A Customer Interaction Approach to Strategy and Production Complexity Alignment in Service Firms

Abstract

This study shows that the strategies of service firms affect the uncertainty they encounter in their dealings with customers. This strategically induced uncertainty then becomes the mechanism by which service firms organize their production processes. In a study of 234 service firms representing 96 different industries, we found strong support for relationships between these organizations' strategies and the level of complexity in their production processes. In addition, service firms that possessed the hypothesized fit between strategy and service production complexity tended to experience higher performance.