrinsic case study, instrumental case study and collective case study.
The intrinsic case study aims at increasing the understanding of a phenomenon and make sense of the case being studied; the instrumental case study aims at refining a theory; and the collective study focuses on using several studies to compare and draw general implications of the phenomenon being studied. In this research, the multiple cases will be adopted and follow the Eisenhardt’s roadmap to build a general framework for analyzing the IT-enabled interactive service innovation.
Furthermore, Yin (1994) issued six sources of evidence related to the data collection in conducting case study strategy, which comprise documents, archival records, interviews, direct observation, participant-observation, and physical artifacts.
In order to enhance the explanatory power, we will collecting the evidence by conducting several semi-structural interviews across different sectors and businesses, the relevant archival records and documentary information will be gathered and analyzed.
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CHATPER 5 THE FRAMEWORK OF CHALLENGES FOR IISI
In the literature, there are several studies addressing the issues of assessing IT values at different levels and of avoiding value discounting. These pioneering studies either propose a chain of three different process of IT value creation, or identify a series of specific barriers in a two-stage framework (Soh and Markus, 1995; Chircu and Kauffman, 2000). Nevertheless, in the context of web-based service, namely, a request-and-respond service pattern, the issues of identifying value and overcoming barriers are intricate because they span multiple level of analysis, including the use of IT and the impact of innovation on the marketplace, where it may alter the fundamental ways in which firms and individuals interact. At the latter level, the issues of interest are business process designs, technological standards, firm-to-firm competition, and alternative organizational strategies. A better understanding of these issues, along with the extent to which new innovations diffuse through the marketplace and are accepted by users, is required. Those studies described above do not seem to provide a comprehensive framework for exploring all the challenges involve in the IT-enable interactive service innovation. Next, we propose an analytic framework for delineating all the issues above.
The ultimate goal for IT-enabled interactive service innovation is to improve the organizational performance and gain competitive advantages. However, the most challengeable part for the executive management is to ensure this transformative potential will proliferate successfully and benefit the bottom-line.
5.1 The Development of IISI
The conversion from the initiation of an IT-enabled Interactive Service Innovation to its final outcome, the firm’s business performance, should be regarded
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as a process of transformation that comprises several intermediate states. Based upon the process-oriented approach of Soh and Markus (1995); Kohli and Sherer (2002), this research proposes the following three-phase development framework shown in Figure 5.1, which specifies how the tasks and underlying expenditures in each stage contribute to the outcome. Foremost, the IT acquisition phase, the development of enabling IT, specifies IT development, where the enabling IT assets of the service initiative are built up; then, the set-up phase, the set-up of IT-enabled interactive service innovation, focuses on the conversion of a firm’s IT assets to its competencies;
and the diffusion phase, the diffusion of IT-enabled interactive service innovation, specifies the diffusion through which the service initiative is commercialized through translating competencies into business performance. The outcome of each phase and its (customer) value may vary based on the level of expenditures and the quality of management. The details of this approach are described as follows.
Figure 5.1 The development framework of IT-enabled interactive service innovation
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The IT acquisition Phase:
Once the initiative to pursue an IT-enabled Interactive Service Innovation is approved by top management, the first major tasks are to form a business strategy that also specifies the business-IT integration and then, based upon the integration, to develop the IT assets that enable the IT-enabled Interactive Service Innovation. There are different types of IT assets, comprising a portfolio of tangible inputs, including hardware, software, infrastructure, communication technology, and other complimentary intangible elements, such as knowledge, enhanced technological and managerial skills in the use of IT, and so on.
During this phase, infusing “IT expense” is necessary for the acquisition of enabling IT, furthermore, the levels of IT expense may impact the breadth (number of IT assets) and the depth (levels of activities supported) of acquired IT assets.
Moreover, with the same level of IT expense, some organizations may be able to acquire more IT assets than others due to their ability to address technical challenges.
The set-up phase:
After acquiring IT assets, an organization should incorporate them into its IT-enabled Interactive Service Innovation projects by effectively integrating these assets into the competencies resulting from the synergy of the cross-functional capabilities of different functions. These competencies include the effective use of IT in service design and automated service processes and activities, a better understanding of service markets and of customers, and flexible and adaptive organizational structures in support of service development and delivery.
“Managerial expense” during this stage refers to exploiting the firm’s capabilities by leveraging all of its business resources, including tangible resources (such as manpower, management teams, and training) and intangible resources (such as culture
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and reputation). On the base of well utilizing all resources within business, the capabilities of different dimensions such as the R&D capabilities, production capabilities, and logistic capabilities etc. can be built on. Thereby, an effective co-ordination and integration of capabilities, the business competencies will evolve.
It is necessary to formulate a service strategy, select the right service projects, infuse business resources into the project, and manage the project effectively.
The diffusion phase:
As the competencies have been built up, this IT-enabled interactive service innovation will encounter the challenges whilst diffusing market wide, in particular, the competencies do not sufficiently result in a good organizational performance when a firm is in an unfavorable environment. The firm should develop a favorable environment through some deliberate activities that, for example, help diffuse the IT-enabled Interactive Service Innovation with either greater benefits (e.g., resulting from a larger customer base) or lower costs (e.g., resulting from a more efficient diffusion process) in comparison with its competitors.
In this phase, market expenses are required to handle (1) social issues, including gaining social acceptance and government support, (2) inter-organizational issues, entailing the strategies for satisfying the key stakeholders’ needs, seeking trustworthy partners, maintaining good governance, and understanding the competitors’ strategies, and (3) managerial issues, such as designing and maintaining an efficient process for diffusing the IT-enabled Interactive Service Innovation, building high market sensing capabilities, and responding the market proactively.
The forgoing discussion provide an exemplar of the transformation process of
The forgoing discussion provide an exemplar of the transformation process of